Nafr High Court
Case Details
1 Digitally signed by RAMESH KUMAR VATTI 2025:CGHC:8735 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPC No. 253 of 2014 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar And Vikas) Sahkari Sangh Maryadit, Through Its Managing Director, A-25, VIP Estate, Khamhardih, Shankar Nagar, Raipur, PS Civil Lines, Raipur, District Raipur, Chhattisgarh Versus --- Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2. Registrar Cooperative Societies, Raipur, District Raipur, District : Raipur, Chhattisgarh --- Respondents And WPC No. 1165 of 2016 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar Evam Vikas) Sahkari Sangh Maryadit Through Its Managing Director, A- 25, V.I.P. Estate, Khamhardih, Shankar Nagar, Raipur, District Raipur, Chhattisgarh Versus ---Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2. Registrar, Cooperative Societies, Raipur, District : Raipur, Chhattisgarh --- Respondents And WPC No. 254 of 2014 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar And Vikas) Sahkari Sangh Maryadit Aged Through Its Managing Director, A-25, VIP Estate, Khamhardih, Shankar Nagar, Raipur, PS Civil Line, District Raipur, Chhattisgarh Versus ---Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2 2. Registrar, Cooperative Societies, Raipur, District : Raipur, Chhattisgarh --- Respondents And WPC No. 532 of 2016 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar Evam Vikas) Sahkari Sangh Maryadit Through Its Managing Director, A 25, V.I.P. Estate, Khamhardih, Shankar Nagar, Raipur, District Raipur, Chhattisgarh Versus ---Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2. Registrar, Co Operative Societies, Raipur, Chhattisgarh, Vivekanand Complex, Vivekanand Nagar Pension Bada Raipur, District : Raipur, Chhattisgarh --- Respondents And WPC No. 600 of 2016 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar And Vikas) Sahkari Sangh Maryadit Through Its Managing Director, A- 25, V.I.P. Estate, Khamhardih, Shankar Nagar, Raipur, District Raipur, Chhattisgarh Versus ---Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2. Registrar, Co- Operative Societies, Raipur, Chhattisgarh, Vivekanand Complex, Vivekanand Nagar, Pension Bada, Raipur, District : Raipur, Chhattisgarh --- Respondents And WPC No. 1205 of 2016 • Chhattisgarh Rajya Laghu Vanopaj (Vyapar Evam Vikas), Sahkari Sangh Maryadit, Through Its Managing Director, A-25, V.I.P. Estate, Khamhardih, Shankar Nagar, Raipur, District Raipur, Chhattisgarh Versus ---Petitioner 1. State Of Chhattisgarh Through Secretary, Department Of Cooperative, Mahanadi Bhawan, Mantralaya, Naya Raipur, District Raipur, Chhattisgarh 2. Registrar, Cooperative Societies, Raipur, District : Raipur, Chhattisgarh --- Respondents For Petitioner
Legal Reasoning
: Mr. V.V.S. Murthy, Senior Advocate with Shri A.S. Kachhwaha and Mr. Shantanu Kumar, Advocates 3 For Respondents/State : Mr. S.P. Kale, Additional Advocate General Hon’ble Shri Justice Rakesh Mohan Pandey Order on Board 19/02/2025 1. In this batch of petitions, the common questions of law and facts are involved, therefore, these petitions were heard together and are being
Decision
disposed of by this common order. 2. In these petitions, the petitioners have challenged the orders dated 09.04.2013, 16.12.2015, 18.02.2016 and 06.04.2016 passed by the Cooperative Department, Raipur, whereby the petitioners/Society have been held as Producers’ Societies. 3. The facts, in a nutshell, are that the petitioners are registered Societies under Section 9(1) of the Chhattisgarh Cooperative Societies Act, 1960 (for short ‘Act 1960’) and agents according to provisions of Section 4 of the Chhattisgarh Rajya Laghu Vanopaj Society Tendu Patta (Vyapar and Viniyam) Act 1964. The certificates of registration were issued in their favour. The petitioners/Societies were appointed as Agents by the State Government vide order dated 23.02.2001 for the purchase and trade of National Forest Produce including tendu leaves. The petitioners’ Societies have their own memorandum of association and bye-laws and are working with certain aims and objects. Section 58 of the Act 1960 gives power to the Registrar, Cooperative Societies to audit the account of petitioners’ Societies once a year and collect audit charges according to the Gazette Notification dated 26.03.2006. According to the Gazette Notification dated 26.03.2006, the Marketing Society (Central) is liable to pay audit charges of 10 paise per hundred rupees and Apex Society - 05 paise 4 per hundred rupees on the total sale, whereas the Producers’ Society either Central or Apex has to pay 10 paise per hundred rupees on total business. 4. The Madhya Pradesh Rajya Laghu Vanopaj Vyapar Avam Vikas Sahakari Sangh Maryadit was registered on 12.01.1984. After the bifurcation of the State of Chhattisgarh it became Chhattisgarh Rajya Laghu Vanopaj (Vypaar Avam Vikas) Sahakari Sangh Maryadit. The Registrar Cooperative Society exercising power under Section 58 of the Act 1960 completed the audit of petitioners Societies for the years 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06 and 2006-07. Initially, for the first 02 years exemption was granted from payment of the audit charges. The petitioners were directed to pay audit charges at the rate of 0.10% for the year 2003-04 vide order dated 18.06.2012. The petitioners preferred appeals according to the provision of Section 77(1) of the Act 1960 before respondent No. 1. The appeals preferred by the petitioners were dismissed vide orders dated 09.04.2013, 16.12.2015, 18.02.2016 and 06.04.2016. 5. Mr. V.V.S. Murthy, learned Senior Advocate appearing for the petitioners would argue that a Notification was issued by the Cooperative Department, State of Chhattisgarh on 28.03.2006 according to the provisions of Rule 50A of the Chhattisgarh Cooperative Society Rules, 1962 (for short ‘Rules 1962) for the imposition of audit charges. (i) According to Entry No. 04, the audit charges for Marketing Society (Central) is 10 paise per hundred rupees and for the Apex Society 05 paise per hundred rupees; (ii) Entry No. 5, Production Society (Central), audit charges 10 paise per hundred rupees and for Apex Society 10 paise per hundred rupees. 5 Mr. Murthy would contend that the petitioners are Marketing Societies, but respondent No. 2 misconstruing the bye-laws and aims and objects of the Societies declared the petitioners’ Societies as “Producers’ Societies” and assessed audit charges at the rate of 10 paise per hundred rupees. He would contend that Section 2(q) of the Act, 1960 defines Marketing Society, whereas Section 2(v) of the Act, 1960 defines Producers’ Society. He would further contend that the ‘Marketing Society’ means a society formed for the purpose of marketing agricultural or other forest produce, and the ‘Producers’ Society’ means a Society formed with the object of producing and disposing of goods as a collective property. He would also contend that Section 2(a) of the C.G. Van Upaj (Vyapar Viniyaman) Adhiniyam,1969 (for short ‘Adhiniyam 1969’) defines ‘Agent’ appointed under Section 4 of the Act, 1964. He would argue that Section 2(d) defines ‘forest produce’ and Section 2(f) defines ‘grower of forest produce’. Learned Senior Advocate would also argue that respondent No. 2 exercising power under Section 58 of the Act, 1960 erroneously declared the petitioners’ Societies as Producers’ Society and brought them within the regime of audit charges of 10 paise per hundred rupees. He would pray to quash the orders passed by the Registrar dated 18.06.2012 and the orders dated 09.04.2013, 16.12.2015, 18.02.2016 and 06.04.2016 6. On the other hand, Mr. S.P. Kale, learned Additional Advocate General appearing for the respondents/State would oppose the submissions made by Mr. V.V.S. Murthy learned Senior Advocate. Mr. S.P. Kale would submit that respondent No. 2 exercised its power conferred under Section 58 of the Act 1960. He would contend that respondent 6 No. 2 declared the petitioners’ Societies as Producers’ Society according to provisions of Section 10(1)(viii) of the Act, 1960 and levied audit charges according to the Notification dated 28.03.2006. He would further contend that according to the bye-laws of the Cooperative Society, the petitioners’ societies produce products and trade them. He would refer to Clauses 2, 9 and 10 of the Objects of bye-laws. He would state that societies are indulged in the production of millet and other products. He would further state that as per Clause 9, the Marketing Societies trade their own products in their own names. He would also submit that as per Clause 10, the petitioners’ Societies export and import the final production of raw material and thus, the Societies would fall within the definition of Producers’ Society. He would also state that respondent No. 2 calculated the audit charges according to the turnover of the Societies. He would lastly submit that the petitions deserve to be dismissed. 7. I have heard learned counsel appearing for the parties, considered their rival submissions made herein-above and perused the documents available on records. 8. The relevant provisions for the disposal of these petitions are reproduced herein below for reference:- Section 2(q) of the Act, 1960 defines “Marketing Society”. It reads as under:- “(q) “Marketing Society” means a society formed for the purpose of marketing agricultural or other produce and including among its objects, the supply of the requisites of such production.” Section 2(v) of the Act, 1960 defines “Producers’ Society”. It reads thus:- 7 “Producers’ Society” means a society formed “(v) with the object of producing and disposing of goods as a collective property of its members and includes a society formed with the object of the collective disposal of the labour of its members.” Section 58 of the Act, 1960 deals with the Audit of Accounts. According to un-amended Section 58 of the Act, 1960, the Registrar was authorized to audit accounts of every society once at least every year and to recover such fees prescribed by the State Government. Rule 50A of the Rules, 1962 deals with A Levy of Audit Fees and the same is reproduced herein below:- “50A. Levy of audit fees – (1) Every society the accounts of which are audited under sub-section (1) of Section 58 shall pay to the State Government a charge for the audit of its account for each co-operative year in accordance with the scale laid down in the Schedule in respect of the class of society to which it belongs. (2) The Registrar shall communicate the charges payable by the society under sub-rule (1) by an order in writing in Form FF to be delivered personally or sent by post to the address of the society under certificate of posting : Provided that in the case of a primary credit society affiliated to a Co-operative Central Bank, the order shall be communicated to such Bank.” Section 2(f) of the Adhiniyam, 1969 defines “Grower of Forest Produce” and the same reads as under:- “(f) “grower of forest produce” means- (i) in respect of forest produce grown or found in areas as may from time to time, be constituted as reserved or protected forests under the Indian Forest Act, 1927 (16 of 1927) the State Government, and (ii) in respect of forest produce grown or found in areas not covered under (i) above, (a) the State Government, where the forest produce is grown or found on unoccupied land as defined in clause (z-3) of sub-section (1) of section 2 of 8 the Code; (b)the tenure holder or a tenant or a Government lessee of the holding or a holder of a service land, as the case may be, in a unit on which the forest produce grows or is found and includes every person who, from time to time, claims title to such forest produce through him; and (c) the Bhoodan holder, under the Chhattisgarh Yagna Adhiniyam, 1968 (28 of 1968) in a unit on which the forest produce grows or is found and includes every person, who from time to time, claims title to such forest produce through him.” Section 4 of the Adhiniyam, 1969 deals with the Appointment of Agents and the same is reproduced herein below:- “4. Appointment of agents.-(1) The State Government may, for the purchase of and trade in, specified forest produce on its behalf appoint one or more agents in respect of different units for all or any specified forest produce and any such agent may be appointed in respect of more than one unit. (2) A co-operative society, a Gram Panchayat or a Janpada Panchayat may be appointed as an agent under sub-section (1) for one or more units and only in the event of none of the aforesaid forthcoming for appointment as agent, an individual may be so appointed as agent. (3) The terms, conditions and the procedure for appointment of agent shall be such as may be prescribed.” 9. A Notification was issued by the Cooperative Department, State of Chhattisgarh on 28.03.2006 according to provisions of Rule 50A of the Rules, 1962 levying audit charges on societies. Entry Nos. 4 and 5 are reproduced herein below:- iz-Ø- LkslkbVh dk oxZ LkslkbVh dk izdkj laijh{kk ’kqYd mn~xzg.k dk vk/kkj laijh{kk ’kqYd dh nj izfr lkS ’kk[kk laijh{kk ’kqYd izfr ’kk[kk ¼1½ 4- 5- 9 ¼2½ ¼3½ ¼4½ ¼5½ ¼6½ foi.ku lkslkbVh dsUnzh; dqy foØ; 10 iSls :- 250-00 ’kh"kZ &rnSo& 5 iSls :- 500-00 mRiknu lkslkbVh dsUnzh; 10 iSls & ¼d½ dqy O;olk; ¼VksVy VuZ vksOgj½ nqX/k rFkk frygu lkslkbfV;ka dks NksM+dj] leLr mRiknd lkslkbfV;ka ftuesa cqudj lkslkbfV;ka lfEefyr gS- ’kh"kZ &rnSo& &rnSo& :- 500-00 30 iSls :- 500-00 dsUnzh; ¼[k½ dqy foØ; leLr nqX/k ,oa frygu lkslkbfV;ka ’kh"kZ &rnSo& &rnSo& :- 750-00 10. Section 10(1) of the Act, 1960 deals with the Classification of Societies:- 10. Classification of Societies- (1) The Registrar shall classify all societies under one or more of the following heads, namely :- (i) Consumer’ Society; (ii) Farming Society; (iii) Federal Society; (iv) Central Society; (v) Housing Society; (vi) Marketing Society; (vii) Multipurpose Society; (viii) Producers’ Society; (ix) Processing Society; (x) Resource Society; (xi) General Society; (xii) Industrial Society; 10 (xiii) Service Sector Society; Provided that a society formed with the object of facilitating the operations of any particular class of societies shall be classified as a society of that class. (1-a) The Registrar may further classify the societies falling under any of the heads specified in sub-section (1) under the following heads, namely :- (a) Apex Society; (b) Central Society; (c) Primary Society. 11. A bare reading of the above-stated provisions would make it clear that the petitioners were appointed as Agents according to provisions of Section 4 of the Adhiniyam, 1969. The petitioners are dealing with the forest produce. The petitioners purchase forest produce at the local level and trade it. Admittedly, the petitioners are growers of forest produce as defined under Section 2(f) of the Adhiniyam, 1969. 12. A Marketing Society is a society dealing with the marketing of agricultural or other forest produce, whereas a Producers’ Society includes societies indulged in producing and disposing of goods. Thus, there is a substantial difference between the Marketing Society and the Producers’ Society. To bring a society within the ambit of the Producers’ Society it has to be proved that the concerned society manufactures or produces certain articles or items. The production of an article or item requires machinery and manpower along with land allotted for this purpose. 13. According to the Classification of Societies given in Section 10 of the Act, 1960, the object of facilitating the operations of any particular class of societies would be decisive. The un-amended Section 58 of the Act, 1960 empowers the Registrar to audit the accounts and rules in this regard have been framed under Rule 50A of the Rules, 1962. 14. The State Government exercising power under Section 58 of the Act 11 1960 and Rule 50A of the Rules, 1962, notified audit charges to be paid by the Cooperative Societies in a financial year. According to the Notification, the Marketing Society (Central) has to pay audit charges of 10 paise per hundred rupees, whereas the Apex body has to pay the audit charge of 05 paise per hundred rupees. As per Entry No. 5, the Producers’ Society (Central) as well as Apex have to pay the audit charges of 10 paise per hundred rupees. 15. The Registrar Cooperative Societies exercising power under Section 58 of the Act 1960 vide order dated 18.06.2012 declared the petitioners’ Societies as Producers’ Societies and directed them to pay audit charges of 10 paise per hundred rupees. The petitioners preferred separate appeals before respondent No. 1 and all appeals were dismissed. 16. All the Societies have framed the bye-laws. The Objects of the Societies particularly Clauses 1, 9 and 10 are reproduced herein below:- 1- lnL;ksa ds fgrksa dks izHkkfor fd;s cxSj LknL;ksa vFkok vU; L=ksrksa ls LFkkuh; mRikfnr ouksit dk dz;] ,d=.k] ifjogu] Hk.Mkj.k] Js.khdj.k] izfdz;k] fuekZ.k] forj.k ,oa foi.ku djuk- 9- vius mRiknu dk Lo;a ds ;k vU; VsªMekdZ@dksM ls foi.ku djuk- 10- dPph izfdz;k fd, gq,] rS;kj oLrqvksa dk vk;kr@fu;kZr djuk- 17. A perusal of the Object of the Societies would make it clear that the petitioners’ Societies purchase and collect forest produce from local residents. They purchase forest produce like Ramtilla, Jagni, Kodo, Kutki etc. and trade them. 18. The respondents/State failed to place on record documents to 12 demonstrate the fact that the petitioners’ Societies have established manufacturing plants for production. There is no document to demonstrate that for production, lands have been allotted to the petitioners’ Societies. There is no pleading with regard to the manpower used by the petitioners’ Societies for production. The petitioners are working as Agents of the State Government according to the provisions of Section 4 of the Adhiniyam, 1969. Respondent No. 2 without conducting any inquiry, declared the petitioners’ Society as Producers’ Societies and levied audit charges 10 paise per hundred rupees. 19. Taking into consideration the above-discussed facts and provisions of law, in the opinion of this Court, respondent No. 2 committed an error of law in declaring the petitioners Marketing Societies as Producers’ Societies and thus, the order(s) passed by the Registrar, Cooperative Societies in this regard are hereby quashed. The orders passed by respondent No. 1 whereby appeals preferred by the petitioners were dismissed, are also hereby quashed. 20. The petitioners’ Society shall fall within the ambit of the definition of a Marketing Society and audit charges of 05 paise per hundred rupees may be levied upon them. 21. Accordingly, these petitions are allowed. No costs. Sd/- (Rakesh Mohan Pandey) Judge vatti