SCA/3919/2008 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 3919 of 2008 With SPECIAL CIVIL APPLICATION No. 3925 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 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 ? ========================================================= BHANKHLA JUTH TELIBIYAN UTPATHAK SAHAKARI MANDALI LTD - Petitioner(s) Versus DISTRICT REGISTRAR & 2 - Respondent(s) ========================================================= Appearance : MR SHIRISH JOSHI for Petitioner(s) : 1, None for Respondent(s) : 1 - 2. GOVERNMENT PLEADER for Respondent(s) : 3, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 03/03/2008 COMMON ORAL JUDGMENT 1. Rule. Mr. Shukla learned AGP waives service of SCA/3919/2008 2/8 JUDGMENT notice of rule for the State Authority in SCA No. 3919 of 2008 and Ms. Trushal Patel learned AGP waives service of notice of rule for the State Authority in SCA No. 3925 of 2008. With the consent of the learned Counsel appearing for both the sides, the matters are finally heard today. 2. The petitioner by this petition has challenged the order passed by the District Registrar and its confirmation thereof by the Addl. Registrar (Appeals) and the State Government whereby the final order of liquidation has been passed. 3. Upon hearing learned Counsel appearing for both the sides, it appears that the present case is covered by the decision of this Court in SCA No. 15465 of 2006 decided on 21.02.2008. In the said decision, this Court observed as under: “5. It appears that Section 107 of the Gujarat Cooperative Societies Act (hereinafter referred to as the “Act”) which is relevant for the purpose of this petition reads as under: “ 107. 1. If the Registrar,- (a) after an inquiry has been held under section 86, or an inspection has been SCA/3919/2008 3/8 JUDGMENT made under section 87, or on the report of the auditor auditing the accounts of the society, or (b) on receipt of an application made upon a resolution carried by three- fourths of the members of a society present at a special general meeting called for the purpose, or (c) of his own motion, in the case of a society which- (i) has not commenced working, or (ii) has ceased working, or (iii) possesses shares of members' deposits not exceeding five hundred rupees, or (iv) has ceased to comply with any conditions as to registration and management in this Act or[the rules or the bye-laws, or] [(v) has failed to comply with any directions issued under sub-section (1) of section 160 or such directions as modified under sub-section (2) of that section.] is of the opinion that a society ought to be wound up, he may make an interim order directing it to be would up. 2. Where an interim order is made on a ground specified in clause (a) or sub-section (iv) of clause (c) of sub-section (1) a copy thereof shall be communicated, in the SCA/3919/2008 4/8 JUDGMENT prescribed manner, to the society calling upon it to submit its explanation to the Registrar within a month from the date of the issue of such order. 3. The Registrar, after giving an opportunity to the society of being heard, shall make a final order, vacating or confirming the interim order.” 6. On plain reading the aforesaid sub-section (2) of section 107 of the Act, it appears that when the interim order of liquidation is made, opportunity to submit the explanation to the Registrar within one month from the date of interim order of winding up is required to be given. The aforesaid requirement of sub-section (2) of section 107 of the Act appears to have been satisfied in the present case. However society has not submitted any explanation. It was the contention of Mr. Desai learned Counsel for the petitioner that as the matter was being agitated before the appellate authority against the interim order of winding up, and before the conclusion of the said proceedings, the final order of winding up came to be passed and therefore, the explanation could not be submitted. However, in his submission there are sufficient material to show that the society has made progress, and is functioning, which would not support last resort of liquidation. 7. In my view the said aspect are not required SCA/3919/2008 5/8 JUDGMENT to be examined, more particularly in view of the order passed hereinafter. However, the facts remains that the opportunity for submitting explanation was given, and the same was not availed by the society 8. It further appears that sub-section (3) of section 107 of the Act also provides for an opportunity of hearing to the society before passing the final order on the aspect of vacating or confirming of the interim order. The aforesaid sub-section (3) of section 107 of the Act is irrespective of the fact that there is explanation or not by the society. It is required for the Registrar to arrive at the satisfaction that the interim order of winding up be vacated or be confirmed, while arriving at such satisfaction, the opportunity of hearing is required to be given to the society unless the society has agreed for liquidation. It is an admitted position that no opportunity of hearing has been given to the society as per sub-section (3) of section 107 of the Act. Therefore, the impugned order passed by the District Registrar is without following mandatory procedure as required under Section 107(3) of the Act. 9. The learned AGP appearing for the State Authority contended that if there is no explanation by the society or the society has not availed opportunity of submitting explanation, the District Registrar may not be required to give opportunity of hearing and SCA/3919/2008 6/8 JUDGMENT therefore, order cannot be said as illegal in the eye of law. 10. In my view when sub-section (3) of section 107 of the Act, independently provides for hearing and is not dependent upon the explanation by the society as conceived sub- section (2) of section 107 of the Act. It cannot be said that if the society has not submitted any explanation, no opportunity of hearing is required to be given before passing the final order for vacating or confirming interim order. If such contention is accepted it would run counter to the scheme of sub-sections (2) and (3) of section 107 of the Act. It is hardly required to be stated that liquidation is last resort and therefore, even if there is no explanation of the society submitted, it would be required for the District Registrar to consider the matter on the basis of the material available before him, and after giving opportunity of hearing to the society, the District Registrar has to record the satisfaction for vacating or confirming interim order. Therefore, such contention of learned AGP cannot be accepted. 11. Further it appears that in the impugned order passed by the District Registrar no satisfaction whatsoever is recorded for vacating or confirming order, except mentioning that after interim order no explanation or reply submitted on behalf of the society, and SCA/3919/2008 7/8 JUDGMENT therefore, final order of liquidation. Such can also be said as mechanical exercise of the power by the District Registrar without considering the ground/ circumstances germen to the exercise of the power for finalising order of liquidation. 12. The aforesaid aspect which goes to the root of the matter are not considered by the Additional Registrar in appeal as well as by the State Government in Revisional Jurisdiction. Therefore, same also can be said as without proper application of mind.” 4. Same is the facts situation in the present case. Neither opportunity of hearing is given nor there is any application of mind by the District Registrar as to whether it is a case for passing final order of liquidation or not. 5. Hence, in view of the same reasoning the impugned order passed by the District Registrar and its confirmation thereof by the Add. Registrar (Appeals) and the State Government deserves to be quashed and set aside. 6. Therefore, the impugned orders passed by the District Registrar and its confirmation thereof by the Add. Registrar (Appeals) and the State SCA/3919/2008 8/8 JUDGMENT Government are quashed and set aside with the further direction that the District Registrar after giving opportunity of hearing to the petitioner society shall pass afresh order in accordance with law in light of the observations made by this Court in the present judgement. 7. The petitions are allowed to the aforesaid extent. Rule made absolutely accordingly. No order as to costs. Direct service is permitted. (JAYANT PATEL, J.) Suresh*