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Ramchandra Ganpat Chogle Vs. the Commissioner for Co-operation and Registrar Co-operative Societies - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Application No. 886 of 1975
Judge
Reported in(1976)78BOMLR682
AppellantRamchandra Ganpat Chogle
RespondentThe Commissioner for Co-operation and Registrar Co-operative Societies
DispositionAppeal dismissed
Excerpt:
.....of a society, the registrar is satisfied or a the basis of the report made by the auditor or the person authorised to make inquiry under section 83 or the person authorised to inspect the books under section 84 or the liquidator tinder section 105 or otherwise that any person who has taken any part in the organisation or management of the society or any deceased, or past or present officer of the society has, within a period of five years prior to the date of commencement of such, audit or date of order for inquiry, inspection or winding up, misapplied or retained, or become liable or accountable for, any money or property of the society, or has been guilty of misfeasance or breach of trust in relation to the society, the registrar or a person authorised by him in that behalf may frame..........charged under section 88 of the act, made an application to the newly appointed authorised person shri gadkari and contended that the proceedings under section 88 of the act should commence de novo before him, shri gadkari, however, rejected the contention, so that the proceedings were to continue before him from the stage where they were left when the previous authorised person died.4. the petitioner thereafter filed a revision application, being application no. 97 of 1974, before the maharashtra state co-operative appellate (court) tribunal. the learned tribunal by its order dated march 5, 1975 dismissed the revision application, but granted one month's stay to enable the petitioner to approach the high court, if he so desired.5. it is in these circumstances that this petition.....
Judgment:

Mukhi, J.

1. The only point which has been raised before us and is, therefore, required to be determined in this petition is whether it is permissible for the authorised person, appointed under Section 88 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as 'the Act') to take over the proceedings after the death of the previous incumbent, to proceed on the basis of evidence already recorded by his predecessor.

2. This petition arises out of proceedings under Section 88 of the Act which were commenced some time in July 1970. The authorised person, one Shri D.G. Godbole, framed charges against the petitioner and other delinquents and the proceedings went on for nearly four years, during which period, we are told, nearly hundred witnesses were examined. However, before the proceedings could conclude, Shri Godbole died on July 16, 1974. The Commissioner for Co-operation and Registrar of Co-operative Societies, Poona, respondent No. 1, passed an order which is dated October 7, 1974, in which he recorded that due to the sudden demise of Shri D.G. Godbole on July 16, 1974 the proceedings entrusted to him under Section 88 of the Act could not be completed. The, learned Commissioner and Registrar then proceeded to authorise Shri B.L. Gadkari, a retired Presidency Magistrate of Bombay, to complete the proceedings under Section 88 of the Act and also directed that Shri B.L. Gadkari should proceed on the basis of evidence already recorded by Shri D.G. Godbole.

3. It would appear that the petitioner, who was an employee of respondent No. 3, and one of the delinquents charged under Section 88 of the Act, made an application to the newly appointed authorised person Shri Gadkari and contended that the proceedings under Section 88 of the Act should commence de novo before him, Shri Gadkari, however, rejected the contention, so that the proceedings were to continue before him from the stage where they were left when the previous authorised person died.

4. The petitioner thereafter filed a revision application, being application No. 97 of 1974, before the Maharashtra State Co-operative Appellate (Court) Tribunal. The learned tribunal by its order dated March 5, 1975 dismissed the revision application, but granted one month's stay to enable the petitioner to approach the High Court, if he so desired.

5. It is in these circumstances that this petition was filed and a rule nisi issued on April 1, 1975. This Court also granted stay of the proceedings in terms of prayer (b) of the petition.

6. Shri Naik, the learned advocate for the petitioner, has contended that it was incumbent on Shri B.L. Gadkari, the new authorised person, appointed after the demise of the previous authorised person Shri D.G. Godbole, to start the proceedings da novo and re-examine all the witnesses who had been examined by Shri Godbole. Shri Naik has further contended that there is no provision in law which would permit the present authorised officer to base his decision on evidence which was not recorded before him. In fact, the learned advocate argued that it would be wrong and illegal for the authorised person to act on evidence not recorded by him personally.

7. Shri A.T. Patil, the learned advocate for respondent No. 3, contends that if the nature of the proceedings held under Section 88 of the Act is noticed, then it would be clear that a fresh examination of all the witnesses examined before the previous authorised person was not at all called for and that the only requirement under Section 88 of the Act was that the petitioner must have a reasonable opportunity to answer to the charges framed against him. Such a reasonable opportunity, according to Shri Patil, could not include any right to a de novo examination of witnesses whose testimony already formed part of the record.

8. It requires to be noticed that during the arguments some contentions were raised that the proceedings under Section 88 of the Act were similar to those under Section 91 of the Act and the suggestion was that the enactment of the new Section 91A and in particular Sub-clause (4) thereof indicated that unless there was a statutory provision to the contrary the proceedings before the new authorised person as a quasi-judicial authority must commence de novo.

9. Now, in order to appreciate the rival contentions advanced before us, it is necessary to notice the nature of the proceedings under Section 88 of the Act. Sub-section (1) of Section 88 of the Act, which is the relevant portion, reads as follows:

Where, in the course of or as a result of an audit under Section 81 or an inquiry under Section 83 or an inspection under Section 8 or the winding up of a society, the Registrar is satisfied or a the basis of the report made by the auditor or the person authorised to make inquiry under Section 83 or the person authorised to inspect the books under Section 84 or the Liquidator tinder Section 105 or otherwise that any person who has taken any part in the organisation or management of the society or any deceased, or past or present officer of the society has, within a period of five years prior to the date of commencement of such, audit or date of order for inquiry, inspection or winding up, misapplied or retained, or become liable or accountable for, any money or property of the society, or has been guilty of misfeasance or breach of trust in relation to the society, the Registrar or a person authorised by him in that behalf may frame charges against such person or persons, and after giving a reasonable opportunity to the person concerned and in the case of a deceased person to his representative who inherits his estate, to answer the charges, make an order requiring him to repay or restore the money or property or any part thereof, with interest at such rate as the Registrar or the person authorised under this section may determine, or to contribute such sum to the assets of the society by way of compensation in regard to the misapplication, retention, misfeasance or breach of trust, as he may determine.

(Italics supplied).

10. There can be no doubt that the proceedings contemplated by Section 88 of the Act are in the nature of misfeasance proceedings against persons who have taken part in the organisation or management of the Society. It is interesting to notice that the provisions of Section 88 Sub-section (i) of the Act are pari materia with provisions of Section 543 of the Companies Act of 1956. Now, the object and the scope of such misfeasance proceedings is substantially clear.

11. Proceedings under Section 88(1) of the Act or Section 543 of the Companies Act, 1956, do not extend to any and every kind of claim which a society or a company may have against its delinquent directors or officers. It is restricted to claims relating to misfeasance or breach of trust. It is well-settled that persons in the position of directors or promoters of the societies and companies are in fiduciary relationship and the law, therefore, provides for summary proceedings with the avowed object of recovering from the delinquent directors or such persons moneys of the society or company, which they may have appropriated or to proceed against such persons whose misfeasance has resulted in a loss to the society or the Company and recover damages.

12. It may be noted that no new rights or new liabilities are created by such provisions. The provisions only provide for a convenient and summary means of enforcing rights and remedies which would be otherwise enforceable by a suit or action in ordinary civil Courts.

13. If the nature of the proceedings contemplated under Section 88 of the Act is thus understood, then it becomes substantially clear that such proceedings are different from the proceedings contemplated under Section 91 of the Act, which is concerned with certain disputes that may arise touching the constitution, election, meetings and business of the society.

14. Section 88 of the Act, therefore, gives power to the Registrar or a person authorised by him in that behalf to assess damages against delinquent persons referred to therein. Since such action entails civil consequences, it becomes obvious that the orders contemplated must be passed after compliance with rules of natural justice. This is clearly provided by the section itself because the Registrar or a person authorised by him in that behalf has first to frame charges against such person or persons. As a result of the framing of charges such a person or persons immediately come to be advised as to what they nave to answer to. This is followed by proceedings in which a reasonable opportunity is to be given to the person concerned to answer the charges. It is only then that the Registrar or the authorised person can make an order against a delinquent to repay or restore the money or property or any part thereof which he becomes liable to do by reason of misfeasance or breach of trust or otherwise as may be determined.

15. In other words, the delinquent person or persons against whom charges have been framed are entitled to notice and hearing.

16. Now, what is the reasonable opportunity to which a person is entitled to in the context of the misfeasance proceedings under Section 88 of the Act. To put it differently, what form of hearing is he entitled to and in relation to the proceedings under Section 88 of the Act what are the ingredients of a fair hearing?

17. It is well-settled that the concept of a fair hearing or a reasonable opportunity to be heard or to answer to charges must vary significantly in different contexts.

18. It is also settled that a hearing or an opportunity or a right to be heard may not in a particular context mean the opportunity or the right to be heard orally. It may in such a context only mean the making of written representations which must be considered by the authority.

19. Now, in modern times a reasonable opportunity to be heard nearly always implies a hearing at which oral submissions are made and evidence is recorded. It is also appropriate to notice that some times the term 'hearing' as used in an enactment may be used in contrast to an 'inquiry'. To that extent the use of the relevant phraseology in the particular enactment may have significance.

20. It is in the context of this state of the law that the question which arises in this petition has to be determined.

21. Our attention was invited by the learned advocate for the petitioners to Rule 72 of the Maharashtra Co-operative Societies Rules, 1961, which provides for the procedure for assessing damages against delinquent promoters etc. under Section 88 of the Act. The learned advocate for the petitioner placed considerable emphasis on Sub-clause (5) of Rule 72, which provides as follows:

The Registrar or the person authorised by him, shall thereafter record the evidence led by the society or the person or persons concerned and take on record the documents proved by them and shall thereafter fix a date for hearing arguments of both the parties.

This, according to the learned advocate for the petitioner, would mean that the authorised person who is appointed after the death of a person (or who may be incapacitated or unwilling to act) must record evidence all over again. In our view, there is no warrant for such a contention. The Act and the rules do not say so. All that this rule suggests is that in the proceedings under Section 88 of the Act the hearing contemplated is one in which evidence is recorded and oral arguments are to be heard, so that a reasonable opportunity can be said to have been afforded to the person concerned to answer the charges.

22. Now, there is no dispute that the manner in -which the evidence was recorded by Shri Godbole was in conformity with this Rule. There is no grievance that in the proceedings before Shri Godbole principles of natural justice were not followed. What is suggested now is that all the witnesses previously examined must be re-examined by Shri Gadkari.

23. The contention raised by the petitioner, therefore, comes to this: that there will be an infringement of the rules of natural justice if Shri Gadkari decides the case on the evidence recorded by his predecessor.

24. Now, in general, it has been considered to be a breach of natural justice if a Court, tribunal or arbitrator decides a matter if it/he has not heard all the oral evidence led in the matter. But the requirements of the rules of natural justice in an 'adjudication' by the Registrar or a person authorised in misfeasance proceedings as those in Section 88 of the Act, appears to be very different. The Registrar or a person authorised under Section 88 of the Act appears to bear no resemblance to Courts or tribunals in the strict sense of the words.

25. There are many situations where the legislative intent is that the person proceeded against must be given a reasonable opportunity of answering to the charges, but that would not necessarily equate the proceedings to those before a Court or a tribunal. As S.A. de Smith has stated in his book 'Judicial Review of Administrative Action'. 'It is possible to comply with the audi alteram partem rule without incurring any risk of being mistaken for a participant in proceedings before a Court of justice.'

26. As pointed out by Mr. Agarwal, the learned advocate for respondent No. 1 the petitioner as the person against whom charges have been framed under Section 88 of the Act is entitled only to a reasonable opportunity to answer those charges and it does not follow that Section 88 of the Act contemplates a trial in the strict sense of the word.

27. The learned advocate for the petitioner, however referred to Order XVIII, Rule 15 of the Civil Procedure Code and Sub-section (4) of Section 91A of the Act in support of his argument that without a statutory provision in that behalf a successor cannot use the evidence recorded by his predecessor. No doubt this is so in the conduct of trials before a Judge so that by reason of such provisions the continuance of a trial by a succeeding Judge from the stage at which it is left by his predecessor is recognised. Continuation of proceedings from a particular stage is also not new in trials in criminal cases and as now pointed out in the matters governed by Section 91 of the Act there is a statutory provision to that effect in the form of Section 91A (4) of the Act.

28. However, in proceedings under Section 88 of the Act it cannot be otherwise and indeed no statutory provision is required because, although the proceedings under Section 88 of the Act may be of a quasi-judicial nature, what the person concerned is entitled to is only that the proceedings are conducted with due regard to the rules of natural justice in the form of notice and hearing.

29. Our attention was invited to certain observations of the Supreme Court in Union of India v. T.R. Varma : (1958)IILLJ259SC . In that ease the Supreme Court observed that all that.the rules of natural justice require is that the party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no materials should be relied on against him without his being given an opportunity of explaining them.

30. Shri Naik, the learned advocate for the petitioner, strenously urged that the proceedings before the successor authorised person would be illegal if he did not give a hearing de novo. The learned advocate sought to rely on a judgment of the Supreme Court in K.P. Co. Bank v. Dulhanbibi. : [1963]2SCR348 In that case which related to arbitration under Section 54 of the Bombay Co-operative Societies Act of 1925, the Board had been reconstituted several times and the Court held the question of mode of proof was a question of procedure and was capable of being varied and.therefore evidence taken in a previous judicial proceeding can be made admissible in a subsequent proceeding by consent of parties.... While what is not relevant under the Evidence Act cannot in proceedings to which Evidence Act applies, made relevant by consent of parties, relevant evidence can be brought on the record for consideration of the Court or the Tribunal without following the regular mode, if parties agree. (p. 1073)

31. Now, it is in this context that the Supreme Court also observed that (p. 1073):.As the High Court has pointed out normally it would have been wrong and indeed illegal for the Tribunal to act on evidence not taken before it. The position is however different when the parties expressly or impliedly agree that some evidence not taken before the Tribunal should be treated as evidence and taken into consideration.

32. Shri Naik seems to rely, upon the latter observations in support of his argument that the authorised person cannot make use of evidence recorded before his predecessor in Section 88 proceedings and must proceed de novo.

33. We are unable to appreciate how these observations have any application to the proceedings of the nature contemplated under Section 88 of the Act, which we have already stated are in the nature of misfeasance proceedings under the supervisory jurisdiction of the Registrar.

34. Now, if all that Section 88 of the Act prescribes is that the person against whom charge are framed should be given a reasonable opportunity of answering them, then there is nothing to show why the evidence of all the witnesses examined before by the predecessor of the authorised person and the documentary evidence put on record cannot be taken into consideration by him when, after examining the remaining witnesses (if any) and hearing the arguments of the parties, he gives his decision.

35. The requirements of natural justice in such a case do not include a further requirement that evidence recorded in one part of the proceedings by one officer cannot be used by his successor who completes the inquiry, so long as such evidence which was taken before by the predecessor was taken in the presence of the person charged with a fair opportunity to cross-examine those witnesses, and object to the taking on, record of documents presented, if any.

36. It is not necessary to discuss at length the concept of natural justice in such cases. Natural justice is after all a flexible concept. It is now settled law that rules of natural justice are not embodied rules and that what particular rule will apply to a given case must depend on (a) the facts and circumstances of the case; (b) the framework and the scope of the relevant law; and (c) the constitution of the body or person who holds the hearing.

37. It is appropriate to notice that the Supreme Court in A.K. Kraipak v. Union of India A.I.R [1970]. S.C. 150 observed:.Whenever a complaint is made that some principle of natural justice has not been observed, the Court has to decide whether the observance of that rule was necessary for a just decision on the facts of the case.

38. Now, it can never be said on a proper interpretation of Section 88 of the Act that in order that Registrar or an Authorised person should come to a just decision, he must re-examine all the evidence led before his predecessor. There is no warrant for importing such a requirement in Section 88 of the Act.

39. We have already referred to the fact that the proceedings before Shri God-bole went on for four years and as many as hundred witnesses were examined and a large number of documents taken on record. We are also informed that if any witnesses remained to be examined, then they will be examined by the present authorised person Shri Gadkari in the presence of all the parties with due opportunity to the parties to cross-examine such witnesses.

40. A good deal of stress was placed by the learned advocate for the petitioner on the fact that the successor authorised person would not be in a position to observe the demeanour of the witnesses who were examined and cross-examined before his predecessor in the presence of the parties.

41. Now, apart from the fact that the petitioner has not suggested that there were any such aspects of demeanour in relation to the witnesses already examined and which should be taken into consideration, the stress placed on the question of demeanour is, in our opinion, highly exaggerated.

42. It is significant that respondents Nos. 5 and 6, who are the other persons charged along with the petitioner, have appeared through their advocates and urged that the proceedings should continue from the stage at which deceased Shri Godbole left them and that there should be no de novo proceedings. Indeed, it would work great hardship on these two respondents if the proceedings which have already taken more than four years have to start all over again.

43. In the result the petition fails and the rule is discharged with costs in one set.

44. At this stage Shri Naik, the learned advocate for the petitioner, applies for an order that the authorised person Shri Gadkari should not give his decision for a period of four weeks. There is no cogent reason for this prayer and it is accordingly rejected.


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