Bhurabhai Patel Dairy Research and Development Association v. Registrar of Co-operative Societies - State of Gujarat
2013-07-24
C.L.SONI
body2013
DigiLaw.ai
JUDGMENT : C.L. Soni, J. Rule. Learned Assistant Government Pleader Mr. Neeraj Ashar for respondent Nos.1 and 3 and learned advocate Mr. Nikhil Joshi for respondent No.2 waive service of Rule. 2. With the consent of the learned advocates for the parties, the matter is taken up for final hearing. 3. Challenge made in this petition filed under Article 226 of the Constitution of India is to the order dated 6.4/5.2013 passed by the Commissioner, Co-operation and Registrar, Co-operative Societies, Gujarat State-respondent No.1 whereby the request of the petitioner to permit the petitioner to prosecute Special Civil Suit No.15 of 1998 filed by it against respondent No.2 came to be rejected. 4. The case of the petitioner is that the petitioner filed Special Civil Suit No.15 of 1998 to recover an amount of Rs. 1,34,61,547/- with interest against Sardar Vallabhbhai Patel Regional Oil Seeds Growers Union, which since under liquidation, shall now be referred as respondent No.2. It appears that in the said suit, the petitioner had preferred an application at Exh.129 seeking to stay the proceedings of the said suit till the application dated 16.10.2000 made by the petitioner under Section 112 of the Gujarat Co-operative Societies Act (hereinafter referred as 'the Act' for short) for leave to proceed with the suit was decided. Learned 5th Additional Senior Civil Judge rejected the said application vide order dated 13.7.2005. The said order came to be challenged by the petitioner by preferring Special Civil Application No.23789 of 2005 before this Court. This Court partly allowed the said petition by order dated 15.11.2010 and set aside the order to the extent the learned Civil Judge had considered the application Exh.129 as an application under Section 10 of the Code and remitted the matter to the learned Judge for fresh decision on the said application in accordance with law and also directed the Registrar-respondent No.1 to decide the application moved by the petitioner under Section 112 of the Act within four weeks from the date of the order. 4.1.
4.1. Based on the above order passed by this Court, respondent No.1 then issued show cause notice dated 9.1.2013 to the petitioner as also to respondent No.2 for hearing on the question of grant of permission under Section 112 of the Act by observing that since respondent No.1 received clear opinion of respondent No.2 not to grant permission under Section 112 of the Act, before taking any decision on merits of the application, both the parties were required to be given opportunity as per the principles of natural justice. In response to the show cause notice, the petitioner made written submission dated 28.1.2013 before respondent No.1 pointing out the scope of Sections 111 and 112 of the Act and requesting for grant of permission to prosecute the said suit. Respondent No.1 then passed the impugned order on the ground that the petitioner being proposed Society is not a body corporate under Section 37 of the Act and as per the Code of Civil Procedure, and as per the definition of 'Person', the petitioner could not be said to be 'Person' and therefore, cannot be given permission under Section 112 of the Act. 5. I have heard learned advocates for the parties. 6. Learned senior advocate Mr. Shalin Mehta appearing with learned advocate Ms. Vidhi J. Bhatt for the petitioner submitted that the reasons given by the Registrar for rejecting the application of the petitioner are not germane to decide the application preferred by the petitioner under Section 112 of the Act. Mr. Mehta submitted that Section 37 of the Act does not provide for any embargo on the proposed society from taking any legal remedy against the society in liquidation. Mr. Mehta submitted that whether suit by proposed society before the Civil Court is maintainable or not could be decided only by competent Civil Court and therefore, rejecting the application by the Registrar would amount to non-suiting the petitioner at the very threshold. Mr. Mehta submitted that there is no provision in the Act like one which is found in the Partnership Act that a suit by the proposed Society is not maintainable. Mr.
Mr. Mehta submitted that there is no provision in the Act like one which is found in the Partnership Act that a suit by the proposed Society is not maintainable. Mr. Mehta submitted that Section 37 of the Act just lays down that a society on its registration shall be a body corporate by the name under which it is registered, with perpetual succession and a common seal, and with power to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings, and to do all such things as are necessary for the purpose for which it is constituted. Mr. Mehta submitted that this provision does not prohibit the proposed society to continue with the proceedings of the suit already instituted by the proposed society. Mr. Mehta submitted that till the society is registered, it remains as a body or association of individual and if individual can continue with the proceedings of the suit, why not the proposed society which is a body of individuals. Mr. Mehta, therefore, urged to allow the petition and to quash and set aside the impugned order. 7. As against the above arguments, learned Assistant Government Pleader Mr. Neeraj Ashar submitted that the Registrar while deciding the application under Section 112 of the Act was required to consider the status of the petitioner society. Mr. Ashar submitted that since the petitioner society could not be said to be body corporate so as to become entitled to institute and defend the suit, the Registrar has rightly not accepted the request of the petitioner society for permission under Section 112 of the Act. Mr. Ashar submitted that Section 37 of the Act clearly provides that a society could be a body corporate only on its registration and then becomes entitled to hold any property or enter into any contract and to institute and defend suits. Mr. Ashar submitted that if under the provisions of the Act, unregistered society is not entitled to enter into a contract and institute any suit, there was no question of granting any permission to the petitioner society even though the petitioner society has already instituted the suit. Mr.
Mr. Ashar submitted that if under the provisions of the Act, unregistered society is not entitled to enter into a contract and institute any suit, there was no question of granting any permission to the petitioner society even though the petitioner society has already instituted the suit. Mr. Ashar submitted that the permission sought for under Section 112 of the Act is since in respect of the suit filed against the society, which is under liquidation, the provisions of Section 37 of the Act would squarely apply for taking decision in connection with the application filed under Section 112 of the Act. He, thus, submitted that the reasons assigned by the Registrar in rejecting the application are germane to and very much relevant for taking decision under Section 112 of the Act. He, thus urged to dismiss the petition. 8. Having heard learned advocates for the parties and having perused the record of the case, it appears that the petitioner (proposed) society has instituted Special Civil Suit No.15 of 1998 against respondent No.2- Sardar Vallabhbhai Patel Regional Oil Seeds Growers Limited-a Co-operative Society for recovery of Rs.1,34,61,547/- with interest. In respect of said suit, the petitioner filed a petition, being Special Civil Application No.23789 of 2005, before this Court challenging the order passed by the Civil Court below application Exh.129, praying to stay the proceedings of the suit till the application made by the petitioner under Section 112 of the Act was decided. This Court partly allowed the said petition by order dated 15.11.2010 and directed the learned Civil Judge to decide the application at Exh.129 without considering the said application as filed under Section 10 of the Code of Civil Procedure. In the said order, this Court also directed the District Registrar to decide the application of the petitioner filed under Section 112 of the Act. The District Registrar has now taken the impugned decision. 9. The main ground on which the said application is rejected is that respondent No.2 has taken objection that the petitioner is not a registered society and therefore, it is not a body corporate and therefore, cannot be said to be a 'Person' and no permission to such proposed society, which is not a body corporate, can be granted under Section 112 of the Act. The District Registrar has accepted the objection raised by respondent No.2. 10.
The District Registrar has accepted the objection raised by respondent No.2. 10. Section 112 of the Act reads as under- "112. Bar of suit in winding up and dissolution matters: Save as expressly provided in this Act, no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society under this Act; and when a winding up order has been made no suit or other legal proceedings shall lie or be proceeded with against the society or the liquidator, except by leave of the Registrar, and subject to such terms as he may impose: Provided that, where the winding up order is cancelled, the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned, but they shall continue to apply to the person who acted as liquidator." 11. It is nowhere provided in Section 112 of the Act that the proposed society shall not be competent to institute or continue with the legal proceedings instituted by it before the Civil Court. What is provided by the said Section 112 of the Act is that no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society under the Act and when a winding up order has been made, no suit or other legal proceedings shall lie or be proceeded with against the society or the liquidator, except by leave of the Registrar and subject to such terms as he may propose. Therefore, there is a bar against the Civil Court not to take cognizance of any matter connected with the winding up or dissolution of the society and when a winding up order has been made, institution of the suit or other legal proceedings or continuation of the legal proceedings against the society or liquidator is permitted with leave of the Registrar. Therefore, the provisions of Section 112 of the Act nowhere make the proposed society dis entitled from either institution or continuation with the legal proceedings before the Civil Court. Under these circumstances, the leave sought for of the Registrar under Section 112 of the Act could not be refused by the Registrar on the ground that the society is not a body corporate. 12.
Under these circumstances, the leave sought for of the Registrar under Section 112 of the Act could not be refused by the Registrar on the ground that the society is not a body corporate. 12. It is required to be noted that the leave sought for by the petitioner is to continue with the legal proceedings of civil suit pending before the Civil Court. Whether the suit at the instance of the petitioner-proposed society is maintainable or not is to be decided by the competent Civil Court. Therefore, refusal of permission by the Registrar under Section 112 of the Act to prosecute the suit would amount to usurp the jurisdiction of the Civil Court to decide as to whether the suit at the instance of the society is maintainable or not. 13. What is provided by Section 37 of the Act is to give recognition to a society on its registration to become body corporate with the power to acquire, hold and dispose of the property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all such things as are necessary for the purpose for which it is constituted. However, it is nowhere provided that in absence of such recognition, a proposed society, which is an association of individuals, if has already instituted the suit before the Civil Suit, was not entitled to continue with such suit. Therefore, the impugned decision taken by the District Registrar refusing to give permission to the petitioner society under Section 112 of the Act on the ground that the petitioner society is not body corporate, cannot stand scrutiny of law. Thus, the impugned order dated 6.4/5.2013 is required to be quashed and set aside and the matter is required to be remanded to the District Registrar to reconsider the application of the petitioner filed under Section 112 of the Act and to take a fresh decision thereon irrespective of the fact that the petitioner is a proposed society. 14. For the reasons stated above, the petition is partly allowed. Impugned order dated 6.4/5.2013 at Annexure-A is quashed and set aside. The matter is remanded to the respondent No.1. The respondent No.1 is directed to reconsider the application of the petitioner filed under Section 112 of the Act and to take decision afresh on the said application irrespective of the fact that the petitioner is a proposed society.
Impugned order dated 6.4/5.2013 at Annexure-A is quashed and set aside. The matter is remanded to the respondent No.1. The respondent No.1 is directed to reconsider the application of the petitioner filed under Section 112 of the Act and to take decision afresh on the said application irrespective of the fact that the petitioner is a proposed society. The respondent No.1 shall take such decision within a period of ONE MONTH from the date receipt of this order. Rule is made absolute to the extent stated above. Petition partly allowed.