B. Laila v. JtOf Fisheries — 1993 DIGILAW 209 (KER)

JUDGMENT G.H. Guttal, J. 1. The petitioners are members of the managing committee of the Kovalam Harijan Fisheries Cooperative Society, the respondent No. 1 herein. They impugn the validity of the order No. F1-2449/92 dated 26-11-1992 (Ext. P6) of the Registrar of Fisheries, the respondent No. 2 herein, whereunder he superseded the managing committee of the respondent No. 1 society and appointed an Administrator under S.32 of the Kerala Cooperative Societies Act, hereinafter referred to as the "Act". 2. In a nutshell, the petitioners' contention is that the respondent No. 2 made the impugned order without giving to the committee of the Society "an opportunity to state its objections" as envisaged by sub-s.(1) of S.32 of the Act. 3. The undisputed facts are these: On 19-10-1992 respondent No. 2 addressed a notice No. F1/2449/92 (Ext. P 1) to the petitioner No. 1 alone in her capacity as the president of the Board of Directors of respondent No. 1 society. The notice alleged that an enquiry based on a complaint, revealed that the members of the board of directors of the respondent No. 1 are related to each other and belong to one family, which, according to the respondent No. 2, is a contravention of the Act. Rules and bye laws. The explanation of the petitioner No. 1 was sought. Finally the notice stated that if the explanation was not received within the stipulated time "the present Board of Directors of the society will be superseded and the society will be brought under the Administration rule". No other charge or allegation was made in this notice. No notice was issued to any other member of the board of directors. The petitioner No. 1. B. Laila sent her explanation denying the allegation that the members of the managing committee were related to each other. Thereafter the impugned order No. F1/2449/92" dated 26-11-1992 was made. It is necessary to set out the contents of this order. The order was based on verification of relevant records and after conducting an enquiry into the affairs of respondent No. 1. The order records that the respondent No. 2 was satisfied that the managing committee of the society had committed the following acts: a) Procured registration of the society by suppressing the fact that the promoters consisted of near relatives such as husband, wife, brothers and so on. The order records that the respondent No. 2 was satisfied that the managing committee of the society had committed the following acts: a) Procured registration of the society by suppressing the fact that the promoters consisted of near relatives such as husband, wife, brothers and so on. b) appointed a paid secretary in violation of the bye laws of the society. c) Committed serious offences like alteration of entries, overwriting and destruction of records with ulterior motives and to get undue favour and benefits from the society. d) denied membership to deserving applicants. e) admitted to membership persons who are not bona fide fishermen thereby violating the rules and bye laws and f) misappropriated funds and other benefits received under Special Component Plan. On the basis of these facts, the Registrar recorded his satisfaction that the managing committee indulged in unlawful activities, failed to perform duties and functions with responsibility and was composed of members of one family. Then he proceeded to make the impugned order. 4. Learned Government Pleader urged two points to support the impugned order. Firstly he urged that the opportunity to the committee to state its objections need not be given if the Registrar considered it impracticable to do so. The provision of giving such opportunity is not mandatory. Therefore even if such opportunity is not given the impugned order is not vitiated. Secondly he contended that the removal of members of the managing committee, by the impugned order, is not an action under S.32 of the Act. According to learned Government Pleader it is an action under R.44 of the Act. Therefore, a notice calling upon the committee to state its objections envisaged by S.32(1) was rightly denied. 5. I will deal with these two points in the first instance. The only notice issued to any member of committee is the notice dated 19-10-1992 (Ext. P1). The submission of the learned Government Pleader that this is not a notice under sub-s.(1) of S.32, is unfounded. By this very notice respondent No. 2 cautioned the petitioner No. 1 that "the present board of directors of the society will be superseded and the society will be brought under the administration rule". R.44 does not authorise removal of members of a committee as a whole or supersession of a committee. By this very notice respondent No. 2 cautioned the petitioner No. 1 that "the present board of directors of the society will be superseded and the society will be brought under the administration rule". R.44 does not authorise removal of members of a committee as a whole or supersession of a committee. It merely empowers the Registrar to declare that a member of a committee has ceased to be such a member. The opportunity to state objections contemplated by sub-r.(3) of R.44 is meant for individual members who may be found to have been disqualified. The opportunity to state objections envisaged by sub-s.(1) of S.32 of the Act is given to the committee as a whole and not to individual members. S.32 and R.44 operate in different areas and serve different purposes. An opportunity to state objections contemplated by R.44(1) is not an opportunity against supersession of a committee and appointment of Administrator. It is against the proposed declaration that a member of a committee is disqualified. The notice Ext. P1 expressly proposed supersession, of the committee. Having regard to the distinction between S.32 and R.44 and upon a true interpretation of the notice Ext. P 1. I have no doubt that it purports to be the opportunity to state objections under sub-s.(1) of S.32 of the Act and not under R.44. 6. In view of the judgments of this Court in. M. V. Hydrose v. Deputy Registrar of Cooperative Societies ( 1971 KLT 753 ) and Deputy Registrar of Cooperative Society and another v. P. K. George ( 1974 KLT 189 ) the learned Government Pleader is right that the omission to give the opportunity to state objections envisaged by S.32(1) is not mandatory and therefore by itself such omission may not vitiate the order of supersession and appointment of administrator. But the matter does not end here. Two questions immediately arise. Having chosen the course of providing an opportunity to the committee. - to state its objections to the proposed supersession, is it open to the Registrar to urge that he did not purport to supersede the committee under S.32 of the Act? But the matter does not end here. Two questions immediately arise. Having chosen the course of providing an opportunity to the committee. - to state its objections to the proposed supersession, is it open to the Registrar to urge that he did not purport to supersede the committee under S.32 of the Act? Secondly having chosen to call upon the petitioner to show cause why the committee should not be superseded, is it open to the Register to contend that, since the opportunity to state objection, is not mandatory, the omission to give such opportunity does not vitiate his order? I answer both these questions in the negative. Where the Registrar is satisfied that the committee needs to be removed on grounds stated in sub-s.(1) of S.32 of the Act, he must makeup his mind whether or not the opportunity to the committee to state its objections is reasonably practicable. If it is not, he may not give such opportunity. If it is reasonably practicable, he shall not shrink from giving it. In this case, since such opportunity was given through the notice No. F 1/2449/92 dated 19-10-1992 (Ext. P1), the Registrar very well knew that giving such opportunity was reasonably practicable. The Registrar's notice dated 19-10- 1992 (Ext. P 1) is an expression of his opinion that it was reasonably practicable to give to the committee an opportunity to state its objections to the proposed supersession. A litigant cannot be permitted to blow hot and cold in the same breath. Having actually given the notice dated 19-10-1992 (Ext. P.1), which purports to provide the opportunity to the committees to state its objection to the proposed supersession, the Registrar cannot turn round and urge that the opportunity to state objection not being mandatory should be considered superfluous. The approach of the Registrar is not bona fide. If notice to state objections is in his opinion reasonably practicable and is actually given, the Registrar cannot be permitted to adopt a position inconsistent with it. Having chosen the path of supersession of the committee, the Registrar cannot now urge that he did not. Having given the opportunity to state objections it is not open to the Registrar to defend his action on the basis of the legal effect of the omission to give an opportunity to the committee to state its objections. Having chosen the path of supersession of the committee, the Registrar cannot now urge that he did not. Having given the opportunity to state objections it is not open to the Registrar to defend his action on the basis of the legal effect of the omission to give an opportunity to the committee to state its objections. The question is not whether the requirement of the opportunity under sub-s.(1) of S.32 is not mandatory and therefore its inadequacy does not vitiate the impugned order. The question is whether the Registrar of Cooperative Societies who actually gave such opportunity can be permitted to defend his action on the basis of the legal effect of the omission to give such opportunity. Having chosen to give to the committee the opportunity to state its objection to the proposed supersession, the Registrar cannot be permitted to escape a scrutiny of the validity of such opportunity. Aware of the inadequacy of the notice dated 19-10-1992 (Ext. P1) as an opportunity to state objections, the Registrar has resorted to the untenable defence that he was not bound to give such opportunity. 7. Then the question is whether the notice dated 19-10-1992 (Ext. P1) complies with the requirements of giving to the committee "an opportunity to state its objections" envisaged by sub-s.(1) of S.32. Sub-s.(1) of S.32 lists several acts. These acts are (a) persistent default or neglect in the performance of duties imposed by the Act, Rules or bye laws (b) commission of any act which is prejudicial to the interests of the society and (c) wilful disobedience or failure to comply with any lawful order or direction issued under the Act or rules. The opportunity to state objections is intended to enable the committee to place before the Registrar its case in regard to the accusations on the basis of which the committee is proposed to be superseded. It follows that any opportunity, in order to be meaningful as an opportunity, must enable the committee to understand what it is accused of and then put forth its case in reply to such accusations or complaints. Such opportunity must bring to the notice of the committee all the allegation which may enter adverse decision by the Registrar. It follows that any opportunity, in order to be meaningful as an opportunity, must enable the committee to understand what it is accused of and then put forth its case in reply to such accusations or complaints. Such opportunity must bring to the notice of the committee all the allegation which may enter adverse decision by the Registrar. If the purported opportunity does not call upon the members of the committee to explain every incriminating fact which is likely to influence the Registrar's decision, it is not "opportunity to state objections". The power to supersede a Committee is really an extraordinary power which should not be resorted to unless there is an extraordinary situation. This extraordinary nature of the power and the existence of the three situations set out earlier, which make the exercise of the extraordinary power possible, provide the rationale of the statutory opportunity to the committee to state its objections. This requirement of giving opportunity is a manifestation of the legislative urge to follow the rules of natural justice before superseding a Cooperative society. 8. Before considering whether the principles of natural justice embodied in S.32 have been followed by the Registrar, the nature and content of the principle of natural justice applicable to this case needs to be borne in mind. 9. The development of the rules of natural justice is marked by a steady growth of a code of fair administrative procedure. As the governmental power becomes increasingly drastic, the need to enforce procedural fairness becomes all the more imperative. The observance of rules of natural justice is a mandatory rule of administrative law, the non observance of which renders the exercise of power void. A universally accepted fundamental principle is that a party whose rights are adversely affected should know the case of its adversary and place its case before the authority. Fairness is the essence of such opportunity. The administrative authority is free to obtain adverse information from any source. But it is of the essence of fairness of the opportunity that the party against whom action is proposed must have the opportunity to "correct or contradict anything prejudicial to their view" (Board of Education v. Rice and others (1911 A. C. 179). 10. The facts of this case may be considered in the light of the principles set out in Para.9 above. 10. The facts of this case may be considered in the light of the principles set out in Para.9 above. The notice dated; 19-10-1992 refers to only one fact viz., the directors were closely related to one another. But the Registrar took into consideration several other facts set out at (a) to (f) in Para.3 above. These allegations are so serious that, inevitably, they entered the Registrars "satisfaction" that the committee was guilty of the acts enumerated in sub-s.(1) of S.32 of the act. The petitioner or the committee was not even informed that these allegations need to be met by them. Every accusation or information which is being used against the committee must be brought to the notice of the committee. The Registrar's satisfaction was based on the cumulative effect of all these facts on his mind. Since the "opportunity" was given only in respect of the inter relationship between members of the Board, it follows that the "opportunity to state its objections against other accusations was denied to the committee. A fair opportunity must call upon the committee to meet every accusation against it. An opportunity to meet only one accusation is an opportunity to object to that fact alone. An adverse decision may be based on such a circumstance. But in this case the Registrar based his satisfaction on several accusations which were not brought to the notice of the petitioners. Since the impugned order is based on the Registrar's satisfaction in regard to facts which were never brought to the notice of the petitioners and the committee, there is a clear denial of the "opportunity to state its objections". The impugned order therefore suffers from breach of the rule of natural justice embodied in sub-s.(1) of S.32 of the Act. 11. However the order which I propose to make herein below shall not preclude the Registrar of Fisheries from starting fresh proceedings in accordance with law. Such proceedings if any may be commenced only after complying with the order made in the next paragraph. 12. For the reasons stated in the foregoing paragraphs, I allow this petition and make the following order: i) The order No. F1-2449/92 dated 26-11-92 (Ext. Such proceedings if any may be commenced only after complying with the order made in the next paragraph. 12. For the reasons stated in the foregoing paragraphs, I allow this petition and make the following order: i) The order No. F1-2449/92 dated 26-11-92 (Ext. P6) superseding the committee made by the Registrar of Fisheries is quashed ii) The respondent Nos: 2 and 5 shall forthwith withdraw the Administrator appointed under the order referred to at (i) above and direct the Administrator to hand over the affairs of the society to the managing committee of the Kovalam Harijan Fisheries Cooperative Society. iii) The Administrator shall forthwith cease to function as the Administrator of the society referred to at (ii) above. iv) The Registrar of Fisheries and the State of Kerala shall comply with this order before 8th April, 1993.