The decision to sell or lease the factory was taken before the order of winding up, and the general body of the society was not consulted, violating the legal provisions and the society's objectives. The court also found that the impugned order lacked bonafides and was violative of the spirit and letter of the law.

Balakrishna

1. By consent of the learned Counsel appearing for the parties, the Writ Petition is taken up for final hearing.

2. This Writ Petition is directed against the order dated 18-3-1986 in case No. DSK/LQD/398/85-86 passed by the Director of Sugar and Additional Registrar of Co-operative Societies, Bangalore, who is respondent-2 herein and also against the order of the State o.f Karnataka represented by its Secretary to Government, Co-operation Department, Bangalore, which is respondent-1 herein accepting the offer of respondent-4 for lease/sale of Mahadeswara Sahakara Sakkare Karkane Limited, Kollegal. The petitioners are the residents of Mullur Village, Kollegal Taluk, Mysore District. They are sugar-cane growers. They are share holders of Mahadeswara Sahakara Sakkare Karkane Limited, Kollegal, and they are aggrieved on account of the winding up of the Society and the sale of the factory to respondent No. 4.

3. Briefly set out the following are the essential facts: Respondent-3 which is Mahadeswara Sahakara Sakkare Karkane Limited, Kollegal (for short 'the Society') is a Co-operative Society registered in 1963 under the Karnataka Co-operative Societies Act, 1959 (for short 'the Act'). The Society was promoted by the farmers belonging to the Taluks of Kollegal, Yelandur, T. Naraslpur, Gundlupet, Chamarajanagar, Nanjangud and Malavalli. The Society was founded with the object of establishing a sugar factory in the co-operative sector in Kollegal Taluk which is recognised to be an industrially backward area. On 30-5-1973, a licence was granted by the Central Government permitting the establishment of a sugar factory at Kunthur, the estimated cost of the entire project being Rs. 419 lakhs. The petitioners are the Members of the Society and they assert that they are preferring this Writ Petition not only in their own interest as aggrieved share holders, but also in the interest of the public.

4. On the establishment of the factory, the Management of the Society was vested in a Board of Directors nominated by the Government of Karnataka and obviously the majority of the Directors were Government Officers. On 13-4-1973, the control and management of the Society was taken over by the Government of Karnataka under Section 54 of the Act. The Divisional Commissioner of Mysore Division was appointed as Chairman of the Board of Directors and the Deputy Commissioner of Mysore 'District was appointed as Vice Chairman. Besides the said persons, the Board of Directors consisted of the Special Deputy Commissioner, Mysore District; Joint Director of Co-operative Societies, Mysore Division; Joint Director of Agriculture, Mysore Division; Superintending Engineer, Mysore Circle; Deputy Registrar of Co-operative Societies; Mysore District; Deputy Director of Agriculture, Mysore District; Executive Engineer, P.W.D., Chamarajanagar; Joint Director of Small Scale industries, Bangalore; Secretary and Director of Small Farmers Development Board and the Managing Director. The Managing Director invariably was a Government Officer deputed by the State Government from time to time. The other Directors nominated by the Government were non-officials. As on 30-6-1974, there were 2881 Members in the Society inclusive of the State Government. Among these 2881 Members, 2434 were sugarcane growers, 43 were non-growers, 189 were Co-operative Societies and 214 were Taluk Boards and Village Panchayats besides the State Government. The share capital invested by the Members including the State Government was Rs. 46,53,395/- upto 30-6-1974. Out of this investment, the contribution of the State Government was Rs. 30,08,000/-. As on that date, the share capital was Rs. 1,57,35,904/- and out of this the State Government invested Rs. 1,22,50,000/-. The remaining amount was the share capital invested by other Members. As on 30-9-1979, there were 8241 grower members, 195 non-grower members, 200 Co-operative Societies and 214 Village Panchayats and Taluk Boards