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IN THE HIGH COURT OF KERALA AT ERNAKULAM
RAJA VIJAYARAGHAVAN V., J.
The Kodur Service Co-Operative Bank Ltd. – Petitioner
Versus
State of Kerala, Rep. by the Principal Secretary – Respondent
W.P. (C) Nos. 33596 of 2019, 571, 1916, 6639, 11753, 20371, 20400, 21265 of 2020, 4882 of 2021
Decided On : 28-04-2021
Kerala Co-operative Societies Act - Section 2 and 74H(1)(a) - Constitution of India, 1950 - Article 14, 19(1)(c), 213 and 43B - Whether Section 74H(a) (a) and proviso to sub-section 2 (ia) introduced vide impugned ordinances are beyond legislative competence of State - Formation of a co-operative society having been elevated to status of a fundamental right, will not action for amalgamation other than by a voluntary act of parties infringe fundamental right under Article 19(1)(c) and rights to be protected under Article 43B of Constitution of India - Isn’t amendment selective, arbitrary and discriminatory as same is confined to DCB's alone and thereby violative of Article 14 of Constitution of India - “Voluntary and open membership” and “democratic member control” and “Autonomy and Independence” being edifice of Co-operative identity, values and principles, will not the impugned amendment erode co-operative principles envisioned under Clause (eccc) of Section 2 of Kerala Co-operative Societies Act - Whether Kerala Co-operative amendment Ordinances from Ordinance by re-promulgation is a colourable exercise of power liable to be struck down as unconstitutional and void?
Finding of the Court:
It is now well established that while Article 14 forbids class legislation, it does not forbid reasonable classification for purposes of legislation and that in order to pass test of permissible classification two conditions must be fulfilled - Its representatives are the best judges of what is good for people. If legislature thinks that a particular type of society alone should be admitted as members of the DCB, it has to be recognised as law of land. If legislature thinks that some other type of societies should also be admitted to membership of DCB, it has also to be recognised as law of the land. This Court cannot sit in appeal over wisdom of legislature - contention raised by petitioners on basis of infraction of cooperative principles and also directive principles under Section 43B cannot be sustained - A one-day session was held and in continuation of that session, Budget session was held. Kerala Co-operative Societies (Amendment) Bill, 2021 to replace Ordinance was published as Bill to facilitate passage of bill. However, due to sudden spread of Covid-19 pandemic, assembly session was abruptly stopped much ahead of scheduled date. In order to keep alive-provisions of Ordinance, Kerala Co-operative Societies (Second Amendment) Ordinance 2021 was promulgated as Ordinance- Direction to respondents 1 and 2 to expedite process of merger of Malappuram District Co-operative Bank with KSCB so that benefits of amended provisions are extended to petitioners in above Writ Petitions.
Result: Writ Petitions dismissed and Writ Petitions Nos. 20371, 1916, 571, 20400 of 2020 and W.P. (C) No. 33596 of 2019 disposed of.
JUDGMENT :
1. The question which requires a resolution in these writ petitions concern the constitutional validity of the amendment brought in to Section 74H(1)(a) and the proviso to sub-section (2)(ia) by Ordinance No. 6 of 2020 promulgated by the Governor of Kerala in exercise of powers conferred by clause No. (1) of Article 213 of the Constitution of India. The Ordinance is sought to be struck down on the ground that the introduction of the Ordinance is beyond the legislative competence of the State, arbitrary and unreasonable under Article 14, violative of the rights guaranteed to the petitioners under Article 19(1)(c) of the Constitution and the rights which are required to be protected under Article 43B of the Constitution of India and grossly at variance with the cooperative principles. Repeated re-promulgation of the ordinance without laying it before the legislature is yet another ground on which the ordinance is sought to be invalidated.
2. While W.P. (C) Nos. 11753 of 2020 and 6639 of 2020 are filed by the Presidents of two Primary Co-operative Banks challenging the Ordinance on various grounds, W.P. (C) No. 21265 of 2020 is filed by the managing committee of the Malappuram District Co-operative Bank Ltd. seeking the very same relief.
3. W.P. (C) Nos. 20371 of 2020 and 33596 of 2019 are filed by various Primary Agricultural Credit Co-operative Societies supporting the amendment and also for directions to the Government to permit the petitioner banks to become members of the newly formed Kerala Co-operative Bank.
4. W.P. (C) No. 1916 of 2020 and 571 of 2020 are filed by the regular and permanent employees of the Malappuram District Co-operative bank seeking a direction to the Government to complete the process of merger of the 4th respondent bank with the Kerala State Co-operative Bank in terms of Section 74H of Kerala Co-operative Societies Act as amended by Ordinance No. 6 of 2020 and for incidental reliefs.
5. W.P. (C) No. 20400 of 2020 is filed by the Employees Federation of the Malappuram District Co-operative bank seeking to interdict the Board of Directors of the Malappuram District Co-operative Bank from taking any policy decision on the affairs of the 3rd respondent till the merger of the 3rd respondent bank is complete in terms of Ext.P4 Ordinance as duly re-promulgated.
6. W.P. (C) No. 4882 of 2021 is filed by the Managing Committee of the Malappuram District Co-operative Bank seeking for a declaration that the Kerala Co-operative Societies Amendment Ordinances from Ordinance No. 6/2020 to Ordinance No. 24/2021 is a colourable exercise of power and therefore bad in law and also for holding that the recommendation for re-issuance of Ordinance No. 24 of 2021 by the Council of Ministers is by abusing the Constitutional Powers conferred on the State under Article 213 of the Constitution of India.
7. As the issues raised are interrelated, all these cases were heard together and are being disposed of by this common judgment. Except where otherwise indicated, for the sake of convenience and clarity, reference shall be to the facts and Exhibits in W.P. (C) No. 6639 of 2020, treating the same as the leading case. The determination of issues in the leading writ petition would in effect resolve the issues raised in the other writ petitions.
8. Before proceeding to discuss the respective contentions advanced by both the opposing sides, it would be apposite to delineate the sequence of events which led to the filing of these writ petitions.
9. The Kerala Co-operative Societies Act, 1969 (‘Act’ for short) was enacted to consolidate, amend and unify the laws relating to Co-operative Societies in the State of Kerala for the orderly development of Co-operative Sector in the State, in accordance with Co-operative principles, as self governing democratic institutions. Clause (eccc) of Section 2 of the Act defines Cooperative principles to mean the Co-operative principles listed in Schedule II appended to the Act. As per Schedule II,
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