Kerala State Sericulture Co-Operative Apex Society Ltd vs State Of Kerala

,,,,,

N. Nagaresh, J",,,,,

All these writ petitions relate to the proposals for liquidation and revival of the Kerala State Sericulture Co-operative Apex Society Limited,,,,,

(SERIFED). The writ petitions have been filed based on same set of facts and raise same issues of law. They are hence heard together and disposed,,,,,

of by a common judgment.,,,,,

W.P.(C) No.35173/2016 is filed by the SERIFED seeking to command the 1st respondent to do the necessary for strengthening of sericulture in the,,,,,

State of Kerala pursuant to the undertaking given before this Court in W.P. (C) No.31446/2010. The petitioners seek to quash Ext.P14 order dated,,,,,

07.01.2017 of the Government of Kerala wherein the Government has taken a decision not to proceed further with the proposal for reviving SERIFED,,,,,

based on certain facts. The SERIFED subsequently filed W.P.(C) No.15961/2020 seeking to set aside Ext.P4 Government order dated 08.05.2020 by,,,,,

which the Government decided to seek review of the interim orders of this Court dated 03.12.2019 and 20.12.2019.,,,,,

The Federation of Kerala Sericulture Co-operative Societies, Trivandrum has filed W.P.(C) No.8550/2017 seeking to quash Ext.P8 order dated",,,,,

07.01.2017 of the Government of Kerala and to command the respondents to implement the directions contained in Ext.P4 judgment in W.P.(C),,,,,

No.31446/2010 and Ext.P6 Government Order dated 05.08.2015.,,,,,

The Thiruvananthapuram Taluk Sericulture Co-operative Society Limited and the Neyyattinkara Taluk Sericulture Co-operative Society Limited,",,,,,

have filed W.P.(C) No.40553/2016 and W.P.(C) No.40618/2016 respectively. The petitioners in these writ petitions seek to direct the respondents to,,,,,

implement Ext.P1 Scheme for the restructure of sericulture industry in Kerala prepared by The Textile and Traditional Industries Protection Council,,,,,

(TIPCO), Thiruvananthapuram.",,,,,

Nine employees of the SERIFED have filed W.P. (C) No.35303/2016 praying to declare that they are entitled for permanency in the lowest grade,,,,,

available in the management establishment with effect from 01.12.2002 with protection to existing emoluments they are getting in average in view of,,,,,

Ext.P1 Award dated 23.11.2002 in I.D. No.58/99 of the Industrial Tribunal, Alappuzha. The parties and exhibits are referred to in this judgment as",,,,,

they are arrayed/marked in W.P.(C) No.35173/2016, unless otherwise specified.",,,,,

The petitioner in W.P.(C) No.35173/2016, the Kerala Sericulture Co-operative Apex Society Limited (SERIFED), states that the petitioner is the",,,,,

Apex Society to which Taluk Level Sericulture Co-operative Societies are affiliated. The Government of Kerala decided to encourage and develop,,,,,

sericulture in the State of Kerala and the petitioner-Apex Society was formed to achieve the said purpose. The petitionerâ€"SERIFED was registered,,,,,

in accordance with the provisions of the Kerala Co-operative Societies Act and was brought into existence in the year 1994.,,,,,

The SERIFED did not perform well and the Government took a decision on 15.03.2010 to liquidate SERIFED and to deploy its staff to the,,,,,

Departments of Local Self Government, Rural Development and Kerala Khadi and Village Industries Board. The Government decision was to result",,,,,

in loss of employment to substantial number of persons engaged in sericulture. The Taluk level societies submitted representations to the Government,,,,,

requesting that the status quo of SERIFED as a Co-operative Apex/Federation be retained and the orders of liquidation of the federation be,,,,,

withdrawn. They also requested the Government to consider the new Scheme submitted for the restructure of the sericulture industry in the State,",,,,,

jointly by the Department of Sericulture and SERIFED.,,,,,

The order of appointment of liquidator to the Taluk level societies was challenged filing W.P.(C) No.31446/2010. The Government filed a counter,,,,,

affidavit in the writ petition expressing its decision to revive the SERIFED and invigorate its activities, making available necessary funds. Recording",,,,,

the said undertaking, the writ petition was disposed of as per Ext.P5 judgment dated 20.03.2015 directing the Government to take necessary action",,,,,

within a period of six months.,,,,,

Taking note of the representations from various quarters, a meeting was convened by the Minister for Industries, in which representatives of",,,,,

Central Silk Board, Kerala Khadi and Village Industries Board, Department of Rural Development and Presidents of Taluk level Societies",,,,,

participated. In the said meeting held on 28.01.2015, it was decided that the Sericulture especially, the post-cocoon activities should be revived and",,,,,

steps in this regard should be taken earnestly.,,,,,

The Government of Kerala required the Central Silk Board to submit a feasibility report with regard to the revival of post-cocoon sector through,,,,,

SERIFED. The Central Silk Board conducted a detailed study and submitted Ext.P6 Feasibility Report dated 30.03.2015. The Government thereupon,,,,,

issued Ext.P7 order dated 05.08.2015 undertaking to provide financial support and steps for releasing funds from the Central Government as agreed,,,,,

to. By Ext.P8 order dated 08.09.2015, the Government required appointment of an Administrative Committee for the functioning of the SERIFED. By",,,,,

Ext.P9 order dated 26.03.2016, the Secretary, Kerala Khadi and Village Industries Board was required to act as Managing Director of SERIFED.",,,,,

According to the petitioner, the Government of India has promised to release 80% of the financial requirement. The contribution of the State",,,,,

Government for the revival of sericulture as per the proposal of the Central Silk Board is to be less than 20%. The central fund would be released,,,,,

after the State Government disburses its share. The Chairman of the SERIFED therefore submitted Ext.P10 representation dated 20.04.2016,,,,,

requesting the State Government to make provision in the budget as additional authorisation. The Ministry of Textiles of the Government of India as,,,,,

per Ext.P13 order dated 08.09.2016, sanctioned various amounts for the post-cocoon sector. Utilisation of the Central Fund is possible only if the State",,,,,

Government releases State share. To the shock and predicament of the petitionerâ€"SERIFED, the Government issued Ext.P14 order dated",,,,,

07.01.2017 intimating that the Government has taken a decision not to give effect to Ext.P7 decision dated 05.08.2015 proposing revival of SERIFED.,,,,,

Ext.P14 order is under challenge in W.P.(C) No.35173/2016.,,,,,

During the pendency of the writ petitions, Government of Kerala issued G.O. dated 08.05.2020 (Ext.P4 in W.P.(C) No.15961/2020) whereunder",,,,,

the Government has decided to seek review of the interim orders dated 03.12.2019 and 20.12.2019 of this Court. The said interim orders were passed,,,,,

directing the Government to convey its willingness by affirming the availability of the State’s matching fund. The SERIFED thereupon filed W.P.,,,,,

(C) No.15961/2020 challenging the said G.O. dated 08.05.2020.,,,,,

The petitioners argued that as per the bye-laws of the SERIFED, the first Board of Management of SERIFED shall be composed of the persons",,,,,

nominated by the Government and its tenure in the office shall not exceed six months. The nominated committee therefore should have conducted,,,,,

election within six months. The nominated committee did not take any steps to register or affiliate Taluk level sericulture co-operative societies. The,,,,,

omission was deliberate as registration and affiliation of Taluk level societies would have forced the nominated committee to convene General Body,,,,,

meeting and conduct election.,,,,,

During the period of the nominated Board, there were 17 Taluk level Sericulture Co-operative Societies registered under the Kerala Co-operative",,,,,

Societies Act. However, the nominated Board gave affiliation only to 5 of the 17 Societies. The nominated Board did not take any steps to increase",,,,,

the number of members/ affiliated Societies. This was with the ulterior motive of avoiding formation of an elected Board of Management. Due to the,,,,,

non-affiliation of Societies, the nominated Board could continue in power indefinitely. The nominated Board did not convene general body meetings for",,,,,

several years. At the same time, Government funds were diverted and misused. No annual budget or balance sheet was presented before the general",,,,,

body.,,,,,

The petitioners further argued that there were only 5 Taluk level Societies affiliated to the SERIFED. But, the nominated Board of Management",,,,,

of SERIFED recruited about 300 employees, opening District Level Sericulture offices purportedly to oversee the five affiliated Societies. The",,,,,

appointments were in violation of Section 80 of the Kerala Co-operative Societies Act. The SERIFED did not require more than 25 employees. The,,,,,

plan funds provided by the Central Government, the Central Silk Board and State Government intended to develop sericulture in the State, were",,,,,

diverted to pay salary to 300 illegally and unnecessarily recruited employees. When the SERIFED’s financial situation started to collapse, the",,,,,

Government deputed 271 illegally recruited employees of SERIFED to Government Services and to the services of Khadi and Village Industries,,,,,

Board.,,,,,

Such illegal deputation and absorption of the employees of SERIFED in Government Service, was with a view to liquidate SERIFED after",,,,,

protecting the employment of the illegally recruited employees and thus foreclose any investigation or enquiry into the affairs of the Government,,,,,

nominated Board of SERIFED. Inspections conducted by the Department of Finance, Planning Board and AGs Office unearthed that the reason for",,,,,

the collapse of SERIFED was the illegal appointments of about 300 persons and spending of Plan Funds earmarked for development of Sericulture,",,,,,

for payment of salary.,,,,,

The ostensible reasons for not reviving SERIFED as stated in Ext.P14 order dated 07.01.2017 are that (i) Kerala does not have sufficient acreage,,,,,

under sericulture to warrant a set up for post processing activities; (ii) currently there is no functioning sericulture processing co-operative societies;,,,,,

and (iii) there is no justification for a Federation at this stage, which will remain as a paper organisation. All these reasons are unreal. The petitioners",,,,,

pointed out that Post-cocoon development activities do not require extensive areas and therefore there is no issue of not having sufficient acreage.,,,,,

Taluk Level Co-operative Societies are functioning in spite of Government apathy. The non-justifiability of sustaining a Federation is a situation,,,,,

brought about by the Government and its nominated Board of Management.,,,,,

Respondents 1 and 2 (State of Kerala and Secretary to Industries Department) filed a statement dated 23.12.2017 in the writ petition.,,,,,

Respondents 1 and 2 stated that in a high level meeting held on 04.06.2014 in presence of the Minister for Finance and Law, it was decided to revive",,,,,

post-cocoon activities of sericulture under SERIFED. Subsequently, the request for releasing funds was considered. A meeting was convened in",,,,,

presence of Minister for Industries and Minister for Finance on 16.05.2017. The meeting decided that the Chief Secretary shall convene further,,,,,

meeting for analysing and taking a decision considering all aspects.,,,,,

The said meeting convened by the Chief Secretary was held on 05.07.2017, in which the petitioner and Deputy Secretary, Central Silk Board also",,,,,

participated. The meeting concluded that Kerala did not have sufficient acreage under mulberry. It will not be commercially viable for purchasing,,,,,

cocoons from Karnataka to undertake reeling in Kerala. However, considering the market of silk sarees in Kerala, it is possible to undertake post",,,,,

reeling activities in Kerala. It was pointed out that the famous Banaras Silk Sarees are woven in Banaras even though no cocoons were produced,,,,,

there. The Central Silk Board's Schemes could be used for giving training for weaving.,,,,,

The meeting decided to constitute a three-member Committee comprising representatives of Central Silk Board, SERIFED and Director of",,,,,

Handlooms and Textiles. Sri. Victor T. Thomas representing the SERIFED later took exception to the decision of the Committee and requested to,,,,,

defer implementation of the decision till final verdict is passed by this Court. Respondents 1 and 2 submitted that a total amount of ₹29,26,01,366/- was",,,,,

paid directly by the Government of Kerala and another ₹700 lakhs was released through Restructuring and Internal Audit Board and a further amount,,,,,

of ₹600 lakhs was given as grant from the Government in the year 1997-'98.,,,,,

The Secretary of the Kerala Khadi and Village Industries, after an enquiry, submitted a Report dated 25.02.2017 to the effect that the sericulture",,,,,

Societies are defunct. The statement alleged that the petitioner has misutilised huge amounts under the guise of cocoon industry. The State, after",,,,,

conducting proper enquiry, found that only post reeling industry by way of weaving alone is feasible in the State.",,,,,

In the additional counter affidavit dated 20.09.2021 filed by respondents 1 and 2, the respondents stated that by G.O. dated 15.03.2010, the",,,,,

Government accorded sanction to liquidate SERIFED and transfer its staff to Local Self Government Department, Rural Development Department",,,,,

and Kerala Khadi and Village Industries Board. But, in compliance with the commitment made by the Government in W.P.(C) No.31446/2010, the",,,,,

Government issued G.O. dated 05.08.2015 sanctioning revival of SERIFED for post-cocoon sericulture activities. However, a meeting conducted by",,,,,

the Chief Secretary on 04.06.2016 concluded that Kerala does not have sufficient acreage under sericulture to set up post processing activities.,,,,,

Therefore, G.O. dated 07.01.2017 was issued deciding not to proceed with the revival proposal of SERIFED. It was also reported that the affiliated",,,,,

Taluk Societies are defunct or dormant.,,,,,

Respondents 1 and 2 further stated that the Minister for Industries convened a meeting on 16.05.2017 in which the issues regarding revival of,,,,,

SERIFED with financial support of Central Government were discussed. The meeting entrusted the Chief Secretary to review the revival package of,,,,,

SERIFED and to take an appropriate decision. A meeting was convened by the Chief Secretary on 05.07.2017 and decided to constitute a three-,,,,,

member committee comprising representatives of Central Silk Board, SERIFED and the Director of Handlooms and Textiles to formulate a project",,,,,

report on feasibility of undertaking silk weaving in Kerala. The Committee could not be set up since SERIFED did not nominate a representative to the,,,,,

Committee in spite of repeated requests by the Government.,,,,,

I have heard the learned counsel for the petitioners, the learned State Attorney, the learned Government Pleader, the learned Assistant Solicitor",,,,,

General, the learned Central Government Counsel, the learned Standing Counsel for the Khadi and Village Industries Board (KK & VIB), the learned",,,,,

counsel for Taluk Level Sericulture Co-operatives and the learned counsel for the workers.,,,,,

The following facts emerge from the pleadings and arguments. Kerala is one of the largest consumers of silk in the country. Production of silk is,,,,,

grossly disproportionate to the demand. Demand is met by imports, losing huge amounts of money by way of taxes to other States. In the",,,,,

circumstances, the SERIFED was registered under the Kerala Co-operative Societies Act, 1969 as an Apex Society, in December, 1994.",,,,,

The SERIFED was administered initially by a Managing Board nominated by the Government. The tenure of the nominated Board was six months,,,,,

and the Board had to get the Taluk level Sericulture Co-operatives affiliated to the SERIFED and conduct election to the Board in a democratic,,,,,

manner with voting rights to the affiliated member-Societies. According to the petitioners, there were at least 17 Taluk Level Co-operative Societies",,,,,

functioning in the State. Only five Societies were affiliated to the SERIFED. The nominated Board of SERIFED did not take any step to get all Taluk,,,,,

Societies affiliated to SERIFED. This is evident from Exts.P2 and P3 Audit Reports (in W.P.(C) No.40553/2016).,,,,,

At the same time, huge amounts were released to the SERIFED by the Central Government/Central Silk Board and the State Government. The",,,,,

nominated Board instead of spending these funds for the development of Sericulture in the State, went on starting Sericulture Offices in all Districts",,,,,

and appointed about 300 employees under the SERIFED. The said 300 employees were appointed when there were only five Taluk Level Societies,,,,,

affiliated to SERIFED. Plan Funds were diverted to pay salaries to these illegally appointed employees. These irregularities which were committed,,,,,

while the nominated Board was running the affairs of the SERIFED, made SERIFED financially unviable.",,,,,

Instead of making a proper evaluation of the functioning of SERIFED and of taking remedial measures, the Government issued Ext.R1(c) G.O.",,,,,

dated 15.03.2010 (in W.P.(C) No.15961/2020) granting sanction to liquidate SERIFED, transfer its assets and redeploy the staff of SERIFED to",,,,,

LSGD, RDD and KK & VIB “as a measure of strengthening the sericulture activities in Keralaâ€. A reading of Ext.R1(c) would show that the",,,,,

prime purpose of issuing the G.O. was more for absorbing the SERIFED employees who were illegally recruited in violation of Section 80 of the,,,,,

Kerala Co-operative Societies Act, 1969, than to strengthen sericulture operations in Kerala. Such employees were not only absorbed in Government",,,,,

Departments and KK & VIB, but they were granted 2004 pay revision benefits and even their compassionate appointment claims were protected.",,,,,

The Government even directed to ratify the action of the Managing Director of the SERIFED in having incurred salary and administrative expenses,,,,,

from the Plan Fund of the SERIFED.,,,,,

It is evident that large scale appointments were made in SERIFED without getting approved staff pattern under the Kerala Co-operative Societies,,,,,

Act, 1969. Those appointments were obviously illegal. But, the Government ordered to depute/absorb all these illegally recruited employees in",,,,,

Government services and in KK & VIB without obtaining prior approval from the Kerala Public Service Commission. Such illegally appointed,,,,,

employees were given even pay revision benefits retrospectively. Such illegal absorptions were made when thousands of educated unemployed were,,,,,

waiting for direct recruitment to Government services through PSC. Furthermore, even benefits of compassionate appointments were protected in the",,,,,

case of such illegal recruits.,,,,,

By making such illegal recruitment, the nominated Board of SERIFED has indeed played a fraud on the Government and general public, especially",,,,,

the educated unemployed who waited for appointment on merit to public services. And by allowing absorption of the employees in Government,,,,,

service, the Government has committed grave illegality in violation of the law laid down by the Hon’ble Apex Court in the judgment in State of",,,,,

Karnataka v. Umadevi [(2006) 4 SCC 1]. The matter indeed requires thorough investigation and remedial action.,,,,,

Be that as it may, while sanctioning liquidation of SERIFED, liquidator was appointed for winding up of Taluk level co-operative societies also,",,,,,

which action was challenged by filing W.P.(C) No.31446/2010. This Court passed interim order on 14.10.2010 staying further proceedings of,,,,,

liquidation. During the pendency of the said writ petition, the Textile & Traditional Industries Protection Council (TIPCO) submitted Ext.P2 Scheme",,,,,

for “the Restructure of Sericulture Industry in Kerala with New Vision and Action Plan†on 20.11.2013. A meeting was convened by the,,,,,

Industries and IT Minister on 28.01.2015 to discuss the issue of re-starting Post-cocoon activities under SERIFED.,,,,,

In the meeting, the Joint Development Commissioner, CRD said that consequent to the liquidation of SERIFED and transfer of assets to CRD, the",,,,,

Rural Development Department had taken action to motivate the Sericulture farmers and as a result, the Cocoon production in the State had increased",,,,,

to 50,000 Tons. But, there is no agency to collect the Cocoons. The Secretary, KK & VIB suggested to transfer the silk reeling units which are under",,,,,

the control of Khadi Board to SERIFED after its revival. The Joint Secretary (Industries Department) informed that as the liquidation of SERIFED,,,,,

was as part of a Cabinet Decision, a proposal to revoke the same also needs the approval of the Council of Ministers. The Hon'ble Minister",,,,,

(Industries & IT) informed that after the requisite formalities are fulfilled, the matter shall be placed before the Cabinet for approval. The Joint",,,,,

Development Commissioner from the CRD informed that the Secretary, Kerala Khadi & Village Industries Board as the Registrar of SERIFED has",,,,,

not yet transferred funds available in the TSB account of SERIFED. Secretary, Kerala Khadi & Village Industries Board informed that they have",,,,,

already transferred the fund on the basis of the meeting held by Principal Secretary (Industries). The CRD informed that the Utilisation Certificate for,,,,,

the whole amount will be furnished to CSB after the KK & VIB transfers the entire amount. The meeting deliberated in detail and the following,,,,,

decisions were taken:,,,,,

(i) The CRD shall submit the Utilisation Certificate for the entire outstanding amount of ₹170.59 lakhs within 15 days.,,,,,

(ii) The Department of Industries, Government of Kerala shall provide requisite support for the proposal of reviving the Post Cocoon Sector of Sericulture Industry",,,,,

through SERIFED. The Industries Department shall write to CSB to the effect that the State will take care of the continuous management of the SERIFED on a,,,,,

commercially viable and sustainable mode.,,,,,

(iii) The CRD shall commit to take the responsibility of the Pre-Cocoon development through different schemes. It will strengthen the extension and monitoring,,,,,

mechanism to meet the targets laid in the DPR. The CRD shall protect the interest of the farmers and will be responsible for field level implementation. The revived,,,,,

SERIFED shall collect the entire cocoon produced within the State.,,,,,

(iv) The Industries Department will place the proposal for revival of SERIFED with Post-Cocoon activities before the Council of Ministers after the requisite,,,,,

formalities are fulfilled.,,,,,

Accordingly, a token provision of ₹1,000/- was included in the Supplementary Demands for Grant for 2014-'15 and a Head of Account was provided,",,,,,

as stated by the State of Kerala in the counter affidavit filed in W.P.(C) No.31446/2010 (Ext.P10 in W.P.(C) No.35303/2016).,,,,,

In W.P.(C) No.31446/2010, the Government filed an affidavit dated 13.07.2014 stating that a High level meeting convened by the Minister for",,,,,

Industries and IT in the presence of the Minister for Finance on 04.06.2014 decided that action will be taken to revive the post-cocoon activities of,,,,,

Sericulture under the SERIFED and funds will be provided by moving Supplementary Demands for Grant. The affidavit reiterated that action has been,,,,,

taken to revive the SERIFED with the main objective of implementation of Post-Cocoon Sector of Sericulture. In the light of the stand taken by the,,,,,

State of Kerala, W.P.(C) No.31446/2010 was disposed of on 20.03.2015 as per Ext.P5 judgment quashing the order appointing liquidator and the",,,,,

respondents were directed to endeavour to restart the post-cocoon activities as held out in the counter affidavit within a period of six months.,,,,,

The State of Kerala moved on and sought Techno-feasibility of Revival of Post-Cocoon Sector through SERIFED, from the Central Silk Board",,,,,

(CSB). The CSB gave Ext.P6 Techno-feasibility report on 30.03.2015. The CSB recommended as follows:,,,,,

(i) The CRD, Kerala shall be responsible for production of quality bivoltine cocoons and for achieving the targets of pre-cocoon sector under restructuring through",,,,,

execution of a Tripartite Agreement (MOU) with Department of Industries, Govt. of Kerala and 'SERIFED under Revival' for ensuring the supply of required quality",,,,,

raw material (cocoons).,,,,,

(ii) Till the CRD achieves the targets of cocoon production required for the first phase of production as per the DPR, the 'SERIFED under revival' shall arrange for",,,,,

procurement of raw silk from different sources on its own for its operations.,,,,,

(iii) The CRD, Kerala shall also furnish the Component and Beneficiary details (for whom the funds were released) for the pending amount of Rs.50.79 lakhs (Rs.1.60 +",,,,,

Rs.15.19 + Rs.34.00 lakhs).,,,,,

(iv) The Department of Industries, Govt. of Kerala shall strengthen and revive all the defunct post-cocoon infrastructure units in the State and bring them to their",,,,,

optimal use during the 'revival of post-cocoon sector' and allocate the required working capital accordingly.,,,,,

The Government of Kerala considered Ext.P6 Report and passed Ext.P7 G.O. dated 05.08.2015, the material part of which reads as follows:",,,,,

Government have requested the Central Silk Board to nominate an agency for a detailed study of the revival proposal of the Sericulture Industry with new vision,,,,,

and action plan. The high level meeting held by Hon'ble Minister (Industries & IT) on 28/1/15 to discuss the issue with officials of Central Silk Board (CSB) and,,,,,

Commissioner for Rural Development (CRD) decided the following:,,,,,

I. The Department of Industries, Government of Kerala shall provide requisite support for the proposal of reviving the Post-Cocoon Sector of Sericulture Industry",,,,,

through SERIFED. The Industries Department shall write to CSB to the effect that the State will take care of the continuous management of the SERIFED on a,,,,,

commercially viable and sustainable mode.,,,,,

II. The CRD shall commit to take the responsibility of the Pre-Cocoon development through different schemes. It will strengthen the extension and monitoring,,,,,

mechanism to meet the targets laid in the DPR. The CRD shall protect the interest of the farmers and will be responsible for field level implementation. The revived,,,,,

SERIFED shall collect the entire cocoon produced within the State.,,,,,

,,Central Government,,,

YEAR,"Requirement

of amount in

Lakhs","W&CD,

CSB, DCH

for creation

of

infrastructure

& CSFC","NCDC for

working

capital",Sub-Total,"State

Govt

2015-16,1841.91,640.32,619.85,1260.17,581.74

2016-17,2220.88,917.38,906.05,1823.43,397.45

2017-18,3578.61,1380.85,1576.15,2956.99,621.62

2018-19,3688.91,1131.76,1922.63,3054.39,634.52

Total,11330.31,4070.31,5024.69,9094.99,2235.32

,,Central Government,,,

YEAR,"Requirement

of amount in

lakhs","W&CD, CSB,

DCH for

creation of

infrastructure

& CSFC","NCDC for

working

capital",Sub-Total,"State

Govt

2015-16,1841.91,640.32,619.85,1260.17,581.74

2016-17,2220.88,917.38,906.05,1823.43,397.45

2017-18,3578.61,1380.85,1576.15,2956.99,621.62

2018-19,3688.31,1131.76,1922.63,3054.39,634.52

Total,11330.31,4070.31,5024.69,9094.99,2235.32

Year,Activity,Finding Pattern (Res. In lakh),,,

,,CSB,DCH,State(Kerala),

2018-19,"Post

cocoon/

post yarn",486.49,642.22,341.78,

2019-20,- do -,745.63,695.71,334.97,

,Total,1232.12,1337.93,676.75,

Performance of Serifed before the issue of

G.O.",,,,,

Year,"Mulberry

Cultivation (in

Hectares)","Raw-Silk

Production

(MT)",,,

2007-08,1438,14,,,

2008-09,1525,20,,,

2009-10,1604,22,,,

In the light of the Techno-feasibility Report of the Central Silk Board and in the light of the afore data, it cannot be said that there is no justification for",,,,,

reviving SERIFED.,,,,,

In fact, in the deliberations and discussions in various official meetings presided by the Ministers concerned also, there is unanimity that there is",,,,,

much scope for reviving Post-cocoon Sector under SERIFED. It is based on those conclusions that the Government undertook before this Court on,,,,,

03.12.2019 that the State Government is prepared to give necessary confirmation on availability of State matching share. On 20.12.2019, the",,,,,

Government again undertook before this Court that necessary communication will be issued to the Central Silk Board in that regard. Respondents 1,,,,,

and 2 are not justified in again going back from the decision to revive SERIFED for Post-cocoon Sector sericulture activities.,,,,,

The learned Government Pleader, relying on the judgments of the Apex Court in Balco Employees' Union (Regd.) v. Union of India and others",,,,,

[(2002) 2 SCC 333] and Bannari Amman Sugars Ltd. v. Commercial Tax Officer and others [(2005) 1 SCC 625], argued that the issue involved in",,,,,

these cases are pure policy matters falling exclusively within the realm of executive and it would be highly illegal to decide such issue by courts of law.,,,,,

In a democracy, it is the prerogative of each elected Government to follow its own policy. It is settled law that unless a decision is contrary to any",,,,,

legal provision, court cannot interfere with it.",,,,,

The question is whether non-revival of Post-Cocoon activities under SERIFED is due to any policy decision of the Government. The facts of the,,,,,

case will amply make it clear that there is no policy decision by the Government in this regard, not even of a fiscal policy. Here, the Government",,,,,

decided to establish SERIFED in the year 1994, and in the year 2010, the Government decided to liquidate SERIFED. In the year 2014, after a",,,,,

meeting by the Industries Minister, the Government decided to revive Post-Cocoon activities under SERIFED and an affidavit was filed in this Court",,,,,

swearing that action will be taken for revival of Post-Cocoon activities. A Techno-feasibility report for revival was obtained from Central Silk Board,,,,,

for the said purpose. By Ext.P7 G.O., the Government accorded sanction for reviving Post-Cocoon activities.",,,,,

The Government directed to reconstitute the Administrative Committee of SERIFED. The bye-laws of SERIFED were amended. The Central Silk,,,,,

Board released ₹69.178 lakhs for critical intervention on 08.09.2016. But, on 07.01.2017, the Government issued Ext.P14 G.O. ordering not to proceed",,,,,

with revival of SERIFED. The issue did not end there. In spite of Ext.P14, the Government, through the Chief Secretary, convened another meeting",,,,,

on 05.07.2017 and the Chief Secretary decided to constitute a three-member committee comprising of representatives of SERIFED, Director of",,,,,

Handlooms and Textiles and the Central Silk Board to formulate a Project Report on feasibility of silk weaving. Before receiving any such report, the",,,,,

Government as per Ext.P4 (in W.P.(C) No.15961/2020) dated 08.05.2020 decided not to provide matching fund for revival. If the afore facts prove,,,,,

anything, it is the lack of policy of the Government of Kerala. There is nothing on record to show that the Government has taken any concrete policy",,,,,

decision in the matter of liquidation or revival of sericulture in Kerala.,,,,,

The Detailed Project Report for revival of sericulture activities, which was approved by the State Government for the years from 2015-'16 to",,,,,

2018-'19 contemplated total investment by all funding agencies to the tune of ₹11,330.31 lakhs and the State share was only ₹2,235.32 lakhs. The rest",,,,,

of the funding was to be made by the Central Government through the Central Silk Board and other Central agencies. A project which was,,,,,

appreciated by the Central Silk Board and found to be of great advantage to the State in the matter of giving employment opportunities to many and of,,,,,

augmenting State’s silk production and State’s revenue, has been put in limbo by the Government for no tangible reason.",,,,,

The Hon’ble Apex Court, in the judgment in Bannari Amman Sugars Ltd. (supra), held that-",,,,,

While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and",,,,,

implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria.,,,,,

The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is,,,,,

an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heart beat of fair play.",,,,,

Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons, not whimsically for any ulterior",,,,,

purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is,,,,,

arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is,,,,,

any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.",,,,,

In this case, there is no discernible principle emerging from the impugned action of the Government.",,,,,

A further question arises as to whether the Government, after expressing its decision to revive Post-cocoon activities and after undertaking to",,,,,

revive SERIFED, can go back from the said promise and undertaking. Under our jurisprudence, the Government is not exempt from liability to carry",,,,,

out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to,,,,,

carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the",,,,,

circumstances in which the obligation has arisen.,,,,,

In W.P.(C) No.31446/2010, which was filed challenging the decision of the Government to liquidate sericulture co-operatives, the Government",,,,,

filed counter affidavit expressing its decision to revive SERIFED and invigorate its activities, making available necessary funds. This Court delivered",,,,,

Ext.P5 judgment dated 20.03.2015 in the said writ petition directing the Government to take necessary action within a period of six months. The said,,,,,

Ext.P5 judgment was not challenged and has become final. Can the Government go back from its promises made before this Court, subsequently ?",,,,,

In the judgment in Hope Plantations Ltd. v. Taluk Land Board [1999 (1) KLT 331], dealing with the principles of issue estoppel, the Apex Court",,,,,

held as follows:,,,,,

It is settled law that principles of estoppel and res judicata are based on public policy and justice. Doctrine of res judicata is often treated as a branch of the law of,,,,,

estoppel though these two doctrines differ in some essential particulars. Rule of res judicata prevents the parties to a judicial determination from litigating the same,,,,,

question over again even though the determination may even be demonstrated wrong. When the proceedings have attained finality, parties are bound by the",,,,,

judgment and are estopped from questioning it. They cannot litigate again on the same cause of action nor can they litigate any issue which was necessary for,,,,,

decision in the earlier litigation. These two aspects are 'cause of action estoppel' and 'issue estoppel'. These two terms are of common law origin. Again once an issue,,,,,

has been finally determined, parties cannot subsequently in the same suit advance arguments or adduce further evidence directed to showing that issue was wrongly",,,,,

determined. Their only remedy is to approach the higher forum if available. The determination of the issue between the parties gives rise to, as noted above, an issue",,,,,

estoppel. It operates in any subsequent proceedings in the same suit in which the issue had been determined. It also operates in subsequent suits between the same,,,,,

parties in which the same issue arises. Section 11 of the CPC contains provisions of res judicata but these are not exhaustive of the general doctrine of res judicata.,,,,,

Legal principles of estoppel and res judicata are equally applicable in proceedings before administrative authorities as they are based on public policy and justice.,,,,,

Promissory estoppel long recognised as a legitimate defence in equity was held to found a cause of action against the Government, even when the",,,,,

representation sought to be enforced was legally invalid in the sense that it was made in a manner which was not in conformity with the procedure,,,,,

prescribed by statute.,,,,,

In the judgment in Union of India and others v. Indo-Afghan Agencies Ltd. [AIR 1968 SC 718], the Hon’ble Apex Court held that-",,,,,

Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some,,,,,

undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the",,,,,

citizen on an ex-parte appraisement of the circumstances in which the obligation has arisen.,,,,,

The Hon’ble Apex Court dealt with the issue of promissory estoppel in the judgment in State of Punjab v. Nestle India Ltd. and another,,,,,

[(2004 (6) SCC 465] and held as follows:,,,,,

As for its strengths it was said: that the doctrine was not limited only to cases where there was some contractual relationship or other pre-existing legal relationship,,,,,

between the parties. The principle would be applied even when the promise is intended to create legal relations or affect a legal relationship which would arise in,,,,,

future. The Government was held to be equally susceptible to the operation of the doctrine in whatever area or field the promise is made, contractual, administrative",,,,,

or statutory. To put it in the words of the Court:,,,,,

“The law may, therefore, now be taken to be settled as a result of this decision, that where the Government makes a promise knowing or intending that it would be",,,,,

acted on by the promisee and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise",,,,,

would be enforceable against the Government at the instance of the promisee, notwithstanding that there is no consideration for the promise and the promise is not",,,,,

recorded in the form of a formal contract as required by Article 299 of the Constitution.,,,,,

* * *,,,,,

Equity will, in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights, even where they arise, not under any contract,",,,,,

but on his own title deeds or under statute.,,,,,

* * *,,,,,

Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the essential",,,,,

ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it.â€​",,,,,

Â,,,,,

In the present case, Ext.P5 judgment in W.P.(C) No.31446/2010 and the interim orders passed by this Court in these writ petitions on 03.12.2019",,,,,

and 20.12.2019 would indeed operate as issue estoppel, against respondents 1 and 2 and the orders passed by respondents 1 and 2 ignoring the same",,,,,

are liable to be set aside.,,,,,

For all the afore reasons, these writ petitions are disposed of with the following orders and directions:",,,,,

(1) Respondents 1 and 2 are directed to cause appropriate enquiry and investigation into the action of the nominated Board of Directors of the,,,,,

SERIFED in recruiting about 300 employees in SERIFED in violation of law and also into the action of the Government in absorbing 271 employees,,,,,

illegally recruited in SERIFED into the Government Services and in the services of Kerala Khadi and Village Industries Board and take appropriate,,,,,

action based on such enquiry/ investigation, in accordance with law;",,,,,

(2) The impugned Ext.P14 order dated 07.01.2017 in W.P.(C) No.35173/2016 and Ext.P4 order dated 08.05.2020 in W.P.(C) No.15961/2020 are,,,,,

quashed;,,,,,

(3) The Central Silk Board, SERIFED and the Director of Handlooms and Textiles are directed to nominate their representative to the Three-Member",,,,,

Committee decided to be formed in the meeting convened by the Chief Secretary on 05.07.2017 and communicate the nominations to the Chief,,,,,

Secretary forthwith;,,,,,

(4) The Three-Member Committee shall formulate a fresh Project Report on the feasibility of revival of SERIFED, Post-Cocoon Sector and Silk",,,,,

Weaving in Kerala, and submit the same to the 1st respondent within a period of four months;",,,,,

(5) Respondents 1 and 2 (in W.P.(C) No.35173/2016) shall take a final decision on the revival of SERIFED, Post-Cocoon Sector and Silk Weaving in",,,,,

Kerala, within a further period of two months from the date of receipt of the Project Report;",,,,,

 (6) The petitioners in W.P.(C) No.35303/2016 are permitted to get Ext.P1 Award in I.D. No.58/99 of the Industrial Tribunal, Alappuzha",,,,,

executed/implemented, invoking the provisions of the Industrial Disputes Act, 1947.",,,,,

The Registry is directed to forward a certified copy of this judgment to the Director of Handlooms and Textiles, Vikas Bhavan P.O.,",,,,,

Thiruvananthapuram-695 033.,,,,,