SCA/4494/2003 1/161 JUDGMENT Arguments concluded & reserved for Judgment : 20.1.06 Judgment pronounced on: 2.2.2006 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 4494 of 2003 with SPECIAL CIVIL APPLICATION NOS. 4502, 4558, 4602, 4603, 4604, 4605, 4606 OF 2003 For Approval and Signature: HONOURABLE MR.JUSTICE H.K.RATHOD ================================================= 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 ? ================================================= PARMAR DIPUBHAI B & 10 - Petitioner(s) Versus REGISTRAQR OF CO-OPERATIVE SOCIETIES&3- Respondent(s) ================================================= Appearance : Mr. Tushar Mehta with Mr. Devang Vyas and Mr. Paresh Upadhyay for Petitioners in this group of SCA/4494/2003 2/161 JUDGMENT petitions. Mr. AD Oza, GP with Mr. Mukesh Patel AGP for Respondent(s) : 1 and 4. MR GM JOSHI for Respondent(s) : 2. MR AJ YAGNIK for Respondent(s) : 3. ================================================= ==== CORAM : HONOURABLE MR.JUSTICE H.K.RATHOD Date : 2/02/2006 C.A.V. JUDGMENT 1. Heard learned advocate Mr. Tushar Mehta, Mr. Paresh Upadhyay and Devang Vyas on behalf of petitioners. Heard learned advocate Mr. Gautam Joshi for GUJCOMASOL, Shri A.J. Yagnik for respondent No.3 GUJCOMASOL Staff Association and learned GP Shri A.D. Oza with learned AGP Shri Mukesh Patel on behalf of Registrar of Cooperative Societies and Shri D.P. Joshi, Joint Registrar, Respondents No.1 and 4. 2. In this group of petitions, petitioners have challenged order passed by respondent no.1 dated 28th February, 2003/3rd March, 2003 and SCA/4494/2003 3/161 JUDGMENT retrenchment notices issued by respondent No.2 dated 22nd March, 2003. According to petitioners, order passed by Registrar, Cooperative Societies is having effect of terminating services of 161 employees including petitioners. Same challenge is made by petitioners in this group of petitions pursuant to notice of retrenchment received by them from respondent no.2 on the basis of the order of Registrar, Cooperative Societies dated 28th February, 2003/3rd March, 2003. 3. According to the petitioners,as a consequence of the order of Registrar, Cooperative Societies, respondent No.2 has already issued retrenchment notice dated 22nd March, 2003 having effect of termination of their services. 4. According to petitioners, respondent No.2 is a cooperative society duly registered under the provisions of the Gujarat Cooperative Housing Societies Act, 1961. Respondent No.2 society is SCA/4494/2003 4/161 JUDGMENT an autonomous body having right of self governance and is supposed to function in accordance with the provisions of the Act with a view to achieve objects mentioned in its bye laws. Final authority in cooperative societies including respondent No.2 vests in the general body of the Society as per section 73 of the Act who elects managing Committee. Management of every society vests in the committee constituted in accordance with the Act, the Rules and the bye laws under section 74 of the said Act. SO far as the question of recruitment of staff by cooperative society is concerned under Statute, Gujarat Cooperative Societies Act, 1961, section 76 thereof provides to the effect that the qualification and other conditions of service of officers and employees of society may be such as may from time to time be prescribed. State Government has not framed any rules prescribing mode of recruitment, qualification or other conditions of service, therefore, it is for SCA/4494/2003 5/161 JUDGMENT managing committee of each cooperative society to make recruitment of staff considering exigencies of work. Accordingly, managing Committee of respondent no.2 society made recruitment of petitioners after following procedure of holding interview etc. Petitioners have been working approximately since November, 2000 Respondent NO.3 is association which filed Special Civil Application No. 6042 of 2002 in collusion with respondent NO.2 with the sole object of removing present petitioners. Said petition came to be disposed of by this Hon'ble Court (Coram : Hon'ble Mr. Justice Akshay Mehta) on 16th July, 2002 wherein this Court directed Registrar, Cooperative Societies to decide representation which may be made by respondent No.3 Association after hearing affected employees namely petitioners. This Court also kept open the question regarding jurisdiction of the Registrar, Cooperative Societies to be agitated upon before him. As per directions issued by this Court by SCA/4494/2003 6/161 JUDGMENT order dated 16.7.2002, such representation was to be decided within three months. Respondent No.4 Joint Registrar who heard the matter issued notice at the fag end of said period of three months on 25.10.2002 and hearing was fixed on 28th October, 29th October, 30th October 2002. According to petitioners, many of petitioners have not received notices as the notices were sought to be served through respondent No.2. Thereafter, respondent No.1 suddenly passed order. It is the contention of petitioners that the order is passed by Respondent No.1 Shri Prakash Shah, Registrar of Cooperative Societies but the matter was heard by Joint Registrar Shri D.P. Joshi. Registrar, Cooperative Societies is ex officio member of Board of Directors/Managing Committee of respondent NO.2 society and in all proceedings of meeting of managing committee including wherein petitioners were appointed. According to petitioners, Registrar, Cooperative Societies was present and has not objected to the SCA/4494/2003 7/161 JUDGMENT resolutions which were passed there. According to petitioners, Registrar, Cooperative Societies, who is a member of managing committee of respondent No.2 society cannot act as a Judge in his own cause and cannot issue instruction to respondent no.2 to terminate services of petitioners. Order passed by Registrar, Cooperative Societies is violative of the principles of natural justice and the notices issued by Joint Registrar on 25th October, 2002 for hearing started from 28th October, 2002 in case of some 17 persons, on 29th October, 2002 in case of some of the petitioners and Joint Registrar wants to complete hearing and to conclude matter within three months, therefore, he has hurriedly concluded hearing and submitted report to Registrar. According to petitioners, this order is passed by Registrar, Cooperative Societies in purported exercise of powers under section 160 of the Gujarat Cooperative Societies Act, 1961 and said order is beyond the scope and SCA/4494/2003 8/161 JUDGMENT purview of the said provisions and the Registrar, Cooperative Societies has no competence or authority or power under section 160 of Act to direct respondent No.2 to terminate service of petitioners. Said order is also passed without considering mandatory provisions of the ID Act, 1947 and, therefore, said order passed by Registrar, Cooperative Societies is illegal and void, ab initio, arbitrary and contrary to the provisions of the Societies Act as well as the Industrial Disputes Act, 1947, violative of the principles of natural justice and, therefore, same is liable to be quashed. 5. On behalf of respondent No.1, affidavit in reply is filed by one M.J. Parmar, Deputy Registrar which is at page 65 of Special Civil Application No. 4494 of 2003 which is considered to be main matter in this group of petitions. This affidavit in reply was filed on 26.8.2003. Thereafter, another affidavit in reply is filed SCA/4494/2003 9/161 JUDGMENT by one A.B. Patel, Deputy Registrar, Consumers, on behalf of respondent No.1 which is at page 70 on 17th January, 2006. Then, affidavit in rejoinder filed on behalf of respondent no.3 through Maheshbhai R. Patel, office bearer of respondent No.3 Association is at page 83 which is dated 13th January, 2006 along with which, bye laws and representations are annexed. Further affidavit in reply is filed by respondent no.3 through Maheshbhai Patel on 17.1.2006 along with correspondence of staff association with respondent NO.2. Respondent No.3 has also produced annual report of respondent No.2 from 2000-2001 to 2003-2004. Respondent NO.1 has filed third affidavit of Mohanlal Jethabhai Paramar, present District Registrar, Cooperative Societies, Rajkot on 18.1.2006. Learned advocate Mr. Tushar Mehta has submitted written submissions on behalf of petitioners. Except that, no affidavit in reply or rejoinder is filed by either parties on record. Respondent no.2 SCA/4494/2003 10/161 JUDGMENT society has not filed any reply against present petition but oral submissions have been made on behalf of respondent no.2 by learned advocate Mr.G.M. Joshi 6. In affidavit in reply filed on behalf of respondent no.1 by Shri M.J. Parmar, Deputy Registrar, Consumer Cooperative Society, Gujarat State, averments, allegations and submissions made by petitioners in their petitions have been denied and not admitted. It is averred that in view of the order passed by this Court in Special Civil Application NO. 6042 of 2002 dated 16th July, 2002, representation of respondent no.3 has been examined by Registrar after giving opportunity of hearing to affected employees. It is also alleged in reply that the registrar is a Board Member but he was not a member of staff sub committee which was appointed for recruitment of petitioners. Appointments made by respondent No.2 are not economically sustainable as respondent SCA/4494/2003 11/161 JUDGMENT no.2 has been incurring aggregated heavy losses in 1999-2000 to 2001-2002. Representations made by affected employees were considered by Joint Registrar. Affected employees were given sufficient opportunity to represent their individual cases. Registrar has taken administrative decision after considering all representations of affected employees and facts of case. Order of Registrar, Cooperative Societies is in financial interest of respondent NO.2 as well as long term public interest of societies associated with respondent no.2 as well as other farmer members. Respondent NO.2 has not considered requirement of specific number of employees for specific post. Respondent No.2 has not given wide publicity by advertisement for vacancies. Order is passed by Registrar, Cooperative Societies as per the directions issued by this Court and not under section 160 of the Act. In second affidavit in reply filed by AB Patel on behalf of respondent NO.1, same things SCA/4494/2003 12/161 JUDGMENT have been reiterated and further, it is alleged that earlier, as per the order of this Court (Coram : S.K. Keshote,J.) in Special Civil Application NO. 3028 of 1999 dated 15th August, 1999, directions were issued by Registrar to retrench 57 employees and also it was directed to take decision with regard to recruitment of staff and procedure by order dated 31st December, 1999. It is alleged by respondent no.1 that the said order was accepted by respondent no.2 and pursuant to said order, 57 employees were retrenched by respondent no.2 but further direction with regard to procedure and framing of recruitment rules have not been complied with by respondent no.2. In second paragraph of said affidavit, it is made clear that in affidavit in reply filed earlier by Shri M.J. Parmar, through mistake, it has been stated that the order in question has been passed as per the directions of this Court and not under section 160 of the Act. It is therefore clarified that looking to the SCA/4494/2003 13/161 JUDGMENT order of this Court and also looking to the facts of case, it is clear that the order has been passed by Registrar considering directions of this Court and also in exercise of power under section 160 of Act. In affidavit in reply filed by Mohanbhai Jethabhai Parmar on behalf of respondent No.1, it is further clarified that due to misconception and inadvertence it is stated by him that order is not passed by Registrar under section 160 of the Act. He further supported the earlier affidavit of AB Patel which is completely based on record and reflects correct position. In short, he supported affidavit of Shri AB Patel with clarification that it was pointed out through misconception and inadvertence that the Registrar has not exercised powers under section 160 of the Act. 7. In affidavit in reply filed on behalf of respondent No.3 by Mahesh Ratilal Patel which is at page 83, it is inter alia alleged that the SCA/4494/2003 14/161 JUDGMENT petition under Article 226 is not maintainable; petitioner is having alternative remedy under the Industrial Disputes Act,1947 and petitioners were appointed by way of back door entry without following due process of law. Petitioners are relatives of members of Directors and Managing Directors, therefore, no independent recruitment is made by respondent no.2 by following legal procedure. It is also alleged that respondent NO.2 is a society and it being a private body, petition challenging contractual right is not maintainable as respondent No.2 is not a State or other authority of State within the meaning of Article 12 of Constitution of India. In its affidavit, respondent no.3 has emphasized that appointments of petitioner are without following any process of law and are back door entry in service due to favoritism and nepotism, therefore, initially such type of appointments were challenged before this Court by filing special civil application no. 3028 of 1999 and in SCA/4494/2003 15/161 JUDGMENT view of the order of this Court (Coram : S.K.Keshote,J.) dated 15.8.1999, representation was decided by Registrar, Cooperative Society and ultimately respondent no.2 retrenched service of 65 employees by canceling their appointments. Directions were issued by respondent NO.1 to respondent no.2 to cancel appointment of such 65 employees on 31st December, 1999 and at that time, Registrar Cooperative Societies had directed respondent no.2 to frame service bye laws and got them approved and not to make further appointments without issuing advertisements and without calling names of eligible candidates from the employment exchange under appropriate legislation. Respondent No.2 has not framed such rules and regulations and direction issued by respondent no.1 were not complied with by respondent NO.2. In second occasion, same type of directions were issued by this Court in Special Civil Application No. 6042 of 2002 by order dated 16th July, 2002. This Court directed the SCA/4494/2003 16/161 JUDGMENT Registrar, Cooperative Societies to decide representation of association after hearing affected parties and liberty was reserved to raise all contentions including that of jurisdiction of respondent NO.1 Registrar to decide such issue. Accordingly, Registrar, Cooperative Societies decided representation but came to conclusion that appointments of petitioners are illegal and contrary to rules and, therefore, directed respondent NO.2 to terminate services of such 161 employees. According to respondent no.3, such action is within competence and power of respondent no.1 and he is having authority in law to issue such directions under section 160 of the Act. Respondent No.2 is performing public functions, therefore, Article 14 is applicable though respondent NO.2 is not a “State” within the meaning of Article 12 of Constitution. When this Court passed order on special civil application no. 6042 of 2002 on 16th July, 2002, all SCA/4494/2003 17/161 JUDGMENT petitioners were represented by lawyer. At that time, as regards jurisdiction, no contention was raised by petitioners who were represented by their lawyer. According to respondent NO.3, Registrar is having power of superintendence under section 160 of the Act, over the activities of cooperative societies registered under the Act and to issue necessary directions from time to time for the purposes stated in section 160 of the Act. Respondent NO.2 has not taken care while creating additional burden by employing 161 employees and such appointments of 161 employees have been made without following due process of law according to respondent no.3. It is also alleged by respondent No.3 in its reply that it is nothing but fatal discrimination by body involved in public functions, therefore, it is unfair, unreasonable arbitrary and discriminatory. Along with affidavit in reply of respondent No.3, copies of annual report for the year 2000-2001, 2001-2002 and 2003-2004 are SCA/4494/2003 18/161 JUDGMENT produced. According to respondent no.3, respondent no.2 has incurred heavy losses of more than five crores since 2000-2001 and onwards. Such losses are continuing from year to year. 8. Thereafter, advocates for the parties have made their oral submissions in support of their pleadings. Learned advocate Mr. Paresh Upadhyay has submitted that respondent No.1 Registrar of Cooperative Societies has no jurisdiction to examine such issue which is relating to service conditions of petitioners under section 160 of the Act. He also submitted that Registrar directed Joint Registrar, Commerce to hear respective parties as per the directions issued by this Court in SCA No. 6042 of 2002 by order dated 16th July, 2002. By order dated 16th July, 2002, it was directed that in the event of the respondent no.3 making representation to the Registrar, Registrar shall decide same within three months from the date of receipt of such SCA/4494/2003 19/161 JUDGMENT representation and, therefore, according to him, it was the duty of respondent no.1 to completely comply with the direction of this Court and he cannot delegate this function to his subordinate officer and, therefore, by delegating the task of hearing the affected parties, Registrar of Cooperative Societies has committed breach of the directions of this Court and the delegation of such powers to Joint Registrar by Registrar, Cooperative Societies is totally contrary to the directions of this Court and provisions of Act. He also submitted that Joint Registrar, Commerce has no jurisdiction to hear objection of respective parties under section 160 of the Act, therefore, whole proceedings initiated by Joint Registrar on the basis of delegation of power by Registrar, Cooperative Societies is contrary to the directions issued by this Court and is also contrary to the provisions of the Gujarat Cooperative Societies Act, 1961. He also submitted that show cause notices were issued by SCA/4494/2003 20/161 JUDGMENT Joint Registrar, Commerce on 25th October, 2002 calling explanation from respective parties to show cause why order under section 160 of the Act should not be passed. He also submits that along with such show cause notices, copy of representation made by Respondent No.3 association was not supplied to the affected parties and therefore, affected parties against whom order was sought to be made under section 160 of the Act were deprived of their right to make effective representation. It caused great prejudice to petitioners, not getting fair opportunity. Therefore, it is violative of the principles of natural justice. He also submitted that the order was passed by this Court on 16.7.2002 directing the respondent No.1 to decide representation that may be made within three months from the date of receipt of such representation. Pursuant to such direction, respondent No.3 made such representation through its Chairman Arvind A. Patel on 1st August, 2002 SCA/4494/2003 21/161 JUDGMENT which is at page 173. Thereafter, respondent No.1 remained silent upto 25th October, 2005 since no actions were initiated by him as a consequence of representation made by respondent no.3 on 1st August, 2002. Thereafter, pursuant to delegation of power by respondent no.1, respondent no.4 issued show cause notice dated 25th October, 2002 but along with such notice to show cause, copy of representation of respondent no.3 dated 1st August, 2002 was not supplied. According to Mr. Upadhyay, after remaining in slumber upto 25th October, 2002, respondent No.4, at the instance of respondent no.1, completed proceedings in hurried manner which ultimately resulted in gross violation of the principles of natural justice because petitioners were not given reasonable and effective opportunity of hearing to make submissions against such representation. Hearing was completed between 29th October, 2002 to 14th November, 2002 during which Diwali Vacation was SCA/4494/2003 22/161 JUDGMENT intervening, therefore, respondent no.4 hurriedly, without giving reasonable opportunity to petitioners, completed hearing because three months' time prescribed by this Court was coming to an end. When Registrar, Cooperative Societies and Joint Registrar both were having sufficient time after receiving representation dated 1st August, 2002 from respondent NO.3 Association, then, why almost three months, both the authorities remained silent and why no action whatsoever was initiated upon representation of respondent NO.3 upto 25th October, 2002? Therefore, there was intentional delay and lapse on the part of said respondents with pre determined mind and, therefore, order passed by respondent No.1 is mala fide and vindictive in nature. He also submitted that after concluding hearing by Joint Registrar, Commerce submitted report to Registrar, Cooperative Societies and based upon such report submitted by Joint Registrar, Commerce, Registrar, Cooperative SCA/4494/2003 23/161 JUDGMENT Societies took decision. Thus, authority hearing the matter and the authority deciding matter both are different and, therefore, authority taking decision should have first supplied copy of the report of Joint Registrar to the persons who were likely to be affected adversely and should have invited their representation against the report submitted by the Joint Registrar before taking decision on the basis of such report. However, copy of such report of Joint Registrar was not supplied to the petitioners by the Registrar, Cooperative Societies and without supplying such copy and without inviting their representation/objections on such report, Registrar Cooperative Societies took decision in the matter which is also violative of the principles of natural justice. Thus, according to the submissions made by learned advocate Mr. Paresh Upadhyay, order of respondent No.1 is bad in law and contrary to the principles of natural justice and it is also without jurisdiction. He SCA/4494/2003 24/161 JUDGMENT also submitted that the reasonable opportunity was denied under the pretext of court direction wherein specific time limit was fixed. He also raised contention that as per section 96of the Act, Registrar is having jurisdiction to decide dispute as a quasi judicial authority even though apex court has taken view in number of cases that the question or dispute relating to service conditions of employees is not within the jurisdiction of Registrar and Registrar has no jurisdiction to decide any dispute between societies and its employees relating to service conditions and for that, machinery under the Industrial Law is required to be resorted to. Therefore, he submits that according to the scheme under the Gujarat Cooperative Societies Act, 1961, when the Registrar has no jurisdiction to decide dispute between society and its employees, then, on what basis registrar has got power under section 160 of the Act to decide dispute about validity of appointment of SCA/4494/2003 25/161 JUDGMENT employees made by society ? He submits that section 160 of the Act for limited purpose having supervision for maintenance, proper management and affairs of the society but it is not relating to dispute which has to be examined by the Registrar under the said provisions. Therefore, he emphasized that the Registrar has no jurisdiction to act under section 160 and, therefore, order passed by Registrar, Cooperative Societies is without jurisdiction and contrary to the provisions of the Act. He also submitted that since the retrenchment notices is the consequence of the order of Registrar, Cooperative Societies, therefore, present petitions challenging the order of Registrar, Cooperative Societies in substance and the retrenchment notices as a consequence of that order, are maintainable and, therefore, it is not a petition against private party/body relating to contractual relations between the society and its employees but the matter is relating to the order of respondent SCA/4494/2003 26/161 JUDGMENT No.1, therefore, petitions are maintainable since petitioners are not having any other alternative equally efficacious remedy against the order of Registrar, Cooperative Societies, 1961. 9. Learned advocate Mr.Gautam Joshi appearing for Respondent No. 2 has almost supported submissions made by the learned advocate Mr. Paresh Upadhyay and has emphasized that the society is not having any service bye laws of its own. He also submits that the State Government has not framed any rules under the Act relating to service conditions of the employees of society. He also submits that in absence of recruitment rules which have not framed by society as well as the State Government, respondent NO.2 has followed proper procedure for recruiting concerned petitioners. He submits that there is no mal practice adopted by respondent no.2. He also submits that according to qualification fixed by sub committee, persons were selected and it is SCA/4494/2003 27/161 JUDGMENT the right of the society to select particular employee of their choice and confidence of respondent no.2 and, therefore, there is no any illegality committed by respondent NO.2 in giving appointment to petitioners after following due process of selection by sub committee and appointed by society. He submits that there is no loss caused to society due to appointment of such petitioners. He also submits