NARAYAN SINGH MINA v. M. P. STATE CO-OPERATIVE TRIBUNAL, BHOPAL
2002-05-10
ARUN MISHRA
body2002
DigiLaw.ai
ORDER Arun Mishra, J. Petitioner seeks in the instant writ petition issuance of writ of certiorari to quash the order of supersession of Zila Sahkari Krishi Evam Gramin Vikas Bank Ltd., Bhopal as per order Annexure P/5 dated 30th August, 2001 passed by Registrar, Co-operative Societies. Petitioner submits that Board of Director of the society took over on 11th December, 1996 from the predecessor Board of Directors pursuant to the election which was held in the year 1996 on expiry of the term of Board of directors in 2001 the fresh election was scheduled to be held in the month of September, October, 2001. Returning officer was appointed by Joint Registrar, Co-operative Society on 21st August, 2001 as per order Annexure P/1. Impugned order P/5 has been passed on the basis of show cause notice issued to the Board of Directors on 8-12-1999 in which it was mentioned that for last three years i.e. 95-96, 96-97, 97-98 the percentage of recovery of the loans was respectively 39, 32 and 27 percent. As such the members of the Board of Directors were required to show cause why the body should not be superseded exercising powers u/s 53(11) of M.P. Co-operative Societies Act, 1960 (for short "the Act"). A reply to show cause notice was filed Annexure P/3 on 8th February, 2000 on behalf of the Board of Directors it was pointed out inter alia that owing to natural calamities there was loss of crops in the year 1997-98; the Board of Directors took over in the year 96-97 and performance since then has improved; an additional reply P/4 was filed on 14th July, 2000 pointing out that percentage of recovery in the year 1999-2000 was 52% which was the record recovery for last 15 years. There is considerable improvement of 14% in the percentage of recovery and in the disbursement of loan also. It was expected that enhanced performance would satisfy the Registrar.
There is considerable improvement of 14% in the percentage of recovery and in the disbursement of loan also. It was expected that enhanced performance would satisfy the Registrar. However, when election programme was already announced returning officer was already appointed on 21st August, 2001 an order P/5 was issued by Registrar, Co-operative Society, M.P. on 30th August pointing out that percentage of recovery in the year 95-96 was 39% in the year 96-97 it was 32%, 97-98 : 27%, 98-99 38% thus, percentage of recovery was less than 65%; a show cause notice was issued, warning letter was issued, but still there was no substantial improvement made in the recovery hence disagreeing with the reply filed by the society, order was passed under sub-section (11) of section 53 of M.P. Co-operative Societies Act, 1960 and Board of Director was superseded initially for a period of one year or till further orders and Joint Registrar, Cooperative Societies, M.P., Bhopal was appointed as an Administrator. Order P/5 was assailed before the M.P. Co-operative Tribunal by filing a revision u/s 77 of M.P. Co-operative Societies Act, 1960. It was pointed out that in the year 2000-01 the percentage of the recovery was 59.70% the learned M.P. Co-operative Tribunal as per order Annexure P/9 dated 8-10-2001 has dismissed the revision. Petitioner assails the order on the ground that the period prior to when the superseded Board of Directors took over has been taken into consideration by the Registrar while ordering the supersession which is impermissible, secondly it has been assailed on the ground that there was substantial enhancement in the business reported by the petitioner in the year 2000-01. The recovery of loan was 60% and thirdly on the ground that reasons which were assigned by the petitioners for lessor percentage of recovery such as natural calamities and the other reasons which were mentioned in the reply to Annexure P/3 and P/4 have not been adverted to at all and the order has been passed with an undue haste just on the eve of election which shows that the power has not been exercised bona-fide and the order P/5 and P/9 deserve to be quashed. The respondent No. 4 in the return contends that the jurisdiction relating to supersession has been rightly exercised by the Registrar u/s 53(11) of M.P. Co-operative Societies Act. Superseded managing committee took over on 11-12-1996.
The respondent No. 4 in the return contends that the jurisdiction relating to supersession has been rightly exercised by the Registrar u/s 53(11) of M.P. Co-operative Societies Act. Superseded managing committee took over on 11-12-1996. The tenure of superseded Board of directors was for five years which is already over in the year 2001 as such writ petition has been rendered infructuous. Allegation regarding the political interference has been denied. The business was 59.70% in the year 2000-01 not 60%; there was no charges levelled against the managing committee in respect to the recovery pertaining to the year 2000-01. The Registrar has rightly passed the order after a gap of 1 1/2 years as an opportunity was given to managing committee to improve its work. No interference is called for in the writ jurisdiction of this Court. It has been further pointed out that administrator has also taken the action to retire the employees compulsorily from the service of the bank. In the return filed by respondents No. 2 and 3, it has been contended that jurisdiction has been properly exercised u/s 53(11) of the Act, recovery in the year 95-96 to 97-98 was less, attention was drawn, show cause notice was given once the business was less than 65% supersession could be ordered in view of the specific provision u/s 53(11) of the Act. Shri R.N. Singh, learned senior counsel for the petitioner has submitted that action is patently illegal the period of predecessor board of director has been taken into consideration which is not fair and permissible as per the decision of the Apex Court in the Jt. Registrar of Co-operative Societies Madras and Others Vs. P.S. Rajagopal Naidu and Others, and a decision of this Court in Sitaram vs. Registrar of Co-operative Societies and another, 1986 MPLJ 567 . It has also been submitted that order has been passed in mechanical manner; on one hand the period in which the Board of director did not work has been considered and on the other hand the improvement which was made in the subsequent years has not been taken into consideration.
It has also been submitted that order has been passed in mechanical manner; on one hand the period in which the Board of director did not work has been considered and on the other hand the improvement which was made in the subsequent years has not been taken into consideration. The reasons assigned for less recovery in the reply/representation P/3 and P/4 have also not been taken into consideration at all and the point of time when elections were scheduled in September/October programme was notified; an order of supersession P/5 was passed, overall circumstances indicate that order must go and cannot be allowed to stand. Learned counsel for respondent No. 4 Shri M.K. Sharma submits that period of the predecessor board of directors could be taken into consideration for passing an order of supersession as there is no bar u/s 53(11) of the Act to consider the functioning of even predecessor board of directors. Power has been properly exercised business was less than 65% which is the requirement prescribed u/s 53(11); no cogent reasons have been given in the show cause notice why the recovery was less; hence no interference is called for as the order was passed in the interest of the society and the administrator is making an improvement. Shri Wakeel Khan, learned counsel for respondents 2 and 3 also supported the stand taken by Shri M.K. Sharma. First question for consideration is that whether the period of 95-96 could be taken into consideration by the Registrar while issuing the show cause notice as well as passing the final order. The full bench decision of Madras High Court in The Joint Registrar of Co-operative Societies, Madras and Others Vs. P.S. Rajagopal Naidu and Others, has been over-ruled by the Apex Court in Jt. Registrar of Co-operative Societies Madras and Others Vs. P.S. Rajagopal Naidu and Others, in para 9, the Apex Court considered the question as under:- The single Judge laid a great deal of emphasis on the Committee being an elected body and the prejudice that would be caused to its members if they are visited with the consequences of supersession on account of irregularities and improper functioning of the previous members of the Committee. What was argued before the High Court was that one-third members of the Committee have to retire every year and fresh members have to be elected.
What was argued before the High Court was that one-third members of the Committee have to retire every year and fresh members have to be elected. If certain grave irregularities are committed, say in the years 1964, 1965, it would be unfair to the new members who have been elected to supersede the Committee in 1968. We do not consider that that would be the correct approach in construing section 72 which is meant for superseding the Committee as a whole when its working discloses such irregularities or improprieties as would justify its supersession. Normally it would be expected that only that Committee would be superseded whose functioning has been found to be highly defective. The object of supersession apparently is to appoint a Special Officer or a managing committee in order to set the working of the society right. It is not difficult to envisage a situation where maladministration by a committee has so adversely affected the functioning of the society that it is essential in the interests of the society itself to give temporarily the control of its affairs to a neutral authority. At any rate if the operation of section 72 in certain circumstances is likely to operate harshly so far as certain members of the committee are concerned, it is not possible to read into it other provisions of the Act which are not incorporated in the section expressly or by necessary implication. It was held by their Lordship that it would normally be expected that only that committee would be superseded whose functioning has been found to be highly defective; to supersede a new committee on the basis of performance of the predecessor committee may not be, normally fair. A Division Bench of this Court in Sitaram vs. Registrar of Co-operative Societies and another (supra) held that performance of the predecessor board of director has not been considered in the matter of supersession. In Para 13 and 17 this Court held as under:- 13. It is urged that as per item No. 6 of the charges in the show cause notice (Annexure H) and the order of supersession (Annexure J) the present Board of Directors is held responsible for failure of the old Board of Directors to call an annual general meeting of the members u/s 49 of the Act before vacating the office on 1-9-1982 as per subsection 8 thereof.
The responsibility is sought to be fastened by a queer reasoning that some of the members in the present Board of Directors happened to be the members in the old Board of Directors as well. The charge is, therefore, irrelevant and the finding holding the charge proved is given without application of mind. Learned counsel for the petitioner contended that if the irrelevant charges and the findings reached without application of mind were to be excluded, it cannot be said that the respondent No. 2 would still have reached the same subjective satisfaction so as to pass an order of supersession. In the circumstances the order of supersession is not sustainable and deserves to be quashed. We uphold the contention of the learned counsel and hold that the order of supersession is vitiated and invalid is liable to be quashed. Thus the show cause notice P/2 as well as the impugned order P/5 which takes into consideration the period of the year 1995-96 and also an entire year 96-97 cannot be said to be proper as the board of directors which has been superseded took over in December, 1996; the period prior to it even of 1996 could not have been normally considered. It would not normally be fair and just to penalise the board of directors for the performance of the predecessor board of directors particularly when its term also had come to an end. It also does not appear that mind was applied by the Registrar to the explanation offered by the petitioners of less recovery in the year 1997-98. The reason was shown in para 2 of the reply Annexure P/3 due to natural calamity there was total loss of Kharif and Rabi crops hence recovery could not be made; it has not been adverted to thus simply by considering the recovery to be less than 65% an order could not be passed superseding the petitioner society, even if recovery is less than 65% as provided u/s 53(11) of the Act; the reasons offered by board of directors such as which were advanced in the instant case have to be taken into consideration which were not at all adverted to nor mind was applied, thus, the order has not been passed in fair and reasonable manner. The same has been passed in mechanical manner without due application of mind.
The same has been passed in mechanical manner without due application of mind. It was further pointed out by the petitioner in the explanation furnished as it was asked to improve the performance; petitioners Board of directors had filed a representation Annexure P/4 pointing out that performance of recovery has improved in the year 1999-2000; it was 52% on the date on which the order was passed and it was 59.70% for the year 2000-01 roughly 60%; both these figures were totally ignored and overlooked when board of directors was required to show improvement and improvement was made; figure reached 60%; it ought to have been taken into consideration in the facts of the case. The respondents seek to justify in return passing of an order after 1 1/2 years of show cause notice on the ground that opportunity was given to Board of Directors to improve its work, when Board of Directors reported considerable improvement in work as best when compared to data of last 10 years available, it has been completely ignored and over-looked; improvement was definitely made in recovery which ought to have been considered by Registrar before passing the order as material was placed before him showing improved performance. The counsel has urged that order was not passed bona fide and was passed just on eve of elections need not be dilated on as in the order other serious infirmities have been found which have been discussed hereinabove. The order passed by the Registrar Annexure P/5 and the order passed by the Tribunal P/9 are quashed. Board of Directors is restored; it shall continue till the elections are held. In the facts and circumstances of the case, cost to be borne by the parties. Final Result : Dismissed