Gujarat High Court
Shivnagar Seva Sahakari Mandali ... vs State Of Gujarat on 29 November, 2018
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
C/SCA/13797/2007 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 13797 of 2007
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SHIVNAGAR SEVA SAHAKARI MANDALI LIMITED
Versus
STATE OF GUJARAT
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Appearance:
MR BHARAT T RAO(697) for the PETITIONER(s) No.
1,1.1,1.1.1,1.1.2,1.2,1.3,1.4,1.5,1.6,1.7,1.8,1.9
NOTICE SERVED(4) for the PETITIONER(s) No.
1.1.1,1.1.2,1.4,1.5,1.6,1.7,1.8,1.9
MR. RONAK RAVAL, ASST. GOVERNMENT PLEADER(1) for the
RESPONDENT(s) No. 1
MR BS PATEL(602) for the RESPONDENT(s) No. 4
RULE SERVED BY DS(65) for the RESPONDENT(s) No. 1,2,3,4
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 29/11/2018
ORAL ORDER
1. By this writ application under Article 226 of the Constitution of India, the writ applicant, claiming to be a Society registered under the provisions of the Gujarat Cooperative Societies Act, 1961 ( for short "the Act, 1961") and the Rules framed thereunder, has prayed for the following reliefs;
"(A) That the Hon'ble Court be pleased to issue a writ of mandamus or certiorari or a writ in the nature of mandamus or certiorari or any other appropriate writ, order or direction quashing and setting aside the impugned order dated 24th May 2007 passed by respondent No.1 [Annexure 'A'] (B) Pending the hearing and final disposal of the petition, this Honourable court be pleased to stay and Page 1 of 16 C/SCA/13797/2007 ORDER suspend the implementation operation and enforcement of the impugned order dated 24th May 2007, passed by respondent No.1 [Annexure 'A'] (C ) That this Honourable Court be pleased to award costs;
(D) That this Honourable Court be pleased to pass such other and further orders as may be deemed just and proper."
2. The case of the writ applicant, as pleaded in the writ application, is as under;
"4. it is respectfully submitted that the petitioner is a Society registered under the provisions of the Gujarat Cooperative Societies Act, 1961 and the Rules framed thereunder. It is respectfully submitted that, in pursuance of the proposal to register the petitioner-Society made by the District Registrar, Rajkot, respondent No.4 filed objections against registration of the petitioner-Society. Pursuant thereto, the Assistant District Registrar, Rajkot, has called for certain details, clarification and rectification from the Taluka Development Officer, Morbi, vide communication dated 24th April 2006. In pursuance thereof, vide communication dated 8th May 2006, the main promoter of the petitioner-Society filed a detailed reply and rectification thereof with documentary evidence. A copy of the communication dated 24th April 2006 and the explanation in support thereof made by the main promoter of the petitioner-Society is annexed hereto and marked as Annexure "B". Thereafter, the meeting of respondent No.3-Committee was held, with whom powers are delegated to take a decision qua registration of the petitioner Society under the Act and, ultimately, in the meeting of respondent No.3- Committee. it was decided to grant registration to the petitioner-Society. Ultimately the petitioner-Society came to be registered under the provisions of the Act. A copy of the order grating registration of the petitioner-Society is annexed hereto and marked as Annexure "C".
5. Feeling aggrieved and being dissatisfied with the order granting registration of the petitioner-Society at Page 2 of 16 C/SCA/13797/2007 ORDER Annexure "C". respondent No.4 filed Appeal No.78 of 2006 before the learned Additional Registrar, respondent No.2 herein, wherein,.initially an ad-interim order came to be granted by respondent No.2. A copy of the memo of appeal, being Appeal No.78 of 2006 filed by respondent No.4, is annexed hereto and marked as Annexure "D".. It is respectfully submitted that the petitioner Society filed a reply in the said appeal before respondent No.2 on 12th July 2006, dealing with all the contentions raised and the averrments made in the appeal memo and also pointing out the true and correct facts on the record of the case. A copy of the reply filed by the petitioner-Society is annexed hereto and marked as Annexure "E".. Ultimately, after hearing both the parties, by a reasoned and detailed order dated 21" August 2006, dismissed the appeal tiled by respondent No.4. A copy of the order dated 21.8.2006. passed by respondent No.2 dismissing Appeal No.78 of 2006 filed by respondent No.4 is annexed hereto and marked as Annexure "F".
6. Feeling aggrieved and being dissatisfied with the order dated 21.8.2006 passed by respondent No.2 dismissing Appeal No 78 of 2006 filed by respondent No.4 at Annexure "F". respondent No.4 filed Revision Application No.118 of 2006 before the learned Deputy Secretary, Cooperation Department. at Gandhinagar, respondent No.1 herein. Initially, respondent No.1 granted ad-interim relief. A copy of the memo of Revision Application No.118 of 2006 filed by respondent No.4 is annexed hereto and marked as Annexure " G"
7. On 4th October 2006, the petitioner .Society clarified its status to the Revisional Authority, respondent No.1 herein. stating that. now, the petitioner-Society has already started functioning.
8. Ultimately, after hearing the parties, surprisingly, without considering the material and documents on record and detailed reasons given by the learned Additional Registrar, respondent No.2 herein, while dismissing the appeal filed by respondent No.4, respondent No.1 was pleased to allow Revision Application No.118 of 2006 filed by respondent No.4 by the impugned order dated 24'h May 2007, a copy whereof figures at Annexure "A" to the memorandum of the present petition. In the impugned order at Annexure Page 3 of 16 C/SCA/13797/2007 ORDER "A", it has been observed by respondent No.1 that the guidelines issued have not been considered by the Registering Authority; principles of natural justice are vitiated and the recovery proceedings of respondent No.4 would be affected by registration of the petitioner- Society."
3. Mr. Rao, the leaned counsel appearing for the writ applicant vehemently submitted that the State Government committed a serious error in passing the impugned order. According to Mr. Rao, the Society had already started functioning and on the date of the filing of the petition, there were as many as 223 members. Mr. Rao further submitted that the Society also obtained loan from the Central Financing Agency, i.e., the Rajkot District Cooperative Bank Ltd. so as to provide financial assistance to its members. It is pointed out that the financial assistance has been provided to almost 152 members of the Society. According to Mr. Rao, the Society also obtained license for business of chemical fertilizers in its area of operation. According to Mr. Rao, there was no good reason for the State Government to disturb the order passed by the Addl. Registrar, dismissing the appeal filed by the respondent No.4 herein. According to Mr. Rao, past almost 41 years, Panchasar and Shivnagar are two separate villages and the distance between the two villages is about 3 kms. He further pointed out that the population of village Shivnagar is about 3091. In such circumstances, referred to above, Mr. Rao prays that there being merit in this writ application, the same be allowed and the impugned order passed by the State Government be quashed.
4. On the other hand, this writ application has been vehemently opposed by Mr. Chirag Patel, the learned counsel Page 4 of 16 C/SCA/13797/2007 ORDER appearing for the respondent No.4. Mr. Patel would submit that no error, not to speak of any error of law, could be said to have been committed by the State Government in passing the impugned order.
5. According to Mr. Patel, the respondent No.4-Society was registered since a long period of time. Having regard to the population of the village, there was no good reason for the authority to grant conditional registration to the writ applicant. Mr. Patel has placed reliance on the affidavit-in-reply filed by the respondent No.4. The reply reads as under;
"I, Narendrasinh Jhala, s/o. Nathubha Jhala, Hindu, Adult, Residing at village Panchasar, Taluka: Morbi, District Rajkot, do hereby solemnly affirm and state here as under:
1. I am Chairman of respondent No.4 society. I am conversant with the facts of the case. I am also authorized by the resolution of the managing committee of respondent No.4 society to file the present affidavit-in-
reply and I am filing the present affidavit-in-reply as under.
2. At the outset, I submit that the petition is not correct and the same deserves to be dismissed.
3, I deny all the averments and contentions of the petitioner except which are expressly admitted by me hereinafter and my non-dealing with any of the averments and/or contentions para-wise may not be treated as admission thereof.
4. At the outset, I submit that the present petition is not maintainable as the petitioner society is not in existence and by order dated 14.10.2008, the District Registrar, Cooperative Societies, Rajkot had cancelled registration of the petitioner society, copy of which is appended hereto and marked as Annexure-I to this affidavit-in-reply which has never been challenged. Hence, in absence of existence, the present petition deserves to be dismissed Page 5 of 16 C/SCA/13797/2007 ORDER as abated.
5. I submit that what was submitted before the authority by the respondent No.4 society is correct and I stick to the same. The order passed by the State Government exercising the powers under Section 155 of the Act is correct and with jurisdiction. In that event also, the present petition is not maintainable.
6. I submit that the promoters of the petitioner society were politically influenced persons. Even though right to register the society is vested with the Production, Cooperation and Irrigation Committee, Rajkot District Panchayat, under the provisions of the Act, there is no provision for giving conditional registration, the petitioner society had been given conditional registration on 26.6.2006 and the same had been confirmed in the meeting of the Production, Cooperation and Irrigation Committee dated 6.7.2006 by resolution No.60, copy of which is appended hereto and marked as Annexure-II to this affidavit-in-reply. This clearly establishes that the conditional registration had been given which had been confirmed. Hence, conditional registration itself is without jurisdiction and confirmation thereof also is without jurisdiction.
7. I submit that registration of the petitioner society was with a view to have voters in the election of the Agriculture Produce Market Committee, Morbi. Considering the provisions of the Act, the State Registrar had issued the circular on 18/21.7.2003, copy of which is appended hereto and marked as Annexure-III to this affidavit-in-reply.
8. I submit that Shivnagar is an area known in Panchasar village. Almost, all the agriculturists of Shivnagar area are the members of respondent No.4 society and they still continued as members. Previously, there were more members from the same area in the managing committee of respondent No.4 society. Today also, one Laxmanbhai Mohanbhai Amrutiya and Bhavanbhai Kanani are the members of the managing committee of respondent No.4 society. Hence, registration of the petitioner society would amount to dividing respondent No.4 society area wise in the village and it would adversely affect the financial stability of Page 6 of 16 C/SCA/13797/2007 ORDER respondent No.4 society.
9. I submit that everything had been brought to the notice of respondent No.3 by the respondent No.4 society, but for political consideration, the order had been passed. Even, the Rajkot District Cooperative Bank Limited also acted politically with a view to increase the voters; they had also given consent for registration of the petitioner society.
10. I submit that Shivnagar is the part of village Panchasar. For creating evidence, intentionally some of the promoters of the petitioner society had recorded Shivnagar, Post Panchasar, but today also, Shivnagar is an area in village Panchasar and the revenue of Shivnagar area itself is also collected by Panchasar Village Panchayat. Hence, the petition deserves to be:
dismissed.
11. I submit that, at present, there are 365 members in the respondent No.4 society. If the petitioner society is permitted to register again, approximately 150 members will have to join the petitioner society and it would adversely affect the business and financial stability of the respondent No.4 society. Hence also, the present petition deserves to be dismissed."
6. In such circumstances, referred to above, Mr. Patel prays that there being no merit in this petition, the same be rejected.
7. Mr. Ronak Ravel, the learned AGP appearing for the State vehemently submitted that no error, not to speak of any error of law, could be said to have been committed by the State Government in passing the impugned order. Mr. Raval has, by and large, adopted the submissions of Mr. Patel, the learned counsel appearing for the respondent No.4.
8. In such circumstances, referred to above, Mr. Raval prays Page 7 of 16 C/SCA/13797/2007 ORDER that there being no merit in this writ application, the same be rejected.
9. Having heard the learned counsel appearing for the parties and having considered the materials on record, the only question that falls for my consideration is whether the State Government committed any error in passing the impugned order.
10. On 8th June, 2007, a learned Single Judge of this Court passed the following order;
"Heard Mr.Shirish Joshi, learned advocate for petitioner- society represented through its Managing Committee, and Mr.V.C. Vaghela, learned advocate appearing on caveat for respondent no.4. Mr.Vaghela though appearing on caveat is not having any of the documents which he wants to rely upon, like the so called 'conditional' registration certificate and conditional resolution. When asked to produce them Mr.Vaghela submitted that as same was obtained by the petitioner- society it should be asked to produce the same. This is not the way of arguing a matter before the Court. When Mr.Vaghela is appearing on caveat, he should have all papers and particularly the one which he relies upon. The petitioner submitted that the revisional authority without taking into consideration the factual aspects of the matter has passed the order under challenge.
Learned advocate Mr.Joshi invited attention of the Court to the order passed by the appellate authority in Appeal No.78 of 2006, which is found to be much more detailed one wherein very aspect of the matter is considered and dealt as is clear from paras 9.2 and 9.3, etc.
2. Mr.Vaghela submitted that in light of the provision of section 4 of the Gujarat Cooperative Societies Act, 1961 if registration of a new society is going to have an adverse effect upon any existing society then such Page 8 of 16 C/SCA/13797/2007 ORDER registration is not required to be granted. There cannot be second opinion about this proposition of law, but then in the present case the factual position is otherwise, which is reflected by the appellate authority in its well thought and well considered judgement and order dated 21.08.2006. In view of that the matter requires consideration. Rule. Interim relief in terms of para 16(B). Direct service is permitted."
11. The respondent No.4, being dissatisfied with the grant of interim relief, preferred the Letters Patent Appeal No.1127 of 2007. The Letters Patent Appeal No.1127 of 2007 came to be allowed by a Division Bench of this Court vide order dated 8.8.2008. The order reads thus;
'Heard the learned advocates. With the consent of the learned advocates, this appeal is heard and finally decided.
This appeal preferred under Clause 15 of the Letters Patent arises from the order dated 8th June, 2007 made by the learned Single Judge pending the above Special Civil Application No.13797 of 2007. The above writ petition preferred by the respondent no.4 has been admitted to final hearing. Pending the petition, the impugned order dated 24th May, 2007 made by the State Government in Revision Application No.118 of 2006 is stayed.
The dispute arises from the registration of the respondent no.4 Credit Cooperative Society constituted to serve the agriculturists of Shivnagar. It is the claim of the appellant that Shivnagar is part of the village Panchasar. The appellant Society is already functioning for the benefit of the agriculturists of Panchasar village including the agriculturists of Shivnagar since the year 2000. If the respondent no.4 is permitted to be registered, the appellant Society will lose substantial number of its members which would result into unhealthy competition. Besides, the learned Single Judge has granted the interim relief in favour of the respondent no.4 on the sole ground that the appellant Society could Page 9 of 16 C/SCA/13797/2007 ORDER not produce the relevant documents at the time of hearing.
We are of the opinion that the registration of the Society subject to the result of the petition would result into complex questions in case the registration is held to be bad and illegal. It would be the members of the Society whose interest would be gravely prejudiced.
For the aforesaid reasons, the Appeal is allowed. The impugned order dated 8th June, 2007 made by the learned Single Judge insofar as the interim relief has been granted in terms of paragraph 16(B) of the petition in favour of the respondent no.4 is set aside. Interim relief pending the writ petition is refused.
In view of the above order, the Civil Application stands disposed of.
Learned advocate Mr.Joshi appearing for the respondent no.4 requests, this order be stayed for some time. Request is rejected."
12. It appears that after the order came to be passed in appeal vacating the interim relief, which was earlier granted, the District Registrar, Cooperative Societies, Rajkot, vide order dated 14th October, 2008, cancelled the conditional registration of the writ applicant-Society. The operative part of the order passed by the District Registrar, cancelling the registration, reads as under;
"I, G.M. Moliya, District Registrar, Co-operative Societies, Rajkot, by virtue of power conferred u/s 20 of Gujarat Co- operative Societies Act, 1961, revoke the registration of Shri Shivnagar Seva Sahakari Mandali Limited, at Shivnagar, Taluka- Morbi, District - Rajkot.
As per the last balance sheet of Shri Shivnagar Seva Sahakari Mandali Limited, at Shivnagar, Taluka - Morbi, District - Rajkot, capital, liabilities and assets and dues Page 10 of 16 C/SCA/13797/2007 ORDER are hereby assigned to the Rajkot District Co-operative Bank Ltd., Rajkot. "
13. I take notice of the fact that till this date, the order dated 14th October, 2008 has not been questioned or challenged.
14. At this stage, let me look into the impugned order passed by the State Government. The relevant observations in the impugned order are as under;
"To conclude the present matter, it is necessary to peruse the provisions of section-4 of Gujarat Co-operative Society Act-1961. It has been mentioned in section-4 that a society, which has its object to promotion the economic interests or general welfare of its members or of the public, in accordance with co-operative principles, or a society is established with the object of facilitating the operations of any such society, may be registered under this Act. But, it shall not be registered if, in the opinion of the Registrar, it is economically unsound, or its registration may have an adverse effect upon any other society, or it is contrary to public policy.
Looking to the arguments of Ld. Advocate of applicant, Assistant District Registrar, Co-operative Societies and Ld. Advocate of the respondent No. 4, it transpires that applicant society has neither been given an opportunity to make submission nor it has been heard at any stage of the proceedings. If the applicant society has right of any legal provision to object the registration of the respondent No. 4, society in question, the right to object is certainly availed to the extent that the society functioning presently should not be adverse affected by the registration of the new society as provided in section- 4 of Gujarat Cooperative Society Act-1961. Under such circumstance, no any opportunity to make submission has been given.
Provision to give provisional registration has been given in section -9 of Gujarat Cooperative Societies Act - 1961. But, there is no provision to give any conditional registration. Under such circumstances, it appears that Page 11 of 16 C/SCA/13797/2007 ORDER the respondent No. 2 has not taken care of this point.
Shivnagar is not a separate revenue village. Under the given circumstances, the procedure carried out to register the society all of a sudden is also a hurried step. Several members have availed credit from original Panchasar Seva Co-operative Society and the amount remains unpaid. Under the given circumstances, many issues would arise for the original society to recover dues in forming a new society all of a sudden and becoming member in new society.
While registering new society namely Shivnagar Seva Co- operative Society, no objection certificate from original society has not been obtained. The new society has been registered all of a sudden. Hon'ble Justice Shri Akil Kureshi, Gujarat High Court has delivered judgment dated 07-10-2006 wherein guidelines have been given. While registering the said society, Assistant District Registrar and Agriculture Produce, Irrigation and Co- operative Committee have not followed the said guidelines. Hon'ble Justice Akil Kureshi has made suggestions in paragraph 18 to 25 in the judgment. The same have not been complied with by Assistant District Registrar and Defendant No.4.
The Registrar, Co-operative Societies, Gujarat, Gandhinagar has earlier issued written guidelines for registration of societies. The same have not been followed. Under these circumstances, adverse effect has been caused to economic condition of applicant society and procedure of recovery. Applicant society has not been given opportunity to make further representation. Under the given circumstances, following order is passed on the basis of above findings. "
15. I have, to my advantage, a decision of this Court in the case of Nandotra Dudh Utpadak Sahkari Mandali Ltd. vs. State of Gujarat & Ors., reported in AIR 2004 Guj. 253, wherein a learned Single Judge of this Court has observed the following;
Page 12 of 16 C/SCA/13797/2007 ORDER"7. Therefore, in view of the above, what is further required to be considered is the adverse affect and the requirement to form a new society. Merely because there are two groups or one group is having minority and there is some dispute with the other group of majority can not be said to be sufficient circumstances for formation of new society. If there are disputes amongst the members it would be for the members concerned to resort to remedy available under law. At the same time, those who are in majority must see to it that no illtreatment or discriminatory treatment is given to another group which is in minority but such existence of dispute can not be said to be the only yardstick for directing the registration of the society. Right to form an association is a right guaranteed under Article 19(1)(c) of the Constitution subject to restriction. The said restrictions are regulated by the provisions of Gujarat Cooperative Societies Act, 1962 (hereinafter referred to as "the Act"). Section 4 of the Act, interalia, provides for registration. However, the provisio reads as under:
"Provided that it shall not be registered, if in the opinion of the Registrar, it is economically unsound, or its registration may have an adverse affect upon any other society, or it is opposed to, or its working is likely to be in contravention of public policy."
8. The Govt has formed the policy as per circular, dated 8.9.89 and 7.11.1989 by way of guidelines. Further, the Government has also issued circular dated 18-21/7/03 as guidelines for the purpose of granting registration. As per the said circular, it has been, interalia, provided that as far as possible no other cooperative society should be granted registration in the same village, more particularly, in respect of Seva Sahakari Mandalis, Samudayak Kheti(Joint Agriculture) Society, Milk Coop.Society etc. There are disputes between some of the members of the petitioner as well as of respondent No.4 in the same village and it appears that the village is a small village where the population is only 3,182. The Addl.Registrar (Appeals), after considering the matter, had found four important aspects, viz, (i) the Dist.level union did not recommend for registration, (ii) the proposed society is situated at a distance of about 100 Mtrs, (iii) the existence of dispute Page 13 of 16 C/SCA/13797/2007 ORDER amongst the members can not be a only ground for formation of new society, (iv) the existing society has made huge investment of about Rs.17 lacs for modernisation and for establishing cold centre and therefore it will have adverse affect. The perusal of the order passed by the State Govt shows that the State Govt has not at all recorded any any extraordinary or exceptional circumstances for making departure from normal policy or guidelines for granting registration. Not only that, but there is no reference to the aforesaid circulars/policy/guidelines for registration issued in July, 2003. It appears that while considering the matter the State Govt has misdirected itself on the question of minimum eligibility criteria. The minimum eligibility criteria can not be treated as a valid ground for making departure from the normal principles that one society at one village. If it is a village comprising of more population normally exceeding 10,000, the matter would have been different because there are instructions/guidelines issued for such purpose by the authority. Here, it has come on record that it was a small village having population of 3182 persons. Therefore, the minimum criteria provides for functioning of a society can not be treated as a ground for making departure from the normal policy or guidelines of the State Govt. Further, the State Govt has not independently examined the material on the question of adverse affect which was found by the Additional Registrar (Appeals) in the decision in appeal. The aspect which is considered by the State Govt is that even if the District union has not recommended for registration after taking assurance from the society registration can be granted. The main issue which was required to be examined by the State Govt was to ascertain whether the registration to respondent No.4 society will have adverse affect on the functioning of the petitioner society or not, more particularly, when the appellate authority in appeal had examined and had found that it will have adverse affect on the functioning of the petitioner society. Even otherwise also if the record of the present case is examined it primafacie appears that when it is a small village having population of 3182 persons and the society in all is having 365 members and if such 80 persons are excluded who are supplying milk of about 700 Ltrs per day it can reasonably be concluded that the functioning of such new society with such 80 persons will Page 14 of 16 C/SCA/13797/2007 ORDER have adversely affect on the functioning of the petitioner society, more particularly, when it has already made huge investment of about Rs.17 lacs towards modernisation and for establishing cold centre etc.
9. Merely, because there is additional profit of Rs.10,000/- by the petitioner society in my view it can not be concluded that the registration of respondent No.4-society will not have any adverse affect. The adverse affect may be of various types including that of unfair competition. In the present case, as observed earlier, the petitioner society has made huge investment of about Rs.17 lacs, not only that but if out of 365 suppliers of milk 80 are excluded it will have direct bearing on the functioning of the turnover of the petitioner-society. Moreover, in a small village like Nandotra having population of 3186 normally if one society is maintained, it would create not only harmonious atmosphere but would also promote the economic interest of other members and the village."
16. The position, as on date, is that the registration of the writ applicant-Society has been cancelled. It came to be cancelled way back in the year 2008.
17. Mr. Patel, the learned counsel pointed out that almost 115 members, who had got themselves enrolled in the writ applicant-Society are now the members of the respondent No.4-Society. Be that as it may, these are all questions of fact.
18. In my view, no interference is warranted with the order passed by the State Government in exercise of my writ jurisdiction under Article 226 of the Constitution of India. Whether there should be one Society or more than one Society in a particular village is not for this Court to determine. It is for the authorities to look into the same. Having regard to the materials on record, it seems that the villages are side by side. The population is not more than 3000. The respondent No.4- Page 15 of 16 C/SCA/13797/2007 ORDER Society was already in operation much prior to the writ applicant-Society came to be registered. It also appears that Shivnagar is a part of the village Panchasar. This has been observed by the Division Bench while deciding the letters patent appeal. The reasons assigned by the Division Bench while allowing the letters patent appeal are quite germane and I would like to adopt the very same line of reasoning while disposing of the main matter.
19. For the foregoing reasons, this writ application fails and is hereby rejected. Rule is discharged.
(J.B.PARDIWALA, J) Vahid Page 16 of 16