Sukumar Bera vs The State Of West Bengal & Ors
2022 Latest Caselaw 2119 Cal

            IN THE HIGH COURT AT CALCUTTA
                          Civil Appellate Jurisdiction
                                (Appellate Side)

                              M.A.T. 1011 of 2021
                              I.A. No. CAN/2/2022

                                 Sukumar Bera
                                       Vs.
                         The State of West Bengal & Ors.

                                      With

                               CPAN 119 of 2022
                              Chintamani Mandal
                                      Vs.
                                 Dr. M. V. Rao

                                       In

                                MAT 1012 of 2021
                             I.A. No. CAN 1 of 2021

                               Suvendu Adhikari

                                       Vs.

                         The State of West Bengal & Ors.

Before: The Hon'ble Justice Arijit Banerjee
                      &
        The Hon'ble Justice Kausik Chanda

For the Appellants in              : Mr. Abhratosh Majumdar, Sr. Adv.
(MAT 1011 of 2021) and For           Mr. Srijib Chakraborty, Adv.
the Respondent no.8 in              Mr. Aditya Mondal, Adv.

(CPAN 119 of 2022)

For the Respondent nos. 2 : Mr. Pradip Kumar Roy, Adv.

Mr. Joydeep Roy, Adv.

For the Respondent nos. 6 : Mr. Pratik Dhar, Sr. Adv.

Mr. Ritwik Pattanayak, Adv.

For the Respondent nos. 8 in : Mr. Billwadal Bhattacharyya, Adv. (MAT 1011 of 2021) and Mr. Anish Kumar Mukherjee, Adv.

For the Appellants in                 Mr. Saket Sharma, Adv.



(MAT 1012 of 2021)                     Mr. Amrit Sinha, Adv.
                                       Mr. Surojit Saha, Adv.

For the State                     : Mr. S.N. Mookherjee, LAG.
                                    Mr. Anirban Ray, LGP.
                                    Mr. Srijan Nayak, Adv.
                                    Ms. Rituparna Maitra, Adv.

For the R.B.I.                    : Mr. Alok Kumar Banerjee, Adv.
                                   Mr. Arunabha Sarkar, Adv.

For the alleged Contemnor no. 4       : Mr. Ankit Surekha, Adv.
In (CPAN 119 of 2022)                  Mr. Biplob Das, Adv.

Heard On                          :    06.12.2021, 20.01.2022, 11.02.2022,
                                       21.02.2022, 22.02.2022, 25.02.2022
                                       and 28.02.2022

CAV On                            : 01.03.2022

Judgment On                       : 20.04.2022



In re: I.A. CAN 2 of 2022


Arijit Banerjee, J.:

1. I.A. No. CAN 2/2022 and CPAN 119 of 2022 arise out of the same

bundle of facts. Accordingly, we have taken up the two matters analogously

and are disposing of both by this common judgment and order.

2. Three appeals viz. M.A.T. 1011 of 2021 (Sukumar Bera v. The State

of West Bengal and Ors.), M.A.T. 1012 of 2021 (Suvendu Adhikari v. The

State of West Bengal and Ors.) and M.A.T 808 of 2021 (Sukumar Bera v.

The State of West Bengal and Ors.) were disposed of by this Bench along

with the connected applications by a judgment and order dated January 20,

2022. The relevant portion of the said order reads as follows:-

"Since there is a serious contention about the competence or

authority of the present Board to be in charge of the affairs of the

Bank and since the Bank deals with public money, we are of the

view that for its remaining tenure till the constitution of a fresh

Board, the present Board should function under the general

supervision of an officer to be nominated by the Governor of the

Reserve Bank of India. Such officer shall not interfere with the day

to day functioning of the Board. However, any major policy

decision shall be taken and any transaction over the value of Rs. 1

Crore shall be undertaken by the Board only in consultation with

such officer. We are passing this order of interim arrangement in

public interest and to inspire public confidence in the functioning

of the concerned Bank. The Reserve Bank of India being the

guardian of all Banks in India and having supervisory power over

such Banks, we are sure that the present Board shall not find it

objectionable to function for the limited period indicated above

under the general supervision of an Officer of the Reserve Bank of

India."

3. The appellant has taken out the present application for modification of

the aforesaid order dated January 20, 2022. The prayer in the said

application reads as follows:-

"In the premises as aforesaid Your Lordships would graciously be

pleased to issue a Rule calling upon the respondents to show

cause as to why the order dated 20.01.2022 passed in CAN 1 of

2021 in MAT 808 of 2021 and CAN 1 of 2021 in MAT 1011 of 2021

be not modified to the effect that due to the expiry of the tenure of

the Board of Directors in the respondent no. 6 Bank, the Reserve

Bank of India should be directed to take control of the day to day

affairs of the respondent no. 6 bank in terms of the Banking

Regulation Act, 1949 and on causes being shown and/or if no

cause is shown to make the Rule absolute and to pass such

further order/orders as Your Lordships may deem fit and proper."

4. We have been told that pursuant to the aforesaid order, the Governor

of the Reserve Bank of India (in short 'RBI') has nominated an officer, under

whose supervision the Board of Directors of the Bank is presently

functioning.

5. Appearing in support of the application, Mr. Abhratosh Majumder,

Learned Senior Counsel, submitted that the tenure of the Board of Directors

of the Cooperative Bank came to an end on February 5, 2022. Referring to

Section 36(2) of the West Bengal Cooperative Societies Act, 2006, he

submitted that all the Directors are deemed to have vacated office on that

date. None of them can function as a Director any further. However, taking

advantage of this Court's Order dated January 20, 2022, the defunct Board

continues to operate.

6. Mr. Majumder further submitted that RBI should exercise its powers

under Section 35 ACA of the Banking Regulation Act, 1949, and appoint an

Administrator over the affairs of the Cooperative Bank. Referring to Section

35 (1A) of the 2006 Act, he argued that there is no inconsistency between

the powers of the State Government and the power of RBI to take charge of

the affairs of the Cooperative Bank by appointing an Administrator in the

event protection of interest of the depositors so warrants. He said that since

the Bank is presently functioning under the supervision of an officer of RBI,

it would be convenient that RBI takes charge of the affairs of the Bank by

appointing an Administrator till such time that a new Board of Directors is

elected. The Board, of which the tenure has expired, cannot be allowed to

function even for a single day. He further pointed out that most of the

Directors having completed ten years on the Board, they are disqualified to

contest the next election by reason of the provisions of Section 10A(2A) of

the Banking Regulation Act which provides inter alia that no director of a

banking company other than its chairman or whole-time Director, by

whatever name called, shall hold office continuously for a period exceeding 8

years.

7. Appearing for the respondent nos. 6,7,9 to 11, 13 to 18, Mr. Pratik

Dhar, learned Senior Counsel, urged the following points:-

(i) Section 36 of the West Bengal Cooperative Societies Act, 2006,

which deals with expiry of the Board's term and appointment of

Special Officer, will not apply in the facts of this case because of

judicial intervention. He pointed out that a writ petition being WPA

1631 of 2021 was filed by the Bank challenging a notification

dated January 8, 2021, issued by the State Government

appointing a nominee on the Board of Directors of the Bank. Upon

the learned Single Judge refusing to pass an interim order, the

Bank preferred an appeal being MAT 120 of 2021. In the said

appeal an interim order dated February 11, 2021, was passed

"directing the parties to maintain status quo ante maintaining the

position connected to the composition of the BOD of the appellants

as existing prior to the notification impugned dated 8th of January,

2021 until further orders. In view of the aforesaid direction, the

notification dated 8th January, 2021, remains axiomatically stayed.

Mr. Dhar submitted that such interim order is still in subsistence.

Accordingly, neither the State Government nor RBI can interfere

with the composition of the Board of Directors without first getting

the said interim order vacated or suitably modified.

(ii) Mr. Dhar then submitted that it was the responsibility of the

Cooperative Election Commission to hold election prior to expiry of

the tenure of the present Board. Each and every effort made by the

Election Commission to do so was challenged at every stage by the

appellant. The appellant's sole object has been to create a

situation which would apparently justify appointment of a Special

Officer by the State Government or an Administrator by RBI over

and in respect of the affairs of the Bank. The State has also acted

in a manner making election impossible till date. By issuing

notification under Section 36 of the West Bengal Cooperative

Societies Act, 2006, the State has sought to do indirectly what it

could not do directly because of subsistence of the interim order

passed in MAT 120 of 2021. In this connection learned Counsel

relied on the decision of the Hon'ble Supreme Court in the case of

Shiv Kumar Sharma v. Santosh Kumari (2007) 8 SCC 600, at

paragraph 22 whereof it has been observed that what cannot be

done directly cannot be done indirectly. Learned Counsel also

relied on the decision of the Hon'ble Supreme Court in the case of

Devendra Kumar V. State of Uttaranchal & Ors. (2013) 9 SCC

363, at paragraph 25 whereof it has been observed that a person

cannot take advantage of his own wrong.

(iii) Thirdly, Mr. Dhar submitted that until fresh election is held,

the choice is between the present Board running the affairs of the

Bank under the supervision of the officer nominated by RBI or a

Special Officer appointed by the State or an Administrator

appointed by RBI taking charge of such affairs. The present Board

has been managing the affairs of the Bank successfully for the last

several years. It will be in the interest of all concerned if the

present Board under the supervision of the officer nominated by

RBI continues to administer the Bank until constitution of a new

Board pursuant to election. Referring to Section 29(7) of the

Cooperative Societies Act, 2006, learned Counsel submitted that

under certain circumstances even the Registrar of Cooperative

Societies can constitute a Board. A fortiori, the Court can order an

ad-hoc Board to function for a limited period if the circumstances

of a case so warrant. There is no allegation of mis-management of

the Bank's affairs by the present Board. The election will be

completed very soon. The present arrangement should continue in

so far as managing the affairs of the bank is concerned.

(iv) Mr. Dhar then submitted that the bonafide of the present

Board is beyond any question. Even with a favourable interim

order of status quo in its favour, it is trying to get fresh election

held rather than trying to delay the election.

(v) Learned Counsel then submitted that the State, by issuing

notification under Section 36 of the 2006 Act has acted in breach

of the aforesaid interim order of status quo ante passed by the

Division Bench in MAT 120 of 2021. Learned Counsel referred to

paragraph 28 of the Supreme Court decision in the case of All

Bengal Excise Licensees' Association v. Raghabendra Singh

& Ors. ( 2007) 11 SCC 374, which reads as follows:-

"In our opinion, a party to the litigation cannot be allowed to

take an unfair advantage by committing breach of an interim

order and escape the consequences thereof. By pleading

misunderstanding and thereafter retaining the said advantage

gained in breach of the order of the Court and the wrong

perpetrated by the respondent contemnors in contumacious

disregard of the order of the High Court should not be

permitted to hold good. In our opinion, the impugned order

passed by the High Court is not sustainable in law and

should not be allowed to operate as a precedent and the

wrong perpetrated by the respondent contemnors in utter

disregard of the order of the High Court should not be

permitted to hold good."

(vi) Mr. Dhar submitted that the prayer in the modification

application is in effect one for appointment of Administrator by the

RBI over and in respect of the Bank's affairs. This is identical with

prayer (e) of a Public Interest Litigation pending before a

Coordinate Bench being WPA(P) No. 225 of 2021 Devasish Jana

v. Reserve Bank of India and Ors. Hence, this Court should not

entertain such prayer.

(vii) Finally, Mr. Dhar submitted that the present modification

application is not maintainable. The appeal stood disposed of by

the order dated January 20, 2022. The appeal cannot be reopened

by way of a miscellaneous application. The applicant could have

preferred a Special Leave Petition before the Hon'ble Supreme

Court or could have filed a review application. In this connection

learned Counsel relied on paragraph 10 of the decision of the

Hon'ble Supreme Court in State of Uttar Pradesh v. Brahm Datt

Sharma and Anr. (1987) 2 SCC 179 which reads as follows:-

"The High Court's order is not sustainable for yet another

reason. Respondents' writ petition challenging the order of

dismissal had been finally disposed of on August 10, 1984,

thereafter nothing remained pending before the High Court.

No miscellaneous application could be filed in the writ

petition to revive proceedings in respect of subsequent events

after two years. If the respondent was aggrieved by the notice

dated January 29, 1986 he could have filed a separate

petition under Article 226 of the Constitution challenging the

validity of the notice as it provided as separate cause of action

to him. The respondent was not entitled to assail validity of

the notice before the High Court by means of a miscellaneous

application in the writ petition which had already been

decided. The High Court had no jurisdiction to entertain the

application as no proceedings were pending before it. The

High Court committed error in entertaining the respondent's

application which was founded on a separate cause of action.

When proceedings stand terminated by final disposal of writ

petition it is not open to the court to reopen the proceedings

by means of a miscellaneous application in respect of a

matter which provided a fresh cause of action. If this principle

is not followed there would be confusion and chaos and the

finality of proceedings would cease to have any meaning."

8. In reply, Mr. Majumder, learned Advocate for the applicant submitted

that the interim order of status quo would be applicable only in respect of

composition of an existing Board. The order cannot apply in respect of

composition of a Board of which tenure has expired. The status quo order

must be construed in the context of the challenge in those proceedings

which was to the nomination of a Government representative on the Board

of the Bank. He further submitted that the Board members, when they

moved the court for early election, did not feel that the status quo order will

stand in the way. No contempt application has been filed by the Board

members for alleged violation of the status quo order.

9. As regards the point of maintainability of the modification application,

Mr. Majumder submitted that the writ petition which gave rise to the appeal

on which the order dated January 20, 2022, was passed, modification

whereof is sought, is pending. Hence it cannot be said that the proceedings

have been disposed of finally. When the said order was passed, everybody

was under the impression that election for constitution of a fresh Board will

be held prior to the tenure of the Board expiring. Since that has not

happened and the Board continues to function, the present modification

application became necessary. He also referred to Order 39 Rule 4 second

proviso of the Code of Civil Procedure.

10. We have considered the respective contentions of the parties.

11. The prayer in the modification application is for a direction on the

Reserve Bank of India to take control of the day to day affairs of the

respondent Bank in terms of the provisions of the Banking Regulation Act,

1949. RBI being the guardian of all Banks in the country, no doubt it has

power to supervise or regulate the operations of a particular Bank. In fact,

the RBI has the power to supersede the Board of Directors of a banking

company in certain cases and appoint an Administrator over the affairs of

the banking company. The power is to be exercised by RBI in consultation

with the Central Government and in public interest for preventing the affairs

of a banking company from being conducted in a manner detrimental to the

interest of the depositors or for securing proper management of the banking

company. Upon such an order of supersession being passed and an

Administrator being appointed, the Chairman, Managing Director and other

Directors of the banking company shall vacate their offices. All the powers,

functions and duties of the Board of Directors shall be exercised and

discharged by the Administrator until reconstitution of the Board of

Directors.

12. We inquired of learned Advocate representing RBI as to whether or not

RBI was contemplating taking steps under Section 36 ACA of the Banking

Regulation Act. Learned Advocate, on instruction, categorically stated that

RBI was not thinking of exercising its power under Section 36 ACA qua the

respondent Bank.

13. We are of the view that RBI being an expert body, it is in the best

position to assess and decide as to when it should exercise its power under

Section 36 ACA of the Banking Regulation Act. The Court should not issue a

writ of or in the nature of mandamus directing RBI to exercise its power

under Section 36 ACA of the 1949 Act.

14. We are accordingly unable to accede to the prayer in the modification

application. However we take this opportunity to clarify the true intent and

purport of our order dated January 20, 2022.

15. At the time the order dated January 20, 2022 was passed, the tenure

of the Board of Directors of the respondent Bank was fast coming to an end.

The tenure was due to expire on February 5, 2022. Preparation for holding

election for constituting a new Board was in progress. In view of the serious

allegation raised that the current Board of Directors of the Bank is

incompetent to Act since most of the Directors stand disqualified by

operation of law, we were inclined to make an interim arrangement

whereunder the Board would operate under an officer to be nominated by

the Governor of the RBI, for the rest of its tenure. The sentence in the said

order which has perhaps created some confusion reads as follows:-

"Since there is a serious contention about the competence or

authority of the present Board to be in charge of the affairs of the

Bank and since the Bank deals with public money, we are of the

view that for its remaining tenure till the constitution of a fresh

Board, the present Board should function under the general

supervision of an officer to be nominated by the Governor of the

Reserve Bank of India."

The aforesaid sentence needs to be read and understood in the

context of the immediately preceding paragraph of the said order which

reads as follows:-

"Hence, we see that fresh election is scheduled to be held very

soon."

Since it is the mandate of law that the Cooperative Election

Commission will conduct an election for constitution of a new Board

prior to expiry of the tenure of the existing Board, we proceeded on the

basis that such election would be held before the life of the existing

Board came to an end on February 5, 2022. Hence, we used the words

"till the constitution of a fresh Board." It was never our intention to

extend the tenure of the existing Board beyond its natural life. The true

intent of the order was that for the remaining tenure, the Board will

function under the supervision of an officer of RBI. The aforesaid

sentence in our order quoted above must not be construed as a

direction that the existing Board shall continue to function under the

officer of the RBI until a new Board is elected, despite tenure of the

existing Board having expired on February 5, 2022.

16. Mr. Pratik Dhar, learned Senior Counsel appearing for some of the

respondents who are members of the Board which continues to function

beyond February 5, 2022, argued that the constitution of the Board cannot

be changed in view of the subsistence of an interim order dated February

11, 2021, passed in MAT 120 of 2021, "directing the parties to maintain

status quo ante" maintaining the position connected to the composition of

the BOD of the appellants as existing prior to the notification impugned

dated 8th of January, 2021 until further orders.

17. We are unable to agree with such submission. The aforesaid interim

order cannot be construed to extend the tenure of the Board which came to

an end in terms of the relevant statutory provision on February 5, 2022. The

said interim order must be understood and interpreted in the context in

which it was passed. The Bank had challenged the appointment of a State

Government nominee on its Board of Directors. In that context, the Division

Bench passed the aforesaid interim order being prima facie satisfied that the

State Government did not have the power or authority to appoint such a

nominee on the Board of the respondent Bank. The said interim order must

be understood to be limited in period of time and operative during the

tenure of the Board. The interim order, in our opinion, became redundant

and otiose once the tenure of the Board came to an end on February 5,

2022.

18. Before parting, we only wish to observe that election for constitution of

a new Board of Directors should be held by the Cooperative Election

Commission at the earliest.

In re: CPAN 119 of 2022

19. The Contempt application, being CPAN 119 of 2022, was filed for

alleged wilful violation of our order dated January 20, 2022. The alleged act

of violation was issuance of a notification by the State Government under

Section 36 of the West Bengal Cooperative Societies Act, 2006, appointing a

Special Officer for managing the affairs of the respondent Bank upon the

tenure of the existing Board of Directors of the Bank coming to an end on

February 5, 2022. The Petitioner argued that our order dated January 20,

2022, was to the effect that the present Board would continue to function

under the RBI officer until constitution of a fresh Board. Hence, issuance of

the notification under Section 36 of the 2006 Act was in breach of such

order and was contumacious.

20. Prima facie, the petitioner's submission had appealed to us and by an

order dated February 9, 2022, passed on the contempt application, we had

stayed the operation of the notification dated February 7, 2022. However,

upon hearing the parties and upon reconsidering the matter, we are not

inclined to continue the said order dated February 9, 2022. We have

clarified above that it was never our intention to extend the life of the

existing Board of Directors of the Bank by passing our order dated January

20, 2022. Hence, we are of the view that upon the tenure of the existing

Board expiring on February 5, 2022, the State Government was well within

its rights to exercise its power under Section 36 of the West Bengal

Cooperative Societies Act, 2006. We accordingly vacate the interim order of

stay passed on February 9, 2022.

21. However, we repeat that the State Government should have

approached this Court before issuing the notification under Section 36 of

the 2006 Act for obtaining clarification of our order dated January 20, 2022.

The alleged contemnors have filed affidavits wherein they have stated that

they failed to understand the true purport of the order dated January 20,

2022, and have tendered unconditional apology which we accept. We do not

find any wilful violation of our order dated January 20, 2022, on the part of

the alleged contemnors. We accordingly close the contempt proceedings.

22. The modification application being MAT 1011 of 2021 with IA No. CAN

2 of 2022, and the contempt application being CPAN 119 of 2022 are

accordingly disposed of.

23. Urgent certified website copies of this judgment, if applied for, be

supplied to the parties subject to compliance with all the requisite

formalities.

(Kausik Chanda, J.)                                   (Arijit Banerjee, J.)