P. D. DESAI, J. ( 1 ) THE brooding omnipresence of the rule of natural justice audi alteram partem sanctified constitutionally in the great equalizing principle enunciated in Article 14 pervades in varying forms and flexible moulds every administrative action in our republic unless a validly enacted law excludes it. The rule which mandates that no one shall be condemned unheard has very often been regarded as anathematical by administrators involving as it does the irritating inconvenience of notice and opportunity. Yet jurists and judges with their inveterate zeal to invest law with fairness and to secure justice have over the years reaffirmed that principle in diverse situations. These contrary approaches have given rise to a plethora of decisions which has crystallized the content and reach of this great humanizing principle but in its application to concrete cases perplexing problems often arise especially when there are no positive words in the statute applicable to the situation requiring that the party likely to be affected shall be heard. The person hurt persuasively pleads in such a case that the omission of the Legislature is unintentional and that informed as it was of the great stride taken by judicial pronouncements in invigorating and expanding the doctrine of fair play in action it has left it to the Court to supply the omission by necessary implication. The authority on the other hand strenuously submits that the exclusion is meaningful and that fairness in action does not demand its implication having regard to the nature of action to be taken its object and purpose and the scheme of the relevant statutory provisions. This dispute with its contradictory and conflicting pulls is not easy of solution especially when the subject-matter falls within the amber areas of natural justice where the case law lays down no clear cut formula applicable in a free zone where pitfalls vie with milestones. This dispute with its contradictory and conflicting pulls is not easy of solution especially when the subject-matter falls within the amber areas of natural justice where the case law lays down no clear cut formula applicable in a free zone where pitfalls vie with milestones. The instant case falls within that twilight zone and the dilemma is : Is the rule of fair play in action excluded when in exercise of the statutory powers and upon fulfilment of the statutory conditions the competent authority forms an opinion that a co-operative society ought to be wound up and makes an interim order directing it to be wound up which order is subject to be reviewed after giving an opportunity to the society of being heard before making a final order vacating or confirming the interim order ? If the answer be in the affirmative is the law valid having regard to the dynamic concept of the principle of equality enshrined in Article 14 ? If the answer be in the negative what is the form of hearing required to be given before an interim order can be made ? The Factual Matrix : ( 2 ) THE petitioner is a co-operative society registered under Section 9 of the Gujarat Co-operative Societies Act 1961 (hereinafter referred to as `the Act ). It was initially registered on 13/11/1973 It functions as a primary co-operative society since 9/09/1947 In course of time its business expanded. At present it claims to have 860 Savings Bank Accounts 450 Current Accounts 200 Fixed Deposit Accounts 400 Recurring Deposit Accounts and 252 Advances Accounts. The number of shareholders is 529 As per the audit report for the period ending 30/06/1978 the petitioner had 125 Savings Bank Accounts 196 Current Accounts 132 Fixed Deposit Accounts 163 Recurring Deposit Accounts including Mini-Bank Accounts and 153 Advances Accounts at the end of the relevant accounting period. The total worth of deposits as aforesaid aggregatas to about Rs. 29 0 0000/ ( 3 ) AS the petitioner is carrying on banking business it is required to obtain a licence in that behalf from the Reserve Bank of India under Section 22 read with Section 56 of the Banking Regulation Act 1949 It appears that the petitioner had made an application to the Reserve Bank for grant of such a licence and that on 23/02/1979 the Reserve Bank made an order refusing licence. The petitioner challenged the said order in Special Civil Application No. 721 of 1979 instituted on its behalf of this Court on 13/03/1979 The preliminary hearing of the writ petition took place for the first time on 30/03/1979 and this Court ordered notice to issue to the Reserve Bank. The petition was heard from time to time thereafter and it was ultimately withdrawn on 1/05/1979 The petition was withdrawn according to the petitioner upon an assurance held out by and on behalf of the Reserve Bank that the matter would be recosidered after taking into account the representation made by the petitioner. We are not concerned in this petition with the question whether or not such assurance was actually held out and since there is a serious dispute on that question between the petitioner and the Reserve Bank in a cognate proceeding we do not deem it fit and proper to make any observation in that behalf in the instant proceedings. Be that as it may it is not in dispute that the petitioner has filed in this Court a fresh petition namely Special Civil Application No. 2259 of 1979 against the Reserve Bank and Union of India on 3/08/1979 seeking an appropriate writ order or direction commanding the respondents to cancel the order dated 23/02/1979 refusing to grant to the petitioner licence to carry on banking business and to reconsider the matter after restoring the petitioners application in that behalf on file and for other appropriate reliefs. Rule nisi has been issued in the said petition on 7/08/1979 and the matter is pending for decision. ( 4 ) THE law requires that the accounts of every co-operative society shall be audited at least once in each year by a person authorised by the competent authority in that behalf. An audit of the petitioners accounts was made by an authorised auditor whose report was forwarded to the petitioner under a communication dated 4/06/1979 The report related to the period covering a span of about four and half years commencing from 13/11/1973 and ending with 30/06/1978 The communication forwarding the auditors report directed the petitioner to rectify the defects and remedy the irregularities and to make report on the action taken within a period of two months. The communication reached the petitioner on 5/06/1979 and the time limit for submission of rectification report would therefore expire on or about 5/08/1979 ( 5 ) BEFORE expiry of the said period however the first respondent (District Registrar of Co-operative Societies City Division Ahmedabad) made the impugned interim order Annexure `c on 1/08/1979 under Section 107 (1) (a) and (c) (ii) and (iv) of the Act directing the petitioner to be wound up and appointing the third respondent (an official attached to the first respondent) as the liquidator of the petitioner under Section 108 (1) of the Act. The impugned order is a speaking order which runs into eleven closely typed pages. Suffice it to say for the present that the first respondent purported to make the said order in exercise of the powers vested in him by Section 107 (1) read with Section 108 of the Act since he was of the opinion in substance that the petitioner ought to be wound up having regard to the defects and irregularities pointed out in the report of the auditor for the period from November 13 197 3/06/1978 and in view of the fact that the petitioners application for licence to carry on banking business was refused by the Reserve Bank as stated above. Incidentally the first respondent also appears to have taken into account certain facts and circumstances which according to him disclosed that the petitioner had ceased to comply with the provisions of the Gujarat Co-operative Societies Rules 1965 (hereinafter referred to as `the Rules) and the by-laws of the society in the course of its management. The impugned order was served upon the petitioner by hand delivery on the very day on which it was made and admittedly the third respondent took a formal charge of the records of the petitioner and he also admittedly sealed the main entrance giving access to the petitioners business premises. ( 6 ) THE petitioner thereupon instituted the present writ petition on 2/08/1979 Rule nisi was issued on the petition on 7/08/1979 and ad interim relief directing the maintenance of status quo as on the date of the said order was granted to the petitioner. By a subsequent order dated 29/08/1979 the ad interim relief was vacated. ( 6 ) THE petitioner thereupon instituted the present writ petition on 2/08/1979 Rule nisi was issued on the petition on 7/08/1979 and ad interim relief directing the maintenance of status quo as on the date of the said order was granted to the petitioner. By a subsequent order dated 29/08/1979 the ad interim relief was vacated. The petitioner feeling aggrieved by the order vacating the interim relief preferred a petition for special leave to appeal in the Supreme Court of India and by an order made on 3/09/1979 the Supreme Court granted ad interim relief directing maintenance of status quo as on the date of the said order in respect of the subject-matter of dispute before this Court in the instant proceeding. The main petition has now reached final hearing before us. The Grounds of Challenge : ( 7 ) THE petitioner has challenged the impugned order on several grounds in the memo of writ petition. However all of those grounds were not pressed into service at the hearing and the challenge was confined only to the following grounds : (1) Section 107 (1) and Section 108 (1) and (2) of the Act are ultra vires Articles 14 as no opportunity of hearing is to be afforded thereunder before an interim order under Section 107 is made and a liquidator is appointed under Section 108 (1 ). (2) If Section 107 (1) and Section 108 (1) are construed as implying an opportunity of hearing then as no hearing was given in the instant case the impugned order is ultra vires void and ineffective in law. (2) If Section 107 (1) and Section 108 (1) are construed as implying an opportunity of hearing then as no hearing was given in the instant case the impugned order is ultra vires void and ineffective in law. (3) The impugned order is even otherwise ultra vires and/or mala fide and/or bad in law because : (A) It is based upon a stale audit report covering the period from November 13 197 3/06/1978 and it was made even before the time limit for rectification of the defects and remedying irregularities granted by the competent authority had expired; (B) It takes into account the circumstances of the refusal of grant of licence by the Reserve Bank in isolation and out of context and it was made without awaiting the outcome of the legal proceedings taken by the petitioner to challenge the order of the Reserve Bank refusing licence; (C)IT takes into consideration matters not covered by the grounds enumerated in Section 107 (D) It is passed at the behest and under the direct pressure of the Deputy Chief Officer of the Reserve Bank who had passed the order refusing the grant of licence and who was directly interested in the favourable outcome of the writ petition filed against the Reserve Bank wherein serious allegations are made against him with regard to the circumstances under which the previous writ petition (Special Civil Application No. 721 of 1979 was withdrawn by the petitioner. The Statutory Conspectus : ( 8 ) IN order to examine the validity of the challenge levelled under the various heads enumerated above it would be necessary to glean through the Act in its relevant parts. The short Preamble shows that the Act was enacted to consolidate and amend the law relating to co-operative societies in the State of Gujarat. Section 2 provides the legislative dictionary for the various terms used in the Act. Clause (7) thereof defines co-operative bank to mean a society registered under the Act and doing the business of banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking Companies Act 1949 Clause (12) defines Liquidator to mean a person appointed as a liquidator under the Act. Clause (7) thereof defines co-operative bank to mean a society registered under the Act and doing the business of banking as defined in clause (b) of sub-section (1) of Section 5 of the Banking Companies Act 1949 Clause (12) defines Liquidator to mean a person appointed as a liquidator under the Act. Clause (14) defines Officer to mean a person elected or appointed by a society to any office of such society according to its by-laws including a chairman vice-chairman president vice-president managing director manager secretary treasurer member of the committee and any other person elected or appointed under the Act the rules or the by-laws to give directions in regard to the business of such society. Clause (17) defines Registrar to mean a person appointed to be the Registrar of Co-operative Societies under the Act and as including to the extent of the powers of the Registrar conferred on any other person under the Act such person and an Additional or Joint Registrar. ( 9 ) SECTION 3 deals with the appointment of the Registrar of Co-operative Societies for the State and other officers and their powers. Sub-section (3) of the said section provides that the State Government may by general or special order confer on a person or persons appointed under sub-section (2) as Additional Registrars Joint Registrars Deputy Registrars Assistant Registrars and any other person with appropriate designations all or any of the powers of the Registrar under the Act. Under sub-section (4) every such person has to act under the general guidance and the superintendence and control of the Registrar. Section 4 provides that a society which has as its object the promotion of the economic interests or general welfare of its members or of the public in accordance with co-operative principles or a society established with the object of facilitating the operations of any such society may be registered under the Act unless in the opinion of the Registrar it is economically unsound or its registration may have an adverse effect upon any other society or it is opposed to or its working is likely to be in contravention of public policy. Sections 17 to 19 deal with amalgamation transfer division or conversion of societies and reconstruction of societies. Sections 17 to 19 deal with amalgamation transfer division or conversion of societies and reconstruction of societies. Section 19 which falls in the said group provides that where a compromise or arrangement is proposed between a society and its creditors or between a society and its members the Registrar may on the application of the society or of any member or of any creditor of the society or in the case of a society which is being wound up of the liquidator order reconstruction in the prescribed manner of the society. Section 20 deals with cancellation of registration and it enjoins upon the Registrar to make an order cancelling the registration of a society if it transfers the whole of its assets and liabilities to another society or amalgamates with another society or divides itself into two or more societies or if its affairs are wound up or it has not commenced business within a reasonable time of its registration or has ceased to function. The effect of cancellation of registration is that the society is deemed to be dissolved and it ceases to exist as a corporate body. ( 10 ) XXX xxx xxx ( 11 ) XXX xxx xxx ( 12 ) CHAPTER VII deals with management of societies and Section 73 therein occurring provides that the final authority of the society shall rest in the general body. Under Section 74 the management of every society shall vest in a committee constituted in accordance with the Act the rules and by-laws which shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by the Act the rules and the by-laws. . . . Under Section 74 the management of every society shall vest in a committee constituted in accordance with the Act the rules and by-laws which shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by the Act the rules and the by-laws. . . . Section 81 provides for supersession of committee 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 the Act or the rules or the by-laws or does anything which is prejudicial to the interest of the society or its members after giving the committee an opportunity of hearing and to appoint a committee of members in its place or to appoint one or more administrators who need not be members of the society to manage the affairs of the society for a period not exceeding two years which may at the discretion of the Registrar be extended from time to time subject to the maximum of four years in the aggregate. . . . ( 13 ) XXX xxx xxx ( 14 ) UNDER Section 82 a duty is imposed upon every society to keep the prescribed books of accounts with respect to all sums of money received and expended by the society and the matters in respect of which the receipt and expenditure take place all sales and purchases of goods by the society and the assets and liabilities of the society and to furnish such statements and returns and such records to the Registrar as the Registrar may by order direct from time to time. The officer or officers of the society must comply with the order within the period specified therein. . . . The officer or officers of the society must comply with the order within the period specified therein. . . . ( 15 ) XXX xxx xxx ( 16 ) SECTION 83 empowers the Registrar to issue an order directing a person duly authorised by him in writing to seize and take possession of the books and records of a society or funds and property of a society if he is satisfied that such books and records are likely to be tampered with or destroyed or such funds and property are likely to be misappropriated or misapplied and the officer of the society responsible for the custody of such books records funds and property is required to give delivery thereof to the person so authorised. . . . ( 17 ) IT would be appreciated that by enacting Sections 80 to 83 and the relative penal sections the Legislature has provided an adequate machinery for securing proper and efficient management or to put it negatively for preventing mismanagement of a co-operative society through effective and timely intervention of the State Government or the Registrar as the case may be. The right of the State Government to nominate representatives on the committee of certain societies the power of the Registrar to supersede the committee of any society persistently making default or negligent in the performance of the duties or acting prejudicially to the interest of the society or its members and to enforce performance of obligations such as to maintain proper books of account and above all the authority of the Registrar to seize and take possession of the books records funds and property of a society when tempering or destruction of the records or misappropriation or misapplication of the funds and property is apprehended place in the hands of the competent authority potent weapons which if judiciously and discreetly used at the opportune moment are capable of effectively checking in good time the mismanagement of a co-operative society. Such powers are vested in the competent authority with the legitimate expectation that they would be exercised when occasion demands so that the need to take other extreme steps might not arise later. ( 18 ) CHAPTER VIII is important providing as it does an effective remedial machinery to set right the affairs of an ill-managed or mis-managed society. Some of its provisions merit examination in detail. ( 18 ) CHAPTER VIII is important providing as it does an effective remedial machinery to set right the affairs of an ill-managed or mis-managed society. Some of its provisions merit examination in detail. Under Section 84 a duty is cast upon the Registrar to audit or cause to be audited by an authorised person possessing prescribed qualifications the accounts of every society at least once in each year. . . . ( 19 ) SECTION 85 provides that if the result of the audit held under Section 84 discloses any defects in the working of a society the society shall within three months from the date of the audit report explain to the Registrar the defects or the irregularities pointed out by the auditor and take steps to rectify the defects and remedy irregularities and report to the Registrar the action taken by it thereon. The Registrar is empowered to make an order directing the society or its officers to take such action and within such time as may be specified therein to remedy the effects. ( 20 ) XXX xxx xxx . ( 21 ) SECTION 86 empowers the Registrar to hold an inquiry himself or by a person duly authorised by him into the constitution working and financial conditions of a society. When however he is moved by a requisition of a society duly authorised by rules made in that behalf to make such requisition in respect of any of its members such member being itself a society or on the application of a majority of the committee of a society or on the application of one-third of the members of a society the Registrar is under an obligation to hold such an inquiry. . . . ( 22 ) UNDER Section 87 the Registrar is empowered if he thinks it necessary to inspect or direct a person authorised by him by order in writing in that behalf to inspect the books of a society on the application of a creditior of the society who satisfies the Registrar that the debt is a sum then due and that he had demanded payment thereof and that he has not received satisfaction within reasonable time and deposits with the Registrar such sum as the Registrar may require as security for the costs of inspection of the books of the society. The result of the inspection is required to be communicated by the Registrar to the applicant and to the society whose books have been inspected. . . . ( 23 ) SECTION 92 empowers the Registrar to bring the defects disclosed in the constitution working or financial condition or the books of a society as a result of an inquiry held under Section 86 of inspection made under Section 87 to the notice of the society and authorises him to direct the society or its officers to take such action as may be specified in the order to remedy the effect within the time specified therein. In case the society fails to rectify the defects as directed by the Registrar and such direction is not annulled reversed or modified in an appeal preferred by the society to the State Government the Registrar is authorised to himself take steps to have the defects rectified and to recover the cost from the officers of the society who in his opinion have failed to rectify the defects. . . . ( 24 ) SECTION 89 empowers the Registrar to direct the committee of a society to suspend a paid officer or servant of the society when in the course of an audit under Section 84 or an inquiry under Section 86 or an inspection inter alia under Section 87 it is brought to his notice that such officer or servant has committed or has been otherwise responsible for misappropriation breach of trust or other offence in relation to the society provided in his opinion there is prima facie evidence against such officer or servant and the suspension is necessary in the interests of the society. . . . . . . ( 25 ) SECTION 93 empowers the Registrar to assess damages in certain cases if in the course of or as a result of an audit under Section 84 or an inquiry under Section 86 or an inspection under Section 87 or the winding up of a society the Registrar is satisfied on the basis of the report of audit or inspection or the liquidator that a person who has taken any part in the organisation or management of the society has within a period of five years prior to the date of such audit inquiry inspection or order for winding up misapplied or retained or become liable or accountable for any money or property of the society or has been guilty of misfeasance or breach of trust in relation to the society. . . . ( 26 ) THIS batch of sections namely Sections 84 85 86 87 89 92 and 93 gives wide powers to the Registrar to be exercised in some cases in his discretion and in others as a matter of course upon satisfaction of the requisite statutory conditions and upon an objective assements of facts and circumstances relatable by the exercise of power under each section to effectively control the society with a view to ensuring that in its constitution and working the society broadly speaking acts in consonance with its statutory duty and in the interest of its members and creditors. Diverse powers conferred upon the Registrar under different sections to meet varying situations ensure that effective exercise of such powers from time to time upon fulfilment of conditions would prevent a defaulting society and its committee officers and servants from bringing the society irreversibly to the dead end of the road. The power of suspension in case of paid officers and servants and the power to require the promoters and any deceased or past or present officer of the society to repay or restore the money or property or any part thereof in cases of misfeasance breach of trust etc. are potent enough if judiciously exercised at the correct point of time to prevent that funds and properties of the society being misapplied misused or misappropriated. are potent enough if judiciously exercised at the correct point of time to prevent that funds and properties of the society being misapplied misused or misappropriated. ( 27 ) THIS quick survey of the various statutory provisions before we go to the heart of the matter has been undertaken with a view to bringing into sharp focus the width and amplitude to the power authority and jurisdiction of the Registrar whose duty it is to continuously oversee the proper management and working of a society and to pinpoint the desirability of judicious exercise of such power authority and jurisdiction from time to time before the last step of ordering winding up of any society which in substance and effect is the civil death of the society is taken. ( 28 ) IT would be appropriate to mention at this stage that under Section 155 occurring in Chapter XIII the State Government and the Registrar are empowered to call for and examine the record of any inquiry or the proceedings of any other matter of any officer subordinate to them except those referred to in sub-section (9) of Section 150 for the purpose of satisfying themselves as to the legality or propriety of any decision or order passed and as to the regularity of the proceedings of such officer. In any case if it appears to the State Government or the Registrar that any decision or order or proceedings so called for should be modified annulled or reserved the State Government or the Registrar as the case may be after giving persons affected thereby an opportunity of being heard are authorised to pass such order thereon as it or he may deem just. This revisional power vested in the State Government and the Registrar provides a check and balance mechanism against arbitrary or ultra vires exercise of any of the powers by any subordinate authority under any of the provisions of the Act. In exceptional cases subject to the limitation the State Government or the Registrar as the case may be would also be entitled to enforce exercise of statutory powers by such authorities when such power is coupled with duty if all the conditions for the exercise of power are satisfied and the occasion demands the exercise of such power for ensuring proper management and working of the society. The Core Provisions : 28 We now move on to Chapter X which contains the material provisions around which the controversy centres in this proceeding. Section 107 and Section 108 which lie at the root of the controversy need to be fully extracted and reproduced. They read as under :"107 (1) If the Registrar (A) after an inquiry has been held under Section 86 or an inspection has been made under Section 87 or on the report of the auditor auditing the accounting of the society or (B) on receipt of an application made upon a resolution carried by three-fourths of the members of a society present at a special general meeting called for the purpose or (C) of his own motion in the case of a society which- (i) has not commenced working or (ii) has ceased working or (iii) possesses shares of members deposits not exceeding five hundred rupees or (iv) has ceased to comply with any conditions as to registration and mamagement in this Act or the rules or the by-laws is of the opinion that a society ought to be wound up he may make an interim order directing it to be wound up. (2) Where an interim order is made on a ground specified in clause (a) of sub-clause (iv) of clause (c) of sub-section (1) a copy thereof shall be communicated in the prescribed manner to the society calling upon it to submit its explanation to the Registrar within a month from the date of the issue of such order. (3) The Registrar after giving an opportunity to the society of being heard shall make a final order vacating or confirming the interim order. 108 (1) When an interim or final order is made under Section 107 for the winding up of a society the Registrar may in accordance with the rules appoint a person to be the liquidator of the society and fix his remuneration. (2) Where an interim order is made the officers of the society shall hand over to the liquidtor the custody and control of all the property effects and actionable claims to which the society is or appears to be entitled and of all books records and other documents pertaining to the business of the society and shall have no access to any of them. (3) When a final order is made confirming the interim order the officers of the society shall vacate their offices and while the winding up order remains in force the general body of the society shall not exercise any powers. (4) The liquidator shall subject to the general control of the Registrar exercise all or any of the powers mentioned in Section 110. The Registrar may remove him from his office and appoint another in his place without assigning any reason. (5) The whole of the assets of the society shall on the appointment of the liquidator vest in him and notwithstanding anything contained in any law for the time being in force if any immovable property is held by him on behalf of the society the title over the land shall be complete as soon as the mutation of the name of his office is effected and no Court shall question the title on the ground of dispossession want of possession or physical delivery of possession. (6) In the event of the interim order being vacated the liquidator shall hand over the property effects actionable claims books records and other documents of the society to the officers who had delivered the same to him. The acts done and the proceedings taken by the liquidator shall be binding on the society and such proceedings shall after the interim order has been vacated under Section 107 be continued by the officers of the society. Section 109 provides for an appeal against an order of winding up and the material part thereof reads as under :" (1) The committee or any member of the society ordered to be wound up may within two months from the date of the communication to the society of the order made under Section 107 appeal if the order is made by the Registrar Additional Registrar or Joint Registrar to the State Government or if the order is made by any other person on whom the powers of the Registrar are conferred to the Registrar:provided that no appeal shall lie against an order issued under sub-clause (i) (ii) or (iii) of clause (c) of sub-section (1) of Section 107:provided further that no appeal shall lie against an order passed by the Registrar on appeal. (2) xxx xxx xxxhistorical Facts and surrounding Circumstances : ( 29 ) BEFORE we proceed to the task of interpretation of Section 107 it would be pertinent to refer to the parallel provisions in the predecessor Acts and facts and circumstances existing at the time of enactment of Section 107 and more particularly the provision therein contained with regard to the making of an interim order directing a co-operative society to be wound up and the final order vacating or confirming such interim order. It is a settled rule of construction of statutes that at all times and under all circumstances it is permissible to have regard to the state of things existing at the time when the statute was passed and to the evils which as appears from the provisions it was designed to remedy. ( 30 ) THE earliest enactment with regard to the subject-matter under consideration was the Co-operative Societies Act 1912 which was a Central Act and which will be referred to as such hereinafter. The Central Act was repealed so far as it was applicable to the pre-Reorganisation State of Bombay by Section 73 of the Bombay Co-operative Societies Act 1925 hereinafter referred to as `the Bombay Act enacted by the Bombay Legislature. Section 169 of the Gujarat Act in hand has since repealed the Bombay Act. ( 31 ) THE following comparative table of the relevant section of the three Acts would indicate the common features of the enactments : @@@ -- central Bombay Gujarat :subject- act Act Act matter - s. 22 S. 48 Annual audit - s. 22a S. 85 rectification s. 35 s. 43 S. 86 inquiry s. 36 s. 44 S. 87 inspection - s. 46a S. 92 removal of defects disclosed in inquiry and inspection - @@@ we wish to make it clear that the sections of the three Acts mentioned above are comparable in the sense that they deal with the same subject-matter and that their provisions are broadly analogous. The sections however are not identical and there are individual variations which for the present purpose are not required to be noticed. ( 32 ) THE provisions of the Central Act dealing with the winding up of the affairs of a society may now be adverted to. The sections however are not identical and there are individual variations which for the present purpose are not required to be noticed. ( 32 ) THE provisions of the Central Act dealing with the winding up of the affairs of a society may now be adverted to. Section 39 empowered the Registrar to cancel the registration of a society if after an inquiry held under Section 35 or an inspection made under Section 36 or on an application made by three-fourths of the members of a registered society he was of the opinion that the society ought to be dissolved. The order of dissolution was subject to an appeal and it was not to take effect until the expiry of the period prescribed for presentation of the appeal and in case where an appeal was preferred within the prescribed time limit until the order was confirmed by the appellate authority. Section 40 made provision for the cancellation of registration of a society upon the satisfaction of the Registrar that the number of members of the society was reduced to less than the number of members prescribed as a condition of the registration of the society. Under Section 42 upon the cancellation of the registration of a society under Section 39 or 40 the Registrar was empowered to appoint a competent person to be liquidator of the society and the powers of the liquidator so appointed inter alia were to institute and defend suits and other legal proceedings to determine the contribution to be made by the members and past members of the society to the assets of the society to investigate all claims against the society to decide questions of priority and to give such direction in regard to the collection and distribution of the assets of the society as may appear to him to be necessary for winding up the affairs of the society. It would appear on a conjoint reading of Sections 39 40 and 42 that winding up followed automatically upon the cancellation of the registration of a society. The conditions therein prescribed for the cancellation of registration of a society are to be found substantially incorporated in Section 107 (1) (a) and (b) and (c) (iv) of our Act. It would appear on a conjoint reading of Sections 39 40 and 42 that winding up followed automatically upon the cancellation of the registration of a society. The conditions therein prescribed for the cancellation of registration of a society are to be found substantially incorporated in Section 107 (1) (a) and (b) and (c) (iv) of our Act. What is significant however is that the Central Act made no provision for an interim order directing the winding up of a society being made as a condition precedent. ( 33 ) IN the Bombay Act the provisions with regard to winding up of a society are to be found in Chapter VIII. Sections 47 and 48 contained in the said Chapter provide the conditions for winding up. Those conditions broadly speaking are similar to the conditions laid down in Section 107 of our Act save and except in two respects; first winding up could not be ordered thereunder on the report of the auditor auditing the accounts of the society and secondly there was no provision with regard to the making of an interim order directing the society to be wound up. Section 47 straightway provided for the winding up of a society and when necessary for the appointment of a liquidator. The powers of the liquidator appointed under Section 47 were prescribed in Section 50 and by and large they correspond to the power conferred upon the liquidator under Section 110 of our Act. Section 50 was substantially similar to Section 93 of our Act and it conferred power on the Registrar to assess damages against delinquent promoters etc. Section 52 was broadly analogous to Section 115 of our Act in so far as it provided that the surplus assets shall not be divided amongst the members of the society but they shall be devoted to any object or objects described in the by-laws of the society. ( 34 ) ON 19/12/1956 the Government of Bombay appointed a Committee popularly known as the Land Committee to consider the question of amendment of the Bombay Act and Rules and to study the Co-operative Societies Acts which were in force in the component parts of the bigger bilingual State and to suggest a common Act for all the areas. The Committee made its report in due course. Paragraph 345 of the said report is material and it requires to be reproduced. The Committee made its report in due course. Paragraph 345 of the said report is material and it requires to be reproduced. It reads as under :"winding up.- Sections 47 and 48 of the Bombay Act deal with the circumstances in which a society can be ordered to be wound up by the Registrar. These Section have been derived from the Act II of 1912 A question has been raised as to whether the Registrar is competent to issue an order for the winding up of a society without giving an opportunity to the society to explain its conduct. In a recent case the State Government on an appeal from a society annulled the order of the Registrar on the ground that the society was not given an opportunity to be heard. This is a decision based on equity and justice and in conformity with the view taken by the Courts that no person individual or institution can be adjudged without being heard. At the same time there is one danger in providing such an opportunity inasmuch as the office-bearers of the society concerned get an intimation in advance of the Registrars intention and if they wish can take steps to destory the records or evidence on the basis of which the Liquidator can take steps against them for the recovery of the societys dues. We are of the view that the Law must provide for giving an opportunity to the society to be heard and at the same time take care to ensure that the office-bearers do not take undue advantage of this opportunity. We therefore recommend that the Registrar should first issue an interim order for the winding up of a society and confirm it if he is not satisfied with the explanation of the society. During the period the interim order is in force the liquidator will be under the proposal made by us in charge of the affairs of the society but will not proceed with the winding up of the society. He will assume the latter functions only after the order is confirmed and will hand over the affairs of the society to the Committee if the interim order is vacated". He will assume the latter functions only after the order is confirmed and will hand over the affairs of the society to the Committee if the interim order is vacated". In Paragrph 347 the Land Committee observed it was necessary to provide for the procedure for the issue of an order of winding up in the rules and also to authorise the Registrar to wind up a society on the basis of the Auditors report and to widen his power in respect of winding up by providing that a society could be wound up if violated any condition of registration. The Committee in order to implement its recommendations recommended deletion of Sections 47 and 48 and insertion of new Section 98 in the Act as per the draft incorporated in its report. It might be stated that sub-sections (1) (2) and (3) of Section 107 of our Act are modelled on the proposed Section 98 incorporated in the report of the Land Committee and except in minor particulars they are almost identical with Section 98 as proposed by the said Committee. ( 35 ) THE aforesaid historical background provides the clue to the insertion of the provision with regard to the making of an interim order in sub-section (1) of Section 107 of our Act. The said provision has obviously been introduced because it was realized that it was not competent for the Registrar to issue an order for the winding up of a society without giving an opportunity to the society to explain its conduct. It was felt however that if an advance intimation with regard to the Registrars intention was given with a view to providing such an opportunity the office-bearers of the society might destroy the records of evidence on the basis of which the liquidator can take steps against them for the recovery of the societys dues. To avoid any such consequence provision is now made to first issue an interim order and to authorise the Registrar to confirm or vacate it after receiving the explanation of the society. Meanwhile the liquidator if appointed would take charge of the affairs of the society. The speech made by the Minister for Co-operation at the time of the introduction of the Bill in the House also emphasized this aspect. (See Gujarat Legislative Assembly Debates Vol. Meanwhile the liquidator if appointed would take charge of the affairs of the society. The speech made by the Minister for Co-operation at the time of the introduction of the Bill in the House also emphasized this aspect. (See Gujarat Legislative Assembly Debates Vol. 3 Part-II 1961 at page 463 Against this background we shall have to construe Section 107 and other cognate provisions of the Act. Interpretative Technology : ( 36 ) IT would be pertinent to point out at this stage that one principle of construction which is well-recognised is that the interpretative process should be controlled on consideration of constructionality. In other words a statute must be so construed as far as possible as to make it effective and operative and transgression of constitutional mandate should not be lightly assumed. If therefore on one construction the given statute becomes ultra vires the powers of the Legislature whereas on another construction which may be open the statute remains effective and operative the Court will prefer the latter on the ground that the Legislature is presumed not to have intended an excess of its jurisdiction. Rules of natural justice bear upon construction where a statute is silent. Unless any law validly made excludes by necessary implication compliance with natural justice when civil consequences are involved it would be proper and indeed right for the Court to read into the provision the necessity to act in accordance with natural justice. And the question might well arise having regard to the wide content and reach of Article 14 whether any law which excludes natural justice although it involves civil consequences would be valid for natural justice is intended to invest law with fairness and to secure justice and the law which authorises any administrator to act without being required to act fairly would be immediately open to challenge on the ground of arbitrariness. In our approach to the problem of construction of Section 107 (1) it would be proper for us therefore to be guided by these considerations. WINDING up - Conceptual pre-view against the Back-drop of Parallel Legislation : ( 37 ) WE must cover one more ground before we come to grips with the problem of construction of Section 107. The section deals with winding up and it would be worthwhile to examine the concept of winding up which is a process known to law under other cognate legislations. The section deals with winding up and it would be worthwhile to examine the concept of winding up which is a process known to law under other cognate legislations. The liquidation or winding up of a corporate body is the process whereby its life is ended and its property administered for the benefit of its creditors and members. The liquidation winds up its affairs and then kills it although under a reconstruction it may sometimes rise like a phoenix from the ashes of its funeral pyre. There are two main types of liquidation compulsory under an order of the Court or any other competent authority and voluntary under a resolution of the corporate body. Speaking generally one may say that the former occurs when those in control of the corporate body do not want that body to be liquidated whereas the second occurs when they do. (See Gowers Principles of Modern Company Law Fourth Edition pages 719 and 720.) Once winding up or liquidation takes place the management of the corporate bodys affairs are taken out of its managements hands its assets are realized by a liquidator and its debts are paid out of the proceeds of realization and any balance remaining is returned to its members or shareholders. At the end of the winding up the corporate body will have no assets or liabilities and it will therefore be simply a formal step for it to be dissolved that is for its legal personality as a corporation to be brought to an end. (See Penningtons Company Law Fourth Edition page 674 Broadly speaking this is the concept and content of the winding up process and it manifests beyond doubt that liquidation is essentially the final step which is required to be taken when it is found that the continued existence of the corporate body is no longer advantageous having regard to all the relevant circumstances. ( 38 ) THE closest parallel to the provisions under consideration is to be found in the relevant provisions of the Company Act 1956 Under Section 433 read with Section 439 of the said Act a petition can be lodged before the High Court for winding up a company. ( 38 ) THE closest parallel to the provisions under consideration is to be found in the relevant provisions of the Company Act 1956 Under Section 433 read with Section 439 of the said Act a petition can be lodged before the High Court for winding up a company. On such a petition being filed the Court may give a notice before giving directions for advertisement as required by Rule 96 Under Section 443 on hearing a winding up petition the High Court may dismiss it or make any interim order that it thinks fit or make an order for winding the company or any other order that it thinks fit. If a winding up order is made it relates back to the date of presentation of the petition and the Official Liquidator steps in and becomes the liquidator of the company under Section 449. Under Section 456 the liquidator has to take into his custody or under his control all the property effects and actionable claims to which the company is or appears to be entitled. Under Section 457 (1) the liquidator in a winding up has the power with the sanction of the Court inter alia to carry on the business of the company so far as may be necessary for the beneficial winding up of the company to sell the immovable and movable property and actionable claims of the company and to do all such other things as may be necessary for winding up the affairs of the company and distributing its assets. Section 450 empowers the High Court to appoint the Official Liquidator to be liquidator provisionally at any time after the presentation of a winding up petition and before the making of a winding up order after giving notice to the company and giving it a reasonable opportunity to make its representations unless for special reasons to be recorded in writing the Court thinks fit to dispense with such notice. The High Court may limit and restrict his powers by the order appointing him or by a subsequent order but otherwise he shall have the same powers as a liquidator. The Provisional Liquidator ceases to hold office and becomes a liquidator on a winding up order being made. The High Court may limit and restrict his powers by the order appointing him or by a subsequent order but otherwise he shall have the same powers as a liquidator. The Provisional Liquidator ceases to hold office and becomes a liquidator on a winding up order being made. ( 39 ) THE aforesaid brief resume of the relevant provisions of the Companies Act 1956 relating to the winding up by the Court would show that it contains no provision authorising the High Court to make an interim order winding up a company with the ultimate power either to confirm or vacate it. It also shows that no winding up order can possibly be made without a prior opportunity of hearing is given to company. In cases where it is found that the assets of the company are in jeopardy and that it is necessary for the protection and preservation of such assets to take some immediate action pending an order for winding up power is conferred under Section 450 for the appointment of a Provisional Liquidator. Even that power however can ordinarily be exercised only after giving a reasonable opportunity to the company to make its representation. Dispensation of the notice to the company can only be made when the Court thinks it fit to do so for special reasons to be recorded in writing. Besides the Provisional Liquidator does not necessarily have the same powers as a Liquidator. The Court is competent to limit and restrict his powers by the order appointing him or by any subsequent order. This is mechanism of the corresponding law in the field of winding up and it is manifest that prior notice and hearing is a pre-condition before winding up could be ordered or pending winding up a Provisional Liquidator could be ordinarily appointed. And this healthy provision has been made although the powers of winding up are vested not in any administrative authority or in a subordinate Court but in the High Court itself. Winding up - Machinery under the Impugned Enactment : ( 40 ) WE move on now to an analysis of Section 107 and cognate provisions which is our main task in this proceeding. Winding up - Machinery under the Impugned Enactment : ( 40 ) WE move on now to an analysis of Section 107 and cognate provisions which is our main task in this proceeding. The mechanism of winding up laid down in Section 107 contemplated two essential steps to be taken; first an interim order directing winding up being made and secondly a final order being made vacating or confirming the interim order. The law is silent on the question as to whether the concerned society has to be given an opportunity of being heard before an interim order is made. However it has expressly provided for such hearing to be given before a final order vacating or confirming the interim order is made. The taking of these two steps in their proper sequence is inevitable. It is apparent on a bare reading of the section that it is not permissible to make a final winding up order unless an interim order is first made. To this extent the provisions of this section are at variance with the corresponding provisions of the Companies Act 1956 Against this background let us proceed to analyse the various sub-sections of Section 107 and the provisions which follow. . ( 41 ) TAKING up first sub-section (1) as the express words of the sub-section indicate the power to make an interim and final order is conferred on the Registrar. . . . 41a. The State Government has in exercise of the powers conferred by sub-section (3) of Section 3 conferred upon all District Registrars and Assistant District Registrars the powers of the Registrar under Section 107 except in cases of 22 apex co-operative societies and 15 sugar manufacturing co-operative societies. We are told that there are in all 26590 registered co-operative societies in the State and the statement accordingly made is supported by the particulars furnished in writing which are taken on record with the consent of parties by the authorities. It would thus appear that except in case of a minimal few the powers under Section 107 are capable of being exercised by an officer at the lower rung of the hierarchy namely Assistant District Registrar. This is one aspect of the matter which is required to be borne in mind while construing the relevant provision. It would thus appear that except in case of a minimal few the powers under Section 107 are capable of being exercised by an officer at the lower rung of the hierarchy namely Assistant District Registrar. This is one aspect of the matter which is required to be borne in mind while construing the relevant provision. ( 42 ) THE conditions for winding up are incorporated in clauses (a) (b) and (c) of sub-section (1) of Section 107. Clause (a) enumerates three circumstances for the exercise of such power and they are : (1) after an inquiry has been held under Section 86 (2) after an inspection has been made under Section 87 and (3) on the report of the auditor auditing the accounts of the society. On a plain reading of this clause it is apparent that upon any of the three eventualities occurring it would be competent to the competent authority to make in a given case an interim order directing a society to be wound up if he is of the opinion that the society ought to be wound up. In other words an interim order winding up a society could be conceivably made in a given case upon the report of the auditor even without giving to the society an opportunity to explain the defects or irregularities pointed out by the auditor or to take steps to rectify such defects and irregularities either suo motu or under the direction of the Registrar. Similarly an interim order could conceivably be made soon after an inquiry has been held or an inspection has been made even without bringing the defects disclosed in the course of the inquiry on inspection to the notice of the society and without directing the society or its officers to remedy the defects. . . . ( 43 ) UNDER clause (b) an interim order of winding up could be made on receipt of an application made upon a resolution carried by three-fourths of the members of a society present at a special general meeting called for the purpose. This is in substance and reality winding up of the society at the behest of substantially large number of its members present at the special general meeting called for the purpose. This is in substance and reality winding up of the society at the behest of substantially large number of its members present at the special general meeting called for the purpose. ( 44 ) CLAUSE (c) confers suo motu powers on the competent authority to make an interim order winding up a society in four cases and they are : (1) When a society has not commenced working (2) when a society has ceased working (3) when a society possesses shares of members deposits not exceeding five hundred rupees and (4) when a society has ceased to comply with any directions as to registration and management prescribed in the Act rules or by-laws. The first two conditions would be attracted where a society is defunct in the sense that it is not working and its continued existence does not any longer appear to be necessary. So far as the third condition is concerned it would appear that it covers a society whose funds are so inadequate that it would not be really able to function effectively to carry out its objects. The fourth condition takes in the case of a society which ceases to comply with any conditions as to registration and management laid down in the statute rules or by-laws and the power to wind up such societies has obviously been conferred with a view terminating the existence of societies which fail to comply with such basic requirements. ( 45 ) IT is significant to bear in mind that mere existence of any one or more of the conditions laid down in clauses (a) (b) and (c) is not by itself sufficient to warrant the making of an interim order of winding up for the law requires the competent authority to form an opinion that the society ought to be wound up having regard to the facts and circumstances of the case. The opinion must be formed reasonably and bona fide on the proof of the existence of the objective circumstances one or more set out in the three clauses which are conditions precedent for the formation of the opinion. The opinion must be formed reasonably and bona fide on the proof of the existence of the objective circumstances one or more set out in the three clauses which are conditions precedent for the formation of the opinion. If the opinion is formed without application of mind or on the existence of circumstances on the basis of which no rational human being could have formed the opinion or it rests on grounds which are extraneous and not germane or is arrived at mala fide the opinion could not be said to have been formed as required by the statute and it would be open to judicial scrutiny even in a collateral proceeding such as a writ petition apart from the departmental hierachical forum. (See Barium Chemicals Ltd. v. Company Law Board A. I. R. 1967 S. C. 295 and Rohtas Industries Ltd. v. S. D. Agarwal A. I. R. 1959 S. C. 707.) But these are not the only cases in which the opinion becomes vulnerable. If in the formation of the opinion in perfect good faith the competent authority has misconstrued the provisions giving it power to act or refused to take into account something which it was required to take into consideration then also the opinion would be vitiated and the consequential order would be ultra vires. (See Anisminic Ltd. v. Foreign Compensation Commission (1969) 1 All. E. R. 208 and Union of India v. Tarachand Gupta and Brothers A. I. R. 1971 S. C. 1558.) It would thus appear that the competent authority would have to form the requisite opinion without committing any of these errors and that an order which is based upon an opinion which is vitiated by any of such errors would be clearly in excess of jurisdiction. ( 46 ) THE necessary implicaton of the aforesaid limitation is that the competent authority will have to make a speaking order setting out the ground for the exercise of power and the reasons which has led him to form the requisite opinion. It is only when an order is accordingly made that it would be possible to ascertain whether the power has been exercised within the terms of the statute or whether it is ultra vires as being vitiated by any of the errors indicated above. It is only when an order is accordingly made that it would be possible to ascertain whether the power has been exercised within the terms of the statute or whether it is ultra vires as being vitiated by any of the errors indicated above. Whether the authority which has to ascertain this fact when the order is challenged is the departmental authority or an outside authority such as this Court exercising the writ jurisdiction it would not be possible for such authority to arrive at a just conclusion in the absence of a reasoned order nor would it be possible for the aggrieved society to challenge such order in the appropriate forum on the ground of it having been vitiated by any of the afore-mentioned errors unless the material grounds which went into the formation of the opinion are disclosed by a reasoned order. Besides insistence upon reasoned order Itself would be an effective safeguard against arbitrary exercise of powers and even from that point of view the requirement of making a reasoned order must necessarily be applied. It is also relevant to bear in mind that the competent authority has to form the requisite opinion and make an interim order provided the prescribed conditions exist and that the action of the competent authority is bound to prejudicially affect the society and is likely to entail serious consequences for the society and its office-bearers. It cannot possibly be disputed therefore that the function of the competent authority in making an interim order is a quasi-judicial act. Law is now well-settled that when an authority makes an order in exercise of quasi-judicial function it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. This is the minimal requirement of the law. (See Mahindra and Mahindra v. Union of India A. I. R. 1979 S. C. 798.) Having regard to all these considerations it is apparent that an interim order made by the competent authority must contain reasons in support of such order. ( 47 ) AS indicated above in cases covered by clause (a) the competent authority will have to take into account the existence of various statutory alternatives before he forms an opinion that the society ought to be wound up. ( 47 ) AS indicated above in cases covered by clause (a) the competent authority will have to take into account the existence of various statutory alternatives before he forms an opinion that the society ought to be wound up. For example in cases where defects or irregularities are disclosed in the working of a society in the report of an auditor appointed under Section 84 he will have to consider whether the circumstances demand and the occasion requires to wind up a society even without giving to such society an opportunity to rectify the defects and remedy the irregularities under Section 85. Similarly if any defect is disclosed in the construction working or financial conditions or the books of a society pursuant to an inquiry held under Section 86 or an inspection made under Section 87 before forming the requisite opinion under Section 107 (1) the competent authority will have to take into account the alternative course provided by Section 92 and to consider whether winding up must be ordered by an interim order having regard to the special facts and circumstances of the ease without recourse to such course. As earlier pointed out winding up is the process whereby the life of the society is ended and such a step would ordinarily be taken only if the alternatives provided by the various other provisions of the statute are found to be inadequate to infuse healthy life in an erring or defaulting society. ( 48 ) IT is necessary to emphasize before we leave sub-section (1) that what it contemplates is the making of an interim order liable to be vacated or confirmed by a final order which would be made after giving an opportunity to the society of being heard. What the competent authority does while exercising power thereunder is not merely to ascertain whether a prima facie case exists for the purpose of passing an ex parte ad interim order subject to modification after notice to the affected party. In substance and effect the competent authority makes an interim order after forming a considered opinion that a society ought to be wound up and such interim order remais in force till he makes the final order vacating or confirming the interim order at the termination of the proceeding. In substance and effect the competent authority makes an interim order after forming a considered opinion that a society ought to be wound up and such interim order remais in force till he makes the final order vacating or confirming the interim order at the termination of the proceeding. In other words an order under Section 107 (1) is not comparable to an ex parte ad interim order which a Could or Tribunal makes in urgent situation on its being satisfied about the existence of a prima facie ease before hearing the other side and which if confirmed remains operative as interim order till the proceeding before such Court or Tribunal ends. The interim order contemplated by the statute is in substance and reality the first and inevitable step in the process of winding up and as we shall presently show. once such an order is made the process of winding up commences with all its consequences except the realization of the assets of the society by sale or otherwise in cases where a liquidator is appointed under Section 108 (1 ). ( 49 ) WE now move on to sub-section (2) of Section 107 A cursory reading of this provisions might leave an impression that an interim order under sub-section (1) is to be communicated to the society only when such an order is based on the grounds mentioned in sub-section (2 ). That however is not the true purport and import of this provision. An interim order on whatsoever grounds based will of necessity have to be communicated to the society in a suitable manner for on order adversely affecting an individual or a body corporate would be enforceable unless it is communicated to the affected party. Besides unless the order is communicated and the grounds for the action are disclosed the society would have no real and effective opportunity of making an expeditious representation before a final order vacating or confirming the interim order is made. . . . ( 50 ) COMING now to sub-section (3) it provides an opportunity to the concerned society of being heard before a final order vacating or confirming the interim order is made. The hearing to be afforded accordingly is a full-fledged hearing. . . . ( 50 ) COMING now to sub-section (3) it provides an opportunity to the concerned society of being heard before a final order vacating or confirming the interim order is made. The hearing to be afforded accordingly is a full-fledged hearing. The competent authority will therefore have to afford to the society all opportunities to correct or controvert the grounds on which the winding up process has been commenced. If the society wants to produce evidence oral or documentary such opportunity will have to be afforded and oral hearing will also have to be given. Once all that has been done the competent authority will have to make the final order vacating or confirming the interim order which again must be a speaking order for the reasons already earlier indicated. ( 51 ) SECTION 108 which deals with the appointment of a liquidator consists of six sub-sections. . . . That the power of appointment of a liquidator is discretionary is evident from the use of the word may which shows that the provision is directory and not mandatory in character. It is obvious however that in cases where a final order is made there is no question of discretion and that a liquidator will have to be appointed In cases where an interim order is made the competent authority will have to consider on the facts and in the circumstances of each case and having regard to the ground which has weighed with it in making the interim order whether it is necessary and proper to appoint a liquidator in order to protect and preserve the assets of the society to facilitate the ultimate winding up of the society. . . . Sub-section (3) provides for one of the consequences ensuing upon the making of a final order confirming the interim order and accordingly the officers of the society vacate their offices no sooner such final order is made Besides while the winding up order remains in force the general body of the society is precluded from exercising any powers. The extracted portion of this sub-section apparently refers to the final order confirming an interim order winding up a society and therefore the general body of the society is not to exercise any powers only after such final order is made. The extracted portion of this sub-section apparently refers to the final order confirming an interim order winding up a society and therefore the general body of the society is not to exercise any powers only after such final order is made. A final winding up order remains in force subject to the result of the appeal until the termination of liquidation proceedings under Section 114 and it is during that period that the general body will not exercise any powers. . . . 51b Sub-section (5) provided one of the consequences of the appointment of the liquidator and accordingly the whole of the assets of the society on the appointment of the liquidator vest in him and it further provides for the completion of his title over the land held by him on behalf of the society as soon as the mutation of the name of his office is effected. . . . 51c In other words once a liquidator is appointed irresoective of whether he is appointed at the stage of making an interim order or final order the whole of the assets of the society vest in him and his title over the land held by him on behalf of the society is also made complete once the conditions prescribed under the sub-section are satisfied. . . . ( 52 ) SECTION 109 provides for an appeal against a winding up order. The right of appeal is conferred upon the committee or any member of the society ordered to be wound up. The right of appeal is against the order made under Section 107. These wide words would indicate that an appeal would lie both against an interim order as well as final order. There is no reason to cut down the wide ambit of those words and to read down the provision as providing for an appeal only against a final order. Indeed the respondents conceded that the right of appeal was in respect both of an interim as well as of a final order. There is no reason to cut down the wide ambit of those words and to read down the provision as providing for an appeal only against a final order. Indeed the respondents conceded that the right of appeal was in respect both of an interim as well as of a final order. On this apparently wide right of appeal however there are two restrictions which are expressly enacted and they are : (1) That no appeal is provided against an order interim as well as final issued under Section 107 (1) (c) (i) (ii) or (iii); in other words no appeal would lie if an interim or final order winding up a society is made on the ground that it has not commenced working or that it has ceased working or that it possesses shares of members deposits not exceeding five hundred rupees; (2) that there is no right of second appeal that is to say if an order has been made by the Registrar in an appeal preferred against an interim or final order made by any person on whom the powers of the Registrar are conferred such appellate order of the Registrar would not be subject to a further appeal before any authority. ( 53 ) SECTION 110 details the various powers of the liquidator which he has to exercise subject to the rules and the general supervision control and direction of the Registrar. . . . ( 54 ) IT requires to be borne in mind that some of these powers can be exercised or in any case effectively exercised by the liquidator only after the period for appeal against a final order confirming the interim order of winding up has expired or where an appeal has been preferred such appeal has been dismissed in view of the provisions of Section 111 which provides : (1) that the order for winding up shall be effective and shall operate in favour of all creditors and of all the contributories of the society as if it had been made on the joint petition of creditors and contributories only upon the happening of either of those two events and that (2) the liquidator shall proceed to realise the assets of the society by sale or otherwise only after the winding up order becomes effective. It would thus appear that some of the powers such as those with regard to the sale of immovable and movable property of the society for realizing the assets of the society or to decide the questions of priority arising out of claims against the society and making payment to any class or classes of creditors in full or rateably according to the amounts of such debts would enure in favour of the liquidator only after the winding up order becomes effective upon the expiry of the period of appeal or the decision of the appeals as the case may be. . . . ( 55 ) XXX xxx xxx ( 56 ) SECTION 114 provides for the termination of liquidation proceedings within a period of three years from the date of the order of the winding up unless the period is extended by the Registrar and the power of the Registrar to grant extension is limited to one year at a time and four years in the aggregate. After the period of seven years from the date of the order by fiction the liquidation proceedings are to be treated as having been terminated and the Registrar is enjoined to pass an order terminating the liquidation proceedings accordingly. The Registrar is also under a duty to terminate the liquidation proceedings on receipt of the final report from the liquidator notwithstanding anything contained in the preceding provision. ( 57 ) XXX xxx xxx ( 58 ) THE foregoing analysis of the various provisions relating to liquidation of a co-operative society brings into sharp focus the following important features : (1) The winding up can be ordered not only by the Registrar but also by the Additional or Joint Registrar or any other person including the District or Assistant District Registrar upon whom the Registrars power in this behalf is conferred by a general or special order made by the State Government; (2 ). The winding up could conceivably be ordered straightway upon he receipt of the report of the auditor auditing the accounts of the society under Section 84 or on the basis of the result of the inquiry under Section 86 or inspection under Section 87 without first resorting to the less drastic measures such as those provided in Sections 85 and 92 of the Act; (3) The liquidation procedure consists of two essential stages one following upon the other and the first stage which consists of the making of an interim order is an effective step in the process of winding up taken after full consideration and it is not in the nature of an ex parte ad interim order made under urgent circumstances in a civil proceeding by a Court on a prima facie view of the matter. which might be vacated after hearing the other side if it applies to discharge the order; (4 ). The making of an interim order is dependent upon the existence of the statutory conditions and a bona fide and reasonable opinion of the competent authority formed on objective facts and after taking into account all the relevant circumstances including the alternative measures available that the society ought to be wound up; (5 ). The interim order must be speaking order disclosing on the face of it how the mind was applied to the objective facts and the conclusion was reached and it must be communicated to the concerned society; (6 ). The interim order besides being subject to an appeal in certain cases can be challenged in a collateral proceeding such as a writ petition if it suffers from any of the well-known errors which make such an order vulnerable in writ jurisdiction; (7) The law is silent on the question as to whether the concerned society has to be given an opportunity of being heard before an interim order is made; (8) However a full-fledged hearing is to be afforded to the concerned society before a final order vacating or confirming the interim order is made; (9) Once a final order is made a liquidator will have to be appointed; however at the stage when an interim order is made the appointment of liquidator is discretionary and it will depend upon judicious exercises of the powers by the competent authority on the facts and in the circumstances of the case; (9-A ). The law is silent on the question as to whether the concerned society has to be given an opportunity of being heard before a liquidator is appointed; (10) Where a liquidator has been appointed pursuant to an interim order the officers of the society have to hand over to him the custody and control of all the property effects actionable claims books records and other documents pertaining to the business of the society although they do not vacate their office. The general body of the society however does not cease to exercise its powers; (11) In the event of an interim order being vacated status quo ante is to be restored by the liquidator by handing over the property effects actionable claims books records and other documents of the society to the office-bearers who delivered the same to him; (12) The whole of the assets of the society vest in the liquidator on his appointment and his title over land must be taken to be complete as soon as the mutation of the name of his office is effected; (13) The liquidator has wide powers enumerated in the relevant provisions and for all practical purposes he acts for and on behalf of the society and does all acts as may be necessary to wind up the society subject to the general supervision control and direction of the Registrar; (14) When a final order is made confirming the interim order the officers of the society will cease to exercise any powers; (15) An interim order or a final order winding up the society is appealable at the instance of the committee or any member of the society ordered to be wound up subject to the limitation that no appeal lies against an order issued under Section 107 (1) (c) (i) (ii) or (iii) and no second appeal also lies; (16) The jurisdiction of a Civil Court is barred and it is precluded from taking cognizance of any matter connected with the winding up or dissolution of a society; (16a) The Liquidation proceeding must terminate latest within a period of seven years from the date of the order of winding up; and (17) The surplus assets if any of the society which has been finally wound up are not to be divided amongst its members but are to be disposed of in the manner prescribed in the Act. Crucial Questions : ( 59 ) WE now move on to the centre of the stage. The law is silent on the question of prior notice and hearing before an interim order is made and the liquidator if any pursuant to such orders is appointed. The question has arisen whether such opportunity must be held to have been necessarily excluded or whether it must be implicitly read into it having regard to the nature of the power the person or persons on whom it is conferred the consequences ensuing from the exercise of the power and the manner in which the power is expected to be exercised. We have earlier noticed the historical background and the motivation behind the insertion of the provision with regard to the making of an interim order. The framers of the law having realized and accepted the requirement of prior notice and hearing to the society concerned before a final order of winding up is made have expressly provided for the same in sub-section (3) However with the end in view of preventing the office-bearers of the society from destroying the record or evidence on the basis of which the liquidator can ultimately take action against them for the recovery of the societys dues the framers of the law provided for the making of an interim order as an antecedent step to the making of a final winding up order. The question. which has now arisen is whether even at that stage compliance with audi alteram partem rule is necessary and if yes whether the silence of the statute must be taken to have negatived the same with the consequence of its being exposed to a constitutional challenge or whether silence notwithstanding it is permissible to read into the statute by necessary implication the duty to comply with the audi alteram partem rule. ( 60 ) IN order to answer these questions it would be necessary to consider the content and reach of the audi alteram partem principle its applicability or otherwise under diverse situations and its place in the constitutional set up of our country. Audi Alteram Partem - Constitutional Perspactive and Jural Prescription : . ( 61 ) THE principle of audi alteram partem is a facet of the rules of natural justice. It mandates that no one shall be condemned unheard. Audi Alteram Partem - Constitutional Perspactive and Jural Prescription : . ( 61 ) THE principle of audi alteram partem is a facet of the rules of natural justice. It mandates that no one shall be condemned unheard. The increasing importance of natural justice in the field of administrative law cannot be over-emphasized. That great humanising principle is intended to invest law with fairness and to secure justice and over the years it has grown into a widely pervasive rule affecting large areas of administrative action. It has been described as a majestic conception and in recent years it has been epitomised as ensuring fair play in action. The right to an administrative hearing is now universally regarded as an essential requirement of fundamental fairness. ( 62 ) IN A. K. Kraipak v. Union of India A. I. R. 1970 S. C. 150 the role of natural justice in our Republic has been succinctly stated. . . . This celebrated decision highlights the importance of natural justice and brings into sharp focus its pervasiveness in our constitutional set-up. ( 63 ) ARTICLE 14 on which rests securely the foundation of our democratic republic embodies that from a positivistic point of view equality is antithetic to arbitrariness. Equality and arbitrariness are sworn enemies; one belongs to the rule of law in a republic while the other to the whim and caprice of an absolute monarch. Where an act is arbitrary it is implicit in it that it is unequal both acording to political logic and constitutional law and is therefore violative of Article-14 (E. P. Rovappa v. State of Tamil Nadu. A. I. R. 1974 S. C. 555.) It would thus appear that Article 14 strikes at arbitrariness and unreasonableness in legislative and executive action and ensures fairness and equality of treatment. Any law or state action in order to be in conformity with Article 14 must be right just and fair and not a arbitrary fanciful or oppressive. Compliance with the requirement of prior notice and hearing before any prejudicial action is taken guarantees fair play in action. Ensuring as it does a just and fair decision and excluding as it does arbitrary and capricious exercise of power it must be regarded as having been constitutionally sanctified in the great equalising principle enunciated in Article 14. Compliance with the requirement of prior notice and hearing before any prejudicial action is taken guarantees fair play in action. Ensuring as it does a just and fair decision and excluding as it does arbitrary and capricious exercise of power it must be regarded as having been constitutionally sanctified in the great equalising principle enunciated in Article 14. ( 64 ) IT must be remembered however that rules of natural justice operate in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it. If therefore any law specifically excludes audi alteram partem in the context of a State action there can be no question of reading into the law the requirement of compliance with it irrespective of the pervasiveness of that principle in our legal sustem. Such a legislation however might be charged with the vice of unreasonableness and consequential voidness. If and when such challenge is levelled the Court will have to decide whether having regard to the nature of the power conferred the person or persons on whom it is conferred the framework and the subject-matter of the law conferring the power the consequences ensuing from the exercise of the power and so on and so forth the exclusion of the rules defeats the protection of Article 14 and renderd the law void. ( 65 ) WHEN the statute does not specifically exclude audi alteram partem but is silent as to its applicability the question whether the rule is attracted depends upon construction that is to say the legislative intention is to be ascertained upon a true construction of the statute and it has to be determined whether silence signifies exclusion or leaves room for implication bearing in mind all the relevant considerations enumerated above. This brings into sharp focus the question as to when audi alteram partem rule must be held to be excluded by implication. 65a It might be pointed out that this question was considered in Smt. Maneka Gandhi v. Union of India A. I. R. 1978 S. C. 597 and Mohinder Singh Gill v. The Chief Election Commissioner A. I. R. 1978 S. C. 851. 65a It might be pointed out that this question was considered in Smt. Maneka Gandhi v. Union of India A. I. R. 1978 S. C. 597 and Mohinder Singh Gill v. The Chief Election Commissioner A. I. R. 1978 S. C. 851. The first was a case where the passport of the aggrieved citizen was impounded by the Government of India without offering to her an opportunity of showing that the ground for impounding it either did not exist or had no bearing on public interest. The second was a case in which the poll in a Loksabha election constituency already held was cancelled and the time for the completion of the election was extended by the Election Commission of India and one of the competing candidates challenged the action inter alia on the ground of violation of natural justice. ( 66 ) XXX xxx xxx the principle which emerges from the decisions in Maneka is that right to prior notice and opportunity may be taken to have been jettisoned where having regard to the nature of the action to be taken its object and purpose and the scheme of the relevant statutory provision fairness in action does not demand its implication and even warrants its exclusion. If nothing unfair can be inferred by not affording an opportunity to present or meet a case if importing the right to be heard has the effect of paralysing the administrative process or the need for promptitude or if the urgency of the situation so demands compliance with audi alteram partem rule may be excluded. However the rule cannot be jettisoned save in very exceptional circumstances where compulsive necessity so demands. ( 67 ) XXX xxx xxx ( 68 ) THIS decision in Mohinder Singh reaffirms the high pedestal on which audi alteram partem rule stands in our constitutional order and negatives its exclusion except in very exceptional and extreme cases such as when the clearest case of public injury flowing from the least delay is self-evident or dire social necessity requires it. Even in such cases however remedial hearing as soon as urgent action is taken is held to be the next best. If importing the right to be heard will paralyse the process law will be assumed to exclude it but the onus then is on him who urges exclusion to make out way. Even in such cases however remedial hearing as soon as urgent action is taken is held to be the next best. If importing the right to be heard will paralyse the process law will be assumed to exclude it but the onus then is on him who urges exclusion to make out way. Audi alteram partem cannot be matyred or jettisoned for the cause of administrative immediacy. although it may in a given case be reduced to a manageable minimum. It cannot be given a go-by on the ground of impracticability. Similarly it cannot be excluded where the person in authority makes an order which though it appears to be provisional being subject to subsequent review by another forum is in substance and reality not a mere exparte order based on the existence of a prima facie case but an order which operates on its own force until set at naught by a subsequent hearing. ( 69 ) IT would thus appear to be well-settled law that total exclusion of the light of hearing is not to be inferred save in very exceptional and extreme cases and that too if nothing unfair can be inferred by denial of such opportunity and where dire social necessity or clearest case of public injury warrants the same. ( 70 ) ALL this said and done it is equally well-settled that audi alteram partem rule is not cast in a rigid mould and the judicial decisions establish that it may suffer situational modifications. The essence of the rule must however remain namely that the affected person must have a reasonable opportunity of hearing and the hearing must be a genuine hearing. As observed in Manekas case what opportunity may be regarded as reasonable would necessarily depend on the practical necessities of the situation. Similar observations are to be found in Mohinder Singhs case. ( 71 ) IT would thus appear that the right to prior notice and hearing is not cast in any rigid mould. It has no strait-jacket formula. It does not consist of hard and fast rules or cut-and-dry principles. Since fairness itself is flexible pragmatic and relative concept no rigid ritualistic and sophisticated formula can be laid down All said and done however the fundamental postulate namely fair play in action by affording a reasonable opportunity of being heard must be preserved. It has no strait-jacket formula. It does not consist of hard and fast rules or cut-and-dry principles. Since fairness itself is flexible pragmatic and relative concept no rigid ritualistic and sophisticated formula can be laid down All said and done however the fundamental postulate namely fair play in action by affording a reasonable opportunity of being heard must be preserved. Audi Alteram Partem - Its Applicability and the Extent of Applicability to Interim Orders : ( 72 ) AGAINST the aforesaid background we must now proceed to consider the applicability and if so the extent of applicability of audi alteram partem rule at the stage of making of an interim order under Section 107 (1 ). We must make it clear at the outset that the question herein is not of total exclusion of audi alteram partem rule in the process of winding up of a society for sub-section (3) ensures a reasonable opportunity to the society of being heard before a final order vacating of confirming the interim order is made. The controversy is confined merely to prior notice and herein at the stage of the making of an interim order and the statute being silent regarding the opportunity of hearing at that stage to that extent alone the question requires examination. ( 73 ) SILENCE of a statute has no exclusionary effect except where it flows from necessary implication It was strongly contended on behalf of the respondents that silence here denotes exclusion and to buttress the submission several circumstances were pressed into service. ( 73 ) SILENCE of a statute has no exclusionary effect except where it flows from necessary implication It was strongly contended on behalf of the respondents that silence here denotes exclusion and to buttress the submission several circumstances were pressed into service. Those circumstances are: (1) The Legislature has expressly provided hearing at the stage of making of the final order thereby necessarily implying that hearing is excluded at the stage of an interim order; (2) An interim order is a legislative device to secure immediate action with the end in view of preventing the office-bearers of the society from destroying the records or evidence on the basis of which action could ultimately be taken against them for recovery of the societys dues till they are afforded a regular opportunity of being heard and having regard to the exercise of power under such circumstances prior notice and hearing is necessarily excluded; (3) The concerned society must be assumed to have known or in fact knows what is being alleged against it and what is likely to happen when an action is taken under Section 107 (1) on the grounds stated therein and under such circumstances prior notice and healing is totally an empty formality; (4) An interim order is a temporary action having a limited play until a final order is made and since a post decisional remedial hearing is provided audi alteram partem rule is excluded at that stage of interim order Alternatively it was urged that there was no need to imply compliance with requirement of prior notice and hearing having regard to the alternative safeguards namely (i) the provision for appeal against an interim order; and (ii) the power having been vested in a high authority whose opinion is required to be founded on objective facts and statutory conditions and since the action based on such opinion is open to judicial review on the ground of fundamental defects. ( 74 ) ON behalf of the petitioner quite the contrary line of reasoning was adopted and it was strenuously contended that having regard to the nature of the power the person upon whom it is conferred the dire consequences which follow upon the making of an interim order which indeed is an effective step in the process of liquidation and the scheme of the relevant provision audi alteram partem rule must necessarily be implied at the stage of the making of an interim order and if not implied the provision would itself be violative of Article 14. ( 75 ) THE contour of the controversy having been thus defined we must proceed to resolve the problem in the light of the guidelines referred to earlier. We are not impressed by the argument that merely because a hearing is provided at the stage of making of a final order the right to prior notice and hearing must be deemed to have been excluded at the stage of making of an interim order. In the first pace as earlier pointed out the mechanism of winding up in Section 107 contemplates taking of two distinct essential steps in a proper sequence. Therefore the right of hearing provided at the second stage of the proceeding cannot be treated as having excluded by necessary implication the right of hearing at the first stage. In the next place the Legislature could not possibly have left the right of hearing to be implied at the second-stage having regard to the fact that it is the final step in the process of liquidation and such a step cannot ordinarily be taken unless a reasonable opportunity of hearing is afforded. An express provision in regard to a reasonable opportunity of hearing at that stage cannot therefore be pressed into service to exclude hearing at the first stage by implication. In the last place as earlier pointed out an interim order is made by the competent authority after forming a considered opinion and it remains in force till the final order vacating or confirming the interim order is made at the termination of the proceeding. What the competent authority does at the stage of passing an interim order is not merely to ascertain whether a prima facie case exists for the purpose of passing an ex parte ad interim order subject to modification after notice to the affected party. What the competent authority does at the stage of passing an interim order is not merely to ascertain whether a prima facie case exists for the purpose of passing an ex parte ad interim order subject to modification after notice to the affected party. As a result of the making of such an order serious consequences follow especially when a liquidator is appointed soon thereafter. The office-bearers of the society are excluded from the management the assets of the society vest in the liquidator and its business would automatically come to a standstill since its image would be tarnished having regard to the fact that the process of winding up has commenced. Under such circumstances the right or prior notice and hearing cannot be jettisoned by implication save in very exceptional circumstances where compulsive necessity so demands on grounds such as when public injury is likely to flow from the least delay or dire social necessity. The onus on those who urge limited exclusion of hearing at the stage of making of an interim order cannot be discharged by merely pointing out the provision with regard to a full-fledged hearing at a totally different stage of the proceeding. ( 76 ) WE are also not impressed by the argument founded on the alleged administrative immediacy or urgency. Even assuming that the intention of the framers of the law in enacting the provision for the making of an interim order was to implement the relevant recommendation of the Laud Committee we are not satisfied that it is necessary to jettison audi alteram partem on the ground of alleged immediacy or urgency arising out of possible destruction of records and evidence by the office-bearers. This aspect which has been pressed into service to war rant expediency overlooks the provision of Section 83 which confers upon the Registrar the power to seize and take possession of books and records of a society in case he is satisfied that they are likely to be tampered with or destroyed or the funds and property of a society in case he is satisfied that they are likely to be misappropriated or misapplied. What could be achieved by a mere exercise of power of seizure cannot be allowed to be achieved by making an interim order of winding up without affording an opportunity of being heard. What could be achieved by a mere exercise of power of seizure cannot be allowed to be achieved by making an interim order of winding up without affording an opportunity of being heard. The ground of immediacy or urgency is also difficult to be appreciated because the interim order is subject to an appeal in certain cases. The very provision for appeal with all the possible reliefs that could be granted including interim relief destroys the basis of this argument. That apart in our opinion the taking of an action behind the back of the society cannot be justified on this ground because it does not appear to us that such situation exists in every case. A clearest case of public injury or dire necessity is therefore not made out which would justify the casualty of audi alteram partem. ( 77 ) THERE is no substance in the argument that the society must be assumed to know or in fact knows what is alleged against it and what is likely to happen to it when an interim order is made and that therefore compliance with audi alteram partem would be an empty formality. This argument neglects the various conditions for the exercise of power and the alternative courses open to the competent authority to deal with an erring society. Take for example the grounds stated in clause (a) of sub-section (1) of Section 107. A society against which an auditor has made a report under Section 84 or against which an inquiry has been held under Section 86 or in respect of the books of which an inspection is held under Section 87 even if it is aware of defects or irregularties in its constitution working or financial condition or in its books as the case may be would hardly be able to apprehend the course of action which the competent authority might take. The society might well expect on its own appreciation of the situation that a remedial action under Section 85 or Section 92 might be taken against it. The competent authority on the other hand on its own assessment of the situation might consider it desirable to take the extreme action of winding up the society. The society might well expect on its own appreciation of the situation that a remedial action under Section 85 or Section 92 might be taken against it. The competent authority on the other hand on its own assessment of the situation might consider it desirable to take the extreme action of winding up the society. Even assuming however that such extreme action is apparently warranted on the facts and in the circumstaces of the case it would not justify the contention that no prior notice and hearing is necessary as it would be an empty formality because the society must be deemed to know the inevitability of such course of action. The argument in substance is that fair play in action does not demand a prior notice and hearing because adverse result is a foregone conclusion. The submission in our opinion demonstrates unfairness because it rests on a pre-judgment of the case even before the whole of the case is disclosed and a chance of meeting the same is afforded. One cannot overlook that even there are manifest grounds for action for a proper assessment of the situation and for forming an objective opinion in a just and fair manner a prior hearing even after the defects and irregularities are brought to the surface would be necessary. ( 78 ) THE last ground urged in support of the exclusion theory is equally baseless. In the first place there is no difference in principle so far as observance of rules of natural justice is concerned between decisions which are final and those which are not. Natural justice is attracted even where a preliminary point which affects the parties rights is to be decided or where the limited scope of the decision is whether there is a prima facie case for taking action. [ (See Wiseman v. Borneman (1969) 3 All E. R. 275 (H. L.)] In the next place an interim order under Section 107 is not a temporary order in the sense of an ex parte ad interim order made to meet an urgent situation and liable to be varied at short notice upon the motion of the affected party. We have earlier explained the true legal effects and consequences of an interim order. We have earlier explained the true legal effects and consequences of an interim order. Merely because it is liable to be vacated or confirmed by a final order that may be passed at the termination of the proceeding after a full-fledged hearing it cannot be regarded as a temporary or provisional order having a limited play. Besides the right of hearing provided at the stage of the making of a final order cannot strictly speaking be regarded as a post decisional remedial hearing. The right of hearing provided at that stage is intended to give an opportunity to the affected party to show cause against the final step in the process of liquidation being taken. Such a right cannot be equated with a post decisional remedial hearing being afforded to the affected party soon after an interim order is made with a view to seeking its review. ( 79 ) THE alternative argument namely that there is a provision for appeal and that the power is vested in a high authority who has to form an objective opinion subject to judicial review is equally ill-founded. ( 80 ) A limited right of appeal under Section 109 against an interim order is no substitute for hearing before the order is made. In Malloch v. Aberdeen Corporation (1971) 1 Weekly Law Reports 1578 at 1598 Lord Wilberforce observed as follows"a limited right of appeal on the merits affords no argument against the existence of a right to a precedent hearing and if that is denied to have the decision declared void". These observations have been approvingly cited in Mohinder Singhs case and they completely answer the first ground urged on behalf of the respondents. . ( 81 ) THE submission that the power of winding up is vested in high authority is not only statutorily but factually unsound. We have dealt with that aspect of the matter earlier. The power can and has in fact trickled down to an Assistant District Registrar who by no stretch of imagination can be said to be a high authority or highly placed officer. Once the power is shown to have been invested not in a high authority but in lower rungs of administration the immunity which is ordinarily afforded to discretionary orders made by highly placed officials cannot be invoked. There may not be personal mala fides in every case. Once the power is shown to have been invested not in a high authority but in lower rungs of administration the immunity which is ordinarily afforded to discretionary orders made by highly placed officials cannot be invoked. There may not be personal mala fides in every case. Legal mala fides however cannot be straightway ruled out. For want of expertise experience or adequate comprehension of the nature of power and its dire consequences the possibility that the power might be exercised in situations which do not justify the exercise of such power cannot altogether be ruled out. The remedy by way of a writ petition against such ultra vires orders besides being expensive is of a restricted nature. It cannot always be invoked in all situations and if invoked would not necessarily give an expedtious relief. ( 82 ) IT would thus appear that the various grounds urged for our consideration for holding that audi alteram partem is impliedly excluded at the stage of making of an interim order do not impress us. We are unable to hold on those grounds that the applicability of the rule is ruled out by necessary implication at that stage. ( 83 ) WE find much merit on the other hand in the submission made on behalf of the petitioner that having regard to the various considerations the Court must readily infer by necessary implication the right to prior notice and hearing before a interim order is made. And what are those considerations ? First the constitutional mandate contained in Article 14 which sanctifies natural justice and makes it a pervasive principle applicable to all State actions. And what are those considerations ? First the constitutional mandate contained in Article 14 which sanctifies natural justice and makes it a pervasive principle applicable to all State actions. Second the nature of the action namely the first step in the process of winding up which is the beginning of the process of imposition of a death sentence on a live society even assuming that it is leading a wasted life It is inconceivable that such an extreme measure could be allowed to be taken without affording even a minimal hearing especially when quasi-judicial power is exercised while making an interim order Third the framework of the law namely the very conditions prescribed for the exercise of power the choice of available alternatives the exercise of discretionary power on the objective set of facts present in each case the consequential step of the appointment of a liquidator with all the attendant circumstances and so on and so forth would make it extremely difficult if not impossible for the competent authority to act fairly and justly without affording to the concerned society a prior opportunity of being heard An opinion that the society ought to be wound up cannot possibly be rationally and honestly formed unless the viewpoint of the society is before him Fourth as earlier pointed out the power has trickled down to the lower hierarchical level and the constitution of the tribunal exercising the power does not afford guarantee or immunity against the abuse of power Last and above all the implication of audi alteram partem is not ruled out either on the ground of over riding public interest or dire social necessity nor on the ground that importing the right to be heard will have the effect of paralysing the administrative process. Quite the contrary conclusion can easily be reached We are of the view therefore that this is a fit and proper case in which the Court would read in sub-section (1) of Section 107 the right to a prior notice and hearing before an interim order is made. Quite the contrary conclusion can easily be reached We are of the view therefore that this is a fit and proper case in which the Court would read in sub-section (1) of Section 107 the right to a prior notice and hearing before an interim order is made. ( 84 ) THE inevitable question which must next arise is as to what is the extent of hearing that is required to be provided No doctrinaire of fanatical approach can be adopted in examining this question Having regard to the object and purpose behind the provision on the one hand and on the other to the consequences likely to ensue upon the exercise of the power thereunder before an interim order is made with of without consequential appointment of a liquidator the society should be given a fair opportunity of being heard which need not necessarily be elaborate or formalised It is not obligatory that a Counsel should be allowed to appear nor would it be compulsory to permit oral evidence to be adduced in all cases at that stage Disclosure of the relevant grounds and gist of the evidence in support thereof and asking for an immediate explanation oral in emergent case and otherwise written may in many cases be sufficient compliance A hearing which in the ultimate analysis satisfies the test of fair play in action would meet the requirement It is inadvisable indeed impracticable to lay down a general rule governing the hearing to be provided in each and every case. Situational variations may require modifications in the nature and content of hearing. The ultimate guideline can only be one namely that a reasonable opportunity suitable in the circumstances of the case which affords a fair and just hearing must be given to the society bearing in mind the various considerations pointed out above lest it might be alleged against the authority later that it undertook an empty public relations exercise or underwent an irritating inconvenience Beyond this we want to say no more on this subject the Finale: ( 85 ) IN the view which we have taken as above the conclusion is inevitable that the order impugned in the instant case having been made without affording to the petitioner any opportunity of being heard the said order must fall to the ground as being arbitrary and ultra vires. In this view of the matter we have not thought it proper and necessary to go into the other grounds raised on behalf of the petitioner ( 86 ) THE petition is accordingly allowed and Rule is made absolute by quashing the impugned order with costs Consequently the liquidator will forthwith cease to function and he will hand over to the officers of the society the property effects actionable claims books records and other documents of the society. The liquidator will also forthwith remove the seals affixed by him on the premises of the Bank an Epilogue ( 87 ) BEFORE parting with the case we would like to draw the attention of the State Government to the desirability of investing the power of liquidation in an officer not lower in rank than the Joint Registrar of Co-operative Societies who has the necessary experience equipment and expertise to deal with such matters. We need not repeat again what we have stated earlier with regard to the content and extent of the power of winding up and the serious consequences which follow upon liquidation. The law relating to co-operative societies has provided for winding up as a last measure and not as the first resort. There are enough checks and balances and the attempt of the authorities should be to inject healthy life into the body-fabric of a sick society lather than bring about its speedy end In order to achieve this object it would be desirable to invest the power in a high official who can be trusted to exercise it reasonably honestly and bona fide having regard to all the relevant circumstances of the case and bearing in mind the policy and object of the statute We hope and trust that the view expressed by us would be considered at an appropriate level and action taken soon to implement the same ( 88 ) XXX xxx xxx ( 89 ) XXX xxx xxx petition allowed