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Judgment
Deshpande, J.—[After holding that the findings recorded in the impugned order were not based on the allegations made in the "charges" and the order was, therefore, liable to be set aside, the judgment proceeds.] Mr. Dhanuka urged that no interference is called for in exercise of jurisdiction under Articles 226 and 227 of the Constitution on such technical grounds, when facts are incapable of being disputed. It is true, as contended by Mr. Dhanuka, that admittedly the petitioners have failed to get the regular Managing Committee elected till this day. But Mr. Advani contends that this was because of the stay order obtained and obstructions created by the respondents and he could have proved this to the hilt had he been called upon to explain his failure.
In connection with the contention as to the scope of section 78 made by Mr. Advani it is necessary to ascertain the true meaning and effect of the provision in section 78, the relevant parts whereof read as follows:
78 (i) If, in the opinion of the Registrar, the committee of any Society or any member of such committee persistently makes default, or is negligent, in the performance of the duties imposed on it or him 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 wilfully disobeys directions issued by the Registrar for the purposes of securing proper implementation of co-operative production and other development programmes approved or undertaken by Government, or is otherwise not discharging its or his functions properly, or where a situation has arisen in which the committee or any member thereof ceases or refuses to discharge its or his functions and the business of the Society has or is likely to come to a standstill, the Registrar may, after giving the committee or the member, as the case may be, an opportunity of stating its or his objections (if any) within fifteen days from the date of issue of notice, and after consulting the federal Society to which the society is affiliated, by order-(a) remove the committee, and (i)
(ii) appoint one or more administrators, who need not be members of the society, to manage the affairs of the society for a period (not exceeding two years) specified in the order,...
Apparently the Legislature has by the language of the section indicated that in its view the authority and power to remove the Committee enacted by the section was extraordinary and abnormal and that this authority and power must not be used except in abnormal situations mentioned in the section and only upon satisfaction of the conditions mentioned in the section. These abnormal situations are:
(a) the committee of any Society or any member of such committee persistently makes default; or
(b) the said committee or any member thereof is negligent in the performance of the duties imposed on it or him by the Act or the Rules or the Bye-laws; or
(c) the committee of any Society or any member of such committee commits any act which is prejudicial to the interests of the Society or its members; or
(d) the committee or its member wilfully disobeys directions issued by the Registrar for the purposes of securing proper implementation of cooperative production and other development programmes approved or undertaken by Government; or
(e) committee or its member is otherwise not discharging its or his functions properly; or
(f) where a situation has arisen in which the committee or any member thereof ceases or refuses to discharge its or his functions and the business of the Society has or is likely to come to a standstill.
It is only when the Registrar forms an opinion as to the existence of such situation that he can proceed to take action for the removal of the Committee. The conditions which are required to be satisfied prior to the exercise of the authority and power are (1) an opportunity to the Committee or its member, as the case may be, "of stating its or his objections", and (2) consultation with the Federal Society. These, in our opinion, are not empty formalities. The safe-guards appear to have been provided against the misuse of the powers by the officers of the Co-operative Department.
Apparently the Co-operative Societies under the Act are autonomous bodies. Final authority of each such Society vests in the General Body of members. The management, however, of such Society vests in a Committee which is otherwise known as Managing Committee. The provisions of the Act, Rules and the Bye-laws regulate proceedings at the General Body meeting as also the manner of election of the Managing Committee and the exercise of control over it by members of the Society. These also provide for the removal thereof, in case of loss of their confidence. Members and shareholders are prima facie the masters of their own Society and the property or the business owned by it, and it is really for them to decide as to how they should function, subject to their obligation to comply with the provisions of the Act as also other laws of the land. Powers are also vested in the Registrar u/s 79 to enforce the performance of such obligations which a Society or its Committee owe under the law. It is only when such normal checks are found to be unenforceable and lawful functioning of the Society becomes impossible, that recourse to the extreme step contemplated u/s 78 is intended to be taken. In the event of any action u/s 78, the shareholders are deprived, at any rate, temporarily of their rights to manage their own affairs through the Committee of their choice. Such action also, on the other hand, constitutes a slur on the persons who happen to occupy seats in the Managing Committee. The management then consequently stands vested in the hands of one who is not of their own choice, but is the choice of the Registrar. This apart, the remuneration of the Administrator is also required to be borne by the shareholders or is otherwise defrayed from the assets of the Society. This drastic action, therefore, cannot be resorted to lightly and without regard to the legal rights of the shareholders as also the members of the Managing Committee. Such action has to be taken only to protect the interest of the Society, or the community at large. That is why the Registrar cannot have recourse to such an extreme step unless the members of the Managing Committee are given an opportunity to explain their conduct. The scheme of the section is that action taken thereunder without affording due opportunity to show cause would be illegal and accordingly of no effect.
Now, the order of the State Government itself does not show which of the several contingencies contemplated u/s 78 of the Act had, in its opinion, warranted, such supersession in this case. All that the learned advocates for the respondents could do in defence of the order, was to harp on the admitted existence of rival groups in the Society and rely on clause (e) of section 78, as analysed above. In our opinion, existence of rival groups by itself, cannot furnish any basis for such action unless it is shown further that it interferes with the normal functioning of the Managing Committee and exercise of control by it over the affairs of the Society. We have already shown that this aspect of the matter, as discussed earlier, was not even the subject-matter of any one of the charges incorporated in the show-cause notice dated April 26, 1969.
Mr. Dhanuka contends that findings of the Inquiry Officer as also the conduct of the parties during the present litigation do warrant some action to put the house of the Society in order. All this undoubtedly presents a very sorry picture. It will be open for the Registrar to have a fresh look and take such action as is warranted in his opinion. It is for the Registrar to examine and take appropriate action.
We cannot but observe that the timing at which the show cause notice is given against the background of the controversy between the Co-operative Department and the Committee, and the casual manner in which the charges are levelled and the way in which the supersession order is passed on October 18, 1969, does not inspire much confidence in the judgment of the District Deputy Registrar, as to the necessity and urgency of the action. Complaint of the petitioners to the Joint Registrar dated February 1, 1969, against the District Deputy Registrar was almost ignored on April 11, 1969 and show cause notice follows on its heels on April 26, 1969. Charge No. 2 is too vague, wide and uncertain to admit of any precise reply. Charge No. 3 is absurd and frivolous as the petitioners were charged with the omission of holding a meeting for the year 1968-69 on April 26, 3969 when the year itself had not expired and last date in the month of September was still five months ahead. Charge No. 4 could have hardly any relevance for action u/s 78 and complaints under three other charges could have been got removed by recourse to other milder provisions. While under charge No. 1 the petitioners are accused of not recovering clues of Rs. 56,000, it was admitted by the respondents'' advocates that implication of charge No. 2 was the grievance as to why Rs. 24,000 and odd, included in the above sum of Rs. 56,000 was being recovered from respondent No. 3. Laconic order dated October 18, 1969, beyond repeating some phrase from section 78 does not even refer to any findings on the four charges. While officers must act fearlessly where action is necessary, they must also not fail to acquit the delinquents of the charges, when charges are not found to have been justified. This silence is unfair not only to the persons charged but to the department itself as the fog of suspicion will continue to cloud and obscure their visions while examining any subsequent allegations, when an occasion arises. Order of the Deputy Registrar is based ultimately on the petitioners'' (a) failure to get the regular Managing Committee elected and (b) existence of factions, with which allegations they were not charged. This can hardly be said to be fair manner of exercising statutory powers pregnant with far-reaching consequences.
[The rest of the judgment is not material to this report].