S. Viswanathan v. The Registrar of Co-operative Societies
1999-03-03
S.S.SUBRAMANI
body1999
DigiLaw.ai
Judgment :- Petitioner seeks issuance of writ of certiorarified mandamus after calling for the records of the second respondent pertaining to his proceedings in Na.Ka. No. 31291/97, Ve-1 and quash the order dated 08.06.98 and consequently direct the first respondent to restore the Board duly elected under the petitioners Presidentship and pass such further orders. 2. Petitioner is one of the Directors of the third respondent-Bank and he was elected as President. Proceedings were initiated by the Deputy Registrar of Cooperative Societies, Pollachi Circle to order for inspection into the affairs of third respondent-bank under Section 82 of the Tamil Nadu Cooperative Societies Act. The inspection was held for the following reasons :— (1) The elected Board has entered into a settlement under Section 18(1) of the Industrial Disputes Act, 1947. Thereby the employees were paid in excess. (2) Three employees were appointed as Salesman and Packer in P.D.S. Scheme in contravention of the regulations. (3) Excess payment made to one of the Salesmen. 3. According to the petitioner, the proceeding initiated under Section 82 of the Act was mala fide. The Board extended its full cooperation to the Inspection Officer. Apart from the Banks participation and explanation for the enquiry, the Inspection Officer also seized all the materials of the Bank for the said purpose. All the records were also placed before the Inspection Officer who retains the custody of the same till now. The petitioner was expecting the report of the Inspection Officer to be communicated to them. But, therefore, what they received was a show cause notice dated 26.04.1998 to the individual Directors asking them to explain why the Board should not be superseded under Section 88 of the Tamil Nadu Cooperative Societies Act. They were asked to explain within a period of ten days from the date of receipt of the order. Within the prescribed time, the petitioner submitted the explanation on 14.05.98 informing him, when the entire records are with the Inspection Officer and without looking into the records of the Society, they cannot file explanation and they also initiated that the Inspection Report has not been communicated to them. It was submitted that without return of the documents and getting copy of the report, they cannot file explanation. They wanted time to file explanation till the records are made available. On 8.6.1998, the impugned order was passed superseding the Board.
It was submitted that without return of the documents and getting copy of the report, they cannot file explanation. They wanted time to file explanation till the records are made available. On 8.6.1998, the impugned order was passed superseding the Board. The same is challenged in this writ petition, as violating the principles of natural justice and also on other grounds mentioned in the writ petition. It is also said that even though notices have been given to the Individual Directors, no notice has been given to the Board and therefore, the impugned proceedings are invalid. The order is arbitrary and goes against the provisions of law. It is also said that the petitioner has filed an appeal months back, but the Appellate Authority did not take it up for hearing nor did he pass any orders on the same even j though election date has been fixed by the j Managing Committee and this has compelled the petitioner to file the writ petition for the relief mentioned above. 4. Counter affidavit is filed on behalf of the respondent justifying the action taken. 5. In regard to the violation of the principles of natural justice and non-supply of the copy of the report, it is said that in the show cause notice issued under Section 88, result of the Inspection has been stated therein and that is sufficient compliance of the principles of natural justice. The petitioner is not entitled to get a copy of the Inspection Report. The allegation that opportunity was not given to file the explanation is also denied. According to the respondent, they have satisfied the statutory requirements. It is also stated therein that Special Officer has assumed management and the writ petition itself has now become infructuous. 6. Heard both sides. 7. The only question that was seriously argued by the learned counsel for the petitioner is that the impugned order violates the principles of natural justice and the same has to be considered in this case. 8. Admittedly, the petitioner is the President and he has been duly elected to the Board of third respondent-Ban and inspection was ordered under Section 82 of the Cooperative Societies Act. Based on the report under Section 82 of the Act, proceedings under Section 88 of the Act were initiated.
8. Admittedly, the petitioner is the President and he has been duly elected to the Board of third respondent-Ban and inspection was ordered under Section 82 of the Cooperative Societies Act. Based on the report under Section 82 of the Act, proceedings under Section 88 of the Act were initiated. The relevant portion of Section 88 of the Tamil Nadu Cooperative Societies Act reads thus: “ 88 Supersession of Board:— (1)(a) The Registrar,- (i) may, if he is of opinion that the Board of any registered society is not functioning properly or wilfully disobeys or wilfully fails to comply with any order or direction issued by the Registrar under this Act or the rules; (ii) shall, where for two consecutive cooperative years (A). (B). after giving the Board of the registered society or the financing bank, as the case may be, an opportunity of making its representations, by order in writing, supersede the Board and appoint (a Government Servant or an employee of any body corporate owned or controlled by the Government) (hereinafter referred to as the Special Officer) to manage the affairs of the society for a specified period not exceeding one year.” 9. It is true that the Registrar of the Society, if he has formed an opinion that the Board is not functioning properly or wilfully disobeys or wilfully fails to comply with the orders or directions given by him, he can initiate action under Section 88. In this case, it is not the case of the respondents that the petitioner has wilfully disobeyed or wilfully failed to comply with the order or direction. The only case is that the Society is not functioning properly. The reason for such an opinion is based on the Inspection Report under Section 82. 10. When show cause notice was issued asking them to explain why the Board should not be superseded, the petitioner is entitled to make a representation why it is not liable to be superseded. The Act also provides for giving an opportunity of making a representation. “An opportunity of making his representation means; effective opportunity for making the representation.” An opportunity may not be said as “effective” if the petitioner is prevented from or not in a position to file his explanation.
The Act also provides for giving an opportunity of making a representation. “An opportunity of making his representation means; effective opportunity for making the representation.” An opportunity may not be said as “effective” if the petitioner is prevented from or not in a position to file his explanation. When reliance is placed by respondents on Inspection Report and when Inspecting Officer has taken all the records of the Society, the petitioner are really prevented from making the representation, since they have to verify the records. When the records are also taken away by the Inspecting Officer and the inability is pleaded, atleast an opportunity should have been given to the petitioner to verify the records which have been taken away by the Inspecting Officer and also after giving a copy of the report of Inspection. When the basic material on the basis of which action is taken is not given to the petitioner, it cannot be said an effective opportunity has been given to the petitioner to make his representation. All materials, in the hands of the respondents which are likely to be used against the petitioner must be informed and thereafter, explanation must be taken. The Cooperative Societies Act itself was enacted only for an orderly achievement of the Cooperative movement and the democratic management of the societies. Therefore, an elected representative must be allowed to continue in management and only as a last resort proceedings, under Section 88 could be initiated and while initiating action, the principles of natural justice must also be followed. In this connection, Section 82(5) also enables the Registrar to direct the Society to take such action to remedy the defects, if any, pointed out by the Inspecting Officer. If any defect is disclosed in the Inspection Report, an opportunity should be given to the Society to remedy the same within such time and as specified in the order. The purpose of Section 82(5) is clear i.e. , the management as far as possible must continue with the elected representative and a Special Officer could be appointed only as a last resort. 11. Immediately after getting a show cause notice, petitioner wanted the copy of the report and return of the documents. There was not even a reply from the respondents before passing an impugned order. The order cannot stand. 12.
11. Immediately after getting a show cause notice, petitioner wanted the copy of the report and return of the documents. There was not even a reply from the respondents before passing an impugned order. The order cannot stand. 12. At this juncture, learned Government Pleader submitted that the appeal filed by the petitioner is still pending and it is only proper that necessary directions may be given to the Appellate Authority to dispose of the appeal. It was argued that when the petitioner himself has restored to statutory remedy, this Court should not exercise its original jurisdiction under Article 226 of the Constitution of India. 13. I do not find any merit in the said contention. In a recent decision of the Honourable Supreme Court reported in (1998) 8 Supreme Court Cases I =1999-2-L.W. 200( Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and others ), this question was considered in detail. The relevant portions of that judgment are as follows:— “14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for “any other purpose.” 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principle “ of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged.
There is a plethora of case-law on this point but to cut down this circle of forensic whirlpool, we would rely on some old decisions of the evolutionary era of the constitutional law as they still hold the filed. 16. Rashid Ahmed v. Municipal Board, Kairana laid down that existence of an adequate legal remedy was a factor to be taken into consideration in the matter of granting writs. This was followed by another Rashid case, namely, K.S. Rashid & Son v. Income Tax Investigation Commission which reiterated the above proposition and held that where alternative remedy existed, it would be a sound exercise of discretion to refuse to interfere in a petition under Article 226. This proposition was, however, qualified by the significant words, “unless there are good grounds therefore”, which indicated that alternative remedy would not operative as an absolute bar and that writ petition under Article 226 could still be entertained in exceptional circumstances. 17. A specific and clear rule was laid down in State of U.P. v. Mohd. Nooh as under: “But this rule requiring the exhaustion of statutory remedies before the writ will be granted is rule of policy, convenience and discretion rather than a rule of law and instances are numerous where a writ of certiorari has been issued in spite of the fact that the aggrieved party had other adequate legal remedies.” 18. This proposition was considered by a Constitution Bench of this Court in A. V. Venkateswaran, Collector of Customs v. Ramachand Sobhraj Wadhwani and was affirmed and followed in the following words: “ The passages in the judgments of this Court we have extracted would indicate (1) that the two exceptions which the learned Solicitor General formulated to the normal rule as to the effect of the existence of an adequate alternative remedy were by no means exhaustive, and (2) that even beyond them a discretion vested in the High Court to have entertained the petition and granted the petitioner relief notwithstanding the existence of an alternative remedy.
We need only add that the broad lines of the general principles on which “the Court should act having been clearly laid down, their application to the facts of each particular case must necessarily be dependent on a variety of individual facts which must govern the proper exercise of the discretion of the Court, and that in a matter which is thus pre-eminently one of discretion, it is not possible or even if it were, it would not be desirable to lay down inflexible rules which should be applied with rigidity in every case which comes up before the Court. “ 19. Another Constitution Bench decision in Calcutta Discount Co. Ltd. v. ITO Companies Distt. laid down. “ Though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts will issue appropriate orders to directions to prevent such consequences. “ Writ of certiorari and prohibition can issue against the Income Tax Officer acting without jurisdiction under Section 34, Income Tax Act.” 20. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. 21. That being so, the High Court was not justified in dismissing the writ petition at the initial stage without examining the contention that the show-cause notice issued to the appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the “Tribunal”. The above decision answers the contention of the learned Government Pleader. 14. An appeal was filed with an application for stay.
The above decision answers the contention of the learned Government Pleader. 14. An appeal was filed with an application for stay. When an urgent application is moved, the statutory authority did not take it in all its seriousness and it is now more than five months since the application was filed, Before the Appellate Authority also only one question arises i.e. , whether the impugned order violates the principles of natural justice. When the statutory authority did not think of early disposal of such matters and has allowed the illegality to continue by his inaction or refusing to hear the appeal, I think I will be justified in entertaining this writ petition under Article 226 of the Constitution of India. Merely because a statutory appeal is filed, it cannot be said that this Court is powerless in entertaining the writ petition. The period of the Elected Officers is also less than a year, if I am to direct the Appellate Authority to dispose of the appeal, a direct the petitioner to take the chance before him, I will also be preventing an elected office/bearer to be in management. Once I find the order violates the principles of natural justice I will be justified in entertaining the W.P. The provisions under Article 226 of the Constitution of India are invoked only to do complete justice to the parties. 15. The technical objections raised by the counsel for the respondents will not stand in the way of this Court to exercise its jurisdiction, if it is found that the injustice is done and it is patent. 16. Apart from the same, a detailed counter has been filed and the respondents themselves wanted to agitate the matter before this Court and the entire matter was argued on merits. No purpose will be served if I am to direct the Appellate Authority to do the same exercise. 17. In the result, impugned order is quashed and there will be a direction to the respondents to restore the management and elected representative forthwith. 18. Writ Petition is allowed. No costs. Consequently, W.M.P. Nos. 26439 to 26441 of 1998 are dismissed.