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2015 Supreme(Ker) 1582
High Court of Kerala
Dama Seshadri Naidu, J.
Adhitha Varma Raja T K - Appellant
Versus
Irinjalakuda Co Op Agricultural Rural Development Bank Ltd & Ors - Respondent
W.P.(C) No. 15917 of 2015
Decided On : 20-11-2015
The main legal point established in the judgment is the necessity to follow the prescribed procedural requirements for bifurcation under Section 14 and Rule 13 of the Kerala Co-operative Societies Act, while also considering equitable adjudication in practical application.
Headnote:
Bifurcation - Kerala Co-operative Societies Act - Section 14, Rule 13 - The court discussed the bifurcation of a Primary Co-operative Agricultural and Rural Development Bank and the division of its assets and liabilities. The key legal provisions of Section 14 and Rule 13 were interpreted to determine the procedural requirements for bifurcation. The court emphasized the necessity to follow the prescribed procedure and the equitable adjudication of the draft scheme.
Fact of the Case:
The petitioner, a member and erstwhile President of the first respondent Bank, challenged the bifurcation process of the bank. The bank was divided due to the creation of a new Taluk, resulting in the need to apportion assets and liabilities. The petitioner objected to the approval process of the Draft Scheme and raised concerns about the division of assets and liabilities.
Finding of the Court:
The court analyzed the procedural requirements for bifurcation under Section 14 and Rule 13 of the Kerala Co-operative Societies Act. It concluded that the prescribed procedure should be followed, but recognized the impracticality of turning back the process. The court directed the Draft Scheme to be placed before the Joint Registrar for appropriate orders, with a provision to follow Section 14 procedure if necessary.
Issues: The main issue was the procedural requirements for bifurcation and division of assets and liabilities of the bank, specifically whether the procedure under Section 14 or Sections 28(1D) and 28(1E) of the Act should be followed.
Ratio Decidendi: The court held that while the prescribed procedure under Section 14 and Rule 13 should be followed, turning back the process was impracticable. It directed the Draft Scheme to be placed before the Joint Registrar for appropriate orders, with a provision to follow Section 14 procedure if necessary.
Final Decision: The writ petition was disposed of with a direction to place the Draft Scheme before the Joint Registrar and follow the prescribed procedure under Section 14 if necessary. The Joint Registrar was instructed to dispose of the issue expeditiously.
Dama Seshadri Naidu, J.
1. The petitioner, who is the member of the first respondent Bank, apart from being its erstwhile President, has questioned the manner and method of bifurcation the first respondent Bank has been subjected to.
2. Briefly stated, a Primary Co-operative Agricultural and Rural Development Bank, as has been defined under Section 2(oc) of the Kerala Co-operative Societies Act, 1969 ('the Act' for brevity), has to confine its area of operation to a particular Taluk. In this instance, the first respondent Bank is situated in Mukundapuram Taluk. Initially in 2008, when the said Taluk was divided and a new Taluk, Kodungallur, was created, the Bank was bifurcated. Once again in 2013, Mukundapuram Taluk was bifurcated; it resulted in the creation of Chalakudy Taluk. It has thus necessitated the division of the first respondent Bank, again.
3. As a consequence to the bifurcation of the respondent Bank, the Managing Committee prepared Exhibit P1 Draft Scheme for apportioning the assets and liabilities of the Bank. Later, it placed the Scheme before the General Body, which is said to have approved it despite the objection of the petitioner, a participant. Eventually, the Draft Scheme thus approved by the General Body was placed before the Joint Registrar, who is said to have given his imprimatur to the Scheme. As a matter of further development, the Scheme was approved and placed before the General Body of the newly created Taluk, i.e., Chalakudy Taluk. At that juncture, the petitioner has approached this Court.
4. Sri.P.Ravindran, the learned Senior Counsel for the petitioner, has strenuously contended that Section 14 of the Act mandates the procedure concerning the bifurcation of an existing Primary Co-operative Agricultural and Rural Development Bank, especially an Assisted Society, which the respondent Bank is. He has contended that the procedural nitty gitty concerning the bifurcation is provided under Rule 13 of the Kerala Co-operative Societies Rules, 1969 ('the Rules' for brevity).
5. The singular grievance of the petitioner is that before placing the Draft Scheme, as had been prepared by the Managing Committee, before the General Body, it ought to have been placed before the Joint Registrar, after whose consideration alone it should have been placed before the General Body. In this regard, the learned Senior Counsel has taken me through the statutory provisions such as Section 14 of the Act, as well as Rule 13 of the Rules.
6. The learned Senior Counsel has further drawn my attention to Exhibit R1(a) Draft Scheme and also Exhibits P3 and P4 Model Draft Scheme and Model Decision of the General Body respectively to hammer home his point that all these documents invariably establish that the proper procedure to be adopted is as has been mandated under Section 14 of the Act and Rule 13 of the Rules.
7. The learned Senior Counsel has also submitted that gross injustice has been done to the Society being formed in the division of assets and liabilities. In elaboration of his submissions, he has submitted that majority members come from the area that is now under the new Taluk. Ipso facto, major portion of the assets ought to have been allotted to the new Society. On the converse, most of the assets and liabilities, contends the learned Senior counsel, have not been divided; nor have they been specified. According to him, the ratio of 62:38 is only with regard to the loans outstanding and that is based on the pattern of the membership in the two Taluks.
8. The learned Senior Counsel has drawn my attention to Clause 18 of Exhibit P1 to contend that the assets and liabilities which have not been expressly mentioned in the Scheme should be divided between the existing Society and the new Society in the ratio of 60:40. The said ratio, according to the learned Senior Counsel, is quite iniquitous.
9. Further, referring to the reply affidavit filed by the petitioner, the learned Senior Counsel has submitted that many a
