CASE ANALYSIS OF CHINMAY PREMALKUMAR GANDHI v. ADARSH MULTI STATE COOPERATIVE BANK LTD

BENCH: HIGH COURT OF GUJARAT; MR. JUSTICE C.L. SONI

CITATION: C/SCA/7659/2013


Authors:

Sudhir Yadav (KIIT School of Law, Bhubneshwar)

Elasha Saha (Army Law School, Pune)

Editor:

Yash Raj Gupta (Department of Law, CU)

INTRODUCTION

In this case, Section 17 of Co-operative Societies Act, 1961; Multi State Co-operative Societies Act, 2002 (Central Act) was in issue. The appellant petitioner has challenged the decision of the Learned Single Judge dated 04.12.2013 in Special Civil Application No. 7659 of 2013 holding that even after the merger of a co-operative society registered under the Gujarat Co-operative Societies Act, 1961 with the multi-state co-operative society registered under the Multi State Co-operative Societies Act, 2002, on pending proceedings of Lavad Suit instituted by state co-operative society before the Board of Nominee that it would continue before the said authority. Hence, this Petition was filed under Letters Patent Appeal No. 1237 of 2014 to find out whether there was any effect of merger of co-operative society registered under Act, with multi state co-operative society registered under Central Act.

FACTS OF THE CASE

1. Shri Deesa Nagrik Sahkari Bank Ltd., a co-operative society functioning as a co-operative bank filed Summary Suit No. 702/2005 against the petitioners for recovery of Rs.31,78,681/- with interest at the rate of 19.5% per annum from 01/04/2004 till the said amount is recovered from the petitioners.

2. Shri Deesa Nagrik Sahkari Bank Ltd. decided to merge with Madhav Nagrik Sahakari Bank Ltd., multi state cooperative bank. The Registrar-Co-operative Societies, Gujarat State passed order dated 23/04/2009 under Section - 17 of the Act approving merger of Shri Deesa Nagrik Sahakari Bank Ltd. with Madhav Nagrik Sahakari Bank Ltd. which subsequently changed its name to Adarsh Multi State Cooperative Bank, the respondent No. 1.

3. On account of the above development, Shri Deesa Nagrik Sahakari Bank Ltd. filed an application in summary suit for amendment in the name of plaintiff so as to read Adarsh Multi State Cooperative Bank as plaintiff in the suit. In response to such application, learned advocate for the petitioners in the suit submitted before learned Board of Nominee that as per the amendment, the plaintiff shall be multi state co-operative society and therefore, the Board of Nominee will have no jurisdiction to decide the suit of multi state cooperative society.

4. Learned Board of Nominee accepted such plea raised by learned advocate for the petitioners and passed order dated 10/08/2010 for return of the suit plaint to the plaintiff for presenting it before the competent authority.

5. The above order passed by learned Board of Nominee came to be challenged by respondent No. 1 by filing Appeal No. 24 of 2012 before the Gujarat State Co-operative Tribunal. The Tribunal heard and decided the said appeal with other appeals which were also filed against the order passed in other two suits. The Tribunal allowed all appeals by the order dated 30/01/2013 and set aside the orders made by learned Board of Nominee and directed learned Board of Nominee to accept the application for amendment preferred by the plaintiff bank, frame necessary issues and decide the suits on merits on the basis of evidence which may be led by the parties within three months from the date of the order.

ISSUES

1. The effect of merger of a co-operative society registered under the Co-operative Societies Act, 1961 with multi state co-operative society registered under the Multi-State Co-operative Societies Act, 2002 on the pending proceeding of Lavad Suit instituted by the state co-operative society before the Board of Nominee for the disputes under Section 96 of the Co-operative Societies Act.

JUDGEMENT

Having heard the educated bankers for the gatherings and having scrutinized the record of the case, Shri Deesa Nagrik Sahakari Bank Ltd. documented Lavad Suit No. 702 of 2005 against the solicitors on 20/09/2005. Pending the said suit it set out to converge with Madhav Nagrik Sahakari Bank Ltd., a multi-state co-usable society, presently respondent No. 1. There is no question about the way that such merger was endorsed by the Registrar of the Cooperative Society of the State vide request dated 23/04/2009 under Section 17 of the Act with one of the condition to proceed with the legitimate procedures started by Shri Deesa Nagrik Sahakari Bank Ltd. Condition No. 6 in the request additionally gives that on scratch-off of enlistment of Shri Deesa Nagrik Sahakari Bank Ltd., Shri Deesa Nagrik Sahakari Bank Ltd. will be known as Madhav Nagrik Sahakari Bank Ltd. and all advantages and liabilities of Shri Deesa Nagrik Sahakari Bank Ltd. will stand vested in Madhav Nagrik Sahakari Bank Ltd.

About the provisions of Section 20 and 37 of Gujarat Co-operative Societies Act, 1961, Hon'ble Division bench saw that by virtue of section 20 of the Act of 1961, the legal existence of State cooperative Society would stand drop and immediately will stop to be a body corporate under Section 37, not to be qualified for establish and safeguard suits or other lawful procedures. In the said choice, the Court did not held that the merger of the state helpful society affirmed under Section 17 of the act would deliver the procedures of the pending Lavad Suit blemished. In the said choice, the Court inspected that when the cooperative bank registered under the act has merged with the multi scheduled bank enlisted under the central act, regardless of whether recorded under the Multi State Cooperative Societies Act, 2002 could be allowed to execute the cash order under the provisions of the Act. With regards to such question, the Court inspected the impact of crossing out of enlistment of the cooperative society under section 20 read with Section 37 of the Act after it merged with multi state agreeable society and held that it would stop to exist and lose its status as body corporate and in this manner, the announcement went in support of it’s under the arrangements of the act cannot be executed by the multi-state agreeable society by falling back on the provisions of the act. In our view the said decision has no application to the facts of the current case.

CONCLUSION

Learned advocate Mr. Thakkar was correct while presenting that absence of provisions for move of the suit on merger of state agreeable society into multi state helpful society, would make break if the conflict raised by the solicitors about losing of ward by the Board of Nominee on merger of the general public is acknowledged. Truth be told, when explicit arrangements is made for continuation of lawful procedures after merger particularly with the expression 'transferee', the governing body plainly planned to proceed with legitimate procedures by or even against other sort of the general public on merger of the state agreeable society. Such being away from the governing body rising up out of Sub-Section 4 of Section 17 of the Act, the Tribunal could be said to have arrived at right resolution on understanding of Section 17 of the Act that the Board of Nominee submitted grave blunder in restoring the plaint to the offended party. No impedance in such request of the Tribunal is called for in exercise of forces under Article 226/227 of the Constitution of India. There is no debate about the way that the essentials under Section 17 (1) of the Act are consented for merger of Shri Deesa Nagrik Sahakari Bank Ltd. with Madhav Cooperative Bank Ltd. In this manner, Sub-Section 4 of Section 17 would apply to the suit procedures established by Shri Deesa Nagrik Sahakari Bank Ltd before the Board of Nominee. Area 20 of the Act does not remove the impact of Sub-Section 4 of Section 17. Sub-Section 1 of Section 20 first orders the Registrar to make a request for undoing of enlistment of the general public on the off chance that it moves the entire of its advantages and liabilities to another general public or amalgamate with another general public. Sub-Section 3 thereof accommodates considered disintegration of such society and even command that it will stop to exist as a corporate body. In this way, on merger, the enlistment of the said helpful society will be dropped and it would stand broke up and will stop to exist as a corporate body. Be that as it may, the lawmaking body in its astuteness have taken enough consideration to spare the pending procedures initiated by such society before the Board of Nominee or before the Authority by giving in Sub-Section 4 of Section 17 that such procedures might be proceeded or started by or against amalgamated society, the changed over society, the new social orders or the transferee by and large. Along these lines, on occurring of the occasions thought about by Section 20 and 37, the procedures pending for the sake of the blended society could proceed by or against the consolidated society or the transferee.

Without any arrangements either in the Act or in the Central Act to deliver the pending procedures started by the state helpful society deficient and taking into account the particular arrangement for proceeding with such procedures by or against the consolidated society or the transferee according to Sub-Section 4 of Section 17 of the Act, Section 20 and Section 37 cannot be perused to hold that educated Board of Nominee would lose or stop to have ward to choose the suit recorded by Shri Deesa Nagrik Sahakari Bank Ltd.

Thus, we agree with the decision made by the Gujarat High Court to dismiss the petition.

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