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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s).3888 OF 2015

VINESHKUMAR MAVJIBHAI PARMAR …Appellant(s)

VERSUS

DETHALI GOPALAK VIVIDH KARYAKARI SAHAKARI MANDALI LTD. AND ORS.     ...Respondent(s)

WITH

CIVIL APPEAL NO(s). 3889 OF 2015

CIVIL APPEAL NO(s). 3890 OF 2015

CIVIL APPEAL NO(s). 3891 OF 2015

CIVIL APPEAL NO(s). 3892 OF 2015

CIVIL APPEAL NO(s). 3893 OF 2015

CIVIL APPEAL NO(s). 3894 OF 2015

CIVIL APPEAL NO(s). 3896 OF 2015

J U D G M E N T

Chelameswar, J.

1. All these eight appeals are preferred by the unsuccessful

respondents in various special civil applications (writ petitions

under Article 226 of the Constitution) before the High Court of

Gujarat  at  Ahmedabad disposed of  by a  common judgment

dated 17.3.2015.

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2. Whether  the  members  of  the  Managing  Committees  of

co-operative  societies  (against  whom  proceedings  under

Section 107 of  the Gujarat  Co-operative Societies Act,  1961

are pending) have a right to participate in the election process

of an Agricultural Produce Marketing Committee constituted

under  the  Gujarat  Agricultural  Produce  Markets  Act,  1963.

The  two  enactments  mentioned  above  are  referred  to

hereinafter as “the SOCIETIES ACT” and “the MARKETS ACT”.

3. The facts leading to the present litigation:

Sec.  9  of  the  MARKETS  ACT  contemplates  the

establishment  of  a  “Market  Committee”  for  every  “market

area”. Both expressions are defined under Section 2(xiii) and 2

(xiv)1.

Section  10  of  the  MARKETS  ACT  declares  market

committees to be bodies corporate with perpetual succession

and a common seal.  Section 11 stipulates that every market

committee  shall  consist  of  17  members  falling  into  5

categories.  Section 11(1)(i) stipulates that eight agriculturist

members shall be elected by an electoral college consisting of

1  Section 2 (xiii) “market area” means any area declared or deemed to be declared to be a market area under this Act;

    Section  2(xiv)  “market  committee”  means  a  market  committee  established  or  deemed to  be established under this Act;

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the members of the managing committees of the “co-operative

societies  dispensing  agricultural  credit”  (hereafter  CREDIT

SOCIETIES) in the market area.

Section 11(1)(i) of the MARKETS ACT reads as follows:

“eight agriculturists who shall be elected by members of  managing  committees  of  co-operative  societies (other than co-operative marketing societies and milk  produce  co-operative  societies) dispensing agricultural credit in the market area;”

4. The  activity  of  co-operative  societies  in  the  State  of

Gujarat is regulated by the SOCIETIES ACT. Section 107 of

the SOCIETIES ACT provides for the liquidation and winding

up of the societies functioning under the Act. Section 107(1)

authorises the Registrar to pass an interim order directing a

cooperative society to be wound up for any one of the reasons

specified  in  clauses  (a),  (b)  and  (c)  of  Section  107(1).

Sub-Section(3), thereof authorises the Registrar to pass a final

order after granting a hearing to the society against which an

interim order under sub-Section(1) is made. Such a final order

could  be  one  either  finally  winding  up  the  society  by

confirming  the  interim  order  or  vacating  the  interim  order

passed earlier, whichever is appropriate in law having regard

to the facts and circumstances of the case.  

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5. In  exercise  of  the  power  under  Section  107  of  the

SOCIETIES ACT proceedings were initiated by the Registrar2

against  eleven  Co-operative  societies  (established  for  the

purpose  of  dispensing  agricultural  credit)  operating  in  the

market area of a market committee known as SIRPUR market

committee,  the  details  of  which  are  not  necessary  for  the

present purpose.

6. We  are  concerned  with  only  eight  of  the  eleven

co-operative  societies  mentioned  above.  Admittedly,  with

reference  to  each  of  the  said  eight  co-operative  societies,

interim orders were passed initially under Section 107(1)3 of

the  SOCIETIES  ACT  directing  them  to  be  wound  up.

Subsequently,  final  orders directing the winding up of  each

2     Section 2(17)  of the Gujarat Co-operative Societies Act, 1961 - “Registrar” means a person appointed to be the Registrar of Co-operative Societies under this Act; and includes to the extent of the powers of the Registrar conferred on any other person under this Act, such person and includes an Additional or Joint Registrar;

3 Section 107 Winding up – (1) [Except as otherwise provided in sub-section (1A) if the Registrar, –- (a) after an inquiry has been held under section 86, or an inspection has been made under any of the provisions of sub-section (8) of section 84, section 87 or section 88 or on the report of the auditor auditing the accounts of the society, or] (b) on receipt of an application made upon a resolution carried by three-fourths of the members of a society present at a special general meeting called for the purpose, or     (c) of his own motion, in the case of a society which –

(I) has not commenced working, or (ii) has ceased working, or (iii) possesses shares of members deposits not exceeding five hundred rupees, or (iv) has ceased to comply with any conditions as to registration and management in this act or

[the rules or the bye-laws, or] (v) has failed to comply with any directions issued under sub-section (1) of Section 160 or

such directions as modified under sub-section (2) of that section.] is of the opinion that a society ought to be wound up, he may make an interim order directing

it to be wound up.

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one of the said cooperative societies were also passed.  The

said  orders  were  challenged  before  the  Appellate  authority.

The  matters  eventually  reached  the  High  Court,  complete

details of the litigation may not be necessary except to say that

the High Court had set aside the final orders with a further

direction to the Registrar to conduct an inquiry afresh under

Section 107 of the SOCIETIES ACT and pass appropriate final

orders.  Admittedly the said enquiry is pending.  

7. Elections to the SIRPUR market committee fell due in the

year  2015.   A  voters  list  (under  Rule  7  of  the  Gujarat

Agricultural Produce Market Rules, 1965) came to be prepared

consisting  the  names  of  the  members  of  the  managing

committee  of  the  above-mentioned  8  cooperative  societies

(alongwith other societies) operating within the market area of

the SIRPUR market committee.

8. In view of the pendency of the liquidation proceedings,

objections for the inclusion of the names of the members of

the managing committees of the 8 cooperative societies were

raised.   Objections  were  upheld  by  the  proceedings  dated

26.2.2015 of the Additional Registrar and Co-operation Officer

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(Market),  Patan,  directing  the  deletion  of  the  names  of  the

members of the managing committee of the above-mentioned 8

cooperative  societies4.  Operative  portion  of  the  order  dated

26.2.2015 w.r.t. one of the 8 societies reads;

“I, Mr. H.G. Rawal, Authorized Officer & Co-operation Officer [Market], Patan & in exercise of the powers conferred in me and as per the provisions of the Gujarat Agriculture Produce Market Committee Act, 1963 and Market Committee Rules, 1965  allow  the  application  by  the  objector  Mr.  Parmar Vineshkumar Mavjibai and Prajapati Manishbai Khemabhai for deleting the names of the Managing Committee members of the Shri Kalyana Group Gopalak Vividh Karyakari Sahkari Mandali  Ltd.  at  Kalyana,  Taluka  Siddhpur  from  the Agriculturist constituency voters list and accept the just and proper objections raised, and in the voters list Sr. 259 to 279 voters names are ordered to be deleted.  The said orders will be subject to the orders passed by the Hon. High Court and Additional  Registrar[Appeal],  Co-operative  society,  Gujarat State, Gandhinagar.

              -sd-                [S.G. Rawal]         Additional Registrar &

           Co-operation Officer [Market]                   Patan”

9. Aggrieved  by  such  a  decision,  the  members  of  the

managing  committee  of  the  said  society  filed  special  civil

applications invoking Article 226 of the Constitution of India.

By the judgment impugned in these appeals, the special civil

application  was  allowed  setting  aside  the  orders  of  the

Additional Registrar dated 26.2.2015.  

10. We are informed that  the  facts  relating to  the other  7

4      We take the facts of the first respondent society in Civil Appeal No. 3891/2015 as representative  facts of the 8 appeals.   

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societies are substantially similar.

11. It is argued by the appellant;

Since the 8 societies in question are in the process of

being wound up, they ceased to be CREDIT SOCIETIES

within the meaning of Section 11(1)(i)  of the MARKETS

ACT because  their  activities  are  limited  under  Section

110  of  the  SOCIETIES  ACT  i.e.,  the  business  of  the

societies can be carried only so far as may be necessary

for  the  beneficial  winding  up  of  the  society.  It  is,

therefore, submitted that the members of the managing

committees of these 8 societies would be disentitled to be

voters  at  an  election  for  the  agricultural  market

committee.

According to the appellants, permitting the members of

the managing committees of CREDIT SOCIETIES which

are in the process of being wound up, to participate in

the election process and elect agriculturist members to

the market committees, would be inconsistent with the

spirit  of  the MARKETS ACT, in view of  the declaration

contained in Section 108(2)5 of the SOCIETIES ACT.  

5      See F/N 9 infra  

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 It is, therefore, submitted that the High Court erred in

interfering  with  the  orders  of  the  Registrar  directing  the

deletion  of  the  names  of  the  members  of  the  managing

committees of the 8 societies from the voters list.  

12. None appears for anyone of the respondents.

13. The  purpose  of  the  establishment  of  the  market

committees  was  examined  and  explained  by  this  Court  in

M.C.V.S.  Arunachala  Nadar v. The  State  of  Madras  &

Others, AIR 1959 SC 300.  A constitution bench of this court

made an elaborate inquiry into the legislative history of  the

subject and held that:  

“The object of such legislation is to protect the producers of  commercial  crops  from  being  exploited  by  the middlemen and profiteers and to enable them to secure a fair return for their produce”

                                                (See Para 6)

14. For achieving the said purpose, market committees are

constituted under the laws made by the legislatures of various

States  giving  representation  considered  appropriate  by  the

concerned legislature to various classes of persons who have

an interest in achieving the purpose of the market committees.

15. The legislature of  the State of  Gujarat thought it  fit  to

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give representation under the MARKETS ACT to 5 classes of

persons: (i) agriculturists, (ii) traders holding general licences6

(iii) representatives of the cooperative marketing societies7 (iv)

a nominated member by the concerned local authority8 within

whose jurisdiction the “principal market yard” is situated and

(v) two nominated members of the State Government.

16. Of the above-mentioned 5 classes of members, the first

three classes consist of elected members and the later two are

of  nominated.   Three  distinct  electoral  colleges  are  created

under sub-clause (i), (ii) and (iii) of Section 11(1) for electing

the 3 classes of elected members.  

“Section 11. Constitution of market committee –  

(1)   Every market  committee shall  consist  of  the following members namely:-

(i)   eight  agriculturists  who  shall  be  elected  by members  of  managing  committees  of  co-operative societies  other  than co-operative  marketing  societies

6  Section 2(ix) – “licence” means a licence granted under section 6 or, as the case may be, a general or special licence granted under section 27;

7  Section 2(v) – “co-operative marketing society” means a society registered or deemed to be registered as such under the Gujarat  Co-operative Societies Act, 1961 (Guj.  X of 1962),  and engaged in the business  of  buying or  selling of  agricultural  produce or  of  possessing of  agricultural  produce and holding a licence;

8  Section 2(xi) – “local authority” means – (a) a corporation constituted under the Bombay Provincial Municipal Corporation Act, 1949 (Bom.

LIX of 1949); or (b) a municipality constituted or deemed to be constituted under –

(i) the Bombay District  Municipal  Act,  1901 (Bom. III  of  1901),  or that  Act as adapted and applied to the Saurashtra area; or

(ii) the Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of 1925), or that Act as adapted and applied to the Saurashtra area or that Act as applied to the Kutch area; or

    (c)  a  village  panchayat  constituted  or  deemed  to  be  constituted  under  the  Bombay  Village Panchayats Act, 1959 (Bom. III of 1959), or a gram panchayat or nagar panchayat constituted under the Gujarat Panchayat Act, 1961 (Guj. VI of 1962);

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and  milk  produce  co-operative  societies  dispensing agricultural credit in the market area;

(ii)  four  members  to  be  elected  in  the  prescribed manner  from  amongst  themselves  by  the  traders holding general licenses;

(iii) two  representatives  of  the  Co-operative marketing  societies  situate  in  the  market  area  and holding general licenses, to be elected from amongst the  members  (other  than  nominal,  associate  or sympathizer  members)  of  such  societies  by  the members  of  the  managing  committees  of  such societies:

Provided that where the number of co-operative marketing  societies  so  situate  does  not  exceed  two, only one representative shall be so elected.”

17. While  the  elected  representatives  to  the  market

committee belonging to classes (ii)  and (iii)  mentioned above

are required to be members of the concerned electoral college,

the  Act  does  not  insist  upon such requirement  w.r.t.  those

who are to be elected under the class (i) mentioned above.  In

other words, the members of the market committee belonging

to  the  1st of  the  abovementioned  5  classes  need  not  be

members of the electoral college which elects them.

18. The right to elect ‘agriculturists’ to a market committee is

conferred under Section 11 of  the MARKETS ACT upon the

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electoral  college  consisting  of  members  of  the  managing

committees  of  cooperative  societies  operating  in  the  market

area  which  are  dispensing  agricultural  credit  (hereafter

CREDIT SOCIETIES).  

19. The reason for the above, as we understand, is that those

who seek election under the category of agriculturists belong

to a very nebulous class, whereas the persons falling under

classes  (ii)  and  (iii)  mentioned above  can be  identified  with

certainty  based  upon  public  records.   Therefore,  the

legislature, in its wisdom, though it fit to create an electoral

college which, by virtue of its very activity, would be in a better

position  to  identify  agriculturists  eligible  to  contest  for  the

membership of a market committee.  By the very nature of the

office held by them, members of the managing committees of

“cooperative  societies  dispensing  agricultural  credit”  would

have an opportunity to interact with the agriculturists.

20. The  pendency  of  the  liquidation  proceedings  in  law9,

9      Section 108.   Appointment of Liquidator - (1)  When an interim or final order is made under  Section 107 for the winding up of a society, the Registrar may, in accordance with the rules appoint a  person to be the liquidator of the society, and fix his remuneration.

(2) Where an interim order is made the officers of the society shall hand over to the liquidator the custody and control of all the property, effects and actionable claims to which the society is or appears to be entitled, and of all books, records and other documents pertaining to the business of the society and, shall have no access to any of them.

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compels  the  elected  members  of  the  managing  committee

(OFFICERS of  the Society)  of  a co-operative society to hand

over the custody and control of  all  the property and assets,

etc. of the society to the liquidator appointed under Section

107(1) of the SOCIETIES ACT.  According to the appellants,

the  necessary  implication  flowing  therefrom  is  that  the

members  of  the  managing  committee  of  a  society  facing

liquidation proceeding are debarred from anyway dealing with

the affairs of their society.  Therefore, they should also not be

permitted to exercise the right to participate in the election of

a market committee.

21. The powers of the liquidator are specified under Section

110, the details of which may not be necessary except to state

that the liquidator virtually becomes the caretaker manager of

the society whose winding up is impending. At the same time

it is equally important to note that Sec. 108(3)(b)10 stipulates

that the officers11 of the cooperative society vacate their offices

10     108 (3) When a final order is made confirming the Interim, order, the officers of the society xxx xxx xxx xxx (b)  shall vacate their offices and while winding up order remains in force the general body of the  society shall not exercise any powers.

11    Section 2(14) of the SOCIETIES ACT. – “officers” means a person elected or appointed by a society to  any  office  of  such  society  according  to  its  bye-laws;  and  includes  a  chairman,  vice-chairman, president, vice-president, managing director, manager, secretary, treasurer, member of the committee, and any other person elected or appointed under this Act, the rules or the bye-laws, to give directions in regard to the business of such society.

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only  on  the  passage  of  the  final  order  of  winding  up.

Obviously,  they  continue  to  be  the  office  bearers  but  are

disabled from enjoying certain rights attached to the office and

performing certain functions to be performed by the holders of

the office

22. The  rights  and  functions  of  the  OFFICERS  of  a

co-operative society are many. Some of them are created by

the statute under which the office is created. Others could be

the creation of subordinate legislation (in the context of  the

present case, even the byelaws of the society).  The existence

or lack of such rights and functions depend upon the scheme

and  tenor  of  the  SOCIETIES  ACT  and  the  subordinate

legislation made thereunder.  Such rights  and functions  are

put an end to only by the operation of law i.e., the SOCIETIES

ACT.  

23. Apart  from that,  nothing  prevents  the  legislature  from

conferring by another law additional rights or functions on a

person holding an office created under the SOCIETIES ACT.  

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24. The  legislature  of  Gujarat  by  Section  11(1)  of  the

MARKETS  ACT  conferred  on  the  OFFICERS  of  a  class  of

CREDIT  SOCIETIES  an  additional  function  of  electing

members of the market committees. Such function is neither

conferred  on  the  OFFICERS of  all  the  societies  functioning

under  the  SOCIETIES  ACT  nor  such  function  includes  the

right  to  elect  every  member  of  the  concerned  market

committee.  Such a function obviously creates a right in the

officers of the societies.  Such a statutory right could not be

taken away in the absence of any express authority of law.

25. The  Gujarat  legislature  expressly  provided  under  the

SOCIETIES ACT for  the curtailment of  certain rights  of  the

officers of societies facing liquidation proceedings.  It must be

remembered that at the same time it also declared that such

OFFICERS cease to be the officers of the Society only when a

final  order of  winding up is passed.   In a given case if  the

Registrar  after  an  appropriate  enquiry  following  the  interim

order of winding decides not to finally wind up the society, the

OFFICERS  of  the  society  would  once  again  be  entitled  to

exercise all the rights associated with it and perform all the

functions attached to the office. Therefore, merely because the

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officers  of  CREDIT  SOCIETY facing  liquidation  are  disabled

from enforcing certain rights attached to the office or perform

certain  obligations  appended  to  the  office,  it  does  not

necessarily follow that they are disabled from performing every

function entrusted by law to such office.

26. We now deal with the submission that the society ceased

to  be  a  CREDIT  SOCIETY  in  view  of  the  pendency  of  the

winding up proceedings.

27. We  are  of  the  opinion  that  the  phrase  “co-operative

societies dispensing agricultural credit in the market area” in

Section 11(1)(i) of the MARKETS ACT is only descriptive of the

purpose for which the societies are established.  Section 11(1)

(i) cannot be construed as imposing an incessant obligation of

“dispensing  agricultural  credit”  in  order  to  enable  the

members of the managing committee of CREDIT SOCIETIES to

participate  in  the  election  to  the  market  committee.  The

obligation, if any, to “dispense agricultural credit” arises under

the bye-laws of the society subject of course to the availability

of funds and various other factors. We are of the opinion that

the above quoted words are only descriptive of  the class of

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society  the  members  of  whose  managing  committees  are

entitled to participate in the election of the market committee.

It is obvious from the language of the sub-section that there

can  exist  more  than  one  class  of  co-operative  societies

functioning under the Act.  The very fact that the legislature

took  care  to  expressly  exclude  members  of  the  managing

committees  of  two  classes  of  societies  i.e.  “Co-operative

Marketing  Societies”  and  “Milk  Produce  Co-operative

Societies”, definitely indicates that there can exist more than

one class of societies – apart from the common knowledge.  

28. Section  412 of  the  SOCIETIES  ACT  contemplates  that

societies could be registered for different purposes.  They are –

“the promotion of  the economic interests  of  its  members or

general  welfare  of  its  members  or  economic  interest  of  the

general welfare of the public”.

29. Since  Section  11(1)(i)  of  the  MARKETS  ACT  is

establishing an electoral  college for the election of a certain

class  (agriculturists)  of  members  of  the  market  committees,

the  legislature  thought  it  fit  that  only  the  members  of  the

12    Section 4. Societies which may be registered.— A society, which has as its object the promotion of the  economic  interests  or  general  welfare  of  its  members  or  of  the   public,  in  accordance  with co-operative principles, or as society established with the object of facilitating the operations of any such society, may be registered under this Act.  

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managing  committees  of  those  co-operative  societies  which

have a nexus to agricultural activity should be members of the

electoral college.  

30. The  submission  of  the  appellant  that  Section  11(1)(i)

imposes a legal obligation that the members of the managing

committees  of  only  those  co-operative  societies  which  are

currently dispensing agricultural credit in the market area are

entitled to participate in the electoral process of the concerned

market  committee  (in  other  words,  the  phrase  “co-operative

societies  dispensing  agricultural  credit”  is  indicative  of  the

current activity of the societies but not the purpose for which

the  society  is  established),  would  lead  to  various  difficult

questions:

(i) What  is  the  period  to  which  the  currency  of  such

activity would relate to?  Whether the activity should

be  current  when  the  voters’  list  is  prepared  or  the

activity should continue even on the date of voting?

  (ii) Whether  credit  societies  which  do  not  dispense

agricultural credit for a certain period of time because

of either paucity of  funds or borrowers are debarred

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from “dispensing agricultural credit” because of some

legal  prohibition  or  any  other  reason  operating

temporarily cease to be societies whose objective is to

provide agricultural credit?

31. Credit Societies against which there is an ‘interim order’

of  winding  up  are  temporarily  debarred  from  dispensing

agricultural  credit,  by  virtue  of  the  operation  of  law.   The

embargo  imposed  by  such  interim  order  may  or  may  not

fructify  into  a  final  order  of  winding  up.  (We  have  already

discussed this aspect of the matter at para 21 supra).  On the

face of such possibility of the society resuming its activity of

“dispensing  agricultural  credit”  -  to  debar  its  managing

committee  members  from  discharging  their  statutory

obligation under the MARKETS ACT would be productive of

public mischief.  Such an interpretation of the statute must be

avoided.   

32. For the above reasons, we do not see any merit in the

appeals.  Therefore, the appeals are dismissed.  

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….………………………….J.                                                       (J. Chelameswar)

…….……………………….J.   (Prafulla C. Pant)

New Delhi; November 16, 2016   

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