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Judgment
1.The petitioner challenges a show-cause notice issued under S. 72(l)(a) of the Tamil Nadu Co-operative Societies Act, 1961 (Tamil Nadu Act
53 of 1961) hereinafter referred to as the Act. As on date, admittedly no final order of supersession has been passed. Only a show-cause notice
has been issued. Mr. G. Devadoss, learned counsel appearing for the petitioner, admits that the petitioner has submitted his explanation in answer
to the above show-cause notice. Learned counsel would state that even before the issuance of the show-cause notice, there ought to be a
consultation with the Financing Bank as per S. 72(6) of the Act, and in support of this proposition, he relies on a pronouncement of a Bench of the
High Court of Orissa in Sarat Chandra Panda Vs. State of Orissa and Others, , where provisions similar to S. 72(6) of the Act were considered. It
is true that the said pronouncement supports the proposition advanced by the learned counsel for the petitioner. But, so far as this Court is
concerned, there is a pronouncement of Ramanujam, J., in K. Thangavelu, President and Member of the Committee of Perambalur Co-operative
Primary and Development Bank Vs. The Joint Registrar of Co-operative Societies and Others, . It is directly to the point and the learned Judge
has categorically opined that consultation is necessary only before final order of supersession is passed. While doing so, the learned Judge relied on
the observations of Ramaprasada Rao, J., as he then was, in The Committee of Management of the Padanthalu Moodu Village Co-operative
Agricultural Credit Society Vs. Joint Registrar of Co-operative Societies Tirunelveli and Others, .
The observations of Ramaprasada Rao. J., as he then was, in the decision referred to above run as follows: -
.... Obviously, such consultation begins after the Registrar is subjectively satisfied on objective materials placed before him that a prima facie case
has been made out for the purpose of superseding the co-operative society. It is only at that point of time that the necessity for consulting the
Financing Bank arises. This has been held to be a mandatory requirement by the highest Court of the land. Such a consultation, therefore, cannot
be avoided. Though consultation is not equivalent to concurrence. Yet, there must be material on record to show that, after the Registrar
entertained an opinion about the unsatisfactory working of a registered society, he should consult the financing bank to whom the society is
indebted before he finally passed an order of precession under S. 72 of the Act."". Page 461.
The contention that was put forth before Ramanujam. J. and the reasoning of the learned Judge for repelling the said contention are found in the
following passages in the judgment of the learned Judge. ....
... ... Mr. N. C. Raghavachari, the learned counsel for the petitioner, contends- that having regard to the language of S. 72(6) the first respondent
has to consult the financing bank before taking any action under S. 73(l) including the action of issuing the show cause notice, that by issuing the
show cause notice the first respondent had initiated the proceedings under S. 72(l) and that for such initiation of the proceedings. the consultation
with the financing bank is necessary.
But on a due consideration of the matter, I am inclined to think that, having regard to the object of the provision under S. 72(6) which requires the
consultation of the financing bank, such consultation is necessary before the final order is passed under S. 72(l). At the stage of the issue of the
above show cause notice no one knows as to what is going to happen ultimately. It is only when the first respondent makes up his mind after due
enquiry in relation to the irregularities referred to in the show cause notice, that the financing bank has to be consulted with regard to the action
proposed to be taken. If the consultation is before the issue of show cause notice and if the first respondent ultimately finds that the irregularities
referred to in the show cause notice have not been established, the consultation earlier obtained will become a mere formality and it would be a
sheer waste of time. The matter is also clear if we consider the question of prejudice that will be caused to the petitioner. The petitioner can
complain that the consultation has not been made only if the enquiry arising out of the show cause notice ultimately results in an order of super
session under S. 72(l). 1 am, therefore, of the view that consultation as contemplated by S. 72(6) is necessary before the final order is passed
under S. 72(l) and not before the issue of show-cause notice."" page 281
The bench of the Orissa High Court has drawn support for its view from a certain passage occurring in the judgment of the supreme Court in Jt.
Registrar of Co-operative Societies Madras and Others Vs. P.S. Rajagopal Naidu and Others, and in particular the following sentence, and more
so the underlined portion occurring in the judgment of the Supreme Court: -
There is no other requirement or condition precedent laid down by the Legislature which the Registrar must fulfill before he acts in the matter of
super session of the Committee .......... page 996.
S. 72(l)(a) of the Act reads as follows: -
If in the opinion of the Registrar, the committee of any registered society is not functioning properly or willfully disobeys or willfully fails to comply
with any lawful order or direction issued by the Registrar under this Act or the rules, he may, after giving the committee an opportunity of making
its representations by order in writing, dissolve the committee and appoint either a person (hereinafter referred to as the special officer) or a
committee of two or more persons (hereinafter referred to as the managing committee) to manage the affairs of the society for a specified period
not exceeding two years.
Section 72(6) reads as follows: -
Before taking any action under sub-section ''(1) in respect of any registered society, the Registrar shall consult the financing bank to which the
society is indebted.
Before the Supreme Court, in the decision referred to above, the present question did not arise for consideration even remotely. The two questions
considered by the Supreme Court, as set out in paragraph 5 of the judgment, were as follows: -
(i) Whether the Registrar before taking action u/s. 72 must have an audit made u/s. 64 and inquiry held u/s 65 and an inspection made u/s 66 of
the Act and must also given an opportunity for rectification of the defects which may come to light as a result of such audit inquiry or inspection?
(ii) What is the scope of interference by the High Court with the Order of a Registrar made u/s 72 of the Act?
In The Committee of Management of the Padanthalu Moodu Village Co-operative Agricultural Credit Society Vs. Joint Registrar of Co-
operative Societies Tirunelveli and Others, . the competency of supersession without consultation under S. 72(6) was put in issue. The facts, as
disclosed by the judgment, make out that the financing bank itself passed the resolution that the affairs of the concerned society were not
satisfactory and it made a request to the Registrar to dissolve the same. It was on this, further action under S. 72 was started and on the basis of
the resolution of the financing bank and without any more consultation with it, the order of super session was passed. In the above context,
Ramaprasada Rao J., as he then was, made the observations extracted above.
On my own appraisal of the provisions, I am also of the view that though the consultation under S. 72(6) must precede the actual order of
supersession, it is not necessary that there ought to have been a consultation before the issuance of the show cause notice. S. 72(6) speaks about
before taking any action under Sub-section (1)"". The only concrete action under sub-section (1) is that of super session. Action need not
necessarily be equated to the very initiation of the proceedings under S. 72(l)(a) by the issuance of the show cause notice. The affording of an
opportunity to make representation precedes the action of super session. But, that by itself is not the action of super session. I have no reason and
I have not been persuaded to take a view different from that of the two learned Judges of this Court. In this view, the writ petition fails and the
same is dismissed. There will be no order as to costs.
Petition dismissed.