The assent of the President is necessary for the validity of an Ordinance which takes over the management of any property by the State for a limited period in the public interest or to secure the proper management of the property.

Headnote:
COOPERATIVE SOCIETIES - RAJASTHAN COOPERATIVE SOCIETIES ACT - ORDINANCE - Vires - Amendment of Act - Appointment of Administrator - Validity - Banking Regulations Act - Applicability - Article 213 of the Constitution - Assent of the President - Necessity.
Fact of the Case:

The petitioners challenged the vires of Ordinance No. 2 of 1990, which amended the Rajasthan Cooperative Societies Act and inserted Section 36(1B), providing for the appointment of an Administrator to manage the affairs of a society if a new Committee is not constituted before the expiry of the term specified in the bye-laws. They also challenged the vires of the consequential amendment to Rule 34(2) and the notification postponing elections till further orders.
Finding of the Court:

The Court held that the Ordinance was invalid and ineffective as it was not assented to by the President as required under Article 213 of the Constitution. It also held that the amended Rule 34(2) was invalid as it was a consequence of the invalid Ordinance. The Court further held that the appointment of an Administrator under Section 36(1B) was valid as it was a reasonable restriction on the fundamental right to form associations and unions, and was necessary to regulate the functioning of the society in the public interest.
Issues: 1. Whether the Ordinance No. 2 of 1990 and the consequential amendment to Rule 34(2) were valid? 2. Whether the appointment of an Administrator under Section 36(1B) was valid?
Ratio Decidendi: 1. The Court held that the Ordinance was invalid and ineffective as it was not assented to by the President as required under Article 213 of the Constitution. It also held that the amended Rule 34(2) was invalid as it was a consequence of the invalid Ordinance. 2. The Court held that the appointment of an Administrator under Section 36(1B) was valid as it was a reasonable restriction on the fundamental right to form associations and unions, and was necessary to regulate the functioning of the society in the public interest.
Final Decision: The Court accepted the writ petitions and declared the Ordinance and the amended Rule 34(2) as invalid and ineffective. It also directed that the committees/persons which existed prior to the issuance of the notification should be entitled to take over the charge and the charge should be handed over to them. The Court further directed that the process of election should be continued and the elections should be held as per the Schedule.

JUDGMENT

1. - In all these writ petitions the petitioners have challenged the vices of the Ordinance No. 2 of 1990 (31st August 1990). By this Ordinance, the Rajasthan State Cooperative Societies Act was amended and Section- 26(IB) [sic 36(IB)] was inserted. Section- 26 (1B) [sic 36 (1-B)J provides that "if before the expiry of the term of the Committee as specified in the bye-laws, a new Committee is not constituted, the Registrar may appoint a Government Servant as administrator to manage the affairs of the society for a period not exceeding one year or till a new committee is constituted, whichever is earlier". Petitioners have also challenged the vires of the notification No. F. 4 (15) Agr. Gr-IV/Coop/88, dated 31 August 1990. By this notification, the State Government has substituted sub-rule (2) in Rule -34. This amendment is consequential. State Government has also exercised the powers and dispensed with the previous publication of the proposed amendment. Vide Annexure-19, dated, 31st August, 1990, Registrar has directed that the elections of the Cooperative Societies be postponed till further orders. Thus, all these orders were passed on the same day, vide Annex. 20, in exercise of the powers conferred under the amended ordinance and the Rules. Collector and District Magistrate was appointed as the Administrator of the Central Cooperative Bank. Before passing any order Mr. M.I. Khan Addl. Advocate General, appeared and accepted the notice on behalf of the State and the State functionaries including the Chief Minister, in some of the writ petitions filed earlier, thereafter, he appeared in all the writ petitions.

2. During the course of arguments, Mr. B.P. Agrawal, Advocate General, appeared and submitted to the Court that he will like to address the court on some points of law. Learned Advocate General was also heard.

3. All the parties agreed that the writ petitions may be finally disposed of at this very stage.

4. Mr. Bajrang Lal Sharma and Mr. R.P. Tiwari appearing on behalf of the petitioners, challenged the vires of Ordinance No. 2 of 1990 on the following grounds:

His excellency the Governor has not applied the mind in the matter of satisfaction that the circumstances exist which render it necessary for him to take immediate action. It was further argued that the Governor had no jurisdiction without instructions from the President to promulgate any such Ordinance like the Ordinance of 1990 and there is a clear violation as the previous sanction of the President has not been obtained and the assent of the President has also not been obtained.

5. On behalf of the petitioners attention was invited towards Chapter-IV of the Constitution and particularly, articles 38 and 39 of the Constitution. Article 38, provides that the State shall strive for the welfare of the people by securing and protecting as effectively as it may, the social order in which Justice-social, economic and political is available to all the institutions of the National life. Article 39 also provides among other things, that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. It was submitted that for the survival of the democracy the regular elections should be held and the system of appointing the Administrator should not be resorted and the Administrator should not be appointed. Our attention was also invited to Article 19 of the Constitution, particularly, relating to the provisions of clause (1) (g) of Article 19. Article -19 provides that, every person shall have the right to practise trade or business of his choice. Under cl. (6) of Article 19, reasonable restrictions can be imposed by the State and special law can be enacted, particularly in favour of the Corporations. On behalf of the petitioners it was also submitted that under the Banking Regulations Act, the Banks in the present case are the Scheduled Banks and they are under the control of the Reserve Bank of I

Click Here to Read the rest of this document

Judicial Analysis

1990 Supreme(Raj) 765

RAJASTHAN HIGH COURT AT JAIPUR BENCHD.L.Mehta, G.S.Singhvi, JJ.Dr. Hari Singh & Ors. - AppellantsVersusState of Rajasthan and others - RespondentsD.B. Civil Writ Petition No. 4654, 5775, 4673 and 4674 of 1990.Decided On : 29-11-1990

The assent of the President is necessary for the validity of an Ordinance which takes over the management of any property by the State for a limited period in the public interest or to secure the proper management of the property.

Cases Referred (3)

Judicial Analysis

RAJASTHAN HIGH COURT AT JAIPUR BENCH
D.L.Mehta, G.S.Singhvi, JJ.
Dr. Hari Singh & Ors. - Appellants
Versus
State of Rajasthan and others - Respondents
D.B. Civil Writ Petition No. 4654, 5775, 4673 and 4674 of 1990.
Decided On : 29-11-1990