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R.P. Dube Vs. Lt. Governor and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 1303 of 1975
Reported inILR1977Delhi79; 1976RLR595
ActsDelhi Cooperative Societies Act, 1972 - Sections 60; Delhi Cooperative Societies Rules, 1973 - Rule 77
AppellantR.P. Dube
RespondentLt. Governor and ors.
Advocates: B. Kirpal,; Kailash Vasdev,; B.N. Lokur,;
delhi co-operative societies act (1972) - sections 60 & 61 and delhi co-operative societies rules, rule 77--'management' and 'business' distinguished--whether the sections or the rules apply to disputes affecting management--special rule 154--applicability of--whether the impugned orders were tainted with mala fides prejudice or bias and hence invalid.; in the instant case under article 226 of the constitution of india, the petitioner, who claims to be the secretary of the delhi consumers co-operative wholesale store ltd., a society, registered under the bombay co-operative society act, 1925, as extended to the union territory of delhi, hereinafter to be referred as 'the society', seeks to quash certain orders made by the registrar, co-operative societies, respondent no. 2, and to.....h.l. anand, j. (1) by this petition under article 226 of the constiution of india, the petitioner, who claims to be the secretary or thedelhi consumers cooperative wholesale store ltd., a society, registeredunder the bombay cooperative society act, 1925, as extended to theunion territory of delhi, hereinafter to be referred as 'the society',seeks to quash certain orders made by the registrar, cooperative soieties, respondent no. 2, and to restrain the respondents, who includethe lt. governor of delhi, certain individuals who claim to be itsoffice-bearers, and the commissioner, food & supplies, from interferingin the working and management of the society. an order is also soughtto restrain the registrar, cooperative societies, delhi, hereinafter to bereferred as 'the registrar', from.....

H.L. Anand, J.

(1) By this petition under Article 226 of the Constiution of India, the petitioner, who claims to be the Secretary or theDelhi Consumers Cooperative Wholesale Store Ltd., a Society, registeredunder the Bombay Cooperative Society Act, 1925, as extended to theUnion Territory of Delhi, hereinafter to be referred as 'the Society',seeks to quash certain orders made by the Registrar, Cooperative Soieties, respondent No. 2, and to restrain the respondents, who includethe Lt. Governor of Delhi, certain individuals who claim to be itsoffice-bearers, and the Commissioner, Food & Supplies, from interferingin the working and management of the Society. An order is also soughtto restrain the Registrar, Cooperative Societies, Delhi, hereinafter to bereferred as 'the Registrar', from taking any action under Section 55 of the Delhi Cooperative Societies Act, 1972 hereinafter to be referredas 'the Act'.

(2) The Society was registered in December 1962 with the object of organising, assisting and aiding consumer cooperatives and do wholesale and retail business in consumer goods. In October 1969, the Managing Committee of the Society was superseded following certain chargesagainst it and the management of the affairs of the Society was entrusted to a nominated committee. In March 1975, the Society electedSmt. Mukul Bannerjee, a member of Parliament and PrithviSingh Gaur, respondent No. 3, as its President and VicePresident respectively. The petitioner and B. L. Chabra, respondent No. 4, J. N. Sahney, respondent No. 5, were elected as themembers of the managing committee. The managing committee electedthe petitioner as its Secretary. It further appears that, either on accountof charges of misappropriation of the funds of the Society and mismanagement of its affairs, made against the petitioner, or as a resultof a tussle for leadership of the Society, the managing Committee wassplit up into two hostile groups, one led by the petitioner and the otherby respondents 3, 4 and 5. The petitioner was apparently able toenlist the support of the President of the Society. As a sequel to thedissensions attempts were made by one group to oust the other from the various offices and the Managing Committee. Rival claims weremade as to the validity of proceedings of various meetings, election ofoffice bearers and even eligibility to be the members of the ManagingCommittee. The faction opposed to the petitioner apparently soughtthe intervention of the Registrar and persuaded him to make four ordersand directions. By an order of 19/09/1975 (Annexure 12) inpurported exercise of power under Rule 77 of The Delhi CooperativeSocieties Rules, 1973, hereinafter to be called 'the Rules', the Registrardirected that the status quo be maintained pending consideration of .thedispute by the Managing Committee and convened its meetings. By anorder of 8/10/1975 (Annexure 31), also in purported exerciseof power under Rule 77 of the Rules, the Registrar directed that ameeting called by the petitioner shall not be held. By the third orderof 15/10/1975 (Annexure 36), for which also Rule 77 of theRules was invoked, the Registrar declared as illegal certain meetings,the co-option of members, the election of the petitioner and cancelleda meeting of the General Body called by the Managing Committee. Bythe fourth order of 8/10/1975 (Annexure 10), in purportedexercise of power under Section 55 of the Act, the Registrar directedan inquiry into the charges leveled against the petitioner. By this petition, the petitioner assails these four orders.

(3) The petitioner contends that the various actions taken and ordersissued by the Registrar from time to time culminating in his order of 15/10/1975, were mala fide, illegal, void and bad in law andwere, thereforee, liable to be quashed. The petitioner contends thatfrom the chronology of events, it is obvious that the Registrar has beenin collusion with respondents 3 to 5 and has been acting in a manner,which was contrary to the interest of the Society. It is further contendedthat the various orders and directions issued by the Registrar from timeto time in purported exercise of power vested by Rule 77 of the Ruleswere in excess of powers inasmuch as Rule 77 did not empowerthe Registrar to make any of the orders or the directions in question.It is further contended that if Rule 77 is construed as being wide enoughto empower the Registrar to make any order or give any direction inrelation to the business, affairs and administration of the Society Rule 77is bad, being ultra virus of. the' Act, as also being beyond the rule-making power conferred by the Act. It is urged that under Rule 77 itwas not open to the Registrar to set at naught the decisions taken bythe duly constituted Committee of the Society in the conduct of itsbusiness and such a power would be excluded by implication becauseof specific provision in the Act which empowers a Registrar to interferein the management and the affairs of the Society, after following theprocedure laid down in the Act and the Rules. It is, thereforee, urgedthat the various orders passed by the Registrar, particularly the ordersdated 19/09/1975, Annexure 12/10/1975. Annexure31, order dated 8/10/1975, Annexure 10, and order dated 15/10/1975, Annexure 36, must be quashed as being mala fide,in excess of powers and, void. It is further urged that the order dated 19/09/1975, Annexure 12, was both mala fide and in excessof powers and that the Registrar had no power to call a meeting of themanaging Committee and could have, at best, directed the Committeeto convene the meeting or to take action, if the directions had not beencarried out. It is further alleged that the action of the Registrar incalling meetings, even though being aware that neither the Presidentnor the Secretary of the Society would be available, was mala fide. the petitioner, thereforee, prays that the impugned orders and actions bequashed and that the Registrar and the other respondents be restrainedfrom interfering in the management and conduct of business of theSociety and the Registrar be also restrained from taking any actionunder Section 55 of the Act in relation to the affairs of the Society.

(4) The petition is opposed by the respondents and affidavits inreturn to the Rule have been filed on behalf of respondents 1, 2 and 4to 6. By the affidavit of R. S. Rai, Registrar, by way of return to theRule, on his behalf and on behalf of the Lt. Governor, respondent No. 1,and the Commissioner, Food & Civil Supplies, respondent No. 6 it isalleged that the petitioner had not been duly elected as Secretary ofthe Society. It is further alleged that on receipt of complaint of seriousirregularities in the conduct of the management of the Society and itsbusiness, a statutory inquiry under Section 43 of the Bombay Cooperative Societies Act, as extended to Delhi, which was then in forcein the Union Territory of Delhi, was ordered as a result of whichliability of individual Directors, including the petitioner, was fixedleading to the supersession of the Managing Committee and the appointment of a nominated committee to look after the affairs of the Society.It is alleged that in the course of the inquiry observations were madeby the Inquiry Officer against the conduct of the petitioner. It is claimedthat serious allegations had been made against the petitioner and it wasconsidered proper to institute an inquiry under Section 55 of the Actand Shri Y. P. Puri was appointed as Inquiry Officer to hold aninquiry into the working of the Society by an order dated 19/10/1975. The various requisitions for cancellation of the meetings, thevarious orders made and directions issued from time to time under Rule77 of the Rules, were said to be justified and the allegations of inalafide and collusion made against respondent No. 2 were denied. It isfurther stated that the petitioner had already been removed from Secretaryship of the Society and an enquiry had already been ordered intothe affairs of the Society, in which the petitioner would be given fullopportunity in accordance with the law. In a further affidavit dated 8/03/1976, the Registrar has made out that serious allegations ofmisappropriation of funds, mismanagement of the affairs of the Societyand irregularities were made against the petitioner. By a separate affidavit, respondent No. 5 alleged that the petitioner had not cometo this Court with clean hands and had suppressed thematerial facts which rendered the petition liable to be dismissed. Thedismissal of the petition is also sought to be justified on the ground ofnon-joinder of Smt. Mukul Banerjee and because the petition involvesdisputed questions of fact. It is further claimed that the petitioner hadan effective alternative remedy under Section 60 of the Act and THE petition, was, thereforee, not maintainable. The various orders anddirections made by the Registrar from time to time were defended asbeing valid and in accordance with the Act, Rules and the bye-laws.The allegations of collusion and mala fide were denied. By a separateaffidavit, B. L. Chhabra, respondent No. 4, has, by and large, reiteratedthe various averments made by Sawhney in his affidavit.

(5) In his rejoinders to the three affidavits, the petitioner has. byand large, reiterated the allegations made in the petition. In a rejoinderto the additional affidavit of the Registrar, the allegations of misappropriation, mismanagement etc. were denied.

(6) The first question that requires consideration is whether the orders and directions issued by the Registrar cancelling meetings, declaring the proceedings of the meetings as illegal and convening freshmeetings. Annexures 12, 31 and 36, in exercise of powers claimedunder Rule 77 of the Rules were in excess of powers.

(7) The impugned order of 19/09/1975, Annexure 12,made by the Registrar in purported exercise of power under Rule 77of the Rules runs thus :'Whereas Shri R. P. Dube, Secretary of the Delhi WholesaleConsumer Cooperative Store Ltd., vide his office orderdated 3-9-1975 has informed S/Shri J. N. Sahney andB. L. Chabra that their membership stands automaticallyceased with immediate effect under the provision of Section 60(f) of Delhi Cooperative Societies Rules, 1973:And whereas S/Shri P. S. Gaur, Vice President, B. L. Chabraand J. N. Sahney in their Memorandum dated 4-9-75 haveinformed that Shri R. P. Dube, has ceased to be a memberof the Managing Committee and Secretary of Delhi Consumers Cooperative wholesale Store Ltd., having incurred disqualification being a defaulter of Saket Cooperative Thrift & Credit Society;And whereas after giving adequate opportunity to S/Shri P. S.Gaur, J. N. Sahney, B. L. Chabra and R. P. Dube,I am satisfied that action of both the parties in declaringeach other as having ceased to be Member of the ManagingCommittee of the aforesaid store is not accordance withthe provisions of Law and also not in the interest of theaforesaid store itself.Now, thereforee, I, R. S. Rai, Registrar Cooperative Societies, inexercise of the powers vested in me under Rule 77 of theDelhi Cooperative Societies Rules, 1973, hereby directthat slatllS-quo shall be maintained pending considerationof the dispute by the Managing Committee for whichanother meeting shall be called in accordance with theprovision of the Law. I further direct that the meetingscheduled to take place on the 20/09/1975, at3.00 P.M. at Co-ops. shall stand S. Rai, Registrar, Cooperative Societies'

(8) The impugned order made by the Registrar on 8/10/1975, Annexure 31, and also made in purported exercise of powersunder Rule 77 of the Rules is in the following terms :

'WHEREASS/Shri P. S. Gaur, Vice-President, J. N. Sawhney,Member, Managing Committee, B. L. Chhabra, Member,Managing Committee and S. S. Saini, General Manager/Secretary in their letter dated 7-10-75 have representedto the undersigned that the Chairman and Ex-Secretary(Shri R. P. Dube) of the Delhi Consumers Cooperativewholesale Store Ltd. have summoned a meetingof the Managing Committee for 8-10-75 at 3.00 P.M. atCoops, Connaught Place, New Delhi and that the Managing Committee had, in its meeting held on 6-10-75 cancelled this proposed meeting;And whereas unauthorised persons are stated to have been invited in the aforesaid meeting;And whereas no members can be coopted on the ManagingCommittee by the Chairman except in accordance withlaw;And whereas the undersigned is satisfied that no members canbe coopted on the Managing Committee except as provided by the Act/Rulea/Bye-laws and that if such a meeting is allowed to be held, it will create complications,besides being illegal;Now, thereforee, 1. R. S. Rai, Registrar, Cooperative Societies in exercise of the powers vested in me under Section 77 of the Delhi Cooperative Societies Rules, 1973, herebydirect that the scheduled meeting shall not be held.'

(9) The impugned order made by the Registrar on 15/10/1975(Annexure 36) invoking the said powers reads thus :

'WHEREASin a meeting held on 6/10/1975, the ManagingCommittee of the Delhi Consumers' Cooperative Whole-sale Store Ltd., and two nominated members removedShri R. P. Dubey, from the Secretaryship of the aforesaidstore and empowered Shri S. S. Sainy, General Manager,of the store to act as Secretary in addition to his dutiestill further decision;And whereas the President of the said store held meeting on 8/10/1975 which was attended to only by one member viz. Shri R. P. Dubey and some outsiders in violationof the statutory directive issued by Registrar CooperativeSocieties, under Rule 77 of the Delhi Cooperative SocietiesRules, 1973 on 7/10/1975 ;And whereas three elected Directors and General Manager/Secretary of the Store have represented that the meetingheld on 8/10/1975 was illegal and was in contravention of the Act, Rules and Bye-laws of the store.Now thereforee, I, R. S. Rai, Registrar of the Cooperative Societies, Delhi Administration in exercise of thepowers conferred upon me under Rule 77 of the DelhiCooperative Societies Rules, 1973, hereby direct :-(i) that the meeting held on 8/10/1975 in violationof statutory directive and without quorum is hereby treated as illegal;(ii) that any co-option of the outsiders as members of theManaging Committee of the said store over and abovethe strength of 5 as fixed at the time of the election ofthe store in March 1975 by the President and allegedto have been ratified in the illegal meeting of the Managing Committee held on 8/10/1975 is hereby declared as illegal;(iii) that the decision of the President or any other illegalmembers to continue Shri R. P. Dubey as Secretary ofthe Store, or to remove Shri B. L. Chhabra from themembership of the said store or to revert the GeneralManager of the Store to Delhi Admn., or to make anyarrangement for the operation of the accounts of thesaid store is hereby declared as illegal and the entireminutes of the meeting held on 8/10/1975shall be treated as cancelled; and(iv) that the meeting of the General Body called for 1 6/10/1975 by the illegal Managing Committee ishereby cancelled as majority of the Primary ConsumerCo-operative Store affiliated to the Wholesale Storehave in writing demanded the cancellation of the afore-said meeting.I, further direct that action of the President andShri R. P. Dubey in holding the illegal meeting of theManaging Committee on 8/10/1975 and that ofthe General Body meeting on 16/10/1975 iscontrary to the statutory provisions and they shall beheld responsible for any loss to the store under clause 24of the bye-laws of the said R. S. Rai,15-10-75Registrar, Cooperative Societies'

(10) Even a cursory look at the three orders and the examinationof the form in which they are drawn, as indeed their substance, hardlyleaves any possible manner of doubt that these were made as a sequelto disputes raised between rival groups in the Society with regardto the validity or otherwise of the proceedings of meetings, convened bythe Society, from time to time, and as to the decisions arrived at by theSociety, either in the matter of election of office bearers or with regardto the validity of the proceedings of the earlier meetings of the Societyor with respect to the declaration by the Society with regard to thevalidity of the membership of certain persons of the Committee and/or are based on decisions arrived at by the Registrar with regard tothe validity or otherwise of the various actions which were challengedbefore him, after giving an opportunity to the parties concerned ofbeing heard. That being the substance of the three orders and directions the question would be whether, having regard to the scheme ofthe Act and the Rules framed there under, such orders and directionswere within Rlule 77 of the Rules or even otherwise valid.

(11) For a proper appreciation of this question it is necessary toexamine the scheme of the Act and the Rules with regard to the settlement of disputes affecting the constitution, management and the business of the Society and as to the functions and powers of the differentauthorities in that behalf.

(12) Section 9 of the Act provides for registration of a cooperativeSociety. Sub-section (2) of this Section, inter alia, empowers the Registrar to refuse registration, but obliges him to 'communicate the orderof refusal, together with the reasons thereforee, to such of the applicantsas may be prescribed'. Section 11, inter alia, empowers the Registrarto refuse to register the amendment of the bye-laws but obliges himto 'communicato the order of refusal together with the reasons thereforee,to the society in the manner prefcribed'. Section 16 confers on theRegistrar the power to direct amalgamation, division and re-organisationof cooperative societies. Section 32 empowers the Registrar to removethe committee of any society, order fresh elections of the committee,appoint one or more administrators to manage its affairs and mattersconnected there with, Chapter Iv of the Act, according to its title,deals with 'management of co-operative societies' and makes provision regarding annual general meeting, special general meeting elections, supersession of committees etc. Section 55 empowers the Registrar to hold an enquiry into the constitution, working and financial condition of a society or to cause such an enquiry to be held and conferspower to require the officers of the society to call a general meeting,and if they refuse or fail to do it, to call it himself. Section 56 empowers the Registrar to inspect the books of the Society or cause thesame to be inspected. Section 57 empowers the Registrar to apportionthe costs of any enquiry under Section 55 or an inspection under; Section 56 of the Act. Section 59 empowers the Registrar to enquire intothe conduct of any person who is found to have mismanaged its affairsand to require such a person after appropriate proceedings to restorethe property or the money as he may consider 'just and equitable.Chapter Viii deals with settlement of dispute. Section 60, which occursin this Chapter, provides that 'any dispute touching the constitution,management or the business of a co-operative society', other than adispute regarding disciplinary action against any employee of the Society, may be referred to the Registrar for decision. Section 61 provides that the Registrar may on a reference under Section 60 decidethe dispute himself or transfer it to a nominee or refer it for disposalto an arbitrator. Sub-section (3) of this Section provides that 'theRegistrar or any other person to whom a dispute is referred for decision under this section may, pending the decision of the dispute, makesuch interlocutory orders as he may deem necessary in the interest ofjustice'. Chapter X deals with the execution of awards, decrees, ordersand decisions. Section 71, which occurs in this Chapter, provides thatevery decision, award or order duly passed by the Registrar or arbitrator or Tribunal under Sections 29, 30, 59, 61, 70, 76, 78 and 79 shall be executed in the manner laid down in the Section. Section 73 provides for attachment before the award. Chapter Xi provides forappeal and revision. Section 76 confers the right of appeal against the orders of the Registrar made under sub-section (2) of Section 9 refusingto register a society ; sub-section (4) of Section 11 refusing to registeran amendment ; sub-section (1) of Section 16; any decision or awardmade under Section 61 and certain other orders. Section 78 provides forthe constitution of a Tribunal to hear the appeals. Section 79 confersthe power of review by the Tribunal while Section 80 confers thepower of revision on the Lt. Governor. Section 81 confers on the various appellate and revisional authorities the power to 'make such inter-locutory order, including an order of stay, pending the decision of theappeal or revision as such authority or the Tribunal or Lieutenant-Governor may deem fit'. Section 97 empowers the Lt. Governor tomake rules to carry out the purposes of the Act.

(13) Chapter Iv of the Rules deals with 'management' of cooperative societies and makes provision with regard to maintenance of accounts, holding of meeting, elections, voting etc. Chapter V sets outthe privileges of co-operative society and deals with borrowings bythe Society. Rule 77 in this chapter empowers the Registrar to 'issuesuch directions as he considers necessary for the successful conductof the business of a cooperative society or class of cooperative societies'. Chapter Xii of the Rules contain miscellaneous provisionsand includes Rule 154 which is described as a special rule and confers special powers on the Registrar in relation to societies in whicheither share has been subscribed by the Government or liability byway of guarantee for borrowing exceeding fifty per cent of the working capital of the society has been undertaken by the Government.The powers include the power to declare the proceedings of the general meeting as invalid, or certain conditions being satisfied. Sub-rule(3) of this Rule further provides that 'in a society in which shareshave been subscribed by the Government, the Registrar may, aftersuch inquiry as he may deem fit and after giving the person concerneda reasonable opportunity of showing cause, remove any member ofthe committee who has been guilty of any act or omission resulting infinancial loss to the society'.

(14) On a reference to the scheme of the Act and the Rules andthe provisions with regard to the settlement of disputes affecting theconstitution, management and business of the society it appears obvious that the expressions 'management' and 'business' of the societyare not inter-changeable and, consistently with the ordinary meaningsof these expressions, the former connotes and encompasses within itsscope the constitbent bodies of the Society, the election to such bodies,meetings etc., the maintenance of books of accounts etc., while thelatter connotes the actual business which the society carries on, whether of trade, commerce, industry, etc. It is also apparent that except incertain types of societies a certain amount of corporate democracy isensured in the management of the societies. It is also apparent that,by and large, orders which the Registrar is empowered to makeaffecting the interest of the societies or the individual concerned aremade appealable as well as subject to review and revision. Specialprovision is made for reference of disputes touching the constitution,management or business of the society between the members andthe decisions that may be arrived at on these references, as indeedthe award that may be made, are enforceable as also subject to appeal,review and revision. Having regard to these provisions, it is difficult toaccept the contention that when Rule 77 empowers the Registrar toissue directions for 'successful conduct of the business of a cooperative society or class of cooperative societies', it empowers the Registrar to decide disputes between the members of the societies with regardto the management of the society, such as the validity of the electionsto various offices, validity of meetings of various constituent bodies orempowers him to cancel meetings or to direct fresh meeting being heldor to otherwise supersede the decisions of the various constituentbodies of the societies or its individual officers or to adjudicate on thevalidity of the proceedings of the meetings, decisions with regard tothe status of members or to declare that certain members have becomedisqualified or have ceased to be the members of the society. In viewof the specific provision made under Sections 60 and 61 with regardto the adjudication of these matters, any general power to issue directions would exclude from its ambit matters for which there is a specific provision. Even otherwise, the expression 'the successful conductof the business of a cooperative society or class of cooperative societies' in Rule 77 is not wide enough to include any directions withregard to the management of the society otherwise the expression'successful conduct of business' would be given a meaning whichwill be wholly unjustified on the language of the Rule. To hold tothe contrary would amount to making the Registrar a repository ofwide powers to entertain and decide all types of disputes with regardto the constitution, management and business of the Society andinterfere in the management of the society without any such decision,orders or directions being made subject to any appeal, revision orreview because the directions that may be made under Rule 77 arenot made justiciable either by the Act or by the Rules. To concedesuch powers to the Registrar would amount to elevating him to theposition of a despot with absolute and unregulated power to makedrastic orders that may affect the vital interests of the societies andtheir members and would not be justified either with reference to thescheme of the Act or the language of the Rules. It must, thereforee,be held that Rule 77 merely empower the Registrar to issue directionsfor the successful conduct of the business of the society and such directions would not include matters which fall within the provisions ofSection 60 and 61 of the Act.

(15) Shri B. N. Lokur, who appeared for the Administration, didnot seriohsly challenge the contention that the impugned orders werebeyond the scope of Rule 77 of the Rules but nevertheless sought todefend the validity of impugned orders with reference to the powerof the Registrar under Rule 154. Rule 154 runs thus :'154. Special rule.

(1)Notwithstanding anything contained in these rules theprocedure laid down in this rule shall apply to a societyin which either shares have been subscribed by the Government or liability by way of guarantee for borrowingexceeding fifty per cent of the working capital of thesociety has been undertaken by the Government :Provied that it shall not be incumbent upon such asociety to follow the procedure laid down in clauses (i)and (ii), if its working capital does not exceedRs. 1,00,000 or it does not have another co-operativesociety as its member :

(2)(i) Notice of all general body meetings shall be givento the Registrar. The Registrar may, of his ownmotion or on a reference made to him, declare theproceedings of the general meetings as invalid, if heis satisfied that the meeting was held without propernotice or without all the members not having received the notice turn the meeting or if the meetingwas not conducted at the appropriate place andtime.(ii) No matter shall, except with the permission or direction or directions of the Registrar be consideredeither in a meeting of a general body or committeeor in a meeting of any smaller body set up if theagenda of which is not circulated to all members atleast fifteen clear days or seven days in advance, respectively.(iii) Should a difference of opinion in respect of anymatter arise between a nominated member of thecommittee and other members thereof the opinionof the nominated member shall be recorded in theminutes of the proceedings of the meeting in The words of the nominated member and the proceedingsshall also be got signed from the nominated member.The Chairman, shall, as soon as possible, make areference to the Lt. Governor and if no reference ismade within seven days of the date of the meeting,the Registrar may on receipt of a report from anominated member make a reference to the Lt.Governor lor getting his decision which shall befinal on the issue on which difference of opinion wasso recorded.

(3)In a society in which shares have been subscribed by theGovernment, the Registrar may, after such enquiry as hemay deem fit and after giving the person concerned areasonable opportunity of showing cause, remove anymember of the committee who has been guilty of any actor omission resulting in financial loss to the society-'

It was not disputed on behalf of the petitioner that, having regardto the capital structure of the Society, Rule 154 of the Rules, incorporating the special procedure, would be attracted and the orders anddirections, which the Registrar is empowered to make underthe said Rule, could be legitimately made, if the other conditions for the exercise of such power were satisfied and that, if theimpugned orders and directions fell within the terms of the aforesaidRule, subject to the question of mala fides, no exception could betaken to these. Shri B. N. Kirpal, learned counsel for the petitioner,however, contends that the impugned orders cannot be justified withreference to the aforesaid Rule either because they are beyond thescope of he said Rule. This contention of the petitioners appears to meto be well-founded. By virtue of sub-rule (2) of Rule 154 the Registrar is empowered to declare the proceedings of the general meeting asinvalid on certain conditions being satisfied. By virtue of sub-rule (3)of Rule 154 the Registrar is also empowered to remove any memberof the committee who has been found guilty of an act or omissionresulting in financial loss to the Society after such inquiry as theRegistrar may deem fit and after giving the person concerned a reasonable opportunity of showing cause. That is the totality of the specialpowers conferred by the special Rule. Unfortunately, for the respondents, none of the impugned orders could be said to fall either in thefirst category or the second in that none of the three impugned ordersinvolve the declaration of the proceedings of any general meeting asinvalid or removal of any member of the committee. The impugnedorder of 19/09/1975, (Annexure 12) directs that status quoshall be maintained pending consideration of the dispute by theManaging Committee and contains a direction cancelling its meeting.The impugned order of 8/10/1975 (Annexure 31) similarly restrains the holding of a meeting, While the impugned order of 15/10/1975 (Annexure 36) declares the meeting of the Managing Committee,co-option, to the committee, the election of the petitioner as secretary,the requisition for a general body meeting and certain decisions of theManaging Committee to be illegal. None of these orders could, thereforee, be said to be within the terms of the Rule 154 and could not, thereforee, be justified with reference to it. The impugned orders being thuswithout the authority of law are liable to be quashed.

(16) In the way I have looked at the validity of the three impugnedorders referred to above, it would have been unnecessary to considerthe further contention of the petitioner that the said orders are invalidbecause of mala fides and bias attributed to the Registrar but theseallegations would have to be considered in view of the fact that thefourth impugned order made on 8/10/1975 (Annexure 10)under Section 55 of the Act would still survive the decision of thefirst question.

(17) Whether the impugned orders including the aforesaid orderunder Section 55 are invalid on account of mala fides or bias on thepart of the Registrar is next question that must be considered.

(18) According to the petitioner, the allegations of mala fide on thepart of the Registrar have their genesis in the bias and prejudice thatthe Registrar throughout carried against the petitioner because of theinvolvement of the petitioner in a criminal case on false charges ofmisappropriation and the wild allegations of misappropriation of funds.mismanagement of the affairs of the society and various other acts ofcommission and omission in the conduct of the business of the Societymade by certain hostile elements in the Society against the petitioner. IT is urged that the conduct of the Registrar in relation to the managementof the Society and the disputes raised before him by the dissident elements, the manner in which he rushed through the matter, annulledthe proceedings of the meeting: cancelled the meetings convened bythe petitioner, himself convened meetings on dates which did not suitthe petitioner or the President of the Society, made the four impugnedorders and even declined the innocuous requests of the petitioner andthe President to change the dates of meetings, even while aware thatthe said dates did not suit the petitioner and the President of theSociety. irresistibly point to a deep rooted prejudice and bias againstthe petitioner on the part of the Registrar and a complete identificationand collusion with the elements in the Society hostile to the petitioner.It is urged that because of this prejudice and bias the Registrar hadrendered himself unfit to act in a just and fair manner, which, as 'astatutory authority, he was bound to do and that the impugned orderswere, thereforee, vitiated on that account. It was further urged that thevery fact that at least three impugned orders could not have been madeunder Rule 77 of the Rules and the matters raised in it could have beendealt with only under Sections 60 or 61 of the Act by itself indicatesthat these orders were made in an unholy haste with a view to humiliate the petitioner without the due process of law, and in such a manner as to circumvent the statutory requirements and deny the petitionerthe right to challenge them in appeal, review or revision.

(19) On behalf of the authorities the allegations of mala fide, prejudice or bias are denied and the impugned orders dealing with theconduct of the affairs of the Society and the treatment of the variousmatters in relation to it, brought before the Registrar, are sought to bejustified on the ground that they were dealt with by the Registrar in theordinary routine in discharge of his official functions on the basis of thematerial placed before him uninfluenced by any bias or prejudice,even though conscious of the fact that grave allegations of misappropriation of funds, mismanagement of the affairs of the Society and otheracts of omission or commission had been made against the petitionerfrom time to time.

(20) After hearing learned counsel for the parties it appears to methat, while the Registrar was not at all justified either in involving Rule77 of the Rules in making the three impugned orders, which weremade in purported exercise of the said Rule, and in declining briefpostponements of the various meetings convened by him, even when therequest for such postponement was made not only by the petitioneron the ground that he would not be available, inter aha, becauseof a commitment in a court of law, but also by the President of theSociety, a well known public figure and Member of Parliament, who admittedly, though siding with the petitioner, couldnot be said to be guilty of an attempt to delay the meetings and hadrequested postponement because she was going either out of India orout of station, and the manner in which the Registrar dealt withthese matters may, thereforee, appear to be both unreasonable and unfortunate. It is not possible to hold that the impugned orders weretainted with any mala fide, prejudice or bias so as to vitiate them forthat reason. It is true that it is a paramount requirement that Statemust act in a just and proper manner and that, thereforee, every Statefunctionary, whether a statutory authority or otherwise, must act in ajust and fair manner in the discharge of his public duties. It is implicitthat in the discharge of such duties the ordering servant would have anopen mind and would act on an objective assessment of the materialand circumstances that may be available without being influenced in anymanner by what may be described as any personal bias or prejudicefor or against the person and without any preconceived notions withregard to men and matters which may impair his capacity at impartialconsidieration. Even so no exception could be taken to an executiveact, whether of a statutory authority or otherwise, merely because in theprocess of consideration of the matter by the authority the authority wasinfluenced by certain adverse circumstances appearing on the recordagainst the person sought to be affected by the order, or if the authorityacts on the basis of a reasonable suspicion as to the conduct of theperson for which there is some warrant. This is so because there is aclear distinction between bias or prejudice, which is based on some adverse material or circumstances or a reasonable suspicion as to theexistence of certain facts and bias or prejudice which is purely subjective having no foundation in any objective conditions. It is not everybias or prejudice that vitiates an action. It is only such bias or prejudice which, without having any objective basis, is so deep sealed ordeep rooted in the mind of the subject that it impairs his capacity toact in just and fair manner and blurrs his ordinary vision as to thetrue state of affairs. The representation by parties before courts, tribunals, as indeed before executive authorities, are intended, in a sense,to cause prejudice in the mind of the court, tribunal or the authority infavor of a certain point of view or against the contrary point of viewand are, to that extent, thereforee, intended to cause a justifiable prejudice in favor or against. The attempt to cause such a state of themind is, thereforee, implicit in any process of consideration and couldnot vitiate the process unless such bias or prejudice blinds the facultyof the subject to act in an impartial manner and prevents a just,fair and detached examination of the matter. The Registrar admittedlyhad before him the fact and the circumstance that the conduct of theaetitioner had been adversely commented upon in an earlier statutoryinquiry, he has since been arrayed in a court on a criminal charge ofmisappropriation etc., as indeed, grave allegations of misappropriationof funds of the Society, mismapagemept of its affairs and of the comnission of various acts, constituting irregularities, had been madeagainst him. If the Registrar, thereforee, acted in the manner he did andto which an exception is taken, it could not be said to be thg rgsult ofany personal bias or prejudice independent of the material and cirgumsatnces which could reasonably have influenced his mind that byseeking postponement of the meetings the petitioner was probablymerely trying to put off the evil day. He may have also misconstrusdthe support that the petitioner had of a prominent public figure whenhe brushed aside even her request for adjournment. No bias or prgiudice can be necessarily inferred merely from the fact that some of thempugned orders were elearly beyond the authority of law. That maymake the orders illegal of improper .and may, on some reekoning.lose the Registrar to the critipism of being rough, and perhaps rash.but would not necessarily lead to the conctusion that they were taintedby any bias or prejudice,

(21) In considering the validity of the order by which an inquiryunder Section 55 has been ordered it cannot be ignored that theinquiry has been ordered on the basis of grave allegations of misqapproprigtion, mismanagement and irregularities and that in the courseof the inquiry the petitioner would have adequate opportunity of beingheard and, what is more, be entitled to assail the findings of the inquiry.if adverse to him, in appeal, revision or review. Where serious allegationsof misappropriation of funds of a Society, mismanagement of its affairshave been made against an officer or past officer of the Society, it isbut proper that the Registrar should take seizin of the complaints and,unless he is satisfied that they are frivolous, direct a proper and fairinquiry so that ends of justice are met, either by the person responsiblebeing punished or, if he is innocent, his honour is suitably vindicated.No exception could, thereforee, be taken to the order by which an inquiryhas been directed under Section 55 of the Act.

(22) As a result of the aforesaid discussion the impugned ordersof 19/09/1975 (Annexure 12/10/1975 (Annexure31) and 15/10/1975 (Annexure 36) must be quashed, while THE petition must be dismissed in so far as it seeks to assail the fourthorder of 8/10/1975 (Annexure 10).

(23) In the result, the petition succeeds in part and the impugnedorders of 19/09/1975 (Annexure 12/10/1975 (Annexure 31) and 15/10/1975 (Annexure 36), are quashed. THE petition in so far as it assails the fourth order of 8/10/1975(Annexure 10) is dismissed.

(24) The appropriate authorities would, however, be free to initiateany valid proceedings or take any valid action in relation to thematters which were dealt with in purported exercise of power underRule 77 either on the existing material or any other material that may bebrought on the record with a view to ensure that the public interest andthe interests of the Society are fully protected and the affairs of theSociety are conducted in accordance with law.

(25) The petitioner would also have his costs. Counsel fee is assessed at Rs. 500.00.

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