Rama Jois, J.:—
In this Writ Petition presented under Article 226 of the Constitution by the Muslim Co-operative Bank Limited, New Sayyaji Rao Road, Mysore, the following question of law arises for consideration:
Whether an order directing the holding of an inquiry into the affairs of a Co-operative Society by the Registrar pursuant to a complaint made by one of the members of the Society is violative of Section 64 of the Karnataka Co-operative Societies Act, 1959, (‘the Act’ for short)?
2. The brief facts of the case are these:
The petitioner-Bank is a Co-operative Society registered and functioning under the provisions of the Act. An inquiry into certain allegations regarding the working of the Society levelled in writing by one of its members has been ordered by the 2nd respondent - Deputy Registrar of Co-operative Societies, under Section 64 of the Act. Sub-sections (1) and (2) of Section 64 of the Act which are relevant to this case read:
“64. Inquiry by Registrar:— (1) The Registrar may, of his own motion, by himself or by a person authorised by him, by order in writing, hold an inquiry into (any matter specified in the order touching) the Constitution, working and financial condition of a Co-operative Society.
(2) An inquiry of the nature referred to in sub-section (1) shall be held on the application of —
(a) a Co-operative Society to which the society concerned is affiliated;
(b) a majority of the members of the Committee of the society; or
(c) not less than one-third of the total number of members of the society.”
The expression ‘Registrar’ used in the above Section includes Additional Registrar, Joint Registrar, Deputy Registrar and also an Assistant Registrar of Co-operative Societies appointed to assist the Registrar when exercising all or any of the powers of the Registrar in view of the definition of ‘Registrar’ given in Section 2(1) of the Act. The Deputy Registrar of Co-operative Societies, Mysore District who is competent to exercise powers of the Registrar under Section 64 of the Act, in relation to the petitioner-Society, received a complaint from one Mohamed Khaleel, a member of the petitioner-Society making a complaint about the irregularity, misappropriation and incongruities committed by the Board of Management of the petitioner-Society. On receipt of the same, the Deputy Registrar directed the Assistant Registrar to hold an enquiry in terms of Section 64 of the Act. On receipt of the said direction, the Assistant Registrar issued notice dated 29-5-1984 Annexure-A which reads:
“PROCEEDINGS OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES, MYSORE SUB-DIVISION, MYSORE.
Sub: Grave irregularities committed by the Board of Management of the Muslim Co-operative Bank Ltd., Mysore — Enquiry under Section 64 of the K.C.S Act, 1959 — Regarding —
Ref: Letter No. DRM. RSR. 2/929/8384 dated 16-2-1984 of the Deputy Registrar of Co-operative Societies, Mysore District; Mysore.
PREAMBLE:
The Deputy Registrar of Co-operative Societies; Mysore District Mysore, while enclosing the original letter dated 23-1-1984, of Sri Mohamed Khaleel, a member of Muslim Co-operative Bank Ltd., Mysore in respect of irregularities, misappropriation and defaulcation committed by the Board of Management has instructed to order on enquiry under Section 64 of Karnataka Co-operative Society Act, 1959. The following are the irregularities pointed out:
1. It is alleged that the Auditor has directed to recover a sum of Rs. 7,949-70 from the concerned persons (as stated in Page No. 19 of General Body Meeting Report) for which details are not available.
2. The steps taken for the recovery of the other dues of Rs. 22,713-81 ps narrated in Page No. 18 of G.B.M Report.
3. It is alleged that without obtaining quotations printing work was got done as objected by the Auditor (Page No. 192) G.B.M Report.
4. It is alleged that, there is defaulcation to the extent of Rs. 1,05,266-00 in respect of S.B Account whether any enquiry is conducted by the Board of Management? If so who conduct the enquiry and whether enquiry is completed? If completed on whom assessment is made and action taken on the concerned.
5. It is alleged that during 1981-1982 only three audit, committee meeting were held, whether meetings have been conducted properly. Action taken on the report of Sri Shabeer Ahamed Khan, member, Audit Committee whether any criminal complaint has been lodged with the police on the findings of the above report, about the defaulcation.
6. Whether the banks premises/Houses has been letout to tenants? If so to whom letout? Whether proper procedure followed in letting out the Bank's premises/Houses and whether rent is being paid regularly to the Bank. Action taken on the defaulting tenants.
7. Maintenance of Cash Book, General Ledger etc., is stated to be un-satisfactory. Action taken by the Board of Management in getting the Banks Accounts maintained.
8. It is alleged that cheques have been passed without obtaining the signature of the concerned parties on the back side of the cheques. Whether proper procedure is followed in passing cheques?
9. It is alleged that as per the Audit Report for the year 1981-1982 a sum of Rs. 22,713-81 is outstanding whether action is taken for recovery of the amount. If so the details are to be examined.
10. It is alleged that loans have been granted with voucher vested interests violating the Banking Principles.
No. AR 41. PLB. ??? Dated 23rd May-84
In the circumstance explained and in exercise of the powers vested with the under signed under Section 64 of the K.C.S Act, 1959, read with Government Notification No. DDC 73 CEA 74 dated 13-3-1974 I, N.S Maligappa, Assistant Registrar of Co-operative Society, Mysore Sub-Division, Mysore, hereby order an enquiry into the Constitution, working and financial condition of Muslim Co-operative Bank Ltd. Mysore, with special reference to the points mentioned in the preamble authorising the Senior Inspector of C.S (Cons), attached to the Deputy Registrar of Co-operative Societies, Mysore an enquiry Officer with a request to complete the enquiry and furnish report within 30 days from the date of receipt of this orders.
Given under my hand and seal this day the 29th May 1984.
Questioning the legality of the said notice, the petitioner has presented this Writ Petition.
3. The contention urged in the Petition is that an enquiry under Section 64 of the Act cannot be initiated upon the complaint of a single Member of the Co-operative Society, for, according to sub-section (2) of Section 64, an enquiry could be initiated only if the same is demanded in writing by a Society to which the concerned Society is affiliated or by a majority of the Members of the Managing Committee of the Society, or atleast ⅓rd of the total Members of the Society concerned and that as in the present case, the enquiry has been initiated only on the written complaint of one of the Members it was illegal. It is also contended that the Assistant Registrar could exercise the power of the Registrar only in respect of Co-operative Societies whose area of operation is less than a Taluk and as in the present case, the Assistant Registrar had issued the notice, it was illegal. It is also contended that the Deputy Registrar could not instruct the Assistant Registrar to hold the enquiry.
4. When this matter was posted for hearing before Chandrakantaraj Urs, J., the petitioner relied on a Judgment of this Court rendered by Puttaswamy, J., in the case of Mahila Seva Samaj v. Registrar of Societies in which Section 25 of the Karnataka Societies Registration Act (‘Societies Act’ for short), which is similarly worded as Section 64 of the Act was considered. In the said decision, the legality of an order made by the Registrar of Societies directing an enquiry into the affairs of Mahila Seva Samaj - a Society registered under the Societies Act was questioned on the ground that the Registrar had initiated the enquiry on an application made by 3 members of the Society, though they did not constitute the majority of the governing body of the Society and also did not constitute not less than ⅓rd of the total Members of the Society though that was a condition precedent for ordering an enquiry under Section 25 of the Societies Act. The learned Judge accepted the contention that under Section 25(1) of the Societies Act it was obligatory for the Registrar to institute an enquiry when a written request is made by the majority of the members of the governing body of the Society or by at least not less than ⅓rd of the Members of the Society, and that the Registrar could not order an enquiry when a request was made only by 3 members of the Society, who did not constitute the majority of the governing body or who did not constitute atleast ⅓rd of the Members of the Society. The relevant portion of the Judgment reads:
“8. Sub-section (1) of Section 25 of the Act that is material for deciding the controversy reads thus:
“The Registrar may on his own motion and shall on the application of the majority of the members of the governing body or of not less than one third of the members of the Society, hold an enquiry or direct some person authorised by him by order in writing in accordance with the Rules made in this behalf to hold an enquiry into the constitution, working and financial condition of a registered Society.”
Sub-section (1) of Section 25 of the Act, authorises the Registrar to direct an enquiry on his own motion or suo motu when an application is made to him by the majority of the members of the governing body of a Society or by not less than ⅓rd of the members of a Society. Whether a suo motu enquiry should be ordered or not, is a matter exclusively for the Registrar to decide. In such case, the Registrar has the discretion and power to order an enquiry or not to order an enquiry. For making such an order, it is open to the Registrar to rely on any information, reports available or collected by him or furnished to him by any other person. When an application is made by the majority of members of the governing body of a society or by not less than ⅓rd of the members of the society and if the Registrar is satisfied with either of those requirements, he has no discretion in the matter and is under a compulsive duty to order an enquiry into the affairs of a Society. But, before ordering an enquiry in the latter cases, he must be satisfied that the majority of the members of the governing body or not lass than ⅓rd of the members have made an application before him.
9. Earlier I have found that the Registrar has made his order only on the application made by the three members of the society and not on the application, if any, made by the majority of the members of the governing body. It is not the case of the respondents that the said three members constitute not less than ⅓rd of the members of the society. By no stretch of imagination, it is possible to hold that the Registrar has ordered an enquiry suo motu or on his own motion. In these circumstances, the impugned order made by the Registrar is wholly without jurisdiction, manifestly illegal and is liable to be quashed. I, therefore, quash the impugned order of the Registrar. But, this order does not prevent the Registrar from ordering an enquiry into the affairs of the society on his own motion or on an application if any, already made or to be made by the majority of the members of the governing body or by not less than ⅓rd of the members of the said society in accordance with law and in the light of the observations made in this order.”
Chandrakantaraj Urs, J., was unable to agree with the interpretation of Section 25 of the Societies Act, in the case of Mahila Seva Samaj and as that Section is pari materia with Section 64 of the Act, he referred the matter to Division Bench. Accordingly, the matter has come up before us.
5. As can be seen from Section 64(1) of the Act, the Registrar has the power to order an enquiry into the affairs of a Co-operative Society on his own motion in respect of any matter touching the constitution working and financial condition of a Co-operative Society. Under sub-section (2), he is bound to hold an enquiry of the nature specified in sub-section (1) if a written request for doing so is made by the Co-operative Society to which the society concerned is affiliated or by a majority of the Members of the Committee of the Society concerned or by not less than ⅓rd of the total number of the Members of the Society. Except regarding the obligation to order an inquiry at the request of another Co-operative Society to which the concerned Society is affiliated, the other two circumstances which make it obligatory for the Registrar of Co-operative Societies to institute an inquiry are similar to Section 25(1) of the Societies Act. That Section confers power on the Registrar of the Societies to hold an enquiry into the affairs touching constitution, working and financial condition on his own motion. But if a request is made for holding such an enquiry in respect of affairs of a Society by a majority of the Members of the governing body or by not less than one third of the Members of the Society concerned, the Registrar is bound to hold an enquiry. Therefore, on the plain language of both Section 25 of the Societies Act and Section 64 of the Act, it is clear the Registrar of Societies in the case of societies under the Societies Act and Registrar of Co-operative Societies in the case of the Act have got undoubted powers to initiate an enquiry into a Society or a Co-operative Society, as the case may be suo motu. This power is independent of not only the power but also the duty to hold an enquiry when it is demanded in writing by the requisite number of persons named in Section 25(1) of the Societies Act in respect of a Society and Section 64(1) of the Act in respect of a Co-operative Society. In other words, in respect of a Society registered under the Societies Act, if majority of the members of the governing body or ⅓rd of the total number of members make a written request to the. Registrar to hold an enquiry, he is bound to do so. If he fails to do so, the requisitionists are entitled to seek a Writ of Mandamus directing the Registrar to institute an enquiry. Similarly in the case of a Co-operative Society if a written request for holding an enquiry into the affairs of the Society is made either by another Co-operative Society of which the Society concerned is a member or by majority of the members of the Managing Committee of the Society or by not less than ⅓rd of the total number of members of the Co-operative Society concerned, the Registrar is bound to institute an enquiry. This power and duty is independent of the suo motu power conferred on the Registrar.
6. As far as the exercise of suo motu powers is concerned, under what circumstances it should be exercised is left to the Registrar himself under the Societies Act as also under the Act. He could do so in whatever manner he gets information if he considers the information sufficient to institute an enquiry into the affairs of the Society or a Co-operative Society, as the case may be. Even if one member of a Society or a Co-operative Society lodges a complaint and requests the Registrar of a Society or a Registrar of a Co-operative Society, as the case may be, the Registrar concerned has the power to institute an enquiry under Section 25 of the Societies Act in the case of a Society and Section 64(1) of the Act in the case of a Co-operative Society, if the Registrar is satisfied that sufficient basis is made out in such written representation. Such is the suo motu power conferred on the Registrar of Societies under Section 25(1) of the Societies Act and on the Registrar of Co-operative Societies under Section 64(1) of the Act. Therefore the fact that the Registrar has referred to the complaint made by a member in the order instituting the enquiry is no ground to hold that the Registrar had not acted suo motu. Naturally for exercise of suo motu powers also, there must be some source of information for the Registrar to do so. Such information may come to the Registrar of the Societies or the Registrar of Co-operative Societies, during his inspection of a Society or a Co-operative Society as the case may or by any other means including a written complaint by a member. For these reasons with great respect, we are unable to agree with the view expressed by Puttaswamy, J., in the case of Mahila Seva Samaj that if a Registrar institutes an enquiry on the basis of a complaint submitted by members who do not constitute either fifty per cent of the governing body members or one third of the members of the society, the enquiry instituted is illegal, and that his power to institute enquiry suo motu must be exercised without reference to any complaint by any member or members who do not fulfil the requirement prescribed under Section 25.
7. In the present case, it is seen that the Deputy Registrar exercised his suo motu powers of instituting enquiry into the affairs of the petitioner - Co-operative Society under Section 64 of the Act when a written complaint was lodged by a member of the petitioner society viz., Sri Mohamed Khaleel. In our opinion, the Deputy Registrar had the necessary jurisdiction to institute suo motu enquiry under Section 64 of the Act even on the basis of the complaint lodged by one of the member. The power exercised is the suo motu power conferred on the Registrar under Section 64(1) of the Act and the written complaint given by one of the members constitute only a source of information for instituting the enquiry. The difference between the institution of enquiry suo motu on written information or written complaint given by one of the members and by requisite number of members of the Managing Committee or of the members who are entitled to demand enquiry under Section 64(2) of the Act, in the case of a Co-operative Society and under Section 25(1) of the Societies Act in respect of the Society, is, that there is no legal compulsion on the part of the Registrar to institute enquiry in the former case, whereas in the latter case he is obliged to do so. Therefore whenever the Registrar of Co-operative Societies institutes an enquiry on the basis of a written complaint by a member, institution of enquiry falls squarely under Section 64(1) of the Act and it is within his powers to do so. For these reasons, we answer the question set out above as follows:
Question No. 1:
An enquiry into the affairs of a Co-operative Society instituted by a Registrar pursuant to a complaint made by one of the members of the society falls within the power conferred on the Registrar under Section 64(1) of the Karnataka Co-operative Societies Act 1959 and not violative of Section 64(2).
In view of our answer as above, we hold that the enquiry instituted in the present case is the one which the Registrar had the jurisdiction to initiate under sub-section (1) of Section 64 of the Act, and that non-existence of the written requisition mentioned in clauses (a), (b), (c) of sub-section (2) of Section 64 of the Act is no ground to hold that the order is bad under Section 64(1).
8. One other contention urged in this Writ Petition is that the Assistant Registrar can exercise the power of the Registrar only in respect of societies which has got jurisdiction over a Taluk or less and therefore, the impugned notice is without jurisdiction as the petitioner society has jurisdiction over an area which is larger than a Taluk. This contention over Jooks the provision of sub-section (1) of Section 64 which authorises the Registrar to hold an enquiry by himself or by a person authorised by him. In the present case, it can be seen from the impugned notice that it is the Deputy Registrar who has authorised the Assistant Registrar, to hold an enquiry. It is not the case of the petitioner that Deputy Registrar is not a Registrar for purpose of instituting enquiry against the petitioner Bank under Section 64(1) of the Act. As the Deputy Registrar is the Competent Authority to institute enquiry under Section 64(1) of the Act against the petitioner Society, he had the authority to hold an enquiry himself or to authorise a person to hold the enquiry. In the present case Deputy Registrar has authorised the Assistant Registrar to hold an enquiry. The second contention urged by the petitioner also fails.
9. In the result, we make the following order:
(i) The Writ Petition is dismissed.
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