THE REGISTRAR, CO-OPERATIVE SOCIETIES versus DHARAM CHAND AND OTHERS

Citation: [1962] 2 S.C.R. 433 · Decided: 27-04-1961 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

2 S.C.R 
SUPREME COURT REPORTS 
433 
customs duty and against the order imposing penalty 
for importation without licence. 
We would accordingly allow the petition. 
French India 
Importing Cor-
poration, Delhi 
BY CouRT. In accordance with the opinion of the 
v. 
majority, the petition is allowed in part and the orders Chief Controller of 
of the Government in so far as they impose a penalty Imports & Exports 
on the petitioners for importing goods without a 
licence, are set aside; except to this extent., the peti-
Das c .. pta J. 
tion shall stand dismissed. 
THE REGISTRAR, CO-OPERATIVE SOCIETIES 
v. 
DHARAM CHAND AND OTHERS 
(P. B. GAJENDRAGADKAR, A. K. SARKAR, 
K. N. WANCHOO, K. C. DAS GUPTA and 
N. RAJAGOPALA AYYANGAR, JJ.) 
Co-operative Societies-Co-operative Bank-Defalcation of bank 
funds-Show cause notice to committee members and subsequent 
removal by the Registrar-Misfeasance application by shareholders 
against committe.e members-Hearing of application by the Registrar 
-Legaiity-Bias-N atural justice-Co-operative Societies Rules, 
rr. 17, 18, :JG(J}-Co-operative Societies Act, 1912 (2 of 1912), 
s. 17. 
An investigation of the affairs of a Co-operative Bank regis-
tered under the Co-operative Societies Act, 19r2, on the dis-
appearance of the manager of the bank in r953, showed that a 
very large amount of money had been defalcated. On February 
26, r955, the Registrar of Co-operative Societies gave notice to 
the members of the managing committee of the bank asking 
them to show cause why the committee should not be suspended 
under r. 30(3} of the Rules framed under the Act. In reply the 
members denied allegations of mismanagement etc., but the 
Registrar, however, appointed an administrator of the bank 
after removing the managing committee. Jn the meantime, 
some of the shareholders of the bank made an application before 
the Registrar under r. r8 of the Co-operative Societies Rules, in 
the nature of a misfeasance proceeding against the members of 
the managing committee, praying for an award directing them 
to pay the amount found defalcated, on the ground that it had 
been occasioned by a glaring breach of the law and the rules 
April 27. 
434 
SUPREME COURT REPORTS 
[1962] 
196 1 
and the bye-laws of the bank aad betrayal of confidence by the 
. 
members of the committee. The Registrar originally appointed 
Registrar, Co-
an arbitrator for this purpose, but, on the inability of the arbi-
operative Societies trator to act due to his illness, the Registrar informed the 
v. 
parties that he would decide the dispute himself. The legality 
Dharam Chand of the procedure adopted by the Registrar was challenged in a 
petition filed before the Judicial Commissioner, on the ground 
that he was in the position of a party and had expressed his 
opinion unequivocally against the members of the committee in 
the notice he gave on February 26, 1955, and therefore his con-
stituting himself as a tribunal to decide the dispute under r. 18 
was against the principles of natural justice, inasmuch as a 
party constituted himself the judge. The Judicial Commissioner 
took the view that although the Registrar had no pecuniary or 
proprietary interest in the dispnte yet in view of the circums-
tances of the case there was a strong likelihood of bias and 
therefore his acting as the tribunal would be against the princi-
ples of natural justice. 
Held, that the notice dated February 26, 1955, was concern-
ed with the collective responsibility of the members of the 
managing committee in the discharge of their duties, while the 
application made under r. 18 of the Co-operative Societies Rules 
was in the nature of misfeasance proceedings in which their 
individual responsibility as members to make good the loss 
caused by the embezzlement fell to be considered, and conse-
quently there could be no inference oi bias against the Regis-
trar simply because he gave notice to show cause against the 
removal of the managing committee, as the two matters were 
quite different. 
Held, further, that the fact that Registrar had general 
supervision over all co-operative societies could not be said to 
amount to a bias in him so as to disentitle him to act as a judge 
or arbitrator under r. 18. 
CIVIL 
APPELLATE 
JURISDICTION: Civil 
Appeal 
No. 1 of 1958. 
Appeal from the judgment and order dated April 
18, 1956, of the former Judicial Commissioner, Ajmer, 
in Civil Writ Petition No. 1 of 1956. 
G. C. Ka8liwal, Advocate-General f

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