Jharkhand High Court
Tundi Primary Agricultural Credit ... vs The State Of Jharkhand on 11 July, 2018
Author: Anubha Rawat Choudhary
Bench: Anubha Rawat Choudhary
1
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 1888 of 2013
1. Tundi Primary Agricultural Credit Corporation Society Limited,
through its Chairman-Nand Kishoe Swarnkar, S/o Late Sadanand
Sonar, At Village:- Tundi, Post Office-Tundi, Police Station:- Tundi,
District: Dhanbad
2. Keska Rajabhitha Primary Agricultural Credit Cooperative Society
Limited through its Chairman Md. Abdul Ansari, Son of Md. Abhash
Ansari, At Village Kadai, Post Office: Keska, Police Station: Tundi,
District Dhanbad ... ... Petitioners
Versus
1. The State of Jharkhand, through Secretary, Department of
Cooperative, State of Jharkhand, 4th Floor of Project Building, Dhurwa,
Post Office Dhurwa Police Station: Jagarnathpur, Ranchi, Jharkhand,
2. Secretary, Department of Cooperative, State of Jharkhand, 4th Floor of
Project Building, Dhurwa, Post Office Dhurwa Police Station:
Jagarnathpur, Ranchi, Jharkhand,
3. Registrar, Jharkhand Cooperative Societies, 2nd Floor of Engineers
Hostel No. 3, Near Golchakra, Dhurwa, Post Office Dhurwa, Police
Station, Jagarnathur, Ranchi, Jharkhand
4. The District Cooperative Officer Cum-Assistant Registrar, Dhanbad
Office at Combined Building, At, Post Office, Police Station and
District Dhanbad ... ... Respondents
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CORAM: HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
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For the Petitioners : Mr. V.P. Singh, Sr. Advocate Mr. Rajesh Lala, Mr. Arpit Kumar Advocates For the Respondents : Mrs. Chandra Prabha, S.C. IV Mr. Vishal Kumar Rai, A.C. to S.C. IV
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14/11.07.2018
1. Heard Mr. V.P. Singh, Sr. Advocate appearing on behalf of the petitioners assisted by Mr. Rajesh Lala, Advocate.
2. Heard Mrs. Chandra Prabha, S.C. IV appearing on behalf of the respondent-State.
3. This writ petition has been filed for the following reliefs:-
(i) To quash the Resolution as contained in Memo No. 75/Ranchi dated 09.01.2013 issued by the Respondent No. 2 whereby and whereunder, pursuant to the decision of the Cabinet of Ministers of the State of Jharkhand dated 20.12.2012, reorganisaiton of PACS has been, illegally, arbitrarily autocratically & without jurisdiction, directed by reducing the size of the existing PACS in the State of Jharkhand [including Petitioners] to the Grampanchayat level 2 without there being any provision to that effect in the Jharkhand Co-operative Societies Act, 1935, in utter violation of the Principle of Natural Justice and it would adversely affect the economics viability of the PACS.
(ii) The Hon'ble Court may graciously be pleased to quash the annexure impugned as Annexure-2, and Annexure-3 to the Rejoinder Affidavit filed by the petitioner in this writ petition and also be pleased to set aside all action taken by the State Government and its officers and instrumentalities pursuant to the impugned Annexure- 1 of the writ petition.
4. Counsel for the petitioners at the out set submit that the petitioners are challenging only clause 6(i) of the impugned resolution dated 09.01.2013 issued by the state of Jharkhand which reads as follows:-
orZeku Lo:i esa ySEil@iSDl vius mn~ns';ksa dh "kr&izfr"kr iwfrZ djus esa lQy ugha ik jgs gSaA vr,o d`"kdksa dks izHkkoh <ax ls ykHk igqWapkus ,oa lgdkfjrk ds ek/;e ls d`f"k ,oa d`"kdksa ds fodkl ds fy, etcwr bdkbZ ds :i esa izR;sd iapk;r esa iSDl@ySEil dks LFkkfir djus dk fu.kZ; fy;k x;k gS] ftlds vkyksd esa fuEukafdr dkjZokbZ dh tk;sxhA ¼1½ orZeku xfBr ySEil@iSDl ds dk;Z{ks= dks muds eq[;ky; ds vk/kkj ij mDr iapk;r esa lhfer djus rFkk bl ifjizs{; esa lacaf/kr iapk;r ek= ds d`"kd lnL;ksa rd lnL;rk lhfer j[kukA
5. Counsel for the petitioners submits that the petitioners are short term co-operative credit society registered under the Jharkhand Co-
operative Societies Act, 1935 are functioning within their respective area of operation in the district of Dhanbad which includes more than one panchyats . The petitioners are Primary Agricultural Credit Co-operative Societies (PACS) .
6. Counsel for the petitioners by referring to the Annexure-1 to the writ petition submits that a resolution has been passed by the respondent-state as contained in memo no. 75 dated 09.01.2013 and as per clause 6(i) of the resolution, the area of operation and membership of Primary Agricultural Cooperative Credit Society as well as Large Area Multiple Credit Co-operative Society (hereinafter referred as PACS and LAMPS respectively) have been affected.
7. Pursuant to this resolution, the area of operation of the petitioners would be altered and restricted to only one Panchayat and person living in that Panchayat will only be entitled to become a member of the co-operative society of the petitioners.
38. He further submits that the co-operative society is guided by the provisions of the Jharkhand co-operative societies Act 1935 and bye- laws are approved by the competent authority i.e. Registrar of the co-operative societies who is an authority under the said Act. He submits that the area of operation as well as the membership is also mentioned in bye- laws of the petitioner co-operative societies .
9. The counsel further submits that aforesaid clause 6(i) of impugned memo no 75 dated 09.01.2013 (Annexure-1) amounts to forcing the petitioners to change the bye-laws of their co-operative society itself and confine the petitioners to only one panchayat and forcibly exclude those persons who are members of the petitioner but are from various other panchayats and forcibly include those persons who are not members but belong to a particular panchayat.
10. He further submits that pursuant to Annexure-1, certain follow up action has also been taken by the respondents by asking the petitioners to amend the bye-laws of the co-operative society. He submits that the petitioners being the co-operative society cannot be forced to amend their bye-laws and the respondents have no jurisdiction to ask the petitioners to either change the area of operation or membership of the co-operative society.
11. Counsel for the petitioners by referring to the provisions of the Constitution of India submits that part IX B has been introduced in the Constitution by 97th amendment Act w.e.f. from 15.02.2012 and article 243-ZI deals with incorporation of co-operative societies. It provides that subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member- economic participation and autonomous functioning.
12. He submits that as per the provision of Article 243-ZI of the Constitution of India, necessary amendment has been done under the provisions of Jharkhand Co-operative Society Act 1935 and chapter VI-C has been introduced. The petitioners being the primary agricultural credit co-operative society are covered by the provisions of Chapter VI -C of Jharkhand Co-operative Society Act 4 1935. He refers to Section 44 -AT, Section 44 -AU as well as Section 44 -AV (1) and (6) of Jharkhand Co-operative Society Act 1935 to submit that these provisions have overriding effect and there is a mandate regarding freedom of area of operation as per the amendment made in the co-operative societies Act itself.
13. Counsel for the petitioner submits that clause 6(i) of the impugned circular as contained in Annexure-1 is not only violative of the provisions of Jharkhand Co-operative Societies Act 1935 read with the aforesaid amendments but is also violative of the Constitution of India itself particularly Article 19 as well as Article 243-ZI of the Constitution. He also refers to the judgment passed by the Hon'ble Supreme Court in Vipulbhai M. Chaudhary Versus Gujarat Cooperative Milk Marketing Federation Limited and Others reported in (2015)8 SCC 1. He refers to paragraph no. 6, 41 and 42 of the aforesaid judgment. He also relies upon the judgment passed by Hon'ble the Supreme Court in the case of Andhra Pradesh Dairy Development Corporation Federation Versus B.Narasimha Reddy & Others reported in (2011)9 SCC 286 para 23 to 29 , 54 and 62 . He has also relied upon judgement passed by Hon'ble the Supreme court in the case of Thalappalam Ser. Coop. Bank Ltd. and Ors. Vs. State of Kerala & Ors. reported in 2013 (4) JLJR 362(SC).
14. Counsel for the respondent on the other hand submits that respondents have filed supplementary counter affidavit dated 19.06.2018 wherein specific stand has been taken that membership of the PACS and LAMPS is completely voluntary and the department does not interfere with the membership and other issue of the society . She refers to Section 66 of the Jharkhand co- operative societies Act,1935 to submit that the impugned circular has been issued under Section 66(viii) of the Jharkhand co- operative societies Act 1935.
15. She further submits that impugned resolution is for the benefit of the co-operative societies and with particular reference to the farmers. It has come to light that in spite of having so many PACS and LAMPS, necessary benefits could not be passed on to the farmers and accordingly, it is submitted that the impugned resolution may not be set aside. She also submits that as per the supplementary affidavit the impugned resolution does not amount 5 to interference in the membership and the area of operation of the petitioners and that the other co-operative societies have voluntarily made changes in area of operation as well in membership in light of the aforesaid resolution as per the provisions of Rule 37 of the rules framed under the aforesaid Act.
16. Before considering the rival contentions of the parties it would be useful to consider the constitutional scheme for the cooperative society read with the provisions of Jharkhand Co-operative Society Act, 1935 with its up to date amendment and the rules framed under the provisions of Jharkhand Co-operative Society Act 1935 .
17. Article 243 ZI of part IX B of the Constitution of India which has been introduced by Constitutional (97th Amendment) Act, 2011, and received the assent of the President on 12.01.2012, notified in the Gazette of India on 13.01.2012 and came into force on 15.02.2012. Article 243 ZI reads as under:-
243 ZI Incorporation of co-operative societies- Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning.
18. Co-operative society is a state subject under Entry 32 List II Seventh Schedule to the Constitution of India. Most of the States in India including the then state of Bihar and now Jharkhand enacted their own Co-operative Societies Act with a view to provide for self help, democratic working and orderly development of the cooperative sector in the state to achieve the objects of equity, social justice and economic development, as envisaged in the Directive Principles of State Policy, enunciated in the Constitution of India.
19. The Parliament, with a view to enhance public faith in the co-
operative institutions and to insulate them to avoidable political or bureaucratic interference brought in Constitutional (97th Amendment) Act, 2011, and by virtue of above amendment ,inter alia, the words "co-operative societies" are added in Article 19(1)(c) of the Constitution of India which reads as under:
"19(1)(c) - All citizens shall have the right to form associations or unions or co-operative societies".6
20. Constitutional 97th Amendment Act also inserted a new Article 43B in the Directive Principles of State Policy with reads as follows :-
"the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co- operative societies".
21. Thus rights of the citizens to form co-operative societies voluntarily, is now raised to the level of a fundamental right and State shall endeavour to promote their autonomous functioning.
22. It has been held in the aforesaid Judgement by Hon'ble the Supreme court in the case of Thalappalam Ser. Coop. Bank Ltd. and Ors. Vs. State of Kerala & Ors. reported in 2013 (4) JLJR 362(SC) that Constitutional amendment has been effected to encourage economic activities of co-operatives which in turn help progress of rural India. Societies are expected not only to ensure autonomous and democratic functioning of co-operatives, but also accountability of the management to the members and other share stake-holders. Article 19 protects certain rights regarding freedom of speech. It has been also held that Article 19(1)(c), therefore, guarantees the freedom to form an association, unions and co-operative societies. Right to form a co-operative society is, therefore, raised to the level of a fundamental right, guaranteed under the Constitution of India.
23. As per the provision of Article 243-ZI of the Constitution of India, necessary amendment has been done under the provisions of Jharkhand Co-operative Society Act 1935 and chapter VI -C has been introduced.
24. It is the admitted case of the parties that the petitioners are governed by the provisions of Jharkhand Co-operative Society Act, 1935 with particular reference of chapter VI-C.
25. Some of the provisions of the said chapter which are relevant for the purposes of this case are as follows:-
Section 7 Societies which may be registered-
(1) Subject to the provisions of this Act, a Co-operative Society constituted in accordance with the provisions of the said Act as amended from time to time, which has as its object, the promotion of the common interest of its members and securing the fulfilment of any or all directives contained in Part IV of the Constitution of India, may be registered under 7 this Act with or without limited liability.
(2) ... . .... .... ....
(3) .... .... .... ....
8 Condition of registration- (1) No society, other than a society of which a member is registered society, shall be registered under this Act which does not consist of at least ten persons above the age of eighteen years and, where the primary object of the society is the creation of funds to be lent to its members, unless such persons-
(a) Reside in the same town or village or in the same group of villages; or
(b) Save where the Registrar otherwise directs, are members of the same tribe, class or occupation.
[(The State Government may by notification in the Official Gazette reduce the minimum number of membership of 10 persons for particular class of Co-operative Societies.] (2) The word "limited" shall be the last word in the name of every society with limited liability registered under this Act.
9. Application for registration-(1) An application for the registration of a Co-operative Society shall be made to the Registrar, and shall be accompanied by a copy of the proposed bye-laws of the society and the persons by whom or on whose behalf such application is made furnish such information in regard to the society as the Registrar may require.
(2) The application shall be signed-
[(a) if none of the applications is a registered society by at least ten persons or less number of persons qualified in accordance with the requirements of sub-section (1) or sub section (1-A) of Section 8]
(b) If any of the applicants is a registered society, by a duly authorised person on behalf of every such registered societies, and where all the members of the society are not registered societies, and where all the members of the society are not registered societies by ten other members or, where there are less than ten other members, by all of them.
11. Registration-(1) If the Registrar is satisfied that a society has complied with the provisions of this Act and Rules and that its 8 proposed bye-laws are not contrary to this Act or to the Rules, he may, if he thinks fit, register the Society and its bye-laws. (2) If the Registrar refuses to register a society he shall record his reasons for such refusal.
(3) An appeal shall lie to the State Government from an order of the Registrar refusing to register a society, within two months from the date of the receipt of the order by at least one of the applicants.
"Section 44 AT. Provision to this chapter to apply to short term Co-operative Credit Structure Societies-The provision contained in this chapter shall apply to short terms Co-operative credit structure societies.
Section 44 A U- Overriding effect of Chapter VI-C. Not standing anything contrary or inconsistent with any provision contained in any other Act or Rules framed thereunder or bye-laws of any registered society or orders issued thereunder the provision of this chapter shall have overriding effect.
44 AV(1) (a) Membership rights to depositors/borrowers: Every person or group holding a minimum deposit of rupees one thousand for a continuous period of minimum two years or such other amount or time as may be prescribed in the bye-laws of a primary agricultural credit society shall become a member of the society by subscribing the minimum share capital specified in the bye-laws and shall have full membership and voting rights.
(b) A group borrower shall become a member of a primary agricultural credit society by subscribing the minimum share capital specified in the bye-laws and shall have full voting rights.
(c) Every group depositor or group borrower admitted as a member shall be entitled to vote one delegate nominated by the group.
(2) Autonomy of STCCS: A short term cooperative credit structure society shall have freedom to decide its financial and internal administrative matters especially
(i) Interest rate on deposit and loans, in conformity with the RBI guideline,
(ii) Borrowing and Investments,
(iii) Loan policies and individual loan decisions,
(iv) Personnel policy, staffing, recruitment, posting and 9 compensation to staff, and
(v) Internal control system, appointment of auditors and fees for the audit (6) Freedom of area of operation: A Short Term Co-operative Credit Structure Society shall have the freedom of entry and exit at any time and there shall be no mandatory restrictions of geographical boundaries for the conduct of its operation.
..........
............
44 AV (14) (a) Registration of bye-laws: The bye-laws or any amendment to the bye-laws of a society under the Short Term Co- operative Credit Structure Society shall be registered by the Registrar within thirty days from the date of receipt of the application.
(b) If the Registrar is satisfied that the proposed bye-laws or the amendments to the bye-laws are contrary to the provisions of the Act and the Rules made there under, he shall reject the same duly recording his reasons thereon within thirty days from the date of receipt of the application.
66. Power to make Rules- The State Government may for the whole or any part of the State and for any registered society or a class of registered societies, make Rules to carry out all or any of the purpose of this Act.
In particular and without prejudice to the generality of the foregoing power, such Rules may-
(i) ... ... ... (ii) ... ... ... (iii) ... ... ... (iv) ... ... ... (v) ... ... ... (vi) ... ... ... (vii)... ... ...
(viii) Prescribed the conditions under which a society may be prohibited from appointing a defaulting member of any society to its managing committee or to the managing committee of any other society and from allowing him to exercise his right of membership in the society or to represent it in on other society.
1026. Rule 15 to 19 of the rules framed under the aforesaid Act deals bye- laws of the cooperative society and its amendments . Rule 36 to 39 deals with change of liability , amalgamation and division of societies.
27. Rule 15 to 19 of the Rules read as under
15. Bye-laws of societies.- (1) A registered society shall subject to the provisions of the Act and these rules; make bye-laws in respect of the following among other matters, namely :-
(a) the area of its operation;
(b) the objects of the society and the ways and means of carrying out those objects;
(c) the purpose to which its funds are applicable, the manner in which capital may be raised; and the custody and investment of its funds;
(d) the qualification for admission to membership, the continuance of such membership and the condition of cessation of or expulsion from membership;
(e) the rights and liabilities of members, and the consequences of default in payment of any sum due by a member to the society;
(f) the mode of holding general meetings of the managing committee or any other committee of the society and the powers and duties which may be exercised and performed by such committee:
(g) the mode of appointment, suspension and removal of the members of the managing committee and of the officer of the society, and the duties and powers of the committee and officer; and
(h) the authorisation of any officer or officer of the society to sigh documents on its behalf.
(2) If the objects of the society include the creation of funds to be lent to members, the society shall also make bye-laws in respect of-
(a) the purposes for which and the security on which loans may be granted:
(b) the maximum liability which the society may incur:
(c) the maximum limit of loan which may be advanced to a member:
(d) the terms and conditions subject to which loans may be granted and extension of time for re-payment.
(e) the maximum rates of interest of lendings, and
(f) the disposal of profits and the maximum dividend payable on paid up share capital.
(3) In case of a registered society having as its objects the purchase, sale, 11 production of distribution of commodities and such other objects, the society may make bye-laws in respect of the mode of conducting the business of purchase, sale and stock-taking. (4) A registered society may make bye-laws in respect of any other matter incidental to the management of its affairs.
16. Amendment of bye-laws.- A registered society may by a resolution adopted by a majority of two thirds of its members present at a general meeting of which due notice has been given to the members, amend its bye- laws.
17. (1) An application for the registration of an amendment to the byelaws shall be made within three months from the date of the general meeting at which the resolution in respect of the amendment was adopted, to the Registrar in Form VI and shall be accompanied by three certified copies of the resolution.
(2) On Registration of the amendment, the Registrar shall retain one copy in his office, and issue a copy certified by him to the society concerned and another copy similarly certified to the affiliating society, if any, in form VII.
(3) If the Registrar refuses to register an amendment, be shall send a copy of the order of refusal giving reasons thereof to the society concerned.
18. When the Registrar registers an amendment to the bye-law of a registered society under sub-lection (2) of section 26, he shall issue by registered post a copy thereof certified by him to the society concerned and the affiliating society, if any, in Form VIII. 19. The registered name of a society shall not be changed except by an amendment of its bye-laws and the Registrar may require the changed name to be such as he may direct.
28. Rule 37 reads as under:-
"37. Division of societies.- (1) Any registered society may, at a general meeting of the society held for the purpose of which at least seven days notice shall be given to its members, resolve to divide itself into two or more registered societies. The resolution (hereinafter in this rule referred to as preliminary resolution) shall contain proposal for the division of the assets and liabilities of the society among the new societies into which it is proposed to divide it and may prescribe the area of operation of, and specify the members who will constitute, each of the new societies.12
(2) A copy of the preliminary resolution shall be sent to all the members and the creditors of the society and notice thereof shall be given to all other persons whose interests may be effected by the division of the society.
(3) Any member of the society may, notwithstanding any bye-
law to the contrary, by notice given to the society within a period of one month from the receipt of the preliminary resolution, intimate his intention not to become its member of any or the new societies.
(4) Any creditor of the society may, notwithstanding any agreement to the contrary, by notice given to the society within the said period, intimate his intention to demand a return of the amount due to him. (5) Any other person whose interests may be affected by the division may, by notice to the society within the said period, object to the division, unless his claim is satisfied. (6) After the expiry of the month from the receipt of the preliminary resolution by all the members and creditors of the society and of the notice by other persons given under sub-rule (2) of this rule, another general meeting of the society, of which at least fifteen days' notice shall be given to its members, shall be convened for considering the preliminary resolution. If at such meeting, the preliminary resolution is confirmed by a resolution passed by a majority of the members present, either without changes or with such changes as in the opinion of the Registrar are not material, he may, subject to the provisions of sub-rule (9) and rule 4, register the new societies and the bye- laws thereof; and on such registration the registration of the old society shall be deemed to have been cancelled.
(7) The opinion of the Registrar as to whether the changes made in the preliminary resolution are not material shall be final. (8) At the general meeting referred to in sub-rule (6) provision shall be made by another resolution for-
(i) the payment of the share capital of all the members who have given notice under sub-rule (3);
(ii) the satisfaction of the claims of all creditors who have given notice under sub-rule (4); and
(iii) the satisfaction of the claims of such of the other persons who have given notice under sub-rule (5) for securing their 13 claims in such manner as the Registrar directs;
Provided that no member or creditor or other person shall be entitled to such payments or satisfaction of the claim until the preliminary resolution is confirmed as provided in sub-rule (7). (9) If within such time as the Registrar considers reasonable the share capital of the member referred to in sub-rule (8) is not repaid or the claims of the creditors or other persons referred to therein are not satisfied or secured, the Registrar may refuse to register the new societies.
(10) On the registration of the new societies, the assets and liabilities of the original society shall vest in the new societies in the manner specified in the preliminary resolution and confirmed under sub-rule (6):
[Provided that in special circumstances in the interest of cooperative movement in general and a cooperative society or a class of cooperative societies in particular, where the State Government deems it fit and expeditious division of a society or class of societies is necessary, the Government may by special order in writing exempt a society or a class of societies from the application of any or all of the provisions of sub-rule (9) to (10) of Rule 37 and in such cases the preliminary resolution adopted under rule 37 (1) shall be deemed to be the resolution adequate to effect the division of the societies and for registration of the new society or societies in accordance with Rule 4 emerging from such division. The existing societies so divided shall continue to exist under the same registered number and date with necessary amendments as registered by the Registrar, Cooperative Societies as a result of division. In the event of such exemption having been ordered by the State Government in respect of any society it shall be Incumbent upon the old registered society as well as upon the newly registered societies created by the division to receive notices of objection by any member, creditor or other person affected by the division up to one month from the date of registration of the divided new societies and to satisfy their claim in the proportion based upon the division of their assets and liabilities finalized by the Extraordinary General Meetings of the divided societies called on 15 days notice and as approved 14 by the Registrar Cooperative Societies, whose decision in this regard shall be final."
29. The instant case has to be examined from the point of view of the aforesaid amendments in the constitution indicating the importance of cooperative societies and fundamental right conferred on its members under the constitution of India and also the democratic functioning of the cooperative societies as envisaged under the constitution of India read with the provisions of cooperative societies Act and the rules framed thereunder read with the bye- laws of the cooperative societies which have been approved by the registrar cooperative societies as per the mandate of law.
30. Admittedly the petitioners are primary agricultural credit co- operative societies and are duly registered under the provisions of Jharkhand Co-operative Societies Act 1935. Admittedly the petitioners are operating in more than one gram panchayat and are having members from more than one gram panchayat as per the provisions of Co-operative Societies Act 1935, rules framed thereunder and the approved bye-laws duly approved by the registrar of the cooperative societies.
31. The approved bye-laws inter alia provides the criteria for membership as well as for area of operation . It provides that every person who is permanent resident of the area of operation of the co- operative society and having age of more than 18 years is entitled to become the member of the co-operative society.
32. Section 44 AV (14) of the aforesaid Act deals with registration of bye-laws and also registration of amendment of bye-laws and both are required to be approved by the Registrar. The by-laws of a cooperative society is required to be made as per rule 15 of Rules of 1959 which clearly provides that the bye-laws shall provide, inter alia, the area of operation and criteria for membership of the cooperative societies and is required to be registered with the registrar .It can be amended in accordance with rules 16 and 17 of the rules.
33. The by-laws of the co-operative society can be amended as per the provisions of by- laws itself and the proposal for amendment in the by laws has to be passed by 2/3rd of the general body consisting of members of co-operative society.
1534. There is no dispute that the co-operative societies are governed by the provisions of part IX B of the Constitution of India which deals with the co-operative societies consisting Articles from 243 ZH to 243 ZT .
35. Admittedly pursuant to Article 243 ZI of the constitution of India , provision of Jharkhand Co-operative Societies Act 1935 was amended vide Jharkhand Co-operative Societies (Amendment) Act 2011 and by the said amendment Jharkhand Co-operative Societies Act Chapter VI C having sections from 44-AT to 44- AV was introduced which deals with the special provision applicable to short term co-operative credit structure.
36. Section 44 -AT mandates that Chapter VI C shall apply to short term co-operative society. As per the provisions of Section 44 -AU the provisions of chapter VI C has to have overriding effect to all the existing provisions of the Act and rules framed thereunder or bye laws of any registered society or order issued thereunder. Section 44 AV (2) provides that short term co-operative credit society shall have the freedom to decide its financial internal and administrative matters. Section 44A V (6) provides for freedom of area of operation and shall have freedom to entry and exist at in time and there shall be no mandatory restrictions of geographic boundaries for conduct of its operations.
37. This court finds that there is no such restriction under the Act regarding area of operation or regarding membership so as to restrict the area of operation or the membership of such primary agricultural credit society to a particular panchayat. This court further find that as per section 8 of the cooperative societies Act the cooperative society should have at least 10 members of above the age of 18 years and they are required to be residing in the same town, same village or in the same group of villages or members of same tribe, class or occupation.
38. From perusal of Annexure-1 of the writ petition it appears that a decision was taken by the state government vide clause 6(i) of memo no. 75 dated 09.01.2013 so as to limit the area of operation of existing PACS/LAMPS to a panchayat and membership to farmers of that panchayat only although as per existing law and as per their 16 approved bye laws, the petitioners are operating in more than one panchayat. Meaning thereby some of the members of the petitioners society will now be forced to leave their membership and join another credit society which is operative in their respective panchayat and further many persons of a particular panchayat who are not members of the petitioner society cannot become a member of any other society except of a society operating in their panchyat only.
39. This court finds that such provision in the impugned clause 6(i) of the resolution dated 09.01.2013 is not in consonance and is in conflict with the aforesaid provisions Jharkhand Co-operative Societies Act 1935 read with the rules and the existing bye-laws of the cooperative society of the petitioners. It has the direct and immediate effect of forcefully changing the membership as well as the area of operation of the cooperative society of the petitioners at the instance of the respondent state. Admittedly there is no such corresponding amendment in the cooperative societies Act so as to restrict the membership and the area of operation to any panchyat. The impugned provision has the direct effect of amending the bye- laws of the petitioner societies or forcing the petitioners societies to undertake such amendment and thus taking away the right of the members of the cooperative society to approve or reject the amendment by a democratic process.
40. The contention of the respondents that this particular clause 6 (i) of the impugned resolution has been issued by the government in exercise of power under Section 66 (vii) of Jharkhand Co-operative Societies Act 1935 is rejected for the following reasons. Section 66
(vii) of Jharkhand Co-operative Societies Act 1935 deals with the manner in which managing committee and sub committees of the co-operative society shall be constituted and provide for appointment, suspension and removal of the members of the managing committees and other officers and for the procedure at meetings of managing committee and for the powers to be exercised and the duties to be performed by the managing committees and other officers. In the instant case the clause 6 (i) of the impugned resolution with which the petitioners are concerned 17 in this writ petition ,has nothing to do with the functions of the managing committee of the petitioners- co-operative society, rather the entire issue is related to membership and area of operation of the petitioners society. Thus it cannot be said that clause 6 (i) of the impugned resolution has been issued in exercise of powers under section 66 (vii) of the said Act.
41. This court further finds that direction by the respondent state vide impugned clause 6(i) of the resolution dated 09.01.2013 altering and restricting the area of operation and altering and restricting the membership of the petitioner cooperative societies directly affects the existing area of operation and existing criteria of membership as per the approved bye-laws of the petitioner cooperative societies. The bye-laws of the cooperative society can be amended as per the procedure prescribed which includes democratic decision making process by the existing members of the cooperative society and also requires approval of the registrar of the cooperative societies. Thus this court finds that the impugned clause 6(i) of the resolution is not in consonance with the provisions of the Act, Rules and the existing Bye-laws. This also adversely affects the right of voluntary formation, autonomous functioning and democratic control of the petitioner cooperative societies. This also effects the right of the petitioner cooperative societies to continue with the existing membership and area of operation which is still in consonance with the Constitution of India , Cooperative societies act , rules and the bye-laws framed and approved thereunder. It has been held by Hon'ble the Supreme court in judgement reported in 2013 (4) JLJR 362(SC) Thalappalam Ser. Coop. Bank Ltd. and Ors. Vs. State of Kerala & Ors. that the right of the citizens to form cooperative societies voluntarily has been raised to a level of fundamental right and the state shall promote their autonomous functioning. Right to form cooperative societies has been guaranteed under Article 19(1)
(c) of the Constitution of India and the directive principles of state policy under Article 43B of the Constitution of India provides that the state shall endevour to promote voluntary formation, autonomous functioning , democratic control and professional management of cooperative societies. The parliament, with a view 18 to enhance public faith in the cooperative institutions and to insulate them to avoidable political and bureaucratic interference brought in Constitutional (97th amendment) Act, 2011 which received the assent of the Hon'ble President of India on 12.1.2012 and came into force on 15.2.2012.
42. This court finds that under section 66 of the said Act, the state government has the power to make rules to carry out the purposes of the Act and as per the respondents the purpose of agriculture credit having not been achieved by the existing credit societies , such impugned clause 6(i) of the resolution has been issued. Moreover the respondents have taken a specific stand in their counter affidavit that they are not interfering with the membership and area of operation of the co-operative society by virtue of impugned resolution dated 09.01.2013 and the cooperative societies are free to have their membership and area of operation. The respondents have also taken a specific stand that various co- operative societies have got their area of operation membership etc. bifurcated pursuant to the impugned resolution by exercise of power under rule 37 of the Jharkhand Co-operative Societies Rules 1959 and they have taken steps for reorganization of the cooperative society and any order passed in this case in connection with impugned resolution dated 09.01.2013 will have a direct bearing on such restructured societies.
43. By aforesaid stand of the respondent, it appears that the respondent has taken steps so as to bring the impugned clause 6(i) of the resolution in consonance with the Act and the rules as well as with the existing bye-laws of the cooperative societies. The aforesaid stand of the respondents in the course of arguments and the counter affidavit is not reflected from the impugned resolution dated 09.01.2013.
44. This court finds that there is nothing in the impugned clause 6(i) of the resolution that the decision to restrict/alter the area of operation and membership has to be taken by a democratic process as per the bye-laws of the cooperative society and that the general body while taking a decision in the matter may also reject the proposal to restrict/alter the area of operation and membership.
1945. This court is of the considered view that in order to strike a balance between the concern of the state regarding credit facilities to the farmers coupled with the fact that some of the cooperative societies have already acted pursuant to the impugned clause 6(i) resolution dated 09.01.2013 on the one hand, and right of the petitioner cooperative societies and their members under the provision of law including their democratic rights on the other hand , this court is of the considered view that the ends of justice would be served if this impugned clause 6(i) resolution dated 09.01.2013 is read subject to the provision of the Act , Rules and the existing bye-laws of the petitioner cooperative societies so that the same is not binding on the co-operative societies and can be made effective only as per law including Rule 37 of the Jharkhand Co-operative Societies Rules 1959 and the democratic procedure prescribed in the existing cooperative societies act , rules and the bye-laws of the petitioner cooperative societies .
46. Meaning thereby, that in spite of impugned clause 6(i) of resolution dated 09.01.2013, it will be still open for the co-operative society not to accept the membership or reduce membership or not to alter the area of operation in terms of this clause 6(i) of resolution dated 09.01.2013 through a democratic process amongst the members of the petitioner cooperative societies.
47. As per provisions of rule 37 itself, the division of the co-operative society is possible only if the members of the co-operative society resolved to do so. Meaning thereby that in absence of such resolution the division of the co-operative society cannot take place irrespective of the provision of clause- (6) (i) of the impugned resolution dated 09.01.2013. As this clause- (6) (i) of the resolution dated 09.01.2013 has to be read with the provisions of Jharkhand co- operative societies Act, 1935, rule and bye-laws , therefore it is held that the petitioner co-operative societies are not bound to change the area of operation of their co-operative society or the membership of the co-operative society if the existing members of the co-operative society do not agree as per the provisions of existing by laws read with Rule 37 of the Bihar Co-operative Rules 1959.
2048. So far as other two impugned letters which have been issued to the petitioners as contained in Annexures 2 and 3 of the rejoinder are concerned, this court finds that the same is nothing but follow up action of the clause- (6) (i) of the resolution dated 09.01.2013 and the petitioners and its members have been asked to approve the proposed amendments by signing on dotted lines.
49. As this court has held above that clause- (6) (i) of the resolution dated 09.01.2013 has to be read subject to the Act, Rules and the Bye-laws and the same cannot be binding on petitioners and/or its members, therefore the proposal for the amendment in terms of clause- (6) (i) of the resolution dated 09.01.2013 has to be placed before the members/body of the petitioners for taking appropriate decision in the matter in accordance with the procedure prescribed by the Act, rules and the bye-laws. Certainly it will be open to the members of the petitioner co- operative societies either to accept or to reject the proposal for amendment of the by laws of the co- operative society. They are not bound to amend the by laws of the co-operative society under the dictates of clause- (6) (i) of the resolution dated 09.01.2013. The petitioners co-operative society is directed to place the proposal for amendment as mentioned in Annexures 2 and 3 before the members of the co-operative society in accordance with law within a period of six months so that appropriate decision may be taken by the members of the co- operative society.
50. This writ petition is disposed of with aforesaid observation and direction.
(Anubha Rawat Choudhary, J.) Binit/A.F.R. 21