IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 10967 of 2001 with SPECIAL CIVIL APPLICATION No 10968 of 2001 with SPECIAL CIVIL APPLICATION No 11753 of 2001 with SPECIAL CIVIL APPLICATION No 2033 of 2002 with SPECIAL CIVIL APPLICATION No 2056 of 2002 with SPECIAL CIVIL APPLICATION No 2257 of 2002 For Approval and Signature: Hon'ble MR.JUSTICE JAYANT PATEL ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements? 2. To be referred to the Reporter or not? : YES 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Judges,Tribunal/Tribunals? -------------------------------------------------------------- VALSAD DISTRICT CENTRAL COOPERATIVE BANK LTD. Versus STATE OF GUJARAT V H SHAH IAS OR HIS SUCCESSOR -------------------------------------------------------------- Appearance: 1. Special Civil Application No. 10967 of 2001 MR BM MANGUKIYA for Petitioner No. 1 MR KAMAL TRIVEDI, Addl. Adv. Gen. with GP for Respondent No. 1,3 (in All matters) NOTICE SERVED BY DS for Respondent No. 4 MR PS CHAMPANERI for Respondent No. 5 (As referred to in the order) -------------------------------------------------------------- CORAM : MR.JUSTICE JAYANT PATEL Date of decision: 23/12/2002 ORAL CAV JUDGEMENT 1. Heard Mr.Vakharia, learned Sr. Counsel, and Mr.N.D.Nanavati, learned Sr. Counsel appearing with Mr.Mangukia, learned Counsel in SCA No.10967/2001, SCA No.10968/2001 and SCA No.11753/2001, Mr.P.M.Raval, learned Sr. Counsel appearing with Mr.Champaneri in SCA No.2056/2002 and SCA No.2257/2002 and Mr.Jhaveri, learned Counsel appearing in SCA No.2033/2002. On behalf of the concerned Government authority as well as the other, including the Registrar and the Election Officer, Mr.K.B.Trivedi, learned Addl. Advocate General appearing with the learned GP is heard. 2. It has been submitted by the aforesaid advocates that wherever their clients are either petitioners or respondents in the aforesaid group of petitions, the very submission may be treated as made for their respective clients and they have made their submissions for final disposal of the all petitions and, therefore, they may be disposed of accordingly by the common judgement finally. 3. In all these petitions, the facts are interconnected and common and interconnected questions are involved regarding amendment in the bye-laws of Valsad District Central Cooperative Bank Limited (hereinafter referred to as "Bank/Society") and its effect upon the election of the members of the Managing Committee of the Bank and hence they are being dealt with together. 4. The short facts of the case are that some petitions are preferred by the Bank, whereas some petitions are preferred by the member Cooperative Societies and, therefore, they shall be referred accordingly hereinafter, and further details shall be stated subsequently. There is no dispute on the point that the term of the members of the Managing Committee was to expire and has expired on November 20, 2001, subject to the deeming fixation of their entitlement to continue until the first meeting of the members of the Managing Committee is held after election. As per the petitioners who are member Cooperative Societies, since the election was to become due (the relevant year would be beginning from 1-4-2001 to 31-3-2002 which will be referred as 2001-2002), and therefore, it is the contention of the member Cooperative Societies, who are petitioners herein, that the members whose names are required to be included for the preparation of the voters' list would be of those members, who were members of the Bank either individuals or the members of the Managing Committee of the member Cooperative Societies as on 31-1-2001 i.e. the last date of the year proceeding the year in which the election becomes due. It is the case of the Bank that on 19th June, 2000, the Annual General Body of the Bank had passed the resolution for approval of the amendment in the bye-laws No.3(2), 5, 29(1) and 37 of the Bank. The English translation of bye-laws No.5 and 29(1) as it existed prior to the amendment would be as under: Bye-law 5: Any Cooperative Society registered under Gujarat Cooperative Societies Act, within the working area of the Bank, can become the member with this Bank. Bye-law 29(1): Nonexistent. The proposed amendment (English translation) in the Bye-laws No.5 and 29(1) would be as under: Bye-law 5: Any Cooperative Society registered under Gujarat Coop. Societies Act, within working area of the Bank, desirous to get loan, can become the member of this Bank. Bye-law 29(1): For the purpose of above A, B, C, C, D, and DD, the representative of such Cooperative Societies shall have right of voting at the election and of contesting at the election as Director only if those member Cooperative Societies, in the period of last preceding three years, have obtained any loan or any loan is outstanding. 5. As per the Bank, reason for insertion of bye-law No.29(1) is with a view to see that the members may get more opportunity for getting loan and they may remain active thereby they can make financial improvement. The society in its Annual General Meeting dated 19-6-2000 passed the resolution for amendment in the bye-laws. However, as per Section 13 of the Gujarat Cooperative Societies Act (hereinafter referred to as the "Act") since the approval is to be obtained from the Registrar, the application was made by the Bank to the Registrar, Cooperative Societies, Gandhinagar and ultimately on 9-3-2001, the order for sanctioning the amendment in the bye-laws was granted subject to the modification as mentioned therein. There is no dispute on the point that the Registrar in the order dated 9-3-2001 did not approve or sanction the proposed amendment in the bye-law No.5. However, so far as the bye-law No.29(1) is concerned, the Registrar added one more condition of having deposit of Rs.50,000/= in the last proceeding year by such member Cooperative Society. Saying in other words, the bye-law No.29(1) for which the sanction is granted by the Registrar as per the order dated 9-3-2001, would be as under (English Translation): " For the purpose of above A, B, C, C, D, and DD, the representative of such Cooperative Societies shall have right of voting at the election and of contesting at the election as Director only if those member Cooperative Societies, in the period of last preceding three years, have obtained any loan or any loan is outstanding or there is deposit of Rs.50,000/= in the Bank in the period of last proceeding one year." 6. It is not necessary to refer to the other modification order in the other proposed bye-law since they are not relevant for the purpose of this petition. 7. Since the Registrar granted sanction for amendment in the bye-laws with modification, one of the conditions mentioned in the order dated 9-3-2001 was that such amendment in the bye-laws shall come into force only after the approval is granted by the General Board in the next meeting. Thereafter on 22-6-2001, the General Board has granted approval and, therefore, accordingly the aforesaid amendment in the bye-laws No.29(1) has come into force on 22-6-2001. 8. It is the case of the petitioner member Co-op. Societies that since the election had become due on November 20, 2001, the provisional list of the voters was required to be prepared by the bank as on 31-3-2001 and the same was accordingly not prepared and was forwarded to the District Registrar as well as to the Collector under Gujarat Specified Cooperative Societies Election to Committees Rules, 1982 (hereinafter referred to as "Rules"). However, it is also the case of the Bank that since the amendment had already come into effect, the provisional voters' list was prepared on the basis of the aforesaid amendment in the bye-law No.29(1) and accordingly those member cooperative societies, which had not obtained any loan in the last proceeding three years, or had no loan outstanding during the said period, or had no deposit of Rs.50,000/=, were not included in the preliminary list of voters. It is also the case of the Bank that the provisional voters' list was published as per the Rules and last date for submitting objections was 1-11-2001 and the date for deciding objections was 5-11-2001 and the publication of the final voters' list was to be made on 9-11-2001. It is also the case of the bank that the member cooperative societies, which are objecting such voters' list in the present petitions had filed their objections, more particularly the client of Mr.Champaneri and Mr.Jhaveri and those objections were also decided by the Collector. 9. In the meantime, on 8-11-2001, the State Government exercised suo motu power against the order dated 9-3-2001 for sanctioning of the bye-laws by the State Registrar and the said amendment in the bye-laws was stayed. The perusal of the order dated 8-11-2001 passed by the State Government shows that it has been recorded in the said order that there is a representation made that such amendment in the bye-laws are contrary to the provisions of the Act and Election Rules and the voting rights of the members are snatched away and, therefore, the power is exercised. 10. On 9-11-2001, on account of the order dated 8-11-2001 passed by the State Government by exercise of the suo motu power in the appeal against the sanction of the bye-laws, the election officer and the deputy collector issued a public advertisement for postponement of the election until the final decision is given regarding amendment in the bye-laws. The said advertisement is published in the newspaper on 10-11-2001, but it appears that the publication of the final voters, which was to be made on 9-11-2001 has not been made and the process of finalization of the voters' list were postponed at that stage at that time by the election officer, who was holding the election as per the provisions of the Act. It is the case of the bank that the election process had already commenced since the programme dated 29-10-2001 was published in the newspaper for fixing various steps of election. However, it is the case of the member cooperative societies that the election officer had forwarded the programme for its publication on 9-11-2001, but since he himself had stayed the process of the election, there was no necessity to publish the programme and the bank unauthorisedly had sent it to the newspaper for its publication. On account of the said action of the election officers and also for exercise of suo motu power by the State Government in revisional jurisdiction, the bank preferred SCA No.10967/2001 for appropriate orders to quash and set aside the action of the election authority to arrest the process of election and to declare that there is no power to postpone or cancel the election since the election process has already commenced and for appropriate writ against the exercise of suo motu power by the State Government etc. 11. It appears that on 12-11-2001, the Bank also preferred SCA No.10968/2001, apprehending that since the election is postponed, the power under Section 74D of the Act for appointment of the custodian may be exercised without giving opportunity and, therefore, for appropriate writ against the Government regarding the appointment of the custodian, the aforesaid petition was preferred. This Court, pending the petition, had granted stay against the appointment of the custodian. 12. It appears that on 29-11-2001, in the proceedings of suo motu power in appeal No.2/2001, the State Government passed the final order, whereby the matter was remanded to the Registrar of the Cooperative Societies. The State Government mainly considered various relevant aspects, more particularly as to its adverse effect upon the voting powers of the members are not examined and, therefore, the matter is remanded. AT that stage, the Bank preferred SCA No.11753/2001 for appropriate writ to challenge the order dated 29-11-2001 passed by the State Government. 13. Thereafter, on 16-1-2002 in SCAs No.10967/2001 and 10968/2001, the Court passed the following order, the relevant portion is reproduced below: "Considering the submissions made before me in respect of the order under challenge dated 29-11-2001 passed in Revision Application No.135/2001 by the Deputy Secretary(Appeals), Agriculture and Co-operation Department, Gandhinagar in respect of amendment to the bye-laws of the society of the petitioners, this Court is of the view that matter requires to be dealt with finally and the request is made by the counsel appearing in the matters that the matters be kept for hearing finally on 31-1-2002. Accordingly interim relief granted earlier in Special Civil Application No.10968/2001 is continued. Learned Counsel appearing in the matters have also agreed that without prejudice to their contentions, they will cooperate with the Registrar in respect of the order of remand made by the authority and Mr.Kamal Trivedi, learned Addl. Advocate General states that it will be possible for the Registrar to take decision in the matter on or before 30.1.2002. The order passed by the Registrar be placed before the court on 31-1-2002. Liberty is granted to the parties to file affidavit in respect of the order passed by the Registrar in respect of the amendment of the bye-laws. Counsel appearing in the matters agree that they will file reply to the petitions on or before 28-1-2002. Accordingly S.O. to 31-1-2002. Dt: 16-1-2002 (D.K.Trivedi, J.)" 14. Thereafter on 30-1-2002, the Registrar passed the order, whereby he considered that by proposed amendment in the bye-laws it is not likely to have any adverse effect in the exercise of the legal voting right of the members, and the proposed amendment in the bye-laws is with a view to activate the members and to allow the members to participate at the election, who are genuinely interested in the administration of the bank and, therefore, he maintained the earlier order dated 9-3-2001 passed by him for grant of sanction of amendment in the bye-laws. 15. It appears that against the order of the Registrar dated 30-1-2002, four member Cooperative societies namely; Amalsad Vibhag Doodh Udpadak Sahakari Mandali Ltd. and others" preferred Revision No.16 to 19/2002 before the State Government and the State Government on 1-2-2002 entertained the revision and granted stay against the order dated 30-1-2002 passed by the Registrar. Thereafter, in response thereto, the bank appeared before the State Government and objected to the stay order as well as to the revisions and made written representation before the State Government and the relevant para reads as under: "10. So as to avoid the said situation, the Hon'ble High Court of Gujarat did not permit the finality of the order passed by the Registrar and directed that any order passed by the Registrar be placed before the Hon'ble High Court of Gujarat and the parties to the proceedings shall be at liberty to exercise the order passed by the Hon'ble High Court of Gujarat. Therefore, the order passed by the Registrar becomes final only after the Hon'ble High Court of Gujarat takes decision on the same." 16. It was also submitted that the matters are at large pending before the High Court and, therefore, the appeal may be disposed of accordingly and the stay order may be vacated. It appears that thereafter the State Government on 4-2-2002 passed the order of vacating the stay and subsequently on 7-2-2002 disposed of the revision mainly on the ground that since the matters are pending before the High Court and the order dated 30-1-2002, which is under challenge is subject to the final decision by the High Court, it is not proper to exercise the revisional power and, therefore, the revision applications were not accepted. The member cooperative societies namely; Vejalpur Vibhag Seva Sahakari Mandali Ltd., preferred SCA No.2033/2002 against the aforesaid order dated 30-1-2002 of the Registrar, order dated 4-2-2002 of the State Government of vacating the stay in the revision and the order dated 7-2-2002 for disposal of the revision. 17. It appears that on 6-2-2002, the election officer republished the election programme since the said order was vacated by the State Government as per the order dated 4-2-2002 and the order, after remand, was passed by the Registrar on 30-1-2002 and he fixed up the date for declaration of the publication of the final voters' list as of 6-2-2002 and he fixed up various other stages of the election. 18. One Sahkari Khand Udhyog Mandal, member Cooperative Society, preferred SCA No.2056/2002 for appropriate writ against the publication of the election programme dated 6-2-2002 by filing petition on 11-2-2002. Thereafter, Vejalpur Vibhag Seva Sahakari Mandali Ltd., who is a member cooperative society has also preferred SCA No.2257/2002 for appropriate writ to quash and set aside the order dated 30-1-2002 passed by the Registrar of Cooperative Societies. 19. However, in the meantime, in above referred SCA No.2033/2002 and SCA No.2056/2002, on 14-2-2002, this Court, while issuing notice, passed the order of refusing interim relief against the implementation of the orders of the Registrar and of the State Government as well as against staying of the election pursuant to the notification dated 6-2-2002. The order dated 14-2-2002 came to be challenged before the Division Bench in LPA No.73/2002 and LPA No.77/2002. The Division Bench in the aforesaid LPA, as per the order dated 20-2-2002, after hearing all the parties, interpreted the order dated 16-1-2002 passed in SCA No.10967/2001 and SCA No.10968/2001 and observed as under: " Thus it is very clear that the Court was anxious to consider the legality of the amendment to the bye-laws of the Society. So far as the Valsad District Cooperative Bank Limited is concerned, it appears that the arrangement was sought to be continued without prejudice to the rights and contentions of the parties and, therefore, there was no haste in taking decision as parties to the proceedings before the learned Single Judge agreed to the arrangement. It is also made clear by the learned Additional Advocate General, Mr.Kamal Trivedi that the Registrar shall take decision in the matter before 30th January, 2002 and the order that may be passed by the Registrar shall be placed before the Court on 31-1-2002 as directed by the Court. With a view to see that the parties are given full opportunity, parties were given liberty to file affidavit in respect of the order that may be passed by the Registrar in respect to the amendment to the bye-laws. However, no liberty was given to make the order operative." The Division Bench further observed as under: " It prima facie appears that it was not open for the Election Officer to act in this manner and it was for the parties to proceedings to make an application to the learned Single Judge seeking permission to make the order effective or operative after hearing." It was further observed by the Division Bench as under: " We fail to understand how the election officer has also acted upon the order which was supplied for the purpose of filing reply only. Before us, no subsequent order is placed indicating that the learned Single Judge made any order about the implementation or operation of the order made by the Registrar on remand and, therefore, it was highly improper on the part of the concerned authorities to act as per the order made by the Registrar. When attention of the learned Addl. Advocate General was drawn to the order made by the learned Single Judge and the other aspects, which we have referred to hereinabove, he fairly stated that it was highly improper on the part of the concerned authority to proceed further in the matter. He fairly stated that without the order made by the learned Single Judge, it was not open for the concerned authority to act as if the order is in operation. The learned Addl. Advocate General fairly stated that the order made by the Registrar on remand (dated 30th January, 2002) was not to be implemented by the officer concerned. In view of the above, we direct the State Government to abide by the statement made before us by the learned Addl. Advocate General. We also reserve the liberty to the parties to move learned Single Judge for obtaining appropriate orders in the matter." From what is stated hereinabove, as the matters require consideration, we admit both the appeals and be listed for final hearing on 1-3-2002. We are prima facie of the view that the notice is required to be issued to the Registrar as well as the Election Officer to show cause as to why action under the provisions contained in the Contempt of Courts Act should not be initiated and for that purpose, we direct the Registry to issue notice returnable on 1st March, 2002." 20. On account of the aforesaid interpretation of the order dated 30-1-2002 passed by the Registrar (which is not accepted by the Division Bench in the aforesaid LPA) the process of the election was continued further by the Election Officer (of course, wrongly from the publication of the final voters' list upto the stage of withdrawal of the nomination papers) and thereafter the election was not proceeded further on account of direction by Division Bench to act as per statement. The statement was also made at the bar that the contempt proceedings, which came to be initiated on account of the above referred order of the Division Bench in the LPA, is still pending. 21. It appears that after the order, dated 29.11.01, the order dated 6.12.01 was passed by the State Govt through the Deputy Secretary(appeals) intimating the Dist.Registrar that as per the order of the State Govt the matter has been remanded to the Registrar, Gujarat State and therefore until the decision is rendered in the said remanded case the process of election can not be undertaken and deserves to be postponed. It appears that the copy of the said order was also forwarded to the Registrar, Gujarat State, Collector, Valsad, Deputy Secretary and the Election Officer. Thereafter, in view of the said order, dated 6.2.01 the Deputy Collector passed the order of postponing the election process until the decision is rendered by the Registrar, Gujarat State in the aforesaid remanded case. At that stage, the Bank who is the petitioner in Spl.C.A.No.10967/01 preferred draft amendment praying for various reliefs and to quash the order dated 6.12.01 of the Deputy Secretary of the State Govt and the order, dated 7.12.01 of postponing the election by the Election Officer. The petitioner therein also prayed for appropriate writ directing the respondents to proceed with the election from the stage at which it has been interfered with by the State Govt or postponing by the Collector. 22. The Ld.Sr.counsel Mr.Vakharia and Mr.Nanavaty appearing with Mr.Mangukia mainly raised the contentions that the Election Officer has no power to postpone the election once the process of election is on and Mr.Vakharia alternatively submitted that even if the power to postpone the election is read with the Election Officer, then also for postponing or cancelling the election, the power must be exercised in the same manner as is required for declaration of election and such power, in any case, must be exercised only for bonafide purpose, and in his submission, the power in the present case has been exercised with malafide purpose under political pressure and therefore the action on the part of the Election Officer postponing the election, in any case, is bad in law. Mr.Vakharia also submitted that it is always within the scope of the power of the General Board of a Cooperative Society, which in the present case, District level bank, to amend the bylaws and he submitted that the byelaws could be amended with retrospective effect also. However, in his submission, in the present case, the byelaws which are amended can not be said to be with retrospective effect because he submitted that the bylaws have been amended with effect from 22.6.01 and the term was to expire in November, 2001 and therefore when the provisional voters' list came to be prepared