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2008 DIGILAW 201 (KAR)

C. Shivalingaiah v. State of Karnataka

2008-03-26

H.N.NAGAMOHAN DAS

body2008
ORDER H.N. Nagamohandas, J. The Karnataka State Judicial Department Employees House Building Co-operative Society Limited - the 5th respondent herein is a Co-operative society (for short ‘Society’) registered under Karnataka Co-operative Societies Act, 1959 (for short ‘Act’). The society is managed by a committee of management elected by its members for a term of five years. On 27.03.2005 elections were held to the committee of management of society and 15 directors that is the petitioners in these three writ petitions were elected for a term of five years. On 14.06.2007 the 3rd respondent issued a show-cause notice under Section 30(1) of the Act framing 16 charges and to show cause as to why committee of management of the society shall not be superseded. The second respondent in the impugned order in the appeal before him summarises the charges as under: A. Failure to follow the instructions issued under Section 68 based on audit report of 2004-05 (Charge 1) B. Charges pertaining to staffing pattern and payment of bonus (Charge 5 and 14) C. Charge pertaining to financial irregularity (Charge 2,3,4,6,7, and 11) D. Loss to the Society (Charge No.13) E. Irregularities in land purchase and development and site allotment (Charge No. 8,9,10 and 12) F. Failure to observe certain procedure (Charge No.15) G. General charge about several irregularities reported in newspapers and media and alleged in writ petition before Hon’ble High Court (Charge No.16). 2. The society submitted its reply on 18.07.2007 interalia contending that the charges are untrue, baseless and requested to drop further proceedings. In reply to the charges the society also produced number of documents. The 3rd respondent by considering reply submitted by the society passed an order on 08.08.2007 superseding the committee of management of the society and appointed the 4th respondent as administrator to the society. Aggrieved by this order of supersession some of the Directors of the society i.e., the petitioners in W.P.No. 20081/2007 filed an appeal before the Secretary to Government in Appeal /CMW 10/CAP/2007 under Section 106 of the Act. The Secretary to Government vide endorsement dated 31.10.2007 dismissed the appeal as not maintainable on the ground that the Registrar of Co-operative Societies is the appellate authority and not the Government. Some of the Directors filed an appeal against the order of supersession before the Registrar of Co-operative Societies in Appeal No.RCS/DAP/D1/23/2007-08 i.e., the petitioners in W.P.No.19053/2007 and 19054/2007. The Secretary to Government vide endorsement dated 31.10.2007 dismissed the appeal as not maintainable on the ground that the Registrar of Co-operative Societies is the appellate authority and not the Government. Some of the Directors filed an appeal against the order of supersession before the Registrar of Co-operative Societies in Appeal No.RCS/DAP/D1/23/2007-08 i.e., the petitioners in W.P.No.19053/2007 and 19054/2007. The 2nd respondent Registrar of Co-operative Societies vide order dated 29.11.2007 dismissed the appeal and sustained the order of supersession. Hence these writ petition questioning the order of supersession dated 08.08.2007, order of appellate authority dated 29.11.2007 and the endorsement dated 31.10.2007 and for other reliefs. 3. Sri T.R. Subbanna, learned Senior Counsel for some of the petitioners contend that the impugned order of supersession dated 08.08.2007 passed by the 3rd respondent is opposed to the principles of natural justice. The petitioners after submitting their objections and documents, orally requested the 3rd respondent to give a personal hearing and the same was denied. The 3rd respondent in the impugned order of supersession held that some of the charges as proved on the ground that the society has not produced necessary documents in support of their defense. The 3rd respondent ought to have called upon the society to produce the necessary documents and ought to have provided an oral hearing. He contends that the hearing includes oral hearing. Therefore, he contends that the impugned order is opposed to principles of natural justice and liable to be quashed. 4. Sri M.Sivappa, learned Senior Counsel for some of the petitioners contend that the charges levelled against the society are vague, frivolous and unfounded. He contends that in respect of some of the charges the respondents initiated enquiry proceedings under Section 64 of the Act much earlier to the show-cause notice dated 14.06.2007. In respect of some of the charges a public interest litigation is pending in W.P.No.40994/2002. He contends that when the matters are pending before this Court and the authorities, the impugned order of supersession as bad in law. 5. Sri Jayakumar S.Patil, learned Senior Counsel for some of the petitioners contend that pursuant to the oral observation made by the Court in W.P.No.40994/2002 the Government Advocate wrote a letter on 20.03.2007 to the respondents to initiate action against the society for super session. 5. Sri Jayakumar S.Patil, learned Senior Counsel for some of the petitioners contend that pursuant to the oral observation made by the Court in W.P.No.40994/2002 the Government Advocate wrote a letter on 20.03.2007 to the respondents to initiate action against the society for super session. The respondents without applying their mind and without enquiring into the allegations and only on the basis of a letter written by the Government Advocate, the proceedings under Section 30(1) of the Act are initiated and as such the same suffers from legal malafides. 6. Sri F.V.Patil, learned Counsel for some of the petitioners contend that all the charges levelled against society relates to the period prior to 2005. The present committee of management is in no way responsible for the charges specified in the show cause notice. For the lapses committed by the previous managing committee, the respondents have superseded the present managing committee and as such the same is bad in law. He further contends that if the members of the previous managing committee committed certain irregularities, then the respondents shall proceed to take action against them either under Section 29 or under Section 64 or under Section 69 of the Act and not to supersede the newly elected managing committee of the respondent society. Reliance is placed on the following decisions: i) AIR 1971 SC 1093 -Union of India Vs. Jyoti Prakash Mitter ii) AIR 1967 SC 1398 - State of Assam Vs. Gauhati Municipal Board, Gauhati iii) AIR 1975 SC 596 -The Government of Mysore and others Vs. J.V. Bhat iv) 1976(2) Kar. L.J.123 -Viswanathiah Gangadharaiah Vs. Joint Registrar of Co-operative Societies and others. v) 1979(2) Kar. L.J.50- C.S. Mohan Vs. State of Karnataka vi)1998(2) Kar. L.J. 248- K. Shantharaj Vs. M.L. Nagaraj and others. Vii) ILR 1999 Kar 2391- Asif Alim Sait Vs. Union of India viii) ILR 2000 Kar 2841- M.Srinivasa Reddy and others Vs. Registrar of Co-operative Societies for Karnataka ix) 1988(2) Kar. L.J. 214- Selvan M. and another Vs. Vivek Finance Corpn. & anr. x) AIR 1959 SC 308 - Gullapalli Nageswara Rao and others Vs. A.P.S.R.T.C. xi) 2008 AIR SCW 540- Reserve Bank of India Vs. M. Hanumaiah & ors. xii) AIR 1981 SC 818 - Swadeshi Cotton Mills Vs. Union of India xiii) 1981 (1) Kar. L.J. 443-Jagdish Patil Vs. State of Karnataka 7. Vivek Finance Corpn. & anr. x) AIR 1959 SC 308 - Gullapalli Nageswara Rao and others Vs. A.P.S.R.T.C. xi) 2008 AIR SCW 540- Reserve Bank of India Vs. M. Hanumaiah & ors. xii) AIR 1981 SC 818 - Swadeshi Cotton Mills Vs. Union of India xiii) 1981 (1) Kar. L.J. 443-Jagdish Patil Vs. State of Karnataka 7. Per contra, Sri S.Z.A. Khureshi, learned AGA, supports the impugned order of supersession and also the order of appellate authority. He contends that Seciton 30(1) of the Act do not specify oral or personal hearing. After issuing show-cause notice and by considering statement of objections and documents filed by the petitioners, the 3rd respondent passed the impugned order of supersession and the same is in accordance with law and there is no violation of principles of natural justice. He further contends that this Court cannot interfere with the concurrent finding of the authorities under the Act. Reliance is placed on the following decisions : i) 1978(1) Kar. L.J. 127- Navalgund Taluka Agri Produce Co-op Marketing Society Ltd. Annigeri & Ors Vs. State of Karnataka & ors. ii) 1970(1) Kar. L.J. 530- The Bhadra Ryots Co-operative Society Ltd Vs. State of Mysore and another. iii) 1983(2) Kar. L.J. 313- Veerannagowda Vs. Dy. Regr, Coop. Societies, Mandya iv) ILR 1987 Kar 1336- Appa Saheb R. Kerakalamatti Vs. Addl.R.C.S. 8. Heard arguments on both the side and perused the entire writ papers. On the basis of the pleadings and on the submissions made at the bar, the following points will arise for my consideration. (i) Whether this Court under Article 226 of the Constitution of India can interfere with the impugned orders of supersession under Section 30(1) of the Act and the order of Appellate Authority under Section 106 of the Act? (ii) Whether the impugned order under Section 30(1) of the Act is bad in law for want of oral or personal hearing? (iii) Whether the impugned order of supersession is in conformity with the requirement under Section 30(1) of the Act. On Point No. (i) 9. One of the essential features of the democratic republic established under the Indian Constitution is division of powers between the three wings of the State : The Parliament and State Legislature, The Executive and The Judiciary. (iii) Whether the impugned order of supersession is in conformity with the requirement under Section 30(1) of the Act. On Point No. (i) 9. One of the essential features of the democratic republic established under the Indian Constitution is division of powers between the three wings of the State : The Parliament and State Legislature, The Executive and The Judiciary. These three wings are expected to operate in their respective earmarked fields so that the democratic Government both at the Center and the States may function for the welfare of the people. Our constitution created the Supreme Court and the High Courts as Constitutional Courts with extensive powers of judicial review to enforce constitutional rights and fundamental rights and also to safeguard other rights flowing from various statutes or laws. Dr. Ambedkar speaking in the Constituent Assembly on the question of right of citizen to move Supreme Court for enforcement of the Fundamental Rights (Article 32) observed : “If I was asked to name any particular Article in this Constitution as the most important, an Article without which this Constitution would be a nullity, I could not refer to any other Aritcle except this one. It is the very soul of the Constitution and the very heart of it and I am glad that the House has realised its importance.” 10. Justice V. R. Krishna Iyer speaking for the Bench of the Supreme Court in Gujarat Steel Tubes Limited Vs. Gujarat Steel Tubes Mazdoor Sabha (1980 I LLJ 137) held that Article 226, however restrictive in practice, is a power wide enough, in all conscience, to be a friend in need when the summons comes in a crisis from a victim of injustice; and more importantly, this extraordinary reserve is unsheathed to grant final relief without necessary recourse to a remand. What the Tribunal may, in its discretion do the High Court too can, under Article 226, if facts compel to do so. 11. The SUpreme Court of India in the case of The Controller and Auditor General of India Vs. K.S. Jaganathan, AIR 1987 SC 537 , held : “20. What the Tribunal may, in its discretion do the High Court too can, under Article 226, if facts compel to do so. 11. The SUpreme Court of India in the case of The Controller and Auditor General of India Vs. K.S. Jaganathan, AIR 1987 SC 537 , held : “20. There is thus no doubt that the High Courts in India exercising their jurisdiction under Article 226 have the power to issue a writ of mandamus or a writ in the nature of mandamus or to pass orders and give necessary directions where the Government or a public authority has failed to exercise or has wrongly exercised the discretion conferred upon it by a statute or a rule or a policy decision conferred upon it by a statute or a rule or a policy decision of the Government or has exercised such discretion mala fide or on irrelevant considerations or by ignoring the relevant considerations and materials or in such a manner as to frustrate the object of conferring such discretion or the policy for implementing which such discretion has been conferred. In all such cases and in any other fit and proper case a High Court can, in the exercise of its jurisdiction under Article 226, issue a writ of mandamus or a writ in the nature of mandamus or pass orders and give directions to compel the performance in a proper and lawful manner of the discretion conferred upon the Government or a public authority, and in a proper case, in order to prevent injustice resulting to the concerned parties, the Court may itself pass an order or give directions which the Government or the public authority should have passed or given had it properly and lawfully exercised its discretion.” 12. Keeping in view the law laid down by the Apex Court in the decisions referred to supra, the fact situation in the instant case is to be examined. Judicial review has become an integral part of our constitutional system. The purpose of judicial review is to ensure that an individual is given fair treatment by the authority to whom he has been subjected to. Judicial review has become an integral part of our constitutional system. The purpose of judicial review is to ensure that an individual is given fair treatment by the authority to whom he has been subjected to. Under Section 30(1) of the Act the Registrar is empowered to supersede the committee of management of a cooperative society which persistently makes default or is negligent in the performance of the duties or any act which is prejudicial to the interest of the society or its members, Against this order of supersession an appeal is provided under Section 106 of the Act. If the original order passed under Section 30(1) of the Act or the order passed by the Appellate Authority under Section 106 of the Act are found to be against the object and spirit of supersession of a society or where it is found that the authority exceeded in his jurisdiction, committed error of law apparent on the face of record or when the findings are perverse in relation to the fact situation, undoubtedly such and order is always subject to judicial review. It is not the duty of Court to substitute its opinion for the orders passed by an authority while deciding the matter. If the conclusion of the authorities is not supported by evidence on record or contrary to the available evidence then this Court has the power to interfere with the orders passed by the authorities under the Act. Therefore I hold that this Court, under Article 226 of the Constitution, can interfere with the orders of the authorities passed under Section 30(1) of the Act and the order passed by the Appellate Authority under Section 106 of the Act. Point No.(i) is answered in affirmative. On Point No. (ii) 13. Proviso to Section 30(1) of the Act specifies that the Registrar may, after giving the committe an opportunity to state its objections, if any, order in writing remove the said committee, and appoint an administrator to manage the affairs of the society for such period. The Supreme Court in the case of Reserve Bank of India Vs. Proviso to Section 30(1) of the Act specifies that the Registrar may, after giving the committe an opportunity to state its objections, if any, order in writing remove the said committee, and appoint an administrator to manage the affairs of the society for such period. The Supreme Court in the case of Reserve Bank of India Vs. M. Hanumaiah, 2008 AIR SCW 540 while interpreting Section 30 of the Act held that in case of removal of the committee of a cooperative society, compliance with the principals of natural justice is expressly required in as much as in sub-section (1) of Section 30 it is stipulated that the Registrar would pass the order of removal only “after giving the committee an opportunity to state its objections.” On the other hand the requirement of any hearing is absent in sub-section (5) which starts with a non-obstante clause that also covers the provisions of the earlier sub-section of Section 30 of the Act, In Charan Lal Sahu Vs. Union of India, AIR 1990 SC 1480 it is held that all civilised countries accepts the right to be heard as part of due process of law where questions affecting their right, privileges or claims are considered or adjudicated. In State of Assam Vs. Gauhati Municipality, AIR 1967 SC 1398 it is held that the State after considering the explanation of the Board to show-cause notice and without granting personal hearing not specifically asked for ordering supersession is valid and there is no violation of natural justice. In Government of Mysore Vs. J.V.Bhat, AIR 1975 SC 596 it is held that the nature of hearing would, of course, vary according to the nature of the function and what its just and fair exercise required in the context of rights affected. A Division Bench of this Court in the case of Navalgund Taluka Agri Produce Co-op. Marketing Society Ltd., Annigeri and others Vs. State of Karnataka and others, 1978 (1) KLJ 127 held, that Seciton 30(1) of the Act requires an opportunity to be given to the Committee against which action is proposed to be taken to state its objections, if any. An opportunity to state its objections in writing is sufficient compliance with the rules of natural justice. The order would not be vitiated because no opportunity was given to make oral representation. In Veeranna Gowda Vs. An opportunity to state its objections in writing is sufficient compliance with the rules of natural justice. The order would not be vitiated because no opportunity was given to make oral representation. In Veeranna Gowda Vs. Deputy Registrar of Cooperative Societies, Mandya, 1983 (2) KLJ 313 it is held that an opportunity of hearing under Section 30 of the Act need not necessarily be oral hearing in every case. 14. Keeping in mind the law laid down by the Supreme Court and this Court in the decisions referred to above it is required to examine the scope of Section 30(1) of the Act. In my considered opinion the following principles will emerge : (i) An opportunity to state objections in Section 30(1) of the Act means an opportunity of hearing to the aggrieved party. (ii) The word ‘hearing’ in the context of Section 30 of the Act do not include oral hearing or personal hearing. (iii) The Committee of management or the members of the Committee of the co-operative society as a matter of right are not entitled for oral or personal hearing. (iv) Nature of hearing would vary from case to case in the interest of justice and fair exercise of power. (v) If the authority who exercises the power entertains any doubt or ambiguity, may call upon the Committe of management to clarify the same. 15. In the instant case the Committee of management in reply to the show-cause notice have not sought for any oral hearing. Though the petitioners contend that they orally requested the third respondent to provide a personal hearing the same is disputed by the respondent. There is no other material on record to prove and establish that the petitioners had made a request for personal hearing. Even otherwise as a matter of right the petitioners are not entitled for an oral or personal hearing. The third respondent while considering the reply did not entertain any doubt or ambiguity which needs clarification. Therefore the impugned order passed by the third respondent would not be vitiated for want of personal hearing. Accordingly I hold point No. (ii) in the negative. On Point No.(iii) 16. Co-operation is as old as human civilisation. In the primitive commune system, man developed the concept of Co-operation of each according to his ability and each according to his need. Accordingly I hold point No. (ii) in the negative. On Point No.(iii) 16. Co-operation is as old as human civilisation. In the primitive commune system, man developed the concept of Co-operation of each according to his ability and each according to his need. The evolution of family, community and ultimately international feeling spring out of the desire of men and women to Co-operate with one another to overcome individual weakness. What is known as Co-operative effort is ultimately the group instinct in man which enables him to live together, work together and help each other in times of stress and strain. In India, the principles of Co-operation have been practiced from time immemorial. The spirit of village Communities of India was almost entirely co-operative. The villages have throughout the ages worked together on an informal Co-operative basis. The Co-operative element in the community life of India was represented by joint family system. The ancient Indian scripture Rig Veda states: “ May you all have a common purpose May Your hearts be unison May you all be the same mind So that you can do work efficiently well” 17. In the modern technical sense, the genesis of Co-operative movement and its applications in the economic field can be traced from the Industrial Revolution which took place in England during second half of eighteenth and first half of the nineteenth century. Co-operation as is understood today as an economic system was born as a peaceful reaction against the mercantile economy and Industrial Revolution which had resulted in concentration of wealth, mass poverty and degradation. In India the modern Co-operative movement had started in the early part of twentieth century. Since then, it has grown in stature and extent of covering more than 90% of the villages and covering nearly 40% of rural population. The Co-operative activities acquired a predominant position in our national life. 18. Number of persons join together, invest and organise themselves into a Co-operative society. But, it is not possible for all the members to attend the day-to-day affairs of the Co-operative society. Therefore, the administration of the society is entrusted to a few elected representatives. The representatives are expected to carry on the administration of the society in accordance with law and constitution of the society. The representatives should manage the society not for their own selfish motives, but for the common benefit of all the members. 19. Therefore, the administration of the society is entrusted to a few elected representatives. The representatives are expected to carry on the administration of the society in accordance with law and constitution of the society. The representatives should manage the society not for their own selfish motives, but for the common benefit of all the members. 19. The law makers in their wisdom enacted several provisions in the Act as a measure of check over the functioning of the committee of management as a whole, its members and employees of the society. Section 29(c)(8) of the Act empowers the Registrar of Co-operative Societies to remove or to disqualify from holding any office for a period not exceeding 5 years, any member of committee of the Co-operative Society who has acted fraudulently or with gross negligence or contravenes the provisions of the Act and the Rules. Under Section 63 of the Act, audit of the Co-operative Societies is made compulsory. The Co-operative audit is not only a financial audit but also encompasses management audit, detection and prevention of frauds and errors, purposeful and useful suggestions etc. Section etc. Section 64 of the Act empowers the Registrar to hold an enquiry in any matter touching the constitution, working and financial condition of a Co-operative society. Section 68 of the Act empowers the Registrar to pass orders directing the societies to remedy the defects disclosed in the audit under Section 63 of the Act or an enquiry under Section 64 of the Act. Section 69 of the Act specifies initiation of surcharge proceedings for recovery of money or property from the committee of management or its office bearers or any other members. 20. Yet another important provision as a measure of check over the committe of management of a society is its supersession under Section 30 of the Act. For the purpose of this case the relevant provision is Section 30(1) of the Act and the same reads as under : “30. 20. Yet another important provision as a measure of check over the committe of management of a society is its supersession under Section 30 of the Act. For the purpose of this case the relevant provision is Section 30(1) of the Act and the same reads as under : “30. Supersession of Committe : (1) If, in the opinion of the Registrar,- (a) The committee of a Co-operative society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or commits any act which is prejudicial to the interest of the society or its members, or is otherwise not functioning properly; or (b) A Co-operative society is not functioning in accordance with the provisions of this Act, the rules or bye-laws or any order or direction issued by the State Government or the Registrar (including the direction issued under Section 30-B) the Registrar may, ........ 21. The powers conferred under Section 30(1) of the Act to the Registrar is not absolute power and the same is conditional. The condition precedent for exercising the power of supersession against an elected committee of management of the society is that there must be persistent default in the performance of its duties. Despite the directions or warnings by the Government or the Registrar if the society persists in making default in discharge of its duties, then only it can be said that the society has persistently mad default. Therefore, the issuance of directions or warnings is the first measure to which the Registrar should resort before rushing to exercise the power of supersession. As far as possible the power of supersession should be exercised only as a last measure. The power or supersession should be used very sparingly and only when the Registrar is fully satisfied that the continuance of the committee of the management in power is prejudicial to the interest of the society as a whole and its members. The frequent use of this power and its exercise are likely to defeat the very object and spirit of Co-operative movement. If the power of supsersession is freely exercised, then the duly elected committee of management and its members will be in perpetual fear of axe of supersession. The frequent use of this power and its exercise are likely to defeat the very object and spirit of Co-operative movement. If the power of supsersession is freely exercised, then the duly elected committee of management and its members will be in perpetual fear of axe of supersession. Therefore strict compliance of the requirement under Section 30(1) of the Act is a must to remove the duly elected committe of management and to appoint an administrator in its place. 22. Keeping in mind the object and spirit of Seciton 30(1) of the Act, it is required to examine the fact situation in the instant case. In the show-cause notice dated 14.06.2007 as many as 16 charges are levelled against the society. The 3rd respondent in the order of supersession dated 08.08.2007 dropped charge Nos. 2,3,4,8 and 16 and held the remaining charges as proved. In appeal, the 2nd respondent in his order dated 29.11.2007 held charge Nos. 9, 10, 11 and 12 as proved and the remaining charges as not proved. The order of supersession dated 08.08.2007 is merged with the order of appellate authority dated 29.11.2007. Therefore the charges 9 to 12 are the only charges required to be considered for the purpose of this case. 23. Charge No.9, 10 and 12 pertains to irregularities in purchase of land, its development and allotment of sites. Admittedly these charges relates to the period prior to 2005. The committee of management now superseded was elected on 24.02.2005. The committee of management now superseded is in no way responsible for the irregularities stated in these charges. For the irregularities if any committed by the previous management, the supersession of the present committee of management is bad in law. 24. Further it is noticed from the record that the respondents vide order dated 05.06.2007 initiated enquiry proceedings under Section 64 of the Act in respect of the charges pertaining to 9, 10 and 12. When the enquiry proceedings under Section 64 were pending against the society relating to purchase of land, its development and allotment of sites, the same cannot be made as a charge by the respondents in the impugned order of supersession. When the enquiry proceedings under Section 64 were pending against the society relating to purchase of land, its development and allotment of sites, the same cannot be made as a charge by the respondents in the impugned order of supersession. Now it is brought to my notice by the learned Government Advocate that the proceedings initiated against the society under Section 64 of the Act are concluded by submitting a report on 29.11.2007 by the Additional Registrar of Cooperative Societies and further suggested to take action under Section 68 of the Act. On one hand the respondents have taken action under Section 64 of the Act and on the other hand under Section 30(1) of the Act against the society in respect of the very same charges. This act on the part of the respondents is opposed to the common law doctrine of “Nemo Debet Bix Vexari” which means no person shall be prosecuted and punished for the same offence more than once. This is very important safeguard available to a citizen against the State under Article 20(2) of the Constitution of India. On this ground the impugned order of supersession is liable to be quashed. 25. It is not is dispute that the issue relating to purchase of land, its development and allotment of sites is also the subject matter in a public interest litigation in W.P. No. 40992/2002 pending on the file of this Court. When the matter is ceased of by this Court in a public interest litigating the same cannot be made as a charge for supersession of the committee of management of society. Further the respondents without appreciating the documentary evidence produced by the committe of management, in support of their defense in respect of charge no.9, 10 and 12, concludes that these charges as proved. Again this finding of the 3rd respondent is contrary to the evidence on record. The alleged charges 9, 10 and 12 will not amount to persistent default by the society. Therefore, the impugned order of supersession is liable to be quashed. 26. Charge No. 11 specifies the revised payment of Rs. 165 per Sq. Ft to the developer by the society without analysis of cost escalation. Again this charge relates to the period prior to 2005. The previous committee of the management of the society enhanced the payment to the developer from Rs. 140 to 165 per sq. 26. Charge No. 11 specifies the revised payment of Rs. 165 per Sq. Ft to the developer by the society without analysis of cost escalation. Again this charge relates to the period prior to 2005. The previous committee of the management of the society enhanced the payment to the developer from Rs. 140 to 165 per sq. ft by their resolution dated 15.02.2004. The audit report for the year 2004-05 pointed out that this escalation in price is without any cost analysis. The appellate authority in the impugned order noticed the fact that in a project spanning over several years, cost escalations are normal. Further the appellate authority noticed the fact that only four directors in the present committee who were in the previous managing committee are responsible for the decision to escalate price. Therefore, the supersession of the present managing committee for the irregularity committed by the previous managing committee is bad in law. 27. The reasoning of the Appellate Authority that some of the elected members of the present committee of management were also members in the previous committee of management and they are responsible for the charges levelled in the show-cause notice and therefore present committee of management is to be superseded is bad in law. If some of the members of the committee of management are responsible for default or negligent in performance of the duties imposed under the Act or the Rules, then the Registrar is empowered to proceed against them under Section 29(c)(8) of the Act or under Section 64 of the Act or under Section 69 of the Act. Merely because some of the members of the previous committee of management who are responsible for the charges are continuing in the present committee of management shall not be a ground for supersession of the present committee of management of the society. Further it is important to notice that no material is placed on record to prove and establish that there is persistent default on the part of the society and its members. There is no evidence on record to show what are the directions or warnings issued by the Government or Registrar which are disobeyed or violated persistently by the present committee of management of the society. There is no evidence on record to show what are the directions or warnings issued by the Government or Registrar which are disobeyed or violated persistently by the present committee of management of the society. Therefore the essential requirement for exercising the power of supersession, that is, the elements of persistent default on the part of the society is absent in the instant case. For these reasons the impugned order of supersession and the order of Appellate Authority are liable to be quashed. For the reasons stated above, the following : ORDER i) Writ petitions are hereby allowed. ii) The impugned order of supersession dated 08.08.2007 passed by the 3rd respondent and the order dated 29.11.2007 passed by the 2rd respondent - Appellate Authority are hereby quashed. iii) The 4th respondent - Administrator is hereby directed to hand over the charge to the committee of management within one week from today. Ordered accordingly.