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Bhavnagar District Co-operative Bank Ltd. Vs. Government of Gujarat and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application Nos. 2645 of 1981 and 879 of 1982 and L.P.A. Nos. 283 of 1981 and 194 of
Judge
Reported in[1987]61CompCas326(Guj); (1985)2GLR1380
ActsGujarat Co-operative Societies Act, 1961 - Sections 20, 114 and 161
AppellantBhavnagar District Co-operative Bank Ltd.
RespondentGovernment of Gujarat and anr.
Appellant Advocate S.J. Joshi, Adv.
Respondent Advocate M.I. Hawa, Adv.
Cases ReferredCollective Farming Society Ltd. v. State of M.P.
Excerpt:
.....of order of winding up - registrar may extend period in aggregate by four years - winding up proceeding cannot go beyond period of seven years - delay in deciding matter can be deprecated and not condoned. - - 1. these four matters involving a common question of interpretation of section 161 of the gujarat co-operative society act, 1961 (hereinafter referred to as 'the act' for the sake of brevity), can be conveniently dealt with and disposed of by this common judgment, and we are happy to note that mr. joshi, however, urged that the petitioner bank had in some cases moved the government for exercise of the power well with in the time, i......of three years or four years, etc. by the time the government came to handle this matter, seven years' period was already over. the government, even on merits, rejected the revision application upholding the decision of the district registrar. hence, in this special civil application also, the prayer is that the order annexure 'a' passed by the government be set aside and the government be called upon to extend the period in exercise of its alleged powers under section 161 of the act. letters patent appeal no. 283 of 1981 is against the summary rejection of the very district co-operative bank's petition no. 1617 of 1980, and the prayer in the petition was that the state government should be directed to pass an order under section 161 of the act giving exemption to this district.....
Judgment:

N.H. Bhatt, J.

1. These four matters involving a common question of interpretation of section 161 of the Gujarat Co-operative Society Act, 1961 (hereinafter referred to as 'the Act' for the sake of brevity), can be conveniently dealt with and disposed of by this common judgment, and we are happy to note that Mr. Joshi, learned counsel appearing for the four petitioners in the four matters, and Mr. M. I. Hawa appearing for the State Government and the Registrar, common respondents in these four matters, have agreed to this common treatment.

2. In order to understand the controversies, more or less common, in these four matters, a few facts are required to be noted with precision and clarity. Various co-operative societies are existing in Bhavnagar District. In respect of these various societies, liquidation proceedings had come to be initiated by the Registrar under section 107 of the Act because he was of the opinion that those societies ought to be wound up. Interim orders were passed and final orders were also passed with the result that the Bhavnagar District Co-operative Bank Ltd., which appears to be a substantial creditor of these co-operative societies, had come to be appointed as the liquidator under section 108 of the Act. Under section 114 of the Act, the winding up proceedings of a society are to be closed within three years from the date of the order of winding up unless the period is extended by the Registrar. In the case of various societies which are involved in these four proceedings before us, the period had come to be extended to the maximum limit, namely, four years in the aggregate. The Bhavnagar District Co-operative Bank Ltd., the liquidator, however, could not conclude its proceedings of winding up and in one case had made a move through the District Registrar and the move was directed to the State Government to exercise its power under section 161 of the Act. In the Special Civil Application No. 2645 of 1981, there is a prayer sought for to the effect that the State Government be directed to exercise its powers under section 161 of the Act and the period be extended so as to enable this Co-operative Bank to conclude the liquidation proceedings to its satisfaction. In Special Civil Application No. 879 of 1982 also, there is such a prayer preceded by the prayer for quashing of the order, annexure 'A', which was passed by the State Government rejecting the Registrar's attempt not to extend the period beyond a period of three years or four years, etc. By the time the Government came to handle this matter, seven years' period was already over. The Government, even on merits, rejected the revision application upholding the decision of the District Registrar. Hence, in this special civil application also, the prayer is that the order annexure 'A' passed by the Government be set aside and the Government be called upon to extend the period in exercise of its alleged powers under section 161 of the act. Letters Patent Appeal No. 283 of 1981 is against the summary rejection of the very District Co-operative Bank's Petition No. 1617 of 1980, and the prayer in the petition was that the State Government should be directed to pass an order under section 161 of the Act giving exemption to this District Co-operative Bank from the provisions of sub-section (1) of section 114 of the Act, and the ultimate idea was to get the period extended till the winding up proceedings were fully over. Letters Patent Appeal No. 194 of 1984 is directed against the order of our brother G. T. Nanavati J. in Special Civil Application No. 4108 of 1983 which was a petition filed for setting aside the order, annexure 'G', and directing the Registrar to forward the proposal immediately to the State Government and a direction to the State Government to pass appropriate orders about extension of the period beyond three years or seven years, whatever it is.

3. The above synopsis would show that to all intents and purposes, the prayer that is sought for before us is that we should direct the State Government to exercise its powers under section 161 of the Act so that the period of three years or the period up to seven years is still extended so that the applicant, District Co-operative Bank, exercises its powers as a liquidator and completes the liquidation proceedings because it appears to be a substantial creditor of these various co-operative societies concerned.

4. Section 161 of the Gujarat Co-operative Societies Act, 1961, is reproduced below for ready reference :

'161. The State Government may, by general or special order, to be published in the Official Gazette, exempt any society or class of societies from any of the provisions of this act, or may direct that such provisions shall apply to such society or class of societies with such modifications not affecting the substance thereof as may be specified in the order : Provided that no order to the prejudice of any society shall be passed without an opportunity being given to such society to represent its case.'

5. Mr. Joshi, the learned counsel who argued for the District Co-operative Bank, common petitioner in these four matters, urged that section 161 should be so interpreted as to achieve the purpose underlying the objective of advancing the co-operative movement and curbing the contrary object when a co-operative society is not able to discharge its functions and achieve the objectives underlying the co-operative working. We find that the power to exempt or the power to direct which may include the provisions of section 114 also shall apply to such societies with such modifications not affecting the substance thereof as may be specified in the order. Section 114 has been couched by the Legislature in very emphatic terms. Section 114 requires that winding up proceedings of a society shall be closed within three years from the date of the order of the winding up. The anxiety of the Legislature is self-evident. If the society can be revived, it may be revived in reasonable time. If the society cannot be reconstituted or revived, it may be revived, it must obliterate itself from the field or scene so that further obligations or complications do not arise. That is why the Legislature's keenness to see that the winding up proceedings are concluded or closed within a period of three years from the date of the order of the winding up. The Legislature, however, is not oblivious of the day-to-day difficulties and that is why the proviso appended to sub-section (1) of section 114 provides that the Registrar may extend the period in the aggregate by four years. But here, again, the Legislature's anxiety is to see that this aggregate period of four years, which is permissible as the maximum period, is not to be granted at a stretch but not more than one year's period is to be granted at a stretch, the idea being that the Registrar should closely watch those proceedings and should try to see that if the winding up proceedings can be concluded in four years, no extention is given. So the substance of section 114(1) is that the winding up proceedings under any circumstance cannot go beyond a period of seven years.

6. Section 161 is a general section not limited to section 114(1). Let us assume that section is also contemplated to be covered by section 161. The most question that would arise before us is whether such an exemption can be granted or a direction can be issued to apply a section with modification retroactively. To us it appears clear that here the seven year period is over and the resultant effects automatically follow and the powers under section 161, assuming that they are there, cannot be exercised. It is the rule of interpretation that legislative provisions are prospective in operation and not retroactive. The science of interpretation is not oblivious of the legislature's power to give retroactive authority. But this retroactive operation of any law or retroactive exercise of any statutory power conferred by the law is to be inferred only when there is an express provision to that effect or if there is a necessary implication permissible in the facts and circumstances of a particular provision or a particular power. Reading section 161 of the Act and particularly nothing the legislature's anxiety that the substance of any provision is not to be adversely affected, we would say that the power of extending the period under section 114(1), even if presumably existing, cannot be so exercised as to adversely affect the real thrust of the provisions of section 114 of the Act. The said section in very clear and unambiguous language provides that the winding up proceedings of a society are to be closed within three years from the date of the order or within the extended period which cannot in the aggregate exceed seven years in all. There is a legal fiction contained in the proviso appended to sub-section (1) of section 114 of the Act and it is to the effect that immediately after the expiry of seven years from the date of the order of the winding up of the society, the liquidation proceedings shall stand terminated and the Registrar shall pass an order terminating the liquidation proceedings. When the Legislature's intent is explained in very clear terms, that auxiliary verb 'shall' would stare us in our face, and it is too much to say that the powers under section 161 qua section 114 can be exercised retroactively. The fact that the Gujarat Co-operative Societies Act is a sort of a welfare legislation would not mend the matter in any way. Ultimately, it is a question of interpretation of a particular legislative text or the power under that text. The power delegated to the authority by the Legislature cannot be exercised with retrospective effect. This is the view accepted by our brother Ahmadi J. in his judgment in Special Civil Application No. 1311 of 1978 decided by him on June 25, 1985 (Bhavnagar District Co-operative Bank Ltd. v. M. M. Joshi [1987] 61 Comp Cas 318 (Guj), following the ratio of the Full Bench of the Madhya Pradesh High Court in the case of Collective Farming Society Ltd. v. State of M.P., AIR 1974 MP 59, where the Madhya Pradesh High Court was dealing with section 91 of the Madhya Pradesh Co-operative Societies Act, in pari materia with section 161 of our Act.

7. Mr. Joshi, however, urged that the petitioner bank had in some cases moved the Government for exercise of the power well with in the time, i.e., before the expiry of the period of seven years. This can hardly mend the matter. When the legislative intent is clear, cogent and unequivocal, the delay in deciding the matter by the State Government may be deprecated, but cannot be condoned. That delay cannot go to the benefit of the applicant who missed the bus. It is no doubt true that insistence of the District Registrar or the Government that any such proposal for extension of time must pass through the District Registrar cannot be sustained for want of any statutory rule in that regard. We, therefore, would certainly agree with Mr. Joshi that the District Registrar cannot insist that any such move for extention of period must pass through the District Registrar's hands.

8. Mr. Joshi's next argument was that till there was cancellation of registration of a co-operative society, its juristic existence continued. He, in this connection, invited our pointed attention to section 20 of the act. We agree with Mr. Joshi in this regard. A society once registered is a body corporate and as long as the registration of the society is existent, its life also continues. It is because of this that section 20(1) of the Act provides certain contingencies in which a Registrar who has registered the society can cancel the registration, and sub-section (3) very categorically lays down that a society from the day of such order of cancellation is to be deemed to have been dissolved and it would cease to exist as a corporate body. However, this has no relevance to the matters on hand. What would happen to the society ordered to be wound up, but the winding up proceedings are not concluded as provided by section 114 of the Act is not a matter for us to deal with at this stage. All we are concerned with is that the winding up proceedings of the society on the expiry of that period shall be closed and as and when the Registrar passes any further order, the matter can be dealt with at the proper stage. The result is that the two special civil applications stand rejected and the two Letters Patent Appeals stand dismissed. In the two special civil applications, rule accordingly stands discharged. There will be no order as to costs both in the special civil applications and in the Letters Patent Appeals.


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