Full Judgment Text
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PETITIONER:
ZILEY SINGH, ETC.
Vs.
RESPONDENT:
REGISTRAR, CANE COOPERATIVE SOCIETIES,LUCKNOW AND ORS.
DATE OF JUDGMENT20/01/1972
BENCH:
RAY, A.N.
BENCH:
RAY, A.N.
HEGDE, K.S.
GROVER, A.N.
CITATION:
1972 AIR 758 1972 SCR (3) 149
1972 SCC (1) 719
ACT:
U.P. Cooperative Societies Act, 1965 and Cooperative
Societies Rules, 1967-Election of Committee of management of
a society-S. 20 confers one vote on one member-
Interpretation of Rule 409 by Registrar by which each member
would cast more than one vote was against statute-Registrar
has no power under Rule 409 to issue such circular.
HEADNOTE:
Under s. 32 of the U.P. Cooperative Societies Act, 1965 the
business to be conducted at the annual general meeting of a
society includes inter alia election of the committee of
management of the society. Under Rule 409 of the Act namely
the Cooperative Societies Rules, 1967 a Cooperative society
may, for the purpose of the election of the Committee of
management, with the previous sanction of the Registrar of
Cooperative Societies (a) divide its membership into
different groups on territorial or any other rational basis,
and (b) also specify the number or proportion of the members
of the committee of management in such a manner that
different arm or interests, as the case may be, in the
society may, as far as may be, get suitable representation
on the committee of management. On 5 November 1969 the
Registrar issued a circular interpreting Rule 409 and laid
down the principle that "all the members of the general
body" of the cooperative society would "exercise their right
of vote-in filling all the seats of elected Directors". The
elections in the cooperative societies concerned in the
present appeals were held according to the aforesaid
directions given by the Registrar. The elections were
challenged and set aside in proceedings under the Act. On
the question whether the circular interpreting Rule 409
issued by the Registrar was valid, this Court,
HELD : Under rule 409 the principal matters to be kept in
the forefront are these. First, the society will divide the
constituencies on territorial basis or any other rational
basis. By territorial basis is meant territory where the
member will reside. Residence is therefore the relative re-
quirement of territorial basis. If any other rational basis
like occupation or vocation is determined to be the basis of
a constituency the persons falling within the constituency
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will satisfy that test. Secondly, the society will specify
the proportion of members of the committee in such a manner
that different areas or interests may get suitable
representation. The inherent idea is that such areas or
interest will obtain representation. If membership is on
territorial basis the different areas will get
representation according to the interest of such territories.
Again, if occupational or professional tests are created for
dividing groups such interests will have to be given
suitable representation. Representation is therefore with
reference to areas or interests. Judged by these principles
the impeached circular of the Registrar suffered from the
vice of giving the members the right of casting vote in
constituencies to which they did not belong. This strikes
at the basic root of the fight of representation. This also
reads as under the principle of one member one vote which is
made a role of law in the Act. [155 E-G]
150
The words ’affairs of the society’ in s. 20 cannot be
equated with the constituencies to give each member a right
to vote for each constituency. That would defeat the
purpose of s. 20 and rule 409. The basic idea of
representation for each constituency depends on the mandate
of the respective constituency and not of other
constituencies. That is why s. 20 of the Act speaks of one
member having one vote irrespective of shareholding. It
means equality of votes of members. [155 H]
The impeached circular of the Registrar was illegal and
unwarranted. The Registrar has no power to interpret rule
409. The Registrar has equally no power to express view
with regard to the conduct of the election and regulate the
voting rights by giving members more than one vote. The
society is to frame rules for elections. The rules and the
bye-laws cannot be in derogation of the statute and
statutory rules. At an election of members of the committee
of management one member will have only one vote for the
constituency to which he belongs. [156 E]
The result was that the elections which were held following
the circular of the Registrar were bad.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1533 of 1971.
Appeal by special leave from the judgment dated September
18, 1971 of the S.D.O./Arbitrator, Muzaffarnagar in Election
Petition No. 140 of 1970.
AND
Civil Appeals Nos. 1797 and 1798 of 1971. , Appeals by spe-
cial leave from the judgments dated September 18, 1971 of
the District Magistrate/Registrar, Co-operative Societies,
Saharanpur in Appeals Nos. 6 and 8 of 1971 under S. 98 (i)
(h) U.P. Co-Societies Act.
AND
Special Leave Petition (Civil) No. 3254 of 1971
From the judgment dated September 16, 1971 of the Registrar,
Co-operative Societies/District Magistrate Saharanpur in
Appeal ’No. 5 of 1971 under section 98 (i) (h) Co-operative
Societies Act.)
J. P. Goyal and V. C. Parashar, for the appellants (in
C.As. Nos. 1533 and 1797 of 1971) and the petitioners (in
S.L.P. No. 3268 of 1971)
R. K. Garg, S.C. Agrawal and R. K. Jain, for the
appellants ,(in C.A. No. 1798 of 1971) and the Petitioners
(in S.L.P. No. 3254 of 1971)
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C. B. Agarwal and P. P. Juneja, for respondents Nos. 7, 8
and 1 to 13 (in C.A. 1533 of 1971)
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O. P. Rana, for respondents Nos. 7 and 12 (in C.A. No.
1797 of 1972) and respondent No. 7 (in C.A. No. 1798 of
1971).
M. C. Setalvad, R. K. Garg, S. C. Agarwal and R. K. Jain,
for the intervener.
The Judgment of the Court was delivered by
Ray, J. These three appeals are by special leave. Civil
Appeal No. 1533(N) of 1971 is by special leave against the
judgment dated 18 September, 1971 of the Arbitrator setting
aside the election of the Management Committee of the Co-
operative Cane Development Union, Shamli in an election
petition filed under rule 229(2) of the Co-operative
Societies Rules, 1967 framed under the Uttar Pradesh Co-
operative Societies Act, 1965. Civil Appeal No. 1797 of
1971 is by special leave against the order of the District
Magistrate and Registrar, Co-operative Societies Sharanpur
dismissing an appeal filed under section 98(i)(h) of the
U.P. Cooperative Societies Act, 1965 against an order of the
Arbitrator under section 70 and 71 of the U.P. Co-operative
Societies Act. 1965 setting aside the election of the
Sahkari Ganna Vikas Samiti Ltd., Iqbalpur, District
Saharanpur. Civil Appeal No. 1798 of 1971 is against the
order and judgment dated 16 September, 1971 of the District
Magistrate, Saharanpur dismissing an appeal under section
98(i)(h) of the U.P. Co-operative Societies Act, 1965
against the order of the Arbitrator under sections 70 and 71
of the U.P. Co-operative Societies Act, 1965 setting aside
the election of ,the Sahkari Ganna Vikas Samiti Ltd.,
Lhaksar, District Saharanpur. Special Leave Petition
(Civil) No. 3254 of 1971 is for leave to appeal against the
order of the Registrar, Co-operative Societies in appeal
under section 98(i)(h) against the order of the Arbitrator
under sections 70 and 71 of the U.P. Co-operative Societies
Act, 1965 setting aside the election of Sahkari Ganna Vikas
Samiti, Sarsawa. Special Leave Petition (Civil) No. 3268 of
1971 is for leave to appeal against the order of the
District Authority, Bulandsbahr setting aside the election
of the Committee of Management of the Co-operative Cane
Development Union Ltd. on an application under rule 229 of
the U.P. Co-operative Societies Rules, 1968.
These matters raise a common question. These Co-operative
’Societies held their annual general meeting under the
provisions of section 32 of the Uttar Pradesh Co-operative
Societies Act, 1965 (hereinafter called the Act). At the
general meetings the members of the Committee of Management
of the Society were elected by members of the Society. The,
Registrar of the U.P. Co-operative Societies issued a
circular dated 5 November, 1969 interpreting rule 409 of the
U.P. Co-operative Societies Rules, 1968 (hereinafter called
the Rules) and laid down the principle that all the members
of the general body "of the Co-operative
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Society would" exercise their right of vote in filling all
the seats of elected Directors." The question in the present
appeals is whether the Registrar had power to issue the
circular interpreting rule 409 and secondly whether that
interpretation is correct in terms of the Act and the Rules.
The Act deals with Co-operative Societies and inter alia
their members and their Committee of Management. The
relevant sections for the purpose of present appeals and
special leave petitions are sections 20, 29 and 32 of the
Act. Section 20 of the Act speaks of vote of members.
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Under that section, a member of a Co-operative Society shall
notwithstanding the quantum of his interest in the capital
of the Society have one vote in the affairs or the Society.
There are four provisos to section 20. Proviso (a) deals
with nominal or associate members who have no right of vote.
Proviso (b) deals with a co-operative society, the State
Warehousing Corporation or a body corporate being a member
of such society in which case each delegate of such co-
operative society, State Warehousing Corporation or body
corporate shall have one vote. Proviso (c) deals with the
State Government or the Central Government being a member of
such society in which case a nominee of the State Government
or the Central Government shall have one vote. Proviso (d)
deals with a group of members or any class of members
partaking in the affairs of the society through a delegate
or delegates each delegate having one vote.
Section 29 of the Act deals with the Committee of Manage-
ment. The management of every co-operative society shall
vest in a committee of management. The term of the election
members of the committee of management shall be such as may
be provided in the rules and the bye-laws of the society.
After the expiry of the term the co-operative society shall
at the annual general meeting elect members for the
committee of management as provided in section 32(i)(b) of
the Act. If a society fails to elect members for the
committee of management the Registrar shall call upon the
society by order in writing to elect such members within
three months from the date of the communication of the
order. If the society still fails to elect the members for
the committee of management, the Registrar may himself
nominate such persons as under the rules and the bye-laws
are qualified for being elected as members of the committee
of management. Within six months from the date of
nomination made by the Registrar, the Registrar shall call a
general meeting for electing members of the committee of
management.
Section 32 of the Act speaks of annual general meeting which
shall be held once in ’a co-operative year. A co-operative
year means the year commencing the first day of July and
ending on the 30th June of next following. One of the
purposes of the annual
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general meeting is election of the members of the committee
of management in accordance with the provisions of the rules
and of the bye-laws of the society.
Rule 409 is as follows
"For the purposes of election to the
membership of the committee of management a
co-operative society may, with the previous
sanction of the Registrar-
(a) divide its membership into different
groups on territorial or any other rational
basis, and
(b) also specify the number or proportion of
the member of the committee of management in
such a manner that different areas or
interests, as the case may be, in the society
may, as far as may be, get suitable
representation on the committee or
management."
In order to appreciate as to how rule 409 comes up for
consideration in the present case it is necessary to refer
to facts in Civil Appeal No. 1533 (N) of 1971 as a typical
case.
The Shamli Cane Development Union Ltd., Shammli, U.P. was
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registered under the Co-operative Societies Act, 1912. It
was deemed to be registered under the Act. The society had
its bye-laws with regard to the formation of the committee
of management and its election including the election of the
Chairman and the Vice-Chairman. The bye-laws provided for a
committee of management consisting of 14 members. The
committee of management elects a Chairman and a Vice-
Chairman. The delegates constituting the general body of
the society are divided into 14 constituencies. Each
constituency elects one Director. The delegates of the
members of the society in a constituency elect a member of
each single member constituency. The 14 members of the
committee are elected on that basis whereby each delegate of
each constituency exercises one vote for electing a member
of that constituency.
The Secretary of the society fixed 13 October, 1970 as the
date for filing the nomination for the office of the
committee of management. 17 October, 1970 was the date for
scrutiny of nomination papers. 19 October, 1970 was the date
for withdrawal of nomination papers. 28 October, 1970 was
the date of poll. By a letter dated 14 October, 1970 the
Registrar, Cooperative Societies directed that "the election
of the members of the managing committee shall be done by
all the representatives of the area of the society and not
by the representatives of the related constituencies alone.
This means that every representative -L864Sup.CT/72
154
shall have as many votes as the members are to be elected".
In short, the Registrar’s interpretation of rule 409 as well
as the letter stated that each delegate would vote for 14
members of the committee of management and thus each
delegate would exercise 14 votes.
The rival contentions which fall for determination are
whether the right of vote for election of a member of the
committee of management is confined to the delegates of the
members of that particular constituency or whether a
delegate would have the right to vote for all the
constituencies constituting the committee of management.
As to the power of the Registrar to interpret rule 409 it
win appear that the rule does not confer any power on the
Registrar to interpret or to express views to guide the
rights of members to vote at the annual general meeting for
the purposes of election of the committee of management. On
the contrary, under rule 409 the Co-operative Society may
with the previous sanction of the Registrar (i) divide its
membership into different groups on territorial or any other
rational basis and (ii) also specify the number or
proportion of the members of the committee of management in
such a manner that different areas or interests, as the case
may be, in the society may, as far as may be, get suitable
representation on the committee of management. Therefore,
under rule 409 a co-operative society can divide its
membership into different groups on territorial or any other
rational basis for the purposes of election of the members
of the committee. The rule also empowers the society to
apportion the membership of the committee of management
amongst different groups into which the membership is
divided. The number or proportion of members of the com-
mittee of management will have to be apportioned in such a
manner that the different areas or interests into which the
membership of the society are divided may obtain suitable
representation on the committee of management. The entire
purpose of division of membership into different groups and
specifying suitable representation of such group on the
committee of management is to emphasise the, right of the
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particular group to send its representative to the
committee. To illustrate if a society is divided into 14
separate groups on a territorial. basis and one member of
the committee of management is allotted to each group and if
delegates of one group have the right to cast 14 votes two
consequences will follow. First, the right of choosing a
representative of the constituency will be not confined to
that constituency but will be enlarged to outsiders in other
constituencies. Secondly, a member of the committee from
one constituency may be elected by a majority of votes from
delegates of other constituencies. If delegates residing
outside a territorial constituency
155
take part at the election for member of a committee from
territorial constituency within which he is not a resident
it will not only amount to enlarging the right of
representation beyond ones territorial basis but also deny
the delegates within the constituency the right of electing
their own representative.
It was said on behalf of the appellants that section 20 of
the Act speaks of a member of the co-operative society
having one vote in the affairs of the society with the
result that each member is entitled to exercise as many
votes as the members of the committee of management. Accent
was placed on the words ’affairs of the society’ and it was
said that the constitution of the committee of management
was one of the principal affairs of the society and
therefore each member would entitled to cast as many votes
as the strength of the committee of management. The fallacy
lies in overlooking the significant words in section 20 of
the Act that a member shall have one vote. It may also be
noticed that if each member exercises by way of illustration
14 votes in regard to 14 members of the committee each
member shall be "exercising 14 votes in the affairs of the
society.
Under rule 409 the principal matters to be kept in the fore-
front are these. First, the society will divide the
constituencies on territorial basis or any other rational
basis. By territorial basis is meant territory where the
member will reside. Residence is therefore the relative
requirement of territorial basis. If any other rational
basis like occupation or vocation is determined to be the
basis of a constituency the persons falling within the cons-
tituency will satisfy that test. Secondly, the society will
specify the proportion of members of the committee in such a
manner that different areas or interests may get suitable
representation. The inherent idea is that such areas or
interests will obtain representation. If membership is on
territorial basis, the different areas will get
representation according to the interest of such
territories. Again, if occupational or vocational or
professional tests are created for dividing groups such
interests will have to be given suitable representation
Representation is therefore with reference to areas or
interests. Judged by these principles the impeached
circular of the Registrar suffers from the vice of giving
the members the right of ’casting vote in constituencies to
which they do not belong. This strikes at the basic root of
right of representation. This also reads as under the
principle of one member one vote which is made into a rule
of law in the Act. [155 E-G]
The words ’affairs of the society’ cannot be equated with
the Constituencies to give each member a right to vote for
each constituency. That would defeat the purpose of section
20 and rule 409. The basic idea of a representative for
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each constituency
156
depends on the mandate of the respective constituency and
not of other constituencies. That is why section 20 of the
Act speaks of, one member having one vote irrespective of
shareholding. It means equality of votes, of members.
The constitution of the committee of management is indisput-
ably one of the affairs of the society. If each member
exercises franchise with respect to the representation from
his constituency he is not in any manner prevented from
having a right to partake in the affairs of the society
through a member elected from the constituency.
Some reliance was placed by counsel for the appellants on
rule 105 in support of the contention that every member
would have one vote for each member of the committee of
management. Rule 105 occurs in Chapter VII relating to
meetings and speaks of matters before a committee being
decided by a majority of votes of the members present. That
rule obviously has no reference to election but only to
passing of resolution by majority at meetings. It is
obvious that members of the committee of management will
have the right to vote at all matters at the meeting and
matters will be decided by a majority of votes.
The impeached circular of the Registrar is illegal and
unwarranted Registrar has no power to interpret rule 409.
The Registrar has equally no power to express view with
regard to conduct of the election and regulate the voting
rights by giving the members more than one vote. The
society is to frame rules for elections. Rules require the
sanction of the Registrar. The rules and the bye-laws
cannot be in derogation of the statute and statutory rules.
At an election of members of the committee of management one
member will have only One vote for the constituency to which
he belongs.
The result is that the elections which were held following
the circular of the Registrar are bad.
For these reasons the three appeals fail and are dismissed.
The two special leave petitions are also dismissed. Parties
will pay and bear their own costs.
G.C. Appeals dismissed.
157