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K.S. Radhakrishnan and Dipak Misra, JJ.
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State of M.P. and others v. Sanjay Nagayach and others
flfoy vihy Øekad 4691 lu~ 2013 ¼,l-,y-ih- ¼flfoy½ Ø- 6860 lu~ 2012 ls mRiUu½ rFkk flfoy vihy Øekad 4692 lu~ 2013 ¼,l-,y-ih- ¼flfoy½ Ø- 13125 lu~ 2012 ls mRiUu½% ¼2012 jk-fu- 252 esa laizdkf’kr½( fu.khZr fnukad 16-5-2013-
Civil Appeal No. 4691 of 2013 [Arising out of SLP (Civil) No. 6860 of 2012] and Civil Appeal No. 4692 of 2013 [ Arising out of SLP (Civil) No. 13125 of 2012]: [reported in 2012 RN 252]; Decided on 16.5.2013.
(1) Cooperative Societies Act, 1960 (M.P.) -- S. 53 (1), second proviso -- Reserve Bank of India Act, 1934 -- S. 22 -- Banking Law (Application to Cooperative Societies) Act, 1965 -- S. 55 -- Banking Regulation Act, 1949 -- S. 35 -- Deposit Insurance and Credit Guarantee Corporation Act, 1961 -- S. 2(gg) (iii) National Bank of Agricultural and Rural Development Act, 1981 -- S. 2 (d) -- applicability of -- applied to cooperative bank -- supersession of Board of Directors -- prior consultation of Reserve Bank is mandatory. [Paras 10 to 17
(2) Interpretation of Statutes -- M.P. Cooperative Societies Act, 1960 -- S. 53(1), second proviso -- meaning of -- clear and unambiguous -- no interpretation or explanation called for. (2009) 3 SCC 553 and (2010) 5 SCC 1 relied on. [Para 15
(3) Cooperative Societies Act, 1960 (M.P.) -- S. 53 (1), second proviso -- expression ‘consultation’ -- for examining meaning of -- six propositions laid down by Supreme Court in 1993 Supp. (1) SCC 730 -- one more added as such -- when outcome of proposed action about supersession -- is oust democratically elected body -- expression used “shall not be passed without previous consultation”. (1987) 2 SCR 1, 1992 Supp. (1) SCC 548, (2002) 4 SCC 524 and (2008) 7 SCC 203 relied on. [Paras 16 and 17
(4) Cooperative Societies Act, 1960 (M.P.) -- Ss. 49 (7-A) (i), proviso and 53 (1), second proviso -- Board of Directors elected for five years -- illegally superseded in violation of second proviso to section 53 (1) -- order of supersession set aside -- period during which Board of Directors remained under supersession -- be excluded in computing period of five years -- direction given to Joint Registrar, Cooperative Societies to put Board of Directors back in office for period which they were out of office. [Paras 23 to 26
(5) Constitution of India -- Arts. 226 and 227 -- alternative remedy of appeal -- order of supersession of Board of Directors passed by Joint Registrar -- arbitrary and in clear violation of second proviso to section 53(1) of M.P. Cooperative Societies Act, 1960 -- such alternative remedy is not bar in exercing writ jurisdiction. [Para 27
(6) Cooperative Societies Act, 1960 (M.P.) -- S. 53 (1) -- powers under -- must be exercised bona fide and within four corners of statute -- elected Board of Directors -- cannot be superseded by acting under extraneous influence, under dictation and by illegal order -- statutory functionaries -- duty of -- must be functionaries -- duty of -- must be function independently without external pressure. [Paras 28 to 30
(7) Precedent -- ratio decidendi -- has force of law and is binding on all statutory authorities on similar issues -- Registrar/Joint Registrar is bound to follow judicial precedents -- 1972 JLJ 435, 1981 JLJ 774 and 1986 RN 403 = 1986 JLJ 656 why overlooked by Joint Registrar -- judicial rulings and principles -- are meant to be followed by statutory authorities. [Paras 31 and 32
(8) Cooperative Societies Act, 1960 (M.P.) -- S. 53 (1), second proviso -- elected Board of Directors -- supersession order passed by Joint Registrar -- order in gross violation of second proviso -- cost of Rs. 10,000/- imposed against Joint Registrar -- which will be deducted from his salary.
[Paras 33 to 34
(9) Constitution of India -- Arts. 136 -- M.P. Cooperative Societies Act, 1960 -- S. 53 (1), second proviso -- elected Board of Directors -- supersession in violation of proviso -- order of supersession set aside by High Court -- without following binding precedents of High Court -- State Government has spent huge public money by litigating the matter upto Supreme Court -- both appeals dismissed with cost -- cost of Rs. 1,00,000/- against State Government and Rs. 10,000/- against Joint Registrar imposed. [Paras 28, 33 and 34
(10) Court -- discretion of -- elected committees -- supersession of -- order of supersession challenged in various Courts -- for justification in this regard -- general directions given by Supreme Court. [Para 35
Radhakrishnan, J. 1. Leave granted.
2. We are, in this case, concerned with the legality of an order passed by the Joint Registrar of the Cooperative Societies, Sagar Division, Sagar, M.P., superseding the Board of Directors of District Cooperative 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 Cooperative Societies Act, 1960 [for short ‘the Act’].
3. 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.
4. 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.
5. 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.
6. 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 Cooperative 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. Satyawati 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 other materials to RB
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