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TMI Blog2015 (3) TMI 1430X X X X Extracts X X X X X X X X Extracts X X X X ..... c manner. A cooperative society is registered on cooperative principles of democracy, equity, equality and solidarity. Democratic accountability, mutual trust, fairness, impartiality, unity or agreement of feeling among the delegates, cooperativeness, etc., are some of the cardinal dimensions of the cooperative principles. A body built on such principles cannot be led by a captain in whom the co-sailors have no confidence - If a person has been selected to an office through democratic process, and when that person looses the confidence of the representatives who selected him, those representatives should necessarily have a democratic right to remove such an office bearer in whom they do not have confidence, in case those institutions are viewed under the Constitution/statues as democratic institutions. The cooperative society registered under the Central or the State Act is bound to function as a democratic institution and conduct its affairs based on democratic principles. Democratic functioning on democratic principles is to be reflected in the respective Acts or Rules or Bye-laws both on the principle and procedure. If not, it is for the court to read the democratic princi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A co-operative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. (Emphasis supplied) 6. The Statement also provides for 'values' on which cooperatives should model themselves, which reads as follows: Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. (Emphasis supplied) 7. The Statement further provides for 'seven cooperative principles' as guidelines by which the cooperatives put their values into practice. Following are the principles: 1st Principle: Voluntary and Open Membership Co-operatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2nd Principle: Democratic Member Control Co-operatives are democratic organi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, democratic functioning and professional management. The National Policy on Cooperatives announced by the Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India adopted in March, 2002, is wholly based on the definition, values and principles stated above. 97th Amendment to the Constitution of India, in fact, gave a constitutional frame to this policy. 9. Apart from providing for the right to form cooperative societies to be a fundamental right Under Article 19 of the Constitution of India and insertion of Article 43B under the Directive Principles of State Policy on promotion of cooperative societies, the amendment also introduced a new Part IXB on Cooperative Societies. Reference to the Statement of Objects and Reasons of the amendment would give a clear picture as to the need to strengthen the democratic basis and provide for a constitutional status to the cooperative societies. Thus, one has to see the constitutional aspirations on the concept of cooperative societies after the 97th Amendment in the Constitution of India which came into effect on 12.01.2012. STATEMENT OF OBJECTS AND REASONS The co-operative sector, over the years, ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate a new Part in the Constitution so as to provide for certain provisions covering the vital aspects of working of co-operative societies like democratic, autonomous and professional functioning. A new article is also proposed to be inserted in Part IV of the Constitution (Directive Principles of State Policy) for the States to endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies. The proposed new Part in the Constitution, inter alia, seeks to empower the Parliament in respect of multi-State co-operative societies and the State Legislatures in case of other co-operative societies to make appropriate law, laying down the following matters, namely: (a) provisions for incorporation, Regulation and winding up of co-operative societies based on the principles of democratic member-control member-economic participation and autonomous functioning; (b) specifying the maximum number of directors of a co-operative society to be not exceeding twenty-one members; (c) providing for a fixed term of five years from the date of election in respect of the elected members of the board and its office beare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members of the board and its office bearers: 243ZJ. (1) The board shall consist of such number of directors as may be provided by the Legislature of a State, by law: Provided that the maximum number of directors of a co-operative society shall not exceed twenty-one: Provided further that the Legislature of a State shall, by law, provide for the reservation of one seat for the Scheduled Castes or the Scheduled Tribes and two seats for women on board of every co-operative society consisting of individuals as members and having members from such class or category of persons. (2) The term of office of elected members of the board and its office bearers shall be five years from the date of election and the term of office bearers shall be coterminous with the term of the board: Provided that the board may fill a casual vacancy on the board by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of office of the board is less than half of its original term. (3) The Legislature of a State shall, by law, make provisions for co-option of persons to be members of the board having experience in the field of banking, manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n erstwhile Madras province [Brief History of Urban Cooperatives adapted from a paper by O.P. Sharma published on Reserve Bank of India website www.rbi.org.in/scripts/briefhistory.aspx] . The traits of democracy were present in the very first legislation through the principle one man, one vote . Since the first legislation was limited to the credit societies, a new legislation was introduced 8 years later as Cooperative Societies Act, 1912 . The restriction regarding registration limited to credit societies was taken away and any society established with the object of promoting the economic interests of its members in accordance with the cooperative principles, or a society established with the object of facilitating the operations of such a society, could be registered [The Co-operative Movement in India by Eleanor M. Hough, Fourth Edition, 1959] . 14. Under the Government of India Act of 1919 (Montague Chelmsford Reforms), cooperation became a provincial subject which gave a further impetus to the movement. This gave birth to several cooperative land mortgage banks. The first of its kind was registered in Punjab. Close to independence and thereafter, we see a radical chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the representative body, viz., the Board of Directors and that the Chairperson elected by the Board of Directors is the Chairperson of the society and not of the Board of directors. 18. In Bhanumati and Ors. v. State of Uttar Pradesh through its Principal Secretary and Ors. (2010) 12 SCC 1 , the cooperative principles governing democratic institutions have been discussed in detail; no doubt while dealing with the Panchayati Raj institutions. However, the basic democratic principles governing both the institutions, enjoying the constitutional status, are the same and, therefore, it would be profitable to refer to the discussion on the principles. To quote: 58. These institutions must run on democratic principles. In democracy all persons heading public bodies can continue provided they enjoy the confidence of the persons who comprise such bodies. This is the essence of democratic republicanism. This explains why this provision of no-confidence motion was there in the Act of 1961 even prior to the Seventy-third Constitution Amendment and has been continued even thereafter. Similar provisions are there in different States in India. 66. Democracy demands accountability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cedure framed Under Articles 118 and 208 of the Constitution. Both the Prime Minister of India and Chief Ministers of several States heading the Council of Ministers at the Centre and in several States respectively have to adhere to the principles of collective responsibilities to their respective houses in accordance with Articles 75(3) and 164(2) of the Constitution. 23. In Pratap Chandra Mehta case (supra), at paragraph-45, the principle has been discussed as follows: 45. In the instant case, the election process as contemplated under the relevant laws is that the members of a State Bar Council are elected by the electorate of advocates on the rolls of the State Bar Council from amongst the electorate itself. The elected members then elect a Chairman, a Vice-Chairman and the Treasurer of the State Bar Council as well as constitute various committees for carrying out different purposes under the provisions of the Advocates Act. In other words, the body which elects the Chairman or Vice-Chairman of a State Bar Council always consists of members elected to that Council. The democratic principles would require that a person who attains the position of a Chairman or Vice-Chairm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, but rather a set of implicit agreements to collude in keeping fundamental questions of political authority in a state of irresolution. Abeyances are, in effect, compulsive hedges against the possibility of that which is unresolved being exploited and given meanings almost guaranteed to generate profound division and disillusionment. Abeyances are important, therefore, because of their capacity to deter the formation of conflicting positions in just those areas where the potential for conflict is most acute. So central are these abeyances, together with the social temperament required to sustain them, that when they become the subject of heightened interest and subsequent conflict, they are not merely accompanied by an intense constitutional crisis, they are themselves the essence of that crisis. 27. In Part II, Chapter Four, the author has also dealt with the constitutional gaps and the arts of prerogative. To the extent relevant, it reads as follows (Page-82): Gaps in a constitution should not be seen as simply empty space. They amount to a substantial plenum of strategic content and meaning vital to the preservation of a constitution. Such interstices accommodate the abe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in States prior to the commencement of the Amendment Act to be in tune with and in terms of the constitutional concept and set up of cooperative societies. In fact, a period of one year has been provided in the Constitution from the commencement of the amendment for the required amendment or repeal by the competent legislature or by the competent authority, of laws which are inconsistent with Part IXB. As a corollary, the Constitution enables the competent legislature or authority to suitably amend the existing provisions in their laws in tune with the constitutional mandate. Thereafter, in case there continues to be silence in the Act or Bye-laws, the court will have to read the constitutional requirements into the existing provisions. It is essentially a process of purposive construction of the available provisions as held by this Court in Pratap Chandra Mehta case (supra). 30. Bye-law 18.2 of the first Respondent, pertaining to the office of the Chairperson of the Federation falling vacant before the expiry of his elected term, will have to be analysed in the light of the above principle. The provision reads as follows: 18.2. The Chairperson of the Federation will be el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aws: Provided that, where the bye-laws of a society provide for the election of delegates of such members, the final authority may vest in the delegates of such members elected in the prescribed manner, and assembled in general meeting. 33. The General Body of the first Respondent-Federation, in terms of Bye-law 13.1 comprises of the following: 13.1 The General Meeting shall consist of the following: (1) The Chairman of each of the affiliated Milk Unions enrolled as Ordinary Members; (2) The Registrar; (3) The Dairy Management Expert co-opted by the Board; (4) Managing Director of the Federation; (5) A nominee of the National Dairy Development Board as long as the loan/interest of the National Dairy Development Board have not been fully repaid by the Federation. The Chairman of the Board of Directors shall preside over the General Meeting. In case of his absence, the meeting shall elect a Chairman from among the members present. 34. The composition of the Board of Directors of the first Respondent-Federation is provided under Bye-law 18.1: 18.1 The Board will consist of the following: (i) Chairman of the affiliated milk unions enrolled as ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... term is five years. When the post of Chairperson falls vacant, the Board is bound to elect a new Chairperson for the remaining term. The post of Chairperson may fall vacant on account of variety of reasons like resignation, death or cessation of membership in the Board, operation of Section 76B of the Act, i.e., removal by the Registrar on account of persistent default or misconduct. 39. The removal by no confidence is not expressly provided in the Bye-laws. Neither is there any such provision in the Act or Rules. The only enabling provision is Bye-law 18.2 which mandates that in case the office of the Chairperson of the Federation falls vacant before the expiry of his term for any reason, the Board has to elect a new Chairperson for the remaining term. 40. Shri Kapil Sibal, learned Counsel appearing for the Appellant, inviting reference to the doctrine of casus omissus and placing reliance on the Full-Bench decision of the High Court of Kerala in S. Lakshmanan, President, Thiruvilwamal Weavers Co-operative Society v. V. Velliankeri, Member of Board of Directors, Thiruvilwamala Weavers Co-operative Society Ltd. and Ors. [AIR 2002 Kerala 325] and the decisions of the other H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the judgment, is that in absence of any provision in the Punjab Co-operative Societies Act, 1961, Rules and the Bye-laws made thereunder (as also in the Haryana Cooperative Societies Act, 1984, Rules and the Bye-laws made thereunder) for moving a no-confidence in the President of a Managing Committee/Chairman of a Board of Directors of a Co-operative Bank, it is not permissible to move such a motion, inasmuch as such a power cannot be inferred nor such a power is inherent in the members of the Managing Committee/Director of the Bank. The Office bearers can only be removed in accordance with Section 27 of the Act read with Rules 25 and 26 of the Rules. With respect we are unable to agree with the law laid down by the Division Bench in Haji Anwar Khan's case (AIR 1980 Punjab and Haryana 306) (supra) (which was a case under the Wakf Act), to our mind, does not lay down correct law. 44. It may be seen that all these decisions dealt with the pre-Ninety Seventh Amendment status of the cooperative societies. The amendment providing constitutional status to the societies has brought out radical changes in the concept of cooperative societies. Democratic functioning and autonom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well-settled proposition that a right to elect is not a fundamental right nor a common law right; it is a statutory right, and any question relating to election has to be resorted within the four corners of the Act as held by this Court in Jyoti Basu and Ors. v. Debi Ghosal and Ors.[(1982)1 SCC 691] . To quote paragraph-8: 8. A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a common law right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election. Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election. Statutory creations they are, and therefore, subject to statutory limitation. An election petition is not an action at common law, nor in equity. It is a statutory proceeding to which neither the common law nor the principles of equity apply but only those rules which the statute makes and applies. It is a special jurisdiction, and a special jurisdiction has always to be exercised in accordance with the statute creating it. Concepts familiar to common law and equity must remain strangers to election law unles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the legislation [Bennion on Statutory Interpretation by Francis Bennion, 6th Edition, p. 136] . 49. The conventional view is that the legislature alone makes the law. But as Bennion puts it: The truth is that courts are inescapably possessed of some degree of legislative power. Enacted legislation lays down rules in advance. The commands of Parliament are deliberate prospective commands. The very concept of enacted legislation postulates an authoritative interpreter who operates ex post facto. No such interpreter can avoid legislating in the course of exercising that function. It can be done by regarding the breadth or other obscurity of the express language as conferring a delegated legislative power to elaborate its meaning in accordance with public policy (including legal policy ) [Bennion on Statutory Interpretation by Francis Bennion, 6th Edition, p. 137] . 50. According to Donaldson J.: The duty of the courts is to ascertain and give effect to the will of Parliament as expressed in its enactments. In the performance of this duty the judges do not act as computers into which are fed the statues and the rules for the construction of statues and from whom issue fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... negatively, to prevent the frustration of the legislation or perversion of the goals and values of the society. So long as the courts keep themselves tethered to the ethos of the society and do not travel off its course, so long as they attempt to furnish the felt necessities of the time and do not refurbish them, their role in this respect has to be welcomed. 53. The cooperative society registered under the Central or the State Act is bound to function as a democratic institution and conduct its affairs based on democratic principles. Democratic functioning on democratic principles is to be reflected in the respective Acts or Rules or Bye-laws both on the principle and procedure. If not, it is for the court to read the democratic principles into the Act or Rules or Bye-laws. If a procedure is prescribed in any Act or Rule or Bye-law regarding election of an office bearer by the Board, as defined Under Article 243ZH(b) of the Constitution of India, and for removal thereof, by way of a motion of no confidence, the same procedure has to be followed. In case there is no express provision under the Act or Rules or Bye-laws for removal of an office bearer, such office bearer is liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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