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    W.P.24729 Of 1998

    Decided On, 14 July 2000

    At, High Court of Andhra Pradesh


    For the Appearing Parties: B. Adinarayana Rao, B.V. Subbaiah, Advocates.

Judgment Text


( 1 ) THE Writ Petition was originally filed at the stage of show-cause notice, but however, after final orders were passed and after availing the appeal remedy, the prayer in the writ petition has been amended and the same was allowed by this Court.

( 2 ) THE order passed by the Deputy registrar of Co-operative Societies-3rd respondent herein dated 01-09-1998 under section 34 (1) of the Andhra Pradesh Cooperative Societies Act (for short 'the Act') superseding the first petitioner-Society as confirmed by the appellate authority by an order dated 11-01-1999, is assailed in this writ petition.

( 3 ) THE facts leading to the filing of the writ petition in nutshell are as follows: the first petitioner is one of the biggest co-operative Housing Building Society in the State consisting of more than 4,000 members having vast extent of land under its control. The composition of the managing Committee is 15 including the president. As per the Bye-laws of the society, election to the. Managing committee is conducted once in five years and the elected Members shall be in Office for a period of five years. Petitioners 2 to 7 are all the elected Members to the managing Committee of the first petitioner society. The elections were held in June, 1996 and the Managing Committee has taken the charge in July, 1996 and therefore it will continue in Office for a period of five years unless it is disturbed in accordance with law.

( 4 ) WHILE the matters stood thus, it has come to the notice of the third respondent that the Managing Committee has not been conducting its affairs in accordance with the provisions of the Co-operative Societies Act and that there are a number of irregularities in allotment of plots. Apart from that, the direction issued by the Registrar under section 4 (2) of the Act has not been complied with by the Society, and therefore, the 3rd respondent initiated proceedings under Section 34 of the Act and issued show-cause notice dated 18-08-1999

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s to why the Managing Committee should not be superseded. The Managing Committee was directed to submit the explanation to the show-cause notice. Accordingly, Mr. N. M. Chowdary, President of the society has submitted representation to the show-cause notice bringing out various replies to the issues as set out in the show-cause notice. Similarly, another representation was also filed by Mr. C. V. Rao, Secretary of the society to the said show-cause notice. Both the representations were considered by the third respondent-Deputy Registrar and he held that the grounds have been made out for superseding the Society and accordingly passed orders on 01-09-1998 appointing the joint Registrar of Co-operative Societies as a special Officer to manage the affairs of the first petitioner-Society for a period of three months and the said period is being extended from time to time. Now it is stated that on 30th June, 2000 the term of the Special Officer has been further extended by six months. Aggrieved by the order passed by the Deputy Registrar, the matter was carried in appeal before the government of Andhra Pradesh by the president of the Co-operative House building Society. The said appeal was dismissed by an order dated 11-01-1999. The said orders are assailed before this court. ( 5 ) THE learned Counsel appearing for the writ petitioners, Mr. Adinarayana Rao submits that the impugned orders of the third respondent as confirmed by the first respondent are wholly illegal and run contrary to the provisions of Section 34 of the Act. . He submits that the third respondent did not consider various contentions raised by the petitioners in the representations filed in response to the show-cause notice issued by the third respondent and thus there is a total non- application of mind by the authority while passing the order. The learned Counsel also submits that the appellate authority has equally committed errors in disposing of the appeal as it has considered extraneous matters while dealing with the appeal filed by the petitioners against the orders of third respondent. Therefore, he submits that the 1st respondent also equally committed illegalities in passing the impugned order. ( 6 ) THE issue that arises for consideration is whether the orders passed by the third respondent as confirmed by the first respondent are valid?( 7 ) THE matter arises under Section 34 of the Act, under which it is open for the registrar to appoint Special Officer superseding the Managing Committee if he is of the opinion that the Committee was not functioning properly or wilfully disobeys or fails to comply with any of the lawful orders or directions. The said section is extracted below:"34. Supersession of the Committee: (1) If in the opinion of the Registrar, the Committee is not functioning properly or willfully disobeys or fails to comply willfully with any lawful order or direction issued by the Registrar under this Act or the rules, he may, after giving the committee an opportunity of making its representation, by order supersede the Committee from a specified date; and appoint either a person (hereinafter referred to as the Special Officer) or a committee of two or more persons (hereinafter referred to as the managing Committee) to manage the affairs of the Society for a period not exceeding two years, specified in the order which period, may, at the discretion of the registrar, be extended from time to time, so however, that the aggregate period shall not exceed three years. (2) Such order shall take effect from the date specified therein unless it is stayed by the Government. Where such order is reserved by the Government, the Special Officer or the Managing Committee shall forthwith hand over the management of the Society to the committee. (3) The Special Officer or the managing Committee shall, subject to the general control of the registrar and to such directions as he may from time to time, give, have power to exercise all or any of the functions of the Committee or of any officer of the Society. (4) The Registrar may fix the remuneration payable to the special Officer or the Managing committee. The amount of remuneration so fixed and such other expenditure incidental to the management of the society during the period of the supersession as may be approved by the Registrar shall be payable from the funds of the Society. (5) At the expiration of the period of appointment of the Special Officer or the Managing Committee, the registrar shall arrange for the calling of a general meeting for the election of a new Committee in accordance with the provisions cf sub-section (5) of Section 32. (6) Where a Society indebted to any financing bank, the Registrar shall, before taking any action under subsection (1) in respect of that Society, consult the financing bank. "( 8 ) THE Learned Counsel for the petitioners, however, submits that in the show-cause notice only three issues were brought to the notice of the Managing committee viz. , that the meeting of the managing Committee was not convened within the time stipulated. e. , within three months from the date of the earlier meeting. The last meeting was only convened on 26-06-1997 and thereafter no meeting was convened. Hence it constitutes violation of the provisions of the Act. In reply to this, it is the submission of the petitioners that the meetings were properly convened and the meetings were conducted on 26-04-1997, 05-05-1997, 17-05-1997, 31-05-1997 and 19-06-1997. The meeting proposed on 30-06-1997 was postponed in view of the orders passed by the Andhra Pradesh Cooperative Tribunal. But, however, the meeting was held on 12-07-1997. These meetings were borne out by the record. Hence, the learned Counsel submits that the finding of the third respondent that the meeting was not held within three months was unsustainable in law. ( 9 ) TO the allegation that the common members of the Society have to bear the brunt of utter indifferences of the Managing committee to carry out the business of the society, it is the reply of the Managing committee that the allegation was ill- founded. In fact, 84 No Objection certificates were issued during the period august, 1996 to March, 1997 and from April, 1997 till date, 27 No Objection certificates were issued and on the other hand during the period under which the special Officer was appointed, he issued only 18 No Objection Certificates within a period 14 months. Thus, there was no inconvenience to the Members of the society as alleged. ( 10 ) WITH regard to the serious internal differences among the Managing committee Members affecting the smooth functioning of the Society on the ground that it was split into two groups - one headed by the President and another headed by the Secretary and these two groups have been continuously filing petitions before the Deputy Registrar alleging omissions and commissions on each other, it is stated in the representation that in a democratic set-up each member is entitled to take recourse to law wherever it is provided when an injury is caused to him. If there is any inconvenience or any order is passed contrary to the provisions of the Act, it is always open for the members to agitate the same before the appropriate forum and express their own views and in a democratic set-up, it cannot be construed that it affects the smooth functioning of the society. The Society is run by Managing committee consisting of 15 Members, and therefore, it is open for the Members to express their views. But that could not be termed as affecting the functioning of the society and thus they tried to establish that it would not constitute a ground for considering that the Society is not functioning in a proper manner. ( 11 ) WITH regard to the alleged transfer of the plots in favour of kith and kin and vice versa, it is stated that the allotment made in favour of the Members referred to in the show-cause notice was in order and it is in accordance with the Bye-laws of the Society. It was further stated that it is not only such transfers which have taken place in respect of the members of Mr. N. M. Chowdary, but also similar type of transfers took place on the side of the Secretary - Mr. C. S. Rao and they have given details of such transfers in para 7 of the representation filed before the registrar to the show-cause notice. It was also stated that the entire matter was initiated at the instance of Mr. M. Y. Moses co-operative Sub-Registrar/field who was also supporting the Secretary and he has been sending reports against the president and his supporters. On the other hand, in the representation filed by the secretary, it is stated that he has supported the stand of the President with regard to the convening of meetings. But, however, with regard to the allotment of plots, there was a divergent opinion. In any case, both the representations were considered and the third respondent after considering the matter found that the Committee was not functioning properly and that it attracted the provisions under Section 34 of the Act. The learned Counsel for the petitioners, however, submits that the so-called transfer of plots did not take place during the tenure of the present Managing Committee and they took place long back and they became final, and therefore, it cannot be construed as one of the ingredient of non-functioning of the Society during the period, under which the present Managing Committee was elected. ( 12 ) THE learned Advocate General appearing for the respondents submits that the action was initiated under Section 34 of the Act and it was found by the authorities that the Society was not functioning properly. The very wordings in the Section are widely couched so as to contain all the situations. It is the satisfaction which has been recorded by the authorities to say that the Society was not functioning. He further submitted that the rival groups have started complaining against each other thereby the transactions which the Society is expected to carry out, could not be completed on account of these actions. Hence, the order of the third respondent in superseding the managing Committee cannot be said to be illegal or contrary to Section 34 of the Act. He also submits that the appellate authority has considered this matter though it has referred to some events which are not subject matter in the show-cause notice, yet so long as those extraneous matters did not impinge on the authority in deciding the issue, they have to be ignored for all purposes and what is required to be seen is whether the authority has applied its mind to the facts of the case. The appellate authority, incidentally, must have-referred to the other aspects, which do not form part of show-cause notice nor the other proceedings. He also submits that the enquiry was instituted under Section 51 of the Act with regard to the irregular and illegal transfer of plots and the same was pending before the appropriate authority.( 13 ) BE that as it may, we are not concerned with the enquiry pending. In the background of this situation, it has to be seen whether the opinion formed by the third respondent is in conformity with the provisions of Section 34 of the Act. The provisions are very specific to the effect that if in the opinion of the Registrar, the committee is not functioning properly, it is always open for the Registrar to supersede that Committee and extend the term of the special Officer from time to time subject to maximum of three years. It is not in dispute that the alleged irregularities and illegal transactions regarding transfer of plots was not done during the tenure of the present managing Committee. They took place long before the present Managing committee came into power. But, the ingredients which could form the opinion that the Society in not functioning properly have to be culled out from the facts of each case. The Legislature knowingly used the words 'not functioning properly' so as to view the situation depending on the facts and circumstances of each case without putting any specific instances for forming such an opinion. In the instant case, the managing Committee was constituted in the year 1996 and the meetings are being conducted from time to time. Even with regard to the meetings, the allegation that the Managing Committee meeting has not conducted meeting within three months from the date of last meeting of the managing Committee, the explanation given by the President was that the meetings were in fact held and this aspect was not considered. But that is not an issue which goes to the root of the matter. The main ground on which the opinion was formed by the third respondent was that there were indifferences and bickerings among the Members of the Managing committee and that there are two groups - one group is headed by the President and another group is headed by the Secretary and they have been creating obstacles for the proper functioning of the Society. Though the learned Counsel for the petitioners submits that there were no instances of such obstacles which have been noticed by the third respondent, yet this court cannot lose sight of the situation that the President himself has categorically admitted that there are two groups in the managing Committee. The fact is that the president in his explanation to the show- cause notice has stated that the Members on the side of the Secretary - C. V. Rao have also transferred a number of plots in favour of their kith and kin and gave the details of the persons to whom such transfers have been effected. In the show-cause notice it was stated that in respect of mr. N. M. Chowdary, T. L. Prasad, g. Narasimha Rao and Mrs. Rama Prasad, there were illegal or irregular transfer of plots, and President, MKR. Choudary himself has stated that similar illegal or irregular transfers have taken place in respect of Mr. P. Ram Reddy, Mr. Damador reddy, Dr. K. Anil, Mr. C. V. Rao and Sri p. Subba Rao, who are on the side of mr. C. V. Rao, Secretary, Thus, it is to be seen that both the groups are hurling the stones against each other. The Institution is established under the' provisions of the Act with a view to augment the Co-operative movement among the Members and the very purpose is to acquire the lands and construct the residential buildings in accordance with the provisions of the Act. If these two groups openly confess that there are differences among the members who are managing the Society and they are persistently levelling allegations and counter-allegations against each other, can it be said that the Co-operative movement is existing in the Society. In an institution like co-operative society mutual understanding and tolerance are necessary. In the guise of freedom of expression in a democratic setup, the members cannot be allowed to demolish the very edifice of co-operative movement. It is thus evident that both the groups are not getting on well even though it is not mentioned in the order as to what are the instances in which there was no consensus among the Members, but the fact remains yet the petitioners themselves have come out openly accepting that there are rivalries among the Members of the managing Committee and also surfaced the irregularities alleged to have been committed by the rival Members of the managing Committee. In such a situation, it need not go into the further aspect whether there was really any instance establishing the non-functioning of the society. The non-co-operation among the members of the Managing Committee more especially when they themselves openly declared, is a strong indication of a non- functioning of the Society itself. That need not be established by any factual instances and that itself is established by their own conduct which is reflected in the explanation submitted to the show-cause notice. The words 'not functioning properly' have been intentionally and guardedly used by the Legislature to cover up such acts which are not ostensible. Section 34 as such is a surrogate provision to prevent the Co-operative Society from disjunction and thus avoid total collapse. Here is a case where the members of the managing Committee were immersed in bickerings and mud sliging acts which are sufficient to form a valid opinion that the society is not functioning in a proper manner. But, the learned Counsel for the petitioners, however, strenuously contended that the order of the appellate authority is wholly illegal and erroneous inasmuch as it is taken into consideration various aspects which did not figure in the show-cause notice. I have also perused the order of the Government and noticed that certain events which are not subject matter of show-cause notice have been reflected in the order. But the question is that this court cannot expect a Judgment to be written by the Government as if it is a judgment of a Judicial Officer. The administrative authorities are entrusted with the power of passing the orders under the Act and it may not be in the form of the judicial Order in the eye of law. But yet if it is found that the authority applied its mind in a proper manner, that would be sufficient compliance of the requirement of law. The Government has considered the matter with reference to the non-cooperation among the Members and it confirmed the finding of the original authority that the Society is not functioning in a proper manner. It is true that the government has referred the other matters in the order, but do not go to the root of the matter nor did they influenced the mind of the appellate authority. So long as the non- co-operation among the members itself is established by their own conduct, nothing remains to be considered even by the appellate authority. In those circumstances, i do not find any illegality or irregularity in the order passed by the third respondent as confirmed by the first respondent. Accordingly, the writ petition is dismissed. There shall be no order as to costs. ( 14 ) SINCE the Special Officer is continuing by virtue of extension of Orders, the respondents shall initiate appropriate proceedings for conducting fresh elections in accordance with the Bye-laws of the society. This exercise shall be done within a period of two months from the date of receipt of this order. It is hoped that the new Managing Committee will function in an atmosphere of mutual respect and commitment to co-operative movement.

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