JUDGMENT A.H. Saikia, J. 1. Heard Mr. K.P. Pathak, learned Sr. counsel assisted by Mr. D. Pathak, learned Counsel for the writ Petitioner and Mr. K.N. Choudhury, learned Sr. counsel assisted by Mr. I. Choudhury, learned Counsel for the intervenor Sri Hirembeswar Kataki. Also heard Mr. A. Thakur, learned state counsel appearing on behalf of the State-Respondents and Mr. G. Uzir, learned Counsel appearing on behalf of the Respondent No. 2, Registrar of Co-operative Society, Assam, Guwahati as well as Mr. R.C. Saikia, learned Counsel appearing on behalf of the newly impleaded Respondents 3 to 7. 2. By this writ petition, the Petitioners have laid the challenge to the impugned order dated 7.2.2003 issued by the Respondent No. 2 (Annexure-B to the writ petition) suspending the Petitioners. 3. The scope of exercise of power of Suspension of the Board of Directors of the Gauhati Co-operative Urban Bank Ltd. (for short, the 'Board') by the Registrar under Section 36 of the Assam Co-operative Societies Act, 1949 (for short, the 'Act') is the central issue for consideration in this writ petition. The facts, in a nut-shell, leading to filing of this writ petition may be noted thus: The Petitioners Board were elected on 29.5.2000 by the share holders of the Gauhati Co-operative Urban Bank Ltd. (for short, 'the Bank') in the 31st Annual General Meeting of the Bank and on the said date, the Board assumed office for 3 years in terms of Rule 27 of the Assam Co-operative Societies Rules, 1959 as amended in 1992 (for short, 'the Rules'). 4. While the Board had been functioning and performing its statutory duties, being apprehended of its dissolution by the Respondent No. 2, Registrar of the Cooperative Societies, it approached this Court through W.P. (C) No. 582/02 for protection against such threatened dissolution and this Court by its order dated 1.2.2002 at the time of admission of the said writ petition granted interim relief to the Board directing that 'the present Board of Directors shall be allowed to continue till expiry of their term or until further orders from this Court granting liberty to the Respondents to move this Court for modification/alteration and/or cancellation of the said interim order. If so advised. Feeling aggrieved by such order, the Respondent No. 2, Registrar Co-operative Societies brought a Misc. application being Misc. If so advised. Feeling aggrieved by such order, the Respondent No. 2, Registrar Co-operative Societies brought a Misc. application being Misc. Case No. 350/2002 before this Court for its vacation or modification and this Court, upon hearing the learned Counsel for the parties, refused to interfere with the said interim order, rather by order dated 19.7.2002, the said Misc. case was disposed of granting liberty to Respondent No. 2 to carry out all necessary investigation and enquiry to meet the guidelines and norms set out by the Reserve Bank of India (for short, 'the R.B.I) and if in the course of enquiry the Respondent No. 2 was faced with any obstruction or non-cooperation from the Board of Directors or at the end of the enquiry further order was called for from this Court. It would be open to the Respondent No. 2 to approach this Court once again for modification/alteration and/or cancellation of the interim order dated 1.2.02. Accordingly, when this interim order was in force, the Respondent No. 2 made an enquiry into the entire matter and consequent upon such enquiry, to utter surprise and dismay of the Petitioners, the impugned order dated 7.2.2003 was passed by the Respondent No. 2 suspending the Board forthwith in terms of Section 36 of the Act. 5. The impugned order dated 7.2.03 may te extracted as under: GOVERNMENT OF ASSAM OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES::ASSAM. GUWAHATI 7th February/2003. ORDER It appears that the Gauhati Urban Cooperative Bank Ltd. is not functioning properly, according to the Assam Coop: Societies Act and Rules and the Bye-laws of the Bank. For this reason the Bank could not comply with the provisions of the Section 11(1) of the Banking Regulations Act, 1949. The Registrar of Coop: Societies Assam, recommended the application of the Bank with an Action Plan Prepared by the Bank to the Govt. of India for exemption. However, the Bank Management did not take any initiative to implement the Action Plan and Reserve Bank of India has pointed out number of defects in their inspection report. Further, the R.B.I. has informed that they are the only Bank in the State which has defaulted in payment of insurance premium for 3 and half years which is against the larger interest of the depositors. Further, the R.B.I. has informed that they are the only Bank in the State which has defaulted in payment of insurance premium for 3 and half years which is against the larger interest of the depositors. On the basis of an enquiry conducted by departmental officers pursuant to the Hon'ble Gauhati High Court dated 19.7.02 passed in Misc. Case No. 350/02 in W.P. (C) No. 582/02, a Show Cause Notice was issued to the Bank Vide No. CF 39/2002/69 dated 6.1.03 under Section 36 of the Act by framing charges with a direction to submit their reply within 15 days from the date of issue of the notice. A clarification was sought by the Bank on the notice vide their letter No. GUCBK/11/02-03/1989 dated 17.1.03 which was also clarified by giving further 15 days time upto 5th Feb/93. However, no response on the Show Cause Notice has been received till date. Moreover the enquiry conducted by the departmental officers has disclosed many violation of the norms and gross mis-use of funds by the present Bank Management which needs a further thorough enquiry by some specialised agencies. The Bank is still continuing with the violation of the Bye-laws of the Bank, RBI's directives and provisions made under Assam Coop: Societies Act and Rules even after the interim order of the Hon'ble Gauhati High Court on 19.7.02, which is also evident from the letter of one of the Directors of the Board dated 27.1.03. So it is necessary at the moment to suspend the offending Board temporarily paving way for at proper and thorough enquiry by the RBI/State Vigilance Commission so that the present Board cannot create any hindrance during the process of enquiry. Under these circumstances, in the interest of the share-holders and the depositors of the Bank and also of the Cooperative Movement in particular, I Shri G.R Phatowali, IAS, Registrar of Coop: Societies, Assam, is of the opinion that it is necessary as an emergent measure to suspend the offending body forthwith and hence as empowered under Section 36 of the Assam Coop: Societies Act, 1949, do hereby suspend the present Managing Committee of the Gauhati Urban Coop: Bank Ltd. headed by Shri N.N. Mahanta and appoint Shri A. Rahman, Asstt. Registrar of Coop: Societies, Guwahati to be in full control of the suspended body until action has been taken in accordance with the Section 37 of the Assam Coop: Societies Act, 1949. Sd/ G.P. phatowali Registrar of Coop: Societies, Assam Guwahati. 6. Assailing this impugned order, Mr. Pathak, learned Sr. Counsel has stated that his argument is two-fold. Firstly, that this impugned order ex-facie is illegal and in violation of the interim order dated 1.2.02 passed by this Court in W.P. (C) 582/02 and secondly, that the impugned order is highly unjust, unfair and clearly violative of the provisions of Section 36 of the Act. 7. Advancing his first argument, Mr. Pathak, learned Sr. Counsel has contended that after rejection of the Misc. Application i.e., Misc. Case No. 350/02, the Respondent No. 2, being well aware of the existence of the interim order by which the Board was allowed to continue till expiry of its term or until further orders from this Court, passed this impugned order suspending the functioning of the Board when its terms was yet to expire in total disregard to the interim order dated 1.2.02. It is stated that the term of the Board has been fixed for three years after amendment of the Rules in 1992. Rule 27 as amended reads as follows: 27. Election and Recruitment of Directors in a Co-Operative Society: The Directors of the members of the Board of Directors or any managing body, as the case may be, of a Co-Operative Society shall retire on the expiry of a term of 3 years from the date of its first meeting but shall be eligible for reelection. Provided that at the commencement of this rule the existing elected members of the administrative Council, Managing Body or Board of Directors, as the case may be, shall hold office for three years effective from the date of its first meeting. 8. According to Mr. Pathak, learned Sr. Provided that at the commencement of this rule the existing elected members of the administrative Council, Managing Body or Board of Directors, as the case may be, shall hold office for three years effective from the date of its first meeting. 8. According to Mr. Pathak, learned Sr. counsel, since the Court has categorically directed by the interim order dated 1.2.2002 in W.P. (C) No. 582/02 that the Board of Directors be allowed to continue till expiry of their terms or until further orders from this Court, this impugned order dated 7.2.03 suspending the Board, effecting its tenure which is to expire on 28.5.03, has directly and manifestly hit the said interim order and as such, on that count alone, this impugned order is liable to be quashed. 9. Hammering on the second submission, Mr. Pathak, has forcefully argued that Section 36 of the Act contains 2 parts. In the first part, the Section envisages the provision of dissolution of the Board and the second part speaks of the suspension of the Board, before deliberating on the submission of Mr. Pathak, pertaining to the interpretation of Section 36, it would be apposite to refer the relevant portion of Section 36 of the Act i.e., Section 36(1) which is as under: 36. Dissolution or reconstruction of the Administrative Council, managing body or any committee of a society: (1) When the registrar is satisfied, after an inspection or inquiry under Section 60 or 61 for reasons to be recorded in writing, that the Administrative Council, managing body or any committee of a registered society is not functioning properly or according to this Act, rules or bye-laws, he may after giving the offending body an opportunity to state its case, direct under Clause (d) of Section (1) of Section 33, that a special general meeting of the General Assembly be called within a time to be specified to dissolve the Administrative Council, managing body or committee concerned and to elect a new one; provided that, if in the opinion of the Registrar, it is necessary as an emergent measure to suspend the offending body forthwith, he may do so and shall appoint a person or persons, on such conditions as prescribed by him to be in full control of the suspended body until a new body has been elected or action has been taken in accordance with Section37. 2. . . 3. . 2. . . 3. . . 10. This provisions of law clearly stipulates that the Registrar has specifically been empowered to take two categories of panel action against the offending Body or the Board as the case may be i.e., Dissolution and Suspension. Therefore, Mr. Pathak is very correct in submitting that there are 2 parts in the said provision. As regards Dissolution part, it appears that the Registrar has the power to take action for dissolution of the Board only after being satisfied upon an inspection or enquiry, being conducted under Section 60 or 61 of the Act to the effect that the Committee or the Board is not functioning properly or according to the provisions of related law in force governing such committee or the Board. But such action to exercise the power or dissolution can only be exercised after giving an opportunity of hearing to the offending body and assigning reason to be recorded in writing. Thereafter in order of effect such dissolution, a Special General Meeting of the general body is required to be called within a time frame to be specified and thereafter a new body may be elected in this said meeting. Such direction of holding the Special General Meeting shall be at the instance of the Registrar himself in terms of Section 33(1)(d) of the Act which provides for holding of Special General Assembly. 11. Now coming to the provisions in the 2nd part of the Act, it is seen that the power has also given to the Registrar to suspend the Board forthwith. The Registrar may suspend the offending body only when if in his opinion, it is necessary to suspend the offending body as an emergent measure and after such suspension of the offending body, he shall appoint a person or persons on such conditions as prescribed by him to be in full control of the suspended body until a new Board has been constituted or any action has been taken in accordance with Section 37 of the Act. Be it noted that Section 37 provides for Dissolution of Administrative Council, managing body or any committee and appointment of persons to manage the affairs of a society and if the said body is not dissolved and reconstituted within the time specified by the Registrar under Section 36 of the Act, the Registrar may by his order in writing dissolve such body and thereafter shall appoint a person or persons, on such conditions as prescribed by him to manage the affairs, of the society for such period not exceeding one year and he has also the power to extend the said period from time to time not exceeding three years. 12. According to Mr. Pathak, the present suspension amounts to outright dissolution of the Board because in terms of the provisions of law laid down under Section 36 of the Act, the Registrar has the power to suspend a body till a new body has been elected or action for the dissolution of the Board has been under Section 37 of the Act and as such there is no scope for revival of the suspended Board once it is suspended. Therefore, impugned suspension, according to Mr. Pathak, ought to have been preceded by an enquiry giving all adequate opportunity to the Board. But in the instant case, no such enquiry before exercising the power of suspension under Section 36 of the Act was held nor has any opportunity of hearing been given to the Petitioner and as such, it amounts to violation of the principle of natural justice for which the impugned order needs to the interfered with by this Court. 13. Endorsing the argument put forward on behalf of the writ Petitioner, Mr. K.N. Choudhury, learned Sr. counsel appearing for the intervenor, has contended that the impugned action of suspension has been taken by the Respondent No. 2 only to accommodate certain class of persons having their vested interest in the bank and at the behest of an employee who happens to be the General Secretary of the Union and there are no valid reasons for formation of opinion in taking the impugned action save and except the complaint so made by the said employee who influenced the mind of the Registrar to pass the impugned order. Thus, the impugned order is highly motivated and arbitrary and wholly contrary to the provisions of law laid down under Section 36 of the Act. 14. Supporting the impugned order, Mr. Uzir, learned Counsel appearing on behalf of the Respondent No. 2-Registrar of Cooperative Societies, has strenuously argued that the impugned action has been taken against the Board of Directors including the Managing Director, the Petitioner No. 2, due to their mal-administration in functioning of the Bank which being a public body, has suffered a lot and presently on the verge of collapse with the end result of getting cancellation of Bank's licence at the instance of Reserve Bank of India. His submission is that an enquiry as envisaged under Section 60and 61 had thoroughly been conducted and completed and as per the findings of the said enquiry itself, such action of suspension has been taken. It is stated that though the action has been taken under Section 36 of the Act, the Respondent has only suspended the Board only to facilitate the holding of an enquiry without the intervention of the Board and as such the same does not amount to dissolution and if, upon such enquiry, the offending body is found to be exonerated from all the charges of maladministration and mismanagement as alleged, they shall definitely be put back to their office of Directors. As such, no interference is necessary with the impugned order at the stage. Mr. Uzir, relying on the affidavit-in-opposition filed on behalf of Respondent No. 2 with special reference to Annexures D, E and F appended therein, has stated that the statutory body like Deposit Insurance and Credit Guarantee Corporation (for short, DICGC) has repeatedly been requesting the Respondent to take immediate action against the Bank due to its default in payment of premium for the period from December, 1999 to June, 2002 and if these directions are not complied with, the licence to carry on banking business by the Bank has been threatened to be cancelled by the Licensing authority mainly the Reserve Bank of India prejudicing the interest of the public in general and the share holders in particular. 15. When asked about the interim order passed on 1.2.2002 and also order dated 19,7.2002 passed in Misc. Case No. 350/2002 by this Court by which the Court refused to vacate the interim order dated 1,2.2002, Mr. 15. When asked about the interim order passed on 1.2.2002 and also order dated 19,7.2002 passed in Misc. Case No. 350/2002 by this Court by which the Court refused to vacate the interim order dated 1,2.2002, Mr. Uzir learned Counsel for the Respondent No. 2 has contended that immediately after the direction given vide order dated 19.7.2002, the enquiry as referred to Annexure A to the affidavit-in-opposition filed by the Respondent No. 2, was conducted by the Registrar and in that enquiry it was found that Board was involved in numerous irregularities in the management of the Bank as a result of which the Bank was about to crumble and these facts have necessitated the Respondent to take impugned action and as such there is no illegality or arbitrariness in passing the impugned order. He has also submitted that after making such enquiry as per direction of this Court on 19.7.2002 abovenoted, Respondent No. 2 has approached this Court by filing a Misc. Application being Misc. Case No. 228/03 on 11.2.03 for vacating the interim order dated 1.2.02 and the same is pending for disposal. It is really surprising to note that when this Misc. application for modification/alteration and/or cancellation of the interim order dated 1.2.2002 has been pending as stated by Mr Uzir, how the authority i.e., Respondent No. 2 can pass the impugned order under Section 36 suspending the functioning of the Board of Directors who have been allowed to continue till the expiry of their term or until further orders from this Court vide order dated 1.2.2002. The affidavit-in-opposition filed by the Respondent No. 2 is also silent in that regard. Even no explanation has been forthcoming on the face of the impugned order when the initial interim order dated 1.2.2002 has been in force and the Respondent No. 2 is well aware of the same. 16. Defending the impugned suspension on the other hand Mr. The affidavit-in-opposition filed by the Respondent No. 2 is also silent in that regard. Even no explanation has been forthcoming on the face of the impugned order when the initial interim order dated 1.2.2002 has been in force and the Respondent No. 2 is well aware of the same. 16. Defending the impugned suspension on the other hand Mr. R.C. Saikia, learned Counsel appearing on behalf of impleaded Respondents 3 to 7, has urged that the Chairman i.e., the writ Petitioner No. 2, is a defaulter in this Bank in repayment of loan because as per provision of Bye-laws 27(5) of the Gauhati Co-operative Urban Bank Ltd. Bye-laws (for short, 'Bye-laws') any member of the Board of Directors shall be considered to be defaulter, if he/she fails to deposit the loan instalment for a period of three months and over and as such a defaulter even after getting elected as Director shall automatically cease to be a member of the Board of Directors and in the instant case, the Petitioner No. 2 defaulted in payment of the loan taken by him and as such, he being a defaulter, the Managing Director has no locus-standi to seek relief for continuation of the Board of Directors by quashing the impugned order. This Court is constrained to accept the submission of Mr. Saikia on the ground that the impugned order ex-facie does not indicate any such reason for taking impugned action. It is also interesting that the Respondents 3 to 7 being the share holders of the Bank did not take any action against the Board of Directors though they along with other share holders could have requisitioned the holding of Special Meeting in terms of Bye-Laws 19(iv) of the Bye-Laws for dissolution of the Petitioners. The said Bye-Laws provides as follows: 19. General Assembly. . . . . . . Special Meeting (iv) A Special Meeting of the General Assembly shall be convened by the Managing Director whenever the Board of Directors thinks fit or at the request of the Chairman or on a requisition singed by one-tenth of the member of the General Assembly or twenty members whichever is less, specifying the object of the Meeting or at the request of the Registrar, Cooperative Societies. This provision clearly goes to show that a Special Meeting can be held on a requisition signed by one-tenth of the member (i.e. share holders) of the Bank or twenty members whichever is less specifying the object of the Meeting. But despite this provision, it appears that no attempt has been made by any such share holders, particularly Respondents 3 to 7 to convene a special meeting by a requisition singed by atleast 20 of them in which the Board of Directors could have been democratically, removed. It is seen, by the conduct of the share holders, they have failed to carry out the obligation so entrusted upon them under the Bye-Laws and accordingly the submission made on behalf of the Respondents 3 to 7 is hereby disapproved. 17. In support of his submission, Mr. Pathak has relied on a decision of this Court in Baladmari Gobindapur Machmara And Jalbowa Samabay Samity v. The State of Assam and Ors. reported in(1984) 2 GLR-265. In the said case, the Division Bench of this Court dealing with the power of dissolution under Section 36 of the Act ruled that in exercising the power under Section 36 of the Act, the offending Body must be given an opportunity to state its own case. Relying on this settled principle, Mr. Pathak, has submitted that though the present case does not relate to dissolution but a case of suspension, mandate of provisions of Section 36 to give an opportunity of hearing cannot be ignored. Referring to the phrase "in the opinion of the Registrar" appeared in the second part of Section 36, he has contended that before taking any action of suspension, the Registrar must form an opinion that it has become necessary to resort to such action of suspension as an emergent measure and accordingly such formation of opinion has to be founded on by causing an enquiry and inspection in this regard by adhering to the concept of natural justice. In the instant case before suspending the Body no opportunity of hearing has admitted been afforded. 18. In the instant case before suspending the Body no opportunity of hearing has admitted been afforded. 18. Having heard the rival contentions of the parties at length and on careful perusal of the impugned order including the pleadings of the parties, this Court finds that once the power of suspension is exercised by the Registrar, the Committee of the Board shall remain suspended till a new body has been elected or action has been taken in accordance with Section 37. As already noticed, according to provision of Section 37, the Registrar has the power to dissolve a society if the said society is not dissolved or re-constituted within the time specified by the Registrar exercising his power under Section 36 relating to the dissolution part. That being the position, once the Board or the Committee is suspended, the same shall definitely amount to dissolution as there is no provision for revocation of the said suspension to make the body alive again. So, the arguments advanced by Mr. Uzir to the effect that if after the enquiry the allegation of mismanagement or maladministration cannot be proved against the Petitioners, they be allowed to continue again, cannot be sustained. In view of the said provision of Section 36, the impugned suspension can be safely read as dissolution inasmuch as the legislative intention has clearly been reflected in the said provision that whether it is dissolution or suspension the end result would be the culmination of the functioning of the present body. It is clearly provided in the statute that the suspension would continue till a new body is elected or action of dissolution as reflected above is taken. So after suspension of the body, it is mandate of the statute to elect a new body. Accordingly, this Court finds enough force in the submission of Mr. Pathak, learned Sr. Counsel and without any hesitation, it is held that before taking the impugned action of suspension, the authority must give the Board an opportunity of hearing to defend its case. 19. Taking into consideration the entire factual situation in its entirety, this Court is of the considered view that since the impugned suspension has admittedly been passed without affording reasonable opportunity of hearing, the same deserves to be set aside and quashed. Consequently, the impugned order dated 7.2.03 is hereby quashed and set aside. In the result, this writ petition stands allowed. Consequently, the impugned order dated 7.2.03 is hereby quashed and set aside. In the result, this writ petition stands allowed. However, considering the facts and circumstances of the case, there shall be no order as to costs. Petition allowed