Agriculture Produce Market vs State Of Gujarat Through on 4 December, 2013

[Cites 60, Cited by 0]

Gujarat High Court

Agriculture Produce Market vs State Of Gujarat Through on 4 December, 2013

Bench: C.L. Soni

  
	 
	 AGRICULTURE PRODUCE MARKET COMMITTEE, VISNAGARV/SSTATE OF GUJARAT THROUGH SECRETARY
	 
	 
	 
	 
	 
	 
	 
	 
	

 
 


	 


	C/SCA/7527/2013
	                                                                    
	                           CAV JUDGEMNT

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 7527 of 2013 With CIVIL APPLICATION NO.

9274 of 2013 In SPECIAL CIVIL APPLICATION NO. 7527 of 2013 With SPECIAL CIVIL APPLICATION NO. 13490 of 2013 With SPECIAL CIVIL APPLICATION NO. 13491 of 2013 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE C.L. SONI Sd/-

========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?

No 2 To be referred to the Reporter or not ?

Yes 3 Whether their Lordships wish to see the fair copy of the judgment ?

No 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?

No 5 Whether it is to be circulated to the civil judge ?

No ========================================= AGRICULTURE PRODUCE MARKET COMMITTEE, VISNAGAR & 1 Versus STATE OF GUJARAT THROUGH SECRETARY & 1 ============================================= Appearance in SCA No.7527 of 2013:

MR BS PATEL, ADVOCATE for the Petitioners MR PRAKASH JANI, GOVERNMENT PLEADER with MR NEERAJ ASHAR, AGP for the Respondent- State Appearance in CA No.9274 of 2013:

MR NAVIN K PAHWA for M/S THAKKAR ASSOC. ADVOCATE for the Applicant MR PRAKASH JANI, GOVERNMENT PLEADER with MR NEERAJ ASHAR, AGP for the Respondent No.3- State MR BS PATEL, ADVOCATE for the Respondent(s) No. 1 Appearance in SCA Nos.13490 and 13491 of 2013:

MR MIHIR JOSHI, SR. ADVOCATE with MR DIPEN DESAI, ADVOCATE for the Petitioner MR PRAKASH JANI, GOVERNMENT PLEADER with MR NEERAJ ASHAR, AGP for the Respondent Nos.1, 2 and 5 MR VC VAGHELA, ADVOCATE for Respondent Nos.3 and 4 ========================================= CORAM:

HONOURABLE MR.JUSTICE C.L. SONI Date : 04/12/2013 CAV JUDGEMNT

1. The petitioners have filed the present petitions feeling aggrieved by the action of the Director of Agricultural Marketing and Rural Finance to hold inquiry under Section 44 of the Agricultural Produce Markets Act, 1963 ( the Act for short).

2. In Special Civil Application No.7527 of 2013, petitioner No.1- Agricultural Produce Market Committee- Visnagar and petitioner No.2, who is its Chairman, have challenged the show cause notice dated 7.3.2013 calling upon the petitioners to show cause why action under Section 44 of the Act should not be initiated.

3. In Special Civil Application No.13490 of 2014, the petitioner- Market Committee has challenged the order dated 17.8.2013 passed by the respondent No.1-

State Government in Revision Application No.79 of 2013 affirming the order dated 30.4.2013 made by the Director appointing the Deputy Director, Agricultural Marketing and Rural Finance and the District Registrar, Co-operative Societies, Mehsana to hold inquiry under Section 44 of the Act into the affairs of the Market Committee.

4. Special Civil Application No.13491 of 2013 is filed challenging the decision of the Director to permit the respondent Nos.3 and 4 to be parties in above-said proceedings under Section 44 of the Act and the order dated 30.7.2011 passed by the respondent No.1- State Government affirming such decision of the Director.

5. The main grievance/ challenge in Special Civil Application No.7527 of 2013 is that the Director has decided to initiate inquiry under Section 44 of the Act on the basis of the representation of the MLA and issued show cause notice without forming an independent opinion as required by Section 44 of the Act, which is prerequisite for initiation of inquiry under Section 44 of the Act.

6. In Special Civil Application No.13490 of 2013, the main grievance/ challenge made is that the action of the Director to initiate inquiry under Section 44 of the Act is politically motivated at the instance of the respondent Nos.3 and 4 against whom the Market Committee had taken action of cancelling the licenses though the alleged irregularities for which the action is initiated under Section 44 of the Act do not come within the purview of inquiry under Section 44 of the Act.

7. During course of hearing, since the Court prima facie finds that it is within the discretion of the Director to hold inquiry into the affairs of the Market Committee to find out whether the Market Committee discharges its duties to achieve the object of the Act, the Market Committee or its office bearers may not be entitled to challenge the action of initiation of inquiry under Section 44 of the Act, the Court called upon the learned advocates appearing for the petitioners and also asked learned Government Pleader Mr. Prakash Jani to address the Court on the aspects whether the Market Committee and its officers are entitled to any hearing before taking decision by the Director to hold inquiry and whether they can challenge the decision of the Director to hold inquiry under Section 44 of the Act.

8. Learned senior advocate Mr. Mihir Joshi however submitted that the Court may not go into such aspects of the matter as the Court is not called upon to decide the above such issues, especially when the Director himself has called upon the Market Committees by show cause notice to state as to why the action under Section 44 of the Act should not be initiated against the Market Committee.

9. However, since the Court was of the view that such issue was required to be gone into, it asked learned advocates to address the Court on the question of rights of the Market Committee and its office bearers to challenge the decision to hold inquiry and on the question of powers of the Director under Section 44 of the Act.

10. Learned senior advocate Mr. Mihir Joshi appearing with learned advocate Mr. Dipen Desai for the petitioner in Special Civil Application No.13490 of 2013 and in Special Civil Application No.13491 of 2013 submitted that the action of the Director in ordering the inquiry under Section 44 of the Act is not bonafide and in good faith but at the instance of the respondent Nos.3 and 4, against whom the Market Committee had taken action. Mr. Joshi submitted that the alleged irregularities in the affairs of the Market Committee are neither related to the present body of the Market Committee nor even germane for holding inquiry under Section 44 of the Act. Mr. Joshi submitted that the inquiry under Section 44 of the Act could be ordered only in respect of the matters in which alleged failure of the Market Committee in performing its function under the Act is found. Mr. Joshi submitted that none of the matters referred in the show cause notice is with regard to performance of the function of the Market Committee under the Act. Mr. Joshi submitted that what is sought to be inquired into by the Director is the irregularity alleged to have been committed by the office bearers of the Market Committee not connecting to the functioning of the Market Committee under the Act. Therefore, not only such inquiry is not contemplated under Section 44 of the Act but it might result into serious civil consequences for the Market Committee and its office bearers if the Director is allowed to hold inquiry under Section 44 of the Act. Mr. Joshi submitted that the Director is not permitted to hold inquiry under Section 44 of the Act at the instance of anybody but he should satisfy himself that inquiry into the affairs of the Market Committee is required. Mr. Joshi submitted that it clearly appears from the order of the Director that the Director decided to hold inquiry under Section 44 of the Act through the Deputy Director just because the respondent Nos.3 and 4 insisted to hold inquiry against the Market Committee. Mr. Joshi submitted that the fact that the respondent Nos.3 and 4 are allowed to represent in the inquiry strongly suggests that the Director without satisfying himself for holding the inquiry into the affairs of the Market Committee has decided to hold inquiry at the instance of the respondent Nos.3 and 4. Mr. Joshi submitted that since the Director is not justified in holding the inquiry at the instance of respondent Nos.3 and 4, the Revisional Authority ought to have quashed the order dated 30.4.2013 passed by the Director to hold inquiry under Section 44 of the Act. Mr. Joshi submitted that the Revisional Authority did not grant any hearing to the petitioners before finally deciding the revision application and therefore, this Court may quash the order passed by the Revisional Authority and remand the matter to the Revisional Authority to decide the revision afresh.

11. As regards the challenge made in Special Civil Application No.13491 of 2013, learned senior advocate Mr. Joshi submitted that in the proceedings of the inquiry under Section 44 of the Act, hearing to any third party is not contemplated. Mr. Joshi submitted that under Section 44 of the Act, the Director is not deciding the lis between the parties and the inquiry contemplated is only against the Market Committee and only the Market Committee and its officers could be heard in such inquiry and therefore, the order passed by the Director permitting the respondent Nos.3 and 4 to be parties in the inquiry affirmed by the Revisional Authority is required to be quashed and set aside.

12. Learned senior advocate Mr. Joshi submitted that since the result of the inquiry may entail civil consequences, the Market Committee and its office bearers are entitled to challenge the decision of the Director to hold inquiry under Section 44 of the Act and are also required to be heard before taking such decision.

13. Learned senior advocate Mr. Joshi submitted that since inquiry under Section 44 of the Act may seriously affect the rights of the office bearers of the Market Committee, it is always open to the Market Committee and its office bearers to point out at the threshold that there is no material to hold such inquiry and alleged irregularities for which inquiry is sought to be held are not related to functioning of the Market Committee.

14. Learned senior advocate Mr. Joshi submitted that as per Section 44(4) of the Act, the Director is empowered to take follow-up action as a result of the inquiry. Mr. Joshi submitted that when the Director is empowered to take follow-up action against the Market Committee, there is no logic to say that the Market Committee or its office bearers are not entitled to challenge the action of holding such inquiry. Mr. Joshi submitted that sequel of the result of the inquiry could as well be initiation of action under Section 46 of the Act. Therefore, if the result of the inquiry is to be relied on for initiating action under Section 46 of the Act and if no hearing before taking decision to hold inquiry under Section 44 of the Act is given, the same would seriously prejudice the rights of the Market Committee and its office bearers and would entail serious consequences for the Market Committee.

15. Learned senior advocate Mr. Joshi submitted that in fact, the issue about challenging the decision of holding inquiry and giving of hearing could be said to be no longer res integra inasmuch as in the context of almost para-materia provisions of Section 86 of the Gujarat Co-operative Societies Act, 1961 ( the Societies Act for short), the Hon'ble Division Bench of this Court has held that the order directing inquiry under Section 86 may involve serious consequences to the co-operative societies and it is not possible to say that such order does not affect the rights and liabilities of the co-operative societies. Relying upon the decision of the Hon'ble Division Bench in the case of Chimanbhai Dadubhai Desai and Another Vs. Chaturbhai P. Patel, District Registrar, Co-operative Societies reported in 1971 GLR 31 , Mr. Joshi submitted that the same principle would apply to the inquiry under Section 44 of the Act and therefore, this Court may not take different view of the matter.

16. Learned advocate Mr. B.S. Patel appearing for the petitioner in Special Civil Application No.7527 of 2013 while adopting the arguments of learned senior advocate Mr. Mihir Joshi submitted that in the case of Agricultural Produce Market Committee, Visnagar- the petitioner of Special Civil Application No.7527 of 2013, the Director issued the show cause notice for holding inquiry under Section 44 of the Act on representation of the MLA. Mr. Patel submitted that most of the items in the representation of the MLA are just asking for information by MLA and not relevant for conducting any inquiry under Section 44 of the Act and still the Director without forming any independent opinion, called upon the Market Committee to explain as to why the order for inquiry under Section 44 of the Act on all the points stated by the MLA be not held. Mr. Patel submitted that before ordering inquiry under Section 44 of the Act, the Director has to form independent opinion and satisfy himself as to whether any inquiry into the affairs of the Market Committee is required or not. The Director has not independently formed any such opinion and therefore, the impugned show cause notice issued to the Market Committee is required to be quashed and set aside.

17. Learned advocate Mr. B.S. Patel submitted that Section 86 of the Societies Act and Section 44 of the Act are almost similar in nature. Mr. Patel submitted that inquiry under Section 44 of the Act cannot be at the instance of a third party. Mr. Patel submitted that unlike sub-section (2) of Section 86, where the Registrar shall be required to hold inquiry pursuant to the application filed by the society, no right is given to any person compelling the Director to hold inquiry under Section 44 of the Act. Therefore, issuance of the impugned show cause notice to the Market Committee at the instance of the MLA is not only contrary to law but could be said to be without jurisdiction. Mr. Patel submitted that the inquiry contemplated under Section 44 of the Act is not to be routinely held against the Market Committee as it entails serious consequences. Mr. Patel submitted that the Market Committee is constituted of 14 elected members. The powers of the Market Committee are exercised through collective decision in the meeting of the members. Mr. Patel submitted that as per Rule 38, the proceedings of the Market Committee are to be sent to the Director and therefore, the functioning of the Market Committee is under the watch of the Director. Mr. Patel submitted that Section 21 provides for preparation of the accounts and submitting the same to the Director as prescribed in Rule 47. Mr. Patel submitted that Section 47 provides for the powers of the Director to call for the proceedings for any information or the statements or accounts of the Market Committee and to direct the Market Committee for doing anything necessitated to be done by the Market Committee. Mr. Patel thus submitted that when the above-said powers are available with the Director, power to hold inquiry under Section 44 of the Act is not to be routinely exercised, that too at the instance of any other party. Mr. Patel submitted that if the Director decides to hold inquiry under Section 44 of the Act for oblique purpose and at the instance of the third party under the political influence, the Market Committee and its office bearers are justified to invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India, so as to prevent the Director from misusing his power and authority under Section 44 of the Act.

18. Learned Government Pleader Mr. Prakash Jani submitted that the provisions of Section 44 of the Act cannot be compared with Section 86 of the Societies Act. Like the Market Committee, the Co-operative Society is not the local authority. It is a voluntary association of the persons working for economic interest and welfare of its members. Mr. Jani submitted that by virtue of the amendment in the Societies Act in the year 2013, it has got complete freedom to work independently without any control of the Government except following the statutory provisions of the Societies Act. Mr. Jani submitted that in the case of Chimanbhai Dadubhai Desai (supra), Hon'ble Division Bench was faced with the question as regards the exercise of the revisional power under Section 155 of the Societies Act against the order of the Registrar to hold inquiry under Section 86 of the Societies Act and in that context, the Court held that since the order directing the inquiry under Section 86 may involve serious consequences to the Societies, the Society can invoke the revisional powers under Section 155 of the Societies Act. Mr. Jani submitted that the Scheme of the Societies Act and the Act and their objects and purposes are different and therefore, no reliance could be placed on the decision of Chimanbhai Dadubhai Desai (supra). Mr. Jani submitted that nowhere in the said decision, the Court has held that before taking decision to hold inquiry, the hearing is required to be afforded to the society. Mr. Jani submitted that there is a difference between Section 44 and Section 47 of the Act. Mr. Jani submitted that Section 47 is the revisional power of the Director where the procedure for notice and hearing to the parties may be followed, whereas Section 44 of the Act is a special power of the inquiry of the Director to inspect or cause to be inspected the accounts of the Market Committee or to hold inquiry into the affairs of the Market Committee. Mr. Jani submitted that such powers of holding inquiry under Section 44 of the Act could be exercised by the Director on getting the information from any source, including third party. Mr. Jani submitted that the Act was enacted in the year 1963 when the legislature could not have envisaged the kinds of irregularities being indulged into in the present days and therefore, Section 44 could be said to have encompassed all the affairs of the Market Committee.

19. Learned Government Pleader Mr. Jani submitted that the decision of the Hon ble Supreme Court in the case of Rohtas Industries Ltd. Vs. S.D. Agarwal and Another reported in AIR 1969 SC 707, on which the reliance is placed by the Hon ble Division Bench of this Court in the case of Chimanbhai Dadubhai (Supra), was in the context of the provisions of Sections 235 to 237 of the Companies Act and considering the said provisions, the Hon ble Supreme Court has held that the investigation into the affairs of the company is a serious matter and it should not be ordered except on good grounds and it is open to the company to challenge the decision to hold investigation into the affair of the company. Mr. Jani submitted that the same principle is not applicable in respect of the inquiry under Section 44 of the Act.

20. Learned Government Pleader Mr. Jani submitted that under the Scheme of the Act, the Director is responsible for establishment of the Market Committee. The Market Committee does not come into existence on account of association of persons who want to form such association for their own interest but it is established for benevolent object of the Act to weed out the middleman for helping the farmers for their agricultural produces. Mr. Jani submitted that the Director holds pivotal position and since responsible to establish markets and market committees, he is conferred with additional and independent powers to inquire into the affairs of the Market Committee. Mr. Jani submitted that Section 44 inquiry does not stigmatize anybody. Mr. Jani submitted that at the stage of taking decision to hold inquiry, no show cause notice either to the Market Committee or its office bearers is required to be issued. Mr. Jani submitted that since the action under Section 46 of the Act results into compelling the office bearers to vacate the offices, the provision for affording reasonable opportunity is made therein. Mr. Jani submitted that result of inquiry under Section 44 of the Act does not make the office bearers to vacate their offices. Mr. Jani submitted that on getting the result of the inquiry, the Director may order the Market Committee to do or abstain from doing a thing required for the purpose of the Act and therefore, neither any show cause notice nor any hearing is required to be given to the Market Committee or the office bearers before taking decision to inquiry under Section 44 of the Act.

21. Learned Government Pleader Mr. Jani submitted that under the Act, the Director is responsible to establish the Market Committee for market areas and the Director would remain under obligation to ensure that the Market Committee carry on their affairs to achieve the object of the Act and since functioning of market committee cannot be compared with a Co-operative Society or a company, the petitioners are not entitled to challenge the action of the Director to hold inquiry under Section 44 of the Act.

Learned advocate Mr. V.C. Vaghela appearing for respondent Nos.3 and 4 submitted that Section 44 inquiry could be initiated by the Director on getting the information as regards the irregularities in the affairs of the Market Committee from any source. Mr. Vaghela submitted that the respondent Nos.3 and 4 since connected with the working of the Market Committee, they brought to the notice of the Director various irregularities committed by the Market Committee through its office bearers in the affairs of the Market Committee and therefore, not only the Director was justified in ordering inquiry but also allowing the respondent Nos.3 and 4 to be parties in the inquiry under Section 44 of the Act. Mr. Vaghela submitted that the petitioners are not entitled to challenge the action of the Director in holding inquiry under Section 44 of the Act as it is the sole discretion of the Director to hold such inquiry. Mr. Vaghela submitted that the Revisional Authority, therefore, rightly rejected the revision application preferred by the petitioners against the order for holding inquiry under Section 44 of the Act as also the order of the Director permitting the respondent Nos.3 and 4 to participate in such inquiry. Mr. Vaghela submitted that Section 44 inquiry is against the Market Committee and the purpose of such inquiry is to ensure that the Market Committee conducts its affairs in the best interest of the farmers. Mr. Vaghela submitted that in conducting such inquiry under Section 44 of the Act, no action/ order entailing the civil consequences is ever passed. Mr. Vaghela submitted that if on result of the inquiry, the Director finds that the Market Committee is to take some action, the Director can issue direction to the Market Committee for doing a particular thing and at that stage, it is always open to the Market Committee to point out as to whether it is possible or not for the Market Committee to comply with the directions of the Director. Mr. Vaghela thus submitted that the petitioners are, therefore, not entitled to challenge the order of the Director in holding inquiry under Section 44 of the Act. He thus urged to dismiss the Special Civil Application Nos.13490 of 2013 and 13491 of 2013.

23. Learned advocate Mr. Navin K. Pahwa for the applicant of Civil Application No.9274 of 2013 was permitted to assist the Court on the question of exercise of the powers by the Director under Section 44 of the Act.

Learned advocate Mr. Pahwa submitted that the reliance placed by the petitioners in all the petitions on the decision of the Hon ble Division Bench in the case of Chimanbhai Dadubhai Desai (supra) is misconceived inasmuch as the Hon ble Division Bench was considering the issue whether the Revision Application under Section 155 against the order of inquiry under Section 86 of the Societies Act was maintainable or not. Mr. Pahwa submitted that the Court therein was examining the issue in the context of the provisions of the Societies Act and therefore, the said decision cannot be applied in the facts of the case. Mr. Pahwa submitted that the power available with the Director is like the power available with SEBI and RBI to inquire into the affairs of the company independently and the action of holding inquiry by them is not permissible to be challenged. Mr. Pahwa submitted that the principle of natural justice in the action for holding inquiry under Section 44 of the Act cannot be read. Mr. Pahwa submitted that Section 44 inquiry is independent of other actions under the Act and since such inquiry does not entail any civil consequences against the office bearers of the committee, the committee or office bearers are not entitled to challenge the order of the Director to hold inquiry into the affairs of the Market Committee. Mr. Pahwa submitted that the hearing contemplated for action under Sections 235 to 237 of the Companies Act is on reading the provisions of the said sections but no such hearing could be read in the provisions of Section 44 of the Act. Mr. Pahwa submitted that the scheme of the Act is different than the scheme of the Societies Act and the Companies Act and since the discretion is available with the Director to hold inquiry, neither the Market Committee nor the office bearers of the Market Committee are entitled to challenge the order of the Director to hold inquiry into the affairs of the Market Committee. Mr. Pahwa submitted that if such challenge is permitted, then in no case, the Director would be in a position to hold inquiry and the very provision for holding inquiry would stand frustrated. Mr. Pahwa thus urged to dismiss the petitions.

25. Having heard learned advocates for the parties and having considered the scheme of the Act, the Societies Act and the Companies Act, what appears to the Court is that the establishment of the Market Committee is not the choice of the association of persons for promotion of their economic interest or for their general welfare but is to achieve the objects of regulating the purchase and sale of the agricultural produce in the market area declared by the Director under the provisions of the Act. The constitution of the Market Committee is as per the intention of the legislature and not gathering of people for their interest. The members of the Market Committee are from different categories. Such members are to function to achieve the objects of the Act and not for their common good or welfare. The Market Committee is a local body within the meaning of sub-section (26) of Section 3 of the Bombay General Clauses Act, 1904. Such Market Committee established and constituted under the Act cannot be compared with the co-operative society incorporated under the Societies Act. Unlike the Market Committee, a co-operative society owes its formation and existence to the wish of the association of individuals, who with object of promotion of their economic interest or general welfare, or even with object of welfare of the public in accordance with the co-operative principles, form the society and get the status of corporate body and statutory recognition on its registration under the Societies Act and on getting registration, it functions as per the provisions of the Societies Act. The establishment and incorporation of the Market Committee is a result of declaration of intention by the Director under the Act for the purpose of regulating the sale and purchase of agricultural produces for the market areas declared by him. The market committee and co-operative society function for different purposes and to achieve different objects and therefore, one cannot be compared with another.

26. Similarly, the company established under the Companies Act, 1956 also cannot be compared with the Market Committee. There are various kinds of companies, including Government Company and other public institutions, and they may be functioning like social institution and discharging their duties and responsibilities towards the community in which they function. However, the purpose of their establishment and incorporation is totally different than the one found for the Market Committee.

27. Considering the above background for establishment and incorporation of the Market Committee, the Co-operative Society and the company, question about the exercise of power under Section 44 of the Act by the Director needs to be examined by referring the provisions of the Act. The Act is of 1963 and it was brought into force to consolidate and amend the law relating to regulation of buying and selling of the agricultural produce and establishment of the markets for agricultural produce in the State of Gujarat. In addition to establishment of markets by the Director, the Act also envisages the establishment of the private market.

28. The Director is conferred with sole responsibility to declare market areas and to establish market committees for such market areas. Section 5 provides that the Director may by notification in the official gazette declare his intention of regulating the purchase and sale of such agricultural produce and in such areas as may be specified therein. Declaration of intention of the market areas intended by the Director is provided in Section 6 after considering the objections/ suggestions received by the Director. Section 6 further provides that once any area is declared as market area, no place in the said area shall be used for purchase and sale of any agricultural produce specified in the notification except in accordance with the provisions of the Act and except under the licence granted by the Director to any person to use any place in the said area for purchase and sale of any such agricultural produce. It is further provided that the Director may at any time include or exclude any area as market area. Section 7 provides for different kinds of markets in market area, like principal market yard, sub-market yards or all markets proper. Section 8 provides that no person shall operate in the market area or any part thereof except under and in accordance with the conditions of a licence granted under the Act. Section 9 provides for establishment of market committee or committees by the Director. Under this Section, if the Director is satisfied that it is necessary to appoint a separate market committee for efficient regulation of the purchase and sale of any specified kind of agricultural produce in the market area, he may in addition establish for the market area a separate market committee for the purpose. Sub-section (5) thereof provides that every market committee shall be deemed to be established under this section with effect from the date on which it is duly constituted for the first time under Section 11 of the Act.

Section 10 of the Act provides that every Market Committee shall be a body corporate by such name as the Director may specify by notification in the official gazette and it shall be competent to acquire, hold, lease, sell or otherwise transfer property, to raise loans upon the security of its property in the manner and subject to the limits and other requirements and to contract and to do all other things necessary for the purposes for which it is established. Sub-section (2) thereof provides that the market committee shall be a local authority within the meaning of Clause (26) of Section 3 of the Bombay General Clauses Act 1904. Section 11 provides for constitution of the Market Committee from different segments of the people, like agriculturists, traders holder general licenses, representatives of co-operative market societies situated in the market area and holding general licenses, one member to be nominated by the local authority within whose jurisdiction, the principal market area is situated, from amongst its councilors who do not hold any general licenses and two members to be nominated by the State Government. Sub-section (2) provides that if election of the Market Committee is not held for any reason, the Director shall report the fact to the State Government and with previous approval of the State Government, nominate on the Market Committee members of the respective class specified in sub-section (1) from amongst members so nominated are to hold office as Director may determine with approval of the State Government but not exceeding the period of two years. Sub-section (3) provides that if election of the Market Committee does not result in the return of the required number of qualified persons to take office, the Director shall after considering views of the members already elected as soon as, nominate from amongst the persons qualified to be elected. Section 18 provides for conduct of business in the Market Committee in accordance with the Rules, except otherwise provided in the Act. Section 24 provides that where more market committee than one are established for any market area, the Director may issue general or special directions as to which of the market committees shall exercise, perform and discharge respectively all or any of the powers, dues and functions under the Act in which they are jointly interested or which are of a common nature.

30. Section 26 provides for duties of the Market Committee to maintain and manage the market, to prevent adulteration and promote grading and standardization of the agricultural produce as may be prescribed, to provide such facilities in the market as the Director may from time to time direct and to enforce in the market area the provisions of the Act, Rules, Bye-laws and conditions of licenses granted under the Act in connection with purchase and sale of the agricultural produce with which it is concerned. It is further provided that it shall be the duty of the Market Committee to collect and maintain such information relating to market intelligence and to supply the same to the Government whenever so required. Section 27 provides for grant or renewal of the general licence or special licence for the purpose of specific transaction or transactions to a trader, general commission agent, broker, weighman, surveyor, warehouseman or any person to operate in the market area or part thereof, or after recording its reason, to refuse to grant or renew any such licence. It also provides for suspension or cancellation of licence. Sub-section (4) thereof provides that if it appears to the Director that on any ground specified in sub-section (3) for suspension or cancellation of licence, an action was necessary and if such action is not taken by the market committee, the Director may on any such grounds and after giving reasonable opportunity to the holder of the licence by order suspend or cancel any licence.

31. Section 44 of the Act comes in Chapter No.VIII under the heading of Control . Section 44 reads as under:-

44. Power to hold inquiry.-(1) The Director may of his own motion, himself or by an officer authorised by him, inspect or cause to be inspected the accounts of a market committee or hold an inquiry into the affairs of a market committee.

(2) When the affairs of a market committee are inquired into, all members, officers and servants of the committee shall furnish such information and produce such documents in their possession, relating to the affairs of the committee, as the Director or the officer may require.

(3) The Director and the officer shall have the power to summon and enforce the attendance of members and officers of the market committee and to compel them to give evidence and to produce documents by the same means and as far as possible in the same manner as is provided in the case of a Civil Court by the Code of Civil Procedure, 1908 (V of 1908).

(4) The Director or, as the case may be, the officer may require the market committee either as a result of the inquiry or otherwise to do a thing or to abstain from doing a thing which the Director or the officer considers necessary for the purposes of this Act, and to send a written reply to him within a reasonable time, stating whether the aforesaid requisition is complied and in case it is not complied,stating its reason for not complying with the requisition.

32. Under Section 44 of the Act, the Director may on his own motion by himself or by an officer authorized by him, inspect or cause to be inspected the accounts of a market committee or hold an inquiry into the affairs of a market committee. Independent of the inspection of accounts of the market committee, the Director can hold inquiry into the affairs of the market committee. Sub-section (2) mandates all members, officers and servants of the committee to furnish such information and produce such documents in their possession relating to the affairs of the market committee as may be required by the Director or the officer when the affairs of the market committee are inquired into. The Director and the officer have all powers to summon and enforce the attendance of members and officers of the committee and compel them to give evidence and to produce documents as far as possible in the same manner as provided in the case of a Civil Court by the Code of Civil Procedure,1980. Sub-section (4) provides that the Director of the officer may require the market committee either as a result of the inquiry or otherwise to do a thing or to abstain from doing a thing which the Director or the officer considers necessary for the purposes of this Act and to send a written reply to him within a reasonable time stating whether such requisition is complied and if not complied, stating the reason for not complying with such requisition. Section 45 gives power to the Director to provide for performance of duties in default of market committee by fixing a period for due performance of duties by the market committee. It further provides that if the market committee does not perform such duties, as required by the Director, the Director may appoint a person to perform it and may direct that the expense of performing it and the reasonable remuneration of such person shall be forthwith paid by the committee. It also further provides for further power of the Director to make an order directing the bank of the committee to pay expense and remuneration to such person from the account of the committee. Section 46 provides for supersession of market committee. It provides that if in the opinion of the State Government, market committee is not competent to perform or persistently makes default in performing the duties imposed on it by or under this Act or abuses its powers, the State Government may, by notification in the official gazette, supersede such market committee. Before exercise of such power, the State Government is mandated to give a reasonable opportunity to the market committee for showing cause why it should not be superseded and the State Government is to consider the explanation and objections of the market committee. Section 47 is the revisional power of the Director. Section 48 is revisional powers of the State Government to call for and examine the proceedings of the Director or of any market committee to satisfy itself as to legality or propriety of any decision or order passed by the Director or the market committee. Section 54 provides for dissolution and constitution of new market committee on alteration of limits of markets. Section 57 provides that the Chairman or the Vice Chairman, members, Secretaries and servants of market committee shall be deemed to be public servants within the meaning of Section 21 of the Indian Penal Code. The Gujarat Agricultural Produce Markets Rules, 1965 provide amongst other things certain matters and duties to be performed by the market committee.

33. The provisions of the Act and the Rules clearly reveal that the intention of the legislature is to establish the markets for the purpose of regulating the purchase and sale of the agricultural produces specified in the Schedule and to ensure that the Market Committee properly carries on its duties and functions required to achieve the objects of the Act and also does all other things necessary for the purpose for which it is established. The Act fastens the responsibility on the Director for declaration of market areas and for establishment of the Market Committee for efficient regulation of purchase and sale of any specified agricultural produces. The constitution of such market committee is not left to the choice of anybody but is from agriculturists, traders, representatives of the co-operative societies holding general licenses in the market area and representative from local authority and the State Government as provided in the Act. The establishment of the market committee precedes declaration of intention of Director of regulating the purchase and sale of the agricultural produces in any area to be declared as market area under the Act. Thus, as rightly submitted by learned Government Pleader Mr. Jani, the Director holds a pivotal position who carries responsibility for establishment of the market committee for market area declared by him under the Act.

34. On establishment and incorporation of the market committee, it becomes competent to acquire, hold, lease, sell or otherwise transfer property, to raise loans upon the security of its property and is also competent to do all other things necessary for the purposes for which it is established. It is deemed to be a local authority. It is thus incumbent upon the market committee to perform its duties and functions to achieve the objects of the Act. It is not functioning just for promotion of either economic interest or welfare of its members. It is statutorily required to do all things necessary for the purpose for which it is established and to achieve such purposes, it is made competent to acquire, hold, lease, sell, transfer the property or raise loans and even to enter into contracts with any person.

The performance of duties and functions of the market committee under the Act and the Rules and to do all things necessary for the purpose for which it is established could be said to be the affairs of the market committee. To make the market committee to properly function and discharge its duties to achieve the purpose for which it is established, the Act has given independent powers under Section 44 to the Director to inquire into the affairs of the market committee. Such power is not to be compared with the powers available with the Director under Section 47 of the Act. Exercise of powers under Section 44 of the Act is the sole discretion of the Director and not dependent upon any requisition from any member of the market committee or resolution by the market committee or any application of third party though it may be open to the Director to use any information received from any source to hold inquiry. Therefore, simply because, the Director decides to hold inquiry based on application or representation of any party, the decision of the Director to hold inquiry shall not be vitiated. The inquiry under Section 44 is fact finding inquiry and as a result of inquiry, the Director may require the market committee to do a thing or abstain from doing a thing for the purposes of the Act. It is therefore, not open to the market committee to challenge the decision of the Director to hold inquiry under Section 44 of the Act. In given case, it might appear that the Director has decided to hold inquiry on irrelevant matters based on somebody s representation or application. But, since during the inquiry, it is open to the market committee to explain a particular matter as and when the market committee through Secretary or any member or servant or office bearer is called to explain such matter. If on conclusion of the inquiry, when the market committee is called upon to do a thing or abstain from doing a thing and the market committee finds that it is not required to act as per the direction by the Director based on the result of the inquiry, sub-section (4) of Section 44 of the Act has taken care of such situation by permitting the market committee to send a written reply stating reasons for not complying with the requisition. Since doing or abstain from doing a thing by the market committee is the only consequence as a result of inquiry, there is no question of affecting the rights of the market committee or its office bearers especially when unlike co-operative societies and its members, the market committee and its members do not have such rights. Since the Act provides for exercise of powers and duties by the market committee for the purposes of the Act, there is also no question of entailing any civil consequences as a result of inquiry under Section 44 of the Act. It is therefore, not open to the market committee or its office bearers to challenge the decision of the Director to hold inquiry. It is required to be noted that sub-section (4) of Section 44 of the Act gives further power to the Director to ask the market committee to do a thing or abstain from doing a thing for the purpose of the Act, otherwise than as a result of inquiry. Therefore, irrespective of the result of the inquiry, the Director is having independent power to require the market committee to do or abstain from doing a thing, which is necessary for the purpose of the Act. It appears from the scheme of the Act that the power given under Section 44 of the Act to the Director is to ensure that the market committee carries on its affairs to properly discharge its duties in connection with purchase and sale of the agricultural produce with which it is concerned with other duties of collecting and maintaining information relating to the market intelligence and supply to the Government whenever required. The decision to hold inquiry under such power if permitted to be challenged by the market committee, the very purpose behind giving of such powers will stand frustrated.

36. Unlike the provision of Section 93 of the Societies Act for taking of consequential action after the conclusion of the inquiry under Section 86 thereof, no provision is found in the Act for the action entailing civil consequences for the office bearers of the market committee. If the State Government is to rely on the result of the inquiry held under Section 44 of the Act while taking action under Section 46 of the Act, it is always open to the market committee to explain the matters in such report as and when hearing is afforded to the market committee or its office bearers before taking action under Section 46 of the Act. But, it clearly appears that the legislature has not intended to give any hearing to the market committee or its office bearers before taking decision to hold inquiry under Section 44 of the Act by the Director. Giving of such hearing by the Director since cannot be read in the provisions of Section 44 of the Act, there is no need to issue any show cause notice by the Director to the market committee asking the market committee to show cause as to why inquiry under Section 44 of the Act should not be held in the affairs of the market committee. Learned Government Pleader Mr. Jani also put his views that since the hearing is not contemplated to the market committee before taking decision to hold inquiry under Section 44 of the Act, the Director is not required to issue any show cause notice to the market committee for such purpose.

37. Learned senior advocate Mr. Mihir Joshi and learned advocate Mr. B.S. Patel for the petitioners, however, submitted that once the Director is of the view that before taking decision to hold inquiry under Section 44 of the Act, the market committee is required to be heard and when with this clear view, the Director issued the show cause notice to the petitioners, and, as further submitted by learned senior advocate Mr. Joshi, the Director having agreed before this Court in earlier petition to afford hearing before deciding to hold inquiry under Section 44 of the Act, taking a view that no hearing is required or no show cause notice is required to be issued to the market committee before taking decision to hold inquiry under Section 44 of the Act, might result into giving unbridled and arbitrary powers to the Director to hold inquiry at the instance of the influential persons and even for the matters not connected with the affairs of the market committee, and with an oblique motive to malign the office bearers of the market committee and to make a platform for further action under the Act entailing civil consequences and affecting the rights of the market committee and its office bearers.

38. Though the above submissions of the learned advocates for the petitioners appear to be attractive, however, simply because the Director has issued the show cause notice and decided to give hearing before taking decision to hold inquiry under Section 44 of the Act, the same would not warrant to take a view that the market committee and its office bearers are either entitled to challenge the decision of the Director to hold inquiry under Section 44 of the Act or to claim hearing before the Director decides to hold inquiry under Section 44 of the Act. Considering the scheme of the Act as a whole, this Court is of the clear view that the powers of the Director to hold inquiry into the affairs of the market committee under Section 44 is distinct and independent of the other powers available to the Director under the Act and the legislature does not appear to have contemplated giving of any hearing to the market committee or its office bearers before and at the stage when the Director is taking decision to hold inquiry.

39. In the case of Union of India Vs. Col. J.N. Sinha and Another reported in (1970)2 SCC 458, relied on by learned Government Pleader Mr. Jani, the Hon ble Supreme Court has held and observed in para 8 as under:-

8. Fundamental Rule 56 (j) in terms does not require that any opportunity should be given to the concerned Government servant to show cause against his compulsory retirement. A Government servant serving under the Union of India holds his office at the pleasure of the President as provided in Article 310 of the Constitution. But this "pleasure"

doctrine is subject to the rules or law made under Article 309 as well as to the conditions prescribed under Art. 311. Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. As observed by this Court in Kraipak v. Union of India, AIR 1970 SC 150, "the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law but supplement it." It is true that if a statutory provision can be read consistently with the principles of natural justice,the Courts should do so because it must be presumed that the legislatures and the statutory authorities intend to act in accordance with the principles of natural justice But, if on the other hand, a statutory provision either specifically or by necessary implication excludes the application of any or all the rules of principles of natural justice then the Court cannot ignore the mandate of the legislature on the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power.

In the case of Competition Commission of India Vs. Steel Authority of India Limited and Another reported in (2010)10 SCC 744, relied on by learned Government Pleader Mr. Jani, the Hon ble Supreme Court has held and observed in paragraph Nos.54, 55, 56, 60, 61, 76, 77, 78, 79, 80, 82, 83, 85 and 86 as under:-

54.

The Law Commission of India, in its 183rd Report, while dealing with the need for providing principles of interpretation of statute as regards the extrinsic aids of interpretation in General Clauses Act, 1897, expressed the view that a statute is a will of legislature conveyed in the form of text. Noticing that the process of interpretation is as old as language, it says that the rules of interpretation were evolved at a very early stage of Hindu civilization and culture and the same were given by 'Jaimini', the author of Mimamsat Sutras; originally meant for shrutis, they were employed for the interpretation of Smritis as well.

55. While referring to the said historical background, the Law Commission said :

"It is well settled principle of law that as the statute is an edict of the Legislature, the conventional way of interpreting or construing a statute is to seek the intention of legislature. The intention of legislature assimilates two aspects; one aspect carries the concept of 'meaning', i.e., what the word means and another aspect conveys the concept of 'purpose' and 'object' or the 'reason' or 'spirit' pervading through the statute. The process of construction, therefore, combines both the literal and purposive approaches. However, necessity of interpretation would arise only where the language of a statutory provision is ambiguous, not clear or where two views are possible or where the provision gives a different meaning defeating the object of the statute. If the language is clear and unambiguous, no need of interpretation would arise. In this regard, a Constitution Bench of five Judges of the Supreme Court in R. S. Nayak v. A. R. Antulay, AIR 1984 SC 684 has held :

"...If the words of the Statute are clear and unambiguous, it is the plainest duty of the Court to give effect to the natural meaning of the words used in the provision. The question of construction arises only in the event of an ambiguity or the plain meaning of the words used in the Statute would be self-defeating."

Recently, again Supreme Court in Grasim Industries Ltd. v. Collector of Customs, Bombay, (2002) 4 SCC 297 : (AIR 2000 SC 1706 : 2002 AIR SCW 1646) has followed the same principle and observed :

"10. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for Court to take upon itself the task of amending or altering the statutory provisions."

56. Thus, the Court can safely apply rule of plain construction and legislative intent in light of the object sought to be achieved by the enactment. While interpreting the provisions of the Act, it is not necessary for the Court to implant, or to exclude the words, or overemphasize language of the provision where it is plain and simple. The provisions of the Act should be permitted to have their full operation rather than causing any impediment in their application by unnecessarily expanding the scope of the provisions by implication.

60. Expressum facit cessare tacitum- Express mention of one thing implies the exclusion of other. (Expression precludes implication). This doctrine has been applied by this Court in various cases to enunciate the principle that expression precludes implication. [Union of India v. Tulsiram Patel, AIR 1985 SC 1416]. It is always safer to apply plain and primary rule of construction. The first and primary rule of construction is that intention of the legislature is to be found in the words used by the legislature itself. The true or legal meaning of an enactment is derived by construing the meaning of the word in the light of the discernible purpose or object which comprehends the mischief and its remedy to which an enactment is directed. [State of Himachal Pradesh v. Kailash Chand Mahajan (AIR 1992 SC 1277) : (1992 AIR SCW 1247) and Padma Sundara Rao v. State of T.N. (AIR 2002 SC 1334)] : (2002 AIR SCW 1156).

62. It is always important for the Court to keep in mind the purpose which lies behind the statute while interpreting the statutory provisions. This was stated by this Court in Padma Sundara Rao's case, (AIR 2002 SC 1334 : 2002 AIR SCW 1156) (supra) as under :-

"12....

The first and primary rule of construction is that the intention of the legislation must be found in the words used by the legislature itself. The question is not what may be supposed and has been intended but what has been said. "Statutes should be construed, not as theorems of Euclid", Judge Learned Hand said, "but words must be construed with some imagination of the purposes which lie behind them". (See Lenigh Valley Coal Co. v. Yensavage, 218 FR 547). The view was reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama (AIR 1990 SC 981)."

76. Regulation 48, which deals with the procedure for imposition of penalty, requires under sub-regulation (2) that show cause notice is to be issued to any person or enterprise or a party to the proceedings, as the case may be, under sub-regulation (1), giving him not less than 15 days' time to explain the conduct and even grant an oral hearing, then alone to pass an appropriate order imposing penalty or otherwise.

77. Issue of notice to a party at the initial stage of the proceedings, which are not determinative in their nature and substance, can hardly be implied; wherever the legislature so desires it must say so specifically. This can be illustrated by referring to the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injuries) Rules, 1995 under the Customs Tariff Act, 1975. Rule 5(5) provides that while dealing with an application submitted by aggrieved domestic producers accounting for not less than 25% of total production of the like article, the designated authority shall notify the Government of exporting country before proceeding to initiate an investigation. Rule 6(1) also specifically requires the designated authority to issue a public notice of the decision to initiate investigation. In other words, notice prior to initiation of investigation is specifically provided for under the Anti-Dumping Rules, whereas, it is not so under the provisions of Section 26(1) of the Act.

78. Cumulative reading of these provisions, in conjunction with the scheme of the Act and the object sought to be achieved, suggests that it will not be in consonance with the settled rules of interpretation that a statutory notice or an absolute right to claim notice and hearing can be read into the provisions of Section 26(1) of the Act. Discretion to invite, has been vested in the Commission, by virtue of the Regulations, which must be construed in their plain language and without giving it undue expansion.

79. It is difficult to state as an absolute proposition of law that in all cases, at all stages and in all events the right to notice and hearing is a mandatory requirement of principles of natural justice. Furthermore, that non-compliance thereof, would always result in violation of fundamental requirements vitiating the entire proceedings. Different laws have provided for exclusion of principles of natural justice at different stages, particularly, at the initial stage of the proceedings and such laws have been upheld by this Court. Wherever, such exclusion is founded on larger public interest and is for compelling and valid reasons, the Courts have declined to entertain such a challenge. It will always depend upon the nature of the proceedings, the grounds for invocation of such law and the requirement of compliance to the principles of natural justice in light of the above noticed principles.

80. In the case of Tulsiram Patel, (AIR 1985 SC 1416) (supra), this Court took the view that audi alteram partem rule can be excluded where a right to a prior notice and an opportunity of being heard, before an order is passed, would obstruct the taking of prompt action or where the nature of the action to be taken, its object and purpose as well as the scheme of the relevant statutory provisions warrant its exclusion. This was followed with approval and also greatly expanded in the case of Delhi Transport Corporation v. Delhi Transport Corporation Mazdoor Congress [(1991) Suppl SCC 600] : (AIR 1991 SC

101), wherein the Court held that

31. rule of audi alteram partem can be excluded, where having regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provisions, fairness in action does not demand its application and even warrants its exclusion.

82. The exclusion of principles of natural justice by specific legislative provision is not unknown to law. Such exclusion would either be specifically provided or would have to be imperatively inferred from the language of the provision. There may be cases where post-decisional hearing is contemplated. Still there may be cases where 'due process' is specified by offering a full hearing before the final order is made. Of course, such legislation may be struck down as offending due process if no safeguard is provided against arbitrary action. It is an equally settled principle that in cases of urgency, a post-decisional hearing would satisfy the principles of natural justice. Reference can be made to the cases of Maneka Gandhi v. Union of India [(1978) 1 SCC 248] : (AIR 1978 SC 597) and State of Punjab v. Gurdayal [AIR 1980 SC 319].

83. The provisions of Section 26(1) clearly indicate exclusion of principles of natural justice, at least at the initial stages, by necessary implication. In cases where the conduct of an enterprise, association of enterprises, person or association of persons or any other legal entity, is such that it would cause serious prejudice to the public interest and also violates the provisions of the Act, the Commission will be well within its jurisdiction to pass ex parte ad interim injunction orders immediately in terms of Section 33 of the Act, while granting post-decisional hearing positively, within a very short span in terms of Regulation 31(2). This would certainly be more than adequate compliance to the principles of natural justice.

85. Wherever, this Court has dealt with the matters relating to complaint of violation of principles of natural justice, it has always kept in mind the extent to which such principles should apply. The application, therefore, would depend upon the nature of the duty to be performed by the authority under the statute. Decision in this regard is, in fact, panacea to the rival contentions which may be raised by the parties in a given case. Reference can be made to the judgment of this Court in the case of Canara Bank v. Debasis Das [(2003) 4 SCC 557] : (AIR 2003 SC 2041 : 2003 AIR SCW 1561).

86. We may also notice that the scope of duty cast upon the authority or a body and the nature of the function to be performed cannot be rendered nugatory by imposition of unnecessary directions or impediments which are not postulated in the plain language of the section itself. 'Natural justice' is a term, which may have different connotation and dimension depending upon the facts of the case, while keeping in view, the provisions of the law applicable. It is not a codified concept, but are well defined principles enunciated by the Courts. Every quasi-judicial order would require the concerned authority to act in conformity with these principles as well as ensure that the indicated legislative object is achieved. Exercise of power should be fair and free of arbitrariness.

40. Learned senior advocate Mr. Joshi however, wanted the Court to read the intention of the legislature as regards giving of hearing in sub-section (3) of Section 44 of the Act. In my view, sub-section (3) is enabling provision for the Director or the officer authorized to hold inquiry like the powers of a Civil Court under Sections 30 and 31 of the Code of Civil Procedure to compel any member or officer of the market committee to give evidence and to produce documents in the inquiry. Intention behind such provision is to ensure that the members, officers or servants of the market committee cooperate with the inquiry. No right of hearing could be read either for the market committee or its office bearers in sub-section(3). Unlike Section 46, the legislature has consciously not provided in Section 44 for giving of any opportunity of hearing to the market committee or its officer bearers to see that the Director can independently decide to initiate inquiry into the affairs of the market committee.

41. In the case of Chimanbhai Dadubhai Desai (supra), the Court has examined the question whether remedy of revision under Section 155 of the Societies Act is available against the decision to hold inquiry under Section 86 of the Societies Act. While examining such question, the Court relied on following observations of the Hon ble Supreme Court in the case of Rohtas Industries Ltd. (supra):-

It is true that the investigation under sec.237(b) is of a fact finding nature. The report submitted by the Inspector does not bind anybody. The Government is not required to act on the basis of that report, the company has to be called upon to have its say in the matter but yet the risk-it may be a grave one-is that the appointment of an Inspector is likely to receive much press publicity as a result of which the reputation and prospects of the company may be adversely affect.

Based on the above-said observation of the Hon ble Supreme Court, the Court observed that order directing an inquiry under Section 86 of the Societies Act may involve serious consequences to the co-operative society and it is not possible to say that an order does not affect rights and liability of the co-operative society.

42. As stated above, formation and establishment of Co-operative Society and Company cannot be compared with market committee. Like in the case of co-operative societies and the companies, concept of reputation or right cannot be applied in the case of the market committee and its office bearers.

43. It is required to be noted that the inquiry contemplated under sub-section (1) of Section 86 of the Societies Act is into the constitution, working and financial condition of a society. Though the provisions of Section 86(1), (3) and (4) appear to be like the provisions of Section 44 of the Act, however, unlike Section 93 of the Societies Act, no direct sequel by any provision in the Act is provided. Though there is a provision in Section 50 of the Act for making the members liable for misapplication of funds of the market committee but it is not stated to be sequel of inquiry under Section 44 of the Act. Section 50 reads as under:-

50. Members to be held responsible for misapplied funds.-

Every member of the market committee shall be personally liable for any misapplication of its moneys to which he shall have been a party, or which shall have occurred through, or been facilitated by, gross neglect of his duty as a member, and may be sued for recovery of the moneys so misapplied as if such moneys had been the property of the State Government:

Provided that no member shall be personally liable in respect of any contract or agreement made, or for any expense incurred by, or on behalf of, the market committee, and the funds of the market committee shall be liable for, and be charged with, all costs in respect of any such contract and agreement and all such expenses.

For ready reference, Section 93 of the Societies Act is reproduced as under:-

93.

(1) Where in the course of or as a result of an audit under section 84, or an inquiry under section 86 or an inspection under section 87, or the winding up of a society, the Register is satisfied on the basis of the report made by the auditor or the person authorized to make inquiry under section 86, or the person authorized to inspect the books under section 87, or the Liquidator under section 110, that any person who has taken any part in the organization or management of the society or any deceased, or past or present officer of the society has, within a period of five years prior to the date of such audit, inquiry, inspection or order for winding up, misapplied or retained, or become liable or accountable for, any money or property of the society, or has been guilty of misfeasance or breach of trust in relation to the society, the Register or a person authorized by him in that behalf may investigate the conduct of such person or persons and after framing charges against such person or persons, and after giving a reasonable opportunity to the person concerned and in the case of a deceased person to his requiring him to repay or restore the money or property or any part thereof, with interest at such rate as the Registrar or the person authorized under this section may determine, or to contribute such sum to the assets of the society by way of compensation in regard to the misapplication, retention, misfeasance or breach of trust, as he may determine.

(2) The Registrar or the person authorized under sub-section (1) in making any order under this section, may provide therein for the payment of the costs or any part thereof such investigation, as he thinks just, and he may direct that such costs or any part thereof shall be recovered from the person against whom the order has been issued.

(3) This section shall apply, notwithstanding that the act is one for which the person concerned may be criminally responsible.

44. In view of the distinguishing features of the provisions of the Societies Act, the decision in the case of Chimanbhai Dadubhai Desai (supra) cannot be applied to the facts of the case.

45. The investigation into the affairs of a company cannot be compared with the inquiry into the affairs of the market committee. Section 234 to 237 of the Companies Act, 1956 make out the difference in procedure to be followed. Sections 234 to 237 of the Companies Act, 1956 read as under:-

Sec 234 - Power of Registrar to call for information or explanation.

(1)

Where, on perusing any document which a company is required to submit to him under this Act, the Registrar is of opinion that any information or explanation is necessary with respect to any matter to which such document purports to relate, he may, by a written order, call on the company submitting the document to furnish in writing such information or explanation, within such time as he may specify in the order.

(2)

On receipt by the company of an order under sub-section (1), it shall be the duty of the company, and of all persons who are officers of the company, to furnish such information or explanation to the best of their power.

(3)

On receipt of a copy of an order under sub-section (1), it shall also be the duty of every person who has been an officer of the company to furnish such information or explanation to the best of his power.

(3A) If no information or explanation is furnished within the time specified or if the information or explanation furnished is, in the opinion of the Registrar, inadequate, the Registrar may by another written order call on the company to produce before him for his inspection such books and papers as he considers necessary within such time as he may specify in the order ; and it shall be the duty of the company, and of all persons who are officers of the company, to produce such books and papers.

(4)

If the company, or any such person as is referred to in sub-section (2) or (3) refuses or neglects to furnish any such information or explanation or if the company or any such person as is referred to in sub-section (3A) refuses or neglects to produce any such books and papers, -

(a) the company and each such person shall be punishable with fine which may extend to five thousand rupees and in the case of a continuing offence, with an additional fine which may extend to five hundred rupees for every day after the first during which the offence continues ; and

(b) the Court trying the offence may, on the application of the Registrar and after notice to the company, make an order on the company for production before the Registrar of such books and papers as in the opinion of the Court, may reasonably be required by the Registrar for the purpose referred to in sub-section (1).

(5)

On receipt of any writing containing the information or explanation referred to in sub-section (1), or of any book or paper produced whether in pursuance of an order of the Registrar under sub-section (3A) or of an order of the Court under sub-section (4), the Registrar may annex that writing, book or paper, or where that book or paper is required by the company, any copy or extract thereof, to the document referred to in sub-section (1) ; and any writing or any book or paper or copy or extract thereof so annexed shall be subject to the like provisions as to inspection, the taking of extracts and the furnishing of copies, as that document is subject.

(6)

If such information or explanation is not furnished within the specified time or if after perusal of such information or explanation or of the books and papers produced whether in pursuance of an order of the Registrar under sub-section (3A) or of an order of the Court under sub-section (4), the Registrar is of opinion that the document referred to in sub-section (1), together with such information or explanation or such books and papers discloses an unsatisfactory state of affairs or does not disclose a full and fair statement of any matter to which the document purports to relate, the Registrar shall report in writing the circumstances of the case to the Central Government.

(7)

If it is represented to the Registrar on materials placed before him by any contributory or creditor or any other person interested that the business of a company is being carried on in fraud of its creditors or of persons dealing with the company or otherwise for a fraudulent or unlawful purpose, he may, after giving the company an opportunity of being heard, by a written order, call on the company to furnish in writing any information or explanation on matters specified in the order, within such time as he may specify therein ; and provisions of sub-sections (2), (3), (3A), (4) and (6) of this section shall apply to such order.

If upon inquiry the Registrar is satisfied that any representation on which he took action under this sub-section was frivolous or vexatious, he shall disclose the identity of his information to the company.

(8)

The provisions of this section shall apply mutatis mutandis to documents which a liquidator, or a foreign company within the meaning of section 591, is required to file under this Act.

235. Investigation of affairs of a company.-

(1) The Central Government may, where a report has been made by the Registrar under sub-section (6) of section 234, or under sub-section (7) of that section, read with sub-section (6) thereof, appoint one or more competent persons as inspectors to investigate the affairs of a company and to report thereon in such manner as the Central Government may direct.

(2) Where-

(a) in the case of a company having a share capital, an application has been received from not less than two hundred members or from members holding not less than one-tenth of the total voting power therein; and

(b) in the case of a company having no share capital, an has been received from not less than one-fifth of the persons on the company s register of members;

the [Tribunal] may, after giving the parties an opportunity of being heard, by order, declare that the affairs of the company ought to be investigated by an inspector or inspectors, and on such a declaration being made, the Central Government shall appoint one or more competent persons as inspectors to investigate the affairs of the company and to report thereon in such manner as the Central Government may direct.]

236. Application by members to be supported by evidence and power to call for security. - An application by members of a company sub-section (2) of section 235 shall be supported by such evidence as the [Tribunal] may require] for the purpose of showing that the applicants have good reason for requiring the investigation; and the Central Government may, before appointing an inspector, require the applicants to give security, for such amount not exceeding one thousand rupees as it may think fit, for payment of the costs of the investigation.

237. Investigation of company s affairs in other cases.- Without prejudice to its power under section 235, the Central Government-

(a) in the case of a company having a share capital, an application has been received from not less then two hundred members or from members holding not less than one-tenth of the total voting power therein, and

(i) the company, by special resolution; or

(ii) the Court, by order, declares that the affairs of the company ought to be investigated by an inspection appointed by the Central Government; and

(b) may do so [in its opinion or in the opinion of the Tribunal] there are circumstances suggesting-

(i) that the business of the company is being conducted with intent to defraud its creditors, members or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose;

(ii) that person concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members; or

(iii) that the members of the company have not been given all the information with respect to its affairs which they might reasonably expect, including information relating to the calculation of the commission payable to a managing or other director, or the manager, of the company.

46. The decision in the case of Rohtas Industries Ltd. (supra), therefore, will also have no application in the facts of the case.

47. Considering the provisions of Section 44 of the Act in light of the principles of law in the case of Competition Commission of India (supra), the market committee or anybody connected with the market committee cannot be held entitled to claim hearing before the Director decides to hold inquiry under Section 44 of the Act. Therefore, the Director is not under any obligation to issue any show cause notice either to the market committee or to its office bearers calling upon them as to why inquiry under Section 44 of the Act should not be held into the affairs of the market committee. As discussed above, considering the provision of Section 44 of the Act, the petitioners are not entitled to call in question the decision of the Director to hold inquiry either by filing revision under Section 48 before the State Government or by invoking the writ jurisdiction or supervisory jurisdiction of this Court under Articles 226 and 227 of the Constitution of India respectively. Therefore, even if it is accepted that no hearing is given by the Revisional Authority to the petitioners of Special Civil Application No.13490 of 2013 before deciding the revision application, the same would pale into insignificance.

48. For the reasons stated above, Special Civil Application No.13490 of 2013 and Special Civil Application No.7527 of 2013 both are dismissed. Civil Application No.9274 of 2013 would not survive as the main matter is dismissed. It stands disposed of accordingly.

49. As regards Special Civil Application No.13491 of 2013, in view of the scheme of Section 44 of the Act discussed above, no third party is entitled to claim hearing in inquiry under Section 44 of the Act. The Director as also the Revisional Authority were therefore, not justified in permitting the respondent Nos.3 and 4 to be the parties in inquiry to be held against the petitioners. Therefore, Special Civil Application No.13491 of 2013 is required to be allowed. The orders impugned therein dated 16.8.2013 and 30.4.2013 are quashed and set aside.

Sd/-

(C.L. SONI, J.) omkar FURTHER ORDER After pronouncement of the judgment, learned advocate Mr. B.S. Patel for the petitioners in Special Civil Application No.7527 of 2013 and learned senior advocate Mr. Mihir Joshi appearing for the petitioner in Special Civil Application No.13490 of 2013 requested to continue the interim relief operating in the petitions for four weeks.

Such request is opposed by learned Assistant Government Pleader Shri Niraj Ashar as also learned advocates appearing for the opposing parties. However, considering the issue decided, the Court finds that if the status quo as on today is ordered for some time, no prejudice will be caused to either of the respondents. Hence, the respondent State Authorities are directed to maintain status quo, as on today, for a period of two weeks from today.

Sd/-

(C.L. SONI, J.) omkar Page 38 of 38

Unlock Advanced Research with PRISMAI

Gujarat High Court