ORAL JUDGMENT R. M. LODHA, J. :- Though in the writ petition, the petitioners have challenged the constitutional validity of section 69A of the Maharashtra Co-operative Societies Act, 1960 (for short, "Act of 1960") and Rule 53-A and 53-B of the Maharashtra Co-operative Societies Rules, 1961 (for short, "Rules of 1961 "), the learned counsel for the petitioners, during the course of arguments, did not press the said prayer. Inter alia, the learned counsel for the petitioners challenged the notice dated 30th April 1990, (Exhibit-A), on the ground that the direction by respondent No.3-society to petitioner No. 1-society to credit a sum of Rs. 1,08,844/- into the account of respondent No.3-society, viz. Kolhapur District Cooperative Supervisory Society, Kolhapur, towards salary subscription at the rate of 1.50 percent for the year 1989-90 on short term and medium term loans of the first petitioner society, is illegal. The contention of the learned counsel for the petitioners is that direction to credit the amount of Rs. 1,08,844.00 into the account of respondent No.3-society, viz. Kolhapur District Supervisory Co-operative Society, Kolhapur, towards salary subscription at the rate of 1.50 percent for the year 1989-90 on short term and medium term loans of the first petitioner-society and the said amount, so assessed, is grossly arbitrary and not in conformity with the Table appended to rule 53-A. 2. The first petitioner is a cooperative society and is classified as a resource society within the meaning of rule 10 of the Rules 1961. As per the annual report of the year 1989-90, the first petitioner society has 5530 members and the share capital of the first petitioner Society is Rs. 24,03,000/-. The petitioners have reproduced the abstract of the annual report of the year 1989-90 showing the profit distribution. The third respondent demanded from the petitioners contribution to the Caderisation Fund in exercise of their powers under section 69A of the Act of 1960 and Rule 53-A and 53-B of the Rules of 1961. By demand letter dated 30th April 1990, respondent No.3 Society informed the first petitioner Society that as per rule 53-B and Government Resolution dated 13th October 1989, the petitioners should pay Rs. 1,08,884/- as its contribution for the year 1989-90. The said figure was worked out on the basis of 1.50 percent of the societys short term and medium term loans advanced by the first petitioner-Society. 1,08,884/- as its contribution for the year 1989-90. The said figure was worked out on the basis of 1.50 percent of the societys short term and medium term loans advanced by the first petitioner-Society. The first petitioner society was informed that in case the aforesaid amount was not credited and paid, the same would be recovered under section 69A(5) of the Act of 1960. The first petitioner society has also given details of the contributions paid by it for the years from 1982-83 to 1988-89 which shows that the contribution paid by the first petitioner society for these years was less than 1l,500/-every year. But, for the first time in 1989-90 the contribution demanded was to the extent of Rs. 1,08,844/- which, according to the petitioner, is grossly illegal. 3. The petitioners have also sought to challenge the Government Resolution dated 13th October 1989 on the ground that the Government had no such power to issue such Resolution. 4. Though the respondents have been served long back, no counter/ return has been filed by anyone of them and accordingly we proceed with the writ petition on the basis of the averments made therein. 5. Section 69A of the Act of 1960 makes provision for contribution of the Co-operative State Cadre of Secretaries of certain societies and establishment of Employment of such Cadre. It reads thus: "69A. Contribution of Co-operative State Cadre of Secretaries of certain societies and establishment of Employment of such Cadre. - (1) There shall be constituted a Co-operative State Cadre of Secretaries of primary agricultural credit societies, multipurpose co-operative societies and service co-operative and such other classes of societies as may be prescribed in this behalf (hereinafter in this section referred to as "the Co-operative State Cadre"), consisting of persons recruited for this purpose by the Central Societies notified in this behalf by the State Government. The number of persons to be recruited and their conditions of service shall be determined by the Central Societies in accordance with such general or special guidelines, if any, as may be issued by the State Government, from time to time. (2) A central Society may, from time to time, depute any person appointed by it to that Cadre to work under any society referred to in sub-section (1), as it may consider necessary. (2) A central Society may, from time to time, depute any person appointed by it to that Cadre to work under any society referred to in sub-section (1), as it may consider necessary. Where any such person is posted to work under any society his services shall be taken over by the society on such post, for such period and on such other terms and conditions, as the Central Society may determine, but the person so posted shall draw his salary and allowance from the Fund established under the next succeeding sub-section. (2A) The immediate initial supervisory control on the person appointed to the cadre and deputed or posted to work as secretary under each of the societies referred to in sub-section (1) shall be with the Taluka Supervision Society consisting of the societies, in each respective Taluka to which such persons are deputed, as members thereof and registered for the purpose. The Taluka Supervision Society, shall exercise such powers and discharge such functions or perform such duties as may be conferred or imposed on it by the bye-laws of such society. (3) An Apex society notified in this behalf by the State Government shall establish a Fund to be called "the Co-operative State Cadre Employment Fund," which when established, shall be deemed to have been established with effect from the 1st day of July 1973. It shall be utilized for meeting the expenses on the salaries, allowances and other emoluments to be paid to the persons appointed to the Co-operative State Cadre and the expenditure relating to the Cadre. It shall be utilized for meeting the expenses on the salaries, allowances and other emoluments to be paid to the persons appointed to the Co-operative State Cadre and the expenditure relating to the Cadre. (4) (a) Every society or class or classes of societies, which in the opinion of the State Government, derive any benefit, directly or indirectly, from the service of any Secretary belonging to the Co-operative State Cadre of Secretaries and (b) Every other body corporate carrying on any trade, business or industry or class or classes of such corporate bodies, which in the opinion of the State Government, derive such benefit as aforesaid; and which are notified by the State Government in this behalf from time to time, by general or special order, shall, with effect from the 1st day of July 1977, contribute annually to the said Fund, at such rate and in such manner as may be prescribed, and different rates may be prescribed for different societies or other corporate bodies or class or classes of societies or class or classes of other corporate bodies. In determining the rate or rates of contribution, the State Government shall take into consideration the expenditure referred to in sub-section (3), the services likely to be rendered and the financial condition of the societies or other bodies concerned. Explanation - Notwithstanding anything contained in any law for the time being in force, for the purpose of levy and collection of the contribution to the said Fund by any other corporate body to which this section applies, such corporate body shall be deemed to be a society governed by this Act. (5) Where there is a failure to comply with the requirements of the last preceding sub-section, the Registrar may serve a demand notice on the society concerned to pay the contribution within two months from the date of demand. Such demand shall be a charge on the income of the society. If the contribution is not paid within the period aforesaid, the Registrar may direct any bank or person having custody of the funds of the society to pay the amount of the contribution immediately, and such Bank or person shall comply with the orders of the Registrar. Such demand shall be a charge on the income of the society. If the contribution is not paid within the period aforesaid, the Registrar may direct any bank or person having custody of the funds of the society to pay the amount of the contribution immediately, and such Bank or person shall comply with the orders of the Registrar. Every payment made pursuant to such direction shall be a sufficient discharge to such Bank or person from all liability to the society in respect of any sum so paid by it or him out of the moneys of the society in his custody. (6) The State Government may make rules regulating all matters connected with or ancillary to the custody and maintenance of, the payment of moneys into and the expenditure and withdrawal of moneys from, the said fund." Rules 53-A and 53-B of the Rules of 1961 provide for rates of annual contribution to Co-operative, State Cadre Employment Fund and the manner of contributions to be made under Rule 53-A respectively. In Maharashtra State Co-operative Land Development Bank Ltd. and Anr. vs. State of Maharashtra and ors, AIR 1982 Bombay 199, besides the challenge to the constitutional validity of section 69A of the Act of 1960 and Rule 53A and 53-B of the Rules of 1961, the challenge was also made to the demand notice issued under section 69A read with Rule 53-A and 53-B of the Rules of 1961. However, the Division Bench did hold that the demand notice was illegal because the payment to cadre fund was of no benefit to the primary resource society directly and even if it be assumed that there was some benefit indirectly it was too remote and farfetched which cannot furnish basis for levying any fees and making the primary resource society liable to contribution and without any rational basis. In para 25 of the report, the Division Bench held thus: "25. Section 69(4) requires the State Government to take into account, (1) the expenditure referred to in sub-sec. (3) viz. total emoluments payable to the personnel of the Cadre; (2) the services likely to be rendered and (3) the financial condition of the societies or other bodies concerned. There is no explanation how all these factors were actually taken into account. Section 69(4) requires the State Government to take into account, (1) the expenditure referred to in sub-sec. (3) viz. total emoluments payable to the personnel of the Cadre; (2) the services likely to be rendered and (3) the financial condition of the societies or other bodies concerned. There is no explanation how all these factors were actually taken into account. It is a moot point whether the capacity to pay towards fees can be a relevant consideration for fixing the quantum thereof. Certain observations in the judgment of the Supreme Court in Kewal Krishans case ( AIR 1980 SC 1008 ) do create a doubt in the relevancy of the capacity to pay. Even if this aspect of the matter is ignored, neither the affidavit in this case nor the affidavit in writ petition No. 181 of 1980 nor the material placed before us indicates in what manner the services likely to be rendered by the Cadre to the petitioner- society were measured or taken into account and which financial condition of the petitioner-society was taken into account for the contemplated apportionment of the expenditure amongst several categories of societies. The contention of Dr. Naik, therefore, that the fixation of the quantum of contribution towards the fund is arbitrary, irrational and unreasonable, in our opinion, deserves to be accepted. The petition deserves to be allowed and the demand notice is liable to be quashed." 6. In so far the present case is concerned, a bare look at the demand notice dated 30th April 1990 would reveal that the demand of Rs. 1,08,884/- has been made towards contribution for the year 1989-90 on the basis of 1.50% of the society short term and medium term loans advanced by the petitioner society. We are afraid, the determination of the said amount of Rs. 1,08,844/- on the basis of 1.50% of the society short term and medium terms loans, is wholly without any legal basis or foundation. In the Table appended to rule 53-A, the first petitioner society is covered under item 9 according to which the rate of contribution could only be 1.5% of the outstanding agricultural credit business at the end of the previous co-operative year. The quantification of Rs. 1,08,844/ in the notice, therefore, is illegal and unjustified. In the Table appended to rule 53-A, the first petitioner society is covered under item 9 according to which the rate of contribution could only be 1.5% of the outstanding agricultural credit business at the end of the previous co-operative year. The quantification of Rs. 1,08,844/ in the notice, therefore, is illegal and unjustified. Respondent No.3 Society has not taken into consideration the relevant facts including that the first petitioner society has its own staff and factual expenditure incurred by respondent No.3 society only one secretary was deputed by respondent No.3 society to the first petitioner society. As the quantification of Rs. 1,08,844/- towards contribution to be paid by the first petitioner society to respondent No.3 society for the year 1989-90 is unsustainable, we do not deem it necessary to go into other questions. 7. We, accordingly, partly allow the writ petition and quash and set aside the demand notice dated 30th April 1990. However, it would be open to the respondent no-3-society to reassess the contribution for caderisation payable by the first petitioner society in the year 1989-90 under section 69A of the Act of 1960 read with Rules 53-A and 53-B of the Rules of 1961 after hearing the first petitioner society. In case the first petitioner society is aggrieved by fresh demand towards their contribution for caderisation for the year 1989-90, it would be open to the first petitioner society to challenge the same in appropriate proceedings on all available grounds. No costs. Petition partly allowed.