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The Collective Farming Society Ltd. and ors. Vs. State of Madhya Pradesh and ors. - Court Judgment

LegalCrystal Citation
SubjectTrusts and Societies
CourtMadhya Pradesh High Court
Decided On
Case NumberMisc. Petn. No. 559 of 1973
Judge
Reported inAIR1974MP59; 1974MPLJ1
ActsMadhya Pradesh Co-operative Societies Act, 1961 - Sections 53(1), 53(3) and 91; Constitution of India - Article 245; General Clauses Act - Sections 3(42); Madhya Pradesh Co-operative Societies Rules, 1962 - Rule 41
AppellantThe Collective Farming Society Ltd. and ors.
RespondentState of Madhya Pradesh and ors.
Appellant AdvocateGulab Gupta, ;R.K. Gupta and ;V.S. Shrouti, Advs.
Respondent AdvocateY.S. Dharmadhikari, Adv. General, ;K.K. Adhikari, Deputy Govt. Adv. for Nos. 1 and 2 and ;K.K. Issrani, Adv. for No. 4
DispositionPetition allowed
Cases ReferredPremnarain v. Shilpakar Sahakari Mazdoor Sangh
Excerpt:
- - he concedes that if the state government makes an order which is repugnant to the object or the scheme of the act, or is mala fide, the order can well be quashed. but merely because a bad order can be passed, the provisions of the law cannot be struck down as unconstitutional. left to the section itself, it can well be challenged as conferring despotic or arbitrary power. --now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persona on whom, tax is to be laid therate at which it is to be charged in respect of different classes of goods and the like. state of bombay air 1961 sc 4:-it is now well established by the decisions of this court.....shiv dayal, j. 1. this case was referred to this full bench for two reasons: (1) the vires of section 91 of the m.p. co-operative societies act, 1961, was in doubt, and (2) the correctness of the decision of a division bench of this court in premnarain v. shilpakar sahakari mazdoor sangh ltd. 1971 jab lj 924, was in doubt. 2. this petition under article 226 of the constitution is to quash certain orders passed by the state government effecting supersession or continuation of supersession of the committee of petitioner no. 1 collective farming society, ltd,. lilakheri (hereinater called the petitioner-society) and to direct the respondents by a writ of mandamus to handover charge of the society to the petitioners nos. 2, 3 and 4, who claim to be duly elected president. secretary and.....
Judgment:

Shiv Dayal, J.

1. This case was referred to this Full Bench for two reasons: (1) The vires of Section 91 of the M.P. Co-operative Societies Act, 1961, was in doubt, and (2) the correctness of the decision of a Division Bench of this Court in Premnarain v. Shilpakar Sahakari Mazdoor Sangh Ltd. 1971 Jab LJ 924, was in doubt.

2. This petition under Article 226 of the Constitution is to quash certain orders passed by the State Government effecting supersession or continuation of supersession of the Committee of petitioner No. 1 Collective Farming Society, Ltd,. Lilakheri (hereinater called the petitioner-society) and to direct the respondents by a writ of mandamus to handover charge of the society to the petitioners Nos. 2, 3 and 4, who claim to be duly elected President. Secretary and Treasurer of the petitioner-society.

3. Facts material for the questions, which have been raised before us may be briefly stated thus:

(i) The petitioner-society is a registered co-operative society of cultivatorsof village Lilakheri, tahsil and district, Sihore, and is registered under the provisions of the M.P. Co-operative Societies Act, 1961 (hereinafter called the Act). It has a committee to manage the affairs of the society. Some land was given to it by the State Government under the provisions of Section 162 of the M.P. Land Revenue Code. The Registrar, Co-operative Societies, in exercise of his powers under Section 53 (1) of the Act, and after issuing a show cause notice under Sub-section (2), ordered removal of the committee and appointed Shri N. K. Shrimal to manage the affairs of the society for a period of one year.

(ii) Before us, challenge to that order of supersession was expressly given up by the learned counsel for the petitioners.

(iii) By order dated November 20, 1968, the Assistant Registrar extended the period of supersession by another year with effect from November 9, 1968. It is not contended before us that the Assistant Registrar had no power.

(iv) By order dated February 11. 1970 the Assistant Registrar further extended the period of supersession upto October 31, 1970, and appointed Kendriya Sahakari Adhikosh Maryadit, Bhopal, to manage the affairs of the society.

(v) On May 28, 1970, the aforesaid Bank appointed Shri R. N. Tripathi as on officer to manage the affairs of the society. He is managing the affairs of the society.

(vi) On May 24/1971, the State Government, purporting to exercise powers under Section 91 of the Act, relaxed the maximum limit of the period of supersession and accorded sanction to extend the period of supersession by one year from November 10, 1970, to November 9, 1971, although this was beyond the period of three years from the initial date of supersession, that is, November9, 1967.

(vii) By a second order dated October 24, 1972, the State Government again relaxed the maximum limit contained in Section 53 (3) of the Act and accorded sanction to extend the period of supersession for 13 months from November10, 1970 to December 9, 1972.

(viii) During the pendency of this petition, it is common ground, by a similar order dated May 26, 1973 the State Government again relaxed the maximum prescribed period of supersession and accorded sanction to extend the period of supersession for a period of one year, that is, from December 10, 1972 to December 9, 1973.

4. Sections 53 and 91 of the Act read as follows:--

'53. Supersession of committee -- (1) If in the opinion of the Registrar, the committee of any society:--

(a) persistently makes default or is negligent in the performance of the duties imposed on it by or under this Act or bye-laws of the society or by any lawful order passed by the Registrar or is unwilling to perform such duties; or

(b) commits acts which are prejudicial to the interest of the society or its members; or

(c) is otherwise not functioning properly;the Registrar may, by order in writing, remove the committee and appoint a person or persons to manage the affairs of the society for a specified period not exceeding two years in the first instance.

(Provided that in case of a Cooperative Bank, the order of supersession shall not be passed without previous consultation with the Reserve Bank).

(2) No order under Sub-section (1) shall be made unless the committee has been given a reasonable opportunity of showing cause against the proposed order and representation, if any, made by it, is considered.

(3) The period specified in the order under Sub-section (1) may, at the discretion of the Registrar, be extended, from time to tune.

Provided that no such order shall remain in force for more than three years, in the aggregate.

X X XX X X X'

'91. Power to exempt societies from conditions as to registration and provisions of Act. -- Notwithstanding anything contained in this Act, the State Government may, by a general or special order in each case and subject to such conditions, if any, as it may impose, exempt any society or class of societies from any of the provisions of this Act, or may direct that such provisions shall apply to such society or class of societies with such modifications as may foe specified in the order.'

5. It is clear that Section 91 clothes the State Government with powers (a) to exempt any society or class of societies from any of the provisions of the Act; and (b) to apply to such society or class of societies such provisions with, such modifications as it may specify.

6. Shri Gulab Gupta, learned counsel for the petitioners, challenges the vires of Section 91, contending that it is a piece of excessive delegation by the legislature to the executive. In fact, the legislature abdicated its functions in favour of the executive, which is not permissible. The power is unfettered and can be exercised with, impunity.

There are no standards fixed for the exercise of the power.

7. The learned Advocate General took us not only through the preamble and the scheme of the Act, but also through all its provisions. He emphatically argued that the criteria and the checks are to be found in them, so that the legislature has delegated the powers under Section 91 only to be exercised in consonance with the object, the scheme and the provisions of the Act. He concedes that if the State Government makes an order which is repugnant to the object or the scheme of the Act, or is mala fide, the order can well be quashed. But merely because a bad order can be passed, the provisions of the law cannot be struck down as unconstitutional. He concedes that the validity of an order passed under Section 91 will be justiciable on any of these grounds.

8. Section 91 is couched in such wide terms that it appears to confer tin-controlled and uncanalised powers. The words 'such provisions shall apply to such society or class of societies with such modifications' followed by the words 'as may be specified in the order' confer widest possible discretion. Left to the section itself, it can well be challenged as conferring despotic or arbitrary power. Further it is expressive of a mere subjective test. The section does not lay down any criteria or standards on the basis of which the State Government may pass an order under Section 91 either with regard to exemption or with regard to modification. If that was all, we would have struck down the section as unconstitutional and violative of Article 245 of the Constitution.

9. Delegated legislation strives to relieve the over-burdened legislature of the strain by attending to the matters of detail within the scope of the policy and guidance furnished in the statute. In areas of socio-economic change. Legislative delegation is growing and expanding in degrees. With the increased pace of the socio-economic change delegative legislation has become inevitable and indispensable. Recognition to the power of delegation cannot be withheld. Recognition has been given to the legislative competence for delegated legislation in a number of cases. In Banarasi Das Bhanot v. State of M.P. 1959 SCR 427 = (AIR 1958 SC 909) it was observed:--

'Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persona on whom, tax is to be laid therate at which it is to be charged in respect of different classes of goods and the like.'

10. It was succinctly observed by Gajendragadkar, J. (as he then was) in Vasanlal Maganbhai v. State of Bombay AIR 1961 SC 4:--

'It is now well established by the decisions of this Court that the power of delegation is a constituent element of the legislative power as a whole, and that in modern times when the Legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by their Acts.'

11. It is the exclusive province of the legislature to formulate legislative policy and to declare the essentials of working out that policy by setting forth sufficient guidance. The Court should be reluctant to invalidate a statute on plea of abdication of legislative power or excessive delegation. It must be conceded, that the legislature has utmost discretion in making laws intended to apply and implement the programme of directive principles of State policy in its efforts to promote the welfare of the people and the aims of socio-economic change. The Court should not unduly hinder the pace of the welfare and social legislation by insisting upon moral application of the rule against delegation. But this is subject to preservation of constitutional processes. The Court does not interfere with the rule of excessive delegation in any spirit of hostility by adopting a negative judicial attitude of striking out a law. All that the Court insists upon is that the legislative policy is made out with sufficient clarity and proper legislative standards are set-forth.

12. In America, legislative delegation was first rationalised by Chief Justice Marshall in Wayman v. Southard (1825) 10 Wheat 1, where it was observed that the legislature may make a general provision and give to those, who are to act under such general provision power to fill up the details. The unconstitutional legislative delegation theory was used as a powerful weapon by the Supreme Court of the United States in the tussle between President Roosevelt and the administration over the 'New Deal Programme'. In Panama Refinery Co. v. Riyan, (1934) 293 US 388 the Hot Oil case, Section 9 of the National Industrial Recovery Act, 1933, which empowered the President to prohibit transportation of inter-State commerce of oil produced or stored in excess of limits imposed by legislation in various States,was held by the Supreme Court to be vitiated by the vice of excessive legislation. After the rage of controversy with President Roosevelt cooled down, the Supreme Court again returned to the practice of approving fairly broad delegations of power by the legislature. See, for instance, United States v. Sharp-nack (1958) 355 US 286.

13. In Queen v. Burah, (1878) 5 Ind App 178 = ILR 4 Cal 172 (PC) an Act of the council of the Governor General of India, by which Garo Hills were removed from the jurisdiction of the ordinary judicial tribunals and the administration of civil and criminal justice was vested in the State Officers to be appointed by the Lt. Governor, came to be considered. Section 9 of the Act provided that any of the provisions of the Act could be extended to Khasi and Jaintia hills by the Lt. Governor by means of a notification in Calcutta Gazette. It was held that Section 9 did not involve any delegation of legislative power and was only an instance of conditional legislation.

14. In Jatindra Nath v. Province of Bihar, (1949) 2 FCR 595 = (AIR 1949 FC 174) the question arose as to the validity of the proviso to Section 1 (3) of the Bihar Maintenance of Public Order Act (V of 1947), which provided that the Act should remain in force for a period of one year from the date of commencement 'provided that the Provincial Government may, by notification direct that this Act shall remain in force for a further period of one year with such modifications, if any, as may be specified in the notification.' The Federal Court, by a majority, held that the power to extend the operation of the Act was a legislative power and was not a conditional legislation. The proviso and the notification, were held to be ultra vires.

15. In re Article 143 of the Constitution of India (Delhi Laws Act case). AIR 1951 SC 332 the question as to the delegatibility of legislative power was comprehensively examined by the Supreme Court on a reference made by the President of India under Article 143 of the Constitution. It was held by a majority of Judges that the power conferred on the executive to extend the existing Act with such modifications as the executive thought fit, was intra vires the legislature concerned. Thus. Jatindra Nath's case (1949) 2 FCR 595 = (AIR 1949 FC 175) (supra), ceased to hold the field.

16. Although the power of delegation is a constituent element of the legislative power, the true position isthat while the essential legislative functions cannot be delegated it is permissible to delegate non-essential legislative functions. It is, therefore, necessary to draw a line of demarcation between essential and non-essential legislative functions. The legislature has to formulate the legislative policy and then it is free to delegate the work of formulation of details for carrying out that policy. To put it differently, what can be delegated is something which is ancillary or in aid of exercise of the legislative function by the legislation to make laws effective. When the Act lays down the policy in broad terms, the legislature can pass on to the executive the function of filling the details of that policy. Laying down legislative policy is the exclusive prerogative of the legislature but, in its discretion, it is free to authorise the executive to do certain things in pursuance of the legislative intendment. See Raj Narain Singh v. Patna Administration, (1955) 1 SCR 290 = 1954 SC 569) : Hari Shankar Bagla v. State of M.P. (1955) 1 SCR 380 = AIR 1954 SC 465, D. S. Garewal v. State of Punjab 1959 Suppl (1) SCR 792 = (AIR 1959 SC 512); Vasantlal Sanjanwala v. State of Bombay, (1961) 1 SCR 341 = (AIR 1961 SC 4) and Municipal Corporation of Delhi v. Birla Cotton Mills (1963) 3 SCR 251 = AIR 1968 SC 1232. These cases were noted in Kesavananda Bharati v. State of Kerala AIR 1973 SC 1461, paras 450 and 566.

17. In AIR 1968 SC 1232 Wanchoo, C. J. on a review of the authorities, laid down:--

'Essential legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself ....Where the legislative policy is enunciated with sufficient clearness or a standard is laid down the courts should not interfere. What guidance shoud be given and to what extent and whether guidance has been given in a particular case at all, depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation.'

In the light of the above passage, it must be remembered that co-operative movement has a well-established policy and principle. It is a national movement. It is recognized and practised in almost all the States and there are correspondingenactments there. Section 91 confers power on the State Government, which is fully conversant with the principles of co-operative movement.

18. Co-operative movement originated with Rochdale Stores of England and assumed a variety of forms and was applied to various walks of economic and social life. Co-operative principles have been formulated on the basis of experience acquired by pioneers of co-operation in different countries. It will be useful to recapitulate them here.

(1) Voluntary Association. -- A cooperative society is essentially a voluntary association. No one can be compelled to join a society; no one can be compelled to continue, having joined once. The members are free to take advantage of the services of the society to the extent considered necessary by them.

(2) Democratic management. -- The administration of a co-operative society is to be carried on democratically. The supreme authority is its General body of members, who may, subject to the provisions of the Act, the rules and bye-laws, take any decision for governing its affairs. The following advice of Rochdale Pioneers incorporates the principles of democracy:---

'(i) Let each member have only one vote and make no distinction as regards the amount of wealth that any member may contribute.

(ii) Let majority rule in matters of government.

(iii) Let committees of management alwavs have the authority of the members before taking any action or expensive step.

(iv) This is thus only for your leaders whom you can trust, and give them your confidence.'

(3) Self help and mutual help.-- Cooperation implies an enterprise of those who are individually financially weak and cannot derive material advantage such as the rich can with all their resources and connections. By pooling their resources and working together by mutual benefit, the members can convert their weakness into strength.

(4) No profit motive,-- Unlike the General Stock Companies, which are formed for earning profits for the shareholders, a co-operative society is organised to enable the members to improve their economic conditions by helping them in their respective pursuits and not to earn profits. However, a co-operative society is not restrained from earning profit. Profit is the natural result of better management which must always be encouraged. What is to be avoided is not profit, but profit motive.

(5) Open door policy.-- A co-operative society always welcomes new comers, ifthey possess the requisite qualifications, reside within the area of its operation and do not carry on parallel trade. There is no bar on the ground of caste, sex, religion or political affinity.

(6) Publicity.-- A co-operative movement is primarily meant for the poor and illiterate people. To secure their intelligent participation, a system of education should necessarily be evolved to keep the members informed of the decisions and activities of the society.

(7) Neutrality.-- The co-operative movement must be allowed to remain above party politics. It is a national movement and has for its object the economic and social uplift of mankind.

(8) Equality.-- Equality is thehall mark of democracy, within thesociety, equality should govern therelationship between the members. Whatever social or financialstatus may be of a member and irrespective of the extent of the share capital contributed by him, he has equal rights inthe society.

19. In corresponding enactments of almost all other States, the same provisions are found as contained in Section 91 of the M.P. Act. See Section 92 of the Assam Act; Section 62 of the Bihar Act; Section 67 of Delhi Act; Section 161 of Gujarat Act; Section 111 of Madras Act; Section 157 of Maharashtra Act; Section 121 of Mysore Act; Section 123 of Orissa Act; Section 77 of Punjab Act; Section 81 of Rajasthan Act; Section 89 of Travancore-Cochin Act; and Section 56 of U. P. Act. In all these corresponding provisions, the power to exempt and the power to apply with modifications are conferred on the State Government. All those sections are almost verbatim copy of one another. They seem to have been borrowed from Section 46 of the Central Act, which reads thus:--

Section 46. Power to exempt registered societies from provisions of the Act.--

The State Government may, by general or special order exempt any registered society from any of the provisions of this Act, or may direct that such provisions shall apply to such society with such modifications as may be specified in the order.'

20. It is remarkable that in the Delhi Act (Section 67); Gujarat Act (Section 161): Maharashtra Act (Section 157); and Rajasthan Act (Section 81), a proviso is added in these words: --

'Provided that no order to the prejudice of any society shall be passed without an opportunity being given to such society to represent its case. This proviso is not to be found in Section 91 of the M.P. Act but no argument was constructed before us on the omission of the proviso, nor on the non-requirement of an opportunity being givento the co-operative society concerned to represent its case before the State Government makes an order.

21. What society or class of societies may be exempted from the operation of any of the provisions of the Act is not a question of policy. It is not an essential function of the legislature; it depends on the local conditions. Therefore, if the legislature delegated that power to an authority, not less than the State Government, it cannot be said to be its effacement, nor abdication of its essential legislative function. The delegation was of a secondary or ancillary legislative function which is non-essential.

22. It is permissible for the legislature to confer discretion on the executive to make modifications and alterations in an Act, while extending it to a given area, or to effect consequential amendment.

23. The implications of the word 'modification' were considered in 1951 SCR 747 = (AIR 1951 SC 332). Fazl Ali J. (at page 355) observed :--

'There are only two main checks in this country on the power of the legislature to delegate, these being its good sense and the principle that it should not cross the line beyond which delegation amounts to 'abdication and self-effacement'.'

And, at pages 359-360, while dealing with the power to modify, he said.--

'The power of introducing necessary restrictions and modifications is incidental to the power to apply or adapt the law........................The modifications areto be made within the framework of the Act and they cannot be such as to affect its identity or structure or the essential purpose to be served by it. The power to modify certainly involves a discretion to make suitable changes, but it would be useless to give an authority the power to adapt a law without giving it the power to make suitable changes.'

Mukerjee, J. observed in AIR 1951 SC 332--

'The word 'modification' does not, in my opinion, mean or involve any change of policy, but is confined to alteration of such a character which keeps the policy of the Act intact and introduces such changes as are appropriate to local conditions of which the executive Government is made a judge.'

These modifications are permissible for local adjustments or changes of a minor character. The power to restrict and modify does not import the power to make essential changes; it should be confined to alteration of a minor character. The crux of the matter is that the modifications in the provisions of the Actmust be within the frame-work of the Act; they cannot be such as to affect its identity, structure or essential purpose to be served by it. In the true sense, the power to make modifications implies a power exercisable in aid of the legislative policy of the Act; it cannot go beyond it; certainly not contrary to it; it cannot change the essential features, pith and substance of the Act.

24. In Raj Narain Singh's case (1955) 1 SCR 290 = AIR 1954 SC 569 (supra) the limits of 'modification' weredefined thus:--

'An executive authority can be authorised to modify either existing or future laws but not in any essential feature. Exactly what constitutes an essential feature cannot be enunciated in general terms. But this much is clear that it cannot include a change of policy.' However, in that case, the impugned notification was found to have travelled beyond the authority conferred and was ultra vires.

25. In Jalan Trading Co. v. Mill Mazdoor Sabha, AIR 1967 SC 691 it was observed that in Section 36 of the Payment of Bonus Act, 1965, the Parliament clearly laid down the principles and gave adequate guidance to the appropriate government in implementing its provisions. By that section, the Government is invested with power to exempt an establishment or a class of establishments from the operation of the Act, provided the Government is of the opinion that having regard to the financial position and other relevant circumstances it would not be in the public interest to apply all or any of the provisions of the Act. Thus, in that case, the conditions for exercise of that power were laid down. That was a clear case of permissive delegation,

26. Recently, in Tata Iron and Steel Co. v. Workmen, AIR 1972 SC 1917 it was held that the delegation of legislative power is permissible only when the legislative policy and principle is adequately laid down and the delegate is only empowered to carry out the subsidiary policy within the guidelines laid down by the legislature.

27. Shri Gulab Gupta relies on Devi Das Gopal Krishnan v. State of Punjab AIR 1967 SC 1895. That case is distinguishable. There, it was held:--

'Under that section Section 5 of the Punjab General Sales Tax Act, 46 of 1948) the legislature effaced itself in the matter of fixation of rates. It did not give any guidance, either under that section, or under any other provision of the Act. No other provision was brought to our notice.'

28. It is succinctly laid down in Mohmedalli v. Union of India AIR 1964 SC 980, thus.--

'If, on a review of all the facts and circumstances and of the relevant provisions of the statute, the Court is in a position to say that the legislature had clearly indicated the underlying principle of the legislation and laid down criteria and proper standards but had left the application of those principles and standards to individual cases in the hands of the executive, it cannot be said that there was excessive delegation of powers by the legislature. On the other hand, if a review of all those facts and circumstances and the provisions of the statute, including the preamble, leaves the Court guessing as to the principles and standards, then the delegate has been entrusted not with the mere function of applying the law to individual cases, but with a substantial portion of legislative power itself.'

29. The scheme of the Act may be recapitulated. Section 10 deals with classification of societies. Chapter II of the Act deals with registration. Chapter III contains provisions for eligibility for membership and also rights, liabilities and privileges of members. Section 19 enumerates the persons who may become members. Section 24 provides for restriction on holding of share capital by a member (with delegated power to State Government). Chapter IV deals with duties, privileges, property and funds of societies. Section 31 enacts that the societies are to be bodies corporate. Section 43 deals with funds and profits. Section 45 provides for grant of State aid to societies (with delegated power to State Government). Section 47 provides for power to direct affiliation to federal society. The power is conferred on the State Government Chapter V deals with management of societies. Section 48 declares that the final authority in a society vests in the general body of members. Section 52 confers power on the State Government to appoint Government nominees. Section 53 provides for the power to supersede a committee. Chapter VI deals with audit, enquiry, inspection and supervision of societies. Section 58 provides for audit and audit-fee, with delegated powers, to the State Government to exempt any class of societies from payment of fee. Section 63 is about surcharge with appellate power to the State Government Chapter VIII is about liquidation. Chapter IX deals with offences and penalties. Chapter X deals with appeals and revisions. Section 80 confers on the State Government revisional jurisdiction. Section 91 is the impugned section. Section 95 confers on the State Government power to make rules on particular subjects en-umerated in Sub-section (2), apart from the general rule making power under Sub-section (1).

30. In the present case, if the State Government in exercise of its delegated power under Section 91 of the Act, relaxed the outside limit for supersession, which is prescribed in the proviso to Section 53, it cannot be said to be ultra vires. Section 53 itself contains the standards and guidelines for supersession. In corresponding enactments of some of the States, supersession can be extended upto four years in the aggregate.

31. The provisions relating to supersession of committee, as are contained in Section 53 of the M.P. Act are to be found in the corresponding enactments of other States such as. Section 34 of the Andhra Pradesh Act. Section 41 of Bihar Act, Section 81 of Gujarat Act, Section 72 of Madras Act, Section 78 Maharashtra Act, Section 30 of Mysore Act, Section 32 of Orissa Act, Section 27 of Punjab Act, Section 51 of Rajasthan Act and Section 49 of Travancore-Cochin Act. However, the period of supersession in the aggregate varies in different Acts. For instance, two vears in Bihar. Puniab and Travancore-Cochin, three years in Andhra Pradesh, and four years in Gujarat, Madras, Maharashtra, Mysore, Orissa and Rajasthan. Thus in most of the States, the period of supersession can be extended, from time to time, upto four years in the aggregate.

32. Judged in this light, the impugned Government orders are valid inasmuch as they are within the frame-work of the Act, Clearly. Section 53 (1) lavs down the conditions for supersession. In the present case, the Government merely relaxed the maximum duration of supersession fixed in the proviso to Section 53 (3).

33. Now, the question is what the State Government actually did by the first impugned order, dated May 24, 1971. All that it has done is to relax the maximum time limit of supersession under the proviso to Section 53 (3) of the Act. But having done so, all that it says is that it accords sanction or approval. The Hindi word used in 'Swikriti Pradan Ki Jati Hai'. The word 'Swikriti' is authorised Hindi equivalent of the word 'admit'. It is obvious enough that the word 'admit' does not fit in if the order of the State Government were to be translated into English, The word 'Swikriti' is then a second equivalent of 'accept', 'approve', 'sanction'. 'Approve' refers to a past act. 'Sanction' refers to a future act. In its true context, the Order of the State Government can be read either as granting approval to a past act or as grantingsanction, to a future act. These are the two possible alternative interpretations. Itseems to us quite clear that the State Government merely relaxed the rigour of the proviso to Section 53 (3) and granted 'sanction' for extending the period of supersession, even beyond three years. But an order to extend the period of supersession had then to be passed by the competent authority. The word 'Swikriti' is not the appropriate standard or authorised equivalent of 'sanction'; it is 'Manzoori.'

34. It is contended before us on behalf of the State Government that it neither accorded approval nor sanction inthe above senses; what it did was that the Government itself extended the period of supersession for the period specified in the order, that is, from November 10, 1970 to November 9, 1971. We cannot accept this construction of the impugned order. Its language does not justify such a construction. The State Government's order was, therefore, ineffective, without an order made by the Registrar or other competent authority, extending the period of supersession.

35. The same language is used in the two subsequent impugned orders of October 24, 1972 and May 26, 1973.

36. The result of this discussion is that none of the three impugned orders proprio vigore extended the period of supersession. Each one of the three orders was auxiliary in nature. It merely relaxed the limit prescribed in the proviso to Section 53 (3) to enable the competent authority to extend the period of supersession beyond the prescribed limit. There is no order of supersession made by any competent authority extending the period of supersession, beyond October 30, 1970.

37. The next contention for the petitioners is that the State Government had no power to extend the period of supersession with retrospective effect. In our opinion, this contention must be accepted. Bv order dated May 24, 1971 the period of supersession was extended with effect from November 10, 1970. By the second order dated October 24, 1972 the period of supersession was extended with effect from November 10, 1971. And by the last order dated May 26, 1973 the period of supersession was extended with effect from December 10, 1972. It js only a sovereign legislature which can enact a law with retrospective operation. The Parliament can delegate its legislative power within the recognised limits. Where powers are delegated by the legislature to a person or authority, it will depend upon the language employed in the statutory provision, which delegates such power, whether it has empowered, in ex-press terms or by necessary implication, such person or authority to exercise that power with retrospective effect But where no such language is to be found, the person or authority, exercising delegated legislative functions, cannot make order, which can operate with retrospective effect. When power is delegated to an authority by the legislature such authority has no power to exercise it with retrospective effect. In Indramani v. W.R. Natu (1963) 1 SCR 721 = (AIR 1963 SC 274) Subba Rao. J., in his dissenting judgment, observed:--

'Unless a statute confers on the Government an express power to make an order with retrospective effect, it cannot exercise such a power.'

38. In I.T. Officer, Alleppey v. M. C. Ponnoose, AIR 1970 SC 385 it was laid down:--

'The Parliament can delegate its legislative power within the recognised limits. Where any rule or regulation is made by any Person or authority to whom such powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the language employed in the statutory provision which may in express terms or by necessary implication empower the authority concerned to make a rule or regulation with retrospective effect. But where no such language is to be found it has been held by the Courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect'

In that ruling. Grover. J., who spoke for the Court, referred to the view of Subba Rao, J., (supra) and observed that in that case the majority did not express any different opinion on the point. See also Hukam Chand v. Union of India, (1972) 2 SCC 601 = (AIR 1972 SC 2427). We are therefore, of the opinion that all the three orders passed by the State Government are ultra vires and must be struck down.

39. It remains to be mentioned that we were asked to express our opinion on the ambit of the words, 'person or persons' in Section 53 (1) of the Act It was urged that the word 'person' in that section does not include a co-operative society, because of the language of the provision. It is argued that the words 'person or persons' necessarily mean one or more human beings, but not a corporate body. We are unable to accept this contention. The word 'person' is not defined in the Act. Therefore, the expression must be read with the meaning ascribed to it in Section 3(42) of the General Clauses Act which reads as follows:--

''person' shall include any company or association or body of individuals, whether incorporated or not.'

There is nothing to show that this inclusive definition will be repugnant to the context of Section 53 (1) of the Act We hold that even a corporate body is within, the meaning of the expression 'person or persons' as employed in Section 53 (1).

40. We shall now advert to the decision of the Division Bench in Premnarain v. Shilpakar Sahakari Mazdoor Sangh 1971 Jab LJ 924. In that case, the committee of the society was superseded on September 11, 1965, under Section 53 of the Act for a period of two years. It was extended from, time to time. The maximum period of three years expired on September 10, 1968. It is said in the judgment; 'The period has, however, been further extended for a period of two years by the Registrar with the sanction of the State Government accorded under Section 91 of the Act'. The contention before the Division Bench was that the period could not be extended beyond three years. It was held that the Government in exercise of its powers under Section 91 of the Act relaxed the proviso to Sub-section (3) of Section 53 of the Act to the extent specified in the order, and that this was clearly within the powers of the State Government. In that case, the State Government did not, by its order, proorio vigore extend the period of supersession. It merely accorded sanction by relaxing the limit prescribed in the proviso to Sub-section (3) of Section 53. It is clear from the statement of facts in that decision that it was the Registrar who extended the period of supersession beyond three years and that he did so by virtue of the aforesaid sanction. Further, there is nothing in the judgment to indicate that the sanction accorded by the State Government was with retrospective effect we do not see any error in that decision, so far as that point is concerned. The other points decided in that case are not for consideration before us.

41. It was urged for the petitioners Ratanlal, Ramcharanlal and Naravan Singh (petitioners Nos. 2, 3 and 4) that they have been elected by the members of the society in their meeting held on August 29, 1971. Ratanlal (petitioner No. 2) was elected President, Ramcharanlal (petitioner No. 3) was elected Secretary and Naravan Singh (petitioner No. 4) was elected Treasurer. It is urged for these petitioners that they be declared duly elected representatives of the society-petitioner No. 1 and are entitled to manage the same. They further seek a writ of mandamus to the respondents to handover charge of the society to the petitioners immediately. In our opinion, thisrelief cannot be granted. No provision of the Act or the rules could be cited by the learned counsel for the petitioners to support such an election. It is conceded that the procedure for election is contained in Rule 41 of the M.P. Co-operative Societies Rules, 1962. It is also conceded that the procedure laid down in the said rule was not followed. What was done was that one fine morning all the members assembled and held the election. We cannot, therefore, declare that petitioners Nos. 2, 3 and 4 were validly elected. As we are going to quash the supersession, there must be a fresh election according to the provisions of the Act and the rules.

42. We may now sum up the conclusions:

(1) When the legislatures enact laws to meet the challenge of the complex socio-economic problems, they often find it convenient and necessary to delegate subsidiary or ancillary powers to delegates of their choice for carrying out the policy laid down by the Acts. In view of multifarious activities of a welfare State they cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or another agency.

(2) The legislature cannot abdicate essential legislative functions in favour of another authority.

(3) The essential, legislative function consists of the determination of the legislative policy and its formulation as a binding rule of conduct.

(4) The power to make subsidiary or ancillary legislation may be entrusted by the legislature to another body of its choice.

(5) While so delegating, the legislature should enunciate, either expressly or by implication, the policy, principles or standards for the guidance of the delegate in exercising such delegated power,

(6) Uncontrolled entrustment of power without guidance amounts to excessive delegation of legislative authority.

(7) The legislature cannot delegate to the executive the power to make exemptions from the operation of an Act, without laying down the policy for guidance of the latter.

(8) As a delegated power, 'modification' does not mean or involve any change of policy but is confined to alteration of such a character which keeps the policy of the Act intact and introduces such changes as are appropriate to local conditions of which the executive Government is made the judge.

(9) Where unguided discretion is conferred by the statute on theexecutive the legislation need notbe struck down, the Court shouldexamine the principles and policy of thestatute. Whether guidance has been givenmay depend upon the consideration of theprovisions of the particular Act withwhich the Court has to deal including itspreamble.

(10) If the delegated authority makes an order in contravention of the standards laid down in the section or contrary to the legislative policy found in the provisions of the Act, as the case may be the order of the delegate must be struck down, but not the section. The question is justiciable.

(11) Section 91 of the M.P. Co-operative Societies Act, 1961, confers a delegated power on the State Government. Prima facie the power appears to be uncontrolled as no standards for its exercise are stated in the section. But the preamble and the provisions of the Act sufficiently indicate the policy, principles and standards for the guidance of the delegate. The State Government must be guided by them while exercising the delegated power. Section 91 does not suffer from the vice of excessive delegation.

(12) In the context of the scheme and object of the legislation and the provisions of the Act as a whole the wide expression employed in Section 91 cannot be construed in a subjective sense. The opinion of the Government as to the necessity or expediency of making the order must be reached objectively, having regard to the relevant considerations and it must be reasonably tenable in a Court of law.

(13) When power is delegated to an authority by the legislature, such authority cannot, unless expressly empowered, exercise it with retrospective effect.

(14) The word 'person' in Section 53 of the Act includes a corporate body, such as, a co-operative society.

(15) Under Section 91 of the Act, the State Government has the power to relax the outside limit prescribed in the proviso to Section 53 (3) of the Act and grant sanction to the competent authority to extend the period of supersession beyond three years and to the extent specified in the order.

(16) Members of a co-operative society cannot just assemble and hold an election. An election can be held only as prescribed in the Act and the rules framed thereunder (Rule 41).

43. The petition is allowed. The orders passed on May 24, 1971: October 24, 1972: and May 26, 1973 by the State Government are quashed. We direct that an election shall be held forthwith underthe provisions of the Act and the rules. Parties shall bear their own costs.


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