Point of Law: for any reason if a new committee or the management for any reason whatsoever is not elected before the expiry of the term or that such Committee having been held is not functioning, as is the case on hand in the present petition, it is not possible to read the obligation of affording hearing in the present provisions of Section 74D of the Act before the order of appointment of the Custodian is made by the Registrar under Section 74D of the Act because if such an opportunity of hearing was to be given, the intention of the legislature would stand frustrated

JUDGMENT :

1. In this petition under Article 226 of the Constitution of India, the petitioner has prayed for a direction to quash and set aside the order dated 05.09.2020 passed by the respondent No.3- District Registrar appointing the respondent no.4 as custodian of the petitioner society and also the order dated 03.11.2020 passed by the respondent no.2-Additional Registrar, Cooperative Societies, by which, the order dated 05.09.2020 was confirmed.

2. Facts in brief are as under:

2.1 It is the case of the petitioner that the petitioner society is a society registered on 17.04.2008. A custodian was appointed who held the elections of the society on 31.03.2019 and after the elections, the Committee started functioning regularly. The case of the petitioner is that after the Committee took charge, one member of the Committee misappropriated some amount, there were vacancy of three members of the Managing Committee who during the lockdown had left the society, however, since three other persons were co-opted, the Committee of the society continued to function in accordance with Coram of 50% in accordance with the bye-laws. The case of the petitioner is that though the society was continuing the function through its Committee, by the order dated 05.09.2020, in exercise of powers under Section 74D of the Gujarat Cooperative Societies Act, the respondent no.3-District Registrar appointed a Custodian and the order of the District Registrar was confirmed in Revision.

3. Mr.Baiju Joshi, learned advocate for the petitioner would submit that the orders dated 05.09.2020 and 03.11.2020 are bad in law. He would submit that the order was passed at the pretext of a member of a legislative assembly Shri Kishorbhai Chauhan. The order was therefore passed under political pressure on an application made by the MLA of the Vejalpur constituency. The order was therefore mala-fide and therefore deserve to be quashed and set aside.

3.1 The next submission of Mr.Baiju Joshi was that a committee was duly constituted on 31.03.2019. The Committee had started functioning. None of the components of Section 74D of the Act viz. neither was the term of the Committee over nor was there a case that Committee once appointed had not started functioning. In the submission of Shri Joshi therefore in absence of both the components, the exercise of power by the District Registrar under Section 74D of the Act was without jurisdiction.

3.2 The next submission of Mr.Baiju Joshi was that the order suffered from violation of principles of natural justice. He would submit that it was apparent from reading the order dated 05.09.2020 passed by the District Registrar that the same was passed without giving an opportunity of hearing to the petitioner or even a show cause notice. The order therefore was bad in law and deserve to be quashed and set aside.

3.3 The next submission of Mr.Baiju Joshi was that the society in accordance with the provisions of Section 74D, 74(1C)(i) read with the proviso thereto was entitled to co-opt three members. Such members were therefore co-opted and of the 11 members of the Committee, 9 members were functioning as members of the Committee and in accordance with the bye-law therefore, at no point of time there were less than six members in the Managing Committee and therefore the exercise of powers under Section 74D was unwarranted.

3.4 Mr. Joshi would submit that the resignations of which the District Registrar has taken note of could not have been said to be valid resignations in the eye of law. He would draw the attention of the Court to the bye-laws annexed to the rejoinder and submit that as per bye-law no.36(6) read with bye-law 39(1), the resignation had to be tendered to the society. No such resignation was ever submitted before the society and therefore such a resignation cannot be the basis of appointment of a custodian.

3.5 In support of his submissions, Mr.Baiju Joshi relied on the following decisions:

I. State of Madhyapradesh and Ors. V. Sanjay