TaxTMI 
TaxTMI 
2014 (4) TMI 1210
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....ench in this case, having disagreed with the view taken by another Division Bench of this Court in Shankarappa Mallappa Kelageri and others vs. The Co-operative Election Commission, Karnataka State and others, W.A. Nos. 100076-80 & 100081-83/2014, formulated the following questions which consequently required determination by the Full Bench: "i) Whether Section-28-A(4) of the Karnataka Cooperative Societies Act, 1959, as substituted by the amended Act dated 11.02.2013, is prospective or retrospective in nature? ii) When the elections are to be conducted to a cooperative society by the second respondent-State Cooperative Societies Election Commission-and for any reason if the Election Commission fails to conduct the elections within the stipulated time, whether an Administrator can be appointed automatically under Section 28-A(5) of the Act? and iii) Whether Section-28-A(4) is ultra vires?" 2. The appellant-Hassan Co-operative Milk Producers Societies Union Ltd., which is a 'Federal Society' as defined by Section 2(e-4) of the Karnataka Cooperative Societies Act, 1959 (for short "the Act"), shall be hereinafter referred to as &....
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.... mischief sought to be prevented and they, by interpretative process, can declare whether the said amendment is prospective or retrospective". Having so observed, the Division Bench refused to grant interim order as prayed for in the writ petition holding that their (Committee/Board) term came to an end on 31st March 2014. 5. The Division Bench in Hassan Milk Union independently considered the provisions contained in Section 28-A(4) of the Act and so also the judgment in S. M Kelagiri to take a divergent view on the question decided by the Division Bench in that case. In the order of reference dated 20.03.2014, in this appeal, the Division Bench observed that "when a provision of law has been amended by way of a substitution, it relates back to the date of the Act unless otherwise specifically stated." It was further observed that "it is well within the wisdom of the legislature to bring about the amendment by way of an addition, deletion, insertion etc. It has, however, chosen that the present amendment should be a substitution and not otherwise. It has deliberately not assigned date of substitution since a substitution, always relates back to the date of enactment unless other....
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....e Societies whose term comes to end by 31-3-2014, the election could be held to elect the new managing Committee after the expiry of the present term (five co-operative years) but, until the elections are held, an Administrator could be appointed to enable him to conduct the elections, and therefore, there was no need to resort to removal of difficulty clause as suggested by the Election Commission. 6.2. The Managing Committee of Hassan Milk Union was elected on 1-7-2009 for a period of five co-operative years as contemplated by Section 28-A(4) of the Act, i.e. till the end of 31-3-2014. Even before expiry of their term on 31-3-2014, an amendment vide the amending Act No. 3/2013 was introduced whereby, the words 'five cooperative' years, as occurred in sub-section (4) of Section 28-A of the Act, were substituted by the words "five years from the date of election". In this view of the matter, Hassan Milk Union and members of its Managing Committee approached this Court by way of writ petition, apprehending the appointment of an Administrator in view of the communication dated 29-1-2014. 6.3. Writ Appeal Nos. 792-796/2014, though technically arise from the order dated 7....
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....ittee is not constituted under Section 29-A, on the date of expiry of the term of office of the committee or if the elections are not held within the time limits specified in Section 39-A. Next, he submitted that it is the cardinal principle of construction that every statute is prima facie prospective unless it is expressly or by necessary implication made to have a retrospective operation. He submitted that in view of the scheme of the provisions contained in the amended Sections 28-A, 28-B, 29-A and 39-A of the Act, and the provisions of the Constitution introduced by way of 97th amendment, it is clear that the legislature, intended to give retrospective effect to these provisions. In support, Mr. Patil placed reliance upon the judgments of the Supreme Court in Zile Singh v. State of Haryana and others, AIR 2004 SC 5100; Government of India and others v. Indian Tobacco Association, (2005) 7 SCC 396; and Shamrao Parulekar and others v. District Magistrate, Thana Bombay and others, AIR 1952 SC 324. 7.2. Mr. A.S. Ponanna, Prl. Govt. Advocate appearing on behalf of respondents-1 and 3 to 6, on the other hand, submitted that when substitution takes place, unless the amending Act s....
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....necessary implication made to have a retrospective operation. But the rule in general is applicable where the object of the statute is to affect vested rights or to impose new burdens or to impair existing obligations. Unless there are words in the statute sufficient to show the intention of the Legislature to affect existing rights, it is deemed to be prospective only 'nova constitutio futuris formam imponere debet non praeteritis' - a new law ought to regulate what is to follow not the past. (See: Principles of Statutory Interpretation by Justice G.P. Singh, Ninth Edition, 2004 at p. 438). It is not necessary that an express provision be made to make a statute retrospective and the presumption against retrospectivity may be rebutted by necessary implication especially in a case where the new law is made to cure an acknowledged evil for the benefit of the community as a whole (ibid, p. 440). 15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, Seventh Edition), it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enac....
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....n results in repeal of the earlier provision and its replacement by the new provision (see Principles of Statutory Interpretation, ibid., p. 565).........In West U.P. Sugar Mills Assn. case a three-Judge Bench of this Court held that the State Government by substituting the new rule in place of the old one never intended to keep alive the old rule. Having regard to the totality of the circumstances centering around the issue the Court held that the substitution had the effect of just deleting the old rule and making the new rule operative....." 8.4. In Sham Rao V Parulekar, (supra) the Preventive Detention Act 1950 was due to expire on the first of April 1951, but in that order, an amending Act was passed which, among other things prolonged its life to the first of April 1952. The order of detention in the case before the Supreme Court was passed under the Act of 1950 as amended by Act of 1951. According to the above decision of the Supreme Court the detention would have expired on the first of April 1952 when the Act of 1950 as amended in 1951 would itself have expired. But fresh Act was passed in 1952, namely, the Preventive Detention (Amendment) Act, 1952. The effect of this ....
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....uit. However, the position in law would be different in the matters which relate to procedural law but so far as substantive rights of parties are concerned they remain unaffected by the amendment in the enactment. We are, therefore, of the view that where a repeal of provisions of an enactment is followed by fresh legislation by an amending Act, such legislation is prospective in operation and does not affect substantive or vested rights of the parties unless made retrospective either expressly or by necessary intendment......" 9. It is in this backdrop, we now proceed to have a glance at the relevant provisions of the Act as they stand before and after the amending Act No. 3 of 2013. 9.1. Sub-section (4) and sub-section (5) of Section 28-A are relevant for our purpose. Sub-section (4) as it stood before the amending Act No. 3 of 2013 read thus: "(4) Subject to the provisions of Section 29A and 39A, the term of office of the members of the committee shall be five Co-operative years and they shall be deemed to have vacated office as such members of the committee on the date of completion of the said term." (emphasis supplied) The proviso and explanation to t....
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....-A was once again amended by the amending Act No. 3 of 2013 whereby, the word "committee", not only in this provision but wherever it occurred in the Act was substituted by the word "board". Insofar as sub-section (4) is concerned, the words "five co-operative years" were substituted by the words "five years from the date of election". Insofar as subsection (5) is concerned, it remained the same. 9.6. By the amending Act No. 3 of 2013, the legislature made the term of elected board five years from the date of election. In sub-section (5) of Section 28-A, by the amending Act No. 6 of 2010, one more contingency/situation was inserted, whereby, the Registrar was conferred with the power to appoint an administrator if the elections are not held within the time limits specified in Section 39-A, in addition to the situation, if the new Board is not constituted under Section 29-A, on the date of expiry of the term of office of the Board. 10. That takes us to consider Section 29-A of the Act. This provision deals with the commencement of term of office. It would be relevant to reproduce Section 29-A as it stood prior to the amendment Act No. 3 of 2013, which reads thus: &nbs....
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....rimary societies, secondary societies, federal societies and apex societies. The amended sub-section (2) only is relevant for our purpose. 11.1. Again, by the amending Act No. 3 of 2013, Section 39-A was amended with effect from 11.2.2013. By this amendment, no significant changes were made, insofar as these appeals are concerned. The amended provision specified time limits for the elections of Boards of societies of all categories and further provided that the incumbent boards of all such co-operative societies shall continue to be in their respective offices till the conduct of the elections, as provided therein. Further, it provided that the Election Commissioner should start the preparatory work for the conduct of elections during the last six months prior to the expiry of the term of office of the board and till the elections are conducted the incumbent board shall continue in their respective office. 12. Section 28-B, in particular, sub-section (2) thereof is also relevant to know the intendment of the legislature. Sub-section (2) prior to its amendment by the Amending Act No. 3 of 2013 and after the amendment remained the same except the substitution of the word 'c....
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....f the existing boards/committees would continue till expiry of the term of five years from the date of their elections, and since the said term has not yet expired, they shall continue till the elections are held within the time limits specified in Section 39-A of the Act or till the newly elected board assume office or the term of outgoing board expires, whichever is later. We make it clear, that we are not considering a situation, where the term of the elected Board, as provided for under sub-section (4) of Section 28-A, once gets over whether such board would also continue till the elections are held within the time limits specified under Section 39-A of the Act. Such contingency/situation, has not arisen in the present cases apart from the fact that none of the appellants/petitioners made such prayer in the writ petitions. Thus, if the amended sub-section (4) of Section 28-A is held to be retrospective in operation, the term of the boards/committees in all these appeals would stand extended till expiry of the period of five years from the date of their election and they shall continue till the time limits specified in Section 39-A of the Act to hold elections get over. 15. I....
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....h the provisions of this Part, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is less." 15.3. On a conjoint reading of the aforesaid Articles, it is clear that the term of office of the elected members of the board and its office bearers is prescribed as five years from the date of election and the term of the office bearers is co-terminus with the term of the board. The election of a board has to be conducted before the expiry of the term of the board so as to ensure that the newly elected members of the board assume office immediately on the expiry of the office of members of the outgoing board. The prescription of the term of office of the elected members of the board of a Co-operative Society may vary from State to State. Therefore, Article 243ZT has provided a non obstante clause stating that any prescription contrary to clause (2) of Article 243ZJ shall continue to be in force till the period it is amended or repealed by a competent Legislature or until expiration of one year from the date of commencement of the constitutional amendment, wh....
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....ation. This can be achieved by express enactment or by necessary implication from the language employed. As observed by the Supreme Court, in the absence of a retrospective operation having been expressly given, it is necessary to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity. 18. The retrospectivity is liable to be decided on a few touchstones such as the words used must expressly provide or clearly imply retrospective operation and the retrospectivity must be reasonable and not excessive or harsh. (See National Agricultural Co-operative Marketing Federation of India Limited vs. Union of India (2003) 5 SCC 23). Thus, the absence of a provision expressly giving retrospective operation to the legislation is not determinative of its prospectively or retrospectivity. The other factors will have to be seen to find out whether the amendment was necessarily intended to have retrospective effect and if one can unhesitatingly conclude in favour of retrospectivity there is no reason why the Court should hesitate in giving the Act or the relevant provision that operation unless prevented....
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.... between supersession of rule and substitution of a rule and held that the process of substitution consists of two steps: first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. Thus, what emerges from the aforesaid judgments of the Supreme Court is that an amendment which has the effect of substitution of a provision has the effect of replacing the old provision by the substituted provision and in the absence of repugnancy, inconsistency and absurdity, must be construed as if it has been incorporated in the Act right from ab-initio. In other words, an amendment by way of substitution has retrospective operation. 22. The State Government, in the present case, by substituting new provisions of the Act in the place of old one, in our opinion, did not intend to keep alive the old provisions, otherwise, it would have made its intention clear in the amending Act No. 3 of 2013. Having regard to the totality of the circumstances centering around the issue, we have no hesitation to hold that substitution, by the amending Act No. 3 of 2013, had the effect of just deleting the old provisions and making the new provisions operative as i....
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....ssume charge on expiry of the period of five years from the date of elections of the existing boards. This Bench has so recorded in order dated 21.4.2014. 26. The Board of Hassan Milk Union was elected on 1st July 2009 and their term as per the amended provisions contained in Sub-section (4) of Section 28-A of the Act would come to an end on 30th June 2014. It is mandatory to hold elections within the time limits specified under Section 39-A of the Act. In this view of the matter, the second question as formulated by the Division Bench while making reference to the Full Bench need not be answered and suffice it to say that till the elections are conducted and charge is handed over to the newly elected board, the existing members of the board shall continue to hold office. We have not entered into a question whether the Registrar or any other officer within whose jurisdiction the society is situated, and who is authorised by the Registrar can take charge as administrator on expiry of term of office of the members of the board, as provided for under sub-section (4) of Section 28-A viz., of five years from the date of election. Since none of the appellants/petitioners raised such i....