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2021 Supreme(Online)(Guj) 181
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Biren Vaishnav, J
Krishnadham Awas Yojna – Appellant
Versus
State of Gujarat – Respondent
R/SPECIAL CIVIL APPLICATION NO. 14948 of 2020
For the Appellants/Petitioners: Baiju Joshi
For the Respondents: Nidhi Vyas
Under Section 74D of the Gujarat Cooperative Societies Act, the Registrar is empowered to appoint a custodian if an elected committee becomes non-functional due to quorum failure, and such an appointment does not require prior notice or a hearing, as the statutory provision is mandatory.
Headnote:(A) Gujarat Cooperative Societies Act, 1961 - Section 74D - Appointment of Custodian - When after elections, the number of committee members falls below the required quorum due to resignations, the committee ceases to function - Registrar is empowered to appoint a custodian under Section 74D - Principles of natural justice, such as providing a show-cause notice or opportunity of hearing, are not applicable to the exercise of power under the amended Section 74D as it would frustrate the legislative intent. (Paras 5, 5.iv)
Facts of the case:
The petitioner society, registered in 2008, held elections on 31.03.2019. Subsequently, six out of eleven managing committee members resigned. The petitioner claimed the committee could function via co-opted members, but the District Registrar found that the committee was no longer functional due to lack of quorum and appointed a custodian. The Additional Registrar confirmed this order, leading the petitioner to challenge the legality and the lack of opportunity for a hearing.
Findings of Court:
The Court held that the resignation of six members left only five members, which was insufficient to maintain a quorum. It was concluded that the Registrar's action was mandatory and legally justified under Section 74D, as the committee was effectively non-functional.
Issues: Whether the District Registrar had the authority to appoint a custodian under Section 74D without providing a hearing to the society, and whether the committee remained functional despite member resignations.
Ratio Decidendi: The amended provisions of Section 74D of the Gujarat Cooperative Societies Act mandate the appointment of a custodian when an elected committee ceases to function; furthermore, the statute does not necessitate a prior hearing, as such a requirement would contradict the legislative purpose of ensuring the continuous management of a cooperative society.
Result: Petition dismissed.
| Table of Content |
|---|
| 1. factual background involving the appointment of a custodian due to managing committee vacancy. (Para 1 , 2) |
| 2. arguments regarding political influence, lack of procedural fairness, and quorum requirements. (Para 3 , 4) |
| 3. court rules that statutory power under s.74d is exercisable without hearing when committees are non-functional. (Para 5 , 6) |
CAV JUDGMENT
| 1 | Whether Reporters of Local Papers may be allowed to see the judgment ? | NO |
| 2 | To be referred to the Reporter or not ? | NO |
| 3 | Whether their Lordships wish to see the fair copy of the judgment ? | NO |
| 4 | Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ? | NO |
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 les
