CHANNAPPA Vs. SECRETARY GOVT OF KARNATAKA

JUDGEMENT

(1.) I have before me a clutch of writ petitions numbering about a dozen but the point to note is all of them have for their target a notification of the State of Karnataka purported to have been issued in exercise of the powers conferred under Section 121 of the Co-operative Societies Act, 1959 (hereinafter referred to as 'the Act'). Government having taken power under the aforesaid Section proceeded to exempt a large number of individual members of co-operative societies as also the societies themselves from the operation of sub-clauses (a-1) and (b)(iv) of Sub-Section (2) of Section 20 of the Act stating further that the exemption, so ordered, shall remain in force up to and inclusive of 30th December, 1991 and upon its expiry the provisions of the said Section shall stand revived. I must mention the said order is dated the 23/09/1990. Earlier to the passing of the order afresh Government had passed two other orders one on the first occasion i.e. on 28/05/1990 and another on the second occasion i.e. on 22-7-1991 both of which carried the same directive as found in the order dated 23/09/1991, the only difference being that the two earlier orders referred to above limited themselves to Agricultural Credit Co-operative Societies and Primary Agriculture and Rural Development Banks whereas the last of the notifications dated 23/09/1991 is a proclamation of further amnesty with particular reference to individual members of a co-operative society. The three notifications appear very innocuous in nature issued in a routine fashion but the petitioners claim that they have a far-reaching effect and could lead to a total degeneration in the quality of Administrators ushered-in to occupy pivotal positions in a co-operative society through elections that were already in the offing. Some of the far-sighted members and directors of the societies becoming restive, and realising that there was every likelihood of societies being swamped and over-run by people who had defaulted in the payment of their dues which the Act treats as a cardinal sin, have come up with these writ petitions challenging the validity and correctness of the three notifications and praying for quashing them, holding them to be ultra vires of the powers of the Government, ultra vires of the Constitution of India as made without taking into account the fall-out from the game-plan they had adopted. The petitioner, therefore, say if not for anything else at least on the ground that the Government has failed to apply its mind to the need for taking power from an abundant source like Section 121 of the Act, for issuing notifications to suspend the operation of Section 20 of the Act should be quashed and rendered ineffective.

(2.) The facts mentioned supra hold good for all the writ petitions but, however, for the purpose of convenience I would in the course of this judgement refer to the facts enumerated in W.P. No. 27979 of 1991. The petitioner herein is one of the Directors of the Karnataka State Co-operative Agriculture and Rural Development Bank. He has taken up cudgels against the impugned notifications because, he says, he is anxious to ensure that only qualified persons will vote and contest the elections to usher-in the new committee of management of the bank in question. He wants to make sure that persons who had defaulted in payment of their dues are not allowed to either vote in. or contest the elections. He points out, notwithstanding the bar imposed by Sec. 20 of the Act, 90% of the Taluk level bank, who had defaulted in making the payments due from them and therefore ineligible to either vote in or contest the elections would now be free to do both, in virtue of the suspension of the operation of Sec. 20 under the impugned notification. This, according to the petitioner, is a case of misguided sympathy or if it was not that, it is a case of undue anxiety to pack these positions of power with the votaries of the Government in power. He, therefore, says that this was clearly a case of Government conferring a largesse on people who were not merely undeserving but were thoroughly unqualified to receive the benefaction showered on them by the unmerited though magnamonious act of Government in suspending the operation of Sec. 20 of the Act. The last ground of attack against the impugned notifications is based on Art. 14 of the Constitution. The petitioner claims that the impugned notifications offend Article 14 of the Constitution being instances of arbitrary and capricious exercise of power. It is urged that Government cannot by a stroke of the pen, without due application of mind to the facts and circumstances of the case extend a benefit to all and sundry although the statute itself confines exercise of that power in that behalf within certain limits. It is pointed out if the grass-root banks themselves were ineligible to vote and contest the elections their nominees could not profess to act on their behalf as it would then make the entire exercise a mockery in the eye of law, for reasons mentioned as aforesaid the petitioner asks that exercise of omnipotent power by Government under Sec. 121 be struck down.

(3.) The chief contestant in these writ petitions is the State. Appearing through the learned Advocate General it has produced a statement of abjections wherein apart from pointing out that the crusade against the notifications is a waste of fuselage because a similar notification had been upheld by the Supreme Court. Not only that, it is said even this Court has affirmed the constitutional validity of the aforesaid Section. Then it goes on to justify the impugned notifications urging inter alia the facts and circumstances under which the said notifications came to be made. It is averred that somewhere in the year 1990 the Government of India came up with a scheme to wipe out rural indebtedness. The salient features of that programme was that individual members who had borrowed small sums not exceed, Rs. 10,000/- subject to certain other conditions and requirements would be exempt from repaying the said loan, with the Government of India agreeing to bear 50% of the debt provided the respective State Governments agreed to make themselves responsible for the other moiety. The Government of India also called upon such of those States concurring with the scheme as aforesaid to draw up a similar scheme so that the laudable motive of relieving rural indebtedness could be brought to fruition. This feeler by the Government of India to the State Governments asking them to formulate a scheme on the foregoing lines raised the hopes of the poverty-striken rural debtors who thought that massive dosage of financial assistance being round the corner pouring in through the twin inlets of the Center and the State, it would be just a matter of time before ah their debts stood wiped out completely by the generosity of the Central and State Governments, the upshot however was that individual members of the societies and the gross-root level co-operative banks became slack in repayment of loans so much so most of the individual members and most of these banks became in no time defaulters under the Act. The immediate fall-out was, the indebted grass-root level banks were by the operation of Section 20 of the Act rendered ineligible overnight to send their representatives to the lead banks and as a result the lead banks who depend on these representatives for forming their committees of management would find themselves placed in a piquant situation without the services of these representatives. Both alarmed and distraught by this state of affairs, Government felt that it had no option except embarking upon a massive programme of resurrecting the overwhelming number of defaulters both human and institutional so that they could go to the conclave of the higher echelons of the Co-operative Societies to vote and contest for places in the management of the primary banks. The only way of ushering in the above transformation was to remove the ban imposed by the Legislature under Section 20 of the Act and only to achieve that end, the State maintains, the Government had resorted to drawing power from Section 121 to remove the blanket ban under Section 20 vis a vis a defaulter in order to pass the impugned notifications. It is contended that Government had no other purpose in mind and much less any sinister design or desire to make the institutions and individual members their own tools pliable at their will and pleasure. The Government, therefore, asks the notifications be saved and the writ petitions dismissed.