# 3 S.C.R. 997 VIPULBHAI M. CHAUDHARY v. GUJARAT COOPERATIVE MILK MARKETING FEDERATION LIMITED AND OTHERS

- **Citation:** [2015] 3 S.C.R. 997
- **Court:** Supreme Court of India
- **Decided:** 2015-03-19
- **Case number:** Civil Appeal No. 3047 of 2015
- **Bench:** Anil R. Dave, Kurian Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/3-s-c-r-997-vipulbhai-m-chaudhary-v-gujarat-cooperative-milk-marketing-30559
- **Pages:** 42

## Headnote

Cooperative Society:
Removal of Chairperson/elected office bearer by a
motion of no-confidence in the absence of a specific
provision on removal by no confidence in the Act, Rules
A
B
c
or even Bye-laws of a Co-operative Society - Held: Office D
bearer is liable to be removed in the event of Joss of
confidence by following the same procedure by which he
was elected to office - Gujarat Cooperative Societies Act,
1961 - s. 73, proviso -
Constitution of India, 1950 -
Arts.243ZT, 243ZH(b).
E
No confidence motion - Held: There is no uniformity
with regard to the procedure and process regarding motion
of no confidence in local self governments - Having regard
to the set up in local self-governments preva1Jing in many F
of the States as such, in the case of cooperative societies
registered under any Central or State law, a motion of no
confidence against an office bearer should be moved only
after two.years of his assumption of office -
Jn case the
motion of no confidence is once defeated, a fresh motion G
shall not be introduced within another one year.
Laws relating to Cooperative Societies - Historical
background and the legislation - Discussed.
997
H
998
SUPREME COURT REPORTS
[2015] 3 S.C.R.
· A
Interpretation of statutes: Held: If the statute is silent
or imprecise on the requirements under the Constitution,
it is for the court to read the constitutional mandate into
the provisions concerned and declare it accordingly
B
Dismissing the appeals, the Court
HELD: 1. If a person has been selected to an
office through democratic process, and when that
person looses the confidence of the representatives
c who selected him, those representatives should
necessarily have a democratic right to remove such an
office bearer in whom they do not have confidence, in
case those institutions are viewed under the
Constitution/statues as democratic institutions. Once
o the cooperative society is conferred a constitutional
status, it should rise to the constitutional aspirations
as a democratic institution. So, it is for the respective
legislative bodies to ensure that there is democratic
functioning. When the Constitution is eloquent, the
E laws made thereunder cannot be silent. If the statute
· is silent or imprecise on the requirements under the
Constitution, it is for the court to read the
constitutional mandate into the provisions concerned
and declare it accordingly. Article 243ZT has given a
F period of one year to frame/reframe the statutes in
consonance with Part IXB and thereafter, i.e., with
effect from 12.01.2013, those provisions which are
inconsistent with Part IXB, cease to operate. [Paras 21,
G 25) [1017-C-D; 1019-C-E]
H
Bhanumati and Ors. v. State of Uttar Pradesh through
its Principal Secretary and Ors. (2010) 12 SCC 1: 2010
(11) SCR240; Pratap Chandra Mehta v. State Bar Council
of Madhya Pradesh and Ors. (2011) 9 SCC 573: 2011 (11)
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP.
999
MILK MARKETING FED. LTD.
SCR965; Usha Bharti v. State of Uttar Pradesh and Ors. A
(2014) 7 SCC 663: 2014 (4) SCR1076 - distinguished.
Thompson (Pauper) v. Gold and Co. [1910) A.C. 409
- referred to.
2. The entire administration, management and B
control of the respondent-Federation are vested in the
Board of Directors as per the Bye-law in terms of
proviso to Section 73 of the Gujarat Cooperative
Societies Act, 1961. The Chairperson of the first c
respondent is elected by the Board for a term of three
years and after the 97th Amendment to the Constitution,
the term is five years. When the post of Chairperson
falls vacant, the Board is bound to elect a new
Chairperson for the remaining term. The post of o
Chairperson may fall vacant on account of variety of
reasons like resignation, death or cessation of
membership in the Board, operation of Section 76B of
the Act, i.e., removal by the Registrar on account of
persistent default or misconduct. The removal by no E
confidence is not expressly provided in the Bye-laws.
Neither is there any such provision in the Ac

## Text

_Characters 0–39,816 of 67,715. This is a partial read: ask again with offset=39816 for what follows._

[2015) 3 S.C.R. 997
VIPULBHAI M. CHAUDHARY
v.
GUJARAT COOPERATIVE MILK MARKETING
FEDERATION LIMITED AND OTHERS
(Civil Appeal No. 3047 of 2015 etc.)
MARCH 19, 2015
[ANIL R. DAVE AND KURIAN JOSEPH, JJ.]
Cooperative Society:
Removal of Chairperson/elected office bearer by a
motion of no-confidence in the absence of a specific
provision on removal by no confidence in the Act, Rules
A
B
c
or even Bye-laws of a Co-operative Society - Held: Office D
bearer is liable to be removed in the event of Joss of
confidence by following the same procedure by which he
was elected to office - Gujarat Cooperative Societies Act,
1961 - s. 73, proviso -
Constitution of India, 1950 -
Arts.243ZT, 243ZH(b).
E
No confidence motion - Held: There is no uniformity
with regard to the procedure and process regarding motion
of no confidence in local self governments - Having regard
to the set up in local self-governments preva1Jing in many F
of the States as such, in the case of cooperative societies
registered under any Central or State law, a motion of no
confidence against an office bearer should be moved only
after two.years of his assumption of office -
Jn case the
motion of no confidence is once defeated, a fresh motion G
shall not be introduced within another one year.
Laws relating to Cooperative Societies - Historical
background and the legislation - Discussed.
997
H
998
SUPREME COURT REPORTS
[2015] 3 S.C.R.
· A
Interpretation of statutes: Held: If the statute is silent
or imprecise on the requirements under the Constitution,
it is for the court to read the constitutional mandate into
the provisions concerned and declare it accordingly
B
Dismissing the appeals, the Court
HELD: 1. If a person has been selected to an
office through democratic process, and when that
person looses the confidence of the representatives
c who selected him, those representatives should
necessarily have a democratic right to remove such an
office bearer in whom they do not have confidence, in
case those institutions are viewed under the
Constitution/statues as democratic institutions. Once
o the cooperative society is conferred a constitutional
status, it should rise to the constitutional aspirations
as a democratic institution. So, it is for the respective
legislative bodies to ensure that there is democratic
functioning. When the Constitution is eloquent, the
E laws made thereunder cannot be silent. If the statute
· is silent or imprecise on the requirements under the
Constitution, it is for the court to read the
constitutional mandate into the provisions concerned
and declare it accordingly. Article 243ZT has given a
F period of one year to frame/reframe the statutes in
consonance with Part IXB and thereafter, i.e., with
effect from 12.01.2013, those provisions which are
inconsistent with Part IXB, cease to operate. [Paras 21,
G 25) [1017-C-D; 1019-C-E]
H
Bhanumati and Ors. v. State of Uttar Pradesh through
its Principal Secretary and Ors. (2010) 12 SCC 1: 2010
(11) SCR240; Pratap Chandra Mehta v. State Bar Council
of Madhya Pradesh and Ors. (2011) 9 SCC 573: 2011 (11)
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP.
999
MILK MARKETING FED. LTD.
SCR965; Usha Bharti v. State of Uttar Pradesh and Ors. A
(2014) 7 SCC 663: 2014 (4) SCR1076 - distinguished.
Thompson (Pauper) v. Gold and Co. [1910) A.C. 409
- referred to.
2. The entire administration, management and B
control of the respondent-Federation are vested in the
Board of Directors as per the Bye-law in terms of
proviso to Section 73 of the Gujarat Cooperative
Societies Act, 1961. The Chairperson of the first c
respondent is elected by the Board for a term of three
years and after the 97th Amendment to the Constitution,
the term is five years. When the post of Chairperson
falls vacant, the Board is bound to elect a new
Chairperson for the remaining term. The post of o
Chairperson may fall vacant on account of variety of
reasons like resignation, death or cessation of
membership in the Board, operation of Section 76B of
the Act, i.e., removal by the Registrar on account of
persistent default or misconduct. The removal by no E
confidence is not expressly provided in the Bye-laws.
Neither is there any such provision in the Act or Rules.
The only enabling provision is Bye-law 18.2 which
mandates that in case the office of the Chairperson of
the Federation falls vacant before the expiry of his F
term for any reason, the Board has to elect a new
Chairperson for the remaining term. [Paras 32, 38, 39)
[1023-G; 1026-F-H; 1027-A-B)
Lakshmanan, President, Thiruvi/wamal Weavers CoG
operative Society v. II. Vel/iankeri, Member of Board of
Directors, Thiruvilwamala Weavers Co-operative Society
Ltd. and Ors. AIR 2002 Kerala 325; Veeramachaneni
Venkata Narayana v. The Deputy Registrar of Co-operative
societies, Eluru, West Godavari District and Ors. I.LR. H
1000
SUPREME COURT REPORTS
[2015) 3 S.C.R.
A [1975) A.P. 242; Hindurao Ba/want Patil and Anr. v.
B
Krishnaro Pashuram Patil and Ors. AIR 1982 Bombay
216; Jagdev Singh v. The Registrar, Co-operative
Societies, Haryana and Ors. AIR 1991 P & H 149 -
referred to.
3. Section 26B simply deals with removal for
misconduct or persistent default/non-performance. A
person with good conduct may still not earn the
confidence of the people who selected him to the
c office. The very concept of cooperation is to work
jointly towards the same end. Unless there is
cooperativeness among the elected cooperators who
constitute the Governing Body for achieving the object
for which ttie society is constituted and for which
o those representatives are elected by the members
entrusting them with the management of affairs of the
society, there will be total chaos. Cooperation among
the cooperators is the essence of democratic
functioning of a cooperative society. If there is no
E de!llocracy in a cooperative society, it ceases to be a
cooperative society as conceived by the Constitution
of India under the 971h Amendment. A right to elect is
not a fundamental right nor a common law right; it is
a statutory right, and any question relating to election
F has to be resorted within the four corners of the Act.
[Paras 46, 47) [1030-F-H; 1031-A-C]
Jyoti Basu and Ors. v. Debi Ghosa/ and Ors. (1982)
1 SCC 691: 1982 (3) SCR 318 - relied on.
G
Seaford Court Estates v. Asher (1949) 2 All ER 155
- referred to.
4. The cooperative registered under the Central or
the State Act is bound to function as a democratic
institution and conduct its affairs based on democratic
H
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1001
MARKETING FED. LTD.
principles. Democratic functioning on democratic A
principles is to be reflected in the respective Acts or
Rules or Bye-laws both on the principle and procedure.
If not, it is for the court to read the democratic
principles into the Act or Rules or Bye-laws. If a
procedure is prescribed in any Act or Rule or By.e-law B
regarding election of an office bearer by the Board, as
defined under Article 243ZH(b) of the Constitution of
India, and for removal thereof, by way of a motion of
no confidence, the same procedure has to be followed.
In case there is no express provision under the Act. or C
Rules or Bye-laws for removal of an office bearer, such
office bearer is liable to be removed in the event of loss
of confidence by following the same procedure by
which he was elected to office. [Para 53] [1034-H, 1035D
A-D] [1035-F-H; 1036-A-C]
Rattan Chand Hira Chand v. Askar Nawaz Jung (Dead)
by Lrs. and Ors. (1991) 3 SCC 67: 1991 (1) SCR 327 -
relied on.
Case Law Reference
2010 (11) SCR 240
Distinguished
. Para 18
2011· (11) SCR 965
Distinguished
Para 19
2014 (4) SCR 1076
Distinguished
Para 19·
(1910) A.C. 409
referred to
Para 28
AIR 2002 Kerala 325
referred to
Para 40
I.LR. (1975) A.P. 242
referred to
Para 41
AIR 1982 Bombay 216
referred to
Para 42
AIR 1991 P & H 149
referred to
Para 43
1982 (3) SCR 318
relied on
Para 47
E
F
G
H
1002
A
SUPREME COURT REPORTS
[2015] 3 S.C.R.
1991 (1) SCR 327
relied on
Para 52
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
3047 of 2015 etc.
8
From the Judgment and Order dated 10.01.2014 of
the High Court of Gujarat at Ahmedabad in LPA No. 6 of
2014 in Civil Application No. 13220 of 2013 in Special
Application No. 16515 of 2013.
WITH
c
C. A. Nos. 3048 and 3049 of 2015
Kapil Sibal, H. Ahmedi, Harin P Raval, Mihir Thakar,
B. B. Naik, Anip Sachthey, Saakaar Sardana, Rohan
D Sharma for the Appellant.
Tushar Mehta, ASG, Dr. Rajeev Dhawan, Ashok Desai,
Jesal Wahi, Puja Singh, Giss Antony (for Hemantika Wahi),
Abhijeet Sinha, Dilip Singh Parmar, Bharat S. Patel, Sanjay
E R. Hegde, Amit M. Panchal, S. Nithin (for Anil Kumar
Mishra-I), Shamik Sanjanwala, Nandish Chudgar, Kailash
Pandey, Ranjeet Singh (for K. V. Sreekumar), Purvish
Jitendra Malkan, B. S. Patel, Pradhuman Gohil., Vikash
Singh, Taruna Singh Gohil, Jaikriti Singh Jadeja,
F Prabuddha Sharma, for the Respondents.
The Judgment of the Court was delivered by
KURIAN, J. 1. Leave granted.
G
2. Whether in the absence of a specific provision on
H
removal by no confidence in the Act, Rules or even Byelaws of a Cooperative Society, the Chairperson/elected
office bearer can be removed by a motion of no
confidence, is the short but complex question.
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1003
MARKETING FED. LTD. [KURIAN, J.]
3. Appellant was removed from the office of the A
Chairperson of the first respondent-cooperative society
through a no confidence motion. Aggrieved, appellant filed
a writ petition which was dismissed as per the impugned
judgment and thus the appeal.
4. Shri Kapil Sibal, Shri H. Ahmedi and Shri Harin P.
B
Raval, learned Senior Counsel led the arguments on
behalf of the appellant. Shri Tushar Mehta, Additional
Solicitor General, Dr. Rajeev Dhawan, Shri Ashok Desai
and Shri V. Giri, learned Senior Counsel, Shri Sanjay R. c
Hegde and Shri B. S. Patel, learned Counsel, led the
arguments on behalf of the respondents.
5. International Cooperative Alliance Statement on the
Cooperative Identity was adopted in Manchester, United
Kingdom on 23.09.1995. The 'cooperative' is defined as:
D
"A co-operative i.s an autonomous association of
persons united voluntarily to meet their common
economic, social, and cultural needs and aspirations
through a jointly-owned and democratically-controlled
E
enterprise."
(Emphasis supplied)
6. The Statement also provides for 'values' on which
cooperatives should model themselves, which reads as F
follows:
"Co-operatives are based on the values of self-help,
self-responsibility, democracy, equality, equity and
solidarity. In the tradition of their founders, G
co-operative members believe in the ethical values of
honesty, openness, social responsibility and caring for
others."
(Emphasis supplied)
H
1004
SUPREME COURT REPORTS
[2015] 3 S.C.R.
A
7. The Statement further provides for 'seven
cooperative principles' as guidelines by which the
cooperatives put their values into practice. Following are
the principles:
B
"1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organizations, open to all
persons able to use their services and willing to accept
the responsibilities of membership, without gender,
c
social, racial, political or religious discrimination.
D
E
2nd Principle: Democratic Member Control
Co-operatives are democratic organizations controlled
by their members. who actively participate in setting
their policies and making decisions. Men and women
serving as elected representatives are accountable to
the membership. In primary co-operatives members
have equal voting rights (one member, one vote) and
co-operatives at other levels are also organized in a
democratic manner.
3rd Principle: Member Economic Participation
Members contribute equitably to, and demoqratically
F
control, the capital of their co-operative. At least part
of that capital is usually the common property of the
co-operative. Members usually receive limited
compensation, if any, on capital subscribed as a
condition of membership. Members allocate surpluses
G
for any or all of the following purposes: developing
their co-operative, possibly by setting up reserves, part
of which at least would be indivisible; benefiting
members in proportion to their transactions with the
co-operative; and supporting other activities approved
H
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1005
MARKETING FED. LTD. [KURIAN, J.]
by the membership.
A
4th Principle: Autonomy and Independence
Co-operatives are autonomous, self-help organizations
controlled by their members. If they enter to 8
agreements with other organizations, including ·
governments, or raise capital from external sources,
they do so on terms that ensure democratic control by
their members and maintain their co-operative
autonomy.
c
5th Principle: Education, Training and Information
Co-operatives provide education and training for their
members, elected representatives, managers, and
employees so they can contribute effectively to the D
development of their co-operatives. They inform the
general public - particularly young people and opinion
leaders -
about the nature and benefits of cooperation.
E
6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively
and strengthen the co-operative movement by working
together through local, national, regional and F
international structures.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of
their communities through policies approved by their G
members."
(Emphasis supplied)
8. The cooperative movement in India started at the H
1006
SUPREME COURT REPORTS
[2015] 3 S.C.R.
A beginning of the 20'h century. Though the movements were
also based on some of the values and principles stated
above, it appears that the cooperatives in India did not
have effective autonomy, democratic functioning and
professional management. The National Policy on
B Cooperatives announced by the Department of Agriculture
and Cooperation, Ministry of Agriculture, Government of
India adopted in March, 2002, is wholly based on the
definition, values and principles stated above.
97'h
Amendment to the Constitution of India, in fact, gave a
C constitutional frame to this policy.
9. Apart from providing for the right to form
cooperative societies to be a fundamental right under
Article 19 of the Constitution of India and insertion of
D Article 438 under the Directive Principles of State Policy
on promotion of cooperative societies, the amendment also
introduced a new Part IXB on Cooperative Societies.
Reference to the Statement of Objects and Reasons of the
amendment would give a clear picture as to the need to
E strengthen the democratic basis and provide for a
constitutional status to the cooperative societies. Thus, one
has to see the constitutional aspirations on the concept of
cooperative societies after the 97'h Amendment in the
F Constitution of India which came into effect on 12.01.2012.
"STATEMENT OF OBJECTS AND REASONS
The co-operative sector, over the years, has made
significant contribution to various sectors of national
G
economy and has achieved voluminous growth.
However, it has shown weaknesses in safeguarding
the interests of ihe members and fulfilment of objects
for which these institutions were organised. There
have been instances where elections have been
H
postponed indefinitely and nominated office bearers or
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1007
MARKETING FED. LTD. [KURIAN, J.]
administrators remaining in-charge of these institutions A
for a long time. This reduces the accountability of the
management of co-operative societies to their
members. Inadequate professionalism in management
in many of the co-operative institutions has led to poor
services and low productivity. Co-operatives need to
B
run on well established democratic principles and
elections held on time and in a free and fair manner.
Therefore, there is a need to initiate fundamental
reforms to revitalize these institutions in order to
ensure their contribution in the economic development C
of the country and to serve the interests of members
and public at large and also to ensure their autonomy,
democratic functioning and professional management.
2. The "co-operative societies" is a subject enumerated D
in Entry 32 of the State List of the Seventh Schedule
of the Constitution and the State Legislatures have
accordingly enacted legislations on co-operative
societies. Within the framework of State Acts, growth
of co-operatives on large scale was envisaged as part E
of the efforts for securing social and economic justice
and equitable distribution of the fruits of development.
It has, however, been experienced that in spite of
considerable expansion of co-operatives, their F
performance in qualitative terms has not been up to
the desired level. Considering the need for reforms in
the Co-operative Societies Acts of the States,
consultations with the State Governments have been
held at several occasions and in the conferences of G
State Co-operative Ministers. A strong need has been
felt for amending the Constitution so as to keep the
co-operatives free from unnecessary outside
interferences and also to ensure their autonomous
organisational set up and their democratic functioning.
H
1008
A
8
c
D
E
F
SUPREME COURT REPORTS
[2015) 3 S.C.R.
3. The Central Government is committed to ensure
that the co-operative societies in the countrv function
in a democratic, professional, autonomous and
economically sound manner. With a view to bring the
necessary reforms, it is proposed to incorporate a new
Part in the Constitution so as to provide for certain
provisions covering the vital aspects of working of cooperative societies like democratic, autonomous and
professional functioning. A new article is also proposed
to be inserted in Part IV of the Constitution (Directive
Principles of State Policy) for the States to endeavour
to promote voluntary formation, autonomous
functioning, democratic control and professional
management of cooperative societies. The proposed
new Part in the Constitution, inter alia, seeks to
empower the Parliament in respect of multi-State cooperative societies and the State Legislatures in case
of other co-operative societies to make appropriate
law, laying down the following matters, namely:-
( a) provisions for incorporation, regulation and
winding up of co-operative societies based on the
· principles of
democratic member-control,
member-economic participation and autonomous
functioning;
(b) specifying the maximum number of directors of
a co-operative society to be not exceeding twentyone members;
G
(c) providing for a fixed term of five years from the
date of election in respect of the elected members
of the board and its office bearers;
(cf) providing for a maximum time limit of six months
H
during which a board of directors of co-operative
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1009
MARKETING FED. LTD. [KURIAN, J.]
society could be kept under supersession or A
suspension;
(e) providing for independent professional audit;
(f) providing for right of information to the members 8
of the co-operative societies;
(g) empowering the State Governments to obtain
periodic reports of activities and accounts of cooperative societies;
(h) providing for the reservation of one seat for the
Scheduled Castes or the Scheduled Tribes and two
seats for women on the board of every co-operative
society, which have individuals as members from
c
•
such categories;
D
(t) providing for offences relating to co-operative
societies and penalties in respect of such offences.
4. It is expected that these provisions will not only E
ensure the autonomous and democratic functioning
of co-operatives. but also ensure the accountability
of management to the members and other
stakeholders and shall provide for deterrence for
violation of the provisions of the law.
5. The Bill seeks to achieve the above objectives."
(Emphasis supplied)
F
10. Article 438 of the Constitution of India provides for G
promotion of cooperative societies:
"438. The State shall endeavour to promote voluntarv
formation. autonomous functioning, democratic control
and professional management of co-operative H
1010
SUPREME COURT REPORTS
[2015) 3 S.C.R.
A
societies."
(Emphasis supplied)
11. Part IXB of the Constitution of India is titled as
B ''The Cooperative Societies". A few provisions would be
relevant for our consideration.
Article 243ZH(b) defines "board":
"243ZH(b) "board" means the board of
C
directors or the governing body of a co-operative
society, by whatever name called, to which the
direction and control of the management of the
affairs of a society is entrusted to;"
D
E
F
G
H
(Emphasis supplied)
Article 243ZH(c) defines "cooperative society":
"243ZH(c) "co-operative society" means a
society registered or deemed to be registered under
any law relating to co-operative societies for the time
being in force in any State;"
"Office bearer" is under Article 243ZH(e):
"243ZH(e) "office bearer" means a President,
Vice-President, Chairperson, Vice-Chairperson,
Secretary or Treasurer of a co-operative society and
includes any other person to be elected by the
board of any co-operative society;"
Article 243ZJ provides for the number and term of
members of the board and its office bearers:
"243ZJ. (1) The board shall consist of such
number of directors as may be provided by the
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1011
MARKETING FED. LTD. [KURIAN, J.]
Legislature of a State, by law:
Provided that the maximum number of
directors of a co-operative society shall not exceed
twenty-one:
Provided further that the Legislature of a
A
B
State shall, by law, provide for the reservation of one
seat for the Scheduled Castes or the Scheduled·
Tribes and two seats for women on board of every
co-operative society consisting of individuals as C
members and having members from such class or
category of persons.
(2) The term of office of elected members of
the board and its office bearers shall be five years 0
from the date of election and the term of office
bearers shall be coterminous with the term of the
board:
Provided that the board may fil~ a casual
vacancy on the board by nomination out of the E
same class of members in respect of which the
casual vacancy has arisen, if the term of office of
the board is less than half of its original term.
(3) The Legislature of a State shall, by law,
F
make provisions for co-option of persons to be
members of the board having experience in the field
of banking, management, finance or specialization in
any other field relating to the objects and activities
undertaken by the co-operative society as members G
of the board of such society:
Provided that the number of such co-opted
members shall not exceed two in addition to twentyone directors specified in the proviso to clause (1 ):
H
1012
SUPREME COURT REPORTS
(2015) 3 S.C.R.
A
Provided further that such co-opted members
B
shall not have the right to vote in any election of the
co-operative society in their capacity as such
member or to be eligible to be elected as office
bearers of the board:
Provided also that the functional directors of
a co-operative society shall also be the members of
the board and such members shall be excluded for
the purpose of counting the total number of directors
C
specified in first proviso of clause (1 )."
D
E
F
(Emphasis supplied)
Article 243ZT provides for continuance of the
existing laws:
"243ZT. Notwithstanding anything in this Part,
any provision of any law relating to co-operative
societies in force in a State immediately before the
commencement of the Constitution (Ninety Seventh
Amendment) Act, 2011, which is inconsistent with
the provisions of this Part. shall.continue to be in
force until amended or repealed by a competent
Legislature or other competent authority or until the
expiration of one year from such commencement.
whichever is less.'."
(Emphasis supplied) ·
12. Thus, by 12.01.2013, all laws on cooperative
G societies were bound to be restructured in consonance
with the Ninety Seventh Amendment of the Constitution of
India and, in any case, any provision in the Act or Rules
or Bye-laws otherwise inconsistent with the Constitution will
be inoperative thereafter. Articles 438 and 243ZT are
H mandates to all the States and the competent authorities .
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to structure cooperative societies as conceived in the A
Constitution of India, if not already there. Therefore, we
have to see whether the Act, Rules or Bye-laws contain
any provision for democratic functioning.
13. The first legislation on cooperative movement in B
India was the Cooperative Credit Societies Act, 1904 and,
thereafter, the cooperative societies emerged in India as
State sponsored/promoted institutions. The main objective
was only credit intended to relieve the poor agriculturists
from the clutches of moneylenders. The first urban. C
cooperative credit society under the Act of :1904 was
registered in Kanjivaram in erstwhile Madras province1• The
traits of democracy were present in the very first legislation
through the principle "one man, one vote". Since the first
legislation was limited to the credit societies, a new D
legislation was introduced 8 years later as "Cooperative
Societies Act, 1912". The restriction regarding registration
limited to credit societies was taken away and any society
established with the object of promoting the economic
interests of its members i.n accordance with the E
cooperative principles, or a society established with the
object of facilitating the operations of such a society, could
be registered2•
14. Under the Government of India Act of 1919 F
(Montague Chelmsford Reforms), cooperation became a
provincial subject which gave a further impetus to the
movement. This gave birth to several cooperative land
1 "Brief History of Urban Cooperatives" adapted from a paper by O.P. G
Sharma published on Reserve Bank of India website
- www.rbi.org.in/scripts/briefhistory.aspx.
2 The Co-operative Movement in India by Eleanor M. Hough, Fourth Edition,
1959
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. A mortgage banks. The first of its kind was registered in
Punjab. Close to independence and thereafter, we see a
radical change and increased growth in the cooperative
movement. Activities were spread to all spheres of human
endeavour, and thus in 2002, National Policy on
B Cooperatives was announced.
15. The cooperative societies having been conferred
a constitutional status by the Ninety Seventh Amendment,
the whole concept of cooperatives has undergone a major
C change.· In 1993, the local self.governments, viz.,
panchayats and municipalities were also given
constitutional status under Parts IX and IXA of the
Constitution of India by the 73'd and 74'" Amendments. The
Statement of Objects and Reasons would show that the
D Constitution wanted the local bodies to function as vibrant
democratic units of self-government. After two decades,
cooperative societies were given the constitutional status
by including them under Part IXB. The main object for the
said amendment was also to ensure "their autonomy,
E democratic functioning and professional management".
16. The National Policy on Cooperatives announced
in March 2002 has recognized democracy, equality, equity
and solidarity as values of cooperatives. Cooperative
F society has been declared as a democratic institution.
Democratic principles have all through been recognized as
one of the cooperative principles though the constitutional
affirmation of those principles came only in 2012.
G
17. The principle of representative democracy is the
election of representatives by the people otherwise eligible
to caste their vote and the people thus elected, constituting
the body for the management of an institution. Thus, in the
case of cooperative societies, after the amendment in the
H Constitution, there has to be a Board of elected
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1015
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representatives, which may be called Board of Directors or A
Governing Body or a Managing Committee, etc., to which
the members entrust the direction and control of the
management of the affairs of the society. That
representative body selects one among the elected
representatives as its Chairman or any other office bearer,
B
as the case may be. Selection is the act of carefully
choosing someone as the most suitable to be the leader
or office bearer. Thus, there is a mt of difference between
election of delegates/representatives to constitute a body
and selection of a person by the body from amongst the C
elected members to be the leader. It is to be borne in mind
that the management and control of the society is
entrusted to the representative body, viz., the Board of
Directors and that the Chairperson elected by the Board D
of Directors is the Chairperson of the society and not of
the Board of directors.
18. In Bhanumati and others v. State of Uttar
Pradesh through its Principal Secretary and others3 ,
the cooperative principles governing democratic institutions E
have been discussed in detail; no doubt while dealing with
the Panchayati Raj institutions.
However, the basic
democratic principles governing .both the institutions,
enjoying the constitutional status, are the same and,
F
therefore, it would be profitable to refer to the discussion
on the principles. To quote:
"58. These institutions must run on democratic
principles. In democracy all persons heading public
bodies can continue provided they enjoy the G
confidence of the persons who comprise such bodies.
This is the essence of democratic republicanism. This
3 (2010) 12 sec 1
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A
explains why this provision of no-confidence motion
was there in the Act of 1961 even prior to the Seventythird Constitution Amendment and has been continued
even thereafter. Similar provisions are there in different
B
States in India.
66. Democracy demands accountability and
transparency in the activities of the Chairperson
especially in view of the important functions entrusted
with the Chairperson in the running of Panchayati Raj
c
institutions. Such duties can be discharged by the
Chairperson only if he/she enjoys the continuous
confidence of the majority members in the panchayat.
So any statutory provision to demonstrate that the
Chairperson has lost the confidence of the majority is
D
conducive to public interest and adds strength to .such
bodies of self-governance. Such a statutory provision
cannot be called either unreasonable or ultra vires Part
IX of the Constitution."
E
19. In Pratap Chandra Mehta v. State Bar Council
of Madhya Pradesh and others4 and in Usha Bharti v.
State of Uttar Pradesh and others~. the concept of
democratic principles governing the democratic institutions
have been discussed. In a democratic institution,
F confidence is the foundation on which the superstructure
of democracy is built. The bedrock of democratic
accountability rests on the confidence of the electorate. If
the representative body does not have confidence in the
office bearer whom they selected, democracy demands
G such officer to be removed in a democratic manner.
20. A cooperative society is registered on cooperative
4 c2011i 9 sec 573
H s c2014) 1 sec es3
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1017
MARKETING FED. LTD. [KURIAN, J.)
principles of democracy, equity, equality and solidarity. A
Democratic accountability, mutual trust, fairness,
impartiality, unity or agreement of feeling among the
delegates, cooperativeness, etc., are some of the cardinal
dimensions of the cooperative principles. A body built on
such principles cannot be led by a captain in whom the coB
-;ailors have no confidence.
21. If a person has been selected to an office through
democratic process, and when that person looses the
confidence of the representatives who selected him, those C
representatives should necessarily have a democratic right
to remove such an office bearer in whom they do not have
confidence, in case those institutions are viewed under the
Constitution/statues as democratic institutions.
22. In Bhanumati case (supra), at pwagraph-67, this
Court elaborated on this principle:
D
"67. Any head of a democratic institution must be
prepared to face the test of confidence. Neither the E
democratically elected Prime Minister of the country
nor the Chief Minister of a State is immune from such
a test of confidence under the Rules of Procedure
framed under Articles 118 and 208 of the Constitution.
Both the Prime Minister of India and Chief Ministers F
of s~~eral States heading the Council of Ministers at
the Centre and in several States respectively have to
adhere to the principles of collective responsibilities to
their respective houses in accordance with Articles
75(3) and 164(2) of the Constitution."
G
23. In Pratap Chandra Mehta case (supra), at
paragraph-45, the principle has been discussed as follows:
"45. In the instant case, the election process as H
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contemplated under the relevant laws is that the
members of a State Bar Council are elected by the
electorate of advocates on the rolls of the State Bar
Council from amongst the electorate itself. The elected
members then elect a Chairman, a Vice-Chairman and
the Treasurer of the State Bar Council as well as
constitute various committees for carrying out different
purposes under the provisions of the Advocates Act.
In other words, the body which elects the Chairman or
Vice-Chairman of a State Bar Council always consists
of members elected to that Council. The democratic
principles would require that a person who attains the
position of a Chairman or Vice-Chairman, as the case
may be, could be removed by the same electorate or
smaller body which elected them to that position by
taking recourse to a "no-confidence motion" and in
accordance with the Rules. The body that elects a
person to such a position would and ought to have the
right to oust him/her from that post, in the event the
majority members of the body do not support the said
person at that time. Even if, for the sake of argument,
it is taken that this may not be generally true, '.:the
provisions of Rule 122-A of the M.P. Rules make it
clear, beyond doubt, that a "no-confidence motion" can
be brought against the elected Chairman provided the
conditions stated in the said Rules are satisfied."
24. In Usha Bharti case (supra) also, this Court
eloquently held at paragraph-53 as follows:
"53. In our opinion, the provision for removing an
elected representative such as Panchayat Adhyaksha
is of fundamental importance to ensure the democratic
functioning of the Institution as well as to ensure the
transparency and accountability in the functions
\
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1019
MARKETING FED. LTD. [KURIAN, J.]
performed by the elected representatives."
A
25. No doubt, in the cases referred to above, the
respective Acts contained a provision regarding no
confidence. What about a situation where there is no
express provision regarding no confidence? Once the B
cooperative society is conferred a constitutional status, it
should rise to the constitutional aspirations as a democratic
institution. So, it is for the respective legislative bodies to
ensure that there is democratic functioning. When the
Constitution is eloquent, the laws made thereunder cannot C
be silent. If the statute is silent or imprecise on the
requirements under the Constitution, it is for the court to
read the constitutional mandate into the provisions
concerned and declare it accordingly. Article 243ZT has
given a period of one year to frame/reframe the statues in D
consonance with Part IXB and thereafter, i.e., with effect
from 12.01.2013, those provisions which are inconsisterit
with Part IXB, cease to operate.
-
26. Silence in Constitution and abeyance as well has E
been dealt extensively GY Michael Foley in his celebrated
work "The Silence of ·constitutions". To quote from the
Preface:
"Abeyances refer to those constitutional gaps which
F
remain vacuous for positive and constructive
purposes. They are not, in any sense, truces between
two or more defined positions, but rather a set of
implicit agreements to collude in keeping fundamental
questions of political authority in a state of irresolution. G
Abeyances are, in effect, compulsive hedges against
the possibility of that which is unresolved being
exploited and given meanings almost guaranteed to
generate profound division and disillusionment.
Abeyances are important, therefore, because of their H
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capacity to deter the formation of conflicting positions
in just those areas where the potential for conflict is
most acute. So central are these abeyances, together
with the social temperament required to sustain them,
that when they become the subject of heightened
interest and subsequent conflict, they are not merely
accompanied by an intense constitutional crisis, they
are themselves the essence of that crisis."
27. In Part II, Chapter Four, the author has also dealt
C with the constitutional gaps and the arts of prerogative. To
the extent relevant, it reads as follows (Page-82):
D
E
F
"Gaps in a constitution should not be seen as simply
~
empty space. They amount to a substantial plenum of
strategic content and meaning vital to the preservation
of a constitution. Such interstices accommodate the
abeyances within which the sleeping giants of
potentially acute political conflict are communally
maintained in slumber. Despite the absence of any
documentary or material form, these abeyances are
real, and are an integral part of any co.nstitution. What
remains unwritten and indeterminate can be just as
much responsible for the operational character and
restraining quality of a constitution as its more tangible
and codified components. .. . "
28. Where the Constitution has conceived a particular
structure on certain institutions, the legislative bodies are
bound to mould the statutes accordingly. Despite the
G constitutional mandate, if the legislative body concerned
does not carry out the required structural changes in the
statutes, then, it is the duty of the court to provide the
statute with the meaning as per the Constitution. . . . "The
job of the Supreme Court is not to expound the meaning
H
VIPULBHAI M. CHAUDHARY v. GUJARAT COOP. MILK 1021
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of the constitution but to provide it with meaning"6• The A
reference obviously is to United States Supreme Court. As
a general rule of interpretation, no doubt, nothing is to be
added to or taken from a statute. However, when there are
adequate grounds to justify an inference, it is the bounden
duty of the court to do so.
. .. "It is a corollary to the B
general rule of literal construction that nothing is to be
added to or taken from a statue unless there are adequate
grounds to justify the inference that the legislature intended
something which it omitted to express"7• According to Lord
Mersey in Thompson (Pauper) v. Goold and Co.8 ... "It is C
a strong thing to read into an Act or Parliament words,
which are not there, and in the absence of clear necessity,
it is wrong to do". In the case of cooperative societies, after
the Ninety Seventh Amendment, it has become a clear or D
strong necessity to do the strong thing of reading into the
legislation, the constitutional mandate of the cooperative
societies to be governed as democratic institutions. . ..
"The constitutional provisions have to be construed broadly
and liberally having regard to the changed circumstances E
and the needs of time and polity"9•
29.