Raghunath Govind Satarkar vs State of M.P. and Others

H.G. Mishra, J.

This is a petition for issuance of a writ of Certiorari and / or any other writ, order or direction in the nature of a writ under Article 226/227 of the Constitution of India; for quashing the notice dated 10-11-1980 (Annexure-C) and the order of supersession dated 20-1-1981 (Annexure-G) issued and passed by the Joint Registrar, Co-operative Societies (respondent No. 3 herein) respectively. Misc. Petn. No. 16 of 1981 decided on 19-10-1981 (Indore).

Briefly stated the facts giving rise to this petition are as under: The Hindu Nagarik Sahakari Bank, Indore (for short, the Society) is a co-operative society duly registered under the Madhya Pradesh Co-operative Societies Act, 1960 (for short, the principal Act). There is a Board of Directors (Sanchalak Mandal), which manages the affairs of the society. The Board of Directors functioning at the relevant time was elected on 16-7-1979 for a period of three years ending 14-7-1982. It can function in spite of expiry of the period till the New Board of Directors is elected. The Joint Registrar, Co-operative Societies (Respondent No. 3) gave a notice (Annexure-C) dated 11-10-1980 to the Board of Directors through the Chairman, the petitioner-herein, to show cause as to why the Board of Directors, the Executive Committee and the sub-committees, if any of the society, be not superseded u/s 53(1) of the Principal Act. By order contained in penultimate paragraph of the notice the Board of Directors, Executive Committee and the sub-committees were suspended and an Administrator was appointed to manage the affairs of the society. A copy of the show-cause notice (Annexure-C) was also sent to the Deputy Chief Officer of the Reserve Bank of India, 6 Manoramaganj, Indore, for information. On behalf of the society reply to the show-cause notice dated 25-11-1980 (Annexure-F) and supplementary reply (Annexure-F-1) dated 22-12-1980 were submitted. Ultimately by order dated 20th January, 1981 (Annexure G), the respondent No. 3 ordered supersession of the society.

The petitioner seeks to quash the aforesaid show-cause notice and the order of supersession on the grounds that prior to passing of the order of supersession, there was no consultation with the Reserve Bank of India, as required by virtue of the first proviso to section 53(1): that the charges levelled are vague, irrelevant and are even otherwise not in nature which may warrant taking of drastic action by way of supersession; that there have been no persistent defaults or negligence in performance of duties nor any act prejudicial to the interests of the society or its members have been overdone by the Committee, nor the functioning of the society has been improper: that the impugned action is mala fide. Details of these grounds are contained in the petition, but are not being given as burdening of this order by the details do not appear to be necessary for deciding it.

The petition is resisted by the respondents on the grounds that the requirement of previous consultation with the Reserve Bank has ceased to be legally necessary in view of the Madhya Pradesh Nirsan Adbiniyam, 1979 (No. 13 of 1979), which has repealed the Madhya Pradesh Co-operative Societies Act, 1970, (No. 8 of 1970) as a whole: that it was by this amendment Act No. 8 of 1970 that the first proviso requiring previous consultation with the Reserve Bank was added to the principal Act. The M. P. Nirsan Adhiniyam, 1979, came into force with its publication in the M. P. Govt. Gazette (Extraordinary) dated 10-5-1979; that even otherwise copy of the show-cause notice (Annexure-C) was sent to the Reserve Bank, branch at Indore, which contained the relevant material on the basis of which the proposed action of supersession was to be taken. As such, in substance the order of supersession has been passed after previous consultation with the Reserve Bank and that the other grounds raised by the petitioner are factually incorrect and legally untenable.

The crucial questions on which the decision of this petition hinges and (a) whether the requirement with regard to previous consultation of the Reserve Bank prior to passing of the impugned order of supersession was necessary, even after the coming into force of the M P. Nirsan Adhiniyam No. 13 of 1979, with effect from 10-5-1979 and (b) whether merely sending of copy of show cause notice amounts in law to consultation with the Reserve Bank before passing of the impugned order of supersession. It is not in dispute between the parties that by the M. P. Co-operative Amendment Act No. 8 of 1970, proviso to the following effect was added to section 53(1) of the Principal Act:

Provided further that in case of a Co-operative Bank, an order of supersession shall not be passed without previous consultation with the Reserve Bank". The Amendment Act No. 8 of 1970 was repealed, by M. P. Nirsan Adhiniyam No. 13 of 1979 which came into force with effect from 10-5-1979. As to the effect of this repeal, the petitioner, on the one hand contends that by virtue of section 4 of the M. P. Nirsan Adhiniyam, 1979, the Amendment Act No. 8 of 1970 only was repealed and the aforesaid proviso added by it to sub-section (1) of section 53 of the principal Act remained a part thereof. The contention of the respondents, on the other hand, is that with coming into force of the Nirsan Adhiniyam No. 13 of 1979, not only the Amendment Act No. 8 of 1970 stood repealed, but the proviso added thereby to section 53(1) also stood deleted. In order to appreciate the rival contentions of the parties on the point, it appears necessary to keep in mind the provisions placed in section 4 of the M. P. Nirsan Adhiniyam No. 13 of 1979, which read as under :

S. 4.- Effect of repeal of amending enactment.-For the removal of doubts, it is hereby declared that where this Act repeals any enactment by which the text of any such previous enactment, was amended by express omission, insertion or substitution of any matter, the repeal shall not affect the continuance of any such amendment made by the enactment so repealed and in operation at the commencement of this Act.

(Emphasis supplied)

In view of the language employed in section 4, reproduced above, it is clear that its object is not to bring out any change, in the law but to remove the Amending Act No. 8 of 1970 from the statute book. "Mostly, they (Repealing and Amending Acts) expurgate amending Acts; those Acts have served their purpose and have no further reason for their existence", as held in Jethanand Betab Vs. The State of Delhi (Now Delhi Administration), (Parenthesis supplied). Here also what is provided by section 4 in terms is that the repeal of the Amending Act shall not affect the continuance of the amendments made thereby. For this reason and also because the aforesaid proviso to sub-section (1) of section 53 was in operation at the commencement of the M. P. Nirsan Adhiniyam No. 13 of 1979, it has to be held that the proviso in question was intended to remain as a part of the principal Act and the Amendment Act No 8 of 1970 was merely removed as being unnecessary. Accordingly, the contention advanced by the respondents to the contrary does not merit acceptance.

Now, before passing an order of supersession it was necessary for the respondent No. 3 to have consulted the Reserve Bank. The proviso enacts a legislative injunction prohibiting passing of the order of supersession without previous consultation with the Reserve Bank. Accordingly, for acquisition of jurisdiction to pass the order of supersession, consultation with the Reserve Bank was a condition precedent. The provision on the point is mandatory in character. This is also the view taken by this Court in Radheshyam Sharma Vs. Govt. of M.P. through C.K. Jaiswal and Others,

Now, the further question, which arises for consideration is whether mere sending of a show-cause notice (Annexure-C) to the Reserve Bank, Branch at Indore, constitute compliance of the provision of law on the point. In order to make the consultation effective and meaningful, it is inter alia necessary that all relevant material must be shown to have been supplied to the Bank, consulted so as to enable them to tender the advice on the point on which the advice is sought. This is what flows from what has been held by this Court in Board of Directors of Shri Ganesh Sahakari Vipnan (Marketing) Sanstha v. Dy. Registrar Misc. Petition No. 232 of 1981, decided on 15-9-1981 (1982 MPLJ 46.), and in the case of Radheshyam v. Govt. of Madhya Pradesh (supra). In this case, a copy of the show-cause notice (Annexure-C) purports to have been sent to the Deputy Chief Officer of the Reserve Bank of India, Indore Branch, for information only. Accordingly, it cannot be deemed that the copy of the notice was seat for consulting the Reserve Bank, as contemplated by law. Moreover, it is not shown by the respondents that at any stage of time prior to the passing of the order of supersession, all relevant material was supplied to the Reserve Bank to enable them to tender their advice, inviting their attention to the point or points on which the advice was sought, indicating how the authority seeking the advice viewed the matter. As such, the impugned order of supersession cannot be regarded to have been passed with previous consultation of the Reserve Bank As such, there has been non-compliance with the mandatory provision of law on the point, which renders the order of supersession void. Accordingly, without going into the merits of the other contentions, the petition deserves to be allowed partly in accordance with the view taken by us above.

As a result of the discussion aforesaid, the petition succeeds and is allowed partly to the extent that the order of supersession dated 20-1-1981 (Annexure-G) passed by respondent 3, is hereby quashed and a writ of Certiorari is directed to be issued for the purpose. So far as the question of quashing of the show-cause notice (Annexure-C) is concerned, no ground appears to have been made out for quashing the same. Accordingly, the relief for the purpose cannot be granted and the petition is dismissed with regard to quashing of the show-cause notice (Annexure-C). There shall be no order as to costs. The outstanding amount of the security deposit, if any, shall be refunded to the petitioner.

Petition partly allowed.