Kerala High Court
Dr.Riji G.Nair vs State Of Kerala on 3 December, 2020
Equivalent citations: AIR 2021 KERALA 26, AIRONLINE 2020 KER 1147
Bench: A.M.Shaffique, Sunil Thomas
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
THE HONOURABLE MR. JUSTICE SUNIL THOMAS
and
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 03RD DAY OF DECEMBER 2020/12TH AGRAHAYANA,1942
WP(C).No.36951 OF 2017(T)
PETITIONER:
DR.RIJI G.NAIR
AGED 56 YEARS, S/O.P.K.GANGADHARAN NAIR, 'SRI
SRI', NELLIMUKKU THIRUMULLAVAROM P.O., KOLLAM.
BY ADV. SRI.D.SOMASUNDARAM
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY THE SECRETARY TO GOVERNMENT, CO-
OPERATION (A) DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM-695001.
2 REGISTRAR OF CO-OPERATIVE SOCIETIES
THIRUVANANTHAPURAM-695001.
3 KERALA STATE CO-OPERATIVE CONSUMER FEDERATION
LTD. NO.4328
(CONSUMER FED), REPRESENTED BY ITS MANAGING
DIRECTOR, GANDHI NAGAR, KOCHI-682020.
R1 BY SR GOVERNMENT PLEADER SRI.ANTONY MUKKATH
R3 BY SRI.M.SASINDRAN, SC, CONSUMERFED
THIS WRIT PETITION (CIVIL) HAVING BEEN HEARD ON
07.10.2020, ALONG WITH WA.1554/2017, THE COURT ON 03.12.2020
PASSED THE FOLLOWING:
WP(C) No. 36951/2017 & WA No.1554/2017
-:2:-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE
THE HONOURABLE MR. JUSTICE SUNIL THOMAS
and
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 03RD DAY OF DECEMBER 2020 / 12TH AGRAHAYANA,
1942
WA.No.1554 OF 2017
AGAINST THE JUDGMENT IN WPC 39358/2016 DATED 06-03-2017 OF
HIGH COURT OF KERALA
APPELLANT/PETITIONER:
DR.RIGI G.NAIR
S"SRI SRI".NELLIMUKKU,
THIRUMULLAVAROM P.O, KOLLAM
BY ADV. SRI.D.SOMASUNDARAM
RESPONDENTS:
1 REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)
THIRUVANANTHAPURAM 695 001
2 KERALA STATE CO-OPERATIVE CONSUMER FEDERATION
LTD NO 4328CONSUMERFED
REPRESENTED BY ITS MANAGING DIRECTOR,GANDHI
NAGAR, KOCHI 682 020
WP(C) No. 36951/2017 & WA No.1554/2017
-:3:-
3 THE ENQUIRY OFFICER
(JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
(SC/ST)CONSUMER FEDERATION,OFFICE OF THE
REGISTRAR OF CO-OPERATIVE SOCIETIES,
THIRUVANANTHAPURAM.
R1 BY SR.GOVT.PLEADER SRI.ANOTNY MUKKATH
R2 BY SRI.M.SASINDRAN, SC, CONSUMERFED
THIS WRIT APPEAL HAVING BEEN HEARD ON 07.10.2020, ALONG
WITH WP(C).36951/2017(T), THE COURT ON 3.12.2020 PASSED THE
FOLLOWING:
WP(C) No. 36951/2017 & WA No.1554/2017
-:4:-
"C.R."
ORDER
Dated this, the 3rd day of December, 2020 Shaffique, J.
These matters have been referred to us based on a reference order dated 14/8/2018. Another Division Bench while considering the aforesaid appeal and writ petition observed that the Division Bench judgment in Sankaranarayanan v. Kunhikrishnan (1965 KLT 740) and judgment of a learned single Judge in Benny Peruvanthanam v. Kerala State Co- operative Consumers Federation (2013 (4) KLT 987) do not appear to have laid down the correct law in the light of the decision of Apex Court in Government of Andhra Pradesh and Others v. D.Janardhana Rao and another [(1976) 4 SCC 226] and therefore, it was felt that the matter requires to be heard by a Full Bench.
2. The issue involved is with reference to an exemption granted by the Government invoking Section 101 of the Kerala Co-operative Societies Act, 1969, (hereinafter referred to as 'the WP(C) No. 36951/2017 & WA No.1554/2017 -:5:- Act') Under S.65(5) of the Act, an enquiry under Section 65 has to be completed within a period of six months. The said period at the discretion of the Registrar can be extended, of course, for reasons to be recorded in writing. However, the aggregate period shall not in any way exceed one year. These are cases in which the period of one year had expired and subsequently the Government invoking power u/s 101 of the Act exempted the said society from the application of S.65(5) for a specified period from the date of expiry of the one year period until a future period.
3. In Sankaranarayanan's case (supra), Division Bench of this Court was considering whether the State Government had the power to exempt any registered Society from any provisions of the Act invoking S.60 of the Co-operative Societies Act, 1932 (Madras) (Madras Act was applicable to erstwhile Malabar area of State of Kerala). As per S.36 of the said Act, a registered society had to carry to its reserve fund a fourth of its net profits and then may contribute an amount not exceeding 10% of the remaining net profits to any charitable purpose. After the specified period, the Government exempted the society from the operation of S.36, and also validated a resolution taken earlier, which was WP(C) No. 36951/2017 & WA No.1554/2017 -:6:- invalid at the time of its inception. It was held that the Government could not have retroactively exempted the society in complying with the statutory provisions and to validate the resolution, which was invalid at the time of its inception.
4. In Benny Peruvanthanam's case (supra), the question that had arisen for consideration was whether the persons nominated by the Government u/s 31 of the Kerala Co-operative Societies Act, 1969 to the Apex or Central Society is entitled to continue after the coming into force of the Kerala Co-operative Societies (Amendment) Act, 2013 on account of the operation of sub-section (2A) of Section 31 and whether the order of exemption issued by the Government as SRO 508/2013 u/s 101 permitting such nominees and office bearers to continue till the date of next elections would be valid. It was held at paragraph 32 as under:-
"32. That Section 101 does not grant any power to exempt provisions of the Act retrospectively, calls for no dispute. That by operation of sub-section (2A), no nominated person can hold office of the President/Chairman or Vice- President/Vice-Chairman of the Apex or Central Societies too, brooks no dispute. On the said restriction being introduced, the nominated persons who held office as per a valid WP(C) No. 36951/2017 & WA No.1554/2017 -:7:- election cease to hold office as has already been found by me. Despite their having continued in office, the later notification exempting sub-section (2A) of Section 31 does not permit them to continue in office till their elected term is over. Necessarily it warrants recalling them to the office which they had vacated by statutory operation. This can only be done by reviving their power to hold office from 14.02.2013; the date of the Amendment Act, which require retrospective exemption of sub-section (2A) of Section 31. Such power of retrospective exemption is not available going by the specific language employed in Section 101 of the Act. This Court is not persuaded to think that the legislative intendment is evident from Exhibit P8. The Government and the party respondents contend that the term of the elected body expires in the 1 st quarter of next year and there is no reason why this Court should interfere at this stage. The intention of the Government also was to see that the elected office bearers may be continued till the expiry of the term of office, is the plea. In law, not touching upon policy, the best of intentions would fail in the context of sheer absence of power. The 'Henry VIII' clause, Section 101, does not grant power to the executive Government to bring in retrospective exemption. To that end, Exhibit P8 has to be set aside."
5. In Janardhana Rao's case (supra), the Apex Court was considering the power of the Governor to relax the rigour of the general rules in exercise of the power under Rule 47 of the Andhra Pradesh State and Subordinate Service Rules. It is held that the power under Rule 47 is to be exercised in the interest of WP(C) No. 36951/2017 & WA No.1554/2017 -:8:- justice and equity and an occasion for acting under Rule 47 may arise after the attention of the Government is drawn to a case where there has been a failure of justice. It was therefore held that "In such cases, justice can be done only by exercising the power under Rule 47 with retrospective effect, otherwise the object and purpose of the rule will be largely frustrated".
6. Learned counsel appearing for the appellant and the petitioner in the above case Sri.D.Somasundaram would submit that on expiry of the maximum period specified under S.65(5) of the Act, the members of the society will get an indefeasible right not to be proceeded against for any further action at the instance of Registrar. It is pointed out that this is a case in which the Registrar had initiated an enquiry and when it was found that the enquiry could not be completed within the aforesaid time, after the expiry of the specified time, the Government had exempted the society from the purview of S.65(5) of the Act for a period of one year which apparently relates back to an earlier date as well. It is submitted that the power of the exemption cannot be utilized for such purposes and if at all such power is exercised, it can have only prospective effect and the Government cannot issue WP(C) No. 36951/2017 & WA No.1554/2017 -:9:- such orders only for the purpose of extending time.
7. On the other hand, the exemption order issued by the Government had been supported by the learned senior Government Pleader Sri.Antony Mukkath and Sri.M.Sasindran, learned counsel appearing for the Society. Sri.Sasindran, learned counsel would submit that the factual aspects involved in the case would indicate that large volume of records had to be verified by the Registrar for conducting the enquiry with the help of several persons, and when the enquiry could not be completed within the statutory period prescribed u/s 65(5), the Registrar has no option other than to approach the Government and consequently the Government had exempted the society from the purview of 65(5) for a specified period, which according to the learned counsel does not suffer from any vice warranting interference.
8. Learned Government Pleader would place reliance on a few judgments of the Apex Court and this Court in order to contend that similar rules for granting retrospective effect to Government Order has been upheld by the Apex Court as well as the High Court. It is pointed out that what is provided u/s 65(5) is WP(C) No. 36951/2017 & WA No.1554/2017 -:10:- only a period of limitation for completing an enquiry. Prescribing a period of limitation is part of procedural law and hence there is no embargo in issuing orders which has retrospective effect. It is pointed out that the petitioner or the appellant is not at all affected by the impugned order and only if the Government later on decides to take further action pursuant to the enquiry that he can challenge the proceedings. Learned Government Pleader placed reliance on the following judgments to indicate that the Government has power to relax any rule if it is necessary in the interest of justice and equity:-
(i) P.V.T.Phillip v. P.Narasimha Reddy and Others [1993 Supp (3) SCC 438].
(ii) M.Venkateswarlu and Others v. Government of A.P and Others [1996) 5 SCC 167].
(iii) Santosh Kumar v. State of A.P and Others [(2003) 5 SCC 511].
(iv) Showkath Ali A.P and Others v. The State of Kerala and Others [2008 (1) KLJ 923].
(v) Kerala Public Service Commission v. Tessymole Sebastian and another [ILR 2005 (3) Ker. 486].
WP(C) No. 36951/2017 & WA No.1554/2017 -:11:-
(vi) Sherafuddin v. State of Kerala (2004 (2) KLT 731).
9. The question to be considered is whether the Government can exempt a society from the provisions of Section 65(5) retrospectively, which has been done as per G.O.(P) No.41/2017/Co-op dated 25/7/2017.
10. In Hitendra Vishnu Thakur v. State of Maharashtra [(1994) 4 SCC 602], the Apex Court while considering the question whether the 1993 Amendment, amending Section 167(2) of the Code of Criminal Procedure by modifying Section 20(4)(b) and adding Section 20(4)(bb) of the Terrorist and Disruptive Activities (Prevention) Act, 1987, is applicable to pending cases, crystallised the law on the subject as under:-
"From the law settled by this Court in various cases the illustrative though not exhaustive principles which emerge with regard to the ambit and scope of an Amending Act and its retrospective operation may be culled out as follows:
(i) A statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment, whereas a statute which merely affects procedure, unless such a construction is textually impossible, is presumed to be retrospective in its application, should not be given an extended meaning and should be strictly confined to its clearly defined limits.
WP(C) No. 36951/2017 & WA No.1554/2017 -:12:-
(ii) Law relating to forum and limitation is procedural in nature, whereas law relating to right of action and right of appeal even though remedial is substantive in nature.
(iii) Every litigant has a vested right in substantive law but no such right exists in procedural law.
(iv) A procedural statute should not generally speaking be applied retrospectively where the result would be to create new disabilities or obligations or to impose new duties in respect of transactions already accomplished.
(v) A statute which not only changes the procedure but also creates new rights and liabilities shall be construed to be prospective in operation, unless otherwise provided, either expressly or by necessary implication."
11. In Thirumali Chemicals Limited v. Union of India and Others [(2011) 6 SCC 739], the Apex Court was considering the difference between substantive law and procedural law and it is held at paragraphs 23 to 26 and 29 to 33 as under:-
"Substantive and procedural law
23. Substantive law refers to a body of rules that creates, defines and regulates rights and liabilities. Right conferred on a party to prefer an appeal against an order is a substantive right conferred by a statute which remains unaffected by subsequent changes in law, unless modified expressly or by necessary implication. Procedural law establishes a mechanism for determining those rights and liabilities and a machinery for enforcing them. Right of appeal being a substantive right always acts prospectively. It is trite law that every statute is prospective unless it is expressly or by WP(C) No. 36951/2017 & WA No.1554/2017 -:13:- necessary implication made to have retrospective operation.
24. Right of appeal may be a substantive right but the procedure for filing the appeal including the period of limitation cannot be called a substantive right, and an aggrieved person cannot claim any vested right claiming that he should be governed by the old provision pertaining to period of limitation. Procedural law is retrospective meaning thereby that it will apply even to acts or transactions under the repealed Act.
25. Law on the subject has also been elaborately dealt with by this Court in various decisions and reference may be made to a few of those decisions. This Court in Garikapati Veeraya v. N. Subbiah Choudhry [AIR 1957 SC 540] , New India Insurance Co. Ltd. v. Shanti Misra [(1975) 2 SCC 840] , Hitendra Vishnu Thakur v. State of Maharashtra [(1994) 4 SCC 602 : 1994 SCC (Cri) 1087] , Maharaja Chintamani Saran Nath Shahdeo v. State of Bihar [(1999) 8 SCC 16] and Shyam Sunder v. Ram Kumar [(2001) 8 SCC 24] , has elaborately discussed the scope and ambit of an amending legislation and its retrospectivity and held that every litigant has a vested right in substantive law but no such right exists in procedural law. This Court has held that the law relating to forum and limitation is procedural in nature whereas law relating to right of appeal even though remedial is substantive in nature.
26. Therefore, unless the language used plainly manifests in express terms or by necessary implication a contrary intention a statute divesting vested rights is to be construed as prospective, a statute merely procedural is to be construed as retrospective and a statute which while procedural in its character, affects vested rights adversely is WP(C) No. 36951/2017 & WA No.1554/2017 -:14:- to be construed as prospective."
"Law of limitation
29. Law of limitation is generally regarded as procedural and its object is not to create any right but to prescribe periods within which legal proceedings be instituted for enforcement of rights which exist under substantive law. On expiry of the period of limitation, the right to sue comes to an end and if a particular right of action had become time-barred under the earlier statute of limitation the right is not revived by the provision of the latest statute. Statutes of limitation are thus retrospective insofar as they apply to all legal proceedings brought after their operation for enforcing cause of action accrued earlier, but they are prospective in the sense that they neither have the effect of reviving the right of action which is already barred on the date of their coming into operation, nor do they have the effect of extinguishing a right of action subsisting on that date. Bennion on Statutory Interpretation, 5th Edn. (2008), p. 321 while dealing with retrospective operation of procedural provisions has stated that provisions laying down limitation periods fall into a special category and opined that although prima facie procedural, they are capable of effectively depriving persons of accrued rights and therefore they need be approached with caution.
30. The learned author in order to establish the above proposition referred to the decision of the Court of Appeal in Ydun case [1899 P 236 (CA)] where the Court held that the amending legislation dealt with procedure only and therefore applied to all actions whether commenced before or after the passing of the Act and even in respect of previously accrued rights. The principle laid down in Ydun [1899 P 236 (CA)] was WP(C) No. 36951/2017 & WA No.1554/2017 -:15:- applied in R. v. Chandra Dharma [(1905) 2 KB 335 : (1904-07) All ER Rep 570] and it was held that if a statute shortening the time within which proceedings can be taken is retrospective then it is impossible to give good reason, why a statute extending the time within which proceedings be taken, should not be held to be retrospective.
31. The Judicial Committee of the Privy Council in Yew Bon Tew v. Kenderaan Bas Mara [(1983) 1 AC 553 : (1982) 3 WLR 1026 : (1982) 3 All ER 833 (PC)] opined that whether the statute has retrospective effect, cannot in all cases safely be applied by classifying statute as procedural or substantive and pointed out in certain situation the Court would rule against a retrospective operation.
32. Limitation provisions therefore can be procedural in the context of one set of facts but substantive in the context of different set of facts because rights can accrue to both the parties. In such a situation, test is to see whether the statute, if applied retrospectively to a particular type of case, would impair existing rights and obligations. An accrued right to plead a time bar, which is acquired after the lapse of the statutory period, is nevertheless a right, even though it arises under an Act which is procedural and a right which is not to be taken away pleading retrospective operation unless a contrary intention is discernible from the statute. Therefore, unless the language clearly manifests in express terms or by necessary implication, a contrary intention a statute divesting vested rights is to be construed as prospective.
33. A statute, merely procedural is to be construed as retrospective and a statute while procedural in nature affects vested rights adversely is to be construed as prospective. The manner of filing an appeal, under sub-section (2) of Section WP(C) No. 36951/2017 & WA No.1554/2017 -:16:- 19 of FEMA and the time within which such an appeal has to be preferred and the power conferred on the Tribunal to condone delay under the proviso to sub-section (2) of Section 19 are matters of procedure and act retrospectively, so as to cover causes of action which arose under FERA."
12. In Videocon International Ltd. v. Securities and Exchange Board of India [(2015) 4 SCC 33], the Apex Court was considering the question whether an amendment involving change of forum can be considered as procedural or substantive. It is held at paragraph 45 as under:-
"45. Having concluded in the manner expressed in the foregoing paragraphs, it is not necessary for us to examine the main contention, advanced at the hands of the learned counsel for the appellant, namely, that the amendment to Section 15-Z of the SEBI Act, contemplates a mere change of forum of the second appellate remedy. Despite the aforesaid, we consider it just and appropriate, in the facts and circumstances of the present case, to delve on the above subject as well. In dealing with the submission advanced at the hands of the learned counsel for the appellant, on the subject of forum, we will fictionally presume, that the amendment to Section 15-Z by the Securities and Exchange Board of India (Amendment) Act, 2002 had no effect on the second appellate remedy made available to the parties, and further that, the above amendment merely alters the forum of the second appeal, from the High Court (under the unamended provision), to the Supreme Court (consequent upon the amendment). On the above assumption, the WP(C) No. 36951/2017 & WA No.1554/2017 -:17:- learned counsel for the appellant had placed reliance on the decisions rendered by this Court in Maria Cristina De Souza Sodder [Maria Cristina De Souza Sodder v. Amria Zurana Pereira Pinto, (1979) 1 SCC 92] , Hitendra Vishnu Thakur [Hitendra Vishnu Thakur v. State of Maharashtra, (1994) 4 SCC 602 : 1994 SCC (Cri) 1087] and Thirumalai Chemicals Ltd. [Thirumalai Chemicals Ltd. v. Union of India, (2011) 6 SCC 739 : (2011) 3 SCC (Civ) 458] cases to contend, that the law relating to forum being procedural in nature, an amendment which altered the forum, would apply retrospectively. Whilst the correctness of the aforesaid contention cannot be doubted, it is essential to clarify, that the same is not an absolute rule. In this behalf, reference may be made to the judgments relied upon by the learned counsel for the respondent, and more importantly to the judgment rendered in Dhadi Sahu case [CIT v. Dhadi Sahu, 1994 Supp (1) SCC 257] , wherein it has been explained, that an amendment of forum would not necessarily be an issue of procedure. It was concluded in the above judgment, that where the question is of change of forum, it ceased to be a question of procedure, and becomes substantive and vested, if proceedings stand initiated before the earlier prescribed forum (prior to the amendment having taken effect). This Court clearly declared in the above judgment, that if the appellate remedy had been availed of (before the forum expressed in the unamended provision) before the amendment, the same would constitute a vested right.
However, if the same has not been availed of, and the forum of the appellate remedy is altered by an amendment, the change in the forum, would constitute a procedural amendment, as contended by the learned counsel for the WP(C) No. 36951/2017 & WA No.1554/2017 -:18:- appellant. Consequently even in the facts and circumstances of the present case, all such appeals as had been filed by the Board, prior to 29-10-2002, would have to be accepted as vested, and must be adjudicated accordingly."
13. The validity of Section 60 of the Madras Co-operative Societies Act 1932, which is similar to Section 101 of Act, has been upheld by the Apex Court in The Registrar of Co- operative Societies and another v. K. Kunjabmu and others (AIR 1980 SC 350). The Apex Court in paragraphs 11 to 13 of the judgment, held as under:
"11. Let us now turn to Section 60 of the Madras Co-operative Societies Act, 1932 whose vires is in question and which is as follows :-
"Section 60 :- 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,"
The provision is a near Henry VIII clause. But to give it a name is not to hang it. We must examine the preamble, the scheme and other available material to see if there are any discernible guidelines. Sure the Co-operative Societies Act is a welfare legislation. Its preamble proclaims :-
"Whereas it is expedient further to facilitate the formation and working of co-operative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about WP(C) No. 36951/2017 & WA No.1554/2017 -:19:- better living, better business and better methods of production and for that purpose to consolidate and amend the law relating to co-operative societies in the State of Madras."
12. The policy of the Act is there and so are the guidelines. Why the legislation? "To facilitated the formation and working of Co-operative Societies". Co-operative Societies, for what purpose? "For the promotion of thrift, self-help and mutual aid". Amongst whom? "Among agriculturists and other persons with common economic needs". To what end? "To bring about better living, better business and better methods of production". The objectives are clear; the guidelines are there. There are numerous provisions of the Act dealing with registration of societies, rights and liabilities of members, duties of registered societies, privileges of registered societies, property and funds of registered societies, inquiry and inspection, supersession of committees of societies, dissolution of societies, surcharge and attachment, arbitration etc. We refrain from referring to the details of the provisions except to say that they are generally designed to further the objective set out in the preamble. But numerous as the provisions are, they are not capable of meeting the extensive demands of the complex situations which may arise in the course of the working of the Act and the formation and the functioning of the societies. In fact, the too rigorous applications of some of the provisions of the Act may itself occasionally result in frustrating the very objects of the Act instead of advancing them. It is to provide for such situations that the Government is invested by Section 60 with a power to relax the occasional rigour of the provisions of the Act and to advance the objects of the Act. Section 60 empowers the State Government to exempt a registered society from any of the provisions of the WP(C) No. 36951/2017 & WA No.1554/2017 -:20:- Act or to direct that such provision shall apply to such society with specified modifications. The power given to the Government under Section 60 of the Act is to be exercised so as to advance the policy and objects of the Act, according to the guidelines as may be gleaned from the preamble and other provisions which we have already pointed out, are clear.
13. We are therefore of the view that Section 60 is not void on the ground of excessive delegation of legislative power. We so declare and otherwise dismiss the appeal."
14. Still further, a learned Single Judge of this Court in Pambady Rural Co-op. Housing Society v. Joint Registrar (1986 KLT 921) has upheld the constitutional validity of Section 101 of the Act. Paragraph 4 of the judgment reads as under:
"4. It is well known that the working of a statute may create problems or difficulties unanticipated at the time of the enactment of a legislation. It is necessary that sufficient enabling provisions are made to get over such problems and difficulties. To seek a legislative cure, is necessarily a time consuming process. Emergent situations would require speedy action. Such situations may be of diverse characters. It will be virtually impossible if a legislative amendment is to be sought for, for tiding over such situations, when public interest would justify a departure from the existing provisions. The power to exempt is a necessary power. The possibility of its abuse has to be provided for. Conferring power on the Government itself is one way of checking the abuse. Even the exercise of power by the Government is hedged in by conditions. The exemption can be granted only if public interest demands the same. Yet WP(C) No. 36951/2017 & WA No.1554/2017 -:21:- another safeguard is that the reasons have to be recorded when any such order is issued. These provisions give sufficient protective cover to S.101 when it is assailed on the ground of violation of Art.14 of the Constitution. The fact that similar provisions have been in existence for many decades, is also an indication not necessarily conclusive of the reasonableness and necessity of such a provision. I repel the contention that S.101 has the vice of uncanalised and arbitrary power."
15. We may also refer to two Division Bench judgments of this Court, which dealt with the power of the Government to grant exemption under Section 101 of the Act.
(i) Feroke Service Co-op. Bank Ltd. v. State of Kerala [1995 (2) KLT 404]. Paragraph 6 is relevant, which reads as under:
"6. Section 101 of the Act empowers the Government to exempt any society or any class of societies from any of the provisions of the Act on the basis of public interest. Section 101 provides that the Government may, if they are satisfied that it is necessary to do so in the public interest, by general or special order for reasons to be recorded, exempt any society or any class of societies from any of the provisions of the Act or direct that such provisions shall apply to such society or class of societies subject to such modifications as may be specified in the order. From a reading of S.101 it can be discerned that the Government in order to safeguard public interest can exempt any society or any class of societies from any of the provisions of the Act. S.60 of the WP(C) No. 36951/2017 & WA No.1554/2017 -:22:- Madras Co-operative Societies Act is similar to S. 101 of the Kerala. Co-operative Societies Act. While dealing with S.60 of the Madras Service Co-operative Societies Act in Registrar, Co-operative Societies v. K.Kunjambu (AIR 1980 SC 350) the Supreme Court held that the Section has been provided to relax the occasional rigour of the provisions of the Act and to advance the object of the Act. The Supreme Court further observed that S.60 empowers the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provision shall apply to such society with specified modification. As the power given to the Government under S.101 of the Kerala Co-operative Societies Act can very well be exercised by the Government to advance the policy and objects of the Act and to safeguard public interest, it is not possible for us to hold that the power under S.101 is in anyway limited or curtailed by S.7(l)(c) of the Act. As wide power is given to the Government under this Section taking into consideration the overall public interest it cannot be held that in a particular situation where public interest demands S.7(l)(c) cannot be relaxed. However, we make it clear the power under S.101 cannot be used by the Government in a whimsical or arbitrary manner. Only in such cases where public interest demands that the said power can be exercised."
(ii) Joseph Zacharia & Anr. v. State [1996 (1) KLT 199]. Paragraphs 5 and 6 are relevant, which reads as under:
"5. S.101 empowers the Government either to exempt any society (or any class of societies) from any of the provisions of the Act or to direct that such provision shall apply to such society subject to the modifications WP(C) No. 36951/2017 & WA No.1554/2017 -:23:- specified in the order. In other words, the modification of the provision is intended to effectuate the exemption envisaged in the section. It cannot be forgotten that the power in S.101 is only to grant exemptions from the provisions of the Act.
6. What is meant by the expression "exempt" in the section? It seems to be a process by which a society is liberated from any trammel, condition, obligation or liability created under the Act. Exempting process cannot be stretched to deprive a society of any benefit or right under the Act. In Webster's dictionary the meaning of the word "exempt" is given as "to free or permit it to free from any burden, promise or duty to which others are subject; to grant immunity to." Similar is the meaning attached to the word "exempt" in Oxford dictionary as "free from any (obligation)".
16. In so far as Section 101 of the Act has been held to be constitutionally valid, there cannot normally be any limitation on the power of the Government. But still the exercise of such power has to be considered on a case to case basis in order to understand whether the power is exercised in public interest. As held by the Apex Court in K. Kunjabmu (supra), some of the provisions of the Act may itself result in frustrating the very object of the Act, instead of advancing them, and it is to provide for such situations that the Government is invested with a power WP(C) No. 36951/2017 & WA No.1554/2017 -:24:- to relax the occasional rigour of the provisions of the Act and to advance the objects of the Act. It is held that Section 60 of the Madras Act empowered the State Government to exempt a registered society from any of the provisions of the Act or to direct that such provision shall apply to such society with specified modifications.
17. The only restriction to exercise the power under S.101 of the Act is as held in Feroke Service Co-operative Bank Ltd.'s case (supra) that the said power cannot be used in a whimsical or arbitrary manner and the power can be exercised only when public interest demands to exercise such a power. Apparently, S.101 empowers the Government to exempt any society from any provisions of the Act. Exemption itself means and as held in Joseph Zacharia (supra) that the society is liberated from any trammel, condition, obligation or liability created under the Act. However, such exemption cannot be stretched to deprive a society of any benefit or right under the Act.
18. In Sankaranarayanan (supra), the correctness of which we are asked to consider, this Court held that "the subsequent exemption by the Government could not have WP(C) No. 36951/2017 & WA No.1554/2017 -:25:- retroactively operated, so as to validate the resolution passed earlier which was invalid at the time of its inception". That was a case in which there was a clear finding that at the time when the resolution was passed by the General Body on 10/1/1953, the society had no power to contribute to a charitable purpose more than 10% of the profits that remained after carrying a fourth of the net profits to the reserve fund. Therefore, we are of the view that Sankaranarayanan's case (supra) was decided on its own facts and cannot be treated as a proposition that the Government could not retroactively operate the exemption clause under S.60 of the Madras Act.
19. In Benny Peruvanthanam's case (supra), a learned Single Judge of this Court had while upholding the validity of S.101 of the Act, after referring to the judgments of the Apex Court in Strawboard Manufacturing Co v. G.Mill Workers' Union (AIR 1953 SC 95), Indramani v. W.R.Natu [AIR 1963 SC 274], I.T.Officer, Alleppey v. M.C.Ponnoose (AIR 1970 SC 385) and Bakul Cashew Co. v. Sales Tax Officer (1986 (62) STC
122), held that unless the legislature specifically grants power to the delegate to legislate retrospectively, no such power can be WP(C) No. 36951/2017 & WA No.1554/2017 -:26:- exercised in making subordinate legislation. It was therefore held that what has been done by the exemption notification is not to exempt sub-section (2A) of S.31 from its application to apex or semi societies but to revive the office of nominated persons which stood terminated on sub-section (2A) being introduced in the statute. It was held that what the legislature consciously left out cannot be saved by the Government by exercising the power of delegated legislation. Thereafter, learned Single Judge held that S.101 does not grant any power to exempt provisions of the Act retrospectively.
20. In fact, in D.Janardhana Rao (supra), the question considered by the Apex Court was whether Rule 47 of the Andhra Pradesh State and Subordinate Service Rules permits relaxation of any rule with retrospective effect. Rule 47 reads as under;-
"47. Relaxation of rules by the Governor.--No rule made under the proviso to Article 309 of the Constitution of India or continued under Article 313 of the Constitution shall be construed to limit or abridge the power of the Governor to deal with the case of any class or category of person for being appointed to any civil post, or of any person serving in a civil capacity under the Government of Andhra Pradesh in such manner as may appear to him to be just and equitable:
WP(C) No. 36951/2017 & WA No.1554/2017 -:27:- Provided that, where any such rule is applicable to the case of any person or a class of persons the cases shall not be dealt with in any manner less favourable to the person or class of persons than that provided by that rule."
The power given to the Governor was to relax the rigour of the General rules in such manner as may appear to be just and equitable. The three Judge bench of the Apex Court held that the power under Rule 47 is to be exercised in the interest of justice and equity. An occasion for acting under Rule 47 may well arise after the attention of the Government is drawn to a case, when there has been a failure of justice. It was therefore held that in such case, justice can be done only by exercising power under Rule 47 with retrospective effect, otherwise the purpose and object of the rule will be largely frustrated. Though a contention was raised that Rule 47 was meant to be applied prospectively, the said contention was negatived. Paragraph 9 of the said judgment reads as under:-
9. Counsel for the respondents drew our attention to the words "for being appointed" in Rule 47 to contend that the rule was meant to be applied only prospectively. According to counsel the rule when it says that nothing in the general rules shall limit or abridge the power of the Governor to relax the rigour WP(C) No. 36951/2017 & WA No.1554/2017 -:28:- of these rules in the case of any class or category of persons "for being appointed to any civil post", it contemplates an appointment in future. We do not think that this contention has any force. The words "for being appointed" in the context in which they appear, do not necessarily refer to a future appointment. The validity of an appointment to any civil post may be questioned after the appointment has been made, and there is nothing in Rule 47 to indicate that the Governor in exercise of power under this rule cannot deal with such a case, if this was required in the interest of justice and equity."
The above judgment was followed in P.V.T.Phillip (supra), M.Venkateswarlu (supra) and Santosh Kumar (supra). Apparently these judgments have been rendered in the light of service rules, where the orders having retrospective operation are issued to prevent injustice and to be fair and reasonable. Further to cure an injustice, an event should definitely occur and only when the Government understands on a future date that there has been failure of justice, that orders could be issued to remedy the injustice, which in any event will have to be retrospective in operation. The judgments of this court in Showkath Ali A.P (supra), Tessymole (supra) and Sherafuddin (supra), also come under the same category. Therefore, these judgments may not have application to the facts of the present case, and cannot be WP(C) No. 36951/2017 & WA No.1554/2017 -:29:- treated as an authority for the proposition that delegated legislation can be prospective or retrospective.
21. Let us now analyse the judgments relied upon in Benny Peruvanthanam's case (supra). In Strawboard Manufacturing Co. Ltd. (supra), an industrial dispute had been referred by the Governor to the Labour Commissioner or to a person nominated by him with the direction that the award should be submitted not later than April 5, 1950. The award was made on April 13, 1950. On April 26, 1950, the Governor issued a notification extending the time up to April 30. The Apex Court held that in the absence of a provision authorising the State Government to extend the period within which the Tribunal or the adjudicator could pronounce the decision, the State Government had no authority to extend the time and the award was, therefore, one made without jurisdiction and a nullity.
22. Indramani (supra) is a Constitution Bench Judgment. The Majority view has in fact upheld the subordinate legislation, though it was having retrospective operation. It was held that: "It is clear law that a statute which could validly enact a law with retrospective effect could in express terms validly confer upon a WP(C) No. 36951/2017 & WA No.1554/2017 -:30:- rule-making authority a power to make a rule or frame a bye-law having retrospective operation............If this were so the same result would follow where the power to enact a rule or a bye-law with "retrospective effect" so as to affect pending transactions, is conferred not by express words but where the necessary intendment of the Act confers such a power. If in the present case the power to make a bye-law so as to operate on contracts subsisting on the day the same was framed, would follow as a necessary implication from the terms of Section 11, it would not be necessary to discuss the larger question as to whether and the circumstances in which subordinate legislation with retrospective effect could be validly made." It was further held that:
"It is therefore manifest that Section 11 authorises the framing of a bye-law which would operate retrospectively in the sense that it affects rights of parties under subsisting contracts."
23. However, SUBBA RAO, J., in a separate judgment held that the legislature can always legislate retrospectively, unless there is any prohibition under the Constitution which has created it. But the same rule cannot obviously be applied to the Central Government exercising delegated legislative power, for the scope WP(C) No. 36951/2017 & WA No.1554/2017 -:31:- of their power is not coextensive with that of Parliament.
24. In M.C. Ponnoose (supra), the Apex Court held as under:
"The courts will not, therefore, ascribe retrospectively to new laws affecting rights unless by express words or necessary implication it appears that such was the intention of the Legislature. 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 persons or authority exercising subordinate legislative functions cannot make a rule, regulation or bye-law which can operate with retrospective effect."
25. In Bakul Cashew (supra), the Apex Court followed the judgment in M.C.Ponnoose (supra).
26. In Director General of Foreign Trade v. Kanak Exports [(2016) 2 SCC 226], the Apex Court approved the judgment in State of Rajasthan v. Basant Agrotech (India) WP(C) No. 36951/2017 & WA No.1554/2017 -:32:- Ltd [(2013) 15 SCC 1], wherein it is held as under:
"There is no dispute over the fact that the legislature can make a law retrospectively or prospectively subject to justifiability and acceptability within the constitutional parameters. A subordinate legislation can be given retrospective effect if a power in this behalf is contained in the principal Act." In this regard we may refer with profit to the decision in Mahabir Vegetable Oils (P) Ltd. v. State of Haryana, wherein it has been held that: (SCC p. 633, paras 41-42) '41. We may at this stage consider the effect of omission of the said note. It is beyond any cavil that a subordinate legislation can be given a retrospective effect and retroactive operation, if any power in this behalf is contained in the main Act. The rule-making power is a species of delegated legislation. A delegatee, therefore, can make rules only within the four corners thereof.
42. It is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication."
27. From the judgments referred above it is rather clear that a statute which affects substantive rights is presumed to be prospective in operation unless made retrospective, either expressly or by necessary intendment. A statute which merely affects procedure, unless a different intention is available, is presumed to be retrospective. However, a statute which is WP(C) No. 36951/2017 & WA No.1554/2017 -:33:- procedural in its character, but affects vested rights adversely is to be construed as prospective. Limitation provisions can be procedural in the context of a certain set of facts but may be substantive in a different set of facts on account of the fact that, rights can accrue to both the parties. An accrued right to plead a time bar, which is acquired after the lapse of the statutory period, is nevertheless a right, even though it arises under an Act which is procedural and a right which is not to be taken away pleading retrospective operation unless a contrary intention is discernible from the statute.
28. Though the legislature can legislate retrospectively, the same rule cannot be applied to the Government exercising delegated legislative power, for the scope of their power is not co-extensive with that of Legislature. In other words, an executive Government exercising subordinate and delegated legislative powers, cannot make legislation retrospective in effect, unless that power is expressly conferred or such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication.
29. Now let us consider the scheme of the Act, and to what WP(C) No. 36951/2017 & WA No.1554/2017 -:34:- extent, the Government will be entitled to exercise their executive power to extend the time for the Registrar to complete with the enquiry under Section 65 of the Act. By the Constitution Ninety-Seventh Amendment) Act, 2011, the citizens right to form co-operative societies has been included as a fundamental right under Article 19(1)(c) and Article 43B has been incorporated for promotion of co-operative societies, as part of directive principles of State policy. Part IXB has been incorporated containing Articles 243ZH to 243ZT. As per the constitutional scheme, State has to frame laws taking into account the provisions of Part IXB. In the State of Kerala, the Act had come into force on 15/5/1969, and had been subject to various amendments from time to time. The preamble to the Act reads as under:
"Preamble.- WHEREAS with a view to provide for the orderly development of the Co-operative sector in the State, it is essential to organize the Co-operative Societies in accordance with Co- operative principles as self governing democratic institutions, to achieve the objects of equity, social justice and economic development, as envisaged in the directive principles of State Policy of the Constitution of India, and to promote scientific and technological development, health care, market intervention and management excellence in the Co-operative Sector it is expedient to consolidate, amend and unify the law relating to Co-operative WP(C) No. 36951/2017 & WA No.1554/2017 -:35:- societies in the State."
30. Apparently, the provisions under the Act, has been made keeping in mind the orderly development of co-operative sector in the State. The statute takes care of the formation and registration of co-operative societies, rights and liabilities of the members, election of managing committee members, conduct of meetings, supersession of managing committee, proper upkeep of its properties, audit, inquiry into its functioning, imposition of surcharge, settlement of disputes, winding up etc.
31. In this case, we are concerned with the power exercised by the Government under Section 101 of the Act, which reads as under:
"101. Power to exempt societies.- The Government may, if they are satisfied that it is necessary to do so in the public interest, by general or special order for reasons to be recorded, exempt any society or any class of societies from any of the provisions of this Act or direct that such provisions shall apply to such society or class of societies subject to such modifications as may be specified in the order."
32. Government order G.O.(P) No.41/2017/Co-op dated 25/7/2017 reads as under:
WP(C) No. 36951/2017 & WA No.1554/2017 -:36:- "GOVERNMENT OF KERALA Co-operation (A) Department ORDER G.O.(P) No.41/2017/Co-op dated 25th July, 2017 S. R. O. No. 483/2017.-WHEREAS, under sub-section (5) of section 65 of the Kerala Co-operative Societies Act, 1969 (21 of 1969), the enquiry under this section shall be completed within a period of six months which period may at the discretion of the Registrar and for reasons to be recorded in writing, be extended from time to time, so however that the aggregate period shall not, in anyway, exceed one year;
AND WHEREAS, an enquiry was ordered by Registrar under sub- section (5) of section 65 of the said Act into the various irregularities, constitution, working and financial condition of Kerala State Co-operative Consumer Federation Ltd. No. 4328 for the period up to 11th October, 2016 and the enquiry was not completed within the said period. The former Managing Director of said Federation had filed WP(C) No. 39358/16 before the Hon'ble High Court of Kerala challenging the period of validity of above said enquiry which was dismissed on 6th March, 2017. Hence Registrar of Co-operative Societies has requested the Government to extend the period of above said enquiry for a further period from 12th October, 2016 to 30th August, 2017.
AND WHEREAS, the Government have considered the matter in detail and found that it is necessary in public interest to extend the period of above enquiry for a further period from 12th October, 2016 to 30th September, 2017.
Now, THEREFORE, in exercise of the powers conferred by section 101 of the Kerala Co-operative Societies Act, 1969 (Act 21 of 1969) the Government or Kerala hereby exempt the Kerala State Co-operative Consumer Federation Ltd. No. 4328 from WP(C) No. 36951/2017 & WA No.1554/2017 -:37:- provision of sub-section (5) of section 65 of the said Act for a further period from 12th October, 2016 to 30th September, 2017 for the limited purpose of enabling the enquiry officer to complete the enquiry.
By order of the Governor, P. VENUGOPAL, Special Secretary to Government."
33. Section 65 of the Act reads as under:
"65. Inquiry by Registrar - (1) The Registrar may,-
(a) on his own motion; or
(b) on an inquiry report of the Vigilance Officer appointed under section 68A; or
(c) on a report of the Director of Co-operative Audit appointed under section 63; or
(d) on an application by the majority of the members of the committee of the society, or by not less than one third of the quorum for the general body meeting, whichever is less; or
(e) on an application by the apex society or financing bank of which such society is a member; or
(f) on an application of a society to which the society concerned is affiliated;
hold an enquiry by himself or by a person authorized by order in writing, into the constitution, working and financial condition of the society, if he is satisfied that it is necessary so to do. (2) The Registrar or the person authorized by him under sub- section (1) shall, for the purpose of an inquiry under this section, have the following powers, namely:-
(a) he shall, at all reasonable times, have free access to the WP(C) No. 36951/2017 & WA No.1554/2017 -:38:- books, accounts, documents, securities, cash and other properties belonging to, or in the custody of the society and may summon any person in possession of or responsible for the custody of any such books, accounts, documents, securities, cash or other properties, to produce the same at any place at the headquarters of the society or at any branch thereof or where there is no working office for the society, at the office of the Registrar or at the office of any of his subordinate officers;
(b) he may summon any person who, he has reason to believe, has knowledge of any of the affairs of the society, to appear before him at any place at the headquarters of the society or any branch thereof and may examine such person on oath; and
(c) (i) he may, notwithstanding any rule or bye-law specifying the period of notice for a general body meeting of the society, himself call a general body meeting or require the President or Secretary of the society to call a general body meeting at such time and place at the headquarters of the society or any branch thereof, to determine such matters as may be directed by him;
(ii) any meeting called under sub-clause (i), shall have all the powers of a general body meeting called under the bye-laws of the society.
(3) When an inquiry is made under this section, the Registrar may communicate the result of the inquiry to the financing bank, if any, to the society to which such society is affiliated and to the Circle Co-operative Union.
(4) When an inquiry made under this section reveals only minor defects which, in the opinion of the Registrar, can be remedied by the society, he shall communicate the result of the inquiry to the society and the society, if any, to which that society is affiliated.
He shall also direct the society or its officers to take such action WP(C) No. 36951/2017 & WA No.1554/2017 -:39:- within the time specified therein to rectify the defects disclosed in such inquiry.
(5) The enquiry under this section shall be completed within a period of six months which period may at the discretion of the Registrar and for reasons to be recorded in writing, be extended from time to time, so however that the aggregate period shall not in anyway, exceed one year.
(6) If the Registrar, on completion of the enquiry finds that there is a major defect in the constitution or working or financial condition of the society, he may initiate action in accordance with the provisions of section 32."
34. No doubt, the time specified to conduct enquiry as contemplated under Section 65, is part of a procedure under the statutory scheme. However, the Registrar has been authorised to complete the enquiry within a specified time and at any rate it shall not exceed one year. By virtue of the order aforesaid, Government had exempted the society from the operation of Section 65(5) until completion of the enquiry. The Government order is issued after, expiry of the period prescribed for enquiry and has the effect of extending the time retrospectively. Apparently the enquiry by the Registrar does not create any vested right on any member of the managing committee. After the enquiry only if it is found that there has been a major defect, he may initiate further action as contemplated under section WP(C) No. 36951/2017 & WA No.1554/2017 -:40:- 65(6) of the Act, in which event alone a right to defend arises to an individual. The short question, therefore, is whether the Government can exercise the said power, which has a retrospective effect.
35. In fact, Section 101 of the Act, empowers the Government with wide powers, to ensure smooth functioning of the societies as envisaged under the statute. At times, there might be difficulty faced by a society or societies in complying with the provisions of the statute, in which event, the statute itself has provided a machinery to set right such deficiencies. Such power can be exercised only in public interest, which of course is a matter to be considered on a case to case basis. Therefore, the power to be exercised under Section 101 of the Act, can occur in some cases only after the event had occurred. For example, in the case on hand, the Registrar could not complete the enquiry within the time limit specified under Section 65(5), on account of the fact that voluminous documents had to be verified to prepare a report. Is it that the enquiry should be stopped or should he ask the Government to exempt the society from the limitation of time specified to complete the report. If the WP(C) No. 36951/2017 & WA No.1554/2017 -:41:- enquiry is stopped after the specified time, the Government will not have the advantage of monitoring the accounts of the society, which is not the purport of the statutory scheme. The Registrar could ask for exemption from the provision under Section 65(5) only after the time limit has expired. Therefore, taking into account the statutory scheme in which Government and the statutory authorities have control over the functioning of the societies, though not expressly stated, Government's power to issue orders of exemption under Section 101 retrospectively is implicit.
36. A bare reading of the Rule making power under Section 109 will clarify the position. Section 109(1) reads as under:
"109. Power to make rules (1) The Government may, for the whole or, any part of the State and for any class of societies, after previous publication by notification in the Gazette, make rules either prospectively or retrospectively to carry out the purposes of this Act."
The words "either prospectively or retrospectively" is a power granted to the Government for the purpose of framing rules. Therefore, when the Government has the power to frame rules retrospectively, while exercising power under Section 101 also, WP(C) No. 36951/2017 & WA No.1554/2017 -:42:- the Government can retrospectively issue orders.
37. Section 101 of the Act, is intended to subserve public interest and therefore, in public interest, if it is felt by the Government that exemption has to be given to any society from the provisions of the Act retrospectively, the said power is not taken away in any manner. However, each case will have to be considered on its own merits in order to evaluate whether the power of exemption had been exercised in public interest. There might be instances where a vested right had been created in favour of any person on account of the statutory mandate. In such circumstances, the State Government cannot exercise the power of exemption retrospectively, but in respect of procedural matters, there is absolutely no restriction on the part of the Government in granting exemption retrospectively.
In the light of the above discussion, we answer the reference as under:-
(i) That S.101 of the Act can have retrospective operation subject to the limitation that vested rights cannot be taken away by invoking the above provision.
(ii) To the extent mentioned above, the judgments in WP(C) No. 36951/2017 & WA No.1554/2017 -:43:- Sankaranarayanan (supra) and Benny Peruvanthanam (supra) do not lay down the correct law.
Registry shall place the matter for hearing before the appropriate court.
Sd/-
A.M.SHAFFIQUE JUDGE Sd/-
SUNIL THOMAS JUDGE Sd/-
GOPINATH P.
Rp JUDGE