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Judgment
Chitra Venkataraman, J.—The batch of Writ Petitions before this Court are filed by the members of different Co-operative Societies
seeking a Writ of Declaration to declare the provisions of the Tamil Nadu Co-operative Societies (Third Amendment) Ordinance 2012, as
unconstitutional and ultra vires the Constitution, particularly Part IXB of the Constitution of India. Subsequent to the filing of the Writ Petitions, the
Ordinance had become an Act and accordingly, the petitioners have filed petitions before this Court, amending the prayer to declare the amended
Act as unconstitutional. Accordingly, the amendment petitions filed in the Writ Petitions are ordered. On notice, the State has filed a common
counter in all these Writ Petitions. It is a matter of record that approximately for about 11 years, there had been no election in the Co-operative
Societies for some reason or other to elect the members of the Board of Directors/Governing Body of the cooperative societies. In the wake of the
above-said fact, in the place of the Board/governing body, Special Officers were appointed by the Registrar for a specified period not exceeding
six months, to manage the affairs of the registered society, pending constitution of a new Board. The term of office of the Special Officer was
extended from time to time. As of today, in the place of the Board/governing body, we have only Special Officers managing the affairs of the
society. In this background, Section 89A was inserted by the Tamil Nadu Cooperative Societies (Amendment) Act of 2001 (Tamil Nadu Act 12
of 2001), effective from 12th June 2001. Through this provision, powers were conferred on the Special Officer appointed u/s 88 of the Tamil
Nadu Cooperative Societies Act, 1989 and the Administrator appointed u/s 33 to admit any individual eligible for admission as a member of the
society. The validity of the said provision came up for consideration before the Full Bench of this Court. The decision of the Full Bench is reported
in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited,
.
This Court struck down the provisions as violative of Article 19(1)(c) and not saved by any of the grounds under Clause (4) of Article 19. In so
holding, this Court followed the decisions of the Apex Court reported in K. Shantharaj and another Vs. M.L. Nagaraja and others, and Jt.
Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, . In the above-said decisions, the Apex Court held that enrolment of new members
in the cooperative society by the Special Officers would be detrimental to the democratic process of the society and as the cooperative society is
expected to function in a democratic manner, such a power should be exercised by an elected committee only. Thus, following the decision of the
Apex Court, this Court pointed out that the admission of new members and the examination with regard to the eligibility to be the member of a
society are entirely in the discretion of the Board of Directors elected by the general body. A Special Officer or an Administrator, appointed
temporarily to manage the affairs of the society, cannot be allowed to alter the composition of the society by conferring power on the Special
Officer for enrolling new members. This Court further pointed out ""the admission of members is a primary right of the society. In a democratic set
up, it is the general body/executive committee which would alone have the power to admit new members who satisfy the required criteria as per
the bye-laws of the society. The Special Officer cannot enter into any conflicting policy decision by admitting new members without the consent of
other members. The Special Officer is assigned with a duty to administer the day-to-day administration for a limited period with a limited purpose.
Thus holding, this Court declared Section 89A of the Act as arbitrary, unreasonable, ultra vires and unconstitutional, as it would be detrimental to
the democratic process and disturbance to the democratic set up, affecting the democratic right of the general body of the society, which would
amount to a declaration by the Legislature making the early judicial declaration in the decision reported in Jt. Registrar of Co-op. Societies Vs.
T.A. Kuttappan and Others, ineffective and invalid. Thus as of today, all the cooperative societies'' affairs are managed only by the Special
Officers and there are no new members inducted into the society on account of the absence of a governing body, who alone were empowered to
admit a person as a member of the society as per the unamended Section 21(2) of the Act.
While matters stood thus, under the Constitution (97th Amendment) Act, 2011, Article 19(1)(c) was amended, making the right to form an
association or co-operative Society, a fundamental right. Article 43-B was inserted in Part IV- Directive Principles of State Policy, that ""the State
shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional Management of Co-operative
Societies."" Apart from this, a separate Chapter was inserted in the Constitution as Part IXB under the Head ""the Co-operative Societies"". Under
Article 243ZH, apart from giving definition to various terms such as, ""Board"", ""Co-operative Society"", ""Registrar"" etc., Article 243ZI enjoined on
the States to enact law to make provisions with respect to incorporation, regulation and winding up of co-operative societies based on the
principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning; Article 243ZJ. The
number and term of members of Board and its office bearers; Article 243ZK-Election of members of Board; Article 243ZL- Supersession and
suspension of Board and interim management and Article 243ZN- Convening of general body meetings etc., about which we shall deal later.
The amended Articles 243ZK and 243ZL emphasize the need for holding elections to elect members of the board before the expiry of the term
of the Board, so that there is continuity in the administration of the society, that the board shall not be suspended or kept under suspension for a
period exceeding six months. In the wake of these constitutional provisions through Ordinance No. 14 of 2012 dated 3.8.2012, the State
legislature amended Section 21(2) Clause (i) of the Act, that in the absence of the Board, the general body will have the authority to admit new
members. The provisos under the sub section are also accordingly amended The explanatory statement on the amendment made reads as under
EXPLANATORY STATEMENT.
Under the Tamil Nadu Co-operative Societies Act, 1983 (Tamil Nadu Act 30 of 1983) the Board of Directors of a registered society is vested
with the power to admit, any individual eligible for admission, as a member of the society. At present Special Officers are managing the affairs of
the registered society. When the Special Officers were empowered, by making specific provision in the said Tamil Nadu Act 30 of 1983, to admit
any individual eligible for admission, as a member of the Co-operative Society, the full Bench of the High Court of Madras in K. Nithiyanantham
Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, declared the said
provision as arbitrary, unreasonable, ultravires and unconstitutional, by observing as follows:--
In view of the above discussion, this Court is of the view that the Co-operative Societies are constituted to function through the democratic
management by the General Body through its elected board which alone is empowered to enroll the new members.
In view of the above, new members could not be admitted in the Co-operative Societies for the past 11 years.
Article 43-B in Part IX-B of the Constitution envisages that the State shall endeavour and promote voluntary formation, autonomous functioning,
democratic control and professional Management of Co-operative Societies. In order to pave the way for democratic functioning of the Co-
operative Societies in tune with the provisions of the Constitution, the Government have considered to admit new members in the Co-operative
Societies by empowering the General Body of the Co-operative Societies to admit, any individual eligible for admission, as a member of the
Society and have decided to amend the said Tamil Nadu Act 30 of 1983 suitably for the said purpose.
The Ordinance seeks to give effect to the above decision.
On 16.11.2012, the amendment made through the ordinance was carried through under the Amending Act under the Tamil Nadu Co-operative
Societies (Third Amendment) Act, 2012 (Act 37 of 2012). Section 21(2)(i) was amended, whereby, the expression ""or by the general body
where there is no board"" after the expression ""by the board"" was inserted. Corresponding amendments were also brought in to the two provisos to
the said Sub-section. Thus the petitioners who are all members in different co-operative societies challenge the validity of the amendment made to
Section 21(2)(i) of the Act.
The amended provisions in Constitution 97th Amendment Act in Article 19(1)(c), Article 43-B, Part-IX-B and amended Section 21(2) of the
Tamil Nadu Co-operative Societies Act are as follows:
Protection of certain rights regarding freedom of speech, etc.- (1) All citizens shall have the right-
(a) to freedom of speech and expression;
(b) to assemble peaceably and without arms;
(c) to form associations or unions or co-operative societies;
(d) to move freely throughout the territory of India;
43-B. Promotion of co-operative societies-The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control
and professional management of co-operative societies.
PART IXB
The Co-Operative Societies
243ZH. Definitions.- In this Part, unless the context otherwise requires,--
(a) ""authorised person"" means a person referred to as such in article 243ZQ;
(b) board"" means the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and
control of the management of the affairs of a society is entrusted to;
(c) ""co-operative society"" means a society registered or deemed to be registered under any law relating to co-operative societies for the time being
in force in any State;
(d) ""multi-State co-operative society"" means a society with objects not confined to one State and registered or deemed to be registered under any
law for the time being in force relating to such co-operatives;
(e) ""officer bearer"" means a President, Vice-President, Chairperson, Vice-Chairperson, Secretary or Treasurer of a co-operative society and
includes any other person to be elected by the board of any co-operative society;
(f) Registrar"" means the Central Registrar appointed by the Central Government in relation to the multi-State co-operative societies and the
Registrar for co-operative societies appointed by the State Government under the law made by the Legislature of a State in relation to co-
operative societies;
(g) ""State Act"" means any law made by the Legislature of a State;
(h) ""State level co-operative society"" means a co-operative society having its area of operation extending to the whole of a State and defined as
such in any law made by the Legislature of a State.
243ZI. Incorporation of co-operative societies.--Subject to the provisions of this Part, the Legislature of a State may, by law, make provisions
with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic
member-control, member-economic participation and autonomous functioning.
243ZJ. Number and term of members of board and its office bearers.--
(1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law:
Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one:
Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled
Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class
or category of persons.
(2) The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office
bearers shall be conterminous with the term of the board:
Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual
vacancy has arisen, if the term of office of the board is less than half of its original term.
(3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of
banking, management, finance or specialisation in any other field relating to the objects and activities undertaken by the co-operative society, as
members of the board of such society:
Provided that the number of such co-opted members shall not exceed two in addition to twenty-one directors specified in the first proviso to
clause (1):
Provided further that such co-opted members shall not have the right to vote in any election of the co-operative society in their capacity as such
member or to be eligible to be elected as office bearers of the board:
Provided also that the functional directors of a co-operative society shall also be the members of the board and such members shall be excluded
for the purpose of counting the total number of directors specified in the first proviso to clause (1).
243ZK. Election of members of board.--(1) Notwithstanding anything contained in any law made by the Legislature of a State, the election of a
board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office
immediately on the expiry of the office of members of the outgoing board.
(2) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co-operative society
shall vest in such an authority or body, as may be provided by the Legislature of a State, by law:
Provided that the Legislature of a State may, by law, provide for the procedure and guidelines for the conduct of such elections. 243ZL.
Supersession and suspension of board and interim management.--(1) Notwithstanding anything contained in any law for the time being in force, no
board shall be superseded or kept under suspension for a period exceeding six months:
Provided that the board may be superseded or kept under suspension in case-
(i) of its persistent default; or
(ii) of negligence in the performance of its duties; or
(iii) the board has committed any act prejudicial to the interests of the co-operative society or its members; or
(iv) there is stalemate in the constitution or functions of the board; or
(v) the authority or body as provided by the Legislature of a State, by law, under clause (2) of article 243ZK., has failed to conduct elections in
accordance with the provisions of the State Act:
Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government
shareholding or loan or financial assistance or any guarantee by the Government:
Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949(10 of
1949) shall also apply:
Provided also that in case of a co-operative society, other than a multi-State co-operative society, carrying on the business of banking the
provisions of this clause shall have the effect as if for the words ""six months"", the words ""one year"" had been substituted.
(2) In case of supersession of a board, the administrator appointed to manage the affairs of such co-operative society shall arrange for conduct of
elections within the period specified in clause (1) and handover the management to the elected board.
(3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator.
243ZM. Audit of accounts of co-operative societies.--(1) The Legislature of a State may, by law, make provisions with respect to the
maintenance of accounts by the co-operative societies and the auditing of such accounts at least once in each financial year.
(2) The Legislature of a State shall, by law, lay down the minimum qualifications and experience of auditors and auditing firms that shall be eligible
for auditing accounts of the co-operative societies.
(3) Every co-operative society shall cause to be audited by an auditor or auditing firms referred to in clause (2) appointed by the general body of
the cooperative society:
Provided that such auditors or auditing firms shall be appointed from a panel approved by a State Government or an authority authorised by the
State Government in this behalf.
(4) The accounts of every co-operative society shall be audited within six months of the close of the financial year to which such accounts relate.
(5) The audit report of the accounts of an apex co-operative society, as may be defined by the State Act, shall be laid before the State Legislature
in the manner, as may be provided by the State Legislature, by law. 243ZN. Convening of general body meetings.--The Legislature of a State
may, by law, make provisions that the annual general body meeting of every co-operative society shall be convened within a period of six months
of close of the financial year to transact the business as may be provided in such law.
243ZO. Right of a member to get information.--(1) The Legislature of a State may, by law, provide for access to every member of a co-operative
society to the books, information and accounts of the co-operative society kept in regular transaction of its business with such member.
(2) The Legislature of a State may, by law, make provisions to ensure the participation of members in the management of the co-operative society
providing minimum requirement of attending meetings by the members and utilising the minimum level of services as may be provided in such law.
(3) The Legislature of a State may, by law, provide for co-operative education and training for its members.
243ZP. Returns.-- Every co-operative society shall file returns, within six months of the close of every financial year, to the authority designated by
the State Government including the following matters, namely:--
(a) annual report of its activities;
(b) its audited statement of accounts;
(c) plan for surplus disposal as approved by the general body of the co-operative society;
(d) list of amendments to the bye-laws of the co-operative society, if any;
(e) declaration regarding date of holding of its general body meeting and conduct of elections when due; and
(f) any other information required by the Registrar in pursuance of any of the provisions of the State Act.
243ZQ. Offences and penalties.-(1) The Legislature of a State may, by law, make provisions for the offences relating to the co-operative societies
and penalties for such offences.
(2) A law made by the Legislature of a State under clause (1) shall include the commission of the following act or omission as offences, namely:--
(a) a co-operative society or an officer or member thereof wilfully makes a false return or furnishes false information, or any person wilfully not
furnishes any information required from him by a person authorised in this behalf under the provisions of the State Act;
(b) any person wilfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of
the State Act;
(c) any employer who, without sufficient cause, fails to pay to a cooperative society amount deducted by him from its employee within a period of
fourteen days from the date on which such deduction is made;
(d) any officer or custodian who wilfully fails to handover custody of books, accounts, documents, records, cash, security and other property
belonging to a co-operative society of which he is an officer or custodian, to an authorised person; and
(e) whoever, before, during or after the election of members of the board or office bearers, adopts any corrupt practice.
243ZR. Application to multi-State cooperative societies.--The provisions of this Part shall apply to the multi-State co-operative societies subject
to the modification that any reference to ""Legislature of a State"", ""State Act"" or ""State Government"" shall be construed as a reference to
Parliament"", ""Central Act"" or ""the Central Government"" respectively.
243ZS. Application to Union territories.-
The provisions of this Part shall apply to the Union territories and shall, in their application to a Union territory, having no Legislative Assembly as if
the references to the Legislature of a State were a reference to the administrator thereof appointed under article 239 and, in relation to a Union
territory having a Legislative Assembly, to that Legislative Assembly:
Provided that the President may, by notification in the Official Gazette, direct that the provisions of this Part shall not apply to any Union territory
or part thereof as he may specify in the notification.
243ZT. Continuance of existing laws.--Notwithstanding anything in this Part, any provision of any law relating to co-operative societies in force in
a State immediately before the commencement of the Constitution (Ninety-seventh Amendment) Act, 2011, which is inconsistent with the
provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the
expiration of one year from such commencement, whichever is less.
The Tamil Nadu Co-operative Societies Act 21- Qualifications for membership of society
(1)(a) Subject to the provisions of Section 23
(i) any individual competent to contract u/s 11 of the Indian Contract Act, 1872, (Central Act IX of 1872),
(ii) any other registered society,
(iii) the Government, and
(iv) any body of persons whether incorporated or not and whether or not established by or under any law, if such body is approved by the
Government in this behalf by general or special order, shall be eligible for admission as a member of a registered society:
Provided that the individual or the registered society or the body of persons referred to in items (i), (ii) and (iv) shall possess such further
qualifications as may be specified in the Rules or the bye-laws:
Provided further that a Hindu undivided family as such shall not be eligible for admission as a member of a registered society:
Provided also that persons who are minors or of unsound mind may be admitted as members of such class of registered societies as may be
prescribed and such members shall possess only such privileges and rights of members and be subject only to such liabilities of members as may be
prescribed: Provided also that no individual shall be eligible for admission as a member of any financing bank or apex society, except as an
associate member.
(b) Notwithstanding anything contained in this Act or in any other law for the time being in force, every individual member other than an associate
member of every financing bank and every apex society shall cease to be a member of such bank or society, as the case may be, on and from such
date as the Government may, by notification, specify and such individual member shall be entitled to receive his share or interest in the capital and
other moneys due to him in such manner and within such time as may be prescribed.
(2) (i) In the case of every registered society, every individual eligible for admission as a member of any such society under the provisions of this
Act, the Rules and the bye-laws of the society shall, on application made in such form and in such manner as maybe prescribed, be admitted by the
board or by the general body where there is no board as a member of the society with effect from the date of receipt of such application in the
office of such society:
Provided that the board or the general body, as the case may be, may, for good and sufficient reasons to be recorded in the minutes of the meeting
at which the application for admission is considered, refuse admission to any individual and the decision of the board or the general body, as the
case may be, shall be communicated to the individual:
Provided further that if the decision of the board or the general body, as the case may be, on the application is not communicated to the individual
within a period of sixty days from the date of receipt of the application in the office of the society, the individual shall be deemed to have been
admitted as a member of such society, on the sixtieth day after the date of receipt of the application in the office of the society.
(ii) Notwithstanding anything contained in class (i), or in any other provision of this Act, the Registrar may, either suo motu or on application at any
time, by order and after recording the reasons in writing, remove any individual deemed to have been admitted as a member of the society under
clause (i) from such membership if such individual is not eligible to be a member of such society under the provisions of this Act, the Rules and the
bye-laws of the society:
Provided that an order under this clause shall be passed within such period as may be prescribed.
(iii) No order under clause (ii) shall be passed without giving a reasonable opportunity of being heard to the parties concerned.
Before going into the various contentions raised in the Writ Petitions, we need to look at the broad scheme of the Act. The subject matter of
legislation on Co-operative Society falls under Entry 32, List II of Seventh Schedule to the Constitution-""incorporation"" ""regulation"" and ""Winding
up"" of Corporations other than those specified in List I and universities unincorporated trading literary scientific religious and other societies and
associations; Co-operative Societies. Entry 41 List I of the Seventh Schedule lists the incorporation, regulation and winding up of trading
corporations, including banking, insurance and financial corporations, but not including Co-operative Societies as a subject of legislation by the
union. Thus, by virtue of Entry 32 List II, the Tamil Nadu Co-operative Societies Act, 1983, (hereinafter referred to as the Act) was enacted by
the State. The Act seeks to provide for an orderly development of the co-operative movement in accordance with the co-operative principles for
the promotion of thrift, self-help and mutual aid among persons with common socioeconomic needs so as to bring about improvement in agriculture
and industry, better methods of production etc. The Act thus covers a wide range of co-operative societies, such as Joint Farming Societies, Co-
operative Sugar Mills, Agricultural and Rural Development Banks, Lift Irrigation Societies, Agricultural Producers Marketing Societies, Consumer
Societies, Credit Societies other than Financing Banks and Employees Credit Societies; Dairy Societies; Farming Societies; Fisheries Societies;
Industrial Societies; Irrigation Societies; Oil-Seeds Growers Societies; Processing Societies, Housing Societies, Banking societies, Weavers
Societies etc. Separate chapters are there in the Act to exclusively deal with Joint Farming Societies (Chapter XIII); Lift Irrigation Societies
(Chapter XIV); Agricultural and Rural Development Bank (Chapter XV) and Co-operative Sugar Mills (Chapter XVIII).
Section 2 of the Act defines the terms such as ''Board''- Section 2(7), ''byelaws''-Section 2(8) ''member''- Section 2(16) etc. Section 4 of the
Act deals with Societies, which may be registered. It says that subject to the provisions of this Act, a Society having the object of promotion of the
economic interests or general welfare 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 with limited or unlimited liability. Every Society constituted must apply
for registration before the Registrar in the prescribed form. Section 8 is the relevant provision on the procedure for filing an application for
registration before the Registrar; Section 9 deals with registration of the Society by the Registrar. As per the said Section, the application for
registration has to be accompanied by a copy of the proposed bye laws of the Society; on satisfaction that the proposed bye laws of the Society
are not contrary to the provisions of the Act or Rules or to the Co-operative principles or to any other law applicable to the Society, the Registrar
may register the Society and its bye laws. It is open to the Registrar to refuse registration of the Society and its bye laws. If the Registrar does not
communicate the order of refusal within a period of 120 days, it shall be deemed that the Registrar has registered the Society and its bye laws.
Chapter II, Rule 6 of the Tamil Nadu Co-operative Societies Rules, 1988 (hereinafter referred to as the ''Rules) deals with registration of co-
operative Societies and its bye laws. It specifies as many as 42 items as subject matter of byelaws. Thus a reading of Rule 6 listing the subject
matter of byelaws, shows among various things, qualification for admission to membership (Rule 6(1)(e)); admission of persons who are minors or
of unsound mind and if so, the privileges, rights and liabilities of such Members as specified in the Rules 6(1)(g); admission of associate member,
qualification therefor (Rule 6(1)(h)); the nature and amount of share capital, if any of the Society (Rule 6(1)(i)), entrance fee to be collected from
the member (Rule 6(1)(j)), withdrawal of membership and the procedure to be followed in cases of withdrawal, ineligibility and death of members
Rule 6(1)(k); the maximum share capital that can be refunded in any Co-operative year (Rule 6(1)(l)), the procedure for expulsion of Members
and as to how the assets and liabilities of an expelled Member in the Society shall be dealt with Rule 6(1)(m); the constitution of representative
General Body and the powers of the General Body that are exercisable by the representative general body and the restrictions and conditions
subject to which the representative General Body may exercise its powers Rule 6(1)(n); the constitution of the Board and the duties and powers of
the Board and officers (Rule 6(1)(p)); convening of the meetings of the General Body and the Board, notice, business and quorum for such
meetings, conditions for, and manner of, adjournment of such meetings (Rule 6(1)(w)); authorisation of the Officers to sign documents/contracts
(Rule 6(1)(y)), Preparation and Submission of Annual Accounts (Rule 6(1)(aa)), settlement of disputes (Rule 6(1)(ee)), inspection of accounts
(Rule 6(1)(gg)), etc. Sub-Rule (2) states ""The bye laws may also deal with such other matters incidental to the organisation and working of the
Society and the management of its business as may be deemed necessary.
Rule 9 deals with the procedure regarding amendment of bye-laws. According to the said Rule, every amendment of the bye-laws shall be
made only by a resolution passed by a majority of the Members present and voting at a meeting of the General Body, for which notice of
amendment of bye-laws has been given in accordance with the Rule and the byelaws.
According to Section 11 of the Act, no amendment of any Bye-law of a registered Society shall be valid until the same has been registered
under the Act. Under Sub-section (3), if the Registrar is satisfied that an amendment of the byelaws is not contrary to the provisions of this Act or
the Rules or to the Co-operative principles or to any other law applicable to the Society, he may register the amendment. Sub-section (4) reserves
the right to the Registrar to refuse to register the amendment; but he has to communicate the same with the reasons for the refusal. On registration
of an amendment to the byelaws, he has to issue to the registered Society, a copy of the amendment to the byelaws certified by him, which shall be
a conclusive evidence that the amendment has been duly registered. Sub-section (9) states that an amendment of a Bye-law of the Society involves
material change in the objects or operations of the Society; the amendment shall be registered only subject to such Rules as may be made in this
behalf.
Section 12 prescribes the power of the Registrar to direct amendment of byelaws. It says that where the Registrar is satisfied that for the
purpose of altering the area of operation of a registered Society or for the purpose of improving the services rendered by it or for any other
purpose specified in the Rules, an amendment to the byelaws is necessary, after consulting the Board of the Financing Bank in the manner
prescribed, to which the Society is affiliated, call upon the Society to show cause why the amendment should not be made. Rule 11 prescribes the
purposes for which the Registrar may direct the amendment of Bye-laws.
Chapter III of the Act prescribes the qualification for membership in the Society and their rights and liabilities. Section 21 of the Act lists out
the qualification for membership in the Co-operative Society. Subject to the disqualification prescribed u/s 23, Sub-section (1) of Section 21 of the
Act lists who may become a member of the Society. The proviso to the sub section states that the persons referred to above shall possess such
further qualifications as may be specified in the Rules and the bye laws. Sub-section (2) of Section 21 of the Act deals with admission of members
to Co-operative Society. Sub-section (2), as it originally stood prior to the amendment in 2012, which is under challenge before this Court now,
states that every individual, eligible for admission as a member of any registered society under the provisions of the Act, Rules and the byelaws of
the Society, shall be admitted by the Board as a Member of the Society with effect from the date of receipt of such application in the office of such
Society. Proviso to Sub-section (2) gives the authority to the Board to refuse admission of any individual. It also prescribes the time limit within
which the Board has to exercise its authority as regards the admission of Members. Second Proviso to Sub-section (2) states that if the decision of
the Board on the admission of a Member is not communicated to the individual within a period of 60 days from the date of receipt of the
application in the office of the Society, the individual shall be deemed to have been admitted as Member of such Society on the sixtieth day after
the date of receipt of the application in the office of the Society. Sub-Clause (ii) of Sub-section (2) to Section 21 of the Act reserves the right of
the Registrar, suo motu or on application, to remove any individual admitted as Member of the Society under Sub-clause (i). from such
Membership, if such individual is not eligible to be a Member of a Society under the provisions of the Act, Rules and byelaws of the Society. After
the amendment now introduced in the year 2012, under Sub-section 2(i) of Section 21 of the Act, wherever the Board is not there, the General
Body is now empowered to admit new member. The provisos also stand accordingly amended, empowering the General Body to act in the
absence of the Board.
Section 23 of the Act speaks about the disqualification of Membership in the Society on grounds of insolvency, punishment for offences
involving moral turpitude, expulsion from Membership under the Act or that the Member did not possess the qualification with reference to the
principal object of the Society prescribed in the Rules or the byelaws of the Society. Sub-section (2) lists out the grounds under which a particular
individual would cease to be a Member of the Society. As per Section 25 of the Act, a member of a registered Society could be expelled, upon a
resolution of a General Body passed at a special meeting convened for the purpose by the votes of not less than two-third of the total number of
Members present and voting at the meeting. Section 28 provides for restriction on transfer of share or interest; Section 29 provides for restrictions
on withdrawal of share or interest by members of registered societies and Section 30 provides for transfer of share or interest on death of
Member.
Chapter IV is concerned about the Management of the Registered Societies. Section 32 of the Act deals with the authority of the General
Body as regards the Management of the Registered Society, which reads as follows:
General Meetings.- (1)(a) Subject to the provisions of this Act, the Rules and the byelaws, the ultimate authority of a registered Society shall
vest in the General Body of its Members:
Provided that nothing contained in this clause shall affect the exercise by the Board of any officer of a registered Society of any power conferred
on such Board or such officer by this Act or the Rules or the byelaws.
Sub-section (2) of Section 32 of the Act speaks about the convening of the General Meeting of a registered Society for the purposes of
(a) approval of the budget for the ensuing year with reference to the programme of the activities of the Society prepared by the Board;
(b) consideration of the audit report and the annual report;
(c) disposal of the balance of the net profits as specified in sub-section (2) of Section 72;
(d) consideration of the details of the services, if any, rendered to any Member of the Board or any such near relation as may be prescribed, of any
Member of the Board during the preceding year;
(dd) appraisal of the programme of the activities of the Society; and
(e) consideration of any other matter which may be brought forward in accordance with the byelaws;
The proviso states that it is open to the registered Society to convene general meetings as often as may be necessary in the interest of the Society.
Sub-section (3) of Section 32 of the Act deals with the Board calling for a special general meeting of a registered Society and Sub-section (4)
deals with the power of the Registrar to call for a meeting under the stated circumstances of the Board''s failure or refusal to call for a meeting.
Section 33 of the Act speaks about the constitution and the meetings of the Board. A reading of the provision u/s 33 of the Act shows that the
Management of the registered Society shall vest in a Board constituted in accordance with the provisions of the Act, Rules and byelaws; that the
Board shall exercise such powers and perform such duties as may be conferred or imposed on it by the Act, the Rules and the byelaws. The
Section also prescribes the constitution of the Board giving representation to the Scheduled Tribes and Scheduled Castes and to the
representatives of women. It also provides for co-opting member/members, who is an expert or a person specially skilled in or having special
knowledge of experience in matters connected with the business or objects of the scheduled Cooperative Society.
Chapter V of the Act deals with duties and privileges of the registered Societies. Section 39 of the Act states that the registration of the Society
shall render it a Body Corporate by the name under which it was registered, with a power to hold property, to enter into contracts, to institute and
defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. Chapter XV of the Act
provides for winding up and cancellation of registration of the registered Societies. Section 137 deals with winding up of the registered societies
and Section 138 deals with the appointment of a liquidator. Chapter XVIII of the Act deals with penal provisions. Section 90(7) of the Act
excludes the applicability of the Arbitration and Conciliation Act, 1996; Section 90(8) of the Act excludes the applicability of Section 34 of the
Civil Procedure Code. Section 175 of the Act states about the non-applicability of the Companies Act, 1956. Section 88 deals with circumstances
under which the Board may be superseded by an order of the Registrar and the appointment of a Special Officer to manage the affairs of the
society for a specified period not exceeding one year and the responsibilities and the duties of the Special Officer that subject to the control of the
Registrar, he shall have the powers to exercise all the powers of the Board and to such action as may be required in the interests of the society.
Rules 105 and 106 are the related Rules in regard to the above provision. Section 89 is also as regards the appointment of the Special Officer
under stated circumstances.
Thus a reading of the provisions of the Act shows the following powers vested on the General Body under various Sections:
(1) Division of the society into two or more societies (Section 13(1)(a) of the Tamil Nadu Co-operative Societies Act, 1983).
(2) Amalgamation of two or more Societies (Section 13(2)(a) of the Tamil Nadu Co-operative Societies Act, 1983).
(3) Joint business with any other registered society or undertaking of the Government (Section 18 of the Tamil Nadu Co-operative Societies Act,
1983).
(4) Expulsion of a member (Section 25(1) of the Tamil Nadu Co-operative Societies Act, 1983).
(5) Approval of Budget (Section 32(2)(a) of the Tamil Nadu Co-operative Societies Act, 1983).
(6) Considerations of Audit report and Annual report (Section 32(2)(b) of the Tamil Nadu Co-operative Societies Act, 1983).
(7) Disposal of the balance of the net profits as specified in sub section (2) of Section 72 (Section 32(2)(9c) of the Tamil Nadu Co-operative
Societies Act, 1983).
(8) Consideration of the details of the services, if any, rendered to any member of the board or any such near relation as may be prescribed of any
member of the board during the preceding year (Section 32(2)(d) of the Tamil Nadu Co-operative Societies Act, 1983).
(9) Appraisal of the programme of activities of the Society (Section 32(2)(e) of the Tamil Nadu Co-operative Societies Act, 1983).
(10) Passing resolution for winding up of the society (Section 137(1) of the Tamil Nadu Co-operative Societies Act, 1983).
(11) writing off non recoverable assets (Section 178 of the Tamil Nadu Co-operative Societies Act, 1983).
(12) Amendment of byelaws (Rule 9(1) of the Tamil Nadu Co-operative Societies Rules, 1988).
(13) Conversion of the Society into a different class or category (Rule 19(2) of the Tamil Nadu Co-operative Societies Rules, 1988).
(14) Removal of elected members of the board (Rule 61(1) of the Tamil Nadu Co-operative Societies Rules, 1988).
(15) According prior approval for purchase of Vehicle (Rule 88(1)(a) of the Tamil Nadu Co-operative Societies Rules, 1988).
As already seen, the byelaws of the Society have to provide for various matters which are enumerated in Rule 6 of the Rules, apart from what
are given under the Act and the Rules. The byelaws have to be in conformity with the provisions of the Act and the Rules, and above all, serves the
objects of the cooperative movement fully.
Since the arguments of the petitioners in all these Writ Petitions revolved on the importance of the byelaws governing the affairs of the Society,
particularly as regards the admission of new members by the Board and that the amendment cannot interfere with the bye-laws empowering the
Board to admit new members, the leading judgment of the Apex Court on the above topics needs to be seen, to find out the impact of the
amendment in Section 21(2) of the Act on the Bye-laws of the Society, providing for admission to the new members by the Board.
It may be noted herein that u/s 21(2) of the Act, as it stood prior to the impugned amending Act, admission of new Member was to be done
only by the Board. The present amendment seeks to include the General Body, wherever there is no Board, for the purposes of admission of new
Members. Article 19(1)(c) of the Constitution of India was amended under Constitution 97th Amendment Act, 2011, that the right to form co-
operative societies is now a fundamental right guaranteed under the Constitution of India. It is a well settled principle that a Co-operative Society is
a Society formed by persons, who voluntarily associate together for the promotion of their economic interests. Voluntariness is thus considered to
be the cardinal principle of co-operation and no one can be compelled to join in or prevent one from withdrawing from the society except in the
manner provided for under the Act and the bye laws of the Society. Recognising the concept of voluntariness, Article 19(1)(c) of the Constitution
of India has made this right to form a Co-operative Society, a fundamental right.
Touching on the laudable object on the forming of Co-operative Society, in the decision reported in Myurdhwaj Cooperative Group Housing
Society Ltd. Vs. The Presiding Officer, Delhi Cooperative Tribunal and Others, , the Apex Court pointed out that a Co-operative Society is
formed with the laudable object to inculcate a spirit to work in a group, ready for rendering benefits to the Members through Co-operative
contributions. The Apex Court pointed out that the Society can lay down its policy to deal with different situations, as may arise from time to time.
In the Full Bench decision of this Court reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-
operative Production and Sales Society Limited, , referring to the decision of the Apex Court reported in Jt. Registrar of Co-op. Societies Vs.
T.A. Kuttappan and Others, , this Court pointed out to the Co-operative Societies'' functioning on democratic principle. Thus, given the object of
formation of a co-operative Society to work as a Society on democratic principles born out of an agreement among the various members to form
the Society with a purpose to achieve the object of promoting the economic welfare of the members, given the need for orderly growth and
development of this movement, the State is empowered to legislate, providing for incorporation, regulation and winding up of Co-operative
Societies (Entry 32, List II of the Seventh Schedule to the Constitution of India) in accordance with the Co-operative principles, such as, open
membership democratic management, co-operation among co-operatives for the promotion of thrift, self-help, mutual aid among members with
common socio-economic needs, to promote better business and better living. The Preamble to the Tamil Nadu Act thus emphasizes on the above
aspect and as already seen, the Act provides on the subject of registration of the Society with Bye laws, membership, Constitution of the Board,
power of the Board, General Body, winding up, liability, remedial provision and other incidental and ancillary matters, such as contents of the bye
laws etc., while within the framework of the byelaws. The Society has absolute authority to make byelaws on matters in consonance with the
objects of the Society. It also includes such provisions as are given under the Act, even though the absence of referring to such provision in the
bye-laws does not make the bye-law bad in law, or that the bye laws alone have provided for the particular topic, for, the bye laws are to be in
consonance with the provisions of the Act and the Rules and any other law applicable to the Society (Section 9(1)(e)), as an autonomous body to
regulate its affairs. It has every right to prescribe the qualifications and eligibility of a Member to be admitted into a Society, apart from what is
prescribed under the Act; that it is left to the authority of the Society to decide on the admission of a Member into a Society, even though such a
Member may have satisfied the eligibility criteria. In the context of such co-operative nature of a Society, Courts have held that formation of a Co-
operative Society is a result of a consensus among persons; that it is out of a contractual relationship that a Society is born and that the free will
exercised while forming the society continues even thereafter in conducting its affairs and the business. In the background of the regulatory
provisions of the Act, it is a settled law that the byelaws have no statutory force; they cannot override the provisions of law, which means, the
Society has to have the byelaws in terms of the provisions of the Act and the Rules made thereunder.
We have already seen that Section 21(2), as it originally stood, provided for admission of members by the Board and after the amendment, in
the absence of the Board, the General Body is given the authority to admit new members. We find that, in almost every one of the byelaws of the
Society produced, there is provision for admission of Members and the Board is given the authority to admit new Members. The question as to the
admission of new members in terms of the provisions of the Act admitting new members and the relevance of bye law, vis-�-vis, the provisions
on the admission of members by the State came up for consideration in the decisions reported in Smt. Damyanti Naranga Vs. The Union of India
(UOI) and Others, ; Babaji Kondaji Garad Vs. Nasik Merchants Co-operative Bank Ltd., Nasik and Others, and others); State of Maharashtra
and Others Vs. Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar Sahakari Griha Karan Sanstha Niyamati
and Others, and Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and
Others, and Others). On a question as to whether, through an amendment to the Tamil Nadu Co-operative Societies Act, a Member could be
thrust on to the Society contrary to the byelaws, came up for consideration in the decision reported in Babaji Kondaji Garad Vs. Nasik Merchants
Co-operative Bank Ltd., Nasik and Others, (a decision cited by the State). This decision also considered the question as to whether the bye law
has the force of a statute.
The brief facts of the case therein were that u/s 73-B of the Maharashtra Co-operative Societies Act, 1960, two seats were to be reserved on
the Committee of the Society for Members belonging to Scheduled Caste or Scheduled Tribe and one for the weaker section of the Members,
who have been granted loan from the Society, to an amount not exceeding Rs. 200/- during the year immediately preceding. The Section provided
that the State Government may pass general or special order directing such membership. The Section further provided that if no persons are
elected or appointed, the Committee shall co-opt the required number of members on the committee from amongst the persons entitled to such
representation.
On a challenge made to Section 73-B that it cannot have precedence over Bye law No. 40, on a SLP filed before the Apex Court, the
Supreme Court pointed out that Section 73 of the Maharashtra Co-operative Societies Act provided for vesting of the management of the Society
in the Committee constituted in accordance with the Act, Rules and bye-laws. Section 73-B made it obligatory that two seats shall be reserved on
the Committee of such Society or class of Societies, as the Government may, by general or special order, direct one for the members, who belong
to Scheduled Caste or Scheduled Tribe and one for weaker sections of the Members. The Section itself pointed out the legislative intention that if
no such persons are elected or appointed, the reserved seats may be filled in by co-option. This would imply that the General Body of Members
will elect persons eligible to fill the reserved seats. Rejecting the contention of the State that the method of filling of such reserved seats through
election was not mandatory, it observed that such a view would ""strike a death-knell to the democratic principle of giving the constituency the right
to elect its representatives and it would be usurped by a coterie of certain elected persons."" The Apex Court further observed ""From enjoying a
direct representation, the constituency would move backwards and the process of regress would be that instead of direction election by the
constituency which is the statutory right granted by Section 73-B, the right to select would be usurped by the Board of Director who would decide
who should be co-opted to fill in the reserved seats. Such a retrograde movement is undemocratic"". Pointing out that a Bye-law of a Co-operative
Society could, at best, have the status of an Articles of Association of a company governed by the Companies Act, 1956 and that the Bye-law for
Co-operative Society framed in pursuance of the provisions of the relevant Act cannot be held to be law or to have the force of law, it observed
that ""they are neither statutory in character nor they have statutory flavour so as to be raised as to the status of law. Now if there is any conflict
between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over subordinate
legislation and the bye-law if not in conformity with the statute in order to give effect to the statutory provisions, the rule or bye-law has to be
ignored. The statutory provision has precedence and must be complied with."" Thus holding, the Supreme Court held that even though the bye-laws
are not amended, if reserved seats remained unfilled by election, the same can be filled up by co-option. In the circumstances, even though the
Bye-law did not provide for reservation of seats, the prescription u/s 73B providing for reservation must receive such construction as would
advance the purpose and intendment underlying the provision, making reservation.
The Apex Court pointed out that in considering the effect of the amendment, one must apply Heydon''s test, namely, ""(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."" Thus, while upholding the provision, the Apex Court pointed out that the Collector, while statutorily
charged with a duty to hold election according to the Act, must specify in the election programme first, that there are reserved seats to be filled up
in the election and the class in whose favour the reservation is made. Failure to do so would vitiate the election, it being contrary to Section 73-B
of the Maharashtra Co-operative Societies Act.
In the context of the admission of new members through statutory provision, the decision of the Constitution Bench of the Supreme Court
reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, assumes great significance. The said decision was applied in the
decisions reported in K. Shantharaj and another Vs. M.L. Nagaraja and others, and Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and
Others, .
The brief facts of the decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, are that Hindi Sahitya
Sammelan, an association founded for development of Hindi and its propagation throughout the Country, was formed in the year 1910, registered
as a Society under the Societies Registration Act. There were three classes of Members,- Special Members, Permanent Members and Ordinary
Members. As per the original Bye-laws, apart from constituting the Society, further members could be admitted under the above three
classification, on being elected by the working committee of the Society. In the year 1950, due to some differences among various members of the
Society, there was an attempt to alter the constitution of the Society. This led to litigation by filing of suits in Civil Court in Allahabad. The Uttar
Pradesh Legislature passed an Act called UP Hindi Sahitya Sammelan Act No. 36 of 1956, under which, a statutory body was created under the
name of Hindi Sahitya Sammelan. The new statutory Sammelan was to take over the management and the properties of the original Hindi Sahitya
Sammelan. The said Act was challenged before the High Court, which held the State Act as violative of Article 19(1)(c) and not saved by Article
19(4) of the Constitution of India. There after wards, the Hindi Sahitya Sammelan Act No. 13 of 1962 was passed in Entry 63, List I of the
Seventh Schedule to the Constitution of India, which came up for challenge once again before the Apex Court. u/s 4(1) of the Act, the Sammelan
was to consist of the first members of the Sammelan and all persons, who, thereafter, were to become members thereof, in accordance with the
Rules made in that behalf. The first Governing Body was directed to make Rules in respect of matters relating to membership including
qualifications and disqualifications for the membership of the Sammelan. The first Governing Body was to be constituted u/s 8 of the Act, consisting
of a Chairman, Secretary and 13 other members. The Governing Body was constituted by a notification in the official capacity. The Rules made by
the Governing Body relating to membership etc. were to be approved by the Central Government and were published in such manner as the
Government would direct. The Rules were to be laid before the House of Parliament. The Rules came into force on 1st February, 1971. The Act
was challenged on the ground that it interfered with the right to form an association under Article 19(1)(c) and was not protected by Article 19(4)
of the Constitution of India. The High Court held that since all the Members of the original Society had become Members of the newly formed
Society under the Act, there was no infringement of right to form an association.
Apart from an appeal against the judgment of the High Court, Writ Petition against the Central Act was also filed by the original Society, apart
from the Members of that Sammelan joining as parties before the Supreme Court. On an examination of the provisions of the Act, the Supreme
Court pointed out that the Sammelan consisted not only of persons who were the original Members of the Society, but also of others, who had
been given the right to be Members of the Sammelan without the consent of the pre-existing Members, without any option available to the existing
members of the Society to elect or refuse to elect them as members, which was the right they possessed under the Constitution of the Society itself.
Referring to Section 12(1)(a) reserving the authority to the first Governing Body to make Rules in respect of matters relating to Membership
including qualification and disqualification for membership of the Sammelan, the Apex Court pointed out that the Sammelan, which came into
existence under the impugned legislation, was not identical with the Sammelan, which was registered originally under the Societies Registration Act,
1860. The admission of the future members was no longer at the choice of the original members, who had formed an association. The original
members had no right to induct new members. Thus the Apex Court held that the Act interfered with the right to form an association, which was
exercised by the Members of the Society by forming the Society with its constitution; the future members could come in as members only as a
result of the election by the Working Committee; there was no identity between the original society and the society formed under the impugned
Act. Dealing with Article 19(1)(c) of the Constitution of India, the Apex Court held ""it is true that it has been held by this Court that after an
Association has been formed and the right under under Article 19(1)(c) has been exercised by the members forming it, they have no right to claim
that its activities must also be permitted to be carried on in the manner they desire.
Distinguishing all these cases cited by the State, the Apex Court pointed out that with the old Society still existing and so too the Governing
Body, the impugned Act, apart from regulating the administration of the affairs of the Society, altered the composition of the society itself by
admitting members, who had been imposed as members by the Act and in whose admission to membership, the members who formed a society,
had no say. This amounted to alteration in the composition of the Society itself; hence, was an interference with the right to continue to function as
members of the association, which was voluntarily formed by the original founders. It observed that the right to form an association necessarily
implies that the persons forming the association have also the right to continue to be associated with only those whom they voluntarily admit in the
association. ""Any law, by which members are introduced in the voluntary association without any option being given to the members to keep them
out or any liability, which takes away the membership of those who have voluntarily joined it, will be a law violating the right to form an association.
It rejected the arguments of the State that the right guaranteed under Article 19(1)(c) is confined to the initial stage of forming an association;
hence does not protect the right to continue the association with the membership either chosen by the founders or regulated by the rules made by
the association itself. ""The right can be effective only if it is held to include within it the right to continue the association with its composition as
voluntarily agreed upon by the persons forming the association"". The Apex Court pointed out that the impugned Act purported to take away all the
properties of the Society, leaving the Society as an existing body, and given them to the new sammelan, which was a separate and distinct legal
entity from the Society. Thus the law depriving the Society of its properties altogether, could not be held to be a reasonable restriction, in the public
interest. Referring to the power given to the Governing Body, the Supreme Court pointed out that the admission of such members under the Act
could even leave the original members in a small minority. In the context of the Rules thus made, divesting the properties from the original
Sammelan to a new entity and the identity of the new Sammelan not identical with the Sammelan originally registered under the Societies
Registration Act and that no discretion was left to the Society in the matter of admission of members, the Apex Court observed that the Act was in
violation of Article 19(1)(c), which seriously interfered with the right of citizens to form a Society. Thus the Act, which materially altered the original
association, was declared as unconstitutional and struck down by the Apex Court.
The judgment of the Supreme Court shows that it lays down the proposition that a Co-operative Society is a voluntary body, into which there
should be no admission of new members without any option being given to the members to keep them out; the right to form an association includes
the right to continue to be associated with members whom they voluntarily admit in the association. The said decision is an authority for the
proposition that if members are thrust on the Society, the spirit of co-operative movement would be put an end to and it would be in violation of
the Article 19(1)(c) of the Constitution of India.
In the decision reported in Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies
(Urban) and Others, , the Supreme Court once again dealt with the similar issue. The said case relates to a Society formed with the object of
providing housing to the members of the Parsi community. The Society was registered in terms of Section 11 of the Bombay Co-operative
Societies Act. The Bye-law provided the objects of the Society to carry on trade of building and of buying, selling hiring, letting and developing
land in accordance with co-operative principles. The Bye-law provided that members belonging to Parsi community shall be elected by the
Committee of the Society, subject to satisfying other conditions in the Bye-law. The transfer of share allotted to a member had to have the previous
sanction of the Committee of the Society. It is seen that one of the members of the Society sold the plot, in which he had constructed a residential
building, to another member with the previous sanction of the Society. The said Member sought for permission of the Society to demolish the
bungalow and put up a commercial building in its place. The same was refused by the Society by quoting the Bye-law, which did not permit
commercial use of the land. Hence, the said member sought for permission to construct residential flats to be sold to Parsis. It is seen that though
the permission was granted to construct residential flats to be sold only to the members of the Parsi community, the said Member did not act on the
permission for a period of seven years. However, the said Member was stated to have started negotiation with Builders'' Association, in violation
of the restriction on the sale of shares or property to a non-Parsi. This gave rise to a litigation and an order of injunction was sought for against the
Society. The Board informed that the Society could not restrict its membership only to the Parsi community and that the membership should remain
open for every person. Based on that, once again the Member applied for permission, which was rejected by the Society on the ground that it was
contrary to the Rules, Act and the byelaws of the Society.
On a Writ Petition filed as against the Tribunal''s orders that the view of the Society was a restriction on the right to property, the same was
dismissed by the High Court. Hence, an appeal was preferred before the Apex Court. After referring to the decision reported in Smt. Damyanti
Naranga Vs. The Union of India (UOI) and Others, , which was distinguished by the decision reported in Daman Singh and Others Vs. State of
Punjab and Others, , the Supreme Court pointed out that the Rule would prevail over the Bye laws of the Society, which confined the membership
to only persons belonging to the Parsi Community. On going through the provisions contained in Section 24(1) of the Bombay Act, the Supreme
Court pointed out that it did not contemplate an open membership, de hors the byelaws of the Society, nor it had precluded the Society from
prescribing the qualification for membership based on a belief, persuasion or religion for that matter. The individual right of a member got
submerged in the collective right of the Society. Thus the Supreme Court referred to the decision reported in State of U.P. and another etc. Vs.
C.O.D. Chheoki Employees'' Co-op. Society Ltd. and others etc., , holding thus:
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 the bye-laws
and is subject to its operation. The stream cannot rise higher than the source.
The Apex Court held that in the absence of any prohibition in the Act against the formation of a Society for a particular community or origin, it
could not be held that the confining of membership, as was done by the Bye-law, was opposed to public policy. It further observed ""Membership
in a co-operative society only brings about a contractual relationship among the members forming it subject of course to the Act and the Rules.
One becomes a member in a co-operative society either at the time of its formation or acquires membership in it on possessing the requisite
qualification under the bye-laws of the society and on being accepted as a member. It is not as if one has a fundamental right to become a member
of a co-operative society. But certainly, if the application of one for membership, who is otherwise qualified to be a member under the Act, Rules
and the bye-laws of the society, is rejected unreasonably or for frivolous reasons, the person may be entitled to enforce his claim to become a
member in an appropriate forum or court of law. This is the effect of the decision in Jain Merchants Co-operative Housing Society Vs. HUF of
Manubhai (1995 (1) GLR 19 ), relied on by the High Court. The said decision does not lay down a proposition, nor can it lay down a proposition,
that even a person who does not qualify to be a member in terms of the bye-laws of a society can enforce a right to become a member of that
society. It is one thing to say that it is not desirable to restrict membership in a society based solely on religion or sex but it is quite different thing to
say that any such voluntary approved bye-law containing such a restriction could be ignored or declared unconstitutional by an authority or a
Tribunal created under the Act itself. Normally, the bye-laws of a society do not have the status of a statute and as held by this Court in Co-
operative Central Bank Ltd. and Others Vs. Additional Industrial Tribunal and Others, , bye-laws are only the rules which govern the internal
management or administration of a society and they are of the nature of articles of association of a company incorporated under the Companies
Act. They may be binding between the persons affected by them but they do not have the force of a statute.
The Apex Court further observed that while the validity of a Bye-law has to be tested in the light of the provisions of the Act and the Rules
governing the Co-operative Societies, it is not permissible for the State Government to compel the Society to amend its Bye laws, as it would
defeat the object of formation of a Society. Referring to the decision reported in Karvenagar Sahakari Griha Rachana Sanstha Maryadit, Pune and
Another Vs. State of Maharashtra and Others, , which was subsequently confirmed in the decision reported in State of Maharashtra and Others
Vs. Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar Sahakari Griha Karan Sanstha Niyamati and Others,
, the Apex Court observed that the paramount consideration of the State lies in the interests of the Society. What is in the interest of the Society is
primarily for the Society alone to decide and it is not for the outside agency to have a say on this. Where the Registrar exercised his statutory
power to amend the byelaws, such directions should satisfy the requirement of the interests of the Society. It observed that the approved byelaws
clearly confer power on the Committee to reject the application for membership of a person who is not qualified in terms of the Bye-law and the
same cannot be interfered with on the basis of anything contained in the Act or the Rules and in the name of public policy, a registered Society
cannot be directed to admit a member, who is not otherwise qualified to be a member in terms of the duly registered byelaws. As to the nature of
the byelaws of a Society, the Supreme Court pointed out ""the byelaws of a Co-operative Society setting out the terms of membership to it, is a
contract entered into by a person when he seeks to become a member of that society. Even the formation of the society is based on a contract.
This freedom to contract available to a citizen cannot be curtailed or curbed relying on the fundamental rights enshrined in Part III of the
Constitution of India against State action.
Touching on the rights of a member admitted to a Society, the Supreme court pointed out that when a person exercised his right of association
to become a member of a Society by entering into a contract with others, he submerges his rights in the common right to be enjoyed by all. Thus,
he is really exercising his right of association guaranteed by Article 19(1)(c) of the Constitution of India. In that process, his rights merge in the
rights of the society and are controlled by the Act and the byelaws of the Society. The availability of membership is subject to the qualification
prescribed under the provisions of the Act, Rules and the byelaws and if the relevant Bye-law places any restriction on a person admitted to a co-
operative society, that Bye-law would be operative against him. Thus the Apex Court upheld the right of the Society that the property was to be
dealt with by a member, only in terms of the byelaws of the Society.
The above-said judgments thus laid down that the byelaws framed by the Society are in the nature of contract entered into between persons
joining together to form a society; the various clauses of the bye laws must be in consonance with the provisions of the Act and that they are in
addition to what is prescribed under the Act and the Rules. As forming of a Society itself is the result of the voluntary act of individuals, admission
of new members is also a matter within the choice and option of the members and whenever such option is exercised under the Act, the same is
violative of Article 19(1)(c) of the Constitution of India. Apart from the Statute laying down the qualifications and disqualifications, the bye law
prescribes the qualification of the Members to be admitted therein. No provision of the Act can compel admission of a member, contrary to the
bye laws of the Society. The above decisions are also an authority for the proposition that the State cannot impose membership into the Society
and against the free will of the society which would bring in a change in the composition of the Society, since it fundamentally tinkers with the
independence of the society and the democratic control that the society exercises in the matter of selecting the members with whom the society
desires to associate. Such compulsion would go against the democratic spirit with which the society functions. The interests of the individual
member on admission submerges with that of the society. The judgments are also an authority for the proposition that the byelaws are not statutory
in character and they cannot run against the provisions of the Act and the Rules.
In the background of the law laid down by the Apex Court, the provisions of the Tamil Nadu Act has to be seen. We have seen in the
preceding paragraphs that Rule 6 of the Rules lays down the contents or the subject matter of a Bye-law of a Society. The eligibility criteria of a
person to become a Member for admission into a Society is governed by the Bye-laws, Act and the Rules. Section 21(2)(i) conditions the
admission of a person as a member, subject to his satisfying the criteria laid down in the Bye-laws, Act and the Rules. Thus, when the Society
makes Bye-laws or subjects enumerated under Rule 6, this is in addition to what is already provided for under the Act and within the framework of
the provisions of the Act and the Rules; what is to be provided for as laid down under the Act and the Rules are not contrary to what is provided
in the Act. Thus, while the right to form an association is guaranteed under Article 19(1)(c) of the Constitution of India to the citizens, Article 43-B
and Article 243ZI enjoin on the State to make provisions with respect to incorporation, regulation and winding up of the Co-operative Societies
based on the principles of voluntary formation, democratic member control, member economic participation and autonomous functioning and
thereby, promote voluntary functioning, democratic control and professional management of the Co-operative Societies.
In the decision reported in H. Puttappa and Others Vs. The State of Karnataka and Others, , the Full Bench of the Karnataka High Court
pointed out that when the principles are not affected, there is no question of the fundamental right guaranteed by Article 19(1)(c) of the
Constitution of India being impaired or infringed. The Full Bench of the Karnataka High Court considered this question in the context of Section
14-A of the Karnataka Co-operative Societies Act as to whether it conferred unguided arbitrary power on the Registrar directing amalgamation of
Co-operative Societies of more than 800 societies. Holding that the powers conferred on the authority were not violative of Article 14 of the
Constitution of India, the Karnataka High Court pointed out to the locus standi of the new members challenging the provisions relating to
amalgamation. Referring to the Section 14-A, the Karnataka High Court held that the amalgamation, division or reorganisation of co-operative
societies could be ordered only when the statutory authorities are satisfied that such action is essential either in public interest or in the interest of
co-operative movement or for the purpose of securing the proper management of any co-operative society. The Section, therefore, not only lays
down the policy, but also provides the safeguards to ensure that the cooperative societies are not dismantled unnecessarily.
On the issue raised that the said provision encroaches the right under Article 19(1)(c) of the Constitution of India, that without their consent,
they had been made members of the amalgamated Co-operative Society, the Karnataka High Court pointed out that as soon as the citizens form
an association, the Members cannot lay claim to the fundamental right guaranteed under Article 19(1)(c); the association cannot complain about
the restrictions in the Act as restrictions against the right conferred by Article 19(1)(c) of the Constitution of India. It pointed out ""The provisions in
the Act govern the duties and privileges, rights and liabilities, property and funds, the audit, inspection and surcharge, the dissolution and
amalgamation of co-operative societies and its members. The Act thus regulates the economic interests of the members and controls the trading
activities of the societies in the interests of the public or in the interests of the advancement of the co-operative movement. The process of
amalgamation and division or reorganisation of co-operative societies relate only to structural alterations in the corporate bodies and cannot be
construed as a restriction on the right guaranteed to the citizens by Article 19(1)(c)."" The High Court also referred to the decision reported in Smt.
Damyanti Naranga Vs. The Union of India (UOI) and Others, and held that the facts of that case are far removed from the case on hand and held
that the Act merely regulates the economic interests of the Members and hence, the process of amalgamation relating to structural alteration in the
corporate body cannot be construed as a restriction on the right guaranteed under Article 19(1)(c) of the Constitution of India. As far as this
decision is concerned, even though the view of the High Court that the right to form a Society is only a statutory right would no longer hold waters,
in view of Article 19(1)(c) as it stands today, yet, the view of the High Court on the regulatory nature of the Act that on being members, they cease
to have any individual interest other than that of the Societies'' interest, merits acceptance in the context of the protection available in Section 14-A
of the Andhra Pradesh Co-operative Societies Act and the regulation brought was in the economic interests of the members as well as in public
interest. Therefore, regulations which promotes the interests of the society are valid. So long as the action taken note of the voluntary nature of
functioning of the association and in the given case, the same is regulated by the statute in public interest, which is a subject matter of subjective
satisfaction in an objective way, the authority of the State to regulate the affairs cannot be faulted with, as violative of the constitutional mandate. In
such cases, the question of violence to the provisions of the bye laws cannot arise, but must yield to the larger public interest that the society seeks
to promote.
In the context of the byelaws prescribing qualification for admission of members and the authority given to the Board to admit new members,
the principle of democratic control exercised by the co. operative societies, the decisions of the Apex Court reported in K. Shantharaj and another
Vs. M.L. Nagaraja and others, and Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, need to be seen.
Both these decisions relate to the question as to whether the Administrator, who was a stop-gap arrangement to manage the day-to-day
administration, could take policy decision on admitting new members. The Supreme Court pointed out that when the State appointed an
Administrator superseding the Committee, the power of the Administrator should be confined within the parameters set out under the provisions of
the Act, Rules and the byelaws and that the Administrator has no power to enrol new members. He can only organise election process in
accordance with the provisions of the Act, Rules and the byelaws of the Society. The decision of the Full Bench of this Court reported in K.
Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited,
followed the above-said decisions to hold that the Special Officer has no authority to admit new members and being an in-charge officer, his
authority is to only go ahead with the day-to-day functioning of the Society.
Thus the decisions, right from the year 1971, i.e., Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, to Zoroastrian Co-
operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, , as well as the cases relating to
the Special Officer admitting members, are concerned with situations brought out by the admission of members who are ineligible to be admitted as
members as well as cases on ignoring the options available to the existing members to decide on the admissibility of the members, that there was no
scope for the exercise of free will to decide with whom they should be associated with. In the decision reported in A.P. Dairy Development
Corporation Federation Vs. B. Narasimha Reddy and Others, , after considering the decisions reported in Smt. Damyanti Naranga Vs. The Union
of India (UOI) and Others, and Dharam Dutt and Others Vs. Union of India (UOI) and Others, , the Apex Court observed ""it becomes evident
that the right of the citizens to form the association are different from running the business by that association. Therefore, right of individuals to form
a society has to be understood in a completely different context. Once a co-operative society is formed and registered, for the reason that co-
operative society itself is a creature of the statute, the rights of the society and that of its members stand abridged by the provisions of the Act. The
activities of the society are controlled by the statute. Therefore, there cannot be any objection to statutory interference with their composition or
functioning merely on the ground of contravention of individual''s right of freedom of association by statutory functionaries. ""Thus the case before us
is of a totally different nature.
A reading of the byelaws placed before this Court shows that apart from laying down the objects of the Society, the share capital of the
Society, the eligibility criteria of the Society and the business of the Society, it also contains clauses on the eligibility of a person seeking admission,
ineligibility of a person from being admitted and the expulsion, which are verbatim taken from the Act itself. Thus the Bye-laws provide for the
authority of the Board to admit new members in terms of the provisions contained in Section 21(2), as it stood originally. The provisions contained
in Section 21(2) on the admission of new members is a regulatory provision, well within the framework of the concept adumbrated in the decision
reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, , preserving the rights of the existing members to admit or reject an
application for membership. Thus, even with the ultimate authority of the registered Society resting on the General Body, when the Act conferred
the authority on the admission of a new member on the Governing Body, if any Bye-law is to provide for the authority on the General Body to
admit new members, even going by the principle of voluntariness, the bye-law being contrary to the provisions of the Act, would be bad in the eye
of law. Thus, regulating the exercise of the authority as to the admission of members cannot be viewed as a matter exclusively within the authority
of the Society and the State has no authority to regulate a situation warranted by the absence of the Governing Body. If the State can make
provisions for empowering a Body to admit new members, it is equally open to the State to regulate the situation warranted by the absence of the
Body on whom the authority stands; that till such time the original authority is constituted, a stop-gap arrangement has to be made through another
body. The contention of the petitioners herein is that the State cannot make such an amendment, which would be against the tenor of Part IX-B of
the Constitution brought about under the 97th amendment to the Constitution.
46 A reading of the amendment brought in to Article 19(1)(c), Article 43-B and Part IXB of the Constitution of India, with effect from 15.2.2012,
shows the anxiety of the State to promote voluntary formation, autonomous functioning, democratic control and provisional amendment of Co-
operative Societies. Article 43-B in Chapter IV- Directive Principles of State policy was inserted by the Constitution (97th Amendment) Act,
2011. In furtherance of this, is Part IX-B-The Co-operative Societies. It contains Articles 243-ZH to 243-ZT. ''Board'' is defined under Article
243ZH(b) to mean the board of directors or the governing body of a co-operative society, by whatever name called, to which the direction and
control of the management of the affairs of a society is entrusted to. Sub-section (c) defines ''co-operative society'', which means, a society
registered or deemed to be registered under any law relating to co-operative societies for the time being in force in any State. Article 243ZI speaks
about the State making provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of
voluntary formation, democratic member-control, member-economic participation and autonomous functioning. Part IXB also lays down the
number and term of the members of the Board and its office bearers. Although the number of Directors may be as prescribed by the Legislature of
the State, yet, Article 243ZJ fixes the maximum number as not exceeding 21. It speaks about the reservation of one seat for SC/ST and two seats
for women on the Board of every co-operative society. The term of office of elected members of the board is given as five years from the date of
election. The proviso to sub-Article (2) to Article 243ZJ states ""Provided that the board may fill a casual vacancy on the board by nomination out
of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original
term.
The Section also provides for co-option of persons to be the members of the board having experience in the field of banking, management,
finance or specialisation in any other field relating to the objects and activities undertaken by the co-operative society, as members of the board of
such society. However the number of such co-opted members shall not exceed two in addition to twenty-one Directors. It also specifies the right
of the co-opted members not to vote in the election of the co-operative society. Article 243ZK of the Constitution of India deals with the election
of members of the board. Article 243ZL of the Constitution of India deals with Supersession and suspension of the Board and interim management
with a limitation of a period not exceeding six months for the suspension or supersession to operate. Article 243ZM deals with auditing of accounts
of co-operative societies. Article 243ZN provides for convening of general body meetings of the Society within a period of six months of the
closure of the financial year to transact the business as may be provided in such law. Article 243ZQ deals with Offences and penalties to be
provided for by the Legislature of a State. Article 243ZT provides for the continuance of the existing laws, which are not inconsistent with the
provisions of Part I until the expiration of one year from the commencement or until amended or repealed by the competent Legislature, whichever
is less.
Thus a reading of the Articles inserted in Chapter IXB of the Constitution of India shows the necessity for constituting a representative Board,
having representatives of the weaker Sections of the Society as well as professionals to give the society the advantages of professional
management, the need for an autonomous functioning of the Society by holding election before the term expired, restricting the period of
suspension to six months and the need to hold an election and the need for placing the business of the society before the General Body Meeting
within a period of six months of the close of the financial year.
While introducing the amending Act, the Minister for Agriculture referred to the amendment brought to Article 19(1)(c) of the Constitution of
India to include the right to form a Co-operative Society and the consequential amendments and pointed out that such insertion would give boost
to the co-operative movement. Referring to the prevailing status on the Societies'' functioning without elections for years, which seriously affect the
democratic member control and autonomous functioning, the Minister stated ""the proposed amendment would go a long way to address the
problems and deficiencies that the cooperatives face today""; that the co-operative movement would be further strengthened by the amendment and
serve the members, particularly those from economically weaker sections on board. The amendment to the Constitution thus touches on five
important aspects, namely, on voluntary formation, autonomous functioning, democratic member-control, member-economic participation.
In the background of the amendment thus brought into the Constitution, the various contentions raised by the petitioners as to the
constitutionality of the amendment to Section 21(2) need to be seen.
The contentions of the petitioners fall under three heads, namely, (i) constitutionality of the amendment made to Section 21(2); that it is
offensive of Article 19(1)(c) of the Constitution of India; the said provision is unreasonable, arbitrary and not a reasonable restriction to be saved
under Article 19(4) of the Constitution of India. It is violative of Part IX B of the Constitution. Considering the objects and reasons on the 97th
amendment to the Constitution, which prescribes the Authority of the Governing Body, the amendment interferes with the democratic set up,
democratic control and professional management of the Co-operative Societies; hence against the spirit of the Constitution (97th amendment) Act,
2011. The admission of new members is the prerogative of the Governing Body, which is empowered under the byelaw to do so. Hence, the
amendment interferes with the byelaws of the Society and hence against the spirit of cooperative movement. The amendment, thus being contrary
to the decisions of law declared by the Apex Court reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, followed in Jt.
Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, and K. Shantharaj and another Vs. M.L. Nagaraja and others, and in the decision
reported in Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, , is
an attempt to nullify the decision of this Court reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms
Weavers Co-operative Production and Sales Society Limited, . The admission of new members by the General Body would affect the
composition of the association. The Board is a specialised body, which alone is competent to assess the merits of the eligible applicants to become
members of the Society. When the byelaws say that the new members are to be admitted by the Board alone, it is not open to the State to confer
such authority on the General Body. Going by the second proviso to Section 21(2) of the Act providing for deemed admission, there is every
possibility of unmerited members entering into the Society, thereby affecting the composition of the Society. The amendment, in effect, seeks to
bypass the judgment of this Court reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-
operative Production and Sales Society Limited, and what could not be achieved through Section 89A of the Act, the State seeks to achieve the
same by the amendment and hence, the amended act is a colourable piece of legislation and is contrary to the decision reported in K.
Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, . The
above are the common contentions of the petitioners.
Mr. P. Wilson, learned senior counsel appearing for the petitioners in W.P. Nos. 25699, 25882, 25889 and 25890 of 2012, submitted that
when the Bye-law of the Society contemplated admission of new members by the Board alone, the amendment giving authority to the general body
is aimed at making inroads into the functioning of the Co-operative Society, thereby affecting the autonomy of the Co-operative Society. When this
Court has specifically held in the decision reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers
Co-operative Production and Sales Society Limited, that the Board alone has the authority to admit new members and that the Special Officer has
no right to admit a member, the present amendment u/s 21(2) of the Act is an attempt to get over the judgment of this Court, thereby, nullify the
same. Thus, what the State could not achieve through Section 89A of the Act, is now sought to be achieved by the State through the amendment
to have a control over the admission of members, thereby, undermining the democratic principles on which the Society is formed.
Commenting that the State has no right to bring in new members to the Society, admission of members into the Society being a prerogative
right of the Board, the amendment to Section 21(2) of the Act is a clear violation of Article 19(1)(c) of the Constitution of India. Even going by the
explanatory statement, it is clear that the intention of bringing an amendment is only to bring in the members of its choice into the Society, thereby
restricting the authority of the Society to select its own members. This would totally change the composition of the Society and have serious impact
on the functioning of the Society; hence, the amendment is violative of the spirit of the 97th amendment to the Constitution. When the aim of the
97th amendment is to promote voluntary formation by free exercise of will for an autonomous formation for self-governance and to have
democratic control through the elected members of the Board as well as to bring about a professional management through qualified persons, the
State cannot use its authority to bring an amendment, which would not be in furtherance of Article 43-B of the Constitution of India. On the other
hand, it would be totally violative of Article 19(1)(c) of the Constitution. He further pointed out that the Board is a qualified body, which alone has
the expertise and knowledge to select the eligible members, whose presence would contribute and promote the well-being of the Society. Thus,
when the Board is not in existence, giving authority to the General Body would only result in bringing in members, which may be adverse to the
well-being of the Society. Hence, the very complexity of the Society would be interfered with. He further pointed out that the Board is a
specialised body to assess the merits of an eligible member to be admitted into the society and a General Body is not well-informed in that regard
to judge the merits of an individual applicant to be admitted into the Society. When the mandate of the Constitution is to bring the election within a
period of six months, instead of holding the election immediately, the amendment brought in is an attempt to interfere and stifle the democratic
control of the Society.
Referring to Section 33 of the Co-operative Societies Act, which touches on the composition of the Board and the meetings of the Board, he
submitted that in the absence of any amendment to Section 33 of the Act, the State cannot bring in General Body as a body competent to admit
new members. Referring to the hurried manner with which the Special Officers have called for the General Body Meeting to admit new members,
he pointed out to the Constitutional amendment made on 15.2.2012, particularly Part IXB, Article 43-B and Article 19(1)(c) of the Constitution of
India. The State amended Section 21(2) of the Act, effective from 16.11.2012. Form No. 16 is the relevant form relating to admission of new
members. Rule 27 is the relevant Rule prescribing the application to be submitted by a person intending to become a member/the manner of
admission as a Member. The said Rule and Form 16 were amended in tune with the amendment to Section 21(2) only on 19.11.2012. However,
the Meetings on the admission of new members were held even before the amendment to the Rule and the form were brought in and hence, the
election based on the unamended Form 16 are not valid. Thus, the admission of new members could only be on the basis of a proper application in
Form 16; hence, the admission of new members on the notice sent by the Special Officer holding the General Body Meeting, is ab initio void. He
further submitted that the State cannot control the Society to amend its byelaws to empower the General Body to admit new members.
In this connection, he placed reliance on the decisions reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, ;
Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, , Jt. Registrar
of Co-op. Societies Vs. T.A. Kuttappan and Others, and Grand Kakatiya Sheraton Hotel and Towers Employees and Workers Union Vs.
Srinivasa Resorts Ltd. and Others, and submitted that the provisions are arbitrary, unreasonable, unworkable and contrary to the law declared by
the Apex Court and violative of Articles 14 and 19(1)(c) of the amendment brought under 97th amendment to the Constitution in Chapter I and
the byelaws made by the Society and hence, liable to be struck down.
Learned senior counsel further pointed out that the State has not understood the spirit of the 97th amendment, which is clearly brought out in
the speech of the Minister. He pointed out that Part IXA clearly brings out the demarcation of the power between the Board and the General
Body; that the Board is the ultimate authority in the matter of managing the affairs of the Society; the voluntary formation, independent functioning,
democratic control and professional management cannot be compromised at all by induction of new members through the General Body. Pointing
out that there is absolutely no necessity at all to amend the provisions hurriedly through an ordinance, he submitted that the only mandate which the
State ought to have taken up emergently as per the 97th amendment, is the conduct of the election. When admission of new member is essentially
in the realm of the Society and that the method by which such members could be admitted is laid down by the byelaws, the amendment is clearly
an interference with the democratic set up of the Society. Thus, he submitted that the vision of 97th amendment must be sustained at any cost and
the State cannot dilute the directive principles as given under Article 43-B of the Constitution of India. In this connection, he placed reliance on the
decision reported in Grand Kakatiya Sheraton Hotel and Towers Employees and Workers Union Vs. Srinivasa Resorts Ltd. and Others, ,
particularly paragraph Nos. 73 and 77 and submitted that the byelaws cannot be interfered with by the amendment. Thus, the byelaw cannot be
subjected to any control or amended through the Act. When the right to form an association is a constitutional right, the right to continue the
association as per the byelaws is also a constitutional right. In this connection, he referred to the decisions reported in Jt. Registrar of Co-op.
Societies Vs. T.A. Kuttappan and Others, and Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, , K. Nithiyanantham Vs. State
of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, and Zoroastrian Co-operative
Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, .
Referring to the decision reported in Karvenagar Sahakari Griha Rachana Sanstha Maryadit, Pune and Another Vs. State of Maharashtra and
Others, particularly, paragraph 9, he pointed out that if the members are to be admitted through the General Body, this calls for an amendment to
the byelaws, and the State cannot bring an arbitrary legislative provision to interfere with the autonomy of the Society. Thus, the object of the
amendment is clearly detrimental to the Co-operative Society and the Co-operative movement. He pointed out that the present amendment
differentiates the Societies, one with the Board and another without the Board. Such classification has no nexus with the object of a Co-operative
movement. In effect, the amendment is irrational, illegal and capricious, having no nexus at all with the object of the Society. He placed reliance on
the decision reported in Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and
Others, , particularly paragraph 21 and submitted that even if there is no fundamental right to become a member of a Society, the better
determining authority is the Board and not the General Body. Thus the observation of the Full Bench decision of this Court reported in K.
Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, ,
particularly Paragraph No. 49 relating to the power of the Board, cannot, in any manner, be got over by any amendment; hence prayed for
declaring the provisions as ultra vires.
Reiterating the above contentions, Mr. R. Shanmugasundaram learned senior counsel appearing for the petitioners in W.P. Nos. 31749 of
2012, 1126 and 1127 of 2013, pointed out that in deciding the validity of the amendment in Section 21(2) of the Act, the objects and reasons on
the 97th amendment must necessarily be borne in mind. Secondly, when the byelaws prescribed the membership eligibility and the mode of
admission of new members, the amendment cannot dilute the Bye-law, thereby authority of the Governing Body, which alone could admit new
members. The vesting of the authority with the Governing Body is in consonance with the 97th amendment to the Constitution. Considering the
limited role of the General Body and having no authority to admit new members as per the Bye-law, Section 21(2) of the Act, as amended, causes
serious dent into the byelaws of the Society; hence, arbitrary, illegal and contrary to the settled position of law.
Mr. R. Shanmugasundaram, learned senior counsel appearing for the petitioners in W.P. Nos. 31749 of 2012, 1126 and 1127 of 2013, also
made a submission on the aspect of deemed membership u/s 21(2) second proviso, which would structurally alter the composition of the Society.
Pointing out to the byelaws of the Society on the admission of members by the Board, he submitted that in any event, the amended Section cannot
bring in an automatic amendment to the byelaws to insist on the admission of new members through the General Body. He submitted that there
could be no admission of new members by show of hands or by counting of heads and that admission of an eligible member is the discretion of the
Governing Body of the Board, which, after deliberation, decides on the admissibility of the member. In the circumstances, through this amendment,
the State cannot compel the Society to bring an amendment to the Bye-law or for the byelaws to stand automatically amended by reason of the
amendment. In this connection, he placed reliance on the decision reported in Zoroastrian Co-operative Housing Society Limited and Another Vs.
District Registrar Co-operative Societies (Urban) and Others, . Referring to the counter in paragraph 8. he submitted that as the byelaws
authorised the Board alone to admit new members, it could only be by the Board. As regards the Society to which the petitioners belonged, he
pointed out that the balance sheet clearly spells out the capital contribution by the members and that it is always open to the existing members to
take more shares subject to the limit prescribed under the Bye-law. Therefore, it is not open to the State to amend the law so as to compel new
members to be admitted. He pointed out that the option of the Society to keep the admission of new members out is now taken away by the
amendment; consequently, the Legislation is bad.
Mr. V. Raghavachari, learned counsel appearing for the petitioners in W.P. Nos. 24817 to 24820, 23753 and 23754 of 2012, pointed out
that even under the Scheme of the Act, specific powers are given to the Board and the General Body. In the matter of admission of new members
u/s 21(2) of the Act, as it originally stood, the Board alone was conferred with such an authority, for the precise reason that there must be a
substantive satisfaction on the admission of an eligible member. This is possible only with a smaller body, which has the expertise to consider the
claim of the applicant Member to have membership into the Society. Part IX-B of the Constitution of India defines what the Governing Body is.
Section 33 of the State Act touches on the constitution of the Board and the powers of the Board to manage the Society. Thus on a reading of the
constitutional provisions, statutory provisions and the byelaws, it is clear that the Board is the only competent authority to admit new members and
the authority of the General Body thus clearly spelt out u/s 32 of the Act; without an amendment to Section 32 of the Act, the amendment to
Section 21(2) will not be of any consequence to empower the General Body to admit new Members.
Referring to the decision reported in Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative
Societies (Urban) and Others, , particularly to paragraph Nos. 15, 16 and 21, he submitted that when the Bye-law says that the Board is the
empowered body to admit new members, the State cannot amend the provision to say that the General Body will have the authority to admit new
members. Therefore, the amended Section 21(2) of the Act, which has interfered with the authority of the Society to name the body competent to
admit new members, is bad in law. He also pointed out that with authority given to the General Body to admit new members, the possibility of
arbitrary exercise of power in admitting members is also there. Consequently, the Section suffers from arbitrariness too.
Mr. V. Raghavachari, learned counsel appearing for the petitioners in W.P. Nos. 24817 to 24820, 23753 and 23754 of 2012, further pointed
out to the reference to other State enactments, namely, Bihar, Jharkhand, Goa and Mizoram and the provisions therein, to submit that these Acts
were later enactments and hence, the State cannot seek support to its amendment based on other State laws. He submitted that when Section 33
of the Act specifies the powers of the General Body and restricts its powers, without an amendment to Section 33 of the Act, Section 21(2)
amendment, per se, cannot empower the General Body to admit new members. In any event, without any amendment to the byelaws, the power
given to the Board cannot be, in any manner, denuded. In this connection, he placed reliance on the decision reported in Murarka Paint and
Varnish Works Ltd. Vs. Mohanlal Murarka and Others, and submitted that the formation of a Society, being contractual in character, the
provisions providing for admission, cannot, in any manner, be interfered with through an amendment. He also placed reliance on the decision
reported in The Suburban Bank Private Ltd. Vs. Thariath and others, and submitted that the admission of new members shall be against the
byelaws.
Mr. C.R. Prasannan, learned counsel appearing for the Writ Petitioner in W.P. No. 34058 of 2012, apart from the contentions already taken
as above, pointed out that Section 94 of the Act clearly points out that admission of the new member in the case of Joint Farming Society shall be
considered by the Board only. He submitted that Section 94 of the Act starts with a non-obstante clause that notwithstanding anything contained in
Section 21 of the Act, every application for Membership in a Joint Farming Society shall be considered by the Board, which may grant or refuse
admission. In the absence of any amendment to Section 94 of the Act in the case of Joint Farming Society, Section 21(2) amendment has no
consequence at all. In any event, he pointed out that as regards other Writ Petitioners whom he is representing, there was no clear notice before
convening the meeting; hence, admission of new members through General Body is bad.
Mr. H. Dhandapani, learned counsel appearing for the petitioners in W.P. Nos. 26487 and 26504 of 2012, referred to the composition of the
Sugarcane Cooperative Society and submitted that as far as this Society is concerned, only cane growers could be members of the Management
Committee. Considering the object of the Society and the need for like-minded persons to be in the Society, admission of new members has to be
necessarily given to an expert body like the Governing Body, lest, the power given to a larger body like the general body would only result in
admission of members, who, instead of contributing to the growth, would only mar its growth. Thus the possibility of non-application of mind in the
admission of the members writ large, the provision is arbitrary and bad in law. He pointed out that the admission of new members is not an
automatic one, but one which requires deliberation; hence, it is a quasi judicial act. The Act contains provisions of appeal as against the rejection of
an application seeking admission. Hence, being a subject critical to the existence of the cooperative society formed out of free will and having great
significance to the well being and functioning of the Society, each applicant has to be subjected to deliberation and then admission. Considering the
conduct of admission of members in the Society post amendment, it is evident that the amended provision only provides for an area of abuse and
hence, the same is not in good faith. If the State is well-intended to promote cooperative movement, it must hold the election immediately and give
the authority to the Governing Body to admit new members.
Mr. H. Dhandapani, learned counsel appearing for the petitioners in W.P. Nos. 26487 and 26504 of 2012, further pointed out to the
admission of new members to the strength of 10,000 and submitted that the impracticability of the admission of such huge members in a Society
consisting of Sugarcane Growers would not be in the best interests of a democratic set up of the Society. He pointed out that such admission
would certainly change the composition of the Society and ultimately would defeat the very object of the Society.
Mr. V. Ravi, learned counsel appearing for the petitioners in W.P. Nos. 25993, 27055 to 27059, 26440, 26441, 27746, 27792, 28530,
28800, 30305 and 33951 of 2012, while reiterating the submissions made by the other counsel, submitted that the amendment does not spell out
the reasons for bringing the amendment through an ordinance. He further submitted that being a specialised body, the Board alone is the competent
body to scrutinise the application to admit new members. There is no provision in the amending Act as who is the competent person to scrutinise
the application. The counter also does not, in any manner, speak on that. Therefore, admission of a member through the General Body would only
lead to a situation of non-application of mind. As far as the amendment to the Rule is concerned, in the absence of any notification, the amendment
can have no effect at all. By the amendment, the State has only attempted to nullify the decision of this Court reported in K. Nithiyanantham Vs.
State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, . In this connection, he
relied on a decision reported in The State of Maharashtra and Others Vs. Kumari Tanuja, , particularly paragraph Nos. 3, 9, 10, 11 and 12, that
what could not be done u/s 89A is now sought to be done through the amendment to admit members in an undemocratic manner. He further
pointed out that when the Parent Act was enacted in the year 1983, the same was assented to only by the President. In the absence of any
sanction by the President, as per Article 255 of the Constitution of India, to the present amendment, the provisions are bad. He relied on the
decision reported in Jawaharmal Vs. State of Rajasthan and Others, , State of Kerala and Others Vs. Mar Appraem Kuri Company Ltd. and
Another, and Kaiser-I-Hind Pvt. Ltd. and Others Vs. National Textile Corporation (Maharashtra North) Ltd. and Others, .
Mr. R. Krishnaswamy, learned counsel appearing for the petitioners in W.P. No. 34489 of 2012, submitted that after the amendment, as many
as 3676 members are admitted by the General Body on 15.9.2012. He submitted that this figure itself is an indication of how the admission of new
members by the General Body could be a matter of abuse at the hands of the General Body, which has no expertise in judging the individual merits
of the members seeking admission. He submitted that even though the General Body is the ultimate body having the right on the management of the
Society, yet, the Legislature had thought it fit to vest certain powers alone with the General Body, which means, matters which require specialised
handling must be left to the body which is endowed with such knowledge and such an area is one relating to admission of new members.
Consequently, if the Board is absent or absolved or not functioning, neither the General Body nor a Special Officer, as per the decision of the Full
Bench, could be vested with the authority to admit new members. In other words, the provisions are hit by the decision of the Full Bench reported
in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited,
. He pointed out that the Constitutional (97th amendment) Act, 2011 calls for immediate holding of election. The failure to carry out the
constitutional mandate and making of the present amendment is mala fide. In the circumstances, the Section has to fail.
Mr. T. Murugamanickam, learned counsel appearing for the petitioners in W.P. No. 27358 of 2012, questioned the need for passing an
ordinance. He placed reliance on the decision reported in Dr D.C. Wadhwa and Others Vs. State of Bihar and Others, , wherein, the Apex Court
held ""whenever an Ordinance is made and the Government wishes to continue the provisions of the Ordinance in force after the assembling of the
Legislature, a Bill will be brought before the Legislature for enacting those provisions into an Act."" The conduct of the State in bringing the
amendment through an ordinance has not been properly explained. In any event, the amended provisions are violative of the scheme of Part IXB
and hence, liable to be struck down.
W.P. No. 27758 of 2012 is a Public Interest Litigation filed by a Member of the Society viz., U. Chandru. Mr. P. Vijendran, learned counsel
appearing for the petitioner, pointed out to the admission of members in Tiruvarur District even without the General Body Meeting properly
convened, which is an abuse of the Co-operative movement, and thus calls for serious interference by this Court. Emphasizing the absolute need
for holding election for constituting the Board for the purpose of admitting new members derives support from the decision reported in All India
Anna Dravida Munnetra Kazhagam Vs. The State Election Commissioner and Others, , he submitted that the Election Commissioner would be the
most competent person to hold the election.
Mr. Krishnakumar, learned counsel appearing for the petitioners in W.P. Nos. 25972 and 27846 of 2012, Mr. S.N. Ravichandran, learned
counsel appearing for the petitioner in W.P. No. 31020 of 2012, Mr. M. Sriram, learned counsel appearing for the petitioners in W.P. Nos.
25343 and 25950 to 25952 of 2012, Mr. C. Prakasam, learned counsel appearing for the petitioners in W.P. Nos. 25824 to 25826, 26005 to
26010, 26193 to 26197, 24793, 24918, 24919, 24917, 25591 to 25594, 27809 to 27834, 28051, 26980, 26467 to 26479, 31934, 25089,
26870 and 30542 of 2012; Mr. N. Manokaran, learned counsel appearing for the petitioners in W.P. Nos. 23528, 23529, 26811, 31066 and
31067 of 2012; Mr. G. Ethirajulu, learned counsel appearing for the petitioners in W.P. Nos. 24187 to 24189 of 2012; Mr. P. Ganesan, learned
counsel appearing for the petitioners in W.P. Nos. 26088 and 26089 of 2012; Mr. P. Subramaniam, learned counsel appearing for the petitioners
in W.P. No. 26342 of 2012; Mr. Ma. P. Thangavel, learned counsel appearing for the petitioners in W.P. No. 24473 of 2012; Mr. R.
Jayaprakash, learned counsel appearing for the petitioners in W.P. No. 25 173 of 2012; Mr. S. Dhanasekaran, learned counsel appearing for the
petitioners in W.P. No. 25386 of 2012; Mr. V. Sivakumar, learned counsel appearing for the petitioners in W.P. No. 28175 of 2012, Mr. M.
Babu Muthumeeran, learned counsel appearing for the petitioners in W.P. No. 28176 of 2012; Mr. N. Ramesh, learned counsel appearing for the
petitioners in W.P. No. 29028 of 2012; Mr. V. Bharathidasan, learned counsel appearing for the petitioners in W.P. No. 26851 of 2012; Mr. S.
Doraisamy, learned counsel appearing for the petitioners in W.P. No. 27558 of 2012; Mr. S. Sathishrajan, learned counsel appearing for the
petitioners in W.P. No. 28445 of 2012; Mr. M.V. Deenadayalan, learned counsel appearing for the petitioners in W.P. No. 29574 of 2012; Mr.
S. Parthasarathy, learned counsel appearing for the petitioners in W.P. No. 29630 of 2012; Mr. E.C. Ramesh, learned counsel appearing for the
petitioners in W.P. No. 922 of 2013; Mr. S. Raja, learned counsel appearing for the petitioners in W.P. (MD) No. 12871 of 2012; Mr. R.
Devaraj, learned counsel appearing for the petitioners in W.P. (MD) No. 12273 of 2012 and Mr. R. Thamaraiselvan, learned counsel appearing
for the petitioners in W.P. Nos. 1016 and 1260 of 2013 Mr. R. Neelakantan, learned counsel appearing for the petitioners in W.P. Nos. 25708,
26047 to 26051, 26076 to 26079, 26080 to 26084, 26134 to 26137, 26138 to 26142, 26171, 26172 of 2012 and W.P. No. 491 of 2013;
Mr. P.R. Thiruneelakandan, learned counsel appearing for the petitioners in W.P. Nos. 26932 of 2012; Mr. K.H. Ravikumar, learned counsel
appearing for petitioners in W.P. No. 27700 of 2012 and Mr. R. Karthikeyan, learned counsel appearing for the petitioners in W.P. No. 24866 of
2012, submitted that they adopt the arguments of Mr. P. Wilson, learned senior counsel appearing for petitioners in W.P. Nos. 25699, 25882,
25889 and 25890 of 2012.
Countering the submissions made by the petitioners, learned Advocate General appearing for the State pointed out that for the past 11 years,
the day-to-day affairs of all the societies are managed only by the Special Officer and there was no election conducted; hence there are no boards
constituted. With the result, no new members are admitted into any cooperative society, thereby paralysing the very movement. The general body
is a perpetual body in existence. Thus, if the concept of cooperative formation and democratic functioning of a society to carry on the movement
further has to have any meaning necessarily, there must be some instrumentality which must exercise authority to admit members to join the society.
Thus, he referred to Article 243ZI of the Constitution of India as to the need for making laws to provide for the incorporation, regulation and
winding up of the cooperative societies based on the principles of democratic member control of the society. The present amendment seeks to
achieve this constitutional mandate. Further, the supremacy of the general body over that of the Board- the governing body, cannot, in any manner,
be undermined at any point of time on the singular fact that the bye law states that the board shall have the authority to admit new members which
is nothing but the mandate in the Section. He further submitted that byelaw is only a Regulation of the society for the internal administration of the
society. Being registered under the provisions of the Act, every byelaw has to be in consonance with the provisions of the Act and within the
framework of the Act and the Rules. The decisions of the Courts clearly point out that byelaws are not in the nature of statutory Rules. Even
though the byelaws may provide for the eligibility criteria, even that has to be in tune with the provisions of the Act. The procedure and the
authority for admission of a new member satisfying the eligibility requirement is given under the Act and the Rules. Thus, the amended provisions in
Section 21(2) provides for admission of new members through the Board and in the absence of a governing body, this jurisdiction is exercised by
the general body. He further submitted that being a State subject falling under Entry 32 List II of 7th Schedule, the Constitution has left it to the
State to legislate on the subject of cooperative societies, making provisions with respect to incorporation, regulation and winding-up of the
cooperative societies based on the voluntary formation, democratic member control, member economic participation and autonomous functioning.
Article 43B enjoins on the State to actively promote voluntary formation, autonomous functioning, democratic control and professional
management of the cooperative societies. Thus, keeping in tune with the democratic formation, autonomous functioning and democratic control, the
State has passed this amendment, which is well within the Constitution manadate. Considering the 97th amendment contemplating holding of
election in furtherance of these democratic principles, admission of new members cannot be frowned upon by the petitioners as interfering with the
byelaws of the society or contrary to the democratic principles. The amendment made to Section 21(2) is only in furtherance of the spirit of 97th
amendment to the constitution of India, to re-activate and revitalise the cooperative movement. The provision thus; contemplates the general body
admitting new members only when there is no governing body functioning. Wherever the governing body is there, it is not open to the general body
to assume jurisdiction. Hence, the provision made u/s 21(2), permitting the general body to admit new members in the absence of a governing
body, is transitory in nature. The amendment provides for a lacuna in the Act and in the byelaws and hence, the regulatory amendment made is well
within the legislative authority of the State. He further pointed out to the Full Bench decision of this Court, holding that the Special Officer does not
have the authority to admit members and that the general body is the ultimate authority in a society. Thus, when there is no other authority available
competent to admit new members, with the stalemate on admission of new members, amendment to Section 21(2) is necessary in promoting the
democratic functioning of the society. Relying on paragraph 49 of the decision of this Court reported in K. Nithiyanantham Vs. State of Tamil
Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, , he submitted that the Full Bench
decision has not, in fact, pointed out that the general body alone is empowered to admit new member. As such, contrary to the assertion of the
petitioners, the Full Bench of this Court, in fact, had pointed out to the supremacy of the authority of the general body to admit new members.
Commenting on the stand of the petitioners that the Board consists of specialised persons, who alone are competent to admit new members, he
pointed out that the Board consists of members elected only from the general body; therefore, the board members are the members in the general
body; in the circumstances, the question of attributing any better wisdom or an expertise or qualifications to the board governing body alone over
the general body, does not arise; The Board is only the reflection of the general body; consequently, there is no illegality or arbitrariness or violation
in the constitutional provisions in enacting an amendment to Section 21(2) of the Tamil Nadu Cooperative Societies Act. He pointed out that in
providing for such a mechanism, there is no undermining of the democratic control by the members, who alone are to exercise their free will,
admitting new members. Consequently, the question of violation Article 19(1)(c) of the Constitution of India does not arise at all. He further
pointed out that the purpose of the amendment has to be seen in the context of the background of the legislation and the defect that the amendment
sought to remedy.
Referring to the powers of the General Body, as evident from the various provisions of the Act, he pointed out that the ultimate authority in a
society is the General Body; hence, even if there be no amendment, if there is no governing body existing, the general body is empowered to admit
the new members and the amendment merely carried out the law laid down by the Full Bench and that the amendment is not an exercise to go
against the law laid down by the Full Bench of this Court or to get over the law declared by the Full Bench. Referring to the reliance placed on the
decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, that the amendment seeks to change the composition of
the society, he submitted that by admission of new members by the general body, there is no increase in the membership of the society beyond
what is fixed under the bye-laws. There is no alteration in the voluntary character of a member choosing to admit a member to the society. The
admission or the rejection of an eligible member is always vested with the society, exercised through the general body in the absence of a governing
body, in that, there is no giving up of the voluntary character of the society or the democratic functioning or democratic control of a society.
The decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, is totally distinguishable from the provisions of the
Act and unlike the facts of the reported decision, the present amendment does not, in any manner do away with/curtail the rights of the existing
members to admit members. The amendment does not seek to amend the bye-law to compulsorily bring in members contrary to the bye-laws of
the Society. The amendment merely addresses the mischief arising on account of the absence of a board in the matter of admitting new members.
In the circumstances, referring to the decision reported in State of U.P. and another etc. Vs. C.O.D. Chheoki Employees'' Co-op. Society Ltd.
and others etc., , particularly to paragraph 15, he submitted that what is implicit in the corporate nature of the society is made statutorily explicit,
that in the absence of the governing body, the general body is the competent and the only body to admit new members.
As regards the submission on the deemed admission, he submitted that the Second proviso to Section 21(2) of the Act, even before the
amendment, provided for deemed admission if the Board does not consider an application of an eligible member seeking admission into the society
within sixty days of receipt of the application. If the petitioners have no grievance over that, equally there could be no grievance on the amendment
made to the second proviso by insertion of the words as has been done in the main section 21(2). The allegation that the provisions are
unreasonable, unworkable and arbitrary are not substantiated by the petitioners, who are the members of the society and it is an argument in vain.
In the absence of any material to substantiate this contention, the presumption as to the constitutionality of the provision has to be upheld. In any
event, if there be any violation it is always open to the aggrieved party to seek remedial action and this has nothing to do with the constitutionality of
the provision.
As regards the contention that the amending Act has not received the assent of the President, he submitted that making law as regards Co-
operative Society is a State subject. Being a State subject falling under List II, the State is entitled to legislate on the said subject matter. Co-
operative Societies Act of 1963 was originally assented to by the President only on account of specific provisions contained therein, making certain
Central Acts as not applicable to the Co-operative Societies. In the circumstances, the amended Act is a regulatory measure and hence, the same
cannot be invalidated on the ground of non-compliance of Article 255 of the Constitution of India.
Taking the submissions further, learned Additional Advocate General referred to the decision reported in Namit Sharma Vs. Union of India
(UOI), as to the ground on which a constitutionality of a provision can be challenged. He pointed out that Article 246(3) empowers the State to
legislate on matters falling under List II of Seventh Schedule to the Constitution of India. Article 243ZI directs the State to legislate with respect to
the incorporation, regulation, winding up of the Co-operative societies, based on the principles of voluntary formation, democratic member control,
member economic participation and autonomous functioning. Referring to the decision reported in 1978 Kar. L.J. 302 (H. Puttappa & others Vs.
The State of Karnataka and others), particularly to paragraphs 6 and 11, he submitted that the present provision is a regulatory measure to provide
for the mechanism for admission of new members to a society, whenever there is no governing body functioning. Hence, the provisions made are in
tune with what is spoken to under Article 243ZI of the Constitution of India.
Defending the amendment that it is not in violation of the Full Bench decision of this Court, he relied on the decision reported in Rajput Ruda
Meha and Others Vs. State of Gujarat, and contended that as far as the Full Bench decision of this Court is concerned, the judgment is an
authority for the proposition that the Special Officer is an in charge Officer appointed to take care of the day-to-day affairs of the Society in the
absence of the Board. The question raised therein was on the validity of Section 89-A , empowering the Special Officer to admit new members.
So too, in the decision reported Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, , the Apex Court reiterated the view that the
Special Officer has no authority to admit new members and it is only the General Body/Governing Body, who could admit new members. Thus,
these decisions are concerned about the authority of the Special Officer and the issue raised herein is a totally different issue. Referring to the
decision of the Karnataka High Court reported in M.L. Nagaraj Vs. State of Karnataka, , he submitted that the General Body is the ultimate
authority to decide, with whom the society is to deal with and who should be associated with it for promoting the object of the Society. Section
21(2) as it stood originally gave authority to the Board to decide on admitting new members. He further pointed out that the Full Bench judgment
of this court has not held that the General Body has no authority to admit new members. On the other hand, it also recognised the supreme
authority of the general body to admit new members. Referring to paragraph 49 of the Full Bench decision, he also referred to the decision of the
Karnataka High Court reported in M.L. Nagaraj Vs. State of Karnataka, , particularly to paragraphs 15 and 21, which was approved by the
Apex Court in the decision reported in K. Shantharaj and another Vs. M.L. Nagaraja and others, and submitted that the decisions cannot be taken
as having concluded the issue as to the authority of the general body to admit members that too when the amendment merely provides for a
situation brought about by the absence of the board. Going by the above, no illegality could be attributed to the amended provision.
In any event, he submitted that the general body is a repository of all powers and as a matter of convenience alone, the administration is given
to the board whose members are elected from out of the general body. Thus, the power available with the general body is only delegated to the
board for the purpose of administration. Hence, one cannot look on the governing body as without any authority to admit new members. In this
connection, he placed reliance on the decision reported in D.R. Patel Vs. A.S. Dimellow, , particularly to paragraphs 18 and 19, that the board is
only the delegatee of the power vested in the General Body, which entrusts its authority on the Governing Body for the purposes of administering
the Society. He also placed reliance on the decisions reported in Roop Chand Vs. State of Punjab, , J.C. Budharaja Vs. State of Orissa and
Others, , L. Rama Subbu and K.S.A. Krishnamoorthy Vs. Madura College Board, Madura College, at paragraphs 5 and 54, that the general
body is a body with supreme authority in the Society and even if there be a limitation on its powers, it would only be subject to such restrictions as
would be there in the bye-laws or in the statute. He also pointed out that there is nothing in the bye-laws to limit the power of the General Body
and Section 32 of the Act specifically refers to the ultimate authority of the General Body, but subject to the provisions of the Act, Rules and Bye-
laws. This does not mean that the State cannot make law to invest the authority back on the General Body to admit new members, where ever
there is vacuum in the exercise of a particular authority. He also pointed out that the authority of the general body on the admission of new
members arises only on account of the absence of the governing body.
Learned Additional Advocate General also referred to provisions similar to Section 21(2) available in the enactments of other States, namely,
Bihar, Goa, Jharkhand and Mizoram. He also referred to the model Co-operative Societies Act providing for the exercise of authority by the
general body in the absence of the governing body to admit new members and no mala fide intention can be attributed to the introduction of the
amendment, which merely provides for a lacuna in the provisions and that too to be discharged in the absence of the Board. In so providing, there
is no violation of any of the constitutional provisions, including Part IX-B of the Constitution of India.
On the submission of the petitioners as to the absence of amendment in the Rule and Form 16 in consonance with Section 21(2) of the Act at
the time of admission of members by the General Body pursuant to the amendment in Section 21(2) of the Act, he pointed out to the decisions
reported in Seth Bikhraj Jaipuria Vs. Union of India (UOI), and 1980 Supp (1) SCC 27 (Ram Chandra Kumar & Co. Vs. State of U.P.) at
paragraphs 35 and 44 and submitted that the Rules are to sub-serve the substantial provisions of the Act. Hence, the Rules could never be in
conflict with the provisions of the Act. Even if the Rules are not amended, in so far as they are not in conflict with the Section, the Rules will
nevertheless apply in any given situation. Thus, even assuming that the Rules are not amended, the substantive part of the Rules still having
relevance to the amended provision, no illegality could be read in to the amendment brought subsequently to the Rules and the Form, which is the
normal case in every amendment. There is no substantive difference between the unamended Form and the amended Form, except for the insertion
of the words ""general body in the absence of governing body"". Consequently, the details specified in Form 16 to be furnished by an intending
member remaining the same, no illegality could be read in to the admission of members on the basis of unamended Form No. 16. In this
connection, he also referred to the decisions reported in Commissioner of Income Tax, Chennai Vs. Tulsyan NEC Ltd., , Mohd. Basha and
Others Vs. The Secretary, Regional Transport Authority and Another, and Kailas Prosad Musaddi Vs. The State, at paragraph 6 and submitted
that when the Form, as it stood originally, contained all the particulars necessary for showing the eligibility, the part of the Form for office use not
containing the amendment as per the Section, does not make the Rules and the Forms as in violation of the provisions of the Act.
One of the contentions taken in these writ petitions relates to the mode of serving notice on the members as regards the convening of the
general body. Learned Additional Advocate General referred to Rule 46, which provides for more than one method of notice to be given in calling
for the general body meeting. He pointed out that the Rules do not contemplate paper publication as the last of the modes to be undertaken after
exhausting personal notice on the member. He pointed out that a reading of Rule 46 would show that it contemplated service of notice through one
or more of the methods specified therein. Thus, going by the wording in the above-said Rule that one or more methods enumerated therein may be
observed for serving notice on the members and the period of notice as provided for under the byelaws, the notice given through paper publication
cannot be taken exception to. He further submitted that when the byelaw specified the share capital, the number of shares to be allotted to the
individual member, subject to the maximum, and the total membership capacity to a society is fixed therein, the question of admitting new members
beyond the membership capacity fixed therein in the bye laws does not arise even if the Governing Body is there to admit new members. The
question of changing the composition of the society would arise only when the number of persons admitted exceed the maximum member capacity
fixed under the bye-laws or an ineligible member admitted to the Society or for that matter without the involvement of the members to decide on
the admission of a member, the present amendment does not do away with the free will of the members to decide on the admission of a person
seeking admission in the society.
He pointed out that there are as many as 22,000 Co-operative Societies in the State. The petitioners before this Court are members of nearly
134 Co-operative Societies. None of the Societies function with full capacity of membership as stated in the bye-laws. As such, admission of new
members by the general body is well within the framework of each of the societies on the maximum number of admitted members and the
contention of the petitioners, particularly Mr. Wilson, learned senior counsel appearing for the petitioners in W.P. Nos. 25699, 25882, 25889 and
25890 of 2012 and Mr. R. Shanmugasundaram learned senior counsel appearing for the petitioners in W.P. Nos. 31749 of 2012, 1126 and 1127
of 2013, that their society is functioning in full capacity is incorrect and not borne out by records.
In this connection, he produced the data showing the present membership strength of the Societies, to which the petitioners belong. When the
amendment does not contemplate statutory admission of members, thereby interfering with the choice and option of the existing members to admit
or reject the application for membership to the Society, the reliance placed on the decision reported in Smt. Damyanti Naranga Vs. The Union of
India (UOI) and Others, that the admission of new members by the General Body would change the character of the society is incorrect and not
substantiated by facts. He also relied on the observation, particularly in pages 967, 968, 969, 970 and 971 in the above-said decision to his aid
that there is no unconstitutionality in the amendment made to Section 21(2) of the Act. Referring to the decision reported in Babaji Kondaji Garad
Vs. Nasik Merchants Co-operative Bank Ltd., Nasik and Others, that a byelaw must go in tune with the provisions of the Act and the Rules, he
submitted that given the supreme authority of the General Body, in the absence of specific express provision doing away with the authority of the
General Body under the byelaw or the statute, the inherent authority of the General Body to admit members in the absence of the Governing Body
cannot be overlooked or denied. Thus, no exception could be taken to the admission of new members by the general body, more so when there is
no governing body existing to admit new members. The said admission of new members would be in consonance with the democratic functioning
of the society. Hence, the provision does not offend Article 19(1)(c) or Article 14, or for that matter, Part IX-B of the Constitution of India;
consequently, there are no merits in the submissions of the petitioners herein.
We have bestowed our attention to the arguments raised on either side. We agree with the contention of the State on the constitutionality of the
amending Act. We have already noted that the Constitution (Ninety Seventh) Amendment Act, 2011 inserted the right to form a Co-operative
Society, a fundamental right guaranteed under Article 19(1)(c) of the Constitution of India and the said right may be subjected to reasonable
restriction if it is so warranted in the interest of the sovereignty and integrity of India, public order or morality.
Article 19(1)(c) speaks about the right to form a co-operative society as a fundamental right. Article 43-B-Directive principle of State policy,
touches on the responsibilities of the State to promote voluntary formation, autonomous functioning, democratic control and professional
management of the cooperative societies. Article 243ZI enjoins on the State, subject to the provisions of Part IX-B, to make provisions with
reference to the incorporation, regulation and winding up of the cooperative societies based on the principles of voluntary formation, democratic
member control, member economic participation and autonomous functioning. The provisions subject to which the State may make laws, relate to
number and term of members of Board of Directors or the governing body (Article 243ZJ), election to the Board (Article 243ZK), supersession
and suspension of Board and interim management and its duration (Article 243ZL); Penalties to be provided for in the State Act (Article 243ZQ).
Where any of the provisions of the State statute are inconsistent with the provisions of the Central Act, Article 243ZT stipulates that the State shall
amend or repeal the same within one year from the commencement of the provision. As regards the audit of accounts and the convening of general
body, the State is directed to make provisions regulating the above-said subjects. Thus the Cooperative Societies Acts of the States are to provide
for matters specified in the Constitution and in accordance and consistent with what is stated in Part IX-B of the Constitution of India. At the same
time, the Constitution also directs the States to legislate on matters which are regulatory as to the formation, regulation of the conduct of business
and affairs of the Society on the principles of voluntary formation, democratic member control, member economic participation, autonomous
functioning and professional management.
A reading of Article 243-ZJ ""number and term of members of the Board and its office bearers"", on which much reliance is placed by the
petitioners in support of the argument as indicative of the power and expertise of the Board alone to decide on the admission of new members,
reveals that while prescribing the maximum number of directors in the Co-operative Society as not more than 21, it leaves it to the State to
prescribe the number of directors and it enjoins on the State to provide for reservation of one seat for SC/ST and two scats for women on board
of every Society. The term of office of directors is fixed under sub-article (2) as five years from the date of election and that the term of the office
bearer shall be coterminous with the term of the board. In the event of a casual vacancy arising and the term of office of the board is less than half
of the original term, the board may fill the vacancy by nomination out of the same class of members in respect of which the casual vacancy has
arisen. The said Article also provides for the State legislature to make provision for co-option of members, having experience in the field of
banking management, financial or specialisation in any other field relating to the objects and activities undertaken by the co-operative Society, to be
members of the Society. This shall be in addition to the 21 directors and the number of co-opted members shall not exceed two in number, who
shall not have the right to vote in the election of the Society or to be eligible for election as office bearers of the board. It also makes the functional
directors as members of the board. Thus, apart from fixing the maximum number of members in the board and its duration, the above Article
makes the board a representative board in consonance with the constitutional mandate on reservation, providing for professional management by
co-opting two experts as members in the board.
Thus, the prescription in Article 243ZJ covers only those matters referred to above and that the State has no legislative competence to regulate
the functioning or the authority of the Board. The fact that it provides for professional management by co-opting members in the Board does not
mean that the professional expertise is for admission of members It is no doubt true that Article 243ZH(b) defines ""Board"" to mean the Board of
Directors or the governing body of a cooperative society by whatever name called, to which the direction and ''control of the management of the
affairs of a society is entrusted to''. The use of the word ""entrusted to"" in the definition clearly points out that whatever control and authority that the
Board has, are all what is entrusted to the Board for the management of the affairs of the society and nothing beyond and that there exists an
authority over and above the Board to entrust the said authority to the board. Thus, as already pointed out earlier, with the responsibility thrust on
the State to make provisions with respect to incorporation, regulation, etc., of the cooperative societies, one cannot read any limiting of the
authority in the State in making provisions on the extent of authority to be entrusted to the Board to direct and control/manage the affairs of the
Society. This authority to legislate thus extends to a wide range of topics relating to the affairs of the Society, over which the Board would exercise
control and it also included such incidental and ancillary matters relating to the authority and functioning of the Board as well as regulating the
functioning of the Society. In this connection, it may be seen that Article 243ZL provides on the subject of supersession and suspension of the
Board and the interim management of the affairs of the Board. It provides for the grounds on which the Board may be suspended or kept under
suspension and the period upto which the Board may be suspended or superseded. Sub-Article (2) states that the Administrator appointed to
manage the affairs of such society shall arrange for the conduct of election within the period of six months or as provided in the proviso to Sub-
Article (1) and hand over the management to the elected Board. Thus, the authority of the State is provided for under Article 243ZI. Given the
settled proposition of law that the Administrator has no authority to admit new members and his authority is limited to the managing of the affairs of
the society alone during the supersession or suspension of the Board and that the Legislature is assumed to know this law, we do not find any
limiting of the authority of the State Legislature to make such provisions as are required to meet those situations caused by the
suspension/supersession of the Board and the limitation on the powers of the Administrator consistent with the principles of voluntary formation
and democratic control, to promote the autonomous functioning of the society. Thus, when the amending Act filled up the lacuna as regards the
admission of new members during the time when the Board is in suspension by entrusting the same with the General Body, we find, there is nothing
inconsistent or violative of any of the provisions conferred under Part IX-B of the Constitution of India. The Tamil Nadu Amending Act thus
provides for the regulatory measure to ensure that the autonomous functioning and member participation promoting the co-operative movement
does not suffer any casualty on account of suspension of the management body, namely, the Board.
In this context, the right guaranteed under Article 19(1)(c) of the Constitution of India needs to be seen. There is no denial of the fact that there
is no compulsion to form or become a member of a society under the Constitution. An individual is free to form or become a member of the
society and the Constitution recognises this right as a fundamental right under Article 19(1)(c).
Thus, in the background of such a right, when a group of citizens volunteer to form a co-operative society, Section 4 of the Act states that a
society, which has its objects of promoting the economic interests or general welfare of its members in accordance with co-operative principles,
may be registered under the Act with limited or unlimited liability. Registration of a Society under the Act confers certain benefits and privileges on
the Society and the members under the Act and the Rules formed thereunder. Thus, on the formation of the Society, the interest of the members
merges with the interest of the Society and there is no such thing as an individual member''s interest, qua the society. In the decision reported in
Daman Singh and Others Vs. State of Punjab and Others, , the Apex Court pointed out ""once a person becomes a member of a cooperative
society, he loses his individuality qua the society and he has no independent rights except those given to him by the statute and the byelaws. 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. Pointing
out to Section 30 of the Punjab Cooperative Societies Act, which is similar to Section 35 of the Tamil Nadu Cooperative Societies Act, the
Supreme Court observed that the registration of the cooperative society renders it a body corporate by the name under which it is registered,
having perpetual succession and a common seal and with power to hold property, enter into contract, institute and defend suits and other legal
proceedings and to do all things necessary for the purpose for which it is constituted. Thus ""there cannot, therefore be a slightest doubt that a
cooperative society is a corporation as commonly understood.
In the decision reported in Kaamareddy Suryanarayana and Another Vs. The District Co-operative Officer-cum-Election Officer, The West
Godavari Co-operative Sugars Ltd. and Others, , the Andhra Pradesh High Court observed in paragraph 22 ""If a Society is formed and is
registered under the Act and its members claim special privileges and advantages conferred by the Act and the Rules framed thereunder, they
cannot turn round and say that they are not bound by any restrictions imposed by some provision of the Act or the Rules in the interests of good
and fair administration and working of the society on the ground that they are violative of the fundamental right to form Associations guaranteed
under Article 19(1)(c) of the Constitution and the restrictions imposed are not those contemplated under clause (4) of Article 19 and therefore they
are not bound by them.
The petitioners, however, contend that the right guaranteed under Article 19(1)(c) of the Constitution is not confined to the initial stage of
forming the association, but it protects the right to continue with the members forming the society to carry on the society in the manner they desire.
Any law passed interfering with this right would be hit by Article 19(1)(c), unless saved by Article 19(4) of the Constitution of India. Thus, the
person forming the association has the right under Article 19(1)(c) to see that the composition of the society continues as voluntarily agreed to by
them. In this connection, the petitioners lay great stress on the decision of the Apex Court reported in Smt. Damyanti Naranga Vs. The Union of
India (UOI) and Others, , followed by the decision reported in Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, and Zoroastrian
Co-operative Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, .
As far as this contention is concerned, the State does not dispute, in principle, that the right guaranteed under Article 19(1)(c) includes the right
of the members to continue the association as voluntarily agreed upon by the members and the same cannot, in any manner, be curtailed or
interfered with, except in the manner stated in Article 19(4) of the Constitution of India. But the State contends that the amendment has nothing to
do with imposing of any restriction on the right of voluntariness to admit new members; hence, the decisions are not of any assistance to the
petitioners.
The decisions relied on by the petitioners have to be seen in the background of the provisions which came up for challenge in the decisions, the
first which is the one reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, . The challenge therein was as to the validity
of the Central Act. u/s 4(4) of the Act, as retrospectively amended in the year 1963, apart from persons who were members of the society, there
were admission of new members into the society without any option being available to the original members of the society to admit or refuse
admission to them. The Apex Court observed that the right to form an association implied that the persons forming the association have also the
right to continue to be associated with those whom they voluntarily admit in the Association. Thus, any law by which members are brought into a
voluntary association without any option to the members to decide on the admission or keep them out or any law which takes away the option, will
be a law violating the right to form an association under Article 19(1)(c) of the Constitution of India.
On considering Sections 4 and 12(1)(a), the Supreme Court pointed out that when new members were added without any option being
available to the existing members of the Society to elect or refuse to elect them as members, which was the right they possessed under the
constitution of the society itself, there was ""a clear interference with the right to form an association which had been exercised by the members of
the society by forming the society with its constitution under which they were members and future members could only come in as a result of their
choice by being elected by their working committee."" Thus the Apex Court called the admission of the new members without the right of the old
members to consider the admission, as interfering with the composition of the society and hence, hit by Article 19(1)(c) of the Constitution of India.
The above-said law laid down by the Supreme Court was reiterated in the decision reported in Asom Rastrabhasa Prachar Samiti and
Another Vs. State of Assam and Others, , wherein the Apex Court observed ""Any law by which members are introduced in the voluntary
association without any option being given to the members to keep them out; or any law which takes away the membership of those who have
voluntarily formed it, will be a law violating the right to form an association. ""The decision was again reiterated in Zoroastrian Co-operative
Housing Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, .
The decision of the Apex Court reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, and Asom Rastrabhasa
Prachar Samiti and Another Vs. State of Assam and Others, came up for consideration in the decision reported in Rajib Mukhopadhyaya and
Others Vs. Registrar Cooperative Societies, . Referring to the said decision, the Delhi High Court referred to the decision reported in Daman Singh
and Others Vs. State of Punjab and Others, and pointed out that the principle of voluntary and open membership would exclude the State''s
interference in the affairs of the society. If the society has any requirement in the byelaws about the characteristics required to be possessed by an
intending member, it has the right to restrict its membership in accordance with the byelaw of the society. Thus, the fundamental principle on which
every cooperative society functions is voluntary and open membership and democratic control. Thus, when forming of a cooperative society is the
result of free will of members joining to form a Society and likewise, when a society admits a person into the membership, the voluntariness with
which they joined to form an association would continue to decide on who should be associated with them in their common object. The Delhi High
Court referred to the decision reported in 1988 CLJ 75 (Navjivan Cooperative House Building Society v. Delhi Cooperative Tribunal, Delhi),
wherein, six principles on cooperation are enumerated, which read as under;
(i) Voluntary and open membership;
(ii) Democratic control;
(iii) Limited interest on capital;
(iv) Equitable division of surplus;
(v) Co-operative Education;
(vi) Co-operation among cooperatives.
At page 82 of the judgment it was observed by the learned single Judge in Navjivan Cooperative Society''s case, while referring to the
principle of voluntary and open membership as follows:
The principle that the membership shall be voluntary in the Cooperative Society means that:
(i) a person who joins a cooperative society of his own free will, and
(ii) the society which admits a person into its membership should likewise do so voluntarily.
The principle of open membership is that:
(i) there shall be no artificial restriction on the admission of members;
(ii) there shall be no social, political, racial or religious discrimination against persons who wish to join, and
(iii) memberships shall be available to all persons who need and can make use of the society''s services and are willing to accept the responsibilities
of membership.
The principle of voluntary, open membership would naturally exclude the state from becoming a member of a Cooperative Society and would
exclude the state interference in the affairs of the society.
The Delhi High Court observed ""It is always like minded persons who join together and form a cooperative society. If members are thrust on
the society then the spirit of cooperation and comradeship will come to an end. ""There can be no two views on this and we respectfully agree with
what has been stated therein in the above decision.
The case of the petitioners is that the amendment to Section 21(2) by investing on the general body, the authority to admit new members in the
absence of the Board, is violative of Article 19(1)(c) and that by the said amendment, the entry of the new members admitted by the general body
would be against the bye law of the Society and will interfere with the composition of the Society. Thus, the compulsory thrust of the members
interferes with the fundamental right guaranteed under Article 19(1)(c) and against the law declared in the decisions reported in Smt. Damyanti
Naranga Vs. The Union of India (UOI) and Others, and Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar
Co-operative Societies (Urban) and Others, and on that ground, the Section has to be struck down. We do not find any good ground to accept
this contention.
As already seen, while prescribing who shall be eligible for admission as a member, Section 21(1) of the Act further provides that a registered
society may specify such further qualification as may be specified in the Rules or byelaws. Having thus provided for the qualification required for
admission as a member, the Act left it to the registered society to decide on the admission of associate member (Section 22). Thus, as far as the
admission of a member other than an associate member is concerned, Section 21(2), as it originally stood, conferred authority on the Board to
admit new members. However, as to the expulsion of a member suffering disqualification as per Section 25, it is the General Body, which is vested
with the authority to expel the members through a resolution at a special meeting.
Chapter IV of the Act deals with the management of registered societies. Section 32 states that subject to the provisions of the Act, the Rules
and the byelaws, the ultimate authority of a registered society shall vest in the general body of its members. The provision qualifies the ultimate
authority of the general body by stating that such ultimate authority of the general body shall not affect the exercise of any power by the board or
any officer of the registered society conferred on such board/such officer by the Act or Rules or the byelaws. Sub section (2) deals with the
convening of the general body for considering the subjects stated therein. Section 33 deals with the constitution and meeting of the Board. It states
that the management of every society shall vest in a board constituted in accordance with the provisions of the Act, Rules and the byelaws, which
shall exercise such power and perform such duties as may be conferred or imposed in it by the Act, Rules and the byelaws. Given the constitution
of the Board to represent the society through members elected by the General Body, it represents the collective will of the members. Thus, the
status of the Board is more in the nature of an agent and trustee to represent the Society to discharge such powers as are conferred under the Act,
Rules and the Byelaws.
Thus, one such authority given to the Board under the Act relates to admission of new member. Section 21(2), as it originally stood,
conferred authority on the Board to admit new members, who are eligible for admission, as members of a society under the provisions of the Act,
the Rules and the byelaws. Having thus given the authority to admit new members, it also gave the authority to the Board to reject the application
for good and sufficient reasons recorded in the minutes of the meeting, thereby refuse admission to any individual. Such reservation of power to
admit or reject the application for membership is well in accordance with the principle, that membership shall be voluntary in the co-operative
society and the society which admits a person into its membership, likewise acts voluntarily to admit or reject the application seeking membership.
As held in the decision of the Apex Court reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, , the right guaranteed
under Article 19(1)(c) is not only limited to the initial stage of forming the association, but extends further to include within it, the right to continue
the association with its composition as voluntarily agreed upon by the persons forming the association. Given the right to form an association or
cooperative society, a constitutional right under Article 19(1)(c), the right to become a member of a society is a matter of individual free will, but is
governed by the provisions of the Act, Rules and the byelaws. Thus, when a society admits an eligible person as a member, it does so out of its
free will and voluntarily. Given the discretion to the Board to admit an eligible person as a member, the society exercises democratic control in
choosing who from among the eligible applicants should be admitted to associate as a member of the society. With all the authority given to the
Board to admit the members, in the matter of expulsion of a member, it is not the board but the general body alone which is given the authority to
pass a resolution in this regard. Thus, as already noted, admittedly, the absence of the Board for merely ten years has thus brought in a stalemate in
the matter of admission of new members. We do not think that such a stalemate advances the cause of co-operative movement or in the interests
of the co-operative movement to grow further in achieving the very object for which the society is formed. In the background of this situation
brought about by the absence of the Board, the present amendment to Section 21(2) is brought to fill up this gap that in the absence of the Board,
the general body is the competent body to admit new members. In so conferring such an authority, we do not find any interference with the
byelaws of the society, for, even when the byelaws provided for admission of new members by the Board, it is only by virtue of Section 21(2) and
not by reason of the individual society''s decision. A reading of the byelaws of the petitioners produced before this Court shows that apart from
prescribing certain eligibility criteria, which are specific to the objects of the society, matters concerning the eligibility, disqualification, transfer of
shares, composition of the Board and admission of new members are all taken only from the Act. In the circumstances, we fail to understand how
any particular petitioner society could claim that providing for admission of new members by the Board is a matter provided for under the byelaw
alone and hence, cannot be tinkered with by the statute.
Section 33 specifically states that the Board shall exercise such powers and perform such duties as may be conferred and imposed by the
Act, Rules and byelaws. Hence, what is prescribed by the statute, Rules and the bye laws alone govern the authority of the board. As already
seen, the byelaws of the society must be in conformity with the Acts and the Rules. Rule 6 provides the areas on which the byelaws of the society
may provide for. Thus, although sub clause (g) of sub rule (1) of Rule 6 provides that the byelaw of the society may provide for the constitution of
the Board and the duties and powers of the Board, when the byelaw provides for admission of members by the Board, it is not as though the
Board derives its power from the byelaw, for, even if the byelaw does not provide for it, the Act makes provisions for such authority to be
exercised by the Board. In the circumstances, no petitioner society can claim that providing for a mechanism on admission of new member is a
matter entirely at the exclusive authority of the society provided for under the byelaws. It may also be noted that none of the byelaws produced
before us go against the provisions of Section 21(2), to contend that it is open to the society to prescribe an authority other than the Board to
admit new members. If the Act can provide for a mechanism, namely, the Board, to admit new member in consonance with the principles of
cooperation and democratic control, it is equally open to the State to provide for a situation caused by the absence of a Board to admit new
members on the very same principles of free will and democratic control by entrusting that authority on the general body.
Thus, in providing for such a situation, there is no illegality or arbitrariness or unconstitutionality to interfere with the right guaranteed under
Article 19(1)(c) of the Constitution. Hence, we hold that the amended provisions are constitutional and intra vires.
We further hold that interference with the democratic control of a society on the admission of new members would arise only if the State
seeks to interfere with the eligibility criteria, as provided for in the byelaws, to admit ineligible members or admit members more than what the
society could hold beyond what is prescribed in the byelaws, or where the State interferes with or controls the discretion of the society to admit
new members against the will of the society or restricts the admission of members into the society. So long as the amending Act does not interfere
with the discretion and free will of the general body on its decision to admit new members, no fault could be alleged on the amending Act, giving
the authority to the general body, that too in the absence of the Board only, as unconstitutional. The amendment that has been brought in u/s 21(2)
thus fills up the gap or a situation caused by the absence of the Board. Thus the decision of the Apex Court reported in Smt. Damyanti Naranga
Vs. The Union of India (UOI) and Others, has no bearing on the issue. The observation made therein as regards the admission of new members
altering the composition of the society has to be understood in the context of the provisions of the impugned Act that original members, who
voluntarily formed the association, were compelled to act in that Association with other members who were brought in as members by that Act
without any option given to the original members to decide on their admission and in whose admission to membership, the original members had no
say.
The crux of the Supreme Court decision is ""the right to form an association, in our opinion, necessarily implies that the persons forming the
association have also the right to continue to be associated with only those whom they voluntarily admit in the Association. Any law by which
members are introduced in the voluntary Association without any option being given to the members to keep them out, or any law which takes
away the membership of those who have voluntarily joined it, will be a law violating the right to form an association."" Thus, autonomous functioning
and democratic control in prescribing the eligibility of person to be admitted into a society extends to the admission of persons according to the will
of the society and voluntarily. The fact that the general body is a larger body than the Board, by itself, cannot lead to an argument that the general
body would be less autonomous in its activities or that it will lose sight of the democratic control that needs to be exercised in the matter of
admission of new members. Thus the exercise of autonomy and democratic control does not depend on the size or the number of the body, but
rests on the society at large, whose interests alone the Board represents and nothing more. The autonomous functioning and democratic control are
still preserved and the amendment does not, in any manner, dilute these principles which are the hallmarks of the cooperative society.
The petitioners, however, strongly contended that the Board is the specialised body in the matter of admission of new members. It is
contended that a mere eligibility, does not, per se, ensure admission to a society. Endowed with wisdom and better decision making capacity, the
Board alone could decide on who, among the eligible applicants, could be admitted. If the authority is vested with the General body which is
comparatively larger in capacity, the possibility of unmerited persons entering the society would always be there; the general body may not have
the wisdom of the Board to assess the individual merits of an application, that the admission of such undesirable member would alter the
composition of the society. The petitioners further contended that with the authority vested in the general body, there would be influx of members
admitted through deemed membership which amounts to back-door entry, which would not be conducive to the healthy growth of the society,
apart from it being detrimental to the democratic control. Referring to the decision reported in K. Nithiyanantham Vs. State of Tamil Nadu and
Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society Limited, , the petitioners contended that the admission of
members is the primary right of the society; enrolment of members changes the very composition of the society; the admission of new member on
deliberation as regards the eligibility to be a member, is entirely the discretion of the Board of Directors elected by the General Body. The
petitioner made particular emphasis on the observation of this Court in paragraphs 68 and 69, which read as under:
At this juncture, it is to be pointed out that the observation made by the Division Bench relating to the same on 21.12.1995 is prior to the Jt.
Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, . Further, in the said decision of the Division Bench, the same was not the main
issue and the said observation was only incidental in the light of the then prevailing circumstances. As a matter of fact, it was only an obiter. In any
event, subsequent to the law declared by the Supreme Court in Kuttappan''s case, the observation made by the Division Bench as referred to
above, has become non-est.
In view of the above discussion, this Court is of the view that the Co-operative Societies are constituted to function through the democratic
management by the General Body through its elected board which alone is empowered to enrol the new members. If the power of enrolment of
new members is conferred on the Special Officer who is appointed for a limited period with limited power to manage the affairs of the society till
the constitution of newly elected board, it would amount to conferring powers on the Special Officer for alteration of the composition of the society
itself, which affects not only the democratic set up and management of the society, but also the scheme of the Act itself.
Thus, according to the petitioner, these are all matters which are properly left to the discretion of the elected board, which, due to its intimacy with
men and matters of the locality, would be well-equipped to assess the qualifications and disqualifications of an applicant.
Thus according to the petitioners, the provision is an unreasonable restriction on the democratic control and autonomy of the society not
saved by Article 19(4) of the Constitution of India. Induction of such members would only make the members of such society a minority and
hence, the law laid down in the decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, would govern the case.
The State, on its part, relied on as to the observation in paragraph 49 of the said judgment and submitted that the Full Bench of this Court as
well as the decision of the Apex Court reiterated that the right of the Society to admit members vests with the general body or the Board. This
Court has not, in any manner, held that the general body has no authority to admit new members. All that the decision of this Court held was that
Section 89A conferring the right on the Special Officer to admit new members, is unconstitutional, that the rights of the society, the discretion and
independence of the members in the matter of admission of new members cannot, in any manner, be taken away or whittled down by the State by
empowering an authority appointed to take care of the day-to-day functioning of the Society. Thus, when the rights of the members to choose the
members is taken away by the authority vested on the Special Officer, this Court held that Section 89A offended Article 19(1)(c) of the
Constitution of India. Thus, the decision of this Court reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms
Weavers Co-operative Production and Sales Society Limited, was concerned about the validity of Article 89A and the authority of the Special
Officer in the context of Section 21(2), as it then stood. Hence, the decision of this Court cannot be read as laying down the law that the general
body has no authority at all to admit new members.
We agree with the submissions of learned Advocate General and learned Additional Advocate General.
It is not disputed that as per Section 33, the Board is an elected body, the members themselves being the members of the society and elected
by the general body. A reading of Section 33 shows that it provides for the nature and composition of the Board, giving representation to women
and members of the weaker sections of the society, Scheduled Caste and Scheduled Tribe, in deference to the constitutional mandate. It also
provides for professional management, which fits in with the professional management contemplated under Articles 43B and 243ZJ. The
professional management spoken to therein is for the purpose of conduct of the business and such members have no right to participate in the
election of the society or vote in the meeting.
Thus the composition of the Board is the reflection of the composition of the general body and is a representative of the interests of the
society in all matters. Thus, if one can repose confidence in the capacity of members of the general body to elect members of the Board, it is totally
illogical to think otherwise that the general body does not possess the competency or expertise to judge an applicant''s merit so as to admit a
member in the society. It must be kept in mind that the constitution of a cooperative society is made up of like-minded members who have joined
together to form a society with a common object or purpose. For the purpose of achieving the object, for better conduct of business of the society
which is a corporate body, powers are entrusted to a Board elected by the general body. Section 39 states ""the registration of a society shall
render it a body corporate by the name under which it is registered, with perpetual succession and a common seal and with power to hold
property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which
it is constituted.
In the background of the above provisions of the Act and the powers of the Board which are exercised on matters specified under the
byelaws and the statute, one can only say that it is a representative body of the larger body, to represent the interests of the society at large. It
performs such duties as are conferred under the Act, Rules and the byelaws. Hence, the wisdom with which the Board acts, is the reflection of the
collective wisdom of the general body and so too the collective wisdom of the general body reflected in the collective wisdom of the board. We do
not find there exists any reason or facts to attribute and recognise greater wisdom and ability in the Board than the general body in the matter of
appointment of new members. It must be remembered that while forming the society is the result of the consensus born out of free will, the
members associate with each other with a common purpose to be achieved. Thus, the Board is only an entity created out of the larger body to
represent the larger body of the society consisting of the general body. Thus, the Board is only a convenient agency appointed to transact the
business of the society on behalf of the society. Thus, unlike a Special Officer appointed only for the purpose of carrying on the day-to-day affairs
of the society, till such time the elected body is appointed, the Board does not and cannot have powers larger than that of the general body which
created it and it derives its strength only from the larger body. It is too pretentious to think otherwise that the Board alone has the competency and
the ability to decide on the admission of new members. Thus, all that the amendment seeks to achieve is to regulate the admission of new members
from among the eligible members through the general body whenever the Board is not there. This is only a temporary measure till such time that the
board is elected. Unlike the experience of the past 11 years where no elections were held, after the 97th amendment, in the context of Articles
243ZK and Article 243ZL mandating the holding of the election to be before the expiry of the term of the board and suspension of the board for
not more than six months, the present amended provision empowering the general body to admit new members is only a transitory provision.
However, this aspect is not the only ground to hold that the provision is valid. As already pointed out, the capacity of the general body cannot, in
any manner, be undermined to say that the Board alone has the expertise to admit new members. The need for observing transparency,
deliberation and application of mind in the admission of new members are not qualities that the general body may have to search for, for, the scales
that the general body possesses while electing members of the board is not less onerous than that the general body may have to have while
admitting new members. Given the fact that the general body alone is the only authority to elect the board, the authority given to the Board in
admitting new members could, only be regarded as the delegation of authority of the general body to the Board to appoint new members. Given
the fact that the general body is the ultimate authority in a society Section 21 could only be regarded as the regulatory provision in the matter of
admitting members, there could be no clash of interests between the board and the general body, that the board shall be recognised statutorily as
having the authority to admit new members It is also relevant to note that Section 33 itself states that the Board shall have such powers and
perform such duties as may be conferred on or imposed by the Act, Rules and the byelaws, that u/s 25, an expulsion of a member of a registered
society acting adversely to the interests of the society could be only through a resolution of the general body passed at a special meeting convened
for the purpose, by the votes of not less than two-thirds of the total members present and voting at the meeting. The proviso to Section 25 states
that for this, no such special meeting shall be called by the Board except upon the requisition in writing by not less than one fourth of the total
number of members of the society or 25 members, whichever is less. In the background of the above facts, it is difficult to treat the Board alone as
the only supreme body having the capacity to admit members. Thus, if the State has the authority to regulate the admission of new members
through one forum in a society, it has equally the authority to empower the only other forum in the society, in the event of the first empowered
forum lying dormant or suffering incapacity to act in terms of the provisions of the Act, Rules and the byelaws. Given the fact that the general body
alone is the one and only forum in the society in the place of the Board to admit members, rightly, the amendment filled up the vacuum, so that
admission of new members to the society does not suffer. In so providing, we do not find any violation of Article 19(1)(c) or any unreasonableness
to attract Article 14 of the Constitution of India. It is no doubt true that admission of a new member requires adjudication on the merits of the
candidature of eligible person seeking admission. Thus, when the amended provision provides for admission of new members by the general body
in the absence of the Board, in the same manner as has been done by the Board, one cannot visualise the admission by the general body as less
voluntary, irrational or without application of mind. Thus, when the amended provision keeps intact the authority of the society to admit persons
into its membership voluntarily with even option to either admit or reject the application, we do not find anything unconstitutional or unreasonable in
the amended provision to hold that the amended provision does not protect the rights of the society/members to continue the association with the
membership chosen voluntarily to retain its character and composition.
This is in accordance with what is laid down as law in the decisions of the Apex Court reported in Smt. Damyanti Naranga Vs. The Union of
India (UOI) and Others, , Asom Rastrabhasa Prachar Samiti and Another Vs. State of Assam and Others, and Zoroastrian Co-operative Housing
Society Limited and Another Vs. District Registrar Co-operative Societies (Urban) and Others, . The decision reported in Smt. Damyanti Naranga
Vs. The Union of India (UOI) and Others, and Zoroastrian Co-operative Housing Society Limited and Another Vs. District Registrar Co-
operative Societies (Urban) and Others, and Others) are all related to cases on admission of members without any option to the members to
exercise their will as in the decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, and on the admission of
members who are ineligible to become members in the society as in the decision reported in Zoroastrian Co-operative Housing Society Limited
and Another Vs. District Registrar Co-operative Societies (Urban) and Others, . Thus the circumstances and facts in these cases, at any cost,
cannot be overlooked to, while looking at the reasons arrived at to declare the law therein to these cases as unconstitutional. In any event, as
already pointed out, the amended provision respects the law declared in maintaining the free will of the members in selecting the members. Equally,
we do not find anything in the Full Bench decision of this Court being violated by the amendment to Section 21(2) of the Act. On the other hand,
paragraph 49 clearly pointed out that in a democratic set up, it is the general body/executive committee, which would alone have the power to
admit new members who satisfy the required criteria as per the byelaws of the society.
The decisions of the Supreme Court reported in Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, and K. Shantharaj and
another Vs. M.L. Nagaraja and others, , on which much reliance was placed by the petitioners, relate to cases relating to the authority of an
Administrator appointed during the suspension of a Management Committee of the cooperative society to enrol new members. In paragraph 3 of
the judgment reported in Jt. Registrar of Co-op. Societies Vs. T.A. Kuttappan and Others, , the Supreme Court referred to the decision reported
in K. Shantharaj and another Vs. M.L. Nagaraja and others, as follows:
When an identical question came up before this Court for consideration in K. Shantharaj case this Court held that from the language of Section 30
[which is similar to Section 32(4) of the Act] and Section 30-A of the Karnataka Cooperative Societies Act, 1959, it would be clear that the
administrator, subject to control of Registrar exercise all or any of the functions of the society, and the Special Officer, subject to control of the
State Government and the Registrar exercise and perform all the powers and functions of the committee of the society and in the interest of the
society can take such action as is necessary for proper functioning of the society as per law. He should conduct elections as is enjoined thereunder,
that is, he is to conduct election with the members as on the rolls and by necessary implication, he is not vested with the power to enrol new
members of the society.
Analysing Section 32 of the Kerala Cooperative Societies Act, the Apex Court pointed out:
If we carefully analyse the provisions of the Act, it would be clear that the administrator or a Committee appointed while the Committee of
Management of the Society is under supersession cannot have the power to enrol new members and such a question ought not to be decided
merely by indulging in an exercise on semantics in ascertaining the meaning of the expression have ""power to exercise all or any of the functions.
The Apex Court held ""a Cooperative Society is expected to function in a democratic manner through an elected Committee of Management
and that Committee of Management is empowered to enrol new members. Enrolment of new members would involve alteration of the composition
of the society itself and such a power should be exercised by an elected Committee rather than by an administrator or a Committee appointed by
the Registrar while the Committee of Management is under supersession. ""The Apex Court thus reaffirmed the view taken in the decision reported
in K. Shantharaj and another Vs. M.L. Nagaraja and others, . Both these decisions, as in Nithyanandam''s case, relate primarily as to the
jurisdiction of the Special Officer to admit new members. Under the Kerala Act, Section 32 of the Kerala Co-operative Societies Act, 1969 is the
provision regarding the admission of the new members by the society. So too under the Karnataka Act (Section 16), there is no specific
mentioning of either the general body or the board as entrusted with the jurisdiction to admit new members as we have in the Tamil Nadu Act. In
any event, the question that arose before the Apex Court was as regards the authority of the Special Officer and the said decisions are not
concerned on the subject that we have before us. The observation of the Apex Court on the alteration of composition of the society has to be
understood in the context of admission of members by the State in that case without any option to the existing members. Thus, the admission of
new members within the broad framework of the Society in accordance with the provisions of the Act, Rules and byelaws, which itself has to be in
accordance with the Act and the Rules, does change the composition of the society, except making the society numerically stronger. Thus,
admission of new members, be it by the Board or the General Body in the absence of the Board, certainly would alter the composition of the
Society in improving the financial strength of the society, improved activity and better quality in the business of the society. If such alteration
brought about by the Board by the admission of members is to be viewed as well within the four corners of the provisions of the Act, Rules and
Bye-laws, we do not understand, how the authority of the General Body in admitting new members in accordance with the provisions of the Act,
Rules and the Bye-laws, would make the composition different from the one brought about by the Board. The decision of the Full Bench in
Nithyanandam''s case was also as regards the authority of the Special Officer to admit new members. In the circumstances, the decisions have to
be seen and understood in the context of the issue before the Courts and the provisions as they existed at the time of consideration of the question.
The decision, in the circumstances, do not, in any manner, advance the cause of the petitioners.
Mr. R. Shanmugasundaram, learned senior counsel appearing for the petitioners in W.P. Nos. 31749 of 2012, 1126 and 1127 of 2013,
expressed his concern about the deemed admission of members, which, according to him, is a back-door entry, which may bring a change in the
composition of the society and hence, the amendment is bad. Further, under the back-door entry, even an ineligible member may get in and there is
no mechanism to check this.
The provision as regards the deemed admission appears in the second proviso to Section 21(2), which reads as under:
Section 21(2)(i):
(2) (i) In the case of every registered society, every individual eligible for admission as a member of any such society under the provisions of this
Act, the Rules and the bye-laws of the society shall, on application made in such form and in such manner as maybe prescribed, be admitted by the
board or by the general body where there is no board as a member of the society with effect from the date of receipt of such application in the
office of such society:
Provided that the board or the general body, as the case may be, may, for good and sufficient reasons to be recorded in the minutes of the meeting
at which the application for admission is considered, refuse admission to any individual and the decision of the board or the general body, as the
case may be, shall be communicated to the individual:
Provided further that if the decision of the board or the general body, as the case may be, on the application is not communicated to the individual
within a period of sixty days from the date of receipt of the application in the office of the society, the individual shall be deemed to have been
admitted as a member of such society, on the sixtieth day after the date of receipt of the application in the office of the society.
Admittedly, even under the unamended Section, the first proviso dealt with the deemed admission of members in the event of the Board not
passing any order on the application, that, on the expiry of 60 days'' period from the date of receipt of the application in the office of the society,
such applicant would be deemed to have been admitted by the Board as a member of the Society. Admittedly, the petitioners never had any
grievance or questioned the legality of the above-said deemed membership as a back-door entry as bringing a change or altering the composition
of the Society. Thus, after the amendment to Section 21(2) of the Act, in consonance with the substantive part of Section 21(2)(i), the proviso to
Section 21(2) also stood amended by insertion of the words ""general body in the absence of the board"". This, in effect, is only a continuation of
what is inserted under the substantive part of Section 21(2)(i) of the Act. Thus, all that the present amendment does, is that the benefit that is there
on deemed admission will continue as before, that in the event of the board or the general body in the absence of the board not taking any decision
on the application within 60 days of receipt of the application, such applicant will gain deemed membership in the society. In the circumstances,
applying the same reasoning as we have done in the preceding paragraphs, we do not find any justifiable ground to accept the submission made by
the learned senior counsel.
It may be seen from the provisions of the Act that Section 21(2)(ii) vests the authority on the Registrar to remove any individual admitted
under the deeming provision contained in the second proviso, either suo motu or on application at any time. The said provision u/s 21(2)(ii) reads
as under:
Section 21(2)(ii):
Notwithstanding anything contained in class (i), or in any other provision of this Act, the Registrar may, either suo motu or on application at any
time, by order and after recording the reasons in writing, remove any individual deemed to have been admitted as a member of the society under
clause (i) from such membership if such individual is not eligible to be a member of such society under the provisions of this Act, the Rules and the
bye-laws of the society:
Provided that an order under this clause shall be passed within such period as may be prescribed.
The admission of a disqualified member is also subject to sub-section (4) of Section 23, which provides that the Registrar shall decide any
question relating to such disqualification in respect of admission of a member to a registered society.
Thus, contrary to the assertion of the petitioners, we find that the authority of the Board to admit new members traces its origin only to
Section 21(2) and not to the byelaws. In prescribing an alternative authority in the event of there being no governing body, there exists no necessity
to amend Section 32 of the Act. In the circumstances, we reject the arguments of Mr. V. Raghavachari, learned counsel appearing for the writ
petitioners in W.P. Nos. 24817 to 24820, 23753 and 23754 of 2012.
Learned counsel appearing for the writ petitioners submitted that if the general body is to have the authority to admit members, this would
only promote unmerited persons'' entry and this would lead to arbitrary exercise of power and would become an area of abuse by the general
body.
Instead of holding the election, the State is adopting an unfair means to admit new members through the general body. Hence, according to
Mr. P. Wilson, learned senior counsel, the amendment manifests legislative arbitrariness. There is no nexus to the object sought to be achieved and
the provision is detrimental to the very interests of the cooperative movement. He further pointed out that the Act differentiates between societies
with the Board and societies without the Board. Such classification has no nexus with the cooperative movement. In this connection, he placed
reliance on the decision reported in State of Tamil Nadu and Others Vs. K. Shyam Sunder and Others, . Further, the legislation is a colourable one
and seeks to get over the decision of the Full Bench.
Mr. R. Shanmugasundaram, learned senior counsel, submitted that the amendment is primarily against the interests of the society. What is in
the interest of the society is primarily for the society to decide. Thus, the admission of members being purely a matter of the Society''s choice, the
State cannot direct the general body to admit new members. He referred to the decision reported in State of Maharashtra and Others Vs.
Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar Sahakari Griha Karan Sanstha Niyamati and Others, ,
where the Apex Court pointed out that the power of the State to issue directions in public interest cannot be exercised so as to be prejudicial to
the interests of the society.
As far as the contention of the petitioners as to the possible abuse of power is concerned, as already noted, as per Section 21(2)(ii) ,
admission of ineligible members can always be checked by the Registrar, either suo motu or on application. The apprehension as to the possible
abuse of the power, however, per se, does not give rise to any infringement of a constitutional provision. An Act cannot be declared as
unconstitutional solely on the ground of possibility of an arbitrary exercise of power-Re Maganlal Chhaganlal (P) Ltd. Vs. Municipal Corporation
of Greater Bombay and Others, -followed in Indian Council for Enviro-Legal Action Vs. Union of India (UOI) and Others, .
As regards Mr. Wilson''s submission on the differential treatment to societies with Board functioning and societies without the Board having
no nexus to the object of cooperative movement, the said argument has to be straight away rejected. The Tamil Nadu Cooperative Societies Act is
a regulatory Act to provide for organisation management and supervision of cooperative societies in the State in accordance with cooperative
principles, such as open membership and democratic management. In so providing for the organisation and management in accordance with the
democratic principles, the amending Act remedies the situation on the admission of new members brought about by the absence of the board on
whom the Act originally vested. With no election conducted to form the governing body for 11 years and in the wake of the limited jurisdiction of
the Special Officer to manage the day-to-day affairs of the society, the State thought it fit to address itself to the situation brought about by the
absence of a governing body leading to non-admission of eligible members. Given the object of forming a cooperative society with a laudable
objective of inculcating a spirit to work in a group freely on democratic principles for rendering benefit to its members, the growth of the movement
on democratic principles itself depends on admission of new members into the society. Article 19(1)(c) confers right on ail citizens to form an
association. The right conferred on the citizens includes the right to be associated with members of their choice whom they voluntarily admit in the
Association. If such a right to admit new members with whom the members decide to associate is suspended by reason of the absence of a body
empowered to admit, certainly, such situation itself is offensive of Article 19(1)(c) and it calls for remedial action by the State. If the byelaws have
provided for such a situation, then, by reason of absence of such provision in the Act, perhaps, there may be no need for addressing such a
situation through an amendment. The byelaws of the society are regulated by the Act and the Rules and the same are to be in accordance with the
requirements of the Act and the Rules. The byelaws provided by the societies principally cover the areas assigned to it, on topics which are left to
it by the statute. In matters relating to admission of members, the byelaws provide for the eligibility criteria, apart from what is prescribed
statutorily. Therefore, when the State amends the Section to provide for the gap in the provisions arising on account of the absence of the Board
through an amendment to the Section, the said amendment does not amount to amending the byelaw or offending Article 19(1)(c) of the
Constitution of India. On the other hand, it is the recognition of the ultimate authority and the rights of the general body to admit persons to
associate with the society for the general betterment and achieving of the objects of the society.
Thus, in remedying a situation which is transitory, there can be no classification of societies to result in an arbitrariness or to have a nexus with
the object of the cooperative movement. As of today, there are no two classes of societies as one with the Board and the other without a Board,
even to speak of discrimination. Hence, the societies do not suffer any differential treatment. Even otherwise, when the amendment merely provides
for a situation arising on account of the absence of the Board, there is no such thing as two classes of Societies to result in any discrimination. The
question of raising such an issue itself does not arise herein. Apart from this, no two society similarly placed has come before this Court
complaining of any differential treatment even among these societies. In fact, the amended provision only promotes and aids the cooperative
movement, which, hitherto, has been under a spell of hibernation on account of the society functioning just with a Special Officer and the existing
members with no scope for further growth.
We also reject the argument of the learned senior counsel that the provision is a colourable one, in so far as it seeks to get over the decision
of the Full Bench reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production
and Sales Society Limited, . As already pointed out, the Full Bench decision is concerned about the role of the Special Officer and his authority to
admit new members. Section 21(2), as it then stood, empowered the Board alone to admit new members. The statement of objects and reasons
clearly points out the defect that the amendment seeks to rectify and the amendment has not, in any manner, attempted to get over the judgment of
this Court. Thus, in providing for a situation caused by the suspension or absence of the Board to admit new members, the State rightly made the
amendment making provision for admission through the general body.
In the decision reported in A.P. Dairy Development Corporation Federation Vs. B. Narasimha Reddy and Others, , the Apex Court pointed
out that the action of the legislature to be held as violative of Article 14, should ordinarily be manifestly arbitrary. It held:
It is a settled legal proposition that Article 14 of the Constitution strikes at arbitrariness because an action that is arbitrary, must necessarily involve
negation of equality. This doctrine of arbitrariness is not restricted only to executive actions, but also applies to legislature. Thus, a party has to
satisfy that the action was reasonable, not done in unreasonable manner or capriciously or at pleasure without adequate determining principle,
rational, and has been done according to reason or judgment, and certainly does not depend on the will alone. However, the action of legislature,
violative of Article 14 of the Constitution, should ordinarily be manifestly arbitrary. There must be a case of substantive unreasonableness in the
statute itself for declaring the Act ultra vires of Article 14 of the Constitution. (Vide: Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and
Others, ; Reliance Airport Developers Pvt. Ltd. Vs. Airports Authority of India and Others, ; Bidhannagar (Salt Lake) Welfare Association Vs.
Central Valuation Board and Others, ; Grand Kakatiya Sheraton Hotel and Towers Employees and Workers Union Vs. Srinivasa Resorts Ltd.
and Others, and State of Tamil Nadu and Others Vs. K. Shyam Sunder and Others, .
Thus, applying the law declared, we have no hesitation in rejecting the submissions made based on Article 14 of the Constitution of India.
As far as the submission made by Mr. R. Shanmugasundaram, learned senior counsel, placing reliance on the decision reported in State of
Maharashtra and Others Vs. Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar Sahakari Griha Karan
Sanstha Niyamati and Others, is concerned, we do not find that the said decision would be of any assistance to the petitioners.
There is no dispute on the proposition of law that admission of new members is a subject entirely within the discretion of the society. In the
decision reported in State of Maharashtra and Others Vs. Karvanagar Sahakari Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar
Sahakari Griha Karan Sanstha Niyamati and Others, , the facts were that the State of Maharashtra directed the cooperative housing societies to
amend their byelaws so as to enable the plot holders to construct multi-storeyed building with more than one residential tenement on their plots and
to form a society of flat owners of the multi-storeyed buildings, which shall be a member of the housing society and represented by its
representative in the housing society. The cooperative societies challenged the circular that they completely destroyed the basis of such societies
and would promote commercialisation of housing societies meant for individuals on the basis of the tenant-ownership and hence, violative of Article
19(1)(c) of the Constitution of India. In this context, the Apex court pointed out to Section 14, which enabled the Registrar to call upon any
society to amend its byelaws if the same appeared to him that the amendment is necessary. It observed in paragraph 6 of the judgment, as follows:
From the above discussion, it is clear that though the power is conferred on the Registrar to direct amendment of the bye-laws of the Society,
yet the paramount consideration is the interest of the Society. So also the power of the State Government to issue directions in public interest
cannot be exercised so as to be prejudicial to the interest of the Society. In our view, what is in the interest of the society is primarily for the society
alone to decide and it is not for an outside agency to say. Where, however, the Government or the Registrar exercises statutory power of issuing
directions to amend the bye-laws, such directions should satisfy the requirement of the interest of the Society. In the instant case, having regard to
the nature of the Society and its objectives, referred to above, and having also regard to the fact that the Society in the case of 5th respondent has
turned down his request for the grant of permission by overwhelming majority, we are unable to say that the amendment directed by Government is
in the interest of the Society. The High Court is, therefore, right in quashing the impugned directions/circulars.
The judgment is distinguishable and has no application to the issues raised. As already seen, the amended provision merely provides for a
situation warranted by the absence of the Board. In admitting new members, the general body has to necessarily go by the provisions of the Act,
Rules and the byelaws, prescribing the eligibility. Thus, the amended Section nowhere directs the society to admit members who do not satisfy the
eligibility criteria. The amended Section does not interfere with the discretion of the society so as to compel the Society on the admission of every
individual applicant by the mere score of his satisfying the eligibility prescribed under the Act and the bye-laws for admission as a member. Hence,
the stand taken by the learned counsel by placing reliance on the decision reported in State of Maharashtra and Others Vs. Karvanagar Sahakari
Griha Rachana Sanstha Maryadit and Others and Lokmanyanagar Sahakari Griha Karan Sanstha Niyamati and Others, , fails.
We also reject the arguments of Mr. V. Raghavachari, learned counsel appearing for the petitioners in W.P. Nos. 24817 to 24820, 23753
and 23754 of 2012, based on the judgments reported in Murarka Paint and Varnish Works Ltd. Vs. Mohanlal Murarka and Others, and The
Suburban Bank Private Ltd. Vs. Thariath and others, .
As already seen, a reading of the amended provision shows that it has not, in any manner, interfered with the free will of the society in
admitting new persons. Thus, there being no such restriction spoken to in the amendment or discernible from the amendment, as to the authority of
the general body to admit new members, we do not find any justifiable ground to uphold the contentions of the petitioners. Consequently, the writ
petitions are liable to be dismissed. We hold that the amended provision does not violate Articles 14 or 19(1)(c), or for that matter, Part-IXB of
the Constitution of India and hence, are perfectly valid.
Mr. P. Wilson, learned senior counsel, submitted that the amendment permitting admission of new members by the general body is against the
interests of the society, that such admission would only make the existing members a minority; that the amendment has been introduced by the
State only with an ulterior motive to fill the societies with members of their choice.
We reject the contention that the admission of new members would make the existing members a minority. If admission of new members by
the Board is a welcome exercise to the petitioners and hence would not make the existing members a minority, we fail to see any logic in the
contention of the petitioners that the admission by the general body would make the existing members, a minority. The situation spoken to in the
decision reported in Smt. Damyanti Naranga Vs. The Union of India (UOI) and Others, as to the admission of new members making the existing
members a minority is a totally different one, for, in the said decision, it was clearly noted that under the impugned enactment, the existing members
had no say in the matter of admitting new members which was totally done by the Government. In the decision reported in A.P. Dairy
Development Corporation Federation Vs. B. Narasimha Reddy and Others, , the Apex Court observed as follows:
The constitutional right to freely associate with others encompasses associational ties designed to further the social, legal and economic benefits of
the members of the association. By statutory interventions, the State is not permitted to change the fundamental character of the association or alter
the composition of the society itself. The significant encroachment upon associational freedom cannot be justified on the basis of any interest of the
Government. However, when the association gets registered under the Co-operative Societies Act, it is governed by the provisions of the Act and
rules framed thereunder.
Pointing out that the duty of the State as a continuing body to continue and carry on an unfinished job of the previous Government, for the
reason ""the action is that of the State"" within the meaning of Article 12 of the Constitution of India, which continues to subsist, the Supreme Court
observed that in this, the motive of the legislature is inconsequential. In the decision reported in State of Tamil Nadu and Others Vs. K. Shyam
Sunder and Others, , the Supreme Court observed as follows:
It has consistently been held by this Court that the doctrine of malafide does not involve any question of bonafide or malafide on the part of
legislature as in such a case, the Court is concerned to a limited issue of competence of the particular legislature to enact a particular law. If the
legislature is competent to pass a particular enactment, the motives which impelled it to an act are really irrelevant. On the other hand, if the
legislature lacks competence, the question of motive does not arrive at all. Therefore, whether a statute is constitutional or not is, thus, always a
question of power of the legislature to enact that Statute.
Motive of the legislature while enacting a Statute is inconsequential: ""Malice or motive is beside the point, and it is not permissible to suggest
parliamentary incompetence on the score of mala fides.
The legislature, as a body, cannot be accused of having passed a law for an extraneous purpose. This kind of ""transferred malice"" is unknown in
the field of legislation.
[See: K.C. Gajapati Narayan Deo and Others Vs. The State of Orissa, ; R.S. Joshi, Sales Tax Officer, Gujarat and Others Vs. Ajit Mills Limited
and Another, ; K. Nagaraj and Others Vs. State of Andhra Pradesh and Another, ; Welfare Assocn. A.R.P., Maharashtra and Another Vs. Ranjit
P. Gohil and Others, and State of Kerala and Another Vs. Peoples Union for civil Liberties, Kerala State Unit and Others, .
III. LAWS CONTRAVENING ARTICLE 13(2):
The legislative competence can be adjudged with reference to Articles 245 and 246 of the Constitution read with the three lists given in the
Seventh Schedule as well as with reference to Article 13(2) of the Constitution which prohibits the State from making any law which takes away or
abridges the rights conferred by Part-III of the Constitution and provides that any law made in contravention of this Clause shall, to the extent of
contravention be void.
Thus a challenge to the constitutionality of a provision or statute could be made only on the ground of lack of legislative competence, violation
of Part III of the Constitution of India and which includes reasonableness of the law made. Referring to D.D. Basu on the Shorter Constitution of
India 14th Edition 2009, in the decision reported in Namit Sharma Vs. Union of India (UOI), , a decision relied on by the learned Additional
Advocate General, the Supreme Court observed:
An enacted law may be constitutional or unconstitutional. Traditionally, this Court had provided very limited grounds on which an enacted law
could be declared unconstitutional. They were legislative competence, violation of Part III of the Constitution and reasonableness of the law. The
first two were definite in their scope and application while the cases falling in the third category remained in a state of uncertainty. With the passage
of time, the law developed and the grounds for unconstitutionality also widened. D.D. Basu in the ''Shorter Constitution of India'' (Fourteenth
Edition, 2009) has detailed, with reference to various judgments of this Court, the grounds on which the law could be invalidated or could not be
invalidated. Reference to them can be made as follows:
Grounds of unconstitutionality.- A law may be unconstitutional on a number of grounds:
i. Contravention of any fundamental right, specified in Part III of the Constitution. (Ref. Under Article 143, (Ref. In the matter of: Under Article
143 of the Constitution of India,
ii. Legislating on a subject which is not assigned to the relevant legislature by the distribution of powers made by the 7th Sch., read with the
connected Articles. (Ref. In the matter of: Under Article 143 of the Constitution of India,
iii. Contravention of any of the mandatory provisions of the Constitution which impose limitations upon the powers of a Legislature, e.g., Article
(Ref. Atiabari Tea Co., Ltd. Vs. The State of Assam and Others,
iv. In the case of a State law, it will be invalid in so far as it seeks to operate beyond the boundaries of the State. The State of Bombay Vs.
R.M.D. Chamarbaugwala,
v. That the Legislature concerned has abdicated its essential legislative function as assigned to it by the Constitution or has made an excessive
delegation of that power to some other body. Hamdard Dawakhana and Another, Kalipada Deb and Another, Lakshman Shripati Itpure @
Lakshman Shripati Impore and A.B. Choudhri and Another Vs. The Union of India (UOI) and Others,
In paragraph 13, it further observed as follows:
A law which violates the fundamental right of a person is void. In such cases of violation, the Court has to examine as to what factors the Court
should weigh while determining the constitutionality of a statute. First and the foremost, as already noticed, is the competence of the legislature to
make the law. The wisdom or motive of the legislature in making it is not a relative consideration. The Court should examine the provisions of the
statute in light of the provisions of the Constitution (e.g. Part III), regardless of how it is actually administered or is capable of being administered.
In this regard, the Court may consider the following factors as noticed in D.D. Basu (supra).
(a) The possibility of abuse of a statute does not impart to it any element of invalidity.
(b) Conversely, a statute which violates the Constitution cannot be pronounced valid merely because it is being administered in a manner which
might not conflict with the constitutional requirements.
In the case of Charan Lal Sahu Vs. Union of India, , MUKHERJEE, C.J. made an unguarded statement, viz., that In judging the Constitutional
validity of the Act, the subsequent events, namely, how the Act has worked out, have to be looked into. It can be supported only on the test of
''direct and inevitable effect'' and, therefore, needs to be explained in some subsequent decision.
(c) When the constitutionality of a law is challenged on the ground that it infringes a fundamental right, what the Court has to consider is the ''direct
and inevitable effect'' of such law.
(d) There is presumption in favour of constitutionality of statutes. The law courts can declare the legislative enactment to be an invalid piece of
legislation only in the even of gross violation of constitutional sanctions.
Thus, guided by the law declared, we reject the contention of the petitioners based on lack of bona fides in bringing out the amendment as
well as in the reasonableness of the provision. Thus, we have no hesitation in holding that the amended provision of Section 21(2) is constitutionally
valid and does not offend Articles 14, 19(1)(c) and Part IXB of the Constitution of India.
Mr. P. Wilson, learned senior counsel, referred to the decision reported in Grand Kakatiya Sheraton Hotel and Towers Employees and
Workers Union Vs. Srinivasa Resorts Ltd. and Others, that even if the law cannot be declared ultra vires on the ground of unreasonableness,
applying Wednesbury''s principle, the amending Act has to be struck down. He relied on the observation in paragraph 27, which reads as under:
The High Court took into consideration the provisions of the Gratuity Act and found that the minimum period of service therein was five years,
as also for the government servants of the State, the minimum qualifying period for earning gratuity was 10 years of service, comparatively, the
High Court came to the conclusion that limiting this period of long, continuous and satisfactory service only to one year was unreasonable and
discriminatory. The High Court also severely commented on the provisions that in case of death or disablement, the condition of completion of one
year of service was also not necessary.
We have already seen in the preceding paragraphs that the amending Act does not, in any manner, interfere with the discretion of the society
to admit new members. Thus, with the right of the society to admit new members in fact preserved, we do not find any unreasonableness in the
provision to strike it down. The observation of the Apex Court, does not, in any manner, help the petitioners in this case.
This takes us to the issue raised on the validity of the amended rules.
Section 21(2) states that a person submitting an application for admission as a member must submit the application in such form and in such
manner as may be prescribed under the Rules.
Rule 27 of the Tamil Nadu Cooperative Societies Rules, 1988, provides for the form of application and the manner of admission as a
member. It states:
Form of application for, and manner of, admission as a member.--
(1) Every individual seeking admission as a member of any society under clause (i) of sub-section (2) of Section 21 shall make an application in
Form No. 16.
(2) The application shall be sent to the society by registered post with acknowledgement due or personally handed over under acknowledgement
to an officer or servant of the society authorised in this behalf by the society.
(3) Every individual seeking admission as a member of any society under clause (i) of sub-section (2) of Section 21 shall, along with the application
for admission pay the value of at least one share of the first instalment of the share, where share capital is payable in instalments and also the
entrance fees. Such payment may be made either by sending the required amount by money order or postal order sent by registered post with
acknowledgement due or by making direct remittance into the society or by any other mode approved for the purpose by the society or the
Registrar.
(4) The Secretary or where there is no Secretary, the Chief Executive or where there is no Secretary or Chief Executive, the President shall place
or cause to be placed all applications for membership before the board for its decision and arrange to communicate the decision of the board
granting or refusing the grant admission to the applicant within a period of sixty days from the date of receipt of the application in the office of the
society.
(5) Every member admitted or deemed to have been admitted as such, shall, for exercising the rights of a member, pay, within a period of one
month from the date of admission or the date on which he is deemed to have been admitted as a member, all the amounts required of him under the
bye-laws.
In the face of the authority specified in the Rule to receive and place the application before the general body, we do not find any ground to
accept the plea of the petitioner that there is no competent authority to receive the application and scrutinize the same for placing it before the
general body.
It may be seen that consequent on the amendment to Section 21(2), necessary amendments are also brought in, in Rule 27(1). The amended
Rule reads as follows:
In the said Rules,--
(1) in rule 27, for sub-rule (4), the following sub-rule shall be substituted, namely:-
(4) The Secretary or where there is no secretary, the chief executive or where there is no secretary or chief executive, the president shall place or
cause to be placed all applications for membership before the board or the general body, where there is no board for its decision and arrange to
communicate the decision of the board or the general body, as the case may be, granting or refusing to grant admission to the applicant within a
period of sixty days from the date of receipt of the application in the office of the society.
The grievance of the petitioners is that even before the Rule and the Forms prescribed thereunder were amended, applications for admission
as member in the society in the unamended form have been made and submitted before the Secretary/Special Officer and new members are
admitted by the general body. Further, there was no notice given to the members in accordance with Rule 45 on the convening of the general body
to admit new members.
Form 16 to be filed by the applicant seeking membership, prescribed as per Rule 27, is as follows:
FORM No. 16
[See Rule 27(1) of the Tamil Nadu Co-operative Societies Rules, 1988]
Application for admission as a Member
To
The Secretary/President
........................Society
Sir,
I request you to admit me as a Member of your Society. I furnish the following particulars:-
1 (a) Name in Full:
(b) Sex
2 Father''s or Husband''s name:
3 Age
4 Whether the applicant belongs to Scheduled Caste/Scheduled Tribes:
5 (a) Occupation:
(b) Annual Income: Rs...........
6 Residential Address (full postal address with name of main village, taluk and district).
7 Particulars of properties held, if any:
Hectare Approximate value: Rs........
(a) Own land:
(b) Leasehold land:
(c) Other properties
8 Whether an ex-Member of the Society, if so-
(a) Date of admission:
(b) Membership No:
(c) Shares taken:
(d) Date of discontinuance from Membership
(e) Reasons for discontinuance from membership
9 Whether a Member in any other Society of the same class, if so, -
(a) Name of the Society:
(b) Membership Number
(c) Share taken:
(d) Particulars of amount due to the society: Rs...................
10 The reasons for applying for admission when the applicant is already a Member of the same class:
11 Whether a Member in any other Co-operative Society of different class, if so,--
(a) Name of the Society:
(b) Membership Number:
(c) Share taken Rs....
(d) Particulars of amount due to the society Rs....
12 Number of shares required:
13 (a) Amount remitted towards Share Capital and Entrance fees: Rs.....
(b) Date of remittance:
(c) Mode of remittance:
(d) If by Money-Order, Receipt Number and Name of the Post Office in which remitted:
14 Whether nomination in Form No. 17 is enclosed:
I declare that I am qualified to become a Member of the Society and I possess all the qualifications prescribed for membership of the Society in
the Tamil Nadu Co-operative Societies Act, 1983 (Tamil Nadu Act 30 of 1983), the Tamil Nadu Co-operative Societies Rules, 1988 and the
Bylaws of the Society.
I also declare that the above particulars furnished by me are true to the best of my knowledge and belief.
I declare that I have not incurred any of the disqualifications for membership of the Society contemplated in the Tamil Nadu Co-operative
Societies Act, 1983 (Tamil Nadu Act 30 of 1983), the Tamil Nadu Co-operative Societies Rules, 1988 or the Bylaws of the Society.
Station:
Date: Signature of the applicant
Name and signature of two witnesses with full address:
(1)
(2)
TO BE FILLED UP BY THE SOCIETY
1 Date of receipt of application in the Society:
2 Date of expiry of thirty days/two months from the date of receipt of the application
3 Date of consideration of the application by the Board:
(a) Whether admitted by the Board:
(b) If so (i) Admission number assigned:
(ii) Number of shares allotted:
(iii) Amount of Share Capital and Entrance Fees remitted: Rs....
(iv) Date of remittance:
(v) Mode of remittance:
4 If the admission is refused:
(i) Date of communication of the decision of the Board refusing admission to the applicant:
(ii) Reason for refusal:
5 *(a) Date of deemed admission as a Member of the Society if any, for not having communicated the decision of the Board within the period of
thirty days mentioned against column (2):
(b) If so, admission number assigned:
Signature of the President/Secretary
*Applicable only to the Societies specified in clause (i) of sub-section (2) of Section 21 of the Act.
The amendment to Section 21(2) was originally brought through Ordinance No. 14/2012 on 03.08.2012. The said Ordinance No. 14/2012
of the Tamil Nadu Cooperative Societies (Third Amendment) Ordinance, 2012, promulgated on 3rd August 2012 by the Government, was
gazetted on 03.08.2012, coming into effect from 03.08.2012. The Ordinance became an Act under Article 37 of 2012, gazetted on 16.11.2012
and received the assent on 14th November 2012. The Rules were amended on 19.11.2012 vide G.O. (Ms) No. 142, Cooperative, Food and
Consumer Protection (CJ1) Department dated 19.11.2012. The said Rule was gazetted on 05.12.2012.
Learned Additional Advocate General submitted that so long as the Rules are in tune with the intention of the Section and even if the same are
not amended, the same will apply in so far as they are not in conflict with the Section. The absence of any modification to the form at the time when
the applications are made, however, will not make them bad in law to be rejected.
It may be noted that membership in a society is a matter of contract and the society itself is the result of an agreement between the members
to form an association with a common object. As seen already, a reading of Section 21(2) shows that a person seeking admission has to make an
application in such form and in such manner as may be prescribed and Rule 25 enjoins on an applicant to give the declaration that he possesses all
qualifications prescribed for membership of the society under the Tamil Nadu Cooperative Societies Act, 1983, Tamil Nadu Cooperative
Societies Rules, 1988 and the byelaws of the Society. Thus, the application assumes significance in the context of the eligibility of a member.
Although every eligible member cannot, as a matter of right, claim membership in a society on the ground that he satisfies the eligibility criteria, yet,
a rejection of the claim at the threshold fundamentally stems from the ineligibility of the applicant not satisfying the eligibility qualification prescribed
therefor. Thus the importance of the Form assumes significance in the context of the declaration from the eligible member that he is qualified to
apply for membership and that he has not suffered any disqualification for membership. Given the object of the society as indicated in the byelaws
with which an applicant seeks to associate and work for the fulfilment of that object, the question as to whether the delayed amendment to the
Rules or the absence of amendment in accordance with the amended Section to insert the general body in the Form would vitiate the amending
provision, arises for consideration by this Court.
In the decision reported in B.K. Srinivasan and Others Vs. State of Karnataka and Others, , the Supreme Court reiterated the principle that a
subordinate legislation, to take effect, must be published and promulgated in some suitable manner and it takes effect from the date of such
publication or promulgation.
Courts have held that being subordinate legislation, they must be consistent with the substantive provisions of the Act and cannot have the
effect of either enlarging or restricting or curtailing the content and the amplitude of the provision.- Refer Delhi Science Forum and others Vs.
Union of India and another, and Dr. Mahachandra Prasad Singh Vs. Hon. Chairman, Bihar Legislative Council and Others, . Rules are to be in
consonance with the substantive provision and must supplement the Act. Thus, when the amending Act confers authority on the general body to
admit new members in the absence of the Board, the authority of the general body is not taken away merely by reason of the Rule or Form not
being amended accordingly when the notice for admission by the general body was issued. The Rule and the Form made thereunder prescribe the
particulars to be submitted by an intending member. It thus prescribes the contents of the application and has nothing to do with naming the
authority who shall consider the application. Thus the Rule cannot be elevated to the status of a substantive law to hold that the society had no
authority to admit new members through general body till the Form is amended or by reason of an applicant using the old Form.
The decisions relied on by the learned Additional Advocate General reported in Seth Bikhraj Jaipuria Vs. Union of India (UOI), , Talaksi
Malsi Sawala and Others Vs. State of Maharashtra, and Commissioner of Income Tax, Chennai Vs. Tulsyan NEC Ltd., , point out that even if the
Rules are not amended in consonance with the provisions of the statute, Rules have to be read only mutatis mutandis, the provisions. Thus the
Form prescribed being in the nature of a declaration by an applicant containing the details on eligibility, the subsequent insertion in the Act, of the
words ""general body in the absence of a board"" and on the Form cannot, in any manner, make the proceedings taken on the basis of the old Form,
illegal. In the circumstances, we reject the contention of the petitioners.
As regards the service of notice for convening the general body meeting, Rule 46(2) prescribes the service of notice. The said Rule reads as
under:
General meeting of societies.--
(1)...
(2) The notice of the general meeting, whether ordinary or special, shall be sent by the society to the members by one or more of the following
modes, namely:-
(a) by giving or tendering it to the member under his acknowledgement; or
(b) if the member is not found by giving or tendering it to some adult member of his family under his acknowledgement; or
(c) by post under certificate of posting; or
(d) by publication in one of more local newspapers having circulation in the area of operation of the society and approved by the Government for
issue of Government advertisement.
The society shall, in addition to sending notice by one of the modes aforesaid, also display the notice in the board at the office of the society or in
one or more public places within the area of operation of the society.
As is evident from the reading of the sub rule, it contemplates service of notice in either one or more of the methods specified therein. Apart
from the mode specified, the society has to display the notice in the board at the office of the society or in one or more public places within the
area of operation of the society.
Having regard to the clear provision on the service of notice, compliance of any one or more of the modes thus being sufficient, learned
Additional Advocate General submitted that the notice through publication being one of the contemplated methods, there is full compliance of the
provisions of the Rules. The use of the word ""or"" has to be read as disjunctive and the observance of either one or more need not be sequential. In
the decision reported in Municipal Corporation of Delhi Vs. Tek Chand Bhatia, , the Apex Court referred to Stroud''s Judicial Dictionary 3rd
edition, Vol. I at page 135, which reads as under:
In Stroud''s Judicial Dictionary, 3rd Edn., vol. 1, it is stated st p. 135: ""And"" has generally a cumulative sense, requiring the fulfillment of all the
conditions that it joins together, and herein it is the antithesis of OR. Sometimes, however, even in such a connection, it is, by force of a context,
read as ""or
In the background of the law enunciated, in the absence of anything indicated in the Rule as to the compliance of more than one mode of
service as absolute requirement and considering the words employed ""notice of the general meeting whether ordinary or special shall be sent by the
society to member by one or more of the following modes, namely"", the intention is clear that the legislature intended to read ""or"" as disjunctive
only and that there is no need to follow either one or more in the order stated in the Rule. The petitioners herein do not deny that in all the cases,
notice of the meeting was published in the local daily. Thus going by the clear language of the Rule, we do not find any justification to read ""or"", a
disjunctive, as a conjunction. Consequently, the submission of Mr. K. Ravi, learned counsel appealing for the petitioners in W.P. Nos. 25993,
27055 to 27059, 26440, 26441, 27746, 27792, 28530, 28800, 30305 and 33951 of 2012, stands rejected.
Mr. K. Ravi, learned counsel appearing for the petitioners in W.P. No. 25993, 27055 to 27059, 26440, 26441, 27746, 27792, 28530,
28800, 30305 and 33951 of 2012, submitted that the present amendment has not got the assent of the President under Article 255 or Article
254(2) of the Constitution of India. The Tamil Nadu Cooperative Societies Act, 1983, when enacted, received the assent of the President of India.
Hence, any amendment to the provision must necessarily go through the same procedure under Article 255 of the Constitution of India.
Learned Advocate General, however, countered this by contending that being a State subject falling under Entry 32, List II of the Seventh
Schedule to the Constitution of India, the State has every authority to bring an amendment and this does not require the assent of the President.
Being regulatory in nature, the said amendment is not in conflict with any of the provisions of the Central enactment or a subject falling in the
Concurrent List. Hence, the objection of the petitioners cannot be sustained.
We agree with the submissions of the State. Article 255 of the Constitution of India, reads as follows:
Requirements as to recommendations and previous sanctions to be regarded as matters of procedure only.-- No Act of Parliament or of the
Legislature of a State [The words and letters ""specified in Part A or Part B of the First Schedule "" omitted by the Constitution (Seventh
Amendment) Act, 1956, S. 29 and Sch.], and no provision in any such Act, shall be invalid by reason only that some recommendation or previous
sanction required by this Constitution was not given, if assent to that Act was given --
(a) where the recommendation required was that of the Governor, either by the Governor or by the President;
(b) where the recommendation required was that of the Rajpramukh, either by the Rajpramukh or by the President;
(c) Whether the recommendation or previous sanction required was that of the President, by the President.
As far as the requirement of the assent of the President to a State legislation is concerned, such contingency would normally arise only under
the stated circumstances mentioned in the Act, say, as in the case of a State legislation falling for consideration under Article 304. As far as the
Tamil Nadu Cooperative Societies Act is concerned, learned Advocate General pointed out that at the time of enactment, by reason of Section
175 referring to the non-applicability of certain laws- viz., Companies Act, Section 90- Arbitration and Conciliation Act, 1996, exclusion of the
provision u/s 34 of the CPC to the decisions passed or award made u/s 90(8) of the Cooperative Societies Act, the original Act was assented to
by the president. But the situation now is not the same. When the State is fully competent to legislate on matters relating to cooperative societies
under Entry 32 List II of Seventh Schedule to the Constitution of India, the petitioners cannot contend that for want of assent, the amendment fails.
We agree with the submissions of the learned Advocate General. Admittedly, legislation on cooperative societies is a subject falling under
Entry 32 List II of the Seventh Schedule to the Constitution of India. There is nothing in the amended provision to show that it falls for
consideration under any of the stated circumstances under Article 254 or Article 255 of the Constitution of India. Learned counsel Mr. Ravi
referred to the decision reported in State of Kerala and Others Vs. Mar Appraem Kuri Company Ltd. and Another, . The said decision has no
relevance to the issue, since the said decision was concerned about the validity of the Kerala Chitties Act, 1975, which had the requisite
Presidential assent, became void and stood pro tanto repealed on account of the Central Legislation Chit Fund Act, 1982. In the circumstances,
the Kerala Finance Act 7 of 2002 introducing Section 4(1)(a) in Kerala Chitties Act, 1975, was also void, as the State Legislation stood denuded
of the authority to enact the 2002 Act- Public Premises (Eviction of Unauthorised Occupants) Act, 1971, falling under Entry 6 and 7 of List III of
the Constitution. The Apex Court pointed out that Entry 7 List III deals with the subject of ""contract"". It also covers special contracts. Chitties are
special contracts. Thus, the Parliament and the State Legislature are competent to enact a law with respect to such contracts. The Apex Court
pointed out:
The question of repugnancy between parliamentary legislation and State legislation arises in two ways. First, where the legislations, though
enacted with respect to matters in their allotted spheres, overlap and conflict. Second, where the two legislations are with respect to matters in the
Concurrent List and there is a conflict. In both the situations, the parliamentary legislation will predominate, in the first, by virtue of non obstante
clause in Article 246(1); in the second, by reason of Article 254(1).
Broadly speaking, law-making is exclusively the function of the legislatures (see Articles 79 and 168). The President and the Governor are a
part of the Union or the legislatures of the States. As far as Parliament is concerned, the legislative process is complete as soon as the procedure
prescribed by Article 107 of the Constitution and connected provisions are followed and the Bill passed by both the Houses of Parliament has
received the assent of the President under Article 111. Similarly, a State legislation becomes an Act as soon as a Bill has been passed by the State
Legislature and it has received the assent of the Governor in accordance with Article 200. It is only in the situation contemplated by Article 254(2)
that a State legislation is required to be reserved for consideration and assent by the President. Thus, irrespective of the date of enforcement of a
parliamentary or State enactment, a Bill becomes an Act and comes on the statute book immediately on receiving the assent of the President or the
Governor, as the case may be, which assent has got to be published in the Official Gazette.
Thus the decision is concerned about cases falling under List III, where the State and the Union have concurrent provisions with respect to
subjects enacted in List III. It observed that the intention to override the State law was clearly manifested in the Central Act and Section 3 made it
clear that the provisions of the Central Act shall have effect, notwithstanding anything to the contrary contained in any other law for the time being
in force. Learned counsel also referred to the decision reported in Kaiser-I-Hind Pvt. Ltd. and Others Vs. National Textile Corporation
(Maharashtra North) Ltd. and Others, . The said decision also does not help the petitioner where the issue was as regards the repugnancy
between the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 and Public Premises (Eviction of Unauthorised Occupants) Act,
1971. A similar contention as is now raised was raised in the context of the amendment brought to the Tamil Nadu Tax on Entry of Motor
Vehicles Act. In the decision reported in R. Gandhi and Another Vs. Union of India (UOI) and Others, , this Court dealt with the question in
extenso and rejected the plea of the petitioner based on Articles 254(2) and 255 of the Constitution of India. The law declared by this Court
answers the question here too. In the circumstances, we reject the contention taken by Mr. Ravi, learned counsel appearing for the petitioners in
W.P. Nos. 25993, 27055 to 27059, 26440, 26441, 27746, 27792, 28530, 28800, 30305 and 33951 of 2012.
Learned Additional Advocate General produced before us, the copies of the Cooperative Societies Act of the States of Goa, Bihar,
Jharkhand and Mizoram and contended that similar provisions as in Section 21(2) of the Tamil Nadu Act are available in these legislations. Mr. V.
Raghavachari, learned counsel appearing for the writ petitioners in W.P. Nos. 24817 to 24820, 23753 and 23754 of 2012, submitted that the
availability of provisions in other State enactments cannot, in any manner, be pressed into service to support the amendment now under challenge.
These Acts, with the provisions on the authority confined on the general assembly, have come into effect, even before the Amending Act to Tamil
Nadu Cooperative Societies Act, 1983. Pointing out to the specific provisions of other States'' enactment which specified the general body as
having authority to admit new members whenever the Board is not functioning, he submitted that when specific power is entrusted to the Board by
the bye laws, with qualitative difference existing between the Board and the general body, the power given to the Board cannot be amended
without amendment to the byelaws Thus, the contract providing for management, cannot, in any manner, be interfered with through the amendment.
In this connection, he relied on the decision reported in Murarka Paint and Varnish Works Ltd. Vs. Mohanlal Murarka and Others, .
We reject the reasoning of the learned counsel appearing for the petitioners. The question raised herein is about the authority of the State to
bring an amendment to confer authority on the general body to admit new members. The test to the constitutionality of the provision does not rest
on the argument as to whether the State contained originally such a provision or not.
We have already discussed in the preceding paragraphs that the provision on conferring authority on the Board under the byelaw itself is
traceable to Section 21(2) only and not independent of it, to contend that such provision made in the byelaw cannot be touched by the State
through an amendment to Section 21(2), whereby, in the absence of the Board alone, the general body will have the authority to admit new
members. The consistent view of the Courts on the role of the general body is that it is the ultimate authority of a registered society.
Even though Section 175 specifically excludes the applicability of the Companies Act, Section 39 of the Act treats a registered cooperative
society as a body corporate by the name under which it is registered.
Societies to be Bodies Corporate.-- The registration of a Society shall render it a Body Corporate by the name under which it is registered,
with perpetual succession and a common seal and with power to hold property, to enter into contracts, to institute and defend suits and other legal
proceedings and to do all things necessary for the purposes for which it is constituted.
Thus, on the admission of a member into a society, he loses his individual identity and his individual interest yields to that of the society''s
interest. Hence, the interest of the member is no less or greater than that of the society. Thus, given a statutory corporate status, the ultimate
authority in the society as in the case of a company, vests with the general body, although subject to the provisions of the Act, the Rules and the
byelaws. Thus, when the Act conferred the authority on the Board originally to admit new members, it is not as though an authority which the
general body does not possess, was conferred on the Board. Recognising the fact that the ultimate authority rested on the members consisting the
society which is a body corporate, the Amending Act merely regulated a situation brought about by the absence of a Board.
In the decision reported in B.N. Viswanathan and Another Vs. Tiffin''s Baryt Asbestos and Paints Ltd. and Others, , arising under the
Companies Act, 1913, a Division Bench of this Court considered the situation brought about by the absence of the Board. The brief facts are that
a company was incorporated in 1945 and its first Directors were five in number and there was a co-opted member. With the resignation of four of
the directors, only two were there. After 30.12.1948, there was no annual meeting held. In this background, one of the shareholders filed an
application before this Court u/s 79(3) of the Companies Act, 1913, equivalent to Section 186 of the Companies Act, 1956, for a direction to
convene a general body meeting by a Commissioner and for the appointment of an independent Chairman to preside over the meeting.
As per the order of this Court, a meeting was held, wherein the general body elected the Directors. This was challenged in an application
before this Court. On the dismissal of the application referring the applicants to seek suit remedy, a suit was also filed by two shareholders for a
declaration that the election of the Directors was void. The suit was dismissed. On the appeal, one of the contentions taken was that the authority
of the general body under the Articles of the Company was only to appoint Directors in the place of those who retire at the annual meeting. The
power to appoint Directors was delegated to the Board of Directors under the Articles and hence, the election of six Directors beyond the
competence of the general body meeting and hence was in contravention of the Articles of Association.
The said stand was countered by the respondent company that even if the power to appoint additional Directors was exclusively vested with
the Board, yet, the resolution of the general body in appointing the additional Directors should be upheld. Therefore, at the time of the meeting,
there were no Board of Directors, which validly functioned under the Articles and that the General Body had the inherent power, which, it could
then exercise to appoint Directors for enabling the company to function.
This Court held that at the time of the annual meeting, there were no Directors validly appointed in the Board and placing reliance on the
decision in the case of ''Isle of Weight Rly. Co. v. Tahordin'' (1884) 25 Ch D 320 (D) and ''Barron v. Potter'', (1914) 1 Ch 895 (E), this Court
held that in the absence of the board or it suffering any disability, the members had the right to elect the Directors at the general body meeting.
Thus the principle one may deduce from this is, a company has inherent power to take all steps to ensure its proper working and this includes
the power to appoint Directors. It can delegate this power to the Board of Directors to appoint Directors and such decisions by the Board are
binding on the company. But where a Board is unable to act or where there is no legally constituted Board, the authority delegated to the Board
lapses and the members can exercise the right inherent in them, to appoint Directors. Thus, this Court held that where there is no board to elect the
Directors, the members had the right to elect the Directors at the annual meeting.
Extending the above principle to the case on hand, admittedly, the Board consists of members elected by the General Body. The Board is
defined under Article 243ZH(b) to mean the Board of Directors or the general body of a cooperative society, by whatever name called, to which
the direction and control of the management of the affairs of the society is ""entrusted to"" Thus, the Board is a representative body, a delegatee to
whom the management of the affairs of the society is entrusted to by the society, which is none else than the general body of the society. Going by
the words ""entrust"", it is clear that a Board does not have an inherent power to do something which is not entrusted to the Board and it looks upon
to the Principal, viz., the general body, for drawing up of an authority to do a particular act. Thus the status of the Board is no more than in the
nature of a delegatee/trustee of an authority given to it by the society, which is a collective body of the members. Learned Additional Advocate
General referred to the decision of the Madhya Pradesh High Court reported in D.R. Patel Vs. A.S. Dimellow, . The decision, though, was
overruled, in the decision reported in Deccan Merchants Co-operative Bank Ltd. Vs. Dalichand Jugraj Jain and Others, on a different aspect, the
observation of the High Court in paragraph 19 on the aspect of delegation, bears some relevance to the issue raised herein. The Madhya Pradesh
High Court pointed out:
A member of the cooperative society is a shareholder in the society, contributing to the capital of the society as per the byelaws. The byelaws
produced before us gives the pattern of shareholders in each of the petitioner cooperative societies. Thus, the capital of the society is the sum total
of the shares held by the members. Section 28 touches on the ""restriction on or of share or interest, Section 29 on withdrawal of shares or interest,
Section 30 on transfer of share or interest on death of members. Section 42 deals with charge and set off in respect of share or interest of
members on the deposits, bonus payable to a member/past member, the estate of the deceased member in respect of any debt due for such
member to the society and set off any sum credited or payable to a new member towards payment of any such debt. Section 44 projects the
shares/interest of a member in the capital of the registered society or the amount to the credit of a member in the thrift deposit held by the society
from attachment or sale under any decree or order of Court in respect of any liability incurred by such member and neither the Official Assignee
under the Presidency-Towns Insolvency Act, 1909 nor a Receiver under the Provincial Insolvency Act, 1920 shall be entitled to or have any claim
on such share, interest, amount or sum.
Section 72(2) deals with payment of dividend on the shares to the members from out of the balance net profit after meeting other heads u/s
86(1) at the rate not more than 14% per annum on the paid-up value of each share. The Rules provide for valuation of shares and the interest in
the capital for the purpose of repayment. Thus, going by Section 39, a cooperative society, though not governed by the Companies Act,
nevertheless, is a body corporate and the interest of the society is the interest of the members collectively. In the circumstances, the law declared
by this Court in B.N. Viswanathan and Another Vs. Tiffin''s Baryt Asbestos and Paints Ltd. and Others, , which has stood the test of time on the
authority of the general body in the absence of a Board to appoint a Director, applies to a situation herein, that the amendment introduced to
restore the authority on the general body in the absence of the Board to appoint new members, is a reiteration of a legal principal statutorily and
hence, well within the legislative competence of the State and hence, constitutionally valid. We reject the arguments of Mr. V. Raghavachari,
learned counsel, in this regard. Thus, the contentions raised by the petitioners herein, other than the petitioners in W.P. No. 34058 of 2012, stand
rejected.
Learned counsel appearing for the petitioners uniformly attacked the present amendment, that it is contrary to the decision of the Full Bench
reported in K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-operative Production and Sales Society
Limited, . We have already noted that the decision of the Full Bench is more on the authority of the Special Officer to admit new members. In
considering the same, this Court, however, pointed out to the ultimate authority of the general body and in the context of Section 21(2) as it stood
then, pointed out to the authority of the Board to admit members. Thus the decision of this Court has to be seen in the context of the issue raised
and the provisions governing the issue. It must also be noted herein that as far as the decision reported in K. Shantharaj and another Vs. M.L.
Nagaraja and others, is concerned, there is no provision in the Karnataka Act like Section 21 on the admission of members by the Board, as it
originally stood. Under the Karnataka Act, the Section deals with admission of members by the Society. A reading of the judgment of the learned
single Judge of the Karnataka High Court shows that Bye law 16 alone provided for the authority of the Board to admit new members. So too the
Kerala Cooperative Societies Act. Hence, it is difficult to accept the plea of the petitioners that the above decisions govern the issue on hand on
the constitutionality of the amended provision.
Learned counsel appearing for the petitioners voiced their apprehension that the power would be exercised in an unrealistic manner and
against the interests of the society and hence, the amended provision is liable to be struck down. We do not think that this can be a ground for
striking down the provision. The parameters laid down by the Supreme Court in a series of decisions on the considerations on the question of
constitutionality, clearly, are against the contentions of the petitioners.
The petitioners questioned the wisdom of the State in making a hurried amendment, particularly in the context of the 97th Constitutional
amendment enjoining on the State to hold the election to the governing body and that the amendment would only undermine the democratic
control, which is the characteristic of the cooperative society. We do not think, such argument merits acceptance by this Court, in the wake of the
observation of the Apex Court in the decision reported in Sardar Sarup Singh and Others Vs. State of Punjab and Others, and K.C. Gajapati
Narayan Deo and Others Vs. The State of Orissa, , that Courts cannot question the wisdom of public policy and political wisdom of the State in
bringing the amendment. The satisfaction of the State to issue an Ordinance is also beyond the pale of interference by this Court- Refer S.K.G.
Sugar Ltd. Vs. State of Bihar and Others, . We may only observe quoting from the observation of the Supreme Court in the decision reported in
Maganlal Chhaganlal (P) Ltd. Vs. Municipal Corporation of Greater Bombay and Others, that ""we should avoid dogmatic and finical approach
when dealing with life''s manifold realities.
The case of the writ petitioners in W.P. No. 34058 of 2012 in the case of Joint Farming Societies, however, stands on a different footing.
Chapter XIII is a specific Chapter relating to Joint Farming Societies. Section 94 of the Act is the relevant provision on the admission of new
members. It reads as follows:
Admission of Members.--Notwithstanding anything contained in Section 21 every application for Membership of a Joint Farming Society shall
be considered by the Board which may grant or refuse admission.
Going by the non-obstante clause on the applicability of Section 21, with no corresponding amendment to Section 89 as in the line of Section
21(2), on the plain language of Section 94, we agree with the submission of the learned counsel appearing for the petitioner in W.P. No. 34058 of
2012 that the authority for admission of new members rests only with the Board. Thus, when specific power is given to the Board under a specific
provision, the amendment to Section 21 cannot have any effect on the joint farming cooperative societies.
Learned counsel appearing for the petitioners in W.P. No. 26487 of 2012 pointed out to the admission of 10,000 members in the Sugarcane
Growers'' Society, wherein, the total membership prior to the admission was only 2000. He pointed out to the hurried manner of admission of
these members, which would only show the non-application of mind and that such admission would go against the interests of the society in the
conduct of its affairs. Considering the object and the nature of the society, he pointed out to the impracticability of the admission of such huge
number of persons, which would include ineligible members.
If the admission of new members includes ineligible members and without proper notice, the same can always be corrected u/s 20(2)(ii) of the
Act by the Registrar, who, on his own motion or on application, pass orders on the legality of the admission. So too in the case of writ petition filed
as Public Interest Litigation in W.P. No. 27758 of 2012, where the allegation is as to the absence of proper notice issued and in all cases, where
the notice for the general body was given by the Special Officer, wherever any such violation of the provisions of the Act/Rules/byelaws are
alleged on the admission of members, it is open to the aggrieved parties to move for remedial action before the Registrar. Being an Officer in
charge, all that the Special Officer can do in the given circumstances is to place the application before the General Body for consideration and for
convening the general body meeting. In the circumstances, it is not necessary for this Court to call for the records regarding the admission of new
members.
Considering the fact that the Registrar has the revisional authority, either suo motu or on application where ever there are excesses or abuse
of the procedure, the Registrar has to take action to set things right. It may be noted further that on the contention of the petitioners that all the
societies have full membership capacity, learned Advocate General produced before this Court, the details of the existing membership and that
none of the petitioner societies has full membership. Thus, admission of new members in a society which does not have full capacity, cannot be
questioned. On going through the same, in the absence of any further material for the petitioners to dispute the same, we hold that so long as there
exists room for admission of new members, it is always open to the Board/general body in the absence of the Board, to admit new members. The
difficulty on admission of new members arises only if and when the petitioner society has reached its full strength as per the byelaws, where the
membership is based on the capital strength of the society and the share allocation pattern.
We have gone through the byelaws of the societies produced before this Court, which clearly reveal the pattern of allocation of shares and
the minimum and the maximum number of shares a member can hold. Thus, whenever the admission has crossed the maximum number of members
as fixed by the bye laws, the same would be against the byelaws of the society. Neither a Board nor a general body in the absence of the Board,
can act against this. Thus, it is a matter for the Registrar to check and act thereon.
In the circumstances, we reject the prayer of the petitioners. We hold that the amendment is constitutionally valid and intra vires the provisions
of the Constitution under Part IX- B of the Constitution of India, not violative of Article 19(1)(c) to attract Article 19(4) and Article 14 of the
Constitution of India. We hold that the amendment does not, in any manner, undermine the bye laws of the society, nor does it interfere with the
free will and democratic control of the society. Hence, the amendment does not go against the law laid down in the decisions reported in Smt.
Damyanti Naranga Vs. The Union of India (UOI) and Others, ; Zoroastrian Co-operative Housing Society Limited and Another Vs. District
Registrar Co-operative Societies (Urban) and Others, ; K. Shantharaj and another Vs. M.L. Nagaraja and others, ; Jt. Registrar of Co-op.
Societies Vs. T.A. Kuttappan and Others, and K. Nithiyanantham Vs. State of Tamil Nadu and Aringnar Anna Silk Handlooms Weavers Co-
operative Production and Sales Society Limited, . The amendment brought to the Rules are in consonance with the amendment to Section 21(2) of
the Act. Even if there is any repugnancy at the time when the meeting was called for, the Section cannot, on that account, be held as bad.
In the circumstances, barring W.P. No. 34058 of 2012 all the other writ petitions are dismissed and W.P. No. 34058 of 2012 is allowed. No
costs. Consequently, connected Miscellaneous Petitions are closed.