# The Mechanical Dept. Primary & Anr v. Union of India & Anr

- **Citation:** (2025) 2 ILRA 229
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2025-02-10
- **Case number:** Writ C No. 6744 of 2019
- **Bench:** Anjani Kumar Mishra, Jayant Banerji
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/the-mechanical-dept-primary-anr-v-union-of-india-anr-53113
- **Pages:** 27

## Headnote

A.S.G.I.
Adya Prasad
Tewari,
Gaurav
Gautam, Ramesh Chandra Pandey, Sanjeev
Kumar, Sheo Shankar Tripathi

A. Civil Law -Constitution of India,1950Article
226-
Multi-State
Co-operative
230 INDIAN LAW REPORTS ALLAHABAD SERIES
Societies
Act,2002-The
petitioners
challenged the Central Registrar's order
dated
26.12.2018
rejecting
their
application for registration under the
Act,2002 despite earlier directions from
the HC in related writ petitions-The
petitioners claimed a long history of
registration and operation dating back to
1919, with branches and members in
multiple states including uttar Pradesh,
bihar, uttarakhand-the asserted that their
society
qualified
as
a
multi-state
cooperative society and sought mandamus
to be treated as such-The court examined
the statutory framework of cooperative
society laws from 1912 through to the Act
2002-
The
registration,
control
and
dissolution
of
a
co-operative
society
depend on its area of operation, if the
objects and membership span more than
one State, State law alone does not
suffice-central
legislation
becomes
applicable-The court held that the Central
Registrar erred in disregarding binding
judicial directions and failing to properly
assess
the
petitioner's
historical
registration, area of operation, and legal
continuity under the deemed registration
provision of law-(Para 1 to 62)

The writ petition is dismissed. (E-6)
List of Cases cited:

## Text

_Characters 0–39,861 of 92,951. This is a partial read: ask again with offset=39861 for what follows._

2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
229
specification laid down by the NOIDA
Authority in the brochure of the Sports city
Scheme. It is also made clear that the
interest of the homebuyers is supreme and
their interest should be well protected.

192. It is expected that in a proceeding
under the Insolvency and Bankruptcy
Code, 2016 initiated against a builder,
before accepting the application, the
learned NCLT may ensure and satisfy itself
as to whether the insolvency proceeding is
genuine or the same has been filed
maliciously on the behest of the builder
only to get away from civil/criminal
liabilities after syphoning away the funds.
In case, there is syphoning away of the
funds, a complaint should be forwarded to
the ED, which is competent to investigate
and the E.D. should take considerable
action as provided under law to retrieve the
money which has been syphoned by the
management of the company.

193. NCLT may also consider the fact
that the project was an integrated project
and has to be developed as per the objects
of the sports city and the IRP while
choosing the developer should keep in
mind the development of the project as an
integrated project.

194. This Court at the same time
realises that we will be failing in our duty,
if we accept the fraud, which is writ large
and the conduct of the builders/developers
and senior officials of the NOIDA
Authority. Since inception of Sports city
scheme, the undue benefits had been
extended by the NOIDA officials to the
builders/developers. In the facts and totality
of the circumstances, we find that this
Court has no other recourse but to refer the
instant
matter
to
the
Enforcement
Directorate,
which
is
competent
to
investigate. The ED must also ensure the
fair investigation, as provided in law, to
retrieve the siphoned/laundered money by the
erstwhile management of the company and
further the E.D. shall make all endevours to
find out the trail of syphoned/misappropriated
money so that the same may be brought back
into the company and with that the
outstanding dues of NOIDA Authority, State
Government, additional compensation to the
farmers and the other dues may be paid off.

195.
With
the
aforesaid
observations, the writ petition stands
disposed of.

196.
Registrar
(Compliance)
is
directed to send a copy of this judgment to
the learned NCLT, Delhi and the Director
of the E.D. for information and necessary
compliance forthwith.
----------
(2025) 2 ILRA 229
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 10.02.2025

BEFORE

THE HON'BLE ANJANI KUMAR MISHRA, J.
THE HON'BLE JAYANT BANERJI, J.

Writ C No. 6744 of 2019

The Mechanical Dept. Primary & Anr.
 ...Petitioners
Versus
Union of India & Anr. ...Respondents

Counsel for the Petitioners:
Satyawan Shahi, Shashi Ranjan Srivastava,
Sri Shashi Nandan (Senior Advocate)

Counsel for the Respondents:
A.S.G.I.
Adya Prasad
Tewari,
Gaurav
Gautam, Ramesh Chandra Pandey, Sanjeev
Kumar, Sheo Shankar Tripathi

A. Civil Law -Constitution of India,1950Article
226-
Multi-State
Co-operative
230 INDIAN LAW REPORTS ALLAHABAD SERIES
Societies
Act,2002-The
petitioners
challenged the Central Registrar's order
dated
26.12.2018
rejecting
their
application for registration under the
Act,2002 despite earlier directions from
the HC in related writ petitions-The
petitioners claimed a long history of
registration and operation dating back to
1919, with branches and members in
multiple states including uttar Pradesh,
bihar, uttarakhand-the asserted that their
society
qualified
as
a
multi-state
cooperative society and sought mandamus
to be treated as such-The court examined
the statutory framework of cooperative
society laws from 1912 through to the Act
2002-
The
registration,
control
and
dissolution
of
a
co-operative
society
depend on its area of operation, if the
objects and membership span more than
one State, State law alone does not
suffice-central
legislation
becomes
applicable-The court held that the Central
Registrar erred in disregarding binding
judicial directions and failing to properly
assess
the
petitioner's
historical
registration, area of operation, and legal
continuity under the deemed registration
provision of law-(Para 1 to 62)

The writ petition is dismissed. (E-6)
List of Cases cited:

1. Apex Cooperative Bank of Urban Bank of
Mah. & Goa Ltd Vs Mah. St. Co-op Bank Ltd. &
ors.(2003)11 SCC 66
2. Pandurang Ganpati Chaugule Vs Vishwasrao
Patil Murgud Sahakari Bank Ltd.(2020) 9 SCC 215
3. Virendra Pal Singh Vs Registrar of Co-op
Societies.
4. Greater Bombay Coop. Bank Ltd. United Yarn
Tex (P) Ltd.(2007) 6 SCC 236
5. Apex Coop. Bank of Urban Bank of Mah. &
Goa Ltd Vs Mah. St. Coop. Bank Ltd. &
ors.(2003) 11 SCC 66
(Delivered by Hon'ble Jayant Banerji, J.)

1. The array of parties in this petition
is as follows:-

"1. The Mechanical Department
Primary Co-operative Bank Limited, North
Eastern Railway, Gorakhpur through its
Secretary Mr. Balwant Kumar Shahi.

2. Mr. Balwant Kumar Shahi son
of Late Prasiddh Narain Shahi Secretary,
The Mechanical Department Primary Cooperative
Bank
Ltd.,
North
Eastern
Railway, Gorakhpur.
.................PETITIONERS
VERSUS

1.
Union
of
India
through
Secretary, Ministry of Agriculture & Cooperative, Government of India, New
Delhi.

2. Central Registrar, Co-operative
New Delhi/Joint Secretary, Government of
India Krishi Bhawan New Delhi.

3. Reserve Bank of India through
its Manager, 8-9 Vipin Khand, Gomti
Nagar, Lucknow.
.............RESPONDENTS."

2. This writ petition has been filed
seeking the following reliefs:-

"I. Issue a writ, order or direction
in the nature of certiorari quashing
impugned order dated 26.12.2018 passed
by Central Registrar, Co-operative New
Delhi/Joint Secretary Government of India
Krishi Bhawan, New Delhi/respondent no.2
(Annexure no.20 to the writ petition).

II. Issue a writ, order or direction
in the nature of mandamus commanding
Central
Registrar,
Co-operative
New
Delhi/Joint
Secretary,
Government
of
India,
Krishi
Bhawan,
New
Delhi/respondent
no.2
to
treat
the
petitioners' bank registration in Multi State
Co-operative Societies Act, 2002."
2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
231
3. The petitioner No. 11 is stated to
have been registered under the Cooperative
Societies Act, 19122 on 31.5.1919 bearing
registration No. 275 and at that point of
time, the petitioner-bank was named "The
Mechanical Department Credit Society Ltd.
Gorakhpur". It is stated that time to time,
necessary amendments were made in the
years 1962-1966. Again amendment was
done on 3.5.1973 by the Central Registrar
Co-operative Societies, U.P. Lucknow,
whereby the name of the petitioner-bank
became Mechanical Department Primary
Co-operative Bank Ltd. In 1982, the
Reserve Bank of India granted licence to
the petitioner-bank under Section 23 read
with
Section
56(p) of
the Banking
Regulation Act, 19493 to open an office at
Izzat Nagar, District Bareilly apart from
Gorakhpur for working and functioning of
the petitioner-bank.

4. The petitioner-bank has sought
to demonstrate its being subjected to
regulatory control under the Multi-State
Cooperative Societies Act, 19844 by the
respondent no.2 by stating that a letter
dated 14.3.1997 was sent by the Registrar
of
the
Cooperative
Societies,
U.P.
Lucknow to the Joint Secretary/Central
Registrar on the subject of prior approval of
supersession of governing body of the
petitioner-bank under Section 48 of the
Act,
1984;
a
reminder
letter
dated
31.3.1997 was again issued. Thereafter, the
respondent no.2, Central Registrar issued a
letter dated 2.4.1997 to the Registrar
Cooperative Societies, U.P. conveying his
approval to initiate action against the Board
of Directors of the petitioner-bank under
Section 48 of the Act, 1984. By an order
dated 10.4.1997, the respondent no.2,
Central Registrar superseded the petitionerbank
and
appointed
a
Board
of
Administrators
comprising
of
three
administrators to administer the affairs of
the petitioner-bank. The petitioner-bank
then filed a writ petition No. 43087 of 1998
which was disposed of by a judgment and
order dated 18.1.1999.

5. It is stated that it was held by this
Court in the aforesaid writ petition of 1998
that the Board of Administrators was
legally put in office; it was directed, inter
alia,
that
the
existing
Board
of
Administrators,
which
would
be
functioning only till such time the newly
elected Board of Directors was constituted
by the close of the month of February 1999,
shall merely manage day to day affairs of
the petitioner-bank and shall not take any
policy decision and shall also not make any
fresh appointments; the Chief Mechanical
Engineer,
North
Eastern
Railway,
Gorakhpur as well as the Central Registrar
were directed to ensure that the elections to
constitute new Board of Directors take
place and existing Board of Administrators
is relieved of its responsibilities positively
by the end of February, 1999.

6.
The
Additional
Commissioner/Additional
Registrar,
Cooperative, U.P. Lucknow wrote a letter
dated 9.5.2017 to the Secretary of the
petitioner-bank in respect of an order dated
13.4.2017
passed
by
this
Court
in
Contempt Application(Civil) No. 1573 of
2017 to state that in respect of Writ Petition
No. 60894 of 2016 filed by the petitionerbank, consequent to the direction passed in
that writ petition, the Joint Commissioner
and Joint Registrar, Gorakhpur Division
had submitted a report by means of a letter
dated 30.01.2017 stating that in his office
in the registration register, the Mechanical
Department Cooperative Credit Society
Ltd,
Gorakhpur
was
registered
on
31.5.1919 at sl. no. 275; that the
232 INDIAN LAW REPORTS ALLAHABAD SERIES
registration No. 275 pertaining to the
petitioner-bank the Mechanical Department
Primary Cooperative Bank Ltd., North
Eastern Railway, Gorakhpur was not
registered on 3.5.1973; that by a letter
dated 31.1.2017, pursuant to the order of
the High Court, the matter was disposed of
earlier by the Commissioner/ Registrar; that
the petitioner-bank was intimated about the
developments by another letter dated
27.4.2017, a copy of which was enclosed
alongwith that letter.

7. It is stated that on one hand in its
own order of 14.3.1997, the Registrar,
Cooperative Societies states that the
Mechanical
Department
Primary
Cooperative Bank Ltd. (petitioner no.1)
must be dissolved, while on the other hand
the letter dated 9.5.2017 was issued stating
that the petitioner-bank does not appear to
be registered at sl. no. 275 on 3.5.1973.

8. An order dated 9.8.2017 was
passed by the Lucknow branch of the
Reserve Bank of India, whereby within
fifteen days the payment counter running at
Samastipur, Bihar was directed to be
stopped and membership granted by the
petitioner-bank in other States was directed
to be cancelled. This order was challenged
before this Court by the petitioner-bank by
way of Writ-C No. 38808 of 2017 which
came to be disposed of by an order dated
21.3.2018 on the terms agreed by the
counsel for the parties in which the
petitioner-bank's application under the
provisions
of
Multi-State
Cooperative
Societies Act, 20025 was directed to be
considered afresh on the basis of original
registration in 1919 under the provisions of
the Act, 1912. The petitioners were
directed to produce an extract of the
register showing their registration as a
Credit society. The Reserve Bank of India
was
also
directed
to
consider
the
petitioner's request for grant of licence
after registration under the provisions of
the Act, 2002 expeditiously. The order
dated 21.3.2018 of this Court is quoted
below:-

 "Heard
Mr.
Shashi
Nandan,
learned
Senior
Advocate
with
Mr.
Satyawan Shahi, learned counsel for the
petitioners, Mr. Ramanand Pandey, learned
Addl.
Chief
Standing
Counsel
for
respondents-State, Mr. Vikas Budhwar,
learned counsel for respondent no.4, Mr.
Gyan
Prakash,
learned
counsel
for
respondent no.2 and Mr. A.P. Tiwari,
learned counsel for the intervener.
 The writ petition is directed
against the order dated 9.8.2017 issued by
respondent no.4-Reserve Bank of India.
The relevant portion of the order, impugned
in the present writ petition, reads thus:

"4-केतरीय र्ैफकब की 16वीं बैठक सिनांक 09
िून, 2017 की अनुशं ा के अनु ार आपके बैंक को unistate बैंक में convert सकया िाना है। अतः आपको यह सनिेश
सिया िाता है सक इ पत्र की प्रासि े 15 सिनों के भीतर
Samastipur, Bihar में चि रहे अपने पेमेंर् काउंर्र को बंि
करना ुसनसित करें तथा अतय राज्यों में सवसभतन िोगो को प्रिान की
गई िस्यता को सनरस्त करें।

5. इ के असतररक्त उपरोक्त के ंबंध में आप े
अपेसक्षत है सक बैंक अपने bye-laws का amendment
करवाए तथा RCS, Lucknow े अनमोिन के पिात उ की
एक प्रसत भारतीय ररिवग बैंक, िखनऊ को यथाशीघ्र प्रिान करें।"

The letter of the Reserve Bank of
India also takes a note that the petitioners
Society is not registered with the Central
Registrar of Co-operative Societies under
the
provisions
of
the
Multi-State
Cooperative Socialites Act, 2002 (for short
'Act, 2002'). In view thereof, the petitioners
have also prayed for a direction to the
Central Registrar (respondent no.2) to
continue to keep their Society as Multi-
2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
233
State
Cooperative
Society
and
issue
necessary registration certificate under the
provisions of the Act, 2002.

In this backdrop, we have heard
learned counsel for the parties and with
their assistance gone through the entire
materials placed before us.

It is not in dispute that the
petitioners were initially registered as
Credit Society under the provisions of the
U.P. Cooperative Societies Act, 1912. We
have also perused the Register produced by
Mr. Ramanand Pandey, learned Addl.
Chief Standing Counsel for the State,
which supports the petitioners' case that
they
were
registered
in
1919
as
"Mechanical Department Credit Society
Ltd." The entry in the Register at Serial No.
275 also shows that in 1962, revised byelaws of the Society were registered and
some amendment was also registered on
3.2.1966. It is not clear from the entry in
the Register as to what amendment was
registered in 1966.

According to the petitioners, in
1973, the name of their Society was
changed as "The Mechanical Department
Primary Co-operative Bank Ltd." and the
certificate to that effect was issued by the
Central Registrar, Co-operative Societies,
U.P. Lucknow on 3.5.1973. Unfortunately,
the original registration certificate dated
3.5.1973 is, according to the petitioners,
misplaced. In other words, they are not in a
position to produce original registration
certificate dated 3.5.1973 as a Co-operative
Bank. Mr. Pandey, learned Addl. Chief
Standing Counsel, submits that even in
their record, such a certificate is not
available. '

Be that as it may, the petitioners since
May, 1973 are functioning as a Cooperative Bank and they claim that the
employees of the North Eastern Railway,
not only in the State of U.P. but in the
States of Uttarakhand and Bihar, are also
members. Their total membership is
18,933, who are employees of the North
Eastern Railway and East Central Railway.
According
to
the
petitioners,
577
employees of the Railways are not
residents of the State of Uttar Pradesh. For
their
convenience,
according
to
the
petitioners,
they
opened
a
pay
counter/recovery counter at Samastipur,
which falls in the State of Bihar. The
petitioners Bank has total deposits of
Rs.56,73,49,000/-. The petitioners Bank is
run and managed by an elected Board of
Directors and they cater the need of only
their members, who are also employees of
the Railways. We may also make a
reference to the license issued by the
Reserve Bank of India dated 12.5.2010 and
the license dated 5.3.1982 (Annexure-2
collectively), which show that the Reserve
Bank of India in exercise of the powers
conferred by Section 23 read with Section
56 (p) of the Banking Regulation Act,
1949, authorized the petitioners Bank to
open an office at Izzat Nagar, District
Bareilly subject to conditions mentioned in
the office letter dated 5.3.1982. It further
appears from the license dated 12.5.2010
that the petitioners Cooperative Society
was granted license under Section 22 (1)
read with Section 56 (a) of the Banking
Regulation Act, 1949.

We may also observe that the
parties have agreed for this order in view of
the fact that the petitioners Co-operative
Society was initially registered in 1919 as
Credit Society and thereafter since 1973,
they have been functioning as a Bank
without interruption and for its employees,
who are all employees of the Railways and
there is no allegations of whatsoever nature
about functioning of the Bank. We may
also notice that the Central Registrar under
the provisions of the Act, 2002 refused the
234 INDIAN LAW REPORTS ALLAHABAD SERIES
petitioners' registration only on the ground
that they could not and did not produce the
registration certificate dated 3.5.1973 of the
Mechanical
Department
Primary
Cooperative Bank Ltd.

The intervener has not disputed
that the petitioners Society was registered
under
the
provisions
of
the
U.P.
Cooperative Societies Act, 1912 and
initially they were registered as Credit
Society, and since May 1973, they have
been working as a Co-operative Bank.

In this backdrop, counsel for the
parties have agreed for the order that we
propose to pass. We, therefore, dispose of
this petition by the following order:

The
Central
Registrar,
Cooperative Societies, under the provisions
of the Act, 2002, shall proceed to consider
the petitioners' application afresh on the
basis of original registration in 1919 under
the provisions of the U.P. Cooperative
Societies Act, 1912 and pass appropriate
orders within a period of four weeks from
the date of receipt of this order. The
petitioners are directed to produce an
extract of the Register, showing their
registration under the provisions the U.P.
Cooperative Societies Act, 1912 as the
Credit Society. It is needless to mention
that the respondent no.2-Central Registrar
shall not insist for original registration
certificate dated 3.5.1973 bearing No.275.
After the registration under the provisions
of the Act, 2002, it is open to the
petitioners to approach the Reserve Bank of
India for obtaining their permission to open
new place of business in and outside the
State of Uttar Pradesh. Till the license as
contemplated under Section 23 read with
Section 56 of the Banking Regulation Act,
1949 is issued by the Reserve Bank of
India, the petitioners shall not operate/run
their counter in and outside the State of
Uttar Pradesh except at its head office at
Gorakhpur and at its Branch at Izzat Nagar
in district Bareilly, as mentioned in the
registration certificate. We direct the
respondent
no.2-Central
Registrar
to
consider the petitioners' application within
the stipulated time. We also observe that
the Reserve Bank of India shall also
consider
the
petitioners'
request
for
issuance of license after their registration
under the provisions of the Act, 2002
expeditiously. We direct the petitioners to
produce a copy of this order along with all
necessary documents before respondent
no.2-Central Registrar within one weeks
from today.

The
petition
is,
accordingly,
disposed of.

9. By an order dated 20.4.2018, the
respondent no.2 rejected the application of
the petitioner-bank for registration under
the Act, 2002.

10. Challenging the order dated
20.4.2018 passed by the respondent no.2,
the petitioners filed a writ petition bearing
Writ-C No. 16029 of 2018 which was
disposed of by an order dated 12.10.2018
after
setting
aside
the
order
dated
20.4.2018. The order passed by this Court
is quoted below :-

 "Heard
Mr.
Shashi
Nandan,
learned
Senior
Advocate,
with
Mr.
Satyawan Shahi and Mr. Shashi Ranjan
Srivastava, Advocates, for the petitioners
and Mr. Ajay Singh, learned counsel for the
respondent - Union of India.

This writ petition impugns the
order dated 20.04.2018 passed by the
second respondent, rejecting the petitioners'
application/claim for registration of their
Society under the provisions of the MultiState Cooperative Societies Act, 2002 (for
short 'Act, 2002'). This order has been
2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
235
passed in pursuance of the order passed by
this Court dated 21 March 2018 in Writ-C
No. 38808 of 2017. By this order, the
petitioners were allowed to make an
application afresh, on the basis of the original
registration in 1919 under the provisions of
the U.P. Cooperative Societies Act, 1912 for
their registration under the provisions of the
Act,
2002.
The
Central
Registrar,
Cooperative
Societies,
rejected
the
petitioners' application, observing that the
petitioners do not have members in more than
one State, as contemplated by Section 5 of
the said Act. He also observed that the
petitioner Society did not produce any
materials in support of their case. Learned
Senior Counsel for the petitioners, submits
that the petitioners were not heard by the
Central Registrar, Cooperative Societies
before passing the impugned order. This
submission has not been disputed by counsel
for the respondents. That being so and
considering the observations made in the
impugned order, in particular paragraphs 3
and 4 thereof, we propose to dispose of this
writ petition by order which, counsel
appearing for both sides, have consented for.
Hence, we dispose of this writ petition by the
following order:

The
order
dated
28.04.2018,
impugned in the present writ petition, is set
aside. The matter is remanded to the Central
Registrar, Cooperative Societies, to decide
afresh. Petitioners are allowed to produce a
list of their members with their addresses in
support of the case that they have members in
more than one State and that "area of
operation" is outside State also, from where
persons are admitted as their members. The
Central
Registrar
shall
consider
the
petitioners' case in the light of materials
produced by them and after granting them an
opportunity of being heard, on merits in
accordance with law, within a period of two
months from the date of receipt of this order.
Petitioners are directed to produce a copy of
this order alongwith a copy of the writ
petition and annexures before the Central
Registrar, within a period of two weeks from
today.

With
these
observations,
the
petition is disposed of."

11. The petitioners submitted a
detailed representation to the respondent no.2
on 22.10.2018 alongwith a list of members of
the petitioner-bank in the State of Uttar
Pradesh, Bihar and Uttarakhand. Thereafter
by means of the impugned order dated
26.12.2018, the respondent no.2 has once
again rejected the claim of petitioners.

12. It is contended by the learned
counsel for the petitioners that the impugned
order dated 26.12.2018 has been passed by
the respondent no.2 in utter disregard of the
judgment dated 12.10.2018, passed by this
Court in Writ-C No. 16029 of 2018; that the
judgment dated 21.3.2018 passed in Writ-C
No. 38808 of 2017 has attained finality and
the respondent no.2 is bound to proceed
strictly in accordance with the detailed
directions given in the judgment dated
21.3.2018; that the petitioner-bank is working
under the Act, 2002; that the only question
for adjudication before the respondent no.2
was
whether
the
petitioner-bank
is
functioning in one State or not, which issue
was not considered at all by it. Under the
circumstances, it is prayed that the impugned
order dated 26.12.2018 passed by the Central
Registrar Cooperative, New Delhi be set
aside.

13. Primarily, the questions that
would arise for considerations are:-

 (1) Whether the objects of the
petitioner-bank were not confined to one
State, and if so, since when?
236 INDIAN LAW REPORTS ALLAHABAD SERIES

(2) Whether the petitioner-bank
has demonstrated its registration under the
Act, 2002?

(3) Whether the circular of the
Reserve Bank of India can legally mandate
prior permission of Reserve Bank of India
by the petitioner-bank for seeking revision
of its by-laws by amendment?

Consideration of Question Nos. 1 &
2

14. It appears from the record of
this petition that respondent no.2, by its
order dated 24.7.2007 (Annexure No. 9 to
the writ petition), appointed a returning
officer to conduct the elections of the
Board of Directors of the petitioner Cooperative Bank in exercise of power
conferred upon him under Rule 19 of the
Multi-State Cooperative Societies Rules,
20026. In the order, the respondent no.2
had observed that the returning officer may
decide the question of disqualification,
inter-alia, under Section 43(2)(a) read with
Section 45 of the Act, 2002. This is not
denied in the counter affidavit.

15. Annexure-10 to the writ
petition is a letter dated 29.8.2007 issued
by the respondent no.2 to the District
Magistrate, Samastipur Bihar. In this
letter, it has been stated that the
petitioner-bank is registered under Act,
2002 and Rules, 2002. It was mentioned
that the members of the petitioner-bank
are Railway employees of North Eastern
Railway and the branches of the bank
are
spread
in
Izatnagar
(Bareilly),
Lucknow, Gonda, Varanasi, Gorakhpur,
Samastipur, Sonpur etc. The District
Magistrate was requested to provide
accommodation to the Returning Officer
in the Government Guest House/Circuit
House, Samastipur.
16. There is another letter of the
Director (Cooperative), Department of
Agriculture and Cooperative, Ministry of
Agriculture, Government of India dated
2.4.1997 (Annexure no. 14 to the writ
petition) addressed to the Registrar Cooperative
Societies,
U.P.
Lucknow
conveying the approval of the Central
Registrar to initiate action against the
Board of Director of the petitioner-bank
under Section 48 of the Act, 1984
apparently in exercise of powers under
Section 4(2) read with Section 3(c) of the
Act, 1984. Moreover, by an order dated
10.4.1997 (Annexure no. 15 to the writ
petition),
the
Registrar
Cooperative
Societies,
U.P.
Lucknow,
exercising
powers of the Central Registrar under a
notification dated 16.9.1985, superseded
the committee of management of the
petitioner-bank under the provisions of
Section 48(1) of Act, 1984 and appointed a
Board of Administrators of three persons
which was challenged in a writ petition as
mentioned above.

17. The Reserve Bank of India also
permitted the petitioner-bank to open an
office at Izzatnagar in Bareilly in exercise
of powers under Section 23 read with
Section 56(p) of the B.R. Act.

18. In the impugned order dated
26.12.2018, the respondent no. 2 has
observed that the existing by-laws of the
petitioner-bank are registered under the
State Act in the year 1973 and that the
petitioner-bank has not produced any
document evidencing that its by-laws had
been amended at any time by the Central
Registrar.

19. At this stage, it is pertinent to
look into the laws enacted from time to
time governing multi-state cooperative
2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
237
societies. The Act, 1912 was enacted by the
Governor General of India in Council
which received the assent of the Governor
General on 1 March 1912 and was
promulgated by publication in the Gazette
of India dated 9.3.1912 to facilitate
formation of the cooperative societies for
the promotion of thrift and self-help among
agriculturists and artisans and persons of
limited means, and for that purpose to
amend the law relating to Cooperative
Societies. The Act, 1912 extended to the
whole of British India having provisions
for registration of such societies, rights and
liabilities of members, duties and privileges
of registered societies, their inspection,
dissolution, and delegation of powers to the
local government for the whole or any part
of the province, and for any registered
societies or class of such societies to make
rules for carrying out the purposes of the
Act, 1912. Section 18 of the Act, 1912
provided that registration of a society shall
render it a body corporate by the name
under which it is registered, with perpetual
succession and a common seal, and with
power to hold property, to enter into
contracts, to institute and defend suits and
other legal proceedings and to do all things
necessary
for
the
purpose
of
its
constitution. Section 39 to 42 pertained to
dissolution/cancellation of registration of a
society.

20. The petitioner society was
apparently registered in 1919 in Uttar
Pradesh7 under the provisions of the Act,
1912, which Act, as stated, extended to the
whole of British India.

21. The Multi-Unit Cooperative
Societies Act, 19428, received the assent of
the Governor General on 2-3-1942 and was
published in the Gazette of India in Part IV
dated 7.3.1942. The preamble of this Act
read
'An
Act
to
provide
for
the
incorporation, regulation and winding up of
cooperative societies with objects not
confined to one province'. The Act, 1942
extended to the whole of British India and
applied to all cooperative societies with
objects not confined to one province
incorporated before the commencement of
the Act, 1942, under the Cooperative
Societies Act, 1912, or, under any other
Act relating to cooperative societies in
force
in
any
province,
and
to
all
cooperative societies with objects not
confined to one province to be incorporated
after the commencement of the Act, 1942.
The Statements of Objects and Reasons of
the Act, 1942 were as follows-

"Multi-unit
co-operative
societies, that is to say co-operative
societies operating over more than one
province, are 'corporations' within the
meaning of entry 33 in List I of the Seventh
Schedule of the Government of India Act,
1935, and the legislative and executive
jurisdiction
in
respect
of
their
incorporation, regulation and winding up is
exclusively Central. Any provisions of the
Co-operative Societies Act, 1912, or of the
Provincial Co- operative Acts which might
purport to vest executive jurisdiction in
respect of such multi-unit societies in
provinces can have no valid basis. It is
therefore, necessary to legislate for the
incorporation, regulation and winding up of
co-operative societies operating over more
than one province.

2. The Bill applies to the multiunit societies the existing legislation
applicable to societies operating within a
single province. It will apply to all multiunit societies irrespective of the nature of
their work. Provision has been made to
enable the Government to appoint a Central
Registrar but as the number of mult-unit
238 INDIAN LAW REPORTS ALLAHABAD SERIES
societies in existence at present is small, it
is proposed to entrust the functions of the
Central
Registrar
to
the
Provincial
Registrars until the growth in the numbers
of
multi-unit
societies
make
the
appointment
of
a
Central
Registrar
necessary. Powers of inspection and audit
of the branch offices of a multi-unit society
will also be vested in the Registrars of the
Provinces where such branch offices are
situated, and they will also have the power
to call for such returns and information
from the branches of multi-unit societies as
they can call for from single-unit societies
registered by them."

22. Sections 2, 3 and 5 of the Act,
1942, as they originally stood, read as
follows-

"2. Co-operative societies to
which this Act applies registered before
commencement of this Act- (1) A cooperative society to which this Act applies
which has been registered in any province
under the law relating to co-operative
societies in force in that province shall be
deemed in any other province to which its
objects extend to be duly registered in that
other province under the law there in force
relating to co-operative societies, but shall,
save as provided in sub-sections (2) and
(3), be subject for all the purposes of
registration, control and dissolution to the
law relating to co-operative societies in
force for the time being in the province in
which it is actually registered.

(2) Where any such co-operative
society
has
established
before
the
commencement of this Act or establishes
after the commencement of this Act a
branch or place of business in a province
other than that in which it is actually
registered, it shall, within six months from
the commencement of this Act or the date
of establishment of the branch or place of
business, as the case may be, furnish to the
Registrar of Co-operative Societies of the
province in which such branch or place of
business is situated a copy of its registered
by-laws, and shall at any time it is required
to do so by the said Registrar submit any
returns and supply any information which
the said Registrar might require to be
submitted or supplied to him by a cooperative society actually registered in that
province.

(3) the Registrar of Co-operative
Societies of the province in which a branch
or place of business such as is referred to in
sub-section (2) is situated may exercise in
respect of that branch or place of business
any powers of audit and of inspection
which he might exercise in respect of a cooperative society actually registered in the
province.

"3. Co-operative societies to
which this Act applies registered after
commencement of this Act. (1) A society
which might, if its objects were confined to
one province, be registered as a cooperative society in any province under the
law relating to co-operative societies in
force
in
that
province,
shall,
notwithstanding that its objects are not
confined to the province in which its
principal place of business is to be situated,
be deemed for the purposes of registration
as a co- operative society to be situated
wholly in that province, and may be
registered by the Registrar of Co-operative
Societies of that province in accordance
with the law relating to co-operative
societies for the time being in force in that
province, and if so registered shall be
deemed in any other province to which its
objects extend to be duly registered in that
other province under the law there in force
relating to co-operative societies but shall,
save as provided in sub-sections (2) and
2 All. The Mechanical Dept. Primary & Anr. Vs. Union of India & Anr.
239
(3), be subject for all the purposes of
registration, control and dissolution to the
law relating to co-operative societies in
force for the time being in the province in
which it is actually registered.

 (2) Where any such co-operative
society establishes a branch or place of
business in a province other than that in
which it is actually registered, it shall
within six months from the date of
establishment of the branch or place of
business furnish to the Registrar of Cooperative Societies of the province in
which such branch or place of business is
situated a copy of its registered by-laws,
and shall at any time it is required to do so
by the said Registrar submit any returns
and supply any information which the said
Registrar might require to be submitted or
supplied to him by a co-operative society
actually registered in that province.

(3) The Registrar of Co-operative
Societies of the province in which a branch
or place of business such as is referred to in
sub-section (2) is situated may exercise in
respect of that branch or place of business
any powers of audit and of inspection
which he might exercise in respect of a cooperative society is actually registered in
that province.

.................

5. Penalty for failure to furnish
information required under this Act.- If
any co-operative society fails to furnish the
information which it is required to furnish
by or under sub-section (2) of Section 2 or
sub-section (2) of Section 3, or to submit
any return required to be submitted under
either of those sub-sections, the society,
and any officer or member of the society
responsible for the failure, shall each be
liable to fine which may extend to fifty
rupees, and the registration of the society
may, at the discretion of the Registrar of
Co-operative Societies of the province in
which the society is actually registered, be
cancelled."

23. The appointment and powers of
Central
Registrar
of
the
cooperative
societies was specified in Section 4.
Section 5 dealt with penalty. Section 6
delegated power to the Central Government
to make rules by notification in the official
Gazette for carrying into effect the
provisions of the Act, 1942.

24. As a result of reorganization of
States, certain cooperative societies which
had their objects confined to one state only
became multi-unit cooperative societies.
Section 5A was inserted in the Act, 1942
by the States Reorganization Act, 1956
which provided for reconstitution and
reorganization
of
such
multi-unit
cooperative
societies
as
Intra-State
cooperative societies and for the formation
of new cooperative societies and the
transfer thereto of the assets and liabilities
of such multi-unit cooperative societies.

25. The stand of the petitioner-bank
is that they have a branch in Samastipur,
which is in the State of Bihar, and also
branch in the State of Uttarakhand. It is
pertinent to mention here that Bihar
became a separate State well before the
Act, 1942 came into force. Therefore, given
that the Act, 1942 was enacted for
incorporation, regulation and winding up of
Cooperative Societies operating over more
than province, as such the petitioner-bank
could only be covered under the Act, 1942
subject to its demonstrating that its
'objects' were not confined to one State.

 Only
in
such
a
case,
the
petitioner-Bank in terms of the deeming
clause in Section 2 of the Act, 1942 would
be deemed to be duly registered in the
240 INDIAN LAW REPORTS ALLAHABAD SERIES
province of Bihar under the law there in
force relating to Cooperative Societies, and,
consequently, for the purpose only of
registration, control and dissolution, the
petitioner-bank can then claim to be
covered
under
the
law
relating
to
Cooperative Societies in force for the time
being in the province in which it was
actually registered, that is, the State of
Uttar Pradesh. However, the proviso in
sub-section (1) of Section 2 specified that
for other purpose, namely for furnishing to
the Registrar of the Cooperative Societies
of the province in which a branch or place
of business is situated, which is other than
that in which it is actually registered, a
copy of its registered by-laws, returns and
supply any information that the said
Registrar may require to be submitted or
supplied to him by a Cooperative Society
actually registered in that province, in
terms of sub-sections (2) and (3) thereof.

26. After the States Reorganisation
Act, 1956, the Cooperative Societies (U.P.
Amendment) Act, 1956 [U.P. Act No.X of
1957]9 was passed by the Uttar Pradesh
Legislature and assented to by the President
on March 7 and published in the U.P
Gazette, Extraordinary, dated March 12,
1957. The express purpose of this Act as
reflected in its preamble was to amend the
Act, 1912. Under Section 2 of the
Amendment Act, 1956, inter alia, under
Sections 11-A, 11-B, 11-C, 11-D, 11-E and
11-F were added after the existing Section
11 of the Act, 1912. The amendments were
made to attune the Act, 1912 to bring it in
line with the requirements of the State of
Uttar Pradesh. Thereafter, of course, in
exercise of the State's legislative right
under Entry 32 of List II of the Seventh
Schedule to the Constitution, the U.P.
Cooperative Societies Act, 196510 was
enacted. The Act, 1912 in its application to
Uttar Pradesh then stood repealed11.

27. In the Act, 1942, Sections 5-A
and 5-B were inserted by Section 105 of
the States Reorganisation Act, 1956 with
effect from 1.11.1956. Section 105 of the
States Reorganisation Act, 1956 reads as
under:-

"105.