Delhi High Court
Vishal Singh And Anr vs Union Of India And Ors on 13 August, 2014
Author: Vibhu Bakhru
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 13.08.2014
+ W.P.(C) 3259/2014
VISHAL SINGH AND ANR ..... Petitioners
versus
UNION OF INDIA AND ORS ..... Respondents
Advocates who appeared in this case:
For the Petitioners : Mr Harish Malhotra, Sr. Advocate
with Mr Ankit Kumar Lal.
For the Respondents : Mr Sanjay Jain, ASG with Mr Akshay
Makhija, CGSC and Ms Pallavi Shali
for UOI.
Mr Mahesh Srivastava with Mr Rabi
Naryan Raut and Mr Vaibhav Manu
Srivastava for R3.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J (ORAL)
1. The petitioner has, by way of this petition, called into question the
letters dated 24.02.2014 and 18.03.2014 issued by respondent no.2 under
Section 122 of the Multi State Cooperative Societies (MSCS) Act, 2002
(herein after referred to as the 'Act') as well as an order date 16.05.2014
passed by respondent no.2 under Section 123 of the said Act. However, the
learned counsel for the petitioners has limited the challenge in the present
petition only to the order dated 16.05.2014 under Section 123 of the Act.
(herein after referred to as the impugned order)
2. The petitioner herein is aggrieved by the impugned order, whereby
respondent no.2 have superseded the Board of Directors of National
Cooperative Consumers Federation (NCCF) without giving an opportunity
to the members of the Board to state their objections and appointed the
Joint Secretary, Department of Consumer Affairs (i.e respondent no. 3) as
Administrator to manage the affairs of the NCCF.
3. The principal ground of challenge to the impugned order is that the
same was passed without affording any opportunity to the petitioners to
voice their objections to any action under Section 123 of the Act.
4. Before proceeding further, it would be necessary to refer to the
provisions of Section 123 (1) of the Act which read as under:-
"(1) If in the opinion of the Central Government, the board
of any specified multi-state cooperative society is
persistently making default or is negligent in the
performance of the duties imposed on it by this Act or the
rules or the bye-laws or has committed any act which is
prejudicial to the interests of the society or its members, or
has omitted or failed to comply with any directions given to
it under section 122 in public interest or that there is a
statement in the constitution or functions of the board, the
Central Government may, after giving the board an
opportunity to state its objections, if any, and considering
the objections, if received, by order in writing, remove the
board and appoint one or more administrators, who need not
be members of the society, to manage the affairs of the
society for such period not exceeding six months, as may be
specified in the order which period may, at the discretion of
the Central Government, be extended from time to time, so,
however, that the aggregate period does not exceed one
year.
Provided that in the case of a cooperative bank, the
provisions of this sub-section shall have effect as if for the
words "one year", the words "two years" had been
substituted."
5. It is apparent from the plain reading of Section 123(1) of the Act that
before any action is taken under the said provision an opportunity has to be
given to the Board of the Society in question to state its objections against
any proposed action.
6. The learned ASG has contended that notices under Section 122 of the
Act had been served and the action under Section 123 of the Act is
predicated on non-compliance of the said notices. It is contended that an
opportunity of further notice, in these circumstances would be a mere
formality considering that such opportunity had already been granted on
two earlier occasions. (i.e. in view of notices under Section 122 of the Act).
7. I am unable to accept the contention of the learned ASG as a
direction under Section 122 of the Act and an action under Section 123 of
the Act are entirely separate and distinct actions. Whereas Section 122 of
the Act contemplates directions to be issued to a society, Section 123 of the
Act contemplates an action inter alia on the ground that the said directions
have not been complied with. It is indisputable that an action under Section
123 of the Act is a drastic measure and is an action adverse to the, allegedly
delinquent, Board of Director. Therefore, in any event principles of natural
justice are required to be complied with before any such adverse action is
taken. Accordingly, an opportunity to be heard is necessarily to be afforded
to the Board of Directors of the society. In the present case, Section 123
itself embodies that such an opportunity be given before any action is taken
under the said provision. The Board must have an opportunity to explain
why directions under Section 122 of the Act were not complied with and
also address any other issues that may be held against them. In my view the
opportunity for raising objections under Section 123 of the Act is not a
mere formality but a substantive right. In this view, the writ petition is
allowed and the impugned order dated 16.05.2014 is set aside.
8. The petitioners shall be given an opportunity for being heard and to
raise objections against any action under Section 123 of the Act in the event
the respondents intend to pursue to remove the Board of Directors of NCCF
and appoint an Administrator.
9. Nothing construed in this order shall be considered to be an
expression of opinion on the merits of the controversy; whether any action
under Section 123 is warranted.
10. Dasti.
VIBHU BAKHRU, J
AUGUST 13, 2014
pkv
