Ashok Verma And Anr. vs State Of U.P. And 2 Ors.
2013 Latest Caselaw 5878 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR 
 
Court No. - 2 
 
Case :- WRIT - C No. - 48536 of 2013
 

 
Petitioner :- Ashok Verma And Anr.
 
Respondent :- State Of U.P. And 2 Ors.
 
Counsel for Petitioner :- Manish Singh
 
Counsel for Respondent :- C.S.C.,Irshad Husain,Sanjeev Singh
 
and
 
Case :- WRIT - C No. - 47944 of 2013
 

 
Petitioner :- The Prabhu Narain Union Club Varanasi
 
Respondent :- State Of U.P. And 2 Others
 
Counsel for Petitioner :- Irshad Hussain,Sanjeev Singh
 
Counsel for Respondent :- C.S.C.,Manish Singh
 

 
Hon'ble Tarun Agarwala,J.

Prabhu Narain Union Club, Varanasi is a society registered under the Societies Registration Act, 1960, which was created with the object of providing suitable means of social recreation and feeling of unity, cordiality and sociality amongst respectable persons of all caste and creeds. Under the memorandum of the Association, the term of Committee of Management is one year.

On the basis of a complaint, the Assistant Registrar, Firms Societies & Chits, Varanasi issued a letter dated 17th July, 2013 initiating investigation into the affairs of the Society under Section 24 of the Societies Registration Act. Upon investigation, the Assistant Registrar passed an order dated 1st August, 2013 holding that no election of the Society was held for the past 5 years, and that the accounts were not being properly maintained and that the affairs of the Society were not being carried out in accordance with the objects of the Society. The authority, accordingly, directed that the election of the Society would be held under its supervision pending finalization of the members list and till such time the election was not held, the Assistant Registrar directed formation of an adhoc committee to manage the affairs of the Society on a day to day basis.

Based on the said direction, the adhoc committee took charge and, by an order dated 14th August, 2013 expelled certain members from the Society. These expelled members being aggrieved by the action of the adhoc committee made a representation before the Registrar, who by an order dated 20th August, 2013 stayed the resolution of the adhoc committee. The adhoc committee, being aggrieved by the order of the Assistant Registrar dated 20th August, 2013 filed Writ Petition No. 47944 of 2013, which was entertained and an interim order was passed staying the effect of the order of the Assistant Registrar. As a result of the interim order, the expelled members filed Writ Petition No. 48536 of 2013 questioning the order of the Assistant Registrar dated 1st August, 2013 and the resolution of the committee of management date14th August, 2013.

Since both the writ petitions are interconnected and is one of urgency since in the meanwhile the Assistant Registrar has fixed 29th September, 2013 for holding the election, the matter is being decided at the admission stage itself without calling for a counter affidavit with the consent of the parties.

Heard Sri Ashok Khare, learned Senior Counsel and Sri Manish Singh on behalf of the expelled members in Writ Petition No. 48536 of 2013 and Sri Sanjeev Singh, the learned counsel for the adhoc committee, who has filed Writ Petition No. 47944 of 2013 and is representing the Club in the writ petition filed by the expelled members.

The learned Senior Counsel contended that the Assistant Registrar while investigating the affairs of the Society under Section 24 of the Act had no power to issue any order for formation of an adhoc committee. The committee so formed was wholly illegal and was liable to be set aside. The learned counsel submitted that the powers of the Registrar under Section 24(5) was only to give such direction upon conclusion of the investigation to remove any defects or irregularities found in such investigation or may proceed to take action under Section 12D or under Section 13B of the Act, as the case may be, but had no power to appoint an adhoc committee.  The learned senior counsel further contended that the adhoc committee was only appointed to look after the day to day affairs and was not entitled to make major decisions such as expelling members of the Society. The learned counsel submitted that the action of the adhoc committee in passing such a resolution was wholly illegal and unwarranted.

On the other hand, the learned counsel for the adhoc committee supported the order of the Registrar passed under Section 24(5) of the Act, contending that it had all the powers to form an adhoc committee for the purpose of good governance and that the words "as he may think fit" was wide enough to include the power to appoint an adhoc committee. The learned counsel further submitted that since the members was not adhering to the notices sent by the adhoc committee and were interfering with the affairs of the Society, it became imperative for the adhoc committee to issue the expulsion order in accordance with the bye-laws.

Having heard the learned counsel for the parties, the Court finds that in order to settle the issue, it would be appropriate to have a look at certain provisions of the Act, namely, Section 24 and Section 25(2) of the Societies Registration Act as applicable in the State of Uttar Pradesh. For ready reference, Section 24 and 25(2) of the Act are extracted hereunder:

24. Investigation of affairs of a society. - (1) Where on information received under section 22 or otherwise, or in circumstances referred to in sub-section (3) of section 23, the Registrar is of opinion that there is apprehension that the affairs of a society registered under this Act are being so conducted as to defeat the objects of the society or that the society or its governing body, by whatever name called, or any officer thereof in actual effective control of the society is guilty of mismanaging its affairs or of any breach of fiduciary or other like obligations, the Registrar may, either himself or by any person appointed by him in that behalf, inspect or investigate into the affairs of the society or inspect any institution managed by the society.

(2) It shall be the duty of every officer of the society when so required by the Registrar or other person appointed under sub section (1) to produce any books of account and other records of or relating to the society which are in his custody and to give him all assistance in connection with such inspection or investigation.

(3) The Registrar or other person appointed under sub-section (1) may call upon and examine on oath any officer, member or employee of the society in relation to the affairs of the society and it shall be the duty of every officer, member or employees, when called upon, to appear before him for such examination.

[(3A) The Registrar or other person appointed under sub-section (1), may, if in this opinion it is necessary for the purpose of inspection or investigation, seize any or all the records including account books of the society:

Provided that any person from whose custody such records are seized shall be entitled to make copies thereof in the presence of the person having the custody of such records.]

(4) On the conclusion of the inspection or investigation, as the case may be, the person if any appointed by the Registrar to inspect or investigate shall make a report to the Registrar on the result of his inspection or investigation.

(5) The Registrar may, after such inspection or investigation, give such directions to the society or to its governing body or any officer thereof, as he may think fit, for the removal of any defects or irregularities, within which as may be specified and in the event of default in taking action according to such directions, the Registrar may proceed to take action under section 12D or section 13B, as the case may be.

25. Dispute regarding election of office-bearers.-

(1) .....................

(2) Where by an order made under sub-section (1), an election is set aside or an office-bearer is held no longer entitled to continue in office or where the Registrar is satisfied that any election of office-bearers of a society has not been held wihtin the time specified in the rules of that society, he may call a meeting of the general body of such society for electing such office-bearer of office-bearers, and such meeting shall be presided over and be conducted by the Registrar or by any officer authorized by him in this behalf, and the provisions in the rules of the society relating to meeting and elections shall apply to such meeting and election with necessary modifications.

A perusal of Section 24 indicates that the Registrar or any person appointed by him can suo motu or on a complaint, investigate into the affairs of the Society or inspect any institution managed by the Society. On the conclusion of the inspection or investigation, the Registrar upon perusal of such report would give such direction to the Society or to its governing body or any officer as he may think fit for the removal of any defects or irregularities and, in the event of default in compliance of the directions given by the Registrar, the Registrar may proceed to take action under Section 12D or Section 13B of the Act.

Section 12D gives power to the Registrar to cancel the registration of the Society in certain circumstances and 13B gives power for dissolution of the Society by a Court.

Section 25(2) provides that where the Registrar is satisfied that any election of the office bearers of the Society has not been held within the time specified in the rules of that Society, the Registrar may call a meeting of the general body of the Society for electing such officers or office bearers and such meeting shall be presided over and be conducted by the Registrar or by any officer authorized by him in this behalf. Here the words "or by any officer authorized by him in this behalf" is of importance which will be considered hereinafter.

From a perusal of the impugned order dated 1st August, 2013, the Court finds that it is a composite order of the Registrar passed under Section 24(5) read with Section 25(2), namely, that the affairs of the Society was not being managed in accordance with the bye-laws of the Society and that the election had not been held for a long time.

The Registrar, accordingly, directed appointment of an adhoc committee to manage the affairs of the Society on a day to day basis rather than allowing the old committee to continue and further took upon itself the task of holding the election.

During the course of arguments, the learned counsel for the adhoc committee submitted that the list of members has been finalized by the Registrar and 28th September, 2013 has been fixed for holding the election.

From a perusal of the order of 1st August, 2013, the Registrar had clearly indicated in the said order for appointment of an adhoc committee to manage the day to day affairs till such time such election of the office bearers of the Society are not held.

In the light of the aforesaid provisions, and the order of the Registrar dated 1st August, 2013, the Court finds that the order of the Registrar dated 1st August, 2013 does not suffer from any manifest error of law. The Registrar after investigation found that the affairs of the Society was not being managed in accordance with the bye-laws of the Society and was therefore justified in appointing an adhoc committee and in holding an election. The order for appointing an adhoc committee is not an order under Section 24(5) of the Act but is an order under Section 25(2) of the Act. The Registrar has taken a decision to hold an election, and till such time such election was not held, the Registrar was competent to conduct the affairs of the society himself or by any officer authorized by him in this behalf. The words "any officer authorized by him" in the given circumstances would include an ad hoc committee.

The purpose of appointing the ad hoc committee was to remove the outgoing members of the committee of management as they were holding the post for several years and were not conducting the election in accordance with the bye-laws of the society. The action taken by the Registrar was thus justified, in the given circumstances. It would have been a different matter if the adhoc committee was allowed to continue and manage the affairs of the Society,  without calling for an election, but in the instant case, the Court has been informed that the election would be held on 28th September, 2013.

Consequently, the Court is of the opinion that the formation of the adhoc committee by an order of the Registrar dated 1st August, 2013 was justified in the given circumstances, which requires no interference.

The adhoc committee was required to manage the affairs of the Society on a day to day basis under the supervision of the Registrar.  The adhoc committee was not required to take any major decisions like expulsion of any permanent members of the Society. Such resolution passed by the Committee of Management was ex-facie illegal and the Registrar's action in the given circumstances was justified in staying the said resolution by an order of 20th August, 2013. The Court finds that the adhoc committee exercising its power in expelling its members was wholly illegal and that the Registrar was competent to put the clock back and restore the membership of the expelled members.

In the light of the aforesaid, the order of the Registrar dated 1st August, 2013 appointing an adhoc committee and directing holding of the election does not suffer from any error of law. The resolution of the adhoc committee dated 14th August, 2013 expelling its members is patently without jurisdiction and cannot be sustained and is quashed. The order of the Assistant Registrar dated 20th August, 2013 staying the effect of the resolution dated 14th August, 2013 was perfectly justified in the given circumstances.

In the result, the Writ Petition No. 48536 of 2013 is partly allowed. The order dated 1st August, 2013 is affirmed and the resolution dated 14th August, 2013 passed by the adhoc committee of management is quashed.

The Writ Petition No. 47944 of 2013 is dismissed. Interim order, if any, is vacated. In the circumstances of the case parties shall bear their own cost. Let a certified copy of the order be issued to the learned counsel for the parties within a week on payment of usual charges.

Order Date :- 18.9.2013

Fahad

(Tarun Agarwala,J.)