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2021 DIGILAW 956 (JHR)

Sanjay Kumar Sharma v. State of Jharkhand

2021-11-24

RAJESH SHANKAR

body2021
JUDGMENT : RAJESH SHANKAR, J. 1. The case is taken up through Video Conferencing. 2. The present writ petition has been filed for quashing the letter as contained in memo No. 475 dated 03.07.2019 (Annexure-8 to the writ petition) issued by the respondent No. 5 whereby the petitioner (the present Honorary Secretary and former Treasurer) and one Pradeep Kumar (the former Honorary Secretary) of the CCL Employee Co-operative Credit Society Limited, Barkakana (hereinafter referred to as ‘the said society’) have been directed to deposit a sum of Rs. 3,80,539/- along with interest in the bank account of the said society within twenty four hours, failing which an appropriate action as per the Jharkhand Co-operative Society Act, 1935 [hereinafter referred to as ‘the Act 1935’] would be taken against them. Further prayer has been made for quashing the letter as contained in letter No. 2336(6) dated 10.08.2018 (Annexure-4 to the writ petition) whereby the respondent No. 3 while observing that disbursement of Rs. 3,80,539/- in the honorarium head for the period from 1993 to 2008 was contrary to Clause 44(c) of the Bye-laws of the said society, has directed the respondent No. 5 to recover the said amount along with interest from the petitioner and one Pradeep Kumar within a period of three days. The petitioner has also prayed for quashing the letter as contained in memo No. 383(6) dated 04.02.2019 issued by the respondent No. 3 directing Shri Pradeep Kumar (former Honorary Secretary) and the petitioner to deposit the said amount along with interest (payable at the rate of nationalized bank) paid as honorarium during the period from 1993 to 2008, failing which an appropriate action for recovery of the same would be taken against them. 3. The factual background of the case, as stated in the writ petition, is that the said society in its Annual General Body meeting held on 11.05.2008, decided at agenda No. 3 that dividend earned for the period of business years between 1992-93 to 2007-08 and honorarium equivalent to 13% of the dividend should be paid to its office bearers. 3. The factual background of the case, as stated in the writ petition, is that the said society in its Annual General Body meeting held on 11.05.2008, decided at agenda No. 3 that dividend earned for the period of business years between 1992-93 to 2007-08 and honorarium equivalent to 13% of the dividend should be paid to its office bearers. Thereafter, the said decision regarding disbursement of honorarium among the office bearers, as sanctioned by the Annual General Body meeting held on 11.05.2008, was placed before the respondent No. 5 for his approval in terms with Clause 44(c) of the Bye-laws of the Co-operative Credit Society and the said respondent granted approval to the said decision of the Annual General Body meeting vide letter dated 05.09.2008. Thereafter, the honorarium was disbursed to its office bearers, who had served the society for the period from 1992-93 to 2007-08. Subsequently, an objection was raised in the audit report of the business years 2008-15 observing that disbursement of honorarium to the office bearers did not have the necessary approval of the Registrar, Cooperative Societies, Jharkhand, Ranchi (the respondent No. 3). The said respondent issued letter bearing memo No. 2336(6) dated 10.08.2018 to the respondent No. 5 with a copy to the petitioner stating that disbursement of honorarium was in contravention of Clause 44(c) of the Bye-laws of the Cooperative Credit Society and the amount should be recovered along with interest from the former Honorary Secretary, namely, Prdeep Kumar and the petitioner (former Treasurer of the said society). After receipt of the aforesaid letter, the petitioner made representation dated 25.09.2018 before the respondent No. 3 stating that disbursement of the honorarium was not in violation of Clause 44(c) of the Bye-laws of the Co-operative Credit Society, rather it was in terms with the approval granted by the respondent No. 5 and as such there was no illegality in disbursement of honorarium and accordingly requested for recall of letter as contained in memo No. 2336(6) dated 10.08.2018. Subsequently, the letter as contained in memo No. 383(6) dated 04.02.2019 was issued by the respondent No. 3 to Shri Pradeep Kumar (former Honorary Secretary) and the petitioner (former Treasure) stating that they had disbursed the honorarium for the period from 1993 to 2008 among the office bearers to the tune of Rs.3,80,539/- in contravention of Clause 44(c) of the Bye-laws of the Co-operative Credit Society and hence the amount disbursed under the said head along with interest was directed to be deposited in the account of the said society within two days, failing which appropriate action for recovery of the same would be taken against them. The petitioner filed reply to the same vide his letter dated 06.02.2019 stating that the honorarium amount was disbursed in pursuance of the decision of the said society taken in the Annual General Meeting held on 11.05.2008 which was duly approved by the respondent No. 5 vide letter No. 702 dated 05.09.2008. Thereafter, the petitioner and the former Honorary Secretary were served the impugned letter as contained in memo No. 475 dated 03.07.2019 issued by the respondent No. 5 directing them to deposit an amount of Rs. 3,80,539/- which was disbursed as honorarium to the office bearers of the said society for the period from 1993 to 2008 along with interest (at standard rate of nationalized bank as well as of society) in the account of the said society within twenty four hours, failing which an appropriate action for recovery of the said amount would be taken against them under the provisions of the Jharkhand Co-operative Societies Act, 1935 and the Jharkhand Co-operative Societies Rules, 1959 (hereinafter referred to as ‘the Rules 1959’). 4. Learned counsel for the petitioner submits that the word “Registrar” as defined in Section 6 of the Act, 1935 means and includes “Assistant Registrar” also and the approval granted by the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh has to be treated as granted by the Registrar. 4. Learned counsel for the petitioner submits that the word “Registrar” as defined in Section 6 of the Act, 1935 means and includes “Assistant Registrar” also and the approval granted by the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh has to be treated as granted by the Registrar. In the entire Act, no power has been vested to the Additional Registrar, Joint Registrar, Deputy Registrar, District Co-operative Officer and Assistant Registrar, Co-operative Societies, rather all the powers are vested in the Registrar, Co-operative Societies and the aforesaid officers are appointed to assist the Registrar, Co-operative Societies in exercise all or any of the powers as provided under the Act, 1935, except the powers under Sections 26, 28(3) and 33 of the Act, 1935. The word “Registrar” mentioned in the Bye-laws of the said society has to be interpreted in the manner as provided in the said Act. It is well settled that in the event of any difference of interpretation, the provisions of the Act would prevail over the Bye-laws. Admittedly, prior approval of the respondent No. 5 was obtained prior to the disbursement of Rs. 3,80,539/- under honorarium head. Hence, it was not proper for the respondent No. 5 to issue the impugned letter dated 03.07.2019 since the said authority vide letter No. 702 dated 05.09.2008 himself had approved the decision of the Annual General Body Meeting held on 11.05.2008 and had collective responsibility for disbursement of the honorarium. It is further submitted that the said society of which the petitioner is presently the Honorary Secretary, is a primary society and in normal practice, the matters relating to primary societies are decided by the respondent No. 5 himself in terms with the power conferred upon him under Section 6 of the Act, 1935. Disbursement of honorarium being the subject matter of inquiry by the Sub-Divisional Audit Officer, Co-operative Societies, Hazaribagh, the same was assigned to him by the respondent No. 4, who submitted the report vide memo No. 21 dated 28.08.2017 stating that the allegations levelled against the petitioner (former Treasurer) by Shri Madan Prasad (former Honorary Secretary) were baseless and unsubstantiated. It is also submitted that the second charge, which was the subject matter of enquiry relating to disbursement of Rs. 3,80,539/- among the office bearers, was not proved. It is also submitted that the second charge, which was the subject matter of enquiry relating to disbursement of Rs. 3,80,539/- among the office bearers, was not proved. The respondent No. 3 vide its letter No. 1700 (6) dated 28.06.2018, again directed the Joint Registrar, Co-operative Societies, North Chotanagpur Division, Hazaribagh to conduct an inquiry with respect to the charges levelled against the petitioner by Shri Madan Prasad (former Honorary Secretary) regarding disbursement of Rs. 3,80,539/- among the office bearers of the said society under honorarium head. The Joint Registrar submitted the report vide letter No. 408 dated 12.07.2018 stating that in terms with the direction of the respondent No. 3, a three-member-committee was constituted under the chairmanship of the District Audit Officer, Co-operative Societies, Hazaribagh comprising two other Senior Auditors, Co-operative Societies to conduct an enquiry and the team so constituted submitted its report stating that the charges levelled against the petitioner could not be proved. 5. Per-contra, learned counsel for the respondents submits that the petitioner and the said society are silent on the aspect as to why they did not approach the respondent No. 3 for grant of necessary written approval in terms with Clause 44-C of the Bye-laws of the Co-operative Credit Society when the office of the Registrar was functional and operative. The action of the office bearers of the said society by not approaching the office of the Registrar, Co-operative Societies, Jharkhand for approval of the decision taken in Annual General Body meeting of the said society regarding disbursement of honorarium creates doubt and suspicion as no explanation was submitted by them. Moreover, as the said provision of the Bye-laws clearly stipulated that the approval by Registrar, Co-operative Societies had to be taken for disbursement of honorarium to the Secretary or any other office bearer, the same cannot be allowed to be interpreted as per convenience of the petitioner. It is well settled that if an act is to be performed in certain way, it must be done in that way or not at all and other methods of performance are necessarily forbidden. The petitioner’s presumption that disbursement of honorarium has been approved under Clause-44(c) of the Bye-laws of the Co-operative Credit Society, does not confer any legal right to retain the amount of Rs. The petitioner’s presumption that disbursement of honorarium has been approved under Clause-44(c) of the Bye-laws of the Co-operative Credit Society, does not confer any legal right to retain the amount of Rs. 3,80,539/- and the petitioner is bound to return his share of the disbursed amount along with interest at the bank rate. The Act, 1935 provides the mechanism to initiate recovery proceeding, if any payment is made contrary to law which includes the rules or the Bye-laws of the said society and empowers the respondent No. 3 to take appropriate action in accordance with law. In the present case, letter No. 290 dated 11.07.2018 issued by the Joint Registrar, Co-operative Societies, North Chotanagpur Division, Hazaribagh and the audit report for the year 2008-15 pointed out the irregularity committed by the managing committee of the said society in disbursement of honorarium for the period 1993-2008 by not complying Clause-44C of the Bye-laws of the said society. The respondent No. 3, after due consideration of letter No. 290 dated 11.07.2018 and audit report for the period 2008-2015, observed that honorarium was disbursed to the office bearers of the said society in contravention of Clause-44-(c) of the Bye-laws which was illegal and liable to be recovered along with interest at the bank rate from the petitioner and one Mr. Pradeep Kumar, who were the erstwhile Treasurer and Honorary Secretary respectively of the said society. It is further submitted that the petitioner deliberately violated the direction issued by the respondents and hence Patratu (Barkakana) P.S. Case No. 189/19 was lodged on 24.07.2019 under Sections 420 and 34 of the Indian Penal Code against the petitioner and one Mr. Pradeep Kumar and the information was communicated to the respondent No. 4 on the same date vide letter No. 545. 6. Heard learned counsel for the parties and perused the relevant materials available on record. The petitioner has challenged the impugned letters issued by the respondent authorities whereby he and one Mr. Pradeep Kumar have been directed to deposit a sum of Rs. 3,80,539/- along with interest alleging that honorarium was disbursed amongst the office bearers of the said society during the period from 1993 to 2008 in contravention of Clause 44(c) of the Bye-laws of the society requiring approval of the Registrar, Co-operative Societies, however, the amount of honorarium was disbursed by taking permission of the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh. 7. 7. The thrust of the argument of learned counsel for the petitioner is that as per Rule 31 of the Rules, 1959, the registered society may with the approval of the General Body, pay honorarium to a member for service rendered to the society. Further, Clause 44(c) of the Bye-laws of the society provides that honorarium to the Secretary or any other office bearer as sanctioned by the General Body, be paid with the previous approval of the Registrar, Co-operative Societies. At the relevant point of time, the power of Registrar, Co-operative Societies to approve the proposal for paying honorarium to a member for the services rendered to the society, was delegated to the Assistant Registrar vide notification No. 1391 dated 28.06.2008 issued by the order of the Hon’ble Governor of the State of Jharkhand in exercise of power conferred under Section 6(2) of the Act, 1935 and in exercise of that power, the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh approved payment of honorarium to the office bearers of the said co-operative society. 8. I have perused Section 6 of the Act, 1935. Sub-Section (1) of Section 6 empowers the State Government to appoint a person to be the Registrar of Co-operative Societies for the State or any portion of it, and may appoint persons to assist such Registrar. However, sub-section (2) provides that State Government may, by general or special order published in the Official Gazette, confer on any person appointed under sub-section (1), to assist the Registrar, all or any of the powers of the Registrar under the Act, except the powers under Sections 26 and 56 of the said Act. 9. On bare perusal of notification No. 1391 dated 28.06.2008 annexed as Annexure-15 to the supplementary affidavit dated 16.03.2021, it appears that by the order of the Hon’ble Governor, the State of Jharkhand exercising power conferred under Section 6(2) of the Act, 1935, the Assistant Registrar, Co-operative Societies, who made approval for payment of honorarium, was delegated some powers of Registrar as described in Colum 2 of the said notification. It further appears that the Assistant Registrar, Co-operative Societies was given the said powers under Rules, 1959, except rules 37, 38 and 39. Rule 31 of the Rules, 1959 provides for paying honorarium to the members of the Co-operative Society. It further appears that the Assistant Registrar, Co-operative Societies was given the said powers under Rules, 1959, except rules 37, 38 and 39. Rule 31 of the Rules, 1959 provides for paying honorarium to the members of the Co-operative Society. It is provided in the said rule that a registered society may, with approval of the Registrar, Co-operative Societies, pay honorarium or amount of pocket expenses to a member for service rendered to the society and any amount paid on this behalf shall be debited to the head “Establishment Charge.” While empowering the Assistant Registrar, Co-operative Societies to exercise the power of the Registrar, Cooperative Societies, the power conferred under rule 31 was not excluded and thus I do not find any reason to hold that the honorarium granted to the office bearers of the said society on the approval of the Assistant Registrar was bad in law. 10. Apart from that, the respondent No. 4 had directed for inquiry to be conducted by the Sub-Divisional Audit Officer, Co-operative Societies, Hazaribagh, who submitted enquiry report vide memo No. 21 dated 28.08.2017 (Annexure-9 to the writ petition). I have perused the said report wherein the Sub-Divisional Audit Officer, Co-operative Societies, Hazaribagh reported that the Audit Officer had wrongly observed that the dividend was excessively disbursed during the period 2008-15. The Sub-Divisional Audit Officer further reported that though at page 11 of the Bye-laws mentioned “dividend not exceeding 9.38% per annum on paid up value of share” however, the Audit Officer wrongly calculated 9.38% per annum of the net profit instead of 9.38% of paid up share capital. It was further reported that the recommendation for disbursement of honorarium was duly approved by the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh and as such the allegation levelled against the petitioner (Honorary Secretary) was not proved. The respondent No. 3, however, again directed the Joint Registrar, Co-operative Societies, North Chotanagpur Division, Hazaribagh to conduct enquiry against the alleged disbursement of honorarium amount of Rs. 3,80,539/- among the office bearers of the said society. Thereafter, the Joint Registrar constituted a three-member-committee comprising of the District Audit Officer, Co-operative Societies, Hazaribagh and two Senior Auditors to conduct enquiry and the said team did not find the alleged charges to be proved. 3,80,539/- among the office bearers of the said society. Thereafter, the Joint Registrar constituted a three-member-committee comprising of the District Audit Officer, Co-operative Societies, Hazaribagh and two Senior Auditors to conduct enquiry and the said team did not find the alleged charges to be proved. The Joint Registrar, Co-operative Societies, North Chotanagpur Division, Hazaribagh reported vide letter dated 12.07.2018 that if the Registrar so wished, he might constitute a high level committee under his Chairmanship to look into the matter. It however appears that the respondent No. 3 did not constitute any such high level committee and straightway issued the impugned letters for recovery of the amount disbursed as honorarium from the former Honorary Secretary and Honorary Treasurer. 11. In view of the aforesaid facts and circumstances, the impugned letter as contained in memo No. 475 dated 03.07.2019 issued by the Assistant Registrar, Co-operative Societies, Hazaribagh Circle, Hazaribagh and the letter as contained in letter No. 2336(6) dated 10.08.2018 as well as the letter as contained in Memo No. 383(6) dated 04.02.2019 issued by the Registrar, Co-operative Societies, Jharkhand, Ranchi cannot be sustained in law and are hereby quashed. 12. The present writ petition is, accordingly, allowed.