Gujarat High Court
Vipulbhai Mansinhbhai Chaudhary vs State Of Gujarat & 2 on 2 February, 2015
Author: C.L. Soni
Bench: C.L. Soni
C/SCA/2063/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 2063 of 2015
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VIPULBHAI MANSINHBHAI CHAUDHARY....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
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Appearance:
MR NAIK, SR. ADVOCATE WITH MR PS CHAMPANERI, ADVOCATE for the
Petitioner(s) No. 1
MR PK JANI, ADDITIONAL ADVOCATE GENERAL WITH MR. ROHAN YAGNIK,
AGP for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 02/02/2015
ORAL ORDER
[1] Draft amendment is allowed. To be carried out forthwith.
[2] The petitioner who is presently Chairman of the Mehsana District Cooperative Milk Producers' Union Limited has filed this petition challenging the show cause notice dated 12.01.2015 issued by respondent no.2 under section 76B(1)(2) of the Gujarat Cooperative Societies Act, 1961 ('the Act' for short).
[3] The show cause notice is challenged on different grounds including of malafide. I have heard Mr.Naik, learned senior advocate who is appearing with Mr. Champaneri, learned advocate for the petitioner and Mr. Jani, learned Additional Advocate General appearing with Mr. Yagnik, learned AGP on advance copy for respondent no.1.
Page 1 of 8 C/SCA/2063/2015 ORDER[4] Mr. Naik, learned senior advocate for the petitioner submitted that the allegations made in the show cause notice are all pointing to alleged acts of the Sangh and the petitioner as a Chairman has not taken any action so as to warrant action under section 76B(1) (2) of the Act. Mr. Naik submitted that the show cause notice is issued under political pressure just to see that in the forthcoming election the petitioner may not be permitted to take part. Mr. Naik submitted that none of the allegations in the show cause notice would fall within the parameters of section 76B of the Act and therefore, based on such show cause notice, no further proceedings should be permitted against the petitioner. Mr. Naik submitted that in fact there are various provisions in the Act for initiation of appropriate action against the society and only when it is found that a particular officer is responsible for the act of default or causing any loss to the society, action could be taken under section 76B of the Act against him. Mr. Naik submitted that if all actions were taken by collective wisdom by the society (sangh), it could not be said that the petitioner had personally defaulted in performing duty or has acted prejudicially against the interest of the society. Mr. Naik submitted that the show cause notice since can be said to be without jurisdiction, this Court may entertain this petition and prohibit respondent no.1 from proceeding with the show cause notice.
[5] As against above arguments, Mr.Jani, learned Additional Advocate General submitted that the show cause notice clearly states prejudicial acts of the petitioner who has functioned as Chairman of the society. Mr. Jani submitted that the petition Page 2 of 8 C/SCA/2063/2015 ORDER may not be entertained at the stage of show cause notice unless a clear case of lack of jurisdiction is made out. Mr. Jani submitted that the allegations of mala fide are easy to be made by any person facing proceedings under section 76B of the Act or any penal action and simply because mala fide are alleged, that does not mean that the concerned authority has not acted independently. Mr. Jani submitted that the contents of show cause notice would clearly fall within four corners of section 76B of the Act and therefore, this Court may not entertain this petition at this stage.
[6] Having heard learned advocates for the parties and having perused the allegations made in show cause notice, it appears that though the petitioner has alleged legal and factual mala fide in initiation of action by show cause notice under section 76B of the Act, however, at this stage the Court is concerned with the contents of the show cause notice to find out whether the authority is well within its power to issue show cause notice.
[7] In the show cause notice, in each of the issues, alleged act of Chairman is described. From the allegations, it appears that the concerned authority issuing show cause notice is prima facie satisfied to initiate action under section 76B(1) (2) of the Act. It is not the case of the petitioner that respondent no.2 - Cooperation Commissioner and Registrar has no authority to issue show cause notice. What is sought to be contended is that all the allegations made in the show cause notice are as regards decision taken by the society and there is no allegation against the petitioner that in individual capacity, the petitioner has acted in prejudicial manner Page 3 of 8 C/SCA/2063/2015 ORDER against the interest of the society.
[8] This Court has gone through the show cause notice. In issue no.1 of the show cause notice, it is stated that the Chairman has acted against the interest of the members of the society by withdrawing increase in the price of commodity. In issue no.2 of the show cause notice, it is stated that the petitioner is the same person who is Chairman of the GCMMF and Chairman of Mehsana District Cooperative Milk Producers' Union Limited and took illegal decision for the purpose of supply of seeds to Maharashtra and by such decision he has acted against the interest of members of the society. Similarly in issue nos.3 to 5, there are allegations of petitioner acting against the interest of the society. From issue no.6 to 8, it appears that the allegations as regards making illegal recruitment is made against the petitioner. In issue no.9, it is alleged that the petitioner was responsible as a head of the institution to pay more price for purchase of sugar. In issue no.10, it is stated that one Mr.Khengarbhai Desai who was not member of the society was allowed to spend from the society for his journey / travel. Issue no.11 speaks about decision to make unauthorized donation. In all the issues stated in the show cause notice, the petitioner's involvement as a Chairman is alleged.
[9] During the course of hearing, Mr. Champaneri, learned advocate for the petitioner drew attention of the Court to the documents annexed with the draft amendment so as to point out that action taken by the petitioner was for the benefit of the members of the society. Mr. Champaneri submitted that for all the Page 4 of 8 C/SCA/2063/2015 ORDER allegations made in the show cause notice there is lack of inherent jurisdiction of respondent no.2. However, on going through the show cause notice, this Court finds that the petitioner as a Chairman is alleged to have acted against the interest of the society.
[10] In above such view of the matter, it cannot be said that the show cause notice is without jurisdiction to initiate action under section 76B of the Act.
[11] Mr. Naik submitted that all the actions which are part of the show cause notice in respect of which the petitioner is alleged to have acted prejudicially to the interest of the society are permitted under byelaws by the Sangh and the petitioner in individual capacity has not taken any decision. Mr. Naik submitted that similar issue is under consideration before the Division Bench in Letters Patent Appeal and therefore, this Court can certainly entertain the petition and stay the proceedings even at the stage where the authority contemplates to take further action based on the show cause notice.
[12] Mr. Naik relied on the decision of the Hon'ble Supreme Court in the case of Calcutta Discount Co. Ltd. v/s. Income Tax Officer, Companies District I, Calcutta and another reported in AIR 1961 SC 372 so as to lay emphasis on his submission that this Court if finds that the conditions for exercising powers are not satisfied then it can grant relief at the stage of show cause notice in exercise of powers under Article 226 of the Constitution of India.
Page 5 of 8 C/SCA/2063/2015 ORDERThe case relied on by Mr. Naik was in the context of provisions of section 34 of the Income Tax Act. In the said case, the Hon'ble Supreme Court found that the conditions for action under section 34 of the Income Tax Act were not complied and therefore, held that the High Court could have exercised powers under Article 226 of the Constitution of India. In the present facts situation, said decision will have no application.
[13] As against above, Mr. Jani, learned Additional Advocate General has relied on the decision in the case of Vipulbhai Mansinghbhai Chaudhary v/s. G.C.Murmu and Anr. reported in 2007 (3) GLR 2204. Para 38 of the said judgment reads as under : "(38) Section 76B of the Act permits removal of an officer if, in the opinion of the Registrar, any officer - (I) makes persistent default in performance of the duties imposed on the officer by the Act, or the Rules or the Byelaws; (ii) is negligent in performance of the duties imposed on the officer by the Act, or the Rules or the Byelaws; (iii) does anything which is prejudicial to the interests of the society; and (iv) stands disqualified by or under the Act, the Registrar may, after giving officer an opportunity of being heard, remove such officer. Each of the four defaults are in the alternative and though in given set of circumstances there may be some overlapping, yet there could be a situation where any one of the defaults may exist on its own. The contention that there was no breach of any duty on the petitioner in absence of any obligation may be correct in so far as the first two defaults are concerned. However, in relation to a default relatable to an action which is prejudicial to the interests of the society it is not necessary that there should be any duty/obligation cast upon the Page 6 of 8 C/SCA/2063/2015 ORDER officer either under the Act or the Rules or the Byelaws. The petitioner, as head of the Union, was holding a post in fiduciary capacity. Even if there has been no persistent default or negligence in discharge of his duties as chairman of the Union the petitioner has definitely acted in a manner which is prejudicial to the interests of the society. Employment of a person entails financial liability for a substantial period of time on a permanent basis. Employment of 461 persons would definitely be adverse to or prejudicial to the interests of the Union, unless and until it is shown that the recruitment of these many persons was warranted by facts and circumstances; it is shown that not only was the recruitment necessary and in interest of the Union, but the persons so employed were qualified and capable of handling the work assigned to each one of them. In absence of any such details being provided by the petitioner, despite having been called upon to do so, the respondent authority was justified in raising an adverse presumption and exercising powers under Section 76B of the Act."
[14] In the case of Bellary Steels and Alloys Limited v/s. Deputy Commissioner, Commercial Taxes (Assessments) and Others reported in (2009) 17 SCC 547 relied by Mr. Jani, learned Additional Advocate General, the Hon'ble Supreme Court has observed in paragraph no.3 as under : "3.Before concluding, we may state that we have allowed the appellant(s) to withdraw the original Writ Petition as the said proceedings came to be filed against show cause notice. We have repeatedly held that in the absence of factual foundation, it would be impossible to decide matters of this kind. When doctrine of promissory estoppel is invoked, the doctrine needs to Page 7 of 8 C/SCA/2063/2015 ORDER be based on factual data which has not been pleaded. The High Court should not have interfered in the matter. In these cases, the writ petition was filed without reply to even the show cause notice. In the circumstances, we could have dismissed these Civil Appeals only on the ground of failure to exhaust statutory remedy, but for the fact that huge investments involving the large number of industries is in issue."
[15] In light of above and having regard to the contents of the show cause notice, this Court is of the view that the petitioner has not made out any case for restraining or prohibiting respondent no.2 from proceeding further with the show cause notice.
In view of above, the petition is dismissed.
Mr. Champaneri, learned advocate for the petitioner at this stage request to stay the operation of this order. Such request is totally misconceived as this Court except not entertaining the petition has not passed any other order. Therefore, the request is rejected.
(C.L.SONI, J.) satish Page 8 of 8