Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 1994 of 2020 (In the matter of an application under Articles 226 and 227of the Constitution of India, 1950). Kartikeswar Sahu …. Petitioner(s) -versus- All Odisha State Bank Officers’ Cooperative Society Ltd., Bhubaneswar …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. Mahitosh Sinha, Sr. Adv. Along with associates Mr. J.K. Naik, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-11.02.2025 DATE OF JUDGMENT:-13.03.2025 Dr. S.K. Panigrahi, J. 1. In this Writ Petition, the Petitioner challenges the order dated 06.10.2018, passed by the Registrar, Co-operative Societies, Odisha, Bhubaneswar, dismissing the Dispute Case No.298/2017 for lack of cause of action. Page 1 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 2. Additionally, the Petitioner assails the order of the Co-operative Tribunal passed in TA No. 391/2018, which affirmed the aforesaid order dated 06.10.2018. I. FACTUAL MATRIX OF THE CASE:
Legal Reasoning
3. The brief facts of the case are as follows: (i) The petitioner, an active shareholder of the Opposite Party No.1 Cooperative Society, invoked the provisions of Section 68(1)(b) of the Odisha Co-operative Societies Act, 1962, to initiate a dispute case before the Registrar of Co-operative Societies. The dispute case, registered as Dispute Case No. 298/2017, which centered around alleged misconduct by the President and Directors of the Society, who are the present Opposite Parties 2 to 16. (ii) The Opposite Party No. 1 is a co-operative society registered under the Odisha Co-operative Societies Act, 1962, and the corresponding rules, vide the Registration Certificate No. 8 dated 25.09.1980. The society was formed with the objective of conducting business as a credit co- operative society. (iii) Clause 6 of the society’s bye-laws prescribes the eligibility criteria for membership, restricting it to employees of the State Bank of India (SBI) working within the State of Odisha, provided they are not members of any other similar credit co-operative society. (iv) The Registrar of Co-operative Societies dismissed the Dispute Case No. 298/2017, holding it to be non-maintainable. It was observed that the petitioner had failed to establish a valid cause of action under the provisions of the Odisha Co-operative Societies Act, 1962. It was further Page 2 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 observed that the issues raised by the petitioner could have been addressed in a General Body Meeting, and the petitioner had made no attempt to raise these concerns there before invoking Section 68 of the Odisha Co-operative Societies Act, 1962. (v) The petitioner challenged the decision of the Registrar of Co-operative Societies by filing T.A. No. 39/2018 before the Co-operative Tribunal, Odisha, Bhubaneswar. The Tribunal, upon examination, held that in the absence of any deficiencies in the society’s audit report, the petitioner’s plea for the supersession of the Managing Committee was untenable. It further observed that the challenge to the continuity of membership of retired officers lacked merit as the society’s bye-laws permitted retired officers to contribute to the Thrift Fund and thereby retain their membership. Regarding the petitioner’s request for supersession of the Managing Committee, the Co-operative Tribunal noted that under Section 32 of the Odisha Co-operative Societies Act, 1962, such action could only be taken under exceptional circumstances, such as government shareholding or financial assistance. (vi) Aggrieved by the Co-operative Tribunal’s decision and finding no other efficacious remedy, the petitioner has approached this Court by way of the present writ petition. II. SUBMISSIONS ON BEHALF OF THE PETITIONER: 4. (i) Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: The petitioner contended that Clause 6(iii) of the society’s bye-laws was unlawfully altered without approval of the Registrar of Co-operative Page 3 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 Societies. While the original provision stated "can continue to contribute," the amendment reworded it to "officers can continue by contributing." This subtle yet significant change allowed retired officers to retain membership, contradicting the original intent of the bye-law. As a result, retired SBI officers, including Rabindra Kumar Pattnaik, assumed executive positions such as President despite having retired. The petitioner further asserted that this amendment was never approved by the Registrar of Co-operative Societies. (ii) The petitioner contended that the Society accepted term deposits from both members and non-members without the mandatory RBI license, effectively operating like a chit-fund. This practice, facilitated by the Opposite Parties Nos. 2 through 12, was concealed through manipulated audit clearances. Additionally, the Society engaged in unauthorized real estate activities, including land purchases and plot distribution to non-members, funded through the illegal collection of money from non-members. (iii) The petitioner referred to the 2015-16 annual report of the society alleging that it revealed a diversion of ₹7,00,02,464/- into real estate activities in violation of bye-laws and RBI regulations, endangering members’ funds. The petitioner submitted that despite these disclosures, the Registrar of Co-operative Societies failed to take any action. Further, land transactions were conducted without the approval of the Registrar of Co-operative Societies’, with a separate land account operated secretly by the Opposite Parties Nos. 2 and 5 to facilitate misappropriation. Page 4 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (iv) The petitioner contended that from 2013 to 2015, the Management In- Charge failed to curb illegal land dealings and fund mismanagement. A resolution dated 12.09.2014 records a withdrawal of ₹20,00,000/- by the Opposite Party No. 2 with no proper investment record, indicating embezzlement. Additionally, land prices were inflated, and fraudulent misrepresentations were made to extract money for personal gains. (v) The petitioner contended that despite his repeated efforts to expose these financial irregularities, the Registrar of Co-operative Societies dismissed the dispute on irrelevant grounds. As a legitimate member, the petitioner seeks judicial inquiry and supersession of the management committee under the Odisha Co-operative Societies Act, 1962, given the magnitude of fraudulent activities. (vi) The petitioner contended that the Registrar of Co-operative Societies is empowered to conduct a summary inquiry under Rule 77 of the Odisha Cooperative Rules, 1965. The Registrar of Co-operative Societies is not bound by civil procedure provisions such as Order 7 Rule 11 CPC or Order 14 Rule 2 CPC, as special laws governing cooperative societies prevail over general procedural laws. (vii) The petitioner submitted that retired SBI officers should not hold positions or participate in elections, as the Society’s bye-laws restrict membership to active SBI officers. Further, the auditors failed to report these irregularities, including continued membership of retired officers, their election to the Board, and unauthorized real estate dealings. (viii) The petitioner contended that Rabindra Kumar Pattnaik, who retired in 2007, continued serving as President in violation of the bye-laws. His Page 5 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 participation in the 2014 election and subsequent appointment as President was illegal. (ix) The petitioner asserted that the Opposite Parties’ actions concern the Society’s constitution, management, and business, making them squarely fall within the scope of Section 65(b) & 68 of the Odisha Co- operative Societies Act, 1962. However, the Co-operative Tribunal erroneously dismissed the appeal without considering material facts. Section 68(3) of the Odisha Co-operative Societies Act, 1962expressly ousts the jurisdiction of civil courts, reinforcing the self-contained and exclusive nature of the Odisha Co-operative Societies Act, 1962. The petitioner relied on the decision in State of Maharashtra v. Laljit Rajshi Shah & Ors1, where the Supreme Court observed that co- operative society laws operate as self-contained codes. (x) The petitioner contended that the Co-operative Tribunal erred in interpreting Section 32 of the Odisha Co-operative Societies Act, 1962, which pertains to negligence by the committee, as overriding Section 68. Section 68 specifically governs disputes concerning the Society’s constitution, management, and business and operates independently. In order to substantiate that disputes concerning the business of the Society fall under Section 68 of the Odisha Co-operative Societies Act,
Legal Reasoning
1962, the petitioner placed reliance on the decision of this court in Sri Gunduchi Rout v. Orissa State Handloom Weaver’s Co-operative Society Ltd & others2. 12000 (2) SCC 699. 22008 (Supp.-II) OLR 747. Page 6 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTY (S): 5. (i) The Learned Counsel for the Opposite Party(s) earnestly made the following submissions in support of his contentions: The petitioner filed a Dispute Case under Section 68 of the Odisha Co- operative Societies Act, 1962, seeking a declaration that retired bank employees cease to be members of Opposite Party No. 1 Society. The Opposite Parties denied the allegations and filed a petition under Order 7 Rule 11 CPC, challenging maintainability on the grounds of lack of cause of action, res judicata, limitation, and lack of jurisdiction under Section 68 of the Odisha Co-operative Societies Act, 1962. The Registrar of Co-operative Societies rightly dismissed the dispute on 06.10.2018 for failure to disclose a valid cause of action. Judicial forums have consistently held that maintainability must be determined before addressing the merits, and the petitioner failed to provide sufficient evidence to establish jurisdiction. (ii) The petitioner failed to raise the issue at the General Body Meeting, as required under Section 29(2) of the Odisha Co-operative Societies Act, 1962. Consequently, invoking Section 68 was inappropriate and unnecessarily complicated the matter. (iii) Furthermore, the Society’s Bye-laws allow retired bank employees to remain members under specific conditions, such as contributing to the thrift deposit. The petitioner’s claim that their continued membership is illegal is baseless. Page 7 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (iv) Allegations of financial mismanagement are unfounded, as Section 62(1) of the Odisha Co-operative Societies Act, 1962, mandates regular audits. No audit reports of the society indicate any financial irregularities, and the ongoing audit process has revealed no adverse findings. (v) The Registrar of Co-operative Societies’ power to supersede the Committee under Section 32 of the Odisha Co-operative Societies Act, 1962applies only where there is government shareholding, loans, financial assistance, or guarantees, none of which exist in this case. Therefore, the petitioner’s demand for supersession lacks legal basis. (vi) The Board of Directors/Committee Members of the Opposite Party Society were elected on 15.01.2015 but became defunct on 25.01.2020. A new Board was reconstituted on 04.02.2020, and since 10.02.2020, the Deputy Registrar of Co-operative Societies, Khordha, Rosalyn Senapati, has been managing the Society under Section 32(1) of the Odisha Co- operative Societies Act, 1962. Consequently, all Opposite Parties have
Decision
ceased to hold positions, and the allegations in the writ petition are now infructuous. (vii) Three Opposite Parties i.e., Opposite Party No. 6, Opposite Party No. 9, and Opposite Party No. 12, passed away years ago. The petitioner failed to substitute them in the writ application and concealed their deaths, leading to abatement of the case against them. (viii) Amendments to the Society’s Bye-laws fall solely within the discretion of the Governing Body. Neither the Government nor any other authority can enforce or execute such amendments. Page 8 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (ix) The present writ petition lacks merit. The orders passed by the Registrar of Co-operative Societies and the Co-operative Tribunal are legally sound and require no interference. Accordingly, this writ petition is liable to be dismissed. IV. COURT’S REASONING AND ANALYSIS: 6. 7. Heard the learned counsel for the Parties and perused the materials placed on record. In the exercise of its writ jurisdiction, this Court does not function as an appellate authority over the Registrar of Cooperative Societies or the Co-operative Tribunal. However, intervention is warranted where the Tribunal has erroneously refused to admit admissible and material evidence, has erroneously admitted inadmissible evidence, or where a finding of fact is based on no evidence, amounting to an error of law correctable by a writ of certiorari. 8. In this regard, Supreme court observed in Syed Yakoob v. K.S Radhakrishnan & Ors.3 as hereinunder: “8. …Where it is manifest or clear that the conclusion of law recorded by an inferior Court or Tribunal is based on an obvious mis-interpretation of the relevant statutory provision, or sometimes in ignorance of it, or may be, even in disregard of it, or is expressly founded on reasons which are wrong in law, the said conclusion can be corrected by a writ of certiorari. In all these cases, the impugned conclusion should be so plainly inconsistent with the relevant statutory provision that no difficulty is experienced by the High Court in holding that the said error of law is apparent on the face of the record. It may also be that in 3(1964) 5 SCR 64. Page 9 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 some cases, the impugned error of law may not be obvious or patent on the face of the record as such and the Court may need an argument to discover the said error; but there can be no doubt that what can be corrected by a writ of certiorari is an error of law and the said error must, on the whole, be of such a character as would satisfy the test that it is an error of law apparent on the face of the record. If a statutory provision is reasonably capable of two constructions and one construction has been adopted by the inferior Court or Tribunal, its conclusion may not necessarily or always be open to correction by a writ of certiorari. In our opinion, it is neither possible nor desirable to attempt either to define or to describe adequately all cases of errors which can be appropriately described as errors of law apparent on the face of the record. Whether or not an impugned error is an error of law and an error of law which is apparent on the face of the record, must always depend upon the facts and circumstances of each case and upon the nature and scope of the is alleged to have been legal provision which misconstrued or contravened.” 9. 10. The petitioner, in the present writ petition, is challenging the order dated 06.10.2018, issued by the Registrar of Cooperative Societies, Odisha, Bhubaneswar, whereby the Dispute Case No. 298/2017 was dismissed for lack of cause of action. To examine the validity of the impugned order, it is necessary to analyze the contours of Section 68 of the Odisha Cooperative Societies Act, 1962, which governs disputes concerning the constitution, management, or business of a cooperative society. The same is replicated hereinunder: “68. Disputes which may be referred to arbitration. Page 10 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, management or the business of a Society, other than a dispute required to be referred to the Tribunal and a dispute required to be adjudicated under the Industrial Disputes Act, 1947, [and a dispute relating to non-payment of contribution to the Co-operative Education Fund referred to in Sub-section (3) of Section 56] shall be referred to the Registrar if the parties thereto are among the following, namely:- (a) the Society, its Committee, past Committee, any past or present Officer or office-bearer, any past or present agent, any past or present servant or the nominee, legal heir or representative of any deceased Officer, office-bearer, deceased agent or deceased servant of the Society; or (b) a member, past member, or a person claiming through a member, past member or deceased member of the Society, or of a Society which is a member of the Society; or (c) a surety of a member, past member or a deceased member, whether such surety is or is not a member of the Society; or (d)any other Society. Explanation I - A claim in respect of any sum payable to or by a Society, by or to a person or Society mentioned in Clauses (a) to (d) shall be a dispute touching the business of the Society within the meaning of this section, even in case such claim is admitted and the only points at issue are the ability to pay and the manner of enforcement of payment. Explanation II - A claim by a Financing Bank against a member of a Society which is a member of the Financing Bank and indebted to it for the recovery of dues payable by such member to the Society shall be a dispute touching the business of the Financing Bank within the meaning of this Section. Page 11 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 Explanation III - The question whether a person is or was a member of a Society or not shall be a dispute within the meaning of this section. Explanation IV - A claim by a surety for any sum or payment due to him from the principal borrower in respect of a loan advanced by a Society shall be a dispute within the meaning of this Section. Explanation V - The question whether a person or any one of his family members is carrying on any business prejudicial to the business or interests of the Society, or whether such family member has common economic interest with such person shall be a dispute within the meaning of this Section.] (2) Any person, Society, [or Financing Bank] referring a dispute to the Registrar under Sub-Section (1) shall deposit in advance such fees as may be prescribed. (3) No dispute referred to in this section shall be entertained in any Civil Court and decision of the Registrar in this respect shall, subject to the provisions of Section 70, be final. (4) If any question arises whether a dispute referred to the Registrar under this section is a dispute touching the constitution, management or the business of a Society, the decision thereon of the Registrar shall be final and shall not be called in question in any Court. (5) Nothing in this section shall, where the disputes relate to the recovery of the dues of any Society from any of its member be construed to debar any Financing Bank of such Society from referring such dispute to the Registrar.” 11. 12. A perusal of Section 68 of the Odisha Cooperative Societies Act, 1962, makes it clear that disputes concerning the constitution, management, or business of a cooperative society may be referred to the Registrar of Cooperative Societies, thereby excluding interference by civil courts. In the present case, the Registrar of Cooperative Societies, while dismissing the dispute, observed that the petitioner had failed to Page 12 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 demonstrate any cause of action within the meaning of Section 68of the Odisha Cooperative Societies Act, 1962. A careful examination of the record reveals that the petitioner’s contentions lacked both substantive legal backing or factual foundation to bring the matter within the purview of Sections 68 and 70 of the Odisha Cooperative Societies Act, 1962. 13. The core grievance of the petitioner pertains to the continued membership of retired bank employees in the cooperative society. However, Clause 6(iii) of the society’s bye-laws explicitly permits such membership, subject to the following conditions: “Officers after retirement can continue by contributing to his/her Thrift Fund provided he/she shall intimate the Society in writing to do so, subject to approval of the Management Committee.” 14. 15. Furthermore, Rule 8 of the Odisha Cooperative Societies Rules, 1965, affirms that matters related to membership qualification, admission, and continuation fall squarely within the purview of the society’s bye- laws. At this juncture, it is imperative to underscore that judicial intervention in the internal affairs of a cooperative society is inherently circumscribed. The amendment, interpretation, and implementation of bye-laws remain an internal matter, falling exclusively within the domain of the society’s governing body. External authorities, including this Court, ought to refrain from interference in such matters unless there is a clear and manifest violation of statutory provisions. Page 13 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 16. The petitioner has also alleged irregularities in the society’s management. In this regard, the Cooperative Tribunal, in T.A. No. 391/2018, observed that Section 62(1) of the Odisha Cooperative Societies Act, 1962, mandates an annual statutory audit within six months of the end of the financial year to detect any violations. Crucially, it was observed that no material has been placed on record to suggest that the alleged irregularities were reflected in any audit report. 17. As for the petitioner’s plea for the supersession of the managing committee, Section 32 of the Odisha Cooperative Societies Act, 1962, assumes significance. This provision vests the Registrar of Cooperative Societies with discretionary power to supersede a committee under extraordinary circumstances. It was observed by the Cooperative Tribunal that such an action necessitates an independent assessment by the Registrar, and the petitioner cannot invoke this provision in the absence of statutory grounds. This Court does not find any infirmity with this view. 18. Furthermore, both the Registrar of Cooperative Societiesand the Cooperative Tribunal have observed that the petitioner had the opportunity to raise these grievances before the General Body or to requisition a General Body meeting under Section 29(2) of the Odisha Cooperative Societies Act, 1962. There is no indication that the petitioner availed of these remedies before resorting to the dispute resolution mechanism under Section 68 of the Odisha Cooperative Societies Act, 1962. Page 14 of 15 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 13-Mar-2025 17:54:08 19. Given the availability of an effective and specific remedy under Section 29(2) of the Odisha Cooperative Societies Act, 1962, no case has been made out warranting judicial intervention. Since such remedies were not availed, this Court enters into the precinct of merit and finds that the impugned order is well reasoned and does not suffer from any legal infirmity. It is also pertinent to note that the Board of Directors/Committee Members of the respondent society became defunct on 25.01.2020. As a result, all office-bearers have ceased to hold their respective positions, rendering the present writ infructuous. Therefore, in the absence of any material discrepancies in the statutory audit report and given that the issues raised by the petitioner pertain to internal matters governed by the society’s bye-laws, this Court finds no justification for interference. CONCLUSION: In light of the foregoing discussion, this Court finds no substantial ground for intervention in the orders of the Registrar, Co-operative Societies, Odisha, Bhubaneswar and the Co-operative Tribunal. Accordingly, the Writ Petition stands dismissed. Interim order, if any, passed earlier stands vacated. 20. 21. V. 22. 23. 24. Orissa High Court, Cuttack, Dated the 13th March, 2025/ (Dr.S.K. Panigrahi) Judge Page 15 of 15