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2012 Supreme(Kar) 92
High Court of Karnataka
MR. VIKRAMAJIT SEN & MRS. B.V.NAGARATHNA
Vadiraja Shetty & Others
Versus
The State of Karnataka, Rep. By its Secretary, Department of Co-Operation, Bangalore & Others
W.A. No. 15974 of 2011 C/W W.A. NO, 15975 of 2011 & W.A. No. 15980 of 2011 (CS-RES)
Decided on: 14-02-2012
For the Appellants:Ashok Haranahalli, Sr. Counsel for M. Vijay Krishna Bhat, S.K. Acharya, Advocates.
For the Respondents: R1 – R3 - B. Veerappa, AGA, R4 - Deleted.
Headnote:KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 - Section 14: [Vikramajit Sen, C.J. & Mrs. B.V. Nagarathna, JJ] Applicability - Bifurcation of co-operative society into two by State Government - Held, Section 14 would apply only where Co-operative Society itself is desirous of amalgamating with any other body or transferring its assets and liabilities and/or dividing itself. Therefore, question of compliance with provisions of Section 14 by State Government would not arise.
KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 -Section 30-B: [Vikramajit Sen, C.J. & Mrs. B.V. Nagarathna, JJ] Bifurcation of co-operative society - Validity - Held, The well-considered and articulated decision has kept all factors., in mind, which follows from the decision of the State of Karnataka to carve out two smaller districts from the erstwhile Dakshina Kannada District. There can be no criticism of such a decision as subsequent events have shown. The State would be better administered after the bifurcation into the Districts of Udupi and Dakshina Kannada (Mangalore). It is not necessary to speculate about the division of the South Canara District Central Co-operative Bank Ltd. The plausible rationale for the bifurcation of the erstwhile Dakshina Kannada District into two smaller districts would equally apply to the division of South Canara District Central Co-operative Bank Ltd., into Dakshina Kannada District Central Co-operative Bank with Mangalore as it is head quarters and Udupi District Central Co-operative Bank with Udupi as its head quarters. Moreover, there can be no gainsay that the creation of a district is only ordained if it is found necessary for better administration, which eventually is in public interest. Decisions of this nature do not broach interference by Courts.
In such a case it could not be said that the decision bifurcating the co-operative bank into two should have preceded by clearance of the Reserve Bank of India, as order clarifies that the separated co-operative banks shall start functioning from 1-4-2009 or from the date of approval from the Reserve Bank of India whichever occurs later. This language palpably expects that the approval of the Reserve Bank would have been obtained prior to 1-4-2009 or either in the financial year. Moreover, during the course of hearing of the writ petition as well as the appeal, interim orders, had been passed, which must be a reason as to why the Reserve Bank of India has not accorded its approval or disapproval as the case may be.
KARNATAKA CO-OPERATIVE SOCIETIES ACT, 1959 -Section 30-B: [Vikramajit Sen, C.J. & Mrs. B.V. Nagarathna, JJ] Direction of State Government under - Held, Directions can be issued by the State Government in public interest alone. It cannot be said that in addition to public interest, directions of State Government must also be for the purpose of secured implementation of co-operative and other development programmes approved or undertaken by State Government. Despite the use of the word ’and’in Section 30-B in between the words ’in public interest and for the purpose of securing proper implementation of co-operative and other development programmes, it is necessary to read the word ’and’as ’or’instead. In the matter of interpretation of conjunctive and disjunctive words, the words ’and’ is normally conjunctive, while the word ’or’ is normally disjunctive, but at times, they are read vice versa to give effect to the manifest intention of the legislative as disclosed from the context in which they occur. If a literal reading of the words produced an unintelligible or absurd result ’and’ may be read for ’or’ and ’or’ for ’and’ even though the result of so modifying the words is less favourable to the subject provided that the intention of the legislature is otherwise quite clear.
1. These appeals assail the order dated 11.08.2011, passed by the learned Single Judge, dismissing several writ petitions challenging the Government Order dated 02.02.2009 bifurcating the South Canara District Central Co-operative Bank, which was/is one of the writ petitioners/appellants before us.
2. It is contended by the learned Senior Counsel that the learned Single Judge has passed a very brief order and all the arguments raised have not been duly considered.
3. The provisions that have been cited before us are Section 14, the deleted Section 14A and Section 30-B of the Karnataka Co-operative Societies Act, 1959. We reproduce these provisions for facility of reference:
“14.) Amalgamation transfer of assets and liabilities and division of co-operative societies – (1) A co-operative society may, by a resolution passed by a two-thirds majority of the members present and voting at a general meeting of the society.
(a) Divide itself into two or more cooperative societies: or
(b) Transfer its assets and liabilities in whole or in part to any other co-operative society which by a like resolution agrees to such transfer.
(2) Any two or more co-operative societies may, by a resolution passed by a two-thirds majority of the members present and voting at a general meeting of each such society amalgamate themselves and form a new co-operative society.
(3) The resolution of a co-operative society under sub-section (1) or sub-section (2) shall contain all particulars of the transfer, division or amalgamation, as the case may be, and no such resolution shall have any effect unless approved by the Registrar; [Provided that in the case of a co-operative bank, the Registrar shall not approve such resolution without the previous sanction in writing of the Reserve Bank.]
(4) When a co-operative society has passed any such resolution, and it has been approved by the Registrar, the co-operative society shall give notice thereof in writing to all its creditors and such members of the society as did not vote in favour of the resolution land, notwithstanding any bye-laws or contract to the contrary, any creditor or any member to whom such notice is given shall during the period of one month from the date of service of the notice upon him, have the option of withdrawing his shares deposits or loans, as the case may be.
(5) Any member or creditor who does not exercise his option within the period specified in sub-section (4) and every member who has voted in favor of the resolution shall be deemed to have assented to the proposals contained in the resolution.
(6) A resolution passed by a co-operative society under this section shall not make effect until either-
(a) The assent thereto of all the members and creditors has been, or deemed to have been, obtained under this section or;
(b) All claims of members and creditors who exercise the option referred to in subsection (4) within the period specified therein, have been met in full.
(7) Where a resolution passed by a co-operative society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any further assurance.
14. A POWER TO DIRECT AMALAGAMATION, DIVISION AND RE-ORGANISATION IN PUBLIC INTEREST-
(1) Notwithstanding anything contained in this act or the rules made thereunder and the bye-laws of the Co-operative Societies concerned. Where the Registrar is satisfied that it is essential in public interest or in the interest of Co-operative Societies should be amalgamated to form a single Co-operative Society or any Co-operative should be divided or any Co-operative Society should be recognized, then the Registrar shall order the amalgamation, division or re-organisation of such Co-operative Societies. Provided that in the case of a Co-operative Bank no order under this sub-sec
