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2004 Supreme(Guj) 348

Gujarat High Court
Judgename :D.H.WAGHELA, R.K.Abichandani
GUJARAT STATE MARKETING CO OP FEDERATION LTD - Appellant
Versus
STATE OF GUJARAT - Respondent
S.C.A.10252 of 2003
Decided On : 06/15/2004

Advocates Appeared: B.S.PATEL, HARIN P.RAVAL, Jirga D.JHAVERI, K.D.Shah, K.G.VAKHARIA, M.K.VAKHARIA, M.R.TUSHAR MEHTA, P.S.CHAMPANERI, PUSHPADATTA VYAS, S.K.JHAVERI, S.N.SHELAT, Shruti Trivedi

Headnote:

Constitution of India, Articles 14, 19 (1) (c), 19, 38 and 46 - Co-operative societies Act, 1961 - Section 80, 2 (5), 74 - Criminal Law Amendment Act -Co-operative Societies Act, 1925 -22 and 24, 80 (2) -29 - Petitions are grouped and heard together as they involve the common issue of the validity of sub-section of Section of the Co-operative societies Act - Petitions are required to be divided into three sub-groups - Petitions in which show cause notices to appoint nominee directors were issued, where appointment orders of such nominees were already issued and the petitions filed only on the basis of apprehension of such appointments by the Government - Government from time to time - Members so nominated shall hold office during the pleasure of the State Government, or for such period as may be specified in the order by which they are appointed and any such member on assuming office shall have all rights duties responsibilities and liabilities as if he were a member of the committee duly elected. Explanation: Any nomination of the Registrar or his nominee on the Committee of a society under the bye-laws of such society shall not be construed as nomination of the representative on that Committee in exercise of the right of the State Government under this sub-section - Where the State Government is of the opinion that having regard to the public interest involved in the operation of society it is necessary or expedient so to do it may nominate its reprepsentatives on the committee of such society as if the State Government had subscribed to the share capital of the society and the provisions of sub-section shall so far as may be apply to such nomination is defined in Section - Committee of management or other directing body to which the management of the affairs of a society is entrusted - As per Section of the Act - Management of every society shall vest in a committee constituted in accordance with the 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 the Act the rules and the bye-laws - Held, Impugned orders made in the exercise of the powers under Section are found to be inconsistent with the legal propositions summarised In Special Civil Application no reply to the amended petition is filed and hence the allegations made against the legality of the impugned order appointing three representatives remain uncontroverted - Impugned order is found and held to be clearly in violation of the principles of natural justice and hence quashed - Rule is accordingly made absolute and Civil Application filed therein for interim relief is disposed of as not surviving and rejected - In Special Civil Application the allegations made to challenge the impugned order appointing three representatives are not denied by the respondent by filing any reply and the impugned order does not disclose the necessity or expediency of appointment of nominees of the State allowed and the impugned order dated at Annexure-A is quashed. Rule is made absolute accordingly impugned order dated clearly appears to have been made after sufficient opportunity of hearing being granted to the petitioner and after recording reasons and grounds which are not seriously challenged - Petition is mainly based on the challenge to the constitutional validity of Section and is filed after about eight months of the making of the impugned order. The allegations of mala fides and ulterior motives though not controverted by any reply are vague and have remained unsubstantiated by any material or factual averments - Impugned provision being held to be valid the petition has to be rejected - Accordingly same is rejected Rule is discharged and interim relief is vacated In the facts and circumstances - petitions disposed.

D. H. WAGHELA., J.

( 1 ) THESE petitions are grouped and heard together as they involve the common issue of the validity of sub-section (2) of Section 80 of the Gujarat Co-operative societies Act, 1961 (the Act for short ). However, the petitions are required to be divided into three sub-groups viz. the petitions in which show cause notices to appoint nominee directors were issued, where appointment orders of such nominees were already issued, and the petitions filed only on the basis of apprehension of such appointments by the Government.

( 2 ) THE relevant Section 80 of the Act reads as under:"s. 80 Power to appoint Government Nominee: (1) Where the State Government has subscribed to the share capital of a society, directly or through another society, or has guaranteed the repayment of the principal of and payment of interest on, debentures issued or loans raised by a society, the State Government shall, notwithstanding anything contained in the bye-laws of such society, have the right to nominate three represenetatives on the Committee of such society, in such manner as may be determined by the State Government from time to time. The members so nominated shall hold office during the pleasure of the State Government, or for such period as may be specified in the order by which they are appointed, and any such member on assuming office shall have all rights, duties, responsibilities and liabilities as if he were a member of the committee duly elected. Explanation: Any nomination of the Registrar or his nominee on the Committee of a society under the bye-laws of such society shall not be construed as nomination of the representative on that Committee in exercise of the right of the State Government under this sub-section. (2) Where the State Government is of the opinion that having regard to the public interest involved in the operation of society it is necessary or expedient so to do, it may nominate its reprepsentatives on the committee of such society as if the State Government had subscribed to the share capital of the society and the provisions of sub-section (1) shall, so far as may be apply to such nomination. ""committee" is defined in Section 2 (5) as: "the committee of management, or other directing body, to which the management of the affairs of a society is entrusted". As per Section 74 of the Act, the management of every society shall vest in a committee constituted in accordance with the 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 the Act, the rules and the bye-laws.

( 3 ) IT must be noted at the outset that constitutional validity of the provisions of sub-section (2) of Section 80 has been tested and upheld by an elaborate judgment of a Division Bench of this Court as far back as in 1984 in AMRELI DISTRICT CO-OPERATIVE SALE and PURCHASE UNION LTD. AND OTHERS v. STATE OF GUJARAT [ 1984 (2) G. L. R. 1244] wherein it is held as under:"78. SEC. 80, as it originally stood in the principal Act, empowered the Government to nominate its representatives not exceeding three on the Committee of a society to the share capital of which the State Government has directly or indirectly subscribed or has guaranteed the repayment of the principal and interest on debentures issued or loans raised by such society. Two fold amendment has been made in Sec. 80; firstly, by empowering the State Government to nominate its representatives notwithstanding anything contained in the bye-laws of such societies and, secondly, by inserting new sub-sec. (2) empowering the State Government to nominate the representatives on the committee of a society having regard to the public interest involved in the operation of such society it has been found necessary or expedient to do so as if the State Government had subscribed to the share capital of the society. We must reject the challenge to this new provision inserted by sub-sec. (2 ). The power is an enabli











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