K. Yella Reddy and Others vs State of Andhra Pradesh and Others

Jaya Chandra Reddy, J.—In all these writ petitions G.O.Ms. No, 359 dt. 2-7-1987 amending Rule 22 of the Rules made under the Andhra Pradesh Co-operative Societies Act (hereinafter referred to as ''the Act'') and the consequent issuance of notice to reduce the time for the elections to the managing committees of the District Co-operative Central Banks, are challenged.

To appreciate the rival contentions, it is necessary to refer to the various amendments carried out, chronologically. Section 130 of the Act empowers the Government to make rules for carrying out all or any of the purposes of the Act for the whole or any part of the State and for any classof Societies, Section 31(3) (a) lays down that in the case of the committee of a Co-operative Central Bank and other Societies of the District level, an Officer of the Department not below the rank of a Deputy Registrar shall be the election officer and the election of the members of the committee shall be in such manner as may be prescribed. Rule 22 provides for the entire programme for holding the elections. Rule 22(1)(d) as it stood in the year 1985 provided for the appointment of the election officer for the Central and District Societies and lays down that the election authority shall appoint the election officer for these societies and inform the President or the Chief Executive of the society by registered post not less than 45 days prior to the date of poll. Under the 3rd proviso to Rule 22(3) (b) the Managing Director or Secretary or the Business Manager of these District Co-operative Central Banks and Societies including the Apex Societies, shall prepare and furnish to the Election Officer not less than twenty days before the date of poll a list containing the names of delegates of affiliated societies and the individual members of the societies. Similarly under the 1st proviso to Rule 22(4)(a) the election officer had to issie a notice of election not less than 20 days before the date of poll containing the particulars about the elections. G.O.Ms. No. 229, dated 4-5-1987 was issued amending Rule 22. The period under Rule 22(1)(d)(ii) in respect of the Central and District Societies, is reduced from 45 days to 20 days. The period under the 3rd proviso to Rule 22(3)(b) is reduced from20 days to 7 days. A proviso is added to Rule 22(4)(a) reducing the period of 20 days to 7 days in respect of Apex Societies, District Co-operative Central Banks and Societies. Again the Government issued the impugned G.O. Ms. No. 359, dated 2-7-87 amending Rule 22(1)(d) and reducing the period from 20 days to 7 days in respect of Central and District Societies, and reducing the period in the 3rd proviso to Rule 22(3)(b) from 7 days to 4 days and correspondingly reducing the period under Rule 22(4) from 7 days to 5 days.

In all these writ petit ions it is submitted that the elections to primary agricultural Co-operative Societies were held on 28-6-1987 and 30-6-1987 except to those societies in respect of which there is stay or postponement of elections, and the counting took place on 1-7-1987 and results also were announced on the same day, the elected Presidents of these societies are the eligible voters for the elections to the District societies and by virtue of the amendment of the Rule in the above manner reducing the time gap, the voters had no sufficient time to actively participate in the elections and some of them though were interested to contest, could not do so because of the short notice and those who contested also could not effectively canvass. In this context it is also submitted that the voters list that is published in respect of each of these district co-operative banks and societies did not even contain the names of the newly elected Presidents except showing the designation. Therefore, according to the learned counsel the impugned amended rule is not in consonance with the scheme of the Act, nor does it subserve the purposes of the Act as contained in the language employed in Section 130 of the Act, and that the impugned Rule is outside the scope of the delegated legislation. It is also submitted that even otherwise the Rule is not complied with meticulously and there has been violation of the principles of natural justice and Government while exercising the delegated powers has acted in an unreasonable and arbitrary manner therefore trie issuance of the impugned G.O. is beyond the legislative competence and the same power has been exercised in bad faith.

In the counter-affidavit it is stated that the Government from the beginning was contemplating to hold elections to the Cooperative Central Banks after the conclusion of elections to the re-organised P.A.CSs. and the Government amended the Rule reducing the periods for conducting the elections to the Co-operative Central Banks under G.O.Ms. No. 229 dt. 4-5-1987. The Rule as amended as per G.O.Ms. No. 229 dt. 4-5-87 provides for appointment of election officer not less than 20 days prior to the date of poll and the voters list has to be furnished to the election officer as provided under the 3rd proviso to R 22(3) (b) not less than 7 days before the date of poll and the election officer under Rule 22(4) (a) shall issue notice of election not less than 7 days before the date of poll Thereafter G.O.Ms. No. 252 dt. 15-5-1987 was issued amending Rule 22(4)(a)(v) and reducing the period for filing the nominations from 10 days to ''the same day'' which shall not be less than two days before the date of poll, in respect of the District Co-operative Banks. The Rule provided for scrutiny on the next day. The Commissioner for Co-operation and the Registrar of Co-operative Societies issued press statements on 2-7-1987 stating that elections to the Co-operative Central Banks would be held on 7-7-1987 and the above statements appeared in Telugu Daily ''Enadu'' and in the English Daily ''Chronicle''. It was found that all but very few of the Primary Agricultural Co-operative Societies were in default to the Co-operative Central Bank, and the Government took a policy decision to exempt the P.A.C. Societies from the operation of Section 21-A and issued a G.O. to that effect with a v iew to conduct the elections to the Co-operative Central Banks early in view of the general desirability to hold the elections and also in view of the imminent commencement of the Budget Session of the Assembly and accordingly issued the impugned G.O. reducing the periods.

The learned counsel for the petitioners submitted that as per these amended rule within seven days from2-7-87 (i.e. a day after the declaration of the results of the elections to the P.A.C. Societies) the election authority shall appoint the election officer for each Central Bank, and the Managing Director or the Secretary of the Bank has to furnish to the eleetion officer within four days before the date of the poll a list containing the names of delegates of the affiliated societies and the individual members of the societies and the copy of the voters list has to be supplied within four days before the date of poll to any member of the society who filed his nomination and that the election officer under the Proviso to Rule 22(4)(a) as it stands now, had to issue the election notification within five days. Before the date of poll, in respect of the District Co-operative Central Banks, containing the particulars, and the nominations had to be filed and scrutinised on the same day which shall however be not less than two days before the date of poll. Therefore, according to the learned counsel the elections are being held in a hustled manner without giving proper opportunity to the members and also in an arbitrary and unreasonable manner, which is contrary to the object of the Act and therefore the amendments have to be struck down.

Before we proceed to consider these contentions, it becomes necessary to refer to the principles governing the subordinate legislation and when they can be declared to be invalid. Rule 22 is framed u/s 130 read with Section 31(3) so far as the District Co-operative Central Banks are concerned. There cannot be any doubt that the Rule is part of the statute. That being so, the vires of a rule can be questioned only on certain known grounds. In Attorney General for Canada v. Hallet and Co. Ltd 1952 AC 427 it is observed that subordinate legislation will normally be declared invalid only on the following grounds:

(1) Bad faith, that is to say, that powers entrusted for one purpose are deliberately used with the design of achieving another, itself unauthorised or actually forbidden;

(2) The subordinate legislation prima facie appears to be a misconstruction of the enabling Act which is beyond the legislative competence;

(3) that it does not bear nexus to the purpose mentioned in the Act This decision is referred to with approval in MCEldowney v. Forde (1969) 2 All ER, 1039 at p. 1068 wherein Lord Diplock observed thus:

"Where the validity of subordinate legisaltion made pursuant to powers delegated by Act of Parliament to a subordinate authority is challenged the Court has a threefold task; first to determine the meaning of the words used in the Act of Parliament itself to describe the Subordinate legislation which that authority is authorised to make. Secondly todetermine the meaning of the Subordinate Legislation itself and finally to decide whether the subordinate legislation complies with that description."

State of Tamil Nadu Vs. Hind Stone and Others, is a case where the validity of Rule 8C of the Tamil Nadu Minor Mineral Concession Rules, which provides for lease of quarries in respect of black granite to Government Corporations, etc. came up for consideration and the question "whether the rule was ultra vires the Rule making power of the Government'''' was considered. Their Lordships of the Supreme Court held thus:

"A statutory rule, while ever subordinate to the parent statute, is otherwise to be treated as part of the statute and as effective. "Rule made under the Statute must be treated for all purposes of construction or obligation exactly said they were in the Act and are to be of the same effect as if contained in the Act and are to be judicially noticed for all purposes of construction or obligation."

It is ultimately held as follows :

"We are satisfied that Rule 8C was made in bona fide exercise of the rule making power of the State Government and not in its misuse to advance its own self interest."

It can thus be seen that the power to make subordinate legislation which is derived from an Act has to be exercised within the limits of authority envisaged by the Act, and the Government to whom the power is delegated cannot override the Act by exceeding the authority or by making provisions inconsistent with the Act and should not act in bad faith. So far as the Courts are concerned, presumptions governing interpretation of a statute equally apply to the interpretation of the Rules which formpart of thestatute. In the instant cases it is not in dispute that the elections were not held, to the Co-operative Societies since 1985 and the Legislature passed Act I of 1987 amending Section 36 giving a mandate that elections ought to be held before 30-6-1987. The validity of this Act is upheld in Writ Appeal No. 138 of 1987 dt. 3-6-87. The Registrar of Co-operative Societies on 12-5-1987 made it clear by way of a statement that elections would be held for P.A.C. societies on 28th and 30th of June, 1987 and for Central Banks on 9-7-1987. Pursuant to this, the respective District Registrars issued separate notifications on 14-5-1987 fixing 28th and 30th June, 1987 for the elections to the P.A.C. societies and election officers were appointed Now coming to the constitution of these Central Banks, u/s 25(4) the President of the Primary Agricultural Co-operative Society is a delegate to the Central Society and as per the bye laws 16 persons have to be elected from A-Group societies i.e. Primary Agricultural Co-operative Societies, and 5 are to be elected from the B-Group Societies (i.e. functional societies), and these elected members i.e. 16 and 5 respectively, constitute the managing committee of the District Co-operative Central Bank. The numberof voters in respect of each of these District Co-operative Central Banks are also limited. Only so far as Krishna District is concerned, the total number of such societies is 447 and in other district it varies from 111 to 351. The voters list was in fact published, but what the learned counsel for the petitioners say is that the names of the elected Presidents of these P.A.C. societies are not mentioned in this list. We are not able to say how this makes any difference. As per Section 25(4) of the Act the Presidents of the P.A.C. Societies represent the society as its delegates. Therefore, the amendments to Rule 22 carried out under the impugned G. O. are only with a view to hold the elections as expeditiously as possible. The purpose is clear and bears a nexus to the object that is sought to be achieved u/s 130 which confers the rule-making power. The amended rule does not override the Act.

Now coming to the question of bad faith though specific allegations of mala fides are not made against any individual persons in authority, it is contended that by bringing about this amendment the persons in authority have misused the powers. Professor de Smith in his ''Judicial Review of Administrative Action'', fourth edition at pp. 335-336 says :

"The concept of bad faith eludes precise definition, but in relation to the exercise of statutory powers it may be said to comprise dishonesty (or fraud) and malice. A power is exercised fraudulently if its repository intends to achieve an object other than that for which he believes the power to have been conferred. Power is exercised maliciously if its repository is motivated by personal animosity towards those who are directly affected by its exercise."

H.W.R, Wade in his "Administrative Law." fifth edition, at page 42 sums up the situations:

"Lack of jurisdiction may arise in many ways. There may be an absence of those formalities or things which are conditions precedent to the tribunal having any jurisdiction to embark on an injury. Or the tribunal may at end make an order that it has no jurisdiction to make. Or in the intervening stage, while engaged on a proper inquiry, the tribunal may depart from the rules of natural justice; or it may ask itself the wrong questions; or it may take into account matters which it was not directed to take into account.''''

In Express Newspapers Pvt. Ltd. and Others Vs. Union of India (UOI) and Others, the Supreme Court referred to both these passages and proceeded to hold thus:

"Fraud on power voids the order if it is not exercised bonafide for the end design. There is a distinction between exercise of power in good faith and misuse in bad faith. The former arises when an authority misuses its power in breach of law, say, by taking into account bona fide, and with best of intentions, some extraneous matters or by ignoring relevant matters. That would render the impugned act or order ultra vires. It would be a case of fraud on powers. The misuse in bad faith arises when the power is exercised for an improper motive, say to satisfy a private or personal grudge or for wreaking vengeance.."

Relying on these passages and the decision of the Supreme Court it is submitted that the party in power with a view to see that their candidates get an advantage have suddenly advanced the elections. We see no force in this submission. We may mention at this stage, that the elections are not fought onany party basis. The symbols of the political parties are not allotted to any one of the candidates. Further, the figures relating to the number of voters participated in the elections, to which we will presently refer, go to show that almost all the elected P.A.C. Societies participated in the elections. Therefore, viewed from any angle, the amendment does not suffer from any vice which renders it ultra vires.

While considering the question whether the amendment is made to achieve the objects mentioned in Section 130, we must also advert to some details regarding participation by the elected members. The following statement gives the necessary figures :

A GROUP SOCIETIES

Statement showing the number of affiliated societies to the District Co-operative Central Banks and those voted at the elections.

S. No. Dist. Total No. of Societies No. for which elections were not held due to High Court stay orders No. of Societies dormant Balance No. of Societies No. of Siocieties voted Percentage of voting Remarks

2 3. 4. 5. 6. 7. 8. 9.

Visaka-patnam 111 --- --- 111 100 90-09

Krishna 447 41 --- 406 396 97-50

Guntur 284 32 1 251 250 09-60

Nellore 186 19 --- 167 XX XX unanimous 7 Societies are affiliated to commercial banks.

Anantapur 214 27 --- 187 177 94-00 The reorganisation of 4 societies wereremanded,

East Godavari 351 6 --- 343 338* 90-00 The societies were not affiliated to CCB.

Khammam 204 8 --- 196 193 98-50 One Society was mpt affiliated to CCB.

Nizamabad 170 --- --- 170 170 100-00

Mahabub-nagar 166 5 --- 161 161 100-00

Medak 216 12 --- 204 204 100-00 Reorganisation 5 societies were remanded.

Cuddapah 134 20 --- 114 . 109 95-604 Reorganisation of 9 societies were remanded

''B'' GROUP SOCIETIES

Statement showing the number of societies affiliated to District Co-operative Central Banks under ''B'' Group and those voted in the elections.

S.No. District Total No. of Societies No. for-which elections were not held due to High Court stay etc, No. of Societies dor mam Balance No. of Societies No. of Societies voted Percentage ot, voting Remarks

1 2 3 4 5 6 7 8 9

Visakapatnam 194 � 48 141 103 75.00

Krishna 625 �� 23 602 277 46.00

Guntur 816* 156 597 385 plus 63 74.50 In 63 Societies, there are persons in charge.

Nellore 323 23 16 284 � ��

Anantapur 278 � 83 195 147 75.40

East Godavari 588 170 286 plus 132 213 74.50 In 132 Societies, there are persons in charge.

Khammam 257 �- 41 216 81 37.50

Nizamabad 175 �� 71 104 54 51.90

Mahaboob Nagar 200 93 107 64 59.80

Medak 299 �� 145 154 83 53.80

Cuddapah 393 -� 133 260 122 46.90

From the above statements it can be seen that so far as P.A.C. Societies are concerned, the percentage of voting is very high. It must be remembered that large number of members, viz., 16, have to be elected by the Presidents of these societies to the Managing Committee, whereas from the other functional societies only five delegates have to be elected. Further, so far the functional societies, ie. B-Group societies, are concerned, it is submitted that most of them are defunct or went into liquidation and there the elections could not be held, However, taking an over-all picture, we are satisfied that by cutting short the period under the impugned G.O. Ms. No. 359 amending Rule 22, the voters or the contestents are not at all handicaped. A special plea was made in respect of Nizamabad, Mahaboobnagar and Medak Districts, viz. that there was no time for some of the petitioners to file nominations. But the above figures show that there was 100 per cent voting in respect of each of these societies. Therefore the submission that the amendment is unreasonable and gave scope for arbitrary exercise of power has no force.

The other submission of the learned counsel is that even this amended rule also is not complied with. According to the learned counsel the words ''not less than'' are mandatory and there should be 7 or 4 or 5 clear daysrespectively even according to the amendments. It is not substantiated as to why there has been a violation. So far as the amendments of 3rd proviso to Rule 22(3)(b) and the Ist proviso to Rule 22(4)(a) are concerned, the period reduced is negligible, ie. in the first case the reduction is from 7 days to 4 days and in the second case it is from 7 days to 5 days; and the steps contemplated under these sub-rules are only, aftec the election process is commenced. It is only under Rule 22(1)(d) the period of 20 days is reduced to 7 days. But as already discussed above, the date of election to these societies was announced by way of a statement on 12-5-1987 by the Registrar. Electionofficerswere also appointed as provided under Rule 22(1)(d). The election programme was published on 3-7-1987 and the list of voters was published on 4-7-87 and nominations were filed and scrutinised and all the seats are contested and the locations were held on 9-7-87. These dates made it clear that there is no violation.

Yet another submission made by the learned counsel is that there has been violation of principles of natural justice inasmuch as the persons interested were not given an opportunity and the amendment was carried out in a sudden manner. It is not in dispute that the Government is empowered u/s 130 to make rules to carry out the purposes of the Act and the rules also do not suffer from any vices. In Union of India (UOI) and Another Vs. Cynamide India Ltd. and Another etc., , the Supreme Court while dealing with the validity of someclauses of the Drugs (Prices Control) Order, 1979 considered the distinction between subordinate legislative action and the administrative action and the concept of principles of natural justice, and held thus :

"The legislative activity being a subordinate or delegated legislative activity, it must necessarily comply with the statutory conditions if any no more and no less, and no implications of natural justice can be read into it unless it is a statutory condition."

In the instant cage also, the amendments are made by virtue of the power conferred u/s 130 of the A. P. Cooperative Societies Act only with a view to expedite the elections. That being so, nobody can insist to read natural justice into such legislative activity.

Sri Ramasarma, the learned counsel appearing for the petitioners in some of the writ petitions submitted that the elections to some of the P.A.C. societies are still to be held and such societies are deprived from participating in the elections to the District Co-operative Central Banks because of this amendment and therefore the amendment is invalid We see no force in this submission. Just because there are some vacancies oi delegates in respect of some societies, it cannot be contended that the elections to these Apex bodies should be postponed If this principle is to be observed, these elections can never be held as there would be some vacancy or other. In Kanakaiah v. Commr., Eluru Municipality, 1958 Andh LT 110 this Court held that a vacancy in the office of a member will not invalidate any act done by the Municipality and will not be a bar to the election of a Chairman, and that the failure to fill up one of the offices of the councillors will not render the Constitution of the Municipality an invalid one, as the Municipality has an independent existence apart from the councillors. Likewise, the Co-operative society also is a body corporate having an independent existence apart from the delegates.

Sri E. Ella Reddy, the learned counsel appearing for the petitioners in some of the writ petitions, submitted that so far as Group-B societies are concerned, there are number of societies for which elections were not held and therefore the elections to the District Co-operative Central Banks is improper. The learned Government Pleader submitted that a number of these societies are defunct. In any event, as mentioned above, elections to these Apex bodies cannot be postponed on the ground that elections were not held to some of these Group-B societies.

Sri D. Sudarshana Reddy appearing in some of the writ petitions contended that under Rule 22(1)(d) as it stood prior to the amendment, the election authority has to appoint the election officer and communicate the same to the person-in-charge not less than 20 days by registered post and asper the amended Act this period is reduced to 7 days and there is no question of sending the same by registered post within 7 days and therefore the amendment is invalid. He also reliedon a decision in K. Venkateswarlu v. Konatamakur Primary Agricultural Co-operative Credit. Societies (1978) 2 APLJ (S.N.) 45 wherein it is held that the provision relating to giving of not less than 15 clear days notice under the rules is only directory and not mandatory, but this provision is intended to enable the members to make up their minds to stand for the election and to canvass for the same and to gather their strength. The learned counsel submits that by reducing this period, there is no reasonable opportunity for the members to participate in the elections. So far as this aspect is Concerned, we have already held that the voters were not at all handicapped. They had ample opportunity to participate and contest. In State of Tamil Nadu Vs. Hind Stone and Others, , their Lordships while upholding the vires of Rule 8C, however observed :

"However, on an examination of the performance of the lessees over the past several years, it has been found that excepting in a very few. cases, none of the lessees had set up proper industries or developed systematic mining of the quarries. The exports continue to be mainly on the raw black granite materials and not cut and polished slabs, a large number of the leases were not operating either due to speculation or lack of finance from the lessees. Therefore, the Government decided that there should be no further grant of lease to private entrepreneurs for black granite. This was mentioned in G.O. Ms. No. 1312 Industries dt. 2-12-1977. We are satisfied that Rule 8C was made in bona fide exercise of the rule making power of the State Govt. and not in its misuse to advance its own sale-interest."

For the same reasons, while considering whether the Government in bringing about this amendment has acted in good faith and whether the amendments bear relationship to the purpose mentioned in the Act, the details of voting and the participation of these delegates in the elections to the District Co-operative Central Banks have to be taken into account On a consideration of all these circumstances also we are of the view that the amendments are neither unreasonable nor arbitrary.

For all the aforesaid reasons, the writ petitions are dismissed with costs. Advocate''s fee Rs. 150 in each.