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Judgment
P.C. Balakrishna Menon, C.J.—These Letters Patent Appeals and the writ petition raise common questions of law. A learned single Judge of this Court dismissed a batch of writ petitions by a common judgment upholding the validity of the proceedings taken by the District Cooperative and Supplies Officer, u/s 14A of the Himachal Pradesh Co-operative Societies Act, 1968 (herein after referred to as the Act).
All these writ petitions are by Co-operative Societies functioning at different places in the district Una. These Societies are Agricultural Credit Societies serving its members within the respective areas of their jurisdiction. These Societies advance loans to its members for raising agricultural crops and according to the Petitioners had been extending great help and assistance to the agriculturists of the locality.
The District Co-operative and Supplies Officer, exercising the powers of the Registrar delegated to him, has passed the orders impugned in these proceedings amalgamating the respective Societies with other Societies. The Petitioners aver that these orders if implemented would adversely affect the credit facility for the agriculturists in the respective areas of operation of these Societies as the Societies with which these Societies are amalgamated are located at far of place(s) not easily accessible to the members of these credit Societies. As per interim orders passed by this Court in these writ petitions and the L.P. as, the impugned orders are not yet implemented and the respective Credit Societies are allowed to function as independent Societies.
The facts in all these cases are similar and for the purpose of this judgment, we are referring to the facts in L.P. A. No. 29 of 1981 arising out of C.W.P. No. 9 of 80.
Annexure PE dated 6th February 1979 is the preliminary order issued by the District Co-operative and Supplies Officer and it reads:
Whereas to revitalise the loaning system and in order to improve the working and efficiency of the Primary Agricultural Co-operative/Service Co-operative Societies has been considered desirable and essential to amalgamate the societies mentioned in column 3 below with the societies enumerated in column 2 of the table given below:
S.No. Name of society Name of the Remarks with which the societies Balance societies are which are sheet on proposed to be to be amal- 30-6-77 amalgamated gamated of the societies mentioned in Cols & 3 are enclosed. ----------------------------------------------------------------- 1. Ispur Co-op Agri The Ispur Shargi Service Societies service Co-op V&PO Ispur Agri. Service Teh & Distt. Society V&PO
Una. Ispur Teh & Distt. Una. ------------------------------------------------------------------
Now, therefore, in exercise of the powers conferred by Section 14A(1) of the Himachal Pradesh Cooperative Societies Act, 1968 (Act No. 3 of 1969), I, Jai Kishan, District Co-operative and Supplies Officer, Una District, Una, propose to amalgamate the societies mentioned in column (3) with the societies given in column (2) of the table given above.
Further in exercise of the powers vested in me u/s 14A(2) of the Himachal Pradesh Co- operative Societies Act, 1968, afford you an opportunity to file objections and make suggestions in this connection, if any, within a period of sixty days from the receipt of this order but not later than 1-3-1979 in any case.
On receipt of these orders, the Society summoned a special General Body meeting and by an unanimous resolution objected to the proposal for amalgamation. A translation of the copy of the resolution was produced in the writ petition as Annexure PF. The District Co-operative and Supplies Officer on 22nd June 1979 passed a final order amalgamating the Society as proposed in the preliminary order. Annexure PG is the final order of amalgamation and it reads as follows:
WHEREAS Primary Agricultural Credit/Service Cooperative Societies mentioned in column 3 below proposed to be amalgamated with societies given column 2 of the table given below vide order No. 857-61 dated 6-2-1979 and the objections and suggestions and were invited all financing institutions/societies as required u/s 14A(2) of the Himachal Pradesh Cooperative Societies Act.
----------------------------------------------------------------------------------- S. No. Name of the societies Name of the societies in which the societies which are amalgamated of Col. 3 are amal- with societies in gamated. column 2. 1 2 3 ----------------------------------------------------------------------------------- 1. The Ispur Coopera- The Ispur service co- tive Agri. Service operative Agri. Service Society, V&PO Society, V&PO Ispur, Ispur, Teh. and Distt. Teh. and Distt. Una. Una. -----------------------------------------------------------------------------------
The objections/suggestions received from the financing institutions, societies shown in Col. 3 and 2 of the table given above members or creditors have been considered and I am satisfied that it is desirable in the interest of the societies shown in column 3 that these should be amalgamated with the societies shown in col. 2.
Now, therefore, I, Jai Krishan Sharma, District Cooperative Supplies Officer, Una, exercise of the powers vested in me u/s 14A(1) of the Himachal Pradesh Cooperative Societies Act, 1968 order that the societies shown in column 3 stand amalgamated with all the existing assets and liabilities given above.
These assets and liabilities of the societies mentioned in col. No. 3 shall vest in the societies mentioned in col. No. 2 with effect from 25-7-1979.
Annexure PG order is confirmed by the Government in revision as per its order dt. 28.12.79, a copy of which is produced as Annexure PJ.
Both the preliminary order as well as the final order in all these cases is of a stereo-typed pattern and hence it is not necessary to separately refer to the orders passed in each separate case.
Even though there is a ground taken in CWP No. 56/81 and LPA No. 32 of 81 challenging the constitutional validity of Section 14-A of the Act, Advocate Sh. K.C. Rana appearing for the Petitioner-society in that case has not pursued the challenge in the light of the decision of the Supreme Court in Daman Singh and Others Vs. State of Punjab and Others, The main ground of attack in all these cases is that the impugned orders have been passed in a mechanical manner without application of mind and without affording to the respective societies, their members and creditors an effective opportunity to show that amalgamation is not in the public interest or in the interest of cooperative movement nor is it for the purpose of securing proper management of the societies concerned.
Sub-Sections 1 and 2 of Section 14A of the Act are extracted below:
Power to direct amalgamation, conversion and reorganisation of societies, (1) Where the Registrar is satisfied that it is essential or desirable in the public interest of co-operative movement for the purpose of securing the proper management of any society or societies, that two or more societies should be amalgamated or should be reorganised or should be converted into any other class of society or societies should transfer assets and liabilities thereof in whole or in part in equal proportion to the total assets and liabilities to any other society then notwithstanding anything contained in the last preceding section but subject to the provisions of this section, the Registrar may order such amalgamation or reorganization or conversion or transfer of assets and liabilities of such society or societies, as the case may be, with such constitution, property, rights, interests, liabilities, duties and obligations as may be specified in the order.
(2) No order shall be made under this section unless the Registrar, after inviting the suggestions and objections in writing from the concerned society or societies or members or creditors thereof and also the concerned financing Bank or Banks, has considered and made such modifications in the proposed order as may seem to him desirable in the light of such suggestions and objections, which may be received by him within sixty days from the date of inviting such suggestion and objection.
The reason for the proposed amalgamation mentioned in the preliminary order is to revitalise the loaning system and to improve the working and efficiency of the Primary Agricultural Cooperative/Service Societies. There is no mention that in what way the loaning system will be improved by the process of amalgamation nor is there any indication in the preliminary order that by such amalgamation the working and the efficiency of the Primary Societies will be Lip roved. To say the least, the ground for amalgamation mentioned in the preliminary order is too vague and is applied uniformly to all these Societies without any reference to the existing conditions such as financial capacity and the volume of business being carried on by these societies. The averments in CWP No. 9 of 80 that the Petitioner-society had improved its status from class B to class A is not denied by the Respondents. The only reason mentioned in the final order Annexure PG for the amalgamation is that the officer concerned is satisfied "that it is desirable in the interest of the Societies shown in column-3 that these should be amalgamated with the societies shown in column-2." It is clear from the final order itself that the second Respondent has not applied his mind before he passed the final order of amalgamation. He has not considered the case relating to the individual societies. The order passed is an omnibus one in a stereo-typed form applied to all the Societies without considering the merit of each case in the light of the objections received. No specific ground for the proposed amalgamation is mentioned in the preliminary order and the objections and suggestions called for had no meaning except as an empty formality. A Full Bench of the Andhra Pradesh High Court in Seethapathi Nageswara Rao and Others Vs. The Govt. of Andhra Pradesh and Others, considering a similar provision in Section 15-A of the Andhra Pradesh Co-operative Societies Act (7 of 1964) observed at page 142:
The next question that has to be considered regarding publication of notice is whether it contains the necessary particulars so as to enable the societies and their members to make effective representation. Section 15-A only refers to the publication of notice, but it does not speak of what particulars the notice should contain. The notice must also contain particulars or reasons either for the proposal to declare a particular society as a non-viable society and whether it is proposed to be merged or liquidated. If the particulars are not published in the notice, it would be difficult for the societies to make effective representation. It should enable an affected party to rebut the reasons or grounds mentioned in the notice. The notice no doubt refers to the impugned G. Os., which lay down the guidelines. But the G. Os., are not enclosed to the notice nor are these guidelines published in the notice. We are therefore, of the opinion that the notice published should be one which should afford a reasonable opportunity to the affected persons to make effective representations. Since the notices in all these cases are bald notices and no reasons are given nor the guidelines indicated nor the G. Os. enclosed, we are of the opinion that, to this extent the notices published are not consistent with the principles of natural justice. The notices are therefore defective and thus violative of the principles of natural justice.
A Full Bench of the Karnataka High Court in AIR 1978 Karnataka 148, H. Puttappa and Ors. v. The State of Karnataka and Ors. had by a majority judgment up-held the constitutional validity of a similar provision in Section 14A of the Karnataka Cooperative Societies Act, introduced by amendment Act 70 of 1976. Jagannatha Shetty, J. as he then was, on behalf of himself, P.P. Bopanna and Venkatachala, J J. after up-holding the validity of the Section, quashed the impugned orders of amalgamation for violation of the principle of natural justice. Malimath J., as he then was, with whom Srinivasa Iyengar J. agreed, had after declaring the section invalid for violation of Article 19(1)(c) of the Constitution, stated at page 189:
The preamble to the order makes it clear that the Deputy Registrar has not examined the working and structure of the societies sought to be amalgamated. As the Deputy Registrar has not formed the necessary opinion after examining the working and structure of the societies sought to be amalgamated, he could not have exercised the power of amalgamation under Sub-section (1) of Section 14A of the Act. The norms specified in the order pertain to the area of operation, the capital etc. These are norms having a bearing on the question of the size and capital of the co-operative society to be formed by amalgamation. There are no norms to take into account the manner in which the existing co-operative societies are functioning. As all the impugned orders are stereo-typed orders, this is another circumstance indicating that there is no application of the mind of the Registrar to the requirements of Sub-section (1) of Section 14A before he passed the impugned orders. When a power is conferred on an authority to make an order on his being satisfied about the existence of certain conditions, he has to make an order after applying his mind and forming an opinion that the conditions for exercising the powers have been satisfied. If such authority passes an order in a mechanical way without the application of his mind, the same cannot be regarded as a valid order.
Construing Section 13 of the Punjab Co-operative Societies Act, a Division Bench of the Punjab and Haryana High Court in AIR 1976 Punjab and Haryana 345, The Amerheri Co-operative Agricultural Service Society and Anr. v. The State of Haryana and Ors. stated at page 351:
The order passed under Sub-section (8) of Section 13 of the Act has to provide for the constitution, property, rights, interests, liabilities, duties and obligations of the society or societies coming into existence. A copy of the proposed order has also to contain all this information regarding the society or societies to be affected by the Order. It is only after these matters are made known to the society or its members or creditors that they can be in a position to raise objections and also to make suggestions and make up their minds to withdraw from the membership or to withdraw their deposits. If the relevant material concerning the constitution, property, rights, interests, liabilities, duties and obligations of the concerned society or societies as the case may be is not made known the purposes of the provisions cannot be achieved as no effective objections and suggestions can be made by the society, its members or creditors.
It is further stated at page 352:
The impugned orders are also liable to be quashed on another ground. The scheme of the provisions of Sub-section (8) of Section 13 of the Act clearly goes to show that the Registrar has to apply his mind to the facts and circumstances of a society or societies with a view to be satisfied that it is essential or desirable in the interest of a society or societies that two or more societies be amalgamated or any society should be divided to form two or more societies.
The preliminary order in these present cases does not give any specific reason for the amalgamation nor does it show in what way the amalgamation will revitalise the loaning system and improve the working and efficiency of the Primary Society concerned. The preliminary order calling for objections has not, therefore, served the purpose of Section 14-A of the Act to be afforded to the society, its members and creditors an opportunity to raise objections and suggestions against the proposed amalgamation. The final order passed in the stereo-typed form against all these Societies without affording an effective opportunity to put forward objections and suggestions on specific grounds for amalgamation is clearly unsustainable. It is apparent from the final order itself that the officer discharging the functions of the Registrar u/s 14A of the Act has not applied his mind before he passed the impugned orders of amalgamation. He has not given any reason to amalgamate these societies except to say that he is satisfied that in the interest of the Societies shown in column 3 it is desirable to amalgamate the Societies shown in column-2. There is no indication on what material the officer is satisfied about the desirability of amalgamation and how the same satisfaction applies to all these Societies. The Supreme Court in The Siemens Engineering and Manufacturing Co. of India Ltd. Vs. The Union of India (UOI) and Another, stated at page 1789:
It is now settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial-order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N.M. Desai v. Testeels Ltd., CA. No. 245 of 1970-decided on 17-12-1975 (SC).
In a later decision in Mohinder Singh Gill and Another Vs. The Chief Election Commissioner, New Delhi and Others, The Supreme Court stated at page 417:
The second equally relevant matter is that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to Court on account of a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose, J. in Commissioner of Police, Bombay Vs. Gordhandas Bhanji,
Public orders, publicly made in exercise of a statutory authority cannot be construed in the light of explanations subsequently given by the officer making the order of what he meant, or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting''s and conduct of those to whom they are addressed and must be construed objectively with reference to the language used in the order itself.
Order are not like old wine becoming better as they grow older.
The revisional order of Government has merely confirmed the order of amalgamation passed by the District Co operative and Supplies Officer. The invalidity of the proceedings and the orders passed by the original authority is not in any way rectified by the revisional order. We, therefore, allow the L.P. As and the writ petition and quash the orders amalgamating the Petitioners Societies with the other Societies mentioned in the impugned orders. The parties will suffer their respective costs.