This Order will govern disposal of Misc. Pet. No. 1141/90 (Mahendra singh v. State of M. P. & Others), Misc. Pet. No. 1197/90 (Umakant Dixit v. State of M. P. and Others), Misc. Pet. No. 1215/90 (O. P. Pandey v. State of M P.& Others), Misc. Pet. No. 1805/90 (D. Logan v. State of M. P. and. Others), Misc. Pet. No. 2380/90 (Brij Kishore Tiwari v. State of M. P. and Others), Misc. Pet. No. 230/91 (Executive Committee of Hariyana Nagar Grih Nirman Sahkari v. State of M. P. and Others), Misc. Pet. NO. 1047/92 (Vish-wanath Modi v. State of M. P. and Others), Misc. Pet. NO. 1937/89 (Raipur Co-op. Land Dev. Bank v. State of M: P. and Others), Mist. Pet. No. 2759/90 (J N. Vyas v. State of M. P. and Others), Misc. Pet. No. 3530,90 (Ram-narayan Idu v. State of M. P. and Others), Misc. Pet. No. 3662/90 (Mohanlal Gupta v. State of M. P. and Others), Misc. Pet. No. 263/91 (Devendra Khare & Others v. State of M. P. and Others), Misc. Pet. No. 376/91 (Ramswaroop Pathak v. State of M. P. and Others), Misc. Pet. NO. 846/91 (Smt. Ranjana Kumari Singh v. State of M. P. and Others) and Misc. Pet. NO. 4097/91 Radheshyam Kasar v. state of M. P. and Others), as all these petitions raise common questions of facts and law, for consideration of this Court.

Petitioners in all these petitions are elected officers and members of managing committee of Co-operative Societies registered under M.P. Co-operative Societies Act, 1960 (hereinafter referred to as the). The Managing Committee of all the petitioner societies had, in terms of Sec. 49 Of the), as it existed immediately before 26th April, 1990, passed resolutions to hold new elections of the officers and members of the Managing Committee and requested the Registrar, Co-operative Societies or his nominee to appoint the Returning Officer for the purpose. The respondent State promulgated an Ordinance called M. P. Co-operative Societies (Amendment) Ordinance, 1990 (Ordinance No. 2 of 1990) on 20th April, 1990, published in M. P. Rajpatra (Extra-ordinary) dated 26th April, 1990 making extensive change in the including Section 49 dealing with the election of the officers and members of the Managing Committee of registered societies. Constitutional validity of this Ordinance and particularly provisions relating to substitution of the Managing Committee of the Society by the Registrar or his nominee, pending election, was challenged in these writ petitions. The Ordinance was subsequently replaced by M. P. Co-operative Societies (Amendment) Act, 1990 (Act No. 14 of 1990) (hereinafter referred to as the Amendment Act) and hence the petitioners have been amended to include challenge to the corresponding provisions of the Amending Act. All these petitions have been heard together and are being decided by this common order.

Though the petitioners challenge almost all provisions of the, the challenge has been confined to the Constitutional validity, of Section 48 (4), Section 49 (7-A) (iii) and Section 49 (8) of the Act, and amended by the Amending Act, at the time of final hearing. These provisions read as under :-

Section 48 (4) :

48. Final authority in society,-

(4). In the case of resource society operating in a Scheduled Area not less than two-third of the total number of seats of the members on the Committee as may be provided in the bye-laws of the society shall be reserved for the members belonging to Scheduled Tribe;

Provided that in the event of a society operating in a Scheduled area, failing to elect the requisite number of such members or to elect less than such number of members, the members of the committee shall co-opt the requisite number of members from amongst members of such society eligible for such representation and in the event of the committee failing to do so, Registrar shall nominate the requisite number of members from amongst members of such society eligible for such representation.

Section 49 (7-A) (iii) :

49. Annual General Meeting.-

(7-A) (iii)--Notwithstanding anything contained in this Act, with a view to constitute committees or general bodies so as to give effect to the provisions contained in clause (f) of Section 19-A, sub-section (3), (4), (5-A), (7) and (8) of Section 48, Section 48-B, and Section 52-B in relation to any class of society, the State Government may by general order, direct that-

(a) the term of committee in office shall expire, Or

(b) the election of delegates, irrespective of whether their term has connected or not shall stand cancelled on the date specified in the order.

Section 49 (8):

If the elections are not held before the expiration of the term specified in sub-section (7-A) or the extended term under subsection (7-AA), all the members of the committee shall be deemed to have vacated their seats and the powers of the committee shall be deemed to have vested in the Registrar and he shall hold elections as early as possible :

Provided that the Registrar may authorise say officer to exercise the powers of the committee vested in him under this sub-section and the officer so authorised shall exercise such powers from the date of such authorisation.

Since these provisions deal with three different situations and are challenged on different grounds, it will be convenient to deal with them separately.

The Act, as is well known, was a consolidating and amending law enacted to provide the State with a uniform system of administration of Cooperative Societies. Before the enactment of the, various parts of the State were governed by different laws like Madhya Bharat Co-operative-Societies Act or the Central Co-operative Societies Act. These laws had administrative structure of their own and caused administrative inconvenience. The Act, to a greater extent, achieved the purpose and provided for democratic and unified functioning of Cooperative Societies. The Act was amended from time to time either on the recommendation of the Law Commission or of the Committee appointed by the Government for the purpose. Inspite of the amendment, the purpose of the remains to organize and develope Cooperatives was effective democratic instrument for curtailing exploitation and ensuring socio-economic development of people with particular emphasis on wearker sections of the society. As stated in the Preamble or long title of the. In Brij Gopal v. State of Madhya Pradesh 1979 MPU 695., a Division Bench of this Court considered the nature, object and purpose of the and observed that "societies which can be registered under the are those which have their objects the promotion of the economic interest of their members or their general welfare in accordance with the co-operative principles or similar objects." Though co-operative principles are not stated anywhere in the, the Court brought them out as under :-

The basic principle of co-operation is that the members join as human persons and not as capitalists. Co-operation is a form of organisation wherein persons associate together as human beings on the basis of equality for the promotion of the economic interest of themselves. Co-operation is a method of doing business with an ethical base.. Each for all, and all for each" is the motto of Co-operation.. Co-operation not only develops the latent business capacity of its members; it produces leaders; it encourages the growth of social virtues; honesty and loyalty become imperative; the prospects of a better life obtainable by concerted effect is opened up; the individual realises that there is something more to be sought than more material gain for himself. Co-operation being a business-cum-moral movement, the success of the enterprise depends upon the reality with which each One of the members works for the achievement of the object of the organisation. (See Law and Principles of Co-operation by M. Calvart, pp. 18, 19, 22 and 45). The committee on co-operation in India emphasised the moral aspect of co-operation. To quote their words : "The theory of co-operation is very briefly that an isolated and powerless individual can, by association, with others and by moral development and mutual support, obtain in his own degree the material advantages available to wealthy or powerful persons and thereby develop himself to the fullest extent of his natural abilities. By the union of forces, material advancement is secured and by united Action self-reliance is forstered and it is from the inter action of these influence that it is hoped to attain the effective realisation of the higher and more prosperous standard of life which has been characterised as better business, better farming and better livings we have found that there is a tendency not only among the outside public but also among supporters of the movement to be little its moral aspect and to regard this as superfluous idealism. Co-operation in actual practice must often fall far short of the standards aimed at and details inconsistent with co-operative ideals have often to be accepted in the hope that they may lead to better things. We wish clearly to express out opinion that it is true co-operation alone, that is, to a co-operation which recognises the moral aspect of the question that Government must look for the amelioration of the masses and not to psudo-co-operative principles. The movement is essentially a moral one and it is individualistic rather than a cialistic, It provides as a substitute for material assets honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction." (Pp. 5 and 6 of Theory & Practice of Co-operation in India and Abroad by Kulkarni, Vol. 1). Co-operation as a mode of doing business, is at present applied as the solution of many economic problems. Co-operation is harnessed to almost all forms of economic activity. Though co-operation was introduced in this Country as a remedy for rural indebtedness, it has been applied successfully in a wide range of activities such as production, distribution, banking, supply, marketing, housing and insurance : (See Theory and Practice of Co-operation in India and Abroad by Kulkarni, Vol. I, p. 2). As observed by a Division Bench of this Court in Kamta Prasad v. Registrar Co-op. Societies The co-operative movement is both a theory of life and a system of business. It is a form of voluntary association where; individuals unite for mutual aid in the production and distribution of wealth upon principles of equity, reason and common good. It stands for distributive justice and asserts the principle of equality and equity ensuring to all those engaged in the production of wealth a share proportionately commensurate with the degree of their contribution. It provides as a substitute for material assets, honesty and a sense of moral obligation and keeps in view the moral rather than the material sanction. The movement is thus a great movement.

Since members join the corporative movement as human beings and not as capitalists and follow the principle-each for all and all for each-the movement promotes human dignity and self-help. Since society is run on democratic principles, it can be safely infered that the seeks to promote human dignity and economic prosperity by democratic means. Democratic functioning of societies under the is therefore basic as without such functioning, societies cannot hope to become effective democratic instruments for suitailing exploitation and ensuring socio-economic development. During the working of the, it was felt that benefits of the movement have not gone to the weaker sections of the society, particularly members of Scheduled Castes and Scheduled Tribes and therefore a Committee under the Chairmanship of Shri Ram Gopal Tiwari was appointed to suggest ways and means to obtain the said objective. The Committee made recomondations which accepted by the State Government Ordinance No 2 of 1990 was promulgated to give effect to those recommondations. The Ordinance, as noticed earlier, was replaced by Act No. 14 of 1990. This Ordinance and the do not claim anything different as their object and purpose of the. The amending Act; on the contrary claims to be ensuring that the co-operative movement would become a more effective instrument for the socio-economic development of" the people, and would be clear from its statement of object and reasons. Under the circumstance, promoting co-operative societies as effective democratic instruments for socio economic development of the people, particularly the weaker sections of the society, remains the main objective of the. This objective will require keeping in view, while determining constitutional questions involved in these writ petitions,

As regards challange to the constitutional validity of the provisions mentioned above, it may atonce be noticed that the challenge in not to the competence of the legisleture. Not even the wisdom of the legislature is under challenge, thougn allegations of making undue political profits through amendments are made. In Sardar Sarup Singh v. State of Punjab AIR 1959 SC 860 . Rehman Shacoo v. State of Jammu and Kashmir : AIR 1960 SC 1 S. Nagrai v. State of Andhare Pradesh : AIR 1985 SC 551 it has been held that the court while determining the question of constitutionality of a statute are not concerned with the wisdom or motive of the legislature. In Collector of Custom v. Sampathu : AIR 1962 SC 316 , it was clarified that the possibility of abuse of a statute does not impart to it any element of invalidity. In Maneka Gandhi v. Union of India : AIR 1978 SC 597 . Express Newpapers v. Union of India : AIR 1958 SC 578 and R. C, Cooper v. Union of India : AIR 1970 SC 564 , it was held that where the constitutionality of a statute is, challenged on the ground that it infringes a fundamental right, the Court will examine the statute in the light of relevent fundamental right and ascertain whether it was constitutionally valid but in so doing the Court will consider only the direct and inevitable effect of such law and nothing more. Indeed, this is the obligation of the Courts under Article 13 (2) of the Constitution which prevents the State from making any law which takes away Or abridges fundamental rights and further provides that law made in contravention of this clause shall, to the extent or the contravention, be void, In the instent writ petition, the provisions of the amending Act are challenged on the ground of infringement of Articles 14 and 15(4) of the Constitution and hence it is the obligation of this Court to consider whether the direct and inevitable effect of the amended law is the infringement of these constitutional guarantees. As regards Act, 14, it may be mentioned that its protection is available to every person in the Country and hence it will not be necessary to consider whether the petitioners are citizens of India. Object of this Article is to ensure equality before law and equal protection of laws to all. The provision prohibits discrimination within the members of a defined class. It however does not prohibit classification. The Article has been liberally interpreted so as to impose an obligation on the State to so frame laws as to make available their benefits equally to all. The decisions of the Supreme Court in Maneka Gandhi v. Union of India (supra) and R. D. Shetty v,. The International Airport Authority of India : AIR 1979 SC 1628 , have given a wider meaning to this guarantee of equality by holding that the action of the state must meet the test of reasonableness and absence of reasonableness would make the action arbitrary. Absence of arbitrariness is the essence of this constitutional guarantee of equality. Subsequent decisions in Ajay Hasia v. Khalid Mujib Sehravardi : AIR 1981 SC 487 , and A.L. Kalra v. The Project and Equipment Corporation of India Ltd. : AIR 1984 SC 1361 , carry this message further. In A. L. Kalras case (supra) it was hold that the proposition that Art. 14 strikes at arbitrariness is well settled, because any action that is arbirary must necessarily involve the negation of equality. As regards legislation, it was observed that if the law be void being in violation of any of the fundamental rights set out in Part III of the Constitution, it cannot be shielded on the ground that it enacts legislative policy. Wisdom of the legislative policy may not be open to judicial review but when the wisdom takes the concrete form of law, the same must stand the test of being in tune with the fundamental rights and if it treches open any of the fundamental rights, it is void as ordained by Art. 13. Subsequent decision in Central Inland Water Transport Corporation Ltd, and another v. Brojo Nath Ganguly AIR 1986 SC 157. Also convey the same message. Under the circumstances constitutional validity of the provisions aforesaid will be judged in the light of these principles. Section 48 (4) :

Section 48 (4) quoted above deals with a resource society operating in a scheduled area end requires that not less than two third of total number of seats of the members of the committee shall be reserved for the members belonging to the Scheduled Tribes. Proviso to this section deals with a situation, where the society falls to elect less than the aforesaid number of members in its annual general meeting. According to this proviso, the members of the committee are then required to co-opt the requisite number or members from amongst members of the society eligible for such representation and further provides that in the event of the committee failing to do so, Registrar shall nominate the requisite number of members from amongst members of such society. The constitutional validity. of this provision is challenged on the ground that the reservation has been made without reference to the realities and is consequently arbitrary. This challange is particularly made by the petitioner society in Misc. Pet. No. 1047/92 and it is submitted that the society has a total membership of 843 out of which only 41 members are the members of the Scheduled Tribe. The committee consists of 10 members only and hence under this provision, the managing committer will have 7 Scheduled Tribe members, 2 ladies and I member from the general category. This, according to the petitioner society, is in excess of permissible limit of reservation, which cannot be more than 50%. The submission also is that through the membership percentage of Scheduled Tribe members is only 2.22% of the total membership, reservation in the managing committee is of 67%, violating the established norms of reservation. It is, therefore submitted that the provision violates not only Art. 14 and 15, but also Art. 19(1) (c) of the Constitution and reserves to be declared unconstitutional.

The learned Additional Adv. General has, however, submitted that because of the aforesaid infirmity, the respondent Government has issued an order dated 2-11-1992 making the aforesaid provision imperative. It is accordingly submitted that there is no justification for any challenge to it. The provision is, however, claimed to be Constitutionally valid, on the ground that it relates to-a resource society operating in a scheduled area. The scheduled area, according to the respondents, is an area having heavy population of Scheduled Tribes and, therefore, there is nothing illegal in providing for representation, as aforesaid. In other words, the claim of the State is that Societies working in Scheduled areas and societies working in non-scheduled areas are two different classes and since scheduled areas are those areas, where there is heavy concentration of Scheduled Tribes, the provision is legal and valid. As regards classification, it is well settled that right MPJR (2) R 6 of equality guaranteed under Article 14 permits classification and giving special but equal treatment to each class. Even otherwise, if a law deals equally with members of a well defined class, it is not abnoxious and it is not open to charge of denial of equal protection under Article-14. In spite of it, Article-14 piohibits class legislation, which means that if the legislature takes care to reasonably classify persons for legislative purposes and if it deals equally which all persons belonging to well defined class, it is not open to the charge of denial of equal protection. In order, however, to pass the test of permissible classification, 2 conditions must be fulfilled, nemely, (i) that the classification must be founded on an intelligible differentia, which distingushes persons or things that are grouped and together from others left out of the group; and (ii) that the differentia must have a rational relation to the objects sought to be achieved by the statute in question. Though the classification can be founded on geographical basis, there must be a nexus between the basis of the classification and the object of the under consideration. The law in this regard has been crystalised in Ramkrishna Dalmias case 1955 SCR 279. As regards classification on geographical basis, State of Nagaland v. Ratansingh : AIR 1967 SC 212 , K. Gopal v. Union of India : AIR 1967 SC 1864 & Jialal v. Delhi Administration : AIR 1962 SC 1781 may be looked into. Under the circumstances, it must be held that classification bassed On geographical areas is permissible, but the classification must be a reasonable classification, i.e., it must be based on some real and substantial distinction bearing a reasonable and just relation to the objects sought to be achieved. In other words, the classification cannot be made arbitrarily and without any substantial basis. It may, therefore, be examined whether the provision meets the aforesaid Constitutional requirement.

What is the purpose of this reservation The return filed by the respondents suggests that the area is heavily populated bymembers of Scheduled Tribes and hence the object is to provide opportunities to the members of Scheduled Tribes to become effective partners of the cooperative movement. Article 43 of the Constitution imposes an obligation on the State to promote co-operatives in rural areas and hence it is submitted that as long as the members of the Scheduled Tribes are not brought in the management category, the aforesaid object would not be achieved. In this connection, the decision of the Supreme Court in B. K. Garad v. Nasik Marchants Co-op. Bank Ltd : AIR 1984 SC 192 deserves attention. This was also a case relating to co-operative society. The question under consideration was about the filling of the reserved seats. The Bombay Act, which was directly under consideration in the said case did not originally provide for reservation in favour of SC or ST members. The Supreme Court, therefore, observed that the working of the must have disclosed a sorry state of affairs that even though the co-operative movement was expanding by leaps and bounds, the members of the Scheduled Castes and Scheduled Tribes or the weaker section of the members of the society were not represented in the committee and had no opportunity to participate in the decision making process, laying down broad policies and management of the society. According to the Supreme Court, Article-43 of the Constitution set the goal that the State shall endeavour to promote cottage industries on an individual or co-operative basis in rural areas. In our on word march of economic independence, India was destined to be a cooperative commonwealth. Since independence, co-operative movement proliferated in all directions, its activities were diversified, more especially in the rural areas. The members of the Scheduled Castes and Scheduled Tribes predominantly in rural areas did not remain unaffected by the gigantic stride that the cooperative movement took. They were directly and substantially affected by it. In order to avoid that those who are affected by the movement in their vital day to day existence enjoy a second class status by being denied the opportunity to be represented in the management council, the decision making bodies, a provision like Section 73-B was introduced to ensure representation of such persons who in the absence of reservation may find it difficult to be elected to the committee in which the entire power of management vests. Absence of representation coupled with subjection to the dictates of the society would be antithesis of damocratic process reducing such persons to serfdom. A co-operative society is to be governed by a committee elected by damocratic process. This damocratic process must permeate in filling in reserved seats otherwise the committee would not enjoy a representative character. Eventually, the Court observed that, "the felt necessities of the time and the historical perspective of class domination led to the constitutional guarantee of reservation so that India can be truly a Sovereign Socialist Secular Damocratic Republic. These observations, therefore, provide the basis for the reservation in favour of Scheduled Castes & Scheduled Tribes. A reasonable reservation in their favour, if made in accordance with law, would not be open to challenge on the ground of discrimination. The recent decision of the Supreme Court in Indra Sawhney v. Union of India : AIR 1993 SC 477 , though not in relation to representation in the managing committee of a co-operative society, provides Constitutional justification to reservation in favour of Scheduled Castes and Scheduled Tribes in general. The decision of J. B. Sawant, J., very aptly brings out the reason for such reservation, in the context of equality of opportunity. Equality, according to the distinguished Judge, postulates not merely legal equality, but also real equality. Under the circumstances, the equality has to be considered a positive right of the persons and hence a more formal declaration of right would not satisfy the Constitutional mandate. The Court also held that the reservation cannot be more than 50% and anything more than that limit would unreasonable. Again Their Lordships were not prescribing the limit of reservation in the managing committee of a co-operative society, but were considering this in relation to public employment. For that purpose, they considered cases under Article 15 (4) of the Constitution of India and applied the ratio thereof to cases covered under Article-16. The Court ultimately held that reservation contemplated under both these Articles should not be more than 50%. The Court further observed that except for certain extra-ordinary situations, inherent in the great diversity of this country and the people, 50% shall be the rule. The Court approved this rule as laid down in N. R. Balaji v. State of Mysore : AIR 1963 SC 649 which concerned with Article-15 (4). Under the circumstances, the view that reservation in favour of Scheduled Castes & Scheduled Tribes cannot be more than 50%, must be held to have crystalised and become part of the law of the land. Judging the Constitutional validity of the provision in the aforesaid context, it is apparent that reservation of two-third in favour of SC & ST members is violative of the aforesaid rule and makes the same arbitrary. Then, the provision, as aforesaid, does not take into consideration, the membership of the society, but prescribes the aforesaid on the basis of regions predominantly inhabited by members of S/Tribes. Regions may be predominantly inhabited by members of Scheduled Tribes, but that does not unnecessarily imply that the co-operative societies functioning in such areas are also predominantly consist of S/Tribe membership. The managing committee members are elected not by the inhabitants of area, but by the members of the society and, therefore, the nexus between the reservation must be with the membership of the society. Apparently, therefore, the reservation of two-third seats only because the society exists in an area predominantly inhabited by S/Tribes cannot be accepted as just, proper or reasonable. The object of the provisions should be to provide adequate representation to the members belonging to S/Tribe in the management of the society, as clarified in B. K. Garads case (supra). The legislature has not kept this additional object in view, while enacting Section-48 (4) of the, which instead of providing representation to the S/Tribe members in the society aims at determining their representation on the basis of S/Tribe population in the geographical area. The legislature does not seem to have taken into consideration the fact that unless the S/Tribe citizens become members, of the co-op. soc. they would not be concerned with the management thereof. Under the circumstances, the reservation of two-third seats in the managing committee is wholly unreasonable and arbitrary, violating Article-14 and 15 (4) of the Constitution.

The return filed by the respondent State indicates that since several difficulties were faced in the working of the, a committee under the Chairmanship of Shri Ram Gopal Tiwari, a veteran leader of co-operative movement, was appointed to suggest amendments to make the effective. The aforesaid amendment is claimed to be based on the recommendations of the said committee. Before Ordinance No. 2 of 1990, the representation of Scheduled Tribe members was only 50%, which, according to the State, did not serve the purpose and needed change. The State, therefore, submit that the purpose of the amendment is to bring large S/Tribe population into the co-operative movement. The argument appears to be that the provision may perhaps attract S/Tribe population to the membership of co-operative societies. This amounts to putting the cart before the horse. The State should have first taken steps to induce S/Tribes citizens to join the co-operative movement and those who joined the movement could have been provided the opportunity of managing the movement itself. If the State had acted as aforesaid, the factual situation, as in the present case, would not have emerged. After all, the State could not claim to be acting in accordance with law, by providing 60% seats to only 2.22% members. This Court has, therefore, no hesitation in holding that Section-48 (4) of the, as amended by the No. 14/90 is unconstitutional. It is accordingly struck down.

Section-49 (7-A) (iii):--The aforesaid provision is really consequential to the amendment of Sections 19-(a) (f), 48 (3), (4) (5-A) (7) & (8) and Sections 49-B & 42-B of the Legal validity of these provisions, except Section-48 (4) has not been challenged by the petitioners. The submission of the petitioners, however, is that this provision has the effect of stopping the election process and thereby permitting the respondent Registrar to take over management of the society. In other words, the question requiring consideration is whether the amendments effected by the aforesaid provisions should be applied with immediate effect or their application should be postponed to a future date. The aforesaid question arises because election process in some of the societies had already started, but had not been completed. This is more so, with regard to apex bodies where representation of primary societies is to be assured. Once a valid law has been enacted, it is the conclusive privilege of the legislature to decide as to when the said law will become operative. In the instant case, the decision to give effect to the amendment, without any delay has been taken. The said decision would not be arbitrary or illegal, only because it affects some of the continuing elections. Indeed, such situations are inherent in the process and hence for this reason alone, the provision cannot be held to be illegal, unjustified or arbitrary. No question of violation of Article-14, therefore, arises. Challenge to the Constitutional validity of the provision fails and is hereby dismissed.

Section-49 (8) :--This is the most controversial provision in the Amending Act and Constitutional validity has been challenged not only on the ground of Article-14, but also on the ground of mischief inherent in it. It has been strenuously urged that the purpose of this provision is to replace elected members of all co-operative societies by officers appointed by the Government and thereby subvert the co-operative movement itself. It is further submitted that if Section-49 is read as a whole, it would appear that the elected managing committee was required to pass a resolution for holding fresh election much before the expiry of its term and request the Registrar to appoint a Returning Officer for the purpose. Sub-section (5) provided that in case the society failed to pass the resolution, the officers and members guilty of the said dereliction of duty, could be debarred from holding any elected office and may otherwise be punished by fine. This according to the learned counsel, ensures continuance of democracy and election of new society before the expiry of the term. The provision before the amendment v. as that in case the Returning Officer was not able to hold election for any reason, the earlier elected body was to continue. The provision has now been amended to provide that even if the elections are not held, not because of any fault on the part of the existing managing committee, they are deemed to have vacated their seats and the Registrar would assume charge of the society and hold elections, as early as possible. The provision before its substitution by M. P. Act No. 14 of 1990 was, as under :-

(8) (i) It shall be obligatory on the outgoing committee of society to hold elections prior to the expiration of the term specified in sub-section (7A) or extended term under sub-section (7-AA). The outgoing committee shall apply to the Registrar for appointment of a Returning Officer within a reasonable time which shall not be in any case less than three months before expiration of the term of committee;

(ii) If the committee fails to hold elections and has not handed over charge on expiration of the term specified in sub-section (7-A) or extended term under sub-section (7-AA) to the Registrar or any officer authorised by him in this behalf, all the members of the committee shall be deemed to have vacated their seats and the Registrar shall assume charge and hold elections as early as possible;

Provided that if the outgoing committee of the society has resolved and requested the Registrar to hold election at least three months in advance and the Registrar has failed to conduct the election on its request, the Registrar shall not assume charge of the committee and the members of the committee shall continue to hold the offices.

The petitioners submit that this provision was just and fair and penalised the managing committee only if it failed to hold the elections and not otherwise. The amended provision, according to the petitioners, encourage the Registrar not to hold election, as he will obtain management of the society for not performing his duties. The respondents submit that the purpose is to ensure democracy and avoid members, whose term had expired, to continue in the management thereof. The learned Addl. A. G. has also submitted that the Registrar takes over the management as a Custodian of the faith of members and hence assumes a responsibility of ensuring damocratic functioning. It is, therefore, claimed that the amendment does not suffer from any vice.

The co-operative movement, as noticed earlier, is an effective democratic instrument of curtailing exploitation and socio-economic development. In B. K. Garads case (supra), the Supreme Court observed that co-operative movement was necessary for giving shape to a secular sovereign democratic republic that India is destined to be. According to the Supreme Court, a republic is made of men and institutions, and co-operative societies are such institutions. Under the circumstances, there should be no difficulty in holding that the objective of the co-operative movement is to make the democratic process enshrined in the Constitution little more effective. In spite of it, a co-operative society is not meant to be run as a close preserve of an individual or a group of a persons, as would be clear from the decision of Supreme Court in Bhandara Dist. Central Co-op. Bank Ltd. v. State of Maharashtra : AIR 1993 SC 59 "Co-operative" has been understood as a form of organisation, where persons voluntarily associate together on the basis of equality for the promotion of their economic interests, by democratic means and methodology. The emphasis is on co-operation. It is, therefore, necessary to have active participation of as many members as possible. It should, therefore, be clear that if the impugned amendment has the effect of avoiding management monopoly of any individual or group of persons, the same would not be unreasonable or unjust. Speaking conversely, if the amendment has the effect of unreasonably denying the opportunity to elected members of managing the affairs of the society, the same would also be subversive of democratic process. Can it then be said that the impugned amendment had become necessary because the elected members were trying to maintain their monopoly over the society and not permitting the democratic process to go on In the context of things, it is difficult to answer the question in the affirmative. Under the law, as it existed before the amendment, there was adequate provision to not only debar such a defaulting committee, but also punish members for their default. The earlier provision, therefore, did not permit creation of any vested interest or running the society as a close preserve of the members of the managing committee. If the managing committee did not pass the resolution for holding fresh election, it was considered to be a defaulter and Registrar then got jurisdiction under sub-section (5) to take action against such a committee and members. There was, therefore, no possibility of any monopoly of management being created. It is however submitted that though an elected member may have a right to continue upto the expiry of his term, he cannot claim such a right after the expiry of the term. In other words, the submission of the respondent-State is that the elected members cannot claim to continue in the managing committee after the expiry of the terms of the committee. This Court finds no difficulty in accepting the submission that a committee cannot claim to continue for any period longer than its prescribed term. This, however, is not the question to be considered in the present case, if a committee by giving any indication of its intention to continue beyond its prescribed term, there might be justification for action against it. It is not the petitioners claim even nor is there an allegation by the respondents that the petitioner societies had shown any tendency to continue after the expiry of their term. Indeed the factual situation is that the petitioner societies had passed resolution and requested the respondent Registrar to appoint the Returning Officer for holding new elections. In a situation like this, the real question is whether the Registrar by not performing his obligations under the and not holding election before the expiry of the term of the existing committee, can be permitted to be benefited by his own default. If the matter is considered in the context of default of the Registrar of the Returning Officer appointed by him, and the decision is required to be taken in the context of democratic destiny and the rights of the members to manage the society, the provision would appear, prima facie, unreasonable and arbitrary. Such a situation was considered by Andhra Pradesh High Court in M. Ranga Reddy v. State of Andhra Pradesh and others : AIR 1989 A. P. 81, and it was held that if a committee has done all that it was required to do under law to ensure election of a new body before the expiry of the term, it cannot be held guilty of any dereliction of duty and it cannot be said that such a law abiding body suffers from any handicap in continuing to be in position of management till elections are held. The aforesaid conclusion was arrived at in the context of default of the Registrar, who was in charge of holding elections and failed to perform his duties. Under the circumstances the aforesaid judgment supports the reasoning that between an obedient, law abiding and duly elected managing committee whose term has expired and a defaulting and law-violating Registrar, it is more reasonable to continue the society to function till now elections are held. That such a course is not unconstitutional is also apparent from the fact that the law before the amendment provided for such a situation. If the earlier arrangement was constitutionally valid and otherwise just and proper, it is possible to hold that it has been substituted by an unjust and unfair provision. There is no reasonable nexus between the provision and the object sought to be achieved by it. The object, as is clear from the statement of objects and reasons, is to promote democratic functioning of the society, which can only be done by holding fresh election. Instead of ensuring the aforesaid object, which may have required enacting a provision compelling the Registrar to act within the time frame and hold election before the expiry of term, the impugned amendment puts a premium on his defaults and gives him the right to take over the management of the society by committing default. The provision is prima-facie arbitrary.

Apparently, the object of the legislature is bound to be subverted by the present amendment. Possibility of its flagrant misuse in the context of current political situation is also real. The Registrar, being an officer working under the Government headed by a particular political party, the possibility of that political party controlling societies through the Registrar, cannot be ruled out. Apparently, therefore, the potency of the provision is more for creating mischief and subverting democratic process than for ensuring healthy democratic culture by holding elections. Such a provision must be held to be arbitrary and violative of Article 14 and it is accordingly held so.

Though the aforesaid is enough to dispose of these petitions, the submission of Shri Fakhruddin, learned counsel for the petitioner in M. P. No. 3662/90 about the constitutional validity of Section 55 -AA may be noticed. The aforesaid provision deals with a situation where an officer or member of the Managing Committee of a co-operative society becomes a Member of Vidhan Sabha or Parliament and provides that such a member would ceases to hold office in the society. The provision further provides that a Member of Parliament or Legislative Assembly will not be eligible to hold office in the society. The constitutional validity of this provision is challenged on the ground that it curtails the rights of a Member of Parliament or the Legislative Assembly arbitrarily and is in violation of the specific provision of the Constitution in this behalf. There is no substance in the submission. The provision does not curtail the right of any member of a co-operative society to become a Member of Parliament or Legislative Assembly. It only provides that a member of Parliament or the Legislative Assembly would not hold office in the co-operative society. The restriction, if any, is to the holding of office in the society and not in the Parliament or Legislative Assembly. No question of interpretation of any constitutional provision should therefore arise. A perusal of the statement of objects and reasons would indicate that the provision had become necessary to make available the services of officers of the society on day-to-day basis. Since Members of Parliament and Legislative Assembly are required to remain out of their villages or place of their residence for long, they are not able to devote enough time or attention to the problems of the society. The purpose of the aforesaid provision is therefore to make available the services of officers of a society on day-to-day basis. Since the co-operative society is the manifestation of democratic process at the grass root level, its working on day-to-day basis is important. Under the circumstances, there is nothing arbitrary in the provision. Indeed the provision seeks to achieve the object of co-operative movement little more MPJR (2) R 7 effectively. This Court is therefore not able to find any illegality or invalidity in the aforesaid provision.

In view of the discussions aforesaid, these petitions succeed and are allowed by quashing Section 48 (4) and Section 49 (8) of the Act, as amended by M. P. Act No. 14/90. As a necessary consequence, provisions in these sections existing immediately before the aforesaid amendment would be deemed to be continuing legally and validly. As a necessary consequence, the officers of the earlier Managing Committee of the petitioners societies will continue to function, till elections are held, in accordance with law. They would be entitled to get charge of the society, where charge had been taken from them by the Registrar or his nominee, pursuant to this amendment. The petitioners are also held entitled to costs of this petition. Counsel fee Rs. 250/- each. Outstanding amount of security, if any, shall be refunded to the petitioners.