2006 Supreme(Guj) 60

Gujarat High Court
Judgename :H.K.RATHOD
Parmar Dipubhai - Appellant
Versus
Registrar Of Co-operative Societies - Respondent
Special Civil Application 4494 of 2003
Decided On : 02/02/2006

Headnote:Point in Issue :

       Termination - Order of Registrar Co-operative Societies - Jurisdiction - Finding as to - Sustainability.

       Head Note :

       (a) Gujarat Co-operative Housing Societies Act, 1961 - Sections 3(3), 37, 73 to 77, 86, 89, 96, 107, 160 & 168 - Constitution of India, 1950 - Articles 12, 14, 19 & 335 - Notices of retrenchment - Registrar Co-operative Society - Jurisdiction - Finding as to - Sustainability - The Registrar Co-operative Societies has power under Secion 160 of the Act in respect of proper implementation of co-operative production, development, progress, linking and co-ordinating of co-operative activities such as marketing and credit and securing proper management of business of the society to the interests of members or depositors or creditors - In view of that issuance of direction by the Registrar to the society to terminate service of employee who may not have been recruited even as per rules or procedure is not satisfying the requirements of Section 160 of the Act - That apart appointment of employees is not touching the constitution, management or business of the society, therefore, Registrar cannot invoke its jurisdiction under Section 96 of the Act in relation to termination of service of an employee - Therefore, it is clear that the impugned acting order of Registrar to direct Respondent No. 2 society to cancel or terminate services of 161 employees of this society is beyond jurisdiction of Registrar and cannot be sustained.

       Held :

       It is clear that language employed in Section 160 is giving powers to the Registrar for the purpose of securing proper implementation of co-operative production, other developmental programmes, linking and co-ordinating of co-operation activities such as marketing and credit and securing proper management of business of the society, conduced in a manner detrimental to the interests of members or depositors or creditors. In view of that, none of the items specified in Section 160 of the Act covers the issue about validity of appointments and validity of mode of recruitment/appointments made by society without following recruitment procedure. Section 160 of the Act must be given narrow meaning because management of society which is having number of activities carried out with the help of employees but validity of appointment of such employees or termination or retrenchment are not incorporated in the section which would give power and jurisdiction to Registrar to issue direction to Respondent No. 2 to cancel or terminate the appointments made by Respondent No. 2 society. Registrar cannot be permitted to do something indirectly which he cannot do directly in respect of service conditions of employees or appointments of employees or mode of recruitment procedure as per Section 160 of the Act. Therefore, it is clear that the action of Registrar to direct Respondent No. 2 society to cancel or terminate service of 161 employees of Respondent No. 2 is beyond jurisdiction and not covered by the language employed in Section 160 of the Act. [Para 43]

       The matters relating to termination of employees of society or any alteration in service conditions by the society or any dispute about service condition with the society by its employees are not covered within the jurisdiction of Registrar under Section 96 of the Act. Registrar is having power to decide disputes arising under the Co-operative Societies Act and is having limited jurisdiction to decide dispute touching constitution, management and business of the society. In these circumstances, quasi judicial power of the Registrar is limited. Therefore, question arise, whether the Registrar is having power and jurisdiction under Section 160 of the Act to decide legality, validity and propriety of the appointments of petitioners made by society which is relating to service condition of such employees. If Registrar is not having quasi judicial power, then, how he is having administrative power upon society in relation to service condition of employees or recruitment procedure or appointments of such petitioners. Scheme of the Act is very much clear that the Registrar is having control only in respect of the matters relating to constitution, management and business of the society and beyond that, Registrar is not having any control over the society. These parameters, disputes between employees and society relating to service condition is clearly out side the scope of Section 96 of the Act. [Para 38]

       Respondent No. 2 society has registered bye laws in No. 24090/7 dated 19.04.1960. According to bye laws No. 50, entire administration, management and control of federation shall be vested in the Board of Directors and subject to control of the board in an executive committee to be constituted by the Board of Directors from amongst themselves. Item No. 24 of bye laws is providing from time to time to appoint and at pleasure to remove or suspend or otherwise punish, as the Directors deem best, for the management of the business of the Federation, any officer, clerk or other employee of the Federation, to fix their remuneration, salaries and wages, to appoint such staff temporary or permanent on such remuneration as they may deem necessary and to frame rules for recruitment, grades and scales of pay and allowances and for their conduct and discipline. These are the powers under the existing bye laws enjoyed by the Board of Directors and interference with it by Registrar without any jurisdiction and justification is beyond the scope of Section 160 of the Societies Act.

        [Para 57]

       Head Note :

       (b) Constitution of India, 1950 - Article 226 - Writ petition - Challenging retrenchment notices - Availability of alternative remedy - Maintainability - Respondent contention that writ petitions are not maintainable since the petitioner is having alternative remedy to challenge retrenchment notices before the Industrial forum has no substance and cannot be accepted - The main challenge in these petitions is order of Registrar, Co-operative Societies dated 28.02.2003/03.03.2003 and the retrenchment notices are issued by Respondent No. 2 Society on based of said directions of Registrar, Co-operative Society - Further also because Industrial Forum cannot decide the legality, validity and propriety of the order/direction of Respondent No. 1 Registrar - It can be decided only in writ jurisdiction.

       Held :

       The contention raised by Mr. Yagnik on behalf of Respondent No. 3 that writ petitions are not maintainable since the petitioner is having alternative remedy to challenge retrenchment notices before the industrial forum cannot be accepted because the main challenge in these petitions is the order of Registrar, co-operative societies dated 28.02.2003/, 03.03.2003 and the retrenchment notices issued by Respondent No. 2 society are based on the said directions of Registrar Co-operative Societies. Further, industrial forum cannot decide the legality, validity and propriety of the order/direction of Respondent No. 1 Registrar and it can be decided only in writ jurisdiction. Therefore, these petitions under Article 226 of Constitution of India are maintainable. [Para 44]

       Head Note :

       (c) Gujarat Co-operative Societies Act, 1961 (Guj. Act 10 of 1962) - Sections 3(2), (3) & 2(17) - Registrar -Definition of - Includes and intent to - Scope indicated - Registrar means a person appointed to be the Registrar of the Society under the Act and includes to the extent of powers of the Registrar conferred on any other person which includes an Additional or Joint Registrar - In the case there is no notification issued by the State Government under Section 3(3) of the Act in favour of Joint Registrar (Commerce) who has in the case heard the respective parties and submitted his report to Registrar - Since directions were issued by Court to Registrar to heard affected parties, therefore, Registrar should not have directed Joint Registrar to hear the matter - Therefore, directions issued by the Court have been clearly violated when the matter was heard by Joint Registrar - Consequently entire proceedings are vitiated.

       Held :

       Registrar is being appointed under Section 3(3) of the Gujarat Co-operative Societies Act. As per Sub-section (3) of Section 3 of the Act, State Government may, by general or special order confer on a person or persons appointed under Sub-section (2) all or any of the powers of the Registrar under this Act. So, State Government is having power by issuing notification for appointment of Registrar under this Act. As per Sub- section (17) of Section 2 of the Act, "Registrar" means a person appointed to be the Registrar of Co-operative Societies under this Act and includes to the extent of the powers of the Registrar conferred on any other person under this Act, such person and includes an Additional or Joint Registrar. There is no notification issued by the State Government under Sub-section (3) of Section 3 of the Act in favour of Joint Registrar (Commerce) who has heard respective parties and submitted his report to Registrar, Co-operative Societies, Gujarat State. So, Joint Registrar is not appointed by the State Government by issuing notification under Section 3(3) of the Act, therefore, Joint Registrar (Commerce) who has heard the matters has no jurisdiction to hear respective parties and he was not a Registrar within the meaning of Section 2(17) read with Section 3 (3) of the Act. Since directions were issued by this Court to Registrar to hear affected parties, Registrar should not have directed the Joint Registrar to hear matter of respective parties including affected persons. Such delegation of power by Registrar is without authority in law because Registrar has no power to appoint any other person as Registrar in his place. Therefore, directions issued by this Court have been clearly violated when the matter was heard by Joint Registrar (Commerce), therefore, entire hearing given by Joint Registrar (Commerce) to the affected parties is vitiated for want of power and jurisdiction as Registrar under Section 3 (3) of the Act. [Para 49]

       Looking to the facts of the present case, when this Court directed Registrar to decide representation which was submitted by Respondent No. 3 Association, then, it was duty of the Registrar to personally hear respective parties and to decide matter in accordance with law but instead of that, he directed Joint Registrar (Commerce) to hear objection/contentions to be raised by the respective parties and to submit his report to Registrar. Therefore, Joint Registrar (Commerce) who heard matter and submitted report to Registrar is not a Registrar appointed by State Government while issuing notification under Section 3(3) of the Act, therefore, hearing authority is not Registrar within the meaning of Section 3(3) of the Act, therefore, Joint Registrar has no jurisdiction to hear matter and affected parties including Respondent No. 2 society and submit his report to Registrar, therefore, that hearing by Joint Registrar is without jurisdiction and vitiated. [Para 51]

       Head Note :

       (d) Gujarat Co-operative Societies Act, 1961 (Guj. Act 10 of 1962) - Sections 3(3) & 107 - Registrar - Appointed under the Act - Powers of - Scope - The Registrar Co-operative Societies appointed under the Act has powers as conferred by the State Government in the notification - The powers so conferred do not indicate that Registrar has any power to interfere with private management affairs of societies in respect of mode of recruitment and appointments made by the society - Registrar is no doubt head of the subordinate officers appointed to assist him but he is not head of the Co-operative Societies - Therefore, Registrar cannot be deemed to have powers to interfere in the matters of appointments and dismissal of its employees.

       Held :

       Registrar is having powers which will be exercised by him subject to general superintendence and control of Registrar. Such superintendence and control may be exercised in judicial and non judicial matters. Registrar may call for and examine record of any inquiry or proceedings of any other matter of any officer subordinate to him for the purpose of satisfying himself as to the legality of any decision or order passed and as to the regularity of the proceedings of such officer. Such decision or order may be modified, annulled or reversed by Registrar under Section 107 of the Act. Such Registrar is, no doubt, head of the subordinate officers appointed to assist him but he is not head of the co-operative societies. Cooperative societies are, no doubt, a creation of the statute just like any other Joint Stock Company. Registrar is given certain powers of general supervision over the societies and he has power to hold inquiry into the constitution, working and financial condition of the society but these powers can only be exercised in cases where entire working of the society is defective or where interests of share holders and those who have to deal with the society are to be protected. Registrar cannot be deemed to be a Head of the Co-operative societies and should not be deemed to have power to interfere in the matters of appointments and dismissal of its employees. [Para 52]

       Head Note :

       (e) Service & Employment - Appointment - Resolution by Managing Committee - Registrar as member - Subsequent deciding otherwise by Registrar - Sustainability - Registrar was ex-offico member of the Managing Committee wherein appointment of petitioners were approved by passing resolution - Therefore, Registrar has no jurisdiction to decide otherwise or contrary to resolution and set aside the appointment.

       Held :

       In the facts of this case, Registrar who become ex-officio member of the managing committee wherein appointment of petitioners were approved by managing committee by passing resolution, when resolution was passed, Registrar was a member of committee being a party to the managing committee, therefore, Registrar has no jurisdiction to decide otherwise or contrary to the resolution, Registrar is having acquiesced in the appointment and having allowed the incumbent to work for more than three years, it was not open to him to set aside the appointment. [Para 59]

       Head Note :

       (f) Gujarat Co-operative Societies Act, 1961 (Guj. Act 10 of 1962) - Section 160 - Termination - Non supply of necessary documents - Violation of principles of natural justice - Finding as to - Sustainability - Joint Registrar and Registrar both decided matter very hurriedly - Copy of representation made by Association and copy of report submitted by Joint Registrar were not supplied to petitioners before passing impugned order - Thus there has been clear denial of reasonable opportunity and the order of Registrar suffers from the vice of non-compliance of natural justice, therefore, whole inquiry and decision of Registrar is contrary to the principle of natural justice and vitiated as baseless and perverse - That apart report submitted by Joint Registrar to Registrar has not been produced before this Court - Registrar Co-operative Societies has not even discussed his report, therefore, it also amounts to non-application of mind by him - In absence of any allegation of corruption napotism and favouritism or that petitioners are not working satisfactorily services of petitioners appointed under a proper procedure cannot be terminated.

       Held :

       From perusal of the record, it is clear that no reasonable opportunity was given to concerned employees who were likely to be affected by such directions by Registrar. No accommodation was given for hearing and hurriedly matter was concluded within the period of fifteen days though time of three months was granted by this Court. Petition was disposed of by this Court by order dated 16.07.2002. Copy of representation made by Association was not given to the employees at the time when the employees were called upon to submit explanation by issuing show cause notice dated 25.10.2002 to show cause why order under Section 160 of the Act should not be passed. [Para 60]

       The reasonable opportunity is not merely formality but in substance it must have to strict compliance. The order of Registrar Co-operative Societies is, therefore, suffering from the vice of non compliance of natural justice. Report of finding recorded by Joint Registrar (Commerce) was submitted by Joint Registrar (Commerce) to Registrar Co-operative Societies and on that basis, Registrar, Cooperative Societies passed order in question but before passing such order, copy of report submitted by Joint Registrar (Commerce) was not supplied to petitioners concerned and they were not called upon to submit as to why such report should not be believed by him for passing order under Section 160 of the Act. This is also clear denial of reasonable opportunity. Therefore, whole inquiry and decision of Registrar, Co-operative Societies is contrary to the principles of natural justice and the finding given by the Registrar, Co-operative Societies is vitiated as baseless and perverse as well as contrary to the record. Conclusion of the Registrar is not based upon the material produced by the parties and is based on extraneous consideration, conjectures and surmises. There is no finding on factual aspects whether in fact any adverse thing has been done by the employees appointed by the society. [Para 60]

       In the facts and circumstances of the case, when there is no statutory rules or service bye laws in existence, method and mode which was adopted by Respondent No. 2 by appointing sub committee to take interview and make selection of 161 employees cannot be considered to be unreasonable process or arbitrary process. This procedure is also known to law. Unless and until there is concrete evidence of corruption, nepotism and favoritism as alleged, no action whatsoever could be taken against concerned employee in absence of direct and concrete material. This aspect has also been ignored by Registrar while dealing with this sensitive issue of employees about 161 in number whose services were to be terminated by exercise of the powers under Section 160 of the Societies Act. Therefore, it is clear that the Registrar, Co-operative Societies has passed order in question without considering reply of Respondent No. 2 wherein hard reality was disclosed by Respondent No. 2.

        [Para 61]

       The Registrar has not made any allegations of mal-practice, corruption and that incompetent persons were selected and appointed by Respondent No. 2 society. The Registrar has not given any finding about mal practice, corruption and incompetent persons were selected and appointed by Respondent No. 2 society. There is no finding given by Registrar that petitioners are not qualified to the post in which they were appointed. It is not in dispute that managing committee has appointed Sub Committee and interviews of petitioners were taken and then selection was made which was approved by authorized and competent managing committee. It is not the case of Respondent No. 3 that petitioners are not working satisfactorily. It is also not the case of Respondent No. 3 that petitioners are working against the interest of society and members/farmers. It is also not the case of Respondent No. 3 that due to said appointments of petitioners, Respondent No. 2 society has incurred loss in their business, meaning thereby, whatever loss incurred is not due to appointment of petitioners. Petitioners are not responsible for said loss incurred by Respondent No. 2 society. It is also not the case of Respondent No. 3 association that there is no set up or vacancies available for petitioners. The post in which petitioners are appointed found to be vacant and covered within sanctioned set up in the society. There is no contrary material on record produced by Respondent No. 3 association and no contrary finding has been given by Registrar. There is no mandate given to society under statutory rules or bye laws that recruitment of employee has to be made in a particular manner. There is no statutory compulsion upon society to fill up the post in a particular manner. The State Government has also no power over society Respondent No. 2 under Section 155 of the Act to appoint petitioners in a particular manner or manner in which petitioners are appointed is wrong or illegal or irregular. The State Government has no power to interfere in day to day function and affairs of management of society. Then naturally, Registrar who is appointed by the State Government cannot have such power to interfere with the functions and affairs of management of society. [Para 62]

       Law Laid Down :

       Registrar cannot be permitted to do some thing indirectly which he cannot do directly in respect of service conditions of employees.

       Case Law Analysis :

       Amreli District Co-operative Sale & Purchase Union Ltd. & Ors. vs. State of Gujarat, 25(2) GLR 1244 [Para 18];; Bipinchandra Jugaldas Soni vs. Gujarat State Co-operative Cotton Federation and Others, 1985 (2) GLR 698 [Para 35];; Allahabad District Co-operative Bank Ltd. vs .Hanuman Dutt Tiwari, AIR 1982 SC 120 [Para 39];; Kendriya Sarvodya Sahakari Sangh vs. Jawan Singh and Another, AIR 1968 Raj 33 [Para 40];; Kaasturbanagar Co-operative Houses Construction Society vs. K. Soundararajan and Another, AIR 1968 Madras 67 [Para 40];; Rambhau Jairam Dhamange and Others vs. President, Vinkar Co-operative Society Ltd., Chanda & Ors., AIR 1966 Bom 187 (Nagpur) [Para 40];; Bihar State Co-operative Marketing Union Ltd. vs. Registrar, Co-operative Societies, Bihar and Another, AIR 1974 Patna 77 [Para 41];; National Co-operative Consumer Federation Ltd. vs. Delhi Administration, AIR1971 Delhi 141 [Para 43];; Gujarat State Co-operative Land Development Bank Ltd. vs. P.R. Mankad, AIR 1979 SC 1203 [Para 43];; Jallandar Transport Co-operative Society Jallandar vs. Punjab State through Secretary to Government, Labour Department, AIR 1959 Pun 34 [Para 43];; Madan Mohan Sen Gupta and Another vs. State of West Bengal and Others, AIR 1966 Cal 23 [Para 45];; A.K. Gulamnabi Mansuri vs. Janata Commercial Co-Operative Bank Ltd., 1998 (2) GLH 226 [Para 45];; Union of India vs. Dhanvanti Devi, 1966 (6) SCC 44 = (1966 AIR SCW 4020) [Para 47];; Dukhram Gupta vs. Co-operative Agricultural Association Ltd., Kawardha and Others, AIR 1960 MP 273 [Para 50];; Dalel Singh vs. Co-operative Union Ltd. U.P., Lucknow and Others, AIR 1956 All 43 [Para 53];; Benny T.D. and Others etc. etc. vs. Registrar, Co-operative Societies and Another etc. etc., AIR 1998 SC 2012 [Para 58];; The Nayagarh Co-operative Central Bank Ltd. & Anr. vs. Narayan Rath and Another, AIR 1977 SC 112 [Para 59].-Relied on

       Cases Referred :

       State of Maharashtra & Ors. vs. Karvannagar Sahakari Grub Rachna, 2000 (9) SCC 295;; Bhavnagar District Co-operative Bank Ltd. & Anr. vs. State of Gujarat & 3, in Special Civil Application No. 20625 of 2005, dated 29.11.2005;; Gujarat State Co-operative Marketing Federation Ltd. vs. V.H. Paresh and Another, 1995 (1) GLH 857;; Motibhai R. Chaudhary, Chairman vs. Registrar, Co-operative Societies, 2005 (1) GLH 270;; Amreli Municipality vs. Gujarat Pradesh Municipal Employees Union, 2004 (2) GLH 692;; State of Gujarat and Another vs. Suryakant Chunilal Shah, 1999 (1) SCC 529;; Malvikaben Bhikhabhai Patel & Ors. vs. State of Gujarat and Ors., 1998 (2) GLR 1258.

       Conclusion:

       Action of Respondent No. 1 is bad in law for want of powers under Section 160 of the Act - The action is also violative of the principles of natural justice, therefore, same is required to be quashed and set aside.

       Decided in Favour of :

       Petitioners

       Petition Allowed