1988 (2) TMI 475 - HC - Indian Laws

Cooperative Appeal Court revises costs order, clarifies powers under Maharashtra Co-operative Societies Act

Official Liquidator, Dadhich Sahakari Bank Ltd. Versus Murlidhar S. Sharma and Ors.

The Cooperative Appeal Court set aside the costs order granted by the Inquiry Officer during an adjournment, finding that the Officer lacked explicit ... - Issues:1. Interpretation of the powers of the Inquiry Officer under the Maharashtra Co-operative Societies Act, 1960 regarding granting costs during adjournments.Analysis:1. Background and Facts:The case involves the Official Liquidator of a Co-operative Bank filing a petition under Section 88 of the Maharashtra Co-operative Societies Act, 1960 against the Directors of the Bank due to unsatisfactory functioning leading to the bank's winding up. The Inquiry Officer appointed under Section 88 conducted proceedings, and an issue arose regarding the grant of costs during an adjournment.2. Appeal Against Order of Costs:Respondent No. 1 appealed against the Inquiry Officer's order of costs during an adjournment, arguing that the Officer lacked the power to grant costs. The Cooperative Appeal Court set aside the costs order, citing the burden on Respondent No. 1 and lack of opposition from other parties.3. Powers of the Inquiry Officer under Section 89:The main contention was whether the Inquiry Officer had the authority to grant costs during adjournments under the Act. Section 89 of the Act provides powers to summon persons and documents but does not explicitly mention the power to grant costs. The Court analyzed that a narrow interpretation of this section would lead to unreasonable consequences, emphasizing that the Officer should have the implicit power to grant adjournments and costs.4. Powers under Section 88 and Principles of Natural Justice:The Court highlighted that Section 88 grants the Officer powers to conduct misfeasance proceedings, including granting adjournments and costs. These proceedings are quasi-criminal, requiring adherence to natural justice principles. The Officer must have necessary powers to ensure an expeditious inquiry, including the authority to grant costs.5. Reasonableness of Costs Order:While the Court generally avoids interfering with costs orders, it found the Inquiry Officer's grant of costs arbitrary due to lack of opposition from other parties and common cause among respondents. The Court modified the order, directing Respondent No. 1 to pay costs to the petitioner Bank but quashing costs in favor of other respondents, aligning with the Appellate Court's decision.In conclusion, the Court upheld the Inquiry Officer's order of costs in favor of the petitioner Bank but modified the order regarding costs to other respondents, emphasizing the Officer's authority to grant costs during adjournments under Sections 88 and 89 of the Act.