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Radheshyam Sharma Vs. Govt. of M.P. Through C.K. Jaiswal and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 86 of 1971
Judge
Reported inAIR1972MP160; 1972MPLJ796
ActsCode of Civil Procedure (CPC) , 1908 - Order 1, Rule 3; Madhya Pradesh Co-operative Societies Act, 1961; Madhya Pradesh Co-operative Societies (Amendment) Act, 1970 - Sections 53(1)
AppellantRadheshyam Sharma
RespondentGovt. of M.P. Through C.K. Jaiswal and ors.
Appellant AdvocateJ.P. Gupta, Adv.
Respondent AdvocateY.S. Dharmadhikari, Adv. General, ;H.G. Mishra and ;S.K. Dube, Advs. for Ad-hoc Committee
DispositionPetition dismissed
Cases ReferredManik Rao v. Registrar
Excerpt:
- - 3. in the return filed on behalf of the government the joint registrar cooperative societies and other authorities concerned it is averred that the order of supersession is perfectly valid and therefore, the petition is liable to be dismissed. as for the central bank its interests are effectively represented by the registrar. it was held therein that a necessary party is one without whom no order can be made effectively: it is quite clear that the order in question can be made effectively even in the absence of the reserve bank and the central cooperative bank and the members of the ad hoc committee. since the ad hoc committee can at best be considered as a proper party shri mishra was allowed to intervene and was also heard in support of the order of supersession. 7. so far as the.....raina, j.1. this is a petition under article 226 of the constitution.2. the central co-operative bank ltd. guna (hereinafter referred to as the 'bank') is a financial bank registered under the madhya pradesh co-operative societies act, 1960 (hereinafter referred to as the 'act'). under the bye-laws of the bank there is a provision for constitutive a managing committee (board of directors) consisting of elected members and three members nominated by the government. the elections were held under the bye-laws and the petitioner and non-petitioners nos. 2 to 10, 12 and 18 were duly elected as members of the said managing committee. the managing committee of the bank took charge on 6-11-68. on 23-4-70 the joint registrar of the co-operative societies gave a notice to show cause why it should.....
Judgment:

Raina, J.

1. This is a petition under Article 226 of the Constitution.

2. The Central Co-operative Bank Ltd. Guna (hereinafter referred to as the 'Bank') is a financial Bank registered under the Madhya Pradesh Co-operative Societies Act, 1960 (hereinafter referred to as the 'Act'). Under the bye-laws of the Bank there is a provision for constitutive a Managing Committee (Board of Directors) consisting of elected members and three members nominated by the Government. The elections were held under the bye-laws and the petitioner and non-petitioners Nos. 2 to 10, 12 and 18 were duly elected as members of the said Managing Committee. The Managing Committee of the Bank took charge on 6-11-68. On 23-4-70 the Joint Registrar of the Co-operative Societies gave a notice to show cause why it should not be superseded in view of the charges specified therein (vide Annexure 'A'). The Committee submitted a reply to the said charges vide Annexure 'B'. On receipt of the reply the joint Registrar passed an order dated 22-6-70 vide Annexure 'C' superseding the Committee for a period of one year. Being aggrieved thereby the petitioner submitted an appeal to the State Government under Section 77 of the Act. As there was a delay in disposal of the appeal the non-petitioner No. 12 Bhagwati Prasad Sharma filed a petition (M. P. No. 198 of 1970) for a writ of mandamus directing the Government to decide the appeal expeditiously. The petition was allowed and in pursuance of the direction of this Court the appeal was decided. It was dismissed on 12-5-61 vide Annexure 'D'. According to the petitioner the order of supersession is illegal and void because it was passed without holding any enquiry and giving the members of the committee a personal hearing. He has further questioned the validity of the order on the ground that it was passed without previous consultation with the Reserve Bank as required by Proviso to Sub-section (1) of Section 53 of the Act. The petitioner, therefore, prays that the order of supersession may be quashed.

3. In the return filed on behalf of the Government the Joint Registrar Cooperative Societies and other authorities concerned it is averred that the order of supersession is perfectly valid and therefore, the petition is liable to be dismissed.

4. The learned Advocate General who appeared on behalf of the State raised a preliminary objection that the Reserve Bank, the Bank and the members of the Ad hoc Committee who have been appointed to manage the affairs of the Bank in place of the Committee should have been joined as parties to this petition. So far as the Reserve Bank and the Central Bank are concerned no relief has been claimed against them and they do not appear to be directly concerned with the result of this petition. In the matter of supersession the Reserve Bank merely performs a consultative function and it cannot be treated as proper or necessary party. As for the Central Bank its interests are effectively represented by the Registrar. Co-operative Societies who is a party to this petition. We do not, therefore, consider it to be a proper or a necessary party. As for the members of the Ad Hoc Committee it is no doubt true that they will be affected by the result of this decision in case the order of supersession is quashed and, therefore, they may be interested in supporting the order of supersession, but on that ground alone they cannot be considered to be necessary parties. Ad Hoc Committee came into existence only after the order of supersession was passed. It did not and could not have any voice in the proceedings that led to this supersession.

5. The learned Advocate General referred to the decision of the Supreme Court in Udit Narainsingh v. Board of Revenue, AIR 1963 SC 786 in this connection. It was held therein that a necessary party is one without whom no order can be made effectively: a proper party is one in whose absence an effective order can be made, but whose presence is necessary for a complete and final decision on the question involved in the proceeding. It is quite clear that the order in question can be made effectively even in the absence of the Reserve Bank and the Central Cooperative Bank and the members of the Ad Hoc Committee. They cannot, therefore, be considered as necessary parties. Their Lordships further held in paragraph 12 that in a writ of certiorari not only the tribunal or authority whose order is sought to be quashed but also the party In whose favour the said order is issued are necessary parties. The order in question cannot be treated as an order in favour of the Ad Hoc Committee because it was not in existence when the order was passed. In fact the Committee came into existence some time after the supersession. Immediately after the supersession of the Committee the Assistant Registrar Co-operative Society was appointed to manage the affairs of the Bank. The Assistant Registrar has been joined as non-petitioner. There is, therefore, no substance in the contention that this petition. is defective for want of necessary parties.

6. The Ad Hoc Committee can at the most be treated as a proper party as it is interested in supporting the order of supersession in order to secure its own existence, but as pointed out by their Lordships the impleading of a proper party is within the discretion of the Court and since the objection as to nonjoinder has been raised at a late stage it would not affect the petitioner adversely. In fact Shri H.C. Mishra has filed an application on 18-8-71 on behalf of the Ad Hoc Committee for being joined as party. Since the Ad Hoc Committee can at best be considered as a proper party Shri Mishra was allowed to intervene and was also heard in support of the order of supersession.

7. So far as the merits of the petition are concerned the first contention of the learned counsel for the petitioner is that the order of supersession is bad as it was passed without prior consultation with the Reserve Bank as required by Sub-section (1) of Section 53 of the Act. The said sub-section as amended by the M. P. Co-operative Societies (Amendment) Act, 1970 (Act No. 8 of 1970) is reproduced below for facility of references

'53. Supersession of Committee:-- (11 If, in the opinion of the Registrar, the Committee of any society--

(a) persistently makes default or is negligent in the performance of the duties imposed on it by or under this Act or bye-laws of the society or by any lawful order passed by the Registrar or is unwilling to perform such duties; or

(b) commits acts which are prejudicial to the interests of the society or its members: or

(c) is otherwise not functioning property;

the Registrar may, by order in writing remove the Committee and appoint a person or persons to manage the affairs of the Society for a specified period not exceeding two years in the first instance:

Provided that in case of a Co-operative Bank, the order of supersession shall not be passed without previous consultation with the Reserve Bank.'

8. It was urged by the learned Advocate General that the provisions regarding consultation in the aforesaid Proviso is merely directory and not mandatory and, therefore, non-compliance with it would not affect the validity of the order of supersession. This argument requires consideration in the light of the authorities cited by the learned counsel for both the sides.

9. The provisions relating to consultation which occur in the Constitution have come up for consideration before the Supreme Court from time to time. It is necessary to refer to the decisions bearing on this question. In the State of U. P. v. Manbodhanlal, AIR 1957 SC 912 their Lordships were required to consider whether the provisions of Article 380 of the Constitution which enjoin consultation with the Public Service Commission in disciplinary matters are mandatory or not. Clause (3) of Article 320 of the Constitution provides that the Union Public Service Commission, or the State Public Service Commission as the case may be, shall be consulted inter alia, on all disciplinary matters affecting a person serving under the Government of India or the Government of State in a civil capacity vide Sub-clause (c) thereof. Their Lordships held that the said provision is not mandatory and did not afford cause of action to the civil servant in a Court of law. The following observations of their Lordships in paragraph 12 are pertinent:--

'We have already indicated that Article 320(3)(c) of the Constitution does not confer any rights on a public servant so that the absence of consultation or any Irregularity in consultation, should not afford him a cause of action in a court of law, or entitle him to relief under the special powers of a High Court under Article 226 of the Constitution or of this Court under Article 32. It is not a right which could be recognised and enforced by a writ.'

Their Lordships further held that Article 320(3)(c) is not in the nature of a rider or Proviso to Article 311.

10. In Chandramouleshwar v. Patna High Court, AIR 1970 SC 370 the Provisions of Article 233 of the Constitution which provide for appointment and posting and promotion of District Judges to be made by the Government in consultation with the High Court came up for consideration before their Lordships. The following observations made in paragraph 7 thereof are pertinent:--

'No doubt the appointment of a person to be a District Judge rests with the Governor but he cannot make the appointment on his own initiative and must do so in consultation with the High Court. The underlying idea of the Article is that the Governor should make up his mind after there has been a deliberation with the High Court. The High Court is the body which is intimately familiar with the efficiency and quality of officers who are fit to be promoted as District Judges. The High Court alone knows their merits as also demerits. This does not mean that the Governor must accept whatever advice is given by the High Court but the Article does require that the Governor should obtain from the High Court its views on the merits or demerits of persons among whom the choice of promotion is to be limited.'

Their Lordships further observed in the same paragraph as under:--

'Consultation or deliberation is not complete or effective before the parties thereto make their respective points of view known to the other or others and discuss and examine the relative merits of their views. If one party makes a proposal to the other who has a counter proposal in his mind which is not communicated to the proposer the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation. In our opinion the notification of October 17, 1968 was not in compliance with Article 233 of the Constitution. In the absence of consultation the validity of the notification of 17th October, 1968, cannot be sustained.'

It is clear from this decision that their Lordships not only held that the provision as to consultation was mandatory but were also of the view that consultation within the meaning of Article 233 should be effective, and Purposeful and not a mere formality.

11. The learned Advocate General tried to distinguish this case on the ground that their Lordships proceeded upon the view that the High Court alone knew merits and demerits of the officers to be promoted as District Judge and, therefore, consultation was imperative. He urged that the position of the Reserve Bank vis-a-vis the Bank cannot be said to be similar. We are, however, unable to agree with him. The Reserve Bank in our opinion, is in a much better position to judge whether the Managing Committee of the Bank is functioning properly or not than the Registrar himself. It is apparently for this reason that a provision has been made for prior consultation with the Reserve Bank before superseding the Committee. We may also point out in this connection the provisions of Sub-section (11) of Section 53 of the Act as introduced by the Amendment Act of 1970. Sub-section (11) gives an overriding power to the Reserve Bank to supersede the Managing Committee of the Bank through the Registrar who is bound to act as desired in case the Reserve Bank is of the opinion that is necessary to do so in the public interest or for preventing the affairs of the Co-operative Bank being conducted in a manner detrimental to the interest of the depositors or for securing the proper management of a Co-operative Bank. Shri Mishra, learned counsel for the Ad Hoc Committee also submitted in the course of his arguments that the show cause notice in the present case was in fact based on the inspection notes and comments of the Reserve Bank. This by itself implies that the Reserve Bank holds a pre-eminent position vis-a-vis Co-operative Bank and as such has been considered by the legislature to be in a position to judge whether the managing body of a Bank is functioning properly or not

12. We may now refer to certain other decisions on which the learned Advocate General relied in support of his contention that the provision as to consultation is not, mandatory. Reliance was strongly placed on the decision of the Supreme Court in L. Hazari Mal Kuthiala v. Income-tax Officer, AIR 1961 SC 200. In that case their Lordships while construing the provisions of Sub-section (5) of Section 5 of the Patiala Income Tax Act held that the provisions for consultation contained therein was directory and not mandatory. In the course of their judgment their Lordships referred to the decision of the Privy Council in Montreal Street Rail. Co. v. Normandin 1917 AC 17 = (AIR 1917 PC 142) wherein it was observed as follows:--

'............The question whether provisions in a statute are directory or imperative has very frequently arisen in this country but it has been said that no general rule can be laid down and that in every case the object of the statute must be looked at. The cases on the subject will be found collected in Maxwell on Statutes 5th Edn. p. 596 and the following pages. When the provisions of a statute relate to the performance of a public duty and the case is such that to held null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with duty, and at the same time would not promote the main object of the Legislature it has been the practice to hold such provisions to be directory only the neglect of them, though punishable, not affecting the validity of the acts done.'

13. The principle laid down in the Montreal Street Rail, case 1917 AC 17 -(AIR 1917 PC 142) (supra) was applied by the Federal Court in Biswanath v. Emperor, AIR 1945 FC 67. In that case it was held by their Lordships that a direction as to consultation laid down in Section 256 of the Government of India Act is directory and not mandatory and non-compliance with it would not render an appointment otherwise regularly and validly made ineffective or inoperative.

14. It may be mentioned here that the provision regarding consultation in Section 256 of the Government of India Act was in respect of recommendation for the grant of Magisterial powers and was thus not a duty directly cast on the authority competent to exercise the power of appointment. Their Lordships after considering the aforesaid decision in L. Hazarimal's case. AIR 1961 SC 200 (supra) summarised the position as under in paragraph 6:--

'The essence of the rule is that where consultation has to be made during the performance of a public duty and an omission to do so occurs, the action cannot be regarded as altogether void, and the direction for consultation may be treated as directory and its neglect, as of no consequence to the result.'

15. It would therefore, appear that as suggested by Shri J.P. Gupta, learned counsel for the petitioner, we must make a distinction between a case where consultation has to be made during the performance of a public duty and, the one, where consultation is a condition precedent to the exercise of a power. In the former case consultation may be adjudged to be merely directory but in the latter case it cannot but be considered as mandatory. This view finds support from the decision of their Lordships of the Supreme Court in Joint Registrar Cooperative Societies. Madras v. P.S. Rajgopal Naidu, AIR 1970 SC 992. Their Lordships while dealing with a case under the Madras Co-operative Societies Act observed as under in paragraph 8 at page 996:--

'The requisite opinion has indisputably to be formed honestly and after applying his mind by the Registrar to the relevant materials before him the only condition precedent for taking action under Section 72(1) is financing Bank to which the society is indebted (vide Sub-section (61). There is no other requirement or condition precedent laid down by the Legislautre which the Registrar must fulfil before he acts in the matter of supersession of the Committee.'

Sub-section (6) of Section 72 of the said Act made it obligatory on the Registrar to consult the financing Bank before taking any action under Sub-section (1) and the said provision appears to be in pari materia with the Proviso to Sub-section (1) of Section 53 of the Act. The Proviso clearly lays down that the order of supersession shall not be passed without previous consultation with the Reserve Bank. Thus it dearly indicates that consultation is a condition precedent to the exercise of power of supersession and as such mandatory.

16. The learned Advocate General urged that even if consultation is held to be mandatory, there has been sufficient compliance with the provision in the circumstances of this case. He pointed out that a copy of the notice dated 23-4-70 vide annexure 'A' was forwarded to the Reserve Bank with a request to send its opinion within 15 days and, therefore, if the Bank failed to send an opinion as desired it should be held that the requirement as to consultation had been duly fulfilled. He further submitted that even if it is held that for obtaining opinion of the Reserve Bank it was necessary to forward to the Bank the reply of the Committee to the notice that condition has also been fulfilled because the Committee itself forwarded a copy of its reply to the Bank as would appear from the endorsement on Annexure 'C' '.

17. Shri. Gupta, on the other hand contended that for a proper consultation It was necessary for the Registrar to obtain the opinion of the Reserve Bank after furnishing it full material on which an opinion could be formed and should have passed the order after taking into consideration such opinion.

18. This leads us to the consideration of the question what the word 'consultation' implies. The ordinary dictionary meaning of the word 'consult' is 'to ask advice of: 'to take counsel'; and. 'to consider jointly'. In 16 A. C. J S 1242 it has been stated as under regarding the word 'consult':--

'While the word 'consult' is frequently defined as meaning to apply to for direction or information or to ask the advice of, as to consult a lawyer or a physician, or to obtain direction, information or advice as to one's health, it is also frequently defined in a more general sense as meaning to discuss something together or to deliberate,.............. to confer etc..............'

The word 'consult' or 'consultation' may assume slightly different shades of meaning according to the context in which it occurs, and, therefore the exact import thereof in any particular enactment must be determined with due regard to the context in which it occurs and the purpose indicated therein.

19. In Rollo v. Minister of Town and Country Planning, (1948) 1 All ER 13. Bucknil L. J. while construing the word 'consultation' occurring in Sub-section (1) of Section 1 of the New Town Act, 1946, observed as under:---

'Consultation in the sub-section means that on the one hand, the Minister must supply sufficient information to the local authority to enable them to tender advice, and, on the other hand, a sufficient opportunity must be given to the local authority to tender that advice.'

20. In R. Pushpam v. State of Madras, AIR 1953 Mad 392. Subbarao J. (as he then was) construed the word 'consult' occurring in Section 43 of the Madras District Municipalities Act at page 393. Col. 1 as under:--

'The word 'consult' implies a conference of two or more persons or an impact of two or more minds in respect of a topic in order to enable them to evolve a correct, or at least, a satisfactory solution. Such a consultation may take place at a conference table or through correspondence. The form is not material but the substance is important. It is necessary that the consultation shall be directed to the essential points and to the core of the subject involved in the discussions. The consultation must enable the consulter to consider the pros and cons of the question before coming to a decision.'

21. The very object of consultation is to obtain the view of the person or body to be consulted in order to arrive at some conclusion in respect of the matter on which the advice is sought. No doubt the best way to consult would be to discuss the entire matter at a conference table so that there may be a full and fair exchange of views but that is neither possible nor feasible in many cases. In our view the requirement as to consultation would be duly fulfilled if the person to be consulted is supplied with all material available on the basis of which a particular conclusion has to be reached and his opinion is sought on the points in issue after indicating how the authority which seeks to consult views the matter.

22. Thus the following two conditions must be fulfilled in order to make the consultation effective and meaningful and not merely superficial:--

(1) Sufficient information or in other words all relevant material must be supplied to the person to be consulted to enable him to tender advice, inviting his attention to the points on which the advice is sought, indicating how the authority seeking advice views the matter;

(2) sufficient opportunity must be given to such person to tender that advice.

In our view neither of these conditions has been fulfilled in the present case.

23. In this case all that was done by the Registrar was to forward a copy of the show cause notice containing charges against the Committee (Vide Annexure 'A') to the Reserve Bank inviting their opinion in the matter within 15 days. It appears that the business of the Reserve Bank is transacted in English and so the proper course would have been to send alone with the copy a D. O. letter in English requesting them to give their opinion in the matter. That has not been done. Apart from this there is nothing to show that the copy was actually despatched and was received by the Bank or that it attracted the notice of the Bank authorities. For this we are required to rely on the presumption of regularity of the official acts. But even assuming that copy was received by the Bank authorities they could hardly express any opinion in the matter unless the reply of the Committee to the said charges was forwarded to the Bank with such comments as the Registrar proposed to make thereon. It is no doubt true that the Committee of its own accord forwarded a copy of its reply Annexure 'B' to the Reserve Bank but again it is extremely doubtful if the Bank authorities could connect the two documents and realise the importance and urgency of the matter to convey their opinion in the matter. The proper course for the Registrar was to send a copy himself inviting attention of the Bank to the earlier communication and requesting them to favour him with their opinion. This has not been done.

24. The Registrar did not even care to pursue the matter and to send any reminder or to press for an opinion at an early date before taking a decision in the matter, thus it appears that a mere formality of sending a copy of show cause notice was performed and a decision was taken without taking any steps to obtain the opinion of the Reserve Bank in the matter.

25. It has been suggested on behalf of the petitioner that this was done deliberately to avoid an unfavourable opinion by the Bank because the Apex Bank (M. P. State Co-op. Bank) which had been consulted in the matter had advised the Registrar against supersession. There appears to be some force in this contention particularly in view of the fact that the petitioner was obliged to file a writ petition to obtain a decision from the Government on the appeal preferred by the Committee.

26. We may here refer to a recent decision of this Court in Manik Rao v. Registrar, Co-operative Societies, M. P. No. 362 of 1970 (JBL) decided on 1-3 1971. (Madh Pra). The following observations In that order are pertinent--

'The impugned order indicates that the Reserve Bank was sent a letter on 11th March, 1970, proposing that the Managing Committee of Betul Co-operative Central Bank intended to be superseded and since no reply was received from the Reserve Bank, the supersession order was passed on 8th April, 1970. We are not satisfied that this was sufficient compliance of the proviso to Section 53 (1) of the Act. Obviously the intention of this proviso is to set the opinion of the Reserve Bank before ordering supersession of a Co-operative Bank. If there was any delay in getting a reply, either reminders or a special messenger could have been sent to obtain the opinion, of the Reserve Bank.'

In the aforesaid circumstances it was held that the Registrar acted with great hurry and against the spirit of the M. P. Cooperative Societies Act. The observations are equally applicable to the present case and we have no hesitation in holding that order of supersession was passed by the Registrar without proper consultation as required by the Sub-section (1) of Section 53 of the Act and as such the order of supersession is bad.

27. The learned counsel for the petitioner has also questioned the order of supersession on the ground that the Committee was not given due opportunity to show cause against the proposed order as required by Sub-section (2) of section 53 of the Act. In this connection it has been pointed out that the Committee was not given any opportunity to adduce evidence and to explain its position in the matter at an oral hearing.

28. The learned Advocate General on the other hand contended that the power to supersede the Committee is purely an administrative power and not in the nature of a quasi-judicial Power and as such the principles of natural justice which are usually applicable to quasi-judicial matters are not attracted in this case. He also submitted in the alternative that giving of a show cause notice to the Committee and acting after taking the reply into consideration was sufficient compliance with the provisions of the Act. We need not however, go into this matter, which was no doubt discussed at some length at the Bar, because we are of the view that the order of supersession is bad for want of prior consultation with the Reserve Bank.

29. The learned Advocate General also referred to Sub-section (11) of Section 53 as amended by the amendement Act of 1970 and tried to construe it in a manner suggesting that it confers on the Registrar an overriding power of supersession independent of Sub-section (1) of Section 53 of the Act. We do not, however, find any merit in this contention whatsoever. A plain reading of this sub-section clearly indicates that it merely confers an overriding power on the Reserve Bank to have a particular Managing Committee superseded by the Registrar in the circumstances specified therein. It does not confer any independent power on the Registrar. The power of the Registrar to supersede is conferred solely by Sub-section (1) of Section 53 of the Act and must be exercised in accordance with the provisions thereof and the other provisions connected therein.

30. Although we would have ordinarily quashed the order of supersession on the grounds aforesaid but it appears to us that it would not be proper to do so now at this stage for the following reasons. The Committee in question assumed office on 6-11-68 and its term as fixed under the bye-laws expired on 6-11-71. This position was not disputed before us. Shri Gupta, however, pointed out that under the bye-laws this committee could continue in office until the new Committee was installed in its place. But that would mean hardly a few days after 6-11-68. It has been brought to our notice that the period of supersession has been extended till June 1971 and could even be extended further. This is a matter with which the Bank itself is concerned. It is significant that the Bank has not joined the petitioner in filing this petition and has not even made a party to this case. In these circumstances the petitioner who was merely one of the members of the managing Committee has no locus standi to question the supersession beyond the term of the Committee itself. In these circumstances we decline to interfere with the impugned order. It may be mentioned that this Court adopted a similar course in Misc Petn. No 362 of 1970 (JBL) D/-1-3-1971 (Madh Pra) (supra) in somewhat similar circumstances.

31. The petition, therefore, fails and is hereby dismissed. We however, make no order as to costs in the circumstances of the case and direct that the security amount deposited by the petitioner shall be refunded to him.


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