Manit Cooperative Housing Society Limited v. Additional Registrar (Appeals)
2022-04-20
BHARGAV D.KARIA
body2022
DigiLaw.ai
ORDER : 1. Heard learned advocate Mr. Dipen Desai for the petitioner and learned advocate Mr. Parth Contractor for the respondent nos. 4.1 to 4.3. 2. This Court (Coram : Hon’ble Mr. Justice G.R. Udhwani, As His Lordship was then) passed the following order on 17th August, 2020 : “Rule. The petitioner has assailed the initiation of the inquiry under Section 86 of the Gujarat Co-operative Societies Act, 1961 ( for short 'the Act') which provision reads as under: 86. Inquiry by Registrar : (1) The Registrar may of his own motion himself, or by a person duly authorised by him in writing in this behalf, hold an inquiry into the constitution, working and financial conditions of a society. (2) The Registrar shall hold such an inquiry- (a) on the requisition of a society duly authorised by rules made in this behalf to make such requisition, in respect of any of its members, such member being itself a society, or (b) on the application of a majority of the committee of a society, or (c) on the application of one-third of the members of a society. (3) (a) Every officer, member and past member of the society in respect of which an inquiry is held, and any other person who is in possession of information, books and papers relating to the society, shall on being so required furnish such information as is in his possession., and produce all books and papers relating to the society which are in his custody or power, and otherwise give to the officer holding the inquiry all assistance in connection with the inquiry which he can reasonably give. (b) If any such person refuses to produce to the Registrar or any person authorised by him under sub-section (1), any book or paper which it is his duty under clause (a) to produce or to answer, any question which is put to him by the Registrar or the person authorised by the Registrar in pursuance of sub-clause (a) the Registrar or the person authorised by the Registrar may certify the refusal and the Registrar may impose on the defaulter a penalty of an amount not exceeding five hundred rupees. Before imposing such penalty, the Registrar shall give, or cause to be given a reasonable opportunity to the defaulter, of showing cause against the action proposed to be taken in regard to him.
Before imposing such penalty, the Registrar shall give, or cause to be given a reasonable opportunity to the defaulter, of showing cause against the action proposed to be taken in regard to him. (4) (a) If at any stage of the inquiry under this section the Registrar is satisfied that in the interest of the members of the society it is necessary to take over all books and papers relating to the society during the period of inquiry, he may make an order in writing to that effect and directing the society to hand over all books and papers relating to the society to such officer as may be specified in the order. The Registrar may also issue a direction to the society to refrain from doing such acts or engaging in such activities as may be specified in the direction. (b) The society shall be bound to comply with any direction issued to it under clause (a). (c) The books and papers taken over under clause (a) shall be returned to the society on the completion of the inquiry. (5) When an inquiry is hold under this section the Registrar shall communicate the result of the inquiry- (i) in case the State Government have subscribed directly to the share capital of the society or in case any moneys are due from the society to the Principal State Partnership Fund or to the Subsidiary State Partnership Fund, to the State Government or to any officer appointed by it in this behalf; (ii) to the federal co-operative society concerned, and (iii) to the society concerned. (6) It shall be competent for the Registrar to withdraw any inquiry from the officer to whom it is entrusted, and to hold the inquiry himself or entrust it to any other person as he deems fit. The challenge is rested substantially on two counts : (1) the lack of the authority to initiate the inquiry and (2) the scope of section 86 of the Act.
The challenge is rested substantially on two counts : (1) the lack of the authority to initiate the inquiry and (2) the scope of section 86 of the Act. On consideration of the rival submissions on admission of the petition and interim relief, it appears that preceding this petition there was one round of litigation on the subject wherein an assault inter alia was made to the show cause notice and the said case culminated into the order dated 05.04.2019 rendered in Special Civil Application No. 8462 of 2015 with Special Civil Application No. 13677 of 2015 with Special Civil Application No. 14290 of 2018. Heavy reliance has been placed on paragraph xii onwards of the said order wherefrom it appears that the petitioner herein was facing twin proceedings under the Act on the same subject and this court having found that the twin proceedings on the same subject were not permissible, quashed the proceedings other than the show cause notice under Section 86 of the Act against the petitioner and challenge to the show cause notice met with the fate indicated in paragraph 4 which reads as under: 4. In view of the above, the learned Senior Advocate Mr. Shalin M. Mehta for the petitioners in Special Civil Application No. 14290 of 2018 does not press for the said petition, and submitted that the petitioners shall respond to the impugned show cause notice dated 25.03.2013 issued by the respondent-District Registrar. Hence, the Special Civil Application No. 14290 of 2018 stands dismissed as not pressed for. Further, it is directed that the District Registrar shall proceed with the inquiry under Section 86 of the said Act in accordance with law and after granting opportunity of hearing to all the affected parties as expeditiously as possible.” What is emerging from the above quotation is that the petition was not pressed and the petitioner was to respond to the show cause notice issued under section 86 of the Act and the District Registrar was directed to proceed with the inquiry in accordance with law after hearing the affected parties as expeditiously as possible. Insofar as competence or authority under section 86 of the Act is concerned, in the prima facie opinion of this court, the issue cannot be said to have concluded by said order.
Insofar as competence or authority under section 86 of the Act is concerned, in the prima facie opinion of this court, the issue cannot be said to have concluded by said order. Mere withdrawal of the petition in the opinion of this court would not confer the competence or authority which otherwise might be statutorily lacking. The issue whether the Registrar has an authority to initiate the inquiry at the instance of only one member of the society in absence of requisitions contemplated in either of clauses (a), (b) and (c) of section 86(2) of the Act which requisition would be the trigger point for initiation of the inquiry. Prima facie in absence of compliance of sub-section (2) of Section 86 of the Act, the initiation of the inquiry itself would be ill-founded and the respondent was required to legally justify the continuation of the inquiry after the petitioner replied to the show cause notice. When the inquiry itself is stillborn, in the prima facie opinion of this court the petitioner is not required to wait until the conclusion of the inquiry by the District Registrar and the petition cannot be nomenclated as premature petition . This is the fit case where this court would exercise the discretion and issue the injunction in a case where the authority to proceed with the inquiry under Section 86 of the Act is completely lacking. Another issue raised in this petition is as to whether in absence of the challenge to the resolution passed by the society whereby the petitioner and his family members were enrolled as members of the society, the proceedings under section 86 of the Act would lie? The subsidiary issue raised by the learned counsel for the petitioner in this regard is as to whether section 86 is adjudicatory process and whether the Registrar would be able to set at naught the aforementioned resolution. It appears that while the proceedings were pending with the inquiry officer, this petition was filed which has taken time for listing on account of such administrative hitches and in the meanwhile the inquiry officer has submitted the report to the District Registrar. For the reasons above stated, that would not make any difference and still the issue remains open as to whether District Registrar is authorized by law to proceed with the proceedings under section 86 of the Act?
For the reasons above stated, that would not make any difference and still the issue remains open as to whether District Registrar is authorized by law to proceed with the proceedings under section 86 of the Act? Prima facie as indicated above such authority in the Registrar is lacking in absence of the requisition under subsection (2) of Section 86 of the Act. For the forgoing reasons, the petitioner is entitled to interim relief; accordingly interim relief in terms of paragraph 6(B) is granted. Direct service is permitted. Direct service through E-mail is also permitted.” 3. Learned advocate Mr. Dipen Desai submitted that after passing of the aforesaid order, there was a Memorandum of Understanding between the parties for resolution of all the disputes between them. It was submitted that respondent nos.4.1 to 4.3 legal heirs of late Rajnikant Dahyabhai Patel have also given an application dated 22nd November, 2021 (which is produced in Civil Application No.1 of 2022) praying for withdrawal of the application made by respondent no.4 – late Rajnikant Dahyabhai Patel before the District Registrar under section 86 of the Gujarat Cooperative Societies Act, 1961 (For short “the Act, 1961”). 4. Learned advocate Mr. Desai submitted that the District Registrar by letter dated 1st March, 2022 informed respondent nos. 4.1 to 4.3 that in view of pendency of this petition, no decision can be taken by him. 5. Learned advocate Mr. Parth Contractor has also submitted that respondent nos. 4.1 to 4.3 are not desirous to proceed with the application made by respondent no.4 - late Rajnikant Dahyabhai Patel under section 86 of the Act, 1961. 6. In view of above, this petition is disposed of with a direction to the District Registrar to pass appropriate order upon the application dated 22nd November, 2021 filed by respondent nos. 4.1 to 4.3 to withdraw the application made by late Rajnikant Dahyabhai Patel under section 86 of the Act, 1961 and dispose of the proceedings accordingly. 7. With aforesaid directions, the petition is disposed of. Rule is discharged. Direct service is permitted.