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2015 DIGILAW 338 (CAL)

Tapas Panda v. State of West Bengal

2015-04-10

ASHIS KUMAR CHAKRABORTY

body2015
Judgment :- Ashis Kumar Chakraborty, J. The petitioner has challenged the legality of the award dated January 30, 2006 passed by the respondent No.2 the Assistant Registrar or of Co-operative Societies, Midnapore-II, Contai (hereinafter stated as “the impugned award”) directing the petitioner to pay a sum of Rs.17,63,299/- with interest at the rate of 16.5% per annum from January 31, 2006 to the respondent No.3 bank. The respondent No.2 further ordered that in the event of the petitioner not paying the said sum of Rs.16,75,674/- the respondent No.3 bank would have the liberty to adjust the cash securities furnished by the borrower and his sureties against the outstanding dues first and the remaining dues would be recoverable from the mortgaged properties furnished by the borrower and the sureties. The petitioner obtained financial facilities from the respondent No.3 Cooperative Bank, that is, a term loan of Rs. 4 lakh and a cash credit loan of Rs.10 lakhs. For the purpose of securing the repayment of the said term loan and cash credit loan to the respondent No.3 bank, the petitioner deposited certain cash securities and his parents being the respondent Nos.4 and 5, as sureties, mortgaged their immovable properties with the respondent No.3 bank. The petitioner committed default in repayment of his dues in respect the term loan and the cash credit loan to the respondent No.3 bank and the respondent No.3 bank lodged a complaint under Section 128 of the West Bengal Co-operative Societies Act, 1983 (hereinafter referred to as the “said Act”) at the office of the respondent No.2. By a notice dated January 9, 2006, the respondent No.2 informed to the petitioner of the requisition filed by the respondent No.3 for obtaining a decree against the petitioner under Section 128 of the said Act, for Rs.17,55,674/-, and directed the petitioner to appear before him on January 30, 2006 at 12 noon. The petitioner alleged that along with the said notice dated January 9, 2006, the respondent No.2 did not disclose the details of the amount claimed by the respondent No.3 after due giving adjustment of the money already repaid by him. The petitioner alleged that along with the said notice dated January 9, 2006, the respondent No.2 did not disclose the details of the amount claimed by the respondent No.3 after due giving adjustment of the money already repaid by him. In paragraph 8 of the writ petition, the petitioner categorically stated that on January 30, 2006 he appeared before the respondent No.2 and prayed for time and requested for furnishing the details statement of account on which the amount of claim was arrived at by the bank but the respondent No.3 instead of granting time proceeded to pass the impugned award arbitrarily and with undue haste. In paragraph 8 of the affidavit-in-opposition affirmed by its Chairman, the respondent No.3 bank, has admitted that the petitioner was present before the respondent No.2 on January 30, 2006 and there is no specific denial of the averment of the petitioner requesting the respondent No.2, during the said hearing held on January 30, 2006 to grant him some time and furnish him with the details statement of account on which the respondent No.3 claimed the said amount. However, in the impugned award disclosed as Annexure P5 to the writ petition, it is expressly mentioned that the same is an ex parte award under Section 128 of the said Act. When this writ petition was moved by an order dated March 02, 2006 a learned Single Judge stayed the impugned award until further order. Mr. Srimanta Dutta, the learned Advocate appearing for the petitioner at the very outset of the hearing of the writ petition submitted that the said interim order dated March 02, 2006 was passed in view of the decision of a Full Bench of the Bombay High Court in the case of Narendra Kantilal Shah vs. Joint Registrar, Co-operative Societies (Appeal) Bombay & Ors. reported in AIR 2004 Bom 166 where it was held that in view of the provisions contained in the Recovery of Debts Due to the Banks and Financial Institutions Act, 1993 a ‘Cooperative Bank’ becomes a bank within the meaning of Section 2(d) of the said Act and as such the Debts Recovery Tribunal would have the exclusive jurisdiction to deal with all claims of a co-operative bank for recovery of its dues and that Registrars or any other officer under the State Co-operative Societies Act would not have the jurisdiction to entertain any recovery proceeding at the instance of the co-operative bank. He, however, pointed out that but said Full Bench decision now stands overruled in view of the subsequent decision of the Supreme Court. According to Mr. Dutta the impugned award does not disclose any reason nor conforms to the requirements of Rule 177 of the West Bengal Co-operative Societies Rules, 1987 (hereinafter referred to as “the said Rules”) and as such the impugned award passed by the respondent is void. Mr. Dutta further submitted that the petitioner is not a member of the respondent No.3 bank and relying on a decision of a Single Judge of this Court in the case of Pravat Kumar Chatterjee vs. State of West Bengal reported in AIR 1986 Cal 270 , submitted that Section 39 of the said Act prohibits a co-operative bank from advancing loan to a nonmember. Per contra, Mr. Milon Bhattacharyya, the learned Senior Advocate appearing for the respondent No.3 bank submitted that none of the contentions raised on behalf of the writ petitioner has any merit. He strenuously urged that from the documents disclosed in the writ petition, it is evident that the respondent No.3 issued a notice dated August 13, 2004 to the petitioner stating his overdue outstanding amount of Rs. 14,49,758/- and requested the petitioner to repay the said outstanding sum against the cash credit loan within August 31, 2004. He further relied on the letter dated April 08, 2005 issued by the petitioner the Branch Manager to the respondent No.3 bank admitting his outstanding dues to the bank and the expressed his desire to repay the dues of the bank by selling the immovable properties mortgaged to bank and prayed for time till August 31, 2005 for payment of the dues of the bank. On the basis of the said two documents Mr. On the basis of the said two documents Mr. Bhattacharyya contended that since the petitioner was aware of his liability to pay the dues of the bank and he himself prayed for certain time to repay the dues of the bank, he cannot assail the impugned award passed by the respondent No.3 bank on any ground whatsoever. According Mr. Bhattacharyya in the instant case, the impugned award was passed by the respondent No.2 under Section 128 of the said Act of 1983 and as such the respondent No.2 had no obligation to comply with the requirements laid down under Rule 177 of the said Rules. He submitted that the said Rule 177 is applicable in respect of proceeding conducted by a Registrar under Sections 95 and 96 of the said Act. He further pointed out that while the provisions contained in Sections 95 and 96 of the said Act falls under chapter XI under the heading Settlement of Dispute, Section 128 of the said Act falls under chapter XIV under the heading Enforcement of obligation and recovery of sums due. Thus, according to him, in respect of proceedings under Section 128 of the said Act, the said Rule 177 does not apply. So far as the decision of the learned Single Judge of this Court in the said case of Pravat Kumar Chatterjee (supra) cited on behalf of the petitioner, Mr. Bhattacharyya submitted that in the said case the Assistant Registrar had passed the award under Section 86 of the West Bengal Co-operative Societies Act, 1973 which stood repealed by the said Act of 1983 against a person who was not admitted as a member of the co-operative bank. He further contended that from the documents disclosed in the writ petition it is evident that the petitioner was admitted as a nominal member of the respondent No.3 bank and as such the petitioner cannot allege that he was not admitted as a member of the respondent No.3 bank. Thus, according to him, the said decision relied by the petitioner has no application in the instant case. With regard to the contention raised on behalf of the petitioner that the impugned award does not disclose any reason, Mr. Thus, according to him, the said decision relied by the petitioner has no application in the instant case. With regard to the contention raised on behalf of the petitioner that the impugned award does not disclose any reason, Mr. Bhattacharyya strenuously urged that in the instant case the impugned award was passed by the respondent No.2 under Section 128 of the said Act and the provisions contained in the said Section do not provide that while passing an award the respondent No.2 was required to disclose reason for his decision. According to him, the petitioner was already aware of his outstanding dues to the bank and he even admitted his liability to pay the said dues of the bank and as such the petitioner did not suffer any prejudice for absence of any reason in the impugned award. In support of his contention. Mr. Bhattacharyya strongly contended that the legislature did not require the respondent No.2 to record any reason in his award and if such requirement is introduced, the same would amount to adding words to the statute and enlarging the scope thereof which is not permissible in law. In support of the said contention, he relied on the decision of a Division Bench of this Court in the case of Gopal Kumar and Anr. Vs. State of West Bengal and Ors. reported in (2015) 1 Cal LT 173 (HC). I have considered the submissions made on behalf of both the councilor appearing for both the petitioner and the respondent No.3 bank respectively. So far as the contention raised on behalf of the petitioner that the petitioner was not a member of the respondent No.3 bank, I find that in paragraph 3 of the writ petition, the petitioner himself admitted that the said term loan and the cash credit loan was sanctioned to him by the respondent No.3 bank, after the petitioner was granted nominal membership of the bank. This would also be evident from the sanctioned letter dated June 03, 2002 being Annexure P-1 to the petition where it was specifically mentioned that the petitioner to deposit an amount to Rs. 1000/- with the Contai Branch of the Bank as nominal membership fees. Further from the impugned award it is evident that the same was passed by the respondent No.2 under Section 128 of the Act. 1000/- with the Contai Branch of the Bank as nominal membership fees. Further from the impugned award it is evident that the same was passed by the respondent No.2 under Section 128 of the Act. However, the decision of the learned Single Judge of this Court in the case of Provat Kumar Chatterjee (supra) has rightly pointed out by Mr. Bhattacharyya on behalf of the respondent No.2 bank is a decision on an award passed under Section 86 of the previous Act of 1973 which was not applicable in the instant case. Thus, I find no merit in the first contention of the petitioner. The next point to be determined by me is whether the impugned award passed by the respondent No.2 is a reasoned award or not and whether the impugned award can be declared to be paid void on the ground of not disclosing any reason. In order to answer the aforesaid questions it would be convenient to the impugned award. From the impugned award it is evident that the respondent No.2 himself has declared the same to be an ex parte award. However, as stated above, the respondent No.3 bank itself has admitted that the petitioner had attended the hearing held by the respondent No.2 on January 30, 2004. Further, there is no specific denial by the respondent No.3 in paragraph 8 of the said affidavit-in-opposition of the statements made in paragraph 8 of the writ petition that date, the petitioner prayed for time and requested the respondent No.2 to furnish the detailed statements on account of which the respondent No.3 had raised the amount of claim against him. Thus, there cannot be any doubt that sufficient opportunity was not given to the petitioner to defend the claim of the respondent No.3 bank not was he allowed to contest the said proceeding. All these resulted in violation of the principle of natural justice and rendered the impugned order void. Further, the impugned award does not disclose that the respondent No.3 bank proved the amount claimed against petitioner or that the respondent No.2 ascertained the amount of claim of the respondent No.3 bank against the petitioner Mr. Bhattacharyya appearing on behalf of the respondent No.3 bank did not dispute that the impugned award does not disclose any reason. Further, the impugned award does not disclose that the respondent No.3 bank proved the amount claimed against petitioner or that the respondent No.2 ascertained the amount of claim of the respondent No.3 bank against the petitioner Mr. Bhattacharyya appearing on behalf of the respondent No.3 bank did not dispute that the impugned award does not disclose any reason. His contention was that since the provisions or Section 128 do not stipulate any condition the award to be a reasoned order, no fault can be found with the impugned order. The respondent No.2 passed the impugned order in exercise of his quasi-judicial functions under the said Act. In the case of Woolcombers of India Ltd. Vs. Workers’ Union reported in AIR 1973 SC 2758 , while dealing with an award passed by an Industrial Tribunal, under the Industrial Disputes Act, 1947, the Supreme Court held that the giving of reasons in support of the conclusions by judicial and quasi-judicial authorities when exercising initial jurisdiction is essential. The Supreme Court further held that the requirement of giving reason is to prevent unfairness or arbitrariness in reaching the conclusion and the requirement to give reasons by a quasi-judicial authority in its decision is, as per the settled principle that justice should not only be done but should also appear to be done as well. It was held that an unreasoned conclusion may be just but they may not appear to be just to those who read them. Again in the case of Siemens Engg. and Mfg. Co. Ltd. vs. Union of India reported in AIR 1976 SC 1785 the Supreme Court held that it is far too well-settled that an authority in making an order in exercise of its quasi-judicial functions, must record reasons in support of the order it makes. It was further held that the rule requiring reasons in support of the quasi-judicial order is as basic as following the principle of natural justice, the rule must be observed in its proper spirit, and a mere pretence of compliance would not satisfy the requirement of law. It is now well established, reasons are held to be the links between the mind of the decision maker and the controversy in question as also the decision or conclusion arrived at and the recording of reasons is indicative of application of mind special even the order is amenable to judicial review. It is now well established, reasons are held to be the links between the mind of the decision maker and the controversy in question as also the decision or conclusion arrived at and the recording of reasons is indicative of application of mind special even the order is amenable to judicial review. It is settled principle of law that even there is no provision for filing an appeal against a decision of a quasi-judicial authority, the said decision is amenable to judicial review and the same can be challenged under Article 226 of the Constitution of India and the High Court exercising of power under Article 226 or even the Supreme Court exercising of power under Article 136 of the Constitution of India ought to have the advantage of examining the reasons that prevailed with the authority making the order. Section 7B of the Telegraph Act provides as follows: “7-B. Arbitration of disputes – (1) Except as otherwise expressly provided in this Act, if any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person for whose benefit the line, appliance or apparatus is, or has been, provided, the dispute shall be determined by arbitration and shall, for the purpose of such determination, be referred to an arbitrator appointed by the Central Government either specially for the determination of that dispute or generally for the determination of disputes under this section. (2) The award of the arbitrator appointed under sub-section (1) shall be conclusive between the parties to the dispute and shall not be questioned in any court.” By reading the aforesaid provision in Section 7B of the Telegraph Act, it is evident that the same is statutory remedy under the Act and as such in a dispute as regards the amount claimed in a demand raised by an Authority under the said Act the only remedy is by way of arbitration under Section 7B of the said Act, by operation of sub-section (2) thereof, the award of the arbitrator made under sub-section (1) shall be conclusive between the parties to the dispute and shall not be questioned in any Court. Considering the said provisions contained in Section 7B of the said Act, in the case of M.L. Jaggi vs. Mahanagar Telephones Nigam Ltd. & Ors. Considering the said provisions contained in Section 7B of the said Act, in the case of M.L. Jaggi vs. Mahanagar Telephones Nigam Ltd. & Ors. reported in (1996) 3 SCC 119 , the Supreme Court held as follows: “It is, thus, settled law that reasons are required to be recorded when it affects the public interest. It is seen that under Section 7-B, the award is conclusive when the citizen complains that he was not correctly put to bill for the calls he had made and disputed the demand for payment. The statutory remedy opened to him is one provided under Section 7-B of the Act. By necessary implication, when the arbitrator decides the dispute under Section 7-B, he is enjoined to give reasons in support of his decision since it is final and cannot be questioned in a court of law. The only obvious remedy available to the aggrieved person against the award is judicial review under Article 226 of the Constitution. If the reasons are not given, it would be difficult for the High Court to adjudge as to under what circumstances the arbitrator came to his conclusion that the amount demanded by the Department is correct or the amount disputed by the citizen is unjustified. The reasons would indicate as to how the mind of the arbitrator was applied to the dispute and how he arrived at the decision. The High Court, though does not act in exercising judicial review as a court of appeal but within narrow limits of judicial review it would consider the correctness and legality of the award. No doubt, as rightly pointed out by Mr. V.R. Reddy, Additional Solicitor General, the questions are technical matters. But nonetheless, the reasons in support of his conclusion should be given. In this case, arbitrator has not given reasons. The award of the arbitrator is set aside and the matter is remitted to the arbitrator to make an award and give reasons in support thereof.” (Para-8) In the case of Kranti Associates (P) Ltd. vs. Masood Ahmed Khan reported in (2010) 9 SCC 496 (para-47) the Supreme Court summarized the principles on the recording of reasons as follows: (a) In India the judicial trend has always been to record reasons, even in administrative decisions, if such decisions affect anyone prejudicially. (b) A quasi-judicial authority must record reasons in support of its conclusions. (b) A quasi-judicial authority must record reasons in support of its conclusions. (c) Insistence on recording of reasons is meant to serve the wider principle of justice that justice must not only be done it must also appear to be done as well. (d) Recording of reasons also operates as a valid restraint on any possible arbitrary exercise of judicial and quasi-judicial or even administrative power. (e) Reasons reassure that discretion has been exercised by the decision-maker on relevant grounds and by disregarding extraneous considerations. (f) Reasons have virtually become as indispensable a component of a decision-making process as observing principles of natural justice by judicial, quasi-judicial and even by administrative bodies. (g) Reasons facilitate the process of judicial review by superior courts. (h) The ongoing judicial trend in all countries committed to rule of law and constitutional governance is in favour of reasoned decisions based on relevant facts. This is virtually the lifeblood of judicial decision making justifying the principle that reason is the soul of justice. (i) Judicial or even quasi-judicial opinions these days can be as different as the judges and authorities who deliver them. All these decisions serve one common purpose which is to demonstrate by reason that the relevant factors have been objectively considered. This is important for sustaining the litigants’ faith in the justice delivery system. (j) Insistence on reason is a requirement for both judicial accountability and transparency. (k) If a judge or a quasi-judicial authority is not candid enough about his/her decision-making process then it is impossible to know whether the person deciding is faithful to the doctrine of precedent or to principles of incrementalism. (l) Reasons in support of decisions must be cogent, clear and succinct. A pretence of reasons or “rubber-stamp reasons” is not to be equated with a valid decision making process. (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.) (n) ……………………………………………………………………… (o) ……………………………………………………………………. (m) It cannot be doubted that transparency is the sine qua non of restraint on abuse of judicial powers. Transparency in decision-making not only makes the judges and decision-makers less prone to errors but also makes them subject to broader scrutiny. (See David Shapiro in Defence of Judicial Candor.) (n) ……………………………………………………………………… (o) ……………………………………………………………………. In view of the aforesaid Supreme Court decisions, I cannot convince myself to accept the contention of the respondent No.3 that an award passed by the Registrar or any Officer authorized by him under Section 128 of the said Act need not disclose any reason. So far as the decision of the Division Bench of this Court in the case of Gopal Kumar & Anr. (supra) cited by Mr. Bhattacharyya, in the said case, the subject matter of challenge in the writ petition was not a decision of a quasi-judicial authority under any statute. The question of law that arose for consideration by the Division Bench, in the said case is stated in paragraph 2 of the said decision as follows: “Upon receipt of a motion from the requisite number of members of a Gram Panchayat indicating their intention to remove the Pradhan or the Upa-Pradhan, before issuing a notice convening a meeting of the Gram Panchayat for consideration of the motion and taking a decision on it, whether or not the Prescribed Authority is required to expressly record his satisfaction that the motion conforms to the requirements of section 12(2) of the West Bengal Panchayat Act, 1973 (hereinafter referred to as ‘the said Act’)”? From the aforesaid question it is evident that in the said case, the decision of the Division Bench would depend upon the interpretation of various Sub-Sections 1 to 3 or of Section 12 of the West Bengal Panchayat Act, 1973 (hereinafter referred to as “the Panchayat Act”). From the aforesaid question it is evident that in the said case, the decision of the Division Bench would depend upon the interpretation of various Sub-Sections 1 to 3 or of Section 12 of the West Bengal Panchayat Act, 1973 (hereinafter referred to as “the Panchayat Act”). By reading the provisions contained in Sections 1 to 3 or of Section 12 of West Bengal Panchayat Act, 1973 (hereinafter referred to as “the Panchayat Act”) it is evident, and it was also held the Division Bench in the said decision that the obligation of the Prescribed Authority to convene a meeting, after receipt of a motion signed by minimum three members of Gram Panchayat, expressing their lack of confidence against the Pradhan or the Upa Pradhan or recording their intention to remove Pradhan or Upa Pradhan, is more of a ministerial task and no executive or administrative order is to be issued by the Prescribed Authority. In view of such finding, the Division Bench held that the language of sub-section 3 is quite clear and the legislature did not require the Prescribed Authority to record his satisfaction or reasons as regards the sufficiency of the motion before convening the meeting and that issuance of notice convening the meeting itself indicates the satisfaction of the Prescribed Authority as regards acceptability of the motion. However, in the instance case the respondent No.2 has passed the impugned award in exercise of his quasi-judicial function under the said Act and in view of the aforesaid decisions of the Supreme Court, that to meet the test of natural justice any decision or any quasi-judicial authority must disclose reason even though the statute does not provide for such requirement, I find that the decision of the Division Bench of this case in the aforesaid case of Gopal Kumar & Anr. has no application in this case. For all the aforesaid reasons, the writ petition being W.P.No. 4393(W) of 2006 is allowed and the impugned award dated January 30, 2006 passed by the respondent No.2 is set aside. However, the respondent No.2 shall make a fresh hearing of the requisition filed by the respondent No.3 bank for realization of its dues from the petitioner and the respondent Nos.4 and 5 and the respondent No. 2 shall pass a fresh reasoned award after giving appropriate opportunity of hearing to the petitioner and the respondent Nos. 4 and 5. However, the respondent No.2 shall make a fresh hearing of the requisition filed by the respondent No.3 bank for realization of its dues from the petitioner and the respondent Nos.4 and 5 and the respondent No. 2 shall pass a fresh reasoned award after giving appropriate opportunity of hearing to the petitioner and the respondent Nos. 4 and 5. However, there will be no order as to costs.