Holding

Section 73(2) is a directory provision and does not impose a mandatory duty on the Registrar; consequently the election programme stands and the state notification does not apply.

Summary

The Supreme Court examined whether sub‑section (2) of Section 73 of the Maharashtra Co‑operative Societies Act, 1960 – inserted by the 1986 amendment – imposes a mandatory duty on the Registrar to prescribe the maximum number of members of a co‑operative society’s committee and publish it in the Official Gazette, or whether it is merely a directory, discretionary power. The issue arose because the Beed District Central Co‑operative Bank had conducted elections to its Board of Directors under its bye‑law which already fixed the maximum number of directors at 21, without a separate order from the Registrar. The High Court had held the provision mandatory and declared the election programme illegal; the Bank appealed. The Court noted that the proviso to Section 27(3), which originally justified Section 73(2), had been struck down and later deleted, rendering Section 73(2) redundant and only enabling. Consequently, the Court held that the Registrar is not obliged to issue a fresh order and that the election programme could proceed, and that the state’s December 1991 notification postponing elections did not apply because nominations had already been filed. The appeal was allowed, the High Court judgment set aside, and the writ petition dismissed, with the Collector directed to complete the remaining stages of the election.

Issues considered

Whether sub‑section (2) of Section 73 of the Maharashtra Co‑operative Societies Act, 1960 is a mandatory provision or a directory (enabling) provision.
Whether the Registrar is required to issue an order prescribing the maximum number of committee members and publish it in the Official Gazette before elections can be held.
Whether the deletion of the proviso to Section 27(3) by the 1988 Act removes the purpose of Section 73(2).
Whether the State of Maharashtra's notification dated 27 December 1991 postponing elections applies to the Bank’s election programme already in progress.

Legislation cited

Subjects

co-operative societieselection lawstatutory interpretationmandatory vs directory provisionRegistrar's powerMaharashtra Co-operative Societies ActSection 73Section 27official gazetteelection postponement

Judgment

A BEED DISTRICT CENTRAL CO-OP. BANK LTD. AND ANR.
v.
I JAGANNATH S. SHAHANE AND ORS.

MARCH 13, 1992

B [N.M. KASLIWAL AND YOGESHWAR DAYAL, JJ.]

Maharashtra Co-operative Societies Act, 1960 : Section 73 (2) (As
inserted by Maharashtra Amendment Act XX of 1986).

C Specified Society-Co-operative Bank-Board of Directors-Elec-
tion-Provision requiring Registrar to prescribe the maximum number of
members on the Society held directo7)'7Purpose of Section 73 (2) Explained.

Section 27 (3)-l'roviso-Deletion of Proviso-Effect of.

D Elections to the Board of Directors of the appellant Bank, a specified
co-operative Society under the Maharashtra Co-operative Societies Act,
1960, were to be held as provided under Section 73 (G) of the Act read with
Maharashtra Specified Co-operati.ve Societies (Elections to Committees)
Rules, 1971. By the Maharashtra Act No. XLV of 1983 the Maharashtra
Co-operative Societies Act was amended and a proviso was added to
E sub-section (3) of Section 27. This amendment was challenged and the
High Court declared the proviso to sub-section (3) of Section 27 as void
and inoperative. Thereafter respondents No. 1 and 2 filed a writ petition
in the High Court which was allowed by directing that all steps taken by
the appellant bank for holding elections and all the steps taken on the
F basis of provisc: to section 27 (3) were null and void. The parties aggrieved
against the aforesaid decision filed appeals before this Court. During the
.pendency of the appeals Section 73 of the Maharashtra Co-operative
Societies Act was amended and sub-section (2) was added to it. Further by
Act No. X of 1988 1st proviso to Section 27(3) was deleted. After the
aforesaid changes in the 1960 Act, this Court, by its order dated March
G 13, 1989, disposed of the appeals directing that elections to the Co-opera·
Uve Societies may be held in accordance with the amended law. Thereafter
the Collector declared the election programme of the appellant bank under
which last date for filing nominations was 23.10.1991 last date for scrutiny .i
, was 25.HU991, last date for withdrawal was 11.11.1991 and the date of
H polling was fixed on 27.11.1991. By a notification dated 27th December,
2% ~
.. BEED CO-OP. BANK v. J.S. SHAHANE 297

1991 the State of Maharashtra postponed elections upto 1Sth April, 1992• A
fl Respondents No. 1 and 2 filed a writ petition in the Bombay High

\
Court challenging the election programme. By its judgment dated Novem-
ber 19, 1991 the High Court allowed the petition holding that (i) in view
of the mandatory provision of section 73(2) it was incumbent on the
Registrar of Co-operative Societies to prescribe the maximum number of B
""'< members on the Committ._,r the appellant bank by publishing an order
in the official gazette; (ii) since no such order was published, the election
process fixed by the Collector was illegal and invalid; and (iii) the election
process was in violation of this Court's order dated March 15, 1989.
,,.. Against the decision of the High Court the Co-operative Bank filed an c

~
appeal in this Court.
·~~
On behalf of the appellant bank it was contended that (i) with the
deletion of proviso to section 27(3), section 73(2) has become redundant;
(ii) that the word 'may' in section 73(2) clearly meant that it was an
enabling provision and the said sub-section does not cast any duty on the D
Registrar to exercise the power of prescribing maximum number in every
case but only confers upon him the discretion to make such an order if the
circumstances enumerated in the said provision necessitated the exercise
of such power; and (iii) since bye-law No. 28 of the Bank already prescribed
'\. the maximum number of members in the Committee to 21 members and E
_...., j
as such there was no question of passing any order under section 73(2).

For the respondents it was contended that unless the Regish-ar
applied his naind in the light of Section 73(2) no elections could have been
declared by the Collector. It was necessary for the Registrar to apply his
mind as to whether the maximum number prescribed in the bye-laws of a F
society was justified or not and thereafter issue an order and to publish
~ the same in the official gazette.
~.
Allowing the appeal, this Court,

HELD: 1. The main purpose of introducing proviso to sub-section G
(3) of Section 27 was to widen and make the scope of voters as broad based
RI while electing members to the Committees of a federal society. It was laid
~ down that all the members elected as well as co-opted shall have the right
to vote on behalf of such society while electing the members to the Com-
mittee of a federal society. The provision was declared invalid by the High H
298 SUPREME COURT REPORTS [1992) 2 S.C.R.

A Court and thereafter it was also deleted by a Legislative fiat by •
Maharashtra Act No. (X) of 1988. The position as now stands is that in
case of an election to the members of the Committee of a federal society,
any member of such society shall not have more than one vote. [305 C-E]

The purpose of inserting sub-section (2) of Section 73 of the Act was
B that there was a necessity to control the large number, if any, of the elected
,..,,,~

and co-opted members getting a right of~~Iowed under the proviso to
sub-section(3) of section 27 of the Act. •. ;ever, when the proviso to
sub-section (3) of Section 27 was struck down by the High Court and also
deleted by the legislature itself, the purpose of introducing sub-section(2)
c in Section 73, lost its thrust and relevance and even if it continued in the
Statute, it would be considered as directory and not mandatory. [305 E-F]

1.1 It is no doubt that sub-section (2) of Section 73 of the
Maharashtra Co-operative Societies Act starts with a non obstante clause
overriding anything contained in any bye laws of a society, but at the same
D time the discretion has been left to the Registrar to prescribe the maximum
number of members of the Committee of the society or class of societies.
This provision does not compel the Registrar nor makes it obligatory to
prescribe maximum number even when the Registrar may be satisfied with
the maximum number already prescribed in the bye-laws of such society.
E [305 F-GJ

2. The order dated 27th December 1991 issued by the Government
postponing the elections upto 15th April, 1992 would not apply to such
co-operative societies in whose case the election process from the stage of
F making nominations has already commenced on or before 26th December,
1991. In view of this, the notification dated 27th December, 1991 cannot
apply in the case of the appellant Beed District Central Co-operative Bank
as the election process of filing nominations was fixed for 23.10.1991 and
even the date of polling was 27.11.1991 i.e. much before 26th December,
Ci 1991. [306 B-C]

3. The Collector District Beed shall complete the left out stage for
election to the Board of Directors of the appellant Bank. [306-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1111 of
H 1992.
BEED CO-OP. BANK v. J.S. SHAHANE {KASLIWAL, J.J 299
'
. '\'
,;y From the Judgment and Order dated 19.11.91 of the Bombay High A
Court in W.P. No. 3398 of 1991.

Soli J. Sorabjee and A.M. Khanwilkar for the Appellants.

U.R. Lalit, V.N. Ganpule and K. Madhava Reddy, V.B. Joshi, S.M.
Jadhav and A.S. Bhasme for the respondents. p
I

S.K. Dholakia, R.B. Masodkar and K.L. Taneja for the lntervenors.

The Judgment of the Court was delivered by

KASLIWAL, J. Special leave granted. c
This appeal is directed against the Judgment of High Court of
Judicature of Bombay at Aurangabad dated November 19, 1991. Brief facts
of the case are that elections to the Board of Directors of the Beed District
Central. Co-op. Bank Limited a specified co-operative society under the I)
Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as
'the Principal Act') were to be held for the years 1991-1996. The elections
are held as provided under the provisions of Section 73(G) of the Act read
with Maharashtra specified Co-operative Societies (Elections to Commit-
tees) Rules, 1971 (hereinafter referred to as 'the Rules of 1971'). The
Constitution of the Board of Directors of the Beed District Central Co-op. E
Bank Ltd., (hereinafter referred to as 'the Beed Co-op. Bank, is provided
in bye law No. 28 of the bye laws of the Beed Co-op. Bank. The elections
to the Board of Directors for the years 1991-96 had become due in
November, 1990. With a view to conduct the elections, voters lists were
initially finalised on 28.2.1990 but the same were postponed on account of F
Government directions, Eventually the Collector declared the elections of
the Beed Co-op. Bank under Rule 16 of the Rules of 1971 on 8.10.1991.
According to the election programme last date for filing nominations was
23.10.1991, last date for scrutiny on 25.10.1991, last date for withdrawal
11.11.91 and the date of polling was fixed on 27.11.91, Jagannath, respon-
dent No.I an individual member of the Beed Co-op. Bank and G
Ramkrishana Maroti being member of Agriculture Service Co-operative
Society, Bhayala and delegate of the said society in the Beed Co-op. Bank
filed writ petition in the Bombay High Court challenging the aforesaid
election. The High Court took the view that the election process had been
started in derogation and violation of Section 73(2) of the Act and as such H
300 SUPREME COURT REPORTS [1992} 2 S.C.R.

A the \ame was declared as illegal and invalid. It was directed that it will be
open to the authorities to start a new election programme adhering to the
mandatory requirement of Section 73(2) of the Act taking every step in a
proper and careful manner. The Beed Co-op. Bank and its Chairman have
come in appeal before this Court challenging the order of the High Court.

B In order to appreciate the controversy we find it necessary to men-
tion the background of the litigation as well as the various changes brought
from time to time in the relevant provisions of law. The Maharashtra
Legislature by the Maharshtra Act No. (XLV) of 1983 sought several
amendments in the Maharashtra Co-operative Societies Act, 1960. The
C relevant amendment for our purpose is the following proviso added to {
sub-sec. (3) of Sec. 27 of the Act:

"Provided that, notwithstanding anything contained in this Act
or in the rules made thereunder or in any bye-laws of any
society, where such other society is a federal society belonging
D to any of the categories specified in Section 73-G, then all the
members elected to , and the members, if any, co-opted or
appointed under Section 73-B on the committee of such first
society shall have the right to vote on its behalf in the affairs
of such other society;
E Provided further that, where the election is to a reserved seat under
Section 73-B, no person shall have more than one vote".

The aforesaid amendment was challenged by filing writ petitions Nos.
2170 and 2054 of 1984 and the High Court by its order dated 8.1.1985
F declared the aforesaid proviso to sub-section (3) of Section 27 as void and
inoperative. After the said decision a writ petition No. 787 of 1984 was filed
by four petitioners including Jagannath and Ramkrishan, the present
respondents Nos. 1 and 2 and the High Court following its earlier decision
dated 8.1.1985 rendered in Writ Petition Nos. 2170 and 2054 of 1984, by
G an order dated 15.1.1985 allowed the writ petition and gave a declaration
that all steps taken by the Beed Central co-op. Bank Ltd., for holding
elections of the Bank and all the steps taken on the basis of Proviso to
sub-s.(3) of Section 27 were null and void. The parties aggrieved against
the aforesaid decision filed Special Leave Petition before this Court. This
Court granted Special Leave and registered Civil Appeals Nos. 1907 and
H 1908 of 1989. Before the aforesaid appeals came up for fmal hearing by
BEED CO-OP. BANK v. J.S. SHAHAN£ (KASLIWAL, J.] 301

this Court the Maharashtra Legislature brought the Maharashtra Act A
- 'f' No.(XX) of 1986 an Act further to amend the Maharashtra Co-operative
Societies Act, 1960. By this amendment Act, Section 73 of the Principal
Act was renumbered as sub-s.(1) thereof; and after sub-s.(1) as so renum-
bered, the following; sub-s.(2) inserted:

"(2) Notwithstanding anything contained in any bye-laws of a B
society or class of societies, the Registrar may, having regard
to the area of operation, subscribed share capital or turnover
of a society or class of societies, by general or special order,
published in Official Gazette, prescribe the maximum number
of members on the committee of such society or class of C
societies, as may be specified in such order".

The Maharashtra Legislature further brought an amendment by
Maharashtra Act No.(X) of 1988 to amend the Maharashtra Co-operative
Societies Act, 1960 and the 1st proviso to sub-s.(3) of section 27 was D
deleted. After the aforesaid changes in the principal Act, this Court by
order dated March 13, 1989 disposed of the Civil Appeal Nos. 1907 and
1908 of 1989. This Court passed the following order:-

"It is brought to our notice by the learned counsel for both the
parties that subsequent to the Judgment of the High Court E
Section 73 of the Maharashtra Co-operative Societies Act has
been amended by addition of sub-section (2) of Section 73 of
the Act in 1986. In view of the above amendment it is submitted
by learned counsel for both the parties that the elections to the
co-operative societies in question have to be held in accordance F
with the amended law. We accordingly make an order in
substitution of the order of the High Court that elections to the
co-operative societies may be held in accordance with the
amended law as early as possible. The appeals are disposed of
accordingly''.
G
Thereafter the Collector fixed the programme of election mentioned
above and the respondents Jagannath and Ramkrishan filed the writ peti-
tion challenging the programme of election and the writ petition filed by
them was allowed by order dated November 19, 1991 which is now the
subject matter of challenge before us. H
302 SUPREME COURT REPORTS [1992] 2 S.C.R.

A We have heard learned counsel for the parties and have throughly
perused the record. The short controversy raised before us is regarding Y-~
sub-s. (2) of Section 73 of the Act inserted in the Act by Maharashtra
Amendment Act (XX) of 1986, to be mandatory or directory. The High
Court has taken the view that the above provision is mandatory and it was
incumbent on the Registrar of the co-operative societies to prescribe the
B maximum number of members on the Committee of the Beed Co-operative
Bank by issuing a specific order and to publish such order in the Official ~
Gazette. The High Court further held that in the absence of such order in
respect of the Beed Co-operative Bank followed by publication in the
official Gazette, the election process fixed by the Collector was liable to be
c declared illegal and invalid. The High Court also took the view that this
Court also in its order dated 15.3.1989 had clearly given a direction to 1
comply with the provisions of sub-s. (2) of Section 73 and as such the
programme of election fixed by the Collector was in violation of the order y
of this Court also.
D
Shri Soli J Sorabji, Learned Senior Counsel, appearing on behalf of
the appellants submitted that sub-s. (2) of Section 73 was inserted only with
a view to curtail the unequal voting rights conferred on the members of the
society circumstanced on account of insertion of proviso to sub-s. (3) of
Section 27 of the Act. It was contended that admittedly the aforesaid
E proviso to sub-s. (3) of Section 27 was deleted on 22.4.1988 by Maharashtra
Act No.X of 1988. With the deletion of the above proviso sub-s. (2) of Sec.
73 became redundant. It was contended that the insertion of sub-s. (2) of
Section 73 was necessitated for validating the proviso to sub-s. (3) of
Section 27 as both these provisions were complimentary to each other. It
/ F was contended that prior to the insertion of sub-s. (2) of Section 73, the
constitution of the Committee--0f. the Beed Co-operative Bank was depend-
ent on its own bye laws which were duly approved by the Registrar of the
co- operative societies. The bye law No. 28 of the Beed Co-operative Bank
already prescribed the maximum number of members in the committee to
-)--
21 members and as such there was no question of passing any order under
G sub-s. (2) of Section 73. It was submitted that the word 'may' in sub-s. (2)
of Section 73 clearly meant that the said provision was an enabling
provision and not mandatory as held by the High Court. The said sub-sec-
tion does not cast any duty on the Registrar to exercise the power of
prescribing maximum number in every case but only confers upon him the
H discretion to make such an order if the circumstances enumerated in the
BEED CO-OP. BANK v. J.S. SHAHANE [KASLIWAL, J.] 303

said provision necessitated the exercise of such power. It was also con- A
tended that such power could alone be exercised by the Registrar where
either the maximum number of members on the Committee fixed in the
bye laws was required to be changed in the opinion of the Registrar or
where the bye laws of a society may not have fixed the maximum number
at all. In that kind of case, if any, order was passed by the Registrar then B
such order was required to be published in the official Gazette.

It was also contended that if this provision is held to be mandatory,
it would result in invalidating the constitution of numerous managing
Committees of the co-operative societies in the State of Maharashtra and
this could never have been the intention of the Legislature. C

On the other hand Sh. U .R. Lalit, Learned Senior counsel for the
respondents Nos. 1 and 2 and Sh. Dholakia, Learned Senior Counsel for
one of the interveners supported the impugned Judgment of the High
Court. It was contended that unless the Registrar applied his mind in the D
light of the provisions contained in sub-s.(2) of Section 73 no elections
could have be_en declared by the Collector. It w~s necessary for the
Registrar to apply his mind as to whether the maximum number prescribed
in the bye laws of a society was justified or not and thereafter issue an
order and to publish the same in the official Gazette. In the alternative it
was submitted that in the event of this Hon'ble Court taking a different E
view from that of the High Court, it was necessary to issue a fresh election
programme in view of the fact that all the contesting candidates were
informed that the election programme fixed by the Collector had been set
aside by the High Court. It was also submitted that the State of
Maharashtra has now issued a Notification on 27th December, 1991 F
postponing such elections upto 15th April, 1992.

It is worthwhile to note that the stand taken by the State of
Maharashtra before us is that the proviso to sub-s. (3) of Section 27 was
inserted in order to make the electorate broad based and more repre-
sentative in character, where the other society was a federal society belong- G
ing to any of the category mentioned in sub-s. (3) of Section 27 of the Act,
it was proposed to provide that the right to vote on behalf of the members
of society should be conferred on all the elected members and co-opted
members appointed on the committee under Section 73 instead of single
representative exercising such right of vote. The said provision was H

•
304 SUPREME COURT REPORTS f1992] 2 S.C.R.
A declared invalid by the High Court of Bombay by its Judgment dated
8.1.1985 and the said proviso was deleted by Act No. (X) of 1988. As the
said proviso has been deleted, the sub- s.(2) of Section 73 has lost its
relevance now and it has remained only as an enabling provision instead
of a mandatory one.

B We shall have to consider the question of sub-s. (2) of Section 73
being mandatory or directory in the background of changes made from
time to time in the Principal Act and the effect of the directions given by
this Court in its order dated 13.3.1989. The Beed District Central Co-
operative Bank is a specified Co-operative Society having a federal char-
C acter. The elections to the Board of Directors have to be held according
to the provisions of the Rules of 1971 in conformity with the provisions of {
the Act and the bye laws made by it. The constitution of the Board of
Directors is provided in bye law No.28 which clearly states that the T
management of business and affairs of the bank shall be entrusted to a
Board of Directors which shall hold office for five years consisting of not
D more than 21 members. Thus the bye-laws clearly specify that the maximum
number of the Board of Directors would be 21. The bye laws have been
made with the approval of the Registrar Co-operative Societies. Proviso to
sub-s. (3) of Section 27 was inserted by Act No.(XL V). of 1983. Section 27
dealt with voting powers of members. After deletion, of the proviso to
E Sub-s. (3) of Section 27, by Maharashtra Act (XX) of 1988, Sub-s. (3) of
Section 27 reads as under : (p.103) (Annexure-D)

S. 27 Members and their Rights and Liabilities :

Voting powers of members 1((1) Save as otherwise
F provided in sub-sections (2) to (7), both inclusive, no member
of any society shall have more than one vote in its affairs; and
every right to vote shall be exercised personally and not by
proxy:

Provided that, in the case of equality of votes the Chairman
G
shall have a casting vote;)

(2) Where a share of a society is held jointly by more than
one person 2 [the person whose names stands first in the share

H
certificate, if present, shall have the right to vote. But in his
absence the person whose name stands second, and in the
+
•
BEED CO-OP. BANK v. J.S. SHAHANE (KASLIWAL, J.] 305

- absence of both, the person whose name stands next, and A
likewise, in the absence of the preceding persons the person
whose name is next on the share certificate, who is present and
who is not, a minor, shall have the right to vote.]

(3) A society which has invested any part of its funds in the
shares of another society, may appoint one of its members; to B
vote on its behalf in . the affairs of that other society; and
accordingly such member shall have the right to vote on behalf
of the first society;

The main purpose of introducting proviso to sub-s.(3) of Section 27 c
was to widen and make the scope of voters as broad based while electing
members to the committee of a federal society. It was laid down that all
the members elected as well as co-opted shall have the right to vote on
behalf of such society while electing the members to the Committee of a
federal society. The provision was declared invalid by the High Court and D
thereafter it was also deleted by a Legislative fiat by maharashtra Act
No.(X) of 1988. The position as now stands is that in case of an election
to the members of the committee of a federal society, any member of such
society shall not have more than one vote. The purpose of inserting sub-s.
(2) of Section 73 of the Act was that there was a necessity to control the
large number, if any, of the elected and co-opted members getting a right E
of vote allowed under the proviso to sub-s. (3) of Section 27 of the Act.
However, when the proviso to sub-s.(3) of Section 27 was struck down by
the High Court and also deleted by the legislature itself, the purpose of
introducing sub-s.(2) in Section 73, lost its thrust and relevance and in our
view even if it continued in the Statute, it would be considered as directory F
arid not mandatory. It is no doubt that sub-s. (2) of Section 73 starts with
a non obstante clause overriding anything contained in any bye laws of a
society, but at the same time the discretion has been left to the Registrar
to prescribe the maximum number of members of the Committee of the
society or class of societies. In our view this provision does not compel the
Registrar nor makes it obligatory to prescribe maximum number even when G
the Registrar may be satisfied with the maximum number already
prescribed in the bye laws of such society. As already mentioned above the
State of Maharashtra has also taken the stand in their written submissions
placed before us that after the deletion of the proviso to sub-s. (3) o{
Section 27 the provision of sub-s. (2) of Section 73 has lost its relevance H '
306 SUPREME COURT REPORTS [1992] 2 S.C.R.

A and it has remained only as an enabling provision instead·a mandatory one.

Thus we find force in the submissions made on behalf of the Beed
Co-operative Bank, the appellant before us that the provision of section
73(2) are directory and not mandatory.

B As regards the order dated 27th December, 1991 issued by the
Government postponing the elections upto 15th April, 1992 and placed on
the record of the case suffice to say that the same would not apply to such
co-operative societies in whose case the election process from the stage of
making nominations has already commenced on or before 26th December,
1991. In view of this, the notification dated 27th December, 1991 cannot
c apply in the case of the appellant Beed District Central Co-operative Bank
as the election process of filing nominations was fixed for 23.10.91 and even
the date of polling was 27.11.1991 i.e. much before 26th December, 1991.
In view of these circumstances we allow this appeal, set aside the Judgment
of the High Court and dismiss the Writ petition filed by the respondents
D Nos.1 and 2. In the facts and circumstances of the case we pass no order
as to costs. As a result of the above order the Collector District Beed shall
complete the left out stage for election to the Board of Directors of the
Beed District Central Co-operative Bank limited.

T.N.A. Appeal allowed.

,