2017 (4) TMI 1391 - SC - Indian Laws

Supreme Court clarifies Registrar's powers, reduces disqualification period

The Supreme Court upheld the Registrar's authority to issue show-cause notices and take subsequent actions under Section 76B, clarified the discretionary ... Removal from Office - Chaudhary was elected as its Chairman for a period of three years commencing from 2.5.2011 to 1.5.2014 - Whether the period of disqualification of six years is consistent with law? Held that:- Section 76B(2) as of today provides for disqualification of an officer for a period not exceeding six years. Originally the Section provided for disqualification only for four years. But the 'four years' period was substituted by 'six years' period by the Gujarat Co-operative Societies (Amendment) Act, 2015 (Act No. 12 of 2015) - All the acts and omissions which formed the basis for action against Chaudhary pertained to the period anterior30 to the Act No. 12 of 2015. Under Section 7 of the Gujarat General Clauses Act, it is provided that where an enactment is repealed by a subsequent enactment, the repeal does not normally affect any investigation or legal proceedings in respect of any right, privilege, obligations, liability, penalty, forfeiture or punishment and any legal proceeding initiated during the currency of the repealed enactment could be continued as if the repealing Act has not been passed. No right or liability can be created by a repealing enactment, which is inconsistent with the rights and obligations conferred under the repealed Act unless the repealing enactment makes an express declaration to that effect or adopts some other technique known to law to achieve that purpose. Giving retrospective effect to the repealing enactment is one of the techniques by which the legislature seeks to achieve that purpose - There is nothing in Act No. 12 of 2015 which warrants an interpretation that the legislature intended to create a disqualification which would run for a maximum period of six years with retrospective effect. The learned Additional Solicitor General Shri Mehta fairly accepted it. In the circumstances, the disqualification of six years upon Chaudhary is not tenable and at best Chaudhary could be disqualified for a maximum period of four years. Appeal dismissed. Issues Involved1. Legality of Show-Cause Notices and subsequent actions under Section 76B of the Gujarat Co-operative Societies Act, 1961.2. Validity of the Registrar's orders removing and disqualifying Chaudhary.3. Interpretation and application of Sections 76B and 81 of the Gujarat Co-operative Societies Act.4. Whether the Registrar can issue a second show-cause notice without the High Court's leave.5. Whether action should be taken against the entire Committee or individual members.6. Legality of disqualification period imposed on Chaudhary.Detailed Analysis1. Legality of Show-Cause Notices and Subsequent Actions under Section 76BThe case revolves around the issuance of two show-cause notices by the Registrar of Co-operative Societies to Chaudhary under Section 76B of the Gujarat Co-operative Societies Act, 1961. The first show-cause notice (Show-Cause Notice-I) led to Chaudhary's removal from office and disqualification for three years. This was challenged and partially set aside by the High Court. Subsequently, a second show-cause notice (Show-Cause Notice-II) was issued, which was also challenged and quashed by the High Court. The Supreme Court found the High Court's quashing of Show-Cause Notice-II untenable, stating that statutory powers can be exercised repeatedly as occasion requires, especially when previous actions were set aside on procedural grounds.2. Validity of the Registrar's Orders Removing and Disqualifying ChaudharyThe Registrar's order dated 10.03.2015, removing Chaudhary from office, was upheld by the High Court, which found no procedural irregularities. However, the disqualification for three years was set aside. The Supreme Court declined to re-examine the factual findings of the Registrar, emphasizing that such an exercise is not normally undertaken even by High Courts under Article 226 of the Constitution of India.3. Interpretation and Application of Sections 76B and 81 of the Gujarat Co-operative Societies ActSection 76B deals with the removal and disqualification of an officer, while Section 81 deals with the supersession of the Committee. The Supreme Court clarified that the Registrar has the discretion to take action either against individual officers under Section 76B or against the entire Committee under Section 81. The Court rejected the argument that action against individual members is impermissible if collective action against the Committee is not taken.4. Whether the Registrar Can Issue a Second Show-Cause Notice Without the High Court's LeaveThe Supreme Court found no legal basis for the High Court's conclusion that a second show-cause notice could not be issued without its leave. The Court cited the General Clauses Act, which allows statutory powers to be exercised from time to time as occasion requires. The principle that procedural flaws can be corrected by re-initiating proceedings was upheld.5. Whether Action Should Be Taken Against the Entire Committee or Individual MembersThe Court held that the Registrar has the discretion to decide whether to take action against the entire Committee or individual members. The argument that action should be taken only against the entire Committee was rejected. The Registrar's discretion in choosing the appropriate course of action, depending on the facts and circumstances, was emphasized.6. Legality of Disqualification Period Imposed on ChaudharyThe Supreme Court found that the disqualification period of six years imposed on Chaudhary was not tenable, as the acts and omissions occurred before the amendment extending the disqualification period from four to six years. The Court reduced the disqualification period to a maximum of four years, consistent with the law in force at the time of the misconduct.ConclusionThe Supreme Court upheld the Registrar's authority to issue show-cause notices and take subsequent actions under Section 76B, clarified the discretionary powers of the Registrar under Sections 76B and 81, and reduced the disqualification period imposed on Chaudhary to four years. The appeals of Chaudhary were dismissed, and the appeal of the State was disposed of accordingly.