AI Structured Summary
Not yet generated for this judgment
Judgment
B.R. Tuli, J.—The petitioner is the Jyoti Nagar Cooperative House Building Society, Limited, Ludhiana, which is a cooperative society which was registered under the Cooperative Societies Act, 1961 (hereinafter called the Act). Its membership at the time of incorporation was 37. The value of each share of a member of the society was Rs. 50/-and the admission fee was Rs. 5/-. The society was formed with the object of acquiring land for building of houses for the members of the society. To carry out the objects of the society, land measuring 14449 sq. yards was purchased on February 10, 1965 in the suburbs of Ludhiana known as Model Gram. Ludhiana. Each member paid Rs. 3625/- inclusive of share money of Rs. 50/-. Only 33 members were given the plots of land for which they paid according to the area taken by each of them. It was further resolved that more land should be acquired from the Improvement Trust, Ludhiana or a private landlord and other members may be given land there form The land measuring 14449 sq. yards which had been purchased by the society had been notified for acquisition u/s 4 of the Land Acquisition Act for the Improvement Trust, Ludhiana and the society got that land released from the notification before the registration of the deed.
Treasurer of the society used to retain with him large amounts in cash and it has been explained in the petition that the money was required for certain necessary expenses which may not be termed as legal but were very essential in the present set-up of administration.
The accounts of the society were being audited by the Auditors and no defalcation or embezzlement was found. Twenty-seven new members were admitted who were also to benefit from the land to be acquired for the members for building houses. The old members, who had already got the plots of land, did not like the admission of new members and. therefore, they made reports against the management to the Assistant Registrar, Cooperative Societies. The Assistant Registrar, Cooperative Societies Package Programme, Jagraon at Ludhiana, sent letter dated April 29, 1966, to the President of the petitioner-society in which it was stated that he had received information about the misappropriation of Rs. 7268-24. The Sub-Inspector incharge directed Shri Amrit Lal, Cashier, on July 9, 1965 to produce the cash balance but he could not do so no the spot from which he concluded that he had misappropriated the amount. Registered notices were sent on July 23, 1965 September 17, 1965 and November 18, 1965 which were not acknowledged by the Cashier. The matter was brought to the notice of the Deputy Registrar for registering a case with the police authorities. On coming to know of this fact, the Cashier, accompanied by Shri Sat Paul Mital, M.L.C. and Shri Dina Nath Aggarwal, M L.A-, met him in his office in the third week of December 1965 and on their request he advised the Inspector to wait up to January 21, 1966 to see that the Cashier fulfilled his promise because the Cashier could not produce the cash before the Assistant Registrar as well. Reference was also made to certain other communications and it was concluded as under:
I have to point out that the committee did not act in a bona fide way and instead of bringing the responsible man to book, they created further difficulties and connived to deliberately hush up the misappropriation case by appointing Shri Amrit Lal, Cashier, as custodian of the record of the society. The working of the society is not satisfactory and time and again whatever directions were given to the Managing Committee, were not carried out in a responsible manner.
There are certain serious allegations against the management of the society I, therefore, arrived at the conclusion that the working of the society is not satisfactory and that there are serious defects in its working. I therefore, appoint Shri Muni Lal Inspector, Co-operative Societies, Ludhiana East, an Inquiry Officer u/s 50 of the Co-operative Societies Act, 1961, to conduct an inquiry into the constitution, working and financial position of the society and to submit his report within seven days of the receipt of his letter.
To this letter the President of the society sent a reply on May 6, 1966 refuting the allegations made in his letter of April 29, 1966. It was stated that the record was in the proper and authorised custody of the society and the allegations against the committee of the society were groundless, baseless and without any cogent reasons. The allegations had been made mala fide to give a bad name to the society for the reasons best known to the office of the Assistant Registrar The society and its committee had been abiding by all the instructions and even the members had appreciated the working of the committee with open heart. The appointment of Shri Muni Lal, as Inquiry Officer, was beyond jurisdiction and a hasty step and the conclusions arrived at by the Assistant Registrar were wrong. It was further stated that the entire record of the case and cash was lying at the office of the society which could be inspected on any working day during office hours after giving prior intention to the cashier. The hope was expressed that the letter dated April 29, 1966 would be withdrawn. It appears that July, 15, 1966 was fixed for the Inspector, Co-operative Societies, Ludhiana East, to visit the society in order to carry out his duties as Inquiry Officer but by his letter of that date he informed the Cashier of the society that he could not pay visit to the society on that day, He fixed July 20, 1966 as the date for holding the enquiry.
On September 6, 1966, the Assistant Registrar, Co-operative Societies (VP), Jagraon at Ludhiana, sent a show-cause notice to the President of the society in which after stating various allegations it was concluded as under:
The enquiry u/s 50 thus reveals serious irregularities and mala fide intentions of the Managing Committee. You are, therefore, requested to explain within 15 days from the date of receipt of this letter why the society should not be brought under winding-up process and the committee be surcharged u/s 54 of the Punjab Co-operative Societies Act, 1961, as it did not serve in accordance with the Co-operative Principles''.
The allegations in the show cause notice related to the retention of money by Amrit Lal, Cashier, and misuse thereof by him; the application received from 25 members on April 27, 1966 levying certain serious allegations against the Managing Committee and the Cashier; expressing no confidence in the Managing Committee and requesting for re-election and recovery of misappropriated amount; the Managing Committee returned share money of Rs. 500/- each to Shri Avtar Krishan, President, on April 11, 1966 and Shri Ravinder Nath, Honorary Secretary, on April 12, 1966, which was contrary to byelaw No. 18 as the share money was only transferable and could not be refunded; Shri Jagdish Parshad Sood was intentionally expelled from membership on April 25, 1966 and was given the cheque for Rs 3000/-on account of his share money etc; the committee members had slipped away to invest money in the purchase of land and no election of the committee had been effected since July 14. 1964. It was further alleged that on April 26, 1966, 12 new members were enlisted by the Managing Committee with the malicious intention of remaining in power in future if new election took place. To the allegations contained in the show-cause notice, the President gave a reply on September 26, 1966. On December 12, 1966 the Assistant Registrar passed an order dealing with the points stated in the show-cause notice and the reply thereto the report of the Inquiry Officer. The last paragraph reads as under:
The society is not working according to the Co-operative principles. It has so many defects and disputes quite unsettled and knowingly avoided. However, I am taking a very lenient view and give respite up to March 31,1967 to improve the working of the society failing which the society will be brought into winding-up process on assessing its worth with the working of the society as on March 31, 1967.
This order was conveyed to the President of the society by letter No. 1911 RK/ARJ/C/SPL dated December 12, 1966 to which the President sent a reply on January 13, 1967, refuting all the points and stating:
The society is working strictly in accordance with Co-operative Principles in entirety. The society shall work according to the ways and means suggested by your good sell. The working of the society is quite alright. 1 once again thank you for the Cooperation rendered. Your suggestion shall have the guiding effect on the society.
On March 18, 1967, the Inspector, Co-operative Societies, Ludhiana Urban, sent a letter to the President of the society directing him to call the general meeting of the society for the election of the new committee and fix date, time and place for this purpose according to bye-laws and intimation about the action taken in this respect should be given to his office before March 31, 1967. Fresh elections were held on May 14, 1967, after due notice by the department itself. The department was asked to send a representative to be present in that meeting but none was sent. On May 15, 1967 the department was duly informed of the fresh elections.
On August 2, 1967, the Inspector, Co-operative Societies, asked the society to produce cash book, proceedings book and ledgers and register of members of the society before him on August 8 1967 at 10 A. M. as he had to go through numerous complaints against the society and its management. To this letter the Cashier of the society sent a reply on August 7, 1967, in which it was pointed out that the record of the society was inspected on July 20, 1966. The balance sheet of the society had been sent to his office on June 30, 1937 upto date. If the same were required to be inspected again, the inspection should be held at the office of the society on any working day during office hours after prior intimation to the society. Without any further enquiry or affording an opportunity to the society, the Assistant Registrar, Co operative Societies, exercising the powers of Registrar, Co-operative Societies, passed an order on November 15, 1967, a copy of which is Annexure ''L'' to the writ petition. In this order reference is made to the enquiry u/s 50 of the Act, the show cause notice issued to the President of the society by the Assistant Registrar on September 6, 1966 detailing the defects in the working of the society and the reply thereto submitted by the society on September 26, 1966. Reference is then made to the order dated December 12, 1966 allowing a respite of three months to the society for making improvements in its working and removing the defects etc. Then it is stated as under:
All these defects still stand. I am fully satisfied that this society has ceased to function in accordance with co-operative principles and it is of no use to continue it any longer in the present stage. All efforts made to improve its affairs have proved useless.
He then passed the order winding up the society u/s 57(2)(b) of the Act.
Against this order the society filed an appeal u/s 68 of the Act which was dismissed by Shri Amarjit Singh, P. C. S., Under Secretary to Government Punjab, Co-operative Department (exercising the powers of the State Government) on March 25, 1968. The society filed the present writ petition on May, 25, 1968 and the Liquidator was restrained from proceeding with the liquidation of the petitioner society. The winding up of a co-operative society can be ordered u/s 57(2) of the Act only on the following grounds:
(a) Where it is a condition of the registration of the society that the society shall consist of at least ten members and the number of members has been reduced to less than ten; or
(b) where the co-operative society has not commenced working or has ceased to function in accordance with co-operative principles.
I regret to say that neither the Assistant Registrar, exercising the powers of the Registrar Co-operative Societies in his order dated November 15, 1967, nor the Under Secretary to Government, Punjab, Co-operation Department, exercising the powers of the State Government u/s 68 of the Act, gave any finding that the society had ceased to function in accordance with co-operative principles although the order for winding up was made specifically under this clause. "Co-operative principles" are nowhere defined but as held by a Division Bench of this Court (Mehar Singh, C. J. and myself), in Civil Writ No. 2146 of 1968, Ch. Bishan Dass and others v. The Governor of the Punjab and others C. W. 2146 of 1968, decided on August 29, 1968, the underlying idea is to work together for the mutual benefit of the co-operators on the principle "one for all and all for one".
The two orders do not give any reasons or instances from which it could be concluded that the society had ceased to function according to the co-operative principles and, therefore, the two orders are not covered by clause (b) of sub-section (2) of section 57 of the Act. There was thus no jurisdiction in the Registrar of Co-operative Societies or the Assistant Registrar, exercising the powers of the Registrar, to wind up the society on the grounds stated in his order. The State Government also failed in its duty in not noticing that the order which had been appealed against was without jurisdiction and could not be passed u/s 57(2)(b) of the Act. It was the duty of the two officers to give the reasons and the instances from which it could be concluded by this Court that the case was covered by the provisions of clause (b) of subsection (2) of section 57. From that point of view both the orders are not speaking orders. It has been held by their Lordships of the Supreme Court in Bharat Raja Vs. The Union of India (UOI) and Others, that "the case for giving reasons or for making a speaking order becomes much stronger when the decision can be challenged not only by the issue of a writ of certiorari but an appeal to this Court". The order passed by the Assistant Registrar, Co-operative Societies, winding up the society is a quasi-judicial order and it must be supported by reasons. The order in appeal passed by the officer exercising the powers of the State Government is likewise a quasi-judicial order and must contain succinctly the reasons for the conclusions arrived at. It is an established principle of law that a quasi-judicial tribunal must pass a speaking order giving reasons in support of its decision.
After March 31, 1967, the Assistant Registrar, Cooperative Societies, issued no notice to the petitioner society bringing to its notice that the defects pointed out on December 12, 1966 had not been removed and the working of the society had not improved nor was the society given any opportunity to prove that it removed the defects pointed out and had improved in its working. In the return it has been specifically stated that no necessity was felt to issue another show-cause notice. The show-cause notice issued on September 6. 1966. to which representation was made by the society on September 26, 1966 and on the basis of which the Assistant Registrar passed his order dated December 12, 1966, had exhausted itself with the passing of that order. '' If the Assistant Registrar was not satisfied with the working of the society during the three months allowed to it, it had to act on the principles of natural justice, that is, bringing the facts to the notice of the society and asking it to explain how it had run its business in those three months. Nothing of the kind was done by the Assistant Registrar and suddenly the order for the winding up of the society was passed on November 15, 1967. It is, therefore, not possible to uphold that order and the order dismissing the appeal.
For the reasons given above, I accept this writ petition with costs. The order of the Assistant Registrar, Co-operative Societies, exercising the powers of the Registrar, Co-operative Societies, dated November 15, 1967, and the order of the Under Secretary to the State of Punjab, Co-operation Department, exercising the powers of the State Government dated March 25, 1968, copies of which are Annexure ''L'' and ''M'' to the writ petition are hereby quashed. Counsel''s fee Rs. 106/-.