The Vaish Co-Operative Adarsh ... vs The Registrar Of Co-Operative ...
2002 Latest Caselaw 1702 Del

JUDGMENT

S.B. Sinha, C.J.

1. The authority of Lieutenant Government in issuing a notification dated 27.06.1990 and/or validity or otherwise thereof exempting the petitioner, a co-operative society from the limitation of the period of six years as provided in Section 59(1) of the Delhi Co-operative Societies Act, 1972 (hereinafter for the sake of brevity referred to as, 'the said Act') falls for consideration in this writ petition.

2. The said notification reads thus :-

"GOVERNMENT OF NCT OF DELHI

(COOPERATIVE DEPARTMENT)

No. F.42/76/BKG/Coop./96/246-253

dt. 27.6.96

NOTIFICATION

In exercise of the powers conferred under Section 88 of the Delhi Cooperative Societies Act, 1972 (35 of 1972), the Lt. Governor of NCT of Delhi is pleased to exempt the Vaish Cooperative Adarsh Bank Ltd., 3, Netaji Subhash Marg, Daryaganj, New Delhi:- 110002 from the restriction of the period of six years as provided in Section 59(1) of the said act for holding an enquiry against the bank."

3. The said notification was issued in the following circumstances :-

The first respondent herein in the year 1991 initiated an enquiry against the petitioner herein, which is a co-operative society registered under the said Act on certain complaints. Allegedly the order passed, if any, by the competent authority pursuant to and in furtherance of the said enquiry had never been communicated to the petitioner herein. Only on 16.01.1991, the petitioner herein was informed about the appointment of the Enquiry Officer. Allegedly his report, which was made on 03.06.1992, had not been forwarded to the petitioner. It, however, forwarded the summary of inquiry in terms of Section 55(4) of the said Act, whereto the petitioner herein replied inter alia informing, that the bank did not have a regular and established practice of preparing a 'scrutiny note in each and every case'. No further action in terms of Section 55 of the said act was allegedly taken thereafter. However, only on 30.10.1995, the first respondent herein issued the impugned notice in exercise of its power conferred upon it under Section 59 of the said Act, where after the respondent No. 2 was sought to be appointed as an Enquiry Officer to inquire into the alleged irregularities pointed out in the inquiry report and to establish the extent to which the persons who were or might have been officers/employees of the petitioner herein had made any payment contrary to the said Act, Rules or bye-laws or had caused any deficiency in the assets of the Bank by breach of trust or willful negligence or had misappropriated or had fraudulently retained any money or other property belonging to the Bank.

Only at that time, the detailed inquiry report of the Enquiry Officer dated 03.06.1992 was supplied to the petitioner.

4. It is not in dispute that the said proceeding was initiated after the expiry of the prescribed period of limitation. On the said ground, the petitioner raised a contention about maintainability of the said proceeding.

However, pursuant to or in furtherance of the impugned order dated 30.10.1995, the respondent No. 2 herein issued the impugned notice dated 10.01.1996 thereby proposing to go ahead with the inquiry under Section 59 of the said Act. The said notice dated 10.01.1996 is in the following terms:-

"OFFICE OF THE ENQUIRY OFFICER : OFFICE OF THE REGISTRAR COOPERATIVE SOCIETIES : GOVT. OF DELHI: NEW DELHI - 110001.

No. F.RCS/Coop./Acctts./E-59/95-96/635

Dated:- 10/1/96

NOTICE

Whereas an enquiry under Section 55 of the Delhi Coop. Societies Act, 1972 was conducted in respect of irregularities committed by the Management of Vaish Coop. Adarsh Bank Ltd. in sanctioning/ disbursement of loans to some members. And whereas, Enquiry Report dated 3/6/92 was submitted to the Registrar, Cooperative Societies wherein a gross irregularities of sanction/disbursement of loans to 24 members/borrowers involving an amount of Rs. 4,46,40,000/- has been shown.

And whereas the undersigned has been appointed under Section 59(1) of Delhi Coop. Societies Act, 1972 as enquiry officer vide Order No. F.42/76/ARB/Coop./170 dated 30.10.95 (copy endorsed to you) to enquire into the irregularities, pointed out in the enquiry report and to establish the extent to which the persons who have taken part in the Organization/Management of the Bank or any deceased, past or present officer of the Bank had made any payment contrary to the Act, the rules or the bye-laws or had caused any deficiency in the assets of the Bank by breach of trust or willful negligence or had misappropriated or fraudulently retained any money or other property belonging to the bank.

Now, therefore, I, N.L. Sharma, in exercise of the powers vested in me, direct you to appear before me on 29.1.96 at 11.00 A.M. Along with the necessary documents/records and comments pertaining to the above charges.

(N.L. SHARMA)

ENQUIRY OFFICER/SR.A.O."

5. The respondents do not deny or dispute that the proceeding was barred by limitation, but as indicated hereinbefore relied upon the purported notification dated 27.06.1990, as noticed supra.

6. Section 59 of the said Act reads thus :-

"59. Surcharge.

(1) If in the course of an audit inquiry, inspection or the winding up of a cooperative society it is found that any person who is or was entrusted with the organization or management of such society or who is or has at any time been an officer or an employee of the society had made any payment contrary to this Act, the rules or the bye-laws or has caused any deficiency in the assets of the society of breach of trust or willful negligence or has misappropriated or fraudulently retained any money or other property belonging to such society the Registrar may of his own motion or on the application of the committee liquidator or any creditor inquire himself or direct any person authorised by him by an order in writing in his behalf to inquire into the conduct of such person:

Provided that no such inquiry shall be held after the expiry of six years from the date of any act or omission referred to in this sub-section.

(2) Where an inquiry is made under Sub-section (1) the Registrar may, after giving the person concerned an opportunity of being heard make an order requiring him to pay or restore the money or property or any part thereof with interest at such rate of to pay contribution and costs or compensation to such extent as the Registrar may consider just and equitable."

7. A bare perusal of the aforesaid provision would clearly go to show that the inquiry must be directed against a person, who is said to be guilty of alleged omissions and commissions specified therein. Proviso appended thereto in no uncertain terms states that no enquiry shall he held after the expiry of six years from the date of any act or omission referred to in Sub-section (1) thereof. The said proviso is couched in a negative language. It bars initiation of proceeding after the expiry of six years. The said provision is, therefore, imperative in character. Thus, any proceeding initiated beyond the prescribed period of limitation would undoubtedly be a nullity.

8. In that view of the matter, the question, which now arises for consideration is as to whether in a situation of this nature, the provisions of Section 88 of the said Act can be invoked. The answer to the said question must be rendered in negative.

9. The power of the Lieutenant Governor to exempt any co-operative society from the provisions of the said Act or directions would apply with certain modifications ex facie is meant to be exercised in favor of the co-operative society and not for excluding the period of limitation.

10. The said Act is regulatory in nature. It also provides for rights and liabilities of the co-operative societies. The Legislature in its wisdom though it fit that in the interest of co-operative societies, inquiry in certain irregularities, if any, should not be initiated after the expiry of period of limitation prescribed for therein.

Once the statute of repose comes into operation, the competent authority ceases to have any jurisdiction in the matter. The jurisdiction of the concerned authority to initiate a proceeding could be invoked only within the prescribed period and not thereafter.

The statutory authority, as is well known, must exercise its jurisdiction within the four corners of statue and upon following the procedure(s) established thereby, of which it is the creature or not at all.

In Taylor v. Taylor, (1875) 1 Ch.D. 426, Jessel M.R. adopted the rule that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all. The said rule was applied by the Privy Council in Nazir Ahmed v. Emperor, 63 Ind App. 372 at 381.

Furthermore, in Vitarelli v. Seaton, (1959) 359 US 535 : 3 L. Ed 2d 1012, it has clearly been held that one who takes the procedural sword shall perish with the sword.

Section 88 of the said Act must be read having regard to the aforementioned legal position.

11. The Legislature may have a right to make retrospective law, but yet unless it is done expressly or by necessary implication, statutes dealing with substantive rights must not be applied retrospectively. Evidently, an executive order cannot take away a vested right upon giving the same a retrospective effect.

Instead of referring to a large number of decisions, we are of the opinion that suffice it to state the following passage from Principles of Statutory Interpretation, Seventh Edn., 1999 from Justice G.P. Singh, Former Chief Justice Madhya Pradesh High Court, at page 380:-

"Statutes of limitation are regarded as procedural and the law of limitation which applied to a suit is the law in force at the date of the institution of the suit irrespective of the date of accrual of the cause of action. The object of a statute of limitation is not a create any right but to prescribe periods within which legal proceedings may be instituted for enforcement of rights, which exists under the substantive law. But, after the expiry of the period of limitation, the right of suit comes to an end, therefore, if a particular right or action had become barred under an earlier Limitation Act, the right is not revived by a later Limitation Act even if it provides a larger period of limitation than that provided by the earlier Act. On the same principle, if right to execute a decree or judgment gets barred under an earlier Act, the right is not revived by a later Act.

12. In that view of the matter, an order of execution would be prospective in nature. It cannot be retrospective in nature. Thus, even assuming that the Lieutenant Governor could issue an exemption notification in a case of this nature in exercise of its power conferred upon him under Section 88 of the said Act, the same will have only prospective operation it can neither have a retrospective operation nor can it be retro-active in nature. Once the period of limitation as provided for in Section 59 of the said Act expires, it confers a right upon the society and any liability there under is statutorily removed. It in the aforementioned situation must be held that no such notification could be issued, which will have a retrospective operation.

13. In strawboard Manufacturing Co., Ltd. v. Gutta Mill Workers' Union, (1953) S.C.R. 439, it was observed :-

"..... If, therefore, the amending order operates prospectively, i.e., only as from the date of the order, it cannot validate the award, which had been made after the expiry of the time specified in the original order and before the date of the amending order, during which period the adjudicator was functus officio and had no jurisdiction to act at all."

14. In Deep Chand v. Mst. Bhago and Ors., 1964 (66) Punjab Law Reporter 1047, it was clearly held that Section 30 of the Limitation Act, 1963 would not apply in a case where the period of limitation prescribed under the Act of 1908 had expired before the commencement of the new Act.

15. In Hukum Chand etc. v. Union of India and Ors., , the Apex Court held :-

"7. The learned Solicitor General has not been able to refer to anything in Section 40, from which power of the Central Government to make retrospective rules may be inferred. In the absence of any such power, the Central Government in our view, acted in excess of its power in so far as it gave retrospective effect to the Explanation to Rule 49. The Explanation, in our opinion, could not operate retrospectively and would be effective for the future from the date it was added in February 1960."

16. Yet again in Regional Transport Officer, Chittor, etc. v. Associated Transport, Madras (P) Ltd. and Ors., , the Apex Court clearly held that no rules could be made with retrospective effect and such an action cannot be upheld only on the ground that such rules are required to be placed before the Parliament.

17. For the reasons aforementioned, the impugned order cannot be sustained, which is set aside accordingly. This writ petition is accordingly allowed. However in the facts and circumstances of the case, there shall be no order as to costs.