Nijanand Seva Sahakari Mandli Ltd. v. Udhela Seva Sahkari Mandali Limited Thro Its Delegate Saiyed Safimuhamad Illudin
2023-12-21
ANIRUDDHA P.MAYEE, SUNITA AGARWAL
body2023
DigiLaw.ai
JUDGMENT : (Aniruddha P. Mayee, J.) 1. The present Letters Patent Appeal impugns the judgment and order dated 10.7.2023 in Special Civil Application No.11197 of 2022. The petitioner and the respondent Nos.1 to 13 are the Cooperative Societies duly registered under the Gujarat Cooperative Societies Act, 1961 [“Act of 1961” for short]. The respondent societies are engaged in sale and purchase of agricultural products. They applied to become the members of the respondent No.16 – Gujarat State Cooperative Marketing Federation Limited [“Federation” for short]. The respondent No.16 - Federation having found the petitioner societies to be qualified, enrolled them as their members on 25.3.2021. That the respondent No.16 - Federation being an apex level society which is a specified society under Section 74(C) of the Act of 1961, elections were declared to be conducted as the term of the Managing Committee of the said Federation was expiring in July 2022. Accordingly, a voters list came to be prepared by the respondent No.16 - Federation and it forwarded the same to the Election Officer for preparation of the final voters list. The preliminary voters list came to be published on 16.5.2022 and after hearing the objections, the final voters list was published on 20.5.2022. Accordingly, the election programme came to be declared on 23.5.2022 and the nominations were to be filed from 25.5.2022 till 1.6.2022. The scrutiny of nomination was to be held on 3.6.2022 and the final list of contesting candidates came to be declared on 8.6.2022. The voting was to be held on 19.6.2022. 2. That a day prior to the date of voting i.e. on 18.6.2022, the appellant herein filed Lavad Suit Nos.133 of 2022 and 134 of 2022 before the learned Board of Nominees. That the interim prayer was to restrain the respondent Nos.1 to 13 from functioning as the members of the respondent No.16 - Federation. That by order dated 18.6.2022, the Board of Nominees – respondent No.14 herein passed an order restraining the respondent Nos.1 to 13 societies to exercise any right of membership in the respondent No.16 - Federation and as a consequence thereof, the respondent Nos.1 to 13 came to be denied their voting right in the election held on 19.6.2022.
That by order dated 18.6.2022, the Board of Nominees – respondent No.14 herein passed an order restraining the respondent Nos.1 to 13 societies to exercise any right of membership in the respondent No.16 - Federation and as a consequence thereof, the respondent Nos.1 to 13 came to be denied their voting right in the election held on 19.6.2022. As soon as the respondent cooperative societies were restrained from voting, they immediately preferred Special Civil Application No.11197 of 2022 in this Court and being a holiday, sought permission to circulate the petition urgently. In the meanwhile, the Election Officer declared the results of the election and the respondent Nos.17 came to be elected in the election. 3. That by order dated 9.9.2022, the learned Board of Nominees proceeded with the final hearing of the injunction application (Exh.6) in the Lavad Suit No.134 of 2022 and confirmed the ad-interim prayers restraining the respondent Nos.1 to 13 from exercising their membership rights. Accordingly, the Special Civil Application No.11197 of 2022 came to be amended. The respondent Nos.1 to 13 – writ petitioners also raised the issue of maintainability of the Lavad cases filed before the learned Board of Nominees and further prayed to quash and set aside the election result dated 19.6.2022 declared by the Election Officer. 4. The learned Single Judge, after hearing all the parties, was pleased to allow the Special Civil Application and set aside the impugned orders passed by the learned Board of Nominees and further dismissed the Lavad suits filed by the appellant herein holding that it had no jurisdiction to try such suits. Further, the learned Single Judge has given liberty to the respondent Nos.1 to 13 societies to file appropriate proceedings under Section 145(U) of the Act of 1961 to challenge the election in accordance with law before the Election Tribunal. Aggrieved, the appellant has filed the present Letters Patent Appeal. 5. Learned counsel Mr. B.T.Rao appearing for the appellant society submitted that as per the bye-laws Nos.9(A)(1) and 9(A)(2) of Federation, only those societies which are fulfilling the said requirement and continue to work as per bye-laws are eligible to continue as members of Federation and can get various benefits by virtue of its membership.
5. Learned counsel Mr. B.T.Rao appearing for the appellant society submitted that as per the bye-laws Nos.9(A)(1) and 9(A)(2) of Federation, only those societies which are fulfilling the said requirement and continue to work as per bye-laws are eligible to continue as members of Federation and can get various benefits by virtue of its membership. He submits that only those primary cooperative societies, agricultural cooperative societies, Vividh Karyakari Societies or societies which are engaged in selling agricultural produce of the members of the society to the tune of Rs.1 lakh every year are only eligible to continue as member of Federation. In addition, he submitted that the paid up share capital of the society should be Rs.50,000/- and society should have given minimum share contribution of Rs.2,500/- to Federation. He submits that as per the bye-laws of the respondent No.16 - Federation, the respondent Nos.1 to 13 herein are not eligible to cast vote. He further submitted that the appellant Society had made complaint to the respondent No.16 - Federation that certain members of the societies are not fulfilling the eligibility criteria to continue as member of the respondent No.16 - Federation as per the bye-law No.9(A)(1) and therefore, in view of bye-law No.11(A) (2), they are disqualified and not qualified to continue as members of the respondent No.16 - Federation. 6. He submits that the appellant society had also requested for copies of annual balance-sheets of the petitioner society and other documents from the respondent No.16 - Federation, but the same were not supplied and therefore, the appellant made an application under the R.T.I. to the office of the District Registrar, Cooperative Societies, Kheda requesting to supply the copies of annual balance-sheets and other relevant documents of the respondent Nos.1 to 13 societies. He submits that on perusing the same, it is revealed that the respondent societies had incurred disqualification for continuing as members of the respondent No.16 - Federation as they do not have annual turnover of Rs.1 lakh or more from the sales of agricultural produce of their members. In view thereof, he submits that they cannot enjoy valuable rights of membership as per the bye-laws of Federation. 7.
In view thereof, he submits that they cannot enjoy valuable rights of membership as per the bye-laws of Federation. 7. He submits that the appellant society thereafter invited attention of these documents to the Authorized Officer of respondent No.16 - Federation informing that these societies cannot continue as members of Federation and it was the duty of Federation to remove them as members in view of non-fulfillment of bye-law No.9(A)(1) and for that purpose, the Federation has to take steps to remove them as members. He submits that since the Federation did not take any steps in the matter for the reasons best known to it, the appellant herein was forced to approach the learned Board of Nominees’ Court under Section 96 of the Act of 1961 seeking declaration that the present petitioners should be restrained as members of Federation who are not fulfilling condition precedent to be eligible to be member of Federation and the documents submitted by such societies did not provide any data in respect of their operation and business. He submits that since the respondent Nos.1 to 13 were not eligible and qualified to enjoy the rights as members of respondent No.16 - Federation, the appellant society initiated proceedings under Section 96 of the Act of 1961. He submits that the learned Single Judge has erroneously come to the conclusion that the appellant had no locus to file the Lavad suit before the learned Board of Nominees since the appellant is a member of Federation. He submits that when the societies which are ineligible to continue as members of the Federation and continue with a view to impact the voters list, the appellant have a locus to prefer the Lavad case. 8. He further submits that the respondent Nos.1 to 13 have directly preferred the writ petition before this Court when alternative remedy by way of appeal to the Tribunal was available for challenging such an order by preferring revision application under Section 150(G) of the Act of 1961. He submits when such an equally efficacious remedy was available, the learned Single Judge ought not to have exercised its jurisdiction under Article 226 of the Constitution of India.
He submits when such an equally efficacious remedy was available, the learned Single Judge ought not to have exercised its jurisdiction under Article 226 of the Constitution of India. He further submits that the learned Single Judge has erroneously held that the learned Board of Nominees had no jurisdiction to try such a suit preferred by the appellant and quashed and set aside the entire suit though no such relief was prayed for by the respondent Nos.1 to 13 – writ petitioners. He submits that the learned Single judge further erred in observing that the said respondent Nos.1 to 13 - writ petitioners can prefer election petition before the Tribunal which is directed to be heard and decided within a period of 3 months. He, therefore, submitted that the present Letters Patent Appeal be allowed and the impugned order of the learned Single Judge be quashed and set aside. 9. Per contra, Mr. Dipen Desai, learned advocate appearing on behalf of the respondent Nos.1 to 13 submits that the respondent societies are members of the respondent No.16 - Federation. He submits that since the election process came to be initiated, the Election Officer prepared the preliminary voters list for Kheda constituency. As no objections were received, the names of the petitioners came to be included in the final voters list as published by the Election Officer. He submits that no objection came to be taken by the appellant society to the said voters list against the inclusion of the respondents. He submits that the voting for the election was to be held on 19.6.2022 and prior one day thereto, i.e. on 18.6.2022, the appellant society filed Lavad suit No.133 of 2022 before the learned Board of Nominees seeking a stay against exercise of any membership rights by the society in the respondent No.16 Federation. That the learned Board of Nominees, Ahmedabad granted ad-interim stay, in favour of the appellant society as a result of which, when the respondent societies went to vote, the Election Officer was furnished a copy of the impugned order and they were denied their right to vote in the said election.
That the learned Board of Nominees, Ahmedabad granted ad-interim stay, in favour of the appellant society as a result of which, when the respondent societies went to vote, the Election Officer was furnished a copy of the impugned order and they were denied their right to vote in the said election. He submits that the exercise of filing the suit and passing of the ad-interim stay order by the learned Board of Nominees is completely politically motivated move to ensure that the respondent Nos.1 to 13 societies do not vote in the election and thereby undue benefit is accrued to the winning candidate. He submits that the ad-interim order passed by the learned Board of Nominees directly interferes with the process of election which has been deprecated by various judgments of this Court as well as Hon’ble Supreme Court. He submits that the suit itself was not maintainable as the same had direct effect of interfering with the election of the specified society and therefore, was hit by the provisions of Section 145(U) of the Act of 1961 and the suit preferred by the appellant society is not maintainable. 10. The learned counsel further submits that in the said election, the respondent No.17 came to be elected by margin of 17 votes. The losing candidate received 17 votes, whereas the respondent No.17 received 24 votes. He submits that the respondent societies who are 13 in number were restrained from voting because of the order dated 18.6.2021 passed by the learned Board of Nominees and the said fact shows that if the petitioner societies who had declared their support in support of the losing candidate Shri Dhirubhai Amarsinhbhai Chavda would have been permitted to vote, the said candidate Shri Dhirubhai Amarsinhbhai Chavda would have succeeded in the election. The learned counsel further submitted that the entire exercise was undertaken only with a view to ensure that the respondent No.17 is elected by such malafide, arbitrary and completely illegal order passed by the learned Board of Nominees. He submitted that the learned Single Judge has rightly quashed the order dated 18.6.2022 and the suit pending before the learned Board of Nominees.
He submitted that the learned Single Judge has rightly quashed the order dated 18.6.2022 and the suit pending before the learned Board of Nominees. He, therefore, submits that the impugned order need not be interfered with as the same has been passed taking into consideration the provisions of the Act of 1961 and the law as laid down by various judgments passed by this Court as well as Hon’ble Supreme Court. He, therefore, submits that the present Letters Patent Appeal be dismissed. 11. Heard learned counsels for the parties and perused the documents on record. 12. In the present case, the appellant herein has filed the Lavad Suit No.133 of 2022 under Section 96 of the Act of 1961 praying for the relief of declaration that the respondent Nos.1 to 13 are not entitled to membership of Federation and should not exercise their rights as members of the respondent No.16 – Federation and further that they may be permanently injuncted from exercising such rights as members. The only contention raised by the appellant in the said suit is that the respondent Nos.1 to 13 societies have given forged and fabricated documents in support of their claim for membership and that they were not eligible to become member under the bye-law No.11(A) of the respondent No.16 – Federation. It is also pertinent to note here that the Lavad suit was filed just one day before the ensuing elections to the Board of the respondent No.16 – Federation, which was to be held on 19.6.2022. The learned Board of Nominees has without assigning any reasons, passed an ad-interim order restraining the respondent Nos.1 to 13 societies from exercising their membership and voting rights till the next date of hearing. In the aforesaid background, respondent Nos.1 to 13 herein had filed Special Civil Application No.11197 of 2022 which came to be allowed by the learned Single Judge holding that the learned Board of Nominees had no jurisdiction to entertain and try such a suit and accordingly, the impugned order of the learned Board of Nominees was set aside and the suit filed by the appellant came to be dismissed. 13. At this juncture, it would be apposite to refer to the relevant Sections of the Act of 1961. Chapter III of the Act of 1961 provides for “Members and Their Rights and Liabilities”. Section 22 deals with the “Person who may become member”.
13. At this juncture, it would be apposite to refer to the relevant Sections of the Act of 1961. Chapter III of the Act of 1961 provides for “Members and Their Rights and Liabilities”. Section 22 deals with the “Person who may become member”. Section 23 deals with “Removal from membership in certain circumstances”. Sections 27 and 28 deal with “Right to vote” and “Voting powers of members”. Section 36 deals with “Expulsion of members”. The said Chapter further provides that such a dispute has to be tried by the Registrar and the decision rendered by the Registrar can be challenged under Section 155 of the Act of 1961. 14. Further, Chapter IX provides for “Procedure for Deciding Disputes”. Section 96 of the Act of 1961 reads thus:- “96. Disputes.- (1) Notwithstanding anything contained in any other law for the time being in force, any dispute touching the constitution, management or business of a society shall be referred in the prescribed form either by any of the parties to the dispute, or by a federal society to which the society is affiliated, or by a creditor of the society, to the Registrar, if the parties thereto are from amongst the following:— (a) a society, its committee, any past committee, any past or present officer, any past or present agent, any past or present servant or nominee, heir or legal representative of any deceased officer, deceased agent or deceased servant of the society, or the Liquidator of the society; (b) a member, past member or a person claiming through a member, past member or a deceased member of a society, or a society which is a member of the society; (c) a person, other than a member of the society, who has been granted a loan by the society, or with whom the society has or had transactions under the provisions of section 46, and any person claiming through such a person; (d) a surety of a member, past member or a deceased member, or a person other than a member who has been granted a loan by the society under section 46, whether such a surety is or is not a member of the society; (e) any other society, or the Liquidator of such a society.
(2) When any question arises whether for the purposes of sub-section (1) a matter referred to for decision is a dispute or not, the question shall be considered by the Registrar, whose decision shall be final. Explanation 1.—For the purposes of this sub-section, a dispute shall include— (i) a claim by a society for any debt or demand due to it from a member, past member or the nominee, heir or legal representative of a deceased member, whether such a debt or demand be admitted or not; (ii) a claim by a surety for any sum or demand due to him from the principal borrower in respect of a loan by a society and recovered from the surety owing to the default of the principal borrower, whether such a sum or demand be admitted or not; (iii) a claim by a society for any loss caused to it by a member, past member, or deceased member, by any officer, past officer or deceased officer, by any agent, past agent or deceased agent, or by any servant, past servant or deceased servant, or by its committee, past or present whether such loss be admitted or not; (iv) a refusal or failure by a member, a past member or a nominee, heir or legal representative of a deceased member, to deliver possession to a society of land or any other asset resumed by it for breach of conditions of the assignment. Explanation II .—For the purposes of this section, the expression "agent" includes in the case of a housing society, an architect, engineer or contractor engaged by the society.” 15. In the present case, the Lavad suit has been filed under Section 96 of the Act of 1961. However, the prayers prayed for in the said suit are referable to the provisions under Chapter III and in particular, Section 23 thereof. At this juncture, it would be profitable to reproduce Section 23 of the Act of 1961 which reads thus:- “23. Removal from membership on certain circumstances. - (1) Where a person becomes a member of any society on his making a declaration as required by the bye-laws of the society or otherwise and such declaration is found to be false, then such person shall be disqualified to continue as a member of the society.
Removal from membership on certain circumstances. - (1) Where a person becomes a member of any society on his making a declaration as required by the bye-laws of the society or otherwise and such declaration is found to be false, then such person shall be disqualified to continue as a member of the society. (2) Where a person continues as a member of the society notwithstanding the disqualification incurred by him [under sub-section (3) of section 22 or under sub-section (l)], he shall be removed from the society by the Registrar: Provided that the Registrar shall, before making an order of removal give the person an opportunity of being heard.” 16. It is pertinent to note here that though the contentions raised by the appellant society has to be dealt with under Section 23(1) by the Registrar, the prayers in the Lavad suit have been mischievously modified so as to portray that the dispute is one of general nature, which has to be adjudicated under Section 96 of the Act of 1961 since the same touches the constitution, management or business of the society. While the dispute so raised in the Lavad suit seeks to restrain the respondent Nos.1 to 13 societies from exercising their rights as members, the Lavad suit does not challenge the resolution by which the respondent Nos.1 to 13 societies came to be admitted as members and does not pray for any substantial relief for removal of membership since the appellant society was very well aware that such a dispute was not maintainable under the provisions of Section 96, but only under the provisions of Section 23 of the Act of 1961. At the sake of repetition, it is required to be noted that the only contention raised in the Lavad suit is that the respondent Nos.1 to 13 societies had produced false and fabricated documents to obtain the membership of the respondent No.16 – Federation and therefore, in view of the said contention, it was very clear that the dispute so raised was covered under the provisions of Section 23(1) and not under Section 96 as tried to be made out by the learned counsel for the appellant. 17.
17. The dispute raised in the present appeal by the appellant is regarding the disqualification of the respondent Nos.1 to 13 societies and pertaining to their enrollment as members of the respondent No.16 – Federation by misleading it and suppressing the true facts. According to the appellant, this false declaration made by the respondent Nos.1 to 13 societies resulted in grant of membership to them and the contention that they were disqualified for being enrolled as member as also to be continued in membership is in contravention of the bye-laws of the societies. This Court is of the opinion that the contention and dispute raised in the Lavad suit is squarely covered by the provisions of Section 23 of the Act of 1961 and therefore, it is only the Registrar who can entertain such a dispute and can make a proper order for removal of the concerned societies after giving due notice and opportunity of hearing and not by way of dispute under Section 96 of the Act of 1961 which, in our opinion, is a general provision which would cover all sorts of disputes other than what is provided for specifically in Sections 23 and 36 of the Act of 1961, as the rights and liabilities of members has been specifically dealt with in Chapter III of the Act of 1961. 18. It is trite law that when for a specific dispute, a specific machinery has been provided under the Act including a right to appeal, the said dispute has to be tried only under the said provisions and not in any other general provision regarding disputes as provided for in Section 96 of the Act of 1961. Further, the right of appeal has also been provided for under Section 155 of the Act of 1961 against the order passed by the Registrar under Section 23 of the Act of 1961. Therefore, we are of the opinion that the dispute raised in the Lavad suit preferred by the appellant before the learned Board of Nominees was a dispute which would fall under the provision of Section 23 of the Act of 1961 and not under Section 96 of the Act of 1961 and therefore, the said Lavad suit was not at all maintainable and the order passed by the learned Board of Nominees granting ad-interim relief to the appellant herein and further confirming the same was without jurisdiction. 19.
19. Further, the contention raised by the learned counsel for the appellant that the respondent Nos.1 to 13 societies should have availed the alternative efficacious remedy available to them to challenge the impugned order passed by the learned Board of Nominees under Section 102 of the Act of 1961 is liable to be rejected outrightly since we have held that the present dispute is not maintainable under Section 96 of the Act of 1961 and that the same has to be adjudicated by the Registrar under Section 23 of the Act of 1961. In the present case, it cannot escape the attention of this court that the Lavad suit has been filed just one day before the voting for the elections to the Board of Management of the respondent No.16 – Federation i.e. on 18.6.2022 and ad-interim order injuncting the respondent Nos.1 to 13 societies from exercising their voting rights came to be passed on the same day without assigning any reasons in regard to the prima facie case, balance of convenience or any reference to the provisions of the Act in respect to the maintainability of the dispute while passing such an interim order. The learned Board of Nominees has passed such an order despite being fully aware that there were elections to the respondent No.16 – Federation on the very next day. 20. In the said attending circumstances and more particularly in view of the fact that such a dispute was not maintainable before the learned Board of Nominees under Section 96 of the Act of 1961 by way of Lavad suit, the learned Single Judge has rightly exercised the jurisdiction under Article 226 of the Constitution of India to quash and set aside the order dated 18.6.2022. Further, in view of the provisions of the Act of 1961 and the observations made hereinabove, we are also of the opinion that the Lavad suit as preferred by the appellant before the learned Board of Nominees was not at all maintainable under Section 96 of the Act of 1961 and the ad-interim order passed by the learned Board of Nominees was wholly without jurisdiction. Further, all the contentions raised by the appellant society and the judgments relied upon have been properly adjudicated by the impugned order. 21.
Further, all the contentions raised by the appellant society and the judgments relied upon have been properly adjudicated by the impugned order. 21. In view thereof, no interference is called for in the impugned judgment and order dated 10.7.2023 in Special Civil Application No.11197 of 2022 and the same is in accordance with the law as laid down. The Letters Patent Appeal is devoid of merits and is accordingly, dismissed. No order as to costs. Connected Civil Application for interim relief also stands disposed of.