TaxTMI 
TaxTMI 
2019 (11) TMI 167
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssistance, in order to enable them to procure mechanized fishing boats/trawlers. During the period from 1974 to 1980, the Society advanced loans to its members to the extent of Rs. 316 lacs to purchase engines/hull, winches, nets, etc. by raising loan from the Goa State Cooperative Bank Limited. 3. While granting loan to its members, serious irregularities were committed by the Board of Directors of the Society. Due to which, Registrar of Cooperative Societies filed Misfeasance Case No.4/1/80. 4. On the basis of enquiry conducted under Section 83(1) of the Act and in view of the report dated 1.8.1980, the Registrar of Cooperative Societies, Goa passed an interim order on 23.8.1985 under Section 102(1)(a) of the Act for winding up of the Society. The Registrar of the Cooperative Societies confirmed the order, in exercise of power under Section 102(2), on 24.1.1986 and appointed Additional Collector of Goa as Liquidator, who continued till 9.12.1991. As liquidation proceedings were not completed, the Registrar on 10.12.1991 appointed Mr. B.N. Pathan, Assistant Registrar of the Cooperative Societies as Liquidator, who continued till 28.2.1992. Yet another Liquidator was appointed by....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the winding up proceedings. Therefore, the writ petition was allowed and it has been declared that the winding up proceedings in respect of the Society are deemed to have been terminated with retrospective effect from 24.1.1993. The Registrar and the Liquidator have been restrained from continuing with the winding up/liquidation proceedings in respect of the Society. 8. Mr. Arvind Sharma, learned counsel appearing on behalf of appellant Bank has submitted that the High Court has erred in law in allowing the writ petition even after lapse of the period fixed under Section 109 of the Act, the proceedings for recovery of loan amount from members have to be continued. Ms. Shobha Gupta, learned counsel appearing on behalf of LRs. of respondent no.1, has submitted that no case for interference with the impugned judgment and order is made out and has taken us to the scheme of the Act to take home the submission. 9. Where we consider the provisions in the Act, it is apparent that under Section 102 of the Act, the Registrar is empowered to pass an interim order directing winding up. The same shall be communicated to the Society and thereupon Registrar may pass final order, vacating or co....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of a society under the Act. Under Section 108, the Liquidator's accounts can be audited and Liquidator has to furnish the Registrar such vouchers and information as may be required. The Liquidator shall cause a summary of audited accounts to be prepared and send a copy of such summary to every contributory as provided under Section 108(2). 11. Section 109 provides for termination of liquidation proceedings. The provisions contained in Section 109 reads as under: "109. Termination of liquidation proceedings (1) The winding up proceedings of a society shall be closed as soon as practicable within six years from the date the Liquidator takes over the custody or control of all the property, effects and actionable claims to which the society is or appears to be entitled and of all books, records and other documents pertaining to the business of the society, under sub-section (2) of section 103, unless the period is extended by the Registrar: Provided that, the Registrar shall not grant any extension for a period exceeding one year at a time and four years in the aggregate, and shall, immediately after the expiry of ten years from the date aforesaid, deem that the liquidation pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 109 makes it clear that if due to termination of liquidation proceedings at the end of 10 years, the Registrar comes to a conclusion that the work of liquidation under Section 105 could not be completed by the liquidator, due to reasons beyond his control, he shall call upon the liquidator to submit the report. After getting the report, if the Registrar is satisfied that the realisation of assets, properties and sale of properties still remained to be achieved, he shall direct the liquidator to complete the entire work and carry out the activities only for the purposes of winding up and submit his report within such period not exceeding one year. 12. Section 109(2) of the Act contains non-obstante clause that the Registrar has to terminate liquidation proceedings on receipt of the final report of the Liquidator. The final report shall state closure of the liquidation proceedings and how the winding up has been conducted. The final report shall also contain, inter alia, summary of account of the winding up including the cost of liquidation, the amount (if any) standing to the credit of the society in liquidation 'after paying off its liability' including the share or intere....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....e., Assistant Registrar, Cooperative Society's Sales and Recovery Officer under section 156 of the Act. Therefore, the termination of the winding up under section 109 of the Act, cannot be strictly applied so as to defeat the very purpose of the legislative intent of recovery of amount. 16. It is also submitted that by lapse of time under section 109(1) of the Act, recovery proceedings cannot come to an end. It is further pointed out that the recovery of public money from defaulting members is absolutely necessary failing which huge financial loss would be caused to the appellant bank. The interim stay granted by the tribunal cannot come to the prejudice of the bank. Thus, the provisions of Section 109 have to be construed in such a fashion so as to enable continuance of the proceedings for recovery. As the interim order of the court cannot work to the prejudice of any of the parties, the provision of section 109 of the Act should be construed in a manner that it is not used to interdict recovery from the defaulting members. 17. It is apparent from the facts of the instant case that the winding up of the Society has been ordered and liquidator has been appointed as the Society h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hey specify that such a surplus shall be utilised for the particular purpose or may be utilised for both the purposes. 20. It is apparent that on the termination of the liquidation proceedings, liability of the members for the debts taken by them does not come to an end. There is no such provision in the Act providing once winding up period is over, the liability of the members for loans obtained by them which is in their hands, and for which recovery proceedings are pending shall come to an end. No automatic termination of recovery proceedings against the members is contemplated. On the other hand, on completion of the period fixed to liquidate the society, final report has to be submitted as to the amount standing to the credit of the society in liquidation after paying off its liabilities including the share or interest of members. Thus, even in the case of liquidation the accountability remains towards surplus and liabilities do not come to an end. Even if the period fixed for liquidation of society is over, that does not terminate the proceedings for recovery which have been initiated and appeals are pending. 21. It is a settled law that when there is stay of proceedings by ....