1. This special appeal by Sri Sobhnath is directed against the judgment of G.C. Mathur, J. dated 11-4-1966 allowing writ petition No. 2019 of 1965 filed by respondent No. 1 Sri Raj Kishore.
2. Sri Sobhnath filed an election petition before the Sub-Divisional Officer Meja district Allahabad challenging the election of Sri Raj Kishore as the Pradhan of village Kaundhiara. The main ground on which the election petition was founded was that Raj Kishore being a dismissed employee of the Sadhna Sahkari Samiti Ltd. which (according to Sobhnath) was a local authority was not eligible for nomination and consequently for election. The Sub Divisional Officer by his judgment dated 28-5-1965 allowed the election petition on the finding that Raj Kishore being a dismissed employee of the Sadhna Sahkari Samiti Ltd. was not eligible for election as the Sadhna Sahkari Samiti was a local authority within the meaning of Section 5A of the U. P. Panchavat Raj Act. This led to the filing of the writ petition No. 2019 of 1965 by Sri Raj Kishore.
3. G.C. Mathur, J. was of the opinion that the Sadhna Sahkari Samiti Ltd. could not be comprehended in the expression 'local authority' as occurring in Section 5A of U. P. Panchayat Raj Act and for that reason his election to the office of the Pradhan of village Kaundhiara was wrongly set aside by the Sub Divisional Officer.
4. Mr. D. Sanyal who has appeared for the appellant before us has contended that the view taken by the learned Single Judge is not correct and that taken by the Sub Divisional Officer is correct.
5. Section 5A of the U. P. Panchayat Raj Act so far as relevant for our purposes reads:
'Section 5-A. Disqualification for holding office under Gaon Sabha or Nyaya Panchayat.--A person shall be disqualified for being chosen, nominated or appointed to, and for holding any office in the Gaon Sabha or the Gaon Panchayat, or the Nyaya Panchayat constituted under Section 42, if he .....
(d) has been dismissed from the service of a State Government, the Central Government or a local authority or a Nyaya Panchayat for misconduct.....'
6. The word 'local authority' has not been defined in the Act but it has been defined under the U. P. General Clauses Act which would be applicable to the present case, the U. P. Panchayat Raj Act being State Act. Section 4(25) of the U. P. General Clauses Act reads:
''Local authority' shall mean municipal board, district board, or other authority legally entitled to, or entrusted by the State Government with the control or management of a municipal or local fund.'
7. Admittedly the Sadhna Sahkari Samiti Ltd. is a co-operative society registered under the provisions of the Co-operative Societies Act.
8. The sole question, therefore, that requires consideration is whether it can be treated to be a 'local authority'. In order to find out the real nature or the essential quality of a society registered under the Co-operative Societies Act we would naturally have to fall back upon the preamble of the Co-operative Societies Act and its provisions. The preamble reads:
'Whereas it is expedient further to facilitate the formation of co-operative societies for the promotion of thrift and self-help among agriculturists and persons of limited means, and for that purpose to amend the law relating to Cooperative Societies.'
It is clear from the preamble that the purpose for which a co-operative society is formed is not to administer a certain local area but only to promote thrift and self-help among its members who are agriculturists and persons of limited means. A perusal of the provisions of the Cooperative Societies Act fully reveals that a society registered under the Co-operative Societies Act has no administrative duties or responsibilities affecting the public or a section of the public. Its activities are confined only to self help among its various members, and the bye-laws and the rules that are framed are only for the purpose of regulating the management of its business, the control of its officers and agents and the rights and duties of the members between themselves. Section 4 of the Co-operative Societies Act provides for the registration of a society formed under that Act and so far relevant for our purpose reads:
'Subject to the provisions hereinafter contained, a society which has its object the promotion of the economic interests of its members in accordance with co-operative principles, or a society established with the object of facilitating the operations of such society, may be registered under this Act with or without limited liability.... .' From this provision it clearly follows that the object of the society which can be registered under the Co-operative Societies Act must be 'the promotion of the economic interests of its members in accordance with the co-operative principles.' There cannot, therefore be any escape from the conclusion that a co-operative society registered under the Co-operative Societies Act is something in the nature of a company the object of which is to promote the economic interest of its members, and it has no administrative functions to perform except in respect of its own domestic management. Entry No. 5 of the list :?. of the 7th Schedule of the Constitution, which corresponds to entry No. 13 of the second list of the second schedule of the 1935 Act, reads 'Local Government that is to say the constitution and powers of a municipal corporation, improvement trust, district boards, minor settlement authorities and local authorities for the purpose of Local Self Government or village administration.'
9. In our judgment the authorities included in the expression 'local authority' are those authorities which partake in the administration of Local Self Government in a certain local area, and not self-help societies like a society registered under the Co-operative Societies Act. Admittedly the Sadhna Sahkari Samiti Ltd. is not a Municipal Board or a District Board. The only question, therefore, that requires consideration is whether it is 'other authority legally entitled to or entrusted by the State Government with the control or management of a municipal or local fund'. The words 'municipal fund' have not been defined either in the U. P. Panchayat Raj Act or in the U. P. General Clauses Act. However it is clear that municipal fund is that fund which is contemplated by Section 114 of the U. P. Municipalities Act which reads:
'Section 114--.Municipal Fund:--There shall be for each municipality a municipal fund and there shall be placed to the credit thereof-
(a) all sums received by or on behalf of the board.
(2) Nothing in this section shall affect any obligations of a board arising from a trust legally imposed upon or accepted by it.'
The expression 'municipal fund' as occurring in Section 4(25) of the U. P. General Clauses Act means a municipal fund within the meaning of Section 114 of the U. P. Municipalities Act. Admittedly the Sadhana Sahkari Samiti Ltd. has no control over or management of such a fund.
10. The expression 'local fund' also has not been defined either in the U. P. Panchayat Raj Act or in the U. P. General Clauses Act. It has, however, been defined in Clause (14) of Rule 9 of the U. P. Financial Hand Book Vol. II. This rule finds place in chapter II which is headed as 'Definitions'. Rule 9(14) reads:
'Local fund means-
(a) revenues administered by bodies which by law or rule having the force of law come under the control of the Government, whether in regard to proceedings generally or to specific matters, such as the sanctioning of their budgets sanction to the creation or filling up of particularposts, or the enactment of leave, pension or similar rules; and
(b) the revenues of any body which may be specially notified by the Government as such.' The body whose funds can be described as 'local funds' must be a body which by a rule having the force of law come under the control of Government or the revenues of which have been specifically notified by the Government as 'local fund'. Admittedly there is no rule or law which brings a co-operative society under the control of the Government. It has also not been brought to our notice that there has been a special notification by the Govt. declaring that the funds of co-operative societies like the Sadhna Sahkari Samiti Ltd. are the funds of a local authority. It is, therefore, clear that the Sadhna Sahkari Samiti does not control or manage a municipal fund or a local fund. It cannot, therefore, be comprehended in the expression 'local authority' as mentioned in Section 4(25) of the U. P. General Clauses Act. We may also add that Sadhna Sahkari Samiti has neither the authority to manage a municipal or a local fund nor has it been authorised or entrusted by the Government to do so. We are, therefore, unable to agree that the Sadhna Sahkari Samiti Ltd. is a 'local authority' and for that reason are of the opinion that the learned Single Judge was right when he excluded Sadhna Sahkari Samiti from the purview of the expression 'local authority' in Section 5A of the Panchayat Raj Act. Mr. D. Sanyal has placed reliance on Dukhooram Gupta Hari Prasad v. Co-operative Agricultural Association Ltd. Kawardha, AIR 1961 Madh Pra 289. In that case the learned Judges of the Madhya Pradesh High Court were concerned with the question as to whether a society registered under the Co-operative Societies Act would fall under Article 12 of the Constitution of India. The learned Judges while dealing with this matter observed:
'In Article 12 of the Constitution 'State' has been defined for the purposes of Part III asincluding 'all local or other authorities'. The meaning of the expression 'other local authorities' was considered in Bramadathan Namboori-pad v. Cochin Dewaswom Board, AIR 1956 Trav-Co. 19 and it was held that the expression referred to any authority or body of persons exercising the power to issue rules, byelaws or regulations having the force of law.
A co-operative society under the Co-operative Societies Act, 1912, with which we are concerned in the instant case, has power to make byelaws. We shall refer to the relevant provisions of the Act and the byelaws later. These byelaws are binding on it as well as the public coming within the ambit of the byelaws. A society registered under the Act would thus fall within the meaning of 'State' as defined in Article 12 and Chapter III would thus have application to such a society.' In the first place this case is clearly distinguishable being no authority on the question as to which authorities fall under the expression 'local authority' as occurring in Section 5A of the Panchayat Raj Act or Section 4(25) of the U. P. General Clauses Act. Secondly it is clear that a rule or bye-law or regulation framed by a society registered under the Co-operative Societies Act cannot govern the outside public. The Cooperative Societies Act as amended for being administered in U. P. does not confer on a society registered under the Co-operative Societies Act the power to frame any rule or a regulation. It can only frame a bye-law. The power to make a bye-law can be conferred by a rule framed under Sub-sections (1) and (2)(c) of Section 43 of the Co-operative Societies Act. It is obvious that the bye-laws so framed cannot travel beyond the scope of the Co-operative Societies Act which, as already pointed out earlier, is confined to the formation of societies for the purpose of promoting economic interest of its members. It is, therefore, obvious that a bye-law framed under such rates can only be with regard to the running and the management of the business of a society or in relation to the control of its officers and agents and the rights and duties of the members between themselves and the society. In other words no bye-law can travel beyond the domestic sphere of the society. That being the position such a bye-law cannot be a law, nor can it have the force of law. The Travancore case is also clearly distinguishable. In any case it was held therein that a Dewaswom Board is not a 'local authority'.
11. For the reasons mentioned above we are of the opinion that there is no force in thisappeal. It is, therefore, dismissed.