Gujarat High Court
Natubhai Punjalal Shah President & vs State Of Gujarat & on 13 November, 2014
Author: J.B.Pardiwala
Bench: J.B.Pardiwala
R/CR.MA/933/2002 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CRIMINAL MISC.APPLICATION NO. 933 of 2002
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
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NATUBHAI PUNJALAL SHAH PRESIDENT & 1....Applicant(s)
Versus
STATE OF GUJARAT & 1....Respondent(s)
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Appearance:
MR BS PATEL, ADVOCATE for the Applicant(s) No. 2
MR DM SHAH, ADVOCATE for the Applicant(s) No. 1
MRS RANJAN B PATEL, ADVOCATE for the Applicant(s) No. 2
MRS HANSA PUNANI, APP for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 13/11/2014
CAV JUDGMENT
Page 1 of 12
R/CR.MA/933/2002 CAV JUDGMENT
By this application under Section 482 of the Code of Criminal Procedure, 1973, the petitioners - original accused persons seek to invoke the inherent powers of this court praying for quashing of a criminal complaint lodged by the respondent no.2 herein in the Court of the learned JMFC, Dabhoi, culminating in the Criminal Case No.3272 of 2001 of the offence punishable under Section 71 of the Gujarat Co-
operative Societies Act, 1961.
The factual matrix giving rise to this application may be summarized as under :
The petitioner nos.1 and 2 herein were elected as the President and the Secretary respectively of the Navapad Cooperative Credit Society Ltd., Dabhoi, in the Accounting Year of 1998-99. Before the petitioners were elected to the respective posts, one Shri Prakashbhai Manekbhai Bhatporwala and Shri Pramod M. Shah were the President and the Secretary of the Society respectively.
In the year 1997, the Board of Directors of the Society decided to invest a sum of Rs.10 lac with the Dabhoi City Page 2 of 12 R/CR.MA/933/2002 CAV JUDGMENT Cooperative Credit Society Ltd. (hereinafter referred to as 'the Credit Society'). A resolution for such purpose was passed by the Board of Directors dated 26th September 1997.
Pursuant to such resolution, an amount of Rs.10 lac was deposited with the Credit Society. The petitioners herein were not the office bearers of the society at the relevant point of time when the resolution was passed. The amount of Rs.10 lac had been invested with the Credit Society considering that the Society was offering a good rate of interest. The amount which had been invested in the Credit Society was that of excess funds of the Society and was not one of the types of funds as prescribed under Chapter-VI of the Act.
It is the case of the petitioners that for depositing the amount no permission of the Registrar as provided under Section 71 of the Act was necessary. However, the respondent no.2 in his capacity as the Assistant Cooperative Officer, District Registrar, filed a private complaint in the Court of the learned JMFC, Dabhoi, for the offence alleged to have been committed under Section 71 of the Act, 1961. The complaint further states that after the deposit of the amount of Rs.10 lac Page 3 of 12 R/CR.MA/933/2002 CAV JUDGMENT in violation of the provisions of Section 71 of the Act, the Society was able to recover only Rs.3,97,650=00 from the Dabhoi City Cooperative Credit Society, whereas the said Credit Society was unable to repay a sum of Rs.6,02,350=00. According to the complainant, the petitioners herein as office bearers failed to protect the interest of the Society and its members. The sum and substance of the complaint is that the amount of Rs.10 lac could not have been invested by the petitioners in such a Co-operative Credit Society.
According to the complainant, the petitioners as office bearers have committed an offence punishable under Section 147(1)(d) of the Act for the breach of the provisions of Section 71 of the Act.
It appears that upon such private complaint lodged by the respondent no.2 in the year 2001, the Magistrate took cognizance and ordered issue of process. It is at that stage that the petitioners herein approached this Court by filing the present application.
Mr.Chirag Patel, the learned advocate appearing on behalf of the petitioners, submitted that the complaint fails to disclose commission of any offence for the alleged breach of the provisions under Section 71 of the Act. According to Page 4 of 12 R/CR.MA/933/2002 CAV JUDGMENT Mr.Patel, the amount was invested way back in the year 1997 when the petitioners were not even the office bearers of the Society. However, according to Mr.Patel, even if any liability is to be fastened upon the present petitioners, the complaint deserves to be quashed on the ground that the offence under Section 147(1) (d) punishable under Section 148(1)(d) of the Act provides for a maximum punishment of fine of Rs.500=00.
In such circumstances, according to Mr.Patel, the learned JMFC could not have taken cognizance of the compliant after a period of almost four years as the complaint could be said to be time barred considering the provisions of Section 468 of the Criminal Procedure Code. Mr.Patel submits that even otherwise no case is made out to prosecute the petitioners for the alleged offence.
On the other hand, the learned APP Mrs.Hansa Punani opposed this application and submitted that the complaint prima facie discloses commission of an offence punishable under Section 148(1)(d) of the Act, 1961, for the breach of the provisions of Section 71 of the Act. According to the learned APP, the amount of Rs.10 lac although may fall in the category of excess funds, yet could not have been deposited with the Credit Society without the permission of the Registrar, Co-
Page 5 of 12 R/CR.MA/933/2002 CAV JUDGMENToperative Societies as provided under Section 71 of the Act.
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 in this application is, whether the private complaint lodged by the respondent no.2 deserves to be quashed.
Before adverting to the rival submissions canvassed on either side, it would be beneficial for better adjudication of the matter to refer to the relevant provisions of law.
THE GUJARAT COOPERATIVE SOCIETIES ACT, 1961
71. (1) A society may invest, or deposits its fund,--
(a) in a Central Bank, or the State Co-operative Bank,
(b) in the State Bank of India,
(c) in the Postal Savings bank,
(d) in any of the securities specified in section 20 of the Indian Trusts Act, 1882,
(e) in shares or security, or debentures, issued by any other society with limited liability or,
(f) in a Scheduled co-operative bank as defined in clause (2) of section 2 of the Reserve Bank of India Act, 1934 and having its registered office within the State or in any nationalised bank, Page 6 of 12 R/CR.MA/933/2002 CAV JUDGMENT (ff) in any land or building-
(i) where the money in a building fund established by a society is sufficient for the purpose, or
(ii) where the money in such a fund is insufficient for the purpose or where a society has not established such fund, with the previous sanction of the Registrar:
Provided that the Registrar shall endeavor to decide the question as to previous sanction be given or not, within ninety days of the receipt of an application for such sanction,
(g) in any corporation owned or controlled by the Government of Gujarat and other Scheduled Banks not covered under clause (f), with the prior approval of the State Government subject to such terms and conditions as may be prescribed in this behalf:
Provided that in the case of the State Co-operative Bank, the Central Co-operative Banks and the Primary Agricultural Credit Co-operative Societies, the Reserve Bank of India may issue further guidelines restricting or enlarging the scope of investment in any institutions approved for the purpose under this section. (2) Notwithstanding anything in sub-section (1) the Registrar may, with the approval of this State Co-
operative Central Council, order a society or a class or societies to invest any funds in a particular manner, or may impose conditions regarding the made of investment of such funds."
77. (1) Every society shall, within a period of three months next after the date fixed for drawing up its accounts for the year under the rules for the time being in force, call a general meeting of its members :
Provided that, the Registrar may, by general or special order, extend the period for holding such meeting for a further period not exceeding three months :
Page 7 of 12 R/CR.MA/933/2002 CAV JUDGMENT
Provided further that, if in the opinion of the Registrar no such extension is necessary, or such meetings is not called by the society within the extended period, if any, the Registrar or any person authorized by him in that behalf may in the prescribed by the manner call such meeting which shall be deemed to be a general meeting duly called by the society.
(2) At every annual general meeting a society, the committee shall lay before the society a balance sheet and profit and loss account for the year in the manner, prescribed by the Registrar by general or special order for any class or classes of societies.
(3) There shall be attached to every balance sheet laid before the society in general meeting, a report by its committee, with respect to (a) the state of the society's affairs; (b) the amounts, if any, which it proposes to carry to any reserve either in such balance sheet, or any specific balance sheet;
and (c) the amounts, if any, which it recommends for payments by way of dividend, bonus, or honorary workers. The committee's report shall also deal with any changes in the nature of the society's business which have occurred during the year for which the accounts are drawn up. The committee's report shall be signed by its Chairman, or any other member authorized to sign on behalf of the committee.
(4) At every annual general meeting, the balance sheet, the profit and loss account, the auditor's report and the committee's report, shall be placed for adoption, and such other business will be transacted as may be laid down in the bye-laws and of which due notice has been given.
(5) Where any officer of the society, whose duty it was to call a general meeting within the period specified in sub-section (1) or, as the case may be, the period extended by the Registrar under that sub-section or to comply with sub-section (2), (3) or (4) fails without reasonable excuse to call such meeting or to comply with sub-section (2), (3) or (4), then--
(i) if such officer is a servant of the society, the Registrar may by an order in writing impose on him a penalty of an amount nor exceeding one hundred rupees, and
(ii) if such officer is not a servant of the society, the Registrar may by an order in writing declare such officer to be disqualified for being an officer or a member of the Page 8 of 12 R/CR.MA/933/2002 CAV JUDGMENT Committee, of the society or for being elected or appointed to any officer of the society, for such period not exceeding three years as he may specify in the order :
Provided that before making an order under this sub- section, the Registrar shall give or cause to be given, a reasonable opportunity to the officer to show cause against the action proposed to be taken in regard to him.
84. (1) The Registrar shall audit, or cause to be audited by a person possessing prescribed qualifications and authorized by the Registrar by general or special order in writing in this behalf, the accounts of every society at least once in each year. The person so authorized shall be auditor for the purposes of this Act:
Provided that the audit of the Central Co-operative Banks and the State Co-operative Bank shall be conducted only by the Chartered Accountants from the panel approved by the National Bank.
(2) The audit under the foregoing sub-section include an examination of overdue debts, if any the verification of the cash balance and securities, and a valuation of the assets and liabilities of the society.
(3) The Registrar of the auditor shall, for the purpose of audit, at all times have access to all the books, accounts, documents, papers, securities, cash and other properties belonging to, or in the custody of, the society, and may summon any person in possession or responsible for the custody of any such books, accounts, documents, papers, securities, cash or other properties, to be produce the same at any place at the head-
quarters of the society or any branch thereof.
(4) Every person who is, or has at any time been, an officer or employee of the society, and every member and past member of the society shall furnish such information in regard to the transactions and working of the society as the Registrar, or the auditor may require.
(5) The auditor shall have the right to receive all notices, and every, communications relating to the annual general meeting of the society and to attend such meeting and to be heard Page 9 of 12 R/CR.MA/933/2002 CAV JUDGMENT threat, in respect of any part of the business with which he is concerned as auditor.
(6) If it appears to the Registrar, on an application by a society or otherwise, that it is necessary or expedient to re-audit any account of the society, the Registrar may by order provide for such re-audit and the provision of this Act applicable to audit of accounts of the society shall apply to such re-audit.
(6A) The Registrar shall, by an order provide for a special audit of the co-operative credit structure on the basis of the recommendation of the Reserve Bank of India or, as the case may be, the National Bank. A copy of the report of such special audit shall be submitted to the Reserve Bank of India or, as the case may be, the National Bank within the period specified by the Reserve Bank of India or, as the case may be, the National Bank, The provisions relating to audit of accounts of the society made under this section shall also apply to such special audit.
(7) For auditing the accounts of a society under this section, every society shall be liable to pay to the Registrar, or, as the case may be, to the auditor, audit fee,--
(i) in relation any period beginning from the date of the commencement of this Act and ending on the day immediately before the date of general or, as the case may be, special order made under clause (ii), at the existing rates ;
(ii) in relation to any other period at such rates or scales as the State Government may, from time to time, by general or special order, determine.
(8) The State Government may, if it considers it necessary to do so in public interest, exempt, by notification in Official Gazette, and for reasons to be specified therein, any society or class of societies wholly or partially form payment of audit fees.
(9) The amount of audit fees payable by any society for any period, whether before or after the commencement of this Act, shall be deemed to be a sum due to the Government for the purpose of section 157.
(10) The Registrar shall, in consultation with the National Page 10 of 12 R/CR.MA/933/2002 CAV JUDGMENT Bank prescribe Prudential Norms including Capital to Risk Weighted Assets Ratio for Primary Agricultural Credit Co- operative Societies.
(11) The Registrar shall, by an order, provide for the periodical inspection by the officers subordinate to the Registrar or by federal society or by financing bank, for a class of society under section 87 or, section 88.
147. (1) It shall be an offence under this Act, if--
(a) to (c) xxxxx xxxxx xxxxx
(d) a committee of a society or an officer or member thereof fails to invest of such society in the manner required by section 71.
148. (1) every employer, or officer, member, agent or servant of a society, or any other person, who commits an offence under section 147 shall, on conviction, be punished,--
(a) to (c) xxxxx xxxxx xxxxx
(d) if it is an offence under clause (d) of that section, with fine which may extend to five hundred rupees or both."
THE CODE OF CRIMINAL PROCEDURE, 1973
468. Bar to taking cognizance after lapse of the period of limitation.--(1) Except as otherwise provided elsewhere in this Code, no Court, shall take cognizance of an offence of the category specified in sub-section (2), after the expiry of the period of limitation.
(2) The period of limitation shall be--
(a) six months, if the offence is punishable with fine only;
(b) one year, if the offence is punishable with imprisonment for a term not exceeding one year;
Page 11 of 12 R/CR.MA/933/2002 CAV JUDGMENT(c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.
(3) For the purposes of this section, the period of limitation, in relation to offences which may be tried together, shall be determined with reference to the offence which is punishable with the more severe punishment or, as the case may be, the most severe punishment.
For the foregoing reasons, this application is allowed. The further proceedings of Criminal Case No.3272 of 2001 pending in the Court of the learned Judicial, First Class, Dabhoi, are hereby ordered to be quashed. Rule made absolute.
(J.B.PARDIWALA, J.) MOIN Page 12 of 12