Skip to content


The Govindpur Agricultural Credit Co-operative Society and anr. Vs. Assistant Registrar, Co-operative Societies and anr. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtOrissa High Court
Decided On
Case NumberO.J. Cs. Nos. 109, 356 and 388 of 1970
Judge
Reported inAIR1973Ori148; 39(1973)CLT70
ActsConstitution of India - Article 226; Orissa Co-operative Societies Act - Sections 2, 14(3) and 14(4)
AppellantThe Govindpur Agricultural Credit Co-operative Society and anr.
RespondentAssistant Registrar, Co-operative Societies and anr.
Appellant AdvocateL. Rath and ;U. Nanda, Advs.
Respondent AdvocateAddl. Govt. Adv. and ;G.G. Das, Adv.
DispositionPetition allowed
Cases ReferredNagle v. Feilden
Excerpt:
.....order to provide co-operative credit facilities to all the areas of the district the registrar, cooperative societies. co-operative societies, the co-operative extension officer of the panchayat samiti referred to above conducted inspections of the societies proposed to come under amalgamation and he is of view for amalgamating the societies already mentioned above so that a viable service co-operative society will be emerged which will be able to appoint well-paid people residing within the area of operation of the proposed service co-operative society, as the existing small type of societies neither able to appoint the paid and qualified secretaries nor the societies take any interest to render proper service to the people. --as the right of the petitioner to hold the licence is..........parties seeking for writs of certiorari to quash orders made by the assistant registrar of co-operative societies. balasore circle, amalgamating the petitioning co-operative societies with some other societies which have been impleaded as opposite parties in the respective cases.2. all these applications were heard analogously at the request of parties and common arguments were advanced. the points that arise for consideration are also common. there are, however, allegations of fact in each of the applications which may briefly be noticed.3. o.j.c. no. 109 of 1970 --the petitioners here are two in number. govindpur agricultural credit cooperative society is the first petitioner. it has come through its secretary. the second petitioner is a member of the society. it is alleged that.....
Judgment:

R.N. Misra, J.

1. These are three applications under Article 226 of the Constitution on behalf of different parties seeking for writs of certiorari to quash orders made by the Assistant Registrar of Co-operative Societies. Balasore Circle, amalgamating the petitioning Co-operative Societies with some other societies which have been impleaded as opposite parties in the respective cases.

2. All these applications were heard analogously at the request of parties and common arguments were advanced. The points that arise for consideration are also common. There are, however, allegations of fact in each of the applications which may briefly be noticed.

3. O.J.C. No. 109 of 1970 --The petitioners here are two in number. Govindpur Agricultural Credit Cooperative Society is the first petitioner. It has come through its Secretary. The second petitioner is a member of the Society. It is alleged that on application being made under the Act, the Society was duly registered and assigned registration number 82 of 1951. It began with a membership of 12 and at the relevant time in 1969, it had a membership of 149. Its business assets and turnover had expanded considerably during the 18 years of activities. The Assistant Registrar of Co-operative Societies Balasore Circle (Opp. party No. 1) directed by order dated 26-12-1969, that the petitioner Society should be amalgamated with the Balanga Service Co-operative Society (opp. party No. 2). Annexure A to the petition is the impugned order by which that direction was given. The justification for the order is found in the following portion of the impugned order:

'In order to set up appropriate pattern of Co-operative Societies, so that they can effectively undertake various service functions for the benefit of village farmers and in order to provide co-operative credit facilities to all the areas of the district the Registrar, Cooperative Societies. Orissa, has already ordered to take up the Action Programme as approved by the Deputy Registrar. Co-operative Societies, by marginal adjustment to achieve the object of credit societies in all the areas and for avoidance of duplication of membership and overlapping of finance in more than one society.

Recently the Deputy Registrar. Cooperative Societies No. II Central Division. Cuttack has already approved the Action Programme of Baliapal Panchayat Samiti in the district of Balasore. According to the approved programme the following societies are to come under amalgamation, so that Balanga Service Co-operative Society in the above-named Block will be immerged .....

Further to examine the justification of amalgamation of the societies mentioned above and to implement the order of the Deputy Registrar. Co-operative Societies, the Co-operative Extension Officer of the Panchayat Samiti referred to above conducted inspections of the societies proposed to come under amalgamation and he is of view for amalgamating the societies already mentioned above so that a viable Service Co-operative Society will be emerged which will be able to appoint well-paid people residing within the area of operation of the proposed Service Co-operative Society, as the existing small type of societies neither able to appoint the paid and qualified secretaries nor the societies take any interest to render proper service to the people.....'

The Assistant Registrar, therefore, directed in exercise of powers conferred under Section 14 (3) of the Orissa Cooperative Societies Act. 2 of 1963 (hereinafter referred to as the Act) that

'the Balanga G.P.G.G. and Govindpur Co-operative Societies having similar objects in regard to finance, shall amalgamate to form a new Service Cooperative Society by the name 'the Bolanga Service Co-operative Society', the area of operation of which shall conform to the following villages.....'

This order by which incorporation was withdrawn from the petitioner-society and it was asked to get amalgamated with a new society (opp. party No. 2) is impugned in this case.

4. O.J.C. 356 of 1970 -- TheMandarada Co-operative Society through its Secretary and its President end the petitioners. This Society was registered in September, 1943 under the Bihar end Orissa Co-operative Societies Act and was assigned registration number BL-13. It began with a membership of 16 and by the time of the order of amalgamation its total membership was 149. Its business activities had also substantially expanded by the time the order for amalgamation was made. As in the earlier case, here also on the same day, i.e. 26-12-1969, the Assistant Registrar of Co-operative Societies. Balasore Circle directed amalgamation of the petitioning Society with the opposite party No. 2 The reasons are more or less similar as in the earlier case.

5. O.J.C. 388 of 1970.-- The Balisahi Agricultural Credit Co-operative Society through its Secretary is the first petitioner and its President is the second petitioner. It is alleged that the Society is a very old one haying been registered under the Co-operative Societies Act of 1912. When it was registered in 1918, it was given registration number BL-221. It started with a membership of 12 and by the time of the order of amalgamation its membership was 94. On the 26th of December, 1969, the Assistant Registrar of Co-operative Societies. Balasore Circle, directed its amalgamation with the opposite party No. 2 Society. On similar grounds as indicated above, amalgamation has been ordered.

6. In each of the cases, the Assistant Registrar has given an affidavit of a common pattern apart from contending that the order was open to appeal under the statute and, therefore, an application under Article 226 of the Constitution is not maintainable. The order has been justified as being in the interest of the members of the society. It is further contended that the petitioning societies were not economically viable units and. therefore, the order of amalgamation is in the interest of the petitioning society itself. The financing bank was consulted and its consent has been duly obtained. In O.J.Cs. 356 of 1970 and 388 of 1970, it has been further contended in the respective counter affidavit, that the petitioning Co-operative Society in each of the cases is one of the signatories in the Bye-laws for the newly constituted society (i.e. opp. party No. 2) and. therefore, the writ application challenging the amalgamation should not be entertained.

7. So far as the latter two cases are concerned (i.e. O. J. Cs. 356 of 1970 and 388 of 1970), the preliminary objection raised regarding maintainability, inour opinion must be sustained. Each of the petitioning societies in those two cases is estopped from challenging the order of amalgamation inasmuch as it has joined in the formation of the new society into which the petitioning society was to amalgamate. By its own action, it must now be found that the petitioner is estopped from disputing the amalgamation. The allegation in the counter affidavit is not seriously disputed in a rejoinder filed on behalf of the petitioning society in each of the cases. This is what has been said in the rejoinder-

'.....The statement that the petitioner is one of the applicants for the registration of the new society and has signed the Bye-law submitted for registration is not correct and also this no way affects the present case.'

In O. J. C. 388 of 1970, the secretary of opposite party No. 2 society into which the petitioning society of that case has been ordered to amalgamate has given an affidavit. In paragraph 6 thereof, it has been alleged that-

'Sri Haripada Chakrabarti, as secretary of Balisahi society, gave his consent to the formation of the larger Sri Sri Sitala Service Co-operative Society Ltd., after which the same was allowed tp be registered by the Assistant Registrar.'

In view of these circumstances, we would hold that our discretionary jurisdiction should not be allowed to be invoked by the petitioners in those cases. The writ applications are accordingly dismissed as not maintainable without examination of merits of the allegations raised in these petitions.

8. O.J.C. 109 of 1970. -- Mr. Rath for the petitioners contends that the order of amalgamation is contrary to principles of natural justice. No hearing was ever afforded though the impugned order affected the status of the society and brought about devastating consequences so far as the society end its members are concerned. His next contention is that Section 14 (3) of the Act has not been followed and the inspection made under Section 64 of the Act was a mala fide act. His third contention is that rules having not yet been made to prescribe the conditions contemplated under Section 14 (3) of the Act, the power was not exercisable. These contentions of Mr. Rath may now be examined.

9. Contention No. 1.-- The Govindpur Agricultural Credit Co-operative Society Ltd., was registered and duly incorporated as a society under the provisions of the Bihar and Orissa Co-operative Societies Act and under Section 133 of Orissa Act 2 of 1963, that society has to be treated as a society duly registered under the Orissa Act. A detailed procedure is laid down for registration and once registration is granted, the society is made a body corporate and is entitled to hold property, enter into contracts, institute and defend suits and other legal proceedings and do all things necessary for the purpose for which the society is constituted. A status is acquired upon registration. Certain privileges are conferred and certain obligations ere also simultaneously laid. Learned Additional Government Advocate does not dispute the contention of Mr. Rath that registration brings about a change in the status and confers advantages provided under the Act and the Rules as also in dealings with Government and other public bodies. Subject to regulatory provisions under the Act and the Rules as also the Bye-laws, a Co-operative Society has the right to carry on its business control its dealings with its members and manage its own affairs. Under the statutory provisions and the Bye-laws, the society has a President, a Board of Management, a Secretary and many of these are elective offices. Those who hold such offices have also a status. The Assistant Registrar of Co-operative Societies came to make an objective assessment of the situation before directing amalgamation and asked for amalgamation to be made only upon such satisfaction being reached.

The petitioners have alleged that no opportunity was given to them of being heard before the order of amalgamation was made. Given an opportunity they would have been in a position, they assert, to satisfy the Assistant Registrar that the opinion which he formed leading to the order of amalgamation was not correct or appropriate. It is settled law by now that if a tribunal or a statutory authority has to reach an objective conclusion affecting rights of others, he has to act quasi-judicially. As indicated by the Law Lords in the case of Wise-man v. Borneman, 1971 AC 297, the statutory authorities are expected to act fairly and fairplay requires those who are likely to be affected to be given an opportunity to participate in the enquiry undertaken for reaching objective conclusions. Guest. L. J. stated:

'It is reasonably clear on the authorities that where a statutory tribunal has been set up to decide final questions affecting parties' rights and duties, if the statute is silent upon the question, the Courts will imply into the statutory provision a rule that the principles of natural justice should be applied. This implication will be made upon the basis that Parliament is not to be presumed to take away parties' rights without giving them an opportunity of being heard in their interest'

Lord Reid added:

'.....Natural justice requiresthat the procedure before any tribunal which is acting judicially shall be fair in all the circumstances and I would be sorry to see this fundamental general principle degenerate into a series of hard and fast rules. For a long time the Courts have without objection from Parliament supplemented procedure laid down in legislation where they have found that to be necessary for this purpose .....'

Lord Justice Sachs in the case of (In re Pergamon Press Ltd.). (1971) 1 Ch D 388 rightly indicated :--

'In the application of the concept of fair play, there must be real flexibility so that very different situations may be met without producing procedures unsuitable to the object in hand ..................'

In the case of Digambar v. Addl. Dist Magistrate Dhenkanal, AIR 1970 Orissa 110, this Court dealing with the provisions of the Arms Act and & case of cancellation of a licence without giving a hearing to the licensee indicated:--

'As the right of the petitioner to hold the licence is clearly affected by the order of cancellation the petitioner is entitled to a hearing by the original revoking authority and a reasonable opportunity of defending this right. Section 17, doubtless, makes no provision for hearing the party. It is exactly here the principle of natural justice would be invoked to supplement the law.'

In the case of Dr. Harekrushna Mahatab v. The Chief Minister of Orissa, AIR 1971 Orissa 175, at page 187, the learned Justice has indicated:

'As has already been stated in 1964 AC 40. if any administrative order adversely affects any right or interest then the principles of natural justice must be observed in the inquiry unless the statute either expressly or by necessary implication prohibits it .....'

In the case of A.K. Kraipak v. Union of India, AIR 1970 SC 150 their Lordships have stated:

'..... For determining whether apower is an administrative power or a quasi-judicial power one has to look to the nature of the power conferred the person or persons on whom it is conferred, the framework of the law conferring that power, the consequences ensuing from the exercise of that power and the manner in which that power is expected to be exercised .....'

And again their Lordships stated:--

'The concept of rule of law would lose its validity if the instrumentalities of the State are not charged with the duty of discharging their functions in a fair and just manner. The requirementof acting judicially in essence is nothing but a requirement to act justly and fairly and not arbitrarily or capriciously. The procedures which are considered, inherent in the exercise of a judicial power are merely those which facilitate if not ensure a just and fair decision. In recent years the concept of quasi-judicial power has been undergoing a radical change. What was considered as an administrative power some years back is now being considered as a quasi-judicial power.'

In view of what has been stated in these decisions we must hold that the Assistant Registrar of Co-operative Societies in making the order in question was expected to act quasi judicially and in so acting he was obliged to give a hearing to the affected society and in view of the position that no such hearing was given the impugned order of amalgamation which affects the society and results in civil consequences adverse to the society and its members is bad.

The learned Additional Government Advocate indicated that the action can be justified as a measure of public good and, therefore, be protected as an instance of giving effect to public policy. This stand of the learned counsel does not appeal to us at all. Lord Denning M.R. in the case of Enderby Town Football Club Ltd. v. Football Association Ltd., (1970) 3 WLR p. 1021, has stated

'..... I know that over 300years ago Hobart C.J., said the 'Public policy is an unruly horse'. It has often been repeated since. So unruly is the horse it is said that no Judge should ever try to amount it lest it run away with him. I disagree. With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles, it can leap the fences ,put up by fictions and come down on the side of justice, as indeed was done in Nagle v. Feilden, (1966) 2 QB 633. It can hold a rule to be invalid even though it is contained in a contract.'

In this case justification for the amalgamation is contended to be on a finding of necessity. While the Assistant Registrar was engaged in the fact finding inquiry, it was equally necessary that he should have heard the society so that a proper conclusion in the matter could' be reached. The plea of Public goods or public policy cannot be held out as justification for the procedure adopted by the Assistant Registrar in making of the impugned order.

10. Contention No. 2-- The next contention was that there has been no compliance with the requirements of the Section 14 (3) of the Act. That section provides-

'The Registrar after an inspection is made under Section 64 or an enquiryis held under Section 65 may, with the consent of the concerned financing bank, if any and subject to the prescribed conditions, order-

(i) that two or more societies with the same or having overlapping or adjoining areas of operation and having similar objects shall amalgamate themselves and form a new society; or .

(ii) that a society shall be divided into two or more societies.'

Mr. Rath contends that the power is available to be exercised when in normal course an inspection of the books of a society is undertaken under Section 64 of the Act and the result of inspection shows that action under Section 14 (3) is necessary. An inspection under Section 64 cannot be directed to justify a preconceived conclusion that amalgamation must be ordered. Mr. Rath argues that the reading of the order of amalgamation -- Annexure A -- clearly gives the impression that the policy was first decided and to implement it an inspection was ordered. This was like. Mr. Rath contends, putting the cart before the horse. The counter affidavit of the Assistant Registrar is somewhat different from what was stated in the order of amalgamation in regard to making of the inspection. As we propose to quash the order of amalgamation as it has been made in breach of principles of natural justice, it is not necessary to examine this contention of Mr. Rath at any length, but there is force in his contention that the inspection provided for under Section 64 is one of the conditions precedent to taking of action under Section 14 (3) of the Act The scheme of the statute is not that a conclusion for amalgamation must be first reached and thereafter to justify it an inspection would be ordered.

11. Contention No. 3.-- The third contention is based upon the provision in Sub-section (3) of Section 14 that the order is to be made 'subject to the prescribed conditions'. The learned Additional Government Advocate contends that the conditions are laid down in Sub-section (4) itself where provision is made to the following effect:--

'The resolution of a society under Sub-section (1) or Sub-section (2) or the order made under Sub-section (3) shall contain all particulars of the transfer, division or amalgamation as the case may be.'

We are not prepared to accept this contention because, the word 'prescribed' has been defined in Section 2 (h) of the Act to mean 'prescribed by rules made under this Act'. Besides, what is provided in Sub-section (4) cannot be taken to be the conditions contemplated to be prescribed in making an order of amalgamation. Admittedly rules have not been made prescribing the conditions. We need not deal with the matter further. It is for Government to consider whether an order of amalgamation can be made without the conditions being prescribed as laid down in Sub-section (3) of Section 14 of the Act.

12. We would accordingly quash the order of amalgamation made on 26-12-1969 by the Assistant Registrar of Co-operative Societies. Balasore Circle, directing amalgamation of the petitioner society with the opposite party No. 2 by issuing a writ of certiorari. The petitioners shall have their costs. Hearing fee is assessed at rupees one hundred.

B.K. Ray, J.

13. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //