IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 5TH DAY OF FEBRUARY 2019 BEFORE THE HON’BLE MR. JUSTICE H. T. NARENDRA PRASAD WRIT PETITION No.33722/2014(GM-KSR) BETWEEN:
SRI. R.G. SHAH SON OF LATE. GULABDAS SHAH AGED ABOUT 77 YEARS RESIDING AT FLAT NO.303 SHRADDHA TEMPLE TREE APARTMENTS, NO.17, 5TH CROSS RUSTOM BHAG, INDIRANAGAR BANGALORE-560017.
…PETITIONER (BY SRI. S.N.PRASHANTH CHANDRA, ADV.) AND:
1. THE DISTRICT REGISTRAR AND REGISTRAR OF SOCIETIES CHURCH STREE, BANGALORE-560 001 2. THE SECRETARY INDIRANAGAR CLUB NO.3273, HAL 2ND STAGE BANGALORE-560038.
… RESPONDENTS (BY SMT. NILOUFER AKBAR, AGA. FOR R1, SRI. G. SUKUMARAN, ADV. FOR R2) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED:19.06.2013 PASSED BY THE R1 IN ANNEXURE-M & ETC.
THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R This petition is directed against the order No.DRO/SJN/SOR/555/1979-80/235 dated 19.06.2013 passed by the respondent No.1 vide Annexure-M.
2. Brief facts of the case:
The petitioner is a permanent resident of Indiranagar, Bengaluru for the last three decades of which, he has been the resident member of respondent No.2-society for the last 29 years. Petitioner was also an office bearer of respondent No.2. Subsequently, he has been removed from the membership. He had challenged the same before the City Civil Court in O.S.No.9578/2014, which is pending before the civil Court for consideration. The petitioner has given representation dated 16.4.2013 vide Annexure-G addressed to the Chief Secretary to the Government of Karnataka. The copy of the same has been sent to the Registrar, Co-operative Societies requesting to conduct enquiry under Section 25 of the Karnataka Societies Registration Act. Pursuant to that representation, respondent No.1 has issued an endorsement on 19.6.2013 vide Annexure-M rejecting the representation of the petitioner. Being aggrieved by the same, the petitioner is before this Court.
3. Sri. S.N.Prashanth Chandra, the learned counsel appearing for the petitioner submits that the respondent No.1 has passed the impugned order dated 19.6.2013 vide Annexure-M rejecting the representation of the petitioner on the ground that there is judgment of this Court reported in ILR 1990 KAR 3740 (S. Srinivasa Rao v/s Registrar) wherein it is held that the Registrar cannot take any action unless a complaint is made to him by not less than one-third of total number of members otherwise section would be rendered nugatory. On this ground, the representation of the petitioner has been rejected. He has relied upon the judgment of this Court in the case of Bangalore Grain Mechants Association v. The District Registrar for Societies and another [2001 (1) KCCR 292 (FB)] wherein the judgment referred by respondent No.1 has been over-ruled by the full bench of this Court and it has been held that on the representation given by the petitioner, it is the discretionary power of respondent No.1 to take decision. The impugned order is passed is contrary to the judgment passed in Bangalore Grain Mechants Association (stated supra). Hence, he sought for allowing the writ petition.
4. Per contra, the learned counsel for the respondent No.1-State and learned counsel for respondent No.2 has defended the order passed by respondent No.1.
5. Heard the learned counsel for the parties and perused the records.
6. It is not in dispute that the petitioner has given representation dated 16.4.2013 vide Annexure- G to the respondent No.1 to conduct an enquiry under Section 25(1) of the Karnataka Societies Registration Act. Section 25(1) of the Act reads as under:
25. Enquiry by the Registrar, etc.-(1) The Registrar may on his own motion and shall on the application of the majority of the members of the governing body or of not less than one--third of the members of the society, hold an enquiry or direct some person authorised by him by order in writing in accordance with the rules made in this behalf to hold an enquiry into the constitution, working and financial condition of a registered society.
The provision is very clear that there is suo-moto power vested with the Registrar to conduct enquiry. This Court in the case of Bangalore Grain Mechants Association (stated supra) has categorically held in paragraph 7 as follows:
“7. We shall now refer to the relevant provisions of law. Section 25(1) of the Karnataka Societies Registration Act reads:
“The Registrar may on his own motion and shall on the application of the majority of the members of the governing body or of not less than one third of the members of the society, hold an enquiry or direct son person authorized by him by order in writing in accordance with the rules made in this behalf to hold an enquiry into the constitution, working and financial condition of a registered society”
(2) The Registrar or the person authorized by him under sub-section (1) shall have the following powers, namely:-
(a) he shall at all reasonable times, have free access to the books, accounts, documents, securities, cash and other properties belonging to or in the custody of the society and may summon any person in possession or responsible for the custody of any such books, accounts, documents, securities, cash or other properties to produce the same at any place at the headquarters of the society or any branch thereof;
(b) he may summon any person who, he has reason to believe has knowledge of any of the affairs of the society to appear before him at any place at the head quarters of the society of any branch thereof and may examine such person on Oath;
(iii) when a enquiry is made under this section, the Registrar shall communicate the result of the enquiry to the society concerned.
We may also notice Rule 8 framed under the Act. The rule governs the procedural modalities of conducting the enquiry. The Rules contemplates issuance of notice to the society, calling for explanation, fixing the date of enquiry, oral hearing, reception of oral and documentary evidence and recording the findings.
From the above provisions, it is fairly clear that the enquiry, when once it is set in motion, partakes of the character of quasi-judicial enquiry. A fair procedure is prescribed for this purpose.
7-A. An analysis of Section25(1) also discloses that there are three situations in which the Registrar can initiate and hold an enquiry. These are: (1) the Registrar acting on his own motion, (2) the Registrar acting at the instance of the majority of the members of the governing body and (3) the Registrar acting on the request of 1/3rd of the members of the Society. In the first contingency, the exercise of power is discretionary and enabling, as denoted by the word ‘may’. Whereas in the latter two cases, it is obligatory to hold an enquiry as seen from the word ‘shall’. If the second and third requisites are satisfied, the Registrar has no option but to trigger off an enquiry in deference to the wishes of the requisite number of members unless, of course, the allegations are alien to the working of the Society. In the first case, the Registrar can act on his own motion irrespective of any application by the majority of the members of the governing body or 1/3rd of the members of the Society. The Registrar, however, is not compelled to act, if the situations 2 and 3 are absent. He can exercise his discretion whether to act or not on the basis of the material or information in his possession. It is significant to note that the expressions ‘may’ and ‘shall’ are used in the same sub-section in contradistinction to each other to emphasize the distinction, which have earlier pointed out supra. In the context, ‘may’ and ‘shall’ mean what they ordinarily mean, though it is not uncommon to read one for the other. Of course, the discretion vested in the Registrar under the opening clause may not be absolute and unchannelised. The exercise of discretion is by implication conditioned and moulded by the statutory purpose underlying conferment of such power. Depending on the facts and circumstances of the case, the discretion may be coupled with a duty to act, if such action is warranted. Even in the first situation, therefore, the Registrar cannot exercise or refuse to exercise the power to hold the enquiry on his whim and fancy.”
In the very same judgment, the judgment referred by respondent No.1 i.e., ILR 1990 KAR 3740 has been over-ruled. Therefore, endorsement issued by the respondent No.1 is contrary to Section 25 of the Act and contrary to the law laid down in the case of Bangalore Grain Mechants Association (stated supra).
7. In view of the above, the impugned order dated 19.6.2013 vide Annexure-M passed by respondent No.1, is set aside. The matter is remitted to respondent No.1 to consider the representation of the petitioner and take appropriate decision in accordance with law within four weeks from the date of receipt of copy of this order and communicate the same to the petitioner.
8. Accordingly, the writ petition is disposed of.
Sd/- JUDGE DM