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2011 (1) GCD 863 (Guj) (DB)
Hon’ble Mr. Chief Justice S.J. Mukhopadhaya &
Hon’ble Mr. Justice J.B. Pardiwala
Narmada Cotton Co-operative Spinning Mill Ltd.
Versus
Mahendra Kumar Indrajeetsinhji Cotton Pvt. Ltd. & Ors.
Letters Patent Appeal No. 1065 of 20101—Decided on 24/02/2011
Gujarat Co-operative Societies Act, 1961 — Sections 107, 108, 112 and 167 — Winding up of Society — Leave to continue legal proceedings against Society — Refusal by Registrar on ground of failure to give required notice under the Act — Sustainability — Finding of — Contention that notice under Section 167 of the Act is necessary in the matter can be raised and decided by civil Court at an appropriate stage of the suit proceeding is not acceptable in view of the plain language of the Section 112 of the Act — Which provides that no Court shall take cognizance except by leave of the Registrar — In case civil Court is left to decide the question of requirement of said legal notice, it shall first have to go in the facts and merits of the suit which will amount to taking cognizance barred under the Act — Court, therefore, held that Registrar Respondent 3 is comptent and justified in refusing to grant leave as prayed by Respondent No. 1 under Section 112 of the Act — Court quashed and set aside the judgment of Single Judge.
Held :
It is difficult for Court to accept the line of reasoning adopted by the learned Single Judge because, the learned Single Judge appears to be of the opinion that the issue as to whether the notice under Section 167 of the Act is necessary can be raised and decided by the Civil Court at an appropriate stage of the suit proceedings. Court is afraid that the same is not permissible on the plain language of Section 112 itself. If the Civil Court is left to adjudicate the issue as regards compliance or non-compliance of Section 167 at an appropriate stage of the civil suit, that means, the Civil Court should first take cognizance of the matter and then decide as to whether notice under Section 167 of the Act was required or not required.
If the Civil Court is left to decide this issue, then, the Civil Court will have to go into the facts and the merits of the suit and that will amount to taking cognizance. Without taking cognizance, the Civil Court will not be able to decide the issue about compliance or non-compliance of Section 167 and Section 112 specifically prohibits the Court concerned from taking cognizance of any matter except by leave of the Registrar. “What law prohibits something to be done directly the same cannot be done indirectly.” [Para 15]
Law Laid Down :
What law prohibits some thing to be done directly the same can not be done indirectly.
J.B. Pardiwala, J.—A neat question of law falls for our consideration in the present appeal, which is as under:—
“Whether the Registrar appointed under the Gujarat Cooperative Societies Act, 1961, while adjudicating the application under Section 112 of the Gujarat Cooperative Societies Act, 1961 for leave to continue legal proceedings of civil suit, is justified in refusing to grant leave to continue the suit or other legal proceedings after winding up order of the society is passed on the premise that before institution of the suit the plaintiff has failed to issue notice under Section 167 of the Gujarat Co-operative Societies Act, 1961?”
2. The above referred question of law arises in the backdrop of the following factual background.
3. The appellant before us is a cooperative society (now in liquidation) registered under the provisions of the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as “the Societies Act”). The original petitioner entered into agreement of lease dated 1.10.1998 with the appellant-society for conversion contract for a period of five years. The agreement was signed on behalf of the Chairman of the appellant Society and Director of the original petitioner – company i.e. Respondent No. 1 in the present appeal. On 26th April 2000 a suit being Civil Suit No. 2467 of 2000 was filed by the Respondent No. 1 against the appellant society in the City Civil Court, Ahmedabad for breach of agreement of lease deed dated 1st October 1998 for non-fulfilment of the agreement by the Society. In the civil suit Respondent No. 1 has mainly pleaded that they have suffered huge losses on account of breach of the terms of the agreement by the appellant society and accordingly prayed for damages and loss sustained by Respondent No. 1.
4. It deserves to be noted that during the pendency of Civil Suit No. 2467 of 2000 an order of winding up of the appellant society came to be passed in exercise of powers under Section 107 of the Societies Act and Liquidator also came to be appointed under Section 108 of the Societies Act on 19th April 2001. After winding up order came to be passed Liquidator filed Special Civil Suit No. 208 of 2001 in the Court of the learned Senior Civil Judge, Bharuch against Respondent No. 1 for recovery of outstanding dues and liquidated damages for breach of the contract.
5. It is important to mention that for the breach of the terms and conditions as enumerated in various clauses of the agreement the parties have filed suits against each other and they are pending before different courts.
6. As required under Section 112 of the Societies Act, Respondent No. 1 preferred an application for permission to grant leave to proceed further with the suit i.e. Suit No. 2467 of 2000.
7. The application preferred by Respondent No. 1 under Section 112 of the Societies Act came to be rejected by the Joint Director (Administration), Cottage and Village Industries on the ground that the notice as provided under the provisions of Section 167 of the Societies Act was not addressed to the Registrar before filing of the suit and therefore the very institution of the suit was not in accordance with law. Accordingly, the prayer for leave was rejected. The said order dated 28.11.2005 passed by Respondent No. 3 herein in this appeal was subject matter of challenge before the learned Single Judge in Special Civil Application No. 623 of 2006.
8. The learned Single Judge came to the conclusion that Respondent No. 3 ought not to have rejected the application preferred by Respondent No. 1 for leave as contemplated under Section 112 of the Societies Act on the premise that Section 167 of the Societies Act had no application at all in the facts and circumstances of the case. The learned Single Judge is of the opinion that Section 167 would apply only if there is any dispute touching the business of the Society. The learned Single Judge is of the view that having regard to the nature of dispute between the appellant so
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