Rajasthan High Court - Jodhpur
Jaspal Singh vs State Of Raj. & Ors on 11 May, 2017
Author: Govind Mathur
Bench: Govind Mathur, G.R. Moolchandani
IN THE HIGH COURT OF JUDICATURE FOR
RAJASTHAN AT JODHPUR
D.B. Civil Writ Petition No. 13859 / 2016
Shri Bhanwar Lal S/o Shri Gopram,, Aged About 65 Years, R/o
Village-malkosni, Tehsil-Bilara, Rajathan. Presently Working As
Director Central Cooperative Bank Limited, Jodhpur
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department,, Group-II, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government,, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department,, Secretariat, Jaipur (Rajasthan)
4. The Registrar, Co-operative Society Rajasthan,, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority,, 10- B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited,, Jodhpur
Through Its Chairman & Managing Director
----Respondents
Connected With
D.B.Civil Writ Petition No. 1651 / 2015
Devi Singh Bhati
(2 of 66)
[CW-13859/2016]
----Petitioner
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 7143 / 2016
Sohan Lal & Ors.
----Petitioners
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 7769 / 2016
Hari Gopal Rathi
----Petitioner
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 7770 / 2016
Mrs. Savita Ajmera & Ors.
----Petitioners
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 8098 / 2016
Gurcharan Singh & Ors.
----Petitioners
Versus
(3 of 66)
[CW-13859/2016]
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 8472 / 2016
Manak Chand Parasar
----Petitioner
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 8476 / 2016
The Udaipur Mahila S.U. Co-Op Bank & Ors.
----Petitioners
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 8477 / 2016
The Udaipur Urban Co-Op. Bank Ltd., & Ors.
----Petitioners
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 8573 / 2016
Laxman Ram
----Petitioner
Versus
State & Ors.
----Respondents
(4 of 66)
[CW-13859/2016]
D.B.Civil Writ Petition No. 8595 / 2016
Laxman Singh Khor & Ors.
----Petitioners
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 9004 / 2016
Mohan Parashar
----Petitioner
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 10334 / 2016
Jaspal Singh
----Petitioner
Versus
State Of Raj. & Ors.
----Respondents
D.B.Civil Writ Petition No. 10403 / 2016
Anil Kumar Shishodia
----Petitioner
Versus
State & Ors.
----Respondents
D.B.Civil Writ Petition No. 11962 / 2016
(5 of 66)
[CW-13859/2016]
Nemaram & Anr.
----Petitioners
Versus
State Of Raj. & Ors.
----Respondents
D.B.Civil Writ Petition No. 12172 / 2016
Ganpat Singh S/o Shri Narpat Singh, Aged About 51 Years,
Village- Utvan, Tehsil & District- Pali, Rajasthan
----Petitioner
Versus
1. State of Rajasthan Through the Chief Secretary to the
Government, Secretariat, Jaipur (Rajasthan)
2. The Secretary (Law Legislative) Drafting Department, Group-II,
Secretariat, Jaipur, Rajasthan
3. The Principal Secretary to the Cooperative Department,
Secretariat, Jaipur, Rajasthan
4. The Registrar, Cooperative Societies, Nehru Sahakar Bhawan,
Bhawani Singh Marg, Jaipur
----Respondents
D.B.Civil Writ Petition No. 13745 / 2016
Leela Maderna W/o Shri Mahipal Maderna,, Aged About 56 Years,
R/o Laxman Nagar, Chandi, Tehsil-phalodi, Presently Residing At
Jodhpur, Presently Working As Director of Jodhpur Central
Cooperative Bank Limited, Jodhpur
----Petitioner
Versus
(6 of 66)
[CW-13859/2016]
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department,, Group-II Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government,, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department,, Secretariat, Jaipur (Rajasthan)
4. The Registrar,, Co-operative Society Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority,, Rajasthan State Cooperative Election
Authority, 10-B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited,, Jodhpur
Through Its Chairman & Managing Director.
----Respondents
D.B.Civil Writ Petition No. 13748 / 2016
Smt. Rimjhu Devi W/o Shri Khet Singhji, Aged About 68 Years,
R/o- Village- Haripura-motai, Tehsil- Bap, Presently Working As
Director of Jodhpur Central Cooperative Bank Limited, Jodhpur.
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department, Group-II, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government, Secretariat, Jaipur (Rajasthan)
(7 of 66)
[CW-13859/2016]
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department, Secretariat, Jaipur (Rajasthan)
4. The Registrar, Co-operative Society Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority, 10-B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited, Jodhpur
Through Its Chairman & Managing Director.
----Respondents
D.B.Civil Writ Petition No. 13860 / 2016
Bhanwar Lal S/o Shri Dana Ram Jat, Aged About 52 Years, R/o-
Village- Umaid Nagar, Rajasthan, Presently Working As Director of
Jodhpur Central Cooperative Bank Limited, Jodhpur.
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department, Group-II, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department, Secretariat, Jaipur (Rajasthan)
(8 of 66)
[CW-13859/2016]
4. The Registrar, Co-operative Society Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority, 10-b, Institutional Area, Ricem, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited, Jodhpur
Through Its Chairman & Managing Director
----Respondents
D.B.Civil Writ Petition No. 13861 / 2016
Ghamanda Ram S/o Shri Keshu Ram, Aged About 57 Years, R/o-
Village- Punasar, Tehsil- Osiya, Rajasthan, Presently Working As
Director of Jodhpur Central Cooperative Bank Limited, Jodhpur
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department, Group-II, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department, Secretariat, Jaipur (Rajasthan)
4. The Registrar, Co-operative Society Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority, 10-b, Institutional Area, Ricem, Bhawan, Jhalana
(9 of 66)
[CW-13859/2016]
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited, Jodhpur
Through Its Chairman & Managing Director
----Respondents
D.B.Civil Writ Petition No. 13862 / 2016
Bansi Lal S/o Shri Chutra Ram, Aged About 59 Years, R/o Villager
Modi Joshiyan, Tehsil-luni, Rajasthan. Presently Working As
Director of Jodhpur Central Cooperative Bank Limited, Jodhpur
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative)
Drafting Department,, Group-II, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government,, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department,, Secretariat, Jaipur (Rajasthan)
4. The Registrar, Co-operative Society Rajasthan,, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority,, 10- B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited,, Jodhpur
Through Its Chairman & Managing Director
(10 of 66)
[CW-13859/2016]
----Respondents
D.B.Civil Writ Petition No. 13866 / 2016
Hari Ram S/o Sh. Jassa Ram, Aged About 59 Years, S/o Surpura
Khurd, Tehsil Bhopalgar, Presently Working As Director of Jodhpur
Central Cooperative Bank Ltd., Jodhpur
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (law Legislative),
Drafting Department, Group-II, Secretariat, Jaipur (Raj.)
2. The State of Rajasthan Through the Chief Secretary to the
Govt., Secretariat, Jaipur (Raj.)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department, Secretariat, Jaipur (Raj.)
4. The Registrar, Co-operative Society Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority, Rajasthan State Cooperative Election
Authority, 10-B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Ltd,, Jodhpur Through
Its Chairman & Managing Director
----Respondents
D.B.Civil Writ Petition No. 13867 / 2016
Raghunath Ram S/o Shri Mangla Ram, Aged About 45 Years, R/o
Village-daikada, Tehsil-jodhpur, Presently Working As Director of
Jodhpur Central Cooperative Bank Limited, Jodhpur
(11 of 66)
[CW-13859/2016]
----Petitioner
Versus
1. State of Rajasthan Through the Secretary (Law Legislative)
Drafting Department, Group-II,, Secretariat, Jaipur (Rajasthan)
2. The State of Rajasthan Through the Chief Secretary to the
Government,, Secretariat, Jaipur (Rajasthan)
3. The State of Rajasthan, Through the Principal Secretary to the
Cooperative Department,, Secretariat, Jaipur (Rajasthan)
4. The Registrar,, Co-operative Soceity Rajasthan, Sahkar Bhawan,
Bhawani Singh Road, Jaipur
5. The Election Authority,, Rajasthan State Cooperative Election
Authority, 10-B, Institutional Area, RICEM, Bhawan, Jhalana
Doongri, Jaipur
6. The Jodhpur Central Cooperative Bank Limited,, Jodhpur
Through Its Chairman & Managing Director
----Respondents
D.B.Civil Writ Petition No. 12411 / 2016
Bhakar Ram
----Petitioner
Versus
State Of Raj. & Ors.
----Respondents
D.B.Civil Writ Petition No. 217 / 2017
Indra Mal Sethiya & Anr.
(12 of 66)
[CW-13859/2016]
----Petitioners
Versus
State of Raj. & Ors.
----Respondents
D.B.Civil Writ Petition No. 430 / 2017
Likhmewala Gram Sewa Sahk. Samiti & Ors.
----Petitioners
Versus
State of Raj. & Ors.
----Respondents
D.B.Civil Writ Petition No. 403 / 2017
Mani Lal Gurjar & Ors.
----Petitioners
Versus
State of Raj. & Ors.
----Respondents
_____________________________________________________
Mr. Manoj Bhandari ]
Mr. Rajesh Joshi ]
Mr. T.S.Champawat ]
Mr. B.S.Sandhu ] for the petitioner(s).
Mr. S.S.Rathore ]
Mr. Gaurav Srimali for]
Mr. Manish Sisodiya ]
Mr. Rajesh Panwar, Additional Advocate General, with
Mr. Parvej Khan, for the respondent State.
Ms. Kusum Rao ]
Mr. Darshan Jain ] for the respondents.
(13 of 66)
[CW-13859/2016]
HON'BLE MR. JUSTICE GOVIND MATHUR
HON'BLE MR. JUSTICE G.R. MOOLCHANDANI Order Per Hon'ble Govind Mathur,J.
11/05/2017 REPORTABLE These petitions for writ are before us for examining constitutional validity of certain provisions of the Rajasthan Cooperative Societies Act, 2001 and to have reliefs as follows:-
"i) By an appropriate writ, order or direction, the Section 30(1)(c) of the Act of 2001 introduced vide Notification dated 8th October, 2015 may kindly be declared ultra vires of the Constitution of India so as to be violative of Article 14 and Article 19(1)(c) of the Constitution of India to the extent that it gives power to appoint the Administrator in the Co-operative Society while removing and superseding the existing Committee.
ii) By an appropriate writ, order or direction, the sub-
section (7-A) of Section 28 of the Rajasthan Co- operative Societies Act, 2001 introduced vide Notification dated 26th April, 2016 (Anx.4) published in the Rajasthan Gazette on the said date may kindly be declared unconstitutional as being ultra vires of the constitution of India and be quashed and set aside.
iii) By an appropriate writ, order or direction, the Section 30-C read with Section 32 of the Rajasthan Cooperative Societies Act, 2001 as amended vide Notification dated 8th October, 2015 (Anx.7) may kindly be declared ultra vires of the Constitution of India and be quashed and set aside.
(14 of 66) [CW-13859/2016]
iv) By an appropriate writ, order or direction, the petitioner and / or the Members of the Board of Directors who have completed two or more than 2 terms be permitted to take part in the forthcoming elections for the third consecutive term in order to take part in the elections of Board of Directors/Committee of Jodhpur Nagrik Sahkari Bank Limited, Jodhpur.
v) by an appropriate writ, order or direction, the respondents be restrained to appoint Administrator during the pendency of the present writ petition and / or till the elections to the Board of Directors, takes place in Jodhpur Nagrik Sahkari Bank Limited, Jodhpur." In some of the writ petitions challenge is also given to the provisions of Section 30-B of the Act of 2001 as amended vide the notification dated 26.4.2016.
Cooperative Sector in the State of Rajasthan:-
Before coming to merits of the case, it would be appropriate to notice legislative background of the cooperative movement in the State of Rajasthan, as referred in the Rajasthan Co-operative Societies Act, 2001 by Professor S.R.Bhansali, 2005 Edition:-
(15 of 66) [CW-13859/2016] "The Co-operative movement in Rajasthan was initially started about seventy five years back primarily to meet the credit requirements of the agriculturists. Ajmer which was a centrally administered territory, witnessed the first Co-operative movement in the State, under the Acts of 1904 and 1912. In the erstwhile Bharatpur State, on the lines of Central Act of 1912, the Bharatpur Co-operative Societies Act, 1915 was enacted. On the same lines Co-operative Societies Act were passed by the Kota State in 1916, by Bikaner State in 1926, by Alwar State in 1934, by Kishangarh State in 1935, by Jodhpur State in 1943 and by Jaipur State in 1943. The condition for the growth of the Co- operative movement were not very favourable in all parts of Rajasthan at the time of merger of various princely States. At the time of the formation of Matsya State (Alwar, Bharatpur, Dholpur and Karauli), the Matsya Co-operative Societies (Extension of provisions) Ordinance, 1948 was promulgated. Immediately after about a month when the United States of Rajasthan was formed, the Co-operative Societies Ordinance, 1948 (No.96 of 1948) was promulgated.
By 1949, when the State of Rajasthan was formed, the co-operative movement has already started in Udaipur, Dholpur, Karauli, Jhalawar, Bundi and Kushalgarh States, but in 11 princely States the movement has not taken deep roots and even in places where the movement actually existed in some form, it had not progressed beyond the supply of credit to agriculturists.
The first Rajasthan Co-operative Societies Act, 1953 came into force from first April 1953. That Act had (16 of 66) [CW-13859/2016] followed the pattern of Central Act of 1912 and the Bombay Co-operative Societies Act, 1925. It had also incorporated the important recommendations of the 15th conference of Registrars of the Co-operative Societies, and the Co-operative Planning Committee under the chairmanship of Shri R.G.Saraiya.
In the year 1956, the Rajasthan Co-operative Land Mortgage Banks Act, 1956 was passed which was based on the Madras Land Mortgage Banks Act, 1934. Its main object was to provide for long term loans to holders of land to enable them to discharge their debts, to carry our agricultural improvements, to acquire land for the formation of economic holding and other like purposes and thereby to promote thrift and self help among them. With that Act an amendment was made in Rajasthan tenancy Act, 1955 which provides that a Khatedar tenant may also transfer the rights in whole or part of his holding in the form of a simple Mortgage for the purpose of obtaining loans from the Rajasthan Central Land Mortgage Bank (now State Land Development bank) or a Co-operative Land Mortgage Bank (Now Land Development Bank) or a Co-operative credit society registered or deemed to be registered as such under the Rajasthan Co-operative Societies Act, 1953. Such mortgages were to be governed by the provisions of the Rajasthan Co-operative Societies Land Mortgage Banks At, 1956.
Both these Acts - the Rajasthan Co-operative Societies Act, 1953 and the Rajasthan Co-operative Land Mortgage Banks Act, 1956 were extended to the Abu, Ajmer and Sunel areas from 1.9.1957.
(17 of 66) [CW-13859/2016] In order to have a sort of uniformity of principles in the development of the co-operative movement in India, consistent with the recognition of the freedom for development according to local conditions, the Union Ministry of Community Development, Panchayat Raj and Co-operation appointed a 'Committee on Co- operative Law'. The terms of reference of this Committee were:
(i) To make recommendations for a simple legislative measure generally suited to the whole country, to facilitate a coordinated progress of the movement, and
(ii) To examine, in the light of the recommendations of the R.C.S., Committee's Report, the modifications necessary in the Co-operative Societies Act and rules for giving effect to the concept of State partnership in share capital and State participation in the management of co-operative societies.
The Committee did not rest with only making recommendations but has actually prepared a model Bill. The Committee retained the old credit structure. It has taken a review of the provincial laws and incorporated their best features for an All India implementation, such as execution through the co- operative department as in Madras or establishment of a Co-operative Tribunal as in Bombay. It has given effect to the concept of State partnership as required by the terms of reference. It advocated contribution by Government to share capital of societies at all levels, either directly or indirectly. Along with this, the State is to nominate not more than three persons on the managing boards or committees of the societies. Thus, (18 of 66) [CW-13859/2016] the Board or Committee becomes a tripartite body representing the States, the societies and the individual members. The model Bill made provision for advancing of long-term credit for the development of land. Chapter XI in the model bill is based largely on the provisions of the Madras Land Mortgage Banks Act. It also recommended for exemption from the State Ceiling law to such banks.
In 1965, the Rajasthan Co-operative Societies Act, was passed which was based on the main recommendations of the above report and model Bill prepared by the Committee on Co-operative Law, with suitable modifications to suit the requirements of this State. The State Government while framing the statute implemented the recommendations of the Rural Credit Survey report and the schemes of the Co-operative development under the Five Year Plans. This Act had repealed the two previous Acts i.e. the Rajasthan Co- operative Societies Act, 1953 and the Rajasthan Co- operative Land Mortgage Banks Act, 1956. The State was given a duty to promote the Co-operative movement in the State. A concept of State aid to co- operative societies through the Apex and central Banks was introduced. Powers of audit, inquiry, inspection and surcharge were given to the Registrar. For settlement of disputes, the Registrar was given a power to appoint Arbitrator for arbitration. A co-operative Tribunal was constituted for hearing appeals and revision applications. Quick procedure for the execution of awards, orders etc. were provided. Provisions were made for the delegation of powers to the subordinate officers of the Co-operative department."
(19 of 66) [CW-13859/2016] National Policy for Cooperatives & Rajasthan Cooperative Societies Act, 2001:-
The Government of India, looking to the substantial growth of cooperative sector and diverse area of economy, considered it appropriate to have an exhaustive national policy for cooperatives. Accordingly, the Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India, after noticing existing constraints in the cooperative sector, declared a national policy on cooperatives. The policy declared had a guideline from the Manchester International Cooperative Alliance (ICA) congress 1995, with following basic cooperative principles:-
"4.2.1 Voluntary and Open Membership Cooperatives are voluntary organisations, open to all persons capable of using their services and willing to accept the responsibilities of membership, without discrimination on basis of gender, social status, racial, political ideologies or religious consideration.
4.2.2 Democratic Member Control Cooperative are democratic organisations controlled by their members, who actively participate in setting their policies and decision making Elected representatives of these cooperatives are responsible and accountable to their members.
(20 of 66) [CW-13859/2016] 4.2.3 Members' Economic Participation Members contribute equitably and control the capital of their cooperatives democratically. At least a part of the surplus arising out of the economic activity would be the common property of the cooperatives. The remaining surplus could be utilised benefiting the members in proportion to their shares in the cooperative.
4.2.4 Autonomy and independence Cooperatives are autonomous self-help organisations controlled by their members. If cooperatives enter into agreement with other organisations including government or raise capital from external sources, they do so on the terms that ensure democratic control by members and maintenance of cooperative autonomy.
4.2.5 Education, Training and Information Cooperatives provide education and training to their members, elected representatives and employees so that they can contribute effectively to the development of these institutions. They also make the general public, particularly young people and leaders, aware of the nature and benefits of cooperation.
4.2.6 Cooperation among Cooperatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working (21 of 66) [CW-13859/2016] together through the available local, regional, national and international structure.
4.2.7 Concern for Community While focusing on the needs of their members, cooperatives work for the sustainable development of communities through policies accepted by the members."
As per the policy document the objective of the National Policy is to facilitate all round development of the cooperatives in the country with necessary support, encouragement and assistance to ensure autonomy, self-reliant and democratic institutional management of the cooperative societies accountable to its members. An emphasis in the National Policy is given for significant contribution of the cooperative sector to national economy, particularly in the areas which require peoples participation and community efforts. The policy as declared by the Government of India in consultation and collaboration with all the State Governments of the country enunciates certain principles which are as follows:-
"(i) While upholding the values and principles of cooperation, it recognizes the cooperatives as autonomous associations of persons, united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly owned and democratically controlled enterprises;
(22 of 66) [CW-13859/2016]
(ii) upholds the preservation of the distinct identity of cooperatives, its values and principles by providing an appropriate environment and taking the required administrative and legislative measures;
(iii) recognizes cooperatives as s distinct economic sector and an integral component of the socio- economic system of the country and an effective and potential instrument of socio-economic development. It considers them as essentially community initiatives for harnessing people's creative power, autonomous, democratically managed, decentralized, need-based and sustainable economic enterprises. Cooperatives will, however, remain the preferred instrument of execution of the public policy especially in the rural area;
(iv) the regulatory role of the Government will be mainly limited to the conduct of timely elections, audit of the cooperative societies, and measures to safeguard the interest of the members and other stake holders in the cooperatives. There shall, however, be no interference in the management and working of the cooperatives. The Government recognises the apolitical nature of cooperatives.
(v) reiterates and reinforces its commitment to the cause of the SC/ST, women and other weaker sections of the Society and their development through the cooperatives. Wherever members belonging to women or Scheduled Castes/Scheduled Tribes and other backward castes want to have their exclusive societies provided they find a socio-economic reason to form (23 of 66) [CW-13859/2016] such a society, encouragement and assistance will be provided by the Government. Cooperative Societies, if they so decide, can provide for the representation of such category of persons in their bye-laws which they are competent to frame;
(vi) accepts the need to phase out its share holdings/equity participation in the cooperatives. It shall, however, endeavour and extend appropriate support for improving financial viability and resource mobilization by harnessing local savings and adequate refinance facility, and to the possible extent providing a policy framework to ensure that there is no discrimination against the cooperatives in the matter relating to resource mobilisation to attain financial viability. The cooperatives shall be enabled to set up holding companies/subsidiaries, enter into strategic partnership, venture into futuristic areas like insurance, food processing and information technology etc., and shall be independent to take the financial decisions in the interest of the members and in furtherance of their stated objects;
(vii) recognizes the role of the Government in ensuring that the benefits of liberalization and globalisation in the emerging economic environment are extended to the cooperatives in equal measure through suitable fiscal policies and pledges to provide support and protection to the cooperative movement through suitably designed investment programmes with a view to providing the cooperatives a level playing field vis-a- vis other competing enterprises especially in the field of agro-processing and marketing.
(24 of 66) [CW-13859/2016]
(viii) recognizes the need for more effective regulation of cooperatives operating in the financial sector and accepting public deposits;
(ix) also recognises the need for incorporating special provision in the Cooperative Societies Acts with regard to banking, housing, real estate development, processing, manufactures co-operatives, infrastructure development, etc.;
(x) recognizes the need to provide preferential treatment, as far as possible, to the cooperatives engaged in areas such as credit, labour, consumer, services, housing, development of SC/ST and women and development of emerging areas as well as sectors requiring people's participation especially in rural areas;
(xi) undertakes to devise and execute suitable programmes and schemes to build and develop cooperative institutions in the cooperatively under- developed States/religions with particular reference to the North Eastern States including Sikkim;
(xii) recognizes the need to support the cooperative movement to develop human resources, cooperative education and training, appropriate technologies and infrastructural facilities so as to promote professional management in cooperatives particularly at the primary level, for their greater functional and operational efficiency. It may also include the introduction of cooperatives as a curriculum vitae at school level;
(25 of 66) [CW-13859/2016]
(xiii) undertakes to initiate structural reforms in order to improve the functioning of the cooperatives at various levels to ensure greater efficiency and viability. These may include steps to activate idle membership, enhance member participation and involvement, provision of multi cooperatives approach, ensure timely conduct of general body meetings and elections, provide for effective audit, devise suitable mechanism for rehabilitation of the sick societies particularly in the processing sector, expedite winding up of defunct societies; and providing legal framework for voluntary winding up of cooperatives;
(xiv) undertakes to bestow autonomy to cooperatives to follow appropriate personnel policies including those relating to recruitment, promotions and other such matters with due emphasis on quality and transparency;
(xv) undertakes to introduce the required electoral reforms through legislative measures. Elections to the cooperative societies should be held through an independent authority like the State Election Commission; and (xvi) also undertakes to take other such measures as would be required for efficient and healthy growth of the cooperative movement."
With the principles as above, the policy document concludes with its aims in following words:-
(26 of 66) [CW-13859/2016] "The Government of India trusts that the enunciation of this statement of Policy on Cooperatives aimed at professionalisation and democratization of their operations will facilitate the development of cooperatives as self-reliant and economically viable organizations, providing their members improved access to the economics of scale, offsetting various risk elements, safeguarding them against market imperfections and bestowing the advantages of collective action.
And further trusts that the above statement of policy would ensure enduring autonomy and lasting viability to them as democratically owned, self-reliant enterprises, responsible and accountable to their members and to a larger public interest." After having national policy on cooperatives, it was considered appropriate by the Rajasthan State Legislature to have a new code of legislation to make the cooperative sector in harmony to the national policy. For the purpose, it was necessary to remove the obsolete provisions by repealing the Rajasthan Cooperative Societies Act, 1965 with introduction of the provisions to make the cooperative societies more autonomous, to bring clarity in different provisions and to bring more impartiality in the elections of the cooperative societies. In result, the State Legislature enacted the Rajasthan Cooperative Societies Act, 2001 and that changed the concept of dependance on the single Registrar for the purpose of guiding, supervising and controlling of cooperative societies in the State. The powers available to the (27 of 66) [CW-13859/2016] Registrar were curtailed with larger democratic apparatus within the cooperative societies.
It would be appropriate to notice that by the Rajasthan Cooperative Societies (Amendment) Act, 2010, Sections 30-A and 30-B were introduced which are pertaining to obligations of Registrar to ensure compliance of Reserve Bank of India's regulatory prescriptions and the authority in all financial and internal administrative matters respectively. Section 30-A provides that the Registrar shall ensure that Reserve Bank of India regulatory prescriptions including recommendations for supersession of the committee or winding up of the Apex Cooperative Bank and Central Cooperative Banks are implemented within one month of being advised by the Reserve Bank of India. The Registrar shall also ensure that the liquidator or the Administrator, as the case may be, is appointed within one month of being advised by the Reserve Bank of India for winding up or supersession of the committee. The Registrar is further required to ensure removal of Chief Executive Officer of the Apex Cooperative Bank or a Central Cooperative Bank who does not fulfill eligibility criteria specified by the Reserve Bank of India within one month and a request has been received from Reserve Bank of India or the National Bank to that effect. The Registrar shall also, within one month, on being advised by the Reserve Bank of India or the National Bank, ensure removal of any person elected or co-opted (28 of 66) [CW-13859/2016] as a member of the committee under sub-section (2-A) of Section 27 without having the requisite qualification mentioned therein.
Section 30-B pertains to authority in all financial and internal administrative matters and that reads as follows:-
"30-B. Autonomy in all financial and internal administrative matters.-
Notwithstanding anything contained in this Act or any other law for the time being in force, a short term co- operative credit structure society shall have autonomy in all its financial and internal administrative matters including the following area, namely:-
(a) personnel policy, staffing, recruitment, posting and compensation to staff;
(b) issues relating to affiliation and disaffiliation with any federal structure of its choice including entry and exit at any level;
(c) area of operation according to its business requirements; and
(d) internal control system."
Inclusion of Part-IX-B in the Constitution of India and corresponding amendments in the Act of 2001:-
In view of the significant contribution to various sectors of national economy and voluminous growth of the cooperative (29 of 66) [CW-13859/2016] sector it was considered necessary by the Central Government to amend the Constitution, so as to keep the cooperative free from unnecessary outside interference and also to ensure their autonomous organisational setup and their democratic functioning. Accordingly, by the Constitution (97 th Amendment Act, 2011) significant amendments were introduced with the Constitution of India. In Part-III of the Constitution, in Article 19, in clause (1) in sub-clause (c), after the words 'or unions' the words 'or cooperative societies' were inserted. In Part-IV of the Constitution, after Article 43-A, a new Article i.e. 43-B was introduced. Article 19(1)(c) and Article 43-B as at present exists in the Constitution of India, are as follows:-
"19. Protection of certain rights regarding freedom of speech, etc.-- (1) All citizens shall have the right--
(a) .....
(b) .....
(c) to form associations or unions [or co-operative societies];"
"[43B. Promotion of co-operative societies.-- The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies.]"
By the amendment Act of 2011, Part-IXB was introduced that pertains to the cooperative societies. As per Article (30 of 66) [CW-13859/2016] 243ZH a 'cooperative society' means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State.
The term 'office bearer' as per clause (e) of Article 243ZH means the President, Vice-President, Chairperson, Vice- Chairperson, Secretary or Treasurer of a co-operative society and includes any other person to be elected by the board of any co- operative society.
As per Article 243ZI, subject to the provisions of Part- IXB of the Constitution, 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. (Emphasis given by us).
Article 243ZJ provides number and term of members of board and its office bearers, Article 243ZK pertains to election of members of board and 243ZL pertains to supersession and suspension of board and its interim management. Significant to notice here that as per proviso (1) to Article 243ZL the board of any cooperative society, where there is no Government shareholding or loan or financial assistance or any guarantee by (31 of 66) [CW-13859/2016] the Government, shall not be superseded or kept under suspension.
After having constitutional amendments, the Rajasthan State Legislature also found it necessary to amend the Rajasthan Cooperative Societies Act, 2001, accordingly, by the Rajasthan Cooperative Societies (Amendment) Act, 2013 several amendments were introduced in the Act of 2001 including the amendments in Sections 2, 16, 18, 25, 27, 30, 32, 33, 34, 52, 62, 109, 122-A and Schedule-B appended with the Act. The Schedule- B, after amendment, stands as follows:-
"SCHEDULE - B (See Section 8) SUBJECT MATTER OF BYE-LAWS (1) The bye-laws of a co-operative society shall provide for the following matters, namely:-
(a) the name and address of the society;
(b) the area of its operation;
(c) the objects of the society;
(d) the matter in which funds may be raised and the maximum share-capital which a single member may hold;
(e) the nature and extent of the liability of the members;
(f) the extent to which the society may borrow funds and the rates of interest payable on such funds;
(g) the entrance and other fees to be collected from members;
(h) the purposes for which its funds may be applied;
(32 of 66) [CW-13859/2016]
(i) the terms, qualifications and conditions of admission of members and their rights and liabilities;
(j) in the case of credit societies,-
(i) the maximum loan admissible to a member;
(ii) the maximum rates of interest of loans to members;
(iii) the conditions on which loans may be granted to members;
(iv) the procedure for granting extension of time for the re- payment of loans and advances;
(v) the consequences of default in payment of any sum due; and
(vi) the circumstances under which a loan may be recalled.
(k) the mode of conducting business, purchase, sale, stock-taking and other allied matters in case of non-credit societies;
(l) the mode of holding meetings and issue of notices;
(m) the mode of appointment of the committee by election or otherwise and removal of the committee and mode of appointment and removal of other officers, the duties and powers of the committee and such officers and their term;
(n) the disposal of net profits;
(o) the preparation and submission of the annual statements specified by Registrar and the publication of the same;
(p) the constitution of an "Agricultural Crecdit Stabilisation Fund"
in case of every co-operative society which facilitates the operations of affiliated agricultural co-operative credit societies and which has received financial assistance from the Government.
(q) constitution and maintenance of funds;
(r) the privileges, rights, duties and liabilities of members including nominal and associate members;
(s) the manner of making, altering and abrogating bye-laws;
(t) the Chairperson's powers, duties and functions and his removal on his losing support of the majority;
(33 of 66) [CW-13859/2016] (u) the mode of convening annual and special general meetings, issue of notices, and the business which may be transacted thereat;
(v) to send a representative to another society; (w) any other matters incidental to the management of its business.
(2) A society may make bye-laws for the following matters, namely:-
(a) the method of recruitment, the conditions of service and the authority competent to fix, revise or regulate the scales of pay and allowances of paid officers and employees of the society and the procedure to be followed in the disposal of disciplinary cases against term;
(b) the circumstances under which withdrawal from membership may be permitted;
(c) the procedure to be followed in case of withdrawal, ineligibility and death of members;
(d) the conditions, if any, under which the transfer of share or interest of a member may be permitted;
(e) the method of appropriating payments made by members from whom moneys are due;
(f) powers of an officer or officers to sign documents and to institute and defend suits and other legal proceedings on behalf of the society."
Suffice to mention that as per Section 8 of the Act of 2001, every cooperative society is required to be regulated by a set of bye-laws registered under the Act of 2001 with the subject matter as given in Schedule-B. No amendment in bye-laws shall (34 of 66) [CW-13859/2016] be valid unless that has been registered by the Registrar under the provisions of the Act of 2001. Under the amendment Act of 2013, as already stated, amendments were also introduced in several other provisions out of those we deem it appropriate to quote certain provisions which are relevant for adjudication of the instant petitions for writ:-
"30. Removal of Committee or Member thereof.- (1) Where-
(a) the committee of a co-operative society
(i) persistently makes default; or
(ii) is negligent in the performance of its duties imposed on it or him by this Act or the rules or the bye-laws; or
(iii) commits any act prejudicial to the interest of the society or its members; or
(b) there is stalemate in the constitution or functions of the committee; or
(c) the term of the existing committee has expired and the State Co-operative Election Authority has failed to conduct elections for a new committee in accordance with the provisions of this Act or the rules made thereunder, the Zonal Registrar, in case of primary society, the Registrar, Co-operative Societies, Rajasthan, in case of central society and the State Government in case of an apex society may, after giving the committee a (35 of 66) [CW-13859/2016] reasonable opportunity of being heard, by order in writing, remove the committee and appoint a Government servant as an Administrator to manage the affairs of the society for a period not exceeding six months;
Provided that the committee of a society shall not be superseded where there is no Government share holding or loan or financial assistance or any guarantee by the Government;
Provided further that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (Central Act No.10 of 1949) shall also apply;
Provided also that in case of a co-operative society carrying on the business of banking, the provisions of this clause shall have effect as if for the words "six months", the words "one year" had been substituted. (2) If any member of the committee persistently makes default or is negligent in the performance of his duties imposed by this Act or the rules or the bye-laws made thereunder or commits any act prejudicial to the interest of the society or its members, the Zonal Registrar, in case of primary society, the Registrar, Co- operative Societies, Rajasthan, in case of a central society and the State Government in case of an apex society may, after giving a reasonable opportunity of being heard, remove such member by order in writing.
(36 of 66) [CW-13859/2016] (3)The Administrator appointed under sub-section (1) shall,-
(a) arrange for conduct of elections within the period specified in that sub-section and hand over the management to the elected committee; and
(b) till the time the new committee is elected, subject to the control of the Registrar and to such instructions as he may from time to time give, have powers to perform all or any of the functions of the elected committee and take all such actions as may be required in the interest of the society."
(Emphasis given by us) "32. Election of Co-operative Society.- The Election of a committee shall be conducted before the expiry of the term of the committee so as to ensure that the newly elected members of the committee assume office immediately on the expiry of term of the office of members of the outgoing committee." (Emphasis given by us) "33. State Co-operative Election Authority and its function.- (1) The State Government shall, by notification in the Official Gazette, appoint an officer of the State Government, as the State Co-operative Election Authority, hereinafter in this Chapter referred to as the Authority, in such manner, as may be prescribed, and may appoint such other officers and staff to assist such Authority, as it may deem fit.
(37 of 66) [CW-13859/2016] (2) The terms and conditions of the service of the Authority and other officers and staff appointed under sub-section (1) shall be such as may be prescribed. (3) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society shall vest in the Authority.
(4) The State Government may prescribe procedure and guidelines for conduct of elections to the co- operative societies.
(5) For the purpose of this Chapter, the Zonal Registrars, Co-operative Societies posted at zone level and Unit Officer posted at the unit level shall act as ex- officio Zonal Returning Officer and Unit Returning Officer respectively and shall be answerable to the Authority for discharging the duties entrusted to them by the Authority.
(6) Subject to the provisions of sub-section (4) of section 27, the Authority shall conduct elections for filling in a casual vacancy occurring in the committee of a society for the remainder of the term of the committee, within six months of the occurrence of such vacancy."
"34. Preclude to the elections.- (1) The Chief Executive Officer of every co-operative society shall send a written information in such manner, as may be prescribed, to the Authority to conduct election of its committee and its office bearers, six months before the (38 of 66) [CW-13859/2016] expiry of the term of the existing committee. The Chief Executive Officer shall also send written information regarding a casual vacancy in the committee immediately after occurrence of such vacancy. (2) It shall be the duty of the committee of a society to ensure that all the information, books and records, which the authority may require for the purpose of election, are updated and made available in time to the Authority or a person authorized by it for the purpose. (3) The committee of the society shall also ensure that the society provides all the assistance to the Authority, as may be required by it for conduct of the election. (4) The process of election of co-operative society, once started shall not be stopped or postponed for any reason, save for a natural calamity or break down of law and order."
A new edge was given to the Act of 2001 by making the same in consonance with the constitutional provisions enshrined under Part-IXB through the 97th amendment Act and that ensured greater participation in an autonomy of the cooperative societies.
The judgment rendered by Hon'ble the Gujarat High Court and the subsequent amendments made in the Act of 2001:-
(39 of 66) [CW-13859/2016] Before proceeding further, it would be appropriate to take note of the judgment given by High Court of Gujarat in Rajendra N. Shah v. Union of India & Anr., reported in MANU/GJ/0375/2013. In the case aforesaid the Gujarat High Court, while adjudicating a public interest litigation, examined constitutional validity of Constitution (97 th Amendment) Act, 2011. It was contended by the writ petitioner that the power under Article 368 of the Constitution of India itself is the basic structure of the Constitution of India and the fact that by the constitutional amendment the procedure prescribed in Article 368(2) of the Constitution, which recongises the federal structure of the Constitution as one of the basic structures , has not been followed, is violative of the Constitution. It was urged that the subject matter cooperative societies does not fall in the 7 th Schedule, Entry 45 of List I of the Constitution and those are specifically excluded from entry No.43 of List 1. Therefore, the State Legislature is the only competent authority in law to enact the laws for the cooperative societies and on that ground, the proposed amendment should be set aside as violative of the Constitution of India as the consent of the majority of the State Legislatures was not received before presenting the Bill proposing the amendment to the President of India. The Gujarat High Court, while accepting the writ petition, held that by the amendment impugned the principles of federalism has been effected. The subject of cooperative societies is in the List II of 7 th Schedule, by depriving the State Legislatures of their free exercise of right to (40 of 66) [CW-13859/2016] enact on the said subject and by curtailment of their right over the subject matter to abide by newly enacted provision of the Constitution without following the requirement of rectification as provided in Article 368(2), the doctrine of federalism which is one of the basic features of the Constitution has been infringed. Accordingly the Constitution (97th Amendment) Act of 2011 inserting Part-IXB containing Articles 243ZH to 243ZT were declared ultra vires to the Constitution of India for not taking recourse to Article 368(2) of the Constitution.
It appears that the State felt some problems in holding smooth and simultaneous elections at different levels of the cooperative societies, therefore, the Rajasthan State Legislature further introduced amendments in the Act of 2001 under the Rajasthan Cooperative Societies (Amendment) Act, 2015. The amendment Act was brought with following statement of objects and reasons:-
"Under the existing provisions of the Rajasthan Co- operative Societies Act, 2001 (Act No.16 of 2002), elections to different co-operative societies were conducted at different times, which made it imperative that elections were to be continued in one or the other co-operative societies throughout the year, which was taxing administratively as well as financially.
Since the elected chairpersons of primary societies represent their societies at the central societies and the (41 of 66) [CW-13859/2016] elected chairpersons of the central societies represent their societies at the apex societies, the committees of many central and apex societies were not able to complete their full term due to different timing of elections in different co-operative societies.
To alleviate this problem it had been considered proper to conduct elections to different co-operative societies in a synchronized manner so that the terms of their committees end more or less at the same time.
To implement this, it was felt necessary and desirable to amend sections 27, 30 and 32 of the Rajasthan Co- operative Societies Act, 201 (Act No.16 of 2002), whereas one new section, namely 30-C was also proposed to be added in the Act."
By this amendment Act the time limit for an Administrator to manage the affairs of the society for a period of not exceeding six months was withdrawn and the proviso to Section 30 too was altered. The amendment introduced in Section 30 by the amendment Act of 2015 reads as follows:-
"(1) Where-
(a) the committee of a co-operative society
(i) persistently makes default; or
(ii) is negligent in the performance of its duties imposed on it by this Act or the rules or the bye-laws;
or
(iii) commits any act prejudicial to the interest of the society or its members; or (42 of 66) [CW-13859/2016]
(b) there is stalemate in the constitution or functions of the committee, The Zonal Registrar, in case of primary society, the Registrar, Co-operative Societies, Rajasthan, in case of central society and the State Government, in case of an apex society may, after giving the committee a reasonable opportunity of being heard, by order in writing, remove the committee and appoint a Government servant as an Administrator to manage the affairs of the society till the elections are held to the committee of the society:
Provided that in case of co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (Central Act No.10 of 1949) shall also apply."; and
(ii)for the existing sub-section (3), the following shall be substituted, namely:-
"(3) The Administrator so appointed shall have powers to perform all or any of the functions of the elected committee and take all such actions as may be required in the interest of the society, subject to the control of the Registrar and to such instructions as he may give from time to time."
By the same amendment Act an amendment was also introduced in Section 30-B of the principal Act making the autonomy of a cooperative society in financial and internal administrative matters subject to the general conditions and (43 of 66) [CW-13859/2016] norms laid down by the Registrar in this regard. Section 30-B, as amended by the Amendment Act of 2016, reads as follows:-
"30-B. Autonomy in all financial and internal administrative matters.- A short term co-operative credit structure society shall, subject to the general conditions and norms laid down by the Registrar in this regard, have autonomy in its financial and internal administrative matters including the following areas, namely:-
(a) personnel policy, staffing, recruitment, posting and compensation to staff;
(b) issues relating to affiliation and disaffiliation with any federal structure of its choice including entry and exit at any level;
(c) area of operation according to its business requirements; and
(d) internal control systems."
A new Section i.e. "30-C" was also introduced after the existing Section 30-B and before the existing Section 31 of the principal Act. Section 30-C referred above reads as follows:-
"30-C. Appointment of Administrator on completion of term of the committee.- (1) Where the term of existing committee has expired and the State Co-operative Election Authority has failed to conduct elections for a new committee, for whatever reason, in accordance with the provisions of this Act or the rules made (44 of 66) [CW-13859/2016] thereunder, the Registrar may, by an order in writing, appoint a Government servant as an Administrator to manage the affairs of the society till the elections are held to the committee of the society.
(2) The Administrator so appointed shall have powers to perform all or any of the functions of the elected committee and take all such actions as may be required in the interest of the society, subject to the control of the Registrar and to such instructions as he may given from time to time."
A bare reading of Section 30-C discloses that it empowers the Registrar to appoint an Administrator to manage the affairs of the society on expiry of the term of the managing committee, if the State Cooperative Election Authority fails to conduct elections for a new committee. By the same amendment Act Section 32 of the principal Act was also substituted in following terms:-
"32. Election of Co-operative Society.- The election to the committee of a co-operative society shall be conducted as per the provisions of this Act and the rules and bye-laws made thereunder."
Pertinent to notice here that according to Section 32, as that was existing prior to the amendment, it was statutory responsibility to conduct election of a committee before expiry of the term of the committee, so as to ensure that the newly elected (45 of 66) [CW-13859/2016] members of the committee assume office immediately on the expiry of the term of the office of members of the outgoing committee. As such, there was no chance for appointment of an Administrator due to non-holding of elections.
The Act of 2001 was again subjected to important amendments under the Rajasthan Cooperative Societies (Amendment) Act, 2016. While making several amendments under the principal Act, a new sub-section (7-A) was inserted after existing sub-section (7) and before existing sub-section (8) of Section 28 of the principal Act and that reads as follows:-
"(7-A). No person shall be eligible for election as a member of a committee, if he has been elected or co- opted to be a member of the committee of the same society in continuation for two times, unless a period of five years from the date of expiry of his second term as the member of such committee has elapsed:
Provided that a member of a committee once elected or co-opted to the committee shall be deemed to have completed his full term for the purpose of this sub- section, even if he was not elected or co-opted for a full term of five years or has not completed his term of office for any reason whatsoever it may be."
By introduction of sub-section (7-A) a disqualification has been introduced for being a member of a committee of the (46 of 66) [CW-13859/2016] same cooperative society in continuation for two times, unless having a break of five years from the date of expiry of second term of the member concerned.
The challenge is given to the amendments introduced in the principal Act of 2001 by the amendment Acts of 2015 and 2016. Broadly, the arguments advanced by learned counsels for the petitioners are that -
(1) the provisions under challenge are in conflict with the provisions of Articles 19(1)(c), 19(1)(g) read with Article 43-B and Part-IXB of the Constitution of India, in as much as, it curtails complete autonomy of a cooperative society, which amounts to curtailment of the right 'to form cooperative societies';
(i) According to the petitioners the term 'to form' under Article 19(1)(c) of the Constitution of India is quite broad and that includes administration, management and operation of the cooperative society with full autonomy to achieve the objects of its creation;
(ii) The amendments impugned made in different provisions of the Act of 2001 snatches away the financial autonomy of a cooperative society, even a society which is not having any (47 of 66) [CW-13859/2016] financial aid or share of the State Government, which ultimately amounts to denial of right to carry on trade or business.
(iii) As per Article 43-B of the Constitution of India the State should have and endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of the cooperative societies, but the amendments introduced by the amendment Acts of 2015 and 2016 are contrary to it.
(iv) The provisions under challenge in these petitions for writ are repugnant to the provisions of Part-IXB of the Constitution of India and as such deserves to be declared ultra vires. (2) the amendments under challenge are manifestly arbitrary and are in contravention to the accepted principles of the cooperative movement, as such, are in violation of Article 14 of the Constitution of India.
(3) the amendment could have not been made effective till having assent from the President of India in view of the fact that the principal Act was enforced only after having such assent. The assent is required in view of the fact that the cooperative societies are operational in different sectors, such as banking, dairy etc. (48 of 66) [CW-13859/2016] which are the matters out of the State list of Schedule-VII appended with the Constitution.
Before examining constitutional validity of the provisions in question, it would be appropriate to marshal certain facts and prepositions which are not disputed among the parties, as under:-
(1) The national policy for cooperatives was introduced by the Government of India with emphasis to have autonomous self-held organisations in the form of cooperatives which are to be controlled by their members.
(2) As per the national policy document the assistance of the Government was to ensure autonomy self-reliant and democratic institutional management of the cooperative societies with maximum accountability to its members.
(3) The autonomous and self-reliant cooperative societies can contribute significantly to national economy with participation of the people at large.
(4) The wide spreading need of autonomous cooperative sector was also noticed by the Parliament and, therefore, Part IX-B was (49 of 66) [CW-13859/2016] introduced in the Constitution of India and while doing so an amendment was also introduced under Article 19(1)(c). (5) By this amendment, a fundamental right was given to the citizens to "form" associations or unions or "cooperative societies". (6) As a directive principle, Article 43-B was included to have endeavour for State to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.
(7) The State Legislature of Rajasthan by keeping in mind the objectives of the national policy introduced a new enactment in the name of the Rajasthan Cooperative Societies Act, 2001 by repealing the earlier legislation i.e. the Rajasthan Cooperative Societies Act, 1965.
(8) After inclusion of Part IX-B in the Constitution read with Articles 19(1)(c) and 43-B, important amendments were introduced in the Act of 2001 ensuring autonomy, authority, independence and self-reliance of the cooperative societies in consonance with the constitutional provisions as well as the national policy.
(50 of 66) [CW-13859/2016] (9) The State Legislature under the Act of 2001 desired to change the concept of dependence on the single Registrar for the purpose of guiding, supervising and controlling of cooperative societies, accordingly, the authority of the Registrar was curtailed with a larger democratic apparatus within the cooperative societies itself.
(10) While examining application of the Act of 2001, the legislature found that the new order of economy demands more accountability and more autonomy for the cooperative societies involved in banking activities, thus, certain necessary amendments were made in the Act and while doing so, an important provision i.e. 30-B was introduced extending complete autonomy to the cooperative societies in their financial and internal administrative matters including the areas relating to personnel policy, staffing, recruitment, posting and compensation to staff, issues relating to affiliation and disaffiliation with the federal structure of choice, area of operation according to business needs and internal control system.
(11) Under Section 30 of the Act of 2001, while giving a procedure for removal of committee or member thereof, it was made obligatory for the State to not allow management of cooperative societies by an administrator for a period beyond six months.
(51 of 66) [CW-13859/2016] (12) It was also statutorily provided that the committee of a society shall not be superseded where there is no Government share holding or loan or financial assistance or any guarantee by the Government.
(13) The purpose of the amendment aforesaid was to ensure maximum autonomy to the cooperative societies.
Before examining constitutional validity of the provisions other than sub-section (7-A) of Section 28 of the Act of 2001, we would like to state that a Division Bench of this Court in Suraj Birla & Ors. v. State of Rajasthan & Ors., reported in 2017(1) WLN 291, while examining vires of sub-section (7-A) of Section 28, held that the same is introduced with statute book with an object to remove monopoly of the individuals who are controlling the cooperative societies and, therefore, the same is in public interest and does not suffer from any wrong to arrive at the conclusion that the same is in conflict with any of the right of the petitioners conferred under Part-III of the Constitution of India and further in conflict with the competence to frame such a provision. The Division Bench emphasised that the purpose of the sub-section in question is to have change in the society with a view to transfer steering of the cooperative societies in the hands of young generation or to the persons with different sectors. In view of the view already taken by a Division Bench, we are abide (52 of 66) [CW-13859/2016] by that and we adopt the same, hence, the challenge to sub- section (7-A) of Section 28 of the Act of 2001 fails.
We would now proceed to scan constitutional validity of the other provisions introduced in the Act of 2001 by the amendment Act of 2015.
Whether Section 30 of the Act of 2001 is in conflict with any right of the petitioners conferred by Part-III of the Constitution of India or repugnant to any other constitutional provision?
Section 30 of the Act of 2001 (post amendment) empowers the Registrar, Cooperative Societies, Rajasthan, to remove the committee of a cooperative society and to appoint a Government Servant as an Administrator to manage affairs of the society till the fresh elections held to have the committee. As per this provision, a committee of society can be removed by an order in writing after having an opportunity of hearing, if such society persistently makes defaults or any negligent in performance of its duties or commits any act prejudicial to the interest of the society or its members or there is stalemate in the constitution or the functions of the committee.
The provision, in its first look, appears to be a reasonable one, but on comparison of that with pre-amendment provision and the spirit of national policy for cooperative societies, Article 19(1)(c) read with Article 43-B and provisions of Part-IXB (53 of 66) [CW-13859/2016] of the Constitution of India, it come on screen with a mischievous face. It would be appropriate to state that prior to the amendment under the Act of 2015, Section 30 was maintaining a balance in the powers of the Registrar and also the spirit of the cooperative movement. As per pre-amended Section 30, the Registrar had power to appoint a Government Servant as an Administrator to manage the affairs of the society for a period not exceeding six months. The cap of six months is not available in the amended provision. Meaning thereby, an Administrator appointed to a cooperative society can continue as such for an indefinite period.
As per pre-amended provision of Section 30, it was necessary for the election authority to hold elections of the committee at earliest but with a maximum limit of six months. The cap of six months was provided by statute with an object to have democratic control on a cooperative society, but that has now been diluted. The Registrar may now allow an Administrator with a cooperative society to administer that for indefinite period by not holding elections within a reasonable period.
Article 19(1)(c) of the Constitution of India ensures a valuable fundamental right to all the citizens to "form" cooperative society. The term "form" used under Article 19(1)(c) is required to be read in the spirit of national policy of cooperative sector, endeavour of the State as per Article 43-B and Part-IXB of the Constitution of India. The interpretation advanced by learned (54 of 66) [CW-13859/2016] Additional Advocate General that the right to form of a cooperative society is only to the extent of its establishment and not beyond that, in our considered opinion, shall be contrary to the spirit of the provisions referred above.
The term "form" looking to the thrust of the provisions referred above cannot be restricted only to the extent of registration of a cooperative society. Such a narrow amplitude if given then that will frustrate the purpose of entire cooperative movement. It is to be defined in the manner to have optimum participation of the members of the cooperative society in having the benefit of its establishment and that can be achieved only by maximum participation of the members of the society in its administration. The term "form" used under Article 19(1)(c), therefore, must be defined by inclusion of establishment of a cooperative society, its administration and functioning in consonance with the national policy, the constitutional directive and further in accordance with the provisions of Part IX-B of the Constitution of India. The term "form" under Article 19(1)(c) in the spirit of the provisions discussed covers establishment and also the day to day functioning of a cooperative society with all its autonomy, authority and functioning with an endeavour to have promotion of cooperative movement with a view to extend maximum control on administration of the society to its members and other persons connected therewith.
(55 of 66) [CW-13859/2016] The appointment of an Administrator without having any time cap shall certainly empower the Registrar to have direct control of State through the Administrator, who can only be a Government servant. This would be in disregard not only to national policy for cooperative sector and the endeavour of Article 43-B of the Constitution of India, but also to Article 19(1)(c) and Part-IXB of the Constitution. As per Article 243-ZJ of the Constitution of India the term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearer shall be coterminous with the term of the board. Article 243-ZK provides that notwithstanding anything contained in any law made by the legislature of a State, the election of a board shall be conducted before expiry of the term of the board so as to ensure that newly elected members of the board assume office immediately on expiry of the term of office of members of outgoing board. The constitutional provisions referred above clearly indicate that a cooperative society is always required to have an elected management except for the eventualities given in proviso to Article 243-ZL and these are:-
(i) persistent default by a society; or
(ii) negligence in performance of its duties; or
(iii) the board has committed any act prejudicial to the interest of the cooperative societies or its members; or
(iv) there is a statement in the constitution or functions of the board; or (56 of 66) [CW-13859/2016]
(v) the authority or body as provided by the legislature of a State, by law, under clause (2) of Article 243-ZK, has failed to conduct elections in accordance with the provisions of the State Act.
Clause (2) of Article 243-ZL prescribes that in the case of supersession of a board, the Administrator appointed to manage the affairs of such cooperative society shall arrange for conduct of elections within the period specified in clause (1) and handover the management to the elected board. The cumulative consequence of all these provisions is that a cooperative society is required to have an elected board and the appointment of an Administrator is a rare phenomenon. We find no rational for removing the time cap for continuance of an Administrator to a cooperative society. As a matter of fact, in entire reply to the writ petition the State utterly failed even to mention any rational to remove the time cap of six months for continuance of a Government Servant as an Administrator to the cooperative society. Learned Additional Advocate General too failed to satisfy us any rational to remove such cap and further to ensure that even without such cap it shall be obligatory for the Registrar to restore democratic administration of a cooperative society at earliest.
In entirety, we are of the view that non-prescription of the time limit for continuance of a Government Servant as an Administrator of a cooperative society is an interference in (57 of 66) [CW-13859/2016] functioning of a cooperative society that is not permissible as per the spirit of national cooperative policy and that also causes injury to the fundamental right to "form" a cooperative society. It is also in direct conflict with the provisions of Article 243-ZL which prescribes that notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period of exceeding six months. In light of whatever stated above, the amendment introduced under Section 30 of the Act of 2001 by the amendment Act of 2015, as discussed above, is ultra vires to Article 19(1)(c) and Article 243- ZL of the Constitution of India and further in conflict with Article 14 of the Constitution of India being having no rational and also being not in consonance with the object sought to be achieved by the cooperative societies under the Act of 2001.
Validity of Section 30 (post amendment) is also questioned on the count that now the Registrar is having authority to appoint Administrator to supersede a committee of a society where there is no Government share holding or loan or financial assistance or any guarantee by the Government. The Administrator so appointed is also empowered to perform all or any of the functions of the elected committee and also to take all such actions as may be required in the interest of society, subject to the control of the Registrar and to such instructions as he may given from time to time. Prior to the amendment aforesaid, as per proviso to sub-section (1) to Section 30 of the Act of 2001, the (58 of 66) [CW-13859/2016] committee of a society, where there is no Government share holding or loan or financial assistance or any guarantee by the Government was not open for supersession under the orders of Registrar or any other governmental authority.
Under the amendment Act of 2015 the proviso (1) to sub-section (1) of Section 30 has been deleted. As a consequence of the deletion, it is now open even to supersede the committee of a cooperative society which is not receiving any aid in any form by the State. The deletion of the proviso is apparently bad in light of the proviso (1) to Article 243-ZL of the Constitution of India, according to which the board of any cooperative society shall not be suspended or kept under suspension where there is no Government share holding or loan or financial assistance or any guarantee by the Government. It is submitted by learned Additional Advocate General that after the judgment of Gujarat High Court in Rajendra N. Shah v. Union of India & Anr. (supra) the Chapter IX-B of the Constitution of India is non-existent, therefore, no aid of that is available for examining constitutional validity of the provision in question. We do not find any merit in the argument advanced. No one within the territory of Rajasthan ever challenged the Part-IX-B and the Government of Rajasthan acting upon the provisions of Part-IX-B introduced several significant provisions in the Act of 2001 just with a view to make that more effective. The judgment of Gujarat High Court is admittedly subject matter of an appeal which is pending (59 of 66) [CW-13859/2016] consideration before Hon'ble the Apex Court. Beside that, the Government of Rajasthan is signatory of the national policy for cooperative sector wherein too such a provision exists.
The provision in question is further bad as that empowers the Registrar to interfere in functioning of a body which is having no State liability. The object of the Act of 2001 is to promote cooperative sector in light of the national policy for cooperative sector and further in consonance with the spirit of Part-IX-B of the Constitution. The national policy as well as Part- IX-B of the Constitution of India thrusts for maximum autonomy in cooperative sector and absolute autonomy to the cooperative societies wherein the State is having no liability.
In light of whatever stated above, we are of considered opinion that the amendments introduced in Section 30 of the Act of 2001 by the amendment Act of 2015 are bad and deserves to be declared ultra vires to Article 243-Z, 243-ZK and 243-ZL of the Constitution of India and also being contrary to the national policy for cooperative sector to the extent that allows the Registrar to appoint a Government servant as an Administrator of a cooperative society for a period beyond six months and also to continue the Administrator with a cooperative society without any period specified. The deletion of proviso (1) to Section 30(1) of the Act of 2001 deserves to be restored being supported with rational in consonance to the provisions of Article 19(1)(c) read (60 of 66) [CW-13859/2016] with Article 43-B and Part-IX-B of the Constitution of India as well as in consonance to the national policy for cooperative sector. Whether Section 30-C read with Section 32 of the Act of 2001 as am,ended under the amendment Act of 2015 are bad being in conflict with any fundamental right of the petitioners or repugnant to any constitutional provision?
The next question is in relation to constitutional validity of Sections 30-C and 32 of the Act of 2001 which is to be examined in light of the provisions of Articles 19(1)(c), 43-B and other provisions of Part-IX-B of the Constitution of India.
Section 33-C was introduced by the amendment Act of 2016 and that changes complete complexion of the liability to hold elections of a cooperative society before expiry of the term of the committee in currency. As per Section 30 of the Act of 2001, as that was existing prior to the amendments introduced in it under the amendment Act of 2015, no Administrator could have been allowed to continue to manage affairs of a society for a period exceeding six months. Meaning thereby, it was obligatory to hold elections within a period of six months after appointment of an Administrator, if appointed in the eventualities given under Section
30. As per pre-amended Section 32 of the Act of 2001, it was also obligatory to have election to the committee of a cooperative society before expiry of the term of the committee so (61 of 66) [CW-13859/2016] as to ensure that newly elected members of the committee assume office immediately on the expiry of the term of the office members of outgoing committee. A conjoint reading of Section 30 and Section 32, as existing prior to the amendment, discloses that the anxiety of the State legislature was to ensure complete democracy and autonomy of the in-cooperative sector with consonance to the provisions of Part-IX-B of the Constitution and for that purpose no possibility was kept to have bureaucratic control by non holding of elections.
As already stated, as per Article 243-ZI, subject to the provisions of Part-IX-B, the State legislature of a State may by law, make provisions with subject to incorporation, regulation and winding up of cooperative societies based on the principles of voluntary formation, democratic member-control, member- economic participation and autonomous functioning. As per clause (2) of Article 243-ZJ, the term of office fo elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board. As per Article 243-ZK, notwithstanding anything contained in any law made by the legislature of a State, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of the office of members of the outgoing board. Though the amendment introduced in the Cooperative Societies Act are by (62 of 66) [CW-13859/2016] State legislature, but looking to the constitutional provisions referred above, it can be very well said that the enabling authority for cooperative sector vests under Part-IX-B of the Constitution of India and every provision of the State legislature pertaining to the cooperative sector is required to be in consonance to that. The non-obstinate clause under Article 243-ZL, and further keeping the provisions relating to incorporation of cooperative societies under Article 243-ZI subject to the provisions of Part-IX-B of the Constitution of India strengthens the absolute control of the provisions of Part-IX-B in framing of law by State legislature relating to cooperative sector.
Section 30-C, as presently existing, keeps it open for the Registrar to appoint the Administrator to manage the affairs of the society till the elections are held to the committee concerned. The embargo of holding elections within a period of six months from the date of appointment of Administrator has been deleted even in eventuality of non-holding of elections by the cooperative election authority. The provision aforesaid is apparently bad being in conflict with the provisions of clause(1) of Article 243-ZK. We utterly failed to understand that why the State legislature chose to adversely effect the democratic values and autonomy of the cooperative societies by keeping those at the mercy of the executive or in more specific terms to the bureaucracy. The anxiety of the State legislature, as a matter of fact, should have been to strengthen the values incorporated in the Constitution of (63 of 66) [CW-13859/2016] India by introducing Part-IX-B. It is really sad that a view different has been taken by the State legislature. Same is the position with regard to Section 32 of the Act of 2001. Section 32, prior to its amendment, was putting an embargo upon the cooperative societies election authority to ensure that the newly elected members of the committee assumes office immediately on the expiry of the term fo the office of members of outgoing committee. Such a necessary requirement to strengthen democratic values and autonomy of cooperative societies has been highly diluted by amending existing provision aforesaid. As per the existing Section 32, the election to the committee of a cooperative society shall be conducted as per the provisions of the Act of 2001 and the Rules and bye-laws made thereunder. It is good to have elections in accordance with the statute, but it is not understandable, why the State legislature decided to withdraw the embargo to hold elections of a committee before expiry of the term of the office members of the outgoing committee. Learned Additional Advocate General also utterly failed to satisfy us as to why such a valuable right available to the cooperative societies has been withdrawn and that too in complete disregard to the provisions of Article 243-ZK of the Constitution of India.
In light of whatever stated above, we are having no hesitation in arriving at the conclusion that the provisions of Sections 30-C and 32 of the Act of 2001, as amended by the amendment Act of 2016, are in absolute conflict with the (64 of 66) [CW-13859/2016] provisions of Part-IX-B of the Constitution of India, more specifically to the provisions of Articles 243-ZI and 243-ZK of the Constitution of India read with Articles 14, 19(1)(c) and 43-B of the Constitution of India.
While parting with the case, we would like to state that in some of the writ petitions a challenge is also given to the provisions of Section 30-B of the Act of 2001, but during the course of hearing no arguments were advanced to support that, therefore, we are leaving that to be examined in other suitable case, if challenged.
The consequence of whatever discussed and stated above is that the writ petitions under consideration deserve to be allowed in part by holding as under:-
1. The challenge to sub-section(7-A) of Section 28 of the Rajasthan Cooperative Societies Act, 2001 fails as the provision in question does not suffer from any wrong to arrive at the conclusion that the same is in conflict with any of the rights of the petitioners ensured under Part-III of the Constitution of India or further in conflict with any other constitutional provision;
2. The amendments introduced in Section 30 of the Rajasthan Cooperative Societies Act, 2001 under the amendment Act of 2015 (65 of 66) [CW-13859/2016] are in direct conflict with the provisions of Articles 14, 19(1)(c) read with 43-B, 243-ZJ, 243-ZK, 243-ZL of the Constitution of India, hence the same are hereby declared illegal, hence are quashed. Section 30, as that was existing prior to the amendments introduced in it under the amendment Act of 2015 stands restored;
3. The provisions of Sections 30-C and 32 of the Rajasthan Cooperative Societies Act, 2001, as amended under the amendment Act of 2016, are declared illegal being in conflict with the provisions of Articles 14, 19(1)(c) read with 43-B, 243-ZJ, 243-ZK, 243-ZL of the Constitution of India, hence the same are declared illegal, hence are quashed. Section 32, as that was existing prior to the amendments introduced in that under the amendment Act of 2016 stands restored;
4. The respondents shall ensure elections of the cooperative societies in accordance with law at earliest; and
5. By acting upon the provisions, which are declared unconstitutional, if any Government Servant has been appointed as Administrator for any cooperative society by the Registrar of the cooperative societies, then such Administrator shall be removed from the office at earliest by holding elections of the (66 of 66) [CW-13859/2016] committee as far as possible within a period of 45 days from today.
No order to costs.
(G.R. MOOLCHANDANI)J. (GOVIND MATHUR)J. MathuriaKK/PS