)) IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No 3282 of 1998 WITH CIVIL APPLICATION No 7605 of 1998 For Approval and Signature: Hon'ble MR.JUSTICE M.S.PARIKH ============================================================ 1. Whether Reporters of Local Papers may be allowed to see the judgements? 2. To be referred to the Reporter or not? 3. Whether Their Lordships wish to see the fair copy of the judgement? 4. Whether this case involves a substantial question 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 Civil Judge? 1 Yes, 2 Yes except [ ] portion, 3-5 No UNJHA AGRICULTURAL PRODUCE MARKET COMMITTEE Versus STATE OF GUJARAT Appearance: MR KS JHAVERI for Petitioners MR JM THAKORE, Advocate General with MR PG DESAI, G.P. for Respondent No. 1 MR PK JANI for Respondent No. 2 MR MD PANDYA for Respondent No. 4 CORAM : MR.JUSTICE M.S.PARIKH Date of decision: 5/11/1998 JUDGEMENT 1. In the main matter the petitioners have come out with following prayer :- ".... to issue a writ of mandamus or writ of prohibition or any other appropriate writ or direction or order quashing and setting aside the Notification dated 20th April, 1998, at Annexure-D to the petition and the order dated 21st April, 1998, at Annexure-E to the petition and be pleased to direct the respondents to restore the position prevailing on 19th April, 1998 prior to passing of the order dated 20th April, 1998." [Annexure-D to the petition is the notification of the State Government issued u/S. 52 and 5 of the Gujarat Agricultural Produce Markets Act, 1963 (for short 'the Markets Act') replacing the members of the Unjha Agricultural Produce Market Committee with the named members nominated by the Government u/S. 54 of the Markets Act. The order dated 21/4/1998 Annexure-E is passed by the Director under the Markets Act appointing Deputy Director [Agricultural Marketing] and District Registrar, Cooperative Societies, Mehsana as the authority to administer the affairs vice the Chairman/Vice Chairman to be appointed u/S. 31 of the Markets Act. 2. It appears that by notification dated 31/1/1997 (Annexure-A) referring to the earlier notification dated 30/10/1995 and 28/12/1995 issued u/S. 52 read with sec. 5 of the Markets Act, declaring its intention to divide the market area of the Agricultural Produce Market Committee [APMC] Unjha, comprising of Unjha and Unava of Meshana District into two separate market areas, namely Unjha and Unava and particularising the villages/towns for the said two areas, declared that the market area of the APMC under Unjha and Unava of Mehsana District shall be divided into two market areas as aforesaid for regulating the purchase and sale of the commodities described in the notification from the date of the publication of the notification in the Government Gazette. By second such notification dated 31/1/1997 also placed at Annexure-A the Government of Gujarat exercised power u/S. 54 of the Markets Act for nominating the members of the two committees, namely Agricultural Produce Market Committee, Unjha, District Mehsana and Agricultural Produce Market Committee, Unava, District Mehsana. 3. The petitioners have also placed on record notification dated 18/9/1997 Annexure-B indicating allocation of funds and properties of the erstwhile Unjha Agricultural Produce Market Committee to the bifurcated market committees, namely Unjha Agricultural Produce Market Committee and Unava Agricultural Produce Market Committee in the ratio of 80:20. The petitioners have subjected to challenge the aforesaid orders on the ground that powers u/S. 54 of the Markets Act came to be exhausted and could not be exercised once again when the nominated members were already working, that the State Government failed to appreciate while nominating new members of the Unjha Agricultural Produce Market Committee that the provision of sec. 54 (2) of the Markets Act prescribes for nominating as far as possible the members of the dissolved market committee, that the appointment of the earlier body was for a period of 2 years and the same could not be recalled and hence, the impugned order would be illegal and would amount to colourable exercise of power by the State Government and that the orders impugned in this petition are otherwise arbitrary and would amount to arbitrary exercise of powers. 4. When this matter was placed for admission this Court (Coram : M.S. Shah, J.) admitted the same but did not grant interim relief and expedited the final hearing of this petition. Following contentions of the parties were recorded :- "Firstly, the petitioners having been appointed under the order dated 31/1/1997 under the provisions of sub-section (2) of section 54 of the Act upon bifurcation of the old APMC, Unjha, cannot be removed before completion of the period of two years stipulated in the impugned order dated 31/1/1997. Secondly, the members of the Committee to be appointed under sub-section (2) of section 54 must be, as far as practicable, persons who were members of dissolved market committee, but the impugned order dated 20/4/1998 does not include any member of the dissolved market committee and, therefore, also the impugned order is illegal and is required to be stayed. Thirdly, it is submitted that the reliance placed by the respondents on the order dated 6/3/1998 passed by the Division Bench of this Court in Special Civil Application No. 8953 of 1997 is misconceived because in para. 6 of that order, the Division Bench had observed that it was a fit case where action was to be taken under the Act with special reference to the provisions contained in Section 46 of the Act. If the Government had taken any action under Section 46 of the Act, the petitioner committee and its members as appointed under the order dated 31/1/1997 would have got an opportunity of being heard, but by not taking action under the said provisions, the Government has deprived the petitioners of their right to be heard before the drastic and adverse action taken against the petitioners and the other members of the old committee. 4. On the other hand, Mr. P.G. Desai, learned Government Pleader has relied on the decision of this Court in Special Civil Application No. 1708 of 1998 and has contended that in view of the fact that the appointment of members by order dated 31/1/1997 was made as nominees of the Government, pleasure doctrine would apply and the Government has a right to replace the said members by other members. Secondly, it is submitted that there is nothing in the provisions of sub-section (2) of Section 54 which would suggest that the power under the provisions of sub-section (2) of Section 54 can be exercised only once and that the committee appointed once cannot be reconstituted. Thirdly, it is submitted that in view of the facts pointed out in the decision of the Division Bench in Special Civil Application No. 8953 of 1997, the Government was justified in passing the impugned order." At that stage the Court refrained from entering into the larger question of applicability of pleasure doctrine. 5. The petitioners moved aforesaid civil application with following interim reliefs :- "Pending final disposal of this petition, the Hon'ble Court be pleased to restrain the new management from taking any policy decision and divert the funds of the market committee contrary to provisions of the Act and be pleased to further restrain them from disturbing the position of the licence holder prevailing during the year 1997-98 and to issue appropriate directions to the members of the opponent no. 4 Market Committee to reimburse the Unjha Agricultural Produce Market Committee the funds wrongly diverted as stated in this application and lastly to take up the main matter for final hearing." The allegations in the aforesaid civil application are that the new management is transferring huge fund of the market committee to the State Government for certain oblique purpose, that the new management has diverted more than Rs. 1,61,00,000/- to the State Government under the scheme of Gokul Village and such diversion of funds would be contrary to the provisions of law in as much as the market funds could be diverted for the purposes referred to in sections 32 and 33 of the Markets Act and that too in the market area comprising the market committee. Reference has been made to order dated 8/5/1998 passed by this Court in S.C.A. No. 3367 of 1998, when similar order came to be passed by the Government in case of Unava Market Committee and this Court (D.C. Srivastav, J.) stayed the order dated 21-22/4/1998 of the State Government and the old management has been managing the affairs of the market committee. Against the said order the State Government preferred L.P.A. No. 680 of 1998 which has been admitted and interim relief has been refused, whereas the L.P.A. No. 678 of 1998 filed by the affected party came to be withdrawn. It has further been asserted that the nominated member of the Unjha A.P.M.C. has also preferred S.C.A. No. 3994 of 1998 wherein, while admitting the matter, this Court restored the nominated member as the member of the respondent - market committee. It has then been asserted that the respondent no. 4 - new market committee nominated by the State Government on 30/4/1998 has diverted total donation to the tune of Rs. 2,56,00,000/-, as against the total reserved funds of the market committee as on 30/9/1997 in the sum of Rs. 16,65,97,488-96, out of which 20% amount was required to be diverted in the Unava A.P.M.C. leaving the balance reserved fund of Rs. 13,32,77,990-40. As against that, the previous market committee diverted only Rs.81,95,000/- over a period of eight years, whereas the new market committee has donated Rs.1,61,00,000/- to the State Government in Gokul Gram Scheme, Rs.31,00,000/- to the Education Institutions, Rs. 5,00,000/- to Health Centres, Rs. 28,00,000/- to Gokul Gram Scheme and Rs. 31,00,000/- to the Chief Minister's Relief Fund. It has, therefore, been asserted that the present management has diverted the funds disproportionately against the interest of the market committee. The interim relief was refused in the main matter inter-alia on the ground that the old market committee diverted funds of Rs.50,00,000/to the Education Institutions within the market area and yet the said amount was deposited with interest with the market committee by those Trusts after the report of the opponent no.3 (Deputy Director of Agricultural Market and Rural Finance and District Registrar, Cooperative Societies. It has been the case of the applicant that the State Government issued resolution for donation for the Charitable purposes permitting donation not beyond 20% of the market fund, whereas the new market committee exceeded the limit by giving total donation to the extent of Rs. 3,37,95,000/- as against maximum limits of such donations in the sum of Rs. 2,50,00,000/-. 6. As the civil application was placed for hearing, by consent the main matter was taken up for final hearing and disposal. 7. The case of the petitioners as aforesaid has been resisted in the form of affidavit in reply filed in the main matter on 23/4/1998 by the Joint Secretary of the State Government and affidavit in reply dated 14/9/1998 filed by the Secretary of the newly added respondent no.4 (new market committee). There is also an affidavit in the civil application dated 31/8/1998 filed by the Secretary of the market committee. 8. While denying the allegations made by the petitioners it has been asserted that the petition is not maintainable under Article 226 of the Constitution of India, that the petitioners were nominated by the State Government on the Agricultural Produce Market Committee, Unjha, District Mehsana vide order dated 31/1/1997 u/S. 54 of the Markets Act by the previous Government and that Section 54 does not provide for any qualification except that a nominated member may as far as practicable be a member of the dissolved market committee and the maximum period for which such member can hold office is 2 years. In Dattaji Chirandas and ors. v/s. State of Gujarat Special Civil Application No. 1708 of 1998 (Coram : M.S. Shah, J.), it has been held that even though, in the notification it is stated that the members of two market committees would hold office for a period of two years, the Government was empowered to nominate other members. The petitioners were not the elected members, but they were nominated members u/S. 54 of the Markets Act and as such the Government could replace them by other members. In respect of the same market committee a petition was filed by one Naranbhai Lallubhai Patel. That was S.C.A. No. 8953 of 1997 and this Court (Coram : K. Sreedharan, C.J. as he then was and A.R. Dave, J.) passed order directing the State Government to take action as per the provisions of the Act. Under all these circumstances, the State Government decided to replace the earlier nominated members by the present members pursuant to bonafide steps taken by the State Government in the interest of Agricultural Produce Market Committee. It has been asserted that the decision of the State Government is not tainted with political influence, but has been in accordance with law as per the directions of this Court. In S.C.A. No. 3154 of 1998 the contention was that there was likely to be merger of Unjha and Unava Market Committees. Hence, the order passed in S.C.A. No. 3154 of 1998 was referable to the said contention. In the second affidavit in the main petition as referred to hereinabove it has been contended that the petitioners having not joined the nominated members pursuant to the impugned notification of the State Government Annexure-D, the petition suffers from the vice of non-joinder of proper and necessary parties. It has been asserted that the petitioners nos. 2 and 3 and other persons formed as many as six trusts after they became Chairman and Vice Chairman of the A.P.M.C. Unjha. The said trusts in the name of Vivekanand Gram Vikas Trust and others were registered on or around 4/7/1997 and the petitioners nos. 2 and 3 and persons of their close confidence were made trustees thereof. The six trusts were in the names and style of - i. Vivekanand Gram Vikas Trust of Brahmanwada ii. Vivekanand Gram Vikas Trust of Maktupur iii. Vivekanand Gram Vikas Trust of Ranchhodpura iv. Vivekanand Gram Vikas Trust of Kahoda v. Vivekanand Gram Vikas Trust of Karli vi. Vivekanand Gram Vikas Trust of Unjha. In the background of the formation of the trusts the agenda of the market committee was circulated on 20/9/1997 for considering applications regarding seeking of donations by these trusts. On 29/9/1997 the meeting of the market committee was convened and the petitioners nos. 2 and 3 by majority vote with the opposition of one Mr. Naranbhai Lallubhai Patel, present Chairman of the market committee, got the resolutions passed under the terms of which total amount of Rs. 1,09,05,000/- was resolved to be transferred in favour of these trusts and out of that amount, Rs. 49,05,000/- came to be disbursed and transferred with the result that the aforesaid Naranbhai Lallubhai Patel had to file S.C.A. No. 8953 of 1997 in which order dated 13/2/1998 was passed by the Division Bench of this Court as aforesaid. The order has been reproduced in the affidavit in reply and the same reads as under :- "Heard Counsel representing the parties in these proceedings. Learned Government Pleader was also heard. We direct 2nd respondent, the Director of Agricultural Marketing and Rural Finance to hold a detailed enquiry into the circumstances under which the third respondent, Agricultural Produce Market Committee, Unjha, disbursed Rs. 49,00,000/- odd in favour of various Trusts. The amount disbursed by the Agricultural Produce Market Committee as per its own affidavit is as follows :- "..... remaining amount of Rs.49,05,000/was to be disbursed to the six respondent trusts for charitable purposes, and accordingly, Rs. 9,85,000/was allotted to Vivekanand Gram Vikas Trust, Brahmanvada, an amount of Rs.9,80,000/- was allotted to Vivekanand Gram Vikas Trust, Maktupur, an amount of Rs. 9,80,000/- to Vivekanand Gram Vikas Trust, Ranchhodpura, an amount of Rs.9,80,000/- was awarded to Vivekanand Gram Vikas Trust, Kahoda and an amount of Rs. 9,80,000/- was allotted to Vivekanand Gram Vikas Trust at Karli. ...." According to the said affidavit, the total amount of Rs. 49,05,000/-, which is donated to the six Trusts is to be utilized for construction of rooms of primary schools. Enquiry to be conducted by the 2nd respondent must cover the aspect as to the circumstances under which the amount has been transferred, the necessity for such transfer and whether the provisions of the Gujarat Agricultural Produce Market Act, 1963 and the Rules framed thereunder, allow such transfer of Market Committee's funds to private trusts. Detailed enquiry into the entire transaction must be held by the 2nd respondent in accordance with the said Act and the Rules and the detailed report thereon should be made available to this Court. This must be done as expeditiously as possible, at any rate, on or before 6/3/1998. If the report is not made available to this Court on 6/3/1998, 2nd respondent must personally be present before this Court to explain the reason for the delay. Adjourned to 6/3/1998." 9. It has been asserted that in view of the directions given by this Court a detailed inquiry was made and report of such inquiry was submitted to the Court dealing with the aforesaid petition (S.C.A. No. 8953 of 1997). It was found in the inquiry that the market committee Unjha had transferred the amount to the respective trusts named above and the funds were accordingly misused. Upon hearing of the writ petition the Division Bench by its order dated 6/3/1998 gave following directions :- "6. On the basis of the report now made available to us by the Director, Agricultural Marketing and Rural Finance, it is seen that the third respondent Market Committee was giving largesses to various trusts with scant respect to the provisions contained in the Agricultural Produce Market Act and the Rules framed thereunder. So, prima facie this is a fit case where Government are to take action under the Act with special reference to the provisions contained in Section 46 of the Act. We direct the Government, first respondent, to apply its mind to the entire affairs of the third respondent Market Committee and to take appropriate action in accordance with law as expeditiously as possible. 7. Special Civil Application is disposed of with the above directions. Notice is discharged. We direct the parties to suffer their costs. The report submitted by the second respondent, Director of Agricultural Marketing and Rural Finance, will form a part of the record of this case." 10. It has also been asserted that the petitioner no. 2 had gone to foreign countries for a period of almost one month from 4/3/1998 to 1/4/1998 and approximately a sum of Rs. 3,70200/- came to be spent. Out of this amount 75% amount was to be borne by the market committee and remaining 25% amount was to be borne by the petitioner no.2. The petitioner no.2 moved in different cities as particularised in para. 9 of the affidavit in reply. Over and above the aforesaid amount, a sum of Rs. 3266/- was also spent by the market committee towards the petitioner no.2's foreign trip. These facts have been stated for saying that the petitioner no. 2's visit to foreign country was totally uncalled for and against the provisions of the Markets Act and Rules. It has then been asserted that on account of high handed and arbitrary actions of the petitioners nos. 2 and 3 some of the traders at large of the market committee at Unjha had suffered considerably. One person had resolved to go on fast unto death. The market yard also remained closed for a day or two. Thus, the petitioners nos. 2 and 3 misused their office and improperly and inefficiently handled the affairs of the market committee for their personal interest. In view of all these facts and more particularly in view of the directions given by the Division Bench of this Court in S.C.A. No. 8953 of 1997 the State Government was required to recall the nominations and exercise its power to replace the nominees. A reference has also been made to a decision rendered by this Court (Coram : M.S. Shah, J.) in S.C.A. Nos. 1708, 1709, 1711 and 1712 of 1998 and other allied matters where questions regarding tenure of Chairmen of various statutory corporations having been terminated or likely to be terminated were required to be considered. This Court by its judgment and order dated 7/4/1998 dismissed the petitions holding that the tenure was at the pleasure of the Government. In the Letters Patent Appeals preferred against the said decisions no interim orders have been passed as per the information of the 4th respondent. 11. It has finally been asserted that by virtue of Article 12 of the Constitution of India the Agricultural Produce Market Committee is a "State" and the State Government has complete control regarding the entire functioning of the market committee. Thus, it would be within the policy of the State Government if the power regarding nominees of the market committee has been exercised as aforesaid. 12. With regard to allegations made against Mr.Naranbhai Lallubhai Patel, who is the M.L.A. it has been asserted that he is not joined as a party to this petition and in view of the decision of this Court as reported in 1998 (2) G.L.R. 1604 the allegations of malafides cannot be accepted as the person against whom they are alleged is not joined as a party. The interim relief passed in this matter came to be challenged by way of L.P.A. No. 611 of 1998 and the Division Bench of this Court (Coram : C.K. Thakkar and A.L. Dave, JJ.) by order dated 30/4/1998 dismissed the said L.P.A. This would establish that even at the interim stage the petitioners had no prima-facie case and the balance of convenience was also not in favour of the petitioners. 13. The respondents have, therefore, claimed the present petition to be dismissed. 14. In so far as the aforesaid civil application is concerned, while denying the allegations in the said civil application, it has been asserted on behalf of the respondents that the prayers in the civil application have no direct or indirect connection with the issues involved in the main petition and, therefore, the civil application is not maintainable and that the opponent no.4 market committee has acted in accordance with the provisions of the Markets Act and Rules framed thereunder and has not committed any illegality or has not violated any directions. It has been asserted that the action of giving the funds for particular purposes to the State Government is in accordance with the provisions of sections 32 and 33 of the Markets Act and there has been no violation of the said provisions by the market committee. It has been asserted that the action of the funds having been donated to the State Government for Gokul Village Scheme, Education Institutions, Health Centres and to the Chief Minister's Relief Fund in view of the extra-ordinary cyclonic position in Gandhidham and Kandla was approved by the Director of Agricultural Marketing and Rural Finance. Such approvals are placed on record at Annexure-I to the affidavit in reply to the civil application. It has, however, been asserted that no such amount of Rs.28,00,000/- has been transferred to Gokul Gram Scheme and that no fund has been donated contrary to the provisions of law and rules. The civil application has been sought to be dismissed accordingly.] 15. I have heard Mr. S.K. Jhaveri, learned advocate appearing for the petitioners, Mr. J.M. Thakore, learned Advocate General with Mr. P.G. Desai, Ld. Govt. Pleader for the respondent no. 1 - State and Mr. M.D. Pandya, learned advocate for the rest of the respondents. Mr. Jhaveri has submitted that following points arise for consideration in this petition :- (I)