Important Point
Bar stipulated in Sections 36 and 37 of the Multi State Co-operative Societies Act cannot be done away with by granting exemption u/s 99(2).

Headnote:Multi State Co-operative Societies Act, 1984-Section 99(2) read with Sections 36 and 37-Bar to hold office of president/vice president in more than one society simultaneously and holding such post for more than two terms-Bar cannot be done away with by granting an exemption u/s 99(2)-Rigour of Sections 36 and 37 is qua an individual and not qua society-Section 99(2) enables Government to give relief to society from operation of any provisions of Act but not to an individual.
       Held : The power of the Central Government u/s 99(2) is to exempt a multi-State co-operative society or any class of such societies from any of the provisions of the Act or the rules and this provision does not contemplate giving exemption to anyone else. In other words, if the society is required to comply with any of the provisions or the rules and a case is made out for granting exemption then the Central Government can, in the manner provided by the said section, grant exemption. (Para 9)
       Section 36 and Section 37 are provisions which inter alia create a bar or an impediment on a person holding office of more than one society as the president at the same time or for continuing to hold such office for more than two consecutive terms. The rigour of these two provisions is qua an individual and not qua the society. Section 99(2) enables the Government to give relief to the society from the operation of any provisions of the Act but what has now been done is to give relief to an individual, namely, respondent No. 4 from the operation of Section 36 and Section 37. That certainly is not the intention nor the letter of the law. (Para 11)
       Section 34 provides that no member of multi-State co-operative society shall be eligible to be chosen as a member or shall continue to be a member if he incurs the disqualification contained in the said section. Section 34, to our mind, is pari materia with Section 36 and Section 37. Just as Section 36 and Section 37 provide that under certain circumstances the elected office holder is not to continue in office, similarly, Section 34 provides that a person who has a disability attached to him not to stand for election or a person who is elected as a member of the board shall stand disqualified from continuing as a member in the event of his incurring any disqualifications mentioned in the said section. If the contention of the respondent is correct and the Central Government could grant exemption under Section 99(2) from the applicability of Sections 36 and 37 of the Act, then on the same principle one would have to hold that the Central Government could also grant exemption to a multi State co-operative society of the applicability of the provisions of Section 34. Surely, that will be opposed to the very object and purpose of the Act. Just as applicability of Section 34 of the Act cannot be dispensed with or relaxed, similarly, the provisions of Sections 36 and 37 cannot be done away with by granting an exemption to the society under Section 99(2). Sections 36 and 37 are directed at a person holding or aspiring to hold office and is not directed at any multi-State co-operative society. The question of granting exemption to a multi-State co-operative society under Sections 36 and 37 does not arise and is not covered by Section 99(2). (Paras 12 & 13)

Order

The challenge in this appeal is to the exercise of powers by the Central Government under Section 99 of The Multi State Co-operative Societies Act, 1984 (hereinafter referred to as ‘ the Act’) whereby it has purported to grant an exemption to respondent No. 3, namely, The National Cooperative Union of India (for short NCUI) from the provisions of Section 36 and Section 37 of the said Act.

2. Briefly stated the facts for the purposes of this case are that respondent No. 3 is a Multi State Cooperative Society. Shri B.S. Vishwanathan, respondent No. 4 was first elected as its President in 1990. Upon the three years term contemplated by Section 35 coming to an end he was re-elected for a further period of three years. In the meanwhile National Cooperative Bank of India (later re-named Cooperative Bank of India) [hereinafter referred to as ‘COBI’] was promoted. Respondent No. 4 was also elected as the Chairman of COBI in February 1994 for a period of three years.

3. Since Section 36 of the Act restricted an individual from holding the office of Chairman/Vice-Chairman, President/Vice-President in more than one Multi State Cooperative Society, the Central Government was approached and by orders dated 23rd August, 1994 and 1st February, 1995 exemption was accorded under Section 99(2) in respect of Section 36 to NCUI and COBI. On 16th January, 1997 3rd exemption for two years from 3rd February, 1996 to 2nd February, 1998 was granted under Section 99(2) from the bar of Section 36 of the Act. The fourth exemption from the bar of Section 36 for a period of two years was granted on 13-1-98 from 3rd February, 1998 to 2nd February, 2000. Bar of Section 37 was sought to be removed firstly by an exemption granted for two years by order dated 16th January, 1997 which was followed by a subsequent order dated 13th January, 1998.

4. The appellant then filed a writ petition in the High Court of Delhi seeking to challenge the two exemptions dated 13th January, 1998 one relating to Section 36 and the other relating to Section 37 which exemption had permitted respondent No. 4 to continue as the Chairman of NCUI and COBI simultaneously and for more than two terms.

5. On the writ petition being dismissed by the High Court the present appeal has been filed.

6. The validity of the action of the Government depends on the interpretation of some of the provisions of the Act. Chapter IV of the Act contains provisions regarding the direction and management of the multi State Cooperative Societies. Section 34 sets out the disqualifications regarding a member of a board; Section 35 provides for election of members of the bar, which stipulates that the member shall be elected for a period not exceeding three years; Section 36 and Section 37 which are relevant in the present case and deal with the holding of office in cooperative societies read as follows :

36. Holding of office in co-operative society:-Notwithstanding anything contained in this Act, no person shall be eligible to hold, at the same time, office of a president or chairman or vice-president or vice-chairman on the board of more than one multi-State co-operative society :

Provided that any person holding, at the commencement of this Act, the office of a president or chairman or vice-president or vice-chairman in more than one multi-State co-operative society shall, within three months from such commencement by notice in writing signed by him, intimate the name of the multi-State co-operative society in which he wishes to serve and thereupon his office in the other multi-State co-operative society in which he does not wish to serve shall become vacant :

Provided further that in default of such intimation within the period referred to in the preceding proviso, his offices in all the multi- State co-operative societies shall, as the expiration of the period aforesaid, become vacant.

37. Restrictions on holding of office: -No person shall be eligible to hold the office of a president or

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Judicial Analysis

SupremeToday

1999 Supreme(SC) 722

Important PointBar stipulated in Sections 36 and 37 of the Multi State Co-operative Societies Act cannot be done away with by granting exemption u/s 99(2).

Judicial Analysis

Important Point
Bar stipulated in Sections 36 and 37 of the Multi State Co-operative Societies Act cannot be done away with by granting exemption u/s 99(2).