Sahab Singh v. Kashi Nath Mishra — 1985 DIGILAW 931 (ALL)

JUDGMENT S.K. Dhaon, J. - This petition, at the instance of the member of a State Legislature, stems from his appointment, as an Administrator of the District-Co-operative Bank, Ghazipur, a co-operative Society, under sub-section (4) of S. 29 of the U. P. Co- operative Societies Act, 1965 (hereinafter referred to as the Act). An order replacing the petitioner with the District Magistrate as an Administrator is being impugned. 2. The Deputy Registrar, Co-operative Societies, acting as the Registrar has passed the impugned order. In it, it is merely recited that it is in the interest of the Bank that the District Magistrate shall take over from the petitioner. In accordance with the direction of this Court, the Deputy Registrar has filed a counter-affidavit. In it the averments made are these; During the tenure of the petitioner the target of the short-term as well as the medium term loans could not be achieved. For short-term loans the achievement was Rs. 2.81 lacs as against a target of Rs. 7.50 lacs. For medium term loans the achievement was Rs. 23.34 lacs as against the target of Rs. 80 lacs. The petitioner made fresh appointments in the Bank after removing the old employees in violation of the Rules. The petitioner recovered a sum of Rs. 57,367/- from the Bank to cover the cost of petrol during the year 1983-84. He sanctioned a sum of Rs. 6,146/- as his own travelling allowance. He used the jeep and the car of the Bank for performing certain journeys between Ghazipur and Mednipur, a distance of about 11 kilometers, and he also realised rickshaw charges for the same journey. Serious financial irregularities were detected in his T. A. bills. A circular was issued on 20th September, 1984, by the Registrar of the Co-operative Societies in which some guidelines for the appointment of an Administrator were given. One of them was that a person who had been convicted of any offence or found guilty by competent Court of having committed any offence or against whom some criminal case was pending in a competent Court should not be appointed as Administrator. After the receipt of the said guidelines it was found that a Criminal Case No. 197 of 1976 under Sections 302, 307 and 149 of the Penal Code was pending in the Court of the 1st Additional District Judge, Ghazipur against the petitioner. After the receipt of the said guidelines it was found that a Criminal Case No. 197 of 1976 under Sections 302, 307 and 149 of the Penal Code was pending in the Court of the 1st Additional District Judge, Ghazipur against the petitioner. The impugned order was passed in the interest of the Bank as the unsatisfactory performance of the petitioner as an Administrator of the Bank was "the main basis of his change". 3. The impugned order is assailed on the grounds : (1) Principles of natural justice violated; (2) power of removal exercised arbitrarily; (3) clause (b) of sub-sec. (4) of S. 29 of the Act is, in so far as the conferment of power to change an Arbitrator from time to time, hit by Article 14 of the Constitution and is void; and (4) exercise of power by the Deputy Registrar is mala fide. We shall deal with these contentions seriatim. 4. Is any statutory or civil right created in the Administrator to continue in office? On the reply to this question will depend the answer to the, first submission. A brief reference to the relevant provisions may be made. Clauses (e), (o) and (r) to S. 2 respectively define "Committee of Management", "Officer of a Co-operative Society" and "Registrar". The first expression means the Committee of a Co- operative Society, by whatever name called, to which the management of the affairs of the Society is entrusted under S. 29. The second expression means the President, Vice-President, Chairman, Vice-Chairman, Secretary, Member of the Committee of Management, Treasurer, Liquidator, Administrator or any other person employed by Co-operative Society whether with or without remuneration to carry on the business of the society or to supervise its affairs. The last expression means the person for the time being appointed as Registrar of the Co-operative Societies under sub-section (1) of S. 3 and includes any person appointed under sub- sec. (2) of that section when exercising all or any of the powers of the Registrar. Section 3 empowers the State Government to appoint a person to be a Registrar of Co-operative Societies for the State. It also empowers the State Government to appoint other persons to assist the Registrar and by general or special order confer on any such person all or any of the powers of the Registrar. Section 3 empowers the State Government to appoint a person to be a Registrar of Co-operative Societies for the State. It also empowers the State Government to appoint other persons to assist the Registrar and by general or special order confer on any such person all or any of the powers of the Registrar. In S. 7 the Registrar is empowered to register a society and its bye- laws. A registration certificate is issued by the Registrar (Section 8). Section 9 provides that the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal, and with power to hold the property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purpose for which it is constituted. Sub-section (2) of S. 27 empowers the Registrar to remove or expel a person from the membership of a Co-operative Society in certain situations. Chapter IV of the Act deals with the "Management of Societies". S. 28 provides that the final authority of a Co- operative Society shall vest in the general body of its members in general meeting. Section 29 provides that the management of every Co- operative Society shall vest in a Committee of Management constituted in accordance with the Act, the Rules and the bye-laws, which shall exercise such powers and perform such duties as may be conferred or imposed by the Act, the rules and the bye-laws. The term of the elected members of the Committee of Management shall be such as may be provided in the Rules or the bye-laws of the Society. A duty has been cast on the Committee of Management to take steps before the expiry of its term for election of members of the Committee of Management. However, it is open to the State Government to direct that in respect of a certain class of Co-operative Societies, the superintendence, direction, control and conduct of elections of the members and Chairman and Vice-Chairman of the Committee of Management shall vest in the Registrar. However, it is open to the State Government to direct that in respect of a certain class of Co-operative Societies, the superintendence, direction, control and conduct of elections of the members and Chairman and Vice-Chairman of the Committee of Management shall vest in the Registrar. Sub- section (4) of S. 29 provides that where, for any reason whatsoever, the election of the elected members of the Committee of Management has not taken place or could not take place before the expiry of the term of elected members the Committee of Management shall, notwithstanding anything to the contrary in the Act or the rules, or the bye-laws of the society cease to exist on the expiry of such term. The Registrar is empowered to appoint an Administrator for the management of the affairs of the society. He has- also been empowered to change the Administrator from time to time. The functions of the Administrator are subject to any direction which the Registrar may give from time to time. Section 35 empowers the Registrar to either supersede or suspend a Committee of Management. In the event of the supersession of the Committee of Management the Registrar is empowered to appoint in its place a new committee consisting of one or more members of the Society or an Administrator or Administrators who need necessarily be members of the Society. The Registrar is empowered to change a Committee or any members thereof or the Administrator or Administrators at his discretion. The Committee, the Administrator or Administrators are enjoined to exercise powers subject to any direction which the Registrar may issue from time to time. Section 64 empowers the Registrar to audit the accounts of every Co-operative Society. In S. 65 the Registrar is empowered to hold inquiry into the constitution, working and financial condition of a co-operative Society. Under S. 66 the Registrar has the power to inspect books, cash and other properties of the Society. Section 69 empowers the Registrar to make an order directing the Society or its Officers to take such action to remove the defects detected in the audit, inquiry, inspection etc. Sections 70 and 71 clothe the Registrar with the powers of adjudicating disputes. Section 72 arms the Registrar with the power of directing the winding up of a co-operative society. In section 73 he can appoint a Liquidator. 5. Sections 70 and 71 clothe the Registrar with the powers of adjudicating disputes. Section 72 arms the Registrar with the power of directing the winding up of a co-operative society. In section 73 he can appoint a Liquidator. 5. From a conspectus of the aforementioned provisions it is apparent that the Legislature has conferred administrative, supervisory and even quasi-judicial powers on the Registrar. He is a powerful officer. The machinery of the Act revolves round him and the State Government exercises control over the Co-operative Societies through him. 6. We have already seen that the Committee of Management ceases to exist on the expiry of the term of its elected members. Clause (b) of sub-section (4) minus the proviso and the Explanation to it and sub-section (5) of S. 29 may be extracted :- "(b) On or as soon as may be after the expiry of such term, the Registrar shall appoint an Administrator for the management of the affairs of the society until the reconstitution of the Committee of Management in accordance with the provisions of this Act, the rules and the bye-laws of the society, and the Registrar shall have power to change the Administrator from time to time. (5) The Administrator appointed by the Registrar under sub-section (4) shall, subject to any directions which the Registrar may from time to time give, have the power to perform all or any of the functions of the Committee of Management or of any officer of the society and shall be deemed for all purposes under this Act, the rules and the bye-laws of the society to be the Committee of Management." 7. In the scheme of S. 29 the Registrar is the sole authority to appoint any person as an Administrator. There is no limitation to the exercise of his power so far as the choice of an appointee is concerned. No qualification for such an appointment is laid down by or under the Act. No remuneration is prescribed for an Administrator appointed under S. 29. The Administrator has no fixed term. He is there in a stop-gap arrangement. He has to go out the moment a Committee of Management is reconstituted and it is his duty to arrange for such a reconstitution within a period of one year from the date of his appointment. 8. The Administrator has no fixed term. He is there in a stop-gap arrangement. He has to go out the moment a Committee of Management is reconstituted and it is his duty to arrange for such a reconstitution within a period of one year from the date of his appointment. 8. In law, no distinction exists between the termination of service under the "term of contract" and that in accordance with the "terms and conditions of service". A fortiori the same principle should apply to an appointment to an office. Section 29 provides the terms and conditions. They are : The Registrar shall have the power to change an Administrator from time to time, the Administrator shall, subject to any direction which the Registrar may from time to time give, perform certain functions and the Administrator shall within one year from the date of his appointment arrange for the reconstitution of the Committee of Management. 9. An Administrator who has accepted the office cannot afterwards complain his replacement by another person. He cannot be permitted to wriggle out of the statutory condition that the power to change an Administrator is exercisable by the Registrar from time to time. The only exception is where the condition prescribed by the statute is void as being inconsistent with some Constitutional provision. The foundation of the exception is not the choice of the holder of the office but the invalidity of the provision itself. To put it differently, the petitioner cannot claim any right to continue to hold the office once the power reserved in the Registrar to change him is exercised. 10. It is implicit in S. 29 that the right, if any, acquired under the appointment to the office is subject to be determined by the Registrar. Such a precarious right is created from the very beginning. And if the right itself is determinable under the statute, there is really no interference with it. The Registrar has an undoubted power to change the Administrator from time to time. By the exercise of this power there is no interference with any right, including civil right, of an Administrator. Even if there be such an interference it is a necessary incidence to the exercise of the statutory power. 11. Can an Administrator recover damages for wrongful removal from office? If yes, the petitioner surely acquired a right to continue in office. Even if there be such an interference it is a necessary incidence to the exercise of the statutory power. 11. Can an Administrator recover damages for wrongful removal from office? If yes, the petitioner surely acquired a right to continue in office. An agreement may come into existence either by act of parties or by operation of law. Likewise, the terms of conditions of an agreement may have their origin either in contract or in a statute or provisions having the force of a statute. Assuming, a contract of employment comes into existence by the appointment of a particular person as an Administrator, the term or condition is that the employment is terminable by the Registrar unilaterly. The Registrar exercises his option and terminates the employment. Such a termination cannot be termed as wrongful. Therefore, the question of any damages being awarded to the Administrator does not arise. 12. The Deputy Registrar in the impugned order merely replaced the petitioner with the District Magistrate. The petitioner was not entitled to any opportunity whatsoever of a hearing before his removal from the office. In his counter-affidavit the Deputy Registrar has, under the orders of this Court, given reasons for exercising the power of removing the petitioner. Undoubtedly, unsavoury allegations have been made against the petitioner and he was not afforded any opportunity to give his version to those allegations. Violation of the principles of natural justice is being complained as. according to the petitioner, the impugned order coupled with the allegations made in the counter-affidavit entail civil consequences. The petitioner cannot succeed without establishing that he acquired a civil right by virtue of his appointment as an Administrator. 13. In Mohinder Singh Gill v. The Chief Election Commr., New Delhi, AIR 1978 SC 851 Black's Legal Dictionary has been pressed into service for ascertaining the meaning of civil rights. In the said case it is mentioned that "Civil Rights" are such as belong to every citizen of the State or Country, or, in a wider sense, to all its inhabitants, and are not connected with the organisation or administration of government. They include the rights of property, marriage protection by the laws, freedom of contract, trial by jury, etc ................ They include the rights of property, marriage protection by the laws, freedom of contract, trial by jury, etc ................ Or, as otherwise defined, civil rights are rights appertaining to a person in virtue of his citizenship in a State or community; Rights capable of being enforced or redressed in a civil action. Also a term applied to certain rights secured to citizens of the United States by the Thirteenth and Fourteenth amendments to the Constitution, and by various acts of Congress made in pursuance thereof. In the same case it was observed that "civil consequences" undoubtedly cover infraction of not merely property but of civil liberties, material deprivations and non-pecuniary damages. In its comprehensive connotation, every thing that affects a citizen in his civil life inflicts a civil consequence. The conclusion, therefore, is inevitable that the imputations made against the petitioner in the counter-affidavit do visit him with civil consequences. In such a situation, normally, unless the statute either expressly or impliedly provides to the contrary, the doctrine of natural justice would be held to be applicable. 14. In Union of India v. Tulsi Ram Patel, (1985) 3 SCC 398 : AIR 1985 SC 1416 para 100 the Supreme Court has quoted with approval the view expressed by Chinnappa Reddy. J. in his dissenting judgment in Swadeshi Cotton Mills v. Union of India, (1981) 2 SCR 533 : AIR 1981 SC 818 to the following effect : "The principles of natural justice have taken deep root in the judicial conscience of our people, nurtured by Binapani, (1967) 2 SCR 625 : AIR 1967 SC 1269 . Kraipak (1969) 2 SCC 262 : AIR 1970 SC 150 , Mohinder Singh Gill (1978) 2 SCR 272 : AIR 1978 SC 851 , Maneka Gandhi (1978) 1 SCC 248 : AIR 1978 SC 597 , etc. etc. They are now considered so fundamental as to be `implicit in the concept of ordered liberty' and, therefore, implicit in every decision making function, call it judicial, quasi-judicial or administrative. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by statute can be claimed nor can the right be narrowed. Where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. No wider right than that provided by statute can be claimed nor can the right be narrowed. Where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. The implication of natural justice being presumptive it excluded by express words of statute or by necessary intendment. Where the conflict is between the public interest and the private interest, the presumption must necessarily be weak and may, therefore, be readily displaced." (Emphasis supplied by us). 15. Let us, therefore, have a look again on some of the provision of the Act to discern the intendment of the Legislature regarding the application of the doctrine of natural justice in the exercise of power of changing an Administrator. Section 35 provides for the supersession or suspension of a Committee of Management. In sub-section (1) it is laid down that the Registrar may supersede a Committee of Management after affording it a reasonable opportunity of being heard and obtaining the opinion of the general body of the Society. In sub-section (3) of S. 35 the Registrar is empowered to appoint either a new committee or an Administrator or Administrators in place of the superseded Committee of Management. This arrangement is to ensure for one year. Further, the Registrar is empowered to change the committee or any member thereof or the Administrator or Administrators appointed under sub-section (3) of S. 35 at his discretion. In sub-section (5) it is provided that the committee, the Administrator or Administrators appointed under sub-sections (3) and (4) shall, subject to any directions which the Registrar may from time to time give, have the power to exercise all or any of the function of the committee of management or of any officer of the society and shall be deemed for all purposes under the Act, the rules and bye-laws of the society to be the committee of management. In sub-section (6) a duty is cast upon the committee, administrator or administrators appointed under sub-sections (3) and (4) to arrange for the reconstitution of the Committee of Management to take over the management of the Co-operative Society on the expiry of the period of one year referred to in sub-section (3). It is clear from the scheme of S. 35 that the Legislature has contemplated the application of the doctrine of natural justice only when the Registrar is exercising his powers of superseding the existing Committee of Management under sub-section (1). This doctrine has not been made applicable when the Registrar is exercising power under sub- section (4). Therefore, reading sub-sections (1) and (4) of S. 35 together, it cannot he successfully contended that even in the absence of specific words as found in sub-section (1). the Legislature intended that even at the stage of exercising powers under sub-section (4) the Registrar should afford an opportunity of hearing to the committee or any member thereof or the Administrator or administrators appointed under clause (a) or (b) of sub-section (3). On the contrary, the presence of express words in sub-section (11 and observance of complete silence in sub-section (5) lead to the irresistible conclusion that by necessary implication the doctrine of natural justice has been made inapplicable in sub-section (4). 16. In sub-sections (4), (5) and (6) of S. 29 the Legislature has adhered to the same policy which is evolved in sub-sections (3), (4), (5) and (6) of S. 35. If the Legislature excludes the applicability of the doctrine of natural justice when the Registrar exercises power under sub- section (4) of Section 35. there is no reason to hold that it intended the application of the said doctrine when the Registrar exercises power under clause (b) of sub-section (4) of S. 29. On the other hand, in the absence of any indication express or implied in clause (b ) of sub-section (4) it will be reasonably inferred that the Legislature has stuck to the policy. The contents of S. 38 clinch the issue against the observance' of the rules of natural justice by the Registrar while exercising powers either under sub-section (4) of S. 35 or under clause (b) of sub-section (4) of S. 29. The contents of S. 38 clinch the issue against the observance' of the rules of natural justice by the Registrar while exercising powers either under sub-section (4) of S. 35 or under clause (b) of sub-section (4) of S. 29. Sub-section (1) of S. 38 provides that the Registrar may in certain situations call upon a co-operative society to remove, within a specified period, an officer from the office held by him and where necessary also to disqualify him from holding any office in a society for a period not exceeding three years, whereupon, the society shall, after affording opportunity of being heard to the officer concerned, pass such order as it may deem fit. Sub-section (1) of S. 38 makes it clear that the Registrar may exercise the power referred to therein, without prejudice to any other action that may or can he taken against an officer. Sub-section (2) provides that on the failure of the society to take action under sub-section (1), the Registrar may, after affording opportunity of being heard to the officer and for reasons to he recorded and communicated to the person and the society concerned, remove,or remove and disqualify for a period not exceeding three years, the officer from holding any office under that society. On a bare reading this provision does not apply to the appointments made either under clause (b) of sub-section (4) of Section 29 or under sub-section (3) of section 35. Assuming. It applies; the legislative intendment is made crystal clear that the giving of an opportunity of being heard is not contemplated when the Registrar is taking action either under S. 29 or under S. 35. 17. There is yet another reason as to why the presumption of the applicability of doctrine of natural justice stands rebutted. In S. 29 as well as in S. 35 the Registrar has been armed with the powers of drastic nature of changing the Administrator or the members etc. from time to time to meet the exigencies of the situations. These situations are of urgent nature. Further, the presumption is that the Registrar is exercising his powers in the public interest and in furtherance of the scheme and the provisions of the Act. from time to time to meet the exigencies of the situations. These situations are of urgent nature. Further, the presumption is that the Registrar is exercising his powers in the public interest and in furtherance of the scheme and the provisions of the Act. Therefore, the petitioner cannot he allowed to make any grievance of the fact that the Registrar did not afford him an opportunity of a hearing before exercising the power of removing him from the office even though the order has the effect of visiting him with civil consequence. 18. No doubt. the "heart" of the audi alteram partem rule is "justice and fair play in action". Its role is to secure justice and prevent miscarriage of justice. We have seen that an Administrator has no right to continue in office. We have also seen that the terms of the statute rule cut the application of the said rule of natural justice. The question is : Should the petitioner be given a post-decisional remedial hearing? While answering this question a conscious effort should be made to avoid an approach which may result in the answer in the negative to the question posed. Assuming the foundation of the impugned order is mixed up with certain stigmas, the non-observance (sic) of the petitioner. Therefore, nothing unfair can be inferred by not affording him an opportunity of presenting his case. It is not a statutory requirement that the Registrar should record reasons while changing an Administrator. The purpose of a post-decisional remedial hearing is to restore the status quo as obtaining on the date of an order or action, Such a restoration is not countenanced by the provisions of S. 29. The power is exercisable from time to time. Indeed, in the instant case, the petitioner has brought to our notice the fact that the Registrar has now replaced the District Magistrate with a Committee of certain persons headed by a Chairman. There is nothing in the statute to prevent the Registrar to make yet another change and to continue the process of change. The only rider is that his action should be bona fide and actuated by the desire to preserve and advance the interest of the public. Therefore, no useful purpose will be served by the giving of an opportunity of a hearing to the petitioner now. The only rider is that his action should be bona fide and actuated by the desire to preserve and advance the interest of the public. Therefore, no useful purpose will be served by the giving of an opportunity of a hearing to the petitioner now. We are, therefore, of the opinion that the petitioner is not entitled even to a post-decisional hearing. 19. To sum up, the petitioner was appointed as an officer with a precarious right, he had no right to continue as an Administrator, the statute excluded the application of the audi alteram partem rule, the petitioner was not entitled to a pre-decisional hearing, he is not entitled to a post decisional remedial hearing and the giving of a hearing now will be an exercise in futility. 20. The reasons disclosed by the Deputy Registrar in the counter-affidavit filed in this court show that he honestly and bona fide believed that the continuance of the petitioner as an Administrator was not in the interest of the Bank. It cannot, therefore, be said that he exercised the power arbitrarily. The scheme of the Act has already been referred to by us in the earlier part of this judgment. The pre-amble to the Act and the relevant provisions, particularly those contained in Chapter IV, are clear and they give out clear guidelines for an action under clause (b) of sub-section (4) of S. 29. An Administrator is appointed to meet an emergent situation on account of the failure of a. Society to elect the members of its Committee of Management. An Administrator has to exercise the powers and perform the functions of the Committee of Management and for all practical purposes he has been given the status of the Committee of Management. We have already indicated that the Registrar has been vested with wide administrative and supervisory powers. He is an officer appointed by the State Government. In sum, it cannot be said that the Legislature has conferred wide, uncontrolled and unfettered powers upon the Registrar to change the Administrator from time to time. It goes without saying that even if there is no infirmity in the statute which confers statutory powers on an authority the exercise of power by that authority is always amenable to a challenge on the ground, of mala fides or on the ground of it being exercised with an ulterior motive or extraneous consideration. It goes without saying that even if there is no infirmity in the statute which confers statutory powers on an authority the exercise of power by that authority is always amenable to a challenge on the ground, of mala fides or on the ground of it being exercised with an ulterior motive or extraneous consideration. We, therefore, do not find any substance in the submissions made on behalf of the petitioner that the Deputy Registrar either acted arbitrarily in passing the impugned order or the provisions of clause (b) of sub-section (4) of S. 29 of the Act contravene Article 14 of the Constitution. 21. We are now left with the last submission. According to the petitioner, the impugned order was passed by the Deputy Registrar under the directions of and at the behest of Sri Kashi Nath Misra, the then State Minister for Co-operative in the Government of Uttar Pradesh, Sri Kashi Nath Misra has filed his affidavit in this Court. He has denied the allegations made by the petitioner. He has averred that he neither gave any direction to the Deputy Registrar, nor made any request to the Deputy Registrar, nor used any pressure tactics upon the Deputy Registrar so as to induce him to pass the impugned order. The Deputy Registrar in his turn had averred that he passed the order on his own without being influenced at all by Sri Misra. These affidavits sound a death-knell of the submission made on this part of the case. Reliance is placed on behalf of the petitioner on certain newspaper cuttings filed and annexed to the rejoinder- affidavit. These cuttings have no evidentiary value and are not even admissible. The correspondents who are alleged to have sent the news to the newspapers concerned for publication are neither parties to the petition nor have their affidavits been filed. 22. All the submissions made in support of this petition are devoid of merit. The petition fails and is dismissed, but without any order as to costs.