GH NABI BHAT Vs. DY REGISTRAR CO-OPERATIVE SOCIETIES, BARMULLA

JUDGEMENT

(1.) THIS petition is directed against an order passed by the Deputy Registrar Co -operative Societies, Baramulla under section 29 of the Cooperative Societies Act (hereinafter called Ëœthe Actâ„¢), by which he has removed the Managing Committee of the Multipurpose Co -operative Society, Tarzua, Sopore and appointed a Special Officer to manage the affairs of the society for a period of three months. The grounds of challenge are twofold; one, that the Deputy Registrar was not competent to pass the order ; and, the second that the order is violative of section 29 of the Act. The petition came up for hearing before my learned brother, Main Jalal -ud -Din J. Being of the opinion that the case raised question as regards the true scope and effect of section 29(4) he referred it for hearing to a larger bench. That is how this case has come before us now.

(2.) THERE is an ambiguity about the date on which the impugned order was passed. Let me first clear it. The copy of the order annexed with the petition is dated ll -12 -1973. The reply filed by the other side gives the date as 1 -12 -1973. At the hearing, therefore, we called for the original file and found that the order was passed on 1 -12 -1973 and bears that date. The date given on the copy is obviously not correct, The copy has been attested by the Assistant Registrar Co -operative Societies, Baramulla who does not seem to have taken care to compare the dates while attesting the copy. We wish that he were to act in a reasonable manner. Section 29 of the Act reads , (1) If as a result of an inquiry or an inspection or an audit conducted under this Act the Registrar is of opinion that the Committee of any co -operative society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye -laws or commits any act which is prejudicial to the interests of the society or its members or is otherwise not functioning properly the Registrar may after giving the Committee an opportunity to state its objections, if any by order in writing remove the Committee and - (a) appoint a new Committee consisting of one or more members of the Society in its place ; (b) appoint one or more ËœAdministratorsâ„¢ who need not be members of the Society. to manage the affairs of the society for a period not exceeding six months specified in the order which period may, at the discretion of the Registrar be extended from time to time so however, that the aggregate period does not exceed one and a half year. (2) The Committee or Administrators so appointed shall subject to the control of the Registrar and to such instructions as he may from time to time give, have power to exercise all or any of the functions of the Committee or of any officer of the society and take all such action as may be required in the interests of the society. (3) The Committee or Administrators shall, at the expiry of its or their term of office, arrange for the constitution of a new Committee in accordance with the bye -laws of the society. (4) Before taking any action under sub -section (1) in respect of a co -operative society, the Registrar shall consult any financing institution to which it is indebted." Clearly sub -section (1) empowers the Registrar to supersede the committee of a co -operative society if, in his opinion, the Committee makes persistent defaults or is negligent in the performance of duties imposed on it by the Act or by the Rules or bye -laws made thereunder or commits any act prejudicial to the interests of the society or its members or is otherwise not functioning properly. The Sub -section however requires that the Registrar should base his opinion on cogent facts discovered as a result of an inquiry, inspection or audit conducted under the Act: and, that before he gives effect to his opinion, the Registrar should give opportunity to the Committee to file its objections in the matter. It may be that the society is indebted to a financial institution. In that case the law lays down a further requirement in Sub -section (4) according to which the Registrar must consult such financial institution "before taking any action" under sub -section (1). The object of the Legislature in providing for these requirements manifestly is firstly to prevent arbitrary interference by the Registrar into the affairs of the Society and: secondly, to preserve and protect the fair name of the Society. The courts must, therefore, insist on strict adherence to these provisions which are mandatory.

(3.) THE question arises: At what stage is it obligatory on the Registrar to consult the financial institution? This is precisely the question involved in the present case on which divergent views were expressed before us at the bar. The learned counsel for the petitioner contended that in terms of sub -section (4) the Registrar is under an obligation to consult the financial institution in regard to the final order of supersession end not necessarily with respect to his earlier order directing issue of show -cause notice about which, the learned counsel added, he may or may not consult such institution. The learned counsel for the respondent put it the other way round. Sub -section (4) provides that before taking any action under subsection (1), the Registrar shall consult the financial institution to which the society is indebted. Sub -section (1) contemplates various processes. The Registrar is to consider first the result of the inquiry, inspection or audit and come to a provisional conclusion that the committee of the society be superseded. Then he is to apprise the committee of the charges against it and ask it to file objections why it should not be superseded. Where the committee does not file any objections or the objections filed by it are unsatisfactory, the Registrar has to come to a final conclusion that the committee be superseded and issue orders accordingly. It may be that the objections filed by the committee are satisfactory. In that case the Registrar will naturally drop the proceedings and discharge the notice. Thus under sub -section (1) action against the committee commences with the issue of a show cause notice to it and ends with the discharge of such notice or with the issue of an order of its supersession. That being so, the provisions of sub -section (4) must be read to mean that the Registrar is under an obligation to consult the financial institution in regard to the show cause notice and not necessarily with respect to the final order that he proposes to make in the matter. In other words the consultation must be with regard to the provisional conclusion and not necessarily with respect of the final conclusion about which he may or may not consult the financial institution. It is no doubt desirable that the Registrar should consult the financial institution with regard to the final conclusion as well, but if he does not do so, that would not vitiate his action. On the other hand if he omits to consult the financial institution with regard to his provisional conclusion, that would render the subsequent proceedings void and ineffectual. The word Ëœanyâ„¢ in sub -section (4) is significant. It clearly suggests that the Registrar cannot commence action by the issue of a show cause notice to the committee unless he first consults the financial institution to which the society is indebted. If the intention were that the Registrar must consult the financial institution at the last stage, the legislature should have used the word Ëœfinalâ„¢ for the word Ëœanyâ„¢ appearing in sub -section (4).