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1956 Supreme(Mad) 251

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Rajagopalan and Rajagopala Ayyangar, JJ.
V. Sundaram Iyer
Versus
Deputy Registrar of Co-operative Societies, at Sivaganga
W.P. Nos. 853, 914, 915, 920 and 258 to 263 of 1955.
Decided On : 31 July 1956

Advocates:
K. Rajah Aiyar, A. Sundaram Aiyar, M. Natesan, G. R. Jagadeesan and R. Rangachari, for the petitioners.
The Advocate-General (V.K. Tiruvenkatachari), the Special Government Pleader (V.V. Raghavan), K.S. Naidu and M. M. Ismail, for the Respondents.

Rajagopala Ayyangar, J.-These writ petitions are for the issue of writs of prohibition restraining the Deputy Registrar of Co-operative Societies from proceeding with certain plaints filed before him under S. 51 of the Co-operative Societies Act, and they raise for consideration mainly the proper construction of certain sections of that enactment to which we shall advert presently. These petitions fall into two major divisions and each relates to two co-operative societies which have now been superseded and whose management has now been vested in special officers appointed by the Registrar of Co-operative Societies. W.P. Nos. 853, 914, 915 and 920 of 1955 arise out of claims made on behalf of the Sivaganga Co-operative Urban Bank, Ltd., while W.P. Nos. 258 to 263 of 1955 relate to claims preferred on account of the Karaikudi Co-operative Stores, Ltd. It will be necessary to set out in brief outline the facts and the allegations on the basis of which claims have been made against the petitioners in the several writ petitions, who are ex-directors of these societies, in order to appreciate the point raised on their behalf.

W.P. No. 853 of 1955 and 920 of 1955 seek the issue of writs of prohibition restraining the Deputy Registrars of Co-operative Societies, who have been impleaded as the first respondent, from proceeding with the enquiry in A.R.C. No. 6239 of 1953-54 filed by the Special Officer appointed to manage the affairs of the Sivaganga Co-operative Urban Bank, Ltd., W.P. No. 853 of 1955 being by the ex-director-President, while W.P. No. 920 of 1955 is by eight other ex-directors who all have been impleaded as several defendants in this claim. The affairs of this banking institution appear to have given rise to a number of complaints with the result that an enquiry was ordered into the affairs of this institution by the Registrar on 17th January, 1954, under section 38 of the Co-operative Societies Act. The operative part of this section provides:

“38.(1) The Registrar may, of his own motion, and shall on the request of the Collector, or on the application of a majority of the committee or of not less than one-third of the members, hold an enquiry, or direct some person authorised by him by order in writing in this behalf to hold an enquiry into the constitution, working and financial condition of a registered society”.

The Board was superseded on 19th February, 1954 and a Special Officer was appointed in the place of the Board by an order of the Registrar, dated 26th February,1954. The enquiring officer submitted an interim report on 28th June, 1954, in the course of which he reported the irregularities, one of which is that which forms the subject-matter of the plaint A.R.C. No. 6239 of 1953-54 with which W.P. Nos. 853 and 920 of 1955 are concerned. In this plaint under section 51 of the Cooperative Societies Act filed by the Special Officer, it is stated that the Secretary of the Bank, impleaded as the first defendant in the case, had advanced moneys to the Secretary of the Raja Doraisingam Memorial College in breach of the rules of the Society and that whereas the books of the Society showed that a sum of Rs.48,800 was still outstanding from the college authorities, the latter’s books showed only a sum of Rs. 14,100 and the college authorities had disclaimed liability for the rest. The Secretary of the Co-operative Society was charged with fraud and misappropriation of this difference and similar charges were made against the directors, including the petitioner in W.P. Nos. 853 and 920 of 1955. In paragraph 11 of the plaint, the Special Officer stated:

“The directors have been privy to the fraud and have so contrived by their fraud to conceal it from the auditors, departmental officers and the general body and the bank in general and was revealed to the bank only sometime after the supersession of the board”.

On this basis, a claim is made against the defendants, including the petitioner in W.P. Nos. 853 and 920 of 1955,

























































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