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2005 Supreme(Guj) 674
Gujarat High Court
Judgename :D.N.Patel
MARKETYARD COMMERCIAL CO-OP BANK LTD - Appellant
Versus
STATE OF GUJARAT - Respondent
SPECIAL CIVIL APPLICATION 7573 of 1999
Decided On : 10/05/2005
Headnote:
Gujarat Co-operative Societies Act, 1961 - Section 71 - Service - Common question of law has been raised to the effect whether the Government is liable for the failure of the Government Company, Small Industries Corporation Limited Respondent, in making payment of non-convertible Bonds issued by the Government Company - Held, Court have carefully gone through the pleadings, the annexures filed by both sides and the orders passed by the BIFR and the judgments cited by the counsel appearing on either side - Learned Counsel for the contesting respondent drew our attention to a recent judgment of this Court - Court have perused the said judgment - Breach of right canvassed by the present petitioners in the aforesaid petitions cannot be compared with breach of human dignity or human right or breach of right to life guaranteed under Article 21 of the Constitution of India as stated herein in paragraph 74 of the said judgment - It has been made clear by the Honble Supreme Court that it cannot be said in all the cases that Government is responsible for the acts and deeds of the Government Company - All that depends upon the facts and circumstances of each case - Looking to the facts and circumstances of the present case and the nature of transaction which is based upon non redemption of unsecured, non-convertible bonds in the nature of promissory notes , the aforesaid petitions are not entertained by this Court, as there is no liability vested in the Government or there is no legal duty vested in the Government for redemption of those unsecured, non-convertible bonds - Petition failed. (Para 20)
( 1 ) IN all the aforesaid petitions, a common question of law has been raised to the effect whether the Government of Gujarat is liable for the failure of the Government Company viz. Gujarat Small Industries Corporation Limited Respondent No. 4, in making payment of non convertible Bonds issued by the Government Compnay.
( 2 ) THE learned Counsel appearing for both the sides have considered Special Civil Application No. 7573/1999 as the lead matter. As per Section 71 of the Gujarat Co-operative Societies Act, 1961 (hereinafter referred as Act, 1961 for short), the petitioner-Cooperative Society may invest or deposit its fund in Central Bank or the State Bank of India or in the postal Savings Bank etc. which are referred to in Section 71 of the Act, 1961. There is also a provision of sub-section 1 (g) of the Section 71 of the Act, 1961 for getting approval of the Registrar, in case of deposit in any other company, other than which are referred in Section 71. In pursuance of this provision, the petitioner-society applied to Respondent Nos. 1 and 2-State of Gujarat for investing of its funds in the Gujarat Small Industries Corporation Limited (which is a Government Company ).
( 3 ) THE permission was also granted by the State of Gujarat vide its order dated 18th November, 1997 under Section 71 (1) (g) of the Act, 1961. In pursuance of this permission, the petitioner-society invested the amount in Gujarat Small Industries Corporation Limited which is a Government Company. Unsecured Non-Convertible Bonds in the nature of promissory notes were issued to the petitioner-Society (Annexure C to the memo of the petition ). Because of the financial difficulties, the Gujarat Small Industries Corporation Limited i. e, Respondent No. 4 was not able to make payment of non-convertible debentures. The said Bonds were issued for 17 months and 29 days from the date of allotment i. e, from 30th December, 1997, but the said Corporation was unable to redeem the said Non-Convertible Bonds. As Respondent No. 4 is a Government of Gujarat Company, the money ought to be returned by the State of Gujarat to the petitioner. It is also submitted by the learned Counsel for the petitioner that Respondent No. 4 is a Public Sector Undertaking Company which is owned, run and managed by the Government of Gujarat and because of the permission given by the Government under Section 71 (1) (g) of the Act, 1961, the amount was invested by the petitioner in Gujarat Small Industries Corporation Limited. It is also submitted by the learned Counsel for the petitioner that the salaries of the employees of the Respondent No. 4 - Corporation has also been paid by the Government corpus. The Government has released sizeable amount for the payment of salaries to the employees. It is the liability of the Government to develop the industries under the Industries (Development and Regulation) Act, 1951 and therefore, Respondent No. 4 Corporation was performing the functions of the Government and it being an instrumentality of the State of Gujarat, for the non-fulfillment of the liabilities of Respondent No. 4 Corporation Limited, the Government of Gujarat is responsible. The learned Counsel appearing for the petitioner has relied upon the case decided by Honble Supreme Court in Kapila Hingorani v. State of Bihar reported in (2003) 6 SCC 1. The learned Counsel for the petitioner has also relied upon the following judgments: (i) AIR 1975 SC 1331 : paras 80,81,82,83 upto 107 (ii) AIR 1979 SC 1628 : paras 11 to 21 and 33. (iii) AIR 1980 SC 840 : para 21 and 22 (iv) AIR 1981 SC 212 : para 22, 23, 23-A, 23-B, 23-C, 23-D, 27,28,30,32,33,36,29,54,55 and 77. (v) AIR 1988 SC 1737 : paras 50, 62, 63, 64, 65, 66,67, 68 (vi) AIR 1996 SC 2005 : paras 28, 31, 32, 33, 34, 35. (vii) 2003 (6)SCC 1 : paras 27, 28, 30 to 39, 48, 49, 53, 54, 55, 61, 63, 64, 67, 68, 70, 71, 73. (viii) DHN Food Distributors Ltd and others V. London Borough of Tower Hamlets reported in All England Law Repor
