Allowed

M/S Kansal Coop House Building Society Ltd. v. Registrar Coop Societies Pb

Punjab & Haryana HC17 Jan 2012CWP/11392/2011

Case brief

AI extract

What is this about?

This court held that the Registrar of Cooperative Societies cannot delay registration until state rules are framed under the Punjab Self-Supporting Co-operative Societies Act, 2006. Relying on the deeming fiction of Section 5(9) and the principle that law abhors a vacuum, the court issued a writ of mandamus directing registration.

What did the court decide?

Issue serves a writ of mandamus directing the Registrar to issue a certificate of registration converting the petitioner society as a Self Supporting Cooperative Society under the 2006 Act by operatio

M/S Kansal Coop House Building Society Ltd… — Cooperative Societies | Punjab & Haryana HC (2012)

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Civil Writ Petition No. 11392 of 2011 1

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In the High Court for the States of Punjab and Haryana at Chandigarh

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Civil Writ Petition No. 11392 of 2011

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Date of decision: 17.1.2012

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M/s Kansal Cooperative House Building Society Ltd. Petitiioner.

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Versus

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Registrar Cooperative Societies, Punjab ..Respondent.

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Coram: Hon'ble Mr. Justice Rajiv Narain Raina

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Present: Mr. Rahul Sharma, Advocate for the petitioner. Mr. N.S. Pawar, Addl. A.G. Punjab for the respondents.

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To be referred to the reporters or not?

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Whether the judgment should be reported in the Digest?

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Rajiv Narain Raina,J.

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The Punjab Self-Supporting Co-operative Societies Act, 2006 (Punjab Act No. 17 of 2010)(for short, “ 2006 Act ”) was brought on the statute book after the Act passed by the Punjab Legislature received the assent of the President of India on 5.12.2008. The preamble of this Act proclaims that it is an Act to facilitate voluntary formation of self-supporting co-operative societies as self-reliant, self help, mutually aided, autonomous, accountable, voluntary, democratic business enterprises, jointly owned, managed and controlled by members for their economic and social betterment through the financially gainful core services and for matters connected therewith or incidental thereto. The scheme of the Act in short shows that it has been enacted to facilitate the voluntary formation

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Civil Writ Petition No. 11392 of 2011 2

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of self-supporting co-operative societies, which are essentially autonomous in character.

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The Act lays down that those cooperative societies which have not received any Government aid and are registered under the Punjab Cooperative Societies Act, 1961 have been given an option to convert themselves into a self-supporting co-operative society under the 2006 Act. 3. It is the case of the petitioner society that it was a primary cooperative society registered under the Punjab Cooperative Societies Act, 1961 (for short,” 1961 Act ”). It wanted to convert itself into a self supporting cooperative society under the 2006 Act. To this end it submitted an application dated 18.1.2011 to the respondent Registrar of Cooperative Societies, Punjab. The application was made in accordance with the provisions of Section 5 of the Act and all the relevant documents which were required were duly submitted including its Bye laws (P-2). The application was received by the Assistant Registrar, Cooperative Societies, SAS Nagar (Mohali) vide diary No. 17 dated 18.1.2011. The same was forwarded to the Registrar, Cooperative Societies, Punjab Chandigarh by the Assistant Registrar vide diary No. 359 dated 15.2.2011. Despite making application in accordance with the procedural provisions of the Act, the petitioner has not received any response as to the fate of its application for registration. The petitioner served a legal notice dated 26.5.2011 (P3) on the respondent for taking action on the application for grant of certificate of registration. There has been response to the request.

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Accordingly, the petitioner aggrieved by the inaction has approached this Court under Article 226 of the Constitution with the prayer that his application for registration dated 18.1.2011 should be held deemed to have been granted in terms of Section 5(9) of the Act, 2006 which mandates that if the application for registration is not disposed of

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within a period of 60 days or the Registrar fails to communicate the order of refusal within that period, the application is deemed to have been accepted for registration in accordance with the provisions of the Act after the expiration of a period of 90 days from the date of receipt of the application. That period is long over.

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The petitioner, therefore, prays for a writ of mandamus to the respondents commanding it to issue Certificate of Registration on the strength of the deeming fiction contained in Section 5(9).

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On notice having been issued, the Registrar, Cooperative Societies, Punjab has put in appearance and has filed reply by way of an affidavit of the Additional Registrar (D), Cooperative Societies, Punjab.

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In the written statement, the date of application or its receipt has not been disputed. The defence taken is that the Registrar’s in-action in the matter is justified on account of the fact that rules have been framed under the Act, 2006 and have been sent to the Government through the office of Registrar Cooperative Societies, Punjab on 3.6.2011 but have not yet been notified. It is stated in para No.1 of the preliminary submissions that unless and until the rules are notified in the official gazette, it is not possible to register the society under the provisions of the 2006 Act. It is the further stand of the respondent that a Committee has been constituted for framing model bye laws of societies to be registered under the provisions of the 2006 Act and such bye laws are in the pipeline.

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I have heard learned counsel for the parties at length and have dwelt on the pleadings and the provisions of 2006 Act.

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Mr. Rahul Sharma, learned counsel for the petitioner submits that the present case would be covered by Section 5 (9) of the 2006 Act which deals specifically with primary Cooperative Societies. Section 5 of 2006 Act reads as under:-

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5.(1) Notwithstanding anything contained in the Punjab Co-operative Societies act, 1961(hereinafter in short referred to as the Act of 1961), a primary co-operative society which intends to convert itself into a selfsupporting co-operative society, may apply to the Registrar for conversion into a self-supporting cooperative society under this Act:

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Provided that where the Central Government or State Government has given Government aid to such a co-operative society, it shall, before applying for such conversion, return such Government aid;

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Explanation:- For the purpose of this sub-section, the expression” primary co-operative society” shall mean a co-operative society whose membership consists exclusively of individuals.

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(2) An application for conversion shall be submitted to the Registrar by hand or by registered post, by the duly authorized person of such primary c0-operative society, along with the special resolution passed in this regard by giving thirty days notice.

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(3) The duly authorized person shall furnish such information with regard to the primary co-operative society applying under sub-section (1), as the Registrar may require.

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(4) Every such application shall be accompanied by—

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(a) a true copy of the special resolution passed by the general body certifying the fact that such primary co-

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operative society shall follow the co-operative principles and guidelines, mentioned in the Schedule;

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(b) two copies of the bye-laws adopted by the general body of such primary co-operative society through a special resolution;

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(c) evidence to show that the primary co-operative society is not in possession of any Government aid from the Central Government or the State Government;

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(d) a true copy of the latest annual report and audited statement of accounts of such primary co-operative society;

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(e) a list of members, who attended the meeting of general body or delegate general body of such primary cooperative society; and

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(f) receipt of deposit of registration fee as may be specified from time to time by the Registrar.

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(5) If the Registrar is satisfied that the application and the proposed bye-laws are in consonance with the provisions of this Act, he shall convert the primary co-operative society into a self-supporting co-operative society and register the same as such and its bye-laws ad issue a certificate of registration and return the copy of the registered bye-laws duly signed and sealed by him within a period of sixty days from the date of receipt of application to such society through its duly authorized person.

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(6) If the application for registration is not in conformity

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with the provisions of sub-sections (4) and (5), the Registrar, after giving an opportunity of being heard to such a society, shall communicate by registered post, the order of refusal for registration along with the reasons therefore within a period of sixty days from the date of receipt of application for registration to the said society.

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(7) Where an order of refusal is received under subsection (6) by the duly authorized person within the period, specified in that sub-section, he may-

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(a) submit an application to the Registrar against the refusal and seek registration afresh; or

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(b) make an appeal against the order of refusal or delay in issuing the certificate or deemed registration to the Cooperative Tribunal within a period of sixty days from the date of communication of such an order.

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(8) The certificate of registration signed by the Registrar with the seal of his office, shall be the conclusive evidence that the self-supporting co-operative society mentioned therein is duly registered under this Act.

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(9) If the application for registration is not disposed of within a period of sixty days or the Registrar fails to communicate the order of refusal within that period, the application shall be deemed to have been accepted for registration in accordance with the provisions of this Act after the expiration of a period of thirty days from the said period of sixty days.

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(10) Where a primary co-operative society is converted

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and registered under sub-section (5), it shall send to the Registrar, Co-operative Societies, a copy of registration certificate issued under the Punjab Co-operative Societies Act, 1961, and the Registrar shall, within a period of thirty days from the receipt of such copy, cancel registration of such primary co-operative society and delete the name of such society from the register maintained by him.

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(11) Consequent upon the conversion of a primary cooperative society into a self-supporting co-operative society, the assets, liabilities, rights, obligations and transactions of such primary co-operative society shall be deemed to be the assets, liabilities, rights, obligations and transactions of the self-supporting co-operative society. Like-wise, the members of the primary co-operative society shall be deemed to be the members of the selfsupporting co-operative society.

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(12) At the time of conversion of primary co-operative society into a self-supporting co-operative society, if the term of elected Board of Directors of primary co-operative society has not expired, the same Board of Directors shall continue to hold office for the remaining term or for one year, whichever is less.”

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Learned counsel relies on Section 5(9) to contend that since the application for registration has not been disposed of within a period of sixty days nor has the petitioner received any communication of refusal within sixty days, the application shall be deemed to have been accepted for registration in accordance with the provisions of the Act after the expiration

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of a period of thirty days from the said period of sixty days. That period is long over and there is deemed acceptance. He submits that the satisfaction of the Registrar on the proposed bye-laws of the society is confined to an examination of whether the Bye laws are in consonance with the provisions of the Act and not rules which may be framed. It is not the requirement of the Act to await the framing and promulgation of the rules for the provisions of the Act to become operable and the State is therefore, not correct in its stand that registration in absence of rules is not permissible or possible.

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Learned counsel for the petitioner would urge that only if the provisions of the Act are unworkable in the absence of rules, then we must await the framing of the rules before the Registrar can take action under Section 5. To put it differently, he submits that if power flows from rules to convert a primary society into a self supporting cooperative society, then the State may be correct in its stand but if power flows directly from the Act then the Registrar’s silence would lead to deemed registration.

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In support of his argument, learned counsel for the petitioner has relied on the ratio of a Division Bench decision of the Patna High Court in Ruby Singh v. State of Bihar 2010(3) PLJR 411. Though the matter involves elections and a “No Confidence Motion” but the legal principle laid down touches upon and promotes the case of the petitioner. Para Nos.25, 26 and 27 of the judgment relied upon by the counsel for the petitioner read as follows:-

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“25. In this context, we may refer with profit to the decision rendered in Jantia Hill Truck Owners Association v. Shailang Area Coal Dealer and Truck Owner Association and others, (2009) 8 SCC 492, wherein their Lordships were considering the decision rendered by a division bench of the Gauhati High Court whereby

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and whereunder the memorandum dated 11.09.2003 issued by the Government of Meghalaya purported to be in terms of Section 138 (2)(v) of the Motor Vehicles Act, 1988 was held to be illegal and a writ in the nature of mandamus was issued directing the Government of Meghalaya to make rules in exercise of the powers made therein. Their Lordships posed the question in paragraph 20 whether the State Government is empowered to issue any executive order in respect of the matters required to be prescribed by the rules. In that context, their Lordships have held in paragraphs 22 and 23 as follows:

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“22. Clause (3) of Article 166 empowers the Governor to make rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Minister of the said business insofar as it is not business with respect to which the Governor is by or under the Constitution required to act in his discretion. The memorandum was issued in the name of the Governor. It is not in dispute that it was authenticated in terms of clause (2) of Article 166 of the Constitution. The power was exercised by the State under the provisions of the Act. The said order was to remain in force till rules are framed in the prescribed manner.

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23. The provisions of the Act mandate that the unladen weight and laden weight must be determined. Indisputably, weighing devices had to be provided for the said purpose. It is true that for the said purpose rules may have to be framed. It is, however, a well-settled principle of law that even in a case where the statute provides for certain things to be done, subject to rules, any action taken without framing the rules would not render any (sic that) action invalid. If a statute is workable even without framing of the rules, the same has to be given effect to. The law itself except in

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certain situations does not envisage vacuum. Non-compliance with the provisions relating to “laden weight” and “unladen weight” being penal in nature must be held to be imperative in character.”

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26. From the aforesaid enunciation of law, it is clear as crystal that if the provisions of the Act can be given effect to, non-framing of the rules would not vitiate the act. The acid test is the workability of the provisions. The submission of the learned counsel for the appellants is that without framing of the rules, a vote of no confidence cannot be carried out. They have invited our attention to Sections 48 and 51 of the Act. We have already reproduced Section 51 of the Act herein above. Section 48 of the Act reads as under:

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48. Meetings.- (1) The Municipality shall meet not less than once in every month for the transaction of its business.

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(2) The Chief Councillor may, whenever he thinks fit, and shall, upon a requisition in writing by not less than one-fifth of the Councillors, convene a meeting of the Municipality.

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(3) If the Chief Councillor fails to call the requisition meeting provided in sub-section (2), the meeting may be called by the persons who signed the requisition.

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27. On a scrutiny of the scheme of the Act, we are of the considered opinion that it cannot be said that without laying down of the procedure for conduct of business in a special meeting under the rules, the provision as engrafted under Sections 25 and 51 of the Act cannot really be effectively carried out. The procedure to be adopted has to be fair. Appreciating the scheme of the Act in entirety, we notice that the Chief Councillor has been empowered to convene a meeting of the Municipality. In fact, Section 48 of the Act adequate guidance and safeguard. It is a well settled proposition of law that a statute has to be read as a whole to understand its object

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and purpose. On a reading of the provisions in entirety, we are of the considered view that a vote of no confidence can be mooted and carried out without framing of the rules and, hence, the provisions of the statute are workable.”

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Mr. Sharma has also placed reliance upon a decision of the Hon'ble Supreme Court in Surinder Singh v. Central Government reported in 1986(4)SCC 667. Para No.7 of the judgment on which reliance is placed is reproduced as under:-

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7. As noted earlier Sections 8 and 20 of the Act provide for payment of compensation to displaced persons in any of the forms as specified including by sale to the displaced persons of any property from the compensation pool and setting off the purchase money against the compensation payable to him. Section 16 confers power on the Central Govt. to take measures which it may consider necessary for the custody, management and disposal of the compensation pool property. The Central Govt. had therefore ample powers to take steps for disposal of pool property by auction sale and for that purpose it had authority to issue administrative directions. Section 40(2) (j) provides for framing of rules prescribing procedure for the transfer of property out of the compensation pool and the adjustment of the value of the property so transferred against the amount of compensation. Neither Section 8, 16, 20 or Section 40 lays down that payment of compensation by sale of the pool property to a displaced person shall not be done unless rules are framed. These provisions confer power on the Central Government and the authorities constituted under the Act to pay compensation to displaced persons by sale, or allotment of pool property to them in accordance with rules, if any. Framing of rules regulating the mode or manner of

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disposal of urban agricultural property by sale to a displaced person is not a condition precedent for the exercise of power by the authorities concerned under Sections 8, 16 and 20 of the Act. If the legislative intent was that until and unless rules were framed power conferred on the authority under Sections 8, 16 and 20 could not be exercised, that intent could have been made clear by using the expressing "except in accordance with the rules framed" a displaced person shall not be paid compensation by sale of pool property. In the absence of any such provision the framing of rules, could not be a condition precedent for the exercise of power.” (Underlined for emphasis)

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These decisions indeed help the petitioner and persuade me to the view that the sole stand of the State that they are helpless to act in absence of rules does not merit acceptance as a legal principle that would govern this case.

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Mr. Pawar, learned Additional Advocate General, Punjab has not made any effective counter argument to persuade me to agree with him that the application for conversion of the petitioner into a self supporting cooperative society should be kept in limbo till the rules are framed and notified.

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It is well settled that law abhors a vacuum. The operation of the Act cannot, in my considered view, be kept in animated suspension or in a state of flux once it has been notified and passed into the body of the law. The legal fiction of Section 5(9) has to be taken to its logical end by assuming all in actions of the Registrar as actions by default. There would be deemed application of mind as well. Such appear to me to be the consequences, however, grave they may be. In any case the Act is a regulatory Act and by grant of certificate of registration converting the petitioner to a Self Supporting Cooperative Society will not take away the regulatory authority of the Registrar under the 2006 Act to keep the society compliant of the provisions of the Act whenever and wherever authorized by law.

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In view of the foregoing reasons, I allow this writ petition and issue

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a mandamus to the respondents to issue certificate of registration registering the petitioner-society as a Self Supporting Cooperative Society under the 2006 Act by conversion in terms of the deeming fiction contained in Section 5(9) of the Act.

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I would also direct the respondent/Registrar to return the original bye-laws to the petitioner after signing the same and appending his final seal thereon. Let this be done within a fortnight of the receipt of a certified copy of this order. Thereafter, the petitioner would comply with Section 5 (10) and approach the Registrar for deletion and cancellation of registration of the name of petitioner society as a primary cooperative society from the register maintained by him and the Registrar would then inform the petitioner accordingly.

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No costs.

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January 17, 2012 nk

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(RAJIV NARAIN RAINA) JUDGE

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M/S Kansal Coop House Building Society Ltd. v. Registrar Coop Societies Pb

Case brief

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M/S Kansal Coop House Building Society Ltd. v. Registrar Coop Societies Pb

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