NIRMALA v. Chhattisgarh Rajya Sahakari Bank Mariyadit

Shri Aniket Verma, Advocate. Shri Jitendra Shrivastava, Advocate. Shri R.C.S. Deo, P.L. Hon'ble Shri Justice Rakesh Mohan Pandey Order on Board

22.04.2026

#1. The petitioners have filed this petition seeking the following reliefs:- “10.1) This Hon'ble Court may kindly be pleased to call for the entire records pertaining to the case of the petitioner.

10.2) That, the Hon'ble Court may kindly be pleased to issue writ/direction to set-aside the show-cause notice dated 28.09.2022 (ANNEXURE P/1) issued by the respondent authority in the interest of justice.

10.3) Any other relief or relief(s) which this Hon'ble Court may think proper in view of the facts and circumstances of the case may also kindly be granted.”

#2. The facts, in brief, are that late Shri Tekram Kaushik was working as Prabhari Samiti Prabandhak at Seva Sahakari Samiti Mariyadit, Jinda & Jhirona, Village Jinda, Post Dharampura, Tahsil and District Kawardha. He died on 26.3.2020. The petitioners are son and wife of the deceased employee. On 28.9.2022, the Deputy Registrar Cooperative Societies, Kabirdham issued a show-cause notice to the petitioners for recovery of Rs.37,19,664.48/-. This was issued on the grounds that while Tekram Kaushik was posted as Samiti Prabandhak at Primary Society, Jinda and Jhirona from 2016-17 to 2019-20, he 3 committed financial irregularities amounting to the aforementioned sum. The notice was issued according to the provisions of Section 58-B(1) of the Chhattisgarh Cooperative Societies Act, 1960 (for short ‘Act, 1960’). The petitioners were directed to appear or file a reply by

22.11.2022. The petitioners have challenged this show-cause notice by filing this petition.

#3. Learned counsel for the petitioners would argue that no enquiry was conducted against the deceased employee during his lifetime, and the show-cause notice was issued without affording opportunity of hearing to the petitioners. He would contend that recovery proceedings cannot be initiated against the legal representatives of a deceased employee. He would refer proviso appended to Section 58-B(1) of Act, 1960 which states that no enquiry shall be instituted against a person unless the person concerned is given a reasonable opportunity of being heard. He would submit that the deceased employee was never issued a notice during his lifetime, the current proceedings against his legal representatives are unsustainable.

#4. On the other hand, learned counsel appearing for the respondents would oppose. Shri Jitendra Shrivastava, counsel appearing for respondent No.1 would refer Section 58-B(2) of the Act 1960 which states that if the Registrar is satisfied that a deceased person caused loss to the society, an order may be passed requiring the repayment or restoration of the money or property. He would contend that the liability of legal representatives can be assessed to the extent of the estate that has come into their hands. He would further contend that according to provisions of Section 58-B(3) of the Act, 1960, the notice 4 issued by the Deputy Registrar is appealable before the Tribunal. He would submit that this petition deserves to be dismissed.

#5. I have heard learned counsel for the parties and perused the documents present on record.

#6. A perusal of Annexure-P/1, notice issued by the Deputy Registrar would show that the petitioners, as legal representatives of the deceased society employee, have been provided an opportunity of hearing. The show-cause notice was issued intending to recover Rs.37,19,664.48/- from the petitioners.

#7. Section 58-B of the Act, 1960 is reproduced herein below: “Section 58-B. Procedure for making good losses caused to a society — Notwithstanding anything contained in this Act or the rules or the byelaws of a society where the State Government has contributed to its share capital or has given loans or financial assistance or has guaranteed the repayment of loans, debentures, advances or has given grants in any other form and if in the course of an audit, inquiry, inspection or the winding up of a society or otherwise, it is found that any person who is or was entrusted with organization or management of such society or any deceased, past or present Chairman or Secretary, member of the Committee, Officer or employee of the society has made any payment contrary to the provisions of this Act or the rules made thereunder or byelaws of a society or has caused any deficiency or loss by gross negligence or misconduct or has misappropriated or fraudulently retained any money or other property belonging to such society, the Registrar may on his own motion or on the application of the committee, liquidator or any creditor, enquire himself or direct some person authorized by him, by an order in writing in this behalf, to enquire into the conduct of such person within two years of 5 the date of the report of audit, enquiry or inspection, or winding up, as the case may be: Provided that no such enquiry shall be instituted against a person unless the person concerned is given a reasonable opportunity of being heard. (2) If, on enquiry made under sub-section (1), the Registrar is satisfied that there are reasonable grounds for an order under this sub-section, he may make an order requiring such person, or in the case of a deceased person, his legal representative who inherits his estate, to repay or restore the money or property or any part thereof, with interest at such rate, or to pay contribution and costs or compensation to such extent as the Registrar may consider just and equitable: Provided that no order under this sub-section shall be made unless the person concerned is given a reasonable opportunity of being heard in the matter: Provided further that the liability of a legal representative of the deceased shall be to the extent of the property of the deceased which has come to the hands of such legal representative. (3) Any person aggrieved by the order made under sub- section (2), may within thirty days from the date of communication of the order to him appeal to the State Government. Provided that in computing the period of limitation, the time requisite for obtaining a copy of the order appealed against shall be executed. (4) Any order made under sub-section (2) or sub-section (3) shall be enforced in accordance with the provisions of section 85. (5) If the Registrar is satisfied by an affidavit, enquiry or otherwise that any person with intent to delay or obstruct 6 the enforcement of any order that may be made against him under this Section- (a) is about to dispose of the whole or any part of his property : or (b) is about to remove the whole or any part of his property from the jurisdiction of the Registrar; he may, unless adequate security is furnished, direct the conditional attachment of the said property or such part thereof as he thinks necessary.”

#8. A perusal of the proviso appended to Section 58-B(2) of the Act, 1960 would make it clear that an order under this sub-section cannot be passed without affording a reasonable opportunity of being heard. At the same time, the liability of a legal representative is limited to the extent of the property of the deceased which has come into their hands. Thus, the authority concerned is under an obligation to afford an opportunity to the person concerned, including the legal representatives of the deceased employee and at the same time, the authority must assess the extent of the property of the deceased which has come into the hands of the legal representatives.

#9. In the present case, the petitioners have challenged the show-cause notices, notwithstanding that they have an opportunity to appear before the Deputy Registrar and present their case. As the law permits to initiate the proceedings against the legal representatives of the deceased employee, in my opinion, no case is made out for interference in the matter.

#10. Accordingly, this petition fails and is hereby dismissed. However, the petitioners would be at liberty to participate in the pending 7 proceedings and defend their case in accordance with the provisions contained in Section 58-B of the Act, 1960.

#11. Interim order granted earlier is hereby vacated. Nimmi Sd/- (Rakesh Mohan Pandey) Judge