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ANDHRA PRADESH HIGH COURT AT AMARAVATHI
D.V.S.S. Somayajulu, J.
Sangam Milk Producer Company Limited - Appellant
Versus
State of Andhra Pradesh - Respondent
Interlocutory Application No. 1 of 2021; Writ Petition No. 9279 of 2021
Decided On : 07-05-2021
COMPANY LAW - COOPERATIVE SOCIETIES - CONVERSION OF COOPERATIVE SOCIETY INTO PRODUCER COMPANY - VALIDITY - G.O.Ms.No.515, Forests and Rural Development (Corporation) Department, dated 17.7.1978 - INTERPRETATION - TRANSFER OF MANAGEMENT AND ASSETS - OWNERSHIP OF ASSETS - POWER OF STATE TO TAKE OVER ASSETS - G.O.Ms.No.19 Animal Husbandry, Dairy Development & Fisheries (Dy.Vig) Department, dated 27.4.2021 - VALIDITY - INTERIM SUSPENSION.
Fact of the Case:
The petitioner, a producer company formed by the conversion of a cooperative society, challenged the validity of G.O.Ms.No.19, dated 27.4.2021, issued by the State Government, which sought to set aside an earlier G.O.Ms.No.515, dated 17.7.1978, and take over the management and assets of the petitioner company. The petitioner contended that the impugned G.O. was illegal, arbitrary, and without authority of law, and that the State could not unilaterally take over the operations and/or assets of the company.
Finding of the Court:
The court held that the impugned G.O. was prima facie illegal and arbitrary, as it was issued without any statutory authority and without following due process of law. The court also held that the State could not summarily take over possession of the petitioner's assets, even if it had a claim over the property, as the petitioner had been in settled possession for decades. The court further held that the petitioner had made out an arguable case and that the balance of convenience was in their favor, and therefore they were entitled to interim relief.
Issues: 1. Whether the impugned G.O.Ms.No.19, dated 27.4.2021, issued by the State Government, was valid and legal. 2. Whether the State Government had the power to take over the management and assets of the petitioner company. 3. Whether the petitioner company had a right to continue in the management and control of its assets.
Ratio Decidendi: 1. The court held that the impugned G.O. was prima facie illegal and arbitrary, as it was issued without any statutory authority and without following due process of law. The court also held that the State could not summarily take over possession of the petitioner's assets, even if it had a claim over the property, as the petitioner had been in settled possession for decades. 2. The court held that the State Government did not have the power to take over the management and assets of the petitioner company, as the company was a duly formed entity under the law and the State could not treat itself as the "owner" of the company's assets. 3. The court held that the petitioner company had a right to continue in the management and control of its assets, as the company had been in settled possession for decades and had made out an arguable case that the impugned G.O. was illegal and arbitrary.
Final Decision: The court allowed the petitioner's interlocutory application and granted interim relief by suspending the operation of the impugned G.O.Ms.No.19, dated 27.4.2021. The court also directed that the petitioner company would continue in the management and control of its assets, subject to certain conditions.
JUDGMENT
D V S S Somayajulu, J. - The writ petition is filed under 226 of Constitution of India for the following relief.
2. This Interlocutory Application is filed to stay the operation of the said G.O.Ms.No.19, dated 27.4.2021.
3. This Court has heard Sri B. Adinarayana Rao, learned Senior Counsel appearing for the petitioners, and the learned Advocate General. Even though this is an interlocutory application still in view of the detailed arguments advanced, this Court is also compelled to reproduce the same in some detail.
4. Learned senior counsel points out that the impugned G.O. that has been issued on 27.4.2021 seeks to set aside an earlier G.O. that was issued on 17.7.1978 i.e after 43 years.
5. Learned senior counsel initially draws the attention of this Court to the G.O.Ms.No.515, Forests and Rural Development (Corporation) Department, dated 17.7.1978 and its contents. Prior to that, he points out that the State Government has decided to establish a Feeder Balancing Dairy at Sangam Jagarlamudi, Guntur District. According to the learned senior counsel, the milk producers of Guntur District contributed money to purchase the land in Vadlamudi adjoining Sangam Jagarlamudi village. The details of purchase are mentioned in Table-A of the affidavit. One Sale-deed bearing No.1446/1973 is also filed as an illustrative example. This document as per the Learned Senior Counsel shows that the financial contribution for the purchase was made by the milk producers. Learned senior counsel also draws the attention of this Court to the Table-B, which is mentioned in the writ petition, in which he states that the land acquired by the Andhra Pradesh Dairy Development Corporation (for short 'APDDC') is mentioned. He also draws the attention of this Court to the fact under the A.P. Cooperative Societies Act, 1964, the Guntur District Milk Producers Cooperative Union (hereinafter called as 1964 Cooperative Society) started functioning. In the year 1978, by G.O.Ms.No.675, Dairy Development and Fisheries Department, dated 27.08.1977, Vadlamudi Dairy was directed to be transferred to the said Society. Since then, according to the learned senior counsel, the Feeder Dairy at Vadlamudi popularly called as Sangam Dairy was transferred to the 1964 Society. On settlements of accounts, it was found that the State Government invested a sum of Rs.81,00,000/-(Rupees Eighty One Lakhs only), which was according to the learned counsel was directed to be treated as 'share capital'. This valuation was done by the State only as per the learned senior counsel According to the learned senior counsel, with effect from 1978 and by virtue of G.O.Ms.515, the assets became the assets of the Sangam Dairy. Learned senior counsel also draws the attention of this Court to the repayment of the amount and the challans, by which the money invested by the State was repaid to the State Government .He also points out that the audited accounts also reveal that the State Government became the shareholder alone. Later in 1995, when the Mutually Aided Co-operative Societies Act, 1995 came into force, the 1964 Society was converted into MACS Society. The NDDB (National Dairy Development Board) also advised the 1964 Society to get converted into an MACS Society. Accordingly, the learned senior counsel submits that the Society submitted its application in December, 1996 and ultimately the 1964 Society converted
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