R. A. MEHTA, J. ( 1 ) THE petitioner is a registered Labour Co-operative Society consisting of labourers working at the Food Corporation of India Godown and Depot at Rajkot and at Rail Sidings at Rajkot. The Society is formed with a view to get contract labour work for handling operations of the Food Corporation of India at Rajkot. The petitioner-society has been formed in view of the Food Corporation of India policy laid down by its circular dated January 19 1989 at annexure-C. ( 2 ) THE petitioner relies on that circular and contends that the labour contract should have been awarded to the petitioner co-operative society which is of labourers. They are also relying on second circular dated June 30 1989 wherein it is again emphasized that the Labour Co-operatives are to be encouraged to replace the existing contractors in FCI Depots and it is also emphasized that any let up in the implementation of the policy would be viewed seriously. The third circular dated June 11 1991 is also relied which provides that the Labour Co-operative Societies will be entrusted the handling work without invitation of tender on the basis of workable rates to be offered by them and to be finalised by mutual negotiations. In view of these circulars the petitioner-society of labourers has been formed and registered on September 13 1991 ( 3 ) THE petitioner-society is aggrieved by the action of the respondent Food Corporation of India in not following the aforesaid circulars and not giving the contract to the petitioner-society and by inviting tenders and ultimately giving the labour contract to respondent no. 5. ( 4 ) THE respondent Corporation has contested the claim of the petitioner-society and filed an affidavit in reply and it is submitted that the petitioner society was not a genuine labour co-operative society and was found to be sponsored and controlled by the existing H and T contractor and it is further submitted as follows:-IT is submitted that since the Senior Regional Manager has come to know from the reliable sources that the petitioner society is not a genuine labour co-operative society but it is sponsored and controlled by the present H and T contractor it was decided to award the contract to M/s. Jhala Transport Co. which is the lowest bidder. which is the lowest bidder. I crave leave to produce the relevant file in which such a decision was taken at the time of hearing the petition. Therefore the question is whether the petitioner is a genuine Co-operative society of labourers or whether it is sponsored and controlled by the existing labour contractor. ( 5 ) HOWEVER before dealing with this question a few orders in this petition may be noted. On February 27 1991 notice was issued in the petition and it was directed that if the circular dated June 11 1991 was in force the respondents were directed to maintain status quo with regard to the grant of contract on that day. This interim relief had continued till December 22 1992 when the petition was disposed of by the following order:-MR. G. M. Joshi learned Counsel for the 5th respondent whose bid was accepted by the respondent Food Corporation of India states that the respondent no. 5 is now not interested in continuing with his bid after this much lapse of time and the 5th respondent has addressed a letter to the Food Corporation to that effect. In view of the fact that the respondent no. 5 has now gone out of picture the Food Corporation of India will have to take a fresh decision and therefore at this stage this petition does not survive and is therefore disposed of accordingly. If the petitioner Co-operative Society is aggrieved by any fresh decision it would be open to them to challange the same. However in Misc. Civil Application No. 157 of 1993 the petition was revived in view of the fact that the respondent no. 5-Jhala Transport Co. had started the work of labour contractor for the Food Corporation of India. In that petition a prayer has been made for taking appropriate action against the respondents for their conduct of playing fraud on the Court and obtaining fraudulent disposal of the petition and then flouting the order so as to frustrate the proceedings. ( 6 ) IT is the say of the respondent no. 5 that the respondent no. 5 had stated that it was not interested in continuing its bid after this much lapse of time and therefore the Court had recorded that the respondent no. ( 6 ) IT is the say of the respondent no. 5 that the respondent no. 5 had stated that it was not interested in continuing its bid after this much lapse of time and therefore the Court had recorded that the respondent no. 5 had gone out of picture and the Food Corporation of India would have to take a fresh decision and therefore the petition was disposed of but the Food Corporation of India had insisted and forced respondent no. 5 to take contract work and threatened with consequences for breach of contract. The Food Corporation has submitted that it was within its rights to insist that the contractor much comply with his contractual obligations undertaken towards the Food Corporation. That Misc. Civil Application No. 157 of 1993 is also placed for hearing with this matter. ( 7 ) THE policy of the Food Corporation of India towards Labour Co-operative Societies is required to be examined by perusing its three circulars dated January 19 1989 June 30 1989 and June 11 1991 at pages 22 24 and 28 of the paper book. ( 8 ) BY the first circular it has been laid down that the contract labour system in FCI Depots may be replaced be forming labour co-operative societies by entrusting the work to those societies in a phased manner. This change was to be brought out within a period of three months and the response was desired by the first week of December 1989 and the progress was to be reported by the first week of February 1989 and therefore the action plan was laid down as follows :-2 It has therefore been decided that the following action should be taken by all the SRMs/rms/jm (PO)s :- i) Senior Officers should visit all the depots talk to the labourers working at the depot help them in forming the Labour Co-operative Societies and getting it registered with the appropriate State authorities;ii) List containing the names age etc. of labourers working under the contract system should be prepared and all of them enlisted as the members of the Labour Co-operatives. iii) They should also be helped in obtaining the licence etc. of labourers working under the contract system should be prepared and all of them enlisted as the members of the Labour Co-operatives. iii) They should also be helped in obtaining the licence etc. required under the provisions of Contract Labour (R and A) Act 1970 iv) As and when the existing contracts expire the next contract should be awarded only to the Labour Co-operatives if the societies have the capacity to undertake the work. v) These Labour co-operative Societies should also be encouraged to take composite H and T contracts as far as possible. 3 An action plan should be drawn in each Region in respect of each godown/depot where contractor has been engaged for H and T jobs with reference to the date of expiry of the subsisting contract indicating the target dales for specific action and also by which date the Labour Co-operative Societies would be formed in the various depots. The progress should be regularly reviewed every fortnight by SRMs/jm (PO)s and should also be intimated to concerned ZO/hos every month as to reach by the 7th of preceding month giving the position upto the end of previous month. The compliance of these instructions should be strictly enforced by SRMs/jm (PO) 9 In continuation of the above circular another circular was issued on June 30 1989 There the attention was drawn to the earlier circular and the instructions to draw action plan and the change to be effected and progress to be reviewed every fortnight. It was further observed that unfortunately no progress in regard to the formation of Labour Co-operative Societies had been received from any of the regions despite reminders. A meeting under the Chairmanship of the Minister for Food and Civil Supplies was referred to wherein it was decided that while engagement of labour through private contractors in the FCI is to be abolished formation of genuine Labour Co-operative Societies is to be encouraged to replace the existing contractors in FCI depots. In para 6 FCI Officers were directed to intimate the Headquarters about the action plan and the steps taken for the formation of Co-operative Societies. The information and progress was to reach regularly every month. It was further stated that the policies shall be implemented and any lapse in the implementation of the policy would be viewed seriously. In para 6 FCI Officers were directed to intimate the Headquarters about the action plan and the steps taken for the formation of Co-operative Societies. The information and progress was to reach regularly every month. It was further stated that the policies shall be implemented and any lapse in the implementation of the policy would be viewed seriously. 10 The third circular is dated June 11 1991 wherein it is stated that with a view to effective implementation of the policy of the Government to encourage formation of Labour Co-operative Societies in the Depots of FCI the Board of Directors had decided to grant further concessions to Labour Co-operative Societies. The most important of these concessions in the second concession which reads as follows :- (ii) The Labour Co-operative Societies will be entrusted the handling work without invitation of tender on the basis of workable rates to be offered by them and to be finalised by mutual negotiations. The broad guidelines for determining such workable rate shall be :- (a) Statutory minimum wages for similar work as notified for the area; (b) Labour strength required as per FCI norms of 90 bags a day per labourer; (c) Provision of attendance wages PF productivity Incentive bonus OT and other commitments; (d) Demurrage charges to the extent to be borne by the society; (f) Reasonable margin to ensure improvement of welfare measures on progressive basis; (g) Any other statutory payments that have to be met by society. 11 The concessions offered by that circular were in addition to the earlier concessions. That circular also provides that the society shall sign an agreement with the FCI on the basis of the provisions of the Model Tender Form for H and T contracts as suitably modified incorporating the above conditions. It also provides that the Labour Co-operative Society will have on its managing committee a representative of SRM to monitor compliance of various regulations by the managing committee. Paras 4 and 5 of the said circular give directions to the FCI to encourage speedy formation of Co-operative Societies and co-ordinate the work and also undertake training of labourers for initiating them in the process of organisation and management of Co-operative Societies. Paras 4 and 5 of the said circular give directions to the FCI to encourage speedy formation of Co-operative Societies and co-ordinate the work and also undertake training of labourers for initiating them in the process of organisation and management of Co-operative Societies. Those two paras read as under:- 4 To encourage the speedy formation of Co-operatives by the labourers in FCI Depots and to coordinate this work at the State level FCI will actively liase with Office of the Registrar of Co-operative Societies in such of those regions where here is likely to be encouraging response for formation of Labour Co-operatives. 5 FCI would undertake training of labour for initiating them in the process of organisation and management of Co-operative Societies. 12 These circulars takes into account basic fact that the Co-operative Societies are to consist of labourers; they are not highly educated they are not organised. Some of them may be semi literate and many of them may be totally illiterate and it is an exploited class. Unless there is someone or some agency to help them they would not be able to organise themselves and to take the benefit which the Government and FCI policies want to give them. It is for this reason that the senior officers of the FCI are directed to visit all the Depots to talk to labourers to help them in forming Co-operative Societies and getting them registered and also to help them in obtaining licence under the Contract Labour (Regulation and Abolition) Act. The FCI Officers are also directed to encourage speedy formation and to co-ordinate this work at State level. FCI Officers are also directed to undertake training of labourers for initiating them in the process of organisation and management of Co-operative Societies. All these things are required to be emphasized to show how seriously the policy makers have taken the issue for protecting unorganised and illiterate labourers from exploitation and all the duty is cast on the FCI Officers to see that this policy is implemented and succeeds. As we proceed to examine the matter in detail it appears that on behalf of FCI Officers no action has been taken to see the spirit of the policy and implementation of it. There is no heart put by the FCI Officers into this aspect. As we proceed to examine the matter in detail it appears that on behalf of FCI Officers no action has been taken to see the spirit of the policy and implementation of it. There is no heart put by the FCI Officers into this aspect. Instead of encouraging the formation of Co-operative Societies and guiding them attempt is made anyhow to exclude the society. First of all the FCI Officers do not take interest in helping them to form Co-operative Society when the labourers on their own formed the society and got it registered and sought the contract even then there is no attempt to help them. On the contrary there are positive indications of making it difficult for the labourers to get the benefit of the policy enacted for their welfare. There is a duty cast on the FCI Officers to see that genuine Co-operative Societies of genuine labourers are formed and they are not exploited. If there is any exploitation the FCI should see that such element is eliminated. However labourers are self to suffer exploitation. What the FCI has done is to throw the baby with the bath tub. 13 Let us examine the stand of the FCI taken in their affidavit in reply filed by VS Pagare Deputy Manager (G) FCI Ahmedabad. In the affidavit of Shri P. K. Nair Dy. Legal Manager FCI dated March 3 1993 it is stated that the petitioner society is not a genuine Labour Co-operative Society as it was found to be sponsored and controlled by H and T contractor and reliance was placed on the relevant file in which such a decision was taken. That file was called for and produced and it is seen that dozens of times it is reported by Rajkot officials that the society is a genuine and in Ahmedabad Office also notings have been made that the society is genuine. It is true that the question of genuineness was not finalised but at no time any adverse circumstance or any circumstance throwing any doubt on the genuineness of the society has been pointed out. In fact the workable rates have also been worked out and several submissions have been made to award the contract to the petitioner society. The note of Sr. Regional Manager Mr. In fact the workable rates have also been worked out and several submissions have been made to award the contract to the petitioner society. The note of Sr. Regional Manager Mr. M. D. Saxena records that: to me the society does not appear to be genuine as it has always been represented by Deepak Singh of M/s. Harsidhi Enterprises Rajkot unofficially though their names do not appear anywhere in the constitution of the society. A typed copy of the note at point no. 52 is taken on record at page 143. 14 It is thus seen that it is for the first time that on February 6 1992 Mr. Saxena suddenly realises that the society is not genuine as it has always been represented by Mr. Deepak Singh of M/s. Harsidh Enterprises Rajkot unofficially. If this were really so it would have been certainly reflected in some of the notings of Mr. Saxena and it would have immediately struck him that an undesirable element is taking interest in the Labour Co-operative Society; when repeatedly the matters were sent for inquiry as to the genuineness of the society and when the committee had inquired into the question of genuineness of the society this aspect also would have been brought to the notice of the committee and the officers making inquiries into the genuineness of the society. From time to time and repeatedly the reports were that the society was genuine and at no point of time Mr. Saxena noted that the society had been represented by Mr. Deepak Singh. 15 The affidavit-in-reply is not filed by Shri Saxena though number of affidavits have been filed by the Food Corporation of India. The averment in the affidavit in reply is contrary to the official record of the FCI. The first affidavit of Shri Nair who is Deputy Legal Manager dated March 3 1992 states that the petitioner-society was not a genuine co-operative society and was found to be sponsored and controlled by the existing H and T contractor. There is neither one word anywhere in the file nor is there any circumstance in the file or anywhere which enable the deponent to make this averment that the society was sponsored and controlled by the existing H and T contractor. There is neither one word anywhere in the file nor is there any circumstance in the file or anywhere which enable the deponent to make this averment that the society was sponsored and controlled by the existing H and T contractor. In the second affidavit of the same officer dated March 24 1992 there are further improvements wherein in para 4 it is stated as follows:- 4 I respectfully say and submit that it has been reliably learnt by the competent authority that the petitioner society is sponsored and controlled by the present handling and transport contractor. I say and submit that Shri Dipaksinh of Harsidh Enterprise Rajkot who is the present H and T contractor has always been representing the petitioner society before the FCI. He has called upon the Senior Regional Manager not only in Ahmedabad but also in Rajkot requesting him to allot the H and T work to the petitioner society which according to him is formed by him. I crave leave to produce the noting made by the Senior Regional Manager to this effect. Since the Senior Regional Manager came to know that the present H and T contractor is always aspousing the cause of the petitioner and the present contractor is vitally interested in the petitioner society he has come to the conclusion that the petitioner society is fictitious society and the present H and T Contractor is working under the cover of the said society. Therefore the Senior Regional Manager intimated to the Zonal Manager Bombay that it will be desirable to float tender inquiry rather than to award contract to such fictitious society which is sponsored and controlled by the present H and T Contractor. The FCI will have to spend 1. 5 to 2 times more money in H and T contract if the contract is given to the petitioner society. There is nothing in the file or in any record that the said Shri Dipaksinh had on any occasion represented the petitioner-society. The affidavit in reply goes to the extent of even attributing a statement to Shri Dilip Sinh that he had formed the society for which there is nothing on record and it is a definite improvement on the first affidavit. 16 Even on probabilities the allegation of the society being sponsored and controlled by the existing H and T contractor is not at all acceptable. 16 Even on probabilities the allegation of the society being sponsored and controlled by the existing H and T contractor is not at all acceptable. The existing contractor himself was interested in giving his own tender and competing for the contract. If the labourers formed themselves into a co-operative society and claimed the contract such contract would be given without inviting tenders and therefore his own interest would be gravely and adversely affected. At the most on probabilities he may take interest when he loses in the competitive bidding. That has not occurred till the competitive bids wore opened on January 7 1992 for which the bids wore invited on December 13 1991 At this bidding not only the petitioner-society and the respondent no. 5 were the competitors but the existing contractor Harisiddh Enterprises and Dilipsinh wore also the competitors. Therefore having regard to the totality of circumstances the ground sought to be made out by the respondent authorities that the petitioner-society is not a genuine co-operative society of labourers is totally without any evidence and in fact it is nothing but ipse dixit and after-thought and the reasons for that after-thought are seen from the note of Mr. Saxena as he has pointed out that the FCI would be saving a huge amount by not awarding the contract to the co-operative society of labourers and by working it to the private contractor namely respondent no. 5 Although such a stand may be in the economic interest of the FCI and also of respondent no. Saxena as he has pointed out that the FCI would be saving a huge amount by not awarding the contract to the co-operative society of labourers and by working it to the private contractor namely respondent no. 5 Although such a stand may be in the economic interest of the FCI and also of respondent no. 5 but it is directly contrary to the policy consciously laid down with a view to give benefit to the labourers It was very much known that the labourers are illiterate unorganised and unable to complete and therefore without inviting competitive basis they were to be offered the contract labour work on the basis of workable rates worked out as per the guidelines 17 In any ease even if the FCI official finds that in a given co-operative society there is an undesirable element it is required to take active and constructive interest in the matter to eliminate the undesirable element and to encourage the sustainance and survival of the co-operative society rather than killing it ironically in name of the benevolent policy laid down by the Government and the FCI 18 The learned Counsel for the petitioner has pointed out that there was a representation by some other labourers and it was submitted that this was not a genuine co-operative society. That was also examined and it was found that there was no substance in the allegation. In fact Mr. Saxena has not based his conclusion on it. It is therefore surprising that in the affidavit-in-reply para 5 this circumstance has been relied to contend that the petitioner-society is not a genuine labour co-operative society and that it had made a false claim. The allegation against the petitioner society was investigated and it was found that the allegation was wrong and the petitioner society was a genuine society on noting pages no. 10 to 12 after investigation into this allegation it is recorded that the petitioner society is a genuine co-operative labour society and there is nothing in the file to prove any ambiguity into the genuineness of the petitioner society. 19 The learned Counsel for the FCI has also shown that in respect of some other co-operative societies whore outsiders were in the managing committee this High Court has not believed them as genuine co-operative societies and those societies have volunteered to keep away those outsiders. 19 The learned Counsel for the FCI has also shown that in respect of some other co-operative societies whore outsiders were in the managing committee this High Court has not believed them as genuine co-operative societies and those societies have volunteered to keep away those outsiders. It is further submitted that even though on paper there may not be an outsider but there may be an outsider exploitative element behind the curtain and that would also render the society a non genuine one. It is true that this labour class is easily proned to exploitation and it is bound to be exploited unless protected. If the FCI officials wore not to take any interest in seeing that genuine co-operative societies are formed for which specific directions had been given by the higher authorities there might be occasions that such societies and labourers might be exploited but that will be no reason to throw away and kill such societies. The circular of the FCI itself provides for a safeguard of keeping the representative of the Senior Regional Manager on the managing committee of the society. If any further assurance is needed the same can certainly be provided Everyone would be interested in seeing that these labourers are not exploited. In order to further safeguard the interests of the labourers it is necessary to direct that all money transactions of the Labour Co-operative Society shall be through bank and account payee cheques; even with its members who shall also maintain bank accounts so that the amounts paid to them are credited in their bank accounts. Signing authority on behalf of the society may include the representative of the FCI as a joint signatory. The surplus or profit at the end of every year shall be distributed to the members after making provisions for statutory payments and reserves if any. If any further safeguards are found necessary it would be open to the FCI to insert and insist on such safeguards to see that the co-operative spirit and co-operation takes deep roots flourishes and the exploitation is prevented. It is hoped that the FCI officials will at all places actively encourage format on of co-operative societies and will not throw out any society as a non genuine one without making any attempt to make it genuine. It is hoped that the FCI officials will at all places actively encourage format on of co-operative societies and will not throw out any society as a non genuine one without making any attempt to make it genuine. 20 In view of the aforesaid discussion the petition is required to be allowed and is allowed and the contract awarded to respondent no. 5 is quashed and set aside and the respondent authorities are directed to give the contract to the petitioner society at the workable rate. It would be open to the FCI to rework the workable rates in consultation with the petitioner-society. The petitioner-society is directed to see that all its money transactions take place through bank and by account payee cheques and that its members also maintain bank accounts. The petitioner-society and Food Corporation of India are also directed to see that an official or the representative of the FCI is nominated on the managing committee of the petitioner-society and is made a joint signatory for operating the bank account. The petitioner-society is also directed to see that its surplus and profits shall be distributed to its members-labourers. If at any time the Food Corporation of India finds that the petitioner society and its members-labourers are not working properly and they want to invite tender inquiry it would be open to the Food Corporation of India to approach this Court. Rule is made absolute with costs quantified at Rs. 1000 to be paid by the Food Corporation of India to the petitioner-society. Petition Allowed. .