Primary Agriculture Credit Cooperative Society Ltd. v. State Of Bihar
1993-03-17
N.PANDEY, S.K.SINGH
body1993
DigiLaw.ai
Judgment N. Pandey, J. 1. These two writ applications although are on behalf of different Primary Agriculture Credit Co-operative Society Ltd (In short pacs) but for a common relief. Therefore, for the sake of convenience, they are being disposed of by a common order with the consent of the parties at the stage of admission itself. 2. The petitioner while praying for quashing the letter dated 6th july, 1993, issued by the Cane Commissioner, Bihar Patna (respondent no.2) in exercise of his power under sub-rule (5) of Rule 32 of the Bihar sugarcane (Regulation of Supply and Purchase) Rules, 1978 (hereinafter called the Rules) have also sought for a declaration that sub-rule (5) of rule 32 of the Rules is arbitrary, unbridled and ultra vires to the provisions of section 32 sub-sections (1) and (3) and proviso (i) to sub-section (4) as also to Sec.43 of the Bihar Sugarcane (Regulation of Supply and Purchase)Act, 1981 (hereinafter referred to as the Act) 3. As indicated above, the petitioners are village level sugercane growers Co-operative Societies. Their main object is to facilitate sale and purchase of sugarcane on behalf of the members of the societies As per certain provisions of the Act, they entered into agreements with the occupier of sugarcane factories for supply of sugarcane on behalf of different members. These societies, also used to receive prices from the occupier of the factories and disburse amongst the members of the societies who had supplied sugarcane under the provisions of Sec.43 of the Act read with rule 32 sub-rule (5) of the Rules. 4. The petitioners, as indicated above, are aggrieved by the decision of the Cane Commissioner, communicated through letter dated 6th July, 1992 (Annexure-1) that in view of various allegations against different pacs of default/misappropriation with respect to the amount received in lieu of supply of sugarcane by different sugarcane growers henceforth the amount of price of sugarcane shall be directly paid to the members of the co-operative societies in order to ensure prompt payment. Their claim is that no occupier of a sugar factory can directly purchase sugarcane from a sugarcane grower, if he is a member of the Co-operative Society nor payment for such sale can be made to such member on whose behalf agreement was executed by the society under the provisions of Sec.32 sub-sections (3) and (4) of the Act.
Their claim is that no occupier of a sugar factory can directly purchase sugarcane from a sugarcane grower, if he is a member of the Co-operative Society nor payment for such sale can be made to such member on whose behalf agreement was executed by the society under the provisions of Sec.32 sub-sections (3) and (4) of the Act. Their further claim is that Section 43 of the Act exclusively debars direct payment to a member of the co-operative society. Their further case is that under the provisions of sub-section (3) of Sec.43 of the Act, a Co-operative Society which had received price of interest thereon from the occupier of factory, shall be liable to pay the same to the growers and in case of default under various penal provisions of the Act, they are liable for penal action, etc. 5. In order adjudicate the controversies it would be appropriate to notice certain provisions of the act and rules; Sec.32 of the Act prescribes a provision for purchase of sugarcane grown in a reserved area. The Cane Commissioner is authorised to notify fixed quantity or proportion of sugarcane grown in the reserved area to be supplied by the sugarcane growers or if he is a member of a society, through such society It would be useful to quote some of the relevant provisions of Sec.32 of the Act hereunder : "32. Purchase of cane grown in a reserved area.- (1) The Cane commissioner may, by order notified in the official Gazette, fix with respect to any specified sugarcane grower or sugarcane growers, generally the quantity or proportion of sugarcane grown in the reserved area by the sugarcane grower or sugarcane growers concerned, as the case may be, which each sugarcane grower by himself, or if he is a member of a co-operative society of the reserved area, through such society, shall supply to the factory concerned.
(2) Every sugarcane grower, cooperative society or occupier of the factory concerned shall be bound to supply or purchase, as the case may be, the quantity or proportion of sugarcane fixed under sub-section (1) by entering into agreement in the manner specified in sub-sections (3) and (4) and any wilful failure on the part of any such person to do so shall constitute a breach of the provisions of this Act : provided that where the default committed by any cooperative society is due to any failure on the part of any of its members, such co-operative society shall not be bound to make supplies of cane to the factory to the extent of such default. (3) A canegrower or a co-operative society in a reserved area may offer in the form and by the date prescribed to supply to the occupier of the factory for which the area is reserved cane grown in such area by the cane grower or by the member of cooperative society or societies as the case may be. (4) The occupier of a factory for which an area is reserved shall enter into an agreement in such form by such date and no such terms and conditions as may be prescribed, to purchase the cane offered in accordance with the provisions of sub-section (3) ; Provided that- (i) such occupier shall purchase or enter into an agreement to purchase cane grown in a village by a member of the co-operative society of that village except from the co-operative society concerned ; (ii) x x (iii) x x section 43 of the Act prescribes a provision for payment of price sugarcane to be paid by the occupier of the factory to a sugarcane grower of cooperative society. It says the occupier of the factory shall make agreement for payment of price and in process of such agreement immediately after supply for sugarcane, the occupier of the factory shall make payment of cane so supplied. Relevant provision of Sec.43 are thus : "43. Payment of price of cane.- (1) The occupier of a factory shall make such agreements for the payment of price of cane as may be prescribed. (2) (i) As soon as cane is supplied to a factory, the occupier of such factory shall be liable to pay the price of cane so supplied.
Payment of price of cane.- (1) The occupier of a factory shall make such agreements for the payment of price of cane as may be prescribed. (2) (i) As soon as cane is supplied to a factory, the occupier of such factory shall be liable to pay the price of cane so supplied. (ii) xxx (3) (1) Where a cooperative society has received the price of cane or interest thereon from the occupier of a factory, the Secretary or the Treasurer of the Society or any other person in charge of payment on behalf of such society shall be liable to pay the same price together with interest, if any, to the cane growers or member of such society, as the case may be, immediately on receipt thereof from the occupier of the factory. (ii) Where the person liable under clause (i) makes default in payment of the price or interest thereon received from the factory for the period exceeding fourteen days from the date of such receipt he shall be liable to pay interest thereon at the rate of seven and a half per centum per annum from such date. " Rule.32 framed as per the provisions of Sec.65 of the Act prescribes mode and certain conditions for payment of price of sugarcane so purchased under the provisions of Sec.32 of the Act. As noticed above, the case of the petitioners is that second part of sub-rule (S) of rule 32 of the Rules is ultra vires to the provisions of Sections 32 and 43 of the Act, it would be also approriate to quote sub-rule (5) of rule 32 hereunder : "32. Payment of price cane.-xxx (5) The amount of price of cane ultimately receiveable by a member of a co operative society may be directly paid by the occupier or manager of a factory or any person acting on their behalf of such member, if there is an agreement between the occupier or manager of the factory and the cooperative society concerned for making such direct payment or if the Cane Commissioner orders for such direct payments being made to the members of any co-operative society in order to ensure prompt payments to them. " From the aforesaid provision, it would appear that sub-rule (5) prescribes two modes of payment.
" From the aforesaid provision, it would appear that sub-rule (5) prescribes two modes of payment. The first part says in case or an agreement between the occupier or manager of the factory and the co-operative society, the payment can be made directly to such society. The second part says if the Cane Commissioner so desires, can direct such payment to be made directly to the members of any co-operative society in order to ensure prompt payments. 6. Learned counsel for the petitioners contended that as per subsection (4)of Sec.32 of the Act, a duty is enjoined upon a Cooperative society to enter into an agreement with occupier of the fac tory in form XV prescribed under rule 25 of the Rules. It shows that no occupier can purchase or enter into an agreement to purchase sugarcane by a member of the co-operative society, except from the Cooperative Society concerned. It is contended that there is no provision under Sections 32 and 43 of the Act, authorising the Cane Commissioner to direct an occupier of a factory to make payment directly to the members of a society, debarring such society to discharge its legal obligation, enjoined upon it under the provisions of the Act. Their contention is that the provision of sub-rule (5) of rule 32 of the Rules, which gives power to the Cane Commissioner restrict payment to be made in favour of the Co-operative Society, is arbitrary, unbridled and unguided and therefore ultra vires to the provisions of Sections 32 and 43 of the Act. It is contended that a delegated legislation cannot go beyond the powers and provisions conferred by the Act to eneroach upon fundamental rights or other constitutional guarantees. 7. Separate counter affidavits have been filed by respondent nos 2, 3 and 4. Respondent no.4, the Co-operative Development and Cane marketing Union in its counter affidavit has taken at and in favour of the petitioners. In order to qualify the stand of the Cane Commissioner that different cooperative societies are in default, it is alleged that in fact different occupiers of the factories are withholding huge payments of the sugarcane growers and in case the co-operative societies are debarred from receiving payment on behalf of its member, it would be difficult for an individual member to enter into litigation for fight with such factory owners for their claim. 8.
8. Respondent nos 2 and 3 have taken uniform stand. According to them, different Co-operative Societies although received payment from the occupier of the factiories but defaulted in making payments and, therefore, in order to save cane growers including members of societies from harassment, the Cane Commissioner took a decision that payment be made directly to the members of the society. The decision of the Cane Commissioner is strictly in accordance with the object of the Act. 9. Besides the aforesaid, it was contended that in absence of any delegation or authorisation by members of the cooperative societies, the writ applications filed on behalf of the petitioners are not maintainable. In support of such contention, reliance was placed over the decision of this court in the case of Nirmalendu Bhattacharya V/s. The President Board of secondery Education and Anr. ( 1974 BBCJ 1001 ). It was next contended there is no pleading in the writ application under what circumstances, the provisions of sub rule (5) of the Rule is ultra vires to the provisions of the Act. Therefore, in absence of such pleadings, in view of the decision of the Supreme Court in the case of Prabodh Verma and ors. V/s. State of Uttar Pradesh and others, [1984) 4 SCC 251], the writ applications are fit to be rejected.9-A. It was urged that the Bihar Sugarcane (Regulation of Supply and Purchase) Rules were framed by the Government in exercise of the powers conferred by Sec.65 of the Bihar Sugarcane (Regulation of Supply and purchase) Second Ordinance, 1978 Therefore, any of the provisions of the rules cannot be declared ultra vires to the provisions of the Bihar sugarcane (Regulation of Supply and Purchase) Act, 1981. Sec.66 of the Act prescribes the provisions of repeal and saving. As per sub-section (2) of Sec.66 of the Act, anything done or action taken (including any rule made or notification issued with prospective or retrospective effect, by the Bihar Sugarcane (Regulation of Supply and purchase) Second Ordinance, before the commencement of this Act, shall notwithstanding the repeal thereof, be deemed to have been done or taken under this Act. In other words, the provisions of sub-rule (5) of rule 32 was prescribed by the Government under the provisions of Sec.65 of the second Ordinance of 1978.
In other words, the provisions of sub-rule (5) of rule 32 was prescribed by the Government under the provisions of Sec.65 of the second Ordinance of 1978. The Legislature while introducing the Act 1981 under section 66 of the Act mentioned that all the provisions prescribed under the 2nd Ordinance shall survive. Accordingly, it is clear that the legislature while introducing the aforesaid saving clause approved the provisions sub-rule (5) of rule 32. Therefore, the petitioners cannot be allowed to urge that such provision is ultra vires to the provisions of Sections 32 and 43 of the Act. 10. It was next contended that sub-rule (5) of rule 32 is supplementing the provision of Sec.43 of this Act. This is completely in conformity with the scheme and object of the Act. It cannot be said that such provision is at loggerhead to the provisions of the Act. It is further urged if the relevant provision of the Act is silent, none of the provisions of the rules, framed under the provisions of the Act, to achieve the object can be declared as ultra vires. In order to challenge the legality of such provision, one has to see whether such provision is in conformity of the object of the Act. In support of the contention, reliance was placed on the case of Messrs Ram Autar Santosh Kumar V/s. State of Bihar and others (1986 PLJR 818 ). Reference in this regard may be made to paragraph 11 of the judgment hereunder : "11. Learned counsel for the respondent has also rightly pointed out that on settled cannons of construction, if the Act is silent on a point and there is a gap, the same can obviously be filled in by statutory rules to carry out its primal purposes. In order to vitiate a rule framed under an Act, it must be shown that it is in direct headlong and glaring conflict with the present provision. There is presumption of constitutionality and if the statutory rules and the Act can be harmonised, effect must be given to both. Herein, I find not the remotest conflict or contradiction between the Act and Rule 88 and there appears to be no ground whatsoever for quashing or striking it down on that score. " 11.
There is presumption of constitutionality and if the statutory rules and the Act can be harmonised, effect must be given to both. Herein, I find not the remotest conflict or contradiction between the Act and Rule 88 and there appears to be no ground whatsoever for quashing or striking it down on that score. " 11. The question, therefore, which would fall cosideration is whether the power conferred upon the Cane Commissioner under sub-rule (5) of rule is ultra vires, ineffective and arbitrary to the powers which, expressly or by implication, are conferred upon him under the enabling Act. The point dealing with such provisions has been considered in numerous oases by the supreme Court as well as this Court. Therefore, it is well settled that powers delegated under a statute is limited by its terms. Rules framed under a delegated legislation cannot go beyond the scope of the Act. It has to give always the effect of the Act, strictly in nature and action, enabling the authority on whom such power is conferred, to extend the scope of the general operation of the Act. In support of the aforesaid provision, it would be useful to refer to the case of General Officer Commanding-in-Chief and another V/s. Dr. Subhash Chandra Yadav and another, [ (1988) 2 SCC 351 ] which lays down the following : "14. It is well settled that rules framed under the provisions of statute form part of the statute. In other words, rules have statutory force. But before a rule can have the effect of a statutory provision, two conditions must be fulfilled, namely, (1) it must conform to the provisions of the statute under which it is framed; and (2) it must also come within the scope and purview of the rule-making power of the authority framing the rules. If either of these two conditions is not fulfilled, the rule go framed would be void. . . . " 12. Similarly, in the case of A. N. Parasuraman Etc. V/s. State of Tamil nadu ( AIR 1990 SC 40 ), L. M. Sharma, J. (as his Lordship then was) laid down the following : "5. . . . . It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative function which cannot be delegated.
V/s. State of Tamil nadu ( AIR 1990 SC 40 ), L. M. Sharma, J. (as his Lordship then was) laid down the following : "5. . . . . It is well established that determination of legislative policy and formulation of rule of conduct are essential legislative function which cannot be delegated. What is permissible is to leave to the delegated authority the task of implementing the object of the Act, after the Legislature lays down adequate guidelines for the exercise of power When examined in this light the impugned provisions miserably fail to come in the required standard. " "8. The provisions of the Act indicate that the State Government has been vested with unrestricted discretion in the matter of the choice of the competent authority under Sec.2 (2) (c)as also in picking and choosing the institutions for exemption from the Act under Sec.22. Such an unguided power bestowed on the State Government was struck down as offending article 14 in the case of State of West Bengal V/s. Anwar Ali sarkar, 1952 SCR 284 : AIR 1952 SC 72 . A similar situation arose in Kunnathat Thatunii Moopil Nair V/s. State of Kerala, (1961)3 SCR 77 : ( AIR 1961 SC 552 ), where under Sec.4 of the travancore-Cochin Land Tax Act, 1955, all lands were subjected to the burden of a tax and Sec.7 gave power of the government to grant exemption from the operation of the Act. The section was declared ultra vires on the ground that it gave uncanalised, unlimited and arbitrary power, as the Act did not lay down any principle or policy for the guidance of exercise of the discretion in respect of the selection contemplated by Sec.7. " 13. In the case of Hukumchand V/s. Union of India ( AIR 1972 SC 2427 )also having taken notice of facts and circumstances of that case, it was held that the power to make subordinate legislation is derived from the enabling Act and it is fundamental that the delegate on whom such a power is conferred has to act within the limits of authority conferred thereby. 14. D. Jha also referred to a judgment of this court in the case of bihar Motor Transport Federation and ors. V/s. The State of Bihar and ors.
14. D. Jha also referred to a judgment of this court in the case of bihar Motor Transport Federation and ors. V/s. The State of Bihar and ors. [cwjc Nos.9981 and 10052 of 1992 and CWJC No.1697 of 1993 disposed of on 7-12-1993) : 1994 (1) PLJR 343] wherein the vires of rule 3b of the bihar Motor Vehicle Taxation Rule was challenged. Sec.14 (1) (2)of the Motor Vehicles Act which is an enabling provision for rule making is in pari materia to the provisions of Sec.65 of this Act. Section 14 (3) of the M. V. Act prescribes that only a fine of Rs.50/- can be imposed for violation of the provisions of that Act. As per rule 3b of the motor Vehicles Rules, the authorities were given power to impose penalty in such circumstances upto 50% if the tax was not paid or deposited within the prescribed period. The contention, therefore, was raised that the provisions, prescribed under the rule for payment of fine was directly in conflict to the provisions made in sub-section (3) of Sec.14 of the M. V. Act. 15. Having considered different decisions of the Supreme Court, their lordships held that rule 3b of the M. V. Rules doea not cantain any guideline and confers an unbridled and uncanalised power, therefore, the same was violative of Article 14 of the Constitution. It was also held that the rule was directly in conflict to the provisions made under the Act and such power has to be expressly conferred by the rule-making authority of the Legislature itself as was done in terms of Sub-section (3) of Section 14 of the Act. 16. There cannot be any dispute on the provisions laid down so far on the point in issue. But one cannot ignore the settled connon of construction if the provisions to the. Act are silent and there is sufficient gap, the same can be filled up by making statutory rules, to carry out the object of the enactment. In order to declare a rule ultra vires to the provisions of the Act, it has to be shown that such rule is in direct conflict with the object and provisions of the Act. 17. As noticed above, Sec.32 is an enabling provision for purchase of sugarcane grown in reserved area.
In order to declare a rule ultra vires to the provisions of the Act, it has to be shown that such rule is in direct conflict with the object and provisions of the Act. 17. As noticed above, Sec.32 is an enabling provision for purchase of sugarcane grown in reserved area. It has also been noticed that as per provisions of sub-sections (3) and (4) of Sec.32 of the Act, an occupier of the factory cannot purchase sugarcane or enter into an agreement with a member of the Co-operative Society. Such agreement has to be made by the respective societies under form XV framed under rule 25 of the Rules. 18. As per Sec.43 (1) of the Act, for making payment of price by an occupier of the factory an agreement has to be made, as may be prescribed under the provisions of the Act It also provides certain remedies and consequential reliefs to a cane grower or co-operative society as the case may be, in default of payment. But Sec.13 (1) is completely silent about mode of payment and/or to whom payment is to be made if supply of sugarcane is made through a co-operative society on behalf of its members 19. We have already noticed, Sec.65 of the Act is an enabling provision to make rules to effect the purpose of the Act for all or any of subject enumerated therein. As per sub-section (2) (xx), a rule can be framed by making arrangement for payment of price of sugarcane as required by section 43 of the Act. In these backgrounds, rule 32 was framed, making a provision for payment of price of sugarcane by an occupier. We have already noticed subsection (5) of this Rule, which, inter alia, empowers the Cane Commissioner to direct such payment in appropriate cases to be made directly to a member or members of co-operative societies, as the case may be. 20. From bare reference to the facts stated above, there appears not a remotest conflict or contradiction between the provisions of Sections 32 or 43 of the Act and Rule 32 (5) of the Rules. We have already noticed that the Act is completely silent on this point. Therefore, in order to fill up the gap as also to achieve the object of the Act, if such Rule is framed, there cannot be any ground to interfere with such provisions. 21.
We have already noticed that the Act is completely silent on this point. Therefore, in order to fill up the gap as also to achieve the object of the Act, if such Rule is framed, there cannot be any ground to interfere with such provisions. 21. Much emphasis has been given to the ratio laid down in the case of Bihar Motor Transport Federation and Ors. V/s. The State of Bihar and Ors. (supra) and it is said that the relevant provisions of that Act is in pari materia to the provisions of that Act and Rules. In that case, there was a clear provision under section 14 (3) of the Act to charge a fine upto Rs 50/-whereas under rule 3 (3), the provision to impose fine upto 50% of the tax not paid was introduced. Therefore, facts of that case are quite different. 22. Besides the facts stated above, the main object of the Act appears to regulate the production, supply and distribution of sugarcane in a smooth manner. We have already noticed different provisions of the Act from which it would be evident that the purpose of the Act is to ensure supply of sugarcane and payment to a person from whom such sugarcane is purchased. The second part of Rule 32 (5) is a provision enabling the Cane commissioner to take a decision in appropriate cases for direct payment of sugarcane price in order to ensure prompt payment Therefore, if the main object of Cane commissioner while issuing the impugned notification was to ensure prompt payment to the cane growers, in our view the notification issued under such provision cannot be held ultra vires to the provisions of the Act. 23. For the reasons stated above, we find no merit in these applications. 24. In the result, these writ applications are dismissed. But in the circumstances of the case, there shall be no order as to costs. Petition Dismissed.