2003 Supreme(AP) 295

Andhra Pradesh High Court
Judges : B.SUDERSHAN REDDY, N.V.RAMANA
M.Krishnama Naidu - Appellant
Versus
State OF A.P. - Respondent
Decided On : 02-25-03

Headnote:A.P. Cooperative Societies Act, 1964 - Section 12-A - Constitutional Validity - proof of - burden to prove unconstitutionality of provision lies on person who alleges it.

       A.P. Cooperative Societies Act, 1964 - Section 12A ; Constitution of India - Arts. 19(1)(c), 19(1)(g), 31-A, 300-A - Constitutional Validity of Section 12 - Classification between cooperative sugar factories and other cooperative societies in which government holding majority shares, reasonable - Section 12 neither violative of Article 14 nor 19(1)(g) of constitution, hence Valid.

       Held : The constitutional validity of section 12-A of the Act is accordingly upheld. However, the rule of audi alteram partem has to be read into the said provision requiring the Registrar to issue notice and provide an opportunity of being heard to the managing Committee before formation of his opinion under Section 12-A of the Act in respect of each of the Co-operative sugar Factories. No decision can be taken to hold that in a particular Co-operative sugar Factory (a) the majority of the shares are held by the Government; (b) it is or has become sick; and (c) there is no possibility to rehabilitee the same, unless a notice has been issued and an opportunity of being heard is provided to the Managing committee.

       The Members/shareholders of the co-operative Society are also entitled on their own accord to intervene and raise objections in this regard. All such objections may have to be considered in the same manner along with the objections preferred by the managements pursuant to the notice required to be issued by the Registrar as is held in this order.

       In the absence of any such objections from the Managing Committee, the objections if any preferred by the individual members of the Managing committee and as well as the members/ shareholders may have to be considered by the Registrar in accordance with law and in the light of observations made in this order. Wherever the management of a Cooperative sugar Factory is entrusted to the official Person-in-Charge Committee, such committee shall widely publish the notice issued by the Registrar for the information and benefit of the shareholders/members of the General Body of the society so as to enable them to prefer their objections if any in the matter.

       They may have myriad suggestions to make, which they can do, if they are allowed to be heard.

       In every case, the Registrar is required to pass a speaking order assigning reasons in support of the formation of his opinion.

       It is the Registrar, who is required to act independently and discharge the statutory power vested in him under Section 12-A of the Act in a fair and Reasonable manner by duly taking relevant considerations into account in respect of each of the factories. Writ petitions are accordingly partly allowed

       The Court in order to decide as to whether the classification has no nexus to the object sought to be achieved, cannot make any roving enquiry and find out for itself as to whether there is any substance in the submissions so made.

       Similar is the misconceived submission that Section 12-A makes discrimination between the sick Co-operative sugar Factories and Co-operative Sugar factories, which are not sick. The sick cooperative Sugar Factories in which the government holds majority of the shares are class by themselves.

       Court did not find any merit whatsoever in the submission that the impugned provision takes away the fundamental right guaranteed under Article 19 (1) (g) of constitution of India.

       There is no provision in the Act enabling the Government to decide the matter as to which of the Co-operative Sugar factories in the State is required to be privatised. The Government may have decided as policy to privatise sick cooperative Sugar Factories. That policy is crystallised in the form of Section 12-A of the Act. But, the duty is cast upon the registrar in each case to examine the material available on record in order to decide as to whether a particular Co-operative Sugar factory is or has become sick and that there is no possibility to rehabilitate the same. It is a clear case where the Registrar has surrendered his statutory duty to form such an opinion to the Government and obviously appears to have been guided by the decision of the Government to privatise the Cooperative sugar Factories in the State. The registrar may be subordinate to the government but he is under statutory obligation to form an opinion and his opinion is to govern, he must form it himself on such reasons and grounds as seem good to him. The Registrar in law cannot abdicate to discharge his statutory function to any outside agency including the Government.

       The record made available does not reflect the decision-making process. Majority of the documents are xerox copies of internal correspondence between one authority and another. It is unnecessary to make any further comment about the same.

       Even that record discloses that it is the Government, which has taken the decision to privatise Co-operative Sugar factories on the ground of their becoming sick. The second respondent herein played pivotal role in the decision-making process of the Government in his capacity as the principal Secretary to the Government, Public enterprises Department. He is all rolled into one.

       Impugned provision, in our considered opinion, does not confer any unguided or uncanalised power upon the Registrar to pass orders calling upon the Committee of a co-operative Sugar Factory to transfer its assets or its assets and liability, in whole or part. The discretion conferred upon the registrar is very well structured.