The High Court
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IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P. (C) No. 4596 of 2021 --- 1. Arvind Kumar Singh 2. Parvatia 3. Usha Devi 4. Arjun Kumar Singh 5. Debabrata Mukherjee 6. Bina Devi 7. Bhushan Mahato 8. Narayan Mahto 9. Gloria Dungdung 10. Krishna Singh 11. Ful Bai 12. Unki Devi 13. Meera Devi --- --- Petitioners 1. The State of Jharkhand through its Chief Secretary, Government of Jharkhand 2. The Secretary, Department of Agriculture, Animal Husbandry and Co-operative, Versus Government of Jharkhand 3. The Registrar, Co-operative Societies, Jharkhand 4. Joint Registrar, Co-operative Societies, North Chotanagpur Division, Hazaribag 5. The District Co-operative Officer, Dhanbad 6. The Assistant Registrar, Co-operative Societies, Dhanbad 7. Ganesh Bhuiyan --- --- Respondents ---- CORAM: HON’BLE MR. JUSTICE AMBUJ NATH --- For the Petitioners: M/s Ajit Kumar, Sr. Advocate, Shruti Shrestha, Advocate For the Resp.-State: Mr. Sachin Kumar, A.A.G-II For the Respondent No.7: Mr. Saket Upadhyay, Advocate ---- 26/12.04.2024 Heard learned counsel for the parties. 2. Petitioners had filed this writ application for quashing of letter no. 377 dated 18.10.2021, (Annexure-6), issued by the Respondent No. 5- District Cooperative Officer, Dhanbad, whereby and whereunder, he had stayed all business / Financial activities and law-making powers of the elected members of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad with immediate effect. They had also prayed for quashing of the order contained in Memo No. 2559 dated 28.10.2021 (Annexure-12), passed by the Respondent No.3- Registrar, Cooperative Societies, Jharkhand, Ranchi who had constituted a two Member Committee to check the financial irregularities in the disbursement of loans, payment of loans by bearer cheques along with other illegalities. They have further prayed for stay of the operation and execution of Annexure-12. 3. Subsequently, vide I.A. No. 2636 of 2022 filed by the petitioners, prayer for amendment was allowed and they have further prayed for quashing of order contained in Memo No. 584 (6) dated 23.03.2022 by virtue of which, Respondent No. 3 – 2. Registrar, Cooperative Societies, Jharkhand removed the petitioner no. 1- Arvind Kumar Singh and petitioner no. 13-Meera Devi from the post of Secretary and Member of the Working Committee respectively and further debarred them from contesting election of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad for the next five years. Registrar, Cooperative Societies by this Memo, had reinstated the Managing Committee with immediate effect. Vide I.A. No. 3051 of 2022 dated 20.04.2022. Order was passed for initiating fresh election process against the vacant posts of petitioner no. 1 – Arvind Kumar Singh and petitioner no.
Legal Reasoning
13 – Meera Devi. They have challenged their removal and holding of fresh election was stayed as the matter was sub-judice. Petitioners have also filed I.A. No. 5874 of 2022 restraining the Respondent No. 7 from taking any step on behalf of Managing Committee of Dhanbad Coal Board Co-operative Society, Dhanbad. 4. On 22.09.2021, the Respondent No. 7-President of the Society made a complaint to the Respondent No. 5-District Cooperative Officer, Dhanbad regarding unsatisfactory functioning of the society by the petitioner no. 1- Arvind Kumar Singh and requested to dissolve the present elected body of the society. He had also enclosed his resignation and resignation of seven members of the Managing Committee and prayed for appointment of an Administrator under section 41(5) of Jharkhand Cooperative Societies Act, 1935. The Respondent No. 5-The District Cooperative Officer, Dhanbad vide letter no. 377 dated 18.10.2021 (Annexure-6) stayed the financial activities / operation of accounts and policy decision of the Managing Committee of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad with immediate effect and thereafter, the Respondent No. 3-The Registrar, Cooperative Societies, Jharkhand, Ranchi constituted a Two Member Committee to enquire into the financial irregularities committed in disbursement of loan by way of issuing bearer cheques along with other illegalities and to submit the inquiry report within 15 days. In the meantime, the Managing Committee of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad was suspended in exercise of powers conferred under section 41(1) of Jharkhand Cooperative Societies Act, 1935 (as amended in 2015) and the Assistant Registrar, Cooperative Societies, Dhanbad Circle was appointed as a Special Officer to deal with the daily work of the said
Legal Reasoning
Cooperative Society. The Two Member Committee comprising of Shri Devendra Kumar Singh, Managing Director, JHASCOLAMPH, Ranchi and Shri Shashi Mohan, District Statistical Officer-cum-Professor, Cooperative Training Centre, Ranchi, after inquiry submitted a report pointing out that several irregularities were committed by 3. the petitioner no. 1- Arvind Kumar Singh, Secretary of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad in connivance with the petitioner no. 13-Meera Devi. Show-cause was issued to both these petitioners. Their reply was not found satisfactory. Accordingly, they were directed to file fresh show cause vide letter no.176 dated 31.01.2022 and ultimately, the petitioner no. 1- Arvind Kumar Singh and petitioner no. 13-Meera Devi were expelled from their respective posts and they were further debarred for a period of five years declaring them ineligible to contest election of the Managing Committee of the said Society. Further vide Memo No. 2559 dated 28.10.2021 (Annexure-12), the Respondent No. 3 – Registrar, Cooperative Societies, Jharkhand, Ranchi reinstated the Respondent No. 7 and other Members of the Managing Committee to their original posts. Further resolution was passed for disbursement of loans through A/C, RTGS and other banking operations vide letter no.132 dated 20.03.2021. 5. Ms. Shruti Shrestha, learned counsel appearing on behalf of the petitioners submitted that Annexure-6, vide which, the Respondent No. 5- District Cooperative Officer, Dhanbad had stayed all the business / Finance activities and law making powers of the elected members of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad with immediate effect and Annexure-12, vide which, Registrar, Cooperative Societies, Jharkhand, Ranchi had constituted a committee to check the financial irregularities in the disbursement / payment of loan by bearer cheques and other illegalities have become infructuous and as such, she will confine her argument only on the point of removal of the petitioner no. 1 and 13 from Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad and further debarring them from contesting election for another five years. 6. Mr. Ajit Kumar, learned senior counsel appearing on behalf of the petitioners, submitted that bye-laws of the Cooperative Society did not warrant that before sanctioning the loan to its members, approval of the Managing Committee was required, nor the bye laws prescribed disbursement of loan amount through bearer cheque. It was further submitted that vide letter no. 2619 dated 02.11.21, Respondent No. 3-Registrar, Cooperative Societies, Jharkhand, Ranchi directed all the co- operative societies to disburse loan through A/C payee cheques /RTGS/NEFT and not through bearer cheques. According to the learned senior Advocate, this direction will not have retrospective effect. He further submitted that despite the fact that there is no allegation of misappropriation, the Respondent No. 3-Registrar, Cooperative Societies, Jharkhand, Ranchi has disqualified the petitioner no. 1 and 13 from the 4. membership of the Cooperative Society and further debarred them from contesting election for the next five years and it was not in accordance with the provisions of section 41(1) of Jharkhand Cooperative Societies Act, 1935 read with Jharkhand Cooperative Societies (Amendment) Act, 2015 as the Cooperative Society in which the petitioners are the office bearers is not financed by the Government. 7. Learned counsel appearing on behalf of the Respondent No. 7 drew attention of this Court towards the bye-laws Nos. 35 & 36 of Co-operative Society, which clearly states that before sanctioning of the loan, application was to be placed before the Managing Committee and except in exceptional and urgent cases, no loan should be advanced, unless it was approved by the Committee. It was submitted that the Society was granting loan to its members without approval of the Managing Committee and that too not by directly depositing loan amount to their accounts. It was further submitted that the Inquiry Committee had found several financial irregularities due to which, Respondent No. 3-Registrar Cooperative Societies, Jharkhand, Ranchi removed the petitioner no. 1 and 13 from the posts of Secretary and Member of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad and debarred them from contesting election for five years. 8. Now, the issue to be determined is, “whether the Respondent No. 3- Registrar, Cooperative Societies, Jharkhand, Ranchi has acted beyond jurisdiction in terminating the petitioner no. 1-Arvind Kumar Singh from the post of Secretary and the petitioner no. 13 – Meera Devi from the Member of the Managing Committee?”, in view of the amended Section 41(1) of Jharkhand Cooperative Societies (Amendment) Act, 2015. Reliance has been placed by the petitioners on the decision of Hon’ble Supreme Court in the case of Union of India versus Rajendra N. Shah and Another, reported in [2021 SCC OnLine SC 474] and in the case of Park Leather Industry (P) Ltd. And Another versus State of U.P. and Others, reported in [(2001) 3 SCC 135]. 9. As has been discussed above, a Two Member Inquiry Committee was constituted by the Respondent No. 3-Registrar, Cooperative Societies, Jharkhand, Ranchi to inquire into the financial irregularities committed by the petitioner no. 1- Arvind Kumar Singh, Secretary of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad in disbursing the loan without proper sanction from the Managing Committee and also by issuing bearer cheques to the beneficiaries along with other irregularities. The Two Member Committee after inquiry, submitted a detailed report that the society was disbursing the loan disregarding the provisions of Cooperative Act, 1935 and Cooperative Rules, 1959. It was reported that Rs. 5. 1,63,09,660/- could not be realized as the beneficiaries have defaulted in repayment of the loan and it has to be written off as a bad debt. The Committee further reported that the Society has disbursed the loan to such members who had earlier defaulted in repayment of their previous loan amount in utter disregard to the rules of the Cooperative Society. Other financial irregularities were also pointed out in the functioning of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad. 10. Learned counsel appearing on behalf of the petitioners has vehemently stressed upon the amended provisions of section 41(1) of Jharkhand Co-operative Societies (Amendment) Act, 2015, which provides as under: (1) (i) (ii) (iii) (iv) (v) “Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months; Provided that if in the opinion of the Registrar, the Board of any registered society, where the state government has contributed to the share capital, has provided loan, or financial aid provided has been on Government guarantee may be superseded or kept under suspension in case, it- is persistently making defaults, or is negligent in the performance of the duties imposed on it by this Act, the Rules or the byelaws, or committed any act prejudicial to the interest of the co-operative society or its members, or there is stalemate in the constitution or functioning of the Board; or the authority or body as provided in the act, rules and bye-laws has failed to conduct elections in accordance with the provisions of the act: The Registrar may, after giving opportunity to the managing committee to state its objection, if any, by order, with reasons in writing, supersede the Board of the Co-operative society for a period not exceeding six months and order that all or any of its members may be disqualified from being elected to the Board of the co-operative society for a period to be specified in the order, not exceeding five years. Registrar shall record every order passed under this section in writing and inform the concerned Co- operative society through registered post. Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no government shareholding or loan or financial assistance or any guarantee by the government.” 11. Thus, relying upon the aforesaid provisions, petitioners have tried to make out a case that since Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad had no Government shareholding or loan or financial assistance or any grant by the Government, the Cooperative Society shall not be superseded or kept under suspension. The fact that Dhanbad Coal Board Employees Cooperative Credit Society 6. Limited, Dhanbad was not funded by the Government, has been admitted by the Respondents. On specific query by this court, whether the society, which is not funded by the Government, misuses its powers and continues to work in a manner which was detrimental to the very objective of the society, and “whether the Respondent No. 3 – Registrar, Cooperative Societies, Jharkhand, Ranchi will have no authority to intervene?, Mr. Ajit Kumar, learned senior counsel submitted that the option available to the members of the Cooperative Society will be to impeach the present Committee and to elect a new Committee. 12. It is a fact that the Respondent No. 3 - Registrar, Cooperative Societies, Jharkhand, Ranchi had suspended Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad after receiving inquiry report and thereafter, show- cause notice was issued to the petitioners and ultimately, it transpired that the petitioner no. 1-Arvind Kumar Singh, Secretary of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad and the petitioner no. 13-Meera Devi, Member of Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad were found guilty of causing financial irregularities which has caused loss of Rs. 1,63,09,660/- to the Society. It has also come to light that despite the fact that some of the members had defaulted in repayment of loan, Society continued to grant them fresh loan knowing fully well that the loan amount cannot be realized. Thereafter, the Respondent No. 3- Registrar, Cooperative Societies, Jharkhand, Ranchi removed the petitioner no. 1-Arvind Kumar Singh from the post of Secretary of the Society and the petitioner no. 13-Meera Devi from the Member of the Managing Committee of the Society and debarred them from contesting elections for five years. 13. Presently, the only issue to be answered is, whether the Registrar, Cooperative Societies, Jharkhand, Ranchi was empowered to remove these two petitioners from their posts and debarring them from contesting election for five years. As discussed above, petitioners are not challenging the Annexure-6 by virtue of which, Dhanbad Coal Board Employees Cooperative Credit Society Limited, Dhanbad was suspended and Annexure-12 by virtue of which, the Inquiry Committee was constituted. 14. Amended Section 41 (1) of Jharkhand Cooperative Societies (Amendment) Act, 2015 prohibits the Registrar from suspending the Cooperative Society or superseding it in a case society is not funded by the Government. This provision does not restrict the Registrar from removing any office bearer of the society who is involved in 7. financial irregularities. Section 41(1) of the Act empowers the registrar to disqualify members of the board from contesting election for five years and the removal of the petitioner no. 1-Arvind Kumar Singh from the post of Secretary and the petitioner no. 13-Meera Devi from the Member of the Managing Committee does not by any means amount to supersession of the entire Managing Committee as per the terms of the proviso. Style of functioning of these two petitioners has led to loss to the tune of Rs. 1,63,09,660/- to the society and the same cannot be realized as per the Inquiry Report. Accordingly, situation demands their removal from the posts and the direction that they will not contest the election of the society for the next five years, appears to be quite reasonable. 15. I do not find any merit in this writ application. Accordingly, it is dismissed.
Decision
Pending I.A., if any, stands disposed of. Ranjeet/ (Ambuj Nath, J.)