BOARD OF DIRECTORS OF SAHAKARI VIPNAN SAMITI MARYADIT, KHACHROD v. REGISTRAR OF CO-OPERATIVE SOCIETIES, M. P.
1986-10-29
C.P.SEN, S.AWASTHY
body1986
DigiLaw.ai
C. P. SEN, J. ( 1 ) THE petitioners, who are members of the Board of Directors of respondent No. 3 Society, are seeking, in this petition under Article 226 of the constitution, quashing of the show cause notice issued under Section 53 (2) of the M. P. Co-operative Societies Act, 1960 and also for striking down Section 53 (10) of the Act as ultra vires of the Constitution. ( 2 ) THE respondent No. 3 Sahkari Nipnan Samiti, Khachrod was established in 1967 with the object of sale and purchase of agricultural inputs, improved seeds, chemical fertilizers and essential commodities of domestic use to its members ; to arrange for proper storage and marketing of members agricultural produce and generally to improve their economic condition ; to work as an agent of Government or of M. P. State Co-operative Marketing Federation or of other institution for the above purpose. It was registered under the M. P. Co-operative societies Act, 1960 and the petitioner No. 2 was elected as President of board of Directors. The respondent No. 2, i. e. the Assistant Registrar of co-operative Societies, Ujjain, issued a show cause notice on 16-3-1985 to the petitioners under Section 53 (2) of the Act as to why the Board of Directors be not suspended for serious irregularities, illegalities, mismanagement, misappropriation, mis-utilisation of the funds of the Society. The same day an order was passed under Section 53 (10) suspending the Board of Directors and appointing respondent No. 4 as officer-in-charge of the Society. The petitioners grievance is that the show cause notice was given on the basis of certain enquiry made behind the back of the petitioners and without hearing them and there was no justification for suspending the Board of Directors ; at the most the functioning of the Society under the supervision of an authority nominated by respondent no. 2 would have been sufficient, as required under sub-section (10) of Section 53; there was no necessity of taking action under Section 53 when the respondent no.
2 would have been sufficient, as required under sub-section (10) of Section 53; there was no necessity of taking action under Section 53 when the respondent no. 2 could have taken action under Section 61 for rectification of the defect, if any, found in the inspection ; the charges related to the period when the old board of management was functioning and the present Board of management was not responsible for the same ; Section 53 (10) violates Article 14 of the constitution as it cuts down the three years tenure of the elected body under section 49 ; it gives arbitrary power to the respondents to suspend the duly elected body and thereby curtailing its tenure and prevent its functioning. ( 3 ) THE petition is being opposed by the respondents saying that the petition is misconceived ; no final order has been passed ; curtailment of the period under Section 53 (10) of the Act is justified and the State has the authority to do so and can impose such reasonable restrictions under Article 19 (4) of the constitution in the larger interests of the Society. ( 4 ) HAVING heard the parties, we are of the opinion that there is no merit in this petition. The Joint Registrar, Co-operative Societies and the Collector, Ujjain informed respondent No. 2, Assistant Registrar, Co-operative Societies, Ujjain in January 1985 that proper accounts has not been maintained by the Society and due payments have not been made to the farmers and there was a demonstration by more than 200 farmers before the Sub-Divisional Officer on 10-1-1985; therefore, the respondent No. 2 by invoking his powers under Section 59 of the act, authorised the Audit Officer, Ujjain to enquire into the affairs of the society. The Audit Officer by his report submitted that the Board of Directors have committed serious irregularities and illegalities in the working of the society on the basis of the records of theSociety there is misappropriation and misutilisation of the funds of the Society, has not maintained record properly and upto date, for this reasons the financial position of the Society is not sound and he, therefore, proposed that the Board of Directors be superseded.
A show cause notice dated 6-3-1985 was issued to the petitioners under Section 53 (2), giving details of the allegation and charges under two heads and giving 13 instances of serious lapses on the part of the Board of Directors. The petitioners thereafter filed a reply to the charges on 19-4-1985 and before any final order could be passed the petitioners rushed to this Court by filing this petition and obtaining stay of the operation of the order of suspension. But ultimately the ad interim stay granted was vacated. ( 5 ) THE charges are grave and serious in nature and we are of the opinion that the respondent No. 2 was justified in suspending the Board of Directors by invoking his powers under Section 53 (10) of the Act. The show cause notice was give a after the respondent No. 2 had gone through the report of the Audit officer who conducted an enquiry and submitted his report. In the show cause notice the statement of allegations have been given in detail and the petitioners were also furnished with copies of the enquiry report. Therefore, there is no violation of any provisions of law or any infringment of any right of the petitioners. It is true that under Section 53 (10) of the Act, the tenure of the elected body which is three years under Section 49, stands curtailed to the extent the body remains under suspension under this provision and there may be causes where an order of suspension may have been revoked ultimately after finding that no case has been made out for supersession. But under Section 53 (1) there can be supersession only, if, in the opinion of Registrar, Committee of any society (a) persistently makes default or is negligent in the performance of the duties imposed on it under this Act or bye-laws of the Society or by any lawful order passed by the Registrar or is unwilling to perform such duties ; (b) commits acts which are prejudicial to the interests of the Society or its members ; or (c)is otherwise not functioning properly, the Registrar may, by order in writing remove the Committee and appoint a person or persons to manage the affairs of the Society for a specified period not exceeding two years in the first instance.
Under sub-section (2) no order under sub-section (1) shall be made unless the committee has been given a reasonable opportunity of showing cause against the proposed order and representation, if any, made by it, is considered. Under section 53 (10) during the period between the issuance of notice and the passing of an order removing the Committee, the Committee may be required by the registrar to function under the supervision, and with the approval of such authority as the Registrar may specify in this behalf and no order made or resolution passed or any other act performed by the Committee, shall be effectual unless it is approved by such specified authority, provided that where the Registrar is of the opinion that the supersession of the Committee during the period of proceeding is necessary in the interests of the Society, he may suspend the Committee. Therefore, suspension can only be if the Registrar is satisfied that the Committee persistently makes default or is negligent in the performance of its duties or acts in a man ner prejudicial to the interests of the Society or is not functioning properly. May be in some cases ultimately the Society is not superseded but that would n ot show that there was no justification for suspending the Committee. Under the circumstances, the second proviso to Section 53 (10), on reinstatement of the Committee, the period during which it remained under suspension has to b e counted towards its tenure of 3 years. Therefore, there is nothing unreasonable in that provision nor it is unconstitutional. Under Article 19 (4) of the Constitution, the State may enact reasonable restriction on such type of societies and their elected Committees in the general interests and such Societies form a different class by themselves. Therefore, there is reasonable restriction that such type of elected Committee, that is the Board of Directors, should not be allowed to function after giving show cause notice and so the period of suspension will be counted towards the tenure of three years under Section 49. ( 6 ) WITH the result, the petition fails and it is dismissed with costs. Counsel's fee Rs. 200/-, if certified. Petition dismissed. .