2011 (9) TMI 998 - SC - Indian Laws

Whether the Act 2006 is arbitrary, discriminatory or unreasonable or has taken away the accrued rights of the Milk Dairy Societies registered directly under the Act 1995 or got conversion of their respective registration under the Act 1964 to the Act 1995?

Issues Involved:
1. Constitutionality of the Andhra Pradesh Mutually Aided Co-operative Societies (Amendment) Act, 2006.
2. Violation of Article 14 and Article 19(1)(c) of the Constitution.
3. Retrospective application of the Act 2006.
4. Breach of promissory estoppel.
5. Government control over co-operative societies.

Detailed Analysis:

1. Constitutionality of the Andhra Pradesh Mutually Aided Co-operative Societies (Amendment) Act, 2006:
The Supreme Court upheld the High Court's decision that the Andhra Pradesh Mutually Aided Co-operative Societies (Amendment) Act, 2006 (Act 2006) is unconstitutional. The High Court had struck down the provisions of the Act 2006, which excluded dairy co-operative societies from the purview of the Andhra Pradesh Mutually Aided Co-operative Societies Act, 1995 (Act 1995) and brought them under the Andhra Pradesh Co-operative Societies Act, 1964 (Act 1964). The Court found that the Act 2006 was arbitrary and lacked a rational basis for creating a separate class for dairy co-operatives.

2. Violation of Article 14 and Article 19(1)(c) of the Constitution:
The Court held that the Act 2006 violated Article 14 (Right to Equality) and Article 19(1)(c) (Right to form associations or unions) of the Constitution. The classification of dairy co-operative societies as a separate class was found to be without any scientific or rational basis. The Act 2006 imposed unreasonable restrictions on the right to form associations by forcing societies registered under the Act 1995 to be deemed as registered under the Act 1964, thereby infringing on their autonomy and democratic functioning.

3. Retrospective Application of the Act 2006:
The retrospective application of the Act 2006, which deemed societies registered under the Act 1995 to be registered under the Act 1964 from the date of their original registration, was found to be arbitrary and unreasonable. The Court emphasized that retrospective legislation should not interfere with vested rights or accrued benefits unless there is a compelling reason, which was absent in this case.

4. Breach of Promissory Estoppel:
The Court rejected the argument that the doctrine of promissory estoppel applied to the legislature. However, it noted that the State had made certain promises and assurances to the co-operative societies, and the sudden change in law without adequate justification amounted to a breach of those promises. The Court observed that the doctrine of promissory estoppel does not apply to legislative actions, but the principles of fairness and legitimate expectations were violated.

5. Government Control Over Co-operative Societies:
The Court compared the provisions of the Act 1964 and the Act 1995, noting that the former provided for extensive government control over co-operative societies, while the latter ensured minimal state intervention and greater autonomy for the societies. The Act 2006, by bringing dairy co-operatives under the Act 1964, increased government control and undermined the principles of co-operation and democratic functioning. The Court held that such increased control was inconsistent with the national policy on co-operatives and the principles enshrined in the Act 1995.

Conclusion:
The Supreme Court dismissed the appeals, upholding the High Court's judgment that the Act 2006 was unconstitutional. The Court found that the Act 2006 violated Articles 14 and 19(1)(c) of the Constitution, imposed unreasonable retrospective application, and increased government control over co-operative societies, thereby undermining their autonomy and democratic functioning. The appeals were dismissed with no costs.

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