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2006 DIGILAW 2539 (RAJ)

Agro Sales & Manfacturing v. Union of India

2006-08-23

DINESH MAHESHWARI

body2006
Judgment Dinesh Maheshwari, J.-Learned Counsel for the parties have been heard at length in relation to the objection raised by the Respondent No. 5 against maintainability of this writ petition before this Court for want of territorial jurisdiction. Judgment Dinesh Maheshwari, J.-Learned Counsel for the parties have been heard at length in relation to the objection raised by the Respondent No. 5 against maintainability of this writ petition before this Court for want of territorial jurisdiction. In order to address to this question regarding territorial jurisdiction, the subject matter of this writ petition could be taken in comprehension thus: The Petition The petitioner Agro Sales and Manufacturing Cooperative Limited has submitted this writ petition through its Chairman claiming the following reliefs:- "It is, therefore, humbly prayed that this writ petition may kindly be allowed and by issuing an appropriate writ, order or direction: (1) it may kindly be declared that Department of Agriculture and Cooperation is Central Government for the purposes of Sections 122 and 123 of the Act of 2002; (2) it may also kindly be declared that the Department of Fertilizers of Ministry of Chemicals and Fertizilers is not Central Government within the means of Sections 122 and 123 of the Act of 2002; (3) theorder dated 28.09.2004 (Annx.P/5) issued by the Department of Fertilizers of Ministry of Chemicals and Fertilizers may kindly be quashed and set aside, as if same was never so passed; (4) all decisions taken by the respondent-KRIBHCO in pursuance to order dated 28.09.2004 (Annx.P/5) may kindly be declared null and void, as if same were never so passed; (5) it may kindly be declared that IFFCO is not commercial/business rival of KRIBHCO and further, that KRIBHCO is subsidiary institution of IFFCO; (6) that decision of KRIBHCO to repatriate entire equity of IFFCO in KRIBHCO may kindly be declared nullity and void; (7) further, the decision on the part of KRIBHCO to repatriate five Directors of IFFCO nominated on the Board of KRIBHCO as well as two nominee Directors in the Executive Committee of KRIBHCO, may kindly be declared nullity and void; (8) the Central Registrar may kindly be directed to examine legality, validity and justifiability of all the policy decisions taken by KRIBHCO, in consequence to setting aside of the order dated 28.09.2004 (Annx.P/5); (9) without prejudice, if KRIBHCO is to be treated as business/commercial rival of IFFCO then registration of KRIBHCO may kindly be cancelled by the Central Registrar in view of provisions of rule 12 of the Rules of 2002 as well as Section 7(1)(c), 19 (6) and 34(f) of the Act of 1984; (10) further, in consequent thereto, in view of Section 116 of the Act of 2002 read with rule 12 of the Rules of 2002, Central Government may be directed to omit the entry of KRIBHCO in the Second Schedule of the Act of 2002 from the list of National cooperative societies. (11) The costs of this writ petition may kindly be awarded in favour of the petitioner. (12) Any other writ, order or direction which your Lordship may deem just and proper in the facts and circumstances of the case, may also kindly be issued in favour of the petitioner. 2. The averments taken by the petitioner for seeking the reliefs aforesaid are that the petitioner is a cooperative society registered under the Rajasthan Co-operative Societies Act, 1965. As per Sections 19 and 25 of the Multi-State Co-operative Societies Act, 1984 (the Act of 1984) and Multi-State Co-operative Societies Act, 2002 (the Act of 2002) respectively, the petitioner society is a Member of Indian Farmers Fertilisers Co-operative Limited (IFFCO) and so also Krishak Bharti Co-operative Limited (KRIBHCO); the share capital of the petitioner in IFFCO is Rs.10 lacs and in KRIBHCO Rs.5.70 lacs; and the Registered Office of the petitionersociety is at Merta City, District Nagaur, Rajasthan. 3. The petitioner has averred that IFFCO and KRIBHCO are market leaders in fertilisers and the petitioner is also a wholesale dealer of IFFCO and KRIBHCO being their member society; the delegate of petitioner is entitled to participate in General Body meeting of IFFCO and KRIBHCO and so also in the election process and the petitioner is getting dividends from IFFCO and KRIBHCO annually at 20% of its share capital. The petitioner has further averred that its Chairman Shri Mangilal was earlier on the Board of Managing Committee as Director of IFFCO; and its Chairman also remained Vice-Chairman of KRIBHCO. The petitioner being their member is keenly interested that both IFFCO and KRIBHCO should function in accordance with relevant laws and bye-laws; and according to the petitioner, the function of IFFCO and KRIBHCO is being seriously interfered with illegally by the authorities who are not competent, in contravention of the provisions of the Act of 2002, rules made thereunder and bye-laws of KRIBHCO and consequently the functioning of IFFCO and KRIBHCO shall adversely affect the petitioner; and in view of this, the Board of the petitioner-society has authorised its Chairman to file the present writ petition under its resolution dated 13.01.2006. 4. The petitioner has given out the details of incorporation of IFFCO and KRIBHCO in the manner that IFFCO was registered on 011.1967 as a Multi-Unit Co-operative Society under the provisions of Bombay Cooperative Societies Act. 4. The petitioner has given out the details of incorporation of IFFCO and KRIBHCO in the manner that IFFCO was registered on 011.1967 as a Multi-Unit Co-operative Society under the provisions of Bombay Cooperative Societies Act. Subsequently, upon coming into force the provisions of the Act of 1984 and thereafter of the new Act of 2002 and the rules thereunder, IFFCO came to be regulated by those provisions. Consequent amendments made in the bye-laws of IFFCO were also registered under the Act of 2002 and the Rules of 2002. According to the petitioner, bye-law No.2 of IFFCO provides that its area of operation shall extend to the whole of Indian Union and in the interest of its members, IFFCO may extend its operation beyond the Indian Union. According to the petitioner, while discussing the diversification plan of IFFCO in its 76th Meeting held on 03.08.1978, the Board of IFFCO took a considered view that IFFCO should expand in related fields, having synergies with their activities and for this purpose, a separate co-operative society should be created. In October 1978 a fertilizer project was in offing at Hazira in Surat District of Gujarat State consisting of two ammoniaurea plants with the proposal that IFFCO and National Fertilizers Ltd. would be putting up one plant each; but at the subsequent discussions, it was felt desirable to have a single organization to own and operate the entire Hazira Fertilizer Project. Though opinion was in favour of IFFCO owning this project but keeping in view its size and capacity at the relevant time, the then Managing Director of IFFCO was reluctant to accept the offer and felt that other alternative could be set up as a separate organisation for executing Hazira Project. According to the petitioner, after detailed discussions in its meeting dated 04.06.1979, the Board of Directors agreed to the proposal of putting of both plants in the co-operative sector and also taking required steps for organisation of a new society for this purpose of owning Hazira Project with IFFCO as its prime promoter; and bye-laws for the new society were approved ultimately on 111.1979. Therefore, after issue of letter of intent for Hazira Project, IFFCO thought it appropriate to promote a separate society and pass the letter of intent to the newly promoted society. 5. Therefore, after issue of letter of intent for Hazira Project, IFFCO thought it appropriate to promote a separate society and pass the letter of intent to the newly promoted society. 5. The petitioner has asserted that in view of the above, the application was submitted to the Central Registrar by IFFCO and pursuant to this and in pursuance of the provisions of Multi-Unit Cooperative Societies Act, 1942 a co-operative society by the name of KRIBHCO was registered on 17.04.1980 as a Multi-Unit Cooperative Society under the Delhi Co-operative Societies Act, 1972. Subsequently the Act of 1984 and the Act of 2002 came into force and thereafter amended bye-laws of KRIBHCO were registered under the provisions of the Act of 2002. As per bye-laws of KRIBHCO, five Directors would have to be nominated by IFFCO on the Board of KRIBHCO; the area of operation of KRIBHCO, as per its bye-law No.4 is analogues to the area of operation of IFFCO and the object is also analogues to the object of IFFCO. The petitioner has referred to the marketing agreements between IFFCO and KRIBHCO and their common terms for sale of urea with relevant variations and also of setting up of coordination committees. The petitioner has pointed out that 90% of the member co-operatives of IFFCO are also the member co-operatives of KRIBHCO including the petitioner society, selling the products of both IFFCO and KRIBHCO. According to the petitioner, total sale of urea by the co-operatives is more than the combined annual production by IFFCO and KRIBHCO; and in fact both of them compliment each other by fulfilling the requirements of urea in co-operative sector in keeping with co-operative principles of mutual aid and self-help. The pivotal submission of the petitioner is that the activities of both the organisations, IFFCO and KRIBHCO are complimentary to each other and not in conflict. 6. According to the petitioner, KRIBHCO was always taken as a subsidiary institution of IFFCO and was registered as such and was administered as such with a common board. 7. The pivotal submission of the petitioner is that the activities of both the organisations, IFFCO and KRIBHCO are complimentary to each other and not in conflict. 6. According to the petitioner, KRIBHCO was always taken as a subsidiary institution of IFFCO and was registered as such and was administered as such with a common board. 7. The petitioner has referred to the provisions of the Act of 1984 and has pointed to the restriction on registration of Multi-State Cooperative Societies having similar area of operation and identical objects under Section 7(1)(c); and so also the restriction in Section 19(6) of the Act of 1984 of any person being a member on the Board in case the businesses were in competition to each other and has pointed out that similar are the provisions in Section 29 and 43(f) of the Act of 2002. The emphasis of the petitioner is that despite such restrictions, KRIBHCO continues to exist and that clearly indicates that the activities of IFFCO and KRIBHCO were considered to be complimentary. 8. The petitioner has further averred that KRIBHCO was promoted by IFFCO and both of them have been placed in Second Schedule (to the Act of 2002) at serial Nos.9 and 17 of the List of National Co-operative Societies; and if they are commercial/business rival to each other, then in view of Rule 12 of the Rules of 2002, KRIBHCO cannot find its place in the list of National Co-operative Societies. The petitioner has further referred to the bye-laws of KRIBHCO to show that IFFCO is one of its member and five Directors to the Board of KRIBHCO are to be nominated by IFFCO, one of whom shall be a functional Director; that in the Executive Committee of KRIBHCO, there shall be two nominees of IFFCO, one of whom will be a functional Director; and that IFFCO and KRIBHCO are members in certain joint ventures too, as named in the petition. 9. Thus elaborating on its contentions that IFFCO and KRIBHCO are complimentary to each other and KRIBHCO is a subsidiary of IFFCO, the petitioner has averred that an order dated 212.2002 was issued by the Department of Agriculture and Cooperation, Government of India and the Central Registrar of Cooperative Societies whereby the bye-laws of KRIBHCO indicated in the said order were registered under Section 11 of the Act of 2002. The petitioner has placed the bye-laws of KRIBHCO as Schedule-A to the writ petition. The petitioner has also placed the observations of Central Registrar on the proposed bye-law Nos. 6(vii), 38(iii) and 51 (a)(6-7) as Schedule-B to the petition. These observations of the Central Registrar forming the genesis of the dispute sought to be raised in this writ petition may usefully be noticed as under:-Proposed Bye-Law of KRIBHCO MEMBERSHIP Observation of the Central Registrar MEMBERSHIP