The Supreme Court Thursday said that the registrar or the joint registrar of co-operative societies should resist political pressures and if they choose to succumb to it then they would be personally liable to bear the cost of litigation that would arise out of their decisions inspired by extraneous considerations.
“Registrar/joint registrar shall not act under political pressure or influence and, if they do, be subjected to disciplinary proceedings and be also held personally liable for the cost of the legal proceedings”, said an apex court bench of Justice K.S.Radhakrihnan and Justice Justice Dipak Misra in their judgment.
“Registrar/joint registrar therefore is duty bound to exercise his powers bona fide and not on the dictation or direction of those who are in power”, said the judgment pronounced by Justice Radhakrishnan.
The court imposed a cost of Rs.1 lakh on Madhya Pradesh government that it would pay to the Madhya Pradesh Legal Services Authority within one month.
It also imposed cost of Rs.10,000 on the joint registrar, co-operative societies, Sagar who had passed the order superseding the board of directors of District Cooperative Central Bank Ltd., Panna. The court said that the sum, to be deducted from his salary, would be deposited with District Co-operative Bank within two months.
The court said this while dismissing two appeal against the order of the Madhya Pradesh High Court by which the high court) had set aside the order of the Sagar joint registrar, passed without previous consultation with the Reserve Bank of India.
Such a consultation with the RBI is provided under the second proviso to Section 53(1) of the Madhya Pradesh Cooperative Societies Act, 1960.
The board of directors was superseded Sep 30, 2011 but the high court set aside the decision by its order dated Feb 13, 2012.
The order of the high court was challenged by the Madhya Pradesh government and the joint registrar.
Stating that it had failed to notice why the Madhya Pradesh government and the department of co-operative societies had taken so much interest in this litigation, Justice Radhakrishnan said that the state government should not spend public money in “unnecessary litigation” involving dispute between different factions of the society.
“Public money not to be spent by the state government or the registrar for unnecessary litigation involving disputes between various factions in a co-operative society. Tax-payers money is not expected to be spent for settling those disputes. If found necessary, the same be spent from the funds available with the concerned bank,” said one of the seven general directions issued by the court.
Directing that the elected body should be allowed to complete the term for which it is elected, the court sad that the “supersession of an elected managing committee/board should be an exception and be resorted to only in exceptional circumstances”.
The court further directed that the “elected committee in office be not penalised for the short-comings or illegalities committed by the previous committee, unless there is any deliberate inaction in rectifying the illegalities committed by the previous committees”.
The court said that the approach in dealing with the co-operative societies should be making them correct their mistakes that are pointed out in the audit report and for which they should be given sufficient time, say at least six months.
Underlining that registrar/joint registrar are legally obliged to comply with all the statutory formalities, including consultation with the financing banks/controlling banks etc, the court said that they should always bear in mind the consequences of an order of supersession which not only ousts the board, but also disqualify its members from contesting the succeeding elections.