IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 05.10.2009 CORAM THE HONOURABLE MR.JUSTICE S.MANIKUMAR W.P.Nos. 29428 and 29429 of 2008 and M.P.No.1 of 2008 V.P.Periyasamy ... Petitioner Vs 1.The General Manager/ District Registrar of Industrial Cooperative Societies, District Industries Centre, Coimbatore-641 001. 2.The Special Officer, The Arignar Anna Cooperative Industries Estate Ltd., 1807 Anna Industrial Park, 544, Varun Srihari Complex, 100 feet Road, Gandhipuram, Coimbatore-12. ... Respondents Prayer: Writ of Declaration declaring that the bye-law 11(c) of the 2nd respondent society is ultra vires in violation of Articles 14, 15, 19(1) (e) and 21 of the Constitution of India, and Section.23 of the Tamilnadu Co-Operative Societies Act, 1983, and the Rules framed thereunder. For Petitioner : Mr.N.Manokaran For Respondents: Mr.P.Subramanian, AGP for R1 Mr.VijayNarayanan (Senior Counsel) for Mr.R.Parthiban for R2 ORDER Petitioner, a member of a society formed under the Tamilnadu Co-operative Societies Act, has sought for a declaration declaring bye-law No.11-c of the second respondent society, as ultravires of Articles 14, 15, 19-1(e) and 21 of the Constitution of India read with Section 23 of the Co-operative Societies Act and the rules framed thereunder: He has also sought for a Writ of Certiorari to quash the order of the General Manager/Registrar of Industrial Co-operative Societies, Coimbatore, dated 14.11.2008, by which the petitioner has been removed from the membership of the second respondent society. As pleadings and submissions are common, both the writ petitions are taken up together and dispose of by a common order. 2. Facts leading to the writ petitions are as follows: On 18.9.1996, the petitioner enrolled as a member in Arignar Anna Co-operative Industrial Estate to frame object is to carry on business of developing and maintaining industrial estate for the members, to establish cottage,small and minimum scale industries. He has paid a sum of Rs.45,527/- and Rs.27,500/- for allotment of land in his name on 18.9.1996 and 8.8.2006 respectively. The name of the second respondent society was lateron amended as Anna Industrial path. The total membership of the society is 1128 and only 550 have paid the value for the purchase plots. The second respondent society had purchased lands to an extent of 3.70.31 acres out of the amount contributed by the members to the extend of two crores till 1999 in various villages namely, Kittampalayam, Karumathampatti, Thekkalur etc. Though lands have been purchased in 1999, no allotment has been made in the name of the petitioner. In the meantime, the respondents had private negotiation with one M/s. Suzlan Infrastructures Limited had ended into settlement and thereby acted against the interest of the members. 3. To know the details about the administration, management and allotment of lands etc, the petitioner sent a petition dated 1.8.2008 under the Right to Information Act seeking for the above details. It is the contention of the petitioner that the above said petition has provoked the respondents 1 and 2, to issue show cause notices dated 31.10.2008 and 22.9.2008 calling upon the petitioner to submit his explanation as to why he should not be removed from the membership of the society, in view of violation of bye-law No.11(C) of the second respondent's society. Though the petitioner, has submitted his explanation dated 8.11.2008, stating that the amended bye-law restricting the place of residence of the petitioner to the area of operation of the Co-operative Industrial Estate has violative of the Constitutional Provisions and requested the General Manager/District Registrar of Industrial Co-operative Societies, Coimbatore, the first respondent not to proceed further and also sought for one month time to give a comprehensive reply, notwithstanding the same, the first respondent, by order dated 14.11.2008, ordered that the petitioner is disqualified to be a member as per bye-law No.11(C) of the bye-laws of the society read with Section 23(h) (i) of the Co-operative Societies Act and removed the petitioner from the membership of the second respondent's society. Both the orders are under challenge in these writ petitions. 4. The General Manager/District Registrar of Industrial Co-operative Society, Coimbatore, the first respondent, in his counter affidavit has admitted that the object of Arignar Anna Co-operative Industrial Estate is to carry on the business of developing and maintaining industrial estate. He further submitted that every Co-operative Society is having its own area of operation and that the services of the society would be applicable only to those who are residing within the area of operation of the society. According to him, the second respondent's society has collected advance in the form of deposit from the members to generate funds for the purchase of lands. He has denied the contention that the members have paid the value for the purchase plots. According to him,the society has purchases the lands utilising its own general funds, the loan received from the financial institutions, the assistance received from the government and advance received from the members. The management of the estate has taken a decision to give priority in allotments of lands to those who have paid the advance amount. 5. The first respondent has denied the contention that a private negotiation was made with M/s.Suzlan infrastructures limited the general body of the estate resolved to swap a portion of its land with M/s.Suzlan infrastructures limited which has benefited the estate in the following manner (1) settlement of term loan outstanding of Rs.98,49,519 with the TAIC is follow by M/s.Suzlan infrastructures limited. (2) Code 115.11 acres of land from M/s.Suzlan infrastructures limited lieu as 1.0593 acres numbering the above advantages to the second respondent's Co-operative Estate necessary approval was granted by the Registrar of Industrial Co-operative Societies, Chennai, to swap a portion of land with M/s.Suzlan infrastructures limited. Based on the results of the general body, exchange deed was executed after getting prior approval of the Registrar of Industrial Co- operative Societies, Chennai. After swapping of the land revised layout has been submitted before the authorities and the approval is awaited. Therefore, the first respondent has submitted that the issue of swapping the land with M/s.Suzlan infrastructures limited has no relevance to the impugned order of the General Manager and District Registrar of Industrial Co-operative Societies, Coimbatore 6. The first respondent has further submitted that as per Section6 of the Tamilnadu Co-operative Societies Act, one of the conditions of registration of a society is that, the members to be admitted to a society under the Act, should reside or own property in the in an area of operation of the society. He has also submitted that the subject matter of the bye-laws i.e. 11(c) is enumerated in Rule 6 of the Tamilnadu Co-operative Societies rules 1988, according to which, the bye-laws of every society shall have its own area of operation and the qualifications for admission to membership of the society. He therefore submitted that the bye-law is not violative of the statutory and the constitutional provisions. 7. The District Registrar has further submitted that as per Section 29 of the Tamilnadu Co-operative Societies Act, has placed restrictions of withdrawal of share or interest by the members of the societies, except in the case of death or withdrawal or removal of the member or permanent shifting of his residence outside the area of operation of the registered society. He also submitted that as per Section 21 of the Act, the members shall possess the qualification as may be prescribed in the bye- laws. Therefore, on a combined reading of section 6 of the Tamilnadu Co-operative Societies Act, read with rule 6 of the rules section 21, 29 of the Act, every member of the registered society shall have or own an immovable property in the area of operation of the society and if a member shifts his residence out of the area of operation of the society, he shall attract disqualification as a member and therefore, the amendment made in bye-law 11(c) is well within the statutory provisions of the Act and it is not violative of the Article 14 or 19 (I) (e) of the Constitution of India. 8. The first respondent has further submitted that a person who was qualified at the time of admission made, may attract any of the matters leading to disqualification on a later date. In such an eventuality, the Registrar shall decide as to whether such person has suffered disqualification for which, necessary procedure is prescribed under the Act and the rules. The respondents have denied the contention of the petitioner that the petition dated 01.09.2008, sent under the Right to Information Act, is the cause for issuing the notices dated 22.09.2008 and 31.10.2008. 9. He has further submitted that the General body of the second respondent's society has unanimously approved the amended bye-laws and the same has been registered by the General Manager and District Registrar of Co-operative Societies, Industrial Estate Society, Coimbatore, on 11.4.2007. He has also contended that though the amendment came into effect on 11.4.2007, the petitioner has not chosen to challenge the same. 10. As regards the show cause notices, he submitted that though the petitioner has contended that the amended bye-law is violative of the constitutional provisions he has not denied the shifting of his residence out of the area of operation of the society. The first respondent has submitted that the order of removal was issued duly observing the formalities as contemplated under rule 35 of the Tamilnadu Co-operative Societies Rules, 1988. 11. The first respondent has further submitted that as per section 52 of the Tamilnadu Co-operative Societies Act, any person who is aggrieved by an order or decision under section 23 can file an appeal to the Registrar, and as per the Full Bench Decision of this Court, in K.Marappan Vs. Deputy Registrar of Co-operative Societies, the writ petition filed against the society is not maintainable. For the above said reasons, he prayed for dismissal of the writ petition. The Special Officer of the second respondent's society has filed a counter affidavit on the same lines. 12. Assailing the constitutional validity of the amended bye-law 11(c) of the second respondent's society Mr.N.Manoharan, learned counsel appearing for the petitioner, submitted that when the petitioner became a member on 18.9.1996, no condition was imposed by the society that a member to be admitted to the society should be residing within the area of operation of the society. 13. Referring to the object of society namely, to carry on business of developing and maintaining the industrial estate for the members to establish cottage of small and minimum scale industry, he submitted that the change of residence on account of family circumstances, or for any other cause would not in any way affect the right of the member of the society to carry on business in the plots proposed to be allotted by the second respondent society and no restrictions can be made by introducing an amendment to the bye-laws restricting the choice of residence of the petitioner or for the matter disqualify a member of the society on the sole ground of a change of residence outside the area of operation of the society. 14. According to the learned counsel for the petitioner though the society was found and registered as early as in the year 1994, even after lapse of 14 years, no need for allotment has not been executed in favour of the members and therefore, it is unreasonable to expect that the members of the second respondent's society to reside only within Coimbatore District, and that they cannot leave the area of operation for some other location or carry on business to lead their life. 15. It is also the further contention of the learned counsel, that even if the members of the second respondent's society resides outside the area of operation, they can very well carry on business within the area of operation of the society in which they were members and contributed a reasonable sum for the purchase of certain extent of land. According to him, the object of the second respondent's society is to carry on business of developing and maintaining industrial estate for the members to establish cottage small and medium scale industries and for this purpose, a member of the society cannot be compelled to reside within the jurisdiction of Coimbatore District. 16. Referring to Section 21 (1) of the Co-operative Societies Act and Article 19 (1) (e) of the Constitution of India, he submitted that when the Act does not impose any restriction with regard to permanent residence for doing business and Article 19(1)(e) guarantees freedom to reside and settle in any part of India, the respondents cannot impose any condition indirectly that the members should reside only within the area of operation of the society and it amounts to placing unreasonable restrictions on the right guaranteed under Article 19(1)(e) of the constitution of India . According to the learned counsel for the petitioner, the amended bye-law runs contrary to the Constitutional right of the petitioner to carry on business and also to reside in a place of his choice and even if the amendment has to be given effect, it cannot be applied to those who have become members, in the year 1996, retrospectively. 17. Inviting the attention of this Court to the sequence of events from the day, when he sought for particulars about the transactions relating to M/s.Suzlan infrastructures limited, and allotment of lands etc. under the Right to Information Act, the Special Officer of the second respondent's society has decided to issue a show cause notice dated 22.9.2008, calling upon the petitioner to submit his explanation as to why he should not be removed from the membership, he submitted that the above acts reflect his anxiety to some how remove the petitioner from the society. He also submitted that having realise that the second respondent has no jurisdiction to issue a notice under rule 35 of the Tamilnadu Co-operative Societies Act, he has somehow influenced the first respondent to initiate action to remove the petitioner from the society and in these circumstances, he submitted that the action of the second respondent is nothing, but usurping the powers of the first respondent, which exhibits bias and malafide on the part of the second respondent. 18. Placing reliance on a decision reported in Bhau Ram Vs. Baij Nath Singh and others, reported in AIR 1955, Supreme Court 1476, Learned counsel for the petitioner submitted that the reasonableness of any law has to be judged in the context of the fundamental rights conferred on the people regarding acquiring, holding, or disposing of the property. By introducing an amendment to the bye-laws after elapse of 14 years, the second respondent society and cannot put an embargo on the right of a person to acquire property on the sole ground, that he has shifted his residence outside the area of operation of the second respondent society. 19. Referring to a decision in Bhagwan Dass Vs. Kamal Abrol reported in 2005-04-Law Weekly 267, Learned counsel for the petitioner submitted that, the word 'residence' employed in Tamil Nadu Co- operative Societies Act, and the rules, framed thereunder, has to be interpreted in the context of the purpose and object for which the societies are created and the construction of the term is governed by the connotation in which it is used or the result designed to be achieved by its use. As the primary object of the second respondent society is to carry on business of developing and maintaining industrial estate for the members to establish cottage, small scale industries, mere change of residence would not in any way disqualify the petitioner from conducting his business within the area of operation. 20. Per contra, reiterating the averments made in the counter affidavit filed by the first respondent, Mr.P.Subramanian, Learned Additional Government Pleader, submitted that, the amendment to the bye-laws is in consonance with Section 6 of the Tamil Nadu Co-operative Societies Act, which deals with the conditions of registration of a society, that individual members to be admitted in a society, shall reside in the area of operation of the society. 21. Referring to rule 6 of the Tamil Nadu Co-operative Societies Act, rule 1988, and section 29 of the Act, dealing with withdrawal of the shares, refund of shares, etc., in the case of a member, shifting his residence out of the area of operation of the society, and the qualifications stipulated in section 21 of the Act, he further submitted that, a combined reading of all the provisions would lead to a conclusion that every society shall have its own area of operation, and the services of the society would be available only to the members who are residing in the area of operation of the society. 22. Placing reliance on the decision in Mr.Vijayanarayanan, Learned Senior counsel for the second respondent, submitted that the bye-laws have been amended in accordance with the statutory provisions, and the issue as to whether the membership could be denied to a citizen of this country, who is located outside the area of operation of the society is no more 'res intergra'. He further submitted, that there is no question of infringement of any fundamental rights of a citizen, to settle down in any part of the country, for the purpose of carrying on business, but the restriction is placed, by virtue of bye-laws of the society which are not against public policy. 23. He further submitted that, when the formation and running of a Co-operative Society is governed by a law enacted for that purpose namely, TamilNadu Co-operative Societies Act, it is open to, impose restrictions on the rights of the members, by appropriate provisions in the bye-laws of the society. According to him, the restrictions imposed by the amendment extending the benefits and services of a society to the members residing within the area of operation, is in accordance with the sections, 6, 21, 29 of the Act read with rule 6 of the TamilNadu Co-operative Societies rules framed thereunder, and therefore, there is no surrender or infringement of any fundamental right to the amended bye-law. As each society has a specific area of operation, restricting the services and the benefits of a society, to the members residing within the area of operation, as per the scheme of the Act, the amendment of the bye law cannot be said to be arbitrary or against the provisions of the Contract Act, or the Constitution of India, particularly, 19(1)e of the Constitution of India. 24. Refuting to the averments of malafide and bias, in issuing the notice dated, 22.09.2008, Learned Senior counsel further submitted that, the said notice was issued when it came to the knowledge of the second respondent, that the petitioner had changed his residence out of area of operation of the society and therefore, it was proposed to remove the name of the petitioner, from the list of the members of the society, as per sub-class H class 1 of Section 23 of the TamilNadu Co-operative Societies Act, 1983. 25. Lateron, an application dated 23.10.2008, was submitted to the first respondent, requesting him to pass an order, directing removal of the petitioner, from the membership of the society, for the reason that the petitioner had changed his residence out of the area of operation of the society attracting disqualification, under the statutory provisions, and bye-law No.11(C) of the society. He further submitted that, the procedure contemplated for removal of the petitioner is in accordance with the statute, and the rules framed thereunder. For the above said reasons, he prayed for dismissal of the Writ petition. 26. Heard the learned counsel for the parties and perused the materials available on record. 27. Before adverting to the facts of the case, it is relevant to extract the provisions of the Tamilnadu Co-operative Societies Act, and the rules, framed thereunder. Section 2(8) of the Co-operative Societies Act defines, "Bye-laws" means the registered bye-laws for the time being in force and includes a registered amendment of such bye-laws. 28. As per the section 6 of the Act, no society, other than society of which a member is a registered society shall be registered under this Act which does not consist of at least 25 independent persons qualified to be admitted as members under this Act and residing or owning immovable property in the area of operation of the society. 29. As per Section 9(D) of the Act, the area of operation of the proposed society should not overlap the area of another registered society of the same class or category save as permitted by the Registrar. 30. Section 11 deals with, amendment of the bye-laws of registered society and it is extracted here under. 31. Section 12 of the Act empowers, the Registrar to direct amendment of bye-laws if he is satisfies that for the purpose of altering the area of registered society or for the purpose of improving the services referred by it or for any other purposes specified in the rules after issuing appropriate notice to the society as to why, the amendment should not be made. 32. Section 21, in chapter 3 of the Act, deals with the qualifications of members and their rights and liabilities subject to the provisions of section 23. Among other persons stated in section 21, any individual competent to contract under section 11 of the Indian Contract Act 1872, is eligible to become a member of the society, provided that the individual, or the registered society, or the body of persons refer to in (i), (ii) and (iv) shall possess such further qualifications, as may be specified, in the rules or the bye-laws. 33. As per Section 21 (ii) of the Act, notwithstanding anything contained in clause (i), or in any other provisions of this Act, the Registrar may, either suo motu or on application at any time, by order and after recording the reasons in writing, remove any individual deemed to have been admitted as a member of the society under clause (i) from such membership if such individual is not eligible to be a member of such society under the provisions of this Act the rules and the bye-laws of the society. Provided that no order under this clause shall be passed without giving a reasonable opportunity of being heard to the parties concerned. 34. Section 23 sets out the various conditions under which a member, attracts disqualification for membership of a society. As per Section 23(1)H, of the Act, if a member does not possess the qualifications with reference to the principle object of the society, prescribed in the rues, or the bye- laws, he can be disqualified from the society. 35. Section 24 deals with the rights of members to services by registered society and application for redress and it states that.--(1) Every member of a registered society shall be entitled to the services available to the members of the registered society under the provisions of its bye-laws and such services shall, on application made by him, be rendered to him by the board. (2) if any member of any registered society is refused any services or where the decision of the board on his application for services is not communicated to him within such time as may be prescribed he may apply to the Registrar for redress. (3) An application to the Registrar under sub-section(2) shall be made within such time as may be prescribed. (4) If the registrar, is satisfied that the refusal of any service is unreasonable, improper or discriminatory, he may, after giving the board an opportunity of making its representations, by order, direct the board to render the service: Provided that before passing an order under this sub-section, the Registrar shall consult the board of the financing bank of which the society is a member. (5) Where any service is rendered by the board in pursuance of an order under sub-section (4), the board and the member to whom such service is rendered shall have the same rights and be subject to the same liabilities in