Kasturi Lal Jain vs State of Punjab and Others

J.M. Tandon, J.—The All India Wool Combers Co-operative Society Limited, Ludhiana, (hereinafter the Society) was registered on January 31, 1961, for setting up a Wool Combing Plant with a capacity of 5 billion pounds of Wool tops per annum. It had about 418 members. It was granted a licence by the Government of India on June 1, 1961, to establish the industrial unit within a period of 12 months from the date of the issue of the licence. The total share capital of the Society was Rs. 9,44,750/-, out of which the share of the Government was to the extent of Rs. 4,29,750/-. The remaining share capital of about Rs. 515 lacs was contributed by other members. The Petitioner is one of the members having a share of Rs. 1000/-. The Society had chequered history. Due to inaction or disinterestedness or negligence or may be infighting on the part of its non official share-holders, the project for which the Society had been registered did not come up. On August 11, 1967, the General Body of the Society in a general meeting which was also attended by the then Minister of State for Co-operation and Industries resolved that the Society be wound up and funds of the shareholders be returned pro rata. On September 9, 1972, the General Body of the Society passed the following resolution on this subject:

It is unanimously resolved that all the assets and liabilities be transferred to the Punjab State Industrial Development Corporation for setting up a Wool Combing Plant at Ludhiana (Dhandari Kalan) for the benefit of local woolen industry in the decentralised sector. It is also decided that the share money of the members may be returned at par while effecting transfer. The Committee is authorised by the Central House to negotiate and make agreement with the P.S.I.D.C. in this regard.

The Board of Directors of Society in its meeting held on November, 19, 1974, considered this matter again and passed the following resolution:

The Chairman of the Society informed the Board that in pursuance of the resolution of the General Body passed in its meeting held on September 9, 1972, he along with Sarvshri B.R. Ahuwalia and K.L. Sabharwal, Directors of the Society held a meeting with Shri A.S. Chatha, Managing Director of Punjab State Industrial Development Corporation with a view to explore the possibility of sale of the assets of the Society. In this connection the Chairman placed before the Board letter No. PSIDC/3696 dated October 18, 1974 received from the Punjab State Industrial Development Corporation. According to this letter, the P.S.I.D.C. had expressed its willingness to purchase the assets of the Society at the book value only.

In this context the Chairman explained that undoubtely the market value of these assets was far greater than the book value. However, while considering this matter, it had to be kept in view that the Society has not been able to set up the project for all these years. A part from this, it had to be considered that the assets were being sold to the Punjab State Industrial Development Corporation which is a Punjab Government undertaking. In view of this as well as keeping in view the resolution of the General Body meeting which authorised the sale of the assets of the Society with the condition that the members be paid the value of their shares at par, it would be in the interest of the Society as well as the woolen industry in genera], if the assets were sold to the P.S.I.D.C. at their book value. The Chairman stressed that this concession of selling assets at the book value instead of the market value was being shown in this case only because of the purchased being Punjab Government undertaking After considering this matter the Board felt that since out of the total share capital amounting to Rs. 9,44,750/, the Government share as a contribution was of the value of Rs. 4,29,750/. It was necessary to have the concurrence of the Punjab Government before taking the final decision to sell the assets of the Society at their book value. It was also felt that the delay in commissioning this plant is harassing the interest of the industry and the share holders have been feeling frustrated about the lack of progreas.

Shri Aggarwal, the Secretary of the P.S.I.D.C. who attended this meeting as a special invitee, discussed the proposal of the P.S.I.D.C. as well as the draft sale deed which will have to be executed by the Society in case ultimately the Government approved of the proposal received from the P.S.I.D.C. The Board noted the offer of the P.S.I.D.C. to pay a sum of fts. 9,87,100/- as the amount in full and final settlement of the sale price of the assets of the Society. The Board decided that this figure may also be communicated to the Punjab'' Government through the Registrar, Cooperative Societies, Punjab. This figure of Rs. 9,87,000/taken care of the liabilities of the Society and the project upto December 31, 1974. The act of transfer and sale should get finalised with the consent of Government.

The Board resolved that in case the Government approval to the sale of the assets of Society for Rs. 9,87,000/- was resolved; Sarvshri K.K. Adya, B.R. Ahluwalia, K.L. Sabbawal and Puran Chand Saini be and are hereby authorised to the sign the sale deed for and on behalf of the Society and complete all other formalities of this transfer.

The Board also resolved that the registration fee and stamp duty, if any, leviable on the transfer of the immovable assets and sale-tax, if any, leviable on the transfer of movable assets shall be borne by the Punjab State Industrial Development Corporation Limited, Chandigarh.

On May 29,1976, Shri K.K. Adya, Chairman of the Society sent the following telegram to the Registrar, Co-operative Societies, Chief Minister, Secretary Industries Department and others:

Pursuant decision Chief Minister Punjab in a meeting on March 25, 1976. Desir; Transfer Assets Liabilities of Society on Collection Rs. 9,90,507/48 from P.S.I.D.C. Chandigarh. Regret this Decision being delayed which was to be Implemented by April 15, 1976. Request your Concurrence and Convey P.S.I.D.G. Regards.

The Society had been granted an import licence for the import of the machinery from Japan for setting up the plant. This licence was not utilised by the Society within the stipulated period. The licence granted to the Society for installation of the plant had also expired. The Society had, however, purchased land for setting up the plant and had also made some further advancement but woefully short of setting up of the plant which could go into production It was under these circumsances that the Society decided to transfer its assets to the P.S.I.D.C for Rs. 9,90,507.48 which amount represented the share capital of the Society as also its liabilities.

The Deputy Registrar, Co-operative Societies vide order dated August 2, 1976, (P.5) appointed an Administrator of the Society as the term of its Managing Committee had expired and after its cession no Committee had been constituted in accordance with law. A copy of this order was endorsed to Shri K.K. Adya, Ex Chairman of the Society. The Registrar, Co-operative Societies vide order dated January 21, 1977, (P.7) ordered the winding up of the Society u/s 57(2)(b) of the Punjab Cooperative Societies Act (hereinafter the Act) on the ground that its members were not taking interest to set up the wool Combing Plant. A Liquidator was consequently appointed, who, after taking over the charge sold the assets of the Society on its behalf by sale-deed (P.6) dated January 25, 1977 in favour of Punjab Wool Combers Limited (Respondent No. 8). The Punjab Wool Combers Limited had been set up by the P.S.I.D.C. holding 26 per cent share capital therein whereas 25 per cent was given to the collaborators who possessed the technical know-how and the remaining 49 per cert to the public. Notices were issued by the Liquidator to the private numbers of the Society to collect their share money. It is not disputed that a large number of private members (may be about 400) of the Society have since received their share money from the Liquidator. A similar notice (P.9) dated July 18, 1678, was sent to the Petitioner to collect his share money of Rs. 1,000/. The Petitioner did not collect money. He filed an appeal against the order of the Registrar, Cooperative Societies dated January 21, 1977, whereby the Society was ordered to be wound up u/s 57(b) of the Act. He alleged that he learnt about the winding up order for the first time when he received the notice (P.9) on July 20, 1978. The Development Commissioner disposed of the appeal by order dated September 26, 1978. (P. II). The Development Commissioner noted the points urged before him but did not record any finding thereon. The relevant paragraph of his order reads:

The points raised by the learned Counsel needs further examination, in view of the judgment quoted by him. I, therefore, accept the appeal and remand the case to the Registrar, Cooperative Societies, Punjab, Chandigarh, for a fresh decision.

On October 17, 1978, the Petitioner submitted an application (P. 12) to the Registrer praying that the election of the Board of Directors of the Society be got made as consequence of the acceptance of the appeal by the Development Commissioner. The Registrar declined the prayer vide order P. 13 holding that the Development Commissioner had not set aside the winding up order (P. 7 and further its legality or otherwise was yet to be re-examined by him. The Petitioner feeling aggrieved by this order (P.13) filed a revision against it and same was dismissed by the Secretary to Government, Punjab, Co-operation Department, vide order dated February 21, 1979, (P. 15). The view taken by the Registrar in his order P. 13 was affirmed.

The matter again came up before the Registrar who, after hearing the Petitioner, vide order dated March 15, 1979, (P. 16) declined to review or modify the winding up order dated January 21, 1977 for the detailed reasons given therein The Petitioner filed Civil Writ Petition No. 2728 of 1979 againat the order of the Registrar dated March 15, 1979, (P. 16). It was dismissed vide order dated August, 7 1979, (R. 8/2) on the ground that the impugned order of the Registrar being appealable the Petitioner may avail of the alternative remedy, if so advised. The Petitioner then filed an appeal against the order of the Registrar dated March 15, 1979, (P. 16) which was dismissed by the Financial Commissioner Revenue vide order dated August 30, 1979, (P.19) being time barred. The Petitioner has filed the present writ petition challenging the order of the Registrar dated January 1,1977, (P.7) winding up the Society, the order of the Registrar dated March 15, 1979, (P.16) declining to review or modify the order dated January 21,1977 the order of the Financial Commissioner Revenue dated August 30, 1979, (P. 19) dismissing the appeal of the Petitioner as time barred and sale-deed (P. 6) dated January 25, 1977, executed by the Liquidator transferring the assets of the Society to the Punjab Wool Combers Limited Respondent No. 8.

One Shri Kundan Lal Sabharwal who was also a member of the Society challenged the sale-deed dated January 25, 1977 (P.6) in Civil Writ Petition No. 2628 of 1977 and the same was dismissed vide order dated November 30, 1977, (R. 8/1).

9 The main argument of the learned Counsel for the Petitioner is that the Development Commissioner vide order dated September 26, 1978, (P. 11) accepted the appeal of the Petitioner against the order of the Registrar dated January 21,1977, (P.7) and further remanded the case to the Registrar for a fresh decision. The implication of the appellate order is that the order of the Registrar dated January 21, 1977, (P.7) was set aside. The Registrar, while passing the order (P.16) afresh, wrongly treated the order (P.7) having not been set aside by the appellate order when in fact it had ceased to exist and as such it could not be maintained The order of the Registrar P. 16 maintaining the order P. 7 being violative of the appellate order is no order in the eye of law. In this situation, the dismissal of the appeal vide order dated August 30, 1979, (P.19) filed by the Petitioner against the order P.16 on the point of limitation shall stand rendered irrelevant as the void order of tie Registrar shall net turn valid by its merger with the appellate order P. 19. The orders P. 16 and P. 19 are, therefore, liable to be quashed. Reliance has been placed on Bai Bai Gyanoba Vs. Mahadu Maruti, , Chakrapani Jagannath Prasad Shukla Vs. Chandoo Sahadeo Satnami and Another, and Sivanancha Perumal Pillai Thampuranthozha Pillai v. Thirunamakarassu Pandaram and Ors. AIR 1951 TraC 26.

The learned Counsel for the Respondents have argued to the contrary. Their contention is that the order dated 21, 1977, (P. 7) of the Registrar winding up the Society was not set aside by the Development Commissioner by order (P. 11) dated September 26, 1978. The Development Commissioner noted the points raised before him on behalf of the Appellant (now Petitioner) and without expressing any opinion thereon he accepted the appeal and remanded the case to the Registrar for afresh decision on the ground that points raised before him required further examination. It can, therefore, be not inferred that the order P.7 stood set aside. The true implication of the order P.16 is that the matter was referred to the Registrar for deciding the case afresh after hearing the Petitioner. It was for the Registrar to maintain or set aside or modify the order P.7 by passing a fresh order. The argument proceeds that acceptance of the appeal and remand of the case does not perse amount to the setting aside of the impugned order Reliance has been placed on Mohan Lal Vs. Anandibai and Others, . It has also been argued that after the Development Commissioner had passed the order P.11 the Petitioner approached the Registrar with the prayer to arrange the election of the Managing Committee of the Society as a result of the acceptance of the appeal by the Development Commissioner. The Registrar declined this prayer vide order P. 13 holding that it was premature as no final decision had yet been made (by him) as to whether the winding up order dated January, 21, 1977 (P.7) was liable to be amended or rescinded. The Registrar thus gave a categorical finding in his order P. 13 that the appellate order P. 11 did not have the effect of setting aside the order P. 7. The Petitioner filed a revision against the order of the Registrar P. 13 and the view taken by the Registrar was maintained by the Secretary to Government vide order dated February 21, 1979, (P.15) The orders P. 13 and P. 15 remain unchallenged throughout. Still another argument advanced is that the order P. 16 which otherwise is not void has become final as a result of its merger in the appellate order P. 19 which though challenged in this writ petition has not been assailed on merits.

In my opinion, the contention of the learned Counsel for the Petitioner has no force. In Bai Bai Gyanoba Vs. Mahadu Maruti, , it was held that in spite of the fact that the order of remand did no say in terms that the decree of the trial Court was reversed, but, at the same time, if the remand order was read as a whole there was no doubt that the decree was reversed. In Kaluram and Another Vs. Mehtab Bai and Another, , it was held that an order of remand implied reversal of the decision of the lower Court and reopened the whole case for trial by the original Court except in regard to matters expressly or impliedly decided by the order of remand. In Sivanancha Perumal Pillai v. Thapuranthozha Pillai AIR 1951 TraC 26 it was held that when a decree is set aside and the case remanded to the lower Court all the contentions between the parties are before the Court and it is open for the trial Court to go into all the issues arising on such contentions. In Mohan Lal Vs. Anandibai and Others, , the Supreme Court opined that when the appellate Court remands a case with the direction that the findings of the lower Courts are set aside the direction refers to the findings considered by it and on which it differed from lower Court. It cannot be presumed that all the findings of the lower Court are necessarily set aside The findings which the appellate Court was not called upon to consider cannot be deemed to be set aside.

The Development Commissioner in the appeal ate order P. 11 did not record any finding on any point in favour of the Appellant (now Petitioner). The impugned order of the Registrar be fore the Development Commissioner was also not set aside. The Development Commissioner noted the points raised before him and without opining thereon remanded the case to the Registrar for a fresh decision after accepting the appeal on the ground that the points raised required further examination. The facts of the authorities cited are not identical with the facts of the case now under consideration. The broad consensus ratio of the authorities is that where the appellate Court has recorded findings in favour of the Appellant on material issues then irrespective of the lacto that the impugned order is not specifically set side the order of remand may, by implication, have the same effect. The implication of an order of remand, therefore, shall have to be assessed on the facts of each case. The appellate order P. 11 of the Development Commisioner did not the aside the impugned order P. 7 specifically nor is it suggestive that the same was meant to have been set aside. This apart, the Registrar held in his order P. 13 when approached by the Petitioner for the election of the Managing Committee of the Society as a result of the appellate order P. 11 of the Development Commissioner that it was yet to be decided by him if the order P. 7 was liable to be set aside or maintained. The Petitioner preferred a revision against the order of the Registrar P. 13 and the latter''s view was maintained by the Secretary to Govern rent in his order dated February 21, 1979 (P. 15). These two orders P. 13 and P. 15 have remained unchallenged.

The order P. 16 of the Registrar has been challenged on the sole ground that the order P. 7 which had been set aside by the appellate order P. 11 was wrongly maintained being still in force. The Petitioner preferred an appeal against the order P. 16 and the same was dismissed as time barred vide order P. 19. The order P. 19 has been challenged in the writ but has not been assailed on any ground during arguments. The order P. 16 having merged in the appellate order P. 19 the matter stands rendered final, I therefore, find no justification to quash the orders P. 7. P. 16 and P. 19.

The learned Counsel for the Petitioner has contended that the Board of Directors of the Society had resolved to transfer the assets of the Society to P.S.I.D.C. The Liquidator of the Society who purporting to act in accordance with the resolution of the Board of Directors executed the sale dead P. 6 in favour of Punjab Wool Combers Limited. The transfer was not made in favour of P.S.I.D.C. The sale by the Liquidator being in contravention of the resolution of the Board of Directors of the Society is bad. The learned Counsel for the Respondents have argued that P.S.I.D.C. does not undertake the running of plants like the one the Society was to set up. The P.S.I.D.C. promotes the establishment of industries in the State and it is done generalist fuel in the joint sector, the pattern of investment being the P.S.I.D.C. holds 26 per cent share and the private collaborators possessing the technical know-how not more then 25 per cent and the balance 49 per cent is issued to the general public The same pattern was followed in setting up the Punjab Wool Combers Limited (Respondent No. 8) The transfer of the assets of the Society by the Liquidator in favour of the Punjab Wool Combers Limited was thus a substantial compliance of the resolution passed by the Board of Directors of the Society. In my opinion, the contention of the learned Counsel for the Respondents must prevail. The sale of the assets of the Society by the Liquidator in favour of the Punjab Wool Combers Limited cannot be taken in contravention of the resolution of the Board of Directors of the Society.

Another argument of the learned Counsel for the Petitioner is that the Liquidator could not execute sale deed P. 6 in favour of the Punjab Wool Combers Limited in spite of the resolution of the Board of Directors of the Society because it was obligatory for him to follow the procedure prescribed in Chapter VII of the Punjab Co operative Societies Rules, 1963, for the disposal of the assets of the Society. The sale of the assets of the Society by the Liquidator in favour of Punjab Wool Combers Limited is, therefore, not valid. This contention is also devoid of force. The Society was set up in 1961 under the licence granted to it, the industrial unit was to be established within a period of 12 months from the date of the issue of the licence which expiated in 1962. The Society remained in doldrums thought It failed to raise adequate share capital in spite of substantial financial assistance by the Government or to take necessary steps for the import of the essential machinery. The General Body of the Society decided in 1967 that it be wound up and he funds of the shareholders be refunded pro rata. In 1972 the Society again passed a resolution for transferring its assets and liabilities to P.S.I.D.C. and for the refund of the share money to its members. This resolution was again repeated in 1974. It is thus clear that the Society failed to make any headway due to inaction. On January 25, 1977, the Punjab Wool Combers Limited came into the picture when the assets of the Society were transferred in its favour by seeded P.6. The Punjab Wool Combers Limited have since spent about 2.5 crores on setting up the Wool combing project The Government share money worth Rs. 4,29,750/- has been returned. Most of the members of the Society have been paid back their share money. The Petitioner held a share of Rs. 1,000/ out of the total share capital of about 9, 5 lacs Even assuming for the sake of argument that some irregularity occurred on the part of the Liquidator in the matter of transfer of the assets of the Society in favour of the Punjab Wool Combers Limited, it is evident that under the circumstances explained above it would be inappropriate and may be impossible also to put the clock back and that too at the instance of the Petitioner.

That last contention of the learned Counsel for the Petitioner is that the sale-deed P. 6 is liable to be set aside being in contravention of Rule 65 of the Punjab Co-operative Societies Rules, 1963. This contention is also without merit. The transfer of the assets of the Society in favour of Punjab Wool Combers Limited by sale-deed P. 6 was not made under Chapter VII of the Punjab Co-operative Societies Rules, 1963 and as such Rule 65 contained in this Chapter will not affect it adversely.

In view of discussion above, I find no force in the writ petition and the same is dismissed with no order as to costs.