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1973 DIGILAW 320 (KAR)

HUBLI MUSLIM CO-OPERATIVE BANK LTD. v. I. M. KIREETAGERI

1973-11-13

K.J.SHETTY

body1973
( 1 ) THE Hubli Muslim Co-operative Bank Ltd. , which I shall call as 'the bank' was ordered to be wound up by the Registrar of Co-operative societies, under S. 72 of the Karnataka Co-operative Societies Act, 1959, hereinafter referred to as 'the Act'. The Registrar has appointed the 5th respondent as the Liquidator under S. 73 (1) of the Act. The appeal preferred by the Bank before the State Government was dismissed. In this petition under Art. 226, the Bank and its Directors have challenged the validity of the orders. ( 2 ) THE only question involved in this petition is whether it was obligatory for the Registrar to have issued a notice before he made the order for the winding up of the Bank. The action was taken under S. 72 of the act. The said section does not state that a notice should be given before the Registrar makes an order directing the Bank to be wound up. It reads:" 72. Winding up of Co-Operative Societies.- (1) If the Registrar after an inquiry has been held under S. 64 or an inspection has been. made u/s. 65 or on receipt of an application made by not less than three-fourths of the members of a co-operative society, is of opinion that the society ought to be wound up, he may issue an order directing it to be wound up. (2) The Registrar may, of his own motion, make an order directing the winding up of a co-operative society- (a) where it is a condition of the registration of the society that the society shall consist of at least ten members and the number of members has been reduced to less than ten; or, (b) where the co-operative society has not commenced working or has ceased to work. (3) The Registrar may cancel an qrder tor the winding up of a co-operative society, at any time, in any case where in his opinion the society should continue to exist. "s. 73 of the Act states that the Registrar after making an order for winding up, may appoint a Liquidator tor the purpose. The order made by the registrar is appealable before the Government under S. 106. ( 3 ) MR. "s. 73 of the Act states that the Registrar after making an order for winding up, may appoint a Liquidator tor the purpose. The order made by the registrar is appealable before the Government under S. 106. ( 3 ) MR. Doddakalegowaa, learned High Court Government Pleader, contended that it is not proper to read into the section the necessity or issuing a notice as a condition precedent tor taking action under S. 72. He further said that whereever the legislature intended that a notice should be given to the Society, the Act specifically provides for it, and in the absence of such a provision he added, the Courts should not supply the omission in this context, he referred to S. 30 providing for the supersession of the Managing Committee of a Society and tne issuance or a show cause notice. While turning to S. 72, it has been said that the section is silent with regard to the issuance of any notice and that was tne legislative intent. ( 4 ) FOR the petitionter, it was argued that the action contemplated under S. 72 is more serious than the action to be taken under S. 30, and thereiore, it is all the more necessary that there should be a show-cause notice consistent with the principles of natural justice, before making an order directing the Bank to be wound up. ( 5 ) THE question here is does tne general principle of natural justice apply to a case like this ? Whenever a complaint is made that some principle of natural justice has been contiavenea, the Court nas to decide whether the observance of that rule was. necessary for a just decision of the case. We often speak of the rules of natural justice. But there is nothing rigid or mechanical a,bqut them. What they comprehend has been analysed and described in many authorities. In Union of India v. P. K. Roy, AIR. 1968 SC. 850. the Supreme Court observed at page 858 thus :". . . . . the extent and application of the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula. What they comprehend has been analysed and described in many authorities. In Union of India v. P. K. Roy, AIR. 1968 SC. 850. the Supreme Court observed at page 858 thus :". . . . . the extent and application of the doctrine of natural justice cannot be imprisoned within the strait-jacket of a rigid formula. The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon, the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case. "in Lala Shri Bhagwan v. Ram Chand, AIR. 1965 SC. 1767, it was stated that the authority or body given jurisdiction by statutory provisions to deal. with the rights of citizens, must act in accordance with the principles of natural justice before exercising its jurisdiction and its powers and that the obligation to follow the principles of natural justice need not be expressly imposed. ( 6 ) THE purpose of the rules of natural justice is to prevent the miscarriage of justice and to ensure ' fairplay in action'. The Registrar is invested with the power to make an order directing the winding up of a society. He has to form an opinion on the affairs of the Society, affecting its rights and duties. Then, is it fair that he should form his opinion without an opportunity to the Society to explain? The statute is no doubt silent on that question. But, the Courts will imply into the statuory prpvision a rule that the principles of natural justice should be applied. Lord Guest observed in Wiseman v. Boreneman, LR 1971 AC. 297. :" It is reasonably clear on the authorities that where a statutory tribunal has been set up to decide final questions affecting parties' rights and duties, if the statute is silent upon the question, the Courts will imply into the statutory provision a rule that the principles of natural justice should be applied. This implication will be made upon the basis that Parliament is not to be presumed to take away parties' rights without giving them an opportunity of being heard in their interest. In other words, Parliament is not to be presumed to act unfairly. " (Page 310 ). This implication will be made upon the basis that Parliament is not to be presumed to take away parties' rights without giving them an opportunity of being heard in their interest. In other words, Parliament is not to be presumed to act unfairly. " (Page 310 ). Upon these principles, I can see no reason why the principles of natural justice should not be applied by the Registrar entrusted with the power to make an order for the winding up of the Bank, before making such an order. ( 7 ) A question similar to the one before me came up for consideration before the High Court of Kerala, in Common Wealth Co-op. Society v. Joint registrar (General) of Co-op. Societies, AIR. 1971 Ker. 34. In that case, a society was ordered to be wound up under S. 51 (1) of the T. C. Co-operative Societies act, 1951. The provisions of the said section are identical with the provisions of s. 72 of the Act. Dealing with the scope of S. 51 (1) of the T. C. Co-operative Societies Act, 1951, Mathew, J. , as he then was observed :" The question whether the society has committed the acts or is guilty of the omissions is a question of fact. An adjudication of the facts without notice and an opportunity of being heard, when the adjudication will have serious civil consequences to the society is against the principles of natural justice. And even if the statute does not expressly provide for notice, the justice of the common law will supply the omission and would require notice and an opportunity of being heard. No person shall be condemned without being heard. Even if the Ultimate conclusion is to be formed on the basis of subjective satisfaction of the Registrar, I can conceive of very many advantages in formation of his opinion if an opportunity of being heard is given to the society. " ( 8 ) I respectfully adopt this reasoning. The fact that an expert enquiry was conducted by the nominee of the registrar under S. 64 of the Act, in the present case is no answer to the contention that a notice is necessary. It is also stated for the petitioner that a copy of the report of the enquiry was not communicated to the bank as required by sub-sec. (4) of S. 64 of the Act. It is also stated for the petitioner that a copy of the report of the enquiry was not communicated to the bank as required by sub-sec. (4) of S. 64 of the Act. ( 9 ) SINCE the order of the Registrar is contrary to the rules of natural justice, it is null and void. The omission to give a notice by the original authority cannot be said to be cured in the present case by giving the petitioner an opportunity of being heard at the appellate stage. Because in the appeal, the Bank was not in a position to adduce any materials in support of its contentions much less to refute the statement of facts made in the order of the Registrar. ( 10 ) IN the result, this writ petition is allowed and the imugned orders of the Registrar and the Government, Exts. B and C are quashed with liberty to the Registrar to take proceedings in accordance with law. No costs. --- *** --- .