Holding

Section 73A of the Maharashtra Cooperative Societies Act, 1960 is constitutionally valid and does not violate Articles 14, 19(1)(c) or 19(1)(g).

Summary

The Supreme Court examined the constitutional validity of Section 73A of the Maharashtra Cooperative Societies Act, 1960, which restricts designated officers (Chairman, President and other officers declared by the State) from holding office in more than one cooperative society and limits their tenure to ten years in aggregate. Petitioners argued that these restrictions violated Articles 14, 19(1)(c) and 19(1)(g) of the Constitution by discriminating against designated officers and granting the State arbitrary power to declare officers. The Court held that the classification of designated officers is a reasonable measure to prevent monopolisation of society affairs and to promote democratic participation, and that the State’s power is confined to officers defined under the Act, thus not arbitrary. It further observed that the provisions serve a legitimate public interest and are uniformly applied, satisfying the equality clause. Consequently, the Court dismissed all writ petitions, civil appeals and special leave petitions, upholding the statutory restrictions.

Issues considered

Whether Section 73A of the Maharashtra Cooperative Societies Act, 1960 violates Article 14 of the Constitution.
Whether the restrictions under Section 73A infringe Articles 19(1)(c) and 19(1)(g) guaranteeing freedom of association and occupation.
Whether the distinction between designated officers and other members constitutes illegal discrimination.
Whether the State Government’s power to declare additional designated officers is arbitrary and exceeds legislative competence.

Legislation cited

Constitution of Indias. Article 14, s. Article 19(1)(c), s. Article 19(1)(g)
Maharashtra Cooperative Societies Act, 1960s. 145, s. 2(20), s. 72, s. 73, s. 73A(1), s. 73A(2), s. 73A(4), s. 73A(5)

Subjects

Cooperative societiesDesignated officerTenure limitationArticle 14Article 19DiscriminationLegislative competencePublic policy

Judgment

BHANDARA DISTRICT CENTRAL CO-OP. BANK LTD. AND A
ORS. ETC. ETC.
v.
STATE OF MAHARASHTRA AND ANR. ETC.

SEPTEMBER 10, 1992
B
(LAUT MOHAN SHARMA, S. MOHAN AND
N. VENKATACHALA, JJ.]

Maharashtra Cooperative Societies Ac~ 1960:

Section 73A-'Designated officer'-Tenn of office-Maximum period--
c
Fixing of-Bar on holding office in more than one Society-Whether violative
of Altic/es 14, 19(1)(c) and 19 (l)(g) of the Constitution of India.

Constitution of India, 1950:

Altic/es 14, 19(l)(c) and 19(1)(g~Section 73A of the Maharashtra
D
Cooperative Societies Act, ]~ether violative of.

Section 73A(l) of the Maharashtra Cooperative Societies Act, 1960
defines a 'designated officer' as the Chairman and the President and as
lndudlng any officer of the Society as may be declared by the State E
Government, but not an officer appointed or nominated by the State
Government or by the Registrar. Such a 'designated officer' bas not been
allowed to bold office in more than one Society In view of sub-sections (2)
and (4) of section 73A and by sub-section (S) the maximum period avail-
able to a designated officer to continue in office bas been fixed in
peremptory terms. F

In the present appeals, Writ Petitions and Special Leave Petitions,
the Constitutional validity of section 73A of the above said Act bas been
challenged as being violative of Articles 14, 19(l)(c) and 19(1)(g).

It was contended that the designated officers were entitled to G
manage the affairs of the cooperative societies as entrusted to them by the
members, without any Interference from the legislature; that the
provisions separating the Chairman and the President from the other
members of the Managing Committee in regard to the application of the
restrictions were discriminatory; and that the power given to the State H
501
502 SUPREME COURT REPORTS[ 1992] SUPP. 1 S.C.R.

A Government to declare any other officer or the society as a designated
officer was bad and arbitrary in the absence or proper guidelines.

Dismissing the appeals/petitions, this Court,

HELD: 1. There is clear basis for selecting the category or persons
B
to be referred to by the expression 'designated officer' for the purposes of
sections 73A, 73C, 73D and 73E of the Maharashtra Cooperative Societies
Act, 1960 and the policy in this regard is perfectly reasonable, having
regard to the object of the amendment. The provisions restrict the period
for which a person either elected or appointed and is entitled to give
c directions in relation to business of that society, can remain in office. The
object of the amendment is clearly discernible as preventing a person or
a group or persons from monopolising the affairs of a society by exercising
control thereon indefinitely for a long period. A cooperative society is not
meant to be run as a close preserve of an individual or a group of persons.
D 'Co- operative' has been understood as a form of organisation where
persons voluntarily associate together on a basis of equality for the
promotion of their economic interests. The emphasis is on 'Co-operation'.
It is, therefore, desirable to have the active participation of as many
members as may be possible. The Statement of Objects and Reasons for
the Amending Act has mentioned that the object of the Act was not being
E fully achieved as a group of persons were found holding the key positions
in serveral important cooperative institutions simultaneously and for long
periods, with a result that new leadership was not being built np to the
desired extent. To check this unhealthy tendency and to give a more
democratic character to the cooperative institutions, it was found neces-
F sary to prescribe the limitations in the statute itself by amendment. When
after watching the effect of the earlier amendments, the legislature found
that the goal was not fully achieved, and a further amendment was neces-
sary, the abovesaid provisions were inserted in the Act. All this has been
done for realising the objective set out by the Act and is clearly in the
public interest. (508 A-Fl
G
2. The basis of distinction made between the 'designated officers' as
defined in the Act and the other members has clear nexus with the object
which the amendment seeks to achieve. It has been firmly established that
this Court cannot be called upon to embark on an enquiry into public
H policy or investigate into questions of political wisdom or even to
BHANDARA CO-OP. BANK v. STATE 503

pronounce upon motives of the legislature in enacting law which is other- A
wise within its legislative competence. [509 B.C]

3. The power of the State Government to include within the expres·
sion 'designated officer' is limited to 'officers', which terms has been
defined under section 2(20) as a person elected or appointed to give
directions in regard to business of a society. The State Government, B
therefore, cannot include a person who has no power to issue directions
within the expression. The element of arbitrariness is thus adequately
taken care of. Besides, while choosing a person, the State Government has
to keep in mind the object of the legislation. It is not necessary to have the
guideline in express terms in the very section dealing with delegation. The C
entire Act is available for this purpose. [509 D-E]

4. By prospective application, sub-section (5) of section 73A is now
putting the bar on all the persons who have already completed the period
of ten years. If a person bas already in the past, managed to remain in
office, for, say 15 years continuously nothing is permissible to undo it. The D
only question which is relevant is whether he has completed an aggregate
of 10 years. Equality before law does not mean absolute equality in math-
ematical terms. The test is whether the rule is uniformly applied.
[510 G-H; 511 A-Bl
E
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2706of1988.

From the Judgment and Order dated 21.3.88 of the Bombay High
Court in Writ Petition No. 2098 of 1986.

WITH F

Civil Appeal Nos. 5030 of 1985, 1762 of 1986, 2692-2705, 2707- 2735,
4148 of 1988; Writ Petition (Civil) Nos.686, 810, 880, 106 5, 1202 and 1251
of 1988, 85, 265, 283, 488, 687, 728, 799, 998, 1051, 1178 and 1362 of 1989,
43 and 403 of 1990; S.L.P.(C) Nos. 9635 of 1983, 13360 of 1986, 4947 and G
15205 of 1989 and 8584 of 1992.

Anil B. Divan, V.N. Ganpule, B.A. Masodkar, Y.K. Naik, K.R.
Choudhary, R.K. Sharma, A.M. Khanwilkar, R.B. Masodkar, K.L. Taneja,
V.B. Joshi, G.B. Sathe, V.D. Khanna and S.K. Agnihotri for the Appel-
lants/Petitioners. H
504 SUPREME COURT REPORTS[l992] SUPP. 1 S.C.R.

A S.B. Bhasme and A.S. Bhasme for the Respondents.

The Judgment of the Court was delivered by

SHARMA, J. The petitioners (including the appellants in civil ap-
peals also) have challenged the constitutional validity of section 73A of the
B Maharashtra Co-operative Societies Act, 1960, as being violative of Articles
14, 19(1)(c) and 19(1)(g) of the Constitution of India. As all these cases
have been heard together, they are being disposed of by this common
judgment. Except where otherwise indicated, we are proceeding to refer
to the facts of Civil Appeal No. 2706 of 1988 which has been treated as the
C leading case.

2. By the impugned provisions a designated officer as defined in
section 73A(l) is not allowed to hold office in more than one society in
violation of the restrictions mentioned in sub-sections (2) and (4) thereof;
and by sub-section (5) the maximum period available to a designated
D officer to continue in office has been fixed in peremptory terms. Before
proceeding further it will be useful to examine the provisions of sub-sec-
tions (1), (2), (4) and (5) of section 73A which are in the following terms:-

"73A. (1) In this section and in sections 73C, 730 and 73E,
"a designated officer" means the Chairman and the Presi-
E dent, and includes any other officer of the society as may
be declared by the State Government, by notification in the
Official Gazette, to be a designated officer, but does not
include, any officer appointed or nominated by the State
Government or by the Registrar."
F "(2) No person shall at the same time, be or continue to be
a designated officer of more than one society falling in
Category I or Category II or Category III of the categories
mentioned below; and shall not be or continue to be a
designated officer in more than two societies in the ag-
G gregate in the three categories:-

Category I - Societies, the area of operation of which
extends to the whole of the state, -

(a) but extends to Greater Bombay and the authorised
H share capital of which is more than Rs. 10 lakhs; or
BHANDARA CO-OP. BANK v. STATE [SAWANT, J.] 505

(b) but extends to one or more districts; or A
(c) is less than a district and the authorised share capital
of which is more than Rs. 10 lakhs.

Category III -Societies, the area of operation of which does
not extent to the whole of a district but extends to one or B
more talukas, or the authorised share capital of which is
not more than Rs. 10 lakhs but is not less than Rs. 5 lakhs.

Explanation - For the purposes of this sub-section, the
expression "society'' shall not include a society with no share
capital and a society not engaged in commercial activities."
c
"(4) If any person becomes, at the same time, a designated
officer of societies, in excess of the number prescribed
under sub-section (2), unless he resigns his office in the
society or societies in excess of the said number within a D
period of ten days from the date on which he is elected or
appointed a designated officer of more than the permis-
sible number of society or societies, or if the elections or
appointments are held or made simultaneously, from the
date on which the resuh oflast of such elections or appoint-
ments is declared, he shall, at the expiration of the said E
period of ten days, cease to 1;ie a designated officer of all
such societies and thereupon, notwithstanding anything
contained in any other provisions of this Act, a person so
resigning or ceasing to be a designated officer of any or all
such societies shall not be eligible for being re-elected or F
re-appointed as a designated officer of such society or
societies during the remainder of the term of office for
which he was so elected or appointed; and at no point of
time such person shall be a designated officer of societies
in excess of thr number prescribed under sub-section (2).'
G
"(5) No person shall be, or shall continue to be, a designated
officer of any society of any of the categories referred to
in sub-section (2), for a period of more than ten years in
the aggregate and at the expiration of that period any such
person shall cease to be a designated officer of that society, H
506 SUPREME COURT REPORTS[1992] SUPP. 1 S.C.R.

A and shall not be eligible for being re-ele.cted or re-ap-
pointed as a designated officer, until a period of one term
of the committee has elapsed after completion of the
aforesaid period of ten years.

Explanation - For the purposes of this sub-section -
B
(a) in calculating the aggregate, period of ten years in
office, any period for which the person concerned may have
been such officer, before the commencement of the
Maharashtra Co-operative Societies (Second Amend-
c ment) Act, 1969, ,hall be ignored;

(b) if any person resigns his office as a designated officer
at any time within twelve months of the date on which the
aggregate, period of ten years would, but for his resigna-
tion, have been completed, he shall be deemed to have
D completed the period ten years on his resignation."

3. According to the case of the petitioners, the designated officers
are entitled to manage the affairs of the co-operative societies as entrusted
10 them by the members, without any interferance by the legislature, and
the restrictions imposed by the impugned provisions are violative of their
E fundamental rights as protected by Articles 19(1) (c) and (g) of the
Constitution. The members of a co-operative society, according to the
argument, are entitled to conduct the affairs of the society in accordance
to their choice and any intrrferance in this is uncalled for. We were not
able to fully appreciate tllis argument, and so we pointed out to Mr. Anil
F B. Divan, the learned counsel for the petitioners (that is, the appellants in
Civil Appeal No. 2706/88). that there was no impediment in the running of
the societies, and the impugned provisions are attracted only in such cases
where the societies are desirous of being registered under the Act with a
view to take advantage of the provisions thereunder. The Act does not
G place any restriction on the formation of any association or union for
carrying on any trade or business, nor does it require such unions or
societies to be registered under the Act. The petitioner-societies were free
to proceed as they wished (of course, they could ·not be allowed tq
contravene any law) without being subjected to any condition placed by the
Act, but in that case they would not be entitled to the benefits of the Act.
H Mr. Divan appreciating the situation, explained his point by saying that as
BHANDARA CO-OP. BANK v. STATE [SAWANT, J.] 507

a consequence of section 145 of the Act an unregistered society is not A
entitled to use the word 11 co- operative" in its name or title (without the
sanction of the State Government) and this by itself puts the society under
a disadvantage, affecting its trade and business. The learned counsel fairly
conceded that he is not in a. position to rely on any other circumstnace in
support of his argument based on Articles 19(1)(c) and (g). We do not find B
any merit in this point which is solely based on the ban of the use of the
word "co- operative", by section 145. The restriction is clearly reasonable
and in the interest of the general public and is, therefore, saved by clause
(6) of Article 19. The purpose of section 145 is to ensure that the general
public has adquate notice that a society they may have to deal with, is
unregistered and, therefore, not amenable to the provisions of the Act, C
.before taking a decision about their relationship with the same. The
persons desirous of running such a society have been placed under an
obligation to publicly delcare that their society is not registered under the
Act, and we do not see any valid objection to this course. The main
argument of Mr. Divan is, therefore, overruled. D
4. The learned counsel has, next, challenged section 73A of the Act
on the ground that the provisions separating the Chairman and the Presi-
dent from the other members of the managing committee for the applica-
tion of the impugned restrictions are discriminatory. He also urged that the
further power given to the State Government to declare any other officer E
of the society as a designated officer is bad in the absence of a proper
guideline. The State Government is, thus, vested with unlimited, unbridled
and, therefore, arbitrary power. Mr. Masodkar appearing on behalf of the
appellant in Civil Appeal No. 2699 of 1988, besides reiterating the ques-
tions discussed earlier, offered some additional reasons. He argued that a F
separate class were created by section 73A which was not permissible in
view of the provisions in sections 72 and 73. The final authority of every
society has been vested by section 72 in the general body of members in
general meeting and by section 73 the management is vested in the manag-
ing committee and in that background if the legislature intended to put any G
limitation on the period of tenure it should have done so with respect to
all the members of the society, or in any event all the members of the
managing colllll''ttee. The learned counsel also objected to the exception
made by section 73A in favour of an officer appointed or nominated by •he
State Government or by the Registrar.
H
508 SUPREME COURT REPORTS(1992] SUPP. 1 S.C.R.

A 5. We have considered the argument and examined the provisions of
the Act placed before us by the learned counsel for the parties. It appears
that there is clear basis for selecting the category of persons to be referred
to by the expression "designated officer" for the purposes of sections 73A,
73C, 730 and 73E, and the policy in this regard is perfectly reasonable,
B having regard to the object of the amendment. The impugned provisions
restrict the period for which a person either elected or appointed (under
the Act, the rules or the by-laws, who is entitled to give directions in
relation to business of a society, can remain in office. Tlie object of the
amendment is clearly discernible as preventing a person or a group of
persons from monopolising the affairs of a society by exercising control
C thereon indefinitely for a long period. A co-operative society is not meant
to be run as a close preserve of an individual or a group of persons. "Co-
operative" has been understood as a form of organisation where persons
voluntarily associate together on a basis of equality for the promotion of
their economic interests. The emphasis is on 'co-operation'. It is, therefore,
D desirable to have the active participation of as many members as may be
possible. The Statement of Objects and Reasons for the 1969 Amendment
has mentioned that the object of the Act was not being fully achieved as a
group of persons were found holding the key postilions in several important
co-operative institutions simultaneously and for long periods, with a result
that new leadership was not being built up to the desired extent. To check
E this unhealthy tendency and lo give a more democratic character to the
co-operative institutions, it was found necessary to prescribe the limitations
in the statute itself by amendment. When after watching the effect of the
earlier amendments, the Gujarat legislature found that the goal was not
fully achieved, and a further amendment was necessary, the impugned
F provisions were inserted in the Act. All this has done for realising the
objective set out by the Act and is clearly in the public interest.

6. Reliance by Mr. Masodkar on sections 72 and 73 of the Act is also
misplaced. The interest taken by all the members of the society in the
working thereof can hardly be described as a participation in the running
G of the society. The sittings of the managing committee also take place after
intervals and the looking after of the affairs of the society and implemen-
tating the decisions are left lo persons who are in the words of section 2
{20) "to give directions in regard in business of such societies". As to which
officer exercises this power effectively with reference to a particular soc-
H ciety will depend on the facts and circumstances which would differ from
BHANDARA CO-OP. BANK v. STATE [SAWANT, J.] 509

society to society, but so far the Chairman and the President are concerned A
they certainly come in that class. This is the reason that section 73A
includes the Chairman and the President within the expresion 'designated
officer" and leaves it to the State Government to issue further notifications
according to the exigencies arising in a particular society. Thus, the basis
of distinction made between the 'designated officers' as defined in the Act B
and the other members has clear nexus with the object which the amend-
ment seeks to achieve. The plea of illegal discrimination must, therefore,
be repelled as being without any merit. It has been firmly established that
this Court cannot be called upon to embark on an enquiry into public
policy or investigate into questions of political wisdom or .even to
pronounce upon motives of the legislature in enacting law which is other• C
wise within its legislative competence.

7. So far the argument of excessive delegation of power under section
73A (1) is concerned, it has to be appreciated that the power of the State
Government to include within the expression "designated officer' is limited D
to "officers', which terms has been defined under section 2(20) as a person
elected or appointed to give directions in regard to business of a society.
The State Government, therefore, cannot include a person who has no
power to issue directions within the expression. The element of arbitrari-
ness, which is presumed in the argument of the petitioners, is thus ade-
quately taken care of. Besides, while choosing a person, the State E
Government has to keep in .mind the object of the legislation as discussed
in the previous paragri.ph. It is not necessary to have the guideline in
express terms in the very section dealing with delegation. The entire Act
is available for this purpose. This Court in Harishankar Bag/a and Another
v. The State of Madhya Pradesh, (1955) 1 SCR 380 had, while considering p
a similar argument with reference to the Essential Supplies (Temporary
Powers) Act, 1946, observed that the preamble and the body of the Act
sufficiently formulate the legislative policy. The exercise of power under
section 73A (1) has, therefore, to be in accordance with the policy of the
impugned amended provisions read with the entire Act, and the discretion
in this regard by the State Government is to be exercised in a manner which G
will advance this policy. In paragraph no.8 of their Writ Petition No.2098
of 1986 in the High Court, the appellants in Civil Appeal No. 2706 of 1988
have stated that by a notification issued under Section 73A (1) the respon-
dent-Government has included within the definition of designated officer
(i) Vice-Chairman; (ii) Vice-President; (iii) the Secretary, Additional H
510

A Secretary or the Joint Secretary, when. he is not a salaried employee of the
I' societf a~d (iv) the Matiagfug I>irec'ior' ~r 'iii~ Joint"M.,;aging Pirecfor
\\;b.en he is not ~ 's~laried employee.of. the soci~iY, This o;;iyillusfrates that'
.- r., •~, ... -~ d ''···'·· ;t·;·~'i. «''-'1' ,•,· . .. •1·.11., .. _(l·
the State Government. has noi e1iher misconstrued or misused the
~ , , :·L; "·· '.l .t ."·'.~~u1J1 .r
· '
1
• :J·_)· .. t •J · -"JI 1 • •• ' "
provmon. Mr. Masodkar· further urged that since in pursuance of Sechon
74, proper disciplii:ie .can be ~aintained on the' co-operative societies, it
B was not necessary to "J\'• ha~e I.b~ought in, the amendments· which are. und~r
' , ' ·j ,. '.• -. i L" ' . -• " -•i' '
; , ,- _, • ''!,,

challenge. This again is a matter of policy to be decided by the legislature
'and the judiciary '.can~ot sub~iit~te its own view in this i'natter. . ' · '
'' • • Lo < ;• • " •I • , ~' ~j • I ' ' ' "vi{

,1• ' ,._ ·, .·• )

8. For appreciating the next argument of Mr. Diwan it is necessary
C to mention that the provisions of sub-section ( 5) of section 73A as initially
inserted in the Act in 1%9 have been modified from time to iirne. When
the section was inserted for the first time, the bar under sub-section (5)
was with reference to a consecutive period of 6 years. This period was later
changed to a consecutive period of 10 years. I.i the sub-section as it stands
D now, the consecutive period of 10 years has been substituted by a period
of 10 years in the aggregate. The learned counsel has challenged this last
amendment as being arbitrary. The argument is .that if earlier ~ decision
.was taken to link the bar with a cpnsecutive period of 10 years it should
not hav.e been changed again. We do not see any merit in this point either.
It w~ against.a question of policy,whic)l was adopted, only after a thorough
E examination, :J'h~ Joint Committee· to which the relevant Bill.was referredi
filter studying the situation, stated in its report that its conclusion was.that
because of the "concept of consecutive. period of 10 years in the existing
section.73A(5), the provisions of the Act were not being.implemented,in
the letter.. and spirit of .the. law." The Committee, therefore., thought that
F this disqualification should be.applicable in cases of period. of more than
10 years instead of the existing consecutive period of 10 years. The Com-
mittee also thought that the person concerned should not be elligible for
being re-elected for a period of one term of the Committee instead of the
present period of 3 years. It is then urged that since the period of 10 years
in aggregate is made applicable to every case irrespective of the period for
G which a person has already remained in the office in the past, the same is
discriminatory. We do not see any force in the point. The impugned
provision is not meant to rectify everything which has happened in the past.
By Prospective application it is now putting the bar on all the persons who
have already completed the period of 10 years. If a person has already in
H the past, managed to reamin in office, for, say 15 years continuoulsy,
BHANDARA CO-OP. BANK v. STATE [SAWANT, J.] 511

nothing is permissible to undo. it. The only question which is relevant i' A
whether he has completed an aggregate of 10 years. The equality before
law does not mean absolute equality in mathematical terms. Let us take
the case of retirement of a governmen(orfi;,.;~ where the age of super-an-
nuation is fixed at 58 years. By.applying the same rule.to persons entering
in government services at vfilying ages the ~qu;;i_ity clause of the Constitu· B
tion is not violated.· The· test is whether the rule ls uniformly applied.

. 9, In the result we do not find any merit in the points raised on behalf
of th~ 'petitioners. . c
10. The learned counsel for the appellants, Mr. Diwakar B. Balvekar,
in Civil Appeal Nos. 2730 and 2734 of 1988 attempted to raise a new plea
not taken earlier. He said that the co-operative societies in question are
small ones and are, therefore, not covered by the amended provisions. This D
is not a pure question of law and cannot be raised at this stage.

11. For the reasons mentioned above all the writ petitions, civil
appeals and special leave petitions are dismissed but, in the circumstances
without costs. E
Appeals/Petitions dismissed.
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