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Judgment
Anant S. Dave, J.—This petition under Article 226 of the Constitution of India read with Articles 14 and 19 of the Constitution of India and
the provisions of Gujarat Co-operative Societies Act, 1961 and Rules made thereunder is challenged by the petitioner-Bank, is filed by the
petitioner-Bank, a Co-operative Society registered under the provisions of the Gujarat Co-operative Societies Act, 1961 (for short ''the Act'').
The challenge in this petition is the order dated 31st January, 2007/ 1st February, 2007 passed by the District Registrar, Co-operative Societies
(at Annexure ''F'' to the petition) and order dated 23rd April, 2008 passed by the respondent No. 2 in Appeal No. 26 of 2007 (at Annexure ''T''
to the petition) as well as the order dated 6th October, 2008, passed by the respondent No. 1 (at Annexure ''V to the petition) with further prayer
to confirm the Resolution passed by the petitioner-Society for amending its bye-laws in its Annual General Meeting dated 22nd July, 2006 (at
Annexure ''D'' to the petition).
Short facts of this case are as under:
3.1. That the petitioner-Bank was established as a Co-operative Society on 6th December, 1973 and being a Co-operative Society, its area of
operation was confined to Village Ranuj, which has a population even in the year 2008 of 6600 only. With economic development of the area
about 11 villages of Patan and Chanasma Talukas were included in the area of operation of the petitioner-Bank, and thereafter, the entire Patan
and Mehsana districts were also brought within the purview of operation in accordance with law. As per the then existing bye-laws, even after
expansion of the village and numbers of areas of operation were brought within the purview of the petitioner-Bank, the ratio of Election of
Directors to the Managing Board of the petitioner-Society remained as under:
(i) Eight Directors are to be elected from the members belonging to village Ranuj.
(ii) Three Directors are to be elected from the members of other places.
3.2. This created an iniquitous and anomalous situation, particularly in view of the receipts of deposits and advancement of loans and even
members increased substantially from the areas other than village Ranuj and membership from other than village Ranuj area was 1758 with total
deposits of Rs. 21 crore and loan advances to Rs. 11 crore against 1192 members with deposits of Rs. 4,88,46,265/- and loan advances of Rs.
2,64,04,109/- from Ranuj village. The Board of Directors passed a Resolution for necessary amendment in bye-laws No. 28 on 26th June, 2006
to remove the anomaly and to rationalize the structure of the Board of Directors by giving proportionate representation keeping the right of voting
intact of all members so that, minimum eight members to be elected from Ranuj village only, was to be removed and all the eleven members to be
elected by the members, irrespective of their place of belongings. The Resolution passed by the Board of Directors was approved in the Annual
General Meeting on 22nd July, 2006 by the society and unanimously it was decided to make necessary amendments in the above bye-laws. The
petitioner-Society submitted the above amendment in prescribed Form-A to the District Registrar, but objections were raised by the respondent
Nos. 4, 5 and 6, though remained present in the meeting of 22nd July, 2006. However, amendment of bye-laws No. 28 was not granted with
regard to change of representation in the Board of Directors, as amended and forwarded by the petitioner-Society by District Registrar vide order
dated 31st January, 2007/1st February, 2007.
3.3. The petitioner-Society was aggrieved by the refusal by the District Registrar of the amendment of bye-laws No. 28 qua the subject of election
and representation Appeal No. 26 of 2007 was preferred before the Additional Registrar, Co-operative Societies, Gujarat State u/s 153 of the
Act, which came to be partly allowed including the subject of election and representation was also approved and accepted by modifying certain
provisions as reflected in the above order dated 11th May, 2007 and the representation of 11 Directors in the Managing Board of the petitioner-
Society to be elected by all the members irrespective of their place of origin was held legal, and subsequently, in the meeting dated 24th May,
2007, the order of the Additional Registrar, Cooperative Societies, Gujarat State as above, was accepted.
3.4. However, when the said acceptance of the order was to be placed before the Annual General Meeting, which was fixed on 23rd June 2007,
an Agenda was issued on 30th May, 2007, a Revision Application No. 75 of 2007 was filed by private respondents hereinbefore the Deputy
Secretary (Appeals), Agriculture and Co-operation Department at Gandhinagar, which came to be admitted and upon issuance of notice to the
petitioner-Society, a detailed reply was filed and it was brought to the notice of the Revisional Authority that the respondent No. 4 had vested
interest, and therefore, the amendment was opposed. It was also pointed out that against the respondent No. 4, even criminal complaint was also
filed for the offences punishable under Sections 406, 420, 465, 467, 468 and 471 of the Indian Penal Code on 7th July, 2007. However, the
Revision Application was allowed by an order dated 27th March, 2008 on the ground that principles of natural justice were not violated and
intimation was given to the private respondents and later on to the petitioner also.
3.5. It appears that there was a litigation with regard to the notice u/s 76B of the Act, issued against the office-bearers namely Chairman of the
petitioner-Society but after intervention of this Court, the District Registrar had withdrawn the said notice.
3.6. The petitioner herein challenged the order of revision dated 27th March, 2008, passed by the Revisional Authority by filing Special Civil
Application No. 5491 of 2008 and by an order dated 1st April, 2008, this Court directed to dispose of the appeal preferably within two weeks
from the receipt of the order of the Court.
3.7. After that, by an order dated 23rd April, 2008, the above Appeal No. 26 of 2007 was decided by the Additional Registrar (Appeals), Co-
operative Societies, Gujarat State by dismissing the same on the ground that the Bank was established in the village Ranuj, and therefore,
representation and dominion of the village Ranuj is quite natural and if Directors are to be permitted to be elected from area other than Ranuj, in
future, it may happen that representation of village Ranuj in the Board of Directors of the Bank may not remain and that will go against the spirit
and desire of the founding fathers of the Bank. Even, in future there may be demand to change the headquarter of the Bank, and therefore,
considering the requirement of credit facilities to the villagers of Ranuj and glory and tradition of that village and the amendment affects the basic
structure of the Bank, and it was not advisable to accept the plea of the appellant and appeal came to be rejected.
3.8. The last and final stage as prescribed under the statute namely, Gujarat Co-operative Societies Act, 1961, a Revision Application was
preferred u/s 155 of the Act by the petitioner also came to be rejected by order dated 6th October, 2008 by confirming the order dated 23rd
April, 2008, passed in Appeal by the Additional Registrar, Co-operative Societies, Gujarat State by which findings and conclusion of the
Additional Registrar, in verbatim to justify the order.
Shri Prakash Jani, learned Advocate appearing for the petitioner-Bank has raised manifold ground and submitted that initially in representation
dated 18th January, 2007 submitted by the objectors namely private respondents herein, failed to point out to the District Registrar that in the
Annual General Meeting of 22nd July, 2006, when the subject of amendment of the bye-laws was considered, such objections were raised. In
fact, discussion did take place with regard to amendment on 22nd July, 2006, but no objections were raised by the private respondents. The
above fact is overlooked by the Appellate and Revisional authorities, and therefore, the order suffers from non-application of mind by the
respondents and deserves to be quashed and set aside. It is further submitted that keeping the spirit of the Co-operative Societies Act and
provisions pertaining to amendment of bye-laws, District Registrar is empowered to see that when the proposed amendments are to be made and
recommended by the concerned society, whether such amendments are carried out as per the provisions and no hearing is contemplated to an
individual member. In fact, the agreed forum to agitate any grievance is the forum u/s 96 of the Act and not an appeal before the Appellate
Authority. It is further submitted that the amendment was proposed and carried out with an avowed object, to rationalize the representation to the
Managing Board of the petitioner-Bank, particularly keeping in mind the increased strength of membership from the areas subsequently brought
within the purview of the Bank other than the area of village Ranuj, which strengthened the petitioner-Bank enhancing deposits which multiplied by
three times, and accordingly, even credit facilities were also increased and thus, the ultimate beneficiaries were the villagers of Ranuj, and therefore,
such a democratic step taken by the petitioner-Society in accordance with law is set at naught for no genuine reason and the authorities below
namely the Appellate and Revisional both have been swayed by extraneous considerations. Even, reasons canvassed for arriving at the conclusion
by both the authorities are not germane and based on facts of the case as transpired from the record, and therefore, the impugned order deserves
to be quashed and set aside.
By an order dated 16th January, 2009 rule was made returnable on 11th February, 2009 and though served, no one appeared for the private
respondents.
Learned A.G.P., appearing for the respondents submit that the order passed by the Appellate Authority as confirmed by the Revisional
Authority is based on appreciation of facts and keeping in mind the welfare of the villagers of Ranuj, where the petitioner-Bank was established,
conclusion of the authorities cannot be said to be in any manner unreasonable and the decision taken by the authorities will protect the interest of
the depositors of village Ranuj and to avoid complications in future, such decision do not require any interference in exercise of the powers under
Article 226 of the Constitution of India.
Having heard the learned Counsel for the parties and on perusal of record of the case and impugned orders of respondents including order
passed by the Appellate and Revisional Authorities, I am of the opinion that the authorities below have been unnecessarily swayed by the place of
establishment of the petitioner-Bank, ignoring economic development, which has taken place because of expansion of area of operation in nearby
villages of District Patan and Mehsana from where, the petitioner-Bank could muster the deposits of Rs. 21 crore with further membership of 1758
in addition to membership of 1192 of village Ranuj with deposit of amount Rs. 4.88 crore. This expansion has also resulted into advancing credit
facilities to the villagers of Ranuj and if representation in the Board of Directors is restructured and rationalized in a democratic manner by
removing centralized concentration of power based on geographical representation cannot be said to in any manner contrary to the provisions of
the Gujarat Cooperative Societies Act, 1961 and Rules made thereunder.
So far as the amendment to bye-laws No. 28 is concerned, the above amendment was carried out by following due procedure of law viz.
initially it was proposed and approved by the Board of Directors, all the members were informed about amendment with Annual Report and the
date of meeting, and subsequently, unanimously a Resolution was passed approving the same and initially the District Registrar also considered it
and Appellate Authority approved by order dated 11th May, 2007. The so-called objections of the private respondents were at the most after the
General Meeting Resolution passed on 22nd July, 2006, and therefore, it cannot be said that the action of the petitioner-Bank to amend the bye-
laws was contrary to law or against the principles of natural justice.
8.1. Even perusal of Section 13 of the Gujarat Co-operative Societies Act, 1961 and Rule 6 of the Gujarat Co-operative Societies Rules, 1965
mandate upon the society to follow certain procedures namely such proposed amendment to bye-law is to be approved by the General Body of
the society in General Meeting and it is to be forwarded to the Registrar in the manner prescribed. If we peruse the procedure adopted by the
petitioner-Society as above, the requirement under Sub-section (1) of Section 13 of the Act and Rule 6 of the Rules is fulfilled. That widening base
of the representation to the Board of Directors by removing an embargo of minimum numbers of representatives from Ranuj village only, the
amendment has not in any manner violated any of the provisions of the Act or any Rules made thereunder. Therefore also, the amendment is in
consonance with the spirit of the Gujarat Co-operative Societies Act, 1961 and deserves to be upheld in exercise of powers under Article 226 of
the Constitution of India.
The amendment carried out by the petitioner-Bank do not alter overall representation or structure of the Managing Board but mandatory
requirement of representation of eight representatives from the village Ranuj is only done away with and the amendment to the effect that eleven
members on the Board can be from area other than Ranuj is proportionate to the total membership of the area of operation of the petitioner-Bank.
The above decision of the Bank is based on sound financial economics and in consonance with activity of the Bank namely to receive the deposits
and advance loans/credits to its members and ultimately representation in the Board of Directors has to be proportionate to the total strength of the
members and considerations of the Appellate and Revisional Authorities of feelings of the founder members of the petitioner-Bank and likelihood
of change of headquarter of the Bank in future to some other place than Ranuj are not based on sound legal reasoning but on apprehension. On the
contrary, by expansion of area of operation, increase in the total strength of membership has resulted into more receipts of deposits which in turn
gives huge credit facilities to its members, which cannot be said to in any manner detrimental to either overall banking and financial interest of the
Bank or its members.
Considering the overall facts and circumstances of the case and as discussed above, the impugned orders dated 31st January, 2007/1st
February, 2007 passed by the District Registrar, Co-operative Societies, order dated 23rd April, 2008 passed by the respondent No. 2 in Appeal
No. 26 of 2007, order dated 6th October, 2008 passed by the respondent No. 1 Revisional Authorities and are quashed and set aside and
amendment to the bye-laws No. 28 is upheld, as approved by the Additional Registrar (Appeals), Co-operative Societies, State of Gujarat vide
order dated 11th May, 2007.
This petition is allowed to the above extent.
Rule made absolute accordingly with no order as to the costs.