ISHWARDAS PREMKUMAR CHORADIYA Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) RULE. Respondents waive service. Heard forthwith.

(2.) THE petitioners by the present petition are impugning the order dated 11-2-2002. Respondent No. 5 has issued the order under section 110-A of the Maharashtra Co-operative Societies Act, 1960 superseding the Board of Directors of respondent No. 7 and appointing Administrator. At the hearing of the petition, on behalf of the petitioners, it is contended that the order of respondent No. 5 is contrary to the principles of natural justice and fair-play. It is submitted that respondent No. 5 has acted on the directions issued by the Reserve Bank of India based on a report prepared while carrying out inspection. Inspection can be carried out under section 35 of the Banking Regulation Act, 1949. Pursuant to such inspection, a report was prepared. It is contended that the said report was not made available to the Board of Directors of respondent No. 7 before the impugned order was issued. In these circumstances, it is contended that respondent No. 5 was duty bound to make available the report or, at least, the Reserve Bank of India respondent No. 3, before issuing directions, ought to have made available the report to the Board of Directors of respondent No. 7, as the effect of supersession has resulted in civil consequences.

(3.) UNDER the Maharashtra Co-operative Societies Act, 1960, there are two provisions under which the Board of Directors can be superseded. The first of such provisions is section 78 of the Maharashtra Co-operative Societies Act, 1960. When the authority under section 78 exercises those powers, the authority is duty bound to issue a show cause notice. In other words, the right of hearing is mandatory. The section itself has so provided. The other provision is section 110-A. Under section 110-A of the Maharashtra Co-operative Societies Act, 1960, notwithstanding anything contained in the Act in the case of an insured Co-operative Bank if an order for winding up, or an order sanctioning a scheme of compromise, or arrangement or amalgamation, or reconstruction (including division or reorganization) of a bank may be made only with the previous sanction in writing of the Reserve Bank of India, such an order can be made in the public interest, or for preventing the affairs of the Bank being conducted in a manner detrimental to the interests of the depositors, or for securing the proper management of the bank, the Registrar shall make an order for the supersession (removal) of the committee and the appointment of an administrator thereof for such period or periods, not exceeding five years in the aggregate as may from time to time be specified by the Reserve Bank of India and the administrator so appointed shall after the expiry of his term of office continue in office until the day immediately preceding the date of the first meeting of the new committee.