Chattisgarh High Court
Koyla Karmachari Grih Nirman Evum ... vs State Of Chhattisgarh on 9 February, 2023
Author: Arup Kumar Goswami
Bench: Arup Kumar Goswami
AFR
HIGH COURT OF CHHATTISGARH, BILASPUR
Writ Appeal No.258 of 2020
Judgment Reserved on : 09.01.2023
Judgment Delivered on : 9.02.2023
Koyla Karmachari Grih Nirman Evum Kalyan Sahakari Samiti Maryadit,
registered under the relevant provisions of the Chhattisgarh
Cooperative Society Act, 1960 having its registered office at Lagra,
Near R.T.O. Office, Bilaspur, District Bilaspur, its registration
No.258/Bilaspur, dated 01.07.2006, through its elected President
namely Shri Anuranjan Prasad Singh, S/o Late Hanuman Singh, aged
about 53 years, R/o Ashok Nagar, Near DLS College, Sarkanda,
Bilaspur, District Bilaspur, Chhattisgarh
---- Appellant
versus
1. State of Chhattisgarh, through Secretary, Cooperative Societies,
Mahanadi Bhawan, Mantralaya, Capital Complex, Atal Nagar, Nawa
Raipur, District Raipur, Chhattisgarh
2. Registrar, Cooperative Societies, Raipur, District Raipur, Chhattisgarh
3. Deputy Registrar, Cooperative Societies, In front of Collectorate, Old
Composite Building, Bilaspur, District Bilaspur, Chhattisgarh
4. Joint Registrar, Cooperative Societies, In front of Collectorate, Old
Composite Building, Bilaspur, District Bilaspur, Chhattisgarh
5. Shikshit Swarojgar Udyog Sahakari Samiti Maryadit, Bilaspur, through
its President namely Jyoti Bhushan Gond, A registered society
registered under the Cooperative Societies Act having its registered
office at Garima Press Road, Tilak Nagar, Bilaspur, District Bilaspur,
Chhattisgarh
--- Respondents
For Appellant : Mr. Manoj Paranjpe along with Mr. Shreyansh
Agrawal, Advocates
For Respondents No.1 to 4 : Mr. H.S. Ahluwalia, Deputy Advocate General
For Respondent No.5 : Mr. Ashok Kumar Swarnakar, Advocate
2
Hon'ble Shri Arup Kumar Goswami, Chief Justice
Hon'ble Shri Arvind Singh Chandel, Judge
C.A.V. JUDGMENT
Per Arvind Singh Chandel, J.
1. The instant writ appeal has been preferred by the petitioner being aggrieved by the order dated 3.3.2020 passed by a learned Single Judge of this Court in Writ Petition (C) No.698 of 2020, whereby the writ petition has been dismissed.
2. Writ Petition (C) No.698 of 2020 was filed seeking the following reliefs:
"1. That, this Hon'ble Court may kindly be pleased to writ/writs, order/orders, direction/directions and quashing the impugned order dated 04.01.2020 (Annex.P/1) passed by the Joint Registrar and the Hon'ble Court may kindly be pleased to quash the entire proceedings initiated by the Joint Registrar under Section 53 of the Chhattisgarh Cooperative Societies Act, 1960.
2. That, this Hon'ble Court may kindly be pleased to grant any other relief(s), which is deemed fit and proper in the aforesaid facts and circumstances of the case."
3. Facts of the case, as narrated in the writ petition, are that the petitioner is a society registered on 1.7.2006 under Section 7 of the Chhattisgarh Co-operative Societies Act, 1960 (henceforth 'the Societies Act'). Coloniser licence was also issued to the petitioner society on 2.5.2009. The petitioner is a private society having no government share holding or financial assistance, even no guarantee has been given by the government. The petitioner is 3 having its own bye-laws. In view of the relevant provisions of the bye-laws, the board of directors have been elected by the members of the petitioner society. The society was constituted by the employees of the Coal India Limited and South Eastern Coalfields Limited. The society was formed to achieve certain goals, i.e., to provide the place of residence and to provide plots for construction of residential houses on reasonable rates to its members. The petitioner society is working on no profit no loss basis and the employees are the members of the said society. According to the bye-laws, only the members of the society are entitled for plots on reasonable rates fixed by the society. The members of the society have also contributed amounts for running the activities of the society. There are 757 members in the society. The society has not taken any financial assistance or any benefit from the State Government or from the S.E.C.L.
4. It was further pleaded that Respondent No.5 of the writ petition raised a dispute before the Deputy Registrar, Co-operative Societies with regard to non-payment of certain dues under Section 64 of the Societies Act, which is still pending before the Deputy Registrar, Co-operative Societies, Bilaspur. Respondent No.5 on similar allegations made a separate complaint to the Joint Registrar, Co-operative Societies and the Joint Registrar without application of mind and without looking to the provisions of Section 53(2) of the Societies Act had issued a show cause notice as to why the petitioner society should not be suspended and administrator be not appointed, which was replied by the petitioner society. However, the Joint Registrar, on 4.1.2020, invoked the 4 power under Section 53(10) of the Societies Act and the petitioner society was placed under suspension until further orders and one Deputy Registrar, Co-operative Societies was appointed as administrator.
5. Being aggrieved by the order dated 4.1.2020, the appellant/petitioner filed Writ Petition (C) No.698 of 2020 before this Court and the learned Single Judge vide the impugned order dated 3.3.2020 dismissed the writ petition. Hence, this appeal.
6. It was submitted by learned counsel appearing for the appellant/petitioner society that the Joint Registrar has no jurisdiction either to initiate the proceedings under Section 53 of the Societies Act or to place the appellant/petitioner society under suspension as the society is not getting any financial assistance from the State Government and there is no government share holding or loan or any guarantee. It was further argued that the learned Single Judge has also failed to appreciate and draw distinction between waiver and financial assistance. It was argued that the notifications pertain to the waiver of the stamp duty were issued on 10.10.1980 and 24.10.1980 under Section 9 of the Indian Stamp Act, 1899 (henceforth 'the Stamp Act'), whereas the appellant society was formed on 1.7.2006. Relying on the judgment passed by the Bombay High Court in Rhea Chakraborty v. Union of India, 2020 SCC OnLine Bom 990, Thalappalam Service Co-operative Bank Limited v. State of Kerala, (2013) 16 SCC 82 and D.A.V. College Trust and Management Society v. Director of Public Instructions, (2019) 9 SCC 185, it was submitted 5 that mere providing subsidy, grants, exemptions, privileges as such cannot be said to be providing funding to the society unless the record shows that the funding was so substantial to the body which particularly runs by such funding and but for such funding it would struggle to exist. It was further submitted that the State may float many schemes generally for the betterment of the co-operative societies, but those facilities cannot be termed as "financial assistance" by the State Government.
7. Learned counsel appearing for the State/Respondents 1 to 4 opposed the arguments advanced on behalf of the appellant society. It was argued by the State Counsel that the order passed by the learned Single Judge is a well reasoned order and grant of waiver to the appellant society can be termed as "financial assistance". Since the appellant society was exempted from payment of the stamp duty, the proviso to Section 53 of the Societies Act would not be applicable to the appellant society and the Joint Registrar has the power to appoint an administrator and to supersede the society and to place the society under suspension.
8. We have heard the arguments raised on behalf of the parties and perused the material available minutely.
9. Before entering into the issue, it would be appropriate to reproduce the relevant provisions of Section 53 of the Societies Act, which run as under:
"53. Supersession of Board--(1) If in the opinion of the Registrar, the Board of Directors of any Society--
(a) is in persistent default; or
6
(b) is negligent in the performance of the duties
imposed on him/her by or under this Act or bye-laws of the Society or by any lawful order passed by the Registrar or is unwilling to perform such duties; or
(c) commits acts which are prejudicial to the interest of the Society or its members; or
(d) violates the provisions of this Act or rules made thereunder or bye-laws of the Society:
The Registrar may, by order in writing, remove the Board of Directors and appoint an administrator to manage the affairs of the society for a specified period, which shall not exceed six months and in case of a Co-operative Bank one year:
Provided that, the Board of Director of any such Co- operative Society shall not be superseded or kept under suspension, where there is no Government shareholding or loan or financial assistance or any guarantee by the Government:
Provided further that, in case of a Co-operative Bank, the order of supersession shall not be passed without previous consultation with the Reserve Bank:
Provided also that, if no communication containing the views of the Reserve Bank, on action proposed is received within thirty days of the receipt by that Bank of the request soliciting consultation, it shall be presumed that the Reserve Bank agrees with the proposed action and the Registrar shall be free to pass such order as may be deemed fit."
10. From perusal of the above-quoted provisions, it is clear that on certain conditions the Registrar, Co-operative Societies has power to appoint an administrator and to supersede the society and place the society under suspension. The proviso to Section 53 of the Societies Act also provides that in cases where there is no government share holding or loan or financial assistance or any guarantee by the government to the concerned co-operative society, the board of directors of any such co-operative society shall not be superseded or kept under suspension.
11. The Supreme Court in Thalappalam (supra) held as under: 7
"22. The right of the citizens to form cooperative societies voluntarily, is now raised to the level of a fundamental right and the State shall endeavour to promote their autonomous functioning. Parliament, with a view to enhance public faith in the cooperative institutions and to insulate them to avoidable political or bureaucratic interference brought in the Constitution (Ninety-seventh Amendment) Act, 2011, which received the assent of the President on 12-1-2012, notified in the Gazette of India on 13-1-2012 and came into force on 15-2-2012. The constitutional amendment has been effected to encourage economic activities of cooperatives which in turn help progress of rural India. The societies are expected not only to ensure autonomous and democratic functioning of cooperatives, but also accountability of the management to the members and other share stakeholders.
24. The Constitution (Ninety-seventh Amendment) Act also inserted a new Article 43-B which reads as follows:
"43-B. Promotion of cooperative societies.--The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies."
By virtue of the abovementioned amendment, Part IX-B was also inserted containing Articles 243-ZH to 243-ZT. The cooperative societies are, however, not treated as units of self- Government, like Panchayats and Municipalities.
25. Article 243-ZL dealing with the supersession and suspension of board and interim management states that:
"243-ZL. Supersession and suspension of board and interim management.--(1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months:"
It provided further that the Board of any such cooperative society shall not be superseded or kept under suspension where there is no government shareholding or loan or financial assistance or any guarantee by the Government. Such a constitutional restriction has been placed after recognising the fact that there are cooperative societies with no government shareholding or loan or financial assistance or any guarantee by the Government.
8
47. We often use the expressions "questions of law" and "substantial questions of law" and explain that any question of law affecting the right of parties would not by itself be a substantial question of law. In Black's Law Dictionary (6th Edn.) the word "substantial" is defined as "Substantial.--Of real worth and importance; of considerable value; valuable. Belonging to substance; actually existing; real; not seeming or imaginary; not illusive; solid; true; veritable. ... Something worthwhile as distinguished from something without value or merely nominal. ... Synonymous with material."
The word "substantially" has been defined to mean "essentially; without material qualification; in the main; in substance; materially". In Shorter Oxford English Dictionary (5th Edn.), the word "substantial" means "of ample or considerable amount of size; sizeable, fairly large; having solid worth or value, of real significance; solid; weighty; important, worthwhile; of an act, measure, etc. having force or effect, effective, thorough". The word "substantially" has been defined to mean "in substance; as a substantial thing or being; essentially, intrinsically". Therefor the word "substantial" is not synonymous with "dominant" or "majority". It is closer to "material" or "important" or "of considerable value". "Substantially" is closer to "essentially". Both words can signify varying degrees depending on the context.
48. Merely providing subsidies, grants, exemptions, privileges, etc. as such, cannot be said to be providing funding to a substantial extent, unless the record shows that the funding was so substantial to the body which practically runs by such funding and but for such funding, it would struggle to exist. The State may also float many schemes generally for the betterment and welfare of the cooperative sector like deposit guarantee scheme, scheme of assistance from NABARD, etc. but those facilities or assistance cannot be termed as "substantially financed" by the State Government to bring the body within the fold of "public authority" under Section 2(h)(d)(i) of the Act. But, there are instances, where private educational institutions getting ninety-five per cent grant-in-aid from the appropriate Government, may answer the definition of public authority under Section 2(h)(d)(i).
50. The burden to show that a body is owned, controlled or substantially financed or that a non-government organisation is 9 substantially financed directly or indirectly by the funds provided by the appropriate Government is on the applicant who seeks information or the appropriate Government and can be examined by the State Information Commission or the Central Information Commission, as the case may be, when the question comes up for consideration. A body or NGO is also free to establish that it is not owned, controlled or substantially financed directly or indirectly by the appropriate Government."
12. From perusal of the judgment in Thalappalam (supra), it is clear that merely providing subsidy, grants, exemptions, privileges etc. as such cannot be said to be providing funding to the substantial extent unless the record shows that the funding was so substantial to the society and for such funding it would struggle to exist. In Thalappalam (supra), considering Article 43B and Article 243-ZL of the Constitution of India, it is held that the co-operative society is essentially an association of persons who have come together for any purpose of economic development or for mutual help.
13. In the case in hand, the State Government has granted waiver by notifications dated 10.10.1980 and 24.10.1980 just to promote co- operative societies. As per Article 43B of the Constitution of India, it is a duty of the State to promote autonomous funding, domestic control and professional management of co-operative societies and to fulfill the said obligations, the notification under Section 9 of the Stamp Act was issued for all kinds of co-operative societies. As held by the Supreme Court in Thalappalam (supra), providing facilities cannot be termed as "substantial finance" and if the facilities in the form of waiver would be termed as "financial assistance" then the very purpose for establishment for the private societies and to promote voluntary function, autonomous 10 functioning, domestic control of co-operative societies would be frustrated and it would be violative of Article 243-ZL of the Constitution of India.
14. Dealing with the issue the similar position has been reiterated in DAV College (supra) as under:
"24. A society which may not be owned or controlled by the Government, may be an NGO but if it is substantially financed directly or indirectly by the Government it would fall within the ambit of sub-clause (ii).
25. That brings us to the second limb of the argument of the appellants that the colleges/schools are not substantially financed. In this regard, we may again make reference to the judgment in Thalappalam case wherein this Court dealing with the issue of substantially financed made the following observations: (SCC pp. 107-08, paras 47-48) "47. We often use the expressions "questions of law" and "substantial questions of law" and explain that any question of law affecting the right of parties would not by itself be a substantial question of law. In Black's Law Dictionary (6th Edn.) the word "substantial" is defined as 'Substantial.--Of real worth and importance; of considerable value; valuable. Belonging to substance; actually existing; real; not seeming or imaginary; not illusive; solid; true; veritable. -- Something worthwhile as distinguished from something without value or merely nominal. ... Synonymous with material.' The word "substantially" has been defined to mean "essentially; without material qualification; in the main; in substance; materially". In Shorter Oxford English Dictionary (5th Edn.), the word "substantial"
means "of ample or considerable amount of size; sizeable, fairly large; having solid worth or value, of real significance; solid; weighty; important, worthwhile; of an act, measure, etc. having force or 11 effect, effective, thorough". The word "substantially" has been defined to mean "in substance; as a substantial thing or being;
essentially, intrinsically". Therefore the word "substantial" is not synonymous with "dominant" or "majority". It is closer to "material" or "important" or "of considerable value". "Substantially" is closer to "essentially". Both words can signify varying degrees depending on the context.
48. Merely providing subsidies, grants, exemptions, privileges, etc. as such, cannot be said to be providing funding to a substantial extent, unless the record shows that the funding was so substantial to the body which practically runs by such funding and but for such funding, it would struggle to exist. The State may also float many schemes generally for the betterment and welfare of the cooperative sector like deposit guarantee scheme, scheme of assistance from NABARD, etc. but those facilities or assistance cannot be termed as "substantially financed" by the State Government to bring the body within the fold of "public authority"
under Section 2(h)(d)(i) of the Act. But, there are instances, where private educational institutions getting ninety-five per cent grant-in-aid from the appropriate Government, may answer the definition of public authority under Section 2(h)(d)(i)."
15. In Rhea Chakraborty (supra), the Bombay High Court considered the word "financing" and observed as under:
"73. Thus, "financing" as generally understood, is offering monetary support or provide funds.
74. Therefore, simply providing money for a particular transaction or other transactions will not be financing of that activity. Financing will have to be interpreted to mean to provide funds for either making that particular activity operational or for sustaining it. It is the financial support which directly or indirectly is cause of existence of such illicit traffic. The word "financing" would necessarily refer to some activities involving illegal trade or business."12
16. The learned Single Judge relying upon paragraph 26 of the judgment in DAV College (supra) dismissed Writ Petition (C) No.698 of 2020 and held that grant of waiver would be termed as "financial assistance". In our considered view, the learned Single Judge has failed to appreciate the factual matrix of the matter of DAV College (supra). In the said matter of DAV College (supra), the Supreme Court observed that the value of the land will have to be evaluated not only on the date of allotment but even on the date when the question arises as to whether the said body is substantially financial. If the grant of waiver is considered as 'financial assistance', then all the private individual societies would be under the control of the State. In such an event, the object of Article 243-ZL and Article 43B of the Constitution of India would be frustrated. In other words, to bring the private societies within the control of State, the State will have to provide 'financial assistance' to promote the co-operative societies and then only it can claim control over the said societies. Waiver of the stamp duty is the statutory discretion of the government to fulfill the object of Article 43B of the Constitution of India. The existence of the appellant/petitioner society is not dependent upon the waiver of the stamp duty as granted by the State Government in the year 1980. Therefore, in our considered view, it cannot be treated as "financial assistance".
17. The proviso to Section 53(1)(d) of the Societies Act clearly provides that the board of directors of any such co-operative societies shall not be superseded or kept under suspension, where there is no 13 share holding or loan or financial assistance or any other guarantee by the State Government. As observed by us hereinabove that providing waiver in stamp duty cannot be termed as "financial assistance" by the State Government. Therefore, the proceeding initiated by the Joint Registrar under Section 53 of the Societies Act is without jurisdiction and the order of suspension of the appellant/petitioner society is also illegal and without jurisdiction and the same has been passed contrary to the specific provision of Section 53 of the Societies Act. Therefore, the order dated 4.1.2020 passed by the Joint Registrar is liable to be and is quashed.
18. Consequently, the order dated 3.3.2020 passed by the learned Single Judge is set aside.
19. The appeal is allowed. No costs.
Sd/- Sd/-
(Arup Kumar Goswami) (Arvind Singh Chandel)
Chief Justice Judge
Gopal