IMPORTANT POINTS
The Government can very well explain to RBI its compliance of conditions as above. It is for the RBI to be satisfied with the conditions stipulated as above. Since final approval is yet to be granted by RBI, it is for RBI alone to decide whether the conditions have to be satisfied or not. It is open for RBI to accept the present procedure adopted so far by the Registrar and District Co-operative Banks or to insist for convening a meeting as above. This Court need not substitute the satisfaction to be entered or arrived at by the RBI at this stage.

JUDGMENT :

Lives are changed when people connect. Life is changed when everything is connected.

--, [An American telecom enterprise], [Qualcom motto].

In modern business model, success depends upon how one design or structure the business. The big shift in the business in a market economy is attributable to convergence, interdependency and technology. This era of acceleration is relatable to the afore-mentioned factors. The current model of business enterprise is deemed to be vulnerable if they fail to translate the above mentioned key factors into reality or to put them into practice. A co-operative movement representing collective ownership in their economic pursuit is no exception for the application of factors as above. While it is necessary to assert autonomy of cooperative enterprises through decision making at basic unit level, its affiliation to the central authority cannot be ignored to meet the challenges faced by it. The edifice of co-operative enterprise is built on autonomy with subsidiarity and solidarity as its bulwarks to remain independent. But that in itself cannot be decisive enough so as to remain competitive in pursuit of market interest. In as far as the urge to remain competitive is concerned it is not the organisational structure alone that matters but it is the factors that determine the interest in the market. Therefore, challenges in this regard are multi-fold. The policy makers may face the risk of existential crises if cooperative enterprises remain non responsive to market demands. It is therefore necessary to be propulsive and to embrace nuances to remain competitive in a market economy. The balancing of co-operative principles and factors reckoning market interest is a delicate task. Balancing interest as an object, the Government decided in principle to amalgamate the District Co-operative Banks with the Kerala State Co-operative Bank. The Government realised that such amalgamation of banks is necessary for the very existence of the Co-operative banks as well for the purpose of economic development and providing financial service to the people. The Government constituted an expert committee to obtain an expert view as per G.O.(Rt).No.488/2016/Co.op, dated 28.9.2016. Accordingly, Professor M.S. Sreeram, IIM Bangalore, was appointed as the Chairman of the said committee. The committee suggested layering of the three tier structure into two tier structure. The committee was of the view that the present three tier structure of the District Co-operative Banks at the middle level only adds to the costs and that they being intermediary, can be avoided to undertake a two tier structure with the Kerala State Co-operative Bank and Primary Co-operative Banks being its constituents. The Government, in order to realize this expert opinion, invoked legislative mandate and amended statutory provisions for amalgamation. This resulted in filing these writ petitions.

2. The central issue that emerges in these writ petitions is how far the balancing exercise has been maintained through the legislation between the co-operative enterprise and the market interest, which is the ultimate cause for this amendment.

3. The present scenario of the co-operative banking sector as evident from Rule 15 of the Kerala Co-operative Societies Rules, 1969 (for short, the “K.C.S Rules”) and proposed scenario based on amendment are as follows:

Before the amendment, the State Co-operative Bank at Apex level having only District Co-operative Bank as its memb