1969 Supreme(Mad) 376

Madras High Court
K.VEERASWAMI,RAMAPRASADA RAO,GOKULAKRISHNAN
Joint Registrar of Co-operative Societies, Madras - Appellant
Versus
P.S.Rajagopal Naidu - Respondent
Decided On : 10/08/1969

The Registrar of Co-operative Societies cannot unilaterally act and base his penal action solely on his subjective satisfaction. The committee as a statutory body is a permanent and a continuous one. Any change in the personnel of the committee would not effect a consequential change, in any manner whatsoever, in the statutory body as such. The acts of commission and omission of the previous committee can be mechanically attributed to the succeeding committee.

Headnote:

CO-OPERATIVE SOCIETIES - SUPERSESSION OF COMMITTEE - JURISDICTION OF REGISTRAR - SCOPE AND CONTENT OF S. 72 OF THE MADRAS CO-OPERATIVE SOCIETIES ACT, 1961 - OPINION OF REGISTRAR - SUBJECTIVE SATISFACTION - OBJECTIVE STANDARDS - NECESSITY - CONTINUITY OF COMMITTEE - ACTS OF PREVIOUS COMMITTEE - ATTRIBUTION TO SUCCEEDING COMMITTEE.

Fact of the Case:

The Joint Registrar of Co-operative Societies issued a notice of supersession, purporting to supersede, under S. 72 of the Act, the committee in charge of a co-operative society by name The North Arcot District Co-operative Supply and Marketing Society Ltd., Vellore. 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 of 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 Society and to place the Society 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 S. 96(2) of the Act were unsuccessful.

Finding of the Court:

The Court held that the Registrar of Co-operative Societies cannot unilaterally act and base his penal action solely on his subjective satisfaction. The Court further held that the committee as a statutory body is a permanent and a continuous one, and any change in the personnel of the committee would not effect a consequential change, in any manner whatsoever, in the statutory body as such. The Court also held that the acts of commission and omission of the previous committee can be mechanically attributed to the succeeding committee.

Issues: 1. Whether the Registrar of Co-operative Societies can unilaterally act and base his penal action solely on his subjective satisfaction? 2. Whether the committee as a statutory body is a permanent and a continuous one? 3. Whether any change in the personnel of the committee would effect a consequential change, in any manner whatsoever, in the statutory body as such? 4. Whether the acts of commission and omission of the previous committee can be mechanically attributed to the succeeding committee?

Ratio Decidendi: 1. The Court held that the Registrar of Co-operative Societies cannot unilaterally act and base his penal action solely on his subjective satisfaction. The Court reasoned 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. The Court agreed 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. 2. The Court held that the committee as a statutory body is a permanent and a continuous one. The Court reasoned that 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. 3. The Court held that any change in the personnel of the committee would not effect a consequential change, in any manner whatsoever, in the statutory body as such. The Court reasoned that 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. 4. The Court held that the acts of commission and omission of the previous committee can be mechanically attributed to the succeeding committee. The Court reasoned that 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.

Final Decision: The writ appeals were dismissed, but in the circumstances, there was no order as to costs.