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The Joint Registrar of Co-operative Societies, Madras and ors. Vs. P.S. Rajagopal Naidu and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Case NumberWrit Appeal Nos. 296 and 297 of 1969
Judge
Reported inAIR1970Mad212
ActsCode of Civil Procedure (CPC) , 1908 - Sections 64, 65, 66 and 67; Madras Co-operative Societies Act, 1961 - Sections 72
AppellantThe Joint Registrar of Co-operative Societies, Madras and ors.
RespondentP.S. Rajagopal Naidu and ors.
Appellant AdvocateAdv.-Gerneral assisted by, ;Govt. Pleader
Respondent AdvocateR.D. Indrasenan and ;N. Rajendran, Advs.
DispositionPetitions dismissed
Excerpt:
trusts and societies - committee of management - section 72 of madras co-operative societies act, 1961 - committee of society not functioning properly and failed to discharge its duties - registrar dissolved committee without any enquiry - appeal - committee was statutory body - registrar can take action if committee failed to discharge its duties - registrar was within its jurisdiction to take action under section 72 against committee functioning at time of action or even if irregularity were committed by management of earlier committee against whom show cause notice was issued not withstanding fact that persons wholly or partially different from those constituted earlier committee. - - the joint registrar was of the view that the committee of the society was not functioning.....ramaprasada rao, j.1. these writ appeals are directed against the common judgment in w. p. nos. 1744 and 1951 of 1969 rendered by alagiriswami j. in the first instance it came up before a division bench consisting of my lord, the chief justice and gokulakrishnan j. the division bench felt it desirable to place the matter in question arising in they appeals before a full bench and observed:'section 72 of the madras co-operative societies act 1961 calls for interpretation. a division bench of this court, in w. a. no. 113 of 1969 (mad), has taken a particular view of the scope and effect of it, with which, prima facie, with due respect, we do not find ourselves in agreement. the question is one of importance and will affect all the co-operative societies in the state. we consider, therefore,.....
Judgment:

Ramaprasada Rao, J.

1. These writ appeals are directed against the common judgment in W. P. Nos. 1744 and 1951 of 1969 rendered by Alagiriswami J. In the first instance it came up before a Division Bench consisting of my Lord, the Chief Justice and Gokulakrishnan J. The Division Bench felt it desirable to place the matter in question arising in they appeals before a Full Bench and observed:

'Section 72 of the Madras Co-operative Societies Act 1961 calls for interpretation. A Division Bench of this Court, in W. A. No. 113 of 1969 (Mad), has taken a particular view of the scope and effect of it, with which, prima facie, with due respect, we do not find ourselves in agreement. The question is one of importance and will affect all the Co-operative Societies in the State. We consider, therefore, that the matter should be placed before a Full Bench for decision.' The subject having been set once again for hearing before us, we are called upon in the main to consider the scope and content of Section 72 of the Madras Co-operative Societies Act, 1961. hereinafter referred to as the Act.

2. A few relevant facts touching upon the matter in issue may be noticed before the scheme of the Act, its purpose and intendment are considered. On 4-1-1969, the Joint Registrar of Co-operative Societies issued a notice of supersession. purporting to supersede, under Section 72 of the Act, the committee in charge of a cooperative societv by name The North Arcot District Co-operative Supply and Marketing Society Ltd.. Vellore. In the said notice certain charges were framed and it was sought to be made out that the Society was not functioning properly for some time past and the Committee in management of the affairs of the Society was called upon to explain why it should not be superseded. The Committee showed cause by submitting its due explanation to as many as ten charges framed against it. The Joint Registrar was of the view that the committee of the Society was not functioning properly and failed to discharge its duties and responsibilities. The Committee explained that many of the charges which relate to deficits in the main society or its associates, reflect on the day-to-day administration of the society, which is mainly in the hands of a paid whole-time secretary of the rank of a Deputy Registrar of Cooperative Societies in the service of the Co-operative Department of the Government of Tamil Nadu and the other members of the staff, that no irregularity was brought to its notice by the Secretary or any member of the staff, that if there was any commission or omission at all, it was attributable to the chief executive officer of the Society and that in the absence df proof of lack of good faith or the presence of an oblique purpose in the minds of the committee as a whole, the order of supersession without a fuller enquiry is illegal. Notwithstanding the explanation of the Committee and the note of dissent of the Vellore Co-operative Central Bank Ltd.. which was the financing bank of the Society, the Joint Registrar, with a view to set right the affairs of the Society and to safeguard the interests of the shareholders and the creditors of the Societv and to place the Societv on a satisfactory basis, dissolved the committee. Appeals by the President and the members of the committee to the Registrar of Co-operative Societies under Section 96(2) of the Act .were unsuccessful. Two writ petitions were filed, one by the President and the other by a director of the Society, to quash the impugned order of the Joint Registrar which ultimately found favour with the Appellate authority as well. When the Registrar of Co-operative Societies considered and heard the appeals, the ratio in W. A. No. 113 of 1969 (Mad) was ruling. In applying the principle therein, however, he, according to Alagiriswami J., misapplied the same.

The learned Judge gave certain findings which we reproduce more for completion of the relevant facts attendant upon these appeals:--

'Even so. it appears to me, that in the case of this committee whatever else might have been said, the charges, if analysed from the point of view set forth by the Bench, would show that at worst the Committee has not been as active as it might have been. But after all the Committee consists of non-official members: they are not whole time servants of the Society; they have their own private affairs to attend to; they have necessarily to depend upon a paid whole-time secretary and other members of the staff. The paid secretary during most of the times seems to have been a Deputy Registrar. It was their duty to have kept the registers in proper order. It was their duty to have inspected and found deficiencv in stock and brought it to the notice 01 the Committee. With regard to a number of matters with which the Committee is charged, it could be seen that all of them relate to matters for which the paid permanent staff are primarily responsible. The Committee can only supervise and cannot be engaged in day-to-day management of the affairs of the Society or even in matters like maintenance of registers or maintenance of accounts. It was the duty of the paid staff to have brought them to the notice of the committee. The Joint Registrar as well as the Registrar have failed to appreciate the scope of the duties of the Board of Directors and the permanent staff. There is no allegation or proof that the Board of Directors have either acted mala fide or have benefited themselves ..... Considering all the charges and the explanations, it appears to me that both the Registrar and the Joint Registrar have failed to keep clear in their minds the distinction between the duties and responsibilities of the committee and the paid permanent staff ..... Undoubtedly there is no material whatsoever to hold that the committee in this case has wilfully disobeved or wilfully failed to comply with the lawful order or directions of the Registrar under the Act or the rules. The committee cannot by any stand be said to have been recalcitrant or lethargic. So the only question that arises is whether the committee was not functioning properly. The committee pointed out that the defects pointed out related only to day-to-day working and business of the Society and that was purely administrative in character, that the paid staffs are in charge of the day-to-day administration of the Societies and that it is the secretary, who is the chief executive authority of the society ..... I do not see that opportunity was given to the committee to set right the irregular ities ..... I am not satisfied that even taking into account a few minor charges, which may be held to be proved, they are of such a character that they could justify the drastic penalty of supersession..... On the whole I am satisfied that there was no justification for the action taken by the Joint Registrar in this case to supersede the committee .....'.

3. One thing however which is conspicuous is that Alagiriswami. J. was. as he expressed himself, bound by the decision of the Division Bench of this Court in W. A. No. 113 of 1969 (Mad), the scope of which we shall presently consider. Before we notice the ratio of the Bench, certain general observations regarding the essence of co-operation and its process, as also the scheme of the Act, are necessary.

4. In a socialistic pattern of society. democratic process is the vehicle of action and if such a means is to be outwitted by the individualistic opinion of the Registrar of Co-operative Societies on a priori considerations and insufficient material, then it would be the very negation of cooperation, which is the essence of organised liberty. The title of the Act, though not conclusive, is one of the numerous sources from which assistance may be obtained in the ascertainment of the legislative intent of an enactment. Even so Is the 'Co-operative Societies Act'. If, therefore, as we will presently point out, there is some ambiguity in the application of a particular section of the Act. which is penal in character to a particular set of material and facts, the title provides ample and singular assistance to Interpret the particular section in harmony with and in conformity, to the other allied provisions therein. It is in this light that the democratic process envisaged and adumbrated fully in the Act should not lightly be displaced by an arbitrary dispensation if the jurisdictional facts to placate the former are not made available to the hierarchy of tribunals constituted under the Act to act judicially.

5. At this stage it is convenient to notice the provisions of the statute, to appreciate the nature, colour and scope of the jurisdiction of such statutory tribunals like the Joint Registrar of Co-operative Societies and the Registrar of Cooperative Societies, particularly while deciding to supersede an elected body like the committee of a co-operative society functioning under the Act.

6. Section 2(2) defines a 'committee' as to mean 'the governing body of a registered society to whom the management of its affairs is entrusted'. Section 2(6) explains 3 'member' as 'a person joining m the application for the registration of a society and a person admitted to membership after registration..... By Section 2(8) an officer' includes a president, vice-president, chairman, vice-chairman, secretary. assistant secretary, treasurer, member of committee, and any other person empowered under the rules or the by-laws to give directions in regard to the business of the society'. Section 2(10) defines 'Registrar' as 'a person appointed to perform the duties of a Registrar of Co-operative Societies under this Act, and Includes a person on whom all or any of the powers of a Registrar under this Act have been conferred under Section 3'. Section 4 provides for registration of a society under the Act 'which has as its object the promotion of the economic interests of its members in accordance with co-operative principles.....'. A 'financing Bank' means 'a registered society which has as its principal object the lending of money to other registered societies'. Section 27 provides for the constitution of a committee. 'The general body of a registered society shall constitute a committee in accordance with the by-laws and entrust the management of the affairs of the registered society to such committee.' The proviso thereto provides for the constitution of such committee in case the society is registered after the commencement of the Act. Section 27(3)fa) says that 'the terms of office of an elected member of a committee constituted under the Act shall be three years' and it also provides for the retirement of one-third of the members elected to the committee at the end of each year. The committee may also consist of a non-official member nominated either by the Registrar or the financing bank. Anv casual vacancy in the office of a member of the committee shall be filled in such manner as may be specified in the rules or by-laws. Section 28 prescribes the disqualifications for membership of committee. Inter alia it provides that any member who has been removed from the office of the member of the committee of the registered society is not eligible for being elected or appointed as a member of a Committee. Section 28(4) prescribes another kind of disqualification for being elected or appointed as a member of the committee. It is:--

'No member of a committee against whom an order under Sub-section (1) of Section 71 has been passed ..... shall be eligible for election or appointment as a member of the committee for a period of three years from the date of such order.' Section 28(5) (a) reads:--

'No member of a committee which has been superseded shall be eligible for election or appointment to the committee for a period of three years from the date of expiry of the period of supersession'. Even so Section 28 (5) (b) provides-

'No member of a committee in respect of which proceedings for supersession under Section 72 are pending shall be eligible for election or appointment to the committee till the termination of those proceedings.'

Section 28-A which has been inserted by the Madras Amending Act VIII of 1966 is an important provision and has to be reproduced. It reads as under:--

'1. Where in the course of an audit under Section 64 or an enquiry under Section 65 or an inspection under Section 66 or Section 67, it appears that a person who is, or was, a member of a committee has misappropriated or fraudulently retained any money or other property or been guilty of breach of trust in relation to the society or of gross or persistent negligence in connection with the conduct and management of, or of gross mismanagement of, the affairs of the society, or of misfeasance or default in carrying out his obligations and functions under the law, the Registrar may, without prejudice to any other action that may be taken against such member, by order in writing, remove such person from the office of member of committee if he holds such office, or disqualify him from holding in future the office of a member of the committee, if he has ceased to hold such office.

2. No person shall be removed or disqualified under Sub-section (1) without being given an opportunity of making his representations. A copy of the order removing or disqualifying him shall be communicated to him.'

7. Section 31 provides a mandate and reads that the registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal with various powers enumerated therein, attached to it. Chapter VIII of the Act deals with audit, inquiry, inspection, surcharge and supersession, The accounts of a society shall be audited once at least in every year at the instance of the Registrar (Section 64(1)). Section 64(2) indicates the nature of the audit to be done under Section 64(1) and such audit shall include an examination of overdue debts, if any, the verification of the cash balance and securities and a valuation of the assets and liabilities of the society. For the successful examination of the accounts and for a proper audit as above, the Registrar may, under Section 64(5), by order in writing direct any officer of the society to take such action as may be specified in the order to remedy within such time as mav be specified therein the defects, if any, disclosed as a result of the audit. The procedure for conducting the audit is prescribed in Rule 54 and it provides for the submission of an audit memorandum by the person examining the accounts. The audit memorandum, according to the above rule, is self-instructive and shall contain full particulars of all transactions which appear to be contrary to the provisions of the Act, all sums which ought to have been but have not been brought into the accounts by the society, any material impropriety or irregularity in the expenditure, or in the realisation of moneys due to the society, and other instructive particulars mentioned therein.

S. 65 gives the discretion to the Registrar to hold an enquiry into the constitution, working and financial condition of a registered society. Such an enquiry can be undertaken under the said section, on an application for the purpose by a majority of the committee or of not less than one-third of the members or on the request of the Collector. The person authorised by the Registrar to so enquire has several powers set out in Section 65(2). Such powers include the seizure of books, summoning of persons to give evidence, call for a general meeting or a meeting of the committee at such places to be decided by him either by himself or through any of the officers of the society and in the end, the enquiry officer is obliged to communicate the result of the inquiry in certain cases to the Government and in all cases to the financing bank to which the society is affiliated and lastly to the society concerned. Section 65(4) is vet another power of the Registrar who may, by order in writing, direct any officer of the Society or its financing bank to take such action as may be specified in the order to remedy, within such time as may be specified therein, the defects, if any, disclosed as a result of the Inquiry. One other special power vested in the Registrar under Section 66 is that the Registrar may, of his own motion, or on the application of a creditor of a registered society, inspect or cause the inspection of the books of the society under certain circumstances. The financing Bank also has the right to inspect the books of any registered society which is indebted 1o it. Section 66(3) provides that the Registrar, after such inspection, may, by order in writing, direct any officer of the society to take such action as may be specified in the order to remedy within such time as may be specified therein the defects, if any. disclosed as a result of the inspection. Section 70 provides for suspension of a paid officer or servant of a registered society who in the course of an audit under Section 64 or an enquiry under Section 65 or an inspection under Section 66 or Section 67 has been found to have committed or has been otherwise responsible for misappropriation; breach of trust or other offence, in relation to the society. Such an order of suspension shall be obeyed by the committee of the society.

Section 71 provides for the surcharging of any person who is or was entrusted with the organisation or management of the society or any past or present officer or servant of the society who has misappropriated or fraudulently retained any money or any other property or been guilty of breach of trust in relation to the society or has caused any deficiency in the assets of the society by breach of trust or wilful negligence or has made unauthorised payments contrary to the Act. by-laws and directions. The Registrar can act under this section on his own motion or on the application of the committee, liquidator or any creditor or contributory and inquire into the conduct of the person concerned and direct him to restitute the moneys or properties found to have been misappropriated by him. Any such inquiry shall not be held after the expiry of six years from the date of any act or omission referred to in this sub-section. An opportunity to the alleged delinquent officer should be given to enable him to make his representations. Lastly comes Section 72 which provides for the supersession of the committee. Section 72(1) (a) reads as follows:

'If. in the opinion of the Registrar, the committee of any registered society is not functioning properly or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued by the Registrar under this Act or the rules, he may, after giving the committee an opportunity of making its representations, by order in writing, dissolve the committee and appoint either a person (hereinafter referred to as the special officer) or a committee of two or more persons (hereinafter referred to as the managing committee) to manage the affairs of the society for a specified period not exceeding two years.'

The Registrar on appointing a special officer may also appoint an advisory board to assist him. The remuneration of the special officer shall also be fixed by him. Before taking any action under Sub-section (1) of Section 72 in respect of anv registered society, the Registrar shall consult the financing bank to which the society is indebted. It is thus seen that a committee can be superseded in case it is not functioning properly or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued by the Registrar under this Act or the rules. One other section can also be usefully referred to. Section 85 appearing in Ch. XI dealing with winding up and cancellation of registration of registered societies, provides for the winding up of registered societies as under:

'(1) If the Registrar, after an enquiry has been held under Section 65 or an inspection has been made under Section 66 or Section 67, or on receipt of an application made by not less than three-fourths of the members of a registered society, is of opinion that the society ought to be wound up, he may, after giving the society an opportunity of making its representations, by order in writing direct it to be wound up. A copy of the order shall forthwith be communicated to the society by registered post.'

Thus, even the winding up of a registered society by the Registrar could be undertaken only after an enquiry has been held under Section 65 or an inspection has been made under Secionm 66 or Section 67 or at the request of not less three-fourths, of the members of the registered society. Here also, the society has to be given an opportunity to make its representations to the contrary. Section 85(2) provides for the other circumstances in which a society could be wound up. Section 101 is a penal section which provides for punishment of the committee of a society, an officer of a society, an officer employed, paid servant or any member of a society who furnishes false information or disobeys summons or other lawful order, requisition or direction issued under the provisions of the Act.

8. From the scheme of the Act and tin-primordial purpose and intendment of the Act it appears that the Registrar of Cooperative Societies is constituted as a vigilant sentinel to look to the proper working and functioning of Co-operative Societies created and registered under the Act, and though certain powers are vested in him in relation to such supervisory jurisdiction vested in him, yet such powers though prima facie cxercisable on his subjective satisfaction, they have to pass muster objectively as well and should conform reasonably with the reality of the situation, A Committee of management, in so far as a co-operative society is concerned, is the sole body to which is entrusted the affairs of the said society. A 'member of the committee' is deemed to be an officer of the society the primary object of which is to advance the economic interests on co-operative principles. A 'committee' is an elected body of which one-third of the members constituting the said committee shall retire once in three years. In fact, there is an interdict on persons against whom action is taken under Section 71 or 72 from being and continuing to be a member of the committee. It is, however, important to note that when the Registrar of Co-operative Societies or any officer authorised in that behalf by the statute intends taking any action against a member of the society or a member of the committee or against the society as a whole, it appears from the scheme of the statutory provisions that an audit under Section 64 or an enquiry under Section 65 or an inspection under Section 66 is a necessary concomitance and the report or material obtained on such audit, enquiry or inspection form as it were the foundation of bedrock for the supervening action, whatever the nature of such action may be, which is to be undertaken by the Registrar of Co-operative Societies. It is unlikely that the Registrar could be said to be armed with the necessary material, hypothesis and equipment to penalise a member, a member of the committee or the society, on inchoate information obtained by him from some source other than the statutory prescribed channels such as audit, enquiry or inspection. In fact, a registered society is a body corporate with perpetual succession and a common seal.

Analogically therefore, it follows that a body constituted for the purpose of administering such a society should also be deemed and held to be a continuous body though by various events specified in the statute there may be a change in the personnel of such management. Sections 64. 65 and 66, which are the statutory procedural stems which interdict the apparently arbitrary course of action which a Registrar could undertake to interfere with the affairs of a society, its members or officers, provide a sufficient halo to tighten up such indiscriminate and imguided exercise of the powers by the Registrar, when it becomes necessary. In each of those sections, it is incumbent on the Registrar to give an opportunity to the member concerned, officer concerned or the society concerned to rectify the defects. If this much is clear and unambiguous, the intention of the Legislature whose purpose is to advance co-operation and suppress bureaucracy, then it cannot be lightly predicated that if the Registrar forms an opinion aliunde and otherwise than on an audit report, inquiry report or inspection report, the jurisdictional fact which has to he found by the Registrar before he attempts to exercise his statutory powers under the Act is available to him.

In our view, and under the scheme of the Act, the condition precedent to the exercise of jurisdiction by the Registrar under one or the other of the sections considered above and in particular Section 72 is to secure an audit memorandum or a report of inspection or inquiry, so that he may be provided with the necessary material to act thereon. Unless such a fact finding authority has provided the Registrar with the hypothesis to act and ultimately supersede an elected body, the impugned order of supersession will undoubtedly be tainted with the absence of a jurisdictional basis. Whether such a basis exists, is subject to review by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India.

9. No Tribunal subject to the jurisdiction of the High Court can on its own volition finally decide on the question of the existence or extent of its jurisdiction to pass orders which are punitive in nature and above all to set at naught a committee of management of a co-operative society, elected by its general body of members. If, therefore, the purport ot Sections 64, 65, 66 and 67 is fully appreciated and correctly understood, it appears to us that before the Registrar can take action which would result in the imposition of a penaltv, he should not only give an opportunity to the delinquent member, officer, committee or society, but he should also be armed with the related reports under Sections 64, 65 or 66. This appears to be a mandatory provision from which there is no escape.

10. From the nature of the charges framed in these proceedings before us it appears to us that the Registrar has avoided the prescribed legislative channel of procedure which he is obliged to adopt before he takes action under Section 72 of the Act. By way of illustration we could consider some of the charges mentioned and dealt with by the Registrar. The Registrar is of the view that several deficits were noticed in the stocks of the society or its associates as pointed out in the audit report. But it is not clear whether any action was taken under Section 64 (5) to remedy that defect. Even as surmised by the Registrar, if the working of the society was irregular it is not understandable as to why an enquiry was not held under Section 65. Section 65 provides ample plenary authority to the Registrar to set right matters and indeed under Section 65 (4) an opportunity has to be given to the Society as a whole or its financing bank to remedy such defects, if any. disclosed as a result of the enquiry. It does not appear that any such enquiry as contemplated under Section 65 was undertaken. The right of inspection contemplated in Section 66 is yet again a prerequisite before the Registrar could finally supersede a committee. No such statutory inspection has been done, nor was it stated before us that any such inspection was undertaken. The charges, no doubt, relate to certain discrepancies during the years 1964 and 1965. It is not disputed that there has been a change in the personnel of the committee year after year due to the operation of Section 27 (3) of the Act. Though this reconstitution of the committee may not by itself matter as would be indicated by us later, vet In such circumstances where there is an annual change by necessity, in the body constituting the committee, it becomes all the more necessary for the Registrar to equip himself with the audit, inquiry, or inspection report before a final decision can be arrived at under Section 72 of the Act. As already stated, even in the case wherein the Registrar is of the opinion that the society ought to be wound up, an enquiry under Section 65 and an inspection under Section 66 or 67 are preeminently needed. Thus, if the Registrar cannot take action against a member for unsatisfactory working and the financial condition of a registered society without an enquiry under Section 65 and if the Registrar cannot take suo motu action without giving an opportunity to the erring member, officer or society to remedy the defects found and noticed in the course of the audit, enquiry and inspection and when a member or' officer cannot even be surcharged on the ground of misappropriation or fraudulent retention of moneys or deliberate causance of any deficiency In the assets of the society without such action being preceded by the procedure contemplated in Sections 64, 65, 66 or 67, then it appears to us that even under Section 72 of the Act, which enables the Registrar to supersede a committee in management of the affairs of the society he cannot un-ilaterally act and base his penal action solely on his subjective satisfaction.

11. This leads on to the question as to what is opinion or subjective satisfaction and its relative impact on supersession of a committee or management of a cooperative Society. 'Supersession' means to make the existing things inefficacious by exercise of superior power. Such a power if vested in a statutory tribunal, it should exercise it in a judicious spirit and primarily to render substantial justice. The decision should be arrived at by such a tribunal which is ordinarily characterised as one vested with quasi-judicial functions in a spirit and with a high sense of responsibility in order to mete out justice ultimately. We have in the analysis undertaken by us as above, sought to explain the fascicule of the sections which lend support to the irresistible conclusion that Section 72 ought not to be read and interpreted in the abstract de hors the intent and purport envisaged in the prior sections, which form part and parcel of the same chapter. When two or more sec-tions appearing together and in the same context are susceptible of analogous meaning, they are to be understood in their cognate sense. Each section and the action contemplated therein lend colour to the other section and it is on such cumulative understanding of the sections and their application, that the tribunal empowered to brand a committee as inefficacious, should act and act judiciously as well after giving an effective opportunity to the committee to rectify the defects. Alagiriswami, J. rightly found that no such opportunity was given to the committee to set right the irregularities and that there was no justification for the action taken by the Joint Registrar to supersede the committee. Apart from the view of the learned Judge that the defects in the main are attributable to the executive staff of the society which includes a Government official of the rank of a Deputy Registrar of Co-operative Societies, we are unable to uphold the impugned order on the ground that the Registrar failed to secure the necessary facts and material which could vest him with the necessary jurisdiction to act under Section 72 of the Act.

12. The section, however, speaks of the opinion of the Registrar which is essentially subjective in nature. It is to be remembered, however, that the result of the action taken under Section 72 would make a statutory functionary dormant. In such circumstances it is to be considered whether mere and bare subjective information of the Registrar can prevail and no standard of objectivity is any more required for the exercise of such power. Section 72 contemplates that the initial hypothesis necessary to enable the Registrar to act under it is that the society is not functioning properly. We agree with Alagiriswami, J., that there is absolutely no material whatsoever to hold that the committee in this case wilfully disobeyed or wilfully failed to comply with the lawful order or directions of the Registrar under the Act or the rules. This is yet another limb of Section 72 which vests in the Registrar the jurisdiction to act and supersede. Under Section 65. an enquiry can be directed by the Registrar into the working and financial condition of a registered society. Ordinarily it could be expected that if the working or the functioning of the society is not proper, then only an inquiry would be directed. If, therefore, the language in Section 65 (1) and Section 72 (1) (a) have to be reconciled and harmoniously interpreted, it appears to us that no order as to supersession can be made without an enquiry or inspection as contemplated earlier. It is in this respect that the subjective opinion which is the guide line provided in Section 72 is intermixed with certain objective standards as well which have to be placed in the forefront before a decision is arrived at. It can only be then said that the superior power vested in the Registrar under Section 72 to render dormant an elected body has been rightly exercised by him without violating the principles of natural justice and having foremost in his mind his duty to render substantial justice. No doubt, it is an accepted principle of law that where a statute provides a particular course of action and makes it dependent upon the subjective satisfaction of a tribunal created by the Act, then the decision arrived at by the said tribunal, if it does not violate the principles of natural justice and is bona fide prima facie, then the Court cannot substitute its judgment as if it were a Court of appeal over the said tribunal. In the instant case, however, not only the principles of natural justice have been violated, but the Registrar assumed jurisdiction without the hypothesis essential for him to deal with the circumstances of this case and such exercise of power by a quasi-judicial tribunal has to be set at naught as its acceptance would be to encourage arbitrariness and throw overboard principles of natural justice. Under these circumstances, we agree, though for a different reason, with Alagiriswami, J.

13. Now it has to be considered whether the acceptance of the ratio in W. A. No. 113 of 1969 (Mad) by Alagiriswami. J., which also formed another course of his reasoning for allowing of the writ petitions is correct. In fact, the reference tothis Full Bench has been necessitated because the learned Judges who constituted the Division Bench in the first Instance took prima facie a view contrary to that expressed in W. A. No. 113 of 1969 (Mad) which will hereafter be referred to as writ appeal.

14. In the writ appeal. Anantana-rayanan C. J. and Natesan J., who 'constituted the Bench, agreed with the contention of the Registrar of Co-operative Societies that the committee under the Act being the governing body of the society statutorily formed, is a permanent body, a legal entity with continuous existence notwithstanding the changes in its personnel. Speaking for the Bench, Natesan, J., in the writ appeal, observed--

'True the Committee as such is not made under the Act a body corporate with perpetual succession and a common seal. But that does not affect the determination of the question we are now called upon to decide ..... But the crux of the matter is that no period isfixed for the life of the Committee, andits continued existence is secured in theprovisions as to its constitution. We areclearly of the view that for initiation ofproceedings under Section 72, there canbe no question of previous committee andpresent committee. Action can be takenunder the section against the governingbody of the Bank as a legal entity havingcontinuous existence, notwithstanding theannual retirement of one-third of themembers of the Committee and re-electionin their place'.

To the above dicta, there can be no exception. As a matter of fact, we have noticed in this judgment the various provisions of the Act and the causes which might effect a change in the personnel of the committee; but nevertheless it is seen that the continuity of the committee is maintained for all purposes and it is not possible to uphold the view that the committee had to be truncated according to the physical personnel constituting it from time to time, and thus truncated, there is a snap in the chain of continuity of such a committee and, therefore, it should be deemed to be non-permanent.

15. In the writ appeal, however, an opinion has been expressed that as the committee acts only through its members who enter into and exit therefrom from time to time, any act of omission or commission on which the charges of supersession are to be based must be related to the committee as constituted when supersession is proposed. According to the learned Judges, there must be some nexus between the act complained of and the personnel constituting the committee and finally the learned Judges observed that the virus infecting the society should be found in the committee when it is proposed to dissolve it. They were also of the view that the section in reality provides for action against the committee composed of recalcitrant members and lethargic committees that could not be activated. Said the Division Bench:--

'Before any opportunity is given to the members of the governing body so constituted to set right matters, and before they have had time .to take steps in that regard, is this body to be superseded under Section 72 of the Act solely for the acts of their predecessors? It may be that the Registrar would not be so. In our view. Section 72 does not contemplate action in such a case, to supersede the committee in the circumstances would be abuse of Dowers ..... Equally, though the committee is an entity by itself, the Registrar can look to the realities behind the legal facade to ascertain the causes for the deterioration in the affairs of the society'.

It would thus appear from the latter portion of the ratio in the will appeal that unless there is a link between the act and the person or persons constituting the committee then only the necessary hypothesis is available to the Registrar to act under Section 72 and ultimately supersede the committee. With respect to the learned Judges who decided the writ appeal, we are unable to agree that such is the foundation for the exercise of jurisdiction by the Registrar under Section 72 of the Act. Once it is not disputed, as it is indisputable, that the committee as a statutory body is a permanent and a continuous one, then it cannot be said that any change in the personnel of the committee would effect a consequential change, in any manner whatsoever, in the statutory body as such. If such a limited scope and interpretation is to be given to such a statutory functionary, then it would cease to be a permanent body. Once it is conceded that the body is a legal entity with continuous existence, to say that the acts of commission and omission of the previous committee cannot be mechanically attributed to the succeeding committee unless there is a link between the act and the person or persons constituting the committee would be to whittle down the pronouncement made that the body is a permanent and a continuous one. Indeed such a wedging into its legal character for any purpose is irreconcilable. 'Once permanent, always permanent' can have no exception. We are unable, with respect, to accept the reasoning that as the committee acts through human beings, it is essential that the impugned acts or the substance of the charges must be brought home to one or the other of the members of the committee physically constituting It

Subject to the other limitations provided for in the Act itself, it is open to the Registrar to take such action as indicated in the first part of our judgment to call upon the committee functioning for the time being and on behalf of the society to explain and show cause why it should not be superseded. The latter portion of the decision in the writ appeal creates, in our opinion, a limitation which cannot be supported by the very language and infend-ment of the various provisions of the Cooperative Societies Act. We are. therefore, unable, with respect, to agree with the observations made by the learned Judges in the writ appeal and excerpted above. We hold that all other circumstances, data and material being available or made available to the Registrar of Cooperative Societies in the manner indicated by us, he would be within his jurisdiction to take action under Section 72 against the committee which at or about the time of the action was functioning asi committee of management of the society: notwithstanding the fact that the charges imputed or defects noticed or irregularities complained of were those attributable to or referable to the administration, management and conduct of an earlier committee and notwithstanding also the fact that the committee against whom the show cause notice is issued consists of persons wholly or partially different from those constituted the earlier committee or committees.

16. In the result, however, the writ appeals are dismissed, but in the circumstances, there will be no order as to costs.


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