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| HC quashes suppression of directors of CC Bank | | | EARLY TIMES REPORT
Jammu, Aug 20: A Division Bench of Jammu & Kashmir High Court (Jammu Wing) comprising Justice JP Singh and Justice Mohd Yaqoob Mir today set-aside the judgment of Single Judge and also quashed the supersession of Board of Directors of Citizen Cooperative Bank Limited ordered by Registrar Cooperative Societies dated December 21, 2009.
In this 21 pages landmark judgment written by Justice JP Singh for the Division Bench allowed two LPAs filed by Board of Director CC Bank Ltd which were filed against the judgment of Writ Court, after hearing Advocates Abhinav Sharma and Pranav Kohli appearing for the Board of Directors whereas Advocates DK Khajuria and Surinder Singh who appeared for the respondents and gone through the show cause notice and supersession order of Board issued by Registrar Cooperative Societies and also referred order of J&K Special Tribunal and also the judgment of Writ Court, observed that The Show Cause Notice and the supersession Order did not indicate Registrar's Opinion as to the existence of any, one or the others of the four contingencies, on satisfaction whereof, supersession of a Committee or Board of Directors of a Co-operative Society may be contemplated. That apart, the Show Cause Notice and the Supersession Order demonstrates absence of independent application of mind by the Registrar to find out the existence or otherwise of the contingencies contemplated by Section 30 (1) of the Act justifying supersession of a Committee or the Board of Directors of a Co-operative Society. He appears to have acted on whatever was put up to him by the Deputy Registrar (Counsel). Rather than forming his own independent and conscious opinion, in terms of Section 30 of the Act, he appears to have acted on the advice of the Deputy Registrar (Counsel), who appears to have played major role in issuance of the Show Cause Notice and drafting of the Supersession Order. A Statutory Authority is required to discharge its duties as the Statute requires it so to do and in this view of the matter, enjoined by the Statute to form “Opinion” before directing supersession of a Committee or Board of Directors of a Co-operative Society, the Registrar was required to apply his independent mind for formation of opinion, as to the existence of requisite conditions justifying supersession of the Board.
DB while quashing the order and show cause notice issued by the Registrar Cooperative Society took serious note and said that Registrar has failed to discharge its Statutory duty as required by Section 30 of the Act. His order, therefore, cannot be sustained. Another aspect which needs to be noticed is that the allegations appearing against the Board of Directors, in the Show Cause Notice are vague, ambiguous and irrelevant.
The Division Bench further observed that Show Cause Notice attributes the activities of the erstwhile Board of Directors to the present Board of Directors merely because it included some of the members of the Board who had been the members of the erstwhile Board too, which was superseded way back in 2004. Reference has been made in the Show Cause Notice to the reports of the Committees which had been constituted by the Registrar to inquire into the constitution, working and financial conditions of the Citizens Co-operative Bank Limited, Jammu; but neither the reports of the inquiry Committee appear to have been supplied to the Bank nor does the Show Cause Notice refer to the findings of the inquiry Committees.
Reading of the Show Cause Notice as a whole, indicates it to be a blend of vague, ambiguous and irrelevant information about the working of the Board of Directors, without indicating as to how such information indicated existence of any of the contingencies, necessitating exercise of power under Section 30 of the Co-operative Societies Act for supersession of the Board of Directors.
Such a Show Cause Notice, which delineates only allegations, sans requisite opinion of the Registrar as contemplated by Section 30 cannot thus be sustained, in that, the Board of Directors sought to be superseded, cannot be expected to file their objections to the Show Cause Notice unless they were informed of the Registrar's tentative opinion as to how had its working, actions or conduct, been found, by the Registrar, attracting the provisions of Section 30 of the Act, justifying its supersession.
DB further observed that looking to the volley of the Complaints and acts attributed to the Board of Directors of its mis-management in the Show Cause Notice, cannot make out as to which set of allegations/factors had prevailed with the Registrar to direct issuance of the Show Cause Notice and consequent Supersession Order. In these circumstances, the Show Cause Notice could not be appropriately replied by a person of ordinary prudence, particularly when the Registrar had neither spelt out his mind nor expressed his opinion as to how the omissions and commissions in the working of the Board had attracted any one or the other(s) of the four requisites contemplated by Section 30 of the Act for supersession of the Board of Directors. The absence of requisites in the Show Cause Notice contemplated by Section 30 of the Act, had, therefore, deprived the Board of Directors of its right to file objections to its intended supersession. Formation of opinion being the sine-qua-non before initiation of action under Section 30 of the Act for supersession/removal of the Committee, the Registrar was, therefore, required to spell out his prima facie opinion in the Show Cause Notice and final opinion in the Supersession Order before directing supersession of the Board of Directors. Omission to form requisite opinion, which is a Statutory pre-requisite, for exercise of power of supersession, therefore renders the supersession of Board of Directors of the Citizens Co-operative Bank Limited, illegal.
Division Bench found that the Registrar had acted illegally in directing the supersession of the Board of Directors of the Citizens Co-operative Bank Limited. DB found that the Registrar's order was bad in law, having been issued without complying with the requirements of Section 30 (1) of the Act, DB do not find any necessity to deal with the other submissions advanced at the Bar, for these Appeals need to be disposed of in view of our finding on the issues. With these observations Division Bench allowed these appeal and setting aside the judgment of Writ Court dated July 8, 2010 and show cause notice dated December 11, 2009 and supersession of Board of Directors of Citizens Co-operative Bank Limited ordered vide Registrar's Order No. RCS/B&F/07 of 2009 dated December 21, 2009 shall stand quashed. JNF |
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