P K PATIL Vs. J G KANGA

JUDGEMENT

(1.) This Special Civil Application is directed against the order of the State Government dated 10-2-1977 dismissing the appeal of the petitioners preferred by them against the order of the Registrar, Co-operative Societies, Maharashtra State, dated 8th October, 1976, superseding the Managing Committee of the Satpuda Tapi Parlsar Sahakari Sakhar Karkhana Ltd., Purshottam Nagar, hereinafter referred to as the Karkhana and entrusting the management thereof to an Administrator. Few facts giving rise to this Special Civil Application can be stated thus:

(2.) This Karkhana was registered as a Multi-Unit Co-operative Society on 5th September, 1969 under the Multi-Unit Co-operative Societies Act, 1942 (Central Act). The area of operation of this Society consists of 376 villages from the State of Maharashtra, 47 villages from the State of Gujarat and 34 villages from the State of Madhya Pradesh, though the location of the Karkhana is at Purshottam Nagar in taluka Shahada of Dhulia district in Maharashtra. The Karkhana was established for the production of the Management of the society was entrusted to a Board of Directors otherwise known under the Act as the Managing Committee consisting of 16 members. The Karkhana commenced its operation during the year 1972-73. Originally the crushing capacity of this Karkhana was 1,250 TCD. Encouraged by the results of the achievements of the very first year the Managing Committee decided to expand the crushing capacity from 1,250 TCD to 2,500 TCD and also to set up distillery for the manufacture of alcohol, country liquor Moha liquor out of the molasses. This expansion naturally needed licences, applications for which were made to the competent authorities immediately after the decision and this expansion scheme. This necessitated, in the first place the installation of machinery and purchase involving the expenses of Lakhs of Rupees for the purchase of the machinery as also construction of the necessary building and sheds. The Managing Committee had expected to meet these capital financial requirements by increasing the subscribed capital, subsidies from the Government and also long term loan for capital investment from the Industrial Finance Corporation of India as well as other Banking Institutions. They accordingly placed orders for the machineries. In the month of August, 1974 they also made commitments with the growers of sugar-cane in the hope that the machinery will be installed before the end of February, 1974 and crushing capacity of the Karkhana would get increased. It appears that by that time the suppliers of the machinery from Calcutta had committed to the Karkhana that the added machinery will be supplied by the end of January, 1974. Application for licence, however, was not granted till the month of December, 1973. This delay in the grant of licence prevented the Industrial Finance Corporation and other Banking Institutions from advancing the long term loans. Due to the shortage of power and other difficulties, Calcutta machinery suppliers also could not instal the machinery till the month of June, 1974. This resulted firstly, in prolonging the crushing period from September, 1973 to July, 1974, instead of from November, 1973 to May, 1974 necessitating the crushing of the immature and dry sugar-cane. This consequently resulted in the fall in the quantity of sugar which ordinarily could have been produced with the same quantity of sugar which ordinarily could have been produced with the same quantity of sugar cane had the crushing operations being confined to the period from November, 1972 to May, 1974. In the first place, the Karkhana was driven to pay compensation to the growers of the tune of 10 Lakhs of Rupees for failure to purchase the sugar-cane grown by them for the factory. Secondly, as stated earlier, the average of 10-50 per cent of sugar production fell to 9.48 resulting in the loss of several lakhs of bags of gur, the loss having been estimated to the tune of Rs. 1,12,00,000/- and odd. Failure to get the long term loans from the Banking Institutions drove the Karkhana to utilise the short term loans available for the recurring expenses and to obtain them at higher rate of interest at all per cent per annum. This also resulted in preventing the Karkhana from making payment to the growers of sugar-cane who had grown sugar-cane in compliance with their commitment to the Karkhana, which in turn discouraged from them growing the sugar-cane in the coming years, viz., 1974-75 and 1975-76. Sugar-cane growing area stood reduced to 7000 acres in 1976-77 from the total average of 21,500 in the beginning of 1973-74 and 16,214 in 1974-75 and 10,500 in 1975-76.

(3.) This seems to have been noticed by the Registrar, who prima facie found that this was the result of the negligence of the Directors of the Karkhana and action under section 78 of the Maharashtra Co-operative Societies Act was called for. It may be noticed even at this stage that though the Karkhana is registered as a Society under the Central Act, the Registrar, Co-operative Societies of Maharashtra is competent to take action under section 78 of the Maharashtra Co-operative Societies Act because of the delegation of the powers by the Central Registrar under section 5-B of the Central Act, when the Society is deemed to have been registered under the Maharashtra Co-operative Societies Act.