Allowed

Mathuralal Nagda v. State of Rajasthan

Rajasthan HC2 Dec 2023CW/12195/2023

Case brief

AI extract

What is this about?

The High Court quashed the rejection of nomination forms for the election of the Board of Directors of a District Cooperative Land Bank. The Court held that a Bye-law disqualifying members who did not avail loans in the last five years was ultra vires the Rajasthan Co-operative Societies Act, 2001, as qualification/disqualification of members cannot be a subject of bye-laws under Schedule B.

What did the court decide?

Impugned order dated 28.06.2023 rejected and set aside; Bye-law Clause 26A(6) declared non est; respondents directed to re-initiate election process ignoring said Bye-law.

Mathuralal Nagda Vs State of Rajasthan — Constitutional and Fundamental Rights | Rajasthan HC (2023)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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S.B. Civil Writ Petition No. 12195/2023

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Mathuralal Nagda S/o Gopilal Nagda, Aged About 69 Years, Sisarma Village, Tehsil Girwa, Udaipur.

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Arjun Mehta S/o Bheem Ji Mehta, Aged About 52 Years, Adhkaliya, Salumber, District Udaipur.

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Kesra Ram S/o Hujaji Kher, Aged About 55 Years, Village Khajuriya, District Udaipur.

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Omprakash Barber S/o Bherulal, Aged About 45 Years, Village Ward No. 2, Near Narsi, Tehsil Sanwad, District Udaipur.

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Karan Singh S/o Surendra Singh, Aged About 50 Years, Khatikwada, Gogunda, District Udaipur.

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Mannalal S/o Bheraji Gamaan, Aged About 58 Years, Adkaliya, Tehsil Jhadol, District Udaipur.

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Karan Singh S/o Inder Singh Chundawat, Aged About 60 Years, Kalyanpur, Tehsil Rishabhdeo, District Udaipur.

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Shiv Lal S/o Devendra Ji Meena, Aged About 62 Years, Parsaad, Tehsil Sarada, District Udaipur.

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Vijai Singh S/o Inder Singh Rajput, Aged About 48 Years, Kachumbra, Tehsil Lasadiya, District Udaipur.

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----Petitioners

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Versus

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State Of Rajasthan, Through Secretary, Department Of Cooperative, Government Of Rajasthan, Jaipur.

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State Cooperative Election Authority, Office Of Rajasthan, State Cooperative Election Authority, 10-B, Institutional Area, Raisen Bhawan, Jhalan Dungari, Jaipur.

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Registrar, Cooperative Societies, Jodhpur.

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Regional, Election Officer Cum Addl. Registrar, Cooperative Societies, Jodhpur Division, Jodhpur.

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Unit Returning Officer Cum Dy. Registrar, Cooperative Societies, Udaipur.

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Secretary, Udaipur District Cooperative Land Department Bank Ltd. Udaipur.

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Election Officer, Udaipur District Cooperative Land Department Bank Ltd. Udaipur.

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----Respondents

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For Petitioner(s) : Dr. Pratishtha Dave For Respondent(s) : Mr. Navneet Singh Birkh, Asst. to Mr. Sudhir Tak, AAG

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HON'BLE MS. JUSTICE REKHA BORANA

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Order

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02/12/2023

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The present writ petition has been filed against the order dated 28.06.2023 (Annexure-6) whereby the nomination forms of the petitioners for the election of Members of the Board of Directors (for short hereinafter referred to as, ‘BOD’) of Udaipur District Cooperative Land Development Bank Limited, Udaipur have been rejected holding them to be ineligible/invalid.

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The facts of the case are that vide order dated 29.05.2023, the programme for election of the Delegate Body in the first step and for Members of the BOD in the second step was issued. The petitioners, who were elected for the delegate body, being eligible to contest for a Member of the BOD, submitted their nomination forms in the requisite format. However, the nomination forms of all the 15 members who filled up the forms, were rejected vide order impugned (Annexure-6) dated 28.06.2023 holding them to be invalid. The reason given for the said rejection was that none of the members was qualified in terms of Clause 26A(6) of the bye laws governing the bank.

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Before adverting further in the matter, it is relevant to note that in the complete writ petition as well as reply to the writ petition, the impugned Clause has been mentioned to be Clause 26.6 whereas a perusal of the bye laws (Annexure-8) makes it clear that the same is Clause 26A(6).

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Both the counsels admitted that the same has been inadvertently mentioned and the same be read to be ‘Clause 26A(6)’.

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In view of the admission and submission made by both the counsels, the Clause 26.6 as referred in the writ petition is read by this Court to be Clause 26A(6).

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Sub Clause 6 of Clause 26A of the bye laws provides that any member who has not availed any loan in the period of last five years would not be eligible to be appointed/nominated as a Member of BOD. The validity of said condition No.26A(6) of the bye laws is also under challenge in the present writ petition.

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Learned counsel for the petitioners submits that a similar issue dealing with specific clauses pertaining to dis-qualification of the Member of BOD was under consideration before the Division Bench of this Court in D.B. Spl. Appl. Writ No.704/2015; State

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of Rajasthan vs. Roop Nagar Dugdh Utpadak Sahakari Samiti Ltd. & Anr. (decided on 18.05.2022). Learned counsel submitted that the issue in question would be squarely covered by the ratio laid down by the Division Bench in Roop Nagar’s case.

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Learned counsel for the respondents is not in a position to refute the above position of law and also the fact that the present issue would be governed by the ratio laid down in the cases of 1995 (2) WLC 140, Pukhraj Mehta vs. State of Rajasthan & Ors. and Roop Nagar (supra).

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The issue in Pukhraj Mehta and Roop Nagar’s case (supra) was whether a Co-operative Society is empowered to frame any Bye-law pertaining to qualification or dis-qualification of the Member of the Co-operative Society beyond the matters as

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incorporated in Schedule B to the Rajasthan Co-operative Societies Act, 2001 (for short hereinafter referred to as, ‘the Act of 2001’)? In Roop Nagar’s case (supra), the Division Bench held has under:

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“7. It is a well settled position of law that a subordinate legislation cannot supersede a parent legislation. In exercise of bye law making power, a Cooperative Society cannot make bye laws in respect of the matters beyond those incorporated in Schedule B appended to the Act of 2001. A Cooperative Society is precluded from making stipulations through bye laws in respect of subjects which are to be exclusively dealt with by the State Government in exercise of its rule making power under Section123 of the Act of 2001.

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8. By a plain reading of Schedule-B, it comes to fore that a Cooperative Society is not empowered to frame any bye law pertaining to qualification or disqualification of a Cooperative Society and thus, the impugned bye laws do not stand to scrutiny because they were framed by the Milk Union which has no jurisdiction to act in this manner. Learned Single Judge considered the import of the Supreme Court Judgment in the case of Babaji Kondaji Garad Vs. Nasik Merchants Co-operative bank Ltd.& Ors. reported in (1984)2 SCC 50 wherein, it has been held that bye laws of the Cooperative Society can have the status of Articles of Association of a company and do not have force of law.

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9. In this background, apparently, the disqualification prescribed under bye laws Nos.20.1 (2), 20.2 (7) and 20.2 (9)were rightly struck down by the learned Single Bench as being beyond the scope of the bye law making power of the Cooperative Societies. The impugned judgment dated 24.07.2015 does not suffer from any infirmity whatsoever warranting interference therein. 10. As a consequence, the instant writ appeal fails and is dismissed as being devoid of merit.”

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In Pukhraj Mehta’s case, the Court observed as under:

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“18. A close scrutiny of subject-matters enumerated under rule 8 of the Rules framed by the State government in exercise of its powers

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under Sec. 148, the subject matters of framing Bye-laws by a Co-operative Society has not authorised (sic) a Co-operative Society to frame Bye-laws prescribing additional qualifications or dis-qualifications for election of membership of a Committee. In our considered opinion, since the State Government in exercise of its rule making power has not delegated the subject matter of qualifications or dis-qualifications for election of membership of a Committee to the Bank, therefore, the Bank being a Co-operative Society has no authority to frame Bye-law No.31 prescribing further qualifications for membership of a Committee to contest the election for the office of the Board of Directors. In our humble opinion, Bye-law No.31 prescribing additional qualification for contesting the election for the Board of Directors framed by the Bank is beyond its power to frame such a Bye law, hence, the petitionerappellant cannot be debarred to contest the election for the office of the Board of Directors on the basis of Bye-law No.31.”

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On the touchstone of the above ratio, this Court is to consider whether Clause 26A(6) of Bye-laws in question is within the domain of Schedule B appended to the Act of 2001. Clause 26A reads as under:

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“ 26- lapkyd e.My ds lnL;ksa dh ;ksX;rk ,oa v;ksX;rk %

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1 [ ¼v½ dksbZ O;fDr cSad ds lapkyd e.My dk lnL; pquk tkus ;k euksuhr lgofjr fd;s tkus ;ksX; ugha gksxk%&

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1- mldh vk;q 21 o’kZ ls de gksA

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2- og fnokfy;k gksus dk izkFkhZ gks ;k fnokfy;k ?kksf’kr dj fn;k x;k gksA

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3- og ikxy ?kksf’kr dj fn;k x;k gksA

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4- og fdlh Hkh ljdkj ¼dsUnz vFkok jkT;½ ;k fdlh LFkkuh; vf/kdkjh ;k vU; izkf/kdkjh ;k fdlh lgdkjh laLFkk dk oSdfYid deZpkjh gksA

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5- mlus bl cSad ;k vU; fdlh Hkh lgdkjh lfefr dk] ftlesa mlus _.k ys j[kk gks] _.k le; ij uk pqdk;k gks vkSj ,slk _.k rhu ekg ls vf/kd le; dk vof/kdkj gks pqdk gksA

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6- mlus fuokZpu dh frfFk ds foÙkh; o’kZ dh 1 vizSy esa rqjUr iwoZ lekIr gq,² [ ikap foÙkh; o’kZ ] dh vof/k esa cSad ls _.k u fy;k gks ¼;gk¡ _.k ysus dk rkRi;Z gksxk& bl vof/k esa _.k ;k _.k dh fd”r dk cSad ls vkgj.k fd;k x;k gks] _.k Lohd`fr dh rkjh[k _.k ysus dh rkjh[k ugha ekuh tk,xhA½

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7- og Lo;a vFkok mlds ifjokj ds lnL; ¼ifjokj dh ifjHkk’kk vf/kfu;e dh /kkjk 2 ¼M+½ ds vuqlkj gksxh½ us izR;{k ;k vizR;{k :i ls cSad ds lkFk fd, x, djkj] Bsds ;k cSad }kjk csph ;k [kjhnh xbZ lEifr esa ;k cSad ds fdlh vU; izdkj ds ysu&nsu esa dsoy cSad ds fy, x, fdlh _.k dks NksM+dj Hkkx fy;k gksA ijUrq cSad }kjk dh xbZ fdlh Hkh lkoZtfud uhykeh esa Hkkx ysdj cSad }kjk csph xbZ lEifr Ø; djus ij v;ksX;rk ugha ekuh tk,xhA ”

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As held in the cases of Pukhraj Mehta and Roop Nagar (supra), the Co-operative Society is empowered to frame Bye-laws qua the subjects incorporated in Schedule B to the Act of 2001. Schedule B as appended to the Act of 2001 provides as under:

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“SCHEDULE-B

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SUBJECT MATTER OF BYE-LAWS

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(1) The bye-laws of a co-operative society shall provide for the following matters, namely:-

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(a) the name and address of the society;

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(b) the area of its operation;

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(c) the objects of the society;

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(d) the manner in which funds may be raised and the maximum share-capital which a single member may hold;

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[(da) the norms regarding minimum essential utilisation of the services of the society or regarding minimum essential attendance of the meetings of the society or regarding other dealings with the society, which shall be fulfilled by a member.]

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(e) the nature and extent of the liability of the members;

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(f) the extent to which the society may borrow funds and the rates of interest payable on such funds;

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(g) the entrance and other fees to be collected form members;

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(h) the purposes for which its funds may be applied;

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(i) the terms, qualifications and conditions of admission of members and their rights and liabilities;

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(j) in the case of credit societies, -

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(i) the maximum loan admissible to a member; (ii) the maximum rates of interest of loans to members;

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(iii) the conditions on which loans may be granted to members;

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(iv) the procedure for granting extension of time for the repayment of loans and advances;

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(v) the consequences of default in payment of any sum due; and

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(vi) the circumstances under which a loan may be recalled;

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(k) the mode of conducting business, purchase, sale, stock- taking and other allied matters in case on non-credit societies;

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(l) the mode of holding meetings and issue of notices;

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(m) the mode of appointment of the committee by election or otherwise and removal of the committee and mode of appointment and removal of other officers, the duties and powers of the committee and such officers and their

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term;

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(n) the disposal of net profits;

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(o) the preparation and submission of the annual statements specified by Registrar and the publication of the same;

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(p) the constitution of an "Agricultural Credit Stabilisation Fund" in case of every co-operative society which facilitates the operations of affiliated agricultural co-operative credit societies and which has received financial assistance from the Government.

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(q) constitution and maintenance of funds;

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(r) the privileges, rights, duties and liabilities of members including nominal and associate

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members;

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(s) the manner of making, altering and abrogating bye-laws;

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(t) the Chairperson's powers, duties and functions and his removal on his losing support of the majority;

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(u) the mode of convening annual and special general meetings, issue of notices, and the business which may be transacted thereat;

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(v) to send a representative to another society;

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(w) any other matters incidental to the management of its business. (2) A society may make bye-laws for the following matters, namely :-

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(a) the method of recruitment, the conditions of service and the authority competent to fix, revise or regulate the scales of pay and allowances of paid officers and employees of the society and the procedure to be followed in the disposal of disciplinary cases against them;

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(b) the circumstances under which withdrawal from membership may be permitted;

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(c) the procedure to be followed in case of withdrawal, ineligibility and death of members; (d) the conditions, if any, under which the transfer of share or interest of a member may be permitted;

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(e) the method of appropriating payments made by members from whom moneys are due;

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(f) powers of an officer or officers to sign documents and to institute and defend suits and other legal proceedings on behalf of the society.”

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A bare perusal of the above schedule makes it clear that the same does not provide for framing of any Bye-law pertaining to qualification or dis-qualification of Member of a Co-operative Society/BOD. As held in Roop Nagar’s case (supra), a Cooperative Society is precluded from making stipulation through Bye-law in respect of subjects which are to be exclusively dealt with by the State Government in exercise of its rule making power under Section 123 of the Act of 2001.

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In view of the settled position of law as laid down in the cases of Pukhraj Mehta and Roop Nagar (supra) , this Court is of the clear opinion that Clause 26A(6) of the Bye-laws in question is hit by the ratio laid down in the said judgments. The disqualification prescribed under Clause 26A(6) of the Bye-laws being beyond the scope of Bye-law making power of the society/bank, the same is hereby declared ultravires the provision of the Act of 2001. The said Bye-law shall be treated as non est.

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Consequently, the order impugned dated 28.06.2023 is hereby quashed and set aside. The respondent authorities are directed to re-initiate the process for election of the Members of BOD with immediate effect strictly in accordance with law ignoring

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the aforesaid Bye-law No.26A(6) which has been declared ultravires by this Court.

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