- (1.) R. N. Ray, J. Heard the learned counsel for the Parties. All these 4 petitions are taken up for hearing together by more less common question of law and facts are involved in these cases.
(2.) THE senior learned counsel for the petitioners, Sri R. G. Padia con tended that these petitions have been filed to quash the arbitrary advertisement in the newspaper dated 22-7-1994 published in the daily (Times of India) calling for tenders for the sale of the disputed Co-operative Sugar Mills, namely, Kisan Sahkari Chini Mills, Samity, Sathiaon, Azamgarh and also for quashing the notice issued by the Registrar, respondent No. 1 on 18-7-1994. A copy of which is filed as (Annexure '12' and '13' to the petition) and notice was issued to Principal Manager, Kisan Sahkari Chini Mills, Sathiaon, Azamgarh and to the District Magistrate, U. P. Co-operative Federation at Lucknow and also to some of the members of the Co- operative Society. The case of the petitioners is that the petitioners are ordinary members of the society in question duly registered under the provisions of the U. P. Co-operative Societies Act. All the petitioners hold their share to the extent of Rs. 200 each in the said society. The society in question namely, Kisan Co- operative Sugar Mill Society, Sathiaon, Azamgarh owns a Sugar Mill at Azamgarh and the said Mill is operated through the society in ques tion. All these cane growers are also share-holders in the said sugar mill. It is submitted that there are about 32 Co-operative Societies which are also the members of the society in question and the State Government is also a member of the society and in fact the bulk of share capital to the extent of more than 90% is of the State Government. The said society was constituted in the year 1972 with 11 founder members and the sugar mill started function ing in the year 1975-76 and under the Bye-Laws a provisional/at/ hoc Manag ing Committee was constituted and it worked upto 1978. Thereafter an order was passed by the Registrar, Co-operative Sugar Mills, U. P. dated 21-7-1978 suspending the management and appointing an authorised controller. A copy of the order dated 21-7-1978 is filed as (Annexure '2' to the petition ). There after a fresh order was passed to constitute the Board by duly elected delegates and thereafter there could be no election/nominations by the State Government and as such there shall be no election of the nominees of the State Government and thereafter another order was passed on 9-12-1981 appointing the collector as the Administrator. A copy of the order dated 9-12-1981 is filed and marked (as Annexure '3' to the petition ). That vide order dated 5-4-1994, the respondent No. 1 issued a press notification, inviting applications for the purpose of election, including the petitioner. In that order it was stated that the election of the representative of the society will be held upto 15-5-1994 and 15-6-1994 was fixed for holding the election for electing the members of the Committee of Management. A copy of the order dated 5-4- 1994 is filed and marked as Annexure '4' to the petition. Thereafter vide order dated 24-6-1994 the Deputy Cane Commissioner made an enquiry in respect of the sugar mill society including the petitioners society about the extent of completion of election programme. A copy of the order dated 24- 6-1994 is filed and marked as Annexure '5' to the petition ). The Secretary of the society in question by his letter dated 25-6-1994 submitted necessary information and the name of the petitioner society was shown at serial No. 1. A copy of the said letter dated 25-6-1994 is filed (as Annexure '6' to the petition ). That on 9-5-1994 it was directed to stop further proceedings pertaining to elections and by a fresh order dated 15-7-1994 of the respondent No. 1, the dates for election were re-fixed and delegates were elected upto 14-8-1994 and the Managing Com mittee was constituted upto 15-9-1994 and similar elections in respect of respondent No. 2, that is, U. P. Co-operative Sugar Factories Federation Ltd. , Lucknow will be held upto 15-10-1994. A copy of the letter dated 15-7-1994 is filed and marked (as annexure '7' to the petition ). A fresh election pro gramme was also issued in the daily newspaper 'dainik Deobrat' dated 20-7-1994 in respect of the society in question. A true copy of the same is filed herewith and is marked (as Annexure '8' to the petition ). It has been asserted by the learned counsel for the petitioner that the present society of the petitioners is huge profitable society. In the financial year 1993-94, it earned a net profit of Rs. 19,33,467 and gross profit of Rs. 29,36,824. A copy of the said certificate is filed and marked (as Annexure '10' to the petition ). The balance-sheet of the society as on 31-3-1994 duly certified by the Chartered Accountant which shows the net profit of the society in respect of financial year 1993-94 as Rs. 19,33,467 and the gross profit was Rs. 29,36,824. A copy of the balance-sheet is filed and marked (as Annexure '11'to the petition ). According to the petitioners a notice was issued by the respondent No. 1 on 18-7-1994 asking the society as to why it should not be wound up in accord ance with the provisions of Section 72 (2) (d) of the U. P. Co-operative Socie ties Act, 1965. A copy of the notice dated 18-7-1994 is filed and marked (as annexure '12' to the petition ). In this petition the petitioners have prayed for quashing the same. It is the case of the petitioners that under the provi sions of Section 72 (2) of the Act, the Registrar may of his own motion and after giving such notice as may be prescribed pass an order directing the winding up of a co-operative society. Section 72 (d) runs as follows :- ' (d) Where the Co-operative Society id no longer fulfiling its objects or complying with the requirements of clause (d) of sub-section (1) of Section 7. Clause (d) of Sub-clause (1) of Section 7 of U. P. Co-operative Societies Act, 1965 runs as follows : " (d) that the proposed society complies with the requirements of rules in regard to the existence of any conditions in general or for the class of societies to which the particular society belongs and with the requirements of sound business and has reasonable chances of success. " It has been further contended by the learned counsel for the petitioners that for winding up a letter was issued in respect of the society at Budaun run by the same co-operative society. However, an order was thereafter passed not to wind up the said society in Budaun in view of the fact that in the financial year 1993-94 the said sugar Milll at Budaun made a profit to the extent of Rs. 17. 30 lakhs and the gross profit being to the extent of Rs. 27. 41 lakhs which is inclusive of depreciation. It has been conten ded that the impugned notice dated 18-7-1994 (Annexure '12' to the petition), is motivated and mala fide and it has been contended that there are 10 more sugar Mills which are incurring loss every year including the financial year of 1993-94. According to the petitioner those are not made the target for the winding up by the Registrar under the U. P. Co-operative Societies Act. It has been further submitted that the impugned notice dated 18-7-1994 was on the dictation and illegal pressure and inference by respondent No. 2. It has been submitted that the respondent No. 1 issued notice on the dictation of respondent No. 2 which will be revealed in the impugned notice itself i. e. from the reference of letter dated 16-6-94 as appeared in that notice. The respondent No. 1 is to function as the statutory authority but he failed to apply his own mind on being pressurized by respondent No. 2 and as such the notice should be quashed. It has been further submitted that the notice was bad because it suffers from vagueness. It is submitted that in notice it was alleged that the society had totally failed to fulfill the objects and aims of the society for which the society was established but the notice did not contain any specific reference as to which may and to what manner objects remained unfulfilled for which respondent No. 1 felt it necessary to wind up the society under the purported exercise of sub-section (2) of Section 72 of that Act. It has been contended that on a perusal of that letter dated 18-7-94, it will appear that respondent No. 1 was directed by respondent No. 2 to issue such notice without giving any scope for him to apply his own mind as required under the provisions of Section 72 (2) of that Act. The representa tions of the petitioners are marked as Annexures '14' and '15' to the petition which are of 15-3-94 and 22-7-94. The respondent No. 2 issued fresh notice inviting tenders for the sale of petitioner's sugar Mills as published in the news paper 'dainik Deobrat' published on 20-7-94. It has been contended that respondent No. 1 could not apply his own independent mind at the time of issuance of the impugned notice (Annexure '12'to the petition) which, the respondent No. 1, has described as an order instead of notice. It is not the mere mistake in nomenclature but that reveals mental strain of the respondent No. 1 in which he was in at the time of issuance of the impugned notice (Annexure '12' to the petition ). This contention will be further supported from the fact that notice suffers from vagueness as he did not specify as to which of the objects got totally frustrated. It has been further contended that fresh advertisement was made promptly after the issuance of the impugn ed notice. In this way the learned counsel for the petitioners tried to impress upon the court that the respondent No. 2 knew it fully that under their pressure what respondent No. 1 was going to do and as such before the issuance of notice the respondent No. 2 could indulge himself in making advertisement inviting tenders for the sale of sugar owned by the petitioners and after revoking its tender notice promptly secured advertisement. In support of the contentions made by the learned counsel for the petitioners they referred following rulings regarding the maintainability of the writ peti tion reported in AIR 1981 SC 344. No direction can be issued by other higher authority, AIR 1970 SC 1986 ; allegations made in the notice should be specified and not vague ; AIR 1971 SC 752 ; AIR 1986 SC 995 ; and 1983 UPLBEC 67. The validity of an order must be judged only by reading the order itself and not by taking recourse to any other matter, AIR 1978 SC 851. It has been contended that the court should not assess the correctness of the notice by referring to other documents of facts but the court should base its decision upon itself examining the notice. In this regard the learned counsel for the petitioners has referred a decision as reported in AIR 1978 SC 851. The contention of the petitioners are more or less the same in all. In one of writ petitions it was argued that the election process was still in progress.
(3.) THE learned counsel for the respondents further contended that it was pertinent to point out that Kisan Sahkari Chini Mills, Ltd. , Sathiaon, is a sugar Mill having its crushing capacity of 1250 TCD. THE Central Govern ment constituted the committee and it has, after elaborate enquiry and consi deration of cost and expenditure, given its recommendation that, with the change of time over the years a sugar Mill with crushing capacity of 1250 TCD is no longer a vailable unit. It is further submitted that area where the Mill is situated is also short of supply of cane and this has been the continuous features for the last 18 years. It is further submitted that in this regard that the Mill society, for its optimum utilisation is requirable to crush 22. 50 lakhs quintals of cane per season of 180 days at the rate of 1250 TCD. However, the review over the past 18 years it was found that optimum quantity of cane was not available in the area. In this connection, learned counsel for the respondents drew my attention to Annexure '3' to the counter-affidavit and submitted that a bare reading of the same and could reveal that average cane crushing over last 18 years is only 10. 0 lakhs quintals of sugarcane per season which show that the mill society had continuously failed to fulfil its very object for which the mill was established and in spite of huge Government funding and protection over the past years ; there is no chance of Its improvement and the Government had already contributed more than the amount of Rs- 18-98 crores approximately for the off season repairs of Sathiaon Sugar Factory as well as cane development projects, etc. , but in spite of the best efforts in the past it failed and the society has completely failed to fulfil its objects. A copy of the chart showing the investment made by the State Government for the repairs of the said sugar mill with effect from 1991-92 is being filed herewith and marked (as Annexure '4' to the counter-affidavit ). It is further submitted that the case of Budaun society cannot be equated with Sathiaon society inasmuch as the petitioners have made false and incorrect statements of profit of Sathiaon mill society in the year 1993-94, whereas during 1993-94 the Sathiaon mill society had run into losses. THE position of the Ghosi mill society absolutely different since they are in process to expand their crushing capacity from 1250 TCD to 2500 TCD and the mill society is also running a Distillary in order to achieve its objectives and, therefore, their overall finan cial condition is much better and they are fulfilling their objectives for which they are established. Similarlarly, Kayamganj society is not only running the mill but is also running the distillary and, therefore, stands all together on different footing than the Sathiaon mill society. According to respondent No. 2, the Registrar has issued notice strictly in the exercise of powers vested in law under Section 72 (2) (d) of the U. P. Co-operative Societies Act, 1965 and it has been submitted that the letter dated 16-6-94 issued by the respondent No. 2 to respondent No. 1 was purely a communication and respondent No. 2 duly issued the letter because it was the duty of the respondent No. 2 to state regarding financial condition and to suggest that necessary steps for due consideration. It has been contended that the petitioners are mere share holders and cannot have the locus standi to file this writ petitions because the number of share-holders are Rs. 10,000 and only a very insignificant number of share-holders have come up with writ petition praying for quashing the tender notice and also for quashing the notice to show cause. It has been further contended by the respondent that, by this tender notice, the respondent No. 2/government or any authority under the control of the Government are not going to sell this sugar mill so the notice inviting tenders for the sale of the sugar mill may be quashed on the sub missions of the learned counsel for the respondents but the learned counsel for the respondent No. 2 further con tended that the impugned show-cause notice is Annexure '12' to the writ petition was perfectly valid and it was issued under the full authority as enjoyed by respondent No. 1 after applying his mind as required. THE respondent No. 1 submitted regarding the letter issued by the respondent No. 2 that respondent No. 2 was thoroughly convinced relating to continuous loss incurred by the co-operative society and it was felt necessary by the respondent No. 1 to wind up the society to avoid further loss for the best interest of all concerned. It is true that if the factory is closed the workers employed therein will automatically be terminated and if it is found palpable on the face of the record before the Court that the society has been running loss all, through since its inception, certainly that per se will justify the issuance of the notice issued by the respondent No. 1 that is Annexure 12 to the writ petition. It has been further contended that if the society was formed definitely for the purpose to make profit and in case of failure the Registrar should seriously consider for winding up of the society if the society is running at loss for considerable period without showing any improvement. In this regard learned counsel for the respondents drew my attention to Section 7 (1) clause (d) of the Act. The learned counsel for the respondent No. 2 submitted that respon dent No. 2 is an apex society which would reveal from Section 2 (a-4 ). It has been contended that from the bye-laws of the U. P. Co- operative Sugar Factories Federation Ltd,, Lucknow, it would appear from paragraph 5 (h) that it is the duty of the respondent No 2 to supervise and guide the working of member factories generally and as may be necessary under Section 123 and advice regarding their work.;