1998 DLT 75 778 . 1999 DRJ 48 154 . 1998 SCC ONLINE DEL 531 .

O.P Dhingra & Ors v. Registrar, Cooperative Societies & Ors.

Delhi High Court (Aug 7, 1998)

CASE NO.
C.W No. 4737/95

ADVOCATES
Mr. Sanjay Poddar, Advocate for respondent No. 1

Mr. M.L Munjal, Advocate for respondent No. 2

Mr. Anand Yadav, Advocate for Petitioner.

JUDGES
Devinder Gupta

K. Ramamoorthy, JJ.

SUMMARY

1. Full facts were not brought to the notice of Registrar.

2. Registrar this time examined the entire record and passed his order on 10.2.1995
Earlier P.N Mishra was appointed as the Administrator, but he expressed his
inability to function as such through another order dated 31.3.1.995, Lt. Col. O.V.S
Arya was appointed as the

3. An inquiry under Section 55 of the Act was ordered.

4. There was no ground to hold the present Managing Committee guilty of lapses and
there was no reason to supersede the Managing Committee.

5. The order under assailment deserves to be set aside on this solitary ground itself.

6. I hold with the learned counsel for the appellants that that tantamountcd to
reviewing the earlier decision and that the powers of review are not available with
the Registrar.

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7. The impugned action culminating in the passing of the order under challenge is
again bad in law and without jurisdiction.

8. We direct the Registrar, Cooperative Societies to proceed to make appointment of

an Election Officer for the conduct of elections in consonance with law and as per
the provisions contained in Rule 21 of the Cooperative Societies Rules and
Schedule-II thereof within a period of four months from today.

Devinder Gupta, J. — Petitioners are members of Panchdeep Cooperative Group

Housing Society Limited (hereinafter referred to as the “Society”), which is a Society
duly registered under Delhi Cooperative Societies Act, 1972 (hereinafter referred to as
the “Act”). The petitioners, in this petition instituted on 1.12.1995, have prayed for
quashing of the order dated 27.4.1995 (Annexure- O) passed by the Financial
Commissioner, Delhi and the order dated 25.8.1995 (Annexure- Q) dismissing
petitioners' review application.

The facts, as they emerge from the respective affidavits filed on record are that on
22.6.1994, show cause notice (Annexurc- I) was served upon the Society by the
Registrar, Cooperative Societies stating that the Society, which is required to perform
certain statutory obligations, namely, preparation of annual accounts for auditing,
holding of annual general body meetings and election of one third of the members of
the Managing Committee every year, failed to discharge such statutory obligations
and there were charges of various other irregularities against the running of the
Society. As such, the Managing Committee of the Society was called upon to show
cause within a period of 15 days from the date of issue of the notice as to why the
Society be not superseded under Section 32 of the Act.

The reply of the Managing Committee was considered by the Registrar, who also
heard the representative of the Managing Committee including O.P Puri, President,
and R.K Mudgil, Honorary Secretary. B.M Sethi, Assistant Registrar was heard on
behalf of the department. On 13.9.1994, the Registrar proceeded to pass order
(Annexure-K) discharging the notice , after coming to the conclusion that there was
no reason to supersede the Managing Committee. However, while discharging the
show cause notice dated 22.6.1994, he observed that Joint Registrar, Cooperative
Societies will continue pursuing vigourously the action already initiated under
Sections 33 and 82(5) of the Act and will also initiate action for early conduct of the
elections, which are overdue.

Almost within a period of one month of the passing of the aforementioned order

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(Annexure K), the Society was served with another show cause notice dated
20.10.1984 (Annexure-L) calling upon the Managing Committee to show cause why it
should not be superseded under Section 32 of the Act. To this show cause notice ,
reply was filed on 28.11.1994 by the Managing Committee raising numerous
objections that another show cause notice on similar grounds ought not to have been
issued especially when the first notice had already been discharged and that the
second show cause notice has been issued mala fide at the behest and under pressure
from the Minister of Development and Cooperation. On 10.2.1995, the Registrar
proceeded to pass the order (Annexure-M) superseding the Managing Committee of
the Society in exercise of his power under Section 32(1)(b) of the Act and appointing
one P.N Mishra as the Administrator of the Society. Feeling aggrieved, the Society
preferred a statutory appeal (Annexure-N) before the Financial Commissioner under
Section 76 of the Act, who after hearing arguments in the appeal and on going
through the entire record passed his order on 27.4.1995 (Annexure- O) allowed the
appeal and setting aside the order of the Registrar. The petitioners claiming
themselves to be the bona fide members of the Society, filed review petition
(Annexure- P) against the order of the Financial Commission. This review petition
was dismissed by the Financial Commissioner through his order dated 25.8.1995
(Annexure-O) holding that the same is not maintainable. This writ petition has been
filed by some of the members of the Society questioning the legality and validity of
the order dated 27.4.1995 (Annexure-O) on a number of grounds.

It is alleged that from the year 1987 till date, three elections were held whereafter no
elections could be held because of the conduct of R.K Mudgal, O.P Puri and M.P
Sharma Records were not handed over for which reason fresh elections could not be
held. Records have been forged. There were various complaints on the basis of which
show cause notice was issued. O.P Puri and R.K Mudgal were able to mislead and
misguide the Registrar. Therefore, full facts were not brought to the notice of
Registrar. Show cause notice was also discharged. As members were suffering, they
again approached the Registrar, who was apprised of the facts and for that reason,
fresh show cause notice was served. Registrar this time examined the entire record and
passed his order on 10.2.1995 Earlier P.N Mishra was appointed as the
Administrator, but he expressed his inability to function as such, therefore, through
another order dated 31.3.1.995, Lt. Col. O.V.S Arya was appointed as the
Administrator. In appeal also, R.K Mudgal misguided the Financial Commissioner,
which was the main cause in the Financial Commissioner passing the impugned order
dated 27.4.1995 One of the grounds stated in the petition is that the Financial

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Commissioner failed to appreciate an important aspect that the term of the Executive
Committee elected in 1991 had already expired in 1992 and in view of his orders
passed, the same Managing Committee was continuing to hold the office. The Man
aging Committee was not cooperating in holding of fresh elections though the
Election Officer had been appointed for the purpose. The main object of O.P Puri and
R.K Mudgal was to continue managing the affairs of the Society for their personal
gains.

Respondent No. 1 in its reply filed on the affidavit of J.S Jolly, Assistant Registrar
stating that the last election of the Managing Committee was held on 27.10.1991 No
further elections were held by the erstwhile Managing Committee. Therefore, P.P
Sikri was appointed as the Election Officer on 9.2.1993 He could not hold elections as
the Managing Committee failed to furnish requisite records. Again S.C.S Bisht was
appointed as the Election Officer on 8.2.1994 to conduct elections. As list of the
members was not supplied alongwith the requisite records, he could not hold elections
of the Society. It is further stated that the erstwhile Managing Committee had been
taking shelter of non availability of the records with them. Therefore, an inquiry
under Section 55 of the Act was ordered. The Inquiry Officer also expressed his
inability to conduct the inquiry in view of the acts of the Managing Committee. On
receipt of the request of the Inquiry Officer, complaints under Sections 33(1) and
85(2) of the Act against the Ex- Managing Committee elected in 1989, were filed
before the competent authority, but the same did not yield any results so far. As such,
there was no option left except to issue show cause notice under Section 32.

Respondents Nos. 2 and 3 have filed their separate reply denying petitioners'
allegations and supporting the impugned order stating that the same was rightly
passed by the Financial Commissioner withdrawing the earlier notice .

During the course of arguments, learned counsel for the petitioner pointed out that
the term of the Managing Committee elected in 1991 expired on 27.10:1992. Grounds
on which Financial Commissioner passed the impugned order on 27.4.1995 were
extraneous. The second show cause notice was not on the same ground on which
earlier show cause notice was issued and the effect of the impugned order would be
that no elections to the Managing Committee of the Society can be held because of
the conduct of respondents Nos. 2 and 3.

The first show cause notice which was served upon the Society was on the following
grounds:—

“And whereas no information about holding of election has been received after

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27.10.1991 and thereafter the society did not hold any election.

And whereas after the failure of the society to hold election on its own, an Election
Officer was appointed by this office vide order No. 98-99 dated 8.2.94 But the society
failed to produce the required documents for conducting the elections and as such the
same could not be conducted.

And whereas the society did not get it's accounts audited after 1989 on the ground
that the record of the society has not been handed over to the present Managing
Committee by the previous Managing Committee.

And whereas the society is charging premium from members enrolled since 8.6.88

And whereas there are charges of various other irregularities against the Managing
Committee of the society viz. withdrawing large sums from the accounts of the
members whose names have not been cleared by this office, submission of wrong
affidavit by the present Secretary and selling of flats on premium etc.”

The Registrar in his order dated 13.9.1994 clearly opined for the reasons stated
therein that the present Managing Committee could not be blamed for not
conducting the elections and not having the records audited. The allegation of
charging premium from the members enrolled since 8th June, 1988 also does not hold
good against the present Managing Committee and the inquiry report dated 10.5.1994
did not mention any alleged irregularity purported to have been committed by the
Managing Committee. Thus, there was no ground to hold the present Managing
Committee guilty of lapses and, therefore, there was no reason to supersede the
Managing Committee.

After the second show cause notice , the Financial Commissioner in the impugned
order while setting aside the order, held:—

“I have given my careful consideration to the points raised on behalf of the

appellants, which practically remained unrebutted by the departmental representative.
I find that, on the face of it, the impugned order has been passed without application
of mind and that it is totally a non-speaking order. No grounds/reasons, except the
allegations/ charges contained in the show cause notice , have been spelt out in the
impugned order by the learned Registrar as to why the Managing Committee has
been removed. The order under assailment, therefore, deserves to be set aside on this
solitary ground itself. It is also noteworthy, that undenial the earlier show cause notice
on identical facts had been discharged by the previous Registrar after consideration
of the reply furnished on behalf of the Society. There was, therefore, no reason again

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for issuing the second identical show cause notice . I, therefore, hold with the learned
counsel for the appellants that that certainly tantamountcd to reviewing the earlier
decision and that the powers of review are not available with the Registrar. The
impugned action culminating in the passing of the order under challenge is, therefore,
again bad in law and without jurisdiction. The other irregularity such as the fixation
of the date of hearing before the date of furnishing the reply to the show cause notice
is apparent on the face of it.

To conclude, judged from all the angles, the impugned order cannot be sustained.
That being so, the appeal is allowed and the impugned order of superseding the
Managing Committee of the appellant-society is set aside.” (emphasis supplied)

In view of what the Financial Commissioner observed coupled with the reasonings,
which were recorded by the Registrar in his earlier order and the note which is
available on the original file of Registrar which is at p-102 (which was made available
to us during the course of hearing), are sufficient enough to dismiss the petition as we
do not find any ground to interfere with a lawful order passed by an authority
allowing the appeal of the Society and thereby setting aside the order of the Registrar.
Reading of the two show cause notices and the note which is at p-102 of the file of
Registrar, will lead to no other conclusion than what the Financial Commissioner
observed in the aforequoted portion of the order that there was no reason again for
issuing second identical show cause notice and that the second show cause , notice was
nothing else, but reviewing the earlier decision by issuing Iron show cause notice for
which Registrar was not competent.

We find no ground to interfere with the impugned orders. We are of the view that
direction still can be issued in this petition for holding fresh elections for which none
of the parties had any objection. Accordingly, we direct the Registrar, Cooperative
Societies to proceed to make appointment of an Election Officer for the conduct of
elections in consonance with law and as per the provisions contained in Rule 21 of the
Cooperative Societies Rules and Schedule- II thereof within a period of four months
from today. The Election Officer will proceed to complete the entire election process
within a period of six months from the dae of his appointment. Respondents Nos. 2
and 3 will hand over, whatever record is available with them, to the Registrar,
Cooperative Societies or his nominee against receipt, within a period of four weeks
from date of passing of this order. On receipt of the said record, which is handed over
by respondents Nos. 2 and 3. in case Registrar or his nominee or the Election Officer
will feel that record is insufficient for the conduct and holding of the elections,

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Registrar will proceed to pass the appropriate orders for preparation of fresh records
in accordance with law. Needless to add that for any reason whatsoever, election
process when started, will not be slopped merely for this reason that the record is not
available or has not been handed over by the respondents. It is further clarified that
the Registrar will be competent separately to take appropriate action in accordance
with law against the defaulting parties for dereliction of their statutory duties under
the provisions of the Act. Mere rejection of petitioners' prayer to quash the impugned
order will nol come in the way of the Registrar in taking appropriate action in
accordance with law against the defaulting persons against whom there might be any
complaint of default in dereliction of their statutory duties.

This writ petition stands disposed of.

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