-^.s.;^^^"- .^ \'^ c SS THS MIGH COURT OF CHHATTISGARH AT BILASPUR WRIT PETiTJON N0. ^^-^C OF 2004 PEflTIONERS ^^ A-€/ .c%;K ?</^ X//' ^ w ^^—^ 1. Mohan Lal Gupta, soti of Late Shri Gopal Da§ Gupta, aged about 65 years, President-BhiIai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, District Durg. 2. Smt. Ramkumari Bandhe, wife of Shri Sundar Kumar, aged about 42 years, Vice President- Bhilai Na.grik Shahkari B^ink Maryadit, Bhilai Nagar, resident of 143-IF*, Risali Sector, Bhilal. 3. Preetam Lal Tandon, son of Shri B.R. Tatldon, Aged about 32 year§, Vice President, Bhilal Nagrik Shahkari Bank Maryadit, Bhilai Nagar, District Durg, resident of Sector-1, Bhilai. 4. Chandrabhan Patel, son of Shri B. Patel, aged about 54 years, Direetor- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resident of Plot No.544/3, Ashsish Nagar, Risali, Bhilai. 5. Jagdish Kumar Deshmukh, s6n of Late P. Ram, aged about 50 years, Director- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resideiit of Near Ravanbhata, Supela, Bhilai. 6. Jagannath Singh, §6n of Shri Lochan Singh Yadav, aged about 51 years, Director- Bhilai Nagrik Shahkari Bank Maryadtt, Bhilai Nagar resident of Near Durga Kifaria Stores, Adarsh Nagar, Camp-1, Bhilai. /'^' |F<?'' '-'" vs RESPaNDENTS ^.^f^ ^^.^•r|: V-^^'p (^^j^ •K--.,^ '^^i:t.^ 7. Ravishankar Singh, son of Shri Maneshwar Singh, aged about 39 years, Director- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resident of 74/34, Sectior- 4, Bhilai. 8. Subhash Soni, son of Shri Kuber Sorii, aged about 48 years, Director- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resident of Soni Bhawan, Bhilai. 9. Yunus Khan, son of Shri Yusuf Khan, aged about 40 years, Director- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resident of Farid Nagar, Koka, Bhilai. 10. Smt. R.K. Sahu, wife of Shri Ramkumar Sahu, aged about 47 years, Director- Bhilai Nagrik Shahkari Bank Maryadit, Bhilai Nagar, resident of MIGI/37, HUDCO, Bhilai. 1. State of Chhattisgarh, through the Secretary, Cooperative Departnient, D.K.S. Bhawan, Raipur (C.G.) 2. The Registrar, Copperative Societies, Krishak Nagar, Labhandi, Raipur (C.G.) 3. The Additional Regisfrar, Cooperative Societies, Krishak Nagar, Labhandi, Raipur (C.G.) 4. The Assistant Registrar, & Enquiry Officer, Cooperative Sociefies (Audit), Durg.,,pistrict Dtirg^(C.G.) 7-' WRIT PETITTON UTtfDER ARTICLE 227 & 226_QF_THE CONSTITUTION OF INDIA. ryl^l— MI^H COURT OF JUDICATURE i4T BILASPUR rCHH^mS6ARW Writ Petition No.3550 of 2004 Mohao. Lal Gupta & Others - Versus - Stat^ of Chhattis9Ctr*h & oth^rs P05T FOR ORDER ON^«NOVEMBER.2004 Sd/- L.C. Bhadoo Judge Z'^3- HIGH COURT OF JUDICATURE AT BILASPUR (CHHATTISGARH) Wiit PctitipnNo.3550 pf 2004 Mohaa Lal Gupta & Otliers -Vcrsus- State ofChhatdsgarh & Otiiers ^' Mr. P. DiwaJkar, Advocate: For the petitiouer. Mr. N.K, Agrawal, Dy. A.G,; For fhe State/respoudents 1 to 4. Mr, Anand Kiiraar Tiwari, Advocate: For tlie Inteivencr, ORDER (Passcd on'Z^ts' Novcmbcr. 2004) L.C. BHADOO. J. By this writ petition filed under Article 226/227 of the Constitiition of India tlie petitiouers, who arc Presidcnt, Vice-Prcsident and Directors of Bhllal Nagnk Shah.kail Baak Maryadit, Bhilai Nagai', Distiict Durg, have questioned the correctness and legality of the show cause notice dated 22.9.2004 (Aiinexure-P/3) issued by respondent No,3 Additional Rcgistrar, Co-operativc Societies, Raipur uuder Sectioa 53(2) read with Section 61 of the C.G. Co-operative Societies Act, 1960 whereby tlie petitioners have been asked to subm.it their x^ply withia. seveu daya about the irregularides coxam.itted by thein while dischargiag tlieir function ia thcir official capacity aiid why they should not be renioved from their posts aad in their place aii aufhority should not be appointed, Brief facts leaduig to filing of this wnt petition are that the election for the posts of President, Vice President & Du-cctors of Bhilai Nagnk Shalikari Bank Mary^dit, BhUai Nag^r, Dlstrict Diirg, was conducted and on 23.5.2000 the ^t-. :^" ^: 3. petitioners were elected for a period of five years. Vide ^how cause notice dated 22.9.2004 (Annexure-P/3) the petitioners have becn directed to 431e their reply wifh.in seven days about the nme rrregularities mentioned m the show cause notice. The allegations against the petitiouers are fhat loaii amount of Rs>,2033.23 Lac is outetanduig agamst tlie debtors, but no efforts have been Biade to recover tih.at aiaount and on account of that the baak has suffered a loss, Purtlier allegation is that on account of mismariagement duriiig tlie. period 2000-04 the baiik has suffercd a loss, There are UTegularities iii spending fhe aiaount by tlie Board of Dir'ectors, as tlie same was spent m. violation of thc gzudelmcs issucd by the Rescrve Bank of India. Fiirther iiTegularitles are m respect of tlie allotinent of rcsidential accommodations, payment of electricity biUs, saiiction of loao. to fhe Maiiagiag Director, Manager aiid Additional Manager of tlie Bank, as also there is HTegiUarity iii respect of the expenditure uxcxirred ia the laaiatenance of tlie vehicles, maintenance of log book of tlie vehicle. misuse oftlie ofiicial telephoue, misuse offtind ui respect of advertisenien.t aiid ia fhe inatter of disburseinent ofloaii, The case of tlie petitioners is that ihe allegations are baseless and have becn levcllcd agaisist thc petitioners based on flie enquiry report subniitted by fhe Assistaiit Registrar, Durg dated 23-8-2004. The Assistant Registrar conducted the enquny without giving aay opgoitunity to the petitioners to explaia tlieir conduct The inipiigned show cause notice has bccn issued with a pre-determuied miad to supersede the Board of Dtrectoi's. The impugned show cause notice is a farce, as tlie same is based on the J&ivolous aUegations aad to satisfy a particulai' poHtical group, It has been issued wifhout satisfyin.g tlie requirenient of law with nialaiide iiitention m. an arbitarazy maaner. The petitioners have not committed aiiy finaiicial ia'egularities aud they are makiag aU eflforts for recovery of flie loaa amount. The petitioners have not. been given opportunity to coinply wifh the provisions and ultmiately, ^s" ^ fhe petitioners have prayed for quashnient of the iinpugned show cause notice dated 22,9,2004 (Aniiexure-P/3), 4. Rctima. has becn filcd on bchalf of fhe State/respondcnts No. 1 to 4 in which it has been mentioned that tlie ioipugned show cause notice has been issued on the basis ofUie .material available on fhe record aiid after considering the irregularities coininitted by the petitioners, they have been asked to explaia their conduct with.ui seven days, sliow cause notlce is based on tlic legal premises, The petitiouers have ah-eady filed tiieir reply, opportunity of hearing was given to flieia and now ttie fuial order is to be passed, therefore, the petition of fhe petitioners beiag premature Uablc to bc disiiiissed. It is iacorrect to say that tlie iaipugned show causc notice has bcen issued witli a prcdetermnied miad to supercede tlie Board of Directors, before passing aiiy order as per provisious of fhe Act consent of flie Reserve Bank of India was asked for aad sajne has been received, It is further incntioned ia the retiira that vague aad bald allegations havc been leveled agaiast tlie respondents, Letter Annexiirc P-6 was wiitten by the Additional Registrar to Reserve Baak of India to protect the Bhilai Nagrik Sahkari Bank fromL its Ucence canccUation and bv this lettcr it was never intcnded to praise tlie Board of Directors, It is fiu'tlier mentioned tliat after consideriag the material on rccord, rcply aiid after affbrdiug tlie opportunity to the petitioners final order would be passed ia accordance wifh law, The provisions contamed ta Section 53(2) havc been coiaplied with, all fhe documents on the basis of which the auttioritvr hcis foiined the pilma-facie opinion to issue show cause notice has been supplied to tlie petitioners, Nothing has been concealed, which is clear froin the show cause notice (Anncxure P-3). No jurisdictional crror niuch less absolute want ofjiuisdiction has been poiated out by (he petitioners, The ground taken ia the petition that Additional Registrar will supercede the Boai'd of Directors without aay rhyzae or reason, is iiicoiTect, the order vyill be passed after 2-S^ -4- ^ r"~ cousidering fhe Bia.terial available on record and contentions^ objections & subxnission of the petitioners. Ulticnatcly, it has been praycd that the petition of tfae petitioners be disniissed being premature. 5. I .have heard Mr, P. Diwakai\ leanied counsel for tlie petitionex^, Mr, N.K. Agrawal, leamed Deputy Advocate General for tlie State/respoiidents 1 to 4 aad Mr, Anand Kiiaiar Tiwari, lcamed counsel for the Intervcuer. 6, The maia objection about the maintamabiUty of tlie writ petition I'aise.d by the respondents is that agam.st show cause notice writ petition is not iiiaintainable. The petitioners have been asked to show cause aad explain about flieir stand about the irregularities poiatcd out ta the iaipugned notice, they have already submitted flieii' reply and opportunity of hearmg has ateady been given to them, thercfore, fhey would be eutitled to file petition only if aay adverse order is passed agaiast thein. 7, Leamed counsel for the pctitioners argued that the respondents have already formed the opmion aad tliey have reached to tlie conclusion, which is evident from tlie uotice itself, fherefore, nofhitig is reiuaiaed to be decided, as such the petitioii is inaiataiiiable, He furtlier argued that tlie perraission of thc Rcservc Bank of India should have becn asked for only after receivmg the reply of the petitioners, it' consideriiig aU the material/reply tlie authority reaches to the conclusion that sonie in'egulanties have been coiamitted. But ia this case the view of the Reserve Baak of India was askcd for ia advance with a pre-detenniiicd conclusion; Uierefore, it was not a compUaiice ofprovisions of Section 53(1) of th.e Act He furtlier iirged tliat in tliis case coinpUaace of sub-section (2) of Section 53 has also not been made. As per sub-section (2) of Section 53 tlie respondents are required to servc on fhc pctltioncrs the list of tlie allegations, documents aad witoesses tliereof Counsel fartlier argued tliat allegatlons arc iU founded aiid conti'aiy to flie recoixl, JL2^ -y 8. The law ou the point as has been heM by fhe Hon?ble Apex Court ia tlie matter of The Special Director aiid aaother Vs<Mohd<Ohulaxa Ghouse aad az&other repQrted In JT 2004 (II'SC 206 that unless, the High Court is satisfied that tlw show cause notice was totally non est in ifze eye of law for absolute wani of jurisdiciion of tJie authority to even investigate into fact writ peiitions Qhould not be entertained for the mere asking and as a matter of roiitine, The zorit petitioner should invariably be direcled to respond to the show cause notice ar^d take all stands high lighied in ifze writ peiiiion. When ihe Coutipasses an inierim order it should be careful to see that the statuioty junctionaries spedally and spedficaUy constituted for the purpose are not denuded ofpowers andauthority to imtially dedde the matter and ensare that ultinwte reUef which may or nzay not be fifially granied in ifze writ petiiion is accorded io ihe wrii petitioner even ai the threQhold by the inierim protection granied. In thc matter of M/s Procter & Gamble Home Products Ltd. Vs. Commisslona' of Customs & Central Excise reoorted iu 2001 (11 MPJR 191 the M.P. High Court after analyzuig fhe law i-egarditig the inaintaiaabiHty of fhe writ petition against a show cause notice has hcld that wrii petition against the show cause noftce is maintainable only on the ground tluit it ivas issued by an authoriiy havii^g no jarisdiction and where the shoiv cause jzotice has been issued as per the requirerfient of the provisions then further scrutiny not possible in writ and shoiu cause notioe cannot be cjuashed. Based on tlie above legal position, tfwelook into the facts of tlie present case, tlie arguments advaaced by the leamed counsel for the petitionersare not sustahiable aiid tenable at law. Leained counsel for fhe petitioners has not raised a poiiit that the Additional Rcgistrar, Cooperative Societics is not aufh.oi'ized to issue the impugned show causc notice. Section 53 of tlie C,G, Cooperative Societies Act, 1960 envisages that sify in the opinion of tJze Registrar^ the cornrmitee of any sodeiy; (a) is negligeni in tJze performan.ce ^ ^T. 9. of the duiies imposed on ii by or under ihis Ad or bye-laws o/ the Qodety or by any lazufizl order pasQed by ihe RegiQtrar or is unwilling to perfonn such duties; or (b) comjnzfe a<^ zohich are prejudiaal to the interests of the society or its rnernbers; or (c) violates the provisiorzs of this Act or the rules made ihereunder or bye"laws of the society or any order passed by ihe Registrar, the Registrar may, by order in zuriting, remove the OQnunittee and appoint a person or persons 1o manage the affairs of the soaety for a speafied periocl not exoeeding two years in the first nzstance. Proviso to sub'section (1) of Seciion S3frtft}zer envisages ihat in case of a Co-operative Bank^ the order of super Qession shall not be pcussed without preznous consultation zuiih the Reserve Bank of India. Sub'section (2) of Section 53 envisages that no order under sub'section (1) shall be passed unless a list of allegations^ docwnenis cuid wiinesses in suppori of charges leveled againsi it has been provided and the oomTnittee has been .given a reasonable opportuniiy of shoimng cnuse agaiast the proposed order and representation, ifany, made by it, is oonsidered^ In fhis connection, if we look iiito the facts of the present case it is aa admitted position that before proceediag agaiiist the petitioner, the respondents have cousulted with tlie Reserve Baiik of India as per provisions, Thc Reserve Baiik of ludia has sent its consent on tlie show cause notice issued by fhe Additional Registi'ai' vide letter dated 26,10,2004, ia coinpUance of siib-section (1) of Section 53 of the Act as inaiiy as 09 irrcgularitics have becn poiated out by the Additional Registrar m ffae ofiicial functionmg of tlie petitioners aad tliey have been asked to show cause aad explaia about tliese in'egulaiities, Thereforc, on the facts of tlie case fhe Additioual Registrar was coxnpetent to issue show cause notice and saine has be.cn issucd under the enablmg powers of Section 53 of fbe Act, fherefore, it caanot be said that tlie unpugned show cause notice suffers fi'oin lack ofjixdsdiction/ QJ2^ 7 t t- 10. Now conaLiag to the poin.t raised by the leanied counsel for fhe petitioners that the allegations of irregularities levelled in thc show causc nouce are bascd on fhc unsustaiaable grounds. I am afrald whUe hearmg this writ petition; agamst a show cause notice this court is not required to go into fhe sustaio.abiUty of grounds on which fhe show cause notice has been issiied, For this purpose fhe petitioners are entitled to fUe their reply aiid m fheir rcply they can take all the staads which tliey have taken m tliis writ petition and they are wifhin theii' right to raise this plea fliat fh.e grounds which have been raentioned ia tiie impugned show cause notice are not siistainable on the facts of the case aiid the respondents after giviag opportunity of hearing to tlie petitioner aiid consideriiig ftie reply woiild pass the order m accordance wifh law. For this I am fortified ui ray opniion with the above two judgraents of tfae HonT^le Apex C.ourt and M.P, High Court ia which it has been held fhat whefher the shoEw cause notice. was founded on aay legal premises is jurisdictional issue which caii even be urged by the recipieuts of the notice aiid such issues caa also be adjudicated by fhe aufhority issuing the vexy notice initially, before tlxe aggrieved coxdd approach the Conrt. Looking to the allegations aicntioned ia fhe shcw case notice it caanot be said ftiat the notice is non est ta law, ia tlie eyes of law or tliere was no basis for issuance of such a notice. 11, Now coiniag to tlie poiat raised by leamed counsel for the pctitionei^ that laaguage of the last parugraph of thc impugned show cause notice shows ftiat respondent No,3 has issued the impugued notice with a pre-determiaed xniiid to supercede tlie petitioners' baiik, 12, I have perused fhe last paragraph of the iaipugned show caiisc noticc in which it has been inentioued fh.at on the grounds mentioned above you should show cause fhat on account of tlie irreguladties comiiiitted by tlie Boarcl of Du'ectors, why they should not be renioved for one yeai' aiid in. their place an authoi'ized officer should not be appointed. ^s^ 8 This uotice is stactly in confon3aily witli Uie provisions of sub-section (1) of Section 53 offhe Act, which says that the Registrar may, by order in writing, remove ihe cormnittee and appomt a person or persons to manage the affairs of the sodetyfor a spedfiecl period not exceeding two year-s in the first insiance, Therefore, by fh.is notice tiie petitioners have beeu asked to show cause agaiast the irregularities coiniaitted by thein aad to explaia that why they should not be superceded on the grouiid oftliose irregularities. As tliis notice has been issued 011 the legal premises aiid m conforoiity wifh the Section 53 of Uie Act, fherefore, it cannot be said tliat lookiag to laagiiage of tlie notice, respondent No.3 has issucd fh.is notice with a pre- determiaed mind to supercede the Board of Dii'ectors oftlie Bank. 13. The next poiiit raised by leamed counsel for fh.e petltioner is fhat respondent No,3 wifhout considering the m.aterial on record and bcforc fhe reccipt of fhie reply of pctitioncrs consiilted witli Resenre Bank of India, In my opmion tliis argi.inient is also not tenable for the reasons tliat proviso to Section 53 envisages fhat iii a case of Co-operative Baiik, the order of super session shaU not be passed wifhout previoiis consultation wifh fhe Reserve Baak of India. In this case respondent No.3 while sendmg the copy of show cause notice to tlie petitioners forwarded tlie saaie to Reser^e Baak of India along with audit report, iaspection report aad relevaat docuraents, thereforc, it caanot be said fhat withoiit supplyiag necessan^ niaterial to Rcserve Bank of India and witliout consideilag an.y material respondent No.3 moved for consultation with Reseive Baak of India, In fact, previous consultation wifh Reseive Bank of India is envisaged iii fhe above proviso aad respondent No.3 has coinpUed with the saaie, fherefore, it caanot be said that consultation is m contrary to tlie above provisions. 14. Now coiniag to the next pouit raised by learaed coiinsel for tlie petitioner that comLpUance of sub-section (2) of Section 53 of the Act has not been inade iti this case. In the first 2^>f Q i- 15. instaiice, as. has beeu nieiitioiied a.bove and a.& has» been held by the Hon?ble Apex Court. that poiat caa be urged by the petitioncrs in rcply to their show cause notice that necessary docume.nt as envisaged under szib-section (2) of Section 53 has uot been served on fhem in order to enable tliera to reply fhe s»how ca.use iiotice. In this petition fhe petitioners have not placed on record aiiy dociiinent uidicatiiig aiid shoivia.g that such an. objcction was raiscd by tliem before respondent No.3 aiid he has rejected theii' contention. Even otlierwise, a bare perusal of show cause uotice {Aiinexure P-3) shows that ia the list ofeuclosure of impugned iiotice it has been inentioned tliat copy ofaudit rcport, iaspection rcport and cnclosed aiinexzires m. all thc documents ninnmg m 91 pages were given to tlie petitioners, thercfore, prima-facie this argument is also not sustairiable, Even ofherwise, stiU if the petitioners feels that tlie provisions of Section 53 (2) has uot been coinpMed with, fh.cn they are at libcrty to raise thc sanie bcfore respondent No.3 m writing and also at tlie time of arguments, In vie^v of tiie foregoing paragraphs, I aua of tlie view at this stage tliat the petitioners have not been able to inake oiit a case for inten^ention by fhis Coiut under Article 226/ 227 of tlie Constitation of India by mvoking extraordmaiy jurisdiction. Therefore, this petition is liable to be dismissed at flie adimssion stage aad accordnigly, it is disraissed beiag not raaiataiaable. Sd/- L.C. Bhadoo Judge