The first proviso to sub-section (3) of section 27 of the Maharashtra Co-operative Societies Act, as amended, violates Article 14 of the Constitution of India as it results in hostile discrimination between societies similarly placed and circumstanced, is arbitrary and unreasonable, and has no nexus with the object sought to be achieved.

Headnote:
CO-OPERATIVE SOCIETIES - VOTING RIGHTS - FIRST PROVISO TO SUB-SECTION (3) OF SECTION 27 OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, AS AMENDED - CHALLENGE ON GROUNDS OF VIOLATION OF ARTICLE 14 OF THE CONSTITUTION OF INDIA - HELD, THE PROVISO IS NULL AND VOID.
Fact of the Case:

Writ petitions challenging the first proviso to sub-section (3) of section 27 of the Maharashtra Co-operative Societies Act, as amended, on the ground that it violates Article 14 of the Constitution of India. The petitioners contended that the proviso results in discrimination between co-operative societies similarly circumstanced and is arbitrary and unreasonable.
Finding of the Court:

The court held that the first proviso to sub-section (3) of section 27 of the Act is null and void as it violates the mandate of Article 14 of the Constitution of India. The court found that the proviso results in hostile discrimination between societies similarly placed and circumstanced, is arbitrary and unreasonable, and has no nexus with the object sought to be achieved.
Issues: 1. Whether the first proviso to sub-section (3) of section 27 of the Maharashtra Co-operative Societies Act, as amended, violates Article 14 of the Constitution of India? 2. Whether the proviso results in discrimination between co-operative societies similarly circumstanced? 3. Whether the proviso is arbitrary and unreasonable? 4. Whether the proviso has any nexus with the object sought to be achieved?
Ratio Decidendi: 1. The court held that the proviso violates Article 14 of the Constitution of India as it results in hostile discrimination between societies similarly placed and circumstanced. The court found that the proviso confers unequal voting rights upon co-operative societies belonging to the same class, depending on the strength of the Managing Committee of such affiliated society. This creates a hostile discrimination between the same class of societies without any rational basis. 2. The court held that the proviso is arbitrary and unreasonable as it confers a blanket right upon every member on the committee of the member society, irrespective of whether they are acting for and on behalf of the society or exercising their right to vote and contest independently. This can lead to a contest between members of the same society, which runs counter to the very interest of the co-operative society. 3. The court held that the proviso has no nexus with the object sought to be achieved, which is to make the electorate broad-based and more representative in character. The court found that the proviso does not achieve this objective, as it only results in a contest between members of the same society.
Final Decision: The court declared the first proviso to sub-section (3) of section 27 of the Maharashtra Co-operative Societies Act, as amended, to be null and void and inoperative. The court also directed the authorities to take necessary steps for holding elections of the committees of the respondent federal societies as expeditiously as possible, overlooking the said proviso.

JUDGMENT - C.S. DHARMADHIKARI, J.:---All these writ petitions were heard together as they involve common questions of law and fact, and, therefore, are being disposed of by this common judgment.

2. In all these writ petitions, the first proviso to sub-section (3) of section 27 of the Maharashtra Co-operative Societies Act, as amended, is challenged on various grounds. In writ petition No. 3952 of 1984 respondent No. 6 the Nasik District Central Co-operative Bank Ltd., Nasik is a Co-operative society duly registered under the Act. It is also a Central Co-operative Bank within the meaning of the said expression as defined in section 2(6) of the Act. It is an Apex Co-operative bank for the Nasik District. It is also a co-operative bank within the meaning of the said expression in sub-section (10) of section 2. It is also a federal society as defined in sub-section (13) of section 2 of the Act. Consequently, therefore, the voting rights in regards to the election of the Board of Directors, of respondent No. 6 are regulated in accordance with the first proviso to sub-section (3) of section 27 of the Act, as amended. On the basis of the said provision, the respondents have prepared a voter's list for the election. These facts are not disputed. It is the contention of the petitioners that the first proviso to sub-section (3) of section 27, which came into force with effect from 26th December, 1983, is wholly null and void, it being violative of the guarantee enshrined in Article 14 of the constitution of India. As in these writ petitions, were are concerned with the said challenge only, it is not necessary to make a detailed reference to the averments or the allegations made in the other writ petitions. However, it is pertinent to note that in none of these writ petitions the respondents have chosen to file any return and, therefore, it can safely be presumed that so far as the factual averments or allegations are concerned, they stand admitted.

3. Dr. Naik, Shri C.J. Sawant and Shri Kamerkar, the learned Counsel appearing for the petitioners in the various writ petitioners, have contended before us that a federal society has several co-operative societies as its members. The members of the Managing Committee of these member societies differ in strength. Some primary co-operative societies have only 5 members on the Managing Committee, while other primary co-operative societies have differing membership ranging upto 21. This number, therefore, varies from primary co-operative society to society. All these primary co-operative societies are members of and are affiliated to the federal co-operative society. Prior to 26-12-1983 all these primary co-operative societies had only one vote under sub-section (3) of section 27 of the said Act. Now, by reason of the first proviso to sub-section (3) of section 27, each co-operative society will have as many votes as will be the total number of its members on the Managing Committee. In other words, within the same class of primary co-operative societies affiliated to the federal co-operative society, there is discrimination between the same class and some co-operative societies will have more voting rights than the other depending upon the number of members on their Managing Committee. The strength of the Managing Committee of a society is not determined by any statutory provision. It is entirely decided by the bye-laws of the co-operative society. Therefore, there is an obvious hostile discrimination between co-operative societies similarly circumstanced. Further, this will create an unhealthy competition amongst the co-operative societies since each society will try to increase the number of members on its Managing Committee, which will run counter to the very object of the legislature. In this context, Shri C.J. Sawant, the learned Counsel appearing for the petitioners in Writ Petition No. 2170 of 1984 has drawn our attention to the allegation made in para 7 of the said petition, which appar

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