Back
2020 Supreme(Guj) 134
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
VIKRAM NATH, A.J. SHASTRI, JJ.
Natvarbhai Pirambardas Patel – Appellant
Versus
Navinchandra Jagjivandas Patel – Respondents
R/LETTERS PATENT APPEAL NO. 1664, 1665 of 2019 In R/SPECIAL CIVIL APPLICATION NO. 224 of 2019, SPECIAL CIVIL APPLICATION NO. 97 of 2016 With CIVIL APPLICATION (FOR STAY) NO. 1 of 2019
Decided on : 23-01-2020
Advocate Appeared:
For the Appellant : MR BB NAIK, SENIOR COUNSEL WITH MR DIPEN DESAI
For the Respondent:MR JAL UNWALA, SENIOR COUNSEL with MR BAIJU JOSHI, MR KAMAL TRIVEDI, ADVOCATE GENERAL WITH MR DM DEVNANI, MR BS PATEL, SENIOR ADVOCATE WITH MR CHIRAG B. PATEL
Point of Law:
Subscription of the share capital by the State Government vide Resolution dated 28.12.2015 and the consequent Resolution of even date appointing the Government nominee under section 80(3) of the 1961 Act is illegal and liable to be quashed.
Headnote:
Constitution of India – Entry 32 of List II of the Seventh Schedule – Cooperative Credit Societies Act, 1904 – Present matter relates to the interpretation of various provisions of the 1961 Act pertaining to the election and term of the members; the Office Bearers of the Managing Committee; powers of the Custodian and lastly, the powers of the State Government in relation to a District Cooperative Bank. The term of the Office Bearers and the elected members of the Bank was due to expire and fresh elections could not be notified within the stipulated period, Custodian was appointed by the State Government. The appointment of the Custodian was challenged by way of Special Civil Application, in which the learned Single Judge initially declined to grant interim relief. The said order was carried before the Division Bench by Letters Patent Appeal. The Letters Patent Appeal was allowed vide order and the appointment of the Custodian was quashed. The order in the Letters Patent Appeal was challenged before the Supreme Court by the State of Gujarat wherein the Supreme Court granted stay vide order and as such the Custodian has continued. Held – Learned Counsels for the parties have placed reliance upon a large number of judgments in support of their submissions. We have dealt with the relevant ones and the others, which according to us have no direct bearing on relevance or even if relevant are in support of our reasons given which are based on clear interpretation of law and the facts of this case, as such we are not inclined to further loath this judgment by referring to them – Applications stand disposed of. (Para 92)
Facts of the Case:
Present matter relates to the interpretation of various provisions of the 1961 Act pertaining to the election and term of the members; the Office Bearers of the Managing Committee; powers of the Custodian and lastly, the powers of the State Government in relation to a District Cooperative Bank.
Finding of the Court:
Learned Counsels for the parties have placed reliance upon a large number of judgments in support of their submissions. We have dealt with the relevant ones and the others, which according to us have no direct bearing on relevance or even if relevant are in support of our reasons given which are based on clear interpretation of law and the facts of this case, as such we are not inclined to further loath this judgment by referring to them.
Result: Applications stand disposed of.
JUDGMENT :
VIKRAM NATH, J.
1. It has been reported that there are more than 5,50,000 active Cooperative Societies in India. They engage in providing economic and social services to not only the neglected and downtrodden sections of the society currently living in rural India, but also cater to a myriad of sections that reside in urban areas. In the Indian context, the cooperatives have been in existence for more than 200 years now. Initially, they were set up to provide for the economically weaker sections of the society but in due course, these cooperatives have grown by leaps and bounds and are not limited to providing houses and products, but are also effective in providing loans and advances.
2. The cooperatives have an autonomous and democratic setup enshrining the concepts of self-help, democracy, equality, mutual cooperation and solidarity. Statutory recognition was first given to the cooperatives by promulgation of the Cooperative Credit Societies Act, 1904. Later on as incorporation, regulation and winding up of cooperative societies was provided for in Entry 32 of List II of the Seventh Schedule of the Constitution, it evolved into a State subject and every State framed its own laws. The Gujarat Cooperative Societies Act was enacted in 1961.
3. The present matter relates to the interpretation of various provisions of the 1961 Act pertaining to the election and term of the members; the Office Bearers of the Managing Committee; powers of the Custodian and lastly, the powers of the State Government in relation to a District Cooperative Bank.
4. Part IXB was inserted into the Constitution (relevant in the current matter are Articles 243ZH to Article 243ZT) vide The Constitution (Ninety-Seventh Amendment) Act, 2011, thereby, giving the cooperatives a constitutional status. Article 43B in Part IV (inserted by the same Act of 2011) of the Constitution mandates that it is the duty of the State to promote voluntary formation, autonomous functioning, democratic control and professional management of the cooperative societies. Under Part IXB of the Constitution along with the statutory provision contained in the 1961 Act, the State Government has been given control over the cooperatives. This control is, however, limited to a certain extent with the objective of avoiding interference or intrusion upon the autonomous character and the democratic setup of the cooperatives. However, simultaneously, it ensures that the cooperatives are not misused and abused by their managements on account of misconduct, corruption, etc. to the disadvantage of the society to which the cooperative caters.
5. In recent times, it is observed that the State seeks to keep effective control over the cooperatives by misusing the powers given to it, thereby, completely affecting the very autonomous and democratic fabric of the cooperatives. The present case is a classic example where the election of a District Cooperative Bank has been largely affected on account of the State and its officers' undue interference and illegal support to a faction of a contesting group. This was done by the appointment of a Custodian (Government Servant) and the Custodian further appointed two professional members, while the State appointed one nominee under the various provisions of the 1961 Act to tilt the result of the election in favour of one group. As a result of the above, a dispute has been created, which has led to a series of litigation(s). The ultimate beneficiary of the dispute at hand has been the Custodian who has continued to manage and control the affairs of the Bank for more than four and a half years while keeping the elected body away from taking over charge.
6. The Mehsana District Central Cooperative Bank Limited, having its office at Rajmahal Road, Mehsana (hereinafter referred to as “the Bank”), is duly registered with the relevant authorities under rele
