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SCA/15465/2004 7/ 7 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 15465 of 2004
For
Approval and Signature:
HONOURABLE
MR.JUSTICE KS JHAVERI
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
VINUBHAI
JETHABHAI PATEL & 5 - Petitioner(s)
Versus
DISTRICT
REGISTRAR & 2 - Respondent(s)
=========================================================
Appearance
:
MR
BAIJU JOSHI for
Petitioner(s) : 1 - 6.
GOVERNMENT PLEADER for Respondent(s) : 1 -
2.
RULE SERVED BY DS for Respondent(s) : 1 - 2.
MR SN THAKKAR
for Respondent(s) :
3,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE KS JHAVERI
Date
: 28/09/2010
ORAL
JUDGMENT
By
way of the present petition, the petitioners have challenged the
order dated 18.10.2004 passed by the Gujarat State Cooperative
Tribunal in Appeal No.1324 of
2003 filed by the petitioners, whereby the appeal has been dismissed.
2. The
brief facts of the case are that, the petitioners are Members of the
Managing Committee of the respondent No.3-Society registered under
the Gujarat Cooperative Societies Act, 1963 (hereinafter referred to
as ‘the Act’ for short) and the said Society was under liquidation
and the Liquidator had taken over the charge of the said Society.
2.1 It
is alleged that the audit of the respondent No.3-Society for the
period from 1.7.2000 to 31.3.2001 was held and certain irregularities
were found and upon the remarks of the Auditor, the respondent No.1
– District Registrar, Cooperative Societies, Sabarkantha issued
a show cause notice on 19.7.2002 to the petitioners to the effect
that due to the irregularities committed by the Members of the
Managing Committee in respect of sales and purchase of wheat, there
was loss of Rs.96,556/- and in addition to that, inclusive of
weighing charges, godown rent and interest, in all, there was a total
loss of Rs.1,65,350/- to the Society. The petitioners filed their
reply to the said show cause notice on 26.8.2002 denying all the
charges levelled against the members of the Managing Committee. It
is alleged that, without considering the reply of the petitioners,
the respondent No.1 had initiated proceedings on 30.11.2002, under
Section 93 of the Act and appointed the respondent No.2 as Enquiry
Officer to hold inquiry under
Section 93 of the Act against the petitioners.
2.2 Pursuant
to the aforesaid order, the respondent No.2 issued a show cause
notice on 10.2.2003, which according to the petitioners was vitiated
right from the beginning, i.e. at the stage of issuance of the show
cause notice by the Enquiry Officer. The petitioners filed a
detailed reply on 21.2.2003 to the said show cause notice, but
without considering the same, the respondent No.2 issued a charge
sheet against the petitioners on 6.5.2003. The petitioners gave a
detailed reply on 24.6.2003 as well as another reply on 28.7.2003. It
is alleged that, without considering the replies given by the
petitioners, the respondent No.2 submitted a report of enquiry held
under Section 93 of the Act to the respondent No.1 holding all the
Members of the Managing Committee were equally responsible and
suggested to recover the amount from the Members of the Managing
Committee of the respondent No.3- Society.
2.3 According
to the petitioners, under the provisions of the Act and the Rules
framed thereunder, no person can hold the office or become a Member
of the Managing Committee when any order is passed against him under
Section 93 of the Act as provided under Rule 32 of the Gujarat
Cooperative Societies Rules. It is alleged that, by virtue of the
enquiry report, none of the petitioners is in a position to hold the
office of the Member of the Managing
Committee of any Society for the alleged irregularities, which is not
even a misconduct or misappropriation.
2.4 Being
dissatisfied with the report submitted by the respondent No.2 to the
respondent No.1 dated 4.8.2003, the petitioner preferred an appeal
being Appeal No.1324 of 2003 before the Gujarat State Cooperative
Tribunal, at Ahmedabad. The Tribunal, after hearing the parties,
granted interim relief vide order dated 7.10.2003 and stayed the
order until 17.10.2003 by observing that it appears that there is no
personal interest of the Members of the Managing Committee and there
are also other issues which require consideration and therefore, the
appeal was admitted. But, ultimately, the Tribunal dismissed the
appeal on 18.10.2004 and the said order is under challenge in this
petition, as aforesaid.
3. I
have heard learned advocates for the parties. Learned advocate
Mr.Joshi appearing for the petitioners submitted that the petitioners
have been working as Members of the Society for a long time and they
have not committed any irregularity or misappropriation of the funds
of the Society. He submitted that there was overall slackness in the
business of wheat, the wheat lying in the godown might get spoiled
and, with a view to see that there might not be total loss in the
sales and purchases of wheat, it was decided to sell such wheat at a
lesser price than the market value in the interest of the Society
and therefore, the Members of the Managing Committee had acted in the
interest of the Society with bona fide intention and therefore, the
inquiry conducted under Section 93 of the Act holding the Members of
the Managing Committee responsible for the loss caused to the Society
is against the provisions of law and hence, the order dated
18.10.2004 passed by the Tribunal and the enquiry report submitted by
the respondent No.2 to the respondent NO.1 is required to be quashed
and set aside. He further submitted that the action taken by the
Members of the Managing Committee and the Resolution passed by the
said Committee had been approved by the General Body, which is
supreme, under the provisions of the Act and therefore, when the
action taken by the Managing Committee which is approved by the
General Body, it is not proper to hold anybody responsible under
Section 93 of the Act as it is well settled proposition. He has
relied upon a judgment reported in 2003 (1) GLR 462, wherein it has
been held that, “where the General Body approved the proposal
and pursuant thereto expenditure was incurred, it was not proper to
hold anybody responsible under Section 93 of the Act.”
Therefore, according to him, when the Resolution passed by the
Managing Committee approved by the General Body in the Annual General
Meeting, no proceeding under Section 93 of the Act can be initiated
holding the Members of the Managing Committee responsible for the
loss incurred to the respondent Society.
4. On
behalf of the respondent No.3, an affidavit-in-reply has been filed
by the Official Liquidator controverting the averments made in the
petition. In reply thereto, the petitioners have filed a rejoinder
denying the averments made in the affidavit-in-reply. The petitioner
No.1 has also filed a further rejoinder wherein it is stated that the
petitioners have deposited the entire amount towards the alleged loss
incurred to the respondent Society and hence, the petition deserves
to be allowed.
5. Learned
advocate Mr.Joshi has further submitted that, as aforesaid, the
petitioners have have already paid the amount to the Society towards
the alleged loss incurred during the interregnum period and
therefore, no action may be taken against the petitioners under the
provisions of Section 93 of the Act and hence, the petition is
required to be allowed. He also submitted that the amount which has
been deposited by the petitioners can be appropriated for the benefit
of the Society and the alleged act on the part of the petitioners may
not be treated as disqualification of the Members of the Society.
6. From
the facts of the case, it is found that the action taken by the
Members of the Managing Committee and the resolution passed by the
Managing Committee had been approved by the General Body. It is also
a fact that bye-law No.2(4) of the Society empowers to carry on the
business in a particular manner in the interest of the respondent
Society and the finding states that the Managing Committee ought to
have taken care, which would mean that there was no mens rea
or mala fide intention on the part of the Managing Committee. It also
cannot be said that there was personal interest involved. Having
considered the overall facts and circumstances of the case, I am of
the view that interests of justice would be met by passing the
following order:
The
impugned order dated 18.10.2004 passed by the Gujarat State
Cooperative Tribunal, at Ahmedabad in Appeal No. 1324 of 2003 and the
enquiry report submitted by the respondent No.2 to the respondent
No.1 are hereby quashed and set aside. Considering the fact that the
entire amount as alleged to have been incurred as loss to the
Society has already been deposited by the petitioners, the action on
their part will not be treated as disqualification as per the
provisions of Section 93 of the Act. Further, as suggested by learned
advocate Mr.Joshi, the amount which has been so deposited by the
petitioners with the Society towards the alleged loss, may be
appropriated for the benefit of the Society.
7. The
petition is allowed accordingly and rule is made absolute, with no
order as to costs.
Sreeram. (K.S.Jhaveri,
J.)
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