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Case Number

Spl. Civil Appln. No. 5606 of 1986

Advocates

Dipak K. Trivedi
K.G. Vakharia
Advocates.

Judges

Hon'ble Mr. Justice Shailesh Bhadrayulal Majmudar

Acts

S. 76-B(2) of the Gujarat Co-operative Societies Act, 1961 (the Act for short).
provisions of Ss. 49, 61 and 73 of the Gujarat Panchayats Act, 1961
Act and dehors the provisions of S. 76B(2).8.
S. 49(1)(2) of the Gujarat Panchayats Act
S. 49(2) of the Gujarat Panchayats Act,

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The petitioner filed a writ petition under Article 226 of the Constitution challenging two related orders: (i) an order dated 19-9-1986 passed by the District Registrar of Co-operative Societies (second respondent) and (ii) an order dated 14/15-10-1986 passed by the Registrar of Co-operative Societies, Gujarat State (first respondent) which confirmed the second respondent's order. The impugned orders (Annexures A and B) disqualified the petitioner from holding any elected post for four years either on the Managing Committee of Navdeep Co-operative Bank Ltd., Navrangpura, Ahmedabad or on the managing committee of any other co-operative society. The second respondent's order was said to have been passed under Section 76B(2) of the Gujarat Co-operative Societies Act, 1961.

Chronology and key facts from the opinion:

Show-cause notice dated 30-8-1986 was served on the petitioner calling upon him to show cause why he should be removed as a Director and why he should not be declared disqualified; the notice covered proposed action under S.76B(1) and S.76B(2).
The petitioner tendered his resignation as a Director on 12-9-1986; the Board of Directors accepted the resignation on 13-9-1986. The petitioner informed the District Registrar by letter dated 17-9-1986 and made another application on 19-9-1986 requesting proceedings be dropped as he had ceased to be a Director.
Despite this, the District Registrar on 19-9-1986 issued an order disqualifying the petitioner under S.76B(2) for four years. The petitioner filed an appeal-cum-revision under S.155 of the Act before the Registrar (revisional authority). The revisional authority dismissed the appeal on 14/15-10-1986 and confirmed the disqualification.
This writ petition challenged both the original disqualification order and its confirmation on the single principal ground that S.76B(2) cannot be validly invoked unless a prior removal order under S.76B(1) has been passed.

Legal Issues Presented

Whether a competent authority may validly pass an order of disqualification under Section 76B(2) of the Gujarat Co-operative Societies Act, 1961 unless it has first passed an order of removal of the concerned officer under Section 76B(1).
Whether the fact of the petitioner having resigned (and the resignation having been accepted by the Board) before the disqualification order affects the validity of imposing a disqualification under Section 76B(2) without any prior removal order under Section 76B(1).

Arguments of the Parties

Appellant's (Petitioner's) Arguments — Mr. Vakharia

Section 76B(2) can only be invoked after the Registrar is satisfied to remove an officer and has passed an order of removal under S.76B(1); disqualification is consequential on removal.
In the present case no order of removal under S.76B(1) was passed against the petitioner because the petitioner had already resigned on 12-9-1986 and his resignation had been accepted on 13-9-1986; therefore, the condition precedent for S.76B(2) was absent and the disqualification order was ultra vires and without jurisdiction.
By reference to provisions of the Gujarat Panchayats Act (Ss.49, 61 and 73), the legislature in that Act expressly provided for disqualification even after resignation; the absence of a similar provision in S.76B(2) of the Co-operative Societies Act demonstrates a different legislative intent in the Act under challenge.

Respondents' Arguments — Mr. Trivedi and revisional authority

The respondents pointed out that no explicit removal order was passed because the petitioner had already resigned and his resignation was accepted by the Board of Directors.
They submitted that the resignation may not have been genuine; if the resignation was not genuine, that could be treated as an implied removal (or otherwise justify treatment equivalent to removal) and thus respondents contended a disqualification could still follow.
The revisional authority observed there was no clear evidence in the District Registrar's records to show when and whether the petitioner tendered his resignation and whether it was accepted as required by the bye-law; no evidence was produced to prove acceptance.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's analysis proceeded in sequential steps, closely adhering to the statutory text and the facts recorded in the orders under challenge:

The court examined the text of S.76B(1) and S.76B(2) of the Gujarat Co-operative Societies Act. S.76B(1) gives the Registrar power to remove an officer after giving opportunity of hearing; S.76B(2) authorises the Registrar to direct that "the officer as removed shall be disqualified" for up to four years. The court emphasised the express link in the language between removal and disqualification.
The show-cause notice of 30-8-1986 covered proposed actions under both S.76B(1) and S.76B(2). After service of that notice the petitioner resigned (12-9-1986) and the Board accepted the resignation (13-9-1986), which the petitioner asserted and informed the District Registrar about.
The District Registrar's order of 19-9-1986 — although it merely referred to "S.76B" — expressly disqualified the petitioner under S.76B(2). The court noted the order's text indicates the District Registrar was aware of the resignation yet proceeded only to disqualify rather than pass a removal order under S.76B(1).
For comparative statutory purposive interpretation, the court examined S.49(1)-(2) of the Gujarat Panchayats Act which expressly allows disqualification after resignation if misconduct is established and action is taken within six months. The court contrasted the explicit provision in the Panchayats Act with the absence of similar language in S.76B(2), concluding the legislature did not intend S.76B(2) to operate in the same post-resignation manner.
From the statutory language and the order-text, the court concluded S.76B(2) must be read as contingent upon and consequent to a prior valid removal under S.76B(1). Thus a valid removal order in the field is a condition precedent to any disqualification under S.76B(2).
The court addressed the respondents' contention that a finding that the resignation was not genuine could amount to an implied removal. The court said that it was for the first authority (the District Registrar) to determine the genuineness of the resignation and, in this case, the District Registrar did not treat the resignation as a sham by passing a removal order; instead, he acknowledged the resignation and proceeded only to disqualify. The revisional authority's remarks about lack of evidence of resignation did not cure the absence of any removal order by the District Registrar.
Because there was no order of removal under S.76B(1) preceding the disqualification order, the court concluded the disqualification was without jurisdiction, ultra vires S.76B(2) and had to be quashed.
The court expressly limited its decision to this statutory/technical ground and refused to express any opinion on the substantive merits of the charges against the petitioner.

Holding and Implications

PETITION ALLOWED; ORDERS QUASHED

Holding (core ruling): The court held that an order of disqualification under Section 76B(2) of the Gujarat Co-operative Societies Act, 1961 cannot be validly passed unless there is already in existence a valid order of removal under Section 76B(1) removing the officer from the society. Because no removal order under S.76B(1) was passed against the petitioner before the disqualification order of 19-9-1986, the disqualification order (and its confirmation) were without jurisdiction and were quashed.

Immediate consequences and implications for the parties:

The writ petition was allowed and the impugned orders at Annexures A and B were quashed and set aside.
As a direct practical effect, the petitioner shall no longer be disqualified from being elected to the Navdeep Co-operative Bank or any other co-operative society for the four-year period earlier directed by the District Registrar.
There was no order as to costs. The court also noted that ad interim relief granted earlier in the petition would stand vacated as a consequence of allowing the petition.
The court explicitly limited itself to the technical statutory ground and did not opine on the merits of the allegations of irregularity or misconduct against the petitioner.

This summary is limited strictly to the matters and findings contained in the provided opinion and does not add or infer information beyond that text.

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Kantilal Chandulal Shah v. C.J Jose And Another

1. In this petition under Art. 226 of the Constitution, the petitioner has challenged the legality of the order dt. 14/15-10-1986 passed by the Registrar of Co-operative Societies, Gujarat State, respondent No. 1 herein, whereby he confirmed the order dt. 19-9-1986 passed by the second respondent, District Registrar of Co-operative Societies. The impugned orders are at Annexures A and B to the petition. By the original order at Annexure ‘A’ which is confirmed by the first respondent, the petitioner has been disqualified to hold any elected post for a period of four years either on the Managing Committee of Navdeep Co-operative Bank Limited, Navrangpura, Ahmedabad or on the Managing Committee of any other co-operative society. The said order has been passed by the second respondent under S. 76-B(2) of the Gujarat Co-operative Societies Act, 1961 (‘the Act’ for short). The said order has been challenged on diverse grounds, but it is not necessary to mention all of them for the simple reason that one ground put in the forefront goes to the root of the matter and entitles the petitioner to succeed. The said ground runs as under:—

The competent authority exercising power under S. 76-B(2) can order disqualification of the concerned officer of a society only if the competent authority has first passed an order of removal of such officer from the society wherein he operated at the relevant time. In the absence of any removal order passed under S. 76-B(1) against the concerned officer, no subsequent disqualification order under S. 76-B(2) can be passed against such officer and in the present case, as there is no order passed against the petitioner removing him from the society, as per S. 76-B(1), the order passed by the second respondent under S. 76-B(2) is ex facie without jurisdiction and null and void and its confirmation by the appellate authority viz. respondent No. 1 is also equally stiose and an exercise in futility.

2. In order to appreciate the aforesaid contention, in its true perspective, it is necessary to note a few relevant facts leading to this petition. The petitioner at the relevant time was working as a Director in Navdeep Co-operative Bank which is a co-operative society duly registered under the provisions of the Act. He was served with a show cause notice dt. 30-8-1986 calling upon him to show cause why he should not be removed from the office of the Director of the said society on the grounds mentioned in the show cause notice. He was also called upon to show cause why he should not be declared disqualified from being elected as a member of the committee of any other co-operative society. A copy of the said show cause notice is at annexure ‘C’ to the petition. It clearly covers the proposed actions under S. 76B(1) as well as S. 76B(2) of the Act. It will be profitable at the outset to have a look at the aforesaid relevant provisions of S. 76B:—

“76B.(1) If, in the opinion of the Registrar, any officer makes persistent default or is negligent in performance of the duties imposed on him by this Act or the rules or the bye-laws or does anything which is prejudicial to the interests of the society or where he stands disqualified by or under this Act, the Registrar may, after giving the officer an opportunity of being heard, by order remove such officer and direct the society to elect or appoint a person or a qualified member in the vacancy caused by such removal and the officer so elected or appointed shall hold office as long only as the officer in whose place he is elected or appointed would have held if the vacancy had not occurred.

(2) The Registrar may, by order, direct that the officer as removed shall be disqualified to hold or to contest election for any office in the society from which he is removed and in any other society for a period not exceeding four years from the date of the order and such officer shall stand disqualified accordingly.”

3. It transpires that after service of the show cause notice on the petitioner, he tendered his resignation as a Director of the bank on 12-9-1986. The said resignation was accepted by the Board of Directors on 13-9-1986. This fact was also pointed out to the second respondent by the petitioner by his letter dt. 17-9-1986 and he was requested to drop the proceedings proposed to be initiated against him as per the show cause notice dt. 30-8-1986 as he had already ceased to be a Director of the said bank. Another application was submitted before the second respondent on 19-9-1986. However, it appears that the second respondent by his order dt. 19-9-1986 instead of dropping the proceedings directed that the petitioner should be disqualified from being elected to the managing committee of Navdeep co-operative bank or to any other co-operative society for a period of four years from the date of the order. The said order obviously was passed under S. 76B(2) of the Act, though the order merely mentioned S. 76B. The petitioner challenged the said order by filing an appeal-cum-revision under S. 155 of the Act before the Registrar of Co-operative Societies, Gujarat State. His appeal along with appeals of four other members of Lean committee of Navdeep Co-operative Bank, who were also removed and disqualified by the Registrar for their alleged irregularities and illegalities, were heard together and were disposed of by a common order. So far as the petitioner is concerned, his appeal was No. 102/86. It came to be dismissed on 14/15-10-1986 by the revisional authority, which confirmed the order passed by the second respondent. The aforesaid orders at Annexures ‘A’ and ‘B’ to the petition passed by the revisional authority and the original authority, as stated earlier, are brought in challenge in the present proceedings.

4. Mr. Vakharia for the petitioner placing reliance on S. 76B(1) and (2) of the Act, vehemently contended that the order of disqualification under S. 76B(2) can be passed against the concerned officer of the society provided in the first instance, the authority is satisfied about the need to remove such officer from the society and after having passed an order of removal of such officer under S. 76B(1), he can proceed further and pass further order under S. 76B(2). In the facts of the present case, no order of removal is passed by the second respondent against the petitioner as the petitioner himself walked out by resigning his membership in the Board of Directors and his resignation was accepted, much prior to the date on which the second respondent passed his order on 19-9-1986. It was, therefore, contended that the very condition precedent to the passing of the order under S. 76B(2) is absent in the present case and hence, the said order of disqualification is patently null and void and ultra vires and without jurisdiction.

5. In order to support his contention, Mr. Vakharia invited my attention to the provisions of Ss. 49, 61 and 73 of the Gujarat Panchayats Act, 1961 and submitted that the same legislature which has enacted both those Acts are clearly made a difference in case of the exigency of situation in which the authority acting under the Gujarat Panchayat Act may deal with suitably and may disqualify any person from holding any elected post even after he resigns from the existing post. However, so far as S. 76B(1) and (2) of the Act are concerned, the State legislature has exhibited quite a different intention. The State legislature never contemplated that any order of disqualification can be passed against any officer of the society by the competent authority exercising powers under the Act unless that authority first decides to remove the concerned officer and passes proper order under S. 76B(1). I asked Mr. Trivedi for the respondents to point out whether the second respondent has passed any order of removal of the petitioner from the Board of Directors of the Navdeep Co-operative Bank. He fairly stated that there is no such order passed by the second respondent but he submitted that, that was so because the petitioner had already walked out from the membership of the bank on 12-9-1986 which was accepted by the Board of Directors on 13-9-1986. He further submitted that there did not appear to be sufficient evidence on record to indicate that this resignation was genuine one. In my view, the said contention of Mr. Trivedi cannot be accepted for the simple reason that a mere look at the last para of the judgment of the second respondent shows that he has impliedly accepted the fact that the petitioner had already resigned as a Director and having accepted that fact, he had naturally concentrated on the order which he had to pass viz. disqualification of the petitioner from being elected to the Board of Directors of Navdeep Co-operative bank or any other co-operative society for a period of four years. It is pertinent to reproduce at this stage the English version on the relevant aspect as found in the order of the second respondent:—

“Only because resignation has been given as a Director of the bank, it is not possible to accept the contention that notice under S. 76B(2) should be cancelled and as it is found that you are responsible for many irregularities as mentioned in the notice, it is necessary to disqualify you under S. 76B from being elected to the Board of Management of the said bank or any other co-operative society, for a period of four years.”

The aforesaid reasoning adopted by the second respondent clearly indicates that he was conscious of the fact that the petitioner had already resigned as a Director of the said bank. That is the reason why he did not pass any order removing the petitioner from the membership as it would have amounted to slaying the slain. He, therefore, proceeded to pass the only order of disqualification for a period of four years from being elected to the membership of any managing committee of such society. This is clearly an order under S. 76B(2). It must, therefore, be held that the second respondent has not passed any order under S. 76B(1) removing the petitioner from the membership of the Board of Directors of Navdeep Co-operative Bank and straightway has passed the order of disqualification under S. 76B(2). If S. 76B(2) was worded on the same lines as S. 49(2) of the Gujarat Panchayats Act, the situation might have been different. It would be profitable to reproduce S. 49(1)(2) of the Gujarat Panchayats Act which also deals with same type of removal of elected officers of gram panchayat, and under what circumstances they can be disqualified from holding such posts in future:—

“49.(1) The competent authority may remove from office any member of a panchayat or the sarpanch, the Upa-sarpanch, the Chairman or as the case may be, the Vice-Chairman, thereof after giving him an opportunity of being heard and giving due notice in that behalf to the panchayat and after such inquiry as it deems necessary, if such member, sarpanch, Upa-sarpanch, Chairman or Vice-Chairman, as the case may be, has been guilty of misconduct in the discharge of his duties or of any disgraceful conduct or abuses his powers or makes persistent default in the performance of his duties and functions under this Act or has become incapable of performing his duties under this Act. The Sarpanch, Upa-Sarpanch, Chairman or as the case may be, Vice-Chairman removed may at the discretion of the competent authority also be removed from the membership of the panchayat.

(2) The competent authority may, after following the procedure laid down in sub-sec. (1) disqualify for a period not exceeding four years, any person who has resigned his office as a member, sarpanch, Upa-sarpanch, Chairman or Vice-Chairman or otherwise ceased to hold any such office and has been guilty of misconduct specified in sub-sec. (1) or has been incapable of performing his duties:

Provided that an action shall be taken within six months from the date on which the person resigns or ceases to hold any such office.”

Ss. 61 and 73 of the Gujarat Panchayat Act are also identical in nature. They deal with removal of officers of Taluka and District Panchayats.

6. A mere look at S. 49(2) of the Gujarat Panchayats Act and reading it in juxtaposition with S. 76B(2) of the present Act, leaves no room for doubt that the legislature in its wisdom while enacting S. 76B(2) did not contemplate a situation in which the competent authority can order disqualification of an officer of the society who is not first removed by him for the alleged misconduct. In short, no order of disqualification under S. 76B(2) can be passed by the competent authority without there being in the field, as a condition precedent, a valid order of removal of the concerned officer from the membership of the managing committee of the society. May be this a case of omission on the part of the legislature which may be wilful or otherwise. But as far as the provisions stand on the statute book, there cannot be any escape from the conclusion that no order of disqualification under S. 76B(2) can be passed against an officer of the society unless in the first instance, there is a valid order in the field under S. 76B(1) ordering his removal from the concerned office occupied by him in the managing, committee of the society. Mr. Vakharia's contention, therefore, has to be accepted.

7. Mr. Trivedi then submitted that if the authorities have come to the conclusion that so called resignation of the petitioner was not a genuine one, it would amount to their impliedly passing the order of removal. In this connection, he invited my attention to the revisional order passed by the first respondent wherein in the penultimate page of the order, at second para thereof, the following observations are made by the revisional authority:—

“It was urged that the present appellant had tendered his resignation from the board of Directors on 12-9-1986. In support of this a copy of the agenda dt. 9-9-1986 where at serial No. 3 mention is made of the item regarding resignation of the members and transfers. From the records of the District Registrar, it is not clear as to when and whether the present appellant had tendered his resignation and the same was accepted by the Board of Directors as enjoined by bye-law No. 29(2)(1). In any case, no evidence was produced to that effect.”

It is true that the revisional authority found that there was no clear evidence about the resignation tendered by the petitioner from the Board of Directors of Navdeep Co-operative Bank. However, this is neither here nor there. It is the first authority viz. the second respondent who has to hold that so called resignation was a make believe or was a camouflage and that the petitioner had continued to occupy the post of a Director and, therefore, he was required to remove the petitioner first before passing any disqualification order against him. That exercise was never undertaken by the second respondent. Instead, as seen earlier, assuming that the resignation was valid, he did not pass any removal order but straightway proceeded to pass disqualification order. Under these circumstances, the observations of the revisional authority in the aforesaid para 2 cannot be of any avail to the respondents. Ultimately, the revisional authority has confirmed the order of the second respondent by dismissing the revision-cum-appeal. Therefore, operative order which holds the field against the petitioner is the order passed by the second respondent directing him to be disqualified for a period of four years from holding any elected post in the concerned bank. Now, that order squarely falls under S. 76B(2) of the Act. As there is no order passed by the second respondent removing the petitioner from the directorship of the bank under S. 76B(1) of the Act, it must be held that the very condition precedent which must exist for passing disqualification order under S. 76B(2) is not available in the present case. It must be kept in view that S. 76B(2) in terms provides that Registrar may by order, direct that the officer so removed shall be disqualified. Thus, the removal order under S. 76B(1) must precede the order of disqualification under S. 76B(2). In the present case, admittedly, there is no removal order in the field. Consequently, disqualification order must be treated to be entirely without jurisdiction and ultra vires the scheme of the Act and dehors the provisions of S. 76B(2).

8. Only on this short ground, this petition will have to be allowed. It is made clear that I express no opinion on the merits of the controversy between the parties or on merits of the charges levelled against the petitioner. Only on the aforesaid technical ground, this petition is allowed. Rule is made absolute Orders at annexures A and B are quashed and set aside. Consequently, there will remain no question of the petitioner being held disqualified from being elected to Navdeep Co-operative Bank or any other co-operative society for a period of four years as earlier directed by the second respondent by the impugned order. There will be no order as to cost. As the petition is allowed and the impugned orders are set aside, ad interim relief granted by this Court earlier in the present petition will automatically stand vacated.

Petition allowed.

Kantilal Chandulal Shah v. C.J Jose And Another

Structured Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's (Petitioner's) Arguments — Mr. Vakharia

Respondents' Arguments — Mr. Trivedi and revisional authority

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Kantilal Chandulal Shah v. C.J Jose And Another

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