Varanasi Whole-Sale Central Consumers' Cooperative Stores Ltd. , Varanasi v. Deputy Registrar, Cooperative Societies, Varanasi
1967-08-26
SATISH CHANDRA
body1967
DigiLaw.ai
JUDGMENT Satish Chandra, J. - On 29th May, 1967, the Deputy Registrar, Cooperative Societies, Uttar Pradesh, Varanasi, issued an order suspending the management of the petitioner viz. the Varanasi Whole-sale Central in whole, and appointing Sri I.P. Singh, an official of the Cooperative Department, as Administrator of the Stores till further orders. He was directed to take over complete charge of the Stores and assume all powers of the Committee of Management of the Stores. The order stated that "whereas a heavy embezzlement of the Funds of the Stores has been committed and the management of the Stores has conducted its affairs in 3 manner prejudicial to its interest and which is likely to end in disaster. it is considered inevitable to stop the management from further functioning in order to save the Stores from ultimate collapse." This order was passed in exercise of the powers conferred by the proviso to rule 31 of the Rules framed by the State Government of Uttar Pradesh under the Cooperative Societies Act, 1912. The same day, the Deputy Registrar issued a show cause notice uncle,- rule 31 (a). In this, 25 charges were set out. The President and the Members of the Committee of Management were direct-ed to submit their clarification of all the charges within 30 days. The order of suspension and the notice are sought to be quashed in this petition under Article 226 of the Constitution. 2. Ski S.C. Khare, learned counsel for the petitioner, has challenged these orders on the following grounds: (i) That rule 31 of the U.P. Cooperative Societies Rules, 1936, is ultra vires the hilt making power conferred by Section 43 of the Cooperative Societies Act, 1912. (ii) That rule 31 is void for delegation of legislative powers, beyond the constitutionally permissible limits. (iii) That rule 31 violates Article 31 (1) and (2) of the Constitution of India. (iv) That the impugned orders do not satisfy the conditions precedent set out in rule 31. (v) That the impugned orders have been passed mala fide with a view to sub-serve the political interests of the Jan Sangh party which was a constituent of the State Government, by ousting Congressmen who were in control of the Committee of Management of the Stores. (vi) That the notice contains Vague charges and does not disclose the materials which were treated as sustaining them.
(vi) That the notice contains Vague charges and does not disclose the materials which were treated as sustaining them. I have heard the learned counsel on the legal points only. The first point relates to the vires of rule 31. It runs as follows: "31 (a) Where the Registrar is satisfied that the members of the Committee of Management of a registered society have, in spite of protests from an officer of the Cooperative Department, the Financing Bank, if any, or members of the society, persisted in conducting its affairs in a manner prejudicial to its interest and likely to end in disaster, he may communicate in writing the grounds of his finding and give the Committee reasonable time to show cause why it should not be stopped from functioning further. In case the explanation is unsatisfactory he may suspend the Committee in whole or in part as a temporary measure and arrange for the work, until the next Annual General Meeting is held. The Registrar may himself assume all the powers and functions of the CoMmittee or he may appoint an Administrator or an ad hoc committee or both to manage on his behalf the affairs of the society during such period. Such Administrator or ad hoc Committee will have all or any of the powers of the Committee of Management as the Registrar may direct. Provided that in urgent cases where the Registrar is satisfied that the need for suspension is immediate, he may pass an order suspending the Committee in whole or in part as a temporary measure, and may thereafter issue a notice to show cause why the Board of Management or the Executive Committee be not dissolved or altered in part or whole, and the order of temporary suspension will remain in force till the Committee has shown cause against the notice and a final order is passed by the Registrar in that respect. (b) Any party considering itself aggrieved may appeal to Government within one month of the communication to the society of the final order passed by the registrar under this rule. Note: The Committee of Management includes the ,board of Directors or Managing Committee or Executive Committee or any Board or Committee entrusted with the duties and powers of managing all or any of the affairs". 3.
Note: The Committee of Management includes the ,board of Directors or Managing Committee or Executive Committee or any Board or Committee entrusted with the duties and powers of managing all or any of the affairs". 3. This rule in its existing form was promulgated by the Notification No. 108-BLXII-R224 150 issued on March 21, 1951. This notification substituted the preexisting rule framed in 1936 by the present one. Previously, rule 31 consisted of the rule as it now is, minus the proviso. The substitution in 1951 in effect only added the proviso. Section 43 of the Cooperative Societies Act, 1912, provides that the State Government may for the whole or any part of the State and for any registered society or class of, Such societies, make rules to carry out the purposes of this Act. Sub-Sec. (2) of Section 13 illustrates various matters for which Rules may be made. Under the proviso to rule 31 the Registrar can suspend the Managing Committee at once and assume all the powers and functions of the Committee or appoint an administrator to manage on his behalf the affairs of the Society during the period of suspension. This position is to last till the final order is passed under rule 31 (a) in the first instance, and after the final order, till the next annual general meeting of the society. During this period the society has no power to oust or shake off the rule of the Registrar or its Administrator. The carrying on of a business demands personal qualities and business experience and acumen. The Society may not have any confidence in the Registrar or his Administrator's abilities, yet it remains helpless in the matter. So long as the order lasts, the society is deprived of the possession of its property as also of its right to be managed by its elected and appointed representatives. The individual Directors are divested of their rights to hold their office for the residue of their term. Rule 31 deprives the Society and the Directors of management and possession, and, transfers them to the - Registrar or his nominee. For the petitioner it was submitted that it authorises requisition without payment of compensation. It virtually confiscates, though temporarily. The Cooperative Societies Act, 1912, was not enacted for such a purpose, and hence rule 31 does not carry out the purposes' of the Act. 4.
For the petitioner it was submitted that it authorises requisition without payment of compensation. It virtually confiscates, though temporarily. The Cooperative Societies Act, 1912, was not enacted for such a purpose, and hence rule 31 does not carry out the purposes' of the Act. 4. The question is what are the purposes of the Cooperative Societies Act? The purpose of an Act is the aim or aspiration, object or end in view, intended to be efficiently embodied in the enactment (American Jurisprudence Vol. 50, Article 303, p. 285). In order to find the purpose imputed to the legislature, the whole face of the law is to be seen. Section 43 (1) speaks of "the purpose of this Act". "Of this Act" would, in my opinion, mean the provisions directly enacted in the statute or matters which are gather able by necessary implication therefrom. Under Section 43 (1) rules can be made "to carry out" the purposes of the Act. In Carbines v. Powell, (1925) 36 CLR 88 (91) Issacs, J. observed: "To "carry out" the Act means to en-force its provisions. To "give effect" to an Act is to enable its provisions to be effectively administered. Both connote that the Governor-General's regulations are to be confined to the same field of operations as that marked by the Act itself." His Lordship Pithily remarked that a granted power may be "complemented but not supplemented" in the guise of carrying out the purposes. 4. These observations have been cited with approval by a Full Bench of our Court in U.P. State v. Murtaza Ali, A.I.R. 1961 Alld. 447, Para 26. Thus, the power to make rules to carry out the purpose of the Act, will not enable the State Government to provide for any and eve), aspect of the Cooperative Societies. The rules are to be confined to the purposes marked out by the Act. They can implement or complement, but cannot supplement the indicated purposes. The Cooperative Societies Act, 1912, revised and amended the Cooperative Credit Societies Act, 1904 (X of 1904) . Act. No. X of 1904 was passed to provide for the constitution and control of Co-operative Credit Societies.
They can implement or complement, but cannot supplement the indicated purposes. The Cooperative Societies Act, 1912, revised and amended the Cooperative Credit Societies Act, 1904 (X of 1904) . Act. No. X of 1904 was passed to provide for the constitution and control of Co-operative Credit Societies. The preamble of that Act stated: "Whereas it is expedient to encourage thrift, self-help and cooperation among agriculturists, artisans and persons of limited means, and for that purpose to provide for the constitution and control of cooperative credit societies, it is hereby enacted as follows: - " 5. The preamble of the 1912 Act stated: "Whereas it is expedient further to facilitate the formation of Cooperative Societies for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means, and for that purpose to amend the law relating to Cooperative Societies, it is hereby enacted as follows:" 6. The aspiration of these Acts was to facilitate the formation of Cooperative Societies with a view to promote thrift and self-help among agriculturists, artisans and persons of limited means. They devised a scheme for the constitution and control of Cooperative Societies. In Act X of 1904, Sections 3 and 4 provided for constitution and membership of the society. Sections 5 and 6 dealt with their registration. The registration had the effect of making the society a corporate body. The fourth Chapter consisting of Sections 7 to 11 was headed as 'Management'. Section 7 related to the liability of the Members of a society for the debts of the society. Section 8 placed restrictions on the disposal of profits and its distribution by way of bonus. Section 9 regulated borrowing from persons who were not members. Section 1.0 controlled the power of a society to give loans. Section 11 provided that the funds of a society may be deposited in Government Savings Banks or any other Banker approved by the Registrar. Thus, this Chapter sought to control the powers of the management of a society in a few specified matters, like disposal of profits, borrowing and lending and depositing of funds. The other provisions of the Act dealt with the "Shares and Interests of Members" and for audit and inspection. Under Section 21 the Registrar had to audit the accounts of each society once at least in every year.
The other provisions of the Act dealt with the "Shares and Interests of Members" and for audit and inspection. Under Section 21 the Registrar had to audit the accounts of each society once at least in every year. The Registrar could hold an enquiry into the constitution and the working and financial condition of the society. Under Section 23, if the Registrar after holding an enquiry under Section 21 (5) , or on receipt of an application made by 314th of the Members of the Society, was of the opinion that a Society ought to be dissolved, he could cancel the registration of the society. On cancellation of the registration the society ceased to exist as a corporate body. Under Section 24, after the registration of a society was cancelled, the Registrar could appoint a competent person to be the liquidator of the society. The function of the liquidator was merely to wound up the society. Section 27 authorised the Local Government to make rules to carry out the purpose of the Act. It has not been suggested that any rule like the present rule 31 was made under the Act of 1904. Section 28 made the provisions of the Indian Companies Act, 1882 in applicable to the societies registered under the Act. The Registrar's functions were to register a society under Section 6, to regulate the making of loans to a person other than a member of a society or on the security of immovable property (Sec. 10) , and to approve banks with which the society may deposit its funds (Sec. 11) . Another power conferred on the Registrar was to audit accounts of the society and to hold enquiries into the constitution, working and the financial condition of the society, and thereafter, if warranted, to cancel the registration and appoint a liquidator to wind up the affairs of the society. The Act contemplated control of Registrar over the management of a society from a distance, and in specified matters only. The normal functioning of a registered society was left completely to the society itself as long as it lived. On its civil death by cancellation of its registration, the Registrar could appoint a liquidator to take over the management in order to wind up the society. The liquidator could not continue the business in order to revive the society.
The normal functioning of a registered society was left completely to the society itself as long as it lived. On its civil death by cancellation of its registration, the Registrar could appoint a liquidator to take over the management in order to wind up the society. The liquidator could not continue the business in order to revive the society. From the scheme as adopted in the provisions, it is plain that the legislature did not intend that the Registrar was to interfere with the actual working, so long as the cooperative society retained the corporate person . The ambition or the purpose the Act of 1904 was not to suspend or supplant the management or take possession of the properties of a live society. 7. The Act of 1904 was confined to Credit Societies Only. The Act of 1912, as its Statement of Objects and reasons show, was enacted primarily to extend the benefits of the Act of 1904 to cooperative societies of other kinds, i.e. those established for production or distribution and also to the central societies i.e. societies of which other cooperative societies were members. The statement of objects and reasons or the preamble of the Act of 1912 do not suggest that the purposes of the Act of 1904 about non-interference with the management and the possession of the properties of a society. so long as it continued to retain its corporate status, was affected. To attain the proclaimed purpose, namely, to further facilitate the formation of cooperative societies. some minor changes and amendments were made. The bye-laws of a society seeking registration had to meet the approval of the Registrar. The change in the registered address of the society was henceforth to be notified to the Registrar. These were the matters, in addition to the preexisting ones, namely, constitution, registration, regulation of the borrowing and lending, depositing of funds, audit and enquiry and dissolution etc. for which the Registrar was interposed, by the Act of 1912. The legislative history or the structure and scheme of the Act of 1912 does not establish that the purpose of the Act was to suspend the management of a registered society and let it be taken over by the Registrar or his nominee. The Cooperative Societies (U.P. Amendment) Act X of 1957 introduced Sections 11-A to 11-F, 21-A, 42-A and 44-A to the Act and amended Section 19.
The Cooperative Societies (U.P. Amendment) Act X of 1957 introduced Sections 11-A to 11-F, 21-A, 42-A and 44-A to the Act and amended Section 19. For finding the purposes of the Act with a view to see whether rule 31 which was framed in 1936 and re framed in 1951, carried them out, it will, in my opinion, not be permissible to look at provisions which were not in existence in 1936 or 1951. The provisions introduced by the 1957 amending Act hence are irrelevant to the present enquiry. But. assuming that these provisions can be considered, they do not show any change in the preexisting purposes of the Act. They confer powers on the. Registrar in a few more minor matters. Under Section 11-A the Registrar can require a society to make amendments in its bye-laws, if he is of the opinion that they are necessary or desirable in the interest of the society or in public interest. The learned Advocate General appearing for the respondents urged that under this provision the Registrar could force the society to have a bye-law in terms of rule 31. I am unable to accede to this submission. Under Section 9 of the Act, the Registrar can register a society and its bye-laws provided the proposed bye-laws are 'consistent with the Act or the rules and exhypothesi to the purposes. An amendment to the bye-laws under Section 11-A cannot be contrary to the Act, or its purposes. else the Society would become disqualified to be registered. Section 11-A was not intended to nullify the basic requirements of registration of a society. Under Section 11-C a Society on amend its bye-laws to change its liability from 'limited' and 'unlimited' or vice-versa, provided it secures the Registrar's satisfaction on certain matters of procedure. This provision is not relevant. Under Section 11-D amalgamation and transfer of assets and liability of a society is subject to the approval of the Registrar. This again is a provision for regulating the affairs, from a distance. The Registrar has no initiative in these matters. Section 11-E stands on the same footing. Under it the splitting or division can be done by a society with the approval of the Registrar. Section 11-F says that "the final authority of a society shall vest in the general body of its members in general meeting".
The Registrar has no initiative in these matters. Section 11-E stands on the same footing. Under it the splitting or division can be done by a society with the approval of the Registrar. Section 11-F says that "the final authority of a society shall vest in the general body of its members in general meeting". The Registrar can prescribe the circumstances in which a society may vest its final authority in the elected delegates assembled in the meeting of the general body. This provision, if at all, reinforces the purpose of the Act to leave the actual management of a society untouched by any external agency. The amendment to Section 19 and Sections 21-A. 42-A are not relevant. Section 44-A authorises the Registrar to require any person or officer to contribute to the assets of the society such sums as he may think fit, in order to compensate the society for any loss occasioned to the society by misappropriation, or unauthorised or negligent acts of such person or officer. This power can be exercised either as a result of an audit under Section 17, an enquiry under Section 35, or an inspection under Section 36 or on winding up under Section 42. This provision, therefore, places a liability on an individual member. who has taken part in the organisation or management of the society or any past or present officer of the society, and gives power to the Registrar to deal with them. This provision does not directly or indirectly aspire to bring the management itself in the hands of the Registrar. These changes do not suggest that the legislature intended to modify the preexisting purpose of the Act in relation to the conduct of the management or the possession of the properties of the registered society. 8. Mr. Advocate General suggested that the Act provides for the creation of a cooperative society as a juristic person and for a watch over the various aspects of the affairs of the society. The Act contemplated the civil death of the corporate body. by its dissolution and winding up. Hence the purpose of the Act evidently was to promote the welfare of the society and to see that if the Management was leading the society clown hill towards a collapse. that process may be arrested and dissolution averted by appropriate means. To signify this commendable aim.
by its dissolution and winding up. Hence the purpose of the Act evidently was to promote the welfare of the society and to see that if the Management was leading the society clown hill towards a collapse. that process may be arrested and dissolution averted by appropriate means. To signify this commendable aim. the preamble of the Act of 1904 which was implicit in the preamble of the Act of 1912, specifically provided for control of cooperative societies. The power of temporarily taking over the management of a society was, in view of the objective, of the nature of exercising control. Rule 31, though not referable to any provision of the Act, only carried out that purpose of the Act. Sec. 43 speaks of carrying out the purposes of the Act. not of the preamble merely. Assuming that the preamble used the phrase "control of Cooperative Societies" to indicate that the aim was to save a society from an intending collapse and dissolution, the necessary next step would be to find how that objective has been achieved by the legislature in the Act. The aspiration of the preamble as embodied in the provisions will constitute he purposes of the Act. If the provisions mark out the fields in respect of which the control is to be exercised, those fields constitute the ambit of this purpose of the Act. Rules in order to carry out this purpose, are to confine to the implementation and administration of the indicated areas of operation of control. If the rules invent some other method of control. howsoever desirable, they to that extent supplement and not complement the purposes of the Act. Such innovations are ultra vires. 9. As mentioned above the provisions of the Act mark out the matters in which the Registrar is to act or react. The provisions individually or collectively do not indicate that the Registrar is to exercise control by taking over the management. That hence was not the purpose of the Act. If for the sake of argument it is assumed that it is possible to deduce a purpose simply from the preamble, the question arises, what is the meaning of "control". Control denotes regulating placing restrictions on the rights. It does not extend to divesting and taking over the management or property. That is in law known as acquisition or requisition.
If for the sake of argument it is assumed that it is possible to deduce a purpose simply from the preamble, the question arises, what is the meaning of "control". Control denotes regulating placing restrictions on the rights. It does not extend to divesting and taking over the management or property. That is in law known as acquisition or requisition. Under Section 3-F of the U.P. Industrial Disputes Act, the State Government could by an order pro-vide for exercising control over any public utility service or undertaking. Similarly Section 3 (4) of the Essential Supplies (Temporary Power) Act, 1946 authorised the Central Government to provide for the exercise of functions of control with respect to any undertaking. In Shanti Swarup v. Union of India, A.I.R. 1955 SC 624 a seven Judges constitution Bench of the Supreme Court accepted the submission that the exercise of control connotes the issuing of directions under which the management is to do or refrain from doing something. It cannot under any circumstances amount to divesting the management or the owners of the property and taking it over from them. 10. In Dwarkadas v. Sholapur Sp. and Wg. Co., A.I.R. 1954 SC 119 S.R. Das, J. held that superseding the Board of Directors of a corporation and appointing fresh ones, who are to act under the control of the government, is not exercising "control" but in effect amounts to expropriation, i.e. to say taking over of the possession of the company or requisitioning (vide paragraphs 49 to 52) . Incidentally, it may be noticed that this meaning of "requisition" as distinguished from "control" expressed in the minority judgment of Das, J. was accepted as correct by Parliament. Parliament amended Article 31 of the Constitution suitably by its fourth amendment Act, see Kochuni v. State of Madras, A.I.R. 1960 SC 1080 at p. 1090 P. 23. A Full Bench of our Court in Mst. Bhagwati Devi v. S. Balwant Singh, 1955 ALJ 1 held that when property is requisitioned, the person in possession is deprived of the actual physical possession and not the legal right which had entitled him to remain in possession. "Regulation" means that the rights of the owner or the person entitled to possession are controlled, the State Government neither acquiring possession nor the right to possession. "Control" is law assimilated to "Regulation" spoken of in this authority.
"Regulation" means that the rights of the owner or the person entitled to possession are controlled, the State Government neither acquiring possession nor the right to possession. "Control" is law assimilated to "Regulation" spoken of in this authority. It does not include requisition or acquisition. 11. There is yet another aspect of this matter which deserves consideration. In Tan Bug Taini v. Collector of Bombay, A.I.R. 1946 Bom. 216 Bhagwati, J. (as he then was) held at pages 232 to 234 that a cardinal principle of British Jurisprudence was that no person should be deprived of his property save by authority of law and on payment of compensation. Relying on Maxwells Interpretation of Statutes 8th Ed. p. 248 (which passage is in the 11th Edition at p. 275) held that Courts should not adopt a construction which enables confiscation of property or encroachment on the rights and liberties of the subjects, unless and until the intention of the legislature in that behalf was plainly manifest. If the legislature in 1912 aimed at requisition, to set right an erring management, it would have made its intention plainly manifest by using that term in the preamble or clarifying "control" suitably or, providing for. compensation. There is no indication in the scheme or language of the preamble or the provisions that any special or extra-ordinary meaning of control was intended. Such a significance cannot be presumed merely because it may be desirable, when it will entail confiscation without compensation, a situation so unjust and so opposed to the basic concepts of our jurisprudence. The preamble hence does not aid and sustain rule 31. 12. In my opinion, suspension and sup-planting of the Managing Committee and taking over possession of the properties by the Registrar was not a purpose of the Co-operative Societies Act, and rule 31 does not carry out any purpose of the Act. Section 43 (5) provides that all rules made under this section shall have effect as if enacted in this Act. As held by the Supreme Court in State of Kerala v. K.M.G. Abdulla and Co., A.I.R. 1965 SC 1585 the validity of a rule whether it is declared to have effect as if enacted in the Act or otherwise, is always open to challenge on the ground that it is unauthorised. Section 43 (5) hence will not save rule 31. 13.
Section 43 (5) hence will not save rule 31. 13. For the respondents reliance was placed upon the Full Bench decision of this Court in Abu Bakar v. D.H.W.G. Society, 1965 ALJ 831. That case interpreted the word "officer" to include past officer. It held that the matters enumerated in the various clauses of sub-Sec. (2) of Section 43 were illustrative of the general power conferred by sub-Sec. (1) of Section 43 and that the matters enumerated in the various clauses of sub-Sec. (2) were necessary for carrying out the purpose of the Act. On the basis of this authority it was urged that since clause (g) of sub-Sec. (2) of Section 43 authorised rules to be framed to provide for the appointment, suspension and removal of the members of the Committee, rule 31 was refer-able to it, and within the rule making power. Clause (g) reads: "Provide for the appointment, suspension and removal of the members of the committee and other officers and for the procedure at meetings of the committee and for the powers to be exercised and the duties to be performed by the committee and other officers." The purpose of this clause is regulatory it seeks to regulate the relationship of principle and agent that in law exists between a Corporate body and its directors and officers. It does not deal with the taking possession of the properties, funds and assets of the Society. In the absence of a clear intention, it cannot be constructed to the authorise Confiscation Rule 31 is not related to clause (g). Rules 26 to 30 deal with the matters mentioned in clause (g). Under rule 26 a Member of the Committee shall be appointed, suspended or removed only in a general meeting by the votes of majority of the members. This rule carries out the purpose of the first part of this clause. Mr. Advocate General invited my attention to the decision of a learned single Judge of this court in Writ Petition No. 259 of 1962, decided on 13th December, 1962. There it was urged that rule 31/2 was ultra vires clause (g) of Section 43(2). The only argument was that under clause (g) individual members of the Committee can be suspended, whereas under rule 31 the Committee itself can be superseded. This argument was repelled by the learned Judge.
There it was urged that rule 31/2 was ultra vires clause (g) of Section 43(2). The only argument was that under clause (g) individual members of the Committee can be suspended, whereas under rule 31 the Committee itself can be superseded. This argument was repelled by the learned Judge. He held the suspension of all the members of the Committee would necessary mean suspension of the Committee itself. With respect I agree with this ratio. Thereafter the learned Judge made the following obiter observation: "In any case there is a general provision. It is open to the Government to make rules to carry on the purpose of the Act. It was, therefore. within the Competence of the State Government to frame rule 31 under the power vested in it under section 43 of the Act" It appears that the learned counsel appearing in that case had not argued that the rule was ultra vires Section 43(1). The learned Judge made a passing observation without having the benefit of a full argument on the point. The observations are per in curium and have, in my opinion no binding efficacy. The various aspect mentioned above were not argued before or considered by the learned Judge. 14. My conclusion is: rule 31 does not carry out the purpose of the Act. It is not sustainable either under Sub-section (1) or (2) of Section 43. It is ultra vires the rule making power of the State Government. The impugned orders passed on May 29, 1967 are without the authority of law and beyond the powers possessed by the3 Registrar. I enquired from the learned Advocate General whether a rule like rule 31 had been framed in any other State in the country . My attention was not invited to any such rule. The legislatures of the various States have, after the commencement of the "Constitution made independent legislative enactments on cooperative societies, and have and express provision in them about suspension of the Committee of Management. The U.P. Cooperative societies Act, No. 11 of 1966, wherein by Section 35 the Act specifically provides for supersession and supplanting of the Management of Co-operative societies; but for some unknown reason this Act of 1966 has not yet been put into force by the State Government and supersession of the Managing Committees is being continued under Rule 31.
The U.P. Cooperative societies Act, No. 11 of 1966, wherein by Section 35 the Act specifically provides for supersession and supplanting of the Management of Co-operative societies; but for some unknown reason this Act of 1966 has not yet been put into force by the State Government and supersession of the Managing Committees is being continued under Rule 31. The next equally important question for consideration is if Section 43(1) read with rule 31 is a piece of delegation of legislative power. I will assume that rule 31 carries out the purpose of the Act that the Management and properties of a registered society may be requisitioned to avoid its dissolution and winding up. 15. In Tan Bug Taim Bhagwati, J. (at p. 244 Cl. 3) held that having regard to principles of jurisprudence, English and Australian decisions and the British and Indian Legislative practice, it was clear that requsition was a distinct legislative field, I have carefully read that judgment and with respect, am in agreement with him on this point. I need not repeat the authorities extra cited there. The position is that in enacting the Act of 1912. the Central Legislature was legislating on two legislative topics Co-operative Societies and requisition. The Legislature exercised its own judgment as to "Place, persons, laws and powers" in relation to the legislative field of Cooperative Societies, by making provisions in that behalf, and then left the rest to the Executive. In respect of this field, the Act of 1912 was "Conditional Legislation", according to the consistent view of the Privy Council first expressed in Rex v. Burah, (1878) 3 AC 889 and reiterated in subsequent decisions 11 to 13. But, in respect of the other legislative head, namely requisition, it did not make any provision on the essentials, i.e. Place, Persons, Powers etc. Payment of compensation for requisition, as observed earlier, was a basic principle of British Jurisprudence. Such principles prevailed in this country in 1912. The Legislature did not formulate any policy or standard for the guidance of the Executive on any of these aspects. The indication of the purpose viz. to prevent disaster and dissolution may be formulation of policy for bringing in the legislative head of requisition within the ambit of the Act, but is not legislation on that field.
The Legislature did not formulate any policy or standard for the guidance of the Executive on any of these aspects. The indication of the purpose viz. to prevent disaster and dissolution may be formulation of policy for bringing in the legislative head of requisition within the ambit of the Act, but is not legislation on that field. The Executive could at its will, violate even the basic concept of requisition and authorise, as it did in this State by rule 31, requisition without compensation. The legislature, whose constitutionally imposed duty was to exercise its own judgment, shirked it, and divested itself of responsibility in the matter. It conferred an unfettered, un-canalised and a vagrant power on the Executive to operate on the whole field, on its behalf. In substance the onus of legislation in respect of the head of legislation of requisition was shifted to the State Governments. A legislature has never been permitted to transfer law-making on a legislative head to some other body. That in essence is abdicating or effacing itself and creating a parallel legislature. In Re. the Initiative and Referendum Act cases the Privy Council invalidated that Act. Lord Haldane observed that a legislature could not create and endow with its own capacity a new legislative power, not created by the Act to which it owed its existence. Referring to this observation, Street in his "Doctrine of Ultra Vires" (p. 430) stated: "The decision in this case that the statute was ultra tires did not turn precisely on the ground of delegation. but these remarks suggest that a legislature will not ordinarily be permitted to shift the onus of legislation. though it may legislate as to the main principles and leave details to subordinate agencies." The principles governing the exercise of legislative power were declared by the Supreme Court in B. Shama Rao v. The Union Territories of Pondichery Shelat. J. (speaking for the majority). after referring to the views of Lord Haldane and Street mentioned above, observed: "Cooley in 'Constitutional Law' (4th ed.) 138 states that the reason against delegation of power by the legislature is found in the very existence of its power, 'This high prerogative has been entrusted to its own wisdom, judgment and patriotism and not to those of other persons and it will act ultra vires if it undertakes to delegate the trust instead of executing it'.
This principle is neither the corollary of the doctrine of separation of powers nor is it based on the maxim 'delegates non potest delegare' as sometimes misunderstood. In Empress v. Burah, 5 I.A. 178 the Privy Council held that the Indian legislature had plenary powers within its own field and therefore has the same power to pass conditional legislation as the Imperial Parliament itself." His Lordship then enunciated the principles thus; "But the possession of plenary powers within the ambit laid down only means that within that particular field it can make any laws on those subjects. It would not mean that it can shirk its duty by making a law that it shall not operate on that field but somebody else will operate do its behalf. There was no dispute in the Delhi Laws Act case (1951 S.C. R., 747) about this principle." In our case the legislature has shirked its duty by permitting the Executive to operate on the entire field of legislation. 16. His Lordship after referring to the summary by Bose. J. in Raj Narain v. Chairman Patna Administration Committee, A.I.R. 1954 SC 569 of the diverse views expressed by the seven Judges of the Supreme Court who decided the Delhi Laws Act easels examined and analysed them again and held that in view of the intensive divergence of opinion it is difficult to deduce any general principle. He observed: "The utmost that can be said is that the minimum on which there appears to he consensus was (1) that legislatures in India both before and after the Constitution had plenary powers within their respective fields; (2) that they were never the delegates of the British Parliament, (3) that they had power to delegate within certain limits not by reason of such a power being inherent in the legislative power but because such power is recognised even in the United States of America where separatist ideology prevails, on the ground that it is necessary to effectively exercise the legislative power in a modern state with multifarious activities and complex problems facing legislatures and (4) that delegation of an essential legislative function which amounts to abdication even partial, is not permissible except in respect of subsidiary arid ancillary power." In the instant case the entire essential legislative function was delegated. 17.
17. In Shama Rao's case the Court was considering the Pondicherry General Sales Tax Act, X of 1965, which by Section 2 (1) provided that the Madras General Sales Tax Act, 1959, as in force in the State of Madras immediately before the commencement of this Act, shall extend to and come into force in the Union Territory of Pondicherry. Section 1 (2) of the Pondicherry Act provided that the Act would come into force on such date as the Government may by notification appoint. The Pondicherry Government issued a notification bringing into force the Madras Act as extended by the Act to Pondicherry, as from April 1, 1966. After the passing of the Pondicherry Act, but before its enforcement, the Madras legislature had amended the Madras Act, and, consequently it was the Madras Act as amended up to April 1, 1966 which came into force in Pondicherry. The majority held that the position was that the Pondicherry legislature accepted the amended Act though it was not and could not be aware what the provisions of the amended Act would be. It held that there was in these circumstances a total surrender in the matter of Sales Tax Legislation by the Pondicherry Assembly in favour of the Madras Legislature and for that reason the Act was void, or as is often said, still born. Here,- the Central Legislature did not and could not possibly know what the State Government will by rules provide in respect of requisition. It, by Section 43 (1) , totally surrendered the legislative topic of requisition to the Executive. Rule 31 in substance provides for requisition of a commercial undertaking and its property. That is an independent legislative field. The legislature while enacting the Cooperative Societies Act, did not exercise its own judgment as to place, person, laws and powers in relation to this field. Section 43 (1) will, if interpreted to provide for the making .of the rules on this field of legislation, be invalid and a still born provision, on the ground that it either shifts the onus of legislation or delegates to the State Government, legislative powers beyond the constitutionally permissible limits. Rule 31 hence will be void. 18. Mr. Khare, in the course of the hearing, gave up the point that the impugned of order infringed Article 31 (2) of the Constitution.
Rule 31 hence will be void. 18. Mr. Khare, in the course of the hearing, gave up the point that the impugned of order infringed Article 31 (2) of the Constitution. While addressing the Court in rejoinder he expressed the opinion that the point of violation of Article 31 (1) can also not be successfully pressed. In view of these submissions made by an eminent counsel, I do not feel that these points need , a detailed discussion. 19. In the result, the petition succeeds and is allowed. Both the impugned orders dated 29th May, 1967, are quashed. The petitioner will be entitled to his costs; counsel lee is assessed at Rs. 500/-.