Full Judgment Text
2025 INSC 436
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) NO. 4090 of 2024)
SHRI. MASAIDEVI VIVIDH
KARYAKARI SAHAKARI
SEVA SANSTHA MARYADIT
WAREWADI …APPELLANT(S)
VERSUS
THE STATE OF
MAHARASHTRA & ORS. …RESPONDENT(S)
WITH
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6551/2024)
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(@ SLP (CIVIL) No. 6086/2024)
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(@ SLP (CIVIL) 6262/2024
CIVIL APPEAL NO. ____________OF 2025
Signature Not Verified
(@ SLP (CIVIL) No. 10032/2024)
Digitally signed by
RAVI ARORA
Date: 2025.04.03
14:05:18 IST
Reason:
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(@ SLP (CIVIL) No. 5564/2024)
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(@ SLP (CIVIL) No. 5314/2024)
J U D G M E N T
PRASANNA B. VARALE, J:-
1. Leave granted.
2. The challenge in the present appeals is to the common
order dated 05.01.2024 in Writ Petition No.
8654/2023 and 42 other connected matters, whereby
the High Court of Judicature at Bombay allowed the
petitions preferred by the respondent no. 6 herein and
in other connected matters and set aside the orders
passed by the State of Maharashtra directing
registration of the appellant-societies.
3. For the sake of brevity and as the legal issue involved
is the same, we are referring to the facts of the W.P.
No. 8654 of 2023 resulting into SLP (C) No. 4090 of
2024. The factual background is that on 13.01.2023,
the appellant-society herein filed an application to the
Respondent-Assistant Registrar for getting permission
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 5 of 28
for registration of proposed society as a new Primary
Agricultural Credit Co-operative Society (hereinafter
‘PACCS’), as well as for opening a bank account. A
scrutiny was done by the Scrutiny Committee
(hereinafter ‘Committee’) wherein the application filed
by the appellant-society was rejected on 13.04.2023.
The reasons given by the Committee for rejection of
application are reproduced below:
“1. The District Deputy Registrar and
Divisional Joint Registrar, Kolhapur
have not verified and ascertained as
to whether the Revenue village of the
aforesaid proposed society is within
the purview of the existing society.
2. The information as to whether the
Promoters – members of the proposed
society are the members of other
existing societies or not, has not been
verified and submitted.
3. The Chief Promoter has not verified
and ascertained crop-wise cultivated
area of the Promoters – members in
the proposed society as mentioned in
the Crops Sowing Register.
4. The Kolhapur District Central Co-
operative Bank has not given
undertaking in respect of providing
loan as per it’s Crop-Loan Policy, to
the Promoters – members of the
proposed society or has not annexed
the Undertaking to the effect that
apart from the Kolhapur District
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 6 of 28
Central Co-operative Bank, other
Nationalised Banks or other Financial
Institutions are going to provide loan
to the proposed society.
5. The existing Credit Co-operative
Society for the Revenue village of the
proposed Society, has not issued No-
objection certificate to the proposed
Society for registration.
6. The existing Society has not
submitted information about member-
wise loans provided to the members
to be transferred to the proposed
Society.
7. The extracts of entries from the
Crops Sowing Register and 7/12
extract in respect of the lands of the
Promoters – members included in the
Registration Proposal, have not been
annexed to the Proposal for
Registration. Therefore, the probable
distribution of loan proposed by the
Society cannot be ascertained.
8. The Chief Promoter has not
submitted alongwith the proposal, the
information as to whether the
Promoters – members to be included
in the proposed society are included
in other existing society or not.
9. The self-explanatory opinion of the
Divisional Joint Registrar, District
Deputy Registrar and Taluka
Assistant Registrar, Co-operative
Societies, Kolhapur, as to whether
said society shall be financially
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 7 of 28
viable after registration or not has not
been submitted.
10. The Chief Promoter of the
proposed Society, on the basis of the
certificate issued by the Gaon
Kamgar Talathi, has certified that
agricultural loan of the approximate
amount of more than Rs.150.00 lakhs
will be provided however, he has not
enclosed with the proposal, the
documents in support of providing the
said loan and the documents for
verification thereof and therefore, it
cannot be ascertained that after
registration, the proposed society will
be able to provide loan of the amount
of more than Rs.150.00 lakhs.
11. The loan provided by the existing
society within the area of operation of
the proposed society is less than the
amount of Rs.150.00 lakhs and
therefore, existing society itself is not
financially viable. Therefore, it would
not be appropriate to allow
registration of another society of the
same type with same objectives
within the area of operation of the
existing society which itself is not
financially viable.
12. On the basis of the documents in
the Registration Proposal, the
Assistant Registrar, Co-operative
Societies, Tal. Shahuwadi, under his
letter dated 11.04.2023, has
appraised that the proposed society
will not be financially viable and
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 8 of 28
therefore, as per the instructions
mentioned in the Government
Resolution, it would not be
appropriate to grant permission for
registration of the said society.
13. Though the caveat has been filed
in respect of the registration of the
proposed society, as the society is not
complying with the criteria mentioned
in the Government Resolution dated
23.09.2013 and as the said proposal
is not financially viable, the proposal
of the aforesaid proposed Society has
been rejected and therefore, the
question to give an opportunity of
hearing to the Caveator at the level of
the Scrutiny Committee, does not
arise at all.
14. Thus, it is found that the existing
society itself is not financially viable.
Therefore, it would not be
appropriate· to allow registration of
another society of the same type with
same objectives within the area of
operation of the existing society
which itself is not financially viable.
Hence, considering the aforesaid
aspects and on perusing the
documents in the proposal, it does not
appear that after registration, the
proposed society will be financially
viable in future. Similarly, as per the
instructions mentioned in the
Government Resolution, as the
proposed society is not complying
with the financial criteria required for
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 9 of 28
the registration thereof, it is
unanimously resolved that the
registration proposal should be
rejected.”
4. Being aggrieved by the order of the Committee, the
appellant-society preferred an appeal under Section
152 of the Maharashtra Co-operative Societies Act,
1960 (hereinafter ‘the 1960 Act’) before the State.
Respondent No.6 herein, who is a member of Salashi
Vividh Karyakari Sahakari (Vikas) Seva Saunstha
Maryadit Salashi, a registered co-operative society
having its jurisdiction in Salashi and Warewadi,
District Kolhapur, got himself impleaded as a
respondent-party in the appeal proceedings.
5. The Minister, Co-operatives, on behalf of the State,
vide its order dated 28.06.2023, allowed the appeal
filed by the appellant herein and, thereby, set aside
the Order dated 13.4.2023 passed by the Committee.
It was also directed to the Respondent-Assistant
Registrar to register the appellant-society. The
reasoning given for allowing the appeal is reproduced
below:
“The applicant-society has primarily
sought an independent development
society for its independent revenue
village, based on the directives in the
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 10 of 28
Government Decision and its
amendment that there should be only
one primary agricultural credit society in
an independent revenue village. The
Primary Agricultural Credit society of the
neighbouring village of the applicant-
society has not objected to the proposal
of the applicant-society. It does not
happen and the ratio of risk assets to
capital also does not decrease.
The applicant-society has argued that
as per the lending policy of the bank, the
loan can be provided as per the norms.
Moreover, the applicant-society has
asserted that as per the policy of the
Central Government, the applicant-
society can do about 152. types of
business other than loan distribution
and thereby become profitable. It cannot
be said that it is wrong. Apart from this,
it cannot be denied that the applicant-
society can allocate loans by taking
loans from self-funds and other banks
as well………..
As the village of the applicant-society is
hilly area and there is no adequate
transportation facility, it is difficult and
troublesome to take membership of a
society established in another village
and go to that village to avail the
services of the society. Also Primary
Agricultural Credit Institutions in
neighbouring villages are also
applicants seem unable to avail the
services of the society. Therefore, the
government decision based on the
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 11 of 28
decision dated 16.01.2015 that a new
agricultural credit society can be
registered in a separate revenue village;
the applicant submits that, the proposal
for registration filed by the society is
reasonable and proper……..
However, the intervening-applicant has
not submitted any figures showing that
the cash value of the existing society or
the ratio of risk assets to the capital
would decrease after the registration of
the applicant society…….
The Respondent no.4 viz The Assistant
Registrar has checked the records in his
office that there is no registered primary
agricultural credit society in the
independent revenue village where the
applicant-society has jurisdiction.
Therefore, a report has been given while
submitting the proposal of. the
applicant-society to the senior office that
the registration of the applicant-society
will not adversely affect the financial
condition of the working primary
agricultural credit society. Adequate
contradiction has not been made by the
intervention-applicant…….
This means that the registration the
applicant-society will not adversely
affect any existing society. Also, within
3 years from the date of registration of
the applicant- society, share capital of
Rs.5/- lakhs and the applicant-society
is ready to give a guarantee to start a
new business in one year.”
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 12 of 28
6. Aggrieved by the order of the State, the respondent no.
6 herein filed a Writ Petition before the High Court of
Judicature at Bombay praying to set aside the order
dated 28.06.2023 passed by the State.
7. The High Court, vide the impugned common order,
allowed the appeal of the respondent no. 6 herein and
observed the following:
“ 9. I have perused the impugned
order. The Petitioners were
intervenors before the State
Government. Neither the issue of
locus standi of the Petitioners was
raised before the State Government
nor the State Government recorded
finding in the impugned order/s that
the Petitioners do not have any right
to object to the registration of the
contesting Respondents as
multipurpose co-operative societies.
The only contention which was raised
was that due to registration of the
proposed societies there will not be
any adverse impact on the financial
condition of the existing societies.
10. Considering the facts and
circumstances and in view of the
findings recorded by the scrutiny
committee, I am inclined to accept the
submission that the Petitioners who
are neither existing co-operative
societies or members of the existing
co-operative societies lack locus
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 13 of 28
standi to challenge the impugned
orders.
11. As regards merits, the scrutiny
committee who is in the form of expert
body after scrutinising the documents
filed in support of the application/s
made by the contesting Respondents
has recorded the specific finding that
the. proposed societies would not be
financially viable. The scrutiny
committee has further held that the
proposed societies do not fulfil the
requisite financial parameters laid
down in the Government Resolution
dated 23 September 2013. There is
no finding in the impugned order/s
that the findings recorded by the
scrutiny committee are perverse.
12. Apart from the above, as per, the
Government Resolution dated 14
February 2017 it is necessary for the
proposed societies to have share
capital of Rs.5 Lakhs at the time of
applying for registration. It appears
from the impugned order/s that the
said condition is also relaxed on the
basis of undertaking of the contesting
Respondents that they would raise
the share capital of Rs.5 Lakhs within
one/three years from the date of
registration of the society.
13. Considering the overall facts and
circumstances, the order/s impugned
cannot be allowed to stand as the
same are contrary to proviso to
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 14 of 28
Section 4 of the Maharashtra Co-
operative Societies Act.
14. The Petitions are allowed. The
order/s impugned in the present
Petitions are set aside. All
consequential actions are set aside”
8. Feeling aggrieved and dissatisfied with the impugned
order passed by the High Court, the appellants are
before us.
9. We have heard the learned senior counsels and
counsels for the parties and perused the material on
record.
10. The arguments advanced by the learned Senior
Counsel for the appellants are summarised
hereunder:
10.1 That the appellant is the first and only Co-operative
society in the said Revenue Village, a fact that has
been acknowledged by the Assistant Registrar as
well.
10.2 That it is practically not possible for any society to
have share capital of Rs. 5 lakhs at the time of
applying for registration. In this regard, an
undertaking had been submitted by the appellant-
society that they would raise the required share
capital of Rs. 5 lakhs within one to three years from
the date of registration of society and the appellant
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 15 of 28
has also undertaken the compliance of this term
before this Court.
10.3 That the appellant-society has made a genuine
effort to fulfil all the required documents at the time
of filing the application for registration.
10.4 That the State in its Order clearly stated that there
are multiple reasons which can destabilize the
financial status of a Society, therefore, because of
only one parameter i.e. loan distribution to the
crops, the registration of the society cannot be
denied.
10.5 That the respondent no. 6 does not have any locus-
standi to challenge the Order passed by the State.
10.6 That the Society, of which present respondent no.
6 is a member, has already given a ‘No-Objection-
Certificate’ to the present appellant-society and an
individual member cannot take contrary stand to
the society of which he is a member until and
unless that society passes resolution to that effect.
10.7 That the High Court, on one hand, accepted that
the petitioners therein did not hold any locus standi
yet, on the other hand, allowed the Writ Petition
filed by them.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 16 of 28
10.8 That the chart indicating the population of each
revenue village, submitted by the respondent no. 6,
is as per the 2011 census and it cannot be ignored
that the population in these villages must have
grown in the past 13-14 years.
10.9 That any co-operative society can manage 152
kinds of businesses apart from giving loan.
Therefore, it is unfair to ignore all others important
aspects which helps a society to run successfully.
10.10 That the minimum number of the membership for
registration of a new society is 75 and the present
appellant-society has given the list of 150
members. Therefore, the appellant-society is very
much ahead of the minimum required number of
memberships.
11. Per contra, the arguments advanced by the learned
Senior Counsels and counsels for the respondents are
stated as below:
11.1 That the eligibility for the purpose of registration
cannot be isolated from the impact on an existing
society, if any. The appellant herein has failed to
satisfy the threshold criteria and conditions to
establish its own viability.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 17 of 28
11.2 That it is not open to the appellant to now seek to
by-pass the expert Scrutiny Committee by
contending for the very first time before this Court
that the Committee was constituted without any
authority and/or it lacks jurisdiction to scrutinize
the appellant’s proposal for its registration as a
PACCS.
11.3 That Scrutiny Committee’s Order shows its in-
depth examination of the appellants’ proposals and
the Committee’s detailed findings which militate
against the eligibility of the appellants for
registration.
11.4 That the order passed by the State is ex-facie
perverse and unsustainable as it has allowed the
appellants’ registration without fulfilling the most
basic and mandatory pre-requisites for
registration.
11.5 That the respondent no. 6, being a member of an
existing society, is vitally affected inasmuch as the
registration of the appellant-society could lead to
destabilizing the existing society and even lead to
its closure.
11.6 That the performance of credit/loan disbursement
of existing primary credit cooperative societies
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 18 of 28
would show that even they are hardly in a position
to achieve the minimum target fixed by the
Government Resolution and, in such
circumstances, establishment of any proposed
Credit Cooperative Society in the adjacent village
would have disastrous effect on the existing credit
co-operative societies.
11.7 That the NOC relied upon by the appellant which
is alleged to be given by the society, of which
respondent no. 6 is a member, is unauthorised and
there is no mention of it being issued to the
appellant in record and proceedings of the
abovementioned society.
11.8 That the appellant has approached this Court with
unclean hands as it is obvious that the appellant
has sought to artificially inflate its membership by
showing dead persons so as to show a membership
with larger land holdings in order to meet the
viability criteria. This conduct shows the mala fides
of the appellant.
12. Before delving into the analysis of the facts of the case,
we find it pertinent to mention the relevant provisions
of the 1960 Act and the Government Resolutions dated
23.09.2013 and 14.02.2017.
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13. Chapter II of the 1960 Act deals with the registration
wherein Section 4 and Section 6 are the specific
relevant provisions for the purpose of this matter and
are reproduced as below:
“4. Societies which may be
registered:— A society, which has as
its objects the promotion of the
economic interests or general welfare
of its members or of the public, in
accordance with co-operative
principles or a society established
with the object of facilitating the
operations of any such society, may
be registered under this Act:
Provided that, no society shall be
registered if it is likely to be
economically unsound, or the
registration of which may have an
adverse effect on development' of the
co-operative movement, or the
registration of which may be contrary
to the policy directives which the
State Government may, from time to
time, issue.
6. Conditions of registration:-
(1) No society, other than a federal
society, shall be registered under
this Act,. Unless it consists of at
least ten persons or such higher
number of persons as the Registrar
may, having regard to the objects
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 20 of 28
and economic viability of a society
and development of the Co-
operative movement, determine
from time to time for a class of
societies (each of such persons
being a member of a different
family), who are qualified to be
members under this Act, and who
reside in the area of operation of
the society:
Provided that, a lift irrigation
society consisting of less than ten but
of five or more such persons may be
registered under this Act.
…”
[Emphasis supplied]
14. Now, it will be useful to refer to the Government
Resolutions to which reference is made in the
impugned judgment of the Hight Court.
15. The Government Resolution dated 23.09.2013, which
has been produced as Annexure P-1 before us, sets
out the newly revised criteria for registration of PACCS
and the revised condition nos. 4 and 5 read as follows:
“Condition No.4: The number of
members (accounting members) of a
newly registered primary agricultural
credit cooperative should be at least
75.
Condition No. 5.: For the purpose of
scrutiny of the proposal of primary
agricultural credit cooperative
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 21 of 28
society, committee will be formed as
under mentioned for the purpose of
inspection of financial ability.”
16. The Government of Maharashtra issued another
Government Resolution dated 14.02.2017, in
furtherance of which the Government Corrigendum
was issued, and it reads as follows:
“1) There should preferably be only
one primary agricultural credit
cooperative in a revenue village.
However, in villages where there is
scope for registration of more than
one society, taking into account other
criteria of economic viability, more
than one society can be registered.
1A) A Scheduled Primary Agricultural
Credit Co-operative Society before its
registration; it must have a minimum
of Rs.5 lakh share capital and it is
essential to do so.
….”
[Emphasis supplied]
17. A conjoint reading of Section 4 and condition No.1 of
Section 6 of the 1960 Act makes it very clear that the
economic viability of the society is a pre-requisite or
basic condition for grant of registration to the society.
18. Further, condition No. 5 of the Government Resolution
dated 23.09.2013 makes it unambiguous that a
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 22 of 28
Scrutiny Committee was to be set up/established
specifically for the purpose of inspection of financial
ability of a prospective society.
19. Additionally, Criteria 1A of the Government Resolution
dated 14.02.2017, further clarifies the said pre-
requisite of economic viability of the societies by
explicitly stating that a minimum of Rs. 5 lakhs share
capital is to be maintained by applicant society.
20. It is in the backdrop of the above referred provisions
of the 1960 Act as well as the Government Resolutions
that we have to peruse the order of the Scrutiny
Committee which examined the proposal of the
appellant-societies for registration.
21. The Committee in the opening part of its minutes
records as follows:
“…to scruitinize the registration
proposal of this scheduled society
and to check the financial
capability…”
22. This supports the respondents’ contention that it was
the duty of the Committee to check the financial
capability of the appellant-societies and it was an
expert Committee set up specifically to check the
eligibility criteria of the applicant societies.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 23 of 28
23. We have already referred to the reasons assigned by
the Scrutiny Committee for rejection of the application
in earlier part of this judgment at Paragraph 3. The
Paragraphs 4, 10 and 11 of the Committee’s order
therein noted the findings of the Committee with
regard to the appellant-society not meeting the
financial requirements in the form of a lack of bank
guarantee, lack of documents to support provision of
bank loan etc. It was in furtherance of these specific
findings that the Committee in clear words noted that:
“the petitioner society fails to comply
with the criteria of economic viability
and state it would not be advisable to
establish society of the same type
and with the same purpose in the
area of operation of an unprofitable
working society”
24. Thereafter, the State while deciding the appeal seems
to be impressed by the appellant’s submission that the
registration of the proposed society is not adversely
affecting the existing society as there was no objection
raised by the existing society.
25. In our considered opinion, the State, while deciding
the appeal, completely ignored the basic criteria or the
pre-requisite for the registration of society i.e. the
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 24 of 28
economic viability of the society. The said criteria and
pre-requisites had been laid down by the State itself
through its various Government Resolutions. As such,
it could not have taken a decision contrary to its own
guidelines.
26. It will not be out of place to state that the State was
much impressed by the submissions advanced on
behalf of the appellant-society that any Cooperative
Society can manage 152 kinds of businesses apart
from giving loans.
27. However, the appellant had made such submissions
without placing any supporting material on record
before the Scrutiny Committee to show as to what kind
of other 152 businesses the appellant-society would
undertake and how the appellant-society is
economically viable. Yet, the State accepted the
hypothetical claim of the appellant-society. In our
opinion, in doing so, the State has essentially ignored
the aspect of economic viability.
28. Admittedly, the Committee had found that there was
nothing in the proposal submitted by the appellant-
society to substantiate the conditions of financial
health as provided in the Government Resolution
dated 14.02.2017. There was merely a bald statement
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 25 of 28
that the Kolhapur District Central Cooperative Bank
is going to support the proposed appellant-society but,
as noted by the Committee, there was no letter of
undertaking that was attached to that effect.
29. Thus, it is apparent that there was absolutely no
material on record before the Committee to show that
the appellant-society was in a position to comply with
the pre-requisites as referred to in the Government
Resolution dated 14.02.2017. The Committee had,
therefore, rightly rejected the application for
registration.
30. It may not be out of place to state that if a society is
unable to comply with the pre-condition or pre-
requisite in regard to the economic viability of the
society, allowing the registration of such a society
which might not even be able to function, it may
adversely affect the members of the society and,
ultimately, it would be frustrating the very object of
the establishment of the said society.
31. It must be noted that the constitution of the
Committee and the examination of the proposal by the
Committee is a vital part of the Policy Directives of the
State Government which is required to be complied
with conditions under Section 4 of the 1960 Act.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 26 of 28
Therefore, ignoring the findings of the Committee and
allowing the registration of the society when the
appellants have been unable to point out any
perversity in the said findings shall lead to an
unjustifiable interference in the Committee’s Order.
32. Further, it must be noted that the State Government
may use its discretion for relaxation of conditions.
However, such a discretion cannot be used to frustrate
the very object of the Act. Such a power of relaxing the
necessary pre-requisites could have been made only
through the means of a Government Resolution and
not at the whims of the State in an appeal which
essentially led to by-passing the eligibility criteria set
out by the Government through its multiple
Resolutions. Once such an eligibility standard has
been set out by the Government, the only proper route
to introduce any alteration or relaxation of these
conditions would have been through a subsequent
Government Resolution. In the present case, by
relaxing the pre-requisite condition relating to
financial viability, the State allowed the registration of
the society, which in our opinion, resulted in nothing
but frustrating the very object of the Act.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 27 of 28
33. Lastly, with respect to the locus standi of the
respondent no. 6, such an argument by the appellants
shall not restrain interference by this Court or the
High Court in the matter when there is patent illegality
in the State’s order which requires interference by the
Courts of law.
34. Therefore, considering all these aspects, we are unable
to find any fault in the order passed by the High Court.
The High Court of Judicature at Bombay has rightly
allowed the petition and set aside the order passed by
the State.
35. Accordingly, the appeals stand dismissed, and the
impugned order of the High Court is upheld.
36. Pending application(s), if any, shall be disposed of
accordingly.
37. No order as to cost.
........................................J.
[VIKRAM NATH]
.........................................J.
[PRASANNA B. VARALE]
NEW DELHI;
APRIL 2, 2025.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 28 of 28
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) NO. 4090 of 2024)
SHRI. MASAIDEVI VIVIDH
KARYAKARI SAHAKARI
SEVA SANSTHA MARYADIT
WAREWADI …APPELLANT(S)
VERSUS
THE STATE OF
MAHARASHTRA & ORS. …RESPONDENT(S)
WITH
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6551/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6086/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) 6262/2024
CIVIL APPEAL NO. ____________OF 2025
Signature Not Verified
(@ SLP (CIVIL) No. 10032/2024)
Digitally signed by
RAVI ARORA
Date: 2025.04.03
14:05:18 IST
Reason:
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 1 of 28
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6619/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6535/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6308/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 4808/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6324/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6499/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6493/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6065/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 4926/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 10030/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5423/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5008/2024)
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 2 of 28
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5862/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 9579/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6264/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6168/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6475/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5430/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6360/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5298/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 4929/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5062/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6274/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6621/2024)
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 3 of 28
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5598/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5341/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5385/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5345/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5315/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 7714/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 7722/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 10031/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6222/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5564/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5027/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5312/2024)
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 4 of 28
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 6275/2024)
CIVIL APPEAL NO. ____________OF 2025
(@ SLP (CIVIL) No. 5314/2024)
J U D G M E N T
PRASANNA B. VARALE, J:-
1. Leave granted.
2. The challenge in the present appeals is to the common
order dated 05.01.2024 in Writ Petition No.
8654/2023 and 42 other connected matters, whereby
the High Court of Judicature at Bombay allowed the
petitions preferred by the respondent no. 6 herein and
in other connected matters and set aside the orders
passed by the State of Maharashtra directing
registration of the appellant-societies.
3. For the sake of brevity and as the legal issue involved
is the same, we are referring to the facts of the W.P.
No. 8654 of 2023 resulting into SLP (C) No. 4090 of
2024. The factual background is that on 13.01.2023,
the appellant-society herein filed an application to the
Respondent-Assistant Registrar for getting permission
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 5 of 28
for registration of proposed society as a new Primary
Agricultural Credit Co-operative Society (hereinafter
‘PACCS’), as well as for opening a bank account. A
scrutiny was done by the Scrutiny Committee
(hereinafter ‘Committee’) wherein the application filed
by the appellant-society was rejected on 13.04.2023.
The reasons given by the Committee for rejection of
application are reproduced below:
“1. The District Deputy Registrar and
Divisional Joint Registrar, Kolhapur
have not verified and ascertained as
to whether the Revenue village of the
aforesaid proposed society is within
the purview of the existing society.
2. The information as to whether the
Promoters – members of the proposed
society are the members of other
existing societies or not, has not been
verified and submitted.
3. The Chief Promoter has not verified
and ascertained crop-wise cultivated
area of the Promoters – members in
the proposed society as mentioned in
the Crops Sowing Register.
4. The Kolhapur District Central Co-
operative Bank has not given
undertaking in respect of providing
loan as per it’s Crop-Loan Policy, to
the Promoters – members of the
proposed society or has not annexed
the Undertaking to the effect that
apart from the Kolhapur District
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 6 of 28
Central Co-operative Bank, other
Nationalised Banks or other Financial
Institutions are going to provide loan
to the proposed society.
5. The existing Credit Co-operative
Society for the Revenue village of the
proposed Society, has not issued No-
objection certificate to the proposed
Society for registration.
6. The existing Society has not
submitted information about member-
wise loans provided to the members
to be transferred to the proposed
Society.
7. The extracts of entries from the
Crops Sowing Register and 7/12
extract in respect of the lands of the
Promoters – members included in the
Registration Proposal, have not been
annexed to the Proposal for
Registration. Therefore, the probable
distribution of loan proposed by the
Society cannot be ascertained.
8. The Chief Promoter has not
submitted alongwith the proposal, the
information as to whether the
Promoters – members to be included
in the proposed society are included
in other existing society or not.
9. The self-explanatory opinion of the
Divisional Joint Registrar, District
Deputy Registrar and Taluka
Assistant Registrar, Co-operative
Societies, Kolhapur, as to whether
said society shall be financially
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 7 of 28
viable after registration or not has not
been submitted.
10. The Chief Promoter of the
proposed Society, on the basis of the
certificate issued by the Gaon
Kamgar Talathi, has certified that
agricultural loan of the approximate
amount of more than Rs.150.00 lakhs
will be provided however, he has not
enclosed with the proposal, the
documents in support of providing the
said loan and the documents for
verification thereof and therefore, it
cannot be ascertained that after
registration, the proposed society will
be able to provide loan of the amount
of more than Rs.150.00 lakhs.
11. The loan provided by the existing
society within the area of operation of
the proposed society is less than the
amount of Rs.150.00 lakhs and
therefore, existing society itself is not
financially viable. Therefore, it would
not be appropriate to allow
registration of another society of the
same type with same objectives
within the area of operation of the
existing society which itself is not
financially viable.
12. On the basis of the documents in
the Registration Proposal, the
Assistant Registrar, Co-operative
Societies, Tal. Shahuwadi, under his
letter dated 11.04.2023, has
appraised that the proposed society
will not be financially viable and
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 8 of 28
therefore, as per the instructions
mentioned in the Government
Resolution, it would not be
appropriate to grant permission for
registration of the said society.
13. Though the caveat has been filed
in respect of the registration of the
proposed society, as the society is not
complying with the criteria mentioned
in the Government Resolution dated
23.09.2013 and as the said proposal
is not financially viable, the proposal
of the aforesaid proposed Society has
been rejected and therefore, the
question to give an opportunity of
hearing to the Caveator at the level of
the Scrutiny Committee, does not
arise at all.
14. Thus, it is found that the existing
society itself is not financially viable.
Therefore, it would not be
appropriate· to allow registration of
another society of the same type with
same objectives within the area of
operation of the existing society
which itself is not financially viable.
Hence, considering the aforesaid
aspects and on perusing the
documents in the proposal, it does not
appear that after registration, the
proposed society will be financially
viable in future. Similarly, as per the
instructions mentioned in the
Government Resolution, as the
proposed society is not complying
with the financial criteria required for
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 9 of 28
the registration thereof, it is
unanimously resolved that the
registration proposal should be
rejected.”
4. Being aggrieved by the order of the Committee, the
appellant-society preferred an appeal under Section
152 of the Maharashtra Co-operative Societies Act,
1960 (hereinafter ‘the 1960 Act’) before the State.
Respondent No.6 herein, who is a member of Salashi
Vividh Karyakari Sahakari (Vikas) Seva Saunstha
Maryadit Salashi, a registered co-operative society
having its jurisdiction in Salashi and Warewadi,
District Kolhapur, got himself impleaded as a
respondent-party in the appeal proceedings.
5. The Minister, Co-operatives, on behalf of the State,
vide its order dated 28.06.2023, allowed the appeal
filed by the appellant herein and, thereby, set aside
the Order dated 13.4.2023 passed by the Committee.
It was also directed to the Respondent-Assistant
Registrar to register the appellant-society. The
reasoning given for allowing the appeal is reproduced
below:
“The applicant-society has primarily
sought an independent development
society for its independent revenue
village, based on the directives in the
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 10 of 28
Government Decision and its
amendment that there should be only
one primary agricultural credit society in
an independent revenue village. The
Primary Agricultural Credit society of the
neighbouring village of the applicant-
society has not objected to the proposal
of the applicant-society. It does not
happen and the ratio of risk assets to
capital also does not decrease.
The applicant-society has argued that
as per the lending policy of the bank, the
loan can be provided as per the norms.
Moreover, the applicant-society has
asserted that as per the policy of the
Central Government, the applicant-
society can do about 152. types of
business other than loan distribution
and thereby become profitable. It cannot
be said that it is wrong. Apart from this,
it cannot be denied that the applicant-
society can allocate loans by taking
loans from self-funds and other banks
as well………..
As the village of the applicant-society is
hilly area and there is no adequate
transportation facility, it is difficult and
troublesome to take membership of a
society established in another village
and go to that village to avail the
services of the society. Also Primary
Agricultural Credit Institutions in
neighbouring villages are also
applicants seem unable to avail the
services of the society. Therefore, the
government decision based on the
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 11 of 28
decision dated 16.01.2015 that a new
agricultural credit society can be
registered in a separate revenue village;
the applicant submits that, the proposal
for registration filed by the society is
reasonable and proper……..
However, the intervening-applicant has
not submitted any figures showing that
the cash value of the existing society or
the ratio of risk assets to the capital
would decrease after the registration of
the applicant society…….
The Respondent no.4 viz The Assistant
Registrar has checked the records in his
office that there is no registered primary
agricultural credit society in the
independent revenue village where the
applicant-society has jurisdiction.
Therefore, a report has been given while
submitting the proposal of. the
applicant-society to the senior office that
the registration of the applicant-society
will not adversely affect the financial
condition of the working primary
agricultural credit society. Adequate
contradiction has not been made by the
intervention-applicant…….
This means that the registration the
applicant-society will not adversely
affect any existing society. Also, within
3 years from the date of registration of
the applicant- society, share capital of
Rs.5/- lakhs and the applicant-society
is ready to give a guarantee to start a
new business in one year.”
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 12 of 28
6. Aggrieved by the order of the State, the respondent no.
6 herein filed a Writ Petition before the High Court of
Judicature at Bombay praying to set aside the order
dated 28.06.2023 passed by the State.
7. The High Court, vide the impugned common order,
allowed the appeal of the respondent no. 6 herein and
observed the following:
“ 9. I have perused the impugned
order. The Petitioners were
intervenors before the State
Government. Neither the issue of
locus standi of the Petitioners was
raised before the State Government
nor the State Government recorded
finding in the impugned order/s that
the Petitioners do not have any right
to object to the registration of the
contesting Respondents as
multipurpose co-operative societies.
The only contention which was raised
was that due to registration of the
proposed societies there will not be
any adverse impact on the financial
condition of the existing societies.
10. Considering the facts and
circumstances and in view of the
findings recorded by the scrutiny
committee, I am inclined to accept the
submission that the Petitioners who
are neither existing co-operative
societies or members of the existing
co-operative societies lack locus
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 13 of 28
standi to challenge the impugned
orders.
11. As regards merits, the scrutiny
committee who is in the form of expert
body after scrutinising the documents
filed in support of the application/s
made by the contesting Respondents
has recorded the specific finding that
the. proposed societies would not be
financially viable. The scrutiny
committee has further held that the
proposed societies do not fulfil the
requisite financial parameters laid
down in the Government Resolution
dated 23 September 2013. There is
no finding in the impugned order/s
that the findings recorded by the
scrutiny committee are perverse.
12. Apart from the above, as per, the
Government Resolution dated 14
February 2017 it is necessary for the
proposed societies to have share
capital of Rs.5 Lakhs at the time of
applying for registration. It appears
from the impugned order/s that the
said condition is also relaxed on the
basis of undertaking of the contesting
Respondents that they would raise
the share capital of Rs.5 Lakhs within
one/three years from the date of
registration of the society.
13. Considering the overall facts and
circumstances, the order/s impugned
cannot be allowed to stand as the
same are contrary to proviso to
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 14 of 28
Section 4 of the Maharashtra Co-
operative Societies Act.
14. The Petitions are allowed. The
order/s impugned in the present
Petitions are set aside. All
consequential actions are set aside”
8. Feeling aggrieved and dissatisfied with the impugned
order passed by the High Court, the appellants are
before us.
9. We have heard the learned senior counsels and
counsels for the parties and perused the material on
record.
10. The arguments advanced by the learned Senior
Counsel for the appellants are summarised
hereunder:
10.1 That the appellant is the first and only Co-operative
society in the said Revenue Village, a fact that has
been acknowledged by the Assistant Registrar as
well.
10.2 That it is practically not possible for any society to
have share capital of Rs. 5 lakhs at the time of
applying for registration. In this regard, an
undertaking had been submitted by the appellant-
society that they would raise the required share
capital of Rs. 5 lakhs within one to three years from
the date of registration of society and the appellant
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 15 of 28
has also undertaken the compliance of this term
before this Court.
10.3 That the appellant-society has made a genuine
effort to fulfil all the required documents at the time
of filing the application for registration.
10.4 That the State in its Order clearly stated that there
are multiple reasons which can destabilize the
financial status of a Society, therefore, because of
only one parameter i.e. loan distribution to the
crops, the registration of the society cannot be
denied.
10.5 That the respondent no. 6 does not have any locus-
standi to challenge the Order passed by the State.
10.6 That the Society, of which present respondent no.
6 is a member, has already given a ‘No-Objection-
Certificate’ to the present appellant-society and an
individual member cannot take contrary stand to
the society of which he is a member until and
unless that society passes resolution to that effect.
10.7 That the High Court, on one hand, accepted that
the petitioners therein did not hold any locus standi
yet, on the other hand, allowed the Writ Petition
filed by them.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 16 of 28
10.8 That the chart indicating the population of each
revenue village, submitted by the respondent no. 6,
is as per the 2011 census and it cannot be ignored
that the population in these villages must have
grown in the past 13-14 years.
10.9 That any co-operative society can manage 152
kinds of businesses apart from giving loan.
Therefore, it is unfair to ignore all others important
aspects which helps a society to run successfully.
10.10 That the minimum number of the membership for
registration of a new society is 75 and the present
appellant-society has given the list of 150
members. Therefore, the appellant-society is very
much ahead of the minimum required number of
memberships.
11. Per contra, the arguments advanced by the learned
Senior Counsels and counsels for the respondents are
stated as below:
11.1 That the eligibility for the purpose of registration
cannot be isolated from the impact on an existing
society, if any. The appellant herein has failed to
satisfy the threshold criteria and conditions to
establish its own viability.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 17 of 28
11.2 That it is not open to the appellant to now seek to
by-pass the expert Scrutiny Committee by
contending for the very first time before this Court
that the Committee was constituted without any
authority and/or it lacks jurisdiction to scrutinize
the appellant’s proposal for its registration as a
PACCS.
11.3 That Scrutiny Committee’s Order shows its in-
depth examination of the appellants’ proposals and
the Committee’s detailed findings which militate
against the eligibility of the appellants for
registration.
11.4 That the order passed by the State is ex-facie
perverse and unsustainable as it has allowed the
appellants’ registration without fulfilling the most
basic and mandatory pre-requisites for
registration.
11.5 That the respondent no. 6, being a member of an
existing society, is vitally affected inasmuch as the
registration of the appellant-society could lead to
destabilizing the existing society and even lead to
its closure.
11.6 That the performance of credit/loan disbursement
of existing primary credit cooperative societies
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 18 of 28
would show that even they are hardly in a position
to achieve the minimum target fixed by the
Government Resolution and, in such
circumstances, establishment of any proposed
Credit Cooperative Society in the adjacent village
would have disastrous effect on the existing credit
co-operative societies.
11.7 That the NOC relied upon by the appellant which
is alleged to be given by the society, of which
respondent no. 6 is a member, is unauthorised and
there is no mention of it being issued to the
appellant in record and proceedings of the
abovementioned society.
11.8 That the appellant has approached this Court with
unclean hands as it is obvious that the appellant
has sought to artificially inflate its membership by
showing dead persons so as to show a membership
with larger land holdings in order to meet the
viability criteria. This conduct shows the mala fides
of the appellant.
12. Before delving into the analysis of the facts of the case,
we find it pertinent to mention the relevant provisions
of the 1960 Act and the Government Resolutions dated
23.09.2013 and 14.02.2017.
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 19 of 28
13. Chapter II of the 1960 Act deals with the registration
wherein Section 4 and Section 6 are the specific
relevant provisions for the purpose of this matter and
are reproduced as below:
“4. Societies which may be
registered:— A society, which has as
its objects the promotion of the
economic interests or general welfare
of its members or of the public, in
accordance with co-operative
principles or a society established
with the object of facilitating the
operations of any such society, may
be registered under this Act:
Provided that, no society shall be
registered if it is likely to be
economically unsound, or the
registration of which may have an
adverse effect on development' of the
co-operative movement, or the
registration of which may be contrary
to the policy directives which the
State Government may, from time to
time, issue.
6. Conditions of registration:-
(1) No society, other than a federal
society, shall be registered under
this Act,. Unless it consists of at
least ten persons or such higher
number of persons as the Registrar
may, having regard to the objects
CA No…./2025 @ SLP(C) NO.4090/2024, ETC. ETC. Page 20 of 28
and economic viability of a society
and development of the Co-
operative movement, determine
from time to time for a class of
societies (each of such persons
being a member of a different
family), who are qualified to be
members under this Act, and who
reside in the area of operation of
the society:
Provided that, a lift irrigation
society consisting of less than ten but
of five or more such persons may be
registered under this Act.
…”
[Emphasis supplied]
14. Now, it will be useful to refer to the Government
Resolutions to which reference is made in the
impugned judgment of the Hight Court.
15. The Government Resolution dated 23.09.2013, which
has been produced as Annexure P-1 before us, sets
out the newly revised criteria for registration of PACCS
and the revised condition nos. 4 and 5 read as follows:
“Condition No.4: The number of
members (accounting members) of a
newly registered primary agricultural
credit cooperative should be at least
75.
Condition No. 5.: For the purpose of
scrutiny of the proposal of primary
agricultural credit cooperative
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society, committee will be formed as
under mentioned for the purpose of
inspection of financial ability.”
16. The Government of Maharashtra issued another
Government Resolution dated 14.02.2017, in
furtherance of which the Government Corrigendum
was issued, and it reads as follows:
“1) There should preferably be only
one primary agricultural credit
cooperative in a revenue village.
However, in villages where there is
scope for registration of more than
one society, taking into account other
criteria of economic viability, more
than one society can be registered.
1A) A Scheduled Primary Agricultural
Credit Co-operative Society before its
registration; it must have a minimum
of Rs.5 lakh share capital and it is
essential to do so.
….”
[Emphasis supplied]
17. A conjoint reading of Section 4 and condition No.1 of
Section 6 of the 1960 Act makes it very clear that the
economic viability of the society is a pre-requisite or
basic condition for grant of registration to the society.
18. Further, condition No. 5 of the Government Resolution
dated 23.09.2013 makes it unambiguous that a
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Scrutiny Committee was to be set up/established
specifically for the purpose of inspection of financial
ability of a prospective society.
19. Additionally, Criteria 1A of the Government Resolution
dated 14.02.2017, further clarifies the said pre-
requisite of economic viability of the societies by
explicitly stating that a minimum of Rs. 5 lakhs share
capital is to be maintained by applicant society.
20. It is in the backdrop of the above referred provisions
of the 1960 Act as well as the Government Resolutions
that we have to peruse the order of the Scrutiny
Committee which examined the proposal of the
appellant-societies for registration.
21. The Committee in the opening part of its minutes
records as follows:
“…to scruitinize the registration
proposal of this scheduled society
and to check the financial
capability…”
22. This supports the respondents’ contention that it was
the duty of the Committee to check the financial
capability of the appellant-societies and it was an
expert Committee set up specifically to check the
eligibility criteria of the applicant societies.
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23. We have already referred to the reasons assigned by
the Scrutiny Committee for rejection of the application
in earlier part of this judgment at Paragraph 3. The
Paragraphs 4, 10 and 11 of the Committee’s order
therein noted the findings of the Committee with
regard to the appellant-society not meeting the
financial requirements in the form of a lack of bank
guarantee, lack of documents to support provision of
bank loan etc. It was in furtherance of these specific
findings that the Committee in clear words noted that:
“the petitioner society fails to comply
with the criteria of economic viability
and state it would not be advisable to
establish society of the same type
and with the same purpose in the
area of operation of an unprofitable
working society”
24. Thereafter, the State while deciding the appeal seems
to be impressed by the appellant’s submission that the
registration of the proposed society is not adversely
affecting the existing society as there was no objection
raised by the existing society.
25. In our considered opinion, the State, while deciding
the appeal, completely ignored the basic criteria or the
pre-requisite for the registration of society i.e. the
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economic viability of the society. The said criteria and
pre-requisites had been laid down by the State itself
through its various Government Resolutions. As such,
it could not have taken a decision contrary to its own
guidelines.
26. It will not be out of place to state that the State was
much impressed by the submissions advanced on
behalf of the appellant-society that any Cooperative
Society can manage 152 kinds of businesses apart
from giving loans.
27. However, the appellant had made such submissions
without placing any supporting material on record
before the Scrutiny Committee to show as to what kind
of other 152 businesses the appellant-society would
undertake and how the appellant-society is
economically viable. Yet, the State accepted the
hypothetical claim of the appellant-society. In our
opinion, in doing so, the State has essentially ignored
the aspect of economic viability.
28. Admittedly, the Committee had found that there was
nothing in the proposal submitted by the appellant-
society to substantiate the conditions of financial
health as provided in the Government Resolution
dated 14.02.2017. There was merely a bald statement
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that the Kolhapur District Central Cooperative Bank
is going to support the proposed appellant-society but,
as noted by the Committee, there was no letter of
undertaking that was attached to that effect.
29. Thus, it is apparent that there was absolutely no
material on record before the Committee to show that
the appellant-society was in a position to comply with
the pre-requisites as referred to in the Government
Resolution dated 14.02.2017. The Committee had,
therefore, rightly rejected the application for
registration.
30. It may not be out of place to state that if a society is
unable to comply with the pre-condition or pre-
requisite in regard to the economic viability of the
society, allowing the registration of such a society
which might not even be able to function, it may
adversely affect the members of the society and,
ultimately, it would be frustrating the very object of
the establishment of the said society.
31. It must be noted that the constitution of the
Committee and the examination of the proposal by the
Committee is a vital part of the Policy Directives of the
State Government which is required to be complied
with conditions under Section 4 of the 1960 Act.
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Therefore, ignoring the findings of the Committee and
allowing the registration of the society when the
appellants have been unable to point out any
perversity in the said findings shall lead to an
unjustifiable interference in the Committee’s Order.
32. Further, it must be noted that the State Government
may use its discretion for relaxation of conditions.
However, such a discretion cannot be used to frustrate
the very object of the Act. Such a power of relaxing the
necessary pre-requisites could have been made only
through the means of a Government Resolution and
not at the whims of the State in an appeal which
essentially led to by-passing the eligibility criteria set
out by the Government through its multiple
Resolutions. Once such an eligibility standard has
been set out by the Government, the only proper route
to introduce any alteration or relaxation of these
conditions would have been through a subsequent
Government Resolution. In the present case, by
relaxing the pre-requisite condition relating to
financial viability, the State allowed the registration of
the society, which in our opinion, resulted in nothing
but frustrating the very object of the Act.
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33. Lastly, with respect to the locus standi of the
respondent no. 6, such an argument by the appellants
shall not restrain interference by this Court or the
High Court in the matter when there is patent illegality
in the State’s order which requires interference by the
Courts of law.
34. Therefore, considering all these aspects, we are unable
to find any fault in the order passed by the High Court.
The High Court of Judicature at Bombay has rightly
allowed the petition and set aside the order passed by
the State.
35. Accordingly, the appeals stand dismissed, and the
impugned order of the High Court is upheld.
36. Pending application(s), if any, shall be disposed of
accordingly.
37. No order as to cost.
........................................J.
[VIKRAM NATH]
.........................................J.
[PRASANNA B. VARALE]
NEW DELHI;
APRIL 2, 2025.
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