Dr. Dhananjaya Yeshwant Chandrachud, C.J., Dilip Gupta and Amreshwar Pratap Sahi, JJ. - (1.) THIS Full Bench has been constituted in pursuance of a reference made on 14th September 2012 by a Division Bench of the following question: Whether the High Court may issue a writ, order or direction in the exercise of its writ jurisdiction under Article 226 of the Constitution of India for continuance of a Committee of Management of a co -operative society even though the term of the co -operative society has come to an end in accordance with the provisions of section 29 of the U.P. Co -operative Societies Act, 1965. The issue turns upon an interpretation of section 29 of the Uttar Pradesh Cooperative Societies Act, 1965. Immediately before section 29 was amended with effect from 28 March 2013 by U.P. Act 13 of 2013, section 29, as it stood, read as follows: 29. Committee of Management. - -(1) The management of every co -operative society shall vest in a Committee of Management constituted in accordance with this Act, the rules and the bye -laws, which shall exercise such powers and perform such duties as may be conferred or imposed by this Act, the rules and the bye -laws. (2)(a) The term of every Committee of Management shall he three years and the term of the elected members of the Committee of Management shall be co -terminus with the term of such Committee. (b) The provisions of Clause (a) shall apply also to a Committee of Management in existence on the date of the commencement of the Uttar Pradesh Co -operative Societies (Second Amendment) Act, 2011 and to the elected members of such Committee. (c) The term of the Committee of Management, which has completed on or before the date of commencement of the Act referred to in Clause (b), the period of three years from the date of its constitution and the term of its elected members, shall expire on such commencement. (3) Election to reconstitute the Committee of Management of a Co -operative Society shall be completed in the prescribed manner under the superintendence, control and direction of the Registrar at least fifteen days before the expiry of the term of the Committee of Management and the members so elected shall replace the Committee of Management whose term expires under sub -section (2): Provided that where the Registrar is satisfied that circumstances exist which render it difficult for him to hold the election on the date fixed, he may postpone the election, and all proceedings with reference to the election shall be commenced afresh in all respects. (4) It shall be the duty of the Secretary or the Managing Director of the Co -operative Society, as the case may be, to send to the Registrar, four months before the expiry of the term of Committee of Management, a requisition for conducting the election and to furnish all such information as may be required by him, within such period as may be fixed by him. (5)(a) Where, for any reason whatsoever, the election of the elected members of the Committee of Management has not taken place or could not take place before the expiry of the term of elected members, the Committee of Management shall, notwithstanding anything to the contrary in any other provision of this Act or the rules made thereunder, or the bye -laws of the society, cease to exist on the expiry of such term. (b) On or as soon as may be after the expiry of such term, the Registrar shall appoint an Administrator or a Committee of Administrators (hereinafter, in this section, referred to as the Committee) for the management of the affairs of the society until the reconstitution of the Committee of Management in accordance with the provisions of this Act, the rules and the bye -laws of the society and the Registrar shall have the power to change the Administrator or, as the case may be, any member of the Committee or to appoint Committee in place of an Administrator or vice versa from time to time. (c) Where a Committee is appointed under Clause (b), it shall consist of a Chairman and such other members not exceeding eight as may be nominated by the Registrar out of which at lest two shall be Government servants. (d) The procedure for summoning and holding of meetings of the Committee the time and place of holding such meetings, the conduct of business at such meetings and the number of members necessary to form quorum thereof shall be such as may be prescribed. (e) So long as no Administrator or the Committee, as the case may be, is appointed under Clause (b), the Secretary or the Managing Director, as the case may be, of the society shall be in charge only of the current duties of the Committee of Management. Explanation. - -Where results of the election of members of the Committee of Management have not been or could not be declared, for any reason whatsoever, before the expiry of the term of the elected members of the outgoing Committee of Management, it shall be deemed that the election of the elected members of the Committee of Management has not taken place within the meaning of this sub -section. (6) The Administrator or the Committee appointed under sub -section (5) shall, subject to any directions which the Registrar may from time to time give, have the powers to perform all or any of the functions of the Committee of Management or of any officer of the society and shall be deemed for all purposes under this Act, the rule and the bye -laws of the society to be the Committee of Management and the Chairman of such Committee shall exercise the powers and perform the functions of the Chairman of the Committee of Management. (7) The Administrator or the Committee, as the case may be, appointed under sub -section (5), shall as soon as may be, but not later than the expiry of six months from the date of appointment, arrange for the reconstitution of the Committee of Management in accordance with the provisions of this Act, the rules and the bye -laws of the society to take over the management of the society from the Administrator or the Committee, as the case may be: Provided that where as Administrator is replaced by a Committee or a Committee by an Administrator as provided in Clause (b) of sub -section (5), the period of two years and six months shall count from the date the Administrator or the Committee, as the case may be, was originally appointed. Explanation. - -Notwithstanding that the process of election may have commenced before the appointment of Administrator or the Committee under sub -section (5), a fresh process of election shall commence after such appointment. (8) Notwithstanding anything to the contrary contained in any other provision of this Act, there shall be at least three professionals with full voting rights on the committee of Uttar Pradesh Co -operative Bank or a Central Co -operative Bank having special knowledge or experience in the field of accounting, law, banking, management, agriculture or rural economy as stipulated by the Reserve Bank of India. In case such professionals do not get elected, they shall be co -opted by the Committee of Management of the Bank as aforesaid.
(2.) THE ninety seventh constitutional amendment, which came into force on 12 January 2012, introduced Part IX -B into the Constitution, which contains provisions as regards co -operative societies. Article 243 -ZH(b) defines the expression 'board' to mean 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. Under Article 243 -ZJ(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. Article 243 -ZK stipulates that notwithstanding anything contained in any law made by the legislature of a state, the election of a board shall be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the term of office of members of the outgoing board. Under Clause (2) of Article 243 -ZK, the superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a co -operative society is to vest in an authority or body, as may be provided by a law enacted by the state legislature. Article 243 -ZL2 provides for situations where a board can be kept under suspension or can be superseded, and it has been stipulated that notwithstanding anything contained in any law for the time being in force, no board can be superseded or kept under suspension for a period exceeding six months. Article 243 -ZL, in its first proviso, enumerates circumstances in which a board may be superseded or kept under suspension, which are: (i) persistent default; (ii) negligence in the performance of duties; (iii) commission of an act prejudicial to the interest of a co -operative society; (iv) a statement in the constitution or functions of the board; and (v) a violation by the authority or body as provided under a state law made under Article 243 -ZK(2), to conduct elections in accordance with the provisions of the State Act. The second proviso, however, stipulates that the board of any such co -operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government. Clause (2) of Article 243 -ZL provides that upon the supersession of a board, the administrator appointed to manage the affairs of the cooperative society shall arrange for the conduct of elections within the period of six months stipulated in Clause (i) and to handover management to the elected board. Hence the provision does contemplate the supersession of a board upon a violation by the authority or body constituted by state legislature under Article 243 -ZK(2) to conduct an election in accordance with the state enactment. However, the board of a society which has no Government shareholding and no loan, financial assistance or guarantee from Government cannot be superseded. Following the ninety seventh amendment to the Constitution, state legislature in the State of Uttar Pradesh enacted U.P. Act 13 of 2013 with the following Statement of Objects and Reasons: With a view to making the provisions in accordance with the 97th Amendment 2011 in the Constitution of India, it has become necessary to amend the Uttar Pradesh Co -operative Societies Act, 1965 to provide for ensuring the democratic feature, reservation norms in the Committee of Management of the Co -operative Societies, bringing about uniformity in the term of Committee of Management, making a centralized system for the election of the Committee of Management, office bearers and delegates of the Co -operative Societies, completing the proceedings of suspension and supersession of the Committee of Management of the Co -operative Societies in the stipulated time frame and making mandatory provision for audit of accounts of Co -operative Societies. It has therefore been decided to amend the Uttar Pradesh Co -operative Societies Act, 1965 (U.P. Act No. 11 of 1966) for the said purposes. The Amending Act has substituted sub -sections (2) to (7) of section 29 in the following terms: (2)(a) The term of every Committee of Management shall be five years and the term of elected members of the Committee of Management shall be co -terminus with the term of such Committee. (b) The provisions of Clause (a) shall apply also to a Committee of Management in existence on the date of the commencement of the Uttar Pradesh Co -operative Societies (Amendment) Act, 2013 and to the elected members of such committee. (3) Election to reconstitute the Committee of Management of every Co -operative Society shall be completed in the prescribed manner under the superintendence, control and direction of the election Commission at least fifteen days before the expiry of the term of the Committee of Management and the members so elected shall replace the Committee of Management whose term expires under sub -section (2): Provided that where the Election Commission is satisfied that the circumstances exist which render if difficult for it to hold the election on the date fixed, it may postpone the election and all proceedings with reference to the election shall commence afresh in all respects. (4) It shall be the duty of the Secretary or the Managing Director of the co -operative society, as the case may be, to send to the Election Commission four months before the expiry of the term of the Committee of Management, a requisition for conducting the election and to furnish all such information as may be required by the Election Commission within such period as may be fixed by it. (5) A co -operative society may have as many members in its Committee of Management as may be provided in its bye -laws but an Apex society may have its Committee of Management subject to a maximum of seventeen members, a central society may have its Committee of Management subject to a maximum of fifteen members and every other co -operative society may have its Committee of Management subject to a maximum of thirteen members. Any other committee or sub -committee of the society shall be smaller than its Committee of Management and in no case such committee or subcommittee shall consist of more than seven members: Provided that in the Committee of Management of every co -operative society four seats shall be reserved of which one shall be for the person belonging to the Scheduled Castes or the Scheduled Tribes, one shall be a person belonging to the Other Backward Classes of Citizens and two shall be for the women. (6) Notwithstanding anything to the contrary contained in any other provision of this Act, the Committee of Management of every Co -operative Society shall co -opt at least two professional persons having special knowledge or experience in the field of accounting, law, banking, management, agriculture or rural economy as may be stipulated by the State Government. It is not necessary that a co -opted members shall be a member of the General Body of the Co -operative Society: Provided that the number of such co -opted members shall not exceed two in addition to the number of members specified in sub -section (5): Provided further that such a co -opted member shall not have the right to vote in any election or in any no confidence motion moved in the Co -operative Society in their capacity as such member or to be eligible to be elected as office bearers of the Committee of Management. (7) The Committee of Management of every co -operative society may fill a casual vacancy on the Committee of Management by nomination out of the same class of members in respect of which the casual vacancy has arisen, if the term of the office of the Committee of Management is less than half of its original term." Section 35(1), as substituted by Amending Act 13 of 2013 reads as follows, insofar as material: 35. Supersession or suspension of Committee of Management. - -(1) Where in the opinion of the Registrar the Committee of Management of any Co -operative Society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye -laws of the society or commits any act which is prejudicial to the interest of the society or its members, has failed to conduct the election in accordance with the provisions of this Act before the expiry of the term of the Committee of Management or is otherwise not functioning properly, the Registrar after affording the Committee of Management a reasonable opportunity of being heard and obtaining the opinion of the General Body of the society in a general meeting called for the purpose in the manner prescribed may, by order in writing, supersede the Committee of Management: Provided that where under the prescribed circumstances it is not feasible to convene a general meeting of the General Body of the society, the Registrar may dispense with the requirement of obtaining the opinion of the General Body of the society. Hence, sub -section (1) of section 35 provides for the circumstances in which supersession of the Committee of Management is permissible; one of them being that the society has failed to conduct the election in accordance with the provisions of the Act. The supersession, however, has to be after affording to the Committee of Management a reasonable opportunity of being heard and obtaining the opinion of the general body of the society in a general meeting called for the purpose. However, under the proviso, the requirement of obtaining the opinion of the general body may be dispensed with if, under the prescribed circumstances, it is not feasible to convene a general meeting. The fourth proviso further stipulates as follows: Provided also that the Committee of Management of any such co -operative society shall not be superseded or kept under suspension by the Registrar, where there is no Government shareholding or loan or financial assistance or any guarantee by the Government. Under sub -section (3), upon the supersession of the Committee of Management under sub -section (1), the Registrar may appoint in its place (a) a new Committee consisting of one or more members of the society; or (b) an Administrator or Committee of Administrators who need not necessarily be members of the society. Sub -section (3) provides thus: (3) Where the Registrar has superseded the Committee of Management under sub -section (1), he may appoint in its place - (a) a new committee consisting of one or more members of the society, or (b) an administrator or Committee of administrators who need not necessarily be members of the society: Provided that if the Committee of Management is superseded under sub -section (1), the Committee of Management shall be reconstituted within three months from the date of supersession after holding the election in accordance with the provisions of this Act. However, under the proviso, upon supersession of the Committee of Management under sub -section (1), the Committee of Management has to be reconstituted within three months from the date of supersession after holding the election in accordance with the provisions of the Act. Finally, sub -section (6) stipulates as follows: (6) Before the expiry of the period specified under sub -section (3), the committee, administrator or administrators, appointed under sub -sections (3) and (4), shall arrange for the reconstitution of the Committee of Management in accordance with this Act, the rules and the bye -laws of the society to take over the management of the co -operative society on the expiry of the said period.
(3.) THE provisions of the ninety seventh constitutional amendment inserting Part IX -B, have been held by a Division Bench of the Gujarat High Court to be ultra vires on the ground that restrictions have been imposed on the power of the state legislatures to enact legislation relating to co -operative societies which is a subject falling in the State List to the Seventh Schedule of the Constitution and by the amendment, Parliament curtailed the legislative power of States without complying with the provisions of Article 368(2) of the Constitution. This decision of the Gujarat High Court was rendered in Rajendra N. Shah v. Union of India and another. Writ Petition (P.I.L.) No. 166 of 2012, decided on 22nd April, 2013. The amendment by the state legislature of Uttar Pradesh by U.P. Act 13 of 2013 continues to hold the field. A comparison of the provisions of section 29, as they stood prior to the Amending Act of 2013 which was assented to by the Governor on 28 March 2013 and the provisions which existed earlier, would indicate a material change in regard to the appointment of an Administrator, where the elections of a cooperative society have not been held before the expiry of the term of its Committee of Management Section 29(1), as it stood prior to Amending Act 13 of 2013, provided that the management of a co -operative society would vest in a Committee of Management constituted in accordance with the Act, rules and bye -laws and would perform such duties and exercise such powers as are conferred by the Act, rules and bye -laws. Under Clause (a) of sub -section (2), a term of three years was stipulated for every Committee of Management. Under sub -section (3), an election to reconstitute the Committee of Management of a cooperative society was required to be completed in the prescribed manner under the superintendence, control and direction of the Registrar at least fifteen days before the expiry of the term of the Committee of Management. This was in order that the Committee so elected would replace the Committee of Management whose term was to expire on the completion of its term. Under subsection (4), a duty was cast upon the Secretary or the Managing Director of the society, to forward to the Registrar, four months before the expiry of the term of the Committee of Management, a requisition for conducting the election and to furnish information, as may be required by the Registrar. Clause (a) of subsection (5) provided that the Committee of Management would cease to exist on the expiry of its term where, for any reason whatsoever, the election of the elected members had not taken place or could not take place before the expiry of the term of the elected members, notwithstanding anything to the contrary contained in any other provision of the Act, rules or bye -laws. Under Clause (b) of sub -section (5), the Registrar was under a duty, on the expiry of the term of the Committee of Management or as soon as may be thereafter, to appoint an Administrator or a Committee of Administrators to manage the affairs of the society until the reconstitution of the Committee of Management. Until an Administrator was appointed, the Secretary or the Managing Director of the society was to be incharge only of the current duties of the Committee of Management under Clause (e) of sub -section (5). The explanation to Clause (e) stipulated that where the results of the election had not been or could not be declared, for any reason whatsoever, before the expiry of the term, it would be deemed that the election of the Committee of Management had not taken place within the meaning of sub -section (5). Under sub -section (7), an outer limit of six months was stipulated for the Administrator or the Committee to arrange for the reconstitution of the Committee of Management. The Administrator or the Committee was conferred with the power to perform all or any functions of the Committee of Management and was to be deemed, for all purposes, to be the Committee of Management. Prior to the substitution and amendment of subsections (2) to (7) by Amending Act 13 of 2013, sub -section (5) contained an inexorable consequence by which the Committee of Management would cease to exist on the expiry of its term where the election of the elected members had not taken place or could take place before the expiry of the term. Immediately thereafter, an Administrator or a Committee of Administrators had to be appointed for managing the affairs of the society. The state legislature made its intent clear by stipulating that the Committee of Management would cease to exist on the expiry of its term, whatever may be the reason why the election of the elected member had not taken place or could not take place. Moreover, the legal consequence of the Committee of Management having ceased to exist on the expiry of its term was to follow, notwithstanding anything contained to the contrary in the Act or the rules or bye -laws of the society. Under the mandate of the statute, an Administrator or Committee of Administrators was required to be appointed which was to perform the duties of the Committee of Management and which would be deemed to be the Committee of Management. The Administrator so appointed was then to hold elections in a stipulated time frame. Hence, it is clear that the legislature envisaged two consequences on the expiry of the term of a Committee of Management. The first is that the. Committee of Management would cease to exist. The second is that the Registrar shall appoint an Administrator or a Committee of Administrators. The emphatic nature of its consequence is provided particularly by the non obstante clause contained in Clause (a) of sub -section (5) which overrides anything to the contrary contained in the Act, the rules and bye -laws as well as by the stipulation that whatever be the reason why the election has not taken place or could not be held, the Committee of Management would cease to exist on the expiry of its term. Once this be the position, it would have been impermissible for the High Court in the exercise of its jurisdiction under Article 226 of the Constitution of India to issue any direction, the consequence of which would be to override the legislative mandate contained in the provisions of sub -section (5) of section 29. The equitable power which vests in the High Court while exercising its jurisdiction under Article 226 of the Constitution cannot be utilised to issue a direction contrary to a legislative provision. The equitable jurisdiction of the Court cannot ignore a legislative mandate. The discretionary powers which the Court has under Article 226 of the Constitution cannot override a legislative provision. Equitable jurisdiction has to be in accord with a legislative prescription. Once the legislature has provided that a Committee of Management would cease to exist upon the expiry of its term with a non obstante provision, the legislative mandate must be given full force and effect. A judicial direction to the effect that the erstwhile Committee of Management should continue until elections are held, would be contrary to law and is impermissible. If the Registrar, despite the fact that the co -operative society has taken all due steps to issue a requisition for conducting the election and has furnished all the required information under sub -section (4), fails to discharge his duties, that would not justify the issuance of any direction by the High Court contrary to sub -section (5) of section 29. The Committee of Management is not helpless because it would have recourse to the jurisdiction of this Court under Article 226 of the Constitution for issuing directions to the Registrar to conclude the elections before the expiry of the term of the Committee. Once the term of the elected Committee had, however, come to an end, the Committee of Management would cease to exist and an Administrator would have to be appointed, under the provisions of sub -section (5) prior to the amendment by U.P. Act 13 of 2013.;