Hasmukhbhai Thakorebhai Patel v. Registrar Cooperative Societies
2017-02-09
N.V.ANJARIA
body2017
DigiLaw.ai
JUDGMENT : N.V. Anjaria, J. 1. By offering a post-decisional hearing, whether the order under Section 76B of the Gujarat Cooperative Societies Act, 1961, otherwise passed without affording opportunity of hearing, could be saved for its legality, is the issue surfacing in the present controversy. 2. The challenge is addressed to order dated 10th October, 2016 passed by District Registrar, Cooperative Societies, Surat-the second respondent herein. The said order passed is in exercise of powers under Section 76B of the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act'). Thereby the second respondent disqualified the petitioners from the membership of Bardoli Gram Vikas Sahakari Mandli for a period of six years under Section 76B(2) of the Act. The order was passed without hearing, however the petitioners were subsequently called upon by communication dated 04th November, 2016 to give explanation for various issues. 3. Noticing the attendant facts, the petitioners were the members of the society elected for five years in April, 2015; they also held the position of the Directors in the year 2007-08. They faced an inquiry in the nature of proceedings under Section 93 of the Act. The Inquiry Officer passed order dated 02nd July, 2016 under Section 96 of the Act fixing the liability of the petitioners as Directors of the society. The allegation against the petitioners was the conduct of investing amount wrongfully in breach of Section 71 of the Act. It appears that Special Civil Application No. 8407 of 2016 was filed before this Court in which on 24th August, 2016 this Court directed to stay of all proceedings pursuant to show-cause notice. The petition was, however, subsequently withdrawn by learned advocate for the petitioners on instructions stating that the order was received by the petitioners prior to the order passed by the Court. It further appears that petitioners filed another Special Civil Application No. 16193 of 2016 which was permitted to be withdrawn by order dated 29th September, 2016 as by the time Gujarat State Co-operative Tribunal was constituted, before which forum alternative statutory remedy was available. 3.1 The background facts did not rest there. Upon the petitioners approaching the Gujarat State Cooperative Tribunal, Tribunal issued notice making it returnable on 13th October, 2016. In the said proceedings of appeal before the Tribunal, District Registrar was a party. Notice of the Tribunal was served on the District Registrar on 09th October, 2016.
3.1 The background facts did not rest there. Upon the petitioners approaching the Gujarat State Cooperative Tribunal, Tribunal issued notice making it returnable on 13th October, 2016. In the said proceedings of appeal before the Tribunal, District Registrar was a party. Notice of the Tribunal was served on the District Registrar on 09th October, 2016. Despite this, as is the case of the petitioners, with a view to overreach the process of law, impugned order dated 10th October, 2016 was passed by the District Registrar in purported exercise of powers under Section 76B of the Act. A further event occurred that the Tribunal by order dated 18th October, 2016 stayed the order dated 02nd July, 2016 passed by the Inquiry Officer. 3.2 The impugned order dated 10th October, 2016 was undeniably passed without notice to the petitioners or without affording them any hearing. It appears however that subsequent to the passing of order, a notice dated 04th November, 2016 was issued seeking to give post-decisional hearing to the petitioners in respect of order dated 10th October, 2016. 4. Learned advocate for the petitioners Mr. B.S. Patel submitted that though the provision of Section 76B contemplated to give opportunity of hearing, the order came to be passed by the District Registrar without issuing notice to the petitioner and no opportunity of hearing was given. Referring to the order of pendency of the appeal before the State Cooperative Tribunal against the order dated 02nd July, 2016 and pressing the aspect that the impugned order came to be passed even as the District Registrar was served with the notice of the Tribunal, it was submitted that it was an act of overreaching the process of law and that it smacked a mala fide action. It was further submitted that if the opportunity had been given, petitioners could have brought to the notice of the District Registrar the aspect that the order was even stayed by the Tribunal. It was submitted that the conduct of the authority was highly questionable and was a pre-determined act. It was also submitted that the outcome of the appeal before the Tribunal would have a material bearing on the order under Section 76B in question as one of the main premise for the same was the report/decision which was challenged before the Co-operative Tribunal.
It was also submitted that the outcome of the appeal before the Tribunal would have a material bearing on the order under Section 76B in question as one of the main premise for the same was the report/decision which was challenged before the Co-operative Tribunal. 4.1 Learned advocate for the petitioners relied on decision of the Apex Court in Institute of Chartered Accountants v. L.K. Ratna, (1986) 4 SCC 537 to submit that in the facts and circumstances of the case post-decisional hearing would not afford adequate remedy in absence of pre-decisional hearing which was contemplated in law. He next relied on another decision of the Apex Court in K.I. Shephard v. Union of India, (1987) 4 SCC 431 to underline the principle that natural justice would be applicable and even in emergent situation compliance thereof with observance of at least minimum requirements thereof has to be treated as condition precedent. The said decision also reiterated that post-decisional hearing would not be sufficient in cases where the action entails adverse civil consequences. For asserting the same principle, learned advocate for the petitioners relied on H.L. Trehan v. Union of India, (1989) 1 SCC 764 . Yet another decision of the Supreme Court in Dipak Babaria v. State of Gujarat, (2014) 3 SCC 502 was pressed into service to state the principle that where law requires a particular thing to be done in particular manner, it must be done in that way only and in no other way. 4.2 On the other hand, learned advocate Mr. B.T. Rao for the private respondents submitted that the petitioners had alternative remedy under the Act, therefore this Court should not exercise the writ jurisdiction. He submitted with reference to decision in Union of India v. Major General Shri Kant Sharma, (2015) 6 SCC 773 that where Legislature has created statutory redressal mechanism, the court should be loath to exercise the judicial review and writ powers. Learned Assistant Government Pleader Mr. Utkarsh Sharma joined by learned advocate for private respondents submitted that eventhough prior notice was not issued by the District Registrar before passing the impugned order, as the factum of report under Section 93 was not disputable, no prejudice would occur to the petitioners if the natural justice in form of opportunity of being heard is given at post-decision stage and that such post-decisional hearing would meet the requirement of law.
Both the learned advocates for the respondents harped that in the facts and circumstances of the case, the order under Section 76B may not be viewed as invalid only because hearing is being afforded to the petitioners subsequently. 5. Now, Section 76B under which powers are exercised to pass the impugned order reads as under. "76B.-Removal of officer.-(1) If, in the opinion of the Registrar, any officer makes persistent default or is negligent in performance of the duties imposed on him by this Act or the rules of the bye-laws or does anything which is prejudicial to the interests of the society or where he stands disqualified by or under this Act, the Registrar may, after giving the officer an opportunity of being heard, by order remove such officer and direct the society to elect or appoint a person or a qualified member in the vacancy caused by such removal and the officer so elected or appointed shall hold office so long only as the officer in whose place he is elected or appointed would have held if the vacancy had not occurred. (2) The Registrar may, by order, direct that the officer so removed shall be disqualified to hold or to contest election for any office in the society from which he is removed and in any other society for a period not exceeding six years from the date of the order and such officer shall stand disqualified accordingly." 5.1 The aforesaid provision expressly stipulates for the Registrar to exercise his powers under the said provision after giving the officer concerned an opportunity of being heard. Therefore right to hearing is engrafted explicitly. It is a provision which expressly requires compliance of natural justice requiring affording of opportunity of hearing. 5.2 Since the contention raised is that post-decisional hearing would cure the non-compliance of hearing, the same may be examined by surveying the decisions on the said aspect. In Sahara India (Firm), Lucknow v. Commissioner of Income-tax, (2008) 14 SCC 151 the Apex Court was reiterative in stating the principle that where the exercise of powers under a statutory provision leads to serious civil consequences and such provision neither expressly provides for, nor does it bar, affording pre-decisional hearing, then in such circumstances, the principles of audi alteram partem have to be read in the provision.
The expression 'civil consequences', as is well settled, encompass infraction of not only property or personal rights but also includes the breach of civil liberties and other material deprivations and sufferance of non-pecuniary damages. 5.3 In Shekhar Ghosh v. Union of India, (2007) 1 SCC 331 the Supreme Court observed that post-decisional hearing is not remedy nor it is proper where the authority has already made up its mind before giving the opportunity of hearing. In that case, appellant was transferred to another department and was given promotion there, which promotion later found to have been mistakenly given. The mistake was sought to be rectified by repatriating the appellant to his original department. It was held that when the order of repatriation was passed without giving hearing and compliance of natural justice, it was bad and the post-decisional hearing was not to be sufficient in such circumstances. 5.4 In K.I. Shephard (supra) which was a case of inclusion of employees of banking company in the process of amalgamation. The Supreme Court held that principles of natural justice would apply and that the post-decisional hearing would not be justified. The Supreme Court observed, "...Natural justice generally requires that persons liable to be directly affected by proposed administrative acts, decision or proceedings be given adequate notice of what is proposed so that they may be in a position (a) to make representations on their own behalf; (b) or to appear at a hearing or enquiry (if one is held); and (c) effectively to prepare their own case and to answer the case (if any) they have to meet. Natural justice has various facets and acting fairly is one of them. RBI which monitored the amalgamations in the instant case was required to act fairly. The situation necessitated a participatory enquiry in regard to the excluded employees. Since the decision to exclude them from service under the transferee bank is grouped upon a set of facts the correctness whereof they deny, if an opportunity to know the allegations and to have their say had been afforded, they could have no grievance on this score...." (Paras 12 and 13) 5.4.1 Stating that post-decisional hearing would found without justification, it was stated, "Further, there is no justification to think of a post-decisional hearing. On the other hand the normal rule should apply.
On the other hand the normal rule should apply. The employees have already been thrown out of employment having been deprived of livelihood they must be facing serious difficulties. There is no justification to throw them out of employment and then give them an opportunity of representation when the requirement is that they should have the opportunity referred to above as a condition precedent to action. It is common experience that once a decision has been taken, there is a tendency to uphold it and a representation may not really yield any fruitful purpose." (Para 16) 5.5 In Yoginath D. Bagde v. State of Maharashtra, (1999) 7 SCC 739 the case was that show-cause notice was issued to the appellant with regard to the penalty proposed to be imposed on him. The opportunity was not given at the stage when the charges were held proved by the inquiry officer. It was held that post-decisional hearing given to the delinquent by the disciplinary authority in respect of the proposed penalty notice would not be a cure. The Supreme Court observed that post-decisional opportunity of hearing, though available in certain cases, will be of no avail, at least, in such circumstances. 5.6 The decision in H.L. Trehan (supra) could be successfully relied on by learned advocate for the petitioners in which it was observed and held as under. "The post-decisional opportunity of hearing does not sub-serve the rules of natural justice. Once a decision has been taken, there is a tendency to uphold it and a representation may not yield any fruitful purpose. The authority who embarks upon a post-decisional hearing will naturally proceed with a closed mind and there is hardly any chance of getting a proper consideration of the representation at such a post-decisional opportunity. Thus, even if any hearing was given to the employees of CORIL after the issuance of the impugned circular, that would not be any compliance with the rules of natural justice or avoid the mischief of arbitrariness as contemplated by Article 14 of the Constitution." (Paras 12 and 13) 6. It was a vain attempt on behalf of the respondents that not giving opportunity of hearing did not entail any prejudice to the petitioners. They also sought to justify their giving of notice for post-decisional hearing on the same ground that prejudice was not shown to have been taken place.
It was a vain attempt on behalf of the respondents that not giving opportunity of hearing did not entail any prejudice to the petitioners. They also sought to justify their giving of notice for post-decisional hearing on the same ground that prejudice was not shown to have been taken place. It has to be observed that looking to the nature of consequences resulting from the order under Section 76B which is for removal from office, prejudice occurs if the officer concerned is not afforded opportunity of hearing which is expressly provided as condition precedent before passing the order. 6.1 In any case when a provision of law requires the authority to afford opportunity of hearing and thus to comply with the natural justice, the authority cannot shut its eyes towards the compliance of requirement of giving hearing on the convenient ground that non-giving of opportunity would not result into any kind of prejudice to the person concerned, and therefore instead of pre-decisional hearing, the post-decisional hearing would be a substitute to offer such post-decisional hearing. The authority has to comply with the requirement of natural justice and afford opportunity of hearing as is enjoined under the provision. The authority cannot pre-judge or judge a situation that prejudice would not occur and treat exempt itself from complying with the condition of giving hearing before passing the order. Whether the aspect of omission to give opportunity of hearing could be excused in law on the ground of no prejudice test, is something to be judged at a later stage, and certainly not by the authority at any stage who is mandated to give opportunity of hearing. 6.2 The aforesaid proposition clearly derives support as position of law from the following observations in Dharampal Satyapal Limited v. Deputy Commissioner of Central Excise, Gauhati, (2015) 8 SCC 519 . "So far so good. However, an important question posed by Mr. Sorabjee is as to whether it is open to the authority, which has to take a decision, to dispense with the requirement of the principles of natural justice on the ground that affording such an opportunity will not make any difference? To put it otherwise, can the administrative authority dispense with the requirement of issuing notice by itself deciding that no prejudice will be caused to the person against whom the action is contemplated? Answer has to be in the negative.
To put it otherwise, can the administrative authority dispense with the requirement of issuing notice by itself deciding that no prejudice will be caused to the person against whom the action is contemplated? Answer has to be in the negative. It is not permissible for the authority to jump over the compliance of the principles of natural justice on the ground that even if hearing had been provided it would have served no useful purpose. The opportunity of hearing will serve the purpose or not has to be considered at a later stage and such things cannot be presumed by the authority. This was so held by the English Court way back in the year 1943 in the case of General Medical Council v. Spackman [22]. This Court also spoke in the same language in the case of The Board of High School and Intermediate Education, U.P. & Ors. v. Kumari Chittra Srivastava & Ors. [23], as is apparent from the following words: "7. The learned counsel for the appellant, Mr. C.B. Aggarwal, contends that the facts are not in dispute and it is further clear that no useful purpose would have been served if the Board had served a show cause notice on the petitioner. He says that in view of these circumstances it was not necessary for the Board to have issued a show cause notice. We are unable to accept this contention. Whether a duty arises in a particular case to issue a show cause notice before inflicting a penalty does not depend on the authority's satisfaction that the person to be penalised has no defence but on the nature of the order proposed to be passed." (para 42) "In view of the aforesaid enunciation of law, Mr. Sorabjee may also be right in his submission that it was not open for the authority to dispense with the requirement of principles of natural justice on the presumption that no prejudice is going to be caused to the appellant since judgment in R.C. Tobacco (supra) had closed all the windows for the appellant." (Para 43) 7. In the concept of natural justice comprising of opportunity of hearing before taking action or passing order entailing adverse consequences, the normal rule is to give a pre-decisional hearing.
In the concept of natural justice comprising of opportunity of hearing before taking action or passing order entailing adverse consequences, the normal rule is to give a pre-decisional hearing. The post-decisional hearing is a resort which may be allowed in exceptional cases where the compliance of natural justice in form of hearing before decision was an empty formality or giving of hearing would not have made difference or change the scenario. However where the action or order entails civil consequences and becomes complete in itself against the person concerned, post-decisional hearing would only be an eye-wash and could not be viewed as remedy to fill up the want of natural justice. 7.1 The provision of Section 76B itself expressly incorporates right of affording hearing before passing the order thereunder; and there would be no gainsaying that the order under Section 76B entails civil consequence suffered by person against whom it is passed. Right to hearing has to be viewed in the aforesaid context of the provision and this has its significance. When the Legislature has provided for right to hearing before taking a decision, the concept of post-decisional hearing has to be ruled out at the first blush. Where statute itself contemplates right of hearing before an action and thereby mandates compliance of natural justice before passing an order, the defect of non-hearing cannot be remediate by modus of post-decisional hearing. The order which is passed under Section 76B is one of removal, whereby the officer against whom the order is passed necessarily suffers a civil consequence for which post-decisional hearing is no cure in eye of law. 8. The contention about not entertaining the petition on the ground of availability of alternative remedy has to be referred to be rejected. It is undisputed position that the impugned order was passed without affording hearing and that it was a pure question of violation of principles of natural justice which was incorporated in the provision of Section 76B itself. In this view, having regard to the decision of the Supreme Court in Whirlpool Corporation v. Registrar of Trademarks, Mumbai, (1998) 8 SCC 1 , in particular observation in paragraph 15, which held that one of the considerations for exercising discretion in favour of entertaining the writ petition under Article 226 of the Constitution when there has been a violation of principles of natural justice.
Therefore this contention of the other side is overruled and discretion is exercise in favour of the petitioners to deal with and decide the petition. 8.1 Except the aforesaid aspect of non-giving of hearing and the aspect whether post-decisional hearing would cure the vice, no other aspect of merits have been gone into by this Court. 9. For the foregoing reasons and discussion, the impugned order which is passed without affording opportunity of hearing to the petitioners cannot stand valid in eye of law. The order cannot be saved from vice of illegality by offering post-decisional hearing. Therefore, the impugned order dated 10th October, 2016 passed by the District Registrar, Cooperative Societies, Surat-the second respondent herein, is hereby set aside. Petition stands allowed.