Case Note & Summary
The litigation arose from an order dated 14 July 1971 passed by the Deputy Registrar, Cooperative Societies, Meerut, which suspended the President and the committee of management of Jahangirabad Cooperative Marketing Society Ltd. and appointed Ghanshyam Murari Sharma as Administrator. Veerpal Singh, the President of the Society, challenged the order by way of a writ petition under Article 32 of the Constitution before the Supreme Court. Separately, Yograj Singh and others filed a civil appeal by special leave against the Allahabad High Court's dismissal in limine of their writ petition under Article 226 challenging the same order. Both matters were heard together. The factual background showed a series of political and administrative changes affecting the Society and the Provincial Cooperative Federation. In April 1969 an inspection of the Society was carried out, but the inspection note was not disclosed. In October 1969, Veerpal Singh was re-elected as a Director of the Society and appointed as a delegate to the Provincial Cooperative Federation, later becoming its Chairman. In September 1970, at the instance of the Deputy Registrar and a Minister, the Uttar Pradesh Government nominated ten members and a Chairman to the Federation, omitting Veerpal Singh. In December 1970 a new ministry revoked that order, but in June 1971 another ministry again nominated ten members under Section 34(1) of the Cooperative Societies Act, 1965 and appointed the Additional Registrar as President. A lottery was drawn for directors to vacate, and Veerpal Singh survived. Subsequently, the Deputy Registrar passed the impugned order on 14 July 1971. The administrator appointed under that order, on 15 July 1971, withdrew the delegation of Veerpal Singh to the Federation. The core legal issues before the Supreme Court were whether the Deputy Registrar could suspend the President and the committee of management under Section 35(2) of the Cooperative Societies Act, 1965, and whether he could temporarily appoint an administrator. The petitioner argued that the suspension was void for mala fide and collateral purpose, that no supersession proceedings as contemplated under Section 35 had been initiated, and that the suspension could not justify appointment of an administrator. The respondents defended the order. The Supreme Court examined Section 35(1) and Section 35(2) of the Act. Section 35(1) empowers the Registrar to supersede the committee after forming an opinion of default, negligence, or improper functioning, affording the committee a reasonable opportunity of being heard, and obtaining the opinion of the general body in a general meeting. Section 35(2) permits suspension of the committee during the period of proceedings for supersession and empowers the Registrar to make arrangements for management. The Court held that the power under Section 35(2) is exercisable only when proceedings for supersession have commenced. The commencement requires some definite act, such as issuance of a notice under Section 35(1). In the present case, no such proceedings had been set in motion. Consequently, the interim suspension was invalid. The Court further held that appointment of an administrator under Section 35(2) is also contingent upon the existence of pending supersession proceedings; since none existed, the appointment was without jurisdiction. As a necessary consequence, the administrator's withdrawal of the delegation was also invalid. Accordingly, the Supreme Court allowed the writ petition and the civil appeal, quashed the Deputy Registrar's order dated 14 July 1971, and also quashed the withdrawal order dated 15 July 1971. The Court did not entertain the petitioner's request to amend the petition to plead mala fide because the facts alleged were insufficient.
Headnote
A) Cooperative Societies - Suspension of Committee of Management - Power under Section 35(2) is exercisable only when proceedings for supersession under Section 35(1) have commenced - Cooperative Societies Act, 1965, Sections 35(1), 35(2) - The Deputy Registrar suspended the President and committee of management of Jahangirabad Cooperative Marketing Society without initiating supersession proceedings. The court held that Section 35(2) requires the Registrar to have formed an opinion of default, given opportunity of hearing, obtained opinion of general body, and taken a definite step like issuance of notice to commence proceedings. Held that the suspension was invalid because no supersession proceedings were set in motion (Paras 422A-F). B) Cooperative Societies - Appointment of Administrator - Interim management arrangement under Section 35(2) is permissible only during pending supersession proceedings - Cooperative Societies Act, 1965, Section 35(2) - The Deputy Registrar appointed an administrator while no proceedings for supersession were pending. The court reasoned that appointment of administrator is incidental to the suspension power and cannot exist without the prerequisite of pending proceedings. Held that the appointment of administrator was bad in law (Paras 422G-H, 423A-B). C) Cooperative Societies - Withdrawal of Delegation - Consequence of invalid suspension and administrator appointment - Cooperative Societies Act, 1965, Sections 35(1), 35(2) - The administrator appointed under the invalid order withdrew the delegation of the petitioner to the Uttar Pradesh Provincial Cooperative Federation. Since the administrator's appointment was void, the withdrawal was also without authority. Held that the withdrawal order dated 15 July 1971 was quashed as a consequence of quashing the principal order (Paras 423C-D).
Issue of Consideration
Whether the Deputy Registrar could suspend the President and committee of management of the Society under Section 35(2) of the Cooperative Societies Act, 1965; whether the Deputy Registrar could temporarily appoint an administrator under Section 35(2).
Final Decision
Supreme Court allowed the writ petition and civil appeal; quashed Deputy Registrar's order dated 14 July 1971 and the withdrawal order dated 15 July 1971.
Law Points
- Power under Section 35(2) of Cooperative Societies Act
- 1965 to suspend committee and appoint administrator is exercisable only during pendency of supersession proceedings under Section 35(1)
- supersession proceedings commence only upon definite act like issuance of notice
- interim suspension and administrator appointment without such proceedings are without jurisdiction and void
- consequential withdrawal of delegation by invalidly appointed administrator is also invalid.
