@JUDGMENTTAG-ORDER
1. The petitioners 3 in number, are the trade unions consisting of staff and workers of the A.P. Dairy Development Co-operative Federation-4th
respondent herein filed this writ petition questioning the conversion of Vijaya Visakha District Co-operative Milk Producers Union Limited as a
Vijaya Visakha Milk Producers Mutually Aided Co-operative Union Limited under A.P. Mutually Aided Co-operative Societies Act, 1995 (Act
30 of 1995) on various grounds by impleading the Principal Secretary, Animal Husbandary and Fisheries Department, Secretariat, Hyderabad.
Registrar of Co-operative Societies, A.P., Hyderabad (hereinafter referred to as RCS, A.P. Dairy Development Co-operative Federation
(hereinafter referred to as federation), District Co-operative Officer, Visakhapatnam and Vijaya Visakha District Co-operative Milk Producers
Union Limited which stood converted as Vijaya Visakha Milk Producers Mutually Aided Co-operative Union Limited as respondents 1, 3, 4, 5, 6
and 7 respectively.
2. This Court while admitting the writ petition by order dated 16-7-1999 suspended the incorporation of the 7th respondent in WP MP No.
17948 of 1999 under APMACS Act, 1995 for a period of one month. Thereafter, the 7th respondent file WV MP No.1938 of 1999 seeking
vacation of the interim suspension granted by this Court on 16-7-1999. Having heard the arguments on both sides, by order dated 13-8-1999
interim suspension was extended until further orders. Thereafter, one U. Suribabu, claiming to be a resident of Yelluppi village, Subbavaram
Mandal, Visakhapatnam District filed WP MP No.19088 of 1999 on 23-7-1999 seeking to implead himself as 8th respondent in the above writ
petition claiming to be the group leader of the persons supplying milk at village milk collection centre. On 21-8-1999 three Milk Producers Co-
operative Societies in Pendurthi Mandal, Visakhapatnam District filed WP MP No.20095 of 1999 seeking permission of the Court to get
themselves impleaded as respondents 9 to 11 in the above writ petition. Having heard the arguments of the Counsel for the petitioners in both the
WPMPs, I am inclined to order both the WPMPs. The official respondents 1, 3, 4 as well as proposed respondents 8 to 11 supported the case of
the petitioners in the writ petition and taken the stand that conversion of 7th respondent as mutually Aided Co-operative Union is illegal and the
incorporation certificate issued by the 5th respondent has to be cancelled. At the outset, I would like to observe that"" this Court witnessed for the
first time that the official respondents have taken a stand against their subordinate and in fact the 3rd respondent-RCS has gone one step further
and initiated disciplinary proceedings against the 5th respondent i.e., District Co-operative Officer, Visakhapatnam by contending that the said
officer incorporated the 7th respondent Union in gross violation of the provisions of MACS Act as well as norms issued by the 3rd respondent and
even without referring the matter to the Functional Registrar/Milk Commissioner and thereby mis-used the statutory powers conferred on him.
With the result, the 5th respondent i.e., District Co-operative Officer, Visakhapatnam was forced to engage a Counsel of his own to defend his
action.
3. In sum and substance, the main grievance of these respondents as seen from their pleadings is that if the 7th respondent is allowed to convert
itself as a Mutually Aided Co-operative Union by opting out of the provisions of the A.P. Co-operative Societies Act the three tier structure
approved by the Government of A.P. in G.O. Ms. No.551 dated 10-12-1980 on the basis of Anand Pattern for procurement effected and the
activities of the 4th respondent federation will get disintegrated. The three tier structure contemplated under the above G.O., is that there shall be a
primary milk producers Co-operative society at the village level, District milk producers Co-operative union at the district level and federation at
the State level. To give effect to the above policy of the Government, the fourth respondent federation was set-up in G.O. Ms. No.551 dated 10-
12-1980 in place of existing A.P. Dairy Development Corporation and transferred its assets and liabilities on lease on payment of rent of
Rs.1,000/- per annum. They did not dispute the fact that a society registered under the provisions of A.P. Co-operative Societies Act, if it wishes
to convert itself can convert into Co-operative society under the Act, But, their objection is that the procedure prescribed under the Act as well as
norms issued by the 3rd respondent were not complied with by the 5th respondent before registering the society under the new Act and as such
the registration is ab initio void for non-compliance of the procedure contemplated under the Act. Before adverting to the contentions raised by the
petitioners as well as official respondents, it is useful to extract the objects and reasons in enacting APMACS Act, 1995 (Act 30 of 1995). The
Legislature having realised that the Co-operative Societies registered under the Act 7 of 1964 due to increased State participation in financing and
management of the Co-operative Societies lead to an unfortunate situation where the Co-operative societies themselves, by and large, have started
to perceive themselves not as member controlled, member sensitive business, guided by the universally accepted principles of co-operation, but as
channels for Government subsidies and largesse and thereby sound and sustainable Co-operative business, accountability, responsibility and self-
reliance have taken a back seat enacted the present enactment to confer more autonomy on the Co-operative Societies and to remove the state
control by permitting formation of voluntary Co-operative Societies by excluding State control and make the Co-operative movement more
vibrant, in the State. While making this Legislation sufficient care was taken by the Legislature to enable the Societies registered under Act 7 of
1964 to become Co-operative Societies registered under this Act by making suitable provisions therefore in the new Act. The relevant provisions
of Act 30 of 1995 are extracted herein:
Section 2(e) : ""Co-operative Society"" means a Mutually Aided Co-operative Society registered u/s 4 whose Bye-laws prohibit from raising share
capital from the Government, a Co-operative Society registered u/s 7 of the Andhra Pradesh Cooperative Societies Act, 1964, if it amends its
Bye-laws where necessary to reconstitute its capital base and in respect of other relevant aspects to be in accordance with this Act, and returns to
the Government its share capital, if any, and either enters into a Memorandum of Understanding with the Government for any outstanding loans due
to, or guarantees given by the Government or returns to the Government of such assistance and further gets itself registered u/s 4 as a Co-
operative Society under this Act.
Section 2(g) ; ""Co-operative Tribunal"" means the Tribunal or Tribunals constituted u/s 32"".
Section 2(k) : ''''''Federation"" means a mutually aided Co-operative society registered u/s 4 whose members are mutually aided Co-operative
societies.
Section 2(r) : ""Registrar"" means the Registrar of Mutually Aided Co-operative Societies appointed u/s 4 of this Act, and includes any other person
on whom all or any of the powers of the Registrar under this Act are conferred.
4. While Section 3 deals with the Co-operative principles and Bye-laws of the Societies to be incorporated under the new Act, Section 4 deals
with registration. Section 4 is extracted hereunder:
4. Registration :--(1) Where not less than ten individuals each being a member of a different family intend to form a Co-operative Society, or two
or more Co-operative societies registered under this section wish to form into a federation, or a society registered u/s 7 of the Andhra Pradesh
Co-operative Societies Act, 1964 intends to convert itself into a Co-operative society under this Act, they shall frame Bye-laws for this purpose in
accordance with Section 3 in the first instance.
(2) Thereafter an application for registration shall be submitted to the Registrar by hand or by registered post.
(3) Every such application shall be accompanied by,--
(a) the original and one copy of the Bye-laws of the proposed Co-operative society as adopted by the individuals or delegates of Co-operative
Societies who wish to form into a Co-operative Society under this Act or by the general body of a society registered under the Andhra Pradesh
Cooperative Societies Act, 1964 which wishes to convert itself into a Cooperative society under this Act;
(b) a list of names of individuals or Cooperatives who wish to form into a Co-operative society under this Act or of the members of the committee
of the society registered under the Andhra Pradesh Co-operative Societies Act, 1964 which intends to convert itself into a Co-operative society
under this Act with their addresses, occupations and their financial commitments to the proposed Co-operative Society;
(c) a true copy of the minutes of the meeting at which the Bye-laws were adopted, duly signed by atleast a majority of individuals or delegates
present at the meeting where the Bye-laws were adopted, or by a majority of the members of the committee of the Co-operative concerned where
a society registered under the Andhra Pradesh Cooperative Societies Act, 1964, intends to convert itself into a Co-operative under this Act;
(d) registration fee amounting to one percent of the total authorised share capital by whatever name called subject to a minimum of one hundred
rupees and a maximum of ten thousand rupees; and
(e) in the case of a society registered u/s 7 of the Andhra Pradesh Co-operative Societies Act, 1964 and wishing to convert itself into a
Cooperative society under this Act, evidence to show that the society is not in possession of any share capital from Government, and evidence also
to show that the society is not in receipt of any Government loans for guarantees at the time of applying for registration as a Co-operative society
under this Act, or that it has entered into a memorandum of understanding with the Government for any such outstanding loans or guarantees.
(4) The Registrar shall, if he is satisfied that:
(a) the application is in conformity with the requirements of this Act;
(b) the proposed Bye-laws are not contrary to the provisions of this Act; and
(c) the name of the proposed Co-operative society is not the same as that of a Co-operative society already registered under this section, or the
same as that used by a class of societies already registered u/s 7 of the Andhra Pradesh Co-operative Societies Act, 1964-
register the Co-operative Society and also its Bye-laws and communicate by registered post a certificate or registration and the original of the
registered Bye-laws signed and sealed by him, within a period of sixty days from the date of submission of application, to the chief promoter
mentioned in the application.
(5) if the conditions laid down in subsection (4) are not fulfilled, the Registrar shall communicate by registered post the order of refusal together
with the reasons therefor, within sixty days from the date of submission of application, to the chief promoter.
(6) There shall be appointed Registrar Mutually aided Co-operative Societies for the State and as many other officers as the Government think fit
for the purpose of this Act.
Section 32 - Constitution of Tribunals reads as under:
(1) The Government may, for the purpose of this Act, by notification constitute as many Tribunals as may be necessary for such area or areas as
may be specified in the notification.
(2) The provisions of Section 75 of the Andhra Pradesh Co-operative Societies Act, 1964 shall, mutatis mutandis apply for the constitution of Co-
operative Tribunals under this section.
Section 40 - Dissolution by Tribunal reads as under:
(1) The Registrar or an interested person may, after giving the Co-operative Society ninety days notice of the proposed application, apply to the
Tribunal for an order dissolving the Co-operative Society, where he has reasonable cause to believe that the Co-operative Society has no right to
be or to continue to be recognised as a Co-operative Society, because it-
(a) obtained its registration by fraud or mistake;
(b) is serving illegal purpose;
(c) has wilfully, after notice by the Registrar, violated any of the provisions of this Act or its Bye-laws;
(d) is no longer operating in accordance with principles of Co-operation and the provisions of this Act;
(e) has not commenced business within two years of the date of registration; or
(f) has not carried on business for the past two consecutive years.
(2) Where an interested person applies in pursuance of this section, he shall give the Registrar notice of his application and the Registrar is entitled
to appear and be heard in person or by Counsel.
(3) Where the Tribunal receives an application in pursuance of this section it may, after giving a reasonable opportunity to the Co-operative
Society to state its case, order that the Co-operative Society be dissolved or liquidated and dissolved under the supervision of the Registrar.
(4) Where the Registrar receives an order made in pursuance of subsection (3), he shall-
(a) where the order is to dissolve the Cooperative Society, issue a certificate of dissolution; or
(b) where the order is to liquidate and dissolve the Co-operative Society under the supervision of the Registrar, publish a notice in a news paper
published or distributed in the district in which the registered office of the Co-operative Society is situated.
6. From the above provisions it is seen that u/s 2(d) a Co-operative Society registered under Act 7 of 1964 if it amends its Bye-laws where
necessary to reconstitute its capital base and in respect of other relevant aspects to be in accordance with this Act, and returns to the Government
its share capital, if any, and either enters into a Memorandum of Understanding with the Government for any outstanding loans due to, or
guarantees given by the Government or returns to the Government of such assistance it is entitled to get itself registered as a Co-operative Society
u/s 4 of the new Act. u/s 4(e) the said society should show the evidence that the society is not in possession of any share capital from the
Government and evidence also to show that the society is not in receipt of any Government loans or guarantees at the time of applying for
registration as a Co-operative Society under the Act or that it has entered into a memorandum of understanding with the Government for any such
outstanding loans or guarantees. u/s 40 of the Act any interested person may move the Co-operative Tribunal constituted u/s 32 of the Act for
dissolution of a Co-operative Society after giving notice to the Society if the registration is obtained by fraud or mistake.
7. In the light of the above legal position, the following questions are framed for adjudication on the basis of the pleadings and arguments advance
by the parties in this writ petition:
(1) Whether the petitioners are having locus standi to file this writ petition.
(2) Whether any illegalities or irregularities have taken place in conversion of the 6th respondent to 7th respondent union under APMACS Act and
whether the same will result in the invalidation of the registration of the Society.
(3) Whether the petitioners can approach this Court straight away under Article 226 of the Constitution of India without availing the efficacious and
alternative remedy provided under the statute.
8. Before adverting to these contentions I may also state that though the petitioners questioned the vires of Act 30 of 1995, the Counsel did not
advance arguments on this aspect. But, from the pleadings it is seen that the case of the petitioners is that the law relating to incorporation and
management of Cooperative Societies is covered by the Constitution of India in List II - Slate List at Serial No.32 and when the Legislative power
is exercised by enacting A.P. Cooperative Societies Act, 1964, the Legislature is not competent to enact another law on the same subject i.e., Act
30 of 1995 and the same is ultra vires of the powers of the State Legislature. The issue raised by the petitioners is squarely covered by a decision
of the Constitution Bench of the Supreme Court in Polaki Motors and Others Vs. State of Orissa and Others, . In that judgment their Lordships of
the Supreme Court while considering the validity of Orissa Additional Sales Tax (Amendment and Validation) Act, 1973), whereunder additional
tax on gross turnover and at multi-points, dehors the scheme of single point sales tax on taxable turnover under Orissa Sales Tax Act, 1947
observed that ""both the levies come under the same topic of taxes on the sale or purchase of goods under Entry 54 List II. Instead of levying the
tax under one enactment the State has chosen to levy the same under two different enactments"". Their Lordships further observed that ""enactment
of a statute on topic covered by an entry of a legislative list does not lake away legislative competence to enact another statute on a different aspect
covered by the same entry by the Legislature of a State in exercise of its powers under Article 245 of the Constitution of India."" In the tight of the
judgment perhaps having realised the difficulty in substantiating this contention the Counsel did not press this issue during the course of the
arguments. Following the above judgment, I hold that Act 30 of 1995 is intra vires of the powers of the State Legislature and accordingly this
contention of the petitioners is rejected.
9. Coming to the locus standi it is not in dispute that workers and staff working in 7th respondent Union are not members of any of these unions.
On the other hand, Visakha Co-operative Dairy Employees Union a recognised trade union of the employees of the 7th respondent Union gave a
letter to the Chairman of the 7th respondent expressing no objection for conversion of the 6th respondent union into 7th respondent union. The
petitioners contend that they are interested in continuance of the present set up of three tier system regarding procurement, distribution and sale of
milk and its bye-products in the State. It is also their case that the 7th respondent union by virtue of its incorporation under the new Act is trying to
appropriate the public funds of the State Government and the federation by retaining the plant and machinery and infrastructure in various milk
chilling centres and that the 7th respondent is resorting to appropriation of public money. Hence, they filed this writ petition for safeguarding public
funds and from that point of view they have locus standi to maintain this writ petition. In support of their contention, the petitioners relied on a
judgment of the Supreme Court in Janata Dal Vs. H.S. Chowdhary and Others, . In that judgment their Lordships of the Supreme Court held that
in case of public interest litigation the strict rule of locus standi applicable to private litigation is relaxed and a broad rule is evolved which gives the
right of locus standi to any member of the public acting bona fide and having sufficient interest in instituting an action for redressal of public wrong
or public injury, but who is not a mere busy body or a meddlesome interloper; since the dominant object of PIL is to ensure observance of the
provisions of the constitution and the law which can be best achieved to advance the cause of community or disadvantageous groups and
individuals or public interest by permitting any person, having no personal gain or private motivation or any other oblique consideration but acting
bona fide and having sufficient interest in maintaining an action for judicial redress for public injury to put the judicial machinery in motion like actio
popularis of Roman Law whereby any citizen could bring such an action in respect of public delict"". Now in the light of the principles enunciated by
the Supreme Court, it has to be seen whether the petitioners brought this action for redressal of public wrong or public injury and whether the
petitioners unions acted bona fide and having sufficient interest in maintaining this action of this writ petition is filed to advance the cause for others.
10. Firstly, it is seen that in the year 1997 the Guntur District Milk Producers Co-operative Union converted itself as Guntur District Milk
Producers Mutually Aided Co-operative Union under the provisions of the new Act with registration No.AMC/GNT/DCO/97/28 dated 1-2-
1997. At that time neither the petitioners nor the official respondents raised any objection for its conversion and the reason given now for filing this
writ petition is that if the 7th respondent union is incorporated under the new provisions of the new Act, the fourth respondent federation gets
disintegrated. In fact, when the 7th respondent approached the 4th respondent seeking permission for its conversion under New Act, the
Managing Director of the 4th respondent federation raised objections by his letter dated 1-11-1998 and the 3rd respondent in his proceedings in
Re. No.86733/98-M ACS., dated 19-4-1999 having rejected the objections raised by the 4th respondent federation directed the District
Registrar to arrange for registration and conversion of 6th respondent union under APMACS Act, 1995. But, now the Registrar has taken contra
stand in the counter as well as in the additional counter. In the counter affidavit dated 16-8-1999 and additional counter affidavit dated 4-9-1999 it
is his case that his office issued proceedings dated 19-4-1999 without his knowledge and he initiated departmental action against the erring
officials. He also stated that the 5th respondent happened to be Registrar, Visakhapatnam under the new Act by virtue of the notification issued by
the Government u/s 4(6) of the Act 30 of 1995, the RCS has no say in the matter and the 5th respondent has to take the decision on his own
without reference to the communication issued for his office on 19-4-1999. He also stated that the 5th respondent without reference to the
communication dated 18-4-1999 raised as many as 19 objections to the proposal of the 6th respondent-Society for conversion and thereafter
registered the Society under the new act even though the Society failed to comply with the objections. Hence, the action of the 5th respondent is
illegal. 1 have gone through carefully the affidavit filed in support of the writ petition and the counters filed by the official respondents and I find
except making complaint that the 7th respondent union is in possession of Government properties like plant, machinery and buildings worth
Rs.5.00 crores and the 7th respondent did not obtain permission of the Government which has given guarantee for the loan availed by the 6th
respondent Society from 4th respondent federation, I do not find any other objection worth the name to invalidate the action of the 5th respondent.
In fact, after conversion, the fourth respondent in his reference APDDCF:MD:99 dated 15-7-1999 addressed a letter to the Managing Director of
the 7th respondent union wherein having taken note of the conversion of 6lh respondent union into 7th respondent union observed that the 7th
respondent union ceased to be an affiliated member of the APDDCF, thereby disqualifying it from the use of the ''Vijaya'' brand in sale of liquid
milk and products unless specifically permitted by him. For giving permission he requested the 7th respondent union to enter into MOU if it wishes
to continue the brand name and pending completion of the formalities for MOU requested the union to remit the franchise fee at the rate of 1% of
the MRP for sale of liquid milk in sachets with effect from 8-7-1999. Thereafter, by his letter No.4013/G.M.(F&A)/98 dated 12-7-1999
addressed to the third respondent with a request to abrogate forthwith the registration of the 7th respondent union under the new Act as the same
is being irregular. By another letter dated 17-7-1999 to 3rd respondent he complained that without referring the matter to the functional registrar/
milk commissioner, the 5th respondent registered the society in gross violation of the provisions of the Act and the norms prescribed therein and
requested him to take disciplinary action against the 5th respondent. By another letter dated 14-7-1999 the Managing Director of the fourth
respondent federation requested the third respondent to issue instructions to the respondent No.5 not to resort to registration of the 7th respondent
union under the provisions of the new Act without referring the matter to him who is the milk commissioner and functional registrar under provisions
of Act 7 of 1964 pending delegation of powers under the new Act to him as a functional registrar. The third respondent in his turn by his letter
dated instructed the 5th respondent not to entertain the registration of the society under the new Act without getting proper clearance from the
functional registrar i.e., Managing Director of the 4th respondent Corporation and he seemed to have called for a report whether the required pre-
conditions for the said conversion have been followed by the 7th respondent union or not. From the above narration of facts, it is seen that the
Managing Director of the 4th respondent federation knew pretty well that by 12-7-1999 when he addressed a letter to the third respondent that
the 6th respondent union got converted into 7th respondent union under the provisions of the new Act and the same was incorporated by the 5th
respondent on 8-7-1999. But, this officer seemed to have taken the issue as a prestigious one and went on addressing letters to the first
respondent as well as to the third respondent to take action against the 5th respondent to cancel the registration so on and so forth. But, at the
same time of conversion of Sangam Dairy no objection was taken whatsoever by any of the official respondents. But now in the case of the 7th
respondent union the third respondent having given instructions on 19-4-1999 to the 5th respondent to arrange for registration of the conversion of
the 6th respondent into 7th respondent union under the provisions of the new Act has gone to the extent of blaming his subordinates perhaps at the
instance of the 4lh respondent. Likewise, the first respondent also has taken the stand that the registration is illegal and the Government is awaiting
report to take further action in the matter. From the above it is seen that white the fourth respondent is pressurising the other official respondents
for cancellation of the registration of the 7th respondent union at one berth, he encouraged the trade unions functioning under his control to file this
writ petition though a very effective and efficacious alternative remedy is available for him to canvass the validity of the registration under the
provisions of the new Act and also getting the counters filed by the official respondents supporting the case of the petitioners union conclusively
establishes that the petitioners herein resorted to proxy war on behalf of the Managing Director of the 4th respondent corporation though they have
no locus standi in this case and though their interests are not effected in any way. The other plea that they filed this writ petition to safeguard the
public funds also cannot hold water for the reasons that I am going to record on the issues that cropped up for adjudication in this writ petition.
Hence, I have no manner of doubt in holding that the petitioners are trying to convert the private litigation of the Managing Director of the 4th
respondent federation into a public interest litigation by raising the above pleas and as neither any public interest is involved nor any public injury is
caused due to conversion of the 7th respondent union, I hold that they have no locus standi to file this writ petition.
11. The next question to be considered is whether any illegalities or irregularities have laken place at the time of the conversion of the 6th
respondent union under the provisions of Act 30 of 1995. If so their effect on the validity of the registration. As stated supra the main objection
raised by the petitioners as well as the official respondents in this case is that on the date of incorporation of the 7th respondent union an amount of
Rs.3,97,70,034/- availed by the 7th respondent union from Indian Dairy Corporation/National Dairy Development Board under Operation Flood-
II programme for which the State Government stood guarantee on 17-2-1985 remained unpaid. The respondent union also did not return the
Government properties worth Rs.5.00 crores that are being enjoyed by the union before its conversion. Hence, the conversion of the union under
the provisions of the new Act is illegal. As far as the guarantees given by the Government for the loan availed by the respondent union is concerned
in G.O. Ms. No.55l dated 10-12-1980 with a view to establish 3 tier system on the lines of Anand pattern for procurement, distribution and sale
of milk the Government having brought into existence the 4th respondent federation, transferred the assets and liabilities of the A.P. Dairy
Development Corporation, the predecessor in interest on a token loan of Rs.1,000/- per annum and also agreed to give guarantee for the
repayment of the financial assistance to be provided by the Indian Dairy Corporation to the federation which was later on converted as National
Dairy Development Board (hereinafter referred as NDDB) under Operation Flood-II Programme together with interest. Thereafter under loan
agreement dated 30-4-1992 the 4th respondent federation seemed to have borrowed a sum of Rs.376.85 lakhs from NDDB towards part finance
for implementation of Operation Flood-II Programme and the Government seemed to have given guarantee for repayment of the said amount.
Thereafter, the borrower i.e., 4th respondent federation made a proposal to NDDB to lend an amount of Rs.247.97 lakhs to the 6th respondent
for the aforesaid purpose out of the loan availed by it under the main loan agreement and the NDDB seemed to have agreed for the proposal.
Thereafter an agreement was entered into between NDDB, 4th respondent federation and 6th respondent union for release of the said amount to
it. As per the agreement terms and conditions of the agreement 4th respondent entered into with NDDB, shall form part and parcel of the
agreement including rate of interest and repayment of loan and the parties will be governed by the rights and obligations contained in the said main
loan agreement. This also specifies the rights and obligations to be fulfilled by the borrower in terms of the main loan agreement and shall also to be
carried out and fulfilled by the borrower and the sub-loanee jointly and severally. From this it is seen that though the Government seemed to have
given guarantee to NDDB for the loan availed by the federation, from the Tripartite agreement entered into between the parties on 2-3-1993, it
cannot be said that the Government has given any guarantee for discharging of the loan availed by the 6th respondent union to NDDB directly.
Perhaps the petitioners and the official respondents are harping upon the words appearing in the agreement ""the parties hereby will be governed by
the rights and obligations contained in the said loan agreement"". The 6th respondent union having decided to convert itself as the society under the
new Act seemed to have approached NDDB by its letter dated 1-7-1999 for reduction of Government guarantee to the extent of financial
assistance made available to it by the 4th respondent federation and to issue no objection certificate for its conversion. Having considered the
request for the 6th respondent union, the NDDB in its letter SR:MS;AP:VISAKHA:77I5 dated 13-10-1998 informed the union that it has no
objection for conversion of the union under the new Act. After receiving no objection certificate from NDDB, the 6th respondent union was
incorporated under the provisions of the new Act on 8-7-1999. After the writ petition was filed, perhaps on legal advise by its letter dated 10-8-
1999 repaid total outstanding loan to NDDB duly enclosing a demand draft bearing No.340604 dated 10-8-1999 drawn on Laxmi Vilas Bank
payable at Anand for Rs.3,97,70,000/- and requested the NDDB to issue no due certificate in its favour duly discharging the Government
guarantee if any, given by the Government of A.P. By its letter dated 11-8-1999 the NDDB informed the Secretary, Food and Agriculture
Department, Government of A.P. that it has already given its consent for conversion by its letter dated 13-10-1998. It is useful to extract the last
para of the letter dated 11-8-1999 which is as under:
Since we have already communicated out no objection for registering the Visakha Milk Union under the A.P. Mutually Aided Co-operative
Societies Act, 1995, meaning thereby, a decision in principle was taken by the NDDB to reduce the Government guarantee in respect of the loans
released to the Visakha Milk Union. The necessary steps in this regard are being taken by NDDB and Visakha Milk Union.
12. On 30-8-1999 when the matter came up for hearing, the Counsel for the 7th respondent brought to my notice that his client cleared the loan.
In those circumstances, while directing the 7th respondent to produce a letter from NDDB with regard to the receipt of the Demand Draft sent by
it, 1 directed the Counsel for respondents 1, 3 and 4 to get instructions on the letter of NDDB dated 11-8-1999. On the same day i.e., on 30-8-
1999 the 4th respondent federation addressed a letter to the General Manager, NDDB stating that under tripartite agreement dated 2-9-1993 an
amount of Rs.3.977 crores is outstanding for repayment by the 6th respondent union and any variation in the liability or revocation of the guarantee
should be with the express consent of the Borrower (APDDFC). Hence, the NDDB is requested to ensure that express consent of federation is
obtained before Government guarantee in this matter is revoked. It is useful to extract para No.2 and penultimate para of the letter dated 30-8-
1999 which is hereunder:
In this connection, any variation in the liability or revocation of the guarantee should be with the express consent of the Borrower (APDDCF).
Moreover, this issue is germane to the subject-matter of writ petition No.14636 of 1999 pertaining to registration of Visakha Milk Union under
APMACS Act, which is subjudice.
In the penultimate para it is stated ""As already stated, I request you to ensure that the express consent of APDDCF is obtained before the
Government guarantee in this matter is revoked, as the matter is subjudice.
13. From these two paragraphs, it is seen that the 4th respondent tries to threaten the NDDB that if the DD sent by the 7th respondent union is
encashed by it without obtaining express consent of APDDCF it amounts to sub judice. Having received reply from NDDB on 1-9-1999
acknowledging the receipt of DD the 4th respondent again addressed a letter to the NDDB to inform the date of encashment of the demand draft
sent by the respondent union. In reply to the said letter, the NDDB in its letter dated 3-9-1999 informed the 4th respondent that the 7th
respondent paid the amount by way of demand draft dated 10-8-1999. The letter also stated ""As regards the relaxation of Government guarantee,
please refer to our letter No.FPS:AP:7474 dated 11-8-1999, copy attached for your ready reference."" Once again the 4th respondent addressed
a letter to the NDDB on 3-9-1999 stating that mere receipt of DD does not amount to payment unless it is encashed and requested NDDB to
specifically inform them about the dale of encashment of the DD. The NDDB in its letter dated 6th September, 1999 informed the 4th respondent
that the DD sent by the 7th respondent has been duly encashed.
14. From the above narration of the facts, it is seen that the 6th respondent union having taken a decision to get itself converted as a society under
the new Act, approached the NDDB seeking its permission for conversion and for reduction of the Government guarantee to the extent of the
financial assistance availed by it, by its letter dated 1-7-1998 and the NDDB in its letter dated 13-10-1998 communicated its no objection for
conversion of the 6th respondent union to 7th respondent union much in advance before actual conversion took place on 8-7-1999. But, the
respondents 1, 3 and 4 started contending that without obtaining their prior permission the NDDB cannot give its consent for conversion of 6th
respondent union to 7th respondent-Union. I have seen the file relating to the conversion of ''Sangam'' dairy. The NDDB in its letter
SR:MSG:11321 dated 14-11-1996 has given no objection for getting the Sangam dairy converted under the provisions of the Act and thereafter
the Sangam Dairy has been incorporated under the provisions of the new Act. In fact, the third respondent in his letter dated 19-4-1999 having
taken note of the no objection certificate given by NDDB, directed the 5th respondent to arrange for registration of conversion of 6th respondent
union. As per the provisions of the new act a society registered u/s 7 of the Andhra Pradesh Co-operative Societies Act, 1964, if it wishes to
convert itself it should show the evidence that it is not in receipt of any Government loans or guarantees at the time applying for registration. Though
the NDDB made the legal position clear by its letter dated 11-8-1999 stating that it is prepared to reduce the Government guarantee in respect of
the loans released to 6th respondent union, I do not know what objections these official respondents can have. At any rate, when the entire loan
amount was repaid on 10-8-1999, the question of subsistence of the guarantee given by the Government does not arise. But, the case of the
respondents is that on the date of conversion i.e., on 8-7-1999 the guarantee given by the State Government for the loan availed by the 6th
respondent is subsisting and the very registration of the society is null and void as it is running counter to the provisions of the Act. I cannot, accede
to the contention for the simple reason that 6th respondent union by its letter dated 1-7-1999 sought permission of the NDDB for its conversion
and also for reduction of the Government guarantee to the extent of financial assistance availed by it and the NDDB by its letter dated 13-10-1998
accepted the same. On the basis of the no objection issued by the NDDB the 6th respondent union was converted to 7th respondent union under
the provisions of the new Act. From the letter of NDDB dated 11-8-1999 the position is further made clear that while giving no objection for the
conversion of the 6th respondent it has taken a decision to reduce the Government guarantee to the extent of the loan availed by 6th respondent
union. Nextly, it is useful to extract clause 1.10 of the letter of the 3rd respondent dated 23-4-1996 which is as under:
a copy of the memorandum of agreement between the Co-operative society and the Government of financial institutions in case of loans
outstanding or guarantee (""in this matter, loan or guarantee to a federation even for the purpose of on-lending to the constituents of that federation
may not be treated as loan or guarantee to the constituents, unless there is a specific mention of such a condition in the original agreement"").
15. From this it is evident that a loan or guarantee given by the Government to a federation for the purpose of on-lending to its constituents may not
be treated as a loan or guarantee to the constituents, unless there is a specific union of such a condition in the original agreement. The tripartite
agreement dated 2-3-1993 do not contain any such clause as observed supra. Hence it is to be held that the guarantee given by the Government
for the loan availed by the 4th respondent cannot be treated as guarantee for the loan availed by the 6th respondent union from 4th respondent.
Even assuming without admitting that the guarantee given by the Government is to be treated as a guarantee for the loan availed by 6th respondent,
the same is not in force by virtue of the no-objection certificate dated 13-10-1998 given by NDDB. Thirdly, even if it is in force on the date of
registration, the respondents are estopped from raising any objection having permitted the conversion of the Sangam Dairy in similar circumstances.
The stand taken by the Official respondents resulted in hostile discrimination against the 7th respondent union. Further the 3rd respondent having
given letter dated 19-4-1999 directing the 5th respondent to arrange for registration of the conversion duly taking note of the no-objection
certificate given by NDDB now takes a contrary stand without any basis whatsoever and the stand taken by the 3rd respondent also runs counter
to his earlier stand at the time of conversion of Sangam Dairy and these actions are in clear violation of Article 14 of the Constitution of India.
Further I hold at the worst it may be a procedural irregularity and it cannot effect the very conversion of the 6th respondent union to 7th
respondent union. Lastly, when the entire amount was cleared by the 7th respondent union, the official respondents should not raise any objection.
But, from the letters addressed by the 4th respondent in this regard to NDDB shows his animosity against the 7th respondent and at this instance
the official respondents have taken these untenable pleas contrary to their own instructions referred supra. For the above reasons, I reject the
contention of the respondents on this Court.
16. Coming to the assets held by the 7th respondent, it is seen that a society registered u/s 7 of the Andhra Pradesh Co-operative Societies Act,
1964 if it wishes to convert itself into society under the provisions of the new Act evidence has to be shown that it is not in receipt of any
Government loan or that it has entered into a memorandum of understanding with the Government for such outstanding. In my opinion, from the
above, it is seen that no evidence need be shown with regard to return of the assets to the Government, if any, in its possession at the time of
applying for registration. Assuming for a moment that the society has to either return the assets or enter into a memorandum of understanding with
regard to the assets that are in possession of the 7th respondent union, the circumstances under which the assets of the Government are in the
possession of the 7th respondent union have to be noted. Initially, the integrated Milk Project was launched as a department of Government and as
the dairy activities have grown up the Government converted the same into a public sector corporation under name and style ""A.P. Dairy
Corporation Limited"" owned and controlled by the Government of A.P. by registering the same under the provisions of Indian Companies Act,
1956, vide G.O. Ms. No.842 dated 14-8-1973 and the same came into existence with effect from 2-4-1974. Thereafter, the land, buildings,
machinery, equipment, tools, furniture and fixtures etc., and all the vehicles attached to the units were transferred to the Corporation by the
Government in G.O. Ms. No.80 F and RD (Dairy-I) Department dated 15-4-1974. In the year 1980 the Government having taken a policy
decision to introduce three tier system for procurement, distribution and sale of milk and other bye-products on Anand pattern the present 4th
respondent federation was organised by issuing G.O. Ms. No.551, F and RD (Dairy-I) Department dated 10-12-1980. In the said G.O., the
assets and liabilities and the plant and machinery established by the Government all over the State were given on lease for Rs. 1,0007- per annum.
The respondents estimated the value of the assets in possession of the 7th respondent union at Rs.5.00 crores as seen from Annexure-II of letter
No.4013/ G.M (F and AO/98 dated 1-11-1998. He estimated the value of the plant and machinery not on the basis of depreciated value but on
the basis of appreciated value and such a procedure is unknown.
17. With regard to the land and building he estimated the value on the basis of the prevailing market rate as on 31-3-1996, though these lands
were purchased at the time of starting integrated milk project under the control of Dairy Development Department. Further it is seen as per G.O.
Ms. No.551 dated 10-12-1980 that entire assets and liabilities of A.P. Dairy Development Corporation all over the State were leased out on a
token rent of Rs.1,000/- per annum to the 4th respondent union. It is not known how he can claim such an amount while the federation is enjoying
the plant and machinery and the buildings constructed by the integrated Milk Project only on a nominal rent of Rs.1,000/-per year. Nextly, it is to
be seen that either in his correspondence to various authorities or in the counters Filed in the writ petition no where he stated that the assets of the
Government were handed over by the Guntur District Milk Producers Co-operative Union, at the time of their conversion under the New Act. In
reply to this contention, the 7th respondent stated that while transferring the Srikakulam and Vijayanagaram District Unions, the assets under the
control of those two units were estimated at Rs.20,87,453.32 ps and their the liabilities were estimated at Rs.78,09,400.00. After transfer of the
Srikakulam and Vijayanagaram District Unions to it the 6th respondent union not only discharged the liabilities, but also improved the assets by
investing huge amounts during past 15 years. It is their case that the ITDA units functioning at Paderu, Aruku, Chintapally, Jurupur and Seethampet
were constructed with the funds of ITDA for tribal development and the said units are not in working conditions and are under the control of
respective ITDAs. As far as Narsipatnam and Amdalavalsa units are concerned they were purchased with VCD funds and grants received by it.
There remains two units with R.P. Puram and Srikakutam which were transferred to the 6th respondent as per the orders of the Government in
G.O. Ms. No.67 dated 31-1-1985 with effect from 14-2-1985. Further it is also stated that the fourth respondent federation is liable to pay an
amount of Rs.4.00 lakhs to the 6th respondent union exclusive of loss of 54.7 lakhs at the end of 31-2-1985.
18. During the course of the arguments, the Counsel for the 7th respondent union expressed its willingness to hand over the assets of 4th
respondent federation at any time either before or after settling its accounts. He also stated that though the 6th respondent got itself converted into
a society under the provisions of the new Act, it has no intention of any cessation from the 4th respondent as it can continue to be member of the
4th respondent federation by virtue of amendment Act 6 of 1998 to Section 19 of Act 7 of 64.
19. From the above, firstly it is seen that the ''provisions of the new act do not contemplate handing over the assets of the Government at the time
of applying for conversion. Secondly, the 4th respondent as well as official respondents have taken a different stand at the time of conversion of
Sangam Dairy and conversion of the 6th respondent union. From the contention of the 7th respondent assets and liabilities of only two units were
transferred to it by the federation under the orders of the Government in G.O. Ms. No.67 and as far as units under the control of ITDAs are
concerned they are not in working condition apart from the fact that those units were constructed with the ITDA funds. Further it is the case of the
7th respondent that al the time of transfer of these units while the liabilities were valued at about 78 lakhs the value of the assets transferred was
less than 21 lakhs that apart as on today about 4 crores have to be paid to the 7th respondent society. Unless all these accounts are settled, the
handing over of the assets to 4th respondent or entering into MOU does not arise. Even assuming without admitting that the assets of the 4th
respondent federation has to be redelivered at the time of filing application seeking conversion, it is only a procedural irregularity and as the 7th
respondent is willing and ready to redeliver the properties that are under its control even before settling its accounts shows the bona fides on the
part of the 7lh respondent. At the worse it may be a procedural irregularity and the same is curable, but it cannot have the effect in validating the
very conversion of the 6th respondent as 7th respondent under the new Act.
20. Lastly, it is seen that while 4th respondent federation is running in losses as per the audit report of the audit officer of 4th respondent union in
FAR No.2/97-98 dated 28-8-1998 the 7th respondent earned a gross profit of Rs.13,02,49,033.88 ps. during the Co-operative year 1997-98.
''''In the circumstances, any prudent person will try to come out of a sinking unit as and when opportunity comes and as the provisions of the new
Act are intended to minimise the Governmental interference and to promote more self-reliant and autonomous Co-operative societies, there is
nothing wrong in the action of the 6th respondent in trying to get itself converted as 7th respondent under the provisions of the new Act.
Accordingly, I hold that the objections raised by the official respondents do not hold much water and this contention is also rejected.
21. There remains certain technical objections raised by the 4th respondent federation as welt as official respondents with regard to the registration
of the 7th respondent union. The respondents contended that the 5th respondent has no jurisdiction to register the conversion of the 6th respondent
whose area of operation is extended over three districts i.e., Srikakulam, Vijayanagaram and Visakhapatnam as the Government notified him as a
functional registrar under the provisions of the new Act only for Visakhapatnam District. After the new Act came into force, the third respondent in
his capacity as a registrar for the entire State issued guidelines from time to time with regard to registration of Co-operative societies under the new
Act. As per the letter of the 3rd respondent dated 23-4-1996, the District Registrars are directed to instruct the promoters to file applications for
registration with the Registrar at Hyderabad in case the area extends beyond the district. But the same was modified in his letter Re. No.57310/98/
MACS dated 29-8-1998. From this letter it is seen that the Society having more than 1 district as area of operation, the registrar under the new
Act under whose jurisdiction the headquarters of the proposed society exists is empowered to register the society under the provisions of the new
Act. In the light of these above instructions the respondents cannot take a round about turn and contend that the 5th respondent has no jurisdiction.
22. Nextly, it is contended that if a society registered under old Act intends to convert itself as a society under the provisions of new Act before
general body meeting is convened notices have to be issued to creditors and others having some interest in the affairs of the society and such notice
shall also to be published in any one of the vernacular news paper having good circulation in the local area. I have gone through the provisions of
the Act carefully and I do not find that giving notice to the creditors or the persons interested in the affairs of the society is a pre-condition for an
old society to get itself converted under the provisions of the new Act. Again I have gone through the file of the Sangam Dairy and such a plea was
not raised by the respondents at the time of its conversion. Hence, they are estopped from raising this contention.
23. The 4th respondent in para 9 of his counter contended that the Legislature passed two Acts i.e., 64 Act and 1995 Act and the provisions of
one Act cannot supercede the provisions of another Act and u/s 30 of the Act 7 of 1964 no provision is made for any society to go out of perview
of the Act and as such the general body resolution dated 18-9-1999 by the 6th respondent union is not valid. From this it is seen that this officer
has gone to the extent of questioning the authority of the Legislature itself in passing two Acts and the reasons given by me in upholding the validity
of Act 30 of 1995 holds good for rejecting his contention and it is accordingly rejected.
24. Nextly, it is contended that it is obligatory on the part of the 6th respondent union to settle the accounts as on the date of conversion under the
Act. But, from the conduct of the 4th respondent federation, it is seen that he is opposing tooth and nail by approaching every authority concerned
to come to his rescue in stopping the conversion of the 6th respondent union. Hence, it is highly difficult to hold that this respondent federation
would have settled the accounts had the 6th respondent approached him for settling of its accounts, more so, when it is his specific case that the
production, distribution and sale of milk is interlinked under the 3 tier system that is functioning in the State and if any imbalances occures in the
structure, the fourth respondent federation will get disintegrated. That is the reason why the 6th respondent approached the NDDB seeking no
objection certificate by reducing the Government guarantee to the extent of the loan availed by it and also the third respondent. Though, initially by
3rd respondents proceedings dated 19-4-1999 the District Registrar was directed to register the conversion of the 6th respondent union under the
new Act perhaps because of the pressure brought by the 4th respondent he changed his attitude and he has even gone to the extent of finding fault
with the subordinate in issuing proceedings without his knowledge. Even assuming without admitting that the said proceedings were issued without
the knowledge of the 3rd respondent, I do not find any illegality or irregularity in the proceedings dated 19-4-1999 emenated from 3rd
respondents office. At any rate, under the provisions of the new Act the society intending to convert itself has to show evidence that it is not in
receipt of any Government loan. The 4th respondent which was incorporated under the provisions of the A.P. Act 7 of 1964 cannot equate itself
to that of Government and as the 7th respondent have expressed their willingness to settle their accounts with the 4th respondent and also to return
the assets that were handed over to it at the time of formation of the 4th respondent union. It is always open to the 4th respondent federation to
settle disputes amicably. Accordingly, this contention is also rejected.
25. Nextly it is contended that under clause 2(k) the federation is defined as a mutually aided Co-operative society registered u/s 4. Hence,
according to the petitioners and these respondents unless the primary societies affiliated to it are converted as societies under the new Act, the
question of getting itself converted under the provisions of new Act does not arise. It is not in dispute that out of a total number of 615 member
societies 576 member societies opted for conversion at the general body meeting held on 18-9-1999 and by the time of conversion of the union as
many as 47 primary Co-operative societies got themselves converted under the new Act. Further it is seen from the proceedings Re. No.1315/97/
MACS dated 1-5-1997 addressed to the President of Milk Union, Vadlamudi (Sangam dairy) and the District Co-operative Officer, Guntur one
of the pre-condition for conversion is that within one year time frame all the member societies of the erstwhile federation should be converted into
new Act. From this it is seen that there is still time for the Primary Co-operative Societies to get themselves converted under the provisions of the
new Act. Accordingly, this contention is also rejected.
26. Nextly, it is contended that after conversion of the 7th respondent under the new Act there is no obligation on the part of the 7th respondent to
follow the guidelines of the State federation which may lead to unhealthy competition from different agencies apart from existing competition from
private sector. It is rather unfortunate that an officer of I.A.S. rank has taken this stand forgetting the fact that the healthy competition is always
invited between the competing organisations so that the efficiency of the organisation, quality of service will improve apart from implementing
innovative ideas to face the competition in the market.
27. Lastly it is contended that the Managing Director of the 4th respondent federation being the functional milk commissioner under the provisions
of Act 7 of 1964 his prior permission ought to have been obtained. From his letter dated 1-11-1998 and from Section 4 of the new Act I do not
find any such condition was imposed and even as per his own version he was not nominated as a Milk Commissioner under the provisions of the
new Act. Accordingly, this objection was also rejected.
28. The objections of the unofficial respondents are that
(1) if any laches are committed by the 7th respondent the milk producers are entitled to make representation to the 4th respondent federation
which is being headed by a senior IAS officer;
(2) by the conversion the function, administration and control will be effected and practically there will not be any control of the 4th respondent
federation; and
(3) since the Government control is being minimised as such, there will not be any protection to the milk producers and also effect the payments
due to them as the accountability of 7th respondent is doubtful and ultimately overall administration will be effected thereby functioning of the unit
will be effected.
29. All these above contentions are raised without knowing the aims and objectives underlying the new enactment and ,its provisions. Any member
society which not willing to join the federation is always at liberty to opt itself out of the federation if it is having any apprehension, either on the
functioning, the administration and control of the 7th respondent even as per Clause 3(iii) of the letter of the 3rd respondent dated 23-4-1996.
Hence, the objections raised above by the unofficial respondents are also rejected.
30. Lastly as seen from the proceedings of the 3rd respondent dated 19-4-1999, the Government share capital accounting to Rs.20.39 lakhs was
repaid by the 6th respondent union on 27-12-1997 much in advance to its conversion under the provisions of the new Act. In fact, this issue was
not raised by the petitioners and the same was not disputed by either petitioners or the official respondents. To leave no doubt and see that the
judgment is complete in all respects the above fact is also incorporated in the judgment.
31. In the light of the foregoing discussions, I do not find any merit in any of the contentions raised by the petitioners as well as by the official
respondents. Further, the official respondents having not raised their little finger against the conversion of Sangam Dairy in 1997 and raised these
objections with regard to the conversion of 6th respondent union under the provisions of the new Act on an apprehension that if the conversion of
6th respondent union is permitted the 4th respondent gets disintegrated which cannot form basis for opposing conversion of the 6th respondent
union, in the light of the aims and objects underlying the new Legislation lastly I hold that the officers cannot approbate or reapprobate to suit their
convenience more so contrary to the provisions of the Act and guidelines issued by them from time to time.
32. Lastly, it is to be seen whether the petitioners can invoke the jurisdiction of this Court without exhausting the statutory remedy. As held supra
u/s 40 of the new Act any interested person can move the Co-operative Tribunal constituted u/s 32 of the Act for the dissolution of the society if
the registration is obtained by playing fraud or mistake following the procedure mentioned. Hence, if the petitioners are really aggrieved by the
action of the 5th respondent in converting the 6th respondent union as a 7th respondent union under the provisions of the new Act, they would
have filed an appeal before the Co-operative Tribunal where the dispute would have been settled between the parties on the basis of the pleadings
and also after recording evidence on the issues in controversy. Hence, the petitioners cannot invoke the jurisdiction of this Court under Article 226
of the Constitution of India.
33. Further, this writ petition cannot be treated as a public interest litigation as the interest of the community at large is not going to be effected in
any way by conversion of the 6th respondent union nor any injury is said to have been caused to the public due to the conversion of the 6th
respondent union. Hence, I hold that the writ petition filed by the petitioners is not maintainable both on the ground of existence of an alternative
remedy and also on the ground that it cannot be treated as a pubic interest litigation.
34. For all the aforesaid reasons, I do not find any merit in any of the contentions raised by the petitioners as well as official respondents in this writ
petition opposing conversion of the 6th respondent union as 7th respondent union under the provisions of APMACS Act. In the circumstances of
the case the 5th and 7th respondents shall be paid costs for defending the registration of 7th respondent union by the 4th respondent who is
responsible for all this litigation. Advocates fee is fixed at Rs.5,000/- and the same will be equally apportioned between 5th and 7th respondents
union.