Agro Sales And Manufacturing ... vs Union Of India (Uoi) And Ors.
2007 Latest Caselaw 1280 Del

JUDGMENT

Manmohan Sarin, J.

1. This writ petition had come up for admission when counsel for respondents were also present and opposed the admission of the petition. We have heard learned Counsel for the petitioner in support of the writ petition and Mr. Rajeeve Mehra, counsel for Union of India, represented through the Secretary, Ministry of Agriculture and Cooperation and through the Secretary, Ministry of Chemicals and Fertilizers. Mr. V.P. Singh, Senior Advocate with Ms. Maninder Acharya has been heard in opposition on behalf of respondent No. 5 Krishak Bharati Cooperative Limited (KRIBHCO). With the consent of the parties, we propose to dispose of the writ petition itself.

2. Petitioner M/s. Agro Sales and Manufacturing Cooperative Limited, by this writ petition, seeks quashing of the order dated 28.9.2004, passed by the department of Fertilizers, Ministry of Chemicals and Fertilizers, Government of India. The Under Secretary, department of Fertilizers vide an order dated 28.9.2004 (hereinafter referred to as "the impugned order") in exercise of powers conferred under Section 122 of the Multi State Cooperative Society Act, 2002 (hereinafter referred to as the "MSCS Act") issued directions to respondent No. 5 Krishak Bharati Cooperative Limited to amend its Bye-Laws to remove the nominees of their commercial/business competitors like Indian Farmers Fertilizers Cooperative Limited (IFFCO) and Ors. from the Board of Directors and Board Committees etc. and to repatriate their entire equity stake in KRIBHCO forthwith. Petitioner by this writ petition, seeks declaration to the effect that IFFCO, respondent No. 4, and KRIBHCO, respondent No. 5, are not commercial rivals. Further, that the status of KRIBHCO as a subsidiary organization of IFFCO should subsist. Petitioner, who is a Member Society of both IFFCO and KRIBHCO, has made numerous other prayers stemming out of the above main prayers.

3. The facts relevant for disposing of the writ petition may be noted in brief:

(i) IFFCO was registered on 3.11.1967 as Multi Unit Cooperative Society by the Central Registrar while KRIBHCO was registered in the year 1980 under the Multi Unit Cooperative Societies Act of 1942 as a Society. IFFCO in fact, to expand in related fields and for deriving full benefit from the setting up and execution of the Hazira Fertilizer Project, was instrumental in formation of KRIBHCO as a separate Society registered as a Multi State Cooperative Society on 17.4.1980. The two societies functioned as complementary to each other. In fact, IFFCO had equity in KRIBHCO and vice-versa. This was also the position with regard to the nominees on the Board of Directors inter se between the two. IFFCO was functioning as the main organization with KRIBHCO as its subsidiary. The two societies functioned not as business rivals but complementing each other even though having the same area of operation, common members and seeking to achieve common object in cooperative movement. The Bye-Laws of KRIBHCO provided inter alia for membership of IFFCO in KRIBHCO as well as five nominee Directors of IFFCO on the Board of Directors of KRIBHCO and two Directors of IFFCO on the Executive Committee of the Board of Directors of KRIBHCO. Under the Multi State Cooperative Societies Act, 1984, the two Cooperative Societies could not have been registered if they were business rivals and had the same area of operation.

(ii) The situation underwent a change with the enactment of MSCS Act, 2002. The said Act came into force w.e.f. 19.8.2002. IFFCO, therefore, could not continue as a member of KRIBHCO and vice-versa. It was because both the societies were competitors in business to each other, both the societies being in the same line of manufacture of urea. The competition, therefore, was inherent and inevitable. The legislative intent behind Section 29 and Section 43 of the Act of 2002 was to ensure that the society does not become a member of Multi State Cooperative Societies if it was having a competitive interest qua the society of which it seeks to be a member. It was because such a competing interest may affect the working of the latter society and obstruct its growth, expansion and development. The Central Registrar, it is stated, while granting registration to the Bye-Laws of KRIBHCO under the Act of 2002, registered the Bye-Laws No. 6(a)(vii), 38(iii) and 51(a)(6-7) subject to provisions of Section 29 of the Act of 2002 and Bye-Law No. 21(e) of KRIBHCO. Despite the order of the Central Registrar, KRIBHCO continued as a member of the Multi State Cooperative Societies. KRIBHCO was required by the department of Agriculture, Central Government to re-submit its Bye-Laws carrying out necessary amendments to remove the inconsistency.

(iii) A notice dated 9.9.2004 was sent by KRIBHCO to all its delegates/members for holding the Annual General Meeting scheduled on 30.9.2004. The Ministry of Chemicals and Fertilizers issued the impugned order directing KRIBHCO to amend its Bye-Laws in line with Section 29(a) and Section 43(i)(f) so as to remove nominees of their commercial/business competitors like IFFCO and others from Board of Directors and the Committees and to repatriate the entire equity stake of IFFCO in KRIBHCO forthwith. The impugned order records and proceeds on the basis that IFFCO and KRIBHCO were commercial business competitors, both being engaged in the manufacture of urea. The Bye-Laws No. 6(a)(vii), 21(e), 38(iii) and 51(a)(6-7) of KRIBHCO have to be amended in line with Section 29 and 43(i)(f) of the MSCS Act of 2002. The Board of KRIBHCO in its Annual General Meeting held on 30.9.2004 resolved to comply with the impugned order dated 28.9.2004. On 1.10.2004, an application was sent by the Managing Director of the KRIBHCO to the Central Registrar for registration of the proposed amendments of the Bye-Laws. The said application was declined by the Central Registrar vide order dated 28.12.2004 on account of non-compliance with Section 11(3) of the MSCS Act, 2002. The Managing Director of KRIBHCO, it is stated, informed the Central Registrar vide letter dated 3.1.2005 that the matter be treated as closed.

(iv) The equity and share money of IFFCO in KRIBHCO was returned vide letter dated 4.10.2004 and similarly, IFFCO returned the equities/share money of KRIBHCO on 11.10.2004.

4. Learned Counsel for the petitioner submitted that the presence of the nominee Directors of KRIBHCO in IFFCO and vice-versa only helped in cementing their relationship. Counsel submitted that Bye-Laws of KRIBHCO were originally registered by Central Registrar despite the fact that provision of law prevailing at the time of registration and amended from time to time, did not permit registration of cooperative societies with similar objects and having the same area of operation. This was done by the Central Registrar in view of the decisions by IFFCO and reiterated by KRIBHCO that businesses of both these societies were being run in harmony with each other and that the arrangements were that of cooperation and synergy and not of conflict. Counsel submits that from very inception, KRIBHCO was being treated as subsidiary institution of IFFCO and 90% of members of IFFCO and KRIBHCO are common. The same position had been confirmed by the Central Registrar.

5. Learned Counsel further urged that the decision taken in the Annual General Meeting to comply with the Government of India's order dated 29.9.1994 was against the interest of KRIBHCO and IFFCO and in fact, was non est being based on extraneous considerations. He urged that the Central Registrar has declined to register the proposed amendments in the Bye-Laws of KRIBHCO on account of non-compliance of mandatory provisions of MSCS Act, 2002. The Society did not take any steps after the rejection of the proposed amendments in the Bye-Laws by the Registrar. No steps had been taken to remedy the deficiencies pointed out by the Registrar. He further assails the impugned order on the ground that the requisite notice of 15 days to the members for amendment under Section 11(3) of the Act had not been given. He prays that rather than the Board of Directors having taken the decision to implement the impugned order of the Central Government, the General Body Meeting of the members of KRIBHCO ought to be called where members can deliberate on the Government's decision and if the same does not find favor with the majority of members, a resolution could be passed opposing the amendments in the Bye-Laws as desired by the Central Registrar.

6. Learned Counsel for the petitioner questioning the authority of the department of Fertilizers to issue the order relating to the Bye-Laws of KRIBHCO submitted that under Section 122 of the MSCS Act, such a power could only be exercised by the Department of Agriculture and Cooperation under the Government of India Rules. The role of the Department of Fertilizers was only to look into the administrative responsibilities for fertilizer production in the cooperative sector. The entire gamut of organization, incorporation, constitution of societies and its Bye-Laws were to be looked into by the Department of Agriculture and Cooperation.

7. Learned senior counsel for respondent No. 5 KRIBHCO Mr. V.P. Singh submitted that the petition was wholly misplaced and misconceived. He submitted that the petitioner has no locus standi to file the petition. When the Society itself, i.e. respondent No. 5, was accepting the organizational and structural change, the petitioner had no locus to file this petition. He submits that the decision of reorganization of IFFCO and KRIBHCO has been taken bona fide by the Central Government in the interest of the two societies. The petitioner himself, being a member of the Society, has no locus to challenge the said decision. He submits that if at all the petitioner is aggrieved, his remedy lies by way of an action under Section 84 Clause 1(b) of the Act. Learned Senior Counsel also submits that similar writ petitions filed before the High Court of Punjab & Haryana as also before the High Court of Rajasthan had been dismissed and the filing of the present petition is nothing but forum hunting. Learned Counsel for the petitioner submits that the petition in Punjab & Haryana High Court was not filed by the petitioner and the petition in the High Court of Rajasthan was dismissed only on the ground of want of jurisdiction.

8. Learned Counsel for the respondent had also objected to the entertainment of the petition on the ground of delay and latches. We find considerable merit in this objection also apart from the objection with regard to locus standi. Petitioner seeks to explain the delay saying that it was based on certain news reports in 2006 that he became aware of the impugned order. He thereafter, obtained the registered Bye-Laws. This was rightly refuted by learned Counsel for respondent No. 5, who submits that the petitioner's Vice President was himself present during the Annual General Meeting and, therefore, it is idle to contend that the petitioner learnt of the impugned order only from newspaper reports. We accordingly hold that the petitioner has not been able to explain the unreasonable delay in challenging the impugned order.

9. Learned Counsel for the respondent Union of India Mr. Rajeeve Mehra, who appears both for the department of Agriculture and department of Chemicals and Fertilizers, submits that the order passed in September, 2004 was a part of restructuring of the two cooperative societies. The order was passed in public interest and for the purposes of securing proper implementation of the cooperative movement and other development programmes approved by the Central Government. He submits that it was done to secure proper management of the businesses of KRIBHCO and further, for preventing the affairs of the society being conducted in a manner detrimental to the interests of the members. He submits that the impugned order was in consonance with the legislative intent in enactment of Sections 29 and 43 of the Act to ensure that a cooperative society does not become a member of Multi State Cooperative Society if it has a competing interest qua the society.

10. We are, prima facie, of the view that the Central Government has taken a plausible view based on its perspective, which cannot be said to be vitiated by any malafides. In our view, it does not lie in the mouth of the petitioner and individual member of the cooperative society to challenge the decision of the Government without the challenge being made by the Cooperative Society itself. Besides, the petitioner does not have any locus standi to determine who should or should not be the member and it does not lie within the domain of the petitioner to question whether a particular society be made a member of answering respondent or not.

In view of the foregoing discussion, we find that the petitioner lacks the locus standi to institute the petition in the circumstances as noted above and the petition itself is highly belated, without any explanation for delay. Besides, it is also not maintainable as the Society itself, namely respondent No. 5, has not challenged the impugned order.

The petition is accordingly dismissed.