1. Application for registration of a primary agricultural credit co-operative society — Rejection by scrutiny committee on financial viability — State's reversal — Challenge under Maharashtra Co-operative Societies Act. (Para 2 , 3 , 4 , 5 , 6 , 7 )
Back
Next 
2025 Supreme(SC) 580
SUPREME COURT OF INDIA
VIKRAM NATH, PRASANNA B. VARALE, JJ.
Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha Maryadit Warewadi – Appellant
Versus
The State Of Maharashtra & Ors. – Respondents
Civil Appeal No. 4669 of 2025 (@ SLP (CIVIL) NO. 4090 of 2024) With Civil Appeal No. 4670 OF 2025 (@ SLP (CIVIL) No. 6551/2024) Civil Appeal No. 4671 OF 2025 (@ SLP (CIVIL) No. 6086/2024), CIVIL APPEAL NO. 4672 OF 2025 (@ SLP (CIVIL) 6262/2024, CIVIL APPEAL NO. 4672 OF 2025 (@ SLP (CIVIL) No. 10032/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6619/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6535/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6308/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 4808/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6324/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6499/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6493/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6065/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 4926/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 10030/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5423/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5008/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5862/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 9579/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6264/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6168/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6475/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5430/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6360/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5298/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 4929/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5062/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6274/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6621/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5598/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5341/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5385/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5345/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5315/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 7714/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 7722/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 10031/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6222/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5564/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5027/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5312/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 6275/2024), CIVIL APPEAL NO. OF 2025 (@ SLP (CIVIL) No. 5314/2024)
Decided on : 02-04-2025
Advocates appeared:
For the Petitioner(s): Mr. Shashibhushan P. Adgaonkar, AOR
For the Respondent(s): Mr. Aaditya Aniruddha Pande, AOR Mr. Siddharth Dharmadhikari, Adv. Mr. Rajiv Shankar Dvivedi, AOR
For the Petitioner(s): Mr. Shashibhushan P. Adgaonkar, AOR
For the Respondent(s): Mr. Aaditya Aniruddha Pande, AOR Mr. Siddharth Dharmadhikari, Adv. Mr. Rajiv Shankar Dvivedi, AOR
Economic viability is a prerequisite for the registration of co-operative societies, and decisions contrary to established guidelines are unsustainable.
Headnote:(A) Maharashtra Co-operative Societies Act, 1960 - Sections 4 and 6 - Government Resolutions dated 23.09.2013 and 14.02.2017 - Registration of Primary Agricultural Credit Co-operative Society (PACCS) - Application for registration rejected by Scrutiny Committee due to lack of financial viability and necessary documentation - State allowed registration, which was set aside by High Court - Economic viability is a prerequisite for registration, and the State's decision ignored the Committee's findings. (Paras 3, 12, 25, 31, 35)
(B) Locus Standi - The High Court found that intervenors lacked standing to challenge the registration, but the order was set aside due to the failure to meet financial criteria. (Paras 10, 34)
Facts of the case:
The appellant-society applied for registration as a PACCS, which was rejected by the Scrutiny Committee for failing to meet financial viability criteria. The State later allowed the registration, which was challenged by an existing society member.
Findings of Court:
The High Court upheld the Scrutiny Committee's rejection of the registration application, emphasizing the importance of economic viability.
Issues: The main issues included the financial viability of the proposed society and the locus standi of the intervenors.
Ratio Decidendi: The court ruled that economic viability is essential for registration under the Act, and the State's decision to allow registration was contrary to its own guidelines.
Result: Appeals dismissed.
Legal Category Hierarchy
Table of Contents
2. Appellants claim financial viability through diverse business activities and lack of locus standi — Respondents argue mandatory registration criteria and expert committee findings were ignored. (Para 10 , 11 )
3. The State ignored mandatory economic viability criteria and expert committee findings, erroneously relaxing registration requirements through administrative discretion rather than formal government resolutions. (Para 17 , 18 , 19 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 )
4. Economic viability is a mandatory pre-requisite for society registration; eligibility standards set by government resolutions cannot be relaxed through administrative discretion in individual appeals. (Para 17 , 32 )
5. Appeals dismissed and the High Court order setting aside the registration of the societies is upheld. (Para 34 , 35 )
6. Is economic viability a mandatory requirement for the registration of a co-operative society?
Yes. Under Section 4 and Section 6 of the Maharashtra Co-operative Societies Act, 1960, and relevant Government Resolutions, economic viability is a pre-requisite and basic condition for granting registration to a society. (Para 13 , 17 , 19 )
7. Can the State relax mandatory registration criteria for a co-operative society through an order in an appeal?
No. Mandatory eligibility standards set by Government Resolutions cannot be relaxed at the discretion of the State during an appeal. Any alteration or relaxation of such conditions must be introduced through a subsequent Government Resolution. (Para 32 )
8. What is the legal significance of a Scrutiny Committee's findings regarding a society's financial capability?
The Scrutiny Committee acts as an expert body established specifically to inspect financial ability. Its findings on eligibility and viability are vital parts of policy directives and should not be ignored unless they are perverse. (Para 18 , 22 , 31 )
9. Does a lack of locus standi prevent a court from interfering with an administrative order that is patently illegal?
No. Arguments regarding the locus standi of a party will not restrain the High Court or Supreme Court from interfering when there is patent illegality in the State's order. (Para 33 )
JUDGMENT :
PRASANNA B. VARALE, J:-
1. Leave granted.
2. The challenge in the present appeals is to the common order dated 05.01.2024 in Writ Petition No. 8654/2023 and 42 other connected matters, whereby the High Court of Judicature at Bombay allowed the petitions preferred by the respondent no. 6 herein and in other connected matters and set aside the orders passed by the State of Maharashtra directing registration of the appellant-societies.
3. For the sake of brevity and as the legal issue involved is the same, we are referring to the facts of the W.P. No. 8654 of 2023 resulting into SLP (C) No. 4090 of 2024. The factual background is that on 13.01.2023, the appellant-society herein filed an application to the Respondent-Assistant Registrar for getting permission for registration of proposed society as a new Primary Agricultural Credit Co-operative Society (hereinafter ‘PACCS’), as well as for opening a bank account. A scrutiny was done by the Scrutiny Committee (hereinafter ‘Committee’) wherein the application filed by the appellant-society was rejected on 13.04.2023. The reasons given by the Committee for rejection of application are reproduced below:
“1. The District Deputy Registrar and Divisional Joint Registrar, Kolhapur have not verified and ascertained as to whether the Revenue village of the aforesaid proposed society is within the purview of the existing society.
2. The information as to whether the Promoters – members of the proposed society are the members of other existing societies or not, has not been verified and submitted.
3. The Chief Promoter has not verified and ascertained crop-wise cultivated area of the Promoters – members in the proposed society as mentioned in the Crops Sowing Register.
4. The Kolhapur District Central Co- operative Bank has not given undertaking in respect of providing loan as per it’s Crop-Loan Policy, to the Promoters – members of the proposed society or has not annexed the Undertaking to the effect that apart from the Kolhapur District Central Co-operative Bank, other Nationalised Banks or other Financial Institutions are going to provide loan to the proposed society.
5. The existing Credit Co-operative Society for the Revenue village of the proposed Society, has not issued No- objection certificate to the proposed Society for registration.
6. The existing Society has not submitted information about member- wise loans provided to the members to be transferred to the proposed Society.
7. The extracts of entries from the Crops Sowing Register and 7/12 extract in respect of the lands of the Promoters – members included in the Registration Proposal, have not been annexed to the Proposal for Registration. Therefore, the probable distribution of loan proposed by the Society cannot be ascertained.
8. The Chief Promoter has not submitted alongwith the proposal, the information as to whether the Promoters – members to be included in the proposed society are included in other existing society or not.
9. The self-explanatory opinion of the Divisional Joint Registrar, District Deputy Registrar and Taluka Assistant Registrar, Co-operative Societies, Kolhapur, as to whether said society shall be financially viable after registration or not has not been submitted.
10. The Chief Promoter of the proposed Society, on the basis of the certificate issued by the Gaon Kamgar Talathi, has certified that agricultural loan of the approximate amount of more than Rs.150.00 lakhs will be provided however, he has not enclosed with the proposal, the documents in support of providing the said loan and the documents for verification thereof and therefore, it cannot be ascertained that after registration, the proposed society will be able to provide loan of the amount of more than Rs.150.00 lakhs.
11. The loan provided by the existing society within the area of operation of the proposed society is less than the amount of Rs.150.00 lakhs and therefore, existing society itself is not financially viable. Therefore, it would not
