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2020 DIGILAW 431 (GUJ)

Valwada Milk Producers Co-Operative Society Limited v. District Registrar Co-Operative Societies

2020-03-09

BIREN VAISHNAV

body2020
ORDER : 1 By way of this petition under Article 226 of the Constitution of India, challenge is made to the order dated 26.02.2020 passed by the Joint Registrar, Co-operative Society, Surat. By the impugned order, the Joint Registrar passed an order under Section 81 of the Gujarat Co-operative Societies Act, superseding the committee of the petitioner Society. The facts in brief are as under: 1.1 The petitioner, is a co-operative Society, registered on 28.12.1982. It is the case of the petitioner that it has an Audit Classification “A”. What is alleged in the petition is that since the election of the Surat District Milk Producers Union Limited is due, the order of supersession has been passed. 1.2 Mr.B.S.Patel, learned Senior Advocate, invited the attention of this Court to the Show Cause Notice issued by the respondent on 08.02.2019. By the Show Cause Notice, the petitioner-Society was asked to show cause on the following issues: (i) The petitioner-Society had purchased a godown from Mahuva Pradesh Khand Udyog Sahakari Mandli Limited for a consideration of Rs.2,11,146/- on 05.07.1996. The property still is not in the name of the Society which has purchased the same. The accounts show a figure of Rs.2 lakhs whereas the stand of the Society is that it has purchased for Rs.2,11,146/- and hence there is a discrepancy in the figure. (ii) In the General Meeting of the Society on 25.06.2018, Resolution No.11 was passed from the chair, resolving to lease the godown on rent. Nothing was stated as to whom the godown was to be leased, for what tenure and for what amount. There was no description of the property. (iii) There was no eventuality stated as to how the interest of the Society in the event the tenant does not vacate the property was stated. No tender was issued for the purpose of lease of the godown. (iv) A resolution was moved on 25.06.2018 which was not reflected as one of the main items of the agenda. The Lease Agreement was for five years which required registration and which was not so registered. There are contradictions in the deed, inasmuch as, it talks of a godown at one place and the shop at the other. (v) The resolution which was subsequently moved on 09.09.2018 by the Managing Committee, makes certain additions, and therefore, there is a discrepancy. The Lease Agreement was for five years which required registration and which was not so registered. There are contradictions in the deed, inasmuch as, it talks of a godown at one place and the shop at the other. (v) The resolution which was subsequently moved on 09.09.2018 by the Managing Committee, makes certain additions, and therefore, there is a discrepancy. (vi) The present committee has resolved to give the godown on rent, however, the previous Committee has not made any efforts to transfer the godown in its name after such a long period. Therefore, there has been negligence in performance of the duties by the Society, and therefore, it was asked to show cause as to why it should not be superseeded in accordance with the provisions of Section 81(1) of the Act. 1.3 A reply was filed to the show cause notice on 05.03.2019. According to the reply, though the godown was acquired by virtue of an Agreement to Sale on 05.07.1996, process to get it transferred in its name was still under progress. There are receipts to show for receiving consideration. Certain details were not made on the tenure of the lease and the amount for which it was to be rented out. Subsequent to the Show Cause Notice on 12.02.2019, Lease Deed had been drafted out for a period of eleven months. That issue of sale of the godown is of the year 1996, which is an issue 20-25 years old, and therefore, supersession is not warranted. Based on this response, the impugned order has been passed. 1.4 From the reference in the impugned orders, it is evident that the initiation of proceedings under Section 81 was based on a complaint made by one Mahendrabhai B.Patel. 1.5 Mr.Baiju Joshi, learned advocate, sought permission to file a civil application for being joined as a party respondent, as he is appearing for the complainant. The Court, without such an application, has permitted Mr.Baiju Joshi, learned advocate, to address the Court on merits. 2 Mr.K.M.Antani, learned Assistant Government Pleader, also supported the order. 1.5 Mr.Baiju Joshi, learned advocate, sought permission to file a civil application for being joined as a party respondent, as he is appearing for the complainant. The Court, without such an application, has permitted Mr.Baiju Joshi, learned advocate, to address the Court on merits. 2 Mr.K.M.Antani, learned Assistant Government Pleader, also supported the order. A preliminary objection has been taken by Shri Antani, learned AGP and Shri Baiju Joshi, learned advocate appearing for the complainant, that a petition under Article 226 of the Constitution of India is not maintainable when admittedly an alternative remedy under Section 153 is available against the order of the Magistrate which also is a subject matter which can be taken by way of challenge in a revision under Section 155 of the Act. 3 Mr.B.S.Patel, learned Senior Advocate, has taken me through the impugned order and submitted that looking to the provisions of Section 81 of the Co-operative Societies Act, there are contingencies under which harsh measure of superseding a Society can be taken. Such contingencies are (i) if Registrar is of the opinion that the Committee persistently made default or (ii) the Committee is negligent in performance of its duties or (iii) the Committee has committed any act prejudicial to the interest of its Society or members. 3.1 Mr.Patel, learned Senior Advocate, submitted that by virtue of superseding the Society, the members of the Committee would become ineligible to become the Members of the Committee for a period of six years. 3.2 Mr.Patel, learned Senior Advocate, would further submit that the defaults for which a show cause notice and the impugned orders have been passed neither can be said to be persistent default nor negligence in performing the duties. It is submitted that an Agreement to Sell was entered into in the year 1996. Money had exchanged hands and so was the possession of the Society. Mere exchange of possession on the basis of an Agreement to Sell and not executing of a Sale Deed could not make the omission grave enough to warrant supersession. 3.3 Mr.Patel, learned Senior Advocate, invited the attention of the Court to the Show Cause Notice and the order impugned and would submit that even if it is assumed that there was amissnes on the part of the Society, it was in context of an Agreement to Sell and Rent Agreement. 3.3 Mr.Patel, learned Senior Advocate, invited the attention of the Court to the Show Cause Notice and the order impugned and would submit that even if it is assumed that there was amissnes on the part of the Society, it was in context of an Agreement to Sell and Rent Agreement. The permission was subsequently sought and therefore it was not a case of lapse to warrant supersession of elected Society. 3.4 Mr.K.M.Antani, learned AGP, inviting the attention of the Court to the show cause notice would emphasize that it is not only correct to suggest that there was persistent default which warranted supersession, but there was amisness / negligence in performance of duties, and therefore, the authorities have rightly exercised powers under Section 81 of the Act. Reading the order would indicate that, though, an Agreement to Sell was entered into in the year 1996 albeit by a previous Committee, nothing was done for a period of 25-30 years to execute a sale deed and bring the possession of the godown within the parameters of legal possession. Discrepancy in acts of the execution of the Sale Deed was in contravention of the provisions of the Act which required mandatory registration. Execution of Sale Deed of eleven months on 12.02.2019 and seeking permission after the issuance of the show cause notice is a clear after thought. 3.5 Mr.B.S.Patel, learned Senior Advocate, in support of the submission has relied on a decision of this Court in the case of Pravinbhai Mohanbhai Raiyani vs. State of Gujarat., reported in 2007 (3) GLR 2606 ., to submit that the order of supersession for default of a past committee was bad. Reliance was also placed on in the case of State of Madhya Pradesh vs. Sanjay Nagayach & Ors., reported in 2013 (7) SCC 25 , in support of his submission that a democratically governed Society cannot be superseeded as lately as is sought to be, and therefore, the order suffers from serious consequences for acts which cannot be termed as persistent default. 4 Mr.Baiju Joshi, learned advocate appearing on behalf of the complainant, apart from opposing the petition on it being barred by an alternative remedy, relied on a decision of this Court rendered in Special Civil Application No. 18986 of 2006 to submit that the petition is not maintainable as the Society itself has no locus to litigate for and on behalf of the Managing Committee. 5 Considering the submissions made by the learned advocates appearing for the respective parties, the legal provision which has been invoked to supersede the Society indicates that supersession of the Society can be made on either of the three grounds, namely, when: (a) the Committee persistently makes default; (b) the Committee is negligent in performance of its duties; (c) the Committee has committed any act prejudicial to the interest of the Society. 5.1 The relevant provision of Section 81 reads as under : “81 Supersession of a committee and appointment of a Committee or Administrator:- XXX XXXX XXXX (i) the committee persistently makes default; or (ii) the committee is negligent in the performance of its duties imposed on it by or under this Act or the rules made thereunder or the bye-laws; or (iii) the committee has committed any act prejudicial to the interest of the society or its members;” 5.2 Reading of the show cause notice together with the impugned order would indicate that the Society is stated to be superseeded on the ground that though an agreement to sell was executed on 05.07.1996 and the Committee had taken possession of the godown in question, no formalities of entering into a sale deed were yet completed after 25 years which shows amissness on the part of the Society which would tantamount to negligence and/or persistent default. The function of the order also was that the Society has entered into a tenancy agreement contrary to the provisions of the Registration Act by not allowing the lease deed registered. Contradictions were found in the lease deed and the agreement to sell, inasmuch as, the tenure of the lease deed, the amount for which it was agreed to be rented out etc., was not mentioned. The show cause notice was replied to, post facto sanction by renewing and making eleven months lease deed was sought. Contradictions were found in the lease deed and the agreement to sell, inasmuch as, the tenure of the lease deed, the amount for which it was agreed to be rented out etc., was not mentioned. The show cause notice was replied to, post facto sanction by renewing and making eleven months lease deed was sought. 6 Reading of the provisions of Section 81 in context of the contents of the show cause notice and the basis of supersession would indicate that it was a case where the authorities have come to a conclusion that a particular agreement to sell was entered into and it was only on the basis of such an agreement that the Society was in possession. No formal sale deed had been made for several years. That the lease entered into was unclear and not registered. This sole consideration in the opinion of this Court would not tantamount to being a case either of persistent default or amissness so grave so as to warrant supersession of a democratically elected body. The observations of the Supreme Court in the case of Sanjay Nagayach (supra), read as under: “42 Further, we are inclined to give the following general directions in view of the mushrooming of cases in various courts challenging orders of supersession of elected Committee: 42.1 Supersession of an elected Managing Committee/Board is an exception and be resorted to only in exceptional circumstances and normally elected body be allowed to complete the term for which it is elected. 42.2 Elected Committee in office be not penalised for the shortcomings or illegalities committed by the previous Committee, unless there is any deliberate inaction in rectifying the illegalities committed by the previous Committees. 42.3 Elected Committee in office be given sufficient time, say at least six months, to rectify the defects, if any, pointed out in the audit report with regard to incidents which originated when the previous committee was in office.” 7 The acts, for which the Committee was therefore sought to be superseeded were not so grave enough which could not have been subsequently cured or that the shortcomings were so severe which could not have been rectified. That the Committee continued in possession on the basis of an agreement to sell and not formal sale deed entered into may be a case which can be viewed seriously. That the Committee continued in possession on the basis of an agreement to sell and not formal sale deed entered into may be a case which can be viewed seriously. The interpretation of the amissness in execution of a sale deed in letting out the property may also be considered as a case warranting some action. However, the same cannot be termed as one so grave so as to supersede the Committee, and thereby, disqualify its members to be eligible to become such members for a period of six years. Secondly, if it was the case of the authorities that the root of such an omission or amisness being an agreement to sell which was entered into on 05.07.1996, it certainly could not have resulted in supersession of Committee constituted more than 20 years thereafter. That itself would not justify its case and bring it within the meaning of “persistent default”. Primary objections of Mr.Baiju Joshi, learned advocate, that the petition at the hands of the Committee which is superseeded is not maintainable would also stand negated in view of the fact that petitioner No.2 who is a member of the Society has filed the petition in its individual capacity. 8 Relegating the petitioner to an appeal under Section 155 of the Act when apparently no case is made out for superseding the Society, I do not deem it fit to oust the petitioner only on this ground. 8.1 Having heard Mr.B.S.Patel, learned Senior Advocate for the petitioners and Mr.K.M.Antani, learned AGP and Mr.Baiju Joshi, learned advocate for the complainant, the order dated 26.02.2020 is quashed and set aside. The petition is allowed, accordingly. 8.2 The request of Mr.Antani, learned AGP, that the implementation and operation of the impugned judgment be stayed, is accepted and the impugned judgment is stayed till 20.03.2020. The petition is accordingly allowed with no order as to costs.