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1990 DIGILAW 67 (HP)

ISPUR CO-OPERATIVE AGRICULTURAL SERVICE SOCIETY v. STATE OF HIMACHAL PRADESH

1990-08-21

DEVINDER GUPTA, P.C.BALAKRISHNA

body1990
JUDGMENT P. C. Balakrishna Menon, CJ.—These Letters Patent Appeals and the Writ Petition raise common questions of law. A learned single Judge of this Court dismissed a batch of writ petitions by a common judgment upholding the validity of the proceedings taken by the District Co-operative and Supplies Officer, under section 14-A of the Himachal Pradesh Cooperative Societies Act, 1968 (hereinafter referred to as the Act). 2. All these writ petitions are by Co-operative Societies functioning at different places in the district Una. These Societies are Agricultural Credit Societies serving its members within the respective areas of their jurisdiction. These Societies advance loans to its members for raising agricultural crops and according to the petitioners had been extending great help and assistance to the agriculturists of the locality. 3. The District Co-operative and Supplies Officer, exercising the powers of the Registrar delegated to him, has passed the orders impugned in these proceedings amalgamating the respective Societies with other Societies. The petitioners aver that these orders if implemented would adversely affect the credit facility for the agriculturists in the respective areas of operation of these Societies as the Societies with which these Societies are amalgamated are located at far of place(s) not easily accessible to the members of these credit Societies. As per interim orders passed by this Court, in these writ petitions and the L. P. As, the impugned orders are not yet implemented and the respective Credit Societies are allowed to function as independent Societies. 4. The facts in all these cases are similar and for the purpose of this judgment, we are referring to the facts in L, P. A. No. 29 of 1981 arising out of C> W. P. No. 9 of 1980. 5. Annexure P-E dated 6th February, 1979 is the preliminary order issued by the District Co-operative and Supplies Officer and it reads: "Whereas to revitalise the loaning system and in order to improve the working and efficiency of the Primary Agricultural Cooperative/Service Co-operative Societies has been considered desirable and essential to amalgamate the societies mentioned in column 3 below with the societies enumerated in column 2 of the table given below : S.No. Name of society with which the societies are proposed to be amalgamated Name of the societies which are to be amalgamated Remarks Balance sheet on 30-6-1977 of the societies mentioned in Cols. 2 and 3 are enclosed. 1. 2 and 3 are enclosed. 1. Ispur Co-operative Agricultural Service Society, V & PO Ispur, Teh & District Una The Ispur Shargi Service Co-operative Agricultural Service Society, V &PO Ispur, Teh & District Una. Now, therefore, in exercise of the powers conferred by section 14-A 0) of the Himachal Pradesh Co-operative Societies Act, 19t8, (Act No. 3 of 1969), I, Jai Kishan, District Co-operative and Supplies Officer, Una District, Una, propose to amalgamate the societies mentioned in column (3) with the societies given iri column (2) of the table given above. Further in exercise of the powers vested in me under section 14-A (2) of the Himachal Pradesh Co-operative Societies Act, 1968, afford you an opportunity to file objections and make suggestions in this connection, if any, within a period of sixty days from the receipt of this order but not later than 1-3-1979 in any case." On receipt of these orders, the Society summoned a special General Body meeting and by an unanimous resolution objected to the proposal for amalgamation. A translation of the copy of the resolution was produced in the writ petition as Annexure-PF- The District Co-operative and Supplies Officer on 22nd June, 1979 passed a final order amalgamating the Society as proposed in the preliminary order. Annexure-PG is the final order of amalgamation and it reads as follows:— "Whereas Primary Agricultural Credit/Service Co-operative Societies mentioned in column 3 below proposed to be amalgamated with societies given in column-2 of the table given below vide order No. 857-61 dated 6-2-1979 and the objections and suggestions and were invited all financing institutions/societies as required under section l 6. The reason for the proposed amalgamation mentioned in the preliminary order is to revitalise the loaning system and to improve the working and efficiency of the Primary Agricultural Co-operative/Service Societies. There is no mention that in what way the leaning system will be improved by the process of amalgamation nor is there any indication in the preliminary order that by such amalgamation the working and the efficiency of the primary Societies will be improved. To say the least, the ground for amalgamation mentioned in the preliminary order is too vague and is applied uniformally to all these Societies without any reference to the existing conditions such as financial capacity and the volume of business being carried on by these societies. To say the least, the ground for amalgamation mentioned in the preliminary order is too vague and is applied uniformally to all these Societies without any reference to the existing conditions such as financial capacity and the volume of business being carried on by these societies. The averments in C. W. P. No 9 of 1980 that the petitioner-society had improved its status from class B to class A is not denied by the respondents. The only reason mentioned in the final order Annexure PG for the amalgamation is that the officer concerned is satisfied "that it is desirable in the interest of the Societies shown in column-3 that these should be amalgamated with the societies shown in column-2". It is clear from the final order itself that the second respondent has cot applied his mind before he passed the final order of amalgamation. He has not considered the case relating to the individual societies. The order passed is an omnibus one in a stereo-typed form applied to all the Societies without considering the merit of each case in the light of the objections received. No specific ground for the proposed amalgamation is mentioned in the preliminary order and the objections and suggestions called for had no meaning except as an empty formality. A Full Bench of the Andhra Pradesh High Court in AIR 1978 AP 121, Seethapathi Nageswara Rao and others v. The Government of A. P. and others, considering a similar provision in section 15-A of the Andhra Pradesh Co-operative Societies Act (7 of 1964) observed at page 142:: "The next question that has to be considered regarding publication of notice is whether it contains the necessary particulars so as to enable the societies and their members to make effective representation. Section 15-A only refers to the publication of notice, but it does not speak of what particulars the notice should contain. The notice must also contain particulars or reasons either for the proposal to declare a particular society as a non-viable society and whether it is proposed to be merged or liquidated. If the particulars are not published in the notice, it would be difficult for the societies to make effective representation It should enable an affected party to rebut the reasons or grounds mentioned in the notice: The notice no doubt refers to the impugned G. Os., which lay down the guidelines. If the particulars are not published in the notice, it would be difficult for the societies to make effective representation It should enable an affected party to rebut the reasons or grounds mentioned in the notice: The notice no doubt refers to the impugned G. Os., which lay down the guidelines. But the G. Os., are not enclosed to the notice nor are those guidelines published in the notice. We are therefore, of the opinion that the notice published should be one which should afford a reasonable opportunity to the affected persons to make effective representations. Since the notices in all these cases are bald notices and bo reasons are given nor the guidelines indicated nor the G. Os. enclosed, we are of the opinion that, to this extent the notices published are not consistent with the principles of natural justice. The notices are therefore defective and thus violative of the principles of natural justice. 7. A Full Bench of the Karnataka High Court in AIR 1978 Karnataka 148, H. Puttappa and others v. The State of Karnataka and others, had by a majority judgment up-held the constitutional validity of a similar provision in section 14-A of the Karnataka Co-operative Societies Act, introduced by amendment Act 70 of 1976. Jagannatha Shetty, J., as he then was, on behalf of himself, P. B. Bopanna and Venkatachala, JJ. after up-holding the validity of the section, quashed the impugned orders of amalgamation for violation of the principle of natural justice Malimath J, as he then was, with whom Srinivasa Iyengar, J. agreed, had after declaring the section invalid for violation of Article 19 (1) (c) of the Constitution, stated at page 189:— "The preamble to the order makes it clear that the Deputy Registrar has not examined the working and structure of the societies sought to be amalgamated. As the Deputy Registrar has not formed the necessary opinion after examining the working and structure of the societies sought to be amalgamated, he could not have exercised the power of amalgamation under subsection (1) of section 14-A of the Act. The norms specified in the order pertain to the area of operation, the capital etc. These are norms having a bearing on the question of the size and capital of the co-operative society to be formed by amalgamation. The norms specified in the order pertain to the area of operation, the capital etc. These are norms having a bearing on the question of the size and capital of the co-operative society to be formed by amalgamation. There are no norms to take into account the manner in which the existing co-operative societies are function ing. As all the impugned orders are stereo-typed orders, this is another circumstance indicating that there is no application of the mind of the Registrar to the requirements of sub-section (1) of section 14-A before he passed the impugned orders. When a power is conferred on an authority to make an order on his being satisfied about the existence of certain conditions, he has to make an order after applying his mind and forming an opinion that the conditions for exercising the powers have been satisfied. If such authority passes an order in a mechanical way (sic) application of his mind, the same cannot be regarded as a valid order." 8. Construing section 13 of the Punjab Co-operative Societies Act, a Division Bench of the Punjab and Haryana High Court in AIR 1976 Punjab and Haryana 345, The Amerheri Co-operative Agricultural Service Society and another v. The State of Haryana and others, stated at page 351:— “ The order passed under sub-section (8) of section 13 of the Act has to provide for the constitution, property, rights, interests, liabilities, duties and obligations of the society or societies coming into existence. A copy of the proposed order has also to contain all this information regarding the society or societies to be affected by the Order. It is only after these matters are made known to the society or its members or creditors that they can be in a position to raise objections and also to make suggestions and make up their minds to withdraw from the membership or to withdraw their deposits. If the relevant material concerning the constitution, property, rights, interests, liabilities, duties and obligations of the concerned society or societies as the case may be is not made known the purposes of the provisions cannot be achieved as no effective objections and suggestions can be made by the society, its members or creditors." It is further stated at page 352: "The impugned orders are also liable to be quashed on another ground. The scheme of the provisions of sub-section (8) of section 13 of the Act clearly goes to show that the Registrar has to apply his mind to the facts and circumstances of a society or societies with a view to be satisfied that it is essential or desirable in the interest of a society or societies that two or more societies be amalgamated or any society should be divided to form two or more societies." 9. The preliminary order in these present cases does not give any specific reason for the amalgamation nor does it show in what way the amalgamation will revitalise the loaning system and improve the working and efficiency of the primary Society concerned. The preliminary order calling for objections has not, therefore, has served the purpose of section 14-A of the Act to be afforded to the society, its members and creditors an opportunity to raise objections and suggestions against the proposed amalgamation. The final order passed in the stereo-typed form against all these societies without affording an effective opportunity to put forward objections and suggestions on specific grounds for amalgamation is clearly unsustainable It is apparent from the final order itself that the officer discharging the functions of the Registrar under section 14-A of the Act has not applied his mind before h3 passed the impugned orders of amalgamation. He has not given any reason to amalgamate these Societies except to say that he is satisfied that in the interest of the Societies shown in Column 3 it is desirable to amalgamate the Societies shown in Column 2. There is no indication on what materials the officer is satisfied about the desirability of amalgamation and how the same satisfaction applies to all these Societies The Supreme Court in AIR 1976 SC 1785, The Siemens Engineering and Manufacturing Co, of India Ltd. v. The Union of India and another* stated at page 1789 : "It is now settled law that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by a long line of decisions of this Court ending with N. M. Desai v Testeels Ltd, C. A. No. 245 of 1970 decided on 17-12-1975 (SC)". 10. Every quasi-judicial order must be supported by a long line of decisions of this Court ending with N. M. Desai v Testeels Ltd, C. A. No. 245 of 1970 decided on 17-12-1975 (SC)". 10. In a later decision in (1978) 1 SCC 405, Mohinder Singh Gill and another v. The Chief Election Commissioner, New Delhi and others. The Supreme Court stated at page 417:— "The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplimented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validate by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Gordhandas Bhanji(AIR 1952 SC 16): Public orders, publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant. or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the actings and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself. Order are not like old wine becoming better as they grow older." 11. The revisional order of Government has merely confirmed the order of amalgamation passed by the District Co-operative and Supplies Officer. The invalidity of the proceedings and the orders passed by the original authority is not in any way rectified by the revisional order. We, therefore, allow the L. P. A.s and the writ petition and quash the orders amalgamating the petitioners-Societies with the other Societies mentioned in the impugned orders. The parties will suffer their respective costs. Appeals allowed. -