Point of Law : Section 74A of 1969 Act was incorporated to ensure that benefits of DICGC Act, 1969 were extended to Co-operative Banks as well.

JUDGMENT :

[WP(C) Nos.28650/2021, 12/2023, 173/2023, 4215/2023]

W.P.(C) N0s.28650/2021, 173/2023 and 4215/2023 have been filed by the former President and Vice President of the erstwhile Malappuram District Co-operative Bank while W.P.(C) No.12/2023 has been filed by 93 individuals stated to be Presidents of Primary Agricultural Credit Societies and Urban Co-operative Banks which were members of the Malappuram District Co-operative Bank. They challenge the constitutional validity of Section 14A of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the 1969 Act), which was incorporated by the Kerala Co-operative Societies Amendment Act, 2019 (Act 1 of 2019) as also the provisions of Section 74H of the 1969 Act as amended by the Kerala Co-operative Societies (Amendment) Act, 2021. Consequently, there is also a challenge to the order passed by the Registrar of Co-operative Societies in terms of the provisions contained in Section 74H of the 1969 Act amalgamating the Malappuram District Co-operative Bank with the Kerala State Co-operative Bank. The grounds taken and the reliefs sought in all these writ petitions are almost identical, and they can be conveniently disposed of by common judgment. It is submitted at the Bar that W.P.(C) No.4215/2023 can be taken as the lead case. The exhibits referred to in this judgment are as they are marked in W.P.(C) No.4215/2023 unless indicated otherwise.

2. The petitioners contend that the impugned provisions are unconstitutional and beyond the legislative competence of the State Legislature. It is submitted that the provisions of the Banking Regulation Act, 1949, which apply in entirety to Co-operative Banks, after the amendment of the Banking Regulation Act, 1949, with effect from 26.6.2020, have brought Co-operative Banks under the umbrella of the Reserve Bank of India and the provisions of the Banking Regulation Act, 1949. Therefore, it is submitted that any provision providing for the amalgamation of a Co-operative Bank with another Co-operative Bank should be in tune with the provisions for amalgamation of banking companies under the provisions of the Banking Regulation Act, 1949. In other words, it is the case of the petitioners that 'banking' is exclusively a subject in List-1 of the Seventh Schedule of the Constitution of India, and therefore, the State Legislature was denuded of the power to make any provision for amalgamation of a Co-operative Bank with another Co-operative Bank by providing for a procedure distinct from the procedure contemplated by the Banking Regulation Act, 1949.

3. Mr. George Poonthottam, the learned senior counsel appearing for the petitioners in all these cases on the instructions of Smt. Nisha George would, with reference to the provisions of the 1969 Act and the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as the 1969 Rules), submit that the provision for merger/amalgamation of a Co-operative Society registered under the provisions of the 1969 Act was provided for under Section 14 of the 1969 Act and Rule 13 of the 1969 Rules. It is submitted that to overcome the procedure contemplated by Section 14 of the 1969 Act and Rule 13 of the 1969 Rules, the 1969 Act was amended in 2019 by incorporating Section 14A, which provided for a procedure distinct from the procedure contemplated by Section 14 in as much as Section 14A only required a simple majority of the concerned District Co-operative Bank which would take forward its process of amalgamation with the Kerala State Co-operative Bank. It is pointed out that the provisions of Section 14 contemplated a two-thirds majority. It is submitted that in the case of the Malappuram District Co-operative Bank, two general body meetings were held after the incorporation of Section 14A of the 1969 Act, as above. However, the proposal for amalgamation was defeated by a two-thirds m