A Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi-State Co-operative Societies Act, 1984, which carries on the business of banking, and is therefore governed by the Banking Regulation Act, 1949 does not thereby fall within the expression “State” under Article 12 of the Constitution of India.

Headnote:
CO-OPERATIVE SOCIETY - STATE - MULTI-STATE CO-OPERATIVE SOCIETIES ACT, 1984 - MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960 - BANKING REGULATION ACT, 1949 - Whether a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi-State Co-operative Societies Act, 1984 falls within the expression “State” under Article 12 of the Constitution of India.
Fact of the Case:

The appellant-Bank, a Multi-State Co-operative Society, was deemed to be registered under the Maharashtra Co-operative Societies Act, 1960 and the Multi-State Co-operative Societies Act, 1984. The 1st respondent filed a petition under Article 226 of the Constitution challenging the resolution of the appellant-Bank dated 21st May, 1987 and the consequent termination of his services by the appellant-Bank. A learned Single Judge of the High Court allowed the petition and ordered reinstatement of the first respondent with back wages. The appellant-Bank filed an appeal against the judgment.
Finding of the Court:

The Division Bench of the High Court referred the issue of whether a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi-State Co-operative Societies Act, 1984 falls within the expression “State” under Article 12 of the Constitution of India to a larger Bench for determination.
Issues: Whether a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi-State Co-operative Societies Act, 1984 falls within the expression “State” under Article 12 of the Constitution of India.
Ratio Decidendi: 1. The ultimate control and management of a Multi-State Co-operative Society vests in the general body of its members subject to the provisions of the Act. 2. The provisions of the Banking Regulation Act, 1949 do not prescribe any all pervasive State control over all banks covered by it which would make the banks an agency or instrumentality of the State. 3. Simply because an organisation carries on an activity of public importance, it does not automatically becomes “State” under Article 12 unless it also fulfils some of the other tests. 4. A Multi-State Co-operative Bank cannot be compared, in the manner of its functioning, with the State Bank of India at all.
Final Decision: The appeal was allowed and the writ petition was dismissed.

JUDGMENT - MRS. MANOHAR SUJATA, J.:—The appellants Shamrao Vithal Co-operative Bank Ltd. are a Multi-State to Co-operative Society. The appellant-society is deemed to have been registered under the Maharashtra Co-operative Societies Act, 1960 as well as the Multi-State Co-operative Societies Act, 1984. The appellants carry on the business of banking. The 1st respondent had filed a petition under Article 226 of the Constitution in this Court challenging the resolution of the appellant-Bank dated 21st of May, 1987 and the consequent termination of his services by the appellant-Bank. A learned Single Judge of this Court, by his judgment and order dated 31st March, 1989, (Padubidri Pattabhiram Bhat v. Shamrao Vithal Co-operative Bank Ltd.)1, reported in 1989(2) Bom.C.R. 500, allowed the petition and ordered reinstatement of the first respondent with back wages as set out in the judgment and order. From this judgment the present appeal was filed by the appellants.

2. One of the questions which the learned Single Judge was called upon to decide was whether the Appellant-Bank was “State” within the meaning of Article 12 of the Constitution and whether the writ petition was maintainable against the appellants. The learned Single Judge, by his above judgment and order, held that the appellant-Bank was “State” within the meaning of Article 12 of the Constitution and hence a writ was maintainable against the appellants.

3. The appeal came up for hearing before a Division Bench of this Court consisting of Pendse and Kapadia, JJ. The Division Bench, in its judgment and order dated 26th February, 1992, referred to a decision of a Division Bench of this Court at Nagpur in the case of (Narayan Balaji Bhanage v. Maharashtra State Co-operative Land Development Bank Limited)2, reported in 1991(1) Bom.C.R. 469. The Division Bench of this High Court at Nagpur had held that the Maharashtra State Co-operative Land Development Bank Limited is “State” within the meaning of Article 12 of the Constitution. It approved the judgment of the learned Single Judge herein. The Division Bench at Bombay observed that it is difficult to share the view of the Division Bench at Nagpur in view of certain decisions of the Supreme Court. But it would not be proper for it to take a contrary view because of the decision of the Division Bench at Nagpur. Hence it has referred the following issue to a larger Bench for determination :—

“Whether a Co-operative Society registered under the provisions of the Maharashtra Co-operative Societies Act, 1960 and under the Multi-State Co-operative Societies Act, 1984 falls within the expression “State” under Article 12 of the Constitution of India.”

We are therefore required to consider this question.

4. A similar question had arisen in a number of matters before various High Courts and the Supreme Court. We do not propose to refer to all the decisions which have been cited before us. We will refer to a few of the leading decisions on this question.

5. In the case of (Ramana Dayaram Shetty v. The International Airport Authority of India)3, reported in A.I.R. 1979 S.C. 1628, the Supreme Court considered the question: When a corporate body can be considered as “State” within Article 12. The Supreme Court said that the Government may act through the instrumentality or agency of natural persons; or it may employ the instrumentality or agency of judicial persons to carry out its functions. In a welfare State the functions of Government expand considerably; and often these new tasks are carried out through public corporations. The Supreme Court said that it was not possible to formulate an all inclusive or exhaustive test which would adequately answer the question when such a corporation becomes an instrumentality or agency of the Government. There are several factors which may have to be considered in determining this question. The Supreme Court summarised its conclusions in paragraph 19 at page 1641. It said, “We have referred to some of thes

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1992 Supreme(Bom) 401

Cases Referred (2)