GOVIND MATHUR,J. - (1.) These petitions for writ are before us for examining constitutional validity of certain provisions of the Rajasthan Cooperative Societies Act, 2001 and to have reliefs as follows:- "i) By an appropriate writ, order or direction, the Section 30(1)(c) of the Act of 2001 introduced vide Notification dated 8th October, 2015 may kindly be declared ultra vires of the Constitution of India so as to be violative of Article 14 and Article 19(1)(c) of the Constitution of India to the extent that it gives power to appoint the Administrator in the Co-operative Society while removing and superseding the existing Committee. ii) By an appropriate writ, order or direction, the subsection (7-A) of Section 28 of the Rajasthan Cooperative Societies Act, 2001 introduced vide Notification dated 26th April, 2016 (Anx.4) published in the Rajasthan Gazette on the said date may kindly be declared unconstitutional as being ultra vires of the constitution of India and be quashed and set aside. iii) By an appropriate writ, order or direction, the Section 30-C read with Section 32 of the Rajasthan Cooperative Societies Act, 2001 as amended vide Notification dated 8th October, 2015 (Anx.7) may kindly be declared ultra vires of the Constitution of India and be quashed and set aside. iv) By an appropriate writ, order or direction, the petitioner and / or the Members of the Board of Directors who have completed two or more than 2 terms be permitted to take part in the forthcoming elections for the third consecutive term in order to take part in the elections of Board of Directors/Committee of Jodhpur Nagrik Sahkari Bank Limited, Jodhpur. v) by an appropriate writ, order or direction, the respondents be restrained to appoint Administrator during the pendency of the present writ petition and / or till the elections to the Board of Directors, takes place in Jodhpur Nagrik Sahkari Bank Limited, Jodhpur."
(2.) In some of the writ petitions challenge is also given to the provisions of Section 30-B of the Act of 2001 as amended vide the notification dated 26.4.2016. Cooperative Sector in the State of Rajasthan:- Before coming to merits of the case, it would be appropriate to notice legislative background of the cooperative movement in the State of Rajasthan, as referred in the Rajasthan Co-operative Societies Act, 2001 by Professor S.R.Bhansali, 2005 Edition:- "The Co-operative movement in Rajasthan was initially started about seventy five years back primarily to meet the credit requirements of the agriculturists. Ajmer which was a centrally administered territory, witnessed the first Co-operative movement in the State, under the Acts of 1904 and 1912. In the erstwhile Bharatpur State, on the lines of Central Act of 1912, the Bharatpur Co-operative Societies Act, 1915 was enacted. On the same lines Co-operative Societies Act were passed by the Kota State in 1916, by Bikaner State in 1926, by Alwar State in 1934, by Kishangarh State in 1935, by Jodhpur State in 1943 and by Jaipur State in 1943. The condition for the growth of the Cooperative movement were not very favourable in all parts of Rajasthan at the time of merger of various princely States. At the time of the formation of Matsya State (Alwar, Bharatpur, Dholpur and Karauli), the Matsya Co-operative Societies (Extension of provisions) Ordinance, 1948 was promulgated. Immediately after about a month when the United States of Rajasthan was formed, the Co-operative Societies Ordinance, 1948 (No.96 of 1948) was promulgated. By 1949, when the State of Rajasthan was formed, the co-operative movement has already started in Udaipur, Dholpur, Karauli, Jhalawar, Bundi and Kushalgarh States, but in 11 princely States the movement has not taken deep roots and even in places where the movement actually existed in some form, it had not progressed beyond the supply of credit to agriculturists. The first Rajasthan Co-operative Societies Act, 1953 came into force from first April 1953. That Act had followed the pattern of Central Act of 1912 and the Bombay Co-operative Societies Act, 1925. It had also incorporated the important recommendations of the 15th conference of Registrars of the Co-operative Societies, and the Co-operative Planning Committee under the chairmanship of Shri R.G.Saraiya. In the year 1956, the Rajasthan Co-operative Land Mortgage Banks Act, 1956 was passed which was based on the Madras Land Mortgage Banks Act, 1934. Its main object was to provide for long term loans to holders of land to enable them to discharge their debts, to carry our agricultural improvements, to acquire land for the formation of economic holding and other like purposes and thereby to promote thrift and self help among them. With that Act an amendment was made in Rajasthan tenancy Act, 1955 which provides that a Khatedar tenant may also transfer the rights in whole or part of his holding in the form of a simple Mortgage for the purpose of obtaining loans from the Rajasthan Central Land Mortgage Bank (now State Land Development bank) or a Co-operative Land Mortgage Bank (Now Land Development Bank) or a Co-operative credit society registered or deemed to be registered as such under the Rajasthan Co-operative Societies Act, 1953. Such mortgages were to be governed by the provisions of the Rajasthan Co-operative Societies Land Mortgage Banks At, 1956. Both these Acts - the Rajasthan Co-operative Societies Act, 1953 and the Rajasthan Co-operative Land Mortgage Banks Act, 1956 were extended to the Abu, Ajmer and Sunel areas from 1.9.1957. In order to have a sort of uniformity of principles in the development of the co-operative movement in India, consistent with the recognition of the freedom for development according to local conditions, the Union Ministry of Community Development, Panchayat Raj and Co-operation appointed a 'Committee on Cooperative Law'. The terms of reference of this Committee were: (i) To make recommendations for a simple legislative measure generally suited to the whole country, to facilitate a coordinated progress of the movement, and (ii) To examine, in the light of the recommendations of the R.C.S., Committee's Report, the modifications necessary in the Co-operative Societies Act and rules for giving effect to the concept of State partnership in share capital and State participation in the management of co-operative societies. The Committee did not rest with only making recommendations but has actually prepared a model Bill. The Committee retained the old credit structure. It has taken a review of the provincial laws and incorporated their best features for an All India implementation, such as execution through the cooperative department as in Madras or establishment of a Co-operative Tribunal as in Bombay. It has given effect to the concept of State partnership as required by the terms of reference. It advocated contribution by Government to share capital of societies at all levels, either directly or indirectly. Along with this, the State is to nominate not more than three persons on the managing boards or committees of the societies. Thus, the Board or Committee becomes a tripartite body representing the States, the societies and the individual members. The model Bill made provision for advancing of long-term credit for the development of land. Chapter XI in the model bill is based largely on the provisions of the Madras Land Mortgage Banks Act. It also recommended for exemption from the State Ceiling law to such banks. In 1965, the Rajasthan Co-operative Societies Act, was passed which was based on the main recommendations of the above report and model Bill prepared by the Committee on Co-operative Law, with suitable modifications to suit the requirements of this State. The State Government while framing the statute implemented the recommendations of the Rural Credit Survey report and the schemes of the Co-operative development under the Five Year Plans. This Act had repealed the two previous Acts i.e. the Rajasthan Cooperative Societies Act, 1953 and the Rajasthan Cooperative Land Mortgage Banks Act, 1956. The State was given a duty to promote the Co-operative movement in the State. A concept of State aid to cooperative societies through the Apex and central Banks was introduced. Powers of audit, inquiry, inspection and surcharge were given to the Registrar. For settlement of disputes, the Registrar was given a power to appoint Arbitrator for arbitration. A co-operative Tribunal was constituted for hearing appeals and revision applications. Quick procedure for the execution of awards, orders etc. were provided. Provisions were made for the delegation of powers to the subordinate officers of the Co-operative department." National Policy for Cooperatives & Rajasthan Cooperative Societies Act, 2001:- The Government of India, looking to the substantial growth of cooperative sector and diverse area of economy, considered it appropriate to have an exhaustive national policy for cooperatives. Accordingly, the Department of Agriculture and Cooperation, Ministry of Agriculture, Government of India, after noticing existing constraints in the cooperative sector, declared a national policy on cooperatives. The policy declared had a guideline from the Manchester International Cooperative Alliance (ICA) congress 1995, with following basic cooperative principles:- "4.2.1 Voluntary and Open Membership Cooperatives are voluntary organisations, open to all persons capable of using their services and willing to accept the responsibilities of membership, without discrimination on basis of gender, social status, racial, political ideologies or religious consideration. 4.2.2 Democratic Member Control Cooperative are democratic organisations controlled by their members, who actively participate in setting their policies and decision making Elected representatives of these cooperatives are responsible and accountable to their members. 4.2.3 Members' Economic Participation Members contribute equitably and control the capital of their cooperatives democratically. At least a part of the surplus arising out of the economic activity would be the common property of the cooperatives. The remaining surplus could be utilised benefiting the members in proportion to their shares in the cooperative. 4.2.4 Autonomy and independence Cooperatives are autonomous self-help organisations controlled by their members. If cooperatives enter into agreement with other organisations including government or raise capital from external sources, they do so on the terms that ensure democratic control by members and maintenance of cooperative autonomy. 4.2.5 Education, Training and Information Cooperatives provide education and training to their members, elected representatives and employees so that they can contribute effectively to the development of these institutions. They also make the general public, particularly young people and leaders, aware of the nature and benefits of cooperation. 4.2.6 Cooperation among Cooperatives Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through the available local, regional, national and international structure. 4.2.7 Concern for Community While focusing on the needs of their members, cooperatives work for the sustainable development of communities through policies accepted by the members."
(3.) As per the policy document the objective of the National Policy is to facilitate all round development of the cooperatives in the country with necessary support, encouragement and assistance to ensure autonomy, self-reliant and democratic institutional management of the cooperative societies accountable to its members. An emphasis in the National Policy is given for significant contribution of the cooperative sector to national economy, particularly in the areas which require peoples participation and community efforts. The policy as declared by the Government of India in consultation and collaboration with all the State Governments of the country enunciates certain principles which are as follows:- "(i) While upholding the values and principles of cooperation, it recognises the cooperatives as autonomous associations of persons, united voluntarily to meet their common economic, social and cultural needs and aspirations through jointly owned and democratically controlled enterprises; (ii) upholds the preservation of the distinct identity of cooperatives, its values and principles by providing an appropriate environment and taking the required administrative and legislative measures; (iii) recognises cooperatives as s distinct economic sector and an integral component of the socioeconomic system of the country and an effective and potential instrument of socio-economic development. It considers them as essentially community initiatives for harnessing people's creative power, autonomous, democratically managed, decentralized, need-based and sustainable economic enterprises. Cooperatives will, however, remain the preferred instrument of execution of the public policy especially in the rural area; (iv) the regulatory role of the Government will be mainly limited to the conduct of timely elections, audit of the cooperative societies, and measures to safeguard the interest of the members and other stake holders in the cooperatives. There shall, however, be no interference in the management and working of the cooperatives. The Government recognises the apolitical nature of cooperatives. (v) reiterates and reinforces its commitment to the cause of the SC/ST, women and other weaker sections of the Society and their development through the cooperatives. Wherever members belonging to women or Scheduled Castes/Scheduled Tribes and other backward castes want to have their exclusive societies provided they find a socio-economic reason to form such a society, encouragement and assistance will be provided by the Government. Cooperative Societies, if they so decide, can provide for the representation of such category of persons in their bye-laws which they are competent to frame; (vi) accepts the need to phase out its share holdings/equity participation in the cooperatives. It shall, however, endeavour and extend appropriate support for improving financial viability and resource mobilization by harnessing local savings and adequate refinance facility, and to the possible extent providing a policy framework to ensure that there is no discrimination against the cooperatives in the matter relating to resource mobilisation to attain financial viability. The cooperatives shall be enabled to set up holding companies/subsidiaries, enter into strategic partnership, venture into futuristic areas like insurance, food processing and information technology etc., and shall be independent to take the financial decisions in the interest of the members and in furtherance of their stated objects; (vii) recognises the role of the Government in ensuring that the benefits of liberalization and globalisation in the emerging economic environment are extended to the cooperatives in equal measure through suitable fiscal policies and pledges to provide support and protection to the cooperative movement through suitably designed investment programmes with a view to providing the cooperatives a level playing field vis-a-vis other competing enterprises especially in the field of agro-processing and marketing. (viii) recognises the need for more effective regulation of cooperatives operating in the financial sector and accepting public deposits; (ix) also recognises the need for incorporating special provision in the Cooperative Societies Acts with regard to banking, housing, real estate development, processing, manufactures co-operatives, infrastructure development, etc.; (x) recognises the need to provide preferential treatment, as far as possible, to the cooperatives engaged in areas such as credit, labour, consumer, services, housing, development of SC/ST and women and development of emerging areas as well as sectors requiring people's participation especially in rural areas; (xi) undertakes to devise and execute suitable programmes and schemes to build and develop cooperative institutions in the cooperatively underdeveloped States/religions with particular reference to the North Eastern States including Sikkim; (xii) recognises the need to support the cooperative movement to develop human resources, cooperative education and training, appropriate technologies and infrastructural facilities so as to promote professional management in cooperatives particularly at the primary level, for their greater functional and operational efficiency. It may also include the introduction of cooperatives as a curriculum vitae at school level; (xiii) undertakes to initiate structural reforms in order to improve the functioning of the cooperatives at various levels to ensure greater efficiency and viability. These may include steps to activate idle membership, enhance member participation and involvement, provision of multi cooperatives approach, ensure timely conduct of general body meetings and elections, provide for effective audit, devise suitable mechanism for rehabilitation of the sick societies particularly in the processing sector, expedite winding up of defunct societies; and providing legal framework for voluntary winding up of cooperatives; (xiv) undertakes to bestow autonomy to cooperatives to follow appropriate personnel policies including those relating to recruitment, promotions and other such matters with due emphasis on quality and transparency; (xv) undertakes to introduce the required electoral reforms through legislative measures. Elections to the cooperative societies should be held through an independent authority like the State Election Commission; and (xvi) also undertakes to take other such measures as would be required for efficient and healthy growth of the cooperative movement.";