Prithviraj Dajiso Chavan, Vice ... vs The State Of Maharashtra And Ors.
2001 Latest Caselaw 555 Bom

JUDGMENT

V.G. Palshikar. J.

1. Writ Petition No. 2058 of 2001. By this petition, the petitioners challenge the Maharashtra Ordinance No. 7 of 2001 effecting certain amendments to the Maharashtra Co-operative Societies Act, 1960. However, Ordinance impugned in this petition lapsed by efflux of time. Hence this, petition is rendered infructuous. It is disposed of as such.

2. Writ Petition No. 2607 of 2001 is filed by the petitioners challenging the subsequent Ordinance issued for the same purpose being Maharashtra Ordinance No. 12 of 2001. It replaces Ordinance No. 7 of 2001. The arguments were heard in this writ petition.

3. Writ Petition No. 2687 of 2001 raises similar questions regarding validity of the Ordinance, but the main relief claimed by the petitioner is a writ of mandamus directing the respondents to exercise their statutory power under section 79A of the Maharashtra Co-operative Societies Act by issuing appropriate directions, orders, circulars etc. for holding fair and impartial elections to the specified societies. Whether the Maharashtra Ordinance No. 12 of 2001 is held constitutionally valid or otherwise, according to the petitioners whatever be the frame of Section 27 after adjudication in Writ Petition No. 2607/2001 directions under Section 79A of the Co-operative Societies Act are liable to be issued for holding fair and impartial elections to the specified societies. Arguments were heard in this case also.

4. In our opinion, adjudication of these two petitions can be done by common order.

5. By this petition, the petitioners are challenging Maharashtra Ordinance No. 12 of 2001 which has made certain amendments by addition of a proviso to section 27 of the Maharashtra Co-operative Societies Act, 1960 (hereafter referred as the "Act"). In order to properly understand and justly adjudicate the rival contentions raised in this petition, it would be better if the entire scheme of the Act in relation to establishment of the specified co-operative societies is noted in brief. Section 2 of the Act gives various definitions. Clause 10 thereof defines what the Co-operative Bank is. It reads thus :

"2. (10). Co-operative Bank" means a society which is doing the business of banking as defined in clause (b) of Sub-section (1) of Section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as (an Agriculture and Rural Development Bank under Chapter XI)."

6. Then Section 2, Clause 13 of the Act defines what a Federal society is. It reads thus :

"2(13). "federal society" means a society -

(a) not less than five members of which are themselves societies, and

(b) in which the voting rights are so regulated that the members which are societies have not less than four-fifths of the total number of votes in the general meeting of such society."

In this petition, we are concerned with the elections to District Central Co-operative Bank which is a federal society and a co-operative Bank. The

definition of federal society itself defines how the voting rights of the member societies are to be regulated.

7. Then after providing for membership etc. of the societies, the Act proceeds to lay down in Section 27 what are the voting powers of the members of the society and how the same are to be controlled and exercised.

8. From perusal of Section 27 it will be seen that it becomes a Code in itself for control and exercise of the voting rights of the members of a federal society, it provides by Sub-section (1) that except otherwise provided by Sub-sections (2) to (7), the principle of one member one vote shall apply. The Maharashtra Ordinance No. 12 of 2001 impugned in this petition seeks to create an exception to this rule enunciated in Section 27(1) of one member one vote by adding a proviso by substituting second proviso to Sub-section (3) of Section 27. The amendment made by the Ordinance reads as under:

"2. Amendment of Section 27 of Mah. XXIV of 1961. In section 27 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as "the principal Act") in Sub-section (3), for the second proviso, the following provisos shall be substituted, namely :-

"Provided further that, where the election is to elect a member or members of the committee of a District Central Co-operative Bank including the reserved seats on such committee, as provided under this Act, all the elected, co-opted and appointed members on the committee of such primary Agricultural Credit Societies which have invested any part of their funds in the shares of such District Central Co-operative Bank, shall have right to vote on behalf of those societies; so, however, that the Registrar shall, as provided in Sub-section (2) of Section 73, by general or special order published in the Official Gazette, fix the maximum number of members on the committee of such societies or class of societies :

Provided also that, for contesting the election for the members of the committee of a District Central Co-operative Bank, all the elected, co-opted and appointed members on the committees of such primary Agricultural Credit Societies which have invested any part of their funds in the shares of such District Central Co-operative Bank, shall be eligible from their respective constituencies as specified in the bye-laws :

Provided also that, except in the election to the committee of a District Central Co-operative Bank, in case of any other society where the election: is as provided under this Act, no person shall have more than one vote.

9. Here we must note certain vital events which look place about 17 years ago. Section 27 as it stood till the year 1984 was amended by Maharashtra Act No. XLV of 1983. By that amendment. Section 27, subsection (1) was substituted and a proviso was added to Sub-section (3). Several writ petitions were therefore filed challenging the constitutional validity of these amendments and were decided by a common order on 8.1.1985. It is . The Division Bench of this Court held by the reasoned judgment of that date that the proviso being violative of Article 14 of the Constitution is null and void and, thus, wiped out the effect of the amendment,

10. It should be noted that prior to this amendment of 1984, subsection (1) of Section 27 provided that one member shall have only one vote. Prior to amendment of 1984, Section 27(1) read as follows :

"27(1) No member of any society shall have more than one vote in its affairs : Provided that, in the case of an equality of votes the Chairman shall have a casting vote. Save as otherwise provided in Sub-sections (2) to (7) every right to vote shall be exercised personally, and not by proxy."

This was changed by the amendment to read as under :-

"(1) Save as otherwise provided in Sub-sections (2) to (7), both inclusive, no member of any society shall have more than one vote in its affairs; and every right to vote shall be exercised personally, and not by proxy.

Provided that, in the case of an equality of votes the Chairman shall have a casting vote."

11. It will be seen from the sections as quoted above that the entire construction of Section 27(1) was changed by the amendment. The rule of one member one vote was made subject to the provisions of Sub-sections (2) to (7) and then the proviso was added to Sub-section (3) to give voting rights to the members of the management committee of member society of only one kind viz. Agricultural Co-operative Credit Society. It is necessary to note the change made by the Amending Act of 1983. Prior to the amendment. Section 27 had the principle of one vote for one member, and the rule was of universal application. This nature of application of that rule was changed by making structural change in Section 27(1). The rule of one member one vote was made subject to the provisions of Sub-sections (2) to (7) which was not so earlier and then the proviso was added. These alterations in Section 27 were therefore challenged by the writ petitions as aforesaid. The basic challenge was that the amendment was arbitrary, treats unequals as equals, discriminates between identically situated members of a federal society and is therefore violative of Article 14. All members of the federal society are not treated equally though required by Article 14 that they shall be so treated equally. The Division Bench of this Court, on appreciation of the rival contentions came to the conclusion that the objections raised to the provisions as amended by the Amending Act of 1983 are valid. It, therefore, accepted them and declared the amendments unconstitutional being violative of Article 14.

12. The situation remained same till issuance of Maharashtra Ordinance No. 12 of 2001 whereby the entire exercise of Amending Section 27 to give voting rights to managing committee members for Agricultural Credit Society was again undertaken. The amendment was introduced with certain minor changes. It resulted in filing of the above petitions. Mr. C. J. Sawant, learned senior counsel appearing for the petitioners, who appeared for the petitioners in the earlier cases also, has raised almost identical contentions as were raised by him in the earlier petitions. He reiterated the contentions in nutshell which are as follows :-

(1) That the amendments treat the equals unequally and, therefore, violate the equality clause.

(2) The amendments result in causing discrimination between the same class of co-operative societies. There is no reason for such discrimination nor is it necessary for the purposes of holding elections to a District Central Co-operative Bank.

(3) Pointing the composition and situation of the District Central Cooperative Bank, it was then contended on behalf of the petitioner that several other kinds of societies all federal in nature are also members of the

District Central Co-operative Bank and they also have voting rights to the Managing Committee or the Board of Directors of the District Central Cooperative Bank. The amendment has resulted in picking up only one class of those societies for a separate treatment and enlarged right of voting is conferred on the Managing Committee of that society. There is no reason for making such classification in the member federal societies of the District Central Cooperative Bank. Because in so far as District Central Cooperative Bank is concerned, all member societies together form a class. Therefore, picking up only the Agricultural Credit Societies and give them a separate right of voting is making an unwarranted, artificial, unnecessary classification since such classification has no relationship or nexus with the object viz. holding elections to the District Central Co-operative Bank. Therefore, the provisions of amendment are unconstitutional. In effect, the totality of the arguments advanced on behalf of the petitioner is that by amending provisions of Section 27 by addition of proviso to Clause (3) of Section 27, the State has given preferential treatment to Agricultural Credit Societies in the matter of voting rights. There is no nexus of this treatment to the holding of elections and, therefore, the amendment is arbitrary and hence violative of the equality clause in Article 14 and, therefore, liable to be struck down.

13. Mr. K.K. Singhvi, learned senior counsel for the respondents-State pointed out that these submissions need not be accepted now in the light of the present amendments made by Ordinance No. 12 of 2001. He submitted that the Ordinance is promulgated after removing the anomaly which existed in the Amendment of 1984. According to him, this Court in the case of Jaisingrao Pandurang Badadare and etc. v. State of Maharashtra and Ors., struck down the Amendment of 1984 as certain anomalies existed resulting in discriminatory treatment to members of the District Central Co-operative Bank. The amendment now made by the Ordinance, according to the learned counsel, does away with these anomalies and consequently there is no reason to hold that this Ordinance will also be unconstitutional for those very reasons. They, according to him, do not exist in the present case. He submits that Agricultural Credit Societies form in themselves a class and voting rights of that class have been defined by the amendment. There cannot be any comparison of the credit co-operative societies and other member co-operative societies as each forms a class in itself. From the averments in paragraph 15, he has pointed out that according to the bye-law of the Central Co-operative Banks elections have to be held for the 23 seats on the Board of Directors and bye-laws have created different constituencies from which stated number of Directors is to be elected to make the Board of Directors of 23 members. Agricultural Credit Cooperative Societies is one such constituency. The other constituencies are also named in the bye-laws. Consequently Agricultural Credit Societies form a class in themselves and the amendment does not make any distinction within the class of Agricultural Credit Co-operative Societies. Same right has been conferred on all the members of all the Agricultural Credit Co-operative Societies entitling to vote at the elections of the Board

of Directors of the District Central Co-operative Bank arid, there is, therefore, no question of comparison of these rights so conferred by the amendment with the rights not touched by the amendment.

14. We have seriously considered the rival contentions raised by the parties and given our anxious consideration to the submissions made. In our opinion, the respondents have failed to give any plausible explanation as to why Ordinance No. 12 of 2001 was promulgated in spite of the judgment of this Court in; Jaising Rao's case. It is true that though the Legislature or the State may have the power to nullify the judgment rendered by High Court or Supreme Court, it may do so by taking away the bottom of that judgment by altering the law on the basis of which it was delivered, but such alteration also must be constitutional. It must be within the legislative competence and it cannot violate fundamental rights or guarantees given to the people of India. It cannot, in effect, violate the mandate of equality clause enshrined in Article 14 of the Constitution. The amendment, therefore, has to meet the needs of equality 'mentioned in Article 14. The constitutional validity of the amending Ordinance also can therefore be tested on the touchstone of the principles laid down in Article 14. In effect, this exercise was successfully undertaken by this Court in Jaising Rao's case and according to us, the situation has not changed nor the defects pointed out in that judgment remedied so as to make the amendments constitutional.

15. It will be seen that Section 27 as it stood prior to the Amendment of 1984, provided that no member of any society shall have more than one vote. By the Amendment of 1984, the structure of Section 27(1) changed and then proviso was added to Sub-section (3) giving of right to vote to every member of the constituent member society instead of its delegate. Therefore, prior to the amendment; the proviso as also the principle of one member one Vote was made uniformally applicable to all federal societies to which Section 27 was applicable. According to the amendments, the right to Vote at the election to the Managing Committee of a federal Society or specified society was given to all federal societies who are members of the federal society to which elections are being held and their right to vote was enlarged by conferring it on all the members of the voting society. As per that amendment, all members of the Agricultural Credit Societies had a right to vote at the elections to the specified societies including a District Central Co-operative Bank and such right was available to the members of the Managing Committees of other federal society members also arid yet it was held in Jaising Rao's case that there is no reason; nor any cause for granting such right to them only. The situation is even worse in the present case. Now, the Ordinance No. 12 of 2001 has amended Section 27(3) and has substituted new proviso in place of old one to that clause. Now elections to specified or federal societies to which Section 27 applies have been divided into two classes i.e. elections of District Central Co-operative Banks and elections of all other federal societies covered by Section 27 and the right to vote is enlarged only in relation to one constituency of the District Central Co-operative Bank, namely, Agricultural Credit Societies. The classification is therefore two fold : (1) The federal societies to which elections have to be held are classified into two (a) District Central Cooperative Bank and (b) All other specified or federal co-operative societies

to which provisions of Section 27 apply. (2) The second classification made is between the voters of the District Central Co-operative Bank. The bye-laws of the District Central Co-operative Bank in fact provided for several constituencies from which stated number of Directors are to be elected on the Board of, Directors of the District Central Co-operative Bank and only one constituency namely. Primary Agricultural Credit Societies constituency is chosen for grant of a larger voting right on the pretext of proper elections broad based. If that is the principle, it must apply mutatis mutandis to all other societies which also are federal in nature and which form other constituencies for the Board of Directors election. Obviously, the amendment has chosen only the District Central Co-operative Bank for classification in the electing bodies and the Agricultural Credit Society members of the Bank, only for larger rights from the voters of different constituencies.

16. This obviously has no relationship whatever with the object pf the section and amendments namely the management and elections of federal or specified societies. That being so the amendments are arbitrary, have no relationship with the object namely, having a broad based elections to the District Central Co-operative Bank and are therefore liable to be struck down.

17. There is no reason again given for classifying societies to which elections are to be held. There is no reason why only one of the constituencies in District Central Co-operative Bank should be enlarged or broad based. Why such provision should not be made or is not made in relation to other identically situated Banks. However, it can be assumed in such a situation that the District Central Co-operative Banks in themselves form a class and a separate provision of elections to such classes car) be made arid, therefore, the argument that the District Central Co-operative Bank is unnecessarily classified may not be proper. But there is no answer to the argument that in elections to the District Central Co-operative Bank why only Agricultural Credit Societies have been chosen. For an enlargement of voting rights. If the elections to the District Central Co-operative Bank are to be made broad based, then such right should be conferred on the members of the Managing Committees of all voting federal societies and not only Agricultural Credit Societies. In so doing, preferential, treatment is being granted to the Agricultural Credit Societies. For such grant, there is no reason. For such, grant, there is no nexus between the object and the grant. If the object is broad based elections, the grant should be to all the voters and consequently, in our opinion, the amendment violates the mandate of equality clause contained in Article 14. The answer of the State that the classification; is necessary and properly made does not have any substance. There was no need to classify. If there was need to classify the District Central Co-operative Bank, the classification, could be reasonable and should be applicable to all. There was no need to pick up only Agricultural Credit Societies for grant of their voting rights denying equal right to other members of other constituencies eligibly for voting to elect the Board of Directors of the District Central Co-operative Bank.

18. In our opinion, therefore, the challenge to the Ordinance No. 12 of 2001 must succeed. The provisions of the Ordinance are liable to be quashed as unconstitutional. In the result, therefore, the petition succeeds

and is allowed. The provisions of Ordinance No. 12 amending Section 27 are quashed and set aside. It is, however, directed that the respondents-State through its officer shall take immediate steps to hold fair and impartial elections to all District Central Co-operative Banks immediately after the same are due in accordance with the provisions of Section 27 as it exists without the amendment by Ordinance No. 12 of 2001. Care shall be taken that the elections are fair and impartial if necessary by issuing appropriate directions under section 79A of the Maharashtra Co-operative Societies Act. 1960. Directions be issued to hold elections immediately to hold them fairly and to hold them impartially. In view of these directions. Writ Petition No. 2687 of 2001 also stands disposed of. In the result, therefore, rule is made absolute in terms of the above. There will be no order as to costs.

19. After the judgment was pronounced, the learned Government Pleader requested for suspension of the order for four weeks. We see no reason why a provision of law should be allowed to continue in operation after this Court has held to be unconstitutional. The request is therefore rejected.

20. Parties may be provided with an ordinary copy of this judgment duly authenticated by the Private Secretary as true.