Thammineedi Rama Krishna Vara ... vs The Union Of India
2023 Latest Caselaw 4361 AP

     THE HON'BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA

             WRIT PETITION Nos.21968 AND 22670 OF 2023

COMMON ORDER:-


1.    Both these writ petitions are filed under Article 226 of the

Constitution of India by different petitioners, claiming identical relief, as

such, I find it expedient to decide both the writ petitions by common order,

since the issue involved in all the writ petitions is one and the same.

W.P.No.21968 of 2023 is taken as leading case.


2.    W.P.No.21968 of 2023 is filed under Article 226 of the Constitution of

India, claiming the following relief:


     "To issue writ of mandamus declaring the action of the respondents in

proposing to construct Grain Storage and Agri Infrastructure under Pilot Project of Ministry of Cooperation Government of India in the area of operation of the 6th Respondent Society at Achanta Village and Mandal W G District against the will and wishes of L h said Society and against its General Body Resolution dt 05072023 as highly illegal arbitrary and contrary to the purport of cooperation system and the provisions of A P Cooperative Societies Act and consequently direct the respondents to drop the said proposal and not to construct any such Grain and Agri Infrastructure at Achanta"

3. The facts of the case in nutshell are that, the Ministry of Cooperation

undertook the Pilot Project for the „World‟s Largest Grain Storage Plan in

Cooperative Sector‟. The Pilot Project is being implemented by National

Cooperative Development Corporation with the support of NABARD

Consultancy Services Private Limited in different states. The Pilot Project

entails setting up of grain storage infrastructure including warehouse and

silos, along with other agri infrastructure, including procurement centre,

NV,J WP No.21968 & 22670 of 2023

custom hiring centre, primary processing centre, etc, through convergence

of various Government of India Schemes at PACS Level. In this regard, one

PACS from each of the identified Districts was selected for execution of the

pilot project in consultation with the State Governments and the 6th

Respondent Society was identified for the Pilot Project to set up Grain

Storage and other Agri Infrastructure. A draft Memorandum of

Understanding was entered into by the 6th Respondent and NABARD on

08.05.2023, wherein NABARD undertook to construct the agriculture

infrastructure for the society and the society will pay the executed project

cost as per the milestones and payment schedules as fixed. The petitioners

who are members of the 6th Respondent Society came to know that the

estimation for project cost is Rs.2,17,00,000/- and out of the said amount,

the society shall bear 20% immediately, which is nothing but taxing the

society for the benefit of NABARD Private Services and detrimental to the

interest of the society.

4. Further, the 6th respondent's society owns a rice mill, which was

leased out to a third party due to a shortage of manpower and due to

inability to maintain it. Furthermore, the society possesses eight vacant

godowns, primarily meant for paddy storage. Consequently, the 6th

respondent is grappling with a substantial financial crisis, making it

impossible to cover daily expenses or even initiate the construction of grain

storage and agricultural infrastructure, given the absence of available

funds.

NV,J WP No.21968 & 22670 of 2023

5. It is submitted that the proposal for construction of Grain Storage

and Agri Infrastructure was presented during the General Body Meeting on

05.07.2023. During this meeting, the General Body unanimously passed a

resolution opposing the proposal, citing concerns related to the society's

financial state.

6. The 6th respondent - society submitted a representation dated

11.07.2023 to the respondents urging them to abandon the proposal for

constructing grain storage and agricultural infrastructure at Achanta in

accordance with the General Body's resolution passed on 05.07.2023.

Although the representation was duly received, there was no response from

the respondents. In the midst of these developments, the petitioners

received a caveat filed by the Chairman of the Three Men Official Incharge

Committee, indicating his readiness to be notified in the event of any writ

petition challenging the construction proposal for grain storage and agri-

infrastructure at Achanta. It is emphasized that the current Three Men

Committee serves as the official Person-in-Charge Committee, and they

appear to be aligning their actions with the decisions of the respondent

authorities rather than safeguarding the interests of the society.

Consequently, the said committee should not act contrary to the decision

made by the General Body.

7. It is submitted that the 6th respondent - society is not financially

sound and facing severe financial issues and there is no need or necessity

NV,J WP No.21968 & 22670 of 2023

to construct grain storage and agri infrastructure since the society is

having two rice mills and 8 godowns. But the society is not in a position to

make financially viable due to lack of paddy storage. Having no other

option, leased out the rice mills as well as 8 godowns to different third

parties at meager amount and the society is not in a position to maintain

the same due to lack of manpower and financial reasons. The respondents

cannot act contrary to the decision of the General Body of the society which

is ultimate authority under Section 30 of the A.P. Cooperative Societies Act,

1964, thereby the respondents cannot compel or act contrary to the

decision of the General Body of the Society, which leads the society into

further financial trouble and requested to issue a direction to the

respondents not to construct any Grain and Agri Infrastructure at the

premises of 6th respondent society.

8. Respondent No.5 - Collector and District Magistrate, West Godavari,

Bhimavaram filed detailed counter affidavit, explaining about the

6th respondent society, role of NABCONS and NABARD. It is submitted that

the petitioners are members of the 6th respondent Society. It is further

submitted that, the Ministry of Cooperation, CTP Division, Government of

India is under taking pilot project for the World's Largest Grain Storage

Plan in Cooperative Sector and identified for the Pilot Project to set up

Grain Storage & other Agri. infrastructure for 11 PACS in 11 states among

which Mrutyunjaya LSCS, Achanta from State of Andhra Pradesh which

are to ensure effective and successful implementation of the pilot project.

NV,J WP No.21968 & 22670 of 2023

The project to be implemented by National Cooperative Development

Corporation (NCDC) with the support NABARD Consultancy Pvt Ltd.,

(NABCONS). It is submitted that the MOU signed by the 6th respondent in

respect of Pilot Project with the NABCONS MOU proforma has designed by

NABCONS & the same is applicable to all other 10 states in India. The

petitioner stated that it is nothing but taxing the society for the benefit of

NABARD Private Services and detrimental to the interest of the society is

not correct and baseless.

9. It is submitted that the proposed Pilot project cost as Rs.214.30

Lakhs as per requirement of the society and Rs.38.52 Lakhs subsidy

applicable under scheme, term loan of Rs.171.44 Lakhs repayable in 7

years with Interest rate of 1% which is very meagre interest to be paid by

the 6th respondent society and PACS contribution as Rs.42.86 Lakhs as

per the project and Dist. Coop. Central Bank is the lending bank in this

project and also moratorium period is 2 years.

10. It is submitted that, the 6th respondent society is having Rice Mill

and the same was leased out to a 3rd party due to lack of manpower and

not able to maintain and society having 8 godowns and the same are

vacant due to lack of paddy storage is not correct and baseless. It is

submitted that the society has given leased out the rice mill and 8 godowns

to the 3rd party and 3rd party has been paying @ Rs.10.67 Lakhs per

annum to the 6th respondent society since 01-11-2022 as per agreement

NV,J WP No.21968 & 22670 of 2023

and the lease agreement is going to be expires by 31-10-2024, Therefore,

lease is subsisting and all the godowns are under usage belongs to the

society. The petitioner alleged that most of the agriculture lands are being

converted into aqua culture due to prevailing circumstances and as the

area was declared as aqua zone, therefore production of paddy came down

drastically and no useful purpose would be served on construction of grain

storage and agri infrastructure at Achanta is not correct and baseless. It is

submitted that Achanta Mandal having cultivating paddy in 10,691 Acres

and Aqua culture in 754.26 Acres i.e., 7% of the land area in aqua culture

in the Mandal. Further, it is pertinent to submit that the Achanta Mandal

having only 3 Rice Mills which are not sufficient to cater the needs of the

farmers in the mandal for which the 6th respondent society is taking up

Pilot project sanctioned by the Government of India which will serve the

needs of the farmers in the mandal. Hence, the contention of the

petitioners is not valid and genuine.

11. It is submitted that the Non Official PIC committee of the society

convened emergency General Body on 05.07.2023 presided over by the

Chairperson of the society in which vide Resolution No.2, it was resolved

that the society would not get any benefit with the proposed pilot project

and opined that such proposed project may causes loss to the society.

Therefore cancelled the earlier resolutions and requested the officials to

cancel the sanctioned pilot project to the society.

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12. It is submitted that the said resolution no.2 passed by the General

Body dated 05.07.2023 is null and void on the following grounds

1. As per bye law no.16 A (ii) the society has to serve General Body notices to the members of the society, but the society ignore the byelaw & convened the General Body.

2. After commencement of General Body as per schedule time on the specified date members who attended the General Body shall sign on the Minute Book in token of having attend the said meeting, the Managing Committee has to observe whether the required no. of members were attended to quorum to the G.B, then only to write resolutions in the G.B. In this instant the G.B written the resolutions in the minutes book without observing the no. of signatures which required from quorum as per byelaw.

As per byelaw no. 16 A (iii) of the society required no. of members to attend the said meeting is 249, but only 152 members were signed in the minute book. Hence, the resolution dtd. 05.07.2023 cannot be construed as satisfaction of the society byelaws.

3. Rule 23.- Quorum for meeting of the A.P.Coop.Societies Rules, 1964 read as follows

"Save as expressly provided in the Act no general meeting shall be held or proceeded with unless there is a quorum as specified in the bye-laws provided that the bye-laws shall not specify quorum which is less than ( 1/10th) of the total members"

13. It is submitted that, the total number of members in the 6th

respondent society as on 5-7-2023 was 2451, out of that 10% is 245

members, but the members attended and signed in the General Body

meeting held on 5-7-2023 was 152 members only. Hence, the General Body

is conducted without required quorum as per APCS Rules, 1964.

14. The Emergency General Body meeting convened by the then Non

Official PIC Committee on 5-7-2023 was contrary to the byelaws of the

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society and that the said General Body has no quorum as required, hence

the resolution passed in the said General Body has no sanctity and void.

15. Further it is submitted that the petitioner alleged that respondents

are acting contrary to the decision of the General Body of the society which

is ultimate authority under Section 30 of the APCS Act 1964.

16. It is submitted that the General Body meeting held on 05.07.2023 is

null and void as the then Non official PIC Committee had acted contrary to

the Bye law No. 16(A)(ii) (iii) and also against the Rule 23 of the APCS

Rules. Hence the contention of the petitioner is not acceptable under any

Law.

17. It is submitted that filing of caveat by the 6th respondent is in a view

to smooth execution of the Pilot project taken up by the Government of

India and Government of Andhra Pradesh in the interest of the society.

Further, it is submitted that, under Section 30 of the A.P. Coop. Societies

Act, 1964 the ultimate authority of a society shall vest in the General Body

of the Society subject to the provisions of this Act, the rules made

thereunder, and the byelaws of the Society . As per Bye law No.34 of the

society, the society may take up business for construction of go-downs etc.,

in the interest of the members of the society. As per object of the society

vide Bye law No.3 (xiv) of the society may take up works which may cause

financial development of the members of the society. It is a fact that the

petitioners submitted a representation dated 11-7-2023 to the respondents

NV,J WP No.21968 & 22670 of 2023

requesting them to drop the proposal for construction of grain storage and

agri infrastructure at Achanta in which there are no valid grounds to

consider their representation by the respondents.

18. During the hearing, Sri K. Chidambaram, the learned Senior Counsel

representing Sri Turaga Sai Surya in W.P.No.21968 of 2023, the

petitioner's counsel, argued that the identification and allocation of the

pilot project to the 6th respondent society for grain storage construction,

without any financial support, essentially amounts to burdening the

6th respondent for the benefit of the 4th respondent agency. He further

asserted that, as of today, the 6th respondent society possesses 8 godowns

and 2 paddy rice mills but struggles to utilize them effectively and to

generate substantial income from grain storage. Consequently, subjecting

the 6th respondent to construct grain storage for the agri-infrastructure

project at the highest project cost is detrimental to the society's interests,

given their limited earnings and reserves.

19. The learned Senior Counsel also contended that the non-official PIC

Committee passed Resolution, urging Respondent Nos.1 to 5 to halt the

project and postpone it until a unanimous resolution is passed by the

General Body of the society. Subsequently, an emergency General Body

meeting was convened by the Non-Official PAC Committee on 05.07.2023,

resulted in Resolution No. 2, expressing concerns that the proposed pilot

project might lead to financial burden by way of huge term loan for the

NV,J WP No.21968 & 22670 of 2023

society. It also requested the Respondent Nos.1 to 5 to cancel the

sanctioned project for the society. He emphasized that according to Section

30 of the Act, 1964, the General Body holds the ultimate authority for a

society. Once the General Body passes a resolution to cancel the subject

pilot project for the 6th respondent society, the respondents did not vest

the power or authority to act contrary to it, in accordance with Section 30

of the Act, 1964.

20. The learned Senior Counsel further argued that the Memorandum of

Understanding executed between the 6th respondent society and the 4th

respondent, NABARD, was a standard format document unilaterally

prepared by the 4th respondent, which goes against the interests of the

society. He further contended that any consent obtained through a

resolution from the official PAC Committee on 01.08.2023, is not valid and

contradicts Section 30 of the Act, 1964. Consequently, the respondents

cannot proceed based on the resolution of the official PAC Committee dated

01.08.2023.

21. During hearing, Sri O. Manoher Reddy, learned Senior Counsel

appearing for the petitioner in W.P.No.22670 of 2023 argued that the

construction of the subject pilot project constitutes a policy matter. Such a

project cannot be implemented solely based on the consent or resolution of

the official PAC Committee dated 01.08.2023, as this approach is in direct

contradiction to Sections 30, 31, and 32(7)(a) of the Act, 1964. He further

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emphasized that an individual temporarily in charge of the 6th respondent

society cannot be equated with the duly elected Managing Committee of the

society. In support of his contentions, Learned senior counsel relied upon

the judgment of the Hon‟ble Apex Court in Joint Registrar of Cooperative

Societies, Kerala vs. T.A. Kuttappan and others1 and judgment of High

Court of Kerala in Rajan N. vs. State of Kerala2.

22. Learned Senior Counsel also relied upon the ratio laid down by the

Hon‟ble Apex Court in Radha Krishan Industries vs. State of Himachal

Pradesh3 and High Court of Andhra Pradesh in Sadhu Varahala Babu vs.

Government of A.P., Cooperation Department4 and on the strength of

the principle laid down in the above judgments, would contend that, since

the petitioners are the members of the 6th respondent society and also

interested parties challenging the proposed action of Respondent Nos.1 to

5, by which the respondents are acting detrimental to the 6th respondent,

therefore, the writ petitions are maintainable.

23. The learned Senior Counsel further argues that obtaining consent

through the Resolution dated 01.08.2023, for the construction of the

subject pilot project is invalid and in direct contradiction to Sections 30,

31, and 32(7)(a) of the Act, 1964. Consequently, he contends that the

actions taken by the respondents are not legally valid and requests that the

1 AIR 2000 Supreme Court 2378 2 2016 (2) KHC 805 3 (2021) 6 SCC 771 4 2005 (6) ALD 57

NV,J WP No.21968 & 22670 of 2023

respondents be restrained from proceeding with the construction of the

proposed project pursuant to the approval granted on 08.05.2023.

24. Learned Government Pleader for Cooperation submits that the

present writ petitions are not maintainable, since the petitioners are

available with statutory redressal mechanism before the 2nd Respondent as

envisaged under Section 4(2) of the Act and therefore, liable to be

dismissed. In support of his contention, learned counsel relied upon the

judgment of High Court of Andhra Pradesh at Hyderabad in V. Bhaskar

Reddy vs. Managing Director, The Tirupati Cooperative Bank Limited5.

He contends that the present official PIC Committee falls within the

definition of Section 2(b) of the Act. Consequently, this official PIC

Committee is authorized to pass resolutions on par with the elected

Managing Committee of the Society. Therefore, the Resolution adopted by

the official PIC Committee on 01.08.2023, is deemed valid in accordance

with Sections 30 and 31(A) of the Act, 1964. He also contends that the

purported resolution passed by the General Body of the 6th respondent is

not valid, as the Governing Body meeting was conducted without the

required quorum, as stipulated by Rule 23 of the A.P. Cooperative Societies

Rules, 1964. Therefore, it cannot be asserted that the General Body of the

Society passed a Resolution as envisaged under Section 30 of the Act,

1964.

5 1998 (4) ALT 116

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25. Learned Government Pleader further submits that the judgment

relied on by the learned counsel for the petitioners in Rajan N. vs. State of

Kerala (referred supra) pertains to appointment of employees by the

Administrative Committee, as such it is not applicable to the present facts

of the case.

26. He also submits that the judgment relied on by the learned counsel

for the petitioners in Joint Registrar of Cooperative Societies, Kerala vs.

T.A. Kuttappan and others (referred supra) is also not applicable to the

present facts of the case, since the issue in the present writ petition is with

regard to construction of a pilot project pursuant to the resolution passed

by the Committee, but not relating to addition or deletion of any members

of the society and in view of the same, the present writ petitions are liable

to be dismissed.

27. Heard learned Senior Counsel appearing for the petitioners, learned

Government Pleader for Cooperation and perused the material available on

record.

28. The Non-official PIC Committee convened Emergency General Body

meeting on 05.07.2023 proposing to cancel the subject pilot project granted

to the 6th respondent society, since it is a financial burden to the society.

The same was disputed by the respondents on the ground that there was

no quorum as contemplated under Rule 23 of the Rules, 1964 and the

members who signed the resolution at the meeting are only 150, but the

NV,J WP No.21968 & 22670 of 2023

learned counsel for the petitioner contended that, as if it was signed by 250

members of the society and in accordance with the bye-laws of the society.

29. However, the pilot project was proceeded based on the resolution

passed by the Three Men official PIC Committee on 01.08.2023, which does

not hold the ultimate authority as outlined in Section 30 of the Act.

According to Section 30 of the Act, 1964, ultimate authority vests in the

General Body of the society.

30. On the other hand, Resolution No.2 passed by the Emergency

General Body on 05.07.2023 resolved that the proposed pilot project may

cause financial burden to the society and therefore, cancelled earlier

resolutions.

31. Be that as it may, no notice was served to the members of the society

for the Emergency General Body held on 05.07.2023 as per Bye Law

No.16-A, which is a mandatory requirement and after commencement of

the General Body, the members who attended the General Body shall sign

on the Minutes Book in token of having attended the said meeting. But, in

the Emergency General Body held on 05.07.2023, the resolutions were

written without observing the number of signatures who are attended,

which are required for the quorum.

32. Rule 23 of the A.P. Cooperative Societies Rules, 1964, says that, no

general meeting shall be held or proceeded with unless there is a quorum

as specified in the bye-laws, provided that the bye-laws shall not specify

NV,J WP No.21968 & 22670 of 2023

quorum which is not less than 1/10th of the total members. Evidently, the

total number of members in the 6th respondent society as on the date of

Emergency Meeting dated 05.07.2023 was 2451 and the members who

attended and signed in the Emergency General Body was only 152, thus

falling short of the quorum, as mandated under Rule 23 of the Rules, 1964.

33. The Society registered under the Act is required to be run on

democratic lines and the management of the affairs of the Society is

entrusted to a Managing Committee elected for the purpose by its own

members. The ultimate authority of the Society vests in its general

body. The Act itself prescribed procedure for holding the meetings of the

General Body as well as the Managing Committee. The Act however, give

power to the Registrar to supersede an elected committee but only on the

ground that the committee is not functioning properly or wilfully disobey or

fail to comply with lawful orders and directions issued by the Registrar

under the Act. The existence of the Society to a very large extent depends

upon the efficiency and proper management by the Managing Committee

elected for the purpose and assisted in its day to day management by the

staff. The staff of the society is required to be appointed in accordance with

the Rules.

34. The argument that the Three Men Official Committee PIC Committee

falls within the definition provided in Section 2(b) of the Act and possesses

all the powers akin to those of an elected Managing Committee, as defined

NV,J WP No.21968 & 22670 of 2023

in Section 31(A) of the Act, is also well-founded. It is an admitted fact that

the present PIC Committee is consisting of official of the 6th respondent -

society and the said committee seems to have passed resolution for

construction of the proposed pilot project of construction of grain storage

and agri infrastructure. Since it is a major financial implication upon the

affairs of the 6th respondent - society, such a major policy in respect of the

6th respondent society should be approved/obtained from the General Body

of the society which represents the true opinion or representation of the 6th

respondent society. Certainly, the resolution of the present Three Men

Official Committee should not reflect the true opinion of the 6th respondent

society at large. Therefore, the official respondents cannot act upon the

basis of the resolution passed by the present PIC official committee.

35. Neither the petitioners nor the respondents have placed the bye-laws

of the Respondent No.6 - Society before this Court for consideration. There

is a serious dispute with regard to attendance of quorum of the members of

the society. Nonetheless, given that the petitioners have expressed their

concerns regarding the financial ramifications for the society and

considering that approval of pilot project is a matter of policy decision,

without going into the other aspects, this Court finds it appropriate to

conduct a fresh General Body Meeting of Respondent No.6 - Society and

seek the majority opinion of the members on this matter.

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36. Both the writ petitions are disposed of with the following directions:

a. The Respondent - Society shall issue notices to all members of the society in accordance with Bye-Law No. 16-A(ii) and arrange for a new General Body meeting. Only after this process has been completed, the official Respondents may proceed further in accordance with the decisions made by the newly convened General Body, provided that the requisite quorum is achieved as per Rule 23 of the Rules, 1964.

b. Till then, the Official Respondents are restrained from proceeding further to construct "Grain Storage and Agri Infrastructure" under Pilot Project.

37. Consequently, miscellaneous applications pending if any, shall also

stand closed.

____________________________________________ JUSTICE VENKATESWARLU NIMMAGADDA Date:20.09.2023

SP