1971 Supreme(All) 92
Allahbad High Court
R.S.PATHAK,R.L.GULATI
Sultan Singh - Appellant
Versus
Assistant Registrar Incharge Jhansl Division, Jhansi - Respondent
Decided On : 03/19/1971
M. Asif Ansari and R.C. Srivastava, for Petitioner; Standing Counsel, for Respondents.
Headnote:
CO-OPERATIVE SOCIETIES - U.P. Co-operative Societies Act, 1965 - Validity - Whether ultra vires the State Legislature - Whether contravenes Articles 14, 19 and 31 of the Constitution - Bye-laws framed by Assistant Registrar - Whether in excess of powers - Whether contravenes Article 19 of the Constitution.
Fact of the Case:
Petitioners, individual share-holders of two Co-operative Banks, challenged the validity of the U.P. Co-operative Societies Act, 1965, and the bye-laws framed by the Assistant Registrar under Section 131(4) of the Act. They contended that the Act was ultra vires the State Legislature, that it contravened Articles 14, 19 and 31 of the Constitution, and that the bye-laws were in excess of the powers of the Assistant Registrar and contravened Article 19 of the Constitution.
Finding of the Court:
The Court held that the Act was not ultra vires the State Legislature, that it did not contravene Articles 14, 19 and 31 of the Constitution, that the bye-laws were not in excess of the powers of the Assistant Registrar, and that they did not contravene Article 19 of the Constitution.
Issues: 1. Whether the U.P. Co-operative Societies Act, 1965 is ultra vires the State Legislature? 2. Whether the Act contravenes Articles 14, 19 and 31 of the Constitution? 3. Whether the bye-laws framed by the Assistant Registrar are in excess of his powers? 4. Whether the bye-laws contravene Article 19 of the Constitution?
Ratio Decidendi: 1. The Act is not ultra vires the State Legislature as it falls within Entry 32 of List II of the Seventh Schedule of the Constitution, which deals with the incorporation, regulation and winding up of corporations other than those specified by List I and Universities. 2. The Act does not contravene Articles 14, 19 and 31 of the Constitution as it does not deprive individuals of their fundamental right to be ordinary members of a co-operative society, it does not select central banks arbitrarily from the general group of co-operative societies for discriminatory treatment, and it does not provide for the acquisition of any interest belonging to individuals without compensation. 3. The bye-laws are not in excess of the powers of the Assistant Registrar as they were framed under Section 131(4) of the Act, which empowers him to make necessary amendments including deletions and additions in the bye-laws of a society that fails to comply with Section 131(3). 4. The bye-laws do not contravene Article 19 of the Constitution as they do not deprive individuals of their fundamental right to be ordinary members of a co-operative society.
Final Decision: The petitions were dismissed.
PATHAK, J. :- The petitioner Sultan Singh, applies under Article 226 of the Constitution for an order directing the Assistant Registrar, Incharge, Jhansi Division, not to enforce the bye laws framed by him in respect of the Jhansi District Co-operative Bank Limited, and also prays that the bye-laws be quashed.
2. The Jhansi District Co-operative Bank Ltd., (which for convenience we may refer to as "the Bank") is a co-operative society registered in 1932 under the Co-operative Societies Act, 1912, and constituted, it is said, with the sole purpose of providing banking facilities to its members. Under the bye-laws, as amended from time to time, the Board of Directors of the Bank included a Director elected by the share-holders. The petitioner acquired a block of shares in the Bank in 1961 and became a share-holder. In 1962, he was elected by the share-holders as Director, which office he continued to hold by virtue of successive elections. The petitioner alleges that in 1969 his name was taken off the roll of the ordinary members of the Bank, and he has been denied the right to participate in the affairs of the Bank. The question is whether the petitioner is entitled to any relief.
3. On January 26, 1968, the U.P. Co-operative Societies Act, 1965 was brought into force, repealing the Co-operative Societies Act, 1912 in its application to Uttar Pradesh. Section 17(1) of the new Act lists the persons who can be members of a Co-operative Society. They include individuals satisfying certain qualifications, Co-operative Societies, the State Government, the Central Government, the State Warehousing Corporation and any other body corporate approved by the Registrar generally or in particular for ordinary or nominal membership of Co-operative Societies. Section 17(2), which is material for our purposes, provides:
"Notwithstanding anything contained in sub-section (1) a Joint Stock Company or an individual shall not be admitted as an ordinary member in such co-operative society or societies or class of co-operative societies as may be prescribed."
Section 2(q) defines "prescribed" as meaning "prescribed by rules". Therefore, both individuals and Joint Stock Companies are barred from the ordinary membership of such co-operative societies or class of co-operative societies as are specified by the rules, and this is so notwithstanding that S.17(1) contemplates individuals as members of co-op. society. R.44 of the U.P. Co-operative Societies Rules, 1968 provides:
"(a) ...... ...... ...... ......
(b) No person, who is an individual, shall be admitted as an ordinary member in (i) an apex society or Central Bank (other than U.P. State Co-operative Land Development Bank and an Urban Central Bank).
(ii) a central society which includes any other central society in its ordinary membership."
4. A Central Bank, as defined by Section 2(k) of the Act, is "a co-operative society, the main object of which is to lend money to co-operative societies which are its ordinary members." Admittedly, the Jhansi District Co-operative Bank Limited is a Central Bank. There is also no dispute that it is not an urban central bank. The result is that by reason of Section 17(2) read with Rule 44(b) an individual cannot be admitted as an ordinary member of the Jhansi District Co-operative Bank Ltd., and the petitioner, who was an individual was an ordinary member of the Bank before the new Act came into force is not entitled to be an ordinary member of the Bank under the new Act. Rule 44(c) provides, however,
"If a society mentioned in sub-rule (b) has on the date of coming into force of the Act, individuals as its ordinary members, the Society shall within a period of one year from such date or such further period as the Registrar may, for reasons to be recorded, allow for any co-operative society, adjust its membership to any other class mentioned in sub-section (1) of Section 18 in accordance with the provisions of the bye-laws of the Society." Section 18(1) details