1. This petition is preferred under Article 227 of the Constitution of India challenging the order of learned Civil Judge (Senior Division), Modasa in Special Civil Suit No. 14 of 2010 (old No. Special Civil Suit No. 83 of 2002) dated 30th March 2011.
2. The petitioner No. 1 is Managing Director/Manager of the Dhansura Peoples Co-operative Bank Ltd which is a registered Co-operative society duly registered under the Gujarat Co-operative Societies Act, 1961. An order of winding up of the said Co-operative Society was passed by the Registrar, Co-operative Societies, Gandhinagar and thereafter, the Official Liquidator was appointed by the State Government. The bank carries on its business activities through the Liquidator and the present petition is preferred by the official Liquidator of this Co-operative Society.
3. An application was preferred by the petitioner under section 112 of the Gujarat Co-operative Societies Act, 1961 at Exh. 38 in Special Civil Suit No. 14 of 2010 (Old No. Special Civil Suit No. 83 of 2002) was preferred by the respondent No. 1 (original plaintiff) for recovering an amount of Rs 1,70,000/- from the petitioner and respondent Nos 2 and 3 (original defendant No.1 to 3)towards the recovery of outstanding dues and liquidated damages.
4. It is the say of the petitioner that during the pendency of suit the order for winding up of the said bank was passed under section 107 of the Gujarat Co-operative Societies Act, 1961 vide its order dated 16th February 2006 and a liquidator was appointed under section 108 of the said Act on 29th August 2007.
5. it is the say of the petitioner that no Court shall take cognizance in the matter where the order of winding up of the Co-operative Society is made unnder Section 112 of the Act which further prohibits continuing further proceedings against the society.
5.1 An application, therefore, was moved for disposal of the suit contending that the suit is not maintainable and Court did not accept such an application which is challenged in the present petition. As can be seen from the record the suit has been filed by respondent No. 1 Laxmidas Shamjibhai Contractor for liquidated damages to the tune of Rs 11,70,000/- for illegally detaining JCB machine owned by respondent contractor for a period from 20th June 2001 to 22nd June 2002.
6. In an application Exh. 38 for dismissing the suit, the Court was of the opinion that the dispute pertains to liquidated damages claimed by respondent No. 1 herein as the plaintiff and such dispute could be resolved only by the Civil Court alone and if such a plea is accepted, thereafter the plaintiff may have to requested for a priority for the payment by producing his claim. However, Section 112 of the Co-operative Societies Act would not be applicable.
7. On having heard learned advocate Mr. Golani for the petitioner reliance is placed on the judgment of this Court given in case of Narmada Cotton Co-operative Spinning Mill Ltd Vs Mahendrakumar Indrajeetsinhji Cotton Pvt. Ltd reported in 2011(3) GLH 2246 the Court held thus :
13. On plain reading of Section 112 of the Societies Act it is evident that there is bar operating for the Civil Court in the proceedings of the suit against the Society in case the Society is ordered to be liquidated. The wordings of Section 112 are plain and unambiguous. It says that no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society and when a winding up order has been made no suit or other legal proceedings shall lie or be proceeded with against the society or the liquidator, except by leave of the Registrar, and subject to such terms as he may impose. As it is an admitted position that suit was filed by respondent No.1 prior to order of liquidation, respondent NO.1 was required to obtain the leave of the Registrar for proceeding with the suit. The powers of the Registrar under Section 112 of the Act while considering the matter to grant leave to proceed with the suit or instituting the suit are that of quasi judicial authority because, granting of leave or refusal of leave is to result into adverse consequence to either side, maybe the plaintiff or the defendant, as the case may be. While exercising the power under Section 112 of the Act the Registrar has to largely consider the issue as to whether the suit is filed prior to liquidation and the proceedings of the suit is not going to result into serious prejudice to the proceedings of liquidation or that the liquidator can properly represent the society in the said proceedings. The other relevant circumstances as may be known to law may also be required to be considered by the Registrar, but the powers of the Registrar are more or less at par with the Company Court granting leave to institute or to proceed with the proceedings against the company in liquidation. The important question with which we are confronted with is as to whether the Registrar can take notice of the fact that there is non compliance of Section 167 of the Act. Section 167 has also been inserted with some definite object. For the exercise of various powers under the Gujarat Cooperative Societies Act, 1961 over all the cooperative societies in the State it is necessary that the Registrar should know all the affairs of the society. With this object in view Section 167 of the Societies Act must have been enacted looking to the scheme of the whole Act. It is the Registrar of the Cooperative Societies who is expected to know all litigations which any party intends to file against any cooperative society. On receipt of such a notice he would immediately come to know about the financial condition of the society. He would also be able to know the transactions involved and he can effectively supervise and control a society. If necessary, a compromise could be effected. If necessary, the Committee could be changed. If necessary, an enquiry could be ordered and if necessary, even a winding up order could be passed. It could be that the plaintiff and the office-bearers of the Society might unit, there may be fraud, the plaintiff may not give any notice to the defendant society, a false suit could be filed in which the defendant society might waive the notice and might not even appear. The plaintiff may obtain an ex parte decree. Such a situation can only be averted if before the institution of the suit the Registrar knows the fact that a suit is to be filed against a particular society or for a particular amount or for a particular relief. In order that the Registrar may have control, in order that a cooperative society may not commit any fraud in the large interest of the cooperative movement itself which could be considered a public policy, this mandatory provision has been enacted and, therefore, this mandatory provision cannot even be waived by the Society unlike notice under Section 80 of the Civil Procedure Code.
14. Though Section 80 of the Civil Procedure Code is not relevant for the purpose of deciding the present appeal, but, we deem it fit to make a reference of it from a different perspective. The provisions of Section 80 of the Civil Procedure Code are meant for the benefit of the defendant and therefore defendant could waive them. A notice under Section 167 of the Gujarat Cooperative Societies Act, 1961 has to be served not on the defendant society, but on the third party, that is, Registrar, Cooperative Societies. It is manifest that the mandatory provision of Section 167 is for the protection of the public interest and not just for the protection of an individual society.
15. It is difficult for us to accept the line of reasoning adopted by the learned Single Judge because, the learned Single Judge appears to be of the opinion that the issue as to whether the notice under Section 167 of the Act is necessary can be raised and decided by the Civil Court at an appropriate stage of the suit proceedings. We are afraid that the same is not permissible on the plain language of Section 112 itself. If the Civil Court is left to adjudicate the issue as regards compliance or non-compliance of Section 167 at an appropriate stage of the civil suit, that means, the Civil Court should first take cognizance of the matter and then decide as to whether notice under Section 167 of the Act was required or not required. The words used in Section 112 are "no court shall take cognizance". The expression 'cognizance' has not been defined in the Act. But the word 'cognizance' is of indefinite import. The Hon'ble Apex Court in the matter of S.K.Sinha, Chief Enforcement Officer v/s. Videocon International Limited, reported in 2008 (1) GLH 479 while deciding a matter arising under the Code of Criminal Procedure has explained as to what is the true meaning of the word 'cognizance'. We can take some clue from the observations made by the Honourable Apex Court in the said judgment. In paragraph 12 of the said judgment it is observed as under :-
"The expression 'cognizance' has not been defined in the Code. But the word (cognizance) is of indefinite import. It has no esoteric or mystic significance in criminal law. It merely means 'become aware of' and when used with reference to a Court or a Judge, it connotes 'to take notice of judicially'. It indicates the point when a Court or a Magistrate takes judicial notice of an offence with a view to initiating proceedings in respect of such offence said to have been committed by someone. 'Taking cognizance' does not involve any formal action of any kind."
If the Civil Court is left to decide this issue, then, the Civil Court will have to go into the facts and the merits of the suit and that will amount to taking cognizance. Without taking cognizance, the Civil Court will not be able to decide the issue about compliance or non-compliance of Section 167 and Section 112 specifically prohibits the Court concerned from taking cognizance of any matter except by leave of the Registrar. "What law prohibits something to be done directly the same cannot be done indirectly."
8. Section 112 of the Gujarat Co-operative Societies Act reads thus :
112 Bar of suit in winding up and dissolution matters.
Save as expressly provided in this Act, no Civil Court shall take cognisance of any matter connected with the winding up or dissolution of a society under this Act; and when a winding up order has been made no suit or or other legal proceedings shall lie or be proceeded with against the society or the liquidator, except by leave of the Registrar, and subject to such terms as he may impose;
Provided that where the winding up order is cancelled, the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned, but they shall continue to apply to the person who acted as liquidator.
9. The Division Bench essentially was confronted with a question as to whether the Registrar can take notice of the fact that there is non- compliance of Section 167 of the Act which is inserted with a definite object on the statute book where no suit is permitted to be instituted against the society, or any of its officers in respect of any act touching the business of the society and the Court was also deciding whether the Civil Court can decide or adjudicate the issue as regards compliance or non-compliance of Section 167 at any stage of Civil suit.
10. In the instant case, the petitioner is the manager of the bank whose winding up order passed by Gujarat Co-operative Societies Act and undisputedly, the Official Liquidator has been appointed by the State Government. It is matter of record that the business activities of the bank is being carried through the Official Liquidator.
10.1 The fact is also not in dispute that such a order of winding up is subsequent to the filing of the Special Civil Suit No. 14/2000 as earlier Special Civil Suit No. 83 of 2002. Thus when the order of winding up was passed in the month of February 2006 and consequently appointment of liquidator was in the month of August 2007. Question therefor is that in the suit filed prior to such appointment of liquidation whether the question of taking cognisance under section 112 of Gujarat Co-operative Societies Act would arise or not is extensively answered by the Division Bench of this Court in Narmada Cotton Co-operative Spinning Mill Ltd Vs Mahendrakumar Indrajeetsinhji Cotton Pvt. Ltd (supra) after the order of winding up no suit or any other legal proceedings can be proceeded with against the society or the liquidator except with the leave of the Registrar and subject to such terms as he may impose. Thus, the Court needs to take notice judiciously of such order of winding up.
11. On considering the order impugned it appears that the Court has misdirected itself while interpreting provisions of Section 112 which contemplates seeking of permission of the Registrar and no suit or proceeding can be proceeded with against the society or the liquidator except by leave of the Registrar. The trial court on opining that the dispute of liquidated damages could be proceeded by the Civil Court only and rejected the application preferred by the petitioner herein. Even when the suit is to be proceeded before Civil Court, such permission is a must. The petitioner is the original defendant No.1 and it is required of the petitioner plaintiff to seek necessary permission as required under the law before further proceeding with the suit.
11.1 Resultantly, the order impugned is being quashed and set aside partly, employing Section 112 of the Gujarat Co-operative Societies Act. The original plaintiff respondent herein is directed to apply for the permission of the Registrar before proceeding with the suit. The Registrar, Co-operative Societies on judicious examination of the dispute between the parties shall decide the application seeking permission of proceeding with the pending suit being Special Civil Suit No. 14 of 2010 not later than 4 months of preferring such application.
12. Needless to say that in the event of either party being aggrieved by the outcome of such decision of Registrar, it can approach the appropriate forum challenging the same. This petition stands disposed of in the above terms.
( Ms. Sonia Gokani,J.) mary// Top