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Judgment
K. Chandru, J.—Heard both sides. In the first writ petition, the petitioner is a Co-operative Society registered under the Multi-State Co-
operative Societies Act, 1984 (for short ''1984 Act''). The challenge in this writ petition is to the enquiry ordered u/s 69 of the 1984 Act regarding
the working and the financial condition of the petitioner society. The Joint Registrar of Co-operative Societies, Tiruchirappalli Region was
appointed as the Enquiry Officer. Subsequently, by a further order dated 06.6.2002, the Co-operative Sub-Registrar was authorised to conduct
an enquiry. Once again the Co-operative Sub-Registrar informed the petitioner society to produce the books of accounts in terms of his summons
dated 14.6.2002. It is these proceedings, which are under challenge in the first writ petition.
Pending the writ petition, this Court granted an interim stay on condition that the petitioner produces the books of accounts in terms of the notice
dated 16.9.2002. A detailed counter affidavit dated ''''nil'''' has been filed on behalf of respondents 2 to 4.
In the second writ petition, viz., W.P. No. 45520 of 2002, the writ petition is filed by the two Directors of the Southern Railway Employees''
Co-operative and Credit Society Limited seeking for a direction to the Registrar, Central Co-operative Credit Society, New Delhi and the third
respondent CBI, New Delhi to conduct an inquiry into the functioning of the society on the basis of a complaint dated 05.2.2002 preferred by
them. That writ petition was admitted on 28.1.2003. It was also directed to be posted along with the earlier writ petition.
According to the Co-operative Society, after coming into force of the Multi-State Co-operative Societies Act, 2002 (Central Act 39 of 2002)
(for short ''2002 Act''), the power of the Registrar u/s 69 of the 1984 Act to initiate action and ordering an enquiry is inconsistent with the
provisions of the 2002 Act and such power has been virtually taken away by the 2002 Act. It was argued by the learned Senior Counsel for the
Co-operative Society that the 2002 Act, which received the assent of the President on 03.7.2002 by virtue of Section 126(4) saves such
appointments, orders and notification issued under the repealed Act, which are not inconsistent with the provisions of the 2002 Act. Under the
2002 Act, Section 78 which deals with enquiry referable to Section 69 of the 1984 Act had done away with the powers of the Central Registrar to
order an enquiry on his own motion. Under the present Act, only if one-third of the members of the Board of Directors or one-fifth of the total
members of the society makes a request, an enquiry can be ordered.
Since the Central Registrar had stayed the proceedings of the second and third respondents, directing an enquiry will no longer be valid in terms
of the 1984 Act. It is no doubt true that u/s 69 of the 1984 Act, the Central Registrar had a power to order a suo motu enquiry apart from similar
power provided u/s 78 of the 2002 Act. Though such a power had been taken away, it does not help the case of the petitioners. u/s 126, while the
1984 Act is repealed, it saves certain class of proceedings. In the present case, a reference to Section 126(4) is inappropriate and reference has to
be made only to Section 126(6) of the Act, which reads as follows:
''126(6). Save as otherwise provided in this Act, any legal proceeding pending in any Court or before the Central Registrar or any other authority
at the commencement of this Act shall be continued to be in that Court or before the Central Registrar or that authority as if this Act had not been
passed.
(Emphasis Added)
According to Mr. R. Muthukumarasamy, learned Senior Counsel, the proceeding initiated against the petitioner society cannot be said to be a
''''legal proceeding"". The said term can only mean proceedings such as appeal, revision, review etc. The learned Senior Counsel in this context
referred to Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and also the pronouncement of the Supreme Court
interpreting the term ''''proceedings"" found therein in the case relating to Maharashtra Tubes Ltd. Vs. State Industrial and Investment Corporation
of Maharashtra Ltd. and Another, . The learned counsel referred to paragraphs 11 and 12 of the said decision, which reads as follows:
''Para 11. : Mr Rao, however, invited our attention to the definition of the expression ''legal proceedings'' as found in Black''s Law Dictionary
(Fourth Edition) which reads as under:
Any proceedings in court of justice�by which property of debtor is seized and diverted from his general creditors�. This term includes all
proceedings authorised or sanctioned by law, and brought or instituted in a court of justice or legal tribunal, for the acquiring of a right or the
enforcement of a remedy.
Even this definition does not militate against the view we are inclined to take. In the first place action u/s 29 of the 1951 Act is to seize the property
of the defaulting industrial concern and to appropriate it for satisfying the debt. It gets diverted from the general body of creditors. The Corporation
is fully empowered to dispose it of to a third party and pass a clear marketable title. All this can be done by the Corporation without the need to go
to a court or tribunal or any other recovery agency. The Corporation is itself permitted to play that role. In substance the Corporation is playing the
same role. From the point of view of quality and character the remedy is the same as in execution or distress proceedings. Therefore, even if one
goes by the said meaning and understands the term ''proceedings'' in the light of the object and purpose of Section 22(1) of the 1985 Act, no
difficulty is experienced in taking the view that it must be widely construed.
Para 12.: Reliance was placed on decisions of two High Courts in support of the contentions urged on behalf of the appellant-company. We shall
deal with them briefly. In Testeels Ltd. v. Radhaben Ranchhodlal Charitable Trust the short point for decision was whether a winding up
proceeding already commenced against an industrial company ought to be dismissed or stayed during the pendency of the reference u/s 15 of the
1985 Act. The High Court held that the words ''be proceeded with further'' in Section 22 cannot be interpreted to mean that the proceedings
should be kept in abeyance but the various provisions of the enactment must be construed to put an end to both the contemplated and pending
winding up proceedings. The High Court held that if the winding up proceedings are kept pending it may be difficult to effectively administer the
schemes u/s 18 or grant financial assistance u/s 19 of the 1985 Act. The High Court held that the provision must be broadly construed keeping in
mind the scheme of the law so that the ultimate objective is achieved and not defeated. In the other case of Industrial Finance Corporation of India
and Another Vs. Maharashtra Steel Ltd. and Others, the view taken was that pending inquiry by the BIFR the exercise of power u/s 30 of the
1951 Act would not be proper in view of Section 22(1) of the 1985 Act. Section 30 empowers the Financial Corporation to require an industrial
concern by notice to discharge its liabilities before the agreed date. Even though no legal proceedings are contemplated under that provision, the
High Court did not permit such an action during the pendency of proceedings under the 1985 Act. These two cases reinforce the view that the
provision of Section 22(1) of the 1985 Act should receive a broad construction. These cases, therefore, support the view that the expression
''proceedings'' in Section 22(1) need not be limited to ''legal proceedings'' understood in the narrow sense notwithstanding the use of that
expression in the marginal note.
In the light of the above, he submits that in the 2002 Act, the term ''''proceedings"" was not used but the term ''''legal proceedings"" alone was
used. Therefore, it should have only a restricted meaning. But the learned counsel fails to see that the term ''''legal proceedings"" found in Section
126(6) of the 2002 Act does not confine only to legal proceedings pending before a Court but also includes proceedings before a Central
Registrar or any other authority at the commencement of this Act. Admittedly, an enquiry ordered by the Central Registrar u/s 69 of the 1984 Act
is a legal proceeding pending before the Central Registrar. Therefore, there was no necessity restrictively to read the term ''''legal proceedings
found in section 126(6). But, on the contrary, it should have the meaning assigned under the Act.
Though Section 126 is a repeal and saving clause provision found in 2002 Act (popularly referred to as the ''''sunset clause""), it has to be
construed strictly. In the present case, the saving clause expressly retains all the proceedings pending not only before a Court and the Central
Registrar, but even before any other authority.
u/s 3(c) of the 1984 Act, the term ''''Central Registrar"" means Central Registrar of the Co-operative Societies appointed u/s 4(1) of the Act and
includes any officer empowered to exercise power of the Central Registrar in terms of Section 4(2) of the said Act. Section 4 of the 1984 Act
reads as follows:
''4. Central Registrar. - (1) The Central Government may appoint a person to be the Central Registrar of Co-operative Societies and may appoint
such other persons as it may think fit to assist the Central Registrar.
(2) The Central Government may, by notification,direct that any power exercisable by the Central Registrar under this Act (other than the power of
registration of a multi-State co-operative society) shall in relation to such society, and such matters as may be specified in the notification be
exercisable also by any other officer of the Central Government or of a State Government as may be authorised by the Central Government
subject to such conditions as may be specified therein:
Provided that no officer of a State Government shall be empowered to exercise such power in relation to a national co-operative society;
Provided further that no officer of a State Government below the rank of the Registrar of Co-operative Societies shall be empowered to exercise
any power exercisable by the Central Registrar u/s 87.
(Emphasis Added)
Therefore, when a power is delegated to the State Government, by the notification of the Government of India, Ministry of Agriculture vide
their letter dated 06.9.1985 to the Joint Registrar of Co-operative Society, Tiruchy Region, no exception can be taken. Such an authority, namely,
the Joint Registrar of Co-operative Societies is virtually the Central Registrar and has all the powers except the power to register a Multi-State
Co-operative Society. The communications received from the office of the Central Registrar, cannot take away the power of the third respondent
from proceeding with a statutory enquiry initiated by the third respondent.
In the light of the same, the impugned notice issued by the third and fourth respondents does not suffer from any legal infirmity. They are
entitled to proceed with the enquiry contemplated under the Act and their enquiry does not get eclipsed by virtue of the repealing of the 1984 Act
and are saved by Section 126 of the 2002 Act. Hence, W.P. No. 36624 of 2002 will stand dismissed.
W.P. No. 45520 of 2002 is filed only for the purpose of facilitating the enquiry initiated by the respondents. Therefore, in the light of the order
passed in W.P. No. 36624 of 2002, there is no necessity to grant the relief sought for by the petitioner in W.P. No. 45520 of 2002. Hence, that
writ petition will also stand dismissed. However, there will be no order as to costs.