Orissa High Court
Sambaru Nayak & Ors vs State Of Odisha & Ors on 27 October, 2025
Author: Biraja Prasanna Satapathy
Bench: Biraja Prasanna Satapathy
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.29707 of 2025
Sambaru Nayak & Ors.
Petitioners
....
Mr. P.K. Rath, Sr. Advocate along with
Mr. S. Das, Advocate
-versus-
State of Odisha & Ors.
.... Opposite Parties
Mr. S. Das, ASC
Mr. B. Sahoo, Adv. for O.P.5
CORAM:
JUSTICE BIRAJA PRASANNA SATAPATHY
ORDER
27.10.2025
Order No.
02. 1. This matter is taken up through Hybrid
Arrangement (Virtual/Physical) Mode.
2. Heard learned counsel appearing for the Parties.
3. The present Writ Petition has been filed inter alia
challenging the show-cause notice issued by Opposite
Party No.3 on 22.09.2025 under Annexure-1, in
exercise of the power conferred under Section-32(1) of
the Odisha Cooperative Societies Act, 1962 (in short
'Act'). The said notice has been issued for the purpose
of supersession of the Committee of Management of
Petitioner's society, basing on the enquiry report
// 2 //
submitted by the self-same-Opposite Party No.3 on
03.09.2025.
4. It is the main contention of the learned Senior
Counsel appearing for the Petitioners that the show-
cause issued under Annexure-1 has been issued
basing on the enquiry report submitted by Opposite
Party No.3. But the enquiry since has not been
conducted in terms of the provisions contained under
Section-65(1) of the Act, basing on such report, no
show-cause could have been issued.
4.1. It is also contended that in terms of the provisions
contained under Section-32(iv) of the Act, prior to
issuance of such a show-cause, consultation with the
financing bank was a requirement. But in the instant
case, the same has not been followed and accordingly
no show-cause could also have been issued.
4.2. It is also contended that prior to communication of
the enquiry report, no show-cause could have been
issued. It is also contended that the impugned show
cause since has been issued by Opposite Party No.3,
basing on his own report, the same is not sustainable
in the eye of law.
4.3. It is further contended that even though
Petitioners have already made the reply to the show-
cause on the date fixed i.e. 14.10.2025, but liberty be
given to file a comprehensive show-cause as the matter
// 3 //
has not yet been disposed of and is pending before
Opposite Party No.3.
5. Mr. B. Sahoo, learned counsel appearing for
Opposite Party No.5 on the other hand contended that
in terms of the provision contained under Section-65(1)
of the Act, such an enquiry can be conducted by the
Registrar or by any authority being delegated with such
power by the Registrar. Basing on such delegation of
the power, the enquiry has been conducted by Opposite
Party No.3 with submission of the report.
5.1. It is further contended that as provided under
Section-32(iv) of the Act, only prior to supersession of
the Committee of the Management, consultation with
the financing bank is a requirement. Since such a thing
has not yet come and only a show cause has been
issued proposing supersession, no prior consultation
with the financing bank is required.
5.2. It is accordingly contended that there is no
illegality or irregularity with regard to the impugned
show cause issued under Annexure-1.
6. Mr. S. Das, learned Addl. Standing Counsel for
the State also made similar submission as made by the
learned counsel appearing for Opposite Party No.5.
7. To the submission made by the learned Addl.
Standing Counsel for the State and learned counsel
// 4 //
appearing for Opposite Party No.5, Mr. Rath, learned
Senior Counsel with regard to compliance of the
provisions contained under Section-32(iv) of the Act
submitted that before issuance of the show-cause in
terms of Section-32(1), prior consultation with the
financing bank is a requirement. In support of such
submission, reliance was placed to the following
decisions:- (1) Nikhil Kumar Dash vs. State of
Orissa & Ors. (W.P.(C) No.14053 of 2003 decided on
28.10.2009), (2) Sri Rama Chandra Khera & Ors. vs.
State of Orissa & Ors. (OJC Case No.508 of 1991
decided on 26.04.1991) & (3) S.V. Narayana vs.
Assistant Registrar of Cooperative Societies & Ors.
(OJC No.430 of 1986, decided on 22.02.1989). This
Court in Para-10, 4 & 4 of the aforesaid judgments has
held as follows:-
"10. Law is no more res integra to the effect that a
delinquent is entitled to get the copy of the enquiry
report and other documents before any punishment is
imposed. In the case of Managing Director, ECIL,
Hyderabad, Vs. Karunakar, etc. etc. it was held that
non-supply of enquiry report to the delinquent is equal to
denial of reasonable opportunity to him. In the case of
Harekrushna Jena v. Addl. S.P. of Police and Ors.
reported in 1985 OLR 438 it was held that non-supply of
copies of evidence of witnesses examined in the
preliminary enquiry amounts to violation of natural
justice. The consistent view expressed by the Supreme
Court, however, is that mere non-submission of enquiry
report would not be fatal unless the delinquent is able to
satisfy the Court, that due to such non-supply of the
enquiry report and other documents great prejudice had
been caused to him.".
xxx xxx xxx
// 5 //
4. While thus consulting with the financing bank is the
condition precedent before issue of notice u/s 82() to
show cause and non o consultation renders the
supersession proceedings; void, yet where reference has
been made to the financing Bank -ifter the issue of
notice u/s 32(1) but the order of supersession is passed
after receipt of the opinion of the financing Bank as
agreeing to the supersession, the orders of supersession
have been upheld by this Court in Parameswar Bagh
and Others Vs. State of Orissa and Others, and Durga
Shankar Kar Vs. State of Orissa and Others. A reading
of the decisions shows the Court to have held, while
maintaining that consultation u/s 32(4)is a condition
precedent, that in cases like the one under its
consideration then, the discretionary jurisdiction under
Art. 226 of the Constitution of India would not be
invoked. What was being handed Court in we the codes
of would not be in furtherance of these may also he said
then where consultation is made with the financing
Bank after issue of the notice and the Bank offers its
opinion against supersession but the Registrar on
consideration of its opinion and other relevant materials
yet comes to the conclusion that the society is to be
superseded, even then the requirement of consultative
can be taken to have been substantially complied with
and no fault may be found with the order of
supersession if challenge has not been at the stage of
issue of the notice the reference for consultation is made
to the financing Bank does not choose to give a reply. It
is the submission of the learned Additional Government
Advocate that the proviso to Sub-section (4) would still
and a must be taken that the financing Bank had
agreed to the supersession. Consultation with the
financing Bank being the condition precedent to the
issue of notice to show cause u/s 32(1), it has to be
conceded as the normal feature of the scheunne for
supersession of a society under the Act. A reference to
the financing bank after stops have been taken for
supersession can be taken only as an exception and
cannot be made the ordinary rule. The committee of
Management of a co-operative society is an elected body
with statutory powers vested in it and hence even
though some control of the body is vested in the
Registrar, yet such power is to be exercised with great
circumspection and not at every humour. Hence when
the legislature itself directs certain checks in exercise of
the power, the violation of such restraints cannot be
made a normal feature for which reison, before the
// 6 //
Registrar makes up his mind to issue the notice to show
cause, it is obligatory upon him to consult the financing
Bank regarding the wisdom of taking such step. If such
pre-condition is not satisfied and notice is issued and
consultation is purported to the made thereafter, it is
another question if the financing Bank concedes to such
consolation and offers its opinion. But where the
financing Bank does not choose to reply, it cannot be
said that-it has consented to be consulted at such late
stage. The proviso comes into play where the reference
has been made before the issue of show cause notice
providing that if the financing Bank does not reply to the
reference, their consent shall be deemed after thirty
days of the reference. But where no reference is made to
the financing Bank before the issue of the notice and
Subsequently a consultation procedure is started, the
financing Bank may hold the view of there being no
purpose in consultation since the Registrar had already
been prima facie satisfied about supersession thus
reducing the consultation to a mere formality and taking
such view, it may choose not to reply. In such event, to
infer a deemed consent would wholly frustrate the
intention behind the mandatory provision for
consultation and would in reality be giving a premium to
the illegality committed in not making the consultation
prior to the issue of the notice. Such an interpretation
does not naturally flow from the proviso and hence
would that which would defeat the very substantive
provision of Section 32(4). I have thus no situation to
reject the submission of the learned additional
Government Advocate in that behalf. In the instant case
the reference for consultation having been admittedly
made after the issue of notice for supersession and
there being no case of the financing Bank having
waived the prior consultation, it must be held that the
proceeding of supersession has become vitiated".
xxx xxx xxx
"4. A counter affidavit has been filed on behalf of
opposite parties 6, 7 and 11 dating therein that though
they had resigned on 11-12-1985, yet they withdrew
their letters of resignation before acceptance thereof by
the competent authority. The letter at withdrawal of
resignation has been annexed as Annexure-A/6. In the
absence of any counter affidavit on behalf of opposite
party No. 1, the assertions made in the counter affidavit
of opposite parties 6, 7 and 11 must be held to be
// 7 //
correct and hence there was no resignation on behalf of
the five of the directors as contained in the order of the
Assistant Registrar in Annexure-1. Thus the basis on
which the Assistant Registrar lass purported to exercise
his jurisdiction u/s 32(1) of the Act. falls through. That
sport, Section 32(1) of the Act does not authorize the
Registrar to supersede a managing committee for
resignation of some of the members of the society. The
powers of supersession can be exercised only if the
Registrar is of the opinion that the committee makes
persistent default or is negligent in performing its duty
imposed by the Act or the Rules or the Bye-laws or it is
prejudicial to the interests of the society or its members
or is otherwise not functioning properly. To meet the
contingency of resignation of some members of a society
Section 28(6) provides the remedy According to Sub-
Section (6) of Section 28 where a vacancy in the office of
a member or the President of a Committee arises by
reason of death, resignation or removal of any member
of the President or by withdrawal of its representative
by a member-society, such vacancy has to be filed up in
the same manner as it was originally filed up. Therefore,
even if there would have been a resignation, it could
have been filled up in accordance with Sub-Section (6) of
Section 28 of the Act. We also further find that the
mandatory requirement of Sub-Section (4) of Section 32
has not been complied with inasmuch as there has been
no consultation with the financing bank Consequently
the order passed under Annexure-1 cannot be sustained
and is hereby quashed".
7.1. Having heard learned counsel appearing for the
Parties, considering the submissions made and since
the Writ Petition is against the stage of issuance of
show-cause, this Court is not inclined to interfere with
the same. However, considering the submission of the
learned Senior Counsel that Petitioners want to file a
comprehensive reply to the show cause, this Court
permits the Petitioners to file the same on or before
31.10.2025. After receipt of the reply to the show-cause
// 8 //
and by giving due opportunity of hearing to all
concerned, Opposite Party No.3 is directed to decide
the issue which is subject matter of the show cause, in
accordance with law, in which this Court expresses no
opinion.
8. Accordingly, the Writ Petition stands disposed of.
(Biraja Prasanna Satapathy)
Judge
Subrat
Location: HIGH COURT OF ORISSA, CUTTACK
