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K. Thangavelu, President and Member of the Committee of Perambalur Co-operative Primary and Development Bank Vs. the Joint Registrar of Co-operative Societies and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtChennai High Court
Decided On
Reported inAIR1976Mad280; (1976)1MLJ223
AppellantK. Thangavelu, President and Member of the Committee of Perambalur Co-operative Primary and Developm
RespondentThe Joint Registrar of Co-operative Societies and ors.
Cases ReferredP.M.V. Credit Society v. Registrar of Co
Excerpt:
- .....issuing the impugned show cause notice the first respondent did not make any consultation with the financing bank as contemplated by section 72(6) of the act and therefore the show cause notice is invalid. it is also his case that the impugned show cause notice proceeds on the basis that the irregularities referred to in the notice have already been established and this shows that the first respondent has already made up his mined to supersede the society under section 72(1) and that the issue of the show cause notice is a mere formality. the petitioner further contends that the first respondent has initiated proceedings under section 72(1) by issuing show cause notice at the instance of his political opponents and therefore his action in issuing the show cause notice should be taken to.....
Judgment:
ORDER

G. Ramanujam, J.

1. The petitioner was the president of the Perarabalur Co-operative Primary Land Development Bank, Perambalur. He had been elected as a director and later as president on 18th May, 1974. By a show cause notice dated 22nd May, 1975 the first respondent called upon the petitioner and other directors of the Bank: to show cause as to why the Bank should not be superseded under Section 72(1) of the Tamil Nadu Co-operative Societies Act, 1961. It is to quash that notice the above writ petition has been filed.

2. According to the petitioner before issuing the impugned show cause notice the first respondent did not make any consultation with the financing bank as contemplated by Section 72(6) of the Act and therefore the show cause notice is invalid. It is also his case that the impugned show cause notice proceeds on the basis that the irregularities referred to in the notice have already been established and this shows that the first respondent has already made up his mined to supersede the Society under Section 72(1) and that the issue of the show cause notice is a mere formality. The petitioner further contends that the first respondent has initiated proceedings under Section 72(1) by issuing show cause notice at the instance of his political opponents and therefore his action in issuing the show cause notice should be taken to be a mala fide one. It is also stated that the first respondent has got considerable bias against the petitioner in that the petitioner had filed more than one writ petition before this Court questioning certain actions of the first respondent and therefore even if the matters referred to in the show cause notice were to be enquired into, it should be by a different officer. It is also contended that most of the irregularities relate to an earlier period when the present society did not come into existence and therefore the show cause notice so far it relates to those irregularities should be taken to be bad.

3. As regards the first contention regarding the requirement as to consultation with the financing bank contemplated by Section 72(6), in paragraph 8 of the counter-affidavit it has been stated that the financing bank was consulted by sending a letter on 19th May, 1975. It is not the first respondent's case that he received any communication from the financing bank in answer to the said letter. Even if it is taken that the first respondent sent a communication to the financing bank that will not be sufficient to satisfy the requirement as to consultation. Perhaps realising this position the first respondent has taken the stand in the counter-affidavit that the consultation is required only for the passing of the order of supersession and not for issuing show cause notice. Mr. N.C. Raghavachari the learned Counsel for the petitioner contends that having regard to the language of Section 72(6) the first respondent has to consult the financing bank before taking any action under Section 72(1) including the action of issuing the show cause notice, that by issuing the show cause notice the first respondent had initiated the proceedings under Section 72(1) and that for such initiation of the proceedings the consultation with the financing bank is necessary.

4. But on a due consideration of the matter, I am inclined to think that, having regard to the object of the provision under Section 72(6) which requires the consultation of the financing bank, such consultation is necessary before the final order is passed under Section 72(1). At the stage of the issue of the show cause notice no one knows as to what is going to happen ultimately. It is only when the first respondent makes up his mind after due enquiry in relation to the irregularties referred to in the show cause notice, the financing bank has to be consulted with regard to the action proposed to be taken. If the consultation is before the issue of show cause notice and if the first respondent ultimately finds that the it regularities referred to in the show cause notice have not been established, the consultation earlier obtained will become a mere formality and it would be a sheer waste of time. The matter is also clear if we consider the question of prejudice that will be caused to the petitioner. The petitioner can complain that the consultation has not been made only if the enquiry arising out of the show cause notice ultimately results in an order of supersession under Section 72(1). I am therefore of the view that consultation as contemplated by Section 72(6) is necessary before the final order is passed under Section 72(1) and not before the issue of show cause notice. This view finds support from the observation of Ramaprasada Rao, J., in P.M.V. Credit Society v. Registrar of Co-operative Society : AIR1973Mad460 . After holding that the consultation contemplated under Section 72(6) with the financing bank is pre-requisite for the exercise of the statutory power under Section 72(1) the learned Judge proceeds to observe as follows:

Obviously such consultation begins after the Registrar is subjectively satisfied on objective materials placed before him that a prima facie case has been made out for the purpose of superseding the co-operative society. It is only at that point of time that the necessity for consulting the financing bank arises. This has been held to be a mandatory requirement by the highest Court of the land. Such a consultation therefore cannot be avoided. Though consultation is not equivalent to concurrence, yet there must be material on record to show that, after the Registrar entertained in opinion about the unsatisfactory working of a registered society, he should consult the financing Batik to whom the society is indebted, before he finally passes an order of supersession under Section 72 of the Act.

5. As regards the contention that the show cause notice has been issued by the first respondent at the instance of the political opponents and that, it shows that he had already made up his mind, it is not possible to assume that the first respondent who is a statutory authority would stoop to hear the advice of the petitioner's political opponents and to initiate action under Section 72(1) without any basis. I am not therefore inclined to quash the show cause notice on the basis that the show cause notice has been issued mala fide or that the first respondent had a closed mind in relation to the irregularities alleged.

6. On the question as to whether the first respondent has shown any bias in the matter, it is not in dispute that there Were certain writ petitions before this Court initiated by the petitioner against certain orders passed by the first respondent in relation to the affairs of this bank. The petitioner therefore apprehends that if the irregularities pointed out in the show cause notice were to be inquired into by the first respondent such enquiry may not be fair. Having regard to the said earlier proceeding, between the petitioner and the first respondent it cannot be said that the said apprehension is not justified. In the circumstances of this case I consider that the further enquiry in relation to the show cause notice may have to be conducted by a different officer.

7. Regarding the next contention that the charges relate to a period prior to the present committee's taking charge on 18th May, 1974 and therefore those charges cannot be sustained,' I consider that the matter should be urged before the concerned enquiry officer who will consider the tenability of this objection before passing the final orders in this matter.

8. With the above observations this writ petition is dismissed. However I consider that further proceedings under Section 72(1) will have to be conducted by some officer other than the officer who issued the show cause notice.


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