Allowed

Sri. Someshwara Farmers Co-Operative Spinning Mill Ltd., v. State of Karnataka

Karnataka HC20 Feb 2024WP/3983/2023

Case brief

AI extract

What is this about?

The High Court allowed a writ petition challenging the rejection of a proposed amendment to the bye-laws of a co-operative spinning mill. The Court quashed the Registrar's order, holding the Registrar had jurisdiction and rescinded the error regarding the circular. The Registrar was directed to register the amendment permitting the sale of specified land to mobilize funds for the mill.

What did the court decide?

The impugned order was quashed, and the 4th respondent was directed to register the proposed amendment of the bye-laws incorporating the specific extent of land within 30 days.

Sri. Someshwara Farmers Co-Operative Spinning Mill… — Cooperative Societies | Karnataka HC (2024)

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1 - NC: 2024:KHC:7088 WP No. 3983 of 2023

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 20^TH DAY OF FEBRUARY, 2024

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BEFORE

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THE HON'BLE MR JUSTICE ANANT RAMANATH HEGDE WRIT PETITION NO. 3983 OF 2023 (CS-RES)

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BETWEEN:

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SRI. SOMESHWARA FARMERS CO-OPERATIVE SPINNING MILL LTD., AT LAXMESHWAR-582 116, REP. BY ITS CHAIRMAN SRI. P. G. UPANAL, S/O. LATE G. F. UPANAL, NATIVE OF LAXMESHWAR-582 116, ALSO R/AT NO. 108, 2^ND MAIN ROAD, M.L.A. LAYOUT, R.T. NAGAR, BENGALURU - 560 032.

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…PETITIONER

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(BY SRI J S HALASHETTI, ADVOCATE)

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AND:

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Digitally signed by PRAMILA G V Location: HIGH COURT OF KARNATAKA

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STATE OF KARNATAKA, REP BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF CO-OPERATION, M.S. BUILDING, BENGALURU-560 001.

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THE SECRETARY, DEPARTMENT OF COMMERCE AND INDUSTRIES, GOVERNMENT OF KARNATAKA, 1^ST FLOOR, VIKASA SOUDHA, BENGALURU-560 001.

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REGISTRAR OF CO-OPERATIVE SOCIETIES OFFICE OF REGISTRAR OF CO-OPERATIVE, GOVERNMENT OF KARNATAKA,

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NO.1, ALI ASKAR ROAD, BENGALURU-560 052.

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2 - NC: 2024:KHC:7088 WP No. 3983 of 2023

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JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (TEXTILE),

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OFFICE OF THE TEXTILE COMMISSIONER AND DIRECTOR, HANDLOOMS AND TEXTILE, VANA VIKASA, 2^ND FLOOR, 18^TH CROSS, MALLESHWARAM, BENGALURU-560 001.

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…RESPONDENTS

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(BY SRI M SRINIVASA KUMAR, HCGP FOR R1 TO R4)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO SETTING ASIDE THE IMPUGNED ORDER NO.KAIJAE/JAMNI/ SORAISANUMGINI/BAI.TI/20/2018.19/2022.23 DT:21.12.2022 PASSED BY THE R4-JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (TEXTILE), DEPARTMENT OF HANDLOOMS AND TEXTILES, WHICH IS MARKED AS ANENXURE-L TO THE WRIT PETITION.

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THIS PETITION COMING ON FOR FURTHER HEARING THIS DAY THE COURT MADE THE FOLLOWING:

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ORDER

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Heard Sri.J.S.Halashetti, the learned counsel

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appearing for the petitioner and Sri.M.Srinivas Kumar, the High Court Government Pleader, appearing for respondents No.1 to 4.

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The petitioner is a Farmers Co-operative Spinning Mill registered under Karnataka Co-operative Societies Act, 1959 (for short hereinafter referred to as 'the Act of 1959).

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The petitioner is aggrieved by the order dated 21.12.2022

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NC: 2024:KHC:7088 WP No. 3983 of 2023

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passed by the 4^th respondent Society - Joint Registrar of Co-operative Societies (Textile) wherein he has refused to register proposed amendment of Bye-law of the petitionerCo-operative Spinning Mill. The petitioner has also sought for writ of mandamus to direct the 4^th respondent Joint Registrar of Co-operative Societies (Textile), Department of Handlooms and Textiles to register the proposed amendment to the Bye-law of the petitioner-Society.

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It is forthcoming from the records that the petitioner-Co-operative Spinning Mill is established for the purpose of running a Spinning Mill. It owns non-agricultural lands. The total extent of the lands owned by the petitionerSpinning Mill is 102 acres. Earlier the petitioner-Spinning Mill had sought permission to alienate certain piece of land to mobilize the funds required to run the Spinning Mill. Permission was granted and accordingly 12 acres of land was sold.

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It is stated by the petitioner-Spinning Mill that the

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petitioner is short of funds to run the Spinning Mill and still the petitioner owns 89 acres and to mobilize the funds to run

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the Spinning Mill, the petitioner- Co-operative Spinning Mill intends to sell 36 acres of land by forming layout and sites. For this purpose, an agreement is already entered into between the Karnataka Housing Board (for short 'Board') and the petitioner-Co-operative Spinning Mill, wherein the Board agreed to develop the land on a consideration that the Board will retain 60% of the sites formed in the said layout and the petitioner - Spinning Mill will have 40% of the land in the said layout. The proposed amendment seeks to incorporate few changes in the Bye-law which enables the petitioner-Cooperative Spinning Mill to sell the land in terms of the Joint Development Agreement entered between the petitionerSpinning Mill and the Karnataka Housing Board.

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An amendment is also sought to incorporate few more changes to bring the Bye-law of the Petitioner - Spinning Mill in tune with amendment to the Karnataka Co-operative Societies Act, 1959 (for short 'the Act of 1959'), particularly under Section 20 of the Act of 1959.

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Admittedly, the resolution is approved by the General Body of the petitioner - Co-operative Spinning Mill to

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5 - NC: 2024:KHC:7088 WP No. 3983 of 2023

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amend the Bye-law as proposed. After complying the procedure contemplated for proposed amendment, it was sent to the 4^th respondent-Joint Registrar of Co-operative Societies for approval. The 4^th respondent has refused to accept the amendment and in terms of the impugned order dated 21.12.2022 at Annexure-L, has rejected the proposal. While rejecting the proposal, the 4^th respondent has assigned two reasons:

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(a) The proposed amendment is not properly reflected in the notice convened for the purpose of discussing the proposed amendment.

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(b) The proposed amendment is contrary to the circular dated 09.12.2014.

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Learned counsel for the petitioner-Co-operative Spinning Mill would contend that the impugned order is unsustainable. He would submit that the notice relating to the proposed amendment issued is very clear as to the proposed amendment sought by the petitioner-Co-operative Spinning Mill and same is duly discussed and approved in the

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General Body Meeting. It is also his further submission that the circular dated 09.12.2014 does not come in the way of amending the Bye-law.

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Learned Government Advocate would submit that

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the impugned order is passed by the 4^th respondent who has no jurisdiction to deal with the amendment proposed. It is his contention that the amendment proposed is to be considered by the Joint Registrar of Housing and this being the position, he would submit that the matter be referred to the Joint Registrar Housing to consider the proposed amendment of Bye-law of the petitioner-Co-operative Spinning Mill. Learned Government Advocate would further contend that the Writ Petition is not maintainable as the appeal is provided against the impugned order.

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This Court has considered the contentions raised at the bar and also perused the records.

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As can be noticed from the meeting notice issued to discuss the proposed amendment, it is explicitly clear that the petitioner-Co-operative Spinning Mill is seeking

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amendment of Bye-law to dispose of unproductive portion of the land belonging to the petitioner-Co-operative Spinning Mill. To a pointed out question put by this Court as to why the extent of land is not mentioned in the proposed amendment of Bye-law, the learned counsel appearing for the petitioner-Co-operative Spinning Mill would refer to Annexure-H, the portion of the extract of the resolution passed by the Board of the petitioner-Co-operative Spinning Mill in the General Body of the petitioner-Co-operative Spinning Mill, where a decision is taken to sell 34 acres 11 guntas and 5 annas.

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Learned counsel for the petitioner would also submit that the petitioner - Co-operative Spinning Mill will agree if Registrar in his order accepting the registration and specifically provides for extension of land that can be developed and sold.

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This being the position, this Court does not find any difficulty in amending the Bye-law as the Bye-law is sought to be amended by the petitioner-Co-operative

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Spinning Mill after complying the due procedure

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contemplated for amendment of Bye-law.

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It is very much apparent from the proposed amendment of Bye-law wherein the Bye-law is sought to be amended only for the purpose of mobilizing funds to carry out main business of the petitioner - Spinning Mill.

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As far as the contention of the learned Government Advocate that the 4^th respondent has no jurisdiction to consider the proposed amendment is concerned, it is to be noticed that when the Bye-law is proposed for amendment it is still a Spinning mill, and the 4^th respondent-Joint Registrar is conferred with the jurisdiction to deal with the Bye-law of the Spinning Mill. In case, the Bye-law is amended, it is to be noticed that the petitionerSpinning Mill will not metamorphose into a Housing Co-operative Society. The proposed amendment of Bye-law is very clear wherein it is stated that after the sale of certain assets of the Spinning Mill, the Society will continue to function to carry out its original object of running a Spinning Mill. This being the position, this Court is of the view that the

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4^th respondent has no jurisdiction to approve the Bye-law has no substance at all.

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As far as the finding of the Registrar that the Circular dated 09.12.2014 comes in the way of amending the Bye-law is concerned that finding is totally erroneous. This Court has considered the circular dated 09.12.2014. In terms of the said circular what is restrained is the use of the word '««zÉÆÃzÉÝÃ±À' in the name of the Society. The proposed amendment does not seek to incorporate the word '««zÉÆÃzÉÝÃ±À'. Hence, the circular does not come in the way. The 2^nd condition imposed in the said circular is Housing Society would confine itself to the activities of the Housing Societies and should not indulge in any other activities. This Court is of the view that the petitioner - Society is not diversifying itself into a Housing Co-operative Society. The petitioner-Spinning Mill is only trying to realise the capital by selling 34 acres 11 guntas and 5 annas of land to mobilize the funds to run its original business.

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This being the position, this Court is of the view

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that the proposed amendment does not make the petitioner as a Housing Co-operative Society as well as Spinning Mill as apprehended by the 4^th respondent. It is also relevant to note that merely because the petitioner-Society is changing its objective the Spinning Mill into a Housing Co-operative Society for a limited purpose. The very fact that the petitioner Society has entered into a Joint Development Agreement with the Board would speak a lot of the bonafides of the petitioner-Society where there is hardly any scope for manipulation. The only reason as contended by the learned counsel for the petitioner, to enter into Joint Development Agreement with the Board is to ensure transparency in the transaction and to ensure that the sites are formed by following regulations and sites at a higher market value.

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Learned counsel for the petitioner would contend that though an appeal is provided, the appeal is to be filed before the 3^rd respondent who has issued circular dated 09.12.2014 which is treated as the basis to pass the impugned order, this Court is of the view that the appeal is

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not an effacious remedy in the peculiar facts of the present

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case. Under these circumstances, this Court is of the view that the Petition has to be allowed. Hence the following:

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ORDER

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(i) The Writ Petition is allowed .

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(ii) The impugned order dated 21.12.2022 passed by Joint Registrar of Co-operative Societies, (Textile), Department of Handlooms & Textiles, at Annexure-L is quashed.

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(iii) The 4^th respondent - Joint Registrar is directed to register the amendment of the Bye-law proposed by the petitioner -Spinning Mill by incorporating the extent of land as 34 acres 11 guntas and 5 annas in the Bye-law, to convey the meaning that Bye-law is amended only to develop 34 acres 11 guntas and 5 annas of land belonging to the petitioner -Society.

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(iv) The whole exercise shall be carried out within 30 days from the receipt of copy of this order.

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Sd/JUDGE

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GVP

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List No.: 1 Sl No.: 19

Sri. Someshwara Farmers Co-Operative Spinning Mill Ltd., v. State of Karnataka

Case brief

What is this about?

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Sri. Someshwara Farmers Co-Operative Spinning Mill Ltd., v. State of Karnataka

Case brief

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