* THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN + WRIT PETITION No.3108 of 2008 WRIT PETITION No.26039 of 2009 WRIT PETITION No.2531 of 2010 AND WRIT PETITION No.3452 of 2010 W.P. NO. 3108 OF 2008: % Dated 13-04-2010 # The Didugu Sand and Boat Workers Co-operative Societies Ltd …. Petitioner Vs. $ Divisional Cooperative Officer, Guntur Division, Guntur and 3 others …. Respondents ! Counsel for the Petitioner: Sri Kanakamedala Ravindra Kumar ^ Counsel for the Respondents : G.P. for Cooperation : Sri Ramesh Sagar <GIST: > HEAD NOTE: ? Cases referred [1] 2004(2) SCC 590 2 1968 (1) An.W.R. 52 3 1998(4) ALD 41 4 2002 LAP 569 (DB) 5 (1977)4 SCC 337 6 2008 JT (6) 485 7 (1994) 6 SCC 442 8 AIR 1987 SC 72 9 AIR 1978 SC 851 HON'BLE MR JUSTICE RAMESH RANGANATHAN WRIT PETITION No.3108 of 2008 WRIT PETITION No.26039 of 2009 WRIT PETITION No.2531 of 2010 AND WRIT PETITION No.3452 of 2010 COMMON ORDER: Heard Sri E. Manohar, Learned Senior Counsel, Sri K. Ravindra Kumar and Sri N. Sreedhar Reddy, Learned Counsel for the petitioners and the Learned Government Pleader for Co-operation, Sri C.Ramesh Sagar, Sri A. Sanjeev Kumar and Smt. B. Vijaya Lakshmi, Learned Counsel for the respondents and others. At their request all these writ petitions are being finally disposed of. At the outset, it is necessary to briefly note the facts in each of these writ petitions. a). W.P. No.3108 of 2008: The area of operations of the petitioner, a co-operative society registered on 08.06.2001, covers the entire Amaravathi Mandal. There exists another society in the said area, called the Dharanikota Sand and Ferry Boat Workers Co-operative Societies Limited, which was registered on 13.10.1976. Sri Marella Koteswara Rao submitted an application to the 1st respondent on 06.12.2007 requesting him to register a new society in the name of “Isuka Mariyu Boat Panivarala Sangham”. The 1st respondent, however, refused to register the society on the ground that there were already two similar societies in existence. Sri M. Koteswara Rao and others were asked, by proceedings dated 12.12.2007, to join either of the two existing societies. A copy of the said letter was addressed to both the petitioner and the Dharanikota society advising them to admit the new members as per their bye-laws. The Deputy Registrar received a representation from V.Sambasiva Rao on 29.01.2008 requesting him to register their society as they had applied for registration as early as on 28.01.2005. The petitioner submitted a representation on 11.02.2008 requesting the 1st respondent not to register the society within their area of operations. Apprehending that the 1st respondent would register the society without notice to them, and once a new society was registered their area of operations would be bifurcated, the petitioner has invoked the jurisdiction of this Court. In his counter affidavit, the Deputy Registrar of Co-operative Societies would submit that there is no restriction on new societies being registered within the same area of operations of an existing society; the purpose is to help the poor earn their livelihood; and any number of societies can be formed and registered as long as they fulfill the legal requirements. b). W.P. No.26039 of 2009: Sri N. Sivaiah, along with fourteen others, submitted an application to the respondents seeking registration of a new society in the name of “Sri Rama Backward Classes (B.C.) Sand & Boat Workers Co-operative Society”. Their application was rejected on the ground that this Court, in W.P.M.P. No.4054 of 2008 in W.P. No.3108 of 2008 dated 15.02.2008, had passed an interim order. c). W.P. No.2531 of 2010: The area of operations of the petitioner, a society registered under the A.P. Cooperative Societies Act, (hereinafter called the “Act”), is Tullur Mandal, Guntur District. It is their case that, as they are the only registered Cooperative Society in Tullur Mandal, they are entitled to get the benefit of 10% concession on the knocked down amount in the auction held for quarrying of sand in the sand reaches; respondents 4 and 5, in order to deprive them of such benefits, had filed an application to the 2nd respondent, (Divisional Cooperative Officer, Guntur), seeking registration of their society; and that the 2nd respondent did not put the petitioner on notice. The 2nd respondent informed the promoters of the proposed society that they could seek admission in the existing society. As the promoters contended that the scope and nature of the work in the prospective society was vast, and was in conflict with the interests of the existing society, the 2nd respondent took steps to assess the feasibility of registering the proposed society. In his counter-affidavit, the Additional Registrar of Co-operative Societies would submit that there is no requirement for issuing a notice to the existing society under the Act or the Rules; economic viability of the proposed society, and its compliance with cooperative principles, alone are taken into consideration while registering the society; normally more than one society is not registered in the same area of operations keeping in view the limited resources of State aid even though the Act does not contemplate such geographical restrictions; under the Mutually Aided Cooperative Societies Act, 1995 no such restrictions, on area of operations, exist and any number of societies can be registered; the apprehension of existing societies that action would be taken under Section 15-A was without basis; the Circular of the Commissioner and Registrar of Societies dated 25.01.1984 required the registering authority to ensure that there was no overlapping of jurisdiction with any existing society with similar aims and objects; the memo dated 08.01.2010 is a clarificatory memo which was issued keeping in view cooperative principles, and to avoid overlapping of jurisdiction in respect of societies wherein the activities of members are similar; in the prevailing current situation, in respect of sand and boat workers, restrictions on registering more number of societies was proving to be counter productive, and had resulted in vested interests taking undue advantage in the guise of a Cooperative Society; a balance had to be struck while considering applications of societies seeking registration; their objects and other relevant factors were required to be kept in view; whereas in some areas mushrooming growth of the same type of societies is required to be restricted, in certain other areas promotion of societies, which foster healthy competition among cooperative societies, is required to be encouraged; registration of more number of societies would also generate considerable revenue for the Government exchequer; the members of existing societies would not suffer any loss or injury; and registration of a new society would break the monopoly exercised by vested interests through co-operative societies. d). W.P. No.3452 of 2010: In this writ petition the action of the respondents in not registering the ‘Isuka Mariyu Boat Panivarala Sangam, Amaravathi Mandalam, Guntur District’, as a Co-operative society under the Act, is questioned as arbitrary and illegal. It is the case of the petitioners that the income derived from collecting sand is their only source of livelihood; their application seeking registration of the society was rejected by the 2nd respondent on 12.12.2007 on the pretext that there were already two societies registered in Amaravathi Mandal and it was, therefore, not possible to register another society as proposed by them; they had filed a statutory appeal before the Tribunal; and O.A. No.6 of 2008 filed by them was dismissed, by order dated 09.07.2009, affirming the order of the 2nd respondent on the ground that this Court, in W.P.M.P. No.4054 of 2008 in W.P. No.3108 of 2008, had passed an interim order. Sri E. Manohar, Learned Senior Counsel, and other Counsel, appearing on behalf of the existing societies, would submit that, with a view to arrest the mushrooming growth of societies, to prevent unhealthy competition and complications among societies within the same area of operation and with similar objects which would ultimately have a negative impact on the interests of the members at large, the Commissioner had issued Circulars dated 25.01.1984 and 02.07.1993; the Commissioner had also issued proceedings dated 08.01.2010; the Circulars issued by the Commissioner, regarding registration of new societies in the area of operations of an existing society, is required to be adhered to as it is in the interest of the co- operative movement and is in furtherance of, and not contrary to, Section 6(4) of the Act; these Circulars only reiterate the purport and intendment of the Act, and are not ultravires the provisions of the Act; Section 6(4)(c) impliedly bars registration of a new society in the area of operations of an existing society; the words “adversely affect the growth of co-operative movement” in Section 6(4)(c) would mean “adversely affect the existing society”; principles of natural justice must be read into Section 6(4)(c) requiring an opportunity of being heard to be afforded to the existing society before a new society is registered in its area of operations; registration of a new society, in the area of operations of an existing society, is illegal, arbitrary, ultravires Section 15-A and in violation of principles of natural justice; the Act imposes certain restrictions for registration of a new society requiring their economic viability and the jurisdictional area of existing societies to be kept in view; unhealthy competition could give scope to conflicts among the same class or groups; if persons desired to form themselves into a society they could register their society under the A.P. Mutually Aided Co-operative Societies Act, 1995; a new society cannot be registered, within the area of operations of an existing society, without violating the directives of the Registrar of Cooperative Societies in Circulars dated 25.01.1984, 02.07.1993 and 08.01.2010 issued under Section 3(2); registration of a large number of Societies, within the same operational area, was not in the interests of the cooperative movement since the object of the Act was to promote only such societies which were economically viable; the only remedy available to persons, who are not members of the existing society, is to seek admission and, if they are not admitted, to take recourse to the provisions of Section 19; and the existing societies apprehend that, once a new society is registered, steps would be taken under Section 15(A) to get the area of operations bifurcated between the existing and newly registered societies, in which event the interests of existing societies would be adversely affected. Learned Government Pleader for Co-operation would submit that each application for registration of a new society has to be examined by the Registering authority in the light of the provisions of the Act and the Rules; the Registering authority is bound by the Circulars issued by the Registrar under Section 3(2) of the Act and, if there is overlapping of jurisdiction with an existing society, the application has to be rejected; and Section 6 confers a discretion on the Registering authority and does not provide for the existing society being afforded an opportunity of being heard. Learned Counsel, appearing on behalf of the societies seeking registration under the Act, would contend that the interim order of this Court did not prohibit the 1st respondent from registering a new society; neither the Act nor the Rules restricted the number of societies which could be registered within the same area of operations; if the purpose, of forming societies, is to help the poor earn their livelihood any number of societies can be formed and registered as long as they fulfill the conditions prescribed under the Act and the Rules; the petitioner in W.P. No.3108 of 2008 intends to monopolise the Amaravathi Mandal sand & boats workers field and eliminate all competition in the auctions held periodically for quarrying of sand; apprehending that, if any other boatsmen co-operative society was registered, their chances would be jeopardized the petitioner had filed W.P. No.3108 of 2008; the Act neither prohibited nor restricted registration in a particular operational area to one or two societies; exercise of power under Section 15-A of the Act could not be extended to registration of a proposed society; Section 15-A has no application as none of the existing societies receive aid from the Government; the 10% concession given to boatsman co-operative societies, under the A.P. Minor Mineral Concession Rules, in granting leases for quarrying of sand is not a subsidy under Section 43 of the Act; the existing societies have no locus standi to file writ petitions as their legal rights have not been adversely affected by the registration of new societies; having secured the benefit of their society being registered, though the Dharanikota society was already in existence by then, the petitioner in W.P. No.3081 of 2008 cannot be heard to contend that no new society should be registered in the area of operations of an existing society; having taken a stand in their counter affidavits, that there is no bar for registering a new society in the area of operations of an existing society, officials of the Co-operative Department cannot be heard to contend to the contrary; in order to take advantage of G.O.Ms.No.84 dated 10.04.2007, certain undesirable elements were participating in the auctions, held for grant of sand quarry leases, in the guise of cooperative societies; there is no justification in directing the promoters of a proposed society to seek membership in an existing society or to form themselves as a society under the Mutually Aided Co-operative Societies Act; though new members could seek admission into the existing society, either directly or through the Registrar, formation of a new society would enable them to pursue other works like repairs of boats, labour works contracts etc., apart from regular ferrying which may not be possible within the objects of the existing society; as the Act does not prohibit registration of more than one society, no society can be refused registration merely on the ground that there were other societies functioning in the same area of operations; and the cooperative movement would be better subserved if more societies were encouraged to function in the same area of operations. Section 6 of the Act relates to registration of a society and, under sub-section (1) thereof, an application for registration of the society shall be made to the Registrar in such form and with such particulars as may, from time to time, be specified. Section 6(4) confers a discretion on the Registrar to register a Society if he is satisfied that (a) the application conforms to the requirements laid down by the Act and the Rules made thereunder; (b) the objects of the society seeking registration are in accordance with Section 4; (c) such society is likely to be economically sound and its registration may not have an adverse effect on the development of the co-operative movement; (d) the proposed bye-laws are not contrary to the provisions of the Act and the rules made thereunder; and (e) the applicants are aware of the objects of the society as specified in Section 4 of the Act, and the contents of the proposed bye-laws. Section 6(5) provides that, where the Registrar is not so satisfied, he shall communicate by registered post the order of refusal together with reasons thereof to the applicants within such time as may be prescribed. Rule 3 of the A.P. Cooperative Societies Rules, (hereinafter called the “Rules”) prescribes the procedure for registration of a society and, under sub-rule (viii) thereof, if the Registrar is satisfied that the proposed society has complied with the requirements, he shall register the society and its bye-laws. The discretion conferred on the Registrar, to register/refuse to register a society, cannot be exercised at his whim and fancy but in accordance with Section 6 of the Act read with Rule 3 of the Rules. The discretionary power conferred under a Statute must be exercised only in furtherance of the Statute, and not in derogation thereof. When anything is left to any person to be done according to his discretion, the law intends it must be done according to law. Discretion is to discern between right and wrong. Whoever hath the power to act at discretion is bound by the rule of reason and law. It is not to be arbitrary, vague and fanciful, but legal and regular. It must be exercised within the limits to which an honest man, competent to discharge his office, ought to confine himself to. (Union of India Vs. Kuldeep Singh[1]). As the Act and the Rules do not expressly prohibit registration of new societies, in the area of operations of existing societies, refusal by the Registering authorities to register these societies solely on this ground is illegal. Prior to its omission by Act 22 of 2001 dated 24.04.2001, Section 7 of the Act related to registration of societies and, under sub-section 1(c) thereof, if the Registrar was satisfied that such a society was likely to be economically sound, and its registration may not have an adverse effect on the development of the cooperative movement, he was empowered to provisionally register the society. Section 7(1)(c), prior to its omission by Act 22 of 2001, is similar to Section 6(4)(c) of the Act as amended by Act 22 of 2001 dated 25.04.2001. I n Vizianagaram Cooperative Land Mortgage Bank Ltd v The Bheemunipatnam Cooperative Land Mortgage Bank Ltd[2], the jurisdiction of Vizianagaram Cooperative Land Mortgage Bank, a society registered under the Act, extended to Bheemunipatnam taluk. Subsequently, a separate society called ‘the Cooperative Land Mortgage Bank at Bheemunipatnam’ was registered in that taluk by the Deputy Registrar of the Cooperative Societies under Section 7 of the Act. The Vizianagaram bank filed a Revision petition before the Regional Joint Registrar, Kakinada who cancelled the registration of the Bheemunipatnam bank on the ground that the area of the operation of the newly registered society fell within the area of operations of the Vizianagaram Bank; it amounted to division of the area of operations under Section 15 of the Act; and, as the procedure prescribed under Section 15 had not been followed, the registration was liable to be cancelled. This order was confirmed by the Government. A Learned Single Judge of this Court, holding that it was neither a case of division of an existing society nor was it a case where the Registrar had started proceedings for division of the society, quashed the order of the Government. In appeal it was contended before the Division Bench that, when a separate society was registered to serve Bheemunipatnam taluk which was within the area of operation of the Vizianagarm Bank, it amounted to a division of the society within the meaning of Section 15 of the Act. The Division Bench noted that Section 7 of the Act provided that, if the Registrar was satisfied that the application conformed to the requirements of the Act and the Rules, the objects of the Society was in accordance with Section 4, the Society was likely to be economically sound, its registration would not have an adverse affect on the development of the cooperative movement, and the proposed byelaws were not contrary to the Act and the Rules, he could register the Society. The Division Bench opined: “……….A combined reading of these provisions reveals that the Act does not lay down that more than one society complying with the provisions aforesaid cannot be registered with the same area of operation. Once a society is registered, it will be entitled to do all things necessary for carrying out its objects. Before registration, the Registrar should be satisfied that the society is likely to be economically sound, and its registration would not have an adverse effect on the development of the cooperative movement, and also that the proposed bye-laws are not contrary to the Act and the Rules. In the instant case, the society having been registered, it has to be presumed that the Registrar was satisfied on both those matters, in particular, that the registration of the bye-laws providing the same area of operations as covered by the bye-laws of another society, has not got the result of being contrary to the Act or the Rules. The provisions of section 15 are manifest, that in the interests of an existing society or societies the Registrar can direct division of the society or an amalgamation of two or more societies, if, in his opinion, it is necessary to do so. The language of section 15 does not warrant a finding that the registration of a new society for an area already served by an existing society amounts to a division of the area of operations of the existing society, or that the procedure indicated in section 15 should be followed before the registration of the new society, or that it is a proceeding started by the Registrar for division of the existing society. As already stated there is no provision in the Act or the Rules giving any monopoly in respect of the area of operations provided in any bye- laws. We cannot consider the registration of the petitioner – society as affecting a division of the assets and liabilities of the 6th respondent………….” (emphasis supplied). In B. Ramanaiah v. District Collector & Election Authority (Cooperation), Nellore[3] this Court held that none of the provisions of the Act prohibited inclusion of a village in more than one co- operative society in its area of operations except credit societies. Following the Division Bench judgment, in Vizianagaram Cooperative Land Mortgage Bank Ltd2, this Court held that no society could have a monopoly over a particular area; it was for the residents of that area to choose the society; and no one could compel them to seek admission in a society which did not cater to their needs according to them. In the light of the authoritative judicial pronouncements aforementioned, the mere fact that the area of operations of the proposed society falls within that of an existing society is no ground to deny its registration. As noted hereinabove, the petitioner in W.P. No.3108 of 2009 was registered in the very same area of operations where there already existed another Society i.e., “Dharanikota Sand and Ferry Boat Workers Co-operative Societies Limited”. Having been the beneficiary of such registration, the petitioners in W.P. No.3108 of 2008 can ill-afford to contend that no new society should be registered in their area of operations. Reliance is, however, placed on behalf of the existing societies on the Circulars and the proceedings of the Commissioner for Co- operation and Registrar of Co-operative Societies. In purported exercise of his powers under Section 3(2) of the Act, the Registrar of Cooperative Societies issued Circular dated 25.01.1984 fixing guidelines for registration of new societies. These guidelines were issued with a view to arrest the mushrooming growth of societies, and to register only such societies which were viable and had a reasonable chance of existence and success. The guidelines, inter alia, required the registering authorities, while considering registration of a society, to ensure that there was no overlapping of jurisdiction with any existing society with similar aims and objects. The aforesaid guidelines, in the Circular dated 25.1.1984, were reiterated by the Commissioner and Registrar of Cooperative Societies in Circular dated 02.07.1993. Subsequently, by proceedings dated 08.01.2010, the Commissioner and Registrar of Cooperative Societies informed the Divisional Cooperative Officer, Guntur, that, if individuals engaged in the same economic activity were admitted/got admitted in the society, monopolizing the activity may not arise. The Divisional Cooperative Officer was directed to advise the promoters, of the newly proposed society, to seek admission in the existing societies; if the management was not in a position to admit the members into the society, to seek admission under the provisions of Section 19(2-A) of the Act; and, in case of refusal, to advise the promoters of the newly proposed society to organize themselves into a Cooperative Society under the A.P. Mutually Aided Cooperative Societies Act, 1995 as there was no bar of overlapping, or conflict of jurisdiction, between two or more Cooperative Societies under the Mutually Aided Cooperative Societies Act, 1995. The cumulative effect of the provisions of sub-sections (1) and