Gujarat High Court
Surat District Co-Operative Bank Ltd vs State Of Gujarat & 4 on 22 January, 2016
Author: C.L.Soni
Bench: C.L. Soni
C/SCA/7280/2015 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 7280 of 2015
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE C.L. SONI Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of No
the judgment ?
4 Whether this case involves a substantial question of No
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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SURAT DISTRICT CO-OPERATIVE BANK LTD.,....Petitioner(s)
Versus
STATE OF GUJARAT & 4....Respondent(s)
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Appearance:
MR SN SHELAT, SR ADVOCATE with MR DIPEN DESAI, ADVOCATE for the
Petitioner(s) No. 1
MR RAKESH PATEL, ASSTT GOVT PLEADER for the Respondent(s) No. 1
MR BAIJU JOSHI, ADVOCATE for the Respondent(s) No. 4 - 5
NOTICE SERVED BY DS for the Respondent(s) No. 1 - 3
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CORAM: HONOURABLE MR.JUSTICE C.L. SONI
Date : 22/01/2016
ORAL JUDGMENT
1. This petition under Article 226 of the Constitution of India is preferred by the Co-operative Bank challenging the order dated 6.4.2015 passed by the Additional Registrar (Appeal), Co-operative Societies, Gujarat State in Appeal No.10 of 2015 whereby the Appeal preferred by the respondent Nos.4 and 5 was allowed, and the order of the District Registrar dated 23.1.2015 approving amendment in the Page 1 of 10 HC-NIC Page 1 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT bye-laws of the petitioner is quashed and set aside and the matter is remanded to the District Registrar for his fresh decision after hearing the parties.
2. The petitioner is a specified Co-operative Society as per Section 74C of the Gujarat Co-operative Societies Act, 1961 ('the Act'). It has area of operation in more than one villages. As per existing bye-law No.27(b) and (c) (unamended bye-law), the Board of Directors shall consist of 15 directors to be elected by authorized members of the affiliated societies and two directors to be elected by individual members. Equal number of Taluka-wise constituencies were therefore, provided for election of such directors. The petitioner however in its Special General Board Meeting decided to amend such bye-law with other bye-laws by resolution passed by majority of members and forwarded the same to the District Registrar for his approval and registration thereof. By the amendment in bye-law No.27(b), number of directors was proposed to be raised to 21, out of which by amendment in bye-law No.27(c), it proposed one director to be elected by individual members in place of two directors. Other amendments proposed and approved by the District Registrar are not at issue. The petitioner simultaneously proposed amendment in the election Rules for de-limitation of the constituencies though Taluka- wise constituencies whereunder change was proposed within the constituencies as per classification of the societies. For 12 seats, representation to Primary Agricultural Co-operative Societies (PACS)/ Large Agricultural Multipurpose Societies (LAMPS) and multipurpose affiliated societies Taluka-wise are provided. For 5 remaining seats, societies other than PACS/ LAMPS/ Multipurpose Affiliated Societies were provided by grouping them according to their activities. The District Registrar approved such amendment proposed by the petitioner with other amendments in the bye-laws by his order dated 23.1.2015. It is required to note that the resolution passed by the petitioner to amend the bye-laws by majority of members is not Page 2 of 10 HC-NIC Page 2 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT challenged by the respondent Nos.4 and 5. However, they filed appeal under Section 153 of the Act before the Additional Registrar (Appeal). Such challenge, in absence of challenge to the resolution, is permitted for limited purpose to examine whether the amended bye- law would be in consonance with the provisions of the Act. The Additional Registrar passed the impugned order on the ground that all the affiliated societies should get equal representation, whereas by proposed amendment in the bye-laws, the PACS societies would be in majority and that while taking decision on the amendment proposed in the bye-laws, the issue of effective representation and observations of the High Court and of Hon'ble Supreme Court as referred in the impugned order with Rule 3A(8) of the Gujarat Specified Co-operative Societies Election to Committees Rules, 1982 ('1982 Rules') are required to be considered. On such grounds, the Additional Registrar interfered with the order of the District Registrar and remanded the matter to the District Registrar for taking decision afresh.
3. Learned senior advocate Mr. S.N. Shelat appearing with learned advocate Mr. Dipen Desai for the petitioner submitted that the respondent Nos.4 and 5 having not challenged the resolution passed by the petitioner for amendment in the bye-laws, they have no right to challenge the decision of the District Registrar approving the bye- laws based on such resolution. Mr. Shelat submitted that under Section 13 of the Act, the District Registrar was to be satisfied as to whether the amendment forwarded by the petitioner was not contrary to the Act or the Gujarat Co-operative Societies Rules, 1965 ('the Rules'). Mr. Shelat submitted that there is no other inquiry contemplated and the Registrar's function is only to see that amendment in the bye-laws proposed is in consonance with the provisions of the Act and the Rules and even no hearing is contemplated to the members of the society. Mr. Shelat submitted that only hearing is contemplated to the society if the Registrar is to Page 3 of 10 HC-NIC Page 3 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT refuse the amendment in the bye-law and therefore, when the Registrar found that the amendment in the bye-laws forwarded was not contrary to the provisions of the Act and the Rules, the Additional Registrar ought not to have interfered with the order of the District Registrar for the reasons not germane for taking decision for approving the amendment in the bye-laws. Mr. Shelat submitted that in the matter of de-limitation of constituencies, classification of member societies constituency-wise is always permissible. Mr. Shelat submitted that when all members, except respondent Nos.4 and 5, have decided to amend the bye-law so as to provide representations to all societies as per their activities and to classify them accordingly in different constituencies, the decision of all such majority members would bind the respondent Nos.4 and 5 and therefore, there was no good reason for Additional Registrar to interfere with the order of the District Registrar. Mr. Shelat submitted that even as per the law laid down by this Court and as approved by the Hon'ble Supreme Court, reference of which is made in the impugned order, the amendment in the bye-laws approved by the District Registrar is legal and valid. Mr. Shelat would thus submit that the matter would not require any fresh consideration by the Registrar and the order of the Registrar be upheld by quashing and setting aside the order made by the Additional Registrar in the appeal preferred by respondent Nos.4 and
5.
4. Learned advocate Mr. Baiju Joshi on the other hand submitted that simply because the resolution passed by the petitioner is not challenged by the respondent Nos.4 and 5 is no ground to say that they were not entitled to challenge the decision of the District Registrar by filing appeal on the grounds available in law. Mr. Joshi submitted that Section 153 of the Act nowhere restricts a member of the society from filing appeal if he has not objected to the resolution passed by the society. Mr. Joshi submitted that if a member finds that the amendment in the bye-laws approved by the District Registrar is Page 4 of 10 HC-NIC Page 4 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT contrary to the provisions of the Act and the Rules, he can certainly maintain the appeal and even the Appellate Authority on finding that the amendment approved is contrary to the provisions of the Act and the Rules can set at naught the amendment approved by the District Registrar. Mr. Joshi submitted that in the present case, imbalance in the matter of representations to the member societies is sought to be created by amendment in the bye-laws. Mr. Joshi submitted though the societies other than PACS/ LAMPS are large in number, they are given less representations by grouping them in only five constituencies whereas PACS/ LAMPS societies though very less in number will have greater representations, 12 directors out of 17 directors to be elected. Mr. Joshi submitted that by approving the amendment in the bye-laws, concept of equal representation, as held by Hon'ble Supreme Court, is given go-bye. Mr. Joshi submitted that de-limitation of the constituencies has to be either Taluka-wise for all societies or as per the classification of the societies so that all member societies may have equal representations on the Board of Directors. Mr. Joshi submitted that the decision taken by the District Registrar since was in ignorance of law laid down by this Court and Hon'ble Supreme Court, reference of which is made in the impugned order, and contrary to the Rule 3A of 1982 Rules, the Additional Registrar found it proper to interfere with the impugned order and to remand the matter to the District Registrar for his fresh decision after considering the judgments of this Court and of Hon'ble Supreme Court and Rule 3A(8) of 1982 Rules and therefore, this Court may not interfere with the impugned order of remand in exercise of powers under Article 226 of the Constitution of India.
5. Learned Assistant Government Pleader Mr. Rakesh Patel submitted that at the time of de-limitation of the constituencies, it is required to ensure that effective representation to members of societies is made available. Mr. Patel would support the impugned decision by contending that since by impugned order, the District Page 5 of 10 HC-NIC Page 5 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT Registrar is required to take a fresh decision by considering the decision of the High Court and of Hon'ble Supreme Court and in accordance with Rule 3A(8) of 1982 Rules, no prejudice is caused to the petitioner and therefore, this Court may not interfere with the impugned order.
6. Having heard learned advocates for the parties, it appears that though there is no challenge to the resolution passed for amendment in the bye-law, including amendment for increasing the number of seats of directors and delimitation of constituencies and though a member cannot claim any right to be heard at the time of registration of the amendment in the bye-laws by the District Registrar, however, the decision of the Registrar can always be challenged by a member by preferring appeal under Section 153 of the Act on the ground that the amendment in the bye-law would run contrary to the provisions of the Act and the Rules. Therefore, on such limited ground, the appeal preferred by the respondent Nos.4 and 5 was certainly maintainable wherein the decision of the District Registrar could be examined by the Appellate Authority to find out whether the amendment in bye- law approved by the District Registrar is contrary to the Act or the Rules.
7. It appears that the member societies are of different class as their activities differ. They are PACS, LAMPS, Multipurpose Affiliated Societies, Milk Produce Affiliated Societies and other societies. The petitioner forwarded its proposal for amendment in its different bye- laws including bye-law No.27 on 12.1.2015. As per the amendment approved, the Board of Directors will be constituted by total 21 directors. It is not in dispute that number of constituencies shall remain equal to the total number of seats of directors. Under the unamended bye-laws with unamended election Rules, 15 Taluka-wise constituencies for 15 seats of elected Directors were provided. Now, by the amendment, the seats of Directors are raised to 21, out of which 17 seats are to be filled in by election of directors from Page 6 of 10 HC-NIC Page 6 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT member societies of 17 constituencies. Out of such 17 constituencies, 12 Taluka-wise constituencies are to be represented by the directors to be elected from representatives of PACS/ LAMPS and Multipurpose Affiliated Societies situated in such Talukas. Delimitation of remaining 5 constituencies is amongst other societies to elect their directors for each of such constituencies. Such five constituencies are for Milk Produce affiliated Societies of entire Surat District and Tapi District, for affiliated Societies other than PACS/LAMPS, Multipurpose and Milk Produce societies located in Surat Municipal Corporation, limit of Surat City and Taluka, for affiliated Societies other than PACS/LAMPS, Multipurpose and Milk Produce societies located in Choriyasi, Mangrol, Kamrej and Umarpada Talukas of Surat district, for affiliated Societies other than PACS/LAMPS, Multipurpose and Milk Produce societies located in Palsana, Bardoli, Mandavi and Mahuva Taluka of Surat District and for affiliated Societies other than PACS/LAMPS, Multipurpose and Milk Produce societies located in Nizer, Uchchhal, Songadh, Vyara in Valod Taluka of Tapi District. Thus, by amendment in the bye-laws, what is done is internal formation of the constituencies as per the classification of the societies while maintaining that such constituencies shall be equal to number of seats of directors to be elected.
8. Learned advocate Mr. Joshi however submitted that by the amendment in the bye-laws, large number of societies, other than PACS/LAMPS, Multipurpose affiliated societies are given very less representation and an attempt is made to see that the PACS/LAMPS, Multipurpose affiliated societies which are less in numbers, get highest number of directors on the Board of Directors. It is alleged that the members of the PACS/LAMPS have availed of loan facilities and to make them to take further loans, though previous loans are not repaid, delimitation by amendment in the bye-laws is provided in such a manner that they get more representation. In the affidavit-in- reply filed on behalf of respondent Nos.4 and 5, it is stated that as Page 7 of 10 HC-NIC Page 7 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT many as 12 directors are to be elected from amongst 249 Primary Agricultural Co-operative Societies, whereas only 3 directors are from different constituencies from amongst 3000 other societies. Mr. Joshi would contend that on increase of seats by amendment in the bye- laws, delimitation of the constituencies should have remained either Taluka-wise or classification-wise for all societies and seats of directors could have been equally divided amongst such societies. Mr. Joshi would submit that in the present case, to give large representation with deliberate intention to have more say by the representatives of the PACS/LAMPS, Multipurpose affiliated societies on the Board of Directors, Taluka-wise constituencies are provided only to them which would give them 12 Directors which would not be in accordance with law inasmuch as it will violate the principle of equal and effective representation to the member societies on the Board of Directors. The Court, however finds that it is not the case that one member society would get chance to vote for more than one director. One Member One Vote principle is therefore, not violated. However, as regards equal representation, it is required to note that at the time of delimitation of the constituencies, it may not be possible to maintain that all member societies may get equal representation. Some may get more representation and some may get less representation. What is required is to see that number of constituencies remains equal to number of seats of directors. What should be the formation of such constituencies is then entirely left to the collective decision of the members of the society. For formation, as stated above, as per the classification of the societies, collective and majority decision is taken by the members by passing resolution in the meeting of the petitioner society. It appears that only the respondent Nos.4 and 5 have grievance against such formation of constituencies as provided in the amended bye-laws. Therefore, if all other member societies including the societies other than PACS/LAMPS, Multipurpose affiliated societies, have no objection against formation of constituencies as per their classification, it Page 8 of 10 HC-NIC Page 8 of 10 Created On Tue Jan 26 02:08:32 IST 2016 C/SCA/7280/2015 JUDGMENT cannot be said that formation of constituencies as per the objects and activities of the societies was not permissible. No Rule or no provisions of the Act is pointed out as to how the formation of constituency of the member societies with similar activities to give them effective representation by electing their directors is prohibited or otherwise illegal.
9. The Appellate Authority by the impugned order has remanded the matter to the District Registrar to decide the matter afresh after considering Rule 3A of 1982 Rules and the decision of this Court and of Hon'ble Supreme Court on delimitation of the constituencies. Rule 3A provides for delimitation for the purpose of election and what is relevant is sub-Rule (8) which provides that where the area of operation of a society is in more than one village, the number of constituencies shall be equal to the total number of seats excluding two seats reserved under sub-section (1) of Section 74-B. It appears to the Court that by amendment in bye-law, this rule is not violated and therefore, there is no question of re-examining the matter by the District Registrar to consider this Rule and to decide the matter afresh. As regards judgments of this Court and of Hon'ble Supreme Court on the question of delimitation of the constituencies in the context of Rule 3A(8) and (9), the Appellate Authority itself has quoted the final conclusion of this Court as regards delimitation of the constituencies under Rule 3A and of Hon'ble Supreme Court while confirming the judgment of this Court. Conclusion No.(4) of this Court as quoted in the impugned order reads as under:-
"(4) The delimitation of constituency under Rule 3A of the Rules can also be territorywise. The delimitation of the constituencies can be based upon the objects and activities of the societies for the classes of individual members since each electorate is to represent the respective members of a particular area or a particular class, as the case may be."Page 9 of 10
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10. As per the above conclusion No.(4), delimitation of constituencies can be based upon the objects and activities of the societies for the classes of individual members since each electorate is to represent the respective members of a particular area or a particular class, as the case may be. Therefore, if there is no violation of Rule 3A and internal formation of constituencies is done as per the wish of majority members, based on objects and activities of the societies, and when it is ensured that number of constituencies shall remain equal to the number of seats of directors to be elected on the Board of Directors, the Court does not find that the amendment approved by the District Registrar in the bye-laws for the purpose of delimitation of the constituencies for the election of directors of the petitioner society is in anyway contrary to the Act and the Rules. The Appellate Authority was therefore, not justified in remanding the matter to the District Registrar for taking fresh decision in the matter. The Appellate Authority since exceeded in its jurisdiction by remanding the matter, which was not called for, the impugned order needs to be interfered with in exercise of the powers under Article 226 of the Constitution of India.
11. For the reasons stated above, the petition is allowed. The impugned order passed by the Additional Registrar (Appeal), Co- operative Societies, Gujarat State in Appeal No.10 of 2015 is hereby quashed and set aside. Rule is made absolute.
Sd/-
(C.L.SONI, J.) Omkar Page 10 of 10 HC-NIC Page 10 of 10 Created On Tue Jan 26 02:08:32 IST 2016