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2021 DIGILAW 86 (GUJ)

Krishnadham Awas Yojna v. State Of Gujarat

2021-02-01

BIREN VAISHNAV

body2021
JUDGMENT : 1. In this petition under Article 226 of the Constitution of India, the petitioner has prayed for a direction to quash and set aside the order dated 05.09.2020 passed by the respondent No.3- District Registrar appointing the respondent no.4 as custodian of the petitioner society and also the order dated 03.11.2020 passed by the respondent no.2-Additional Registrar, Cooperative Societies, by which, the order dated 05.09.2020 was confirmed. 2. Facts in brief are as under: 2.1 It is the case of the petitioner that the petitioner society is a society registered on 17.04.2008. A custodian was appointed who held the elections of the society on 31.03.2019 and after the elections, the Committee started functioning regularly. The case of the petitioner is that after the Committee took charge, one member of the Committee misappropriated some amount, there were vacancy of three members of the Managing Committee who during the lockdown had left the society, however, since three other persons were co-opted, the Committee of the society continued to function in accordance with Coram of 50% in accordance with the bye-laws. The case of the petitioner is that though the society was continuing the function through its Committee, by the order dated 05.09.2020, in exercise of powers under Section 74D of the Gujarat Cooperative Societies Act, the respondent no.3-District Registrar appointed a Custodian and the order of the District Registrar was confirmed in Revision. 3. Mr.Baiju Joshi, learned advocate for the petitioner would submit that the orders dated 05.09.2020 and 03.11.2020 are bad in law. He would submit that the order was passed at the pretext of a member of a legislative assembly Shri Kishorbhai Chauhan. The order was therefore passed under political pressure on an application made by the MLA of the Vejalpur constituency. The order was therefore mala-fide and therefore deserve to be quashed and set aside. 3.1 The next submission of Mr.Baiju Joshi was that a committee was duly constituted on 31.03.2019. The Committee had started functioning. None of the components of Section 74D of the Act viz. neither was the term of the Committee over nor was there a case that Committee once appointed had not started functioning. In the submission of Shri Joshi therefore in absence of both the components, the exercise of power by the District Registrar under Section 74D of the Act was without jurisdiction. neither was the term of the Committee over nor was there a case that Committee once appointed had not started functioning. In the submission of Shri Joshi therefore in absence of both the components, the exercise of power by the District Registrar under Section 74D of the Act was without jurisdiction. 3.2 The next submission of Mr.Baiju Joshi was that the order suffered from violation of principles of natural justice. He would submit that it was apparent from reading the order dated 05.09.2020 passed by the District Registrar that the same was passed without giving an opportunity of hearing to the petitioner or even a show cause notice. The order therefore was bad in law and deserve to be quashed and set aside. 3.3 The next submission of Mr.Baiju Joshi was that the society in accordance with the provisions of Section 74D, 74(1C)(i) read with the proviso thereto was entitled to co-opt three members. Such members were therefore co-opted and of the 11 members of the Committee, 9 members were functioning as members of the Committee and in accordance with the bye-law therefore, at no point of time there were less than six members in the Managing Committee and therefore the exercise of powers under Section 74D was unwarranted. 3.4 Mr. Joshi would submit that the resignations of which the District Registrar has taken note of could not have been said to be valid resignations in the eye of law. He would draw the attention of the Court to the bye-laws annexed to the rejoinder and submit that as per bye-law no.36(6) read with bye-law 39(1), the resignation had to be tendered to the society. No such resignation was ever submitted before the society and therefore such a resignation cannot be the basis of appointment of a custodian. 3.5 In support of his submissions, Mr.Baiju Joshi relied on the following decisions: I. State of Madhyapradesh and Ors. V. Sanjay Nagayach and Ors. [ (2013) 7 SCC 25 ]. He would rely on headnote E and H of the decision to submit that when the statutory authority, as in the present case, exercises powers on the basis of the political masters, the same needs to be quashed and set aside. II. Vashkui Dudh Utpadak Sahakari Mandli Ltd. And Anr. v. District Registrar, Cooperative Societies, Surat. He would rely on headnote E and H of the decision to submit that when the statutory authority, as in the present case, exercises powers on the basis of the political masters, the same needs to be quashed and set aside. II. Vashkui Dudh Utpadak Sahakari Mandli Ltd. And Anr. v. District Registrar, Cooperative Societies, Surat. He relied on paras 5.2 and 6.1 of the said decision to support his submission that powers under Section 74D were not warranted in the facts of the case. III. Jayantibhai Dahyabhai Patel and Ors. V. State of Gujarat reported in [ 2007 (3) GLR 1978 ] to support his submission that an opportunity of hearing ought to be given in case a custodian is to be appointed. He would submit that this was in accordance with the law laid down with the Division Bench of this Court in the case of Amreli District Cooperative Sale and Purchase Union Ltd. V. State of Gujarat and others reported in 1982 (2) GLR 1244. IV. Valvada Milk Producers’ Cooperative Society Ltd. Passed in Special Civil Application No.5758 of 2020 wherein, he would submit that the Court had considered the decision in case of Sanjay Nagayach (supra) and opined that no circumstances existed for supersession of the Committee under Section 81 of the Gujarat Cooperative Societies Act. V. Shri Pati Dudh Utpadak Sahkari Mandali Ltd. v. District Registrar of Co-Operative Societies and Ors. passed in Special Civil Application No.18379 of 2019 dated 17.10.2019. 4. Ms.Nidhi Vyas learned AGP appearing for the State would draw the attention of the Hon'ble Court to the affidavit in reply filed to the petition. She would submit that the order of the District Registrar dated 05.09.2020 and the order of the Additional Registrar (Appeals) dated 03.11.2020 were just and proper. 4.1 She would further submit that on perusal of the orders under challenge, it would indicate that the parameters of Section 74D were aptly present in the facts of the case. The District Registrar found that after the elections which were held on 31.03.2019, wherein a Committee consisting of 11 members was elected, two members of the Committee resigned on 11.06.2020 and four members resigned on 26.06.2020. Of the Committee of 11 members therefore 6 members had resigned and therefore from the beginning of the term, the Committee was not functioning because it only had five members. Of the Committee of 11 members therefore 6 members had resigned and therefore from the beginning of the term, the Committee was not functioning because it only had five members. It was in these circumstances that the Registrar was of the view that in accordance with Section 74D of the Act, a situation had arisen where in respect of the society, though a Committee had been elected, it was not functioning within a period of three months. Such a situation having arisen, no fault can be found with the order of the District Registrar exercising powers under Section 74D of the Act. 4.2 Ms.Nidhi Vyas would submit that on reading Section 74D of the Act what is evident is that no opportunity of hearing for show cause notice is necessary before exercising powers under Section 74D of the Act. She would rely on the decision in the case of Banaskantha District Cooperative Milk Producers’ Union Ltd. V. State of Gujarat reported in 2015 AIJEL-HC 233371. She would rely on para 20 of the decision to submit that there is no application filed to afford an opportunity of hearing. 4.3 Ms. Vyas would distinguish the decision cited by Mr.Joshi in the case where Section 81 was invoked. She would submit that the principles of natural justice have to be considered in context of the Sections when it was specifically provided under Section 81 when a society has to be superseded, that an opportunity of hearing ought to be given, in contradistinction thereto, Section 74D did not contain the words or the language providing for an opportunity of hearing and therefore the contention of Mr.Joshi that the order was bad because of violation of principles of natural justice was not correct. She relied on the decision in the case of Dr. Umraosingh Choudhary v. State of Madhya Pradesh and Anr. reported in (1994) 4 SCC 328 . She would rely on paragraphs 4 and 5 thereof. 4.4 Ms. Vyas also relied on the decision in the case of Union of India v. Col. J. N. Sinha and Anr. 1970 (2) SCC 458 . She would rely on para 6 thereof to submit that not in every case principles of natural justice ought to be followed. She would rely on paragraphs 4 and 5 thereof. 4.4 Ms. Vyas also relied on the decision in the case of Union of India v. Col. J. N. Sinha and Anr. 1970 (2) SCC 458 . She would rely on para 6 thereof to submit that not in every case principles of natural justice ought to be followed. Reliance was also placed on the decision rendered in Special Civil Application No.519 of 2010 dated 09.02.2010 in which case the Court had justified exercising of powers under Section 74D of the Act, wherein, in circumstances similar to the present case, the Court had approved the action of the authorities in appointing the District Registrar. 5. Having considered the submissions of the learned advocates for the respective parties, reading of the order dated 05.09.2020 with the order in Revision dated 03.11.2020, the same would indicate the following circumstances. (i). That the election of the society was held on 31.03.2019 by the Custodian. (ii). The Committee consisted of 11 members. (iii). Of the 11 members, on the basis of statements recorded by the District Registrar, a finding of fact was arrived at by the authority which was so confirmed by the Revisional Authority that on 11.06.2020 two members had resigned, on 26.06.2020, four members had resigned. It was on the basis of these resignations that the society itself had approached the Registrar requesting that now that there was no Coram existing, there was no committee that was functioning and therefore a Custodian needed to be appointed. This was a case where if the language of Section 74D is read, the second circumstance squarely applies to the facts of the case inasmuch as no legally constituted Committee continued to function after the elections. It was in inevitable for the District Registrar to appoint a Custodian. (iv). As far as the contention of the learned counsel for the order being bad on violation of principles of natural justice, this Court in case of Banaskantha District Co-operative Milk Producers’ Union Ltd. (supra) in paragraph no.20 of the judgment having considered the old provisions of Section 74D with the amended provisions of Section 74D has categorically held that in the amended provision of Section 74D, the word ‘shall’ is used for the Registrar to exercise powers for appointment of custodian. The reasons/grounds for such exercise of powers are the same in the amended provisions of Section 74D as there were Sections 74D when amended by the Gujarat Act 1 of 2008. What the Court held was that for any reason if a new committee or the management for any reason whatsoever is not elected before the expiry of the term or that such Committee having been held is not functioning, as is the case on hand in the present petition, it is not possible to read the obligation of affording hearing in the present provisions of Section 74D of the Act before the order of appointment of the Custodian is made by the Registrar under Section 74D of the Act because if such an opportunity of hearing was to be given, the intention of the legislature would stand frustrated. The submission of Shri Joshi that this judgment is per-incurium inasmuch as the Division Bench decision in the case of Amreli District Cooperative Sale and Purchase Union Ltd. (supra) held otherwise, what learned counsel Shri Joshi lost sight of the fact is that in case of Banaskantha District Cooperative Milk Producers’ Union Ltd. (supra) was considering the amended provision as compared to the unamended provision that was considered in case of Amreli District Cooperative Sale and Purchase Union Ltd. (supra). (v). In context of the submission made by Shri Joshi that a representation was made by Shri Ghanshyambhai who was an outsider, and a person having no locus, perusal of the order of the District Registrar would indicate that it was not a sole circumstance on which the custodian was appointed. The society itself had made an application requesting that a custodian be appointed. As far as legal mala-fide are concerned, merely because the sitting MLA of the constituency in which the society is situated made an application for appointment of custodian, without any detailed adjudication or allegation of proof of mala-fide which have easily made them prove, no such motive can be attributed to the District Registrar inasmuch as to fault the passing of the order to be mala-fide or on the basis of extraneous consideration. (vi). (vi). With regard to the challenge to the order being bad on the ground of violation of principles of natural justice, or that the ingredients of Section 74D would not be attracted, it will be in the fitness of things to consider the decision of this Court rendered in Special Civil Application No.519 of 2010 dated 09.02.2010. It being a short order, it will be worthwhile to quote the decision as a whole. Order dated 09.02.2010 passed in Special Civil Application No.519 of 2010 reads as under: “1. The petitioner by this petition challenges the order passed by the District Registrar and its confirmation thereof by the State Registrar and the rejection of the application for stay by the State Government whereby the appointment of custodian under Section 74D of the Gujarat Cooperative Societies Act (hereinafter referred to as 'the Act') is made and is not stayed. 2. Heard Mr. Chauhan, learned counsel appearing for the petitioner, Mr.Jani, learned Government Pleader for the State Authorities, Mr. Ashish Shah for respondent No.3 and Mr. Manish Shah for respondent Nos. 4 to 11. The other respondents are served but they have chosen not to appear. 3. The contention raised on behalf of the petitioners is that out of 15 members of the Managing Committee, 9 persons are in power and therefore the Registrar could not have exercised the powers for appointment of the custodian under Section 74D of the Act. It was submitted that out of total originally 15 persons, one member had incurred disqualification and the same was automatic and therefore there was cooption by the Committee. Mr. Chauhan submitted that the representation made by 8 persons to the District Registrar for appointment of the custodian is not properly considered by the Registrar in as much as out of those 8 persons, two persons have already resigned and their resignations have accepted and one person had incurred the disqualification. The other remaining members have already coopted three members and as a result thereof the total strength of the existing member is 9 and it cannot be called non quorum. Under these circumstances, the exercise of the powers is beyond the scope and ambit of Section 74D of the Act, therefore this Court may interfere. 4. The other remaining members have already coopted three members and as a result thereof the total strength of the existing member is 9 and it cannot be called non quorum. Under these circumstances, the exercise of the powers is beyond the scope and ambit of Section 74D of the Act, therefore this Court may interfere. 4. Having considered the above, the pertinent aspect deserves to be recorded is that the petitioners have not produced the material or record to show that whether they were elected members or the selected members of the society. If the petitioners were selected members by the General Body of the society and not elected, the consequence would arise of no election after it became due and the power under Section 74D of the Act cannot be said as unwarranted. 5. Even if it is considered that the petitioners were elected members then also total number of persons elected is fifteen out of which eight persons i.e. more than majority applied to the District Registrar for appointment of the custodian. The consequential effect would be that the remaining members would be seven, which will be less than the quorum for functioning of the Managing Committee. As per bye law No.34(3), copy whereof is produced at page 21, the quorum is more than half of the members of the Managing Committee, therefore for constitution of a valid quorum, minimum number of persons should be eight whereas in the group of the petitioners only six persons are the elected members. Such being the position, if the exercise of the powers is made by the District Registrar for appointment of the custodian under Section 74D of the Act, the same cannot be said to be unreasonable or arbitrary because the Managing Committee will not be able to function in view of the aforesaid bye law. 6. The attempt to contend that one person had automatically disqualified himself or that two persons had resigned are disputed questions of facts in as much as if a person has incurred disqualification and he does not vacate the office, the procedure under Rule 32 of the Gujarat Cooperative Societies Rules is required to be followed which has admittedly not followed in the present case. Further, the persons who stated to have resigned, they themselves have denied their signature and resignation having been tendered. Further, the persons who stated to have resigned, they themselves have denied their signature and resignation having been tendered. Not only that but the criminal complaint is also filed for fabrication and concoction of such resignation. Under these circumstances, if the lower authorities have prima facie arrived at the conclusion that the say for resignation and of automatic disqualification cannot be accepted, such an approach on the part of the authority cannot be said to be unreasonable or arbitrary. 7. As observed earlier if the aforesaid three persons are treated in the Committee, the consequence would be that the co-option of three persons would be rendered invalid and the second consequence would be that out of fifteen elected members there will be only seven elected members which will be less than the requisite quorum resulting into disability of the Managing Committee to function. Under these circumstances, if the appointment of the custodian is made, such cannot be said to be unreasonable or arbitrary. 8. Apart from the above, in any case, as per the amended provisions of Section 74D of the Act, it will be required for the Registrar to hold the election within a period of two months, therefore no prejudice will be caused. 9. In view of the aforesaid, no case is made out for interference. It is clarified that the aforesaid reasons are recorded since the contentions were raised and appropriate order was invited, but the State Government will be at the liberty to take independent view of the matter at the time of final hearing of the Revision without being influenced by the observations made by this Court in the present order. Rejected accordingly.” (vii). Accordingly what is apparent on reading the order of the District Registrar so confirmed in Revision by the Additional Registrar is that after the elections of the Committee were held on 31.03.2019, a series of resignation followed, six members resigned out of 11, leaving the committee nonfunctional by virtue of it having only five members. On appreciation of facts, the Registrar has found that there was no coram and therefore the submission of Mr.Baiju Joshi relying on the bye-laws is also misconceived. 6. On appreciation of facts, the Registrar has found that there was no coram and therefore the submission of Mr.Baiju Joshi relying on the bye-laws is also misconceived. 6. For the aforesaid reasons, I find no reason to interfere with the order passed by the authorities dated 05.09.2020 so confirmed by the Additional Registrar on 03.11.2020 appointing a custodian of the petitioner society under Section 74B of the Gujarat Cooperative Societies Act. The petition is accordingly dismissed with no order as to costs.