In the decision reported in (2005) 5 SCC 632 (Zoroastrian Co-operative Housing Society Ltd. V. District Registrar, Co-operative (Urban) and Others), the Supreme Court once again dealt with an important issue. The said case relates to a Society formed with the object of providing housing to the members of the Parsi community. The Society was registered in terms of Section 11 of the Bombay Co-operative Societies Act. The Bye-law provided the objects of the Society to carry on trade of building and of buying, selling hiring, letting and developing land in accordance with co-operative principles. The Bye-law provided that members belonging to Parsi community shall be elected by the Committee of the Society, subject to satisfying other conditions in the Bye-law. The transfer of share allotted to a member had to have the previous sanction of the Committee of the Society. It is seen that one of the members of the Society sold the plot, in which he had constructed a residential building, to another member with the previous sanction of the Society. The said Member sought for permission of the Society to demolish the bungalow and put up a commercial building in its place. The same was refused by the Society by quoting the Bye-law, which did not permit commercial use of the land. Hence, the said member sought for permission to construct residential flats to be sold to Parsis. It is seen that though the permission was granted to construct residential flats to be sold only to the members of the Parsi community, the said Member did not act on the permission for a period of seven years. However, the said Member was stated to have started negotiation with Builders' Association, in violation of the restriction on the sale of shares or property to a non-Parsi. This gave rise to a litigation and an order of injunction was sought for against the Society. The Board informed that the Society could not restrict its membership only to the Parsi community and that the membership should remain open for every person. Based on that, once again the Member applied for permission, which was rejected by the Society on the ground that it was contrary to the Rules, Act and the byelaws of the Society.
On a Writ Petition filed as against the Tribunal's orders that the view of the Society was a restriction on the right to property, the same was dismissed by the High Court. Hence, an appeal was preferred before the Apex Court. After referring to the decision reported in AIR 1971 SC 966 (Damyanthi V. Union of India), which was distinguished by the decision reported in AIR 1985 SC 973 (Daman Singh V. State of Punjab), the Supreme Court pointed out that the Rule would prevail over the Bye laws of the Society, which confined the membership to only persons belonging to the Parsi Community. On going through the provisions contained in Section 24(1) of the Bombay Act, the Supreme Court pointed out that it did not contemplate an open membership, de hors the byelaws of the Society, nor it had precluded the Society from prescribing the qualification for membership based on a belief, persuasion or religion for that matter. The individual right of a member got submerged in the collective right of the Society. Thus the Supreme Court referred to the decision reported in (1997) 3 SCC 681 (U.P.V.C.O.D. Chheoki Employees' Coop. Society Ltd.), holding thus:
"His being a member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the society has no independent right qua the society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and the bye-laws and is subject to its operation. The stream cannot rise higher than the source."
The Apex Court held that in the absence of any prohibition in the Act against the formation of a Society for a particular community or origin, it could not be held that the confining of membership, as was done by the Bye-law, was opposed to public policy. It further observed "Membership in a co-operative society only brings about a contractual relationship among the members forming it subject of course to the Act and the Rules. One becomes a member in a co-operative society either at the time of its formation or acquires membership in it on possessing the requisite qualification under the bye-laws of the society and on being accepted as a member. It is not as if one has a fundamental right to become a member of a co-operative society. But certainly, if the application of one for membership, who is otherwise qualified to be a member under the Act, Rules and the bye-laws of the society, is rejected unreasonably or for frivolous reasons, the person may be entitled to enforce his claim to become a member in an appropriate forum or court of law. This is the effect of the decision in Jain Merchants Co-operative Housing Society vs. HUF of Manubhai (1995 (1) Gujarat Law Reporter 19), relied on by the High Court. The said decision does not lay down a proposition, nor can it lay down a proposition, that even a person who does not qualify to be a member in terms of the bye-laws of a society can enforce a right to become a member of that society. It is one thing to say that it is not desirable to restrict membership in a society based solely on religion or sex but it is quite different thing to say that any such voluntary approved bye-law containing such a restriction could be ignored or declared unconstitutional by an authority or a Tribunal created under the Act itself. Normally, the bye-laws of a society do not have the status of a statute and as held by this Court in Coop. Central Credit Bank Ltd. Vs. Industrial Tribunal, Hyderabad (AIR 1970 SC 245), bye-laws are only the rules which govern the internal management or administration of a society and they are of the nature of articles of association of a company incorporated under the Companies Act. They may be binding between the persons affected by them but they do not have the force of a statute."
37. The Apex Court further observed that while the validity of a Bye-law has to be tested in the light of the provisions of the Act and the Rules governing the Co-operative Societies, it is not permissible for the State Government to compel the Society to amend its Bye laws, as it would defeat the object of formation of a Society. Referring to the decision reported in AIR 1989 Bombay 392 (Karvenagar Sahakari Griha Rachana Sanstha Maryadit V. State of Maharashtra), which was subsequently confirmed in the decision reported in (2000) 9 SCC 295 (State of Maharashtra V. Karvenagar Sahakari Griha Rachana Sanstha Maryadit), the Apex Court observed that the paramount consideration of the State lies in the interests of the Society. What is in the interest of the Society is primarily for the Society alone to decide and it is not for the outside agency to have a say on this. Where the Registrar exercised his statutory power to amend the byelaws, such directions should satisfy the requirement of the interests of the Society. It observed that the approved byelaws clearly confer power on the Committee to reject the application for membership of a person who is not qualified in terms of the Bye-law and the same cannot be interfered with on the basis of anything contained in the Act or the Rules and in the name of public policy, a registered Society cannot be directed to admit a member, who is not otherwise qualified to be a member in terms of the duly registered byelaws. As to the nature of the byelaws of a Society, the Supreme Court pointed out "the byelaws of a Co-operative Society setting out the terms of membership to it, is a contract entered into by a person when he seeks to become a member of that society. Even the formation of the society is based on a contract. This freedom to contract available to a citizen cannot be curtailed or curbed relying on the fundamental rights enshrined in Part III of the Constitution of India against State action."
Touching on the rights of a member admitted to a Society, the Supreme court pointed out that when a person exercised his right of association to become a member of a Society by entering into a contract with others, he submerges his rights in the common right to be enjoyed by all. Thus, he is really exercising his right of association guaranteed by Article 19(1)(c) of the Constitution of India. In that process, his rights merge in the rights of the society and are controlled by the Act and the byelaws of the Society. The availability of membership is subject to the qualification prescribed under the provisions of the Act, Rules and the byelaws and if the relevant Bye-law places any restriction on a person admitted to a co-operative society, that Bye-law would be operative against him. Thus the Apex Court upheld the right of the Society that the property was to be dealt with by a member, only in terms of the byelaws of the Society.
The above-said judgments thus laid down that the byelaws framed by the Society are in the nature of contract entered into between persons joining together to form a society; the various clauses of the bye laws must be in consonance with the provisions of the Act and that they are in addition to what is prescribed under the Act and the Rules. As forming of a Society itself is the result of the voluntary act of individuals, admission of new members is also a matter within the choice and option of the members and whenever such option is exercised under the Act, the same is violative of Article 19(1)(c) of the Constitution of India. Apart from the Statute laying down the qualifications and disqualifications, the bye law prescribes the qualification of the Members to be admitted therein. No provision of the Act can compel admission of a member, contrary to the bye laws of the Society. The above decisions are also an authority for the proposition that the State cannot impose membership into the Society and against the free will of the society which would bring in a change in the composition of the Society, since it fundamentally tinkers with the independence of the society and the democratic control that the society exercises in the matter of selecting the members with whom the society desires to associate. Such compulsion would go against the democratic spirit with which the society functions. The interests of the individual member on admission submerges with that of the society. The judgments are also an authority for the proposition that the byelaws are not statutory in character and they cannot run against the provisions of the Act and the Rules.
In State of U.P. and another v. C.O.D. Chheoki Employees' Cooperative Society Ltd. and others, (1997) 3 SCC 681, this Court after referring to Daman Singh's case (supra) held in paragraph 16 that :
"Thus, it is settled law that no citizen has a fundamental right under Article 19(1)(c) to become a member of a Cooperative Society. His right is governed by the provisions of the statute. So, the right to become or to continue being a member of the society is a statutory right. On fulfillment of the qualifications prescribed to become a member and for being a member of the society and on admission, he becomes a member. His being a member of the society is subject to the operation of the Act, rules and bye-laws applicable from time to time. A member of the society has no independent right qua the society and it is the society that is entitled to represent as the corporate aggregate. No individual member is entitled to assail the constitutionality of the provisions of the Act, rules and the bye-laws as he has his right under the Act, rules and the bye-laws and is subject to its operation. The stream cannot rise higher than the source."
It is true that in secular India it may be somewhat retrograde to conceive of co-operative societies confined to group of members or followers of a particular religion, a particular mode of life, a particular persuasion. But that is different from saying that you cannot have a co-operative society confined to persons of a particular persuasion, belief, trade, way of life or a religion. A co-operative society is not a state unless the tests indicated in Ajay Hasia are satisfied. There is no case here that the appellant society satisfies the tests laid down by Ajay Hasia so as to be considered to be a state within the meaning of Article 12 of the Constitution. The fundamental rights in Part III of the Constitution are normally enforced against State action or action by other authorities who may come within the purview of Article 12 of the Constitution. It is not possible to argue that a person has a fundamental right to become a member of a voluntary association or of a co-operative society governed by its own bye-laws. So long as this position holds, we are of the view that it is not possible, especially for a Registrar who is an authority under The Co-operative societies Act, to direct a co- operative society to admit as a member, a person who does not qualify to be a member as per the bye-laws registered under the Act. Nor can a Registrar direct in terms of Section 14 of the Act to amend the bye-laws since it could not be said that such an amendment, as directed in this case is necessary or desirable in the interests of the appellant society. What is relevant under Section 14 of the Act is the interests of the society and the necessity in the context of that interest. It is not the interest of an individual member or an aspirant to a membership.
It is true that in the activities of a society, as envisaged by the bye- laws, the society may acquire rights or incur obligations which may be enforced. But the incurring of such an obligation or the acquiring of such a right, cannot stand in the way of the right to form an association guaranteed by Article 19(1)(c) of the Constitution available to the members of the society who formed themselves into the appellant Society. The position under The Bombay Co-operative Societies Act under which the Society was originally formed was also no different as can be seen from the relevant provisions of the Act. It, therefore, appears to us to be not open to the Registrar or any other authority under The Co-operative Societies Act to direct the Society to go against its own bye-laws and to admit a person to membership as has been sought to be done in this case.
Supreme Court of India
Prem Chand vs Union Of India And Ors on 11 November, 1980
The provisions of the statute ostensibly have a benign purpose and in the context of escalation of crime, may be restrictions which, in normal times might appear unreasonable, may have to be clamped down on individuals. We are conscious of the difficulties of detection and proof and the strain on the police in tracking down criminals. But fundamental rights are fundamental and personal liberty cannot be put at the mercy of the Police. Therefore, Ss. 47 and 50 have to be read strictly. Any police apprehension is not enough. Some ground or other is not adequate. There must be a clear and present danger based upon credible material which makes the movements and acts of the person in question alarming or dangerous or fraught with violence. Likewise, there must be sufficient reason to believe that the person proceeded against is so desperate and dangerous that his mere presence in Delhi or any part thereof is hazardous to the community and its safety. We are clear that the easy possibility of abuse of this power to the detriment of the fundamental freedoms of the citizen persuades us to insist that a stringent test must be applied. We are further clear that natural justice must be fairly complied with and vague allegations and secret hearings are gross violations of Art. 14, 19 and 21 of the Constitution as expounded by this Court in Maneka Gandhi. We do not go deep into this question for two reasons: there is another petition where the constitutionality of these identical provisions is in issue. Secondly, the counsel for the State has fairly conceded that no action will now be taken even by way of surveillance against the petitioner. In an age when electronic surveillance and mid-night rappings at the door of ordinary citizens remind us of despotic omens, we have to look at the problem as fraught with peril to constitutional values and not with lexical Laxity or literal liberality.
Supreme Court of India
Dr. N.B. Khare vs The State Of Delhi on 26 May, 1950
It is necessary first to ascertain the true meaning of article 19 (1) (d) read with clause (5) of the same article. There is no doubt that by the order of extern-
ment the right of the petitioner to freedom of movement throughout the territory of India is abridged. The only question is whether the limits of permissible legislation under clause (5) are exceeded. That clause provides as follows:--"19. (5) Nothing in subclauses (d), (e) and (f) of the said clause shall affect the operation of any exist- ing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub- clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe." It is clear that the clause permits imposition of reasonable restrictions on the exercise of the right conferred by sub- clause (d)in the interests of the general public. The rest of the provision of clause (5) is not material and neither side relies on it. Two interpretations of the clause are put before the Court. It is argued that grammatically understood the only question before the Court is whether the impugned legislation imposes reasonable restrictions on the exercise of the right. To put it in other words, the only justiciable issue to be decided by the Court is whether the restrictions imposed by the legislation on the exercise of the right are reasonable. If those restrictions on the exercise of the right are reasonable, the Court has not to consider whether the law imposing the restrictions is rea- sonable. The other interpretation is that while the Consti- tution permits a law laying down reasonable restrictions on the exercise of the rights mentioned in sub-clause 19 (1)
(d), the reasonableness has to be of the law also. It is submitted that in deciding whether the restrictions, on the exercise of the right are reasonable, the Court has to decide not only on the extent and nature of the restric- tions on the exercise of the right but also as to whether the conditions under which the right is restricted are reasonable. The majority judgments of the Patna and the Bombay High Courts, although the impugned Acts of the State Legislatures before them were materially different on cer- tain important points, have given clause (5) of article 19 the latter meaning.
In my opinion, clause (5) must be given its full mean- ing. The question which the Court has to consider is wheth- er the restrictions put by the impugned legislation on the exercise of the right are reasonable or not. The question whether the provisions of the Act provide reasonable safe- guards against the abuse of the power given to the executive authority tO administer the law is not relevant for the true interpretation of the 'clause. The Court, on either inter- pretation, will be entitled to consider whether the re- strictions on the right to move throughout India, i.e,, both as regards the territory and the duration, are reasonable or not. The law providing reasonable restrictions on the exercise of the right conferred by article 19 may contain substantive provisions as well as procedural provisions. While the reasonableness of the restrictions has to be considered with regard to the exercise of the right, it does not necessarily exclude from the consideration of the Court the question of reasonableness of the procedural part of the law. It is obvious that if the law prescribes five years externment or ten years externment, the question whether such period of externment is reasonable, being the substan- tive part, is necessarily for the consideration of the Court under clause (5). Similarly, if the law provides the proce- dure under which the exercise of the right may be restrict- ed, the same is also for the consideration of the Court, as it has to determine if the exercise of the right has been reasonably restricted. I do not think by this interpretation the scope and ambit of the word "reasonable" as applied to restrictions on the exercise of the right, is in any way unjustifiably enlarged. it seems that the narrow construc- tion sought to be put on the expression, to restrict the Court's power to consider only the substantive law on the point, is not correct. In my opinion this aspect of the construction of article 19 (5) has escaped the minority judgment in the two matters mentioned above. I am not con- cerned with the conclusions of the two Courts about the invalidity of the provisions of the Acts they were asked to consider. To the extent they help in the interpretation of article 19 (5) only they are helpful.
The next question is whether the impugned Act contains reasonable restrictions on the exercise of the right given under article 19 (1)(d)or (e). It was argued on behalf of the petitioner that under section 4 the power to make the order of externment was given to the Provincial Government or the District Magistrate, whose satisfaction was final. That decision was not open to review by the Court. On that ground it was contended that there was an unreasonable restriction on the exercise of the citizen's right. In my opinion, this argument is unsound. This is not legislative delegation. The desirability of passing an individual order of externment against a citizen has to be left to an offi- cer. In the Act such a provision cannot be made. The satisfaction of the officer thus does not impose an unrea- sonable restriction on the exercise of the citizen's right. So far as the Bombay High Court is concerned Chagla C.J. appears to have decided this point against the contention of the petitioner.
It was next urged that under section 4 (3) the order made by the District Magistrate shall not, unless the Pro- vincial Government by special order otherwise direct, remain in force for more than three months. It was argued that the period of three months itself was unreasonable as the ex- ternee had no remedy during that time. It was contended that when the Provincial Government directed the renewal of the order no limit of time was prescribed by the legislature for the duration of the order. The order therefore can be in operation for an indefinite period. This was argued to be an unreasonable restriction on the exercise of a citi- zen's right. In this connection it may be pointed out that in respect of preventive detention, which is a more severe restriction on the right of the citizen, the Constitution itself under article 22 (4) to (7) permits preventive deten- tion for three months without any remedy. The period of three months therefore prima facie does not appear unreason- able. Under the proviso to section 4 (5) the Provincial Government is not permitted to direct the exclusion or removal from the Province of a person ordinarily residing in the Province, and similarly the District Magistrate is not permitted to order the exclu- sion or removal of a person ordinarily resident in his district from that district. This is a great safeguard provided under the East Punjab Public Safety Act. The further extension of the externment order beyond three months may be for an indefinite period, but in that connec- tion the fact that the whole Act is to remain in force only up to the 14th August, 1951, cannot be overlooked. More- over, this whole argument is based on the assumption that the Provincial Government when making the order will not perform its duty and may abuse the provisions of the sec- tion. In my opinion, it is improper to start with such an assumption and decide the legality of an Act on that basis. Abuse of the power given by a law sometimes occurs; but the validity of the law cannot be contested because of such an apprehension. In my opinion, therefore, this contention of the petitioner cannot be accepted.
It. was next argued that there is no provision in the Act for furnishing grounds of externment to the citizen. Section 4 (6) provides that when an externment order has been made its grounds may be communicated to the externee by the authority making the order and in any case when the order is to be enforced for more than three months he shall have a right of making a representation which shall be referred to the advisory tribunal constituted under section 3 (4). While the word "may" ordinarily conveys the idea of a discretion and not compulsion, reading it with the last part of the clause it seems that when an externment order has to be enforced for more than three months an absolute right is given to the cxternee to make a representation. He cannot make a representation unless he has been furnished grounds for the order. In no other part of the Act a right to obtain the grouuds for the order in such a case is given to him. Therefore, that right has to be read as given under the first part of section 4 (6). That can be done only by reading the word "may" for that purpose as having the mean- ing of "shall" If the word "may" has to be so read for that purpose, it appears to be against the well-recognised canons of construction to read the same "may" as having a different meaning when the order is to be in force for less than three months. I do not think in putting the meaning of "shall" on "may" in the clause, I am unduly straining the language used in the clause. So read this argument must fail.
It was next argued that there is no provision in the Act showing what the advisory board has to do when it receives a representation. A reference to the advisory board neces- sarily implies a consideration of the case by such board. The absence of an express statement to that effect in the impugned Act does not invalidate the Act.