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2005 DIGILAW 749 (KAR)

Vyavasaya Seva Sahakari Bank Limited v. State of Karnataka

2005-11-16

H.L.DATTU, H.N.NAGAMOHAN DAS

body2005
JUDGMENT H.L. Dattu, J.—The Appellant-M/s. Vyavasaya Seva Sahakari Bank Limited is a Bank registered under the provisions of the Karnataka Co-operative Societies Act, 1959 ('Act' for short). Its main object is to provide loans and other facilities to the members of the Bank and also the farmers of the Village where the Bank is situated. 2. The Appellant-Bank being aggrieved by the direction issued by the Deputy Registrar of Co-operative Societies to initiate enquiry proceedings under Section 64(1) of the Act was before this Court in Writ Petition No. 15746 of 2005. The learned Single Judge by his order dated 10th June, 2005 has rejected the writ petition on the sole ground that the Petitioner has an alternate remedy under the Act. Aggrieved by the same, the Appellant-Bank is before us in the present appeal. 3. The primary contention that is canvassed by Sri S.P. Kulkarni, learned Counsel for the Appellant-Bank is that the initiation of proceedings by the Deputy Registrar is contrary to the provisions of Section 64(1) of the Act and in the alternative it is contended by him that the initiation of the enquiry proceedings is at the instance of the Lokayukta and therefore, the proceedings are vitiated. In aid of his submission, the learned Counsel has taken us through the provisions of Sections 64(1) and 64(2) of the Act. 4. Sri Shivanna, learned Additional Government Advocate appearing for the Respondents justifies the impugned action of the Respondent -authorities. 5. The only question that would arise for consideration and determination of this Court in this appeal is, whether the Deputy Registrar has initiated enquiry proceedings as envisaged under Section 64(1) of the Act? If our answer is 'yes', then the appeal should fail and if our answer is 'no' then the appeal should succeed. 6. To resolve the controversy between the parties to the lis, the provisions of Sections 64(1) of 64(2) of the Act require to be noticed. Therefore, it is extracted and it reads as under: 64. Inquiry by Registrar. (1) The Registrar may, of his own motion, by himself or by a person authorised by him, by order in writing, hold an inquiry into any matter specified in the order touching the constitution, working and financial condition of a co-operative society. Therefore, it is extracted and it reads as under: 64. Inquiry by Registrar. (1) The Registrar may, of his own motion, by himself or by a person authorised by him, by order in writing, hold an inquiry into any matter specified in the order touching the constitution, working and financial condition of a co-operative society. (2) An inquiry of the nature referred to in Sub-section (1) shall be held on the application of- (a) a co-operative society to which the society concerned is affiliated; (b) a majority of the members of the committee of the society; or (c) not less than on-third of the total number of members of the society. 7. Before we proceed further, we intend to observe that the provisions of Sections 64(1) and 64(2) of the Act is in pari materia with Section 25 of the Karnataka Societies Registration Act. 8. Section 25 of the Societies Registration Act came up for consideration before a Full Bench of this Court in the case of Bangalore Grain Merchants Association v. The District Registrar for Societies and Anr, ILR 2001 Kar 766. One of the question that was canvassed in the aforesaid decision was, "what is the meaning of the expression 'on his own motion' that finds a place in Section 25 of the Act?". The Full Bench of this Court while explaining the meaning of the expression 'on his own motion' in the order, has observed as under: 9. Now, we come to the more crucial and controversial question i.e., what is the meaning and import of the expression 'on his own motion' and what is its interrelation to the immediately following clauses of the same Sub-section. There could be, no doubt, that the expression 'on his own motion' is synonymous to suo motu, which according to the dictionary means, "on one's own initiative". 'Own motion' obviously implies application of mind and formation of one's own opinion. It does not matter how and from what source he gets information. But, it does not mean that the authority conferred with such power should eschew from consideration information or material furnished by external sources and should look to the information collected by his own self-effort. The exercise of powers suo-motu or on one's own motion, cannot and ought not to be construed in a narrow sense and in a sense which defeats the salutary purpose of the provision. The exercise of powers suo-motu or on one's own motion, cannot and ought not to be construed in a narrow sense and in a sense which defeats the salutary purpose of the provision. No fetters can be placed on the specified authority from the stand point of source material on which it should exercise the power. An authority exercising the suo-motu power is not debarred from obtaining information and materials from various sources. The only requirement is that on the basis of such informations and materials gathered either on its own initiative or received from other sources, the concerned authority has to come to the conclusion, on an active application of mind whether to take up the enquiry or not. Undoubtedly, the decision must be his own. He cannot mechanically act at the behest of some other person or authority without independent application of mind to arrive at a conclusion on the need and expediency of holding an enquiry. It is not argued before us nor can it be disputed that the suo motu exercise of power does not cease to be such merely because a member of the pubic or someone in the know of things brings relevant facts to the notice of the prescribed authority, in this case, the Registrar. The Registrar, on a consideration of such facts has to decide whether it is a fit case warranting initiation of enquiry in the over-all interests of the society. The decision must be his and the decision must of-course be based on relevant factors, but there is no limitation as to the sources by which he should be prompted to action. 9. The Full Bench of this Court has observed in the aforesaid decision that an authority under the Act can initiate proceedings 'on his own motion' and also on the application of the majority of the members of the governing body or of not less than 1/3rd members of the Society. The Court has further observed that the Registrar of Co-operative Societies on an information received by him can also initiate suo-motu proceedings but, the only requirement is, when he acts upon that information, he has to apply his mind before ordering for an enquiry. In the present case, we have carefully perused the directions issued by the Deputy Registrar to the Assistant Registrar on 7.4.2005. In the present case, we have carefully perused the directions issued by the Deputy Registrar to the Assistant Registrar on 7.4.2005. In the preamble portion of the order there is a reference to the information received from Lokayukta against the Appellant-Bank relating to some financial irregularities. Further, there is an indication that the Lokayukta has requested the Deputy Registrar to complete the enquiry as early as possible and to submit a report. Keeping that information on record, the Deputy Registrar, after applying his mind, has framed several charges against the Appellant-Bank and has requested the Assistant Registrar to hold an enquiry on the irregularities mentioned in his order. 10. Now, the question is whether the Deputy Registrar has initiated enquiry proceedings 'on his own motion' or 'on the dictation of the Lokayukta'? If it is on the dictation of the Lokayukta and without application of mind by the Deputy Registrar, Sri Kulkarni, learned Counsel is justified in contending that on a direction issued by some other authority, the Assistant Registrar could not have initiated proceedings. But, in the present case, that is not the situation. A reading of the order passed by the Deputy Registrar, as we have already indicated, would reveal that, on an information furnished by the Lokayukta, the Deputy Registrar, after proper application of mind, has proceeded to initiate enquiry proceedings under Section 64(1) of the Act. In that view of the matter, there is no merit in the contention canvassed by Sri S.P. Kulkarni, learned Counsel for the Appellant-Bank and the same requires to be rejected. 11. For the reasons stated above, the appeal fails and accordingly, it is rejected for the reason other than the one that is assigned by the learned Single Judge in W.P. No. 15746 of 2005 dated 10.6.2005. Ordered accordingly.