The court emphasized that the power of the Government to grant exemption from the area of operation should not undermine the mandatory conditions for the formation of a cooperative society.

1. Petitioner is a co-operative society having the area of operation over the entire Quilon Taluk except the area covered by Anchalummoodu N.E.S. Block. Fourth respondent is another society of similar character having its area of operation in the area, covered by Anchalummoodu N. E. S. Block. The main business of both the societies is to undertake labour contract including construction work within its area of operation. In the year 1980, the State relaxed the rules and permitted 4th respondent society to undertake labour contract even outside the jurisdiction of its area of operation of a period of two years. The petitioner society and similar other societies objected to the temporary relaxation given to the 4th respondent. The petitioner society has got financial potentialities and also facilities to undertake major works and it is classified as "A" class society. Fourth, respondent is also an "A" class society When the petitioner came to know that steps are being taken for granting exemption to 4th respondent from its area of operation, the petitioner submitted Ext. PI representation on 28-6-1987. In reply to that Ext. P2 was issued to the petitioner stating that since permission was given to 4th respondent to undertake labour contract in areas falling outside its area of operation for a period of two years, Ext. P1 cannot be considered. On enquiry the petitioner came to know of Ext. P3 order issued by first respondent granting exemption to 4th respondent relaxing its area of operation. The petitioner questions Ext. P3 on the ground that it is one issued without jurisdiction.

2. On behalf of 3rd respondent, the Joint Registrar of Co-operative Societies, Quilon, an Assistant Registrar has sworn to a counter affidavit. From the counter affidavit it is seen that Ext. P3 order was issued to enable 4th respondent to effectively under take works for an amount of Rs. 20 lakhs for which they are authorised. Fourth respondent is allowed to undertake works through out the whole of Quilon District for a period of two years. The power to that grant that exemption has been traced to S.101 of the Kerala Co-operative Societies Act 1969, hereinafter referred to as "the Act". It is further stated that the quantum of works available in the various departments in Quilon District is far far higher to the work undertaking capacity of all such societies in the District, that the co-operative sector is executing less than 10 per cent of the available public works and that competition between the societies for getting the work is even now an existing practice. In exercise of the powers u/s. 101 of the Act and R.181 of the Rules framed thereunder the Government was entitled to pass Ext. P3 order. The exemption was a temporary one taking note of the fact that the available contract works in Anchalummoodu N.E.S. Block was insufficient for the proper working of 4th respondent society. It is also stated that Ext. P3 does not involve any permanent change in the area of operation, that it is only a temporary relaxation from the rules so as to enable 4th respondent society to effectively carry on the works up to Rs. 20 lakhs for which they are entitled.

3. Fourth respondent in its turn has filed a separate counter affidavit supporting the order Ext. P3.

4. The petitioner society as also 4th respondent society are "A" Class societies in Quilon District. The area of operation of the petitioner society is the entire Quilon Taluk except the area covered by Anchalummoodu N.E.S. Block The area covered by Anchalummoodu N.E. S. Block is the area of operation of 4th respondent. The objects and activities of these societies are exactly identical. While registering a new society S.7(1)(c) of the Act mandates that the area of operation of the proposed society and the area of operation of another society of similar type should not overlap. While effecting registration R.4(ii) of the Rules enjoins the Registrar to examine the application and the bye-laws in ord