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PETITIONER: VEERPAL SINGH

       Vs.

RESPONDENT: REGISTRAR, COOPERATIVE SOCIETIES, U.P. & ORS.

DATE OF JUDGMENT22/01/1973

BENCH: RAY, A.N. BENCH: RAY, A.N. SIKRI, S.M. (CJ) PALEKAR, D.G. BEG, M. HAMEEDULLAH DWIVEDI, S.N.

CITATION:  1973 AIR 1249            1973 SCR  (3) 418  1973 SCC  (1) 456

ACT: Cooperative Societies Act s. 35-Registrar’s powers in regard to  suspension of President and Committees of management  of Cooperative  Society  and  appointment  of   administration- Conditions for exercise of power under s. 35(2).

HEADNOTE: The Deputy Registrar Cooperative Societies, Meerut, by order dated  14  July,  1971  suspended  the  President  and   the Committee   of   management  of   Jabangirabad   Cooperative Marketing   Society   Ltd.,   and   further   appointed   an administrator  to carry on the functions of the  society.  A writ petition was filed by Y and others in the High Court of Allahabad under Art. 226 of the Constitution challenging the aforesaid  order of the Deputy Registrar.  The petition  was dismissed,  whereupon an appeal was filed in this  Court  by special leave.  V, who was the President of the Jahangirabad Cooperative Marketing Society also filed a writ petition  in this Court challenging the Deputy Registrar’s order dated 14 July,  1971.  The questions that fell for  consideration  in the appeal and writ petition were : (1) whether the  Deputy Registrar’s order suspending the President and committee  of management of the Society was valid; (ii) whether the Deputy Registrar could temporarily appoint an administrator. HELD  :  (i) The provisions in s. 35(1) of  the  Cooperative Societies  Act, 1965 indicate the circumstances under  which the  Registrar  has  power  to  supersede  or  suspend   the committee  of  management and to appoint  an  administrator. Section 35(2) of the" Act confers power on the Registrar  to suspend  the  committee of management during the  period  of proceedings for supersession.  The Registrar has also  power under  section  35(2) of the Act to make arrangement  as  he thinks  proper  for the management of the society  till  the proceedings  are  completed.   The  power  to  suspend   the committee of management during the period of proceedings is exercisable   when   proceedings   for   supersession   have commenced.   Section  35(1) of the Act shows that  when  the Registrar is of opinion that the committee of a  Cooperative Society makes default or is negligent in the performance  of

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duties   or  is  otherwise  not  functioning  properly   the Registrar may supersede the committee of management and  has to  give an opportunity to the society to be heard  in  that behalf.  The Registrar has also to obtain the opinion of the general  body of the society.  Therefore the opinion of  the Registrar is to be followed by some definite act which  will Commence  the proceedings for supersession.  The  provisions in  the Act indicate that some definite step like the  issue of  notice  must be taken under the  provisions  of  section 35(1)  of the Act with a view to show that  proceedings  for supersession of the committee are set in motion. [422A-F] It  is  therefore manifest that power exercisable  under  s. 35(2)  of the Act is confined to the time during the  period of  suspension  proceedings.  Unless  the  proceedings  have started  as indicated earlier the Registrar cannot  call  in aid the power exercisable under s. 35(2) of the Act.  [422E- F]                             419 (ii) As no proceedings had been set in motion in  accordance with the provisions of’ the statute, the interim  suspension of  the committee of management was bad.  As appointment  of administrator during the interim period is not ruled out  of the provisions of s. 35(2) of the Act, but the  prerequisite condition  to the appointment of the  interim  administrator had  not  been  fulfilled in the present  case,  because  no proceeding   for  the  supersession  of  the  committee   of management of the society had commenced. [422G-H; 423A-B] (iii)     The  administrator  appointed  by  the   Registrar withdrew the delegation of the petitioner appellant V to the Uttar Pradesh Provincial Cooperative Federation.  Since  the appoi ntment of the administrator was bad the withdrawal  of the  delegation  of  V by the administrator  was  also  bad. [423C-D] Accordingly the writ petition and the appeal must be allowed and  the order of the Deputy Registrar dated 14  July,  1971 must be quashed.[423D]

JUDGMENT: ORIGINAL/CIVIL  APPELLATE JURISDICTION : Writ  Petition  No. 298 of 1971. Petition  under Article 32 of the Constitution of India  for the  enforcement of fundamental rights and Civil Appeal  No. 593 of 1972. Appeal by a special leave from the judgment and order  dated November 24, 1971 of the High Court of Allahabad in W.P. No. 6667/71. A.   K. Sen, A. P. Singh Chauhan, V. C. Prashar and Dharmpal Singh Chauhan, for the petitioner and appellant. C.   K. Daphtary, B. Sen and O. P. Rana, for the respondents Nos. 1-3 (in writ petit-Ion and Appeals). The Judgment of the Court was delivered by RAY,  J. The petitioner in this writ petition impeaches  the order  dated 14 July, 1971 passed by the  Deputy  Registrar, Cooperative  Societies,  Meerut, By that  order  the  Deputy Registrar, Cooperative Societies suspended the President and the  committee  of management  of  Jahangirabad  Cooperative Marketing   Society  Ltd.,  Jahangirabad.   The   petitioner Veerpal   Singh  was  the  President  of  the   Jahangirabad Cooperative  Marketing  Society.  By that order  the  Deputy Registrar   further  appointed  Ghanshyam   Murari   Sharma, Additional  District  Cooperative  Officer,  Bulandshahr  as Administrator to carry on the functions of the society. The appeal is from the order dated 29 November, 1971 of  the

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Allahabad High Court dismissing in limine the petition under Article  226  of  the Constitution.  In  that  petition  the appellant  Yograj Singh and others challenged the  aforesaid order  dated 14 July, 1971 suspending the President and  the committee   of   management  of   Jahangirabad   Cooperative Marketing Society. Two  questions fall for determination in the  writ  petition and  the appeal.  First, whether the Deputy Registrar  under the Cooperative 420 Societies Act, 1965 referred to as the Act could suspend the President  and the committee of management  of  Jahangirabad Cooperative Marketing Society.  Secondly, whether the Deputy Registrar could temporarily appoint an administrator. Counsel on behalf of the petitioner raised three contentions for impeaching the order of suspension.  First, it was  said that the order of suspension is void because it is made mala fide and exercised for the collateral purpose of withdrawing the petitioner from the committee of management to which he, was elected and in which he continued his office.  Secondly, it  was  said that the order of suspension  is  bad  because there  were no supersession proceedings as  contemplated  in section  35  of  the Act.  The Registrar  did  not  give  an opportunity  to  the Society and did not hear  the  Society. The Registrar did not obtain the opinion of the general body of  the  society  as to the  suspension  of  the  committee. Thirdly,  it  was said that the suspension order  could  not have  the  effect of appointment of an  administrator  under section 35 of the Act. In  the month of April 1969 there was an inspection  of  the Jahangirabad  Cooperative  Marketing  Society   (hereinafter referred  to  as the Society).  That  inspection  note  has, however, not been disclosed.  In the month of October,  1969 the petitioner was reelected as a Director of the management of  the society.  Again, in the month of October,  1969  the petitioner  was appointed as a delegate by the committee  of management  of  the Society to  the  Provincial  Cooperative Federation.    Subsequently,   the  general  body   of   the Provincial Cooperative Federation elected the petitioner  to the committee of management of the Federation.  In the month of  April 1970, the petitioner was also elected Chairman  of the Provincial Cooperative Federation. In the month of September 1979 at the instance and under the direction  of  the Deputy Registrar who had  been  a  former Secretary  of  the  Federation and of Shri  Yadav  the  then Minister   of   Cooperative  Society,  the   Uttar   Pradesh Government  nominated  10.  members and a  Chairman  of  the Federation.   The petitioner who was the then Chairman,  was however  omitted from the list of the U.P.  Government.   In the  month  of December, 1970 the new Ministry of  the  U.P. Government revoked the previous order of Government made  in the month of September, 1970. In the month of June, 1971 there was again a new Ministry in which  Shri Yadav again became the Minister  of  Cooperative Society.   The Government then nominated 10 members  in  the committee  of  management of the  Federation  under  section 34(1)  of the Act and appointed the Additional Registrar  of Cooperative Society as the President. 421 In the month of June, 1971 a lot was drawn to find out which of  the Directors of the Provincial  Cooperative  Federation were  to,  vacate the office in order to make room  for  the nominees  of  the Government.  The petitioner  survived  his office in the lot. The  petitioner  made an application for  amendment  of  the

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petition.   In that application for  amendment,  allegations were  made,  that  Shri Yadav and Tyagi  both  contrived  to suspend  the committee of management of the Federation.   It was  also alleged that the withdrawal of the  delegation  of the petitioner to the Provincial Cooperative Federation  was ante  dated.  The order of withdrawal’ was dated  15  July,, 1971.   The letter dated 15 July, 1971 is said to have  been sent  by  the administrator of the Society  withdrawing  the delegation   of  the  petitioner  to  the  U.P.   Provincial Cooperative, Federation.  The Petitioner denies that alleged fact.   In  the  prayer of the petition  for  amendment  the petitioner asked for quashing the order dated 15 July, 1971. In view of the fact that the petitioner did not allege facts toe  raise  any  plea of malafide acts on the  part  of  the respondents this.  Court did not allow any amendment of  the petition. The  power of suspension of the committee of management  is, to be found in section 35(2) of the Act. Section 35(2) of the Act is as follows               "Where  the  Registrar,  while  proceeding  to               take,  action  under  sub-section  (1)  is  of               opinion  that suspension, of the committee  of               management  during the period of’  proceedings               is  necessary in the interest of the  society,               he,  may suspend the committee  of  management               which  shall thereupon cease to function,  and               make such arrangement as be thinks proper  for               the  management of the affairs of the  society               till the proceedings are completed :               Provided  that if the committee of  management               so  suspended  is not superseded it  shall  be               reinstated and the period during which it  has               remained  suspended  shall count  towards  its               term". The  Registrar has power under section 35(1) of the Act  to, supersede  the committee of management.  The  circumstances. under  which  he  can exercise his powers are  when  in  the opinion  of  the Registrar the society makes default  or  is negligent in the performance of duties imposed on it by  the Act  or the rules or the bye-laws of the society or  commits any act which is prejudicial to the interest of the  society or  its members, or, is otherwise not functioning  properly, the Registrar after affording the committee of management  a reasonable  opportunity  of being heard  and  obtaining  the opinion  of  the general body of the society  in  a  general meet- 422 ing called for the purpose in the manner prescribed may,  by order in writing, supersede the committee of management. These provisions indicate the circumstances under which  the Registrar has power to supersede or suspend the committee of management and, to appoint an administrator.  Sect-ion 35(2) of  the  Act confers power on the Registrar to  suspend  the committee of management during the period of proceedings for supersession.   The Registrar has also power  under  section 35(2)  of the Act to make arrangement, as he thinks  proper for  the management of the society till the proceedings  are completed.  The power to suspend the committee of management during  the  period  of  proceedings  is  exercisable   when proceedings for supersession have commenced.  Section  35(1) of the Act shows that when the Registrar is of opinion  that the  committee of a cooperative society makes default or  is negligent  in the performance of duties or is otherwise  not functioning   properly  the  Registrar  may  supersede   the committee  of management and has to give an  opportunity  to

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the  society to be heard in that behalf.  The Registrar  has also  to  obtain  the opinion of the ,general  body  of  the society.   Therefore, the opinion of the Registrar is to  be followed  by  some  definite act  which  will  commence  the proceedings  for  supersession.  The provisions in  the  Act indicate that some definite step like the issue of, a notice must  be taken under the provisions of section 35(1) of  the Act with a view to show that proceedings for supersession of the committee are set in motion.  It  is  therefore  manifest that  power  exercisable  under section  3 5 (2) of the Act is confined to the  time  during the   period  of supersession  proceedings.   Unless   the proceedings have started as indicated earlier the  Registrar cannot  call in aid the power exercisable under  section  35 (2) of the Act. The second question which, has to be decided is whether, the Registrar  could  appoint an administrator  in  the  present case.   The  Registrar could not appoint  an  administrator. The reasons are these.  The proceedings for supersession  of the  committee  of  management  have  not  commenced.    The proceedings  can  commence only when the necessary  step  to commence  it  is  taken.   The  interim  suspension  of  the committee  of management under section 35(2) of the  Act  is when  in the opinion of the Registrar the suspension of  the committee of management during the period ,of proceedings is necessary in the interest of the society.  As no proceedings have  been set in motion in accordance with the  pro-visions of  the statute, the interim suspension of the committee  of management  is  bad.  An appointment  of  administrator  is specifically  dealt  with in sub-sections 3, 4, 5 and  6  of section 35 of the Act.  The appointment of administrator is normally   after  the  Supersession  of  the  committee   of management.  It is true that there is no specific  provision for an appointment of administrator during                             423 the  interim  period.  But section 35(2) of the  Act  states that  the Registrar may make such arrangement as  he  thinks proper for the management of the affairs of the society till the   proceedings   are  completed.    An   appointment   of administrator  during  the interim period is  therefore  not ruled out of the provisions of section 35(2) of the Act, but the prerequisite condition to the appointment of the interim administrator  has not been fulfilled in the  present  case, because no proceedings for the supersession of the committee of management of the society have commenced. The  administrator appointed by the Registrar  withdrew  the delegation of the petitioner appellant Veerpal Singh to  the Uttar Pradesh Provincial Cooperative Federation.  Under Rule 86  of the Uttar Pradesh Cooperative Societies Rules 1968  a person  who  is a delegate of a  cooperative  society  shall cease  to  be  such  delegate if  he  is  withdrawn  by  the committee, administrator or administrators appointed by  the Registrar under section 35 of the Act.  In the present  case the  appointment  of the administrator is bad  as  indicated earlier.  The act of the Registrar in withdrawing the  dele- gation of Veerpal Singh is also bad because of his infirmity to act is an administrator. For  these  reasons, the order dated 14 July,  1971  is  set aside  and quashed.  The petition succeeds.  The  appeal  is also allowed. Parties will pay and bear their own costs. G.C.                              Appeal allowed. 424

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