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The Maharashtra Brahman Sahakari Bank Ltd., Indore and anr. Vs. State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 626 of 1973
Judge
Reported inAIR1980MP84; 1980MPLJ223
ActsMadhya Pradesh Co-operative Societies Act, 1961 - Sections 12, 12(1) and 12(2); Constitution of India - Article 19(1)
AppellantThe Maharashtra Brahman Sahakari Bank Ltd., Indore and anr.
RespondentState of Madhya Pradesh and ors.
Appellant AdvocateG.M. Chaphekar, Adv.
Respondent AdvocateS.L. Saxena, Govt. Adv.
DispositionPetition dismissed
Cases ReferredHarakh Bhagat v. A. R. Co
Excerpt:
.....of fundamental right must, therefore,..........the re-serve bank after inspection advised the petitioner society to follow the principle of open membership by suitably amending the bye-laws. the registrar, co-operative societies, issued a notice on 26th november 1969 under section 12 (1) of the co-operative societies act, 1960, requiring the petitioner society to amend its bye-laws so as to make its membership open to all communities. in this letter it was pointed out that in may 1963 a study group of non-agricultural co-operative societies recommended that membership of urban banks should be open to all persons competent to contract and that in future urban banks should not be organised on communal basis and existing societies so organised should suitably amend their bye-laws to throw their membership open to all communities......
Judgment:

Singh, C.J.

1. The Maharashtra Brahman Sahakari Bank Ltd., petitioner No. 1 in this petition, is a registered co-operative society and carries on banking business. Petitioner No. 2 is the President of the Society. The petitioner society was originally registered under the Indore Co-operative Societies Act and is deemed to be registered under the Ma-dhya Pradesh Co-operative Societies Act, 1960. Bye-law No. 10 of the Society provides that only Maharashtrian Brahmins can be members of the Society. The Banking Regulation Act, 1949, has been extended to co-operative societies by the Banking Laws (Application to Cooperative Societies) Act, 1965. Under the Banking Regulation Act the Reserve Bank has powers of inspection. The Re-serve Bank after inspection advised the petitioner society to follow the principle of open membership by suitably amending the bye-laws. The Registrar, Co-operative Societies, issued a notice on 26th November 1969 under Section 12 (1) of the Co-operative Societies Act, 1960, requiring the petitioner society to amend its bye-laws so as to make its membership open to all communities. In this letter it was pointed out that in May 1963 a Study Group of Non-Agricultural Co-operative Societies recommended that membership of urban banks should be open to all persons competent to contract and that in future urban banks should not be organised on communal basis and existing societies so organised should suitably amend their bye-laws to throw their membership open to all communities. It was also pointed out that the Reserve Bank had advised on inspection that the petitioner society should amend its bye-laws to make it an open society. The petitioner society did not accept the suggestion of the Registrar and declined to make the amendment. The Registrar then by notice dated 7th October 1971 asked the petitioner society to state itsobjections why its bye-laws be not suitably amended to enable persons of all communities to become its members. It was also mentioned in this notice that the amendment would be in the interest of the society. The petitioner society raised various objections which were not accepted by the Registrar who by his order dated 19th April 1973 registered the proposed amendment to the bye-laws in exercise of his power under Section 12 (2) of the Act so as to make the membership of the petitioner society open to all communities. It is this order of the Registrar which is challenged in this petition under Articles 226 and 227 of the Constitution.

2. Section 12 of the Madhya Pradesh Cooperative Societies Act, 1960, reads as follows:

'S. 12. Power to direct amendment of bye-laws-

(1) Notwithstanding anything contained in this Act or the rules or bye-laws, if the Registrar considers that an amendment of the bye-laws of a society is necessary or desirable in the interest of such society, he may, by an order in writing to be served on the society in the prescribed manner, require the society to make the amendment within such time as may be specified in such order,

(2) If the society fails to make any such amendment within the time specified by the Registrar in his order under Sub-section (1), the Registrar may, after giving the society an opportunity to state its objections, if any, register such amendment and issue a certified copy thereof to such society and thereupon such amendment shall be binding on the society and its members.'

3. A reading of Section 12 will show that the Registrar can direct the society to make an amendment of its bye-laws which the Registrar considers to be necessary or desirable in the interest of the society and that when the society fails to make the necessary amendment, the Registrar can register such amendment after hearing the society's objections and on such registration the amendment binds the society and its members. One of the important principles of co-operation is an open door policy. This principle means that a co-operative society always welcomes newcomers, if they possess the requisite qualifications, reside within the area of its operation and do not carry on parallel trade. Further, this principle means that there isno bar for membership on the ground of caste, sex, religion or political amnity: [See C. F. S. Ltd., Lilakari v. State of M. P., 1974 MPLJ 1 at p. 9 (FB) ]. We have already noted that the Study Group in 1963 reported that the membership of urban banks should be open to all persons and that they should not be organised on communal basis and the existing societies so organised should suitably amend their bye-laws to throw their membership open to all the communities. The inspection report of the Reserve Bank also advised the petitioner society to follow the principle of open membership by amending its bye-laws. One of the objects of the society is to obtain Government assistance for the benefit of its members, The State is clearly not expected to assist such bodies or societies which are organised on communal basis, In this background, it is apparent that the amendment made in the bye-laws by the Registrar under Section 12 was desirable being in the interest of the society and was well within his power under that provision. It is not disputed that the procedure contemplated under Section 12 was fully followed by the Registrar in registering the amendment.

4. Learned counsel for the petitioners, however, contends that Section 12 of the Act, if it authorises the change of such nature, and the amendment of the bye-laws made by the Registrar, infringes the petitioners' fundamental right under Article 19(1)(c) of the Constitution and is not saved by clause (4) of the same Article, as Section 12 cannot be construed to contain a reasonable restriction in the interest of the sovereignty and integrity of India or public order or morality. Learned counsel for the petitioners heavily relies upon the case of Damyanti v. Union of India, AIR 1971 9C 966. In our opinion, the contention raised by the learned counsel cannot be accepted. As explained by us in the case of Brij Gopal v. State of M. P., 1979 MPLJ 695, formation of a society is a voluntary act on the part of its members and so is the act of making an application for registration, for the Co-operative Societies Act does not make it compulsory for a society to register itself under the Act. The fundamental right to form an association does not carry with it the right to have the association recognised or registered. When a society applies for registration under the Act, it must be assumed that itsmembers agree to be bound by the regulatory provisions of the Act for getting the privileges which the Act confers on a registered society. The privileges are purely statutory and are not in any way adjunct to the fundamental right to form an association. In Damyanti v. Union of India (supra), the Hindi Sahitya Sammelan, society registered under the Societies Registration Act, 1960, was constituted as a body corporate by the Central Act 13 of 1962. The corporate body was composed not only of persons who were members of the society but also of others who were given the right under the Central Act to be members of the Sammelan without the consent of the pre-existing members. The incorporation of the society and induction of new members were direct and inevitable effects of the Central Act without any express or implied consent of the pre-existing members. In this context, the Supreme Court held the Central Act to be invalid as contravening Article 19(1)(c) of the Constitution. The Court observed :

'The right to form an association necessarily implies that the persons forming the association have also the right to continue to be associated only with 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.'

As pointed out by us in Brij Gopal's case, the important distinguishing feature of Damyanti's case is that the incorporation of the Sammelan under the Central Act was the result of legislative compulsion and did not depend upon the making of voluntary application by the existing members for incorporation. As explained further in Brij Gopal's case the incorporation of a society under the Act by registration and the application of the regulatory provisions of the Act to a registered society result from the voluntary act of the members of the society in making the application for registration. It is not disputed that the members could have themselves made bye-laws conferring power on the Registrar to suitably amend the bye-laws so as to induct other members. The same thing happens here when the members apply for registration voluntarily and thereby impliedly accept to be boundby the regulatory powers conferred by the Act on the Registrar. In these circumstances, it cannot be said that Section 12 and the order of the Registrar made under that section registering the amendment in the bye-laws are violative of the petitioners' fundamental rights under Article 19(1)(c). In Brij Gopal's case, on the same reasoning the power conferred on the Registrar by Section 19-C of the Act to expel a member was sustained. The argument of contravention of fundamental right must, therefore, fail.

5. The learned Government Advocate has referred to us a decision of the Patna High Court in Harakh Bhagat v. A. R. Co-op. Societies, AIR 1968 Pat 211, in which a rule relating to compulsory amalgmation of a society with another society was upheld. It was held that the rule did not violate Article 19(1)(c) of the Constitution.

6. The petition fails and is dismissed but without any order as to costs. The security amount be refunded to the petitioners.


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