2009(1) ALL MR 717 (F.B.)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY(AURANGABAD BENCH)(FULL BENCH)

F.I. REBELLO, S.B. DESHMUKH AND V.R. KINGAONKAR, JJ.

Kushal S/O. Bapurao Pawar Vs. State Of Maharashtra & Ors.

Writ Petition No.656 of 2008

19th September, 2008

Petitioner Counsel: Shri. V. D. SALUNKE
Respondent Counsel: Shri. N. B. KHANDARE,Shri. A. K. GUGLE,Shri. G. C. NAVANDAR,Shri. N. P. PATIL (JAMALPURKAR),Shri. S. B. TALEKAR
Other Counsel: Shri. P. M. SHAH

(A) Maharashtra Co-operative Societies Act (1960), S.73C(3) - Maharashtra Co-operative Societies Rules (1961), Rr.7, 8 - Election - Bye-laws - It will be open for a co-operative society to frame bye-laws - Such bye-laws can provide for constituencies - Bye-laws of a Co-operative Society do not have the force of law. AIR 1970 SC 245 - Rel. on. (Paras 11, 12)

(B) Maharashtra Co-operative Societies Act (1960), S.73C - Expression 'representative' - Interpretation of - Expression "representative" must be interpreted to connote a person to represent the non-borrower in S.73-C(3) and individual members in S.73-C(1). (2006)7 SCC 1 - Ref. to. (Para 14)

(C) Maharashtra Co-operative Societies Act (1960), S.73C - Election - Right to vote - Scope of S.73-C - S.73-C of the Act, held, enables non-borrower members alone to vote in the constituency of non-borrower members and to elect representative. (Para 16)

(D) Constitution of India, Art.19(1) - Maharashtra Co-operative Societies Act (1960), S.73-C - Right to vote - Right, held, not a fundamental right. AIR 1997 SC 2814 & AIR 1952 SC 64 - Ref. to. (Para 17)

(E) Constitution of India, Art.14 - Invocation of - Where a provision is said to be unreasonable or arbitrary, Art.14 can be invoked. (Para 17)

(F) Maharashtra Co-operative Societies Act (1960), Ss.73C(3), 27 - Maharashtra Co-operative Societies Rules (1961), Rr.7, 8 - Election - Right to vote - Restriction - Held, separate bye-laws can validly be framed for creating restrictive right of voting to a class of members. (Para 18)

(G) Maharashtra Co-operative Societies Act (1960), S.73C(3) - Election - From S.73-C(3), it cannot be inferred that creation of a separate constituency of non-borrowing members is contemplated.

S. B. DESHMUKH, J.:- Section 73-C(3), contemplates a restriction on the numerical strength of the category of non borrowing members on the managing committee. Second restriction clamped down is that such a representative from non borrowing members category is prohibited for being elected as Designated Officer. The term "Designated Officer" is defined under section 73-A(a) meaning thereby, the Chairman and the President 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. Thus, important offices as Chairman/President etc. are prohibited to officiate, by such a representative from non borrowing member category as contemplated under section 73-C(1) and (3) of the Act of 1960. Key words appearing in Section 73-C(3) "only from amongst members qualifies", the candidate/representative and not the constituency. From Section 73(C)(3) it cannot be inferred that creation of a separate constituency of non borrowing members is contemplated. Thus, "borrower members" or "non-borrowing members" are not intended to be cabined or enclosed such confinement or enclosure neither is intended from acquiring their status as a borrower member or non-borrowing members. Such interpretation of vertical split amongst the members of the co-operative society is not the legislative intent. It is the voluntary association of the members for promotion of their economical interests and welfare. 2008 ALL MR 404 (S.C.) and 2007(5) ALL MR 841 - Ref. to. [Para 32,33]

(H) Maharashtra Co-operative Societies Act (1960), S.73C(3) - Maharashtra Co-operative Societies Rules (1961), Rr.7, 8 - Election - Bye-laws of - Bye-laws of Co-operative Society do not have force of law.

S. B. DESHMUKH, J.:- Rights and liabilities of the members are determined by the Act of 1960 and not by the bye laws. Bye laws framed by the society and even if approved by the Registrar, do not have over-riding effect on any of the provisions of the legislative enactment. Bye laws must be construed in the manner so as to reflect the intention of the legislature and also make them effective and workable, relating to society concerned. They are for regulating the internal management of the society. They have to be in conformity with the Statutes and Supreme Court has held that if the bye law is not in conformity with the statute, it has to be ignored. However, it is true that society may have a bye law framed, Registrar may accept bye law but test has to be satisfied by the bye law that they are in consonance with the statutory provisions and to further enactment and shall not in the circumstances, they have over riding effect or they cannot prevail over the statutory provisions. (1984)2 SCC 50 and AIR 1970 SC 245 - Rel. on. [Para 35]

(I) Maharashtra Co-operative Societies Act (1960), Ss.73C(3), 27 - Maharashtra Co-operative Societies Rules (1961), Rr.7, 8 - Bye-laws - Election - Bye-law cannot be said to be valid for restricting members right to vote without there being legal sanction or denial of right to vote. (Para 36)

Cases Cited:
Dinkar Pandurang Patil Vs. Chikali Vividh Karyakari Society Ltd., 1984 CTJ 147 [Para 2,4,5,6,8,18,26,27,28]
Pandit R. Jagtap Vs. The Returning Officer, Tarukhedle Vividh Karyakari Sahakari (Vikas) Society Ltd., 1997 CTJ 5 [Para 3,27,28]
Machindranath Bandu Kale Vs. Satali V.K.S. Society Ltd., 1998(5) Bom.C.R. 928 [Para 3,27,28]
Dadarao Apparao Khatke Vs. State of Maharashtra [Para 3,27,28]
Utrane Vividh Karyakari Seva Sahakari (V) Society Ltd. Vs. Laxman Dalpat Patil, 1989 Mh.L.J. 1125 4 [Para 18,27,28,29]
Gulabrao Laxmanrao Kale Vs. Returning Officer to the elections of the Managing Committee of Shivana V.V.K.K.S.M. Shivana, W.P. No.124/1993, Dt.:-18-1-1993 [Para 4]
Shrimant Shahurao Deshmukh Vs. The State of Maharashtra, W.P. No.2071/1993, Dt.:-7-7-1993 [Para 4,29]
Bhajandas Gorekh Bhuirkar Vs. District Election Officer, 2004(1) ALL MR 749=2004(1) Mh.L.J. 923 [Para 5,6,8,27,29]
Vijay Shivaji Kokate Vs. Divisional Joint Registrar, Co-operative Societies, Nashik, 2007(5) ALL MR 841 [Para 6,27]
Sanjay D. Jadhav Vs. State of Maharashtra, 2007(6) ALL MR 126=2007(4) Mh.L.J. 888 [Para 6,18,27,29]
Veena Kumari Tandon Vs. Neelam Bhalla, 2008(1) ALL MR 404 (S.C.) [Para 7,29,34,35]
A. Jithendernath Vs. Jubilee Hills Co-operative House Building Society, (2006)10 SCC 96 [Para 7]
K. M. Nanavati Vs. State of Bombay, AIR 1961 SC 112 [Para 7,13]
Raja Ram Pal Vs. Hon'ble Speaker, Lok Sabha, (2007)3 SCC 184 [Para 7,30]
Co-operative Central Bank Ltd. Vs. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad, AIR 1970 SC 245 [Para 12]
Babaji Kondaji Garad Vs. Nasik Merchants Co-operative Bank Ltd., Nasik, (1984)2 SCC 50 [Para 12]
Kuldip Nayar Vs. Union of India, (2006)7 SCC 1 [Para 14]
Anukul Chandra Pradhan Vs. Union of India, AIR 1997 SC 2814 [Para 17]
N. P. Ponuswami Vs. Returning Officer, Namakkal, AIR 1952 SC 64 [Para 17]
Jumuna Prasad Mukhariya Vs. Lachhi Ram, AIR 1954 SC 686 [Para 17]
Karvenagar SGR Sanstha Maryadit Vs. State, AIR 1989 Bom. 392 [Para 22]
2007(1) ALL MR 741 [Para 29]
M/s. Girdhari Lal and Sons Vs. Balbir Nath Mathur, AIR 1986 SC 1499 [Para 32]
R. L. Arora Vs. State of Uttar Pradesh, AIR 1964 SC 1230 [Para 33]
M/s. Sanghvi Jeevraj Vs. M.C.G. & K.M.W. Union, AIR 1969 SC 530 [Para 33]
Co-operative Central Bank Ltd. Vs. Additional Industrial Tribunal (AP) Hyderabad, AIR 1970 SC 245 [Para 35]
(1984)2 SCC 50 [Para 35]


JUDGMENT

F. I. REBELLO, J.:- Noticing difference of opinion on the construction of Section 73-C(3) of the Maharashtra Co-operative Societies Act, 1960, hereinafter referred to as the Act, the learned Division Bench has placed this matter before the Hon'ble the Chief Justice for reference to a larger Bench for consideration of the following questions.

(1) Whether, Section 73-C of the Maharashtra Co-operative Societies Act, 1960, carves out restrictive right to vote for borrower or non-borrower members or all the members should have a right for electing all the seats of the managing committee ?

(2) Whether, separate bye-law can validly be framed for creating restrictive right of voting ?

2. Before we turn to the arguments, we may refer to the judgments based on which the learned Division Bench felt it necessary to refer the dispute for consideration by the Full Bench. The issue arose from construction of the provisions of Section 73-C(3) of the Act. The relevant sub-section reads as under :

"73-C(3) In the case of an Agricultural Credit Society which gives loans to individuals for the raising of crops, there shall not be more than one representative on the committee of such society, of members who have not taken any loans from the society; and that representative shall be elected only from amongst members who have not taken loans. Such representative shall not be eligible for being elected as a designated officer." (emphasis supplied)

A learned Division Bench of this Court in Dinkar Pandurang Patil & another Vs. Chikali Vividh Karyakari Society Ltd. & others (1984 CTJ 147) had considered the provision of Section 73-C(3). The learned Bench firstly noted that the bye-laws of the society do not provide for any separate constituencies. In construing Section 73-C(3), it firstly observed that election of such representative from amongst such non-borrowing members did not mean election "by" them alone. In the absence of any provision for the election of such representative "by" them alone, right of borrower members to exercise their vote in election for a seat reserved for non-borrowers cannot be denied. Right to vote in the affairs of the Society contemplated u/s.27(1) of the Act can not be denied without some legal authority for such denial. Secondly, no such exclusion of their voting rights can be inferred from the word "representative". Apart from election not being the indispensable ingredient of its conception, the context itself militates against it being its ingredient under the section. Thirdly and more importantly, suggestion as to any separate constituency for the election of the representative of the non-borrowing members assumes, as if they are necessarily entitled to have their representative on the committee. Any such assumption militates against the conception of "restriction" running through the three clauses of the section as against the reservations under Sections 73-B and 73-BB. Section 73-C(3) merely aims at restricting the number of the representatives of certain class of members on the Committee.

It may also be noted that the learned Bench held that instances of voters being divided into separate constituencies restricting their voting rights to the candidates standing from such constituencies are not unknown to the law of elections, where the number of voters happen to be large or interests of voters happen to differ depending on their place of residence or nature of their membership. The learned Bench then noted as under :

"The Act and the Rules to which our attention was drawn do not show how precisely the members of the Committee are to be elected. It appears to have been left to each Society to regulate such procedure by its bye-laws."

On facts, the Bench found that the byelaws do not provide for any separate constituties. In para 12, the Court observed as under :

"It is, however, advisable to frame proper bye-laws to implement the legislative mandate under Sections 73-B to 73-C to avoid any confusion."

3. This view was reiterated by another Division Bench in Pandit R. Jagtap & others Vs. The Returning Officer, Tarukhedle Vividh Karyakari Sahakari (Vikas) Society Ltd. & others (1997 CTJ 5) as also thereafter in Machindranath Bandu Kale & others Vs. Satali V.K.S. Society Ltd. & others [1998(5) Bom.C.R. 928]. It may be noted that in all the three judgments of the learned Division Benches, admittedly the bye-laws did not provide for separate constituencies and restriction on the voting rights of members. This view was also followed by another learned Single Judge in Dadarao Apparao Khatke Vs. State of Maharashtra & others (2002 CTJ 724 : [2002(1) ALL MR 599]).

4. In Utrane Vividh Karyakari Seva Sahakari (V) Society Ltd. & others Vs. Laxman Dalpat Patil & others (1989 Mh.L.J. 1125), a learned Single Judge followed the judgment in Chikali Vividh Karyakari Society Ltd. (supra), however, proceeded to hold that the bye-law providing that there will be only one representative of non-borrower members and he to be elected from amongst the non-borrower members is violative of Section 73-C(3) of the Act.

In an unreported judgment in Gulabrao Laxmanrao Kale Vs. The Returning Officer to the elections of the Managing Committee of Shivana V.V.K.K.S.M. Shivana in Writ Petition No.124/1993 decided on 18.1.1993, the learned Division Benches proceeded on the footing that this Court has taken a view in so many matters that borrowing and non-borrowing members have equal right to cast vote for all the members to be elected on the managing committee of the society. Bye-laws not giving equal right to vote to both borrowing and non-borrowing members is not legal and proper and is discriminatory. This view was reiterated in another unreported judgment in Shrimant Shahurao Deshmukh Vs. The State of Maharashtra & others in Writ Petition No.2071/1993 decided on 7.7.1993. The learned Bench referred to the judgment in Utrane Vividh Karyakari Seva Sahakari (V) Society Ltd. (supra) and observed that restriction on right to vote is done because of provisions of bye-law and held that the bye-law can not take away the right created in favour of the members as such bye-law is ultra vires the provisions of law and can not be given an effect to. It then observed :

"The Bye-law No.38, which makes discrimination between borrowing and non-borrowing members in the matter of voting to elect the seats of the Managing Committee is not proper to that extent. The election is, therefore, to be proceeded with ignoring the provision which makes discrimination between borrowing and non-borrowing members in the light of the observations made above."

5. In Bhajandas Gorekh Bhuirkar Vs. District Election Officer and others (2004 CTJ 253 : [2004(1) ALL MR 749]), another learned Division Bench, after considering the view taken in Chikali Vividh Karyakari Seva Sahakari Society Ltd. (supra) was pleased to observe that the learned Division Bench in Chikali V.K.S.S. (supra) had held the Section 73-C(3) only contemplated representation of the non-borrower members in the society and that representation of the elected representative of non-borrower members amongst themselves did not justify the inference of restrictive intention to constitute any separate constituency of such non-borrower members. The Bench further observed that it was only held that Section 73-C by itself does not create separate constituency for non-borrowing members and unless a separate constituency was created, there was only one constituency of all the members with the reservation of a seat for non borrower members. The Bench then proceeded to observe as under:

"But there is nothing in the Act, which prevents a Society from creating, under its bye-laws, separate constituencies for borrower members and non-borrower members. The bye-laws of a given Society may create separate constituencies for borrower members and non-borrower members. If such separate constituencies are created then bye-laws may provide that the voters belonging to one constituency, say of a borrower members, would be entitled to vote only for the election of the committee members from the constituency of borrower members and non-borrower members would be entitled to vote for election of a committee member from the constituency of non-borrower members."

It then proceeded to observe that thus one would have to look to the bye-laws of the society to find out whether separate constituencies are created by the said bye-laws for borrower members and non-borrower members. In that case, on facts, the Court noted that there was a bye-law providing for separate constituencies and that had not been challenged. It further noted that there was no such bye-law similar to the bye-law in the case of Chikali Vividh Karyakari Seva Sahakari Society Ltd. (supra).

6. The issue thereafter came up for consideration in a different context in the case of Vijay Shivaji Kokate Vs. Divisional Joint Registrar, Co-operative Societies, Nashik & others [2007(5) ALL MR 841]. The judgment in Chikali Vividh Karyakari Seva Sahakari Society Ltd. (supra) and other judgments including the judgment in Bhajandas Gorekh Bhuirkar [2004(1) ALL MR 749] (supra) were considered and this Court observed as under:

"Considering the ratio decidendi of the three judgments, referred to above, it would be clear, that the right to vote, would depend on the bye-laws of the society and as long as, such bye-laws are not inconsistent with Section 73-C(3) of the Act."

Considering the bye-law, which provided for restriction on voting rights, it was observed that such a bye-law which confers a right on non-borrowing members is not contrary to Section 73-C(3) of the Act or the judgments of this Court. This view was again reiterated in Sanjay D. Jadhav Vs. State of Maharashtra & others [2007(4) Mh.L.J. 888 : 2007(6) ALL MR 126].

7. Shri. V. D. Salunke, learned counsel appearing for the petitioner submits that on a plain reading of Section 73-C(3), what is clear is that, it contemplates a restriction on the representatives of the category of non-borrowing members on the managing committee and does not provide for reservation. Referring to the language of Sections 73-C(1) and 73-C(2), it is pointed out that whereas Section 73-C(1) in the case of District Central Co-operative Bank or Apex Co-operative Bank, uses the expression "representative to be elected by individual members from amongst themselves", Section 73-C(3) does not use the expression "by individual members from amongst themselves", but "only from amongst members who have not taken loans". In Section 73-C(1), the words "representative to be elected by individual members amongst themselves" was substituted for the words "representative of individual members" by Maharashtra Act No.20 of 1986. Also in the absence of any provision for election of such representative by non-borrowing members, the right of borrowing members to exercise their vote in the election cannot be denied. Considering the language of Section 27(1), such a right can not be denied without some legal authority for such denial. Reliance is placed on the judgment in the case of Veena Kumari Tandon Vs. Neelam Bhalla & others [2008(1) ALL MR 404 (S.C.)]. The Supreme Court in that case was considering a bye-law which restricted right of members belonging to the same family from voting. Considering the bye-law, the Supreme Court was pleased to observe that if members of the family are allotted flat or admitted to the membership of the society, they may be asked to disclose the details in regard to allotment of flat in favour of any other member of the family, but once admitted, the right to vote shall apply. Noting the judgment in A. Jithendernath Vs. Jubilee Hills Co-operative House Building Society and another [(2006)10 SCC 96], the Court observed that allowing such a bye-law to stand would mean that invalid bye-law shall be permitted to operate and that too in derogation to the legislative act. It held that it is now a well settled principle of law that a Legislative Act shall prevail over subordinate legislation. Bye-laws must, therefore, conform to the provisions of the Act and cannot be in derogation thereof.

The learned counsel also submitted that where it is not possible to follow the literal rule of construction, it is required that other aids of construction be applied and to that extent, relied on the judgment in the case of K. M. Nanavati Vs. State of Bombay (AIR 1961 SC 112) to observe that marginal notes and arrangements of sections may be looked to, as a better key to construction than a mere preamble.

This view was supported by Shri. P. M. Shah, learned amicus curiae. It was submitted that in all the judgments noted earlier of this Court, it has been accepted that Section 73-C(3) provides for restrictions and does not provide for constituencies. A perusal of Section 73-C (1), (2) and (3), would make it clear that language of Section 73-C(1) is different from the language of Section 73-C(3), whereas one uses the word "by", the other uses the expression "from amongst". It is then submitted that right to vote and represent is not an absolute right and there are limitations thereon, it being only a statutory right and not a Constitutional or fundamental right. (Raja Ram Pal Vs. Hon'ble Speaker, Lok Sabha [(2007)3 SCC 184]). Considering the marginal notes and that the section does not provide for reservation, it was contended that literal meaning does not justify any inference of legislative intent to constitute any constituency of non-borrowing members. It was,therefore, submitted that the scheme supports the proposition "all for each and each for all" save and except restrictions which are imposed to relative number of representatives. It is, therefore, submitted that Section 73-C(3) correctly read would mean that all members should have the right for electing to all the seats of the managing committee. Dealing with the second question, considering Section 27, it is contended that the bye-law, which restricts the rights of members to vote, would be invalid.

8. On the other hand, on behalf of learned Government Pleader, considering the scheme of Chapter VII, it is submitted that it is a separate chapter which provides for management of societies, its constitution, formation, powers and functions. It also provides for qualification and disqualification of the member representative. Section 73-C provides for restrictions on representation of certain class of members on the committees of certain societies and for being designated as officers. The section creates and provides for (a) representation, (b) restriction, (c) recognises classification of members, (d) recognises and confers right to choose representative and (e) defines electoral college. The learned Government Pleader has then referred us to the expression "representation/representatives" and "electoral college". Coming to Section 27(1), it is submitted that what section states is that each person shall have one vote. Reading of this section would indicate that this would apply to issues pertaining to business of the society and that matters of elections are covered by Chapter VII. It is further submitted that once it is possible to classify members, which section 73-C permits, then Section 27, which permits members to cast their votes, can be reasonably construed, as long as the right of the member to vote is not taken away. Even otherwise, it is pointed out that language of Section 27 is "no member of any society shall have more than one vote in its affairs". In other words, if this is read literally, no member can cast more than one vote. A proper construction, therefore, would be that in respect of "that constituency", no member can cast more than one vote.

Shri. N. P. Patil (Jamalpurkar), learned counsel appearing on behalf of intervenor, would support the view taken by the learned Government Pleader and points out that considering the various provisions, classification is permissible and that the restrictions can be imposed on the rights of the members.

Shri. Gugle, learned counsel appearing for respondent no.4, took us through the provisions of Section 165(3) as also Rules 7 and 8 of the Maharashtra Co-operative Societies Rules as also Sections 8 and 9 to submit that the society, while framing its bye-laws, must provide for constituencies and in this context, Section 27 would have no effect. Bye-laws, it is submitted, are in the nature of a contract between the parties and/or an instrument and as such, it is not possible to contend that the bye-law, which provides for a separate constituency and which restricts the rights of members in that constituency, to vote, confers any fundamental right to invoke the doctrine of discrimination or violation of fundamental rights. To that extent, it is submitted that the two unreported judgments do not lay down the correct law and should be overruled as also judgment of learned Single Judge in Utrane V.K.S.S. Ltd. & others. It is submitted that insofar as other judgments are concerned, there is no inconsistency. In Chikali V.K.S.S. Ltd., the bye-laws there did not provide for a separate constituency, whereas in the judgments following Bhajandas Bhuirkar [2004(1) ALL MR 749] (supra) and subsequent judgment, bye-laws provided for separate constituencies and that the judgment in Chikali V.K.S.S. Ltd. (supra) itself noted that there could be bye-laws providing for separate constituencies.

9. We, therefore, firstly prefer to answer the first point, which has been referred. Section 73-C(3), as already reproduced, firstly holds that there shall not be more than one representative on the committee of the society of members, who have not taken any loans from the society and secondly that representative shall be elected only from amongst members who have not taken loans. On a literal reading of this sub-section, it would contemplate firstly that in the case of Agricultural Credit Society, which gives loans to individuals for raising crops, if representation is to be provided for non-borrowers, it should not be more than one representative and such representative should be from members who have not taken any loans from the society. The sub-section then uses a conjunctive "and", that representative shall be elected only from amongst members who have not taken loans. It would, therefore, be clear on the literal interpretation that the sub-section permits representation, and that representative shall be from amongst non-borrower members. Is such representation to be elected from them ? Chikali V.K.S.S. noted that whereas Section 73-C(1) uses the expression "by", Section 73-C(3) used the expression "from amongst". This itself will indicate that under Section 73(C)(1), it is permissible to create a constituency and that will not be in conflict with Section 27. Section 165(3) provides that the Government may make rules for carrying out the purpose of the Act and Section (2) provides that such rules may prescribe the manner in which a society may make or the Registrar may direct a society to make bye-laws and the conditions to be followed in making, altering and abrogating bye-laws and the conditions to be satisfied prior to such making alteration or abrogation.

10. Rule 7 of the Rules sets out that where any society does not furnish the information in regard to the society as required by the Registrar or fulfil any of the conditions laid down in the Act or the rules, the Registrar may refuse to register that society. Rule 8(1)(y) reads as under :

"the conduct of elections to the committee and other bodies of the society as provided in the bye-laws, including the number of members to be elected by different constituencies and appointment of Returning Officer."

This rule, therefore, provides for the holding of elections and the number of members to be elected by different constituencies. Rule 8(2)(g) provides that the society may make bye-laws amongst others for constitution of a representative body, consisting of delegates of members of the society and the mode of election of such delegates to exercise the powers of the general body of members and to specify the powers which may be exercised by such smaller body. Under Section 8, application for registration has to be made in the prescribed form and accompanied by four copies of the proposed bye-laws. Section 9 then sets out that if the Registrar is satisfied that a proposed society has complied with the provisions of the Act and the rules amongst others and that the proposed bye-laws are not contrary to the Act or the rules, then to register the society and its bye-laws.

In other words, at the time of registration, there is a clear mandate on Registrar to satisfy himself, that the bye-laws framed are not contrary to the Act or the rules. Section 13 provides for amendment of the bye-laws on the application by the society and Section 14 is the sue motu power of the Registrar to direct amendment of the bye-laws.

11. It would, thus, be clear from the reading of the provisions of the Act and the rules that the bye-laws can be framed and such bye-laws can provide for constituencies. If Section 73-C (3) is considered by itself, then it will be open for a society to frame bye-laws in consonance with the language of that sub-section, which provides for (a) representation of not more than one member and (b) such member shall be elected from amongst such non-borrowing members.

12. It is now settled law that the bye-laws of a Co-operative society do not have the force of law. See Co-operative Central Bank Ltd. & others Vs. Additional Industrial Tribunal, Andhra Pradesh, Hyderabad & others (AIR 1970 SC 245). The Supreme Court there was pleased to hold that the bye-laws that can be framed by a society under the Act are similar in nature to the Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law. The bye-laws that are contemplated by the Act can be merely those which govern the internal management, business or administration of a society. They may be binding between the persons affected by them, but they do not have the force of a statute. This view was reiterated in Babaji Kondaji Garad Vs. Nasik Merchants Co-operative Bank Ltd., Nasik & others [(1984)2 SCC 50] where the Court further observed that if there be a conflict between the statute and the subordinate legislation, the statute will prevail over the subordinate legislation and the bye-law.

13. Assuming that from a literal construction, it is not possible to read into the language of Section 73-C(3) that it provides for reservation of a seat for non-borrowers and to be elected amongst themselves, let us apply other rules of constructions. The rule of interpretation is to consider the marginal notes and arrangement of sections as internal aids as observed by the Supreme Court in K. M. Nanavati (supra). Chapter VII provides for management of societies. Section 73 provides for committee, its powers and functions, constituted in accordance with the Act, rules and bye-laws. Heading of Section 73-C reads as under :

"Restrictions on representation of certain class of members on committee of certain societies and for being designated officers."

It is not disputed that under Section 73-C(1), there is a restriction on representation of individual members in the case of District Central Co-operative Bank or an apex Co-operative bank and such a member is "to be elected by individual members from amongst themselves". In other words, the Section provides that bye-laws can be framed for providing a constituency for individual members and further these individual members can elect one member from amongst themselves. Notwithstanding Section 27, it is permissible for a class of members to vote to the exclusion of the other members for the constituency of individual members.

It is true, insofar as Sections 73-B and 73-BBB that seats are reserved for special categories, yet all the electors have the right to vote for seats reserved for such categories. For employees in case of Section 73-BB, seats reserved for employees have to be filled in by selection from amongst recognised union or unions and when there is no union, then the seats so reserved can be filled in by election of such employees from amongst themselves in the prescribed manner. It is true that the union members may not be members of the society, but yet what the section indicates is that, a class of persons who are members of the union can vote to elect their representative on the committee of the society to the exclusion of its members.

14. Chapter VII uses the expression "representative on the committee", as may be seen, which is the terminology used in Section 73-C of the Act. The expression "representation" or "representative" is not defined in the Act, but the ordinary dictionary meaning would be "consisting of people chosen to act and collective group", "a person to act for another", "representative is one chosen by people to act, exercise power to perform a trust".

Thus, the representative must be interpreted to connote a person to represent the non-borrower in Section 73-C(3) and individual members in Section 73-C(1). The expression "representative" is used in Article 80 with reference to the Council of States. The expression came up for consideration in Kuldip Nayar & others Vs. Union of India & others [(2006)7 SCC 1]. The Court observed as under:

"On the same analogy, it must be said that when a candidate is elected by the electorate comprising of the Members of the Legislative Assembly of the State to represent the State in the Council of States, he is elected and chosen as "a representative of the State". The words "representative of the State" do not in any manner connote that the representative must also be an elector or a voter registered in the State itself."

This was in the context of the challenge being raised that a representative must be from the State only.

Though the word "electorate" is not used in Section 73-C, it speaks about representative to be elected by individual members amongst themselves or representative shall be elected only from amongst members who have not taken loan. In that context, the words "electorate" (members) has to be confined to the body of persons electing a representative.

From reading the various provisions and the terminology used in Section 73-C(3) and read literally or by means of aids of construction that the section provides for representation of non-borrower members from amongst them.

15. Would then a bye-law that makes provision for election of such representation and from such members, considering Section 27 of the Act be legal. For that purpose, we may reproduce Section 27(1), which reads as under:

"Save as otherwise provided in sub-sections (2) to (7), both inclusive, no member of any society shall have more than one vote in its affairs; and every right to vote shall be exercised personally and not by proxy :

Provided that, in the case of an equality of votes the Chairman shall have a casting vote."

From this provision, we find that the expression used is that no member of any society shall have more than one vote in its affairs and every vote shall be exercised personally. Ordinarily, this would, if the section is literally read, to mean that a member can cast only one vote. This normally would be applicable in a case of internal management i.e. either at a meeting of the general body or of its managing committee where each member would have only one vote. In case of tie, the proviso provides that Chairman shall have a casting vote.

The expression "vote" in its affairs, as argued by the learned Government Pleader, ought not to have applied in the matter of elections to societies as members have to cast more than one vote. However, in our opinion, this argument need not be considered considering the judgment in Veena Kumari Tandon where Section 27 was considered vis-a-vis bye-law, which restricted the right of voting to members who belonged to the same family.

16. Once the bye-laws have to provide for constituencies, each constituency can be a class by itself. That classification is permissible can be seen from reading Section 73-C(1) as an illustration. Once classification is permissible, then a bye-law which restricts a right of voting to that class of members who alone can be elected to that constituency cannot be said to be ultra vires Section 27 of the Act as one member will cast one vote for the constituency. If Section 27 is to be read literally in selection of representatives on the committee, then the expression "one vote in its affairs" would be redundant. For a harmonious construction, it would have to be read meaning "members of that constituency who are selecting their representative". Otherwise, there was no need in Section 73-B(4) to use the expression "every person who is entitled to vote at the election of the committee shall be entitled to vote at the election to any such reserved seat". Similar is the language in Section 73-BBB(4). Those sections, therefore, provide that though there may be reserved constituencies, yet all members have the right to vote. If it is so read, then it cannot be said that where the Section provides for restriction of representation on a committee from a class of persons known as "non-borrowers" restricting the right to vote to select a representative on a committee from that constituency is ultra vires Section 27 of the Act.

The first point of reference will have to be answered that Section 73-C of the Act enables non-borrower members alone to vote in the constituency of non-borrower members and to elect representative.

17. Having so said, the next question to answer is question no.2 as referred. That the right to vote is not a fundamental right is no longer res integra. In Anukul Chandra Pradhan Vs. Union of India & others (AIR 1997 SC 2814), the issue once again came up for consideration, as to whether it is a fundamental right or merely a statutory right and if so whether such a right can be restricted. The Supreme Court referred to its earlier judgment in N. P. Ponuswami Vs. Returning Officer, Namakkal (AIR 1952 SC 64) where the Court had observed as under :

"The right to vote or stand as a candidate for election is not a civil right but is a creature of statute or special law and must be subject to the limitations imposed by it."

In Jumuna Prasad Mukhariya Vs. Lachhi Ram (AIR 1954 SC 686), the Court observed:

"........The right to stand as a candidate and contest an election is not a common law right. It is a special right created by statute and can only be exercised on the conditions laid down by the statute. The Fundamental Rights Chapter has no bearing on a right like this created by statute......."

Concluding after reference to other judgments, the Court observed :

"In view of the settled law on the point, it must be held that the right to vote is subject to the limitations imposed by the statute which can be exercised only in the manner provided by the statute; and that the challenge to any provision in the statute prescribing the nature of right to elect cannot be made with reference to a fundamental right in the Constitution............"

A bye-law so framed which restricts the right of the member to vote for election to a specific constituency of non-borrowers cannot be said to be violative of the fundamental right or arbitrary. In fact, as noted, the Supreme Court in Anukul Chandra Pradhan (supra) has been pleased to hold that prescribing the nature of right to elect cannot be made with reference to a fundamental right in the Constitution. The two unreported judgments of this Court as also the judgment of the learned Single Judge would be contrary to the law laid down by the Supreme Court if it is held that they proceeded only on the footing that such a bye-law is discriminatory being violative of Article 14 of the Constitution namely the equality clause.

In our opinion, however, a statutory provision including a bye-law, even if be not an exercise in subordinate legislation, which is unreasonable can also be struck down for violation of Article 14. Therefore, it cannot be said that Article 14 cannot be invoked in a case even where a provision is said to be unreasonable or arbitrary. As such, it would not be a fundamental right of a member which is being affected but a provision of a bye-law. Those unreported judgments can also be read in the another context to mean that what the learned Benches really held, was that the bye-laws were ultra vires the provisions of Section 73-C(3) and Section 27. If so read, then the issue of fundamental rights would not arise. Considering the judgments, apart from using the expression "discriminatory", the learned Division Benches have not proceeded on the footing that they are violative of the fundamental rights of a member. They proceed on the footing that they will be ultra-vires Section 27.

18. In our opinion, it will not be possible to accept the view taken by the two Division Benches in the unreported judgments as also the view taken by the learned Single Judge in Utrane V.K.S.S. (supra). Section 73-C(3) permits a restriction on representation from amongst non-borrowers and further provides that such members must be from the class of non-borrowers. Bye-laws, therefore, can provide that from such constituency only members belonging to that class can vote. This is a view held by this Court from Chikali V.K.S.S. till Sanjay Jadhav [2007(6) ALL MR 126] (supra). In our view, considering that this view is prevailing from 1984 onwards and our earlier discussion, it cannot be said that such a byelaw is not in conformity with the language of Section 73-C(3) or in conflict with Section 27 of the Act.

The reference insofar as the second point is concerned, will have to be answered in the affirmative namely that separate bye-laws can be validly framed for creating restrictive right of voting to a class of members.

19. Conclusions :

(i) Section 73-C(3) of the Maharashtra Co-operative Societies Act, 1960, read with the bye-laws enables a restrictive right to vote, for non-borrower members.

(ii) As the Act and its rules provide that the bye-laws must provide for constituencies, if constituencies are created for a class of members considering the language of Section 73(C)(3) and the right to vote is restricted to such class of members, then such bye-laws will not be ultra-vires Section 73-C(3) or Section 27 of the Maharashtra Co-operative Societies Act, 1960.

The reference is answered accordingly.

The Registrar (Judicial), considering the majority opinion, to place the matter before the Division Bench assigned to hear the writ petition.

CONTRA VIEW : S. B. DESHMUKH, J.:- 20. I have had the benefit of reading the judgment of my Brother Judge Mr. F. I. Rebello, J., who wrote for himself and on behalf of another Brother Judge Mr. V. R. Kingaonkar, J. With due respect, it is not possible for me to agree with the conclusions drawn and issues answered under reference in the said judgment.

21. This reference comprises of two issues, which are reproduced hereinbelow :-

(1) Whether, Section 73-C of the Maharashtra Co-operative Societies Act, 1960, carves out restrictive right to vote for borrower or non borrower members or all the members should have a right for electing all the seats of the managing committee ?

(2) Whether, separate bye-law can validly be framed for creating restrictive right of voting ?"

22. For consideration and decision of the issues referred to the Larger Bench, historiate of the Co-operative legislation, some definitions and a look to the purpose, aim and objects is necessary.

The Co-operative Credit Societies Act, 1904 was the first legislation in India relating to Co-operative societies. Apart from this Act, passed by the Central Government, there were some State Legislations. Bombay Co-operative Societies Act, 1925 (Bombay VII of 1925) was thought expedient and necessary. Said Act of 1925 was extended through out the State. It was considered necessary to consolidate the relevant provisions of the existing laws and provide for further amendments. Shri. G.M. Laud was the Chairman of the committee appointed by the State Government to suggest a common Act for all areas of Maharashtra. The Government of India had also appointed a committee to evolve a simple law to govern the working of the co-operative societies. The recommendations of these two committees have been taken in to account in the present Bill. The Bill seeks to provide for the systematic development of the cooperation movement and the societies in the various stages, keeping with the directive principles of State Policy enunciated in the Constitution of India and to consolidate and amend law relating to Co-operative societies in the State of Maharashtra. It was Maharashtra Act No.24 of 1961, which after assent was made enforceable from 26.1.1962.

Under Section 2(v) "bye-laws" means bye laws registered under the Act of 1960 and for the time being in force and includes registered amendments of such bye laws. "Committee" means the committee of management or other directory body to which the management of the affairs of the society are entrusted, under section 2(7) of the Act of 1960. "Member" means persons joining in on application for registration of the Co-operative society which is subsequently registered, or a person duly admitted to membership of a society after registration and includes a nominal, associate or sympathiser member.

[Section 2(19)(a)].

Section 2(19)(c) has defined a "nominal member". Section 2(19)(d) has clarified "sympathiser member". "Society" means a Co-operative society registered or deemed to be registered under the Act of 1960 as provided under section 2(27).

"Objects of a society" under section 4 of the Act of 1960 are listed as; (i) the promotion of economic interest or welfare of its members or of the public in accordance with the Co-operative principles. For such objects, a society may be registered under the Act of 1960. The economic interest of the members referred under section 4 of the Act of 1960 are to be understood in the context with reference to the objects of the society. The object of such a society should not be that of money lending, meaning thereby to earn good return from the investment by way of interest. In case of a housing society the promotion of economic interest and its members means, securing land at low price and to build good houses at low costs. The promotion of economic interest or general welfare of the members importantly should be in accordance with "Co-operative principles". The term is not defined under the Act of 1960. "Co-operative principles" according to Calvert (Law and Principles of Cooperation by H. Calvert - V Edn. 1959). First principle is that all the members joined as human persons and not as capitalist. Basis of the movement was thus not the capital, however, human individual. Meeting of the members contemplated as second principle by Calvert was on the basis of equality. The individuals meet to satisfy common need and there should be no distinction between the individual in satisfying of that need. The members joined to promote the economic interest of this, ordinarily is also amongst the expression "Co-operative members". S. S. Talmaki (1931 Edn) had stated that the essence of co-operation is that each shall work for all in attainment of their common goal. For formation of the society, requirement of ten persons from different families is considered imperative by section 6(i) of the Act of 1960. Section 6(3) of the Act of 1960 however, provides that for registration of the federal society, atleast five societies as its members is a requirement. Expression "member of family" is clarified in an explanation under section 6 of the Act of 1960. To sum up, it can be said that self help and mutual help are the keywords in the co-operative movement. (Emphasis supplied).

Thus, a Co-operative society is a voluntary association of persons. The objects and scope of Co-operative legislation had been described by Mr. Watkin in his Preface to International Hand-Book of Co-operative Legislation that true co-operation draws its inspiration from realms where the State's writ does not run. Co-operative movements are not created by legislation. Nevertheless, without an appropriate legislative framework a co-operative movement in the form of a growing economic organism is not possible or even conceivable.

It would be interesting to make a reference to the speech of Sir Denzil Ibbeston introducing Co-operative Credit Societies Bill, 1904, which sets out broad principles and precautions in respect of legislation regarding co-operative societies. He said, "The people must in the main be left to work out their own salvation on their own lines, the function of Government being confined to hearty sympathy, assistance and advise." He has further said, "Co-operative Credit Societies Bill, 1904 prescribes the basic rule that the bye-laws of a co-operative expresses its real intention of the participating members, and should be framed within the parameter of the Act and the Rules." (Emphasis supplied)

The principles of cooperation have been reenunciated by the India Co-operator, late Prof. D. G. Karve, which are as follows :-

"(i) Membership of a co-operative society should be voluntary and available without artificial restriction or any social, political, racial or religious discrimination, to all persons who can make use of its services and are willing to accept the responsibilities of membership;

(ii) Co-operative societies are democratic organisations, their affairs should be administered by persons elected or appointed in the manner agreed by the members.

(iii) The membership should provide for development of the business of the Co-operative, provide for common services and distribute amongst the members the profits made."

These principles have been noted and reproduced by the Division Bench of this Court (Coram : Pendse & Tipnis, JJ. in Karvenagar SGR Sanstha Maryadit Vs. State - AIR 1989 Bom. 392).

The learned Division Bench of this Court while considering the scope of sections 4 and 79-A of the Act of 1960, has held;

"The bare perusal of S.4 and S.79-A leaves no manner of doubt that the power is to be exercised for the purpose of securing proper implementation of co-operative movement......It is not permissible for the State Government to compel the society to amend its bye-laws so as to defeat the object and formation of the society."

The objects of the Act of 1960 have been considered and noted by learned Division Bench of this Court in the matter of the Malbar Hill Vs. K. L. Gauba ((Sic) Bom.L.R. Vol.LXV Page 533). Their the Court was considering the issue, whether a nominee appointed by the Registrar under section 93(1) of the Act of 1960 is a Court ? Learned Bench observed; "Section 4 shows that the society which has its objects, the promotion of the economic interest or general welfare of its members or of the public, in accordance with the Co-operative Principles or a society with the object of facilitating the operation of any such society, is registered under this Act.

23. Three tier structure of the Co-operative movement needs a brief reference. It consists, (i) Apex societies at the state level, (ii) central societies at the district level and (iii) primary societies at the village level. These institutions though are functioning at different levels are connected by bonds of affiliation. However, in financial and legal term, they are distinct entities, each catering a set of specific purpose, which justify its existence as an independent institution at that level. Classification of the societies into one or other of the classes has been defined under section 2 of the Act of 1960 and further sub-classification also has been prescribed by Rules. Section 12 of the Act of 1960 empowers the Registrar for classification of the societies.

Primary societies may be classified into agriculture and non-agricultural societies. Agricultural societies are grouped into credit societies and non credit societies. The central societies may be classified into three categories. The central societies function at the district level between the primary village level societies and the apex society at the State level. We are chiefly concerned with the agricultural credit societies, ordinarily functioning at village level to cater the needs of agriculturists and/or financial support by way of loan to agriculturists for raising of the crops.

24. Chapter III of the Act of 1960 deals with the Members and their rights and liabilities. Eligibility to become a member is provided by section 22. "Membership" contemplated is "open membership". A society may admit any person as a nominal, associate and/or sympathiser member (Section 24(1)). This provision is not withstanding the scheme of section 22. Sub-section 2 of Section 24 mandates that a nominal member or sympathiser member shall not be entitled to any share in any form. Any profits or assets of the society in the capacity of nominal or sympathiser member. Such member, it has been further provided, shall ordinarily not have any of the privileges and rights of a member. Privileges, rights and liabilities of nominal sympathiser or associate member are subject to sub-section (8) of Section 27 of the Act of 1960. While considering the issues, rights, privileges and liabilities of nominal member and sympathiser member have no bearing. The life span of a member from registration of the society, and if such member has joined after registration of the society, and/or person admitted to the membership of the society shall be uptill cessation of membership of such person. Section 25 of the Act of 1960 provides that persons shall cease to be a member of the society on his resignation being accepted or on the transfer of whole of his share or interest in the society to another member or his death or removal or expulsion from the society in accordance with the scheme of the Act of 1960. Prohibition against exercising rights of a member is provided under section 26 of the Act of 1960. It has been provided that before a person is entitled to rights of the membership he must make such payment to the society in respect of membership or acquisition of such interest in the society. Unless and until this is done, Section 26 prohibits such a person from exercising rights of a member. "Voting power of a member" is subject matter of section 27 of the Act of 1960. Principle, ordinarily of "One Member One Vote" is contemplated. In other words, voting right is not based on the monetary interest of the share holder. "One Member One Vote" is of course, with few exceptions and subject to the provisions of the Act of 1960. One of the exception is Chairman of the society, who shall have an additional vote in equality which, under parlance of Co-operative movement, recognised as "Casting vote".

25. Before turning to the arguments of learned counsel appearing for the respective parties, I would like to reproduce provisions laid down under section 73-C of the Act of 1960 in its entirety so also to judicial pronouncements cited at Bar.

"73C. Restrictions on representation of certain class of members on committees of certain societies and for being designated officers.- (1) In the case of a District Central Co-operative Bank or an Apex Co-operative Bank of the District Central Co-Operative Bank, there shall not be more than one representative to be elected by individual members from amongst themselves on the committee of such Bank, and such representative shall not be eligible for being elected or appointed as a designated officer.

(2) In the case of a District Co-operative Agriculture and Rural Multipurpose Development Bank or State Co-operative Agriculture and Rural Multipurpose Development Bank, or an Apex Agriculture and Rural Development Bank, there shall not be more than one representative on the committee of such Bank, of Members, who have not taken any loans from the Bank, and such representative shall not be eligible for being elected or appointed as a designated officer.

(3) In the case of an Agricultural Credit Society which gives loans to individuals for the raising of crops, there shall not be more than one representative on the committee of such society, of members who have not taken any loans from the society; and that representative shall be elected only from amongst members, who have not taken loans. Such representative shall not be eligible for being elected as a designated officer."

26. So far judicial pronouncements are concerned, first is the reported judgment in the case of D. P. Patil Vs. Chikhali VKSS Society [1984 CTJ 147] (Coram : V. S. Deshpande and B. Lentin, JJ.). The learned Division Bench noted factual aspect that bye laws of Chikhali Society do not provided for any separate constituency as such for the election. Sections 27(1) and 73-B to 73-BB were considered in the said case. On this premise, section 73-C(3) was interpreted by the learned Division Bench. It is held that there is no doubt that on its plain wording, the section contemplates representation of borrowing members on the Committee by an elected representative. It is further observed that this does indicate the legislative recognition of the distinction if any, conflict between the interests of borrowing and non borrowing members and anxiety to prevent domination of the former (borrowing members) by later (non-borrowing members). The learned Bench further held that this representation by the elected representatives from amongst them still does not justify any inference of legislative intent to constitute any constituency of such non-borrowing members. In paragraph No.9 it is held that firstly election of such a representation from amongst such non borrowing members, does not mean an election by them alone. In the absence of any provision for the election of such representative, by them alone right of borrowing members, who exercise their vote in the election, cannot be denied. Right to vote in the affairs of the society contemplated under section 27(1) of the Act of 1960 cannot be denied without some legal authority for such denial. Secondly, learned Division Bench further observed that no such exclusion of their voting rights can be inferred from the word "representative". Apart from the election, not being the indispensable ingredient of its exception, the context itself is against it, being its ingredient in this section (Para 9). (Emphasis supplied).

In paragraph No.10, it is further observed that thirdly and more importantly one has to be in a separate constituency for the election of the representation of the non borrowing members, assuming as if they are necessarily entitled to have their representative on the committee. As such assumption militates against a span of "restriction" running through the three clauses of this section as against the reservation under sections 73-B and 73-BB. It is also observed that any such assumption obviously ignores the distinction between reservation and restrictions. The learned Division Bench further ruled that section 73-C merely aims at restricting the members and the representatives of such class of the members of the committee. In other words, the section ensures restricting the number of representations and not their representation.

Learned Division Bench in paragraph No.10 opined that possibility of any representation from amongst them being elected at all is not ruled out under this scheme.

It is true that learned Division Bench in paragraph No.12, observed that it is, however, advisable to frame proper bye laws to implement the legislative mandate under sections 73-B and 73-C to avoid any confusion.

27. The judgment of the learned Division Bench of this court, in the matter of D. P. Patil (supra) is followed in other judicial pronouncements enumerated herein below :-

(1) 1989 Mh.L.J. 1125 (Utrane Vividh Karyakari Seva Sahkari (V) Society Ltd. Vs. Laxman Dalpat Patil and others) (Coram : Mrs. Sujata Manohar, J.),

(2) 1997 C.T.J. 5 (Pandit R. Jagtap Vs. Returning Officer) (Coram : A. G. Agarwal and Dr. (Mrs.) P. D. Upasani, JJ.),

(3) 1998(5) BCR 928 (Machindranath B. Kale Vs. Satali VKSS Society) (Coram : Ashok Agarwal and Smt. R. P. Desai, JJ.),

(4) 2002 CTJ 724 : [2002(1) ALL MR 599] (Dadarao Apparao Khatke Vs. State of Maharashtra) (Coram : A. P. Deshpande, J.).

There is another group of three recent judicial pronouncements as under :-

(1) 2004(1) MLJ 923 : [2004(1) ALL MR 749] (Bhajandas Gorekh Bhuirkar Vs. District Election Officer) (Coram : A. P. Shah and D. G. Karnik, JJ.),

(2) 2007(5) ALL MR 841 (Vijay Shivaji Kokate Vs. Divisional Joint Registrar, Co-operative Societies) (Coram : F. I. Rebello and R. V. More, JJ.),

(3) 2007(4) Mh.L.J. 888 : [2007(6) ALL MR 126] (Sanjay D. Jadhav Vs. State of Maharashtra) (Coram : F. I. Rebello and R. M. Savant, JJ.).

In the case of Bhajandas (supra), the learned Division Bench has considered bye-law No.38-A, an approved bye-law, having two constituencies and voters' list i.e. A class borrower members constituency and B class non-borrowing members constituency. In this case, the learned Division Bench in paragraph No.6 of the judgment has referred judgment in the case of Chikhali VKSS (supra), decided by the earlier Division Bench. In paragraph No.8 of the said judgment (i.e. Bhajandas), it has been observed that the decision in the case of Chikhali VKSS is distinguishable on facts and does not support arguments of the petitioner therein. Creation of a separate constituency by a bye-law in that case, has been noted in this paragraph No.8.

In the case of Pandit (supra), earlier Division Bench judgment in the case of Chikhali VKSS has been referred and it being consistent, has been followed.

In the case of Machindranath (supra), the learned Division Bench has referred to Chikhali VKSS and nearly followed the said judgment which is manifest from paragraph No.4 of this judgment.

In the case of Dadarao (supra), the learned Single Bench dealing with the said case has referred Chikhali VKSS in paragraph No.7 and also Utarne VKSS (supra) and followed both these judgments.

In the case of Vijay (supra), learned Division Bench in paragraph No.7 has referred cases of Chikhali VKSS, Machindranath, Bhajandas (supra) and thereafter, noted the facts available in that case. In paragraph No.8, it has been observed;

"..... The question is whether such a bye-law is invalid ? In our opinion, in the absence of any bar in the Act and the object behind the provision for providing for representation of a non-borrowing member on the managing committee and considering the model bye-laws of respondent No.3 have been carried out it was well within the jurisdiction of the registrar to have certified the bye-laws....."

It has been further observed;

"The bye-laws as amended were approved by the General Body of the society and have been certified by the Registrar....."

At the end of said para, it has been observed;

".....This Court will not strike down the bye-law in the exercise of its extra ordinary jurisdiction considering that it is not statutory. However, the challenge to the orders of the Certifying Officers and the orders passed in appeal or revision, as the case may be, the decision certifying the bye-law can be examined and if contrary to law, will be struck down, which will have the effect of the bye-law being not certified and consequently not a part of the certified bye-laws....."

Ratio of the judgment in the case of Vijay (supra) will have to be read and understood on the backdrop of the facts available. In my view, this judgment can not be relied upon by learned Advocates Shri. N. P. Patil and Shri. N.B.Khandare (Government Pleader). This judgment do not indicate that the learned Bench has dis-approved the ratio laid down by the earlier Division Bench in its totality i.e. in the matter of Chikhali VKSS. The fact remains that the learned Division Bench was considering bye-laws framed and certified by the competent authority.

In the case of Sanjay (supra), the learned Division Bench in paragraph No.3 has noted the earlier round of litigation and in paragraph No.5 has noted bye-law No.38 as well as bye-law No.38-B. On this premise, the learned Division Bench in paragraph No.11 of the judgment has observed;

"We, therefore, find that the challenge of the petitioner to the restrictive right of voting in respect of the borrower and non-borrower constituency is bereft on any merit. The fact that separate constituencies have been created is a pointer to the fact that voting right would be restricted though there is no specific bar in the said bye-laws."

This judgment, in my view, does not support learned counsel Shri. N. P. Patil, Shri. N. B. Khandare (Government Pleader) and Shri. A. K. Gugale.

Apart from the above noted reported judicial pronouncements of this Court, there is one unreported judicial pronouncement in the matter of; Shrimant Shahurao Vs. State of Maharashtra in Writ Petition No.2071 of 1993 (Coram : B. N. Deshmukh and M. S. Vaidya, JJ.).

In this matter, the judgment of the learned Single Bench in the case of Utrane VKSS (supra) is relied upon.

28. Shri. Salunke, learned Advocate submitted that ratio of the judgment in the case of D. P. Patil (supra) has been followed in 1997 CTJ 5 (Pandit R. Jagtap Vs. Returning Officer) and 1998(5) Bom.C.R. 928 (Machindranath B. Kale Vs. Satali VKSS) and two judgments of the learned Single Bench, first in the matter of Utrane (supra) and second in the matter of Dadarao [2002(1) ALL MR 599] (supra).

29. Shri. Salunke, learned Advocate submitted that different view is taken by the learned Division Bench in recent three judgments i.e. (i) 2004(1) Mh.L.J. 923, (ii) 2007(1) ALL MR 741 and (iii) 2007(4) Mh.L.J. 888 : [2007(6) ALL MR 126]. This view taken, according to Shri. Salunke, is not reconcilable with two unreported judgments of the Division Bench and Chikhali VKSS. In the matter of Shrimant Shahurao (supra), judgment in the case of Utrane VKSSS (supra) has been relied upon.

Amongst these two unreported judgments, judgment in the matter of Shrimant Deshmukh (W.P. 2071 of 1993), the learned Division Bench dis-approved bye law No.38 therein on the ground of discrimination amongst two sets of members of the society. This view taken by the learned Division Bench is in consonance with Section 27 of the Act of 1960 and Article 14 of the Constitution of India. I concur with this view taken.

Another unreported Division Bench judgment of this Court is in Writ Petition No.124 of 1993. There, in that case, the learned Division Bench has considered the bye-laws of the society in question and found that they are providing discrimination. This view seems to be in consonance with un-reported Division Bench judgment in the matter of Shrimant Deshmukh (supra).

Learned counsel Shri. Salunke further relied upon section 27 which contemplates equal right of vote i.e. "One Member One Vote". In support of his submission he relied upon the judgment of the Supreme Court in the matter of Veena Kumari Tandon Vs. Neelam Bhalla and others [2008(1) ALL MR 404 (S.C.)]. According to him, section 73-C(3) depicts legislative intend of control of borrowers in the affairs of the agriculture credit society. He further submitted that section 73-C contemplates a restriction on the representation of the non-borrowing category members on the managing committee of the society and it does not provide for reservation. He concluded the submission that while interpreting statutory provisions, the marginal note aids to the construction. According to him, section 73-C(3) qualifies "candidate" and not the "constituency". In his opinion, category of borrower - non borrower member is inter changeable. In relation to issue No.2, he submitted that section 27 of the Act of 1960 is clear and unambiguous. Bye law, contrary cannot prevail over the statutory provisions. Lastly, he added that invalid bye law cannot be permitted to operate and that too in derogation of legislative Act.

30. On behalf of the State, learned Government Pleader has referred to the scheme of Chapter VII of the Act of 1960. According to him, this chapter deals with the management of the societies, its constitution, formation, powers, qualification, disqualification and functions. Section 73-C provides for restriction for representation of certain class of members on the committees of certain societies. This restriction is for being designated officer. He submitted that section creates and provides for restriction, representation and recognise classification of members. He also submitted that "electoral college" confers right to choose the representative. Section 27(1), according to him, contemplates "One Vote". According to him, once it is accepted that the classification of membership is permissible under section 73-C, Section 27 may consider as permitting members to exercise their right of voting, so long such right of voting is not taken away. He has also submitted that literal meaning of section 27(1) would mean that no member can cast more than one vote. Proper construction would be that in respect of "that constituency" no member can cast more than one vote.

Shri. N. P. Patil (Jamalpurkar) learned counsel supports the submissions of learned Government Pleader and further points out that classification is permissible and restrictions can be imposed on the right of the parties.

Advocate Shri. Gugale, appearing for respondent No.4 referred to section 165(3), Rules 7 and 8 of the Maharashtra Co-operative Societies Rules, 1961 as well as sections 8 and 9 of the Act of 1960. He submitted that bye laws must provide for constituencies and in that eventuality, section 27 would have no effect. Bye law of Co-operative society are in the nature of contract. If they contemplated a separate constituency and restricts the rights of parties in that constituency, to vote, there is no difficulty. He submitted that two unreported judgments of the Division Bench of this Court do not lay down the correct statement of law and should be overruled. According to learned counsel same is the position regarding judgment of the learned Single Bench in Utrane VKSS case.

Shri. P. M. Shah, learned Senior Advocate (amicus curiae) supported the submissions of learned counsel Shri. Salunke. He submitted that in all earlier judicial pronouncements i.e. from Chikhali VKSS, it has been consistently accepted that section 73-C(3) of the Act of 1960 provides for restrictions and does not provide for constituencies. He has pointed out that language of section 73-C(1), (2) and (3) manifests the difference. Section 73-C(1) uses the word "by" whereas, section 73-C(3) uses the expression "from amongst". Right to vote and represent is not absolute right and they are subject to limitations. In support of his submissions he relied upon a judgment in the matter of Rajaram Pal Vs. Honourable Speaker, Loksabha [2007(3) SCC 184]. In his opinion, literal meaning does not justify any inference of legislative intend to constitute any constituency of non borrowing members. He further submitted that scheme of the Act of 1960 favours the proposition " All for each and each for all". Save and except the restrictions which are imposed, to relative number of representations. All members of Co-operative societies would have the right for electing all the seats of the managing committee, according to him, is the correct interpretation of section 73-C (3). On issue No.2, he submitted that section 27 cannot be restricted by the bye law, in relation of rights of parties to vote. If such restriction is contemplated by bye law, it would be invalid.

31. Now, I turn to first issue referred. Opening sentence of section 73-C(3) makes it clear that it refers the case of agricultural credit society, which gives loans to individuals for raising of crops. Obviously, numerical strength of individual, agriculturists seeking loan from agricultural credit society would be large in number to that of members who have not taken any loan from the society or who do not wish to take loan from the society. In parlance of such society, such members ordinarily are called as borrower members (members taking loan from agricultural credit society for raising of crops). The members, who have not taken any loans from the society are called as non borrowing members. Aim and object of the registration of such agricultural credit society needs to be considered. Members generally need loan from the society for raising of crops. Requirements and necessity of raising such loans from the society would depend upon the manifold circumstances i.e. regional, natural, abrupt, unpredictable, climatic changes, insufficiency of rains, non-availability of necessary manures etc. Such adversities may occur on and may incur in changing time. Shortage of electricity supply, load shedding etc. creates compulsions to resort to irrigational facilities even though potentiality of water source of a well is available.

Status of the member as borrower and non borrower remains interchangeable from admission of the person to the membership of the society till his cessation of membership. Crop pattern has its own formula as prevailing market conditions would also have impact on the yield of the agricultural produce from the crops raised by the borrower members. Status of a person as borrower member, thus stand alter or inter changeable. The compartmentalisation or water tight compartments for borrower members and non borrower members is simply unpredictable and impracticable. Legislature are aware of this fact situation and therefore, in their wisdom they have provided under section 39 of the Act of 1960 that every society shall keep a list of members open to inspection of the public. Rule 30 of Rules of 1961 has obligated the society to keep list of members contemplated under section 39 in form "J" which is appended to the Rules. As against this scheme of Act of 1960 or Rules of 1961 do not provide for preparation and maintenance of list of borrower members and non borrower members. In other words, such constituencies as borrower's constituency or non borrower constituency and persons who are to be enrolled in such constituencies or lists have not been reflected from the scheme of the Act of 1960 and Rules of 1961, neither provided as such. On the back drop of such circumstances, the legislature in its wisdom does not provide for a separate constituency for borrower members or non borrower members under the scheme of the parent Act i.e. Act of 1960.

32. District Central Co-operative Bank is referred in section 73-C(1). From the said provision, it is clear that individual members are contemplated to such bank and separate constituency for such individual members is created by said statutory provision i.e. section 73-C(1) of the Act of 1960, which further provides that one representative to be elected "by" individual members from amongst themselves, on the committee. Further restriction is also provided that such representative shall not be eligible for being elected or appointed as designated officer. District Central Co-operative Banks are a different class of societies altogether. They do not facilitate individual finance to agriculturist. Their finance to farmers is routed through Agricultural Credit Societies. Section 73-C(2) deals with the Development Bank which formerly was known as Land Mortgage Bank. Section 73-C(3) in my view, contemplates a restriction on the numerical strength of the category of non borrowing members on the managing committee. Second restriction clamped down is that such a representative from non borrowing members category is prohibited for being elected as Designated Officer. The term "Designated Officer" is defined under section 73-A(a) meaning thereby, the Chairman and the President 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. Thus, important offices as Chairman/President etc. are prohibited to officiate, by such a representative from non borrowing member category as contemplated under section 73-C(1) and (3) of the Act of 1960. Key words appearing in Section 73-C(3) "only from amongst members qualifies", the candidate/representative and not the constituency. From Section 73(C)(3) it cannot be inferred that creation of a separate constituency of non borrowing members is contemplated.

Thus, "borrower members" or "non-borrowing members" are not intended to be cabined or enclosed such confinement or enclosure neither is intended from acquiring their status as a borrower member or non-borrowing members. Such interpretation of vertical split amongst the members of the co-operative society is not the legislative intent. It is the voluntary association of the members for promotion of their economical interests and welfare. Since the issue of interpretation of section 73-C(3) is on hand, it would be appropriate to consider what is the task of interpreter (Court) in interpreting the statute? If two interpretations are possible, what course should be adopted ? Goulding, J. says;

"The other principle which I must bear in mind is that the language of Parliament, although not to be extended beyond its fair construction, is not to be interpreted in so slavishly literal a way as to stultify the manifest purpose of the legislature. Plainly where two interpretations are reasonably possible on language one must assume that Parliament meant some kind of effective consistent legislation."

This judgment is quoted by Supreme Court with approval in the matter of M/s. Girdhari Lal and Sons Vs. Balbir Nath Mathur and others (AIR 1986 SC 1499) Reference to it would be necessary. It is held by the Supreme Court in the said case as follows :-

"The primary and foremost task of a court in interpreting a statute is to ascertain the intention of the legislature, actual or imputed. Having ascertained the intention, the Court must then strive to so interpret the statute as to promote and advance the object and purpose of the enactment. For this purpose, where necessary the court may even depart from the rule that plain words should be interpreted according to their plain meaning. There need be no meek and mute submission to the plainness of the language. To avoid patent injustice, anomaly or absurdity or to avoid invalidation of a law, the court would be well justified in departing from the so-called golden rule of construction so as to give effect to the object and purpose of the enactment by supplementing, the written word if necessary."

In paragraph No.7, the Court has observed that parliamentary intention may be gathered from several sources. In paragraph No.8, the Court further observed that once parliamentary intention is ascertained and the object and purpose of the legislation is known, it then becomes the duty of the court to give the statute a purposeful or functional interpretation.

33. Assuming that from literal construction of section 73-C(3) it is possible to read in the language of that section that it provides for reservation of a seat for non-borrowers and to be elected from amongst themselves. Let us apply or consider other Rules of Interpretation i.e. heading of section/marginal note, which shows intention of the legislature.

Chapter VII - "Management of societies" starts with section 72 of the Act of 1960 which provides final authority of every society shall vest in the general body of members. Section 73 deals with committee, its powers and functions. Section 73-A deals with the disqualification for being Designated Officer, simultaneously of certain categories of societies or being Designated Officer of the same society for more than ten years. Section 73-B is arranged in earlier point of time, Section 73-B lays down reservation of seats on committees of certain societies for Scheduled Castes, Scheduled Tribes, Other Backward Classes, Denotified Tribes (VJ), Nomadic Tribes, Special Backward Classes and for members of weaker section, election thereto. Sub-section (3) of Section 73-B permits every person who is entitled to vote at the election to the committee to vote at the election to any such reserved seat. Likewise section 73-BB speaks about the reservation for employees and modality of selection and election is provided under prescribed manner. Such nominated members of the Union may not be members of the society concerned, but yet their selection/nomination by the union to the committee of society indicates that class of persons who are members of the union can vote to elect their representative on the committee of the society. Section 73-BBB is again reservation of seats on committees for women members and modality for election thereto. Sub-section (3) of Section 73-BBB provides that every person who is entitled to vote at the election of the committee shall be entitled to vote at the election to any such reserved seat. On the premise of these sections, section 73-C is provided. Thus, from reading various provisions with expressions of the Act of 1960 with Section 73-C(3) it can be said that section 73-C(3) emphasises restriction on numerical representation of certain categories of members, who have not taken any loans from the society. This section does not create separate constituency, neither provides reservation for non borrowing members. This section does not curtail the right of borrowing members to exercise right to vote conferred upon them by section 27. Right of the borrowing members to exercise their franchise in the election, cannot be denied without legal sanction. The cumulative effect of discussion in the foregoing paragraphs leads me to hold that there is no restriction on the right of borrower members to vote for the candidates of all the categories and there is no restriction on a right of non borrowing members to vote for the candidates of all categories. The scheme of the Act is not compartmentalised. There is no restriction of time span or otherwise, for inter changeability of the status of a person as a borrower member or non borrower members. Underlined principles of cooperation appears to be like principles of Armed Forces i.e. "One for all and all for one". The restrictions which are imposed are relating to numerical strength of representatives not exceeding one and non eligibility for being elected as a Designated Officer vis-a-vis the non borrowing member. From this angle also it is not possible to interprete that marginal notes/headings indicated a reservation in favour of non borrower and creation of such separate constituency and control of voting right of borrower and non borrower to their category.

It would be also appropriate to refer to the Constitution Bench Judgment of the Supreme Court in the matter of R. L. Arora Vs. State of Uttar Pradesh (AIR 1964 SC 1230). The Supreme Court was considering the Rule of Literal Interpretation, in relation to the provisions of Land Acquisition Act, 1894 as amended by the Act 31 of 1962, in which it has been held;

"A literal interpretation is not always the only interpretation of a provision in a statute and the court has to look at the setting in which the words are used and the circumstances in which the law came to be passed to decide whether there is something implicit behind the words actually used which would control the literal meaning of the words used in a provision of the statute. It is permissible to control the wide language used in a statute if that is possible by the setting in which the words are used and the intention of the law making body which may be apparent from the circumstances in which the particular provision came to be made."

I have made a brief reference to history of the Co-operative legislation in India and the circumstances prevailing at the relevant time. While construing statutory provisions, whether history and background as well as circumstances prevailing can be said to be an aid to the interpreter (Court) ? The Supreme Court was considering the provisions of Payment of Bonus Act (21 of 1965) and has answered the issue. It is in the matter of M/s. Sanghvi Jeevraj Vs. M.C.G. & K.M.W. Union (AIR 1969 SC 530). In paragraph No.2 of the judgment, the Supreme Court has referred to some earlier pronouncements made by the said Court and held;

"....This Court went into the history of the establishment of the University to ascertain whether it was set up by the Muslim minority and as such entitled to rights under Article 30....."

The Court has further held;

"..... There is thus ample authority justifying the Court in looking into the history of the legislation, not for the purpose of construing the Act but for the limited purpose of ascertaining the background, the conditions and the circumstances which led to its passing, the mischief it was intended to prevent and the remedy it furnished to prevent such mischief. The statement of objects and reasons also can be legitimately used for ascertaining the object which the legislative had in mind, though not for construing the Act."

34. Right to vote is exclusively within the domain of section 27 of the Act of 1960, however, subject to section 26. The Supreme Court in the matter of Veena Kumari [2008(1) ALL MR 404 (S.C.)] (supra) has held that section 27 of the Act of 1960 is absolutely clear and unambiguous. It does not admit of two things. If the literal rule of interpretation is to be applied, there is no reason as to why it should not be by members of the family (in the context of the facts obtaining in the matter of Veena Kumari (supra)), who have been admitted to the membership of the society would be entitled to vote. The Supreme Court, further, was pleased to hold that bye law cannot prevail over the statutory provisions. However, it is "Personal" and not by "Proxy".

35. Now, turning to issue No.2 i.e. whether separate bye law can validly be framed for creating constituencies ? Reference needs to be made to Rules of 1961. It is true that Rule empowers the Registrar to refuse registration of the society. Rule 8(1)(y) provides bye laws to be made to conduct elections to the Committee and other bodies of the society as provided in the bye laws, including the number of members to be elected, by different constituencies and appointment of Returning Officer. It is well settled that bye laws of the Co-operative Society do not have force of law (See : Co-operative Central Bank Ltd. Vs. Additional Industrial Tribunal (AP) Hyderabad and others - AIR 1970 SC 245).

It is to be noted that rights and liabilities of the members are determined by the Act of 1960 and not by the bye laws. Bye laws framed by the society and even if approved by the Registrar, do not have over-riding effect on any of the provisions of the legislative enactment. Bye laws must be construed in the manner so as to reflect the intention of the legislature and also make them effective and workable, relating to society concerned. They are for regulating the internal management of the society. They have to be in conformity with the Statutes and Supreme Court has held that if the bye law is not in conformity with the statute, it has to be ignored. [See : (1984)2 SCC 50 - paragraphs 15 as well as recent judgment of the Supreme Court in the matter of Veena Kumari [2008(1) ALL MR 404 (S.C.)] (supra)]. However, it is true that society may have a bye law framed, Registrar may accept bye law but test has to be satisfied by the bye law that they are in consonance with the statutory provisions and to further enactment and shall not in the circumstances, they have over riding effect or they cannot prevail over the statutory provisions.

Further, the object of the Act as noted in the foregoing paragraphs of this order cannot be lost sight while interpreting the provisions of the Act.

In this view of the matter, the first issue has to be answered that all the members should have a right for electing all the seats of managing committee, in view of section 73-C(3) of the Maharashtra Co-operative Societies Act, 1960.

36. Issue No.2 will have to be answered that separate bye law in contravention of section 27 cannot be framed without legal sanction or any statutory provision. In other words, bye law cannot be said to be valid for restricting members right to vote without there being legal sanction or denial of right to vote.

37. Issues are answered accordingly.

Ordered accordingly.