C/SCA/16863/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 16863 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE AKIL KURESHI 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? KHEDA DIST.CO-OPERATIVE PURCHASE & SALES UNION LTD. & 1 Petitioner(s) Versus J.P. GUPTA OR HIS SUCCESSOR IN THE OFFICER & 1 Respondent(s) Appearance: MR B S PATEL FOR MR CHIRAG B PATEL, ADVOCATE for the Petitioner(s) No. 1 - 2 MR KAUSHIK PURJARA, AGP for the Respondent(s) No. 1 RULE SERVED for the Respondent(s) No. 2 CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI Date : 24/06/2014 ORAL JUDGMENT
C/SCA/16863/2005 JUDGMENT
1. Petitioner has challenged a show cause notice dated 02.08.2005 issued by the Registrar of Co-operative Societies, Government of Gujarat.
2. Brief facts are as under:
Petitioner No.1 is the Kheda District Co-operative Purchase and Sales Union Ltd. (hereinafter to be referred to as the 'society'). Petitioner No.2 was, at the relevant time, the Chairman of the society. On 02.08.2005 impugned notice came to be issued by the Registrar, Co-operative Society stating that why action under Section 93 of the Gujarat Co-operative Societies Act, 1961 (the 'Act' for short) should not be taken against the petitioner. Such notice was issued on the allegations that the noticee had incurred unnecessary expenditure on the society's vehicle. It was alleged that since long except for some depots rest of the depots of the society for distribution of the agriculture items have been given over on commission basis. There was, thus, no need to maintain a car. Though the society was running into losses, amount of Rs. 72,252/- was spent for such purpose in the year 1998-99 and Rs. 1,05,610/- during the year 1999-2000. It was further alleged that the telephone of the Chairman, though the connection was not of the society, its bills were paid by the society. From May 1998 to March 1999 such amounts came to Rs.15,500/- and during May 1999 to March 2000 such amount came to Rs. 28,612/-.
3. The petitioner has challenged such show cause notice C/SCA/16863/2005 JUDGMENT directly before this Court alleging personal mala fides. The case of the Chairman-petitioner No.2 is that respondent No.2 herein was his political rival. He was made Minister of Co-operation on 01.08.2005. Immediately thereupon, he ensured issuance of the impugned show cause notice. Petitioner has joined Registrar of Co-operative Societies as well as the Ministers in their personal capacities.
4. On the basis of such facts, Mr. Patel for the petitioners contended that the show cause notice was actuated by mala fides. There was no financial loss to the society at any rate. The expenditure was approved by the general body. Mere irregular expenditure would not invite application of Section 93 of the Act.
5. On the other hand, learned AGP Mr. Pujara opposed the petition contending that the petition which is directed against the show cause notice, should not be entertained. Petitioners would be relegated to the remedies before the authority. He drew our attention to affidavit in reply dated 19.09.2005 filed by Mr. K.R.Shah, Special Auditor, Co-operative Societies, in which, he has clarified the position about drawing of the special report in case of petitioner No.1 society.
6. Being a petition directed against the show cause notice, I am not inclined to interfere at this stage. The petitioner would have full opportunity to refute all the allegations made in the show cause notice as also opportunity to produce such material as may be desired. It would be C/SCA/16863/2005 JUDGMENT only thereupon that the authority would take a final decision whether to drop the show cause notice or to pass any order in terms of Section 93 of the Act. At this stage, it is not possible to exonerate petitioner No.2 of any possible action under Section 93(1) of the Act. The language used therein is very wide and the adverse consequence envisaged therein would follow against any person who has taken any part in the organization or management of the society within five years prior to the date of the audit, inquiry, inspection and it is found that he has been guilty of misfeasance or breach of trust in relation to the society. Any action ofcourse has to be preceded by granting of reasonable opportunity to the person concerned. Whether the expenditure was authorized by the society, whether the petitioner was guilty of any misfeasance or breach of trust in relation to the society and while incurring such expenditure which must be gone into after permitting the petitioner to file his full reply.
7. It is true that the petitioner has made allegations of mala fides against the author of the impugned notice as well as the concerned ministers have been joined as respondents by name. However, the show cause notice proceeds on the basis of contents of a special audit report dated 01.10.2004. Mr.K.R.Shah, who was responsible for drawing of special report, has filed his affidavit in reply. In such affidavit, he has clearly denied the allegations of mala fides or any pressure on part of the respondent No.2 relevant portion of the affidavit reads as under:
C/SCA/16863/2005 JUDGMENT "5. I say and submit that in pursuance of the order dated 15/7/2002 issued by Agril. & Co operation Department, Sachivalaya, Gandhinagar, Gujarat State, I was appointed as special auditor cooperative societies (certified) Nadiyad. Annexed hereto and readily marked as Exh 1.
6. I say and submit that in pursuance of the Allotment letter/instructions received from the Joint Registrar and Special Auditor, Co-operative Societies (Divisional) Vadodara, I commenced the audit work of the petitioner society with effect from 20/7/2004 and duly completed the same on 15/9/2004. Annexed hereto and readily marked as Exh 2 are copies of the extracts of the audit report undertaken by me. It is submitted that above audit was duly undertake by me in complete conformity and following the legal principle under the Gujarat Cooperative Societies Act and Rules and the byelaws of the society in this regard.
7. It is submitted that in pursuance to the aforesaid audit exercise undertaken by me initially it was duly reported vide Audit Report dated 15/9/2004 to the Joint Registrar and Special Auditor Cooperative Societies (Divisional) Vadodara. Therefore, a Special report on the above audit was also duly prepared and sent to the Joint Registrar and Special Auditor (Divisional Vadodara) on 1.10.2004. Annexed hereto and collectively marked Exh 3 are the copies of the above audit reports prepared by me.
8. I say and submit in so far as the allegations that Respondent No.2 had pressurized or exerted any political pressure in his capacity of MLA (as he than was) or in the capacity of Chairman of the Cooperative Cell, Bhartiya Janata Party Gujarat State is thoroughly misconceive and vague allegations. It is respectfully submitted that the respondent No.2 had never intervened with the above audit process nor made any remarks in this regards nor any correspondence either oral or written were issued by him or his supporters in the facts of the present case. Therefore, it is submitted that the entire audit exercise and the reports are prepared by following the legal provisions of the Act and the Rules and I was discharging C/SCA/16863/2005 JUDGMENT statutory duties cast upon on me as Special Auditor. Therefore, the entire basis of the petition which is sought to be made out that there was any undue pressure or political influence sought to be alleged is denied and entire exercise of the Audit and its reports are only based on the legal provisions and statutory duties cast upon me. I reserve my right to file any further affidavit as and when required."
8. There is no rejoinder filed to this affidavit in reply. As is often suggested, allegations of personal mala fides are easy to make but difficult to sustain. When as denied by the Special Auditor, there was no interference by respondent No.2 in preparing the special audit report which is the basis for the notice under Section 93 of the Act, merely on the ground of personal interest of respondent No.2 such notice cannot be quashed.
9. In the result, petition is dismissed. Rule is discharged. Interim relief vacated.
(AKIL KURESHI, J.) Jyoti