KRISHNA KUMARI Vs. BOARD OF REVENUE MADHYA PRADESH

JUDGEMENT

(1.) THIS is a petition by eight persons who were Directors of the Gwalior commercial Cooperative Bank, Gwalior (hereinafter referred to as the Cooperative society), which is now under liquidation. The facts in short which have given rise to this petition are that according to the petitioners one Shri Jagan prasad was running a bank called the Gwalior Bank at Gwalior. He was the sole proprietor thereof and after his death his son became the proprietor. In August 1955 it was decided to form a co-operative society and to transfer the assets and liabilities of this Bank to that society. The contention of the liquidator, on the other hand, is that this Bank was the joint family property of the petitioners who were members thereof. That question appears to have been assumed by the Deputy registrar and the Board of Revenue, without deciding it on evidence, in favour of the liquidator. However nothing much turns on that fact. The Co-operative Society was formed under the Madhya Bharat Co-operative Societies Act, 1954 (Act No. 9 of 1955) (hereinafter referred to as the Act) and it was registered on the 26th August, 1955. Thereafter, the assets and liabilities of the Gwalior Bank as on 30th september, 1955, were transferred to this Co-operative Society on 2nd October, 1955, According to the report of the liquidator, this Co-operative Society continued to work from 1st October, 1955, to 31st May, 1958 and during this period it spent rupees 43,000/- on different items and transacted no other business, so that it is quite clear that the Bank received no bank deposits after it was taken over by the co-operative Society. This Society went into liquidation by order of the Registrar and stopped business from 5th May, 1958. Shri A. H. Sid-diqui. Advocate, was ultimately appointed liquidator and he made an application before the Registrar under Section 63 of the Act asking the Registrar to make an order against the directors of the Bank for recovery of an amount of Rs. 2,35,000/ -. Numerous items were mentioned as recoverable from the Directors. For instance, there were several items which had been advanced by the Gwalior Bank, when it was a private Bank, to individuals which had become time-barred and it was claimed that the Directors were liable to pay the same as they had neglected to recover them. There was again another item in which were in eluded several items which had been given up by the private proprietors of the Bank and this was also said to be recoverable from the Directors. There were several items again which, according to the liquidator, were irrecoverable from the debtors and the Directors were made responsible on the ground that the proprietors of the private Bank, when making the advances, did not make proper enquiries at that time whether it was proper or not to advance the loans and whether they would be recoverable. There are again certain items of money withdrawn from the private Bank and paid to its constituents between the 56th August, 1955 when the Society was registered and 2nd October, 1955, when the Bank was handed over to the Co-operative Society,

(2.) AFTER hearing the Directors, the Deputy Registrar, Co-operative Societies, who heard the applications passed an order imposing the liability upon the Directors, who are the petitioners, by his order dated 10th August, 1960. This is the first order challenged in this writ petition. Against this order an appeal was filed before the Government as provided by the Act which was transferred to the Board of revenue. The Board of Revenue heard the appeal. By order dated 10th October, 1968 the Board of Revenue remanded the case to the Deputy Registrar for ascertaining the exact amount which had become irrecoverable in respect of certain loans granted by the private Bank. The Board of Revenue accepted the decision of the Deputy Registrar with regard to other items. Thus, the case has gone back to the Deputy Registrar. It is against this order of the Board of Revenue also that the present writ petition has been filed.

(3.) ALTHOUGH in the writ petition the relief claimed is that both these orders be quashed meaning thereby that the applications under Section 63 of the Act were wholly incompetent and liable to be dismissed, before us learned counsel appearing for the petitioners merely argued that the Deputy Registrar as well as the Board of Revenue committed a mistake in placing liabilities upon the Directors in respect of acts done by the properietor or proprietors of the Gwalior Bank when it was a private Bank. Under Section 63 of the Act liability could be imposed on the petitioners only in respect of acts done by them as Directors of the Co-operative society and consequently their acts and omissions relating to the Bank after the formation of the Co-operative Society and the transfer of the Bank in favour of the co-operative Society could be considered and on that basis alone liabilities could be imposed upon the petitioners.