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2017 DIGILAW 894 (ORI)

Panchamukhi Multipurpose Cooperative Society Limited v. State of Odisha, represented through the Principal Secretary to the Government, Department of Co-operation

2017-08-17

BISWANATH RATH

body2017
JUDGMENT : Biswanath Rath, J. This writ petition involves a challenge to the show cause notice dated 3.7.2017 under Annexure-1. 2. Short background involved in the case is that the petitioner-society is represented through its elected President. The election to the Committee of Management of the Orissa State Co-operative Bank Limited was held on 12.7.2015. Consequent upon declaration of the petitioner no.2 as the President of the petitioner no.1-Society, the petitioner no.2 contested for the post of Director for Constituency No.8 and was thus declared as a Director of the Committee of the Management of Orissa State Co-operative Bank Limited. Thus, the petitioner continued as President of the Society-petitioner no.1 as well as the Director of the Committee of the Management of Orissa State Co-operative Bank. It is alleged that for the provision contained in Clause 14(A), Section 16(A) (1)(a-2), provision contained in Section 19(1) of the Orissa Co-operative Societies Act, 1962 read with Section 68 of the Orissa State Co-operative Societies Act, 1962 (hereinafter called “the Act”), the petitioner claimedthe show cause notice under Annexure-1 is without jurisdiction of the Managing Director of the Odisha State Co-operative Bank Ltd. It is alleged that while the petitioner was continuing as such, the petitioner has been issued with a show cause notice under Annexure-1 explaining as to why he shall not be disqualified to continue as a Member of the Bank on the premises that the petitioner-1 Society having lost its eligibility to continue as a member of the Bank. 3. Assailing the impugned notification, Sri P. Acharya, learned senior counsel taking this Court to different provisions of the Act including the provision at Section 68 of the Orissa State Co-operative Societies Act submitted that for the provision contained therein, the Managing Director of the Orissa State Co-operative Bank Limited has no jurisdiction to issue such show cause notice. 4. Sri K.P. Nanda, learned senior counsel appearing for the Orissa State Co-operative Bank Limited on the other hand contested the submission of learned counsel for the petitioner inter alia contending that in the notice requiring a show cause only, the petitioner has been sufficient opportunity to show cause by way of his response against the show cause notice, the writ petition became premature and under no circumstance, the impugned order should be interfered by this Court at this stage. 5. 5. Answering on the authority of the Managing Director issuing such notice as raised by Sri Acharya, learned senior counsel for the petitioners, Sri Nanda, learned counsel for the opposite parties submitted that though the notice is a indicator of issuing by the Managing Director, but the show cause notice has been issued being authorized by the President of the Bank. 6. Considering the rival contention involved in the case, this Court feels it appropriate to decide the issue as to for the provision in Section 68 of the Orissa Cooperative Societies Act whether the authority issued show cause notice having jurisdiction or not? On being asked for the records of the proceeding, concerned records have been produced before this Court. Perusal of the note-sheet dated 6.6.2017, it appears the matter was brought to the notice of the Managing Director at the first instance.The suggestion of the Managing Director was placed before the President for his approval and the approval of the President reads as follows: “Perused the notes above and at P.P. I agree with the suggestions of the Managing Director. As he is the officer to sue and to be sued on behalf of the Bank as per Bye-law No.41(III)(b)(ii) read with Rule 37 of the OCS Rules, 1965, he is authorized to issue the Show Cause Notice and also initiate other actions as suggested.” 7. Under the above circumstances, this Court finds there is no doubt that though show cause notice was issued by the Managing Director but under the authority of the President. Therefore, the submission of Sri Acharya that Managing Director has not been authorized to issue such show cause notice is negative.Now coming to decide the next question as to whether the show cause notice in the involvement of the dispute therein is permissible for the provision contained in Section 68 of the Orissa Co-operative Societies Act? This Court finds Section 28 (3-b)(1), Section 29(1), Section 32(1), (5) ofthe Orissa Co-operative Societies Act, 1962 reads as follows: “Section 28(3-b) (1) of the Orissa Co-operative Societies Act, 1962: Notwithstanding anything contained in this Act, there shall be a Chief Executive for every society, by whatever designation called, who shall be appointed on whole time basis by the Committee subject to the approval of the Registrar. Such Chief Executive shall be deemed to be a member of the Committee in the case of an apex society and any other society or class of societies as the State Government may, by notification from time to time, specify.” “Section 29 Meeting of general body-(1): The meeting of General Body of members of a society shall be held at least once in a year and within such period as may be prescribed in the bye-law but not later than six months after the close of the financial year, to transact the business.” “Section 32. Suspension of Committee and power to disqualify officers of the Society- (1) If in the opinion of the Registrar, the committee of any society,- (i) is in persistent default; or (ii) is in negligence in the performance of its duties imposed on it by this Act, rules or by-laws; or (iii) has committed any act prejudicial to the interest of the Society or its members; or (iv) is stalemate in its constitution or functions, The Registrar may after giving the committee a reasonable opportunity of being heard within twenty-one days from the date of issue of the notice in that behalf and after consulting, in case of a State Cooperative Bank or Central Co-operative Bank, the Reserve Bank of India and in case of any other society, Financing Bank of such Society, by order in writing stating reasons thereof, supersede the committee for a period not exceeding one year in case of Society carrying on the business of banking and in case of other Society for a period not exceeding six months from the date of such order and appoint an “Administrator” on such terms and conditions, as may be prescribed to manage the affairs of the Society who can take all or any policy decision including admission of members in relation to the Society; Provided further that in case of Society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 shall also apply. xxx xxx xxx (5) If the Registrar, while making an order under Sub-sec.(1), is of the opinion that any past or present officer of the Society has been party to or responsible for the mismanagement thereof of has failed to perform any duty lawfully assigned to him, he may, by order in writing after giving such officer an opportunity to state his objection, disqualify him from being a member of a Committee in respect of the Society for a period not exceeding three years to be specified in the order and every order made under the Sub-sections shall state the reasons for which it is made and shall be communicated to the Society and the officer concerned.” Reading of the aforesaid provisions, this Court finds all the provisions indicated hereinabove particularly under Section 28 of the Act deals with Society to have a Committee and the activities of the Committee of the Society. Sub-Section (3-b)(i) authorizes the Registrar to join the Chief Executive for every Society by whatever designation called, who shall be appointed on whole time basis by the Committee and will be deemed to be a member of the Committee in case of an apex society as the State Government may by notification from time to time. Section 29(1) speaks of meeting to General Body of Members of a Society in the particular manner whereas Section 32 provides provision of Supersession of Committee and power to disqualify of the officers of the Society. Section 29(1) speaks of meeting to General Body of Members of a Society in the particular manner whereas Section 32 provides provision of Supersession of Committee and power to disqualify of the officers of the Society. Reading of the provisions contained in Section 32 further transpires such action is contemplated subject to opinion of the Registrar and for the circumstances stated therein, the Registrar may after giving Committee a reasonable opportunity of being heard within 21 days from the date of issue of notice in that behalf and after consulting, in case of State Cooperative Bank by order in writing stating reasons there for supersede the committee and looking to the provisions contained in Section 32(5), the Registrar is empowered/authorised to make an order under Sub-Sectopm-1, if he is of the opinion that any past or present officer of the Society has been party to or responsible for the mismanagement thereof or has failed to perform any duty lawfully assigned to him, he may, by order in writing after giving such officer an opportunity to state his objection, disqualify him from being a member of a Committee in respect of the Society for a period not exceeding 3 years to be specified in the order and however such order made under the Sub-sections shall state the reasons for which it is made andshall be communicated to the Society and the officer concerned. Reading of the aforesaid provisions makes it amply clear that the power for suspension of Committee and the power to disqualify the officers of the Society lies only with the Registrar and under the circumstances, this Court finds the impugned notice even though issued by the Managing Director being authorized by the President of the Bank is wholly not maintainable. 8. For the involvement of violation of provisions of Bye-law and the provisions of the Cooperative Societies Act indicated hereinabove as a consequence, the impugned order at Annexure-1 is interfered and set aside. 9. In the result, the writ petition succeeds. No order as to cost.