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In the High Court of Andhra Pradesh at Hyderabad
VAIDYA AND SRIRAMULU, JJ.
Duvvur Papireddi and others - Petitioner
Versus
Deputy Registrar of Co-op. Societies, Nellore and others - Respondent
W.P. No. 482 of 1969
Decided on : 18-06-1971
The power vested in the Registrar under Section 15 of the Andhra Pradesh Co-operative Societies Act, 1964, to order compulsory amalgamation or division of Co-operative Societies is not arbitrary and unguided, and the impugned notice issued by the Deputy Registrar was not in conformity with Rule 9 of the Andhra Pradesh Co-operative Societies Rules, 1964.
Headnote:
CO-OPERATIVE SOCIETIES - AMALGAMATION - POWER OF REGISTRAR - Vires of Section 15 of the Andhra Pradesh Co-operative Societies Act, 1964 - Whether the power vested in the Registrar under Section 15 is arbitrary and unguided - Whether the impugned notice is in conformity with Rule 9 of the Andhra Pradesh Co-operative Societies Rules, 1964.
Fact of the Case:
The petitioners, members of a Co-operative Society, challenged the vires of Section 15 of the Andhra Pradesh Co-operative Societies Act, 1964, which empowered the Registrar to order compulsory amalgamation or division of Co-operative Societies, on the ground that it infringed their right to form an association under Article 19(1)(c) of the Constitution of India. They also contended that the impugned notice issued by the Deputy Registrar proposing amalgamation of their Society with another Society was not in conformity with Rule 9 of the Andhra Pradesh Co-operative Societies Rules, 1964.
Finding of the Court:
The Court held that Section 15 of the Act was saved by Article 31A(1)(c) of the Constitution of India, which provided for the amalgamation of corporations in the public interest or to secure proper management, and that the impugned notice was not in conformity with Rule 9 of the Rules.
Issues: 1. Whether Section 15 of the Andhra Pradesh Co-operative Societies Act, 1964, was ultra vires the Constitution of India? 2. Whether the impugned notice issued by the Deputy Registrar was in conformity with Rule 9 of the Andhra Pradesh Co-operative Societies Rules, 1964?
Ratio Decidendi: 1. The Court held that Section 15 of the Act was saved by Article 31A(1)(c) of the Constitution of India, which provided for the amalgamation of corporations in the public interest or to secure proper management. The Court reasoned that a registered Co-operative Society was a corporation within the meaning of Article 31A(1)(c), and that the amalgamation of two or more Co-operative Societies was in the public interest or to secure proper management. 2. The Court held that the impugned notice was not in conformity with Rule 9 of the Rules, which required the Registrar to prepare a draft scheme for amalgamation and to send a copy of the scheme to the Society along with the notice. The Court found that the notice did not enclose a copy of the scheme and did not contain all the particulars specified in Rule 9(2).
Final Decision: The Court quashed the impugned notice issued by the Deputy Registrar and directed him to issue a fresh notice in conformity with Rule 9 of the Rules.
JUDGMENT :
1. The petitioners 45 in number are the members of the Epur Co-operative Credit Society, hereinafter referred to as “the Society”. They have filed this writ petition for a writ of mandamus or any other appropriate order directing the Deputy Registrar of Co-operative Societies, Nellore South Circle, Nellore (1st respondent herein) not to proceed further in pursuance of the notice R.C. No. 2862/68-B d/27th Nov. 1968 issued by him under section 15 of the Andhra Pradesh C-operative Societies Act (hereinafter referred to as “Act”).
2. The facts giving rise to this writ petition are that the petitioners' and others formed a Co-operative Society which was registered under the Co-operative Societies Act of 1912 on 31st March, 1922 and started functioning from 13th May, 1922. The main purpose of the Society is to provide cheap credit facilities to its members. According to the petitioners, the society has been working well ever since it was established and the general reserves of the Society as on the date of filing of the writ petition were about Rs. 10,000/-. The maximum credit limit beyond which an individual member cannot borrow is Rs. 1,500/- and the maximum borrowing capacity of the society is Rs. 70,000/-. The society consists of 84 members and its total share capital as on the date of the writ petition was Rs. 7,373/-. The area of operation of the Society extends to the villages of Epur Bit 1(a) and Bit IJ and other hamlets of Epur. The 1st petitioner, who is the President of the Society received the impugned notice issued by the 1st respondent proposing to amalgamate the society with the Pantapalayam Multi-purpose Co-operative Society (hereinafter referred to as the “Pantapalayam Society”) on the ground that the society was not a viable unit. It is stated in the affidavit filed on behalf of the petitioners that the Pantapalayam Society is situated at Pantapalayam which is four miles distant from Epur and is not working satisfactorily, regularly committing default in payment to the Nellore District Co-operative Central Bank Ltd., and is also faction-ridden. They further submit that the individual maximum credit limit in the Pantapalayam Society is Rs. 500/- which in this Society is Rs. 1,500/-. Immediately on receipt of the impugned notice, the Society held a general body meeting on 2nd January, 1969 which was attended by 25 members. It was unanimously decided to oppose the proposed amalgamation on the ground that the Society was financially more sound and working more efficiently than the Pantapalayam Society. They further state that this objection of the Society is likely to be overruled by the 1st respondent and as the petitioners cannot challenge the vires of sec. 15 of the Act before the 1st respondent, they filed this writ petition. The vires of sec. 15 of the Act is challenged on the ground that sub-sec. (1) & (2) thereof empowering the Registrar to direct compulsory amalgamation or division of co-operative Societies against the wishes of the majority of the members of the affected societies infringes the right guaranteed to the members to form an Association by Art. 19(1)(c) of the Constitution of India. It is contended that the impugned notice is not saved by sub-clause (4) of art. 19 in as much as reasonable restrictions under the said Clause can be imposed only in the interests of Sovereignty and integrity of India or public order or morality. The argument of the petitioners is that the restriction imposed by sec. 15 cannot, by any stretch of imagination be considered to be in the interests of Sovereignty and integrity of India or public order or morality. They further contend that the power vested in the Registrar by sec, 15 is arbitrary and interferes with the autonomy of the Co-operative Societies. Neither the said section nor rule 9 of the Rules gives any guidelines to the Registrar as to the circumstances in which he has to act under sub-sections (1) and (2) of section 15. No right of appeal having be
