REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos. 292-294 OF 2005

Naresh Shankar Srivastava          ..…Appellant

Versus

State of U.P. & Ors.                                              .….Respondents

    With

CIVIL APPEAL No. 1722 OF 2005

JUDGMENT

Dr. Mukundakam Sharma, J.

1. The present appeals arise out of judgment and order dated 10.11.2004  

passed by the High Court of Allahabad, Lucknow Bench, Lucknow in  

Writ Petition No. 5171 of 2002 along with 13 other similar connected  

writ petitions. Since the common questions are involved in these appeals,  

the same are being disposed of together with a common judgment.

2. The important legal issues which have arisen for consideration in these  

appeals are whether after the bifurcation/re-organisation of the State of  

Uttar  Pradesh and creation of  the State  of  Uttaranchal  under the U.P.  

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State  Re-organization  Act,  2000  (hereinafter  referred  to  as   the  ‘Re-

organisation Act’) which was promulgated on 9.11.2000, the affairs of  

various cooperative societies carrying out their business in both the States  

at  the  time  of  re-organisation  shall  be  governed  by  the  U.P.  State  

Cooperative Societies Act, 1965 (hereinafter referred to as the ‘UP Act’)  

or  by  the  Multi  State  Cooperative  Societies  Act,  1984  (hereinafter  

referred to as  the ‘Multi-State Act’) and whether these societies would  

automatically become Multi State Cooperative Societies with effect from  

09.11.2000 i.e. the date of re-organisation of the State.   This issue has  

emanated because of an order dated 14.02.2001 passed by the Registrar  

of  Cooperative  Societies  to  the  effect  that  the  U.P.  Cooperative  

Processing and Cold Storages Federation Limited, Lucknow (in short the  

‘PACSFED’) is deemed to be a Multi State Cooperative Society under  

Section 7 of the Multi-State Act.  The said order was the subject matter  

of the writ petitions out of which the present      appeals arise.  

3. Brief facts of the case for the purpose of disposal of present bunch of  

appeals are required to be stated first.  The PACSFED was registered on  

25.11.1974 as apex cooperative society under the provisions of the UP  

Act  and  the  Rules  framed  thereunder.  The  area  of  operation  of  the  

PACSFED was the whole state of Uttar Pradesh. In the year 2000, the  

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Re-organisation Act was passed which came into force on 09.11.2000.  

By  the  operation  of  the  said  Act,  the  State  of  Uttar  Pradesh  was  

bifurcated and a new State of Uttaranchal (now Uttarakhand) was created  

by carving out certain territories from the State of Uttar Pradesh.

4. Due  to  the  aforesaid  re-organisation,  the  PACSFED is  taken  to  have  

become automatically a multi-state co-operative society on 09.11.2000  

i.e. the date of re-organisation by virtue of operation of Section 95 of the  

Multi-State Act. On 14.02.2001, the Central Registrar of the Multi State  

Co-operative  Societies  issued  a  Registration  Certificate  granting  

registration of the PACSFED under the Multi-State Act. Aggrieved by  

this decision, the Registrar of Co-operative Societies,  Lucknow filed a  

revision on 18.04.2001 before the Central Government under Section 92  

of the Multi-State Act challenging the issuance of aforesaid Registration  

Certificate. However, on 06.02.2002 the said revision was dismissed by  

the Central Government.

5. The State  of  Uttar  Pradesh  and  the  Registrar,  Co-operative  Societies,  

Uttar Pradesh on 22.05.2002 filed two Writ Petitions bearing nos. 602  

and  1710  of  2002  in  the  High  Court  of  Allahabad  challenging  the  

aforesaid order dated 06.02.2002 of the Central Government. The High  

Court  by impugned judgment and order  dated 10.11.2004 allowed the  

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said  writ  petition  and  quashed  the  Certificate  of  Registration  dated  

14.02.2001  and  also  the  order  of  the  Central  Government  dated  

06.02.2002.

6. Feeling  aggrieved  by  the  aforesaid  decision  of  the  High  Court,  the  

present special leave petitions have been preferred. There were in total  

six appeals against the said decision of the High Court. This Court vide  

its  order  dated  17.01.2008  dismissed  the  appeal  bearing  C.A.  No.  

291/2005 as withdrawn. Another appeal bearing C.A. No. 290/2005 was  

dismissed for non-prosecution by this Court vide order dated 05.02.2009.  

Therefore, only four appeals bearing Civil Appeal Nos. 292/293/294 of  

2005 and 1722 of 2005 are before us for final disposal.

7. Learned  counsel  for  the  appellant  submitted  that  on  account  of  the  

bifurcation of the State of Uttar Pradesh into two States i.e. State of Uttar  

Pradesh  and  the  State  of  Uttaranchal,  the  area  of  operation  of  the  

PACSFED extended to both the States on and from the date when the  

State of Uttaranchal came into existence i. e. from 09.11.2000 and thus  

the objects  of  PACSFED did not  remain confined to one State  and it  

extended  to  both  the  States.  By  reason  of  extension  of  the  area  of  

operation, the objects of PACSFED also automatically extended to the  

aforesaid  two  States,  as  a  consequence  whereof  the  PACSFED  

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automatically  become  a  deemed  multi-state  cooperative  society,  

registered under the Multi-State Act.  It is also submitted by him that the  

High  Court  recorded  an  illegal  finding  that  the  PACSFED  as  apex  

cooperative  societies  operating  in  the  State  of  U.P.,  shall  continue  to  

operate in two States and these societies should have been governed by  

the U P State Act, unless and until a joint decision was taken by the two  

States and the byelaws of these societies were amended accordingly, and,  

since  the  byelaws  of  the  societies  were  not  amended  and  proper  

resolutions were not passed, it  cannot be said that the Multi-State Act  

would have started to occupy the field.   

8. Another contention placed before us by the appellant was that the High  

Court erred in not considering the effect of Section 95 of the Multi-State  

Act  which  takes  complete  care  of  the  situation  arising  out  of  

reorganization  of  States  on certain  class  of  cooperative  societies.   He  

submitted that Section 67 of the Re-organisation Act does not at all apply  

in the present case as Section 95 of the Multi-State Act already exists in  

the form of a central law which is sufficient to take care of cooperative  

societies which would become Multi-State Cooperative societies from the  

day of reorganisation of State.  He further submitted that the cooperative  

societies are not created under any Central Act or State Act but they are  

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created by the members in accordance with the provisions of the Central  

or  State  Cooperative  Societies  Acts,  therefore,  Section  67  of  the  Re-

organisation  Act  shall  have  no  application.   He  next  submitted  that  

Section 86 of the Reorganisation Act did not apply in the present case as  

Section 86 extends the application of State laws of U.P. to the territories  

of newly carved out State of Uttaranchal for a transitory period till the  

State of Uttaranchal makes its own local laws and under Section 87 the  

appropriate  Government  may make such laws within  a  period of  two  

years.

9. Learned counsel for the respondents contended that the Multi-State Act is  

not applicable in the present case as the affairs of societies formed before  

the Reorganisation of the Uttar Pradesh were still to be governed by the  

U.P. State Act. It is the case of respondents that the PACSFED including  

the constitution of its Committee of Management was to be governed by  

the  relevant  provisions  contained  in  U.P.  Act  and  the  Rules  and  

Regulations of 1968 made thereunder.  He submitted that the High Court  

rightly  held  that  the  specific  provision  would  exclude  the  general  

provision by observing that all the provisions of the Multi-State Act shall  

stand ousted because of the non-obstante clause contained in Section 93  

of the Re-organisation Act and the provisions of Section 93 of the Re-

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organisation  Act  have  an  overriding  effect  on  any  law  containing  

inconsistent provisions.  He argued that Section 67 of the Re-organisation  

Act has taken care of exigencies, events pursuant to carving out of the  

new States from the parent State of Uttar Pradesh.  He submitted that the  

bye-laws of PACSFED clearly mentioned that its area of operation “shall  

be  whole  Uttar  Pradesh”.  No  particular  district  or  area  has  been  

mentioned,  and that  under the objective and bye-laws,  PACSFED can  

operate only in the area of State of Uttar Pradesh, whatever it may be for  

the time being. Before the constitution of the State of Uttaranchal (now  

Uttarakhand)  by  the  Re-organisation  Act,  the  area  falling  under  

Uttarakhand was within the State of Uttar Pradesh and on re-constitution  

some area was taken away and the area of Uttar Pradesh stood reduced.  

He  stated  that  according  to  the  bye-laws,  the  area  in  operation  of  

PACSFED would immediately and automatically get confined to the new  

territory of Uttar Pradesh and it would not permit any operation in the  

territory                      of Uttarakhand.

10. After  referring  to  various  provisions  of  the  Re-organisation  Act,  the  

learned counsel for the respondents pointed out that the laws which were  

in force at the time of re-organisation would continued to operate and  

Part II of the Act shall not be deemed to have affected any change in the  

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territories to which existing laws of Uttar Pradesh were applicable until  

otherwise provided by a competent legislature.  He further pointed out  

that so far as the U P State Act was concerned, the territorial change in  

Part II of the Re-organization Act would become effective only on and  

from 21.5.2003. Before this date, Part II of the Act was not having any  

impact on the U P State  Act  and PACSFED could not  become Multi  

State  Cooperative  Society.   After  21.5.2003,  14  member  societies  of  

PACSFED in Uttaranchal would automatically become registered under  

the Uttaranchal Cooperative Societies Act, 2003 (hereinafter referred to  

as ‘Uttaranchal Act’) by virtue of Section 129 of the Uttaranchal Act.  

Hence, even after 21.5.2003, the PACSFED did not become a Multi State  

Cooperative  Society.   He  submitted  that  neither  the  validity  of  the  

Uttaranchal Act nor the fact of deemed registration of these 14 societies  

under the Uttaranchal Act has                been challenged.

11. After referring to Section 67 of UP State Act,  learned counsel further  

submitted  that  where  a  body  corporate  constituted  under  a  State  Act  

becomes an inter State body corporate then the said body corporate shall  

continue to function and operate in those areas in respect of which it was  

functioning  and  operating  immediately  before  that  day,  subject  to  

directions of Central Government and until other provision is made by  

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law.  In the instant case, after the Re-organisation Act has been passed no  

further directions and law were made by State of Uttaranchal, therefore,  

the Multi-State Act would have no application to PACSFED.

12. In view of the aforesaid submissions advanced by the respective parties,  

it would be desirable to deal with and refer to the various provisions of  

different statutes relevant and applicable to the matter at hand.    

13.Section 7 of Multi-State Act which provides for the registration of any  

Multi State Co-operative Society reads as follows:

“7. Registration - (1) If the Central Registrar is satisfied –

(a) that the application complies with the provisions of  this Act and the rules;

(b)  that  the  proposed  multi-State  cooperative  society  satisfies the basic criterion  that  its  objects  are  to  serve  the  interests of members in more than one State;

(c) that there is no other multi-State cooperative society  having similar area of operation and identical objects;

(d)  that  the  proposed bye-laws  are  not  contrary  to  the  provisions of this Act and the rules; and  

(e) that the proposed multi-State cooperative society has  reasonable prospects of becoming a viable unit, he may register  the multi-State cooperative society and its bye-laws.

(2) Where the Central Registrar refuses to register a multi-State  cooperative society, he shall communicate the order of refusal  

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together  with  the  reasons  therefore,  to  such  number  of  the  applicants and in such manner as may be prescribed.

(3) The application for registration shall be disposed of by the  Central Registrar within a period of six months from the date of  receipt thereof by him:

Provided that if the Central Registrar is unable to dispose  of the application within the period aforesaid, he shall make a  report to the Central Government stating therein the reasons for  his inability to do so, and the Central Government may allow  him such further period or periods as is considered necessary to  dispose of such application.”

Section 18 Multi-State  Act provides for conversion of  co-operative  

society into Multi-State Cooperative Society which is quoted below:  

“18.  Conversion  of  cooperative  society  into  multi-State  Cooperative Society-

(1) A cooperative society may, by an amendment of its bye- laws, extend its jurisdiction and convert itself into a multi-State  cooperative society:

Provided  that  no  such  amendment  of  bye-laws  of  a  cooperative society shall be valid unless it has been registered  by the Central Registrar.

(2)  (a) Every proposal for such amendment shall be forwarded  to the Central Registrar.

     (b)  If the Central Registrar, after consulting the Registrars  of Cooperative Societies of     the  States  concerned,  has  satisfied himself that such amendment fulfils the requirement of  sub-section  (2)  of  section 9,  he may register  the amendment  within a period of six months from the date of receipt thereof  by him:

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Provided that if the Central Registrar is unable to register  the  amendment  within  the  period  aforesaid,  he  shall  make  a  report to the Central Government stating therein the reasons for  his inability to do so, and the Central Government may allow  him such further period or periods as is considered necessary to  register the amendment.

(3)  The  Central  Registrar  shall  forward  to  the  cooperative  society  a  copy  of  the  registered  amendment  together  with  a  certificate  signed  by  him  and  such  certificate  shall  be  conclusive evidence that the amendment has been registered.

(4)  Where  the  Central  Registrar  refuses  to  register  an  amendment of the bye-laws of a cooperative society, he shall  communicate  the  order  of  refusal  together  with  the  reasons  therefore to the society in the manner prescribed within seven  days from the date of refusal.

(5)  (a) Once the amendment of bye-laws has been registered by  the Central Registrar, the cooperative society shall, as from the  date  of  registration  of  amendment,  become  a  multi-State  cooperative society.

    (b) The Central Registrar shall forward to the cooperative  society a certificate signed by him to the effect that such society  has been registered as a multi- State cooperative society under  this Act and also forward a copy of the same to the Registrar of  Cooperative Societies of the State concerned.

    (c)  The Registrar of Cooperative Societies referred to in  clause  (b)  shall  thereupon  make  an  order  directing  that  the  society  had,  as  from the  date  of  registration  by  the  Central  Registrar,  ceased  to  be  a  society  under  the  law  relating  to  co-operative societies in force in that State.”

Section 95 of the Multi-State Act contemplates about the future status  

of the societies functioning immediately before the re-organisation of states:  

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“95.  Cooperative  societies  functioning  immediately  before  re-organisation  of  States  -  (1)  Where  by  virtue  of  the  provisions of Part I of the States Reorganisation Act, 1956, or  any other  enactment  relating  to  reorganisation  of  States,  any  cooperative society which immediately before the day on which  the reorganisation takes place, had its objects confined to one  State  becomes,  as  from  that  day,  a  multi-State  cooperative  society,  it  shall  be  deemed  to  be  a  multi-State  cooperative   society  registered under the corresponding provisions of this   Act and the bye-laws of such society shall, in so far as they are   not inconsistent with the provisions of this Act, continue to be   in force until altered or rescinded.

(2)  If  it  appears  to  the  Central  Registrar  or  any  officer  authorised in this behalf by the Central Government (hereafter  in this  section referred to as  the authorised officer)  that  it  is  necessary or expedient to reconstitute or reorganize any society  referred  to  in  sub-section(1)  the  Central  Registrar  or  the  authorised officer, as the case may be, may, with the previous  approval of the Central Government, place before a meeting of  the general body of that society, held in such manner as may be  prescribed,  a  scheme for  the  reconstitution  or  reorganisation,  including proposals regarding –

(a) the formation of new multi-State cooperative societies  and the transfer thereto in whole or in part, of the assets and  liabilities of that society, or  

(b)  the  transfer,  in  whole  or  in  part,  of  the  assets  and  liabilities of that society to any other  multi-State  cooperative  society in existence immediately before the date of that meeting  of the general body (hereafter in this section referred to as the  existing multi-State cooperative society).

(3)  If  the  scheme is  sanctioned by  a  resolution  passed  by  a  majority  of  the  members  present  at  the  said  meeting,  either  without  modifications  or  with  modifications  to  which  the  Central  Registrar  or  the  authorised  officer  agrees,  he  shall  

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certify  the  scheme  and  upon  such  certification,  the  scheme  shall, notwithstanding anything to the contrary contained in any  law,  regulation  or  bye-laws  for  the  time  being  in  force,  be  binding on all the societies affected by the scheme, as well as  the share-holders and creditors of all such societies.

(4) If the scheme is not sanctioned under sub-section (3), the  Central Registrar or the authorised officer may refer the scheme  to  such  Judge  of  the  appropriate  High  Court,  as  may  be  nominated in this behalf by the Chief Justice thereof, and the  decision of that Judge in regard to the scheme shall be final and  shall be binding on all the societies affected by the scheme as  well as the shareholders and creditors of all such societies.

Explanation  -  In  this  sub-section,  "appropriate  High  Court" means the High Court within the local limits of whose  jurisdiction  the  principal  place  of  business  of  the  multi-state  cooperative society is situated.

(5) Notwithstanding anything contained in this section, where a  scheme under sub-section (2) includes any proposal regarding  the  transfer  of  the  assets  and  liabilities  of  any  multi-State  cooperative society referred to in clause (b) thereof, the scheme  shall not be binding on such multi-State cooperative society or  the  shareholders  and  creditors  thereof,  unless  the  proposal  regarding  such  transfer  is  accepted  by  that  multi-State  cooperative society by a resolution passed by a majority of the  members present at a meeting of its general body.”

  (emphasis added)

14. Sections  67 of  the  Re-organisation  Act  deals  with  the  continuance  of  

existing body corporate when it provides :

“67. General provision as to statutory Corporations.-  

(1)  Save  as  otherwise  expressly  provided  by  the  foregoing  provisions of this Part,  where any body corporate constituted  under a Central Act, State Act or Provincial Act for the existing  

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State of Uttar Pradesh or any part thereof has, by virtue of the  provisions  of  Part  II,  become  an  inter-State  body  corporate,  then, the body corporate shall, on and from the appointed day,  continue to function and operate in those areas  in respect  of  which it was functioning and operating immediately before that  day,  subject  to such directions  as may from time to time be  issued  by  the  Central  Government,  until  other  provision  is   made by law in respect of the said body corporate.  

(2)  Any  directions  issued  by  the  Central  Government  under  sub-section  (1)  in  respect  of  any  such  body  corporate  shall  include  a  direction  that  any  law  by  which  the  said  body  corporate  is  governed  shall,  in  its  application  to  that  body  corporate,  have  effect  subject  to  such  exceptions  and  modifications as may be specified in the direction.”      

            (emphasis added)

Section  86  of  the  Re-organisation  Act  provides  for  the  territorial  

extent of laws:

“86. Territorial extent of laws.-The provisions of Part II shall  not be deemed to have affected any change in the territories to  which the Uttar Pradesh Imposition of Ceiling of Land Holding  Act, 1961 and any other law in force immediately before the  appointed day, extends or applies, and territorial references in  any such law to the State of Uttar Pradesh shall, until otherwise  provided  by  a  competent  Legislature  or  other  competent  authority  be  construed  as  meaning  the  territories  within  the  existing State of Uttar Pradesh before the appointed day.

Section 93 of the Re-organisation Act is the non-obstante clause:

93. Effect of provisions of the Act inconsistent with other  laws.-The  provisions  of  this  Act  shall  have  effect  notwithstanding  anything  inconsistent  therewith  contained  in  any other law.”

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15. A perusal of the above-mentioned provisions makes it crystal clear that  

Section 95 of the Multi-State Act will be squarely applicable to the case  

in  hand.  This  provision  addresses  a  situation  like  the  present  one.  It  

provides that where the object of the cooperative society is confined to  

one State would become from the date of reorganization of State, a Multi  

State Cooperative Society by virtue of Part II of State Reorganisation Act  

and then it shall be deemed to be Multi State Cooperative Society and the  

bye-laws of such Society shall continue to be in force until altered.  

16. It is to be kept in mind that Section 95 of the Multi-State Act has been  

incorporated to meet a particular situation. The said Section provides that  

it would be operative as a consequence of reorganisation of States and  

particularly when any area or portion of area of the Society is bifurcated  

or divided and then fell in the jurisdiction of two State administrations.  

The idea is to obviate the administrative stalemate arising out of creation  

of a new State and new administration.  This section is independent of all  

other sections of the Act. The Multi-purpose Co-operative Society has  

been defined as a Society registered or deemed to be registered under the  

Act and includes a National Co-operative Society. Sections 2, 4, 5, 6, 7  

and  8  deal  with  how  a  Multi-State  Co-operative  Society  could  be  

registered under the Central Act. In other words, by voluntary acts of the  

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concerned persons a Multi-State Co-operative Society could be formed if  

it  satisfies  the  conditions  laid  down in  the  aforesaid  sections.  As  the  

definition of Multi-State Co-operative Societies indicates, there are two  

situations envisaged as to how a Multi-State Cooperative Society comes  

into being. One is registered after observing formalities of Sections 4, 5,  

6, 7 and 8 and the other is deemed Multi-State Co-operative Societies as  

envisaged under section 95 of the Central Act.  

17. As  noted  earlier,  Section  95  of  the  Multi-State  Act  takes  care  of  a  

situation arising out of re-organisation of States of certain class of co-

operative  societies.  Indeed,  the  very  rationale  or  legal  justification  of  

having such a provision in the statute book is to provide continuity to  

those co-operative societies, the objects of which were confined to one  

State  immediately  before  the  day  on  which  the  re-organisation  takes  

place but as from the day of the re-organisation of the State its object  

extends  to  more  than  one  State,  by  declaring  that  such  co-operative  

societies  shall  be  deemed  to  be  a  multi  state  co-operative  societies,  

registered under the corresponding provisions of the Multi-State Act. The  

very purpose of having this kind of provision is to stop the applicability  

of a State Co-operative Societies Act over more than one State as a State  

Act  cannot  have  extra-territorial  operation  and  the  multi-state  co-

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operative  societies  cannot  be  regulated  by  a  State  Co-operative  

Societies Act.

18. The learned counsel for the respondents vehemently argued that in view  

of Section 67 of the Re-organisation Act, Section 95 of the Multi-State  

Act  has  no  application.  However,  we  do  not  find  any  merit  in  such  

contention as Section 67 of the Re-organisation Act does not at all apply  

to the facts of the present case.   Section 95 of the Multi-State Act already  

exists  in  the  form  of  a  central  law  which  takes  care  of  and  makes  

provisions for such co-operative societies which as and from the day of  

the re-organisation of a particular State become Multi State Co-operative  

societies.  

19.  The word used in Section 67 of the Re-organisation Act is “subject to  

such  directions  as  may  from  time  to  time  be  issued  by  the  Central  

Government, until other provision is made by law in respect of the said  

body corporate” which is of vital significance. It gives an unmistakable  

impression that the need for a direction of the Central Government would  

arise  only  in  respect  of  the  applicability  of  a  State  law  to  the  body  

corporate which by virtue of the re-organisation of State become inter-

state body corporate.  This is quite evident from a reading of sub-section  

(2) of Section 67 of the Re-organisation Act.  But when a central Act (in  

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the present case the Multi-State Act) already contains a provision in the  

form of Section 95 which clearly embraces such co-operative societies  

within its fold which as and from the date of re-organisation of the State  

become multi-state cooperative societies, there is no legal requirement of  

issuing any direction by the Central Government for making the Multi-

State Act applicable.

20. So far as the contention regarding the applicability of Section 86 of the  

Re-organisation  Act  is  concerned,  it  would  not  be  applicable  in  the  

present case as Section 86 of the Re-organisation Act cannot affect the  

Multi-State Act which is a central legislation. There is no denying of the  

fact  that  a  central  law viz.  Section  95  of  the  Multi-State  Act  already  

exists in the statute book to govern and regulate the functioning of the  

cooperative societies which as and from the date of reorganisation of the  

State of U.P. become multi-State cooperative societies. Similarly, Section  

93  of  the  Reorganisation  Act  would  also  have  non-application  in  the  

present case since the aforesaid provision cannot override Section 95 of  

the Multi State Act, which is a central Act.

21. In the case of Anand Mal v. State of Rajasthan, AIR 1962 Raj. 218, the  

High  Court  of  Rajasthan,  while  interpreting  Section  119  of  the  State  

Organisation Act, 1956 which is in pari materia to Section 86 of the U.P.  

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Act held that Section 119 of the State Organisation Act would have no  

application to the Central Acts.  

22. Similarly, in the case of Mapusa Urban Cooperative Bank Ltd. v. G.S.  

Patil, MANU/MH/0342/1998, the Bombay High Court held that Section  

95 of the Multi-State Act is an independent provision which resolves the  

situation arising out of operation of law and avoids chaos and confusion  

arising out of the reorganisation of a State.  

23. Besides, we cannot lose sight of the fact that Section 18 of the Multi-

State Act lays down a procedure for conversion of a State cooperative  

society  into  a  multi-State  cooperative  society  whereas  Section  95  of  

Multi-State Act contained in Chapter XII deals with a specific situation  

in which certain cooperative societies would become deemed multi-State  

cooperative societies automatically by operation of law.  Therefore, the  

finding  of  the  High  Court  that  until  the  procedure  laid  down  for  

converting a cooperative society into a multi-State cooperative society is  

followed,  the  cooperative  society  would  continue  to  be  a  State  

cooperative society to be governed and regulated by the provisions of  

U.P. Act, is not correct.  

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24. It has been contended by the respondents that in view of Section 129 of  

the Uttaranchal Act which came into force in 2003, 14 member societies  

of  PACSFED  in  Uttaranchal  would  automatically  become  registered  

under  the  Uttaranchal  Act.   However,  the  said  contention  is  legally  

untenable. Once the State of U. P. was bifurcated by the Re-organisation  

Act which came into force on 09.11.2000, Section 95 automatically got  

attracted.  By  virtue  of  Section  95  of  the  Multi-State  Act,  PACSFED  

becomes  a  Multi-State  Society.  On  14.02.2001,  when  the  Central  

Registrar  of  the  Multi-State  Co-operative  Societies  issued  the  

Registration Certificate granting registration of the PACSFED under the  

Multi-State  Act,  admittedly,  the  Uttaranchal  Act  of  2003  was  not  in  

existence. Even otherwise, a State legislation viz. Uttaranchal Act which  

has been enacted subsequently cannot have an overriding effect over a  

central law viz. the Multi-State Act. The Uttaranchal Act can govern and  

regulate  the  cooperative  societies  whose  objects  extend  to  and  apply  

within the State of Uttaranchal. So, the finding of the High Court that  

with the enforcement of the Uttaranchal Cooperative Societies Act, 2003,  

with effect from 21.5.2003, the Multi-State Act shall not be applicable is  

erroneous. The byelaws of the PACSFED have not been amended so far.  

The area of operation of the PACSFED as laid down in its byelaws is still  

the same as it was on the date of the reorganisation of the State of U.P.  

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Therefore, it would be legally impermissible to say that now the area of  

operation of the PACSFED is confined to the State of U.P. alone and that  

it has ceased to be a multi-State cooperative society. As far as withdrawal  

of member-cooperative societies of the PACSFED operating in the State  

of  Uttaranchal  is  concerned,  the  deemed  conversion  of  a  cooperative  

society into a multi-State cooperative society by virtue of Section 95 of  

the Multi-State Act is an irreversible process and the membership of a  

multi-State cooperative society in a particular State at a given point of  

time is only a fortuitous circumstance on the basis of which a multi-State  

cooperative society cannot automatically revert to assume the character  

of a State cooperative society.  Further, there is no provision in the Multi-

State  Act  which  permits  such  automatic  conversion  of  a  multi-State  

cooperative society into a State cooperative society by operation of law.  

The  only  relevant  consideration  for  continuance  of  a  multi-State  

cooperative society as a multi-State cooperative society is that it should  

have its objects not confined to one State and since the objects of the  

PACSFED  still  remain  the  same  as  it  was  immediately  before  the  

reorganization of the State of Uttar Pradesh, it shall be deemed to be a  

Multi-State  co-operative  society  by  virtue  of  deeming  provision  of  

Section 95 of the Multi-State Act.   

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25. In view of the foregoing discussions the PACSFED is a deemed multi  

State cooperative society registered under the corresponding provision of  

the Multi-State Act, 1984 as and from the date of the reorganisation of  

the State  of Uttar Pradesh and,  therefore,  the impugned judgment and  

order dated 10.11.2004 is liable to be set aside, which we hereby do.   

26.Appeals are accordingly allowed.

………………………..J.                      [S.B. Sinha]

  ...………………………J.            [Dr. Mukundakam Sharma]

New Delhi May 6, 2009

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