Thiruvananthapuram Regional Co-operative Milk Producers' Department Union Ltd v. Registrar (Director), Dairy Development Department, Thiruvananthapuram & Veliyam Padinhattinkara Ksheerolpadaka Sahakarana Sangham (Ltd.)

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **TUESDAY, THE 4TH DAY OF JULY 2017/13TH ASHADHA, 1939** **WP(C).No. 2974 of 2017 (V) ---------------------------** **PETITIONER: ----------** ## **THIRUVANANTHAPURAM REGIONAL CO-OPERATIVE MILK** **PRODUCER'S DEPARTMENT UNION LTD T 177 KSHEERA BHAVAN, PATTOM, THIRUVANANTHAPURAM 695 004 REPRESENTED BY THE MANAGING DIRECTOR** **BY ADVS.SRI.GEORGE POONTHOTTAM SMT.NISHA GEORGE** **RESPONDENT(S):** **--------------** **1. THE REGISTRAR (DIRECTOR) DAIRY DEVELOPMENT DEPARTMENT PATTOM, THIRUVANANTHAPURAM 695 004** *** ADDL R2 IMPLEADED** **2. VELIYAM PADINHATTINKARA KSHEEROLPADAKA SAHAKARANA SANGHAM (LTD.) NO.Q 201(D) APCOS VELIYAM WEST PO., KOLLAM - 691 540., REPRESENTED BY ITS SECRETARY, LUMUMBA M.S.** - **ADDDL R2 IMPLEADED AS PER ORDER DATED 29/5/2017 IN IA 7990/2017** **R1 BY ADDL ADVOCATE GENERAL SRI RENJITH THAMPAN R2 BY ADV. SRI.M.SASINDRAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28-06-2017, THE COURT ON 04.07.2017 DELIVERED THE FOLLOWING:** ## **K.V.** ## **WP(C).No. 2974 of 2017 (V) ---------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS ----------------------EXHIBIT P1 TRUE COPY OF THE APPROVED BYELAW OF THE SOCIETY AS AMENDED UPTO AUGUST 2014 EXHIBIT P2 TRUE COPY OF THE RESOLUTION NO 167 DATED 01-03-1997 ADOPTED BY THE PETITIONER UNION EXHIBIT P3 TRUE COPY OF THE MODEL BYELAWS OF THE PRIMARY SOCIETIES DESCRIBED AS ORDINARY MEMBER IN EXT P1 BELOW EXHIBIT P4 TRUE COPY OF THE G.O(RT) NO 1955/2014/AD DATED 29-10-2014 EXHIBIT P5 TRUE COPY OF THE CIRCULAR NO 20/2016 DATED 08-12-2016 RESPONDENT(S)' EXHIBITS ----------------------R1(A) TRUE COPY OF THE ORDER NO C2/9212/08 DATED 12.3.2010. R1(B) TRUE COPY OF GO (RT) NO 1843/2010/AD DATED 14/10/2010. R1(C) TRUE COPY OF PROCEEDINGS NO C2 8712/2010 DATED 6/8/2010. R1(D) TRUE COPY OF BYELAW CLAUSE 3.3 (B) (III) R1(E) TRUE COPY OF VOTING RIGHTS FIXED AS PER BY LAW CLAUSE 17 R2(A) A TRUE COPY OF THE APPLICATION FOR MEMBERSHIP /TRUE COPY/ P.S.TO JUDGE K.V.** ## **SHAJI P. CHALY, J.** -------------------------------------------------- ## **W.P.(C) No.2974 of 2017 ----------------------------------------------Dated this the 4[th] day of July, 2017** ## **JUDGMENT** This writ petition is filed by the petitioner society seeking to quash Ext.P5 circular dated 08.12.2016 issued by the 1[st] respondent, directing the petitioner to provide membership to all primary societies, if membership is sought for under Form No.31 and paying the requisite fees. Material facts for the disposal of the writ petition are as follows: 2. Petitioner is a central society registered under the provisions of the Kerala Co-operative Societies Act, 1969 (for short, 'the KCS Act'], evident from Ext.P1 approved bye-laws. According to the petitioner, the union is giving membership in the categories specified in Ext.P1 bye-laws. Clause 5.6 of Ext.P1 makes it clear that a registered society has to apply to the union for membership in the manner provided under Clause 13 of the bye-laws. From the said clause, it is seen that there is an obligation cast on an ordinary member to supply the procured milk to the union, after taking the required quantity for local consumption. In consonance with the said **W.P.(C) No.2974 of 2017** 2 stipulations in the bye-laws, the Board of Directors of the union had laid down norms for grant of membership by way of resolution as early as in the year 1997, evident from Ext.P2. It is also stated that, membership is given on application from 1997 onwards strictly following the said prescription. That apart, it is submitted that the union is functioning on the basis of the membership given to ordinary members. It is the milk that is supplied by the ordinary member which is used for supply of milk and other business activities of the union. The ordinary members of the petitioner union are primary milk cooperative societies. They are having approved bye-laws and the bye-laws of the society prescribe the qualification for membership. 3. A model bye-laws of a primary society is produced as Ext.P3. According to the petitioner, a perusal of the provisions/stipulations contained in Ext.P3 will show that there are valid restrictions incorporated in the bye-laws, making it obligatory for the members to supply the minimum volume of milk to qualify them even to participate and to cast vote in the general body of the society as an active member. Therefore, it was thought fit by the managing committee of the petitioner **W.P.(C) No.2974 of 2017** 3 union to incorporate similar provisions in Ext.P1 bye-laws. The amendment was thus notified and the general body was convened. The amendments were passed, and thereafter forwarded for registration to the 1[st] respondent, who is functioning as the Registrar of Co-operative Societies. However, instead of forwarding the resolution to the Registrar, the Deputy Director rejected the proposal, routed through him, against which an appeal was filed before the Government. The Government rejected the appeal and the same was challenged before this Court. The said writ petition was dismissed later by this Court as infructuous. 4. According to the petitioner, simultaneously, the Registrar passed an order rescinding the resolution adopted by the general body in purported exercise of power under Rule 176 of the Kerala Co-operative Societies Rules. The said order was appealed before the Government and the Government passed an order holding that, in the light of incorporation of Sec.19A in the KCS Act, the inclusion of such a clause in the bye-laws has become redundant, and thereupon, passed Ext.P4 order. According to the petitioner, the petitioner union was giving membership to the ordinary members by following 4 **W.P.(C) No.2974 of 2017** the restrictions contained in Ext.P2. Therefore, the circular Ext.P5 issued by the respondent, overlooking the restrictions contained under Ext.P2 is bad under law. These are the background facts projected by the petitioner in the writ petition. 5. First respondent has filed a counter affidavit, disputing the allegations and claims and demands raised by the petitioner. Among other contentions, it is stated that the Primary Co-operative Society in the milk marketing sector is usually called “Apcos” (Anand Pattern Co-operative Society). The Primary Co-operative Societies are the societies where the Dairy farmers pour milk on daily basis. The Primary Cooperative Society after collecting the milk from dairy farmers, hand over the balance milk, after local sale, to the Central Cooperative Society. It is the Central Co-operative society which processes the milk and makes the value added products out of the milk supplied by the Primary Dairy Co-operative Society. Thus, it is very essential and in the best interest of the dairy farmers that Primary Co-operative Society in which a dairy farmer is a member becomes the member of the Central Society also. **W.P.(C) No.2974 of 2017** 5 6. It is submitted that the Central Society like the petitioner herein were taking a defiant attitude in granting membership to Primary Dairy Society, resulting in denial of benefit to the dairy farmers. It was realizing the said aspect, the Director of Dairy Development, who is vested with powers of registration of Co-operative Societies had issued Ext.R1(a) order dated 12.03.2010, wherein, invoking the power under Sec.16 of the KCS Act, has ordered that all the Directors of the societies who had applied for membership in the petitioner society, and who has the necessary qualification provided under Sec.8A of the KCS Act and relevant provisions of the bye-laws shall be granted membership within one month. The petitioner society had challenged Ext.R1(a) before the Government and Ext.R1(a) was upheld, evident from Ext.R1 (b). Petitioner had challenged Exts.R1(a) and R1(b) before this Court in W.P.(C) No.4959 of 2011, which was dismissed on 25.02.2015 as infructuous. 7. That apart, it is contended, as a part of the design to deny membership to the primary Dairy society, the petitioner had decided to put some conditions and stipulations in addition to the provisions of the bye-laws of the society and 6 **W.P.(C) No.2974 of 2017** Ext.P2 was passed. However, Ext.P2 resolution in respect of the bye-law is not registered in accordance with the KCS Act and the Rules. Therefore, Ext.P2 is not in force. That apart, the Director of Dairy Development, as per proceedings dated 06.08.2010 has rescinded Ext.P2 bye-laws as per Ext.R1(c). It is submitted that, in view of the amendment of the Cooperative Societies Act, introducing Sec.19A, the Government as per Ext.P4 order has observed that Ext.R1(c) order has become infructuous. It was thereupon that the appeal filed by the petitioner society was disposed of in view of Sec.16A of the KCS Act. Section 19A provides that no member of the society shall exercise the right of a member, if he did not follow stipulation in Sec.16A. It is on the basis of the said amendment, Ext.P4 order was passed. There is no relevancy as regards the membership in the Central Society is concerned, since the members of the societies are only Primary Co-operative Societies, and since Ext.P2 is not registered, the same is not in force. The petitioner society continued the denial of membership to the Primary Co-operative Societies, resulting in loss of benefits granted by the Government to the dairy farmers. It was under the said factual circumstances, **W.P.(C) No.2974 of 2017** 7 Ext.P5 circular was issued by the 1[st] respondent. 8. That apart, it is contended that, as per Sec.12(1) of the KCS Act, no amendment to any bye-law of a society shall be valid unless such amendment has been registered under the Act. Therefore, consequent to non-registration of Ext.P2, petitioner cannot lay down any resolution stipulating the norms for the grant of membership against the Act, Rules and Byelaws. Therefore, according to the respondent, there is no basis for the petitioner in attacking Ext.P5 directions issued by the 1[st] respondent. 9. The second respondent was impleaded as per the order in I.A.No.7990 of 2017, and the learned counsel appearing for the 2[nd] respondent also addressed arguments, supporting the stand adopted by the 1[st] respondent. 10. Heard learned counsel for the petitioner, Sri. George Poonthottam, learned Additional Advocate General, Sri. Ranjith Thampan, and the learned counsel for the additional 2[nd] respondent, Sri. M. Sasindran. Perused the documents on record and the pleadings put forth by the respective parties. 11. Learned counsel for the petitioner addressed the argument basically contending that Ext.P5 circular is issued 8 **W.P.(C) No.2974 of 2017** apparently on the basis of power conferred under Sec.66(5) of Act, 1969. According to the learned counsel, Sec.66 deals with supervision and inspection and there is no general power conferred on the 1[st] respondent to issue any directives contained in Ext.P5 circular. It is also submitted that, Ext.P2 is a resolution passed by the petitioner society in the year 1997, and ever since, membership is granted to the primary societies in accordance with the stipulations contained thereunder. Therefore, when the petitioner is functioning as a democratic body, the 1[st] respondent has no manner of power to direct the petitioner to grant membership to any persons who makes an application. The petitioner is vested with ample powers to provide stipulations in order to grant membership, and therefore, the directions issued under Ext.P5 circular cannot be sustained under law. 12. That apart, it is contended that, as per Sec.8A of Act, 1969, the manner in which an application for affiliation is to be considered is dealt with. Sub-section (2) of Sec.8A enables the apex society or central society to consider an application for affiliation and take a decision within sixty days, and on non-consideration of such applications within the time **W.P.(C) No.2974 of 2017** 9 stipulated alone, a society is entitled to get deemed membership. Therefore, according to the learned counsel, the direction contained in Ext.P5 circular cannot be sustained under law. 13. _Per contra_ , learned Additional Advocate General submitted that the directions contained in Ext.P5 even though seen issued under Sec. 66(5), it is actually invoking the power conferred under Sec.66A of the KCS Act, the directions are issued. Therefore, the contention advanced by the learned counsel for the petitioner with respect to the said aspect cannot be sustained under law. That apart, it is contended, the petitioner cannot rely on Ext.P2 in order to grant membership for the reason that Ext.P2 resolution adopted and stipulations created is not approved by the 1[st] respondent. It is also contended that, there is no enabling power conferred under Ext.P1 bye-laws of the petitioner society to create any such stipulation as contained in Ext.P2 in respect of providing membership to any primary society. Every amendment or stipulation pursuant to any provision in a bye-law are to be approved by the Registrar concerned, is the paramount contention advanced by the learned Additional Advocate 10 **W.P.(C) No.2974 of 2017** General. Therefore, according to the respondents, Ext.P5 circular issued by invoking the power conferred under Act, 1969 is in order. 14. Learned counsel appearing for the additional 2[nd] respondent supported the arguments advanced by the learned Additional Advocate General. Further, learned counsel has invited my attention to the judgments of this Court in ' _**Trivandrum District Co-operative Bank Ltd. v. State of Kerala**_ ' [1992 (1) KLT 381] and ' _**Aji v. State of Kerala'**_ [1995 (1) KLT 363 (FB)]. According to the learned counsel, there is ample power available to the Registrar, to issue necessary directions under Sec.66 also. 15. On evaluating the respective submissions made across the Bar, I am of the considered opinion, the consideration of contentions raised in the writ petition confines to Ext.P2. It is on the basis of Ext.P2, petitioner contends that there is no manner of power vested with the 1[st] respondent to issue Ext.P5 circular. Apparently, Ext.P2 is not approved by the Registrar, even though petitioner has a case that the same is not a resolution passed to amend the bye-law, there is no power vested with the petitioner under Ext.P1 bye-law to 11 **W.P.(C) No.2974 of 2017** create any such stipulation in respect of providing membership to primary societies. That apart, approval of amendment sought to the bye-laws was declined by the Registrar and which has attained finality as per Ext.P4 order passed by the Government, subject to the challenge made against the order of the Director of Diary Development dated 06.08.2010, in W.P.(C) No.4959 of 2011. However, the said writ petition has also attained finality consequent to its dismissal on 25.02.2013 as infructuous. Therefore, reliance made on Ext.P2 to find fault with Ext.P5 circular cannot be sustained at all. On a reading of Sec.66A of the KCS Act, it is evident that the Registrar is vested with powers to issue general directions and guidelines to any or all of the Co-operative societies in furtherance of the purpose of the Act or for implementing the Government policies for the benefit of the members and the general public. It is clear from Ext.P1 bye-laws that a membership is to be provided to a primary society in accordance with the terms of the bye-laws. There is no enabling powers conferred on the petitioner society to create further stipulations in the matter of granting membership. Therefore, the power assumed by the petitioner over and 12 **W.P.(C) No.2974 of 2017** above the power conferred under Ext.P1 bye-laws, relying on Ext.P2 cannot be sustained under law. 16. Viewed in that circumstances, petitioner is bound to provide membership in accordance with Clause (5) of the byelaws, and the stipulations as per Ext.P2 is an infraction to the provisions contained under Ext.P1 bye-laws, and the provisions of Act 1969 and the rules thereto, and it was in that circumstances, the 1[st] respondent interfered with the modalities adopted by the 1[st] respondent and issued Ext.P5 circular. Therefore, it cannot be said that the direction contained in Ext.P5 circular is illegal or arbitrary in any manner. It is due to the conduct of the societies insisting for complying with the stipulations over and above the provisions of bye-laws and Act and Rules only, Ext.P5 circular happened to be issued. In that view of the matter, I do not find any reason to interfere with Ext.P5 circular issued by the 1[st] respondent. Sequel to the above discussion is, writ petition fails, accordingly it is dismissed. **SHAJI P. CHALY JUDGE** St/29.06.2017