Public-interest directions to co-operative societies can support a factory lease without a general body resolution, if no arbitrariness is shown.

Section 30B of the Karnataka Co-operative Societies Act, 1959 authorises the State Government to issue directions to a co-operative society in public interest and for proper implementation of development programmes. Applied here, that power was held sufficient to direct leasing of a co-operative sugar factory even without a general body resolution, because the factory had suffered heavy losses, remained closed and the lease was framed as a revival measure. Judicial review under Article 226 was confined to mala fides, arbitrariness and unreasonableness; none was found. The lease order and notification were therefore upheld as valid public-interest measures.

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Issues: (i) Whether the State Government could direct leasing of the co-operative sugar factory in public interest without a resolution of the general body of the society. (ii) Whether the impugned lease order and notification were without jurisdiction or liable to be interfered with in writ jurisdiction.

Issue (i): Whether the State Government could direct leasing of the co-operative sugar factory in public interest without a resolution of the general body of the society.

Analysis: The society was a body corporate and its final authority ordinarily vested in the general body subject to the Act, rules and bye-laws. The bye-laws also enabled approval of sale or lease of the society's property. Section 30B of the Karnataka Co-operative Societies Act, 1959 empowered the State Government to issue directions to a co-operative society where it was satisfied that such directions were necessary in public interest and for securing proper implementation of co-operative and other development programmes. In the facts found, the factory had heavy losses, had remained closed, and the proposed long-term lease was treated as a revival measure intended to protect members, farmers, workers and other creditors.

Conclusion: The State Government could issue the direction under Section 30B, and absence of a general body resolution did not invalidate the decision.

Issue (ii): Whether the impugned lease order and notification were without jurisdiction or liable to be interfered with in writ jurisdiction.

Analysis: Judicial review of the decision-making process was confined to examining mala fides, unreasonableness and arbitrariness. The Court found that the State acted in larger public interest, that the lease was designed to revive the factory rather than liquidate the society, and that the proposed arrangement would protect the interests of farmers, employees, financial institutions and the State. On that footing, the impugned orders were held to be just and proper and not vitiated by lack of jurisdiction.

Conclusion: The impugned orders were not liable to be interfered with under Article 226 of the Constitution of India.

Final Conclusion: The challenge to the Government's decision to lease the sugar factory failed, and the writ petition was dismissed because the action was upheld as a valid public-interest measure under the Act.

Ratio Decidendi: Where the statute confers power on the State Government to issue directions to a co-operative society in public interest and for implementation of development programmes, such power may be exercised notwithstanding the absence of a general body resolution, and the resulting decision will not be interfered with in writ jurisdiction absent arbitrariness, mala fides or unreasonableness.

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