Show Cause Notice U/S 93 Gujarat Cooperative Societies Act Can't Be Issued For Transactions Prior To 5 Yrs From Date Of Inquiry: High Court

"The show cause notice which came to be issued by the respondent authority is also an undisputedly dated 26.07.2011. Therefore, all the transaction alleged against the writ applicants are beyond the period of five years from the date of show cause notice i.e. 26.07.2011 and also from the date of inquiry report i.e. dated 07.06.2011."

The Applicants had argued that the notice was against the provisions of Section 93 of the Act since it was issued beyond five years from the date of inquiry. Further, all the transactions were much prior to 2004. Thus, the provisions of the Limitation Act were to be considered. Essentially, the contention was that any transaction prior to the five year period from the inquiry report which was published in June 2011 would not fall within the ambit of inquiry under the Cooperative Societies Act.

Affirming these contentions, the High Court referred to SCA No. 4402 of 2015 where the High Court had held:

"The inquiry under Section 93 of the Act against any person is permissible only when such person has taken any part inorganization of the society and misapplied or retained money or committed other illegality within 5 years prior to the date of audit, inquiry, inspection under Sections 84, 86 and 87 of the Act respectively or prior to the date of winding up of the society."

Noting that the Applicants had ceased to be members of the bank five years prior to the initiation of inquiry, the show cause notice was held to be not maintainable.

Case No. : C/SCA/12511/2011

Case Title: HIRABHAI KANCHANLAL MODI & 8 other(s) v/s REGISTRAR, COOPERATIVE SOCIETIES & 1 other(s)

Citation: 2022 LiveLaw (Guj) 347