w w w . L a w y e r S e r v i c e s . i n



The Karassery Service Co-Operative Bank Ltd., Kozhikode, Represented by Its General Manager v/s State of Kerala, Represented by Secretary, Department of Co-Operative Societies, Government Secretariat, Thiruvananthapuram & Others


Company & Directors' Information:- B S AND SERVICE PRIVATE LIMITED [Active] CIN = U92419MH1946PTC004912

Company & Directors' Information:- CO-OPERATIVE COMPANY LIMITED [Active] CIN = U51226DL1910PLC299886

Company & Directors' Information:- CO-OPERATIVE COMPANY LIMITED [Active] CIN = U51226UP1910PLC000093

Company & Directors' Information:- KERALA SERVICE CO LTD [Active] CIN = U65191KL1928PLC000532

Company & Directors' Information:- GENERAL BANK PRIVATE LIMITED [Dissolved] CIN = U93090TN1935PTC000845

Company & Directors' Information:- OPERATIVE INDIA PRIVATE LIMITED [Active] CIN = U74300KA2008FTC048079

Company & Directors' Information:- BANK OF KERALA LIMITED [Dissolved] CIN = U65110KL1944PLC000131

Company & Directors' Information:- SERVICE CORPORATION LIMITED [Dissolved] CIN = U93090KL1946PLC001075

Company & Directors' Information:- P N N BANK LIMITED [Strike Off] CIN = U65921TZ1948PLC000153

Company & Directors' Information:- CORPORATION BANK LIMITED [Strike Off] CIN = U99999KA1972PLC001067

Company & Directors' Information:- KERALA BANK LIMITED [Dissolved] CIN = U65191KL1920PLC000521

Company & Directors' Information:- KERALA SERVICE CORPORATION LIMITED [Dissolved] CIN = U93090KL1947PLC000579

Company & Directors' Information:- CORPORATION BANK LIMITED [Not available for efiling] CIN = U99999MH1936PTC002552

    WP(C). No. 38305 of 2016 (K)

    Decided On, 29 July 2020

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE ANIL K. NARENDRAN

    For the Petitioner: Ajith Krishnan, Advocate. For the Respondents: R1 to R3, K.K. Ravindranath, Addl A.G, T.A. Shaji, Sr. Advocate, R4 to R8, P.P. Jacob, R9, B.S. Swathi Kumar, Anitha Ravindran, R10 to R17, Athul Shaji, Harisankar N. Unni, S. Sikky, Advocates.



Judgment Text


1. The petitioner is a Primary Agricultural Credit Society, which is classified as 'Class-I Super Grade Bank'. The petitioner has filed this writ petition under Article 226 of the Constitution of India challenging the constitutional validity of sub-section (2) of Section 74B of the Kerala Co-operative Societies Act, 1969 (for brevity, 'the KCS Act'), which deals with 'opening of branches', as being violative of Articles 14, 43B, 19(1)(c) and 243ZI of the Constitution of India.

2. Going by the averments in the writ petition, the petitioner Society was formed in the year 1994. Initially, the area of operation of the Society was Karassery Panchayat in Kozhikode District. By Ext.P1 Government Order dated 16.01.2015, the 1 st respondent State, in exercise of its powers under Section 101 of the KCS Act extended the area of operation of the petitioner Society to the entire Kozhikode Taluk, except Kozhikode Corporation limits, by granting exemption from clause (c) of sub- section (1) of Section 7 of the KCS Act. After Ext.P1 order, the petitioner Society made applications before the 2nd respondent Registrar of Co-operative Societies, seeking permission to open 13 branches in its extended area of operation. The document marked as Ext.P2 is one such application dated 21.02.2015, made before the 2nd respondent Registrar seeking permission to open branches at Kakkodi, Poovattuparamba, Koduvally, Kuzhalmannam and Narikkuni. Without prior written permission of the 2nd respondent Registrar, the petitioner Society opened branches at Palazhi and Poovattuparamba, with effect from 14.10.2015. While so, the 3 rd respondent Joint Registrar of Co-operative Societies (General), Kozhikode issued Ext.P3 order dated 21.02.2015 rejecting Ext.P2 application. Challenging Ext.P3 order, the petitioner Society filed appeal before the 1st respondent State. Thereafter, this writ petition was filed before this Court, challenging the constitutional validity of sub-section (2) of Section 74B of the KCS Act, which deals with 'opening of branches', as being violative of Articles 14, 19(1)(c) and 243ZI of the Constitution of India.

3. On 01.12.2016, when this writ petition came up for admission, this Court admitted the matter on file and issued urgent notice to the respondents. By the order dated 19.12.2016 in I.A.No.20466 of 2016, Mukkom Service Co-operative Bank Ltd. and 4 others were impleaded as additional respondents 4 to 8. By the order dated 08.02.2018 in I.A.No.2574 of 2018, Puthupaddy Service Co-operative Bank Ltd. was impleaded as additional 9th respondent. By the order dated 19.02.2018 in I.A.No.3115 of 2018, Mavoor Service Co-operative Bank Ltd. and 7 others were impleaded as additional respondents 10 to 17.

4. The 1st respondent State has filed a counter affidavit dated 20.03.2018, opposing the reliefs sought for in this writ petition. In the counter affidavit it is pointed out that Article 19(1) (c), Article 14 and Article 231ZI of the Constitution of India deals with the right of a citizen to form associations or co-operative societies as ones fundamental right. The petitioner Society represented by its Chief Executive, does not represent its members. The 97th Constitutional Amendment Act of 2011, inserting Part IXB containing Articles 243ZH to 243ZT, is declared as ultra vires the Constitution of India, by the judgment of the High Court of Gujarat dated 22.03.2014. The Civil Appeal arising out of that judgment is now pending before the Apex Court. In Ext.P1 Government Order dated 16.01.2016, while ordering extension of the area of operation of the petitioner Society, it was made clear that the 2nd respondent Registrar has to take further action in that regard. Therefore, in order to implement Ext.P1 order, certain statutory formalities are to be fulfilled by the petitioner Society, i.e., it has to amend its bye-laws and register the amended bye-laws as per the mandate of sub-section (2) of Section 12 of the KCS Act. The petitioner Society has not so far fulfilled the above statutory requirements. The petitioner Society, being a Primary Agricultural Credit Society, has to lend for agricultural purposes. The intention to open large number of branches with the objectives of a commercial bank is illegal, as per the existing law. The proposal for amendment of the bye-laws of the petitioner Society was rejected by the 3 rd respondent Joint Registrar and the said order was under challenge before this Court in W.P.(C)Nos.34415 of 2016 and 34540 of 2016. Those writ petitions were disposed of by the judgment dated 02.11.2016, by directing the 1st respondent State to take a decision in the matter. The 1st respondent by Ext.R1(a) order dated 03.06.2017 rejected the appeal filed by the petitioner Society under clause (a) of sub- section (2) of Section 83 of the KCS Act, thereby declining permission to open 13 branches in its extended area of operation. The 1st respondent would also point out that, as per Rule 180 of the Kerala Co-operative Societies Rules, 1969 (for brevity, 'the KCS Rules'), no society shall do any act, which is not expressly provided for by the bye-laws of such society without previous express sanction of the Registrar for the same. Therefore, there is absolutely no merit in the contention that the restriction in opening branches was introduced by the insertion of sub-section (2) of Section 74B of the KCS Act, with effect from on 14.02.2013. As per Rule 178A of the KCS Rules, State Co-operative Banks as well as District Co-operative Banks shall submit application for opening offices including branches as per the norms fixed by the Registrar from time to time. The Registrar has issued Circular No.63/2011 dated 16.08.2011 prescribing the instructions to be followed in opening branches by the District Co-operative Banks. Therefore, there is no merit in the contention of the petitioner Society as to violation of Article 14 of the Constitution, on the ground that prior written permission of the Registrar is required only for opening branches by Primary Agricultural Credit Society and not by State Co-operative Banks and District Co-operative Banks. The 1 st respondent would also point out that, as per Clause 4(14) of the bye-laws of the petitioner Society, it can open branches within the area of operation with prior sanction of the Registrar. The petitioner Society, which is a Primary Agricultural Credit Society, cannot claim the status of an apex or central society. As per clause (oaa) of Section 2 of the KCS Act, the area of operation of a Primary Agricultural Credit Society shall be confined to a Village, Panchayat or a Municipality and the principal object of which is to undertake agricultural credit activities and provide loans and advances for agricultural purposes, the rate of interest of such loan and advances shall be the rate fixed by the Registrar. As per the second proviso to clause (oaa) of Section 2, if the above principal object is not fulfilled, such societies shall loss all characteristics of a Primary Agricultural Credit Society, as specified in the KCS Act, the KCS Rules and the bye-laws, except the existing staff strength. The 1st respondent would contend that the request made by the petitioner Society for opening 13 branches in a small geographical area, where there is no demand for agricultural credit, as admitted in the application seeking permission for opening branches, shows the malafide nature of the request and it squarely comes within the prohibition of the second proviso to clause (oaa) of Section 2 of the KCS Act. The 1st respondent would contend further that Ext.P1 order of exemption granted in exercise of the powers under Section 101 of the Act cannot be considered as a permission to open branches in areas outside the jurisdiction, as provided for a Primary Agricultural Credit Society defined in clause (oaa) of Section 2 of the KCS Act.

5. Additional respondents 4 to 8 have filed a counter affidavit dated 19.02.2018, opposing the reliefs sought for in this writ petition. They would contend that the 2 nd respondent Registrar considered Ext.P2 application made by the petitioner Society for opening branches and rejected that application by Ext.P3 order, stating legal and valid reasons. Further, the challenge made in this writ petition against Section 74B of the KCS Act is absolutely untenable and the said provision is not violative of Articles 14, 19(1)(c), etc. of the Constitution of India.

6. Additional respondents 4 to 11 have filed a counter affidavit dated 19.12.2018, opposing the reliefs sought for in this writ petition. They would contend that, in view of the prohibition under clause (oaa) of Section 2 of the KCS Act, the area of operation of the petitioner Society has to be confined to a Village, Panchayat or a Municipality and it cannot function like a Co- operative Bank. They would point out that, in Pantheerankavu Service Co-operative Bank Ltd. and others v. State of Kerala and others [ILR 2016 (2) Ker. 1073], dealing with the challenge made against Ext.P1 order, a Division Bench of this Court considered the extent of power of the Government under Section 101 of the KCS Act and declined interference with that order. However, in paragraph 56 of that judgment, the Division Bench has specifically underlined the requirement of permission from the Registrar as mandated in the KCS Act and the KCS Rules to open branches and only with that categorical finding and rider, interference with Ext.P1 order was declined. The petitioner Society never obtained written permission from the Registrar to open the branches as mandated by sub-section (2) of Section 74B of the KCS Act, Rule 178A of KCS Rules and Circular No.30/2014 issued by the Registrar. The petitioner Society is running two branches in the area of operation of other societies, defying the repeated orders of the Registrar. Now, in order to circumvent the binding directions in the inter-party judgment and to find justification in the illegal opening and functioning of two branches, the petitioner Society has filed this writ petition challenging the vires of Section 74B of the KCS Act. In the writ petition, the petitioner Society has no case as to lack of legislative competence of the State Legislature to enact the KCS Act and particularly sub-section (2) of Section 74B. The said provision does not in anyway invade into the rights conferred by Articles 14, 19(1)(c) and 243ZI of the Constitution of India.

7. The additional 9th respondent has filed a counter affidavit, opposing the reliefs sought for in this writ petition. The said respondent would contend that sub-section (2) of Section 74B of the KCS Act is well within the legislative competence of the 1 st respondent State and that, the said provision only imposes reasonable restriction/regulation in tune with the spirit of the co- operative movement, which cannot be challenged as one violative of Article 14, 19(1)(c), 43B and 243ZI of the Constitution of India.

8. The petitioner Society has filed a reply affidavit dated 10.04.2018, reiterating the contentions raised in the writ petition.

9. On 04.07.2018, along with I.A.No.11928 of 2018, the petitioner Society has placed on record Ext.P4 certificate of registration dated 30.03.2004 issued under Section 12 of the KCS Act, registering certain amendments made to its bye-laws, based on Resolution No.9 dated 14.03.2004 of the General Body, enclosing therewith a copy of the amended bye-laws.

10. On 12.02.2019, the petitioner Society filed I.A.No.1 of 2019, seeking an order to implead Shri N.K.Abdurahiman, the Chairman of the Society, who is arrayed as 18th respondent in that interlocutory application, as additional 2nd petitioner in the writ petition. That interlocutory application is filed under Article 226 of the Constitution of India, read with Rule 148 of the Rules of the High Court of Kerala, 1971 and Order I, Rule 10 of the Code of Civil Procedure, 1908. Going by the averments in the affidavit filed in support of that application, the impleadment of that person as additional 2nd petitioner is sought for, in view of the contention raised by the respondents that the petitioner Society, not being a citizen, cannot claim protection of the fundamental right guaranteed under Article 19(1)(c) of the Constitution of India. On 13.02.2019, Shri N.K.Abdurahiman filed I.A.No.2 of 2019, under Article 226 of the Constitution of India, read with Rule 148 of the Rules of the High Court of Kerala and Order I, Rule 10 of the Code of Civil Procedure, seeking an order to implead him as additional 2nd petitioner in the writ petition. On 28.02.2019, the petitioner Society filed I.A.No.3 of 2019, under Article 226 of the Constitution of India, read with Rules 148 and 154 of the Rules of the High Court of Kerala seeking an order to accept the affidavit of the said Abdurahiman produced along with that interlocutory application as additional document No.I in the writ petition.

11. Heard the learned Senior Counsel for the petitioner Society, the learned Additional Advocate General for the 1st respondent State, the learned Special Government Pleader for respondents 2 and 3, the learned counsel for additional respondents 4 to 8, the learned counsel for the additional 9th respondent, and also the learned Senior Counsel for additional respondents 10 to 17.

12. The KCS Act:- The KCS Act, was enacted to consolidate, amend and unify the laws relating to co-operative societies in the State of Kerala for the orderly development of co-operative sector in the State, in accordance with co-operative principles, as self governing, democratic institutions. The preamble of the KCS Act, as substituted by Act 1 of 2000 reads thus;

"Preamble.- WHEREAS with a view to provide for the orderly development of the co-operative sector in the State, it is essential to organise 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 societies in the State." (underline supplied)

13. In Philip K.J. v. State of Kerala and others [2008 (2) KLT 555] the constitutional validity of Ordinance 62 of 2007 promulgated by the Governor of Kerala was mainly under challenge before a Division Bench of this Court. As a result of that Ordinance, majority of the members of the District Co-operative Banks other than Primary Agricultural Credit Societies and Urban Co-operative Banks became nominal or associate members of the District Co-operative Banks, having no right to vote or participate in the administration of the District Co-operative Bank. Before the Division Bench it was contended that the exclusion of societies belonging to categories other than the two categories mentioned above, is arbitrary and discriminatory and therefore, Ordinance 62 of 2007 is violative of Article 14 of the Constitution of India. On the question as to whether the legislative action to segregate the members of the District Co-operative Bank into two groups will stand the test of Article 14 of the Constitution, the Division Bench held that, if the Legislature thinks that a particular type of societies alone should be admitted as members of the District Co-operative Banks, it has to be recognised as the law of the land. If the Legislature thinks that some other type of societies should also be admitted to the membership of the District Co-operative Bank it has also to be recognised as the law of the land. This Court cannot sit in appeal over the wisdom of the Legislature. Though, what is impugned is only an Ordinance, the above principles will squarely apply. The provisions of Ordinance 62 of 2007 do not trespass into any prohibited terrain, making them invalid. The Division Bench held further that the classification of member societies of the District Co-operative Banks attempted under that Ordinance is not hit by Article 14. There is a clear intelligible differentia between the societies retained as members of the District Co-operative Banks and those excluded. The view that the said classification has rational nexus with the orderly development of co-operative movement [sic: co-operative sector], which is the object of the KCS Act, cannot be said to be irrational.

14. In Radhakrishna Kurup v. Nadakkal Service Co- operative Bank Ltd. No.1874, Kollam and others [2018 (3) KHC 620] a Division Bench of this Court held that the co-operative banks are a separate class by itself when compared to the commercial banks and the classification is based on an intelligible differentia. The differentia which is the basis of the classification has a nexus with the object sought to be achieved, which is obviously the orderly development of the co-operative sector in the State. In the judgment of a leaned Single Judge of this Court, which was under challenge before the Division Bench, it was held that Section 56A of the KCS Act, which deals with 'disposal of non- banking assets', is arbitrary and violative of Article 14 of the Constitution of India, since it applies only to co-operative banks and not to commercial banks. The Division Bench held that the co- operative banks are not treated differently from other commercial banks in the disposal of non-banking assets and there is no hostile discrimination, as alleged. The motive of operation of co-operative banks is 'service', whereas the motive of operation of commercial banks is 'profit' and therefore, both cannot be treated on par to test the plea of discrimination. The borrowers of the co-operative banks are member share holders having a definite say in the lending policy of the bank obviously on account of their voting power. But the borrowers of the commercial banks are only account holders with no voting power and the lending policy of the bank is governed by the regulations of the Reserve Bank of India. The co-operative banks usually cater to the credit needs of agriculturists whereas the commercial banks provide short term finance to industry, trade and commerce. The co-operative banks have comparatively less variety of services and offer lesser rate of interest, whereas commercial banks have an array of services and offer slightly higher rate of interest.

15. In Quilon Taluk L.C.&T. Co-operative Society v. State of Kerala [1989 (1) KLT 350] a learned Single Judge of this Court held that the KCS Act has been enacted, as discernible from its preamble, with a view to provide for the orderly development of the co-operative movement [sic: co-operative sector] in the State of Kerala. As per Section 101 of the Act, the Government is given power, inter alia, to exempt any society or class of societies from any of the provisions of the Act if they are satisfied that it is necessary so to do in public interest. It means that for exercising the power under Section 101 of the Act, the Government must be satisfied that there is necessity to invoke the provisions of that Section in the public interest. Public interest cannot be the interest of a particular society.

16. Clause (eccc) of Section 2 of the KCS Act defines 'co- operative principles' to mean the co-operative principles listed in Schedule II appended to the Act. As per Schedule II, the co- operative principles are (1) open and voluntary membership; (2) democratic member control; (3) member economic participation; (4) autonomy and independence; (5) education, training and information; (6) co-operation among co-operatives; and (7) concern for community. Clause (f) of Section 2 defines 'co- operative society' or 'society' to mean a co-operative society registered or deemed to be registered under the said Act. Clause (l) of Section 2 defines 'member' to mean a person joining in the application for registration of a co-operative society or person admitted to membership after such registration in accordance with the Act, the Rules and the Bye-laws and includes a nominal or associate member. Clause (m) of Section 2 defines 'nominal or associate member' to mean a member, who possesses only such privileges and right of a member who is subject only to such liabilities of a member as may be specified in the bye-laws.

17. Clause (oa) of Section 2 of the KCS Act inserted by the Kerala Co-operative Societies (Second Amendment) Act, 1997, with effect from 29.12.1997, defines 'Primary Agricultural Credit Society' to mean a service co-operative society, a service co- operative bank, a farmers service co-operative bank and a rural bank, the principal object of which is to undertake agricultural credit activities. Clause (oa) was substituted by the Kerala Co- operative Societies (Amendment) Act, 1999, with effect from 01.01.2000, which defines 'Primary Agricultural Credit Society' to mean a service co-operative society, a service co-operative bank, a farmers service co-operative bank and a rural bank, the principal object of which is to undertake agricultural credit activities and having its area of operation confined to a Village Panchayat or a Municipality. Clause (oa) was substituted by the Kerala Co- operative Societies (Amendment) Act, 2010, with effect from 28.04.2010, which defines 'Primary Agricultural Credit Society' to mean a service co-operative society, service co-operative bank, a farmers' service co-operative bank and a rural bank, the principal object of which is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances shall be fixed by the Registrar and having its area of operation confine to a Village, Panchayat or Municipality. The first proviso to clause (oa) provides that, the restriction regarding the area of operation shall not apply to societies or banks in existence at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1999. The second proviso to clause (oa) provides further that, if the above principal object is not fulfilled, such Societies shall lose all characteristics of a primary agricultural credit society as specified in the Act, Rules and bye-laws, except the existing staff strength. Clause (oa) of Section 2 of the KCS Act was re-numbered as clause (oaa) by the Kerala Co-operative Societies (Amendment) Act, 2013, with effect from 14.02.2013.

18. Chapter II of the KCS Act deals with registration of co- operative societies. As per Section 4, subject to the provisions of the Act, a co-operative society which has its object the promotion of the economic interest of its members or the interests of the public in accordance with co-operative principles, or a society established with the object of facilitating the operations of such a society, may be registered under the Act. Section 6 deals with application for registration of co-operative societies. As per sub- section (1) of Section 6, an application for the registration of a co- operative society shall be made to the Registrar in such form as may be prescribed and the applicant shall furnish to him such information about the society as he may require. As per sub- section (2) of Section 6, every such application shall conform to the requirements enumerated in clauses (a) to (c) of sub-section (2). Clause (a) to sub-section (2) provides that the application shall be accompanied by three copies of the proposed bye-laws of the society. Section 7 of the Act deals with registration. As per sub-section (1) of Section 7, if the Registrar is satisfied (a) that the application complies with the provisions of Act and the Rules;

(b) that the objects of the proposed society are in accordance with Section 4; (c) that the area of operation of the proposed society and the area of operation of another society of similar type do not overlap; (d) that the proposed bye-laws are not contrary to the provisions of the Act and the Rules; and (e) that the proposed society complies with the requirements of sound business; he may register the society and its bye-laws within a period of 90 days from the date of receipt of the application.

19. Section 8 of the KCS Act deals with registration certificate. As per sub-section (1) of Section 8, where a co- operative society is registered under the Act, the Registrar shall issue a certificate of registration signed and sealed by him, which shall be conclusive evidence that the said society is duly registered under the Act. As per Section 9 of the Act, the registration of a society shall render it a body corporate by the name under which it is registered, having perpetual succession and a common seal and with the power to hold the property, enter into contracts, institute and defend suits and other legal proceedings and to do all things necessary for the purposes for which it was constituted. The proviso to Section 9 provides that, the Government and the Registrar shall have power to regulate the working of a society for the economic and social betterment of its members and the general public.

20. Section 12 of the KCS Act deals with amendment of bye-laws of a society. As per sub-section (1) of Section 12, no amendment of any bye-laws of a society shall be valid unless such amendment has been registered under the Act. As per sub-section (2) of Section 12, the provisions of Section 7 specifying the conditions to be satisfied before registration of bye-laws of a society by the Registrar shall, mutatis mutandis, apply also to the registration of amendments to bye-laws. As per Section 13, an amendment of the bye-laws of a society shall, unless it is expressed to come into operation on a particular day, come into force on the day on which it is registered.

21. Section 15 of the KCS Act deals with cancellation of registration certificates of societies in certain cases. Sub-section (1) of Section 15 deals with cases where the whole of the assets and liabilities of a society are transferred to another society in accordance with the provisions of Section 14; sub-section (2) of Section 15 deals with cases where two or more societies are amalgamated into a new society in accordance with the provisions of Section 14; and sub-section (3) of Section 15 deals with cases where a society is divided into two or more societies in accordance with the provisions of Section 14.

22. Section 66A of the KCS Act deals with powers of Registrar to give directions. As per Section 66A, inserted by the Kerala Co-operative Societies (Amendment) Act, 2010, subject to the provision contained in the Act and the rules made there under, the Registrar may issue general directions and guidelines to any or all of the co-operative societies in furtherance of the purpose of the Act or for implementing government policies for the benefit of the members and the general public.

23. Chapter XB of the KCS Act inserted by Kerala Co- operative Societies (Amendment) Act, 2010, with effect from 28.04.2010, deals with special provisions relating to co-operative societies, their office bearers and employees. Section 74B of the Act deals with opening of branches. As per sub-section (1) of Section 74B, the State Co-operative Bank, the State Co-operative Agricultural and Rural development Bank and the District Co- operative Banks may open branches in the area of operation of their member credit societies if such member credit societies are weak and not functioning enough to provide service to the members or to the public. As per sub-section (2) of Section 74B, inserted by Kerala Co-operative Societies (Amendment) Act, 2013, all primary credit societies including Primary Agricultural Credit Societies may open branches in their area of operation with the prior written permission of the Registrar. Section 74B of the KCS Act was substituted by the Kerala Co-operative Societies (Amendment) Act, 2019. As per sub-section (2) of Section 1 of the Amendment Act, 2019, Section 3 of the said Act shall be deemed to have come into force on 08.01.2019 and other sections shall come into force on such date as the State Government may, by notification in the Official Gazette appoint and different dates may be appointed for different sections. As per Section 9 of the Amendment Act, 2019, Section 74B of the KCS Act is substituted as follows; "The Kerala State Co-operative Agricultural and Rural Development Bank and all primary co-operative societies/banks may open branches in their area of operation with the prior written permission of the Registrar." In exercise of the powers conferred by sub-section (2) of Section 1 of the Kerala Co-operative Societies (Amendment) Act, 2019 the State Government, vide G.O.(P)No. 124/2019/Co-op. dated 29.11.2019 appointed 29.11.2019 as the date on which the provisions in clauses (ii) and (iii) of Section 2, Section 8, Section 9 and Section 10 of the Amendment Act, 2019, except the proviso to sub-section (3) of Section 74H proposed to be inserted in the KCS Act, by the said Act, shall come into force. Section 74B of the KCS Act, after its amendment by Section 9 of the Amendment Act, 2019, which came into force with effect from 29.11.2019, reads thus;

"74B. Opening of Branches.- The Kerala State Co- operative Agricultural and Rural Development Bank and all primary co-operative societies/banks may open branches in their area of operation with the prior written permission of the Registrar."

24. Section 101 of the KCS Act deals with power to exempt societies. As per Section 101, 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.

25. KCS Rules:- Chapter II of the KCS Rules deals with registration of co-operative societies and their bye-laws. Rule 3 deals with application for registration. As per sub-rule (1) of Rule 3, every application for registration of a society under sub-section (1) of Section 6 shall be made in duplicate in Form No.1, accompanied by the documents enumerated in clauses (a) to (e) of sub-rule (1). Rule 4 deals with registration. As per clause (i) of Rule 4, on receipt of an application under Rule 3, the Registrar shall enter particulars of the application in the register of application to be maintained in Form No.2, give a serial number to the application, and issue a receipt in acknowledgement thereof. As per clause (ii), the Registrar shall then examine the application and the bye-laws in order to satisfy that the conditions specified in clauses (a) to (e) of Section 7 and Rule 3 are satisfied. As per clause (iii), the Registrar may call for such further information or make such enquiry as he may deem necessary or direct the Chief Promoter to make such modifications in the proposed bye-laws as he may deem fit. The Chief Promoter shall thereupon furnish such information or make such modifications in the proposed bye-laws as the Registrar may direct with the consent of the applicants within a period to be specified by him. As per clause (iv), if the Registrar is satisfied that the proposed society has complied with the above requirements he may register the society and its bye- laws and issue to the society free of cost, a certificate of registration in Form No.3 signed by himself and bearing his official seal along with a certified copy of the bye-laws as approved and registered by him. The certificate of registration shall contain the registration number of the society and the date of its registration. The Registrar may assign for each District and each class or such class of societies, a code symbol, for giving registration numbers to the societies. When a society has been registered, the bye-laws as approved and registered by the Registrar shall be the registered bye-laws of the society for the time being in force. As per clause (v), if the Registrar is satisfied that the proposed society will not fulfill the economic interest of the public in accordance with the co- operative principles mentioned in Schedule II of the Act or the registration of the society will make an adverse effect on the development of co-operative movement or he is satisfied that the objects of the proposed society is against the preamble of the Act, the Registrar shall pass an order of refusal together with the reasons thereof and communicate it by registered post or speed post or such courier services, approved by the High Court of Kerala/Government of Kerala to the Chief Promoter within 15 days of such order.

26. Rule 5 of the KCS Rules deals with subject matter of bye-laws. As per sub-rule (1) of Rule 5, the bye-laws of a society shall not be contrary to the provisions of the Act and the Rules and may deal with all or any of the matters specified in clauses (a) to (ab) of sub-rule (1) and with such other matters incidental to the organisation of the society and the management of its business, as may be deemed necessary. Sub-rule (2) of Rule 5 deals with credit societies; sub-rule (3) deals with non-credit societies; and sub-rule (4) deals with composite society. Rule 9 of the KCS Rules deals with procedure regarding amendment of bye-laws and Rule 13 deals with amalgamation, transfer of assets and liabilities or division of societies.

27. Rule 15 of the KCS Rules deals with classification of societies according to types. As per Rule 15, after the registration of a society the Registrar shall classify the society into one or other of the types enumerated in Rule 15, according to the principal object provided in the bye-laws. As per Note (i) to Rule 15, if any question arises as to the classification of a society, it shall be referred to the Registrar for decision and his decision thereon shall be final. As per Note (ii), if the Register alters the classification of a society from one class of society to another or from the sub class thereof to another, he shall issue to the society and the Financing Bank a copy of his order and the society shall fall under that category with effect from the date of that order.

28. Rule 54 of the KCS Rules deals with manner of investment of funds. As per sub-rule (1) of Rule 54, a society may, with the previous sanction in writing of the Registrar, invest the whole or any portion of its funds in the purchase or lease of land or the acquisition, construction or renewal of any building that may be necessary to conduct its business. The amount of the funds so invested shall be recouped on such terms as may be determined in each case by the Registrar. As per the first proviso to sub-rule (1), this sub-rule shall not apply (a) to immovable property purchased (i) by a society at a sale held in execution of a decree, decision or award obtained by it for the recovery of any sum due to it; or (ii) by a Financing Bank at a sale held in execution of a decree, decision or award obtained by a society financed by it for the recovery of any sum due to such society or at a sale by or on behalf of the liquidator of such society; (b) to the purchase or lease of lands or purchase, construction or remodeling of buildings of a society, whose objects according to its bye-laws include such purchase, lease construction or remodeling. As per the second proviso to sub-rule (1), no recoupment of the amount invested under this sub-rule shall be necessary when the investment is made (a) by a society from its building fund raised out of net profits as per the bye-laws; or (b) by a society other than a credit society in which the share capital raised from the members is intended to build up the special kind of business for which it has been registered. As per sub-rule (2) of Rule 54, no society shall dispose of any immovable property acquired by the society without the prior sanction of the general body and of the Registrar. As per the proviso to sub-rule (2), housing societies, the bye-laws of which specifically provide for the purchase and sale of immovable property, may dispose of the property without the sanction of the Registrar or of the general body. As per sub-rule (3) of Rule 54, a society may with previous permission of the Registrar deposit or invest its funds in institutions registered under the Travancore- Cochin Literary, Scientific and Charitable Societies Act, 1955, provided that such institutions are jointly managed by Government and co-operative societies for the promotion of health and educational purposes.

29. Rule 63 of the KCS Rules deals with maintenance of fluid resources by societies. As per sub-rule (1) of Rule 63, every society with limited liability which obtains any portion of its working capital by deposits and coming within the purview of the Banking Regulation Act, 1949 shall maintain fluid resources in such form and according to such standards as may be fixed by the Government from time to time by general or special order and utilise only such portion of its working capital in lending business and distribute its assets in accordance with such standards. The minimum liquid cover shall normally be the following scale:-

(i) full value of the fixed deposit matured and due for payment at close of business on any day;

(ii) 20% of the total of its demand and time liabilities excluding item (i) at the close of business in any day.

30. Rule 178 of the KCS Rules deals with use of premises. As per Rule 178, no society or union shall except with the previous sanction of the Registrar, use or allow to be used any premises used for its business or portion thereof for any purpose other than such business or other co-operative activities. As per the first proviso to Rule 178, the premises may be allowed to be used for the conduct of poll in connection with the elections to the State or Central Legislature. As per the second proviso to Rule 178, no such sanction shall be granted to any society for using or allowing to be used any such premises or portion thereof for political purposes.

31. Rule 178A of the KCS Rules, inserted by SRO 40/2013 with effect from 19.01.2013 deals with opening of branches. As per Rule 178A, the Kerala State Co-operative Bank, the Kerala State Co-operative Agricultural and Rural Development Bank and District Co-operative Banks shall submit application for opening new branches as per the norms fixed by the Registrar from time to time, and every such application shall be accompanied by a chalan receipt for the remittance of fees calculated at the rate of two thousand rupees for each branch. As per the proviso to Rule 178A, such amount shall not be refunded to the applicant bank irrespective of the fact that whether sanction is accorded or not. Rule 178A was substituted by SRO 733/2014 with effect from 26.11.2014. As per Rule 178A, after its substitution by SRO 733/2014, the Kerala State Co-operative Bank, the Kerala State Co-operative Agricultural and Rural Development Bank, District Co- operative Banks, Primary Agricultural Credit Societies, Service Co- operative Banks, Primary Agricultural and Rural Development Banks, Urban Banks and Farmer's Service Co-operative Banks shall submit application for opening offices in the name of Regional Office, Zonal Office, Branch Office, Sub Office or Extension Centre as per the norms fixed by the Registrar from time to time, and every such application shall be accompanied by a chalan receipt for the remittance of fees calculated at the rates given in that Rule. As per the proviso to Rule 178A, such amount shall not be refunded to the applicant bank irrespective of the fact that whether sanction is accorded or not.

32. As per Rule 180 of the KCS Rules, no society shall do any act which is not expressly provided for by the bye-laws of such society without the previous express sanction of the Registrar for the same. In Janardhanan v. Joint Registrar [1990 (1) KLT 530] this Court held that Rule 180 of the KCS Rules is intended to provide for extraordinary circumstances, where a society may have to act in a particular matter, and the bye-laws are silent on that aspect. In such cases, the action of the society is rendered legal if the express sanction of the Registrar is obtained previously. But this does not legitimatise illegalities committed in violation of the bye-laws of the society.

33. Rule 181 of the KCS Rules deals with power to exempt from Rules. As per Rule 181, the State Government may, by general or special order and subject to such conditions as they deem fit, exempt any registered society or class of such societies from any of the provisions of these rules or may direct that such provisions shall apply to such society or class of societies with such modifications as may be specified in the order.

34. The learned Senior Counsel for the petitioner Society contended that, in view of Ext.P1 order of exemption granted under Section 101 of the KCS Act, extending the area of operation of the petitioner Society, which is a Primary Agricultural Credit Society, to the entire Kozhikode Taluk, except Kozhikode Corporation limits, by granting exemption from clause (c) of sub- section (1) of Section 7 of the KCS Act, the petitioner Society is entitled to open branches anywhere in the extended area of operation, for which no prior permission from the Registrar of Co- operative Societies is required.

35. Per contra, the learned Additional Advocate General for the State and official respondents, and also the learned Senior Counsel/learned counsel for the respondent Societies contended that Ext.P1 order of exemption granted to the petitioner Society under Section 101 of the KCS Act, from clause (c) of sub-section (1) of Section 7 of the said Act, will not enable the petitioner Society to open branches anywhere in its extended area of operation, in violation of clause (oaa) of Section 2 and sub-section (2) of Section 74B of the KCS Act and also Rules 54, 63, 178A and 180 of the KCS Rules. A reading of Ext.P2 application made by the petitioner Society, seeking permission of the 2 nd respondent Registrar to open branches in its extended area of operation, would show that the principal object or activity of the petitioner Society is not agricultural credit activities and providing loans and advances for agricultural purposes. The learned Senior Counsel for the respondent Societies would point of the observation made by a Division Bench of this Court in Pantheerankavu Service Co- operative Bank Ltd. [ILR 2016 (2) Ker. 1073] that, for opening new branches/offices the petitioner Society, which is a Primary Agricultural Credit Society, has to obtain sanction as contemplated by Rule 178A of the KCS Rules.

36. As noticed hereinbefore, as per clause (oaa) of Section 2 of the KCS Act, the principal object of a Primary Agricultural Credit Society is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes, the rate of interest on such loans and advances shall be fixed by the Registrar. The area of operation of a Primary Agricultural Credit Society shall confine to a Village, Panchayat or Municipality. As per the second proviso to clause (oaa) of Section 2, if the aforesaid principal object is not fulfilled, such societies shall lose all characteristics of a Primary Agricultural Credit Society, as specified in the KCS Act, the KCS Rules and the bye-laws, except the existing staff strength.

37. The Income Tax Act:- Chapter VIA of the Income Tax Act, 1961 (for brevity, 'the IT Act') deals with deductions to be made in computing total income. Section 80P of the IT Act deals with deduction in respect of income of co-operative societies. As per sub-section (1) of Section 80P, where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in sub-section (2), there shall be deducted, in accordance with and subject to the provisions of this Section, the sums specified in sub-section (2), in computing the total income of the assessee. As per sub-section (2) of Section 80P, the sums referred to in sub-section (1) shall be those enumerated in clauses (a) to (f) of sub-section (2).

38. As per sub-section (4) of Section 80P of the IT Act, the provisions of this Section shall not apply in relation to any co- operative bank other than a Primary Agricultural Credit Society or a Primary Co-operative Agricultural and Rural Development Bank. As per Explanation to sub-section (4) of Section 80P, for the purpose of this sub-section, (a) 'Co-operative Bank' and 'Primary Agricultural Credit Society' shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949; (b) 'Primary Co-operative Agricultural and Rural Development Bank' means a society having its area of operation confined to a Taluk and the principal object of which is to provide for long term credit for agricultural and rural development activities.

39. The Banking Regulation Act:- As per Section 3 of the Banking Regulation Act (for brevity, 'the BR Act'), nothing in the said Act shall apply to- (a) a Primary Agricultural Credit Society; (b) a Co-operative Land Mortgage Bank; and (c) any other co- operative society, except in the manner and to the extent specified in Part V. Clause (b) of Section 5 define 'banking' to mean the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, and order or otherwise. Clause (c) of Section 5 define 'banking company' to mean any company, which transacts the business of banking in India.

40. Part V of the BR Act deals with application of the said Act to co-operative banks. As per Section 56, the provisions of the BR Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to the modifications enumerated in clauses (a) to (zl) of Section 56. As per clause (a) of Section 56, throughout the BR Act, unless the context otherwise requires- (i) references to a 'banking company' or 'the company' or 'such company' shall be construed as references to a co-operative bank; and (ii) reference to 'commencement of this Act' shall be construed as reference to commencement of the Banking Laws (Application to Co-operative Societies) Act, 1965 (23 of 1965). As per clause (b) of Section 56, in Section 2, the words and figures 'the Companies Act, 1956 (1 of 1956), and' shall be omitted.

41. As per sub-clause (i) of clause (c) of Section 56 of the BR Act, clauses (cci) to (ccvii), as enumerated in sub-clause (i) of clause (c) shall be inserted in Section 5 of the BR Act, after clause (cc). As per clause (cci), 'co- operative bank' means a State Co- operative Bank, Central Co-operative Bank and a Primary Co- operative Bank. As per clause (cciia), 'co-operative society' means a society registered or deemed to have been registered under any Central Act, for the time being in force, relating to Multi-State Co- operative Society or any other Central or State law relating to co- operative societies for the time being in force. As per clause (cciv), 'Primary Agricultural Credit Society' means a co-operative society- (1) the primary object or principal business of which is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops); and (2) the bye-laws of which do not permit admission of any other co-operative society as a member. As per the proviso to sub-clause (2) of clause (cciv), the said sub-clause shall not apply to the admission of a co-operative bank as a member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for the purpose. Clause (ccv) define 'primary co-operative bank' and clause (ccvi) define 'primary credit society'. As per Explanation to clauses (cciv), (ccv) and (ccvi), if any dispute arises as to the primary object or the principal object of any co-operative society referred to in clauses (cciv), (ccv) and (ccvi), a determination thereof by the Reserve Bank shall be final.

42. As per clause (d) of Section 56, Section 5A of the BR Act was substituted. As per Section 5A, as substituted by clause (d) of Section 56, the BR Act shall override the bye-laws, etc. As per sub-section (1) of Section 5A of the BR Act, the provisions of the said Act shall have effect, notwithstanding anything to the contrary contained in the bye-laws of a co-operative society, or in any agreement executed by it, or in any resolution passed by it in general meeting, or by its Board of Directors or other body entrusted with the management of its affairs, whether the same be registered, executed or passed, as the case may be, before or after the commencement of the Banking Laws (Application to Co- operative Societies) Act, 1965 (23 of 1965). As per sub-section (2) of Section 5A of the BR Act, any provision contained in the bye- laws, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act, become or be void, as the case may be.

43. In view of the provisions under clause (cciv) of Section 5 of the BR Act (inserted vide sub-clause (i) of clause (c) of Section 56 of the BR Act), the primary object or principal business of a Primary Agricultural Credit Society is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities (including the marketing of crops). In view of the provisions under Section 5A of the BR Act (substituted by clause (d) of Section 56 of the BR Act), the provisions of the BR Act shall override the bye-laws of a co- operative society, any agreement executed by it, resolution passed by it, etc.

44. In Antony Pattukulangara v. E. N. Appukuttan Nair and others [2012 (3) KHC 726] in the context of clause (oa) of Section 2 of the KCS Act [which was later renumbered as clause (oaa) by the Kerala Co-operative Societies (Amendment) Act, 2013 with effect from 14.02.2013], a Division Bench of this Court held that, going by the definition clause of 'Primary Agricultural Credit Society' in order to constitute the Society in that category, the principal activity should be to undertake agricultural credit activities and provide loans and advances for agricultural purposes. It is further stated in the second proviso to the said definition clause that if the society does not achieve its objective i.e., to function like an Agricultural Credit Society it will lose its identity by virtue of the operation of the said proviso. The Division Bench noticed that the society has taken deposits above Rs.22.22 crores and has made advances above Rs.20.4 crores to non-agricultural sector and advances for agricultural purposes was only insignificant amounts compared to the total lending by the Society. Therefore, the society has ceased to be a Primary Agricultural Credit Society, at least in the previous year in which the election was notified. The Division Bench held that, going by the factual position stated as above, it was the duty of the Registrar to order alteration of classification of society in terms of powers conferred on him under Note (ii) of Rule 15 of the KCS Rules, which is not so far done. Probably the Registrar never bothered to find out the operations of the society to justify retention of the identity and that is why the society continues to retain the registration originally obtained. In any case what can be noticed from second proviso to clause (oa) of Section 2 of the KCS Act is that, as and when the society ceases to be a Primary Agricultural Credit Society, it shall loose that identity irrespective of whether the Registrar has made changes or not.

45. In Thathamangalam Service Co-operative Bank Ltd. and others v. Income Tax Officer (TDS) and others [judgment dated 14.09.2012 in W.P.(C)No.14226 of 2012 and connected cases] this Court held that Section 80P of the IT Act provides exemption only in respect of a Primary Agricultural Credit Society as mentioned in sub-section (4) and as such, the status of the society becomes more relevant, as defined under the BR Act. However, this may not have much significance to the case in hand, as pointed out in the statement filed by the respondents, that such objective has already been brought about by amending the Kerala Statute as well, incorporating the 'second proviso' to the definition of the term 'Primary Agricultural Credit Society', as given under Section 2(oa) of the KCS Act, as per Act 7 of 2010. True, some of the petitioners have obtained a certificate as to the classification/ registration as Primary Agricultural Credit Societies. But, by virtue of the amendment to Section 2(oa) of the KCS Act, if the society does not continue to fulfill the obligation, it will lose the colour and characteristics of a Primary Agricultural Credit Society, except for the purpose of staff strength. Thus, it is very much obligatory for the petitioners societies, who claim the status and the benefits of Primary Agricultural Credit Societies, to substantiate that their main object of incorporation is being continued to be fulfilled as well. As such, they have to obtain a certificate from the competent authority by producing the relevant facts and figures including the balance sheet, profit and loss accounts etc., that they satisfy the requirements of the 'second proviso' to Section 2(oa) of the KCS Act, to claim the status of Primary Agricultural Credit Societies so as to contend that they stand exempted by virtue of Section 194A(3)(viia)(a) of the IT Act and hence are not required to effect any TDS. As a natural consequence, they are not supposed to comply with the requirements of Section 200(3) of the IT Act as well, if they succeed.

46. In Mavilayi Service Co-operative Bank Ltd. v. Commissioner of Income Tax, Calicut [2019 (2) KHC 287] a Full Bench of this Court held that, when the classification of a society, as per the provisions of the KCS Act and the Rules made thereunder, at the time of registration, are solely on the basis of the principal object provided in the bye-laws, it cannot be contended that the certificate of registration of a society as Primary Agricultural Credit Society is a conclusive evidence that the primary object or the principal business undertaken by that society is providing financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities, and as such, that society is entitled for deduction under Section 80P of the IT Act, by reason of sub- section (4) thereof, merely on the strength of the certificate registration issued under sub-section (1) of Section 8 of the KCS Act. In order to claim the benefit of deduction under Section 80P of the IT Act, after the introduction of sub-section (4) thereof, the assessee society should be a Primary Agricultural Credit Society falling within the definition clause, i.e., clause (oa) of Section 2 of the KCS Act, [which was re- numbered as clause (oaa) by the Kerala Co-operative Societies (Amendment) Act, 2013] read with clause (cciv) of Section 5 of BR Act inserted by sub-clause (i) of clause (c) of Section 56. Once the principal object as per the aforesaid clause is not fulfilled by a Primary Agricultural Credit Society for a particular financial year, such a society will be disentitled from claiming the benefit of deduction under Section 80P of the IT Act, after the introduction of sub-section (4) thereof. After 28.04.2010, in view of the second proviso to the said clause, such societies shall even loose all characteristics of a Primary Agricultural Credit Society, as specified in the KCS Act, the KCS Rules and the bye-laws, except the existing staff strength.

47. The document placed on record as Ext.P2 is a true copy of the application dated 21.02.2015 made by the petitioner Society before the 2nd respondent Registrar seeking permission to open branches at Kakkodi, Poovattuparamba, Koduvally, Kuzhalmannam and Narikkuni. The reasons stated in Ext.P2 application for seeking permission to open branches in those places read thus;

"MALAYALAM”

48. In Ext.P2 application made before the 2 nd respondent Registrar seeking permission to open branches at Kakkodi, Poovattuparamba, Koduvally, Kuzhalmannam and Narikkuni, the petitioner Society has highlighted only the non-agricultural credit disbursement potential of the locality of the proposed branches and not the potential of those localities for agricultural credit disbursement. In paragraph 2 of Ext.P2 application it is stated that, in the financial year 2014-15, for the period upto 31.01.2015, the petitioner Society advanced a total sum of Rs.410 crores, out of which 17.46% of the amount was advanced as agricultural loans.

49. As already noticed, as per Section 66A of the KCS Act, subject to the provision contained in the Act and the rules made thereunder, the Registrar is empowered to issue general directions and guidelines to any or all of the co-operative societies in furtherance of the purpose of the Act or for implementing government policies for the benefit of the members and the general public. In view of the provisions under Rule 178A of the KCS Rules, for opening offices in the name of branch office, extension centre, etc., the petitioner Society, which is a Primary Agricultural Credit Society, has to submit application, as per the norms fixed by the Registrar from time to time, after remitting the requisite fee.

50. In Akalakunnam Village Service Co-operative Bank Ltd. v. Binu N. [2014 (9) SCC 294], a decision relied on by the learned Additional Advocate General, the Apex Court was dealing with a case in which Akalakunnam Village Service Co-op Bank Ltd. by notification dated 06.06.2009 invited applications to fill up the vacant posts of 1 Attender and 3 Peons and to reserve one vacancy of Peon for members belonging to SC/ST community. As per sub- rule (5) of Rule 182 of the KCS Rules, in respect of societies and posts not covered by Section 80(3A) and Section 80B of the Act, the appointments shall be made by the Committee after conducting the written examination and interview as per the guidelines issued by the Registrar. The writ petitioners submitted their application and participated in the written test and interview held on 15.07.2009. They filed writ petition before this Court challenging the said notification, on the ground that notification does not confirm to the KCS Rules and the circulars issued under sub-rule (5) of Rule 185. They also alleged that steps are afoot to appoint four persons (the appellants in the appeal arising out of S.L.P.(C)No.10809 of 2013 and respondents 6 to 9 in the appeal arising out of S.L.P.(C)No.9794 of 2013). After hearing both sides, a learned Single Judge of this Court came to the conclusion that the notification and selection process were not in accordance with the circulars issued by the Registrar of Co-operative Societies and quashed the said notification, selection and appointment of the selected candidates, and directed the Bank to conduct a fresh selection, within six months, in the manner directed, after inviting applications in accordance with the circular. The judgment of the learned Single Judge was challenged by the Bank as well as selected candidates by way of two separate writ appeals, challenging maintainability of the writ petition against the co- operative society. The appellants contended, inter alia, that the writ petitioners have effective alternative remedy under Section 69 of the KCS Act and that, the directions in the circular are not mandatory in nature, but are only guidelines and unless the writ petitioners prove prejudice, the High Court should not interfere with the selection process. After considering the rival contentions in detail and the relevant provisions of the KCS Act, the Division Bench did not find any merit in the writ appeals and dismissed both the appeals. The Apex Court, after considering the rival contentions and going through the impugned judgment, did not find any reason to interfere with the findings of the High Court. The Apex Court held that the circulars issued by the Government and Registrar of the Co-operative Societies have statutory force and specifically stipulate the procedure for conducting the selection to the post of sub-staff. Paragraph 8 of the said decision reads thus;

"8. We do not find any reason to interfere with the findings of the High Court. Rule 182(5) of the Rules stipulates that 'In respect of societies and posts not covered by Section 80(3A) and Section 80B of the Act, the appointments shall be made by the Committee after conducting the written examination and interview as per the guidelines issued by the Registrar'. The circulars issued by the Government and Registrar of the Co-operative Societies have statutory force and specifically stipulate the procedure for conducting the selection to the post of sub-staff."

(underline supplied)

51. Circulars-Opening of branches:- Vide Circular No.17/81 dated 18.05.1981 issued by the Joint Registrar (Credit), a circular relied on by the learned Additional Advocate General, instructions have been issued regarding opening of branches by Primary Agricultural Credit Societies and also Urban Co-operative Banks not coming under the purview of Banking Regulation Act. As per the said circular, in the annual conference of District Co-operative Banks and Deputy Registrars held on 20.01.1981 at Thiruvananthapuram, it was decided that the Deputy Registrars should not accord sanction to the Primary Agricultural Credit Societies for opening of new branches. It was also decided that in deserving cases, the Deputy Registrars and District Co-operative Banks concerned will jointly survey and study in detail the feasibility and viability of the proposed branch and make specific recommendation to the Registrar along with survey report and other relevant details for considering sanction for the branch. On receipt of application for a new branch of a Primary Agricultural Credit Society, the Deputy Registrar and the District Co-operative Bank will jointly survey the locality for the proposed branch and identify the potential for growth. The area should be capable of providing adequate business for the branch. Detailed study and survey should be conducted regarding the area to assess the potential and prospects for enrolling of new members, for deposit mobilisation and scope for lending with special reference to productive purposes. The potential for the proposed area should be clearly adequate to enable the branch to become self-supporting and to attain viability within a period of one to two years. The Primary Agricultural Credit Society which seeks permission to open new branch should satisfy the conditions stipulated in clauses (a) to (h) of Para.3 of the circular dated 18.05.1981. As per Para.4 of the said circular, the Deputy Registrars, while forwarding proposals for according sanction to open branches, should ensure that the society has satisfied all the above conditions and that the joint survey reveals ample scope for the successful working of the proposed branch/branches. As per Para.5, before considering the application of the society for a new branch, the Deputy Registrar will also ensure that in the area where the new branch is proposed to be opened, there is no prospect for a new Primary Agricultural Credit Society to come up at least for some time in the near future. As per Para.6, the above instructions will also be applicable, mutatis mutandis, for opening of new branches by Urban Co- Operative Banks which do not come under the purview of the Banking Regulation Act.

52. The Registrar of Co-operative Societies issued Circular No.39/2006 dated 02.09.2006, in partial modification of Circular No.17/81 dated 18.05.1981. As per Para.1 of the circular dated 02.09.2006, Primary Agricultural Credit Societies/Service Co- operative Banks shall submit application for opening new branches before the Joint Registrar of Co-operative Societies, through Assistant Registrar (General). On receipt of the application, the Joint Registrar (General) and Joint Registrar (Audit) shall jointly survey the area for the proposed branch and submit a detailed survey report to the Registrar of Co-operative Societies, along with the report of the Joint Registrar, on the success potential of the branch, current operations of the bank in that area, agricultural credit disbursement, possibility of disbursing more credit on the opening of the branch, availability of a building to operate the branch, security, deployment of staff, potential for the branch to become self-sufficient and other activities. In addition to the conditions stipulated in the circular dated 18.05.1981, the society which seeks permission to open new branch should satisfy the condition stipulated in Circular No.39/2006 dated 02.09.2006, i.e., it has provided at least 20% agricultural credit during that financial year or the year preceding it.

53. The Registrar of Co-operative Societies issued Circular No.30/2014 dated 21.06.2014 authorising the Joint Registrar for granting permission to open branches of Primary Agricultural Credit Societies/Service Co-operative Banks/other Credit Co-operative Societies. As per that circular, the Joint Registrar shall grant permission to open branch/extension counter of Primary Agricultural Credit Societies/Service Co-operative Banks/other Credit Co-operative Societies after ensuring strict compliance of the provisions in Circular No.17/81 dated 18.05.1981 and Circular No.39/2006 dated 02.09.2006. The Joint Registrar shall also ensure that adequate security arrangements are made for the headquarters and branches, as per Circular No.33/2009 dated 13.07.2009; payment of interest on deposits and levy of interest on loans are in accordance with the instructions in the circulars issued by the Registrar of Co-operative Societies; the society has taken membership in the Risk Fund and the Deposit Guarantee Scheme; and the society opens the branch/extension counter within six months and operate that branch/extension counter with the existing employees. The permission to open branches can be given only for a period of one year. The permission to continue the operation of the branch shall be granted and the sanctioning of new posts shall be made only after evaluating the performance of the branch for one year, in case the performance of the branch is satisfactory and profitable. The Joint Registrar shall maintain a separate register regarding grant of permission to open branches, which shall contain details like the date of grant of permission, the date of commencement of branch, etc., which shall be produced at the time of inspection.

54. In Pantheerankavu Service Co-operative Bank Ltd. and others v. State of Kerala and others [ILR 2016 (2) Ker. 1073], a decision relied on by the learned Senior Counsel for additional respondents 10 to 17, a Division Bench of this Court was dealing with the challenge made against Ext.P1 Government Order dated 16.01.2015 issued by the 1st respondent State, in exercise of its powers under Section 101 of the KCS Act extending the area of operation of the petitioner Society to the entire Kozhikode Taluk, except Kozhikode Corporation limits, by granting exemption from clause (c) of sub-section (1) of Section 7 of the KCS Act. The Division Bench of this Court considered the extent of power of the Government under Section 101 of the KCS Act and declined interference with that order. However, in paragraph 56 of that judgment, the Division Bench has stated in categorical terms that the petitioner Society (2nd respondent before the Division Bench), a Primary Agricultural Credit Society, is fully covered by Rule 178A of the KCS Rules as existing on date, which has to be complied with by the said society for opening any branches/offices. For opening new branches/offices the petitioner Society has to obtain sanction as contemplated by Rule 178A. The Division Bench dismissed those writ appeals, subject to the observations as made above regarding opening of new branches/offices. Paragraphs 56, 57 and also the last paragraph of the said judgment read thus;

"56. Before we conclude one aspect of the matter need to be noted. Consequent to the exemption granted under Section 101 of the Act the area of operation of 2 nd respondent Society has been extended to the entire Kozhikode Taluk. The area of operation having been extended, it is open for the 2nd respondent to open new branches/offices as per the norms fixed by the Registrar from time to time. The 2nd respondent being a Primary Agricultural Credit Society is fully covered by Rule 178A as existing on date which has to be complied with by the 2nd respondent for opening any branches/offices. We thus observe that for opening new branches/offices the 2nd respondent has to obtain sanction as contemplated by Rule 178A. For ready reference Rule 178A reads as under:

"178A. Opening of Branches.- The Kerala State Co- Operative Bank, the Kerala State Co-operative Agricultural and Rural Development Bank, District Co-operative Banks, Primary Agricultural Credit Societies, Service Co-operative Banks, Primary Agricultural and Rural Development Banks, Urban Banks and Farmer's Service Co-operative Banks shall submit application for opening offices in the name of Regional Office, Zonal Office, Branch Office, Sub Office or Extension Centre as per the norms fixed by the Registrar from time to time, and every such application shall be accompanied by a chalan receipt for the remittance of fees calculated at the rates given below:

xxx xxx xxx

Provided that such amount shall not be refunded to the applicant bank irrespective of the fact that whether sanction is accorded or not."

57. Learned Single Judge did not find the present case as a fit case to exercise jurisdiction under Article 226 of the Constitution of India. No illegality was found in exercise of power under Section 101, hence all the writ petitions were dismissed. In view of the foregoing discussions we do not find any ground to interfere with the judgment of learned Single Judge in exercise of the appellate jurisdiction. In the result, subject to the observations as made above regarding opening of new branches/offices, all the Writ Appeals are dismissed. Parties shall bear their own costs."

(underline supplied)

55. Though it is averred in paragraph 4 of the writ petition that the challenge made against Ext.P1 order was repelled by this Court and as such the jurisdiction of the petitioner Society to operate within Kozhikode Taluk had attained finality, the observations made by the Division Bench in Pantheerankavu Service Co-operative Bank Ltd. that the petitioner Society is fully covered by Rule 178A of the KCS Rules as existing on date, which has to be complied with for opening any branches/offices and that, for opening new branches/offices the petitioner Society has to obtain sanction as contemplated by Rule 178A are not disclosed in the writ petition.

56. As stated by Scrutton, L.J., in R. v. Kensington Income Tax Commissioners [(1917) 1 KB 486], an applicant who does not come with candid facts and 'clean breast' cannot hold a writ of the Court with 'soiled hands'. Suppression or concealment of material facts is not an advocacy. It is a jugglery, manipulation, maneuvering or misrepresentation, which has no place in equitable and prerogative jurisdiction.

57. This Court finds considerable force in the submission made by the learned Senior Counsel for additional respondents 10 to 17 that the petitioner Society, after opening two branches without obtaining prior written permission of the Registrar, has filed this writ petition challenging the vires of Section 74B of the KCS Act, in order to circumvent the binding directions of the Division Bench in the inter-party judgment.

58. As already noticed, the KCS Act was enacted to provide for the orderly development of the co-operative sector in the State , in accordance with co-operative principles, as self governing, democratic institutions. In view of the provisions under Section 4 of the KCS Act, the object of a co-operative society should be promotion of the economic interest of its members or the interest of the public in accordance with co-operative principles, as defined in clause (eccc) of Section 2 of the said Act, listed in Schedule II, which includes co-operation among co-operatives and concern for community. As per clause (v) of Rule 4 of the KCS Rules, the Registrar is empowered to refuse registration of a society if he is satisfied that the proposed society will not fulfill the economic interest of the public in accordance with the co-operative principles mentioned in Schedule II of the Act or the registration of the society will make an adverse effect on the development of co- operative movement or the objects of the proposed society is against the preamble of the Act. As per sub-rule (1) of Rule 5, the bye-laws of a society shall not be contrary to the provisions of the KCS Act and the KCS Rules.

59. As per sub-rule (1) of Rule 54 of the KCS Rules, in order to invest the whole or any portion of the funds in the purchase or lease of land or the acquisition, construction or renewal of any building that may be necessary to conduct the business, a society has to obtain previous sanction in writing of the Registrar. As per sub-rule (1) of Rule 63, every society with limited liability which obtains any portion of its working capital by deposits and coming within the purview of the Banking Regulation Act, 1949 shall maintain fluid resources in such form and according to such standards as may be fixed by the Government from time to time by general or special order and utilise only such portion of its working capital in lending business and distribute its assets in accordance with such standards. In view of the provisions under Rule 178A, for opening offices in the name of branch office, extension centre, etc., the petitioner Society, which is a Primary Agricultural Credit Society, has to submit application, as per the norms fixed by the Registrar from time to time, after remitting the requisite fee. As per Rule 180, no society shall do any act which is not expressly provided for by the bye-laws of such society without the previous express sanction of the Registrar for the same.

60. In view of the provisions under the KCS Act and the KCS Rules referred to above, and also the circulars issued by the Registrar fixing the norms regarding opening of branches by a Primary Agricultural Credit Society, the petitioner Society cannot contend that, in view of Ext.P1 order of exemption granted under Section 101 of the KCS Act extending the area of operation of the petitioner Society, by granting exemption from clause (c) of sub- section (1) of Section 7 of the KCS Act, the Society is entitled to open branches anywhere in the extended area of operation, for which no prior permission from the Registrar of Co-operative Societies is required. In order to open branches in the extended area of operation, the petitioner Society has be comply with the statutory requirements referred to above. In addition to this, the petitioner Society has to maintain its identity or status as a Primary Agricultural Credit Society, in terms of clause (oaa) of Section 2 of the KCS Act and clause (cciv) of Section 5 of the BR Act, i.e., its principal object is to undertake agricultural credit activities and to provide loans and advances for agricultural purposes and its area of operation is confined to a Vilage, Panchayat or Municipality. In Pantheerankavu Service Co- operative Bank Ltd. [ILR 2016 (2) Ker. 1073] the Division Bench observed that for opening new branches/offices the petitioner Society has to obtain sanction as contemplated by Rule 178A of the KCS Rules.

61. The petitioner in this writ petition is a Primary Agricultural Credit Society, represented by its General Manager. On 12.02.2019, the petitioner Society filed I.A.No.1 of 2019, seeking an order to implead Shri. N.K.Abdurahiman, the Chairman of the Society, who is arrayed as 18th respondent in that interlocutory application, as additional 2nd petitioner in the writ petition. That application filed under Article 226 of the Constitution of India, read with Rule 148 of the Rules of the High Court of Kerala, 1971 and Order I, Rule 10 of the Code of Civil Procedure, 1908 is supported by an affidavit sworn to by the General Manager of the petitioner Society, in which it is averred that the impleadment of that person as additional 2nd petitioner is sought for, in view of the contention raised by the respondents that the petitioner Society, not being a citizen, cannot claim protection of the fundamental right guaranteed under Article 19(1)(c) of the Constitution of India. On 13.02.2019, the said Abdurahiman filed I.A.No.2 of 2019, seeking an order to implead him as additional 2nd petitioner in the writ petition. On 28.02.2019, the petitioner Society filed I.A.No.3 of 2019, seeking an order to accept the affidavit of the said Abdurahiman, produced along with that interlocutory application, as additional document No.I.

62. In State Trading Corporation of India Ltd. v. Commercial Tax Officer, Visakhapatnam [AIR 1963 SC 1811], a decision relied on by the learned Additional Advocate General, one among the questions referred to a Constitution Bench of the Apex Court was whether the State Trading Corporation, a Company registered under the Companies Act 1956, is a citizen within the meaning of Article 19 of the Constitution of India and can ask for the enforcement of fundamental rights granted to citizens under the said Article. The Apex Court held that the rights of citizenship envisaged in Article 19 of the Constitution of India are not wholly appropriate to a corporate body. In other words, the rights of citizenship and the rights flowing from the nationality or domicile of a corporation are not conterminous. It would thus appear that the makers of the Constitution had altogether left out of consideration juristic persons when they enacted Part II of the Constitution relating to 'citizenship' and made a clear distinction between 'persons' and 'citizens' in Part III of the Constitution. Part III which proclaims fundamental rights, was very accurately drafted, delimiting those rights like freedoms of speech and expression, the right to assemble peaceably, the right to practice any profession, etc., as belonging to 'citizens' only and those more general rights like the right to equality before the law, as belonging to 'all persons'.

63. In Barium Chemicals Ltd. v. Company Law Board [AIR 1967 SC 295], another decision relied on by the learned Additional Advocate General, a Constitution Bench of the Apex Court held that the Company registered under the Companies Act, 1956 being an artificial legal person cannot, as held in State Trading Corporation of India Ltd. [AIR 1963 SC 1811] claim the benefit of the provisions of Article 19(1)(g) of the Constitution of India. The Company is not a citizen and has no fundamental right under Article 19.

64. In Municipal Committee, Amritsar v. State of Panjab [AIR 1969 SC 1100], another decision relied on by the learned Additional Advocate General, a Three-Judge Bench of the Apex Court held that a Municipal Committee is not a 'citizen' within the meaning of Article 19 of the Constitution of India. The Municipal Committee is, therefore, not entitled to claim protection of any of the fundamental rights under Article 19.

65. In Alagaapuram R. Mohanraj v. Tamil Nadu Legislative Assembly [(2016) 6 SCC 82], another decision relied on by the learned Additional Advocate General, the Apex Court held that the fundamental rights guaranteed under Article 19 of the Constitution of India are available only to the citizens of this country, whereas the other fundamental rights under Article 14 and Article 21 are available to every person who is subjected to the laws of this country. The six freedoms enumerated under Article 19 of the Constitution inhere in all the citizens, by virtue of their citizenship, without the need for anything further.

66. In view of the law laid down by the Apex Court in State Trading Corporation of India Ltd.; Barium Chemicals Ltd.; Municipal Committee, Amritsar; and Alagaapuram R. Mohanraj, the petitioner Society, which is a Primary Agricultural Credit Society registered under the provisions of the KCS Act is not a 'citizen' within the meaning of Article 19 of the Constitution of India, in order to claim protection of the fundamental right guaranteed under Article 19(1)(c) of the Constitution of India.

67. I.A.Nos.1, 2 and 3 of 2019:- The learned Senior Counsel for the petitioner Society relied on the provisions of Rule 147A and Rule 148 of the Rules of the High Court of Kerala, 1971 and also Order I, Rule 10 of the Code of Civil Procedure, 1908 in support of the prayer for impledment of Shri. N.K.Abdurahiman, the Chairman of the petitioner Society, as additional 2 nd petitioner in the writ petition.

68. As per Rule 147A of the Rules of the High Court of Kerala, more persons than one may join in one writ petition as petitioners in whom any right to relief in respect of or arising out of the same act or transaction or series of acts or transactions is alleged to exist, whether jointly, severally or in the alternative, where, if such persons present separate writ petitions, any common question of law or fact would arise, provided that each person joining in such writ petition shall pay the court fee payable under Article 11(r) of Schedule II of the Kerala Court Fees and Suits Valuation Act, as if each of them had filed a separate writ petition.

69. Rule 148 of the Rules of the High Court of Kerala deals with addition of parties. As per Rule 148, all persons directly affected shall be made parties to the petition. Where such persons are numerous, one or more of them may with the permission of the Court on application made of the purpose, be impleaded on behalf of or for the benefit of all persons so affected; but notice of the original petition shall, on admission, be given to all such persons either by personal service or by public advertisement as the Court in each case may direct.

70. Order I, Rule 10 of the Code of Civil Procedure deals with suit in the name of wrong plaintiff. As per sub-rule (1) of Rule 10, where a suit has been instituted in the name of the wrong person as plaintiff or where it is doubtful whether it has been instituted in the name of the right plaintiff, the court may at any stage of the suit, if satisfied that the suit has been instituted through a bona fide mistake, and that it is necessary for the determination of the real matter in dispute so to do, order any other person to be substituted or added as plaintiff upon such terms as the court thinks just. As per sub-rule (2) of Rule 10, the court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added.

71. In Vijayan v. Commissioner Corporation of Cochin [1987 (1) KLT 665], in the context of Rule 147A of the Rules of the High Court of Kerala, this Court held that a reading of the said rule shows that it is meant to be observed at the time of filing the original petition. The words "more persons than one may join in one writ petition as petitioners" are indicative of the joint action to be exercised by more than one person while filing the original petition. The interpretation that the rule enables a stranger to get himself added to as one of the petitioners after the filing of the original petition does not appear to be sound on the language employed in the rule. There is no provision in the High Court Rules similar to Order I, Rule 10(2) of the Code of Civil Procedure as per which the civil court has power to add "the name of any person who ought to have been joined, whether as plaintiff or defendant." Absence of a similar provision in the High Court Rules is of no practical consequence for any other person since it is open to him to file a separate original petition for reliefs which he claims. Rule 148 provides for making all persons directly affected as parties to the petition and that power includes adding of parties as respondents. In Mariamma Punnose v. Tahsildar, Kunathunad [1979 KLT 327] a learned Single Judge of this Court has pointed out that the main purpose of Rule 147A "is to enable litigants having a common grievance to be redressed to join together in a single petition, provided they pay court fee as if they were filing independent petitions." Rule 152 provides for the issuance of notice of the original petition to any person who has not been made a party thereto. But such person who receives the notice has only the right of being heard.

72. In Vijayan it was contended by the learned counsel for the applicant that, if the applicant could have joined as one of the petitioners while filing the original petition it does not stand to reason that he cannot be allowed subsequently to get himself added to the list of petitioners, provided other conditions in the rule are satisfied. While dismissing that application, this Court held that the stranger applicant, who did not become one of the petitioners at the time of filing the original petition, would have been left out either because of the refusal of the others to associate him with them, or because he himself refused to associate with the others initially, or because the petitioners did not consider him at all. Such a person cannot come after the filing of the original petition for permission to join others in the action. The decision of a stranger to get added to the lilt of petitioners cannot be said to be an exercise in which he and other petitioners have joined together. His decision is unilateral, since there is no conjoining of minds as between the stranger applicant and the petitioners who filed the original petition.

73. The learned Senior Counsel for the petitioner Society made an attempt to distinguish the decision in Vijayan by contending that, in the said case this Court dismissed the application for impleadment since the applicant was a stranger and there was no conjoining of minds as between the stranger applicant and the petitioners who filed the original petition. In the instant case, the applicant is the Chairman of the petitioner Society. There is conjoining of minds as between the applicant and the petitioner Society and the application was filed in view of the contention raised by the respondents that the petitioner Society not being a citizen within the meaning of Article 19 of the Constitution of India, cannot claim protection of the fundamental right guaranteed under Article 19(1)(c) of the Constitution of India.

74. In Vijayan this Court held that, a reading of Rule 147A of the Rules of the High Court of Kerala shows that it is meant to be observed at the time of filing the original petition and that, the words "more persons than one may join in one writ petition as petitioners" are indicative of the joint action to be exercised by more than one person while filing the original petition. This Court held further that, the interpretation that the rule enables a stranger to get himself added to as one of the petitioners after the filing of the original petition does not appear to be sound on the language employed in the rule. Absence of a provision similar to Order I, Rule 10(2) of the Code of Civil Procedure in the Rules of the High Court of Kerala is of no practical consequence for any other person since it is open to him to file a separate original petition for reliefs which he claims. Rule 148 provides for making all persons directly affected as parties to the petition and that power includes adding of parties as respondents.

75. In Sreekumaran v. Kerala Agricultural University [1984 KLT 818], in the context of Rule 148 of the Rules of the High Court of Kerala, this Court held that, as per the said Rule, all persons directly affected shall be made parties to the petition. Where such persons are numerous, one or more of them may with the permission of the Court on application made for the purpose, be impleaded on behalf of or for the benefit of all persons so affected; but notice of the original petition shall, on admission, be given to all such persons either by personal service or by public advertisement as the Court in each case may direct. It is open to the petitioner to sue in a representative capacity. Equally, when persons likely to be affected by the decision in the original petition are numerous, one or more of them may be impleaded on behalf of or for the benefit of all so affected, with the permission of the Court. What is required is only the permission of the Court and not the consent of the person sought to be impleaded in a representative capacity. To insist on such consent would render the Rule unworkable. The Rule is evidently based on the provisions in Order I, Rule 8 of the Code of Civil Procedure. Even under Order I, Rule 8 of the Code, what is required is the permission of the court and not the consent or willingness of the person sought to be impleaded in a representative capacity.

76. In Vinod Kumar v. Union of India [ILR 2007 (1) Delhi 757], a decision relied on by the learned Senior Counsel for the petitioner Society, in the context of Section 20 of the Code of Civil Procedure, 1908 and Article 226(2) of the Constitution of India, a Division Bench of the Delhi High Court held that the provisions of Section 20 of the Code of Civil Procedure would not be applicable to writ jurisdiction stricto senso. It is a settled principle of law that provisions of the Code of Civil Procedure would not apply in full vigour or strictly to the writ proceedings. They are not applicable of their own force to such proceedings but nonetheless the writ proceedings could be governed by principles analogous to those contained in the Code particularly when they are not inconsistent with the writ rules of the High Court or the constitutional mandate contained in Article 226. Unlike the provisions of Section 20 of the Code which specifies different grounds for vesting jurisdiction in the Court, Article 226 contemplates location of the authorities and arising of cause of action partly or wholly within the territorial jurisdiction of that Court. By introduction of Article 226(2), great emphasis has been laid on the concept of cause of action. Even this statement is further clarified by use of non-obstante clause that it would be so notwithstanding the fact that seat of such Government or authority or residence of such person is not within those territories. This manifestly shows that residence of the party is not really a relevant consideration for determining jurisdiction of a Court under these provisions. In view of this constitutional mandate, the provisions of the High Court Rules and orders relating to exercise of writ jurisdiction have to be read ejusdem generis to the constitutional provisions.

77. In Press Trust of India v. Union of India [AIR 1974 SC 1044], another decision relied on by the learned Senior Counsel for the petitioner Society, Civil Appeal No.2102 of 1968 and Writ Petition No.40 of 1968 were filed by the Press Trust of India, while Writ Petition No.37 of 1968 was filed by the Indian National Press (Bombay) Ltd., challenging the order dated 27.10.1967 issued by the Union of India, Ministry of Labour, Employment and Rehabilitation (Department of Labour and Employment) accepting the recommendations of the Wage Board constituted under Section 9 of the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955 as violative of Articles 14, 19 and 31 of the Constitution of India. The order accepting the recommendations in respect of the wages, scales of pay, etc. of the working journalists was subject to certain minor modifications therein specified, being modifications which in the opinion of the Central Government did not effect important alterations in the character of the recommendations. So far as the writ petitions are concerned, an objection has been raised that the 2nd petitioner Shri A.B.Nair in Writ Petition No.37 of 1968 had died during the pendency of the petition, and as an application had been filed in Writ Petition No.40 of 1968 to delete the name of the 2nd petitioner Shri Uma Shanker Dikshit, the 1st petitioner in both the petitions being limited companies, the reliefs claimed could only be confined to Articles 14 and 31 of the Constitution and not Article 19 under which the guarantee of fundamental rights is only available to a citizen of India, which the limited companies are not. In order to meet the preliminary objection that no relief in the writ petitions is available under Article 19, it was urged that the prayer for substitution of Shri Jai Kumar Karnani, a share holder in the 1 st petitioner company in place of the deceased A.B.Nair in writ petition No.37 of 1968 and Shri K.Narendra, a share holder in the 1st petitioner company in place of Shri Uma Shankar Dikshit in Writ Petition No.40 of 1968 being manifestly just should be granted. If these prayers are granted, the 2nd petitioner in the respective writ petitions can also challenge the impugned order under Article 19 of the Constitution of India. It was pointed out that in the first writ petition the substitution was necessitated by the death of the 2nd petitioner and in the second writ petition, as Shri Uma Shankar Dikshit became Central Minister, another share holder is sought to be substituted. It was contended on behalf of the 2nd respondent that these petitions should not be allowed, nor should the petitioners' Advocate be permitted to raise any question of infringement of the rights conferred under Article 19, nor is it right to say that no question of limitation arises in the matter of enforcement of fundamental rights. It was also submitted that even otherwise a shareholder can enforce only his rights under the law and no such infringement can arise in this case. The Apex Court noticed that, though no specific mention has been made in the writ petitions of any of the Articles which are alleged to have been infringed by the impugned order, the facts stated and the contentions urged in the petition entitle the petitioners to invoke also Article 19. A share holder can challenge the order if the restriction on his right under Article 19(1)(f) is unreasonable. If the impugned order places a heavy burden on the resources of the company or the wage has been fixed without taking into consideration the capacity to pay, or where the higher wage than what the journalists asked for is fixed without hearing the employer, then that burden will affect the share holders also. In such a case it will not be valid to contend that the right of a share holder is not infringed. The petitioners can validly challenge the order under Article 19. The Apex Court held that, even if the prayer in the second petition (C.M.P. No. 1034 of 1974 in Writ Petition No. 40 of 1968) is rejected as there is nothing to debar a Central Minister from continuing to be a petitioner, the petitioners cannot be denied relief under Article 19. Similarly, if the prayer in the first petition (Writ Petition No. 37 of 1968) is rejected on a technical plea that the 2nd petitioner having died no relief can be granted under Article 19, there is nothing to prevent another writ petition being filed by a share holder of the 1st petitioner company, challenging the impugned order under Article 19. The rejection of the prayer, therefore, will merely prolong the litigation. The argument that such a petition would be barred by limitation cannot be considered unless the circumstances under which a fresh petition has been filed and the question whether the petitioner has been guilty of laches or failure to pursue his remedy diligently are examined. It may be that the circumstances urged for filing the petition later may justify it being entertained. As the prayer for the substitution in each of the writ petitions will further the interests of justice and as the balance of convenience would justify granting the petitions, the Apex Court directed the persons named above to be brought on record in the respective writ petitions as the 2nd petitioner.

78. The learned Senior Counsel for the petitioner Society relied on the concurring judgment of B.L. Hansaria, J. in B.C. Chaturvedi v. Union of India [(1995) 6 SCC 749], in which it was observed that Article 142 of the Constitution of India has specifically conferred the power of doing complete justice on the Apex Court, to achieve which result it may pass such decree or order as deemed necessary; it would be wrong to think that other courts are not to do complete justice between the parties. If the power of modification of punishment/penalty were to be available to the Apex Court only under Article 142, a very large percentage of litigants would be denied this small relief merely because they are not in a position to approach the Apex Court, which may, inter alia, be because of the poverty of the concerned person. The framers of the Constitution permitted the High Court to even strike down a parliamentary enactment, on such a case being made out. The High Court would be within its jurisdiction to modify the punishment/penalty by moulding the relief, which power it undoubtedly has, in view of long lines of decisions of the Apex Court. However, this power of moulding relief can be invoked by the High Court only when the punishment/penalty awarded shocks the judicial conscience.

79. In Indian Bank v. ABS Marine Products (P) Ltd.

[(2006) 5 SCC 72] one of the contentions raised was that, any direction issued by the Apex Court in exercise of power under Article 142 of the Constitution of India to do proper justice and the reasons, if any, given for exercising such power, cannot be considered as law laid down by that Court under Article 141. It was also pointed out that, other Courts do not have the power similar to that conferred on the Apex Court under Article 142 and any attempt to follow the exercise of such power will lead to incongruous and disastrous results. The Apex Court left open that question, observing as follows; "Though there appears to be some merit in the first respondent's submission, we do not propose to examine that aspect." Though the said question was left open, the Apex Court observed as follows in Para.26 of the judgment;

"26...... Many a time, after declaring the law, this Court in the operative part of the judgment, gives some directions which may either relax the application of law or exempt the case on hand from the rigour of the law in view of the peculiar facts or in view of the uncertainty of law till then, to do complete justice. While doing so, normally it is not stated that such direction/order is in exercise of power under Article

142. It is not uncommon to find that Courts have followed not the law declared, but the exemption/ relaxation made while moulding the relief in exercise of power under Article

142. When the High Courts repeatedly follow a direction issued under Article 142, by treating it as the law declared by this Court, incongruously the exemption / relaxation granted under Article 142 becomes the law, though at variance with the law declared by this Court. The Courts should therefore be careful to ascertain and follow the ratio decidendi, and not the relief given on the special facts, exercising power under Article 142....."

80. In State of Punjab v. Rafiq Masih [(2014) 8 SCC 883] a Three-Judge Bench of the Apex Court affirmed the view taken in ABS Marine Product holding that, the directions issued under Article 142 do not constitute a binding precedent unlike Article 141 of the Constitution of India. They are direction issued to do proper justice and exercise of such power, cannot be considered as law laid down by the Apex Court under Article 141 of the Constitution of India. The Apex Court held further that, the directions of the Court under Article 142 of the Constitution, while moulding the relief, that relax the application of law or exempt the case in hand from the rigour of the law in view of the peculiar facts and circumstances do not comprise the ratio decidendi and therefore lose its basic premise of making it a binding precedent. Paras.11 to 13 of the judgment read thus;

"11. Article 136 of the Constitution of India was legislatively intended to be exercised by the Highest Court of the Land, with scrupulous adherence to the settled judicial principle well established by precedents in our jurisprudence. Article 136 of the Constitution is a corrective jurisdiction that vests a discretion in the Supreme Court to settle the law clearly and make the law operational to make it a binding precedent for the future instead of keeping it vague. In short, it declares the law, as under Article 141 of the Constitution.

12. Article 142 of the Constitution is supplementary in nature and cannot supplant the substantive provisions, though they are not limited by the substantive provisions in the Statute. It is a power that gives preference to equity over law. It is a justice oriented approach as against the strict rigors of the law. The directions issued by the Court can normally be categorised into one, in the nature of moulding of relief and the other, as the declaration of law. 'Declaration of Law' as contemplated in Article 141 of the Constitution: is the speech express or necessarily implied by the Highest Court of the land. This Court in the case of Indian Bank v. ABS Marine Products (P) Ltd. [(2006) 5 SCC 72], Ram Pravesh Singh v. State of Bihar [(2006) 8 SCC 381] and in State of U.P. v. Neeraj Awasthi [(2006) 1 SCC 667], has expounded the principle and extolled the power of Article 142 of the Constitution of India to new heights by laying down that the directions issued under Article 142 do not constitute a binding precedent unlike Article 141 of the Constitution of India. They are direction issued to do proper justice and exercise of such power, cannot be considered as law laid down by the Supreme Court under Article 141 of the Constitution of India. The Court has compartmentalised and differentiated the relief in the operative portion of the judgment by exercise of powers under Article 142 of the Constitution as against the law declared. The directions of the Court under Article 142 of the Constitution, while moulding the relief, that relax the application of law or exempt the case in hand from the rigour of the law in view of the peculiar facts and circumstances do not comprise the ratio decidendi and therefore lose its basic premise of making it a binding precedent. This Court on the qui vive has expanded the horizons of Article 142 of the Constitution by keeping it outside the purview of Article 141 of the Constitution and by declaring it a direction of the Court that changes its complexion with the peculiarity in the facts and circumstances of the case.

13. Therefore, in our opinion, the decisions of the Court based on different scales of Article 136 and Article 142 of the Constitution of India cannot be best weighed on the same grounds of reasoning and thus in view of the aforesaid discussion, there is no conflict in the views expressed in the first two judgments and the latter judgment."

81. In Jyni and others v. Raphel P.T. and others [ILR 2016 (2) Kerala 54], a decision relied on by the learned Additional Advocate General, a Division Bench of this Court held that it is only the Apex Court, which, in exercise of its extraordinary powers under Article 142 of the Constitution, can pass such orders to do complete justice to the parties. The said power is not vested with any other Court in the country. Paragraph 18 of the said decision reads thus;

"18. In Jiju Kuruvila v. Kunjujamma Mohan [(2013) 9 SCC 166] the Apex Court has not laid down any absolute proposition of law that the minor children of the deceased are entitled for Rs.1,00,000/- each towards loss of love and affection. In the said judgment, the Two - Judge Bench has also made reference to the judgment of the Three - Judge Bench in Rajesh v. Rajbir Singh [(2013) 9 SCC 54]. As discernible from the judgment in Jiju Kuruvila, the Apex Court awarded Rs.1,00,000/- each to two minor children towards loss of love and affection, invoking its powers under Article 142 of the Constitution of India, for doing complete justice in the matter pending before it. It is only the Apex Court, which, in exercise of its extraordinary powers under Article 142 of the Constitution, can pass such orders to do complete justice to the parties. The said power is not vested with any other Court in the country. In view of the law laid down by the Apex Court in ABS Marine Products and in Rafiq Masih, the said direction issued by the Apex Court under Article 142 of the Constitution, while moulding the relief, does not comprise the ratio decidendi and therefore loses its basic premise of making it a binding precedent."

82. In Press Trust of India, the 1st petitioner in both the writ petitions, i.e., Writ Petition Nos.37 of 1968 and 40 of 1968 were limited companies and the 2nd petitioner in both the writ petition were citizens. The 2nd petitioner in Writ Petition No.37 of 1968 died during the pendency of the writ petition and the 2nd petitioner in Writ Petition No.40 of 1968 became Central Minister. In the first writ petition substitution was necessitated by the death of the 2nd petitioner and in the second writ petition, as the 2nd petitioner became Central Minister. The Apex Court allowed the petitions for substitution filed in both the writ petitions, holding that, even if the prayer in Writ Petition No. 37 of 1968 is rejected on a technical plea that the 2nd petitioner having died no relief can be granted under Article 19, there is nothing to prevent another writ petition being filed by a share holder of the 1st petitioner company, challenging the impugned order under Article 19. Similarly, even if the prayer in C.M.P. No.1034 of 1974 in Writ Petition No.40 of 1968 is rejected, as there is nothing to debar a Central Minister from continuing to be a petitioner, the petitioners cannot be denied relief under Article 19. As the prayer for the substitution in each of the writ petitions will further the interests of justice and as the balance of convenience would justify granting the petitions, the Apex Court directed the persons named above to be brought on record in the respective writ petitions as the 2nd petitioner.

83. As discernible from the judgment in Press Trust of India, the Apex Court allowed the prayer for substitution invoking its powers under Article 142 of the Constitution of India, for doing complete justice in the matter before it. As held by the Apex Court in Rafiq Masih the directions issued under Article 142 do not constitute a binding precedent unlike Article 141 of the Constitution of India. They are direction issued to do proper justice and exercise of such power, cannot be considered as law laid down by the Apex Court under Article 141 of the Constitution of India. In the instant case, in view of the law laid down by this Court in Vijayan [1987 (1) KLT 965] and Sreekumaran [1984 KLT 818], the reliefs sought for in I.A.No.1 of 2019 and I.A.No.2 of 2019, seeking an order to implead Shri N.K.Abdurahiman, the Chairman of the petitioner Society as additional 2nd petitioner in this writ petition cannot be entertained and those applications are accordingly dismissed, along with I.A.No.3 of 2019 filed by the petitioner Society, seeking an order to accept the affidavit of Shri N.K.Abdurahiman as additional document in the writ petition.

84. The learned Senior Counsel for the petitioner Society contended that sub-section (2) of Section 74B of the KCS Act which require prior written permission to open branches within the area of operation of a Primary Agricultural Credit Society is arbitrary and violative of Articles 14 and 19(1)(c) of the Constitution of India, apart from being violative of Article 43B, 243ZI and 243ZT, inserted by the Constitution (97 th Amendment) Act, 2011. By the Amendment Act, the formation of a co-operative society and its functioning have been given a constitutional protection. Since absolute autonomy in functioning has been conferred upon a co-operative society society, any restriction in its autonomy will be violative of the constitutional mandate.

85. In view of the law laid down by the Apex Court in State Trading Corporation of India Ltd.; Barium Chemicals Ltd.; Municipal Committee, Amritsar; and Alagaapuram R. Mohanraj, the petitioner Society, which is a Primary Agricultural Credit Society registered under the provisions of the KCS Act, is not a 'citizen' within the meaning of Article 19 of the Constitution of India, in order to claim protection of the fundamental right guaranteed under Article 19(1)(c) of the Constitution of India. In view of the dismissal of I.A.Nos.1 and 2 of 2019, the contention that sub-section (2) of Section 74B of the KCS Act is violative of Article 19(1)(c) of the Constitution is no more available to the petitioner Society, since it is not a citizen within the meaning of Article 19 of the Constitution of India, in order to seek enforcement of the fundamental rights guaranteed under the said Article.

86. The Constitution (97th Amendment) Act, 2011:- By the Constitution (97th Amendment) Act, 2011, apart from inserting 'co- operative societies' in Article 19(1)(c), Part IXB was inserted in the Constitution of India, which is in addition to insertion of Article 43B in Part IV of the Constitution, which deals with Directive Principles of State Policy. As per Article 43B, which deals with promotion of co-operative societies, the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. As per Article 243ZI, which deals with incorporation of co-operative societies, subject to the provisions of Part IXB, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning. As per Article 243ZT, which deals with continuance of existing laws, notwithstanding anything in Part IXB, any provision of any law relating to co-operative societies in force in a State immediately before the commencement of the Constitution (97 th Amendment) Act, 2011, which is inconsistent with 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.

87. In Kalpetta Co-operative Urban Society Ltd. v. Joint Registrar of Co-operative Societies (General) [2016 (4) KLT 802], a decision relied on by the learned Senior Counsel for the petitioner Society, the vires of clause (c) of sub-section (1) of Section 7 of the KCS Act, which impedes the registration of new co-operative societies of similar type in the same area of operation, was under challenge as violative of Article 19(1)(c) of the Constitution of India. It was contended that, in the light of 97 th constitutional amendment, establishing a co-operative society has become a fundamental right and if any restriction must be read into the said fundamental right, it ought to be within the four corners of the explanations provided under Clauses (2) to (6) of Article 19 of the Constitution of India, but not beyond. In other words, clause (c) of sub-section (1) of Section 7 of the KCS Act has to yield to the constitutional mandate under Article 243ZT, if one were to assume the petitioner Society and the 3 rd respondent society to be similar societies with areas overlapping.

88. In Kalpetta Co-operative Urban Society this Court noticed that the preamble to the KCS Act spells out that the Act aims at an orderly development of the co-operative sector in the State under the co-operative principles. To self-govern the 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. It is also to promote scientific and technological development, health care, market intervention, and management excellence in the co- operative sector. As per the Statement of Objects and Reasons of the Constitution (97th Amendment) Act, 2011 the reason for the amendment are (a) weaknesses in safeguarding the interests of the members and fulfillment of objects for which the co-operative institutions were organised; (b) postponement of elections indefinitely and ad-hoc administration by nominated office bearers or administrators; (c) reduced accountability; (d) inadequate professional management and low productivity; and (e) the need to run the co-operatives on well established democratic principles. To achieve the above objective, the amendment has, apart from inserting 'co-operative societies' in Article 19(1)(c), incorporated Part IXB in the Constitution, which is in addition to adding Article 43B in Part IV of the Constitution (Directive Principles of State Policy), which deals with promotion of co-operative societies. The State Legislatures have been empowered to make laws in respect of co-operative societies, other than multi-State co-operative societies, to provide for the matters enumerated in clauses (a) to (i) of paragraph 3 of the Statement of Objects and Reasons. Article 243ZI empowers the Legislature of a State to make provisions concerning the incorporation, regulation, and winding up of co- operative societies. It shall be based on the principles of voluntary formation, democratic member-control, member-economic participation, and autonomous functioning. Article 243ZJ delineates on the number and term of members of the board and its office bearers. Article 243ZK deals with the election of members of board; Article 243ZL with supersession and suspension of board and interim management; Article 243ZM with audit of accounts of co-operative societies; Article 243ZN with the convening of general body meetings; Article 243ZO with the right of a member to get information; Article 243ZP with returns; Article 243ZQ with offences and penalties; whereas Article 243ZR deals with multi- State co-operative societies and Article 243ZS deals with application to Union Territories.

89. In Kalpetta Co-operative Urban Society this Court noticed further that Article 243ZT, which begins with a non- obstante clause, protects the extant laws inconsistent with Part IXB to be in force until amended or repealed or until the expiration of one year from such commencement, whichever is less. The expiration took place long back. In Vipulbhai M. Chaudhary v. State of Gujarat [(2015) 8 SCC 1] the Apex Court observed that all laws on co-operative societies were bound to be 'restructured' in consonance with the Constitution 97th Amendment. In any case, any provision in the Act or Rules or bye- laws inconsistent with the Constitution shall be inoperative thereafter. Straight and simple is the constitutional mandate in Article 43B and Article 243ZI to all the States and the competent authorities to structure co-operative societies as conceived in the constitutional amendment. In Thalappalam Service Co- operative Bank Ltd. v. State of Kerala [(2013) 16 SCC 82] the Apex Court has discussed the autonomy of co-operatives vis-- vis the constitutional provisions. It was observed in Para.19 of the judgment that the rights of the citizens to form co-operative societies voluntarily has now been raised to the level of a fundamental right and State shall endeavour to promote their autonomous functioning. The Apex Court observed further in Para.20 that the constitutional amendment has been effected to encourage economic activities of co-operatives, which in turn help the rural India progress. Societies are expected, according to the decision of the Apex Court, not only to ensure the autonomous and democratic functioning of co-operatives, but also accountability of the management to the members and other stake-holders.

90. In Kalpetta Co-operative Urban Society, after holding that establishing a co-operative society is a fundamental right, this Court examined the impact of constitutional limitations under Clauses (2) to (6) of Article 19 of the Constitution of India, on the fundamental rights under Clause (1) of Article 19. This Court observed that forming a co-operative society combines two fundamental freedoms, i.e., right to form associations, etc.; and right to carry on economic activity. But the latter falls short of a right under Article 19(1)(g) of the Constitution, for establishing a co-operative society can hardly be called a profession. Nor can be it called an occupation, trade, or business, all of which have the motive of making a living out of it, and, incidentally, the motive of making profit, too. A co-operative society is a collective effort of a given group of people to improve their economic lot collectively. Running the society may be imbued with sound business principles, but that financial prudence does not by itself qualify it to be a trade as has been contemplated under Article 19(1)(g). It is, therefore, essentially a right under Article 19(1)(c). Any interpretation of the content of the rights under Article 19(1)(c) would subsume the wide, liberal content of Article 43B. Thus, the concepts of democratic functioning, voluntary formation, etc., in the newly introduced Article 43B would transmute themselves into fundamental features of Article 19(1)(c). Despite the constitutional amendment, a pre-existing law holds the field if it does not conflict with the amended constitutional mandate. The Legislature has been given the necessary leverage to rein any repugnant piece of legislation out of sync with the constitutional mandate. One year is the period prescribed for that purpose in Article 243ZT of the Constitution of India. As to reasonable restrictions, even in the name of public order and morality, Section 7(1)(c) of the KCS Act offers very little as justification to sustain it in the face of Article 19(1)(c) of the Constitution. Therefore, this Court held that Section 7(1)(c) of the KCS Act is ultra vires and unconstitutional for it falls foul of Article 19(1)(c) of the Constitution of India.

91. The learned Additional Advocate General pointed out that the judgment in Kalpetta Co-operative Urban Society Ltd. is under challenge in Writ Appeal No.1680 of 2016 and connected cases. In those writ appeals, the Division Bench of this Court has granted an interim order on 20.10.2006, staying the operation of the impugned judgment insofar as it declares Section 7(1)(c) of the KCS Act ultra vires and unconstitutional.

92. In Thalappalam Service Co-operative Bank Ltd. [(2013) 16 SCC 82] the Apex Court noticed that the Constitution (97th Amendment) Act, 2011 has been effected to encourage economic activities of co-operatives, which in turn help progress of rural India. Societies are expected not only to ensure autonomous and democratic functioning of co-operatives, but also accountability of the management to the members and other share stake-holders. By virtue of the amendment, Article 19(1)(c) of the Constitution of India guarantees the freedom to form an association, unions and co-operative societies. The right to form a co-operative society is, therefore, raised to the level of a fundamental right guaranteed under the Constitution of India. As per Article 43B inserted by the Constitution (97th Amendment) Act, the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. Part IXB was also inserted to the Constitution, containing Articles 243ZH to 243ZT. Co- operative societies are, however, not treated as units of self- government, like Panchayats and Municipalities. The Apex Court noticed further that, 'co-operative society' is a State subject under Entry 32 List I Seventh Schedule to the Constitution of India. Most of the States in India enacted their own Co-operative Societies Act with a view to provide for the orderly development of the co- operative sector in the state to achieve the objects of equity, social justice and economic development, as envisaged in the Directive Principles of State Policy, enunciated in the Constitution of India. For co-operative societies working in more than one State, the Multi State Co-operative Societies Act, 1984 was enacted by the Parliament under Entry 44 List I of the Seventh Schedule of the Constitution. Co-operative society is essentially an association or an association of persons who have come together for a common purpose of economic development or for mutual help. In the context of clause (h) of Section 2 of the Right to Information Act, 2005 which defines 'public authority', the Apex Court held that co- operative societies, admittedly, do not fall in the categories mentioned in sub-clauses (a) to (d) of clause (h), because none of them is either a body or institution of self-government, established or constituted under the Constitution, by law made by the Parliament, by law made by the State Legislature or by way of a notification issued or made by the appropriate Government. The Apex Court, while examining whether co-operative societies fall in the later part of clause (h) of Section 2 of the Right to Information Act, i.e., sub-clauses (d)(i) and (ii), held that the word 'controlled' used in sub-clause (d)(i) of clause (h) of Section 2 of the Act has to be understood in the context in which it has been used vis-a-vis a body owned or substantially financed by the appropriate Government, that is the control of the body is of such a degree which amounts to substantial control over the management and affairs of the body. The mere 'supervision' or 'regulation' as such by a Statute or otherwise of a body would not make that body a 'public authority' within the meaning of sub-clause (d)(i) of clause (h) of Section 2 of the Act. In other words just like a body owned or body substantially financed by the appropriate Government, the control of the body by the appropriate Government would also be substantial and not merely supervisory or regulatory. Powers exercised by the Registrar of Co-operative Societies and others under the Co-operative Societies Act are only regulatory or supervisory in nature, which will not amount to dominating or interfering with the management or affairs of the society so as to be controlled. Management and control are statutorily conferred on the Management Committee or the Board of Directors of the society by the respective Co-operative Societies Act and not on the authorities under the Co-operative Societies Act.

93. In Vipulbhai M. Chaudhary v. Gujarat Co-operative Milk Marketing Federation Ltd. [(2015) 8 SCC 1], a decision relied on by the learned Senior Counsel for the petitioner Society, the question before the Apex Court was whether in the absence of a specific provision on removal by no-confidence in the Gujarat Co- operative Societies Act, 1961, the Rules or even the Bye-laws of Gujarat Co-operative Co-operative Milk Marketing Federation Ltd., the Chairperson/elected office bearer can be removed by a motion of no-confidence. The Apex Court noticed that 'International Co- operative Alliance Statement on the Co-operative Identity' was adopted in Manchester, United Kingdom on 23.09.1995. The Statement also provides for 'values' on which co-operatives should model themselves, as per which co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. The Statement further provides for 'seven co-operative principles' as guidelines by which the co-operatives put their values into practice. The 6th principle is 'co-operation among co-operatives', which reads as follows; "Co- operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures". The 7th principle is 'concern for community', which reads as follows; "Co-operatives work for the sustainable development of their communities through policies approved by their members". The 'National Policy on Co- operatives' announced by the Department of Agriculture and Co- operation, Ministry of Agriculture, Government of India, adopted in March, 2002, is wholly based on the definition, values and principles stated in 'International Co-operative Alliance Statement on the Co-operative Identity'. The 97th Amendment to the Constitution of India, in fact, gave a constitutional frame to this policy. Apart from providing for the right to form co-operative societies to be a fundamental right under Article 19 of the Constitution of India and insertion of Article 43B under the Directive Principles of State Policy on promotion of co-operative societies, the amendment also introduced a new Part IXB on co- operative societies. Article 243ZT of the Constitution provides for continuance of the existing laws. By 12.01.2013, all laws on co- operative societies were bound to be restructured in consonance with the 97th Amendment of the Constitution of India and, in any case, any provision in the Act or Rules or bye-laws otherwise inconsistent with the Constitution will be inoperative thereafter. Article 43B and Article 243ZT are mandates to all the States and the competent authorities to structure co-operative societies as conceived in the Constitution of India, if not already there.

94. In Vipulbhai M. Chaudhary the Apex Court noticed that the principle of representative democracy is the election of representatives by the people otherwise eligible to caste their vote and the people thus elected, constituting the body for the management of an institution. Thus, in the case of co-operative societies, after the amendment in the Constitution, there has to be a board of elected representatives, which may be called Board of Directors or Governing Body or a Managing Committee, etc., to which the members entrust the direction and control of the management of the affairs of the society. That representative body selects one among the elected representatives as its Chairman or any other office bearer, as the case may be. The management and control of the society is entrusted to the representative body, viz., the Board of Directors and that the Chairperson elected by the Board of Directors is the Chairperson of the society and not of the Board of Directors. A co-operative society is registered on co- operative principles of democracy, equity, equality and solidarity. Democratic accountability, mutual trust, fairness, impartiality, unity or agreement of feeling among the delegates, co-operativeness, etc., are some of the cardinal dimensions of the co-operative principles. The co-operative society registered under the Central or the State Act is bound to function as a democratic institution and conduct its affairs based on democratic principles. Democratic functioning on democratic principles is to be reflected in the respective Acts or Rules or bye-laws both on principle and procedure. If not, it is for the Court to read the democratic principles into the Act or Rules or bye-laws. If a procedure is prescribed in any Act or Rule or bye-laws regarding election of an office bearer by the Board, as defined under Article 243ZH(b) of the Constitution of India, and for removal thereof, by way of a motion of no-confidence, the same procedure has to be followed. In case there is no express provision under the Act or Rules or bye-laws for removal of an office bearer, such office bearer is liable to be removed in the event of loss of confidence by following the same procedure by which he was elected to office.

95. In Rajendra N. Shah v. Union of India and another [CDJ 2013 GHC 045 : (2013) 54 (2) GLR 1698] a Division Bench of the Gujarat High Court held that the Constitution (97th Amendment) Act, 2011, inserting Part IXB containing Articles 243ZH to 243ZT, is violating the basic structure of the Constitution of India so long as the subject of 'co-operative societies' is in the List II of the Seventh Schedule and at the same time, the provisions of Article 368(2) of the Constitution has not been complied with. The Constitution has not permitted curtailment of the power of the State Legislatures over the subject mentioned in List II without taking recourse to Article 368(2). The Division Bench declared that the Constitution (97th Amendment) Act, 2011 inserting Part IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures. The Division Bench made it clear that its judgment, however, will not affect other parts of the Constitution (97th Amendment) Act, 2011. After the judgment was pronounced, the learned Assistant Solicitor General of India, appearing on behalf of the Union of India, prayed for stay of operation of the judgment. The Division Bench found no reason to stay the operation of the judgment and accordingly, that prayer was refused.

96. In Pradeep v. Kerala State Co-operative Election Commission [2016 (4) KHC 93], a decision relied on by the learned Senior Counsel for additional respondents 10 to 17, a Full Bench of this Court noticed that the 97th amendment to the Constitution of India had been challenged before the Gujarat High Court in a public interest litigation as to its constitutional validity, mainly for want of satisfaction of the requirement under the proviso to Article 368(2) of the Constitution of India, which envisaged ratification of amendment by the Legislatures of not less than one-half of the States. After hearing both the sides and after referring to the various judicial precedents, a Division Bench of the Gujarat High Court in Rajendra N. Shah v. Union of India and another [CDJ 2013 GHC 045 : (2013) 54 (2) GLR 1698] declared that the Constitution (97th Amendment) Act, 2011, inserting Part IXB containing Article 243ZH to 243ZT, is ultra vires to the Constitution of India, for not taking the recourse to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures. It was however made clear that the said judgment will not affect the other parts of the Constitution (97th Amendment) Act, 2011. Even though, a stay of operation of the said judgment was sought for then and there, the prayer was refused, as contained in the order. An SLP was preferred before the Apex Court, which came up for consideration on 22.09.2014, when leave was granted, but no interim order of stay is reportedly given.

97. As per Article 43B inserted by the Constitution (97 th Amendment) Act, 2011, which deals with promotion of co- operative societies, the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co-operative societies. Similarly, as per Article 243ZI, which deals with incorporation of co-operative societies, subject to the provisions of Part IXB, the Legislature of a State may, by law, make provisions with respect to the incorporation, regulation and winding up of co-operative societies based on the principles of voluntary formation, democratic member-control, member-economic participation and autonomous functioning. The KCS Act, was enacted to consolidate, amend and unify the laws relating to co-operative societies in the State of Kerala for the orderly development of co-operative sector in the State, in accordance with co-operative principles, as self governing, democratic institutions. In Thalappalam Service Co- operative Bank Ltd. [(2013) 16 SCC 82] the Apex Court noticed that, most of the States in India enacted their own Co- operative Societies Act with a view to provide for the orderly development of the co-operative sector in the state to achieve the objects of equity, social justice and economic development, as envisaged in the Directive Principles of State Policy, enunciated in the Constitution of India. In Vipulbhai M. Chaudhary [(2015) 8 SCC 1] the Apex Court noticed that the 97th Amendment to the Constitution of India, in fact, gave a constitutional frame to the 'National Policy on Co-operatives' announced by the Department of Agriculture and Co-operation, Ministry of Agriculture, Government of India, adopted in March, 2002, is wholly based on the definition, values and principles stated in 'International Co-operative Alliance Statement on the Co-operative Identity' adopted in Manchester, United Kingdom on 23.09.1995, which provides for 'values' on which co-operatives should model themselves, as per which co- operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. Among the 'seven co-operative principles' provided in the said Statement as guidelines by which the co-operatives put their values into practice, the 6th principle is 'co-operation among co- operatives' - strengthen the co-operative movement, by working together through local, national, regional and international structures; and the 7th principle is 'concern for community' - work for the sustainable development of their communities through policies approved by their members. The provisions under Section 74B of the KCS Act and Rule 178A of the KCS Rules, which deals with opening of branches, and also the norms for opening new branches, fixed by the Registrar from time to time, are only regulatory measures in order to ensure orderly development of co- operative sector in the State, in accordance with co-operative principles, which will not amount to an interference with the management or affairs of a co-operative society, or its autonomous functioning, in violation of Article 43B or Article 43ZI of the Constitution of India. Therefore, said provisions under the KCS Act and the KCS Rules are not hit by Article 243ZT of the Constitution of India.

98. In State of A.P v. McDowell and Co. [(1996) 3 SCC 709] a Three-Judge Bench of the Apex Court held that a law made by the Parliament or the Legislature can be struck down by courts on two grounds alone, viz., (1) lack of legislative competence and (2) violation of any of the fundamental rights guaranteed in Part- III of the Constitution or of any other constitutional provision. Paragraph 43 of the said decision reads thus;

"43. Sri Rohinton Nariman submitted that inasmuch as a large number of persons falling within the exempted categories are allowed to consume intoxicating liquors in the State of Andhra Pradesh, the total prohibition of manufacture and production of these liquors is "arbitrary" and the amending Act is liable to be struck down on this ground alone. Support for this proposition is sought from a judgment of this Court in State of T.N. v. Ananthi Ammal [(1995) 1 SCC 519]. Before, however, we refer to the holding in ourselves of certain basic propositions in this behalf. In the United Kingdom, the Parliament is supreme. There are no limitations upon the power of the Parliament. No Court in the United Kingdom can strike down an Act made by the Parliament on any ground. As against this, the United States of America has a Federal Constitution where the power of the Congress and the State Legislatures to make laws is limited in two ways, viz., the division of legislative powers between the States and the federal government and the fundamental rights (Bill of Rights) incorporated in the Constitution. In India, the position is similar to the United States of America. The power of the Parliament or for that matter, the State Legislatures is restricted in two ways. A law made by the Parliament or the Legislature can be struck down by courts on two grounds and two grounds alone, viz., (1) lack of legislative competence and (2) violation of any of the fundamental rights guaranteed in Part-III of the Constitution or of any other constitutional provision. There is no third ground. We do not wish to enter into a discussion of the concepts of procedural unreasonableness and substantive unreasonableness - concepts inspired by the decisions of United States Supreme Court. Even in U.S.A., these concepts and in particular the concept of substantive due process have proved to be of unending controversy, the latest thinking tending towards a severe curtailment of this ground (substantive due process). The main criticism against the ground of substantive due process being that it seeks to set up the courts as arbiters of the wisdom of the Legislature in enacting the particular piece of legislation. It is enough for us to say that by whatever name it is characterized, the ground of invalidation must fall within the four corners of the two grounds mentioned above. In other words, say, if an enactment challenged as violative of Article 14, it can be struck down only if it is found that it is violative of the equality clause/ equal protection clause enshrined therein Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses struck down by just saying that it is arbitrary or unreasonable. Some or other constitutional infirmity has to be found before invalidating an Act. An expression used widely and rather indiscriminately - an expression of inherently imprecise import. The extensive use of this expression in India reminds one of what Frankfurter, J. said in Hattie Mae Tiller v. Atlantic Coast Line Railroad Company [87 L.Ed. 610]. "The phrase begins life as a literary expression; its felicity leads to its lazy repetition and repetition soon establishes it as a legal formula, undiscriminatingly used to express different and sometimes contradictory idea", said the learned Judge. An enactment cannot be struck down on the ground that Court thinks it unjustified. The Parliament and the Legislatures, composed as they are of the representatives of the people, are supposed to know and be aware of the needs of the people and what is good and bad for them. The Court cannot sit in judgment over their wisdom. In this connection, it should be remembered that even in the case of administrative action, the scope of judicial review is limited to three grounds, viz., (i) unreasonableness, which can more appropriately be called irrationality, (ii) illegality and (iii) procedural impropriety (See: Council of Civil Service Unions v. Minister for Civil Service [1985 AC 374] which decision has been accepted by this Court as well). The applicability of doctrine of proportionality even in administrative law sphere is yet a debatable issue. (See the opinions of Lords Lowry and Ackner in R. v. Secretary of State for the Home Department ex p Brind [1991 AC 696] at 766-67 and 762.) It would be rather odd if an enactment were to be struck down by applying the said principle when its applicability even in administrative law sphere is not fully and finally settled. It is one thing to say that a restriction imposed upon a fundamental right can be struck down if it is disproportionate, excessive or unreasonable and quite another thing to say that the Court can strike down enactment if it thinks it unreasonable, unnecessary or unwarranted. Now, coming to the decision in Ananthi Ammal, we are of the opinion that it does not lay down a different proposition. It was an appeal from the decision of the Madras High Court striking down the Tamil Nadu Acquisition of Land for Harijan Welfare Schemes Acts 1978 as violative of Article 14, Article 19 and Article 300A of the Constitution. On a review of the provisions of the Act, this Court found that it provided a procedure which was substantially unfair to the owners of the land as compared to the procedure prescribed by the Land Acquisition Act, insofar as Section 11 of the Act provided for payment of compensation in instalments if it exceeded Rupees two thousand. After noticing the several features of the Act including the one mentioned above, this Court observed (SCC P.526, para 7):

"7. When a statute is impugned under Article 14 what the court has to decide is whether the statute is so arbitrary or unreasonable that it must be struck down. At best, a statute upon a similar subject which derives its authority from another source can be referred to, if its provisions have been held to be reasonable or have stood the test of time, only for the purpose of indicating what may be said to be reasonable in the context. We proceed to examine the provisions of the said Act upon this basis."

99. In Greater Bombay Co-operative Bank Ltd. v. United Yarn Tex. Pvt. Ltd. [(2007) 6 SCC 236] the Apex Court reiterated the principle laid down in McDowell. Paragraphs 82, 83 and 84 of the said decision read thus;

"82. The constitutional validity of an Act can be challenged only on two grounds, viz. (i) lack of legislative competence; and (ii) violation of any of the Fundamental Rights guaranteed in Part III of the Constitution or of any other constitutional provision. In State of A. P. v. McDowell and Co. [(1996) 3 SCC 709] this Court has opined that except the above two grounds, there is no third ground on the basis of which the law made by the competent legislature can be invalidated and that the ground of invalidation must necessarily fall within the four corners of the aforementioned two grounds.

83. Power to enact a law is derived by the State Assembly from List II of the Seventh Schedule of the Constitution. Entry 32 confers upon a State Legislature the power to constitute co-operative societies. The State of Maharashtra and the State of Andhra Pradesh both had enacted the MCS Act, 1960 and the APCS Act, 1964 in exercise of the power vested in them by Entry 32 of List II of the Seventh Schedule of the Constitution. Power to enact would include the power to re-enact or validate any provision of law in the State Legislature, provided the same falls in an Entry of List II of the Seventh Schedule of the Constitution with the restriction that such enactment should not nullify a judgment of the competent court of law. In the appeals/SLPs/ petitions filed against the judgment of the Andhra Pradesh High Court, the legislative competence of the State is involved for consideration. Judicial system has an important role to play in our body politic and has a solemn obligation to fulfil. In such circumstances, it is imperative upon the Courts while examining the scope of legislative action to be conscious to start with the presumption regarding the constitutional validity of the legislation. The burden of proof is upon the shoulders of the incumbent who challenges it. It is true that it is the duty of the constitutional courts under our Constitution to declare a law enacted by the Parliament or the State Legislature as unconstitutional when Parliament or the State Legislature had assumed to enact a law which is void, either for want of constitutional power to enact it or because the constitutional forms or conditions have not been observed or where the law infringes the Fundamental Rights enshrined and guaranteed in Part III of the Constitution.

84. As observed by this Court in CST v. Radhakrishnan [(1979) 2 SCC 249] in considering the validity of a Statute the presumption is always in favour of constitutionality and the burden is upon the person who attacks it to show that there has been transgression of constitutional principles. For sustaining the constitutionality of an Act, a Court may take into consideration matters of common knowledge, reports, preamble, history of the times, objection of the legislation and all other facts which are relevant. It must always be presumed that the legislature understands and correctly appreciates the need of its own people and that discrimination, if any, is based on adequate grounds and considerations. It is also well - settled that the courts will be justified in giving a liberal interpretation in order to avoid constitutional invalidity. A provision conferring very wide and expansive powers on authority can be construed in conformity with legislative intent of exercise of power within constitutional limitations. Where a Statute is silent or is inarticulate, the Court would attempt to transmute the inarticulate and adopt a construction which would lean towards constitutionality albeit without departing from the material of which the law is woven. These principles have given rise to rule of 'reading down' the provisions if it becomes necessary to uphold the validity of the law."

100. The judgment of the Apex Court in Greater Bombay Cooperative Bank was followed by a Division Bench of this Court in Hari Hara Krishnan G. K. and others v. State of Kerala and others [2014 (4) KHC 415] wherein it was held that if an enactment is challenged as violative of Article 14 of the Constitution of India, it can be struck down only if it is found that it is violative of the equality clause/equal protection clause enshrined therein. Similarly, if an enactment is challenged as violative of any of the fundamental rights guaranteed by clauses (a) to (g) of Article 19(1), it can be struck down only if it is found not saved by any of the clauses (2) to (6) of Article 19 and so on. No enactment can be struck down by just saying that it is arbitrary or unreasonable.

101. In Mohd. Hanif Quareshi v. State of Bihar [AIR 1958 SC 731], a decision relied on by the learned Additional Advocate General, a Constitution Bench of the Apex Court held that the meaning, scope and effect of Article 14 of the Constitution of India, which is the equal protection clause in our constitution, has been explained by the Apex Court in a series of decisions in cases beginning with Charanjitlal Chowdhury v. Union of India [AIR 1951 SC 41] and ending with the case of Ramkrishna Dalmia v. Justice Tendolkar [AIR 1958 SC 538]. It is well established that while Article 14 forbids class legislation it does not forbid reasonable classification for the purposes of legislation and that in order to pass the rest of permissible classification two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible different which distinguishes persons or things that are grouped together from others left out of the group and (ii) such differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification, it has been held, may be founded on different bases, namely, geographical, or according to objects or occupations or the like and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. The pronouncements of the Apex Court further establish, amongst other things, that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. The Courts must presume that the Legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the Legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation.

102. In Subramanian Swamy v. Director, Central Bureau of Investigation [(2014) 8 SCC 682], another decision relied on by the learned Additional Advocate General, a Constitution Bench of the Apex Court held that the first part of Article 14 of the Constitution of India, which was adopted from the Irish Constitution, is a declaration of equality of the civil rights of all persons within the territories of India. It enshrines a basic principle of republicanism. The second part, which is a corollary of the first and is based on the last clause of the first section of the 14th Amendment of the American Constitution, enjoins that equal protection shall be secured to all such persons in the enjoyment of their rights and liberties without discrimination of favouritism. It is a pledge of the protection of equal laws, that is, laws that operate alike on all persons under like circumstances Special Courts Bill, 1978, In re, [(1979) 1 SCC 380]. Article 14 incorporates concept of equality and equal protection of laws. The plethora of cases dealing with Article 14 has culled out principles applicable to aspects which commonly arise under this Article. In Budhan Choudhry v. State of Bihar [1955 (1) SCR 1045] the Apex Court exposited the ambit and scope of Article 14 by holding that, while Article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group, and (ii) that differentia must have a rational relation to the object sought to be achieved by the Statute in question. The classification may be founded on different bases; namely, geographical, or according to objects or occupations or the like. What is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. It is also well-established by the decisions of the Apex Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure.

103. In Shankaranarayanan Nambiar v. Union of India [1989 (2) KLT 635], another decision relied on by the learned Additional Advocate General, a Division Bench of this Court held that any Central or State enactment can be challenged only on three grounds: (a) lack of legislative competence; (b) infraction of fundamental rights; and (c) violation of any express provisions in the Constitution. These legislations are not amenable to challenge on the 'slippery slope' of the spirit of the constitution or on the varying phases of any basic structure of the constitution, or any concept based on any principle of fair, just and reasonable.

104. In Mohammad Hussain Gulam Mohammed v. State of Bombay [AIR 1962 SC 97], a decision relied on by the learned Additional Advocate General, the attack before a Constitution Bench of the Apex Court was on Section 29 of the Madras Commercial Crops Markets Act, 1933, which provides that the State Government may by notification in the official gazette, add to amend or cancel any of the items of agricultural produce specified in the schedule. It was submitted that this gives a completely unregulated power to the State Government to include any crop within the Schedule without any guidance or control whatsoever. Repelling the said contention, the Apex Court held that, it is true that Section 29 itself does not provide for any criterion for determining which crop shall be put into the Schedule or which shall be taken out therefrom but the guidance is writ large in the various provisions of the Act itself. The scheme of the Act is to leave out of account retail sale altogether; it deals with what may be called wholesale trade and this provides ample guidance to the State Government when it comes to decide whether a particular agricultural produce should be added to, or taken out of the Schedule. The State Government will have to consider in each case whether the volume of trade in the produce is of such a nature as to give rise to wholesale trade. If it comes to this conclusion it may add that produce to the Schedule. On the other hand if it comes to the conclusion that the production of a particular produce included in the Schedule has fallen and can be no longer a subject matter of wholesale trade it may take out that produce from the Schedule. In Edward Mills Co. Ltd., Beawar v. State of Ajmer [AIR 1955 SC 25] Section 27 of the Minimum Wages Act, 1948 which gave power to the appropriate Government to add to either part of the schedule any employment in respect of which it is of opinion that minimum wages shall be fixed by giving notification in a particular manner was held to be constitutional. It was observed in that case that the legislative policy was apparent on the face of the enactment (impugned there); it was to carry out effectively the purposes of the enactment that power had been given to the appropriate Government to decide with reference to local conditions whether it was desirable that minimum wages should be fixed in regard to particular trade or industry which was not included on the list. The same considerations apply to Section 29 of the Act and the power is given to the State Government to add to, or amend, or cancel any of the items of the agricultural produce specified in the Schedule in accordance with the local conditions prevailing in different parts of the State in pursuance of the legislative policy which is apparent on the face of the Act. Therefore, in enacting Section 29, the Legislature had not stripped itself of its essential powers or assigned to the administrative authority anything but an accessory or subordinate power which was deemed necessary to carry out the purpose and policy of the Act. Therefore, the Apex Court rejected the contention that Section 29 of the Act gives uncontrolled power to the State Government and is therefore unconstitutional.

105. In Jyoti Pershad v. Administrator for the Union Territory of Delhi [AIR 1961 SC 1602], a decision relied on by the learned Additional Advocate General, in the context of Section 19 of the Slum Areas (Improvement and Clearance) Act, 1956, it was contended before a Constitution Bench of the Apex Court that (i) Section 19(3) of the Act vests an unguided, unfettered and uncontrolled power in an executive officer to withhold permission to execute a decree which a landlord has obtained after satisfying the reasonable requirements of the law as enacted in the Rent Control Act. Neither Section 19 of the Act nor any other provision of the Act indicates the grounds on which the competent authority might grant or withhold permission to execute decree and the power conferred is, therefore, arbitrary and offends Article 14 of the Constitution; (ii) The same point was urged in a slightly different form by saying that the power conferred on the competent authority by Section 19(3) of the Act was an excessive delegation of legislative power and was, therefore unconstitutional; and (iii) The vesting of a power in an executive authority to override - at his sweet will and pleasure - rights to property without any guidance from the Legislature constituted an unreasonable restraint on the petitioner's right to hold property, a right which in the case of the property of the type now in question would include a right to obtain possession from the tenant in order either to improve it by reconstruction or for the purpose of his own use. Apart from the objection regarding the vesting of an unguided power in an executive authority which is the common ground of objection urged in regard to points (i) and (ii), it was submitted that the right vested in an executive authority to prevent for an indefinite and indeterminate period of time the right to enjoy his property was for this further reason excessive and an unreasonable restraint which could not be justified under Article 19(5) of the Constitution. The Apex Court held that, it is not, however, essential for the legislation to comply with the rule as to equal protection, that the rules for the guidance of the designated authority, which is to exercise the power or which is vested with the discretion, should be laid down in express terms in the statutory provision itself. As held in Kathi Raning Rawat v. State of Saurashtra [1952 SCR 435] if the impugned legislation indicates the policy which inspired it and the object which it seeks to attain, the mere fact that the legislation does not itself make a complete and precise classification of the persons or things to which it is to be applied, but leaves the selective application of the law to be made by the standard indicated or the underlying policy and object disclosed is not a sufficient ground for condemning it as arbitrary and, therefore, obnoxious to Article 14. So long as the policy is laid down and a standard established by a statute, no unconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply. Such guidance may thus be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well-known facts of which the Court might take judicial notice of which it is appraised by evidence before it in the form of affidavits, Kathi Raning Rawat [1952 SCR 435], being an instance where the guidance was gathered in the manner above indicated; (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment. On the facts of the case on hand, the Apex Court held that there is enough guidance to the competent authority in the use of his discretion under Section 19(1) of the Slum Areas (Improvement and Clearance) Act and therefore, rejected contention that Section 19 of the said Act is obnoxious to the equal protection of laws guaranteed by Article 14 of the Constitution of India. The Apex Court held that the guidance which could be derived from the enactment bears a reasonable and rational relationship to the object to be attained by the said Act, viz., the orderly elimination of slums, with interim protection for the slum dwellers until they were moved into better dwellings.

106. In Sardar Inder Singh v. State of Rajasthan [AIR 1957 SC 510], another decision relied on by the learned Additional Advocate General, in the context of Section 15 of the Rajasthan (Protection of Tenants), Ordinance, 1949, it was contended before a Constitution Bench of the Apex Court that, Section 15, which authorises the Government to exempt any person or class of persons from the operation of the Ordinance, does not lay down the principles on which exemption could be granted, and that the decision of the matter is left to the unfettered and uncanalised discretion of the Government, and is, therefore repugnant to Article 14 of the Constitution of India. Repelling the said contention, the Apex Court held that, it is true that that Section 15 does not itself indicate the grounds on which exemption could be granted, but the preamble to the Ordinance sets out with sufficient clearness the policy of the Legislature, and as that governs Section 15 of the Ordinance, the decision of the Government there under cannot be said to be unguided. Paragraph 13.(4) and 14 of the said decision reads thus;

"13.(4) We shall next consider the contention that the provisions of the Ordinance are repugnant to Article 14 of the Constitution, and that it must therefore be held to have become void. In the argument before us the attack was mainly directed against Section 7(1) and 15 of the Ordinance. The contention with reference to Section 7(1) is that under that section landlords who had tenants on their lands on 1.4.1948 were subjected to various restrictions in the enjoyment of their rights as owners, while other landlords were free from similar restrictions. There is no substance in this contention. The preamble to the Ordinance recites that there was a growing tendency on the part of the land holders to eject tenants, and that it was therefore expedient to enact a law for giving them protection, and for granting relief to them, the Legislature had necessarily to decide from what date law should be given operation, and it decided that it should be from 1.4.1948. That is a matter exclusively for the Legislature to determine, and the propriety of that determination is not open to question in Courts. We should add that the petitioners sought to dispute the correctness of the recitals in the preamble. This they clearly cannot do. Vide the observations of Holmes J. in Block v. Hirsh, [(1920) 65 Law Ed 865 : 256 U 8 135(E)].

14. A more substantial contention is the one based on Section 15, which authorizes the Government to exempt any person or class of persons from the operation of the Act. It is argued that that section does not lay down the principles on which exemption could be granted, and that the decision of the matter is left to the unfettered and uncanalised discretion of the Government, and is, therefore repugnant to Article 14. It is true that that section does not itself indicate the grounds on which exemption could be granted, but the preamble to the Ordinance sets out with sufficient clearness the policy of the Legislature, and as that governs Section 15 of the Ordinance, the decision of the Government there under cannot be said to be unguided. Vide Harishanker Bagla v. State of Madhya Pradesh, (1955)l S C R 380 at p. 386:

(AIR 1954 S C 465 at p. 467)(F). But even if Section 15 were to be held to be bad, that does not affect the rest of the legislation, as the matter dealt with in that section is clearly severable. In fact, Section 15 was not in the Ordinance as it was originally enacted, and was only introduced later by Ordinance No. XII of 1949. We must accordingly, hold that the impugned Ordinance cannot be held to be bad under Article 14."

(underline supplied)

107. In the writ petition, the petitioner Society has no case that there is lack of legislative competence to enact sub-section (2) of Section 74B of the KCS Act. In view of the law laid down in the decisions referred to supra, none of the grounds raised in the writ petition satisfy the requirement to declare the provisions of sub- section (2) of Section 74B of the KCS Act as violative of Article 14 of the Constitution of India. As already held, the petitioner Society not being a citizen cannot enforce the fundamental right guaranteed under Article 19 of the Constitution of India. The preamble of the KCS Act sets out with sufficient clearness the policy of the Legislature, i.e., orderly development of co-operative sector in the State, in accordance with co-operative principles. In view of the provisions under Rule 178A of the KCS Rules and also the norms fo

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r opening new branches, fixed by the Registrar from time to time, it cannot be said that unguided or unfettered power is conferred by sub-section (2) of Section 74B of the KCS Act, on the Registrar, in the matter of opening of branches of a Primary Agricultural Credit Society. 108. The learned Senior Counsel for the petitioner Society would contend that the provisions under sub-section (2) of Section 74B of the KCS Act is only a directory in nature and hence, absence of compliance does not render the action taken as invalid. The learned counsel would also point out that no prohibitory or negative words are used in sub-section (2) of Section 74B and no penal consequences are also provided. In the case of the petitioner Society, which has obtained Ext.P1 order of exemption under Section 101 of KCS Act, from the provisions of Section 7(1)(c) of the said Act, only a mere intimation of opening of branch alone is required. 109. In Hari Vishnu Kamath v. Ahmad Ishaque [AIR 1955 SC 233], a decision relied on by the learned Senior Counsel for the petitioner Society, in the context of Rule 47(1)(c) of the Representation of the People (Conduct of Elections and Election Petitions) Rules, 1951, a Constitution Bench of the Apex Court held that, it is well established that an enactment in form mandatory might in substance be directory, and that the use of the word 'shall' does not conclude the matter. The question was examined at length in Julius v. Bishop of Oxford [(1880) 5 AC 214], and various rules were laid down for determining when a statute might be construed as mandatory and when as directory. They are, well known, and there is no need to repeat them. But they are all of them only aids for ascertaining the true intention of the legislature, which is the determining factor, and that must ultimately depend on the context. The practical bearing of the distinction between a provision which is mandatory and one which is directory is that, while the former must be strictly observed, in the case of the latter it is sufficient that it is substantially complied with. 110. In Commissioner of Income Tax v. Dhanalakshmi Weaving Works [(2000) 24 ITR 13(KER)], another decision relied on by the learned Senior Counsel for the petitioner Society, a Division Bench of this Court, in the context of Section 201(1A) of the Income Tax Act, 1961 held that for ascertaining the intention of the Legislature, the Court may consider, inter alia, the nature and design of the statute and the consequences which would follow from construing it one way or the other; the impact of other provisions whereby the necessity of complying with the provisions in question is avoided; the circumstances, namely, that the statute provides for a contingency of non-compliance with the provisions; the fact that the non-compliance with the provisions is or is not visited by some penalty; the serious or trivial consequences that flow there from; and above all, whether the object of the legislation will be defeated or furthered. If the object of enactment is defeated by holding the same directory, it will be construed as mandatory whereas it by holding it mandatory serious general inconvenience will be created to innocent persons without very much furthering the object of the enactment, the same will be construed as directory. A directory provision may be distinct from a discretionary power. The former gives no discretion and is intended to be obeyed, but a failure to obey it does not render a thing duly done in disobedience of it a nullity. The latter, i.e., discretionary power, leaves the donee of the power free to use or not to use it at his discretion. Another mode of showing a clear intention that the provision enacted is mandatory is by clothing the command in a negative form. 111. In Rani Drigraj Kuer v. Raja Sri Amar Krishna Narain [AIR 1960 SCC 444], another decision relied on by the learned Senior Counsel for the petitioner Society, a Three-Judge Bench of the Apex Court, in the context of Section 56 of the U.P. Court of Wards Act, 1912 held that, in order that one section may be rendered otiose by a certain interpretation of another, that interpretation must make the two sections deal with the same subject matter; the two must then be serving the same purpose. The argument is founded on the basis that read as an imperative provision Section 56 would not be otiose, that is, then it would be serving a purpose different from that which Section 55 served. A provision giving a discretionary power leaves the donee of the power free to use or not to use it at his discretion. A directory provision however gives no discretionary power to do or not to do the thing directed. A directory provision is intended to be obeyed but a failure to obey it does nor render a thing duly done in disobedience of it, a nullity. 112. In May George v. Special Tahsildar [(2010) 13 SCC 98], another decision relied on by the learned Senior Counsel for the petitioner Society, the Apex Court held that, while determining whether a provision is mandatory or directory, in addition to the language used therein, the Court has to examine the context in which the provision is used and the purpose it seeks to achieve. It may also be necessary to find out the intent of the legislature for enacting it and the serious and general inconveniences or injustice to persons relating thereto from its application. The provision is mandatory if it is passed for the purpose of enabling the doing of something and prescribes the formalities for doing certain things. In order to declare a provision mandatory, the test to be applied is as to whether non-compliance of the provision could render entire proceedings invalid or not. Whether the provision is mandatory or directory, depends upon the intent of Legislature and not upon the language for which the intent is clothed. The issue is to be examined having regard to the context, subject matter and object of the statutory provisions in question. The Court may find out as what would be the consequence which would flow from construing it in one way or the other and as to whether the Statute provides for a contingency of the non-compliance of the provisions and as to whether the non-compliance is visited by small penalty or serious consequence would flow there from and as to whether a particular interpretation would defeat or frustrate the legislation and if the provision is mandatory, the act done in breach thereof will be invalid. 113. In State of U.P. v. Babu Ram Upadhya [AIR 1961 SC 751] a Constitution Bench of the Apex Court held that, for ascertaining the real intention of the Legislature, the Court may consider, inter alia, the nature and the design of the statute, and the consequences which would follow from construing it the one way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstance, namely, that the statute provides for a contingency of the non-compliance with the provisions, the fact that the non-compliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. 114. In Raza Buland Sugar Co. Ltd., Rampur v. Municipal Board, Rampur [AIR 1965 SC 895] and in State of Mysore v. V.K. Kangan [AIR 1975 SC 2190] the Apex Court held that as to whether a provision is mandatory or directory, would, in the ultimate analysis, depend upon the intent of the law- maker and that has to be gathered not only from the phraseology of the provision but also by considering its nature, its design and the consequence which would follow from construing it in one way or the other. 115. In view of the law laid down in the decisions referred to supra, for determining when a statute might be construed as mandatory and when as directory, the court has to ascertain the true intention of the legislature, which is the determining factor, and that must ultimately depend on the context. If the object of enactment is defeated by holding the same directory, it will be construed as mandatory; whereas if by holding it mandatory serious general inconvenience will be created to innocent persons without very much furthering the object of the enactment, the same will be construed as directory. While determining whether a provision is mandatory or directory, in addition to the language used therein, the Court has to examine the context in which the provision is used and the purpose it seeks to achieve. The provision is mandatory if it is passed for the purpose of enabling the doing of something and prescribes the formalities for doing certain things. Whether the provision is mandatory or directory, depends upon the intent of Legislature and not upon the language for which the intent is clothed. 116. In Kadungallor Service Co-operative Bank v. State of Kerala [2016 (1) KLT 67], a decision relied on by the learned Additional Advocate General, it was contended on behalf of the petitioner Bank that sub-section (2) of Section 74B of the KCS Act is only an enabling provision and it has not been couched in negative term to hold that no co-operative bank shall open a Branch without prior permission. Per contra, it was contended by the learned Government Pleader that, in terms of sub-section (2) of Section 74B of the KCS Act and Rule 180 of the KCS Rules it is mandatory that any co-operative bank is required to obtain prior permission from the Registrar to open either a Branch or an Extension Counter. In the said decision, one of the issues framed by this Court was whether the petitioner Bank is entitled to open its Customer Service Centre without prior permission from the Registrar in terms of sub-section (2) of Section 74B of the KCS Act and Rule 180 of the KCS Rules. It was contended by the petitioner Bank that the prohibition concerning banking operations without prior permission from the Registrar applies only as regards either a Branch or an Extension Counter. A Customer Service Centre falls under neither of the categories. Repelling that contention, this Court held that, any stipulation concerning any financial activities, be it banking or otherwise, requires strict interpretation and a fortiori strict compliance with the statutory formalities. The services rendered in a Customer Service Centre are also part of the banking operations and the Customer Service Centre has the trappings of either a branch or an extension counter. Therefore, this Court declared that the petitioner's banking operations even in the name of a Customer Service Centre cannot be countenanced in the absence of prior permission from the Registrar. Paragraphs 11, 12, 18, 21 to 24 of the said decision read thus; " 11. Eventually, drawing my attention to Circular No.30/14 concerning the guidelines regarding opening a new branch, the learned Senior Counsel has contended that the second respondent has misconstrued it and accordingly fallen in error in issuing Ext.P3. The Circular, according to the learned Senior Counsel, does not apply to Customer Service Centre. He has also drawn my attention to paragraph 4 of the writ petition where the performance of the petitioner Bank has been highlighted. 12. Per contra, the learned Government Pleader has strenuously contended that in terms of Section 74B(2) of the Kerala Co-operative Societies Act, 1969 ('the Act' for brevity), and Rule 180 of the Co-operative Societies Rules ('the Rules'), it is mandatory that any Co-operative Bank is required to obtain prior permission from the second respondent to open either a branch or an extension counter. According to the learned Government Pleader, Customer Service Centre is only a camouflage for a branch or at least an extension counter. It cannot, according to him, be permitted to be operated without prior sanction by the authority concerned. xxx xxx xxx 18. The learned Senior Counsel in reply has submitted that Section 74B(2) of the Act is only an enabling provision and it has not been couched in negative terms to hold that no Co-operative Bank shall open a branch without a prior permission. xxx xxx xxx 21. Issues: Indeed, the issues that are required to be determined in the writ petitions are as follows: (1) Whether the petitioner Bank is entitled to open its Customer Service Centre without prior permission from the second respondent in terms of Section 74B(2) of the Act and Rule 180 of the Rules? (2) Whether Ext.P3 order of the second respondent has been vitiated on account of infraction of the principles of natural justice? 22. In re, Issue No.1: It is the specific and persistent contention of the learned Senior Counsel that the prohibition concerning banking operations without prior permission from the second respondent applies only as regards either a Branch or an Extension Counter. According to him, a Customer Service Centre falls under neither of the categories. 23. Indeed, the petitioner Bank had chosen to call its new place of business, which it admittedly established without prior permission, a Customer Service Centre. The fact remains that a co-operative bank, for that matter any bank, renders only customer services which include a multitude of operations. Even accepting deposits or remittances such as installments towards loans would also be a facet of those services. Once the plea of the learned Senior Counsel is to be accepted that it is only a full-fledged bank or an extension counter that requires permission, it is not far to visualise the strategy that could be adopted by any bank to obviate the need of obtaining prior permission. It could split its operations into various categories and can have different centres in the proximity, even in the same building, thereby carrying on its banking operations: in one centre accepting the deposits, in another making the payments and yet in another extending some other banking service. Any stipulation concerning any financial activities, be it banking or otherwise, requires strict interpretation and a fortiori strict compliance with the statutory formalities. 24. It needs not much cogitation on the part of the Court to hold that the petitioner Bank has been carrying on its banking operations, at least a part of them, in the name of a Customer Service Centre without prior permission. In fact, having held that services rendered in a Customer Service Centre are also part of the banking operations and that the Customer Service Centre has the trappings of either a Branch or an Extension Counter, the Court is left with no other option than declaring that the petitioner's banking operations even in the name of a Customer Service Centre cannot be countenanced in the absence of prior permission from the second respondent." (underline supplied) 117. As already noticed, the preamble of the KCS Act sets out with sufficient clearness the policy of the Legislature, i.e., orderly development of co-operative sector in the State, in accordance with co-operative principles. Sub-section (2) of Section 74B of the KCS Act, read with the provisions under Rule 178A of the KCS Rules and also the norms for opening new branches, fixed by the Registrar from time to time, prescribes the eligibility criteria and the formalities that have to be complied with for opening branches. By holding the provisions of sub-section (2) of Section 74B of the KCS Act directory, the very object of the provision will be defeated. Therefore, the said provision can only be construed as mandatory, which requires strict interpretation and a fortiori strict compliance with the statutory formalities, as held by this Court in Kadungallor Service Co-operative Bank. 118. As per clause (b) of sub-section (1) of Section 32 of the KCS Act, proceedings for supersession of the committee of a society can be initiated if the Registrar, after an inquiry by himself or through his subordinates or on a report of a Financing Bank or the Vigilance and Anti Corruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society willfully disobeys or fails to comply with any lawful order or direction issued under the KCS Act or the KCS Rules. As per clause (c) of sub-section (1), such power can be exercised if the Registrar is satisfied that the committee of any society makes any payment contrary to the KCS Act or the KCS Rules or the bye- laws or causes any loss or damage to any assets of the society, by breach of trust or willful negligence. As per sub-section (1) of Section 68 of the KCS Act surcharge proceedings can be initiated, if in the course of an audit, inquiry, inspection or the winding up of a society, it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to the KCS Act and the KCS Rules or the bye-laws, or has caused any loss or damage in the assets of the society by breach of trust or wilful negligence or mismanagement, etc. The opening of branches by a Primary Agricultural Credit Society, without obtaining prior written permission of the Registrar under sub-section (2) of Section 74B of the KCS Act, without complying with the provisions of Rule 178A of the KCS Rules and also the norms for opening new branches, fixed by the Registrar from time to time, will amount of wilful disobeyance or failure to comply with the lawful orders or directions issued under the KCS Act and the KCS Rules, for which proceedings under Section 32 of the KCS Act can be initiated against the committee of the society, in appropriate cases. Similarly, surcharge proceedings under Section 68 of the KCS Act can also be initiated for any loss in the assets of the society by the opening of such branches without complying with the relevant statutory provisions. In the result, the challenge made in this writ petition against the constitutional validity of sub-section (2) of Section 74B of the KCS Act fails and the writ petition accordingly dismissed. No order as to costs.
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