ORAL ORDER
(PER: HONOURABLE MR. JUSTICE AKIL KURESHI)
1. This appeal is directed against the judgment of the learned Single Judge dated 24.4.2014 passed in Special Civil Application No. 4402 of 2014.
2. The appellant No. 1 is a Co-Op. Bank. Appellant No. 2 is it's Officer. Respondent No. 2 to 11 herein were subjected to audit/inquiry under Section 86 of the Gujarat Co.Op Societies Act (hereinafter to be referred as the said Act). Such proceedings culminated into a report giving rise to further proceedings under Section 93(1) of the said Act. Inquiry officer appointed by the District Registrar submitted his report dated 12.7.2013 In such report, he held all the said respondents liable to the Co.Op Societies to the extent of Rs. 50 Lacs with interest at the rate of 8.5%. He apportioned 50% of such liability equally amongst Chairman of the Bank, Shatilal Shankarbhai and Managing Director, Hemendrabhai Somabhai. Remaining 50% liability was to be equally shared by rest of the respondents. The said respondents aggrieved by such report of the Inquiry Officer filed appeal before the Co.Op Tribunal. The Co.Op Tribunal set aside the report on various grounds including that the Inquiry Officer did not submit the report within the time permitted and that this was not the case of the defalcation of the Bank funds. Such order dated 30th January, 2014 of the Tribunal was challenged by the Bank before the learned Single Judge. Learned Single Judge by the impugned judgment, dismissed the petition mainly on the ground that Section 93(1) of the Act would debar any proceedings against any person who has taken part in the management of the society beyond 5 years prior to the date of the audit/inquiry report. In the present case, the proceedings as per the learned Single Judge were clearly hit by the said time limitation. We may notice the observations of the learned Single Judge in this respect:
“10. However, the Court noticed that action under Section 93 of the Act could not have been initiated against the respondents no. 2 to 11 as they did not take part in the organization within five years prior to inquiry under Section 86 of the Act. Mr. Patel could not dispute that action against the respondent No. 2 to 11 was required to be taken within 5 years prior to the inquiry under Section 86 of the Act and therefore, no order under Section 93 could have been passed against the respondent No. 2 to 11.
11. Therefore, it appears to the Court that even without going into the grounds for which the Tribunal allowed the appeal of the respondents No. 2 to 11, the order passed under Section 93 of the Act against the respondents No. 2 to 11 could not stand scrutiny of law as in the facts of the case, the provisions of Section 93 of the Act were not attracted.
12. The inquiry under Section 93 of the Act against any person is permissible only when such person has taken any part in organization of the society and misapplied or retained money or committed other illegality within 5 years prior to the date of audit, inquiry, inspection under Sections 84, 86 and 87 of the Act respectively or prior to the date of winding up of the society.
13. There is no dispute about the fact that the resolutions for investment were passed in the meeting by the respondents No. 2 to 10 as Directors and acted upon by the respondent no. 11 as Manager in the year 1996. As stated by the Tribunal, such resolutions were then confirmed in the meeting by the members. As stated in the order at Annexure:C, the inquiry under Section 86 of the Act was ordered on 07.09.2010 Such inquiry was obviously after more than a period of 5 years from the date of decision to invest the amounts.
14. Section 93 of the Act reads as under:
93 (1) Where in the course of or as a result of an audit under section 84, or an inquiry under Section 86 or an inspection under section 87, or the winding up of a society, the Registrar is satisfied on the basis of the report made by the auditor or the person authorized to make inquiry under section 86, or the person authorized to inspect the books under section 87, or the Liquidator under section 110, that any person who has taken any part in the organization or management of the society or any deceased, or past or present officer of the society has, within a period of five years prior to be date of such audit, inquiry, inspection or order for winding up, misapplied or retained, or become liable or accountable for, any money or property of the society, or has been guilty of misfeasance or breach of trust in relation to the society, the Registrar or a person authorized by him in that behalf may investigate the conduct of such person or persons and after framing charges against such person or persons, and after giving a reasonable opportunity to the person concerned and in the case of a deceased person to his requiring him to repay or restore the money or property or any part thereof, with interest at such rate as the Registrar or the person authorized under this section may determine, or to contribute such sum to the assets of the society by way of compensation in regard to the misapplication, retention, misfeasance or breach of trust, as he may determine.
(2) The Registrar or the person authorized under sub-section (1) in making any order under this section, may provide therein for the payment of the costs or any part thereof such investigation, as he thinks just and he may direct that such costs or any part thereof shall be recovered from the person against whom the order has been issued.
(3) This section shall apply, notwithstanding that the act is one for which the person concerned may be criminally responsible,
15. As required by above provisions, the respondents No. 2 to 11 having not taken part in the organization of the petitioner No. 1-Bank within 5 years before the inquiry under Section 86 of the Act, on this legal ground available to the respondents No. 2 to 11, no interference is called for in the ultimate order made by the Tribunal”.
3. Learned counsel, Mr. B.S Patel, for the appellants could not dispute the observations of the learned Single Judge on facts and his legal conclusion on the basis of such facts. It would thus clearly emerge that none of the private respondents had discharged any function in connection with the Bank five years immediately preceding the date of the inspection report. Any action under Section 93(1) of the Act was thus not permissible. We, therefore, agree with the view of the learned Single Judge in this respect.
4. Shri B.S Patel, however, submitted that this was not the ground on which the Co.Op Tribunal quashed the action under Section 93(1) of the Act. He submitted that the observations of the Tribunal in the said order would prejudice the Bank's other remedies as well.
5. Learned Single Judge has dismissed the writ petition of the Bank on sole ground noted above. We also concur with said view. This was however not the ground on which the decision of the Co.Op Tribunal was based. Thus, the contentions of the Bank on the merits of the report under Section 93(1) have remained untested. While therefore dismissing this Letters Patent Appeal, we clarify that observations of the Co.Op Tribunal in the order dated 30 January, 2014 on the reasons for quashing the report also would not survive. In other words, if the Bank institutes any other proceedings to pursue its remedy that may be available under the law, the same shall be decided unmindful of the observations of the Co.Op Tribunal or even that of the report dated 12.7.2013 under Section 93(1) of the Act.
6. Letters Patent Appeal is disposed of in above terms.
7. In view of disposal of appeal, civil application does not survive and is disposed of.
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