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1988 DIGILAW 79 (KAR)

PATIL, R. v. VS STATE OF KARNATAKA

1988-03-01

K.S.BHATT, P.C.JAIN

body1988
SHIVASHANKAR BHAT, J. ( 1 ) CONSTITUTIONAL validity of Sec. 30a (1a) of the Karnataka Co-operative Societies act, 1959 ('the Act' for short) and the order appointing a Special Officer to the Malaprabha Co-operative Spinning mills Ltd. , Saundatti (referred as 'the society' hereinafter) are challenged in these two writ petitions, referred to the division Bench by the learned single judge. Writ Petitions are filed by 9 of the Directors of the Society in all. ( 2 ) THE Society is stated to be a 'major Class' Agricultural Produce Cooperative society, with a vast area of operation. One of its objects is to purchase cotton from grower members and others. Its authorised share capital is Rs. 4 crores and fifty lakhs. The Board of directors consist of 17 Directors elected by 'a' Class members, 3 Directors nominated by the State Government, of whom one is its Managing Director and one director is the nominee of a Financing agency. ( 3 ) THE Society/mill is being assisted under NCDC-III Project under the World bank Agreement for setting up a Spinning mill of 25000 spindles capacity with the ginning and processing emit attached thereto. The Karnataka State Co-operative spinning Mills Federation Ltd. , Bangalore, is the Project Consultant to help in the establishment of the plant. The government of Karnataka constituted a project implementation Committee (PIC) for implementation of cotton component in accordance with the conditions of assistance stipulated under NCDC-III project. The Government constituted a committee to review the progress of the working regarding implementation of cotton component units under NCDC III project with the persons specified in the said order. The project is a time bound project and as per implementation schedule, the Mill was expected to be commissioned by 22-7-1987. The project cost of the Mill as approved by the NCDC was Rs. 1361/- lakhs as per the Financial assistance. ( 4 ) HOWEVER, by an order dated 14-10-1986, the State Government, in exercise of the powers vested in it under sec. 30a of the Act, appointed the Dy. Commissioner, Belgaum, as the Special officer for a period of one year or until further orders whichever is earlier. It is admitted that this appointment has been extended from time to time and the special Officer has been continued and is functioning. 30a of the Act, appointed the Dy. Commissioner, Belgaum, as the Special officer for a period of one year or until further orders whichever is earlier. It is admitted that this appointment has been extended from time to time and the special Officer has been continued and is functioning. ( 5 ) PETITIONERS contend that, an exercise of power under Sec. 30a of the act results in civil consequences and the elected body of the Committee of Management gets dissolved, without any enquiry or hearing the elected members and therefore, the said provision vests an arbitrary power in the State Government; this is so because of the statutory exclusion of the application of the principles of natural justice by Sec. 30a (1a ). The procedure prescribed by the statute in making an order resulting in civil consequences should be fair and reasonable governed by norms of justice and fairplay, which is totally lacking in this provision. Hence the sub-section (1a) of Sec. 30a is an arbitrary piece of legislation. It was also contended that the exercise of such a power under Sec 30a should be strictly construed and if, while making the order, the State Government in any way derogates from the purpose sought to be achieved by the said provision or its mind is vitiated by irrelevant factor, the order will be invalid. In the present case, the impugned order suffers from these vitiating circumstances. ( 6 ) RESPONDENTS 1 to 3 have filed a common statement of objections. It is pointed out that the last election to Committee of management was held on 28-8-1983 and term of office of the members of the committee of management is 3 years by virtue of Sec. 28a (3) and it expired on 30-6-1986, but they continued thereafter till the date of the impugned order by virtue of Rule 13 (3) which permits the continuation till the new committee is elected. It is further averred that the project involved was a time bound project under a World Bank agreement. The project cost of the sociaty as approved by NCDC was Rs. 1361/- lakhs as per the financial assistant, as detailed below : ( 21 ) IN the absence of a clear exclusion of the principles of natural justice, it was held there, that, its principles should be applied to the procedure involving the suspension of the permit under sec. The project cost of the sociaty as approved by NCDC was Rs. 1361/- lakhs as per the financial assistant, as detailed below : ( 21 ) IN the absence of a clear exclusion of the principles of natural justice, it was held there, that, its principles should be applied to the procedure involving the suspension of the permit under sec. 60 of the Motor Vehicles Act. Validity of a provision excluding the application of the Rules of natural justice was not involved in the said case. ( 22 ) GOVERNMENT of Mysore and Others v. J. V. Bhat etc. ( AIR 1975 SC 596 ) was another citation relied upon by the learned counsel for the petitioners to emphasis the importance of the doctrine of natural justice. Again, there, the supreme Court read into the statute in question, the rule of natural justice in the absence of an intention to exclude the said rule by the statute. Learned Advocate general, relied upon the observations in the said decision, at p. 599, which reads,". . . . It is only where there is nothing in the statute to actually prohibit the giving of an opportunity to be heard, but, on the other hand, the nature of the statutory duty imposed itself necessarily implied an obligation to hear before deciding that the 'audi alteram pattern rule could be imported. The nature of the hearing would, of course, vary according to the nature of the function and what its just and fair exercise required in the context of rights affected". ( 23 ) SRI Datar also referred to mohinder Singh Gill and Another v. The chief Election Commissioner ( AIR 1978 sc 851 ), particularly to para-65 to emphasis his contention that exercise of any power resulting in adversely affecting the civil rights (a term which includes, according to the learned counsel, a right to hold an elective office) should be embedded in a fair and reasonable procedure. As alreacy observed by us, the force of this contention is lost by his reliance on the earlier decision in H. L machado's case as to the scope of Sec. 30a. Further, the Supreme Court was not concerned with the validity of any specific provision excluding the application of rules of natural justice. As alreacy observed by us, the force of this contention is lost by his reliance on the earlier decision in H. L machado's case as to the scope of Sec. 30a. Further, the Supreme Court was not concerned with the validity of any specific provision excluding the application of rules of natural justice. ( 24 ) ANOTHER decision relied on by sri Datar is AIR 1986 SC 180 (Olga Tellis and Others v. Bombay Municipal Corporation and Others) in support of his proposition that a law gets vitiated and is liable to be set aside, if the procedure prescribed for exercise of a power resulting in civil consequences is arbitrary, unfair or unreasonable. The observations of the supreme Court in the said case, was in the context of Art. 21 of the Constitution and the effect of the statutory power on the livelihood of several slum dwellers of bombay. ( 25 ) AN elective office is the creation of a statute. None has a fundamental right to be a member of the committee of management of a co-operative society. Principles enunciated to the validity of a procedural law affecting a person's fundamental rights cannot be extended to cover the cases of such a statutory right. ( 26 ) LEARNED Advocate General also referred to an unreported decision of doddakale Gowda, J. . in Basanagouda v. State of Karnataka and Others (W. P. No. 5627/1984d D. 29-5-1984) wherein, the learned Judge repelled a similar contention challenging the validity of Sec. 30a (1a)of the Act. We respectfully agree with the said decision. ( 27 ) IT is also not possible to accept the next contention of the petitioners. The impugned order cites the instances leading to the satisfaction of the Government as to why action under Sec. 30a had to be taken. It is not possible to hold that they are irrelevant factors. The urgency for the action is also pointed out at para-19 of the order. The interest of the State Government and other financial agency like the Karnataka Co-operative apex Bank with State Government's guarantee is also stated in the impugned order. The project cost is estimated at rs. 1361 lakhs. Out of this, the contribution of the individuals (that is the growers) is only Rs. 68. 05 lakhs by way of share capital. The entire balance came from State Government and the Apex bank, referred above. The project cost is estimated at rs. 1361 lakhs. Out of this, the contribution of the individuals (that is the growers) is only Rs. 68. 05 lakhs by way of share capital. The entire balance came from State Government and the Apex bank, referred above. Thus the financial stake to the State Government and the apex Bank is quite high and in the circumstances of this case, the action appointing the Special Officer cannot be termed arbitrary in any manner. ( 28 ) IN the result, for the reasons stated above, these petitions fail and are dismissed. Rule is discharged. Each party shall bear his or its own costs. --- *** --- .