The Mapusa Urban Co-operative Bank Ltd. and Another Vs. Shri G.S. Patil and Others - Court Judgment

Excerpt:
- - the impugned order clearly states the reason for the proposed amendment. the learned counsel for the petitioners, shri kakodkar, strongly endorsed this view of the teamed additional solicitor general and submitted that when a situation envisaged under section 95 of the central act arises, the court need not go into the practical aspect of the matter as to whether the object of the society is to be achieved in the area bifurcated by the state administration act or whether there is any member at all in the 3 area utilising the facilities provided by the petitioner society. therefore, where the requirements of sections 4, 5, 6, 7 and 8 are not satisfied, or not in existence, section 95 of the central act cannot be pressed into service. unless a provision like section 95 of the.....ordert.k. chandrashekhara das, j.1. this writ petition has been filed praying, inter alia, for a writ in the nature of certiorari or any other appropriate writ, direction or order calling for the records relating to the judgement and order of the assistant registrar of co-operative societies, north zone, bearing no. 1/48/65-res/(c)-193/goa/arnz/vol. v dated 8th january, 1993, and quashing the same as also for a declaration that mapusa urban co-operative bank limited became a deemed multi-state co-operative society registered under the corresponding provisions of the multi-state co-operative societies act, 1984 (hereinafter called 'the central act'). the first petitioner is the mapusa urban co-operative bank limited and the second petitioner is the chairman of the mapusa urban co-operative.....

Judgment:
ORDER

T.K. Chandrashekhara Das, J.

1. This writ petition has been filed praying, inter alia, for a writ in the nature of certiorari or any other appropriate writ, direction or order calling for the records relating to the Judgement and Order of the Assistant Registrar of Co-operative Societies, North Zone, bearing No. 1/48/65-RES/(C)-193/Goa/ARNZ/Vol. V dated 8th January, 1993, and quashing the same as also for a declaration that Mapusa Urban Co-operative Bank Limited became a deemed Multi-State Co-operative Society registered under the corresponding provisions of the Multi-State Co-operative Societies Act, 1984 (hereinafter called 'the Central Act'). The first petitioner is the Mapusa Urban Co-operative Bank Limited and the second petitioner is the Chairman of the Mapusa Urban Co-operative Bank Limited. Facts leading to the writ petition are as follows.

2. The first respondent, Shri G.S. Patil, the Assistant Registrar of Co-operative Societies, North Zone, Mapusa, Goa, had issued a notice on 13th October, 1992, to the petitioner Bank requesting to consider the amendment proposed of its Bye-law No. 1.

The existing Bye-law No. 1 of the petitioner Bank reads as hereunder:

The Mapusa Urban Co-operative Bank Limited (hereinafter referred to as the Bank) is a Society registered under the Maharashtra Co-operative Societies Act, 1960, made applicable to the Union Territory of Goa, Daman & Diu. The area of operation of the Bank shall be confined to the whole of the Union Territory of Goa, Daman and Diu.'

The proposed amendment of the Bye-law reads thus:

'The Mapusa Urban Co-operative Bank of Goa (hereinafter referred to as THE BANK) is a Society registered under the Maharashtra Co-operative Societies Act, 1960, as made applicable to the State of Goa. The area of operation of the Bank shall be confined to the Goa State.'

Evidently the purpose of the amendment was to restrict the area of operation of the petitioner Bank to the territory of State of Goa alone.

3. The petitioner's main contention is that by proposing the amendment confining its area of operation to the State of Goa alone, excluding Daman and Diu from its area of operation, aims at changing the characteristic of the petitioner Bank, which is a Multi-State Co-operative Society into a Co-operative Society under the provisions of the Maharashtra Co-operative Societies Act, 1960 (hereinafter called 'the State Act'). According to the petitioners, this is illegal and the first respondent has no authority to exercise any power over the petitioner Bank as it has already become a Multi-State Co-operative Society which is wholly and solely governed by the provisions of theCentral Act. The impugned order clearly states the reason for the proposed amendment. According to the petitioner, as is clear from the impugned order, though by virtue of the Goa, Daman and Diu Re-organisation Act, 1987, the former Union Territory of Goa, Daman and Diu has been bifurcated into two separate territories, the Stale of Goa being one part and Daman and Diu constituting the other part, being a Union Territory and in the context of section 95 of the Central Act, the petitioner Bank has become a Multi-State Co-operative Society governed by the Central Act and the provisions of the State Act, which governed the petitioners ceased to have any effect on the petitioner Bank on and since the appointed day, 30th May, 1987, the date on which part of the Union Territory of Goa became a full-fledged State.

4. The first respondent, on the other hand, refutes this position and contends that the petitioner Bank ceased to have any objects over the territory of Daman and Diu to be achieved, except for the fact that four members are residing in that territory and therefore, section 95 of the Central Act would not operate. The contention of the first respondent is that three members are coming from the same family enrolled as members in 1974 and the fourth member Shri Gohil Mukeshchandra Dhanji, who is hailing from Diu, enrolled on 10th September, 1985. Since they have been enrolled before Goa became a separate State, it does not satisfy the requirement of section 5(1) of the Central Act. Moreover, they are not active members of the petitioner Bank. They do not use the facility of the petitioner Bank and did not take any loan from the Bank after the State of Goa came into existence. It is also contended that in the Union Territory of Daman and Diu no substantial number of transactions have taken place and no branch of the petitioner Bank is functioning in that Territory. Further, he contended that under Clause 2(a) of section 6 of the Central Act a minimum number of 50 members from each State have to be there to be enrolled as members. He further contends that by virtue of section 7 of the Central Act unless there was a viable unit in each State it cannot claim the status of a Multi-State Co-operative Society.

5. We have heard Mr. V.R. Reddy, Additional Solicitor General of India, who is appearing for the Union of India and Mr. V.B. Nadkarni, Advocate General of the State of Goa, appearing for the first respondent. We also heard Mr. S.K. Kakodkar, Senior Advocate appearing for the petitioners. Before going into the rival contentions of the parties, we have to dispose of a controversy which arose between the parties with regard to letter dated 19th November, 1992, said to have been issued by the Assistant Director, Co-operation, Ministry of Agriculture and Co-operation, Government of India, New Delhi, which is produced as Exhibit 'A', alongwith the affidavit of Shri G.S. Patil, the first respondent. That letter dated 19th November, 1992, is purported to be a reply sent to the General Manager, Mapusa Urban Co-operative Bank Limited, in reply to their letter dated 9th September, 1992. The letter of 19th November, 1992, shows that the Assistant Director of the Ministry of Agriculture and Co-operation has clarified the position under what circumstances a Society will become a Multi-State Co-operative Society. He has also produced a copy of the same letter stated to have been produced by the petitioner in Writ Petition No. 23/93. We perused these two letters. The two letters are materially at variance. In the latter copy of the letter, a sentence seems to have been added, which reads thus:-

'Your Society now falls under this category.'

This sentence was not there in the earlier copy which was received form the Director of Agriculture and Co-operation. On seeing the copies of the two letters which differ from each other on material point, we have ordered by our Order dated 28th January, 1997, to produce the original of the letter and the files relating to the same. Afterperusing the file also, we are not in a position to know how this controversial mistake had crept in because the file produced before us did not throw any light about this controversy. Since the letter is not very material for deciding the case, we only express our deep dis-satisfaction about the action of the Government of India in sending the same letter in different tenor to different parties.

6. Be that as it may, as explained earlier, the only question to be decided in this case is as to whether section 95 of the Central Act operates in the case of the petitioner Bank and if it is so, how far the first respondent is justified in passing the impugned order. Section 95 of the Central Act reads as follows:-

'Section 95. Co-operative societies functioning immediately before reorganisation of States-

(1) Where by virtue of the provisions of Part II of the State Reorganisation Act, 1956 (37 of 1956), or any other enactment relating to reorganisation of States, any Co-operative Society which immediately before the day on which the reorganisation takes place had its objects confined to one State becomes as from that date, a Multi-State Co-operative Society it shall be deemed to be a Multi-State Co-operative Society registered under the corresponding provisions of this Act and the bye-laws of such society shall, in so far as they are not inconsistent with the provisions of this Act, continue to be in force until altered or rescinded.'

Apparently section 95 of the Central Act is incorporated to meet a particular situation. As a consequence of the Reorganisation of States when any area or portion of area of the Society came to be bifurcated or divided and fell in the jurisdiction of two State administrations and in order to obviate the administrative stalemate the said section has been provided. This section is independent of all other sections of the Act. The Multi-purpose Co-operative Society has been defined as a Society registered or deemed to be registered under the Act and includes a National Co-operative Society. Sections 2, 4, 5, 6, 7 and 8 deal with how a Multi-State Co-operative Society could be registered under the Central Act. In other words, by voluntary acts of the concerned persons a Multi-State Co-operative Society could be formed if it satisfies the conditions laid down in the aforesaid sections. As the definition of Multi-State Co-operative Societies indicates, there are two situations envisaged as to how a Multi-State Cooperative Society comes into being. One is registered after observing formalities of Sections 4, 5, 6, 7 and 8 and another is deemed Multi-State Co-operative Societies as envisaged under section 95 of the Central Act. The learned Additional Solicitor General, Mr. Reddy, submits that in this case sections 4, 5, 6, 7 and 8 have no application at all. The formalities and procedure contemplated in those sections are entirely with a different purpose and whereas under section 95 of the Central Act, the law takes its own course to meet a particular contingency. Therefore, section 95 of the Central Act has to be looked and construed independently and given effect to if the situation envisaged under that section emerges. The learned Counsel for the petitioners, Shri Kakodkar, strongly endorsed this view of the teamed Additional Solicitor General and submitted that when a situation envisaged under section 95 of the Central Act arises, the Court need not go into the practical aspect of the matter as to whether the object of the Society is to be achieved in the area bifurcated by the State Administration Act or whether there is any member at all in the 3 area utilising the facilities provided by the petitioner Society.

7. The learned Advocate General, Mr. Nadkarni, who appeared for the respondents No. 1 and 2, on the other hand, submits that alt the criteria and formalities envisaged under sections 4, 5, 6, 7 and 8 have to be complied with in order to giveeffect to section 95 of the Central Act. Section 95 of the Central Act cannot be read in isolation. It has to be read alongwith other provisions of the Act. Therefore, where the requirements of sections 4, 5, 6, 7 and 8 are not satisfied, or not in existence, section 95 of the Central Act cannot be pressed into service. He also contended that in the absence of active members to utilise the facility of the Society, section 95 of the Central Act will not operate even if there is a bifurcation of the area of operation. However, we are not impressed with the argument of the learned Advocate General.

8. As we observed earlier, section 95 of the Central Act operates in peculiar circumstances. It operates in a situation where, by operation of another law, the entire character of the existing Society has undergone a change. Unless a provision like section 95 of the Central Act is there the result will be chaos and confusion in the administration of the society. Therefore, when construing a section like section 95 of the Central Act, we will have to ask ourselves what will happen if such a provision were not there. Therefore, the Parliament was quite conscious about the chaotic situation and to get over such a situation section 95 of the Central Act was enacted. Therefore, as rightly pointed out by the learned Additional Solicitor General, the section has to be construed distinctly and independently. In fact, we are faced with a legal fiction that was brought to operate in a given situation which was also created by another enactment. As is well-settled in law, creating a fiction is a legislative device to meet a particular situation, imputing certain things which were not in fact in existence. Parliament has brought in section 95 of the Central Act resorting to this legal fiction. Once the legal fiction is applied in a particular situation, then it is futile to contend that such requirements should exist physically. Therefore, the contention of the learned Additional Solicitor General that all the requirements contemplated in sections 2, 4, 5, 6, 7 and 8 are not required to be adhered to where a legal 'fiction' is applied. It is worthwhile to quote a passage from Shri G.P. Singh's 'Interpretation of Statutes' which reads:

'In interpreting a provision creating a legal fiction, the Court is to ascertain for what purpose the fiction is created, and after ascertaining this, the Court is to assume all those facts and consequences which' are incidental or inevitable corollaries to the giving effect to the fiction.'

As observed by James, L.J.:-

'When a statute enacts that something shall be deemed to have been done, which in fact and in truth was not done, the Court is entitled and bound to ascertain for what purposes and between what person the statutory fiction is to be resorted to.'

When the purpose is ascertained, full effect must be given to the statutory fiction and it should be carried to its logical conclusion. Once it starts to operate it will not stop irrespective of whether in practice the circumstances exist or whether it is necessary to apply. Lord Asquith stated:

'If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the penetrative state of affairs had in fact existed, much inevitably have flowed from or accompanied it. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'

The same view has been approved by the Supreme Court in the case of State of Bombay v. Pandurang Vinayak & others, reported in : 1953CriLJ1049 as follows:

'By reason of the deeming provisions of section 15, the language used in thenotification extending the ordinance to those areas as a necessary consequencehas the effect of extending the operation of the Act to those areas.

When a statute enacts that something shall be deemed to have been done,which in fact and truth was not done, the Court is entitled and bound toascertain for what purposes and between what persons that statutoryfiction is to be resorted to and full effect must be given to the statutoryfiction and it should be carried to its logical conclusion. (Vide LordJustice James in (Ex parte Walton: In re Levy), 1881(17) Ch. D. 746(A).) If the purpose of the statutory fiction mentioned in section 15is kept in view, then it follows that the purpose of that fiction would becompletely defeated if the notification was construed in the literal mannerin which it has been construed by the High Court. In East End DwellingsCo. Ltd. v. Finsbury Borough Council, 1952 A.C. 109 (n), Lord Asquithwhile dealing with the provisions of the Town and Country Planning Act,1947, made reference to the same principle and observed as follows:'If you are bidden to treat an imaginary state of affairs as real, you must surely,unless prohibited from doing so, also imagine as real the consequencesand incidents which, if the putative state of affairs had in fact existed,must inevitably have flowed from or accompanied it .....The statute saysthat you must imagine a certain state of affairs; if does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'

A rider has been provided by the Supreme Court in evaluating the 'fictional' theory that the same cannot be extended beyond the purpose which is to be achieved. That rider has been laid down by the Supreme Court in the cases of M/s. Braithwaite and Co. (India) Ltd. v. The Employees State Insurance Corporation, reported in : (1968)ILLJ550SC and H.S.Atwal & others v. Union of India & others, reported in A.I. R. 1984 S.C. 2531. In these two decisions the Supreme Court has, though restricted the operation of legal 'fiction' and confined it only to the purpose that should be achieved by operation of that 'fiction', but, however, it can be seen that the legal 'fiction' when the purpose is fixed cannot be excluded from its application. In this petition, it is admitted case that the petitioners' area of operation extended to the erstwhile Union Territory of Goa, Daman and Diu and the petitioners were entitled to extend their activities to these areas. Once an area where the Co-operative Society is legally entitled to operate is defined, the consequences and effect of that operation are not depending upon whether it actually operates or it actually does its business in that area. The activities or business of a Co-operative Society are in the nature of the control and jural power of the territory over which it can operate. Therefore, once the contingency under section 95 of Central Act arose, automatically the law takes its own course and nobody can stop it once it starts to operate. Therefore, the contention of the learned Advocate General that there are only four members in the Union Territory of Daman and Diu and they are not doing any business transaction with the Bank for a pretty long time will not obliterate the legal fiction ordained to be brought in by section 95 of the Central Act. The learned Advocate General further contended that the Punjab and Haryana High Court in the case of Raj Pal Singh & others v. State of Haryana & another, reported in which has held thus:-

'..... As per Webster's Dictionary, 1987 Edition, the word 'purpose' means'a result which it is kept in mind in performing an action.' Object means'a thing or conception towards which the action of the thinking mind, considered as subject is directed.' The facts and circumstances of the case as adverted to in the earlier part of the judgment clearly disclose that the main purpose of formation or registration of the Society was to ameliorate or achieve the economic well-being of its members and this was to be so achieved by establishing a sugar mill at Panipat. In other words, the establishment of a sugar mill was the main object of the Society and it was towards it that the entire action of its thinking mind was directed. A reading of the bye-laws of the Society clearly indicates that the whole effort of the Society was to successfully establish a sugar mill at Panipat and hardly anything else.'

We do not see in the observations of the High Court any relevance to the facts of this case. There the question posed was entirely different and the facts are also different. There the very object of the Society itself was to establish a sugar mill at Panipat and Ambala where the Society was to operate were part of the State of Pepsu and subsequently merged with the State of Punjab and again subsequently merged into Haryana. The question posed in that case was entirely different as will be clearly seen from the observation of the same High Court in the very same judgment at para 6, as below:-

'The third plea of the petitioners, as noticed above, has hardly any substance.

As pointed out earlier, this plea has been taken in the light of sub-section (1) of section 95 of the 1984 Act. This provision's attracted to Societies which became Multi-State Co-operative Societies as a result of the reorganisation of a particular State, It is not in dispute that with the promulgation of the State Reorganisation Act, 1956 (37 of 1956) the areas of erstwhile State of Pepsu were merged with Punjab. Similarly with the enforcement of the latter Act, i.e. 1966 Act, the present State of Haryana was carved out of the erstwhile State of Punjab. The case of the petitioners is not that initially the objects of their Society were confined to one State and as a result of the above noted Reorganisation Acts, their Society became a Multi-State Co-operative Society. On the contrary, their plea is that right from the day of its incorporation or registration the Society was a Multi-State Co-operative Society. This plea we have already negatived. Therefore, the Reorganisation Acts referred to above have not affected the petitioners' Society in any manner. Thus we repel this stand of the petitioners also.'

Therefore, we are afraid whether the learned Advocate General can take any assistance from this above judgment to fortify his argument. As we pointed out earlier, the question posed in this writ petition has not been posed at all in that case and the said decision can have no application to the facts of the case in hand.

9. Next the learned Advocate General contended that in the light of the past conduct of the second petitioner, this Court may not exercise jurisdiction under Article 226 of the Constitution of India. He points out that the second petitioner was estopped from contending that the first petitioner Bank is a Multi-State Co-operative Society. In fact, on 30th May, 1987, when Goa became an independent State, he never contended that the first petitioner Bank has become a Multi-State Co-operative Society. He has contested the election under the Maharashtra Co-operative Societies Act after 1987 and got elected. He conveniently seized of the situation because under the State Act the term of office of the Committee was five years, whereas under the Central Act it was only three years. He enjoyed the full five years. He had neverstepped down from the office contending that under the Central Act the term of office is only three years, paving the way to conduct the election after three years. The petitioners have not approached this Court with clean hands. The learned Advocate General also brought to our notice that at the instance of the petitioners the Award passed against the defaulters which was sought to be executed under the State Act was objected to by raising the objection that the Registrar of Co-operative Societies and it officers cannot exercise power in order to enforce the orders for realisation of the amount due to the petitioner Bank from the debtors and at the same time he approached the machinery under the State Act for recovery of an amount of Rs. 4,64,56,799/- by finalising 1084 executive cases under the State Act. Therefore, the Advocate General contended that the second petitioner lacks bona fide in filing this petition. Whenever convenience suits him or circumstances arise he takes up dual stands of conflicting nature. He was a sheer opportunist; he will take up the position that the State Act will apply to the first petitioner if the position suits him to maintain his presidentship. When it does not suit his convenience and causes danger to his position, then he will take up different stand that the State Act will have no application. Therefore, such a person who adopts such contradictory stands on different occasions and who did not come to this Court with clean hands is not entitled to any relief in this case. To some extent, we agree with the contention of the learned Advocate General, that as disclosed from records the second petitioner has taken conflicting stands, taking up a different stand in a different situations. But the conduct of the second petitioner will have to be viewed in a different context. Co-operative movements in India generally are subject to political manipulations and the institutions which afford them a green pasture are day-by-day deteriorating their relevance in the hands of politicians. But this deplorable situation need not deter this Court from examining the implication of the operation of section 95 of the Central Act, which is called for Whatever may be the past conduct of the second petitioner, this Court is called upon to examine what is the legal position and the status of the first petitioner Bank in view of section 95 of the Central Act. Therefore, in view of the above discussion, we have to hold that the first petitioner Bank is deemed to be a Multi-State Co-operative Society by virtue of section 95 of the Central Act with effect from 30th May, 1987, the date on which the State of Goa came into existence.

10. It is true that it is a disturbing factor that for the last ten years the politicians are making use of the first petitioner Bank for their political end; but what the Registrar of Co-operative Societies under the State Act was doing all these years? It was the duty of the Registrar of Co-operative Societies under the State Act to act promptly when the Goa, Daman and Diu Reorganisation Act, 1987, came into existence on 30th May, 1987. We find the Registrar of Co-operative Societies under the Central Government is grossly negligent in not taking action in this regard. By a law enacted by Parliament, the earlier Union Territory was divided into two separate political entities and it seems that the Registrar of Co-operative Societies was unmindful of the legal consequences of that enactment. He should not have waited for people reaching to him with the information that first petitioner Bank had become a Multi-State Co-operative Society by virtue of section 95 of the Central Act. The Central Act had given ample power to the Registrar to punish the persons who violated the provisions of the Act. Sub-section (1) of section 96 of the Central Act gives ample power to the Registrar even to proceed against the person who furnished any false return or information to the Registrar with penal consequences. This power is given to the Registrar to exercise properly and diligently as a guardian of the Co-operative institutions. Can he plead ignorance andbe unmindful of the coming into force of an enactment dividing the erstwhile Union Territory into State of Goa and Union Territory of Daman and Diu? Therefore, the Registrar has to be primarily blamed for all maladministration of the Society for the last ten years. We hope and trust such situation will not repeat in future with regard to any Society and we expect prompt action from the Registrar under the Central Act. We direct the Registry of this Court to forward a copy of the judgment to the concerned Ministry of the Central Government for taking necessary steps to avoid recurrence of the events as occurred in this case, in future.

11. In the result, the writ petition is allowed. The rule is made absolute in terms contained in the prayer clauses (a) and (b). In the circumstances of the case there shall be no order as to costs.

12. Writ petition allowed.