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1994 DIGILAW 192 (CAL)

JAY CO-OPERATIVE HOUSING SOCIETY LIMITED v. STATE OF WEST BENGAL

1994-06-10

RUMA PAL

body1994
RUMA PAL, J, J. ( 1 ) THE application has been filed by seven petitioners. The first writ petitioner Is a Co-operative Society, of which the petitioner nos. 2 to 7 claim to be the Directors. The challenge in this writ application is to an order dated 16th March, 1994 issued by the State Government by which an administrator has been appointed for managing the affairs of the society. ( 2 ) THE factual background to the case is necessary to be stated in order to appreciate the allegations made by the parties. The society was formed in 1978. A Board of Directors was elected. The Board of Directors continued till 1985. In 1985, a second Board of Directors was appointed. On 18th August, 1989, an order v, as passed by the Registrar, being respondent no. 4 appointing an administrator being the respondent No. 5 in place of the Board. The Administrator continued in office for a period of about three years. The terms of the office expired on 19th August, 1992. On 25th January, 1994, an order was passed by the Registrar of Co-operative societies in exercise of power under section 25 (l) (a) of the West bengal Co-operative Societies Act, 1983 (referred to as 'the Act'), nominating the petitioner Nos. 2 to 7 as the Board of Dirertors of the Society. The order which appointed the petitioners 2 to 7 states that the maximum tenure of the nominated Board would be one year from the date of taking over/ assuming charge. Within that period the nominated Board was required to regularise membership and arrange election to constitute a validly elected board for running the day to day functioning of the said Society. On 8th February, 1994, the nominated Board assumed charge and according to them they kept the essential services of the society going. However, the erstwhile administrator did not make over charge to the nominated Board nor did he hand over the documents lying with him. The petitioners have stated in paragraph 16 of the petition that they had lodged an FIR in the Gariahat Police Stition end also informed the D. C. (D D.)regarding the handing over the documents by the erstwhile administrator. It is further stated that the Registrar of the Societies was all along kept intimated of the steps taken by the petitioners to obatain records from the erstwhile administrator. It is further stated that the Registrar of the Societies was all along kept intimated of the steps taken by the petitioners to obatain records from the erstwhile administrator. ( 3 ) THE impugned order, according to the petitioners, was not communicated to the petitioners but was merely put up on the notice board by the society. The impugned order reads as follows:"whereas in this Deptt. Notification No. 3404-Coop/a/3p-27/88 dated 18 8. 89 the Governor, was pleased in exercise of the power conferred by section 30 (2) of the WBCS Act, 1983, to dissolve the then board of directors of Joy Co-operative Housing Society ltd. , 11a Dover Lane, Calcutta-29 (Regd. No. 13/cal of 1978) (hereinafter referred to as the said society) with immediate effect and to appoint Sri Abja Keshab Chatterjee sol of Shri aurobinda Chatterjee, 80, Park Street, Calcutta-17, as the administrator of the said society with immediate effect and until further order ; and whereas section 30 (2) of the WBCS Act, 1983 clearly stated that the maximum period of tenure of the administrator appointed in terms of section 30 (2) ibid is for three years and thereby the terms of administratorship of Shri Abja Keshab chatterjee automatically expired on 17. 8 92 ; and whereas in the office order No. 896 dated 25 1 94, the Registrar of Co-operative Societies, West Bengal, in exercise of the power conferred by sec'ion 25 (l) (a) of the WBCS Act, 1983 appointed a nominated board of administrators from the members of the said Society for a period of one year ; and whereas it has been reported to this Deptt. that the nominated board of directors of the aforesaid Society, appointed by the registrar of Co-operative Societies, West Bengal vide his Order no. 896 dated 25. 1. 94 has not been able to take full charge of the said Society, namely due to non-making over of the related books of records, etc , by Shri Abja Keshab Chatterjee whose tenure has automatically expired on 17. 8. 896 dated 25. 1. 94 has not been able to take full charge of the said Society, namely due to non-making over of the related books of records, etc , by Shri Abja Keshab Chatterjee whose tenure has automatically expired on 17. 8. 92 and "serious allegations of malpractices have been made against some members of the aforesaid nominated board of directors of the said society by some general members of the some Society ; and whereas the Governor is of the opinion that the aforesaid business of the said Society having virtually came to standstill due to presistent default and negligence in the performance of duties, the responsibilities of management of the said Society should be entrusted to an independent person capable to take objective and neutral view of the entire situation In order to restore normalcy in the affairs of the said Society ; now, therefore, in exercise of the power conferred by section 7 (a) of the WBCS Act, 1983, the Governor is pleased to grant exemption in favours of the said Society from operation of section 30 (2) of the WBCS Act in so far as it relates to the tenure of the administrator appointed by the State Government for a period of one year with immediate effect and to appoint Shri Dilip kumar Banerjee, IAS (Retd ) 11/3 Old Ballygunge, 2nd Lane, calcutta-700019 as the sole administrator for managing the affairs of the said Society for a period of one year with immediate effect in the interest of the members of the said society. He should take all possible steps for constitution of a board of directors of the said Society in a regular way during the period of one year ; this Cancels Order No. 896 dated 25. 1. 94 passed by the Registrar of co-operative Societies, West Bengal. " ( 4 ) THE petitioner have contended : (I) that they were entitled to continue in office by virtue of the section 25 (1) (a) read with the proviso to section 30 (2) of the Act as well as the order pated 25th January, 1994 until an elected board was appointed in terms of the said statutory provisions of the order. (II) It is further submitted that the impugned order was defective as the section under which the authority had exercised power had not been mentioned. (II) It is further submitted that the impugned order was defective as the section under which the authority had exercised power had not been mentioned. (III) It is further alleged that the basis upon which the Government had acted was wholly vague and was in effect mere reiteration of the language of section 30 (1) of the Act. It is submitted that this would not amount to 'reasons' within the meaning of section 30 (2) It is stated that the pre-conditions to the exercise of power under section 30 (2) was wholly absent. It is stated that nothing has been disclosed to show that public interest was involved of that the co-operative movement in general was being affected which required immediate action to be taken by the State Government. (IV) It is submitted that the allegations are palpably false and mala fide. It is further alleged that the Government had sought to except the provisions of the Act under section 7 (a) in so far as it related to the period of tenure of the administrator appointed. This, it is submitted, could not be done, without giving the petitioners an opportunity of being heard. (V) It is submitted that the State Government had no authority to appoint the administrator as they had not dissolved the Board appointed by the Registrar nor had the State Government any authority to cancel the order dated 25 1. 94. (VI) Finally, it is submitted that there was no communication of the impugned order and as a result no effect could be given thereto. ( 5 ) ON behalf of the state- respondents it has been submitted that the application was bad for mis-joinder as the respondent No. 1 Society had no right to challenge the action of the State Government. Even under section 136 read with the Third Schedule, Item 4 of the Act only a member of the Society could prefer an appeal from an order under section 30. Secondly, it is submitted that the petitioners 2 to 7 were members of the nominated Board and did not have the right to continue as such. They had no locus standi to question their ramoval and appointment of an administrator in their place and stead. It is stated that the administrator had in fact already assumed charge. Secondly, it is submitted that the petitioners 2 to 7 were members of the nominated Board and did not have the right to continue as such. They had no locus standi to question their ramoval and appointment of an administrator in their place and stead. It is stated that the administrator had in fact already assumed charge. Thirdly, it is submitted that the impugned order was in continuation of the order dated 18th August, 1989, by which the original board had been dissolved. It is stated that there was no need to dissolve a nominated. Board. It is further submitted that the section 30 (2) expressly does not require compliance with the principles of natural justice before an order is passed thereunder. On the question of communication of the order it has been submitted by the state respondents that individual communication was not necessary particularly when the society was the writ petitioner and the other petitioners were claiming as the members of the Board of the Society. The order was admittedly hung up on the Notice Board, and this was sufficient communication. In any event, it is submitted that the question the communication of the order was an academic issue as the petitioners had obviously got a copy of the same and had in fact annexed a copy to the writ petition. Reliance has been placed on a decision in AIR 1985 SC 973 at paragraph 11 in this context. It is further submitted that the Section under which action had been taken by the State Government had been clearly mentioned in the impugned order. The Section was section 30, sub-section (2) of the Act. It is further pointed out that ihe orders under that Section were appealable. But no appeal had been filed by the petitioners. As far as the basis for the exercise of powers was concerned, it is submitted that the State Government had disclosed some evidence in the impugned order on the basis of which the State Government had acted. It is stated that the writ court should not go into the questions which would be disputed questions of fact. Finally, it is submitted that under section 126 of the Act it was incumbent upon the Board to have taken steps to obtain the books, papers and documents from the erstwhile administrator. It is stated that the writ court should not go into the questions which would be disputed questions of fact. Finally, it is submitted that under section 126 of the Act it was incumbent upon the Board to have taken steps to obtain the books, papers and documents from the erstwhile administrator. This had not been done as a result of which the affairs of the society had come to a standstill justifying the State Government in taking action under section 30 (2) of the Act ( 6 ) AFTER the writ application was moved, an application was made by the members of the society claiming to be added as party-respondtnts to the proceedings. This was allowed by this court These added respondents have supported the State Government and have stated in addition that the writ petitioners were seeking to continue on the basis of the order dated 25th January, 1994 which could not have been passed by the Registrar under the provisions of the Act. It is submitted that the circumstances under which the Registrar could nominate a Board under section 25 (1 ) (a) of the Act, were absent in the case. Secondly, it is stated that the Registrar cannot appoint the petitioners 2 to 7 without holding any enquiry and had selected the members of the society an opportunity of being heard It is stated that the Registrar should have disclosed reasons which persuaded him to select the petitioners Nos. 2 to 7 as the members of the Board and not any o'her members of the society. It is further submitted that many of the appointments of the nominated board were bad Some members did not reside in the premises and were in fact permanent residents of outside Bengal altogether. ( 7 ) IT is argued on behalf of the respondents that the court should read the impugned order as a whole and see that the motive of the State goveyimant was to have elections held expeditiously. It is further submitted that without going into the questions of the allegations made against the members of the nominated board, the order properly construed, would show that the affairs of the society had come to a standstill. This was a ground specifically provided for under section 30 (1) and (2) justifying the nomination of an administrator. It is further submitted that without going into the questions of the allegations made against the members of the nominated board, the order properly construed, would show that the affairs of the society had come to a standstill. This was a ground specifically provided for under section 30 (1) and (2) justifying the nomination of an administrator. ( 8 ) FINALLY it is submitted that there was no question of the principles of natural justice being observed If the exercise of power under section 30 (2) was invalid, the mere giving of a notice would not make it a valid exercise of power. If it were a valid exercise of power the section expressly excluded the principle of natural justice. This can be done by legislature and the court should not import any requirement of being heard in the face of such exclusion. Reliance has been placed on the decision of Union of India v. Tulsi Ram Patel, 1985 (3) SCC 398. ( 9 ) IN my view, the impugned order cannot be sustained. I say so for the following reasons. ( 10 ) THE respondents challenge to the order dated 25th January, 1994 cannot be sustained in this proceedings. No writ application was filed by any of the members challenging the exercise of the power by the Registrar under section 25 (l) (a) of the Act appointing the petitioners Nos. 2 to 7 as the nominated board. Therefore, the grounds urged by the State-respondent as well as the added respondents cannot be agitated in this proceeding. Secondly, it may be that the Registrar can withdraw his nominees in appropriate situations In this c; se the Registrar has not done so. The nominated board, therefore, continues. The State Government has not dissolved the Board ; without dissolving the Board the State Government cannot appoint an administrator. I am not persuaded to hold that the word 'board' referred in section 30 (2) of the Act means an elected board only and does not include a nominated board. There is also no law restraining the Registrar from choosing members who are not residents in Calcutta under section 25 (1) (a ). It may be that the discretion exerci; ed by the Regitrar was an improper one but this cannot make the order dated 25. 1. 94 a nullity, justifying setting aside the same in collateral proceedings. There is also no law restraining the Registrar from choosing members who are not residents in Calcutta under section 25 (1) (a ). It may be that the discretion exerci; ed by the Regitrar was an improper one but this cannot make the order dated 25. 1. 94 a nullity, justifying setting aside the same in collateral proceedings. Besides, as has been pointed out by the learned counsel appearing on behalf of the petitioners on the materials before this court at present and the admitted facts, the Registrar's right under section 25 (1) (a) of the Act to nominate the Board had been extended by the 1991 Amendment to section 30 (2) by which a Second Proviso had been added thereto. This second proviso states that when an administrator is appointed to hold an election which he does not do so within a period of three years from the date of dissolution of the original elected board, the Registrar could re-constitute a Board under section 25 (l) (a ). This is precisely what the registrar has done in this case. No authority has been shown to this court that a nominated board does not have a right to challenge its supersession. ( 11 ) THE next aspect of the matter relates to the impugned order itself. As already held without a dissolution of the Board, whether elected or nominated, the administrator could not be appointed With regard to the reasons given for appointment of an administrator, in my view, the reasons that are disclosed cannot be sustained. They are wholly vague and without any material particular of any kind whatsoever. In fact, it appears that a substantial part of the reasoning is a vermaatim reproduction of the statutory pre-conditions prescribe 1 under section 30 (1) for the exercise of power under that section It is well-established that mere iteration of the language of the statute might not constitute sufficient reasons. It is also well-established that when a challenge is thrown to the exercise of power on the ground that pre-conditions for such exercise were absent or when the formation of opinion is challenged, it is incumbent upon the authority to satisfy the court, objectively that there was material justifying such exercise or the formation of the opinion. It is also well-established that when a challenge is thrown to the exercise of power on the ground that pre-conditions for such exercise were absent or when the formation of opinion is challenged, it is incumbent upon the authority to satisfy the court, objectively that there was material justifying such exercise or the formation of the opinion. In this case the records have not been produced before the court and 1 cannot merely on the basis of the language in the impugned order hold tha t the provisions of section 30 (2) have been complied with. ( 12 ) THE arguments of the respondents that the affairs of the society had come to a standstill justifying action under Section 30 (2) cannot be permitted to be raised in view of the clear language used in the impugned order. Although the argument of the respondents is that the affairs of the society had come to a standstill because of the non-handing over of the documents, records, elc. , that is not the basis nor the reason disclosed in the impugned order for appointing the administrator. It has only been stated that because of the non-handing over of the documents the nominated board had not been able to take full charge. The taking over of full charge does not necessarily mean that the affairs of the society bad come to a standstill. The petitioners have also categorically averred in the writ petition that they were in fact running the affairs of the society but with some difficulty. The order only specifies that the business of the society had virtually come to a standstill due to persistent default and negligence in the performance of duties. I have already said that this reason is unacceptable because of the vagueness and because of the mere re-production of the language of the section without any corroborating records. ( 13 ) APART from this ground two grounds in the nature of preliminary objections had been taken by the State Government. The first ground was that of mis-joinder is second was that of alternative remedy. As far as the mis-joinder is concerned, in my view, the objections should have been taken at ihe out set. This could have given the writ petitioner a chance to rectify the detect, if any. The first ground was that of mis-joinder is second was that of alternative remedy. As far as the mis-joinder is concerned, in my view, the objections should have been taken at ihe out set. This could have given the writ petitioner a chance to rectify the detect, if any. If any, event, the writ petition is maintainable at the instance of the petitioners 2 to 7 The plea of mis-joinder is a technical one and cannot stand in the way of granting relief in the circumstances of this case. The second preliminary objection also is rejected by this court for two reasons. The first challenge of the petitioners relates to the jurisdiction of the State Government to issue the impugned notification in the absence of the requisite pre-conditions. When the question of jurisdiction is made, the writ court will not bar the remedy under Article 226 to the writ-petitioners. Secondly, it is well-established that a plea of alternative remedy should be taken at ihe out-set once affidavits have been filed and the matter heard at length, it would be improper exercise of judicial discretion to relegate the petitioners to the alternative, remedy. It needs no authority to state that the plea of alternative remedy is one which does not affect the jurisdiction of the court and it would be taken into consideration at the time of entertainment of the writ application in the first place. ( 14 ) FOR all these reasons, I am of the view that the writ application must be allowed The impugned notification dated 6th March. 1994 is therefore, quashed. However, this court makes it clear that this judgment will not preclude either the state respondents from issuing a fresh order under section 30 (2) of the Act upon appropriate materials in accordance with law and also not debar the added respondents from challenging the order dated 25. 1. 94 in appropriate proceedings as they may be advised. ( 15 ) THERE will be no order as to costs. ( 16 ) LET zerox copies of this order be given to the learned advocates appearing for the parties on their usual undertakings.