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1993 DIGILAW 161 (KAR)

GANAPATHY SEETHARAM BHAT v. STATE OF KARNATAKA

1993-07-08

K.S.BHATT, R.V.VASANTHA KUMAR

body1993
K. SHIVASHANKAR BHAT, J. ( 1 ) THE second respondent before us is the agricultural produce co-operative marketing society which was established to provide the marketing of the agricultural produce to its members. The appellantbefore us who was the writ petitioner, was elected as a director and subsequently as the chairman of the managing committee. Apart from the elected members the government though it fit to nominate respondents 3 to 5 as its nominees under Section 29 of the Karnataka Co-Operative Societies Act, 1959 (the 'act' ). The nomination was done on 28th august, 1991. The period of the nominees to function as the members of the managing committee was not stated in the nomination and it was to be "until further orders. " the petitioner challenged these nominations on the ground that the state government had no power at all to nominate them under Section 29 of the act which was not at all attracted. Since the question involved before us is the interpretation of Section 29 we will refer to the relevant Provisions which reads thus:"29. Nominees of the government on the committee of a co-operative society. (1) where the state government (a) has subscribed to the share capital of a co-operative society, or (b) has assisted indirectly in the formation or augmentation of the share capital of a co-operative society as provided in chapter vi, or (c) has guaranteed the repayment of principal and payment of interest on debentures issued by a co-operative society, or (d) has guaranteed the repayment of principal and payment of interest on loans and advances to a co-operative society, the state government or any authority specified by the state government in this behalf, shall notwithstanding anything contained in this act or the rules or the bye-laws of the co-operative society, but subject to any notification or Order, for the time being in force, issued or made under Section 54 or 121, have the right to nominate as its representatives not more than three persons or one-third of the total number of members of the committee of the co-operative society, whichever is less. " ( 2 ) ACCORDING to the petitioner there is no subsisting share capital subscribed by the state government in the society. " ( 2 ) ACCORDING to the petitioner there is no subsisting share capital subscribed by the state government in the society. The petitioner also pointed out that the state government has not assisted indirectly in the formation or augmentation of the share capital of this society as provided in chapter vi of the act. Similarly, there has been no guarantee by the state government for the repayment of the principal and payment of interest on debentures issued by this society. Neither this society nor any other society has so far issued any debenture and that it has not obtained debentures from any other co-operative society which has issued debentures out of the loan given to the society, so also there was no guarantee on loans and advances. There is no loan incurred by the petitioner on which the state government has offered guarantee. ( 3 ) THE state government has not filed any statement of objection. It is only respondents 3 to 5 i. e. , the nominees who have filed an application in the writ petition considered as statement of objections. These nominees have pointed out that it is not necessary for the state government to have a share in the share capital at the time of nominating the members. It is sufficient that the state government had at any time subscribed to the capital, even though the said share capital had been returned to the government by the cooperative society. In the instant case the government had subscribed to the share capital which existed between the years 1960-61 to 1984-85. However, admittedly since the year 1985-86 government ceased to have any share in the share capital of this society. ( 4 ) SRI u. l. narayana rao, learned senior counsel for the nominees contended that the language of Section 29 vests a power in the government to nominate even in case the share capital had been subscribed at any time, before the time of nomination, even though the said share capital had been returned to the state government. According to the learned counsel the term "has subscribed" is a term of description comprising the fact that the state government had subscribed at any time. A decision of the Supreme Court was relied upon by the learned counsel, reported in gajanan datatraya v sherbanu hosang patel and others, AIR 1975 sc2156. According to the learned counsel the term "has subscribed" is a term of description comprising the fact that the state government had subscribed at any time. A decision of the Supreme Court was relied upon by the learned counsel, reported in gajanan datatraya v sherbanu hosang patel and others, AIR 1975 sc2156. The Supreme Court was considering the Provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act. The act enabled the landlord to seek eviction of the tenant "who has sublet" the premises. By the time the landlord filed the suit for eviction, there was no subletting in existence, however earlier the tenant had sublet. The Supreme Court held that "has sublet" does not mean that the subletting should continue to exist even on the date of the suit for eviction. In this connection, the court made the following observation at page 2158 after referring to an earlier decision in goppulal v thakurji shriji dwarkadheeshji and another, AIR 1969 SC 1291 :"it is in that context that it is said that the words "has sublet" contemplate a completed event connected in some way with the present time. " this court said that the words"has sublet" take within their sweep any subletting which was made in the past and has continued upto the present time. What is meant by these observations is that the vice of subletting which fell within the mischief of the act continues to be a mischief within the act. "in the said case, the Supreme Court was dealing with the protection given to a tenant under the rent control legislation and the circumstances under which the statutory protection ceases to be operative. When the tenant subleases the premises illegally the protection given to the tenant ceases to be in force. The vice created by the subletting continues to operate on the earlier protection given to him by the act. That is why the Supreme Court explained the observations made in the earlier decision by pointing out that the phrase "has sublefcontemplated a completed event connected with the present time. The vice continues to operate. This is further made clear by the subsequent observation in the concluding paragraph of the judgment wherein the Supreme Court pointed out that "the language is that if the tenant has sublet the protection ceases. The vice continues to operate. This is further made clear by the subsequent observation in the concluding paragraph of the judgment wherein the Supreme Court pointed out that "the language is that if the tenant has sublet the protection ceases. " ( 5 ) IT is clear that as and when the tenant illegally sublets the premises, a cause of action arises in favour of the landlord and the said cause of action does not get extinguished when the subtenant leaves the premises. ( 6 ) THAT is not the situation contemplated by Section 29 (1) of the act. The purpose of Section 29 (1) (a) is to enable the state government to nominate to the managing committee of the co-operative society when the state government has subscribed towards the share capital. It is by virtue of the contribution to the share capital the state government gets the right to nominate. Its position is comparable to that of a member because of this subscription. Instead of contesting the election the state government gets a power to nominate its nominees. We cannot read Section 29 (1) (a), as conferring a power to the state government to nominate members to the managing committee by adding the words 'at any time' between the words 'has subscribed' in clause (a ). ( 7 ) ADMITTEDLY, in the instant case, the state government ceased to be a shareholder because the subscription made to the share capital has been returned. It cannot be considered that the state government continues to be a member or it can be deemed to be a member only because at some time past the state government has subscribed to the share capital. It was then contended that from the years 1960-61 to 1985-86 the slate government had assisted the co-operative society while constructing a godown. The state government seems to have paid certain amounts by way of subsidy. Assuming that there was such a payment by the state government such a payment cannot be brought under clause (b), (c) or (d ). To attract clause (b) of sub-section (1) of Section 29, the assistance of the government should be in the formation or augmentation of the share capital as provided in chapter vi, provided that it is an indirect assistance. To attract clause (b) of sub-section (1) of Section 29, the assistance of the government should be in the formation or augmentation of the share capital as provided in chapter vi, provided that it is an indirect assistance. ( 8 ) SECTION 41 in chapter vi provides for direct assistance; it refers to the state government subscribing directly to the share capital. This situation has to be considered in the context of Section 29 (1) (a) which we have already considered and found inapplicable to the present situation. The indirect assistance in the formation or augmentation of the share capital could be related to Section 42, found in chapter vi. Under this provision, the state government may provide moneys to a co-operative society, (referred to as 'apex society'), for the purpose of purchasing shares in other co-operative societies. Admittedly the state government in the instant case has not provided any money to any apex society which in turn has purchased any shares in the second respondent's society. Section 44 is also inapplicable because the second respondent-society is not concerned with any subsidiary state partnership fund. ( 9 ) IN the application filed by the nominees, (referred also as statement of objection) there is an assertion that the second respondent-society has been taking loans every year from canara district central co-operative bank, sirsi and that the said bank had been advancing loans on security of mortgage of land, etc. , and apex bank advances loans to this dcc bank. ( 10 ) THIS assertion of the nominees cannot be accepted at all because chapter xi of the act applies to the agriculture and rural development banks. The second respondent-society is a marketing society. It has nothing to do with the banks referred in chapter xi of the act. The assertions made by the nominees seem to be assertions made only to justify their nomination without any basis for the same. ( 11 ) THERE is no dispute that the dcc bank and the apex bank are not competent to issue any debentures. Even apart from this, the assertion of the learned counsel for the appellant that no debenture has been issued, was not denied before us any one. ( 11 ) THERE is no dispute that the dcc bank and the apex bank are not competent to issue any debentures. Even apart from this, the assertion of the learned counsel for the appellant that no debenture has been issued, was not denied before us any one. Not a single instance of government standing guarantee either to the second respondent-society or to any society which advanced loan to the second respondent-society was placed before this court to justify the nomination either under Section 29 (1) (c) or (d) of the act. ( 12 ) THE leaned single judge proceeded on the assumption that the Provisions of Section 29 should be construed widely in favour of the government. Section 29 gives a special power to nominate to the managing committee of a co-operative society; the normal rules is to have an elected managing committee; nomination to the committee is an exception. This exceptional power should be given in clear terms. In fact there is no ambiguity in the language of Section 29. If for any reason the language is unclear, we would have certainly favoured a construction to justify the nomination provided the nomination is linked to any circumstances which could have been brought within the framework of Section 29. We cannot read Section 29 in such a way as to vest an exceptional power in the government to nominate members to the managing committee of a society, irrespective of the factors stated in Section 29. Legislature has not said that the state government may nominate to the managing committee of any co-operative society as and when the state government deems fit to do so. ( 13 ) THERE are other Provisions in the act which vests several regulatory powers in the government and its officers. In fact the bye-laws of the society in question provide for two governmental officers to be in the managing committee. ( 14 ) IN these circumstances, we are constrained to take a view different from the view taken by the learned single judge. This writ appeal is allowed. The impugned order nominating respondents 3 to 5 to the second respondent's society is quashed. No costs. ( 15 ) SRI h. h. kaladgi, learned high court government pleader is permitted to file his memo of appearance on behalf of respondent No. 1 in six weeks. --- *** --- .