SCA/4956/2005 1/66 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 4956 of 2005 With CIVIL APPLICATION No. 7523 of 2006 In SPECIAL CIVIL APPLICATION No. 4956 of 2005 For Approval and Signature: HONOURABLE MR.JUSTICE AKIL KURESHI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= AHMEDABAD DISTRICT CO-OP PURCHASE AND SALE UNION LTD - Petitioner(s) Versus GUJARAT STATE CO-OP BANK LTD & 12 - Respondent(s) ========================================================= Appearance : MR BN PATEL for Petitioner MR SHIRISH JOSHI for Respondent(s) : 1, 2, 4, MS ARCHANA U AMIN for Respondent(s) : 3 MR SUNIT SHAH, GP for Respondent(s) : 5 & 6, MR KG VAKHARIA, SR. ADVOCATE WITH MR MK VAKHARIA for Respondent(s) : 7 to 13. ========================================================= CORAM : HONOURABLE MR.JUSTICE AKIL KURESHI Date : 19/07/2006 SCA/4956/2005 2/66 JUDGMENT ORAL JUDGMENT 1. This petition has been filed by the Ahmedabad District Cooperative Purchase and Sale Union Limited (hereinafter to be referred to as “the petitioner Union”) primarily challenging the cooption of members in the Managing Committee of various specified cooperative societies which according to the petitioner is contrary to the provisions contained in section 74C(3) of the Gujarat Cooperative Societies Act, 1961 (hereinafter to be referred to as “the said Act”). 2. The petitioner is a cooperative society registered under the Gujarat Cooperative Societies Act. It is a district level cooperative society having area of operation in the whole district of Ahmedabad. The petitioner also happens to be a specified cooperative society under section 74-C of the said Act. The petitioner, in turn, is a member of several cooperative societies including respondent No.1 to 4 co-operative societies. These respondents i.e. respondent Nos.1 to 4 are also specified co-operative societies. It is the case of the SCA/4956/2005 3/66 JUDGMENT petitioner that being specified societies, elections to the Managing Committee of these societies are required to be held as provided in section 74C of the said Act. It is the primary contention of the petitioner that in view of the provisions contained in sub-section (3) of section 74C of the said Act, the Managing Committee of the society can be constituted only through election and by no other mode. It is the case of the petitioner and to which there is no series dispute raised by the respondents that respondents Nos.1 to 4 have been nominating members in the Managing Committee of the society through co-option. Through different bye-laws framed by the respective societies, such power of cooption has been granted to the Committee itself. It is this mode of nominating members to the Committee through cooption by the Committee itself which the petitioner objects to on the ground that the same is impermissible in view of the provisions of section 74C(3) of the said Act. 3. The petitioner relies on the decision of the SCA/4956/2005 4/66 JUDGMENT learned single Judge of this Court in the case of A.M.P.Co-op. Society v. S.K.Dist. Coop Milk Producers Union Ltd., 2004 (1) GLR 310. In the said decision, learned single Judge of this Court had come to the conclusion that bye-laws framed by the society cannot prevail over the provisions contained in sections 74B and 74C of the said Act. It was held that the provisions made under bye-laws for cooption of three women representatives as members of the Managing Committee are in contravention of the provisions contained in section 74C(3) of the said Act. 4. On the other hand, the case of respondents Nos.1 to 4 i.e. the specified cooperative societies as well as other individual private respondents who are members of such societies through co-option is that the bye-laws of the societies permit such cooption and that it is always open for the societies to evolve its own mode for constitution of the Managing Committee of the society. It is primarily contended that section 74-C(3) of the said Act does not prohibit any SCA/4956/2005 5/66 JUDGMENT such provision contained in the bye-laws of the society. 5. Before adverting to the legal controversies, it may be noted that there is no dispute about the fact that the petitioner herein is a member of respondents Nos.1 to 4 societies. Respondents Nos.1 to 4 societies are specified cooperative societies. Elections to the Managing Committee of such societies are governed by the provisions contained in section 74C and Chapter XI-A of the said Act. It is also not in dispute that in so far as the bye-laws of these societies are concerned, they provide for cooption of certain number of members to the Managing Committee. In case of respondent No.1 society, bye-law No.26 provides, inter alia, that the Board may co-opt not more than two Directors. Bye-law 39(H) of respondent No.2 society also provides for cooption of two members by the Managing Committee. Bye-laws of the respondent No.3 cooperative society also permit the Managing Committee to coopt two members on the Committee. Similarly, bye-laws SCA/4956/2005 6/66 JUDGMENT of respondent No.4 society also permit co-option of two members to the Managing Committee. In short, bye-laws of all the four respondent cooperative societies permit cooption of two members to the Managing Committee. Such powers of cooption lie with the Managing Committee. It is in this background that the present petition has been filed by the petitioner. The petitioner contends that the petitioner had made representations to respondents Nos. 5 & 6 i.e. the Registrar of Cooperative Societies and the State Government regarding the illegal cooption of the members in various societies which according to the petitioner was impermissible and so held by this Court in the case of A.M.P. Co-op. Society (supra). Despite representations by the petitioner, since respondent Nos.5 & 6 took no action, the petitioner filed the present petition. 6. By an interim order dated 10th March 2006, learned single Judge of this Court relying on the ratio laid down in the case of A.M.P. Co-op. Society (supra) found it appropriate to give SCA/4956/2005 7/66 JUDGMENT certain interim directions. The learned Judge restrained respondents Nos.1 to 4 from coopting any persons as members of the Managing Committee and further restrained the said respondents from allowing anyone who is coopted from attending the meeting of the Managing Committee. It was further clarified that such directions shall not preclude the said respondents from constituting any advisory committee of the experts body in the respective fields. Respondent No.5 was directed to ensure by issuing an appropriate circular that in all specified cooperative societies even if bye-laws permit cooption, no person shall be included as members of the Managing Committee by way of cooption in view of the express bar provided under section 74C of the said Act. 7. Appearing for the petitioner, learned advocate Shri B.N.Patel submitted that the issues arising in the present petition are no longer res integra. He submitted that the provisions contained in section 74C(3) of the said Act do not permit any mode of constitution of the SCA/4956/2005 8/66 JUDGMENT Managing Committee of the specified cooperative society other than by way of election. Cooption, therefore, is specifically prohibited. He submitted that section 74C(3) begins with a non-obstante clause i.e. “notwithstanding anything contained in the bye-laws”. He therefore, submitted that there is no scope for debate about the non-permissibility of cooption of the members in the Managing Committee of the specified cooperative societies. He submitted that the learned single Judge of this Court in the case of A.M.P. Co-op. Society (supra) has considered all aspects of the matter and has come to a definite conclusion that despite the bye-laws providing to the contrary, no person can get entry as member of a specified cooperative society otherwise than through election. 7.1Learned advocate for the petitioner pointed out that the validity of section 74C of the said Act has been upheld by the Division Bench of this Court in the case of Amreli Dist. Coop. Sale and Purchase Union v. State reported in 25(2)GLR SCA/4956/2005 9/66 JUDGMENT 1244. 7.2 Learned counsel drew my attention to the provisions contained in sections 73, 74, 74B and 74C of the said Act to contend that combined reading of the said provisions would lead to one and only conclusion that any member of the Managing Committee of the specified Cooperative society must seek his entry only through election. 7.3 He further pointed out that even after the decision of the Hon'ble Supreme Court in the case of Zoroastrian Coop. Housing Society Ltd. v. District Registrar, Coop. Societies (Urban), (2005) 5 SCC 632, the situation in this regard has not materially changed. He pointed out that as long as the said Act or the Rules made thereunder prohibit a particular mode of constitution of Managing Committee, the bye-laws to the contrary cannot prevail. He placed reliance on the observations made by the Hon'ble Supreme Court in the case of Zoroastrian Coop. Housing Society Ltd (supra) particularly in para 20, 22 and 23 thereof. 7.4 Placing reliance on the decision of the learned SCA/4956/2005 10/66 JUDGMENT single Judge of this Court in the case of A.M.Bhutaiya v. Amreli Dist. Central Coop Bank, 1998 (2) GLR 1470, he submitted that the writ petition filed by the present petition is maintainable. The petitioner is seeking enforcement of statutory rights and therefore, the present petition would be maintainable as held by this Court in the above mentioned decision. 7.5 Learned advocate for the petitioner further submitted that the present petition is not in the nature of public interest litigation. He pointed out that the petitioner as a member of respondents Nos.1 to 4 societies has a right to urge before this Court that the affairs of the societies be conducted in a manner provided under the said Act. If there was any deviation in the constitution of the Committee, it was open for the petitioner to raise grievance about the same as a member of such societies. He further submitted that in so far as the prayer made in para 15 of the petition is in general nature and does not concern respondent Nos.1 to 4 societies, the petitioner does not press for the same in this petition. In SCA/4956/2005 11/66 JUDGMENT that view of the matter, upon the statement made by the learned advocate for the petitioner, this petition gets confined to following substantive reliefs : “15. (b) To hold and declare that the managing committees of respondents nos 1 to 4 are not competent and entitled to co- opt any member of their managing committees and the provisions of bye-laws as per Annexure-B and C to that effect are absolutely illegal, null and void; (c) To restrain the respondents nos.1 to 4 from co-opting any member of their managing committee by the managing committee and to restrain them form allowing any co-opted member on the managing committee to function as the member of the managing committee forthwith and permanently; (d) To direct the respondent nos 5 and 6 to take all necessary action and steps against all specified cooperative societies including respondent nos.1 to 4 for violating the provisions of section 74-C(3) of the Act and co-opting members on managing committee by managing committee illegally;” SCA/4956/2005 12/66 JUDGMENT 8. On the other hand, learned senior advocate Shri K.G.Vakharia appearing for some of the respondent-cooperative societies and coopted members made detailed submissions opposing the petition. By way of preliminary objection, it was contended before the Court that the petition is not maintainable since respondents Nos.1 to 4 societies are not “State” within the meaning of Article 12 of the Constitution of India. It was contended that the petitioner has not laid any foundation nor produced any material on record to establish that respondents Nos.1 to 4 are State instrumentalities or agencies so as to cover under the term “State” as defined under Article 12 of the Constitution. He, therefore, contended that the petition is not maintainable. 8.1Another preliminary objection raised by Shri Vakharia was that the petition is in the nature of public interest litigation. The petitioner has prayed for wide reliefs and sought for implementation of the decision of this Court in the case of A.M.P. Co-op. Society (supra) against all specified cooperative societies of which the SCA/4956/2005 13/66 JUDGMENT petitioner is not even a member. This petition, therefore being in the nature of public interest litigation should not be heard before this Court. 8.2 With respect to the legal controversies raised by the petitioner, learned Senior Advocate Shri Vakharia submitted that the provisions contained in section 74C of the said Act do not prohibit cooption of members to the managing committee if the bye-laws of the society so permit. 8.3 In this regard, it was contended that the bye- laws of the societies are in the nature of contractual relations between the parties. Once a person agrees to abide himself by certain terms of contract, it is thereafter not open for such a person to challenge the provisions or to seek to ignore such provisions contained in the contract unless the terms are found to be opposed to public policy as envisaged under section 23 of the Indian Contract Act. He further contended that by virtue of the bye-laws of the respective societies, which bye-laws have been approved by the Registrar, provisions are made for nomination of members to the managing committee through SCA/4956/2005 14/66 JUDGMENT cooption by the committees themselves. He submitted that such provisions are to be found in large number of co-operative societies and are in the interest of the co-operative movement. He submitted that co-option of members who are expert in the respective fields only augment the cooperative spirit and would give thrust to the cooperative movement. He submitted that such provisions for cooption cannot be ignored. 8.4 With respect to the provisions contained in section 74-C(3) of the said Act, it was contended that the same do not prohibit cooption of members to the managing committees of specified cooperative societies. He submitted that the requirement of holding election as provided under section 74C(3) of the said Act and Chapter XI of the said Act would apply only to those of the members of the committee who are required to be elected. If there are provisions which permit the co-operative societies to constitute the committee through members in addition to elected members, provisions contained in section 74C(3) of the said Act do not apply nor the same would SCA/4956/2005 15/66 JUDGMENT prohibit such mode of constitution of the committee. 8.5 He further submitted that even otherwise, on the principles of harmonious construction, it would be necessary that the provisions contained in section 74C of the said Act are interpreted in such a manner as not to preclude or prohibit cooption of members to the managing committee of the specified cooperative societies. For the above purpose, he drew my attention to various provisions contained in the said Act and the Rules made thereunder. Reference to these statutory provisions will be made at a slightly later stage. 8.6 With respect to the decision of the learned single Judge in the case of A.M.P. Co-op. Society (supra), it was contended that the same is rendered per incuriam and at any rate, by virtue of the decision of the Hon'ble Supreme Court in the case of Zoroastrian Coop Housing Society Ltd. (supra) the decision in the case of A.M.P. Co-op. Society (supra) should be treated as no longer a good law. Alternatively, it is submitted that SCA/4956/2005 16/66 JUDGMENT this Court should take a view different since according to him, certain statutory provisions contained in the said Act were not discussed by the learned single Judge while rendering the said decision. 8.7 In support of his contention that the writ petition is not maintainable, reliance was placed on the decision of the learned single Judge of this Court in the case of Rajabhai v. Member U.T.S.K.V.S. Ltd., 1976 GLR 583 wherein the learned single Judge of this Court came to the conclusion that the ratio laid down in the case of Lambha S.S.M. v. D.R. Co-op. Societies, Ahmedabad 1973 GLR 786 is not a correct proposition and the bye-laws of co-operative societies do not have statutory force. 8.8 In this regard, reliance was also placed on the decision of the Hon'ble Supreme Court in the case of Zee Tele Films Ltd v. Union of India, AIR 2005 SC 2677. 8.9 In respect of the contention that the decision in the case of A.M.P. Co-op. Society (supra) is per incuriam, the learned counsel has placed on SCA/4956/2005 17/66 JUDGMENT the decisions of the Hon'ble Supreme Court in the case of Govt. of A.P. v. B.Satyanarayana Rao, (2000) 4 SCC 262, Dy. C.S.T. v. Thomas Stephen & Co. Ltd., (1988) 2 SCC 260, and in the case of, State of UP v. Synthetics and Chemicals Ltd. (1991) 4 SCC 139. In these decisions, the Hon'ble Supreme Court has been pleased to discuss the concept of a decision having been rendered per incuriam. In the case of Government of A.P. v. B.Satyanarayana Rao (supra), it has been observed that the rule of per incuriam can be applied where the Court omits to consider a binding precedent of the same court or the superior court rendered on the same issue or whether a court omits to consider any statute while deciding that issue. 8.10 Reliance was placed in the case of Sultana Begum v. Prem Chand Jain, (1997) 1 SCC 373 wherein it is observed that the rule of interpretation requires that while interpreting two inconsistent or obviously repugnant provisions of an Act, the courts should make an effort to so interpret the provisions as to harmonise them so SCA/4956/2005 18/66 JUDGMENT that the purpose of the Act may be given effect to and both the provisions may be allowed to operate without rendering either of them otiose. 8.11 Decision in the case of Datar Switchgears Ltd. Tata Finance Ltd., (2000) 8 SCC 151 was relied upon for the purpose of explaining the concept of nomination. In para 26 of the said decision, the Hon'ble Supreme Court explained the concept of nomination as to mean, the action, process or instance of nominating or the act, process or an instrument of nominating. It is observed that nomination is equivalent to appointment when used by a mayor in an instrument executed for the purpose of appointing certain persons to office. 8.12 Reliance is also placed on the decision in the case of Director of Settlements, A.P. v. Mr.R.Apparao, (2002) 4 SCC 638 wherein the Hon'ble Supreme Court observed that under Article 141 of the Constitution, the law declared by the Supreme Court shall be binding on all courts within the territory of the country. However, what is binding is the ratio of the decision and not the findings of facts. SCA/4956/2005 19/66 JUDGMENT 8.13 On the basis of the said discussion, it was sought to be urged that in the case of A.M.P.Co.op. Soc. (supra), the learned single Judge did not lay down any ratio of universal application. Reliance was placed on the decision in the case of C.K.Uplana v. Dy. Collector, 2005 (3) GLR 2672, wherein a Division Bench of this Court observed that in the case of A.M.P.Co.op. Soc. (supra), the learned single Judge was considering the impact of interpretation of section 74C of the said Act and was not referring to primary level co-operative societies. 8.14 Reliance was placed on the decision of a Division Bench of this Court in the case of N.N.Patel v. A.B.Gor, 2005 (2) GLR 1583 wherein it was observed that the a fair understanding of section 74C would make it clear that the said provisions relate to conduct of election of committees and officers of certain societies and term of office of members of the committees. On the basis of these observations, it was sought to be urged that the Division Bench found that section 74-C would not apply to cases where the SCA/4956/2005 20/66 JUDGMENT members of the committee are to be selected through means other than election. 9. Main reliance was placed on the decision of Zoroastrian Co-operative Housing Society Ltd. (supra). Learned counsel read the decision before the Court at length and submitted that by virtue of the said decision, the decision of the learned single Judge in the case of A.M.P.Co.op. Soc. (supra) has been rendered no longer good law. It was urged that the Hon'ble Supreme Court in the case of Zoroastrian Cooperative Housing Society Ltd. (supra) has recognized the primacy of the contractual relationship between a member of co-operative society and the co- operative society itself. Such contractual relationships are governed by the bye-laws constituted by the society. A member at the time of seeking membership agrees to abide himself by such bye-laws. It is thereafter not open for him to question the bye-laws themselves. It was further pointed out that in the case of Zoroastrian Co.op. Housing Society Ltd. (supra), the Hon'ble Supreme Court thus SCA/4956/2005 21/66 JUDGMENT upheld the provisions of the bye-laws of the co- operative society which confined its membership only to members of a particular community. Such provisions were upheld despite its opposition on the basis of the provisions contained in Articles 14 and 15 of the Constitution of India as well as on the basis of Article 300 of the Constitution. It was held that the bye-laws are not opposed to the public policy so as to be vulnerable to challenge on the anvil of the provisions contained in section 23 of the Indian Contract Act nor amounts to complete restriction on transfer of property so as to be opposed to the provisions contained in the Transfer of Property Act and in particular section 10 thereof. On the basis of the ratio laid down by the Hon'ble Supreme Court in the case of Zoroastrian Coop. Housing Society Ltd. (supra), it was strongly urged before this Court that since there is no express prohibition to cooption of members to the managing committees of respondents Nos.1 to 4 societies, the bye- laws must be allowed to prevail. SCA/4956/2005 22/66 JUDGMENT 10. Learned advocate Shri Shirish Joshi appearing for other respondents adopted the arguments advanced by Senior Advocate Shri Vakharia and opposed the petition. In addition thereto, he submitted that the petitioner cannot seek any relief from the Court as in the past the petitioner itself had nominated members to the managing committees. 11. Learned Government Pleader Shri Sunit Shah appearing with Shri Gori pointed out that pursuant to the interim directions issued by this Court on 10th March, 2006, the Government has issued a circular dated 24th April 2006. A copy of the said circular has been placed on record. He contended that though another view is equally possible, in view of the decision of this Court in the case of A.M.P.Co.op. Soc. (supra), appointment to the managing committee of the specified cooperative society through cooption may not be permissible. He submitted that the Government will abide by the directions that this Court may give in this regard. 12. Having heard the learned advocates appearing SCA/4956/2005 23/66 JUDGMENT for the parties, it would be necessary to dispose of the preliminary contentions raised by the respondents before adverting to the central issues arising in the petition. 13. As noted earlier, an objection of the petition being heard before this Court was raised on the ground that the petition is in the nature of public interest litigation. It is true that at the time of its inception, the petition contained certain prayers with which the petitioner was not directly concerned. The petitioner had no personal interest in the question of constitution of managing committee of specified cooperative societies other than respondent