Biren Vaishnav, J. - (1.) By way of this petition under Article 226 of the Constitution of India, the petitioner, M/s. Shri Ganesh Khand Udhyog Sahakari Mandali Ltd., has challenged the impugned order dated 11.06.2020, passed by the respondent No.1 in exercise of powers under Section 86 of the Gujarat Co-operative Societies Act, 1961. Pending the petition, amendments were carried out and the report dated 6.08.2020 and the notices dated 17.09.2020 and 18.09.2020 asking the petitioners to show cause under Section 76(B) and Section 71 of the Gujarat Co-Operative Societies Act are under challenge.
(2.) The facts in brief are as under: 2.1 The case of the petitioner is that it is a co-operative society engaged in the manufacturing process of sugar. According to the petitioner, it has about 17,416 members. The petitioner states that the present Chairman, Shri Surjitsingh Mangrola has been in power and handles the administration of the Society since many years and the Society under his chairmanship has successfully become financially strong. It is the case of the petitioner that in the past, several complaints had been made and pursuant to such complaints, inquiries have been initiated, explanations have been sought and pursuant to the reply being given, the authorities have closed the chapter of holding inquiries. 2.2 It is the case of the petitioner that in the year 2015, a PIL was also filed against the petitioner - Society by one Shri Chandubhai Maganbhai Vasava and Kanaksinh Harisinh Sangrod being Writ Petition (PIL) No. 49 of 2015. The Court considering the affidavit-in-reply disposed of the said petition. 2.3 It is the case of the petitioner that in respect of the same allegations, one Pushepndrasinh Indrasinh Sunva and others made a complaint on 30.06.2018 against the petitioner society. An inquiry was conducted on 07.06.2018. The petitioners were heard during the course of the proceedings on 29.10.2018. A show-cause notice was issued on 22.05.2020 directing the petitioner-Society to remain present for an opportunity of hearing under Section 86 of the Act. The petitioner-Society submitted its reply to the allegations made, and thereafter, the respondent No.1 has passed an order dated 11.06.2020 directing that an inquiry be conducted into the affairs of the Society under Section 86 of the Gujarat Co-Operative Societies Act (for short 'the Act'). 2.4 That the order dated 11.06.2020 appointing an Inquiry Officer and conducting the inquiry was challenged before this Court in the present petition on 16.06.2020. For some or the other reasons beyond the control of the petitioner, the petition came to be adjourned. On such adjournments and during the pendency of the petition, the respondents prepared an ex-parte inquiry report dated 06.08.2020. Based on such a report, the respondent issued Show Cause Notice dated 17.09.2020, asking the petitioner-Society to show cause as to why proceedings under Section 71 of the Act should not be initiated. A subsequent notice was also issued on 18.09.2020 asking the petitioner as to why proceedings under Section 76(B)(1) and Section 76(B)(2) of the Act to remove the Chairman of the Society and disqualify him also should not be conducted. These proceedings, therefore, namely, the order directing inquiry dated 11.06.2020, the Inquiry Report dated 06.08.2020 and the Notices dated 17.09.2020 and 18.09.2020 are under challenge before this Court.
(3.) Mr.Dipen Desai, learned advocate for the petitioner-Society with Mr.Harshad Prajapati, learned advocate, made the following submissions: (I) Mr.Dipen Desai, learned advocate, invited the attention of this Court to the show-cause notice dated 22.05.2020 issued by the Director of Sugar on 22.05.2020. He would submit that from the contents of the notice, it is evident that the show cause notice is pre-meditated. Reading the contents of the notice dated 22.05.2020, Mr.Desai, learned advocate, would submit that the inquiry which was to be held under Section 86 of the Act was already decided by the author of the show cause notice. He would also invite the attention to the show cause notice at page 100 and submit that an opinion was already formed by the author of the show cause notice that an inquiry under Section 86 of the Act is necessary, and therefore, in his submission the show cause notice is pre-meditated and it is pre-judging the issue. (ii) On the question of the fact that the show cause notice is pre-meditated and it is pre-judging the issue, Mr.Dipen Desai, learned advocate for the petitioner, invited the attention of the Court to the decision of the Supreme Court in the case of Oryx Fisheries Private Limited vs. Union of India & Ors., 2010 13 SCC 427. He would invite the attention of the Court to paras 11,12,18 and 22 of the judgment to submit that the Supreme Court in the case of Oryx (supra) had observed that when the show cause notice confronts a person with a definite conclusion, the entire proceedings initiated by the show cause notice get vitiated by unfairness and bias and the subsequent proceedings become an idle ceremony. Pointing out the show cause notice in the present case, Mr.Dipen Desai, learned advocate, would submit that reading the show cause notice would indicate pre-judging the mind. (iii) The second submission of Mr. Dipen Desai, learned advocate, was on the legality of the show cause notice and he would submit that the entire proceedings initiated pursuant to the show cause notice was without jurisdiction. Reliance was placed on Section 86 of the Act. Mr.Desai, learned advocate, would submit that under Section 86 of the Act, the Registrar, may on his own motion himself or by a person duly authorized by him in writing hold an inquiry into the constitution, working and financial conditions of a Society. Relying on Sub-section 2 thereof, Mr.Desai, learned advocate, would submit that the registrar shall hold an inquiry on (a) a requisition of a Society duly authorized by the rules, (b) on an application of a majority of committee of a Society and (c) on the application of 1/3rd members of a Society. Inviting the attention of the Court to the applications made in the present circumstances, Mr.Dipen Desai, learned advocate, would submit that it is evident that only three members have applied for holding of an inquiry under Section 86 of the Act. A specific contention was made in the reply to the show cause notice by the petitioners. He invited the attention of the Court to the reply dated 30.05.2020 and would submit that a specific contention was raised that the Society had 17,416 members in number, the majority would make it 8,709 and 1/3rd majority would be 5,805. The initiation at the hands of three members would be without jurisdiction and not in compliance with the mandate of Section 86(2) of the Act. (iv) In support of his submission, Mr.Desai, learned advocate, invited the attention of this Court to an interim order passed by this Court construing the provisions of Section 86 of the Act in the case of The Manit Co-Operative Housing Society Ltd., v/s The Addl. Registrar (Appeals) & Ors., rendered in Special Civil Application No. 9394 of 2020, in which, this Court by an interim order dated 17.08.2020 observed and granted interim relief when it found that the inquiry was initiated only at the instance of one member of the Society and such a requisition was not a requisition contemplated in accordance with the clauses (a), (b) and (c) of Section 86(2) of the Act. (v) Mr.Dipen Desai, learned advocate, would submit that thus the order of the show cause notice is without jurisdiction, inasmuch as, it is not in compliance of Section 86 of the Act. He invited the attention of the Court to the order dated 11.06.2020 at page 108 of the paper book. He would submit that the order does not deal with the contention so raised by the petitioner with regard to the jurisdiction under Section 86 and the order is without reasons and the contention raised by the petitioner has not been answered. He would submit that even in the affidavit-in-reply filed to the petition, a specific contention raised in ground (d) has not been answered by the respondent which shows that there is no answer to the contention of the petitioner that the show cause notice and the order under Section 86 are without jurisdiction. (vi) Mr.Dipen Desai, learned advocate, would submit that no reasonings are given in the order directing holding of an inquiry under Section 86 of the Act after having recorded a prima facie opinion in the show cause notice dated 22.05.2020. The order dated 06.08.2020 does not reflect as to what reasons weighed with the authority to hold an inquiry, and therefore, the order being without reasons is an illegal order. In support of his submission that an order without reasons is bad, Mr.Dipen Desai, learned advocate, would rely on a decision in the case of Oryx Fisheries (supra). Attention was drawn to paras 38 to 42 thereof. (vii) The other submission of Mr.Desai, learned advocate, was in context of the Inquiry Report dated 06.08.2020. He would submit that the order or the report on 06.08.2020 has been made Ex-Parte. The action of the respondents in passing such an order amounts to overreaching the process of this Court. The petition was filed on 16.06.2020 against the show cause notice dated 11.06.2020. On the show cause notice under Section 86 of the Act, for reasons beyond the petitioner's control, the hearing of the petition was adjourned from time to time. Admittedly, though there was no stay, it was expected of the State Government to act fairly and not to proceed and precipitate any thing against the petitioner so as to frustrate the cause of the petition. Mr. Desai, learned advocate, in support of his submission relied on the decision in the case of Sujal Leasing and Finance Ltd,1998 2 GLH(UJ) 1. Reliance was placed on paras 1,2 and 5 thereof to submit that even if there was no stay, it implicitly called for restrain from the parties to act so as to make the proceedings infructuous. (viii) Mr.Desai, learned advocate, also relied on the decision of the Supreme Court in the case of Siemens Aktiengeselischaft And S. Ltd. Vs Dmrc Limited., 2014 11 SCC 288. Reliance was placed on paras 16 and 26 to 27 thereof to submit that overreaching the proceedings and taking action which would frustrate the cause of the petitioner amounted to contempt. (ix) Mr.Desai, learned advocate, would then argue on the legality of the notice dated 18.09.2020 issued under the provisions of Section 76(B)(1) and Section 76(B)(2) thereof. Inviting the court's attention to the notice (at page 141 of the paper book), Mr.Desai, learned advocate, would submit that reading of the notice especially makes it clear that the notice under Section 76(B) was based on the Inquiry Report dated 06.08.2020. The show cause notice under Section 76(B) was issued by the author of the same notice dated 11.06.2020. Inviting the attention of the Court to page 147 of the paper book, Mr. Dipen Desai, learned advocate, would submit that it was a common notice under Section 76(B)(1) and Section 76(B)(2) of the Gujarat Co-Operative Societies Act. Inviting the attention of the Court to the provisions of Section 76(B) of the Act, Mr.Desai, learned advocate, would submit that reading Section 76(B)(1) of the Act and Section 76(B)(2) of the Act, the disqualification under sub-section 2 thereof only follows when there is a removal under Section 76(B)(1) of the Act. He would invite the attention of the Court to a decision rendered by this Court in the case of Vipul M Chaudhary vs. State of Gujarat., 2016 1 GLR 86. Relevant paras of the decision were cited at the bar by Mr.Desai, learned advocate, to submit that a specific case has been considered and the Court has held that Section 76(B)(1) and 76(B)(2) of the Act are separate clauses and once the removal is made, it is only thereafter that the proceedings for disqualifications can be initiated under Section 76(B)(2) of the Act. He would submit that the Court observed that if a separate order is to be made after the order of removal is passed for disqualification, the Court has categorically observed that there can be no common notice for the provisions under Section 76(B)(1) and under Section 76(B)(2) of the Act. The notice, therefore, is bad on this count also. He would further submit that the decision in the case of Vipul Chaudhary (supra), was confirmed by the Supreme Court vide its decision reported in 2013 (4) SCC 51. Reliance was placed on para 13 and para 46 of the said decision. He would submit that the basic requirement of sub-section 2 is that the power thereunder could be exercised only against the Officer of the Society who has been removed from the office, and therefore, there can be no common notice under the provisions of Section 76(B)(1) and Section 76(B)(2) of the Act. (x) He also submitted that the show cause notice under Section 71 of the Act based on the inquiry report is also bad. He would submit that reading Section 71 of the Act would make it clear with regard to investment of funds. On the facts of this case, notice under Section 71 of the Act based on the report dated 06.08.2020 is for investments made in the year 2016. Therefore, the exercise is misconceived, inasmuch as, earlier the entire issue was closed. He would further rely on a decision in Writ Petition (PIL) No. 49 of 2015 to submit that for more or less similar allegations made as in the case on hand in the PIL, a notice has been issued and the inquiry proceedings have been held. He would submit that though the Court may not go into the details of the inquiry report and judge the issue on merits, from the facts it becomes evident that for a stale issue which has been once closed, an inquiry has been initiated and the report has been furnished under Section 86 of the Act on 06.08.2020. (xi) On the issue with regard to the authority to issue the show cause notice and proceedings under Section 86 of the Act, Mr.Desai, learned counsel, would submit that the Director who had issued the show cause notice was one of the members of the Board, and therefore, initiation of proceedings by the Director who is one of the members of the Board of the Sugar Co-Operative, would amount to be an action of judging his own cause. For this, he relied on the decision in the case of Gujarat State Co-operative Marketing Federation Ltd., vs. V.H.Parekh., 1995 1 GLH 857. He relied on paras 3, 8 and 10 to 15 thereof. He also relied on the decision rendered in Special Civil Application No. 8507 of 2006. He invited the attention of the Court to page 202 of the paper book, particularly para 2.5 thereof and para 7 to submit that it is the case where bias is apparent inasmuch as the Director who is the member of the Sugar Society himself has issued the notice.;