IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY FOURTH DAY OF FEBRUARY TWO THOUSAND AND FIVE PRESENT THE HON'BLE MR JUSTICE B. SUDERSHAN REDDY and THE HON'BLE MR JUSTICE C.V.RAMULU WRIT PETITION NO : 1979 of 2002 Between: 1 M/s. SRI SUSHEELA COTTON CORPORATION, GUNTUR Rep by its Proprietor, Anumakonda Venkata Ramana Rao, Door No.12-6-5 , Ganeswara Rao Street, Kothapet , Guntur - 522 001 (City & Mandalam). 2 Sri Vani Cotton Syndicate, Proprietor, A.Venkateswara Rao, S/o.Suryanarayana Rao, Door No.12-1-26 , Kothapeta, Guntur. 3 Sri Laxmi Cotton Traders, Prop. Nalakurthi Musalaiah, S/o. China Kothaiah, R/o. D.S.Nagar , 15 Line, Etukuru Road, Guntur. 4 Lalitha Cotton Traders, Prop.Gunturu Naga Raju, S/o.Subrahmanyam, R/o.6-4-27 , 4/2 , Arundalpeta , Guntur. 5 Ravi Kiran Cotton Co., Prop: K.V.Mastanaiah, S/o.Koteswara Rao, Relangi Vari Street , D.No.1-7-23 , Nazar Pet, Tenali. 6 Sripathi Cotton Traders, Partner P.R.Ramesh Kumar, S/o.Venkateswarlu, D.No.22-4-25 , Old Bus stand , Lalapet, G.T.Road , Guntur. 7 Anjani Traders, Prop: L.Venkaiah, S/o.Seetharamaiah, Purchuru Post, Prakasam District. 8 V. Adiseshu, S/o Venkateshwarlu, C/o.Ragadapati Venkaiah , Purchuru PO, Prakasam District. 9 S.Nagasrinivasa Rao, S/o.Nageswara Rao, Pusapadu PO , Inkollu, Prakasam District. 10 B.Subba Rao, S/o. Sriramulu, Pusapadu PO, Inkollu, Prakasam District. 11 B.Srinivas Rao, S/o.B.Subba Rao, Pusapadu PO , Prakasam District. 12 Sri Balaji Cotton Traders, Prop: K.Hari Prasad, S/o.Abaddaiah, Purchuru, Prakasam District. 13 S.Srinivas Rao, S/o.Seetharamaiah, Purchuru, Prakasam District. 14 P.Koteswara Rao, S/o.Venkateswarlu, Purchuru, Prakasam District. 15 T.Hanumanthu Rao, S/o. Lingaiah, Purchuru, Prakasam District. 16 T.V.Bhuvaneswara Rao, S/o.Subba Rao, Purchuru, Prakasam District. 17 Sri Vijaya Trading Co., Prop: A.Suryanarayana Rao, S/o.Venkataiah, 12-6-5B , Ganeswara Vari Street, Guntur. 18 Usman Cotton Traders, Prop: M.Subhani, S/o. Hussain Saheb, Nagarampalem, Police Station Road, Guntur. 19 Usman Ginning Mills, Prop: M.Subhani, S/o. Hussain Saheb, Nagarampalem, Old Police Station Road, Guntur. 20 Sk. Mahabub Subhani, S/o.Hussain Saheb, Pamulapadu PO, Tadikonda Mandal, Guntur District. 21 Sri Kumar Agencies, Prop: Y.V.R.Kumar. S/o.Y.Prasad Guntur. 22 Kamal & Co., Prop: Y.V.R.Kumar. S/o.Y.Prasad, Guntur. 23 K.Venkat Rao, C/o. A.V.Krishna Rao, Kothapeta, Guntur. 24 K.Babu Rao, S/o. K.Peraiah, Daggupadu, Prakasam District. 25 Katta Ravi Kumar, S/o.Peraiah, Daggupadu, Prakasam District. 26 D.Satyannandam, S/o. Joseph, Chirala, Prakasam District. 27 Sujatha Textiles, Prop: Katta Subba Rao, S/o.Peraiah, Daggupadu, Prakasam District. 28 Sujatha Textiles, Prop: Katta Babu Rao, S/o.Peraiah Daggupadu, Prakasam District. 29 Sri Venkateswara Cotton Traders, Prop: P.Subba Reddy, S/o.Venkateswara Reddy, Santoshnagar , Behind Venugopal Swamy Temple, N.G.O.Colony, Guntur. 30 K.Srinivasa Rao, S/o.Guravaiah, Maddipadu PO, Medarampeta Mandal, Prakasam District. 31 A.Pothuraju, S/o.Lingaiah, Via Medarametta, Devalaravuru V&P, Prakasam District. 32 R.Laxminarayana, S/o.Laxmikanthaiah, Davalaravuru V& P, Prakasam District. 33 B.L.V.Prasada Rao, S/o.Venkata Laxmi Narayana, Addanki Village & Mandal, Prakasam District. 34 V.Rama Koteswara Rao, S/o.Nagaiah, Addanki P & M, Prakasam District. 35 J.Anjaneyulu, S/o.Venkatappaiah, Vellampalli, Korisapadu Mandal, Prakasam District. ..... PETITIONERS AND 1 The Government of Andhra Pradesh, Rep by its Secretary, Revenue Department, Secretariat, Hyderabad. 2 The Chairman, Government of Andhra Pradesh, Public Enterprises Dept., Implementation, Secretariat, B-Block, 3rd Floor, A.P.Secretariat, Hyderabad. 3 The Rajahmundry Co-op. Spinning Mills Ltd., Rep by its Managing Director, Rajahmundry, East Godavari District. 4 The Chirala Co-op. Spinning Mills Ltd., Rep by its Managing Director, Chirala, Prakasam District. 5 The Chilakaluripet Co-op. Spinning Mills Ltd., Rep by its Managing Director, Chilakaluripet, Guntur District. 6 The Nellore Co-op. Spinning Mills Ltd., Rep by its Managing Director, Nellore, Andhra Pradesh. 7 The Parchuru Cotton Growers Co-op. Spinning Mills Ltd., Rep by its Managing Director, Inkollu, Prakasam District. 8 The Adilabad Cotton Growers Co-op. Spinning Mills Ltd., Rep by its Managing Director, Adilabad, Andhra Pradesh. 9 The Rajarajeswari Co-op. Spinning Mills Ltd., Rep by its Managing Director, Siriseralla, Karimnagar District. 10 Legal Consultant, Implementation Secretariat, Public Enterprise Department, 3rd Floor, 310, B-Block, Secretariat Buildings, Hyderabad. 11 The Commercial Tax Officer, No- II Circle, Nellore, Represented by P. Suresh Kumar, Commercial Tax Officer-II - Nellore. (R11 is impleaded as per court Order Dt:15/3/04 in WPMP Nos. 21635\03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 12 State Bank of India Rep: by its Assistant General Manager, Nellore Branch, Achari Street, Nellore – AP. (R12 is impleaded as per court Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, Nellore, 29610/03, 21634/03, 34034/03, 6569/03.) 13 The Andhra Bank, Rep. by its Chief Manager, Rajahmundry Branch, Rajahmundry. (R13 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 14 The Commercial Tax Officer, Purchur Circle, Prakasam District, Rep. by Smt. P.S.L. Santha Kumari, Commercial Tax Officer, Purchur. (R14 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 15 V. Narsimha Rao, S/o Sheshagiri Rao, R/o Krishna Nagar, Guntur, Guntur District. (R15 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, Guntur District. 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 16 T. Suri, S/o Yellaiah, R/o Nandyala, Kurnool District. (R16 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 17 Ch. Israilu, S/o Bushanam, R/o Daggupadu, Karamchedu Mandal, Prakasam District. (R17 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 18 K.Samson, S/o Peraiah, R/o Daggupadu, Karamchedu Mandal, Prakasam District. (R18 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03). 19 G. Babu Rao, S/o Raja Rao, R/o Daggupadu, Karamchedu Mandal, Prakasam District. (R19 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 20 R. Yakobu, S/o Venkateshwarlu, R/o Daggupadu, Karamchedue Mandal, Prakasam District. (R20 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03). 21 M.Suri Babu, S/o Venkata Krishnaiah, R/o P.V Palem, Karamchedue Mandal, Prakasam District. (R21 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 22 D.Luthar Sastri, S/o Satyanandam, R/o Parchuru Village, Prakasam District. (R22 is impleaded as per Court-Order Dt:15/3/04, in WPMP Nos. 21635/03,14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 23 K. .Jakraiah, S/o Chinnabai, R/o Inkollu, Prakasam District. (R23 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 24 K. Jayababu, S/o K. Samson, R/o Inkollu, Prakasham District. (R24 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 25 Vaddi Babu, S/o Tirupathaiah, R/o P.V Palem, Karamchedue Mandal, Prakasam District. (R25 is impleaded as per Court-Order, Dt: 15/3/04 in WPMP Nos. 21635/03,14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 26 K. Yehonu, S/o. Bikshalu, Karamchedu Mandal, Prakasam District. (R26 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 27 G.Raja Rao, S/o Pethuru, R/o Inkollu, Prakasam District. (R27 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 28 G. Marku, S/o. Asirwadam, R/o Paruchuru, Prakasam District. (R28 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 4034/03, and 6569/03.) 29 SK. Mustaf, S/o Mastan, R/o Daggupadu, Karamchedue Mandal, Prakasam District. (R29 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 30 Banu Reddy, S/o Ella Reddy, Guntur, Guntur District. (R30 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 31 G.Gopi, S/o Tirupati, R/o Sirisirla, Karimnagar District. (R31 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 32 J.Anjaneyulu, S/o Punna Rao, Medaramitla, Prakasam District. (R32 is impleaded as per Court-Order Dt:15/3/04 in WPMP 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) 33 IFCI Limited, Rep: Asst G.M (Law) V.Satya Venkata Rao, S/o Sri V.V. Ramakrishna Rao, R/o Hyderabad. Taramandal Complex, 8th Floor, 5-9-13 Saifabad, Hyderabad 500 004. (R33 is impleaded as per Court-Order, Dt:15/3/04 in WPMP Nos. 21635/04, 14346/03, 29610/03, 21634/03, 34034/03) 34 Industrial Development Bank of India, Rep: Deputy General Manager, A.V.Sunil S/o Shri K.Karunakaran, R/o Hyd. IDBI Tower, 5-9-89/1&2 Chapel Road, Hyderabad. (R34 is impleaded as per Court-Order Dt:15/3/04 in WPMP Nos. 21635/03, 14346/03, 29610/03, 21634/03, 34034/03, and 6569/03.) .....RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed herein the High Court may be pleased to issue a writ, order or direction, more especially one in the nature of Writ of Mandamus, declaring the action of the 2nd & 10th respondents in not disbursing the amounts which were due to the petitioners that is being deposited in Scheduled Bank as arbitrary , illegal , unjust, besides being Contrary to the Judgment in Writ Petition No.19867/2000 , Dt: 8-5-2001 and consequently direct the respondents to disburse the amounts which were deposited in Scheduled bank as per their entitlement with interest. For the Petitioners: Mr. S. Ramachandra Rao, Senior Counsel for MR.K.R.PRABHAKAR, Advocate. For Respondent Nos.1 and 2: The Advocate General For Respondent Nos.3 to 9: Mr. V.T.M. Prasad, Standing Counsel. For Respondent No.10: For Respondent Nos.11 and 14: Special Government Pleader for Taxes For Respondent No.12: Mr. M. Narender Reddy, Advocate. For Respondent No.13: Mr. Nuty Rammohan Rao, Advocate. For Respondent Nos.15 to 32: Mr. G.V. Shivaji For Respondent Nos.33 and 34: Mr. S. Niranjan Reddy, Advocate. The Court made the following : THE HON’BLE MR. JUSTICE B. SUDERSHAN REDDY AND THE HON’BLE MR. JUSTICE C.V. RAMULU WRIT PETITION NO. 1979 OF 2002 JUDGMENT: (per Sri B. Sudershan Reddy, J) The petitioners in this writ petition invoke the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India and accordingly pray for issuance of a writ of Mandamus declaring the action of the respondents in not disbursing the amounts which were due and payable to them and not extending the benefit of G.O. Rt. No. 412, Industries and Commerce (Tax) Department, dated 14-07-2003 as illegal. The petitioners also pray to declare Section 12-A (9) of the Andhra Pradesh Cooperative Societies Act, 1964 as amended by Act 16 of 2003 as unconstitutional. They accordingly pray for issuance of a consequential direction to the respondents to disburse the amounts which were deposited in the scheduled bank pursuant to the directions of this Court issued in W.P No. 19867 of 2000 dated 08-05-2001. FACTUAL MATRIX: In order to consider as to whether the petitioners are entitled for grant of any relief, a few relevant facts leading to filing of this writ petition may have to be noticed: This writ petition has been initially filed by the cotton growers and traders. However as at present, the cotton growers do not claim any relief and only the trader – writ petitioners press this writ petition for further hearing. These very writ petitioners earlier filed W.P No. 19867 of 2000 challenging the notification dated 24-08-2000 as modified on 30-09-2000 issued by the 1st respondent mainly on the ground of it being violative of Sections 3, 4 and 4(b) of the Andhra Pradesh Relief Undertakings (Special Provisions) Act, 1971. By the said notification, the Government has called for applications inviting tenders for the purchase of the Rajahmundry Cooperative Spinning Mills at Rajahmundry, the Nellore Cooperative Spinning Mills at Nellore and the Adilabad Co-operative Spinning Mills at Adilabad. Their case in the said writ petition was that the cotton growers and traders were suffering on account of the wrong policies and actions of the Government that ultimately resulted in the cooperative spinning mills becoming sick on account of which the amounts due towards price of cotton supplied by the traders as well as the growers could not be paid by the cooperative spinning mills. The assets of the cooperative spinning mills cannot be allowed to be sold, as such sale was likely to effect the rights of the petitioners to recover the amounts due to them. The State opposed the writ petition inter alia contending that the cooperative spinning mills have been set up with the contribution of the share capital of the State Government and that it sanctioned various types of loans to the spinning mills from 1984-85 onwards for modernisation, renovation and rationalization of manpower and that it had also issued guarantees on behalf of the said societies in favour of various financial institutions for the principal amounts borrowed by the spinning mills running into crores of rupees. Apart from the above, the Government had also sanctioned loan amount to the societies to meet expenditure for payment to the employees under the voluntary retirement scheme. The Government having realized that there was no possibility to rehabilitate the cooperative spinning mills, initiated action under Section 12-A of the Andhra Pradesh Cooperative Societies Act, 1964 (for short ‘the Act’). Section 12-A of the Act contains special provisions in respect of spinning mills and sugar factories. The background and circumstances under which Section 12-A of the Act has been inserted in the Act is evident from the Statement of Objects and Reasons appended to the Bill: “The Sugar Mills and Spinning Mills were set up in the Co-operative Sector with the idea of involving the farmers in organizing, financing and managing these Mills. The role of the Government was to help them with share capital, margin money, the required administrative guidance and managerial support. For a variety of reasons, some of these Co-operative Institutions have become non-viable and call for massive investing, not only for their revival but also for recurring overheads including salaries and wages. It was never the intention that Government should fund these organizations in case they become non-viable. On account of financial constraints faced by the State, Government is not in a position to fund the resources to meet these commitments. The managements have to, therefore, look for alternative avenues for improving the functioning and reviving of these Units so that the interests of the farmers and workers of these mills can be safeguarded. The existing provisions of the Andhra Pradesh Co- operative Societies Act, 1964 do not permit the transfer of the assets of a Co-operative Institution to any non-co-operative institution. The Government have, therefore, decided to provide for the transfer of the assets and liabilities of such sick units to non-co- operative institutions by suitably amending the Andhra Pradesh Cooperative Societies Act, 1964”. Be it as it may, the State Government further contended that the petitioners, being unsecured creditors cannot have preference over the secured creditors and only after meeting the debts of the secured creditors can the petitioners’ claim be considered having regard to the financial situation. However, it was not and is not in dispute that the cooperative spinning mills which ultimately became sick owed certain amounts to the petitioners towards the purchase price of the cotton and other amounts. It is also not in dispute that there was a centralized cotton purchase scheme which required the individual growers/purchasers to register themselves by making deposit of Rs. 15,000/- and upon such registration, the growers/purchasers were allotted various cooperative spinning mills to whom they were required to sell the cotton. It was not open for the traders/growers to sell cotton to the spinning mills of their own choice. This Court after an elaborate consideration of the matter held that insofar as the challenge to the constitutional vires of Section 12-A of the Act is concerned, “it is not demonstrated as to how the said legal provision is unconstitutional”. The Court found that the provision was made to meet the situation where the cooperative spinning mills were not able to function viably and the authority named under Section 12-A was authorized to transfer its assets or its assets and liabilities in whole or part to any other society or company or a firm or a body whether incorporated or not on such terms and conditions as may be formulated in the prescribed manner, but only after satisfying itself that the cooperative spinning mills have become sick and there was no possibility to rehabilitate the same. The Court ultimately upheld the constitutional validity of Section 12-A of the Act. This Court in M. Krishnama Naidu and others v. State of A.P[1], having critically examined the constitutional validity of Section 12-A of the Act at the instance of some of the share holders in the cooperative sugar factories in some detail, also came to similar conclusion and accordingly rejected the contentions based on Articles 31-A and 300-A as well as the attack based on Article 19(1) (c) of the Constitution of India. The Court held that the legislation squarely falls within Entry 32 of List II of the Constitution, which provides for incorporation, regulation and winding up of companies other than those specified in List I including the cooperative societies. The challenge based on Article 14 of the Constitution of India was also rejected. This Court, however, while disposing of W.P No. 19867 of 2000 observed: “State is the buyer of the cotton from the petitioners and the same is governed by the Sale of Goods Act. The seller is entitled for the price immediately, and if not paid, he is also entitled for the damages apart from the sale price. In fact, the seller got a lien over the properties sold, so long as the unpaid purchase money is not realized. The seller is also entitled to seize the goods in transit for the unpaid price and re-sell the same. It cannot be said that the petitioners have got no right to realize the amounts or that their rights are subservient to the rights of the secured creditors like the financial institutions/banks. The secured properties may be land, machinery and plants thereof, but that does not bar the claim for the unpaid purchase amounts. Secured debt may be backed by collateral like mortgage etc. and unsecured debt is not backed by any pledged collateral or security agreement. But, what is the impact of the statutory lien provided by Sale of Goods Act is also a question for consideration. In this scenario, it cannot be said that the petitioners are not entitled for any notice before the finalisation of the tender. The tender is yet to be evaluated and accepted, and before that, the petitioners are entitled to participate and debate with regard to their rights for the unpaid price of cotton, which they have undisputably delivered to the above three spinning factories”. The Court accordingly upheld the constitutional validity of Section 12-A of the Act and also upheld the action of the authorities in deciding to sell the spinning mills of Rajahmundry, Nellore and Adilabad. In the operative portion of the judgment, it is held: “In view of the above: (1) We uphold the constitutional validity of Section 12-A of the A.P Co-operative Societies Act inserted by A.P Act 22 of 1996. (2) We also uphold the action of the Authorities in deciding to sell the spinning mills units of Rajahmundry, Nellore and Adilabad; (3) The tenders, which have been submitted, shall be evaluated and further process regarding finalisation of the same may be made; (4) The petitioners shall be entitled for a notice and to debate about their rights for payment of unpaid purchase money and also the priorities and until such hearing and decision thereof, the price fetched in the auction shall not be disbursed to anybody and shall be kept in a fixed deposit for a period of six months in the State Bank of Hyderabad either at the Main Office or at Branch Office/s in the State of Andhra Pradesh; and (5) The above exercise shall be completed within a period of three months from the date of receipt of a copy of this order”. That after the disposal of the writ petition, the implementation Secretariat has completed the bid process and collected the full purchase price for the assets of the spinning mills at Adilabad, Rajahmundry and Nellore. All the amounts collected from the bidders in respect of the assets of the said mills have been deposited with the State Bank of Hyderabad, Secretariat Branch, as directed by this Court in the judgment dated 08-05-2001. That as directed by this Court, notices were given to the petitioners and also to other suppliers of cotton for a hearing on 15-09- 2001 calling upon them to submit their claims regarding unpaid purchase money and proof of their respective claims against the said spinning mills. The petitioners accordingly submitted their claims on 15-09-2001. That while the matter was under consideration, the present writ petition has been filed inter alia contending that the respondents without any justification whatsoever withheld the payment of unpaid purchase money even after realizing certain amounts by sale of assets of the cooperative spinning mills. It is stated in the affidavit filed in support of the writ petition that the respondents have already decided the quantum of amounts payable to the petitioners but without any reason and in an arbitrary manner withheld the payments. It is specifically stated that the respondents have deposited the amounts to a tune of Rs.4.36 Crores in a scheduled bank but failed to take steps to disburse the same to the petitioners. In the counter affidavit, it is explained that attempts were made to disburse the amounts deposited with the State Bank of Hyderabad to various creditors of the said mills in order of priority after 15-03-2002 i.e. to say after the total purchase price is realized in respect of the assets of the Nellore spilling mills also. It is admitted that all the amounts collected from the bidders in respect of the said mills amounting to an aggregate of Rs.16,93,96,000/- have been deposited with the State Bank of Hyderabad. In the meanwhile, the Regional Provident Fund Commissioner attached the sale consideration which is lying in deposit claiming a sum of Rs.5,43,88,492/- towards employees provident fund dues. The case of the respondents is that the petitioners being unsecured creditors are not entitled to have their claims satisfied out of the amounts realized from the sale of said assets before payment of dues of secured creditors, provident fund authorities and other preferential creditors. The summum bonum of the contention of the State is that the petitioners being unsecured creditors cannot have a march over the secured creditors. SUBSEQUENT EVENTS: That during the pendency of the writ petition, the Government vide G.O Rt. No. 412, Industries and Commerce (Tax) Department, dated 14-07-2003 issued orders sanctioning an amount of Rupees One Crore Ninety Three Lakhs Ninety Nine Thousand as interest free loan to A.P State Federation of Cooperative Spinning Mills Limited for payment of “cotton dues to the farmers by Co-operative Spinning Mills. i . e . , Chirala, Inkollu, Sattenpally, Karminagar, Gunthakal, Rajahmundry and Nellore on pro-rata basis as per the annexure and the balance amount if any will be settled later”. The amount sanctioned is secured against the assets of the mills and managing directors of the spinning mills were directed to create charge of assets for this loan amount and shall be repayable by the mills concerned from the sale proceeds of the assets. Obviously, it was a temporary measure initiated by the Government to save the starving cotton growers. That G.O is challenged by some of the petitioners who are traders. It is difficult to appreciate as to how some of the petitioners in the same writ petition can challenge the said G.O which is in their favour, notwithstanding the fact that the petitioners who are growers did not join the challenge. That while the matter stood thus, Section 12-A of the Act which deals with the special provisions in respect of certain societies is further amended by Act 16 of 2003. In the objects and reasons for further amending Section 12-A of the Act, it is inter alia stated that the amendment has been made so as to make Section 12-A in conformity with the orders of this Court in M. Krishnama Naidu’s case (1 supra). The whole of Section 12-A is substituted by Act 16 of 2003 which reads as follows: “Section 12-A. Special provisions in respect of certain societies:- (1) Notwithstanding anything contained in this Act or the rules made thereunder or by the bye-laws of the societies concerned or in any other law for the time being in force, where, in