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The Bapauli Co-Operative Agricultural Service Society v. The State Of Haryana And Ors
Structured Summary of the Opinion
Factual and Procedural Background
The petitioner is a Primary Co‑operative Society registered under the Punjab Co‑operative Societies Act, 1961 (the Act). Pursuant to Section 84‑A of the Act, the Registrar of Co‑operative Societies directed the Apex Society (respondent No. 3) to frame common cadre rules applicable to certain categories of servants of its member societies, including the petitioner. The Apex Society framed first the Primary Co‑operative Agricultural Credit/Service Societies, Secretaries Common Cadre Rules, 1973, later replaced by the Haryana State Central Co‑operative Bank Staff Service (Common Cadre) Rules, 1975 (the Rules).
The petitioner challenged the Rules on two main grounds: (1) that the Rules infringed statutory rights of primary co‑operative societies under Section 23(1) of the Act (which vests final authority in the general body of members or, where provided, a smaller delegates body), and (2) that Section 84‑A did not provide sufficient legislative guidelines to apex societies to frame such rules. The petitioner also alleged it wished to retain a Secretary appointed about five years earlier and feared losing him because of the Common Cadre Rules.
Procedurally, this petition and others were heard by Dhillon, J., on November 7, 1975; he considered the question to be of considerable importance and recommended the case be decided by a larger Bench. The opinion before us resolves the reference. The judgment is authored by Bhopinder Singh Dhillon, J., and another judge recorded agreement with the opinion.
Legal Issues Presented
- Whether the Rules framed under Section 84‑A of the Act infringe the statutory rights of a primary co‑operative society (and its managing body or general body) as vested by Section 23(1) of the Act.
- Whether Section 84‑A of the Act constitutes an impermissible delegation of legislative power because it does not provide sufficient guidelines to the apex societies to frame rules governing recruitment and conditions of service.
Arguments of the Parties
Petitioner's Arguments
- Section 84‑A and the Rules framed thereunder run counter to Section 23 and to Section 85(2)(xxxviii) of the Act, thus infringing the final authority vested in the general body (or delegate smaller body) of a primary society.
- The Legislature has not provided sufficient guidelines in Section 84‑A for apex societies to frame the requisite rules; hence the delegation is excessive.
- The petitioner wished to retain a Secretary appointed about five years earlier and feared that the Common Cadre Rules might force dismissal or loss of that Secretary's service.
Respondents' Arguments
The opinion does not contain a detailed account of the respondents' separate legal arguments beyond the statutory and policy considerations reflected in the court's reasoning.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| The Ambala Ex‑Servicemen Transport Co‑operative Society Ltd., Ambala City v. The State of Punjab, AIR 1959 Punj 1 (FB) | Principle that different statutory provisions should be read harmoniously and that one provision should not be treated as repealing another unless they are wholly irreconcilable. | Used to support the court's view that Section 23 (final authority in the society) and Section 84‑A (power to constitute common cadre) are enactments for different purposes and can be reconciled so that both provisions have effect. |
| Municipal Corporation of Delhi v. Birla Cotton Spinning and Weaving Mills, AIR 1968 SC 1232 | Principle concerning sufficiency of guidance in delegated legislation: the extent and nature of guidance required depends on the statute and the body to which delegation is made. | Relied upon to hold that the words "recruitment" and "conditions of service" in Section 84‑A furnish sufficient guideline and legislative policy, so that the delegation to apex societies is not an unconstitutional abdication of legislative functions. |
| Halsbury's Laws of England (Third Edition, Vol. 25, p.447) — statement on master‑servant relations | Authoritative statement that a person may be a servant although a third party has power of appointment/dismissal or direction; master need not exercise all powers of control. | Applied to explain that the existence of common cadre rules (including powers of appointment/dismissal by an apex-related mechanism) does not negate the subordinate relationship between a Secretary and the general body of a primary society; master‑servant elements may exist even when another party has control over some aspects. |
Court's Reasoning and Analysis
The court proceeded through statutory construction and institutional/policy considerations, addressing each challenge in turn.
- Statutory context and definitions: The opinion sets out key provisions of the Act (definitions in Section 2 for apex, central and primary societies; definition of "committee"; registration criteria in Sections 4 and 8(1); power to direct amendment of bye‑laws in Section 10‑A; final authority in Section 23; powers to supersede committee in Section 27; corporate status and powers in Section 30; and the challenged Section 84‑A and rule‑making power in Section 85(2)(xxxviii)). The court emphasized that societies must pursue cooperative economic interests and that bye‑laws must conform to the Act and rules.
- Role of the Registrar: The court analyzed the Registrar's supervisory role under the Act — power to register societies, to require amendments of bye‑laws under Section 10‑A, to supervise elections, and to nominate/supersede committees. From these powers the court inferred that the Registrar is a statutory mentor/guardian required to ensure societies function according to the Act and rules.
- On Section 23 v. Section 84‑A: The court held that the final authority vested in the general body under Section 23 is not absolute or unconstrained. The general body cannot take steps contrary to the Act or that would derogate from the cooperative objectives. Reading Sections 23 and 84‑A together, the court found they serve different purposes and can be reconciled: Section 84‑A authorizes the Registrar to require a common cadre and to have apex societies (with Registrar's approval) make rules regulating recruitment and conditions of service; these rules govern master‑servant relationship disputes but do not remove the general body's day‑to‑day authority over Secretaries.
- Master‑servant and control considerations: Quoting Halsbury, the court acknowledged that employment relationships may subsist even when a third party has appointment/dismissal or control powers. Thus the existence of common cadre rules and an apex society's role does not destroy the principal subordinate relationship between a Secretary and the primary society's general body.
- On the delegation challenge (Section 84‑A sufficiency of guidance): The court examined the language of Section 84‑A(2) — authorizing rule‑making on "recruitment" and "conditions of service" — and held these words are established terms with settled meanings, furnishing sufficient guidance. Relying on the Municipal Corporation precedent, the court reasoned that where the legislature declares a clear policy and retains essential legislative functions, delegating rule‑making to the designated body (here, apex society subject to Registrar approval) is permissible. The court also emphasized the practical policy that apex societies advancing funds have legitimate interest in ensuring suitably qualified officials to handle funds.
- Reconciliation and scope: Summarizing, the court concluded that the Rules framed under Section 84‑A do not impinge upon the general body's authority under Section 23 in a manner that nullifies Section 23; rather, the Rules operate in the sphere of recruitment and conditions of service and provide the mechanism for resolving service‑relationship disputes.
Holding and Implications
Holding: The petition is dismissed with no order as to costs. More specifically, the court held that:
- The rules framed under Section 84‑A of the Act do not infringe upon the rights of a managing body or the general body of a primary co‑operative society under Section 23(1) of the Act.
- By enacting Section 84‑A, the Legislature did not abdicate essential legislative functions; Section 84‑A provides sufficient guidance for apex societies to make rules regarding recruitment and conditions of service.
Implications: As a direct effect, the challenge to the Common Cadre Rules under Section 84‑A fails and the Rules stand. The decision reconciles the supervisory and rule‑making role conferred on apex societies (with Registrar oversight) with the continuing authority of primary societies' general bodies over day‑to‑day direction of Secretaries. The opinion does not purport to create any novel principle beyond applying established authorities to these provisions; it resolves the petition by upholding the validity of Section 84‑A and the rules framed thereunder and dismissing the petition. No further prospective changes to the law were announced in this opinion beyond these direct consequences for the parties.
Source: Summary based exclusively on the provided opinion text; no information has been added beyond that text.
1. The petitioner is a Co-operative Society registered under the Punjab Co-operative Societies Act, 1961 (hereinafter called the Act). In exercise of powers under Section 84-A of the Act, the Registrar Co-operative Societies, Haryana, Chandigarh, directed the Apex Society respondent No. 3 to frame Common Cadre Rules applicable to some of the categories of servants of its member societies, including the petitioner-Society. Respondent No. 3 consequently framed the Primary Co-operative Agricultural Credit/Service Societies, Secretaries Common Cadre Rules, 1973, which were later on replaced by the Haryana State Central Co-operative Bank Staff Service (Common Cadre) Rules, 1975 (hereinafter called the Rules). It is alleged that these Rules infringed upon the statutory rights of the Primary Co-operative Societies conferred on them under Section 23 (1) of the Act, which lays down that final authority in a co-operative society shall vest in the general body of the members and where the bye-laws of such a society provide the constitution of a smaller body, such authority shall vest in the smaller body consisting of the delegate members of the society.
2. The other ground of challenge is that the Legislature has not provided sufficient guidelines in Section 84-A of the Act to the apex societies to frame the requisite rules. The petitioner-Society has urged that it is highly satisfied with the services rendered by the Secretary appointed by it about five years back whom it wants to retain even now and because of the Common Cadre Rules it may be forced to dispense with his services.
3. This petition and certain other such petitions came up for hearing before my learned brother Dhillon, J., on November 7, 1975. It was argued before him that the provisions of section 84-a run counter to the provisions of Section 23 and Section 85 (2) (xxxviii) of the Act. My learned brother was of the view that the question involved was of considerable importance affecting a large number of employees of the various societies, and for this reason he recommended that the case be decided by a larger Bench. This is how, this reference has come up before us for decision.
4. At the very outset I would like to notice the provisions of the Act. Section 2 of the Act provides the definition of certain expressions used in the Act According to Sub-section (aa) an 'apex society' means 'a co-operative society whose membership includes central societies'. According to Sub-section (bb) a 'central society' means 'a co-operative society whose membership includes primary societies'. According to Sub-section (bbb) a 'primary society' means 'a co-operative society whose membership consists exclusively of individuals'.
5. According to Sub-section (b) of Section 2 'committee' means 'the governing body of a co-operative society, by whatever name called, to which' the management of the affairs of the society is entrusted'.
6. Each and every society is not entitled to be registered as a co-operative society under the Act. Section 4, lays down that subject to the other conditions of the Act, a society which has its object the promotion of 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, may be registered under the Act with or without limited liability. The emphasis is on the promotion of the economic interests of the members of a society in accordance with co-operative principles.
7. Section 7 lays down the manner in which an application for registration of a society is to be made to the Registrar. Section 8 (1) is of some importance which may be reproduced as under:
"8. Registration (1) If the Registrar is satisfied--
(a) that the application complies with the provisions of this Act and the rules,
(b) that the objects of the proposed society are in accordance with Section 4,
(c) that the proposed bye-laws are not contrary to the provisions of this Act and the rules, and
(d) that the proposed society has reasonable chances of success, the Registrar may register the society and its bye-laws."
8. Not only the object of the society should be the promotion of the economic interests of its members in accordance with co-operative principles but its bye-laws should also not be contrary to the provisions of the Act and the Rules.
9. Section 10-A empowers the Registrar to direct the amendment of the bye-laws of a society if he is satisfied that such an amendment is necessary or desirable in the interests of such a society.
10. Section 23 is again of some importance and reads as under:--
"23. Final authority in a co-operative society:--
(1) The final authority in a co-operative society shall vest in the general body of members:
Provided that where the bye-laws of a co-operative society provide for the constitution of smaller body consisting of delegates of members of the society elected or selected in accordance with such bye-laws the smaller body shall exercise such powers of the general body as may be prescribed or as may be specified in the bye-laws of the society.
13. Section 27 empowers the Registrar to supersede a committee if in his opinion such a committee persistently makes default or is negligent in the performance of the duties imposed on it by the Act or the rules framed thereunder or the bye-laws, or the Society commits any act which is prejudicial to its interest or its members.
14. Section 30 provides that the registration of a co-operative society shall render it a body corporate by the name under which it is registered having perpetual succession and a common seal, and also enjoy power to hold property, the power to enter into contracts and the power to institute and defend legal proceedings.
15. The next section which is of relevance for the purpose of this case is Section 84-A of the Act which is under challenge. It reads as under:--
"84-A. Constitution of common cadre:
(1) The Registrar may require an apex society to constitute a common cadre of all or specific class of employees in the service of that society or in the service of the central societies which are members of the apex society, or in the service of the primary societies which are members of the apex society or the aforesaid central societies.
(2) When a common cadre is constituted under Sub-section (1), the apex society shall, with the prior approval of the Registrar, make rules for the regulation of recruitment and the conditions of service of such employees."
16. Section 85 of the Act empowers the State Government to carry out the purposes of the act. sub-section (2) of this section lays down that rules also be framed for--
"85 (2) (xxxviii): qualifications for members of the committee and employees of a society or class of societies and the conditions of service subject to which persons may be employed by societies."
17. A cumulative consideration of the aforementioned provisions of the Act makes it abundantly clear that the societies formed only with the object of promoting economic interests of its members on co-operative principles can be registered by the Registrar under the Act. The bye-laws of these societies are not supposed to be contrary to the provisions of the Act and the rules framed thereunder. Apart from the right of the society to suo motu apply to the Registrar for the amendment of bye-laws, the Registrar himself is empowered to direct a society to amend its bye-laws if he is satisfied that such an amendment is necessary or desirable in the interests of such a society. Since the bye-laws of a society have of necessity to be in conformity with the provisions of the Act and the Rules as laid down in Section 8 (1) (c) of the Act, it is reasonable to infer that wherever it appears to the Registrar that the bye-laws of a particular society come in conflict with the provisions of the Act and the rules framed thereunder, he would not only be empowered to order an amendment of the bye-laws but shall also be under a duty to do so under Section 10-A of the Act. The Registrar acts as a mentor and a guide for the co-operative societies. He is under a statutory obligation to see that these societies continue to function. For this purpose, he has been empowered to supervise the election of the managing committees and to nominate or to supersede the committee if the term of the elected committee expires or the committee is found to be amiss in the performance of its statutory duties, as the case may be. In short, the ultimate power of control and supervision vests in the Registrar. He is expected to see that the co-operative societies which are corporate bodies under the Act continue to function in accordance with the provisions of the Act and the Rules.
18. The final authority in a cooperative society does of course vest in the general body of its members or its managing body elected in accordance with its bye-Laws as laid down in Section 23 of the Act, but this authority is not absolute and free from restraints. Even the general body of the members cannot take any steps which may be derogatory to the promotion of the economic interests of the members of a society in accordance with co-operative principles; nor can the general body take any decision which may be contrary to the Act or the Rules framed thereunder. When considered in this light, Section 23 of the Act has to be interpreted in such a manner so that its operation does not set at naught some of the other provisions of the Act. It is settled law that two provisions of a statute have to be read in such a manner that one of them does not necessarily repeal the other. The question of repeal of one provision of a statute by another arises only when two of them are wholly incompatible with one another or if they are read together they would lead to wholly absurd consequences. If on a fair and proper interpretation these two provisions can be reconciled with each other, the Courts of law are under a duty to adopt such an interpretation and to give full effect to the two provisions of the Act instead of holding that one of them is repealed by the other. See in this connection, The Ambala Ex-Servicemen Transport Co-operative Society Ltd., Ambala City v. The State of Punjab, AIR 1959 Punj 1 (FB), in modern times the theory of laissez faire allowing absolute right to the master to terminate the services of his employees has lost all significance. Under the industrial law, elaborate provisions have been made to avoid security of tenures to the industrial workers. Thus, even a private master cannot be allowed to put an end to the employment of industrial workers so long as they do not commit an act of misconduct. Even when misconduct is alleged, an enquiry has to be held in accordance with the provisions of standing orders which by and large correspond to the principles of natural justice. Precisely for these reasons, it is said that now-a-days elements of contractual liability are slowly vanishing as necessary attributes of a public service which is becoming more and more a matter of status.
19. Even under the common law, it is not necessary that the master himself should exercise all the powers of control over the servant. According to Halsbury's Laws of England, Third Edition, Volume 25, page 447--
"A person may be the servant of another although a third party has the power of appointing or dismissing him or of requiring his dismissal, or has powers of direction and control in regard to his work, or pays him his wages. A person may be a servant although remunerated otherwise than by wages or although only employed at will; and the relation is not destroyed because the master works with the servant. A person may be a servant to different masters; and a contract for exclusive personal service does not necessarily establish the relation of master and servant."
20. An apex society shall advance money to the central and primary societies. It is, therefore, essential that this money should be put to an effective use for the benefit of the borrowing and the lending societies. The law can, therefore, lean in favour of the interests of the borrowing society by providing that such societies should frame rules governing the classes of public servants who are entrusted with the duty of handling the money advanced by them. This is precisely what Section 84-A of the Act authorised the Registrar to do. The service rules framed by the apex society lay conditions of service of the Secretaries of the Primary Societies which do not necessarily impinge upon the authority of the general body of a society conferred upon it under Section 23 of the Act. Such a general body or a small body would continue to give day-to-day instructions to the Secretaries who shall be bound to follow them. The rules would come into play only when a dispute touching upon the relationship of a master end servant vis-a-vis the general body of the Primary Societies and its Secretaries is being considered. Where a Secretary does not follow or obey the lawful directions issued by the general body of the primary society, penal action against him would have to be taken under the Common Cadre Rules, but it does not mean that the Secretary is not subordinate to the general body of the members. Speaking for myself, I can see no conflict between the areas of operation of Sections 23 and 84-A of the Act. Both have been enacted for different purposes and can be given full effect without impairing in any manner the applicability of the other. The first contention raised on behalf of the petitioner-society must, therefore, be repelled.
21. The second ground of attack does not stand even a moment's scrutiny in view of the authoritative pronouncements of their Lordships of the Supreme Court in a large number of cases. Section 84-A (2) of the Act lays down that the apex society shall, with the prior approval of the Registrar make rules for the regulation of recruitment and the conditions of service of such employees. The words 'recruitment' and 'conditions of service' have come to acquire meanings which are well known. These words furnish sufficient guidelines to the apex society to make rules. Where the Legislature retains in its own hands the essential legislative functions and delegates the task of implementing the purposes and objects of the statute by enunciating a legislative policy with sufficient clearness, the rules made by the rule-making authority cannot be said to suffer from the vice of excessive delegation. In the Municipal Corporation of Delhi v. Birla Cotton, Spinning and Weaving Mills, Delhi, AIR 1968 SC 1232, it was observed as under:--
"What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation."
22. The apex society which supplies funds to its member-society is expected to know that officials of a particular standard and security of service would be best suited to handle the funds advanced by it. The rules have to be framed by it regarding regulation of recruitment and conditions of service only. By enacting Section 84-A (2) of the Act, the Legislature has given a clear expression to its policy and has not delegated its essential legislative functions in favour of an outside agency. The second contention raised on behalf of the petitioner also deserves to be repelled and I order accordingly.
23. For the reasons mentioned above, I would hold that the rules framed under Section 84-A of the Act do not infringe upon the rights of a managing body of a primary co-operative society appearing in Section 23 (1) of the Act and by enacting Section 84-A of the Act the Legislature has not abdicated its essential legislative functions. I would accordingly order that this petition be dismissed with no order as to costs.
Bhopinder Singh Dhillon, J.
I agree.
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