Sonewadi Vividh Karyakari Seva ... vs The State Of Maharashtra And Ors.
2002 Latest Caselaw 466 Bom

JUDGMENT

D.G. Karnik, J.

1. Heard the learned Counsel for the respective parties. Rule, made returnable forthwith by consent for the parties.

2. The petitioner was registered as a Co-operative Society in the year 1954 under the Bombay Co-operative Societies Act. The petitioner claims to be a multi-purpose resource society. The area of operation of the petitioner society is stated to be entire Sonewadi village including Mhasobawadi. According to the Certificate issued by the Tahsildar, Kopargaon on 21st October, 1999. (at page 109 of the petition) the village Chande Kasare consists of three residential clusters (commonly known as "Wadis") viz. Sone Wadi, Mhasoba Wadi and Nagad Wadi. One more multi-purpose resource society was subsequently registered in the same village and that society is known as Nagadwadi V. K. S. Society Ltd., According to the petitioner, some disgruntled members who were defeated in the elections to the Managing Committee of the petitioner society proposed to form another society (proposed as Saptashrungji V.K.S. Society which is Respondent No. 5 herein. It is alleged that the proposal for formation of Respondent No. 5 society was made citing 91 persons as the proposed members. According to the petitioner, the respondent No. 5 had not obtained the 'no objection' of the petitioner and yet the Respondent No. 5 society was registered by the District Deputy Registrar under Section 9 of the Act on or about 24th May, 2001, as a Multi-purpose Resource Society under Rule 10 of the Maharashtra Co-operative Societies Rules (for short the Rules). The Certificate of Registration was issued to the Respondent No. 5 on 24th May, 2001. The petitioner society challenged this Certificate of Registration granted to the Respondent No. 5 society by filing an Appeal No. A-7/2001 before the Divisional Joint Registrar under Section 152 of the Act. The Divisional Joint Registrar, by an order dated 21st December, 2001, dismissed the appeal and confirmed the Certificate of Registration dated 24th May, 2001. This order of the Divisional Joint Registrar dated 21st December, 2001 passed in Appeal No. A-7/2001 is challenged in this petition.

SUBMISSIONS OF THE LEARNED COUNSEL FOR THE PETITIONERS

3. Shri Raghuvanshi, learned Counsel appearing for the petitioner, submitted that petitioner society being an existing multi-purpose resource society, ought to have been heard before registering another multi-purpose resource society. He submitted that there was already one more multipurpose resource society, which was registered under the name Nagadwadi V.K.S. Society Ltd., operating in the same area Sone Wadi (part of village Chande Kasare) and, therefore, hearing ought to have been given to the petitioner society as well as Nagadwadi V. K. S. Society before registration of a third society.

4. According to the learned Counsel for the petitioner, the Government of Maharashtra has issued a Circular dated 7th February, 2001 according to which there should normally be only one resource society in a village; however, if there is a demand of second society, it can be registered only where the business of each of the society was likely to be in excess of Rs. 50 lacs per year. According to the learned Counsel for the petitioner the third society cannot be registered in the same village, as per the said Circular which is issued as a policy directive under proviso to Section 4 of the Maharashtra Co-operative Societies Act, 1960 (for short the Act). The registration of the third society in the village, according to the learned Counsel was, contrary to the policy directives and, therefore, third society ought not to have been registered.

SUBMISSIONS OF THE LEARNED COUNSELS FOR THE RESPONDENTS

5. It was submitted that it is not necessary to grant any hearing to the existing society before granting registration to a second or third society. The Act nowhere contemplates giving of hearing to the existing society. The requirement of granting hearing, as spelt out in some of the judgments of this Court, is restricted to milk collecting societies. The principle of granting hearing to the existing society cannot be extended to the registration of other societies and if so extended, it would virtually bring the co-operative movement to a stand still and registration of any new society may not at all be possible.

6. As regards the Government Circular dated 7th February, 2001, it was contended that the Government had a power only to issue only the policy directives regarding the co-operative movement. Under the guise of issuing the policy directives, the Government cannot prohibit the registration of more than one societies in the same village even where there is a need. The power to grant registration of a society is conferred upon the Registrar, and is delegated to the District Deputy Registrar. The District Deputy Registrar is not bound by any directions issued by the Government interfering in his function of registration of the society.

7. It was also contended that the second society viz. Nagadwadi V.K.S. Society was nothing but an arm of the petitioner society. The said society was formed by the petitioner society itself through its nominees with a view to fill the bowl leaving no room for registration of any other societies. The petitioner society and Nagadwadi society, which is an arm of the petitioner society, want to obstruct the co-operative movement and prevent registration of any new resource society in the village so as to create monopoly in the petitioner's favour..

8. The order of the Divisional Joint Registrar is revisable under Section 154 of the Act and, the petitioner has an alternate efficacious remedy by way of revision before the Registrar. Therefore, this Court should not interfere in the order passed by the Divisional Joint Registrar,

9. On facts it was pointed out that the District Deputy Registrar has recorded a finding of fact that the total business of the proposed society is likely to exceed Rs. 50 lacs and, therefore, even according to the Circular, as the turnover was likely to exceed Rs. 50 lacs, the District Deputy Registrar ought to have granted registration which he has legally done and, therefore, the decision of the District Deputy Registrar, as confirmed by the Divisional Joint Registrar, should not be interfered with. PROPOSITION FOR CONSIDERATION

10. Whether it is necessary to grant hearing to the first society (and for that mater all earlier societies) in every case before the registration of a second or any new Co-operative Society having the same classification and sub-classification, needs to be tested on principle as well as on precedents.

PROPOSITION TESTED ON PRINCIPLE

11. The provisions relating to the registration of the societies are contained in Chapter II of the Act. Section 3 of the Act provides that the State Government may appoint the Registrar and appoint one or more persons to assist the Registrar. Accordingly the State Government has appointed the Registrar, and also appointed Joint Registrars, District Deputy Registrars and Assistant Registrars to assist the Registrar. The power of granting registration to the Cooperative Societies has been delegated to the District Deputy Registrar. Section 4 of the Act lays down as to which Societies can be registered. According to Section 4, the Society, which has as its objects promotion of the economic interests or general welfare of its members, or of the public, in accordance with the co-operative principles, may be registered as a society. Proviso to Section 4 lays down that the society, which is likely to be economically unsound, or the registration of which may have an adverse effect on development of the cooperative movement, or the registration of which may be contrary to the policy directives which the State Government may, from time to time, issue, shall not be registered. Section 6 of the Act lays down the conditions for registration of the societies such as, society must have atleast 10 or such higher number as the Registrar may consider necessary having regard to the economic viability and development of co-operative movement, as members. Section 7 confers a power on the State Government to exempt any society or class of societies from any of the requirements as to the registration. Section 8 lays down that application for registration shall be made in the prescribed proforma and shall be accompanied by four copies of the by-laws and such registration fee, as may be prescribed; the application is required to be signed atleast by 10 proposed members. Under Section 9 the Registrar, if satisfied that the society has complied with all the provisions of the Act and the Rules, to grant registration to the society within two months from the date of the receipt of the application. The Act or the Rules nowhere provide for granting of hearing to the existing society before registering a new society.

12. The only ground as canvassed by Shri Raghuvanshi for granting of hearing to the existing society is that the business of the existing society may be adversely affected by the competition from the second society. Competition is a necessary part of life. Under the Companies Act, it is not necessary to grant hearing to existing Company even if a new Company is proposed to be incorporated for carrying on the same business and even if such registration is likely to adversely affect the business of the existing Company. The Partnership Act does not confer any power on the Registrar of Firms to refuse the registration of the partnership on the ground that the second partnership would compete with any firm already in existence. Competition is not recognised as a ground for refusing registration of any other association or organisation under any other law. The competition would ultimately benefit the consumers. The registration cannot, therefore, be refused on the ground of competition unless there is a clear statutory provision to that effect, and if at all any statute makes such provision, constitutional validity thereof would have to be tested on the touchstone of Articles 14 and 19 of the Constitution of India. The registration of the society is, therefore, a rule and refusal to grant registration is an exception.

13. Registration of a proposed society can be refused only on the grounds laid down in proviso to Section 4 of the Act. The grounds on which the registration of a society can be refused are, (i) the proposed society is likely to be economically unsound, (ii) the registration of which may have an adverse effect on development of the co-operative movement, (iii) the registration of which would be contrary to the policy directives, which the State Government may, from time to time, issue. The first ground that the Society is likely to be economically unsound applies qua the proposed society and not qua the existing societies. The fact that by granting registration to the second society, the first society would become economically unsound is not a ground for refusal of registration to the second society. The power given to the State Government to issue policy directives must be exercised in consonance with the Act and not de hors the Act. The requirement as to the minimum turnover of Rs. 50 lacs prescribed by the State Government may be for the purpose of ensuring economical soundness of the second society and also for the purpose of ensuring that unviable Societies do not mushroom because the liquidation of one or more unviable Co-operative Societies may adversely affect the co-operative movement. But to restrict the number only to two societies, even where three or more societies can be financially viable, cannot be said to be for preventing an adverse effect on the development of the co-operative movement. Some villages may be so prosperous or resourceful and enterprising that there could be enough room for multiple societies having a turnover of more than Rs. Fifty lacs. To say that there should be only two societies in a village and there should not be third society, may stultify growth of co-operative movement and cannot be said to be a policy directive in consonance with the Act. The discretion conferred on the Registering Authority (Registrar or the Deputy Registrar, as the case may be), cannot therefore, be taken away under the guise that more than two multi-purpose societies should never be permitted in the same village. The existing society must be heard before registration of new society cannot be the general rule applicable in every case. Take for instance the big city like Mumbai or Pune (which may consist of only one or few revenue Villages). If a Co-operative Housing Society is registered by 10 members coming together in such city and other 10 or more persons desire to form another Co-operative Housing Society and propose to acquire land and construct a building adjoining to the existing society, can it be said that the first society should be heard before registration of the second society? If the principle that the first society should be heard is carried to its logical conclusion, then all existing housing societies in the city would have to be heard before registering a new housing society. This would result into absurdity.

PROPOSITION TESTED IN PRECEDENTS

14. This Court, however, has held that it is necessary to hear the existing society before a new society is registered. In the case of Kondiba Kashiba Aher and Anr. v. Kalmadevi Sahakari Dudh Vyausayik Sanstha Limited 1988 C.T.J. l85 a Division Bench of this Court held that the existing society should be heard before any orders are passed about the registration of a new society. In the case of Shri Hanaman Dudh Utpadak Sahakari Sanstha Ltd. and Anr. v. State of Maharashtra and Ors. 1990 C.T.J. 115 another Division Bench of this Court held that it is necessary to issue notices to and give an opportunities to all concerned and the affected parties and hear them before registration of the new society and then pass a speaking order. In the case of Ahmednagar Zilla Sahakari Dudh Vyawasayik Wa Prakriya Sangh Ltd. v. State of Maharashtra 2000 (2) Mh. L.R. 150 : 2000 (3) All M. R. 559 yet another Division Bench of this Court held that it is necessary to consider the issue of registration in totality by keeping in mind the interest of the existing societies, their members and then only take a decision whether the proposed society should be registered or not.

15. It is thus clear that three Division Benches of this Court have taken the view that the existing society is required to be heard before the registration of new society.

PRECEDENTS ARE BINDING

16. Shri Dhorde, learned Counsel for the Respondent No. 5 submits that all those three decisions were given on the peculiar facts of those cases. In the case of Shri Hanuman Dudh Utpadak Sahakari Sanstha Ltd. and another v. State of Maharashtra and Ors. (supra), there was an allegation of ministerial favouritism. The societies were ordered to be registered as "khas bab"(special case) and the orders were obtained directly from the Government, It was, in this connection, that the Division Bench set aside the registration of the society and held that the hearing be given to the existing society. In the case of Kondiba Kashiba Aher and Anr. v. Kalrnadevi Sahakari Dudh Vyavasayik Sanstha Limited (supra), it was held that the power of registration is a quasi judicial power and, therefore, the matter has to be decided by the Registrar or the Competent Authority, who cannot act at the behest or mandate of somebody else (Government). It was also held that it is necessary to follow the principles of natural justice and hear the existing societies. It was contended that all the three judgments were in the case of milk producers societies in which the milk was to be collected from the members (or the primary societies) and as the resource (which was milk in those cases) was limited, it was necessary to prevent unhealthy competition for viability not only of the old but of the new society and therefore, it was necessary to hear the existing societies. Whatever be the distinctions attempted to be drawn by Shri Dhorde, learned Counsel for the Respondent No. 5, it is not open for a Single Judge of this Court to bypass the decisions given by the Division Benches and hold that it is not necessary to grant hearing to the existing societies on the basis of so-called distinction that those judgments were in respect milk collection societies. The contention that the principle laid down by the Division Benches of this Court that the hearing should be granted to the existing society before registration of a new society is to be universally applied should be limited to milk collection societies cannot be accepted by a Single Judge. Thus, feeling bound, I follow the judgments of the Division Benches. REQUEST FOR REFERENCE

17. Shri Dhorde then urged that the judgments given by the Division Benches holding that the existing society must be heard before the new society is registered requires reconsideration and, therefore, the matter may be referred to a Larger Bench under Rule 7 of Chapter I of the Bombay High Court Appellate Side Rules.

18. The principle that hearing must be given to the existing society before registration of new society is laid down in one but in three judgments, all rendered by the Division Benches. I am bound by each of the said judgments. The weight of the three authorities is such that it would be an impropriety by me, sitting singly, to refer the matter to a Larger Bench. It would be for another Division Bench, if it disagrees with the judgments of the earlier Division Benches, to make such a reference. In my opinion, the interpretation as well as misinterpretation of a statute made by a Division Bench of a High Court is binding on the Benches of smaller or equal strength of the same Court; and the Single Judge should not venture to make a reference merely because he holds a contrary view, especially when more than one Division Benches have taken the same view.

ALTERNATIVE REMEDY

19. There may be some force in the contention of Shri Dhorde, learned Counsel for the Respondent No. 5 that remedy of Revision was available to the petitioner. It is true that normally the High Court would not interfere in a case where the petitioner has an alternate remedy by way of a revision. However, in the present case, the matter is concluded by three judgments of the Division Benches of this Court, The order of the Divisional Joint Registrar is contrary to the principles laid down by the Division Benches of this Court. The Revisional Authority would be bound, as I am, by the judgments of Division Benches and would have to be set aside the order of registration only on the technical ground that the hearing was not given to the existing society. The order is clearly and manifestly against the principles laid down by the Division Benches of this Court. It is, therefore, not necessary to direct the petitioner to file a revision.

CONCLUSION

20. In the present case, admittedly hearing was not given to the petitioner society before registration of the Respondent No. 5 society. In the circumstances, there is no alternative for me than to set aside the impugned order.

21. In the result, the petition is allowed. The impugned order is set aside. The matter is remanded back to the District Deputy Registrar, Ahmednagar to decide the matter afresh on merits after granting hearing to the petitioner society. As the Respondent No. 5 society is already registered and is functioning since May, 2001 the District Deputy Registrar should decide the matter as expeditiously as possible and in any event within two months. In the facts and circumstances of the case, no order as to costs.