Judgement

BHAGWATI, C.J.I. (On behalf of himself and Oza, J.) (Minority view) : - This case has had a chequered history and it is necessary to state the facts in some details in order to appreciate the questions which arise for determination before us. The principal actor in the drama in this case is Dr. Jagannath Mishra, one time Chief Minister of the State of Bihar. The main controversy around which all questions revolve is whether the prosecution launched against Dr. Jagannath Mishra at a time when he was not in power has been rightly allowed to be withdrawn by the Chief Judicial Magistrate or whether such withdrawal is invalid and must be set aside so that the prosecution can continue against Dr. Jagannath Mishra.

2. The fact-situation out of which this case arises relates to the affairs of a Co-operative Bank called the Patna Urban Co-operative Bank (hereinafter referred to as the a Co-operative Bank). The Co-operative bank was registered in May 1970 and it commenced its banking business with Nawal Kishore Sinha as its Chairman, K. P. Gupta as its Honorary Secretary, M. A. Hydari as its Manager and A. K. Singh as a loan clerk. It was not seriously disputed that most of the members of the Co-operative Bank were closely associated with Nawal Kishore Sinha. The object of the Co-operative Bank was to help people financially to set up small industries and businesses and to assist people in ordinary circumstances to carry on their vocation or business. There was a subcommittee formed, called "Loan Sub Committee", consisting of Nawal Kishore Sinha, K. P. Gupta and one Purnendu Narain an Advocate, to attend to the work of sanctioning and granting of loans. The Chairman, i.e., Nawal Kishore Sinha, was according to the bye-laws the ultimate deciding authority in regard to all the functions of the Co-operative Bank and the Honorary Secretary, i.e., K. P. Gupta, along with the Chairman had to exercise supervisory control over all the activities of the Co-operative Bank, while the Manager, i. e. M. A. Hyderi, was concerned only with its day-to-day working. Dr. Jagannath Mishra who was then a Member of the Legislative Council was closely associated with Nawal Kishore Sinha and he helped the Co-operative Bank and Nawal Kishore Sinha in diverse ways in connection with the affairs of the Co-operative Bank and also assisted in mobilisation of resources for the Co-operative Bank . Sometime in 1974 separate audits into the functioning of the Co-operative Bank were carried out by the Reserve Bank of India as well as the Co-operative Department of the State of Bihar for the years 1972-73 and 1973-74 and as a result of these audits, there came to light a large number of irregularities such as non-maintenance of cash books in a proper manner and grant of overdraft facilities without current account as also illegal practices and acts of defalcation and malversation of funds of the Co-operative Bank. The audit reports disclosed that huge amounts running into lakhs of rupees had been squandered away by giving loans to non-members, giving loans even without applications, agreements or promissory notes, giving loans without hypothecation or security, giving short term loans instead of realising cash from sale proceeds of ,hypothecated goods, giving loans to the same persons in different names and giving loans to fictitious persons and non-existing firms or industries. There were instances where loans had been granted on the security of Gandhi Maidan and Patna Railway Station. The audit team of the Reserve Bank in its Report came to the conclusion that Nawal Kishore Sinha and others were responsible for bad loans to the tune of Rs. 12 lakhs and misappropriation and embezzlement of funds to the extent of Rs. 25 lakhs.

3. On the basis of these audit reports, the Registrar Co-operative Societies, at the instance of the Reserve Bank, made an order on 10th July 1974 superseding the management of the Co-operative Bank, removing Naval Kishore Sinha and other Di