Gujarat State Co-operative Marketing Federation v. State of Gujarat
2017-01-18
N.V.ANJARIA
body2017
DigiLaw.ai
JUDGMENT : N.V. Anjaria, J. 1. Whether the Registrar's disapproval to the Resolution of the petitioner-society expelling the respondent-member was 'communicated' to the petitioner society within stipulated time of three months as per the Second Proviso to Section 36 of the Gujarat Cooperative Societies Act, 1961 and whether the Resolution of the petitioner society took effect, are the questions. 2. The petitioner is a co-operative society registered under the provisions of the Gujarat Cooperative Societies Act, 1961, whereas the third respondent herein is a member society of the petitioner Federation. 2.1 The petitioner has prayed to set aside order dated 25th January, 2016 passed by the second respondent-Registrar, Cooperative Societies by which the said authority disapproved Resolution No. 07 of the petitioner Federation expelling the third respondent society. 3. The background events may be stated in brief only for completion in recording of facts. The petitioner-Gujarat State Co-operative Marketing Federation decided to expel the third respondent society as member on the ground that it had undertaken activities detrimental to the interest of the Federation. In 53rd Yearly General Meeting held on 26th September, 2014 as per Agenda published on 19th September, 2014, respondent No. 3 society came to be expelled by passing Resolution No. 08. The society was informed about expulsion by communication dated 01st October, 2014. The expelled society preferred Revision Application No. 181 of 2014 against the said decision. By order dated 05th May, 2015 the Revisional Authority allowed the appeal. The order of the Revisional Authority was challenged by the petitioner by way of Special Civil Application No. 9595 of 2015 which was disposed of as per order dated 16th May, 2015 wherein this Court recorded statement of the petitioner that a fresh general body meeting would be called and after affording opportunity of hearing to the third respondent society, appropriate order would be passed. Thereafter fresh show-cause notice came to be issued to respondent No. 3 on 13th July, 2015. 3.1 Annual General Meeting was again called by the petitioner Federation in which 829 members out of 1,400 members remained present. Resolution No. 07 was passed in the said meeting held on 28th July, 2015. The decision was taken proposing to expel respondent No. 3 from the membership. The proposal was sent to the competent authority-the second respondent herein-the Registrar seeking his approval in view of provision of Section 36 of the Act.
Resolution No. 07 was passed in the said meeting held on 28th July, 2015. The decision was taken proposing to expel respondent No. 3 from the membership. The proposal was sent to the competent authority-the second respondent herein-the Registrar seeking his approval in view of provision of Section 36 of the Act. The proposal dated 26th October, 2015 of the petitioner which was submitted to the Registrar on 27th October, 2015. Notice came to be issued to the third respondent and after considering the reply of the third respondent and the counter of the petitioner, the second respondent passed impugned order on 25th January, 2016 rejecting the proposal of the petitioner for approval. The order which came to be passed as above, was dispatched to the petitioner by speed post. 3.2 Section 36 of the Gujarat Cooperative Societies Act, 1961 as it stands along with its Provisos, may be noticed, which is reproduced hereinbelow. "36. Expulsion of members.- (1) A society may, by resolution passed by three-fourths majority of all the members present and voting at a general meeting of members held for the purpose, expel a member for facts which are detrimental to the proper working of the society: Provided that, no resolution shall be valid, unless the member concerned is given an opportunity of representing his case to the general body, and no resolution shall be effective unless it is submitted to the Registrar for his approval and approved by him. Provided further that, the approval or disapproval of the Registrar shall be communicated to the society within a period of three months from the date of such submission, and in the absence of such communication the resolution shall be effective. (2) No member of a society who has been expelled under sub-section (1) shall be eligible for re-admission as a member of that society, or for admission as a member of any other society, for a period of two years from the date of such expulsion. Provided that, the Registrar may, in special circumstances, sanction the re-admission or admission, within, the said period, of any such member as a member of the said society or of any other society, as the case may be." 3.3 A reading of Section 36 goes to show that it operates together with the First Proviso as well as the Second Proviso thereto.
Under Section 36, a society may expel its member by three-fourth majority for the acts of such member detrimental to the working of the society. While rest of the requirements of Section 36 and the First Proviso have been complied with, the question falls for consideration in the context of the Second Proviso as to whether there was a communication within time stipulated. 4. Learned advocate Mr. Dipen Desai for the petitioner emphasised the Second Proviso to submit that the requisite condition contemplated therein is that the decision of approval or disapproval of the Registrar shall have to be communicated within the stipulated time of three months from the date of submission of proposal of the society. He submitted that in the present case the three months period expired on 27th January, 2016, as proposal was made on 26th October, 2015 and was received by the Registrar on 27th October, 2015. He submitted that the Registrar did not communicate the decision of his disapproval and the communication of Registrar was received through post by the petitioner only on 29th January, 2016 which was clearly beyond the stipulated period. He submitted that as a result of this the consequence would operate and the Resolution of the petitioner society expelling the third respondent became effective. He alternatively submitted that even considered on demurer and taking the date of despatch of the communication by the Registrar, the same was also after the expiry of three months. 4.1 Learned advocate for the petitioner relied on decision of the Apex Court in Raipur Development Authority v. Anupam Sahkari Griha Nirman Samiti, (2000) 4 SCC 357 , which was under Madhya Pradesh Town and Country Development Act, 1973, particularly paragraphs 5 and 6 thereof. The provision of Section 13(5) of the said Act in respect of granting of permission to development scheme was similar provision providing that if the Director does not communicate the decision whether to grant or refuse the permission within 60 days from the date of receipt of the application, such permission shall be deemed to have been granted immediately on the next day on the expiry of 60 days.
Learned advocate for the petitioner relied on another decision of the Supreme Court in State of Gujarat v. Patel Raghav Natha [10 GLR 992], wherefrom he compared the provision of Section 65 of the Bombay Land Revenue Code, 1879 with provision of Section 36 under consideration, and with reference to observations in paragraph 13 of the said decision, it was submitted that Section 65 of the Code provides that in absence of no decision on the non-agricultural permission within three months, there was a deeming fiction to treat the permission as granted. It was submitted that in similar way when the communication was not made within the stipulated period, the Resolution of the petitioner society would come into force as per Second Proviso to Section 36. Furthermore, with specific reference to the application of Section 36 of the Act, decision of the Apex Court in Balasinor Nagrik Cooperative Bank Limited v. Babubhai Shankarlal Pandya, AIR 1987 SC 849 was relied on. 4.2 On the other hand, learned advocate Mr. B.S. Patel for the third respondent submitted that an alternative remedy was available and the petitioner ought to have been relegated rather than entertaining a writ petition. He highlighted the said provision from the decision of Union of India v. Major General Shri Kant Sharma (2015) 6 SCC 773 . He contended thereafter that the Registrar had taken his decision on 25th January, 2016 which was within the period of three months. It was submitted that there was initiation of action by the authority within three months and in that view he could not be said to have been treated as powerless. Therefore there was no question of the Resolution of expulsion taking effect. He furthered his submission by relying upon order of this Court dated 07th February, 2008 in Sachin Udyognagar Sahakari Mandli Limited v. State of Gujarat being Special Civil Application No. 1921 of 2008 in which was held that since in the fact of that case there was initiation of action by the Registrar under Section 36 within three months, the contention that the Registrar had become functus officio was factually ill-founded.
4.3 At the outset, contention of the learned advocate for the respondent about relegating the petitioner to the alternative remedy as such remedy is available, is overruled in as much as the issue involved in the petition was found to be a neat question of law and the interpretation of the provision. 5. In Balasinor Nagrik Cooperative Bank Limited (supra) the Supreme Court had an occasion to consider the interpretational and operational aspects of Section 36. The facts were that the society before the Apex Court expelled a member and forwarded the resolution for approval to the Registrar. The resolution was dated 30th September, 1982, the society forwarded it on 06th October, 1982 and in absence of any response, on 24th January, 1983 the society wrote to the Registrar that the resolution had become effective as the Registrar had failed to communicate his approval or disapproval. The Registrar did not agree with the society and after hearing the parties recorded his disapproval vide order dated 19th September, 1983. The Supreme Court held that a duty was cast upon the Registrar to exercise his powers or approval or disapproval and failure to communicate within the stipulated time would make the Registrar functus officio and the resolution passed by the society would become effective. With regard to the interpretation, it was stated that it is elementary rule that construction of a Section is to be made of all parts together. It is not permissible to omit any part of it. It was observed that For, the principle that the statute must be read as a whole is equally applicable to different parts of the same Section. 5.1 Referring to the conditions flowing from the Provisos to the Section, the Apex Court viewed, "There is no doubt or difficulty as to the precise function of the two provisos appended to Sub-section (1) of Section 36 of the Act. The power of expulsion of a member by a society under Sub-section (1) of Section 36 is made subject to a defeasance clause engrafted in the first proviso. It interdicts that (1) no such resolution for expulsion of a member passed under Sub-section (1) of Section 36 of the Act shall be valid unless the member concerned is given an opportunity of representing his case to the general body and (2) unless it is submitted to the Registrar for his approval and approved by him.
It interdicts that (1) no such resolution for expulsion of a member passed under Sub-section (1) of Section 36 of the Act shall be valid unless the member concerned is given an opportunity of representing his case to the general body and (2) unless it is submitted to the Registrar for his approval and approved by him. Condition No. 2 keeps the resolution for expulsion of a member in abeyance." (Para 4) 5.1.1 About the Second Proviso prescribing requiring the condition as to the communication of the decision, the Apex Court explained thus, "Just as the first proviso construed in the context of the substantive provision contained in Sub-section (1) of Section 36 of the Act is meant to accept or qualify the power of expulsion of a member conferred in the main enacting part and presumed to be necessary, the second proviso is in the nature of a letter on the power of the Registrar to accord his approval or disapproval. Such approval of disapproval in terms of the second proviso has to be communicated to the society within a period of three months from the date of submission of the resolution passed under Sub-section (1) of Section 36 of the Act for his approval. On a combined reading of the two provisos, the legal consequence that ensues is this. After the society communicates Resolution for the expulsion of a member for acts detrimental to the working of the society passed in the manner required by Sub-section (1) of Section 36 of the Registrar for his approval under the first proviso, there is a duty cast on the Registrar to exercise his power of according approval or disapproval within a period of three months from the date of such submission, as provided by the second proviso. According to its plain terms, the second proviso places a limitation on the powers of the Registrar. It appears to us that the obvious intention of the Legislature was that once the period of three months stipulated expires, the Registrar becomes functus officio and his power to accord approval or disapproval to the resolution passed by the Society for expulsion of a member under Sub-section (1) of Section 36 of the Act lapses.
It appears to us that the obvious intention of the Legislature was that once the period of three months stipulated expires, the Registrar becomes functus officio and his power to accord approval or disapproval to the resolution passed by the Society for expulsion of a member under Sub-section (1) of Section 36 of the Act lapses. The District Registrar' therefore had no jurisdiction to set aside the resolution passed by the appellant society under Sub-Section 91) of Section 36 for the expulsion of respondent No. 1 from the primary membership of the society after the expiry of a period of three months from October 6, 1982 i.e. the date of Submission of the resolution. The construction placed by the learned Single Judge on Sub-section (1) of Section 36 of the Act read with the two provisos thereto is patently erroneous and cannot be Sustained." (Para 5) 5.2 As the Second Proviso of Section 36 pins importance on the communication, it would not be out of place to briefly refer in the context of the controversy, certain decisions of the Apex Court on the aspect of the communication of decision, order, etc. In State of West Bengal v. M.R. Mondal, (2001) 8 SCC 443 and in Bipromasz Bipron Trading SA v. Bharat Electronics Limited (BEL), (2012) 6 SCC 384 , the Supreme Court viewed that so far as affected party is concerned, the order made by the authority would be the date on which it is communicated and the order cannot be said to have taken effect unless communicated to the party affected. In Laxminarayan R. Bhattad v. State of Maharashtra, (2003) 5 SCC 413 it was observed that a right created under an order of a statutory authority must be communicated so as to confer an enforceable right. Similarly in Greater Mohali Area Development Authority v. Manju Jain, (2010) 9 SCC 157 it was stated that non-communication of the order to the party concern would not create any legal right which could be enforced as it would not become effective till it communicated. 5.3 The Second Proviso to the Section attaches such significance to the requirement of 'communication'. The valid distinction often made and applied between 'order made' and 'order communicated' could be explained with reference to what is stipulated in Second Proviso to Section 36.
5.3 The Second Proviso to the Section attaches such significance to the requirement of 'communication'. The valid distinction often made and applied between 'order made' and 'order communicated' could be explained with reference to what is stipulated in Second Proviso to Section 36. This distinction has been explained by the Apex Court in Municipal Corporation of Delhi v. Qimat Rai Gupta, (2007) 7 SCC 309 . It was stated thus, "A distinction, thus, exists in the construction of the word "made" depending upon the question as to whether the power was required to be exercised within the period of limitation prescribed therefore or in order to provide the person aggrieved to avail remedies if he is aggrieved thereby or dissatisfied therewith. Ordinarily, the words "given" and "made" carry the same meaning." (Para 26) "An order passed by a competent authority dismissing a government servant from services requires communication thereof as has been held in State of Punjab v. Amar Singh Harika ( AIR 1966 SC 1313 ) but an order placing a government servant on suspension does not require communication of that order. (See State of Punjab v. Khemi Ram (1969) 3 SCC 28 ) What is, therefore, necessary to be borne in mind is the knowledge leading to the making of the order. An order ordinarily would be presumed to have been made when it is signed. Once it is signed and an entry in that regard is made in the requisite register kept and maintained in terms of the provisions of a statute, the same cannot be changed or altered. It, subject to the other provisions contained in the Act, attains finality. Where, however, communication of an order is a necessary ingredient for bringing an end result to a status or to provide a person an opportunity to take recourse to law if he is aggrieved thereby, the order is required to be communicated." (Para 27) (Emphasis supplied) 5.4 The Apex Court in State of Punjab v. Amar Singh Harika, AIR 1966 SC 1313 held that the order of dismissal passed against officer on 03rd June, 1949 could not be said to have taken effect unless he came to know about it on 28th May, 1951. It was observed, "The mere passing of an order of dismissal is not effective unless it is published and communicated to the officer concerned.
It was observed, "The mere passing of an order of dismissal is not effective unless it is published and communicated to the officer concerned. An order of dismissal passed by an appropriate authority and kept on its file without communicating it to the officer concerned or otherwise publishing it does not take effect as from the date on which the order is actually written out by the said authority; such an order can only be effective after it is communicated to the officer concerned or is otherwise published." (Para 11) 5.5 In this process of analysing the legal concept of 'communication' and its effect, referring the decisions of the Apex Court in State of Punjab v. Khemi Ram, AIR 1970 SC 214 which was the case, however, of suspension of government servant and it was held that the order being of suspension, its communication would mean its despatch and not the actual receipt by the government servant concerned. In that case, telegrams intimating about suspension were received by the government servant after his retirement. The Court observed in the facts of that case that it was not persuaded to accept the view that it is only from the date of actual receipt by the government servant that the order would become effective. It was observed that if that be the true meaning of communication, it would be possible for government servant to effectively thwart an order by avoiding receipt of it by one or other method. At the same time, clarifying on the view taken, the Apex Court stated that the meaning which it attached to the word 'communication' in the facts of that case may be different and may be referable to the actual receipt of the communication by the addressee where the provision so provides. It was observed by the Court explaining and clarifying, "...Such a meaning of the word 'communication' ought not to be given unless the provision in question expressly so provides. Actually knowledge by him of an order where it is one of dismissal, may, perhaps, become necessary because of the consequences which the decision in AIR 1966 SC 1313 (supra) contemplates.
It was observed by the Court explaining and clarifying, "...Such a meaning of the word 'communication' ought not to be given unless the provision in question expressly so provides. Actually knowledge by him of an order where it is one of dismissal, may, perhaps, become necessary because of the consequences which the decision in AIR 1966 SC 1313 (supra) contemplates. But such consequences would not occur in the case of an officer who has proceeded on leave and against whom an order of suspension is passed because in his case there is no question of his doing any act or passing any order and such act or order being challenged as invalid." (Para 16) 5.6 The language of the Proviso in question, in the present case could be said to be expressly providing for communication to the society, namely that the communication must terminate at the end of the society to intimate it about disapproval, else the Resolution of the society would take effect. As the consequence of non-communication within the stipulated time is provided, it has to be construed that the communication to the society must complete within the period of three months. 6. The scheme of Section 36 of the Act was considered on the footsteps of Balasnior Nagrik Bank (supra) by this Court in Jentibhai Chitabhai Patel v. State of Gujarat [2007 (4) GLR 2866] stating about the Second Proviso to Section that it provides an embargo along with period of limitation for granting approval or disapproval by the Registrar. The Second Proviso, it was observed, stipulates that approval or disapproval of the Registrar shall be communicated to the society within a period of three months from the date of receipt of submission of the Resolution by the society, and in the event the Registrar fails to communicate within specified period, the Resolution shall be effective. 6.1 It is pertinent to notice what the Court observed about the conjoint operation of the Section and the Proviso as under. "Thus on a conjoint reading of Sub-section (1) of Section 36 of the Act and the two provisos thereunder the legislative scheme that unfolds is that once the society has complied with the requirement of granting an opportunity of hearing to the member concerned and a resolution is passed at a meeting held for such purpose by the prescribed majority, the resolution is valid.
However, the latter part of the first proviso does not talk of the validity of the resolution being subject to approval by the Registrar. The said portion of the first proviso only requires and states that on being granted approval the valid resolution become effective. In other words, what is provided on a conjoint reading of the first proviso and Sub-section (1) of Section 36 of the Act is that once the requirements are complied with by the Society a valid resolution comes into existence and only the implementation thereof stands deferred, awaiting approval or disapproval by the Registrar. It is necessary to note that the power of Registrar to grant approval or disapproval can be exercised only within the stipulated period of 90 days from the date of receipt of the resolution from the Society. Once the period of 90 days is over and the Registrar has failed to either record his approval or disapproval and communicate the same to the Society the Registrar is divested of his powers to grant approval or disapproval." (Para 10) 7. The provision of Section 36 of the Gujarat Cooperative Societies Act operates as a total scheme. It has to be read, considered and applied together with the First Proviso as well as the Second Proviso. The function of the Proviso in a Section is well settled. This function of the Proviso is to explain the Section. The ambit of the main provision is often circumscribed by insertion of Proviso. The First Proviso as well as the Second Proviso to Section 36 states about the conditions attached to the operation of Section 36(1). The Second Proviso being material for the purpose of the controversy herein, it puts and stipulates about the time limit as to the communication of the approval or disapproval. The Second Proviso casts a duty on the Registrar stating that 'the Registrar shall communicate'. The communication of the Registrar is to be 'to the society'. The time limit of such communication is three months. The Second Proviso not only specifies the condition of communication as above, but also speaks for the consequence which would entail in absence of such time stipulated communication, stating that the Resolution of the society shall become effective where there is no communication within three months.
The time limit of such communication is three months. The Second Proviso not only specifies the condition of communication as above, but also speaks for the consequence which would entail in absence of such time stipulated communication, stating that the Resolution of the society shall become effective where there is no communication within three months. By virtue of the consequences provided for non-communication as stipulated, an enforceable right is created as the Resolution of the society in that event, would become effective. Reading together the provision of Section 36 with the Second Proviso it has to be held that the act of communication must occur within the stipulated time of three months and after expiry of the said period, the Registrar would be divested of his power and the Resolution of the society would take effect. 8. Learned advocate for the respondent, out of misconception, wanted to bring into play the principle with reference to the provisions of General Clauses Act that first date or the last date at the either end has to be excluded which would make the communication within time. The said principle does not apply in the facts of the case as the provision is very clear mandating the communication to be within three months period from the date of submission of proposal. This having not been done, the consequence would follow as a necessary sequator. Decision in Sachin Udyognagar Sahakari Mandli Limited (supra) relied on by learned advocate for the respondent was in the context of the fact of that case. The said decision cannot be said to be professing the principle in its ratio against the position which clearly emerges that act of communication has to be within the outer limit of three months as per the Second Proviso to the Section. 9. In light of above discussion, reverting to the undisputed facts of the case, the proposal of the petitioner of expulsion of respondent No. 3 was received by the Registrar on 27th October, 2015. The Registrar is stated to have made his decision on 25th January, 2016 by recording his disapproval to Resolution No. 07 of the petitioner society expelling the third respondent. Reckoning from the said date, the three months period would expire on 27th January, 2016. The requirement of 'communication' ought to have occurred within three months, that is to say on or before 27th January, 2016.
Reckoning from the said date, the three months period would expire on 27th January, 2016. The requirement of 'communication' ought to have occurred within three months, that is to say on or before 27th January, 2016. The Registrar forwarded by Speed Post his decision of disapproval to the petitioner society admittedly on 28th January, 2016 from Gandhinagar. The intimation was received by the petitioner on 29th January, 2016, which is evidenced by copy of envelope accompanied by postal acknowledgment receipt. The Resolution of the society takes effect in absence of 'communication' within three months. The order of the Registrar disapproving the Resolution cannot be allowed to stand valid in view of operation of law. 10. For the foregoing reasons and discussion, the petition succeeds. The impugned order dated 25th January, 2016 passed by the second respondent-the Registrar, Cooperative Societies is hereby quashed and set aside. The consequences in law would operate. FURTHER ORDER At this stage, learned advocate Mr. B.S. Patel requests to stay the aforesaid order on the ground that the third respondent wants to challenge before the higher forum. The request was objected by learned advocate Mr. Dipen Desai for the petitioner. In the facts and circumstances of the case, the order shall remain stayed for two weeks upto 02nd February, 2017.