BHANDARA DISTRICT CENTRAL CO-OP. BANK LTD. AND A

ORS. ETC. ETC. v.

STATE OF MAHARASHTRA AND ANR. ETC.

SEPTEMBER 10, 1992

(LAUT MOHAN SHARMA, S. MOHAN AND

N. VENKATACHALA, JJ.]

Maharashtra Cooperative Societies Ac~ 1960:

Section 73A-'Designated officer'-Tenn of office-Maximum period-- Fixing of-Bar on holding office in more than one Society-Whether violative of Altic/es 14, 19(1)(c) and 19 (l)(g) of the Constitution of India.

Constitution of India, 1950:

D Altic/es 14, 19(l)(c) and 19(1)(g~Section 73A of the Maharashtra Cooperative Societies Act, ]ether violative of.

Section 73A(l) of the Maharashtra Cooperative Societies Act, 1960 defines a 'designated officer' as the Chairman and the President and as lndudlng any officer of the Society as may be declared by the State E Government, but not an officer appointed or nominated by the State Government or by the Registrar. Such a 'designated officer' bas not been allowed to bold office in more than one Society In view of sub-sections (2) and (4) of section 73A and by sub-section (S) the maximum period available to a designated officer to continue in office bas been fixed in peremptory terms.

In the present appeals, Writ Petitions and Special Leave Petitions, the Constitutional validity of section 73A of the above said Act bas been challenged as being violative of Articles 14, 19(l)(c) and 19(1)(g).

It was contended that the designated officers were entitled to G manage the affairs of the cooperative societies as entrusted to them by the members, without any Interference from the legislature; that the provisions separating the Chairman and the President from the other members of the Managing Committee in regard to the application of the restrictions were discriminatory; and that the power given to the State H

A Government to declare any other officer or the society as a designated officer was bad and arbitrary in the absence or proper guidelines.

Dismissing the appeals/petitions, this Court,

HELD: 1. There is clear basis for selecting the category or persons to be referred to by the expression 'designated officer' for the purposes of sections 73A, 73C, 73D and 73E of the Maharashtra Cooperative Societies Act, 1960 and the policy in this regard is perfectly reasonable, having regard to the object of the amendment. The provisions restrict the period for which a person either elected or appointed and is entitled to give directions in relation to business of that society, can remain in office. The object of the amendment is clearly discernible as preventing a person or a group or persons from monopolising the affairs of a society by exercising control thereon indefinitely for a long period. A cooperative society is not meant to be run as a close preserve of an individual or a group of persons.

D 'Cooperative' has been understood as a form of organisation where persons voluntarily associate together on a basis of equality for the promotion of their economic interests. The emphasis is on 'Co-operation'.

It is, therefore, desirable to have the active participation of as many members as may be possible. The Statement of Objects and Reasons for the Amending Act has mentioned that the object of the Act was not being E fully achieved as a group of persons were found holding the key positions in serveral important cooperative institutions simultaneously and for long periods, with a result that new leadership was not being built np to the desired extent. To check this unhealthy tendency and to give a more democratic character to the cooperative institutions, it was found neces- F sary to prescribe the limitations in the statute itself by amendment. When after watching the effect of the earlier amendments, the legislature found that the goal was not fully achieved, and a further amendment was necessary, the abovesaid provisions were inserted in the Act. All this has been done for realising the objective set out by the Act and is clearly in the public interest. (508 A-Fl G

2. The basis of distinction made between the 'designated officers' as defined in the Act and the other members has clear nexus with the object which the amendment seeks to achieve. It has been firmly established that this Court cannot be called upon to embark on an enquiry into public H policy or investigate into questions of political wisdom or even to

BHANDARA CO-OP. BANK v. STATE 503

pronounce upon motives of the legislature in enacting law which is other- A wise within its legislative competence. [509 B.C]

3. The power of the State Government to include within the expres sion 'designated officer' is limited to 'officers', which terms has been defined under section 2(20) as a person elected or appointed to give directions in regard to business of a society. The State Government, B therefore, cannot include a person who has no power to issue directions within the expression. The element of arbitrariness is thus adequately taken care of. Besides, while choosing a person, the State Government has to keep in mind the object of the legislation. It is not necessary to have the guideline in express terms in the very section dealing with delegation. The C entire Act is available for this purpose. [509 D-E]

4. By prospective application, sub-section (5) of section 73A is now putting the bar on all the persons who have already completed the period of ten years. If a person bas already in the past, managed to remain in office, for, say 15 years continuously nothing is permissible to undo it. The D only question which is relevant is whether he has completed an aggregate of 10 years. Equality before law does not mean absolute equality in mathematical terms. The test is whether the rule is uniformly applied.

[510 G-H; 511 A-Bl

CIVILAPPELLA TE JURISDICTION: Civil Appeal No. 2706of1988.

From the Judgment and Order dated 21.3.88 of the Bombay High Court in Writ Petition No. 2098 of 1986.

WITH

Civil Appeal Nos. 5030 of 1985, 1762 of 1986, 2692-2705, 2707- 2735, 4148 of 1988; Writ Petition (Civil) Nos.686, 810, 880, 106 5, 1202 and 1251 of 1988, 85, 265, 283, 488, 687, 728, 799, 998, 1051, 1178 and 1362 of 1989,

43 and 403 of 1990; S.L.P.(C) Nos. 9635 of 1983, 13360 of 1986, 4947 and G 15205 of 1989 and 8584 of 1992.

Anil B. Divan, V.N. Ganpule, B.A. Masodkar, Y.K. Naik, K.R.

Choudhary, R.K. Sharma, A.M. Khanwilkar, R.B. Masodkar, K.L. Taneja, V.B. Joshi, G.B. Sathe, V.D. Khanna and S.K. Agnihotri for the Appellants/Petitioners.

504 SUPREME COURT REPORTS[l992] SUPP. 1 S.C.R.

A S.B. Bhasme and A.S. Bhasme for the Respondents.

The Judgment of the Court was delivered by

SHARMA, J. The petitioners (including the appellants in civil appeals also) have challenged the constitutional validity of section 73A of the B Maharashtra Co-operative Societies Act, 1960, as being violative of Articles 14, 19(1)(c) and 19(1)(g) of the Constitution of India. As all these cases have been heard together, they are being disposed of by this common judgment. Except where otherwise indicated, we are proceeding to refer to the facts of Civil Appeal No. 2706 of 1988 which has been treated as the C leading case.

2. By the impugned provisions a designated officer as defined in section 73A(l) is not allowed to hold office in more than one society in violation of the restrictions mentioned in sub-sections (2) and ( 4) thereof; and by sub-section ( 5) the maximum period available to a designated D officer to continue in office has been fixed in peremptory terms. Before proceeding further it will be useful to examine the provisions of sub-sections (1), (2), (4) and (5) of section 73A which are in the following terms:-

"73A. (1) In this section and in sections 73C, 730 and 73E, "a designated officer" means the Chairman and the President, and includes any other officer of the society as may be declared by the State Government, by notification in the Official Gazette, to be a designated officer, but does not include, any officer appointed or nominated by the State Government or by the Registrar."

"(2) No person shall at the same time, be or continue to be a designated officer of more than one society falling in Category I or Category II or Category III of the categories mentioned below; and shall not be or continue to be a designated officer in more than two societies in the aggregate in the three categories:-

Category I - Societies, the area of operation of which extends to the whole of the state, -

(a) but extends to Greater Bombay and the authorised H share capital of which is more than Rs. 10 lakhs; or

BHANDARA CO-OP. BANK v. STATE [SAWANT, J.]

(b) but extends to one or more districts; or

( c) is less than a district and the authorised share capital of which is more than Rs. 10 lakhs.

Category III -Societies, the area of operation of which does

not extent to the whole of a district but extends to one or B more talukas, or the authorised share capital of which is not more than Rs. 10 lakhs but is not less than Rs. 5 lakhs.

Explanation - For the purposes of this sub-section, the expression "society'' shall not include a society with no share capital and a society not engaged in commercial activities."

"(4) If any person becomes, at the same time, a designated officer of societies, in excess of the number prescribed under sub-section (2), unless he resigns his office in the society or societies in excess of the said number within a period of ten days from the date on which he is elected or appointed a designated officer of more than the permissible number of society or societies, or if the elections or appointments are held or made simultaneously, from the date on which the resuh oflast of such elections or appointments is declared, he shall, at the expiration of the said period of ten days, cease to 1; ie a designated officer of all such societies and thereupon, notwithstanding anything contained in any other provisions of this Act, a person so resigning or ceasing to be a designated officer of any or all such societies shall not be eligible for being re-elected or re-appointed as a designated officer of such society or societies during the remainder of the term of office for which he was so elected or appointed; and at no point of time such person shall be a designated officer of societies in excess of thr number prescribed under sub-section (2).'

"(5) No person shall be, or shall continue to be, a designated officer of any society of any of the categories referred to in sub-section (2), for a period of more than ten years in the aggregate and at the expiration of that period any such person shall cease to be a designated officer of that society,

and shall not be eligible for being re-ele.cted or re-appointed as a designated officer, until a period of one term of the committee has elapsed after completion of the aforesaid period of ten years.

Explanation - For the purposes of this sub-section -

(a) in calculating the aggregate, period of ten years in office, any period for which the person concerned may have been such officer, before the commencement of the Maharashtra Co-operative Societies (Second Amendment) Act, 1969, , hall be ignored;

(b) if any person resigns his office as a designated officer at any time within twelve months of the date on which the aggregate, period of ten years would, but for his resignation, have been completed, he shall be deemed to have completed the period ten years on his resignation."

3. According to the case of the petitioners, the designated officers are entitled to manage the affairs of the co-operative societies as entrusted

10 them by the members, without any interferance by the legislature, and the restrictions imposed by the impugned provisions are violative of their E fundamental rights as protected by Articles 19(1) (c) and (g) of the Constitution. The members of a co-operative society, according to the argument, are entitled to conduct the affairs of the society in accordance to their choice and any intrrferance in this is uncalled for. We were not able to fully appreciate tllis argument, and so we pointed out to Mr. Anil F B. Divan, the learned counsel for the petitioners (that is, the appellants in Civil Appeal No. 2706/88). that there was no impediment in the running of the societies, and the impugned provisions are attracted only in such cases where the societies are desirous of being registered under the Act with a view to take advantage of the provisions thereunder. The Act does not G place any restriction on the formation of any association or union for carrying on any trade or business, nor does it require such unions or societies to be registered under the Act. The petitioner-societies were free to proceed as they wished (of course, they could not be allowed tq contravene any law) without being subjected to any condition placed by the Act, but in that case they would not be entitled to the benefits of the Act.

H Mr. Divan appreciating the situation, explained his point by saying that as

BHANDARA CO-OP. BANK v. STATE [SA WANT, J.] 507

a consequence of section 145 of the Act an unregistered society is not A entitled to use the word

11cooperative" in its name or title (without the sanction of the State Government) and this by itself puts the society under a disadvantage, affecting its trade and business. The learned counsel fairly conceded that he is not in a. position to rely on any other circumstnace in support of his argument based on Articles 19(1)(c) and (g). We do not find B any merit in this point which is solely based on the ban of the use of the word "cooperative", by section 145. The restriction is clearly reasonable and in the interest of the general public and is, therefore, saved by clause

(6) of Article 19. The purpose of section 145 is to ensure that the general public has adquate notice that a society they may have to deal with, is unregistered and, therefore, not amenable to the provisions of the Act, C . before taking a decision about their relationship with the same. The persons desirous of running such a society have been placed under an obligation to publicly delcare that their society is not registered under the Act, and we do not see any valid objection to this course. The main argument of Mr. Divan is, therefore, overruled.

4. The learned counsel has, next, challenged section 73A of the Act on the ground that the provisions separating the Chairman and the President from the other members of the managing committee for the application of the impugned restrictions are discriminatory. He also urged that the further power given to the State Government to declare any other officer E of the society as a designated officer is bad in the absence of a proper guideline. The State Government is, thus, vested with unlimited, unbridled and, therefore, arbitrary power. Mr. Masodkar appearing on behalf of the appellant in Civil Appeal No. 2699 of 1988, besides reiterating the questions discussed earlier, offered some additional reasons. He argued that a separate class were created by section 73A which was not permissible in view of the provisions in sections 72 and 73. The final authority of every society has been vested by section 72 in the general body of members in general meeting and by section 73 the management is vested in the managing committee and in that background if the legislature intended to put any G limitation on the period of tenure it should have done so with respect to all the members of the society, or in any event all the members of the managing colllll''ttee. The learned counsel also objected to the exception made by section 73A in favour of an officer appointed or nominated by •he State Government or by the Registrar.

5. We have considered the argument and examined the provisions of the Act placed before us by the learned counsel for the parties. It appears that there is clear basis for selecting the category of persons to be referred to by the expression "designated officer" for the purposes of sections 73A, 73C, 730 and 73E, and the policy in this regard is perfectly reasonable, B having regard to the object of the amendment. The impugned provisions restrict the period for which a person either elected or appointed (under the Act, the rules or the by-laws, who is entitled to give directions in relation to business of a society, can remain in office. Tlie object of the amendment is clearly discernible as preventing a person or a group of persons from monopolising the affairs of a society by exercising control C thereon indefinitely for a long period. A co-operative society is not meant to be run as a close preserve of an individual or a group of persons. "Cooperative" has been understood as a form of organisation where persons voluntarily associate together on a basis of equality for the promotion of their economic interests. The emphasis is on 'co-operation'. It is, therefore, D desirable to have the active participation of as many members as may be possible. The Statement of Objects and Reasons for the 1969 Amendment has mentioned that the object of the Act was not being fully achieved as a group of persons were found holding the key postilions in several important co-operative institutions simultaneously and for long periods, with a result that new leadership was not being built up to the desired extent. To check E this unhealthy tendency and lo give a more democratic character to the co-operative institutions, it was found necessary to prescribe the limitations in the statute itself by amendment. When after watching the effect of the earlier amendments, the Gujarat legislature found that the goal was not fully achieved, and a further amendment was necessary, the impugned F provisions were inserted in the Act. All this has done for realising the objective set out by the Act and is clearly in the public interest.

6. Reliance by Mr. Masodkar on sections 72 and 73 of the Act is also misplaced. The interest taken by all the members of the society in the working thereof can hardly be described as a participation in the running G of the society. The sittings of the managing committee also take place after intervals and the looking after of the affairs of the society and implementating the decisions are left lo persons who are in the words of section 2 {20) "to give directions in regard in business of such societies". As to which officer exercises this power effectively with reference to a particular soc- H ciety will depend on the facts and circumstances which would differ from

BHANDARA CO-OP. BANK v. STATE [SA WANT, J.] 509

society to society, but so far the Chairman and the President are concerned A they certainly come in that class. This is the reason that section 73A includes the Chairman and the President within the expresion 'designated officer" and leaves it to the State Government to issue further notifications according to the exigencies arising in a particular society. Thus, the basis of distinction made between the 'designated officers' as defined in the Act B and the other members has clear nexus with the object which the amendment seeks to achieve. The plea of illegal discrimination must, therefore, be repelled as being without any merit. It has been firmly established that this Court cannot be called upon to embark on an enquiry into public policy or investigate into questions of political wisdom or . even to pronounce upon motives of the legislature in enacting law which is other• C wise within its legislative competence.

7. So far the argument of excessive delegation of power under section 73A (1) is concerned, it has to be appreciated that the power of the State Government to include within the expression "designated officer' is limited D to "officers', which terms has been defined under section 2(20) as a person elected or appointed to give directions in regard to business of a society.

The State Government, therefore, cannot include a person who has no power to issue directions within the expression. The element of arbitrariness, which is presumed in the argument of the petitioners, is thus adequately taken care of. Besides, while choosing a person, the State E Government has to keep in .mind the object of the legislation as discussed in the previous paragri.ph. It is not necessary to have the guideline in express terms in the very section dealing with delegation. The entire Act is available for this purpose. This Court in Harishankar Bag/a and Another

v. The State of Madhya Pradesh, (1955) 1 SCR 380 had, while considering p a similar argument with reference to the Essential Supplies (Temporary Powers) Act, 1946, observed that the preamble and the body of the Act sufficiently formulate the legislative policy. The exercise of power under section 73A (1) has, therefore, to be in accordance with the policy of the impugned amended provisions read with the entire Act, and the discretion in this regard by the State Government is to be exercised in a manner which G will advance this policy. In paragraph no.8 of their Writ Petition No.2098 of 1986 in the High Court, the appellants in Civil Appeal No. 2706 of 1988 have stated that by a notification issued under Section 73A (1) the respondent-Government has included within the definition of designated officer

(i) Vice-Chairman; (ii) Vice-President; (iii) the Secretary, Additional H

A Secretary or the Joint Secretary, when. he is not a salaried employee of the

I' societf ad (iv) the Matiagfug I>irec'ior' r 'iii~ Joint"M.,; aging Pirecfor

\\; b.en he is not 'slaried employee. of. the sociiY, This o;; iyillusfrates that' .- r., •~, ... -~ d ''·'· ; t;·~'i. "''-'1' ,•,· . .. •1.11., .. _(l

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the State Government. has noi e1iher misconstrued or misused the

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-"JI 1 • •• '" provmon. Mr. Masodkar further urged that since in pursuance of Sechon 74, proper disciplii:ie .can be aintained on the' co-operative societies, it was not necessary to hae bought in, the amendments which are undr

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. "J\'• I. '.• - i ' ;, ,- _, L" . -• " -•i' ' . • ''!,, challenge. This again is a matter of policy to be decided by the legislature 'and the judiciary '.canot subiitte its own view in this i'natter. . ' ' '' • • Lo < ;• • "

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8. For appreciating the next argument of Mr. Diwan it is necessary C to mention that the provisions of sub-section ( 5) of section 73A as initially inserted in the Act in 1%9 have been modified from time to iirne. When the section was inserted for the first time, the bar under sub-section (5) was with reference to a consecutive period of 6 years. This period was later changed to a consecutive period of 10 years. I.i the sub-section as it stands D now, the consecutive period of 10 years has been substituted by a period of 10 years in the aggregate. The learned counsel has challenged this last amendment as being arbitrary. The argument is .that if earlier decision .was taken to link the bar with a cpnsecutive period of 10 years it should not hav.e been changed again. We do not see any merit in this point either.

It w~ against.a question of policy, whic)l was adopted, only after a thorough E examination, :J'h~ Joint Committee to which the relevant Bill.was referredi

filter studying the situation, stated in its report that its conclusion was.that because of the "concept of consecutive. period of 10 years in the existing section.73A(5), the provisions of the Act were not being.implemented, in the letter .. and spirit of .the. law." The Committee, therefore., thought that F this disqualification should be.applicable in cases of period. of more than

10 years instead of the existing consecutive period of 10 years. The Committee also thought that the person concerned should not be elligible for being re-elected for a period of one term of the Committee instead of the present period of 3 years. It is then urged that since the period of 10 years in aggregate is made applicable to every case irrespective of the period for G which a person has already remained in the office in the past, the same is discriminatory. We do not see any force in the point. The impugned provision is not meant to rectify everything which has happened in the past.

By Prospective application it is now putting the bar on all the persons who have already completed the period of 10 years. If a person has already in H the past, managed to reamin in office, for, say 15 years continuoulsy,

BHANDARA CO-OP. BANK v. STATE [SAWANT, J.] 511

nothing is permissible to undo. it. The only question which is relevant i' A whether he has completed an aggregate of 10 years. The equality before law does not mean absolute equality in mathematical terms. Let us take the case of retirement of a governmen(orfi;,.;~ where the age of super-annuation is fixed at 58 years. By.applying the same rule.to persons entering in government services at vfilying ages the qu;; i_ity clause of the Constitu B ti on is not violated.· The test is whether the rule ls uniformly applied .

. 9, In the result we do not find any merit in the points raised on behalf of th~ 'petitioners. . c

10. The learned counsel for the appellants, Mr. Diwakar B. Balvekar, in Civil Appeal Nos. 2730 and 2734 of 1988 attempted to raise a new plea not taken earlier. He said that the co-operative societies in question are small ones and are, therefore, not covered by the amended provisions. This D is not a pure question of law and cannot be raised at this stage.

11. For the reasons mentioned above all the writ petitions, civil appeals and special leave petitions are dismissed but, in the circumstances without costs.

Appeals/Petitions dismissed. , p ' ~) :""

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