Case: Virendra Pal Singh and Others Vs. District Assistant Registrar, Cooperative Societies, Etah and Another

Before the passing of the U.P. Cooperative Societies Act, 1965, the Cooperative Societies Act, 1912, was in force and various cooperative societies including cooperative banks were registered under that Act. In 1965 the U.P. Cooperative Societies Act, 1965, was passed to consolidate and amend the law relating to cooperative societies, in Uttar Pradesh. The Statement of Objects and Reasons shows that the effort was to reorient the policy of the State towards cooperation and to adopt cooperative techniques in various spheres of developmental activity. Experience had shown that it was also necessary to introduce some provisions to entrust additional function and responsibilities to cooperative societies but at the same time it was necessary to give proper guidance and exercise effective supervision and control. It was expressly stated that one of the principal objects of the Act was to enable the weaker section of the public to benefit from cooperatives. Therefore, provision was made for State aid to cooperative societies in various forms while at the same time providing for a proper machinery for supervision and guidance.

Court's reasoning:
There is no substance whatever in this submission. Entry 43 of List I is "incorporation, regulation and winding up of trading corporations, including banking, insurance and financial corporations but not including cooperative societies". Entry 44 is "incorporation, regulation and winding up of corporations whether trading or not, with objects not confined to one State, but not including universities". Entry 45 is "banking". Entry 32 of List II is, "incorporation, regulation and winding up of corporations, other than those specified in List I, and universities; unincorporated trading, literary, scientific religious and other societies and association; cooperative societies"Examining the provisions of the U.P. Cooperative Societies Act in the light of the observations of the Privy Council we do not have the slightest doubt that in pith and substance the Act deals with "cooperative societies". That it trenches upon banking incidentally does not take it beyond the competence of the State legislature. It is obvious that for the proper financing and effective functioning of cooperative societies there must also be cooperative societies which do banking business to facilitate the working of other cooperative societies. Merely because they do banking business such cooperative societies do not cease to be cooperative societies, when otherwise they are registered under the Cooperative Societies Act and are subject to the duties, liabilities and control of the provisions of the Cooperative Societies Act. We do not think that the question deserves any more consideration and, we, therefore, hold that the U.P. Cooperative Societies Act was within the competence of the State legislatureWe see no force in this submission. It is true that the Registrar is given wide powers of supervision. It is also true that Secretaries are also given vast executive powers. But the supervisory powers given to the Registrar, the executive powers given to the Secretary and the creation of a centralised service have a single object in view, namely, the better working of the cooperative societies. It is well known that many of the cooperative societies, particularly in rural areas, need the guidance of well trained expert officers and it is the function of the Secretary and the other members of the centralised service to afford proper guidance to the ignorant and often illiterate members of the cooperative society. The supervisory powers given to the Registrar are with a view to enable him and the officials of his department to keep a vigilant and benevolent eye on the working of the society so that none may take advantage of the innocent rural folk and so that the cooperative movement may be a success and a real boon to the weaker sections of the people. The constitution of a centralised service is perhaps to see that the officials do not acquire any vested interest in the cooperative society of a locality. Though Secretaries are vested with vast powers they are subject to the control and supervision of Chairman and the Committee of Management. We are, therefore, unable to agree with the submission that the U.P. Cooperative Societies Act is not a law dealing with cooperative societies because wide powers are given to the Registrar of Cooperative Societies and the Secretaries of Societies and because a centralised service has been created13. In some of the cases it was urged that some person who had been appointed before the Cooperative Societies Employees Service Regulations, 975, were made under Section 122 of the Act, had been illegally discharged by the Administrator. On a perusal of the relevant affidavits ands we find that these appointments were made after the constitution of the U.P. Cooperative Institutional Service Board in whom vested the power of recruitment of employees of cooperative societies under Section 122 of the Act. Pending the making of the U.P. Cooperative Societies Employees Service Regulations prescribing the method of recruitment etc. administrative instructions had been issued to all the cooperative societies that appointments to all posts in cooperative societies would be made by the Board. If despite the constitution of the Board and the issuance of administrative instruction some cooperative societies chose to make appointments, such appointments have necessarily to be held to be invalid. The fact that Regulations had not been made when the appointments were made did not empower the committee of management to make the appointments usurping the power of the U.P. Cooperative Institutional Service Board. It appears that such persons as were appointed by the Committee of Management during the interregnum were given an opportunity to appear before the U.P. Cooperative Institutional Service Board and were screened. Some were selected and some were not14. Another question which was raised was that though the age of retirement of employees of some of the cooperative societies was originally 60 years under the U.P. Cooperative Societies Employees Service Regulations, the age of retirement has now been made 58 years. We are unable to see any force in this submission. Regulation 24(ii) itself provides that if before the coming into operation of the Regulations the society had entered into any contract with an employee on the date of his employment whereby he was entitled to continue beyond 58 years, the rule of retirement at the age of 58 years shall not apply and the age of retirement shall be governed by the contract. Therefore, if in any case there is a contract between a cooperative society and an employee entered into before the Regulations came into force stipulating the age of retirement as 60 years the Regulation now stipulating the age of retirement as 58 years will not apply to him. We make it clear that this principle does not apply to the members of the centralised services. The above discussion covers all the points which were argued before us.