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Subrata Sarkar and anr. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies;Constitution
CourtKolkata High Court
Decided On
Case NumberCivil Rule No. 10218 (W) of 1981
Judge
Reported inAIR1986Cal198,88CWN885
ActsMulti-Unit Co-operative Societies Act, 1942 - Sections 4(2) and 5B; ;West Bengal Co-operative Societies Act, 1973 - Sections 26(1) and 140; ;West Bengal Co-operative Societies Act, 1940
AppellantSubrata Sarkar and anr.
RespondentUnion of India (Uoi) and ors.
Appellant AdvocateBankim Datta, ;Nirendra Krishna Mitra and ;Bikash Kumar Chatterjee, Advs.
Respondent AdvocateUma Sanyal, Adv. (for Nos. 1 and 2), ;Some Nath Chatterjee and ;Samir Kr. Ghosh, Advs. (for Nos. 3 to 5) and ;Debi Pal and ;Madhusudan Banerji, Advs. (for No. 6)
DispositionPetition dismissed
Cases ReferredAjit Singh v. State of Punjab
Excerpt:
- .....: --(i) whether or not the registrar of cooperative societies, west bengal (hereinafter called the state registrar) had any authority to make a report of one or more of the circumstances mentioned in section 26(1) of the state act, 1973 to enable the state government to issue the impugned notification dt. 1-3-1977 dissolving the managing committee of the co-operative bank;(ii) whether the provisions for prior consultation with the reserve bank in the second proviso to sub-section (1) of section 26 of the said act are mandatory or directory; arid(iii) whether the provisions of section 140(1)(c) of the said act for dissolution of the managing committee of an insured co-operative bank by the registrar, if so required by the reserve bank, exclude the operation of section 26 of that act. or.....
Judgment:
ORDER

Amitabha Dutta, J.

1. In this writ petition two shareholders of the Eastern and North-eastern Forntier Railway Co-operative Bank Limited (hereinafter referred to as the Co-operative Bank) have challenged the Notification dt. 1-3-1977 issued by the Government of West Bengal in exercise of the powers conferred by the proviso to Sub-section (1) of Section 26 of the West Bengal Co-operative Societies Act 1973, dissolving the Managing Committee of the said Co-operative Bank and appointing an Administrator to manage its affairs (Annexure 'A' to the writ petition), the Notification dt. 29-2-1980 issued by the same authority reconstituting the Board of Administrators constituted earlier to replace the Administrator (Annexure 'B' to the writ petition) and the Notification dt. 14-1-1981 also issued by the State Government reconstituting the Board of Administrators before the expiry of one year term of the then existing Board.

2. The grounds of challenge as pleaded in the original writ petition are as follows : --

(a) As the said Co-operative Bank is governed by the Multi-unit Co-operative Societies Act 1942 which is a Central Act the Registrar of Co-operative Societies, West Bengal had no authority to make any report in respect of the Co-operative Bank and under the law the Managing Committee of the Cooperative Bank could not be dissolved by the impugned Notification dt. 1-3-1977.

(b) The impugned Notification dt. 1-3-1977 is void as the Governor exercised his power without any report from the Registrar of Cooperative Societies, West Bengal or from the Central Registrar appointed under the Multi-unit Co-operative Societies Act, 1942 and issued it under political pressure.

(c) The impugned Notification dt. 14-1-1981 has been issued in mala fide exercise of power out of extraneous considerations of serving the interest of the ruling political party and the Board of Administrators has been reconstituted without including a Senior Railway Officer as Chairman, although the Board reconstituted by Notification dt. 29-2-1980 was running the business of the bank impartially to advance the interests of the bank without looking into the interest of the ruling political party.

3. The respondent 1, Union of India and the respondent 2 Central Registrar of Cooperative Societies have appeared in the proceeding but have not filed any return.

4. The respondent 3 Secretary, Cooperation Department, Government of West Bengal, the respondent 4, the Deputy Secretary of the said department and the respondent 5 Registrar of Co-operative Societies, West Bengal have opposed the writ petition by filing affidavit-in-opposition on 18-8-1981, to repel the ground of challenge taken in the writ petition.

5. The respondent 6 is the Co-operative Bank itself and although it appeared through its learned advocate on 5-4-1982 no affidavit was filed on its behalf till 10-4-1984 which was the second day of hearing arguments in this case.

6. The respondents 7 to 9 were members of the Board of Administrators reconstituted by the impugned Notification dt. 29-2-1980 (Annexure 'B' to the writ petition) and the respondents 10 to 12 are the members of the Board of Administrators as reconstituted by the impugned notification dt. 14-1-1981 (Annexure 'C' to the writ petition). They have not appeared in the proceeding after service of the Rule.

7. The respondent 6 in the affidavit filed on its behalf has impugned the three notifications in question on grounds other than those stated in the writ petition. These grounds are as follows: --

(i) From before the impugned notification dt. 1-3-1977, the Co-operative Bank has been a primary co-operative bank governed by Part V of the Banking Regulation Act 1949 and so no step for immediate dissolution of the Managing Committee of the Co-operative Bank and appointment of Administrator could be taken without consultation with the Reserve Bank of India as required by the mandatory provisions of the second proviso to Sub-section (1) of Section 26 of the West Bengal Co-operative Societies Act 1973 (herein after called the State Act, 1973).

(ii) The respondent 6 co-operative bank was registered as an insured bank under the Deposit Insurance and Credit Guarantee Corporation Act 1961 (hereinafter called Deposit Insurance Act 1961) with effect from 1-9-1976 and as no approval of the Reserve Bank of India was obtained by the State Government for appointment of the Administrator as required by Section 140 of the State Act 1973 the impugned notification dt. 1-3-1977 is illegal and void.

8. The petitioners thereafter filed an application for amendment for the writ petition on 10-4-1984 at the stage of hearing arguments to introduce the two identical grounds taken on behalf of the respondent 6 in its affidavit, although the petitioners have not taken those grounds even in their reply or rejoinder filed on 9-4-1984 to the affidavit-in-opposition of the respondents 3 to 5.

9. Mr. Chatterjee appearing for the petitioners (respondents) has strongly opposed the application for amendment of the writ petition to introduce the two new grounds giving rise to a mixed question of law and fact at the stage of hearing arguments, without giving any inkling thereof in the affidavits filed earlier and has also commented on the belated filing of affidavit on behalf of the respondent 6. He has relied on the observation of the learned Judge Pathak, J. in S. S. Sharma v. Union of India, : (1981)ILLJ381SC in which it has been observed at page 591 (para 6): --

'We are of opinion that the Court should ordinarily insist on the parties being confined to their specific written pleadings and should not be permitted to deviate from them by way of modification or supplementation except through the well known process of formally applying for amendment.'

On the other hand Mr. Dutta appearing for the petitioners has referred to the Bench decision of this Court in M. Dutt & Co. v. U. C. Law, (1964) 68 Cal WN 179 in which it has been held that where a question of jurisdiction is involved the revisional Court can allow the petitioner to raise a point not taken in the trial Court and although no Rule was issued on that ground, to do justice between the parties after giving the other party opportunity to meet the point. Mr. Datta has also cited a case viz. Seikh Md. v. Collector of Customs, : AIR1966Cal237 where the learned Judge Banerji, J. followed the aforesaid Bench decision while deciding a writ petition. Ultimately Mr. Datta has endorsed the well known principle that the Court should ordinarily restrict the parties to their pleadings and has pressed the application for amendment of the writ petition. On the question of delay he has relied on the decision of the Judicial Committee in Estate and Trust Agencies v. S. I. Trust, AIR 1937 P. C. 265, 270 that an application for prohibition or certiorari is never too late as long as there is something left for it to operate upon.

10. Mr. Chatterjee while expressing his objection to the amendment being allowed at the very late stage, has not asked for time to file reply or rejoinder to the affidavit of the respondent 6 in which identical points which are sought to be introduced by the petitioners' application for amendment, have been pleaded. Mr. Chatterjee has submitted that already the interests of the co-operative bank have been in jeopardy during the continuance of the interim order passed by this Court and that if the interim order be not vacated there is very urgent necessity of disposal of the writ petition. Mr. Chatterjee has therefore submitted that subject to his objection, he is ready to meet the points raised by the respondent 6 and sought to be pleaded by the petitioners in their application for amendment.

11. After considering the submissions made by the learned advocates for the parties and having regard to the fact that the impugned notification dt. 1-3-1977 on the face of it does not disclose that Reserve Bank of India had been consulted before it was issued and that nothing has been placed before this Court from the office record of the proceedings leading to the issue of the said notification produced by the respondents 3 to 5 showing prior consultation with the Reserve Bank of India, I find that for complete adjudication of all questions in controversy relating to the validity of the said notification, the application for the amendment to the writ petition should be allowed Another pertinent consideration which contributes to this decision is that it cannot be disputed that the co-operative bank in this case was at the relevant time a primary co-operative bank governed by Part V of the Banking Regulation Act 1949 and that it was registered as an insured bank in terms of Section 13A of the Deposit Insurance Act, 1961 (vide Annexure 'C' to the affidavit of the respondent 6). The application for amendment is, therefore, allowed. Notice of the amendment to the non-appearing respondents 7 to 12 is dispensed with as it is considered unnecessary.

12. From the submissions made on behalf of the petitioners and the respondent 6 challenging the three impugned notifications three points arise for decision viz. : --

(i) Whether or not the Registrar of Cooperative Societies, West Bengal (hereinafter called the State Registrar) had any authority to make a report of one or more of the circumstances mentioned in Section 26(1) of the State Act, 1973 to enable the State Government to issue the impugned notification dt. 1-3-1977 dissolving the Managing Committee of the Co-operative Bank;

(ii) Whether the provisions for prior consultation with the Reserve Bank in the second proviso to Sub-section (1) of Section 26 of the said Act are mandatory or directory; arid

(iii) Whether the provisions of Section 140(1)(c) of the said Act for dissolution of the Managing Committee of an insured co-operative bank by the Registrar, if so required by the Reserve Bank, exclude the operation of Section 26 of that Act. or controls that section.

13. Regarding the first point there is no substance in the contention of the petitioners that the State Registrar had no authority to make a report of the circumstances mentioned in Section 26(1) of the State Act 1973 as the cooperative bank in this case is governed by the Multi-unit Co-operative Societies Act 1942 (hereinafter called the Central Act), No doubt the co-operative bank which is registered under the State Act 1940 is governed by the Central Act as contemplated in Section 1(3) of the latter Act because its objects are not confined to any one State and its area of operation is West Bengal, Assam and parts of Bihar and U.P. Section 4(2) of the Central Act confers on the Central Registrar, to the exclusion of the State Registrar, the powers and functions exercisable by the State Registrar of the State in which any such co-operative society is actually registered. But at the same time, Section 5-B of the Central Act empowers the Central Government to direct by a notification that any power or authority exercisable by the Central Registrar shall in relation to such matters and subject to such conditions as may be specified in the direction be exereisable also by the State Registrar or other officer specified therein. In the present case the Central Government by notification No. L-11011/2/70-L & M dt. 30th Jan. 1976directed that the powers of the Central Registrar subject to certain restrictions which are not relevant for the present purpose, shall be exereisable in relation to the co-operative societies specified in col. (3) of the Table appended to the notification also by the officers specified in corresponding entry in col. (2) of the said Table, by the said notification the State Registrar, Additional Registrar and Joint Registrar of Co-operative Societies, West Bengal have been en oowered to exercise powers which include the power or authority to take action under Section 26(1) of the State Act, 1973, in respect of all Multi-unit Co-operative Societies which actually are or deemed to be registered in the State of West Bengal. The first paragraph of the said notification read with cols. (2) and (3) of the Table appended thereto makes this position clear. The delegation of power is subject to wider restrictions and control of the Central Registrar in respect of 14 societies mentioned in sub-para I below the first paragraph of the notification with which we are not concerned in this case. 1, therefore, find that the State Registrar had the authority to make a report of the circumstances mentioned in Section 26(1) of the State Act 1973, in consideration of which the State Government could issue the impugned notification dt. 1-3-1973 immediately dissolving the Managing Committee of the Co-operative Bank. The said notification gives reasons for such dissolution as reported by the State Registrar. The office record containing the report showing its actual existence prior to the notification in question has been produced before this Court. The objection as to the non-existence of such report is, therefore, baseless.

14. For dealing with the second ground of challenge to the notification dt. 1-3-1977 in question, it is necessary to quote the second proviso to Sub-section (1) of Section 26 of the State Act 1973 which runs as follows : --

'Provided further that no such step towards immediate dissolution of the State co-operative bank, any Central co-operative bank or such other co-operative bank as comes within the purview of Part V of the Banking Regulation Act, 1949, shall be taken by the State Government without consultation with the Reserve Bank'.

15. It cannot be disputed that the cooperative bank in this case wasat the relevant time and is a co-operative bank coming within the purview of Part V of the Banking Regulation Act 1949 as it was a primary cooperative bank because its primary object was and is to create funds to be put to members by receiving money by way of loans, deposits or otherwise from members, non-members and any other sources and its share capital with reserves was more than Rs. 1 lac and it did not have permission to admit as member, societies under its bye-laws. It is also not mentioned in the impugned notification was issued after consultation with the Reserve Bank. The first thing to be noticed in this connection is that the second proviso refers to 'dissolation of a State co-operative bank etc.' and not to dissolution of managing committee of such bank. But that in my view, is a drafting error as the preceding words 'Provided further that no such step towards immediate', make it sufficiently plain that it refers to the immediate dissolution of the managing committee of a co-operative society mentioned in the first proviso.

16. The question is whether the provision for consultation with the Reserve Bank in the second proviso though mandatory in form is really compulsory or it is only directory without implied nullification of the notification for breach thereof. It has been submitted on behalf of the petitioners that the provision for consultation with the Reserve Bank is mandatory as it was introduced by amendment in 1974 and the Legislature would not have introduced it if it did not intend it to be obligatory or compulsory. But it appears that a similar provision was already in the State Act 1973 and all that was done by the amendment in 1974 was to include 'such other co-operative bank as comes within the purview of Part V of the Banking Regulation Act 1949'. Reference has been made on behalf of the petitioners to the decision in State of U.P. v. Baburam Upadhya, : 1961CriLJ773 in which the Court formulated the relevant rules for interpretation as under (at p. 765): --

'When a statute uses the word 'shall', prima facie it is mandatory, but the Court may ascertain the real intention of the Legislature by carefully attending to the whole scope of the statute. For ascertainment of the real intention of the Legislature, the Court may consider, inte alia, the nature and the design of the statute, and the consequences which would follow from construing it the one chain or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, viz. that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom and above all whether the object of the Legislature will be defeated or furthered.'

Reference has also been made to the following observations in Craies on Statute Law 7th Edn. at page 263: --

'If the requirements of a statute which prescribes the manner in which something is to be done are expressed in negative language that is to say, if the statute enacts that it shall be done in such a manner and in no other manner, it has been laid down that those requirements are in all cases absolute and that neglect to attend to them will invalidate the whole proceeding'.

But in the present case the statute does not prescribe that the Act shall be done 'in no other manner'.

17. On other hand Mr. Chatterjee appearing for the respondents 3 to 5 has relied on the well-known decision of the Supreme Court in State of U.P. v. M. L. Srivastava, : (1958)IILLJ273SC decided by five learned Judges of the Court in which it has been held that the provisions of Article 320(3)(c) of the Constitution are not mandatory and non-compliance with the provisions does not afford a civil servant a cause of action in a Court of law. The learned Judge Sinha, J. delivering the judgment quoted the following observation of the Judicial Committee of Privy Council in Montreal Street Railway Company v. Normandin, 1917 AC 170 : (AIR 1917 P C 142) as follows: --

'Where the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who had no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable not affecting the validity of the acts done.'

The principle laid down was adopted by the Federal Court in Biswanath Khemka v. Emperor, AIR 1945 FC 67 in which the . provisions of Section 256 of the Government of India Act 1935 were held to be not mandatory although the words of the section were very emphatic and prohibitory in character. Mr. Chatterjee has also cited the recent decision of the Supreme Court in Ajit Singh v. State of Punjab, : (1983)ILLJ410SC in which the aforesaid decisions have been considered and it was held the question depends on the intent of the Legislature and not upon the language in which the intent is clothed.

18. In my view, in the present case the provision of the second proviso to Section 26(1) of the said Act, 1973 is not mandatory in the sense that non-compliance with it would render the notification in question invalid. Consultation does not mean concurrence and even if the Reserve Bank disagreed, the State Government would have been free to take steps for immediate dissolution of the managing committee of the concerned co-operative society. The consequence of non-compliance is, therefore, trivial. The said provision also does not say what will happen in case of non-compliance or that any penalty of serious consequence will follow from it. The object of the legislation is to dissolve immediately the managing committee of a mismanaged cooperative society and it will not be defeated by such non-compliance. To nullify the notification in question issued in neglect of the duty mentioned in the second proviso would work serious general inconvenience to the large majority of share-holders and depositors of the co-operative bank who had no control over the State Government entrusted with the duty and at the same time would not promote the main object of the Legislature. Having regard to these aspects and the nature of the second proviso in question laying down the duty of consultation only with the Reserve Bank, non-compliance with it has not, in my opinion, rendered the impugned notification dt. 1-3-1977 invalid or a nullity.

19. The only other point raised to challenge the impugned notifications is that the operation of Section 26(1) of the State Act 1973 is excluded or controlled by the provisions of Section 140(1)(c) of the said Act which runs as follows : --

'140. Insured Co-operative Banks.--Notwithstanding anything contained in this Act.--

(1) in respect of an insured co-operative bank (mentioned in this clause as the said bank) --

(a) to (b) *****

(c) If so required by the Reserve bank in the public interest or for preventing the affairs of the said bank from being conducted in a manner detrimental to the interests of the depositors or for securing the proper management of the said bank, the Registrar shall, by an order in writing giving reasons therefor,--

(i) dissolve the managing committee of the said bank, and

(ii) appoint, with the approval of the Reserve Bank an Administrator in respect of the said Bank in such period or periods not exceeding five years in the aggregate, as may, from time to time, be specified by the Reserve Bank;'

20. In the Explanation to the said section it is provided that for the purpose of that section 'Insured co-operative bank' means a co-operative bank which is an insured bank within the meaning of Clause (i) of Section 2 of the Deposit Insurance Corporation Act 1961.

21. In my view, the expression 'notwithstanding anything contained in the Act' properly construed does not exclude the operation of Section 26(1) of the said Act 1973 in respect of an insured co-operative bank, even if it be assumed that in this case the cooperative bank is an insured cooperative bank. Section 140 is an additional or supplemental provision directing the State Registrar to dissolve the managing committee of an insured bank if so required by the Reserve Bank. It does not take away or exclude the general powers of the Registrar or the State Government to dissolve the managing committee of any co-operative society under Section 26(1) of the Act. If the Legislature thought that the aforesaid two sets of provisions would be conflicting in their operation in relation to an insured co-operative bank or intended to supersede Section 26(1) in the case of an insured bank, the non obstante clause would have been worded differently and the wording would have been 'notwithstanding anything to the contrary contained in this Act'. In this case the non obstante clause in Section 140 does not limit the ambit and scope of the operative part of Section 26(1). The two sets of provisions operate in the case of an insured co-operative bank in two different sets of contingencies contemplated therein. Moreover, it is a basic rule of interpretation that if it is possible to avoid a conflict between two provisions on a proper construction thereof, then it is the duty of the Court to so construe them that they are in harmony with each other. The statute must be read as a whole and every provision in the statute must be construed with reference to the context and other clauses in the statute so as to make a consistent enactment of the whole statute as far as possible. Mr. Chatterjee has also contended that the co-operative bank in this case does not come within the definition of 'insured cooperative bank' within the meaning of Clause (i) of Section 2 of the Deposit Insurance Act 1961 read with Clause 'gg' thereof. But it is not necessary to deal with that question as I hold that Section 140(1)(c) is an additional provision for dissolution of managing committee of an insured co-operative bank, even assuming that the co-operative bank in this case comes within that category and it does not control or exclude the operation of Section 26(1) of the State Act 1973.

22. No other point has been raised at the hearing in support of the writ petition.

23. In the result, I find that the writ petition has no merit and must fail. The Rule is discharged. The interim order made in this Rule is vacated. There will be no order as to costs.

24. On the oral submission made on behalf of the petitioners, the operation of the order is stayed for three weeks from today although the prayer is opposed on behalf of the respondents 3 to 5.


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