The central legal point established in the judgment is the interpretation of the power of the Government under S.101 of the Kerala Co-operative Societies Act to exempt societies from the provisions of the Act in the public interest and the limitation that the power cannot be used in a whimsical or arbitrary manner.

Pareed Pillay, C.J.

Appellant is the petitioner in O.P.No. 2014 of 1995. appellant-feroke Service Co-operative Bank Ltd. filed the original petition to quash Ext. P5 notification. Learned Single Judge dismissed the original petition holding that the State Government has considered the question of public interest in passing Ext. P5 notification and therefore this is not a case to be interfered with under Article 226 of the Constitution of India.

2. Appellant is registered Society functioning from 1942 onwards. Contention of the appellant is that it has been functioning very well for all these years, that it has 18628 members at present and deposits of Rs. 4,78,00,000/-, that its working capital is Rs. 5,52,00,000/- that loans have been advanced to members amounting to Rs. 5,24,00,000/- and that it is running on profit basis. As per Ex1P2 the Joint Registrar of Co-operative Societies, Kozhikode (3rd respondent) informed the appellant that a proposal was received in his office for formation of the Feroke Panchayat Service Co-Operative Bank with the panchayat area as its area of operation, and accepting the recognised policy of one Co-operative Bank for one panchayat, the appellant was directed to take all necessary steps for excluding Feroke Panchayat area from the area of operation of the Bank and report compliance. After receipt of Ext. P2 appellant passed a resolution on 16.5.1993 stating that the general body has expressed its anxiety regarding the proposal for registration of another society within the area of operation of the appellant-society, which would weaken its functions and requested the third respondent to withdraw Ext. P2. It is thereafter that Ext. P5 notification was issued by the first respondent. In Ext. P5 it is stated that in public interest it has become necessary to exempt the proposed Karuvanthuruthy Service Co-operative Bank from the provisions of Clause (c) of sub-section (1) of S.7 of the Kerala Co-operative Societies Act so as to enable the Registrar for giving registration to the proposed Bank in Feroke Panchayat. Accordingly the State Government exempted the proposed Karuvanthuruthy Service Co-operative Bank from S.7(1)(c) of the Act. In the explanatory note it is stated that the Registrar of Co-operative Societies is of opinion that the appellant-society with its area of operation comprising of Feroke, Cheruvannur and Nallalam Panchayats often failed to serve effectively the people of Feroke Panchayat as its present area of operation is too unwieldy and so the Registrar has recommended that the proposed Karuvanthuruthy Service Co-operative Bank with the Feroke Panchayat as the area of operation can be given registration by exempting it from the provisions of S. 7(l) (c) of the Act.

3. The main contention of the appellant is that Ext. P5 is patently violative of S.7(1)(c) of the Act. S.7(1)(c) specifically states that the area of operation of the proposed society and the area of operation of another society of similar type should not overlap and if it does so proposed society cannot be registered by the Registrar. Appellant's contention is that this provision has been completely overlooked by the third respondent. According to the appellant, Government can exercise the powers under S.101 of the Act only to exempt an existing society from the rigour of any of the provisions of the Act, when it causes any hardship to the working or workability of the society or creates any hurdle to its workability and that power cannot be exercised to enable the Registration of a new society in the area of operation of an already existing society. Ext.P5 notification is assailed as one without jurisdiction and a colourable exercise of power.

4. Learned Government Pleader and counsel for the 4th respondent contended that the appellant's contention is devoid of merit as Ext. P5 notification which is issued under S.101 of the Act has taken into account the public interest involved in the matter and therefore it c