Palakkad Service Co-operative Bank Limited and The Secretary, Palakkad Service Co-operative Bank Limited v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE C.K.ABDUL REHIM** **WEDNESDAY, THE 1ST DAY OF OCTOBER 2014/9TH ASWINA, 1936** ## **WP(C).No. 3229 of 2009 (H)** ## **-------------------------------------** ## **PETITIONER(S):** **-----------------------** **1. THE PALAKKAD SERVICE CO-OPERATIVE BANK LIMITED NO.P.1200, KOPPAM AMSOM DESOM, P.O.PALAKKAD, PALAKKAD DISTRICT, REPRESENTED BY ITS VICE-PRESIDENT, K.D.SUVARNAKUMAR.** **2. THE SECRETARY, THE PALAKKAD SERVICE CO-OPERATIVE BANK LIMITED NO.P.1200, KOPPAM AMSOM DESOM, P.O.PALAKKAD, PALAKKAD DISTRICT.** ## **BY SRI.K.RAMAKUMAR, SENIOR ADVOCATE ADVS. SRI.T.RAMPRASAD UNNI SMT.SMITHA GEORGE** ## **RESPONDENT(S):** - **-------------------------** **1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO DEPARTMENT OF CO-OPERATION, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM.** **2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM.** **3. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, PALAKKAD.** **4. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES, (GENERAL), PALAKKAD.** **5. THE MARUTHA ROAD PANCHAYATH SERVICE CO-OPERATIVE BANK LTD.NO. P 1253, MARUTHA ROAD, PALAKKAD, REPRESENTED BY ITS, CHIEF PROMOTER.** **R1 TO R4 BY SENIOR GOVERNMENT PLEADER SRI. SOJAN JAMES R5 BY ADVS. SRI.V.G.ARUN** **SRI.T.R.HARIKUMAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 01-10-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **msv/** ## **WP(C).No. 3229 of 2009 (H)** ## **---------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** ## **-------------------------------------** **EXHIBIT P1: TRUE COPY OF THE RESOLUTION DATED 25.10.1997 TAKEN BY THE GENERAL BODY OF THE PETIITONERS BANK.** **EXHIBIT P2: TRUE COPY OF THE REPRESENTATION BY THE PETITIONERS BANK BEFORE THE 3RD RESPONDENT.** - **EXHIBIT P3: TRUE COPY OF THE REPLY SUBMITTED BY THE PETITIONERS BANK ON 5.1.1998.** **EXHIBIT P4: TRUE COPY OF THE ORDER NO.4891/96/0 DATED 14.6.1999 ISSUED BY THE 3RD RESPONDENT.** **EXHIBIT P4(a): TRUE COPY OF THE CERTIFICATE NO.4891/96/1 DATED 14.6.1999 ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P4(b): TRUE COPY OF THE AMENDED BY-LAWS ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P5: TRUE COPY OF THE JUDGMENT DATED 1.2.2006 IN WA.NO.1808/03 OF THIS HON'BLE COURT.** - **EXHIBIT P6: TRUE COPY OF THE COMMUNICATION NO.3276/2006/0 DATED 29.9.2006 ISSUED BY THE 3RD RESPONDENT.** - **EXHIBIT P7: TRUE COPY OF THE JUDGMENT DATED 1.9.2008 OF THIS HON'BLE COURT IN WP(C) NO.28731/2006.** - **EXHIBIT P8: TRUE COPY OF THE APPEAL FILED BY THE PETITIONERS BEFORE THE GOVERNMENT.** - **EXHIBIT P9: TRUE COPY OF THE ADDITIONAL STATEMENT AND ARGUMENT NOTES FILED BY THE PEITITONERS BEFORE THE GOVERNMENT.** - **EXHIBIT P10: TRUE COPY OF THE GO(MS)NO.841/CO-OP. /08 DATED 31.12.2008 ISSUED BY THE GOVERNMENT.** ## **RESPONDENT(S)' EXHIBITS** ## **---------------------------------------** ## **NIL** **/TRUE COPY/** ## **P.S. TO JUDGE** **msv/** ## **C.K. ABDUL REHIM, J.** ------------------------------------------------- ## **W.P.(c) No. 3229 OF 2009-H** ------------------------------------------------DATED THIS THE 1[st] DAY OF OCTOBER, 2014. ## **J U D G M E N T** The petitioner herein is a registered Co-operative Society which had its approved area of operation extending to Palakkad Municipality, Marutha Road Grama Panchayat, Karinkarapully area in Kodumbu village and Kavilpad area of Puthupariyaram Grama Panchayat. During the year 1996 the 5[th] respondent society had approached the appropriate authority seeking registration for establishment of a society, to operate within the area of Marutha Road Panchayat. On the basis of the application of the 5[th] respondent society, the 3[rd] respondent had initiated steps to request the petitioner society to make necessary amendments in its byelaws, excluding the limits of Marutha Road Panchayat, from its area of operation. The petitioner society through Ext.P2 letter had objected against the proposal, stating inter alia that, the General Body of the society had declined the proposal for the amendment of the bye-laws. But **W.P.(c) No. 3229/2009** -2- considering all the factual aspects, the 3[rd] respondent took a decision in exercise of the power vested under Section 12 (5), to request the petitioner society to make the amendment in Clause 4 of its bye-laws to the extent of deleting Marutha Road Panchayat from its area of operation. Such a direction was issued after complying with the requisite formalities contemplated under sub rule (5). The direction communicated in this regard was not responded by the petitioner society. Therefore Ext.P4 order was issued invoking the power vested on the 3[rd] respondent under Section 12 (6), registering the amendment as directed in the notice. Exhibit P4 (a) is the registration of the amendment of bye-laws effected in exercise of power vested under Section 12 (6) and Ext.P4 (b) is the amendment. By virtue of Ext.P4 (b) the area of operation of the petitioner society is limited to Palakkad Municipality, Pirayiri panchayat, Karinkarapully area of Kodumpu village and Kavilpad area of Puthupariyaram panchayat. Evidently, the petitioner had challenged Ext.P4, P4 (a) and P4 (b) in a **W.P.(c) No. 3229/2009** -3- writ petition filed before this court as OP No.16672/1999. It is stated that the above writ petition was dismissed, against which the petitioner filed W.A No.1808/2003. Exhibit P5 is the judgment rendered by this court in the writ appeal. Noticing the subsequent amendment brought in the byelaws by virtue of a resolution adopted by the petitioner society on 24-12-2001 effecting change in the area of operation with respect to Karinkarapully bhagom and Kavilpad bhagom as Karinkarapully Amsom and Kavilpad Amsom, it was observed that the said amendment would not relate to the area deleted by Ext.P4 order. However, the Division Bench observed that, in view of the stay granted by this court with respect to Ext.P4 order, nothing survives for consideration after the above said amendment. The relevant portion of Ext.P5 judgment is extracted below; “2. The Joint Registrar has now filed an affidavit that the General Body of the Palakkad Service Cooperative Bank had on 24-12-2001, passed a resolution making changes in the area of operation to the following effect. 'Karinkarapully bhagom ## **W.P.(c) No. 3229/2009** -4- Kavilpad bhagom' was amended as Karinkarapully Amsom, Kavilpad Amsom. Since the earlier order dated 14-06-1999 was stayed by this court and the present amendment would not relate to the area deleted by the order dated 14-06-1999, nothing survives for determination, after the affidavit of the 3[rd] respondent, as mentioned above, has been filed. The writ appeal is closed.” 2. Subsequent to the disposal of the case filed by the petitioner society against Ext.P4, the 5[th] respondent Society was granted with registration under the Act. Ext. P6 is the letter issued by the 3[rd] respondent evidencing the above fact. The petitioners again approached this court in another writ petition, WP(C).28731/2006, challenging Ext.P6 communication. In Ext.P7 judgment this court disposed of the writ petition finding that there is a remedy left open to the petitioners to approach the Government under section 83 (1)(j) of the Act. This court directed the Government to dispose of any such appeal filed, within a period of 2 months from the date of the judgment, treating it as an appeal filed in time. Ext. P8 is the appeal filed by the petitioners against ## **W.P.(c) No. 3229/2009** -5- the grant of registration to the 5[th] respondent society, consequent to Ext.P7 judgment. The appeal was disposed of through Ext.P10 order passed by the 1[st] respondent - Government. It is challenging Exts.P4, P4(a), P4(b), P6 and P10 the present writ petition is filed. 3. Eventhough the petitioners had sought for relief to the extent of declaring section 12(5),(6) and (7) of the Act as unconstitutional, void and inoperative, no contentions based on any legal ground was advanced at the time of hearing of the writ petition challenging the constitutional validity of the above said provisions. Hence this court is proceeding to consider only the question of sustainability of the orders impugned. 4. Evidently Ext. P4,P4(a) and P4(b) were subjected to challenge in an earlier litigation before this court, which had culminated in Ext.P5 judgment. In Ext.P5 this court had declined consideration with respect to challenge raised against Ext. P4,P4(a) and P4(b) observing that in view of the subsequent amendment no issue survives for consideration. **W.P.(c) No. 3229/2009** -6- The subsequent amendment does not relates to the deletion of the area of operation with respect to Marutha Road Panchayat. Therefore it is evident that the amendment to the bye-laws of the petitioners society effected through Ext. P4,P4(a) and P4(b), by virtue of exercising powers vested under section 12(6), stands concluded. However, in view of the challenge being agitated in OP.No.16677/99 and WA.1808/2003 and in view of the finality attained to Ext.P5 judgment, this court cannot consider the challenges now raised against the very same proceedings. Hence the conclusion arrived in Ext.P10 to the effect that the amendment to the bye-laws registered under section 12(6) is legal and sustainable, does not suffer from any illegality or infirmity. 5. Sri. K.Ramkumar, learned senior counsel appearing on behalf of the petitioners society contended that, in view of Ext.P7 judgment permitting the petitioners to file appeal against Ext.P6, the petitioners are given liberty to challenge Ext. P4,P4(a) and P4(b). Therefore the **W.P.(c) No. 3229/2009** -7- Government ought to have considered validity of those orders in the appeal, is the contention. But such a contention cannot be accepted since Ext. P4,P4(a) and P4(b) were not subjected to challenge in WP(C). No.28731/2006, which culminated in Ext.P7 judgment. On the other hand, what was challenged in that writ petition was only Ext. P6 communication . Ext.P6 indicates only about the grant of registration in favour of the 5[th] respondent. This court in Ext.P7 judgment made an observation only to the effect that a statutory remedy is available against Ext.P6 under section 83(1)(j). Therefore the contention that, despite Ext.P5 judgment, Ext. P4,P4(a) and P4(b) were left open to challenge in the appeal, cannot be accepted. 6. However, it is noticed that the 1[st] respondent while dealing with appeal in Ext.P10 had gone into consideration about merits of the issue related to the proceedings initiated under section 12(5) and (6). After evaluating the factual situation the Government have arrived at a conclusion that the services rendered by the petitioners **W.P.(c) No. 3229/2009** -8- society is not received to the residents of Marutha Road Panchayat satisfactorily. It is further found that there is absolute necessity to have a co-operative society with the area of operation exclusively for Marutha road Panchayat for the agricultural development in the Panchayat and for the integrated upliftment of the members of the Panchayat. It is also found that, even after excluding the area of Marutha Road Panchayat, the petitioners society had a vast extent of area of operation consisting of one Municipality, one Panchayat and certain areas of 2 other Panchayats. Therefore the exclusion will not in any manner affect the financial position of the petitioners society and it will only facilitate to have effective service rendered to its members comprising of the remaining area of operation. With respect to the factual finding arrived by the 1[st] respondent as mentioned above, which is based on various reports received from the authorities concerned and based on enquiries conducted, cannot be interfered by this court in exercise of powers vested under Article 226. **W.P.(c) No. 3229/2009** -9- 7. Learned senior counsel contended that the 1[st] respondent had failed to consider the will and desire of the members of the petitioners society with respect to the rejection of the proposed amendment. It is contended that the general body of the members being the ultimate authority as far as a society is concerned, it should be given utmost preference in the democratic set up, upon which the society is established. But it is to be noticed that section 12 (5) is an exemptional provision which confers power on the Registrar to request the society to make amendments in the bye-laws for the purpose of altering the area of operation of any society for improving the service rendered by it. If the Registrar has become convinced through materials available that the power vested under section 12(5) need to be exercised in view of satisfaction of any of the requirement mentioned therein, the same cannot be questioned or challenged as it is against the desire of the General Body of the society in question. The statutory powers vested on the Registrar in this regard will definitely ## **W.P.(c) No. 3229/2009** -10- overrule the decision of the society. Hence the contention based on the resolution passed by the society declining the proposal for amendment of the bye-laws cannot be countenanced. 8. Yet another aspect brought to notice of this court by the petitioners is that, in the amendment about which reference is made in Ext.P5 judgment dated 01.02.2006, the petitioners society had included Marutha Road Panchayat also, in its area of operation. It is pointed out that by virtue of a proceedings issued by the 3[rd] respondent on 24.7.2002 the said amendment was registered . It is contended that in view of the said amendment effected in the bye-laws of the society, which was registered and approved by the 3[rd] respondent, the area of Marutha Road Panchayat stands re-included within the jurisdiction of the petitioners society. Hence Ext.P10 cannot be sustained, is the contention. Provisions contained in section 12(6) contemplates that if any request made under sub section (5) is not complied with by the society within the time ## **W.P.(c) No. 3229/2009** -11- stipulated as required by the Registrar, the Registrar is empowered to register the amendments and to issue a copy of such amendments to the society. The society cannot be heard to contend that the General Body had taken a further resolution to nullify the effect of Ext. P4,P4(a) and P4(b) which is issued in exercise of power vested under section 12 (6). Hence this court is of the considered opinion that the inclusion of Marutha Road Panchayat area, in any subsequent resolution adopted by the society, cannot have any legal effect. 9. It is noticed that the petitioners had raised a contention in the appeal before the Government that registration granted to the 5[th] respondent society, which was impugned in the appeal, is unsustainable in view of the non obtainment of exemption under rule 7(1)(c). But as rightly observed in Ext.P10, the requirement under rule 7(1) (c) will not arise in a case where the area of operation of an existing society is already excluded by virtue of power vested under Rule 12(5) and (6). ## **W.P.(c) No. 3229/2009** -12- 10. Under the above mentioned circumstances this court do not find any legal and valid reasons to interfere with Ext.P10 order passed by the Government while disposing the appeal. It is also found that this court cannot interfere with Ext. P4,P4(a) and P4(b) in view of the findings contained in Ext.P5 judgment and in Ext.P10 order. Hence the writ petition fails . 11. Learned senior counsel for the petitioners had pointed out that, during the pendency of the various proceedings, including the writ petition filed after Ext.P4 order, the petitioners Bank had started a branch within the limits of the Marutha Road Panchayat area and it is functioning. Hence the petitioners requested to provide necessary clarification with respect to permitting operation of the said branch. It is contended that a society is entitled to construct its head office or branch at any place beyond the area of operation of the society, which cannot be regarded overlapping of area of operation, unless the Bank is canvassing business from members of the locality within **W.P.(c) No. 3229/2009** -13- the area of operation of the other Bank. Counsel for the 5th respondent had relied on a decision of this court in **Karassery Service Co-operative Bank vs. Mokkam Service Co-operative Bank (2007(1) KLT 555).** However the question related functioning of any branch of the petitioners society within an area of Marutha Road Panchayat, is not an issue germane for consideration in this writ petition. It will be left open to the petitioners society to take appropriate steps as contemplated under the relevant provisions of the Act and the Rules seeking exemption for functioning of the branch, if so advised, before such appropriate authorities. The writ petition is dismissed subject to liberty as mentioned above. Sd/- **C.K. ABDUL REHIM JUDGE** ## **AMG** True copy P.A. to Judge ## **AMG/Pmn**