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1981 Supreme(Kar) 170
Karnataka High Court
KHODAY BREWING DISTILLING INDUSTRIES P.LTD. - Appellant
Versus
STATE OF KARNATAKA - Respondent
Decided On : 07-01-81
The main legal point established in the judgment is the limitation of the government's power to interfere with contracts made by a cooperative society and the court's jurisdiction to issue a writ against a cooperative society.
Headnote:
rfo - Lease Dispute - Act 149, Section 80 - Summary of the acts and sections referenced and discussed by the court: The court discussed the powers of the government to interfere with the lease granted by a cooperative society, the authority of the society to enter into contracts, and the jurisdiction of the court to issue a writ against a cooperative society. The court also examined the principles of co-operation and the legal personality of a cooperative society.
Fact of the Case:
The petitioner filed a writ petition challenging the government's order directing the grant of a lease to respondent No. 4 and sought a mandamus to lease the distillery in its favor. The court granted the writ in part, quashing the government's orders but rejecting the petitioner's other claims.
Finding of the Court:
The court found that the government had no jurisdiction to interfere with the lease granted by the cooperative society and that the petitioner was not entitled to a mandamus. The court also expressed concerns about the manner in which the lease was finalized.
Issues: The issues included the government's power to interfere with the lease, the authority of the cooperative society to enter into contracts, and the jurisdiction of the court to issue a writ against a cooperative society.
Ratio Decidendi: The court held that the government had no jurisdiction to interfere with the lease granted by the cooperative society and that the petitioner was not entitled to a mandamus. The court also expressed concerns about the manner in which the lease was finalized.
Final Decision: The court quashed the government's orders but rejected the petitioner's other claims. The parties were directed to bear their own costs.
( 1 ) A Co-operative Society called Vanivilasa Co operative Sugar Factory, Ltd. , hiriyur-respondent No. 3, established and functioning under the provisions of the Karnataka Co operative Societies Act, 1959, (Karnataka Act No. 11 of 1959) (hereinafter referred to as the Act) engaged in the manufacture of sugar, some time in 1979 established a distillery for manufacture of rectified spirit. On 1-3-1980, the board of Directors of the Society, inter alia, decided that the distillery should be given on lease to avoid further losses, in pursuance of which a brief advertisement was issued on 12-3-1980, inviting tenders to lease the distillery.
( 2 ) IN response to the above said advertisement, the petitioner, respondent No. 4 and seven others, with whom we are not now concerned, filed their tenders to operate the distillery at the rates or amounts specified in their respective tenders. In their tenders, the petitioner and respondent no. 4 offered to pay a rent of Rs. 7,02,000 and Rs. 6,20,000 respectively.
( 3 ) BEFORE the tenders were opened on 28-7-1980 at 12 noon, that being the appointed date and time for opening tenders, the Executive Committee of the Society, constituted and functioning under bye law No. 27 of the Bye-laws of the Society, invited the tenders for private negotiations, at which the petitioner offered to pay a rent of Rs. 7,30,000 as against Rs. 7. 02,000 offered in its tender and respondent No. 4 offered to pay a rent of Rs. 7,25,000 as against Rs. 6,20,000 offered in its tender. So far as the other terms and conditions, stipulated by the Executive Committee, there was no difference between the petitioner and respondent No. 4.
( 4 ) ON an examination of the aforesaid offers made by the petitioner and respondent No. 4, the Executive Committee, by its resolution dated 28th July, 1980, decided to accept the highest tender of the petitioner and recommended the same to government for its approval. The resolution passed by the Executive Committee in that behalf reads thus: x x x agreeably with the aforesaid resolution, the Managing Director of the Society (hereinafter referred to as the MD) a lent official from the Co operative Department of Government, addressed letter No. VSF/ dtl/80 81 dated 2-8-1980 to the Director of Sugar and Additional Registrar of Cooperative Societies, Bangalore-respondent no. 2, to move the Government to accord its approval to lease the distillery to the petitioner on a rent of Rs. 7,30,000 per annum fora period of ten years on the terms and conditions stipulated in the draft agreement enclosed to the said letter.
( 5 ) WHILE the proposal made by the MD of the Society was pending before respondent No. 2, respondent No. 4 addressed him a letter, inter alia, stating that it was aggreeable to enhance the rent for the distillery from Rs. 7,25,000 to Rs. 8,00,000 per annum. On an examination of the proposals received by him from the MD and , the revised offer made by respondent No. 4, respondent No. 2 addressed letter No. D. O. No. DSK/74 75 DIST/jnl/74, dated 19-8-1980 to Government, recommending the acceptance of the revised tender offered by the petitioner with a postscript, that reads thus: "i write to enclose a copy of my endorsement the Managing Director of m/s. Bangalore Trading and Financing corporation Pvt. Ltd. , along with his letter, in original".
( 6 ) ON an examination of the proposals made by the Director and other relevant papers, the Minister for Co-operation, by his minute dated 26-1-1981 in MD file No. RDC, 149 COF (Paras 53 to 55) decided that the revised offer of respondent No. 4 for Rs. 8,00,000 should be accepted and the distillery should be leased to it at the enhanced rent of Rs. 8,00,000 per annum, the other conditions being the same. The minute made by the Minister reads thus: "i have gone through the entire file. It has been noticed that a lot of injustice has been done, while considering the tenders of M/s. Bangalore Trading and Financing corporati
