Gujarat High Court
Deceased Manguben Ratilal Thakkar vs State Of Gujarat- Dept Of Agriculture ... on 20 June, 2014
Bench: Chief Justice, J.B.Pardiwala
C/SCA/16275/2013 CAV JUDGMENT
SCA162752013Cj26.doc
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 16275 of 2013
With
CIVIL APPLICATION NO. 12484 of 2013
In
SPECIAL CIVIL APPLICATION NO. 16275 of 2013
FOR APPROVAL AND SIGNATURE:
HONOURABLE THE CHIEF JUSTICE Sd/-
MR. BHASKAR BHATTACHARYA
HONOURABLE MR.JUSTICE Sd/-
J.B.PARDIWALA
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1 Whether Reporters of Local Papers may be allowed Yes
to see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the constitution of
India, 1950 or any order made there under ?
5 Whether it is to be circulated to the civil judge ? No
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DECEASED MANGUBEN RATILAL THAKKAR
Versus
STATE OF GUJARAT- DEPT OF AGRICULTURE AND COOPERATION &
ORS.
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Appearance:
MR VISHWAS K SHAH with MR. MASOOM K SHAH, ADVOCATE for the
Petitioner.
MR KAMAL TRIVEDI, ADVOCATE GENERAL with MS SANGITA VISHER,
ASST. GOVERNMENT PLEADER for the Respondent No. 1
MS VIDHI J BHATT, ADVOCATE for the Respondents No. 2 - 3
MR DIPAK R DAVE, ADVOCATE for the Respondent No. 4
Page 1 of 36
C/SCA/16275/2013 CAV JUDGMENT
RULE SERVED BY DS for the Respondent(s) No. 2 - 4
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CORAM: HONOURABLE THE CHIEF JUSTICE
MR. BHASKAR BHATTACHARYA
and
HONOURABLE MR.JUSTICE J.B.PARDIWALA
Date : 20/06/2014
CAV JUDGMENT
(PER : HONOURABLE THE CHIEF JUSTICE MR. BHASKAR BHATTACHARYA)
1. By this Special Civil Application, the petitioner has prayed for the following reliefs :
"10. The petitioner therefore most respectfully prays to this Hon'ble Court that :
(a) Be pleased to declare the section 95, 161 and 162 of the Gujarat Co-operative Societies Act, 1961 as ultra vires the Constitution of India, 1950.
(b) Be pleased to declare Notification NO..Ghkh-82-2002-nsv-
16-2002-3875-ch (3) dated 7.10.02 as ultra vires the Constitution of India, 1950 and the Parent Act (The Gujarat Co- operative Societies Act, 1961).
(bb) Be pleased to declare Notification No..Ghkh-82-2002-nsb- 16-2002-3875-ch (1) and .Ghkh-82-2002-nsb-16-2002-3875-ch (2) dated 7.10.02 as ultra vires the Constitution of India, 1950 and the Parent Act (The Gujarat Co-operative Societies Act, 1961).
(c) Be pleased to declare Notification dated 29.3.2012, 16.08.2012, 23.08.2011 and 4.4.2011 of Gujarat Urban Co- operative Banks Federation as ultra vires the Constitution of India, 1950 and The Gujarat Co-operative Societies Act, 1961. Page 2 of 36 C/SCA/16275/2013 CAV JUDGMENT
(d) Be pleased to quash and set aside the auction dated 2nd March 2012 conducted by sale officer of the respondent bank.
(e) Pending Admission, Hearing and Final Disposal of this petition, respondent No.4 (purchaser) be restrained /injuncted/ prohibited to further transfer the subject property (2, Nilkanth Deepkunj Society, Paldi, Ahmedabad).
(f) Pending admission, hearing and final disposal of this petition, be pleased to grant status quo qua the subject property (T.P. No.3, Final Plot No.2, Nilkanth, Deepkunj Society, Paldi, Ahmedabad).
(g) Costs of this petition be awarded.
(h) Such further and other relief, order or direction which
may be just, fit, proper and equitable in the facts and circumstances of the Petition."
2. The case made out by the petitioner may be summed up thus:-
2.1 The petitioner is one of the legal heirs of late Manguben Ratilal Thakkar, who was the guarantor of a loan account viz. M/s.
Laxmi Cotton Trading Company with the respondent No.2-bank. The liability of M/s Laxmi Cotton Trading came to be crystallized and the same has attained finality up to the Supreme Court of India. Thus, the initial order passed by the Board of Nominees has attained finality. Lavad Suit No.870 of 1982 was filed before the Board of Nominees which was dismissed. Being dissatisfied, the plaintiff as well as the defendants challenged the same before various forums and ultimately, the Supreme Court upheld the decree of the Board of Page 3 of 36 C/SCA/16275/2013 CAV JUDGMENT Nominees.
2.2 Manguben died on 25th April 2010. After the death of Manguben, the name of the petitioner was mutated in the village form and, thus, according to the petitioner, she being one of the heirs and legal representatives, no auction of the property owned by Manguben could be held without giving her a notice and without complying with the procedure laid down by the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act'). 2.3 There were two loan accounts, namely, M/s Laxmi Cotton Trading Company and M/s Shivlal Chaturdas. The petitioner had received auction notice pertaining to the auction of the property as the legal heir of Manguben (TP No.3, Final Plot No.931/3 2, Nilkanth Deepkunj Society, Paldi, Ahmedabad) dated 11th November 2011. The said auction never took place and was settled and as such, the bank did not proceed any further.
2.4 The petitioner has not received any auction-notice qua the property described for M/s. Laxmi Cotton Trading Company. The petitioner was not aware of any auction and even after the conclusion of the so-called illegal auction, the petitioner was never informed or communicated about the auction being conducted or the amount fetched from such auction.
Page 4 of 36 C/SCA/16275/2013 CAV JUDGMENT 2.5 The petitioner is a housewife with very limited knowledge of law and law relating to auction. It has come to the knowledge of the petitioner through her relatives that some auction has taken place for the subject-property of which she is also one of the co-owners and some cases are going on in the Courts. Therefore, she inquired from Mr NY Thakkar, who was litigating for the property with the respondent-bank, and the petitioner was informed that an auction of her property took place on 2nd March 2012 and it was sold to the respondent No.4 of this application. She was also informed that there was a public notice dated 24th January 2012 for auction on 25th February 2012 but Mr NY Thakkar who is hand in glove with the bank approached the Deputy Secretary, Cooperation Appeals and obtained the stay order dated 24th February 2012. The said NY Thakkar is not even the owner of the property as per village form. Subsequently, on 2nd March 2012 without any fresh publication of notice in the newspaper and without even informing the co-owners, the auction was conducted and the respondent No.4 purchased the said property. The said Mr Thakkar has also filed a writ-application before this Court and a Letters Patent Appeal and he has lost the proceedings for having no locus standi and for suppression of material facts. 2.6 Although, Manguben had died and she had left several legal heirs, some of whom got such notice, yet, no auction-notice was issued to the petitioner. The respondent No.4 was in possession of the property. According to her statement in the plaint, prior to the auction Page 5 of 36 C/SCA/16275/2013 CAV JUDGMENT sale on the strength of agreement to sale, she had filed a Civil Suit No.1468 of 2009 seeking mandatory injunction against Manguben and the Sales Officer of respondent No.3.
3. Hence, the petitioner has filed this application by raising the following questions :-
(a) Whether Sections 95, 161 and 162 of the Gujarat Cooperative Societies Act, 1961 gave unguided, unbridled and unauthorized power to the delegated authority.
(b) Whether the three notifications issued by the State of Gujarat dated 7th October, 2002 and the consequent notification issued by the Gujarat Co-operative Federation Ltd. are unconstitutional and ultra vires the parent Act.
(c) Whether the notification by the State of Gujarat permits further delegation of power.
(d) Whether the impugned notifications suffer from the vice of sub-delegation, which is not allowed under the scheme of the Parent Act and hence, ultra vires.
(e) Whether the power delegated to the officer of the respondent-Federation amounts to further sub-delegation as the Page 6 of 36 C/SCA/16275/2013 CAV JUDGMENT first delegation is to the Registrar and then it is sub-delegated to the Secretary of the respondent-Federation and thereby, further delegated to the officers of the respondent-Federation.
4. This application is opposed by the State of Gujarat and Mr Trivedi, the learned Advocate General appearing on behalf of the State of Gujarat, has raised the following contentions :-
5. According to Mr Trivedi, the petition has been filed only with a view to overcome the rigour of the judgment dated 25 th July 2012 of the learned Single Judge rendered in SCA No.2880 of 2012 (pages 74 to 88 of the Civil Application) and confirmed by the Division Bench vide judgment dated 9th October 2013 in LPA No.1102 of 2012 (page 58 of the writ-application) as also the judgment dated 28th April 2008 of the learned Single Judge rendered in SCA No.1480 of 2013 (pages 219 to 227 of the writ-application) and confirmed by the Division Bench in LPA No.773 of 2008 (pages 228 to 231 of the writ- application).
6. Mr Trivedi further contends that this Special Civil Application should be summarily rejected if we follow the principles laid down by the Supreme Court in the case of M/s. PGF Ltd. vs. Union of India reported in AIR 2013 SC 3702 at paragraphs 31 and 32. The observations of the Supreme Court are quoted below :- Page 7 of 36 C/SCA/16275/2013 CAV JUDGMENT
"31. ... .... .... It will be worthwhile to lay down certain guidelines in that respect, since we have noticed that on very any occasions a challenge to a provision of law, as to its constitutionality is raised with a view to thwart the applicability and rigour of these provisions and as an escape route from the applicability of those provisions of law and thereby create an impediment for the concerned authorities and the institutions who are to monitor those persons who seek such challenges by abusing the process of the Court. Such frivolous challenges always result in prolongation of the litigation, which enables such unscrupulous elements who always thrive on other peoples money to take advantage of the pendency of such litigation preferred by them and thereby gain, on the one side, unlawful advantage on the monitory aspect and to the disadvantage of innocent victims, and ultimately, gain unlawful enrichment of such ill-gotten money by defrauding others. In effect, such attempts made by invoking the extraordinary jurisdiction of the writ Courts of many such challenges, mostly result in rejection of such challenges. However, at the same time, while take advantage of the long time gap involved in the pending proceedings, such unscrupulous litigants even while suffering the rejection of their stand at the end as to the vires of the provisions, always try to wriggle out of their liabilities by stating that the time lag had created a situation wherein those persons who were lured to part with huge sums of money are either not available to get back their money or such unscrupulous petitioners themselves are not in a position to refund whatever money collected from those customers or investors. It is, therefore, imperative and worthwhile to examine at the threshold as to whether such challenges made are bona fide and do require a consideration at all by the writ courts by applying the principle of 'lifting the veil' and as to whether there is any hidden agenda in perpetrating such Page 8 of 36 C/SCA/16275/2013 CAV JUDGMENT litigation. With that view, we lay down some of the criteria to be kept in mind whenever a challenge to a provision of law is made before the Court.
32. The Court can, in the first instance, examine whether there is a prima facie strong ground made out in order to examine the vires of the provisions raised in the writ petition. The Court can also note whether such challenge is made at the earliest point of time when the statute came to be introduced or any provision was brought into the statute book or any long time gap exist as between the date of enactment and the date when the challenge is made. It should also be noted as to whether the grounds of challenge based on the facts pleaded and the implication of provision really has any nexus apart from the grounds of challenge made. With reference to those relevant provisions, the Court should be conscious of the position as to the extent of public interest involved when the provision operates the field as against the prevention of such operation. The Court should also examine the extent of financial implications by virtue of the operation of the provision vis-a-vis the State and alleged extent of sufferance by the person who seeks to challenge based on the alleged invalidity of the provision with particular reference to the vires made. Even if the writ Court is of the view that the challenge raised requires to be considered, then again it will have to be examined, while entertaining the challenge raised for consideration, whether it calls for prevention of the operation of the provision in the larger interest of the public. We have only attempted to set out some of the basic considerations to be borne in mind by the writ Court and the same is not exhaustive.. .."
7. On merit, Mr Trivedi contends that Section 95 of the Act Page 9 of 36 C/SCA/16275/2013 CAV JUDGMENT empowers the State Government to recognize one or more Co- operative Federal Societies in such a manner as may be prescribed and subject to such conditions as the State Government may impose for the supervision of a society or a class of societies. Mr Trivedi points out that Section 2(9) of the Act defines the terms ' Federal Society' to mean a society, not less than five members of which are themselves societies and contends that a plain reading of section 95(1) of the Act clearly suggests that a primary society is always subject to the supervision of a Co-operative Federal Society and that is how, it is subordinate to a Co-operative Federal Society inasmuch as the same can be recognised under section 95 of the Act to supervise the conduct of the affairs of a primary society like the respondent No.6, society, in the present case. Mr Trivedi, thus, contends that there is nothing wrong for the Legislature to make provision for giving such recognition to the Co-operative Federal Society and such provision is very much in consonance with the object and philosophy of the Act and as a result, section 95 is constitutionally valid and has been holding the field right from its inception.
8. So far as the challenge to section 161 of the Act is concerned, Mr Trivedi points out that this Court in the case of Joshi Indulal vs. State of Gujarat reported in 1975 GLR 1096 rejected the contention to the effect that section 161 of the Act is violative of Article 14 of the Constitution of India because of conferment of Page 10 of 36 C/SCA/16275/2013 CAV JUDGMENT uncontrolled power to the State Government without any guidelines and for providing delegation of legislative functions and upheld the provisions.
9. Mr Trivedi further relied upon the following two judgments where similar provisions like Section 161 of the Act had fallen for consideration and found to be intra vires :-
(i). Registrar of Cooperative Societies vs. Kunjambu reported in AIR 1980 SC 350 (relevant paragraphs 11 and
12); and
(ii). The Collective Farming Society Ltd. vs. State of Madhya Pradesh reported in AIR 1974 MP 59 (relevant paragraphs are 8 to 18, 20 to 26, 29 to 31 and 42).
10. Mr Trivedi, in this connection, submits that for recognizing any Co-operative Federal Society for the purpose of sub-section (1) of section 95 of the Act, there is a need to prescribe for the same under the Gujarat Co-operative Societies Rules, 1965 (hereinafter referred to as 'the Rules'). Mr Trivedi submits that by virtue of Notifications bearing No.GHKH-80-2002-NSB-16-2002-3875-CH(1) and No.GHKH- 81-2002-NSB-16-2002-3875-CH(2) dated 7th October 2002 issued in exercise of the power conferred under section 161 of the Act, the State Government while recognizing certain Cooperative Federal Societies in a Schedule appended thereto, exempted from the Page 11 of 36 C/SCA/16275/2013 CAV JUDGMENT requirement of prescription under the Rules by issuing a notification in the Official Gazette for the supervision of its members.
11. Mr Trivedi further contends that Rule 44(2) lays down the procedure for execution of the awards either -
(i). like an order of the Civil Court as if it were a decree under the Code of Civil Procedure; or
(ii). through Collector by way of recovery of arrears of land revenue, as provided under section 103 of the Act; or
(iii). through Registrar as provided under section 159 of the Act.
12. Mr Trivedi further refers to Rule 2(4) of the Rules which defines the term 'recovery officer' as a person subordinate to Registrar who is empowered to exercise the powers of the Registrar under section 159. In this connection, the stance of Mr Trivedi is that section 159 deals with the powers of the Registrar to recover certain sums by attachment and sale of property. Such powers, according to him, are exercisable by the Registrar himself or by any officer subordinate to him and empowered by him in that behalf. By pointing out to section 162(b) of the Act, Mr. Trivedi contends that the said provision empowers the State Government to delegate all or any of the powers of the Registrar under the Act, inter alia, to any Co- operative Federal Society recognized under section 95 or to an officer of such a federal society. Thus, according to Mr Trivedi, it is competent for the State Government to delegate the powers of the Page 12 of 36 C/SCA/16275/2013 CAV JUDGMENT Registrar under section 159 to any Co-operative Federal Society or any officer of such society and by resorting to the said provision of delegation, the State Government may enable the primary co- operative society to recover its awarded dues in accordance with the provisions of the Act and the Rules without invoking the jurisdiction of the Registrar. Mr Trivedi contends that in the case before us one of the recognised Co-operative Federal Societies viz. Gujarat Urban Co- operative Banks Federation Ltd. through its officer passed an order appointing the Manager of the primary co-operative society i.e. the respondent No.6, being subordinate to the above-named Cooperative Federal Society as Recovery Officer for the purpose of recovering the awarded dues of the respondent No.6. Mr Trivedi contends that the aforesaid exercise does not amount to 'sub-delegation' of the delegated power. Mr Trivedi contends that section 159 of the Act provides for exercise of the powers relating to the recovery by the Registrar himself or any other officer subordinate to him, and consequently, it is quite natural that when the State Government delegates the said power of Registrar available under section 159 of the Act in favour of an officer of a Co-operative Federal Society, such an officer can very well appoint any person subordinate to him to exercise the powers of the Registrar relating to recovery of the dues of the bank. According to Mr Trivedi, the aforesaid proposition gets support from the language of section 159 of the Act which was not the position in case of section 85B of the ESIC Act, 1948 where under, only the Corporation is empowered to recover damages from the Page 13 of 36 C/SCA/16275/2013 CAV JUDGMENT employer whereas, section 94A of the ESIC Act dealing with delegation of power does not specifically provide that any officer or authority subordinate to the Corporation to whom power has been delegated by the Corporation may, in his turn, authorize any other officer to exercise such power. Mr Trivedi submits that in the above circumstances, the decision of the Supreme Court in the case of Sahni Silk Mills P. Ltd. vs. Employees' State Insurance Corporation reported in (1994) 5 SCC 346 relied upon by Mr. Shah does not apply to the instant case. Mr Trivedi contends that, on the other hand, the view expressed by the Supreme Court in the case of Heinz India P. Ltd. vs. State of UP reported in (2012) 5 SCC 443 gives the answer.
13. Mr Trivedi further relies upon the decision of the Supreme Court in the case of St. John's Teachers' Training Institute vs. Regional Director, NCTE reported in (2003) 3 SCC 321 and J.K. Industries Ltd. vs. Union of India reported in (2007) 13 SCC 673 in support of the proposition that it is always permissible for the Legislature, after laying down the legislative policy, to confer discretion on Administrative or Executive Agency to work out the details within the framework of the legislative policy laid down in the plenary enactment.
14. Lastly, Mr Trivedi submits that as held by this Court in the case of Satish Babubhai Patel vs. Union of India reported in Page 14 of 36 C/SCA/16275/2013 CAV JUDGMENT 2014 (1) GLH 483, the possibility of abuse of the provisions of a statute cannot be a ground for holding a provision thereof procedurally or substantively unreasonable.
15. Mr Trivedi, therefore, prays for dismissal of this writ- application.
16. Mr Shalin Mehta, the learned advocate appearing on behalf of the respondent-bank and Mr Dave, the learned advocate appearing for the subsequent purchaser have virtually adopted the above submissions made by Mr Trivedi and in addition to those, have contended that this application should also be dismissed on the ground that the petitioner has no locus standi to maintain this application and, at the same time, this application should further be dismissed on the ground of delay. Mr Mehta and Mr Dave contend that it is apparent from the materials on record that Manguben, the mother of the petitioner, by executing a Will has deprived the petitioner of the right in the property belonged to her and such fact is known to the petitioner and, therefore, the petitioner has no lawful right, title or interest in the property in question and at her instance, this application is not maintainable.
17. Therefore, the question that arises for determination in this application is, whether the provisions contained in sections 95, 161 and 162 of the Gujarat Cooperative Societies Act as well as the Page 15 of 36 C/SCA/16275/2013 CAV JUDGMENT three notifications indicated above, are ultra vires the provisions of the Constitution or the Parent Statute.
18. Before dealing with the aforesaid question, we propose to first deal with the preliminary objection raised by the Respondent Nos. 2 to 4 as regards the locus standi of the petitioner to maintain this Special Civil Application.
19. According to the learned counsel appearing on behalf of the Respondent Nos. 2 to 4, as the petitioner has been deprived of the right to the property in question by the Will of her mother, the petitioner is not entitled to maintain this application disputing the action on the part of the bank in question.
20. It appears from the record that the purported Will has been executed by the mother of the present petitioner by depriving some of her natural legal heirs and representatives including the petitioner. The petitioner's contention, however, is that she was not aware of the existence of the aforesaid Will and subsequently, having come to know about the existence of such Will, already a Civil Suit has been filed challenging the validity and the execution of such Will and the same is pending.
21. Therefore, at this stage, so long the Civil Court does not dispose of the said suit, it cannot be finally concluded that the Page 16 of 36 C/SCA/16275/2013 CAV JUDGMENT petitioner has been deprived of the right of the property of her mother and in such circumstances, we propose to overrule the preliminary objection raised by the Respondent Nos. 2 to 4.
22. In order to appreciate the main disputes involved in the application, it may be profitable to refer to the following three provisions of the Act as well as the notifications challenged in this application which are quoted below :-
"95. Constitution or recognition of federal society to supervise working of societies ;
(1) The State Government may constitute committees or recognize one or more cooperative federal societies in such manner as may be prescribed and subject to such conditions as the State Government may impose for the supervision of a society or a class of societies and may frame rules for making grants to any such committee or federal society.
(2) The State Government may, by general or special order, require of a society or a class of societies to make contribution of such sum every year as may be fixed by the Registrar towards the recoupment of expenditure which the State Government or any person authorised or a committee in that behalf has incurred or is likely to incur, in respect of the supervision of societies.
(3) A society to which sub-section (2) is applicable shall pay to such authority such fee as may be prescribed within a reasonable time and, if it fails to pay such fee within a reasonable time, the authority may recover it as if it were an Page 17 of 36 C/SCA/16275/2013 CAV JUDGMENT arrear of land revenue.
161. Power to exempt societies from provisions of Act :
The State Government may, by general or special order, to be published in the Official Gazette, exempt any society or class of societies from any of the provisions of this Act, or may direct that such provisions shall apply to such society or class of societies with such modifications not affecting the substance thereof as may be specified in the order:
Provided that, no order to the prejudice of any society shall be passed, without an opportunity being given to such society to represent its case.
Provided further that the aforesaid provision shall apply to societies in the cooperative credit structure subject to the guidelines issued by the Reserve Bank of India.
162. Delegation of power of State Government and of Registrar :
The State Government may by notification in the Official Gazette and subject to such condition, as it may think fit to impose, delegate -
(a) any power exercisable by it under this Act except the power under sub-section (1) of section 153 and section 168 thereof to the Registrar;
(b) all or any of the powers of the Registrar under this Act to any committee constituted or to any cooperative federal society recognised under section 95 or to an officer of such society or to any panchayat constituted under any law relating to panchayats for the time being in force."
NOTIFICATIONS :
PART - IV-B Page 18 of 36 C/SCA/16275/2013 CAV JUDGMENT Rules and orders (other than those published in Parts I, I-A and I-L) made by the Government of Gujarat under the Gujarat Acts.
AGRICULTURAL AND COOPERATION DEPARTMENT Order Sachivalaya, Gandhinagar, 7th October, 2002 GUJARAT COOPERATIVE SOCIETIES ACT, 1961 No.GHKH-80-2002-NSB-16-2002-3875-CH(1) :- In exercise of the powers conferred by section 161 of the Gujarat Cooperative Societies Act, 1961 (Guj. X of 1962) (hereinafter referred to as "the said Act"), the Government of Gujarat hereby directs that the provisions of sub-section (1) of section 95 of the said Act shall apply to the societies specified in the Schedule annexed hereto as if for the words "in such manner as may be prescribed" appearing in the said sub-section (1), the words, "by notification in the Official Gazette" had been substituted.
SCHEDULE
1. The Gujarat State Cooperative Bank Limited.
2. All District Central Cooperative Banks.
3. Gujarat State Cooperative Urban Banks Federation Limited.
By order and in the name of the Governor of Gujarat, JAYANT NAGAR UNDER SECRETARY TO GOVERNMENT PART - IV-B Rules and orders (other than those published in Parts I, I-A and I-L) made by the Government of Gujarat under the Gujarat Acts.
Page 19 of 36 C/SCA/16275/2013 CAV JUDGMENT AGRICULTURAL AND COOPERATION DEPARTMENT Notification Sachivalaya, Gandhinagar, 7th October, 2002 GUJARAT COOPERATIVE SOCIETIES ACT, 1961 No.GHKH-81-2002-NSB-16-2002-3875-CH(2) :- In exercise of the powers conferred by section 161 of the Gujarat Cooperative Societies Act, 1961 (Guj. X of 1962) (hereinafter referred to as "the said Act"), as modified by the Government of Gujarat Order No.GHKH-80-2002-NSB-16-2002-3875-CH(1) dtd. The 7th October , 2002, issued under section 161 of the said Act, the Government of Gujarat hereby recognizes the Co-operative Federal Societies specified in the Schedule annexed hereto for supervision of its members.
SCHEDULE
1.The Gujarat State Cooperative Bank Limited.
2..All District Central Cooperative Banks.
3.Gujarat State Cooperative Urban Banks Federation Limited. By order and in the name of the Governor of Gujarat, JAYANT NAGAR UNDER SECRETARY TO GOVERNMENT PART - IV-B Rules and orders (other than those published in Parts I, I-A and I-L) made by the Government of Gujarat under the Gujarat Acts.
AGRICULTURAL AND COOPERATION DEPARTMENT Notification Sachivalaya, Gandhinagar, 7th October, 2002 GUJARAT COOPERATIVE SOCIETIES ACT, 1961 No.GHKH-82-2002-NSB-16-2002-3875-CH(3) :- In exercise of the powers conferred by section 162 of the Gujarat Cooperative Page 20 of 36 C/SCA/16275/2013 CAV JUDGMENT Societies Act, 1961 (Guj. X of 1962) (hereinafter referred to as "the said Act"), the Government of Gujarat hereby delegates the powers of the Registrar under section 159 of the said Act to recover the amounts, sums, interest and costs specified against him in column (3) thereof, being a society registered under the said Act and recognised under sub-section (1) of section 95 of the said Act by Government Notification, Agriculture and Cooperation Department No. .GHKH-81-2002-NSB-16-2002- 3875-CH(2) dtd. 7th October, 2002 for the supervision of its members.
SCHEDULE
Sr. Officer Co-operative Federal
No. Society
1 2 3
1 Chief Executive Officer The Gujarat State Co-operative
Bank Ltd.
2 Chief Executive Officer A District Central Co-operative
Bank Ltd.
3 Secretary The Gujarat State Co-operative
Urban Banks Federation Ltd.
By order and in the name of the Governor of Gujarat, JAYANT NAGAR UNDER SECRETARY TO GOVERNMENT
23. First, we propose to deal with the contention of the petitioner as regards the validity of section 161 of the Act. It appears that a similar provision like the one contained in section 161 of the Act of the Madras Co-operative Societies Act, 1932, viz. section 60 thereof, came up for consideration before the Supreme Court in the Page 21 of 36 C/SCA/16275/2013 CAV JUDGMENT case of THE REGISTRAR OF CO-OPERATIVE SOCIETIES AND ANOTHER V. K. KUNJABMU AND OTHERS, reported in AIR 1980 SC 350. The provision contained in section 60 of the Madras Cooperative Societies Act, 1932, which was the subject-matter therein, is quoted below.
"Section 60. The State government may, by general or special order, exempt any registered society from any of the provisions of this Act or may direct that such provisions shall apply to such society with such modifications as may be specified in the order."
24. In this context, the Supreme Court pointed out that there was a clear policy of the Act and there are also clear guidelines. There are numerous provisions of the Act dealing with the registration of societies, rights and liabilities of members, duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc. According to the Supreme Court, the provisions are generally designed to further the objective set out in the preamble. But, numerous as the provisions are, they are not capable of meeting the extensive demands of the complex situations which may arise in the course of the working of the Act and the formation and the functioning of the societies. The Supreme Court further pointed out that too rigorous application of some of the Page 22 of 36 C/SCA/16275/2013 CAV JUDGMENT provisions of the Act may itself occasionally result in frustrating the very objects of the Act instead of advancing them and it is to provide for such situations that the Government is invested by section 60 with a power to relax the occasional rigour of the provisions of the Act and to advance the objects of the Act. Consequently, section 60, according to the Supreme Court, empowered the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provision shall apply to such society with specified modifications.
25. Mr. Shah, in this connection, tried to distinguish the said decision by strenuously comparing the preambles of the Madras Act and the Act in question and contending that the preamble of the Madras Act being the basis of the Supreme Court decision, the same is not applicable to the facts of the present case. The preamble of Madras Act is quoted below:-
"Whereas it is expedient further to facilitate the formation and working of Co-operative Societies for the promotion of thrift, self help and mutual aid, and agriculturists and other persons, with common economic needs so as to bring about better living, better business and better methods of production and for that purpose to consolidate and amend the laws relating to cooperative societies in the state of Madras".
26. On the other hand, the preamble of the Gujarat Co- Page 23 of 36 C/SCA/16275/2013 CAV JUDGMENT operative Societies Act, 1961 is as follows:
"An act to consolidate and amend the law relating to Co- operative Societies in Gujarat"
27. By referring to the aforesaid preamble, Mr. Shah wanted to impress upon us that the Supreme Court relied upon the preamble of the Madras Act to justify the validity of section 60 of the said Act as specific guidelines were indicated therein, whereas the preamble of the Gujarat Act is vague and no guideline whatsoever is provided. We are afraid, we are not impressed by such submission, inasmuch as, in the preamble of the Gujarat Act, it is specifically stated that the object of the Act is to consolidate and amend the law relating to Co- operative Societies in Gujarat, meaning thereby, that this is more exhaustive and the effect of the object of such Act is provided in various provisions of the Act itself. In the Gujarat Act also, all the provisions relating to the function of co-operative societies which are quoted by the Supreme Court while dealing with the Madras Act, i.e. the provisions relating to registration of societies, rights and liabilities of members, duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc. are very much in existence and therefore, for the selfsame reason assigned by the Supreme Court in the above decision, we are unable to take a Page 24 of 36 C/SCA/16275/2013 CAV JUDGMENT different view. Moreover, a Division Bench of this Court in the case of Joshi Indulal vs. State of Gujarat & others, reported in 1975 GLR 1096, specifically upheld the provision of section 161 of the Gujarat Act and in view of the subsequent decision of the Supreme Court in the case of THE REGISTRAR OF CO-OPERATIVE SOCIETIES ANDANOTHER V. K. KUNJABMU AND OTHERS, (supra), there is no scope of even taking a contrary view. We, thus, find that section 161 is valid.
28. The next question is whether sections 95 and 162 of the Act are violative of Articles 14, 19 and 21 of the Constitution of India. We find that there is no illegality in the provisions of Sections 95 and 162 of the Act. By enacting the provision of Section 95, the State is authorized to constitute committees or recognize one or more cooperative federal societies in such manner as may be prescribed and subject to such conditions as the State Government may impose for the supervision of a society or a class of societies and may frame rules for making grants to any such committee or federal society. Similarly by way of sub-section (2), the State Government may, by general or special order, require of a society or a class of societies to make contribution of such sum every year as may be fixed by the Registrar towards the recoupment of expenditure which the State Government or any person authorised or a committee in that behalf has incurred or is likely to incur, in respect of the supervision of societies. By sub-section (3), it has been mandated that a society to Page 25 of 36 C/SCA/16275/2013 CAV JUDGMENT which sub-section (2) is applicable shall pay to such authority such fee as may be prescribed within a reasonable time and, if it fails to pay such fee within a reasonable time, the authority may recover it as if it were an arrear of land revenue. There being no legislative incompetence of the State Legislature, it is within its province to enact such provisions which, at the same time, do not infringe any of the legal or fundamental rights of any person. Similarly, by way of Section 162 of the Act, the State Government has been given the usual power of delegation of the power exercisable by the State Government and the Registrar subject to some restriction provided therein and we do not find any illegality in conferring such power.
29. Mr. Shah vigorously contended that section 95 specifically uses the phraseology "in such manner as may be prescribed", and section 2[15] defines prescribed means "prescribed by rules". According to Mr. Shah, by giving a go-by to section 168 of the Act which requires that the Rules so prescribed to be kept for previous publication of 30 days and to be laid down before the assembly and shall be approved as per the modifications made by the legislative assembly, such mandatory procedure prescribed for making the rule cannot be avoided by issue of notification. It appears that by virtue of notification dated 7th October 2002, the phrase "as may be prescribed" are substituted by way of "notification published in the Official Gazette" and according to Mr.Shah, it is an attempt by the Executives to bypass the legislation which otherwise transgresses on Page 26 of 36 C/SCA/16275/2013 CAV JUDGMENT scheme of separation of powers and there is no justification for such an attempt. According to Mr.Shah, the said could have been easily accomplished by the procedure under section 168 and no reasons are given by the notification as to why the substitution in light of the Supreme Court decision in Prahlad and others vs. Devram and others, reported in [2009] 13 SCC 257 should not be followed. We propose to deal with the above question while considering the validity of the three notifications challenged in this application by way of amendment.
30. In an answer to the aforesaid contention that Section 162 is ultra vires, Mr. Trivedi, the learned Advocate General, relies upon the decision of the Supreme Court in the case of St. Johns Teachers Training Institute vs.Regional Director, National Council for Teacher Education and another, reported in [2003] 3 SCC 321 and J.K. Industries Limited and Another vs. Union of India and others, reported in [2007] 13 SCC 673, in support of the proposition that it is always permissible for the Legislature, after laying down the legislative policy, to confer discretion on Administrative or Executive Agency to workout the details within the framework of the legislative policy laid down in the plenary enactment.
31. In the above mentioned case of St. John's Teachers' Training Institute [supra], the Supreme Court laid down the Page 27 of 36 C/SCA/16275/2013 CAV JUDGMENT following proposition of law for deciding whether any particular legislation suffers from excessive delegation.
"10. A regulation is a rule or order prescribed by a superior for the management of some business and implies a rule for general course of action. Rules and regulations are all comprised in delegated legislations. The power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred by the Act. Rules cannot be made to supplant the provisions of the enabling Act but to supplement it. What is permitted is the delegation of ancillary or subordinate legislative functions, or, what is fictionally called, a power to fill up details. The legislature may after laying down the legislative policy confer discretion on an administrative agency as to the execution of the policy and leave it to the agency to work out the details within the framework of policy. The need for delegated legislation is that they are framed with care and minuteness when the statutory authority making the rule, after coming into force of the Act, is in a better position to adapt the Act to special circumstances. Delegated legislation permits utilization of experience and consultation with interests affected by the practical operation of statutes. Rules and regulations made by reason of the specific power conferred by the statutes to make rules and regulations establish the pattern of conduct to be followed. Regulations are in aid of enforcement of the provisions of the statute The process of legislation by departmental regulations saves time and is intended to deal with local variations and the power to legislate by statutory instrument in the form of rules and regulations is conferred by Parliament. The main justification for delegated legislation is Page 28 of 36 C/SCA/16275/2013 CAV JUDGMENT that the legislature being overburdened and the needs of the modern-day society being complex, it cannot possibly foresee every administrative difficulty that may arise after the statute has begun to operate. Delegated legislation fills those needs. The regulations made under power conferred by the statute are supporting legislation and have the force and effect, if validly made, as an Act passed by the competent legislature. [See Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi].
11. It will be useful to reproduce here a passage from Administrative Law by Wade & Forsyth [8th Edn., 2000, at p. 839]:
"Administrative legislation is traditionally looked upon as a necessary evil, an unfortunate but inevitable infringement of the separation of powers. But in reality it is no more difficult to justify it in theory than it is possible to do without it in practice. There is only a hazy borderline between legislation and administration, and the assumption that they are two fundamentally different forms of power is misleading. There are some obvious general differences. But the idea that a clean division can be made [as it can be more readily in the case of the judicial power] is a legacy from an order era of political theory. It is easy to see that legislative power is the power to lay down the law for them, or apply the law to them, in some particular situation."
32. Similarly in the case of J.K. Industries and Another [supra], the Supreme Court laid down the following proposition of law:
Page 29 of 36 C/SCA/16275/2013 CAV JUDGMENT
"133. It is well settled that, what is permitted by the concept of "delegation" is delegation of ancillary or subordinate legislative functions or what is fictionally called as "power to fill up the details". The judgments of this Court have laid down that the legislature may, after laying down the Central Government to work out details within the framework of the legislative policy laid down in the plenary enactment. Therefore, power to supplement the existing law is not abdication of essential legislative function. Therefore, power to make subordinate legislation is derived from the enabling Act and it is fundamental principle of law which is self-evident that the delegate on whom such power is conferred has to act within the limitations of authority conferred by the Act It is equally well settled that rules made on matters permitted by the Act in order to supplement the Act and not to supplant the Act, cannot be held to be in violation of the Act. A delegate cannot override the Act either by exceeding the authority or by making provisions inconsistent with the Act. [See Britnell v. Secy. Of State for Social Security, All ER at p. 730]"
33. On consideration of the above view of the Supreme Court, we find substance in the contention of Mr. Trivedi that section 162 does not violate any of the provisions of the Statute or the Constitution of India and the State Government, at the same time, is lawfully entitled to constitute committee or recognize one or more co- operative federal societies for the purpose indicated in Section 95 of the Act.
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34. We are also not impressed by the submission of Mr. Shah that the power of Registrar having been delegated to the Chief Executive Officer, and Secretary of the Gujarat State Co-operative Bank Ltd., District Central Co-operative Bank Ltd. and the Gujarat State Co-operative Urban Banks Federation Ltd., further delegation in favour of subordinate officers is not permissible. In our opinion, the aforesaid contention of Mr. Shah is equally untenable, inasmuch as once the phrase "Registrar" has been substituted by the delegated authority, namely, Chief Executive Officer and Secretary, in the notification, their subordinate officers, in the like manner will be able to exercise the power conferred upon such officer. We, in this connection find substance in the contention of Mr. Mehta that the decision of the Supreme Court in the case of Sahni Silk Mills P. Ltd. vs. Employees' State Insurance Corporation reported in [1994] 5 SCC 346, relied upon by Mr. Shah, does not apply to the present case, inasmuch as in the said decision, the power was given to the "Corporation" unlike "Registrar and his subordinate officer empowered by him".
35. The next question is whether the three notifications dated October 7, 2002 challenged in this application are valid or not.
36. By notification No.GHKH-80-2002-NSB-16-2002-3875- CH(1), in exercise of the powers conferred by section 161 of the Gujarat Cooperative Societies Act, 1961, the Government of Gujarat Page 31 of 36 C/SCA/16275/2013 CAV JUDGMENT directed that the provisions of sub-section (1) of section 95 of the Act shall apply to the societies specified in the Schedule annexed to such notification as if for the words "in such manner as may be prescribed"
appearing in the said sub-section (1), the words, "by notification in the Official Gazette" had been substituted. Once we uphold the validity of Section 161 of the Act, it is apparent that the State Government is authorized to exempt any society or class of societies from any of the provisions of this Act, or may direct that such provisions shall apply to such society or class of societies with such modifications not affecting the substance thereof as may be specified in the order. Thus, the said notification cannot be said to be ultra vires.
37. As regards the next notification being No.GHKH-81-2002- NSB-16-2002-3875-CH(2) is concerned, it appears that in exercise of the powers conferred by section 161 of the Gujarat Co-operative Societies Act, 1961 as modified by the Government of Gujarat Order No.GHKH-80-2002-NSB-16-2002-3875-CH(1) dated the 7th October , 2002, issued under section 161 of the said Act, which is dealt with above, the Government of Gujarat decided to recognize the Co- operative Federal Societies specified in the Schedule annexed thereto for supervision of its members. As we have upheld the validity of the provisions contained in Section 95 of the Act, we do not find any illegality in the above notification.
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38. So far as the third notification being No.GHKH-82-2002- NSB-16-2002-3875-CH(3) is concerned, it appears that in exercise of the powers conferred by section 162 of the Gujarat Cooperative Societies Act, 1961, the Government of Gujarat delegated the powers of the Registrar under section 159 of the said Act to recover the amounts, sums, interest and costs specified against him in column (3) thereof, being a society registered under the said Act and recognized under sub-section (1) of section 95 of the said Act by Government Notification, Agriculture and Cooperation Department No. .GHKH-81- 2002-NSB-16-2002-3875-CH (2) dated 7th October, 2002 for the supervision of its members. It appears that the notification is in conformity with the provisions contained in sub-section (b) of Section 162 of the Act, and thus, cannot be said to be beyond the scope of Section 162 of the Act.
39. In the case of Prahlad and others vs. Deorao and others, reported in [2009] 13 SCC 257 strongly relied upon by Mr. Shah, under the Maharashtra Co-operative Societies Act, 1960, as pointed out in paragraph 18 of the judgment, indisputably, the State is empowered under the Act to issue a general or special order direct- ing exemption from application of the provisions of the Act. According to the Supreme Court, such power must, however, be exercised in an exceptional situation and an order by the State providing for a power of delegated legislation must be exercised in the manner laid down therein. The Supreme Court further pointed out that an order in terms Page 33 of 36 C/SCA/16275/2013 CAV JUDGMENT of Section 157 of the Act must be issued in terms of the provisions contained in Article 162 of the Constitution of India which was not done. In the said case, in paragraph 20 of the judgment, the Supreme Court made the following observation:
"The State of Maharashtra before the High Court as also be- fore us did not bring on record any material to show as to under what circumstances the said power was exercised. The neces- sity to exercise the said power has not been disclosed. Exercise of such power, however, indisputably is a conditional one. The proviso appended to Section 157 mandates an opportunity of being heard. There is nothing on record to show that such an opportunity was provided."
40. Therefore, in the facts of the said case, the Supreme Court did not approve the action of the State Government for non- compliance of the conditions of exercise of such power. In the case before us, we are considering only the question whether the provi- sions of the Statute or the statutory notifications were ultra vires the provisions of the Constitution or the Statute itself. In the case before us, the notifications have been published in the name of Governor of the State unlike the case before the Supreme Court. We, thus, find that the said decision is of no avail to the petitioner. All these notifica- tions have been issued by the competent authority prescribed in the Act and at the same time, those are in no way beyond the provisions of either Section 95 or Section 161 or Section 162 of the Act.
41. On consideration of the entire materials on record, we, Page 34 of 36 C/SCA/16275/2013 CAV JUDGMENT thus, find that the petition has no merit so far as the question of vires is concerned. We make it clear that we have limited our scrutiny to only the question of vires of the relevant provisions of the Act and of the notifications impugned in this application and we have not gone into the merit.
42. The application is, thus, dismissed with the above observation. Interim order granted earlier stands vacated.
[BHASKAR BHATTACHARYA, CJ.] [J.B. PARDIWALA, J.] mathew FURTHER ORDER:
After the judgment was pronounced, Mr. Vishwas Shah, the learned advocate appearing for the petitioner prayed for stay of our judgment.
In view of what has been stated in our judgment, we find no reason to stay our judgment. The prayer is rejected.
However, certified copy of this judgment be given to the petitioner by tomorrow, if applied for.
Sd/-Page 35 of 36 C/SCA/16275/2013 CAV JUDGMENT
[BHASKAR BHATTACHARYA, CJ.] Sd/-
[J.B. PARDIWALA, J.] mathew Page 36 of 36