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Case Number

Civil Writ No. 518 of 1976

Attorney(S)

Prem Singh with N.S. Ahlawat
C.D. Dewan
Addl. Advocate General
Haryana with H.N. Mehtani Sr. Dy. Advocate General
Haryana

Judges

Mr. Justice Bhopinder Singh Dhillon
Mr. Justice Harbans Lal

Acts

provisions of Section 13(8} to Section 13 (12) of the Punjab Cooperative Societies Act, 1961
Sub-clause (b) of Sub-section (9) of Section 13 and Sub-section (11) of Section 13
provisions of the Orissa Cooperative Societies Act
provisions of Sub-sections (1) to (7) of Section
Sub-section. Sub-section (11) of Section 13
Punjab Co-operative Societies Act, 1961,
Sub-sections (8) to (12) of Section 13
Sub-sections (1) to (7) of Section 13
Sub-section (3) of the Section 13

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Smart Summary

Comprehensive Summary of the Opinion

Factual and Procedural Background

Petitioner No. 1 is Amar Hari Co-operative Agricultural Service Society (a Co-operative Society registered under the Punjab Co-operative Societies Act, 1961 as amended by Haryana) and Petitioner No. 2 is a committee member. The Society had been active for about 40 years, with roughly 235 members, and the petition alleges it was financially self-sufficient and viable.

On December 5, 1975 the Assistant Registrar, Co-operative Societies, Jind (respondent No. 3) issued a draft notice proposing amalgamation of the petitioner-Society with Ahirka Co-operative Agricultural Service Society (copy annexed as P-3). The petitioner Society's managing committee met and resolved to object to the proposed amalgamation (resolution annexed as P-4). After considering objections, the Assistant Registrar issued a final order dated January 2, 1976 ordering the amalgamation (annexed as P-5). The petition challenges the draft notice and final order and also seeks to strike down provisions of Section 13(8)–(12) of the Act as ultra vires.

The Assistant Registrar filed a return and an additional affidavit explaining that the amalgamation proposal arose from reorganisation guidelines and criteria (based on recommendations of a Committee on Co-operative Credit and communications from the Registrar, Co-operative Societies, Haryana). The petition proceeded by way of Articles 226/227 of the Constitution seeking quashing of the impugned notice and order and strike down of the statutory provisions in question.

Legal Issues Presented

Whether the impugned notice dated December 5, 1975 (Annexure P-3) and the final order dated January 2, 1976 (Annexure P-5) should be quashed.
Whether the provisions of Section 13(8) to Section 13(12) of the Punjab Co-operative Societies Act, 1961 (as amended by Haryana) are ultra vires because they constitute excessive delegation.
Whether, even if those provisions are intra vires, the statutory requirements (including service of draft orders and provision of necessary particulars to enable objections by societies, members and creditors) were complied with in this case.
Whether the impugned orders suffer from legal mala fides or were passed under directions not germane to the statutory guidelines (i.e., whether higher authorities dictated exercise of Registrar's discretion contrary to the statutory standard).

Arguments of the Parties

Petitioners' Arguments (as advanced by their counsel)

The amended provisions (Sub-sections (8) to (12) of Section 13) are ultra vires for reason of excessive delegation.
Even if those sub-sections are valid, they were not complied with here: notice of the proposed amalgamation should have been given to the society, to all its members, to its creditors and the financing institutions should have been consulted.
The impugned draft and final orders do not conform to the Act because they fail to mention the constitution, property, rights, interests, liabilities, duties and obligations of the societies involved, depriving affected parties of necessary particulars.
The impugned orders are tainted by legal mala fides, having been passed pursuant to directions and a policy at higher levels (to reduce number of societies) rather than under the statutory guidelines in Sub-section (8).

Respondent (Assistant Registrar / State) Contentions

The return averred that inspection records showed many members had not repaid loans by due date and therefore the petitioner-Society was not as prosperous as alleged.
The reorganisation proposal flowed from a Government/Committee policy on creating viable units; the Government of India had recommended criteria for viability (e.g., full-time paid secretary, regular office, reserves, dividend capacity, quantum of business, provision of godown) and the State/Registrar adopted guidelines consistent with these recommendations.
The Assistant Registrar stated the draft guidelines were sent to Inspectors on September 17, 1975 and the Inspector recommended amalgamation of three named societies with Ahirka Society; the Assistant Registrar invited objections, personally met representatives of the petitioner-Society, provided them information about Ahirka Society and asserts those representatives felt satisfied.
By additional affidavit the Assistant Registrar referred to a letter from the Registrar, Co-operative Societies, Haryana (dated September 16, 1975) containing reorganisation guidelines, and relied on those procedural steps and consultations in support of the amalgamation decision.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Sarwan Singh v. The State of Punjab, AIR 1975 SC 394	That the right of appeal is a statutory right and the Legislature may provide for an appeal in some cases and not in others; absence of an appeal does not of itself make a provision arbitrary.	The court relied on this authority to reject the petitioners' contention that absence of an appeal against Registrar's orders under Section 13(8) rendered the provisions arbitrary.
A. K. Kraipak v. Union of India, AIR 1970 SC 150	The principle that rules of natural justice supplement the law and are intended to prevent miscarriage of justice; quasi-judicial proceedings attract natural justice considerations.	The court invoked this decision to underline that proceedings under Section 13(8)–(12) are quasi-judicial in nature and that natural justice operates to ensure affected persons receive an opportunity to object.
Govindpur Agricultural Credit Co-operative Society v. Asst. Registrar, Balasore Circle, AIR 1973 Orissa 148	Where a statutory authority must reach an objective conclusion affecting rights, those likely to be affected are entitled to notice so they can raise objections.	The court cited this Division Bench decision to support the conclusion that members and creditors are entitled to be served with a copy of the proposed draft order so as to enable them to raise effective objections.

Court's Reasoning and Analysis

The court addressed each contention in turn and explained its legal analysis as follows:

On the challenge that Sub-sections (8)–(12) of Section 13 are invalid for excessive delegation, the court examined the statutory scheme. It observed that Sub-sections (1)–(7) provide for voluntary amalgamation and the content of resolutions; Sub-section (3) requires particulars, Sub-section (4) provides for notice to members and creditors and rights to withdraw, and Sub-sections (1)–(7) effectuate members' choices. The court held that Sub-section (8) provides sufficient guidelines for the Registrar to act in the public interest and to achieve the same objectives that members could achieve by voluntary action; therefore the excessive delegation contention failed.
On the contention regarding absence of an appellate remedy, the court held (relying on Sarwan Singh) that the right of appeal is statutory and the Legislature may choose in a given case not to provide appeal; absence of an appeal does not by itself make the statutory scheme arbitrary.
The court accepted the petitioners' second contention concerning procedural compliance. It analysed Sub-section (9)(a) and (b) and Sub-section (11) of Section 13: Sub-section (9)(a) requires a copy of the proposed order in draft be sent to the society or societies; Sub-section (9)(b) entitles members or classes of members and creditors to raise objections within a period fixed by the Registrar; Sub-section (11) entitles objecting members/creditors to receive their share or dues on issuance of the order. The court determined these are mandatory provisions conferring valuable rights which cannot be defeated by failure to serve the draft order on members and creditors. The court emphasised that proceedings under subsections (8)–(12) are quasi-judicial and that natural justice supplements statutory law (citing A. K. Kraipak). It concluded that to enable affected persons to exercise their rights effectively, the society, its members and creditors must be served with the draft order containing necessary particulars.
On the third contention (that the draft and final orders failed to contain required particulars), the court examined the purpose of serving a detailed draft order. It reasoned that the draft must supply details about the constitution, property, rights, interests, liabilities, duties and obligations of the societies involved so that members and creditors can make informed objections or decide to withdraw membership/deposits. The court found that the impugned draft and final orders did not contain the requisite detailed material, and although the Assistant Registrar averred that he orally supplied the information and that the society's representatives were satisfied, the names of those representatives were not disclosed; further, the statutory draft paper itself lacked the particulars required by the Act. Consequently, the court held the orders failed to comply with mandatory provisions.
The court also found that the impugned orders were influenced by policies and directives from higher authorities (including an objective to reduce the number of societies statewide and certain guidelines by the Central Committee on Co-operatives). Some of those higher-level guidelines (for example, the rule that there should be one cooperative society per Patwar Circle) were not germane to the statutory criteria in Section 13(8). The court held the Registrar is required to apply his mind to the statutory criteria and should not be dictated to exercise power on considerations outside or irrelevant to the Act. Because the impugned orders were passed following directions and policies not strictly tied to the statutory test, this provided another independent ground for quashing the orders.

Holding and Implications

Holding:

Writ petition allowed; the impugned notice dated December 5, 1975 (Annexure P-3) and the final order dated January 2, 1976 (Annexure P-5) are quashed.

The court also held that Sub-sections (8)–(12) of Section 13 of the Act are not invalid for excessive delegation (the first contention failed), and that absence of an appeal did not render those provisions arbitrary. However, for two principal reasons the impugned orders were quashed:

The Registrar and/or the authorities failed to comply with mandatory procedural requirements under Sub-sections (8) and (9) (notably providing a draft order containing full particulars to the society, its members and creditors to enable effective objection and decision-making).
The Registrar's exercise of power was in part dictated by higher authority policies and guidelines not strictly germane to the statutory test in Section 13(8), so the Registrar did not appear to have applied independent statutory judgment confined to the Act's criteria.

Consequences and implications:

The Registrar may, if he so decides, proceed afresh in accordance with law and the statutory requirements (including serving a draft order containing the constitution, property, rights, interests, liabilities, duties and obligations of the societies involved and serving it on the society, its members and creditors so they can exercise their statutory rights).
There is no order as to costs.
The court did not purport to set aside or strike down the statutory machinery embodied in Sub-sections (8)–(12); it upheld those provisions as providing adequate guidelines. The decision is therefore directed to ensuring compliance with the statutory procedural safeguards and that the Registrar applies his mind to statutory criteria rather than to extraneous directives. The opinion does not announce any broader constitutional invalidation beyond these results.

Harbans Lal, J. delivered the judgment; concurrence was expressed by the other judge who stated agreement in entirety.

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The Amerheri Co-Operative Agricultural Service Society And Anr. v. The State Of Haryana And Ors

1. In this petition under Articles 226/227 of the Constitution of India, following prayers have been made:--

(i) That the impugned notice dated December 5, 1975, copy of which is Annexure 'P-3'; and the final order dated January 2, 1976, copy of which is Annexure 'P-5' to the writ petition be quashed.

(ii) That the provisions of Section 13(8} to Section 13 (12) of the Punjab Cooperative Societies Act, 1961 (as amended by the Haryana State) be struck down as ultra vires to the Statute.

2. Brief facts of the case may now be stated. Petitioner No. 1 is a Co-operative Society Registered under the Punjab Co-operative Societies Act, 1961, as amended by the Haryana State Legislature (hereinafter referred to as the Act). Petitioner No. 2 is its Committee Member. It is alleged in the petition that the said Society was organised about 40 years back to boost up the economic interests of its members on co-operative principles The petitioner-Society was showing excellent progress year after year and was financially self-sufficient, a viable unit and was thus fulfilling the requirements of all its members numbering about 235 along with other residents in the area of operation of the Society. The society was free from all types of internal and external difficulties and was running smoothly. On December 7, 1975, the petitioner-Society received a notice from respondent No. 3, Assistant Registrar, Co-operative Societies, Jind, proposing amalgamation of the petitioner-Society along with two other Societies, namely, the Kair Khari Co-operative Agricultural Service Society and the Jhanj Khurd Co-operative Agricultural Society, with Ahirka Co-operative Agricultural Service Society. Copy of the said notice is Annexure 'P-3' to the writ petition.

3. The Managing Committee of the petitioner-society held a meeting on December 8, 1975, and resolved to object to the proposal of amalgamation. The Committee incorporated a number of points in the resolution with a view to show that the petitioner-Society was running efficiently and was viable Society therefore, may not be amalgamated. Copy of this resolution is Annexure 'P-4' to the writ petition. The Assistant Registrar, Co-operative Societies, Jind (respondent No. 3) then issued final orders ordering the amalgamation of the petitioner-Society and two other Societies mentioned above with Ahirka Co-operative Agricultural Service Society, vide order dated January 2, 1976. Copy of this order is Annexure 'P-3' to the writ petition.

4. It has been alleged in the petition that respondent No. 1, State Government, and respondent No. 2, Registrar Co-operative Societies, Haryana, Chandigarh, decided to reduce the number of Agricultural Service Societies in the State of Haryana from about 6600 to about 2000 Agricultural Service Societies. According to the petitioners, the impugned amalgamation order has been passed in pursuance of the abovementioned policy drawn out by the State Government and the Registrar, Co-operative Societies, Haryana, Chandigarh.

5. Return has been filed on behalf of the Assistant Registrar, Co-operative Societies, Jind, (respondent No, 3) it has been alleged in the return that according to the inspection note available in the records of the office of respondent No. 3, the majority of the members of the Society, who were advanced loans, had not repaid the same by the due date. It was, therefore, denied that the Society was showing excellent progress. It has been further averred that in 1969, the Government of India formulated a policy regarding the reorganisation of the Primary Agricultural Service Societies to form viable units based on the recommendations of the Committee Co-operative Credit. Under this policy the Government of India suggested the following criteria for adjudging the viability of the Society:--

(i) Appointment of a full time paid. Secretary.

(ii) A regular office in a building owned or hired.

(iii) Capacity to contribute to statutory and other reserves on the scale considered necessary.

(iv) Capacity to pay a reasonable dividend,

(v) Quantum of business, considered necessary.

(vi) Provision of a godown.

It has further been averred that the aforesaid recommendations have been engaging the attention of the State Government and the Co-operative Department for period of six years and the matter was discussed in various meetings of the officers of the Department and it was proposed that the Agricultural Service Societies having the potential to increase the loaning business to rupees three lacs in a year and fulfilling the aforesaid requirements proposed by the Government of India should be considered as viable units. It was further suggested that to facilitate the preparation of Maximum Credit Limit cases, the area of operation of the Societies should be conterminous with the patwar circles as Maximum Credit Limit cases are prepared on the basis of Revenue Record available with the Patwaris. It has thus been alleged that the entire Scheme has been chalked out in the interest of the members of the Co-operative Societies in order to keep pace with the changing socioeconomic structure of the State. It has been further averred that the meeting of the Deputy Registrars and Assistant Registrar was summoned on December 1, 1975, to explain the objects of the Scheme mentioned above and the procedure which was required to be followed. It has been averred that the representatives of the petitioner-Society were heard before passing the final orders and during the discussion they felt satisfied about the validity of the amalgamation order.

S. Additional affidavit of respondent No. 3 was filed with the permission of the Court. In the additional affidavit it has been averred that respondent No. 2, Registrar, Co-operative Societies, Haryana, Chandigarh, vide letter No Credit/ BA3/27-H/52959-53000 dated September 16, 1975, sent the guidelines to the answering respondent for the reorganisation of the Primary Agricultural Credit Societies on the basis of the recommendations of the Committee on Co-operative Credit constituted by the Government of India. It has been reiterated in the additional affidavit that broadly the following criteria was suggested for available Co-operative Agricultural Service Society:--

(i) The Block Administrative Unit should be kept intact i.e., one Society should not cover the villages outside the Block.

(ii) one viable or potentially viable society should be selected in which adjoining weaker societies are to be amalgamated.

(iii) The area of operation should be so chosen that there is a potential of at least of Rs. three lacs loan business in one year or so.

(iv) Local homogeneity should also be kept in view.

(v) The societies having their own godowns or offices can be given preference.

(vi) Advancement of loans to the weaker Societies to be amalgamated or liquidated should be discouraged.

(vii) In big village, there may be more than one Patwar Circle, but there should not be more than one viable Society.

7. The Assistant Registrar then sent letter dated September 17, 1975, with the said guidelines to the Inspectors, Cooperative Societies, for submitting the proposals regarding the formation of the viable Co-operative Agricultural Service Societies. Consequently, the Inspector Co-operative Societies, Jind, submitted the proposal for the amalgamation of the following Societies with the Ahirka Cooperative Agricultural Service Society:--

(i) Kair Kheri Co-operative Agricultural Service Society.

(ii) Amar Hari Co-operative Agricultural Service Society, (petitioner Society).

(iii) Jhanj Khurd Co-operative Agricultural Service Society.

8. The Assistant Registrar, respondent No. 3, served the impugned notice, copy of which is Annexure 'P-3' to the writ petition, inviting objections/ suggestions from the petitioner-Society and also from the other two Societies, which were proposed to be merged with Ahirka Co-operative Agricultural Service Society. It has been averred that the petitioner Society first sent a copy of the resolution dated December 7, 1975, accepting the proposal of amalgamation and then passed another resolution dated December 8, 1975, by which it decided to file objections against the proposed amalgamation. Respondent No. 3 considered it necessary to have a personal talk with the representatives of the petitioner Society and sent for them through Inspector Co-operative Societies, Jind, representatives of the Society raised a number of objections which were considered by the Assistant Registrar, respondent No. 3, and then final impugned order, copy of which is Annexure 'P-5' to the writ petition, was passed. Briefly stated the objections raised by the petitioner-Society before the Assistant Registrar were as follows:--

(i) That the working capital of the petitioner-Society was about Rs. 50,000/-including shares, security and profits and the petitioner-Society did not know about the working capital of the Ahirka Co-operative Agricultural Service Society with which it was proposed to be amalgamated.

(ii) That the petitioner-Society had 235 members on its roll whereas the number of members of the Ahirka Co-operative Agricultural Service Society was not known.

(iii) That the petitioner-Society had in deposit funds to the tune of Rs. 4,000/-belonging to the local institutions such as Maru Rajput Sabha Dharmsala and Laxmi Narain Temple etc.

(iv) That the petitioner-Society had a profit of Rs. 27,000/- on June 30, 1975.

(v) That the petitioner-Society had almost one member of each of the family of the village, as its member and was thus serving the whole village.

(vi) That the office of the petitioner-Society was situate at a distance of half kilometre from Jind.

(vii) That the petitioner-Society agreed to construct a godown of its own.

(viii) That the petitioner-Society was ready to undertake the work relating to the supply of articles of daily use such as flour, controlled cloth and kerosene oil to its members.

(ix) That the petitioner-Society had been constituted in the year 1935 and being an old Society, its members believed in the principles of co-operation and had deep faith in the policy of the Government.

(x) That the petitioner-Society had donated funds in the National Defence Fund in the year 1962.

(xi) That the petitioner-Society had purchased shares of the Central Co-operative Bank to the tune of Rs. 2,600/- and also had a sum of Rs. 5,000/- in the Savings Bank Account.

(xii) That the petitioner-Society had purchased shares of the Co-operative Marketing-cum-Processing Society, Jind, and was taking advantages of the facilities of selling their produce through the Marketing Society.

(xiii) That the petitioner-Society had purchased shares of Indian Farmers Fertilizer Co-operative.

9. By submitting the above-mentioned objections, the representative of the petitioner-Society in fact wanted to emphsise that the Society was well based and was a viable unit. Since, the impugned notice did not contain in the necessary particulars about the Ahirka Co-operative Agricultural Service Society with which the petitioner-Society was going to be merged, therefore, it is clear from the additional affidavit of the Assistant Registrar that he gave the necessary information regarding all the above-mentioned points to the alleged representatives of the petitioner-Society about the Ahirka Co-operative Agricultural Service Society. It has further been averred in the additional affidavit of the Assistant Registrar that the representatives of the petitioner-Society felt satisfied. However, the names of the alleged representatives of the petitioner-Society have not been disclosed in the additional affidavit; nor the same could be disclosed when we pointedly asked Shri C. D. Dewan, the learned Additional Advocate-General, appearing for the State of Haryana.

10. The following points have, been argued by Shri Prem Singh, the learned counsel for the petitioners:--

1. That the provisions of Sub-sections (8) to (12) of Section 13 of the Act, as amended by the Haryana State Legislature upto date, are ultra vires as they suffer from the vice of excessive delegation.

2. That even if the amended provisions of the Act referred to above, are intra vires, the said provisions have not been complied with inasmuch as notice for the proposed amalgamation, should have been given to the Society, to all its members, to its creditors and that the financing institutions financing the Society should have also been consulted.

3. That the impugned orders, copies of which are Annexure 'P-3' and 'P-5' to the writ petition are not in conformity with the provisions of the Act inasmuch as the proposed order of amalgamation should have mentioned about the constitution, property, rights, interests, liabilities, duties and obligations of the Societies involved in the amalgamation order, so that the petitioner-Society, its members and its creditors were able to know about the necessary particulars of the Societies involved in the amalgamation order.

4. That the impugned orders suffer from the vice of legal mala fide as they have been passed not keeping in view the guidelines as brought out in sub-section (8) of section 13 of the Act, but instead the same has been passed because of the decision of the higher authorities giving directions on various points, which are not germane to the guidelines given in sub-section (8) of section 13 of the Act.

11. There is no merit in the first contention of the learned counsel for the petitioner. It would be seen that Sub-sections (1) to (7) of Section 13 of the Act provide for amalgamation or division of a co-operative society with the previous approval of the Registrar if the general body of the Society passes a resolution by two-third majority to that effect. The said resolution under Sub-section (3) of the Section 13 has to contain all particulars of the transfer, division or amalgamation, as the case may be. Sub-section (4) provides that when a co-operative society has passed any such resolution, it shall give notice thereof in writing to all its members and creditors and, notwithstanding any bye-laws or contracts to the contrary, any member or creditor shall, during the period of one month of the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be. Sub-section (5) provides that any member or creditor, who does not exercise his option within the period specified in subsection (4), shall be deemed to have assented to the proposal contained in the resolution. Sub-section (6) provides time when the said resolution becomes effective. Sub-section (7) further provides that a resolution passed by co-operative society in compliance with the earlier Sub-section, will be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.

12- Haryana State Legislature, by Act No. 13 of 1971, enacted Sub-sections (8) to (12) of Section 13 of the Act, which are as follows:--

"13 (8). Where the Registrar is satisfied that it is essential or desirable in the interest of the society or societies, that two or more societies be amalgamated or any society should be divided to form two or more societies, then, notwithstanding anything hereinbefore contained, the Registrar may, after consulting the financing institution, if any, provide for the amalgamation or division of those societies into single society, or into societies with such constitution, property, rights, interests, liabilities, duties and obligations, as may be specified in the order:--

(9) No order shall be made under this section, unless-

(a) copy of the proposed order has been sent in draft to the society or each of the societies concerned;

(b) the Registrar has considered and made such modifications in the draft order as may seem to him desirable in the light of any suggestions and objections which may be received by him within such period, being not less than two months from the date on which the copy of the order as aforesaid was received by the society, as the Registrar may fix in that behalf, either from the society or from any member or class of members thereof, or from any creditor or class of creditors.

(10) The order referred to in Sub-section (8) may contain such incidental, Consequential and supplemental provisions as may, in the opinion of the Registrar, be necessary to give effect to the amalgamation or the division.

(11) Every member or creditor of each of the societies to be amalgamated or divided, who has objected to the scheme of amalgamation or division, within the period specified, shall be entitled to receive, within the period prescribed, on the issue of the order of amalgamation or division, his share or interest if he be a member, and the amount in satisfaction of his dues, if he be a creditor.

(12) On the issue, of an order under Sub-section (8), the provisions, hereinbefore contained in this section, shall apply to the societies so amalgamated or divided as if they were amalgamated or divided under these provisions, and to the society amalgamated or divided."

13. The bare reading of Sub-section, (8) of Section 13 of the Act would show that the Legislature has given sufficient guidelines to the Registrar, Co-operative Societies, for passing an order of amalgation or division of co-operative societies or a co-operative society. It is further to be noticed that under Sub-sec. (8) of the Act, the Registrar has been given powers to register a co-op. society and while considering whether a co-op. society should be ordered to be registered or not, he is to take into consideration whether the proposed society has reasonable chances of success or not. Section 13 has been enacted by the Legislature with a view to find out remedial measures for reshaping the co-operative societies to which the provisions of that section may apply. Sub-sections (1) to (7) of Section 13 deal with the voluntary amalgamation transfer of assets and liabilities and division of co-operative societies; whereas the Haryana State Legislature by enacting Sub-sections (8) to (12) of Section 13 has given power to the Registrar for achieving the same object which the members of a society can themselves achieve according to the provisions of Sub-sections (1) to (7) of Section 13. In the nature of things, the Legislature cannot provide any more guidelines than the one which have been provided in sub-section (8) of section 13 of the Act. Before passing any order under this section the Registrar has to be satisfied that it is essential or desirable in the interest of the society or societies, that two or more societies be amalgamated or any society should be divided to form two or more societies. In our considered opinion, sufficient guidelines have been given by the Legislature, and while taking into consideration the constitution, property, rights, interests, liabilities, duties and obligations, of the societies concerned, and the above mentioned guidelines, the Registrar can form an opinion in a particular case whether to proceed under this Sub-section or not.

14. The contention of the learned counsel that since no appeal has been provided against the order of the Registrar passed under sub-section (8) of section 13 of the Act therefore, the said provisions are arbitrary, is again without any merit. It is well settled that right of an appeal is a statutory right and the Legislature, in its wisdom, may in the circumstances of a given case, provide for an appeal against an order of a quasi-judicial nature and in another given case, the said remedy of appeal may not be available. If any authority is needed in this regard, reference may be made to Sarwan Singh v. The State of Punjab, AIR 1975 SC 394. The first contention of the learned counsel is, therefore, without any merit.

15. The second contention of the learned counsel deserves to be accepted. It is no doubt true that under Sub-clause (a) of Sub-section (9) of Section 13 of the Act. a copy of the proposed order has to be sent in draft to the Society or each of the societies concerned, but Sub-clause (b) of this section gives right to member or a class of members of society, or to creditor or class of creditors of a society to raise objections to the proposed amalgamation or division of the Society, as the case may be. Sub-section (11) of Section 13 of the Act further gives a right to every member or creditor of the society concerned, who had objected to the scheme of amalgamation or division, as the case may be, within the period specified, to receive within the period prescribed, on the issue of the order of amalgamation or division, his share or interest if he be member, and the amount in satisfaction of his dues, if he be a creditor. Sub-clause (b) of Sub-section (9) of Section 13 and Sub-section (11) of Section 13 are mandatory provisions which bestow a valuable right to the members and creditors of the societies to be affected by the order to be passed under sub-section (8) of section 13 of the Act and the said right cannot be exercised if the members and the creditors are not served with the copy of the proposed order sent in draft so that they are in a position to raise objections within the period specified in Sub-clause (b) of Sub-section (9) of Section 13 of the Act. By Haryana Ordinance No. 7 of 1975, the minimum period of notice has been decreased from two months to fifteen days but the fact remains that this is a minimum period which has been given to the Society, its members and its creditors to raise objections to the proposed amalgamation or division of the Society. In addition to this, the Legislature has further provided under sub-section (8) of section 13 of the Act, for consultation of the financing institutions of the societies to be affected by an order passed under this Sub-section. Sub-section (11) of Section 13 has given an option to member or a creditor of a society to withdraw from its membership or to withdraw his deposits, as the case may be, only if the said member or creditor had filed the objections within the time prescribed under Clause (b) of subsection (9) of Section 13 of the Act. Sub-clause (b) of this Sub-section enjoins upon the Registrar to make such modifications in the draft or as may seem to him desirable in the light of any suggestions and objections which may be received by him within the period prescribed, from the Society or from any such member or class of members thereof, or from any creditor or class of creditors. It was conceded by the learned Additional Advocate General appearing for the State of Haryana, that the proceedings under subsections (8) to (12) of Section 13 of the Act are of quasi-judicial nature. It can also not be disputed that the aim of the rules of natural justice is to secure justice or to put it negatively, to prevent miscarriage of justice. These rules can operate only in areas not covered by law validly made, It is thus clear that rules of natural justice do not supplant the law of the land but supplement it. Reference in this connection may be made to a decision of the Supreme Court in A. K. Kraipak v. Union of India, AIR 1970 SC 150. The provisions of Sub-clause (b) of Sub-section (9) and Sub-section (11) of Section 13 of the Act, bestow a valuable right on the society, its members and the creditors to raise objections and also to make up their minds to withdraw from the society as members or to withdraw the amounts deposited as creditors. The same right has been made available to the members and creditors in case the society itself decides for amalgamations of division, as is clear from the provisions of Sub-sections (1) to (7) of Section 13 of the Act. Keeping in view the above referred provisions, it has to be held that in order to enable the society, its members and creditors to avail of the right so bestowed a notice of the proposed order has to be given to the society, its members and creditors. The view, which we are taking, finds support from a Division Bench decision of the Orissa High Court in The Govindpur Agricultural Credit Co-operative Society v. Asst. Registrar, Co-operative Societies, Balasore Circle, AIR 1973 Orissa 148. The provisions of the Orissa Cooperative Societies Act do not provide for a notice to be given to the members or creditors. The learned Judges disposing of the case, came to the conclusion that where a statutory authority has to reach an objective conclusion affecting the rights of others, it has to give an opportunity to those likely to be affected. It was thug held that the members and the creditors are entitled to notice so that they can object to the proposed amalgamation or division of the Society. In this view of the matter, we find that in addition to the consultation with the financing institutions of the societies to be affected by an order passed under sub-section (8) of section 13 of the Act, the society, its members and the creditors are also entitled to be served with the copy of the proposed order sent in draft so that they can raise objections within the time prescribed by law and also they can make up their minds to withdraw from the membership or to withdraw the deposits made by the creditors of the societies as the case may be.

16. The third contention of the learned counsel for the petitioner is also well-founded. As is clear from the scheme of the provisions of the Act, the whole objective of serving the copy of the proposed order in draft on the society, its members or creditors, is to provide them an effective opportunity to raise objections or suggestions after taking into consideration various matters concerning the society with which the society is proposed to be amalgamated and such other relevant matters concerning the society which is going to be amalgamated or divided. The order passed under sub-section (8) of section 13 of the Act has to provide for the constitution, property, rights, interests, liabilities, duties and obligations of the society or societies coming into existence. A copy of the proposed order has also to contain all this information regarding the society or societies to be affected by the order. It is only after these matters are made known to the society or its members or creditors that they can be in a position to raise objections and also to make suggestions and make up their minds to withdraw from the membership or to withdraw their deposits. If the relevant material concerning the constitution, property, rights, interests, liabilities, duties and obligations of the concerned society or societies as the case may be is not made known the purposes of the provisions cannot be achieved as no effective objections and suggestions can be made by the society, its members or creditors. We have purposely reproduced the objections mentioned in the written statement allegedly raised by the representatives of the petitioner-society before the Assistant Registrar, with a view to show that the material regarding the constitution, property, rights, interests, liabilities, duties and obligations etc., having not been mentioned in the proposed order regarding the societies involved in the amalgamation order, the said information had to be supplied by the Assistant Registrar to the alleged representatives of the society, who, according to the Assistant Registrar, felt satisfied when all such information was brought to their notice. We are, therefore, of the considered opinion that the impugned orders, copies of which are Annexures 'P-3' and 'P-5' to the writ petition, are liable to be quashed, as the came fail to comply with mandatory provisions of Sub-sections (8) and (9) of Section 13 of the Act, as no detailed material has been supplied to the petitioner society so that effective objections and suggestions could be made.

17. The impugned orders are also liable to be quashed on another ground. The scheme of the provisions of sub-section (8) of section 13 of the Act clearly goes to show that the Registrar has to apply his mind to the facts and circumstances of a society or societies with a view to be satisfied that it is essential or desirable in the interest of a society or societies that two or more societies be^ amalgamated or any society should be divided to form two or more societies. In the present case as is clear, the impugned orders have been passed because of the directions given by the various higher authorities, keeping in view the decision of the Central Committee on Co-operatives and the guidelines mentioned in the earlier part of the judgment were directed to be taken into consideration for ordering the amalgamation. It has been specifically alleged in the petition that the decision has been taken at the Government level to reduce the number of Agricultural Service Societies from about 6600 to about 2000 and in view of the directions given by the Registrar, the impugned orders have been passed. This fact is also clear from the return itself. The Registrar having been vested with authority under sub-section (8) of section 13 of the Act, has to apply his mind keeping in view the guidelines given by the Legislature and is not to be dictated by the higher authorities to exercise such power on consideration which are not germane to the provisions of Act. No doubt certain guidelines laid down by the Central Committee on Co-operatives are helpful for the better administration of the societies by the hierarchy of the Co-operative Department, but some of the said guidelines are not at all germane to the guidelines- given by the Legislature in sub-section (8) of section 13 of the Act. For instance, the guideline that there should be one co-operative society in a Patwar Circle has nothing to do with the guidelines provided in sub-section (8) of section 13. Since the impugned orders have been passed under the directions issued by the higher authorities keeping in view the certain guidelines which are not germane to the provisions of sub-section (8) of section 13 of the Act, the said orders are, therefore, liable to be quashed.

18. For the reasons recorded above, this writ petition is allowed and the impugned orders, copies of which are Annexures 'P-3' and 'P-5' with the writ petition, are hereby quashed. The Registrar may proceed with the matter in accordance with law if he so decides to amalgamate, the petitioner-society. However, there will be no order as to costs.

Harbans Lal, J.

I am in agreement in entirety and have nothing to add.

The Amerheri Co-Operative Agricultural Service Society And Anr. v. The State Of Haryana And Ors

Comprehensive Summary of the Opinion

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioners' Arguments (as advanced by their counsel)

Respondent (Assistant Registrar / State) Contentions

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

The Amerheri Co-Operative Agricultural Service Society And Anr. v. The State Of Haryana And Ors

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