Mr.K.Vairamuthu v. Thirumayam Rural Electric Co-operative Society Ltd.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 17.9.2009CORAM:THE HONOURABLE MR.JUSTICE S.J.MUKHOPADHAYAANDTHE HONOURABLE MR.JUSTICE V.DHANAPALANWrit Appeal No.994 of 2002 andWrit Petition No.3350 of 2002Mr.K.Vairamuthu .. Appellant in W.A.No.994 of 2002 and petitioner in W.P.No.3350 of 2002Vs.1. Thirumayam Rural Electric Co-operative Society Ltd., Thirumayam, Pudukottai District Rep. by its Special Officer.2. State of Tamil Nadu, rep. by its Secretary to Government, Energy Department, Fort St.George, Chennai-9.3. The Registrar of Co-operative Societies, N.V.Natarajan Maligai, 170, E.V.R. High Road, Kilpauk, Chennai-10.4. The Joint Registrar of Co-operative Societies, Pudukkottai.5. The Tamilnadu Electricity Board, rep. by its Chairman, M.P.K.R.R.Maligai, Anna Salai, Chennai-2.6. Tamil Nadu Min Oozhiyar Madhya Amaippu (CITU), rep. by its Sub-Division Secretary, A.Raju, Kumaran Nagar, SIPCOT Post, Pudukkottai Dist. 622 002. https://hcservices.ecourts.gov.in/hcservices/

7. Desiya Minsara Thozhilalar Sangam (INTUC), Pudukkottai District, Regn.No.158/PDKT, rep. by its District Vice President S.Adhinarayanan, Plot M-19, Poonga Nagar West, Rajagopalapuram Housing Unit Post, Pudukkottai Dist. 622 008.8. Pudukkottai Mavatta Anna Min Paniyalargal Sangam, rep. by its Secretary, G.Shanmugavel, Plot No.7, Ram Nagar, 4th Street, Machuvadi, Pudukkottai Dist.9. Thirumayam Gramya Minsara Kutturavu Thozhilalar Munnetra Sangam, rep. by its President S.Thennarasu, Sandaipet, Thirumayam Post, Pudukkottai Dist.10. Tamil Nadu Electricity Board Engineers Sangam, rep. by its General Secretary, 793 Anna Salai, Chennai-600 002.(Respondents 6 to 9 impleaded-vide Order ofCourt, dated 4.2.2005 made in W.A.M.P.Nos.126 to 129 of 2005)(Respondent No.10 impleaded-vide order of Court,dated 11.11.2008 made in W.A.M.P.No.151 of 2008) .. Respondents in W.A.No.994 of 20021. State of Tamil Nadu, rep. by its Secretary to Government, Energy Department, Fort St.George, Chennai-9.2. The Tamil Nadu Electricity Board, rep. by its Chairman, M.P.K.R.R.Maligai, Anna Salai, Chennai-2.3. The Registrar of Co-operative Societies, N.V.Natarajan Maligai, 170, E.V.R. High Road, Kilpauk, Chennai-10. https://hcservices.ecourts.gov.in/hcservices/

4. The Special Officer, Thirumayam Rural Electric Co-operative Society Ltd., Thirumayam, Pudukkottai District.5. Tamil Nadu Min Oozhiyar Madhya Amaippu (CITU), rep. by its Sub-Division Secretary, A.Raju, Kumaran Nagar, SIPCOT Post, Pudukkottai Dist. 622 002.6. Desiya Minsara Thozhilalar Sangam (INTUC), Pudukkottai District, Regn.No.158/PDKT, rep. by its District Vice President S.Adhinarayanan, Plot M-19, Poonga Nagar West, Rajagopalapuram Housing Unit Post Pudukkottai District 622 008.7. Pudukkottai Mavatta Anna Min Paniyalargal Sangam, rep. by its Secretary, G.Shanmugavel, Plot No.7, Ram Nagar, 4th Street, Machuvadi, Pudukkottai Dist.8. Thirumayam Gramya Minsara Kutturavu Sanga Thozhilalar Munnetra Sangam, rep. by its President S.Thennarasu, Sandaipet, Thirumayam Post, Pudukkottai District.(Respondents 5 to 8 impleaded-vide Order ofCourt, dated 14.12.2004 made in W.P.M.P.Nos.35090 to 35093 of 2004 respectively) .. Respondents in W.P.No.3350 of 2002Writ Appeal No.994 of 2002 against the order dated 28.3.2002passed by the learned single Judge in Writ Petition No.12026 of 1997This Writ Petition presented to this Court under Article 226 of theconstitution of India to issue a writ of Mandamus directing therespondents to forbear from in any manner interfering with thefunction administration and business of the petitioner-Societyotherwise than in accordance with law, in pursuance of G.O.Ms.No.124,Energy Department, dated 27.6.1997.Writ Petition No.3350 of 2002 filed under Article 226 of theConstitution of India, praying for issuance of a Writ of Mandamus, toforbear the respondents 1 to 3 herein from in any manner interferingwith the functions of the fourth respondent-Society, either underG.O.Ms.No.124, Energy Department, dated 27.6.1997 or otherwise and https://hcservices.ecourts.gov.in/hcservices/ the fourth respondent from handing over the business or functions ofthe Society to the second respondent or any other person pursuant tothe said Government Order or otherwise.For appellant in W.A.No.994 of 2002:Mr.AR.L.Sundaresan, Senior Counsel forM/s.A.L.GandhimathiFor petitioner in W.P.No.3350 of 2002: Mr.R.SubramaniamFor first respondent in W.A.No.994 of 2002 and fourth respondent inW.P.No.3350 of 2002: Mr.R.ParthibanFor second, third and fourth respondents in W.A.No.994 of 2002 andfor first and third respondents in W.P.No.3350 of 2002 :Mr.P.S.Raman, Addl. Advocate General, assisted by Mr.D.Sreenivasan,Addl.G.P. For fifth respondent in W.A.No.994 of 2002 and for second respondentin W.P.No.3350 of 2002: Mr.P.SrinivasFor respondents 6 to 10 in W.A.No.994 of 2002 and for respondents 5to 8 in W.P.No.3350 of 2002: Mr.M.MuthupandianCOMMON JUDGMENTS.J.MUKHOPADHAYA,JIn both the cases, as common questions are involved, preferredby same petitioner against same respondents, they were heard togetherand disposed of by this common judgment.2. Thirumayam Rural Electric Co-operative Society Limited(hereinafter referred to as 'the Co-operative Society'), through itsthen Special Officer, preferred Writ Petition No.12026 of 1997 forissuance of a Writ of Mandamus, to direct the respondents therein toforbear from in any manner interfering with the functions,administration and business of the petitioner-Society therein (i.e.Thirumayam Rural Electric Co-operative Society Limited) otherwisethan in accordance with law, in pursuance of G.O.Ms.No.124, EnergyDepartment, dated 27.6.1997 or otherwise.3. By the aforesaid G.O.Ms.No.124, dated 27.6.1997, theGovernment of Tamil Nadu decided that the Rural Electric Co-operativeSocieties at Kumbakonam, Vandavasi and Thirumayam (the petitioner-Co-operative Society) shall be wound up and that the distribution ofpower supply in these areas shall be entrusted to the Tamil Nadu https://hcservices.ecourts.gov.in/hcservices/ Electricity Board (hereinafter referred to as 'the ElectricityBoard'). The Chairman of the Tamil Nadu Electricity Board wastherefore directed to take immediate steps to take over the functionsof the said three Rural Electric Co-operative Societies.4. Initially, an interim order of injunction was passed in WritPetition No.12026 of 1997, which later on continued to be in force.The Co-operative Society subsequently resolved to merge with theElectricity Board and to withdraw W.P.No.12026 of 1997. Learnedcounsel for the Co-operative Society was so instructed and on theinstructions of the Co-operative Society, W.P.No.12026 of 1997 wasdismissed as withdrawn by the impugned order dated 28.3.2002. Thesaid order of dismissal as withdrawn has been assailed in Writ AppealNo.994 of 2002 by a third party, namely Mr.K.Vairamuthu, the thenPresident of the Co-operative Society.5. The said K.Vairamuthu has also filed Writ Petition No.3350 of2002 seeking for issuance of a Writ of Mandamus, to forbear therespondents 1 to 3 herein from in any manner interfering with thefunctions of the fourth respondent, i.e. Thirumayam Rural ElectricCo-operative Society Limited, either under G.O.Ms.No.124, EnergyDepartment, dated 27.6.1997 or otherwise and the fourth respondent-Co-operative Society from handing over the business or functions ofthe Co-operative Society to the second respondent or any other personpursuant to the said Government Order or otherwise. 6. In Writ Appeal No.994 of 2002, it was argued that WritPetition No.12026 of 1997 was maliciously withdrawn by the Co-operative Society in a dubious manner. The Co-operative Society actsin the interest of its members and the said Writ Petition was filedin the interest of its members. The Co-operative Societydemocratically elected its members/President through the Board ofDirectors and said democratic Board of Directors was replaced by aSpecial Officer under the provisions of the Tamil Nadu Co-operativeSocieties Act, 1983, and the Special officer, after assuming charge,took a decision for withdrawal of the Writ Petition. The learnedsingle Judge ought to have seen that while normally, no person can becompelled to litigate, but the said principle could not have beenapplied in the present case, as withdrawal was vitiated by mala-fide,prejudice and bias in favour of the Electricity Board. 7. So far as Writ Petition No.3350 of 2002 is concerned, it wassubmitted that the State Government cannot dissolve a Co-operativeSociety, nor it can be taken over in the manner it has been soughtfor, except by process known to law. The action of the respondent-State in directing the winding up of the Co-operative Society andhanding over the business to the Electricity Board, is arbitrary,illegal, unjust and unsustainable in the eye of law. The Co-operativeSociety, having been duly granted licence to carry on business of https://hcservices.ecourts.gov.in/hcservices/ distribution of electrical energy in Thirumayam Taluk under Section28 of the Indian Electricity Act, 1910, the said licence gives avested right on the Co-operative Society and its members to carry onbusiness and thereby, the Co-operative Society cannot be compelled tohand over the distribution of electricity supply to the ElectricityBoard so long as the licence is in force and it is not cancelled orrevoked in the manner known to law. On behalf of the petitioner, itwas contended that none of the circumstances contemplated underSections 3 and 4 of the Indian Electricity Act exist to warrant anysuch revocation. At any rate, there is no justifiable reason or causeto cancel the licence. Further, the cancellation, if any, can only bemade after opportunity being given to the Co-operative Society andafter observing the principles of natural justice. In the presentcase, no such action having been taken by giving opportunity to theCo-operative Society, the action can be held to be violative of therules of natural justice. 8. Learned counsel for the appellant in W.A.No.994 of 2002 andthe learned counsel for the petitioner in W.P.No.3350 of 2002, raisedthe question of winding up of the Co-operative Society, whichaccording to them, can be done only under Section 137 of the TamilNadu Co-operative Societies Act and not by any other mode. Accordingto him, no circumstances contemplated under Section 137 of the TamiNadu Co-operative Societies Act exist to warrant the winding up andat any rate, the winding up cannot be done unilaterally, but can bedone if at all only after giving opportunity to the Co-operativeSociety. The Special Officer is duty bound to act in the interest ofthe Co-operative Society and cannot sacrifice the Co-operativeSociety itself. The Resolution, dated 11.1.2002 passed by the SpecialOfficer of the Co-operative Society for withdrawal of W.p.No.12026 of1997, is against the interest of the Co-operative Society and itsmembers. 9. Learned counsel appearing on behalf of the State and theElectricity Board, while questioning the locus-standi of theappellant in preferring the Writ Appeal against the order of"dismissal as withdrawn", also submitted that the appellant-petitioner-K.Vairamuthu, in his individual capacity, even as amember/the then President of the Co-operative Society, cannot assailG.O.Ms.No.124, dated 27.6.1997 issued from the Energy Department, theCo-operative Society having decided to act in terms of the said G.O.The counsel for the Electricity Board placed reliance on differentorders issued from time to time and Section 28 of the IndianElectricity Act to suggest that even the Co-operative Society had noright to continue the business of supply of electricity, except bysanction of the State.10. We have heard the learned counsel appearing on behalf of theparties and perused the records. https://hcservices.ecourts.gov.in/hcservices/

11. For determination of the case, it is necessary to notice therelevant facts and the Notifications issued from time to time, asreferred to hereunder.12. It appears that the Co-operative Society initially appliedfor grant of licence under Section 3 of the Indian Electricity Act.In the light of Section 3(2) of the Indian Electricity Act and Rule15(4) of the Indian Electricity Rules, 1956, objections were calledfor, vide G.O.Ms.No.786, Public Works Department, dated 20.4.1982.However, for the reasons best known to the authorities and to thepetitioner, no licence under Section 3 of the Indian Electricity Actwas granted. The Co-operative Society wanted to have a sanction forsupply, transmission and use of energy under Section 28 of the IndianElectricity Act and in terms of Section 28(1) of the IndianElectricity Act, the State Government, vide G.O.Ms.No.1716, dated27.8.1982, issued from the Public Works Department, granted permit tothe Co-operative Society to carry on the business of distribution ofelectrical power to Thirumayam Taluk, covering Ponnamaravathi,Arimalam and Thirumayam blocks in accordance with the provisions ofthe Indian Electricity Act and the Rules framed thereunder. It wasmade clear that the said permit granted under Section 28(1) of theIndian Electricity Act will be treated as cancelled on and from theeffective date of the licence issued to the Co-operative Societyunder Section 3 of the Indian Electricity Act. 13. It appears that the Co-operative Society was continuouslyworking on loss eversince its inception, the main contributing factorbeing free supply of power to the huts and agricultural pumpsets inthe areas of operation. The said loss of the Co-operative Societycould not be compensated, though the Co-operative Society waspreferring the claim year after year. The Chief Financial Controllerof the Electricity Board, vide letter dated 10.2.1995, stated thatthe Board charged 0.18 paise per unit, even though the High Tensionand cost as estimated for 1995-1996 was 161.18 paise per unit andthat the Electricity Board lost 143.18 paise per unit sold to the Co-operative Society. It was opined that if higher and viable tariffrates were not acceptable, it was better that the distributionnetwork of the Societies may be handed over to the Electricity Board,so that the loss to the Board will be reduced to a great extent. Thematter was also referred by the Registrar of the Co-operativeSocieties, vide letter dated 18.2.1994. The State Government, in itsturn, referring the abovesaid facts, issued G.O.Ms.No.124, Energy(A2) Department, dated 27.6.1997 and directed the Chairman of theElectricity Board to take immediate steps to take over the functionsof the three Rural Electric Co-operative Societies--Kumbakonam,Vandavasi and Thirumayam.14. That was the stage during which the Co-operative Societypreferred Writ Petition No.10015 of 1997 against the decision https://hcservices.ecourts.gov.in/hcservices/ aforesaid. Three other Writ Petitions were also filed by individualsin W.P.Nos.10623, 10627 and 10653 of 1997. All those Writ Petitionswere taken up on 17.7.1997 when the learned Government Advocateinformed on instructions that the impugned order is an enabling orderwhich records a decision taken by the Government and that furthersteps will be taken in conformity with law under the provisions ofthe applicable statues. In view of such clarification, theapprehension of the Co-operative Society and the other petitionersthat the licence granted under the Indian Electricity Act iscancelled or was sought to be cancelled, was shown to be unjustifiedand the Court accordingly disposed of those Writ Petitions. 15. The Electricity Board, through its Accounts Member, informedthe Registrar of Co-operative Societies, vide letter dated 20.7.1997that the Electricity Board has proposed to take over the threeSocieties on 15.8.1997 and thereby, requested the Registrar of Co-operative Societies, Chennai, to issue suitable instructions to theManaging Director of the three Societies. The Registrar of Co-operative Societies, Chennai, in his turn, by letter dated 30.7.1997,informed the matter to the Regional Joint Registrars of Pudukkottai,Thanjavur and Thiruvannamalai, Regions and the Presidents of theVandavasi, Kumbakonam and Thirumayam Rural Electric Co-operativeSocieties, asking them to attend a meeting with the details of themembers, including the names of the staff, latest audited balancesheet of the Societies, assets, liabilities, etc. 16. By letter dated 31.7.1997, the Joint Registrar of Co-operative Societies informed the Managing Director (in-charge) of theCo-operative Society of the aforesaid facts and further informed thatit was his duty and responsibility to supervise the Acts, the Rulesand the Bye-laws and Rule 146(1) of the Tamil Nadu Co-operativeSocieties Rules and nothing should occur contrary to the Acts andRules and Bye-laws. It was the duty of the Managing Director toprotect the properties of the Co-operative Society without occurringany damage and thereby, requested him to supervise the activities ofthe Co-operative Society and to do any further activities only afterobtaining permission from the State Registrar. All the particularswere also called for from the President and the Managing Director ofthe Co-operative Society, by the Joint Registrar of Co-operativeSocieties, Pudukkottai, in his letter dated 1.8.1997.17. It was at that stage, the Co-operative Society preferred WritPetition No.12026 of 1997, wherein interim order of injunction waspassed by this Court on 7.8.1997, restraining the respondents, theirmen, servants and agents from in any manner interfering with thefunctions and business of the Co-operative Society till 17.9.1997.The said order dated 7.8.1997 was subsequently allowed to continue inforce, by order dated 17.12.1999. https://hcservices.ecourts.gov.in/hcservices/

18. It appears that the Co-operative Society has changed theBoard of Governors/Directors and appointed the Special Officer forthe Co-operative Society under the provisions of the Tamil Nadu Co-operative Societies Act. It appears that the said order was notchallenged by any person before any Court of law. The Co-operativeSociety subsequently considered the matter taking into considerationthe relevant facts, particularly the Writ Petition preferred againstG.O.Ms.No.124, dated 27.6.1997 issued from the Energy (A2) Departmentand resolved that in the interest of the Co-operative Society, toinitiate action to withdraw the case in Writ Petition No.12026 of1997 filed before this Court and to bear the expenses from commonfund. The Resolution, dated 11.1.2002 was communicated by the SpecialOfficer of the Co-operative Society. The aforesaid Resolution wasbrought to the notice of the Court and prayer was made by the counselfor the Co-operative Society to withdraw the Writ Petition, which wasallowed by the learned single Judge, by the impugned order dated28.3.2002 in W.P.No.12026 of 1997, which is challenged in Writ AppealNo.994 of 2002.19. It is settled law that no person can be forced to fight alitigation. If any person has moved before a Court of law for anyrelief, he has a right to withdraw the case with or without liberty.The Court generally accepts the prayer for withdrawal of the case, ifsought for without any liberty, till it is shown that it was not inpublic interest or with some mala-fide attitude that the party wantedto withdraw the case.20. In the present case, the Co-operative Society has notpreferred Writ Appeal. The Writ Appeal has been preferred by a thirdparty, who was the erstwhile President of the Co-operative Societyand he has not challenged the decision of the Registrar of the Co-operative Societies, whereby the Board of Directors/Governors wasdissolved and the Special Officer was appointed. The Resolution dated11.1.2002 of the Co-operative Society, whereby, it was decided towithdraw the case, is also not under challenge. In this background,the appellant-Vairamuthu cannot assail the withdrawal of WritPetition No.12026 of 1997, as prayed for in W.A.No.994 of 2002.Therefore, no relief can be granted in W.A.No.994 of 2002.21. So far as Writ Petition No.3350 of 2002 is concerned, it ispreferred by merely a member of the Co-operative Society and not bythe Co-operative Society. This Court has noticed the fact that theCo-operative Society requested to grant licence under Section 3 ofthe Indian Electricity Act, pursuant to which, objections were alsocalled for, but having been not granted such licence, the StateGovernment only permitted the Co-operative Society to supplyelectricity in the area(s) in question.22. Part-III of the Indian Electricity Act, 1910 (Central Act https://hcservices.ecourts.gov.in/hcservices/ No.IX of 1910) relates to supply, transmission and use of energy bynon-licensees and Section 28 therein relates to sanction required bynon-licensees in certain cases. Section 28(1) reads as follows:"Section 28. Sanction required by non-licensees in certaincases--(1) No person, other than a licensee, shall engage inthe business of supplying energy to the public except withthe previous sanction of the State Government and inaccordance with such conditions as the State Government mayfix in this behalf, and any agreement to the contrary shallbe void.(1-A) the State Government shall not give any sanctionunder sub-section (1)--(a) Except after consulting the State ElectricityBoard; and(b) except with the consent--(i) in any case where energy is to be supplied in anyarea of which a local authority is constituted, of thatlocal authority.(ii) in any case where energy is to be supplied in anyarea forming part of any cantonment, aerodrome, fortress,arsenal, dockyard or camp or of any building or place in theoccupation of the Government for defence purposes, of theCentral Government.(iii) In any area falling within the area of supply ofa licensee, of that licensee:Provided that except in a case falling under sub-clause(ii), not such consent shall be necessary if the StateGovernment is satisfied that such consent has beenunreasonably withheld.(2) Where any difference or dispute arises as towhether any person is or is not engaging, or about toengage, in the business of supplying energy to the publicwithin the meaning of sub-section (1), the matter shall bereferred to the State Government, and the decision of theState Government thereon shall be final." 23. From the aforesaid provisions, it would be evident that a Co-operative Society is not a licensee, but is a permit-holder underSection 28, which also could not have been granted, except afterconsulting the State Electricity Board and the consent of the localauthority where the electricity is to be supplied.24. It has been noticed by this Court, as recorded above, thatthe Co-operative Society was going in loss and was charging veryminimal amount in supplying the energy, causing loss to theElectricity Board. In fact, the Co-operative Society was not in aposition to pay the money to the Electricity Board. In thisbackground, if the State Government resolved to take over the https://hcservices.ecourts.gov.in/hcservices/ functions of the Co-operative Society and to provide such functionsto the Electricity Board in the interest of supply of electricity tothe public in general, it cannot be alleged to be illegal or anymala-fide.25. Section 137 of the Tamil Nadu Co-operative Societies Act,1983, deals with the winding up of Registered Societies. In thiscase, there is no order passed by any of the authority to wind up theCo-operative Society. What has been ordered by the State Governmentby the impugned G.O.Ms.No.124, dated 27.6.1997, is only to take overthe functions of the Co-operative Society so far as it relates tosupply of electricity to the public in general. That means, thepermit which was granted to the Co-operative Society under Section 28(1) of the Indian Electricity Act, was merely withdrawn and theElectricity Board was allowed to distribute the power in the area(s)which have the jurisdiction under the Indian ElectricityAct/Electricity (Supply) Act, by using the transmission, supply andusage system of electricity supply by the Co-operative Society. TheCo-operative Society has not been ordered to be dissolved and for thesaid reason, the Co-operative Society preferred Writ PetitionNo.12026 of 1997 in the initial stage and is now the party-respondentin the Writ Appeal, and therefore, the question of application ofSection 137 of the Tamil Nadu Co-operative Societies Act, does notarise. Further, the Co-operative Society having no objection againstthe take over of its functions in the matter of supply of electricityas used to be made under Section 28(1) of the Indian Electricity Act,its members cannot make any grievance. If any of the member like thepetitioner in W.P.No.3350 of 2002 or the appellant in W.A.No.994 of2002 has got a grievance against a Co-operative Society itself, orits Special Officer, he has a remedy under the provisions of theTamil Nadu Co-operative Societies Act, but cannot challenge the orderimpugned (G.O.Ms.No.124, dated 27.6.1997), the Co-operative Societyhaving accepted the said G.O. and acted on the basis of theResolution, dated 11.1.2002. 26. We find no merits in either Writ Appeal No.994 of 2002 or inWrit Petition No.3350 of 2002 and accordingly, both Writ AppealNo.994 of 2002 and Writ Petition No.3350 of 2002 are dismissed. Nocosts. Sd/Asst.Registrar/true copy/Sub Asst.Registrarcs https://hcservices.ecourts.gov.in/hcservices/ To1. Thirumayam Rural Electric Co-operative Society Ltd., Thirumayam, Pudukottai District Rep. by its Special Officer.2. The Secretary to Government,State of Tamil Nadu, Energy Department, Fort St.George, Chennai-9.3. The Registrar of Co-operative Societies, N.V.Natarajan Maligai, 170, E.V.R. High Road, Kilpauk, Chennai-10.4. The Joint Registrar of Co-operative Societies, Pudukkottai.5. The Tamilnadu Electricity Board, rep. by its Chairman, M.P.K.R.R.Maligai, Anna Salai, Chennai-2.+1cc to Govt. Pleader Sr 48427+1cc to M/s. AL.Gandhimathi, Advocate Sr 48227MBS(CO)km/5.10.W.A.No.994 of 2002andW.P.No.3350 of 2002