Bombay High Court
Sangli Zilla Sahakari Nagari Banks ... vs State Of Maharashtra And Ors. on 1 September, 1988
Equivalent citations: 1988(3)BOMCR713, (1988)90BOMLR454, 1989MHLJ173
JUDGMENT C.S. Dharmadhikari, J.
1. The main challenge in this petition is to the order issued by the Government of Maharashtra in Agriculture & Co-operation Department, Mantralaya, dated 25th of August, 1977 under the provisions of sub-section (1) of section 79-A of the Maharashtra Co-operative Societies Act, 1960. The said order reads as under:
"No. CSM-1377/35758/6-C) Agriculture & Co-operation Department Mantralaya, Bombay-32.
25th August, 1977 ORDER Whereas it has come to the notice of Government that Co-operative Institutions employing ten persons or more under them are not implementing fully Government orders regarding the recruitment of new persons and promotion of the existing persons under them in accordance with the policy laid down by Government.
And whereas the State Government is satisfied that for the purpose of securing proper implementation of development and welfare programmes approved of undertaken by Government is expedient to issue directive to all co-operative institutions employing 10 persons or more under them in the state under provisions of sub section 79-A of the Maharashtra Co-operative Societies Act, 1960 the State Government under sub-section (i) of section 79-A of the Maharashtra Co-operative Societies Act, 1960, hereby issues the following directions to all such Co-operative Institutions in the State of Maharashtra.
That while recruiting new persons and promoting the existing persons, the Co-operative institutions employing 10 persons or more shall adhere to a policy of (i) providing reservation of post class persons as per the percentages laid down for each category by Government from time to time and recruiting these persons as per rules of Government and (ii) for carrying forward of vacancies to wipe of the backlog in the recruitment of backward class persons.
By order and in the name of the Governor of Maharashtra.
Sd/-
(A.S.A. Khathatary) Deputy Secretary to Government of Maharashtra, Agriculture & Co-operation Department".
2. Dr. Naik learned Counsel appearing for the petitioners, contended before us that section 79-A of the Maharashtra Co-operative Societies Act, 1960 is ultra vires of Articles 14, 19(1)(c) and 19(1)(g) of the Constitution. It is also contended by him that section 79-A suffers from the vice of excessive delegation. The Legislature has abdicated in favour of the Executive Essential policy matters without any guidelines. State Government has been given power to give directions arbitrarily, and, therefore, the said section is liable to be struck down. Further section 79-A fails to make out any classification. Assuming that there is any classification, it is not based on any intebligible differential distinguishing those that are grouped together from the others left out of the group. Further such differentia does not have nay rational relation or nexus with the object sought to be achieved by the said Act. It is then contended by him that the various expressions used in this section such as 'public interest' for the purpose of securing proper implementation of a co-operative production and other developmental programmes approved or undertaken by Government, 'to secure the proper management of the business of the society', and 'for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members, or of the depositors or the creditors thereof' are wholly vague. Further the section does not lay down any safeguards and is, therefore, arbitrary and thus it is violative of Article 14 of the Constitution. The order issued under section 79-A dated 25th August, 1977 is also discriminatory since only certain banks are picked up for the application of the said directives. In the entire State of Maharashtra the number of Urban Co-operative Banks are nearabout 375, out of which majority of them are located in the City of Bombay and Pune. To the best of the knowledge of the petitioners directions in corporated in the circular are only implemented qua Urban Co-operative Banks at Sangli, Satara, Kolhapur and Thane Districts and the Urban Co-operative Banks in the remaining part of the State are not called upon to implement the said policy of the Government. Therefore on that count also the order dated 25th August, 1977 is violative of Article 14 of the Constitution of India.
3. On the other hand it is contended by Shri Bobde learned Advocate General, that the petitioner Co-operative Society is at liberty to manage its own affairs within the frame work of the Act and the rules framed thereunder. Therefore a right to organise or form an association is not taken away nor their right to carry on business is any way affected by this impugned order. The order dated 25th August, 1977 applies to all Co-operative Institutions employing 10 persons or more. Therefore, it is not correct that it applies only to certain Co-operative Urban Banks in certain districts and not to others. It is also not correct to say that section 79-A is a piece of excessive delegation and it does not lay down any criteria or guidelines, nor it could be said that it is violative of Article 14 of the Constitution. In support of these contentions the learned Advocate General has placed strong reliance upon the decisions of the Supreme Court in Daman Singh v. State of Punjab, and Babaji Kondaji Garad and others v. Nasik Merchants Co-op. Bank Ltd. and others.
4. It appears from record that the Government of Maharashtra in Agriculture and Co-operative Department took a policy decision in the matter of recruitment to its services, so as to ensure fair and adequate representation to the backward classes. In pursuance of this policy the Government issued orders reserving certain percentage of vacancies in its services and in allowing substantial concession to backward classes in the matter of recruitment. It also appears that the issue whether reservation could be made for backward classes in the salaried posts in Co-operative Institutions on the lines of reservation made in the Government services, was under consideration of the Government. Therefore Government decided that while sanctioning financial assistance to Co-operative Societies a conditions should be stipulated that the recipient society should recruit a certain percentage of backward candidates if the total strength of the employees of the Society exceed 10. Such a decision was incorporated in the circular dated 24th October, 1969. We have on record a note indicating a summary of orders issued by the Government regarding recruitment of backward classes in various services. It also lays down percentage of reservation. Then comes the impugned order. From the bare reading of this order it is quite clear that for the purpose of securing proper implementation of development and welfare programmes approved and undertaken by Government, thought it expedient to issue necessary directives under Section 79-A of the Act to all Co-operative Institutions employing 10 persons or more under them in the State.
5. Relevant portion of section 79-A, under which the order came to be issued reads as under :
"79-A(1) If the State Government on receipt of a report from the Registrar or otherwise, is satisfied that in the public interest or for the purpose of securing proper implementation of Co-operative production and other development programmes approved or undertaken by Government of the business of the society generally, or for preventing the affairs of the society being conducted in no manner detrimental to the interests of the members, or of the depositors or the creditors thereof, it is necessary to issue directions to any class of societies generally issue directions tot hem from time to time, and all societies or the society concerned as the case may be, shall be bound to comply with such directions.
(2) The State Government may modify or cancel any directions issued under sub-section (1) and in modifying or cancelling such directions may impose such condition as it may deem fit.
It is not correct to say that this section confers arbitrary and un-chanalised powers upon the State Government to issue directions. The purpose for which the directions could be issued are enumerated in the section itself. A power is also given to the State Government to modify or cancel the directions issued under sub-section (1) of section 79-A of the Act. Therefore, it cannot be said that any unbridled or unchanalised power has been conferred upon the State Government by the said section. The words and expression used in the section have a definite meaning and they cannot be termed as vague. As observed by the Supreme Court in Daman Singh's case, it is needless to refer to the nature and history of the co-operative movement except to say that the promotion of the co-operative movement is one of the Directive Principles of State Policy (See Article 43 of the Constitution). As further observed by the Supreme Court the very philosophy and concept of the Co-operative movement is impregnated with the public interest. In this context a reference could usefully be made to the following observations of the Supreme Court in Babaji Kondaji Garad's case :
"Article 43 of the Constitution set the goal that the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas. In our onward march of economic independence, India was destined to be a comparative common wealth. Since independence, co-operative moment proliferated in all directions, its activities were diversified, more especially in the rural areas. Every activity of a person devoted to agriculture in the rural area is considerably influenced by the co-operative movement, such as seed distribution, credit, disposal of agricultural produce etc. The members of the Scheduled Castes and Scheduled Tribes predominantly in rural areas did not remain unaffected by the gigantic stride that the co-operative movement took. They were directly and substantially affected by it. In order to avoid that those who are affected by the movement in their vital day to day existence enjoy a second class status by being denied the opportunity to be represented in the management Council, and decision making bodies, a provision like section 70-B was introduced to ensure representation of such persons who in the absence of reservation may find it difficult to be elected to the committee in which the entire power of management vests. Absence of representation coupled with subjection to the dictates of the society would be antithesis of democratic process reducing such persons to serfdom. A co-operative society is to be governed by a committee elected by democratic process. This democratic process must permeate in filing in reserved seats otherwise the committee would not enjoy a representative character. One can draw light form the provisions contained in part XVI of the Constitution and especially Articles 330 and 332 which provide for reservation of seats in the House of people and in the Legislative Assembly of every State for the Scheduled Castes and the Scheduled Tribes. The felt necessities of the time and the historical perspective of class domination led to the constitutional guarantee of reservation so that India can be truly a Sovereign Socialist Secular Democratic Republic. A republic is made up of men and institutions. That is why democratic institutions have to be set up by providing for election and to make the democratic institutions truly representative, reservation of seats for those who on account of their backwardness, exploitation and unjust treatment both social and economic cannot obtain representation because of the class domination. This is the genesis of reservation."
These observation of the Supreme Court aptly apply to the impugned order also. In our view the impugned order is also based on the genesis of reservation as explained by the Supreme Court in the aforesaid judgment.
6. The reservation policy adopted by the Government is in tune with the Article 46 of the Constitution which directs the State to promote with special care the educational and economic interests of the of the people and in particular, of the Scheduled Castes and Scheduled Tribes and shall protect them from social injustice and all forms of exploitation. Therefore, in our view the direction issued under section 79-A, have been issue in the interest of general public. It has also come on record that the Government has undertaken certain development and welfare programmes for backward classes. The said programmes includes in its import the employment opportunities for the backward classes also and in tune with this general policy the impugned order came to be issued. Since this decision is taken having regard to the directive principles of the State Policy, as incorporated in Article 46 of the Constitution, the restrictions, if any, are reasonable restrictions imposed in the interest of general public. It is by now well settled that these directive principles should be read in the Chapter dealing with the fundamental rights. Such a reservation is contemplated qua societies which are employing 10 or more persons only. Thus it applies to all Co-operative Societies where reservation policy could be reasonably carried out. Hence we do not find that the directives issued are beyond the scope of section 79-A of the said Act. The directives are restricted to co-operative societies or Institutions employing 10 persons or more only. This classification is also reasonable and cannot be termed as arbitrary. It is also not correct to say that the order or directives only apply to certain Urban Co-operative Banks and not to others. The circular applies to all the Co-operative Institutions, who are employing 10 persons or more under them. Only because the notices were issued to certain Co-operative banks, it does not mean that the directives are not made applicable to others. The directives incorporated in the order dated 25th of August, 1977 apply to all co-operative institutions employing 10 persons or more. Therefore, it is also not correct to say that there is any discrimination in that behalf.
7. It is also not correct to say that various expressions used in the section are vague. On the other hand various expressions used in the said section 79-A, if read in its context together with other provisions of the Act, they clearly lay down guidelines. It cannot be forgotten that powers to issue orders have been conferred on the State Government which is the highest authority. Therefore, the challenge based on excessive delegation must also fail.
8. We are rather surprised to note as to why the order issued under Section 79-A of the Act as far back as in 1977, was not implemented by the various co-operative societies. We are also surprised as to why the matter was not pursued by the Department. But from that an inference cannot be drawn that the obligation cast upon the co-operative institutions employing 10 persons or more under them, cannot be implemented at this stage. From the bare reading of the order it is quite clear that it also contemplates carrying forward vacancies to wipe out the backlog in the recruitment of backward class persons, and this carry forward rule takes care of the inaction also.
9. In the result therefore, the challenge to section 79-A of the Co-operative Societies Act, 1960 and order impugned fails. Rule is discharged with no order as to costs.