Judgment:
P.K. Shamsundar, J.
1. This writ petition is by a group of 15 petitioners all claiming to be the elected directors of two co-operative societies, viz., the Karnataka State Silk Handloom Weavers Co-op. Apex Ltd., Bangalore and the Karnataka State Cotton Handloom Weavers Co-op. Apex Ltd., Bangalore. They are seriously aggrieved by an order of the Additional Registrar of Co-operative Societies dated June 29, 1992, vide annexure 'A' under which the learned Registrar who is a party respondent in this writ petition (R2) ordered the amalgamation of the two societies referred to supra who are incidentally respondents Nos. 4 and 5 herein and in their places brought out a new society called the Karnataka Co-operative Handloom Weavers Federation Ltd., Bangalore, who is the third respondent in this writ petition. Challenging the order of the second respondent, Additional Registrar as aforesaid, the erstwhile directors of the two societies, i.e., some of them have made a serious grievance of the action taken by the second respondent to wipe out from existence the two societies, i.e., the further and fifth respondents, both of whom had been created due to the initiative of a large number of members of the two societies that had been in existence probably from quite some time.
2. The second respondent has since thought it fit to order a function of the two societies referred to above on the ground that the same was essential in public interest as well as in the interest of co-operative movement. The operative portion of the second respondent's order is as follows :
'Under these circumstances, I am satisfied that it is essential in public interest and in the interest of the co-operative movement to amalgamate these two Apex Weavers Co-operative Societies and to form a single Apex Society. Hence, I pass the following order.
ORDER
In exercise of the power vested in me under section 14A of the Karnataka Co-operative Societies Act, 1959, I, L. R. Lewis, Additional Registrar of Co-operative Societies (Industrial and Miscellaneous), Bangalore, hereby order the amalgamation of the Karnataka State Cotton Handloom Weavers Co-operative Apex Society Ltd., 'Nekar Bhavan' No. 49, Model House Street, Basavangudi, Bangalore-4 and the Karnataka State Silk Handloom Weavers Co-operative Apex Society Ltd., Sampangiramanagar, Bangalore-27 and register the new Apex Weavers Co-operative Society in the name and style 'The Karnataka Co-operative Handloom Weavers Federation Ltd.', Nekar Bhavan, No. 18, Model House Street, Basavangudi, Bangalore-4, under registration No. IND-2/52/RGN/17338/92-93, dated June 29, 1992. The registrations of the Karnataka State Cotton Weavers Co-operative Apex Society Ltd., Bangalore and the Karnataka State Silk Weavers Apex Society Ltd., Bangalore, are hereby cancelled.'
3. The order is one apparently passed in exercise of the powers of respondent No. 2 under section 14A of the Karnataka Co-operative Societies Act, 1959 (hereinafter referred to as 'the Act'), which reads :
'14A. Power to direct amalgamation, division and reorganisation in public interest. - (1) Notwithstanding anything contained in this Act or the rules made thereunder and the bye-laws of the co-operative societies concerned, where the Registrar is satisfied that it is essential in public interest or in the interest of co-operative movement or for the purpose of securing the proper management of any co-operative society that any two or more co-operative societies should be amalgamated to form a single co-operative society or any co-operative societies should be amalgamated to form a single co-operative society or any co-operative society should be reorganised, then, the Registrar shall order the amalgamation, division or reorganisation of such co-operative societies.'
4. I may also mention section 15 of the Act with particular reference to sub-clause (2) thereof which reads :
'15. Cancellation of registration certificates of co-operative societies in certain cases. - . . . (2) Where two or more co-operative societies are amalgamated into a new co-operative society in accordance with the provisions of section 14 (or section 14A), the registration of each of the amalgamating societies shall stand cancelled on the registration of the new society and each such society shall be deemed to have been dissolved and shall cease to exist as a corporate body.'
5. The order of the learned Additional registrar challenged herein as mentioned hereinbefore, appears to rest on the purported investigation made by the learned Additional Registrar in relation to the business turnover of both the societies funded as they were by the State Government quite generously as could be seen from the impugned order. It may be noticed from the impugned order that the petitioner-society had incurred losses from the years 1982-83 to 1991-92 in sums ranging from Rs. 11,680.25 ending with the sum of Rs. 25,12,694.47. The order points out to the failure of the societies in improving their turnover annually, vis-a-vis the huge accumulated losses, inter alia, the other commissions like failure in the maintenance of accounts, etc. The relevant portion of the impugned order deservedly merits being excepted, for the sake of convenience and reads as follows :
'Year Turnover Loss(Rs.) (Rs.)1982-83 243.84 11,680.251983-84 322.28 21,70,541.411984-85 240.33 7,47,616.541985-86 207.72 22,24,910.471986-87 187.42 15,41,430.66 (tentative)1987-88 152.63 11,27,317.35 '1988-89 132.93 20,14,284.25 '1989-90 9,58,509.76 '1990-91 110.79 16,67,284.821991-92 129.08 25,12,694.47
6. The society has incurred huge accumulated loss of Rs. 1,49,76,039.98 (tentative) as on March 31, 1992. The society had opened 76 show rooms but it had to close down 32 show rooms. The sales in the remaining 44 show rooms have also not been encouraging.
7. As per the provisional balance-sheet of the society for the year 1991-92, the stock shortages recoverable are to the tune of Rs. 13.12 lakhs and the cash shortages recoverable are to the tune of Rs. 2.77 lakhs.
8. Out of the total reserve found of Rs. 6,56,632, the society has invested Rs. 66,300 only outside the business and the rest of the amount has been utilised in the business of the society, without prior permission from the Registrar of Co-operative Societies in Karnataka, Bangalore, as required under rule 23(2) of the Karnataka Co-operative Societies Rules, 1960. The society has violated all norms fixed for recruitment of staff, and has appointed them far in excess of requirement.
9. The accounts are not properly maintained as a result of which the audit of the society is in arrears from 1986-87.
10. The society has, therefore, miserably failed to achieve the objects for which it was organised.
11. The Karnataka State Silk Handloom Weavers Co-operative Society was registered, vide No. RCS/1621/1955-56, dated March 5, 1956, with the main objective of improving the silk handloom industry and to improve the economic condition of the silk handloom weavers. To achieve this end the State Government has been granting liberal financial assistance to this society in the form of share capital, loan, subsidy and rebate on sales, etc. The assistance released so far is indicated below :
(Rs.)Share capital 73,25,944.00Loan 18,54,175.00Subsidy 1,10,408.53Rebate from 1984-85 to 1988-89 49,25,230.00Subsidy for market development 1,67,441.85
12. In spite of the liberal financial assistance given by the Government this society has failed to achieve its objectives and to help its member-societies and the weavers.
13. Since 1985-86, the society is running under loss and as per tentative figures made available it has incurred huge accumulated loss of Rs. 93,86,258,29 as on March 31, 1992, as indicated hereunder :
Year Loss(Rs.)1985-86 28,56,839.271986-87 25,89,316.441987-88 14,88,312.371988-89 7,18,663.501989-90 2,73,503.461990-91 3,66,527.921991-92 2,58,233.15--------------Total 93,86,258.29--------------
14. Due to serious irregularities the committee of management of the society was taken over by the Government under section 30A of the Karnataka Co-operative Societies Act, 1959, and a special officer was appointed on December 24, 1986. But the elected committee was constituted on May 31, 1990, and the management was handed back by Government. Even after this, the irregularities were not rectified and the weavers could not be assisted to the extent required.
15. The business of the society came down year after year as indicated hereunder :
(Rs.)1986-87 1,07,04,719.901987-88 42,67,245.851988-89 31,13,016.101989-90 12,56,484.001991-92 25,72,804.00 As per the provisional balance-sheet of the society for the years 1991-92, the stock and cash shortages recoverable are to the tune of Rs. 45,531.86, for which the society has not taken tangible action.
The working of these two apex co-operative societies in the State has not helped the weavers of primary weavers societies and consequently the number of weavers on the looms covered is getting reduced year after year.
Losses incurred in both the institutions are also increasing year by year and affecting the lives of weavers.'
16. The ground in regard to the other society, namely, the Karnataka State Silk Handloom Weavers Co-operative Apex Ltd., has now changed resulting in the essaying of a new society, the Karnataka Co-operative Handloom Weavers Federation Ltd. It is apparent from the impugned order that the track record of the Silk Handloom Weavers Co-operative Apex Ltd. was no better than that of the Cotton Handloom Weavers Co-operative Apex Ltd. Referred to earlier. The relevant portion of the order highlighting the losses run up by the Silk Handloom Weavers Society, whose management was placed under a special officer under section 30A of the Karnataka Co-operative Societies Act, 1959, pursuant to an order made in that behalf on December 24, 1986, indicates that notwithstanding the spell of administration by the special officer that apparently came to an end on May 31, 1990, in the wake of which the management was handed over back to the people's representatives had not brought the Silk Handloom Society out of the woods.
17. The order then goes on to probe into the ways and means of putting the society on its feet. Ultimately, it comes to the conclusion that the only way in which both the societies can flourish is by pooling them together by an order of amalgamation made under section 14A of the Act and, in consequence, to usher the birth of a new incarnation that could take care of both the societies and their trading activities such as cotton weaving and silk weaving as well. The off-shoot is the founding of a new society called the Karnataka State Co-operative Handloom Weavers Federation, respondent No. 3 in this writ petition. The operative portion of the impugned order works out the modalities of bringing into the limelight the new society. For the sake of facility making for concluding, the impugned order, I may refer to the operative portion thereof which reads :
'Under the circumstances, I am satisfied that it is essential in public interest and in the interest of the co-operative movement to amalgamate these two apex weavers co-operative societies and to form a single apex society. Hence, I pass the following order :
ORDER
In exercise of the powers vested in me under section 14A of the Karnataka Co-operative Societies Act, 1959, I, Lewis (L. R.), Additional Registrar of Co-operative Societies, (Industrial and Miscellaneous) Bangalore, hereby order the amalgamation of the Karnataka State Cotton Handloom Weavers Co-operative Apex Society Ltd., 'Nekar Bhavan', No. 49, Model House Street, Basavangudi, Bangalore-560 004, and the Karnataka State Silk Handloom Weavers Co-operative Apex Society Ltd., Sampangiramanagar, Bangalore-560 027, and register the new Apex Weavers Co-operative Society in the name and style of 'The Karnataka Co-operative Handloom Weaves Federation Ltd.', Nekar Bhavan, No. 18, Model House Street, Basavangudi, Bangalore-560 004, under Registration No. IND-2/52/RGN/17338/92-93, dated June 29, 1992. The registrations of the Karnataka State Cotton Weavers Co-operative Apex Society Ltd., Bangalore and the Karnataka State Weavers Apex Society Ltd., Bangalore are hereby cancelled.
The assets and liabilities of these two co-operative societies shall vest with the Karnataka Co-operative Handloom Weavers Federation Ltd., Bangalore, from the date of this order.
All rights, powers, claims, demands, interests, authorities, privileges, benefits if existing on the date of this order shall transfer to the new society.
If on the said date any suit, appeal or other legal proceedings of whatever nature by or against the transferor societies is pending the same shall not abate or be discontinued or be in any way prejudicially affected, but shall be prosecuted and enforced by or against the transferee society.
The employees of the transferor societies shall continue in service and be deemed to have been appointed by the transferee society at the same remuneration and on the same terms and conditions of service as were applicable to them in the respective societies.
The department of co-operative audit has to take action to prepare the consolidated assets and liabilities statement as on the date of amalgamation.
The bye-laws of the transferee society appended to this order, at enclosure 'I' are approved and registered.
The first board of directors including the chairman are nominated as per enclosure 'II', appended to this order. Sri. V. Govinda Reddy, Joint Registrar of Co-operative Societies, Bangalore Division, Bangalore, is appointed as the managing director of this federation.
This order comes into effect from the date of issue. This order is issued under my hand and seal this the 29th day of June, 1992.'
18. I am to notice that following the aforesaid order made under section 14A of the Act resulting in the amalgamation of the two different societies, the erstwhile entities after their merger would automatically lose their registrations as enjoined by section 15(2) of the Act, which reads :
'Where two or more co-operative societies are amalgamated into a new co-operative society in accordance with the provisions of section 14 or section 14A the registration of each of the amalgamating society shall stand cancelled on the registration of the new society, and each society shall be deemed to have been dissolved and shall cease to exist as a corporate body.'
19. I must in this context advert to section 8 of the Act which pertains to issuance of a registration certificate by the registrar following the registration of a co-operative society under the Act. Section 8 makes it clear that the certificate of registration signed by the Registrar is conclusive evidence that the co-operative society mentioned therein is a society duly registered under the Act. The position, therefore, is that where a society is registered and a registration certificate is issued under section 8, such certificate is proof presumptive of the existence of the society and the end of such society is spelled out by clause (2) of section 15 of the Act cover the registration of the society being cancelled following the merger of two societies into one (sic).
20. I am to notice that in the course of the impugned order (annexure A) reference is made to the cancellation of the registrations of the Karnataka State Cotton Weavers Co-operative Apex Society Ltd., Bangalore and the Karnataka State Silk Weavers Apex Society Ltd., Bangalore. Therefore, it becomes clear that the two societies referred t supra have ceased and their registration certificates cancelled under section 15(2) of the Act.
21. On this development, it does seem to me, a very piquant situation arises, Nearly as many as 15 petitioners, some of them directors and some of them ordinary members of the two societies, i.e., fifth and sixth respondents, are relentlessly baffled against the amalgamation order at annexure A when the wind is taken out of their sails following the order made under section 15(2) of the Act cancelling the registration of the fourth and fifth respondent-society.
22. The order under section 15(2) follows in the wake of an order made under section 14A, being a necessary concomitant of an order of amalgamation passed under section 14A. In this case, we find that the Registrar has made an order has made an order cancelling the registration of both the said societies as could be seen from annexure A.
23. As a sequel to the foregoing development, the thing to be noticed is that whether it is part of an order under section 14A or it is otherwise. An order under section 15(2) which follows an order under section 14A in my view, entails a separate challenge to action taken under section 15(2) and no such challenge being in the offing although the impugned order of merger is challenged on a medley of other grounds.
24. It, therefore, seems to me that it is futile to malign an order under section 14A like the one under annexure A when it is already superimposed by an order made under section 15(2) as well. There is no gainsaying that the society and its members must co-exist and that one cannot live without the other. In a case where the society itself is rendered non est factum in the eye of law, those who were members of that society can hardly contend against any action taken by the authority under the Act to the detriment of the society. If the society does not exist at all, it vainly leans on the erstwhile members who raise the banner of revolt against the offending order. This in fact was the in limine objection raised by the learned Advocate-General who contented that this writ petition questioning the amalgamation of the two societies is indeed a futile venture with these societies having become extinct with their registration certificates being cancelled under section 15(2) of the Act, and, therefore, the erstwhile members struggle in vain in challenging the order of amalgamation made under section 14A of the Act. The argument, simple in substance, suggesting that the society cannot exist without a committee of management, deserves to be upheld.
25. Reference in this context may be made to section 28 of the Act which reads :
'28. Special general meeting. - (1) The committee of a co-operative society may at any time call a special general meeting of the society and shall call such meeting within one month after the receipt of a requisition in writing from the Registrar or from such number of persons or a proportion of the total number of members as may be prescribed :
Provided that in case of requisition in writing from the Registrar of Co-operative Societies to convince the special meeting, the powers of the committee under this sub-section may be exercised by the President of the society on behalf of the committee.'
26. The provisions referred to supra under which a committee of management constituted in accordance with the Act indicates that the right of management of a co-operative society is vested in the committee. But then whether the right of such a committee to manage the society subsists or continues when the society itself is no longer alive and breathing is indeed a pertinent question. In such circumstances, it seems to me the learned Advocate-Generals' submission raising an in limine objection and the action taken to cancel the registration under section 15(2) is well founded. The effect of cancellation of registration certificates of the societies, i.e., respondents Nos. 4 and 5 would certainly render the challenge by the erstwhile members of these societies wholly unwarranted and ill-advised. Thus the members can speak only through the society, is what the Supreme Court said in the course of the decision in Daman Singh v. State of Punjab, : [1985]3SCR580 :
'...... Once a person becomes a member of a co-operative society, he loses his individuality qua the society and he has no independent rights except those given to him by the statute and the bye-laws. He must act and speak through the society or rather, the society alone can act and speak for him qua rights or duties of the society as a body. So if the statute which authorises compulsory amalgamation of co-operative societies provides for notice to the societies concerned, the requirement of natural justice is fully satisfied. The notice to the society will be deemed as notice to all its members. That is why section 13(9)(a) provides for the issue of notice to the societies and not to individual members. Section 13(9)(b), however, provides the members also with an opportunity to be heard if they desire to be heard. Notice to individual members of a co-operative society, in our opinion, is opposed to the very status of a co-operative society as a body corporate and is, therefore, unnecessary. We do not consider it necessary to further elaborate the matter except to point out that a member who objects to the proposed amalgamation within the prescribed time is given by section 31(11), the option to walk out, as it were, by withdrawing his share, deposits or loans, as the case may be.
27. The question raised therein was about the non-issuance of notice to the members of a society amalgamated under the provisions of the Punjab Co-operative Societies Act. Rejecting the contention that notice to the members was unnecessary provided notice had been issued to the affected society their Lordships pointed out that if any member was opposed to the merger move of a particular society, all the member should do is to shun the proposed arrangement by withdrawing his share deposits or loans, etc., as the case may be.
28. Incidentally their Lordships also observed that an order pertaining to amalgamation of a co-operative society if made in the interest of the society is bound to be treated as done in public interest as well. Their Lordships observed in that behalf as follows (at page 979 of AIR 1985 SC and page 11 of 60 Comp Cas) :
'.... This submission is no more than a play with words. The very philosophy and concept of the co-operative movement is impregnated with the public interest and the amalgamation of co-operative societies when such amalgamation is in the interest of the co-operative societies is certainly in the public interest or can only be to secure the proper management of the societies. The argument of learned counsel is an attempt at hair-splitting and is rejected.'
29. The decision in Daman Singh's case, : [1985]3SCR580 , literally takes away all sting from the petitioners' challenge. The in limine objection raised by the Advocate-General turning them literally into damp squibs. But then I do not propose to reject this writ petition on the in limine ground touching its tenability, as urged by the learned Advocate-General; instead I will go on to consider the submissions made by Sri Shetty for the petitioners.
30. To summarise his contentions, they are : (1) Sub-section (1A) of section 14A of the Act denies an opportunity of being heard to the affected societies or persons concerned, is violative of article 14 of the Constitution and therefore liable to be struck down; (2) that the impugned order does not disclose any objective basis with reference to which it could be sustained as warranted either on the ground of public interest or on the grounds of advancing the co-operative movement, etc.; and (3) respondent No. 2 who passed the impugned order was earlier a member of board of directors of respondents Nos. 4 and 5 society and, therefore, he could not have presided over the dissolution of the two societies by passing an amalgamation order under section 14A since it would be an order by a person definitely biased and prejudiced.
31. These are the three contentions urged by Sri Shetty and I shall deal with them seriatim. I must at this stage refer to the statement of objections filed on behalf of respondents Nos. 1 and 2, the State of Karnataka and the Additional Registrar.
32. In paras 2 and 3, a reference is made in great detail to the losses sustained by respondents Nos. 4 and 5 years after year. It is pointed out that the Karnataka State Cotton Handloom Weavers Co-operative Society, respondent No. 4 had accumulated a loss of Rs. 1,49,76,039.98 as on March 31, 1992, and the loss of the Karnataka Silk Handloom Weavers Co-operative Society Ltd., respondent No. 5 aggregated to Rs. 93,86,258.29 and this would not mention the stock and cash shortages recoverable by both the societies in huge sums.
33. Para 4 of the objection statement refers to the failure of the two societies to assist the primary weavers for whom the societies were created and Government's subsidy was made available.
34. Reference is then made to the theoretical evaluation of the working of the two societies with a view to ascertain ways and means of putting them on their feet and as a result it is pointed out that the only way subsisting to the two societies is to file them together and to amalgamate them by converting into a one single larger unit now named as the Karnataka co-operative Handloom Weavers Federation Ltd., respondent No. 3.
35. The main allegations made by the petitioners in the writ petition having been traversed and denied pointing out that the Karnataka Co-operative Handloom Weavers Federation Ltd. may have incurred heavy loss of thousands of rupees during the tenure of the special officer but the same when compared with loss incurred to the tune of Rs. 95.61 lakhs when the elected body was in officer could not have deterred the Registrar from passing an order of amalgamation.
36. It transpired that the cotton society was for a long time under the management of the special officer, i.e., from October, 1984, to May, 1990, and during the excellent management of that special officer the said society also incurred loss, according to the petitioner in the sum of Rs. 95,000 and according to the Government it was Rs. 95,00,000. Be that as it may, the question is not whether the society failed to improve when it was under the management of the special officer acting under section 30A of the Act.
37. I need hardly mention that there has been appointment of a special officer consequent upon the mismanagement of the society by those elected to the society. Suffice to notice that both the societies had incurred huge losses when they were under the management of the special officer and also when they were managed by the elected representatives as well. It is common ground that the two societies are generously funded by the State Government as a consequence when there is total failure to gear up the machinery of a society for the betterment of the weavers for whose benefit the societies were brought into being and funded generously by the State by pumping large sums of money by way of subside, probably little blame can be attached to the step taken to amalgamate the two societies under section 14A of the Act when a stage had come when the losses sustained being totally unbearable and they were left with no means of mopping those losses, following continued mismanagement of the society by the members or by the special officer whoever they are. This in substance is the story put forward by respondents Nos. 1 and 2 in their statement in opposition to the allegations made by the petitioners in the writ petition.
38. From the back-drop of this factual data gathered from the petition as well as the counter-affidavit, I propose to deal with the contentions of Mr. Shetty, for the petitioners.
39. The first submission of Mr. Shetty is that sub-section (1A) of section 14A of the Act is violative of article 14 of the constitution of India.
40. In order to decide this submission of Mr. Shetty, it is not necessary to reproduce again the whole of section 14A in its entirety and it would suffice for the moment to excerpt that part of it with the built in provisions of sub-section (1A) and section 14A of the Act :
'14A. Power to direct amalgamation, division and reorganisation in public interest. - (1) Notwithstanding anything contained in this Act or the rules made thereunder and the bye-laws of the co-operative societies concerned where the Registrar, is satisfied that it is essential in public interest or in the interest of co-operative movement or for the purpose of securing the proper management of any co-operative societies that any two or more co-operative societies should be amalgamated to form a single co-operative or any co-operative society be divided or any co-operative society should be reorganised then, the Registrar shall order the amalgamation, division or reorganisation of such co-operative societies :
Provided that in case of a co-operative bank no order under this sub-section shall be made without the previous sanction in writing of the Reserve Bank.
(1A) Before making an order under sub-section (1), it shall not be necessary for the Registrar or any other officer to give any co-operative society or person likely to be affected by such order an opportunity of making representation or of being heard.'
41. The above provision no doubt makes it clear that it is neither necessary nor requisite to hear the affected societies or anybody else whoever may be affected by an order of amalgamation made under section 14A. Mr. Shetty says that the section is a gross infraction of the sacrosanct doctrine of audi alteram partem built in to wipe out arbitrariness and total caprice but even so the provision makes no other attempt at concealing its disdain to the prejudice suffered by affected persons having to bear such an order even without hearing them. At this stage Mr. Shetty raises and tells me that the argument challenging the validity of sub-section (1A) was based on the three dimensions of section 14A that can even shelter legislative action and that prima facie, any provision that denies an opportunity of being heard should necessarily be treated as being so arbitrary and capricious literally calling for being axed. Mr. Shetty again submits that in order to ascertain whether an order made under section 14A was sustainable in the light of the requirements propounded by the section itself necessarily involves a right of hearing and denial of such hearing would lead to violation of the fundamental right under article 14 of the Constitution of India. This argument would probably, have been interesting but for that fact the two decisions of this court, both by Division Benches having upheld the constitutional validity of sub-section (1A) referred to supra. It may not be out of place to point out that no court can arrogate itself to the position of super Legislature and seek to sit in judgment over a legislative fiat. The Legislature having thought it fit to limit the terrain over which it could allow a confrontation by the citizens, I am afraid, every one must be trammelled by the fiat of the Legislature and cannot rebel against it.
42. His Lordship Mr. Justice Mathew, now of revered memory, made a momentous observation in the State of Gujarat v. Sri Ambica Mills Ltd., : [1974]3SCR760 thus :
'We must be fastidiously careful to observe the admonition of Mr. Justice Brandeis, Mr. Justice Stone and Mr. Justice Cardozo that we do not 'sit as a super-Legislature' (see their dissenting opinion in Colgate v. Harvey (1935) 296 US 404 (at page 441).'
43. Bearing in mid the words of caution emanating from the apex court, a aforesaid the question arising for consideration has got necessarily to be appraised, evaluated and resolved. If the Legislature says nobody need be heard whatever be the circumstances, the court cannot say the Legislature has erred and, therefore, strike down the provision of the Constitution to ban. All said and done sub-section (1A) referred to supra, is a statutory provision nowhere was a fundamental right guaranteed under the Constitution. If an order made under section 14A is prima facie violated or is found to be unjustified the court can certainly strike it down whether or not somebody is heard or somebody is not heard in which case the circumstances of non-granting of a hearing and no giving an opportunity of being heard to an affected person would not be very material. But then this question is really no longer re integra and decided as it is by two Division Benches of this court. In this connection, I may refer to the decision in Desahally Service Co-operative Society Ltd. v. State of Karnataka, : AIR1980Kant122 . It was later followed by another Division Bench of this court in Patil (R. V.) v. State of Karnataka [1988] 1 Kar LJ 370.
44. In Desahally Service Co-operative Society's case, : AIR1980Kant122 , the question as to whether section 14A(1A) of the Act was violative of the provisions of the constitution was considered and rejected.
45. The core of the matter considered was whether the provision under section 14A(1A) of the Act merited a separate challenge after section 14A itself was upheld by a five Bench Division of this court in H. Puttappa v. State of Karnataka, : AIR1978Kant148 . After upholding section 14A, a majority of three judges struck down the impugned order made under section 14A(1A) on the ground that it violated the principles of natural justice and violative of doctrine of audi alteram partem. The other two judges struck a different note on the question as to whether the societies in question had the right to be heard before an order was made under section 14A of the Act. The minority did not subscribe to the view of the majority but even they joined the striking down the impugned order on the ground the Deputy Registrars had failed to apply their mind before making the order under section 14A of the Act.
46. Following the decision of the special Bench of five judges in H. Puttappa's case, : AIR1978Kant148 , the Karnataka State Legislature amended section 14A by adding sub-section (1A), which is impugned in this writ petition and in Desahally Service Co-operative Society's case, : AIR1980Kant122 . Repelling the attack on the validity of section 14A(1A) and in upholding the same, the Bench in Desahally Service Co-operative Society's case went on to observe thus (at page 126) :
'18. It was next contended by learned counsel that the principle of audi alteram partem embodies a well accepted principle of natural justice and that if the application of that principle is dispensed with, the provisions of section 14A of the Act providing for amalgamation of co-operative societies, should themselves be regarded as invalid. In other words, the contention of learned counsel for the petitioners was that if Legislature makes any law dispensing the application of audi alteram partem, such law itself becomes void.
19. A complete answer to the above contention is contained in the following decision of the Supreme Court in Union of India v. J. N. Sinha, : (1970)IILLJ284SC . There, Hegde J., who spoke for the court, observed thus at page 42 :
'Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. As observed by this court in Kraipak v. Union of India, : [1970]1SCR457 , 'the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words, they do not supplant the law but supplement it'. It is true that if a statutory provision can be read consistently with the principles of natural justice, the courts should do so because it must be presumed that the Legislatures and the statutory authorities intend to act in accordance with the principles of natural justice. But, if on the other hand, a statutory provision either specifically or by necessary implication excludes the application of any or all of the rules of principles of natural justice then the court cannot ignore the mandate of the Legislature or the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express would of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of the power.' From the aforesaid enunciation by the Supreme Court, it is clear that the principles of natural justice do not have a status of a fundamental right and it is competent for the Legislature to abridge or totally dispense with their application to any particular proceeding or class of proceedings. As stated in Halsbury's Laws of England (Fourth Edition), Volume I, at page 90, para 74, the rule of natural justice will not apply where Parliament has evinced an intention to include its competent authority unfettered discretionary power or by expressly providing for notice and opportunity to be heard for one purpose, but omitting to make any provision for another purpose.
20. Even so, it was contended by learned counsel for the petitioners that it was on account of the existence of the safeguard of hearing the affected co-operative societies before making an order of amalgamation, this court held in H. Puttappa's case, : AIR1978Kant148 [FB] that the conferment of power on the Registrar or Deputy Registrar under section 14A of the Act, was not unguided or arbitrary and that if the application of the principle audi alteram partem, is dispensed with, that power becomes arbitrary.
21. On an examination of the scheme of the Act and the provisions thereof, this court held in H. Puttappa's case, : AIR1978Kant148 [FB], that the conferment of power under section 14A of the Act, was not uncontrolled or unguided and that the section contained sufficient guidelines for exercise of such power. If there are such guidelines, we do not see how that power can be said to be uncontrolled or unguided merely because the obligation to hear the concerned societies is dispensed with. Thus, we are unable to accept the contention of learned counsel for the petitioners that the insertion of sub-section (1A) in section 14A has rendered the section invalid on the ground of conferment of uncontrolled or unguided power on the Registrar and Deputy Registrars.'
47. The dicta excerpted as aforesaid I need hardly mention furnishes a complete answer to the contentions raised in this writ petition challenging the validity of section 14A(1A) of the Act. It is pointed out by their Lordships that in reading and interpreting the provisions the mandate of the Legislature cannot be overlooked. In this case the Legislature intended that no right of hearing should be given to any one including the affected parties. Therefore, on the ground that such right of hearing has been denied and, therefore, the legislative provision should suffer is the argument, that was discounted by this court in Desahally Service Co-operative Society's case, : AIR1980Kant122 . Their Lordships pointed out that the right of hearing all said and done is a statutory right and does not have the pre-eminence of a fundamental right which makes all the difference between them. The decision in Desahally Service Co-operative Society's case, : AIR1980Kant122 , is followed with approval by a later Division Bench of our court in Patil (R. V.) v. State of Karnataka [1988] 1 Kar LJ 370. That was a case in which the court was invited to consider the validity of section 30A of the Act, which enjoins that an order appointing a special officer can be made and must necessarily be made without hearing anybody or any one before making such an order, their Lordships upheld that provision and inter alia noticed that a kindred provision under section 14A(1A) which is the subject-matter of consideration in this writ petition a provision in pari materia with section 30(4) of the Act had been upheld by this court in Desahally Service Co-operative Society's case, : AIR1980Kant122 , their Lordships went on to state they shared completely the view taken vis-a-vis section 14A(1A) in the other case and then went on to uphold a drastic order made under section 30A in appointing a special officer taking away the right of management from the society without hearing any one. In the context, Shivashankar Bhat J., speaking for the Bench, took an insight into the laudable object behind the formation of the co-operative societies, etc., and also considered the inter-action of the legislative fiat denying the right of hearing in the matter.
48. In this context, I deem it useful to excerpt the following paragraphs from the judgment referred to supra :
'12. Legislative competence to enact the provision is not in dispute. The argument revolved around the principle of fairness, justness and reasonableness of the procedure. These are the tests to be applied not hypothetically, fairness, justness and reasonableness of a procedural law depends upon the subject-matter of the legislation, effect of the exercise of the statutory power and the object sought to be achieved by the provisions in question.
13. A law vesting a power, exercise of which may result in the deprivation of life, liberty, property or livelihood (such as employment) may have to face a more rigorous test than a provision of law, vesting a power in the State Government, exercise of which will result in the deprivation of an effective office to participate in the management of a body like a co-operative society. . . .
17. In this connection, it was brought to our notice a similar provision excluding the application of principles of natural justice injected as sub-section (1A) to section 14A.
18. Section 14A of the Act empowered the Registrar on being satisfied that it was essential in public interest or in the interest of co-operative movement or for the purpose of securing the proper management of any co-operative society that any two or more co-operative societies should be amalgamated to form a single co-operative society or any co-operative society should be divided or any co-operative society should be reorganised, then, the Registrar shall order the amalgamation, division or reorganisation of such co-operative societies.
19. Several co-operative societies were amalgamated etc. under the provision without affording any opportunity to the concerned societies or to any person. Therefore, this court struck down those amalgamation orders as made without following the principles of natural justice. To get over the situation, sub-section (1A) was introduced giving it retrospective effect from January 20, 1976, thus, taking away the basis of the orders made by this court nullifying the several amalgamation orders, challenge to this sub-section (1A) was repelled by a Division Bench of this court in Desahally Service Co-operative Society Ltd. v. State of Karnataka, : AIR1980Kant122 . We are told that the Supreme Court rejected the prayer seeking special leave to appeal. After referring to a passage from Union of India v. J. N. Sinha, : (1970)IILLJ284SC , this court observed at page 127 :
'From the aforesaid enunciation by the Supreme Court, it is clear that the principles of natural justice do not have the status of a fundamental right and it is competent for the Legislature to abridge or totally dispense with their application to any particular proceeding or class of proceedings. As stated in Halsbury's Laws of England (Fourth Edition), Volume I, at page 90, para 74, the rule of natural justice will not apply where Parliament has evinced an intention to exclude its operation either by conferring on the competent authority unfettered discretionary power or by expressly providing for notice and opportunity to be heard for one purpose, but omitting to make any provision for another purpose.' Therefore, the contention that such conferment of power under section 14A was uncontrolled and arbitrary, was also repelled at para 21 thus : 'on an examination of the scheme of the Act and the provisions thereof, this court held in H. Puttappa's case, : AIR1978Kant148 , that the conferment of power under section 14A of the Act, was not uncontrolled or unguided and that the section contained sufficient guidelines for exercise of such power. If there are such guidelines, we do not see how that power can be said to be uncontrolled or unguided merely because the obligation to hear the concerned societies is dispensed with. Thus, we are unable to accept the contention of learned counsel for the petitioners that the insertion of sub-section (1A) in section 14A has rendered the section invalid on the ground of conferment of uncontrolled or unguided power on the Registrar and Deputy Registrars'.'
49. I am in respectful agreement with the pronouncement of the two Division Bench decisions of this court in Desahally Service Co-operative Society's case, : AIR1980Kant122 and followed by Patil's case [1988] 1 Kar LJ 370, both of which have repelled the challenge to sub-section (1A) of section 14A of the Act. This question being directly dealt with in Desahally Service Co-operative Society's case, : AIR1980Kant122 and incidentally in Patil's case [1988] 1 Kar LJ 370, it becomes clear that section 14A(1A) is a valid provision and does not offend any constitutional mandate is an aspect that is no longer res integra after having been upheld by this court on two occasions. Thus, the same being a concluded chapter, I am afraid, Mr. Shetty's attempt at throwing this issue into the arena once again is indeed a vain attempt.
50. For the reasons mentioned above, I must reject the contention challenging the validity of section 14A(1A) of the Act.
51. The second contention relates to the factum of the order itself. It cannot be said that it is not based on any material to show that the order was either made in the public or for other reasons as enjoined by section 14A of the Act. The impugned order is a self-contained code in itself. The facts cited therein, admit of no dispute at all. The order mentions huge losses run up by the management of the society both when under the control of the special officer and under the control and power of the committee of management as well. The impugned order shows that the losses run not into thousands but to lakhs of rupees. The circumstance that a special officer appointed specially by the Government under section 30A did not improve matters and he was also a fellow traveller along with the peoples representatives, is in my view, really of no consequence at all. The fact remains that both societies had got into the red and thereafter never came out into the warmth of the sunlight at all. The order mentions due to concomitant mismanagement of co-operative societies, namely, in the affairs of the societies having opened a large number of show-rooms only to close them very soon thereafter and that in both the societies the maintenance of accounts being more a casualty are in my view, features that would automatically invite action under section 14A without any hesitation or any debate. As pointed out in Desahally Service Co-operative Society's case, : AIR1980Kant122 , if the trading activity of the society cannot be said to be treated an order of amalgamation has necessarily to be made to save the societies in public interest. It year after year the societies run up huge losses and fritter away the generous subsidies provided by the State in the hope that the societies will exert to assist the poor weavers, but in the end all of it turn out to be a bad dream it would then would be time enough to cry half to this kind of sustained mismanagement leading to losses of public money and wasteful expenditure entailing the making of an order under section 14A of the Act.
52. For the reasons mentioned above, I am satisfied that a more than ample case is made out for passing an order under section 14A and the petitioners' challenge in that behalf is ill-merited.
53. The next contention is that the Allahabad Registrar who made the impugned order under section 14A was also associated with the management of the two societies of the fourth and fifth respondents. The learned Advocate-General pointed out that the charter of administrative duties assigned the task of monitoring these institutions to the Additional Registrar (Industrial and Miscellaneous) and, therefore, respondent No. 2 being the officer occupying that position had to make the order under section 14A. How long that officer was a member of the board of control of the two societies, how effectively he had functioned are aspects on which no information is available. I am, therefore, least inclined to disturb the order from the mere circumstances of respondent No. 2 having been associated for some time with the board of management of respondents Nos. 4 and 5 societies, which point therefore, also falls.
54. The last submission of Mr. Shetty is that the two societies could not have been merged, one being a cotton society and the other a silk society having two different facts and programmes of work and business making for a very curious combination, I am afraid there is really no substance in this contention. This aspect has been dealt with in the impugned order, a reference is made to the circumstance that both societies had a large number of cotton weavers and large number of silk weavers so that if the two are brought together under a common canopy, provided with enough assistance to eke out a profitable living, it is not for the petitioners to suggest that amalgamation of the two societies was a mistake. I refuse to accept this submission and hence this point also fails.
55. For the reasons mentioned above, this writ petition fails and is rejected. The interim order granted by this court stands discharged. Rule issued stands discharged. No costs.