IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 27.11.2008 CORAM: THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.Nos.36624 and 45520 of 2002 Southern Railway Employees' Co-operative Credit Society Ltd. Tiruchirappalli, rep.by its Chief Executive, Tiruchirappalli-620 001. ... Petitioner in W.P. No.36624 of 2002 L.Arputharaj D.Anandam ...Petitioners in W.P. No.45520 of 2002 Vs 1. The Central Registrar/Joint Secretary to Government of India, Ministry of Agriculture, Department of Agriculture and Co-operation, Krishi Bhawan, New Delhi – 110 001. 2. The Registrar of Co-operative Societies, Tamil Nadu, Kilpauk, Chennai-600 010. 3. The Joint Registrar of Co-operative Societies, Tiruchirappalli Region, Gaja Malai, Tiruchirappalli-620 021. 4. The Co-operative Sub-Registrar Special Investigation Squad, Office of the Registrar of Co-operative Societies, Kilpauk, Chennai-600 010. ... Respondents in WP.36624 of 2002 1. The Registrar, Central Co-operative Credit Society, Krishi Bhawan, New Delhi. https://hcservices.ecourts.gov.in/hcservices/ 2. Union of India, rep.by Secretary to Government, Ministry of Agriculture & Co-operative, Krishi Bhawan, New Delhi. 3. The Director, CBI, New Delhi. 4. The Chairman, Southern Railway Employees' Co-operative Credit Society Limited, ''Rail Co-operative Mansion" Dindigul Road, Trichy – 620 001. ... Respondents in WP.45520 of 2002 PRAYER in WP.36624 of 2002:- Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of Certiorari calling for the proceedings of the second respondent made in Ref.RC.71654/2002/SIS, dated 06.6.2002 and the third respondent's proceedings dated 24.5.2000 in Ref.No.8169 of 1999 UB and consequential proceedings of the fourth respondent made in Ref.Nil dated 16.9.2002 and quash the said proceedings. PRAYER in WP.45520 of 2002:- Petition filed under Article 226 of the Constitution of India for the issuance of a Writ of mandamus directing the first respondent and or the third respondent to conduct enquiry into the functioning of S.Ry.Employees Co-operative Credit Society Limited, ''Rail Co-operative Mansion", Dindigul Road, Trichy – 620 001, on the basis of the complaint dated 05.4.2002 preferred by the petitioners and take suitable necessary action in this regard. WP.36624 of 2002: For petitioner : Mr.Muthukumarasamy, SC for Mr.Jenasenan For R1 : Mr.P.Wilson For R2 and R3 : Mrs.C.K.Vishnu Priya, AGP WP.45520 of 2002: For petitioner : Mr.S.J.Jegadev For R1 to R3 : No appearance For R4 : No appearance ***** https://hcservices.ecourts.gov.in/hcservices/ O R D E R 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 under Section 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. 2. 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. 3. 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. 4. 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 under Section 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 https://hcservices.ecourts.gov.in/hcservices/ of the total members of the society makes a request, an enquiry can be ordered. 5. 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 under Section 69 of the 1984 Act, the Central Registrar had a power to order a suo motu enquiry apart from similar power provided under Section 78 of the 2002 Act. Though such a power had been taken away, it does not help the case of the petitioners. Under Section 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) 6. 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 Limited -vs- State Industrial & Investment Corporation of Maharashtra Limited and another reported in (1993) 2 SCC 144. 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.” https://hcservices.ecourts.gov.in/hcservices/ Even this definition does not militate against the view we are inclined to take. In the first place action under Section 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 (AIR 1988 Guj 213) 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 under Section 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 under Section 18 or grant financial assistance under Section 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 v. Maharashtra Steel Ltd (AIR 1988 All 170) the view taken was that pending inquiry by the BIFR the exercise of power under Section 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 https://hcservices.ecourts.gov.in/hcservices/ 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." 7. 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 under Section 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. 8. 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. 9. Under Section 3(c) of the 1984 Act, the term ''Central Registrar" means Central Registrar of the Co-operative Societies appointed under Section 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 https://hcservices.ecourts.gov.in/hcservices/ 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 under section 87." (Emphasis Added) 10. 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. 11. 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. 12. 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. Js Sd/ Asst.Registrar /true copy/ Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ To 1. The Central Registrar/Joint Secretary to Government of India, Ministry of Agriculture, Department of Agriculture and Co-operation, Krishi Bhawan, New Delhi – 110 001. 2. The Registrar of Co-operative Societies, Tamil Nadu, Kilpauk, Chennai-600 010. 3. The Joint Registrar of Co-operative Societies, Tiruchirappalli Region, Gaja Malai, Tiruchirappalli-620 021. 4. The Co-operative Sub-Registrar Special Investigation Squad, Office of the Registrar of Co-operative Societies, Kilpauk, Chennai-600 010. 5. The Registrar, Central Co-operative Credit Society, Krishi Bhawan, New Delhi. 6. The Secretary to Government, Ministry of Agriculture & Co-operative, Krishi Bhawan, New Delhi. 7. The Director, CBI, New Delhi. 8. The Chairman, Southern Railway Employees' Co-operative Credit Society Limited, ''Rail Co-operative Mansion" Dindigul Road, Trichy – 620 001. + 2 ccs to Mr. A. Jenasenan, Advocate SR No. 66546, 66547 W.P.Nos.36624 and 45520 of 2002 TS(CO) SR/4.12.2008 https://hcservices.ecourts.gov.in/hcservices/