IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 10.02.2010 CORAM: THE HONOURABLE MR.JUSTICE S.MANIKUMAR Writ Petition No.12990 of 2000 A.A.Subba Raja ... Petitioner v. 1. The Secretary to Government, State of Tamil nadu, Agriculture Department, Fort St. George, Chennai-9. 2. The Secretary to Government, State of Tamil nadu, Animal Husbandary and Fisheries Department, Fort St. George, Chennai-9. 3. The Commissioner/Registrar for Milk Production and Dairy Development Department, Milk Colony, Madhavaram, Chennai-51. ... Respondents Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, to call for the records relating to the proceedings of the second respondent in G.O.(Ms.)No.236, Animal Husbandary and Fisheries (MP.II) Department, dated 24.11.1999 and records relating to the proceedings of the third respondent in Na.Ka.No.28027/K3/89, dated 23.09.1989 and quash the above proceedings of the respondents 2 and 3. For petitioner : Mr.K.Govi Ganesan For Respondents : Mr.D.Geetha, Addl. Govt. Pleader O R D E R The President of Rajapalayam Milk Co-operative Society, Rajapalayam has challenged G.O.(Ms.)No.236, Animal Husbandary and Fisheries (MP.II) Department, dated 24.11.1999, by which, the Government have rejected the appeal, dated 05.10.1998, against the order of the Commissioner/Registrar for Milk Production and Dairy Development Department, Chennai, third respondent, dated 23.09.1989, by which, the said respondent has issued directions, purporting to be under Section 181 of the Tamil Nadu Co-operative Societies Act, 1983, for conversion of the said Milk Supply Society, in which, the petitioner is a member to a Consumer Society. 2. According to the petitioner, the Rajayapalam Milk Co-poerative Society, Rajapalayam, was formed with the principle object to enable its members to maintain good milch animals to arrange for the purchase of the milk produced by the members of the Society and sell them to general public, thereby, acting as an agent of the members of the Society and for general upliftment and welfare of its members. Consistent with the objectives, the Society had been functioning for nearly seven years. It is also the contention of the petitioner that the Society has been arranging for loans to be given to its members from Nationalised Banks for the purchase of milch cattle, besides giving cattlefeeds on credit basis. 3. It is the further case of the petitioner that the area of operation of the Society extends to the whole of Rajapalayam Town, apart from the neighboring villages extending to 18 Kms. The Society has 17 branches in Rajapalayam Town and 35 branches in the neighboring villages. Milk produced by the members within the area of operation of Society is procured through its employees at various branches, brought to the Headquarters and distributed to the general public through its employees. According to the petitioner, the milk so procured and supplied by the Society is of high quality, conforming to the requirements and standards prescribed by the authorities. 4. The petitioner has further submitted that in 1978, the Government have issued orders in G.O.Ms.No.1000, Agriculture Department, dated 02.06.1978, to effect that it had decided that the organisation pattern for the development of the Dairy Industry in Tamil Nadu should be based on "Anand pattern" of producers' Society at the village level, District level and ultimately at the State level. By the said Government Order, the Government had decided that the existing traditional milk supply societies should be converted into producers societies in an orderly way, avoiding financial and administrative dislocation. In the said order, the Government have also expressed the decision that organised societies should be formed to handle only distribution of milk. 5. The petitioner has further submitted that though the above said orders were issued in 1978, no effective steps were taken to implement the said G.O. The only action that had been taken by the concerned authorities in this regard was to ask the societies to send a proposal approved by their General Body to convert themselves into a milk producers Co-operative Societies. Insofar as the petitioner's Society is concerned, the general body of the Society had unanimously resolved to turn down the proposed and requested the authorities to enable the Society to continue as a producers- cum-supply Society. 6. While be the case, by impugned order, dated 23.09.1989, Commissioner/Registrar for Milk Production and Dairy Development Department, third respondent herein, issued directions to Rajayapalam Milk Co-poerative Society, Rajapalayam, purporting to be issued under Section 181 of the Tamil Nadu Co-operative Societies Act, directing conversion of the said Society into a milk consumers co-operative Society. By the said order, the Society has been prohibited from purchasing milk and further directed to function only as a milk consumers Co-operative Society, and supply milk to the consumers to be purchased by the Society, from Kamarajar District Co-operative Milk Producers Co-operative Union. 7. Aggrieved by the order of the third respondent, the petitioner filed a Writ Petition in W.P.No.13864 of 1989 and this Court, while entertaining the said Writ Petition, by order, dated 12.10.1989, in W.M.P.No.20008/1989, has granted interim stay of the operation of the said order. Finally, the Writ Petition came to be disposed of on 16.09.1998, directing the petitioner to prefer an appeal. The appeal to the Government, dated 05.10.1998, has been rejected by G.O.(Ms.)No.236, Animal Husbandary and Fisheries (MP.II) Department, dated 24.11.1999 on the ground that the Society cannot claim any fundamental right under Article 19(1)(g) of the Constitution of India and that there is no deprivation of the right guaranteed under Article 300(A) of the Constitution of India and that the Society will not be liquidated by mere conversion from Milk Supply Co-operative Society to Milk Consumer Society. In these circumstances, the petitioner, being the President of the Society, in his individual and on behalf of the members of the Socieity, has come forward to prefer the present Writ Petition for the relief as stated supra. 8. Taking this Court through the Government Order in G.O.Ms.No.1000, Agriculture Department, dated 02.06.1978, Mr.Kovi Ganesan, learned counsel for the petitioner submitted that though the Government of Tamil Nadu, have decided to convert the traditional supply Society, into that of a producers Society or Union, as the case may be, and decided that consumers Societies may be organised for conversion of the existing several units, from the year 1978 to 1989, no effective steps were taken by the Government for 11 years and the said Government Order, being directory in nature, the respondents, cannot compel the Society, in which, the petitioner is a member to convert into a producer or consumer Society, contrary to the objects of the Society, for which, it is formed. 9. Inviting the attention of this court to the unanimous resolution passed by the Society, to which, the petitioner is a member, learned counsel for the petitioner submitted that the members of the Society have a statutory right to form a particular Society, which is permissible under the provisions of the Tamil Nadu Co-operative Societies Act and the Rules made thereunder with specific objectives. In the present case, Rajapalayam Milk Co-operative Society was formed with the working arrangement of purchasing milk produced by the members of the Society and sell them to general public and for the up-liftment and welfare of the members, as one of the objectives and by virtue of the impugned orders, the very basic foundation of the Society, would be set at naught and that would be an infringement of the rights guaranteed to the members of the Society under Article 19(1)(g) of the Constitution of India and therefore, the impugned orders are unconstitutional and arbitrary. 10. It is the further case of the petitioner that by impugned order, dated 24.11.1999, the third respondent has virtually prohibited the society from purchasing milk from any quarters and to sell them to general public. According to him, so as long as the objects and purpose of the existing Society are lawful and in accordance with statutory provisions under the Tamil Nadu Co-operative Societies Act, rules framed thereunder and the Bye-laws of the Co-operative Society, as approved by the Registrar of Co-operative Societies, Chennai, the impugned orders purported to have been issued under Section 181 of the Tamil nadu Co-operative Societies Act, would alter the nature and category of the Society. 11. Referring to Rule 14 of the Tamil nadu Co-operative Societies Rules, 1988, which deals with the classification and categorisation of the societies and Rajapalayam Milk Co-operative Society, Rajapalayam, milk supply Society is one of the dairy societies registered under the Tamil Nadu Co- operative Societies Act and the Rules made thereunder, learned counsel for the petitioner further submitted that when registration and existence of the Supply Society is permissible under the statutory provisions, the respondents 1 and 3 do not have jurisdiction to issue any directions, under the guise of exercising power under Section 181 of the Act, which would alter the character and category of the Society, if such direction has to be enforced, then it would liquidate the very existence of the Society in which, the petitioner is a member. 12. Reverting back to G.O.Ms.No.1000, Agriculture Department, dated 02.06.1978, and in particular, to paragraph 4, which states that the consumer societies may be organised by conversion of existing supply union to handle only distribution of milk and he submitted that the said order is only directory in nature and the impugned orders are even violative of above said G.O. 13. Referring to the factors contained in Section 181 of the Tamil nadu Co-operative Societies Act and also the contents of G.O.Ms.No.263, Animal Husbandry (Fisheries) Department, dated 24.11.1999, learned counsel for the petitioner further submitted that in the absence of any materials indicating the subjective satisfaction of the Government or the Registrar of Co-operative Societies, Chennai, warranting a decision said to have been in public interest, the order of the third respondent, directing conversion of the Society, in which, the petitioner is a member into a milk consumer Society, is arbitrary and nothing but colourable exercise of power. 14. Placing reliance on a decision of the Supreme Court in State of Maharashtra v. Karvanagar Sahakari Griha Rachana Sanstha Mariy Adit reported in 2000 (9) SCC 295 and inviting the attention of this Court to the objects of the present Society, learned counsel for the petitioner submitted that under the guise of issuing a direction under Section 181 of the Act, the Registrar of Co-operative Societies, has no jurisdiction to alter the basic structure of the Co-operative Society and whenever the Government or the Registrar, exercises their statutory power of issuing any directions to alter the Society, that will have the effect of amending the bye-laws and in such circumstances, the directions issued should satisfy the requirements of the interest of the Society. According to him, when the members of the Society have unanimously resolved not to accept the suggestion for conversion, the impugned orders compelling the Society to alter its character, is not in the interest of the Society and therefore, they are liable to be set aside. 15. Placing reliance on a decision of this Court in Sambandam v. Mutheeswarar reported in 2000 (3) MLJ 674, learned counsel for the petitioner submitted that under Section 181 of the Tamil nadu Co- operative Societies Act, the Registrar can issue directions only if he has satisfied that (i) in the public interest, or (2) for the purpose of securing proper implementation of Co-operative production, etc., or (3) to secure the proper management of the business, of any class of registered societies generally, or (4) for preventing the affairs of the registered Society, being conducted in a manner, detrimental to the interest of the members or depositors of the Society. 16. Inviting the attention of this Court to the allegations made in the impugned order of the third respondent, learned counsel for the petitioner submitted that the said allegations have been made only for the purpose of assuming jurisdiction under Section 181 of the Act and that when the Society had not come to any adverse notice for the past 11 years, ever since G.O.Ms.No.1000, was issued, the impugned order reflects mala fide on the part of the third respondent. He also submitted that any directions to be issued under Section 181 of the Act can only be with reference to the statutory provisions of the Act and that the powers of the third respondent are not unfettered and they cannot travel beyond the statutory provisions. 17. Learned counsel for the writ petitioner further submitted that there are nearly 170 persons, working in the Society and implementation of the impugned orders would result in loss of employment of the members of the Society. He also submitted that the Society is selling the milk only at a lesser cost and no complaints have been received from any quarters. 18. Referring to Section 12 of the Tamil nadu Co-operative Societies Act, which confers powers on the Registrar, to direct amendment of bye-laws, learned counsel for the petitioner submitted that the said power can be exercised only for the purpose of altering the area of operation or for the purpose of improving the services rendered by it or for any other purpose, specified in the rules, after consulting in the manner prescribed, the Board and the financial banks, if any, to which, the societies are affiliated and in such circumstances, the Society should have been given a notice, in writing to show cause as to why the amendment should not be made. 19. It is the contention of the learned counsel for the petitioner that when the impugned directions are stated to have been issued under Section 181 of the Act, in effect, they alters its bye-laws and therefore, the Society ought to have been given a statutory notice and failure to follow the procedure, has resulted in violation of Section 12 of the Act and also the principles of natural justice. He further submitted that when the above said points were placed before the appellate authority, the same were not properly considered in the light of statutory provisions. According to him, the impugned directions are contrary to the statutory provisions and therefore, they are liable to be set aside. 20. Based on the averments contained in the counter affidavit filed by the Joint Secretary to Government (Milk), Animal Husbandary & Fisheries Department, Chennai, second respondent, Mrs.D.Geetha, learned Additional Government Pleader, taking this Court through G.O.(Ms.).No.1000, Agriculture Department, dated 02.06.1978, submitted that way back in the year 1978, the Government took a policy decision to the effect that the Dairy Industry should be based on Anand pattern of producers and consumers societies, which is a role-model adopted throughout the country. Therefore, as per the policy decision, in every village, there should be a producers Society and Union in the District, having producers societies as its members and ultimately, there should be a State Federation, having the District Unions as its members. 21. Learned Additional Government Pleader further submitted that as per the policy decision of the Government, all existing traditional supply Societies and Unions should be converted into producers Societies or Unions in an orderly way, avoiding financial and administrative dislocation. She further submitted that Consumer Societies were directed to be organised by converting the existing supply societies and unions to handle only distribution of milk. She also submitted that when the policy decision of the Government issued in 1978, has not been challenged by the Writ Petitioner, the consequential directions issued by the third respondent, cannot be challenged in this Writ Petition and therefore, it is not open to the member of a Co-operative Society to advance arguments, testing the policy decision of the Government. 22. Learned Additional Government Pleader further submitted that as per the provisions of Section 181 of the Tamil Nadu Co-operative Societies Act, 1983, the Registrar of Co-operative Societies has got ample powers to issue any directions in public interest or for the purpose of securing proper implementation of Co-operative production and other developmental programmes approved or undertaken by the Government. She further submitted that such directions can also be issued generally to all registered societies or a particular registered Society. Therefore, when the policy decision taken by the Government, as notified in G.O.Ms.No.1000, Agriculture Department, dated 02.06.1978, is given effect throughout the State and when the Society has not challenged the decisions, a member of a Society has no statutory or legal right to challenge the consequential order. According to her, the directions of the Registrar of Co-operative Societies, Chennai, satisfy the conditions stated in Section 181 of the Act and therefore, there is no arbitrariness or mala fide on the part of the Registrar. 23. Learned Additional Government Pleader further submitted that except the petitioner's Society, all other Societies in the State of Tamil Nadu have themselves converted either as Consumers or Producers societies and that the petitioner alone has failed to implement the directions. She further submitted that implementation of the Government order would not in any way affect the interests of the Society, in which, the petitioner is a member. She also submitted that when all the supply societies in the State of Tamil Nadu, have converted themselves into the consumers or producers Societies and when they are functioning without any detriment to the members of the Society, the contention of the petitioner that there would be a likelihood of loss of employment to many employees of the society is not supported by any materials and that the same has to be rejected. 24. Learned Additional Government Pleader further submitted that though the members of the Society have passed an unanimous resolution not to accept the suggestion of converting the Society into a consumer Society, the decision taken by the members will not have any legal sanction to override the statutory directions issued under Section 181 of the Act. 25. Learned Additional Government Pleader further submitted that a Society, which is a creature of the Tamil Nadu Co-operative Societies Act, cannot claim rights and freedom guaranteed under Article 19 of the Constitution of India, as the said rights are confined only to natural persons, who are citizens and that a Co-operative Society, not being a natural citizen, cannot claim any constitutional right. She therefore submitted that there is no constitutional violation in issuing the impugned orders. 26. Learned Additional Government Pleader further submitted that by the impugned orders, the petitioner's supply Society has been directed to convert into milk consumer Society and that will not amount to liquidation of the Society nor it will come under the ambit of Article 300-A of the Constitution of India, which deals with deprivation of property. According to her, ever after the change, the Union can procure milk on quality basis and that distribution of the same, could very well be done by the consumer Society. 27. Learned Additional Government Pleader further submitted that the impugned directions are issued under Section 181 of the Act in public interest and to secure proper implementation of Co- operative production and other developmental programmes undertaken by the Government and also the interests of the consumers and therefore, they cannot be termed as arbitrary. 28. Learned Additional Government Pleader further submitted that the rate of one litre cow milk, containing the prescribed limit of fat and SNF, and Buffaloo milk sold by Rajapalayam Milk Supply Co-operative Society was on the higher side. She further submitted that public have welcomed the decision of the Government, for conversion of Supply Societies into that of consumer or producers Societies and it is her further contention that hygienic milk would be supplied and adulteration of milk would be prevented by sale of quality milk in sachets. 29. Learned Additional Government Pleader further submitted that the area of operation of Rajapalayam Milk Co-operative Society is 18 kms around Rajapalayam Municipal Town. Many revenue villages are situated within the area of operation of the said Society. She further submitted that the milk producers/members of Rajapalayam Milk Supply Co-operative Society can form a Milk Producers Co-operative Societies and that milk would be procured from the said Milk Producers Co- operative Society by the Virudhunagar District. Milk Producers Co-operative Societies could not be formed in the area of operation of the said Society. 30. Refuting the contentions of the writ petitioner that there are chances of the employees of the society losing their employment, learned Additional Government Pleader submitted that Rajapalayam Milk Supply Co-operative Society supplies milk to the consumers through 52 Depots and that there are 133 employees working in the said Society. In order to safeguard the interests of the employees, the Society was given notice under Section 12 of the Act to make an amendment to the by-laws. As the Society has failed to adhere to the notice, directions were issued under Section 181 of the Act. Therefore, she submitted that the impugned directions are issued only to safeguard the interests of the members of the consuming public and also considering the larger interest involved in setting up "Anand pattern" of the societies at three different levels. 31. Learned Additional Government Pleader further submitted that considering the larger public interest vis-a-vis interestof the members of the Society, the former should prevail and therefore, the members of the registered Society has no locus standi to question the policy decision of the Government. For the above said reasons, she submitted that the contentions of the members of the Society that it would be liquidated, are liable to be rejected. 32. Learned Additional Government Pleader further submitted that when thousands of such societies were transformed into the consumer societies, there was no such compliant whatsoever and therefore, the apprehension of Rajapalayam Milk Co-operative Society is unreasonable and liable to be rejected. She also submitted that the decisions relied on by the learned counsel for the petitioner are not applicable to the facts of this case, in view of the policy decision of the Government. For the above said reasons, she prayed for dismissal of the Writ Petition. Heard the learned counsel for the parties and perused the materials available on record. 33. Before adverting to the facts of the case, a cursory look at the few provisions of the Tamil Nadu Co-operative Societies Act and the Rules framed thereunder is required. Chapter 2 of the Act deals with Registration. Section 12 of the Act deals with the power of the Registrar to direct amendment of the by-laws and it reads as follows: "12. Power to direct amendment of by-laws. (1) Where the Registrar is satisfied that for the purpose of altering the area of operation of a registered Society or for the purpose of improving the services rendered by it or for any other purpose specified in the rules, an amendment of the by-laws is necessary, he may, after consulting in the manner prescribed the board of the financing bank, if any, to which the Society is affiliated, by notice in writing, call upon the Society to show cause, within such time as may be specified in the notice, why the amendment should not be made : Provided that if the board of the financing bank does not communicate its COMMENTS within sixty days of the receipt of the communication from the Registrar in this regard it shall be deemed that the board of the financing bank has no COMMENTS to make on the amendment proposed to the by- laws under this sub-section. (2) If, within the time specified in the notice referred to in sub-section (1), the registered Society fails to make the amendment, the Registrar may, after giving the Society an opportunity of making its representations, register the amendment and issue to the Society a copy of such amendment. (3) Any amendment of the by-laws registered under sub-section (2) shall have the same effect as an amendment of the by-laws registered under section 11 unless the registration is cancelled in pursuance of a decision in appeal." 34. Section 181 of the Act deals with the power of the Registrar to give directions in the public interest and it reads as follows: "181. Power of Registrar to give directions in the public