Delhi High Court: In a case wherein a writ petition was filed seeking declaration of Section 35(10)(cc) of the Delhi Co-Operative Societies Act, 2003 (‘2003 Act’) as ultra vires, the Division Bench of Manmohan and Saurabh Banerjee*, JJ. held that there were no reasons for declaring the provisions of Section 35(10)(cc) of the 2003 Act to be ultra-vires as there was no mala fide and/or personal gain to anyone or the legislature in inserting Section 35(10)(cc) in the 2003 Act vide the Delhi Co-operative Societies (Amendment) Act, 2004 (‘2004 Amendment’) and the later amendment thereto vide the Delhi Co-operative Societies (Amendment) Act, 2011. The Court further held that the amendment carried out to Section 35(10)(cc) of the 2003 Act by the 2011 Amendment was logical and a well-thought-off policy decision taken in larger public interest which need not be interfered with.
Background
The petitioner was a member store of Respondent 1, the Delhi Consumer Co-Operative Wholesale Store Ltd. (‘Society’), which was registered in 1962 under the Bombay Co-operative Societies Act, 1912 and later under the Delhi Co-operative Societies Act, 1972 (‘1972 Act’), which was repealed by 2003 Act with the principal object of doing wholesale and retail business in consumer goods as per their bye-laws. As per the bye-law 22(a) of the Society, its Managing Committee consisted of nine members, out of which five members including the President, Vice-President, Secretary and two members, were to be nominated by the Administrator, Respondent 3-Government of NCT of Delhi (‘Delhi Government’) and the remaining four members, were to be elected at the general meeting. The elections of the Managing Committee of the Society (‘Committee’) were held after a gap of 27 years on 24-6-2001.
Despite various orders by the Co-ordinate Bench of this Court, no elections were held since the Committee consisting of nine members had seven members nominated by the Delhi Government. The said dominance and control of the Society by the Delhi Government was flowing from Section 35(10)(cc) of the 2003 Act which permitted the Delhi Government to substitute the elected members with its nominees in proportion to the issued equity share capital held by it. Being aggrieved, the petitioner filed the present writ petition seeking declaration of Section 35(10)(cc) of the 2003 Act as ultra vires and for passing directions to the Society and Delhi Government to conduct time bound elections of the Committee within a period of three months based on membership records, primarily on the grounds that Section 35(10)(cc) of the Act not only usurped different powers of the Committee but also gave complete control to the Delhi Government and was against Section 30 and other provisions of the 2003 Act.
Analysis, Law, and Decision
The Court observed that the repeal of the 1972 Act by the 2003 Act and the introduction of Section 35(10)(cc) vide the 2004 Amendment, were all carefully done after proper scrutiny to consolidate the law relating to co-operative societies with the sole objective of facilitating cumulative promotion, growth and development of different types of co-operative societies for economic betterment of all the members of the co-operative societies in particular and the society as a whole in general, as also to make the co-operative sector a viable economic movement and thus, furthering growth in the fields of information technology, health and education through the medium of co-operative societies.
The Court opined that “the insertion of Section 35(10)(cc) vide the Amendment Act proved to be a lifeline for the Society that was hitherto starving with hardly any business activity. Thus, no mala fide or personal gain could be attributed to any of the respondents or the legislature in incorporating the impugned Section 35(10)(cc) in the 2003 Act”.
The Court noted that as the percentage of issued equity shares held by the Delhi Government and the percentage of members of the Committee to be nominated by it already stood introduced/changed/ proportionately increased way back in 2003, the only change vide the 2011 Amendment to Section 35(10)(cc), as challenged by the petitioner herein, was with respect to the increase of percentage of members to be nominated to the Committee. The Court also noted that the petitioner had not challenged the insertion of Section 35(10)(cc) in the 2003 Act vide the 2004 Amendment till the filing of the present writ petition, wherein it had sought to challenge a subsequent amendment carried out by the 2011 Amendment, thus, this Court opined that the petitioner was guilty of delay, laches and acquiescence. The Court further opined that the holding of elections to the Committee was not a matter of right merely because the petitioner herein was affected by the incorporation of Section 35(10)(cc) in the 2003 Act.
The Court opined that “amendment(s) made to an existing Statute could not be modified, looked into, or set aside simply because the same was not viable or suitable to a party”. The Court further opined that merely because the petitioner was losing emerging business/economic opportunities was not sufficient for this Court to declare the amendment made to Section 35(10)(cc) of the 2003 Act by the 2011 Amendment as ultra vires without challenging the insertion thereof by the 2004 Amendment. The Court further opined that any amendment of the present nature was not liable for interference by a Court of law, much less, when the same was within the parameters and not against public policy and there was a reasonable nexus of the said incorporation and amendment to Section 35(10)(cc) with the object of aiding public policy as it was able to sustain and aid the Society.
The Court held that the amendment carried out to Section 35(10)(cc) of the 2003 Act by the 2011 Amendment was logical and a well-thought-off policy decision taken in larger public interest which need not be interfered with. The insertion of Section 35(10)(cc) in the 2003 Act by the 2004 Amendment and the subsequent amendment thereof by the 2011 Amendment were both made after due deliberation and taking proper precautions at every level from time to time. The Court further held that the petitioner, being governed by the Statute was bound to follow what was laid down in the Act, rules, regulations and bye-laws, including any subsequent amendments thereto, if any, lest it would defeat the purpose of a Society.
The Court dismissed the present writ petition and held that there were no reasons for declaring the provisions of Section 35(10)(cc) of the 2003 Act to be ultra-vires as there was no mala fide and/or personal gain to anyone or the legislature in inserting Section
[The Sudhar Sabha Consumer Co-Operative Store Ltd. v. The Delhi Consumer Co-Operative Wholesale Store Ltd., 2023 SCC OnLine Del 3457, decided on 2-6-2023]
Advocates who appeared in this case :
For the Petitioner: Anju Bhattacharya, Suriti, Vinod Fulara, Advocates;
For the Respondents: Sameer Vashisht, ASC (Civil); Sujata Kashyap, Vanshay Kaul, Amar Singh, Arjun Gupta, Advocates.
*Judgment authored by: Justice Saurabh Banerjee
