Madras High Court
V.P.Periyasamy vs The General Manager/ on 5 October, 2009
Author: S.Manikumar
Bench: S.Manikumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 05.10.2009
CORAM
THE HONOURABLE MR.JUSTICE S.MANIKUMAR
W.P.Nos. 29428 and 29429 of 2008
and
M.P.No.1 of 2008
V.P.Periyasamy ... Petitioner
Vs
1.The General Manager/
District Registrar of Industrial
Cooperative Societies,
District Industries Centre,
Coimbatore-641 001.
2.The Special Officer,
The Arignar Anna Cooperative
Industries Estate Ltd., 1807
Anna Industrial Park,
544, Varun Srihari Complex,
100 feet Road, Gandhipuram,
Coimbatore-12. ... Respondents
Prayer: Writ of Declaration declaring that the bye-law 11(c) of the 2nd respondent society is ultra vires in violation of Articles 14, 15, 19(1) (e) and 21 of the Constitution of India, and Section.23 of the Tamilnadu Co-Operative Societies Act, 1983, and the Rules framed thereunder.
For Petitioner : Mr.N.Manokaran
For Respondents: Mr.P.Subramanian, AGP for R1
Mr.VijayNarayanan (Senior Counsel) for
Mr.R.Parthiban for R2
ORDER
Petitioner, a member of a society formed under the Tamilnadu Co-operative Societies Act, has sought for a declaration declaring bye-law No.11-c of the second respondent society, as ultravires of Articles 14, 15, 19-1(e) and 21 of the Constitution of India read with Section 23 of the Co-operative Societies Act and the rules framed thereunder: He has also sought for a Writ of Certiorari to quash the order of the General Manager/Registrar of Industrial Co-operative Societies, Coimbatore, dated 14.11.2008, by which the petitioner has been removed from the membership of the second respondent society. As pleadings and submissions are common, both the writ petitions are taken up together and dispose of by a common order.
2. Facts leading to the writ petitions are as follows:
On 18.9.1996, the petitioner enrolled as a member in Arignar Anna Co-operative Industrial Estate to frame object is to carry on business of developing and maintaining industrial estate for the members, to establish cottage,small and minimum scale industries. He has paid a sum of Rs.45,527/- and Rs.27,500/- for allotment of land in his name on 18.9.1996 and 8.8.2006 respectively. The name of the second respondent society was lateron amended as Anna Industrial path. The total membership of the society is 1128 and only 550 have paid the value for the purchase plots. The second respondent society had purchased lands to an extent of 3.70.31 acres out of the amount contributed by the members to the extend of two crores till 1999 in various villages namely, Kittampalayam, Karumathampatti, Thekkalur etc. Though lands have been purchased in 1999, no allotment has been made in the name of the petitioner. In the meantime, the respondents had private negotiation with one M/s. Suzlan Infrastructures Limited had ended into settlement and thereby acted against the interest of the members.
3. To know the details about the administration, management and allotment of lands etc, the petitioner sent a petition dated 1.8.2008 under the Right to Information Act seeking for the above details. It is the contention of the petitioner that the above said petition has provoked the respondents 1 and 2, to issue show cause notices dated 31.10.2008 and 22.9.2008 calling upon the petitioner to submit his explanation as to why he should not be removed from the membership of the society, in view of violation of bye-law No.11(C) of the second respondent's society. Though the petitioner, has submitted his explanation dated 8.11.2008, stating that the amended bye-law restricting the place of residence of the petitioner to the area of operation of the Co-operative Industrial Estate has violative of the Constitutional Provisions and requested the General Manager/District Registrar of Industrial Co-operative Societies, Coimbatore, the first respondent not to proceed further and also sought for one month time to give a comprehensive reply, notwithstanding the same, the first respondent, by order dated 14.11.2008, ordered that the petitioner is disqualified to be a member as per bye-law No.11(C) of the bye-laws of the society read with Section 23(h) (i) of the Co-operative Societies Act and removed the petitioner from the membership of the second respondent's society. Both the orders are under challenge in these writ petitions.
4. The General Manager/District Registrar of Industrial Co-operative Society, Coimbatore, the first respondent, in his counter affidavit has admitted that the object of Arignar Anna Co-operative Industrial Estate is to carry on the business of developing and maintaining industrial estate. He further submitted that every Co-operative Society is having its own area of operation and that the services of the society would be applicable only to those who are residing within the area of operation of the society. According to him, the second respondent's society has collected advance in the form of deposit from the members to generate funds for the purchase of lands. He has denied the contention that the members have paid the value for the purchase plots. According to him,the society has purchases the lands utilising its own general funds, the loan received from the financial institutions, the assistance received from the government and advance received from the members. The management of the estate has taken a decision to give priority in allotments of lands to those who have paid the advance amount.
5. The first respondent has denied the contention that a private negotiation was made with M/s.Suzlan infrastructures limited the general body of the estate resolved to swap a portion of its land with M/s.Suzlan infrastructures limited which has benefited the estate in the following manner (1) settlement of term loan outstanding of Rs.98,49,519 with the TAIC is follow by M/s.Suzlan infrastructures limited. (2) Code 115.11 acres of land from M/s.Suzlan infrastructures limited lieu as 1.0593 acres numbering the above advantages to the second respondent's Co-operative Estate necessary approval was granted by the Registrar of Industrial Co-operative Societies, Chennai, to swap a portion of land with M/s.Suzlan infrastructures limited. Based on the results of the general body, exchange deed was executed after getting prior approval of the Registrar of Industrial Co-operative Societies, Chennai. After swapping of the land revised layout has been submitted before the authorities and the approval is awaited. Therefore, the first respondent has submitted that the issue of swapping the land with M/s.Suzlan infrastructures limited has no relevance to the impugned order of the General Manager and District Registrar of Industrial Co-operative Societies, Coimbatore
6. The first respondent has further submitted that as per Section6 of the Tamilnadu Co-operative Societies Act, one of the conditions of registration of a society is that, the members to be admitted to a society under the Act, should reside or own property in the in an area of operation of the society. He has also submitted that the subject matter of the bye-laws i.e. 11(c) is enumerated in Rule 6 of the Tamilnadu Co-operative Societies rules 1988, according to which, the bye-laws of every society shall have its own area of operation and the qualifications for admission to membership of the society. He therefore submitted that the bye-law is not violative of the statutory and the constitutional provisions.
7. The District Registrar has further submitted that as per Section 29 of the Tamilnadu Co-operative Societies Act, has placed restrictions of withdrawal of share or interest by the members of the societies, except in the case of death or withdrawal or removal of the member or permanent shifting of his residence outside the area of operation of the registered society. He also submitted that as per Section 21 of the Act, the members shall possess the qualification as may be prescribed in the bye-laws. Therefore, on a combined reading of section 6 of the Tamilnadu Co-operative Societies Act, read with rule 6 of the rules section 21, 29 of the Act, every member of the registered society shall have or own an immovable property in the area of operation of the society and if a member shifts his residence out of the area of operation of the society, he shall attract disqualification as a member and therefore, the amendment made in bye-law 11(c) is well within the statutory provisions of the Act and it is not violative of the Article 14 or 19 (I) (e) of the Constitution of India.
8. The first respondent has further submitted that a person who was qualified at the time of admission made, may attract any of the matters leading to disqualification on a later date. In such an eventuality, the Registrar shall decide as to whether such person has suffered disqualification for which, necessary procedure is prescribed under the Act and the rules. The respondents have denied the contention of the petitioner that the petition dated 01.09.2008, sent under the Right to Information Act, is the cause for issuing the notices dated 22.09.2008 and 31.10.2008.
9. He has further submitted that the General body of the second respondent's society has unanimously approved the amended bye-laws and the same has been registered by the General Manager and District Registrar of Co-operative Societies, Industrial Estate Society, Coimbatore, on 11.4.2007. He has also contended that though the amendment came into effect on 11.4.2007, the petitioner has not chosen to challenge the same.
10. As regards the show cause notices, he submitted that though the petitioner has contended that the amended bye-law is violative of the constitutional provisions he has not denied the shifting of his residence out of the area of operation of the society. The first respondent has submitted that the order of removal was issued duly observing the formalities as contemplated under rule 35 of the Tamilnadu Co-operative Societies Rules, 1988.
11. The first respondent has further submitted that as per section 52 of the Tamilnadu Co-operative Societies Act, any person who is aggrieved by an order or decision under section 23 can file an appeal to the Registrar, and as per the Full Bench Decision of this Court, in K.Marappan Vs. Deputy Registrar of Co-operative Societies, the writ petition filed against the society is not maintainable. For the above said reasons, he prayed for dismissal of the writ petition. The Special Officer of the second respondent's society has filed a counter affidavit on the same lines.
12. Assailing the constitutional validity of the amended bye-law 11(c) of the second respondent's society Mr.N.Manoharan, learned counsel appearing for the petitioner, submitted that when the petitioner became a member on 18.9.1996, no condition was imposed by the society that a member to be admitted to the society should be residing within the area of operation of the society.
13. Referring to the object of society namely, to carry on business of developing and maintaining the industrial estate for the members to establish cottage of small and minimum scale industry, he submitted that the change of residence on account of family circumstances, or for any other cause would not in any way affect the right of the member of the society to carry on business in the plots proposed to be allotted by the second respondent society and no restrictions can be made by introducing an amendment to the bye-laws restricting the choice of residence of the petitioner or for the matter disqualify a member of the society on the sole ground of a change of residence outside the area of operation of the society.
14. According to the learned counsel for the petitioner though the society was found and registered as early as in the year 1994, even after lapse of 14 years, no need for allotment has not been executed in favour of the members and therefore, it is unreasonable to expect that the members of the second respondent's society to reside only within Coimbatore District, and that they cannot leave the area of operation for some other location or carry on business to lead their life.
15. It is also the further contention of the learned counsel, that even if the members of the second respondent's society resides outside the area of operation, they can very well carry on business within the area of operation of the society in which they were members and contributed a reasonable sum for the purchase of certain extent of land. According to him, the object of the second respondent's society is to carry on business of developing and maintaining industrial estate for the members to establish cottage small and medium scale industries and for this purpose, a member of the society cannot be compelled to reside within the jurisdiction of Coimbatore District.
16. Referring to Section 21 (1) of the Co-operative Societies Act and Article 19 (1) (e) of the Constitution of India, he submitted that when the Act does not impose any restriction with regard to permanent residence for doing business and Article 19(1)(e) guarantees freedom to reside and settle in any part of India, the respondents cannot impose any condition indirectly that the members should reside only within the area of operation of the society and it amounts to placing unreasonable restrictions on the right guaranteed under Article 19(1)(e) of the constitution of India . According to the learned counsel for the petitioner, the amended bye-law runs contrary to the Constitutional right of the petitioner to carry on business and also to reside in a place of his choice and even if the amendment has to be given effect, it cannot be applied to those who have become members, in the year 1996, retrospectively.
17. Inviting the attention of this Court to the sequence of events from the day, when he sought for particulars about the transactions relating to M/s.Suzlan infrastructures limited, and allotment of lands etc. under the Right to Information Act, the Special Officer of the second respondent's society has decided to issue a show cause notice dated 22.9.2008, calling upon the petitioner to submit his explanation as to why he should not be removed from the membership, he submitted that the above acts reflect his anxiety to some how remove the petitioner from the society. He also submitted that having realise that the second respondent has no jurisdiction to issue a notice under rule 35 of the Tamilnadu Co-operative Societies Act, he has somehow influenced the first respondent to initiate action to remove the petitioner from the society and in these circumstances, he submitted that the action of the second respondent is nothing, but usurping the powers of the first respondent, which exhibits bias and malafide on the part of the second respondent.
18. Placing reliance on a decision reported in Bhau Ram Vs. Baij Nath Singh and others, reported in AIR 1955, Supreme Court 1476, Learned counsel for the petitioner submitted that the reasonableness of any law has to be judged in the context of the fundamental rights conferred on the people regarding acquiring, holding, or disposing of the property. By introducing an amendment to the bye-laws after elapse of 14 years, the second respondent society and cannot put an embargo on the right of a person to acquire property on the sole ground, that he has shifted his residence outside the area of operation of the second respondent society.
19. Referring to a decision in Bhagwan Dass Vs. Kamal Abrol reported in 2005-04-Law Weekly 267, Learned counsel for the petitioner submitted that, the word 'residence' employed in Tamil Nadu Co-operative Societies Act, and the rules, framed thereunder, has to be interpreted in the context of the purpose and object for which the societies are created and the construction of the term is governed by the connotation in which it is used or the result designed to be achieved by its use. As the primary object of the second respondent society is to carry on business of developing and maintaining industrial estate for the members to establish cottage, small scale industries, mere change of residence would not in any way disqualify the petitioner from conducting his business within the area of operation.
20. Per contra, reiterating the averments made in the counter affidavit filed by the first respondent, Mr.P.Subramanian, Learned Additional Government Pleader, submitted that, the amendment to the bye-laws is in consonance with Section 6 of the Tamil Nadu Co-operative Societies Act, which deals with the conditions of registration of a society, that individual members to be admitted in a society, shall reside in the area of operation of the society.
21. Referring to rule 6 of the Tamil Nadu Co-operative Societies Act, rule 1988, and section 29 of the Act, dealing with withdrawal of the shares, refund of shares, etc., in the case of a member, shifting his residence out of the area of operation of the society, and the qualifications stipulated in section 21 of the Act, he further submitted that, a combined reading of all the provisions would lead to a conclusion that every society shall have its own area of operation, and the services of the society would be available only to the members who are residing in the area of operation of the society.
22. Placing reliance on the decision in Mr.Vijayanarayanan, Learned Senior counsel for the second respondent, submitted that the bye-laws have been amended in accordance with the statutory provisions, and the issue as to whether the membership could be denied to a citizen of this country, who is located outside the area of operation of the society is no more 'res intergra'. He further submitted, that there is no question of infringement of any fundamental rights of a citizen, to settle down in any part of the country, for the purpose of carrying on business, but the restriction is placed, by virtue of bye-laws of the society which are not against public policy.
23. He further submitted that, when the formation and running of a Co-operative Society is governed by a law enacted for that purpose namely, TamilNadu Co-operative Societies Act, it is open to, impose restrictions on the rights of the members, by appropriate provisions in the bye-laws of the society. According to him, the restrictions imposed by the amendment extending the benefits and services of a society to the members residing within the area of operation, is in accordance with the sections, 6, 21, 29 of the Act read with rule 6 of the TamilNadu Co-operative Societies rules framed thereunder, and therefore, there is no surrender or infringement of any fundamental right to the amended bye-law. As each society has a specific area of operation, restricting the services and the benefits of a society, to the members residing within the area of operation, as per the scheme of the Act, the amendment of the bye law cannot be said to be arbitrary or against the provisions of the Contract Act, or the Constitution of India, particularly, 19(1)e of the Constitution of India.
24. Refuting to the averments of malafide and bias, in issuing the notice dated, 22.09.2008, Learned Senior counsel further submitted that, the said notice was issued when it came to the knowledge of the second respondent, that the petitioner had changed his residence out of area of operation of the society and therefore, it was proposed to remove the name of the petitioner, from the list of the members of the society, as per sub-class H class 1 of Section 23 of the TamilNadu Co-operative Societies Act, 1983.
25. Lateron, an application dated 23.10.2008, was submitted to the first respondent, requesting him to pass an order, directing removal of the petitioner, from the membership of the society, for the reason that the petitioner had changed his residence out of the area of operation of the society attracting disqualification, under the statutory provisions, and bye-law No.11(C) of the society. He further submitted that, the procedure contemplated for removal of the petitioner is in accordance with the statute, and the rules framed thereunder. For the above said reasons, he prayed for dismissal of the Writ petition.
26. Heard the learned counsel for the parties and perused the materials available on record.
27. Before adverting to the facts of the case, it is relevant to extract the provisions of the Tamilnadu Co-operative Societies Act, and the rules, framed thereunder.
Section 2(8) of the Co-operative Societies Act defines, "Bye-laws" means the registered bye-laws for the time being in force and includes a registered amendment of such bye-laws.
28. As per the section 6 of the Act, no society, other than society of which a member is a registered society shall be registered under this Act which does not consist of at least 25 independent persons qualified to be admitted as members under this Act and residing or owning immovable property in the area of operation of the society.
29. As per Section 9(D) of the Act, the area of operation of the proposed society should not overlap the area of another registered society of the same class or category save as permitted by the Registrar.
30. Section 11 deals with, amendment of the bye-laws of registered society and it is extracted here under.
31. Section 12 of the Act empowers, the Registrar to direct amendment of bye-laws if he is satisfies that for the purpose of altering the area of registered society or for the purpose of improving the services referred by it or for any other purposes specified in the rules after issuing appropriate notice to the society as to why, the amendment should not be made.
32. Section 21, in chapter 3 of the Act, deals with the qualifications of members and their rights and liabilities subject to the provisions of section 23. Among other persons stated in section 21, any individual competent to contract under section 11 of the Indian Contract Act 1872, is eligible to become a member of the society, provided that the individual, or the registered society, or the body of persons refer to in (i), (ii) and (iv) shall possess such further qualifications, as may be specified, in the rules or the bye-laws.
33. As per Section 21 (ii) of the Act, notwithstanding anything contained in clause (i), or in any other provisions of this Act, the Registrar may, either suo motu or on application at any time, by order and after recording the reasons in writing, remove any individual deemed to have been admitted as a member of the society under clause (i) from such membership if such individual is not eligible to be a member of such society under the provisions of this Act the rules and the bye-laws of the society. Provided that no order under this clause shall be passed without giving a reasonable opportunity of being heard to the parties concerned.
34. Section 23 sets out the various conditions under which a member, attracts disqualification for membership of a society. As per Section 23(1)H, of the Act, if a member does not possess the qualifications with reference to the principle object of the society, prescribed in the rues, or the bye-laws, he can be disqualified from the society.
35. Section 24 deals with the rights of members to services by registered society and application for redress and it states that.--(1) Every member of a registered society shall be entitled to the services available to the members of the registered society under the provisions of its bye-laws and such services shall, on application made by him, be rendered to him by the board.
(2) if any member of any registered society is refused any services or where the decision of the board on his application for services is not communicated to him within such time as may be prescribed he may apply to the Registrar for redress.
(3) An application to the Registrar under sub-section(2) shall be made within such time as may be prescribed.
(4) If the registrar, is satisfied that the refusal of any service is unreasonable, improper or discriminatory, he may, after giving the board an opportunity of making its representations, by order, direct the board to render the service:
Provided that before passing an order under this sub-section, the Registrar shall consult the board of the financing bank of which the society is a member.
(5) Where any service is rendered by the board in pursuance of an order under sub-section (4), the board and the member to whom such service is rendered shall have the same rights and be subject to the same liabilities in relation to such service as if no such order has been made.
36. Section 29 deals with the restrictions on withdrawal of share or interest by interest by members of registered societies and it states that--Except in the case of death or expulsion or removal of the member or the permanent shifting of his residence outside the area of operation of the registered society, the share or interest in the capital of such member shall not be refunded unless-
(a) Such member has held the share or interest for not less than two years; and
(b) Such refund is in accordance with t bye-laws of the registered society:
Provided that the Government may, by rules, specify the class or classes of cases in respect of which refund may be made before the expiry of the period of two years.
37. As per rule 6 of the Tamilnadu Co-operative Societies, rules 1988, among other matters set out in the said rules, the bye-laws of the society may deal with the area of its operations, the object of the society the purposes for which its funds may be applied the qualifications for admission to membership and the payment if any to be made, or interest to be acquired as a condition proceeded for exercising the right of membership.
38. Rule 35, empowers, the Registrar of his own motion, or on application by order in writing, direct the removal of a member of a society, from such membership if in the known of the Registrar such member was or has become subject to any of the disqualification mentioned in section 23. Provided that no member of a society shall be removed from such membership, under this sub-rule without such member being given an opportunity of making his representations.
39. As per clause 4 of Form No 1 prescribed for application under section 8 of the Tamil Nadu Co-operative Societies Act, 1983 for registration of the society, the society has to furnish,
(a) The area of operation of the proposed society, (names of the villages including hamlets if any to be specified)
(b) Whether there is any other Co-operative Society of the same class or category functioning in the area specified in (A) above,
(c) If so the need for the proposed society.
40. Perusal of the bye-laws of the second respondent society shows, that Arignar Anna Co-operative Industrial Estate Ltd., IND No.1807, commercially named as "Anna Industrial Park" was registered as a Co-operative Society, initially with its area of operation confining to Revenue Taluks of Coimbatore, Avinasi, Palladam, in Coimbatore district. Subsequently, the name, constitution and the registered address had been changed on 07.06.2005, and the area of operation has been confined to Coimbatore District alone. Among other things the main object of the society, is to carry on business of establishing, and running, of an industrial estate, for small scale industries and for the purpose of obtaining the said object the society, was empowered to carry on various activities set out in the bye-laws.
41. Before the introduction of amended byelaw of 11-C the membership of a estate ceases;
(a) On expulsion and,
(b) On death in the case of individual
(c) On the dissolution of a Co-operative or a firm registered under any Act.
42. Perusal of the bye-laws produced by the petitioner shows that as per 39(e) (i), a General body meeting of the estate shall be hold in a Co-operative year, for the purpose of amendment to bye-laws, and notice shall be sent to each of the member in due time either by circulated, or any other form, and such notice shall give the member a reasonably clear idea of the nature of amendments proposed.
(ii) if there is any irregularity in the service of notice, it shall not invalidate the proceedings.
43. Bye-law No.40 enables, the general body among other things to make amendment or appeal of any existing bye-law or the enactment of a new bye-law. Bye-law No.6, is parimateria with section 21 of the Tamil Nadu Co-operative Societies Act, and it is extracted here under,
(a) No person, or body of persons, or partnership, is concerned is eligible for admission, if he/it attracts any disqualification enumerated in section 23 of the Act.
(b) A member of the estate shall cease to be a member, if he or she or it is subject to any of the disqualification enumerated in section 23 of the Act.
(C) Any member who fails to fulfill the obligations on his part, in respect of allotment of developed plots or units or in the commencement of the units/industry shall cease to be a member and the member shall be dealt with under class(G) of sub-section 2 of section 23.
44. As per the amended bye law 11, the membership of the Estate shall ipsofacto cease.
(a) On expulsion,
(b) On death in the case of individuals, and
(c)Changes his residence out of the area of operation of the Estate.
(d) On the dissolution of a Co-operative or a firm registered under any Act.
45. The area of operation of the second respondent society, at the time of formation of the society which was confined, to the Revenue Tauks of Coimbatore, Avinasi, Palladam in Coimbatore district, subsequently, altered, and confined to Coimbatore District alone. Reading of Section 6 of the TamilNadu Co-operative Societies Act 1983, and the rules framed thereunder, and Form I prescribed under the Act, to be submitted under section 8 of the Co-operative Societies Act 1983, for registration of a society, makes it clear that a society should atleast have 25 independent persons qualified under the Act, rules, and bye-laws, to be the members of the society, and the services of the society are restricted only to the members of the society, residing or owning immovable property in the area of operation of society. The statutory provisions, and the rules also makes it clear that, the area of operation of one society, should not overlap with the area of operation of another society, except with the permission of the Registrar. Thus, the principle of area of operation of various societies registered is well defined under provisions of TamilNadu Co-operative Societies Act 1983, and the rules framed thereunder.
46. Provisions stated supra, enables the Registrar of Co-operative Society, to make amendments to the bye-laws within the frame work of the statutory provisions. The General body meeting of the second respondent society is empowered to amend any bye-law of the society, and that any irregularity in the service of notice on any member will not vitiate the proceedings of the General body meeting. The petitioner, is bound by the decision of the General body of the society. Though the issue in Zoroastrian Co-operative Housing Society Ltd., deals with the formation of a society exclusively for parsi community and the restriction placed on the rights of the members of such society, to alienate the property vis-a-vis, section 10 of the Transfer of property Act, the Supreme Court, after elaborate consideration of the purpose of Co-operative movement at paragraph 11 has held as follows:
"The Co-operative movement, by its very nature, is a form of voluntary association where individuals unite for mutual benefit in the production and distribution of wealth upon principles of equity, reason and common good. No doubt, when it gets registered under the Co-operative Societies Act, it is governed by the provisions of the Co-operative Societies Act and the Rules framed thereunder.
In State of U.P. and another V C.O.D. Chheokiciety Ltd., and others (1997) 3SCC 681, this Court after referring to Daman Singh's case (supra) held in paragraph 16 that:
"Thus, it is settled law that no citizen has a fundamental right under Article 19(1)(c) to become a member of a Co-operative Society. His right is governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfillment of the qualifications prescribed to become a member and for being a member of the society and on admission, he becomes a member. His being a member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the society has no independent right qua the society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act rules, and the bye-laws and is subject to its operation. The stream cannot rise higher than the source".
47. In Bhau Ram's V Baij Nath Singh case reported in 1995 Civil Appeal No.270 relied on by the learned counsel for the petitioner, the issue was regarding the constitutionality of certain provisions of the pre-emption laws prevailing in the states of Madhya Pradesh, Delhi, and Maharashtra. The Supreme court while considering Section 10 of Rewa state pre-emption Act (1946), which imposed the restriction by which a person owning immovable property, adjoining the property sold or foreclosed is entitled to pre-empt, subject to, the order provided in the provisions, while examining the right of pre-emption in respect of, urban immovable property, vis-a-vis the restrictions imposed, at para No 7 and 11 held as follows:
"The constitution now prohibits discrimination against any citizen on grounds only of religion, race, caste sex, place of birth or any of them under Article 15 and guarantees a right to every citizen to acquire, hold and dispose of property, subject only to restriction which may be reasonable and in the interest of the general public. Though therefore, the ostensible reason for pre-emption may be vicinage, the real reason behind the law was to prevent a stranger from acquiring property in any area which had been populated by a particular fraternity or class of people. In effect, therefore the law of pre-emption based on vicinage (S. 10(2) is really meant to prevent strangers i.e., people belonging to different religion, race, or caste, from acquiring property. Such division of society now into groups and exclusion of strangers from any locality cannot be considered reasonable, and the main reason therefore which sustained the law of pre-emption based on vicinage in previous times can have no force now and the law must be held to impose an unreasonable restriction on the right to acquire, hold and dispose of property as now guaranteed under Article 19(1),(f) for it is impossible to see such restrictions as reasonable and in the interests of the general public in the state of society in the present day".
"The law of pre-emption giving right of pre-emption to a 'co-sharer imposes a reasonable restriction which is in the interest of the general public. If an outsider is introduced as a co-sharer in a property it will make common management extremely difficult and destroy the benefits of ownership in common. The result of the law of pre-emption in favour of a co-sharer is that it sales take place the property may eventually come into the hands of one co-sharer as full owner and that would naturally be a great advantage. The advantage is all the greater in the case of a residential house and S. 16 is concerned with urban property, for the introduction of an outsider in a residential house would lead to all kinds of complications. The advantages outweigh the disadvantages which the vendor may suffer on account of his inability to sell the property to whomsoever he pleases. The vendee also cannot be said to suffer much by such a law because he is merely deprived of the right of owning an undivided share of the property. On the whole a right of pre-emption based on co-shareship is a reasonable restriction on the right to acquire, hold and dispose of property and it in the interests of the general public. The same reasoning will apply to the third ground were the sale is of a property having a staircase common to other properties. This ground stands on the same footing practically as the first ground relating to co-sharers and for the same reason it is a reasonable restriction, and is in the interest of general public".
48. The said judgment is not applicable to the case on hand, when the rights of the members are clearly set out in the provisions of the TamilNadu Co-operative Societies Act, and the rules framed thereunder.
49. In Bhagwan Dass Vs. Kamal Abrol and others reported in 2005-4-Law Weekly.267, LPG distributorship was offered to an unemployed graduate resident, at Kangra district. The appellant before the Supreme Court applied jointly as partners, along with other appellants. Respondent No.1 Smt. Kamal Aborl, No.5 Shri.Abhay singh had also applied for the dealership and distributorship rights. The Oil Selection Board called the appellants for interviewing their applications, and the Selection Board recommended their names to Hindusthan Petrolium Corporation, in the form of a merit list, by including respondent No 1 and 5 and the appellants, in the order of merit. Hindusthan Petrolium Corporation, issued a letter of intent to respondents No 1 she was directed to complete certain formalities, to make the allotment in her favour. The appellants filed Writ petition in Punjab, Haryana, High Court, challenging the above allotment. The said Writ petition was dismissed on the grounds that a remedy does not lie under Article 226 of the Constitution of India and the appellant was directed to approach the Civil Court, a suit was filed for a declaration, to declare the selection of respondents 1 and 5 as illegal, null and void. A mandatory injunction was also sought for, directing the respondents 2,3,4 to allot LPG dealership/distributorship to the appellants. The Trial Court partly allowed the suit declaring the respondents 1 and 5 would not be allotted the dealership of LPG at Kangra, as they did not fulfill the required eligibility criteria. It was further held that the first respondent was not a resident at kangra district, and hence did not fulfill the mandatory requirement. However, the Trial Court dismissed the suit claiming mandatory injunction for giving distributorship of LPG, to the appellants. The Appeals were filed by both parties. Upholding the order of the Trial Court, the selection of respondents 1 and 5 was declared as illegal, null and void. The Appellate Court, further gave a Mandatory injunction, in favour of the appellants, and directed the Corporation, to allot the LPG distributorship at Kangra town, to the appellants. The High Court, held that the requirements of the residents of 1 to 5 at Kangra District is mandatory in nature, but the residential requirement cannot be held to be that of permanent nature. On facts, the husband of the first respondent, owned lands, is an ancestral property, at Kangra and therefore, the High Court, held that, as the husband of the first respondent is having some ancestral, and personal property, at Kangra, he shall be held to be resident of District of kangra and eligible for LPG distributorship. While testing the correctness of the order of the High Court, in the question as to whether the eligibility criteria, being the resident at kangra District, has to be construed to be a permanent or de facto resident or temporary residents, and after examining the definition and meaning of the word "resident", and the concept of residence, ultimately at para 14 of the judgment, held that the intention of the framers appears to be to provide employment, or source of earning, for the residence of the kangra District, in the form of LPG dealership, as follows:
"In the present case, the necessary eligibility criterion requires the applicant to be a resident of Kangra district. The advertisement inviting the applications has not defined the same and hence it would be necessary to see the intention of the framers of the eligibility criteria to understand the true meaning or the sense for which the word 'resident' is used or as to why the criteria of resident is put as an eligibility criteria for allotments of LPG. In the present case the intention of the framers appears to be to provide employment or source of earning for the residents of the Kangra district in the form of LPG dealership/distributorship. The eligibility criterion requires the person to be a resident of Kangra district only in the actual sense and not in any other sense. What is required to fulfill the eligibility criteria of the residence is that the person should be a de facto residence and not to have the mere connection with the place on account of her husband having some personal and ancestral property in Kangra. There is no finding recorded by the court that the husband of Respondent No.1 is permanently residing at Kangra or has permanent abode in Kangra. From the finding arrived at by the High Court it can be said that her husband having ancestral property in Kangra is a visitor to that place and occasionally resides there for a few days. Respondent No.1 prima facie appears to be a permanent resident of Mandi, since her name appears in the voter's list of Mandi and that she has been drawing her ration from Mandi as per the case set up by the appellants. It is further clear that the intention of providing employment and source of earning to the residents of the place is actually living in Kangra and not by his/her remote connection to the place. This term indicates that the corporation wants that the dealership at a particular place have to be handled by that person, which would necessarily require the personal presence of that person at the place of business".
50. Reverting to the facts on hand, the object of the formation of the society, is to carry on the business of establishing, and running, of an Industrial Estate, for small scale sectors, and the area of operation was confined to Revenue Taluks of Coimbatore, Avinasi, Palladam, in Coimbatore district, which was lateron confined to Comibatore District, only. As stated supra, whenever a society has registered under the Act, it should consist of at least 25 independent members qualified to be admitted as members under the Act, and that they should reside or own immovable property in the area of operation of the society. A conjoined reading of section 6, and section 29 of the Act, makes it clear that, a member of a society can enjoy certain privileges and can avail the services of a society for which it is formed, only if they are satisfy the other requirements under the statutory provisions.
51. Bye-laws 39E, 40 enables, the general body to amend the bye-laws for the purpose of giving effect to the statutory provisions. The petitioner being one of the members having acquiesced himself to the bye-laws, enabling amendment, for giving effect to the statutory provisions, cannot wriggle out the same, contending that the amendment is opposed to Fundamental right to trade, or business in a particular area, despite, the change of residence from the area of operation of the society. Reading of the statutory provisions relating to the formation of a society under the Act shows a clear demarcation of the area of operation, and that the members admitted to the society should be either residents or own immovable property, within the area of operation. The amendment, now impugned in this writ petition is in consonance with the, scheme of the Act, and it cannot be said, to be offending the fundamental rights guaranteed to the petitioner. When the object and conditions for registration of the society, as per sections 6, 29 and rule 6 of the rules framed thereunder is explicit, the contention of the petitioner that the amended bye-law is violative of the statutory provisions, and fundamental rights guaranteed under Constitution of India, cannot be countenanced.
52. Though, the second respondent has caused a notice dated 22.09.2008, calling upon the petitioner as to why, he should not removed as per bye-law 11C owing to the change of his residence, subsequently, the second respondent society has submitted an application, under rule 35 of the TamilNadu Co-operative Societies Rules 1988, for issuance of an order directing removal of the petitioner from the membership of the second respondent Co-operative Society. As rightly contended by the Learned Senior counsel for the second respondent, the petitioner in his explanation dated, 08.11.2008 has not denied that he had shifted his residence from Coimbatore. As stated supra, a society with the prescribed number of persons is permitted to be register, if only such member resides or owns immovable property in the area of operation of the society subject to the provisions of section 23 of the Co-operative Societies Act, or the rules or the bye-laws. As per section 11 of the Indian Contract Act, "every person is competent to contract, who is of the age of majority, according to the law, to which he is subject, and who is of sound mind, and is not disqualified from contracting by any law, to which he is subject".
Though, the petitioner satisfies the age, and the soundness of mind, for becoming a member of the second respondent society certainly, it cannot be said that he has satisfied the requirements of section 23 of the TamilNadu Co-operative Societies Act, which imposes a condition for continuing his membership. Satisfying the requirements under Section 11 of the Contract Act alone, is not sufficient to become a member of the society, for the reason that, among other person stated in section 21, any individual competent to Contract under Section 11 of the Contract Act, the said individual, to become a member of the society, should possess such other qualifications, as may be specified in the rules or the bye-laws. In view of the above, this Court, is unable to subscribe to the contention, there is a bias, or malafide action, taken by the second respondent, for removing the petitioner. Hence, the interim stay granted is vacated.
53. The impugned amendment to the bye-law and the order of termination are in consonance with the statutory provisions and hence, there is no infringement of the constitutional guarantee.
54. In the result, the Writ petitions are dismissed. Consequently, the connected Miscellaneous petition is also closed. No costs.
05.10.2009 Index: Yes nb To
1.The General Manager/ District Registrar of Industrial Cooperative Societies, District Industries Centre, Coimbatore-641 001.
2.The Special Officer, The Arignar Anna Cooperative Industries Estate Ltd., 1807 Anna Industrial Park, 544, Varun Srihari Complex, 100 feet Road, Gandhipuram, Coimbatore-12.
S.MANIKUMAR,J.
nb W.P.Nos. 29428 and 29429 of 2008 and M.P.No.1 of 2008 05.10.2009