Chinappa Reddy, J. - (1.) The opinion of the High Courts appears to be unanimous on the question of the validity of the relevant provisions of the Co-operative Societies Acts in force in their respective States providing for the compulsory amalgamation of Co-operative Societies. The Full Benches of the High Courts of Andhra Pradesh, Karnataka, Punjab and Haryana. (DB ) and a Division Bench of the Patna High Court, AIR 1978 Andh Pra 121 (FB), AIR 1978 Kant 148 (FB), 1976 Pun LJ 302 (FB). There is also an excellent discussion by Vaidya, J. in ILR (1972) Andh Pra 1140) have upheld the validity of such provisions. But litigants, particularly those who are in a position to command funds are rarely deterred by such unanimity of judicial opinion. So, several Co-operative Societies of Punjab have chosen to prefer appeals to this Court questioning the vires of S. 13(8) of the Punjab Co-operative Societies Act which provides for the compulsory amalgamation of co-operative societies if it is necessary in the interests of the co-operative societies. The questions raised are simple and straight and are capable of but single, straightforward answers. Unfortunately a large number of appeals have piled up in this Court on these questions and we are told that a large number of writ petitions said to involve these or similar questions are pending in the various High Courts in the country awaiting the decision of this Court. We earnestly hope that this decision will put an end to this branch of the litigation and will serve to push forward the co-operative movement. We think it is needless to refer to the nature and history of the co-operative movement except to say that the promotion of the co-operative movement is one of the Directive Principles of State Policy (see Art. 43 of the Constitution). As usual in these and such cases, the counter-affidavits, where they have been filed, leave much to be desired and are least helpful. But, as pointed out by us often enough, the vires of legislation is not to be decided on the basis of affidavits of underlings of the executive Who can hardly be described as authorised to speak for the legislature. But even from the meagre material available to us from the record, it is obvious that the provisions relating to amalgamation of Co-operative Societies in different States, enactments were introduced pursuant to a policy decision arrived at an All India Conference. This is evident from the circumstance that these provisions were enacted by the various State legislatures roughly at about the same time. A reference to the policy decision at. an All India Conference may be found in the Full Bench Judgments of the Andhra Pradesh and Karnataka High Courts. It is unnecessary to say more on this aspect of the case.
(2.) The Punjab Co-operative Societies Act, 1961 which replaced the earlier Act was enacted, so it is stated in the Statement of Objects and Reasons, "In pursuance of the policy of the Government of India to simplify co-operative law and procedure in order to remove all bottlenecks in the way of development of co-operative movement in the country." It is further stated in the Statement of Objects and Reasons: "The important provisions, such as relating to change of liability, amalgamation of societies, splitting up of societies, settlement of disputes and winding up of societies, etc. were found to be of a dilatory and complicated nature, and, therefore, creating problems in the day to day working of the co-operative societies. Special care has, therefore, been taken to cut out all unnecessary delays particularly in registration of societies and the provisions to this effect have been simplified. Another approach influencing a change is to make the Co-operative Law comprehensive. Moreover consistent with our national policy to promote the organisation and growth of the co-operative societies in the various fields of economic activity, more difficult and complicated forms of co-operative societies are to spring up as compared to Co-operative Credit Societies ............" Section 2(c) defines "co-operative society" as meaning "a Society registered or deemed to be registered under this Act." Chapter II (Secs. 3 to 14) deals with registration of co-operative societies. In particular S. 8 prescribes the conditions pre-requisite to registration and authorises the Registrar to register a society and its Bye-laws if he is satisfied that the conditions are fulfilled. S. 13 provides for the amalgamation, transfer of assets and liabilities and division of co-operative societies. While S. 13(2) provides for voluntary amalgamation. S. 13(8) provides for compulsory amalgamation if the Registrar is satisfied that it is necessary in the interests of the co-operative societies. S. 13(9)(a) requires the Registrar to send a copy of the proposed order to the societies concerned and the creditors and S. 13(9)(b) requires the Registrar to consider the objections received from the societies concerned or from any member of creditor of such societies. S. 13(11) gives to the member or creditor who has objected to the proposed order under sub-sec. (9) the option of withdrawing his share, deposits or loans as the case may be on an application to be made to the society to which his share, deposits or loans stand allocated by virtue of the order under sub-sec, (8) within a period of 30 days from the date of such order. It is the vires of these provisions, that is in question in these appeals and it will be useful to extract at this juncture, sub-sections (8), (9), (10) and (11) of Sec. 13 of the Punjab Co-operative Societies Act. They are as follows:- "13.(1) to (7) ............... (8) Where the Registrar is satisfied that it is necessary in the interest of the co-operative society or co-operative societies that - (i) any co-operative society be divided to form two or more co-operative societies, or (ii) one or more co-operative societies be amalgamated with any other co-operative society; or (iii) two or more co-operative societies be amalgamated to form a new co-operative society, then, notwithstanding anything hereinbefore contained, the Registrar may, after consulting the financing institution, if any, provide for - (a) the division of that co-operative society into two or more co-operative societies; or (b) the amalgamation of the society or societies (i) With any other co-operative society, or (ii) to form a new co-operative society, with such constitution including representation on the committee, property rights, interests, liabilities, duties and obligations, as may be specified in the order. (9) No order shall be made under sub-section (8), unless (a) a copy of the proposed order has been sent under certificate of posting to the society or societies concerned and the creditors; (b) the Registrar has considered the objections received from the society or societies concerned or from any member or creditor of such society or societies within such period, being not less than fifteen days from the date of posting of the proposed order, as may be specified by the Registrar in this behalf in the proposed order. (10) The Registrar may, after considering the objections referred to in sub-section (9), make such modification in the proposed order as he may deem fit and the order may contain such incidental, consequential and supplemental provisions as the Registrar may deem necessary to give effect to the same. (11) A member or creditor who had objected to the proposed order under sub-section (9) shall have the option of withdrawing his share, deposits or loans, as the case may be, on an application which shall be made to the society to which his share, deposit or loan stands allocated by virtue of the order under subsection (8), within a period of thirty days of the date of such order. (12) ............... Chapter V of the Act deals with privileges of Co-operative Societies and in particular S. 30 states: "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 with power to hold property, enter into contract, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it is constituted."
(3.) The foremost submission of Shri M. K. Ramamurthi, learned counsel for the petitioners was that any law providing for the amalgamation of co-operative societies directly contravenes Art. 19(1)(c) which guarantees to all citizens the right to form associations or unions. According to Shri Ramamurthi, the right of a citizen to form a society or to be a member of a certain co-operative society is interferred with if the society of which he has become a member is amalgamated with another society consisting of members with whom he may not be willing to be associated. Art. 31A(1)(c) furnishes a complete answer to this submission. It provides that no law providing for the amalgamation of. two or more corporations either in the public interest or in order to secure the proper management of any of the corporations shall be deemed to be void on the ground that it is inconsistent or takes away or abridges any of the rights conferred by Art. 14 or Art. 19. Shri Ramamurthi attempted to cross the stile by arguing that co-operative societies were not corporations within the meaning of that expression in Art 31A(1)(c). According to him, the Constitution discloses a Scheme which separates co-operative societies from Corporations, and 'never the twain shall meet'. To substantiate his submission, he invited our attention to Entries 43 and 44 of List-I and Entry 32 of List-II of the Seventh Schedule to the Constitution. He also read out to us the Statement of Objects and Reasons and the Joint Select, Committee's report relating to the Constitution (Fourth Amendment) Act, 1955 by which clause (c) of Art. 31A(1) was ,introduced. His submission was that the legislative intent was merely to render legislation providing for amalgamation of companies and statutory corporations alone immune to challenge on the ground of conflict with the fundamental rights guaranteed by Arts. 14 and 19. According to him the protection afforded by Art. 31A(1)(c) was not available and was never intended-to be made available to co-operative societies, since the expression 'corporations' did not comprehend co-operative societies in its expanse.,;