State Of Andhra Pradesh vs Sangam Milk Producers Company ...
2021 Latest Caselaw 3295 AP

    IN THE HIGH COURT OF ANDHRA PRADESH : AMARAVATI



HON'BLE MR. JUSTICE ARUP KUMAR GOSWAMI, CHIEF JUSTICE
                                      &
            HON'BLE MR. JUSTICE NINALA JAYASURYA


                    WRIT APPEAL No.281 of 2021
                     (Taken up through video conferencing)


State of A.P. rep. by its Special Chief Secretary,
Animal Husbandry, Dairy Development and Fisheries
(Dy.&Vig) Department, Secretariat,
Velagapudi, Amaravati, Guntur District.
                                                             .. Appellant.

      Versus

Sangam Milk Producers Company Limited,
Sangam Dairy, Vadlamudi, S. Jagarlamudi,
Guntur District, Represented by its Director
and others.
                                                             .. Respondents.

Counsel for the appellant            : Mr. S. Sri Ram, Advocate General

Counsel for respondent Nos.1&2       : Mr. B. Adinarayana Rao, Sr.Counsel
                                       for Mr. Srinivasa Rao Bodduluri

Counsel for respondent No.3         : Mr. G.L. Nageswara Rao,
                                      GP for Revenue

Counsel for respondent No.4         : Mr. K. Appa Rao, Standing Counsel


Date of hearing                      : 01.07.2021

Date of judgment                     : 01.09.2021


                               JUDGMENT

(per Arup Kumar Goswami, CJ)

Heard Mr. S. Sri Ram, learned Advocate General for the appellant.

Also heard Mr. B. Adinarayana Rao, learned Senior Counsel appearing for

respondent Nos.1 and 2.

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                                                                 W.A.No.281 of 2021

2. This writ appeal is preferred against an interim order dated

07.05.2021 passed by the learned single Judge in I.A.No.1 of 2021 in

W.P.No.9279 of 2021. The operative portion of the order reads as follows:

"Therefore, this Court is of the opinion that interests of

justice would be met if the following order is passed.

1. There shall be an interim suspension of G.O.Ms.No.19 Animal Husbandry, Dairy Development & Fisheries (Dy.Vig) Department, dated 27.4.2021.

2. The 1st petitioner shall be entitled to continue in the management and control of the petitioners' union.

3. However, the posting of an IAS officer would lead to administrative difficulties particularly as the petitioner is a process industry requiring special expertise. Therefore, this Court directs that the administration and management shall continue to be exercised by the Directors of the company and the Sub Collector Tenali shall not be present in the premises or take part in the operations/administration.

4. Regular day to day activities, the payment of salaries, payments of statutory dues and contractual obligations etc., shall be carried out as before by the 1st petitioner only.

5. However, the Board shall not except with the permission of this Court create any further charge, encumbrance etc., on the properties. All future transactions by which the movable and immovable assets of the petitioners are sought to be alienated, mortgaged, transferred etc., should be with the prior permission of the court.

6. The normal business activities of the 1st petitioner -

buying, processing and selling of milk and milk 3 HCJ & NJS,J W.A.No.281 of 2021

products shall be continued by the 1st petitioner without any hindrance.

In view of the fact that I.A.No.1 of 2021 is allowed and

G.O.Ms.No.19 Animal Husbandry, Dairy Development &

Fisheries (Dy.Vig) Department, dated 27.4.2021, is suspended

with certain directions no further orders are immediately called

for in I.A.No.2 of 2021.

The opinions expressed in this order are prima facie

opinions for the disposal of this application only.

With the above observation, this interlocutory application

is allowed."

3. The writ petition was filed questioning G.O.Ms.No.19, Animal

Husbandry, Dairy Development & Fisheries (Dy.&Vig.) Department, dated

27.04.2021, whereby the Government of Andhra Pradesh had withdrawn

G.O.Ms.No.515, Forest and Rural Development (Corporation) Department,

dated 17.07.1978 and had issued certain directions with regard to the

functioning of the Feeder Balancing Dairy, Sangam Jagarlamudi, popularly

known as Sangam Dairy.

4. In order to understand the contentions advanced by the learned

counsel for the parties, it will be appropriate to briefly take note of the

case projected in the affidavit in support of the writ petition:

(i) With a view to achieve the objects of 'Operation Flood' which

was launched by the Government of India on 13.01.1970, the Government

of composite State of Andhra Pradesh had incorporated the Andhra

Pradesh Dairy Development Corporation (for short, 'APDDC') as a

Government company on 02.04.1974. A programme was taken up as 'Milk 4 HCJ & NJS,J W.A.No.281 of 2021

Shed Programme' comprising of the districts of Guntur, Krishna, East

Godavari and West Godavari. Under the said programme, the State

Government had decided to establish a Feeder Balancing Dairy at Sangam

Jagarlamudi, Guntur District, vide G.O.Ms.No.1222 dated 09.11.1973 at an

estimated cost of Rs.168 lakhs with a handling capacity of 1.50 lakh litres

per day. For the purpose of establishing the said Feeder Balancing Dairy,

the milk producers of Guntur District, who were the members of

Vijayawada Milk Products Factory, had contributed Rs.1.20 lakhs for

purchasing Ac.32.22½ cents of land in Vadlamudi, which adjoins Sangam

Jagarlamudi Village. However, the sale deeds were obtained in the name

of Milk Commissioner, Andhra Pradesh, though in the sale deeds it was

recited that payment of sale consideration was made by the Vice President

and Treasurer of Milk Producers Society. As the consideration amount was

funded by the milk producers, the Government had decided not to treat

the said land as its asset.

(ii) Subsequently, the State Government issued G.O.Ms.No.80,

Forest and Rural Development (Dairy) Department, dated 15.04.1974,

transferring the milk chilling centres in Kolluru, Returu, Narsaraopet and

Gurajala, along with staff, machinery and equipment, to the APDDC. For

construction of Feeder Balancing Dairy, contributions were made by the

Government of Andhra Pradesh to the tune of Rs.50 lakhs and by Indian

Dairy Corporation (for short, 'IDC') to the tune of Rs.228 lakhs, comprising

70% by way of loan component and the balance 30% as grant. The

Feeder Balancing Dairy was constructed by National Dairy Development

Board (for short, 'NDDB') on turnkey basis and the same was inaugurated

on 30.08.1977.

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                                                              W.A.No.281 of 2021

(iii) The APDDC had commenced operations by collecting milk

from 127 milk producer co-operatives, who were part of Vijayawada Milk

Products Factory. The APDDC had also acquired an extent of Ac.13.22¼

cents of land in its own name, adjoining the Feeder Balancing Dairy. A

sum of Rs.28.00 lakhs was allotted to the APDDC by the Government of

Andhra Pradesh during 1976-77 for construction of staff quarters and

minor dairy equipment and out of the said allocation of funds, the APDDC

had acquired an extent of Ac.17.38 cents of land from the Central

Warehousing Corporation, which had its warehouses next to the Feeder

Balancing Dairy. From the balance of funds remaining, the APDDC had

constructed staff quarters.

(iv) A Co-operative Society in the name of Guntur District Milk

Producers Co-operative Union (for short, 'the Co-operative Society') came

to be registered on 23.02.1977 under the provisions of the Andhra

Pradesh Co-operative Societies Act, 1964 (for short, 'the Act of 1964') and

it started functioning from 14.04.1978 with its headquarters at Vadlamudi.

(v) By G.O.Ms.No.675, Forests and Rural Development

(Corporation) Department, dated 27.08.1977, the Feeder Balancing Dairy,

along with its assets, was transferred to the APDDC and the Co-operative

Society had been managing the affairs of the Feeder Balancing Dairy. As

the milk procured was directly sold by the Co-operative Society, the same

resulted in loss of turnover and commission to the APDDC and on

representations being made by the APDDC, the Government had issued

G.O.Ms.No.515, Forest and Rural Development (Corporation) Department,

dated 17.07.1978, in supersession of the order under G.O.Ms.No.675

dated 27.08.1977. With the coming into force of G.O.Ms.No.515 dated

17.07.1978, products produced by the Feeder Balancing Dairy were 6 HCJ & NJS,J W.A.No.281 of 2021

marketed by the APDDC under its brand name 'Vijaya' and the role of the

Co-operative Society was confined to milk procurement and processing

the same into various products and receiving amount from the APDDC for

payment to milk producers.

(vi) During the year 1979, for a complete transfer of assets to

the Co-operative Society, valuation of the assets was undertaken and a

sum of Rs.81.00 lakhs was found to be the value of the assets due to

investments made by the State Government/APDDC. The aforesaid sum

was directed to be treated as share capital contribution of the State

Government and thus, the State Government became a shareholder in the

Co-operative Society. All capital investments made by the Government

were converted into share capital of the Co-operative Society and thus,

the assets stood transferred and vested in the Co-operative Society. In

course of time, the Co-operative Society had acquired an extent of Ac.

17.54¼ cents of land, making the total land holding of the Feeder

Balancing Dairy to Ac.80.04 cents.

(vii) Having regard to the various disputes between Co-operative

Societies and officials of various Departments regarding conduct of the

affairs of the societies and in order to provide autonomy to the Co-

operative Societies, the Andhra Pradesh Legislature enacted the Andhra

Pradesh Mutually Aided Co-operative Societies Act, 1995 (for short, 'the

MACS Act') conferring autonomy to the elected management to run the

affairs of the Co-operative Society and entrusting limited role to the

Registrar of Co-operative Societies. After enactment of the MACS Act, in

view of the encouragement of the State Government to the societies to

get themselves registered under the MACS Act, the Co-operative Society

had filed an application for conversion into a society under MACS Act on 7 HCJ & NJS,J W.A.No.281 of 2021

12.12.1996. In order to satisfy the requirement of Section 4(3)(e) of the

MACS Act, which provides that for conversion of a society registered

under the Act of 1964 into a society under the MACS Act, it had to

demonstrate that the society is not in possession of share capital from

Government and is also not in receipt of any Government loans or

guarantees, the Co-operative Society had returned the share capital

amount of Rs.81.00 lakhs to the Government and also other sums

payable, totalling Rs.96,04,943/-. Thereafter, the conversion took place

and the Co-operative Society was registered under the MACS Act and

Certificate of Registration was issued by the competent authority.

(viii) With the change of Government, an attempt was made by

the State Government to bring back Co-operative Societies under the

control of the Government by introducing by way of amendment a proviso

to Section 4(1) and Section 4(1A) of the MACS Act with retrospective

effect from 01.06.1995. The said attempt of the Government failed as

this Court as well as the Hon'ble Supreme Court had struck down the

amendment as unconstitutional.

(ix) Over a period of time, the operation of the Co-operative

Society had spread over many states and as there were frequent

interjections on its independence and autonomy, the General Body of the

Co-operative Society had passed a resolution on 23.09.2011 to convert

the Co-operative Society as a producer company under Section 581-J of

the Companies Act, 1956 (for short, 'the Act of 1956') and finally on

18.06.2013, it got itself converted into a producer company under the

name and style of 'Sangam Milk Producer Company Limited', i.e., the writ

petitioner No.1, and it is presently having 589 members.

                                      8                               HCJ & NJS,J
                                                              W.A.No.281 of 2021




      (x)     To somehow gain the control over the affairs of the writ

petitioner No.1 company, the Government went on making various efforts.

The Chairman of the Company who was a Member of the State Legislative

Assembly for five consecutive terms upto 2019 was considered to be a

strong opposition leader and to throw aspersions on him and to malign

him, a complaint of the year 2015 made against him was entrusted to the

District Vigilance Authority for an enquiry in the year 2020. The notice

issued by the District Vigilance Authority was challenged by the writ

petitioner No.1 company along with its Chief Executive Officer-cum-

Managing Director by filing W.P.No.23709 of 2020 and by an interim order

dated 11.12.2020, this Court had stayed the notice.

(xi) In the counter filed to the aforesaid writ petition, it was

stated that the Regional Vigilance and Enforcement Officer, Guntur, had

made enquiries about the irregularities committed for converting a

mutually aided co-operative society into a company and later on, the

enquiry was entrusted to Anti Corruption Bureau (ACB) and a crime, being

Crime No.2/RCO-GNT-ACB/2021 dated 22.04.2021 was registered against

the Chairman of the Company and others on the basis of the complaint of

Managing Director of the APDDC. The ACB arrested three persons,

including Chairman and Managing Director on 23.04.2021 and had

conducted searches. Assailing the registration of the aforesaid crime, a

quash petition was filed before this Court.

(xii) Immediately thereafter, the Government issued

G.O.Ms.No.19, Animal Husbandry, Dairy Development & Fisheries

(Dy.&Vig.) Department, dated 27.04.2021, withdrawing G.O.Ms.No.515

dated 17.07.1978, purportedly, in public interest.

                                             9                                   HCJ & NJS,J
                                                                         W.A.No.281 of 2021

5. Challenging the said G.O.Ms.No.19 dated 27.04.2021, the writ

petition came to be filed.

6. As the centre of controversy lies in withdrawal of G.O.Ms.No.515,

Forest and Rural Development (Corporation) Department, dated

17.07.1978, by G.O.Ms.No.19, Animal Husbandry, Dairy Development &

Fisheries (Dy.&Vig.) Department, dated 27.04.2021, at this juncture,

before proceeding further, it will be appropriate to take note of relevant

portions of the aforesaid G.Os.

7. Relevant portion of G.O.Ms.No.515, Forest and Rural Development

(Corporation) Department, dated 17.07.1978, reads as follows:

"O R D E R:

In supersession of the orders issued in the G.O. 1st read

above the Government direct that the management of the

Feeder/Balancing Dairy, Sangamjagarlamudi shall be handed

over by the A.P. Dairy Development Corporation to the Guntur

District Milk Producers' Cooperative Union Ltd.,

Sangamjagarlamudi immediately for its operation.

The transfer of management orders in para 1 above is

subject to the following conditions:-

i. The Union shall not market its products till the loan to the Indian Dairy Corporation is repaid in full with interest thereon. Instead, the A.P. Dairy Development Corporation will market them through a consortium set up by it. Out of the sale proceeds the A.P. Dairy Development Corporation will pay to (the state Government) the principal and interest due to the Indian Dairy Corporation which the State Government is liable to pay. Only the balance after deducting the marketing 10 HCJ & NJS,J W.A.No.281 of 2021

expenses of the Corporation will be passed on to the Union) and

ii. the Union shall not encumber or alienate the property without prior approval of the Government.

iii. The Union shall scrupulously observe and abide by such additional conditions as the Government may from time to time impose in regard to this matter."

8. Relevant portion of G.O.Ms.No.19, Animal Husbandry, Dairy

Development & Fisheries (Dy.&Vig.) Department, dated 27.04.2021, reads

as under:

"3. In the reference 6th read above, the Milk

Commissioner & Registrar of Milk Co-operatives submitted that

certain irregularities including misuse of the assets of the

Government handed over for management through the G.O. 5th

read above, were committed by the then Chairman &

Management of the Guntur District Milk Producers Mutually

Aided Cooperative Union Limited. Hence, in the reference 7th

read above, Government has requested the Anti Corruption

Bureau, Andhra Pradesh, to enquire into the allegations.

Accordingly, in the reference 8th read above, the Anti Corruption

Bureau has submitted its Enquiry Report declaring that there is

prima facie material evidence with respect to connivance of the

then Chairman of the Guntur District Milk Producers Mutually

Aided Cooperative Union Limited with the then Managing

Director and other officials of Guntur District Milk Producers

Mutually Aided Cooperative Union Limited and the then District

Cooperative Officer, Guntur in getting transfer of Ac.10.00 cents

of Government land in the name of the trust which was set up 11 HCJ & NJS,J W.A.No.281 of 2021

in memory of his late father and getting the Dairy incorporated

as a Producer Company and getting memorandums of equitable

mortgage executed in favour of National Dairy Development

Board by depositing the title deeds of the properties which are

in the name of Andhra Pradesh Government/Andhra Pradesh

Dairy Development Corporation Limited (APDDC) by defying the

orders of the Hon'ble High Court, and fraudulently availed huge

loans from National Dairy Development Board (NDDB). The

present unit at Vadlamudi is the same feeder dairy whose

management was transferred to Guntur District Milk Producers'

Cooperative Union Limited, Sangamjagarlamudi. The ownership

had always remained with APDDC only. The Crime No.2/RCO-

GNT-ACB/2021 registered by ACB pursuant references 7th and

8th read above is also on record. The above facts reveal that

encumbrances have been created by the unit in violation of law

is under investigation.

4. In view of the above violations, Government

hereby withdraw G.O.Ms.No.515, Forests & Rural Development

(Corporation) Department dt. 17.07.1978 in public interest.

5. Government is concerned about the genuine

interest of the milk producers, employees of the unit and

consumer public. In order to ensure that there is no further

depletion of assets created with support of Government and

public monies and having regard to the state of affairs indicated

in the references above and the investigation undertaken by

Anti-Corruption Bureau, in the light of the withdrawal of GO Ms

No 515, Forests & Rural Development (Corporation) Department 12 HCJ & NJS,J W.A.No.281 of 2021

dt. 17.07.1978, the Government deemed it appropriate to direct

the following:

(a) The day-to-day activities of the unit shall continue unobstructed with the existing staff and employees.

(b) The Sub Collector, Tenali Division, Guntur District shall be present in the premises of the unit to ensure smooth and uninterrupted operation of the unit including procurement, processing, marketing and all allied activities.

(c) In the event of any deliberate stoppage or obstruction of day to day activities of the unit by any employees or any person connected with the functioning of the unit, the Sub Collector, Tenali is authorised to take such action as is deemed fit and appropriate.

The above arrangement shall be in place for a period of

three months initially subject to further periodic review. The

above measures are necessitated in view of overriding public

interest to ensure uninterrupted supply of essential services and

to ensure protection of the assets of the unit in public interest

and to avoid any further depletion in the asset base of the unit."

9. The learned single Judge, in his order, observed that the Court was

of the prima facie opinion that the writ petitioners had made out an

arguable case and that the balance of convenience is also in their favour.

It was further observed that greater harm would be caused to the writ

petitioners by the impugned action and, thus, they are entitled to an

interim relief. The learned single Judge had also taken note of the

endeavour of the State to protect the assets and to prevent their

depletion and, accordingly, while suspending the impugned G.O., a 13 HCJ & NJS,J W.A.No.281 of 2021

direction was issued to the Board of the writ petitioner No.1 company not

to create any further charge, encumbrance on the property except with

the permission of the Court and all future transactions with regard to the

movable and immovable assets are also directed to be carried out only

with the prior permission of the Court.

10. Mr. S. Sri Ram, learned Advocate General appearing for the

appellants, makes the following submissions:

(i) The learned single Judge erred in law in not pronouncing on

any of the pleaded facts on either side relevant to the subject matter and,

more particularly, concerning the entity and status of the writ petitioner

No.1 company; the legality of its claim to be being the successor entity of

the society established in the year 1964; the claim as to ownership of the

assets as also the antecedent events that had taken place before issuing

the impugned G.O. While the learned single Judge did not rule on the

aforesaid issues, with regard to the question raised regarding the power

of the Government to issue the impugned G.O., the learned single Judge

opined that there is an implied fetter on the Government to retrace itself

because of afflux of time.

(ii) The learned single Judge had misconstrued the impugned

G.O. to be one seeking to dispossess the writ petitioner No.1 entity

without reference to common law remedy, whereas the impugned G.O. in

categorical terms had laid down that the arrangement was made for a

period of three months initially subject to further periodic review and that

the same was occasioned in order to ensure that there is no further

depletion of assets.

(iii) The writ petitioner No.1 entity is not a company converted

into a milk producing company under Section 515-J of the Act of 1956 and 14 HCJ & NJS,J W.A.No.281 of 2021

therefore, the claim of the writ petitioner No.1 entity to be the successor

to the Co-operative Society is dubious if not vitiated by fraud played on

everybody concerned.

(iv) The learned single Judge did not advert to the aspect as to

whether the writ petitioner No.1 entity could lawfully claim to be in

possession of the assets in question and set up an adverse claim against

the original owner.

(v) For exercising discretion to grant an interim order, apart

from existence of a prima facie case, balance of convenience and

irreparable loss or injury, supervening public interest has also to be

considered in a petition under Article 226 of the Constitution of India. The

learned single Judge ought not to have exercised discretion in favour of

the writ petitioners in the attending facts and circumstance of the case, as

the Government was concerned that essential services have to be

protected and people at large for whose benefit all these assets have

been created should not be compromised and, therefore, it was felt that

maintenance of the assets with the presence of the Government officers

would inhibit further depletion of assets. Learned Advocate General has

also drawn the attention of the Court in detail with regard to initiation of

enquiry through Anti Corruption Bureau as indicated in the impugned G.O.

and, accordingly, contended that it was not a case where the learned

single Judge ought to have exercised discretion in favour of the writ

petitioners for passing of an interim order.

11. In response, Mr. B. Adinarayana Rao, learned senior counsel

appearing for the writ petitioners, makes the following submissions:

(i) The G.O. issued on 17.07.1978 was withdrawn after 43

years by the impugned G.O.Ms.No.19 dated 27.04.2021, that too, without 15 HCJ & NJS,J W.A.No.281 of 2021

taking into consideration the changes that have occurred in the

interregnum.

(ii) The society registered under the Act of 1964 had converted

itself into a society under the MACS Act and such conversion had attained

finality in the year 2011 with the Hon'ble Supreme Court affirming the

decision of the High Court striking down the amendments made to Section

4(1) and Section 4(1A) of the MACS Act.

(iii) The share capital of the Government was paid back. While

the conversion of the society into a society under the MACS Act had

attained finality, the conversion into producer company is not final as a

writ petition filed by the APDDC is pending before this Court.

(iv) The impugned G.O. was issued on the basis that the

Government had given the asset to the Society. The said assumption is

incorrect inasmuch as the asset was converted into share capital and

subsequently redeemed.

(v) Assuming for the sake of argument it is accepted that

conversion as a producer company is irregular, even then the status of the

society as a society under the MACS Act is not affected and, therefore, the

Act of 1964 cannot be applied for the purpose of governance.

(vi) When there is a law governing the field and a procedure is

prescribed by the Act, the Government cannot override a statute under

the garb of exercise of executive power and cannot interfere with a

proprietary concern under Article 162 in violation of Article 300-A of the

Constitution of India.

(vii) 10 acres of land was gifted by the Co-operative Society in

the year 2000 and the issue is sought to be raked up after 21 years. The

Co-operative Society had achieved a turnover of about Rs.1100 crores 16 HCJ & NJS,J W.A.No.281 of 2021

catering to about 30,000 milk producers and it appears that only because

of report of ACB, the impugned G.O. came to be issued.

(viii) By virtue of G.O.Ms.No.515 dated 17.07.1978, the assets

became the assets of the Feeder Balancing Dairy and after conversion of

the Co-operative Society under the MACS Act with the permission of the

Government, the Society registered under the Act of 1964 cannot be

treated as holding the assets belonging to the Government and, therefore,

the assets of the writ petitioner No.1 company cannot be treated as the

assets of the Government and the State cannot unilaterally take over the

operations and assets of the writ petitioner No.1 company. It is submitted

that there is no depletion of assets and the assets of the writ petitioner

No.1 company were already mortgaged to NDDB and the same was

extended.

(ix) The entire exercise is mala fide and orchestrated for

extraneous political considerations.

(x) The direction to Sub-Collector, Tenali Division, Guntur

District, to be present in the premises of the writ petitioner No.1 company

is a camouflaged intrusion into the affairs of the company to jeopardise

the operations of the company.

12. We have considered the submissions of the learned counsel for the

parties and have perused the materials on record.

13. A perusal of the order of the learned single Judge would go to

show that the learned counsel for the parties had advanced arguments

before the learned single Judge which are more or less on similar lines as

advanced before us.

14. A reading of G.O.Ms.No.19 dated 27.04.2021 goes to show that it

came to be issued only on the supposition that the ownership always 17 HCJ & NJS,J W.A.No.281 of 2021

remained with the APDDC. An observation was made that the issue

regarding the encumbrances that have been created by the writ petitioner

No.1 company in violation of law is under investigation. The G.O. indicates

that it proceeded on the basis that the Chairman and management of the

Guntur District Milk Producers Mutually Aided Co-operative Union Limited

had committed certain irregularities, including misuse of the assets which,

according to the Government, were its assets and on a request being

made to the ACB to enquire into the allegations, the ACB submitted its

enquiry report stating that there is prima facie material of irregularity in

getting transfer of Ac.10.00 cents of Government land in the name of a

Trust and also getting the Dairy incorporated as a producer company as

well as in creating equitable mortgage in favour of NDDB. It was asserted

that the ownership had always remained with the APDDC and as such,

encumbrances that have been created by the Co-operative Society are in

violation of law. The object for which the impugned G.O. was issued was

to ensure that there is no further depletion of assets and in view of

overriding public interest to ensure uninterrupted supply of essential

services and accordingly, three directions were issued to be in place for a

period of three months initially, subject to further periodic review.

15. The G.O.Ms.No.19 dated 27.04.2021 recites that by G.O.Ms.No.515

dated 17.07.1978, the management of Feeder Balancing Dairy was

handed over to Guntur District Milk Producers' Co-operative Union Limited,

for its operations without transfer of ownership of the lands and dairy

plant and machinery. However, Clause (ii) of unnumbered paragraph 2 of

G.O.Ms.No.515 dated 17.07.1978 goes to show that a condition was

stipulated that the aforesaid Union shall not encumber or alienate the

property without prior approval of the Government. If the property is not 18 HCJ & NJS,J W.A.No.281 of 2021

transferred to the Union, prima facie, there was no occasion to

incorporate a clause that the Union shall not encumber or alienate the

property as question of alienation would not arise if the property is not

vested in the Union. This Court, mindful of the fact that the appeal is

arising out of an interim order, will not record any conclusive finding as to

whether the property/asset of Feeder Balancing Dairy or only the

management thereof was transferred to the Co-operative Society.

16. We are unable to accept the argument of the learned Advocate

General that the learned single Judge erred in law in not authoritatively

pronouncing on any of the pleaded facts on either side relevant to the

subject matter. While an interim prayer is considered, the Court is not

expected to pronounce finding on any of the issues that arise for

consideration in the main case. The finding has to be recorded only at the

time when the case is finally disposed of.

17. A perusal of the order under appeal goes to show that the learned

single Judge took note of the fact that there are certain issues which need

to be gone into deeper. The learned single Judge had observed that from

1978 onwards, the management of certain assets was given to the Milk

Producers Union (Co-operative Society) registered under the Act of 1964

and that the management of the assets includes putting the Co-operative

Society in possession of the assets. It was further observed that the

Co-operative Society registered under the Act of 1964 migrated and

became a society under the MACS Act and later, a producer company. It is

in that context the learned single Judge had prima facie opined that once

the writ petitioners are in settled possession, even if the Government has

a claim over the property, it cannot summarily and by an executive order,

take over the possession. The learned single Judge recorded the finding 19 HCJ & NJS,J W.A.No.281 of 2021

that the Court was of the prima facie opinion that the writ petitioners had

made out an arguable case and that balance of convenience is also in

their favour as they have been managing the business of Dairy by being in

possession of the same since decades and that greater harm would be

caused to them by the impugned action.

18. According to the writ petitioners, all capital investments made by

the Government were converted into share capital of the Co-operative

Society and accordingly, the assets stood transferred and vested in the

Co-operative Society. It is their further pleaded case that in order to

satisfy the requirement of Section 4(3)(e) of MACS Act for conversion of a

society under the Act of 1964 to a society under the MACS Act, it had

returned the share capital amount of Rs.81.00 lakhs to the Government.

That apart, the Co-operative Society came to be registered as a producer

company under Section 581-J of the Act of 1956 on 18.06.2013. In view

of the above developments, the plea raised by the Government that

notwithstanding these developments, the ownership of the assets still

remains with the APDDC would require detailed consideration and this was

also taken note of by the learned single Judge. Assuming that ownership

of the assets still remains with the APDDC and assuming that only

management of Feeder Balancing Dairy was handed over to the Co-

operative Society, as the writ petitioner No.1 was then, the question arises

whether management of the same could have been withdrawn in view of

the developments as noticed hereinabove by simply issuing the impugned

G.O. withdrawing the earlier G.O. dated 17.07.1978.

19. Taking note of the fact that the very basis for issuing the impugned

G.O. was on account of the fact that the State perceived that there was

depletion of assets at the hands of the writ petitioners, the learned single 20 HCJ & NJS,J W.A.No.281 of 2021

Judge, while suspending the impugned G.O., thereby maintaining status

quo with regard to the existing state of affairs, protected the interest of

the State by laying down a condition that the Board of the writ petitioner

No.1 shall not, except with the permission of the Court, create any further

charge, encumbrance etc. on the properties and that all future

transactions by which the movable and immovable assets of the writ

petitioners are sought to be alienated, mortgaged, transferred etc., should

be with the prior permission of the Court, thereby sub-serving public

interest. As by the impugned G.O., the State had sought to unilaterally

take over the management of the Feeder Balancing Dairy and had

deputed a Sub-Collector to run its operations, keeping in view the best

interest of the writ petitioners, the learned single Judge directed that the

Sub-Collector, Tenali Division, shall not be present in the premises of writ

petitioner No.1.

20. In our considered opinion, the learned single Judge had considered

the matter in right perspective in exercise of discretionary power to grant

interim order in the light of established principles and finally balanced the

competing equities during the pendency of the writ petition by protecting

the interest of both the parties and, therefore, we see no good ground to

interfere with the order under challenge.

21. The writ appeal is dismissed. No costs. Pending miscellaneous

applications, if any, shall stand closed.

ARUP KUMAR GOSWAMI, CJ                             NINALA JAYASURYA, J

                                                                             IBL