HAOKHOLIEN GUITE Vs. REGISTRAR OF CO OPERATIVE SOCIETIES

JUDGEMENT

(1.) In this petition, the petitioners who were members, of the Board of Directors of the Manipur State Co-opertive Society have prayed for quashing the impugned order dated 14.6.94 of the Registrar, Co-operative societies, Manipur, disqualified under Section 78 (6) of the Manipur Co-operative Societies Act 1976.

(2.) The brief facts relevant for the purpose of this writ petition are that the Manipur State Coperative Bank is a Co-operative Society in the State of Manipur carrying on business of banking. The Board of Directors of the said bank was elected on 15 2 1922 and it took charge on 26.2.92 A show cause notice dated 28 4.1994 was issued by the Registrar of Co-operative Societies. Manipur to the members of the said Board of Directors wherein it was stated that the percentae of over due to demand of the bank stood at 85% as on 31-3-93 and 86.79% as on 28-2-94 respectively for a continous period of two years and the Board of Directors had failed to scale down the percentage of overdue below 60% for two years consecutive By the said notice, the members of the Board of Directors of the Bank were asked to show cause as to why they should not stand automatically disqualified under Section 78 (6) of the Manipur Co-operative Societies Act. 1976, The petitioners submitted a reply dated 12-5-94 to the said show cause notice stating inter-alia that Section 78 6) of the Manipur Co-operative Societies Act, 1976 was applicable to Central Co-operative Bank at the district level and not to Manipur State Co-oprrative Bank which was not a Central Co-operative Bank at the district level but was a Bank at the apex level of the state of Manipur and that during the period 1991-92, the percentage of overdue to demand of the bank stood at 88 12N and when the petitioners started functioning as Directors of the Bank, the said percentage had decreased to 80 67% as on 31-3-1993and that it was not possible to scale down the said percentage of overdue to demand to the minimum level due to various reasons detailed in the said reply. Thereafter by an order dated 14-6-94 (Annexure-A/1) the Registrar, Co-operative Societies, Manipur rejected the contentions of the petitioners in the said reply and in pursuance of the Section 78 (6) of the Manipur Societies Act 1976 declared the Board of Directors of the Manipur State Co-operative Bank Ltd to be automatically disqualified with immediate effect. Agrleved by the said order dated 14-6-94 (Annexure-A/1). the petitioners have moved this writ petition on the grounds inter alia that the Registrar of Co-operative Societies, Manipur has misconstrued the provision of Section 78 (6) of the Manipur Co-operative Societies Act 1976 while passing the impugned order.

(3.) An affidavit-in-opposition has been field on behalf of the respondents wherein it has been stated that the Manipur State co-operative Bank was a Central Co-operative Bank and that the elected Board of Directors of the Bank have been indiscriminiately giving loans and advances without any regard to the finance and fund position of the bank thereby creating serious financial problems which may lead to liquidation of the bank and that during the year 1993-94 while it recovered an amount of Rs. 248 97 lakhs, only a sum of Rs 54.16 lakhs was repaid to the National Bank of Rural Development (NABARD), and as per the provisions of Section 78 (6) of the Manipur Co-operative Societies Act 1976, the entire Board of Directors of the bank had to be held resposibie for the default in excess of the stipulated 60% of overdue to demand and declared disqualified to function as the Board of the Bank by the impugned order.