Page 1 IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3047 OF 2015

(Arising from S.L.P. (C) No. 6237/2014)

Vipulbhai M. Chaudhary … Appellant (s)

Versus

Gujarat Cooperative Milk Marketing

Federation Limited and others … Respondent (s)

WITH

CIVIL APPEAL NO. 3048 OF 2015

(Arising from S.L.P. (C) No. 3799/2014)

AND

CIVIL APPEAL NO. 3049 OF 2015

(Arising from S.L.P. (C) No. 5270/2014)

J U D G M E N T

KURIAN, J.:

Leave granted.

2. Whether in the absence of a specific provision on removal by

no confidence in the Act, Rules or even Bye-laws of a Cooperative

Society, the Chairperson/elected office bearer can be removed by a

motion of no confidence, is the short but complex question.

1

REPORTABLE

Page 2 3. Appellant was removed from the office of the Chairperson of

the first respondent–cooperative society through a no confidence

motion. Aggrieved, appellant filed a writ petition which was

dismissed as per the impugned judgment and thus the appeal.

4. Shri Kapil Sibal, Shri H. Ahmedi and Shri Harin P. Raval,

learned Senior Counsel led the arguments on behalf of the appellant.

Shri Tushar Mehta, Additional Solicitor General, Dr. Rajeev Dhawan,

Shri Ashok Desai and Shri V. Giri, learned Senior Counsel, Shri Sanjay

R. Hegde and Shri B. S. Patel, learned Counsel, led the arguments on

behalf of the respondents.

5. International Cooperative Alliance Statement on the

Cooperative Identity was adopted in Manchester, United Kingdom on

23.09.1995. The ‘cooperative’ is defined as:

“A co-operative is an autonomous association of

persons united voluntarily to meet their common

economic, social, and cultural needs and aspirations

through a jointly-owned and democratically-

controlled enterprise.”

(Emphasis supplied)

6. The Statement also provides for ‘values’ on which

cooperatives should model themselves, which reads as follows:

“Co-operatives are based on the values of self-help,

self-responsibility, democracy, equality, equity and

2

Page 3 solidarity. In the tradition of their founders,

co-operative members believe in the ethical values

of honesty, openness, social responsibility and caring

for others.”

(Emphasis supplied)

7. The Statement further provides for ‘seven cooperative

principles’ as guidelines by which the cooperatives put their values

into practice. Following are the principles:

“1st Principle: Voluntary and Open Membership

Co-operatives are voluntary organizations, open to

all persons able to use their services and willing to

accept the responsibilities of membership, without

gender, social, racial, political or religious

discrimination.

2nd Principle: Democratic Member Control

Co-operatives are democratic organizations

controlled by their members, who actively

participate in setting their policies and making

decisions. Men and women serving as elected

representatives are accountable to the membership.

In primary co-operatives members have equal voting

rights (one member, one vote) and co-operatives at

other levels are also organized in a democratic

manner.

3rd Principle: Member Economic Participation

Members contribute equitably to, and democratically

control, the capital of their co-operative. At least part

of that capital is usually the common property of the

co-operative. Members usually receive limited

compensation, if any, on capital subscribed as a

condition of membership. Members allocate

surpluses for any or all of the following purposes:

3

Page 4 developing their co-operative, possibly by setting up

reserves, part of which at least would be indivisible;

benefiting members in proportion to their

transactions with the co-operative; and supporting

other activities approved by the membership.

4th Principle: Autonomy and Independence

Co-operatives are autonomous, self-help

organizations controlled by their members. If they

enter to agreements with other organizations,

including governments, or raise capital from external

sources, they do so on terms that ensure democratic

control by their members and maintain their co-

operative autonomy.

5th Principle: Education, Training and

Information

Co-operatives provide education and training for

their members, elected representatives, managers,

and employees so they can contribute effectively to

the development of their co-operatives. They inform

the general public – particularly young people and

opinion leaders – about the nature and benefits of

co-operation.

6th Principle: Co-operation among Co-

operatives

Co-operatives serve their members most effectively

and strengthen the co-operative movement by

working together through local, national, regional

and international structures.

7th Principle: Concern for Community

Co-operatives work for the sustainable development

of their communities through policies approved by

their members.”

(Emphasis supplied)

4

Page 5 8. The cooperative movement in India started at the beginning

of the 20

th

century. Though the movements were also based on

some of the values and principles stated above, it appears that the

cooperatives in India did not have effective autonomy, democratic

functioning and professional management. The National Policy on

Cooperatives announced by the Department of Agriculture and

Cooperation, Ministry of Agriculture, Government of India adopted in

March, 2002, is wholly based on the definition, values and principles

stated above. 97

th

Amendment to the Constitution of India, in fact,

gave a constitutional frame to this policy.

9. Apart from providing for the right to form cooperative

societies to be a fundamental right under Article 19 of the

Constitution of India and insertion of Article 43B under the Directive

Principles of State Policy on promotion of cooperative societies, the

amendment also introduced a new Part IXB on Cooperative

Societies. Reference to the Statement of Objects and Reasons of the

amendment would give a clear picture as to the need to strengthen

the democratic basis and provide for a constitutional status to the

cooperative societies. Thus, one has to see the constitutional

aspirations on the concept of cooperative societies after the 97

th

Amendment in the Constitution of India which came into effect on

12.01.2012.

5

Page 6 “STATEMENT OF OBJECTS AND REASONS

The co-operative sector, over the years, has

made significant contribution to various sectors of

national economy and has achieved voluminous

growth. However, it has shown weaknesses in

safeguarding the interests of the members and

fulfilment of objects for which these institutions were

organised. There have been instances where

elections have been postponed indefinitely and

nominated office bearers or administrators remaining

in-charge of these institutions for a long time. This

reduces the accountability of the management of co-

operative societies to their members. Inadequate

professionalism in management in many of the co-

operative institutions has led to poor services and

low productivity. Co-operatives need to run on well

established democratic principles and elections held

on time and in a free and fair manner. Therefore,

there is a need to initiate fundamental reforms to

revitalize these institutions in order to ensure their

contribution in the economic development of the

country and to serve the interests of members and

public at large and also to ensure their autonomy,

democratic functioning and professional

management.

2. The "co-operative societies" is a subject

enumerated in Entry 32 of the State List of the

Seventh Schedule of the Constitution and the State

Legislatures have accordingly enacted legislations on

co-operative societies. Within the framework of State

Acts, growth of co-operatives on large scale was

envisaged as part of the efforts for securing social

and economic justice and equitable distribution of

the fruits of development. It has, however, been

experienced that in spite of considerable expansion

of co-operatives, their performance in qualitative

terms has not been up to the desired level.

Considering the need for reforms in the Co-operative

Societies Acts of the States, consultations with the

State Governments have been held at several

occasions and in the conferences of State Co-

operative Ministers. A strong need has been felt for

amending the Constitution so as to keep the co-

6

Page 7 operatives free from unnecessary outside

interferences and also to ensure their autonomous

organisational set up and their democratic

functioning.

3. The Central Government is committed to

ensure that the co-operative societies in the country

function in a democratic, professional, autonomous

and economically sound manner. With a view to

bring the necessary reforms, it is proposed to

incorporate a new Part in the Constitution so as to

provide for certain provisions covering the vital

aspects of working of co-operative societies like

democratic, autonomous and professional

functioning. A new article is also proposed to be

inserted in Part IV of the Constitution (Directive

Principles of State Policy) for the States to endeavour

to promote voluntary formation, autonomous

functioning, democratic control and professional

management of cooperative societies. The proposed

new Part in the Constitution, inter alia, seeks to

empower the Parliament in respect of multi-State co-

operative societies and the State Legislatures in case

of other co-operative societies to make appropriate

law, laying down the following matters, namely:—

(a) provisions for incorporation, regulation

and winding up of co-operative societies based

on the principles of democratic member-

control, member-economic participation and

autonomous functioning;

(b) specifying the maximum number of

directors of a co-operative society to be not

exceeding twenty-one members;

(c) providing for a fixed term of five years

from the date of election in respect of the

elected members of the board and its office

bearers;

(d) providing for a maximum time limit of

six months during which a board of directors of

co-operative society could be kept under

supersession or suspension;

(e) providing for independent professional

audit;

(f) providing for right of information to the

members of the co-operative societies;

7

Page 8 (g) empowering the State Governments to

obtain periodic reports of activities and

accounts of co-operative societies;

(h) providing for the reservation of one

seat for the Scheduled Castes or the

Scheduled Tribes and two seats for women on

the board of every co-operative society, which

have individuals as members from such

categories;

(i) providing for offences relating to co-

operative societies and penalties in respect of

such offences.

4. It is expected that these provisions will not

only ensure the autonomous and democratic

functioning of co-operatives, but also ensure the

accountability of management to the members and

other stakeholders and shall provide for deterrence

for violation of the provisions of the law.

5. The Bill seeks to achieve the above

objectives.”

(Emphasis supplied)

10. Article 43B of the Constitution of India provides for

promotion of cooperative societies:

“43B. The State shall endeavour to promote

voluntary formation, autonomous functioning,

democratic control and professional management

of co-operative societies.”

(Emphasis supplied)

11. Part IXB of the Constitution of India is titled as “The

Cooperative Societies”. A few provisions would be relevant for our

consideration.

· Article 243ZH(b) defines “board”:

8

Page 9 “243ZH(b) “board” means the board of

directors or the governing body of a co-operative

society, by whatever name called , to which the

direction and control of the management of the

affairs of a society is entrusted to;”

(Emphasis supplied)

· Article 243ZH(c) defines “cooperative society”:

“243ZH(c) “co-operative society” means a

society registered or deemed to be registered under

any law relating to co-operative societies for the

time being in force in any State;”

· “Office bearer” is under Article 243ZH(e):

“243ZH(e) “office bearer” means a President,

Vice-President, Chairperson, Vice-Chairperson,

Secretary or Treasurer of a co-operative society and

includes any other person to be elected by the board

of any co-operative society;”

· Article 243ZJ provides for the number and term of

members of the board and its office bearers:

“243ZJ. (1) The board shall consist of such

number of directors as may be provided by the

Legislature of a State, by law:

Provided that the maximum number of directors

of a co-operative society shall not exceed twenty-

one:

Provided further that the Legislature of a State

shall, by law, provide for the reservation of one seat

for the Scheduled Castes or the Scheduled Tribes and

two seats for women on board of every co-operative

9

Page 10 society consisting of individuals as members and

having members from such class or category of

persons.

(2) The term of office of elected members of the

board and its office bearers shall be five years from

the date of election and the term of office bearers

shall be coterminous with the term of the board:

Provided that the board may fill a casual

vacancy on the board by nomination out of the same

class of members in respect of which the casual

vacancy has arisen, if the term of office of the board

is less than half of its original term.

(3) The Legislature of a State shall, by law,

make provisions for co-option of persons to be

members of the board having experience in the field

of banking, management, finance or specialization in

any other field relating to the objects and activities

undertaken by the co-operative society as members

of the board of such society:

Provided that the number of such co-opted

members shall not exceed two in addition to twenty-

one directors specified in the proviso to clause (1):

Provided further that such co-opted members

shall not have the right to vote in any election of the

co-operative society in their capacity as such

member or to be eligible to be elected as office

bearers of the board:

Provided also that the functional directors of a

co-operative society shall also be the members of

the board and such members shall be excluded for

the purpose of counting the total number of directors

specified in first proviso of clause (1).”

(Emphasis supplied)

· Article 243ZT provides for continuance of the existing

10

Page 11 laws:

“243ZT. Notwithstanding anything in this Part,

any provision of any law relating to co-operative

societies in force in a State immediately before the

commencement of the Constitution (Ninety Seventh

Amendment) Act, 2011, which is inconsistent with

the provisions of this Part, shall continue to be in

force until amended or repealed by a competent

Legislature or other competent authority or until the

expiration of one year from such commencement,

whichever is less.’.”

(Emphasis supplied)

12. Thus, by 12.01.2013, all laws on cooperative societies were

bound to be restructured in consonance with the Ninety Seventh

Amendment of the Constitution of India and, in any case, any

provision in the Act or Rules or Bye-laws otherwise inconsistent with

the Constitution will be inoperative thereafter. Articles 43B and

243ZT are mandates to all the States and the competent authorities

to structure cooperative societies as conceived in the Constitution of

India, if not already there. Therefore, we have to see whether the

Act, Rules or Bye-laws contain any provision for democratic

functioning.

13. The first legislation on cooperative movement in India was

the Cooperative Credit Societies Act, 1904 and, thereafter, the

cooperative societies emerged in India as State sponsored/promoted

institutions. The main objective was only credit intended to relieve

11

Page 12 the poor agriculturists from the clutches of moneylenders. The first

urban cooperative credit society under the Act of 1904 was

registered in Kanjivaram in erstwhile Madras province

1

. The traits of

democracy were present in the very first legislation through the

principle “one man, one vote”. Since the first legislation was limited

to the credit societies, a new legislation was introduced 8 years later

as “Cooperative Societies Act, 1912”. The restriction regarding

registration limited to credit societies was taken away and any

society established with the object of promoting the economic

interests of its members in accordance with the cooperative

principles, or a society established with the object of facilitating the

operations of such a society, could be registered

2

.

14. Under the Government of India Act of 1919 (Montague

Chelmsford Reforms), cooperation became a provincial subject

which gave a further impetus to the movement. This gave birth to

several cooperative land mortgage banks. The first of its kind was

registered in Punjab. Close to independence and thereafter, we see a

radical change and increased growth in the cooperative movement.

Activities were spread to all spheres of human endeavour, and thus

1

“Brief History of Urban Cooperatives” adapted from a paper by O.P. Sharma

published on Reserve Bank of India website –

www.rbi.org.in/scripts/briefhistory.aspx.

2

The Co-operative Movement in India by Eleanor M. Hough, Fourth Edition,

1959

12

Page 13 in 2002, National Policy on Cooperatives was announced.

15. The cooperative societies having been conferred a

constitutional status by the Ninety Seventh Amendment, the whole

concept of cooperatives has undergone a major change. In 1993, the

local self-governments, viz., panchayats and municipalities were also

given constitutional status under Parts IX and IXA of the Constitution

of India by the 73

rd

and 74

th

Amendments. The Statement of Objects

and Reasons would show that the Constitution wanted the local

bodies to function as vibrant democratic units of self-government.

After two decades, cooperative societies were given the

constitutional status by including them under Part IXB. The main

object for the said amendment was also to ensure “their autonomy,

democratic functioning and professional management”.

16. The National Policy on Cooperatives announced in March

2002 has recognized democracy, equality, equity and solidarity as

values of cooperatives. Cooperative society has been declared as a

democratic institution. Democratic principles have all through been

recognized as one of the cooperative principles though the

constitutional affirmation of those principles came only in 2012.

17. The principle of representative democracy is the election of

representatives by the people otherwise eligible to caste their vote

13

Page 14 and the people thus elected, constituting the body for the

management of an institution. Thus, in the case of cooperative

societies, after the amendment in the Constitution, there has to be a

Board of elected representatives, which may be called Board of

Directors or Governing Body or a Managing Committee, etc., to

which the members entrust the direction and control of the

management of the affairs of the society. That representative body

selects one among the elected representatives as its Chairman or

any other office bearer, as the case may be. Selection is the act of

carefully choosing someone as the most suitable to be the leader or

office bearer. Thus, there is a lot of difference between election of

delegates/representatives to constitute a body and selection of a

person by the body from amongst the elected members to be the

leader. It is to be borne in mind that the management and control of

the society is entrusted to the representative body, viz., the Board of

Directors and that the Chairperson elected by the Board of Directors

is the Chairperson of the society and not of the Board of directors.

18. In Bhanumati and others v. State of Uttar Pradesh

through its Principal Secretary and others

3

, the cooperative

principles governing democratic institutions have been discussed in

detail; no doubt while dealing with the Panchayati Raj institutions.

3

(2010) 12 SCC 1

14

Page 15 However, the basic democratic principles governing both the

institutions, enjoying the constitutional status, are the same and,

therefore, it would be profitable to refer to the discussion on the

principles. To quote:

“58. These institutions must run on democratic

principles. In democracy all persons heading public

bodies can continue provided they enjoy the

confidence of the persons who comprise such bodies.

This is the essence of democratic republicanism. This

explains why this provision of no-confidence motion

was there in the Act of 1961 even prior to the

Seventy-third Constitution Amendment and has been

continued even thereafter. Similar provisions are

there in different States in India.

66. Democracy demands accountability and

transparency in the activities of the Chairperson

especially in view of the important functions

entrusted with the Chairperson in the running of

Panchayati Raj institutions. Such duties can be

discharged by the Chairperson only if he/she enjoys

the continuous confidence of the majority members

in the panchayat. So any statutory provision to

demonstrate that the Chairperson has lost the

confidence of the majority is conducive to public

interest and adds strength to such bodies of self-

governance. Such a statutory provision cannot be

called either unreasonable or ultra vires Part IX of the

Constitution.”

19. In Pratap Chandra Mehta v. State Bar Council of

Madhya Pradesh and others

4

and in Usha Bharti v. State of

Uttar Pradesh and others

5

, the concept of democratic principles

4

(2011) 9 SCC 573

5

(2014) 7 SCC 663

15

Page 16 governing the democratic institutions have been discussed. In a

democratic institution, confidence is the foundation on which the

superstructure of democracy is built. The bedrock of democratic

accountability rests on the confidence of the electorate. If the

representative body does not have confidence in the office bearer

whom they selected, democracy demands such officer to be

removed in a democratic manner.

20. A cooperative society is registered on cooperative principles

of democracy, equity, equality and solidarity. Democratic

accountability, mutual trust, fairness, impartiality, unity or

agreement of feeling among the delegates, cooperativeness, etc.,

are some of the cardinal dimensions of the cooperative principles. A

body built on such principles cannot be led by a captain in whom the

co-sailors have no confidence.

21. If a person has been selected to an office through

democratic process, and when that person looses the confidence of

the representatives who selected him, those representatives should

necessarily have a democratic right to remove such an office bearer

in whom they do not have confidence, in case those institutions are

viewed under the Constitution/statues as democratic institutions.

22. In Bhanumati case (supra), at paragraph-67, this Court

16

Page 17 elaborated on this principle:

“67. Any head of a democratic institution must

be prepared to face the test of confidence. Neither

the democratically elected Prime Minister of the

country nor the Chief Minister of a State is immune

from such a test of confidence under the Rules of

Procedure framed under Articles 118 and 208 of the

Constitution. Both the Prime Minister of India and

Chief Ministers of several States heading the Council

of Ministers at the Centre and in several States

respectively have to adhere to the principles of

collective responsibilities to their respective houses

in accordance with Articles 75(3) and 164(2) of the

Constitution.”

23. In Pratap Chandra Mehta case (supra), at paragraph-45,

the principle has been discussed as follows:

“45. In the instant case, the election process as

contemplated under the relevant laws is that the

members of a State Bar Council are elected by the

electorate of advocates on the rolls of the State Bar

Council from amongst the electorate itself. The

elected members then elect a Chairman, a Vice-

Chairman and the Treasurer of the State Bar Council

as well as constitute various committees for carrying

out different purposes under the provisions of the

Advocates Act. In other words, the body which elects

the Chairman or Vice-Chairman of a State Bar

Council always consists of members elected to that

Council. The democratic principles would require that

a person who attains the position of a Chairman or

Vice-Chairman, as the case may be, could be

removed by the same electorate or smaller body

which elected them to that position by taking

recourse to a “no-confidence motion” and in

accordance with the Rules. The body that elects a

person to such a position would and ought to have

the right to oust him/her from that post, in the event

17

Page 18 the majority members of the body do not support the

said person at that time. Even if, for the sake of

argument, it is taken that this may not be generally

true, the provisions of Rule 122-A of the M.P. Rules

make it clear, beyond doubt, that a “no-confidence

motion” can be brought against the elected

Chairman provided the conditions stated in the said

Rules are satisfied.”

24. In Usha Bharti case (supra) also, this Court eloquently held

at paragraph-53 as follows:

“53. In our opinion, the provision for removing

an elected representative such as Panchayat

Adhyaksha is of fundamental importance to ensure

the democratic functioning of the Institution as well

as to ensure the transparency and accountability in

the functions performed by the elected

representatives.”

25. No doubt, in the cases referred to above, the respective Acts

contained a provision regarding no confidence. What about a

situation where there is no express provision regarding no

confidence? Once the cooperative society is conferred a

constitutional status, it should rise to the constitutional aspirations

as a democratic institution. So, it is for the respective legislative

bodies to ensure that there is democratic functioning. When the

Constitution is eloquent, the laws made thereunder cannot be silent.

If the statute is silent or imprecise on the requirements under the

Constitution, it is for the court to read the constitutional mandate

18

Page 19 into the provisions concerned and declare it accordingly. Article

243ZT has given a period of one year to frame/reframe the statues

in consonance with Part IXB and thereafter, i.e., with effect from

12.01.2013, those provisions which are inconsistent with Part IXB,

cease to operate.

26. Silence in Constitution and abeyance as well has been dealt

extensively by Michael Foley in his celebrated work “The Silence of

Constitutions”. To quote from the Preface:

“Abeyances refer to those constitutional gaps which

remain vacuous for positive and constructive

purposes. They are not, in any sense, truces between

two or more defined positions, but rather a set of

implicit agreements to collude in keeping

fundamental questions of political authority in a

state of irresolution. Abeyances are, in effect,

compulsive hedges against the possibility of that

which is unresolved being exploited and given

meanings almost guaranteed to generate profound

division and disillusionment. Abeyances are

important, therefore, because of their capacity to

deter the formation of conflicting positions in just

those areas where the potential for conflict is most

acute. So central are these abeyances, together with

the social temperament required to sustain them,

that when they become the subject of heightened

interest and subsequent conflict, they are not merely

accompanied by an intense constitutional crisis, they

are themselves the essence of that crisis.”

27. In Part II, Chapter Four, the author has also dealt with the

19

Page 20 constitutional gaps and the arts of prerogative. To the extent

relevant, it reads as follows (Page-82):

“Gaps in a constitution should not be seen as simply

empty space. They amount to a substantial plenum

of strategic content and meaning vital to the

preservation of a constitution. Such interstices

accommodate the abeyances within which the

sleeping giants of potentially acute political conflict

are communally maintained in slumber. Despite the

absence of any documentary or material form, these

abeyances are real, and are an integral part of any

constitution. What remains unwritten and

indeterminate can be just as much responsible for

the operational character and restraining quality of a

constitution as its more tangible and codified

components. …”

28. Where the Constitution has conceived a particular structure

on certain institutions, the legislative bodies are bound to mould the

statutes accordingly. Despite the constitutional mandate, if the

legislative body concerned does not carry out the required structural

changes in the statutes, then, it is the duty of the court to provide

the statute with the meaning as per the Constitution. … “The job of

the Supreme Court is not to expound the meaning of the constitution

but to provide it with meaning”

6

. The reference obviously is to

United States Supreme Court. As a general rule of interpretation, no

doubt, nothing is to be added to or taken from a statute. However,

6

Walter Berns, ‘Government by lawyers and judges’, Commentary, June, 1987

at p.18.

20

Page 21 when there are adequate grounds to justify an inference, it is the

bounden duty of the court to do so. …“It is a corollary to the general

rule of literal construction that nothing is to be added to or taken

from a statue unless there are adequate grounds to justify the

inference that the legislature intended something which it omitted to

express”

7

. According to Lord Mersey in Thompson (Pauper) v.

Goold and Co.

8

… “It is a strong thing to read into an Act or

Parliament words, which are not there, and in the absence of clear

necessity, it is wrong to do”. In the case of cooperative societies,

after the Ninety Seventh Amendment, it has become a clear or

strong necessity to do the strong thing of reading into the

legislation, the constitutional mandate of the cooperative societies

to be governed as democratic institutions. … “The constitutional

provisions have to be construed broadly and liberally having regard

to the changed circumstances and the needs of time and polity”

9

.

29. Article 243ZT of the Constitution requires the laws relating to

cooperative societies in force in States prior to the commencement

of the Amendment Act to be in tune with and in terms of the

constitutional concept and set up of cooperative societies. In fact, a

7

Maxwell on The Interpretation of Statues, Twelfth Edition, page-33.

8

[1910] A.C. 409.

9

Constitutional Bench decision in State of West Bengal and others v.

Committee for Protection of Democratic Rights, West Bengal and others

reported in [(2010) 3 SCC 571, Paragraph-45.

21

Page 22 period of one year has been provided in the Constitution from the

commencement of the amendment for the required amendment or

repeal by the competent legislature or by the competent authority,

of laws which are inconsistent with Part IXB. As a corollary, the

Constitution enables the competent legislature or authority to

suitably amend the existing provisions in their laws in tune with the

constitutional mandate. Thereafter, in case there continues to be

silence in the Act or Bye-laws, the court will have to read the

constitutional requirements into the existing provisions. It is

essentially a process of purposive construction of the available

provisions as held by this Court in Pratap Chandra Mehta

case (supra).

30. Bye-law 18.2 of the first respondent, pertaining to the office

of the Chairperson of the Federation falling vacant before the expiry

of his elected term, will have to be analysed in the light of the above

principle. The provision reads as follows:

“18.2.The Chairperson of the Federation will be

elected by the Board for the Term of three years

and he / she shall continue to hold his / her

office till the new Chairperson is elected and

takes over. He / she shall be honorary

Chairperson. In case the elected Chairperson

vacates his / her office before expiry of his / her

term or due to any other reason the post of

Chairman falls vacant, the Board shall elect the

new Chairperson for the remaining term.

The election of the Chairperson will take place

22

Page 23 in the first Board meeting of the Federation

after the expiry of the term of the elected

Chairperson or when the Chairperson’s post

falls vacant. In his / her absence, the meeting

shall elect its own Chairperson for that meeting

from amongst the eligible members present.

The Chairperson in such event shall exercise

such power as may be delegated to him by the

Board of Directors. The Managing Director of

the Federation shall not be entitled to vote and

contest the election for the post of

Chairperson.”

(Emphasis supplied)

31. Bye-law 23 deals with the powers of the Board of Directors:

“23.Powers and Functions of the Board

The entire administration, management and

control of the Federation shall be vested in the

Board of Directors. The Board of Directors shall

have and exercise all such powers and enter

into all such agreements made, all such

arrangements, take all such proceeding and do

all such acts and things as may be necessary or

proper for the due management of the

Federation and for carrying out objects for

which the Federation is established and for

securing and furthering its interest subject to

the provisions of the Act or such act as shall

hereafter take its place and to any rules which

may be passed by the State Government in

pursuance of the said Act and subject also to

these Bye-Laws and / or any Bye-law which may

be duly made by the Federation.”

32. Thus, the entire administration, management and control

of the Federation are vested in the Board of Directors as per the

Bye-law. This is in terms of proviso to Section 73 of the Gujarat

Cooperative Societies Act, 1961 (hereinafter referred to as “the

23

Page 24 Act”). The Section reads as follows:

“Section 73 :- Final authority of society –

Subject to the provisions in this Act and the rules,

the final authority of every society shall vest in the

general body of the members in general meeting,

summoned in such a manner as may be specified in

the bye-laws:

Provided that, where the bye-laws of a society

provide for the election of delegates of such

members, the final authority may vest in the

delegates of such members elected in the prescribed

manner, and assembled in general meeting.”

33. The General Body of the first respondent-Federation, in

terms of Bye-law 13.1 comprises of the following:

“13.1 The General Meeting shall consist of

the following:-

(1)The Chairman of each of the affiliated Milk

Unions enrolled as Ordinary Members;

(2)The Registrar;

(3)The Dairy Management Expert co-opted by the

Board;

(4)Managing Director of the Federation;

(5)A nominee of the National Dairy Development

Board as long as the loan / interest of the

National Dairy Development Board have not

been fully repaid by the Federation.

The Chairman of the Board of Directors shall preside

over the General Meeting. In case of his absence, the

meeting shall elect a Chairman from among the

members present.”

34. The composition of the Board of Directors of the first

24

Page 25 respondent-Federation is provided under Bye-law 18.1:

“18.1 The Board will consist of the following:

(i)Chairman of the affiliated milk unions

enrolled as ordinary members;

(ii)Registrar or his representative not below

the rank of Joint Registrar [C.S.];

(iii)One Dairy Management Expert to be co-

opted by the Board;

(iv)Managing Director of the Federation [ex-

officio];

(v)A nominee of the National Dairy

Development Board as long as the loan /

interest of the National Dairy Development

Board have not been fully repaid by the

Federation.”

35. “Committee” is defined under Section 2(5) of the Act:

“Section 2(5) “committee” means the Managing

Committee or other governing body of a society to

which the direction and control of the management

of the affairs of a society is entrusted to.”

36. “Officer” is defined under Section 2(14) of the Act:

“Section 2(14) “officer” means a person elected

or appointed by a society to any office of such

society according to its bye-laws; and includes a

chairman, vice-chairman, president, vice-president,

managing director, manager, secretary, treasurer,

member of the committee, and any other person

elected or appointed under this Act, the rules or the

bye-laws, to give directions in regard to the business

of such society.”

37. Section 4 of the Act provides for the registration of societies:

25

Page 26 “Section 4- Societies which may be registered –

A society, which has as its object the promotion of

the economic interests or general welfare of its

members or of the public, in accordance with co-

operative principles, or as society established with

the object of facilitating the operations of any such

society, may be registered under this Act:

Provided that it shall not be registered if, in the

opinion of the Registrar, it is economically unsound,

or its registration may have an adverse effect upon

any other society, or it is opposed to, or, its working

is likely to be in contravention of public policy.”

38. A conjoint reading of all the provisions under the Act and the

Bye-laws of the Society would clearly show that the functional

authority of the first respondent-Federation vests in the Board of

Directors. The entire administration, management and control of the

Federation is with the Board. Thus, the Board of Directors is bound to

do all such acts and things as may be necessary for the proper

management of the Federation. The Chairperson of the first

respondent is elected by the Board for a term of three years and

after the 97

th

Amendment to the Constitution, the term is five years.

When the post of Chairperson falls vacant, the Board is bound to

elect a new Chairperson for the remaining term. The post of

Chairperson may fall vacant on account of variety of reasons like

resignation, death or cessation of membership in the Board,

operation of Section 76B of the Act, i.e., removal by the Registrar on

account of persistent default or misconduct.

26

Page 27 39. The removal by no confidence is not expressly provided in

the Bye-laws. Neither is there any such provision in the Act or Rules.

The only enabling provision is Bye-law 18.2 which mandates that in

case the office of the Chairperson of the Federation falls vacant

before the expiry of his term for any reason, the Board has to elect a

new Chairperson for the remaining term.

40. Shri Kapil Sibal, learned Counsel appearing for the appellant,

inviting reference to the doctrine of casus omissus and placing

reliance on the Full-Bench decision of the High Court of Kerala in

S. Lakshmanan, President, Thiruvilwamal Weavers Co-

operative Society v. V.Velliankeri, Member of Board of

Directors, Thiruvilwamala Weavers Co-operative Society Ltd.

and others

10

and the decisions of the other High Courts submits

that no such power of removal of the Chairperson by no confidence

can be read into the provisions of the Act, Rules or Bye-laws. To

quote from S. Lakshmanan case (supra) :

“16. The Committee is elected by following the

procedure prescribed under the Act and the Rules

and is guaranteed a tenure as prescribed in the Bye-

laws, by virtue of Rule 39(1). It can only be removed

by the procedure prescribed in the Act or the Rules

or the Bye-laws. The only contingency under which

the Committee may be removed before the end of its

tenure is indicated in Section 33(1) of the Act.

Section 33(1) of the Act envisages the passing of a

10

AIR 2002 Kerala 325

27

Page 28 no-confidence motion by the General Body which

results in wholesale removal of the Committee.

Barring this provision, there is no other provision by

which an elected individual member of the

Committee can be removed. We are, therefore,

unable to accept the contention of the appellants

that such a drastic power can be read into the Act,

even where there are no provisions. …”

41. In Veeramachaneni Venkata Narayana v. The Deputy

Registrar of Co-operative societies, Eluru, West Godavari

District and others

11

, at paragraph-10, the view taken by the High

Court of Andhra Pradesh, is as under:

“10. … As sufficient safeguards are provided in the

event of an office-bearer of the committee not

conducting himself properly or not discharging his

duties as required of him under the provisions of the

Act, the Rules and the bye-laws, the Legislature

obviously did not intend to provide for the removal of

an office-bearer of a committee by way of passing of

‘no-confidence’ motion against him.”

42. In Hindurao Balwant Patil and another

v. Krishnaro Pashuram Patil and others

12

, the High Court of

Bombay took the view that:

“10. … The Act, Rules and the bye-laws do no confer

any right upon the members of the Board of

Directors to remove the Chairman and the Vice-

Chairman by passing a mere vote of no confidence.

Therefore it will not be proper to confer such a wider

11

I.L.R. [1975] A.P. 242

12

AIR 1982 Bombay 216

28

Page 29 power upon the board of directors by taking recourse

to the doctrine of implied or inherent power.”

43. In Jagdev Singh v. The Registrar, Co-operative

Societies, Haryana and others

13

, the Full-Bench of High Court of

Punjab and Haryana held as follows:

“22. …. the answer to the question posed in the

beginning of the judgment, is that in absence of any

provision in the Punjab Co-operative Societies Act,

1961, Rules and the Bye-laws made thereunder (as

also in the Haryana Cooperative Societies Act, 1984,

Rules and the Bye-laws made thereunder) for moving

a no-confidence in the President of a Managing

Committee/ Chairman of a Board of Directors of a Co-

operative Bank, it is not permissible to move such a

motion, inasmuch as such a power cannot be

inferred nor such a power is inherent in the members

of the Managing Committee/Director of the Bank.

The Office bearers can only be removed in

accordance with Section 27 of the Act read with

Rules 25 and 26 of the Rules. With respect we are

unable to agree with the law laid down by the

Division Bench in Haji Anwar Khan's case (AIR 1980

Punjab & Haryana 306) (supra) (which was a case

under the Wakf Act), to our mind, does not lay down

correct law.”

44. It may be seen that all these decisions dealt with the

pre-Ninety Seventh Amendment status of the cooperative societies.

The amendment providing constitutional status to the societies has

brought out radical changes in the concept of cooperative societies.

Democratic functioning and autonomy have now become the core

13

AIR 1991 P & H 149

29

Page 30 constitutional values of a cooperative society. Such societies are to

be registered only if they are founded on cooperative principles of

democracy, equality, equity and solidarity.

45. We may also refer to another argument by Shri Sibal. That

once the Act provides for a fixed term, the only mode of unsettling

the term is as provided under the Act. In the instant case, it is

Section 76B of the Act, which reads as follows:

“76B. Removal of officer. - (1) If, in the opinion of

the Registrar, any officer makes persistent default or

is negligent in performance of the duties imposed on

him by this Act or the rules or the bye-laws or does

anything which is prejudicial to the interests of the

Society or where he stands disqualified by or under

this Act, the Registrar may, after giving the officer an

opportunity of being heard, by order remove such

officer and direct the Society to elect or appoint a

person or a qualified member in the vacancy caused

by such removal and the officer so elected or

appointed shall hold office so long only as the officer

in whose place he is elected or appointed would

have held if the vacancy had not occurred.

(2) The Registrar may, by order, direct that the

officer so removed shall be disqualified to hold or to

contest election for any office in the society from

which he is removed and in any other society for a

period not exceeding four years from the date of the

order and such officer may stand disqualified

accordingly."

46. The provision simply deals with removal for misconduct or

persistent default/non-performance. A person with good conduct

30

Page 31 may still not earn the confidence of the people who selected him to

the office. The very concept of cooperation is to work jointly towards

the same end. Unless there is cooperativeness among the elected

cooperators who constitute the Governing Body for achieving the

object for which the society is constituted and for which those

representatives are elected by the members entrusting them with

the management of affairs of the society, there will be total chaos.

Cooperation among the cooperators is the essence of democratic

functioning of a cooperative society. If there is no democracy in a

cooperative society, it ceases to be a cooperative society as

conceived by the Constitution of India under the Ninety Seventh

Amendment.

47. There is no quarrel with the well-settled proposition that a

right to elect is not a fundamental right nor a common law right; it is

a statutory right, and any question relating to election has to be

resorted within the four corners of the Act as held by this Court in

Jyoti Basu and others v. Debi Ghosal and others

14

. To quote

paragraph-8:

“8. A right to elect, fundamental though it is to

democracy, is, anomalously enough, neither a

fundamental right nor a common law right. It is pure

and simple, a statutory right. So is the right to be

elected. So is the right to dispute an election.

Outside of statute, there is no right to elect, no right

14

(1982) 1 SCC 691

31

Page 32 to be elected and no right to dispute an election.

Statutory creations they are, and therefore, subject

to statutory limitation. An election petition is not an

action at common law, nor in equity. It is a statutory

proceeding to which neither the common law nor the

principles of equity apply but only those rules which

the statute makes and applies. It is a special

jurisdiction, and a special jurisdiction has always to

be exercised in accordance with the statute creating

it. Concepts familiar to common lawand equity must

remain strangers to election law unless statutorily

embodied. A court has no right to resort to them on

considerations of alleged policy because policy in

such matters as those, relating to the trial of election

disputes, is what the statute lays down. In the trial of

election disputes, court is put in a strait-jacket. Thus

the entire election process commencing from the

issuance of the notification calling upon a

constituency to elect a member or members right up

to the final resolution of the dispute, if any,

concerning the election is regulated by the

Representation of the People Act, 1951, different

stages of the process being dealt with by different

provisions of the Act. There can be no election to

Parliament or the State Legislature except as

provided by the Representation of the People Act,

1951 and again, no such election may be questioned

except in the manner provided by the Representation

of the People Act. So the Representation of the

People Act has been held to be a complete and self-

contained code within which must be found any

rights claimed in relation to an election or an election

dispute. We are concerned with an election dispute.

The question is who are parties to an election

dispute and who may be impleaded as parties to an

election petition. We have already referred to the

scheme of the Act. We have noticed the necessity to

rid ourselves of notions based on common law or

equity. We see that we must seek an answer to the

question within the four corners of the statute. What

does the Act say?”

48. In the background of the constitutional mandate, the

32

Page 33 question is not what the statute does say but what the statute must

say. If the Act or the Rules or the Bye-laws do not say what they

should say in terms of the Constitution, it is the duty of the court to

read the constitutional spirit and concept into the Acts. … “In so far

as in its Act Parliament does not convey its intention clearly,

expressly and completely, it is taken to require the enforcement

agencies who are charged with the duty of applying legislation to

spell out the detail of its legal meaning. This may be done either- (a)

by finding and declaring implications in the words used by the

legislator, or (b) by regarding the breadth or other obscurity of the

express language as conferring a delegated legislative power to

elaborate its meaning in accordance with public policy (including

legal policy) and the purpose of the legislation”

15

.

49. The conventional view is that the legislature alone makes the

law. But as Bennion puts it:

“The truth is that courts are inescapably possessed

of some degree of legislative power. Enacted

legislation lays down rules in advance. The

commands of Parliament are deliberate prospective

commands. The very concept of enacted legislation

postulates an authoritative interpreter who operates

ex post facto. No such interpreter can avoid

legislating in the course of exercising that function. It

can be done by regarding the breadth or other

obscurity of the express language as conferring a

delegated legislative power to elaborate its meaning

15

Bennion on Statutory Interpretation by Francis Bennion, 6

th

Edition, p.136.

33

Page 34 in accordance with public policy (including legal

policy)”

16

.

50. According to Donaldson J.:

“The duty of the courts is to ascertain and give effect

to the will of Parliament as expressed in its

enactments. In the performance of this duty the

judges do not act as computers into which are fed

the statues and the rules for the construction of

statues and from whom issue forth the

mathematically correct answer. The interpretation of

statutes is a craft as much as a science and the

judges, as craftsmen, select and apply to the

appropriate rules as the tools of their trade. They are

not legislators, but finishers, refiners and polishers of

legislation which comes to them in a state requiring

varying degrees of further processing.”

17

51. In the celebrated case of Seaford Court Estates v.

Asher

18

, Lord Denning has succinctly summarized the principle on

the role of the court. To quote:

“Whenever a statute comes up for consideration it

must be remembered that it is not within human

powers to foresee the manifold sets of facts which

may arise, and, even if it were, it is not possible to

provide for them in terms free from all ambiguity… A

judge cannot simply fold his hands and blame the

draftsman. He must set to work on the constructive

task of finding the intention of the Parliament, and

he must do this not only from the language of the

statue, but also from a consideration of the social

conditions which gave rise to it and of the mischief

16

Bennion on Statutory Interpretation by Francis Bennion, 6

th

Edition, p.137.

17

Corocraft Ltd v Pan American Airways Inc. [1968] 3 WLR 714 at 732.

18

[1949] 2 All ER 155

34

Page 35 which it was passed to remedy, and then he must

supplement the written word so as to give “force and

life” to the intention of the legislature. … Put into

homely metaphor it is this: A judge should ask

himself the question how, if the makers of the Act

had themselves come across this ruck in the texture

of it, they would have straightened it out? He must

then do as they would have done. A judge must not

alter the material of which the Act is woven, but he

can and should iron out the creases.”

52. In Rattan Chand Hira Chand v. Askar Nawaz Jung

(Dead) by Lrs. and others

19

, this Court, at paragraph-17 of the

judgment, has also dealt with the principles in following words:

“17. … The legislature often fails to keep pace

with the changing needs and values nor is it realistic

to expect that it will have provided for all

contingencies and eventualities. It is, therefore, not

only necessary but obligatory on the courts to step in

to fill the lacuna. When courts perform this function

undoubtedly they legislate judicially. But that is a

kind of legislation which stands implicitly delegated

to them to further the object of the legislation and to

promote the goals of the society. Or to put it

negatively, to prevent the frustration of the

legislation or perversion of the goals and values of

the society. So long as the courts keep themselves

tethered to the ethos of the society and do not travel

off its course, so long as they attempt to furnish the

felt necessities of the time and do not refurbish

them, their role in this respect has to be welcomed.”

53. The cooperative society registered under the Central or the

State Act is bound to function as a democratic institution and

conduct its affairs based on democratic principles. Democratic

19

(1991) 3 SCC 67

35

Page 36 functioning on democratic principles is to be reflected in the

respective Acts or Rules or Bye-laws both on the principle and

procedure. If not, it is for the court to read the democratic principles

into the Act or Rules or Bye-laws. If a procedure is prescribed in any

Act or Rule or Bye-law regarding election of an office bearer by the

Board, as defined under Article 243ZH(b) of the Constitution of India,

and for removal thereof, by way of a motion of no confidence, the

same procedure has to be followed. In case there is no express

provision under the Act or Rules or Bye-laws for removal of an office

bearer, such office bearer is liable to be removed in the event of loss

of confidence by following the same procedure by which he was

elected to office.

54. Now that this Court has declared the law regarding the

democratic set up of a cooperative society and that it is permissible

to remove an elected office bearer through motion of no confidence,

and since in many States, the relevant statutes have not carried out

the required statutory changes in terms of the constitutional

mandate, we feel it just and necessary to lay down certain

guidelines. However, we make it clear that these guidelines are open

to be appropriately modified and given statutory shape by the

competent legislature/authority. Having gone through the provisions

regarding motion of no confidence in local self-governments, we find

36

Page 37 that there is no uniformity with regard to the procedure and process

regarding motion of no confidence. Some States provide for a

protection of two years, some for one year and a few for six months,

to the office bearers in office before moving a motion of no

confidence. However, majority of the States provide for two years

and a gap of another one year in case one motion of no confidence

is defeated. Bihar Panchayat Raj Act, 2006 provides for a protection

of two years and one year, Bihar Municipal Act, 2007 provides for a

protection of two years and one year, Himachal Pradesh Panchayati

Raj Act, 1994 provides for a protection of two years and two years,

Madhya Pradesh Panchayat Raj Avam Gram Swaraj Adhiniyam, 1993

provides for a protection of two and a half years, Madhya Pradesh

Municipalities Act, 1961 provides for a protection of two years and

one year, Manipur Panchayati Raj Act, 1994 provides for a protection

of two years and one year, Orissa Panchayat Samiti Act, 1959

provides for a protection of two years, Orissa Grama Panchayats Act,

1964 provides for a protection of two years, Punjab Panchayati Raj

Act, 1994 provides for a protection of two years, Rajasthan

Panchayati Raj Act, 1994 provides for a protection of two years and

one year, Rajasthan Municipalities Act, 2009 provides for a

protection of two years and Uttar Pradesh Panchayati Raj Act, 1947,

as followed by Uttarakhand, provides for a protection of two years

37

Page 38 and one year. Having regard to the set up in local self-governments

prevailing in many of the States as above, we direct that in the case

of cooperative societies registered under any Central or State law, a

motion of no confidence against an office bearer shall be moved

only after two years of his assumption of office. In case the motion

of no confidence is once defeated, a fresh motion shall not be

introduced within another one year. A motion of no confidence shall

be moved only in case there is a request from one-third of the

elected members of the Board of Governors/Managing Committee of

the cooperative society concerned. The motion of no confidence

shall be carried in case the motion is supported by more than fifty

per cent of the elected members present in the meeting.

55. Though for different reasons, we agree with the view taken

by the High Court of Gujarat. The contra views expressed by the

High Courts of Andhra Pradesh, Bombay, Kerala and Punjab and

Haryana are no more good law in view of the Ninety Seventh

Amendment to the Constitution of India.

56. The appeals are accordingly dismissed. There shall be no

order as to costs.

..…….…..…………J.

(ANIL R. DAVE)

38

Page 39 ..……………………J.

(KURIAN JOSEPH)

New Delhi;

March 19, 2015.

39