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LPA/1159/2008 5/ 5 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS
PATENT APPEAL No. 1159 of 2008
In
SPECIAL
CIVIL APPLICATION No. 8271 of 2008
With
LETTERS
PATENT APPEAL No. 1160 of 2008
In
SPECIAL CIVIL APPLICATION No. 8029 of 2008
With
CIVIL
APPLICATION No. 11969 of 2008
In
LETTERS PATENT APPEAL No. 1159 of 2008
With
CIVIL
APPLICATION No. 11970 of 2008
In
LETTERS PATENT APPEAL No. 1160 of 2008
======================================
GUJARAT
STATE CO-OPERATIVE BANK LTD & 1 - Appellant(s)
Versus
GUJARAT
LAGHU UDYOG SAHKARI
MANDALI
LTD & 2 - Respondent(s)
======================================
Appearance :
MR
K.G. VAKHARIA & MR. N.D. NANAVATI, SENIOR COUNSEL with
MR PS CHAMPANERI for Appellant(s) : 1 - 2.
MR
TUSHAR MEHTA, SENIOR COUNSEL with MR KETAN D SHAH for Respondent(s)
: 1,
None for Respondent(s) : 2 -
3.
======================================
CORAM
:
HONOURABLE
THE CHIEF JUSTICE MR. K.S.RADHAKRISHNAN
and
HONOURABLE
MR.JUSTICE AKIL KURESHI
Date
: 15/10/2008
C.A.V
ORDER
(Per
: HONOURABLE THE CHIEF JUSTICE MR. K.S.RADHAKRISHNAN)
Gujarat
State Co-operative Bank Limited along with another, who are
appellants in both these cases, challenge interim order passed by the
learned Single Judge on 30th July, 2008, directing the
Bank to allot additional qualifying shares to the petitioners in the
writ petition, so as to qualify them to context the election to the
Board of Directors of the Bank under bye-law 26(c) of the Bye-laws.
First respondent herein, Ahmedabad District Co-operative Bank Limited
is a member of the Gujarat State Co-operative Milk Producers’ Union
Limited under Clause 4(a) of the Bye-laws of the Bank. As per
bye-law 26(c), two representatives are elected on the Board of
Directors of the apex Bank i.e. Gujarat State Co-operative Bank
Limited, from out of industrial and other Co-operative Societies,
whose paid up share capital is not less than 5 lakhs and has
contributed to share capital of the Bank to the extent of 1/20th
of paid up share capital of such Co-operative Society. Petitioner,
member of the apex Bank, received a communication dated 8th
May, 2008, requesting petitioner Society to follow the procedure as
stated therein. The relevant portion of the communication is
extracted below:-
?SAs
per the provisions made in the bye-laws of this Bank, for continuing
the qualification as a representative on the Board of Directors of
this Bank, it is necessary that on 31.3.2008 your Institution should
hold the shares of this Bank of the equivalent amount of 1/20th
portion of the paid up share capital of your institution. Hence, you
are requested to initiate the procedure for the same.??
Petitioner
responded to that letter and informed the apex Bank that they intend
to additionally purchase 540 shares, each one share having value of
Rs. 5,000/-. Necessary formalities as directed by the apex Bank was
complied with, but it is complained that due to extraneous reasons
the apex Bank is not allotting requisite shares, so that the
petitioner Society can stand for election to the Board of Directors
of the apex Bank. Reasons stated for not giving additional shares
was found unacceptable by learned Single Judge and gave a positive
direction to allot additional qualifying shares to the petitioner so
that they can contest the election to the Board of Directors of the
apex Bank under bye-law 26(c) of the Bye-laws of the Bank. Aggrieved
by that direction, these appeals have been preferred by the State
Co-operative Bank.
2. We
heard learned counsel for the Bank at length. Learned counsel
appearing for the appellant Bank submitted that learned Single Judge
was not justified in giving a positive direction to the Bank, under
Article 226 of the Constitution of India, since writ petition itself
was not maintainable against a Co-operative Bank. In support of his
contention, reference was made to the decisions in 2003 (10) SCC 733,
1995 (3) SCC 257 and 1976 GLR 583. Learned counsel for the appellant
also submitted that granting of interim relief by the learned Single
Judge virtually amounts to allowing the petition.
3.
Learned counsel appearing for the petitioner Society submitted that
the appellant Bank is one of the principal Co-operative Bank in the
State, established with the object of financing other Co-operative
Societies and also receives finance by way of loans and advances from
National Bank of Agriculture and Rural Development (NABARD). Further
it was also stated that the Bank runs on support of the people at
large as well as with the support of financial institutions like
NABARD, State Bank of India and other Co-operative Institutions.
Learned counsel submitted that if the member society wants to contest
in the election to the Board of Directors of the apex Bank, it should
acquire necessary shares as provided under bye-law 26(c) of the apex
Bank. Petitioner Society was directed to acquire the same by the apex
Bank by communication dated 8.5.2008. Learned counsel also referred
to Section 27 of the Gujarat Co-operative Societies Act, 1961 and
submitted that no person shall exercise the rights of a member of a
Society, until he has made such payment to the society in respect of
the membership, or acquired such interest in the society as may be
prescribed by the Rules and Bye-laws of the Society. Bye-law 26(c)
states that two representatives of the Industrial and other
Co-operatives whose paid up share capital is not less than 5 lakhs
and have contributed to the share capital of the apex Bank to the
extent of 1/20th of the paid up share capital as on 31st
March of the preceding year is eligible for contesting as member of
the Board of Directors. Learned counsel for the petitioner Society
submitted that a statutory obligation casts on the apex Bank to
comply with Bye-law 26(c) read with Section 27 of the Act, so that
petitioner Society can acquire interest in the society and
consequentially stand for election. Learned counsel for the
petitioner Society also submitted that the term of the Committee is
already over and prayer for appointment of the Administrator is
pending.
4. Question
as to whether apex Bank has got a statutory obligation under the
above mentioned Bye-laws read with section 27 of the Act, is a matter
to be considered by the learned Single Judge finally when the writ
petition is disposed of. Submission of learned counsel for the
appellant Bank that granting of interim relief by the learned Single
Judge amounted to allowing the writ petition, cannot be accepted in
the facts and circumstances of this case, since the term of the
Committee is already over and prayer for appointment of the
Administrator is pending, as stated by Counsel for the petitioner.
Once the election is over without considering the candidature of the
petitioner Society, it will cause considerable prejudice to the
Society. That being the facts and legal situation, we see no reason
to interfere with the interim order passed by the learned Single
Judge. If the petitioner stands for election, the same would be
subject to the final decision to be taken by this Court in the main
writ petition pending before the learned Single Judge. We make it
clear that the opinion expressed by us in this order are only
tentative, which will not influence the learned Single Judge while
disposing of the matter finally. With the above observations, both
the appeals stand dismissed. Consequently, Civil Applications also
stand dispose of.
5. We
make it clear that all legal questions raised by the parties with
regard to the maintainability of the writ petition as against the
appellant Bank is left open to be decided by the learned Single
Judge.
(K.S.
Radhakrishnan, C.J.)
(Akil
Kureshi, J.)
*/Mohandas
After
pronouncement, learned counsel for the appellant prays for stay of
this order. In the facts and circumstances, we see no reason to
grant stay. Prayer stands rejected.
(K.S.
Radhakrishnan, C.J.)
*/Mohandas (Akil
Kureshi, J.)
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