Holding

The Registrar may prescribe reservation only for co‑operative societies in which the State Government holds at least 51% of paid‑up share capital; the 1997 order, being a blanket rule, is ultra vires and is struck down.

Summary

The appellant, Madhya Pradesh Rajya Sahakari Bank Maryadit, challenged a 1997 order by the Registrar of Co-operative Societies that amended recruitment rules to include reservation for SC, ST, OBC and physically handicapped persons. The High Court set aside the order as ultra vires, and the appellant appealed. The Supreme Court examined whether the Registrar’s power under section 55 of the Madhya Pradesh Co-operative Societies Act, 1960 could be exercised in light of the Madhya Pradesh Lok Seva (Reservation) Act, 1994, which limits reservation to establishments where the State holds at least 51% of paid‑up share capital. The Court held that the 1994 Act, intended to provide reservation in public services, defines “establishment” to include only such co‑operative societies, and therefore the Registrar’s power is confined to those societies. Since the 1997 notification was general and did not distinguish societies with the requisite State shareholding, it was ultra vires and struck down. The appeal was dismissed.

Issues considered

Whether the Registrar of Co-operative Societies can frame reservation rules under s.55 of the Madhya Pradesh Co-operative Societies Act, 1960 notwithstanding the Madhya Pradesh Lok Seva (Reservation) Act, 1994.
Whether reservation under the 1994 Act applies to all co‑operative societies or only to those where the State Government holds at least 51% of paid‑up share capital.
Whether a writ petition is maintainable against a co‑operative society under Article 12 of the Constitution.

Legislation cited

Subjects

reservationco-operative societiespublic serviceArticle 16(4-A)share capitalservice conditionsultra viresMadhya Pradesh law

Judgment

MADHYA PRADESH RAJYA SAHAKARl BANK MARYADIT A
~ ~ v.
STATE OF M.P. AND ORS.

FEBRUARY 22, 2007

[A.K. MATHUR AND H.S. BEDI, JJ.] B

Co-operative Societies:

Madhya Pradesh Co-operative Societies Act, 1960 - s.55-Power
under-Scope, in light of the Act of 1994-Held: Registrar of Co-operative c
Societies under s.55 has power to frame rules but at the same time he cannot
ignore the impact of the Act of 1994-The Registrar can lay down reservation
in favour of SCs, STs and OBC as general condition of service only in Co-
operative societies in which the State has more than 51% paid up share
capital and not for any other co-operative societies-Madhya Pradesh Lok D
Seva (Anusuchit Jatiyon, Anusuchit Jan Jatiyon Aur Anya Pichhade Vargon
Ke Liye Arakshan) Adhiniyam, 1994 - s.2(b)-Constitution of India, 1950-
Article 16(4A).

Jn exercise of its power under s.55 of the Madhya Pradesh Co-operative
Societies Act, 1960, Registrar, Co-operative Societies issued an order dated E
6.3.1997 whereby under Chapter 4 Conditions of Recruitment, Rule 5 of the
Madhya Pradesh Rajya Sahakari Bank Employees (Terms ofEmployment and
Working Conditions) Rules, 1976 was amended whereby conditions of
recruitment were relaxed. High Court declared the order as ultra vires and
...._ allowed the writ petition.
F
The question which arose for consideration in the present appeal is
whether the power exercised by the Registrar, Co-operative Societies, Madhya
Pradesh under s.55 of the Act of 1960 can be sustained in the iight of the
Madhya Pradesh Lok Seva (Anusuchit Jatiyon, Anusuchit Jan Jatiyon Aur
Anya Pichhade Vargon Ke Liye Arakshan) Adhiniyam, 1994 (Act of 1994).
G
It was contended by the Appellant that the power of the Registrar under
-< s.55 of the Act of 1960 is not regulated by the Act of 1994 and that under
s.55(1) of the Act of 1960, the Registrar has full power to give direction for
reservation in order to implement the Constitutional provision under Article
•· 1049 H
'(
1050 SUPREME COURT REPORTS (2007] 2 S. C.R.

A 16(4-A) of the Constitution. The Respondents however contended that the Act
of 1994 clearly lays down that reservation will only be applicable in 1 -r
establishments where the State Government has more than 51 per cent share-
holding and not in other establishments.

Dismissing the appeal, the Court
B
HELD: 1. The Act of 1994 was promulgated by the State Government
for the benefit of providing reservation in the vacancies in public services
and posts in favour of persons belonging to Scheduled Castes, Scheduled
Tribes and other Backward Classes. Therefore, this Act only contemplates ,r
reservation in public services. (Para 8) (1055-B)
c 1.2. In 'order to claim reservation in public offices, the definition of
establishment as mentioned in Section 2(b) of the Act of 1994 will have to
fulfilled. Section 2(b) clearly says that the establishment would include any
office of the State Government or local authority or statutory authority
constituted under the Act of the State or a University, or a company,
D Corporation or a Co-operative Society in which not less than 51 percent paid
up share capital is held by the State Government and including work charge
and contingency paid establishments shall be 'establishment' and in that case
reservation can be made for the members of Scheduled Castes, Scheduled
Tribes and .other Backward classes. The very object of the Act is to provide
reservation in public service and posts. Therefore, it confined only for
E
reservation in public services and not any other private institutions. Reading
the object and reason along with the definition of establishment it clearly
transpires in the context of the Co-operative Society in which the State
Government has paid up share capital of 51 percent or more, then the
reservation can be made in such Co-operative Society. [Para 8)
F (1055-C-E-G)

Indra Sawhney& Ors. v. Union ofIndia & Ors. (19921 Supp.3 SCC 217
and M.Nagaraj & Ors. v. Union of India & Ors., [2006] 8 SCC 212, referred
to.

2.L Reading of the objective of the Act of 1994 along with the definition
G
of establishment it transpires that the Registrar under Section 55 of the Act
~c-,..
.-.:
/
of 1960 can lay down service condition for Co-operative Society in which the
State has 51 percent of share capital. In case any Co-operative Society in >-·
which the State does not have 51 percent of share capital, then that Co-
·'
operative Society will not come within the definition of establishment under
H Section 2(b) of the Act of 1994 and the Registrar of Co-operative Societies
MAD HY A PRADESH RAJY A SAHAKARI BANK MARY ADIT "· STATE OF M P. 5}
}Q

· .:· shall have no power to frame rule for reservation. It is true that under Section A
~ ~· 55 of the Act of 1960 the Registrar can give direction for reservation for the
Scheduled Castes and Scheduled Tribes and other Backward classes while
exercising the mandate under Article 16(4-A) of the Constitution but at the
same time he cannot ignore the State legislation i.e. the Act of 1994. In fact,
the Act of 1994 was also promulgated for achieving the object under Article
16(4-A) of the Constitution. Once the State Legislature has framed an Act
B
which is subsequent legislation in point of time i.e. the Madhya Pradesh Co-
operative Societies Act, 1960 came in 1960 whereas the present Act has come
in 1994. It is presumed that Legislature was aware of the power of the

"' Registrar of the Co-operative Societies under Section 55 of the Act of 1960
to frame condition of service of employees of Co-operative Societies despite c
that the Legislature h,as promulgated the Act of 1994 and laid down ceiling
that the reservation in favour of Scheduled Castes, Scheduled Tribes and other
Backward classes should be made in the establishment where Government

' has more than 51% share holding. [Para 8) [1056-B-E)

. 2.2. Thus, on reading of both these two enactments it is more than clear D
that the Registrar of Co-operative Societies under Section 55 of the Act of
1960 has power to frame rules but at the same time he cannot ignore the
impact of the Act of 1994. The Registrar of Co-operative Societies can lay
down the reservation in favour of Scheduled Castes, Scheduled Tribes and
other Backward classes as general condition of service only in Co-operative
E
societies in which the State has more than 51 percent paid up share capital
and not for any other co-operative societies. But the notification dated 6.3.1997
is of general in nature and does not make any distinction with Co-operative
societies which do not have 51 per cent paid up share capital of State.
Therefore, to this extent the rule framed by the Registrar of Co-operative
Societies, Madhya Pradesh by notification dated 6.3.1997 cannot be upheld F
~
and the same is struck down. But by this it does not mean that the Registrar
of Co-operative Societies, Madhya Pradesh is not denuded of his power to
frame rules but he will have to keep in view the impact of the Act of 1994.
[Para 8) [1056-F-H; 1057-A)

Supriyo Basu & Ors. v. WE.Housing Board & Ors., [2005) 6 SCC 289, G
referred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2661 of2004.

From the final Judgment and Order dated 11.3.2003 of the High Court
of Madhya Pradesh at Jabalpur in WP No. 1415/1997. H
r'
1052 SUPREME COURT REPORTS (2007] 2 S.C.R.

A S.K. Gambhir, M.P. Jha, S.C. Dwivedi, R.E. Roy, Harshvardhan Jba, B.K.
Sharma and Anil K. Chopra for the Appellant.
1 ...
Rajeev K. Virmani, Rajeev M. Roy and Vibha Datta Makhija for the
Respondents.
..
,.._
B The Judgment of the Court was delivered by

A.K. MATHUR, J. 1. This appeal is directed against the order passed
by the Division Bench of Madhya Pradesh High Court at Jabalpur in Writ
Petition No. 1415of1997 by the order dated 11.3.2003 whereby the Division y
Bench of the Madhya Pradesh High Court has set aside the order passed by
c the Registrar of Co-operative Societies in exercise of power under Section
55(1) of the Madhya Pradesh Co-operative Societies Act, 1960 (hereinafter
referred to as the 'Act of 1960') dated 6.3.1997 as ultra vires and allowed the
writ petition. Aggrieved by that the present appeal was filed by the Madhya •..
Pradesh Rajya Sahakari Bank Maryadit (hereinafter to be referred to as the
l
'app,ellant').
D
2. We have heard learned counsel for the parties and perused the
records.

3. Learned counsel for the appellant has submitted that the Registrar of
Co-operative Societies under Section 55 of the Act of 1960 has full power to
E
frame rules relating to service conditions for the Co-operative Societies.
Therefore, in exercise of the aforesaid power, the Registrar of Co-operative
Societies has issued order dated 6.3.1997 whereby under Chapter 4 Conditions i:-l
of Recruitment, Rule 5 of the Madhya Pradesh Rajya Sahakari Bank Employees
(Terms of Employment and working conditions )Rules,_ 1976 (hereinafter to be ;

F referred to as the 'Rules of 1976') was amended and the following amendment ;,,,.
was added:

" The Managing Committee of the Bank shall decide the percentage
of employees to be necessarily recruited from Scheduled Tribes,
Scheduled Castes, Backward Classes and handicapped persons
G provided that a minimum percentage of the posts, as may be advised
;
by the State Government from time to time, shall be reserved for the
candidates of Scheduled Tribes, Scheduled Castes, Backward Classes
>-·
and handicapped persons. Relaxation in the conditions of recruitment
as per instruction issued by Registrar. Co-operative Societies, Madhya '
H Pradesh, Bhopal from time to time may be granted to the Ex-serviceman
.,

MADHYAPRADESHRAJYA SAHAKARI BANK MARYADIT v. STATE OF MP. [A.K. MATHL'R. l.] 1Q53

and Scheduled Castes/ Scheduled Tribes, Backward Classes and A
physically handicapped persons."

The order dated 6.3 .1997 passed by the Registrar of Co-operative Societies
is also reproduced as under:

"OFFICE OF THE COMMISSIONER, COOPERATION & REGISTRAR, B
COOPERATIVE SOCIETIES, MADHYA PRADESH

No. CR/AP-1/30/2 Bhopal, Dated 6.3 .1997.

ORDER

In exercise of the powers of the Registrar, Cooperative Societies,
c
Madhya Pradesh under sub-section (I) of Section 55 of the Madhya
Pradesh Cooperative Societies Act, 1960 (No. 17 of 1961) conferred
upon no.Vide Government of Madhya Pradesh, Cooperation Department
order No.241917060/XV/62 dated 16.6.1962, I U.P.Gupta, Joint Registrar,
Cooperative Societies, M.P. hereby amend in Chapter 4- condition of D
Recruitment Rule No.5 and Chapter-3 File No.15 (b)-2 of the M.P.Rajya
Sahakari Bank Maryadit Employees Service Rules, 1976 as per enclosed
herewith.

The above amendment shall come into force from the date of issue
of the order. E
(J.P.GUPTA) .

JOINT REGISTRAR COOPERATIVE SOCIETIES, M.P.

No. CR/AP-1130/21774 F
Copy forwarded to :-

!. The Managing Director, P.Rajya Sahakari Bank Maryadit, Bhopal
for information and necessary action.
2. Deputy Registrar, l/C Audit, M.P.Rajya Sahakari Bank Maryadit, G
Bhopal for information.

JOINT REGISTRAR

COOPERATIVE SOCIETIES, M.P."
H
(
1054 SUPREME COURT REPORTS (2007] 2 S.C.R.

A 4. Learned counsel for the appellant submitted that this power of the
Registrar under Section 55 of the Act of 1960 is not regulated by the Madhya ...._.
Pradesh Lok Seva (Anusuchit Jatiyon, Anusuchit Jan Jatiyon Aur Anya
Pichhade, Vargon Ke Liye Arakshan) Adhiniyam, 1994 ( No.21 of 1994
(hereinafter to be referred to as the 'Act of 1994 '). Therefore, it was contended
that the Registrar of the Co-operative Societies under Section 55 (I) of the
B Act of 1960 has full power to give direction for reservation under the Act in
order to implement the Constitutional provision under Article 16(4A) of the
Constitution of India.

5. It was also contended that writ is not maintainable because Co-
C operative Society is not a 'State ' within the meaning of Article 12 of the
Constitution. As against this, it was contended that the Act of 1994 clearly
lays down that reservation will only be applicable in the establishment where
the State Government has more than 51 per cent share-holding. Therefore, Act
of 1994 which regulates the reservation of vacancies of ST/SC in State stipulates
that reservation shall be made in establishment wherein holding of the State
D Government is more than 51 per cent and not in other establishments.
6. We have considered the rival submissions of learned counsel for the
parties.

· 7. Article 16 of the Constitution of India was amended and Clause
E (4-A) was subsequently added in view of the decision rendered by this Court
in Indra Sawhney& Ors. v. Union ofIndia & Ors. [ 1992] Supp.3 SCC 217, and
in order to obviate the law laid down by this Court whereby reservation for
Scheduled Castes and Scheduled Tribes was also made permissible in the
matter of promotion. The validity of Article 16(4-A) was again challenged
before this Court and the matter was referred to the Constitution Bench. The
F Constitution Bench in its decision in M.Nagaraj & Ors. v. Union of India &
Ors. (2006] 8 SCC 212, upheld the v.alidity of Article 16(4-A) of the Constitution
of India but with certain conditions that it is left open to the State to identify
and collect quantifiable data showing backwardness of the class and
inadequacy of representation of that._class in public employment, keeping in
G mind maintenance of efficiency in administration and such reservation is
subject to the judicial review. Their Lordships further laid down the ceiling
of limit of maximum of 50 per cent. Their Lordships warned that in case the
parameters laid down in M.Nagaraja (supra) are not fulfilled, then such matter •
will be subject to the judicial review by the Court. In the light of the recent
H decision of the Constitution Bench in M.Nagaraja (supra) one thing is clear
y
MADHYA PRADESH RAJYA SAHAKARI BANK MARYADIT ,., STATE OF M.P. {A.K. MATHUR. J] 1055
that reservation can be made in promotion by the Government subject to the A
),
limits laid down by this Court in th.e aforesaid case.

8. Now, the question before us in the present case is whether the power
exercised by the Registrar of Co-operative Societies under Section 55 of the
Act of 1960 can be sustained or not in the light of Act of 1994. Act of 1994
was promulgated by the State Government for the benefit of providing B
reservation in the vacancies in public services and posts in favour of persons
belonging to Scheduled Castes, Scheduled Tribes and other Backward Classes.
Therefore, this Act only contemplates reservation in public services. In order
to claim reservation in public offices, the definition of establishment as
mentioned in Section 2(b) of the Act of 1994 will have to fulfilled. Section 2(b)
of the Act of 1994 reads as under :
c
"(b) "Establishment" means any office of the State Government or
of a local authority or statutory authority constituted under any Act
of the State for the time being in force, or a University or a Company,
Corporation or a Cooperative Society in which not less than fifty one D
percent of the paid up share capital is held by the State Government
and includes a work charge or contingency paid establishments."

Therefore, Section 2(b) clearly says that the establishment would include
any office of the State Government or local authority or statutory authority
-
constituted under the Act of the State or a University, or a company, E
Corporation or a Co-operative Society in which not less than 51 percent paid
up share capital is held by the State Government and including work charge
and contingency paid establishments shall be 'establishment' and in that case
reservation can be made for the members of Scheduled Castes, Scheduled
Tribes and other Backward classes. The very object of the Act is to provide
reservation in public service and posts. Therefore, it confined only for F
~'

reservation in public services and not any other private institutions. For the
purpose of public service, an establishment should answer the requirement
as given in Section 2(b) of the Act of 1994. Therefore, reading the object and
reason along with the definition of establishment it clearly transpires in the
context of the Co-operative Society in which the State Government has paid G
up share capital of 51 percent or more, then the reservation can be made in
such Co-operative Society. The object & reason of the Act reads as under:
-'

"An Act to provide for the reservation of vacancies in public
services and posts in favour of the persons belonging to the Scheduled
H
1056 SUPREME COURT REPORTS (2007] 2 S.C.R.

A Castes, Scheduled Tribes and other Backward Classes of citizens and
for matters connected therewith or incidental thereto."

Therefore, reading of objective of the Act of 1994 along with the
definition of establishment it transpires that the Registrar under Section 55 of
the Act of 1960 can lay down service condition for Co-operative Society in
B which the State has 51 percent of share capital. In case any Co-operative
Society in which the State does not have 51 percent of share capital, then that
Co-operative Society will not come within the definition of establishment
under Section 2(b) of the Act of 1994 and the Registrar of Co-operative
Societies shall have no power to frame rule for reservation. It is true that
C under Section 55 of the Act of 1960 the Registrar can give direction for
reservation for the Scheduled Castes and Scheduled Tribes and other Backward
classes while exercising the mandate under Article 16(4-A) of the Constitution
but at the same time he cannot ignore the State legislation i.e. the Act of 1994.
In fact, the Act of 1994 was also promulgated for achieving the object under
Article 16(4-A) of the Con~titution. Once the State Legislature has framed an
D Act which is subsequent legislation in point of time i.e. the Madhya Pradesh
Co-operative Societies Act, 1960 (Act 17 of 1961) came in 1960 whereas the
present Act has come in 1994. It is presumed that Legislature was aware of
the power of the Registrar of the Co-operative Societies under Section 55 of
the Act of 1960 to frame condition of service of employees of Co-cperative
E Societies despite that the Legislature has promulgated the Act of 1994 and
laid down ceiling that the reservation in favour of Scheduled Castes, Scheduled
Tribes and other Backward classes should be made in the establishment
where Government has more than 51 % share holding. Thus, on reading of
both these two enactnients it is m·ore than clear that the Registrar of Co-
operative Societies under Section 55 of the Act of 1960 has power to frame
F rules but at the same time he cannot ignore the impact of the Act of 1994.
The Registrar of Co-operative Societies can lay down the reservation in
favour of Scheduled Castes, Scheduled Tribes and other Backward classes as
general condition of service only in Co-operative societies in which the State
has more than 51 percent paid up share capital and not for any other co-
G operative societies. But the notification dated 6.3.1997 is of general in nature
and does not make any distinction with Co-operative societies which do not
have 51 per cent paid up share capital of State. Therefore, to this extent the
rule framed by the Registrar of Co-operative Societies, Madhya Pradesh by
notification dated 6.3.1997 cannot be upheld and the same is struck down. But
by this it does not mean that the Registrar of Co-operative Societies, Madhya
H Pradesh is not denuded of his power to frame rules but he will have to keep
MADHYA PRADESH RAJYA SAHAKARI BANK MARYADIT ,.. STATE OF MP. [AK MA THUR, J.j ) 057

in view the impact of the Act of 1994. A
9. Learned counsel for the respondents has also submitted that the Co-
operative society is not a State within the meaning of Article 12 of the
Constitution, therefore, the writ petition is not maintainable. We need not go
into this aspect as in view of the recent decision of this Act in Supriyo Basu
& Ors. v. WE.Housing Board & Ors. [2005] 6 SCC 289, their Lordships have B
laid down what are the parameters for challenging the orders passed by the
Co-operative Societies. It has been held that writ would be maintainable
against a Co-operative society if it is established that a mandatory statutory
provision of a statute has been violated. Therefore, nothing turns on this
aspect of the matter. C
10. As a result of our above discussion, we do not find any merit in this
appeal and the same is dismissed with no order as to costs.

B.B.B. Appeal dismissed.

'