Drive In Park Apartment Cooperative ... vs Deputy Secretary Appeals Agriculture ... on 6 December, 2018

[Cites 10, Cited by 0]

Gujarat High Court

Drive In Park Apartment Cooperative ... vs Deputy Secretary Appeals Agriculture ... on 6 December, 2018

Bench: J.B.Pardiwala

         C/SCA/10862/2018                                       JUDGMENT




            IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

             R/SPECIAL CIVIL APPLICATION NO. 10862 of 2018

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR.JUSTICE J.B.PARDIWALA

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1     Whether Reporters of Local Papers may be allowed to              No
      see the judgment ?

2     To be referred to the Reporter or not ?                          No

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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    DRIVE IN PARK APARTMENT COOPERATIVE HOUSING SOCIETY LTD
                             Versus
    DEPUTY SECRETARY APPEALS AGRICULTURE AND COOPERATION
                              DEPT
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Appearance:
MR BAIJU JOSHI(1207) for the PETITIONER(s) No. 1,2,3
MR. RONAK RAVAL, ASST. GOVERNMENT PLEADER(1) for the
RESPONDENT(s) No. 1
MR DHAVAL D VYAS(3225) for the RESPONDENT(s) No. 4,5
NOTICE NOT RECD BACK(3) for the RESPONDENT(s) No. 3
NOTICE SERVED(4) for the RESPONDENT(s) No. 2
==========================================================
    CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA

                               Date : 06/12/2018

                               ORAL JUDGMENT

1. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the Page 1 of 28 C/SCA/10862/2018 JUDGMENT following reliefs;

"(A) This Hon'ble Court be pleased to issue a writ of mandamus and/or writ of certiorari or any other appropriate writ, order or direction, quashing and setting the order, dated 24.5.2017 passed by the respondent No.3 - District Registrar as also the order, dated 30.6.2018, passed by the respondent No.1 in Revision Application No.1 of 2018.

(B) During the pendency hearing and final disposal of this petition, this Hon'ble Court be pleased to stay the execution, implementation and operation of the order, dated 24.5.2017 passed by the respondent No.3 - District Registrar as also the order, dated 30.6.2018, passed by the respondent No.1 in Revision Application No.1 of 2018.

(C ) Any other and further reliefs as deemed just and proper looking to the facts of this case, may kindly be granted in favour of the petitioner, in the interest of justice. "

2. The case of the writ applicants, as pleaded in the writ application, is as under;

"3. Brief facts of the case are that respondent Nos.4 and 5 herein are the members of the petitioner No.1 society holding unit Nos.C/2/82 and C/4/63 respectively. It is submitted that as per the bye-laws of the society, no person can let out the property without prior permission of the society and if the same is violated then, such person can be evicted and the penalty can be imposed as per the said bye-laws of the society.

3.1 The petitioners submit that respondent Nos.4 and 5 have committed the violation of such bye-laws and, therefore, a decision came to be taken in the annual general meeting dated 28.6.2015 holding that respondent Nos.4 and 5 have committed two major defaults; one is that the property is let out without prior permission of the society to some unknown person and secondly, despite repeated notices and the specific Page 2 of 28 C/SCA/10862/2018 JUDGMENT decision taken in the annual general meeting dated 28.6.2015, wherein the respondent No.4 had remained present, had tried to cover up the entire balcony of the unit held by them and, therefore, the actions have been taken by the society. As a counterblast, the respondent Nos.4 and 5 made sham and bogus complaint to the office of the District Registrar, who had initiated the proceedings under Section 76B of the Act against the petitioner Nos.2 and 3. It is pertinent to note that so far as covering up the balcony is concerned, against such decision of the society, the respondent Nos.4 and 5 had preferred Lavad Case before the Board of Nominees Court, wherein interim injunction is refused and not only that but even cost of Rs.2500/- was also imposed, against which the respondent Nos.4 and 5 had preferred Revision Application which is pending before the Gujarat State Cooperative Tribunal, wherein also no stay is granted.

3.2 It is submitted that as per the provisions of the byelaws, the member can hold only one unit in the society and if violation thereof is committed, another unit was purchased by respondent Nos.4 and 5 i.e. C/4/63 in the year 2014. However, without taking any prior permission, it has also been let out in violation of the byelaws as well as the settled legal proposition. Therefore, the petitioner No.1 society has imposed penalty for violating the provisions of byelaws and in short, the petitioner Nos.2 and 3, who are the chairman and secretary respectively of the managing committee of the society, had simply implemented the byelaws against the respondent Nos.4 and 5 along with other members of the committee.

3.3 It seems that upon making false and frivolous complaint to the District Registrar by the respondent Nos.4 and 5, the respondent No.3 - District Registrar issued show cause notice under Section 76B of the Act against the petitioner Nos.2 and 3 on 17.10.2016, to which initially on 27.10.2016, a reply was filed and later on, detailed reply was filed on 17.3.2017. Annexed hereto and marked as Annexure-A is copy of notice under Section 76B of the Act dated 17.10.2016. Annexed hereto and marked as Annexure-B Collectively are copies of replies dated 27.10.2016 and 06.04.2017 filed by the petitioners and Annexure-C is copy of written arguments submitted by petition dated 27.3.2017. It is Page 3 of 28 C/SCA/10862/2018 JUDGMENT submitted that before the District Registrar, the petitioner No.1 society has submitted the detailed reply which was signed by about 100 members out of 110 favouring the society. The District Registrar, without considering the same and without giving personal hearing, passed the order under Section 76B(1) of the Act removing the petitioner Nos.2 and 3 from the post of chairman and secretary respectively and further passed the order under Section 76B(2) of the Act holding them responsible and restraining them from holding any post by passing further order of disqualification for a period of 2 years. At this stage, it is submitted that the District Registrar has passed such order on the basis of notings of the auditor and has held that petitioners had charged transfer fees of more than Rs.50,000/- and committed the violation of circular issued by the office of the Registrar. If the provisions of Section 76B of the Act are perused, it clearly states that first the District Registrar has to form an opinion that the officer makes persistent default or is negligent in his performance of duties imposed on him under the Act, Rules or the Byelaws and does anything prejudicial to the interest of the society. At this stage, it is submitted that neither any opinion is formed by the Registrar nor any persistent default or negligence nor there is any action which is prejudicial to the interest of the society. In fact, the petitioner Nos.2 and 3 had not taken any independent decision but, it is the decision of the managing committee and, therefore, two persons cannot be singled out of the entire managing committee. Even otherwise, the petitioners have acted in consonance with the Act, Rules and the Byelaws and have acted in the interest of the society and, therefore, the facts of the present case do not fall within the scope and ambit of Section 76B of the Act and, therefore, the order passed by the District Registrar is ex-facie illegal, improper, ultra vires and the same is passed in violation of the principles of natural justice and, therefore, the same deserves to be quashed and set aside.

3.4 It is submitted that without perusing any of the above-mentioned contentions raised, the District Registrar has passed the order on 24.5.2017 under Section 76B of the Act, a copy of which is annexed hereto and marked as Annexure-D to the petition.

Page 4 of 28

C/SCA/10862/2018 JUDGMENT 3.5 Being aggrieved by such order at Annexure-D, the present petitioners preferred Revision Application No.84 of 2017 before the respondent No.2, a copy whereof is annexed hereto and marked as Annexure-E to the petition. In the said proceedings, the written arguments have also been submitted, copies of which are annexed hereto and marked as Annexure-F Collectively. Ultimately, after hearing the parties including the respondent Nos.4 and 5, who had filed the caveat, the Additional Registrar was pleased to allow the Revision Application No.84 of 2017. Annexed hereto and marked as Annexure-G is copy of the order dated 26.12.2017 passed in Revision Application No.84 of 2017 by the Additional Registrar.

3.6 It is submitted that respondent Nos.4 and 5 herein also preferred Revision Application No.1 of 2018 before the respondent No.1, copies whereof are annexed hereto and marked as Annexure-H Collectively. It is submitted that since the petitioners had filed the caveat, notice was issued on 12.1.2018 by the respondent No.1. Later on, all of a sudden, the respondent No.1 has passed the order granting injunction in terms of Para.3(A) of the Revision, vide order dated 3.4.2018 and fixed up the hearing on 21.4.2018. Annexed hereto and marked as Annexure-I is copy of the interim order dated 3.4.2018 passed by respondent No.1 in Revision Application No.2 of 2018.

3.7 It is submitted that if such order is perused, granting of such relief would amount to granting of final relief at interim stage more particularly when the order of Registrar was acted and the petitioner Nos.2 and 3 had been restored back to their position. Ultimately, the petitioners had filed a detailed reply before the Deputy Secretary in the proceedings of Revision Application No.1 of 2018, a copy of which is annexed hereto and marked as Annexure-J to the petition. Thereafter, the matter was to be fixed up for confirmation of interim relief. Instead, vide order dated 30.6.2018, without giving opportunity of hearing, straightway, the respondent No.1 has passed the final order allowing Revision Application No.1 of 2018 filed by respondent Nos.4 and 5. Resultantly, the order passed by the District Registrar, removing petitioner Nos.2 and 3 under Section 76B of the Act had been confirmed. Annexed hereto and marked as Page 5 of 28 C/SCA/10862/2018 JUDGMENT Annexure-K is copy of order, dated 30.6.2018, passed by the respondent No.1 in Revision Application No.1 of 2018, which is impugned to the present proceedings.

4. Before the petitioners come to the grounds for challenge of order dated 30.6.2018 passed by the respondent No.1, the petitioners hereby specifically allege the grounds of legal malafide against respondent No.3 - District Registrar, in view of the following facts;

4.1 It is respectfully submitted that the District Registrar has initiated the proceedings under Section 76B of the Act against petitioner Nos.2 and 3 only, though the decisions are taken by the managing committee or even by the general body and despite that only petitioner Nos.2 and 3 have been singled out. It is submitted that the District Registrar independently has not formed the opinion under Section 76B of the Act for initiation of proceedings but, had relied upon some observations made by the auditor in its audit report in respect of transfer fees and had initiated the proceedings and thereby, not formed his opinion on that.

4.2 It is submitted that despite the order was passed under Section 76B of the Act which was the subject matter of pending Revision Application No.84 of 2017 before the Additional Registrar, during the pendency thereof, the District Registrar has initiated another proceedings whereby on 5.7.2017 the order under Section 81 of the Act - removal of the entire committee of the society, was passed, which was challenged by filing Revision Application No.87 of 2017 and such order was quashed and set aside on the ground that there is violation of some mandatory provisions which were not complied with and, therefore, the liberty was reserved to initiate proceedings again. Immediately thereafter on 13.9.2017, another notice under Section 81 of the Act was issued on the same grounds, against which the petitioners have filed Revision Application No.125 of 2017 which is pending before the Additional Registrar. During the pendency of such proceedings, again, the District Registrar dares to issue another notice on 12.4.2018 under Section 81 of the Act to the society, against which the petitioner No.1 society had preferred Appeal No.145 of 2018 wherein the Additional Registrar was pleased to grant the stay in the proceedings.

Page 6 of 28

C/SCA/10862/2018 JUDGMENT 4.3 It is submitted that in pursuance to such proceedings, the District Registrar has stated that by mistake, such proceedings had been initiated. In short, the conduct of the District Registrar clearly proves the contention of legal malafides favouring the petitioners, as during the pendency of the proceedings before the higher authorities under Section 76B of the Act, wherein the subject matter is same and identical, the District Registrar dares to initiate the proceedings under Section 81 of the Act for supersession of the entire committee of the society and that too, repeatedly and, therefore, the manner and method in which the District Registrar has acted whereby the proceedings had been initiated under Section 76B of the Act right upto passing of order under Section 76B of the Act in violation of the principles of natural justice and in furtherance of initiation of proceedings under Section 81 of the Act for the same grounds speaks volumes about the legal malafides."

3. Thus, it appears that the respondents Nos.4 and 5 are members of the Drive-in Park Apartment Cooperative Housing Society Ltd. and the writ applicants Nos.2 and 3 herein are the Chairman and Secretary respectively of the said Society. A dispute cropped up between the respondents Nos.4 and 5 and the applicants Nos.2 and 3. In this regard, the respondents Nos.4 and 5 lodged a complaint with the District Registrar (Housing), Ahmedabad. This dispute, ultimately, led to initiation of proceedings by the District Registrar under section 76(B) of the Gujarat Cooperative Societies Act, 1961 (in short "the Act, 1961"). It all started with a show-cause notice issued by the District Registrar dated 17th October, 2016. The show- cause notice reads thus;

"Show cause notice as per section 76(b) of the Act Page 7 of 28 C/SCA/10862/2018 JUDGMENT Outward No. DRM/01/Kh-3/97/2016 District Registrar Co-operative Societies [Housing] Ahmedabad, Krishi Bhavan First Floor B-Wing, Paldi, Ahmedabad Date :: 17/10/2016 PERUSED ::

1. This office site inspection report by Mr. A.D. Chauhan, Auditor Grade - 2, Co-operative Societies [Urban], Ahmedabad dated 8/9/2016.

2. Provisions of section 76(b) of The Gujarat Co-

operative Societies Act, 1961.

3. Agriculture & Co-operation Department, Gandhinagar notification for handing over charge dated 21/7/11 and dated 20/11/12 and 1/1/12016.

4. Office order No. DRM/01/Chh/OS/3/2015 dated 1/1/2016 by the Registrar, Co-operative Societies, Gujarat State, Gandhinagar.

PROPOSAL ::

The Drive-in-Park Co-operative Housing Society Ltd., Vibhag 4, Thaltej, Ahmedabad is a co-operative housing society registered under section 9 of The Gujarat Co-operative Societies Act, 1961 [which shall hereinafter be referred to as 'Co-operative Act']. Having registration No. Gh-14263 registered on 2/5/1990. The said society accounting / administrative control falls below the jurisdiction of this office.

The facts in the present case are that, The Drive-in-Park Co-operative Housing Society Ltd., Vibhag-4, Thaltej, Ahmedabad member Mrs. Punam Ishwarlal Baxani has made written representation about the mismanagement by the Society Managing Committee on 27/6/2016, 11/7/2016 and on 13/07/2016. Taking the same into consideration Mr. A. D. Chauhan, Auditor Grade - 2, Co-operative Societies [Urban] Ahmedabad had taken on hand the site inspection. The details of Page 8 of 28 C/SCA/10862/2018 JUDGMENT the same are as here below.

(1) The applicant Mrs. Punam Ishwarlal Baxani had purchased the Flat C/4/63 in the year 2014, and they are living in C/2/82. The flat No. C/4/62 was given on rent in the same year. In June 2016 the old tenant had vacated the flat and new tenant came therefore the police verification copy was given to the Society on 3/7/2016 and informed the society. But the Society Managing Committee had on 10/7/2017 passed resolution No. 3 believing that the prior permission was not obtained and imposed penalty of Rs. 81000/-.

Which is in fact not proper.

(3). The applicant Mrs. Punam Ishwarlal Baxani had on 28/7/2013 and on 8/5/14 paid transfer fees Rs. 2,50,000/- for transfer of flat No. C/4/63. The member was dissatisfied and therefore made representation to this office and so Rs. 10,000/- was taken as credit towards transfer fees. And Rs. 50,000/- was refunded, and the balance Rs. 1,90,000/- development charges have to be recovered therefore to recover the same or to refund, as directed by the District Registrar, Co- operative Societies [Urban] Ahmedabad vide his letter No. DRM/01/Kh-1/565/2015 on 3/6/2015, and in the Managing Committee if there is separate provision in bye-laws for transfer fees and over and above in the bye-laws there is separate provision for recovery of development charges then it will have to be clearly Page 9 of 28 C/SCA/10862/2018 JUDGMENT stated. And in the general board meeting proceedings will have to be followed accordingly and pass resolution, and this office and all members will have to be informed. It was also directed to hold Managing Committee meeting in the presence of Authorized officer of this Office. Inspite of this the said directions are breached.

(4). The Managing Committee of the Society had met on 28.06.2015 in which there is amendment carried out in the bye-laws - 48(1). The District Registrar had amended the bye-laws on 20/10/2015 [copy enclosed], and after approval of the same in the Managing Committee meeting it has to be implemented. Inspite of this without informing the members in any manner the present Managing Committee has wrongly declared that the Managing Committee of 28/6/2015 term is for five years. And have wrongly tried to continue.

(5). The applicant Mr. Ishwarlal Totaram Baxani and Mrs. Punam Ishwarlal Baxani have renovated their house C/2/82. Against which for the penal proceedings there was no kind of resolution passed by the Managing Committee but the Secretary had suo motu determined the penal amount. Thus arbitrary administration is done. Which is not proper.

Thus, on perusal of the above details the Chairman / Secretary has not carried out the administration as per the bye-laws of the Society and has carried out the administration arbitrarily. The issues like permission are not placed in the notice of the Managing Committee. Thus, the powers as per the bye-laws are misused. Therefore it appears to be just and proper to remove Secretary Mr. K. K. Gupta and Chairman Mr. S. S. Sharma form their posts. Therefore why should the action as per section 76(b) of Co-operative Act not be taken? In this regard if you want to make any representation then you are informed to remain present before me on 27/10/16 with evidences at 15/00 hours in this office. On the stipulated date and time if there is no representation made on your behalf then the decision will be taken on merits. Make note of the same."

4. The explanation offered by the writ applicants to the Page 10 of 28 C/SCA/10862/2018 JUDGMENT above referred show-cause notice did not find favour with the District Registrar and the District Registrar, in turn, passed an order dated 24th May, 2017, Annexure-D to this petition, page- 70, removing the writ applicants Nos.2 and 3 from their respective office. Not only the writ applicants came to be removed from their respective office, but they also came to be restrained from holding any post in any Society or contest any election. The relevant observations in this regard made in the order are as under;

"This office had issued show cause notice as per section 76(b) of Co-operative Societies Act, 1961 against Mr. K.K. Gupta and Chairman Mr. S.S. Sharma as per Sr. (5) above on 17/10/2016 and afforded them opportunity of making representation.

(4) As per the Sr. (5) above show cause notice dated 17/10/2016 by this office and the proceedings followed in this regard both the parties were afforded sufficient opportunity to make their representation. In this regard the Society and its Chairman Mr. S.S. Sharma and Secretary Mr. K.K. Gupta have as per Sr. (6) and (9) respectively on 27/10/2016 and on 16/11/2016 and on 16/3/2017 filed their reply, and from time to time also made oral submissions on date of hearing. Whereas, the clarification about the application made by the applicant Sr. (7) dated 17/11/2016 is given. Taking into consideration the replies and the evidences produced, it is evident that Society Chairman Mr. S.S. Sharma and Secretary Mr. K.K. Gupta have as per the following details, not implemented the directions by the District Registrar, Co-operative Societies [Urban], Ahmedabad as per Sr. (2) above letter dated 3/6/2016, and Registrar, Co-operative Societies, Gujarat State, Gandhinagar on 13/2/1991 Circular No. DRM/6/Jh-519, and has flaunted such directions and also violated the bye-laws of the society.

(1) The District Registrar, Co-operative Societies [Urban], Ahmedabad has as per the Sr. No. (2) above letter dated 3/6/2015, and the Registrar, Co-operative Page 11 of 28 C/SCA/10862/2018 JUDGMENT Societies, Gujarat State, Gandhinagar has vide circular dated 13/2/1991 determined the premium for transfer of plot/house/flat/bungalow by sale, and as per the provisions of this Circular there cannot be any lump sum fees recovered towards transfer premium / fees. But, as provided in the Circular within the limit of Rs. 500/-

to Rs. 50,000/- the transfer fees can be recovered and other then this no other amount can be recovered in any other manner, inspite of such provision, at the time of transferring the flat No. C-4/63 over and above the transfer fees, development fees and in the name of development fees amount is recovered.

(2) Although there are no provisions in the Society bye-laws then also, at the time of transferring the flat No. C-4/63 over and above the transfer fees, unauthorizedly development fees and development fund amounts are recovered, and no information about not recovering any such amounts is given to this office.

(3) The District Registrar, Co-operative Societies [Urban], Ahmedabad has vide Sr. (2) letter above dated 3/6/2015 directed to call Society meeting on 28/6/2015 and in the annual board meeting agenda, according to the Registrar, Co-operative Society, Gujarat State, Gandhinagar Circular dated 13/2/1991 there is provision of transfer fees only, over and above the same in the bye-laws of the society if there is separate provision for recovering the development charges then to state the same and in the general board meeting follow the proceedings and pass resolution, and inform this office and all the members, but there is no action taken accordingly.

(4) On perusal of the provisions in the registered bye- law 48(1) of the society, as per the bye-laws of the society the elected Managing Committee will be of total five members, and every year 1/3rd members will retire, such provisions are made. For amendment of the said bye-laws the issue was placed before the annual general board meeting of the Society on 28/6/2015, and in this regard the District Registrar, Co- operative Society [Urban], Ahmedabad has approved the bye-laws 48(1) on 30/9/2015 vide his yadi No. PKS/85/K-2/783, and by such amendment the term of Page 12 of 28 C/SCA/10862/2018 JUDGMENT the society Managing Committee will be for five years, such provisions have come in force from 30/9/2015. Inspite of this, prior to that, that is on 25/6/2015 the society Managing Committee election results are declared for five years and by such act there is breach of the society bye-laws No. 48(1) provisions.

(5) As per the provisions of the bye-law No. 56(9), according to the Society bye-laws and objects and it is the duty of the Chairman to ensure that the work of the society is carried out as per the Act and Rules and as per the Society registered Bye-law 56(2) provisions, it is the duty of the duty and responsibility of the Chairman to supervise the work of the Secretary. Moreover, as per the provision of the registered bye- law 57(1) of the society, taking into consideration the instructions issued by the Chairman from time to time it is the duty and responsibility of the Secretary to carry out all the functions of the society.

(6) As per the above details, the society Chairman Mr. S.S. Sharma and Secretary Mr. K.K. Gupta have according to the above details, flaunted the directions issued by the District Registrar, Co-operative Societies [Urban], Ahmedabad as per Sr. (2) above letter dated 3/6/2015 and circular by the Registrar, Co-operative Societies, Gujarat State, Gandhinagar on 13/2/1991, and such directions are not implemented and are violated, and also the provisions of the bye-laws of the society are violated and in this manner they have time and again defaulted in performing their duties imposed on them vide the society registered bye-laws, and have carried out the work arbitrarily. There are sufficient reasons to believe this, and therefore it is opined that for the smooth functioning and management of the society, as per the Act and Rules and the registered bye-laws of the society and subject to the prevailing provisions and in the interest of the members, take action under section 76(b) of the Co- operative Act against the Society Chairman Mr. S.S. Sharma and Secretary Mr. K.K. Gupta.

(7) In the present case, as per the principles of natural justice, the concerned were afforded opportunities time and again and in this manner they were afforded sufficient opportunities for their defense.

Page 13 of 28

C/SCA/10862/2018 JUDGMENT (8) As per the Government of Gujarat, Agriculture & Co- operation Department Sr. (11) resolution dated 8/10/2015, this office has come into existence and as pre the Registrar, co-operative Societies, Gujarat State, Gandhinagar Sr. (10) above office order dated 1/1/2016, this office is assigned the works relating to the Housing Co-operative Societies in Ahmedabad and Gandhinagar, and as per the Government of Gujarat, Agriculture & Co-operation Department Sr. (13) above notifications dated 21/7/2011 and 1/1/2016, this office is delegated with the powers of Registrar, Co-operative Societies. Subject to the same, in the above case, this office is vested with powers to take action under section 76(b) included of Co-operative Act and Rules.

(9) Therefore, it would be just and proper to pass the following orders.

ORDERS I, Chetan N. Parmar, District Registrar, Co-operative Societies [Housing], Ahmedabad, in exercise of the powers conferred under the provisions of section 76(b) of the Gujarat Co-operative Societies Act, 1961 and as per the Government of Gujarat, Agriculture & Co- operation Department Sr. (13) above notifications dated 21/7/2011 and 1/1/2016, I hereby order to remove Chairman Mr. S.S. Sharma and Secretary Mr. K.K. Gupta, respectively from their post of Chairman and Secretary and from the post of member of the Managing Committee of the Drive-In-Park Apartment Co- operative Housing Society Ltd., Vibhag-4, Thaltej, Ahmeababad [Registration No. Gh-14263 dated 2/5/1990], and hold that the above persons will be disqualified for a period of six years from the date of these orders to hold any post in the society and in any other Co-operative Society in the State or to participate in any elections.

Moreover, by removing the above persons from their posts in the Society on the posts fallen vacant in the Managing Committee of the Society, I order to fill up the same within 10 days as per the provisions of the registered bye-laws of the society."

Page 14 of 28

C/SCA/10862/2018 JUDGMENT

5. The writ applicants, being dissatisfied with the order passed by the District Registrar, preferred an appeal before the Addl. Registrar (Appeals), Cooperative Societies, State of Gujarat. The Appellate Authority, vide order dated 26th December, 2017, allowed the appeal and thereby quashed and set aside the order passed by the District Registrar. The relevant observations made by the Appellate Authority, in its order, are as under;

"The said revision application and the documents presented with it and the reply / representation made by the opponent, para wise remarks by the office of District Registrar and records are taken into consideration.

In this matter the opponent No. 3 Punam Ishwarlal Baxani had made an application on 27/6/2016 addressed to the Secretary, Co-operation Department, Sachivalaya, Gandhinagar, and made representation about Shri Drive In Park Apartment Co-operative Housing Society Ltd., Vibhag - 4, Flat No. C-4/63 that at the time of selling the said flat the Society has recovered transfer fees, development fees, and orders for refund of the fees recovered as development fees. A copy of the same is endorsed to the Co-operation Commissioner and Registrar, Co-operative Societies, Gujarat State, Gandhinagar and opponent No.1 District Registrar, Co-operative Societies [housing], Ahmedabad. On the basis of the said application site inspection was directed to be carried out by staff member Mr. A. D. Chauhan under the charge of opponent No. 1 and submit his report. The inspection officer had carried out the inspection and on 8/9/2016 submitted his report. In which it is recommended to take action as per section 76(b) of the Co-operative Act against the applicant No. 2 and 3. On the basis of this report the opponent No. 1 District Registrar had issued show cause notice to the applicant Nos. 2 and 3 on 27/10/2016. As per the details in the notice the Chairman / Secretary did not carry out the administration as per the bye-laws and had arbitrarily Page 15 of 28 C/SCA/10862/2018 JUDGMENT carried out the administration. The issues like permission were not placed in the notice of the Managing Committee. The powers as per the bye-laws are misused, and it was reported that the Chairman / Secretary have misused their powers, and it was found to be proper to remove Secretary K.K. Gupta and Chairman Mr. S.S. Sharma from their posts, therefore why should the action as per the section 76(b) of the Co-operative Act not be taken, in this regard they were informed to make their representation with evidences.

Whether the issues in the show cause notice as per the section 76(b)(1) and (2) provisions and the findings given by the District Registrar, Co-operative Societies [Housing], Ahmedabad are consistent or not? The decision is required to be taken in this regard.

The provisions of section 76(b)(1) and (2) of the Co- operative Act are as here below, 76(b)(1) If, in the opinion of the Registrar, any officer makes persistent default or is negligent in performance of the duties imposed on him by this Act or the rules or bye-laws or does anything which is prejudicial to the interests of the society or where he stands disqualified by or under this Act, the Registrar may, after giving the officer an opportunity of being heard, by order remove such officer and direct the society to elect or appoint a person or a qualified member in the vacancy caused by such removal and the officer so elected or appointed shall hold office so long only as the officer in whose place he is elected or appointed would have held if the vacancy had not occurred.

The Registrar may, by order, direct that the officer so removed shall be disqualified to hold or to contest election for any officer in the society from which he is removed and in any other society for a period not exceeding [six years] from the date of such order and such officer shall stand disqualified accordingly.

The District Registrar has framed the following issues in his show cause notice.

(1) The applicant Mrs. Punam Ishwarlal Baxani had purchased the Flat C/4/63 in the year 2014, and they Page 16 of 28 C/SCA/10862/2018 JUDGMENT are living in C/2/82. The flat No. C/4/62 was given on rent in the same year. In June 2016 the old tenant had vacated the flat and new tenant came therefore the police verification copy was given to the Society on 3/7/2016 and informed the society. But the Society Managing Committee had on 10/7/2017 passed resolution No. 3 believing that the prior permission was not obtained and imposed penalty of Rs. 81000/-.

Such penalty is not proper. There is explanation given by the applicant society. But there is no clear reasons given by the District Registrar for not accepting such explanation. The applicant society had passed resolution and in reference to penalty of Rs. 81000/- how is the provision of section 76(b) attracted in this regard also it is not stated. Flat No. C/4/63 is given on rent, only the tenant has changed, and on behalf of the landlord the police verification is done on 3/7/2016 and society is informed, such submissions are made. Whereas the Society has placed reliance on the provisions of its bye-laws and stated that the prior permission is not obtained and thus imposed penalty of Rs. 81000/- on 10/7/2016 by passing resolution. Taking this fact into consideration this dispute can be considered to be dispute between a Society and its member and touching the work of the Society. For adjudicating such issue there is provision made under section 96. Therefore whether the penalty imposed by the society after passing resolution is proper or not cannot be decided by the District Registrar. When the society Managing Committee has taken a decision then the applicant Nos. 2 and 3 cannot be held responsible. Thus relying upon this issue the proceedings followed by the District Registrar as per section 76(b) appear to be erroneous.

(2) As per the Society Bye-laws after placing any issue in the notice of the Society thereafter only the Secretary can take decision. But looking to the previous cases of the Society the matter of taking permission for tenants was not taken up by the Managing Committee. Also, the members are independent to make use of their property. The Society is entitled to 10% more administration funds of the rent received by the member. The Secretary has not obtained the prior permission. Believing this the proceedings are followed. As stated. But on the basis Page 17 of 28 C/SCA/10862/2018 JUDGMENT of the application by the applicant Mrs. Punam Ishwarlal Baxani the inspection is done. Therefore the action is required to be taken with regard to the representation by the applicant. But, the issue of permission by the other member is not placed before the Managing Committee. Considering this to follow the proceedings as per section 76(b) does not appear to be proper. Also, on behalf of the District Registrar in the records produced the applications on the issue of permission for giving on rent by other members is produced. In which the signature of the other Committee members is put granting permission. Therefore it is not proper to say that the Secretary is taking arbitrary decisions. Moreover, their own property situated in the Housing Society can be used as per the provisions of the bye-laws. But it cannot be said that the member is independent to make use of his own property.

(3) The applicant Mrs. Punam Ishwarlal Baxani had on 28/7/2013 and on 8/5/14 paid transfer fees Rs. 2,50,000/- for transfer of flat No. C/4/63. The member was dissatisfied and therefore made representation to this office and so Rs. 10,000/- was taken as credit towards transfer fees. And Rs. 50,000/- was refunded, and the balance Rs. 1,90,000/- development charges have to be recovered therefore to recover the same or to refund, as directed by the District Registrar, Co- operative Societies [Urban] Ahmedabad vide his letter No. DRM/01/Kh-1/565/2015 on 3/6/2015, and in the Managing Committee if there is separate provision in bye-laws for transfer fees and over and above in the bye-laws there is separate provision for recovery of development charges then it will have to be clearly stated. And in the general board meeting proceedings will have to be followed accordingly and pass resolution, and this office and all members will have to be informed. It was also directed to hold Managing Committee meeting in the presence of Authorized officer of this Office. Inspite of this the said directions are breached. As stated.

On the issue of transfer fees paid by the applicant in the society there appears to be settlement made. As per the document made by the applicant Punamben I. Baxani she has received back Rs. 50,000/- from the society on Page 18 of 28 C/SCA/10862/2018 JUDGMENT 7/6/2015. From the share certificate provisional word is removed. Thus it is stated that there is settlement made with the society, and there is no dispute. In these circumstances this issue cannot be the cause for attracting section 76(b). Inspite of this if the applicant Punamben Baxani has any dispute on this issue then the dispute can be raised under section 96 of the Act.

(4) The Managing Committee of the Society had met on 28.06.2015 in which there is amendment carried out in the bye-laws - 48(1). The District Registrar had amended the bye-laws on 20/10/2015 [copy enclosed], and after approval of the same in the Managing Committee meeting it has to be implemented. Inspite of this without informing the members in any manner the present Managing Committee has wrongly declared that the Managing Committee of 28/6/2015 term is for five years. And have wrongly tried to continue. As stated.

The amended bye-laws amended by the co-operative society in its general board meeting comes into force from the date of approval by the Registrar. With regard to the bye-laws approved by the Registrar the approval from the forth coming general board meeting is not required to be obtained. Therefore the bye-laws approved by the District Registrar have to be implemented after approved in the general board meeting in the year 2015-16, such finding is erroneous. On perusal of the records produced by the District Registrar Mr. B.T. Patel Election Officer has addressed a letter to the Chairman of the applicant society on 25/6/2015. And on perusal of the said letter the election program of the said society Managing Committee on 17/6/2015 is published. As per the said program five Managing Committee members post had to be filled. Against which there were five valid nomination forms received therefore they were declared elected uncontested apparently. These uncontested elected members are granted approval in the general board meeting held on 28/6/2015 vide resolution No. 8 for the period from 2015 to 2020. Thus, as per the election program declared by the Society Managing Committee the election officer has declared uncontested results which are granted approval by the general board meeting. Thus, it cannot be said that the Chairman is responsible for this Page 19 of 28 C/SCA/10862/2018 JUDGMENT resolution. Also, before approving the amendment in the bye-laws the Managing Committee was appointed uncontested on 25/6/2015, thus at that time the term of the Managing Committee is as per the provisions of the bye-laws and the Committee can function accordingly. After this term is over then as per the provisions in the new bye-laws the election proceedings can be followed. Thus, when the term of the Managing Committee is continued then by making false declaration tried to continue, it is not proper to say this.

(5) The applicant Mr. Ishwarlal Totaram Baxani and Mrs. Punam Ishwarlal Baxani have renovated their house C/2/82. Against which for the penal proceedings there was no kind of resolution passed by the Managing Committee but the Secretary had suo motu determined the penal amount. Thus arbitrary administration is done. Which is not proper. As stated.

In this regard on behalf of the opponent Nos. 2 and 3 Arbitration Cae No. 207/2016 is filed before the Ahmedabad Board of Nominees. Therefore this issue is not a cause for attracting section 76(b), and on this issue there is no scope for any discussions here.

As per the provisions of the section 76(b) if the Registrar forms an opinion that any officer is frequently defaulting in performing his duties as per the Act, Rules or Bye-laws, and remains negligent or commits any act so as to cause damage to the interest of the society or is held disqualified under the Act then after affording opportunity orders under section 76(b) can be passed. Thus, in these provisions the opinion by the Registrar is an important factor. In the present case the Registrar has instructed the officer under his charge to carry out the inspection and submit report. The inspecting officer has recommended to take action as per section 76(b) against the applicant Nos. 2 and 3. On the basis of such recommendation by the inspector the District Registrar has passed the impugned orders on 24/5/2017. But the District Registrar has not given any independent opinion. It does not appear that the applicant Nos. 2 and 3 have frequently defaulted. It also does not appear that they have committed any act to cause injury to the interest of society. The District Registrar had forwarded the representation made by Page 20 of 28 C/SCA/10862/2018 JUDGMENT the applicant No. 3 to the inspecting officer and directed to complete the pending audit of the society at the earliest and to verify with regard to the representation made by the applicant and to submit report within 10 days with relevant documents. In the circumstances instead of forwarding the factual report the inspecting officer cannot make recommendation to take action under section 76(b). The opponent No. 1 in this matter has issued show cause notice on 17/10/2016 to the applicant Nos. 2 and 3 and informed that it is found proper to remove them from their post and informed them to make representation to show cause why should the action as per section 76(b) not be taken. Thus, from this notice it appears that the proceedings as per the section 76(b)(1) would be followed. But as per the orders dated 24/5/2017 the applicant No. 2 and 3 are also held disqualified under section 76(b)(2) from participating in any election of Co-operative institutions. Thus, although there was no notice regarding the section 76(b)(2) then also order as per section 76(b)(2) are passed. Which is not consistent with the principles of natural justice.

Taking into consideration all these facts I arrive on the conclusion that the proceedings followed by the District Registrar against the applicant Nos. 2 and 3 in this matter does not appear to be proper, therefore it appears to be proper to set aside the order No. DRM/- 01/Kh-3/27/966 dated 24/5/2017, therefore the following orders are passed.

ORDER Revision Application No. 84/2017 is hereby allowed. The orders passed by the District Registrar, order No. DRM/- 01/Kh-3/27/966 dated 24/5/2017 is ordered to be set aside.

No orders as to the costs of the revision application. "

6. It appears that the respondents Nos.4 and 5, being dissatisfied with the order passed by the Appellate Authority, invoked the revisional jurisdiction of the State Government under section 155 of the Act, 1961. The State Government, by Page 21 of 28 C/SCA/10862/2018 JUDGMENT an order dated 30th June, 2018, Annexure-K to this petition, page-168 of the paper-book allowed the revision application and thereby quashed the order passed by the Appellate Authority. The relevant observations made by the State Government, in its order, are as under;

"Taking into consideration the representation by the applicant, representation by the opponent and the records it is established that the society office bearers have recovered higher transfer fees from the applicants contrary to the circular by the Registrar dated 13/2/91. Thus due to the complaint by the applicants the said amount is carried to the development charges, and there is settlement made such finding given by the Additional Registrar does not appear to be proper prima facie. Moreover District Registrar had carried out the inspection in respect to the representation made, and taking into consideration the report notice was issued to the concerned and afforded sufficient opportunity for defense and given sufficient reasons and passed the orders, thus, the Additional Registrar has without rebutting the findings by the District Registrar passed the orders, whereas the stay orders granted by this office are also not complied by the opponent Nos. 3 and 4, this shows that the opponent Nos. 3 and 4 are not habituated to follow the orders by Authority and the society management is done arbitrarily which is established to be contrary to the provisions of Co- operative law and contrary to the provisions of bye- laws therefore the orders are passed by the District Registrar, in the circumstances the orders passed by Additional Registrar are without following the provisions of law appropriately and without sufficient verification of the Circular by the Registrar apparently. In the circumstances the following orders are passed.

ORDER The revision application No. 01/2018 is allowed. The order by the Additional Registrar [Appeal], Co-operative Societies, Gandhinagar in Revision Application No. 84/2017 dated 26/12/17 is hereby set aside.

Page 22 of 28

           C/SCA/10862/2018                                          JUDGMENT



         By the orders of               and in the name of Governor of
         Gujarat."

7. Being dissatisfied with the order passed by the State Government, the writ applicants are here before this Court with this writ application under Article 226 of the Constitution.

8. Before this Court commenced the hearing of this petition, the respondent No.4 appeared in person and made a statement that the disputes have been amicably resolved with the Society and, in such circumstances, he has no objection if this writ application is allowed. He further pointed out that the respondent No.5 is his wife. The respondents Nos.4 and 5 are being represented by Mr. Dhaval Vyas, the learned counsel. Mr. Vyas also submitted that his clients have resolved all the disputes and would like to maintain good relations with the office bearers of the Society. He submitted that the respondents Nos.4 and 5 would like to maintain peace within the Society and would not like to litigate further. In such circumstances, Mr. Vyas submitted that this writ application may be allowed and the impugned order passed by the State Government be quashed.

9. However, Mr. Ronak Raval, the learned AGP appearing for the State-respondents vehemently objected to what came to be submitted on behalf of the respondents Nos.4 and 5. According to the learned AGP, the action came to be taken by the District Registrar in exercise of his powers under section 76(B) of the Act, 1961. Mr. Raval submitted that as the District Registrar noticed that the writ applicants Nos.2 and 3, being the Chairman and the Secretary of the Society had made persistent defaults and were found to be negligent in Page 23 of 28 C/SCA/10862/2018 JUDGMENT performance of their duties imposed on them by the Act, Rules and the Bye-laws, the same was prejudicial to the interest of the Society and, therefore, action to remove them from the office came to be initiated. Mr. Raval would submit that the settlement of the disputes between the respondents Nos.4 and 5 with the Society, by itself, would not bring an end to this litigation. According to Mr. Raval, it may be true that the proceedings came to be initiated by the District Registrar under section 76(B) at the instance of the respondents Nos.4 and 5, but at the same time, it is the duty of the District Registrar to ensure that there is no persistent default or any negligence in performance of the duties at the end of the officers of the Society. Mr. Raval would submit that having regard to the grounds on which the show-cause notice was issued, the same would indicate that there was persistent default and negligence at the end of the writ applicants Nos.2 and 3 in performance of their duties.

10. In such circumstances, referred to above, Mr. Raval, the learned AGP, would pray that the matter should be heard on merits and the settlement between the private respondents and the Society could be ignored in the interest of justice.

11. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for my consideration is whether the acts complained against the writ applicants falls within the ambit of section 76(B) of the Act, 1961. Section 76(B) of the Act, 1961 reads as under;

"76(B) Removal of Officer: (1) If, in the opinion of the Page 24 of 28 C/SCA/10862/2018 JUDGMENT Registrar, any officer makes persistent default or is negligent in performance of the duties imposed on him by this Act or the rules or bye-laws or does anything which is prejudicial to the interests of the society or where he stands disqualified by or under this Act, the Registrar may, after giving the officer an opportunity of being heard, by order remove such officer and direct the society to elect or appoint a person or a qualified member in the vacancy caused by such removal and the officer so elected or appointed shall hold office so long only as the officer in whose place he is elected or appointed would have held if the vacancy had not occurred.

(20 The Registrar may, by order, direct that the officer so removed shall be disqualified to hold or to contest election for any officer in the society from which he is removed and in any other society for a period not exceeding [six years] from the date of such order and such officer shall stand disqualified accordingly."

12. The writ applicants have offered their explanation as regards what has been stated in the show-cause notice. The explanation offered by the writ applicants in their words is as under;

"(d) It is submitted that the first ground in respect of construction carried out by respondent Nos.4 and 5 by covering up the balcony. In this regard, it is submitted that there is a specific resolution passed in the annual general meeting by the general body which is the highest body in the society to not to cover up the balcony and in such meeting the respondent No.4 had remained present and had put his signature without any objection and thereby, it is binding to all the parties. However, in sheer violation thereof, the construction was carried out for which action was taken by the managing committee under Section 74 of the Act, against which the respondent Nos.3 and 4 had filed the Lavad Case No.207 of 2016 which is pending but, interim injunction was refused and cost has also been imposed upon respondent Nos.4 and 5, against which revision is pending before the Page 25 of 28 C/SCA/10862/2018 JUDGMENT Tribunal and no stay is granted. Therefore such issue is the subject matter of pending litigation before the competent authority. Therefore, so far as the ground No.1 is concerned, provision of Section 76B of the Act is not attracted.

(e) So far as Ground No.2 is concerned, the society has imposed the penalty for non-compliance of the provision of the byelaws and highhandedly letting out the property to third party. In that regard, it is submitted that firstly, the respondent Nos.4 and 5, though having one unit had purchased another unit in violation of the settled proposition. Over and above that, without prior permission of the society had let out the said property to somebody else and thereby, it attracted the penalty as per the byelaws. Since as per the byelaws, three months' rent is to be paid to the society and the property was let out for Rs.27,000/- per month, it comes to Rs.81,000/-

and thereby, penalty of Rs.81,000/- has been imposed. Therefore, by imposing the penalty, the society has acted in consonance with the Act, Rules and the Byelaws and such action is in the benefit of the society and, therefore, such issue does not fall within the scope and ambit of Section 76B of the Act, more particularly when it is the decision of the society and its managing committee and, therefore, the petitioner Nos.2 and 3 in any case cannot be held liable under Section 76B of the Act.

(f) It is submitted that Ground No.3 is raised in respect of the transfer fees. In this regard, it is submitted that such issue had already been resolved and such complaint was withdrawn. Even otherwise, the society is entitled to charge the transfer fees and other donations as per the Act, Rules and the Byelaws and furthermore, the District Registrar wanted to implement the circular / resolution of the State Government which was no more in force in pursuance to the order by the Hon'ble High Court which is just ignored by the district Registrar. I crave liberty to refer to and rely upon the same at the time of hearing of this petition. Therefore, so far as Ground No.3 is concerned, the same is against the decision of the society and in any case, the petitioner Nos.2 and 3 cannot be singled out under Section 76B of the Act and furthermore, the society is nowhere adversely affected by such action and again, the society was empowered to charge such transfer fees or accept the donation as per Page 26 of 28 C/SCA/10862/2018 JUDGMENT the order passed by the Hon'ble High Court. Therefore, the District Registrar was absolutely wrong in exercising the powers under Section 76B of the Act against the petitioners and, therefore, such issue also does not fall within the scope and ambit of Section 76B of the Act.

(g) So far as Ground No.4 is concerned, it is submitted that the issue is that without amending the byelaws, the society held election after five years instead of three years. In that regard, it is submitted that provision of the Act had been amended in April,2015 and thereby, the tenure of the committee is determined as five years. There is a judgment of the Hon'ble High Court that without amending the byelaws once the law has come into force, the society has to follow the law and thereby, the election for the period of five years had been held and thereby, such issue also does not fall within scope and ambit of Section 76B of the Act by singling out the petitioner Nos.2 and 3 and, therefore, such issue has also been wrongly determined against the petitioners by the District Registrar.

(h) So far as Ground No.5 is concerned, it is submitted hat same is absolutely vague and which kind of renovation is undertaken by the respondents and what fine was imposed by the society is not taken into consideration, more particularly when even prior to new committee had come into force, some resolutions are taken in the annual general meeting as well as managing committee of the society and in consonance with the same read with byelaws, the penalty has been imposed and the society and the managing committee is empowered to impose the same so as to maintain the discipline and for the smooth administration of the society and accordingly, the same has been done. Therefore, on all the above-mentioned five grounds, no case is made out before the District Registrar to exercise the powers under Section 76B of the Act against the petitioners and without considering the above-mentioned aspects, the order under Section 76B is passed which is absolutely with malafide intention and ulterior motive and in sheer violation of principles of natural justice and, therefore, the same deserves to be quashed and set aside."

13. It appears from the materials on record that the dispute Page 27 of 28 C/SCA/10862/2018 JUDGMENT arose with the private respondents covering up the balcony of their flat. This triggered the controversy and which ultimately landed up before the District Registrar. The private respondents, who are present in the Court today, made themselves very clear that they have already removed the construction covering the balcony. They further pointed out that not only they themselves but around 100 such members who had covered the balcony have opened up their respective balcony. The private respondents further pointed out that as the construction, covering up the balcony has been removed, the Society has resolved that the order of imposition of penalty be recalled.

14. In my view, having regard to the dispute and the grounds mentioned in the show-cause notice, it cannot be said that the case falls within the ambit of section 76(B) of the Act, 1961. The case is not one in which it could be said that the acts complained are sufficient to disqualify the office bearers.

15. in the overall view of the matter, I have reached to the conclusion that the State Government should not have disturbed the order passed by the Addl. Registrar (Appeals) in exercise of its revisional jurisdiction under section 155 of the Act, 1961.

16. In the result, this writ application succeeds and is hereby allowed. The impugned order passed by the State Government dated 30th June, 2018 is hereby quashed and set aside. Rule is made absolute to the aforesaid extent.

(J.B.PARDIWALA, J) Vahid Page 28 of 28

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