IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 9904 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE A.L.DAVE HONOURABLE MR.JUSTICE J.B.PARDIWALA ======================================
1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
Whether this case involves a substantial question of law as to
4 the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
====================================== PATANVAV JUTH VIVIDHKARYAKARI SAHAKARIO MANDALI LTD. & 1 Petitioner(s) Versus STATE OF GUJARAT THROUGH SECRETARY & 4 Respondent(s) ====================================== Appearance :
MR BHARAT T RAO for Petitioner(s) : 1 2. MR P K JANI GP for Respondent(s) : 1 3. NOTICE SERVED for Respondent(s) : 4 5. MSARCHANAUAMIN for Respondent(s) : 4, M/S THAKKAR ASSOC. for Respondent(s) : 5, ====================================== CORAM : HONOURABLE MR.JUSTICE A.L.DAVE and HONOURABLE MR.JUSTICE J.B.PARDIWALA Date : 27/ 07/2012 CAV JUDGMENT (Per : HONOURABLE MR.JUSTICE J.B.PARDIWALA)
1. This petition under Article 226 of the Constitution of India has been preferred by two Primary Level Cooperative Societies registered under the erstwhile Bombay Cooperative Societies Act engaged in the activities of agricultural finance to their members praying for following reliefs:
(A) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent no. 5 to forthwith release agricultural finance to the petitioner society in the name of the petitioner society so that the petitioner societies can disburse the loan to their members as per the provisions of the Act and as per the Scheme of the NABARD society for the reasons stated in the memo of petition and in the interest of poor farmers who are mainly dependent on the loan from the respondent no. 5 which the respondent no. 4 at concessional rate of interest.
(B) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent no. 5 to release agricultural finance to the petitioner societies for its onward disbursement to the members of the petitioner societies and extend the benefit of crop insurance to the members of the petitioner societies as the respondent no. 5 has without authority of law not released the loan without authority of law and thereby depriving the members of the petitioner societies to the benefit of loan at low rate of interest and crop insurance with the sole intention to ruin the activities of the petitioner societies and ruin the farmers who do not support the chairman of the respondent No. 5 bank for the reasons stated in the memo of petition and in the interest of justice.
(C) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent nos. 1 to 3 to initiate proceedings under the Gujarat Cooperative Societies Act, Rules and bye laws of the respondent no. 5 and take all necessary steps against the board of directors of the respondent no. 5 including filing of criminal complaint against them for not releasing agricultural finance to the members of the petitioner society with political vengence and thereby compelling the members to borrow the amount at higher rate of interest though the Government of India through NABARD is extending financial assistance @ 5% p.a. as the petitioner society has given no objection for the incorporation of new primary cooperative society for the reasons stated in the memo of petition and in the interest of poor farmers who are mainly dependent on the loan from the respondent no. 5 which the respondent no. 5 is getting from the respondent no. 4 at concessional rate of interest.
(D) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent nos. 1 to 4 to take steps against the respondent no. 5 pursuant to the representation made by the petitioner pursuant to the order passed by this Hon'ble Court in SCA No. 6751 of 2011 for the reasons stated in the memo of petition and in the interest of justice.
(E) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent no. 4 as well as Reserve Bank of Indian to initiate proceedings against the board of directors of the respondent no. 5 for not following the guidelines of the respondent no. 4 which is meant for farmers and for rural and agricultural development by denying loan to the members of the petitioner society without any reasons because the members of the petitioner society have become member of other primary cooperative society which the board of directors of the respondent no. 5 did not like and supercede the board of directors and appoint new interim board of directors which the respondent no. 4 in consultation with respondent nos. 1 to 3 may deem fit for the reasons stated in the memo of petition.
(F) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction directing the respondent nos. 1 to 3 to take all steps to compel the respondent no. 5 to release agricultural finance to the members of the petitioner society forthwith as if the loan is not disbursed before 30.06.2011, the members of the petitioner society will be ruined and they will lose the Kharif crop after rain and will not get benefit of crop insurance also.
(G) Pending admission, hearing and final disposal of the above special civil application to direct the respondents nos. 1 to 4 to compel the respondent no. 5 to release the agricultural finance / loan to the members of the petitioner society forthwith as the respondent no. 4 has released loan to all 449 societies barring the petitioner societies because the petitioner societies have given no objection for the incorporation of new primary cooperative societies against the wish of the respondent no. 5 for the reasons stated in the memo of petition.
(H) Be pleased to grant any other appropriate relief as the nature circumstances of the case may require.
2. The case of the petitioners as made out in the petition may be summed up thus,
2.1 The petitioners are primary cooperative societies registered under the Act. The petitioners are providing agricultural finance to their members by getting loan from respondent no.5. The petitioners also undertake the activities of selling pesticides, seeds, fertilizers and agricultural equipments. The petitioner societies are getting loan for Kharif crop at the rate of 6% from respondent no. 5 for disbursement to the members of the petitioner societies. The respondent no. 5 is getting this amount of loan from the respondent no. 4 at the rate of 4%. The petitioner societies are disbursing the said loan to its members at the rate of 7% per annum interest.
2.2. It is the case of the petitioners that respondent no. 5 is getting rebate from the State Government and the Central Government to the extent of 2% and 1% respectively, which respondent no. 5 is required to pass over to the petitioner societies and other Primary Level Cooperative Societies. The petitioners have also alleged that since petitioner no. 1 society have given its no objection for registration of new societies and which came to be registered despite objections of respondent no. 5, respondent no. 5 has started taking illegal steps and have stopped giving loan to the society and the members.
2.3. The petitioners have also made reference to the proceedings of Special Civil Application Nos. 5583 of 2011, 5585 of 2011 and 5586 of 2011 which according to the petitioners were filed by respondent no. 5 through some of its members challenging the incorporation of the new societies. According to the petitioners, the said petitions have been dismissed by this Court. A reference is also made to Special Civil Application No. 5582 of 2011 which according to the petitioners were filed by supporters of Chairman of respondent no. 5 challenging the incorporation of two societies. According to the petitioners, the said petition has been withdrawn by order dated 28.04.2011.
2.4 85% of the funds of respondent no. 5 are received from NABARD which is a Central Government Agency. A reference is also made to a judgement in the case of V.J.Patel, Chairman V. Registrar of Cooperative Societies reported in 2010 (1) GLH 633 to urge that though as per the said judgement, a State Cooperative Bank is not “State” within the meaning of Art. 12 of the Constitution, the writ jurisdiction of this Court can be invoked as a public law remedy for fulfilling its duty and obligations.
3. This Court, vide order dated 3.8.2011, issued notice on the respondents with direction to respondents to file their affidavits within two weeks.
4. The respondents, in response to the notice appeared and opposed the petition by filing their respective affidavitinreply.
(I) Stand of respondent no.5:
(a) That the petitioners had earlier filed Special Civil Application No. 6751 of 2011 for similar reliefs which came to be disposed by order dated 20.06.2011, and a A copy of the said order was placed on record at Annexure R1 to the affidavitinreply. While referring to the said order, it was pointed out that a statement was made on behalf of respondent no. 5 that respondent no. 5 would release agricultural finance / loan in favour of farmer members of petitioner societies if one or more is found eligible by 30.06.2011 if they apply. On other grounds, this Court observed that it will be open for the petitioner to bring the matter to the notice of respondent no. 4 NABARD or the petitioner may represent before respondent nos. 1, 2 and 3 if the Registrar of Cooperative Societies has any jurisdiction in the matter. The writ petition came to be disposed of with the said observations and directions. While relying upon this order, it was urged on behalf of respondent no. 5 that this Court may not interfere with the present petition.
(b) That for the period between 1.5.2011 and 31.07.2011, the respondent bank has disbursed loan amounts to the extent of Rs.254.05 lac to about 492 members of petitioner no. 1 society. So far as petitioner no. 2 society is concerned, it was pointed out that the respondent bank has disbursed loan amount to the extent of Rs.50.61 lac to about 88 members during the period between June – July 2011. Additionally, the respondent bank has also disbursed an amount of Rs.
55.74 lac to petitioner no. 2 society during the period April – May, 2011. That no other application by any member of either of two petitioner societies are pending with the respondent bank. The respondent bank also stated that as and when any application is received the same shall be processed immediately and financial assistance will be rendered to the members of the petitioner societies.
(c) That respondent no. 5 only receives refinance facilities from NABARD which are required to be repaid back. Further, the refinance facilities are only to the extent of 26% of the total finance available with the bank for disbursement as loan. Respondent no. 5 also pointed out that respondent no. 5 bank has been sanctioning / disbursing loan in accordance with applicable policies and its byelaws. No complaint or instructions have been received from NABARD. Respondent no. 5 also points out that even if any petitioner is aggrieved by any action or inaction on the part of respondent no.5, the petitioners have alternative remedy under the provisions of Section 96 of the Act to file appropriate proceedings before the Learned Board of Nominees. Attention of this Court was also invited to the affidavitinreply filed on behalf of respondent no. 5 bank in proceedings of Special Civil Application No.6751 of 2011 and various documents which are filed in support thereof.
(II) Stand of respondent no.4 – NABARD :
(a) Respondent No. 4 has no statutory power to direct any District Cooperative Central Bank to provide loan to any society or person. NABARD only provides refinance to various institutions like State Cooperative Banks, Land Development Banks, Regional Rural Banks, Commercial Banks and other approved financial institutions under in inter institutional arrangement. That upon an application made by GSCB, a consolidated credit limit based on various parameters is sanctioned by NABARD. GSCB in turn sanctions the credit limit to eligible DCCBs. The eligible DCCBs are allowed to draw the credit limit sanctioned by submitting applications to GSCB based on their ground level disbursements. DCCBs in turn extend finance to eligible Primary Level Agricultural Cooperative Societies based on their parameters and loan policy. That the share of NABARD in the crop loans sanctioned by DCCBs is only upto 45% and the rest of the amount is out of the financial resources of the DCCBs and there is no direct advancement of loan from NABARD to Primary Level Agricultural Cooperative Societies.
NABARD has opposed the petition and has requested that this Court may not exercise its extra ordinary jurisdiction under Art. 226 of the Constitution of India in favour of the petitioners in the present case.
5. An affidavitinrejoinder has been filed on behalf of the petitioners to the reply affidavit filed on behalf of respondent nos. 4 and 5. The petitioners have disputed certain averments made in the reply affidavits field on behalf of respondent nos. 4 and 5.
6. The respondent no. 5 has also filed affidavitinsurrejoinder to the affidavitinrejoinder filed on behalf of the petitioners. It is reiterated that the petitioners have alternative remedy to file Arbitration Suit under Section 96 of the Act. It is also stated that the petitioners have committed various defaults of the term and conditions of the loan policy of respondent no. 5, which policy is made in exercise of powers conferred under Section 44 (A)(ii) of the Act. It is also urged that the loan policy is made under bye laws no. 31(23) of the byelaws and further that as per byelaw no. 9(2) of the byelaws, it is open for respondent no. 5 to render financial assistance directly to the members of the societies after making them a nominal members. It is also averred that the respondent society is not a “State” within the meaning of Art. 12 of the Constitution of India and therefore, also the present writ petition is not maintainable. A reference is also made to the provisions of Section 73A of the Act to submit that in view of this amended provision, it is not necessary for the societies now only affiliate with the Cooperative Bank to avail the financial assistance.
7. We have heard Shri B.T.Rao, learned advocate appearing for the petitioners, Shri P.K.Jani, Learned Government Pleader for respondent nos. 1, 2 and 3, Ms. Archana Amin, learned advocate appearing for respondent no.4 and Shri Navin Pahwa, learned advocate appearing for respondent no.5.
8. Shri B.T.Rao, learned advocate appearing for the petitioners invited our attention to various orders contained in the petition and documents filed in support thereof. In particular, it is asserted that the petitioners are entitled to avail financial assistance from respondent no. 5 and that respondent no. 5 is under legal obligation to render financial assistance to the petitioners. Various allegations are also made against respondent no. 5 and its Chairman.
9. Shri P.K.Jani, Learned Government Pleader submitted that the respondent bank being a District Central Cooperative Bank is obliged to render financial assistance to the petitioners.
10. Ms. Archana Amin, learned counsel appearing for respondent no. 4 has reiterated the contents of reply affidavit filed on behalf of respondent no.4.
11. Shri Navin Pahwa, learned counsel appearing for respondent no. 5 submitted at the outset that the present petition under Art. 226 of the Constitution of India is not maintainable in view of serious disputed questions of fact, and further in view of alternative remedy available to the petitioners under Section 96 of the Act. He also made reference to the earlier order dated 20.06.2011 made by this Court in Special Civil Application No. 6751 of 2011 to urge that in view of the disposal of the earlier petition, the present petition is not maintainable. Attention of this Court was also invited at length to the affidavitinreply and affidavitinsur rejoinder filed on behalf of respondent bank. In particular, it was urged that respondent no. 5 is entitled to have its own loan policy in view of the provisions of Section 44(A)(ii) of the Act r/w. Bye law No. 31(33). It was also urged that the petitioner societies are defaulters and under the loan policy, it is open for respondent no. 5 bank to take action against defaulters. Without prejudice, it is stated that the members of petitioner societies have been advanced financial assistance and no application of any member of the petitioner societies are pending. In view of the above, it was urged that both on the ground of alternative remedy as also on merits, the present petition may not be entertained by this Court.
12. Having heard learned counsels for the respective parties and having gone through the materials on record, the only point for our consideration in this matter is as to whether the action of respondent no. 5 in not releasing the agricultural finance to the petitioner societies in the name of the petitioner societies can be termed as arbitrary and based on no reason, and further whether the petitioner societies have any legal right in their favour to assert that respondent no. 5 is duty bound to release agricultural finance in the name of the petitioner societies.
13. It appears from the pleadings of the respective parties and also from the contentions of the respective parties that there are highly disputed questions of fact involved in this petition. There are allegations that the petitioners have committed various default on various terms and conditions of the loan policy of respondent no. 5 society, apropos to the powers conferred under section 44(A)(ii) of the Act and is also open for respondent no. 5 society to take necessary action in this regard. It also appears that in view of the amended provisions of Section 73A of the Act, it is not necessary for the societies now to only affiliate with the cooperative bank to avail the financial assistance. Section 73A of the Act makes this position very clear. Section 73A of the Act reads as under :
Section 73A : Freedom for affiliation or disaffiliation with a federal society of choice :
Notwithstanding anything contained in this Act or the rules for the time being in force, the societies in the cooperative credit structure shall be at liberty to affiliate or disaffiliate with any federal society of its choice provided a resolution approving such affiliation or disaffiliation with a federal society is passed in the annual general meeting held for the purpose with threeforth majority of total members, and subject to the rues as may be prescribed and the guidelines issued by the Reserve Bank of India.
Considering the provisions of Section 73A of the Act, it is clear that the petitioners cannot compel respondent no. 5 society to provide financial assistance to the petitioners, more particularly when there are allegations that the petitioners have defaulted. Record also reveals that the petitioners have not only defaulted in complying of various stipulations in the loan policy and the sanction letter too but there are allegations that the petitioners also prevented the officers of respondent no.5 bank to conduct inspection which is permissible as per the loan policy of respondent no.5 bank. As per Clause – 11 of the loan policy of respondent no. 5 bank, read with Section 88 of the Act, it is open for the respondent bank to check records of the borrower societies and also undertake inspection in that regard. The byelaws also permit the bank to stop giving financial assistance in the event the borrower societies do not provide the record for inspection. These facts are borne out by the letter dated 5.4.2011 of the Branch Manager addressed to respondent no. 5 bank which has been provided on record at Annexure S1 collectively.
14. The record further reveals that as per the provisions of Section 44 A(ii) of the Act it is open for respondent no. 5 bank to frame its own loan policy. The agriculturists can avail financial assistance from respondent no. 5 bank in their own name as per byelaw No. 9 Clause – 2 of the respondent bank.
15. Record also reveals that on 31.07.2011 respondent no. 5 had given financial assistance to 492 members and had also advanced a sum of Rs.254.08 lac. It appears that respondent no. 5 bank could have recalled the entire loan amount which was disbursed to the petitioners, but keeping in mind the interest of the members, respondent no. 5 not only has not recalled the loan amount already disbursed, but has continued to disburse the loan to individual members of the petitioner societies. Record also reveals that as against the amount of Rs.280 Crore sanctioned by NABARD respondent no.4, respondent no. 5 has disbursed an amount of Rs.964 Crore towards agricultural credit to the agriculturists in the area. This goes to show that over and above amount of Rs.280 Crore which was given by the NABARD, respondent no. 5 bank has disbursed Rs.684 Crore to the agriculturists.
16. Under the circumstances referred to above, we are of the view that the decision of respondent no. 5 bank cannot be held to be arbitrary and based on no reasons, whatsoever, but even on mere ipse dixit of the said authorities. Respondent no. 5 bank must be held within its competence to frame a policy for the administration of the bank. Unless the decision of policy framed is absolutely capricious and not being involved by any reason, whatsoever, can be held to be arbitrary and founded on mere ipse dixit of the authorities thereby violating Art. 14 of the Constitution.
17. Having regard to the circumstances, we do not find any merit in this petition and the same deserves to be rejected.
18. The petition is accordingly rejected. However, there shall be no order as to costs.
(A.L.DAVE, J.) (J.B.PARDIWALA, J.) *fskazi