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High Court Of Orissa
R. N. Misra And B. K. Ray, JJ.
SARAT CHANDRA PANDA - Appellant
Versus
STATE OF ORISSA - Respondent
Original Jur. Case 499 Of 1978
Decided On : 10/06/1978
CO-OPERATIVE SOCIETIES - SUPERSESSION OF COMMITTEE - CONSULTATION WITH FINANCING BANK - MANDATORY REQUIREMENT - NOTICE ISSUED WITHOUT CONSULTATION - JURISDICTION OF REGISTRAR - WRIT APPLICATION - ALLOWED.
Fact of the Case:
The Aska Central Multipurpose Co-operative Society Limited (the 'society') is a society registered under the Orissa Co-operative Societies Act of 1962 (the 'act'). The petitioner and opposite parties Nos. 4 to 13 are members of its Committee of management. The present Committee was formed on 9-1-1977. The Society has as its financing bank the Aska Central Co-operative Bank and is indebted to the Bank. The committee of Management received a notice dated 14-2-1978 from the registrar of Co-operative Societies, opposite party No. 2, purporting to be under Section 32 (1) of the Act calling upon it to show cause why it may not be superseded by the Registrar in exercise of his powers under that section. Petitioner contends that as a condition precedent to the issue of notice under section 32 (1) of the Act, the financing Bank had to be consulted as required by sub-section (4) of Section 32 of the Act and, in the absence of consultation, the initiation of the proceeding is without jurisdiction and has to be quashed.
Finding of the Court:
The Court held that the Registrar had no jurisdiction to issue the notice under section 32 (1) of the Act without consulting the financing bank, as required by sub-section (4) of Section 32 of the Act. The Court further held that the notice was liable to be quashed.
Issues: Whether the Registrar had jurisdiction to issue the notice under section 32 (1) of the Act without consulting the financing bank, as required by sub-section (4) of Section 32 of the Act.
Ratio Decidendi: The Court held that sub-section (4) of Section 32 of the Act, which requires consultation with the financing bank before taking any action under Sub-section (1), is mandatory. The Court interpreted the phrase "any action" in Sub-section (4) to refer to the entire process indicated in sub-section (1), namely, formation of tentative opinion, issue of notice giving opportunity to the Committee to state its objection, recording an order in writing for supersession etc. The Court further held that the initiation of a proceeding under Section 32 (1) of the Act has a very adverse effect on the working of the society and, therefore, the Legislature advisedly asked for consultation with the financing Bank from the very commencement of the proceeding.
Final Decision: The Court allowed the writ application and quashed the impugned notice.
R. N. MISRA, J.
( 1 ) THE Aska Central Multipurpose Co-operative Society Limited, opposite party no. 3, (hereinafter referred to as the 'society') is a society registered under the orissa Co-operative Societies Act of 1962 (hereinafter referred to as the 'act' ). Petitioner and opposite parties Nos. 4 to 13 are members of its Committee of management. The present Committee was formed on 9-1-1977. The Society has as its financing bank the Aska Central Co-operative Bank and as stated in para. 6 of the writ application, the Society is indebted to the Bank. The committee of Management received a notice dated 14-2-1978 from the registrar of Co-operative Societies, opposite party No. 2, purporting to be under Section 32 (1) of the Act calling upon it to show cause why it may not be superseded by the Registrar in exercise of his powers under that section. Petitioner contends that as a condition precedent to the issue of notice under section 32 (1) of the Act, the financing Bank had to be consulted as required by sub-section (4) of Section 32 of the Act and, in the absence of consultation, the initiation of the proceeding is without jurisdiction and has to be quashed.
( 2 ) OPPOSITE parties Nos. 4, 6, 7 and 9 have appeared through different counsel and counsel for opposite parties Nos. 4 and 6 at the hearing support the petitioner's stand. The application is opposed by opposite parties Nos. 1, 2 and 11 represented by learned Additional Government Advocate. A counter-affidavit on behalf of these contesting opposite parties has also been filed wherein it has not been disputed that there has been no consultation with the financing Bank before issue of the impugned notice and it has been maintained that such consultation at that stage is not warranted by law. It is further contended that the writ application is premature and since the final order of supersession is open to appeal and revision, alternate remedy is available and this Court should not examine the merit of the matter in view of Article 226 (3) of the constitution.
( 3 ) THERE does not seem to be any force in the contention of the contesting opposite parties that alternate remedy is available against the final order, because the objection of the petitioner is that the proceeding itself is without jurisdiction as the basic precondition of consultation with the financing Bank has not been satisfied before initiation of the proceeding. The material question for consideration, therefore, is whether petitioner's contention is acceptable.
( 4 ) SUB-SECTIONS (1) and (4) of Section 32 of the Act, which are material for our purpose, may now be extracted.
"32. Super session of Committee and power to disqualify officers of the society :-(1) If, in the opinion of the Registrar, the Committee of any society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws, or commits any act which is prejudicial to the interest of the society or its members, or is otherwise not functioning properly, the Registrar may after giving the Committee an opportunity to state its objections, if any, by order in writing, stating reasons therefore, remove the Committee; and (a) appoint a new committee consisting of one or more members of the society in its place; (b) appoint one or more Administrators who need not be members of the society; or (c) appoint any other society with its consent; to manage the affairs of the society for a period not exceeding two years specified in the order and the said period may, at the discretion of the Registrar, be extended from time to time, so however that the aggregate period does not exceed four years. xxxxx (4) Before taking any action under Sub-section (1) in respect of a society, the Registrar shall consult the financing Bank to which it is indebted and consider the opinion, if any, received from such Bank. " according to the petitioner, even before issue of the notice with which steps under
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