Gujarat High Court
Jivan Commercial Co-Operative Bank ... vs State Of Gujarat on 6 February, 2020
Author: A.Y. Kogje
Bench: A.Y. Kogje
C/SCA/18717/2019 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 18717 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18714 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18715 of 2019
With
R/SPECIAL CIVIL APPLICATION NO. 18720 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.Y. KOGJE
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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JIVAN COMMERCIAL CO-OPERATIVE BANK LTD.
Versus
STATE OF GUJARAT
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Appearance:
MR NAVIN PAHWA, SR ADVOCATE WITH MR ANAND B GOGIA(5849) for
the Petitioner(s) No. 1
MR BB GOGIA(5851) for the Petitioner(s) No. 1
MS MUSKAN A GOGIA(6624) for the Petitioner(s) No. 1
MR KM ANTANI, AGP for the Respondent(s) No. 1,2,3
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CORAM: HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 06/02/2020
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ORAL JUDGMENT
1. RULE. Learned AGP waives service of Rule on behalf of the respondents.
2. This group of petitions is filed against direction of the respondent which has the effect of doing away with the system of electing delegates from the individual members of the primary societies as per their bye-law and is therefore challenging the decision of the Deputy Secretary and the State Government in upholding such decision.
3. All these petitions are raising the same questions of facts and are contested on the same issues, all these petitions are taken up for joint hearing and disposal at the request of both the sides. The facts are taken from the lead matter Special Civil Application No.18717 of 2019.
4. This petition is filed challenging the decision of the respondent no.2 by its order dated 29th JUNE 2019 in Appeal/ Revision No.36 of 2011 by which the directions of respondent no.3 in its order dated 26th November, 2010 is confirmed. The effect of such order is to take away the Right of the petitioner society to elect certain members amongst all its members as the delegates of the society.
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C/SCA/18717/2019 JUDGMENT 5. Learned advocate for the petitioner submits that the
petitioner is a Co-operative Bank under Gujarat Co-operative Societies Act, 1961 having its branches at various places within Gujarat and it is a primary society. It is submitted that as provided for the petitioner society is having its own bye-law approved by the Registrar of Co-operative Societies. It is submitted that as per bye-law no.18(3) of the Society bye-law an election of delegates of the members to take part in the General Meeting of the Society is provided for. It is submitted that bye-law no.18/4 provides for rotation of such delegates members.
6. It is submitted that the District Registrar Rajkot wayback in the Year 1967 had instructed all the Co-operative Societies to amend their bye-laws for the purpose of carrying out elections of delegates of the members to represent in the Annual General Meeting who in-turn would elect the committee members. It is submitted that since the Year 1967 for more than 50 years such bye-laws has prevailed and put in practice without any hindrance.
7. It is submitted that Section 73 of the Co-operative Societies Act provides for a final authority of every society to vest in the General Body of the Society and therefore, any society governed under the Co-operative Societies Act has ample powers to frame its own bye-laws to manage its own affairs. It Page 3 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT is submitted that in exercise of powers under Section 160 of the Co-operative Societies Act, the Registrar Co-operative Societies ordered discontinuing of the prevailing system of electing delegates amongst the voters. It is submitted that for passing such orders the Registrar had relied upon Rule-15 of Gujarat State Co-operative Societies Rules. It is submitted that there was no occasion for the Registrar of Co-operative Societies to exercise the powers under Section 160 of the Co- operative Societies Act. It is submitted that to pass such an order the Registrar has erroneously interpreted rule-15 as according to the petitioner Rule-15 should apply only in cases of Federal Societies and what is provided for the Federal Societies cannot be directly imported for the primary societies when there is no specific provisions for such inclusions. It is submitted that the Deputy Secretary, Appeals has not considered the arguments and the question of law involved but by simply accepting the reasonings of the Registrar, dismissed the Revision application of the petitioners. Learned advocate has raised a question for consideration that in absence of any specific provision the practice of appointing delegates amongst the members cannot be discontinued only on the basis that a specific provision is made to that effect for Federal type of societies.
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C/SCA/18717/2019 JUDGMENT
8. Learned AGP opposing the petition submits that there cannot be estoppel against law and the law pertaining to appointment of delegates is governed under Rule-15 of the Gujarat Co- operative Societies Rules, 1965 the delegation is circumscribed by Rule-15 alone. Rule-15 provides for a voting rights of an individual member in Federal Society and therefore where there is an issue of electing delegates, the same would be governed under Rule-15 and Rule-15 covers only Federal Societies. Therefore by necessary implication the primary societies which are not covered under Rule-15 cannot be said to have any authority to elect the delegates.
9. Having heard learned advocates for the respective parties and having perused the documents on record. It appears that the petitioner is a Co-operative Bank registered under the provisions of Gujarat Co-operative Societies Act and the petitioner Bank is having several branches within district of Rajkot, Morbi etc. It is not in dispute that the petitioner society is having its own bye-laws which are framed and approved by the Registrar. The society has been in operation and is being governed by such bye-laws since its inception. The practice of electing delegates amongst its voters to be represented by such delegates is provided for under bye-law no.18(3)(4)(5)(6) which reads as under:
"(3) One group for every five hundred members shall be formed on 31st of March out of the membership register of the Page 5 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT previous entire financial years of the bank. All such group shall elect three delegates from them through ballet system.
Remaining number (if any) after formation of groups in proportion of every five hundred members, shall be clubbed in the closest group. Member of one group could register his candidature for another group but he could not register his candidature for more than one post. (Approved w.e.f.
05/08/2005) (4) Bank Meetings:-
General Body, meetings of the bank members:
1/3rd delegates, out of delegates elected as per Sub- section-18(3), shall be retired every three years and election shall be held for the post of said 1/3rd delegates and retiring delegates could register their candidature again subject to Section-18(3). (Approved w.e.f. 17/07/2001) (5) Circumstances under which the post of the delegate shall be considered as vacant (Before expiry of delegate membership) (1) if he resigns by giving written notice and it is approved by the general body;
(2) if he is removed as per the provision of Section-36 of the act;
(3) if he is an original debtor and becomes an overdue debtor after expiry of tenure;
(4) if he is convicted by a Criminal Court for offence of moral turpitude;
(5) if he is declared bankrupt by Court having jurisdiction;
(6) if he is lunatic or has unsound mind; (7) upon death; (8) if he remains absent in four successive meetings; (9) Each delegate of member group shall attend minimum Page 6 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT
two meetings out of five consecutive annual general meetings. Or he shall make minimum use of facilities of objectives of by-laws registered by the organization. As an alternative, membership shall be terminated as per the provision of Section 28-A of the Act.
(Added w.e.f. 01/03/2014) (6) A member cannot contest as a delegate if he has availed any kind of loan or credit facility and installments of such loan or credit facility are overdue; or such loan or credit facility is not renewed upon end of its tenure and interest thereof is accrued in said loan account; or he has provided guarantee towards loan or credit facility availed by other member and installments of such loan or credit facility wherein he is a guarantor are overdue or such loan or credit facility is not renewed upon end of its tenure and interest thereof is accrued in said loan account wherein he is a guarantor. In case of partnership firm, partners of the firm cannot contest as candidate for delegate if installments of any kind of loan or credit facility availed by the firm are overdue;
or such loan or credit facility is not renewed upon end of its tenure and interest thereof is accrued in said loan account."
10. Bye-law 19 further defines the rotation and requirement of the delegates.
(19) General Body shall carry out below given functions:
1) To approve procedures of final general meeting.
2) To obtain financial report for previous year, balance sheet and profit/loss report from the Board of Directors and to approve distribution of profit.
3) To declare result of election or hold election for anyone leaving from the Board of Directors subject to Sub Rule - 28(1).
4) To decide rules regarding election of members of
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Board of Directors. But, such rules shall come into effect only after getting approval from Assistant District Registrar, Cooperative Societies or competent officer from Cooperative Department.
5) To appoint auditors to check bank accounts for next year and to decide their payment.
6) By virtue of special resolution passed by General Body, special General Body has authority to hear appeal of Directors against functions of Board. If there is any such an appeal, it shall be heard.
7) To consider bank accounts sent by the Registrar, other correspondences, list of account checking and any other work produced by the bank and to pass proper resolution.
8) If any member sends resolution regarding banking work to the Managing Director or Manager 21 days prior to the date of general meeting, add the same to agenda of annual general meeting. Besides that, if the President of the bank allows to produce other work in the interest of the bank, same may be considered and dispose of it. But, such work shall not involve modification in by-laws.
9) To approve modifications in by-laws of the bank produced by the Board with 2/3 votes of present members."
11. It is also not in dispute that way back in the Year 1967 by a letter no.-NAVAN/NABAS/3/4664/1967 dated 25.09.1967 all the Co-operative Societies were required to amend their bye-laws for the purpose of electing the delegates of members elected in the Annual General Meeting who would in turn elect the committee members, therefore the practice of electing delegates has been in vogue since more than 50 Page 8 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT years supported by the bye-laws and accepted and approved by the authorities since 1967. Section 73 of the Gujarat Co- operative Societies Act is a specific provision of declaring the final authority of the society to vest in the General Body of the members. It provides for that the final authority of every society shall vest in the General Body of the members in General Meeting and summoned in a manner specified in the bye-laws. It further provides that where bye-laws of the society provide for the election of delegates of such member the final authority may vest in the delegates of such members elected in the prescribed manner assembled in General Meeting. Meaning thereby, bye-law no.18(3) of the petitioner Society is recognized by law under the authority provided under Section 73 and Proviso to Section 73 permits and recognizes the existence of delegate members.
12. The impugned order of the Registrar relying upon Rule- 15 of the Gujarat Co-operative Societies Act appears to be unfounded. Rule-15 which provides for voting right of an individual member is specifically made for the purpose of Federal Society. Non-inclusions of the primary society like the petitioner in Rule-15 would not automatically render the Proviso to Section 73 a nullity. The Court has taken into consideration the notification dated 15th July, 1976 by which Rule-15 came to be substituted does not mention in its Page 9 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT statement of object anything to specifically exclude primary society from being included in Rule-15. In any case in the opinion of the Court when Rule-15 is made to operate for the purpose of Federal Society and Rule-15 provides for election of delegates, non inclusion of primary of society in Rule-15 will not render the practice of the primary societies under its bye- laws as against the law especially when Section 73 and its Proviso continues to exist in the statute book. The impugned order of the Registrar therefore cannot be sustained.
13. Where the provisions for management of the society is made under the bye-law and the bye-laws are approved and are in operation under the provisions of Gujarat Co-operative Societies Act and when such bye-law is to be either deleted from the bye-laws in any manner then such provisions are made in the Gujarat Co-operative Societies Act itself and remedy is available for objecting to such bye-laws by the aggrieved persons but when there is no grievance by the members of the society under Section 160, or that keeping in operation such bye-law and its implementing is not specifically held to be detrimental to interest of the society, it is not open for Registrar to take on himself to issue the directions to render an existing bye-law ineffective, to that extent also the Court is of the view that in the present case the Registrar appears to have exceeded his jurisdiction. It is more so, as the Page 10 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020 C/SCA/18717/2019 JUDGMENT impugned directions are in effect deleting particular bye-law from the approved bye-laws of the society by the Registrar.
14. In view of the foregoing discussion, the impugned order dated 29.06.2019 passed by respondent no.-2-Deputy Secretary (Appeals), Agriculture & Co-operative Department in Appeal/ Revision Application No.36 of 2011 and the order of direction dated 26.11.2010 passed by respondent no.3-Co- operative Societies are ordered to be quashed and set aside.
15. Rule made absolute. Direct Service is permitted.
(A.Y. KOGJE, J) URIL RANA Page 11 of 11 Downloaded on : Sun Jun 14 07:19:35 IST 2020