SCA/5872/2008 1/7 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5872 of 2008 To SPECIAL CIVIL APPLICATION No. 5880 of 2008 With SPECIAL CIVIL APPLICATION No. 5881 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 ? ========================================================= CHOKSI YASHVANTKUMAR NATVARLAL - Petitioner(s) Versus VIJAPUR NAVYUVAK SAHAKARI SHAKHVALI NAGRIK SAHAKARI MANDALI & 3 - Respondent(s) ========================================================= Appearance : MR DIPAK R DAVE for Petitioner(s) : 1,MR PRADIP K DAVE for Petitioner(s) : 1, NOTICE SERVED BY DS for Respondent(s) : 1 - 4. MR GIRISH K PATEL for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 13/05/2008 ORAL JUDGMENT 1. Rule. Mr. Patel learned Counsel appears for SCA/5872/2008 2/7 JUDGMENT respondent No. 1 and waives service of notice of rule and Ms. Patel learned AGP for respondent Nos. 2,3 and 4 waives service of notice of rule. 2. With the consent of the learned Counsel appearing for both the sides, the matters are finally heard today. 3. The only question which arise for consideration in the present petitions is that as to whether it is required for the liquidator to hold an inquiry under Section 110 (h) of the Act, if the liability is denied by the party against whom the demand notice has been issued. 4. The short facts of the case appears to be that respondent No. 1 society is ordered to be liquidated, and the liquidator is holding charge of the affairs of the society. As per respondent No. 1- society the loans were taken by the petitioners concerned and therefore, liquidator had issued the notice calling upon them to make payment of the outstanding amount as per the record of the society. The petitioners denied the liability and the contention of the petitioners in the reply was that they have not SCA/5872/2008 3/7 JUDGMENT taken any loan. Thereafter, it appears that the liquidator once again issued notice calling upon the petitioners to pay amount, but without holding any inquiry. The petitioners also made complaint before the District Registrar and subsequently, appeal was preferred before the Additional Registrar (Appeals) being Appeal Nos. 114 of 2000 to 123 of 2000. The appeals vide order dated 22.12.2000 were allowed and the Additional Registrar (Appeals) found that the inquiry was required to be held after examining documents on record and after giving opportunity of hearing. The respondent No. 1-society carried the matter before the State Government in Revision Application No. 23 to 32 of 2001 and the State Government allowed the Revision Applications by setting aside the order of the Additional Registrar (Appeals) and it is under these circumstances the present petitions before this Court. 5. Heard Mr. Dave learned Counsel for the petitioners and Ms. Patel learned AGP for the respondent-State Government. SCA/5872/2008 4/7 JUDGMENT 6. It is not in dispute that any inquiry has not been held by the liquidator as conceived under Section 110(h) of the Gujarat Cooperative Societies Act (hereinafter referred as to the 'Act'). Section 110 (h) of the Act, reads as under: 110. The Liquidator appointed under section 108 shall have power, subject to the rules and the general supervision, control and direction of the Registrar: (h) to determine, form time to time, after giving an opportunity to answer the claim, the contribution to be made or remaining to be made by the members or past members or by the estate, nominees, heirs or legal representatives of a deceased members, or by any officer, past officer or the estate or nominees, heirs or legal representatives of a deceased officer to the assets of the society, such contribution being inclusive of debts due from such members of officers; Further clause (m) of Section 110 of the Act, which is relevant for the purpose of this petitions reads as under: 110 (m) to summon and enforce the attendance of SCA/5872/2008 5/7 JUDGMENT witnesses and to compel the production of any books, accounts, documents, securities, cash or other properties belonging to or in the custody of the society by the same means and in the same manner as provided in the case of a Civil Court under Code of Civil Procedure, 1908. 7. The aforesaid makes it abundantly clear that after demand notice, if the claim is denied by any member, who is taken loan, it will be required for the liquidator to hold inquiry and while holding inquiry, he has power of the Civil Court to direct for production of documents and also enforcing the attendance of the witnesses. The full-fledged inquiry may not be required, but the summary inquiry is a must before final decision is recorded by the liquidator on the aspect of outstanding amount to be recovered. 8. It is an admitted position that no inquiry has been held by the liquidator after denial of the liability by the petitioner. Therefore, the decision of the liquidator for enforcing recovery, even otherwise also was illegal and without following monetary procedure. The Additional Registrar (Appeals) had rightly SCA/5872/2008 6/7 JUDGMENT interfered with the said decision and had allowed the appeals. It appears that the State Government sidetracked the issue and instead of examining aspect as to whether the proper procedure followed or not, the matter is decided on the ground that loan is taken by the relatives, and the office bearers have miss-used their powers and therefore, Revision Application allowed. It appears that while examining the matter, instead of concentrating on the aspect, which was subject matter of the petition before the State Government, the State Government has transgressed its revisional jurisdiction and has allowed the Revision Application on the aspect which was not germen to the exercise of the power. 9. In view of the above, the order passed by the State Government cannot be sustained in the eye of law, and the order passed by the Additional Registrar (Appeals) appears to be in accordance with the statutory provisions as referred to hereinabove. Therefore, the answer to the question which has been referred to hereinabove, SCA/5872/2008 7/7 JUDGMENT would be that the liquidator shall be required to hold the inquiry before enforcing recovery. If the liability is denied by the person, who is served with the demand notice, and it is only after the inquiry is held and completed, the recovery can be effected by liquidator. 10.In view of the aforesaid, the impugned order passed by the State Government is quashed and set aside and the order passed by the Additional Registrar (Appeals) is restored. Consequently, the liquidator shall be required to hold inquiry after giving opportunity of hearing and to pass appropriate orders in accordance with law. 11.The petitions are allowed to the aforesaid extent. Rule made absolute accordingly. No order as to costs. (JAYANT PATEL, J.) Suresh*