The Committee Of Man... v. The Joint Registrar ...

The petitioner-Society is aggrieved by the order of the first respondent dated 11th June 1971 in and by which the first respondent dissolved the petitioner-society under S. 72(1)(a) of the Tamilnadu Co-operative Societies Act, 1961 and appointed a special officer to manage the affairs of the Society. In or about October 1969, the second respondent, feeling doubtful about the proper administration of the petitioner-society, directed an inquiry under S. 65 of the Act, whereby the working and financial condition of the petitioner-Society was sought to be investigated. Further processing of the enquiry which was started in October 1970, was cancelled and instead an Inspector was appointed under S. 66 authorising him to inspect the books of the petitioner society and report as to the financia-condition of the society and its working. It is common ground that the Inspector submitted such a report under S. 66 of the Act only on 3rd May 1971. The financing Bank of the petitioner-society, is the Kanyakumari District Co-operative Central bank Ltd., Nagarcoil. They have been brought on record, since their presence was felt necessary for a proper adjudication of the main issue that has cropped up in the instant case. Learned counsel for the financing bank says that the financing bank independently and on its own volition, appointed an officer of its own to go into the working of the society which was indebted to the bank and, after obtaining a detailed report from their officer who was specially appointed for the purpose of investigating into the affairs of the petitioner society, the financing bank resolved on 29th April 1971 that the affairs of the petitioner society were not satisfactory and a request was made to the Registrar to dissolve the petitioner society. A copy of this resolution was forwarded to the second respondent. It was on this that the second respondent started a further action under S. 72 of the Act. What the first respondent did was that on the basis of the resolution of the financing Bank and without any more consultation with it, passed the challenged order superseding the society and appointed a special officer to manage the affairs of the society. It is as against this action that the present writ petition has been filed.

2. The contention of Mr. Chidambaram, learned counsel for the petitioner is that the proceeding under S. 72 of the Act being of a peculiar nature and indeed being one reflecting upon the integrity and working of a registered Society under the Act, every limb of the subsection should be satisfied before a final order under S. 72(1) of the Act could be made. Developing this contention, it is said that there was no consultation made by the first respondent, when he took action under sub-Sec. (1) of S. 72, as there does not appear on record that the Registrar consulted the financing bank to which the society was indebted. What is said is that the Registrar took it for granted that the report, in the nature of resolution, farwarded by the financing bank, is by itself a substitute for the process of consultation which he should independently make under S. 72(6) of the Act. Such an assumption, it is said, is not a thing expected of the statutory authority functioning under S. 72, which authority would ultimately issue an order of supersession against the society complained of. Learned counsel for the financing bank, however, would state that, though there was no consultation as such by the Registrar after he mooted action under S. 72(2)(a) yet the communication of the resolution passed by the financing bank on 29th April, 1971, would serve as sufficient hypothesis on which the Registrar could lay his hand to act finally under S. 72(1) to super, sede a registered Society. Learned Government Pleader says that, from the records, it is not clear whether the first respondent before he took action under S. 72(1) of the Acts consulted the financing Bank. But what appears instead is that the first respondent was satisfied, from the resolution of the financing Bank, that the affairs of the society were unsatisfactory. It is, therefore, said that there was sufficient material for the first respondent to act and pass the challenged order.

3. The formalities laid down in S. 72(1) of the Act are not empty requirements. They are not only statutory mandates but they serve a particular purpose. The Supreme Court in Joint Registrar, Co-operative Societies, Madras v. Rajagopal(1) has made it clear that if the Registrar acting under S. 72 is of the opinion that the administration and working of a registered Society is not satisfactory and if he entertains such a subjective satisfaction on objective materials noticed by him, then he has power to initiate action under S. 72(1). But the court laid down, more or less as a pre-requisite for the exercise of such power that the statutory authority acting under S. 72(1) should consult the financing bank before final orders are passed. What consultation is contemplated under sub-S. (6) of S. 72 does not evade analysis. Obviously such consultation begins after the Registrar is subjectively satisfied on objective materials placed before him that a prima facie case has been made out for the purpose of superseding the cooperative society. It is only at that point of time that the necessity for consulting the financing bank arises. This has been held to be a mandatory requirement by the highest court of the lard. Such a consultation, therefore, cannot be avoided. Though consultation is not equivalent to concurrence yet there must be material on record to show that, after the Registrar entertained an opinion about the unsatisfactory working of a registered society, he should consult the financing bank to whom the society is indebted before he finally passes an order of supercession under S. 72 of the Act. In the instant case, the Registrar was apparently of the view that the communication, sent by the financing Bank to the effect that it has resolved to advise the Registrar to dissolve the society, is by itself sufficient information for him to dispense with the necessary mandate regarding consultation envisaged in S. 73(6) of the Act. I do not think that the first respondent could dispense with such a pre-requisite for the exercise of power by assuming that the resolution of the financing Bank by itself is sufficient and that he could dispense with consultation in the matter with the financing bank, though he was aware that it was a compulsory requisite in law. It is not difficult to perceive of cases where the financing Bank, day in and day out, complain to the Registrar about the unsatisfactory working of a registered society and might even indicate its mind through a resolution which also serves the same purpose. These resolutions which are letters of complaint forwarded by the financing Bank to the Registrar as statutory authority under the Act subserve no purpose other than putting into the mind of the Registrar that circumstances have arisen for the Registrar to act and form an opinion as to the necessity to continue the society as a body cognisable under the provisions of the Act or to supersede by appointing a special officer to administer the affairs of the society. The resolution of the financing bank, as in the instant case and such other information which the financing Bank may give to the Registrar serve the same purpose of providing information to the Registrar to form an opinion as to that particular accused society. As a matter of fact, the Registrar himself, in the instant case, called for such a report from his Inspector by taking action under S. 66. The report came to him only on 3rd May 1971. He had not, therefore, on his file any data for him to form an unbiassed opinion about the working of the society. In those circumstances, it cannot be said that the resolution passed by the financing bank prior to the date of submission of the report by the Inspector, acting under S. 66 could be a substitute for the consultation which the Registrar is expected to have by way of a legal necessity, before he could take action under S. 72(1) of the Act. I am therefore, of the view that the statutory requirement as to consultation under S. 72(6) of the Act has not been done in the instant case. It is only, in the show cause notice given to the petitioner, that first respondent, for the first time, stated that there was a resolution of the financing bank recommending dissolution of the society and that he was also inclined to act upon it. This attitude of the first respondent cannot be said to be quite in consonance with the requirements of law and particularly the mandate enunciated in S. 72(6) of the Act. The Supreme Court in Joint Registrar, Co-operative Society Madras v. Rajagopal observed as follows:

“The requisite opinion has indisputably to be formed honestly and after applying his mind to the relevant materials before him; the only condition precedent for taking action under S. 72(1) is that the Registrar must consult the financing bank to which the society is indebted.”

There has not been a consultation at all in the instant case. But on the other hand, the information forwarded by the financing Bank and the resolution which it passed on a report which it obtained from its employee were held to be sufficient to dispense with the requirement of consultation contemplated under S. 72(6).

4. As there is therefore, an error apparent in the order challenged, the writ petition is allowed. There will be no order as to costs. But it is open to the first respondent to take further action, if he so choses after consulting the financing Bank in a manner known to law.

V.C.S