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Judgment
V.A. Mohta, J.—The common point that arises in these two petitions relates to the width and extent of the power of the Registrar u/s 78 of the Maharashtra Co-operative Societies Act, 1960, to remove the committee of an "insured co-operative bank", in view of section 110A of the Maharashtra Co-operative Societies Act.
The short factual background is this : The Bhandara District Central Co-operative Bank, Bhandara, respondent No. 3, is an "insured co-operative bank" as per the Explanation below section 110A of the Maharashtra Co-operative Societies Act. The Registrar, Co-operative Societies, has issued notices u/s 78 of the Maharashtra Co-operative Societies Act to all the 28 members of the committee of the said bank calling upon them to show cause as to why the committee should not be removed for the several charges mostly pertaining to mismanagement mentioned in the notice. Mahendra Gadkari, the petitioner, in Writ Petition No. 2746 of 1990, and Janbaji Bedurkar, the petitioner in Writ Petition No. 99 of 1991, have by these two separate petitions challenged the validity of the said notices.
Chapter X-A containing the sole section 110A is introduced in the Maharashtra Co-operative Societies Act by the Maharashtra Act No. 54 of 1969. It reads thus :
"110A. Notwithstanding anything contained in this Act, in the case of an insured co-operative bank -
"(i) an order for the winding up, or an order sanctioning a scheme of compromise or arrangement, or of amalgamation, or reconstruction (including division or reorganisation), of the bank may be made only with the previous sanction in writing of the Reserve Bank of India;
(ii) an order for the winding up of the bank shall be made by the Registrar if so required by the Reserve Bank of India in the circumstances referred to in section 11D of the Deposit Insurance Corporation Act, 1991;
(iii) if so required by the Reserve Bank of India in the public interest or for preventing the affairs of the bank being conducted in a manner detrimental to the interest of the depositors or for securing the proper management of the bank, an order shall be made by the Registrar for the supersession (removal) of the committee and the appointment of an administrator therefore for such period or periods, not exceeding five years in the aggregate, as may from time to time be specified by the Reserve Bank of India, and the administrator so appointed shall, after the expiry of his term of office, continue in office until the day immediately preceding the day of the first meeting of the new committee;
(iv) an order for the winding up of the bank or an order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction (including division or reorganisation) or an order for the supersession (removal) of the committee and the appointment of an administrator therefore made with the previous sanction in writing or on the requisition of the Reserve Bank of India shall not be liable to be called in question in any manner; and
(v) the liquidator or the insured co-operative bank or the transferee-bank, as the case may be, shall be under an obligation to repay the Deposit Insurance Corporation established under the Deposit Insurance Corporation Act, 1961, in the circumstances, to the extent and in the manner referred to in section 21 of that Act -
Explanation. - In this section, -
(a) the expression ''an insured co-operative bank'' means a society which is an insured bank under the provisions of the Deposit Insurance Corporation Act, 1961;
(b) the expression ''the transferee bank'' has the same meaning as assigned to it in that Act."
A plain reading of section 110A leaves no manner of doubt that it is an overriding provision brought on the statute book with a view to have the control of the Reserve Bank of India ("the RBI") over the insured co-operative banks in certain matters. The only exercise to be undertaken in this matter is to examine the width and extent of the said overriding provision. The analysis of this provision leads to the following result :
(i) No order (a) for the winding up or (b) sanctioning a scheme of compromise or arrangement, or (c) of amalgamation, or (d) of reconstruction, can be made without previous written sanction of the Reserve Bank of India;
(ii) the Registrar is obliged to pass an order for winding up of the bank if so required by the Reserve Bank of India in the circumstances referred to in section 13(d) of the Deposit Insurance Corporation Act ("the DIC Act");
(iii) The Registrar is obliged to order supersession or removal of the committee and appointment of an administrator therefore for such period or periods not exceeding five years in the aggregate if so required to do so by the Reserve Bank of India;
(a) in public interest, or (b) for preventing the affairs of the bank being conducted in a manner detrimental to the interests of the depositors (c) for securing the proper management of the bank;
(iv) the above orders cannot be questioned in any manner;
(v) the liquidator or the insured co-operative bank or the transferee bank, shall be obliged to repay to the Deposit Insurance Corporation established under the Deposit Insurance Corporation Act to the extent and in the manner and circumstances referred to in section 21 of the said Act.
The following main consequences ensue a result of the above provision :
(A) The Registrar without written sanction of the Reserve Bank of India cannot on any ground pass an order for winding up or for sanctioning a scheme of compromise or arrangement or of amalgamation or of reconstruction of the bank;
(B) The Reserve Bank of India''s directions for winding up of the bank in the circumstances referred to in section 13D of the Deposit Insurance Corporation Act are binding upon the Registrar;
(C) the Reserve Bank of India''s directive to supersede the committee and to make an appointment of an administrator (a) in public interest, or (b) for preventing the affairs of the bank being conducted detrimental to the interest of the depositors, or (c) for securing the proper management of the bank, is binding upon the Registrar.
The petitioners want us to read in section 110A an implied embargo even on the power of the Registrar u/s 78 of the Maharashtra Co-operative Societies Act to remove the committee even in the situations not mentioned in section 110A. We see no justification to do so, for a variety of reasons.
In the first place, the plain language of section 110A does not warrant that conclusion. Had that been the legislative intention, the simplest thing to do was to add the word "removal" in sub-clause (i) of section 110A. The absence of the said word goes a long way to infer that entire jurisdiction of the Registrar in the matter of removal of the committee was not intended to be taken away and only limited embargo (the extent of which is specified) was intended to be put. In this context, section 102 of the Maharashtra Co-operative Societies Act may be noticed. It provides for the Registrar''s specific power of winding up. Considering the scheme of the Deposit Insurance Corporation Act in general and sections 15 and 16 of the said Act in particular, the Registrar''s power in the matter of winding up has been hedged in and ultimate authority in the matter is bestowed upon the Reserve Bank of India. This is fortified also from the provisions of sub-section (ii) under which even the Reserve Bank of India can take initiative in the matter. There is no justification whatsoever for placing the order for winding up of the bank and order of removal of committee at par, when the Legislature has not chosen to do so.
Our attention was invited to several provisions of the Banking Regulation Act, 1949, to indicate how pervasive and exhaustive is the control of the Reserve Bank of India over the banking institutions. But from these provisions, a conclusion cannot be drawn that u/s 110A of the Maharashtra Co-operative Societies Act removal of the committee on any ground covered by section 78 of the Maharashtra Co-operative Societies Act was intended to be controlled by the Reserve Bank of India. In this context, useful reference may be made to section 56 of the Banking Regulation Act which makes certain provisions of the said Act applicable even to co-operative banks. Section 36AA which is contained in Part II-A is not made applicable to co-operative banks. Section 36AA deals with the powers of the Reserve Bank of India to remove managerial and other persons from the office. This is just to illustrate that control of the Reserve Bank of India over all the banks is not uniform.
At this stage, the object of section 110A of the Maharashtra Co-operative Societies Act may be noticed. With effect from March 1, 1966, some of the provisions of the Banking Regulation Act were extended even to the co-operative banks. Insurance cover under the Deposit Insurance Corporation Act was also envisaged to be extended to deposits in those banks. For extending that facility condition of amending the State Co-operative Acts conferring powers on the Reserve Bank of India in certain matters was imposed and the Deposit Insurance Corporation was amended in 1968. Taking into consideration those amendments, the Maharashtra Co-operative Societies Act was amended in 1969 and section 110A was introduced.
There is nothing in the object from which a conclusion contrary to the plain language employed in section 110A can be drawn. True, there is control of the Reserve Bank of India even in the matter of removal of the committee, but it is to the extent specified. The removal of the committee can be made u/s 78 of the Maharashtra Co-operative Societies Act on several reasons and some of them may not have any bearing on the interest of the depositors. It is pertinent to notice that when the Reserve Bank of India is not fully empowered to issue binding directives to remove the committee, those directives have to be only under conditions specified in section 110A.
Shri Deshpande, learned counsel for the petitioners, submitted that in case the view urged by him is not taken, the very object of the provision would be defeated and there would be an anomalous situation due to dual control in the matter of supersession. Shri Bobde, learned counsel for the interveners, is right when he contends that the apprehensions are misplaced and unreal. The jurisdictional areas are well demarcated. We have already dealt with them. However, as pointed out by Shri Patil, the learned Government Pleader, the nature of the two powers of supersession and the manner of their exercise are also not identical.
Therefore, we see no merit in the challenge to the jurisdiction of the Registrar to issue the impugned notices and to take a final decision in the matter u/s 78 of the Maharashtra Co-operative Societies Act. No other point was raised before us.
In the result, the two petitions are dismissed and the rule discharged. No order as to costs. Needless to mention the interim orders stand automatically vacated.
Shri D. K. Deshmukh, learned counsel for the petitioners, orally applied for leave to appeal to the Supreme Court. Leave refused. His oral prayer for staying the operation of this order for a period of three months is also refused.