Judgment :- (This writ petition is filed under Articles 226 & 227 of the constitution of India praying to quash the order dated 7.2006 on the file of the R2 vide Annexure D and etc.,) Writ petition was an elected Director of Krishnarajanagar Taluk Co-operative Agricultural and Rural Development Bank Limited, Krishnarajanagar Taluk Mysore District. 2. The second respondent – Deputy Registrar of Co-opertive Societies acting as a Registrar under the provision of the Karnataka Co-operative Societies Act, 1959 [for short ‘the Act’] being moved by the third respondent – Co-operative Bank had counsel issue of a notice dated 20.5.2006 purporting to the under the provisions of section 29-c of the Act calling upon the petitioner to attend enquiry to be held at his office in the background of a complaint filed by the Bank complaining that the petitioner had become a defaulter by not repaying the loan amount and had also sought extension of time on behalf of one Javaregowda, son of Cheluvegowda who had become a defaulter to the Bank and on these two courts, action in terms of section 29-C of the Act was required to be taken against the petitioner. 3. Petitioner responded by replying contending, inter alia, that he was not a defaulter, that the Bank had not issued him any notice for payment of any amounts due; that while he had recommended the case of Javaregowda for granting him a month’s time for repayment of his loan; that he had not stood as a guarantor for the loan borrowed by any person; that the Management of the Bank has complained being motivated by the complaints alleged against the Management by the petitioner and another Director by name K.T Krishnegowda; that the action is more a mala fide action by the other Directors of the Management and prayed for dismissal of the compliant and to close the enquiry etc., 4. The Deputy Registrar held an enquiry and has passed the order dated 7.2006 [copy at Annexure-D] holding that the petitioner having failed to prove that he was not a defaulter and also having admitted to have written in favour of another defaulter javaregowda, the explaination cannot be accepted and therefore passed an order disqualifying the petitioner from holding the post of Director for the rest of his term. .5. .5. Petitioner being aggrieved had preferred an appeal before the first respondent – Joint Registrar of Co-operative Societies under section 106 of the Act. But the appeal also having been dismissed by the appellate authority confirming the view taken by the Deputy Registrar in terms of his order dated .112.2006 [copy at Annexure-K], the present writ petition before this court seeking for quashing of these orders of the Deputy Registrar as well as the Joint Registrar of Co-operative Societies. 6. Respondent had been put on notice and petition had also been admitted for examination by issue of rule, Statutory Functionaries – respondents 1&2 are represented by Smt. Sarojini Muthanna, learned Additional Government Advocate, the Society and the secretary of the society – respondents 3 & 4 respectively are represented by Sri. Ashok Kumar, learned counsel. 7. Respondents 3 & 4 – the Bank and its officials have filed statement of objections, contending that the petitioner had availed a loan of Rs.1.00 lakh for the purpose of modification/reconstruction of his house; that the first instalment of loan was due by 33.2006; that the petitioner defaulted to pay this amount and in fact the amount was paid only much later as on 5-6-2006; that the petitioner had become defaulter in between and had incurred disqualification in terms of Section 29-C (1)(a) of the Act and it is for this reason the registrar was moved for taking suitable action; that the impugned orders are supported by statutory provisions and facts and circumstance; that the petition averments are false and untenable and are denied and urged for dismissal of the writ petition. 8. A copy of the agreement between the petitioner and the bank is produced as an annexure to the statement of objections, so also the letters written by the petitioner recommending the case of one Javaregowda for extension of time, a copy of the code of conduct governing the conduct of members of the committee are also produced as annexures to the statement of objections and it is pointed out that a member of the managing committee should properly utilise the amount borrowed for the very purpose and they should not in any way cause impediment for the recovery of loan amount from other borrowers; that acting contrary would amount to violation of the code of conduct or misconduct on the part of the elected members etc. 9. 9. I have heard Sri M.S. Padmarajaiah, learned Senior counsel appearing for the petitioner, Ms. Sarojini Muthanna K learned additional government advocate appearing for respondents 1 and 2 and Sri Ashok kumar learned counsel for the respondents 3 and 4. 10. The principal submission of Sri M.S. Padmarjaiah, learned senior counsel, is that the impugned orders are vitiated for want of a proper opportunity being accorded to the petitioner to defend the proposed action for disqualification; that no notice for taking such action had ever been served by the deputy registrar; that the notice issued was only in the context of the enquiry to be held in the background of the compliant filed by the management of the bank and therefore there is violation of the provisions of section 29-C (7) of the Act. It is secondly contended that the petitioner being a defaulter had not been determined by the authority or the bank and the petitioner in fact had apprised the authority that he was not a defaulter and in the absence of such determination, action in terms of Section 29-C(1) (a) of the Act was not justified. 11. While the fact that the petitioner had not made any payment till 6.2006 even towards the first annual instalment is not disputed, nevertheless it is submitted that by time the deputy registrar initiated enquiry and at any rate at the time when the deputy registrar passed the impugned order under Annexure-D, the petitioner was not a defaulter; that the petitioner had paid the first instalment and the next instalment was not due and if the petitioner was not a defaulter, there was no occasion for the deputy registrar to have acted to disqualify the petitioner as a defaulter; that in terms of Section 29- C(1) (a) of the Act, the order passed by the deputy registrar is clearly in contravention of the provision of Section 29-C(1)(a) of the Act and the affirming order of the joint registrar suffers from the same defect and therefore both the orders should be set aside. 10.12. 10.12. By drawing attention to the statutory provision i.e. Section 29-C(1)(a) of the Act, learned counsel for the petitioner submits that even in terms of the language of the section and the provision, it is only when the person has continued to be in default, particularly at the time when the order for disqualification is passed by the registrar, such an order is justified under the provision; that a mere fact that at some earlier point of time a person was a defaulter is of no consequence in law, as the mandate of the section for incurring disqualification is that the person is in default to the society, in the sense, has continued or remained to be a defaulter even at the time of determination of the question and only if it is found that the person being in default at the time of the passing of the order of disqualification of a members, the order will be justified and not otherwise. Particular emphasis is laid on the use of the words ‘is in default’ in Section 29-C (1)(a) of the Act and in this regard reliance is placed on the decision of the Supreme Court in the case of F.S. Gandhi Vs. Commissioner of Wealth Tax [(1993)3 SCC 624] particularly the observation of the Supreme Court as contained in paragraphs 10 and 12 of this judgment. Support is sought from the decision to contend that the word ‘is’ used in the context of determination of the disqualification, as in the present case, the requirement is that it should be a continuing one at the time when the authority/court determines; that the word ‘is’ was construed in that case as referring to ‘present’ and ‘future’ and in the present case, it should be construed as one referring to the ‘past’ and the ‘present’ and as in the present, the petitioner was, undoubtedly, not a defaulter as on the date when the order is bad in law. 113. The other submission is that no proper opportunity had given specifically proposing an order of disqualification in terms of Section 29-c (1)(a) of the Act is sought to be supported from the view taken by this court in a related writ petition disposed of yesterday [15-9-2008] in WP No 19046 of 2006. .14. 113. The other submission is that no proper opportunity had given specifically proposing an order of disqualification in terms of Section 29-c (1)(a) of the Act is sought to be supported from the view taken by this court in a related writ petition disposed of yesterday [15-9-2008] in WP No 19046 of 2006. .14. On the other hand, Sri Ashok Kumar, learned counsel for the respondents 3 and 4 would submit that the provisions of Section 29-C (1)(a) of the Act should be understood as one which by itself creates a disqualification by operation of the statutory provision; that a member of the committee of management once had incurred disqualification that definitely will attract the consequence in terms .of the statutory provisions; that it is not necessary the disqualification should be continuing one, in sense, as if it is subsequently purged by the defaulter making good the amount due to the society then the disqualification vanishes; that once the disqualification is incurred it remains so, it can be taken note of and acted even later and such being the precise action taken in the instant case, both as indicated in the order of deputy registrar and the affirming order of the joint registrar and there being no dispute as to the petitioner being a defaulter between 1-4-2006 and 5-6-2006, the petitioner did incur disqualification and because of this reason he should not have been continued as a member of the committee of management and the orders passed are only based on such legal position and confirmation of this factual and legal position and it matters very little as to whether the petitioner had purged himself of the status of defaulter at the time of a passing of the impugned order. 115. 115. In this regard, learned counsel for the respondent 3 and 4 would submit that a provision of this nature is one which is introduced by way of an amendment to the parent Act; that it has a salient purpose to serve; that it is one in respect of persons who are in the management of such cooperative society and public financial institutions, as in the case of the respondents-bank; that such persons who are managing the affairs of the society or the bank should be persons above the board and should by themselves adhere to the norms and the conduct should be one to set an example and not to take any undue advantage of the special position as members of the managing committee; that the provisions for disqualification from the membership is specifically meant to curb the tendency of members of the managing committee either taking the law into their own hands or acting contrary or immunity from the statutory provisions and the provisions like Section 29-C(!)(a) of the Act should be interpreted to achieve this object and if so a disqualification once incurred cannot be got over by a subsequent reparation like in the case of the present petitioner; that it matters little for the examination of the validity of the order passed by the deputy registrar and affirmed by the joint registrar and therefore submits that the writ petition has to be dismissed. .16. Ms. .16. Ms. Sarojini Muthanna K. learned additional government advocate, appearing for the respondents 1 and 2, while defends the validity of the impugned orders, submit that on the aspects of interpretation of the provision of Section 29-C (1)(a) of the Act, it should be so understood as to achieve and sub-serve the object of introducing such provisions, which are purposefully introduced by the legislature to prevent abuse and misuse of a position of trust by members of the committee of management of a society or a bank; that understanding the statutory provision as contended by the learned counsel for the respondents 3 and 4 would sub-serve the object of the Act and advance the purpose for which the provision has been introduced and a parallel is sought to be drawn between such provision and the provision for prosecution, particularly of persons in the management of companies who violate statutory provisions and become offenders; that such action can be pursed even later also before the appropriate forum and in the present case, if the management had only sought the deputy registrar to take action in the context of an accomplished event viz., the petitioner .having incurred disqualification on a proper understanding of the provisions commensurate action is called for and therefore the impugned action is justified and warranted and submits that no interference is called for with the impugned orders and urges for dismissal of the writ petition. 117. I have perused the petition pleadings, records placed by the learned AGA and the relevant statutory provisions as also the submissions made at the Bar. 118. It is not doubt that section 29C of the Act, is penal in nature. It inflicts on the members of a committee of a management who incur a disqualification under this Act, the consequences of not only removal from the membership of the committee but also a possible further debarment for a period of five years and in a given case may be dismembering also can follow. The provision being a subsequent addition to the parent Act by the amending Act No 39 of 1975 with effect from 23-9-1975 and having come to the slightly modified by Act No.25 of 1998 brought into effect from 15-8-1998. The provision being a subsequent addition to the parent Act by the amending Act No 39 of 1975 with effect from 23-9-1975 and having come to the slightly modified by Act No.25 of 1998 brought into effect from 15-8-1998. it is very clear that the legislature has intended the consequences provided for under this statutory provision and the intention is to disqualify an erring member of a society from either being elected to be a member of the managing committee or being continued as a member of the managing committee. A perusal of the different sub-section of Section 29-C of the Act, which reads as under; 29C. Disqualification for membership of the committee: (1) No person shall be eligible for being elected or appointed or continued as a member of the committee of any co-operative society, if- .(a) he is in default to that society or any other co-operative society in respect of any dues from him as borrower. (b) he is interested directly or indirectly in any contract made with such co-operative society or in the sale or purchase made by such co-operative society privately or in auction or in any contract or transaction of the co-operative society (other than investment and borrowing) involving financial interests in the contract, sale, purchase or transaction; Provided that if any question arises as to whether any person is near relation or not the case shall be decided by the Registrar and his decision shall be final. .(d) he is employed as legal practitioner on behalf of such co-operative society or accepts employment as legal practitioner against such co-operative society; .(e) he is a paid employee of such co-operative society or of its financing bank; .(f) he is a near relation of a paid employee of such Co-operative society. .(d) he is employed as legal practitioner on behalf of such co-operative society or accepts employment as legal practitioner against such co-operative society; .(e) he is a paid employee of such co-operative society or of its financing bank; .(f) he is a near relation of a paid employee of such Co-operative society. Explanation: For the purpose of this clause and clause (c ) ‘near relation’ means,- .(i) husband, wife and unmarried daughter, .(ii) father, mother, undivided son, undivided brother and unmarried sister, and xxxxxxxxxxxx (iii) such other relations as may be prescribed to be a near relation xxxxxxxxxxxxxxxx If any question arises whether any person is a near relation or not the same shall be decided by the Registrar and his decision shall be final .(g) he was a paid employee of a co-operative society and was dismissed, removed or compulsorily retired from service of a co-operative society: .(h) heis disqualified to be a member of the society or to vote as such member. .(i) he has been convicted for an offence punishable under section 153-A or section 171-E or section 171F or sub-section (2) or sub-section (3) of section 505 of the Penal Code, 1860 (central Act 45 of 1860) or under section 39-J or clause (b) of sub-section(2) of section 39-K of this Act, unless a period of six years has elapsed from the date of such conviction; .(j) he has been convicted by a Court in India for any offence an sentenced to imprisonment for a term of not less than two years , unless a period of five years has elapsed form the date of his release’ .(k) he is found guilty of corrupt practice within the meaning of section 39-C unless a period of six years has elapsed from the date on which he was found guilty; .(l) he has failed to remit to any co-operative society any amount (other than a loan) retained by him in contravention of the provisions of this Act, rules or bye-laws; (m) he is a representative of a co-operative society which is in default to a financing bank or to any co-operative society in respect of any dues by the co-operative society which he represents, for a continuous period of one year; Provided that the disqualification under this clause for being continued as a member of the committee shall apply to a co-operative society which has defaulted in payment of an amount exceeding thirty percent of ‘such dues:’ .(n) hewas a member of the committee which failed to make arrangement for election within the time limit specified in section 39A: .(o) he , is in the Committee of a District Central Society or a Federal Society or an Apex Society as a representative of a Co-operative Society and,- .(i) he ceases to be a member of the primary or secondary society which he represents or .(ii) thesociety which nominated him as a representative withdraws his nomination; or (iii) the committee of the society of which he is a member has been removed under section 30, or a special officer is appointed under section 31; .(iv) the society of which he is the representative has been liquidated; .(2) No person including a person elected by a co-operative society as a member of a committee of another co-operative society of which such co-operative is a member shall be a President or Chairperson, Vice-President or Vice-Chairperson or other office bearer of more than two cooperative societies. .(4) Nothing in sub-section (2) shall apply: .(i) to any person who is appointed by the State Government or the Registrar as the president or Chairperson, Vice-President or the Vice-Chairperson; or .(ii) to any person who is merely a member of the committee. .(5) In the case of co-operative marketing societies, consumers co-operatives societies and such class or classes of co-operative societies as may be specified by the State Government by notification in the official Gazette, no member shall be eligible for being appointed or elected as a member of the committee of such co-operative society if he does no fulfill the minimum qualifications relating to his transaction with the co-operative society up to such monetary limits as may be specified from time to time in such notification. (6) There shall be no representative of individual members on the committees of a District Central Co-operative Bank or an Apex Co-operative Bank or such other classes of Co-operative banks as may be prescribed. .(7) Any question as to whether a member of the committee was or has become subject to any of the disqualifications mentioned in this section shall be decided by the Registrar after giving the person concerned a reasonable opportunity of being heard. .(7) Any question as to whether a member of the committee was or has become subject to any of the disqualifications mentioned in this section shall be decided by the Registrar after giving the person concerned a reasonable opportunity of being heard. .(8) If any member of a committee of a co-operative society during the term of his office- .(a) becomes subject to any disqualifications specified in sub-sections (1), (2) and (5);or .(b) has acted or has been acting fraudulently or with gross negligence or in contravention of the provision of this Act the rules or the bye-laws of the co-operative society or without the sanction of the committee of the co-operative society where such sanction is necessary or contrary to the resolution of the co-operative society or its committee or in any way prejudicial to the interest of the co-operative society; or (c ) has acted or has been acting persistently against the directions or orders issued under this Act, rules or bye-laws; or (d) is not discharging his duties satisfactorily; the Registrar may either on a report made to him or otherwise, by order remove such member and in cases falling under clauses (a), (b) (c) and (d) of this sub-section disqualify him from holding any office in the co-operative society for such period not exceeding five years, as may be specified in such order: Provided that no order shall be made under this sub-section unless a reasonable opportunity of being heard, is given to the person against whom the order is to be made. (9) A copy of the order made under sub-section (8) shall be communicated to the member and the co-operative society concerned. Clearly indicates that the legislature had expressly provided for according an opportunity of hearing wherever they are found that it should be a disputed aspect. .19. In so far as the provision of Section 29-C(1)(a) of the Act is concerned, opportunity contemplated before passing an order of disqualification is to be found in the general provisions of sub-section (7) of Section 29-C of the Act. .19. In so far as the provision of Section 29-C(1)(a) of the Act is concerned, opportunity contemplated before passing an order of disqualification is to be found in the general provisions of sub-section (7) of Section 29-C of the Act. While there cannot be any two opinions that as to whether a member of .the committee was or has become subject to any disqualification under provision of Section 29-C has to be decided by the registrar by affording the person concerned a reasonable opportunity of being heard and therefore the registrar cannot pass an order to this effect without according a reasonable opportunity to the person concerned, in the present case, submission on behalf of the petitioner is not want of opportunity in that sense but want of proper opportunity in the absence of a specific show cause notice proposing action for disqualification of the member under the provision of Section 29-C(1)(a) of the Act. 20. While a notice calling upon the petitioner to participate in the enquiry did indirectly mention of the possibility of disqualification for being a defaulter and also for some misconduct in recommending the case another, borrower which, according to the society or the bank, amounted to misconduct in the light of the code of conduct for the members of the committee and the petitioner did respond by contending that there was no default, the enquiry was in the context and the deputy registrar has recorded a finding that the petitioner has incurred disqualification. An opportunity of hearing particularly a reasonable opportunity of being heard, even as contemplated under sub-section (7) of section 29-C of the Act, whether has been accorded or fulfilled is an aspect which has to be gathered from the facts and circumstances of each case and not one which can be applied as a formula for all situations saying that no opportunity was given and in the present situation while it was to the understanding of the petitioner about the possibility of an order disqualifying the petitioner could be passed as a consequence of the enquiry and as a result of the notice issued to him, this aspect of the matter need not be further examined in this case, as to whether it was technically or legally in full compliance with the requirement of sub-section(7) for the reason that the ultimate outcome is more depending on the proper understanding of the statutory provision rather that the factual position. The legal position i.e. the meaning of the statute being a matter for interpretation and as the result is directly depending on the proper understanding and interpretation of Section 29-C(1)(a) of the Act, this aspect definitely recedes to the background and this case is further examined on the premise that the petitioner had an opportunity in the present case. 21. In so far as the statutory provision is concerned, while submission on behalf of the petitioners is that unless the petitioner had remained defaulter and therefore had incurred disqualification on the day of the determination by the registrar and for such reason, the order is bad, submission on behalf of the respondents is that it is not necessary for the petitioner to continue to be default, incurring disqualification for being a defaulter earlier in itself is sufficient to pass the impugned order. .22. While it is true that if it becomes necessary to answer this question as to whether a member of a committee was or has subjected to any disqualification enumerated in the section, It has to be answered by the registrar after giving the person concerned a reasonable opportunity of being heard, disqualification by itself is not exclusively by the order passed by the registrar but a disqualification incurred in terms of the statutory provision. It is because of this reason, importance is .given to the incurring of disqualification, and not the order of disqualification, and the requirements as to whether it should be one current at the time of the passing of the order is examined, 23. If a person is a defaulter to the society, in terms of Section 29-V (1)(a) of the Act, the person is not eligible for being elected not eligible for being appointed, not eligible for being continued as a member of the committee of the society. I find that the interpretation urged on behalf of the petitioner that the requirements is that at the time of the order [of disqualification] is passed the members of the committee should be suffering from disqualification and therefore he should not be continued, while will definitely enable the member of the committee to make default earlier and purge himself of the nature of the disqualification and be ready to face the enquiry before the registrar to contend that he is not a defaulter at the time of enquiry and therefore no disqualification can be inflicted on him. .24. I find acceptance of such an interpretation would lead to a situation where even members of the society may become lax, negligent, allow themselves to be defaulters and seek to purge of the nature disqualification by being not a defaulter as and when an enquiry is contemplated or a person is sought to be disqualified. It is for this reason I prefer the submission made on behalf of the respondents by Sri Ashok Kumar, learned counsel, that if such an interpretation is put in place, it can lead to an anomalous situation where time and again a member of the committee can incur disqualification, but nevertheless get over the same by the time the enquiry is held and order is passed or even purging of such nature of disqualification one of default on the eve of passing of the order. It is for this reason, the learned counsel has submitted that a disqualification cannot be made contingent upon the member to act and not to act subsequently. Submission commands acceptance. The disqualification is because of the operation of the statutory provision and because of the factum of the member of the committee of management being in default. It is for this reason, the learned counsel has submitted that a disqualification cannot be made contingent upon the member to act and not to act subsequently. Submission commands acceptance. The disqualification is because of the operation of the statutory provision and because of the factum of the member of the committee of management being in default. If the member of the committee was in default at some point of time after he became a member of the committee, disqualification is at that time and thereafter he cannot be continued as a member. The order that is being passed by the registrar subsequently in terms of Section 29-C (1)(a) of the Act by giving opportunity to the member is a post facto affirmation of an happened event, which had already taken place and the registrar is only enquiring as to whether it had actually taken place in terms of the provisions of the Act. This dispute can be as to whether the petitioner was a defaulter even at any point of time or not? If the petitioner was never a defaulter, definitely that could have been an instance of providing of an opportunity of very useful and purposeful, as otherwise, the petitioner may suffer disqualification even when he was not disqualified at any point of time, but in the present case, as it was not in dispute that the petitioner had defaulted after 31-3-2006 and the default was got over only later by making payment on 5-6-2006. if the petitioner had suffered disqualification in the interregnum, that disqualification is good enough to prevent the petitioner from continuing as a member of the committee of management of the society. The entire object of the penal provision as contemplated in terms of Section 29-C is to ensure a degree of transparency and accountability and model conduct and functioning on the part of the members of the managing committee. If such is the .object of the statutory provision, there is no scope to interpret a provision of this nature to understand that the member of the committee who may keep incurring disqualification but may get over subsequently and avoid the consequence, is not a submission which can be accepted and not an interpretation which is be required to be placed on this provision. While it is true that a penal provision should be strictly construed, even within the scope of this construction, a person who has committed default, has incurred disqualification, is a person who was to be visited with consequences of that disqualification, and it matters little that the consequence are visited upon the person much later in terms of an order passed by the registrar after an enquiry. It is for this reason that I am not impressed upon with the arguments advanced on behalf of the petitioner necessitating interference with the impugned orders. 25. If the petitioner had incurred a disqualification and the statutory consequences follow, assuming that there are slight consequences follow, assuming that there are slight procedural irregularities or order passed by the authorities is wanting in procedure or wanting in a total opportunity of hearing it is not a thing which calls for interference in the exercise of writ jurisdiction of judicial review of administrative action on the interpretation of Section 29-C(1)(a) of the Act as indicated above. This view is also supported by the decision of this court in the case of Bore Gowda Vs Asst Registrar of Co-operative Societies [ILR 1985 KAR 260 Para-8]. 26. In the result, this writ petition is dismissed.