Decided on June 18,1971

Duvvur Papireddi And Others Appellant
Deputy Registrar Of Co Respondents


VAIDYA, J. - (1.) The petitioners 45 in number are the members of the Epur Co-operative Credit Society, hereinafter referred to as "the Society". They have filed this writ petition for a writ of mandamus or any other appropriate order directing the Deputy Registrar of Co-operative Societies, Nellore South Circle, Nellore (1st respondent herein) not to proceed further in pursuance of the notice R.C. No. 2862/68-B d/ 27th Nov. 1968 issued by him under section 15 of the Andhra Pradesh Co-operative Societies Act (hereinafter referred to as "Act").
(2.) The facts giving rise to this writ petition are that the petitioners and others formed a Co-operative Society which was registered under the Co-operative Societies Act of 1912 on 31st March 1922 and started functioning from 13th May 1922. The main purpose of the Society is to provide cheap credit facilities to its members. According to the petitioners, the society has been working well ever since it was established and the general reserves of the Society as on the date of filing of the writ petition were about Rs. 10,000/-. The maximum credit limit beyond which an individual member cannot borrow is Rs. 1,500/- and the maximum borrowing capacity of the society is Rs. 70,000/-. The society consists of 84 members and its total share capital as on the date of the writ petition was Rs. 7,373/-. The area of operation of the Society extends to the villages of Epur Bit I (a) and Bit II and other hamlets of Epur. The 1st petitioner, who is the President of the Society received the impugned notice issued by the 1st respondent proposing to amalgamate the society with the Pantapalayam Multi-purpose Co-operative Society (hereinafter referred to as the "Pantapalayam Society") on the ground that the society was not a viable unit. It is stated in the affidavit filed on behalf of the petitioners that the Pantapalayam Society is situated at Pantapalayam which is four miles distant from Epur and is not working satisfactorily, regularly committing default in payment to the Nellore District Cooperative Central Bank Ltd., and is also faction-ridden. They further submit that the individual maximum credit limit in the Pantapalayam Society is Rs. 500/- which in this Society is Rs. 1,500/-. Immediately on receipt of the impugned notice, the Society held a general body meeting on 2nd January 1969 which was attended by 25 members. It was unanimously decided to oppose the proposed amalgamation on the ground that the Society was financially more sound and working more efficiently than the Pantapalayam Society. They further state that this objection of the Society is likely to be overruled by the 1st respondent and as the petitioners cannot challenge the vires of section 15 of the Act before the 1st respondent, they filed this writ petition.
(3.) The vires of section 15 of the Act is challenged on the ground that sub-section (1) and (2) thereof empowering the Registrar to direct compulsory amalgamation or division of co-operative Societies against the wishes of the majority of the members of the affected societies infringes the right guaranteed to the members to form an Association by Article 19(1)(c) of the Constitution of India. It is contended that the impugned notice is not saved by sub-clause (4) of Article 19 in as much as reasonable restrictions under the said clause can be imposed only in the interests of Sovereignty and integrity of India or public order or morality. The argument of the petitioners is that the restriction imposed by section 15 cannot, by any stretch of imagination be considered to be in the interests of Sovereignty and integrity of India or public order or morality. They further contend that the power vested in the Registrar by section 15 is arbitrary and interferes with the autonomy of the Co-operative Societies. Neither the said section nor rule 9 of the Rules gives any guidelines to the Registrar as to the circumstances in which he has to act under sub-sections (1) and (2) of section 15. No right of appeal having been given to the Society, it is claimed that the said section is unconstitutional and is also vitiated by excessive delegation inasmuch as the power to order amalgamation or division is vested not only in the Registrar but also in the Deputy Registrar. The last Contention raised by the petitioners is that assuming that section 15 sub-sections (1) and (2) are constitutional, the impugned notice is illegal since it does not comply with the procedure prescribed in rule 9 of the Andhra Pradesh Co-operative Societies rules. According to the rules, the Registrar has to prepare a draft scheme proposing amalgamation or division and shall also specify the manner in which the assets and liabilities of the society or societies has to be dealt with, the composition and strength of the new Board of management and the proposed bye-laws of the new society. Under sub-rule (4) of rule 9, the Registrar, after obtaining the views of the financing bank, has to issue a notice together with a copy of the scheme prepared by him and call upon the societies to divide or amalgamate as the case may be, within thirty days from the date of receipt of the notice. No draft scheme has been sent to the Society by the 1st respondent. The notice is not in conformity with the detailed procedure prescribed in R. 9. It is also contended that the notice is illegal and irregular as it is given only to the President and not to the members of the committee as such.;

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