Important Point
Rajasthan Credit Cooperative Institutions Cadre Authority Limited is not a society registrable u/s 4(1) of the Rajasthan Cooperative Societies Act, 1965 and the Registrar of Cooperative Societies has no power to make Central Cooperative Bank Rules, 1969.

Headnote:(i) Rajasthan Co-operative Societies Act, 1965-Section 4(1)- Rajasthan Credit Cooperative Institutions Cadre Authority Limited u/s 4(1)-Constitution of Validity-- Whether Cadre Authority Society could be a cooperative society registered u/s 4(1)?-(No).
       Held that the classified societies are to be registered under the Act. Subject to the provisions of the Act, a cooperative society which has its object the promotion of the economic interests of “its members” in accordance with the cooperative principles, or a cooperative society established with the object of “facilitating the operations of such societies”, may be registered under the Act. The Cadre Authority Society, admittedly, does not come under the first limb of Section 4(1). Cooperative structure is built upon three-tier system, viz., PACS consisting of individual members, at the grass-root level within the area of operation of that society, the District Cooperative Societies and the Central Cooperative Bank. It is not in dispute that the District Cooperative Societies and the Central Cooperative Bank got the Cadre Authority Society which is not a lending institution, registered and the paid Secretaries, who are otherwise a third agency, recruited by it. They are appointed by the Managers of the District Cooperative Societies and are transferred by them to the PACS within the area of the operation of the District Bank. It would, therefore, be clear that it does not come as a society to facilitate the PACS in funding them for disbursement of loan to the members of PACS. (Para 6)
       (ii) Rajasthan Co-operative Societies Act, 1965-Section 4(1)-Co-operative Societies Rules, 1966 -Rule 41-Central Cooperative Bank Rules, 1969-Paid Secretaries recruited by Cadre Authority Society constituted u/s 4(1)-Liability of their salary fastened on Primary Agriculture Credit Cooperative Societies (PACS)-Power of Registrar of Cooperative Societies to make rules calling upon PACS to contribute to Manager’s Salary Fund challenged-Whether PACS are bound to take services of paid Secretaries?-(No)-Whether paid Secretaries appointed by District Cooperative Societies, recruited and controlled by Cadre Authority Society are officers or employees of PACS?-(No)-Whether Registrar can make rules in that behalf or create a fund under Bank Rules?-(No). (Paras 10 & 11)
       Held : The Registrar, as a delegate of the Government is empowered to prescribe qualifications of the officers or employees of the Society, viz., PACS, District Cooperative Societies or the Central Cooperative Bank, as the case may be, and the respective Societies require them to appoint the officers or employees, i.e., Manager, Secretary, Accountant or any other officer or employee over whom they have disciplinary and controlling power. Under its own bye-laws, the respective Societies have the power to make appointment under the rules made by the Registrar in that behalf. (Para 9)
       The Society is a unit by itself with its members managed by the committee elected under the provisions of the Act, the Rules and the bye-laws for specified period. It is empowered to have control and to maintain discipline over its officers and employees. The paid Secretaries are admittedly not the officers appointed to the Society and by the Society. They are officers appointed by the District Cooperative Society by its Manager. ‘Manager’ is defined under the 1969 Rules to mean “the manager appointed under these rules and who shall be Chief Executive and paid employee of the society. Manager shall have no relation with the services of the Bank employees. Due to getting salary from the Managerial fund at Bank level he shall not be entitled for any benefits which are being given to Bank employees. And Society shall not appoint any person as Manager”. A paid Secretary is not, therefore, a Manager appointed by the PACS. It is seen that the structure of the employees is indicated in Section 148(2)(xxx) as Manager, Secretary, Accountant or any other officer or employee of the society. Therefore, in addition to the said establishment, there cannot be any paid Secretary to the Society, i.e., PAC. Obviously, therefore, the Societies have objected that they cannot be fastened with the liability to contribute fund under Bank Rules for payment of the salary of Surveillance Officer appointed by the District Cooperative Society and to be controlled by the Cadre Authority Society. It would, therefore, be clear that they are outside the scope of the Cadre of PACS. (Para 10)
       Further held that the power under Rule 41 is limited only to prescribing the qualifications and conditions of service of the officers and employees enumerated in clause (xxx) of sub-section (2) of Section 148. He, therefore, has no power to make rules governing appointment of paid Secretaries and to create a fund under Bank Rules for payment of salaries to them and to fasten the liability on the PACS. The Registrar travelled beyond the power delegated to him under the Act. (Para 11)

Judgment

K. Ramaswamy, J.-Leave granted in all the special leave petitions.

2. These appeals arise from the judgment and order dated May 9, 1991 passed in Writ Petition No. 1018-20 of 1979 by a Division Bench of the Rajasthan High Court. The facts are fairly not in dispute.

3. Paid Secretaries were recruited by the Rajasthan Credit Co-operative Institutions Cadre Authority Limited (for short, the ‘Cadre Authority Society’) constituted under Section 4(1) of the Rajasthan Co-operative Societies Act, 1965 (for short, the ‘Act’). They were appointed in the respective District Co-operative Banks initially under Recruitment and Service Conditions of the Managers of Agriculture Credit Cooperative Societies Rules, 1977 (1977 Rules) and thereafter under Agriculture Cooperative Credit Societies Service Rules, 1969 (for short, the ‘1969 Rules’) by the Managers of the District Cooperative Banks and were sought to be posted to the Primary Agriculture Credit Cooperative Societies (for short, the ‘PACS’) fastening liability of their salary on the PACS who have challenged the validity of the constitution of Cadre Authority Society and also the power of the Registrar of the Cooperative Societies (for short, the ‘Registrar) to make the rules calling upon PACS to contribute to the Manager’s Salary Fund under Central Cooperative Bank Rules, 1969 (for short, the “Bank Rules”). The Division Bench has held that the Cadre Authority Society cannot be registered as a cooperative society under Section 4 of the Act, the Bank Rules are ultra vires the powers of the Registrar under Rule 41 of the Cooperative Societies Rules, 1966 (for short, the “Rules).

4. S/Shri R.K. Jain, Rajiv Dhavan and Jitendra Sharma, learned senior counsel appear for these Unions and Managers. Pending these appeals, pursuant to the permission granted by this Court, the Government framed the Conditions of Service of the Managers/Assistant Managers of the Agricultural Credit Cooperative Societies Rules, 1995 and placed the same on record. The appellants are not agreeable to those Rules. Consequently, the learned counsel have contended that under Section 4(1), Cadre Authority Society is a society regulating facilitation of disbursement of the loans by the PACS in terms of cooperative movement for which PACS came to be registered under the Act. The Cadre Authority Society came to be registered pursuant to the recommendation made by Datey Committee which has gone into the credit structure and proper utilisation of the loans to the agriculturists made available by the State Government and distributed through the State Central Cooperative Credit Bank to the District Societies who in turn distribute the loans to PACS. For their coordination, supervision and proper utilisation thereof the Managers/Assistant Managers (hereinafter referred to as the “paid Secretaries) are competent persons to work as liaison between the PACS and their members and the District Banks and Central Bank. The Registrar under Rule 41 of the Rules read with Section 147(2) and Section 148(2)(xxx) of the Act is empowered to regulate the service conditions of paid Secretaries and to prescribe qualifications. Consequently, the Cadre Authority Society registered under Section 4(1) of the Act is a valid society. It is also contended that the 1969 Rules prescribe the mode of recruitment, method of appointment and control of the Managers. Bank Rules prescribe the amounts collected from PACS to pay their salaries. Therefore, the PACS are bound to contribute towards the salary and allowances of the paid Secretaries. Shri Jitendra Sharma further contended that they are the members of the PACS and that, therefore, the PACS are bound by the Bank Rules. Shri Aruneshwar Gupta, learned counsel appearing for the State contended that the Registrar has no power to make Bank Rules nor has he power to direct the PACS to contribute for the salary and allowances of the paid Secretaries. The High Court, therefore, was right in recording

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Judicial Analysis

SupremeToday

1996 Supreme(SC) 522

Important PointRajasthan Credit Cooperative Institutions Cadre Authority Limited is not a society registrable u/s 4(1) of the Rajasthan Cooperative Socie­ties Act, 1965 and the Registrar of Cooperative Societies has no power to make Central Cooperative Bank Rules, 1969.

Judicial Analysis

Important Point
Rajasthan Credit Cooperative Institutions Cadre Authority Limited is not a society registrable u/s 4(1) of the Rajasthan Cooperative Societies Act, 1965 and the Registrar of Cooperative Societies has no power to make Central Cooperative Bank Rules, 1969.