Gujarat High Court
For Approval And Signature vs State Of Gujarat & on 30 November, 2015
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/16562/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16562 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.M.THAKER Sd/-
1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
KALOL NAGARIK SAHAKARI BANK LTD....Petitioner(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
Appearance:
MR BAIJU JOSHI, ADVOCATE for the Petitioner(s) No. 1
MS SHRUTI PATHAK AGP for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1 - 2
CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 30/11/2015
CAV JUDGMENT
The petitioner, a cooperative bank, has invoked Article 14 and Article 226 of the Constitution of India and taken out present petition. By present petition, the petitioner - bank has challenged the order dated 3.11.2014 passed by the District Registrar, Cooperative Page 1 HC-NIC Page 1 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT Department.
1.1 By the said order dated 3.11.2014, the respondent No.2 - District Registrar, has instructed the petitioner - bank to initiate and take appropriate steps / actions against its erstwhile Chairman, Vice-Chairman, Managing Director and General Manager in respect of the irregularities allegedly committed by them in respect of the items / matter mentioned in the said communication / order dated 3.11.2014.
2. From a glance at the said communication / order dated 3.11.2014 it emerges that the District Registrar prima facie found involvement of the erstwhile Chairman, Vice-Chairman, Managing Director and General Manager of the petitioner - bank in various irregularities including financial irregularities caused and committed during the tenure of the said erstwhile Chairman, Vice-Chairman, Managing Director and General Manager. The District Registrar having prima facie noticed the irregularities instructed the petitioner bank, vide said communication dated 3.11.2014 to initiate appropriate steps / actions against the said office bearers / employees in accordance with law and under applicable rules.
Page 2 HC-NIC Page 2 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT 2.1 Thus, actually the effect of the instruction is to inquire into the alleged irregularity and, if found necessary, then to initiate / take appropriate action against said - erstwhile office bearers / employees and that therefore, in effect, it would be the said persons who would be the actually affected persons. However, it is the petitioner - bank who, somehow, feels aggrieved by such instructions.
3. It is pertinent that from the submissions by learned advocate for the petitioner and from the contentions raised in the petition, it has emerged that the petitioner - bank is reluctant to follow, and comply, the instructions by District Registrar and to initiate steps / actions against its erstwhile Chairman, Vice- Chairman, Managing Director and General Manager in respect of the irregularities in the conduct and affairs of the petitioner - bank, which are noticed by the District Registrar.
3.1 Differently put, the reluctance of the petitioner - bank to initiate and take appropriate steps/ actions, as may be found appropriate and necessary, after proper inquiry / investigation, translates into a situation which gives out that the petitioner - bank is reluctant to even inquire into the matter/investigate the Page 3 HC-NIC Page 3 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT allegations and without even inquiring (so as to find out and ascertain correct factual position) in the subjects listed by the District Registrar in the said communication wants to avoid initiation of any steps / action against said persons and thereby it wants to shield and protect its erstwhile Chairman, Vice-Chairman, Managing Director and General Manager.
3.2 It is obvious that such reluctance on the part of the petitioner - bank amounts to protecting the said office bearers / employees of the petitioner - bank.
4. So as to ascertain the scope and object of the petition and to ascertain the real object and purpose of present petition and/or the consequence if the petition is entertained and relief is granted, it would be appropriate to take into account the factual backdrop mentioned by the petitioner in light of which it has preferred present petition.
5. It appears that somewhere in September - 2014, a complaint came to be filed by one of the candidates who was contesting the election for the Board of Directors. The candidate submitted a complaint to the respondent No.2 - District Registrar.
Page 4 HC-NIC Page 4 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT 5.1 In the complaint, the candidate narrated certain irregularities including financial irregularities, in the conduct and affairs of the petitioner - bank and in funding the project for digging pond at Kalol during the period between 2006-2007.
5.2 It further appears that upon receipt of the complaint, the District Registrar examined the matter and reached to a prima facie conclusion that a detailed and proper investigation / inquiry into the allegations raised by the complainant was necessary and justified so as to find out the truth and if any substance in the allegation is established, then, to take appropriate actions in accordance with law against the persons who are found guilty of such irregularities.
5.3 The respondent No.2 - District Registrar with the said object, addressed the communication dated 3.11.2014 to the petitioner - bank.
5.4 It appears that after the District Registrar received the complaint, he called for reply / explanation from the petitioner - bank by forwarding the said complaint to the petitioner - bank. The petitioner - bank appears to have Page 5 HC-NIC Page 5 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT submitted its reply / explanation vide communication dated 30.9.2014. Thereafter, the complainant submitted another representation dated 14.10.2014 to the respondent No.2 - District Registrar. The said report was in compliance with or in furtherance of, the complaint dated 12.9.2014.
5.5 In this background, the District Registrar addressed the above referred communication dated 3.11.2014 by which the petitioner feels aggrieved.
6. It is relevant to mention, at this stage, that the said persons (i.e. erstwhile Chairman, Vice-Chairman, Managing Director and General Manager) have not raised any grievance or objection against the instruction by the respondent No.2 - District Registrar or they have not initiated any proceedings against the decision by the respondent No.2 - District Registrar to get the matter investigated and / or against the communication dated 3.11.2014.
6.1 Thus, either the said persons are not aggrieved by the said direction and they do not have any objection against such instruction or initiation of inquiry or they are conducting proxy litigation for which the bank is incurring Page 6 HC-NIC Page 6 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT the cost.
6.2 Instead, it is the petitioner - bank who has initiated present proceedings.
6.3 It is the petitioner - bank who has, for such purpose, invoked Article 14 of the Constitution of India, and taken recourse under Article 226 of the Constitution of India by resorting to writ remedy against the communication by the respondent No.2 - District Registrar.
7. In response to the notice by the Court, the respondent No.2 - District Registrar has filed affidavit. The respondent No.2 - District Registrar has mentioned the background on account of which the communication dated 3.11.2014 came to be issued. The respondent No.2 - District Registrar has mentioned in the affidavit that:-
"8. It is submitted that one Dr. Atul K Patel has written an undated communication and which was submitted to the Office of the Commissioner of Cooperation and Registrar Cooperative society, Gujarat State and along with the said communication, the said person has annexed the communications dated 21.08.2014, 02.09.2014, 11.09.2014 and 12.09.2014, and also communication dated 14.10.2014 of Dr. A.K.Patel to Office of Deponent and stated in the said application that the Chairman and Manager and employees of the bank in collusion with each other, are involved in the scams of lakhs of rupees and also stated that in the annual general meeting of 2013, 2014, the accounts have been called upon by one Bardevbhai Patel but at that time inspite of giving the details of the accounts, irrelevant reply had been given and therefore, in the application, it has Page 7 HC-NIC Page 7 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT been stated that there are irregularities in digging/expanding the pond....
(emphasis supplied)
9. It is further submitted that Joint Registrar (Audit) Cooperative Society, Gujarat State, Gandhinagar, had issued a communication dated 08.10.2014 to the District Registrar Gandhinagar that instructing District Registrar Gandhinagar to verify whether the irregularities as avert in the application of one Atul Patel has been committed or not and if such irregularities have been committed then, after having the proof and evidence necessary action of initiating criminal proceedings are instructed.
10. It is respectfully submitted that after having instructions from the Joint Registrar Audit Gujarat Cooperative Society by communication dated 08.10.2014, the District Registrar Gandhinagar has issued a communication dated 17.10.2014 to the Chairman, Manager of the petitioner bank, directing him to submit a report within a period of 3 days along with supplying the copies of the communications submitted by Dr. Atul Patel. ...
12. It is submitted that in the said communication dated 29.10.2014, the petitioner has supplied documents. ...
13. It is submitted after pursuing the communication dated 29.10.2014 and documents supplied by the petitioner bank, the respondent authority has issued a communication dated 03.11.2014 to the petitioner bank stating that to initiate proper legal proceedings against the persons who are involved in the irregularity.
15. It is further submitted that the petitioner bank has also passed a resolution dated 26.04.2007 being resolution no.17/27 by which authorised Managing Director/Chairman and Vice Chairman and General Manager of the petitioner bank to conduct the work of digging of pond and to incur expenses for the same. .... Therefore, through the said resolution, the bank has already authorised some persons to incur expenses, and it has been found prima facie from the documents/evidence that some irregularities have been committed and therefore, such persons who are responsible for such irregularities, the direction was given to the Page 8 HC-NIC Page 8 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT petitioner bank to initiate legal proceedings against the said persons when the petitioner bank itself has specifically mentioned that no tender process has been undertaken and the payment has been made in cash and moreover, no completion certificate is on record from the competent authority to the effect that such work has ever been undertaken. Thus, from the above prima facie, it transpires that some financial irregularities have been committed.
16. It is humbly submitted that the respondent authority has no malafide intention and the impugned order is in connection with the documentary evidence supplied by the bank and when the petitioner bank in its communications has admitted that the irregularities have been committed and therefore, the petition is required to be dismissed with cost.
17. It is further submitted that as from the documentary evidence, it has been found that the irregularities have been committed and therefore, the direction was given to initiate proper proceedings as per law. It is also submitted that it is the case of the petitioner that digging of the pond was conducted in the year 2007 and the impugned directions have been issued in 2014 i.e. after a delay period of 5 years but to that extent, it is humbly submitted that there is no ban, no time limit prescribed and as no proceedings are initiated u/s. 86 and 93 and the only instruction which has been given was to take necessary action before the persons indulged in the irregularity and report the same to the District Registrar."
(emphasis supplied) 7.1 The respondent No.2 - District Registrar has referred to in his affidavit, the reply / explanation submitted by the petitioner - bank. The respondent No.2 - District Registrar has also referred to the report dated 29.10.2014 submitted by the petitioner - bank.
Page 9 HC-NIC Page 9 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT 7.2 It appears that after considering the report submitted by the petitioner - bank, the respondent No.2 - District Registrar noticed below mentioned seven aspects, which emerge from the said report dated 29.10.2014. The said aspects are :-
"1. That the bank has conducted the work of digging of pond and payment of Rs.10 lakhs have been paid in cash.
2. Ramnagar Gram Panchayat and Kalol Nagar Palika has not given consent in writing.
3. The expenses of the pond digging have been paid from the religious funds/donation but the sanction required u/s 70 of the Act is also not taken. No tenders have been invited, no details of measurement length, width and depth of pond is available with the record of the bank.
4. Ramnagar Gram Panchayat has stated that no record is available with the bank about sand which has been digged out from the pond.
5. The expenses of the work have been paid in cash.
6. It is not on the record that the pond digging work has been conducted by which contractor or by whom, payment has been made.
7. The payment has been made from the religious fund by the bank on 31.05.2007..."
7.3 The respondent No.2 - District Registrar also noticed below mentioned four irregularities viz.:-
"1. All the payments have been made in cash, though the guidelines of the Income Tax do not permit the petitioner bank to pay the same in cash.
2. There is no sanction from the Ramnagar Gram Panchayat and the Kalol Nagar Palika for digging of the pond.
3. No permission of the District Cooperative Union has been taken by the petitioner bank as per Section 70 of the Gujarat Cooperative Societies Act, 1961, which reads as under:-
a. of the Gujarat State Co-operative Union, Page 10 HC-NIC Page 10 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT if the society operates in more than one district, and b. of the District Co-operative Board, in any other case, the whole or part of such sum in contributing to any prescribed co- operative purpose, or to any charitable purpose within the meaning of Section 2 of the Charitable Endowments Act, 1890 (VI of 1890), or to any other public purpose.
4. It is submitted that no tenders have been invited neither the details of the contractors to whom the work was entrusted, neither the person to whom the payments were made, was available with the bank and therefore, prima facie, it seems that there are irregularities committed by the persons involved and that can be established from the documents and evidence supplied by the bank."
7.4 The respondent No.2 - District Registrar has clarified in his affidavit that having noticed the said aspects, it was considered appropriate and necessary to instruct the petitioner - bank to initiate appropriate steps / actions against the erstwhile office bearers / employees of the petitioner - bank and that therefore, the communication dated 3.11.2014 was issued.
7.5 The respondent No.2 - District Registrar has also mentioned and emphasized in his affidavit that the respondent authority has no malafide intention against the petitioner - bank or against its erstwhile office bears / employees of the petitioner - bank, however, since it is the duty of the office of the District Registrar to look into and supervise the conduct and affairs of the cooperative institutions including Page 11 HC-NIC Page 11 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT cooperative banks, it was considered appropriate to get the irregularities investigated and that therefore, the communication dated 3.11.2014 came to be issued.
8. The petitioner - bank has opposed the said details by filing rejoinder affidavit.
9. In this background, Mr. Joshi, learned advocate for the petitioner - bank, submitted that the impugned instructions by the respondent No.2 - District Registrar is illegal, arbitrary and without authority in law. He submitted that without conducting any inquiry, the respondent No.2 - District Registrar has directed the petitioner - bank to initiate actions against the erstwhile office bears and employees of the petitioner - bank. Learned advocate for the petitioner further submitted that there is no material or evidence to justify the directions issued by the respondent No.2 - District Registrar. He further submitted that the respondent No.2 - District Registrar has proceeded on presumptions and conjunctures and has ignored that after 2006-2007, the petitioner
- bank has undergone statutory audit and that therefore, there is no base or justification for such directions. He also submitted that without initiating or conducting any inquiry under Page 12 HC-NIC Page 12 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT Section 86 or under Section 93 of the Act, the respondent No.2 - District Registrar cannot issue directions for actions against the office bearers and employees of the cooperative society and that therefore also, the impugned communication is bad in law and unsustainable.
9.1 Learned AGP opposed the submissions by learned advocate for the petitioner. Learned AGP submitted that the petition is not maintainable and that the respondent No.2 - District Registrar has found prima facie material justifying and warranting initiation of appropriate steps against the erstwhile office bearers and employees of the petitioner - bank and that therefore, the respondent No.2 - District Registrar issued instructions which are impugned in the petition. According to learned AGP, in view of the reason and object behind the said instructions, the grievance and objection of the petitioner - bank is not justified and is not sustainable. Learned AGP also submitted that the instructions issued by the respondent No.2 vide communication dated 3.11.2014 does not adversely affect the petitioner - bank or its interest. Learned AGP requested that the petition may not be entertained and may be dismissed.
10. I have heard and considered the submissions Page 13 HC-NIC Page 13 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT by learned advocate for the petitioner and learned AGP for the respondent.
11. From the said communication, it also appears that after receiving the complaint, the respondent No.2 - District Registrar had called for reply / explanation from the petitioner - bank. The petitioner - bank had submitted its explanation and report.
11.1 The respondent No.2 - District Registrar appears to have considered the said explanation / report. The impugned communication dated 3.11.2014 is issued thereafter.
11.2 A glance at the communication dated 3.11.2014 issued by the respondent No.2 - District Registrar also brings out that the District Registrar has not proceeded merely on the basis of the complaint but before issuing said instruction, the registrar examined the complaint / allegations and also called for and considered the Bank's reply and he issued the said communication after taking into account the reply / explanation submitted by the petitioner - bank and did not act only on the complaint.
11.3 The items and the details or material mentioned in the communication dated 3.11.2014 Page 14 HC-NIC Page 14 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT are not drawn from any flight of imagination but they appear to have been gathered from the reply / report submitted by the petitioner - bank.
12. Meaning thereby, it cannot be said that the respondent No.2 - District Registrar has acted without application of mind or with undue haste or without satisfying himself about the requirement for proper investigation and inquiry into the matter raised pursuant to or in light of the complaint received by his office.
13. It is pertinent that the complaint received by the office of District Registrar raises allegations with regard to various irregularities, including financial irregularities, in the conduct of business and affairs of the petitioner - bank.
13.1 These aspects touch and affect the interest of hundred of members of the petitioner - bank as well as their trust and faith in the functioning and conduct of the petitioner - bank.
13.2 Therefore, the concern of the Registrar cannot be said to be misplaced or irrelevant or unwarranted or arbitrary.
Page 15 HC-NIC Page 15 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT
14. According to the provision under the Gujarat Cooperative Societies Act, 1961, the respondent No.2 - District Registrar is statutorily obliged to supervise the conduct of business and affairs of the cooperative society and to cause inspection, to cause audit and to take steps to ensure that the administration and management of the cooperative society is run in accordance with law and the requirement prescribed by the Act are complied and to ensure that interest of members of the society are not adversely affected and to take all necessary steps to stop any and all irregularities in the conduct of business and affairs of the cooperative societies.
15. When the complaint received by his office and the impugned communication are examined in light of the provision under the Act and in view of the duties of the District Registrar, then, it becomes clear that the action of the respondent No.2 - District Registrar cannot be said to be arbitrary or illegal or without authority of law.
16. Actually, a question which is not answered - or rather which is dodged or avoided - by learned advocate for the petitioner is that why the petitioner - bank feels shy and reluctant in inquiring or investigating into the alleged irregularities and / or as to why the petitioner Page 16 HC-NIC Page 16 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT
- bank is so eager and keen to shield and protect the erstwhile Chairman, Vice-Chairman, Managing Director and General Manager of the petitioner - bank against whom the respondent No.2 - District Registrar has asked the petitioner to make appropriate investigation / inquiry into the matter and take appropriate actions / steps in accordance with law, if found necessary and to submit report.
16.1 It is also interesting to note that the Bank has come out with this petition when the concerned person themselves have not initiated any action against such instruction by the respondent No.2 Registrar.
16.2 Moreover, the petitioner bank has failed to explain and establish the ground, reason and object for its objection despite the possibility that the inquiry would prove to be in Bank's interest and in the interest of its shareholders. More so when said and concerned persons themselves have not taken any action.
16.3 As mentioned earlier, the said persons themselves have not raised any objection with reference to or against the instructions issued by the respondent No.2 - District Registrar vide communication dated 3.11.2014.
Page 17 HC-NIC Page 17 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT 16.4 Despite this, it is the petitioner - bank who has taken out the petition and challenged the communication dated 3.11.2014.
17. The petition, therefore, appears to be a proxy litigation.
17.1 The petitioner - bank appears to be acting at the behest of the erstwhile Chairman, Vice- Chairman, Managing Director and General Manager and is actually and in effect and substance the bank is protecting the said office bearers and employees.
17.2 Not only this, but for the said and such purpose, the fund and money of the petitioner - bank (i.e. the amount which actually belongs to the members of the society) is being spent by the petitioner - bank.
17.3 The petitioner - bank is a front and face and erstwhile office bearers of the petitioner bank are hiding behind such front.
17.4 Differently put, for protecting its erstwhile Chairman, Vice-Chairman, Managing Director and General Manager against whom the respondent No.2 - District Registrar has called Page 18 HC-NIC Page 18 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT for proper inquiry and action or steps in accordance with law if found necessary after such inquiry the petitioner - bank is incurring expenditure out of the fund of the petitioner - bank / its members and the said erstwhile office bearers and employees of the petitioner - bank are indirectly and at the expenditure incurred by the Bank contesting the communication and instructions issued by the respondent No.2 - District Registrar and for protecting their interest the Bank is using money/funds of members.
18. If the instructions issued by the District Registrar are followed and complied, then, the real and actual affected party / persons would be the erstwhile Chairman, Vice-Chairman, Managing Director and General Manager. Besides this, any prejudice will not be caused to the Bank if the instructions are complied. Even the bank has failed to establish that prejudice will be caused to it if it complied the direction and it has also failed to establish how, if any, prejudice will be caused.
18.1 If any material and evidence against them comes out during the inquiry / investigation, then, they would be affected, but ultimately interest of the petitioner bank, more Page 19 HC-NIC Page 19 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT particularly of its members, will be protected.
19. In such circumstances, ordinarily, the petitioner - bank could not and should not have any objection in complying the directions issued by the respondent No.2 - District Registrar.
19.1 It is pertinent that all that the respondent No.2 - District Registrar has instructed is that the petitioner - bank should inquire into and investigate the matter in proper details and ascertain as to whether the said persons are responsible for alleged irregularities or not and if any legal and sustainable material and proof is found, then, appropriate actions may be taken in accordance with law against the responsible persons.
19.2 Thus, when the petitioner - bank is asked merely to act in accordance with law and take whatever steps are considered appropriate and necessary just in the fact of the case in accordance with law, then, there should not be any objection on the part of the petitioner - bank in following and complying such instructions by a statutory authority.
19.3 Instead, the petitioner has come out with present petition and prayed that the Page 20 HC-NIC Page 20 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT communication dated 3.11.2014 may be quashed.
20. The relief prayed for by the petitioner - bank will actually, and in effect and substance, help and protect the erstwhile office bearers and employees of the petitioner - bank by, and after making, proper inquiry and investigation and appropriate steps in accordance with law.
21. In present case, it is noticed that the District Registrar has issued the impugned instructions after examining the complaint and after calling for the explanation from the petitioner - bank and after examining the reply / material supplied by the petitioner - bank. The instructions issued by the District Registrar is issued in exercise of authority conferred on him, rather in process of performing his duty and obligation imposed by the Act.
21.1 It is pertinent that the respondent No.2 has not acted mechanically or arbitrarily while issuing the instruction - communication dated 3.11.2014. The respondent No.2 has also not acted merely on the complaint by a candidate or immediately on receiving the complaint. Before issuing the instruction - communication dated 3.11.2014, the respondent No.2 examined the complainant, called for the response and details Page 21 HC-NIC Page 21 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT and explanation from the petitioner bank and considered its reply. Actually, some details (which seem to have persuaded the Registrar to ask the petitioner to initiate inquiry) appear to have been gathered by the registrar from the said replies.
All these aspects establish that the statutory authority has acted after proper application of mind and has not acted mechanically and / or arbitrarily.
21.2 Besides this, the Registrar is statutory authority and is entrusted / conferred with supervisory authority and power so as to enable him to exercise overall supervision over the functions and operations of co-operative societies / banks and their conduct of affairs and business as well as accounts and audit.
Under the circumstances, the instructions by the respondent No.2 cannot be considered without authority of law.
21.3 Moreover, objection by the bank, who is otherwise required to comply instruction by statutory supervisory authority (unless legally unsustainable), and that too at the behest of the persons against whom inquiry is required/considered, is not only unpalatable but is neither justified nor sustainable inasmuch as Page 22 HC-NIC Page 22 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT the Bank is acting and trying to protect interest of such erstwhile office bearers and employee of the bank against whom the bank is asked to initiate appropriate steps / actions in accordance with law and for such purpose the Bank is incurring expenditure from the funds of the members of the Bank. This is neither just nor equitable. The petition and relief prayed for by the petitioner bank is, actually, aimed at - and in case will result into - protecting interest of said erstwhile officers / employees of the bank. In view of such facts and circumstances exercise of prerogative and discretionary jurisdiction would not be proper or justified.
22. The instruction or direction which is impugned in present petition is administrative in nature and is issued by statutory authority in exercise of administrative and supervisory authority conferred on the authority by the Act. When such action or direction or instruction are brought under challenge then they can be examined and tested and can be interfered with by the Court if they fail the test of reasonableness i.e. if they are found to be arbitrary and unjust or if they are found to be beyond the authority conferred by law. In present case, from the material on record and after examining the impugned instructions and affidavits and rival Page 23 HC-NIC Page 23 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT submissions and foregoing discussion, it has emerged that:-
[a] the impugned instructions are not issued mechanically merely on receipt of the complaint;
[b] the impugned instructions are issued after calling for petitioner's reply and after considering the allegations and the petitioner's reply and the material placed before the Registrar and after being satisfied about the justification and need for such instruction;
[c] the impugned instructions are not issued with undue haste or arbitrarily or without application of mind to relevant aspect; [d] the impugned instructions are not issued without authority of law;
[e] the impugned instructions are not illegal or unjust;
[f] the impugned instructions do not adversely affect the interest of the bank and if the impugned instructions are complied then the affected party would be concerned persons;
[g] the concerned persons have not initiated proceedings against the instructions; [h] this proceedings is proxy litigation and at the cost and expense of the funds of the Bank and its members and the petitioner is Page 24 HC-NIC Page 24 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT providing protective buffer to the concerned persons (who are erstwhile office bearers and managerial cadre employees of the Bank); [i] the Bank has failed to explain, establish and justify the ground/s, reason/s and object, if any, for its objection despite the fact that ultimately interest of the members will be served and protected; [j] the petitioner has failed to establish
(i) any legal injury if the instructions by statutory authority are complied, (ii) any adverse effect to its interest, i.e. how the instructions are adverse to the interest of the Bank and / or its members viz. account holders and/or (iii) how is it affected party;
[k] besides this, statutory alternative remedy is available to the petitioner. Having regard to the above mentioned features of this petition, the Court is of the view that there is no justification to exercise writ jurisdiction in respect of this petition.
23. In light of such facts and circumstances, the reluctance and protest of the petitioner bank to initiate proceedings and its objection against the instructions by the respondent No.2 - District Registrar, does not justify invocation of prerogative and discretionary jurisdiction of Page 25 HC-NIC Page 25 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT this Court.
23.1 As claimed by the respondent, alternative statutory remedy under Section 155 of the Act is available to the petitioner, if it, despite above mentioned aspects, does not want to comply and it desires to oppose the instruction. The petitioner may, in such circumstances, take recourse to statutory remedy. Therefore also, the petition does not deserve to be entertained.
24. When prerogative and discretionary writ jurisdiction of this Court to issue prerogative writ is urged for such purpose, then, in such circumstances and facts, this Court is neither convinced to nor inclined to, and the Court, would be justified also in declining, to exercise discretion and / or in declining the petitioner to permit him to invoke such prerogative and discretionary jurisdiction.
24.1 When the litigant invokes writ remedy available under Article 226 of the Constitution of India for shielding or protecting other persons who themselves do not come forward and do not take measures in accordance with law despite being affected party, then, the Court would be justified in declining to entertain such petition and refusing to exercise discretionary Page 26 HC-NIC Page 26 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT jurisdiction, more so when the instruction does not appear to be illegal or arbitrary or without authority of law. Besides, when the Court finds that the litigation is proxy litigation and the object or purpose of the litigation does not appear to be genuine and bonafide and when the petitioner has failed to establish how it would be prejudiced if it complied the directions by statutory authority, then, in such circumstances also the Court would be justified in refusing to exercise discretionary and prerogative jurisdiction.
24.2 Such blatant refusal, at the threshold, by the bank to comply the instructions issued by the District Registrar and that too for the purpose of protecting the erstwhile office bearers and employees is not only unpalatable and incomprehensible but is also unjustified and does not deserve to be entertained.
24.3 In view of the scheme and provisions of the Act, the petitioner - bank is obliged to comply the instructions and directions by the District Registrar unless the instructions or directions by the District Registrar is found to be ex-facie unjust or arbitrary or without authority in law and strong, rare and compelling circumstances are pleaded as well as established to justify the Page 27 HC-NIC Page 27 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT objection.
24.4 Besides this, in the facts of present case, if, after examining the material and alleged irregularities and the role allegedly played by the erstwhile office bearers and employees of the petitioner - bank, any incriminating material or proof is not found against the erstwhile office bearers and employees, then, the petitioner - bank may make appropriate and suitable report.
25. As mentioned earlier, for the reasons recorded above and in light of the foregoing discussion, the impugned instruction does not appear to be illegal or arbitrary or without authority in law. The petitioner has failed to establish that the instruction issued by the respondent No.2 is arbitrary or biased or illegal or without authority in law. Any ground for invoking Article 226 and Article 14 of Constitution of India - justifying invocation of Article 14 of the Constitution of India is not made out.
26. In this view of the matter, the Court is not inclined to entertain the petition and / or to issue directions as prayed for by the petitioner
- bank. The Court is not inclined to exercise prerogative and discretionary jurisdiction in the Page 28 HC-NIC Page 28 of 29 Created On Wed Dec 02 01:21:01 IST 2015 C/SCA/16562/2014 CAV JUDGMENT facts and circumstances of present case.
Therefore, the petition is not accepted and is hereby rejected. Interim relief stands vacated forthwith.
Mr.Joshi, learned counsel for the petitioner requested that interim relief granted vide order dated 14.11.2014 may be continued for some time to enable the petitioner to prefer appeal.
Mr.Jani, learned Additional Advocate General, submitted that as such there is no need to continue the interim relief, however, if considered fit, the Court may pass appropriate order.
Having regard to the said submission by learned counsel, it is clarified that interim relief granted earlier, will continue for further two weeks.
Sd/-
(K.M.THAKER, J.) kdc Page 29 HC-NIC Page 29 of 29 Created On Wed Dec 02 01:21:01 IST 2015