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Gujarat High Court · body

2008 DIGILAW 589 (GUJ)

Atulbhai Patel v. State of Gujarat

2008-12-16

H.N.DEVANI, MOHIT S.SHAH

body2008
JUDGMENT : Mohit S. Shah, J. This appeal under Clause 15 of the Letters Patent is directed against the judgment dated 26.9.2008 of the learned Single Judge, dismissing the Special Civil Application following the decision dated 4/6.09.2008 of another learned Single Judge in Special Civil Application No.1870 of 2006 and allied matters. Since the LPA filed against the said decision dated 4/6.09.2008 filed earlier has already been withdrawn, this appeal is essentially directed against the reasoning of the learned Single Judge in the decision dated 4/6.09.2008, as adopted in the order dated 26.9.2008 under appeal. 2. All the above petitions were filed to challenge certain Byelaws of respondent No.3 – Gujarat State Co-operative Milk Marketing Federation Ltd. In the decision dated 4/6.09.2008, the learned Single Judge held the said Bye-laws to be valid and legal. The appellant is therefore, reiterating his challenge to the said Byelaws in this appeal. 3. The broad facts of the case are not in dispute. Respondent No.3 – Gujarat State Co-operative Milk Marketing Federation Ltd. (hereinafter referred to as "the Federation" or "the respondent Federation") has its registered office at Anand Dairy, Anand, The Federation, credited with the white revolution in the State of Gujarat, is a State Level Federation, registered as a Co-operative Society under the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act'). The Federation is the State Level Apex Body for the dairies in the co-operative sector in the State. The District level dairies, which are also registered as Cooperative Societies under the Act are known as District Level Milk Producers' Unions, affiliated to the Federation. All dairy products and other milk products viz. milk, chocolate, ice-cream, curd, butter-milk etc. under the brand name of AMUL are manufactured by the District level unions i.e. the Federating unions and are also marketed as per the directives of and under the control of respondent No.3 – Federation. [The respondent Federation as well as all the Federating dairies i.e. all the District level unions are specified Societies i.e. Co-operative Societies specified in Section 74C(1) of the Act, reference to which shall be made hereinafter]. 4. The Federation framed its Bye-laws in the year 1973, which were registered by the Registrar of Co-operative Societies on 19th July 1973. [The respondent Federation as well as all the Federating dairies i.e. all the District level unions are specified Societies i.e. Co-operative Societies specified in Section 74C(1) of the Act, reference to which shall be made hereinafter]. 4. The Federation framed its Bye-laws in the year 1973, which were registered by the Registrar of Co-operative Societies on 19th July 1973. The objects of the Federation, as specified in Bye-law No.5, are as under:- "5.1 The main object of the Federation is to carry out activities for the economic development of agriculturists by efficiently organising marketing of milk and dairy produce, veterinary medicines, vaccines and other animal health products, agricultural produce in raw and/or processed form and other allied produce. 5.2 To achieve the aforesaid objective, the Federation may - 5.2.1 arrange for the sale of dairy and allied produce of the members to the best advantage all over the country and/or abroad; 5.2.2 deal with non-members for marketing dairy and allied produce subject to such conditions as may be decided by the Board from time to time. 5.2.3 prescribe and enforce standards of quality of dairy and allied produce to be marketed by the Federation...." Bye-law No. 7 provides for three type of members: (1) rdinary Members. (2) Nominal Members, and (3) Associated Members. In this appeal, we are not concerned with nominal and associated members as they do not have voting right or right to contest an election or right in the shares in the assets or profits of the Federation. Ordinary members are those registered District Co-operative Milk Producers Union (i.e. District Dairies), which fulfil any one of the following three conditions as specified in Byelaw No.7:- "(a) In the immediately preceding two consecutive accounting years of the Federation it has dealings with Federation of 3 lac units in a regular manner during the course of each year. (b) In the immediately preceding 3 consecutive accounting years of the Federation it has dealings with the Federation of an aggregate of 8 lac units. (c) In the immediately preceding 3 consecutive accounting years of the Federation it has procured milk from the are of operation anaverage quantity of 30,000 liters per day. " Bye-law No.10, inter-alia, provides that failure to fulfil the above obligations will result in cessation of membership of ordinary member. 5. (c) In the immediately preceding 3 consecutive accounting years of the Federation it has procured milk from the are of operation anaverage quantity of 30,000 liters per day. " Bye-law No.10, inter-alia, provides that failure to fulfil the above obligations will result in cessation of membership of ordinary member. 5. Bye-law No.13 provides for constitution of the General Body of the Federation and Bye-law No. 18 provides for the constitution of the Board of Directors of the Federation. The provisions of Byelaws Nos. 2.2, 2.7, 13, 15, 18 and 19, having a bearing on the controversy in this appeal read as under:- 2.2 "Board" means the Board of Directors of the Federation. 2.7 "Milk Union" means Registered District Co-operative Milk Producers Union." GENERAL MEETING: 13.1 The General Meeting shall consist of the following:- (1) The Chairman of each of the affiliated Milk Unions enrolled as Ordinary Members. (2) The Registrar. (3) Dairy Management Expert co-opted by the Board. (4) Managing Director of the Federation. (5) A nominee of the National Dairy Development Board as long as the loan/interest of the National Dairy Development Board have not been fully repaid by the Federation. The Chairman of the Board of Directors shall preside over the General Meeting. In case of his absence, the meeting shall elect a Chairman from among the members present. 13.2 The General Meeting shall be the supreme body of the Federation. It shall be called once in every year within the quarter ending this 30th June. This shall be called Annual General Meeting. VOTING RIGHTS: 15.1 Each member shall have one vote by virtue of its ordinary membership. Besides this, the ordinary member shall have one additional vote for every 5 lakh units transacted through the Federation in the previous financial year. The voting rights shall be determined along with annual accounts on the above basis and will be effective for the year till next Annual General Meeting. Notwithstanding anything mentioned above, a person coopted by the Board as Dairy Management Expert, the Registrar of Cooperative Societies, the nominee of NDDB and the Managing Director of the Federation shall each have votes equal to the average of the institutional members total votes ignoring fractions. 15.2 Nominal and/or Associate Members shall not have voting rights. BOARD OF DIRECTORS: 18.1 The Board will consist of the following: (i) Chairmen of the affiliated milk unions enrolled as ordinary members. 15.2 Nominal and/or Associate Members shall not have voting rights. BOARD OF DIRECTORS: 18.1 The Board will consist of the following: (i) Chairmen of the affiliated milk unions enrolled as ordinary members. (ii) Registrar or his representative not below the rank of Joint Registrar (C.S.) (iii) One Dairy Management Expert to be co-opted by the Board. (iv) Managing Director of the Federation (ex-officio) (v) A nominee of the National dairy Development Board as long as the loan/interest of the National Dairy Development Board have not been fully repaid by the Federation. 18.2 The Chairperson of the Federation will be elected by the Board for the term of three years and he/she shall continue to hold his/her office till the new Chairperson is elected and takes over. He/She shall be honorary Chairperson. In case the elected Chairperson vacates his/her office before expiry of his/her term or due to any other reason the post of Chairperson falls vacant, the Board shall elect the new Chairperson for the remaining term. The election of the Chairperson take place in the first Board meeting of the Federation after the expiry of the term of the elected Chairperson or when the Chairperson's post falls vacant. In his/her absence, the meeting shall elect its own Chairperson for that meeting from amongst the eligible members present. The Chairperson in such event shall exercise such power as may be delegated to his by the Board of Directors. The Managing Director of the Federation shall not be entitled to vote and contest the election for the post of Chairperson. 18.3 Each member of the Board shall have voting rights as fixed under Bye-law No.15.1. The new Board will, however, exercise these voting rights only after the Annual General Meeting. DURATION OF MEMBERSHIP OF BOARD 19. When a person becomes a Member of the Board of Directors by reason of the office or post he holds in his milk union, his membership of the Board shall terminate when he ceases to hold that office or post and his successor shall automatically replace him on the Board." (emphasis supplied) 6. The appellant is a Director in the Baroda District Cooperative Milk Producers Union Ltd., which is one of the 13 District Milk Unions - ordinary members of the respondent Federation. In the petition before the learned Single Judge, the appellant had challenged Bye-law Nos. The appellant is a Director in the Baroda District Cooperative Milk Producers Union Ltd., which is one of the 13 District Milk Unions - ordinary members of the respondent Federation. In the petition before the learned Single Judge, the appellant had challenged Bye-law Nos. 13.1, 15.1 and 18.1 of the respondent – Federation, on the ground that the said Bye-laws are contrary to the provisions of Section 74C, 145D, 145Z inserted by Gujarat Act No.6 of 1981 and Rule 95 of the Gujarat Specified Cooperative Societies Elections of Committees Rules, 1982. 7. The aforesaid statutory provisions read as under:- "74C. Provision for conduct of elections committees and officers of certain societies and term of office of members of committees, - (1) The election of members of the committees and of the officers by the committee, of the societies of the categories mentioned below shall be subject to the provisions of Chapter XI-A and shall be conducted in the manner laid down by or under that Chapter. (i) Apex societies mentioned in the Schedule and such other apex societies as the State Government may, by general or special order, published in the official Gazette, from time to time specify in this behalf, having regard to financial position and share capital of such societies; (ii) all District Central Co-operative Banks; (iii) all Primary Land Development Banks; (iv) all District Co-operative Sale and Purchase Organisations; (v) all Co-operative Sugar Factories; (vi) all Co-operative Spinning Mill; (a) all district co-operative milk unions; (b) all taluka co-operative processing societies; (vii) any other society or class of societies, which the State Government may, by general or special order published in the official Gazette, from time to time specify in his behalf, regard being had to the financial position and share capital of such institutions. (2) When the election of all the members of the committee of any such societies held at the same time the members elected on the committee at such general election shall hold office for a period of three years from the date on which the first meeting is held and shall continue in office until immediately before the first meeting of the members of the members of the new committee. (3) Notwithstanding anything in the bye-laws of any such society, the committee of management shall be elected by a general body of members of the society and all other committees authorised by or under the bye-laws may be constituted by electing or appointing persons from among the persons who are members of the committee of management, and all such committees shall be sub-committee of the committee, of management, and shall be subordinate to it; Provided that it shall be lawful for the State Government:- (a) to nominate its representatives on a Committee of any such society under Section 80, or (b) to nominate the first Committee of Management of any such society where the bye-laws of such society so provide. Provided further that it shall be lawful for any body or authority to nominate its representative on a Committee of such society where the bye-laws of such society so provide. 145D. Conduct of elections, - (1) Save as otherwise provided, every election shall be held on such date or dates as the Collector may fix, and shall be conducted under his control by such Returning officer and other officers, as may be appointed by the Collector in this behalf. (2) In all cases, where a society has to send a nominee as a member of the committee of the specified society, the election of such nominee shall be conducted under the control of the Collector of the District in which the registered office of the society sending the nominee is situated. (3) The voting at every election shall be by secret ballot. (4) No election shall be held in the case where under the bye-laws of a specified society the Government nominee or the nominee of a Financing Agency becomes a member of the committee of the society. 145Z. Special provision for election of officers of specified societies,- (1) This section shall apply only to election of officers by members of committees of societies belonging to the categories specified in Section 74C. (2) After the election of the members of the committees or whenever such election is due, the election of the officer or officers of any such society shall be held as provided in its bye-laws, but any meeting of the committee for this purpose shall be presided over by the Collector or an officer nominated by him in this behalf. 2. 2. Definitions.- In this Act, unless the context otherwise requires,- (14) "officer" means a person elected or appointed by a society to any office of such society according to its bye-laws; and includes a chairman, vice-chairman, president, vice president, managing director, manager, secretary, treasurer, member of the committee, and any other person elected or appointed under this Act, the rules or the bye-laws, to give directions in regard to the business of such society; Rule 95. Election of nominee under section 145-D(2) - The Election of a nominee of a society as a member of the Committee of any Specified Society under sub-section (2) of section 145-D shall be held in accordance with the provisions of this rule. (2) Where a society has to send such a nominee and the Collector has published his order made under Rule 16 as required by clause (b) of Rule 17, the Committee of the Society shall hold its meeting for the election of the nominee, within a period of 15 days from the date of publication of the election programme or within such extended period as the Collector may allow. (3) The election shall be conducted in accordance with the Provision of the bye-laws of the Society, under the control of the Collector or the Returning officer appointed by him under Rule 9." (emphasis supplied by the appellant) 8. The thrust of the appellant's submission is that whatever may be the Bye-laws of the respondent – Federation prior to the amendment of the Co-operative Societies Act, once Section 74C, 145D and 145Z were inserted by Gujarat Act No.6 of 1981, the Byelaws inconsistent with the said statutory provisions, cannot be permitted to operate. It is vehemently submitted by learned Senior Advocate Mr. Tushar Mehta for the appellant that the Federation is a specified Co-operative Society and therefore, its Directors have to be elected in accordance with provisions of Sub-section (3) of Section 74C of the Gujarat Specified Co-operative Societies Elections of Committees Rules, 1982 (hereinafter referred to as the 'Elections Rules') framed in exercise of the powers conferred by Section 168 read with Section 145G(2), 145U(4) and 145Y of the Gujarat Co-operative Societies Act, 1961 (hereinafter referred to as 'the Act". It is submitted that after the aforesaid amendment to the Act, there cannot be any specified Society, in which the Managing Committee is formed, without each member of the Committee being elected as a member of the Managing Committee of such specified Society, in accordance with the provisions of the Chapter 11A and in accordance with the aforesaid Election Rules of 1982. It is also submitted by Mr. Mehta that since Section 74C(3) starts with a non-obstante clause "notwithstanding anything in the byelaw of any such society, the committee of management shall be elected ... ...", a District Milk Producers Union cannot nominate without election its representative or delegate merely because that representative is the Chairman of the District Milk Producers Union. In a given case, a District level union may nominate its Chairman to be a member of the respondent Federation, and therefore, as a Director of the Federation, but the choice has to be left to the District level union to decide, whether it would like to nominate its Chairman or any of its members other than the Chairman on the Board of Directors of the respondent Federation. 9. The learned counsel for the appellant further submits that it is only when outside agencies like financial institutions etc. make nominations, elections are not required, but otherwise all representatives or delegates of other Co-operative Societies must be elected by the respective Co-operative Societies. In the second proviso to Sub-section (3) of Section 74C, inserted by Gujarat Amendment Act No.14 of 1983, the term "body or other authority" was understood by the Legislature to be an outside body or authority, but the said proviso, does not in any manner dilute the mandate contained in Sub-section (1) of Section 74C. In other words, there can be nomination by outside agencies, who are rendering services to a specified Co-operative Society, but, so far as the Managing Committee of a specified Society to be formed from amongst the members is concerned, such formation shall have to be by way of an election. Sub-section (2) of Section 145D, therefore, specifically provides that in all cases where the Society has to send its nominee as member of the Committee of a specified society, the election of such nominee shall be conducted under the control of the Collector of the District in which the registered office of the Society sending the nominee is situated. Mr. Sub-section (2) of Section 145D, therefore, specifically provides that in all cases where the Society has to send its nominee as member of the Committee of a specified society, the election of such nominee shall be conducted under the control of the Collector of the District in which the registered office of the Society sending the nominee is situated. Mr. Mehta submitted that the object of this provision is to ensure that no specified Co-operative Society, by making tactfully drafted Byelaws, avoids election for formation of its Managing Committee in clear breach of statutory mandate contained in Section 74C of the Act. Hence after the amendments of 1981 and 1983, members of the Managing Committee of a specified Society cannot come by way of nomination from their base-units at District or Taluka levels, merely by virtue of their respective offices in such base-units. 10. It is also submitted by Mr.Mehta for the appellant that a conjoint reading of Section 74C, 145D(1) and 145D(2) makes it clear that the Legislature has provided that all the members of the Managing Committee of a specified Society be elected simultaneously to ensure that the tenure of the Managing Committee of a specified Society starts on the same day on which all the members of the Managing Committee are "elected" and are "elected as the members of the Committee". This interpretation is also borne-out by the provisions of Rule 95 of the Election Rules for specified co-operative societies. If the legislative intent was what the respondent – Federation is contending, the Legislature would have provided in Section 145D(2) that election would take place, if the nominee is other than the Chairman, who is already an elected person under Section 145Z. It is submitted that the election of Chairman under Section 145Z of the Act is only as the Chairman of the District level dairy and it is not an election for electing a Director in the Federal Society namely the Federation. It is also submitted that merely because the person is elected as Chairman of the District dairy, it cannot be said that he is elected also as a Director of the Federation. 11. Mr. It is also submitted that merely because the person is elected as Chairman of the District dairy, it cannot be said that he is elected also as a Director of the Federation. 11. Mr. Mehta for the appellant in his written submissions has given the following illustration to show that the operation of the present Bye-law may result into an anomaly:- "Suppose there are 15 affiliated milk unions enrolled as ordinary members, Chairman of all 15 affiliated unions would automatically become Directors in the Board of Directors of the Federation. It is not a fact in dispute and cannot be disputed that the term of the managing committee of each of such affiliated district unions starts at different dates and come to an end on different dates. If the election of Chairman of the Federation takes place in January 2008, such Chairman is entitled to continue till January 2011 and would still continue in his office even thereafter till new Chairman of the Federation is elected. After 1st January 2008, there may be 3 District Unions where the tenure of their respective Managing Committees is coming to an end and the Collectors of their respective Districts would hold elections in such District Unions. Such new Chairmen of 3 district unions would automatically replace their predecessors in the Board of Directors of the Federation, but would automatically replace their predecessors in the Board of Directors of the Federation, but would never get a right to contest the election for being elected as the Chairman of the Federation though they might be enjoying the majority support in the Board of Directors of Federation. This situation is bound to arise since the tenure of the Chairman of the Federation elected on 1st January 2008 is fixed in the byelaws, which is at least till 1st January 2011. In the next year the elections of five other district unions may take place and new Chairmen are elected in five district unions. Such five new Chairmen would also replace their predecessors in the Board of Federation who have elected the Chairmen of the Federation but such new Chairmen of 5 district unions will never get a chance to contest for being elected as the Chairman of the Federation till earlier Chairman completes his tenure. Such five new Chairmen would also replace their predecessors in the Board of Federation who have elected the Chairmen of the Federation but such new Chairmen of 5 district unions will never get a chance to contest for being elected as the Chairman of the Federation till earlier Chairman completes his tenure. In a given case, there is bound to be a possibility where new eight persons who have come as the Directors of the Federation in their capacity as Chairman of the District Level Unions may not have faith in the Chairman who is already elected. Such Chairman would still continue as Chairman of the Federation though he does not enjoy majority support" 12. It is submitted for the appellant that such an anomaly can be avoided only if all the Directors of the Federation are elected by the District level unions on a particular date, in elections to be conducted by the Collector of the district, in which the head-office of the Federation is situated i.e. Collector, District Anand. Once Collector, Anand fixes the date of election of Directors of the Federation, he would declare the election programme and all District level unions will have to follow the procedure contemplated under Section 145D(2) of the Act and elect their nominees, who will become elected members of the Board of Directors of the Federation. Such elected Directors will start their tenure on the date of the first meeting of the Board and would elect the Chairman of the Board of Directors. In this manner, the tenure of the Board of Directors of the Federation would also be fixed as 3 years as stipulated in Section 74C(2), and if no election takes place after 3 years, even custodian can be appointed by the State authorities under Section 74D of the Act. It is submitted that under the present Bye-laws, whenever there are elections in the District unions and the new Chairmen of such District unions replace their predecessors in the Board of Directors of the Federation, there will be frequent and unavoidable motions of no-confidence against the Chairman of the Board of Directors of the Federation, which would result into a constant destabilized state in the office of the Chairman of the Federation. Such a situation is sought to be avoided by the scheme of the amended Act. 13. On the other hand, Mr. Such a situation is sought to be avoided by the scheme of the amended Act. 13. On the other hand, Mr. K.S. Nanavati, learned senior counsel for the respondent – Federation has opposed the appeal and submitted that the respondent – Federation is an apex level body for coordinating the manufacture and marketing of all the dairy products and allied products, as per the quality and standard fixed by the Federation and also to manufacture and market them under different brand names and trade names as may be derived by the Federation and also to see that the District dairies adhere to the manufacturing programme decided by the Federation, depending on the market requirements and to ensure that the consumers in the State and in the country get dairy products and allied products at affordable prices. It is submitted that such functioning of the Federation and District dairies as a team would not be possible, if the District dairy is headed by one person and its representative in the Federation is another person. It is submitted that only if the District dairy in its capacity as a manufacturer and marketing unit and also in its capacity as a member of the Federation speaks with one and the same voice, then only the Federation can achieve the objects specified in Bye-law No.5 and ensure fulfilment of obligations of ordinary members as specified in Bye-law No.9. Mr. Nanavati for the Federation has also submitted that in order to achieve the aforesaid objective, Bye-law No.13 specifically provides that the Chairman of each of the affiliated District Milk Union enrolled as ordinary member becomes a member of the general body of the Federation. Since there are 13 District milk unions enrolled as ordinary members, there are 13 members in the general board coming under this category. The nominee of the Registrar of Co-operative Societies is also a member of the Federation and a Director on the Board of Directors of the respondent Federation. The Managing Director of the Board is a paid officer. The general meeting is the supreme body of the Federation. It is submitted that when all such Chairmen of the affiliated District Milk Unions automatically become Directors on the Board of Directors of the Federation, there cannot be any question of election by Directors of the Federation. The Managing Director of the Board is a paid officer. The general meeting is the supreme body of the Federation. It is submitted that when all such Chairmen of the affiliated District Milk Unions automatically become Directors on the Board of Directors of the Federation, there cannot be any question of election by Directors of the Federation. The elections contemplated by Section 74C, Chapter 11A (including Section 145D etc.) and the Election Rules of 1982 for specified Societies were already held while electing the Chairman and other members of the Board of Directors of the District dairies, known as District Milk Producers Unions. Hence, the Chairmen of District dairies becoming ordinary members of the Federation and in that capacity also becoming Directors of the Federation are democratically elected persons and are not imposed upon the Federation. It is therefore submitted that the Bye-laws of the respondent – Federation are not inconsistent with the provisions of the amended Act. 14. It is further submitted by the learned counsel for the Federation that Sub-section (3) of Section 145D clearly indicates that the question of conducting election under the control of the Collector of the District will arise only in those cases where Society has to send the nominee as a member of the Committee of a specified society, but, when the Bye-laws of the specified society i.e. of the Federation specifically provide that the Chairman of a District level union becomes an ordinary member in the general body of the Federation and in that capacity also becomes a Director on the Board of Directors of the Federation, there is no question of any further election. It is also submitted that the last proviso to Sub-section (3) of Section 74C clearly provides that it shall be lawful for a body or authority to nominate its representative on a Committee of such Society where the Bye-laws of such Society so provide. Therefore, when the Bye-laws of the Federation provide for Chairmen of the District level dairies becoming members of the general body of the Federation as well as the Directors on the Board of Directors of the Federation, the proviso must be given full effect. 15. Mr.Nanavati for the Federation also submitted that the appellant – original petitioner has no locus standi to challenge the Bye-laws of the Federation. 15. Mr.Nanavati for the Federation also submitted that the appellant – original petitioner has no locus standi to challenge the Bye-laws of the Federation. The Baroda District Level Milk Producers Union (the appellant is one of its directors) has not challenged the same. Even otherwise, it would be open to the appellant to contest the election for the office of Chairman of the Baroda District Co-operative Milk Producers Union Ltd. and to get elected to the said office. Had he been elected as the Chairman of the Board of Directors of Baroda District Milk Producers Union Ltd., he would have also become a member of the Federation and a Director on the Board of Directors of the respondent – Federation. Having failed to get elected as the Chairman of the Board of Directors of Baroda District Co-operative Milk Producers Union Ltd., he cannot be permitted to challenge the Bye-laws of the Federation and to ask for separate elections for Directors of the Federation. 16. Mr. Nanavati for the Federation has also submitted that the Bye-laws are in force since 1973 and have stood the test of time for the last 33 years. The Bye-laws have worked to the betterment and advantage of the respondent-Federation, the District Milk Producers Unions and their constituent co-operative societies and have also benefited the individual milk producers, who are small farmers in different villages, on account of the coordination of manufacture and marketing operations by the Federation with the support of the District Milk Producers Unions i.e. the District dairies. Such coordination has continued after the amendment of the Co-operative Societies Act also. Apart from the submission that the Bye-laws are not contrary to the provisions of the amended Act, the Bye-laws, in force since 1973, have continued to operate to the advantage of all concerned as aforesaid, even after the amendments in 1981 and 1983 i.e. for the last 25 years. It is therefore submitted that Bye-laws should not be disturbed after such a long passage of time. 17. Before expressing opinion on the above submissions, we may reproduce the following views expressed by the learned Single Judge on the controversy – "I find that the formation of Board of Directors of respondent No.3 Federation does not offend the provisions contained in section 74C of the said Act and in particular sub-section (3) thereof. 17. Before expressing opinion on the above submissions, we may reproduce the following views expressed by the learned Single Judge on the controversy – "I find that the formation of Board of Directors of respondent No.3 Federation does not offend the provisions contained in section 74C of the said Act and in particular sub-section (3) thereof. Sub-section (3) of section 74C requires that election be held for constitution of the Board of Directors of a specified cooperative society. Factually, in the present case, every Chairman of member society becomes a member of the general body of Federation. It may be noted that as per subsection (3) of section 74C of the said Act, election for the committee of management has to be made by the general body of the members of the society. In respondent No.3 Federation, each Chairman in turn also gets placement as a member of the Board of Directors. Therefore, every chairman of a member society not only becomes member of the general meeting, he also becomes a member of the Board of Directors. If there was any element of election from the general body to that of Board of Directors, the same had to conform to the provisions contained in sub-section (3) of section 74C of the said Act. When every member of the general meeting automatically becomes member of the Board of Directors, there is no further need for election. In my view, therefore, no provisions of subsection (3) of section 74C of the said Act are violated. Therefore, the constitution of Board of Directors cannot be struck down. It may be noted that there are no restrictions in the said Act or the said Rules regarding formation of general body of the society. Bye-law 13.1 is therefore not pointed out to be opposed to any statutory provision." (emphasis supplied) 18. At the outset, we make it clear that what was specifically challenged before us at the hearing of the appeal was Bye-law No.18 providing for composition of the Board of Directors of the respondent Federation which is also the composition of the General Body of the respondent-Federation under Bye-law No.13. The relevant portion of Section 73 and Section 74 of the Act reads as under:- "73. The relevant portion of Section 73 and Section 74 of the Act reads as under:- "73. Final authority of society, - Subject to the provisions in this Act and the rules, the final authority of every society shall vest in the general body of members in general meeting, summoned in such a manner as may be specified in the bye-laws : Provided that, where the bye-laws of a society provide for the election of delegates of such members, the final authority may vest in the delegates of such members elected in the prescribed manner, and assembled in general meeting. 74. Committee, its powers and functions, - The management of every society shall vest in a committee constituted in accordance with this Act, the rules and byelaws, which shall exercise such powers and perform such duties as may be conferred or imposed on it respectively by this Act, the rules and the bye-laws. Thus the Act itself allows the co-operative society to provide for constitution of the General Body and the Managing Committee (i.e. Board of Directors) in the Bye-laws. As rightly observed by the learned Single Judge, there are no restrictions in the Act or in the Rules regarding formation of general body of the society. Sub-section (1) of Section 74C provides that the election of members of the Committees (eg. Managing Committee also known as the Board of Directors) and of the officers (such as Chairman etc.) of Committee of the specified Societies shall be conducted in the manner laid down by or under Chapter 11A of the Act. But the question of election will arise only when the number of Directors to be elected is less than the number of voters or members of a concerned specified Society. In the instant case, the bye-laws of the respondent – Federation clearly provide in Bye-law Nos.13.1 and 18.1 that Chairmen of the District Level Milk Producers Unions, which are ordinary members (i.e. fulfilling any of one of the 3 conditions specified in Rule 7) become the members of the general body of the Federation, and they also become the directors on the board of directors of the Federation. Hence, there is no question of holding election of the directors of the respondent – Federation. Hence, there is no question of holding election of the directors of the respondent – Federation. The learned Single Judge therefore, rightly held that the question of applying Sub-section (1) of Section 74C will not arise in this case of course, the said provision will apply for the purpose of electing the chairman of the board of directors of the respondent – Federation and Mr.K.S.Nanavati for the respondent – Federation agrees that the election of the Chairman of the board of directors of the respondent – Federation has to be held in accordance with the provisions of the Election Rules of 1982 for the specified cooperative societies, and of the directors on the Board of Directors of the Federation. 19. Similarly, Sub-section (2) of Section 145D also clearly provides that where a Society has to send its nominee as a member of the committee of any specified society, it is only in such case that the election of the nominee is to be conducted under the control of the Collector of the district in which the registered office of the society sending the nomination is situate. Since Bye-laws Nos.13.1 and 18.1 themselves provide that the Chairman of the District dairy, which is an ordinary member of the Federation becomes member of the general body of the Federation and also becomes a Director on the Board of Directors of the Federation, the question of applying Sub-section (2) of Section 145D does not arise. The question of holding such election will arise only where the society or any of its office bearers has discretion to select its nominee. The provisions of sub-section (2) of section 145D were enacted to prevent any abuse of such discretion at the hands of one or a few individuals. The question of holding such election will arise only where the society or any of its office bearers has discretion to select its nominee. The provisions of sub-section (2) of section 145D were enacted to prevent any abuse of such discretion at the hands of one or a few individuals. When the members of a specified co-operative society like a District Level Milk Producers Union have, at the elections conducted under the control of the Collector, elected the Directors of the District dairy, in accordance with the provisions of the Gujarat Specified Co-operative Societies Elections Rules, 1982, once such democratic process is followed, and the Board of Directors of the District Union have elected the Chairman in accordance with the provisions of the same Election Rules i.e. in accordance with Section 145Z read with Section 95 of the said Election Rules, there could be no question of any illegality or arbitrariness in such democratically elected Chairman of the District Level Milk Producers Union becoming a member of the general body of the respondent – Federation and in that capacity also becoming a director on the board of directors of the respondent – Federation. The Chairman of the Board of Directors of the Federation is also required to be elected at a meeting to be conducted by the Collector of Anand District (where the head office of the respondent – Federation is situate), and this is also to be done in accordance with the same Election Rules of 1982. 20. We also find considerable substance in the submission of Mr. Nanavati for the Federation that since the basic object of the Federation is to coordinate the efficient organisation of the manufacture and marketing of milk and dairy products and also other allied products, it is of utmost importance that there should not be any dichotomy in the approach and views of the District dairies on the one hand and the Federation on the other hand and that if the District dairy sends a representative other than the Chairman of the District dairy, even a slight difference in the approach and views of the Chairman of the District dairy on the one hand and another representative of the same District dairy on the board of directors of the Federation, will create irreparable harm to the smooth functioning of the Federation as well as the District dairies. In any view of the matter, whether a District Dairy should have the option of sending to the Federation its representative, other than its elected President, is a matter of policy which this Court cannot impose on the Federation or its Federating units i.e. the District Dairies. 21. As regards the submission of Mr. Mehta that under the present scheme, elections of the Chairmen of the different District dairies are held on different dates, and therefore, the term of the directors on the Board of Directors of the respondent – Federation commences and ends on different dates, we do not think that for that reason alone, the Bye-laws of the respondent – Federation, particularly Bye-law No.18.1 can be regarded as arbitrary and unreasonable. As regards the hypothetical illustration and the apprehension about the possibility of the Chairman of the Federation continuing as Chairman, though he does not enjoy majority support, the apprehension is thoroughly misconceived. A Full Bench of this Court has already held in Nandlal Bavanjibhai Posiya & Ors. v. Director of Agriculture Marketing & Rural Finance & Anr. 2002(2) GLR 1132 that it is the inherent right of a member of a democratic body to move the no-confidence motion against their elected leader, which is a concomitant of the right to elect a leader, that a no confidence motion can be passed by simple majority, unless the statute or Bye-law indicates a contrary intention. In Motibhai R. Chaudhary, Chairman, Mehsana District Milk District Producers Co-operative Federation Ltd. v. Registrar, Co-operative Societies, 2004 (3) GLR 2251 a Division Bench of this Court has applied the above principle in the matter of no confidence motion against the Chairman/Vice-Chairman of the Managing Committee of the Federal Society or any Co-operative Society registered under the Gujarat Co-operative Societies Act. Hence, the Chairman of the respondent – Federation, who is elected by the Board of Directors of the Federation can be removed by the Board of Directors at any time by passing a no-confidence motion, as there is nothing in the statute or the Bye-laws of the Society of the Federation to take away the said democratic right. 22. Hence, the Chairman of the respondent – Federation, who is elected by the Board of Directors of the Federation can be removed by the Board of Directors at any time by passing a no-confidence motion, as there is nothing in the statute or the Bye-laws of the Society of the Federation to take away the said democratic right. 22. In this view of the matter, since we do not find any merit in the above contentions urged on behalf of the appellant, we have not thought it necessary to examine the contention that the appellant has no locus standi to challenge the bye-laws of the respondent – Federation nor the contention that the present challenge to the bye-laws, framed in the year 1973, on the ground that the bye-laws are contrary to the amendment to the Gujarat Cooperative Societies Act made in 1981, suffers from gross delay, laches and acquiescence. 23. We, therefore, do not find any merit in any of the submissions urged on behalf of the appellant. 24. In the result, the appeal is dismissed. 25. Since the appeal is dismissed, the Civil Application does not survive and the same is accordingly disposed of. Appeal dismissed.