Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Societies engaged in banking activities, including issuing cheque books, are recognized under the statutory framework, and their capacity to do so is supported by legal definitions and regulations ["Shivananja S/o Late Bhogayaiah vs State Of Karnataka - Karnataka"].
Analysis and Conclusion:
References:["Income-tax Officer, Ward-1 (3),Belgaum VS Shri Durdundeshwar Urban Co-operative Credit Society Ltd. - Income Tax Appellate Tribunal"], ["Hukkeri Taluka Primary Teachers Credit Co-operative Society Ltd. VS Income-tax Officer, Ward-1 (3), Belgaum - Income Tax Appellate Tribunal"], ["Shivananja S/o Late Bhogayaiah vs State Of Karnataka - Karnataka"]
In the world of cooperative societies, a common question arises: whether a primary cooperative society can issue cheque book to its members? This issue touches on the fine line between cooperative societies and banking institutions in India. Many primary societies provide credit and financial services to members, leading to confusion about their powers. However, the law draws a clear distinction. Typically, primary cooperative societies lack the authority to issue cheque books, a function reserved for recognized cooperative banks. This blog post dives deep into the legal framework, key definitions, judicial insights, and practical implications to clarify this matter.
Primary cooperative societies in India do not have the legal authority to issue cheque books to their members, as they are not classified as cooperative banks under the relevant legal framework. The issuance of cheque books is a banking function, and only entities recognized as cooperative banks under the Banking Regulation Act, 1949, have the authority to issue cheques. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa VS Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. - Income Tax Appellate Tribunal (2012)
This restriction stems from the explicit separation between cooperative credit societies and cooperative banks. As clarified, The definition of cooperative credit society explicitly states that such societies do not include cooperative banks, which are specifically defined under the Banking Regulation Act, 1949. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)
Understanding the regulatory landscape is crucial. The Banking Regulation Act, 1949 (as applicable to cooperative societies via Section 56) defines key terms:
The Act further states: The Banking Regulation Act, 1949 defines co-operative bank as a banking institution authorized to accept deposits from the public for lending or investment, with deposits being repayable on demand or otherwise, and capable of withdrawal by cheque or draft. Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa VS Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. - Income Tax Appellate Tribunal (2012)
Primary cooperative societies, focused on member credit, fall outside this scope. The CBDT Circular No.3/2008 reinforces this by noting amendments to section 80P(4), distinguishing non-bank societies. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)
From other judicial contexts, primary societies' operations are limited. For instance, primary Co-operative bank means a Co-operative society, other than a primary agricultural credit society, (1) the primary object or principal business of which is the transaction of banking business. Cherukode Co-op. Rural Bank Ltd. VS Parur Service Co-op. Bank - 2006 Supreme(Ker) 260 This excludes typical primary agricultural or credit societies from banking privileges.
Courts have consistently upheld this distinction. The ITAT Pune decision in ITO v. Jankalyan Nagri Sahakari Pat Sanstha Ltd. supports that cooperative societies are not cooperative banks and lack cheque-issuing authority. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)
CBDT clarifications echo: Cooperative societies (which are not classified as cooperative banks) are not authorized to issue cheques. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)
Related cases highlight enforcement. In matters of registration and operations, primary societies must adhere to state cooperative acts without banking powers. For example, under the Kerala Co-operative Societies Act, primary credit societies require RBI permission for banking, and violations invite penalties. Cherukode Co-op. Rural Bank Ltd. VS Parur Service Co-op. Bank - 2006 Supreme(Ker) 260 Similarly, debt recovery for cooperative banks falls under central laws like SARFAESI, not state registrars, underscoring their banking status. Krishna District Cooperative Central Bank Limited vs Dasari Venkata Srinivasa Rao - 2025 Supreme(Online)(AP) 13867
In Pandurang Ganpati Chaugule, the Supreme Court clarified cooperative banks' governance under Entry 45 of List I, excluding primary societies. Krishna District Cooperative Central Bank Limited vs Dasari Venkata Srinivasa Rao - 2025 Supreme(Online)(AP) 13867
Another instance involves cheque misuse allegations in a village cooperative society, where the society possessed a cheque book but faced scrutiny, affirming limits on such possession. Satwinder Singh VS State Of Punjab - 2010 Supreme(P&H) 1788
Exceptions are narrow:- Only cooperative banks under the 1949 Act—State, Central, or Primary Co-operative Banks—can issue cheque books. Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa VS Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. - Income Tax Appellate Tribunal (2012)- Primary societies' bye-laws cannot override this; internal practices do not confer statutory authority. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)
Related sources confirm: Primary agricultural credit societies lose identity if ceasing to qualify, without banking expansions. Pantheerankavu Service Co-op. Bank Ltd Kozhikode and Others v. State of Kerala and Others - 2016 Supreme(Online)(Ker) 25129 Economic viability checks for registration further restrict operations. Masaidevi Vividh Karyakari Sahakari Seva Sanstha Maryadit Warewadi VS State Of Maharashtra - 2025 Supreme(SC) 580
Multi-state or apex bodies differ but do not extend cheque powers to primaries. RAJESH GUPTA VS STATE OF U. P. - 2009 Supreme(All) 2825
Primary cooperative societies should:- Refrain from issuing cheque books unless classified as banks. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)- Use authorized banks for transactions requiring cheques.- Risk penalties for unauthorized banking, including under RBI directions applicable via Section 56. Cherukode Co-op. Rural Bank Ltd. VS Parur Service Co-op. Bank - 2006 Supreme(Ker) 260
Members facing issues may approach registrars or courts, but societies must comply. For debt recovery or deposits, banks follow federal mechanisms like Debt Recovery Tribunals. Krishna District Cooperative Central Bank Limited vs Dasari Venkata Srinivasa Rao - 2025 Supreme(Online)(AP) 13867Manual Mathew, S/o Mathew vs Joint Registrar (General) - 2025 Supreme(Ker) 2776
In elections or management, primaries operate under state acts without banking perks. PREM NARAYAN SINGH VS STATE OF U. P. - 2012 Supreme(All) 2181
In summary, primary cooperative societies generally cannot issue cheque books, as this is confined to cooperative banks under the Banking Regulation Act, 1949. Income-tax Officer,Ward 1 (3), Jalna VS MSEB Employees Co-op. Credit Society Ltd. - Income Tax Appellate Tribunal (2014)Deputy Commissioner of Income-tax, Central Circle, Panaji, Goa VS Jayalakshmi Mahila Vividodeshagala Souharda Sahakari Ltd. - Income Tax Appellate Tribunal (2012) This protects the integrity of banking functions and prevents regulatory overreach.
Key Takeaways:- Distinguish societies from banks via definitions in Section 56.- Rely on judicial precedents like ITAT Pune and Supreme Court rulings.- Consult legal experts for specific cases, as state variations exist.
Disclaimer: This post provides general information based on legal documents and is not specific legal advice. Laws may evolve; seek professional counsel for your situation.
15.11 A reading of sub-section (2) of Section 28-A therefore indicates that the legislature did not restrict the area of operation of a primary society or a secondary society to a gram panchayat, but permitted such primary Society or a secondary society to operate ... If the area of operation of the primary Society and/or secondary Society were to extend beyond a taluk, but not beyond a district - then 17 members. ... The ratio lai....
It was also considering the issue as to whether the cooperative banks at the State level and the multi-State level were banks for applicability of the SARFAESI Act. ... It can be seen that what was being considered by the Apex Court in Pandurang Ganpati Chaugule’ case was primarily the issue as to whether the cooperative banks were governed by Schedule 7 of List I at Entry 45 and to what extent and further, "whether banking company as defined ... A society shall receive deposits and l....
A reading of sub-section (2) of Section 28-A therefore indicates that the legislature did not restrict the area of operation of a primary society or a secondary society to a gram panchayat, but permitted such primary Society or a secondary society to operate in a part of a taluk, whole of a taluk, within ... If the area of operation of the primary Society and/or secondary Society were to extend beyond a taluk, but not beyond a distr....
(7) To print and issue the 'cheque' book and to provide banking and other facilities other than withdrawal of money through cheque. ... Therefore, in our opinion, before deciding the issue whether the Assessee is entitled for deduction u/s 80P(2)(a)(i), it is essential to decide whether the Assessee is a co-operative bank other than a primary agricultural credit society or a primary co-#HL_START....
Whenever the Legislature wanted to restrict the exemption to a primary co- operative society, it was so made clear as is evident from clause (f) with reference to a milk co-operative society that a primary society engaged in supplying milk is entitled to such exemption while denying the same to a federal ... milk co-operative society." ... This takes me to section 3 of BRA which restricts its applicability to co-operative#....
Therefore, in our opinion, before deciding the issue whether the Assessee is entitled for deduction u/s 80P(2)(a)(i), it is essential to decide whether the Assessee is a co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank ... We have therefore to find whether the assessee is a primary Co-operative bank. 11. ... The #H....
It was contended that the Primary Agricultural Credit Society cannot reserve one seat for depositor which can be done only by primary credit society. ... In any case what we notice from seconds proviso to S.2(oa) is that as and when the society ceases to be a Primary Agricultural Credit Society it shall loose that identity irrespective of whether the Registrar has made changes or not. ... Opening of Branches.— The Kerala State Co - operativ....
to any Co operative bank other than primary agricultural society or a co operative primary agricultural and rural development bank. ... Quepem Urban Co-operative Credit Society Ltd. ... In this regard, we find that all the grounds raised by the Revenue revolves around the issue of allowability of deduction u/s 80P(2)(d) of the IT Act to primary credit cooperative society. ... order dated 14-10-2019 wherein deducti....
only one primary agricultural credit society in an independent revenue village. ... policy directives which the State Government may, from time to time, issue. ... The factual background is that on 13.01.2023, the appellant-society herein filed an application to the Respondent-Assistant Registrar for getting permission for registration of proposed society as a new Primary Agricultural Credit Co-operative Society (hereinafter ‘PACCS’), as well as for ....
Banks Act, 1984 (20 of 1984), as amended from time to time, shall apply with the modification of substituting the words Kerala State Co-operative Bank *[xx], Primary Agricultural Credit Society or Primary Housing Society ["or an Urban Co-operative Bank or any primary Co-operative societies dealing with ... Explanation.- For the purposes of this section, Gehan means a special charge on movable or immovable property, in favour of the *Kerala State Co-....
(f) receipt of deposit of registration fee as may be specified from time to time by the Registrar. (d) a true copy of the latest annual report and audited statement of accounts of such primary co-operative society; (c) evidence to show that the primary co-operative society is not in possession of any Government aid from the Central Government or the State Government; (e) a list of members, who attended the meeting of general body or delegate general body of such primary cooperative society; and
3. The Goonda-Kunwar co-operative society is a primary level co-operative society. The elections, in such primary co-operative societies, were held in the year 2009 and their term is three years.
2. That the complainant is the member in the village Co-operative Society, Society has issued a cheque book bearing cheque No. 030481 to 030500 which was in the possession of Secretary because this cheque was not in any other use other than the society. The cheque book in question belonged to the Co-operative Society. 4. After hearing the learned counsel for the parties, I am of the opinion that the instant petition deserves to be dismissed. 5. In State of Haryana V/s. Bhajan Lal, 1992 Supp(l) Supreme Court Cases 335 : (AIR 1992 SC 604 : 1992 Cri LJ 527), ....
It undertakes any business if the State calls upon as per the law promulgated for its benefit. An apex co-operative body can undertake any business in accordance with the law laid down herein without disturbing the service to be rendered to its member co-operative societies following the principle of Section 123-A of the Act, 1965. An apex co-operative society and a primary co-operative society are distinct and different. Only for some administrative exigencies apex co-operative society controls primary societies as per Section 123-A and such apex co-operative society is co....
Provided that this sub-clause shall not apply to the admission of a Co-operative bank as a member by reason of such Co-operative society out of funds provided by the State Government for the purpose; (2) the paid-up share capital and reserves of which are not less than one lakh of rupees; and (ccv) "primary Co-operative bank" means a Co-operative society, other than a primary agricultural credit society, (1) the primary object or principal business of which is the transaction of banking business;
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