Gujarat High Court
Vipulbhai M Chaudhary vs State Of Gujarat & 2 on 26 April, 2017
Equivalent citations: AIR 2018 (NOC) 77 (GUJ.)
Author: S.G. Shah
Bench: S.G. Shah
C/SCA/1577/2017 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 1577 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.G. SHAH
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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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VIPULBHAI M CHAUDHARY....Petitioner(s)
Versus
STATE OF GUJARAT & 2....Respondent(s)
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Appearance:
MR MIHIR J THAKORE, SENIOR ADVOCATE WITH MR CP CHAMPANERI,
ADVOCATE for the Petitioner(s) No. 1
MR PRAKASH JANI, ADDL.ADVOCATE GENERAL WITH MR ROHAN
YAGNIK, AGP for the Respondent(s) No. 1
NOTICE SERVED BY DS for the Respondent(s) No. 1 - 3
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CORAM: HONOURABLE MR.JUSTICE S.G. SHAH
Date : 26/04/2017
ORAL JUDGMENT
1. Heard learned senior counsel Mr. Mihir J. Thakore with learned advocate Mr. C. P. Champaneri for the petitioner and learned Addl.
Advocate General Mr. P. K. Jani assisted by
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learned AGP Mr. Rohan Yagnik for the respondents. Perused the record.
2. The petitioner herein has prayed for appropriate writ, order or direction in the nature of mandamus or any other appropriate writ, order or direction to quash and set-aside the impugned order dated 13.1.2017, copy of which is produced at Annexure-A, issued by Registrar, Co- operative Societies for initiating proceedings u/s.93 of The Gujarat Co-operative Societies Act, 1961 ('the Act', for short). It is disclosed in such impugned order that as per the details disclosed in the show-cause notice dated 13.6.2016, prima facie it appears that the Mehsana District Co-operative Milk Producers' Union Ltd. has suffered loss of Rs.41,83,68,951/- when petitioner was Chairman of such Society and therefore, it is necessary to inquire about the liability and responsibility of the petitioner and to recover the loss suffered by the co- operative society i.e. Mehsana District Co- operative Milk Producers' Union Ltd. For the purpose, the Registrar of Co-operative Societies i.e. respondent No.2 herein has appointed one Shri S. N. Joshi, District Registrar of Co- operative Societies (Liquidation - 2) of Ahmedabad as investigating officer with a direction to complete his investigation within 30 days and to submit his report of investigation with supporting evidence and documents in two Page 2 of 34 HC-NIC Page 2 of 68 Created On Sun Aug 13 05:26:40 IST 2017 2 of 68 C/SCA/1577/2017 JUDGMENT copies before the Registrar i.e. respondent No.2.
3. The petitioner has also prayed for appropriate writ, order or direction in the nature of mandamus or any other appropriate writ, order or direction to quash and set-aside the show-cause notice dated 13.6.2016 issued by respondent No.2 u/s.93, copy of which is produced at Annexure-B. The reference of such show-cause notice is already there in Annexure-A, and therefore, its details are not reproduced. However, it is clear that such show-cause notice is based upon the same facts, which are referred with reference to Annexure-A regarding huge loss to the co-operative society of which the petitioner was Chairman at the relevant point in time.
4. Therefore, before discussing the facts, details and law points raised by the petitioner, now, one thing is quite clear and obvious that though by order dated 13.6.2016, petitioner was called upon to show cause that why proceedings u/s.93 should not be initiated. When petitioner could not submit reasonable and acceptable explanation or reason to avoid further proceedings u/s.93, the respondent No.2 has issued the impugned order on 13.1.2017 i.e. almost after six months, and therefore, prima facie when petitioner is challenging the show- cause notice also, it becomes clear that petitioner is yet to submit his case before the Page 3 of 34 HC-NIC Page 3 of 68 Created On Sun Aug 13 05:26:40 IST 2017 3 of 68 C/SCA/1577/2017 JUDGMENT competent statutory authority to explain his case that why such proceedings should not be initiated. But, it seems that the petitioner, who is having full financial support to agitate each and every issue at each and every stage upto highest level, so as to get the process delayed wherein there is probability of fixing of his liability for several misdeeds and even if there is no misappropriation, then, huge loss to the co-operative society, wherein milk producers of the entire district are members and when such society is being formed mainly for the benefit of such milk producers so that they get maximum benefit of their produce.
5. It is undisputed fact that the present petition is preferred under Articles 226, 14, 19 and 21 of the Constitution of India read with the provisions of the Act and provision of the Rules thereunder, namely, Gujarat Co-operative Societies Rules, 1965.
6. Therefore, one thing is quite clear and obvious that at this stage, when there is prima facie evidence available with the respondents, that there is huge loss to the members of the co- operative society of which the petitioner was Chairman at the relevant time and that probably petitioner is responsible for such loss, irrespective of legal technicalities, atleast there is a reason to initiate some proceedings, though within the framework of the legal Page 4 of 34 HC-NIC Page 4 of 68 Created On Sun Aug 13 05:26:40 IST 2017 4 of 68 C/SCA/1577/2017 JUDGMENT provision, so as to find out that who is responsible for such loss and how to recover such loss and from whom. Therefore, irrespective of rival submissions, if at all petitioner is of the opinion that he is not responsible for any such alleged loss to the society, then, he should not bother and on the contrary as Chairman of such co-operative society, which has incurred huge financial loss, he should come forward to find out the real culprit, so as to ascertain that how such huge loss has been suffered by the co- operative society and how and from whom, the same can be recovered. Needless to say, such exercise is to be carried out certainly in accordance with law and within the provisions of law, and thereby, not in arbitrary manner or in colourable exercise of powers by the respondents as alleged by the petitioner.
7. In view of above facts and circumstances, though factual details are argued before this Court and though it would be discussed to some extent, it would be appropriate to make it clear that discussion and observation of factual details is for limited purpose and to the extent of referring the submissions and arguments of both the sides, but, otherwise, it does not form any final opinion on such factual details, and therefore, when petitioner is otherwise entitled to disprove and rebut the allegations by the respondents, it would be open for the petitioner to prove his case before the competent authority Page 5 of 34 HC-NIC Page 5 of 68 Created On Sun Aug 13 05:26:40 IST 2017 5 of 68 C/SCA/1577/2017 JUDGMENT in appropriate proceedings and in accordance with law.
8. Thereby, now, it becomes clear that at present, we are at the stage where the competent authority is yet to initiate the proceedings, which would start only after serving the show- cause notice, and therefore, so far as discussion of factual details is concerned, it would certainly be premature at this stage and need not be determined finally so as to avoid prejudice to either side.
9. However, before concluding that there is no reason to grant any interim relief at this stage as prayed for in prayer clause 9(D), so as to stay the implementation and execution of the impugned order dated 13.1.2017, one has to scrutinize the factual details and consider the rival submissions for arriving at a final determination.
10. The sum and substance of the petitioner's case is to the effect that:-
a. Pursuant to provision of Section 93 of the Act, before initiating any proceeding under such section, there must be a report made by the Auditor or the person authorised to make inquiry u/s.86 of the Act or the person authorised to inspect the books under Sub-Section (8) of Sections 84, 87 or 88 or the Liquidator u/s.110 Page 6 of 34 HC-NIC Page 6 of 68 Created On Sun Aug 13 05:26:40 IST 2017 6 of 68 C/SCA/1577/2017 JUDGMENT of the Act. However, in the present case, there is no such report by any such authority, and therefore, the impugned order is bad in law.
b. The impugned order is referring three irregularities or misdeeds viz. (1) financial loss to the tune of Rs.22,50,27,628/- by providing 13731 Metric Tonne of Cattle Feed (Food) (Sagar Dan) to the State of Maharashtra during drought period. (2) there was absence of 2157733 Kgs. of raw-materials for such cattle feed (Sagar Dan) compared to the stock register as on 15.9.2015, and thereby, such quantity of raw-materials was either not purchased at all and its price being Rs.2,06,91,904.50 was paid or was siphoned off, which resulted into misappropriation of its value and (3) for the period between 1.4.2012 to 6.1.2014, sugar was purchased without following the approved purchase procedure through particular agencies with whom there was collaboration. During such irregularity in purchase of sugar, price of the sugar was paid higher than the market rate to the tune of Rs.17,26,50,429/-. Therefore, total loss to the society because of such irregularities comes to Rs.41,83,68,951.05.
c. Amongst above three irregularities, it is submitted that there is reference of audit report so far as first irregularity regarding 13731 Metric Tonne cattle feed is concerned, and Page 7 of 34 HC-NIC Page 7 of 68 Created On Sun Aug 13 05:26:40 IST 2017 7 of 68 C/SCA/1577/2017 JUDGMENT therefore, it is submitted that remaining two irregularities cannot be included in impugned orders i.e. show-cause notice and order of initiating inquiry u/s.93 of the Act.
d. It is submitted that for the first irregularity of mishandling of 13731 Metric Tonne of cattle feed, respondent No.3 has already lodged a complaint on 21.1.2014 being C.R. No.I- 18 of 2014 before Mehsana 'B' Division Police Station u/ss.406, 420, 120B, 465, 468, 471 and 114 of the Indian Penal Code, and therefore, when respondent No.3 himself is complainant in such FIR, he cannot act as an Investigating Officer u/s.93 as per the impugned order. Learned senior advocate Mr. Mihir Thakore has referred relevant provisions of law and documents in support of above issues raised by the petitioner and contended that:-
i) the complainant himself cannot investigate the case, which amounts to breach of principle of natural justice, compliance of which is basic requirement of our jurisprudence;
ii) when complaint is filed, there is no need to proceed further u/s.93 of the Act since it amounts to double investigation of the same cause;
iii) there is no reference in the impugned order, and thereby, no consideration of any report of Page 8 of 34 HC-NIC Page 8 of 68 Created On Sun Aug 13 05:26:40 IST 2017 8 of 68 C/SCA/1577/2017 JUDGMENT any competent authority as referred in Section 93 of the Act so far as alleged misdeed with reference to stock of raw-materials for cattle feed or for the purchase price of sugar, and therefore, though the impugned order is bad even with regard to first issue regarding mishandling of 13731 Metric Tonne Sagar Dan, it cannot sustain for these two issues;
iv) audit report referred in issue No.1 is also confirming that there is no misappropriation, and therefore, when there is absence of prima facie evidence regarding misappropriation, there is no reason to proceed further for any inquiry as contemplated by impugned orders.
11. However, I do not find any reason or substance in any of such ground, which are discussed hereinafter.
12. So far as misdeeds of co-operative societies are concerned, the Act is a complete code in itself for dealing with different issues arising from different kind of administrative functions and business of the co-operative societies, and therefore, in absence of any irregularity, arbitrariness, perverseness or otherwise in impugned order, there is no reason to interfere with any such impugned order, more particularly, at such stage when only show-cause notice is issued and only when inquiry u/s.93 is initiated, wherein actual facts and details are to be Page 9 of 34 HC-NIC Page 9 of 68 Created On Sun Aug 13 05:26:40 IST 2017 9 of 68 C/SCA/1577/2017 JUDGMENT scrutinized so as to determine that, who is responsible for such misdeeds, which may result into misappropriation, and thereby, loss to the co-operative society. At such stage, if there is interference, then, it amounts to interference during investigation, inquiry and trial to find out the culprit and to make good the loss to the society i.e. remedial proceedings, which are quasi-judicial in nature. Hence, position would be different if there is a conclusive report u/s.93 that petitioner has indulged in any irregularities and committed misdeeds, which has resulted into either misappropriation or only loss to the co-operative society, and thereby, if he has been held responsible and liable for such misdeed, misappropriation or loss, and thereby, if there is an order to recover such loss from him, though it can be said that even during such investigation, if there is arbitrariness, irregularity and illegality, it must be scrutinized by the courts under its constitutional powers; the fact remains that there must be specific independent and cogent evidence to confirm that there is arbitrariness or irregularity in any manner whatsoever.
13. Though it is submitted that there is arbitrariness and illegality, the scrutiny of record confirms that in fact there is lack of any evidence or details, which may compel the Court to consider that there is arbitrariness or any Page 10 of 34 HC-NIC Page 10 of 68 Created On Sun Aug 13 05:26:40 IST 2017 10 of 68 C/SCA/1577/2017 JUDGMENT illegality in the impugned order.
14. To allege arbitrariness and illegality, the issues raised by the petitioner are to the effect that respondent No.3 cannot act as a competent authority to proceed further in inquiry u/s.93 as per the impugned order, when he is complainant in FIR being C.R. No. I - 18 of 2014. However, so far as such allegations are concerned, at the initial stage of active hearing, learned Addl.Advocate General Mr. Prakash Jani has already disclosed and passed on a copy of the order dated 8.2.2017 by respondent No.2 whereby respondent No.2 has already handed-over the investigation as per the impugned order to one Mr. I. G. Munia, District Registrar of Co- operative Societies for Panchmahal District. Copy of such communication is to be taken on record. Therefore, pursuant to such order dated 8.2.2017, when, now, respondent No.3 is not to proceed further u/s.93 as per the impugned order, such contention does not remain in force.
15. Even after such disclosure, it has been contended by the petitioner that the day when impugned order was passed, when respondent No.3 cannot proceed further u/s.93 against the petitioner being complainant in FIR being C.R. No. I-18 of 2014, the impugned order needs to be quashed and set-aside. I do not find any substance in such submission also, for the simple reason that irrespective of change in officer and Page 11 of 34 HC-NIC Page 11 of 68 Created On Sun Aug 13 05:26:40 IST 2017 11 of 68 C/SCA/1577/2017 JUDGMENT submission of the petitioner, it cannot be ignored that it is not the case before us wherein respondent No.3, who is now not in charge of the investigation, has to inquire the matter for arriving at a conclusion that who should be punished for committing the offence under the IPC as per the his complaint, but his jurisdiction is altogether different i.e. to verify that who is responsible for such loss and from whom it can be recovered in benefit of the co-operative society. Therefore, this is a case, as repeatedly argued that the complainant cannot be the investigator and judge of his own cause. In other words, it becomes clear that the complaint filed by respondent No.3 is for criminal liability of concerned person, wherein the investigation is to be carried out not by respondent No.3 on his own, but it would be carried out by the investigating agency being police department as per our statute and their prosecution would also be initiated by the police department being investigating and prosecuting agency and the issue to be decided, based upon such investigation, is also different, that whether culprit is to be punished by awarding conviction and sentence as provided under the IPC. Therefore, based upon the First Information Report No. 18 of 2014, investigation is to be carried out by the police to find out that whether there is any misappropriation or not and if it is so, who is responsible for such misappropriation so as to convict him.
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16. Whereas in the Co-operative Societies Act, pursuant to the impugned order, the respondent No.2 has to inquire that how society has suffered the loss, to what extent and because of whom and how it can be recovered. Thereby, there is basic difference between both the investigations, and therefore, when respondent No.2 is not to investigate the mens-rea and it is to be decided by the competent criminal Court, that whether culprit should be punished or not, and thereby, when he has to only decide that how loss can be compensated in regard to the misapplication, retention, misfeasance or breach of trust, the impugned order cannot be bad in law when it allows the respondent No.2 to investigate and to decide that how such loss as aforesaid is to be compensated.
17. So far as source of information in the proceedings under the Act is concerned, in fact, it is in the form of audit report and other reports as contemplated u/s.93, whereas so far as source of information for conducting investigation for criminal proceedings, may be FIR by the competent officer, who has to file the complaint because of his statutory duty.
18. At this juncture, it would be appropriate to recollect the provision of Section 93 of the Act, which reads as under:
"Section 93: Power of Registrar to assess Page 13 of 34 HC-NIC Page 13 of 68 Created On Sun Aug 13 05:26:40 IST 2017 13 of 68 C/SCA/1577/2017 JUDGMENT damages against delinquent, promoters, etc.:-
Where, in the course of or as a result of an audit under Sec. 84, or an inspection under sub-sec. (8) of Sec. 84, or an inquiry under Sec. 86 or an inspection under Sec. 87 or Sec. 88, or the winding up of a society, the Registrar is satisfied on the basis of the report made by the auditor or the person authorised to make inquiry under Sec. 86, or the person authorised to inspect the books under sub-sec. (8) of Secs. 84, 87 or 88 or the Liquidator under Sec. 110,that any person who has taken any part, in the organisation 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 Registrar or a person authorised 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 representative who inherits his estate, to answer the charges make an order 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 authorised 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.
(1) The Registrar or the person authorised under sub-section (1) in making any order Page 14 of 34 HC-NIC Page 14 of 68 Created On Sun Aug 13 05:26:40 IST 2017 14 of 68 C/SCA/1577/2017 JUDGMENT under this section, may provide therein for the payment of the costs or any part thereof of 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 (2) This section shall apply, notwithstanding that the Act is one for which the person concerned may be criminally responsible."
19. Bare reading of the above provision of Section 93 makes it clear that the Registrar i.e. respondent No.2 herein or a person authorised by him in that behalf, may investigate the conduct of such person or persons within a period of five years prior to the date of order to audit, inquiry, inspection or order for winding-up, who has taken any part in the organization or management of the society or even any deceased or past or present officer of the society, so as to verify that whether such person has 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. So far as audit, inquiry, inspection or order for winding-up is concerned, there is reference of Sections 84, 86, 87 and 88 since all such basic or primary information or prima facie evidence would be available in any such document. The Sub-Section (1) of Section 93 is basically in 4 parts, amongst which two parts are as described herein Page 15 of 34 HC-NIC Page 15 of 68 Created On Sun Aug 13 05:26:40 IST 2017 15 of 68 C/SCA/1577/2017 JUDGMENT above, whereby we reached upon the authority of Registrar to initiate inquiry either on his own or by a authorised person and basic requirement before initiating any such investigation. So far as remaining two parts are concerned, the Section specifically provides that while initiating such investigation, the investigating officer has to frame charges against such person and after giving reasonable opportunity to the concerned person to answer the charges, make an order requiring him (such person) to repay or restore the money or property or any part thereof, with interest at such rate as he under this Section may determine or to contribute such sum to the assets of the society by way of compensation in regard to misapplication, retention, misfeasance or breach of trust, as he may determine.
20. Therefore, at this stage of show-cause notice and calling upon the petitioner by affording reasonable opportunity to explain that why order u/s.93 of the Act should not be passed, it cannot be said that such order by respondent No.2 is illegal or arbitrary and there is irregularity when respondent No.3 is authorised by respondent No.2. So far as such authorisation is concerned, the basic principle of law is quite clear that such authorisation can be changed at any point of time, and therefore, now, when it is clear on record, that such authorisation is changed by order dated 8.2.2017, copy of which is taken on record, and thereby, now, when respondent No.3 Page 16 of 34 HC-NIC Page 16 of 68 Created On Sun Aug 13 05:26:40 IST 2017 16 of 68 C/SCA/1577/2017 JUDGMENT has not to proceed further u/s.93 of the Act, there is no ground available to the petitioner to get any relief in his favour in this petition based upon such ground.
21. Similarly, as discussed herein above, there is no irregularity or illegality in initiating proceedings u/s.93 when there is prima facie evidence in different form like audit report, inquiry report and inspection report, which is referred herein after, and therefore, there is no reason to interfere with impugned order.
22. Learned Addl.Advocate General Mr. Jani has submitted the same concept, but from different perspective and there is substance in such submission, when it is submitted that in fact, the act is a complete code in itself so far as the management and administrative activities of co-operative societies are concerned, and therefore, practically, the proceedings u/s.93 is to some extent, like a proceedings before the Civil Court where both the parties have to prove the case and thereafter, the competent authority being Registrar or authorised person has to decide that if at all there is any misapplication and retention of any money or property of the society, then, who is liable or accountable or guilty of misfeasance or breach of trust in relation to the society and on arriving at a conclusion on such issues, after giving reasonable opportunity to such parties, there Page 17 of 34 HC-NIC Page 17 of 68 Created On Sun Aug 13 05:26:40 IST 2017 17 of 68 C/SCA/1577/2017 JUDGMENT would be an order to determine such sum and a direction to repay or restore the money or property or any part thereof with interest or to contribute such sum to the assets of the Society by way of compensation by way of compensation in regard to misapplication, retention, misfeasance or breach of trust, as the case may be. Therefore, it is submitted that the petition is quite premature inasmuch as it is at the stage of show-cause notice and initiation of proceedings u/s.93 only wherein petitioner is free to submit his case before the Registrar to prove that he is not liable or accountable and that he has not retained any money or property of the society or that he is not guilty of misfeasance or that there is no breach of trust committed by him in relation to the society.
23. It cannot be ignored that there is information from different sources of different audit, inquiry and inspection report that the society in question has undergone huge financial loss, which may be more than 1,000 crores rupees , amongst which in the present case, the issues are with reference to only 42 crores rupees and that petitioner was Chairman of such society during relevant time, and therefore, instead of dragging the society into different litigations at the cost of the society, it is necessary for the petitioner to help the statutory authorities to find out that, who are the real culprits for such huge loss to the Page 18 of 34 HC-NIC Page 18 of 68 Created On Sun Aug 13 05:26:40 IST 2017 18 of 68 C/SCA/1577/2017 JUDGMENT society. Thereby, if petitioner is challenging all activities of the competent statutory authorities on all possible grounds to avoid inspection, audit, inquiry and other proceedings as per law, then, prima facie there is reason to believe that probably he is involved in such irregularities, which resulted into huge financial loss to the society. Therefore also, at such initial stage of show-cause notice and initiation of proceedings as per the statute, there is no reason to interfere with it unless there is absolute arbitrariness, perverseness or malafide proved on record.
24. When petitioner is complaining about the malafide attitude of the respondents, it would be appropriate to recall some basic principles of such co-operative societies.
25. Co-operative means living, thinking, and working together to accomplish a common goal through cooperative principles. Consequently, any organisation formed by people to work together to achieve the objects for which it is formed through the co-operative principles is called a co-operative society. The concept of co-operation envisages a group of persons having one or more common economic needs, who voluntarily agree to pool their resources both human and material and use them for mutual benefit, through an enterprise managed by them in democratic lines, guided by the principle of 'Each for all and all Page 19 of 34 HC-NIC Page 19 of 68 Created On Sun Aug 13 05:26:40 IST 2017 19 of 68 C/SCA/1577/2017 JUDGMENT for each'. The essentials of co-operative societies are that (1) a co-operative is a voluntary form of organization (2) it is an association of human beings organized based on equality (3) its objective is the economic interests of its members. The essentials of co- operative societies are thus (1) a co-operative is an enterprise (2) it is an association of users (3) it applies the rules of democracy and (4) it is intended to serve both (a) its own members and (b) the community as a whole.
26. It is undisputed fact that petitioner is union of co-operative milk producers society and is governed by the Act, which is enacted with a view to provide for the orderly development of the Co-operative sector in the State, by organizing the Co-operative societies as self- governing democratic institutions, to achieve objects of equity, social justice and economic development, as envisaged in the directive principles of State Policy of the Constitution of India.
27. It is also undisputed fact that petitioner is an individual person though he was heading the elected body of the society as its Chairman, the society is to be managed by the elected body, which has to act for the benefit of its members and not for any individual or for the interest of any group or individuals. It is also undisputed fact that for the purpose to safe guard such Page 20 of 34 HC-NIC Page 20 of 68 Created On Sun Aug 13 05:26:40 IST 2017 20 of 68 C/SCA/1577/2017 JUDGMENT interest of such co-operative societies, the Act is providing several restrictions and check on elected body and since such provisions are not unconstitutional, the authorities created by such Act has ample powers to Act in accordance with Law and Rules to see that basic concept and purpose of the Co-Operative activities are neither frustrated nor being misused by group of persons based only upon some majority of supporters, because ultimately society is for the benefit of members and not for the benefit of some group.
28. In Indian Railway Construction Company Limited Vs Ajay Kumar [(2003) 4 SCC 579], the Apex Court observed that burden of establishment of malafides is very heavy on the person who alleges it. The allegations of malafides are often mode easily made, than proved, and the very seriousness of such allegations demands proof of a higher order of credibility, observed the Supreme Court. The principle was stated that the Court should be slow to draw dubious inferences from incompetent facts placed before it by a party, particularly when such grave imputations are made against the order of an office who has high responsibility in the administration.
29. In Mutha Associates Vs State of Maharashtra [(2013) 14 SCC 304], the writ petition was filed by APMC in which the charge of malafides was leveled against the then Minister, but the Court Page 21 of 34 HC-NIC Page 21 of 68 Created On Sun Aug 13 05:26:40 IST 2017 21 of 68 C/SCA/1577/2017 JUDGMENT found that the same was without specific particulars or details of how the decision taken by the Minister was influenced by the developer or any other person. The High Court held that the Minister's action was under the influence of the builder, attributing malafides simply because the order was found to be untenable in law. The Apex Court observed that no matter the circumstances enumerated by the High Court may have given a rise to strong suspicion that the Minister acted out of extraneous consideration, but the suspicion, however strong cannot be proof of the charge of malafides.
30. The Supreme Court made following observations by endorsing to the contention of the counsel that mere fact that an order passed by constitutional authority was found to be legally unsustainable, did not ipso facto mean that the order was malafide, by holding "The law regarding pleading and proof "malice in fact" or malafides as it is in common parlance described is indeed settled by a long line of decisions of this Court. The decisions broadly recognize the requirement of allegations suggesting "malice in fact" to be specific and supported by necessary particulars. Vague and general averments to the effect that the action under review was taken malafide would not therefore suffice. Equally well settled is the principle that the burden to establish that the action under challenge was indeed malafide rests heavily upon the person Page 22 of 34 HC-NIC Page 22 of 68 Created On Sun Aug 13 05:26:40 IST 2017 22 of 68 C/SCA/1577/2017 JUDGMENT making the charge; which is taken as quasi- criminal in nature and can lead to adverse consequence for the person who is proved to have acted malafide. There is in fact a presumption that the public authority acted bona fide and in good faith." (Para 42) 7.3 When the pleadings and ground of malafide are examined in light of the aforesaid principles, the case on this count is not only put forth in a cryptic way but falls far short of the facts and the averments on the basis of which malice could be shown in respect of the impugned action. Merely stating that "there has been a shift in political scenario and the ruling party pressurising to remove the petitioner as Vice Chairman and wants to regaining the power of the Market Committee" is not sufficient allegation to constitute and to conclude that the exercise undertaken is mala fide. Nor the averments in paragraph 3.10 that officer had been given inquiry with regard to employment of staff and he gave ex- parte report against the office bearers, by itself is not indicative of the action being malafide.
31. An action to be considered or treated as malafide has a definite parameters of law as could be noticed above. The vague and bald assertions of the petitioner cannot establish malafide or malice in fact and the said contention has to miserably fall flat.
32. The political pressure or political motive Page 23 of 34 HC-NIC Page 23 of 68 Created On Sun Aug 13 05:26:40 IST 2017 23 of 68 C/SCA/1577/2017 JUDGMENT may not be a good argument at all without anything else legally sustainable. Nor does it add to a plea of malafide by itself. The corridors of power always hum with political activities, for; they are the corridors of power. Every hummer and every political move therefrom do not become subject matter of interference by the Court of law and the writ court, of course, unless the action, decision or conduct is in contravention of some statutory provision, is to defeat the law or the interference is necessary to secure and protect some higher legal principle or Constitutional enforcement. Every political maneuvering, unless amounts to violation of law, is no ground in a court of law
33. Though it is contended that the impugned order does not disclose and does not refer any report of any audit, inquiry or inspection as required u/s.93, learned Addl.Advocate General Mr. Jani has pointed out that in fact, the audit report dated 13.6.2013 by the office of the Government Auditor, Mehsana, which is already forwarded to the Managing Director of the Union, specifically discloses that there is irregularity in purchasing sugar without following approved procedure for purchase at a higher rate than the market rate, which resulted into huge loss to the society, amounting to Rs.17,26,50,429/-. Similarly for the issue related to missing of stock of raw-material of cattle feed, there is disclosure in physical verification report dated Page 24 of 34 HC-NIC Page 24 of 68 Created On Sun Aug 13 05:26:40 IST 2017 24 of 68 C/SCA/1577/2017 JUDGMENT 3.4.2015 by Chartered Accountant Parikh Shah & Associates that there is less stock than stock on record so far as raw-material of Jagudan Cattle Feed Factory is concerned. The report confirms that physical verification was done at such factory on 25-26.3.2015. Therefore, there is no substance in any such ground.
34. Therefore, it cannot be said that the initiation of proceedings u/s.93 is not based upon any pre-requisite report of either audit, inquiry or inspection, because difference of stock, is certainly based upon the physical inspection report of the stock of Jagudan Cattle Feed Factory. Thereby, it cannot be said that conclusion of initiating the proceedings u/s.93 is not based on any audit report.
35. So far as allegation regarding misappropriation agaisnt the petitioner is concerned, it is submitted that petitioner has already preferred petition to quash the complaint, which is pending, and therefore, it cannot be presumed that there is any misappropriation committed by the petitioner. In support of such submission, petitioner is also relying upon the schedule of audit report by Harish S. Kansara, Chartered Accountant, which is referred in impugned order and wherein (page 126 with the petition) the C.A. has also disclosed that there is no misappropriation, and therefore, it is not applicable to disclose the name of the Page 25 of 34 HC-NIC Page 25 of 68 Created On Sun Aug 13 05:26:40 IST 2017 25 of 68 C/SCA/1577/2017 JUDGMENT person, who has committed misappropriation and when there is no misappropriation, there is no finding regarding date and time of misappropriation, amount of misappropriation, details of recovery of misappropriation, details of non-recovery of misappropriation, documents to prove misappropriation etc. However, it is quite clear and obvious that the auditor does not have to decide that whether it is misappropriation or misfeasance or any other other irregularity or not, but the auditor has to simply decide that whether accounts are proper or not and whether there is any irregularity in accounts, but whether such irregularity amounts to misappropriation or misfeasance or not, can be decided by statutory investigating authorities only.
36. Surprisingly, though details of other cases may not be referred in general, without its reference in pleading or during submission, I have no option, but to recollect the submissions in recently decided Special Civil Application No. 6089 of 2017 wherein to avoid audit, it has been argued that auditor cannot look into any other aspect, except examining the accounts, whereas, in this case, petitioner is relying upon the observation by the auditor, which is in his favour that there is no misappropriation. Therefore, there is no substance in such submission also.
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37. It seems that by draft amendment, petitioner has contended and raised the same issue regarding FIR for the irregularity with respect to supply of cattle feed to drought affected areas of Maharashtra, for remaining two issues viz. loss of stock of cattle feed in the physical possession and purchase of sugar at higher price, contending that when FIR was filed for all such so- called and alleged irregularities, there is no scope of further investigation u/s.93. However, the discussion herein above makes it clear that both the proceedings can certainly continue simultaneously. It is clear and obvious that proceedings pursuant to FIR where criminal proceedings and it is settled legal position that criminal as well as civil proceedings can continue simultaneously. It is obvious that present proceedings are civil in nature when it provides for recovering the loss either in cash or in the form of compensation, and therefore, there is no substance in such submission also.
38. The perusal of record specifically confirms that before impugned order u/s.93, when show-cause notice was issued, the petitioner has also challenged the show-cause notice by filing the Special Civil Application No.12257 of 2016, which was dismissed by reasoned order dated 21.7.2016.
39. So far as submission by learned Addl.Advocate General Mr. Jani with reference to such Special Civil Application No. 12257 of 2016 is concerned Page 27 of 34 HC-NIC Page 27 of 68 Created On Sun Aug 13 05:26:40 IST 2017 27 of 68 C/SCA/1577/2017 JUDGMENT and to the effect that pursuant to order in such Special Civil Application, present petition is not maintainable, I do not find any reason or substance to dismiss petition solely on that ground, for the simple reason that in such judgment dated 21.7.2016, the Court has dealt with the issue raised by the petitioner herein that respondents shall initially decide the preliminary objections raised by the petitioner by passing a reasoned order and only thereafter, adjudicate all the issues. However, the Co-ordinate Bench has while dismissing such prayer confirmed that it has not gone into the merits of the case of either side and that all the contentions of the petitioner shall remain open to be raised before the authorities. Therefore, though there is no substance in the petition on merits, its rejection is not based on res judicata as submitted by learned Addl.Advocate General Mr. Jani.
40. If we peruse the impugned orders and audit report dated 5.10.2015, it becomes clear that Special Auditor has already conveyed the Registrar about misdeeds and irregularities in the society, so also the audit report by C.A. Harish S. Kansara confirms such irregularities with an observation that proceedings u/s.86 and 93 may be initiated. Therefore, petitioner cannot rely upon only few lines of such report that there is no evidence regarding misappropriation and therefore, no further action can be initiated. If petitioner is relying upon the observation regarding absence of Page 28 of 34 HC-NIC Page 28 of 68 Created On Sun Aug 13 05:26:40 IST 2017 28 of 68 C/SCA/1577/2017 JUDGMENT misappropriation and except such observation, then, entire report is to be accepted, which also confirms that proceedings u/s.86 and 93 are required.
41. An attempt was made to emphasize that at particular time, petitioner was not Chairman, but custodian was holding the charge of the society. If it is so, the petitioner does not have to bother and he may simply show the details of charge on relevant dates when there is alleged irregularity, which results into loss to the society and thereby, if at all it may be proved that there is misappropriation. However, irrespective of evidence regarding misappropriation, the provision of Section 93 is quite clear that action can be taken even in case of misapplication of funds or retaining of the fund of the society or even for misfeasance or breach of trust. The record also shows about some other irregularities like procurement of gunny bags for Sagar Dan etc. However, at present, when the impugned order is restricted to three issues only as discussed herein above, no further discussion is required for other irregularities.
42. Thereby, though factual details are quite clear and obvious and though it is against the petitioner, it is contended that since there is no inspection u/s.88, there cannot be investigation and action u/s.93 and that loss to the society is not material when C.A. has confirmed that there is Page 29 of 34 HC-NIC Page 29 of 68 Created On Sun Aug 13 05:26:40 IST 2017 29 of 68 C/SCA/1577/2017 JUDGMENT no misappropriation and that cattle feed is not misappropriated, but provided to needy people in Maharashtra. However, there is no substance in any such submission, since as already discussed herein above, it is the precise issues to be decided by the competent authority u/s.93 and not in such writ petitions.
43. It is also contended by the petitioner that objections raised by the petitioner in his reply to show-cause notice has not been taken care of. The record shows that after dismissal of previous petition, petitioner has filed detailed reply, but it is his contention and understanding that before proceeding further, a preliminary issue needs to be decided first. However, there is no such requirement under the law and therefore, there is no substance in such submission.
44. Thereby, though factual details as discussed herein above is quite clear that there is no substance in the petition, when parties are relying upon few decisions, they need to be referred to verify that whether it helps the petitioner in any manner whatsoever. The learned senior counsel Mr. Mihir J. Thakore for the petitioner is relying upon the following two decisions:-
a) AIR 2006 SCW 6380 between Ms. Siemens Ltd. Vs. State of Maharashtra;
b) AIR 2010 SCW 7105 between ORYX Fisheries Pvt.
Ltd. Vs. Union of India & Ors.
Page 30 of 34 HC-NIC Page 30 of 68 Created On Sun Aug 13 05:26:40 IST 2017 30 of 68 C/SCA/1577/2017 JUDGMENT 20.1 In case of Siemens Ltd. (supra), the issue was with reference to jurisdiction of the High
Court to entertain a writ petition at the stage of show-cause notice when Hon'ble Supreme Court of India has held that ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless it is without jurisdiction, but when show-cause notice is issued with pre- meditation, a writ petition would be maintainable. However, in absence of any specific evidence regarding pre-meditation, on the contrary the first part of the determination that ordinarily discretionary jurisdiction may not be exercised, would be material and effective. Though Hon'ble Supreme Court has decided to entertain the writ petition, it was because of its observation that authority has already framed an opinion as regards the liability of the appellant before it; whereas, in the present case, authority has not only issued show-cause notice, but given opportunity and it has not decided that petitioner is liable, accountable or responsible, but the prima facie evidence discloses such position, and therefore, disclosure of prima facie evidence in show-cause cannot be considered as pre-meditation.
20.2 Whereas, in the case of ORYX Fisheries Pvt. Ltd. (supra), the Hon'ble Supreme Court of India has held that absence of reasons in the original order cannot be compensated by disclosure of reason Page 31 of 34 HC-NIC Page 31 of 68 Created On Sun Aug 13 05:26:40 IST 2017 31 of 68 C/SCA/1577/2017 JUDGMENT in the appellate order, and therefore, quashed the show-cause notice when it was observed that there is evidence regarding bias by the respondent. Though it can be argued in the present case also that respondents are initiating proceedings one after another against the petitioner, and therefore, they are biased and though it may seem to be an attractive submission and argument, the fact remains that there are several prima facie evidence against the petitioner, and therefore, if somebody has indulged repeatedly in irregularities, then, there may be different proceedings against him, and therefore, such different proceedings cannot be considered as pre-meditation. Whether a habitual offender can say that even if he commits an offence repeatedly, he may not be charged and prosecuted in separate case since it would amount to pre-meditation against him? It is well settled that ordinarily no writ lies against show-cause notice.
45. It would be appropriate to recollect the decision dated 19.11.2010 of Division Bench of this Court in Letters Patent Appeal No.1191 of 2022 between Pravinsinh Dilibhai Vs. District Registrar and Ors., while confirming order of the Single Judge, confirming order u/s.93 observed and held as under:-
"xxxxxx Section 93 finds its place in Chapter VIII entitled Audit, Inquiry, Inspection and Supervision. The provisions of Section 93 are obviously intended to assess and recover damages from a Member xxxxxx"Page 32 of 34
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46. Therefore, there is no substance in the petition so as to grant any interim relief or even to admit the petition at such interim stage when proceedings u/s.93 of the Act are yet to be initiated. Therefore, the petition deserves to be dismissed.
47. For the foregoing reasons, the present Special Civil Application stands dismissed.
(S.G. SHAH, J.) binoy FURTHER ORDER DATED 26.4.2017 Learned advocate Mr. C. P. Champaneri for the petitioner is requesting to stay the implementation of this judgment, whereby petition has been dismissed submitting that interim relief is granted in favour of the petitioner since 30.01.2017.
However, I do not find any substance in such submission for the reasons recorded in this petition itself, which goes to show that, in fact, it is the duty of the petitioner being Chairman of the society to find out and to help the administration to recover the loss that has occurred to the society during his administration. It cannot be ignored that so far as present petition is concerned, loss to such society is Rs.42 Crores and it cannot be further ignored that in fact there is huge loss of Rs.717 Crores as pointed out in Special Civil Application No.6089 of 2017, and therefore, probably total scam may be around Rs.1000 Page 33 of 34 HC-NIC Page 33 of 68 Created On Sun Aug 13 05:26:40 IST 2017 33 of 68 C/SCA/1577/2017 JUDGMENT Crores.
In view of above, interim relief cannot be extended for a single day. Therefore, request is rejected.
(S.G. SHAH, J.)
binoy
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 1577 of 2017 FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE S.G. SHAH ========================================================== 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 ?
========================================================== VIPULBHAI M CHAUDHARY....Petitioner(s) Versus STATE OF GUJARAT & 2....Respondent(s) ========================================================== Appearance:
MR MIHIR J THAKORE, SENIOR ADVOCATE WITH MR CP CHAMPANERI, ADVOCATE for the Petitioner(s) No. 1 MR PRAKASH JANI, ADDL.ADVOCATE GENERAL WITH MR ROHAN YAGNIK, AGP for the Respondent(s) No. 1 NOTICE SERVED BY DS for the Respondent(s) No. 1 - 3 ========================================================== CORAM: HONOURABLE MR.JUSTICE S.G. SHAH Date : 26/04/2017 ORAL JUDGMENT
1. Heard learned senior counsel Mr. Mihir J.
Thakore with learned advocate Mr. C. P. Champaneri for the petitioner and learned Addl.
Advocate General Mr. P. K. Jani assisted by
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learned AGP Mr. Rohan Yagnik for the respondents. Perused the record.
2. The petitioner herein has prayed for appropriate writ, order or direction in the nature of mandamus or any other appropriate writ, order or direction to quash and set-aside the impugned order dated 13.1.2017, copy of which is produced at Annexure-A, issued by Registrar, Co- operative Societies for initiating proceedings u/s.93 of The Gujarat Co-operative Societies Act, 1961 ('the Act', for short). It is disclosed in such impugned order that as per the details disclosed in the show-cause notice dated 13.6.2016, prima facie it appears that the Mehsana District Co-operative Milk Producers' Union Ltd. has suffered loss of Rs.41,83,68,951/- when petitioner was Chairman of such Society and therefore, it is necessary to inquire about the liability and responsibility of the petitioner and to recover the loss suffered by the co- operative society i.e. Mehsana District Co- operative Milk Producers' Union Ltd. For the purpose, the Registrar of Co-operative Societies i.e. respondent No.2 herein has appointed one Shri S. N. Joshi, District Registrar of Co- operative Societies (Liquidation - 2) of Ahmedabad as investigating officer with a direction to complete his investigation within 30 days and to submit his report of investigation with supporting evidence and documents in two Page 2 of 34 HC-NIC Page 36 of 68 Created On Sun Aug 13 05:26:40 IST 2017 36 of 68 C/SCA/1577/2017 JUDGMENT copies before the Registrar i.e. respondent No.2.
3. The petitioner has also prayed for appropriate writ, order or direction in the nature of mandamus or any other appropriate writ, order or direction to quash and set-aside the show-cause notice dated 13.6.2016 issued by respondent No.2 u/s.93, copy of which is produced at Annexure-B. The reference of such show-cause notice is already there in Annexure-A, and therefore, its details are not reproduced. However, it is clear that such show-cause notice is based upon the same facts, which are referred with reference to Annexure-A regarding huge loss to the co-operative society of which the petitioner was Chairman at the relevant point in time.
4. Therefore, before discussing the facts, details and law points raised by the petitioner, now, one thing is quite clear and obvious that though by order dated 13.6.2016, petitioner was called upon to show cause that why proceedings u/s.93 should not be initiated. When petitioner could not submit reasonable and acceptable explanation or reason to avoid further proceedings u/s.93, the respondent No.2 has issued the impugned order on 13.1.2017 i.e. almost after six months, and therefore, prima facie when petitioner is challenging the show- cause notice also, it becomes clear that petitioner is yet to submit his case before the Page 3 of 34 HC-NIC Page 37 of 68 Created On Sun Aug 13 05:26:40 IST 2017 37 of 68 C/SCA/1577/2017 JUDGMENT competent statutory authority to explain his case that why such proceedings should not be initiated. But, it seems that the petitioner, who is having full financial support to agitate each and every issue at each and every stage upto highest level, so as to get the process delayed wherein there is probability of fixing of his liability for several misdeeds and even if there is no misappropriation, then, huge loss to the co-operative society, wherein milk producers of the entire district are members and when such society is being formed mainly for the benefit of such milk producers so that they get maximum benefit of their produce.
5. It is undisputed fact that the present petition is preferred under Articles 226, 14, 19 and 21 of the Constitution of India read with the provisions of the Act and provision of the Rules thereunder, namely, Gujarat Co-operative Societies Rules, 1965.
6. Therefore, one thing is quite clear and obvious that at this stage, when there is prima facie evidence available with the respondents, that there is huge loss to the members of the co- operative society of which the petitioner was Chairman at the relevant time and that probably petitioner is responsible for such loss, irrespective of legal technicalities, atleast there is a reason to initiate some proceedings, though within the framework of the legal Page 4 of 34 HC-NIC Page 38 of 68 Created On Sun Aug 13 05:26:40 IST 2017 38 of 68 C/SCA/1577/2017 JUDGMENT provision, so as to find out that who is responsible for such loss and how to recover such loss and from whom. Therefore, irrespective of rival submissions, if at all petitioner is of the opinion that he is not responsible for any such alleged loss to the society, then, he should not bother and on the contrary as Chairman of such co-operative society, which has incurred huge financial loss, he should come forward to find out the real culprit, so as to ascertain that how such huge loss has been suffered by the co- operative society and how and from whom, the same can be recovered. Needless to say, such exercise is to be carried out certainly in accordance with law and within the provisions of law, and thereby, not in arbitrary manner or in colourable exercise of powers by the respondents as alleged by the petitioner.
7. In view of above facts and circumstances, though factual details are argued before this Court and though it would be discussed to some extent, it would be appropriate to make it clear that discussion and observation of factual details is for limited purpose and to the extent of referring the submissions and arguments of both the sides, but, otherwise, it does not form any final opinion on such factual details, and therefore, when petitioner is otherwise entitled to disprove and rebut the allegations by the respondents, it would be open for the petitioner to prove his case before the competent authority Page 5 of 34 HC-NIC Page 39 of 68 Created On Sun Aug 13 05:26:40 IST 2017 39 of 68 C/SCA/1577/2017 JUDGMENT in appropriate proceedings and in accordance with law.
8. Thereby, now, it becomes clear that at present, we are at the stage where the competent authority is yet to initiate the proceedings, which would start only after serving the show- cause notice, and therefore, so far as discussion of factual details is concerned, it would certainly be premature at this stage and need not be determined finally so as to avoid prejudice to either side.
9. However, before concluding that there is no reason to grant any interim relief at this stage as prayed for in prayer clause 9(D), so as to stay the implementation and execution of the impugned order dated 13.1.2017, one has to scrutinize the factual details and consider the rival submissions for arriving at a final determination.
10. The sum and substance of the petitioner's case is to the effect that:-
a. Pursuant to provision of Section 93 of the Act, before initiating any proceeding under such section, there must be a report made by the Auditor or the person authorised to make inquiry u/s.86 of the Act or the person authorised to inspect the books under Sub-Section (8) of Sections 84, 87 or 88 or the Liquidator u/s.110 Page 6 of 34 HC-NIC Page 40 of 68 Created On Sun Aug 13 05:26:40 IST 2017 40 of 68 C/SCA/1577/2017 JUDGMENT of the Act. However, in the present case, there is no such report by any such authority, and therefore, the impugned order is bad in law.
b. The impugned order is referring three irregularities or misdeeds viz. (1) financial loss to the tune of Rs.22,50,27,628/- by providing 13731 Metric Tonne of Cattle Feed (Food) (Sagar Dan) to the State of Maharashtra during drought period. (2) there was absence of 2157733 Kgs. of raw-materials for such cattle feed (Sagar Dan) compared to the stock register as on 15.9.2015, and thereby, such quantity of raw-materials was either not purchased at all and its price being Rs.2,06,91,904.50 was paid or was siphoned off, which resulted into misappropriation of its value and (3) for the period between 1.4.2012 to 6.1.2014, sugar was purchased without following the approved purchase procedure through particular agencies with whom there was collaboration. During such irregularity in purchase of sugar, price of the sugar was paid higher than the market rate to the tune of Rs.17,26,50,429/-. Therefore, total loss to the society because of such irregularities comes to Rs.41,83,68,951.05.
c. Amongst above three irregularities, it is submitted that there is reference of audit report so far as first irregularity regarding 13731 Metric Tonne cattle feed is concerned, and Page 7 of 34 HC-NIC Page 41 of 68 Created On Sun Aug 13 05:26:40 IST 2017 41 of 68 C/SCA/1577/2017 JUDGMENT therefore, it is submitted that remaining two irregularities cannot be included in impugned orders i.e. show-cause notice and order of initiating inquiry u/s.93 of the Act.
d. It is submitted that for the first irregularity of mishandling of 13731 Metric Tonne of cattle feed, respondent No.3 has already lodged a complaint on 21.1.2014 being C.R. No.I- 18 of 2014 before Mehsana 'B' Division Police Station u/ss.406, 420, 120B, 465, 468, 471 and 114 of the Indian Penal Code, and therefore, when respondent No.3 himself is complainant in such FIR, he cannot act as an Investigating Officer u/s.93 as per the impugned order. Learned senior advocate Mr. Mihir Thakore has referred relevant provisions of law and documents in support of above issues raised by the petitioner and contended that:-
i) the complainant himself cannot investigate the case, which amounts to breach of principle of natural justice, compliance of which is basic requirement of our jurisprudence;
ii) when complaint is filed, there is no need to proceed further u/s.93 of the Act since it amounts to double investigation of the same cause;
iii) there is no reference in the impugned order, and thereby, no consideration of any report of Page 8 of 34 HC-NIC Page 42 of 68 Created On Sun Aug 13 05:26:40 IST 2017 42 of 68 C/SCA/1577/2017 JUDGMENT any competent authority as referred in Section 93 of the Act so far as alleged misdeed with reference to stock of raw-materials for cattle feed or for the purchase price of sugar, and therefore, though the impugned order is bad even with regard to first issue regarding mishandling of 13731 Metric Tonne Sagar Dan, it cannot sustain for these two issues;
iv) audit report referred in issue No.1 is also confirming that there is no misappropriation, and therefore, when there is absence of prima facie evidence regarding misappropriation, there is no reason to proceed further for any inquiry as contemplated by impugned orders.
11. However, I do not find any reason or substance in any of such ground, which are discussed hereinafter.
12. So far as misdeeds of co-operative societies are concerned, the Act is a complete code in itself for dealing with different issues arising from different kind of administrative functions and business of the co-operative societies, and therefore, in absence of any irregularity, arbitrariness, perverseness or otherwise in impugned order, there is no reason to interfere with any such impugned order, more particularly, at such stage when only show-cause notice is issued and only when inquiry u/s.93 is initiated, wherein actual facts and details are to be Page 9 of 34 HC-NIC Page 43 of 68 Created On Sun Aug 13 05:26:40 IST 2017 43 of 68 C/SCA/1577/2017 JUDGMENT scrutinized so as to determine that, who is responsible for such misdeeds, which may result into misappropriation, and thereby, loss to the co-operative society. At such stage, if there is interference, then, it amounts to interference during investigation, inquiry and trial to find out the culprit and to make good the loss to the society i.e. remedial proceedings, which are quasi-judicial in nature. Hence, position would be different if there is a conclusive report u/s.93 that petitioner has indulged in any irregularities and committed misdeeds, which has resulted into either misappropriation or only loss to the co-operative society, and thereby, if he has been held responsible and liable for such misdeed, misappropriation or loss, and thereby, if there is an order to recover such loss from him, though it can be said that even during such investigation, if there is arbitrariness, irregularity and illegality, it must be scrutinized by the courts under its constitutional powers; the fact remains that there must be specific independent and cogent evidence to confirm that there is arbitrariness or irregularity in any manner whatsoever.
13. Though it is submitted that there is arbitrariness and illegality, the scrutiny of record confirms that in fact there is lack of any evidence or details, which may compel the Court to consider that there is arbitrariness or any Page 10 of 34 HC-NIC Page 44 of 68 Created On Sun Aug 13 05:26:40 IST 2017 44 of 68 C/SCA/1577/2017 JUDGMENT illegality in the impugned order.
14. To allege arbitrariness and illegality, the issues raised by the petitioner are to the effect that respondent No.3 cannot act as a competent authority to proceed further in inquiry u/s.93 as per the impugned order, when he is complainant in FIR being C.R. No. I - 18 of 2014. However, so far as such allegations are concerned, at the initial stage of active hearing, learned Addl.Advocate General Mr. Prakash Jani has already disclosed and passed on a copy of the order dated 8.2.2017 by respondent No.2 whereby respondent No.2 has already handed-over the investigation as per the impugned order to one Mr. I. G. Munia, District Registrar of Co- operative Societies for Panchmahal District. Copy of such communication is to be taken on record. Therefore, pursuant to such order dated 8.2.2017, when, now, respondent No.3 is not to proceed further u/s.93 as per the impugned order, such contention does not remain in force.
15. Even after such disclosure, it has been contended by the petitioner that the day when impugned order was passed, when respondent No.3 cannot proceed further u/s.93 against the petitioner being complainant in FIR being C.R. No. I-18 of 2014, the impugned order needs to be quashed and set-aside. I do not find any substance in such submission also, for the simple reason that irrespective of change in officer and Page 11 of 34 HC-NIC Page 45 of 68 Created On Sun Aug 13 05:26:40 IST 2017 45 of 68 C/SCA/1577/2017 JUDGMENT submission of the petitioner, it cannot be ignored that it is not the case before us wherein respondent No.3, who is now not in charge of the investigation, has to inquire the matter for arriving at a conclusion that who should be punished for committing the offence under the IPC as per the his complaint, but his jurisdiction is altogether different i.e. to verify that who is responsible for such loss and from whom it can be recovered in benefit of the co-operative society. Therefore, this is a case, as repeatedly argued that the complainant cannot be the investigator and judge of his own cause. In other words, it becomes clear that the complaint filed by respondent No.3 is for criminal liability of concerned person, wherein the investigation is to be carried out not by respondent No.3 on his own, but it would be carried out by the investigating agency being police department as per our statute and their prosecution would also be initiated by the police department being investigating and prosecuting agency and the issue to be decided, based upon such investigation, is also different, that whether culprit is to be punished by awarding conviction and sentence as provided under the IPC. Therefore, based upon the First Information Report No. 18 of 2014, investigation is to be carried out by the police to find out that whether there is any misappropriation or not and if it is so, who is responsible for such misappropriation so as to convict him.
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16. Whereas in the Co-operative Societies Act, pursuant to the impugned order, the respondent No.2 has to inquire that how society has suffered the loss, to what extent and because of whom and how it can be recovered. Thereby, there is basic difference between both the investigations, and therefore, when respondent No.2 is not to investigate the mens-rea and it is to be decided by the competent criminal Court, that whether culprit should be punished or not, and thereby, when he has to only decide that how loss can be compensated in regard to the misapplication, retention, misfeasance or breach of trust, the impugned order cannot be bad in law when it allows the respondent No.2 to investigate and to decide that how such loss as aforesaid is to be compensated.
17. So far as source of information in the proceedings under the Act is concerned, in fact, it is in the form of audit report and other reports as contemplated u/s.93, whereas so far as source of information for conducting investigation for criminal proceedings, may be FIR by the competent officer, who has to file the complaint because of his statutory duty.
18. At this juncture, it would be appropriate to recollect the provision of Section 93 of the Act, which reads as under:
"Section 93: Power of Registrar to assess Page 13 of 34 HC-NIC Page 47 of 68 Created On Sun Aug 13 05:26:40 IST 2017 47 of 68 C/SCA/1577/2017 JUDGMENT damages against delinquent, promoters, etc.:-
Where, in the course of or as a result of an audit under Sec. 84, or an inspection under sub-sec. (8) of Sec. 84, or an inquiry under Sec. 86 or an inspection under Sec. 87 or Sec. 88, or the winding up of a society, the Registrar is satisfied on the basis of the report made by the auditor or the person authorised to make inquiry under Sec. 86, or the person authorised to inspect the books under sub-sec. (8) of Secs. 84, 87 or 88 or the Liquidator under Sec. 110,that any person who has taken any part, in the organisation 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 Registrar or a person authorised 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 representative who inherits his estate, to answer the charges make an order 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 authorised 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.
(1) The Registrar or the person authorised under sub-section (1) in making any order Page 14 of 34 HC-NIC Page 48 of 68 Created On Sun Aug 13 05:26:40 IST 2017 48 of 68 C/SCA/1577/2017 JUDGMENT under this section, may provide therein for the payment of the costs or any part thereof of 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 (2) This section shall apply, notwithstanding that the Act is one for which the person concerned may be criminally responsible."
19. Bare reading of the above provision of Section 93 makes it clear that the Registrar i.e. respondent No.2 herein or a person authorised by him in that behalf, may investigate the conduct of such person or persons within a period of five years prior to the date of order to audit, inquiry, inspection or order for winding-up, who has taken any part in the organization or management of the society or even any deceased or past or present officer of the society, so as to verify that whether such person has 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. So far as audit, inquiry, inspection or order for winding-up is concerned, there is reference of Sections 84, 86, 87 and 88 since all such basic or primary information or prima facie evidence would be available in any such document. The Sub-Section (1) of Section 93 is basically in 4 parts, amongst which two parts are as described herein Page 15 of 34 HC-NIC Page 49 of 68 Created On Sun Aug 13 05:26:40 IST 2017 49 of 68 C/SCA/1577/2017 JUDGMENT above, whereby we reached upon the authority of Registrar to initiate inquiry either on his own or by a authorised person and basic requirement before initiating any such investigation. So far as remaining two parts are concerned, the Section specifically provides that while initiating such investigation, the investigating officer has to frame charges against such person and after giving reasonable opportunity to the concerned person to answer the charges, make an order requiring him (such person) to repay or restore the money or property or any part thereof, with interest at such rate as he under this Section may determine or to contribute such sum to the assets of the society by way of compensation in regard to misapplication, retention, misfeasance or breach of trust, as he may determine.
20. Therefore, at this stage of show-cause notice and calling upon the petitioner by affording reasonable opportunity to explain that why order u/s.93 of the Act should not be passed, it cannot be said that such order by respondent No.2 is illegal or arbitrary and there is irregularity when respondent No.3 is authorised by respondent No.2. So far as such authorisation is concerned, the basic principle of law is quite clear that such authorisation can be changed at any point of time, and therefore, now, when it is clear on record, that such authorisation is changed by order dated 8.2.2017, copy of which is taken on record, and thereby, now, when respondent No.3 Page 16 of 34 HC-NIC Page 50 of 68 Created On Sun Aug 13 05:26:40 IST 2017 50 of 68 C/SCA/1577/2017 JUDGMENT has not to proceed further u/s.93 of the Act, there is no ground available to the petitioner to get any relief in his favour in this petition based upon such ground.
21. Similarly, as discussed herein above, there is no irregularity or illegality in initiating proceedings u/s.93 when there is prima facie evidence in different form like audit report, inquiry report and inspection report, which is referred herein after, and therefore, there is no reason to interfere with impugned order.
22. Learned Addl.Advocate General Mr. Jani has submitted the same concept, but from different perspective and there is substance in such submission, when it is submitted that in fact, the act is a complete code in itself so far as the management and administrative activities of co-operative societies are concerned, and therefore, practically, the proceedings u/s.93 is to some extent, like a proceedings before the Civil Court where both the parties have to prove the case and thereafter, the competent authority being Registrar or authorised person has to decide that if at all there is any misapplication and retention of any money or property of the society, then, who is liable or accountable or guilty of misfeasance or breach of trust in relation to the society and on arriving at a conclusion on such issues, after giving reasonable opportunity to such parties, there Page 17 of 34 HC-NIC Page 51 of 68 Created On Sun Aug 13 05:26:40 IST 2017 51 of 68 C/SCA/1577/2017 JUDGMENT would be an order to determine such sum and a direction to repay or restore the money or property or any part thereof with interest or to contribute such sum to the assets of the Society by way of compensation by way of compensation in regard to misapplication, retention, misfeasance or breach of trust, as the case may be. Therefore, it is submitted that the petition is quite premature inasmuch as it is at the stage of show-cause notice and initiation of proceedings u/s.93 only wherein petitioner is free to submit his case before the Registrar to prove that he is not liable or accountable and that he has not retained any money or property of the society or that he is not guilty of misfeasance or that there is no breach of trust committed by him in relation to the society.
23. It cannot be ignored that there is information from different sources of different audit, inquiry and inspection report that the society in question has undergone huge financial loss, which may be more than 1,000 crores rupees , amongst which in the present case, the issues are with reference to only 42 crores rupees and that petitioner was Chairman of such society during relevant time, and therefore, instead of dragging the society into different litigations at the cost of the society, it is necessary for the petitioner to help the statutory authorities to find out that, who are the real culprits for such huge loss to the Page 18 of 34 HC-NIC Page 52 of 68 Created On Sun Aug 13 05:26:40 IST 2017 52 of 68 C/SCA/1577/2017 JUDGMENT society. Thereby, if petitioner is challenging all activities of the competent statutory authorities on all possible grounds to avoid inspection, audit, inquiry and other proceedings as per law, then, prima facie there is reason to believe that probably he is involved in such irregularities, which resulted into huge financial loss to the society. Therefore also, at such initial stage of show-cause notice and initiation of proceedings as per the statute, there is no reason to interfere with it unless there is absolute arbitrariness, perverseness or malafide proved on record.
24. When petitioner is complaining about the malafide attitude of the respondents, it would be appropriate to recall some basic principles of such co-operative societies.
25. Co-operative means living, thinking, and working together to accomplish a common goal through cooperative principles. Consequently, any organisation formed by people to work together to achieve the objects for which it is formed through the co-operative principles is called a co-operative society. The concept of co-operation envisages a group of persons having one or more common economic needs, who voluntarily agree to pool their resources both human and material and use them for mutual benefit, through an enterprise managed by them in democratic lines, guided by the principle of 'Each for all and all Page 19 of 34 HC-NIC Page 53 of 68 Created On Sun Aug 13 05:26:40 IST 2017 53 of 68 C/SCA/1577/2017 JUDGMENT for each'. The essentials of co-operative societies are that (1) a co-operative is a voluntary form of organization (2) it is an association of human beings organized based on equality (3) its objective is the economic interests of its members. The essentials of co- operative societies are thus (1) a co-operative is an enterprise (2) it is an association of users (3) it applies the rules of democracy and (4) it is intended to serve both (a) its own members and (b) the community as a whole.
26. It is undisputed fact that petitioner is union of co-operative milk producers society and is governed by the Act, which is enacted with a view to provide for the orderly development of the Co-operative sector in the State, by organizing the Co-operative societies as self- governing democratic institutions, to achieve objects of equity, social justice and economic development, as envisaged in the directive principles of State Policy of the Constitution of India.
27. It is also undisputed fact that petitioner is an individual person though he was heading the elected body of the society as its Chairman, the society is to be managed by the elected body, which has to act for the benefit of its members and not for any individual or for the interest of any group or individuals. It is also undisputed fact that for the purpose to safe guard such Page 20 of 34 HC-NIC Page 54 of 68 Created On Sun Aug 13 05:26:40 IST 2017 54 of 68 C/SCA/1577/2017 JUDGMENT interest of such co-operative societies, the Act is providing several restrictions and check on elected body and since such provisions are not unconstitutional, the authorities created by such Act has ample powers to Act in accordance with Law and Rules to see that basic concept and purpose of the Co-Operative activities are neither frustrated nor being misused by group of persons based only upon some majority of supporters, because ultimately society is for the benefit of members and not for the benefit of some group.
28. In Indian Railway Construction Company Limited Vs Ajay Kumar [(2003) 4 SCC 579], the Apex Court observed that burden of establishment of malafides is very heavy on the person who alleges it. The allegations of malafides are often mode easily made, than proved, and the very seriousness of such allegations demands proof of a higher order of credibility, observed the Supreme Court. The principle was stated that the Court should be slow to draw dubious inferences from incompetent facts placed before it by a party, particularly when such grave imputations are made against the order of an office who has high responsibility in the administration.
29. In Mutha Associates Vs State of Maharashtra [(2013) 14 SCC 304], the writ petition was filed by APMC in which the charge of malafides was leveled against the then Minister, but the Court Page 21 of 34 HC-NIC Page 55 of 68 Created On Sun Aug 13 05:26:40 IST 2017 55 of 68 C/SCA/1577/2017 JUDGMENT found that the same was without specific particulars or details of how the decision taken by the Minister was influenced by the developer or any other person. The High Court held that the Minister's action was under the influence of the builder, attributing malafides simply because the order was found to be untenable in law. The Apex Court observed that no matter the circumstances enumerated by the High Court may have given a rise to strong suspicion that the Minister acted out of extraneous consideration, but the suspicion, however strong cannot be proof of the charge of malafides.
30. The Supreme Court made following observations by endorsing to the contention of the counsel that mere fact that an order passed by constitutional authority was found to be legally unsustainable, did not ipso facto mean that the order was malafide, by holding "The law regarding pleading and proof "malice in fact" or malafides as it is in common parlance described is indeed settled by a long line of decisions of this Court. The decisions broadly recognize the requirement of allegations suggesting "malice in fact" to be specific and supported by necessary particulars. Vague and general averments to the effect that the action under review was taken malafide would not therefore suffice. Equally well settled is the principle that the burden to establish that the action under challenge was indeed malafide rests heavily upon the person Page 22 of 34 HC-NIC Page 56 of 68 Created On Sun Aug 13 05:26:40 IST 2017 56 of 68 C/SCA/1577/2017 JUDGMENT making the charge; which is taken as quasi- criminal in nature and can lead to adverse consequence for the person who is proved to have acted malafide. There is in fact a presumption that the public authority acted bona fide and in good faith." (Para 42) 7.3 When the pleadings and ground of malafide are examined in light of the aforesaid principles, the case on this count is not only put forth in a cryptic way but falls far short of the facts and the averments on the basis of which malice could be shown in respect of the impugned action. Merely stating that "there has been a shift in political scenario and the ruling party pressurising to remove the petitioner as Vice Chairman and wants to regaining the power of the Market Committee" is not sufficient allegation to constitute and to conclude that the exercise undertaken is mala fide. Nor the averments in paragraph 3.10 that officer had been given inquiry with regard to employment of staff and he gave ex- parte report against the office bearers, by itself is not indicative of the action being malafide.
31. An action to be considered or treated as malafide has a definite parameters of law as could be noticed above. The vague and bald assertions of the petitioner cannot establish malafide or malice in fact and the said contention has to miserably fall flat.
32. The political pressure or political motive Page 23 of 34 HC-NIC Page 57 of 68 Created On Sun Aug 13 05:26:40 IST 2017 57 of 68 C/SCA/1577/2017 JUDGMENT may not be a good argument at all without anything else legally sustainable. Nor does it add to a plea of malafide by itself. The corridors of power always hum with political activities, for; they are the corridors of power. Every hummer and every political move therefrom do not become subject matter of interference by the Court of law and the writ court, of course, unless the action, decision or conduct is in contravention of some statutory provision, is to defeat the law or the interference is necessary to secure and protect some higher legal principle or Constitutional enforcement. Every political maneuvering, unless amounts to violation of law, is no ground in a court of law
33. Though it is contended that the impugned order does not disclose and does not refer any report of any audit, inquiry or inspection as required u/s.93, learned Addl.Advocate General Mr. Jani has pointed out that in fact, the audit report dated 13.6.2013 by the office of the Government Auditor, Mehsana, which is already forwarded to the Managing Director of the Union, specifically discloses that there is irregularity in purchasing sugar without following approved procedure for purchase at a higher rate than the market rate, which resulted into huge loss to the society, amounting to Rs.17,26,50,429/-. Similarly for the issue related to missing of stock of raw-material of cattle feed, there is disclosure in physical verification report dated Page 24 of 34 HC-NIC Page 58 of 68 Created On Sun Aug 13 05:26:40 IST 2017 58 of 68 C/SCA/1577/2017 JUDGMENT 3.4.2015 by Chartered Accountant Parikh Shah & Associates that there is less stock than stock on record so far as raw-material of Jagudan Cattle Feed Factory is concerned. The report confirms that physical verification was done at such factory on 25-26.3.2015. Therefore, there is no substance in any such ground.
34. Therefore, it cannot be said that the initiation of proceedings u/s.93 is not based upon any pre-requisite report of either audit, inquiry or inspection, because difference of stock, is certainly based upon the physical inspection report of the stock of Jagudan Cattle Feed Factory. Thereby, it cannot be said that conclusion of initiating the proceedings u/s.93 is not based on any audit report.
35. So far as allegation regarding misappropriation agaisnt the petitioner is concerned, it is submitted that petitioner has already preferred petition to quash the complaint, which is pending, and therefore, it cannot be presumed that there is any misappropriation committed by the petitioner. In support of such submission, petitioner is also relying upon the schedule of audit report by Harish S. Kansara, Chartered Accountant, which is referred in impugned order and wherein (page 126 with the petition) the C.A. has also disclosed that there is no misappropriation, and therefore, it is not applicable to disclose the name of the Page 25 of 34 HC-NIC Page 59 of 68 Created On Sun Aug 13 05:26:40 IST 2017 59 of 68 C/SCA/1577/2017 JUDGMENT person, who has committed misappropriation and when there is no misappropriation, there is no finding regarding date and time of misappropriation, amount of misappropriation, details of recovery of misappropriation, details of non-recovery of misappropriation, documents to prove misappropriation etc. However, it is quite clear and obvious that the auditor does not have to decide that whether it is misappropriation or misfeasance or any other other irregularity or not, but the auditor has to simply decide that whether accounts are proper or not and whether there is any irregularity in accounts, but whether such irregularity amounts to misappropriation or misfeasance or not, can be decided by statutory investigating authorities only.
36. Surprisingly, though details of other cases may not be referred in general, without its reference in pleading or during submission, I have no option, but to recollect the submissions in recently decided Special Civil Application No. 6089 of 2017 wherein to avoid audit, it has been argued that auditor cannot look into any other aspect, except examining the accounts, whereas, in this case, petitioner is relying upon the observation by the auditor, which is in his favour that there is no misappropriation. Therefore, there is no substance in such submission also.
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37. It seems that by draft amendment, petitioner has contended and raised the same issue regarding FIR for the irregularity with respect to supply of cattle feed to drought affected areas of Maharashtra, for remaining two issues viz. loss of stock of cattle feed in the physical possession and purchase of sugar at higher price, contending that when FIR was filed for all such so- called and alleged irregularities, there is no scope of further investigation u/s.93. However, the discussion herein above makes it clear that both the proceedings can certainly continue simultaneously. It is clear and obvious that proceedings pursuant to FIR where criminal proceedings and it is settled legal position that criminal as well as civil proceedings can continue simultaneously. It is obvious that present proceedings are civil in nature when it provides for recovering the loss either in cash or in the form of compensation, and therefore, there is no substance in such submission also.
38. The perusal of record specifically confirms that before impugned order u/s.93, when show-cause notice was issued, the petitioner has also challenged the show-cause notice by filing the Special Civil Application No.12257 of 2016, which was dismissed by reasoned order dated 21.7.2016.
39. So far as submission by learned Addl.Advocate General Mr. Jani with reference to such Special Civil Application No. 12257 of 2016 is concerned Page 27 of 34 HC-NIC Page 61 of 68 Created On Sun Aug 13 05:26:40 IST 2017 61 of 68 C/SCA/1577/2017 JUDGMENT and to the effect that pursuant to order in such Special Civil Application, present petition is not maintainable, I do not find any reason or substance to dismiss petition solely on that ground, for the simple reason that in such judgment dated 21.7.2016, the Court has dealt with the issue raised by the petitioner herein that respondents shall initially decide the preliminary objections raised by the petitioner by passing a reasoned order and only thereafter, adjudicate all the issues. However, the Co-ordinate Bench has while dismissing such prayer confirmed that it has not gone into the merits of the case of either side and that all the contentions of the petitioner shall remain open to be raised before the authorities. Therefore, though there is no substance in the petition on merits, its rejection is not based on res judicata as submitted by learned Addl.Advocate General Mr. Jani.
40. If we peruse the impugned orders and audit report dated 5.10.2015, it becomes clear that Special Auditor has already conveyed the Registrar about misdeeds and irregularities in the society, so also the audit report by C.A. Harish S. Kansara confirms such irregularities with an observation that proceedings u/s.86 and 93 may be initiated. Therefore, petitioner cannot rely upon only few lines of such report that there is no evidence regarding misappropriation and therefore, no further action can be initiated. If petitioner is relying upon the observation regarding absence of Page 28 of 34 HC-NIC Page 62 of 68 Created On Sun Aug 13 05:26:40 IST 2017 62 of 68 C/SCA/1577/2017 JUDGMENT misappropriation and except such observation, then, entire report is to be accepted, which also confirms that proceedings u/s.86 and 93 are required.
41. An attempt was made to emphasize that at particular time, petitioner was not Chairman, but custodian was holding the charge of the society. If it is so, the petitioner does not have to bother and he may simply show the details of charge on relevant dates when there is alleged irregularity, which results into loss to the society and thereby, if at all it may be proved that there is misappropriation. However, irrespective of evidence regarding misappropriation, the provision of Section 93 is quite clear that action can be taken even in case of misapplication of funds or retaining of the fund of the society or even for misfeasance or breach of trust. The record also shows about some other irregularities like procurement of gunny bags for Sagar Dan etc. However, at present, when the impugned order is restricted to three issues only as discussed herein above, no further discussion is required for other irregularities.
42. Thereby, though factual details are quite clear and obvious and though it is against the petitioner, it is contended that since there is no inspection u/s.88, there cannot be investigation and action u/s.93 and that loss to the society is not material when C.A. has confirmed that there is Page 29 of 34 HC-NIC Page 63 of 68 Created On Sun Aug 13 05:26:40 IST 2017 63 of 68 C/SCA/1577/2017 JUDGMENT no misappropriation and that cattle feed is not misappropriated, but provided to needy people in Maharashtra. However, there is no substance in any such submission, since as already discussed herein above, it is the precise issues to be decided by the competent authority u/s.93 and not in such writ petitions.
43. It is also contended by the petitioner that objections raised by the petitioner in his reply to show-cause notice has not been taken care of. The record shows that after dismissal of previous petition, petitioner has filed detailed reply, but it is his contention and understanding that before proceeding further, a preliminary issue needs to be decided first. However, there is no such requirement under the law and therefore, there is no substance in such submission.
44. Thereby, though factual details as discussed herein above is quite clear that there is no substance in the petition, when parties are relying upon few decisions, they need to be referred to verify that whether it helps the petitioner in any manner whatsoever. The learned senior counsel Mr. Mihir J. Thakore for the petitioner is relying upon the following two decisions:-
a) AIR 2006 SCW 6380 between Ms. Siemens Ltd. Vs. State of Maharashtra;
b) AIR 2010 SCW 7105 between ORYX Fisheries Pvt.
Ltd. Vs. Union of India & Ors.
Page 30 of 34 HC-NIC Page 64 of 68 Created On Sun Aug 13 05:26:40 IST 2017 64 of 68 C/SCA/1577/2017 JUDGMENT 20.1 In case of Siemens Ltd. (supra), the issue was with reference to jurisdiction of the High
Court to entertain a writ petition at the stage of show-cause notice when Hon'ble Supreme Court of India has held that ordinarily a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless it is without jurisdiction, but when show-cause notice is issued with pre- meditation, a writ petition would be maintainable. However, in absence of any specific evidence regarding pre-meditation, on the contrary the first part of the determination that ordinarily discretionary jurisdiction may not be exercised, would be material and effective. Though Hon'ble Supreme Court has decided to entertain the writ petition, it was because of its observation that authority has already framed an opinion as regards the liability of the appellant before it; whereas, in the present case, authority has not only issued show-cause notice, but given opportunity and it has not decided that petitioner is liable, accountable or responsible, but the prima facie evidence discloses such position, and therefore, disclosure of prima facie evidence in show-cause cannot be considered as pre-meditation.
20.2 Whereas, in the case of ORYX Fisheries Pvt. Ltd. (supra), the Hon'ble Supreme Court of India has held that absence of reasons in the original order cannot be compensated by disclosure of reason Page 31 of 34 HC-NIC Page 65 of 68 Created On Sun Aug 13 05:26:40 IST 2017 65 of 68 C/SCA/1577/2017 JUDGMENT in the appellate order, and therefore, quashed the show-cause notice when it was observed that there is evidence regarding bias by the respondent. Though it can be argued in the present case also that respondents are initiating proceedings one after another against the petitioner, and therefore, they are biased and though it may seem to be an attractive submission and argument, the fact remains that there are several prima facie evidence against the petitioner, and therefore, if somebody has indulged repeatedly in irregularities, then, there may be different proceedings against him, and therefore, such different proceedings cannot be considered as pre-meditation. Whether a habitual offender can say that even if he commits an offence repeatedly, he may not be charged and prosecuted in separate case since it would amount to pre-meditation against him? It is well settled that ordinarily no writ lies against show-cause notice.
45. It would be appropriate to recollect the decision dated 19.11.2010 of Division Bench of this Court in Letters Patent Appeal No.1191 of 2022 between Pravinsinh Dilibhai Vs. District Registrar and Ors., while confirming order of the Single Judge, confirming order u/s.93 observed and held as under:-
"xxxxxx Section 93 finds its place in Chapter VIII entitled Audit, Inquiry, Inspection and Supervision. The provisions of Section 93 are obviously intended to assess and recover damages from a Member xxxxxx"Page 32 of 34
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46. Therefore, there is no substance in the petition so as to grant any interim relief or even to admit the petition at such interim stage when proceedings u/s.93 of the Act are yet to be initiated. Therefore, the petition deserves to be dismissed.
47. For the foregoing reasons, the present Special Civil Application stands dismissed.
(S.G. SHAH, J.) binoy FURTHER ORDER DATED 26.4.2017 Learned advocate Mr. C. P. Champaneri for the petitioner is requesting to stay the implementation of this judgment, whereby petition has been dismissed submitting that interim relief is granted in favour of the petitioner since 30.01.2017.
However, I do not find any substance in such submission for the reasons recorded in this petition itself, which goes to show that, in fact, it is the duty of the petitioner being Chairman of the society to find out and to help the administration to recover the loss that has occurred to the society during his administration. It cannot be ignored that so far as present petition is concerned, loss to such society is Rs.42 Crores and it cannot be further ignored that in fact there is huge loss of Rs.717 Crores as pointed out in Special Civil Application No.6089 of 2017, and therefore, probably total scam may be around Rs.1000 Page 33 of 34 HC-NIC Page 67 of 68 Created On Sun Aug 13 05:26:40 IST 2017 67 of 68 C/SCA/1577/2017 JUDGMENT Crores.
In view of above, interim relief cannot be extended for a single day. Therefore, request is rejected.
(S.G. SHAH, J.) binoy Page 34 of 34 HC-NIC Page 68 of 68 Created On Sun Aug 13 05:26:40 IST 2017 68 of 68