Ravindra V. Gaikwad and others vs State of Maharashtra and others

R.M.S. Khandeparkar, J.—Heard the learned Advocates for the parties. Perused the records.

Rule. By consent, the rule is made returnable forthwith.

The petitioners challenge the order dated 2.8.2001 passed in Appeal No. APP.13/2001/CR.110/15-C by the respondent No. 2 and the order dated 26-6-2001 passed by the respondent No. 3 u/s 78 of the Maharashtra Cooperative Societies Act, 1960 (hereinafter called as the "said Act"). By the impugned order, the petitioners have been removed from the membership of the Board of Directors of the respondent No. 4 sugar factory and they have been disqualified to be elected to the membership of the Board of Directors of the said society for a term of five years.

The challenge to the impugned orders is on three grounds firstly, that the impugned orders have been passed without effective consultation and, therefore, are in violation of the provisions of law contained in the section 78 of the said Act. Secondly, that the respondent No. 2 the Secretary of the Cooperation Department who had heard and decided the appeal, had no appellate jurisdiction u/s 152 of the said Act and, therefore, the impugned order dated 2-8-2001 is without jurisdiction and hence is bad in law. Thirdly, that the orders do not disclose valid and legal reasons for the action which has been taken against the petitioners and on that count also, the impugned orders are bad in law.

Referring to the order dated 26-6-2001, it was sought to be contended that the same apparently discloses that the action u/s 78 of the said Act was taken without obtaining necessary consultation from the federal society. The same having been totally ignored by the appellate authority, according to the learned Advocate for the petitioners, the order passed by the appellate authority discloses total non application of mind to the material point of law and the issue involved in the matter. On the other hand, referring to the letter dated 3-3-2001 from the Maharashtra Rajya Sahakari Sakhar Sangh Ltd., to the Director of Sugar (Administrator), wherein it was communicated that the federal Society did not intend to express any opinion in the matter it was sought to be argued by the learned Government Pleader that there was effective consultation inasmuch as that the respondents had placed all the materials required for the effective consultation before the federal society and merely because the federal society had refused to express any opinion in the matter, no fault can be found with the respondents as regards compliance of the provisions of the section 78 of the said Act and, therefore, it cannot be said that there was no effective consultation in the matter. Both the learned Advocates have referred to various decisions in support of their rival contentions.

u/s 78 of the said Act the Registrar by his order, after giving the committee or the member, as the case may be, an opportunity of being heard, and after consultation with the Federal Society to which the concerned society is affiliated, is empowered to remove such committee or members of the committee, as the case may be. On removal of the committee, the Registrar may appoint any person as either member of the committee or otherwise, as the administrator for day to day administration of concerned society. The provisions contained in section 78 of the said Act clearly speaks of the necessity of "consultation" with the Federal Society to which the concerned society is affiliated, before passing any order of removal of the committee or the members thereof. Undisputedly, it is now well settled that the provision regarding requirement of "consultation" before passing order u/s 78 of the said Act is mandatory in nature and any failure on the part of the authority to comply with the said requirement would render the order under the said section 78 to be bad in law. The point for consideration which arises in the case in hand, therefore, is not regarding the requirement of "consultation" but, the meaning and scope of the expression "effective consultation" in relation to any order passed u/s 78 of the said Act. Undoubtedly, the term "effective" has not been used in section 78 of the said Act; however, by judicial pronouncements it has been well established that the expression "consultation" which is contemplated u/s 78 of the said Act is not a mere formality but it has to be a meaningful consultation and, therefore, it has to be an effective consultation.

The Madras High Court in R. Pushpam vs. State of Madras reported in AIR 1953 Madras 392 while considering the term "consult" in section 43 of Madras District Municipalities Act held that "the word "consult" implies a conference of two or more persons or an impact of two or more minds in respect of a topic in order to enable them to evolve a correct or at least, a satisfactory solution. Such a consultation may take place at a conference table or through correspondence. The form is not material but the substance is important. It is necessary that the consultation shall be directed to the essential points and to the core of the subject involved in the discussions. The consultation must enable the consulter to consider the pros and cons of the question before coming to a decision."

The Madhya Pradesh High Court in the matter of Radheshyam Sharma Vs. Govt. of M.P. through C.K. Jaiswal and Others, while dealing with the point relating to the object of consultation, has observed that the same is to obtain the view of the person or body to be consulted in order to arrive at some conclusion in respect of the matter on which advice is sought and the best way to consult would be discuss the entire matter at a conference table so that there may be a full and fair exchange of views but that is neither possible nor feasible in many cases. The requirement can be complied with if the person to be consulted is required to be supplied with all the materials available on the basis of which a particular conclusion has to be reached and his opinion is sought on the points in issue after indicating how the authority which seeks to consult view the matter.

The Apex Court in Chandramouleshwar Prasad Vs. The Patna High Court and Others, had observed that consultation or deliberation is not complete until the parties make their points of view known to the other or others and discuss and examine the relative merit of their views and if one party makes a proposal to the other who has a counter proposal which is not communicated to the proposer, the direction to give effect to the counter proposal without anything more, cannot be said to have been issued after consultation. Similar observations were made by the Apex Court in the matter of S.P. Gupta Vs. President of India and Others, as well as in the matter of Union of India vs. Sankalchand Himatlal Sheth reported in (1977) 4 SCC 193.

The Apex Court, in the matter of Indian Administrative Service (S.C.S.) Association, U.P. and Others Vs. Union of India (UOI) and Others, after taking into consideration its earlier decisions in the matter of Union of India (UOI) Vs. Sankalchand Himatlal Sheth and Another, , State of U.P. Vs. Manbodhan Lal Srivastava, , Ram Gopal Chaturvedi Vs. State of Madhya Pradesh, , N. Raghavendra Rao Vs. Deputy Commissioner, South Kanara, Mangalore, , Mohammad Shujat Ali and Others Vs. Union of India (UOI) and Others, , Chandramouleshwar Prasad Vs. The Patna High Court and Others, , Narayanan Sankaran Mooss Vs. The State of Kerala and Another, , Naraindas Indurkhya Vs. The State of Madhya Pradesh and Others, , M/s. Hindustan Zinc Ltd. etc. Vs. Andhra Pradesh State Electricity Board and others, , Rollo vs. Minister of Town and Country Planning reported in (1948) 1 All ER 13(CA), Fletcher vs. Minister of Town and Country Planning reported in (1947) 2 All ER 496 (KBD), Sinfield vs. London Transport Executive reported in (1970) 2 All ER 264, Derham vs. Church Commissioners of England reported in (1954) AC 245, Port Louis Corporation vs. Attorney General of Mauritius reported in (1965) AC 1111 and Union of India and Others Vs. Dr. S. Krishna Murthy and Others, has held that:

"Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points involved to evolve a correct or at least satisfactory solution. There should be meeting of minds between the proposer and the persons to be consulted on the subject of consultation. There must be definite facts which constitute the foundation and source for final decision. The object of the consultation is to render consultation meaningful to serve the intended purpose, Prior consultation in that behalf is mandatory."

In State of Jammu and Kashmir Vs. A.R. Zakki and others, while considering the expression "consultation", the Apex Court has laid down that though consultation does not mean "concurrence", it postulates an effective consultation which involves exchange of mutual view points of each other and examination of the relative merits of the other point of view and that consultation or deliberation is not complete or effective before the parties thereto make their respective points of view known to the other or others and discuss and examine the relative merits of their views.

The Division Bench of this Court in the matter of Agricultural Produce Market Committee, Dharni and others vs. District Deputy Registrar, Cooperative Societies, Amravati reported in 1986 Mh.L.J. 374 while considering the same issue, has observed that the consultation is not an empty formality or a ritual but it has to be real, full and effective and unless there has been full consideration of all the matters relevant to the question, it cannot be said that the process of consultation has taken place. It has been specifically observed therein that there is a corresponding duty also on the body whose consultation is mandatory to give its opinion.

From the above referred judgments of the Apex Court and of this Court, it is abundantly clear that it is now well established that the exercise of consultation u/s 78 of the said Act is not a mere formality to be complied with but, it has to be a meaningful consultation and to be a meaningful consultation, it is necessary not only for the authority who is required to consult the federal society to place all the materials relevant to the matter before the Federal Society for the purpose of consultation but, it is equally necessary for the Federal Society to impart its views on the point on which consultation is sought for.

Referring to two decisions, one in the matter of Pundlik Kadhav vs. District Deputy Registrar, Co-operative Societies, Chandrapur and others reported in 1990 Mh.L.J. 925 and an unreported decision in the matter of Arjun Panditrao Khotkar vs. The State of Maharashtra and others in Writ Petition No. 2231 of 2001 delivered on 15th June, 2001, it is sought to be argued by the learned Government Pleader that once the authority places all the materials before the Federal Society for the purpose of consultation, any failure on the part of the Federal Society to impart necessary advice in the matter would not amount to non compliance of the provisions of section 78 of the said Act by the authority passing the order under the said provision. Referring to the letter dated 3rd March, 2001 by the Federal Society to the Director of Sugar (Administration) as well as resolution dated 9.12.2000 by the Federal society, it is contended that there was effective consultation with the Federal Society and merely because the Federal Society has expressed its inability to impart any advice in the matter, or to express any opinion in the matter that cannot be construed as no consultation for the purpose of section 78 of the said Act.

An observation to the effect that failure on the part of the Federal Society to respond to the authority would not make the consultation ineffective is sought to be pointed out from the decision of the Division Bench of this Court in Pundlik Kadhav''s case. Referring to the said observation, it was sought to be contended that once the authority had placed all the materials before the Federal Society in question, merely because the Federal Society has refused to express any opinion in the matter, it cannot be concluded that there was no effective consultation in the case in hand. There is no doubt that the Division Bench in Pundlik''s case did observe that "what he has to do under the statute is to make" the material available to the Federal Society for its consideration and then leave the matter to the Federal Society. If that is done, then that would be tantamount to consultation and even effective consultation. A failure on the part of the Federal Society to respond would not make the consultation ineffective." However, these observations are immediately followed by the further observations to the effect that "However, we need not go in the hypothetical arena. We have in this case the communication from the Registrar to the Federal Society. We have also in this case the Registrar sending all the material relevant to the Federal Society and in response the Federal Society has informed the District Deputy Registrar to take the action." In other words, the Division Bench had refused to decide the issue pertaining to the effect of the failure on the part of the apex society to respond to the authority approaching for consultation and whether such failure can be construed to mean that there was effective consultation in the matter. Since the said point did not arise for consideration in the facts and circumstances of the case before the Court in the said petition, the Court refused to enter into the hypothetical arena and to deal with the said issue. The materials placed before the Court in relation to the facts of the said case sufficiently disclosed that there was effective consultation as all the materials were properly communicated to the Federal Society and the Federal Society had informed the authority to proceed to take action as proposed. This is apparent from the following observations made by the Division Bench in the very same paragraph :

We have some material apparent on the record which shows that the Federal Society did send a reply which it could be presumed that the Federal Society must have sent a reply on due deliberation. What the Federal Society says is what the action should be taken. Here is thus a case where all material relevant materials were made available to the Federal Society. The Federal Society did consider this matter and thereafter the Federal Society informed the District Deputy Registrar that they had no objection to take action as proposed. It is not a case where the Federal Society has not sent its reply. What is apparent from all these circumstances is that there was a process of consultation and it was an effective consultation. Effective consultation does not necessarily mean expressing a view in particular terms.

(Emphasis supplied).

It is in the above context that the observation regarding the aspect of failure of the federal society to respond are to be understood and not in the manner sought to be construed by the respondents.

In Pundlik Kadhav''s case, the Federal Society did reply to the matter referred to the Federal Society by the authority and gave its opinion for the proposed action by the authority. All the observations made in the said case, therefore, are to be understood and construed based on the facts of that case, the points which arose for consideration in that case and the deliberation made before the Court in respect of those points. The ratio of the decision is to be understood accordingly as has been held by the Apex Court in the matter of Union of India (UOI) and Others Vs. Dhanwanti Devi and Others, Applying the said law regarding ratio decidendi laid down in Dhanwanti Devi''s case, it cannot be said that the Division Bench in Pundlik Kadhav''s case has ruled that the moment all the materials are made available to the Federal Society that would amount to effective consultation, irrespective of the fact whether the Federal Society had responded to such materials placed before it or not. Much to the contrary, the Apex Court in the matter of Kewalram vs. Maharashtra State Co-operative Societies & others reported in 1986(2) SCALE 398 has ruled as under :

"The expression "previously consulted" means that the opinion of the Federation one way or the other must be taken into account before reaching the conclusion whether or not to supersede. It is not good answer to say that the opinion of the Federation could not be taken into account because no opinion was expressed by it. In the eye of law supersession can not be said to have been made in consultation with the Federation. A reply from the Federation one way or the other should have been insisted upon and the opinion expressed by the Federation should have entered into the reckoning before the conclusion to supersede was reached.

(Emphasis supplied).

Apparently, therefore, mere presentation of all the materials to the Federal Society by itself would not amount to effective consultation. It is necessary for the authority to insist upon the opinion being expressed by the Federal Society in one way or the other before proceeding to take necessary action u/s 78 of the said Act, and it is obligatory for the Federal Society to give appropriate opinion in the matter.

The learned Government Pleader then has referred to the decision in Arjun Khotkar''s case wherein it has been observed that there is no obligation cast upon the authority to wait indefinitely for the advice or opinion to be obtained from the Federal Society. Undoubtedly, the said observation was made in the peculiar facts and circumstances of the case before the Court. In the said case of Arjun Khotkar, the facts disclosed that all the materials were furnished to the Federal Society by the authority as and when asked for by the Federal Society. The Federal Society had thereafter by its letter dated 29-7-2000 had communicated to the authority that it would not be possible for the Federal Society to express any opinion in the matter till 31st July, 2000. Yet, there was no response from the Federal Society till 6th August, 2000 and after waiting for the said period, in the facts and circumstances of the case, the authority proceeded to take action u/s 78 of the said Act. Considering the peculiar facts of that case, it was also observed therein that "It is the duty of the advisory board or the body with whom the consultation is precondition for the decision in a matter, to impart appropriate and necessary advice or the opinion within reasonable time after receipt of all the necessary information and the materials required for giving such advice or the opinion and for that purpose to act swiftly and promptly to impart its advice or opinion to the authority seeking consultation as any lethargy on the part of such body in that regard may defeat the very purpose and the object behind taking the proposed action by the authority, resulting in bonanza to those who fail in their duties or act detrimental to the interest of the society." Needless to say that all those observations were made in the peculiar facts and circumstances of that case. It is not the case of the respondents that there was lethargy in communicating the advice by the Federal Society in the case in hand and that therefore without waiting for the advice, the impugned order was passed. On the contrary, the records disclose failure to insist for the opinion in one way or other from the Federal Society by the respondents before passing the impugned order. Besides, it is also to be noted that the decision of the Apex Court in Kewalram ''s case was not brought to the notice of this Court while deciding Arjun Khotkar''s case, as the issue which stands decided by Kewalram''s case was not raised before this Court in Arjun Khotkar''s case. Therein the main issue was whether the Federal Society was given sufficient time to frame its opinion or not. All the observations therein are to be understood in relation to the said issue.

The law being well settled by the decision of the Apex Court in Kewalram''s case which clearly requires the authority not only to place the materials before the Federal Society for consultation but, to insist upon expression of opinion of the Federal Society one way or the other before proceeding to take action u/s 78 of the said Act, it cannot be said that in the absence of opinion in one way or other being expressed by the Federal Society, there would be an effective consultation in the matter. Reverting to the facts of the case in hand, the order dated 26-6-2001 apparently discloses that the action u/s 78 of the said Act was taken either without any opinion being expressed by the Federal Society or without waiting for any reply from the Federal Society on the point referred to it by the authority for the consultation. Indeed, the relevant observations in the impugned order dated 26-6-2001 read thus:

As per the impugned order, therefore, the Federal Society had not expressed any opinion at the time of passing of the impugned order dated 26.6.2001. However, a totally different story is disclosed in the affidavit in reply by the respondents based on a copy of the letter dated 3-3-2001 of the Federal Society and the resolution dated 9-12-2000 of the Federal Society. It is well settled that the order passed by the statutory authority cannot be sought to be justified on extraneous grounds. The deficiency in the impugned order cannot be made good by filing affidavit or by producing additional materials as is held by the Apex Court in the matter of Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, in any case, the letter dated 3-3-2001 by the Federal Society discloses that the said Federal Society had informed that it would remain silent and would not express any opinion in the matter, whereas the observation by the authority in the order dated 26.6.2001 is to the effect that no opinion of the Federal Society was available on record, and that therefore, had implied consent by the Federal Society for the action to be taken, which is not borne out from the records. Much to the contrary, it is contrary to the materials on record and contrary to the intimation by the Federal Society. The letter is clearly to the effect that the Federal Society had decided to remain silent and the same could not have been construed as implied consent by the Federal Society for the proposed action in the matter. Apparently, therefore, there was no effective consultation in the matter in hand and on that count, the impugned orders cannot be sustained and are liable to be quashed and set aside.

Second ground of challenge pertains to the jurisdiction of the Secretary (Cooperation) to hear and decide the appeal filed u/s 152 of the said Act. Section 152(1) of the said Act provides that an appeal against an order of decision under sections 4, 9, 12, 13, 14, 17, 18, 19, 21, 21A, 29, 35, 77A, 78, 79, 88, and 105 including an order for paying compensation to a society shall lie, - (a) if made or sanctioned or approved by the Registrar, or the Additional or Joint Registrar on whom the powers of the Registrar are conferred, to the State Government, and (b) if made or sanctioned by any person other than the Registrar, or the Additional or Joint Registrar on whom the powers of the Registrar are conferred, to the Registrar. Undisputedly, the order dated 26-6-2001 was passed by the officer of the rank of the Additional Registrar the respondent No. 3 herein and the appeal against the same, therefore, would lie to the State Government u/s 152(1)(a) of the said Act. Apparently, the appeal was required to be decided by the State Government. It is a matter of record that the impugned order in appeal has been passed by the Secretary (Cooperation) respondent No. 2 herein. The point for determination which arises, therefore, is whether the decision by Secretary (Cooperation) u/s 152 of the said Act would amount to be a decision by the State Government under the said provision of law? It is the contention of the learned Advocate for the petitioner that there is no provision in the said Act empowering the delegation of powers by the State Government in favour of the Secretary to hear the appeals u/s 152 of the said Act and, therefore, the Secretary had no jurisdiction u/s 152 of the said Act. On the other hand, it is the contention of the learned Government Pleader that section 165 of the said Act empowers the Government to frame rules for carrying out the purpose of the said Act and accordingly, the Government has framed Maharashtra Cooperative Societies Rules, 1961 and therein, Rule 105 empowers the Secretary to hear the appeals under the said Act. Undoubtedly, Rule 105 of the said Rules provides that appeals should lie to the State Government under the said Act may be heard by the Secretary, the Additional Secretary or any of the Deputy Secretaries to Government, Cooperation and Rural Development Department.

It cannot be disputed that the judicial or quasi judicial powers conferred by a statute cannot be delegated unless the statute permits to do so expressly or by necessary implication. (Barnard vs. National Dock Labour Board, 1953, 2 Q.B. 18(40). (Vide Bombay Municipal Corporation Vs. Dhondu Narayan Chowdhary, and Pradyat Kumar Bose vs. The Hon''ble Chief Justice of Calcutta High Court, AIR 1956 Sd 285). The principle against the sub-delegation is based on the maxim "delegata potestas non potest delegare" and the correct rule of construction is that the power conferred by the statute has to be exercised by the authority on which the statute has conferred it and by no other authority. This well established principle of law has been reiterated by the learned Single Judge in the matter of Shriram Sahakari Sakhar Karkhana Ltd. & another vs. Director of Sugar and Additional Registrar, Co-operative Societies, Maharashtra State, Nagpur and others reported in 1997(3) ALL MR 106. However, it is now well settled that the functions or duties which are vested in the State Government under a statute may be allocated to the Ministers by virtue of the provisions contained in the Rules of Business framed under Article 166(3) of the Constitution of India. Section 3(60) of the General Clauses Act 1897 defines the expression "State Government" to mean the Governor of the State. Accordingly, a statutory function of the State Government becomes the function Governor and, therefore, it is the business of the State Government within the meaning of the expression under Article 166(3) of the Constitution of India which would include the quasi-judicial functions like those contemplated u/s 152(1)(a) of the said Act. It would be, therefore, competent for the Governor to allocate such functions to the Minister in terms of the provisions contained in the Rules of Business and the Standing Orders framed thereunder. Undoubtedly, therefore, under the Rules of Business, the Governor is empowered to allocate to a Minister the power to hear and decide the appeals u/s 152 of the said Act. It is also an undisputed fact that the Standing Orders framed under the Rules of Business, provide for the hearing of appeals under the said Act by the Minister dealing with the portfolio of cooperation.

The contention that in view of the rule 105 of the said rules, exercise of appellate jurisdiction by the Secretary cannot be found fault with, is devoid of substance. It is well established that the rules framed under the Act cannot override the statutory provisions in the Act. When the statute specifically provides that the appeals lie to the State Government, they are necessarily to be heard and decided by the State Government or by the authority to which the State Government is empowered to delegate such powers under the Rules of Business considering the provisions contained in Article 166(3) of the Constitution of India. Undoubtedly, the Rules of Business and the Standing Orders framed thereunder do not empower the allocation of said powers to the Secretary of any department. Indeed, in that regard, the observations of the Full Bench of this court are very clear in the matter of Sheikh Mohamed Fatemohamed and etc. vs. Raisuddin Azimuddin Katil and others reported in 2001(1) Mh.L.J. (FB) 850 : Sheikh Mohamed Fatemohamed and etc. Vs. Raisuddin Azimuddin Katil and Others, etc., No doubt, the same are in relation to the provisions contained in Hyderabad Abolition of Inams and Cash Grants Act, 1954 but, are on the similar point relating to the jurisdiction or the power of the Secretary to exercise revisional or appellate jurisdiction under the Act when the Act empowers the State Government to perform such functions. It is always to be remembered that if the statute prescribes a procedure for doing a thing, then the thing has to be done according to that procedure and all other modes are ruled out. (Vide : Haresh Dayaram Thakur Vs. State of Maharashtra and Others, Being so, the impugned order which has been passed by the Secretary of Cooperation cannot be held to be good in law as the Secretary had no jurisdiction or authority to hear the appeal u/s 152 of the said Act. On this count also, the impugned order dated 2nd August, 2001 cannot be sustained.

The last ground of challenge relates to the absence of valid reasons for passing the impugned order. Considering the view that is being taken in the matter, it is not necessary to address to this ground of challenge by the petitioners. The impugned order dated 26-6-2001 cannot be sustained having been passed without effective consultation u/s 78 of the said Act and, the impugned order dated 2-8-2001 cannot be sustained being without effective consultation as well as being without jurisdiction, and therefore, both the orders are not sustainable and are liable to be quashed and set aside. At this stage, it is sought to be contended by the learned Government Pleader that pursuant to the order dated 26-6-2001, the Administrator had already taken charge w.e.f. 28th June, 2001 and at present the Administrator continues to be in charge of the administration of the society. Being so, it was sought to be contended that the matter can be remanded to the respondent No. 1 to be heard by the competent authority within the specified period without disturbing the status-quo in the matter. However, such an arrangement is not permissible as rightly submitted by the learned Advocate for the petitioners that once the order u/s 78 of the said Act is itself found to be bad in law'' on account of absence of effective consultation, the said order as well as all the actions taken subsequent thereto are liable to be quashed and set aside and the status-quo ante is required to be restored. Needless to say that this will not prevent the respondents from proceeding to take action u/s 78 of the said Act de novo after complying with the provisions u/s 78 of the said Act more particularly pertaining to effective consultation. But presently, in the facts and circumstances of the case, the Administrator will have to hand over the charge of the management of the society to the petitioners forthwith.

In the result, therefore, the petition succeeds. The impugned orders are hereby quashed and set aside. The Administrator is directed to hand over the charge of the management of the society to the petitioners forthwith. Rule is made absolute in the above terms with no order as to costs.

At this stage, the Government Pleader prays for stay of the order passed today for a period of four weeks. The request for stay is objected by the learned Advocate for the petitioners. Considering the facts and circumstances of the case and as it is apparent that there was no effective consultation in the matter, as well as the absence of jurisdiction to the Secretary to hear and decide the appeal, there is no question of stay of the order passed today. Hence, the request for stay is rejected.