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1989 Supreme(Kar) 97
Karnataka High Court
H.Shivappa - Appellant
Versus
State of Karnataka - Respondent
Decided On : 03-15-89
W.P. : 3549 of 1988
A.K.SUBBAIAH, A.M.Farooq, B.J.SOMAYAJI, C.N.RODNAVAR, H.B.DATAR, H.K.Vasudeva Reddy, N.SANTOSH HEGDE, R.K.MANSURI, S.N.Hatti
Headnote:
The Karnataka High Court ruled on the validity of an order issued by the state government under Section 30A of the Karnataka Co-operative Societies Act, 1959, which superseded the board of management of a cooperative sugar factory and appointed a special officer to manage its affairs. The court examined the scope of the state government's power under Section 30A and the grounds on which it could be exercised, considering the principles of natural justice, mala fides, and the satisfaction of the government that the society was not functioning in accordance with the law.
Fact of the Case:
The order was challenged by the president and vice president of the society, as well as by a shareholder and a group of members. They alleged that the order was politically motivated, that the charges against the society were false, and that the state government had not followed due process. The state government defended its action, arguing that the society had incurred substantial losses, failed to repay loans, and was not functioning in accordance with the law.
Finding of the Court:
The court held that the state government had the power to issue the order under Section 30A, but that this power was not absolute and could only be exercised if the government was satisfied that the society was not functioning in accordance with the law. The court found that the state government had sufficient evidence to support its conclusion that the society was not functioning properly, including the society's failure to repay loans, its accumulation of losses, and its alleged mismanagement. The court also rejected the petitioners' arguments that the order was politically motivated or that the state government had not followed due process.
Issues: 1. Whether the state government had the power to issue the order under Section 30A of the Karnataka Co-operative Societies Act, 1959. 2. Whether the state government was satisfied that the society was not functioning in accordance with the law. 3. Whether the order was politically motivated. 4. Whether the state government had followed due process.
Ratio Decidendi: The court held that the state government had the power to issue the order under Section 30A, but that this power was not absolute and could only be exercised if the government was satisfied that the society was not functioning in accordance with the law. The court found that the state government had sufficient evidence to support its conclusion that the society was not functioning properly, including the society's failure to repay loans, its accumulation of losses, and its alleged mismanagement. The court also rejected the petitioners' arguments that the order was politically motivated or that the state government had not followed due process.
Final Decision: The court dismissed the petitions challenging the order issued by the state government under Section 30A of the Karnataka Co-operative Societies Act, 1959.
( 1 ) WRIT petition No. 3549 of 1988 is filed by the Chairman and the Vice-Chairman of Bhadra sahakari Sakkare Karkhane niyamitha, Doddabathi, which is the 4th respondent herein challenging the order dated 18-2-1988 made by the State Government under the provisions of Section 30-A of the Karnataka Co-operative societies Act 1959 (in short 'the Act' ). By that order the State Gevernment on a consideration of 23 charges levelled against the Management of the 4th respondent-Society superseded the Board of management of the said Society and appointed the Deputy Commissioner of chitradurga as the Special Officer in addition to his own duties to manage the affairs of the said society with immediate effect for a period of one year or until further orders whichever is earlier. The very same order is challenged by a shareholder of the Society by name B. Veerappa in W. P. No. 1919 of 1989.
( 2 ) IN Writ Petition No. 4155 of 1988 as many as 202 members of the Society claiming to be agriculturists and growers of sugarcane have challenged the very same order.
( 3 ) IN Writ Petition No. 5872 of 1988 the workers of the Society represented by the Bhadra Sahakari Sakkare Karkhane niyamitha Employees Union and the Secretary of the said Union have challenged the said order of the State Government.
( 4 ) THE facts are not in serious controversy in all these petitions as the order impugned is common to all the petitions. But some of the allegations made by these petitioners against the State Government r. 38 are not identical and therefore a brief advertance to those averments may be necessary before 1 consider the validity of the impugned order made under Section 30-A of the Act.
( 5 ) THE material allegations against the State Government are found in Writ petition No. 3549 of 1988 filed by the president and Vice President of the Society. From these allegations it appears that the genesis of the dispute between the parties goes back to the year 1974. The society was established in the year 1969 and the first Board of Management was nominated by the State Government on 27-6-1969 for a period of five years. Thereafter, the Government in exertion of the power conferred on it under Section 54 and 154 of the Act appointed five officers to the Board of Management including the Chairman and the Managing director to manage the affairs of the Society by its order dated 14-3-1974. Subsequently the first Board of Management was elected by 26-6-1974 but the Chairman of the Board was nominated by an order dated 14-3-1974. The said order was challenged in this Court and the same was quashed by this Court with a direction that the Chairman of the Society should be elected from amongst the directors. Accordingly, the first Chairman was elected on 30-6-1980. Thereafter, presumably in terms of the provisions of section 28-A (4) of the Act, every year elections to the posts of Chairman and vice Chairman were held. The election to the Board of Management was also held as and when vacancies arose under the provisions of the Act and the Rules made thereunder. According to these petitioners, the sugar factory was functioning in a satisfactory manner but after the elections to the State Assembly in the year 1983 the State Government at the instance of certain political leaders of the area belonging to the Janatha party by order No. RDC 8 COF 83 dated 25-1-1983 superseded the Board of Management of the Society under Section 30-A of the act and appointed a Deputy Commissioner as the Special Officer. That order of the Government was challenged in Writ petition No. 1968 of 1983 by the 2nd petitioner. This Court by its order dated 31-1-1983 stayed the order of supersession passed by the State Government and that order was subsequently modified with a direction that the elected Board shall continue in office till the disposal of the writ petition. But the State Government on 7-5-1983 once again exercised the power under Section 30-A of the Act by taking shel
