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1972 Supreme(P&H) 82
PUNJAB & HARYANA HIGH COURT
Bal Raj Tuli, J.
Gobind Ram
Versus
State Of Punjab
Civil Writ No. 655 of 1972,
Decided On : MARCH 21, 1972
The Registrar, Co-operative Societies, and the State Government cannot issue instructions restricting the grant of loans for diesel engines to specific makes and dealers without specific statutory authority, as it violates the principle of freedom of trade.
Headnote:
CO-OPERATIVE SOCIETIES - LOAN FOR DIESEL ENGINES - RESTRICTIONS - POWER OF REGISTRAR AND STATE GOVERNMENT - SECTION 45, 85 OF PUNJAB CO-OPERATIVE SOCIETIES ACT, 1961 - RULE 45 OF PUNJAB CO-OPERATIVE SOCIETIES RULES, 1963 - ARTICLE 19 OF THE CONSTITUTION.
Fact of the Case:
Petitioners, members of a Primary Land Mortgage Bank, challenged the legality of letters issued by the Registrar, Co-operative Societies, and the State Government, restricting the grant of loans for diesel engines to specific makes and dealers.
Finding of the Court:
The Court held that neither the Registrar nor the State Government had the statutory power to issue such instructions, as there was no specific provision in the Punjab Co-operative Societies Act, 1961, or the Rules thereunder authorizing them to do so.
Issues: 1. Whether the Registrar, Co-operative Societies, and the State Government had the authority to issue instructions restricting the grant of loans for diesel engines to specific makes and dealers? 2. Whether such instructions violated the principle of freedom of trade enshrined in Article 19 of the Constitution?
Ratio Decidendi: 1. Section 45 of the Act only empowers the Registrar to sanction loans between co-operative societies, not to issue instructions on loan purposes or security. 2. Section 85(2)(xxi) empowers the State Government to make rules on loan conditions and amounts, but it cannot delegate this power to the Registrar. 3. Rule 45, which gives the Registrar general power to issue directives, is arbitrary and inconsistent with the Act. 4. The impugned letters were issued without any statutory authority and interfered with the petitioners' right to utilize loans as they wished.
Final Decision: The Court quashed the impugned letters issued by the Registrar, Co-operative Societies, and the State Government, and awarded costs to the petitioners.
1. The petitioners, thirteen in number, are agriculturists, and are members of the Primary Land Mortgage Bank Ltd., Bhatinda (hereinafter called the Bank). The Bank is a society registered under the Punjab Co-operative Societies Act, 1961 (hereinafter called the Act) and Punjab Co-operative Societies Rules, 1963 (hereinafter called the Rules) and the bye-laws of the Bank (hereinafter called the bye-laws). Bye-law 5 lays down the objects of the Bank and the purposes for which loans can be granted. One of the purposes, for which a loan can be granted, is construction and repair of ordinary wells and tube-wells, installation of pumps and other water lifting appliances. The Bank cannot grant any loan without the approval of the Punjab State Co-operative Land Mortgage Bank Ltd. (hereinafter to be referred as the State Bank). A meeting of the Executive Committee of the State Bank was held on October 27, 1971, when the following resolution was passed:-
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"In view of the advice from R. B. I. and also on the basis of experience gained during last two years it has been considered that there is need to review loaning policy in respect of advances for diesel engines and electric motors. In fact there is need to fix prices of various standard types of diesel engines. The committee is of the view that a committee consisting of the following may be constituted to fix prices of various types of engines after getting quotations from various manufacturers within the State. In view of the experience of the members of the Committee it is possible that three to four standard types of diesel engines should be asked for manufacturing/assembling so that the farmers should be assured about the price and the quality of the engine. The scheme may be put up to the Board of Directors. Simultaneously the M. D. is advised to discuss the scheme with the R. C. S. and also to make a request that the Government may be requested to revise the instructions issued earlier in respect of loaning policy for diesel engines. The Committee, as suggested above may constitute the following:-
- 1. R. C. S.
2. The Director of Agriculture.
3. The Director of Industries.
4. Two nominees of the State Co-operative Land Mortgage Bank. One of the nominees should be the President.
The above-mentioned committee may also approve the dealers."
2 On February 8, 1972, the Registrar, Co-operative Societies, Punjab, issued a letter to all the Deputy Registrars and Assistant Registrars of Co-operative Societies in the State on the subject of "Supply of Diesel Engines." Since the authority of the Registrar to issue this letter has been challenged, it will be helpful to give the contents of this letter in full. The letter reads as under:-
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"Till recently there had been certain complaints about the price and the availability of the suitable Diesel Engines. The State Government have appointed a committee to rationalize the whole procedure so that the agriculturist can be provided good engines at a very reasonable price and he is not to suffer at the hands of the commercial firms in competition. As an interim measure to overcome the present situation seven engines have been approved for sale as per price list enclosed. Henceforth all the loans issued by the Primary Co-operative Land Mortgage Banks and the Central Co-operative Banks through the Primary Societies for the purchase of Diesel Engines will be given only for these seven engines. The payment by the loaning agency will be made to the Marketing Federation of those engines who will be supplying these engines to the loanees through the D. W. Ss./ Marketing Societies in the field. However, it must be very clearly understood that the farmer should be allowed to choose the engines of his own choice. The loaning agency will issue an authority letter to the loanee addressed to the D. W. Ss./Marketing Societies for the delivery of the Diesel Engines as per choice of the farmer. The name of the engines should not be written on the autho
