Case: The Registrar, Co-Operative Societies  Vs. Dharam Chand &amp; Others

considered. So far as the proceedings under the notice are concerned, the only question was whether on the facts found by the investigating auditors the managing committee should as a whole be allowed to act as such and all that the Registrar in that connection did was to decide on the facts found by the investigating auditors that the managing committee should no longer be allowed to manage the affairs of the Bank. That is a very different matter from the dispute in the present proceedings namely, whether the particular members of the managing committee against whom the application under R. 18 has been made are responsible for making good the loss caused to the Bank by the embezzlement, the fact of which is not in dispute. In the present proceedings therefore the Registrar will have to decide the individual responsibility of the various members of the managing committee (including the respondent) in the matter of making good the loss caused to the Bank. We are therefore of opinion that the fact that the Registrar gave that notice for the purpose of the removal of the managing committee is no reason to hold that he would be biased in the investigation of individual responsibility of various members of the managing committee in this matter. We cannot therefore agree with the Judicial Commissioner that there can be any official bias in the Registrar on this ground in connection with the present dispute and that such bias disentitle him to act as a judge or arbitrator under R. 18.5. The next contention is that the Registrar being the administrative head of the Department is in control of all the Co-operative Societies in Ajmer, including the Bank. It is said that because of that administrative control which the Registrar exercises through his subordinates in the Department, he is interested to see that the blame is put on the managing committee and that his Department is freed from all blame. In particular our attention has been drawn to S. 17 which enjoys that the Registrar shall audit or cause to be audited by some person authorised by him the accounts of every registered society once at least in every year. It is said that under this provision the Registrar has been appointing Chartered Accountants to audit the accounts of the Bank and that nothing wrong was discovered in the annual audits till the paid manager Nandlal absconded and the defalcations came to light. We fail to appreciate how this general supervision of the Registrar over all Co-operative Societies can be said to amount to a bias in him so as to disentitle him to act as a judge or arbitrator under R. 18. It is not the respondents case that the Registrar is in any way responsible for the day to day working of the Bank. All that he is concerned with is to see that the accounts of the Bank are audited yearly and if necessary to make inspections of the Bank, if so authorised by the Act and the Rules. That, however does not mean that the Registrar is bound to shield the auditors or his subordinates who might have made so conduct the proceedings as to put the blame on the members of the managing committee. Even if some blame attaches to the auditors appointed by the Registrar or to his subordinates who might have inspected the Bank, their fault would be that they failed to detect the embezzlement till the paid manager absconded. That however, does not mean that the Registrar was at any time a party to the fraud which resulted in the embezzlement. Even the Judicial Commissioner recognises that the Registrar has no personal interest in the matter and that he would but for the bias found by the Judicial Commissioner have been a most proper person to decide the dispute. Therefore even if we hear in mind the fact that the Registrar is the administrative head of the Department, we see nothing inherent in the situation which shows any official bias whatsoever in him so far as adjudication of this dispute in concerned. We have no reason to suppose that if any of his subordinates or the auditors appointed by him are in any way found to be connected with the fraud he would not put the responsibility where it should lie. We are therefore of opinion that the Judicial Commissioner was wrong in the view that there was anything inherent in the situation which made the Registrar a biased person who could not act as a judge or an arbitrator in this case.6. It seems to us, therefore, that the learned Judicial Commissioner was in error in thinking that the Registrar was biased. For the reasons earlier mentioned, we do not think that any such blemish attached to the Registrar. That being so no question of his inability to act as a judge under the rule of natural justice that no man shall be judged in his own cause arises. The judgment of the learned Judicial Commissioner has to be set aside on this ground alone.7. We do not wish however to be understood as having made any pronouncement that if it has been proved that the Registrar was suffering from any bias, then the present would have been a fit case for the issue of a writ of prohibition as asked by the respondent. Before the writ could be issued a further question would have to be decided whether in view of the statute that is R. 18 of the Rules framed under S. 43 of the Act. there was any scope for applying the rule of natural justice on which the contesting respondent relied. A question of this kind was mentioned in G. Nageswara Rao v. State of Andhra Pradesh 1960-1 SCR 580 at p. 587: (AIR 1959 SC 1376 at p. 1379). In the view that we have taken it is unnecessary to go into that question and we do not do so.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]4. We are of opinion that there is no force in either of the contentions. Turning to the notice of February 26, 1955, we are of opinion that there can be no inference of bias against the Registrar as such because he gave that notice and afterwards ordered the removal of the managing committee. That notice was based on the report of the investigating auditors and was concerned with the collective responsibility of the managing committee in the discharge their duties. The proceedings under that notice have nothing in common with the proceedings in the present dispute which, as we have already said, are in the nature of misfeasance proceedings against certain members of the managing committee and in which their individual responsibility as members of the managing committee to make good the loss caused by the embezzlement falls to be considered. So far as the proceedings under the notice are concerned, the only question was whether on the facts found by the investigating auditors the managing committee should as a whole be allowed to act as such and all that the Registrar in that connection did was to decide on the facts found by the investigating auditors that the managing committee should no longer be allowed to manage the affairs of the Bank. That is a very different matter from the dispute in the present proceedings namely, whether the particular members of the managing committee against whom the application under R. 18 has been made are responsible for making good the loss caused to the Bank by the embezzlement, the fact of which is not in dispute. In the present proceedings therefore the Registrar will have to decide the individual responsibility of the various members of the managing committee (including the respondent) in the matter of making good the loss caused to the Bank. We are therefore of opinion that the fact that the Registrar gave that notice for the purpose of the removal of the managing committee is no reason to hold that he would be biased in the investigation of individual responsibility of various members of the managing committee in this matter. We cannot therefore agree with the Judicial Commissioner that there can be any official bias in the Registrar on this ground in connection with the present dispute and that such bias disentitle him to act as a judge or arbitrator under R.fail to appreciate how this general supervision of the Registrar over all Co-operative Societies can be said to amount to a bias in him so as to disentitle him to act as a judge or arbitrator under R. 18. It is not the respondents case that the Registrar is in any way responsible for the day to day working of the Bank. All that he is concerned with is to see that the accounts of the Bank are audited yearly and if necessary to make inspections of the Bank, if so authorised by the Act and the Rules. That, however does not mean that the Registrar is bound to shield the auditors or his subordinates who might have made so conduct the proceedings as to put the blame on the members of the managing committee. Even if some blame attaches to the auditors appointed by the Registrar or to his subordinates who might have inspected the Bank, their fault would be that they failed to detect the embezzlement till the paid manager absconded. That however, does not mean that the Registrar was at any time a party to the fraud which resulted in the embezzlement. Even the Judicial Commissioner recognises that the Registrar has no personal interest in the matter and that he would but for the bias found by the Judicial Commissioner have been a most proper person to decide the dispute. Therefore even if we hear in mind the fact that the Registrar is the administrative head of the Department, we see nothing inherent in the situation which shows any official bias whatsoever in him so far as adjudication of this dispute in concerned. We have no reason to suppose that if any of his subordinates or the auditors appointed by him are in any way found to be connected with the fraud he would not put the responsibility where it should lie. We are therefore of opinion that the Judicial Commissioner was wrong in the view that there was anything inherent in the situation which made the Registrar a biased person who could not act as a judge or an arbitrator in this case.6. It seems to us, therefore, that the learned Judicial Commissioner was in error in thinking that the Registrar was biased. For the reasons earlier mentioned, we do not think that any such blemish attached to the Registrar. That being so no question of his inability to act as a judge under the rule of natural justice that no man shall be judged in his own cause arises. The judgment of the learned Judicial Commissioner has to be set aside on this ground alone.7. We do not wish however to be understood as having made any pronouncement that if it has been proved that the Registrar was suffering from any bias, then the present would have been a fit case for the issue of a writ of prohibition as asked by the respondent. Before the writ could be issued a further question would have to be decided whether in view of the statute that is R. 18 of the Rules framed under S. 43 of the Act. there was any scope for applying the rule of natural justice on which the contesting respondent relied.