Full Text
HIGH COURT OF DELHI
R.P.KESHARI … … … …PETITIONER
Through : Mr.Sandeep Sethi, Sr.Adv. with Mr.Bharat Gupta, Mr.Rahul Mittal &
Mr.Varun Tyagi, Advocates.
- V E R S U S - CENTRAL REGISTRAR OF COOPERATIVE SOCIETIES & ANR.
… RESPONDENTS
Through : Ms.Sweety Manchanda, Adv. for R- 1.
Ms.Deepti Dogra, Adv. for R-2.
HON‟BLE MS. JUSTICE RAJIV SHAKDHER
Whether the Reporters of local papers may be allowed to see the
JUDGMENT
To be referred to Reporter or not? YES Whether the judgment should be YES reported in the Digest?
SANJAY KISHAN KAUL, J.
2011:DHC:4936-DB _________________________________________________________________________________________
1. The petitioner, an erstwhile consultant of National Agricultural Cooperative Marketing Federation of India Limited (NAFED)/R-2, in the present writ petition filed under Article 226 of the Constitution of India seeks to impugn the show cause notice dated 15.07.2010 issued by R-1.
2. The petitioner was appointed as a consultant by R-2 for rendering consultancy services in connection with the tie up business of the said respondent on a monthly lump sum remuneration of Rs.15,000/- with other perquisites as per letter dated 22.07.2005 initially for a period of three months and continued till 30.04.2008 when he ceased to be the consultant. The nature of work of the petitioner, as contained in the letter dated 22.07.2005, is as under:
3. The petitioner had been employed with R-2 as an Additional Managing Director and retired from service on 28.02.1998. It is after a lapse of more than 7 years that the services of the petitioner were sought to be deployed in respect of the tie up business which was stated to be already in existence since the year 2003-2004.
4. It is the say of the petitioner that as a consultant he had no administrative business or financial powers to take any decisions in respect of the business of R-2 and in support of this fact has relied upon an office order dated 24.06.2002 which records the decisions of the Board of Directors of R-2 in its meeting held on 07.06.2002 setting out the guidelines/rules relating to engaging consultants in NAFED/R-2. In para 6 of this office order, the powers of consultants have been specified. The same para reads as under:
5. The petitioner claims that the Managing Director of R-2 vide an order dated 04.01.2006 gave additional responsibility to the petitioner to handle the legal cases in the period when the petitioner was working as a consultant when M/s Disha Impex Private Limited, with whom a memorandum of understanding had been entered into on 10.03.2004, gave additional security to the tune of Rs.12.29 crores by way of post dated cheques. There was a default in the refund of the advance amount and the cheques bounced. The petitioner advised R-2 to initiate legal action not only for dishonoured cheques but also for initiation of arbitration proceedings. These steps are stated to have been taken. However, the petitioner was alleged to be responsible for causing deficiencies to the assets of R-2 to the tune of Rs.8.92 crores as on 31.03.2010. It is the say of the petitioner that the agreement with M/s Disha Impex Private Limited was entered into even prior to the petitioner being appointed as consultant and substantial funds were released prior to his appointment. In any case, the petitioner denies any role in connection with the funding for which requests were made to R-2 by M/s Disha Impex Private Limited. The petitioner claims that the basis of the show cause notice is an internal note penned down by him as a consultant on 20.07.2005, which is as under: “A view has been taken to discourage providing of finance for non-agro items and to implement this view in phased manner.”
6. The petitioner had written to the committee which was authorized in this behalf to take a final view in the matter of which the petitioner was not a member. The matter was placed before a tie up committee appointed by the competent authority and in its meeting held on 20.07.2005, which was attended by the petitioner in the capacity of a consultant, the decision was taken.
7. The Central Registrar of Cooperative Societies/R-1 appointed two Inquiry Committees over a period of time under Section 83(1) of The Multi-State Cooperative Societies Act, 2002 („the said Act‟ for short). The said provision reads as under:
8. The first Inquiry Committee was constituted on 30.01.2008 to enquire into the conduct of the members of the Board of Directors, the Committee, Executive Committee and the then Chairman, Managing Director, Additional Managing Director and officers of R-2/NAFED for causing losses to R- 2/NAFED. The second Inquiry Committee was set up on 24.02.2009 to enquire into the conduct of the members of the Board of Directors of R-2/NAFED and its officers with regard to 13 cases. The second Inquiry Committee inter alia found the Chairman and officers being negligent and imprudent in their acts and omissions while sanctioning the loan amount to the parties and post loan monitoring. The petitioner claims that he has never been given an opportunity to represent his case before the Inquiry Committee and the finding, if any, arrived at is without any hearing being granted to the petitioner. It is on the basis of the finding of the Inquiry Committees that the show cause notice dated 15.07.2010 under Section 83(2) of the said Act has been issued to the petitioner. The relevant para 13 of the said notice reads as under: “And whereas the Inquiry Committee has also named the officers of NAFED and indicated members of Business Committee responsible for causing deficiency in the assets of NAFED to the tune of Rs.1602.37 crores. On the basis of the findings of the first Inquiry Committee, it is, therefore, justified to issue notice to all the members and local Directors of the Business Committee who were present and were party to the decisions taken for approval of tie-up business in its meetings in the years 2003-04 and 2004-05. It is also justified to issue notice to all the officers including the Consultants and Advisors found responsible by the Inquiry Committee for causing deficiency in the assets of NAFED.”
9. The notice called upon the petitioner to show cause within eight weeks from the date of the issue of the notice why the petitioner should not be held responsible for causing deficiency in the assets of R-2/NAFED by breach of trust and wilful negligence to the tune of Rs.8.92 cores jointly and severally and why he may not be required to repay to restore the money or part thereof with interest as may be found just and equitable. The petitioner seeks to challenge the show cause notice on the following grounds: i) The show cause notice is only in respect of the losses caused on account of the decisions taken consequent to approval of tie-up business and in its meetings held in the year 2003-04 and 2004-05 when the petitioner was not even in the picture as the petitioner was appointed only on 22.07.2005. ii) The petitioner was paid a lump sum remuneration of Rs.15,000/- per month as a consultant and such engaging consultants are to be appointed in R-2/NAFED on a short term basis and are not to be delegated any financial/administrative powers as specified in the office order dated 24.06.2002. iii) In view of the aforesaid facts and taking into consideration the provisions of Section 83 read with Section 3(t) of the said Act, the show cause notice is completely without jurisdiction. iv) The findings of the Inquiry Committee are in violation of principles of natural justice as the petitioner was never given an opportunity to explain his stand. v) The disbursements to M/s Disha Impex Private Limited were much prior to the appointment of the petitioner as a consultant with R- 2/NAFED. vi) The petitioner had submitted a reply to the show cause notice dated 15.07.2010 inter alia raising the plea of maintainability of the show cause notice, but instead of deciding that question, the R-1 has proceeded with the merits of the case.
10. We are conscious of the fact that only a show cause notice has been issued to the petitioner to which he has responded and no adverse orders have been passed as yet. Thus, insofar as the aforesaid pleas of merits are concerned, the present stage would not be the appropriate stage to examine the same as no order has been passed by R-1. The question of violation of principles of natural justice would also not arise as post the inquiry, the petitioner has been issued the show cause notice to which he has responded. Thus, the only plea which is really required to be examined is as set out in the third plea relating to the aspect of the notice being without jurisdiction in view of the provisions of the said Act.
11. Learned senior counsel for the petitioner thus contended that if the provisions of Section 83 of the said Act are scrutinized closely, the inquiry against a person can take place only if that person is or was entrusted with the organization or management of such society or who is or has at any time been an officer or an employee of the society.
12. If any person who fits the bill has made any payment contrary to the said Act or the bye-laws or has caused any deficiency in the assets of the Society by breach of trust or willful negligence or has misappropriated or fraudulently retained any money or other property belonging to the society, an inquiry can be made into the conduct of such person within a period of two years from the date of the report of the audit. The expression „officer‟ has been defined in Section 3(t) as under:
13. Learned senior counsel for the petitioner thus contended that the petitioner was not an officer within the definition of Section 3(t) of the said Act.