Gujarat High Court
Bharat Sudambhai Patel vs State Of Gujarat on 14 October, 2022
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 6143 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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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 or any order made thereunder ?
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BHARAT SUDAMBHAI PATEL
Versus
STATE OF GUJARAT
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Appearance:
MR PRAKASH JANI, SENIOR ADVOCATE WITH MR. ARCHIT P JANI(7304)
for the Petitioner(s) No. 1
MR KAMAL TRIVEDI, ADVOCATE GENERAL WITH MR VINAY VISHEN
AGP for the Respondent(s) No. 1,2,3
MR DIPEN DESAI(2481) for the Respondent(s) No. 4
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 14/10/2022
CAV JUDGMENT
Heard learned Senior Advocate Mr.Prakash Jani Page 1 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 assisted by learned advocate Mr.Archit P. Jani for the petitioner, learned Advocate General Mr.Kamal Trivedi assisted by learned Assistant Government Pleader Mr.Vinay Vishen for the respondent Nos.1,2 and 3 and learned advocate Mr.Dipen Desai for the respondent No.4.
1. By order dated 22nd April, 2022, this petition was fixed for final disposal with the consent of the learned advocates for the respective parties and thereafter, the petition was finally heard on 2nd May, 2022. Therefore, issue Rule, returnable forthwith. Learned advocates for the respondents waive service of notice of rule.
2. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the order dated 15th March, 2022 passed by the respondent No.2-Registrar, Co-operative Societies, State of Gujarat under Section 76(B) (1) of the Gujarat Co-operative Societies Act, Page 2 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 1961 (for short 'the Act') read with Rule 32 of the Gujarat Co-operative Societies Rule, 1965 (for short 'the Rules') whereby the petitioner is ordered to be removed from the post of Director of the Surat District Co-operative Mill Producers' Union Limited (SUMUL Dairy) (for short 'the Union').
3. The brief facts of the case are as under :
3.1. The petitioner was an elected member of the Managing Committee of the Union from 2012 to 2015 and thereafter from 2015 to 2020. The petitioner was again elected in the year 2020 for the term 2020 to 2025.
3.2. The father of the petitioner was the founding member of the Union and the petitioner has also worked in the co-operative sector for many years. The petitioner is Vice-President of Surat District Sahakari Sangh which runs NESU Page 3 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Seva Sanchalit Ashram Shala and President of Primary Milk Producing Co-operative Society.
Petitioner was also elected as Director earlier in APMC, Nizar.
3.3. It is the case of the petitioner that the son of the petitioner namely, Mr.Hemant Patel who is an Engineer by profession having degree of Bachelor of Engineering was initially appointed on 29.07.2010 at Mother Dairy which is unit of Gujarat Co-operative Milk Marketing Federation.
3.4. Son of the petitioner - Mr.Hemant Patel was appointed as a Trainee on 16.08.2010 and was confirmed as Engineer with effect from 16.08.2012 in Process and Automation Department. He was thereafter promoted as Senior Technical Officer with effect from 01.01.2016. Son of the petitioner left the job from Federation on 05.07.2016. Thereafter the Union issued a service contract dated 07.07.2016 to Mr.Hemant Patel for Page 4 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 the period from 16.07.2016 to 15.10.2016. The Union also issued an advertisement on 22.03.2016 for the post of B.E. (Instrumentation) having five years of experience for 100 Metric Ton per day milk powder plant capacity and 10 Lakh liter processing dairy products.
3.5. The Union thereafter issued an appointment letter dated 18.10.2016 to Mr.Hemant Patel selecting him for service in the Union after personal interview with effect from 21.10.2016. By letter dated 01.11.2017, the services of Mr.Hemant Patel was confirmed by the Union. Thereafter by letter dated 30th August, 2018 of the Union, Mr.Hemant Patel was transferred from Engineering Department to Purchase Section (Material Management) with effect from 1st September, 2018.
3.6. According to the petitioner, term of the Managing Committee of the Union came to an end in Page 5 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 the year 2020 and election programme was published as per the provisions of the Act and Rules. The respondent No.4-Mr.Yogesh Chunilal Rajput filed the nomination in his capacity as representative of Devada Dudh Utpadak Sahakari Mandali Limited. The petitioner filed an objection against the nomination filed by the respondent No.4 on the ground that the said Society did not provide 80 Lakh Liters of Milk to the Union and therefore, the Society or his representative would not be entitle to file nomination as per the by-laws of the Society. The objection filed by the petitioner was upheld by the Election Officer and nomination of the respondent No.4 was rejected by order dated 25.07.2020 passed by the Election Officer.
3.7. Thereafter the election of the Union was held on 07.08.2020 for sixteen seats of the Managing Committee and the petitioner was elected in the result declared on 09.08.2020. The Page 6 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 respondent No.2-Registrar Co-operative Societies, State of Gujarat by notice dated 20th August, 2020 informed the Union that two Government nominees would be appointed under Section 80(2) of the Act. The petitioner raised objections to the said notice but disregarding the objections, two persons were nominated as Government representatives vide order dated 24.08.2020 and one of them was respondent No.4-Yogesh Rajput.
3.8. The petitioner being aggrieved by the aforesaid notice and order, preferred Special Civil Application No.10405 of 2020 before this Court challenging the appointment of respondent No.4 as Government representative. This Court (Hon'ble Ms.Justice Sangeeta K. Vishen) by common CAV judgment dated 06.11.2020 allowed the petition and the order dated 24.08.2020 passed by the Registrar, Co-operative Societies was quashed and set aside.
Page 7 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 3.9. The respondent No.4 by letter dated 28.05.2021 addressed to the District Registrar, Surat raised objection with regard to continuation of the petitioner as an elected member of the Union in violation of Rules 32B and 33B of the Rules alleging that the petitioner misused his position as Director and made appointment of his son Mr.Hemant Patel in the Union at Surat.
3.10. The District Registrar pursuant to the aforesaid letter dated 28.05.2021, by letter 14.06.2021 addressed to the respondent No.2- Registrar, Co-operative Societies, State of Gujarat gave an opinion to initiate proceedings against the petitioner under Section 76(B)(1) of the Act on the ground that when the petitioner held the position at the Union from 2015 to 2017, a misleading advertisement was issued by the Union on 20th April, 2016 wherein, no post for recruitment at Maharashtra except Bachelor of Page 8 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Economics was mentioned and as such, the appointment of the son of the petitioner was by misuse of his position.
3.11. The respondent No.2-Registrar, Co-
operative Societies issued show cause notice dated 14th July, 2021 under Rule 32 of the Rules calling upon the petitioner to show cause as to why he should not be removed as a Director of the Union under Section 76(B)(1) of the Act in view of the appointment of the son of the petitioner in the Union pursuant to the advertisement dated 20th April, 2016.
3.12. The petitioner filed reply dated 29.07.2021 pointing out the details as to how initiation of proceedings against the petitioner is at the instance of the respondent No.4 and the persons who are in power in the Government as the petitioner belongs to the opposite party in power. It was also contended that the proceedings Page 9 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 under Section 76(B)(1) of the Act are without jurisdiction as none of the ingredients of the said Section are satisfied. The petitioner also submitted that petitioner is not at all concerned in the matter of appointment of his son in the Union and such appointment is not in violation of any of the provisions of laws, rules and by-laws of the Union.
3.13. The petitioner also submitted various judgments in support of his contentions before the Registrar. However, the Registrar by the impugned order dated 15th March, 2022 removed the petitioner as Director of the Union being disqualified under Section 76(B)(1) of the Act.
3.14. Being aggrieved, the petitioner has approached this Court with a prayer to quash and set aside the order dated 15th March, 2022 and to hold that the entire proceedings initiated pursuant to the show cause notice dated 14th July, Page 10 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 2021 are without jurisdiction.
4.1. Learned Senior Advocate Mr.Prakash Jani for the petitioner submitted that Rule 32 would not have any application in the present set of facts. The provisions contemplated under Rule 32(1)(b) is in respect of financial/commercial transaction with the Society. On the principle of "ejusdem generis" and "noscitur a sociis", it was submitted that unclear and ambiguous words should be determined by considering the words with which it is associated. Therefore, the words employed in Rule 32(1)(b) namely "contract", "property", "investment", "loan" would irresistibly lead to interpretation of word "Transaction" that it would mean a transaction with the societies which is in nature of commercial or financial.
4.2. It was submitted that definition of the word "Transaction" as per Black's Law Dictionary is as follows :
Page 11 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 "Transaction,n.(17c) 1. The act or an instance of conducting business or other dealings; esp., the formation, performance, or discharge of a contract 2. Something performed or carried out; a business agreement or exchange. 3. Any activity involving two or more persons. 4. Civil law. An agreement that is intended by the parties to prevent or end a dispute and in which they make reciprocal concessions. La. Civ. Code art. 3071."
4.3. It was therefore submitted that the word "Transaction" cannot be interpreted so as to include recruitment of a family member in a Co-
operative Society.
4.4. It was submitted that Rule 32 of the Gujarat Co-operative Societies Rules, 1965 would not have any application on the present set of facts as the Surat District Co-operative Milk Union Ltd. is a specified Society referred to in Section 74C of the Act, for which Gujarat Co-
operative Societies Rules, 1965 would not be applicable. Chapter-XI of Gujarat Co-operative Page 12 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Societies Act, 1961 would apply to Society belonging to category specified in Section 74C which is in relation to the election of the Committees and Officers of the Societies, Section 145F provides for disqualification of membership of specified cooperative society. Therefore, Section 145F being special provision introduced under the Act would over power Rule 32 of the Gujarat Cooperative Societies Rules, 1965 which is general in nature.
4.5 It was submitted that even otherwise Rule 32 would have application only to the member of the Managing Committee and would not apply to the family member of the member of managing committee. It was submitted that in the present case, the petitioner is not appointed by SUMUL.
The appointment of son of the petitioner would not attract breach of Rule 32(1)(2) of the Rules.
Page 13 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 4.6. It was submitted that Rule 32 of the Gujarat Co-operative Societies Rules, 1965 does not have any application to the facts of the present case, as there is no any direct or indirect contract with the Society or any proceedings filed against the Society as contemplated under the said Rule. It was submitted that there is no violation of Rule 32(1)(B) or Bye-laws no. 35(B)(6) in any manner.
It was submitted that therefore impugned order based on alleged violation of Rule 32 (1) (B) is bad in law and therefore the same is liable to be quashed and set aside.
4.7. It was submitted that there is gross delay which has not been explained. The appointment of the son of the petitioner was made in 2016 and the proceedings against the petitioner are instituted in 2021. It was submitted that the District Registrar was ex-
officio member of the Committee of the Society Page 14 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 and therefore, he was completely in know of the affairs of the Society. It was submitted that the petitioner participated in the election for the term of 2020-2025 which was declared on 07.08.2020. It was further submitted that the nomination form was filed and the same was found to be in accordance with the provisions of the Act and Rules.
4.8. It was submitted that the act which was not illegal in the year 2016 cannot become illegal in the year 2022 at the instance and behest of the respondent no.4. It was submitted that the proceeding against the petitioner came to be instituted at the behest of the respondent no.4 who has allegiance towards the party in power. It was submitted that the respondent no.4 has taken action against the petitioner as the nomination of the respondent no.4 in the election held in 2020 of the Union was rejected upon the objection filed by the petitioner and the Page 15 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 respondent no.4, thereafter, was nominated by the State Government as the representative of the Registrar vide order dated 24.08.2020 and the said order of the Registrar dated 24.08.2020 was challenged by the petitioner before this Court in Special Civil Application No.10405 of 2020 whereby, this Court vide order dated 06.11.2020 quashed and set aside the order dated 24.08.2020 and thus ,the respondent no.4 could not enter the board of Surat District Milk Producing Co-
operative Union Limited, either by way of election or as representative of the Registrar.
4.9. It was submitted that the impugned order passed by the Registrar, Co-operative societies is illegal, arbitrary, without jurisdiction, perverse and with mala-fide. It was submitted that there are no any reasons assigned whatsoever and none of the contentions raised by the petitioner is dealt with and there is neither any objective facts existing or subjective Page 16 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 satisfaction recorded by the Registrar, Cooperative Societies.
4.10. It was submitted that the entire proceeding is initiated with vengeance at the instance of respondent No.4 as the candidature of the respondent No.4 came to be rejected on 25.07.2020 upon the objection filed by the petitioner. It was submitted that because of the petitioner's efforts, the respondent No.4 could not come on the board of SUMUL either by way of election or as nominee of the State Government.
It was submitted that therefore the respondent No.4 had submitted the application against the petitioner which came to be granted by Registrar.
4.11. Learned Senior Advocate Mr. Jani submitted that the petitioner has stated in reply to the show-cause notice that he belongs to opposite party whereas, the respondent No.4 is from the ruling dispensation.
Page 17 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 4.12. It was submitted that in Section 145F, Rule 32(1)(B) and Bye-laws no.35(2)(6), there is no provision which debars and disqualifies a member of the Committee on the ground that his family member is appointed in Co-operative Society. It was therefore submitted that the appointment of family member cannot be considered as disqualification to hold the post. It is submitted that language of Rule 32(1)(B) and language of Bye-laws no.35(2)(6) is clear and unambiguous.
4.13. It was submitted that the alleged disqualification of the petitioner could have been the ground to reject the nomination filed by the petitioner, but, at the time of scrutiny of the nomination form of the petitioner in the month of July, 2020, the Election Officer did not find the petitioner as disqualified to hold the post of member of the Committee and nomination of the petitioner was found to be in order. It was Page 18 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 submitted that if at the time of scrutiny of nomination form the petitioner was not disqualified to hold the post on the ground that the petitioner's son was appointed in the year 2016, the same cannot be held valid to disqualify the petitioner at the instance of respondent no.4 who submitted the application against the petitioner on 28.05.2021.
4.14. It was submitted that in the other local laws namely Municipalities Act, Panchayat Act, etc; the elected member doesn't incur disqualification on the count that his relative is recruited in the organization.
4.15. It was submitted that in the facts of the present case, notice under Section 76B(1) of the Act and the order passed by the Registrar under Section 76B(1) of the Act suffer from complete misreading of the provisions of the Act, Rules and Bye-laws. It was submitted that Page 19 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 condition precedent for issuance of notice under Section 76(B)(1) of the Act is not satisfied and hence, the order passed by the Registrar under Section 76B(1) suffers from fundamental legal defects and therefore also the impugned order is bad in law and liable to be quashed and set aside.
4.16. In support of his submissions, learned Senior Advocate Mr. Jani referred to and relied upon the relevant paragraphs of the following decisions and submitted that under Section 76(B) (1), 145(F) of the Act read with Rule 32 of the Rules, the petitioner could not have been disqualified:
(1) Election Commission, India Versus Saka Venkata Rao1 :
"14. The Attorney-General argued that the whole fasciculus of the provisions dealing 1 AIR 1953 SC 210 Page 20 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 with "disqualifications of members", viz., articles.190 to 193, should be read together, and as articles 191 and 193 clearly cover both preexisting and supervening disqualifications, articles 190 and 192 should also be similarly understood as relating to both kinds of disqualification. According to him all these provisions together constitute an integral scheme whereby disqualifications are laid down and machinery for determining questions arising in regard to them is also provided. The use of the word "become" in articles 190 (3) and 192 (1) is not inapt, in the context, to include within its scope preexisting disqualifications also, as becoming subject to a disqualification is predicated of "a member of a House of Legislature", and a person who, being already disqualified, gets elected, can, not inappropriately, be said to "become"
subject to the disqualification as a member as soon as he is elected. The argument is more ingenious than sound. Article 191, which lays down the same set of disqualifications for election as well as for continuing as a member, and article 193 which prescribes the penalty for sitting and voting when disqualified, are naturally phrased in terms wide enough to cover both preexisting and supervening disqualifications; but it does not necessarily follow that articles 190 (3) and 192 (1) must also be taken to cover both. Their meaning must de end on the language used which, we think, is reasonably plain. In our opinion these two articles go together and provide a remedy when a member incurs a disqualification after he is elected as a member. Not only Page 21 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 do the words " becomes subject" in article 190(3) and "has become subject" in article 192(1) indicate a change in the position of the member after he was elected, but the provision that his seat is to become thereupon vacant, that is to say, the seat which the member was filling theretofore becomes vacant on his becoming disqualified, further reinforces the view that the article contemplates only a sitting member incurring the disability while so sitting. The suggestion that the language used in article 190(3) can equally be applied to a pre-existing disqualification as a member can be supposed to vacate his seat the moment he is elected is a strained and farfetched construction and cannot be accepted. The Attorney-General admitted that if the word " is " were substituted for "becomes" or "
has become ", it would more appropriately convey the meaning contended for by him, but he was unable to say why it was not used.
15. It was said that on the view that articles 190(3) and 192(1) deal with disqualifications incurred after election as a member, there would be no way of unseating a member who became subject to a disqualification after his nomination and before his election, for, such a disqualification is no ground for challenging the election by an election petition under article 329 of the Constitution read with section 100 of the Representation of the People Act, 1951. If this is an anomaly, it arises out of a lacuna in the latter enactment which could easily have provided for such a Page 22 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 contingency, and it cannot be pressed as an argument against the respondent's construction of the constitutional provisions. On the other hand, the Attorney-General's contention might, if accepted, lead to conflicting decisions by the Governor dealing with a reference under article 192 and by the Election Tribunal inquiring into an election petition under section 100 of the Parliamentary statute referred to above."
(2) Ranjeet Singh Versus Harmohinder Singh Pradhan2:
"2. Since, the challenge in the election petition to the election of the respondent, as canvassed before the High Court and before us, is based on Section 9-A of the Act, it would be desirable to first notice the provisions of that Section. Section, 9-A reads :
"9-A. Disqualification for Government contracts, etc-A person shall be disqualified if, and for so long as, there subsists a contract entered into 'by him in the course of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken by. that Government.
Explanation:- For the purposes of this section, where a contract has been fully performed by the person by whom it has been entered into with the 2 1999 (4) Supreme Court Cases 517 Page 23 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 appropriate Government, the contract shall be deemed not to subsist by reason only of the fact that the Government has not performed its parts of the contract either wholly or in part."
3. On its plain reading, Section 9-A of the Act requires
(i) that there must be a subsisting contract which has been entered into by the person whose candidature is sought to be disqualified with the Government;
(ii) that contract is for the supply of goods to the Government, or
(iii) that the contract is for the execution of any works undertaken by the Government.
4. The High Court held that Section 9- A. of the Act was not attracted in the fact situation of the case. In taking this view, the High Court relied upon a judgment given by the Andhra Pradesh High Court in B. LakshmikanthaRao vs. P Chinna Mallaiah, AIR 1979 AP 132, which has been approved by this Court in Dewan Joynal Abed in vs. Abdul Wazed alias ,Abdul Wazad Miah and Others, 1988 (Suppl.)SCC 580. According to both these judgments, merely becoming a licensee with the State Government, cannot amount to either supplying the goods to the Government or engaging in execution of any work undertaken by the Government. Learned counsel for the appellant fairly conceded that it was not a case of 'supply of goods to the Government' but maintained that the subsisting contract between the respondent and the Government amounted to 'execution Page 24 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 of any work undertaken by the Government'.
5. In Dewan Joynal (supra), this Court interpreted the word 'works' as used in Section 9-A of the Act and opined :
"The word 'worms' In the express i on in 'execution of any works' appearing in Section 9-A of the Act is used in the sense of 'projects', '.schemes', 'plants', such as building works, irrigation works, defence works etc. Respondent 1 in this case had not undertaken to carry on any such work. According to the Shorter Oxford Dictionary the 'expression 'work' means a structure or apparatus of some kind:
an architectural or engineering structure, a building edifice. When it is used in plural, i.e., as 'works' it means 'architectural or engineering operations: a fortified building; a defensive structure, fortification; any of the several parts of such structure". The word 'works' used in entry 35 of List II of the Seventh Schedule of the Constitution of India which reads as "works, lands and buildings vested in or in the possession of the State" is used in the same sense. The running of boats across in land waterways is a topic which falls under entry 32 of List III of the Seventh Schedule which reads thus : "Shipping and navigation on inland waterways as regards mechanically propelled vessels, and the rule of the road on such waterways, and the carriage of passengers and goods on inland waterways subject to the provisions of List I with respect to Page 25 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 national waterways". It is, therefore, difficult to hold that when a person acquires the right to collect toll at a public ferry under Section 8 of the Ferries Act he is performing a contract of execution of works undertaken by the government. It may have been perhaps different if the words 'in performance of any services' which were present in Section 7Cd) of the Act. as it stood prior to its amendment in 1958 had been there in Section 9-A of the Act."
6. We find ourselves unable to agree with the learned counsel for the appellant that keeping in view the purpose for which Section 9-A of the Act was enacted, namely, to avoid any conflict between private interest and public duty, a broad interpretation should be placed on Section 9-A.
7. Section 9-A is a statutory provision which imposes a disqualification on a citizen. It would, therefore, be unreasonable to take a general or broad view, ignoring the essentials of the Section and the intention of the legislature. Purposive interpretation is necessary. In Dewan Joynal case (supra). Section 9-A of the Act has been correctly interpreted in the following words :
"An analysis of Section9-A of the Act shows that only in two cases a person would be disqualified if he has entered into a contract with the appropriate government in the course of his trade or business which is subsisting on the date of scrutiny of nomination. They are (1) when the contract is one for Page 26 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 supply off goods to the appropriate government and (ii) where the contract is for the execution of any works undertaken by that Government."
(3) Bhadreshkumar Ramanlal Patel and Others Versus Stat of Gujarat and Others3:
"5. To appreciate the contentions raised by the learned Counsel for the petitioner, first of all I consider it to be appropriate to have a glance at the relevant provisions of the Act, 1961.
Section 76-B of the Act, 1961 reads as under:
Removal of office:- (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 the bye-laws or does anything which is prejudicial to the interest 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.
3 1999 (3) GLR 2549 Page 27 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 (2) The Registrar may, by Order, direct that the officer so removed shall be disqualified to hold or to contest election for any office in the society from which he is removed and in any other society for a period not exceeding four years from the date of the Order and such officer shall stand disqualified accordingly.
Section 145-F of the Act, 1961 reads as under:
Disqualification for membership: - (1) A person shall be disqualified for being elected, as, and for being a member of the committee of any specified society:
(a) If he is a salaried employee of any society (other than a society of employees themselves) or holds any office of profit under any society, except when he holds or is appointed to the office of a Managing Director or any other office under the society declared by the State Government by general or special Order not to disqualify its holder;
(b) If he has been convicted of an offence punishable under Section 153A or Section 171F or Sub-section (2) or Sub-section (3) of Section 505 of the Indian Penal Code (XLV of 1860) or under Section 145R or clause (a) of Sub-section (2) of Section 145S of this Act, unless a period six years has elapsed since the date of his conviction;Page 28 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022
C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022
(c) If he has been convicted by a Court in India for any offence and sentenced to imprisonment for not less than two years, unless a period of five years has elapsed since his release;
(d) If he is found guilty of a corrupt practice under this Chapter by the State Government unless a period of six years has elapsed since the date on which the decision of the State Government take effect;
(e) If he is also disqualified by or under any other provision of this Act.
(2) Any salaried employee of a society who was a member of the committee of a specified society immediately before the commencement of the Gujarat Co- operative Society (Amendment) Act, 1981 (Gujarat VI of 1981) shall not be disqualified, and be deemed never to have disqualified, under clause (a) of Sub-section (1), if he was at that time holding any office saved from disqualification under the said clause
(a) and shall continue to be such member for such period or subject to such term and conditions for which or on which he would have otherwise continued as such member; and anything done or any action taken by such person shall be deemed to be duly done or taken and the committee shall be deemed to be properly constituted, and such thing done or action taken shall not be called in question in any Court or authority on the ground only that the committee was not properly constituted Page 29 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 or that the person was disqualified to continue as a member.
(3) Notwithstanding anything contained in Clause (b) or (c) of Sub-section (1), disqualification under either clause shall not, in the case of a person who on the date of the conviction is a member of any specified society, take effect until three months have elapsed from that date or, if within that period an appeal or application for revision is brought in respect of the conviction or the sentence until that appeal or application is disposed of by the Court.
Section 145U of the Act, 1961 reads as under:
Disputes relating to elections to be submitted to the (Tribunal) :-(1) Notwithstanding anything contained in Section 96 or any other provisions of this Act, any dispute relating to an election shall be referred to the (Tribunal).
(2) Such reference may be made by an aggrieved party by presenting an election petition to the (Tribunal).
Provided that no such petition shall be made till after the final result of the election is declared and where any such petition is made it shall not be admitted by the (Tribunal) unless it is made within two months from the date of such declaration :
Page 30 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Provided further that, the (Tribunal); may admit any petition after the expiry of that period, if the petitioner satisfies the (Tribunal) that he had sufficient cause for not preferring the petition within the said period.
(3) In exercising the functions conferred on it by or under this chapter, the Tribunal shall have the same powers as are vested in a Court in respect of:
(a) proof of facts by affidavit;
(b) summoning and enforcing the attendance of any person and examining him on oath;
(c) compelling discovery or the production of documents, and
(d) Issuing commissions for the examination of witnesses.
In the case of any such affidavit, an officer appointed by the (Tribunal) in this behalf may administer the oath to the deponent.
(4) (Subject to any regulations) made by the (Tribunal) in this behalf, any such petition shall be heard and disposed of by the (Tribunal) as expeditiously as possible. An Order made by the (Tribunal) on such petition shall be final and conclusive and shall not be called in question in any Court.
6. In this Special Civil Application the point arises for consideration of this Page 31 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Court is as to whether for the disqualification which the respondent No. 5 alleged to have incurred he can be removed from the office of the Vice- President of the society as well as its member and for which the remedy is to be taken under Section 76-B of the Act, 1961 or a remedy of filing an election petition.
7. Section 76B of the Act provides for removal of the member from the office of the society. This provision empowers the Registrar of the co-operative society, in his opinion if any officer found defaulter can disqualify by or under the Act. The Registrar after giving 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 occurred 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 hold if the vacancy had not occurred. It is the contention of the learned Counsel for the petitioner that the Registrar should have exercised its power under Section 76B of the Act, 1961 as the respondent No. 5 stands disqualified under the Act and should have been removed from office rather than to relegate the petitioner to the remedy of the election petition. In his submission in case the respondent No. 5 would have been removed under Section 76B of the Act, 1961 he would have incurred further disqualification to hold or to contest election for any office in the society from which he is removed and in any other society for a period not exceeding 4 years Page 32 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 from the date of the Order. In case the remedy of the election petition would have been resorted to by the petitioners in this case the election of the respondent No. 5 would have been declared to be illegal and he would have been Ordered to be removed from the office of the respondent No.4 but it would hot have been incurred further disqualification as provided under Sub-section (1) of Section 76B of the Act, 1961.
8. It is not the case of the petitioner that the alleged disqualification has been incurred by the respondent No. 5 after he was elected as the member of the Board of Directors of the respondent No. 4-Society.
If we go by the pleadings of the
petitioner in this Special Civil
Application coupled with the fact that it is also not the contention of the learned Counsel for the petitioner that the respondent No. 5 has incurred disqualification as alleged against him, after his election as the member of the Board of Directors of the Society. The only inference falls from that is that he was already disqualified to contest election for the member of the Board of Directors of the respondent No. 4-Society. The first meeting of the Board of Directors was held on 6-1-1999 and if we go by the facts of this petition, the petitioners came to know about this disqualification of the respondent No. 5 on 7-1-1999. From Section 145F of the Act, I find that if what the petitioners are alleging against the respondent No. 5 is correct then the respondent No. 5 shall be disqualified from being elected as and for being a member of the Committee of the Page 33 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 specified society. It is not in dispute that the respondent No. 4 is a specified society and the respondent No. 5 is a salaried employee of a society other than the society of the employees themselves. The Section 145-U provides remedy for adjudication of the disputes relating to election of the specified society. Dispute relating to the election of the specified society has to be referred to the Tribunal. As stated earlier, in case the respondent No.5 was already suffering from this disqualification for being elected as and for being a member of the Committee of the specified society and this dispute, there cannot be two views, relates to election and the remedy for the petitioners in this matter would have been only to file election petition before the Tribunal in view of the provisions of Section 145-U of the Act. The approach of the Registrar in this case not to entertain the complaint of the petitioners made against the respondent No. 5 and to observe that only election petition is appropriate remedy cannot be said to be arbitrary or perverse or contrary to the provisions of the Act, 1961. If we go by the provisions of Section 76B of the Act, 1961, coupled with the dispute raised by the petitioners relating to an election of the member of the Board of Directors of the respondent-society and the provisions of the Section 145U of the said Act in case where the member of the Board of Directors of the Society was already disqualified for being elected as and for being elected as member of the Committee of any specified society this case will certainly not fall within four corners of Section 76B of the Act. It is not the case Page 34 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 of the petitioner nor the contention of the learned Counsel for the petitioner before this Court that the dispute which has been raised by the petitioners against the respondent No. 5 does not relate to any election. So this is not in dispute that the complaint made by the petitioners against the respondent No. 5 before the District Registrar is in respect of a dispute relating to election of a person as a member of the Board of Directors of the specified society and the fact that the respondent No. 5 was already suffering from this disqualification earlier to the date of filing of his nomination, the only appropriate and available remedy for decision or/and the adjudication of this dispute is as provided under Section 145U of the Act, 1961. A conjoint reading of Sections 76B and 145U of the Act, 1961 gives out that these provisions work and operate in altogether two different and distinct fields. Though dividing line of the jurisdiction of the authorities under Sections 76B and 145U of the Act, 1961 may be thin but it clearly remarks the scope of the jurisdiction of the authorities under these two provisions to be exercised. Section 76B of the Act, 1961 is very specific and clear and only in case where after election a member of the Board of Directors of the specified society incurs any disqualification to continue as a member, the power vested with that authority to remove that member from the office. But, where the person who has been elected as a member, was not qualified to contest the election for the office of the member of the Board of Directors of the society and but still his nomination was accepted and he has been elected then only Page 35 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 remedy available to the aggrieved party is to file an election petition before the Tribunal as provided under Section 145U of the Act, 1961. In view of this position of the law and the facts of this case the District Registrar has not committed any illegality whatsoever in passing of the impugned Order."
(4) Parmar Dipubhai B. and Others Versus Regisrar of Co-operative Societies and Others4:
"21. Before dealing with this question, scheme of the Act about internal management affairs of the society is required to be considered. Cooperative society is founded on the principle of cooperation and right of autonomous functioning is an internal part of formation of any cooperative society except those interferences which are statutorily permissible by making provisions under the act no interference in the autonomous functioning of the society is contemplated or permitted under the Act. A cooperative society becomes body corporate upon its requisitions under section 37 of the Act. For appreciation of this aspect, section 37 of the act is required to be taken into consideration. Same is, therefore, reproduced as under:
"section 37 : Societies to be bodies corporate. A society on its registration shall be a body corporate 4 2003 (2) GLR 1615 Page 36 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 by the name under which it is registered, with perpetual succession and a common seal, and with power to acquire, hold and dispose of property, to enter into contracts, to institute and defend suits and other legal proceedings, and to do all such things as are necessary for the purpose for which it is instituted."
22. Final authority of every society is statutorily vested in the General Body of the members as contemplated under section 73 of the Act. General Body of the members which includes all affiliated members of a cooperative society elect a Managing committee. So far as respondent No. 2 society is concerned, it is a specified cooperative society within the meaning of section 74-C of the Act as it finds place in the Schedule appended to the Act. Indisputably, respondent No. 2 is a specified cooperative society under section 74c (1) (i)of the Act. Managing Committee is to be elected by the General Body as contemplated under section 74-C (3) of the act, which reads as under:
Notwithstanding anything in the bye-laws of any such society, the committee of management shall be elected by a general body of members of the society and all other committees authorised by or under the bye-laws may be constituted by electing or appointing persons from among the persons who are members of the committee of management, and all such committees shall be subcommittees of the committee of management, and shall be subordinate to it: provided that it shall be lawful for the State Government.- (a) Page 37 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 to nominate its representatives on a Committee of any such society under section 80, or (b) to nominate the first Committee of Management of any such society where the bye-laws of such society so provide. ] 1[provided further that it shall be lawful for any body or authority to nominate its representative on a Committee of such society where the bye- laws of such society so provide. ]
23. Management of every society is vested in the Committee constituted in accordance with the Act, the Rules and the bye laws as provided for under section 74 of the Act, which reads as under: "74.
Committee, its powers and functions.- The management of every society shall vest in a committee, constituted in. accordance with this Act, the rules and bye-laws, which shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by this Act, the rules and the bye-laws. 1 [provided that a Committee of a society falling in any of the categories mentioned in sub- section (1) of section 74c shall not be so constituted as to require a certain part or number, of its members to periodically retire by rotation and any bye-law of such society containing such provision shall with effect on and from the commencement of section 2 of the Gujarat co-operative Societies (Amendment)Act,1981 (6 of 1981) cease to be in force."
24. The only enabling power conferred upon the State Government with respect to recruitment is to be found in section 76 of the Act, which reads as under:
Page 38 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 "76. Appointment of officers and employees and their conditions of service.-The qualifications for the appointment of a manager, secretary, accountant or any other officer or employee of a society and the conditions of service of such officers and employees shall be such as may, from time to time, be prescribed:
provided that no qualifications shall be prescribed in respect of any officer not in receipt of any remuneration."
25. A close scrutiny of said provision made under section 76 of the Act would make it clear that even under the Rules framed by the State Government, the State government can only provide for qualification and conditions of service of employees of the cooperative society. Recruitment procedure cannot be provided for even under the Rules framed under section 76 of the Act. So far as the State of gujarat is concerned, no rules are framed under section 76 of the Act and, therefore, question of prescribing qualification for appointment or service conditions of statutory rules does not arise. Said question is examined by DIVISION BENCH OF this COURT IN MALVIKABEN BHIKHABHAI PATEL and ORS. VERSUS state OF GUJARAT AND ORS. , reported IN 1998 (2) GLR PAGE 1258. Division Bench of this Court (Coram : Hon'ble Mr. Justice K. Sreedharan, CJ and Hon'ble Mr. Justice M. S. Shah) observed as under in para 5 and 8 of the judgment:
Page 39 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 "5. Section 76 of the Gujarat cooperative Societies Act 1961, relates to appointment of the officers and employees of the Societies and other conditions of service. It states that the qualifications for appointment of an employee of a society and the conditions of service shall be such as may be prescribed from time to time.
Term "prescribed" has been defined in Section 2 (15) of the Act as prescribed by rules. So the Act contemplated rules laying down the terms and conditions of service of employees in Cooperative societies. Section 168 of the act authorises the Government, by notification in the official gazette, to make rules on matters required by the Act to be prescribed. A cumulative effect of these statutory provisions enables the government to prescribe qualifications and conditions of service of the members of staff of the Cooperative Societies. State of gujarat has not so far framed any rules relating to the qualifications and conditions of service in Cooperative Societies or the cooperative Banks. In absence of such rules, service regulations framed by the various cooperative Societies control qualifications and conditions of service of their employees. As per the service regulations applicable to 4th respondent Bank, Regulation 9 (5)quoted above has to be followed. This was the direction given by the Division Bench in Special Civil Application No. 3897 of 1996 Page 40 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022
8. The first ground, noncompliance with the directions in selecting persons having less than 50% marks in degree examination, cannot be sustained for the reasons stated hereinabove in the earlier paragraphs. Neither the byelaws nor the service regulations framed by 4th respondent provide for reservation for scheduled Caste and Scheduled tribe candidates. No provision is enacted in the cooperative Societies Act enjoining the cooperative Societies to follow reservation principles while making appointment to its staff. Government of Gujarat has not framed any regulations invoking the provisions contained in Section 168 of the Cooperative societies Act. In the absence of such statutory provisions the Registrar was not entitled to give any direction to the Society to comply with the "standard of reservation as prescribed by the Government". If the government has prescribed any standard for reservation that can be traced to the provisions contained in Article 335 of the constitution; but it relates to only appointments to services and posts in connection with the affairs of the State. Appointment to the staff of the Cooperative society is not in connection with the affairs of the State. Therefore, the said direction given by the Registrar cannot also be sustained."
(5) Shrikant Versus Vasantrao and Others5:
5 2006 (2) SCC 682 Page 41 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 "20. The object and intent of section 9A of the Act is to maintain the purity of the legislature and to avoid conflicts between duty and interest of members of Legislative Assembly and Legislative Council. The said object is sought to be achieved by ensuring that a person who has entered into a contract with the State Government and therefore liable to perform certain obligations towards the State Government, is not elected as a member of the Legislative Assembly or Legislative Council, lest he should use his influence as an elected member of Legislature to dilute the obligations or to seek and secure undue advantages and benefits in respect of the subsisting contracts. It seeks to ensure that personal interests will not override his duties and obligations as a member of Legislature or Legislative Council. For the purpose of section 9-A, what is relevant is whether the candidate has a subsisting contract with the appropriate Government (in this case, the State Government) either for supply of goods to the State Government or for execution of any work undertaken by the State Government. The six requirements for application of disqualification under section 9A of the Act where a candidate holds a contract for execution of works undertaken by the appropriate Government have been listed by this Court in Kartar Singh Bhadana vs. Hari Singh Nalwa [2001 (4) SCC 661] as follows :-
(i) There should be a contract entered into by the candidate;
(ii) Such contract should be entered into by him in the course of his trade Page 42 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 or business;
(iii) The contract should be entered into with the appropriate Government;
(iv) The contract should subsist;
(v) The contract should relate to the works undertaken by the appropriate Government; and
(vi) The contract should be for execution of such works.
21. This Court in KARTAR SINGH (supra) also clarified that :
"The provisions of Section 9A disqualify a citizen from contesting an election; a citizen may, therefore, be disqualified only if the facts of his case squarely fall within the conditions prescribed by Section 9A."
[Emphasis supplied]
22. It is clear from section 9A of the Act that only certain type of contracts with the State Government will result in disqualification. For example subsistence of a mining lease granting by a government to the candidate to win minerals from a specified area was held not to attract section 9A in Kartar Singh Bhadana (supra). A contract for collection of tolls at a government ferry was held to be not a contract for execution of any work undertaken by the appropriate government in Dewan Joynal Abedin vs. Abdul Wazed [1988 Supp. SCC 580]. A subsisting contract for sale of liquor with the Page 43 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 appropriate government was held to be not a contract falling under section 9A in Ranjeet Singh vs. Harmohinder Singh Pradhan [1999 (4) SCC 517]. In Ranjeet Singh (supra), this Court reiterated the following observations in Ram Padarath Mahto v. Mishri Sinha (AIR 1961 SC 480) :-
".7. Section 9-A is a statutory provision which imposes a disqualification on a citizen. It would, therefore, be unreasonable to take a general or broad view, ignoring the essentials of the section and the intention of the legislature. Purposive interpretation is necessary."
23. Therefore, when section 9-A provides that subsistence of a contract with the appropriate government (either for supply of goods or for execution of any work undertaken by that government) will disqualify a candidate for being elected as a member of the Legislative Assembly or Legislative Council, the term 'appropriate Government' refers to the State Government alone, and not to any instrumentality of the State Government. We, therefore, hold that GMIDC and MJP constituted under the MGMIDC Act and MJA Act respectively, are not 'State Government' and, therefore, any contracts with them are not contracts entered into by the candidate with the appropriate government. We accordingly answer both parts of question (i) in the negative."
4.17. Learned Senior Advocate Mr.Jani further Page 44 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 submitted that the impugned order passed by the respondent No.2 is arbitrary inasmuch as the petitioner could not have been disqualified by invoking provision of Sub-section (1) of Section 76(B)(1) of the Act as the petitioner has not made any persistent default or was negligent in performing duties imposed upon him. The Act and Rule 32(b) relied upon by the respondent No.2- Registrar is not applicable to the facts of the case as Rule 32 of the Rules provides for qualification for the member of the Committee and the Rule 32(b) refers to the direct or indirect interest of such members in any contract or in any property sold or purchased or any other transaction of the Society except any investment made in or any loan taken from the Society. It was therefore submitted that neither of these conditions are fulfilled for invocation of the Rule 32 in the facts of the case of alleged misuse of the position of the petitioner with regard to the appointment of his son in the Page 45 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Union. In support of his submissions, learned Senior Advocate Mr.Jani relied upon the decision of the Supreme Court in case of Amar Chandra Chakraborty versus The Collector of Excise, Government of Tripura and Others6 with regard to the scope of the doctrine of ejusdem generis which is interpreted by the Supreme Court as under :
"9. Before dealing with the contention relating to Art. 19 we consider it proper to dispose of the argument founded on the ejusdem generis rule and Art. 14 of the Constitution. It was contended by Shri Sen that the only way in which s. 43 can be saved from the challenge of arbitrariness is to construe the expression "any cause other than" in Section 43(1) ejusdem generis with the causes specified in clauses (a) to (g) of s. 42 (1). We do not agree with this submission. The ejusdem generis rule, strives to reconcile the incompatibility between specific and general words. This doctrine applies when
(i) the statute contains an enumeration of specific words; (ii) the subjects of the enumeration constitute a class or category-, (iii) that class or category is not exhausted by the enumeration; (iv) the general term follows the enumeration and
(v) there is no indication of a different legislative intent. In the present case.
6 (1972) 2 SCC 442 Page 46 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 it is not easy to construe the various clauses of S. 42 as constituting one category or class. But that apart, the very language of the two sections and the objects intended respectively to be achieved by them also negative any intention of the legislature to attract the rule of ejusdem generis."
5.1. On the other hand, learned Advocate General Mr. Kamal Trivedi for the respondent Nos.1 to 3 submitted that Section 76B of the Act, 1961 deals with the removal of officer and one of the eventualities under which removal can be effected, is "where he stands disqualified by or under the Act".
5.2. It was submitted that the aforesaid expression "by or under the Act" means either by direct provisions contained in the Act or by virtue of the provisions laid down under the Rules framed under the Act. In support of his submission, learned Advocate General referred to and relied upon the decision in case of Dr.Indramani Pyarelal Gupta Versus W.R.Nathu7, in 7 AIR 1963 SC 274 Page 47 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 which it is held as under:
"15. "By" an Act would mean by a provision directly enacted in the statute in question and which is gatherable from its express language or by necessary implication therefrom. The words "under the Act", would, in that context, signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done, in other words, bye Jaws made by a Subordinate lawmaking authority which is empowered to do so by the parent Act. The distinction 1s thus between what is directly done by the enactment and what is done indirectly by rule-making authorities which are vested with powers in that behalf by the Act. A power conferred by a bye-law is not one conferred "by the Act", for in the context the expression "conferred by the Act" would mean "conferred expressly or by necessary implication by the Act itself." A bye-law framed under Section 11 or Section 12 could not fall within the phraseology "as may be prescribed" for the expression "prescribed" has been defined to mean "by rules under the Act*, i.e. those framed under S. 28 and a byelaw is certainly not within that description. But having regard to the provisions of Ss.11(1), (4) and 12 (2) (4) it would not be possible to contend that notwithstanding that the bye-
laws are rules made by an Association under S. 11 or compulsorily made by the Central Government for the Association as its bye-laws under S. 12, they are not in either case subordinate legislation under S. 11 or S. 12 as the case may be, of the Page 48 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Act. They would therefore squarely fall within the words "under the Act" in S.4(f)."
5.3. It was submitted that Rule 32 is framed under the Rules, 1965 which are made under the Act and hence, Rule 32 is part of the Act.
5.4. It was submitted that Section 76B while referring to the expression "disqualification", does not provide as to under which eventualities, the same can be said to have been incurred, and hence, regard may be had to Rule 32, which lays down various eventualities under Clauses (a) to
(g) of Sub-rule (1) of Rule 32. It is therefore submitted that a linkage between Section 76B and Rule 32 can always be drawn.
5.5. It was further submitted that in view of the fact of the petitioner's son having been appointed during the course of the erstwhile tenure as Director of the Society for the period Page 49 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 from 2015-2020, the disqualification incurred by the petitioner during the said period, continued even after he was elected for the second time for the period from 2020-2025. It was submitted that such a case is fully covered under the above-
referred eventuality i.e. "where he stands disqualified by or under the Act. In other words, this includes pre-existing as well as supervening disqualifications. In support of his submission, reliance was placed upon the decision in case of Vipulbhai Mansinhbhai Chaudhary Versus District Registrar, Co-operative Societies, Gandhinagar in Special Civil Application No.11977 of 2020, in which it is held has under :
"39. Having heard the learned advocates for the respective parties and having gone through the materials available on record, it is an admitted fact that the petitioner was disqualified to become a member or to be elected as a member of any Co-operative Society for a period of three years from 16.12.2015, as per the order passed by the District Registrar which was confirmed up to the Apex Court.
40. In spite of such Page 50 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 disqualification, the petitioner ventured to contest the election of the Society on 02.07.2017 during the period of disqualification. The conduct of the petitioner is very clear that he has total disregard to the orders passed by this Court as well as the Apex Court whereby he was disqualified to contest the election or to become a member of any Cooperative Society.
41. In the above context, it would be germane to refer to the provision of Section 76B of the Act 1961 which reads thus:
"76(B) Removal of officer (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 the 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.
(2) The Registrar may, by order, direct Page 51 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 that the officer so removed shall be disqualified to hold or to contest election for any office in the society from which he is removed and in any other society for a period not exceeding six years from the date of the order and such officer shall stand disqualified accordingly."
42. On perusal of the provision of Section 76B(1) of the Act, 1961 it is clear that the respondent-District Registrar can initiate proceedings to remove a member of the Society who is an officer under Section 2(14) of the Act, 1961 if he stands disqualified by or under the provisions of the Act. In the facts of the case, the respondent has initiated proceedings only on the ground that the petitioner stands disqualified by or under the Act.
43.The submissions made on behalf
of the petitioners are quite
attractive, inasmuch as, it was tried
to canvas that the petitioner was not disqualified after he was elected as a member of the Society. It was pointed out that the petitioner was already disqualified and therefore, the provisions of Section 76B(1) of the Act, 1961 cannot be applied in the case of the petitioner. However such argument is nothing but a fallacy because it is true that the petitioner was disqualified to contest the election and therefore, the act of election can be contested or Page 52 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 can be questioned in election petition under Section 96 of the Act, 1961. However, the petitioner continued to be disqualified even after being elected as per the order dated 16.12.2015 passed under Section 76B(2) of the Act which prohibits the petitioner from becoming a member of any Co-operative Society. Thus, the petitioner stood disqualified even as a member of the Society and therefore, the reliance placed on the decision of Supreme Court in case of Election Commission, India v/s. Saka Venkata Rao (supra), cannot be applied in the facts of the case as the facts in the said decision before the Supreme Court, the facts are very clear as is evident from the paragraphs reproduced here under:
"11. In the view we have expressed above as to the applicability of Article 226 to the present case, it is unnecessary to enter upon a discussion of the question whether Article 192(1) applies only to members who, having been already elected, have become subject to a disqualification by reason of events happening after their election; but having heard the point fully argued before us, we think it right to express our opinion thereon, especially as both sides have invited us to do so in view of its general importance.
12. The relevant provisions of the Constitution on which the determination of the question turns Page 53 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 are as follows:
190. (3) If a member of a House of the Legislature of a State-
(a) becomes subject to any of
the disqualifications mentioned in
clause (1) of Article 191 ; or
(b) resigns his seat by
writing under his hand addressed
to the Speaker or the Chairman,
as the case may be, his
seat shall thereupon become vacant,
191. (1) A person shall be disqualified for being chosen as, and for being, a member of the Legislative Assembly or Legislative Council of a State
(a) if he holds any office of profit under the Government of India or the Government of any State, specified in the First Schedule, other than an office declared by the Legislature of the State by law not to disqualify its holder;
(b) if he is of unsound mind and stands so declared by a competent court;
(c) if he is an undischarged insolvent;
(d) if he is not a citizen of India, or has voluntarily acquired the citizenship of a foreign State, or is under any acknowledgment of allegiance or adherence to a foreign State;
Page 54 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 (e) if he is so disqualified by or under any law made by Parliament. 192. (1) If any question arises as to whether a member of a House of the Legislature of a State has become subject to any of the disqualifications
mentioned in clause (1) of Article 191, the question shall be referred for the decision of the Governor and his decision shall be final.
(2) Before giving any decision on any such question, the Governor shall obtain the opinion of the Election Commission and shall act according to such opinion.
193. If a person sits or votes as a member of the Legislative Assembly or the Legislative Council of a State............ when he knows that he is not qualified or that he is disqualified for membership thereof, or that he is prohibited from so doing by the provisions of any law made by Parliament or the Legislature of the State, he shall be liable in respect of each day on which he so sits or votes to a penalty of five hundred rupees to be recovered as a debt due to the State.
13. As has been stated already, the respondent's conviction and sentence in 1942 disqualified him both for being chosen Page 55 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 as, and for being, a member of the Legislative Assembly under Article, 191 (1) (e) read with section 7 of the Representation of the People Act, 1951, passed by Parliament, the period of five years since his release on th 15 August, 1947, not having elapsed before the date of the election. The respondent having thus been under a disqualification since before his nomination on 15th March, 1952, could he be said to have "become" subject to that disqualification within the meaning of Article 192. The rival contentions of the parties centered round the true interpretation to be placed on that word in the context of the provisions quoted above.
13. As has been stated already, the respondent's conviction and sentence in 1942 disqualified him both for being chosen as, and for being, a member of the Legislative Assembly under Article 191(1) (e) read with Section 7 of the Representation of the People Act, 1951, passed by Parliament, the period of five years since his release on 15-8-1947, not having elapsed before the date of the election.
The respondent having thus been
under a disqualification since
before his nomination on 15-3-1952,
could he be said to have
"become" subject to that
disqualification within the meaning
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of Article 192. The rival
contentions of the parties
centred round the true
interpretation to be placed on that word in the context of the provisions quoted above.
14. The Attorney General argued that the whole fasciculus of the provisions dealing with "disqualifications of members"
viz Articles 190 to 193,
should be read together, and as
Articles 191 and 193 clearly
cover both pre-existing and
supervening disqualifications, Articles 190 and 192 should also be similarly understood as relating to both kinds of disqualification.
According to him all these
provisions together constitute an
integral scheme whereby
disqualifications are laid down and machinery for determining questions arising in regard to them is also provided. The use of the word "become" in Articles 190(3) and 192(1) is not inapt, in the context, to include within its scope pre-existing disqualifications also, as becoming subject to a disqualification is predicated of "a member of a House of Legislature", and a person who, being already disqualified, gets elected, can, not inappropriately, be said to "become" subject to the disqualification as a member as soon as he is elected. The argument is more ingenious than sound.
Page 57 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Article 191, which lays down the same set of disqualifications for election as well as for
continuing as a member, and Article 193 which prescribes the penalty for sitting and voting when disqualified, are naturally phrased in terms wide enough to cover both pre-
existing and supervening
disqualifications; but it does
not necessarily follow that Articles 190(3) and 192(1) must also be taken to cover both. Their meaning must depend on the language used which, we think, is reasonably plain.
In our opinion these two
articles go together and provide a
remedy when a member incurs a
disqualification after he is
elected as a member. Not only do the words "becomes subject" in Article 190(3) and "has become subject" in Article 192(1) indicate a change in the position of the member after he was elected, but the provision that his seat is to become thereupon vacant, that is to say, the seat which the member was filling theretofore becomes vacant on his becoming disqualified, further reinforces the view that the article contemplates only a sitting member incurring the disability while so sitting. The suggestion that the language used in Article 190(3) can equally be applied to a pre-existing disqualification as a member can be supposed to vacate his Page 58 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 seat the moment he is elected is a strained and far-fetched construction and cannot be accepted. The Attorney General admitted that if the word "is" were substituted for "becomes" or "has become", it would more appropriately convey the meaning contended for by him, but he was unable to say why it was not used.
15. It was said that on the view that Articles 190(3) and 192(1) deal with disqualifications incurred after election as a member, there would be no way of unseating a member who became subject to a disqualification after his nomination and before his election, for, such a disqualification is no ground for challenging the election by an election petition under Article 329 of the Constitution read with Section 100 of the Representation of the People Act, 1951. If this is an anomaly, it arises out of a lacuna in the latter enactment which could easily have provided for such a contingency, and it cannot be pressed as an argument against the respondent's construction of the constitutional provisions. On the other hand, the Attorney General's contention might, if accepted, lead to conflicting decisions by the Governor dealing with a reference under Article 192 and by the Election Tribunal inquiring into an election petition under Section 100 of Page 59 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 the Parliamentary statute referred to above.
16. For the reasons indicated we agree with the learned Judge below in holding that Articles 190(3) and 192(1) are applicable only to disqualifications to which a member becomes subject after he is elected as such, and that neither the Governor nor the Commission has jurisdiction to enquire into the respondent's disqualification which arose long before his election."
44.From the above facts and the
decision of the Supreme Court, it is
clear that the person ought to have
incurred disqualification after
being elected so as to remove
him as an elected member. However,
in the facts of the case, the petitioner continued to be disqualified to hold the post of member for a period of three years which was not the case before the Apex Court and in such circumstances, the reliance placed on behalf of the Learned Senior Advocate Mr.Jani in case of Pundalik (supra) would be applicable, as stated in paragraphs reproduced here under:
"8. Chapter XI-A of the Act deals with election of committees and officers of certain societies. Admittedly this chapter applies to the Bank. Section 144-E deals with disqualification for membership. Under sub-section (1) thereof a Page 60 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 person shall be disqualified for being elected as, and for being a, member of the committee of any specified society, ... (e) if he is so disqualified by or under any other provision of this Act. Section 144 2DT deals with disputes relating to election and provides in sub-
section (1) that notwithstanding
anything contained in Section 91 or
any other provisions of this Act, any
dispute relating to an election
shall be referred to the
Commissioner of the Division in which
such election is held or to an
officer not below the rank of
Additional Commissioner of a
Division authorised by the State
Government in this behalf. The
procedure for an election
petition is prescribed by the
subsequent sections of that
chapter. Admittedly the appellant's
election was not called in
question under the above
provisions. Section 144-E, as we
have noted, over and above the
other specified disqualifications in sub-section (1)(e) included disqualifications by or under any other provisions of the Act. Section 78(1) which deals with powers of removal of committees or member thereof provides as follows:
"78. Power of removal of committee or member thereof.-- (1) If, in the opinion of the Registrar, the committee of any society or any member of such committee makes default, or Page 61 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 is negligent in the performance of the duties imposed on it or him by this Act or the rules or the bye-laws, or commits any act which is prejudicial to the interests of the society or its members, or wilfully disobeys directions issued by the State Government, or by the Registrar for the purposes of securing proper implementation of cooperative policy and development programme approved or undertaken by the State Government or is otherwise not discharging its or his functions properly and diligently and the business of the society has or is likely to come to a standstill, or where any member of such committee stands disqualified by or under this Act for being a member, the Registrar may, after giving the committee or the member, as the case may be, an opportunity of stating its or his objections, if any, within 15 days from the date of receipt of notice, and after consultation with the federal society to which the society is affiliated; by order--
(a)(i) remove the committee, and (ii) appoint a committee consisting of three or more members (who shall not be the members of the committee so removed) of the society in its place, or appoint one or more Administrators who need not be the members of the society, but who shall not be the members of the committee so removed, to manage the Page 62 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 affairs of the society for a period not exceeding six months, which period, at the discretion of the Registrar, be extended by a further period not exceeding three months so, however, that the total period does not exceed nine months in the aggregate:
Provided that, the Registrar shall have the power to change the committee or any member thereof or the Administrator or Administrators appointed under paragraph (ii) at his discretion even before the expiry of the period specified in the order made under this sub-section;
(b)*** Section 78(1) empowers the Registrar to remove a member of a committee who "makes default" or where any member of such committee "stands disqualified by or under this Act for being a member". Section 73-
FF deals with disqualification for membership of committee. Sub- section (1) provides:
"73-FF. Disqualification for membership of committee.-- (1) Without prejudice to the other provisions of this Act or the rules made thereunder in relation to the disqualification of being a member of a committee, no person shall be eligible for being appointed, nominated, elected, co-opted or, for being a member of a committee, if he --Page 63 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022
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(i) is a defaulter of any society;
Explanation.-- For the purposes of this clause, the term "defaulter" includes--
(a) in the case of a
primary agricultural credit
society, a member who defaults the
repayment of the crop loan on the due date;
(b) in the case of term
lending society, a member who
defaults the payment of any
instalment of the loan granted to
him;
***
Sub-section (2) says: "A member who has incurred any disqualification under sub-section (1), shall cease to be a member of the committee and his seat shall thereupon be deemed to be vacant."
9. This section was inserted by Maharashtra Act, 20 of 1986 with effect from May 12, 1986.
If the impugned order is
found to have been passed by
way of setting aside the
election of the appellant the
order would be bad as the
appellant's election had not been
called in question in accordance
with the procedure prescribed by the Act. However, the notice has ex facie been issued under Section 78 of the Act. No doubt there is reference to the appellant's having been a defaulter and disqualified for being elected but it has been addressed Page 64 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 to the appellant as Director of the Bank and also stated: "You have been elected as Director on the Board of Directors of Chandrapur District Central Cooperative Bank on August 18, 1986 and today on this date you are working as the Director of the said Bank."
It also refers to the
appellant's being disqualified
"to be elected or to continue
as Director or Executive Committee
member of the Executive Committee"
under Section 73-FF of the Act and about ceasing to be a Director by committing default. From the above contents, there is no room for holding that the
appellant's election has been set aside by the impugned order; on the other hand, the emphasis is on the appellant's being disqualified to continue as Director or ceasing to be Director on account of his having committed default. The question of generalibus specialia derogant -- special things take from general or generalia specialibus non derogant -- general words do not derogate from special, therefore, does not arise.
What was stated in para 36 of the report in Hundraj Kanyalal Sajnani v. Union of India [1990 Supp SCC 577 : AIR 1990 SC 1106 : (1991) 15 ATC 771] will not be relevant. The question of repugnancy involved in Zaverbhai Amaidas v. State of Bombay [(1955) 1 SCR 799 : AIR 1954 SC 851] does not arise in this Page 65 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 case. The decision in Maharashtra State Board of Secondary and Higher Secondary Educationv. Paritosh
Bhupesh Kumar Sheth [(1984) 4 SCC 27 :
(1985) 1 SCR 29] is also not
apposite. The provisions relating
to election have to be interpreted harmoniously with other provisions of the Act such as in Section 78(1). Interpretareet concordare leges legibus est optimus interpretendi modus. To interpret and in such a way as to harmonize laws with laws is the best mode of interpretation.
10. Mr Sanghi does not dispute that the appellant was in arrear in respect of installments on the date of his election and till October 21, 1986 i.e. both prior and posterior to his election on August 18, 1986.
Admittedly the installment was not paid on due date. There was of course some dispute as to the amount of interest payable and appropriation of the amount paid against interest instead of capital but all this would not exonerate the appellant from being in default on nonpayment of installment on due date.
11. Mr.Sanghi, however, submits that the expression, "makes default"
or "stands disqualified" being in present the default must have been committed after the coming into force of section 73FF and that his default even, if any, Page 66 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 was prior to that date and not after that date. We are unable to persuade ourselves to accept this submission. The day an installment falls due on its due date failure to pay results in default and that default continues from day to day until it is repaid. Every day thereafter until payment results in making of default and, therefore, it could not be said that default could be on the due date only and thereafter no default but only liability. Considered by this principle the appellant can be said to have made default on the first day of his directorship and on every subsequent day till the installment or installments were paid. The submission, has therefore, to be rejected.
12. Similarly the submission that the default must have been one committed after the Act came into force has also to be rejected on the same ground that immediately on the Act coming into force the appellant was a defaulter and so long that default continued he must be taken to have made default until repayment.
13. What then would be the consequence of such a default. Sub-
section (2) of Section 73-FF says
that a member who has
incurred any disqualification under
sub-section (1) shall cease to be a
member of the committee and his
seat thereupon be deemed to
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be vacant. Therefore, the moment the appellant after election continued to be in default, and, therefore, must be taken to have made default, stood disqualified and thereby ceased to be a member of the committee and his seat deemed to have fallen vacant. In this view of the matter the notice of the Deputy Registrar was in effect to say that the appellant had already ceased to be a Director and his seat already fell vacant. In Keshaorao Narayanrao Patil v. District Deputy Registrar [1987 Mah LJ 709] Bombay High Court held that Section 73- FF(2) did not operate automatically and that passing of an order of removal was necessary. This has to be interpreted in the context of the provisions in the section."
45.It is true that the Supreme
Court was considering the provisions
of Section 73FF of the Co-
operative Societies Act. However,
the principle would remain the same and insertion of Section 73FF cannot dilute the situation with regard to assumption of jurisdiction under Section 76B(1) of the Act, 1961 because the provisions of Section 76B(1) of the Act, 1961 is unambiguous and does not require any further interpretation as sought to be done on behalf of the petitioner. The petitioner was and continued to be disqualified and therefore, the incidence of election is of no consequence. In such circumstances, reliance placed on behalf of the petitioner on the decision of this Page 68 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Court in case of Bhadreshkumar Ramanlal Patel(Supra) would not be applicable as in the said case, election of the member of the Society was disputed and therefore, this Court rightly held that the provisions of Section 76B can be resorted to only in case where after election a member of the Society incurs any disqualification to continue as a member and the power is vested with the authority to remove that member from the office.
Therefore, when the petitioner was
disqualified for a period of
three years and continued to be
disqualified even after his
election, the provision of Section 76B(1) would come into play and accordingly, the respondent authority has rightly exercised the power under Section 76B(1) of the Act, 1961.
xxx
49.The contention raised on behalf
of the petitioner that the
petitioner was not disqualified when
the impugned show-cause notice was issued on 30th July, 2020 is also not tenable because as per the provisions of Section 76B(1) of the Act, 1961 once the petitioner stood disqualified under the Act, 1961 the powers under Section 76B(1) of the Act, 1961 can be invoked during the period when the petitioner continued to be a member. As the petitioner was elected as a member from 2017 to 2022, the respondent has the jurisdiction to invoke provisions of Section 76B(1) of the Act, 1961 to remove the petitioner Page 69 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 as a member after giving an opportunity of hearing. As the petitioner continued to be a member during the period from 2017 to December, 2018, though he was disqualified to be a member of any Co-operative Society, the respondent has rightly exercised the jurisdiction under provisions of Section 76B(1) of the Act, 1961. The provisions of Section 76B(1) of the Act, 1961 clearly provides that if any officer which includes the member of the Society, stands disqualified by or under the Act, then powers to remove such member can be exercised by the respondent."
5.6. It was submitted that in the aforesaid judgment, this Court has categorically held to the effect that in view of the Judgment of the Hon'ble Supreme Court in case of Pundalik vs. Dist. Deputy Registrar, reported in (1991) 2 SCC 423, the judgments of the Hon'be Supreme Court in case of Election Commissioner vs. Saka Venkata Rao, reported in AIR 1953 SC 210 and of this Court in case of Bhadresh Ramanial Pate vs. State of Gujarat, reported in 1999 (3) GLR 2549 would not be applicable to the case having the present type of factual position.
Page 70 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 5.7. It was submitted that in the present case, what has been pressed in service against the petitioner is Rule 32 of the Rules which is the eventuality of the petitioner "having direct or indirect interest in any other transaction of the Society" and as a result of this, the Petitioner incurred disqualification.
5.8. It was submitted that the words "any other transaction of the Society" as used in Rule 32(1)(b) of the Rules are of widest amplitude and are required to be interpreted purposively, whereby, the same would include the action of the Society in making available the employment to the son of the petitioner being a Director in the Society, whereby the petitioner can be said to have interest in the said transaction. In support of his submission learned Advocate General referred to and relied upon relevant paragraphs of the decisions in cases of:
Page 71 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 (1) Association of Unified Tele Services Providers Versus Union of India8:
"1. Leave granted. We are in these appeals concerned with the scope and ambit of the powers and duties of the Comptroller and Auditor General of India (CAG), the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunications (DoT) in relation to the proper computation and quantification of Revenue in determining the licence fee and spectrum charges payable to Union of India under Unified Access Services (UAS) Licences entered into between DoT and the private service providers.
xxxx
10. Let us now examine the facts which gave rise to these appeals. On 28.01.2010, the TRAI issued a communication to one of the service providers for furnishing books of accounts to the Branch Audit Office of the Director General of Audit, Post and Telecommunication, operative portion of the said communication reads as follows:
"In terms of Rule 5 of the Telecom Regulatory Authority of India, Service Providers (Maintenance of Books of Accounts and other Documents) Rule, 2002, every service provider shall produce all such books of accounts and documents referred to in sub rule (1) of rule 3 thereof that has a bearing on 8 2014 (6) SCC 110 Page 72 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 the verification of the Revenue, to Telecom Regulatory Authority of India (the authority); (ii) to furnish to the Comptroller and Auditor General of India the statement or information, relating thereto, which the Comptroller and Auditor General of India may require to be produced before him and the Comptroller and Auditor General of India may audit the same in accordance with the provisions of Section 16 of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971.
2. The Comptroller and Auditor General of India (through Director General of Audit, Post & Telecommunications) has decided to audit the books of accounts of your company for the period of three years commencing from 2006-2007 onwards to assess the government share out of the revenues carried by your company in terms of the licence agreement with DoT.
3. Therefore in terms of the rule 5 of the TRAI, Service Providers (Maintenance of Books of Accounts and other Documents) Rules, 2002, it is requested that all necessary records/books of accounts circle/area- wise, on the Maintenance of Books of Accounts and other relevant matters during the last week of January, 2010 in the office of DO Audit, P&T, New Delhi, which would facilitate the audit work.
4. It is, therefore, requested that all necessary co-operation may be extended Page 73 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 to the Branch Audit Officers and Delhi office of DG Audit P&T for completion of the above audit work besides providing all necessary records/information/ documents required in connection with this audit work. This issues with the approval of the Authority."
xxxx
12. One of the service providers replied to the above-mentioned letter on 15.04.2010, the operative portion of the same reads as under:
"We appreciate that DoT in terms of Clause 22.3 of UASL can call for Licensee's books of accounts or go further and direct for a special audit by independent auditor in terms of Clause 22.6 and we have been complying and are committed to complying with direction/s that may be issued by DoT in this regard. However, we should like to mention here that we are currently undergoing the extensive special audit of our books of accounts by an independent auditor M/s S.K. Mittal & Co. appointed by DoT for the same period i.e. FY 2006-07 and 2007-08.
In the light of the above, the recent communication of DoT asking us to provide our accounting records for period of three years starting from 2006-07 for an audit by the C&AG is a matter of surprise and concern for us. We submit that a fresh audit so closely on the heels of the special audit by DoT appointed independent auditor is unwarranted and will result in Page 74 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 duplication of efforts, time and waste of resources. However, as a good corporate citizen, we have provided to DoT the total cost and breakup of original and current cost, cost and breakup of operational expenses, service wise revenue, and income from other sources for the year 2006-07, 2007-08 and 2008-09 vide our letters dated 1st April, 2010 and 12th April 2010 though this information provided to DoT is very sensitive from competitive point of view.
We would also like to submit that the provisions of the C&AG Act, 1971, which set out the duties and powers of the C&AG pertain only to the audit of accounts of the Union or the States or Government Companies or Corporations. The audit of accounts of private companies such as ours is not a part of duties and powers of the C&AG.
It is, therefore, requested that while DoT can call for our books of accounts, the audit of those does not fall within the purview of the C&AG.
We submit that the information sought through the letter like operational expenses, total cost and break up of original and current cost etc. is not only sensitive from competitive point of view but has no direct linkages to the revenues of the company and thus falls beyond our licence obligations.
We submit once again that we have already provided to DoT the desired information and are ready and be Page 75 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 willing to provide any further specific information or data which is required by DoT in accordance with the provisions of the UAs licence.
We look forward to your kind
consideration and support on the
matter."
xxx
16. The Division Bench of the Delhi High Court examined the legality of the above- mentioned communications in the light of Rule 5 of the TRAI Rules, 2002, Section 16 of the CAG Act, 1971 and Article 149 of the Constitution of India read with UAS licence conditions and took the view that the CAG has the powers to conduct the revenue audit of all accounts drawn by the licensees and expressed the view that the accounts of the licensee, in relation to the revenue receipts can be said to be the accounts of the Central Government and, thus, subject to a revenue audit, as per Section 16 of the CAG (Duties, Powers and Conditions) Act, 1971. Holding so, the writ petitions were dismissed against which these civil appeals have been preferred by way of special leave.
xxxx
19. The learned senior counsel submitted that Section 16 of the Act of 1971 does not apply to audit of private telecom licensees and submitted that the mere fact that licence fee payable under the licence agreement has to be credited into the Consolidated Fund of India in the form of receipts does not mean that a proprietary audit in respect of such receipts extends Page 76 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 to a statutory audit of private telecom licensee. Learned senior counsel also submitted that for audit of telecom licensees the correct legal regime would be clause 22 of the Licence Agreement which specifically provides for audit and special audit. Shri Salve also pointed out that the DoT, under the agreement, can appoint an outside auditor of its choice or even the CAG can conduct an audit in terms of clause 22 of UAS. Learned senior counsel also pointed out that the mere fact that Rule 5 of 2002 Rules states that the CAG may carry out an audit of the accounts of telecom licensee under Section
16 of the 1971 Act does not make such audit legally permissible. Rule 5, according to learned senior counsel, ought to be struck down as ultra vires and in contravention of Section 16 of 1971 Act.
xxxx
45. Chapter 3 of the Act of 1971 deals with the duties and powers of the CAG. Section 13 of the Act deals with the general provisions relating to audit and the same is extracted hereinbelow:
"13. It shall be the duty of the Comptroller and Auditor General -
a) to audit all expenditure from the Consolidated Fund of India and of each State and of each Union Territory having a Legislative Assembly and to ascertain whether the moneys shown in the accounts as having been disbursed were legally available for and applicable to the service or purpose to which they have been applied or charged and whether the expenditure conforms to Page 77 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 the authority which governs it;
b) to audit all transactions of the Union and of the State relating to Contingency Funds and Public Accounts;
c) to audit all trading, manufacturing, profit and loss accounts and balance sheets and other subsidiary accounts kept in any department of the Union or of a State;
and in each case to report on the expenditure, transactions or accounts so audited by him."
46. Section 13(b) provides that the CAG would "audit all transactions of the Union and of the States relating to Contingency Funds and Public Accounts". The expression "transaction" means an incident of buying and selling or action of conducting business, it also means an exchange or interaction between people. The "transaction" is, therefore, an expression of widest amplitude and would cover even the lease agreement entered into by the Union with service providers. The expression "relating to" refers to "Contingency Funds and Public Accounts". While examining the scope of Section 13, the test to be applied is, is it a transaction of Union or State or is it, in any way, "relates to contingency public fund".
47. Section 16 of the Act of 1971 deals with audit of receipts of Union or States, reads as under:
"16. It shall be the duty of the Page 78 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Comptroller and Auditor-General to audit all receipts which are payable into the Consolidated Fund of India and of each State and of each Union Territory having a Legislative Assembly and to satisfy himself that the rules and procedures in that behalf designed to secure an effective check on the assessment, collection and proper allocation of revenue and are being duly observed and to make for this purpose such examination of the accounts as he thinks fit and report thereon."
48. The expression "to audit all receipts"
does not distinguish the revenue receipts and non-revenue receipts. For the purpose of audit of receipts, the duty of the CAG extends "to such examination of the accounts as it thinks fit and report thereon". Section 13 read along with Section 16 makes it clear that the expression "to audit all transactions" so also "audit of all receipts", payable into Consolidated Fund of India would take in not only the accounts of the Union and of the State and of any other authority or body as may be prescribed or under any law made by the Parliament but also to audit all transactions which Union and State have entered into which has a nexus with Consolidated Fund, especially when the receipts have direct connection with Revenue Sharing."
(2) Pioneer Urban Land and Infrasturcture Limited Versus Union of India9:
9 2019 (8) SCC 416 Page 79 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 "1.1. Explanation to Section S5(8)(f):
"5. Definitions.--In this part, unless the context otherwise requires-
(8) "financial debt" means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes-
(f) any amount raised under any other transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing:
Explanation.--For the purposes of this sub-clause-
(i) any amount raised from an allottee under a real estate Project shall be deemed to be an amount having the commercial effect of a borrowing; and
(ii) the expressions, "allottee" and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016);"
xxxx
66. Section 5(8)(f) of the Code has been setout in the beginning of this judgment, What has been argued by the learned counsel of the petitioners is that Section 5(8)(f), as it originally stood, is an exhaustive provision which must be read noscilur a sociis, an if so read, sub- clause (f) must take colour from the other clauses of the provision, all of which Page 80 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 show that the sine qua non of a "financial debt" is a loan of money made with or without interest, which must then be returned as money. This According to the learned counsel for the petitioners, is clear from even a cursory reading of Section 5(8), Secondly, according to the learned counsel for the petitioners, by no streach of imagination, could an allottee under a real estate project fall within Section 5(8)(f), as it originally stood and the Explanation must then be read Prospectively i.e. only on and from the date of the Amendment Act. Several Sub- arguments were made on the effect of deeming fictions generally and on the functions of an explanation to a section. Let us address all of these arguments.
xxxxx
74. What is clear from what Shri Venugopal has read to us is that a wide range transactions are subsumed by para
(f) and that the precise scope of para (f) is uncertain. Equaly, para (f) seems to be a "catch all" provision which is really residuary in nature, and which would subsume within it transactions which do not, in fact, fall under any of the other sub-clauses of Section 5(8).
75. And now to the precise language of Section 5(8)(f). First and foremost, the sub-clause does appear to be a residuary provision which is "catch all" in nature. This is clear from the words "any amount"
and "any other transaction" which means that amounts that are "raised" under "transactions" not covered by any of the other clauses, would amount to a financial Page 81 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 debt if they had the commercial effect of a borrowing. The expression "transaction"
is defined by Section 3(33) of the Code as follows:
3. (33) "transaction" includes an agreement or arrangement in writing for the transfer of assets, or funds, goods or services, from or to the corporate debtor;
As correctly argued by the learned Additional Solicitor General, the expression "any other transaction"
would include an arrangement in writing for the transfer of funds to the corporate debtor and would thus clear include the kind of Financial arrangement by allottees to real estate developers when they pay installments at various stages of construction, so that they themselves fund the project either partially or completely.
76. Sub-clause (f) Section 5(8) thus read would subsume within it amounts raised under transactions which are not necessarily loan transactions, so long as they have the commercial effect of a borrowing. We were referred to Collins English Dictionary & Thesaurus (2nd Edn., 2000) for the meaning of the expression "borrow" and the meaning of the expression "commercial". They are set out hereinbelow:
"borrow.--vb I. to obtain or receive (something, such as money) on loan for temporary usc, intending to give it, or something equivalent back to the lender. 2. to adopt (ideas, words, Page 82 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 etc.) from another source; appropriate,
3. Not standard. to lend. 4. (intr) Golf. To putt the ball uphill of the direct path to the hole: make sure you borrow enough."
"commercial.--adj.I. of or engaged in commerce. 2. sponsored or paid or by an advertiser: commercial television. 3. having profit as the main aim:
commercial music. 4. (of chemicals, etc.) unrefined and produced in bulk for use in industry. 5. a commercially sponsored advertisement on radio or television."
5.9. It was submitted that curiously, an advertisement dated 22.03.2016 issued by the Union indicating one post for recruitment, requiring the qualification of B.E. (Instrumentation) at Lahe Plant, Maharashtra, but the interview proceedings held pursuant thereto on 20.04.2016 were not in respect of the said post. It was submitted that despite this, the Petitioner's son was initially recruited on a contract service at the salary of Rs.70,000/- per month and thereafter, was taken up in the post of Deputy Manager (Process & Automation), which post Page 83 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 was never advertised.
5.10. It was submitted that thus, it can very well be said that the petitioner has interest, if not direct, then indirect, in the transaction of the Society, which consists of his son having been given employment in the Society, where the Petitioner is the Director.
5.11. It was submitted that appointment of a person without issuing an advertisement and inviting application from all eligible candidates, violates the mandates of Articles 14 and 16 of the Constitution and non-following of such a norm for public employment can be said to be a serious default in performance of duties, for which a Market Committee can be superseded under Section 46 of the Gujarat Agriculture Produce Market Act, 1963.
5.12. It was submitted that the Registrar, Co-
Page 84 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 operative Societies is not empowered under the Act to direct termination of any appointee of a co-operative society. In support of his submission learned Advocate General Mr. Trivedi referred to and relied upon the relevant paragraphs of the decisions in cases of:
(1) State of Bihar Versus Chandreshwar Pathak10:
10. The order of appointment, in the present case, is as follows:
"10. The order of appointment, in the present case, is as follows:
In the light of the order passed by the Inspector General of Police, Criminal Investigation Department, Bihar, Patna, vide his Letter No. 6/86 F3 Shri Chandeshwar Pathak, s/o Shri Devnarayam Pathak of Village Haraji, PO Haraji, PS Dimbara, District Chhapra was appointed as Constable temporarily from 14-1-1988 afternoon on the condition that his previous character found satisfactory and as and when necessary, his service shall be terminated without assigning any reason or show cause. His pay scale shall be Rs 425-10,565 EB-10-605 with the basic pay of Rs 425. He has been allotted CT No. 390".
10 2014 (13) SC 232 Page 85 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 It is Clear from the above order that the appointment has been given only on the asking of the Inspector General of Police. There is nothing to show that any advertisement was issued giving opportunity to all eligible candidates to compete or any selection process was undertaken before appointment of the respondent.
13. Accordingly, it has to be held that in the absence of any advertisement or selection process, the appointment of the respondent is not protected and could be validly terminated. The learned Single Judge was justified in dismissing the writ petition while the Division Bench erred in interfering with the same."
(2) Gautambhai D. Dave Versus State of Gujarat in Special Civil Application No.14317 of 2003.
"10. There are various grounds, namely, ground Nos 8,9 & 10 in which the Govt has found that the relatives of the office bearers of the market committee were not only appointed without following the norms for recruitment by public advertisement but they were also given promotions de hors the said norms for giving promotion. Such cases are (i) Digesh Vyas, who initially came to be appointed as daily wager was given the grade of Inspector and thereafter he was promoted to the post of Asst.Secretary. The decision taken in the meeting was also without any agenda of the so-called meeting, (ii) Hasmukhbhai Patel Page 86 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 also came to be promoted as the Asst. Secretary and thereafter as the Secretary in breach of byelaws for giving promotion and (iii) Vasantkumar Somabhai who is the son of the sitting member of the market committee, i.e. Somabhai Becharbhai has been given promotion to the post of Inspector. The State Govt found that favour is shown to Vastambhai Mohanbhai, Gautambhai Raval and also four employees, namely, (i) Thakore Parkhanji Mohanji,
(ii) Rajput Jitaji Ganeshji, (iii) Dave Pravinkumar and (iv) Raval Deepakkumar and they were appointed without there being any staff schedule and thereafter there were terminated pursuant to the instructions issued by the Dist.Registrar upon the circular of the Director and thereafter they have been again taken back in service. Mr.Zaveri made an attempt to submit that the allegations are without any basis and the market committee subsequently wanted to rectify its own mistake but on account of dispute pending under section 48 of the Act before the State Govt termination has not taken place. In my view, such is a lame excuse on the part of the office bearers of the market committee. As observed earlier, no prudent elected representative, if he acts as a wise person with sense of responsibility, would give appointment to any person without inviting applications from the public at large if he has desire to appoint the best talented and qualified persons. Secondly, such an approach on the part of the market committee results into disentitling the eligible persons for being considered to the post in statutory body. Therefore, non-following of such norms for public employment can be said to Page 87 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 be serious default in performance of duties. It appears that in certain cases the appointments are given to the persons for which post is not available in the sanctioned staff set up and the excuse sought to be contended is to avoid the consequence of dispute under labour laws.
It appears that no wise or prudent office bearer as an employer would give reemployment to the employee whose services are already terminated pursuant to the order of the Dist.Registrar in anticipation of industrial dispute which may be raised by such employee under labour laws.
xxxx
12. Mr.Zaveri for the petitioners has also made an attempt to submit that there are other grounds, namely, ground Nos.2 to 6 and 12, which, under no circumstances, can be said to be valid grounds for the purpose of exercising power under section 46 of the Act. The law is settled on the said aspects by the Apex Court in case of State of Maharashtra vs Babulal Kriparam Takkamore and others reported in AIR 1967 SC 1353 in as much as even if one ground is sufficient to take the decision of supersession and if the State Govt has exercised power of supersession the order of supersession would not be rendered illegal or beyond the scope and ambit of the power under section 46 of the Act.Therefore, even if such contention of Mr.Zaveri is accepted for the purpose of consideration, the same would not make any difference so far as interference with the order passed by the State Govt under section 46 of the Act is concerned.
Page 88 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 xxxx
20. It is also necessary to note that present is not a case wherein a single aberration is the basis for taking action against Market Committee but there are series of acts of commission and omission (12 in all) which cumulatively go to establish that the Market Committee has not only failed to perform its duties but it has abused its powers. As can be seen from the charges regarding misuse of the vehicle of the Market Committee, claim of allowances which an office bearer is entitled to claim provided a personal vehicle is used, while in the present case it has come on record that though the official car of the Market Committee was used vehicle allowances were claimed by the Chairman of the Market Committee; appointment of various persons closely related to the office bearers or members of the Market Committee in utter disregard of established norms for such appointments; placing of surplus funds in deposit with a Cooperative Bank, admittedly declared to be a weak bank, wherein some of the members of the Market Committee are also on the Board of such bank and then obtaining personal loans against such deposits of the Market Committee. These are but a few instances out of the 12 charges and the authority has given cogent reasons for each and every charge along with specific details including names of persons, amounts involved, dates of such act, etc. Not only that, the authority while passing order dated 26.9.2003 has dealt with detailed submission made by the Market Committee.
Page 89 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 In these circumstances, it is not possible to accept the contention that the authority had failed to deal with various submissions placed on record on behalf of the Market Committee."
(4) Malvikaben Bhikhabhai Patel Versus State of Gujarat11.
"7. Petitioners' appointment to the staff of 4th respondent is sought to be cancelled by order dated 18/19-9-1997 (Annexure F) on two grounds. First ground is that the appointment was made in violation of the directions given by the Registrar while granting sanction namely, that the persons who are not having more than 50% marks in degree examination are selected. Second ground is that the principles of reservation have not been followed for effecting the appointment.
8. The first ground, noncompliance with the directions in selecting persons having less than 50% marks in degree examination, cannot be sustained for the reasons stated hereinabove in the earlier paragraphs. Neither the byelaws nor the service regulations framed by 4th respondent provide for reservation for Scheduled Caste and Scheduled tribe candidates. No provision is enacted in the Cooperative Societies Act enjoining the Cooperative Societies to follow reservation principles while making appointment to its staff. Government of Gujarat has not framed any regulations invoking the provisions 11 1998 (1) GLH 661 Page 90 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 contained in Section 168 of the Cooperative Societies Act. In the absence of such statutory provisions the Registrar was not entitled to give any direction to the Society to comply with the "standard of reservation as prescribed by the Government". If the Government has prescribed any standard for reservation that can be traced to the provisions contained in Article 335 of the Constitution; but it relates to only appointments to services and posts in connection with the affairs of the State. Appointment to the staff of the Cooperative Society is not in connection with the affairs of the State. Therefore, the said direction given by the Registrar cannot also be sustained.
9. From the impugned order it would appear that the Registrar had taken the view that there was not wide publicity for the vacancies in Gujarati newspapers and that the selection was not shown to have been done properly. Fourth respondent advertised the vacancies in one issue of Jansatta dated 19-5-1996. Registrar in his affidavit has taken the view that the said newspaper Jansatta does not have wide circulation in Gujarat. This contention has been countered by learned Counsel representing the petitioners and the Bank. We are inclined to accept the contention raised by the petitioners and the bank especially in view of the fact that pursuant to the advertisement in one issue of that paper more than thousand persons applied for the post. On going through the record made available to us by the Bank, it is beyond dispute that the candidates were properly interviewed and select list Page 91 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 was prepared on the basis of the proved merit of the candidates, Annexure IV Office Note of 4th respondent dated 9-9- 1996 shows that five senior officers of the Bank were entrusted with the responsibility of interviewing the candidates for preparing the select list. They were directed to give marks taking into consideration educational qualifications, writings, drafting of the application, etc. straightforwardness, correct replies, personality, conduct and smartness, etc. of the candidates. Not even a vague averment is made on behalf of the Registrar that those officers acted under the influence of any other person and prepared a select list taking into consideration irrelevant aspects.
10. In view of what is stated above, we are clear in our mind that the Registrar was in error in issuing the impugned order. On the facts and circumstances of this case, action of the Registrar was arbitrary and not supported by any reason. The order dated 18/19 -9-1997 passed by Registrar is therefore, quashed."
5.13. It was submitted that having regard to the true nature of co-operation which the Act intends to foster, a member of the Managing Committee of the society is to face removal or expulsion, when he acts against the interest of the society and undermines the moral base of Page 92 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 doing business in cooperation and keeps in view the moral rather than the material sanction. It is submitted that thus, a Director in a co-
operative society, who is getting his son accommodated by virtue of the employment in the very society, can be said to be acting against the moral norms of the society. In support of his submission, learned Advocate General referred to and relied upon the decision in case of Brij Gopal Degna Versus State12 in which it is held as under :
"1. This order shall also dispose of Misc, Petition No. 396 of 1977.
2. The petitioners in both these petitions which are filed under Article 226 of the Constitution, challenged the constitutional validity of Sub-sections (2) and (3) of Section 19-C of the Madhya Pradesh Co-operative Societies Act, 19.60, hereinafter referred to as the Act.
3. Petitioner No. 1 in Misc. Petition No. 342 of 1977 is a citizen of India.
Petitioners 2 and 3 in this petition are co-operative societies registered under the provisions of the Act. Petitioner No. 1 is a member of these societies. He is also a member of some other cooperative 12 AIR 1979 MP 173 Page 93 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 societies of Chhatarpur District. By order dated 23rd June 1977, passed under Sub- sections (2) and (3) of Section 19-C of the Act, the Registrar, Co-operative Societies, expelled the petitioner No. 1 from all the societies of which he was a member for a period of five years.
4. The petitioner in Misc. Petition No. 396 of 1977 was a member of four co- operative societies. He was also connected with several other co-operative societies in various capacities. By order dated 25th August 1977, passed under Sub-sections (2) and (3) of Section 19-C, the Registrar expelled the petitioner from the four societies of which he was a member.
5. The aforesaid orders of expulsion are challenged by the petitioners on the ground that provisions of Sub-sections (2) and (3) of Section 19-C are ultra vires and void as they infringe the fundamental right guaranteed under Article 19(1)(c) of the Constitution, viz. the freedom to form associations. The orders of expulsion are also attacked on merits in the petitions; but at the stage of arguments the only ground pressed was the constitutional validity of the aforesaid sub-sections, for the petitioners have an alternative remedy of challenging the orders on merits by filing appeals under Section 77 of the Act.
6. The long title of the Act shows that it was enacted to consolidate and amend the laws relating to Co-operative Societies in Madhya Pradesh. Different laws on Co-
Page 94 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 operatives were in force in the constituent units of the State. As indicated in the objects and reasons, the Act was passed "in order to have one uniform law for the whole State and with a view to strengthening and developing the Co-operative movement and to extend the assistance by the State including State partnership, wherever necessary." Section 2 (z) defines "society" to mean a co- operative society registered or deemed to be registered under the Act. The deeming clause is obviously enacted to take in a society registered under the repealed Acts. Section 4 of the Act provides that "subject to the provisions of this Act, a society which has as its objects the promotion of the economic interest of its members or their general welfare in accordance with co-operative principles or a society established with the object of facilitating the operations of such a society, may be registered under the Act. The expression "may be registered" as used in Section 4, will show that registration is not compulsory. Section 6 provides for conditions of registration, Section 8 confers power on the Registrar to decide certain questions pertaining to registration. Section 9 provides that if the Registrar is satisfied that society has complied with the provisions of the Act and the rules and that its proposed bye-laws are not contrary to the Act or the rules, he may register the society and its bye-law with modifications as he may consider necessary. The section further provides that no society shall be registered, if in the opinion of the Registrar, it is likely to be economically unsound or is likely to have an adverse Page 95 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 effect upon any other society. Section 10 of the Act classifies the societies under ten heads, namely : (i) Consumers' Society; (ii) Farming Society; (iii) Federal Society; (iv) Housing Society; (v) Marketing Society; (vi) Multipurpose Society; (vii) Producers' Society; (viii) Processing Society; (ix) Resource Society; and (x) General Society. The Registrar may further classify the societies falling under any of these heads under the following categories : (a) Apex Society;
(b) Central Society; and (c) Primary Society. Section 19 of the Act provides as to who may become members of the society. An individual competent to contract; any other society; a public trust; a firm, company or any other body corporate, registered, established or constituted under any law for the time being in force; a society registered under the M. P. Societies Registration Act, 1059, and the State Government may become member of a society. Section 19-A provides for disqualification of members. A person is not eligible for admission if he is an undischarged insolvent; if he has been sentenced for an offence involving moral turpitude; and if he or any member of his family, having common interest with him, carries on business similar to one carried on by the society. If a person becomes subsequently disqualified to be a member he ceases to be a member as provided in Section 19-B. Section 19-C of which Sub- sections (2) and (3) are challenged, deals with expulsion of members. Sub-section (1) of Section 19-C provides for expulsion of members, by a resolution passed by the Board of Management of the Society which is called the Committee, Sub-section (2) Page 96 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 confers power on the Registrar to expel a member of a society when it appears to him "to be necessary or desirable in the interest of the society." Sub-section (3) provides that no member of a society, who has been expelled, shall be eligible for readmission as a member of the society up to a period of five years. It would be useful to quote the entire section. The section is as follows :
"19-C. Expulsion of members. -- (1) The Committee may, by a resolution passed by three-fourths majority of the members present and voting at a meeting held for the purposes, expel a member if he--
(a) intentionally does any act likely to injure the credit of the society or bring it to disrepute; or
(b) wilfully deceives the society by false statement; or
(c) carries on any business which comes or is likely to come into conflict with the business carried on by the society; or
(d) persistently makes default in payment of his dues or fails to comply with any provisions of the bye-laws :
Provided that no such resolution shall be valid unless the member concerned has been given seven days' notice, either personally or by registered post, of the proposal to expel him and has been given an opportunity to represent his case to the committee. (2) Notwithstanding anything contained in the Act or rules or bye-laws made Page 97 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 thereunder where it appears to the Registrar to be necessary or desirable in the interest of the society to expel a member from the society he may call upon such member and the society, to explain within a period to be specified by him why such member should not be expelled from the society. If the member or society fails to furnish his or its explanation within the time specified or after considering the explanation, if received, the Registrar may pass an order expelling a member from the society.
(3) No member of a society, who has been expelled under Sub-section (1) or Sub-section (2) shall be eligible for re-admission as a member of the society up to a period of five years from the date of such expulsion."
Section 31 of the Act provides that the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal, and with power to hold property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. A society may be wound up under Section 69 by an order of the Registrar when he is of opinion that the society ought to be wound up. The Registrar may also direct the winding up of a society; (a) where the society has not commenced working within a reasonable time of its registration or has ceased to work; or
(b) where in the opinion of the Registrar the society has been working mainly for promoting the interest of Page 98 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 any individual or group of individuals and not of the members generally; or
(c) where the society has ceased to comply with any conditions as to registration or management under the Act, rules or bye-laws; and (d) where the primary credit society continues to be in default by not recovering its full overdue demand from members for continuous three co-operative years and even after supersession, it fails to recover full overdue demand. Section 73 provides that no person other than a society registered under the Act and a person or his successor in his interests of any name or title under which he traded or carried on business at the date on which the Act came into force, shall, without the sanction of the State Government, function, trade or carry on business under any name or title of which the word "Co-operative"
or its equivalent in any Indian language forms part. The Act makes various provisions for control of the affairs of the society by the Registrar. The Act only applies to societies registered under the Act.
Apart from the benefit of incorporation, a society governed by the Act has certain privileges to which we shall refer later. The Act does not make it compulsory for a society to register itself under the Act. But a society not registered under the Act cannot use the word "Co-operative" as a part of its name and cannot enjoy the privileges available to a registered society.Page 99 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022
C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022
7. The contention raised by the learned counsel for the petitioners that Sub- sections (2) and (3) of Section 19-C are void as they impinge upon a citizen's fundamental right guaranteed under Article 10(1)(c) of the Constitution, is as follows. The petitioners submit that the right to form association implies that persons forming an association have also the right to continue as members of the association and that any law which takes away the membership of those who have voluntarily joined will be a law violating the right to form the association. It is also submitted that the power of the Registrar to expel a member conferred on him by Sub-section (2), on the ground that the expulsion is necessary or desirable in the interests of the society, is unrelated to any of the matters referred to in Clause (4) of Article 19 of the Constitution and is, therefore, invalid. The petitioners heavily relied upon the case of Damyanti v. Union of India AIR 1971 SC 966.
8. To appreciate the correctness of this argument, it is necessary to understand the nature of a co-operative society. We have already seen that societies which can be registered under the Act are those which have (as) their objects the promotion of the economic interest of their members or their general welfare in accordance with the co-operative principles or similar objects, The basic principle of co-operation is that the members join as human persons and not as capitalists. Co-operation is a form of organisation wherein persons associate together as human beings on the basis of Page 100 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 equality for the promotion of the economic interest of themselves. Co-operation is a method of doing business with an ethical base. "Each for all, and all for each" is the motto of co-operation. Co-operation not only develops the latent business capacity of its members; it produces leaders; it encourages the growth of social virtues; honesty and loyalty become imperative; the prospect of a better life obtainable by concerted effort is opened up; the individual realises that there is something more to be sought than mere material gain for himself. Co-operation being a business-cum-moral movement, the success of the enterprise depends upon the reality with which each one of the members works for the achievement of the object of the organisation : [See Law and Principles of Co-operation by H. Calvart, pp. 18, 19, 22 and 45.]. The Committee on Co-operation in India emphasised the moral aspect of cooperation. To quote their words : "The theory of co-operation is very briefly that an isolated and powerless individual can, by association, with others and by moral development and mutual support, obtain in his own degree the material advantages available to wealthy or powerful persons and thereby develop himself to the fullest extent of his natural abilities. By the union of forces, material advancement is secured and by united action self-reliance is fostered and it is from the interaction of these influences that it is hoped to attain the effective realisation of the higher and more prosperous standard of life which has been characterised as better business, better farming and better living; we have found that there is a tendency not only Page 101 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 among the outside public but also among supporters of the movement to belittle its moral aspect and to regard this as superfluous idealism. Co-operation in actual practice must often fall far short of the standards aimed at and details inconsistent with co-operative ideals have often to be accepted in the hope that they may lead to better things. We wish clearly to express our opinion that it is to true co-operation alone, that is, to a co- operation which recognises the moral aspect of the question that Government must look for the amelioration of the masses and not to a pseudo-co-operative edifice, however imposing, which is built in ignorance of co-operative principles, The movement is essentially a moral one and it is individualistic rather than socialistic. It provides as a substitute for material assets "honesty and a sense of moral obligation and keeps in view the moral than the material sanction." [pp. 5 and 6 of Theory and Practice of Co- operation in India and Abroad by Kulkarni, Vol. 1]. Co-operation as a mode of doing business, is at present applied as the solution of many economic problems. Co- operation is harnessed to almost all forms of economic activity. Though co-operation was introduced in this country as a remedy for rural indebtedness, it has been applied successfully in a wide range of activities such as production, distribution, banking, supply, marketing, housing and insurance : [See Theory and Practice of Co-operation in India and Abroad by Kulkarni, Vol. 1, p. 2]. As observed by a Division Bench of this Court in Kamta Prasad' v. Registrar, Co-op. Societies AIR 1967 Madh Pra 211. "The co-Page 102 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022
C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 operative movement is both a theory of life and a system of business. It is a form of voluntary association where individuals unite for mutual aid in the production and distribution of wealth upon principles of equity, reason and common good. It stands for distributive justice and asserts the principle of equality and equity ensuring to all those engaged in the production of wealth a share proportionately commensurate with the degree of their contribution. It provides as a substitute for material assets, honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction. The movement is thus a great movement."
16. Section 19-C (2) enables the Registrar to expel a member when it is "necessary or desirable in the interests of the society." The expression "necessary or desirable in the interests of the society"
must in the context be construed to embrace grounds similar to those on which a member can be expelled by a resolution of the Committee of the society under Section 19-C (1). The power of expulsion of a member by a resolution of the Committee can be exercised when he: "(a) intentionally does any act likely to injure the credit of the society or bring it to disrepute; or (b) wilfully deceives the society by false statements; or (c) carries on any business which comes or is likely to come into conflict with the business carried on by the society; or (d) persistently makes default in payment of his dues or fails to comply with any provisions of the bye-laws." These grounds on which a member can be expelled under Page 103 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Section 19-C (1) are illustrative as to when it would be necessary or desirable to expel a member under Section 19-C (2). Speaking! briefly, a member is expelled when hej acts against the interests of the society and undermines the moral base of doing business in co-operation. We have already seen that co-operation is a great moral movement and provides as a substitute for material assets, honesty and sense of moral obligation and keeps in view the moral rather than the material sanction. Having regard to the true nature of co-operation which the Act intends to foster, the power of expulsion of a member conferred on the Registrar by Section 19-C (2) can be described to be a power for preservation of morality amongst the members which is absolutely necessary for doing business in co-operation. Laws encouraging co-operatives are in force in most of the States, if not all. In States where there is no State law on the subject, the gap is filled by the Co-
operative Societies Act, 1912. The people in our Socialist Secular Democratic Republic thus generally realise that cooperation being a great moral movement is especially suited to our country where most of the people have limited means. The power of expulsion of a member, whether exercised by the members or the Registrar, is a power to preserve the moral base of a co-operative society. It appears that the Legislature thought that it would not be enough to authorise expulsion of a member by the Committee of the society alone and the Registrar should also have the power to expel a member, for a majority in the Committee may be won over by an unscrupulous member by using unfair means.
Page 104 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 We cannot lose sight of the fact that our laws are made by the elected representatives of the people and that there is a strong presumption that they are consistent with the moral norms of the society. Viewed in this way. Section 19-C (2) is a reasonable restriction in the interests of morality on the fundamental right to form an association within the meaning of Clause (4) of Article 19. We have already seen that the power conferred is quasi-judicial in nature and the order of expulsion is appealable and that the period of five years during which a person is ineligible to become a member is also reasonable. The impugned provisions of Sub-sections (2) and (3) of Section 19-C of the Act thus fall within the protection of Clause (4) of Article 19.
17. For the reasons stated above, we reject the challenge to the constitutional validity of Sub-sections (2) and (3) of Section 19-C of the Act. As earlier pointed out, the merits of the order of expulsion can be agitated in appeal for which provision is made in the Act. If the appeals have not yet been filed, they can be filed now and it would be open to the appellate authority to condone the delay in filing the appeals under Section 79."
5.14 . It was submitted that Section 145F as contained in Part XI relating to "Specified Cooperative Societies", under the Act, also deals Page 105 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 with "disqualification" for being elected as well as for being a member of the Committee of any specified society. It was submitted that therefore, the member of the specified society like Surat District Milk Producers Union Ltd. is susceptible to the applicability of Section 145F of the Act as well as of Rule 32 of the Rules.
5.15. It was submitted that however, in the present case, none of the eventualities referred to under Section 145F is applicable and that therefore, the said Section 145F is not applicable in the present case and only Rule 32 of the Rules applies for the aforestated purpose.
5.16. It was submitted that regarding formation of opinion as required by Section 76B of the Act, the last para and first two unnumbered para of the Show-Cause Notice dated 14.07.2021 very clearly reveal about the formation of the requisite opinion by suggesting:
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(a) that there were objective facts and circumstances indicating that the petitioner has direct or indirect interest in any transaction of the Society, meaning thereby, petitioner has interest, if not direct, then indirect, in any other transaction of the Society, which consists of his son having been given employment in the Society where the petitioner is the Director, and
(b) that the Respondent No.2-Registrar, Co-
operative Societies, arrived at subjective satisfaction on the basis of the aforesaid objective facts and circumstances that prima facie, the petitioner had incurred disqualification. Reliance was placed upon the relevant paragraphs of the decisions in case of :
(i) Narayan Govind Gavate Versus The State of Page 107 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Maharashtra13:
"10. It is true that, in such cases, the formation of an opinion is a subjective matter, as held by this Court re- peatedly with regard to situations in which administrative authorities have to form certain opinions before taking actions they are empowered to take. They are expected to know better the difference between a right or wrong opinion than Courts could ordinarily on such matters. Nevertheless, that opinion has to be based upon some relevant mate- rials in order to pass the test which Courts do impose. That test basically is: was the authority concerned acting within the scope of its powers or in the sphere where its opinion and discretion must be permitted to have full play? Once the Court comes to the conclusion that the authority concerned was acting within the scope of its powers and had some material, however meagre, on which it could reasonably base its opinion, the Courts should not and will not interfere. There might, however, be cases in which the power is exercised in such an obviously arbitrary or perverse fashion, without regard to the actual and undeniable facts, or, in other words, so unreasonably as to leave no doubt whatsoever in the mind of a Court that there has been an excess of power. There may also be cases where the mind of the authority concerned has not been applied at all, due to misunderstanding of the law or some other reason, what was legally imperative for it to consider."
13 1977 (1) SCC 133 Page 108 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 (2) Union of India versus Praveen Gupta14 "9. It is now settled legal position that decision on urgency is an administrative decision and is a matter of subjective satisfaction of the appropriate Government on the basis of the material available on record. Therefore, there was no need to pass any reasoned order to reach the conclusion that there is urgency so as to dispense with the enquiry under Section 5A in exercise of power under Section 17(4). It is then contended by Shri Sanghi that as per the revised Master Plan, only 37 hectares of land was needed for establishment of timber depots, though extensive land was sought to be acquired. When that objection was taken, we passed the order directing the competent officer to file an affidavit. By our proceedings dated August 24, 1995, it was observed as under:
"In view of the specific averments made in the written submissions of the respondents regarding the location of the timber depots in terms of the master plan, it requires clarification by the Delhi Administration whether the lands in Siraspur & Libaspur are still required for the purpose mentioned in the notification, namely, planned development of Delhi and shifting of the timber depots from the Teliwara area into the new places"
14 1997 (9) SCC 78 Page 109 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 (3) Bhikhubhai V. Patel versus State of Gujarat15:
"18. Before we address ourselves to the questions for their determination it would be appropriate to notice Sections 17 and 21 which are as under :
Section 17 (1) (a) : On receipt of the draft development plan under Section 16, the State Government may, by notification, -
(i) sanction the draft development plan and the regulation so received , within the prescribed period, for the whole of the area covered by the plan or separately for any part thereof, either without modification, or subject to such modification, as it may consider proper; or
(ii) return the draft development plan and the regulations to the area development authority or, as the case may be, to the authorized officer, for modifying the plan and the regulations in such manner as it may direct:
Provided that, where the State Government is of opinion that substantial modifications in the draft development plan and regulations are necessary, the State Government may, instead of returning them to the area development authority, as the case may be, the authorised officer under this sub-clause, publish the modifications so considered necessary in the Official Gazette alongwith a notice in the
15 (2008) 4 SCC 144 Page 110 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 prescribed manner inviting suggestions or objections from any person with respect to the proposed modifications within a period of two months from the date of publication of such notice; or
(iii) refuse to accord sanction to the draft development plan and the regulations and direct the area development authority or the authorized officer to prepare a fresh development plan under the provisions of this Act.
(b) Where a development plan and regulations are returned to an area development authority, or, as the case may be, the authorized officer under sub-clause (ii) of clause (a), the area development authority, or, as the case may be, the authorized officer, shall carry out the modifications therein as directed by the State Government and then submit them as so modified to the State Government for sanction; and the State Government shall thereupon sanction them after satisfying itself that the modification suggested have been duly carried out therein.
(c) Where the State Government has published the modification considered necessary in a draft development plan as required under the proviso to sub- clause (ii) of clause (a), the State Government shall, before according sanction to the draft development plan and the regulations, take into consideration the suggestions or objections that may have been received thereto, and thereafter accord sanction to the drafts development plan and the regulations in such modified form as it may consider fit.
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(d) The sanction accorded under ? [clause (a), clause (b) ] or clause (c) shall be notified by the State Government in the Official Gazette and the draft development plan together with the regulations so sanctioned shall be called the final development plan.
(e) The final development plan shall come into force on such date as the State Government may specify in the notification issued under clause (d):
Provided that the date so specified shall not be earlier than one month from the date of publication of such notification.
(2) Where the draft development plan submitted by an area development authority, as the case may be, the authorized officer contains any proposals for the reservation of any land for a purpose specified in clause
(b) or [clause (n) or clause (o)] of sub-section (2) of section 12 and such land does not vest in the area development authority, the State Government shall not include the said reservation in the development plan, unless it is satisfied that such authority would acquire the land, whether by agreement or compulsory acquisition, within ten years from the date on which the final development plan comes into force.
(3) A final development plan which has come into force shall, subject to the provisions of this Act, be binding on the area development authority concerned and on all other authorities Page 112 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 situated in the area of the development plan.
(4) After the final development plan comes into force, the area development authority concerned may execute any work for developing, re-developing or improving any area within the area covered by the plan in accordance with the proposals contained in the development plan.
Section 21. Atleast once in ten years from the date on which a final development plan comes into force, the area development authority shall revise the development plan after carrying out, if necessary, a fresh survey and the provisions of sections 9 to 20, shall, so far as may be, apply to such revision.
23. The power conferred by Section 17(1)
(a)(ii) read with proviso is a conditional power. It is not an absolute power to be exercised in the discretion of the State Government. The condition is formation of opinion subjective, no doubt that it had become necessary to make substantial modifications in the draft development plan. This opinion may be formed on the basis of material sent along with the draft development plan or on the basis of relevant information that may be available with the State Government. The existence of relevant material is a pre-condition to the formation of opinion. The use of word may indicates not only a discretion but an obligation to consider that a necessity has arisen to make substantial modifications in the draft development plan. It also involves an obligation to Page 113 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 consider which are of the several steps specified in sub-clauses (i), (ii) and
(iii) should be taken.
26. The formation of the opinion by the State Government should reflect intense application of mind with reference to the material available on record that it had become necessary to propose substantial modifications to the draft development plan.
34. In the affidavit in reply filed on behalf of the State Government in the High Court, it was averred what weighed with the State Government to exercise its power under Section 17 (1) (a) (ii) of the Act was public interest at large. The State government thought it fit to classify the lands in question for educational use so that there is a specific pocket of educational institutional area in the fast developing city of Surat where its population in the last decade, has almost doubled. If such educational institutional pockets in the adjoining land, where there already exists the complex of South Gujarat University, are not ensured in the development plan of the city like Surat, then, in that case, land would not be available in future. This would resultantly make people to travel long distance from the city area for educational purpose. Public interest parameter is undoubtedly a valid consideration that could have been taken into account by the State Government. But this aspect of the matter is stated for the first time in the affidavit in reply and is not born out by the record. There Page 114 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 is nothing on record suggesting as to what public interest parameter weighed with the State Government. The question is: was there any material available on record in support of what has been pleaded in the reply affidavit ?
35. Be that as it may, the impugned preliminary notification itself does not reflect formation of any opinion by the State Government that it had become necessary to make substantial modifications in the draft development plan and, for that reason, instead of returning in the plan, decided to publish the modifications so considered necessary in the Official Gazette along with the notice inviting suggestions or objections with respect to the proposed modifications. It is very well settled, public orders publicly made, in exercise of a statutory authority, cannot be construed in the light of explanations subsequently given by the decision making authority. Public orders made by authorities are meant to have public effect and must be construed objectively with reference to the language used in the order itself. (See Gordhandas Bhanji and Mohinder Singh Gill & Anr. Vs. The Chief Election Commissioner, New Delhi ).
36. Neither the preliminary notification itself nor the records disclose the formation of any opinion by the State Government much less any consideration that any necessity as such had arisen to make substantial modifications in the draft development plan."
Page 115 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 5.17. It was submitted that Section 76B(1) and Section 76B(2) of the Act are independent of each other and the authorities specified therein are not obliged to disqualify every officer against whom the order of removal under Section 76B(1) is passed. In support of his submission, learned Advocate General Mr.Trivedi referred to and relied upon the decision in case of Vipulbhai Mansingbhai Chaudhary Versus State of Gujarat16 in which it is held as under :
"51. Section 76-B(1) contemplates removal of an officer of a society if the Registrar is satisfied that such an officer is guilty of any of the misconducts specified under the section. Sub-section (2) further authorities the Registrar to disqualify such an officer either to contest or to hold any office in that society from which the officer is removed and also in any other society for a period to be specified by the Registrar subject to a statutory outer limit. From the language of sub-section (2), it appears to us that the Registrar is not obliged to disqualify every Officer against whom an order of removal under Section 76-B(1) is passed. Going by the 16 2017 (13) SCC 51 Page 116 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 text of sub-section (2) which says that "the Registrar may direct that the officer so removed shall be disqualified..." the power to disqualify is discretionary.
52. The basic requirement of sub-section (2) is that the power thereunder could be exercised only against an officer of a society who has already been removed from office. Therefore, the factual basis on which the action under sub-section (1) and sub-section (2) of Section 76-B is to be taken is bound to be the same though the reasons and logic on the basis of which action under either of the sub-sections is to be taken could be different. Depending upon the intensity and gravity of the misconduct in a given case, Mere act [under Section 76-B(1)] of removal from office might suffice and meet the ends of justice. Whereas in some cases action under both the sub-sections might be called for. But in no case action only under Section 76-B(2) is permissible without taking action under Section 76-
B(1). It is also possible that in a given case, facts may not only justify but also oblige the Registrar to pass not only an order of removal under sub-section (1) but also an order of disqualification under sub-section (2) depending upon the nature of the misconduct and the legal obligation flouted by the officer. It all depends upon the facts and circumstances of each and every case and the scheme of the law relevant to such facts. The variables are too many."
5.18. It was submitted that when Registrar, Page 117 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Co-operative Societies, while considering the report of District Registrar, acts independently in exercise of the powers conferred under Section 76B(1) in matter of removal of the officer, he cannot be said be incompetent to initiate the proceedings under Section 76B(1), merely because his representative i.e. District Registrar by virtue of his post, was the part of the meeting of the Managing Committee of the Society, approving the particular act of the officer. This is because of the fact that Registrar, Co-
operative Societies himself was never the part of the decision-making process of the Managing Committee. In support of his submission learned Advocate General Mr.Trivedi referred to and relied upon the decision in case of Vipulbhai Mansingbhai Chaudhary Versus State of Gujarat17, in which it is held as under :
"5.3. Mr. Jani has tried to distinguish the decision of the Apex Court so far as the jurisdiction of Registrar is concerned and submitted that the Registrar in the 17 2015 SCC OnLine Guj 1930 Page 118 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 present case has not attended any meeting and only his nominee has appeared. He submitted that when the Registrar himself has not participated in any of the meetings, he cannot be barred from exercising his jurisdiction.
9. It has also been canvassed that the Registrar has no jurisdiction to initiate proceedings. We are not much convinced by the said submission. When the Registrar has not participated in the decision making process of the Managing Committee, he is competent to issue notice under section 76B of the Act."
5.19. It was submitted that malafide in facts or in law, including the political malafide can never be assumed or readily inferred in the absence of corroborative and strong evidence of unimpeachable character. In support of his submission, learned Advocate General Mr.Trivedi referred to and relied upon the relevant paragraphs of the decisions in cases of :
(1) E.P.Royappa Versus State of T.N.18 "92. Secondly, we must not also overlook 18 AIR 1974 SC 555 Page 119 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 that the burden of establishing mala fides in very heavy on the person who alleges it. the allegations of mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. Here the petitioner, who was himself once the Chief Secretary, has flung a series of charges of oblique conduct against the Chief Minister. That is in itself a rather extra-ordinary and unusual occurrence and if these charges are true, they are bound to shake the confidence of the people in the political custodians of power in the State, and therefore, the anxiety of the Court should be all the greater to insist on a high degree of proof. In this context it may be noted that top administrators arc often required to do acts which affect others adversely but which are necessary in the execution of their duties. These acts may land themselves to misconstruction and suspicion as to the bona fide of their author when the full facts and surrounding circumstances are not known. The Court would, therefor be slow to draw dubious inferences from incomplete facts placed before it by a party,, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration. Such is the judicial perspective in evaluating charges of unworthy conduct against ministers and other high authorities, not because of any special status which they are supposed to enjoy, nor because they are highly placed in social' life or administrative set up these. considerations are wholly irrelevant in judicial approach but Page 120 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 because, otherwise, functioning effective y would become difficult in a democracy.
It is from this stand point that we must assess that merits of the allegations of mala fides made by the petitioner against the second respondent."
(2) Maharashtra Versus Dr.Budhikota Subbarao19 :
"7. Mala fides violating the proceedings may be legal or factual. Former arises as a matter of law where a public functionary acts deliberately in defiance of law without any malicious intention or improper motive whereas the latter is actuated by extraneous considerations. But neither can be assumed or readily inferred. It requires Strong evidence and unimpeachable proof. Neither the order passed by the learned Single Judge granting ex parte order of stay preventing opposite party from going abroad was against provisions of law nor was the State guilty of acting mala fides in approaching the learned Single Judge by way of writ petition. The order of the trial Judge could not be challenged before the Division Bench. Under the rules of the court, the correctness of, the order could be assailed only in the manner it was done by the State, Any party aggrieved by an order is entitled to challenge it in a court of law. Such action is neither express malice nor malice in law."
5.20. It was submitted that the petitioner 19 1993 (3) SCC 71 Page 121 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 cannot claim negative equality on the ground that no action is taken against other Directors of the Society even though their relatives are working in the Society. In support of his submission, learned Advocate General Mr.Trivedi referred to and relied upon the relevant paragraphs of the decisions in cases of :
(1) Union of India Versus International Trading Company20 "13. What remains now to be considered, is the effect of permission granted to the 32 vessels. As highlighted by learned counsel for the appellants, even if it is accepted that there was any improper permission, that may render such permissions vulnerable so far as 32 vessels are concerned. But it cannot come to the aid of respondents. It is not necessary to deal with that aspect because two wrongs do not make one right. A party cannot claim that since something wrong has been done in another case; direction should be given for doing another wrong.
It would not be setting a wrong right, but would be perpetuating another wrong. In such matters there is no discrimination involved. The concept of equal treatment on the logic of Article 14 of the Constitution of India, 1950 (in short 'the 20 2003 (5) SCC 437 Page 122 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Constitution') cannot be pressed into service in such cases. What the concept of equal treatment presupposes is existence of similar legal foothold. It does not countenance repetition of a wrong action to bring both wrongs or par. Even if hypothetically it is accepted that wrong has been committed on some other cases by introducing a concept of negative equality respondents cannot strengthen their case. They have to establish strength of their case on some other basis and not by claiming negative equality."
(2) State of Bihar Versus Upendra Narayansingh21 "67. By now it is settled that the guarantee of equality before law enshrined in Article 14 is a positive concept and it cannot be enforced by a citizen or court in a negative manner. If an illegality or irregularity has been committed in favour of any individual or a group of individuals or a wrong order has been passed by a judicial forum, others cannot invoke the jurisdiction of the higher or superior Court for repeating or multiplying the same irregularity or illegality or for passing wrong order - Chandigarh Administration and another v. Jagjit Singh and another [(1995) 1 SCC 745], Secretary, Jaipur Development Authority, Jaipur v. Daulat Mal Jain and others [(1997) 1 SCC 35], Union of India [Railway Board] and others v. J.V. Subhaiah and others [(1996) 2 SCC 258], Gursharan Singh v. New Delhi Municipal Committee [(1996) 2 SCC 459], State of Haryana v. Ram Kumar Mann [(1997) 1 SCC 35],Faridabad CT Scan Centre v. D.G. Health Services and others [(1997) 7 SCC 752], Style (Dress Land) v. Union Territory, Chandigarh 21 2009 (5) SCC 65 Page 123 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 and another[(1999) 7 SCC 89] andState of Bihar and others v. Kameshwar Prasad Singh and another[(2000) 9 SCC 94],Union of India and another v. International Trading Co. and another[(2003) 5 SCC 437] and Directorate of Film Festivals and others v. Gaurav Ashwin Jain."
6. Considering the submissions made by both the sides and on perusal of the material available on record, short question arising in this petition is whether the order passed by the respondent No.2-Registrar under Section 76(B)(1) of the Act removing the petitioner as Director of the Union is in accordance with law or not?
7. It would therefore be germane to refer to the provisions of Section 76(B)(1) of the Act which reads as under :
"76B(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 the bye-laws or does anything which is prejudicial to the interest 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 Page 124 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 society to elect or appoint a person or a qualified member in the vacancy caused by such removal and the officer so elected or a appointment shall hold office so long only as the officer in whose place he is elected would have held if the vacancy had not occurred."
8. The word "Officer" is defined under Section 2(14) of the Act which reads as under :
"Section 2(14)- "officer" means a person elected or appointed by a society to any office of such society according to its bye- laws ; and includes a chairman, vice-chairman, president, vice-president, managing director, manager, secretary, treasurer, member of the committee, and any other person elected or appointed under this Act, the rules of the byelaws, to give directions in regard to the business of such society."
9. The petitioner is therefore an Officer as he is elected by the Union to the Office of Director as member of the Society according to its by-
laws. Therefore, to remove the petitioner respondent No.2-Registrar has to form an opinion that the petitioner has made persistent default or has remained negligent in performance of duties imposed under the Act or the Rules or the Page 125 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 By-laws or the petitioner has done anything which is prejudicial to the interest of the Society or he stands disqualified by or under the Act.
10. The respondent No.2-Registrar has relied upon Rule 32 of the Rules to allege that the petitioner has not performed his duties as per the said Rule. Rule 32 of the Gujarat Co-
operative Societies Rules, 1965 reads as under :
"Rule 32. Qualifications for the members of the committee. - (1) Every member of a society who is entitled to vote shall be eligible for appointment as a member of a committee thereof it -
(a) He is not in default in respect of any loan taken by him for such period as is specified in the bye-laws, or (aa) he is not a defaulter in respect of a loan or interest thereon as specified in sub-
sec. (2) of Sec.27 of the Act, or
(b) he has not directly or indirectly any interest in any subsisting contract made with the society or in any property sold or purchased by the society or any other transaction of the society except in any investment made in or any loan taken from the society, or
(c) if he is not otherwise disqualified for appointment a such member, or Page 126 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022
(d) he is not held responsible under Section 82, or
(e) no order for recovery of costs made against him by a Magistrate under Section 91, or
(f) no order is made against him under Section 93, or
(g) if he is not found guilty of any of the offences under Section 147 or any offence under Section 403 of the Indian Penal Code in respect of the property of any society.
(1-A) A member of the Committee who incurs any of the disqualifications specified in sub-rule (1) shall vacate the office and if he does not vacate such office, he shall be removed by Registrar as such member:
Provided that the Registrar, shall before making such order of removal, give the person concerned an opportunity of being heard.
(2) Notwithstanding anything contained in sub-
rule (1).
(a) In case of societies dispensing with credit, on person who does money fending business shall be eligible for appointment as a member of the managing committee of the society.
(b) A member of a society, who carries on business of the kind carried on by the societies of which he is the member, shall not be eligible to be the member of any committee of that society within the sanction of the Registrar.
(3) Where any person becomes a member of a Committee of a society in contravention of Page 127 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 sub-rule (2) he shall be removed from office as a member of such committee by the Registrar.
Provided that the Registrar shall, before making order of removal, give the person concerned an opportunity of being heard."
11. According to the respondent No.2, the petitioner has committed breach of Rule 32(1)(b) of the Rules by permitting his son to be appointed in the Union. On perusal of the Rule 32(1)(b) of the Rules it is apparent that the Rule 32(1)(b) only prohibits a member of a Society to be appointed as member of a Committee if he has directly or indirectly any interest
(i) in any subsisting contract made with the Society or (ii) in any property sold or purchased by the Society or (iii) any other transaction of the Society except any investment made in or any loan taken from the Society. On perusal of the facts of the case, neither of the three ingredients of Rule 32(1)(b) of the Rules can be said to have been committed breach by the petitioner in view of the appointment of the son Page 128 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 of the petitioner in the Union. It is an admitted fact that the petitioner has no direct or indirect interest in any subsisting contract made with the Society nor he has any direct or indirect interest in any other transaction of the Society except any investment made in the Society or any loan taken from the Society nor the petitioner has taken any loan from the Society or made investment in Society.
12. The reasons recorded by the Registrar in the impugned order dated 15th March, 2022 are nothing but misinterpretation of the above Rule 32(1)(b) of the Rules inasmuch as it is held by the respondent No.2 by interpreting Rule 32 that by appointment of the son of the petitioner, he has entered into a transaction with the Union and thereby, he is disqualified under the said Rule.
The respondent No.2 has also submitted that there is a breach of by-law No.35(b)(6) which provides that the petitioner should not have entered into Page 129 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 any direct or indirect contract for the business of the Society and/or any relation. The by-law No.35(b)(6) is therefore only reiteration of Rule 32(1)(b) of the Rules. In such circumstances, there is niether breach of Rule 32(1)(b) nor by-
law No.35(b)(6).
13. It also appears that the respondent No.2 has relied upon the by-law No.42(15) which provides for powers of the Board of Directors to appoint and decide the salary of the employees of the Society and the Managing Director. It is therefore held by the interim-order that the petitioner is dis-qualified for violation of the by-law No.42(15) as the petitioner is part of the Board of Directors and as such, for appointment of son of the petitioner there is involvement of the petitioner being the Director and therefore personal interest of the petitioner is involved as a Director while appointing his son. However, there is nothing on record to show that the Page 130 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 petitioner had participated in any manner in process of appointment of his son in the year 2016.
14. The respondent No.2-Registrar has discarded the case law cited on behalf of the petitioner by applying Rule 32 of the Rules to hold that the petitioner is disqualified and accordingly, he is liable to be removed as Director from the Office under Section 76(B)(1) of the Act.
15. The contention raised on behalf of the petitioner relying upon the principles of "ejusdem generis" and "nosciture a sociis", is required to be applied in the facts of the case, more particularly, when the Union is specified Society referred in Section 74(C) of the Act for which the Rules would not be applicable and Chapter-XI of the Act would apply to the Union being a specified Society. It is true that Chapter-XI is in relation to the election of the Page 131 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Committees and Officers of the Societies and Section 145F provides for disqualification of membership of specified Co-operative Societies.
It was therefore rightly submitted on behalf of the petitioner that Section 145F being special provision introduced under the Act would over power Rule 32 of the Rules which is general in nature. Moreover, Rule 32 would apply only to the member of a Committee and not to the family member of the Managing Committee. Therefore, in the facts of the case, Rule 32 would not apply to disqualify the petitioner for the appointment of the son of the petitioner in the Union.
16. Therefore, the contention raised on behalf of the respondent-authorities relying upon Rule 32 of the Rules to show that there is linkage between Section 76(B)(1) and Rule 32 is not tenable. The decision in case of Dr.Indramani Pyarelal Gupta Versus (Supra) would therefore not apply in the facts of the case. In order to Page 132 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 point out that the petitioner stands disqualified by or under the Act as stipulated in Section 76(B)(1) of the Act, the respondent-authorities have to come to the conclusion to the effect whether it is pre-existing or supervening disqualification. The reliance placed by the respondent on the case of Vipulbhai Mansinhbhai Chaudhary (Supra), wherein the reference was made of the decisions of the Apex Court in cases of Pundalik Versus District Deputy Registrar, Co-
operative Societies22, Election Commissioner, India Versus Saka Venkata Rao23 and Bhadreshkumar Ramanlal Patel Versus State of Gujarat24 would be applicable to the facts of the present case. As discussed above, Rule 32 would not be applicable in the facts of the case as the appointment of the son of the petitioner cannot be termed as petitioner having "direct or indirect interest in any other transaction of the Society". The word transaction as per the Black's Law Dictionary 22 1991 (2) SCC 423 23 AIR 1953 SC 210 24 1999 (3) GLR 2549 Page 133 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 means the act or instance of conducting business or the other dealings or something performed or carried out; in business agreement or exchange or any activity involved in two or more persons. The appointment of son of the petitioner cannot be considered as a transaction so as to disqualify the petitioner having direct or indirect interest in such transaction of the Society. The son of the petitioner is employed by the Union considering his qualifications only. Therefore, contention raised on behalf of the respondent that transaction has to be considered in the widest amplitude and is to be interpreted purposively and therefore it would include the action of the Society in making available the employment to the son of the petitioner who is a Director in the Society and the petitioner can be said to have interest in the said transaction is farfetched. The appointment of son of the petitioner cannot be considered as a transaction of the Society with the son of the petitioner.
Page 134 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Therefore, the reliance placed on the decisions in cases of Association of Unified Tele Services Providers (Supra) and Pioneer Urban Land and Infrasturcture Limited (Supra) would not be applicable in the facts of the case. Contention raised on behalf of the respondent-authorities with regard to the alleged flaws in process of appointment of the son of the petitioner cannot be attributed to the petitioner in any manner whatsoever, inasmuch as the petitioner cannot be said to be disqualified on the ground of appointment of his son in the Society in which he is a Director. Therefore, reliance placed on the decisions in cases of State of Bihar Versus Chandreshwar Pathak (Supra), Gautambhai D. Dave (Supra) and Malvikaben Bhikhabhai Patel (Supra) cannot be said to be applicable which are on merits of the appointment in an organization.
17. It is true that the respondent-Registrar has relied only upon application of Rule 32 of the Page 135 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Rules for invoking the jurisdiction under Section 76(B)(1) of the Act purportedly under the wrong premise for invocation of such jurisdiction for removal of the petitioner in absence of any objective facts and circumstances indicating that petitioner has indirect interest in the appointment of his son treating it as a transaction of the Society so as to arrive at a subjective satisfaction on the objective facts and circumstances by invoking Rule 32 of the Rules. The basic premise on which the respondent No.2-Registrar has founded an opinion of arriving at subjective satisfaction is of violation of Rule 32 being not tenable, the subsequent action taken under Section 76(B)(1) of the Act would be therefore without jurisdiction as there is no violation of Rule 32(1)(b) of the Rules by appointing the son of the petitioner. Therefore, reliance placed on behalf of the respondents on the decisions in cases of Malvikaben Bhikhabhai Patel (Supra), Union of India versus Praveen Page 136 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Gupta and Bhikhubhai V. Patel (Supra) are not applicable in the facts of the case.
18. Moreover, as contended by the petitioner, there is a gross delay in taking action against the petitioner which has not been explained. The appointment of the son of the petitioner was made in the year 2016 and proceedings against the petitioner were initiated in the year 2021 on the basis of the opinion of the District Registrar at the behest of the respondent No.4. It is very apparent from the facts of the case that as the respondent No.4 could not participate in the election because of the objection raised by the petitioner and the appointment of the respondent No.4 was quashed by this Court being the representative of the Government, respondent No.4 appears to have made an application for removal of the petitioner under Section 76(B)(1) of the Act through District Registrar. There is no denial that the proceedings culminating into the Page 137 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 impugned order has been initiated at the behest of the respondent No.4. In such circumstances, the proceedings initiated against the petitioner under Section 76(B)(1) of the Act cannot be said to be bona-fide proceedings and therefore, the contention of the respondents that the respondent No.2 has considered the report of the District Registrar and has acted independently in exercise of powers conferred under Section 76(B)(1) of the Act is contrary to the facts on record and is accordingly, rejected. Considering the overall facts, it appears that the respondent No.2- Registrar has passed the impugned order of removal of the petitioner as Director of the Union at the behest of the respondent No.4. It is true that the petitioner has not alleged any malafide against the respondent No.4 but the facts on record speaks for itself inasmuch as relying upon the Rule 32 of the Rules by the respondent No.2-Registrar to assume the jurisdiction under Section 76(B)(1) of the Act is Page 138 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 only indicative that such powers are assumed without any basis and by no stretch of imagination it can be said that Rule 32(1)(b) of the Rules is violated by the petitioner so as to disqualify the petitioner as member of the Committee of the Union.
19. It is pertinent to note that this Court allowed the Special Civil Application No.10405 of 2020 by judgment and order dated 06.11.2020 quashing and setting aside the nomination of the respondent No.4 in the Board of the Union and the impugned show-cause notice was issued by the Registrar thereafter. The respondent No.4 by letter dated 28.05.2021 alleged against the petitioner with regard to the appointment of his son and on basis of such letter, District Registrar by letter dated 14th June, 2021 has recommended to initiate the proceedings under the petitioner under Section 76(B)(1) of the Act and thereafter, the Registrar has issued the show-
Page 139 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 cause notice on 14.07.2021 and passed the impugned order on 15.03.2022. This timeline clearly shows that the action by the respondent no.2 at the behest of respondent no.4 is nothing but a consequence of the decision of this Court whereby the appointment of the respondent No.4 as a Representative of the Government was quashed and set aside.
20. Considering the above facts, it cannot be said that there is any violation of either Section 76B of the Act, Rule 32(1)(b) of the Rules or by-law Nos.35(2)(6) and 42(15) as there is no provision by which a member of the Committee of the Society can be debarred or disqualified on the ground that his family member is appointed in such Society. The appointment of the family member cannot result into disqualification for the post held by any person, more particularly, when the language of the Rule 32(1)(b) and by-law No.35(2)(6) is clear and Page 140 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 unambiguous. It is also pertinent that the petitioner was not disqualified to contest the election in the month of July, 2020 on the ground that his son was appointed by the Society in the year 2016 and therefore, the petitioner cannot now be disqualified at the instance of respondent No.4.
21. In view of the undisputed facts of the case and the provisions of the Acts, Rules and by-
laws, the respondent No.2-Registrar could not have therefore assumed the jurisdiction to issue the notice under Section 76(B)(1) of the Act as the petitioner has not committed any persistent default nor has remained negligent in performing his duties imposed by the Acts, Rules or by-laws or has not done anything which is prejudicial to the interest of the Society. The petitioner also cannot be said to be disqualified by or under the Act by invoking Rule 32 of the Rules due to appointment of his son as an employee of the Page 141 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022 C/SCA/6143/2022 CAV JUDGMENT DATED: 14/10/2022 Union. The impugned show-cause notice as well as the order are therefore liable to be quashed and set aside and are accordingly, quashed and set aside. Rule is made absolute to the aforesaid extent. No orders as to cost.
(BHARGAV D. KARIA, J) Learned advocate Mr.Dipen Desai for respondent no.4 prays for stay of this order pronounced today.
In view of the reasons assigned in the judgment, the request is rejected.
(BHARGAV D. KARIA, J) PALAK Page 142 of 142 Downloaded on : Mon Oct 17 22:52:46 IST 2022