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1999 DIGILAW 635 (KER)

State of Kerala v. Rajan

1999-12-03

M.R.HARIHARAN NAIR, P.A.MOHAMMAD

body1999
Judgment :- P.A. Mohammed, J. The underlying dispute involved in these Writ Appeals relates to the eligibility criteria for contesting election to the 'Board of Directors' of the Regional Co-operative Milk Producers Unions at Trivandrum and Ernakulam. An important question to be decided in these cases is whether the orders and directions issued by Agricultural Dairy Department of the Government of Kerala and the National Dairy Development Board governed by the National Dairy Development Board Act, 1987 are binding on the three Regional Co-operative Milk Producers Unions and the primary Milk Producers Cooperative Societies. 2. The Chairman of the Trivandrum Regional Co-operative Milk Producers Union Ltd. (for short 'the Union') Sri Nandiyodu B. Rajan filed O.P. No. 9529/99 praying to quash Ext. P6 order of the Secretary to Government, Agriculture (Dairy) Department, Trivandrum dated 23.3.1999 directing to stick to the earlier stand that the minimum quantity of 200 litres per day average milk shall be supplied to the Unions as eligibility criteria for contesting elections to the Board of Unions. It is also prayed to quash Ext. P4 notice issued by the Dairy Director dated 30.3.1999 to show cause why the resolution dated 25.3.1999 amending the existing criteria shall not be rescinded under R.176 of the Kerala Co-operative Societies Rules. The petitioner also sought for a direction to the respondents not to interfere with Exts. P2(a) and P3 decisions of the Union by which it was resolved to implement the resolution of the General body to refix 100 liters of milk per day by the member societies so as to qualify themselves to contest in the coming election to the Board of Directors of the Union. 3. Presidents of four primary Co-operative Milk Producers Co-operative Societies affiliated to Thiruvananthapuram Union filed O.P. No. 11127 of 1999 praying to quash Ext. P6 order of the Government, Agriculture (Dairy) Department dated 23.3.1999 (referred to also as Ext. P6 in OP No. 9529/99). They also sought to quash Ext. P8 proceeding of the Dairy Development Department dated 9.4.1999 rescinding the resolution No. 714 dated 25.3.1999 of the Board of Directors of the Trivandrum Regional Union. 4. The President of the Clappana Ksheerolpadaka Co-operative Society, Sri. Prayar Gopalakrishnan, and also three Presidents of other primary societies filed O.P. No. 12249 of 1999 seeking the very same reliefs contained in O.P. No. 11127 of 1999. 5. All the above three Writ Petitions, namely O.P. Nos. 4. The President of the Clappana Ksheerolpadaka Co-operative Society, Sri. Prayar Gopalakrishnan, and also three Presidents of other primary societies filed O.P. No. 12249 of 1999 seeking the very same reliefs contained in O.P. No. 11127 of 1999. 5. All the above three Writ Petitions, namely O.P. Nos. 9529,11127 and 12249 of 1999 along with O.P. No. 12194 of 1999 came up for hearing before the learned Single Judge. The learned judge after hearing passed a common judgment dated 10.6.1999 allowing O.P. Nos. 9529,11127 and 12249 of 1999 and dismissing O.P. No. 12194 of 1999. The order passed by the Director of Dairy Development dated 9.4.1999 (Ext. P7 in OP No. 9529/99 and Ext. P8 in O.P. No. 11127/99) rescinding the resolution of the Thiruvananthapuram Union was set aside. The Court also directed the respondents to conduct election to the Board of Directors of the Thiruvananthapuram Union in accordance with the resolution of the Board of Directors dated 25.3.1999. 6. As against the judgment of the learned Single Judge, the State of Kerala and the Director/ Registrar of Dairy Co-operative filed Writ Appeal Nos. 1359 and 1393 of 1999 against the judgments in O.P. Nos. 9529 and 12249 of 1999 respectively. They also filed Writ Appeal, W. A. No. 1352 of 1999, against the judgment in O.P. No. 11127 of 1999. Against this judgment, additional respondents 5 to 10 namely, Presidents of six primary Co-operative Societies also filed Writ Appeal, W.A. No. 1344 of 1999. Additional 4th respondent in O.P. No. 9529/99 has also tiled W.A. No. 1341 of 1999 against the common judgment. (Paras 7 to 15 omitted - Ed.) 16. It was pointed out by the counsel that the Government had no power or jurisdiction to issue orders or directions to the Regional Co-operative Milk Producers Unions at Thiruvananthapuram and Ernakulam inasmuch as they are 'Co-operative Societies' registered under the provisions of the Kerala Co-operative Societies Act, 1969. In support of this proposition the counsel cited the following decisions before us. i) Kottayam Co-op. Bank Ltd. v. State of Kerala (1988 (1) KLT 827) ii) Trivandrum Dist. Co-op. Bank Ltd. v. State of Kerala (1992 (1) KLT 381 (DB) iii) 4/1 v. State of Kerala (1995 (1) KLT 363 (FB)) Before we advert to the above decisions it is worthwhile to note, the true character and function of the 'co-operative societies' with which we are concerned. Co-op. Bank Ltd. v. State of Kerala (1992 (1) KLT 381 (DB) iii) 4/1 v. State of Kerala (1995 (1) KLT 363 (FB)) Before we advert to the above decisions it is worthwhile to note, the true character and function of the 'co-operative societies' with which we are concerned. They are the distinctive organisations for the development of dairy and other agriculture based and allied industries on an intensive basis coming within the province of the N.D.D.B. Act. It is evident from the objectives of the society contained in the bye-laws of Unions. It is no doubt true that they are registered as co-operative societies under the provisions of the Kerala Co-operative Societies Act, 1969. The day to day administration of the Union is carried on in view of the provisions contained in the Co-operative Societies Act, Rules and bye-laws. But, the policy matters such as qualification for contesting the election to the Board etc. are governed by the provisions of the N.D.D.B. Act. 17. In all the above three decisions cited supra, the questions for determination confine within the provisions of the Kerala Co-operative Societies Act and Rules and bye-laws. No other statute either under the Central or the State governing the policies or functions of the Co-operative Societies intervene in those cases unlike the present cases. This dissimilarity in facts would be sufficient enough to distinguish those decisions from that of the present. Further the principles that emerge from those decisions are not absolute or unqualified. Look at the observation of the Court in Kottayam Co-op. Bank's case (1988 (1) KLT 827), ie. "The assumption that the Government has got powers to intervene in the day to day administration of any Cooperative Society is not supported by the provisions of the Act or the Rules." Here the emphasis is on'the day to day administration' of the Co-operative Society and not on the policy questions. In 1992 KLT 381. supra, the Division Bench was concerned with the power of Government and Registrar to pass orders in the matter relating to appointment in co-operative societies. The above two decisions have been affirmed by the Full Bench in Aji's case (1995 (1) KLT 363), supra. 18. In the above context, let us see what this Court said in Kurian v. Joint Registrar, (1990(1) KLT 618), "It is true that a co-operative society must have freedom of activities. The above two decisions have been affirmed by the Full Bench in Aji's case (1995 (1) KLT 363), supra. 18. In the above context, let us see what this Court said in Kurian v. Joint Registrar, (1990(1) KLT 618), "It is true that a co-operative society must have freedom of activities. Officers of the Department and the Government are not to take action interfering with the autonomy of the societies. This does not mean that the society can act in any manner ignoring the provisions of the Act and the directions given by the Registrar of Co-operative Societies", (emphasis supplied) This view has been followed by a Division Bench of this Court in N. Gouthaman v. Joint Registrar & Ors. (1998 (1) KLT 275). (Paras 19 to 22 omitted) 23. The next question which requires to be decided is whether there is any justification for quashing the order of the Director of Dairy Development dated 9.4.1999. The above order has been passed by the Director in exercise of the powers conferred under R.176 of the Kerala Co-operative Societies Rules. R.176 is extracted hereunder: "176. Registrar's power to rescind resolution: Notwithstanding anything contained in the bye-laws of a registered society, it shall be competent for the Registrar to rescind any resolution of any meeting of any society or the committee of any society, if it appears to him that such resolution is ultra vires of the objects of the society, or is against the provisions of the Act. Rules. Bye-laws or of any direction or instructions issued by the Department or calculated to disturb the peaceful and orderly working of the society or is contrary to the better interest of the society", (emphasis supplied) This rule starts with a'non-obstante' clause and hence the provisions contained in the bye-laws do not restrict the power of the Registrar to rescind any resolution of the Co-operative Society or the Committee of any society, if it appears to him that such resolution violates any one of the three conditions mentioned in the Rule. Those conditions are: (1) The resolution is ultra vires of the objects of the society. (2) The resolution is against the provisions of the Act, Rules or Bye-laws or of any direction or instructions issued by the Department. Those conditions are: (1) The resolution is ultra vires of the objects of the society. (2) The resolution is against the provisions of the Act, Rules or Bye-laws or of any direction or instructions issued by the Department. or calculated to disturb the peaceful and orderly working of the society; or (3) The resolution is contrary to the better interest of the society. 24. What is the meaning of the word 'Department' contained in the second condition referred to above? The question is whether the Agricultural (Dairy) Department of Government of Kerala would come within its meaning? The word 'Department' is defined in the Encyclopaedia of Britanica as this: "a division or part of a system one of the branches of the Administration in a State or Municipality. In Great Britain it is commonly applied to the subordinate divisions of the Chief Executive Officers of State, such as the savings bank or other department of the Post Office, the mines department of the Board of Trade, etc.; in the United States these subordinate divisions are known as 'bureaux', while 'department' is used of the chief branches of the executive". This word came up for interpretation before a Division Bench of Allahabad High Court in Ram Chandra v. The District Magistrate of Aligarh (AIR 1952 All. 520) where it is said: "Department is a particular activity or a branch of Government under the political charge or control of a Minister or a Minister of State responsible to the legislature." 25. R.4 of the Rules of Business, Government of Kerala provides thus: "The business of the Government shall be transacted in the Department specified in the First Schedule and shall be classified and distributed between those departments as laid down therein." Agriculture Department is one of the Departments included in the First Schedule. Therefore, the directions or instructions issued by the' Agriculture Department' of the Kerala Government would come within the purview of R.176 of the Kerala Cooperative Societies Rules. Therefore, the Registrar is competent to rescind the resolution of any society if such resolution is against the direction or instruction issued by the Agriculture Department of the Government of Kerala. In this case the Unions apparently violated the directions issued by the Agriculture (Dairy) Department, Government of Kerala on 23.3.1999 and therefore, interference of the Registrar by invoking the power under R.176 is justified. 26. In this case the Unions apparently violated the directions issued by the Agriculture (Dairy) Department, Government of Kerala on 23.3.1999 and therefore, interference of the Registrar by invoking the power under R.176 is justified. 26. In this context, it may be mentioned the Governor of Kerala has nominated Kerala Milk Marketing Federation to implement directly and through its member cooperative institutions the Operation Flood II Project in the State of Kerala. The Government authorised the Kerala Milk Marketing Federation to receive financial assistance directly from the Indian Dairy Corporation and therefore the State Government executed a deed of guarantee on 12.9.1981 for the financial assistance. Annexure 3 produced by the Government Pleader along with CMP No. 5926/99 in W.A.No.1359/99 discloses that Indian Dairy Corporation has extended financial assistance of Rs. 18,02,66,000/- to the Federation. Out of the said amount, Rs. 11,93,86,400/- was treated as loan and the balance of Rs. 6,08,75,600/- as grant. Annexure 4 thereof reveals that the Government of Kerala stood as guarantor for the release of financial assistance from N.D.D.B to Milk Marketing Federation to the extent of Rs. 2001.46 lakhs (Twenty crores one lakh and forty six thousand only). Out of this Rs. 1311.21 lakhs (Thirteen crores, eleven lakhs and twenty one thousand) is treated as loan and Rs. 690,25 lakhs as grant under Operation Flood II in the State. Annexure 5 shows that the National Dairy Development Board is still extending financial assistance to the Thiruvananthapuram Milk Marketing Union. The resolution to fix the eligibility criteria of 100 litres in violation of the directions and orders issued by the Agricultural Department and National Dairy Development Board would result in withdrawing the financial assistance on the ground that the Unions are working against the better interest of the society as also acting against the objects of the society. 27. The counsel for the appellant in W.A. No. 1344 of 1999 submitted that this Court had exceeded its power of judicial review available under Art.226 in quashing the order of the Director of Dairy Development rescinding the resolution of the Thiruvananthapuram Union. He further pleaded that before passing the said order, the Director had issued a notice dated 30.3.1999 calling for objections against the proposed action to rescind the resolution under R.176 and granting opportunity for personal hearing in the matter. He further pleaded that before passing the said order, the Director had issued a notice dated 30.3.1999 calling for objections against the proposed action to rescind the resolution under R.176 and granting opportunity for personal hearing in the matter. Pursuant to the said notice, the objections have been filed by the Chairman of the Board of Directors on 5.4.1999. The Director has applied hi s mind to the said objections and considered all relevant matters while passing the impugned order. 28. Lord Scarman said about judicial review in Nottinghamshire Country Council v. Secretary of State for the Environment (1986 AC 240 at 251): "'Judicial review' is a great weapon in the hands of the judges; but the judges must observe the constitutional limits by our parliamentary system upon the exercise of this beneficent power." It is a well accepted proposition that the process of judicial review is directed not against the decision but is confined to the examination of the decision-making process. The Supreme Court in State of U.P. v. Maharaja Dharmander Prasad Singh (AIR 1989 SC 997) held: "However, judicial review under Art.226 cannot be converted into appeal. Judicial review is directed, not against the decision, but is confined to the examination of the decision-making process." For holding so, the apex Court relied on the observation of Lord Hail sham and Lord Brightma.nin Chief Constable of the North Wales Police v. Evans (1982) 1 WLR 1155). The Court finally said: "When the issue raised in judicial review is whether a decision is vitiated by taking into account irrelevant or neglecting to take into account of relevant, factors or is so manifestly unreasonable that no reasonable authority, entrusted with the power in question could reasonably have made such a decision, the judicial review of the decision-making process includes examination, as a matter of law, of the relevance of the factors". In Chandigarh Administration & Ors. v. Manpreet Singh & Ors. ((1992) 2 SCC 380) the Supreme Court said: "while acting under Art.226, the High Court does not sit and/or act as an appellate authority over the orders/actions of the subordinate authorities/ tribunals. Its jurisdiction is supervisory in nature. One of the main objectives of this jurisdiction is to keep the government and several other authorities and tribunals within the bounds of their respective jurisdiction. Its jurisdiction is supervisory in nature. One of the main objectives of this jurisdiction is to keep the government and several other authorities and tribunals within the bounds of their respective jurisdiction. The High Court must ensure that while performing this function it does not overstep the well recognised bounds of its own jurisdiction." In U.P. Financial Corporation v. Geni Cap (India) Pvt. Ltd. & Ors. ((1993) 2 SCC 299) it observed: "Does it mean that the High Court exercising its jurisdiction under Art.226 of the Constitution can sit as an appellate authority over the acts and deeds of the Corporation and seek to correct them? Surely, it cannot be That is not the function of the High Court under Art.226. Doctrine of fairness, evolved in Administrative Law was not supposed to convert the Writ Courts into appellate authorities over administrative authorities. The constraints -self-imposed undoubtedly- of writ jurisdiction still remain. Ignoring them would lead to confusion and uncertainty. The jurisdiction may become rudderless." 29. As against an order passed by the Registrar rescinding a resolution in exercise of power under R.176 of the Co-operative Societies Rules an appeal is ordinarily entertained under S.83 of the Act. Clause (J) of S.83 provides that an appeal shall lie against any order made by any person exercising all or any of the powers of the Registrar before the Government. In this case it is admitted that the Director of Dairy Development Department who has passed the order dated 9.4.1999 rescinding the resolution is functioning as Registrar under the provisions of the Co-operative Societies Act. That means, an appeal is maintainable against the said order of the Director of Dairy Development Department before the Government, But, the counsel on behalf of the Regional Unions contended that the appeal in the facts of these cases would only be an empty formality inasmuch as there is an order by the Government directing to fix the eligibility criteria of supplying 200 litres of milk for contesting the election to the Union. It was further pointed out that appeals were not preferred against the impugned order in view of the aforesaid reason. Therefore, what is pleaded is a decision on merits by this Court while exercising the powers of judicial review. The whole issue centres round the implementation of the orders and directions issued by the Agricultural Department of the Government and Director of Dairy Development. Therefore, what is pleaded is a decision on merits by this Court while exercising the powers of judicial review. The whole issue centres round the implementation of the orders and directions issued by the Agricultural Department of the Government and Director of Dairy Development. We have already found that orders and directions issued by them are binding on the Regional Unions and primary societies and hence they are liable to be implemented. That being the underlying issue, the only task before this Court is to examine whether they have obeyed those relevant factors and if not take a decision on that basis. In this limited exercise of judicial review warranted in this case, we are not concerned with the wisdom of the experts fixing the eligibility criteria; nor are we to say that it requires modification. 30. While exercising the power of judicial review, "The Court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the "feel of the expert" by its own views. When the legislative acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land." (M/s. Shri. Sitaram Sugar Co. Ltd. v. Union of India & Ors. (AIR 1990 SC 1277). In this context, what Supreme Court said in Maharaja Dharmander Prasad Singh's case (AIR 1989 SC 997) (supra) is very relevant. It said: "When the issue raised in judicial review is whether a decision is vitiated by taking into account irrelevant, or neglecting to take into account of relevant factors or is so manifestly unreasonable that no reasonable authority, entrusted with the power in question could reasonably have made such a decision, the judicial review of the decision-making process includes examination, as a matter of law, of the relevance of the factors." (emphasis supplied) When there is neglect to take into account of relevant factors, the judicial review of the decision-making process includes the examination as a matter of law, of the relevance of the factors. When the relevant factors are neglected, the Court while exercising the judicial review can no doubt set right it and decide on the basis of the relevant factors. That is what we have endeavoured to do in this case. 31. In view of what is said above, the order passed by the Secretary to Government, Agriculture Dairy Department, Trivandrum dated 23.3.1999 fixing the eligibility criteria of supplying 200 litres of milk per day for contesting the election to the Board of Directors of the Union is legal and valid. Likewise the order of the Director of Dairy Development Department dated 9.4.1999 rescinding resolution No. 714 dated 25.3.1999 of the Board of Directors of Thiruvananthapuram Regional Co-operative Milk Producers Union is justified in law. In view of the above findings the common judgment of the learned Single Judge dated 10.6.1999 is set aside. Writ Appeal Nos. 1359/99,1341/99,1352/99,1344/99 and 1393/99 are accordingly allowed and O.P. Nos. 9529/99,11127/ 99 and 12249/99 are dismissed. The Administrative Committee appointed pursuant to the interim orders of this Court is directed to hold the election to the Board of Directors of the Thiruvananthapuram Union without any further delay adopting the eligibility criteria of supplying 200 litres of milk per day 32. The learned Single Judge found that since the resolution fixing 200 litres of milk was passed on 24.3.1997 it was unnecessary to quash Exts. P3 and P5 in O.P. No. 11439 of 1999 as the Board of Directors itself has taken a decision under clause 20.2.9 of the Bye-laws. In that view of the matter, the Writ Petition, O.P. No. 11439 of 1999 was dismissed. Challenging the said judgment Writ Appeal No. 1513 was filed. The only contention advanced by the counsel for the appellants is that the Government have no power or jurisdiction to issue directions of the Co-operative Societies for fixing the eligibility criteria for contesting the election to the Board of Directors of the Union. We have already found that directions or orders by the National Dairy Development Board and the Agriculture Dairy Department of the Government of Kerala are binding on the Milk Producers Unions. That being the position, the contention advanced by the counsel cannot be countenanced. The Writ Appeal No. 1513 of 1999 is accordingly dismissed. We have already found that directions or orders by the National Dairy Development Board and the Agriculture Dairy Department of the Government of Kerala are binding on the Milk Producers Unions. That being the position, the contention advanced by the counsel cannot be countenanced. The Writ Appeal No. 1513 of 1999 is accordingly dismissed. However, in CMP No. 3798 of 1999 this Court by order dated 21.7.1999 directed the Returning Officer to receive the nomination papers of the appellants-petitioners without any objection. It is submitted before Court that pursuant to the aforesaid direction, the nomination papers had been received. However, withdrawal of the nominations has not been completed. The election proceedings must continue from where it was actually stopped. 33.O.P. No. 16277 of 1999-K. In this Writ Petition the main prayer is to allow the petitioner to continue as the Chairman of the Kerala Co-operative Milk Marketing Federation Ltd. until election is held to the Thiruvananthapuram Regional Co-operative Milk Producers' Union. In view of the order passed in Writ Appeal Nos. 1359,1341,1352, 1344 and 1393 of 1999 election will have to be held in the light of the orders and instructions issued by the Government and the National Dairy Development Board. In C.M.P. No. 26493 of 1999 filed by the petitioner what was prayed was to allow the petitioner to continue as the Chairman of the Kerala Co-operative Milk Marketing Federation until election is held to the Board of Directors of Thiruvananthapuram Regional Co-operative Milk Producers Union. We have by an order dated 13.7.1999 directed the Writ Petitioner and also Ayira Surendran Nair shall function as delegates to the Federation and directed the Administrative Committee to allow them to function as delegates until otherwise ordered by this Court In view of the final disposal of the Writ Appeals election to the Union has to take place. Therefore, we direct the Administrative Committee to allow the petitioner and also Ayira Surendran Nair to function as delegates to the Federation till election is held. This Writ Petition is disposed of as above.