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Issues Involved:
1. Whether the Registrar must conduct an audit under Section 64, an inquiry under Section 65, and an inspection under Section 66 of the Madras Co-operative Societies Act, 1961, before taking action under Section 72. 2. The scope of interference by the High Court with the Order of a Registrar made under Section 72 of the Act. Detailed Analysis: Issue 1: Requirement of Audit, Inquiry, and Inspection Before Action Under Section 72 The appeals revolved around the interpretation of Section 72 of the Madras Co-operative Societies Act, 1961. The Joint Registrar issued a notice under Section 72 to the Committee of the North Arcot District Cooperative Supply and Marketing Society Ltd., citing improper functioning and detailing various charges. After considering the Committee's representation, the Registrar ordered the suspension of the Committee for one year and appointed a Special Officer to manage its affairs. The Committee's appeal to the Registrar was dismissed, and subsequently, the President and Director of the Society filed a writ petition under Article 226 of the Constitution. The High Court's Full Bench held that the procedure under Sections 64, 65, and 66 must be followed before any action under Section 72 could be taken. They emphasized that these sections provide a procedural safeguard against arbitrary actions by the Registrar. The Full Bench stated: > "In our view and under the scheme of the Act, the condition precedent to the exercise of jurisdiction by the Registrar under one or the other of the sections considered above and in particular Section 72 is to secure an audit memorandum or a report of inspection or inquiry, so that he may be provided with the necessary material to act thereon." However, the Supreme Court disagreed with this interpretation. The Court noted that Section 72(1) does not explicitly mention Sections 64, 65, and 66, unlike Sections 70(1) and 85(1), which do. The Court reasoned that if the Legislature intended for these sections to be prerequisites for action under Section 72, it would have explicitly stated so. The Court clarified: > "All that is required by section 72 (1) (a) is that the Registrar should form an opinion that the Committee of any Registered society is not functioning properly or has wilfully disobeyed or failed to comply with any lawful order or direction issued by him." The Court held that the Registrar could form an opinion based on material from various sources, not necessarily confined to audits, inquiries, or inspections under Sections 64, 65, and 66. The Registrar's opinion must be based on objective facts, but these facts need not exclusively arise from the procedures mentioned in the other sections. Issue 2: Scope of Interference by the High Court The Supreme Court also addressed the High Court's scope of interference under Article 226. The High Court had quashed the Registrar's orders, emphasizing the elected nature of the Committee and the potential prejudice to its members due to previous irregularities. The Supreme Court noted that the High Court had overstepped its jurisdiction by reappraising and re-examining the facts as if it were an appellate court. The Court reiterated the limits of the High Court's jurisdiction under Article 226: > "The High Court could not act as an appellate Court and reappraise and re-examine the relevant facts and circumstances which led to the making of the orders of supersession as if the matter before it had been brought by way of appeal." The Supreme Court found no infirmities in the orders of the Registrar and the Joint Registrar that would justify interference by the High Court. The Court emphasized that the Registrar's opinion, formed honestly and based on relevant material, was sufficient for action under Section 72. Conclusion: The Supreme Court allowed the appeals, set aside the High Court's judgment, and dismissed the writ petitions, underscoring that the Registrar's action under Section 72 did not require prior compliance with Sections 64, 65, and 66, and the High Court's interference under Article 226 was unwarranted. The appeals were allowed with costs.
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