IMPORTANT POINTS
Section 51(1), Proviso, is mandatory.
Statutory functionaries are required to function independently not under extraneous influence or dictates

JUDGMENT :-

K.S. Radhakrishnan, J.

Leave granted.

1. We are, in this case, concerned with the legality of an order passed by the Joint Registrar of the Co-operative Societies, Sagar Division, Sagar, M.P., superseding the Board of Directors of District Co-operative Central Bank Ltd., Panna without previous consultation with the Reserve Bank of India, as provided under the second proviso to Section 53(1) of the Madhya Pradesh Co-operative Societies Act, 1960 [for short ‘the Act’].

2. The Board of Directors of the Bank challenged the above mentioned order on various grounds, including the ground of violation of the second proviso to Section 53(1) of the Act that is non-consultation with the Reserve Bank of India [RBI] before taking a decision to supersede the Board of Directors. The order was challenged by the Board of Directors by filing a writ petition before the High Court of Madhya Pradesh, Jabalpur Bench. Learned single Judge of the High Court disposed of the writ petition directing the parties to avail of the alternative remedy provided under Section 78 of the Act. But on appeal, the Division Bench of the High Court set aside the order of supersession dated 30.9.2011 on the ground of non-compliance of the second proviso to section 53(1) of the Act. Aggrieved by the same, the State of M.P., through its Principal Secretary, Department of Co-operation, the Commissioner Cum Registrar, Co-operative Societies, Bhopal and the Joint Registrar, Co-operative Societies, Sagar, have come up with Civil Appeal No. ......... of 2013 [arising out of SLP No. 6860 of 2012] and a private party filed Civil Appeal No. ........... of 2013 [arising out of SLP No. 13125 of 2012] challenging the judgment of the High Court dated 13.2.2012, followed by lot of intervening applications.

3. As the question of laws involved in both the above mentioned appeals are common, we are disposing of both the appeals by a common judgment.

Facts and Arguments

4. The Board of Directors of the Bank was elected to Office on 16.10.2007 and while in office they were served with a show-cause-notice dated 2.3.2009 issued by the Joint Registrar, Co-operative Societies under Section 53(2) of the Act containing 19 charges. Detailed replies were sent by the Board of Directors on 6.5.2009 and 16.5.2011 stating that most of the charges levelled against them were related to the period of the previous Committee and the rest were based exclusively on an Audit Report dated 25.9.2008. It was pointed out that the Board of Directors on receipt of the Audit report took necessary action and a communication dated 5.12.2008 was sent to the Branch Managers of Primary Societies to take immediate follow-up action on the basis of the Audit report. After filing the detailed reply, nothing was heard from the Joint Registrar but due to political pressure and extraneous reasons after two and half years of the show cause notice, an order of supersession was served on the Board, followed by the appointment of an Administrator in gross violation of the second proviso to Section 53(1) of the Act.

5. Dr. Abhishek M. Singhvi, learned senior advocate appearing for the State, submitted that the High Court was not justified in interfering with the order of supersession passed by the Joint Registrar, while an alternative remedy was available under Section 78 of the Act by way of an appeal before the Co-operative Tribunal. Learned senior counsel placed reliance on the judgments of this Court in Harbanslal Sahnia and Another v. Indian Oil Corpn. Ltd. and Others (2003) 2 SCC 107), United Bank of India v. Satyaw ati Tondon and Others (2010) 8 SCC 110 and Om Prakash Saini v. DCM Ltd. and Others (2010) 11 SCC 622). Learned senior counsel also submitted that the Division Bench of the High Court has not correctly appreciated the scope of the second proviso to Section 53(1) of the Act. Learned senior counsel also pointed out that the Joint Registrar has forwarded the show-cause notice dated 23.2.2009 along with othe