SHRI. MASAIDEVI VIVIDH KARYAKARI SAHAKARI SEVA SANSTHA MARYADIT WAREWADIversusTHE STATE OF MAHARASHTRA & ORS.

                  [2025] 5 S.C.R. 409 : 2025 INSC 436

  Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
                     Maryadit Warewadi
                             v.
              The State of Maharashtra & Ors.
                        (Civil Appeal No. 4669 of 2025)
                                   02 April 2025
            [Vikram Nath and Prasanna B. Varale,* JJ.]


                             Issue for Consideration
       Whether the High Court rightly set aside the orders passed by the
       State directing registration of the appellant-society.

                                    Headnotes†
       Maharashtra Co-operative Societies Act, 1960 – ss.4, 6 –
       Societies which may be registered – Conditions of registration–
       Appellant-society applied for registration of proposed society
       as a new Primary Agricultural Credits Co-operative Society –
       Scrutiny Committee rejected the application mainly on the
       ground of unsubstantiated financial viability of the appellant –
       Order set aside by State, registration directed – Order set
       aside by High Court– Sustainability:
       Held: Impugned order upheld – Under ss.4 and 6, the economic
       viability of the society is a pre-requisite or basic condition for grant
       of registration to the society – Scrutiny Committee being an expert
       Committee was established specifically for the inspection of financial
       ability of a prospective society – It found that there was nothing in the
       proposal submitted by the appellant to substantiate the conditions
       of financial health as provided in the Government Resolution dated
       14.02.2017 – There was no material on record before the Committee
       to show that the appellant was in a position to comply with the
       pre-requisites as referred therein – While deciding the appeal,
       State completely ignored the basic criteria or the pre-requisite for
       the registration of society, i.e. its economic viability, laid down by
       the State itself through its various Government Resolutions – By
       relaxing the pre-requisite condition relating to financial viability, the



* Author
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       State allowed the registration of the society frustrating the very
       object of the Act – Committee had rightly rejected the application
       for registration – State unjustifiably interfered in the Committee’s
       order – High Court rightly set aside the order of the State. [Paras
       17, 18, 22, 25, 27-29, 32, 34, 35]

       Maharashtra Co-operative Societies Act, 1960 – s.4:
       Held: The constitution of the Scrutiny Committee and the
       examination of the proposal by the Committee is a vital part of the
       Policy Directives of the State Government which is required to be
       complied with conditions u/s.4 – If a society is unable to comply
       with the pre-condition or prerequisite in regard to the economic
       viability of the society, allowing the registration of such a society
       which might not even be able to function, may adversely affect its
       members ultimately, frustrating the very object of the establishment
       of the said society – Thus, ignoring the findings of the Committee
       and allowing the registration of the society led to an unjustifiable
       interference in the Committee’s Order – Further, State Government
       may use its discretion for relaxation of conditions – However, such
       discretion cannot be used to frustrate the very object of the Act –
       Power of relaxing the necessary pre-requisites could have been
       made only through a Government Resolution and not at the whims
       of the State in an appeal which essentially led to by-passing the
       eligibility criteria set out by the Government through its multiple
       Resolutions. [Paras 30-32]

                                   List of Acts
       Maharashtra Co-operative Societies Act, 1960.

                                List of Keywords
       Sections 4 and 6 of the Maharashtra Co-operative Societies Act,
       1960; Registration of proposed society; Primary Agricultural Credits
       Co-operative Society (PACCS); Financial viability of the Society;
       Economic viability; Basic criteria or pre-requisite/pre-condition for
       the registration of society; Scrutiny Committee; Expert Committee;
       Government Resolutions; Registered co-operative society; Eligibility
       criteria of the applicant societies; Locus standi; Financially viable;
       Discretion for relaxation of conditions; Frustrate the object of Act;
       Patent illegality.
[2025] 5 S.C.R.                                                      411

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

                          Case Arising From
     CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4669 of 2025
     From the Judgment and Order dated 05.01.2024 of the High Court
     of Judicature at Bombay in WP No. 8654 of 2023
     With
     Civil Appeal Nos. 4670, 4671, 4672, 4673, 4674, 4675, 4676,
     4677, 4678, 4679, 4680, 4681, 4682, 4683, 4684, 4685, 4686,
     4687, 4688, 4689, 4690, 4691, 4692, 4693, 4694, 4695, 4696,
     4697, 4698, 4699, 4700, 4701, 4702, 4703, 4704, 4705, 4706,
     4707, 4708, 4709, 4710 and 4711 of 2025.

                       Appearances for Parties
     Advs. for the Appellant:
     Shekhar Naphade, Vinay Navare, Sr. Advs., Omkar Jayant
     Deshpande, Shashibhushan P. Adgaonkar, Mrs. Pradnya S
     Adgaonkar.
     Advs. for the Respondents:
     Ms. Madhavi Goradia Divan, Ardhendumali Kumar Prasad,
     Sr. Advs., Makarand D Adkar, Pravin Waman Satale, Shantanu M
     Adkar, Rishabh Jain, Shubham Saigal, Akshay Kumar, Deepesh
     Singh, Rajiv Shankar Dvivedi, S K Sarkar, Bhushan, Aaditya
     Aniruddha Pande, Siddharth Dharmadhikari, Bharat Bagla, Sourav
     Singh, Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey.

                Judgment / Order of the Supreme Court

                              Judgment

     Prasanna B. Varale, J:

1.   Leave granted.
2.   The challenge in the present appeals is to the common order dated
     05.01.2024 in Writ Petition No. 8654/2023 and 42 other connected
     matters, whereby the High Court of Judicature at Bombay allowed
     the petitions preferred by the respondent no. 6 herein and in other
     connected matters and set aside the orders passed by the State of
     Maharashtra directing registration of the appellant-societies.
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3.     For the sake of brevity and as the legal issue involved is the same,
       we are referring to the facts of the W.P. No. 8654 of 2023 resulting
       into SLP (C) No. 4090 of 2024. The factual background is that on
       13.01.2023, the appellant-society herein filed an application to the
       Respondent-Assistant Registrar for getting permission for registration
       of proposed society as a new Primary Agricultural Credit Co-operative
       Society (hereinafter ‘PACCS’), as well as for opening a bank account. A
       scrutiny was done by the Scrutiny Committee (hereinafter ‘Committee’)
       wherein the application filed by the appellant-society was rejected
       on 13.04.2023. The reasons given by the Committee for rejection
       of application are reproduced below:
            “1. The District Deputy Registrar and Divisional Joint
            Registrar, Kolhapur have not verified and ascertained as
            to whether the Revenue village of the aforesaid proposed
            society is within the purview of the existing society.
            2. The information as to whether the Promoters – members
            of the proposed society are the members of other existing
            societies or not, has not been verified and submitted.
            3. The Chief Promoter has not verified and ascertained
            crop-wise cultivated area of the Promoters – members in
            the proposed society as mentioned in the Crops Sowing
            Register.
            4. The Kolhapur District Central Co-operative Bank has
            not given undertaking in respect of providing loan as per
            it’s Crop-Loan Policy, to the Promoters – members of the
            proposed society or has not annexed the Undertaking to
            the effect that apart from the Kolhapur District Central
            Co-operative Bank, other Nationalised Banks or other
            Financial Institutions are going to provide loan to the
            proposed society.
            5. The existing Credit Co-operative Society for the Revenue
            village of the proposed Society, has not issued No-
            objection certificate to the proposed Society for registration.
            6. The existing Society has not submitted information
            about member-wise loans provided to the members to be
            transferred to the proposed Society.
[2025] 5 S.C.R.                                                             413

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

           7. The extracts of entries from the Crops Sowing Register
           and 7/12 extract in respect of the lands of the Promoters –
           members included in the Registration Proposal, have not
           been annexed to the Proposal for Registration. Therefore,
           the probable distribution of loan proposed by the Society
           cannot be ascertained.
           8. The Chief Promoter has not submitted alongwith the
           proposal, the information as to whether the Promoters –
           members to be included in the proposed society are
           included in other existing society or not.
           9. The self-explanatory opinion of the Divisional Joint
           Registrar, District Deputy Registrar and Taluka Assistant
           Registrar, Co-operative Societies, Kolhapur, as to whether
           said society shall be financially viable after registration or
           not has not been submitted.
           10. The Chief Promoter of the proposed Society, on the
           basis of the certificate issued by the Gaon Kamgar Talathi,
           has certified that agricultural loan of the approximate
           amount of more than Rs.150.00 lakhs will be provided
           however, he has not enclosed with the proposal, the
           documents in support of providing the said loan and the
           documents for verification thereof and therefore, it cannot
           be ascertained that after registration, the proposed society
           will be able to provide loan of the amount of more than
           Rs.150.00 lakhs.
           11. The loan provided by the existing society within the
           area of operation of the proposed society is less than the
           amount of Rs.150.00 lakhs and therefore, existing society
           itself is not financially viable. Therefore, it would not be
           appropriate to allow registration of another society of the
           same type with same objectives within the area of operation
           of the existing society which itself is not financially viable.
           12. On the basis of the documents in the Registration
           Proposal, the Assistant Registrar, Co-operative Societies,
           Tal. Shahuwadi, under his letter dated 11.04.2023, has
           appraised that the proposed society will not be financially
           viable and therefore, as per the instructions mentioned in
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            the Government Resolution, it would not be appropriate
            to grant permission for registration of the said society.
            13. Though the caveat has been filed in respect of the
            registration of the proposed society, as the society is not
            complying with the criteria mentioned in the Government
            Resolution dated 23.09.2013 and as the said proposal is not
            financially viable, the proposal of the aforesaid proposed
            Society has been rejected and therefore, the question to
            give an opportunity of hearing to the Caveator at the level
            of the Scrutiny Committee, does not arise at all.
            14. Thus, it is found that the existing society itself is not
            financially viable. Therefore, it would not be appropriate·
            to allow registration of another society of the same type
            with same objectives within the area of operation of the
            existing society which itself is not financially viable.
            Hence, considering the aforesaid aspects and on perusing
            the documents in the proposal, it does not appear that after
            registration, the proposed society will be financially viable
            in future. Similarly, as per the instructions mentioned in
            the Government Resolution, as the proposed society is
            not complying with the financial criteria required for the
            registration thereof, it is unanimously resolved that the
            registration proposal should be rejected.”
4.     Being aggrieved by the order of the Committee, the appellant-
       society preferred an appeal under Section 152 of the Maharashtra
       Co-operative Societies Act, 1960 (hereinafter ‘the 1960 Act’) before
       the State. Respondent No.6 herein, who is a member of Salashi
       Vividh Karyakari Sahakari (Vikas) Seva Saunstha Maryadit Salashi,
       a registered co-operative society having its jurisdiction in Salashi and
       Warewadi, District Kolhapur, got himself impleaded as a respondent-
       party in the appeal proceedings.
5.     The Minister, Co-operatives, on behalf of the State, vide its order
       dated 28.06.2023, allowed the appeal filed by the appellant herein
       and, thereby, set aside the Order dated 13.4.2023 passed by the
       Committee. It was also directed to the Respondent-Assistant Registrar
       to register the appellant-society. The reasoning given for allowing
       the appeal is reproduced below:
[2025] 5 S.C.R.                                                               415

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

           “The applicant-society has primarily sought an independent
           development society for its independent revenue village,
           based on the directives in the Government Decision and
           its amendment that there should be only one primary
           agricultural credit society in an independent revenue village.
           The Primary Agricultural Credit society of the neighbouring
           village of the applicant-society has not objected to the
           proposal of the applicant-society. It does not happen and
           the ratio of risk assets to capital also does not decrease.
           The applicant-society has argued that as per the lending
           policy of the bank, the loan can be provided as per the
           norms. Moreover, the applicant-society has asserted that
           as per the policy of the Central Government, the applicant-
           society can do about 152. types of business other than
           loan distribution and thereby become profitable. It cannot
           be said that it is wrong. Apart from this, it cannot be denied
           that the applicant-society can allocate loans by taking loans
           from self-funds and other banks as well………..
           As the village of the applicant-society is hilly area and
           there is no adequate transportation facility, it is difficult and
           troublesome to take membership of a society established
           in another village and go to that village to avail the services
           of the society. Also Primary Agricultural Credit Institutions
           in neighbouring villages are also applicants seem unable to
           avail the services of the society. Therefore, the government
           decision based on the decision dated 16.01.2015 that
           a new agricultural credit society can be registered in a
           separate revenue village; the applicant submits that, the
           proposal for registration filed by the society is reasonable
           and proper……..
           However, the intervening-applicant has not submitted any
           figures showing that the cash value of the existing society
           or the ratio of risk assets to the capital would decrease
           after the registration of the applicant society…….
           The Respondent no.4 viz The Assistant Registrar has
           checked the records in his office that there is no registered
           primary agricultural credit society in the independent
           revenue village where the applicant-society has jurisdiction.
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            Therefore, a report has been given while submitting the
            proposal of. the applicant-society to the senior office that the
            registration of the applicant-society will not adversely affect
            the financial condition of the working primary agricultural
            credit society. Adequate contradiction has not been made
            by the intervention-applicant…….
            This means that the registration the applicant-society will
            not adversely affect any existing society. Also, within 3 years
            from the date of registration of the applicant- society, share
            capital of Rs.5/- lakhs and the applicant-society is ready
            to give a guarantee to start a new business in one year.”
6.     Aggrieved by the order of the State, the respondent no. 6 herein
       filed a Writ Petition before the High Court of Judicature at Bombay
       praying to set aside the order dated 28.06.2023 passed by the State.
7.     The High Court, vide the impugned common order, allowed the
       appeal of the respondent no. 6 herein and observed the following:
            “9. I have perused the impugned order. The Petitioners
            were intervenors before the State Government. Neither
            the issue of locus standi of the Petitioners was raised
            before the State Government nor the State Government
            recorded finding in the impugned order/s that the Petitioners
            do not have any right to object to the registration of the
            contesting Respondents as multipurpose co-operative
            societies. The only contention which was raised was that
            due to registration of the proposed societies there will not
            be any adverse impact on the financial condition of the
            existing societies.
            10. Considering the facts and circumstances and in view
            of the findings recorded by the scrutiny committee, I am
            inclined to accept the submission that the Petitioners who
            are neither existing co-operative societies or members
            of the existing co-operative societies lack locus standi to
            challenge the impugned orders.
            11. As regards merits, the scrutiny committee who is in
            the form of expert body after scrutinising the documents
            filed in support of the application/s made by the contesting
            Respondents has recorded the specific finding that the.
[2025] 5 S.C.R.                                                             417

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

           proposed societies would not be financially viable. The
           scrutiny committee has further held that the proposed
           societies do not fulfil the requisite financial parameters laid
           down in the Government Resolution dated 23 September
           2013. There is no finding in the impugned order/s that the
           findings recorded by the scrutiny committee are perverse.
           12. Apart from the above, as per, the Government
           Resolution dated 14 February 2017 it is necessary for the
           proposed societies to have share capital of Rs.5 Lakhs at
           the time of applying for registration. It appears from the
           impugned order/s that the said condition is also relaxed
           on the basis of undertaking of the contesting Respondents
           that they would raise the share capital of Rs.5 Lakhs within
           one/three years from the date of registration of the society.
           13. Considering the overall facts and circumstances, the
           order/s impugned cannot be allowed to stand as the same
           are contrary to proviso to Section 4 of the Maharashtra
           Co-operative Societies Act.
           14. The Petitions are allowed. The order/s impugned in the
           present Petitions are set aside. All consequential actions
           are set aside”
8.   Feeling aggrieved and dissatisfied with the impugned order passed
     by the High Court, the appellants are before us.
9.   We have heard the learned senior counsels and counsels for the
     parties and perused the material on record.
10. The arguments advanced by the learned Senior Counsel for the
    appellants are summarised hereunder:
     10.1 That the appellant is the first and only Co-operative society in
          the said Revenue Village, a fact that has been acknowledged
          by the Assistant Registrar as well.
     10.2 That it is practically not possible for any society to have share
          capital of Rs. 5 lakhs at the time of applying for registration.
          In this regard, an undertaking had been submitted by the
          appellant-society that they would raise the required share
          capital of Rs. 5 lakhs within one to three years from the date
          of registration of society and the appellant has also undertaken
          the compliance of this term before this Court.
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       10.3 That the appellant-society has made a genuine effort to fulfil
            all the required documents at the time of filing the application
            for registration.
       10.4 That the State in its Order clearly stated that there are multiple
            reasons which can destabilize the financial status of a Society,
            therefore, because of only one parameter i.e. loan distribution
            to the crops, the registration of the society cannot be denied.
       10.5 That the respondent no. 6 does not have any locus-standi to
            challenge the Order passed by the State.
       10.6 That the Society, of which present respondent no. 6 is a
            member, has already given a ‘No-Objection-Certificate’ to the
            present appellant-society and an individual member cannot
            take contrary stand to the society of which he is a member
            until and unless that society passes resolution to that effect.
       10.7 That the High Court, on one hand, accepted that the petitioners
            therein did not hold any locus standi yet, on the other hand,
            allowed the Writ Petition filed by them.
       10.8 That the chart indicating the population of each revenue village,
            submitted by the respondent no. 6, is as per the 2011 census
            and it cannot be ignored that the population in these villages
            must have grown in the past 13-14 years.
       10.9 That any co-operative society can manage 152 kinds of
            businesses apart from giving loan. Therefore, it is unfair to
            ignore all others important aspects which helps a society to
            run successfully.
       10.10 That the minimum number of the membership for registration of
             a new society is 75 and the present appellant-society has given
             the list of 150 members. Therefore, the appellant-society is very
             much ahead of the minimum required number of memberships.
11. Per contra, the arguments advanced by the learned Senior Counsels
    and counsels for the respondents are stated as below:
       11.1 That the eligibility for the purpose of registration cannot be
            isolated from the impact on an existing society, if any. The
            appellant herein has failed to satisfy the threshold criteria and
            conditions to establish its own viability.
[2025] 5 S.C.R.                                                           419

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

     11.2 That it is not open to the appellant to now seek to by-pass
          the expert Scrutiny Committee by contending for the very first
          time before this Court that the Committee was constituted
          without any authority and/or it lacks jurisdiction to scrutinize
          the appellant’s proposal for its registration as a PACCS.
     11.3 That Scrutiny Committee’s Order shows its in-depth
          examination of the appellants’ proposals and the Committee’s
          detailed findings which militate against the eligibility of the
          appellants for registration.
     11.4 That the order passed by the State is ex-facie perverse and
          unsustainable as it has allowed the appellants’ registration
          without fulfilling the most basic and mandatory pre-requisites
          for registration.
     11.5 That the respondent no. 6, being a member of an existing
          society, is vitally affected inasmuch as the registration of the
          appellant-society could lead to destabilizing the existing society
          and even lead to its closure.
     11.6 That the performance of credit/loan disbursement of existing
          primary credit cooperative societies would show that even they
          are hardly in a position to achieve the minimum target fixed
          by the Government Resolution and, in such circumstances,
          establishment of any proposed Credit Cooperative Society
          in the adjacent village would have disastrous effect on the
          existing credit co-operative societies.
     11.7 That the NOC relied upon by the appellant which is alleged
          to be given by the society, of which respondent no. 6 is a
          member, is unauthorised and there is no mention of it being
          issued to the appellant in record and proceedings of the
          abovementioned society.
     11.8   That the appellant has approached this Court with unclean
            hands as it is obvious that the appellant has sought to artificially
            inflate its membership by showing dead persons so as to show a
            membership with larger land holdings in order to meet the viability
            criteria. This conduct shows the mala fides of the appellant.
12. Before delving into the analysis of the facts of the case, we find it
    pertinent to mention the relevant provisions of the 1960 Act and the
    Government Resolutions dated 23.09.2013 and 14.02.2017.
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13. Chapter II of the 1960 Act deals with the registration wherein Section
    4 and Section 6 are the specific relevant provisions for the purpose
    of this matter and are reproduced as below:
          “4. Societies which may be registered:— A society, which
          has as its objects the promotion of the economic interests
          or general welfare of its members or of the public, in
          accordance with co-operative principles or a society
          established with the object of facilitating the operations
          of any such society, may be registered under this Act:
          Provided that, no society shall be registered if it is likely to
          be economically unsound, or the registration of which may
          have an adverse effect on development’ of the co-operative
          movement, or the registration of which may be contrary
          to the policy directives which the State Government may,
          from time to time, issue.
          6. Conditions of registration:-
          (1) No society, other than a federal society, shall be
          registered under this Act,. Unless it consists of at least ten
          persons or such higher number of persons as the Registrar
          may, having regard to the objects and economic viability of
          a society and development of the Co-operative movement,
          determine from time to time for a class of societies (each
          of such persons being a member of a different family),
          who are qualified to be members under this Act, and who
          reside in the area of operation of the society:
          Provided that, a lift irrigation society consisting of less than
          ten but of five or more such persons may be registered
          under this Act.
          …”
                                                   [Emphasis supplied]

14. Now, it will be useful to refer to the Government Resolutions to which
    reference is made in the impugned judgment of the Hight Court.
15. The Government Resolution dated 23.09.2013, which has been
    produced as Annexure P-1 before us, sets out the newly revised
[2025] 5 S.C.R.                                                           421

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

     criteria for registration of PACCS and the revised condition nos. 4
     and 5 read as follows:
           “Condition No.4: The number of members (accounting
           members) of a newly registered primary agricultural credit
           cooperative should be at least 75.
           Condition No. 5.: For the purpose of scrutiny of the
           proposal of primary agricultural credit cooperative society,
           committee will be formed as under mentioned for the
           purpose of inspection of financial ability.”
16. The Government of Maharashtra issued another Government
    Resolution dated 14.02.2017, in furtherance of which the Government
    Corrigendum was issued, and it reads as follows:
           “1) There should preferably be only one primary agricultural
           credit cooperative in a revenue village. However, in villages
           where there is scope for registration of more than one
           society, taking into account other criteria of economic
           viability, more than one society can be registered.
           1A) A Scheduled Primary Agricultural Credit Co-operative
           Society before its registration; it must have a minimum of
           Rs.5 lakh share capital and it is essential to do so.
           ….”
                                                  [Emphasis supplied]

17. A conjoint reading of Section 4 and condition No.1 of Section 6 of
    the 1960 Act makes it very clear that the economic viability of the
    society is a pre-requisite or basic condition for grant of registration
    to the society.
18. Further, condition No. 5 of the Government Resolution dated
    23.09.2013 makes it unambiguous that a Scrutiny Committee was
    to be set up/established specifically for the purpose of inspection of
    financial ability of a prospective society.
19. Additionally, Criteria 1A of the Government Resolution dated
    14.02.2017, further clarifies the said pre-requisite of economic viability
    of the societies by explicitly stating that a minimum of Rs. 5 lakhs
    share capital is to be maintained by applicant society.
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20. It is in the backdrop of the above referred provisions of the 1960
    Act as well as the Government Resolutions that we have to peruse
    the order of the Scrutiny Committee which examined the proposal
    of the appellant-societies for registration.
21. The Committee in the opening part of its minutes records as follows:
          “…to scruitinize the registration proposal of this scheduled
          society and to check the financial capability…”
22. This supports the respondents’ contention that it was the duty of the
    Committee to check the financial capability of the appellant-societies
    and it was an expert Committee set up specifically to check the
    eligibility criteria of the applicant societies.
23. We have already referred to the reasons assigned by the Scrutiny
    Committee for rejection of the application in earlier part of this
    judgment at Paragraph 3. The Paragraphs 4, 10 and 11 of the
    Committee’s order therein noted the findings of the Committee with
    regard to the appellant-society not meeting the financial requirements
    in the form of a lack of bank guarantee, lack of documents to support
    provision of bank loan etc. It was in furtherance of these specific
    findings that the Committee in clear words noted that:
          “the petitioner society fails to comply with the criteria of
          economic viability and state it would not be advisable to
          establish society of the same type and with the same
          purpose in the area of operation of an unprofitable working
          society”
24. Thereafter, the State while deciding the appeal seems to be impressed
    by the appellant’s submission that the registration of the proposed
    society is not adversely affecting the existing society as there was
    no objection raised by the existing society.
25. In our considered opinion, the State, while deciding the appeal,
    completely ignored the basic criteria or the pre-requisite for the
    registration of society i.e. the economic viability of the society. The
    said criteria and pre-requisites had been laid down by the State itself
    through its various Government Resolutions. As such, it could not
    have taken a decision contrary to its own guidelines.
26. It will not be out of place to state that the State was much impressed
    by the submissions advanced on behalf of the appellant-society that
[2025] 5 S.C.R.                                                         423

        Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha
         Maryadit Warewadi v. The State of Maharashtra & Ors.

     any Cooperative Society can manage 152 kinds of businesses apart
     from giving loans.
27. However, the appellant had made such submissions without placing
    any supporting material on record before the Scrutiny Committee to
    show as to what kind of other 152 businesses the appellant-society
    would undertake and how the appellant-society is economically viable.
    Yet, the State accepted the hypothetical claim of the appellant-society.
    In our opinion, in doing so, the State has essentially ignored the
    aspect of economic viability.
28. Admittedly, the Committee had found that there was nothing in
    the proposal submitted by the appellant-society to substantiate
    the conditions of financial health as provided in the Government
    Resolution dated 14.02.2017. There was merely a bald statement that
    the Kolhapur District Central Cooperative Bank is going to support
    the proposed appellant-society but, as noted by the Committee,
    there was no letter of undertaking that was attached to that effect.
29. Thus, it is apparent that there was absolutely no material on record
    before the Committee to show that the appellant-society was in
    a position to comply with the pre-requisites as referred to in the
    Government Resolution dated 14.02.2017. The Committee had,
    therefore, rightly rejected the application for registration.
30. It may not be out of place to state that if a society is unable to comply
    with the pre-condition or pre-requisite in regard to the economic
    viability of the society, allowing the registration of such a society
    which might not even be able to function, it may adversely affect
    the members of the society and, ultimately, it would be frustrating
    the very object of the establishment of the said society.
31. It must be noted that the constitution of the Committee and the
    examination of the proposal by the Committee is a vital part of the
    Policy Directives of the State Government which is required to be
    complied with conditions under Section 4 of the 1960 Act. Therefore,
    ignoring the findings of the Committee and allowing the registration
    of the society when the appellants have been unable to point out
    any perversity in the said findings shall lead to an unjustifiable
    interference in the Committee’s Order.
32. Further, it must be noted that the State Government may use its
    discretion for relaxation of conditions. However, such a discretion
424                                                            [2025] 5 S.C.R.

                              Supreme Court Reports


       cannot be used to frustrate the very object of the Act. Such a power
       of relaxing the necessary pre-requisites could have been made
       only through the means of a Government Resolution and not at the
       whims of the State in an appeal which essentially led to by-passing
       the eligibility criteria set out by the Government through its multiple
       Resolutions. Once such an eligibility standard has been set out by
       the Government, the only proper route to introduce any alteration or
       relaxation of these conditions would have been through a subsequent
       Government Resolution. In the present case, by relaxing the pre-
       requisite condition relating to financial viability, the State allowed the
       registration of the society, which in our opinion, resulted in nothing
       but frustrating the very object of the Act.
33. Lastly, with respect to the locus standi of the respondent no. 6, such
    an argument by the appellants shall not restrain interference by this
    Court or the High Court in the matter when there is patent illegality
    in the State’s order which requires interference by the Courts of law.
34. Therefore, considering all these aspects, we are unable to find
    any fault in the order passed by the High Court. The High Court of
    Judicature at Bombay has rightly allowed the petition and set aside
    the order passed by the State.
35. Accordingly, the appeals stand dismissed, and the impugned order
    of the High Court is upheld.
36. Pending application(s), if any, shall be disposed of accordingly.
37. No order as to cost.

       Result of the case: Appeals dismissed.



       †
           Headnotes prepared by: Divya Pandey