Full Judgment Text
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PETITIONER:
STATE OF U.P.. & ANR. ETC.
Vs.
RESPONDENT:
C.O.D. CHHEOKI EMPLOYEES’ CO-OP.SOCIETY LTD. & ORS. ETC.
DATE OF JUDGMENT: 17/01/1997
BENCH:
K. RAMASWAMY, S. SAGHIR AHMAD
ACT:
HEADNOTE:
JUDGMENT:
WITH
CIVIL APPEAL NO. 605 OF 1997
(Arising out of SLP (C) No.12379 of 1995)
O R D E R
Impleadment and Intervention allowed.
Leave granted.
We have heard learned counsel for the parties.
These appeals raise an interesting questions of law
relating to the validity of the Act and the Rules providing
reservation for or nomination of weaker sections into the
Co-operative Societies registered under the U.P. Co-
operative Societies Act, 1965 (for short, the ‘Act’) and the
U.P. Co-operative Societies Rules, 1968 (for short, the
Rules ‘Rules’), as amended from time to time.
The question is: whether the U.P. Legislature has power
to make the law to so amend the Act and the Rules as to
provide for reservation to the weaker sections? The High
Court declared Section 130(2)(xii) and (xii-A) and the
provisos and the explanation to sub-rule 393-A, Rule 393-B,
clause (d) of sub-rule (4) and part of sub-rules (6) to (8)
of Rules 440, so far as relating to reservation of seats for
weaker-sections, sub-rule (3) of Rule 444-A and clause (i)
of sub-rule (5) of Rule 453 as ultra vires the Constitution
and accordingly quashed them. Calling in question this
judgment of the High Court of Allahabad dated March 10, 1995
in CMWP Nos.40006 and 40121 of 1994, these appeal have come
to be filed.
Due to absence of representation of democratic
character in the management of the co-operative societies on
the basis of election by the general body of the society,
the members of the weaker sections, namely, Scheduled Castes
and Scheduled Tribes women and other backward classes do not
find place. Consequently, the Government introduced
amendment to the Act. By adoption of the definition of
"Other Backward Classes" contained in U.P. Public Services
Reservation for Scheduled Castes and Scheduled Tribes and
Other backward Classes Act, 1994, brought Other Backward
Classes within the ambit of weaker sections and made all of
them members of the Committee of the Management of the Co-
operative Society registered under. The Act so as to enable
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them to be elected or nominated as members. Section 4 of the
Act prescribes the guidelines in the matter of formation of
the Co-operative Societies and reads as under:
"4. Societies which may be
registered - Subject to the
provisions of this Act, a society
which has as its object the
promotion of the economic interest
of its members in accordance with
co-operative principles or a
society established with the object
of facilitating the operations of
such a society, may be registered
under this Act.
EXPLANATION - Co-operative
principles shall
(a) advancement of economic
interest of the members in
accordance with public morals,
decency and the relevant directive
principles of State Policy
enunciated in the Constitution of
India;
(b) regulation and restriction of
profit notice;
(c) promotion of thrift, mutual
aid and self-help;
(d) voluntary membership; and
(e) democratic constitution of the
society."
Section 29 of the Act envisages the constitution of
Committee of Management. Sub-section (1) reads as under:
’29(1) The Management of every,
co-operative society shall vest in
a Committee of Management
constituted in accordance with this
Act, the rules and the bye-laws,
which shall exercise such powers
and perform such duties as may be
conferred or imposed by this Act,
the rules and the bye-laws."
(emphasis supplied)
Other sub-sections are not relevant; hence omitted.
Section 30(1) to (4) deal with election of the Chairman and
Vice-Chairman of the Society. Section 130(1) provides that
the State Government may make Rules. Sub-section (2)
postulates that, in particular, and without prejudice to the
generality of the power under sub-section (1), the rules to
be made under this section may provide for all or any of the
matters enumerated therein. In pursuance thereof, Rules came
to be amended. Clauses (xii) and (xii-A) read as under:
"(xii) the election of the
members and Chairman and Vice-
Chairman of the Committee of
Management of a co-operative
society, including delimitation of
constituencies, reservation of
seats for women and members
belonging to weaker sections
settlement of election disputes,
and levy of fees in respect of any
such matter;
(xii-A) the nomination of women and
members belonging to weaker
sections in the committee of
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management of a co-operative
society."
These amendments were brought on statue by Amendment
Act 17 of 1977. Rule 393 (1) provides as under:
"Section 393(1) : A co-operative
society may have as many persons on
its committee of Management as may
e provided in its bye-laws subject
to a maximum of fifteen persons.
Any other committee or sub-
committee of the society shall be
smaller than its Committee of
Management and in no case such
committee or sub-committee shall
consist of more than seven members;
Provided that in the Committee of
Management of every co-operative
society three seats shall be
reserved of which one shall be
reserved for Scheduled Castes or
Scheduled Tribes, one for Backward
Classes of citizens and one for
women:
Provided further that in case of
Uttar Pradesh Co-operative Consumer
Federation, Central and Primary
Consumer Co-operative Societies
there seats shall be reserved for
women and one for persons belonging
to Scheduled Castes or Scheduled
Tribes or Backward Classes of
citizens.
EXPLANATION - In this rule the
expression "backward classes of
citizens" shall have the meaning
assigned to it in clause (b) of
Section 2 of the Uttar Pradesh
Public Service (Reservation of
Scheduled Castes, Tribes and other
Backward Classes) Act, 1994.
(2) Where a co-operative society
referred to in sub-rule (1) for
any reasons whatsoever, fails to
elect on the Committee of
Management such number of persons
for whom seats are reserved or the
vacancy occurs the deficiency shall
be made good or filed, as the case
may be, by the State Government by
nominating persons belonging to
such class on the Committee of
Management of such society.
Expression "weaker section"
referred to in these rules shall
mean a person belonging to
Scheduled Castes, Scheduled Tribes,
women and Backward Classes of
citizens referred to
in the explanation of sub-rule (1)."
The Preamble of the Constitution provides for socio-
economic and political justice to all citizens and dignity
of person, with equality of status and of opportunity.
Article 46 of the Constitution enjoins that "the State shall
promote with special care, the economic interest of the
weaker sections of the people". The object of Section 4 of
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the Act paves way to promote the economic interest and
status of the members of the society in accordance with the
co-operative principles to facilitate opportunity to augment
the economic improvement of the members of the society by
co-operative principles by providing facilities and
opportunities. The advancement of economic improvement is
one of the rights enshrined under the constitution. Section
4, therefore, intends to effectuate the constitutional
objective in accordance with co-operative principles,
morality, decency and the relevant directive principles and
the State Policy enunciated in the Preamble, Fundamental
Rights and Directive Principles of the State Policy, by
operation of clause (a) of Explanation of Section 4, clause
(c) envisages representation of all sections of the society
in a democratic set up so that they all get the opportunity
to avail promotion of their economic interests in accordance
with co-operative principles by being members of the society
established and registered under the Act, rules or bye-laws
or by being elected to the management thereof when
representation in the management of the Committee by
electoral process of the weaker sections is not achieved on
account of short fall in their nomination to the Committee.
Is one of the principal programmes and the policy under the
Act. Clause 24 and (25) of Article 366 define "Scheduled
Castes" and "Scheduled Tribes" and Articles 341 and 342
envisage issue of presidential notification specifying for
each State the list of Scheduled Castes and Scheduled Tribes
respectively. As far as women are concerned, there is no
need for specification. The Other Backward Classes are
identified as those specified in the Public Services
Reservation Act, 1994. The application of this Act is only
for the purpose of identification of other Backward Classes
and no more. Under the Act, all of them constitute weaker
sections for the purpose of the representation in the
management of the Committee of the Society. The rules
provide for the principles for election or nomination.
Rules 393-A and 393-B of the Rules read as under:
"Notwithstanding anything contained
in these rules or the bye-laws of
the society but subject to Rule
453, if the Committee of Management
of a co-operative society referred
to in the proviso to sub-rule (1)
of Rule 393, on the date of
commencement of this rule does not
have as many persons as are
referred in the above sub-rule of
weaker sections or women, as the
case may be, the State Government
shall nominate on the Committee of
Management of such societies as
many persons as may be necessary to
provide representation to the
extent specified in the said
proviso to sub-rule (1) of Rule
393, and upon the nomination so
made, the Committee of Management
of the society concerned shall
retire the required number of
persons by draw of lots by the
authority of the Registrar, so as
to accommodate such nominees on the
Committee of Management.
393-B. Where the term of the
elected members of the Committee of
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Management of such society does not
have such number of persons as
provided in the aforesaid rules the
State Government shall,
notwithstanding anything contained
in the bye-laws of such society,
nominate on the Committee of
Management thereof such number of
persons as may be necessary for
providing representation to such
person to the extend specified in
the above referred rule and on the
nomination being so made, the
Committee of Management of the
concerned society shall retire the
required number of persons by draw
of lots, so as to accommodate such
nominees."
Rule 440 sub-rule (1)(4)(d) reads as under:
"(4) For purpose of election of
members of Committee of Management
of a co-operative society, the
Registrar shall, notwithstanding
anything contained in the bye-laws
of the Society, before the issue of
notice under sub-rule (2) of Rule
441 for election of a co-operative
society or, as the case may be, of
a class of co-operative societies
determine provisionally -
(a) ...
(b) ...
(c) ...
(d) the number of seats reserved
for weaker section."
Rule 444-A(3) reads as under:
"The Registrar or the authorised
officer shall, under provisions of
sub-rule (6) of Rule 440, reserve
constituencies/areas for weaker
section and such reservation shall
be made to the extent of the seats
reserved by rotation in Hindi
alphabetical order of the names of
constituencies/areas from which
members of the Committee of
Management area to be elected."
Rule 453(1)(h) provides that no person shall be
eligible to be or to continue as a member of the Committee
of Management of any co-operative society, if he is not a
member of the General Body thereof.
These rules demarcate the constituencies and provide
for their rotation, notwithstanding the absence of the
provisions for election of weaker sections so as to
effectuate the object of Section 29(1) read with Section
130(2)(xii) and (xii-a). A conjoint and harmonious reading
of these provisions would, thus, clearly indicate that the
Management of every co-operative Society whose object is in
conformity with Section 4 of the Act, shall be vested in a
Committee of management constituted in accordance with this
Act, the Rules and the bye-laws with elective component
inclusive of weaker sections. In its absence, by nomination
of them. Section 130(2) (xii) and (xiii-A) states that rules
to be made may provide for election of the members, the
Chairman and Vice-Chairman of the Committee of management of
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a co-operative Society including reservation for women and
Other Backward Classes. Therefore, the Rules have been made
to effectuate the purpose of the Act, namely, for the
election of the Committee of the Management and under the
democratic process of election as envisages under the Act
and the Rules, they get elected. In case the members of the
weaker sections, namely, Scheduled Castes, Scheduled Tribes,
other Backward Classes and women are not elected, the
Government have been given power to nominate the members
belonging to weaker sections and the women to an extent of
three seats as envisages thereunder, namely, one Scheduled
Caste, one Backward Class and one women in each of the
Committee of the Management of the every co-operative
society..pa
The question is: whether such a power is violative of
Article 19(1)(c) of the Constitution? Shri Raju
Ramachandran, learned senior counsel for the respondents,
contends that the Constitution has conferred right on every
citizen to form a society or to be its member. Formation of
the Society includes therein inviolability of incorporate
character or enrolment of any member who fulfils the objects
of the society as per the bye-laws. No outsider would be
interposed or thrust against his/her wishes. No outsider,
therefore, could be brought or nominated as member of the
management Committee without being a member of the General
Body. In Daman Singh & Ors. vs. State of Punjab & Ors.
[(1985) 2 SCC 670 at 681], the Constitution Bench had held
that the creation, the constitution and the management of
the Society is a creature of the statute. They are
controlled by the statute and so, there can be no objection
to statutory interference with their composition on the
ground of contravention of the individual right to freedom
to form association. In para 11, this Court held that once a
person becomes a member of a Co-operative Society, he loses
his individuality qua the Society and he has no independent
rights except those given to him by the statute and the bye-
laws. He must act and speak through the Society or rather,
the Society alone can act and speak for him qua rights or
duties of the Society as a body. The question whether the
Legislature has power to enact the law providing for
nomination of the members of the Scheduled Castes, Scheduled
Tribes and women in the matter of election to the Committee
of to the Co-operative Societies, was considered by this
Court in Babaji Kondaji Garad etc. vs. Nasik Merchants C-
operative Bank Ltd., Nasik & Ors. [(1984) 2 SCC 50]. In
paragraphs 9 and 12, this Court stated as under:
"The Act was enacted in 1960 and it
repealed the Bombay Co-operative
Societies Act, 1925. Section 73
provides for the vesting of the
management of every society in a
committee to be constituted in
accordance with the Act, the rules
and the bye-laws. At the
commencement of the Act, there was
no provision for reservation of
seats in favour of the members of
the Scheduled Castes and the
Scheduled Tribes and the weaker
section of the members. Section 73-
B making observation obligatory was
introduced in the Act by Amending
Act 27 of 1969. Why was this
specific amendment made? The
working of the Act must have
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disclosed a sorry state of affairs
that even though the co-operative
movement was expanding by leaps and
bounds, the members of the
Scheduled Castes and Scheduled
Tribes or the weaker section of the
members of the society was not
represented in the committee and
had no opportunity to participate
in the decision making process,
laying down broad policies and
management of the society. Article
43 of the Constitution set the goal
that the State shall endeavour to
promote cottage industries on an
individual or co-operative basis in
rural areas. In our onward march of
economic independence, India was
destined to be a co-operative
commonwealth. Since activities were
diversified, more especially in the
rural areas. Every activity of a
person devoted to agricultural in
the rural area is considerably
influenced by the co-operative
movement, such as seed
distribution, credit, disposal of
agricultural produce etc. The
member of the Scheduled Castes and
Scheduled Tribes predominantly in
rural areas did not remain
unaffected by the gigantic stride
that the co-operative movement
took. They were directly and
substantially affected by it. In
order to avoid that those who are
affected by the movement in their
vital day to day existence enjoy a
second class status by being denied
the opportunity to be represented
in the management council and
decision making bodies, a provision
like Section 73-B was introduced to
ensure representation of such
persons who in the absence of
reservation may find it difficult
to be elected to the Committee in
which the entire power of
management vests. Absence of
representation coupled with
subjection to the dictates of the
society would be antithesis of
democratic process reducing such
persons to serfdom. A co-operative
society is to be governed by a
committee elected by democratic
process. This democratic process
must permeate in filling in
reserved seats otherwise the
committee would not enjoy a
representative character. One can
draw light from the provision
contained in Part XVI of the
Constitution and especially
Articles 330 and 332 which provide
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for reservation of seats in the
House of People and in the
Legislative Assembly of every State
for the Scheduled Castes and the
Scheduled Tribes. The felt
necessities of the time and the
historical perspective of class
domination led to the
constitutional guarantee of
reservation so that India can truly
be a sovereign socialist secular
democratic republic. A republic is
made up of men and institutions.
That is why democratic institutions
have to be set up by providing for
election and to make the democratic
institutions truly representative,
reservation of seats for those who
on account of their backwardness,
exploitation and unjust treatment
both social and economic cannot
obtain representation because of
the class domination. This is the
genesis of reservation. Therefore,
any provision making for
reservation must receive such
construction as would advance the
purpose and intendment underlying
the provision making reservation
and not thwart it. In the part a
method of construction was used to
extend a remedial statute called
proceeding upon ‘the equity of the
statute’. In Hay v. Lord provost of
Perth [(1863) 4 Macq. HL (SC) 535,
544] Lord Westbury observed that
the mode of construction known as
‘the equity of the statute’ was
"very common with regard to our
earlier statutes, and very
consistent with the principle and
manner according to which Acts of
parliament were at that time
framed". Undoubtedly, nowadays this
mode of construction has fallen
into disuse. Even though the
expression ‘the equity of the
statute’ has fallen into disuse, it
is still in vogue in somewhat
similar form in that if it is
manifest that the principles of
justice require something to be
done which is not expressly
provided for in an Act of
Parliament, a court of justice will
take into consideration the spirit
and meaning of the Act apart from
the words. In this context, one can
recall the words of Jessel M.R. in
Re Bethlem Hospital [(1875) LR 19
Eq. 457], that ‘the equity of the
statute’ may as well as mean "such
a thing as construing an Act
according to its intent, thought
not according to its words".
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Alternatively, one can bring in
Heydon’s test more often noticed by
this Court that in order to arrive
at true intendment of a statute,
the court should pose to itself the
questions : (1) what was the
situation prior to the provision
under construction, (2) what
mischief or defect was noticed
before introducing the provision,
(3) whether it was remedial and (4)
the reason for the remedy. Applying
this test, the same result would
follow inasmuch as looking to the
position and the plight of
Scheduled Castes and Scheduled
Tribes and the weaker section of
the members of the society, though
they would be subject to the
dictate of the society they had no
voice in the managerial councils
and that to raise the stature and
status of such persons so as to
bring them on the footing of
equality with other segments of the
society, reservation was provided
in the absence of which those in
whose favour reservation was made
could not get elected to the
decision making bodies. While
ascertaining the true canon of
construction applicable to Section
73-B, these aspects must start into
our face.
When statute requires a certain
thing to be done in a certain
manner, it can be done in that
manner alone unless a contrary
indication is to be found in the
statute. If the Legislature uses
the expression ‘if no such persons
are elected’ it indubitably
suggests that primarily the
reserved seats are to be filled in
by election. Failing the election,
one can resort to appointment or
co-option. The chronology of the
methodology by which seats are to
be filled in as set out in Section
73-B clearly manifests the
legislative intention. The first
and the foremost pride of place is
accorded to election, it ought to
be so because a representative
institution ordinarily must be
democratically elected. The
section, therefore, speaks ‘if no
such persons are elected’ which
would mean that the authorities
charged with a duty to hold
election must proceed to arrange
for holding the election. If
election is held giving out
information that there are
reserved seats and no candidate is
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forthcoming to contest for the
reserved seats, the Legislature in
its wisdom provided that the seats
shall to remain vacant but can be
filled in by two subsidiary methods
such as appointment or co-option
which cannot be put on par or
equated with election which is a
universally recognised method by
which representative institutions
are set up. Therefore, the language
and the chronology of the
methodology of filling in reserved
seats employed in Section 73-B
provide a clue to its correct
construction and there should be no
doubt that opportunity must be
provided for filing in seats by
election, it is the failure of the
election machinery to fill in the
seats which would enable the
concerned authority to fill in the
seats by appointment or co-option.
The condition precedent to filling
in reserved seats by appointment or
co-option is holding of the
election and failure to elect such
person should permit resort to
other methods of filling in the
reserved seats."
In the case of Toguru Sudhakar Reddy & Anr. vs.
Government of A.P. & Ors. [1993 Supp. (4) SCC 439], this
Court considered the power of the Government to nominate
women to the Co-operative Societies under Section 31 of the
A.P. Co-operative Societies Act and the validity of the Act
and the power of the Government for nomination of them was
upheld.
Thus, it is settled law that no citizen has an
fundamental right under Article 19(1)(c) to become a member
of a Co-operative Society. His right is governed by the
provisions of the statute. So, the right to become or to
continue being a member of the society is a statutory right.
On fulfilment of the qualifications prescribed to become a
member and for being a member of the society and on
admission, he becomes a member. His being a member of the
society is subject to the operation of the Act, rules and
bye-laws applicable from time to time. A member of the
Society has no independent right qua the Society and it is
the society that is entitled to represent as the corporate
aggregate. No individual member is entitled to assail the
constitutionality of the provisions of the Act, rules and
the bye-laws as he has his right under the Act, rules and
bye-laws and is subject to its operation. The stream cannot
rise higher than the source.
So, the society having been formed is governed by the
provisions of the Act. The individual members do not have
any fundamental right to the management of the Committee
except in accordance with the provisions of the Act, rules
and bye-laws. The management of the Committee is regulated
by Section 29 of the Act. The composition thereof is also
regulated by the Act and has to be in accordance with the
Rules and the bye-laws. The Rules referred to here in before
have to be in furtherance of and in conformity with the
provisions contained in Section 130(2)(xii) and (xii-A) and
the Rules providing for reservation in the election of the
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committee or for nomination to the Management Committee of
the members belonging to the weaker sections and women
should be to effectuate socio-economic and political justice
assured by the Preamble, Articles 38 and 46 of the
Constitution.
Shri Raju Ramachandran, relying upon the judgment of
this Court in Damyanti Naranga vs. The Union of India & Ors.
[(1971 3 SCR 840], has contended that in view of the ration
laid down by this Court, the Government is devoid of power
to make law unless any of the restrictions as controlled by
clause (4) of Article 19 of the Constitution of India are
infringed. The Government has no power to enact a law
incorporating the reservation to the members of weaker
sections and women thereof. We find no force in the
contention. It could be seen that therein, the Government
had enacted the Sahitya Sammelan Act exercising the power
under Entry 63, List I of the Seventh Schedule to the
Constitution. This Court pointed out that the Act did not
envisage that the Samiti is of national importance.
Therefor, it was held that the Parliament had lacked power
to enact the law incorporating the society and inducting
outside members against the wishes of the founder members of
the Society registered under the Societies Registration Act.
This Court also held that the properties belonging to the
original Society stood vested in the Society incorporated
under Section 4 of the Act without any compensation.
Therefore, it was violative of Article 31 of the
Constitution of India, as it stood then. The ratio therein
has no application to the facts in this case. He then
contended that "Other Backward Classes" defined under the
State Public Services Reservation Act applicable to and
covering the public services, they are being inducted as
members of the society which are otherwise not eligible and,
therefore, the induction of them by amendment of Rules made
on 15.7.1994 is unconstitutional. In support thereof, he
contends that though Article 15(4) of the Act provides that
it is subject to Articles 15(2) and 29(2) of the
Constitution, it does not envisage that it is also subject
to Article 19(1)(c) of the Constitution. Therefore, the
reservation provided to the weaker sections is
unconstitutional. We find no force in the contention. The
object of Article 15(4) is to lift the prohibition of
general equality guaranteed in Article 15(2) and 29(2) of
the Constitution dealing with the right to admission into an
educational institution maintained by the State or receiving
aid from the State. Therefore, their object is distinct and
different from Article 19(1)(c). Though Article 19(1)(c)
gives freedom to form association, it is controlled by the
provisions of the Act. As held by this Court, once a society
has been registered under the Act, the management of the
society through Section 29 and the Rules made thereunder, is
regulated by duly elected members. In the democratic set up,
all eligible persons are entitled to contest the election,
as held, according to the provisions of the Act and Rules.
In the absence of elected members belonging to the weaker
sections and women elected, nomination of them by the
Government is the alternative dispensation envisaged as one
of the policies of the Act. Therefore, the Court cannot
interfere with the policy and declare it is unconstitutional
violating Article 19(1)(c) of the Constitution.
It is then contended that nomination of the members
belonging to the waker sections is arbitrary and uncanalised
and it is violative of Article 14 of the Constitution. It is
seen that the provisions of the Act and the relevant Rules
provide necessary guidelines. The persons are identified.
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The bye-laws prescribe the eligibility of the members who
would be eligible to be nominated as members of the society
and the disqualifications have been provided under Rule 393
of the Rules. Under those circumstances, these provisions do
indicate the guidelines under the Act, If any one is
nominated in derogation of the guidelines provided under the
Act and rules, that would be an individual case to be
considered separately but on that count alone, the Act and
the Rules cannot be declared to be ultra vires.
Shri Raju Ramachandran relied upon the judgment of this
Court in Lalit Narayan Mishra of Economic Development and
Social Change, Patna etc. vs. State of Bihar & Ors. [AIR
1988 SC 1136] in support of his contention. But far from
helping him, the ratio therein also is consistent with the
law laid down by this Court.
It is then contended by Mr. S. Markandeya, learned
counsel for some of the respondents, that the Workers
Ordinance Co-operative Society consists of weaker sections
and further induction of weaker sections by nomination or
women who do not become members of the society is
unconstitutional. The election of nomination of the weaker
sections to the Committee of Management is as per the
provisions of the Act, the Rules and the bye-laws. If any
society consists solely of those segments and elected
Committee of Management consists of them, the question of
nomination to represent them as that segment again would not
arise. In the absence of elected members being there in the
Committee, necessarily, the Government have the power to
nominate the unfilled membership of the Committee.
Thus considered, we are of the view that the provisions
of the Act and rules are consistent with the policy and
object of the Constitution and, therefore, the High Court
was wholly incorrect in declaring the aforesaid provision to
be ultra vires the Constitution.
The appeals are accordingly allowed. The writ petition
stands dismissed. No costs.