Integration of co-operative banks requires compliance with statutory procedures; the failure to follow mandatory provisions invalidates the amalgamation process.

1. Petitioner Ms. Aruna Dixit, Ex - chairman and shareholder of the Bilasa Mahila Nagrik Sahkari Bank Maryadit, Bilaspur (for short 'the Bilasa Bank') has assailed the legality and validity of the order dated 18.01.2011 passed by the Registrar Cooperative Societies, Chhattisgarh under S.18 (1) of the Chhattisgarh Co - operative Societies Act, 1960 (for short 'the Act, 1960') directing amalgamation of the Bilasa Bank with the respondent No.4 i.e. Laxmi Mahila Nagrik Sahkari Bank Maryadit, Raipur (for short 'the Laxmi Bank').

2. Briefly stated, the facts of the matter, as projected from the material available on record, are that the Bilasa Bank was established and constituted in the year 1996 under the provisions of the Act, 1960. The said bank was conducting its business and affairs through its members and elected office bearers. On committing defaults and mismanagement, the Board of Directors of the Bilasa Bank was superseded on 13.09.2006. The said order of supersession was extended for another year vide order dated 12.09.2007, however there was no order of extension till 02.01.2010 when another order was passed directing continuance of the supersession and further increasing the same by one year from the said date. Another extension was granted on 30.12.2010 for a period till 12.09.2011. In the first order of supersession, one Shri. D.R. Thakur, Assistant Registrar, Co - operative Societies, was appointed as the authorized officer, who continued even in the order dated 02.01.2010, however in the third order dated 30.12.2010, one Shri. Nirmal Tirkey was appointed as the authorized officer.

3. The authorized officer convened the annual general meeting of the shareholders of the Bilasa Bank on 07.11.2009 and in the said meeting, a resolution was passed for amalgamation of the Bilasa Bank with the Laxmi Bank, despite objection raised by the shareholders of the Bilasa Bank including the present petitioner. Pursuant to the said resolution, the Registrar sent the proposal of amalgamation for approval by the Reserve Bank of India (for short 'the RBI'). The RBI vide its communication dated 21.05.2010 rejected the proposal on the ground that documents as envisaged in the RBI circular dated 02.02.2005 have not been submitted along with the proposal. The RBI returned the merger application and the documents to the Registrar with the said communication. Pursuant to this, a meeting of officers of the Bilasa Bank was convened on 15.06.2010 and the decision along with other documents were sent by the Laxmi Bank to the Registrar on 07.07.2010, who, in turn, resubmitted the proposal to the RBI and eventually the RBI issued statutory No Objection Certificate (for short 'the NOC') on 27.12.2010. After the said NOC, the Registrar, Co - operative Societies has passed the impugned order directing merger of the Bilasa Bank with the Laxmi Bank.

4. The petitioner, thereafter, preferred an appeal before the State Government under S.77 of the Act, 1960 and the State Government vide order dated 19.07.2011 set aside the Registrar's order dated 18.01.2011.

5. Laxmi Bank preferred a petition, bearing W.P. (C) No.4095 of 2011, before this Court to challenge the order passed by the State Government on 19.07.2011. The writ petition was allowed by this Court on the ground that in view of the provisions contained in S.79 of the Act, 1960, the appeal before the State Government was not maintainable, however, this Court left it open for the petitioner and the Bilasa Bank to take recourse to such remedy as may be available to them under law to assail the legali