BHAVNAGAR JILLA SAHAKARI SANGHLIMITED v. STATE OF GUJARAT
2009-07-17
AKIL KURESHI, K.S.RADHAKRISHNAN
body2009
DigiLaw.ai
JUDGMENT (Per : HONOURABLE THE CHIEF JUSTICE MR. K.S.RADHAKRISHNAN) Petitioners in all these cases are Co-operative Societies established under Section 69 of the Gujarat Co-operative Societies Act, 1961. They have approached this Court seeking a writ of certiorari to quash notification issued by the State Government in exercise of powers conferred under clause (vii) of sub-section (1) of Section 74C of the Gujarat Co-operative Societies Act, 1961 (`the Act' for short) including them also in the categories of societies mentioned in Section 74C of the Act subjecting them to the provisions of Chapter XIA of the Act for the purpose of conduct of elections. Petitioners have also sought for a declaration under Section 74D of the Act as amended, is unconstitutional ultra vires Articles 14 and 19 of the Constitution of India and also for the consequential reliefs. Constitutional validity of Section 74C of the Act came up for consideration before the Division Bench of this Court in the case of Amreli District Co-operative Sale & Purchase Union Ltd. & Ors. v. State of Gujarat, 1984 (2) GLR 1244 and this Court upheld constitutional validity of the said provisions, and hence, no serious challenge was made against validity of that provision. Petitioners mainly contended that the State Government has wrongly exercised its powers by bringing in the petitioners societies within the ambit of sub-section (1) of Section 74C of the Act. Learned counsels S/shri Shrish Joshi, Mehul Vakharia and Chirag Patel appearing for the petitioners submitted that the petitioner-co-operatives unions are not registered under the Gujarat Co-operative Societies Act, 1961 but established under Section 69 of the Act affiliated with the State Co-operative Union. Petitioners have submitted that they have no share capital though they collect subscription, but do not have any membership. Petitioners submitted that a bare reading of Section 69 of the Act read with Rule 31 of the Rules show that a cooperative society which declares dividend, has to contribute to the education fund to State Co-operative Union while retaining 40 % of fund so collected for itself for running its own activities, and has to distribute 60 % of such fund to the District Co-operative Unions for running their activities.
Petitioners have also submitted that for provisions of funds, bye-law 12 provides that fund can be from the membership, subscription, aid from the State Co-operative Union, a portion from education fund collected on behalf of the State Co-operative Union, income from the sale of literatures, gifts and donations and other income etc.. Due to peculiar nature and structure of unions, it has no share capital and therefore, in short, they cannot be covered under clause (vii) enumerated under sub-section (1) of Section 74C of the Act. Petitioners submitted that the existence of share capital is a condition precedent to bring in a society within scope of clause (vii) of sub-section (1) of Section 74C of the Act. Further, it is also submitted that the petitioners unions have no financial activities as its object, therefore, it is not open to the State Government to rope in such societies, subjecting themselves to a procedure for election contemplated in Chapter-XIA of the Act. Petitioners have also submitted for holding election of Managing Committee, separate Election Rules have been framed by the petitioners and those Rules are being followed for the conduct of elections and there is no reason to follow the procedure laid down in Chapter-XIA of the Act. Petitioners also submitted that attempt of the State Government is to remove the Managing Committee of the petitioners unions and to appoint Custodians with ulterior motive so as to effectively control administration of the co-operative unions. Petitioners also submitted that few similarly placed co-operative unions have been omitted from the impugned notification with malafide intention. Learned Advocate General Shri K.B.Trivedi appearing for the State submitted that notification has been issued by the State after taking into account the larger public interest to see that elections are properly conducted following procedure laid down under Chapter-XIA of the Act. Learned Advocate General also submitted that petitioners unions squarely fall within the ambit of clause (vii) of sub-section (1) of Section 74C of the Act and the power has been exercised by the Government in the best interest of the unions as well as in the larger public interest. Learned Advocate General further submitted that petitioners unions are societies falling within ambit of sub-section (19) of Section 2 of the Act and duly registered as per the provisions laid down under Sections 4, 6 and 9 of the Act.
Learned Advocate General further submitted that petitioners unions are societies falling within ambit of sub-section (19) of Section 2 of the Act and duly registered as per the provisions laid down under Sections 4, 6 and 9 of the Act. Learned Advocate General also submitted that as per the provisions of Section 69 of the Act, at the district levels, all such co-operative societies making profits and distributing dividends to its members, are supposed to contribute towards the education fund of a co-operative union at the district level and out of contribution so received in the education fund, such district co-operative unions are supposed to keep 40 % thereof with them and remaining 60 % of the collection is to be given to the Gujarat State Co-operative Union at the State level. Above facts would clearly indicate that the petitioners unions are engaged in important activities dealing with the large amounts and they play very vital role in the matter of considering the grant of approval to various institutions in the district for setting aside a sum not exceeding 20 % of their net profits and utilizing the amounts therefrom for any prescribed co-operative purposes or for any charitable purposes within the meaning of Section 2 of Charitable Endowments Act, 1890. Learned Advocate General also submitted that since the petitioners unions at the district level are discharging very important public functions, it is in the fitness of the things that election of the office bearers of such district co-operative unions is held in a most transparent and democratic fashion as per the provisions contained in Chapter-XIA of the Act. Learned Advocate General also submitted that assuming that there is no share capital as such for such unions, the Court should adopt a purposive interpretation while testing the validity of the notification, therefore, the word `and' used between the words `financial position' and `share capital' in the said clause (vii) should be read disjunctively and the said word `and' may be read as `or' and if so read, it becomes permissible for the State Government to specify any society for the purpose of Section 74C of the Act which will advance larger public interest.
We are neither examining nor elaborating the scope and validity of Section 74C of the Act as the same has already been elaborately dealt with by the Division Bench of this Court in Amreli District Co-operative Sale & Purchase Union Ltd. & Ors. (Supra). Division Bench has examined the scope of said provision and held as under: It does not require much of imagination to appreciate that many malpractices are being committed in these elections by not only the participating candidates but their supporters and sympathisers. There are black sheep and bullies in all these public institutions who try to the elections. If, therefore, the Legislature has thought fit to make detailed provisions about the conduct of the elections, it cannot be objected to on the ground of violation of fundamental right to carry on business or trade since they are all reasonable restrictions in larger public interest. Court must, therefore, reject this challenge to this Section on touch-stone prescribed in Article 19(6) of the Constitution of India. (Para 66) Further, the Bench has opined as follows: The impugned provision contained in Section 74C read with Chapter XI-A, therefore, one which no doubt affects the right of association as well as right to carry on business. As observed in Maneka Gandhi's case (Supra) it is possible that in given case the pith and substance of the State action may deal with a particular fundamental right but its direct and inevitable effect may be on another fundamental right and in that case, the State action would have to meet the challenge of the latter fundamental right. In that view of the matter, therefore, Court is of the opinion that Section 74-C read with Chapter XI-A, insofar as it directly and inevitably affects the right to carry on business through the elected representatives, the restrictive provisions contained in the section is valid since it is reasonable and in public interest. The challenge to this Section 74-C should, therefore, be rejected. We fully endorse the view of the Bench with regard to the scope and ambit of Section 74C of the Act, but in this case we are concerned with the question whether the action of the State government in specifying the petitioners societies under clause (vii) of sub-section (1) of Section 74C subjecting themselves to the election procedure laid in Chapter XI A is sustainable in law?
For ready reference, we may reproduce the relevant Section which is as follows. 74C Provision for conduct of elections of 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 Districts Central Co-operative Banks; iii. all Primary Land Development Banks; iv. (a) all District Co-operative Sale and Purchase Organisation; (iv) (b) all Taluka Co-operative Sale and Purchase Organisation; v. all Co-operative Sugar Factories; vi. all Co-operative Spinning Mills; (vi-a) all district co-operative milk unions; (vi-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 this behalf, regard being had to the financial position and share capital of such institutions. Clause (vii) uses the expression `any other society'. The word `any' means and connotes `any one' `several' according to circumstances. It may mean `all',` every', `some' or `one or more out of several'. Normally it means and connotes wide generality. `Any other society' is not restricted to `nature of societies' mentioned in clause (i) to (vi) of sub-section (1) of Section 74C. Expression `any other society' used in clause (vii) may not in the nature of society mentioned under clause (i) to (vi) under sub-section (1) of Section 74-C. Expression `any other society' is comprehensive enough to take any other society which are not enumerated in clauses (i) to (vi). Legislature in its wisdom has conferred powers on the State Government by general or special order to include any other society within ambit of Section 74-C(1) of the Act after following procedure laid down thereunder. State Government while exercising that power shall have regard to the financial position and share capital of such society.
Legislature in its wisdom has conferred powers on the State Government by general or special order to include any other society within ambit of Section 74-C(1) of the Act after following procedure laid down thereunder. State Government while exercising that power shall have regard to the financial position and share capital of such society. State Government while exercising its discretionary power will have bear in mind the larger public interest so as to advance the purpose and object of the Co-operative Societies Act. Co-operative unions in the State have very important functions to discharge, in public interest. Co-operative societies in the State making profits and distributing dividends to its members, are supposed to contribute towards the education fund of a co-operative union at the district level and out of the contribution so received in the education fund, such district co-operative unions are supposed to keep 40 % thereof with them, whereas remaining 60 % of the collection is to be given to the Gujarat State Co-operative Union at the State level. Petitioners-unions are engaged in very important activities, therefore, their financial positions depends upon contributions from the various and several co-operative institutions of the District. Co-operative unions have to play very vital role in the matter of considering the grant of approval to various co-operative institutions in the district for setting aside a sum not exceeding 20 % of their net profits and utilizing the amounts therefrom for any prescribed co-operative purposes or for any charitable purposes within the meaning of Section 2 of Charitable Endowments Act, 1890. Therefore, the State Government got an obligation in larger public interest to see that elections to such bodies are conducted in a most democratic and transparent manner following the statutory provisions contained in Chapter-XI of the Act. Petitioners-unions, in our view, undisputedly are co-operative societies which fall within the scope and ambit of sub-section (19) of Section 2 of the Act, that means a co-operative society registered or deemed to be registered under the Act. Petitioner-unions might not have been registered just like other ordinary society but the fact remains that they are established under Section 69 of the Act.
Petitioner-unions might not have been registered just like other ordinary society but the fact remains that they are established under Section 69 of the Act. Petitioner-unions are duly registered as per the provisions of Section 4, 6 and 9 of the Act and therefore, in our view, they are co-operative societies governed by the Gujarat Co-operative Societies Act, hence, can fall within scope and ambit of clause (vii) of sub-section (1) of Section 74-C of the Act. Several factors may weigh with the State Government while including certain categories of societies within meaning of Section 74C (i) (vii) of the Act so that they can be made subject to the provisions of Chapter XI-A of the Act. However, while exercising those powers, government should have due regard to the financial position and share capital of such institutions. Assuming that petitioner-societies have no share capital of its own, that does not mean that, that is only factor which may weigh with the State Government while exercising its powers. Financial position is also an equally important factor that may weigh with the Government to bring in certain categories of society to be governed by Chapter-XI-A. While interpreting such a provision, the Court has to adopt a purposive interpretation which will harmonize with object of the statute and effectuate the purpose of the legislature. Co-operative Societies have to function based on self-help and mutual aid and they have to promote economic and social betterment of the society. It may be noticed that petitioners-unions are receiving contribution from large number of co-operative societies and they have to discharge their duties in the larger public interest. We are, therefore, not prepared to say that the decision taken by the State Government to include the petitioners-unions within the ambit of Chapter-XI-A of the Act, is arbitrary or illegal. Petitioners-Unions have also raised a contention that some of the unions have been left out from the notification with an ulterior motive. No materials have been produced before us to show that they were omitted due to any ulterior motive. In any view, the Government has now come out with a subsequent notification dated 3rd July, 2009 bringing in two other district co-operatives unions also within the ambit of the notification.
No materials have been produced before us to show that they were omitted due to any ulterior motive. In any view, the Government has now come out with a subsequent notification dated 3rd July, 2009 bringing in two other district co-operatives unions also within the ambit of the notification. Consequently, all the District Co-operative unions in the State are now included in the categories of the societies covered under clause (vii) of sub-section (1) of Section 74C of the Act. While matters were pending before this Court, elections were conducted in various co-operative unions in accordance with their bye-laws. Needless to say, in future elections have to be conducted in the petitioners unions in accordance with the procedure laid down in Chapter-XI-A of the Act. For the above mentioned reasons, we uphold the impugned notifications dated 28th April, 2008 issued by the State Government and reject the reliefs sought for in all these writ petitions. Accordingly, all the Special Civil Applications stand dismissed. Notice stands discharged. Interim relief granted earlier stands vacated.