Abdul Nazecr, J

In this case, the petitioners have challenged the validity of the notification at Annexure ‘E’ dated 19.7.2007 issued by respondent Nos.3 and 4 whereby tenders have been invited for lease of Raibag Sahakari Sakkare Karkhane Niyamitha, Raibag, Belgaum District, under lease, rehabilitated, operate and transfer (for short ‘LROT’) basis for a period of 30 (thirty) years starting from the year 2007-08 to 2036-37. The petitioners have also challenged the proceedings of the State Government at Annexure ‘G’ dated 5.8.2006 whereby the State Government has decided to revive the aforesaid sugar factory by way of lease on the model of Sriram a Sahakari Sakkare Karkhane . Limited and the Government Order at Annexure ‘H’ dated 16.1.2007 deciding to lease the aforesaid sugar factory for a period of 30 years on LROT basis.

2. The petitioners are the shareholders and members of the 4th respondent-Raibag Sahakari Sakkare Karkhane Niyamitha, Raibag, Belgaum District, (‘for short ‘society’). The said society is registered under the Karnataka Co-operative Societies Act, 1957 (for short ‘the Act’). The society is carrying on the activities of manufacture of sugar. The society purchases sugarcane from its members and also from farmers in the surrounding villages for the purpose of manufacture of sugar. The society commenced its activity of production of sugar in the year 1978 with an installed capacity of 1250 TDC. The society took up an expansion programme by increasing the crushing capacity of sugarcane from 1250 TDC to 2500 TDC. It is the case of the petitioners that for the purpose of increasing the crushing capacity, the society had availed financial assistance of Rs.9.85 crores from NCDC and Rs.7.45 crores from Sugar Development Fund from the Government of India. There was an inordinate delay in release of the fund from the Sugar Development Fund, which resulted in diversion of fund borrowed from the DCB Bank for expansion programme. During the same time, the turbine alteration failed resulting delay in crushing of sugarcane. Therefore the society faced financial problems as a result of which the State Government appointed Managing Director to the sugar factory. It is further contended that the Managing Director misappropriated the funds of the society. An enquiry was conducted in this regard. In the enquiry, it was found that the Managing Director has misappro priated the funds. Therefore, the society approached the State Government to put the factory back on rails and help the farmers for whose benefit the society came into existence. The State Govern ment by its order dated 1.3.2000 gave a guarantee for a sum of Rs. 71 crores for the finance to be given by the Apex Bank and Belgaum District Co-operative Bank Limited. By another Government Order dated 4.6.2001 superseding the earlier Government Order dated 1.3.2000, the Government stood guarantee for payment of pledged loan of Rs. 41.50 crores availed earlier by the society and as per the Government Order, tripartite agreement was entered into between the society, DCC bank and the Deputy Commissioner, and thereafter, the Deputy Commissioner was to operate the accounts of the society. It is contended that the arbitrary action of the Deputy Commissioner made the DCC Bank not to accept the Government guarantee. Due to the inaction on the part of the Deputy Commissioner, spare parts were not purchased and crushing of sugarcane did not take place. The labour force remained idle and the sugarcane growers could not harvest their crops. The society in anticipation of the proposed tripartite agreement undertook large-scale repairs of machinery and placed orders for new parts and equipments. In view of the failure to enter into tripartite agreement, all the orders for supply of spares and new equipments were cancelled and the society suffered further losses. A legal notice was issued to the Deputy Commissioner calling upon him to forbear from interfering with the affairs of the