Karnataka High Court
A.S. Kupparaju vs General Secretary, Raju Kshatriya ... on 27 July, 1990
Equivalent citations: ILR1990KAR3721, 1990(2)KARLJ403
Author: B.P. Singh
Bench: B.P. Singh
ORDER Chandrakantaraj Urs, J.
1. This Writ Petition has come before us on account of the Order of Reference dated June 1, 1988 made by a learned single Judge of this Court. The learned single Judge was of the view that the decision of this Court rendered by a learned single Judge In MAHILA SEVA SAMAJ AND ANR. v. REGISTRAR OF SOCIETIES AND ORS.,1980(1) KLJ 327 required re-consideration. The learned single Judge in the order of reference has given expression to his doubts about the correctness of the aforementioned decision in the case of Mahila Seva Samaj. He has expressed the view that if the requisite majority of the Members of the Society requisitioned an enquiry under Section 25 of the Karnataka Societies Registration Act 1961, (hereinafter referred to as the Act), the Registrar was bound to hold the enquiry and if the requisition for enquiry was less than the prescribed number of members or by a third person, the Registrar could yet hold an enquiry as the relevant Section conferred power on him to initiate an enquiry into the affairs of the Society if it was mismanaged even on his own motion from information gathered from whatever source. It is in this back ground, we have to decide the questions raised in this Writ Petition.
2. The facts leading to this Writ Petition may be stated briefly and they are as follows:
3. The petitioner, among others, founded 'lsri Andhra Kshatriya Maha Samooham' and got the same registered under the Mysore Societies Registration Act, 1904. The petitioner was also the founder Member of the first respondent 'Raju Kshatriya Welfare Association'. The petitioner has alleged, out of his personal funds, he purchased a vacant site in the name of Society by a duly registered Deed of Sale dated 7-3-1956. He has further alleged that he constructed a reading room and two shops on the said site. In course of time, the activities of the Society waned since members of the 'Raju Kshatriya Community' did not evince any interest in the Society and the membership also declined resulting in lack of funds. No useful activity was carried on by the said Society. In such circumstances, in the year 1972, the General Body of the Members of the Society, it is alleged, requested the petitioner and his two brothers to construct a Kalyana Mantap on the said site out of their own funds and decided to create a Trust of the site and building to be constructed thereon. On account of the fact that the entire cost of construction of the Kalyana Mantap was to be met by the petitioner herein along with his two brothers, it was resolved that the Trust should be named after his mother and father. Pursuant to the said Resolution of the General Body in 1972, construction was commenced and a Kalyana Mantap was built on the site of the Society. By yet another resolution dated 20-12-1974, the petitioner was authorised to execute a Deed of Trust on behalf of the Society and a Trust Deed dated 16th of January 1975 in respect of vacant site Came into being. True copy of the Trust Deed has been produced as Annexure-A to the petition. Since the Trust was now in charge of the building constructed thereon, the Society was dissolved in the year 1975. The petitioner on 24th September, 1986, received a notice from the second respondent - Special Deputy Commissioner for Detection and Under-valuation of Stamps, Sriramapuram, Bangalore, calling upon the petitioner to appear before him on 1st October, 1986 at 3 p.m. as he had been directed to hold an enquiry into the working of the Society. In response to the notice, the petitioner appeared before the second respondent and learnt that the proceedings of enquiry had been commenced at the instance of the first respondent 'Raju Kshatriya Welfare Association', which Association had nothing to do with the Society which had been formed earlier and which had since been dissolved in 1975, The petitioner obtained from the second respondent - Special Deputy Commissioner, a copy of the petition submitted by the first respondent to the third respondent -Registrar of Societies in Karnataka, Bangalore City. A true copy of the said petition is enclosed as Annexure-C to the petition, white the notice* issued by the Special Deputy Commissioner - second respondent, is produced as Annexure-9. The order made by the third respondent which is dated 31-7-1986 directing the enquiry, is produced as Annexure-D to the petition.
4. Before the Enquiring Authority - second respondent, the petitioner inter alia contended that the enquiry ordered was without jurisdiction and clearly, illegal and contrary to Section 25 of the Act (which Act had repealed the Mysore Act of 1904). The objections filed in that behalf is produced as Annexure-E to the petition.
5. It is alleged by the petitioner that the second respondent agreed to decide the question of the validity of the order made by the third respondent as a preliminary issue and adjourned the inquiry for that purpose as evidenced by Annexure-F to the petition. However, in the meanwhile, the petitioner had filed Writ Petition No. 3407 of 1987 questioning the validity of the order passed by the third respondent directing enquiry on the ground of want of jurisdiction. Though emergent notice was ordered, petition did not come up for disposal. It Is further alleged by the petitioner that the second respondent did not pass any order on 25-3-1987 and informed the Counsel for petitioner that he would not pass an order till the Writ Petition in the High Court was disposed of. However, in the first week of February, 1988 the petitioner was surprised to receive a copy of the report dated 30th January, 1988 submitted by the second respondent to the 3rd respondent which is to be found at Annexure-G. The said report has recorded findings against the Management of Isri Andhra Kshatri Maha Samooham, touching upon the management of the affairs resulting in mismanagement, abuse of funds and abuse of office by the petitioner. Aggrieved by the same, the petitioner has approached this Court under Article 226 of the Constitution seeking the following reliefs:
"(a) a Writ in the nature of certiorari quashing the report dated 30th January, 1988 passed in No. DVS IV/24/87-88 by the 2nd respondent produced at Annexure-G;
(b) forbid respondent No. 3 to act upon the said report;
inter alia on the ground of total want of jurisdiction to call for the report and to submit the report impugned as at Annexure-U and that Annexure-D being an order contrary to the express mandate of Section 25 of the Act, 3rd respondent could not act upon a report which was obtained by unlawful exercise of the power vested in the 3rd respondent - Registrar of Societies in Karnataka.
6. Mr, S.G. Sundaraswamy, learned Counsel for the petitioner, drew our attention to the Ruling of this Court in Manila Seva Samaj's case supra and contended that the 3rd respondent could not have acted upon the representation of the 1st respondent which was not a Member of the Isri Andhra Kshatria Maha Samooham ('Samooham' for short) muchless representing either the majority of the members of the Governing Body of the Samooham or one third of the Members of the Samooham.
7. It is necessary, in order to appreciate these contentions advanced on behalf of the petitioner to examine the correctness of the decision in Mahila Seva Samai's case in respect of Section 25 of the Act. Section 25 of the Act is as follows:
"25. Enquiry by the Registrar, etc. (1) The Registrar may on his own motion and shall on the application of the majority of the members of the governing body or of not less than one-third of the members of the society, hold an enquiry or direct some person authorised by him by order in writing in accordance with the rules made in this behalf to hold an enquiry into the Constitution, working and financial condition of a registered society.
(2) The Registrar or the person authorised by him under Sub-section (1) shall have the following powers, namely -
(a) he shall at all reasonable times have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may summon any person in possession or responsible for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same at any place at the head-quarters of the society or any branch thereof;
(b) he may summon any person who, he has reason to believe has knowledge of any of the affairs of the society to appear before him at any place at the headquarters of the society or any branch thereof and may examine such person on oath;
(c) (i) he may notwithstanding anything contained an this Act or in any Rule or Regulation prescribing the period of notice for a general meeting of the society, require the governing body of the society to call a general meeting at such time and place at the headquarters of the society or any branch thereof and to determine such matters as may be directed by him. If governing body of the society refuses or fails to call a meeting, he shall have power to call it himself;
(ii) any meeting called under, Sub-clause (i) shall have all the powers of a general meeting called under the Rules or Regulations of the society and its proceedings shall be regulated by such Rules or Regulations;
(iii) when an enquiry is made under this Section, the Registrar shall communicate the result of the enquiry to the society concerned."
Corresponding to Section 25 of the Act or in relation thereto, the relevant Rule made is Rule 8 of the Karnataka Societies Registration Rules, 1961 (hereinafter referred to as the Rules) and it is as follows:
"8. Enquiry by the Registrar - (1) where the Registrar proposed to hold an enquiry under Section 25, either on his own motion or on an application, he or the person authorised by him under the said Section to hold an enquiry shall issue notice to the society concerned in this behalf.
(2) The said notice shall specify a date on which, place in which and the time at which, as also the matters in respect of which the enquiry will be held. The notice shall also call upon the society to furnish its explanation in respect of matters referred to therein before the date specified in the notice.
(3) The Society shall furnish its explanation to the Registrar or the authorised person before such date.
(4) On the date fixed for the enquiry, or on such other date or, dates to which the enquiry might be adjourned, the Registrar or the authorised person shall give the society a oral hearing. He may also examine such persons as may be considered necessary. He may receive any relevant document. If the society fails to furnish its explanation as required under sub-rule (3) or to attend the enquiry on the date fixed or the adjourned date, the Registrar or the authorised person may proceed with the enquiry ex parte.
(5) On the completion of the enquiry, the Registrar or the authorised person shall record his findings and communicate the same to the society concerned."
8. As we have noticed earlier in the course of this Order, Section 25 of the Act fell for consideration by a learned single Judge of this Court in Manila Seva Samaj's case (supra). The relevant portion of the order as reported in 1980(1) Karnataka Law Journal at page 327 on page 328 is to be found in paras 8 and 9 and it is as follows:
"8. Sub-section (1) of Section 25 of the Act that is material for deciding the controversy reads thus:
"The Registrar may on his own motion and shall on the application of the majority of the members of the governing body or of not less than one third of the members of the society, hold an enquiry or direct some person authorised by him by order in writing in accordance with the Rules made in this behalf to hold an enquiry into the constitution, working and financial condition of a registered society."
Sub-section (1) of Section 25 of the Act, authorises the Registrar to direct an enquiry on his own motion or suo motu when an application is made to him by the majority of the members of the governing body of a society or by not less than l/3rd of the members of a society. Whether a suo motu enquiry should be ordered or not, is a matter exclusively for the Registrar to decide. In such case, the Registrar has the discretion and power to order an enquiry or not to order an enquiry. For making such an order, it is open to the Registrar to rely on any information, reports available or collected by him or furnished, to him by any other person. When an application is made by the majority of members of the governing body of a society or by not less than l/3rd of the members of the society and if the Registrar is satisfied with either of those requirements, he has no discretion in the matter and is under a compulsive duty to order an enquiry into the affairs of a society. But, before ordering an enquiry in the latter cases, he must be satisfied that the majority of the members of the governing body or not less than l/3rd of the members have made an application before him.
9. Earlier I have found that the Registrar has made in his order only on the application made by the three members of the society and not on an application, if any, made by the majority of the members of the governing body. It is not the case of the respondents that the said three members constitute not less than l/3rd of the members of the society. By no stretch of imagination, it is possible to hold that the Registrar has ordered an enquiry suo motu or on his own motion. In these circumstances, the impugned order made by the Registrar is wholly without jurisdiction, manifestly illegal..."
9. We are satisfied that the learned Judge correctly analysed the import of Section 25 of the Act and reached the right conclusions. The fault if any is in a coma missing after 'suo motu' in para 8 before "when an application is made". That way one may misread the order to mean "suo motu when the application is made". That becomes clear when the learned Judge clearly states 'whether a suo moto enquiry should be ordered or not' in the following sentence. In other words the learned Judge has enumerated correctly the three occasions on which the Registrar is directed to hold an enquiry. They are:
"(i) suo motu or on his own;
(ii) when an application is made by the majority of the members of the governing body of the society, and
(iii) when an application is made by not less than one-third of the members of the society."
10. The significant feature to notice in the exercise of the power to hold an enquiry or direct the holding of an enquiry is in the employment of the expressions "may" and "shall" in the language of Section 25(1) of the Act. May, occuring just before "on his own" clearly indicates the directory nature. That is, if and when he acts on his own upon or with reference to information or material gathered by him from whatever source or sources, he has the discretion to hold or not to hold an enquiry or direct the holding of it or not holding it by person authorised by him. On the other hand, if it is a case falling either under the second or the third occasion indicated by us, that discretion is taken away by the Legislature and the Registrar is mandated to hold the enquiry or direct the holding of it by person authorised by him. For this reason in Rule 8 of the Rules reference is made to the application that is required to be made relating to the latter two occasions when the power is to be exercised.
11. Understood thus, we do not see any error of construction or interpretation of Section 25(1) of the Act in Manila Seva Samaj's case which requires further consideration or reconsideration.
12. Mr. S.G. Sundaraswamy's contention that the second respondent had no jurisdiction to hold an enquiry is without substance. Second respondent is the authorised person by an order in writing. That implies, the Registrar to be a superior Officer and the authorised person to be subordinate to him. Therefore, if an enquiry is held pursuant to an order authorising to hold the enquiry, the person authorised acquires jurisdiction to hold an enquiry and submit a report by virtue of that order together with the consequential powers enumerated in Sub-section (2) of Section 25 of the Act. Thus, the second respondent cannot be said to lack the jurisdiction to hold the enquiry in question.
13. Mr. S.G. Sundaraswamy also contended that the third respondent, as evidenced by Annexure-F had heard arguments only on the question of his jurisdiction and the validity of the enquiry directed and never on the merits of the allegations and as such the report as at Annexure-G was a report submitted without affording adequate opportunity to the petitioner and therefore violative of the rules of natural justice and as such liable to be quashed.
14. Annexure-F purports to be a true copy of the order sheet of the second respondent (Duly certified photostat copy is also produced). It is seen therefrom that parties appeared on 12-11-1986 on the motion of Counsel for petitioner before us, it was adjourned to 21-11-1986. On 21-11-1986 objections on behalf of the Writ Petitioner was filed. Some one appeared for Samooham. Case was adjourned to 27-11-1986. On 27-11-1986, arguments were heard and case was posted for filing records on 12-2-1988. On 12-12-1986 case was adjourned to 7-1-1987. On 7-1-1987 it was adjourned to 12-2-1987 as opposite party to the petitioner was not present. On 12-2-1987, on request case! was adjourned to 20-2-1987. On 20-2-1987 case was once again adjourned to 2-3-1987. Arguments were heard on 2-3-1987. From the notings in the order sheet for that date it appears to us that arguments were addressed on the questions, whether it was a case of suo motu exercise of power by the Registrar and whether the complainant(s) before the Registrar was or were Members of the society. There is a noting that ten members of the Samooham had given the complaint. After arguments from both sides were heard, case was posted for orders on 25-3-1987. The order sheet ends there.
15. Mr. S.G. Sundaraswamy, therefore, urged that in the light of the order sheet ending that the report at Annexure-G assumes significance. He pointed out that the report of the second respondent is dated 30-1-1988. There being no order delivered on 25-3-1987, the entire report he contended was the result of the sole effort of the second respondent without allowing the petitioner before us to meet the charges in the so called complaint of the 1st respondent.
16. Besides the report as at Annexure-G and the order of the third respondent-Registrar dated 31-1-1986, we have not had the advantage of any other records except the statement of objections filed by the 1st respondent.
17. On 13-5-1990, when we heard the petition and reserved the same for orders, we made the following order in the order sheet of the Writ Petition:
"We have heard Mr. S.G. Sundaraswamy for the petitioner. Counsel for respondent-1 has not appeared in Court the whole of the week. R-2 and R-3 are formal parties. R-2 is served but R-3's acknowledgement has not been returned. R-l has filed his statement of objections. G.Pleader has no instructions from R-2 and R-3. In that circumstance we place all the respondents ex parte and reserve for orders holding R-3 is duly served."
18. A perusal of Annexure-G shows that the report was one made after affording an opportunity to all concerned and after framing issues to be decided and after considering the material on record. Under the marginal heading Proceedings: the following is found:
"PROCEEDINGS: Some of the erstwhile members of the Association and other community people of the Andhra Kshatriya Community through a written petition brought in to the notice of the Registrar the irregularities and violation of law by Shri A.S. Kupparaju. After perusing the records maintained in his office and after satisfying himself about the existence of a prima facie case the Registrar suo motu ordered for a detailed enquiry under Section 25 of the Act and appointed Special Deputy Commissioner for Detection of Undervaluation of Stamps-IV, Basavanagudi as enquiry Officer. Three opportunities were given on different dates and both parties filed written statements and also attended the oral hearing in person and also through their legal representatives. After hearing both the parties the following issues were framed for the scope of the enquiry.
1. Authority of the Registrar for ordering an enquiry.
2. Change in the name of the Association and amendments of objections.
3. Filing of accounts and returns and holding of general body.
4. Property of the Association.
5. Dissolution of an Association and conversion into a Trust.
6. Writ Petition No. 3407/1987 before the Hon'ble High Court."
19. Again we find under the marginal heading: W.P. No. 3407/1987 the following:
"While the enquiry was in progress Sri A.S. Kupparaju did file a Writ Petition before the Hon'ble High Court making the General Secretary Raju Kshatriya Welfare Association. The Special Deputy Commissioner (DUS), Basavanagudi and Registrar of Societies as respondents. Among other things the petitioner has prayed for staying the proceedings of the enquiry and quashing the order of enquiry itself. But the Court has not granted stay of the proceedings. After going through the Writ Petition and the written statement and oral submission made before this enquiry authority there is no new points of law raised and practically there is similarity and hence all the points have been discussed at length. As the highest Court is at liberty to take any decision and give directions to any subordinate Court or authority. The decision shall be binding in future. Pending disposal of the Writ Petition as an enquiry Officer, I would like to give ray findings on the basis of available records and as per law as I understood it to be."
20. Ultimately the following findings are recorded:
FINDINGS: In view of the lengthy discussions as above, I hold the following opinion -
1. The Registrar legally authorised and competent to order for enquiry on his own under Section 25(1) of the Act.
2. The office bearers of the society have not conducted a general body meeting since date of incorporation flouting all democratic norms and violated both statutory provisions under the Act as well as bye-laws of the society,
3. While changing the name of the society from A.K.M.S. to Raju Kshatriya Sangha, the office bearers have clearly violated the provisions of the law.
4. The office bearers have not filed accounts and returns at all since 1949 which is a clear violation of the mandatory provisions.
5. The landed property which once belonged to the society has been unauthorisedly occupied by the President Shri A.S. Kupparaju converting the society into trust against the statutory provisions. Hence liable to pay all income and mesne profits.
6. As such the office bearers are not at all acting and functioning in accordance with its own constitution and it is not working properly and its financial condition is very bad because there is clear case of misappropriation and thereby making wrongful gain to himself and wrongful loss to the community at large. So I recommend for taking over the affairs of the society along with possession of all the moveable and immoveable properties by appointing an official receiver in the form of an administrator."
21. In the absence of continuation of the order sheet as at Annexure-F and the records of the case, it is impossible for us to repel the contention advanced for the petitioner that he had no opportunity to argue his case on merits. The statement of objections by respondent-1 is of no assistance to us. It is no more than denial of the assertions of the petitioner in the Writ Petition and repetition of the charges of mismanagement and misappropriation of the properties of the Society by the petitioner.
22. We have further noticed in Annexure-G that no written permission was granted by the Registrar to convert the society into a trust. The information was conveyed to the second respondent by the 1st respondent by letter dated 22-12-1987. We have no means of finding out whether this was ever put to the petitioner by the second respondent. Information appears to have been obtained just before sending in the impugned report.
23. Respondents 2 and 3 by remaining absent and unrepresented have shown callous indifference to this Court and by default conceded the case of the petitioner.
24. We therefore must conclude that report as at Annexure-G is in violation of the Rules of natural justice and therefore liable to be quashed.
25. What remains for us to decide is whether the petitioner is entitled to the second relief restraining the Registrar from acting upon the impugned report. In our opinion that prayer does not survive for consideration because we have held that the report in question is liable to be quashed.
26. Before we part with this case, we must point out that the other Writ PetitionW.P.No. 3407 of 1987 wherein the petitioner has challenged the legality of the order of the third respondent as at Annexure-D is still pending. That petition has not been referred to us and we have not called for that petition to be disposed of along with this petition. It is therefore appropriate that petition must be Independently decided by the appropriate Bench.
27. In the result, for the reasons given, we hold that the decision of this Court in the case of Manila Seva Samaj And Anr. v. Registrar of Societies and ors. is correctly decided. But we add that when the Registrar acts suo motu or on his own upon whatever material available other than a complaint by Members of the Society or the Governing Body without the requisite majority prescribed to him to exercise his power under Section 25(1) of the Act, he must do so only after due application of mind and disclosure of material upon which he is acting and that must be explicit in the order he is required to make. Such an order cannot be capricious or without proper examination and investigation of the material upon which he proposes to act lest such action becomes arbitrary.
28. We also quash Annexure-G the report of the third respondent by a Writ of Certiorari for violation of Rules of Natural Justice. We do not propose to reserve any liberty for an enquiry afresh for that will depend on the outcome of the other Writ Petition namely, W.P. No. 3407 of 1987.
29. Rule is made absolute in terms above.
ORDER DATED 31-8-1990
1. This matter was set down for 'for being spoken to'. On learning from the Editor of the Official Report Series that Writ Petition No. 3407/1987 had been dismissed even before we pronounced the order on 27-7-1990 and therefore leaving certain matters open to be decided in that Writ Petition constituted an error. This was not brought to our notice by the learned Counsel appearing for parties. In fact, the respondents who had been placed ex parte and the petitioner did not bring to our notice of what had happened to the other Writ Petition.
2. If that has been dismissed, there are two courses open to the petitioner. The first is to rest content with what has been decided in this case and the other is to prefer an appeal against the order of dismissal on such grounds as are available.
3. This observation made by us now will be added on to the order delivered by us on 27-7-1990.