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2014 (4) TMI 1210

Validity of Section 28-A(4) of the Karnataka Cooperative Societies Act, 1959, as substituted by the amended Act dated 11.02.2013 - retrospectivity or prospectivity - Held that:- having regard to the language employed in the Amending Act No. 3 of 2013 and the Act of 2011 (97th Amendment to the Constitution) we are satisfied that by necessary implication/intendment the amended provision would operate retrospectively and as a result thereof, term of all the boards shall stand extended till expiry o .....

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792-796, 797-806, 808-815, 851 and 866/2014 (CS-EL/M) - Dated:- 30-4-2014 - D.H. Waghela, C.J., D.B. Bhosale and B.V. Nagarathna, JJ. For the Appellant: Jayakumar S. Patil, Sr. Adv., Varun Kumar, Adv., Varun J. Patil and A. Mahammed Tahir, Advs. for Jayakumar S. Patil Associates, Dayanand S. Patil, M. Ravindranath, K. Chandrashekar Achar and S.K. Acharya, Advs. For the Respondent: Prof Ravivarma Kumar, AG, A.S. Ponnanna, PRL Govt. Advocate, M. Keshavareddy, Dayanand S. Patil, Ramachandra R. Naik .....

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rative society by the second respondent-State Cooperative Societies Election Commission-and for any reason if the Election Commission fails to conduct the elections within the stipulated time, whether an Administrator can be appointed automatically under Section 28-A(5) of the Act? and iii) Whether Section-28-A(4) is ultra vires?" 2. The appellant-Hassan Co-operative Milk Producers Societies Union Ltd., which is a 'Federal Society' as defined by Section 2(e-4) of the Karnataka Coope .....

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were substituted by the words "five years from the date of election". The Division Bench, in this case, has taken a view that it is a case of substitution which cannot be given effect to mechanically from the date of the statute itself. Then the Division Bench proceeded to observe that "even if the legislature amends the existing provision in a statute by way of substitution and the substituted provision comes into effect from the date of the Act, it is not an invariable rule&quo .....

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t, the object sought to be achieved, the mischief sought to be prevented and they, by interpretative process, can declare whether the said amendment is prospective or retrospective". Having so observed, the Division Bench refused to grant interim order as prayed for in the writ petition holding that their (Committee/Board) term came to an end on 31st March 2014. 5. The Division Bench in Hassan Milk Union independently considered the provisions contained in Section 28-A(4) of the Act and so .....

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the election". In short, the Division Bench in Hassan Milk Union, held that the amended provisions contained in sub-section (4) of Section 28-A would have retrospective effect. The Division Bench also considered the provisions contained in Section 28-A(5) and observed that "election to the Federal Society has to be conducted only by the State Cooperative Societies Election Commission (for short "Election Commission") and if for any reason the Election Commission fails to con .....

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s were disposed of by the common order. The learned Judge dismissed all the writ petitions in terms of the judgment of the Division Bench in S. M Kelageri case. 6.1. In order to understand and to deal with the referred questions we would like to state in brief the background facts in Writ Appeal No. 734/2014 arising from the order of the learned single Judge dated 6th March 2014 in Writ Petition No. 10005/2014. Hassan Milk Union and 13 members of its Managing Committee, in this writ petition, im .....

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tituted by the words "five years from the date of election". In this view of the matter, Hassan Milk Union and members of its Managing Committee approached this Court by way of writ petition, apprehending the appointment of an Administrator in view of the communication dated 29-1-2014. 6.3. Writ Appeal Nos. 792-796/2014, though technically arise from the order dated 7th March 2014, by this order, the writ petitions were disposed of in terms of the order dated 6th March, 2014, in S. M K .....

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to exist. He submitted that substitution combines repeal and fresh enactment. The substitution therefore has the effect of just deleting the old provision and making the new provision operative right from inception. He then submitted that the process of substitution consists of two steps as observed by the Supreme Court: first, the old provision is made to cease to exist and, next, the new provision is brought into existence in its place. In view thereof, the election of next Managing Committee .....

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dinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. He submitted that in view of the scheme of the provisions contained in the amended Sections 28-A, 28-B, 29-A and 39-A of the Act, and the provisions of the Constitution introduced by way of 97th amendment, it is clear that the legislature, intended to give retrospective effect to these provisions. In support, Mr. Patil placed rel .....

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ssions advanced on behalf of the appellants deserves to be rejected outright. In support of his contention, he invited our attention to the judgment of the Supreme Court in Sham Sunder and others vs. Ram Kumar and another, (2001) 8 SCC 24. Based on this judgment he submitted that the amending Act No. 3 of 2013 is presumed to be prospective in operation since there is nothing in the Act to indicate that it was made retrospective, either expressly or by necessary intendment or implication and that .....

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ied. In this backdrop, the Supreme Court stated the principles of construction and interpretation of the provisions introduced/substituted by way of amendment. Paragraph 13 and 15 are relevant for our purpose, which read thus: "13. It is a cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect .....

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on. This can be achieved by express enactment or by necessary implication from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the Courts will give it such an operation. In the absence of a retrospective operation having been expressly given, the Courts may be called upon to construe the provisions and answer the question whether the legislature had sufficiently expressed that .....

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uot;substitute" has been defined to mean "to put in the place of another person or thing", or "to exchange". In Collins English Dictionary, the word "substitute" has been defined to mean "to serve or cause to serve in place of another person or thing"; "to replace (an atom or group in a molecule) with (another atom or group)"; or "a person or thing that serves in place of another, such as a player in a game who takes the place of an inj .....

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new rule operative....." 8.4. In Sham Rao V Parulekar, (supra) the Preventive Detention Act 1950 was due to expire on the first of April 1951, but in that order, an amending Act was passed which, among other things prolonged its life to the first of April 1952. The order of detention in the case before the Supreme Court was passed under the Act of 1950 as amended by Act of 1951. According to the above decision of the Supreme Court the detention would have expired on the first of April 1952 .....

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ter there is no need to refer to the amending Act at all. 8.5. In Sham Sundar, (supra) the question that fell for the consideration of the Supreme Court was, what was the effect of substituted Section 15 introduced by Haryana Amendment Act 1995, in the parent Act i.e. the Punjab Pre-emption Act, as applicable to the State of Haryana whereby, the right of a co-sharer to pre-empt a sale had been taken away during the pendency of an appeal filed against a judgment of the High court affirming the de .....

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etermined under the law in force on the date of the suit. However, the position in law would be different in the matters which relate to procedural law but so far as substantive rights of parties are concerned they remain unaffected by the amendment in the enactment. We are, therefore, of the view that where a repeal of provisions of an enactment is followed by fresh legislation by an amending Act, such legislation is prospective in operation and does not affect substantive or vested rights of t .....

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term of office of the Committee, the Registrar or any other officer within whose jurisdiction the society is situated, and who is authorised by the Registrar shall be deemed to have assumed charge as Administrator and he shall for all purposes function as such Committee of management. The Administrator shall, subject to the control of the Registrar, exercise all the powers and perform all the functions of the Committee of the Co-operative Society or any office bearer of the co-operative society .....

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y the Registrar was deemed to have assumed charge as Administrator. In short, sub-section (4) and sub-section (5) provided that under any circumstances, the outgoing committee would not continue on expiry of "five cooperative years". 9.4. Section 28-A was amended by Act No. 6/2010 with effect from 30-03-2010. By this amendment, the words "term of office of the committee" in sub-section (5) of Section 28-A were substituted by the words "term of office of the committee or .....

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n addition to the situation, if the new Board is not constituted under Section 29-A, on the date of expiry of the term of office of the Board. 10. That takes us to consider Section 29-A of the Act. This provision deals with the commencement of term of office. It would be relevant to reproduce Section 29-A as it stood prior to the amendment Act No. 3 of 2013, which reads thus: "Section 29-A: Commencement of Term of Office: (1) The term of office of the elected members of the committee shall .....

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nificant. 10.2. Section 29-A was then amended by the amending Act No. 3 of 2013, by which, only the word 'committee' occurring at all places in this provision was substituted by the word 'board'. 10.3. Thus, the amendments made from time to time, insofar as Section 29-A is concerned, for our purpose, are insignificant. Under this provision, the term of office of the members of the Board commences on the date on which the majority of the elected members of the board assume office .....

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013. By this amendment, no significant changes were made, insofar as these appeals are concerned. The amended provision specified time limits for the elections of Boards of societies of all categories and further provided that the incumbent boards of all such co-operative societies shall continue to be in their respective offices till the conduct of the elections, as provided therein. Further, it provided that the Election Commissioner should start the preparatory work for the conduct of electio .....

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subject to provisions of Section 29A and 39-A, and on expiry of the term, the members of the committee shall be deemed to have vacated office as such members on the date of completion of the said term. Under Section 39-A, the Election Commissioner is obliged to start the preparatory work for the conduct of the elections during the last six months prior to the expiry of the term of office of the board of the co-operative society and till the elections are conducted the incumbent board shall conti .....

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ion 39-A, the consequences provided therein shall follow, viz., deeming effect of Section 28(4), Section 29-B(2) and appointment of an administrator under Section 28-A(5) of the Act. We hold that the amended provisions, introduced by way of substitution by the amending Act No. 3 of 2013, would operate retrospectively and as a result thereof, members of the existing boards/committees would continue till expiry of the term of five years from the date of their elections, and since the said term has .....

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39-A of the Act to hold elections get over. 15. In this backdrop, before we proceed to consider whether substituted provisions, vide Act No. 3 of 2013, would operate retrospectively, we would also like to have close look at the provisions inserted in the Constitution of India, by the Constitution (Ninety-seventh Amendment) Act, 2011 (for short "the Act of 2011"), which deal with co-operative societies. We, however, make it clear that we are making reference to the Act of 2011, for a l .....

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xpiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the office of members of the outgoing board. (2) The superintendence, direction and control of the preparation of electoral rolls for, and the conduct of, all elections to a cooperative society shall vest in such an authority or body, as may be provided by the Legislature of a State, by law: Provided that the Legislature of a State may, by law, provide for the pro .....

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f the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the office of members of the outgoing board. The prescription of the term of office of the elected members of the board of a Co-operative Society may vary from State to State. Therefore, Article 243ZT has provided a non obstante clause stating that any prescription contrary to clause (2) of Article 243ZJ shall continue to be in force till the period it is amended or repe .....

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as 15.02.2012. Therefore, in order to prescribe the term of office of the board of the Cooperative Society in consonance with the constitutional prescription, sub-section (4) of Section 28-A was amended to the effect that the term of office of the Board would be five years from the date of election. 16. The Act was introduced in 1959 to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies in the State of Karnataka. The obje .....

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g retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed. As observed by the Supreme Court, in the absence of a retrospective operation having been expressly given, it is necessary to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity. 18. The retrospectivity is liable to be decided on a few touchstones such as the words used must ex .....

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r, to bring it in tune with the 97th amendment to the Constitution of India. On perusal of the amended provisions, more particularly, sub-section (5) of Section 28-A read with sub-section (2) of Section 28-B and Section 39-A of the Act and so also the provisions of the Act of 2011, (97th Amendment to the Constitution), it is clear that by necessary implication/intendment, as it appears from the language employed therein, the legislature intended to give retrospective effect to these provisions. .....

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ourt can hold that the substitution has the effect of just deleting the old provision and making the new provision operative. The Supreme Court in State of Rajasthan vs. Mangilal Pindwal, AIR 1969 SC 2181 upheld the legislative practice of an amendment by substitution being incorporated in the text of a statute which had ceased to exist and held the substitution would have the effect of a amending operation of law during the period in which it was in force. Similarly, in Koteswar Vittal Kamath v .....

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ntion clear in the amending Act No. 3 of 2013. Having regard to the totality of the circumstances centering around the issue, we have no hesitation to hold that substitution, by the amending Act No. 3 of 2013, had the effect of just deleting the old provisions and making the new provisions operative as if the same were in existence from inception. It is well settled that the process of substitution consists of two steps, first, the old Rule is made to cease to exist and, next, new rule is brough .....

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uch. Their term is governed by the provisions of the Act. 24. We, accordingly in answer to the first question referred to the Full Bench hold that Section 28-A(4) of the Act is retrospective in nature and that an administrator cannot be appointed under Section 28-A(5) of the Act, till expiry of the period of five years from the date of their election as contemplated by sub-section (4) of Section 28-A of the Act. 25. Insofar as the second question is concerned, in our opinion, in the facts and ci .....

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28-A of the Act would come to an end on 30th June 2014. It is mandatory to hold elections within the time limits specified under Section 39-A of the Act. In this view of the matter, the second question as formulated by the Division Bench while making reference to the Full Bench need not be answered and suffice it to say that till the elections are conducted and charge is handed over to the newly elected board, the existing members of the board shall continue to hold office. We have not entered i .....

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lly conclude thus: i) Sub-section (4) of Section 28-A of the Act has retrospective operation. ii) The members of the existing boards shall continue to hold office till expiry of the period of five years from the date of their election and no administrator can be appointed till then. The Reference is answered accordingly. 28. After answering the reference, it would have been more appropriate to direct the Registry to place all the writ appeals before appropriate Bench for their disposal, in light .....

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