B.S. Chauhan, J. - (1.) All these appeals have been preferred against the impugned judgment and order dated 1st May, 2007 of the High Court of Judicature, Andhra Pradesh at Hyderabad in Writ Petition No. 2214 of 2006, by which the High Court has struck down the provisions of Andhra Pradesh Mutually Aided Co-operative Societies (Amendment) Act, 2006 (hereinafter called as Act 2006) as unconstitutional and further declared that even if the Act 2006 is to be considered constitutional, provisions providing that the Boards of Directors appointed under the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 (hereinafter called Act 1995) shall be deemed to have been continued under the provisions of A.P. Co-operative Societies Act, 1964 (hereinafter called Act 1964), and further G.O. Ms. No. 10 Animal Husbandry, Dairy Development & Fisheries (Dairy-II) Department, dated 4.2.2006 and the consequential proceedings/orders of the Milk Commissioner and Registrar of Milk Co-operatives and the District Collectors concerned in these regards, are quashed.
(2.) Facts: A. The Government of Andhra Pradesh introduced an integrated milk project in the State with the assistance of the UNICEF, according to which, the rural surplus milk produced in the villages was transported to chilling centres and supplied to consumers of Hyderabad. A milk conservation plant/milk products factory was established at Vijayawada in 1969 as a part of the project. In the meanwhile, the Act 1964 came into force w.e.f. 1.8.1964. B. In years 1970-71, the Government of Andhra Pradesh set up an independent Dairy Development Department (hereinafter called the Department) and intensive efforts were made by the Government to give a boost to the Department taking various measures. C. In year 1974, Andhra Pradesh Dairy Development Corporation Ltd. (hereinafter called the Corporation), a company under the Indian Companies Act, 1956, fully owned by the State Government was constituted and the entire dairy infrastructure and assets of the Department of the State stood transferred to the said Corporation vide order dated 15.4.1974. The employees of the Department were absorbed in the Corporation. A huge amount has been contributed by the Government from year 1974 onwards to develop the dairy products. D. The Andhra Pradesh Dairy Development Cooperative Federation Ltd. (hereinafter called the Federation) was registered as a Cooperative Society and all the assets and dairy infrastructure were transferred to the Federation. The State Government vide order dated 10.12.1980 permitted the Federation to hand over the management of the respective units set up at the State expenses to the Societies subject to conditions stipulated in the agreement. Mainly the terms incorporated therein provided for transfer of assets on lease basis, and the State to stand as a guarantor for the payment of loan component and financial assistance etc. E. The Government further permitted the Federation to hand over the management of respective units and operation hitherto to various societies with the right of procurement and further dairy development activities such as manufacturing, processing, feed mixing plants alongwith the concerned employees to the District Milk Producers Cooperative Unions with effect from a mutually agreeable date. F. During the years of 1991 and 1995, the benefits of financial assistance rendered to the units by the State and the Central Governments had been very huge i.e. Rs. 159.45 lakhs and Rs. 729.97 lakhs. G. On commencement of the Act 1995 into force, the existing co-operative societies registered under the Act 1964 could opt to be covered by the Act 1995 with certain conditions, namely, the share capital from the Government, if any, had to be returned and the societies should not accept any Government assistance, and further the societies had to enter into the Memorandum of Understanding (hereinafter called the MoU) for outstanding loans and guarantees or return of the government assistance. These had been conditions precedent for registration of a society under the Act 1995. A very large number of new societies came into existence and were registered under the Act 1995. Many societies already registered under the Act 1964 also got themselves registered under the Act 1995. H. There had been some irregularities in getting the registration under the Act 1995 by certain societies registered under the Act 1964 and some of them did not execute the MoU. Thus, the Statutory Authority issued show cause notices to such societies under Section 4(3) of the Act 1995 on 29.11.2004 to show cause as to why their registration under the Act 1995 be not cancelled. I. Eight writ petitions were filed by 8 District Milk Unions challenging the said show cause notices before the High Court. The Federation filed original petition in various Co-operative Tribunals seeking dissolution of its societies under Section 40 of the Act 1995 as the statutory requirements had not been complied with. J. The Co-operative Tribunal vide its judgment and order dated 9.12.2004 dismissed the original petition against Visakha District Union on the premises that the Act 1995 had not mentioned about returns of assets and the Managing Director had no power to further delegate the power to some one to file the petition. K. The Legislative Assembly of the Andhra Pradesh vide Resolution dated 8.2.2005 constituted a House Committee consisting of its members belonging to different political parties to investigate into irregularities committed by two of the eight District Unions, namely, Visakha and Ongole (Prakasham) Unions, who also got registered under the Act 1995. The Committee submitted its report pointing out certain irregularities by the said Unions. The Committee also opined that the Act 1995 had adverse consequences on the dairy co-operatives, as it had broken down 3-tier structure, reduced the brand value of Vijaya Brand, created conflict in marketing structures, weakened the financial position of some District Milk Unions etc. and had broken down the common cadre of employees. L. After considering the said report, the State Government constituted a Committee consisting of Ministers to consider the recommendations of the House Committee vide order dated 23.8.2005. It was this Committee which recommended that dairy co-operatives be excluded from the purview of the Act 1995 and so far as the dairy co-operatives are concerned, it should be restored to 3-tier structure. Meanwhile, the order passed by the Co-operative Tribunal was challenged in the Writ Petition No. 1420 of 2006 in pursuance to the policy decision of the Government to exclude the dairy societies from the purview of the Act 1995 and to bring them back under the Act 1964. M. The State promulgated the Ordinance No. 2/2006 excluding the milk dairy co-operative societies from the societies covered by the Act 1995 and imported the fiction that such dairies would be deemed to have been registered under the Act 1964, with effect from the date of registration under the Act 1995. N. Government Order dated 4.2.2006 was issued to give effect to such amendments and also to take care of transitional position, particularly providing that District Collector would appoint the person in-charge under Section 32(7) of the Act 1964 to manage the affairs of all primary milk producers co-operative societies till further elections or until further orders, so that affairs of those societies would be managed properly. O. Writ Petitions were filed before the High Court by various District Milk Producers Co-operative Unions challenging Ordinance No. 2/2006 and consequential Government Order dated 4.2.2006. The High Court vide interim order dated 8.2.2006 stayed the operation of the Government Order dated 4.2.2006. Meanwhile, the Ordinance was converted into the Act. By the impugned judgment dated 1.5.2007, the High Court allowed the writ petitions. Hence, these appeals. Rival Submissions:
(3.) Shri R. Venkataramani, Shri S.S. Prasad, learned senior counsel appearing for the Appellants have submitted that the impugned judgment and order are untenable as the Legislature is competent to amend the Act and while doing so the Legislature in its wisdom had rightly decided to treat the milk dairy co-operatives distinctly from all other kinds of societies. Thus, no grievance of discrimination could be raised. More so, there is no discrimination among the milk dairies, as all such dairies have been treated as a separate class. The amendment had not taken away any vested or statutory right of the writ Petitioners by the impugned Act. Both the Acts i.e. Act 1964 as well as Act 1995 are based on the same set of the co-operative principles and serve different sectors of the co-operatives in different ways. Both the Acts co-exist and are not mutually conflicting. Therefore, the question of doubting the validity of the Act 2006 merely on the ground of having retrospective application could not arise. The members of the management committee of the District Unions/writ Petitioners could again contest the election for the posts in their respective society under the Act 1964. Appointment of persons in-charge was merely a temporary/transitional phase to facilitate such elections and, therefore, there was no violation of fundamental rights of any of the writ Petitioners. The High Court erred in recording the finding that the Act 2006 stood vitiated on the ground that it had breached promissory estoppel. The Government undoubtedly, had transferred the management of the assets to the District Unions and as the said District Unions would continue with such management of assets, there was no question of breach of any of the promises made by the State. Doctrine of promissory estoppel does not apply to legislature. There was a rational nexus to enact the Act 2006 as a large number of the milk dairy societies did not enter into the MoU as required under Section 4(4) of the Act 1995. Such legislative action could not be termed as arbitrary and warranting attraction of the provisions of Article 14 of the Constitution of India. There were valid reasons for excluding the milk/dairy societies from the provisions of the Act 1995. Dairy industry being peculiar and having distinct characteristics required States moderation and intervention. Having regard to the special and distinctive features of the Dairy industry and the existence of large number of financially weak and dependent primary milk Co-operative Societies, and the necessity of State funding of these societies, it has been found necessary to take dairy industry out of the purview of 1995 Act. The High Court failed to make distinction of dairy milk societies from other co-operative societies as the dairy milk societies are having with them substantial government interest, assets and government investments. All the societies including the primary societies are dependent on the government and its assets. Such a financial assistance has been granted in view of the provisions of Section 43 of the Act 1964 and the government control over such societies under the Act 1964 is minimal. It was not that the Act 2006 had been brought to have government control over milk dairy societies as under the Act 1995 the government control was negligible. The societies under the Act 1995 "have to be self reliant". Thus, the Act assured such societies a complete autonomy. The Act 2006 was enacted on the recommendation of the House Committee which suggested remedial measures for effective functioning of the dairies in the State. It was so necessary to reconfirm the 3-tier structure e.g. apex society, central society and primary society as such a classification was not available under the Act 1995. The Statement of Objects and Reasons of the Act 2006 clearly provided for justification of amendment (impugned). Therefore, appeals deserve to be allowed and the impugned judgment and order of the High Court is liable to be set aside.;