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2006 DIGILAW 681 (ORI)

Bijay Majhi v. State of Orissa

2006-09-20

M.M.DAS, S.B.ROY

body2006
Judgement M. M. DAS, J. :- The petitioners in this writ petition are members of different Co-operative Societies as well as elected Directors of different Primary Co-operative Societies. Challenge is made in this writ petition to the notification of the Government in its Co-operation Department dated 23-12-2004 and 13-7-2005 which were published in the Orissa Gazette on 27-12-2004 and 14-7-2005 respectively as arbitrary, unreasonable, discriminatory and contrary to the provisions of the Orissa Co-operative Societies Act, 1962 (hereinafter referred to as 'the Act') besides the other grounds as narrated therein. The prayer as made in the writ petition is quoted hereunder : "The petitioners, therefore, most humbly pray that the Hon'ble Court may graciously be pleased to issue Rule Nisi calling upon the opp. parties to show cause as to why the reservations made in the Co-operative Act and Rule and the Election Rule-1992 vide Annexure-3 shall not be held ultra vires and accordingly shall not be quashed; As to why it shall not be held that the reservation principle should not be made applicable to the co-operative societies and/or in alternative, it shall not be held that the reservation policy imposed upon the co-operative societies are not proper, justified and not in consonance with law. As to why there shall not be a direction not to hold election of Central Society on the basis of the invalid rule and Act; And as to why there shall not be a direction to defer the election process for central co-operative societies till the policy for reservation are settled; If, the opp. parties fail to show cause or show insufficient cause, the aforesaid rule may be made absolute and the writ application may be allowed; And/or, further be pleased to pass any other appropriate order(s), direction(s), as this Hon'ble Court deem just and proper; And for this act of kindness, the petitioners shall as in duty bound ever pray." 2. Mr. Sanjit Mohanty, learned Senior Counsel appearing for the petitioners contended that the co-operative societies are separate entity operating in a particular territory and the members of such societies are the voters. They are governed under the framework of bye-laws framed by them. The executive powers vests with the management of the society. Mr. Sanjit Mohanty, learned Senior Counsel appearing for the petitioners contended that the co-operative societies are separate entity operating in a particular territory and the members of such societies are the voters. They are governed under the framework of bye-laws framed by them. The executive powers vests with the management of the society. He further submitted that initially under the Act, there was no reservation criteria for co-operative societies which was introduced at a much later stage and, accordingly, instruction was issued to amend the bye-laws of such societies to ensure membership from different categories of members by Orissa Act 28 of 1991. Once again by Orissa Act 10 of 2001, there was certain amendment to the provisions regarding reservation. In this process, reservation criteria was imposed upon the society through amendment of Section 28(2)(c) of the Act and the societies were compelled to procure membership from different communities as stated in paragraph-10 of the writ petition. According to the petitioners, there should not have been any reservation in the co-operative societies or the reservation should be in accordance with the proportion of the category of members available in the general body of the society. Mr. Mohanty further argued that the newly amended Rule 6, sub-rule (3) and Rule 7, sub-rule (4) of the Orissa Co-operative Societies Election Rules, 1992 runs contrary to the provisions of Section 28(A)(ii) of the Act and, thus, they being ultra vires to the said section should be declared as such. 3. Counter affidavit and rejoinder affidavit have been filed. Relying on the counter-affidavit filed on behalf of the State, learned Advocate General contended that reservation criteria has long since been introduced in the Act and has been amended from time to time. Such amendments were challenged before this Court in various writ petitions and have been held to be intra vires. He further contended that by the impugned amendment of the Act, the basic structure of the Act has not been changed, more specifically, the amendment of Section 28 of the Act which is challenged by the petitioners has not brought about the criteria of reservation in the co-operative societies for the first time. He further contended that by the impugned amendment of the Act, the basic structure of the Act has not been changed, more specifically, the amendment of Section 28 of the Act which is challenged by the petitioners has not brought about the criteria of reservation in the co-operative societies for the first time. Such amendments previously made having been held to be intra vires by this Court, applying the same principles, the present amendment to the Act cannot be held to be unreasonable or discriminatory, contravening Article 14 of the Constitution nor it can be held to be a colourable piece of legislation. With regard to the amendment of the Election Rules by the notification under Annexure-3, learned Advocate General submitted that the grievance of the petitioners with regard to the said amendment whereby it has been stipulated that the membership of the society shall be organized, constituency-wise either on territorial or numerical membership basis as may be determined by the committee and arrayed in the manner as provided therein, so that where it is necessary to organize the constituencies on numerical basis, the constituencies shall be organized chronologically as per the serial numbers of the members in the membership register of the co-operative society and where it is necessary to organize the Constituencies on territorial basis, the Constituencies shall be serially numbered by taking the geographically contiguous areas. According to the learned Advocate General, this amendment in no way contravenes any provision of the Act and only prescribes a method for effecting the reservation policy as provided in the Act. 4. It, therefore, transpires that the prayer made by the petitioners is broadly two fold, namely, challenging the amendment of Section 28 of the Act by Section 3 of the Orissa Co-operative Societies (Amendment) Act, 2004 (Orissa Act 11 of 2004) with regard to reservation of seats in the committee of the society and amendment of the Election Rules providing roster points for such reservation and prescribing the manner of formulating different constituencies either on numerical basis or territorial basis. 5. Before delving into the questions raised in the present writ petition, we would like to rely upon the report of the Planning Commission with regard to development of co-operative movement in our country. 5. Before delving into the questions raised in the present writ petition, we would like to rely upon the report of the Planning Commission with regard to development of co-operative movement in our country. From the said report, it is manifest that as in other countries co-operation, in India, started as a means of ensuring for the poorly equipped citizens advantages which better placed persons were able to command by their own individual resources. The principle of mutual aid, which is the basis of co-operative organization and the practice of thrift and self-help sustains and generates sturdy feeling of self-reliance which is of basis importance in a democratic way of life. By pooling their experience and knowledge and by helping one another, members of co-operative societies cannot find solutions of individual problems but also become better citizens. The broad features of the history and evolution of co-operation in India are unmistakable. With 181,000 Societies, a membership of about 14 million and a working capital of Rs. 276.00 crores, the movement constitutes an important economic and social force in the country. It has shown a steady quantitative expansion, especially during the last five years. Even more striking than the expansion in numbers and size, is the growing diversity of functions assumed by co-operative societies. Besides agricultural societies of all types credit, processing, marketing, farming, irrigation, consolidation, etc. there are industrial co-operatives, labour societies, consumers co-operatives in rural as well as in urban areas, housing societies; processing factories, and urban banks. However, agricultural societies still constitute more than 80 per cent of the total and of these credit societies are still by far the most numerous. The non-credit and the non-agricultural forms are, however, making steady progress. The conditions created by the Second World War, the emphasis on intensive and rapid rural development in the post-war reconstruction programmes of State Governments, arid the channeling of State aid activity through co-operative institutions have been responsible for this trend. 6. An increasing measure of responsibility for organizing and financing rural economic development is being shouldered by co-operatives. Both the natural evolution of co-operative activity, and the impetus of the special need created in several parts of the country by agrarian legislation regulating the business of money-lenders, scaling down of debts, restricting rents and abolishing landlordism are responsible for the striking increase in the operations of co-operative credit societies. Both the natural evolution of co-operative activity, and the impetus of the special need created in several parts of the country by agrarian legislation regulating the business of money-lenders, scaling down of debts, restricting rents and abolishing landlordism are responsible for the striking increase in the operations of co-operative credit societies. Co-operation is in fact being transformed steadily yet surely, from a tolerated exception into a general rule. In industry, commerce, transport and retail distribution co-operatives are gaining experience and strength. Different State Governments sometimes emphasize different fields of co-operative activity in keeping with local conditions. There can be no doubt, however, that a new awareness of an opportunity to build up a form of business organization more suited to the conditions and needs of the times than the joint stock company has come over the people of small means everywhere. The joint stock company is too cumbersome as an organization for the small producer, agricultural or industrial. What is needed and what the co-operative society has provided is a simpler form of organization more suited to the needs of the people to be served and therefore likely to be more acceptable. 7. It is, therefore, clear that a co-operative society is basically an autonomous, open and voluntary organization of persons of the weaker section of the society to meet their common social, economic and cultural needs and aspiration through a jointly owned and democratic control enterprise in accordance with the co-operative values and principles. Such co-operative values are based on self-help, self-responsibility, democracy, equality, equity and solidarity. The basic co-operative principles are (1) voluntary and open membership (2) democratic member control (3) member economic participation (4) autonomy and independence (5) co-operation among co-operatives and (6) concern for community. (Emphasis supplied) 8. The history of co-operative movement in India can be traced to pre-independence era when due to misuse and abuse of agency system for rural credit by landlords, money lenders, zamindars during British Rule in India, there were great consternation and revolt by farmers in some parts of India. This led to search for some reform models. 9. Nicholson, a British Officer, heading a commission suggested 'Find Raiffersen in India' which meant Raiffersen model of German agricultural credit co-operatives for India. There were other simultaneous recommendation for agricultural credit and the first Co-operative Society Act of 1904 was enacted to enable formation of "agricultural credit co-operatives". This led to search for some reform models. 9. Nicholson, a British Officer, heading a commission suggested 'Find Raiffersen in India' which meant Raiffersen model of German agricultural credit co-operatives for India. There were other simultaneous recommendation for agricultural credit and the first Co-operative Society Act of 1904 was enacted to enable formation of "agricultural credit co-operatives". The 1904 Co-operative Society Act was later repealed by 1912 Co-operative Society Act which provided for formation of Co-operative Societies other than credit. In 1919 there was Administrative Reforms and Co-operatives were made a provincial subject making each province responsible for Co-operative movement and development. 10. In 1942, the Multi-Unit Co-operative Societies Act, 1942 was enacted by the Government of India with an object to cover societies whose operations are extended to more than one State. Later, in 1984, the Government of India enacted a comprehensive Act known as Multi State Co-operative Societies Act, 1984, which also repealed the Act of 1942. On the recommendation of the Mirdha Committee and the 'Model Co-operative Societive Act" the Government of India enacted the Multi State Co-operative Societies Act, 2002 which provided for democratic and autonomous working of the Co-operatives. The Multi State Co-operative Societies Act, 2002 came into force with effect from August 19, 2002. 11. Now coming to the questions raised by the petitioners, it would be profitable to quote the un-mended provision of Section 28 of the Act prior to its amendment by the impugned Orissa Co-operative Societies (Amendment) Act, 2004 (Orissa Act 11 of 2004) by which different clauses of sub-section (2) of Section 28 of the Act were amended. We also find it imperative to quote the pre-amended sub-rule (3) of Rule 6 of the Orissa Co-operative Societies (Election to the Committees) Rules, 1992 and the amendments brought in by the Orissa Co-operative Societies (Election to the Committees) Amendment Rules, 2005. The clauses of sub-section (2) of Section 28 sought to be amended by Orissa Act 11 of 2004 stood as follows : "28. The clauses of sub-section (2) of Section 28 sought to be amended by Orissa Act 11 of 2004 stood as follows : "28. Society to have a Committee - (1) and (2) (a), (b) xx xx xx xx (c) In the case of a Primary Society other than Large-sized Adivasi Multipurpose Co-operative Society, three members each shall be from the Scheduled Castes and the Scheduled Tribes, four from Other Backward Classes and five from other categories of members, so however that, among each of the said Scheduled Castes, Scheduled Tribes and Other Backward Classes of members, there shall be one woman and among the other categories, there shall be two women) (d) and (e) xxx xxx xxx (e-1) in the case of a Central Society, three members each shall be from the Scheduled Castes and the Scheduled Tribes, four from Other Backward Classes and five from other categories of members, so however that, among each of the said Scheduled Castes, Scheduled Tribes and Other Backward Classes of members, there shall be one woman and among the other categories, there shall be two women. (e-2) in the case of an Apex Society, four members shall be from the Scheduled Castes, five from the Scheduled Tribes and six each from the Other Backward Classes and other categories of members so however that, there shall be one woman each from the said Scheduled Castes and the Scheduled Tribes, two women among the Other Backward Classes and three women among the other categories of members. (f) and (g), (i) to (iii) xxx xxx (iv) in the event of any Society failing to so amend its bye-laws and reconstitute the Committee within the period specified in sub-clause (iii), the Registrar shall make such amendment and reconstitute the Committee within (eighteen months) following the date of expiry of the period so specified)." 12. By the impugned amendment, the above provisions have been amended to the following effect :- "3. By the impugned amendment, the above provisions have been amended to the following effect :- "3. In Section 28 of the principal Act, in sub-section (2) - (i) For clauses (c), (e-1) and (e-2), the following clauses shall be substituted, respectively, namely :- "(c) In the case of a Primary Society other than Large sized Adivasi Multipurpose Co-operative Societies, two members each shall be from the Societies, two members each shall be from the Scheduled Castes and the Scheduled Tribes, three from Other Backward Classes including Socially and Educationally Backward Classes and two from Women members, so that among each of the said Scheduled Castes, Scheduled Tribes and Other Backward Classes including Socially and Educationally Backward Classes of members, there shall be one woman. (d) In the case of a Central Society, two members each shall be from the Scheduled Castes and the Scheduled Tribes, three from Other Backward Classes including Socially and Educationally Backward Classes and two from Women members, so that among each of the said Scheduled Castes, Scheduled Tribes and Other Backward Classes including Socially and Educationally Backward Classes of members, there shall be one woman. (e) In the case of an Apex Society, three members each shall be from the Scheduled Castes and the Scheduled Tribes, four from Other Backward Classes including Socially and Educationally Backward Classes and three from Women members, so that among each of the said Scheduled Castes and Scheduled Tribes members, there shall be one woman and among the Others Backward Classes including Socially and Educationally Backward Classes members, there shall be two women : Provided that, save as provided in the aforesaid clauses there will be no bar for the members belonging to the said reserved categories to contest the election against the remaining seats in the Managing Committee of the Primary, Central and Apex Co-operative Societies." and (ii) in sub-clause (iv) of clause (g), for the words "thirty-six months", the words "forty-two months" shall be substituted. 13. It, therefore, appears that by the aforesaid amendment, number of members to be elected from reserved categories have been reduced for Primary, Central and Apex Societies. 14. As has been stated earlier, reservation of seats to the committee of a society for various classes, such as, Scheduled Castes and Scheduled Tribes and women from amongst such castes and Tribes as well as general category were long since introduced to the Act. 14. As has been stated earlier, reservation of seats to the committee of a society for various classes, such as, Scheduled Castes and Scheduled Tribes and women from amongst such castes and Tribes as well as general category were long since introduced to the Act. The previous amendment to this provision in the year 1996 was challenged in the case of Pradeep Kumar Moharathi v. State of Orissa and others, 84 (1997) CLT 135 before this Court. This Court in the said case taking into consideration the contentions raised before it by the adversaries came to hold that the said amendment is valid and operative and sustained the same as intra vires. Again the amendment of the said provision by Orissa co-operative Societies (Amendment) Act, 2001 was challenged before this Court in the case of Gurupada Nanda and others v. State of Orissa and others, 93(2002) CLT 729. This Court after detail analysis of the unamended as well as the amended provisions came to the conclusion that the amendment is neither a colourable legislation nor violates any of the Constitutional provisions nor it comes in conflict with any other provision of the Act. For the reasons stated in the said decision, this Court concluded that the said amendments cannot be said to be ultra vires and sustained the same. Applying the ratio of the above decisions, we also find that there is no acceptable grounds raised by the petitioners to take a different view in the matter as by the impugned amendment of Section 28 of the Act, there has been only reduction in the number of candidates from the reserved categories. 15. We, therefore, hold that the prayer of the petitioners in this regard to declare the amendments brought in to Section 28 of the Act as ultra vires, cannot be accepted and we, accordingly sustain the amendments. 16. With regard to the amendments brought in to the election rules by the Orissa Co-operative Societies (Election to the Committees) Amendment Rules, 2005, for better appreciation of the rival contentions, the relevant unamended as well as amended rules are quoted hereunder : Rule 6(3) before amendment "6. 16. With regard to the amendments brought in to the election rules by the Orissa Co-operative Societies (Election to the Committees) Amendment Rules, 2005, for better appreciation of the rival contentions, the relevant unamended as well as amended rules are quoted hereunder : Rule 6(3) before amendment "6. Electoral roll - (1) xxx xxx xxx (2) xxx xxx xxx (3) Notwithstanding any thing contained in any other provisions of the rules, or the bye-laws of any Society, each class of members within the meaning of the term 'Class' as defined under clause (b-1) of Rule 2 shall constitute one constituency. xxx xxx xxx" After amendment 4. In the said rules, in Rule 6- (i) xxx xxx xxx (ii) for sub-rule (3), the following sub-rule shall be substituted, namely :- "(3) The membership of a Society shall be organized Constituencies-wise either on territorial or numerical membership basis as may be determined by the Committee and arrayed in the manner hereinafter provided so that where it is necessary to organize the Constituencies on membership basis, the Constituencies shall be organized chronologically as per the serial numbers of the members in the membership register of the Co-operative Society and where it is necessary to organize the Constituencies on territorial basis, the Constituencies shall be serially numbered by taking the geographically continuous areas : Provided that in the case where the Committee has not organized the membership of the Society into Constituencies it shall be lawful for the Election Officer of the Society to organize Constituencies as per the provisions of the Act and the Orissa Co-operative Societies Rules, 1965 and these Rules." (a) The unreserved Constituencies and the reserved Constituencies meant for Scheduled Tribes (Men and Women) in the case of large-sized Adivasi Multipurpose Co-operative Societies shall be organized in the following manner :- Sl. No. of the Constituencies Details of area/ Sl. No. of members from ....to ..... No. of the Constituencies Details of area/ Sl. No. of members from ....to ..... in the membership register Constituencies earmarked as (1) (2) (3) 1 Unreserved 2 Scheduled Tribes 3 Scheduled Tribes (Women) 4 Unreserved 5 Scheduled Tribes 6 Scheduled Tribes (Women) 7 Unreserved 8 Scheduled Tribes 9 Scheduled Tribes (Women) 10 Unreserved 11 Scheduled Tribes 12 Scheduled Tribes (Women) 13 Unreserved 14 Scheduled Tribes 15 Scheduled Tribes (Women) (b) The unreserved Constituencies and the reserved Constituencies meant for Scheduled Castes, Scheduled Tribes, Other Backward Classes and Women in the case of Primary Co-operative Societies ((other than large-sized Adivasi Multipurpose co-operative Societies) and Central Co-operative Societies, as the case may be, shall be organized in the following manner :- Sl. No. of the Constituencies Details of area/ Sl. No. of members from ....to ..... in the membership register Constituencies earmarked as (1) (2) (3) 1 Unreserved 2 Scheduled Caste (Men) 3 Scheduled Tribes (Women) 4 Unreserved 5 Other Backward Classes (Men) 6 Women 7 Unreserved 8 Scheduled Tribes (Men) 9 Scheduled Castes (Women) 10 Unreserved 11 Other Backward Classes Women) 12 Women 13 Unreserved 14 Other Backward Classes (Men) 15 Unreserved (c) the unreserved Constituencies and the reserved Constituencies meant for Scheduled Castes, Scheduled Tribes, Other Backward Classes and Women in the case of Apex Co-operative Societies, shall be organized in the following manner :- Sl. No. of the Constituencies Details of area/ Sl. No. of members from ....to ..... in the membership register Constituencies earmarked as (1) (2) (3) 1 Unreserved 2 Scheduled Castes (Men) 3 Scheduled Tribes (Women) 4 Unreserved 5 Other Backward Classes (Men) 6 Women 7 Unreserved 8 Scheduled Tribes (Men) 9 Scheduled Castes (Women) 10 Unreserved 11 Other Backward Classes (Women) 12 Women 13 Unreserved 14 Other Backward Classes (Men) 15 Unreserved 16 Scheduled Castes (Men) 17 Scheduled Tribes (Men) 18 Unreserved 19 Women 20 Other Backward Classes (Women) 21 Unreserved Explanation :- "The term 'Unreserved' shall mean the Constituency which is not reserved for the Scheduled Castes, Scheduled Tribes, Other Backward Classes and Women members of the co-operative Society"; (iii) after sub-rule ((3), the following sub-rule shall be inserted, namely :- "(3-a) The Constituencies shall be arranged in the manner as specified in sub-rule (3) at the first instance and shall thereafter rotate in the descending order at every subsequent election". 17. 17. The petitioners specifically challenge the amendments brought in sub-rule (3) of Rule 6 by substituting the same as quoted above. We find in this regard that a vital contention has been raised by the petitioners in stating that the aforementioned amended rules clearly contravene the provisions of Section 28(A) of the Act. 18. By way of amendment to the above sub-rule (3) of Rule 6, it has now been prescribed that the membership of a society shall be organized Constituency wise either on territorial or numerical membership basis as may be determined by the committee and arrayed in the manner prescribed in the said amended rules. It is further prescribed that constituency shall be organized chronologically as per serial numbers in the membership register of the society and where it is organized on territorial basis, the same shall be serially numbered by taking geographically contiguous areas. Whereas section 28(A) (ii) of the Act provides that except the President of the committee, other members of the committee shall be elected by and from among the General Body of members of the society qualified for the purpose in such manner that where the membership of the society is required to be organized into different constituencies in accordance with its bye-laws, only the members belonging to any such constituency shall elect the member of the committee from that constituency. (Emphasis supplied) 19. Taking into consideration the provisions of the Act in the aforesaid section and the amendments brought in to sub-rule (3) of Rule 6, we find that the amended rules speak of organization of constituencies on either numerically or territorial basis, whereas the Act prescribes that such constituencies shall be organized as per the bye-laws of the Societies. Thus, the amendment brought into the above rule is clearly contrary to the provision of Section 28(A) (ii), and, therefore, the same cannot be sustained. In view of the above, we are constrained to declare the amendment of sub-rule (3) of Rule 6 of the Orissa Co-operative Societies (Election to the committees) Rules, 1992 as made by Orissa Co-operative Societies (Election to the Committees) Amendment Rules, 2005 as ultra vires to Section 28(A) (ii) of the Act and we accordingly strike down the same. 20. Though various other questions were raised by the learned counsel for the petitioners, for the sake of brevity, we are not inclined to enter into the same. 21. 20. Though various other questions were raised by the learned counsel for the petitioners, for the sake of brevity, we are not inclined to enter into the same. 21. In view of our above conclusion, as it is an admitted fact that election to the Committee of some of the primary societies has already been held in accordance with the unamended rules and it has been proposed to hold election to the rest of the primary societies by applying the amended rules, we direct that immediate steps shall be taken by the Government to hold election of members to the committee of all such primary co-operative societies by applying the rules as it existed prior to the impugned amendment. We further direct that there should be a sincere effort on the part of the authorities of the State to hold election to primary, Central as well as Apex co-operative Societies in such manner, maintaining uniformity so as to avoid a situation where the election of Central or Apex Societies cannot be held due to expiry of the term of the committee of primary or Central Societies respectively. 22. The authorities of the State are, therefore, directed to hold elections in accordance with the unamended rules positively as early as possible for the balance period in order to maintain the democratic set up of the Co-operative Societies, which is a primary object of forming such societies. 23. The writ petition is accordingly partly allowed. But in the circumstances without costs. Petition partly allowed.