Case: Vipulbhai Mansingbhai Chaudhary Vs. State Of Gujarat

2. The matter arises under the Gujarat Co-operative Societies Act, 1961 (for short THE ACT). The Mehsana District Co-operative Milk Producers Union Ltd. (hereafteris a Society within the meaning of the expression under Section 2(19) (Section 2(19).means a co-operative society registered, or deemed to be registered, under thisTHE ACT. Chaudhary was elected as its Chairman for a period of three years commencing from 2.5.2011 to 1.5.2014. However, he continued to hold the office beyond the period of three years by virtue of the operation of Section 74C(2) - as it then74C(2). When the election of all the members of the committee of any such societies held at the same time, the members elected on the committee at such general election shall hold office for a period of three years from the date on which the first meeting is held and shall continue in office until immediately before the first meeting of the members of the new committee.During the continuance of Chaudhary in the office, a show-cause notice was issued on 12.1.2015 (hereafter) by the Registrar (Section 2(17) –means a person appointed to be the Registrar of Co-operative Societies under this Act; and includes to the extent of the powers of the Registrar conferred on any other person under this Act, such person and includes an Additional or Joint Registrar;)of the Co-operative Societies (hereafter) purporting to be one issued under Section 76B(1) & (2) of THE ACT calling upon Chaudhary to show cause why he should not be removed from the office for various reasons mentioned therein. (Though the notice purported to have been issued invoking both sub-sections (1) and (2) of Section 76B, there is no whisper in the said notice regarding the proposal to disqualify Chaudhary for a further period.)Chaudhary challenged the said show-cause notice by way of a writ petition. It was dismissed by the Gujarat High Court as pre-mature. The dismissal was confirmed by a Division Bench in a Letters Patent Appeal. Aggrieved, Chaudhary carried the matter to this Court by way of SLP (Civil) No.4668/2015 which was filed on 12.2.2015.4. During the pendency of SLP (Civil) No. 4668 of 2015, the Registrar passed a final order on 10.3.2015 (…..Thus, taking into consideration the facts as a whole, because of the irregularities committed by him, the Union has suffered great financial damage and serious damage has been caused to the Mehsana Jilla Dudh Utpadak Sangh as well as the lacs of members providing milk in the milk societies connected with it and interests of the Pashu Palaks. In such circumstances, I consider it proper to remove him from the post and also for the aforesaid reasons, think it proper to held him disqualified to have any office in any Sahakari Mandal or to participate in any election for a period of three years.)by which Chaudhary was removed from the office and also disqualified for a period of three years from holdingThis Court by an order dated 20.3.2015 disposed of SLP(C) No. 4668/2015 directing that status quo regarding the order of the Registrar dated 10.3.2015 be maintained till 30.3.2015 to enable Chaudhary to approach the appropriate forum challenging the correctness of theorder dated 10.3.2015.6. Chaudhary filed a statutory revision before the State Government. The Government by its order dated 8.5.2015 confirmed theorder dated 10.3.2015.7. Aggrieved by the same, Chaudhary filed a Writ Petition No.9618/2015. A learned judge of the High Court by his judgment dated 29.9.2015 upheld the action of the Registrar insofar as it pertained to the removal of Chaudhary from the office but set aside the order insofar as it pertained to the disqualification of Chaudhary for a future period of three years. It was held that proceedings under Section 76B(2) for disqualifying Chaudhary could have been initiated only after an order under Section 76B(1) is passed. Since the Registrar acted on the basis of a composite notice (Show-Cause Notice-I), the action of the Registrar under Section 76B(2) could not be sustained.8. Aggrieved by that part of the judgment in Writ Petition No.9618/2015 insofar as it went against him, Chaudhary preferred Letters Patent Appeal (LPA) No.1302 of 2015. The said LPA was dismissed on 19.10.2015. Chaudhary approached this Court by way of Special Leave Petition (C) No.33630/2015 [now C.A.No.14678 of 2015].9. In view of the fact that the High Court had set aside the order of the Registrar disqualifying Chaudhary for a period of three years, the Registrar issued a fresh show-cause notice dated 3.10.2015 (hereafter ‘Show-Causecalling upon Chaudhary to explain as to why he should not be disqualified for a future period in exercise of the powers under Section 76B(2) of THE ACT.10. The said show-cause notice was challenged by Chaudhary again by way of another Writ Petition (SCA No.17826 of 2015) unsuccessfully. (The writ petition was dismissed by a judgment dated 27.10.2015.)Chaudhary carried the matter in Letters Patent Appeal (LPA No.1343/2015) (It must be stated for the sake of the completion of the narration of the fact that during the pendency of the said LPA, the State made an oral application before the Division Bench to adjourn the matter to enable the Registrar to seek certain clarifications from the Single Judge. Permission was granted. However, the Single Judge declined to give any clarification.).11. Eventually, the LPA No.1343/2015 of Chaudhary was allowed by the High Court on 2.11.2015. The Show-Cause Notice-II was quashedIf the impugned order of the learned single Judge is examined in light of the observations made by us hereinabove, it can be said that the learned single Judge has committed error in interpreting the provisions of section 76B(1) and 76B(2) of the Act and the consequential order for dismissal of the petitioner calls for interference.17. As observed by us, if the second separate show cause notice is not contemplated as per section 76B(2) of the Act, and both the consequences should arise in only one proceeding under proceedings of 76B of the Act, then the fact remains that the order for disqualification was quashed by this court without there being any express liberty reserved for continuation with the proceedings for disqualification under section 76B(2) of the Act. Therefore, in light of the aforesaid observations and discussions, it can be said that the impugned action of issuance of separate show cause notice for disqualification under section 76B(2) of the Act is without jurisdiction and beyond the scope of section 76B of the Act.Before recording such a conclusion, the High Court rejected two submission made on behalf of the Registrar:(i) that in view of the fact that the earlier order of the Registrar disqualifying Chaudhary was quashed on the ground of breach of principles of natural justice, it would still be open to the Registrar to issue show cause notice under Section 76B(2) of THE ACT. (In support of that submission, the Registrar relied upon a large number of decisions.Para 18 of the Judgment dated 02.11.2015 of the High Court of Gujarat in LPA No.1343 ofJani, relied upon the decisions of the Apex Court in M/s. Guduthur Bros. Vs. The Income-tax Officer, Special Circle, Bangalore, reported at AIR 1960 SC 1326 , in Superintendent (Tech. I) Central Excise, I.D.D. Jabalpur and Others vs. Pratap Rai reported at [(1978) 3 SCC 113] , in Anand Narain Shukla vs. State of Madhya Pradesh reported at (1980) 1 SCC 252 , in M.V. Janardhan Reddy vs. Vijaya Bank and Others reported at [(2008) 7 SCC 738] and in Commissioner of Sales Tax and others vs. M/s. Subhash and Company reported at AIR 2003 SC 1628 …Chaudhary is estopped from arguing that the notice under Section 76B(2) is illegal because in Writ Petition No.9618 of 2015, Chaudhary contended that a composite notice under Section 76B(1) and (2) proposing to remove Chaudhary from office and disqualifying him for a further period from contesting any election to the Society was illegal.14. The reasons of the High Court for rejecting the above two submissions of the Registrar are recorded at para 18.1 and 19 respectively asAs such, the facts of all the aforesaid cases cannot be equated with the facts and circumstances of the present case as narrated hereinabove. Further, in view of the interpretation as made by us hereinabove, if only one proceeding is contemplated under section 76B of the Act for two consequences of removal and disqualification, and those proceedings have ended in SCA No. 9618 of 2015 and LPA No. 1302 of 2015, it would not be open to the authority to initiate second proceedings on the same facts, more particularly when no express liberty was so reserved and even otherwise also it could not be reserved in view of the interpretation made by us hereinabove. Hence, when initiation of the second proceedings by issuance of the show cause notice is beyond the scope of section 76B of the Act, the said decisions would be of no help to Mr. Jani, learnedtherefore concluded:20. In view of the above, the impugned notice dated 3.10.2015 (Annexure-F) is quashed being beyond the scope and ambit of section 76B of the Act. The order of the learned single Judge is set aside. The appeal is allowed accordingly. Considering the facts and circumstances, no order as to costs.Mr. Jani, learned AAG did attempted to contend that the appellant in the earlier round of litigation of SCA 9618 of 2015 had contended that separate show cause notice under Section 76B(2) of the Act was required to be issued and not the composite notice under section 76B(1) & (2) and he further contended that learned single judge having accepted the said aspect, it would not be open to the petitioner to play hot and cold at the same time, and now to contend that a composite notice was required, more particularly when the learned single Judge has accepted the said contention and the said order has been not interfered with in the LPA.In the meanwhile on 23.10.2015, a notification fixing the dates for the election to the Managing Committee of the UNION for the tenure commencing from 2015 to 2020 was issued. Chaudhary filed his nomination. He was declared elected uncontested on 18.11.2015.16. Aggrieved by the judgment in LPA No.1343 of 2015 dated 2.11.2015 by which the second show-cause notice was quashed by the High Court, State of Gujarat and others filed SLP(C) No. 32004 of 2015 (Civil Appeal No.13784 of 2015).17. By an order dated 23.11.2015 of this Court, Chaudhary was permitted to reply to the second show-cause notice (This Court while granting leave in SLP (C) No.33630 of 2015 [arising out of the LPA No.1302 of 2015 arising out of WP No. 9618 of 2015] filed by Chaudharyhas been submitted by the learned senior counsel appearing for the respondent (Chaudhary) that the reply to the second show cause notice is being filed today. In these circumstances, we direct that if any order adverse to the respondent is passed by the Registrar, Cooperative Societies, State of Gujarat, the same shall not be implemented for a period of four weeks from the date of communication of the order to theanother order dated 26.02.2016, this Court while granting leave in SLP (C) No.3980 of 2016 filed by Chaudharygranted.List this appeal in the month of August, 2016 for hearing.No interim relief.Tag with SLP (C) No.33630 of 2015 and connectedhe did infact file a reply. Thereupon the Registrar passed an order dated 16.12.2015 disqualifying Chaudhary for a period of six (6)I, Nalin Upadhyay (IAS), Registrar of Cooperative Societies, Gujarat State, Gandhinagar, in exercise of powers conferred upon me under section 76(B)(2) of the Gujarat Cooperative Societies Act, 1961, declare Mr. Vipulbhai Mansingbhai Chaudhary, the then Chairman, the Mehsana District Cooperative Milk Producers Union Ltd., Mehsana, as disqualified to participate in any election or to hold any post in the Mehsana District Cooperative Milk Producers Union Ltd., Mehsana and also any other cooperative organization in the State, for a period of 6 (six) years from the date of this order.Aggrieved by the same, Chaudhary filed Writ Petition (SCA No.177 of 2016). By the judgment dated 18.01.2016, the same was partly allowed by a learned SingleFor the reasons stated above, the impugned order dated 16.12.2015 is quashed only to the extent it imposes period of disqualification beyond 3 years. Disqualification of the petitioner under section 76B(2) of the Act for a period of 3 years is not disturbed. The petitioner, thus will have to suffer disqualification under section 76B(2) of the Act for a period of 3 years from the date of the impugned order. To the extent disqualification is imposed beyond 3 years, the petition succeeds. The petition thus finally stands disposed of accordingly.Challenging the said judgment insofar as it went against him, Chaudhary carried the matter in LPA No.55 of 2016. A division bench of the High Court by its judgment dated 28.01.2016 declined to interfere with the Single. In view of the aforesaid observations and discussion, we find that no further case is made out for interference to the view taken by the learned Single Judge in the impugned order. Hence, the appeal is disposed off accordingly with no order as toSLP (C) No.3980/2016, now Civil Appeal No.1881 of 2016.Civil Appeal No.14678 of 2015 [Arising out of SLP(C) No. 33630 of 2015] challenging the correctness of theabovementioned judgment ofthe High Court is one of the three appeals before us.

Court's reasoning:
In our opinion, LPA No.1302/2015 ought to have been dismissed on the simple ground that the said appeal had become infructuous. Because admittedly the tenure of Chaudhary as Chairman of the Society expired on 01.05.2014. Therefore, SLP (Civil) No.33630/2015 was a futile exercise. We only wonder as to how leave came to granted in the said SLP.The High Court rightly declined to interfere with those findings. We see no error in the decision of the High Court in this regard.We decline to undertake the exercise of examining the correctness of the conclusions recorded by the Registrar.Hence, the submission of Chaudhary both before the High Court and this Court thatI could not have been issued without obtaining the leave of the High Court. Such a submission found favour with the High Court in the judgment in LPA No. 1343 of 2015 when it was called upon to determine the legality of. The High Court did not assign any reason for such a conclusion nor any provision of law or precedent which warrants such a conclusion is referred to. We find it difficult to sustain thesaid conclusion is clearly untenable and is required to beand the first submission of Chaudhary is liable to be rejected. As a consequence, the second submission also falls to ground.38. We shall now deal with the third submission of Chaudhary. The submission in substance is that the acts and omissions which formed the basis of allegations leading to action against Chaudhary under Section 76B are not the individual acts of Chaudhary but the collective acts or omissions of the Committee of the UNION. Therefore, action if at all required must be taken under Section 81 against the entire Committee but not only against Chaudhary. In absence of any action against the Committee, action against Chaudhary is illegal and unsustainable.In substance, THE ACT envisages joint and several action against the officers in their capacity as members of the committee. While Section 81 is designed to deal with the dereliction of the duties by the committee as a body, Section 76B deals with the dereliction of duties of the individual members of the committee. The Registrar is invested by THE ACT with the discretion to choose the proper course of action depending upon the situation. The argument of Chaudhary is not that the Registrar abused his discretion. The submission is that it is not permissible for the Registrar to resort to action only under Section 76B. We reject the submission.45. We shall now examine the fourth submission of Chaudhary that the reliance upon the same set of facts in bothI and II would render theI and the action consequent thereupon illegal.At the outset, we must state that we have examined the tenor of both thenotices and we proceed on the basis that the tenor of both of them is substantially the same if notbasic requirement of(2) is that the power thereunder could be exercised only against an officer of a society who has already been removed from office. Therefore, the factual basis on which the action underion (2) of Section 76B is to be taken is bound to be the same though the reasons and logic on the basis of which action under either of theis to be taken could be different. Depending upon the intensity and gravity of the misconduct in a given case, mere action [under Section 76B(1)] of removal from office might suffice and meet the ends of justice. Whereas in some cases action under both themight be called for. But in no case action only under Section 76B(2) is permissible without taking action under Section 76B(1). It is also possible that in a given case, facts may not only justify but also oblige the Registrar to pass not only an order of removal under(1) but also an order of disqualification under(2) depending upon the nature of the misconduct and the legal obligation flouted by the officer.It all depends upon the facts and circumstances of each and every case and the scheme of the law relevant to such facts. The variables are too many.For the purpose of passing the order of disqualification under Section 76B(2) against Chaudhary, the Registrar rightly proceeded on the basis that there is an earlier order of the Registrar dated 10.3.2013 where charges against Chaudhary had been held proved and the High Court declined to interfere with those findings. He, therefore, opined that he is entitled to proceed to take action under Section 76B(2) on the basis of the same conclusions which rendered Chaudhary liable for removal from office under Section 76B(1). In the process, both in thenotice–II and the order dated 16.12.2015, the Registrar once again repeated all the allegations which formed the basis for the order under Section 76B(1).In our opinion, it was not really necessary. It would have sufficed if the Registrar mentioned the fact that Chaudhary was removed from the office of Chairman of the Society in exercise of the power under Section 76B(1) – the mention of such a fact is also not mandatory. It is only a condition precedent for initiating action under Section 76B(2). The requirements of valid notice under Section 76B(2), in our opinion, are that the notice should indicate broadly the reasons which prompt the Registrar to initiate action and the period for which the person, against whom the action is initiated, is proposed to be disqualified. However, the mentioning of the past history though avoidable does not in any way vitiate thenotice or the final order if they are otherwise in accordance with law.49. In our opinion, there is no legal infirmity either in the logic adopted by the Registrar or the action taken by him under Section 76B(2) on the ground that the Registrar relied upon the same set of facts and the conclusions drawn thereupon for taking action both under Section 76B(1) and Section 76B(2).The final order disqualifying Chaudhary was passed after due compliance with the principles of natural justice. If the Registrar came to the conclusion that Chaudhary should not be permitted to contest any election or hold any office in any society functioning under THE ACT, the same, in our view,be found fault with. Because Chaudhary has already been found guilty of conduct which resulted in a large scale financial irregularities in the conduct of the business of the society and also financial loss to the society. The activity of the UNION is spread over in three districts. The UNION consists of a large number of primary societies. Disqualifying Chaudhary only from the holding post in the UNION is to give him a chance to meddle with the affairs of the societies which are members of the UNION.As a logical corollary to the above proposition, no right or liability can be created by a repealing enactment, which is inconsistent with the rights and obligations conferred under the repealed Act unless the repealing enactment makes an express declaration to that effect or adopts some other technique known to law to achieve that purpose. Giving retrospective effect to the repealing enactment is one of the techniques by which the legislature seeks to achieve that purpose.54. There is nothing in Act No.12 of 2015 which warrants an interpretation that the legislature intended to create a disqualification which would run for a maximum period of six years with retrospective effect. The learned Additional Solicitor General Shri Mehta fairly accepted it. In the circumstances, the disqualification of six years upon Chaudhary is not tenable and at best Chaudhary could be disqualified for a maximum period of four years.55. It is next argued on behalf of Chaudhary that the order dated 12.10.2015 does not disclose reasons which prompted the Registrar to impose the maximum penalty and, therefore, that order is vitiated. We do not wish to examine the submission for the reason the judgment under appeal thought it fit that disqualification of Chaudhary for a period of three years would meet the ends of justice. We are of the opinion that having regard to the acts and omissions of Chaudhary forming the basis of disqualification cannot be said to be unreasonable.