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Mehsana District Central Co-operative Bank Ltd. Vs. the Registrar, Co-operative Societies and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Appln. No. 3674 of 1982
Judge
Reported inAIR1984Guj36; (1983)2GLR1307
ActsGujarat Co-operative Societies Act, 1962 - Sections 88, 88(1), 160, 160(1) and 160(3); Gujarat Co-operative Societies (Amendment) Act, 1982 - Sections 89
AppellantMehsana District Central Co-operative Bank Ltd.
RespondentThe Registrar, Co-operative Societies and ors.
Appellant Advocate K.G. Vakharia, Adv.
Respondent Advocate M.A. Bukhari, Adv. for; Bhaishankar Kanga and; Girdharil
Excerpt:
.....has power to issue directions of such nature which are required to be complied with by the concerned society. i fail to understand as to what compliance is to be made by the petitioner bank regarding the intimation by the first respondent about deputing his representative as an observer in the meeting bf the board of directors. he has no grievance regarding the same an it is always upon to any one much more to an officer functioning under the act to issue request letters to the concerned banks like petitioner no. co-operative financing bank as well as the federal society respectively. 88. that is precisely why in the setting of this sub-section of section 88, it must be held that the power of calling for the relevant information under section 88(1)(b) follows in the wake of the..........first respondent can issue directions to the society which are required to be complied with by the society concerned. sub-section (2) of section 10 provides that the registrar may of his own motion or otherwise modify or cancel any direction issued under sub-section (1) and in modifying or canceling such directions, he may impose such conditions as he may deem fit. sub-section (3) provides that where the registrar is satisfied that any committee or as the case may be. a general body of any society whose duty it was to comply with any directions issued or modified as aforesaid has failed without any reasonable or sufficient cause. to comply with such directions the registrar may exercise the powers conferred on him under subsection (1) of section 81 or as the case may be under sub-section.....
Judgment:
ORDER

1. In this petition under Article P26 of the Constitution of India mad with Articles 14 and 10 thereof the petitioners who are Mehsana Dist. Central Co-operative Bank and its President respectively. seek to challenge two letters-cum-orders Annexures A and B issued by the Registrar of Co-operative Societies Gujarat State. respondent No. 1 as well as the Deputy Registrar. (C.S.). respondent No. 3 respectively. The petitioners contend that the concerned respondents who are exercising statutory powers under the relevant provisions of the Gujarat Co-operative Societies Act. 1961, hereinafter referred to as 'the said Act' have no power or authority to issue the impugned orders. They further contend that the said orders have been issued mala fide.

2. In order to appreciate the aforesaid grievance of the petitioners, it is necessary to note a few relevant facts. Petitioner No. 1 is a federal co-operative bank. Petitioner No. 2 is elected President of the said bank. Petitioner No.1 is a leading district co-operative central bank in the State having the deposits of Rs. 40 crores and odd. As per the byelaws of the Petitioner bank there were vacancies an the Board of Directors with regard to the posts of four directors .who were to retire by rotation from the constituency known as Kalol division relating to multipurpose co-operative societies and service co-operative societies and with regard to the post of one director from the constituency of the individual members. On account of the aforesaid vacancies. the first petitioner bank declared an election programme to fill up the vacancies in accordance with the:) provisions of the said Act and the rules. The case of the Petitioners is that the first respondent at the behest of respondent No. 2-State of Gujarat. and other leading Congress (I) workers in Mehsana district. saw to it that the impugned order at annexure 'A' was issued deputing one Mr. M. B. Vyas. as a representative of respondent No. 1 to remain present in the meeting of the Board of Directors wherein scrutiny of nomination forms was to held for the purpose of filling up the aforesaid vacancies. That order is at annexure 'A' and is dated 7-3-1992. It purports to have been issued under the Powers vested in the first respondent by S. 160 of the said Act , The second impugned letter-cum-order is dated 31-8-1982 at annexure 'B' whereunder certain information was sought for from the petitioner bank by respondent No. 3 herein go far as the letter at annexure 'A' is concerned. the petitioner bank Permitted the observer to remain present as according to them. they had nothing to hide. But so far as the order at annexure 'BI is concerned, before it could be implemented, they filed the present Petition and obtained interim relief against implementation of the order at annexure 'B'. Pursuant to the notice issued by this court pending admission, the concerned respondents Nos. 1 and 3 filed their affidavits-in-reply and thereafter the Petition was admitted to final hearing and ad interim relief was ordered to be continued during the pendency of the Petition. The petition has reached final hearing before me today.

3. Mr. K. G. Vakharia. learned Advocate for the petitioners raised the following two contentions in support of the petition:-

1. That the impugned orders are Passed mala fide and with ulterior motive by the officers of the 2nd respondent who are exercising their powers under the Act and they have Passed these orders under the Political pressure of Congress (1) workers in Mehsana District who are in a position to prevail upon Congress (I) Government which is running the State of Gujarat at Present.

2. Even otherwise, the impugned orders are dehors the Provisions of the said Act and are totally ultra vires and void.

4 to 7 ************

8. That takes me to the second contention raised by Mr. Vakharia in support of the Petition. So far as that contention is concerned, the petitioners are on a firmer ground. As will be seen presently this contention deserves to be accepted. So far as the order at annexure 'A' is concerned. it reads that an observer will be deputed by the first respondent to remain present in the meeting of the Board of Directors of Petitioner No. 1 bank at the time when nomination forms of candidates for filling up vacancies on the Board of Directors of Petitioner bank were to be scrutinised. The impugned order appears to have been passed u/s. 160 of the said Act. A look at Section 160 as amended by Gujarat Act 23 of 198 shows that the Registrar can suo motu or otherwise issue certain directions to the societies functioning under the Act. These directions can be issued either inn a case where the Registrar is filed in the public interest that such directions are required to be issued or for the purpose of securing proper implementation of the co-operative production and other development programmes approved or undertaken by the State Government or for linking and coordinating of co-operative activities such as marketing and -credit or securing the proper management of the business of the society generally or preventing the affairs of the society being conducted in a manner detrimental to the interests of the members or of the depositors or the creditors thereof. It is under the aforesaid circumstances only that the Registrar can issue such directions. In the present case, none of the aforesaid conditions is satisfied. To nominate an observer to remain present when the scrutiny of nomination papers was to be held in the Board of Directors' meeting cannot be said to be a direction either in the public interest or for the purpose of securing proper implementation of co-operative production or for effecting any other objective as contemplated by the said section. Consequently, the order at annexure 'A' is found to be totally dehors the provisions of Section 160 of the Act. Even otherwise, there is a second infirmity in the said order which takes it out of Provisions of Section 160(1) of the Act. That infirmity is that under the aforesaid provisions. The first respondent can issue directions to the society which are required to be complied with by the society concerned. Sub-section (2) of Section 10 provides that the Registrar may of his own motion or otherwise modify or cancel any direction issued under sub-section (1) and in modifying or canceling such directions, he may impose such conditions as he may deem fit. Sub-section (3) provides that where the Registrar is satisfied that any committee or as the case may be. A general body of any society whose duty it was to comply with any directions issued or modified as aforesaid has failed without any reasonable or sufficient cause. To comply with such directions the Registrar may exercise the powers conferred on him under subsection (1) of Section 81 or as the case may be under sub-section (1) of Section 107. A combined reading of subsections (1) and (3) clearly indicates that the Registrar has power to issue directions of such nature which are required to be complied with by the concerned society. In other words, the concerned society must be called upon by the Registrar under the circumstances contemplated by Section 160(1) to do or not to do certain specified acts as mentioned in the concerned directions. Thus compliance with the concerned directions is to be made at the end of the concerned society which has to be the recipient of such directions. Only such types of directions are contemplated by Section 160(1). In the present case the order at annexure 'A' shows that no such directions were issued to the petitioner bank. It only indicates that in the meeting of the Board of Directors where nomination forms were to be scrutinized, the first respondent's representative Mr. Vyas to remain present as an observer. This cannot be said to be any direction by the first respondent to the petitioner bank which is required to be complied with by the petitioner bank itself. Deputing an observer to remain present in the meeting of the Board of Directors may at the highest be treated to be intimation by the first respondent to the petitioner bank about deputing an observer. No such intimation can be issued by the first respondent under the provisions of S. 160(1) as such intimation can by no stretch of imagination be treated to be a direction to the society which the society has to comply with. I fail to understand as to what compliance is to be made by the petitioner bank regarding the intimation by the first respondent about deputing his representative as an observer in the meeting bf the Board of Directors. It must, therefore, be held that both on the ground that the impugned order does not fall within the four comers of S. 160(1) as none of the conditions precedent to the exercise of the power under S. 166(1) is complied with in the present case and also on the additional around that the order does not issue any direction to the petitioner bank as required by S. 160(1). The impugned order at annexure 'A' is dehors and ultra vires S. 160(1) and on that short ground it must be declared to be null and void and non est. It is true that voluntarily petitioner No. 1 bank permitted the observer to remain present at the time when the scrutiny of nomination forms was to be held in the meeting of the Board of Directors. But that is neither here nor there. The petitioners are, therefore, entitled to the aforesaid declaration regarding invalidity of the impugned order at Annexure 'A'. No further relief can be granted to the petitioners in that behalf as the impugned order has already been implemented.

9. That takes me to the legality of the order at annexure 'B'. Now in the first instance a mere look at the said order at annexure 'B' shows that it has been issued under the signature of respondent No. 3 to the manager of the petitioner bank. The subject of the letter shown that certain necessary information was being solicited from the petitioner bank and the first para of the letter shows that a request was being made to the Manager of the Petitioner bank to supply certain information in connection with the affairs of the Petitioner bank. Consequently, it has to be held that the letter by itself does not contain any order to the Petitioner bank. It is merely a request letter to supply certain information to the third respondent who is an officer exercising powers under the Act, Mr. Vakharia for the petitioners made it clear that if the impugned order at annexure 'B' is treated as a request letter. He has no grievance regarding the same an it is always upon to any one much more to an officer functioning under the Act to issue request letters to the concerned banks like petitioner No. I bank functioning under the very said Act. On a mere reading of the letter, it is found that it is not an order but merely a request and consequently, there is no question of passing any further orders in connection with the said request letter.

10. However, in the affidavit-in-reply, respondent, No, 3 has taken up the stand that hi had issued the order at annexure 'B' under S. 88 of the Act. On account of the aforesaid contention stand taken up by respondent No, 3, in spite of the clear language of the request letter at annexure 'B', it becomes necessary for me to examine the said stand taken up by respondent No. 3 in support of the impugned letter at annexure 'B'. A mere took at S. 88 an amended by Gujarat Act 23 of 1982 shows that the Registrar or the person authorised by him in this behalf shall have the right to inspect the books of any society and shall have free access to the books, accounts, documents, securities, cash and other properties belonging to or In the custody of the society. That has been laid down by sub-section (1) (a) of S. 88 of the Act. Under sub-clause (b) of S. 88(1), it has been provided that every person who is or had at any time been an officer or employee of the society and every member and past member of the society shall furnish such information in regard to such transactions and working of the society as the, Registrar or the person authorised by him may require. Sub-section (2) of S. 88 provides that similar power be exercised by co-operative financing bank vis-a-vis the concerned society financed by it. Under sub-section (3) of S. 88, a similar power is conferred on a federal society vis-a-vis the concerned society which is a member of that society. Both these sub-sections (2) and (3) of S. 88 indicate that along with power of inspection of books of accounts, power to solicit and call for necessary information is conferred upon the concerned authorities viz. co-operative financing bank as well as the federal society respectively. Similarly, under S. 88(1) (a) and (b), power to call for information is intertwined with the power to inspect books of accounts of any society. It is, therefore, not possible to agree with the submission of Mr. Bukhari for the respondents that S. 88(1)(b) gives power to call for information from any society Indevendent1v of the contingencies In which Inspection of books of accounts of the concerned society Is held by the Registrar or the person authorised by him. The very marginal note in S. 88 as amended by Gujarat Act 23 of 1982 shows that the section contemplates inspection of books by the Registrar or the, financing bank or federal society. Thus, inspection of books and other relevant document is the main power conferred on the Registrar vis-a-vis the concerned society and pursuant to that power and in the course of exercise thereof. If any need arises to call for any other information regarding the concerned transaction and working of the society, the Registrar or the person authorised by him is entitled to require the concerned society to supply the said information as Per S. 88(1)(b). That also stands to reason as otherwise and if as contended by Mr. Bukhari. sub-clause (b) of S. 88(1) is construed to be conferring an independent power not connected with the course of inspection of books etc,, any type of fishing inquiry by the Registrar may get authorised under sub-section (1) (b) of S. 88. That is precisely why in the setting of this sub-section of Section 88, it must be held that the power of calling for the relevant information under Section 88(1)(b) follows in the wake of the right to inspect the concerned books of the society by the Registrar or by the person authorised by him as provided by S. 88(1)(a) and not in vacuum or independently thereof, S. 89(1) provides that where in the course of an audit under S, 84 or an inquiry under S. 86 or an inspection under S. 87 or S. 88. It is brought to the notice of the Registrar that a paid officer or servant of a society has committed or has been otherwise responsible for misappropriation, breach of trust or other offence in relation to the society. The Registrar may, if in his opinion there is prima facie evidence against such paid officer or servant and the suspension of such officer or servant is necessary in the interest of the society, direct the committee, of the society pending the investigation and disposal of the matter, to place or cause to be placed such paid officer or servant under suspension. The said section also indicates that the main power under S. 88 is the power to inspect the relevant books of the society and therefore power to call for information flows from the said power of inspection and does not inherein the Registrar or his authorised person independent of the power of inspection. It is also interesting to note that certain acts of commission or omission by a society functioning under the Act are treated to be offences by the Statute. Under S. 147(1), it has been provided that-

' It shall lie an offence under this Act, If

xx xx xx xx(i) any officer or member of a society who is in. possession of information, books and records, fails to furnish such information or produce books and papers, or give assistance to a person appointed or authorised by the State Government or the Registrar under Sections, 80. 81. 84. 86. 87. 99. or 108.' Under S. 148. various punishments are provided for offences enumerated in Section 147. It is interesting to note that non-compliance with any direction for furnishing information or producing concerned books or not giving of any assistance to the, person appointed or authorised by the Registrar under S 88, is not treated to be an offence at all. But that apart, S. 88 can be pressed in service by the respondents provided certain information is required in the course of inspection of the books of accounts of the concerned society. So far as the facts of the present case are concerned, the order-cum-letter at annexure 'B' nowhere shows that it was issued in the course of inspection of the books of accounts of the petitioner bank as undertaken by the concerned respondents. The letter at annexure 'B' seems to have been issued independently and not in the course of such inspection as contemplated by S. 88(1)(a). It is true that in the Affidavit-in-reply filed by Mr. Shukla respondent No. 3., an attempt was tried to be made to point out that it was considered necessary to hold an inspection of the petitioner bank and to find out whether there was any case for taking further action and that during the course of his visit to the petitioner bank, he had requested the Chairman and management of the bank to supply necessary record. However, the impugned letter at annex. 'B' belies this stand taken by respondent No. 3 subsequently in his affidavit-in-reply. The subject matter of the letter nowhere shows that it was being issued pursuant to any inspection of books of accounts undertaken by respondent No. 3 so far as the petitioner bank is concerned and that pursuant to such inspection, the said letter was issued. Under these circumstances, it must be held that the impugned letter-cum-order at annexure 'B' is not covered by S. 88(1)(a) road with S. 88(1)(b) of the Act and hence the condition precedent to the issuance of such order is lacking on the facts of the present case. In that view of the matter, the impugned order at annexure 'B' must be quashed and set aside by treating it to be dehors the provisions of S. 88 of the Act and hence null and void.

11. Petition allowed.


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