M.P. Co-operative Societies Act, 1960 — Section 53(1) — Supersession of Board of Directors –

September 7th, 2013

M.P. Co-operative Societies Act, 1960 — Section 53(1) — Supersession of Board of Directors — Interpretation of — Discussed.

(Para 14)

HELD: Section 53 (1) confers powers on the Registrar to pass an order to remove the Board of Directors and to appoint a person to manage the affairs of the society, subject to certain conditions, of which, we are primarily concerned with the applicability of the second proviso to Section 53(1), which specifically states that in the case of a Co-operative Bank, the order of supersession shall not be passed without previous consultation with the RBI. The third proviso to Section 53 states that if no communication containing the views of the RBI on the action proposed is received within thirty days of the receipt by that bank of the request soliciting consultation, it shall be presumed that the RBI agreed with the proposed action and the Registrar shall be free to pass such order, as he may deem fit. Sub-section (2) to Section 53 of the Act specifically states that no order under Sub-section (1) (order of supersession) shall be passed unless a list of allegations, documents and witnesses in support of charges levelled against it has been provided and the Board of Directors has been given a reasonable opportunity of showing cause against the proposed order and representation, if any, made by it, is considered. The second proviso to Section 53 (1) refers to the expression “order of supersession”, means that the final order of supersession to be passed by the Joint Registrar after complying with sub-section (2) to Section 53. Second and third provisos, read together, would indicate that no order of supersession shall be passed without previous consultation with the RBI. Before passing an order of supersession, the show-cause-notice along with other relevant materials, including the reply received from the bank, has to be made available to the RBI for an effective consultation.

(Para 14)

State of Madhya Pradesh v. Sanjay Nagayach[Bench Strength 2], Civil Appeal No. 4691/2013 (Arising out of SLP (C) No. 6860/2012)(16/05/2013), 2013(4) Supreme 10: 2013(7) SCALE 354: 2013(8) JT 339 [K.S. Radhakrishnan, J.: Dipak Misra, J.]

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