Gujarat High Court
Gir Somnath Jilla Sahakari Doodh ... vs State Of Gujarat on 21 September, 2020
Author: A.Y. Kogje
Bench: A.Y. Kogje
C/SCA/8226/2020 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 8226 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.Y. KOGJE Sd/
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1 Whether Reporters of Local Papers may be allowed to Yes
see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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GIR SOMNATH JILLA SAHAKARI DOODH UTPADAK SANGH LTD.
THROUGH MR. RAJENBHAI RAYSINH VAINSH
Versus
STATE OF GUJARAT
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Appearance:
MR PRAKASH K JANI, SENIOR ADVOCATE assisted by M/S.TATVDEEP J
JANI and VIRAL K SHAH(5210) for the Petitioner(s) No. 1
MS MANISHA L.SHAH, GOVERNMENT PLEADER/PP assisted by MS
AISHVARYA GUPTA, AGP for the Respondent(s) No. 1
DS AFF.NOT FILED (N)(11) for the Respondent(s) No. 2,3,4
MR DIPEN DESAI(2481) for the Respondent(s) No. 5
MR JAGDHISH SATAPARA(5524) for the Respondent(s) No. 5
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CORAM: HONOURABLE MR. JUSTICE A.Y. KOGJE
Date : 21/09/2020
ORAL JUDGMENT
1. RULE. Learned AGP Ms.Aishvarya Gupta waives service of Rule on behalf of respondent Nos.1 to 3 and Page 1 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT learned Advocate Mr.Dipen Desai waives service of Rule on behalf of respondent No.5.
2. This petition under Article 226 of the Constitution of India is filed seeking quashing and setting aside of order dated 18.11.2019 passed by the Additional Registrar (Appeals) and order dated 24.06.2020 passed by respondent No.1 in Revision Application No.128 of 2019. The issue pertains to registration of the petitioner society as a Milk Producers' Union of newly formed Gir Somnath District and cancellation of such registration by respondent No.2 and confirmation of such order of respondent No.2 by respondent No.1 in the revision application.
3. Learned Senior Advocate for the petitioner has challenged the orders of the authorities on the grounds inter alia that the impugned orders are completely against the evidence on record, the considerations are irrelevant and grounds are non-germane. It is submitted that after due consideration of all the facts and circumstances, respondent No.2 had granted registration of the petitioner as a Milk Producing Union in newly constituted Gir Somnath District and since registration of the petitioner-Union, the petitioner-Union has carried out necessary activities as per the objective of the Union. The petitioner has a fundamental right to Page 2 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT constitute a cooperative society under Article 43(B) of the Constitution, which provides for directive principle of State policy and it is the duty of the State fo promote cooperative activity and therefore, it is the fundamental right of the petitioner to be constituted as a cooperative society and perceive its legal objective for such constitution.
3.1 It is submitted that along with the petitioner, several other cooperative societies had also made applications for registration and the District Registrar, Cooperative Societies, Gir Somnath, after taking into consideration all relevant aspects, has granted registration to the petitioner. It is submitted that while granting registration, relevant record of not only the petitioner but also of other applicant cooperative societies was examined and having found that the best interest of the society would be served by giving registration to the petitioner-Union, registration has been granted.
3.2 It is submitted that after registration was granted, certain obligations were required to be carried out by the petitioner-Union, which was communicated to the petitioner vide communication dated 19.06.2014 (Annexure-A) and the petitioner has complied with all such requirements.
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C/SCA/8226/2020 JUDGMENT 3.3 It is submitted that the petitioner though had initially some teething problems but thereafter, has
become fully operational and that record pertaining to activity of collecting milk from its members has begun and is strongly going on. However, without referring to such evidence placed on record, the respondent authorities concluded that the petitioner has failed to begun its activity. Such finding is erroneous and contrary to evidence on record.
3.4 It is submitted that registration was objected to by one Badalpara Dudh Utpadak Sahakari Mandali Ltd. ("Badalpara Mandali" for short) - respondent No.4 herein, which was also one of the applicants before the District Registrar, but did not succeed against the petitioner in receiving registration and therefore, against decision of registration said Badalpara Mandali - respondent No.4 preferred appeal under Section 153 of the Gujarat Cooperative Societies Act, 1961 ("the Act" for short). It is submitted that said Badalpara Mandali has now given up its claim for registration and therefore, even before this Court, respondent No.4 has not appeared and defended its case. Therefore, entire cause of action initiated by respondent No.4 is now rendered inconsequential and out of such proceedings, respondent No.5, who was not even initial applicant before the District Registrar, cannot Page 4 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT be permitted to take advantage. It is submitted that the respondent No.4-Badalpara Mandali, if at all had any cause, was with regard to use of letterhead of Badalpara Mandali without its authority to demonstrate its affiliation to the petitioner, but that cause also would not survive as even before the revisional authority, said Badalpara Mandali has not defended the case. 3.5 It is submitted that the respondent authorities in appeal proceedings and revision proceedings were required to examine process and record of the registration granted to the petitioner and therefore, proceedings before the appellate and revisional authorities necessarily be relate back to the date of registration and situation prevailing then. It is submitted that ordinarily, from the contentions raised in the appeal by respondent No.4, at best, it was a case of remanding the matter back to the registering authority for reconsideration of all the applications which were before the Registrar, but under no circumstances, respondent No.5 had any case to come into the fray when he was not original applicant. He cannot even be substituted in place of respondent No.4. 3.6 It is submitted that the authorities have therefore misdirected themselves by taking into consideration any development /event which is subsequent Page 5 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT to the events of registration of the petitioner. 3.7 It is submitted that in the impugned order, the authorities have taken into consideration and were greatly influenced by the stand of respondent No.5 that the petitioner has not commenced its operations for a long period and therefore, registration was rightly cancelled. It is submitted that the only avenue open for the appellate authority and the revisional authority was to examine whether registration granted to the petitioner is justifiable and is granted in accordance with law or not. What happens after the registration cannot be the preview of inquiry or control by the authorities as the Act specifically provides for dealing with the situation in case after the registration of a society, society is not functioning or ceased to function. Learned Senior Advocate for the petitioner has drawn attention of this Court to relevant provisions, i.e. Sections 20 and 107 of the Act.
3.8 It is submitted that for consideration the allegations and not-performing or ceased to perform by the petitioner society, the only action which can be contemplated is under Section 20 or winding up of society under Section 107. In other case, principles of natural justice are required to be followed. In the present case, the petitioner has not been issued with any show Page 6 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT cause notice, putting before the petitioner facts and circumstances on the basis of which the authorities were to conclude that the petitioner has not commenced its activities or the petitioner has become nonoperational. Had that been so, the petitioner would have given explanation to all such grounds raised against the petitioner. But, in the instant case, without putting forth before the petitioner the grounds on which the petitioner's registration is to be cancelled, straightaway, cancellation is effected, bypassing the procedure laid down by law.
3.9 Learned Senior Advocate for the petitioner relied upon decision of this Court in case of Apexa Co- Op. Bank Ltd. Vs. District Registrar & Ors., reported in 1993(2) GLH, 861 to indicate that even when an order of winding up of a society is to be passed, at that time, Registrar is required to grant bearing to the concerned society. In the present case, effect of the impugned orders is similar to that of winding up of society or verse. Still, no opportunity of hearing is granted to the petitioner.
3.10 It is submitted that the respondent authorities, specially respondent No.3 has conducted itself in an inconsistent manner. It is submitted that the registration of the petitioner was granted by Page 7 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT
respondent No.3, which was subject matter of challenge in appeal filed by respondent No.4 before respondent No.2. Before respondent No.2, respondent No.3-District Registrar has gone on record to defend registration granted to the petitioner. Sufficient reasons hve been produced before appellate authority by the District Registrar to maintain its stand that registration granted to the petitioner is not required to be cancelled and while granting such registration, the District Registrar has undertaken necessary procedure and has examined rival claims of other proposed societies. The same authority in its reply before this Court takes a completely contrary stand and in its additional affidavit in reply has stated in para-7 that the Government circulat dated 07.11.2006, which laid down guidelines to be followed for granting registration, have not been duly complied with while granting registration to the petitioner. The order of granting registration clearly indicates what all has been taken into consideration not qua the petitioner alone but qua other proposed societies also. It is submitted that though case is sought to be made out by the authority on the ground that for the purpose of registration, the petitioner has relied upon false documents, still there is no proper inquiry or authority and a clear-cut finding as to which documents were fake and fabricated documents on the basis of which Page 8 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT registration was granted. Moreover, if such grievance of false documents is at all considered, the same can be raised by those societies whose false documents are allegedly used by the petitioner, viz. Badalpara Mandali. It is submitted that Badalpara Mandali has now given up the claim and therefore, in absence of clear cut finding of fake document being on record, registration could not have been cancelled. It is submitted that the petitioner had relied upon the support shown by 128 societies of District Gir Somnath. So even if one society is considered to have withdrawn its support for whatever reasons, the petitioner continued to enjoy support of majority of societies within the District. 3.11 It is submitted that ground of cancellation of registration of the petitioner and ground of registration to respondent No.5 is well staged drama by the authorities. Respondent No.5 was not even in picture when the proposal of all the cooperative societies who had applied, was taken into consideration, at the stage when registration was granted and at the stage when respondent No.4 had challenged registration of the petitioner. It was at the stage of appeal when respondent No.5 submitted its proposal to the District Registrar for registration. Ordinarily, such a proposal would not have been maintained, but for some oblique Page 9 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT reasons, the proposal was kept pending and therefore, as a part of plant, an application was made to the Additional Registrar being Revision Application No.38 of 2018 without joining the petitioner as a party and the Additional Registrar directed the District Registrar to take a decision on the proposal of respondent No.5 within 30 days. Simultaneously, same authority, viz. Additional Registrar also cancelled registration of the society by delivering impugned order and on 26.11.2019, respondent No.5 was granted registration. The chronology clearly indicates that it was only with a view to favour respondent No.5 that such modus was adopted.
4. As against this, learned Government Pleader for the State submitted that vide notification dated 13.08.2013, Junagadh district was bifurcated and Gir Somnath was notified as a separate district comprising of 6 Talukas. Upon constitution of the district of Gir Somnath, 5 societies had applied for registration as Federal Milk Producing Society under Section 9 of the Act. The details of 5 societies are as under:-
I. 16.09.2013 - the Madhavrav district
Cooperative Milk Producers Union Ltd.
Vasavad, Taluka Sutrapada
II. 21.09.2013 - Gir Somnath District
Cooperative Milk Producers Union Ltd.
Aadri, Taluka: Veraval.
III. 30.09.2013 - The Gir Somnath District
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C/SCA/8226/2020 JUDGMENT
Cooperative Milk Producers Union Ltd.,
Sutrapada, Taluka Sutrapada
IV. 04.10.2013 - The Gir Somnath District
Cooperative Milk Producers Union Ltd.
Kodinar, Tal. Kodinar.
V. 18.02.2014 - The Gir Somnath District
Cooperative Milk Producers Union Ltd.
Badalpara, Taluka: Veraval.
4.1 It is submitted that vide order dated
19.06.2014, the petitioner society was granted
registration.
4.2 It is submitted that respondent No.4 perferred
an application seeking cancellation of registration
granted to the petitioner on the ground that several
factually incorrect assertions have been made by the
petitioner society, the resolutions produced on record including the resolution relating to respondent No.4 along with the undertakings is false and fabricated. The petitioner society has been favoured for political reasons.
4.3 It is submitted that the procedure as prescribed i the judgment and order passed in Special Civil Application No.15560 of 2003 and allied matters and as also contained in Government circular dated 07.11.2016 laying down guidelines to be followed while granting registration to a federal society hve not duly been complied with. Thus, the foundation of granting Page 11 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT registration to the petitioner society was based on false and fabricated documents.
4.4 It is submitted that on 15.03.2018, respondent No.5 applied for registration wherein resolutions and undertakings of 17 number of primary societies and 14 number of specified societies in total 31 societies are willing and ready to supply milk to respondent No.5 from across the district was placed on record. As the petitioner-Union was already granted registration, the application of respondent No.5 was kept in abeyance. 4.5 It is submitted that the petitioner society has failed to produce any documentary evidence to substantiate the functioning from the year 2014-19. The only evidence placed on record was with regard to the marginal functioning for the year 2019 only. Thus, from the years 2014-19, the petitioner-Union had remained non- functional and had failed to serve the District for which it has been registered.
4.6 It is submitted that while granting registration to the petitioner society, the District Registrar had failed to consider other applications duly received, some even prior in point of time. The number of members, their resolution, their undertakings, area of operation, etc. ought to have been considered. Without Page 12 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT carrying out such inquiry, accepting the word of the petitioner as absolute truth, the registration is granted to the petitioner-Union.
4.7 It is submitted that on 18.11.2019, the Additional Registrar cancelled the registration of the petitioner-Union by considering the fact that in the span of these many years of its operation since 2014, the petitioner-Union had failed to obtain the membership from Gujarat Cooperative Milk Marketing Federation (GCMMF), the State Level Federation to initiate its functioning and effective procedure for supplying the milk and failed to carry out the main objective for which the petitioner society was registered.
4.8 It is submitted that on 26.11.2019, order granting registration came to be passed in favour of respondent No.5 i.e. Kanaiya Gir Somnath Jilla Utpadak Doodh Sahakari Sangh Limited. The petitioner preferred an appeal before the Additional Registrar, being Appeal No.470 of 2019 under Section 153 of the Act challenging the order dated 26.11.2019 passed by the District Registrar granting registration to respondent No.5. As no interim relief was granted, writ petition being SCA No.22649 of 2019 came to be filed before this Court. That petition came to be disposed of with a direction to the State authorities to decide the interim application Page 13 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT without adjourning the proceedings o 06.01.2020 and passed appropriate order in accordance with law. Further, the application prayed for interim stay was dismissed and final hearing of appeal was fixed on 17.02.2020 and the same is still pending. 4.9 It is submitted that aggrieved by the order dated 18.11.2019 passed in Appeal No.58 of 2014, the petitioner preferred revision before the Joint Secretary bearing Revision Application No.128 of 2019 along with interim application. As no order was passed on the interim application, the petitioner preferred Special Civil Application No.21418 of 2019 before this Court, wherein vide order dated 03.12.2019, this Court had issued direction to decide the interim application within one week and the revision application within six weeks from 13.12.2019 and in view of the same, hearing of the revision application was completed on 02.03.2020 by the revisional authority. This Court vide order dated 03.12.2019, granted status quo as on today which is to be continued till the decision of the interim application. Vide order dated 24.06.2020, the revisional authority had, by way of a speaking order, rejected the revision application preferred by the petitioner society. 4.10 It is contended that Section 41 provides for registration of the society and emphasized on the object Page 14 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT of the society. So when the registration was granted, it was incumbent upon the petitioner-Union to work in furtherance of its object. Having failed to work for the object for a long period of 5 years, the registration was required to be cancelled to make way for other societies which could pursue object in better way, viz. respondent No.5.
4.11 Learned Government Pleader relied upon judgment of this Court in case of Tetoda Seva Sahakari Mandali Limited Vs. State of Gujarat, reported in 2008 (1) GLR, 466 and invited attention of the Court to para-11. 4.12 Learned Government Pleader next relied upon judgment of this Court in case of Aadhunik Patel Park Cooperative Housing Society Limited vs. State of Gujarat, reported in 2010 (3) GLR, 2303, to contend that before exercising powers under Section 20, winding up proceedings of a society under Section 107 is not sine qua none.
4.13 Learned Government Pleader next relied upon judgment of this Court in case of Nilabhai Rupabhai Patel, Chief Promoter of Proposal Vs. Hadta Seva Sahakari Mandli Limited, reported in (2000) 2 GLR, 1617, to contend that under Section 153, respondent No.5 has locus to challenge registration of the petitioner-Union. Page 15 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021
C/SCA/8226/2020 JUDGMENT 4.14 Learned Government Pleader relied upon an
unreported judgment of this Court in case of Vandhhol Dudh Utpadak Sahakari Mandali Limited & Anr. Vs. State of Gujarat & Ors. in SCA No.15560 of 2003 and allied matters dated 07.10.2006 and submitted that the State has also came out with the guidelines. According to this judgment, all the proposed societies will have locus to challenge the registration and therefore, contention of the petitioner about locus will not survive. Based on this judgment, it is also contended that in the order of registration of the petitioner-Union, there is no discussion of eligibility of each of the proposed societies and how claim of the petitioner-Union was found to be better than other claims. The Registrar ought to have assigned detailed reasons in this connection. As the Registrar has not complied with the requirements of this judgment, the impugned order is justified.
5. Learned Advocate Mr.Dipen Desai for respondent No.5 vehemently contended that registration of the petitioner-Union was based on certain documents which were not genuine, fake and fabricated. When the petitioner-Union is to establish itself in the cooperative sector, it is expected that the registration is made on the basis of correct facts and genuine documents. It is submitted that the registration was Page 16 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT initially challenged by Badalpara Mandali on the ground of claim of the petitioner being based on fake documents, which was filed immediately after registration by way of an appeal under Section 153. Thereafter also, the petitioner-Union has not carried out activities for which it is constituted. Even before the authorities, the petitioner-Union had failed to give accounts for a long period of 5 years. The only documents which are produced to show its operations are from the year 2019. The failure on the part of the petitioner-Union to commence its activities for such a long period justified action of cancelling its registration.
5.1 Attention of this Court is drawn to the affidavit in reply filed by respondent No.5. It is contended that even from the documents produced by the petitioner before the authorities, claiming support of 76 cooperative societies, atleast 9 of such cooperative societies have stated that they are not in support of the petitioner-Union and have not passed any resolution in support of the petitioner-Union. The petitioner has named 9 such societies whose names figure. 5.2 It is submitted that the petitioner-Union is still carrying out its activities though its registration is cancelled by hiding behind the order of status quo granted by this Court and therefore, this is coming in Page 17 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT way of respondent No.5 in expanding its activity though it is now legally registered and fully operational. It is submitted that the petitioner-Union has not even fulfilled its legal obligation under the statute like carrying out auditing of its accounts and submitting its audited accounts to the authorities.
5.3 Reliance is placed on the decision the Apex Court in case Prp Exports & Anr. vs. Chief Secretary, Government of Tamil Nadu, reported in 2014 (13) SCC, 692 and an unreported judgment of the Apex Court in case of Ram Chandra Prasad Singh Vs. Sharad Yadav in Civil Appeal No.2004 of 2020 dated 19.03.2020.
6. District Gir somnath was bifurcated from District Junagadh in the year 2013-14. Upon such bifurcation, to encourage activity of cooperative societies in the field of milk producing, proposals were made to the District Registrar, Gir Somnath by the petitioner, respondent NO.5 and 3 other milk producing cooperative societies. The applications made by the respective societies were o different dates in the year 2013-14, which were considered by the District Registrar, wherein the District Registrar undertook process of scrutinizing the proposals, viability of such proposals and having found that the petitioner-Union's proposal was accompanied with maximum number of undertakings to supply Page 18 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT milk as compared to other proposers, whose proposals were accompanied with resolution of only the promoters, the proposal of the petitioner-Union was accepted on 19.06.2014. Accordingly, registration was granted to the petitioner-Union and a communication of the same date was also issued calling upon the petitioner to fulfill certain obligations as mentioned in the said communication. There is no dispute to the fact that 7 requirements to be fulfilled have been complied with by the petitioner.
7. It appears that the order of registration was subject matter of challenge in an appeal filed by Badalpara Mandali, which was one of the proposers before the District Registrar. The main contention in preferring the appeal was that the petitioner-Union along with its proposal had annexed resolution of said Badalpara Mandali. However, no such resolution was passed to support the petitioner and therefore, documents produced along with the proposal were fake and fabricated on the letterhead of said Badalpara Mandali. The said appeal was filed on 28.08.2014, to which the petitioner filed reply on 01.11.2014. It is pertinent to observe that the grounds in appeal were restricted to the alleged irregularities in registration of the petitioner. Nowhere was the ground with regard to the petitioner not Page 19 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT commencing the activity or has abandoned the activity was raised. In the reply, the petitioner-Union has however contended that the election of Milk Union was held by the Authorized Co-operative Societies and the Prant Officer, Una and its notification was published on 14/10/2019. Total eleven new directors have been elected for the respondent no.2 - Milk Union. Its first meeting was held on 02/11/2019, wherein, the chairman/vice chairman of the organization were appointed. 128 Milk Societies are clubbed with respondent no.2 organization and they provide milk and monthly bill of the milk union goes upto Rs.4,40,00,000/-. It is calculated at Rs.27,24,62,756/ gross from Khandhar 01/04/2019 & Co., to 30/09/2019. Chartered M/s. Accountants, Ahmedabad have completed tax audit of the respondent organization and co-operative audit is about to be completed. Thus, new societies are also joining and providing milk to the respondent no.2. Thus, approx. 200 milk societies of the district are supposed to be joined by the end of this year.Milk union has been working as per the objective since more than last five years and its gross bill is Rs.27,24,62,756/- from 01/04/2019 upto 30/09/2019. Considering the same and as the Prant Officer, Una has recently completed an election of the respondent no.2 - milk union as per the provisions of the co-operative laws and new board has been elected and come into existence.
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C/SCA/8226/2020 JUDGMENT
8. By order dated 18.11.2019, Appeal No.58 of 2014 by respondent No.4 came to be allowed. It is pertinent to observe here that respondent No.5, while the appeal was pending, had submitted proposal on 15.03.2018 for registration of Milk Producers' Union in District Gir Somnath. The said proposal being pending, respondent No.5 filed revision application No.38 of 2018 before the Additional Registrar and the Additional Registrar on 01.09.2018 directed the District Registrar to take a decision on the proposal within 30 days. The said decision was challenged by the petitioner by filing revision application No.90 of 2018, which revision application came to be dismissed by the State Government on 20.11.2019. The registration of the petitioner was cancelled by the Additional Registrar on 18.11.2019 and on 26.11.2019, the District Registrar granted registration to respondent No.5. The chronology of events indicates something more than a coincident and an effort to conclude the proceedings in hot haste.
9. The aforesaid chronology becomes more relevant in view of the fact that registration of the petitioner- Union was challenged by Badalpara Mandali- respondent No.4. The said Badalpara Mandali thereafter appears to have abandoned its stake for the reasons which are not on record. Even before this Court, though Badalpara Mandali Page 21 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT is a party respondent No.4, no one has appeared on its behalf nor defended its case against cancellation of registration. When it was evident in the revisional proceedings that respondent Badalpara Mandali was no more interested in pursuing its appeal and revision thereafter and when some semblance of evidence had come on record abut the fact that the petitioner-Union was operational and in fact collecting milk from its members, cancallation of registration appears to be in anticipation of grant of registration to respondent No.5. Therefore, apart from procedural haste suggested in the chronology aforementioned, it appears to be an attempt to end the activities of the petitioner-Union so that automatically respondent No.5, who is a late entrant, stands to gain.
10. It is pertinent to observe that respondent No.5, when filed its proposal, the petitioner-Union was already in existence and at that stage, there was nothing to indicate that the petitioner-Union is non-operational and for that reason, a fresh proposal was made by respondent No.5. Therefore, there was no reason that such proposal ought to have been decided there and then, but this action of keeping it pending, respondent NO.5 approaching higher forum, i.e. to say Additional Registrar (Appeals) and respondent No.2 seeking direction Page 22 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT to the Registrar to decide its application on one hand within a stipulated period, thereafter respondent No.2 turning its attention to the revision application and dismissing the same, then the Registrar deciding the application of grant of registration to respondent No.5, does not indicate a clean procedural action, but rather suggests of respondent No.2 proceeding with predetermined mind. Of course, grant of registration to respondent No.5 is not the subject matter before this Court as the same is already before the authorities which will be brought to logical conclusion in accordance with law and therefore, the Court consciously makes these observations only with due regard to cancellation of registration of the petitioner-Union.
11. Section 4 of the Act provides for the societies which may be registered. It specifies that a society, which has as its object the promotion of the economic interests or general welfare of its members or of the public, in accordance with cooperative principles, or as society established with the object of facilitating the operations of any such society, may be registered under this Act. The proviso to Section 4 provides for the society not to be registered if, in the opinion of the Registrar, it is economically unsound, or its registration may have an adverse effect upon any other Page 23 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT society, or it is opposed to to, or its working is likely to be in contravention of public policy. Therefore, when the petitioner-Union came to be registered, the Court has but to presume that all such requirements under Section 4 have been fulfilled when the District Registrar passed order on 19.06.2014 granting registration. The reasons given by the District Registrar are the proposal of the petitioner was backed with more than 101 Milk Cooperative Societies along with undertaking to supply milk to the petitioner-Union whereas other 4 proposed societies did not have such support by other cooperative societies except for the promoters. The order records that proposals were scrutinized and viability was examined while granting registration. Reliance placed upon the decision of this Court in case of Vandhhol Dudh Utpadak Sahakari Mandali Limited & Anr. Vs. State of Gujarat & Ors. in SCA No.15560 of 2003 and allied matters dated 07.10.2006, which is relied upon by both learned Senior Advocate for the petitioner as well as learned Government Pleader for the respondent-State needs to be read closely. This Court was considering a question where number of objections were received by the High Court by the aggrieved parties either seeking registration when request was turned down by the authorities or opposing the registration granted to rival cooperative societies. The scope of petition this was that despite provisions Page 24 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT made under the Act and Rules framed thereunder and despite certain guidelines being issued by the Govenrment to regulate the procedure for grant of registration to proposed societies, such procedure was not free from possibility of manipulation and in many cases, the Court had observed that the machinery was manipulated to ensure registration of societies whose registration was either not desirable or was only for the purpose of political consideration. With this background, the Court had proceeded to examine the facts petitions and laid down broad guidelines. In these guidelines, the Court in para-16.1 has stated that there cannot be a straight jacket formula which can be applied with mathematical exactitude in view of varieties of societies, their operations in various fields and different situations that may come up for consideration. However, what was required to be considered by the authorities was to rule out any discriminatory approach, differential treatment, giving propriety on the basis of first come first serve formula and of course, when more than one rival societies are staking claim, in that situation, to give a fair treatment to all rivals. The Court had proceeded to give direction in para-23 that the registering authority shall have to weigh rival claims and grant registration to such society which is most likely to serve cooperative principles and be in the interest of population of Page 25 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT village or the area and otherwise fulfill the requirements under the Act. If the facts of the present case are considered in light of these observations, the order of registration of the petitioner-Union, in the opinion of this Court, is in consonance with such observations. When the Registrar was examining claims of rival societies, the Registrar did find claim of the petitioner-Union to be on better footing than others as observed in that order, other societies were only restricted to the benefit to the promoters whereas the petitioner-Union had backing of more than 101 cooperative societies.
12. On behalf of the State, it was submitted by relying upon this judgment in case of Vandhhol Dudh Utpadak Sahakari Mandali Limited (supra) that the rival claim of the proposed societies was not examined and therefore, subsequent decision of cancellation of registration was justified. Such argument will not hold good, firstly when there is no provision nor is the ratio laid down by the judgment in case of Vandhhol Dudh Utpadak Sahakari Mandali Limited (supra) that the order of granting registration to the petitioner needs to demonstrate the reasons for rejecting rival claims of each of the proposed societies. In the present case, in fact, reasons are assigned. Secondly, the Court does not Page 26 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT find that registration has been granted de hors the observations of the Court in the case of Vandhhol Dudh Utpadak Sahakari Mandali Limited (supra) as well as guidelines given by the State pursuant to such judgment. Lastly, rival claims of the societies were not taken into consideration and that reasons for rejecting their claims were not clearly mentioned in the order of registration. Such argument is available only to the proposed societies, which lost in the race to the petitioner. As on date, none of the other proposed societies has raised this ground before the authority. Even only proposed society-respondent No.4, which challenged registration, was on the ground of the petitioner-Union having produced certain documents which were alleged by them to be fake or fabricated. The ground that their claim was not duly considered and that the order of registration ought to have contain detailed reasonings of rejection of the claim of each of the proposed societies, was never taken up. It would therefore be a ground which is not canvassed only and only to justify the act of cancelling registration.
13. Section 37 of the Act provides for the societies which are registered to be body corporates by the name under which it is registered, with perpetual succession and a common seal and with power to acquire, Page 27 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT hold and dispose f property, to enter into contracts, to institute and defend suits and other legal proceeding and to do all such things as are necessary for the purpose for which it is constituted and therefore, once registered, anything that is to be done to effect such registration necessarily must be provided under the law and accordingly, Section 20 provides for cancellation of registration. The eventualities under which Section 20 can be invoked are specified therein where the Registrar is to make an order cancelling registration of the society if it transfers the whole of its assets and liabilities to another society, or amalgamates with another society, or divides itself into two or more societies, or it its affairs are would up or it has not commenced business within a reasonable time of its registration or has ceased to function. Sub-section (3) provides that the society shall, from the date of such order of canellation, e deemed to be dissolved and shall cease to exist as a corporate body. These eventualities mentioned in Section 20 provide for a separate procedure to be undertaken to pass order under Section 20.
14. In the present case, as the order of cancellation is in an appeal proceedings under Section 153, respondent No.2 was required to relate back to the date of registration and the rival claims that existed Page 28 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT then. But, it appears that while examining the claim of registration under Section 153, respondent No.2 travelled into the jurisdiction under Section 20, which is primarily jurisdiction of the Registrar of taking into consideration the eventualities mentioned under Section 20 though there is no manner of doubt that the proceedings were under the proceedings under Section 20. Therefore, respondent No.2, taking into consideration the subsequent development with regard to whether society had taken its operations, whether society is functioning in line of its objections or whether functioning of the society is beneficial to the members were extraneous considerations insofar as appeal proceedings are concerned.
15. Despite respondent No.2 travelling from Section 153 to Section 20, the petitioner did indicate about functioning of the society by producing on record accounts of collection of milk on page Nos.116, 147 and
148. Though it may indicate that that documents were for the years 2019 to 2020, it was not open for respondent No.2 to question as to what happened between 2014 to 2019 for a period of 5 years. It was for the Registrar under Section 20 to raise such an issue before it before the petitioner-Union and receive explanation, if any, before taking such decision. Even before this Court, by way of Page 29 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT further affidavit of the petitioner, detailed statements of accounts have been produced and an explanation is offered that on account of non-affiliation with GCMMFL, the petitioner-Union was supplying milk for its process to Porbandar District Cooperative Milk Producers Union as it had sufficient processing machinery, which the petitioner-Union was yet to establish, meaning thereby from December 2018 to July 2020, milk collected by the petitioner-Union was being deposited with Porbandar District Cooperative Milk Producers Union. Learned Government Pleader has assailed this submission contending it to be misleading the Court and had accordingly, compared the document produced on page No.273, which is certificate of Porbandar District Cooperative Milk Producers Union with page No.326, which is letter dated 30.07.2020 by the Managing Director of Porbandar District Cooperative Milk Producers Union addressed to the District Registrar intimating that Porbandar District Cooperative Milk Producers Union has stopped accepting milk from the petitioner-Union from 01.08.2020 as they came to know about cancellation of registration. The timing of this communication to the District Registrar is not far to be imagined. On one hand the State Government is committed to cooperative movement and when the society like the petitioner was gaining foothold and admittedly undertaking activity of Page 30 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT collecting milk from its members and supplying it to another bigger diary with better facilities, in the opinion of this Court, the activity ought to have been encouraged, but the chronology indicates that with predetermined mind, it was decided to bring in new player-respondent No.5 in place of the petitioner-Union that entire gamete was played.
16. Insofar as submission of learned Senior Advocate for the petitioner keeping registration on the basis of wrong documents, firstly respondent No.4, who had raised this ground, has now abandoned its claim. Moreover, it was only one society which had made such allegations. The claim of the petitioner-Union was raised by more than 10 different cooperative societies, which were supplying milk to the petitioner-Union. In the additional affidavit of respondent No.3, it is stated that in the Gir Somnath District, there are 146 primary societies and 154 specified societies and total registered societies are 300. The claim of the petitioner-Union is that 118 societies are still supporting the petitioner. The further affidavit of respondent No.5 has produced on record certain relevant documents. A list of societies which are mentioned from page Nos.302 to 304, which are 76 in number have supported the case of the petitioner. However, in the Page 31 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT further affidavit of respondent No.5, it is stated that 9 of these societies have not supported the petitioner and have alleged that no resolution has been passed by them to support the petitioner-Union. This factual assertion still leavs behind majority of the societies to be still supporting the petitioner-Union. The circumstances under which such documents, which are now alleged to be fabricated, is a matter of inquiry. te Court does not find either of the authorities have raised the issue of the documents produced to be fabricated upon examination and after inviting attention of the petitioner to such allegations in finding of fact on the basis of evidence arrived at. If such contentions are to be believed then of course, the method required to be adopted by respondent No.2 was to remand the matter, which was the modus adopted by this Court in the judgment in case of Vandhhol Dudh Utpadak Sahakari Mandali Limited (supra).
17. Learned GP relied upon judgment of this Court in case of Tetoda Seva Sahakari Mandali Limited (supra) and invited attention to the observations that before exercising registering authority the is required to carefully consider whether the proposed society the members, is financial is proposed interests registering authority ensure being for for benefit protecting the of the members. The is further required to that the Page 32 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT proposed society established of for is not achieving the nefarious objects of vested interests or for personal gains of traders. There is no quarrel to such proposition. However, in the facts of this case, nothing has come on record that the petitioner-Union is not for the benefit of its members or for protection of financial interest of its members. In fact, considering the fact that the District was recently bifurcated, the petitioner-Union was in fledging state and had now gained some foothold. Nowhere it has come on record that the petitioner-Union has acted against the interest of its members or against the public policy or its own object.
18. In case of Aadhunik Patel Park Cooperative Housing Society Limited (supra) relied upon by learned Government Pleader, this Court indicated that orders under Section 20 are independent to the proceedings under Section 107. Such not being the facts of the present case, the judgment would not help the case of the respondent.
19. Learned Government Pleader relied upon judgment of this Court in case of Nilabhai Rupabhai Patel, Chief Promoter of Proposal (supra). It would be relevant to quote para-4 of this judgment, which reads as under:-
"4. Under Section 2(19) of the Act society is Page 33 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT defined so as to mean a co-operative society registered or deemed to be registered under the Act. Section 4 indicates as to what societies may be registered and cases in which registration may be refused. Section 9 provides for registration, provisional registration and certificate of registration on receipt of an application for registration from a society. It appears that the revisional authority in holding that the appeal could not be filed by the Society unless it was registered was coloured by the definition of `Society' in Section 2(19). In the opening part of Section 2, it is clearly indicated that the definitions have to be understood as per the meaning given unless the context otherwise requires. When a society applies for registration under Section 4 read with Section 9, obviously, it would be a society which is not yet registered. Therefore, the word `society' in context of sections 4 and 9 would be a society which seeks registration and not a society which is already registered. Section 153, inter alia, provides for an appeal against any order made under Section 4 or 9 of the said Act. Obviously therefore, when an application for registration of a proposed society is refused, an appeal would lie against such an order under Section 153(1) at the instance of the person who is aggrieved against the order refusing to register the society proposed by him for registration. The revisional authority therefore committed an error in holding that appeal could not have been filed by the Page 34 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT petitioner under Section 153 on the ground that the petitioner was not a registered society and therefore was not an affected party. The finding of the revisional authority on this ground is clearly against the provision of Section 153 of the said Act."
20. The petitioner in the present case has not argued on the point of locus of respondent No.5. The contention, insofar as respondent No.5 is concerned, is to the effect that to facilitate respondent No.5 and to benefit respondent No.5, the impugned order is passed to cancel registration of the petitioner and close down its activities.
21. Learned Advocate for respondent No.5 relied upon the decision of the Apex Court in case of Prp Exports & Anr. (supra) to contend that the appellate authority was justified in taking into consideration the subsequent events like non-functioning of the petitioner- Union for long time and based its decision on such ground. The judgment in case of Prp Exports (supra) was based on an action against the petitioner firm which had allegedly indulged in unauthorized quarry activity and therefore, the police authorities took steps to seal the factory premises, vehicles and instruments and suspending quarry operations, which was the subject matter of challenge before the Madras High Court. Learned Single Page 35 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT Judge of the Madras High Court had conditionally released seals against which Letters Patent Appeal was preferred by the State where Division Bench had formulated question as to whether the appellant can place reliance on subsequent events, viz. passing of suspension order and issuance of show cause notice against the original petitioner. The LPA was allowed by the Division Bench by issuing some equitable directions by taking into consideration the interest of the workers and for honouring the same, statutory obligations of the original petitioner firm. However, no ratio appears to have been laid down by the Apex Court to support the argument of the petitioner that subsequent event, i.e. non- functioning of the petitioner-Union could be take into consideration by the appellate and revisional authority. In para-12 of this judgment, the Apex Court has held as under:-
"12. We find it difficult to accede to that request made by the senior counsel, at this stage, especially in the wake of the report of the District Collector dated 19.5.2012 as well as the report of the Deputy Director of Geology and Mining dated 23.11.2012. In the affidavit filed by the third respondent, it is pointed out, that the volume of illegal transportation from the petitioners' 16 quarries is around 1207863.164 Cubic Meters and show cause notices have been issued to the Petitioner firm under Page 36 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT Section 21(5) of the Mines and Minerals (Development and Regulation) Act, 1957 for recovery of the cost. It is stated that the value of the illicit quarry in the 16 quarries alone comes around 4124.14 crores. Further, it was also pointed out that other quarry operators have also indulged in similar illegal quarry operations and the total volume of illegal operations is estimated around Rs.12390.460 crores. Further, it was also pointed out that several criminal cases are also pending for carrying on illegal quarrying operations in the government land."
22. In an unreported judgment of the Apex Court in case of Ram Chandra Prasad Singh Vs. Sharad Yadav in Civil Appeal No.2004 of 2020 dated 19.03.2020, reliance is placed on paras 15, 16 and 17 to substantiate the argument that under Article 226 of the Constitution of India, the High Court can take into consideration any subsequent event. The case before the Apex Court was an order of the Delhi High Court in application made by the appellant seeking submission of additional documents to be placed on record, which came to be rejected by the High Court. The exercise of powers under Article 226 is much wider than which is provided under Section 153 of the Cooperative Societies Act which is the jurisdiction exercised by respondent No.2. Moreover, when the Act itself provided for a separate provision to deal with so Page 37 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021 C/SCA/8226/2020 JUDGMENT called subsequent event, bypassing such provision, respondent No.3 ought not to have taken upon itself and undertaken exercise of examination required under Section
20.
23. For the foregoing reasons, the petition is required to be allowed. It is accordingly allowed. The order dated 18.11.2019 passed by the Additional Registrar (Appeals) and order dated 24.06.2020 passed by respondent No.1 in Revision Application No.128 of 2019 are ordered to be quashed and set aside. Rule is made absolute. No order as to costs.
24. Learned Advocate Mr.Dipen Desai for the respondent prayer for staying this judgment and order. However, considering the fact that business of the petitioner-Union is in progress, the prayer is not accepted.
Sd/ (A.Y. KOGJE, J) *Shitole/CAROLINE Page 38 of 38 Downloaded on : Tue Feb 23 06:39:20 IST 2021