Pratap Kumar Ray, J. - (1.) Challenging the judgment and order dated 31st July, 2007 passed by learned trial Judge in W.P. No. 7486 (W) of 2007 this appeal has been preferred by Reserve Bank of India along with two officers of the Bank, namely, the General Manager and the Executive Director. Writ application was moved assailing the dissolution of the Board of Directors of a Cooperative Society who is dealing with the banking business being an insured Cooperative Bank within the meaning of Clause (i) of Sec. 2 of The Deposit Insurance and Credit Guarantee Corporation Act, 1961, hereinafter for brevity referred to as "DICG Act", by the Registrar, Cooperative Society, West Bengal in terms of Sec. 30 Sub -section (2) of the West Bengal Cooperative Societies Act, 1983, hereinafter for brevity referred to as "Cooperative Societies Act". Relevant provision of Sec. 30 of the said Cooperative Societies Act reads such: Section 30. Dissolution of board and appointment of administrator. - (1) if, in the opinion of the Registrar,: (a) any board (i) has persistently made defaults, or has been grossly negligent, in the performance of its duties under this Act or the rules or the by -laws, or (ii) has committed any act prejudicial to the interest of the concerned co -operative society or any other co -operative society, or (iii) has willfully disobeyed or willfully failed to comply with any lawful order or direction of the State Government or the Registrar; or (b) the affairs and business of any co -operative society have due to persistent default or negligence in the performance of duties by its board or a Sec. thereof or otherwise come to a standstill. The Registrar may, after service of a notice upon the board and giving it an opportunity of being heard, by order in writing stating reasons therefor, dissolve the board, the directors of which shall forthwith vacate their offices and the Registrar shall appoint one or more administrators to manage the affairs of the co -operative society for such period, not exceeding one year at a time, as may be specified in the order and may also by an order in writing extend such period so, however, that the total period shall not exceed three years. (2) If, on receipt of a report from the Registrar, or of its own motion, the State Government is of opinion that in view of one or more circumstances referred to in Sub -section (1), immediate dissolution of the board of any co -operative society is essential in the interest of that co -operative society or the co -operative movement in general, the State Government may, without giving such board any notice, by notification, giving reasons therefor, dissolve such board, the directors of which shall forthwith vacate their offices and the State Government shall appoint one or more administrators to manage the affairs of that co -operative society for such period, not exceeding two years at a time, as may be specified in the notification and may also by notification extend the period so, however, that the total period shall not exceed three years: Provided that the State Government shall not take any step towards immediate dissolution of the board of directors of the State Cooperative Bank or the central co -operative land development bank or any central co -operative bank or such other co -operative bank as comes within the provision of Part V of the Bank Regulation Act, 1949 (10 of 1949), without prior consultation with the Reserve Bank of India [or the National bank for Agriculture and Rural Development, as the case may be]. [Provided further that if the administrator or administrators appointed under Sub -section (1) of Sub -section (2) fail to reconstitute the board within the period of three years from the date of dissolution of the board, they shall be removed from office and thereupon the Registrar shall reconstitute the board in the manner laid down in the proviso to Clause (a) of Sub -section (1) of Sec. 25 within one year from the date of removal of the administrator or administrators, and the board so reconstituted function till the directors of the board elected under Sec. 25 assume charge.] (3) The Registrar shall, after service of a notice under Sub -section (1), by order, depute a Government officer [...] to the service of a co -operative society to manage its affairs till [the notice issued by the Registrar under Sub -section (1) is revoked, or] an administrator or administrators is or are appointed by him under Sub -section (1) [as the case may be] and such Government officer shall exercise such powers and perform such duties as the Registrar may specify in the order, and the board of the co -operative society shall allow the said Government officer to exercise his powers and perform his duties accordingly." The writ petitioner was one of the Directors of the said Cooperative Bank and was the elected Chairman of the Bank at the material time. Other Directors of the said Cooperative Bank have not been made as parties in the writ proceeding assailing the order dissolving the Board of Directors in exercise of the power under Sec. 30(2) of the said Cooperative Societies Act and appointment of an Administrator and they are not party -aggrieved against the decision passed by the Registrar exercising of the power under Sec. 30(2) of the said Cooperative Societies Act. Initially, the decision under Sec. 30(2) of the said Cooperative Societies Act was communicated but there was no notification, a statutory requirement, under the said Act and during pendency of the writ application it was notified, which was accepted by the Court below and the writ application was disposed of on considering the decision impugned as notified in Gazette. The decision impugned in the writ application reads such: WHEREAS the existing board of Directors of the Baranagar Co -operative Bank Ltd., 13, B.K. Maitra Road, Kolkata : 700 036 (hereinafter referred to as "the said bank") has been committing a good number of serious irregularities, defaults etc. prejudicial to the interest of the said bank in terms of Sec. 30(1)(a)(ii) of the WBSC Act, 1983 (West Bengal Act XLV of 1983); AND WHEREAS the R.B.I. has advised that in the public interest and for preventing the affairs of the said bank from being conducted in a manner detrimental to the interests of its depositors and for securing the proper management of the said bank, it is deemed necessary to supercede the existing Board of Directors of the said bank by way of appointing a Board of Administrators thereof; AND WHEREAS the existing Board of Directors of the said bank extended no Co -operation either to the Officers attached to Assistant Registrar of Co -operative Societies concerned or to the Officers attached to the Office of the Director of Co -operative Audit, West Bengal; AND WHREAS the Registrar of Co -operative societies, West Bengal has recommended for dissolution of the existing Board of Directors of the said Bank by way of appointing a Board of Administrators to manage the affairs of the said bank in the interest of its members and depositors in particular and also in the interest of Cooperative movement in general; AND WHEREAS the Governor is of the opinion that it is expedient, in the interest of the said bank in particular and also in the interest of Co -operative Movement in the State in general to appoint a Board of Administrators by dissolving the existing Board of Directors of the said bank with immediate effect.
(2.) Learned trial Judge passed the judgment in favour of the writ petitioner by quashing the said impugned decision on two -fold reasons; (1) there was no emergent situation to dissolve the Board of Directors as the cause of action arose long back in the year 2005 when the Reserve Bank of India on finding out the different irregularities of maintaining the accounts and sanctioning of loan etc. informed the Registrar, Cooperative Societies, West Bengal to supersede the Board of Directors of the Bank and to appoint an Administrator and issued several reminders to that effect till the year 2007. (2) that no reason assigned to supercede the Board of Directors under Sec. 30(2), which was sine qua non/condition precedent to exercise such power. On the aforesaid two reasoning, the learned trial Judge passed the judgment. Relevant findings read such: Before adverting to the merits of the rival submissions raised at the bar, it would be profitable to take note of Sec. 30 of the Act to the extent relevant for the present purpose which reads as under: Section 30. Dissolution of board and appointment of administrator. - (1) if, in the opinion of the Registrar,: (a) any board (i) has persistently made defaults, or has been grossly negligent, in the performance of its duties under this Act or the rules or the by -laws, or (ii) has committed any act prejudicial to the interest of the concerned co -operative society or any other co -operative society, or (iii) has willfully disobeyed or willfully failed to comply with any lawful order or direction of the State Government or the Registrar; or (b) the affairs and business of any co -operative society have due to persistent default or negligence in the performance of duties by its board or a Sec. thereof or otherwise come to a standstill. The Registrar may, ***************** (2) If, on receipt of a report from the Registrar, or of its own motion, the State Government is of opinion that in view of one or more circumstances referred to in Sub -section (1), immediate dissolution of the board of any co -operative society is essential in the interest of that co -operative society or the co -operative movement in general, the State Government may, without giving such board any notice, by notification, giving reasons therefor, dissolve such board, the directors of which shall forthwith vacate their offices and the State Government shall appoint one or more administrators to manage the affairs of that co -operative society for such period, not exceeding two years at a time, as may be specified in the notification and may also by notification extend the period so, however, that the total period shall not exceed three years: Provided that the State Government shall not take any step towards immediate dissolution of the board of directors of the State Cooperative Bank or the central co -operative land development bank or any central co -operative bank or such other co -operative bank as comes within the provision of Part V of the Bank Regulation Act, 1949 (10 of 1949), without prior consultation with the Reserve Bank of India [or the National bank for Agriculture and Rural Development, as the case may be].
(3.) It is evident from a bare reading thereof that summary action is permitted if it be essential in the interest of the co -operative society or the co -operative movement in general. However, such action would be justified if there be an actual emergency. It would, therefore, be necessary to mote the sequence of the events for arriving at a decision as to whether emergency existed or not calling for drastic action under Sec. 30(2) of the Act.;