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Uttarakhand High Court · body

2007 DIGILAW 14 (UTT)

Kishori Lal and others v. State of Uttaranchal

2007-01-17

DHARAM VEER, P.C.VERMA

body2007
Judgment P. C. Verma, J. By means of this writ petition, the petitioners have prayed for writ of mandamus directing the respondents to give the benefit of loan to the petitioners which has been given to them earlier from the U.P. Postal Primary Cooperative Bank. 2. The above prayer has been made by the petitioners on the grounds that the U.P. Postal Primary Cooperative Bank Ltd., Lucknow (hereinafter will be referred to as the Bank) is a Primary Society registered under the provisions of the U.P. Cooperative Societies Act, 1965 and it is engaged in the business of Banking. The Bank obtained the licence from Reserve Bank of India to run its various branches in various Districts of State of Uttar Pradesh as well as in State of Uttaranchal as Lucknow, Kanpur, Jhansi, Allahabad, Varansi, Dehradun, Nainital etc. and the Reserve Bank of India issued the banking licence to operate the branches at Nainital and Dehradun on 27-7-1996. After the reorganization, some of the branches of the Bank came under the jurisdiction of State of Uttaranchal for which Reserve Bank of India has not modified the licence yet and the banking facilit'j is also being available to the general public also. The various schemes for which the Reserve Bank of India granted licence to the Bank are Saving Bank Scheme, Recurring Deposit Scheme, Fixed Deposit Scheme, Special Deposit Scheme and Monthly Income Schemes. The Bank for conducting the business framed its own byelaws under the provisions of the U .P. Cooperative Societies Act, 1965 (hereinafter will be referred to as the Act) and under the U .P. Cooperative Societies Rules, 1968 (hereinafter will be referred to as the Rules). As per clause 3 of the said byelaws, it has been provided that the area of operation of the Bank for the purposes of distribution of loan to its members is limited within the U.P. Postal and Railway Mail Services (RMS) circle. The permanent and the quasi-permanent employees of the Postal Department and RMS Department of U.P. Circle are eligible for becoming members of the Bank under the provisions of Clause 5 (Kha) of the byelaws. The benefit of loan was being given to all the members of the UP Postal Primary Cooperative Bank who are working in the Branches situated in the State of Uttaranchal at Nainital as well as in Dehradun. The benefit of loan was being given to all the members of the UP Postal Primary Cooperative Bank who are working in the Branches situated in the State of Uttaranchal at Nainital as well as in Dehradun. The petitioners have alleged that all of a sudden and without any prior information and without any Resolution, the facility of loan to the members of the Bank working in State of Uttaranchal has been stopped by Respondent NO.5- Vice Chairman, Committee of Management, U.P. Postal Primary Cooperative Bank. Against the said action of Respondent No.5, the petitioners also made a representation on 01-02-2006. It has been alleged that till date U.P. Postal Primary Bank Society has not been divided and the assets and liabilities of the branches of the Bank has also not been bifurcated. It has also been stated that the petitioners are permanent members of the Postal Department and are posted at Almora, Nainital and Dehradun. It is also alleged that the petitioners are the members of the bank and till date no action has been taken by the management to remove the petitioners from the membership of the society and they are particularly devoting themselves in the interest of the Public who have deposited the money in the several schemes of the Bank. It has been alleged that the petitioners have the right of loan which has been provided to them by the Bye-laws of the society and the same is one of the main aims and objects of the society and the respondents are not providing the benefit of loan to the petitioners even when the petitioners applied for the loan from the Bank. The U.P. Postal Primary Cooperative Bank filed a writ petition before the Allahabad High Court, Lucknow Bench. Lucknowand the Allahabad High Court, Lucknow Bench, Lucknow vide its judgment and order dated 10-11-2004 dismissed the writ petition filed by the Bank. Against the said judgment dated 10-11-2004, the U.P. Postal Primary Cooperative Bank preferred a Special Leave Petition before the Hon'ble Supreme Court as stated in para 12 of the writ petition. 3. The respondent Nos. Lucknowand the Allahabad High Court, Lucknow Bench, Lucknow vide its judgment and order dated 10-11-2004 dismissed the writ petition filed by the Bank. Against the said judgment dated 10-11-2004, the U.P. Postal Primary Cooperative Bank preferred a Special Leave Petition before the Hon'ble Supreme Court as stated in para 12 of the writ petition. 3. The respondent Nos. 4 and 5 have contested the case by filing their counter affidavit stating therein tt1at the Committee of Management of the Bank was constituted on 1810-2005 but the election of the Managing Committee of the banks branches at Nainital and Dehradun could not be made due to the instructions of Deputy Registrar, Lucknow. Hence, the Loan Committee also could not be constituted at Nainital and Dehradun Branches of the Bank. The Deputy Registrar, Lucknow Region, Lucknow had requested the Registrar, U.P. for determining the responsibilities of the said branches of the Bank and for division of the assets. The Bank vide letter dated 3-12-2005 requested the Deputy Registrar, Lucknow Region, Lucknow to issue necessary directions as to in which manner the loan can be sanctioned to the members of Nainital and Dehradun Branches of the Bank and whether the members of the said Branches can be sanctioned loan by the Head Office at Lucknow or some other neighbouring Branches. 4. We have heard SriAshish Joshi,learned counsel for the petitioners, Sri Sudeep Seth assisted by Sri Vinod Tewari, learned counsel for Respondent No.4, Sri K.P. Upadhyaya, learned standing counsel for State of Uttaranchal and Sri S.P.S. Panwar, Id. Additional Chief Standing Counsel for State of U.P. and perused the entire material available on record. 5. The U.P. Reorganization Act, 2000 came into force on and from 09-11-2000 (hereinafter to be referred as appointed day). On and from the appointed day, the State of Uttaranchal came into existence and the State of Uttaranchal was included in the list of States contained in Schedule-IV of the Constitution of India. Under the U.P. Reorganization Act, the undivided State of Uttar Pradesh has been defined as existing State of Uttar Pradesh and the State of U.P. and State of Uttaranchal have been defined as 'successor state' under the said Act. Under the U.P. Reorganization Act, the undivided State of Uttar Pradesh has been defined as existing State of Uttar Pradesh and the State of U.P. and State of Uttaranchal have been defined as 'successor state' under the said Act. The existing State and successor State as defined in U.P. Reorganization Act as well as the law made under the said Act are reproduced as under :"existing State of Uttar Pradesh" means the State of Uttar Pradesh as existing immediately before the appointed day; "successor State", in relation to the existing State of Uttar Pradesh, means the State of Uttar Pradesh or Uttaranchal; "law" includes any enactment, ordinance, regulation, order, bye-law, rule, scheme, notification or other instrument having, immediately before the appointed day, the force of law in the whole or in part of the existing State of Uttar Pradesh. 6. In the U.P. Reorganization Act, the Parliament has made a provision for operation of laws of the existing State of U.P. in State of Uttaranchal under Sections 86 and 87 until a law is made by the State of Uttaranchal. Sections 86 and 87 of the said Act reads as under: 86. Tutorial extent of Laws - The provisions of Part /I shall not be deemed to have affected any change in the territories to which the Uttar Pradesh Imposition of Ceiling of Land Holding Act, 1961 and any other law in force immediately before the appointed day, extends or applied, and territorial references in any such law to the State of Uttar Pradesh shall, until otherwise provided by a competent Legislature or other competent authority be construed as meaning the territories within the existing State of Uttar Pradesh before the appointed day. 87. Power to adapt laws - For the purpose of facilitating the application in relation to the State of Uttar Pradesh or Uttaranchal of any law made before the appointed day, the appropriate Government may, before the expiration of two years from that day, by order, make such adaptations and modifications of the law, whether by way of repeal of amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. Explanation -In this section, the expression "appropriate Government" means as respects any law relating to a matter enumerated in the Union List, the Central Government, and as respects any other law in its application to a State, the State Government. 7. The U. P. Cooperative Societies Act, 1965 was in operation by virtue of Section 86 and after adoption under Section 87 of the U.P. Reorganization Act in State of Uttaranchal in respect of those cooperative societies, area of which exclusively fell into the State of Uttaranchal. Likewise, the U.P. Cooperative Societies Act continued to remain in force in respect to those cooperative societies, area of which exclusively fell in State of U.P. 8. There is no specific provision in the U.P. Reorganization Act, 2000 relating to the cooperative societies having its area of operation in both the successor States. Either of the States i.e. State of U.P. and State of Uttaranchal cannot make any law for a cooperative society which has its area of operation in both the States. The Parliament alone can make a law relating to the cooperative societies having its area of operation in two states under Article 248 of Constitution of India and such law made by the Parliament is protected by clause (2) of Article 245. Article 248 and 245(2) of the Constitution of India reads as under :248. Residuary powers of legislation - (1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. (2) Such power shall include the power of making any law imposing a tax not mentioned in either of those lists. 245(2). No law made by Parliament shall be deemed to be invalid on the ground that it would have extra-territorial operation. 9. The Parliament while enacting the UP. Reorganization Act, 2000 did not make any provision relating to a cooperative society area of which extends in both the successor States i.e. State of U .P. and State of Uttaranchal. A cooperative society area of which extends in two or more States is a multi State cooperative society. The Parliament has enacted the Multi State Cooperative Societies Act, 1984 (old Act) which has been repealed by Multi State Cooperative Societies Act, 2002 (new Act) in its residuary powers under Article 248 of the Constitution of India. A cooperative society area of which extends in two or more States is a multi State cooperative society. The Parliament has enacted the Multi State Cooperative Societies Act, 1984 (old Act) which has been repealed by Multi State Cooperative Societies Act, 2002 (new Act) in its residuary powers under Article 248 of the Constitution of India. The aims and objects, its application, area of operation, definitions of cooperative bank, cooperative society and rules are relevant to mention here, which reads as under : OBJECTS – "An Act to consolidate and amend the law relating to cooperative societies, with objects not confined to one State and serving the interests of members in more than one State, to facilitate the voluntary formation and democratic functioning of co-operatives as people's institutions based on self-help and mutual aid and to enable them to promote their economic and social betterment and to provide functional autonomy and for matters connected therewith or incidental thereto. " 2. Application - This Act shall apply to (a) all co-operative societies, with objects not confined to one State which were incorporated before the commencement of this Act, - . (i) under the Co-operative Societies Act, 1912 (2 of 1912), or (ii) under any other law relating to co-operative societies in force in any State or in pursuance of the Multi-State Co-operative Societies Act, 1942 (6 of 1942) or the Multi-State Cooperative Societies Act, 1984 (51 of 1984), and the registration of which has not been cancelled before such commencement; and (b) all multi-State co-operative societies. 3. (a) "area of operation" means the area from which the persons are admitted as members; (f) "co-operative bank" means a multi-State co-operative society which undertakes banking business; (h) "co-operative society" means a society registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State; (w) "rules" means the rules made under this Act. 10. A specific provision was made in Multi State Cooperative Societies Act, 1984 under Section 95 relating to the cooperative societies, area of which fell in the successor States on the re-organization of a State. The Multi State Cooperative Societies Act, 1984 (old Act) has been repealed by Multi State Cooperative Societies Act, 2002 (new Act). The same provision as was contained in Section 95 of the old Act has been written in Section 103 of the new Act. The Multi State Cooperative Societies Act, 1984 (old Act) has been repealed by Multi State Cooperative Societies Act, 2002 (new Act). The same provision as was contained in Section 95 of the old Act has been written in Section 103 of the new Act. Section 103 of the Multi State Cooperative Societies Act, 2002 reads as under :103. Co-operative societies functioning immediately before reorganization of States - (1) Where, by virtue of the provisions of Part II of the State Reorganisation Act, 1956 (37 of 1956) or any other enactment relating to reorganization of States, any cooperative society which immediately before the day on which the reorganization takes place, had its objects confined to one State becomes, as from that day, a multi-State co-operative society, it shall be deemed to be a multi-State co-operative society registered under the corresponding provisions of this Act and the bye-laws of such society shall, insofar as they are not inconsistent with the provisions of this Act, continue to be in force until altered or rescinded. (2) If it appears to the Central Registrar or any officer authorized in this behalf by the Central Government (hereinafter in this section referred to as the authorized officer) that it is necessary or expedient to reconstitute or reorganize any society referred to in sub-section (1), the Central Registrar or the authorized officer, as the case may be, may, with the previous approval of the Central Government, place before a meeting of the general body of that society, held in such manner as may be prescribed; a scheme for the reconstitution or reorganization, including proposals regarding (a) the formation of new multi-State co-operative societies and the transfer thereto in whole or in part, of the assets and liabilities of that society; or (b) the transfer, in whole or in part, of the assets and liabilities of that society to any other multi-State co-operative society in existence immediately before the date of that meeting of the general body (hereinafter in this section referred to as the existing multi-State co-operative society). (3) If the scheme is sanctioned by a resolution passed by a majority of the members present at the said meeting, either without modifications or with modifications to which the Central Registrar or the authorized officer agrees, he shall clarify the scheme and upon such certification, the scheme shall, notwithstanding anything to the contrary contained in any law, regulation or bye-laws for the time being in force, be binding on all the societies affected by the scheme, as well as the shareholders and creditors of such societies. (4) If the scheme is not sanctioned under sub-section (3), the Central Registrar or the authorized officer may refer the scheme to such Judge of the appropriate High Court, as may be nominated in this behalf by the Chief Justice thereof, and the decision of that Judge in regard to the scheme shall be final and shall be binding on all the societies affected by the scheme as well as the shareholders and creditors of all such societies. Explanation - For the purposes of this sub-section, "appropriate High Court" means the Court within the local limits of whose jurisdiction the principal place of business of the multi-State co-operative society is situated. (5) Notwithstanding anything contained in this section, where a scheme under sub-section (2) includes any proposal regarding the transfer of the assets and liabilities of any multi-State co-operative society referred to in clause (b) thereof, the scheme shall not be binding on such multi-State co-operative society or the shareholders and creditors thereof, unless the proposal regarding such transfer is accepted by that multi-State cooperative society by a resolution passed by a majority of the members present at a meeting of its general body. " 11. Under sub-section (1) of the aforesaid Section 103, it has been provided that on the appointed day of division of one State into two States, if the area of operation of a cooperative society falls within two successor States, that cooperative society shall be deemed to be a multi-State cooperative society registered under the corresponding provisions of Multi State Cooperative Societies Act, 2002. Sub-section (2) of Section 103 of the aforesaid Act provides that the Central Registrar or any officer authorized in this behalf by the Central Government has the power to reconstitute or reorganize any society referred to in sub-section (1) of Section 103 of the aforesaid Act. Sub-section (2) of Section 103 of the aforesaid Act provides that the Central Registrar or any officer authorized in this behalf by the Central Government has the power to reconstitute or reorganize any society referred to in sub-section (1) of Section 103 of the aforesaid Act. A complete code is provided under Section 103 of the aforesaid Act for division of a cooperative society and its assets and liabilities and also as per the scheme framed under the Section. Upon such a division of the multi-State cooperative society referred to in sub-section (1) of Section 103 of the aforesaid Act, the members of each State may form the cooperative society in their respective States. 12. The U.P. Postal Primary Cooperative Bank - Respondent No.4 is a society which was registered under the U. P. Cooperative Societies Act in the existing State of Uttar Pradesh. The byelaws of the society bank - Respondent No.4 is on record as Annexure 3 to the petition. In the byelaws, the area of operation is given, which reads as under :Area of Operation - The area of the operation of the Bank for the purpose of loan will be limited to U.P. Postal and R.M.S. (Postal and Railway Mail Service) circle. 13. The answering Respondent Nos. 4 and 5 have not denied the allegations made in the writ petition in para 2. The paragraph 2 of the writ 'petition reads as under : 2. That the UP. Postal Primary Cooperative Bank Ltd. is a Primary Society registered under the provisions of the UP. Cooperative Societies Act, 1965, and it is engaged in the business of Banking. The Bank obtained Reserve Bank of India's licence to run its various branches in various Districts of State of UP. as well as in State of Uttaranchal as Lucknow, Kanpur, Jhansi, Allahabad, Varanasi, Dehradun, Nainital etc. It is stated here that the Reserve Bank of India has issued the banking licence to operate the Branches at Nainital and Dehradun on 27-07-1996. The photocopies of the banking licence issued by Reserve Bank of India dated 27-07-1996 are being annexed as Annexure No.1 and 2 to this petition. The reply filed by Respondent Nos. 4 and 5 on the aforesaid allegation reads as under :. 3. That the contents of Paragraph 2, 3, 4, 5, 6, 7 of the writ petition being the matter of record hence require no comments. 14. The reply filed by Respondent Nos. 4 and 5 on the aforesaid allegation reads as under :. 3. That the contents of Paragraph 2, 3, 4, 5, 6, 7 of the writ petition being the matter of record hence require no comments. 14. On the appointed day, the entire Postal Circle was existing in the State of U.P. The Cooperative Society is not a statutory corporation for the reason that the cooperative society is the creation of statute and the registration of the society and its byelaws are confirmed to the provisions of Cooperative Societies Act and Rules framed there under as well as the model byelaws. After the registration, the benefits under the Act is available to that society and then the society is termed as cooperative society. 15. On the day of registration and till the appointed day and even after the appointed day, the States of U.P. and Uttaranchal were having one postal circle, therefore, on the appointed day, the Respondent No.4 became multi-stale cooperative society by virtue of Section 103 of the Multi State Cooperative Societies Act, 2002. Though, for the administrative reason, the circle has been divided now but there is nothing on record to show that the division of assets and liabilities of the cooperative society has been done by the Central Registrar in accordance with the provisions of the Act. 16. The area of operation of U.P. Postal Primary Cooperative Bank was entire existing State of UP., thus on and after the appointed day, by virtue of Section 95 of the Multi State Cooperative Societies Act, 1984 (old Act), the said society became multi-State cooperative society as its area of operation extends in successor States Le. State of U.P. and State of Uttaranchal and it deemed to be a multi-State co-operative society registered under the corresponding provisions of the said Act. The bye-laws of the society shall, insofar as they are not inconsistent with the provisions of this Act, continue to be in force until they are altered or rescinded. Accordingly, the provisions of. Multi State Cooperative Societies Act, 1984 as contained in Section 95 which is now repealed by Section 103 of Multi State Cooperative Societies Act, 2002 and Rules thereunder became operative in respect of cooperative societies which have its area of operation in both the States. Accordingly, the provisions of. Multi State Cooperative Societies Act, 1984 as contained in Section 95 which is now repealed by Section 103 of Multi State Cooperative Societies Act, 2002 and Rules thereunder became operative in respect of cooperative societies which have its area of operation in both the States. There is nothing on record to' show that assets and liabilities of the society have been divided by the Central Registrar or any officer authorized in this behalf by the Central Government under sub-section (2) of Section 103 of Multi State Cooperative Societies Act, 2002. 17. Since the U.P. Postal Primary Cooperative Bank became a multi-State co-operative society by virtue of Section 103 of Multi State Cooperative Societies Act, 2002, therefore, the Deputy Registrar, Lucknow wrongly instructed not to allow the members of Nainital and Dehradun branches to participate in the election held on 18-10-2005. It is further misconceived that the Deputy Registrar, Lucknow Region, Lucknow is requesting the Registrar U.P. Cooperative Societies for the division of assets and liabilities of the society. The provisions of Section 103 of the Multi State Cooperative Societies Act, 2002 are very clear. The request ought to have been made to the Central Registrar for division of assets and liabilities of the cooperative society. The action of the Deputy Registrar and the Registrar, Cooperative Societies have no jurisdiction as the cooperative society has becomes a multi-State co-operative society by virtue of Section 103 of Multi State Cooperative Societies Act, 2002 and in view of the fact that the area of operation of the cooperative society was existing in the State of U.P. and continues to operate in both the successor States Le. State of UP. and State of Uttaranchal as there is nothing on record to show that the U.P. Postal Primary Cooperative Bank and its assets and liabilities have been divided as per Section 95 of the Multi State Cooperative Societies Act, 1984 which is now replaced as Section 103 of Multi State Cooperative Societies Act, 2002. 18. Sri Sudeep Seth, learned counsel for the Respondent No.4 placed reliance on a judgment rendered by Division Bench of High Court of Judicature at Allahabad, Lucknow Bench, Lucknow in Writ Petition No. 5171 of 2002 (M/B) Mahesh Kumar Gupta and others Vs. State of UP. and others and sixteen other writ petitions, which were decided on 10-11-2004 contained in Annexure 3-A to the writ petition. State of UP. and others and sixteen other writ petitions, which were decided on 10-11-2004 contained in Annexure 3-A to the writ petition. We have perused the said judgment and we find ourselves unable to agree with the reasons given by the Division Bench of the Lucknow Bench of the Allahabad High Court for dismissing all the seventeen writ petitions. 19. Thus, we hold that the Respondent No.4- U.P. Postal Primary Cooperative Bank is a multi-State cooperative society and hence Respondent Nos. 4 and 5 are liable to continue the loan facility to its members who are in service in the State of Uttaranchal. 20. For the reasons recorded above, the writ petition is allowed. The Respondent Nos. 4 and 5 are directed to continue the loan facility to the members who are in service in the State of Uttaranchal. No order as to costs.'