JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, MADRAS & ORS. versus P. S. RAJAGOPAL NAIDU AND ORS.

Citation: [1971] 1 S.C.R. 227 · Decided: 06-04-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

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227 
.JOINT 
REGISTRAR OF 
CO·OPERATIVE SOCIETIES, 
MADRAS & ORS. 
v. 
P. S. RAJAGOPAL NAIDU AND ORS. 
April 6, 1970 
(J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.J 
Madras Cooperative Societiea Act, 1961--0rder of Registrar under 
s. 72( 1) (a) superseding tbe committee of a society whether can be made 
only after following procedure in ss. 1\4, 65 & 66. 
Constiiution of India, 1950, Art. 226-Jurisdiction of High Court. 
On 4th January, 1969 the Joint Registrar, Cooperative Societies issued 
a notice under s. 72 of the Madras Cooperative Societies Act, 1961 to 
the committee of the North Arco! District Cooperative Supply and Market· 
ing Society Ltd. After examining the representation made by the com· 
mittee in reply to the notice, the Registrar recorded an order on 11th 
April, 1969 holding that the committee had not been functioning properly 
and had failed to perform its duties and discharge its responsibilities as 
required under the Act. The committee was ordered to be suspended 
for a period of one year and the Deputy Registrar of Cooperative Socie· 
ties was appointed to work as Special Officer to manage its affairs. The 
matter was taken in appeal to the Registrar, who affirmed the order di 
the Joint Registrar. Thereafter the President and Direct<>r of the Co-
operative Society moved the High Court under Art. 226 of the Constitu· 
tion. The writ petition was allowed by a Single Judge on the view that an 
order under s. 72 (1 ) can be passed only after the procedure under ss. 64, 
65 & 66 of the Act has been followed. The Full Bench to which the matte!' 
was referred in Letters Patent Appeal took the same view. 
In appoal before this Court against the judgment of the High Court 
the questions that fell for consideration were : (1) Whether the Registrar 
before takin¥ action under s. 72 must have an audit made under s. 64 
and an inquiry held under s. 65 and an inspection made under s. 66 of 
the Act and must also give an opportunity for rectification of the defects 
which may come to .light as a result of such audit, inquiry or inspection? 
(2) What is the scope,, of interference by the High Court with the order 
of a Registrar made under s. 72 of the Act ? 
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HELD: (1) (a) If the intention of the Legislature was that the super-\ 
session of the Committee under s. 72 c1111 be ordered by the Registrar 
only after rel'.ourse to ss. 64, 65 & 66 there is no reason why. language · 
analogous to s. 70(1) which expressly mentions ss. 64 to 67 and s. 85(1) 
which refers to ss. 65 to 67 should not have been employed. [234 BJ 
All that is required by s. 72(l)(a) is that the Registrar should form 
al' opinion that tho Committee of. any Registered Society is not function-
ing properly or has wilfully disobeyed or failed' to comply with any lawful 
order or direction issued by him. The section cannot be read to mean 
that before forming an opinion as to the proper functioning of the society 
the Registrar must in \he first instance issue a- dir.:ction to remedy the 
defects disclosed as a result of the audit, inquiry or inspection. The 
functioning of !he society may be so irregular and the delfects so blatant 
and prejudicial to the society that no question can arise of any direction 
228 
SUPREME COURT REPORTS 
[1971] l S.C.R, 
being made in the first instance for their being remedied by the persons 
c'r officers concerned. [234 D-F] 
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It may be that the opinion which the Registrar has to form must be 
based on some objective facts but those objective facts in the absence of 
any clear indication in s. 72 cannot be confined to what may be disclosed 
after the Registrar has exercised his powers in the matter of audit, inquiry 
and inspection under the provisions o'f ss. 64, 65 & 66. The requisite 
opinion has indisputably to be formed 
honestly and after applying his 
mind by the Registrar to the relevant material before him. The only condi-
tion precedent for taking action under s. 72(1) is that provided in sub-s. 
(6), namely. that the Registrar must consult the financing bank to which 
the '0ciety is indebted. 
No other requirement or condition precedent 
is laic' down ·by the legislature. It was accordingly not possible to concur 
with the view taken by the High Court. [235 A-DJ 
c 
(b) The fact that one-third of the members of the committee retire 
every year and new members have to be elected in their place could not 
lead to a different conclusion. Section 72 is meant for superse

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