Yatindra Singh, J.
1. The main question involved in these writ petitions relates to the interpretation and scope of section 29(5) of the UP Co-operative Societies Act, 1965 (the Act) and deals with the considerations/factors governing discretion of the Registrar while appointing an Administrator or the Committee of Administrators under section 29(5)(b) of the Act. These points arises as the appointments of private persons as Administrators and in the committee of Administrators under section 29(5)(b) of the Act are challenged in these writ petitions.
THE FACTS
2. A co-operative society {section 2(f) of the Act} means a co-operative society registered under the Act. Chapter III of the Act deals with 'MEMBERS OF CO-OPERATIVE SOCIETIES AND THEIR RIGHTS AND LIABILITIES'. Section 17 of this Chapter explains who can be members of a co-operative society. It shows that not only an individual (natural person) can be member of a co-operative society but State government, or Central Government, or firms, or other incorporated bodies (including cooperative bodies), or even un-incorporated bodies (if approved by the Registrar) can be member of a co-operative society.
3. Members for promotion of their economic interest may form a co-operative society (section 4 of the Act) in accordance with co-operative principles. Co-operative societies are broadly divided into three tiers.
(i) Primary society
(ii) Central society or central co-operative society.
(iii) Apex Society, or Apex level society, or state level co-operative society.
4. Generally, the primary society is at the Nyaya Panchayat level and has individuals as its members. The central society is at the district level and has primary co-operative societies as its members. The apex society is at the State level and has central or primary societies as its members.
5.'Apex Society' or Apex level society or 'State level co-operative societies 'are defined in section 2(a-4) of the Act. Banking is one of the ways to promote economic interest and a co-operative society for banking may be formed. The Apex society in the banking sector is UP Co-operative Bank Ltd. Lucknow (UP Co-operative Bank).
6.'Central Society' is defined in section 2(d-1) of the Act. It is a society that is not a primary society and has other co-operative societies as its members. The Central Societies in co- operative banking are known as District Co-operative Banks (DCBs) of that district. All District co- operative Banks in the State are members of the apex co-operative society namely UP Co-operative Bank.
7. The word 'primary society' is defined in section 2(q-1) of the Act. Its ordinary membership is not open to any other co-operative society. Generally it has individuals or natural persons as its members. There are different kinds of primary societies facilitating lending, crediting and banking. In rural area they are at Nyaya Panchayat level and there could be more than one primary society in a Nyaya Panchayat or one primary co-operative society may serve more than one Nyaya Panchayat. Most of the primary co-operative societies are members of Central banking society namely the District Co- operative Bank (DCB) of that district.
8. Banking in the co-operative sector is not confined to the rural areas. It has operation in urban areas also. Different districts have urban co-operative banks UCBs) in addition to DCB. There can be more than one UCB in a district. UCBs are generally primary co-operative societies and are defined under Rule 2(qq) of the UP Co-operative Societies Rules 1968 (the Rules). Non-agriculturist individuals can be members of the UCBs. UCBs may also be members of the UP Co-operative Bank.
9. Chapter VII of the Rules is titled as CONSTITUTION OF GENERAL BODY OF CO-OPERATIVE SOCIETIES. Rules 84-A deals with the general body of a co-operative society. In case the co-operative society is having individuals (natural persons) as its members, it consists of the individuals. In case the members are individuals (natural persons) and other persons, it consists of individuals and delegates of other persons. DCBs have primary co-operative society as its members. Its general body consists of delegates of the co-operative societies that are its members as detailed in Rule 85-A (a) of the Rules.
10. Every co-operative society has a committee of management to govern it. Chapter XXIX of the Rules is titled as RULES FOR ELECTION IN THE CO-OPERATIVE SOCIETIES. General body of a co-operative society first elects the members of the committee of management. Certain members are disqualified to become members of the committee of management. Disqualifications for members of the committee of management are mentioned in rule 453 of the Rules. The members of the committee of management elect chairman and vice-chairman among themselves. They also elect their delegates to represent them before the co-operative societies of which they are members.
11. The primary societies who are members of DCBs elect their delegates to represent them before DCB. These delegates in turn become general body of the DCBs. These delegates in turn elect the committee of management of the DCB. This committee of management elects chairman and vice-chairman among themselves and elect delegates to represent that DCB before the UP Co-operative Bank. The delegates elected by a DCB or UCB or any other Co-operative society (which is member of the UP Co- operative Bank) become general body of the UP Co-operative Bank and they elect their own committee of management. So the process of election is first for the Committee of management in the primary society then for its officer bearers and delegates; thereafter in the central society and finally in the Apex society.
Details of Appendix-I and II
12. Sub-section (2)(a) of Section 29 of the Act {Section 29(2)(a) of the Act} (See Appendix-I) states that the term of the committee of management of all co-operative societies is five years. Last elections for the committees of management, office bearers and delegates of the DCBs and UCBs were held in the month of July/August 1999. The period of five years expired in the year 2004. After expiry of the term, government servants (GS) {either the District Magistrate (DM) or the District Assistant Registrar (DAR)} were appointed as the administrators (referred as GS Administrators). They were subsequently changed. In their place a private person has been appointed as an administrator (referred to as private administrator) or a committee of Administrators has been appointed. In all committees of administrators a private person is Chairman and at least two GSs as members. In some committees there are other members also who are private persons. A chart showing the writ petition, date of appointment of GS administrator, the date when the GS Administrator was replaced by the private Administrator or the Committee of Administrators, and the persons so appointed is mentioned in Appendix -II to this judgment. In this chart it has also been indicated whether the private person was chairman or member of the outgoing committee of management or member of the general body or not.
13. The Registrar can also supersede committee of management under sub-section (1) of section 35 {section 35(1)} of the Act. During pendency of proceeding under section 35(1) of the Act he may suspend the committee of management under sub-section 2 of section 35 {section 35(2)} of the Act. In case of proceeding under section 35(2) of the Act, he may make arrangements for management under that section. In case there is an order under section 35(1), he may also appoint an administrator or a new committee of management under sub-section (3) of section 35 {section 35(3)} of the Act. In some cases proceedings under section 35 were taken and the committee of management was suspended/superseded and appointments were made under section 35 (2) or 35(3) of the Act; thereafter when the term was over, orders under section 29 (5)(b) of the Act were passed. In these cases the dates on which administrators were appointed under different sections are also mentioned. The details of the sections are mentioned below the dates in Column IV. In case no date is mentioned below the date in column-IV of appendix-II then it means that it is the date on which appointments u/s 29(5)(b) of the Act were made.
14. In WP 9191/05 elections were held sometime in October 2000 and five year term will come to an end in October, 2005. The committee of management in this case was superseded on 4.2.2005. District Magistrate was appointed as an administrator. Subsequently, on 22.2.2005 a committee of administrators with one Sri Shiv Sagar Singh as the Chairman of the committee of administrators was appointed. During pendency of the writ petition, Sri Shiv Sagar Singh was assassinated and now a new person is to be appointed.
POINTS FOR DETERMINATION
15. We have heard counsel for the parties. The following points arise for determination in these writ petitions:
(I) Whether the outgoing committee of management is entitled to continue after expiry of its term.
(II) Whether the petitioners have locus-standi (standing) to file the present writ petitions.
(III) Whether the State Government is entitled to issue government order regarding exercise of Registrar's discretion under section 29(5)(b) of the Act.
(IV) Whether there is any justification for the delay in holding the elections. What is the effect of delay on the exercise of power under section 29(5)(b) of the Act.
(V) What are the considerations/factors for exercising power under section 29(5)(b) of the Act.
(VI) Whether the Registrar has reasonably exercised its power while appointing Administrators or the Committees of Administrators.
POINT-I: OUTGOING COMMITTEE OF MANAGEMENT
16. Chapter IV of the Act is titled as MANAGEMENT OF SOCIETIES. Section 29 of the Act is in this Chapter. It is titled as 'Committee of Management'. This section deals with the committee of management of a co-operative society. Sub-section (2)(a) of Section 29 {section 29(2)(a)} of the Act states that the term of committee of management shall be 5 years and the term of the elected members of the committee of management shall be co-terminus with it. Sub-section 5(a) of section 29 {section 29(5)(a)} of the Act states that the existing committee of management shall cease to exist after expiry of its term irrespective of the fact whether the election of committee of management takes place or not, In view of section 29(5)(a) of the Act the committee of management is not entitled to continue after expiry of its term. This has also been so held by a Division bench of our Court reported in Committee of Management, District Co-operative Bank Ltd v. State of UP and Ors.: {2003 (56) ALR 667} . We agree with the same.
17. In case the committee of management can not continue after its term then someone has to manage the co-operative society: there can not be vacuum. A co-operative society must have a governing body. Sub- section (5) (b) of section 29 {Section 29(5)(b)} of the Act takes care of this situation. It permits the Registrar to appoint an Administrator or a Committee of Administrators. The Administrator or Committee of Administrators is entitled to manage the co-operative societies till reconstitution of the new committee of management. It is possible that there might be some delay in appointing the Administrator or Committee of Administrators. This has also been taken care of. Sub-section 5(e) of section 29 {Section 29 (5)(e)} of the Act further clarifies that the Secretary or the Managing Director of the co-operative society will look after the current duties of the Committee of management till the Administrator or Committee of Administrators is appointed.
18. Here we would like to clarify that in view of section 29(5)(a) of the Act the elected committee of management is not entitled to continue beyond the period of its term. However there is no prohibition on the part of Registrar to appoint the office bearers or the members of the outgoing Committee of the management as the Administrator, or as Chairman or members of the committee of Administrators. Whether there are any fetters on the powers of the Registrar or in what circumstances he may appoint the office bearer or members of the outgoing Committee of management or what are relevant considerations/factors for appointment will be considered in some detail while deciding the remaining points.
POINT-II: THE PETITIONERS HAVE LOCUS STANDI (STANDING)
19. These writ petitions have been filed by the outgoing committees of management or by the persons who were members of the outgoing committee of management or are members of the general body. In these writ petitions, normally the orders by which the GS administrator have been replaced by the private persons as administrator or by a committee of administrators have been challenged. In some writ petitions the orders by which government servants were initially appointed as an administrator have also been challenged. The counsel for the petitioners have made a statement that they are not pressing their prayer for quashing of the orders appointing the GS administrators. Their prayers are confined against the appointment of private administrators or the committee of administrators. They claim that The Registrar while appointing private administrator or committee of administrators has not considered the relevant factors. He has exercised his power arbitrarily in replacing GS Administrators. He has not acted in the interest of the co-operative societies.
20. The outgoing committee of management, or its office bearer, or its members, or the members of the general body of the co-operative society are interested in the welfare of the co-operative society. They are aggrieved persons if there is any arbitrary or unreasonable exercise of power affecting the co-operative society,. It can not be said that they do not have a standing to file the present writ petitions. Apart from it, as we will point out while deciding point no. V and VI that in case private persons are being appointed as administrators or in the committee of administrators then the office bearers or the members of the outgoing committee of management or the members of the general body are entitled to be considered for being appointed as administrator or in the committee of administrators under section 29(5)(b) of the Act. The petitioners have locus standi (standing) to file the present writ petitions.
21. The counsels for the respondents submitted that: Many of the petitioners are corrupt. They are not entitled to be appointed as the administrator or in the committee of administrators. They are not entitle to file the present writ petitions. These writ petitions should be dismissed on this ground at the threshold.
22. We have not investigated the aforesaid submission of the respondents: the reason is that neither the petitioners have been appointed, nor their appointment is challenged. If the allegations are correct then they may not be appointed as administrator or in the committee of administrators but this does not mean that if a wrong person is appointed as an administrator, or as member of the committee of administrator, or any act is done against the interest of the co-operative society of which they are members, then they are debarred from challenging the same or their writ petition should be thrown out on the ground that they have no standing.
POINT-III: GUIDELINES CAN BE ISSUED
23. The Registrar under section 29(5)(b) of the Act, has power to appoint an Administrator or Committee of Administrators after the elected committee of management ceases to exist. The Registrar has also power to change the Administrator or any member of the Committee of Administrators or to appoint a committee in place of administrator or vice versa. This section also clarifies that the administrator or the committee of administrators is to be appointed in accordance with the provisions of this Act, Rules and the bye laws of the Society. Sub-section 5(c) of Section 29 {Section 29(5)(c)} of the Act states that the Committee of Administrators will consist of a chairman and not more than eight members; Out of these, at least two have to be government servants. It is not disputed that apart from this sub-section there is no specific provision in the Act indicating how the Registrar should exercise his discretion.
24. Section 113 of the Act permits the State Government to make Rules. Sub- section 1 of section 113 {Section 113(1)} of the Act permits the State Government to make rules for the purposes of this Act. Sub-section 2 of section 113 {Section 113(2)} of the Act provides details of specific areas or subjects regarding which the rules can be framed; it is without prejudice to the general powers under section 113(1) of the Act. These provisions show that the State government can frame rules regarding how the Registrar should exercise his power under section 29(5)(b) of the Act: it is for this reason that section 29(5)(b) specifically states that exercise of power has to be in accordance with the Rules. The Rules have been framed by the State Government, but there is no rule regarding exercise of power under section 29(5)(b) of the Act.
25. Section 131 of the Act deals with the byelaws of the society. The different co-operative societies have also framed their byelaws, however there is no specific provision in the byelaws of any Co-operative society regarding exercise of power under section 29(5)(a) of the Act.
26. The State Government has also power to remove difficulties under section 133 of the Act. It is also not disputed that the State Government has not issued any notification regarding exercise of power by the Registrar. In absence of any specific provision {except section 29(5)(c)} in the Act, the Rules, the bye-laws of the Society or any removal of difficulties order, is it permissible for the State Government to issue guidelines in form of GOs?
27. The Registrar while exercising the powers under section 29(5)(b) of the Act is neither exercising judicial powers nor quasi-judicial powers. There is no lis. The Registrar is merely exercising administrative/executive powers conferred under the Act to appoint the administrator or a committee of administrators till regular committee of management is elected. The State has overall legislative as well as executive powers including the power to frame rules and remove difficulties. The Registrar is an officer, a functionary of the State. He has not been created by the Act. He is under general supervision of the State and is subordinate to the State Government. In this lightbthe fact that the Registrar is not exercising judicial or quasi judicial powerbthe State Government can not issue general guidelines regarding exercise of discretion/power under section 29(5)(b) of the Act.
28. We would like to add that the guidelines issued by the State government can not be contrary to the Act, Rules or the bye laws of the Society or for that matter any provision of the Constitution or any other instrument having statutory force. In case they are so then that would be illegal. It is for this reason that the two cases cited by the respondents reported in UP State Road Transport Corporation v. Mohd. Ismail: AIR 1991 SC 1099 and Laxman Dundappa Dhamanekar v. Management of Vishwa Bharata Sewa Samiti: 2001 (8) SCC 378 are distinguishable. In these cases the guidelines were contrary to the Rules or Regulations having statutory force.
29. In case the guidelines issued by the State Government are not contrary to any statutory instrument then they can be issued and may be considered by the Registrar. Here we would like to add that these guidelines do not have statutory force; they are not binding upon the Registrar. He may depart from them but for some reason and if he does so then the guidelines can not be enforced in a court of law. However he may generally follow them and depart from them for reasons only (for cases kindly see End note-2) . These are general guidelines applicable in all cases. Nevertheless the same thing can not be said regarding specific cases for appointment as it would amount to dictation. And in case the Registrar follows such an order then that would amount abdication of his function.
30. The State Government has issued many GOs; we will discuss them while discussing points number V and VI. We would also like to mention here that the respondents in these writ petitions are State Government, State officials and the private respondents who have been appointed as Administrators, or Chairman or as members of the Committees of Administrators. In some cases the Ministers have issued orders to appoint specific persons as Administrators or in the committee of administrators. This is not permissible; it amounts to dictation. The respondents defended the orders issued by the minister to appoint specific person as Chairman or as members of the committee of management, but were reluctant to defend the general guidelines issued by the State government. In fact they have argued that the guidelines issued by the State Government are illegal and specific orders are legal. One can understand the attitude of the private respondents; they are interested in their appointment but this attitude on behalf of the State or State officials is baffling and does not befit them especially as we will show while answering point numbers V and VI that the general guidelines are good and direction to appoint specific person may not be given by the Ministers.
POINT-IV: THERE IS JUSTIFICATION FOR THE REGISTRAR
31. Section 29(4) of the Act requires the Secretary or the Managing Director of the Co-operative Society to send requisition to the Registrar four months before expiry of term of the Committee of management for conducting elections. In all these cases, the requisition was sent in time and in most of the cases much before time. The elections ought to have been done before expiry of the term namely July/August 2004. The elections have not been held so far. However, the process is on. There has been delay in holding the elections on the part of the respondents. Is there any justifiable reason? What role does delay play in exercise of power under section 29(5)(b) of the Act.
32. The respondents have given explanation for not holding elections earlier. It has been stated that before the Registrar could issue election programme, the Code of conduct for Parliamentary elections was announced on 28/29th February 2004 for parliamentary elections and the elections could not be held till the parliamentary elections were finalised in May 2004. This is undoubtedly a valid reason as the officials were busy in the Parliamentary elections.
33. The Registrar Co-operative society notified the election schedule on 3.6.2004 but the State Government under second proviso to section 29(3) of the Act directed the Registrar to postpone the election for a period of two months in order to proceed with recovery drive. In pursuance of the same the Registrar postponed the election on 16.6.2004. The State Government again directed for postponement of election on 30.8.2004 and the Registrar again postponed the same on 30.8.2004 and re-scheduled it from 18.10.2004. The State government again directed for the postponement of the elections. Ultimately by order dated 16.11.2004 election schedule has been announced from 16.1.2005. We are informed that these elections are going on.
34. The elections have been postponed three times by the State Government. The Register is bound by the directions of the State government; there is justification for the Registrar for not holding the elections earlier but this does not mean that the State government was justified in directing the Registrar to postpone the elections. We have not considered this question as it was not agitated before us presumably for the reason that elections are going on, though apprehensions were expressed that they may not be completed. We leave this matter here, but there is no denial that there has been delay in holding elections. We will consider the role that delay plays on exercise the of power under section 29(5)(a) of the Act while deciding the remaining points.
POINTS- V & VI: THE REGISTRAR HAS NOT APPLIED RELEVANT CONSIDERATIONS
35. The counsel for the respondents submit that the Registrar has discretion to appoint anyone under section 29(5)(b) of the Act and this court can not interfere in exercise of that discretion. This is not correct.
36. It is correct that the Registrar has discretion in the matter, but it is to be exercised on relevant factors; he does not have absolute discretion. The discretion can not be exercised on irrelevant factors. A century ago it was said, 'When some thing is to be done within the discretion of the authorities ... that something is to be done according to the rules of reason and justice and not according to private opinion, .....according to law and not rumour. It is to be not arbitrary, vague, fanciful but legal and regular.' (Lord Halsbury in Sharp v. Wakefield 1891 AC 173) This was repeated half a century ago, 'Law has reached its finest moments when it has freed man from the unlimited discretion of some ruler, some official, some bureaucrat. Absolute discretion is ruthless master. It is more destructive of man's freedom than any of man's other invention.' (Justice Douglas in (1951) 342 US 98 US v. Wunderlich) 'Rule of law' rather than the discretion is the master.
37. The Courts have carved out an area and have laid down grounds on which an administrative decision can be struck down. A few countries have even enacted laws specifying these grounds concisely and succinctly. Australian Administrative Decisions (Judicial Review) Act, 1977 (The ADJR Act) as well as the Barbados Administrative Justice Act, 1980 are two such Acts (see Appendix-III). Similarly, French and Israel Parliaments have enacted similar laws. Not only our Indian courts but also the Courts world over are reviewing administrative decisions on the grounds similar to Australian and Barbados Acts. In this regard, the High Court of Australia in Minister for Aboriginal Affairs v. Peko-Wallsend Ltd. {1987 LRC (Const) 822 at page 835} had scanned the law world over and has held that section 5(2) (b) of the ADJR Act (Australian Act) is substantially declaratory of the Common Law. The relevant part of the judgment is reproduced as Appendix-IV to this judgment. We have also traversed a similar path; our law is the same; we have been striking down administrative decisions on similar grounds. A decision taken on irrelevant factor or that ignores relevant factors is illegal and is liable to struck down: No shield can protect it.
38. In England a committee on Administrative reforms have made recommendations Administrative Justice - Some necessary reforms: the report of the Committee of the JUSTICE Administrative Law in the United Kingdom. The eleven important recommendations of this committee on page 10 are detailed in Appendix-V to this judgment. They are relevant and lay down correct principles. Some of them have become part of our administrative jurisprudence; others should be adopted by us.
39. It is too late in the day to say that the Registrar has unfettered discretion; he has to make appointments after considering relevant and ignoring irrelevant factors. What are those factors? Many of them have been stated by the State in the different GOs. Let's consider them.
The Details of the GOs
40. The details of the GOs are as follows:
(i) The first guideline is the September 1984 GO. This was passed at the time when the power to appoint the Administrator or the Committee of Administrators was contained in section 29(4)(b) of the Act. This section is similar to the present section 29(5)(b) of the Act. In these guidelines it has been stated that the Registrar may consider following points before appointing private persons as Administrator or in the Committee of Administrators. The Registrar was also required to remove the persons who were already appointed in breach of the guidelines. These guidelines are that the person, should not be,
(a) Disqualified under rule 453 or any other provision of the Act, Rules and byelaws of the co- operative society.
(b) Convicted of crime, or litigating against the government or with the co-operative department, or the one against whom criminal cases are registered by the department.
(c) History sheeter.
(d) Without confidence in the co-operative movement.
(ii) The second guideline is the Jul 1991 GO. It recommends that the government servant should be appointed as administrators.
(iii) The third guidelines is the Dec 2002 GO. It is applicable to the DCBs whose economic condition is bad. This GO has been issued on the recommendations of the Reserve Bank of India. It has recommend that in these Banks the committee of management consisting of the persons mentioned therein may be appointed and strict action be taken so that functioning of these banks may improve.
41. Nothing has been brought to our notice that these GOs have been withdrawn or rescinded by the State Government. These GOs lay down good guidelines. They are not contrary to any statutory provision. They ought to have been followed. Nothing has been brought to our notice as to why they were not followed. The orders replacing GS administrators are liable to be set aside on this ground also.
42. The Jul 1991 GO is for appointment of government servant as an Administrator. In pursuance of this GO initially in every co-operative society GS Administrators were appointed. They have been subsequently changed. It is this change that has been challenged. Nothing has been shown to us to clarify that when this GO was initially followed then why later on private persons have been appointed? We are aware that the GOs are not statutory and merely lay down the guidelines only, yet they can only be ignored for sufficient reasons. And no reasons have been indicated. The orders replacing the GS as administrator are illegal and are liable to be quashed. The Registrar should reconsider the appointments made in all co-operative societies whether challenged before this court or not and follow the guidelines unless there is any reason for not to do so.
43. The Dec 2002 GO applies to those banks where financial conditions were not good and action had been recommended. According to the State, among these cases before us, there was mismanagement in six cases and financial condition was not good and so the committee of management was superseded. These cases are covered by the Dec 2002 GO. In these cases, if the GS Administrator was to be replaced it should have been done as indicated in the Dec 2002 GO rather than the private persons. There was no justification for not to follow the Dec 2002 GO or the Jul 1991 GO and to appoint private persons; at least nothing has been brought to our notice to show that justification.
Factors to be considered
44. We are aware that these GOs are merely guidelines and can be departed for sufficient reasons. Private persons can be appointed as an administrator and in suitable cases it may be done so. However the facts of different writ petitions show that the Registrar has applied inconsistent standards; there has been lack of understanding regarding exercise of his discretion. In view of this, we would also like to clarify the guidelines to be followed by him while considering appointment of private persons.
45. Since our independence, we have made great strides and overcome many obstacles but some areas have remained problematic. They are also on increase. They are acting as white ants and eating away our progress; unless we check them, our future is doomed. In our opinion, all our efforts should be made to remove them or at least to reduce them. It should be fundamental in all spheres of our governance including appointments. These areas are as follows:
I. Criminalisation: Our lives are being criminalised; it is imperative that we weed it out. No person should be appointed who is convicted or is involved in criminal cases. Of course there may be distinction between technical offences on the one hand and offences of serious nature including the ones involving moral turpitude on the other hand. The Registrar, before making any appointment should ensure and obtain an affidavit in this regard from the person concerned that he is neither convicted of any offence nor any criminal case is pending against him. In case affidavit is found to be false then the person should be replaced and appropriate legal action for filing forged affidavit may be taken.
II. Corruption: Corruption is difficult to prove as the person offering the bribe is also involved. Nonetheless there are ways to check it. One of the ways is to obtain statement of property (movable and immovable) not only of those persons but also of their spouses and minor children. This ensures accountability. In case the persons are found to have more property than the one declared by them appropriate legal action can be taken. The Registrar before making any appointment should ensure that the persons submit signed statement regarding the properties held by them, spouses, and their minor children. In case it is found to be incorrect, the person should be removed and appropriate legal action may be taken for corruption and for giving false documents. If it is considered proper the property statement may be obtained every year.
III. Population: Our population is increasing by leaps and bounds. It is the reason of many of our problems. The time has come when we must take strong measures by providing incentives for small family and disincentive for large families. The Supreme Court has upheld a Haryana law debarring the persons to become Pradhan of a Gram Panchayat if they have more than two living children in Javed and Ors. v. State of Haryana 2003 (6) JT 283. The Supreme Court observed the provision to be 'salutary and in public interest'. A person who has more than two living children may not be appointed.
IV. Office bearer of the political parties: There has been allegation in these writ petitions that persons with political affiliation have been appointed. We would like to clarify that every one has a right to have political philosophy and practise the same. Every one has a right to be part of political party of their choice; unless it is declared illegal. As a matter of fact it is everyone's duty to cast vote. It is not disqualification to be part of any party and merely for this ground no appointment may be questioned. Nevertheless when an office bearer of any political party is appointed and he continues to be the office bearer of the party even after the appointment or accepts the post of office bearer of any political party during his appointment then there may be conflict of interest. In order to avoid it, the persons who are office bearers of any political party at any level may not be appointed or it may be ensured that they resign from that post and undertake that they will not accept the post of office bearer at any level of any political party during their tenure. These principles are sound and should necessarily be adhered to while making appointments under section 29(5)(b) of the Act. Office Bearers and Members of Outgoing Committee
46. It is correct that section 29 (5)(a) of the Act states that the committee of management after expiry of its term ceases to exist but this does not mean that office bearers or the members of the committee of management can not be appointed as an Administrator or in the Committee of Administrators under section 29(5)(b) of the Act. The outgoing committee was elected by the general body and in case it completes its terms successfully and there are no charges of mismanagement then the office bearers and members of the committee of management may be considered first for being appointed as an Administrator or the chairman of the Committee of Administrators; after all they have been elected by the general body.
47. The point mentioned in the preceding paragraph may be looked into from another aspect. We have already held that there was justification for the Registrar for not holding the elections earlier, but this does not mean that there was no delay in holding the elections. It was for this reason that we considered whether there was justification for the Registrar or not. There was no fault on the part of the outgoing committee of management. It had sent information in time. In case a government servant is appointed as an administrator at least he is a neutral person. The appointment of private person may not be a way to introduce a person who was defeated or rejected by the general body; at least not in those cases where there was no mismanagement on part of the outgoing committee of management. There should not be a back door entry.
48. There may be many reasons for not appointing anyone from the outgoing committee of management. The office bearers and the members of the committee of management that has been unsuccessful or mismanaged the affairs of the co-operative society or was suspended or superseded may be avoided. If this is done then it would be justified: after all every member was part of such a committee. Appointment of such person should be avoided. Here exactly opposite has been done in WP 39025 of 2004 (DCB Siddharth Nagar). The outgoing committee of management was superseded. The Registrar has appointed one of its members as chairman of the committee of the administrators.
49. We would also like to observe that in case action is taken against a co-operative society under section 35 of the Act then the Registrar has power to appoint persons to manage the co-operative society under section 35(2) as well as 35(3) of the Act as the case may be. In these cases also the Registrar should not appoint a person who is an office bearer or member of the committee of management that was suspended or superseded.
50. There may be many reasons for not appointing the office bearers or the members of out going committee of management. We have indicated some of the reasons and have not enumerated all of them. This is first to be considered by the Registrar in each case on its merit. In case office bearers or the members of the committee of management can not be appointed, then other persons may be considered for appointment. Let's consider the relevant factors/considerations in making such appointment.
Members of the General Body
51. Every co-operative society has a general body which elects the committee of management. Every person can not be part of the committee of management. Some are disqualified. This is detailed in rule 453 of the Rules. A person who is qualified to become a member of the committee is concerned with the affairs of the co-operative society. In case there is no one from the outgoing office bearers or the committee of management who could be appointed, then the appointments may be made from the persons who are qualified to be members of the committee of management; after all they are the persons who are interested in the welfare of the co-operative society. This is also part of the guidelines mentioned in the Sep 1984 GO. In this connection sub-section (3) of section 35 {Section 35(3)} of the Act may also be seen.
52. Section 35 of the Act empowers the Registrar to suspend and supersede a committee of management. Section 35(3) of the Act empowers the Registrar to appoint a new committee of management or administrators in case it is superseded. This sub-section empowers Registrar to appoint a person who is not the member of the general body of the co-operative society. There is no such power under section 29(5)(b) of the Act. If the legislature wanted that such person may be appointed under section 29 (5) (b) of the Act then it would have specifically said so as stated in section 35(3) of the Act. The reason why it is there in section 35(3) of the Act is also clear: there may not be any member who is fit enough to be appointed as the committee of management is superseded for mismanagement. In our view, normally a person who is disqualified under Rule 453, or any provision of the Act, or any other Rule, or under bye laws of the society to become a member of the committee of management may not be appointed under section 29(5)(b) of the Act unless the case was covered under section 35 of the Act.
53. We would also like to clarify that while making appointment, care should be taken to appoint a person, who is knowledgeable in the field which is the primary objective of that co-operative society and can manage the affairs of the co-operative. In the present case all the co-operative societies are related to banking so persons with expertise in banking may be considered.
54. We have already held that the replacement of GS administrator by private persons is wrong and orders are liable to be quashed. We have also enumerated the factors that may be considered while appointing private persons. In the light of these principles let's consider the appointments made by the Registrar.
Specific Instances of Illegality
55. The general guidelines are to be followed but the registrar has to apply his independent mind; he is not to be guided by dictates of the higher-ups. In WP 39025 of 2004 (DCB Siddharth Nagar) there was a letter of the then labour Minister and the present speaker and in WP 3897 of 2005 (DCB Shahjahanpur) there was a letter of the present Co-operative Minister and the same persons named in those letters have been appointed. These letters are not denied. The Ministers are superior authority and their recommendations can not be ignored by a subordinate officer. Ministers are entitled to lay down the general policy, but are not entitled to give direction for appointment of a specific person. These appointments are illegal.
56. We have indicated in paragraph 43 of this judgment that the December 2002 GO may be applicable in six cases that are before us. In one {DCB Siddharthnagar (WP 39025/ 2004)}, out of these five cases, the Registrar instead of following the Dec 2002 GO has appointed a person as the Chairman who was member of the superseded committee of management and this too on the direction of the then Labour minister and the present speaker. The Registrar should re-examine all cases whether brought before this Court or not and see which cases are covered by the Dec 2002 GO. He should change and appoint persons in accordance with this GO. We are informed that in some of these cases the superseded or suspended committee of management has taken legal proceeding against their suspension or supersession. We clarify that we have not considered whether suspension or supersession is valid or not. Those proceedings may be decided in accordance with law without being influenced by any of observations made in this judgment.
57. In WPs 55652 of 2004 (DCB Etah), 1191/05 (DCB Firozabad), 3897/05 (DCB Shahjahanpur) the committee of management completed its entire term and the chairman of the outgoing committee of management was appointed as chairman of the committee of Administrators. However, in the WPs 38022/04 (DCB Deoria), 40654/04 (DCB Basti), 42560/04 (DCB Mathura), 44174/04(DCB Bijnore), 45532/04(DCB Lalitpur), 51433/04 (DCB Bulandshahar), 55547/04 (DCB Mainpuri), and 5373/05 (DCB Moradabad) also, the committees of managements completed their term successfully but the chairmen of the outgoing committees of management have not been appointed as the chairmen of the committees of administrators despite the fact they successfully completed their terms. The respondents neither have indicated any reason for not doing so, nor have brought anything to our notice to show that these persons were even considered. It is true that the Registrar is not bound to appoint them, but he should have at least considered them.
58. Many persons who are neither members of the committee of management nor members of the general body have been appointed. Details of these persons have also been mentioned in the Appendix-II to this judgment. The word NGB has been mentioned after the names of these persons. There is no material on record to show that they are eminent or have expertise in the field of banking. These appointments are illegal.
59. The person who has been appointed as an Administrator in WP 45532/04 (DCB Lalitpur) has twenty four criminal cases (including one u/s 302 IPC) pending against him. He ought not to have been appointed as the Administrator.
60. In WP No. 42560 of 2004 it is not disputed that the person who has been appointed as Chairman was neither member of outgoing committee of management, nor member of general body. It is also admitted that she is wife of sitting Lokdal MLA supporting the ruling party. There is no justification for appointing her as Chairman of the committee of administrators. The appointment is illegal.
SOME OBSERVATIONS
61. The counsel for the respondents submitted that in case we come to the conclusion that appointments are illegal then they may not be quashed but the Registrar may be granted liberty to change the order in light of our observations in this judgment. According to them, in case we do not do so, then many actions of the Administrators will become illegal.
62. We are afraid, we can not accept it. The orders of appointments of private persons are illegal and in case we do not quash them then we would be continuing the illegality and shirking our duty. In case the orders are illegal, then it is our duty to quash them. So far as the legality of any action taken by the administrator or committee of administrators is concerned, the law will take its own course. The defacto doctrine to the extent that it applies will be applicable. We are not required to say anything in that regard at present.
63. We are informed that private administrators or committees of administrators have been appointed in many co-operative societies. All cases are not here. The cases that are not here neither can be considered by us nor can we pass any orders thereon but the Registrar shall examine all such cases within a period of three months. In case the appointments are not in the light of our judgment then the Registrar will change them so as to bring them in accordance with the observations made in this judgment.
64. We have held that the Registrar while exercising powers under section 29(5)(b) of the Act is not exercising quasi judicial or judicial powers. He is merely exercising administrative power for appointing a person as administrator or the committee of administrators. We have also laid down relevant considerations of the factors to be taken into account while exercising the powers. We clarify that this judgment may not be taken to mean that the Registrar is required to pass a reasoned or speaking order. However, in case any appointment is challenged then the material may be brought before the court or the person making the appointment should file his personal affidavit that he has considered them.
SOME SUGGESTIONS
65. We have laid down certain principle for appointment under section 29(5)(b) of the Act. However, some principles namely mentioned in paragraph 45 of this judgment are fundamental and may be followed in all appointments. The State may constitute a committee. This committee may consider following points in regard to the appointments other than the ones considered by us. Whether the principles mentioned in paragraph 45 of this judgment should be adhered to in making all other appointments or not. Whether these principles should be made applicable to not only in the case of appointments but also for any elected office. Whether the condition of two living children may be reduced to one child or in case it is not reduced, then what other incentives can be given to persons having one child. In case the committee considers appropriate, then suitable rules be framed or law be enacted so far as other appointments are concerned. If possible, the Chief Secretary may constitute the committee within three months to consider these aspects.
CONCLUSIONS
66. Our conclusions are as follows:
(a) The State Government has power to issue general guidelines for exercise of power under section 29(5)(b) of the Act. However, they are neither statutory nor mandatory. They are merely guidelines and may be departed for sufficient reasons.
(b) Neither we are informed of any reason, nor anything has been brought to our notice to show as to why the Dec 2002 GO in cases under section 35 of the Act and the July 1991 GO in other cases were not followed.
(c) The outgoing committee ceases to continue after expiry of its term and can not claim continuation after its term as a matter of right. However this does not bar the Registrar from appointing the office bearers or members of the committee of management as Administrator or as members in the committee of Administrators
(d) The orders replacing the government servant by private Administrators or by the Committees of Administrators consisting of private persons are illegal. The appointments of private persons have been made without considering the relevant considerations/factors.
(e) Individuals capable of managing the affairs of the co-operative society and having expertise in the field of primary objective of the co-operative society may be considered for appointments provided that:
I. They are not disqualified to become member of the committee of management under the Act, Rules or the bye-laws of that society except in a case covered by section 35 of the Act.
II. They are neither convicted nor involved in criminal cases and file affidavit to this effect.
III. They file signed statements of the property held by them, their spouse, and of their minor children.
IV. They do not have more than two living children.
V. They are not office bearer of any political party. And in case they are then they must step down.
VI. The persons also undertakes not to accept office of any political party during their appointment.
VII. Among the persons who qualify the above conditions, the office bearers and members of outgoing committee of management if they have successfully completed the term and are suitable may be considered first.
VIII. It will neither be necessary to consider the office bearers or members of the committee of management if they do not qualify under preceding conditions detailed in paragraph 66(e) (i) to 66 (e) (vi). The persons covered by paragraph 66(e)(i) to 66(e)(vi) may not be appointed.
IX. It will also be not necessary to consider any office bearer or members of committee of management if the committee of management had mismanaged the affairs of the society, or was suspended or superseded under section 35 of the Act. Such persons may not be appointed.
67. In view of our conclusions the writ petitions are allowed. Different orders by which the private persons have been appointed as administrators or in the committee of administrators or the government servants were replaced by them as mentioned in column IV of Appendix-II are quashed. The government servants who were initially appointed as Administrators will manage the co-operative societies till the Registrar reconsiders the appointments in the light of the observations made by us. In case no GS Administrator was appointed and private persons were appointed from very beginning then the Collector of the District will manage them.
68. The Registrar shall reconsider persons have been appointed as administrators or in the committees of administrators months. The Registrar shall change them in case their appointment is not in the light of the observations made in this judgment. In case the matter can not be reconsidered in three months then if the case is covered by the Dec 2002 GO, the private administrators or the committees consisting of private members shall be replaced by the persons mentioned therein and in other cases by the GS Administrator as indicated in the Jul 1991 GO. And if the need be then the private persons may be appointed in the light of the observations made in this judgment.
69.The Chief Secretary will appoint a committee within three months to consider the points mentioned under the heading 'SOME SUGGESTIONS'. And the follow up action will be taken.
70. The writ petitions are allowed with the aforesaid observations and directions.