A) ABSTRACT / HEADNOTE

Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha Maryadit Warewadi v. The State of Maharashtra & Ors., [2025] 5 S.C.R. 409 : 2025 INSC 436, concerns the threshold question whether the State correctly directed registration of a Primary Agricultural Credit Co-operative Society (PACCS) despite a Scrutiny Committee’s finding that the proposal lacked economic/financial viability mandated by statutory provisions and State Government Resolutions. The Scrutiny Committee rejected the registration application for multiple deficiencies absence of verifiable bank undertakings, inadequate documentary proof of crop areas and member-wise loan transfers, and a lack of share capital satisfying the Government’s requirement.

The State, on appeal, allowed registration relying on practical difficulties of villagers and undertakings to raise capital later. The High Court set aside the State’s order holding that the State had ignored mandatory policy pre-requisites and unlawfully interfered with the expert Committee’s findings. The Supreme Court upheld the High Court, emphasising that economic viability is a pre-requisite under ss.4 & 6 of the Maharashtra Co-operative Societies Act, 1960 and related Government Resolutions (23.09.2013; 14.02.2017). The Court held that administrative discretion to relax conditions cannot be exercised arbitrarily in appeal to nullify eligibility criteria set by Government Resolutions; such relaxation requires a formal Government Resolution. The Scrutiny Committee’s rejection was justified and the State’s order was quashed.

Keywords: Maharashtra Co-operative Societies Act, 1960; economic viability; registration of PACCS; Scrutiny Committee; Government Resolutions (23.09.2013; 14.02.2017).

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from an application by the appellant-society to register a new Primary Agricultural Credit Co-operative Society (PACCS) for an independent revenue village. The statutory framework requires that only societies promoting members’ economic interests and which are not likely to be economically unsound be registered a standard embedded in s.4 of the Maharashtra Co-operative Societies Act, 1960 and operationalised through s.6 and State Government Resolutions. The State had framed detailed procedural and financial eligibility criteria (notably GR 23.09.2013 and GR 14.02.2017), including a minimum Rs.5 lakh share capital requirement and constitution of a Scrutiny Committee to inspect financial ability.

The Scrutiny Committee, acting as an expert and fact-finding body, rejected the appellant’s registration proposal for specific documentary shortcomings and an adverse assessment of likely financial viability. The State, exercising appellate power under s.152 of the Act, allowed registration relying on factors such as practical accessibility problems for villagers, a broad view of alternative business activities available to societies, and undertakings by the appellant to raise capital post-registration. A competitor-member impleaded as respondent challenged the State’s order before the High Court; the High Court set aside the State’s direction. The Supreme Court was called upon to decide whether the State was justified in overriding the Scrutiny Committee’s expert findings and the Government’s own policy prerequisites. The background underscores a tension between administrative discretion in promotion of co-operative institutions and the need to protect members and the co-operative movement from unsound registrations.

D) FACTS OF THE CASE

The appellant society applied on 13.01.2023 for registration as a PACCS and bank account opening. The district Scrutiny Committee conducted inspection and, by minutes dated 13.04.2023, rejected the proposal for multiple deficiencies: absence of verification whether the proposed revenue village fell outside existing societies’ purview; lack of verification whether promoters were members of other societies; missing crop-wise cultivated area proofs from Crops Sowing Register and 7/12 extracts; no undertaking or supporting letter from Kolhapur District Central Co-operative Bank for loan support; absence of No Objection Certificate from the existing credit cooperative in the area; no member-wise loan transfer details; and the Assistant Registrar’s own appraisal that the proposed society would not be financially viable.

The Committee concluded the proposal did not meet financial criteria in GR 23.09.2013 and GR 14.02.2017 and unanimously resolved to reject it. The appellant appealed under s.152; the Minister, Co-operatives (State), allowed the appeal on 28.06.2023 and directed registration, stating (inter alia) that no objection was recorded by neighboring society, practical difficulties of villagers justified separate society, undertakings regarding capital infusions and bank lending could be relied upon, and prospects of non-loan activities could yield profitability. Respondent No.6 (a member of a nearby society) filed Writ Petition before the High Court challenging the State’s order; the High Court allowed the petition and set aside the State’s direction observing that the Scrutiny Committee’s expert findings were unchallenged and the State improperly relaxed mandatory pre-requisites (including Rs.5 lakh share capital) without formal Government Resolution. The State’s decision thus became the focal point for appellate scrutiny before the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether registration of a PACCS can be allowed when the Scrutiny Committee finds the proposal not financially viable and the application fails to meet Government Resolution criteria?
ii. Whether the State, in an appeal, may relax eligibility criteria laid down by Government Resolution without issuing a formal Government Resolution?
iii. Whether the findings of an expert Scrutiny Committee can be set aside by the State in appeal absent perversity or material contradiction?

F) PETITIONER/ APPELLANT’S ARGUMENTS

The appellant contended that:

(i) the proposed society would serve an independent revenue village and the Assistant Registrar acknowledged no PACCS existed there;

(ii) practical difficulties (hilly terrain, poor transport) justified a new local society;

(iii) strict contemporaneous Rs.5 lakh share capital at application stage is practically difficult and an undertaking to raise it within 1–3 years suffices;

(iv) the appellant had more than required minimum membership (submitted list of 150 against threshold 75);

(v) the State properly relied on an absence of objection from the neighboring society;

(vi) respondent No.6 lacked locus standi since he was an individual member and not the society itself.

G) RESPONDENT’S ARGUMENTS

Respondents countered that:

(i) eligibility cannot be divorced from impact on existing societies;

(ii) appellant failed to meet threshold financial criteria and attempted to bypass the expert Scrutiny Committee;

(iii) the Scrutiny Committee’s detailed factual findings were unchallenged and not perverse;

(iv) State’s allowance was ex facie perverse since it authorised registration without mandatory prerequisites;

(v) respondent No.6, being a member of an affected society, is vitally affected and has locus to challenge;

(vi) there was material suggesting mala fides (inflated membership list), undermining the appellant’s case.

H) JUDGEMENT 

The Supreme Court affirmed the High Court. It construed s.4 and s.6 of the 1960 Act together with GR 23.09.2013 and GR 14.02.2017, holding that economic viability is a pre-requisite for registration. The Court emphasized that the Scrutiny Committee is an expert body instituted to inspect financial ability and its findings that the appellant failed to produce bank undertakings, crop/land documents, member-wise loan details, or contemporaneous Rs.5 lakh share capital evidence were reasoned and unchallenged on record. The State’s appellate order, which accepted general assertions about possible non-loan businesses and an undertaking to raise capital later, effectively relaxed the eligibility requirements without any formal Government Resolution.

Such relaxation in appeal would undermine the policy objective and could frustrate the Act’s purpose by allowing registration of societies likely to be economically unsound. The Court held that administrative discretion to relax conditions exists but cannot be exercised to nullify the eligibility framework set by Government Resolution; any change must be by way of a subsequent Government Resolution. The Court also rejected locus-standi objections in the face of patent illegality in the State’s order. Finding no perversity in the Committee’s conclusions, the Supreme Court dismissed appeals and upheld the High Court’s quashing of the State’s registration directive.

a. RATIO DECIDENDI

The operative ratio is that economic viability is a statutory pre-condition to registration under s.4 read with s.6 and Government Resolutions; an expert Scrutiny Committee’s reasoned findings on financial non-viability must be respected unless shown to be perverse; and the State cannot, in an appeal, relax mandatory eligibility criteria established by Government Resolution any relaxation must be effected by a formal Government Resolution. The protection of members and the integrity of the cooperative movement requires adherence to these safeguards.

b. OBITER DICTA 

The Court observed (non-decisorially) that while co-operative societies have the capacity to undertake other business activities, such possibilities cannot substitute for documentary proof of financial health at registration stage. The Court also commented that practical hardships (e.g., terrain/transport) are relevant but cannot override statutory and policy safeguards unless backed by evidence and compliant administrative process.

c. GUIDELINES

1. Scrutiny Committees must be treated as expert fact-finding bodies; their reasoned rejections carry weight unless demonstrably perverse.

2. Rs.5 lakh share capital requirement (GR 14.02.2017) is an essential pre-requisite unless formally amended by Government Resolution.

3. State may exercise discretion to relax norms but only through proper policy instruments (Government Resolutions), not casually in appeal orders.

4. Locus-standi objections cannot bar judicial review where patent illegality arises from administrative action.

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I) CONCLUSION & COMMENTS

This judgment reinforces administrative regularity and procedural propriety in statutory registrations. It prioritises evidence-based scrutiny over ad hoc administrative sympathy and preserves the protective object of s.4 to prevent registration of economically unsound societies that may harm members and the co-operative movement. The decision delineates limits of executive discretion: policy changes must pass through formal channels and not be achieved by case-by-case relaxations in appeals. Practically, applicants must present contemporaneous documentary proof of financial support, bank undertakings, land/crop records, member-wise loan details and share capital to survive scrutiny. For administrators, the case underscores that expert committee findings require respectful engagement and that any deviation requires transparent policy authorization. The Court’s approach balances the goal of expanding cooperative outreach with prudent safeguards to prevent institutional fragility.

J) REFERENCES

a. Important Cases Referred
i. Shri. Masaidevi Vividh Karyakari Sahakari Seva Sanstha Maryadit Warewadi v. The State of Maharashtra & Ors., [2025] 5 S.C.R. 409 : 2025 INSC 436.

b. Important Statutes / Instruments Referred
i. Maharashtra Co-operative Societies Act, 1960 (India).
ii. Government of Maharashtra Resolution dated 23.09.2013 (criteria for registration of PACCS).
iii. Government of Maharashtra Resolution dated 14.02.2017 (minimum Rs.5 lakh share capital requirement; corrigendum).