High Court of Bombay

Anil N. Naik Gaunekar Vs. State of Goa and Ors.

MANU/MH/2304/2018

01.08.2018

Trusts and Societies

Existence of reasons must be seen in impugned order itself and cannot be supplemented by a subsequent affidavit

The Registrar of Co-operative Societies, exercising power under Section 67A of the Goa Cooperative Societies Act, 2001 appointed two directors to the Board. The Respondent No. 4 from women category. The second was the Respondent No. 5 from SC/ST category. Registrar noted in the order that two members are required to be appointed to fill in the vacancies as it is necessary to have a full-fledged board. He decided to exercise the power to appoint a member suo motu and decided that the notice of the proposed order is not necessary, dispensed with it and proceeded to pass the order on 29th May, 2017. The Petitioner, one of the elected directors, has challenged the order passed on 29th May, 2017 by way of present Petition. The issue is whether the impugned order is a bonafide and lawful exercise of the power.

Generally, unless it is necessary, the Court may not adjudicate on questions of law which may have broader ramifications. Decisions on the constitutional validity of the enactments are to be eschewed if the case can be decided on lesser points. Further, if a provision is challenged as unconstitutional, an attempt should be made to read it down to be in consonance with the constitutional principles. Keeping these positions in mind, we will proceed to consider the controversy.

The power conferred on the Registrar under Section 67A of Act is not for gaining control of the co-operatives, but to take such steps as may be necessary in the larger interest of the co-operatives and the members. The requirement of issuance of notice before issuance of an order is a crucial component of the scheme of Section 67A of Act. Merely because the Legislature has provided for a rare eventuality, where safeguard can be departed from, does not mean that the safeguard can be dispensed with at will. Cogent reasons must exist for doing so.

Thus, there are safeguards in Section 67A of the Act to ensure that it does not empower the Registrar with unguided, arbitrary or draconic powers. It is mandatory to call for objections and suggestions in respect of the proposed order, except where there is an immediate action required or that it is not reasonably practicable to issue such a notice. The proviso relating to dispensation of notice will have to be strictly construed. The grounds mentioned in the second proviso must genuinely exist and cannot be a mere ipse dixit of the authority or that the grounds are artificially created. The order under section 67A of Act must be a speaking order, so that there is transparency and good governance in the exercise of powers by the Registrar.

It is settled position of law, right from the decision of the Constitution Bench rendered in the year 1978 in the case of Mohinder Singh Gill and Anr. vs. The Chief Election Commissioner, New Delhi, existence of reasons must be seen in the impugned order itself and cannot be supplemented by a subsequent affidavit.

Even assuming that there could exist a grave situation where there is no option except to appoint a person who is disqualified, even then there has to be an application of mind and elimination of all possible alternatives as to what would be the consequences of such appointment. The impugned order is bereft of any application of mind to the fact of two directors being disqualified and the necessity to appoint the disqualified members.

The methodology adopted by the Registrar is opposed to the principles of transparency and fairness and is against the principles of democratic governance of the co-operatives. The exercise of power by the Registrar is not for the benefit of the Bank to help it overcome a difficult situation, but it is for the purpose of changing the power dynamics and with the sole object of affecting the democratic functioning. The Legislature has not conferred the power on the Registrar to achieve such an end. The impugned order thus is illegal, ultra vires, a colourable exercise of power and in breach of the mandatory provisions of Section 67A of the Act. Impugned order is quashed and writ petition is allowed.

Relevant

Mohinder Singh Gill and anr., vs. The Chief Election Commissioner, New Delhi and ors. MANU/SC/0209/1977

Tags : Appointment Suo motu power Validity

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