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PETITIONER: VEERPAL SINGH

       Vs.

RESPONDENT: DEPUTY REGISTRAR, CO-OPERATIVE SOCIETIES,MEERUT & ORS.

DATE OF JUDGMENT23/01/1973

BENCH: RAY, A.N. BENCH: RAY, A.N. SIKRI, S.M. (CJ) PALEKAR, D.G. BEG, M. HAMEEDULLAH DWIVEDI, S.N.

CITATION:  1973 AIR 1052            1973 SCR  (3) 430  1973 SCC  (1) 593

ACT: Uttar  Pradesh Co-operative Societies Act, 1965, Ss. 38  and 128-Deputy  Registrar passing orders for removal of  members of  Board  of  Directors  of  Dist.   Cooperative  Societies Federation  Bulandshahr  on  the  ground  that  the   Unions represented  by them were in default within the  meaning  of bye-law  No.  1  (Ta)  of  the  Federation-Deputy  Registrar further  ordering  annulment  of  resolutions  Committee  of management  on the ground that the proceedings were  not  in compliance with bye-laws No. 10(cha) and No. 11-Legality  of Deputy Registrar’s orders.

HEADNOTE: The   petitioner  was  a  delegate  from  the   Co-operative Federation   of   Unchagaon  to  the   Bulandshahr   Distric Cooperative Federation.  In the present writ petition  under Art. 32 of the Constitution he challenged the orders of  the Deputy Registrar Cooperative Societies (i) removing him  and two  other  delegates from the membership ’of the  Board  of Directors  of the Federation in exercise of powers under  s. 38 of the U.P. Cooperatives Societies Act 1965 on the ground that  their Unions were defaulters in respect of their  dues to  the Federation thus attracting bye-law No. 1(Ta) of  the Federation;  (ii) annulling in exercise of powers  under  s. 128  of  the  Act.   The resolutions  of  the  Committee  of Management dated 15th March 1972 in favour of the petitioner and the other two other delegates on the ground  that  the minutes of the meeting in which the resolutions were  passed were not recorded by the Secretary and the proceedings  were thus in violation of bye-laws No. 10 (cha) and No. 11. Allowing the petition, HELD:(1) The Deputy Registrar could not rely on bye-law NO.  1 (Ta) to justify the removal of the petitioner and the two  other  delegates from the membership of  the  Board  of Directors.   The Federation was not a credit  society.   The Federation  did not have any loan transaction with  the  co- operative unions.  The co-operative unions did not have  any loan transactions with the petitioner.  The dues of the  co- operative unions were in respect of supplies of goods by the

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Federation   to   the  Co-operative  unions.    These   were commercial  transactions.   These  were  commercial   debts. Price  of goods supplied if outstanding does not  constitute loan within the meaning of the bye-law.  The impugned  order was entirely on an illegal basis and wrong interpretation of the bye-law.  The order was bad. [435F-H; 436A-B] (2)The  meeting of the Federation on 15th March, 1971  was properly  conducted."  The  Chairman  rightly  appointed  an elected  Director  to record the minutes of the  meeting  in view  of the willful absence of the Secretary.  Section  188 of  the  Act also protects the proceedings of  the  meeting. The  Deputy  Registrar  acted  illegally  in  annulling  the resolutions  of  the  Federation held on  15th  March  1971. [436G-H] 431

JUDGMENT: ORIGINAL JURISDICTION : Writ Petition No. 214 of 1972. (Petition under Article 32 of the Constitution of India  for the enforcement of fundamental rights). A.P. Singh Chauhan and N. N. Sharma, for the, petitioner. A. K. Sen and O. P. Rana, for the respondent. The Judgment of the Court was delivered by RAY,  J. The petitioner in this writ petition under  Article 32  of the Constitution asks for quashing of orders  of  the respondent Deputy Registrar, Co-operative Societies, Meerut dated 2 May, 1972. By  the said order dated 2 May, 1972 the  respondent  Deputy Registrar removed Rajendra Singh, Yograj Singh and the peti- tioner  Veerpal  Singh from the Board of  Directors  of  the District Co-operative Federation, Bulandshahr referred to as the   Bulandshahr  Federation  and  declared  them   to   be disqualified   to  the  office  of  the  Directors  of   the Bulandshahr Federation for a period of three years from  the date of the order. Rajendra  Singh,  Yograj Singh and  the  petitioner  Veerpal Singh were delegates from the Co-operative Unions of Jarcha, Raura   and  Unchagaon  respectively  to   the   Bulandshahr Federation. The circumstances under which the aforesaid order came to be passed  are these according to the Deputy Registrar.   There was  an  inspection in the month of February,  1971  by  the Deputy,  Registrar.. Co-operative Societies,  Uttar  Pradesh about  the constitution, working and financial condition  of the Bulandshahr Federation.  The Deputy Registrar found that the  three,  constituent members of  the  Federation,  viz., Sehkari  Sangh  Raura,  sehkari Sangh  Jarcha  and  the  Co- operative  Union  Inchagaon defaulters in respect  of  their dues  to the Buldandshar Federation Therefore the  delegates from  these. three constituent member at Raura,  Jarcha  and Unchagaon   were not qualified to be elected as  members  of the  Board of Directors of the Bulandshahr Federation.   The annual  general  meeting of the  Bulandshahr  Federation  in spite  of  such disqualification of  those  three  delegates elected  them  as Directors of the  Bulandshahr  Federation. The  Federation in accordance with their resolution dated  3 April  1971.  stated that the three constituent  members  at Raura, Jarcha and Unchagaon were not defaulters.  The Deputy Registrar  stated  that if a member  union was  a  defaulter such member-union was disqualified and the  disqualification attached  to  the  delegates of such a  union.   The  Deputy Registrar gave the Federation notice under section 38(2)  of the  Uttar Pradesh Co-operative Societies Act 1965  referred

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to  as  the  Act  to comply with  the  requirements  in  the inspection note. 432 The   Federation  did  not  comply  with  the   requirements indicated in the report of the inspection note.  The  Deputy Registrar therefore passed the said order dated 2 May, 1972. It is necessary to refer to certain other events which  took place  prior  to  the  passing  of  the  said  order.    The Bulandshahr Federation held its annual general meeting on 20 March, 1970.  At the annual general meeting the committee of management  was elected.  The petitioner was elected one  of the  Directors constituting the committee of  management  of the Bulandshahr Federation.  In the month of April 1970  the petitioner  was  unanimously  elected  as  Chairman  of  the Bulandshahr Federation. After  the  Deputy Registrar Co-operative Societies  sent  a copy  of  the inspection report dated 10 February  1971  the committee,  of  management  of  the  Bulandshahr  Federation considered  the  inspection report at a meeting  held  on  3 April  1971.  The Petitioner Veerpal Singh,  Rajendra  Singh and Yograj Singh did not participate at the meeting inasmuch as   the   inspection   note  related   to   their   alleged disqualification.   The  committee  of  management  of   the Bulandshahr Federation recorded that Shri L. N. Batra,  Sub- Divisional  Magistrate, Khurja as a Scrutiny Officer in  his judgment   dated  5  March  1970  in  connection  with   the nomination  papers  of Yograj Singh, Rajendra  Singh  stated that  they were not defaulters and they were  competent  for membership  of  the  Board of Directors.  The  committee  of management  of the Bulandshahr Federation  further  resolved that  none  of  the three persons  namely,  the  petitioner, Yograj  Singh  and Rajendra Singh had personally  taken  any loan from the Bulandshahr Federation nor had the constituent members viz., the Unions at Jarcha, Raura and Unchagaon ever taken  any  loan  from  the  Bulandshahr  Federation.    The Committee  of Management therefore unanimously decided  that the  petitioner,  Yograj Singh and Rajendra Singh  were  not disqualified to be members of the committee of management of the  Bulandshahr  Federation, The  committee  of  management appointed  a  committee  consisting  of  Yashpal  Singh  and Prahlad  Swarup  for making enquiry in  respect  of  amounts outstanding   against  the  Unions  at  Jarcha,  Raura   and Unchagaon as mentioned in the inspection note. The petitioner further alleges that on 10115 July, 1971  the Deputy  Registrar, Co-operative Societies in collusion  with the  out going Deputy Registrar obtained an  order  removing the  petitioner  under  section  38  of  the  Act  from  the directorship  of the Federation and also  disqualifying  him for  a period of three years from holding any  office  under the  Federation.   The circumstances under which  the  order dated  10115  July  1971 was passed were  that  the  primary society  at  Unchagaon  from  which  the  petitioner  was  a delegate  to the Bulandshahr Federation was in  arrears  and the 433 primary  society at Unchagaon was asked to comply  with  the requirements  of  the  Act  and  remove  the  arrears.   The Bulandshahr  Federation was also asked to secure  compliance by  the  primary  society with the provisions  of  the  Act. Neither  the Bulandshahr Federation nor the primary  society at Unchagaon wiped out the arrears.  Therefore, according to the Deputy Registrar, the petitioner was disqualified to  be a delegate from the, primary society at Unchagaon. Simultaneously  with the removal of the petitioner from  the committee  of management of the Bulandshahr Federation,  the

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Deputy Registrar passed similar orders for removal of Yograj from the Bulandshahr Federation.  Rajendra Singh and  Yograj Singh were delegates from the Co-operative Unions at  Jarcha and Raura. Yograj  Singh thereafter made ail application under  Article 226 of the Constitution before the Allahabad High Court  and impeached the order dated 10115 July, 1971 removing him from the. committee of management of the Bulandshahr  Federation. The  High  Court  at  Allahabad by  its  judgment  dated  21 February,  1972 quashed the order dated 10115 July, 1971  by which the Deputy Registrar had removed Yograj Singh from the committee  of  management.   The High  Court  held  that  no individual notice had been given to Yograj Singh and further that  the inspection note was not a notice, to  the  Society within the meaning of section 38 (1) of the Act. In view of the decision of the Allahabad High Court the com- mittee   of   management  of  the   Bulandshahr   Federation reinstated  Yograj Singh, Rajendra Singh and the  petitioner on 15 March, 1972. On 20 March, 1972 the Deputy Registrar Cooperative Societies issued  a notice to the Federation under section 128 of  the Act  to  annul  the resolution of the  Federation  dated  15 March,  1972  reinstating the petitioner, Yograj  Singh  and Rajendra Singh.  The Deputy Registrar on the same day issued another  notice to the Bulandshahr Federation under  section 38(1) of the Act to show cause as to why action for  removal of the petitioner and Yograj Singh and Rajendra Singh on the basis  of the delinquency indicated in the  inspection  note dated 10 February, 1971 should not be taken. The petitioner on 24 March, 1972 and again on 29 April, 1972 sent two communications to the Deputy Registrar, Cooperative Societies.   These two communications were in answer to  the notice  dated  20 March, 1972 to show cause as  to  why  the resolution  reinstating  the petitioner,  Yograj  Singh  and Rajendra  Singh  should not be annulled and also as  to  why they should not be 434 removed.  In the notice dated 20 March 1972 for annulment of the  proceedings  of  the  committee  of  management  of-the Bulandshahr Federation the Deputy Registrar alleged that the proceedings of the committee were not in accordance with the provisions  of bye-law No. 10(ch) and bye-law No. 11 of  the registered  bye  laws  of the  Federation.   Therefore,  the Deputy  Registrar gave notice under section 128 of  the  Act for  annulment  of the resolution.  The  petitioner  in  the answers dated 24 March, 1972 and 29 April, 1972 stated  that there was no violation of bye-laws.  The petitioner  further stated  that  the  Secretary  Tara  Chand  Sharma  willfully absented  himself  from  the meeting  and  was  therefore  a disobedient  Secretary who did not carry on the  work  under the  supervision  and guidance of the Chairman.   The  peti- tioner further stated that the procedure at the meeting held on 15 March, 1972 was lawful.  The meeting was conducted  by the  acting  Chairman  Shri  Ch.   Shahmal  Singh  who   was empowered under bye-law No. 10 to conduct the meeting.   The proceedings  of  the  meeting were recorded  by  an  elected Director   Shri  Prahlad  Swarup,  Advocate  who  was   duly appointed for that purpose Section 118 of the Act was relied on  by the petitioner to contend that no act of a  committee of management shall be deemed to be invalid by reason of any alleged  defect in the appointment of an officer or  on  the ground   that  such  officer  was  disqualified   for   such appointment  or election.  The petitioner alleged  that  the Bulandshahar  Federation directed the Secretary  Tara  Chand Sharma  on  10  April  1972 to summon  the  meeting  of  the

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committee  of  management of the Bulandshahr  Federation  to consider  the  pros and cons of the notice dated  20  March, 1972 issued by the Deputy Registrar.  The petitioner further alleged  that  Tara  Chand  Sharma  was  acting  under   the directions  of the Deputy Registrar, Cooperative  Societies. Therefore, the petitioner alleged that the Deputy  Registrar was  not competent and justified to annul the resolution  of the committee of management of the Bulandshahr Federation at the meeting held on 15 March, 1972 under section 128 of  the Act. With  regard to the other notice dated 20 March  1972  under section 38 of the Act to show cause as to why the petitioner and the other two delegates from Jarcha and Raura should not be removed, the petitioner alleged that under section 27  of the Act the Registrar has power to remove or expel a  person from  its  membership of the society (a) if the  person  has ceased to fulfil the ,qualifications required for membership or  is disqualified to be a member under the Act, or (b)  if the person was admitted to the membership of the society  in contravention  of the provisions of the Act or the rules  or of the bye-laws of the society. The petitioner also referred to Rule 453(1)(o) of the  Uttar Pradesh Cooperative Societies Rules 1968 referred to as  the Rules 435 which provides that no person shall be eligible to be, or to continue as, a member of the committee of management of  any cooperative society, if,-he is otherwise disqualified  under any of the provisions of the Act or the rules or of the bye- laws of the society. Bye-law  No.  1  (Ta)  of the  Bye-laws  of  the  Federation provides that no person shall be eligible to be or  continue as a member of the committee of management if he, in respect of  any  loan or loans taken by him, is in default  to  the, Federation  or  to  any  other society  or  the  society  he represents  is in default to the Federation for a period  of at least six months. The  allegations made by the Deputy Registrar were that  the Sehkari   Sanghs  of  Jarcha,  Raura  and   Unchagaon   were defaulters  to the Federation for the sums of  Rs.  4443.04, Rs.  877.43  and  Rs.  515.35  respectively  for  a   period exceeding  six months as indicated in the inspection  report dated 10 February, 1971. The first question which arises for consideration is whether the petitioner was a defaulter within the meaning of the Act or  the  bye-laws as alleged in the  impeached  order.   The Secretary  of the Federation wrote a letter dated  22  July, 1971  to the Assistant Registrar, Cooperative Societies  and stated  that the three co-operative Unions at Jarcha,  Raura and  Unchagaon  owed money to the Federation in  respect  of supplies  of  fertilisers by the Federation to  those  three Unions.   The  Secretary  of  the  Federation  also  gave  a certificate  that  none of the three cooperative  Unions  at Jarcha,  Raura  and Unchagaon ever took any  loan  from  the Federation.   The petitioner and the other-two  persons  who were delegates from the three cooperative Unions did not owe any  money  whatever  to the Cooperative Unions  or  to  the Federation. The  Federation is a District Cooperative Federation  within the meaning of rule 2(o).  That rule states that a  District Cooperative  Federation means a Central society which  inter alia  is not a credit society.  A credit society is  defined in  rule  2(h) to mean a society which has  as  its  primary object the raising of funds to be lent to its members.  Rule 453 in sub-section (1) clause (o) states that if a person is

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disqualified under the provisions of the Act or the rules or of  the bye-laws of the society he shall not be eligible  to be, or to continue as, a member of the committee of  manage- ment.  The Deputy Registrar relied on bye-law No. 1 (Ta)  of the  Federation which renders a person to be  ineligible  to to,  or  to  continue  as  a  member  of  the  committee  of management if lie is in default to the Federation or to  any other  society.  That bye-law further provides that  if  the society he represents is in default lie be ineligible. The Federation is not a credit society.  The Federation does not-have any loan transactions with the Cooperative  Unions. The 436 Cooperative  Unions did not have any loan transactions  with the  petitioner.  The dues of the Cooperative Unions are  in respect  of  supplies  of goods by  the  Federation  to  the Cooperative  Unions.   These  are  commercial  transactions. These  are  commercial debts.  Price of goods  supplied,  if outstanding,  does not constitute a loan within the  meaning of the bye-law.  The impugned order proceeded entirely on an illegal basis and wrong interpretation of the bye-law.   The order is bad. The other question which arises for consideration is whether the  Registrar  has power under section 128 of  the  Act  to annul  the  resolutions  of  the  society.   The   Registrar proceeded on the) footing that the minutes of the meeting of the  Federation  held on 15 March, 1971 were  not  correctly recorded.  The Deputy Registrar alleged that the  Federation did  not comply with the provisions of bye-law No. IO  (Cha) read with bye-law No. 1 1 of the Federation in regard to the conduct  of  the  meeting.   Bye-law  No.  1  1  deals  with recording  the  proceedings of the  meeting.   That  bye-law states that the minutes shall be recorded in the book to  be kept for the purpose and the minutes shall be signed by  the person presiding at the meeting as well as by the  Secretary of  the Federation.  Bye-law No.  IO (Cha) states  that  the Secretary  shall,  be  the Chief Executive  officer  of  the Federation  and  subject to control and supervision  of  the Chairman and the committee of management as provided in  the rules or the bye-law.  It is also stated in bye-law No. 1  0 (cha)   that  the  Secretary  shall  inter  alia  sign   and authenticate   all  documents  in  and  on  behalf  of   the Federation and is responsible for the, proper maintenance of various books and records of the Federation. The facts with regard to the meeting of the Federation  held on  15 March, 1971 are that the Secretary wilfully  absented himself at the meeting.  The Federation therefore  contended that the Secretary disobeyed the instructions.  The Chairman under  bye-law  No.  10  is  responsible  for  the  control, supervision and efficient administration of the  Federation. The  Chairman  appointed an elected  Director  Shri  Prahlad Swarup,  Advocate for the purpose of recording the  minutes. Under section 118 of the Act no act of a cooperative society or any committee of management shall be deemed to be invalid by reason of the existence of any defect in the constitution inter alia of committee or in the appointment of an  officer of a cooperative society or on the ground that such  officer was  disqualified for such appointment.  The meeting of  the Federation  on 15 March, 1971 was properly  conducted.   The Chairman rightly appointed an elected Director to record the minutes  in  view of the wilful absence  of  the  Secretary. Section 188 of the Act also protects the proceedings of  the meeting.   The Deputy Registrar acted illegally in  annuling the resolutions of the Federation held on 15 March, 1971.      437

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For  these  reasons the two orders of the  Deputy  Registrar dated 2 May, 1972 which are impeached the petitioner are set aside and quashed. Petitioner  will  be  entitled to costs to be  paid  by  the respondent & The order dt. 12th October 1972 for payment  of costs as Rs. 300 is cancel led. G.C.