Compulsory arbitration in disputes involving cooperative societies is a reasonable classification that has a rational nexus with the object of protecting the cooperative movement and its resources, and the procedure prescribed for arbitration under the Maharashtra Cooperative Societies Act is not unreasonable and provides sufficient safeguards to ensure a fair and just hearing.

JUDGMENT - Patel, J.

1. This is an application which the petitioner has filed even before the Officer on Special Duty has made any order under Section 91 of the Maharashtra Cooperative Societies Act (hereinafter referred to as the Act) and referred the dispute to arbitration as required by it for arresting the proceedings. In short the petitioner wants to smother any proceedings at all before the Officer on Special Duty and wants this Court to go into the question of merits without permitting the said Officer to apply his mind, to the proceedings.

2. Facts as alleged by the petitioner are as follows:

Respondent No. 5 is a member of the Society Respondent No. 4 and as such holds two flats Nos. 10 and 11 in the building of the Society. The petitioner says that respondent No. 5 agreed to transfer to him his interest in the flats, his share holdings etc., for Rs. 70,000 which he paid to him. The agreement is of March 1, 1967, They jointly gave intimation to respondent No. 4 and requested that the petitioner be admitted as member. The request was turned down. For building the flats loan was obtained from respondent No. 6 and instalments had to be paid. The petitioner paid the instalments for some time but as he was not admitted to its membership he did not thereafter pay the instalments. Respondent No. 4 therefore filed a dispute before respondent No, 1 of which notice was given by respondent No. 1 to the petitioner. In this case respondent No. 4 claims dues payable in respect of flats Nos. 10 and 11 and is filed against respondent No. 5 and the petitioner. The petitioner wants the proceedings to be quashed on the ground, that this is not a dispute which can be decided under the provisions of the Act. This question cannot be decided by us, The Registrar or the officer must do it.

3. Mr. Naik, for the petitioner, however says that this is not the question that he proposes to raise. He says that he wants to challenge the vires of Sections 91 to 96 and 163 of the Act. His contention as now formulated is that the provisions for compulsory arbitration in file disputes between a Society and a third person even under limited circumstances offends Articles 14 and 19 (1) (f) of the Constitution of India. In amplyfying this ground he contends that there is no justification for requiring compulsory arbitration in the case of Societies. The procedure provided makes it from procedural aspect a very unreasonable provision. He says that the Registrar is given an absolute and unqualified discretion under Section 91 to decide whether or not a matter referred to him is a dispute, that the dispute may be referred to nominees who may not be trained personnel and may not know law and that no particular procedure is prescribed under the Act and the rules. On the other hand, he says that in the case of other litigants who are not connected with the Society, the procedure of civil Courts with all safeguards gives a proper opportunity to the parties to litigate their cases.

4. What Article 14 prohibits is class legislation. It does not mean that all are entitled to equal treatment. It only means that two persons similarly situated must be treated alike. Reasonable classification for purposes of legislation and treatment is permissible. However, the conditions for the validity of such classification are that there must be intelligible differentia which distinguishes the group of persons or things from those that are left out, and, there must be rational nexus between the classification and the object to be achieved.

5. That in a welfare State co-operative Institutions play an important part cannot be denied. Different authors define Cooperation differently. Facys definition based on socio-economic aspect is: Co-operative Society is an association for the purpose of joint trading originating among the weak and conducted always in unselfish spirit on such terms that all who are prepared to assume the duties of membership may share in its rewards in proportion to th

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