Yugul Kishore Dwivedi And Ors vs Gnct Of Delhi And Ors
2012 Latest Caselaw 313 Del

9
*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       Date of Decision: 17.01.2012

%                            W.P.(C) 4737/2010


      YUGUL KISHORE DWIVEDI AND ORS              ..... Petitioner
                  Through: Mr. Bankuri K and Mr. Sudhir
                            Kumar, Advocates

                    versus


      GNCT OF DELHI AND ORS                       ..... Respondent
                    Through: Ms. Ruchi Sindhwani for R-1&2
                             Mr. Rajesh Raina and Mr. Pallav
                             Mongia for R-3

      CORAM:
      HON'BLE MR. JUSTICE VIPIN SANGHI


VIPIN SANGHI, J. (Oral)

1. Petitioner nos.2 and 3 are present along with their counsel. They

state that they do not wish to pursue this petition. Accordingly, they are

deleted from the array of parties.

2. By this writ petition filed under Article 226 of the Constitution of

India, the petitioner, Yugul Kishore Dwivedi seeks the setting aside of the

expulsion order dated 14.06.2010 passed by respondent no.3, Janta

Cooperative Bank Ltd., expelling him from the membership of the said

cooperative bank.

3. The petitioner was issued a show cause notice under section 40 of

the Delhi Cooperative Societies Act, 2003 on 06.11.2009 requiring him to

show cause against his proposed expulsion within 15 days. On 17.11.2009,

the petitioner sent his reply. The Board of Directors of the respondent bank

held its meeting on 25.11.2009, wherein the expulsion of the petitioner was

approved by the Board.

4. It appears that the respondent bank sent a communication on

03.12.2009 addressed to the Registrar of Cooperative Societies (RCS) to

seek the approval of the Registrar in terms of section 40(2). However, this

communication, though addressed to the RCS, was got received in the office

of the Asst. Registrar (Banking). It appears that the respondent bank did not

receive any approval or disapproval from the office of the RCS for a period

of 180 days. In this scenario, the respondent bank sought to rely upon

Sections 40(2) and 40(3).

Section 40(2) and (3) of the aforesaid Act read as follows:

"(2) After the resolution for expulsion is passed as above by the committee, the resolution shall be referred to the Registrar for approval within a period of thirty days.

(3) On receipt of the resolution for expulsion, the Registrar shall take cognizance of such resolution within thirty days and pass a final order either approving the expulsion or rejecting the proposal for expulsion within a period of one hundred and eighty days and if the matter is not decided by the Registrar within the aforesaid period, the expulsion of such a member shall be deemed to have been approved.

Provided that the Registrar, before approving the resolution, shall hear the parties in the manner prescribed and shall have power to summon and enforce attendance of witness including the parties interested or any of them and compel them to give evidence on oath, affirmation or affidavit and to compel production of documents by the same means as far as possible in the same manner as provided in the case of a civil court under the Code of Civil Procedure, 1908 (5 of 1908) and the order under this section so passed by the Registrar shall be final with a right for appeal before the Tribunal."

5. The respondent bank proceeded on the basis that since the RCS

had not communicated any decision within 180 days, either approving or

disapproving the proposal for expulsion of the petitioner, the petitioner stood

expelled. Consequently, on 14.06.2010, respondent no.3 sent a

communication to the RCS communicating the expulsion of the petitioner.

This communication was received in the office of RCS on 15.06.2010. By

another communication of the same date, the petitioner was informed about

his expulsion and his share money and the deposit made by him was

refunded.

6. Aggrieved by the said action, this petition has been preferred.

7. The submission of learned counsel for the petitioner is that the

petitioner has not been granted any hearing by the RCS. He submits that the

proposal for the petitioner's expulsion was submitted in the office of the

Asst. Registrar (Banking), even though it is the RCS who is empowered to

grant approval or disapproval of the proposal to expel a member. He points

out that while the communication dated 03.12.2009 was received in the

office of Asst. Registrar (Banking), the communication dated 14.06.2010

was got received in the office of the RCS. According to the petitioner, this

was a deliberate and calculated move on the part of the respondent bank so

as to prevent the RCS from taking action on the said proposal of the

respondent bank.

8. On the other hand, the submission of counsel for the respondent

bank is that this petition is not maintainable as the petitioner has an alternate

efficacious remedy of preferring an appeal under section 40(4) before the

Cooperative Tribunal. He, therefore, submits that this petition should not be

entertained by this Court. He submits that there was no deliberate or

calculated move on the part of the respondent bank in tendering the

communication dated 03.12.2009 to the Asst. Registrar (Banking), as the

Asst. Registrar (Banking) has been duly authorized to deal with all such

cases.

9. Learned counsel for RCS submits that the RCS has delegated his

powers under section 40 to the Asst. Registrar (Banking). She, however,

submits that the said communication should have been channeled through

the office of the RCS, and should not have been submitted in the office of

the Asst. Registrar (Banking) directly.

10. Having heard learned counsels for the parties, I am inclined to

allow this petition and to direct the RCS to consider the proposal of the

respondent bank for expulsion of the petitioner afresh, after complying with

the provisions of section 40(3) of the aforesaid Act.

11. It is clear that the said proposal was not submitted in the office of

the RCS. It may be that the respondent no.3 had no malafide in submitting

the said communication before the Asst. Registrar (Banking). However, at

the same time, it is not explained as to why the proposal was not sent to the

RCS, while the subsequent communication was tendered in the office of

RCS. As contended by learned counsel for RCS, the communication should

have been channeled through the office of the RCS. This appears to be the

reason for no action being taken on the respondent banks proposal for a

period of 180 days.

12. Apart from this, on a plain reading of section 40(3), it is clear that

the said provision provides for the following mechanism:

i) On receipt of the resolution for expulsion, the RCS shall take

cognizance of the resolution within 30 days;

ii) The RCS shall pass an order either approving the expulsion or

rejecting the proposal for expulsion within a period of 180 days;

iii) If the matter is not decided by the RCS within the aforesaid period,

the expulsion of the member shall be deemed to have been

approved;

iv) The approval of the resolution shall be preceded by a hearing

to the parties in the prescribed manner. Pertinently, before

disapproving the said proposal, no such hearing is

contemplated;

v) The RCS shall have the power to summon and enforce attendance

of witness including the parties interested or any of them and

compel them to give evidence on oath, affirmation or affidavit and

to compel production of documents in the same manner as a civil

court under the CPC.

vi) The order passed by the RCS shall be final and be subject to right

of the aggrieved party to appeal before the tribunal.

13. From the aforesaid, it is clear that RCS must take cognizance of

the resolution within thirty days. If he is of the view that the resolution

deserves to be rejected, he must pass an order rejecting the same. Before

rejecting the proposal, he may not hear any of the parties. However, in case

he does not consider it appropriate to outrightly reject the proposal of the

society, he must call upon the parties to grant them a hearing. He must hear

the parties and, if necessary, record evidence. The approval of the resolution

to expel a member, whether it is a written approval granted by the RCS or a

deemed approval, on account of the failure of the RCS to pass an order on

the proposal for expulsion, has necessarily to be preceded by hearing to the

parties. The RCS cannot defeat and deny the right of the parties to be heard

before him, by choosing not to pass an order within a period of 180 days and

by allowing the provision of deemed expulsion to kick in. The lack of an

express decision by the RCS does not mean that he can allow the matter to

pass by non-application of mind. His decision not to pass an express order

has also to be taken by application of mind, and after granting a hearing to

the parties, and has to be a conscious decision. The right of being heard,

granted to the parties, before the grant of approval by the Registrar by the

express language of the proviso to section 40(3) cannot be whittled down by

the fact that the Registrar may adopt the route of deemed approval to the

expulsion of the member, by not passing an express order.

14. In the present case, the RCS has not granted any hearing to either

of the parties, and the valuable right of the petitioner to be heard, prior to his

deemed expulsion has been denied to him. The said action of the RCS is

clearly in breach of section 40(3), and also in breach of the principles of

natural justice. Consequently, the expulsion of the petitioner cannot be

sustained.

15. The objection of learned counsel for respondent no.3 that this

Court should not exercise its jurisdiction under Article 226 of the

Constitution of India, as the petitioner has an alternate efficacious remedy by

way of an appeal before the tribunal cannot be accepted, as it is well settled

that the rule against exercise of discretionary jurisdiction under Article 226

of the Constitution of India is a self imposed restriction and in appropriate

cases, the Court may waive the said rule. In a case where there is violation

of principles of natural justice, it is well settled that the said rule cannot be

invoked. (See Whirlpool Corporation v. Registrar of Trademarks & Anr.,

(1998) 8 SCC 1).

16. Moreover, the dispute between the parties raised in this petition is

purely a legal dispute, and does not require any factual determination of

disputed facts. Consequently, this objection of respondent no.3 is rejected.

17. Accordingly, I allow this petition and direct the RCS to consider

the proposal of the respondent bank afresh, after complying with section

40(3) of the Delhi Cooperative Societies Act, 2003. The RCS shall take

cognizance of the resolution within thirty days. Unless he is of the view that

the proposal of the respondent society deserves to be rejected, he shall grant

a hearing to the parties, and thereafter take a decision on whether, or not, the

proposal of expulsion of the petitioner deserves to be approved or not.

Petition stands disposed of.

VIPIN SANGHI, J JANUARY 17, 2012 sr