The Reserve Bank Of India vs U.A.Lathif Mla on 29 February, 2024

[Cites 45, Cited by 0]

Kerala High Court

The Reserve Bank Of India vs U.A.Lathif Mla on 29 February, 2024

The question involved in all the intra-court appeals preferred against the common judgment rendered in four writ petitions preferred by former President, Vice President of erstwhile Malappuram District Co-operative Bank and 93 individuals stated to be the Presidents of Primary Agricultural Credit Societies and Urban Co-operative Banks whereby all the petitioners were not successful in laying challenge to the constitutional validity of Section 14A of Kerala Co-operative Societies Act, 1969 (hereinafter called as 'Act, 1969'), Section 74H(1)(a) of the Act, 1969 and order passed by the Registrar, Co-operative Societies dated 12 th of January, 2023 ordering amalgamation of Malappuram District Co-operative Bank with Kerala State Co-operative Bank.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 28

2. The arguments raised in all the afore-mentioned writ petitions, which have been extensively dealt with by the Single Judge, were with regard to the Entry Nos.43, 45 of List-I and 32 of List-II of the 7th Schedule of the Constitution of India as well as amended provisions of Section 44A of the Indian Banking Regulation Act, 1949 effective from 26 th of June, 2020. In other words, the pith and substance of the claim in the writ petitions was State Government by causing an amendment in Section 74H(1)(a) could not confer power on the Registrar, in the absence of the resolution either by simple majority or by ¾th majority as it was then in vogue, i.e., before amendment can order the amalgamation of the District Co-operative Society into State Co-operative.

3. The other question was since one of the functions of the District Co-operative Bank was 'Banking', amalgamation of banking company would be within the domain of Central legislation and not by the State.

4. Whether in the absence of consultation with the RBI, amalgamation as provided under Section 44A of the 1949 Act effective from 26.6.2020 providing ¾ th majority W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 29 could have been done away with by the State legislation.

5. All these questions raised in the writ petitions have been answered against the appellants/petitioners.

6. There were fourteen (14) district co-operative societies in the State of Kerala. The provisions of the Kerala Co-operative Societies Act, 1969, initially, envisaged amalgamation of the District Co-operative into State Co- operative by way of ¾th majority but later by simple majority and finally in the absence of the resolution either by simple or otherwise Registrar could order for amalgamation. The said amendment was caused by inserting Section 74(1)(a) of 1969 Act with effect from 11th of April, 2020 for the purpose of de-layering.

7. All the thirteen (13) Co-operative Societies had agreed to pass resolution and for the purpose of amalgamation/merging with the State Government except the Society in question, i.e., the Malappuram Co-operative Society.

8. The genesis of the arguments on behalf of the learned senior counsels representing the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 30 appellants/petitioners before the Single Bench and this Court are summarised hereinbelow:-

(i) Merger/amalgamation of Co-operative Society under the 1969 Act was provided under Section 14 and Rule 13 of the 1969 Act and the Rules framed thereunder.

In the year 2019 amendment was caused by inserting Section 14A providing a distinct procedure for the purpose of merger by requiring a simple majority by deleting the provisions of ¾th for the purpose of amalgamation/merger with Kerala State Co-operative Bank.

(ii) Two general body meetings of the Malappuram District Co-operative Society, after the incorporation of Section 14A of the Act, 1969, were held and the proposal for merger was defeated by 2/3rd and even simple majority.

(iii) Chapter X(C) was incorporated in the Act, 1969 and Section 74H(1)(a) provided a different procedure for merger of District Co-operative Bank with State (Kerala) Co- operative Bank empowering the Registrar to merge the District Co-operative with the State Co-operative, in the absence of resolution.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 31

(iv) Malappuram District Co-operative Society is covered under the provisions of Deposit Insurance and Credit Guarantee Corporation Act, 1961 (hereinafter called as 'the DICGC Act') which extended a protection and guarantee to the depositors. The merger/amalgamation and winding up or re-construction of the arrangement of an insured Co- operative would only be made by previous sanction in writing of the Reserve Bank of India.

9. On the other hand, the stand of the State supporting the amendment has been as under:-

(i) Section 74(1)(a) applies to insurance co-operative bank which would mean a bank insured under the DICGC Act. The condition under the DICGC Act was in respect of a insured bank with any other bank or entity with the sanction in writing of the RBI. In the absence of any permission from the RBI the only adverse consequence would be the bank may lose the status of insured Co-operative, nothing beyond.

(ii) The petitioners had no locus standi to file the writ petitions as they have no case by looking at the memo of W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 32 parties and also in the absence of any authorisation.

(iii) Entry No.43 of List-I of seventh schedule relates to trading corporations, including 'banking', insurance and financial corporations, but excludes 'Co-operative Societies'.

Though 'Banking' is exclusively in List-I subject under Entry 45 of List-I, the power to make law regarding incorporation, regulation and winding up of Co-operative Societies would be within the competence of State Legislature under Entry No.32 of List-II. The Entries in the Seventh Schedule are not the power but fields of Legislation.

10. While impugning the vires of an enactment there is a presumption of its constitutionality and if there is any difficulty in ascertaining the limits of legislative power, the difficulty must be resolved as far as possible in favour of the legislature by adopting a liberal construction. Constitutional validity of Section 14A and Section 74H(1)(a) had already been upheld in Abdurahiman.P. and others v. State of Kerala and others [2020 (1) KHC 507] wherein all the contentions raised by the appellants/petitioners had been repelled.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 33

11. The amendments under challenge were preceded by various ordinances as the matter could not be placed before the Legislature owing to the difficulties during the Covid-19 pandemic.

12. Amendments were challenged at the ordinance stage through Writ Petition No.33596 of 2019 and connected cases. This Court vide judgment dated 28 th of April, 2021 in Writ Petition No.33596 of 2019 and connected cases had repelled the challenge to the constitutional validity of the ordinance. The matter was taken up before the Division Bench through Writ Appeal No.708 of 2021 and connected appeals. Writ Appeals were disposed of by common judgment dated 22nd of May, 2022, leaving it open to the appellants to challenge the provisions of the amending Act as the ordinance which was under challenge by that time had been replaced by amending Act.

13. Supreme Court in Jayant Verma and others v. Union of India and others [(2018) 4 SCC 743] while dealing with the proposition regarding the provisions of the Banking Regulation Act, 1949 to the extent it encroaches W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 34 into the fields exclusively reserved to the State Legislature in List-II, held that it would not be operative. The Entries 43 and 45 of List-I would not be applicable to the 'Banking co- operative societies'.

14. As regards the expression 'consultation' with Reserve Bank of India in support of the contention raised by the learned Advocate General reliance was laid to the ratio as culled out in the judgment of the Supreme Court in Ram Tawakya Singh v. State of Bihar and others [(2013) 16 SCC 206]. In the said judgment while dealing with the expression 'consultation' it was held that there must be conference of two or more minds or impact of two or more minds in respect of a topic/subject.

15. Counsel representing the Co-operative Society also adopted the arguments submitted by Advocate General.

16. Smt.Sumathi Dandapani, learned Senior Counsel assisted by Sri.Vishnu Sharesh on behalf of the Reserve Bank of India by relying upon the counter affidavit filed in Writ Petition No.4215 of 2023 contended that though RBI vide letter dated 3rd of October, 2018 had granted in- W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 35 principle approval of amalgamation of District Co-operative Banks with the State Co-operative Bank which were both licensed under the Banking Regulation Act, 1949, therefore any order of amalgamation of the Malappuram District Co- operative Bank with the State Co-operative Bank could have only been in accordance with the provisions of the Banking Regulation Act, 1949 (hereinafter called as 'Act, 1949'). The merger and amalgamation of a District Co-operative Bank with the State Co-operative Bank have to be sanctioned by the Reserve Bank of India in terms of the provisions contained in Section 44A read with Section 56 of the Act, 1949.

17. Registrar of the Co-operative Society even after incorporation of Section 74H(1)(a) had sought the approval of the RBI for merger of Malappuram District Co-operative Bank with State Co-operative Bank.

18. In rebuttal counsel representing the appellants in support of the contentions relied upon following case law:

Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud Sahakari Bank Limited [(2020) 9 SCC 215] to W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 36 contend that the power to regulate the incorporation, winding up of the Co-operative Society though vests with the State Legislature in terms of Entry No.32 of List-II of the Seventh Schedule of the Constitution of India, but when such Co-operative Society engages in a banking activity, any order regarding its winding up, amalgamation including division or re-organization can only be made with the permission in writing of RBI strictly as per provisions of Section 44A of the Act, 1949 which is amended with effect from 26th of June, 2020.

19. The order of the Registrar ordering the amalgamation did not notice the afore-mentioned case law but was swayed away with the amendment caused by the State Legislation.

20. Thalappalam Service Co-operative Bank Limited and others v. State of Kerala and others [(2013) 16 SCC 82] - dealt with maintainability of the writ petition against the Co-operative Society as per the provisions of Article 12 of the Constitution of India. It was contended that the State has no say to the function of the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 37 Society dealing with banking.

21. Reserve Bank of India has also filed intra-court appeal bearing W.A.No.2114 of 2023 against the judgment of the Single Bench by seeking leave assailing inter alia on the following points:-

(I) Vide 2021 Amendment, Section 74H(1)(a) of the Act, 1969 provided for amalgamation of District Co-

operative Banks with Kerala State Co-operative Bank was amended by Act No.34 of 2021 and Section 74H(1)(a) was inserted which vested with the Registrar, a power, to order merger of a District Co-operative Bank with Kerala State Co- operative Bank in the event of general body of District Co- operative Bank do not pass resolution as specified under Section 14A of the Act, 1969. The said amendment went against the principle of decentralization and democratic administration of Co-operative Societies.

(II) Banking is exclusively a subject in List-I of the seventh schedule of the Constitution of India. Therefore the State Legislature was denuded of the power to make provisions for amalgamation of a Co-operative Bank with W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 38 another Co-operative Bank.

(III) Malappuram District Co-operative Society is an insured Co-operative Bank as defined under Section 2(i) of DICGC Act and thus guaranteed its depositors a protection in respect of the deposits maintained with them. The protection will extend to a bank only if the incorporating law, i.e., the KCS Act contains a provision of 'eligible co-operative bank' as defined in Section 2(gg) of DICGC Act.

(IV) 'Reserve Bank of India (Guidelines)' on 'amalgamation of Districts Central Co-operative Banks with State Co-operative Banks' dated 24 th of May, 2021 provides that the Reserve Bank of India will consider proposals for amalgamation if the scheme of amalgamation is approved by requisite majority of shareholders in accordance with the provisions of Section 44A read with Section 56 of the BR Act, 1949. Though the Bank did not have any objection for amalgamation as per the counter affidavit filed in the writ petitions but later on amendment was caused under Section 44A on 26.6.2020 providing an amalgamation of banking co- operative by 2/3rd of majority. Thus, in this view of the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 39 matter, the amendment caused by the State under Section 74H(1)(a) cannot be put into force as has been done by the impugned order of the Registrar. In support of the contention relied upon following case law:- M/s.Fatehchand Himmatlal and others v. State of Maharashtra [(1977) 2 SCC 670] and various other judgments on similar proposition. Paragraphs 56, 62 and 63 of M/s.Fatehchand (supra) read as under:-

"56. Let us look at the basics of the legal situation before us, before examining the wealth of learning counsel has accumulated. Article 246 vests exclusive power in Parliament over matters enumerated in List I (Seventh Schedule) and the State Legislature enjoys like power over topics in List II, subject to clauses (1) and (2) of the Article. Plainly, therefore, the State can legislate upon any Entry in the State List. We may visualize situations where Parliamentary occupation may exclude the State Legislature. Where, for instance, Parliament while enacting on a matter in the Union List, makes as it is entitled to make, necessary incidental provisions to effectuate the principal legislation, such ancillary expansions may trench upon the State field in List II. In such a case, if the State makes a law on an Entry in its exclusive List, and such law covers and runs counter to what has already been occupied by Parliament, through incidental provisions, it may be argued that the State law stands pushed out on account of the superior potency of Parliament's power in our W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 40 constitutional scheme. Again, there are certain tell-tale heads of legislation in the Lists where one may plausibly invoke the doctrine of occupied field. Examples may, perhaps, be furnished by Entries 52 and 54 of List I, Entries 23 and 24 of List II and Entry 33 of List III. Without fear of contradiction, we may assert that Art. 246(3) read with Entry 30 in List II, empowers the State to make the impugned law. Why then is it incompetent? Because, says Mr. Nariman, the field of gold industry is already occupied by Parliament and the State Legislature therefore stands excluded. Entry 52 in List I reads:

"Industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest."

Parliament, in the Industries (Development and Regulation) Act, 1951 (Act 65 of 1951) has made the necessary declaration contemplated in Entry 52 and has occupied the field of 'gold industry', as is evident from reading Section 2 and item 1.B(2) of the First Schedule therein. This expression of Parliamentary intent to legislate upon the gold industry is enough to expel from that field the State Legislature. This is Shri Nariman's contention. But what is the sequitur ? Assuming the approprlation by Parliament of the power to legislate on gold, what follows? It can make laws directly on that industry and ancillarily on every allied area where effective exercise of the parliamentary power necessitates it. So much so, 'business in gold', licensing of gold merchants, regulation of making or pledging of gold ornaments, keeping of jewellery, disclosure of gold possessions and the like are W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 41 incidental to the parliamentary power and purpose and the Gold Control Act, 1968 and the Rules made thereunder are valid (vide, for example, Bantha's Case:

(1970) 1 SCR 479). Several sections of the Act, some rules and a few rulings were read before us to drive home the point that gold loans are already within the ken of the law made under Entry 52, List I. If so, what ?

Does it spell death sentence on the Debt Act? Or maim it ? Or leave it intact ?

xxx xxx xxx

62. In the Canadian Constitution, the question of conflict and coincidence in the domain in which provincial and dominion legislation overlap has been considered. If both may overlap and co-exist without conflict, neither legislation is ultra vires. But if there is confrontation and conflict the question of paramountcy and occupied field may crop up. It has been held that the rule as to predominance of dominion legislation can only be invoked in case of absolutely conflicting legislation in pari materia when it will be an impossibility to give effect to both the dominion and provincial enactments. There must be a real conflict between the two Acts i.e. the two enactments must come into collision. The doctrine of Dominion paramountcy does not operate merely because the Dominion has legislated on the same subject matter. The doctrine of 'occupied field' applies only where there is a clash between Dominion Legislation and Provincial Legislation within an area common to both. Where both can co-exist peacefully, both reap their respective harvests (Please see; Canadian Constitutional Law by Laskin--pp. 52-54, 1951 Edn). W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 42

63. We may sum up the legal position to the extent necessary for our case. Where Parliament has made a law under Entry 52 of List I and in the course of it framed incidental provisions affecting gold loans and money-lending business involving gold ornaments, the State, making a law on a different topic but covering in part the same area of 'gold loans', must not go into irreconcilable conflicts. Of course, if Art.254(2) can be invoked--We will presently examine it--then the State law may still prevail since the assent of the President has been obtained for the Debt Act. Thirdly, the doctrine of 'occupied field' does not totally deprive the State Legislature from making any law incidentally referable to gold. In the event of a plain conflict, the State law must step down unless, as pointed out earlier in the previous passage, Art.254(2) comes to the rescue."

22. We have heard learned counsel for the parties and appraised the paper book.

23. It would be expedient to extract the provisions of Entry 43, Entry 45 and Entry 32 in tabular form as has been done by the Single Bench, the same reads as under:-

Entry 43, List-I (Union Incorporation, regulation and winding up of trading List) corporations, including banking, insurance and financial corporations, but not including co-operative societies.

Entry 45, List-I (Union Banking List) Entry 32, List-II (State Incorporation, regulation and winding up of corporations, List) other than those specified in List I, and universities;

unincorporated trading, literary, scientific, religious and other societies and associations, co-operative societies. W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 43

24. Article 43B of the Constitution of India inserted by ninety-seventh amendment Act, 2011 with effect from 15 th of February, 2012 envisages that the State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of co- operative societies.

25. In Jayant Verma and others (supra) as per the facts revealed constitutional validity of Section 21A of the Banking Regulation Act, 1949 was assailed by public interest litigation under Article 32 of the Constitution of India envisaging that the rate of interest charged by the banking company would not be subject to scrutiny by courts. While dealing with such question raised in paragraphs 12, 13, 16, 40, 41 and 44 of judgment it has been observed by noticing provisions of Article 246 as well as the judgments cited by Mr.E.K.Nandakumar, learned Senior Counsel appearing on behalf of the RBI in W.A.No.2114 of 2023 that it is a common parlance to state that the "Legislative Heads" must receive large and liberal meaning and the sweep of the sense of the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 44 rubrics must embrace the widest range. Banking Regulation Act deals with the subject 'banking' insofar as it licenses banking companies, as defined, and co-operative banks, to ensure proper regulation and nothing beyond. It is also noticed that if it is found that the Legislature as a whole is referable to Entry in List-I but it incidentally encroached upon an Entry in List-II there will be no reason for the doctrine of unoccupied field not to apply to federal legislation. The principle contained in Article 246, should be taken as a last resort in case of failure of harmonious construction, i.e., the entries qua in competing lists, i.e., once the legislation is referable to one list or the other, the doctrine of incidental trenching and unoccupied field would apply equally to both Parliamentary and State legislation. The Court must ascertain a true nature and character of challenged enactment, its 'pith and substance' and not the 'form' alone. Where there has been an endeavour to give pre-eminence to the Central Legislature in cases of a conflict of powers, it is obvious that, in some cases where such conflict exists, the Legislature could not have intended that W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 45 power exclusively assigned to the Provincial Legislature and should be absorbed in those given to the Central Legislature and in the penultimate paragraph 61 it was held as under:-

"61. We declare Section 21A of the Banking Regulation Act to be valid as it is part of an enactment which, in pith and substance, is relatable to Schedule VII List I Entry 45 to the Constitution. However, insofar as Section 21A incidentally encroaches upon the field of relief of agricultural indebtedness, set out in List II Entry 30 it will not operate only in States where there is a State Debt Relief Act which deals with the subject matter of relief of agricultural indebtedness, where the State Debt Relief Act covers debts due to "banks", as defined in those Acts. In States where the State Debt Relief Act does not apply to banks at all, or applies only to certain specified banks, Section 21A will, in the former situation, apply in such States, and, in the latter situation, apply only in respect of loans made to agriculturists where such loans are given by banks other than the banks specified or covered by the State Debt Relief Act concerned, as the case may be."

From the analysis of the conclusion arrived at in the judgment cited (supra), it is clear that, if on causing of the amendment incidentally encroaches upon the relief of agricultural indebtedness, set out in List II of Entry 30, it will not operate only in State where there is a State Debt Relief Act which deals with the subject matter of relief of W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 46 agricultural indebtedness, which also covers debt due to "banks". But in State where the State Debt Relief Act does not apply to banks at all, or applies only to certain specified banks, Section 21A will, in the former situation, apply in such States.

26. In the instant case an amendment was caused in Section 3 of the Banking Regulation Act, 1949 prior to the Banking Regulation (Amendment) Act, 2020. In the post amendment, in order to rule out the ambiguity in respect of certain Co-operative Societies whose primary object and principal business was to provide only long term finance it was made clear that if such society does not use the part of its name with the bank it will consider to be only Co- operative Society but if the banking is also incidental and over and above the other work would exclusively use the word banking.

27. Sant Sadhu v. State of Punjab [AIR (1970) P & H 528] was a case where certain provisions of the Punjab Co-operative Societies (Amendment) Act, 1969 were challenged on the ground that State Legislative did not have W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 47 competence to enact any law relating to Banking Corporations even if they were co-operative societies constituted under law made by the State Legislature. In paragraph Nos.8 and 13 of the afore-mentioned judgment while noticing Entry Nos.43, 45 and 32 of List-I and List-II of the seventh schedule as has been done in the instant case it was held that the co-operative society doing the banking business though are put on par so as far as Entry No.45 List-I is concerned, with other banking institutions, but while construing Entry No.45, it was observed that, the Entry must be limited to the laws which affect the conduct of the business of banks qua banks. Therefore, the co-operative societies were taken out from the ambit of Entry 43 and put in Entry No.32 of List-II. The word 'regulation' in Entry No.43 was held to be of a wide import which would also include how the Co-operative Society would work. In order to give harmonious construction to both the Entry Nos.43 and 44 it was held that only business of banking as such falls within the ambit of Entry No.45; whereas incorporation of the Corporations matters relating to them would fall within the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 48 ambit of Entry 43, but, the constitution of the Societies their working would definitely fall in Entry No.32, List-II and they were strictly taken out of the purview of Entry No.43.

28. There may be confusion in respect of reading of the Entries in List-I and List-II and at some time it appears to be overlapping or may appear to be in direct conflict with each other. In such situation it is the duty of the Court to reconcile the entries to bring out a harmonious construction. If there is a 'general power' in one List and a 'particular power' in the other List which specific power could also be included in the general power of the first list then the general entry in first list must be read so as to 'exclude' the specific power from it so that the general power may cover or occupy all the fields 'excepting' the field under second list.

29. In Pandurang Ganapathi Chaugule (supra) the judgments rendered by Maharashtra and Andhra Pradesh High Courts excluding the applicability of SARFAESI Act with regard to the Societies dealing with banking activity held that in case Co-operative Societies Act of a particular State W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 49 deals with incorporation, management and winding up and incidentally trenches upon banking, it would not take the legislation beyond the competence of the State Legislature. For the proper financing and effective functioning of co- operative societies, there must also be co-operative societies that do banking business to facilitate the working of other co-operative societies merely because they do banking business, they do not cease to be co-operative societies. (Emphasis supplied). While dealing with all the entries it was held that the provisions of the SARFAESI Act would be applied to the co-operative societies dealing with the banking activity. Thus, what is deducible in paragraphs 87 and 88 in Pandurang Ganapathi (supra) extracted by the learned Single Judge it is a clear authority on the proposition that while in all aspects of banking co-operative societies which are banks would specifically come within the purview of law made by the Union Parliament with Entry No.45 of List-I and in all other aspects they would be controlled and regulated by law made with reference to Entry No.32 of List-II.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 50

30. No doubt Section 44A amended in the year 2020 and Section 74H(1)(a) amended later on but made effective from a back date provided different procedure that would be applicable for amalgamation. The pith and substance of the counter affidavit of the RBI is that, it had never opposed to the amalgamation by the Registrar except that consultation from it. We cannot lose sight of the fact that amendment of Section 74H(1)(a) was effective from 11th of April, 2020. To overcome the confusion and for the purpose of clarity it would also be an expedient to extract the provisions of Section 74H(1)(a) of the Co-operative Societies Act and Section 44A of the Banking Regulation Act. The same read as under:-

"74H. Amalgamation of District Co-operative Banks to the Kerala State Co-operative Bank. (1)Notwithstanding anything contained in this Act or in any other law for the time being in force, the Registrar shall order the amalgamation of District Co-operative Banks in Kerala with the Kerala State Co-operative Bank on the basis of the resolution passed by the general body as provided under section 14A of this Act.

(a) if the general body of a District Co-operative Bank has not passed the resolution under section 14A, the Registrar may, after consulting Reserve Bank of India, order merger of such W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 51 District Co-operative Bank with Kerala State Co-operative Bank, on public interest. No order shall be passed under this clause unless,--

(i) a copy of the proposed order of merger has been sent to the member society or member societies concerned by registered post and published the same in two vernacular dailies having wide circulation in the district in which the society situates, for their objections or suggestions;

(ii) the Registrar shall consider the objections/suggestions, if any, received from the society or societies concerned or from any member or creditor of such society or societies within such period, being not less than fifteen days from the date of posting of the proposed order of merger, as may be specified by the Registrar in this behalf.

"44A. Procedure for amalgamation of banking companies (1) Notwithstanding anything contained in any law for the time being in force no banking company shall be amalgamated with another banking company, unless a scheme containing the terms of such amalgamation has been placed in draft before the shareholders of each of the banking companies concerned separately, and approved by the resolution passed by a majority in number representing two-thirds in value of the shareholders of each of the said companies, present either in person or by proxy at a meeting called for the purpose.

(2) Notice of every such meeting as is referred to in sub-

section (1) shall be given to every shareholder of each of the banking companies concerned in accordance with the relevant articles of association, indicating the time, place and object of the meeting, and shall also be published at W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 52 least once a week for three consecutive weeks in not less than two newspapers which circulate in the locality or localities where the registered offices of the banking companies concerned are situated, one of such newspapers being in a language commonly understood in the locality or localities.

(3) Any shareholder, who has voted against the scheme of amalgamation at the meeting or has given notice in writing at or prior to the meeting to the company concerned or to the presiding officer of the meeting that he dissents from the scheme of amalgamation, shall be entitled, in the event of the scheme being sanctioned by the Reserve Bank, to claim from the banking company concerned, in respect of the shares held by him in that company, their value as determined by the Reserve Bank when sanctioning the scheme and such determination by the Reserve Bank as to the value of the shares to be paid to the dissenting shareholders shall be final for all purposes. (4) If the scheme of amalgamation is approved by the requisite majority of shareholders in accordance with the provisions of this section, it shall be submitted to the Reserve Bank for sanction and shall, if sanctioned by the Reserve Bank by an order in writing passed in this behalf, be binding on the banking companies concerned and also on all the shareholders thereof.

xxx (6) On the sanctioning of a scheme of amalgamation by the Reserve Bank, the property of the amalgamated banking company shall, by virtue of the order of sanction, be transferred to and vest in, and the liabilities of the said company shall, by virtue of the said order be transferred to, W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 53 and become the liabilities of the banking company, which under the scheme of amalgamation is to acquire the business of the amalgamated banking company, subject in all cases to [the provisions of the scheme as sanctioned]. [(6A) Where a scheme of amalgamation is sanctioned by the Reserve Bank under the provisions of this section, the Reserve Bank may, by a further order in writing, direct that on such date as may be specified therein the banking company (hereinafter in this section referred to as the amalgamated banking company) which by reason of the amalgamation will cease to function, shall stand dissolved and any such direction shall take effect notwithstanding anything to the contrary contained in any other law. (6B) Where the Reserve Bank directs a dissolution of the amalgamated banking company, it shall transmit a copy of the order directing such dissolution to the Registrar before whom the banking company has been registered and on receipt of such order the Registrar shall strike off the name of the company.

(6C) An order under sub-section (4) whether made before or after the commencement of section 19 of the Banking Laws (Miscellaneous Provisions) Act, 1963 (55 of 1963) shall be conclusive evidence that all the requirements of this section relating to amalgamation have been complied with, and a copy of the said order certified in writing by an officer of the Reserve Bank to be true copy of such order and a copy of the scheme certified in the like manner to be a true copy thereof shall, in all legal proceedings (whether in appeal or otherwise and whether instituted before or after the commencement of the said section 19), be admitted as W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 54 evidence to the same extent as the original order and the original scheme] (7) Nothing in the foregoing provisions of this section shall affect the power of the Central Government to provide for the amalgamation of two or more banking companies (xxx) under section 396 of the Companies Act, 1956 (1 of 1956):

PROVIDED that no such power shall be exercised by the Central Government except after consultation with the Reserve Bank."

31. The apprehension of the RBI that, the provisions of the Banking Regulation Act in view of the finding of the Single Bench would not be applicable for the amalgamation, in our considered view, has already been taken care of by the Single Bench in paragraph 15, the same reads as under :-

15. The 'rag-bag' theory:- It has to be noted that by virtue of Entries in List-I, the entire law relating to banking as well as the entire law relating to incorporation, regulation and winding up of Corporations including banking companies except Co-operative Societies is within the purview of the competence of the Union Parliament. It is settled from the decision of the Constitution Bench of the Supreme Court in Ujagar Prints (II) v. Union of India, (1989) 3 SCC 488 that a legislative W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 55 enactment could draw sustenance from two or more Entries in the same List and legislation need not be confined to or draw sustenance from a single entry in any List contained in Seventh Schedule. It was held:-

"53. If a legislation purporting to be under a particular legislative entry is assailed for lack of legislative competence, the State can seek to support it on the basis of any other entry within the legislative competence of the legislature. It is not necessary for the State to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence. Competence to legislate flows from Articles 245 , 246, and the other articles following, in Part XI of the Constitution. In defending the validity of a law questioned on ground of legislative incompetence, the State can always show that the law was supportable under any other entry within the competence of the legislature. Indeed in supporting a legislation sustenance could be drawn and had from a number of entries. The legislation could be a composite legislation drawing upon several entries. Such a "ragbag" legislation is particularly familiar in taxation.

54. Bennion in his Statutory Interpretation (at p.

644) refers to such a composite legislation, though the observations must be understood in the context W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 56 of the supremacy of the British Parliament and one of unlimited powers and which is under no inhibitions, unlike a federal polity, of distribution of legislative powers. Learned author refers to:

"Ragbag" Acts : Some Acts are "ragbag" Acts, covering many areas. The annual Finance Act is an extreme example. It is divided into Parts, dealing respectively with customs and excise duty, value added tax, income tax, capital gains tax, stamp duty, capital transfer tax and so on. Even within a Part of a Finance Act the various provisions have quite different aims....

In Hari Krishna Bhargav v. Union of India [(1966) 2 SCR 22 : AIR 1966 SC 619 : (1966) 59 ITR 243] , this Court said : (SCR p. 27) There is no prohibition against the Parliament enacting in a single statute, matters which call for the exercise of power under two or more entries in List I of the Seventh Schedule. Illustrations of such legislation are not wanting in our statute book, and the fact that one of such entries is the residuary entry does not also attract any disability."

Therefore, insofar as the provisions of the Banking Regulation Act, 1949 also provide for the regulation of amalgamation etc., of a banking company, it could be said that the Banking Regulation Act, 1949 could make provision for such measures as well on account of the W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 57 fact that both incorporation, regulation and winding up of Corporations including Banking Companies (but excluding Co-operative Societies) as well as the subject of banking are both within the competence of the Union Parliament by virtue of Entries 43 and 45 in List-I of the Seventh Schedule. However, insofar as the provisions of the Banking Regulation Act, 1949 seek to regulate the incorporation, regulation or winding up (including amalgamation) of a Co-operative Society, it must be held that the provisions of the Banking Regulation Act, 1949 to that extent cannot apply to Co-operative Societies as any other interpretation would mean that subjects specifically excluded from List-I would be controlled by a legislation made with reference to Entries in List -I. In other words, the Banking Regulation Act, 1949, in so far as it seeks to regulate activities of Cooperative Societies falling outside the scope of banking and falling within the scope of incorporation, regulation and winding up of Co-operative Societies cannot be held to be operative against Co-operative Societies which are engaged in the banking business. Viewed in that manner, the only conclusion can be that, while in every aspect of banking, Co-operative Societies engaged in the business of banking would be subject to the provisions in the Banking Regulation Act, 1949 in so far as it seeks to regulate the business of banking, the provisions in the Banking Regulation Act, 1949, which encroach into the aspects of incorporation, regulation and winding up of Co-operative Societies would have to be held inapplicable to Co-operative Societies. It cannot W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 58 be disputed that amalgamation by its very nature is an aspect of incorporation and/or regulation and cannot be an aspect of banking. Therefore, when amalgamation and regulation of Co-operative Societies is specifically excluded from Entry 43 of List-I and is specifically included in Entry 32 of List-II, it cannot be said that by virtue of law relating to banking (The Banking Regulation Act, 1949) under and with reference to Entry 45 of List-I any aspect of incorporation and regulation of Co-operative Societies could be brought under the control of Union Legislation referable to Entry 45 of List- I. In Waverly Jute Mills Co.Ltd. v. Raymon and Company (India) Pvt. Ltd., AIR 1963 SC 90, it was held:-

"11.It is next argued for the appellants that even if a law on Forward Contracts can be said to be a law on Futures Markets, it must be held to be legislation falling under Entry 26 in List II, and not Entry 48 in List I, because Forward Contracts form a major sector of modern trade, and constitute its very core, and to exclude them from the ambit of Entry 26 in List II, would be to rob it of much of its contents. Reliance was placed in support of this contention, on the rule of construction that the entries in the Lists should be construed liberally and on the decision in Bhuwalka Brothers Ltd. v. Dunichand Rateria, AIR 1952 Cal 740 (SB) which, on this point was affirmed by this Court in Duni Chand Rateria v. Bhuwalka Brothers Ltd. 1955-1 SCR 1071: (S) AIR 1955 SC 182. The rule of construction is undoubtedly well established that the entries in the Lists should be construed broadly and not in a narrow or pedantic sense. But there is no need for the appellants to call this rule in aid of their W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 59 contention, as trade and commerce would, in their ordinary and accepted sense, include forward contracts. That was the view which was adopted in Bhuwalka Brothers Ltd. case, AIR 1952 Cal 740 (SB) and which commended itself to this Court in Duni Chand Rateria case., 1955- 1 SCR 1071: (S) AIR 1955 SC 182. Therefore, if the question were simply whether a law on Forward Contracts would be a law with respect to Trade and commerce, there should be no difficulty in answering it in the affirmative. But the point which we have got to decide is as to the scope of the entry "Trade and commerce" read in juxtaposition with Entry 48 of List I. As the two entries relate to the powers mutually exclusive of two different legislatures, the question is how these two are to be reconciled. Now it is a rule of construction as well established as that on which the appellants rely, that the entries in the Lists should be so construed as to give effect to all of them and that a construction which will result in any of them being rendered futile or otiose must be avoided. It follows from this that where there are two entries, one general in its character and the other specific, the former must be construed as excluding the latter. This is only an application of the general maxim that Generalia specialibus non derogant. It is obvious that if Entry 26 is to be construed as comprehending Forward Contracts, then "Futures Markets" in Entry 48 will be rendered useless. We are therefore of opinion that legislation on Forward Contracts must be held to fall within the exclusive competence of the Union under Entry 48 in List I."

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 60

32. No doubt the provisions of the Banking Regulation Act will apply to the Co-operative Societies subject to the modifications specified in Section 56 but there is no provision regulating any aspect other than the banking. The reference of term 'banking company', Section 56 or 'the company' or 'such company' in the Banking Regulation Act shall be construed as references to the Co-operative Bank. Thus, the power of inspection, the power of Reserve Bank of India to issue directions in respect of stressed assets and further powers as set out in Section 36 providing control over the management and all other powers of the Banking Regulation Act permitting the Reserve Bank to intervene the affairs of a banking company would definitely extend to the Co-operative Banks with the aim to safeguard and insure that the Co-operative Banks engaged in banking activity are subject to the overall control of the RBI. Un-amended Section 14 and amended Section 14A read as under:-

14.Amalgamation, transfer of assets and liabilities and division of societies.-(1)A society may, 23 [xxx] by a resolution passed by a two-third majority of the members present and voting at a general body meeting W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 61 of the society,- (a)transfer its assets and liabilities in whole or in part to any other society; (b)divide itself into two or more societies (2)Any two or more societies may, 23a[xxx] by a resolution passed by a two third majority of the members present and voting at a general body meeting of each such society, amalgamate themselves and form a new society. (3)The resolution of a society under sub-section (1) or sub-section (2) shall contain all particulars of the transfer, division or amalgamation, as the case may be. (4)When a society has passed any such resolution, it shall give notice thereof in writing to all its members and creditors and, notwithstanding the provisions of section 24 or any bye-law or contract to the contrary, any member or creditor shall, within a period of two months from the date of service of the notice upon him, have the option of withdrawing his shares, deposits or loans, as the case may be. (5)Any member or creditor who does not exercise his option within the period specified in sub-section (4) shall be deemed to have given his assent to the proposals contained in the resolution. (6)A resolution passed by a society under this section shall not take effect until either-- (a)the assent thereto of all the members and creditors has been given or deemed to have been given;

or (b)all claims of members and creditors who exercise the option referred to in sub-section (4) within the period specified therein, have been met in full. (7)Where a resolution passed by a society under this section involves the transfer of any assets and liabilities, the resolution shall, notwithstanding anything contained in any law for the time being in force, be a sufficient conveyance to vest the assets and liabilities in the transferee without any assurance.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 62 14A.Provisions regarding transfer of assets and liabilities of District Co-operative Banks to the Kerala State Co-operative Bank. - (1) Notwithstanding anything contained in this Act or in any other law for the time being in force, the District Co- operative Banks may by a resolution passed by a simple majority of the members present and voting at the special general body meeting of the members, transfer its assets and liabilities in whole to the Kerala State Co-operative Bank and such transfer shall take effect from the date on which the Registrar approves the resolution.

(2) The resolution shall contain particulars of the assets and liabilities to be transferred.

(3) When a District Co-operative Bank has passed any such resolution, under sub-section (1), it shall give notice thereof in writing to all its members within seven days from the date of resolution, notwithstanding anything contained in the provisions of Section 24 or any Rules or any bye-laws and sub- rules or any contract to the contrary, any member shall, within a period of thirty days from the date of issuance of the said notice, have the option of withdrawing his shares, deposits or closing loans, as the case may be:

Provided that any other debtor or creditor shall be informed of such a resolution through publication of notice in two leading daily newspapers in vernacular language within seven days from the date of resolution that they have the option to withdraw deposit, loans, as the case may be, within a period of thirty days from the date of publication of notice.

(4) Any member or creditor or debtor who does not exercise W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 63 his option within the period specified in sub-section (3) shall be deemed to have given his assent to the proposals contained in the resolution.

(5) On and from the date of approval of transfer of assets and liabilities of each District Co-operative Bank by the Registrar, all the assets and liabilities as it stood immediately before the transfer shall without any further act, instrument or deed, stand transferred to and vested in the Kerala State Co-

operative Bank.

(6) On and from the date of approval of transfer of assets and liabilities of each of the District Co-operative Bank by the Registrar, all pending suits or legal proceedings by or against such Banks shall be continued by the Kerala State Co- operative Bank."

33. In Section 14 there was a provision incorporated for amalgamation of the Co-operative Societies with ¾ th majority but the co-operative societies were not opting to do the same. The Legislature brought in Section 14A by substituting ¾th simple majority. But when that was also not followed the amendment was caused in Section 74H(1)(a) in 2020 with effect from 11th of April, 2020. It is a matter of record that all the societies in 13 districts had agreed to get amalgamated with State Co-operative Bank. The whole idea W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 64 was to have de-layering. The main objects for causing the amendment by the legislature in Section 14A and Section 74H(1)(a) were as under:

"STATEMENT OF OBJECTS AND REASONS As per section 14 of the Kerala Co-operative Societies Act, 1969 two third majority of the members of the society is required for amalgamation and transfer of assets and liabilities of two or more co-operative societies. As far as District Co-operative Banks are concerned, as it created difficulty in complying with the transfer of assets and liabilities, the Act was amended incorporating a new section 14A, to relax the condition of two third majority as simple majority, in the case of merger of District Co-operative Banks along with provisions for protecting the interests of its members, creditors and depositors, as per the Kerala Co-operative Societies (Amendment) Act, 2019 (Act 1 of 2019). In pursuance to the provisions of the said Act, out of 14 District Co-operative Banks, 13 have passed resolution in favour of amalgamation with the Kerala State Co- operative Bank, but one District Co-operative Bank, i.e., Malappuram District Co-operative Bank has not passed the resolution and not adopted the scheme of amalgamation as suggested by the Registrar.

2. The spirit behind the amalgamation of District Co- operative Banks with the State Co-operative Bank is that, on the existence of two higher tiers viz., KSCB at apex level and DCBs at middle level adds to the cost on interest without offering any significant benefit to the lowest tier, viz., Primary Agricultural Co-operative Societies (PACS). De-layering of one tier will help in W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 65 unlocking these funds which can be put to more productive uses.

3. As per the provisions of the Kerala Co-operative Societies (Amendment) Act, 2019 (1 of 2019) the District Co-operative Banks will cease to exist, and the members of the said banks i.e., primary co-operative societies will become the members of the Kerala State Co-operative Bank. There is no provision in the Kerala Co-operative Societies Act, 1969 or any other law to control and regulate the functioning of the District Co- operative Bank which has not adopted the scheme of amalgamation. Moreover, the majority of the funds of the DCBs are the contributions of PACs and PACs became the members of the SCB. Since the DCBs have no existence, if the PACS withdraw their deposits from DCB, then the existence of DCB itself also will be under challenge.

4. In the above circumstance, Government have decided to merge the District Co-operative Bank which has not passed resolution in favour of amalgamation, with the Kerala State Co-operative Bank by adopting a reasonable method by providing opportunities to its members, depositors and creditors, by an order of the Registrar in consultation with the Reserve Bank of India.

5. As the Legislative Assembly of the State of Kerala was not in session and the said proposal had to be given effect immediately, the Kerala Co-operative Societies (Amendment) Ordinance, 2020 was promulgated by the Hon'ble Governor of Kerala on 14 th January, 2020 and the same was published as Ordinance No.6 of 2020 in the Kerala Gazette th Extraordinary No.109 dated 15 January, 2020. W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 66

6. As a Bill to replace the said Ordinance by an Act of the State Legislature could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 29th day of January, 2020 and ended on the 12th day of February, 2020, the Kerala Co-operative Societies (Amendment) Ordinance, 2020 was promulgated by the Hon'ble Governor of Kerala on 17th February, 2020 and published as Ordinance No. 16 of 2020 in the Kerala Gazette Extraordinary No.555 dated 18th February, 2020.

7. As a Bill to replace the said Ordinance by an Act of the State Legislature could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 2 nd March, 2020 and ended on the 13th day of March, 2020, the Kerala Co- operative Societies (Amendment) Ordinance, 2020 was promulgated by the Hon'ble Governor of Kerala on 31 st March, 2020 and was published as Ordinance No.20 of 2020 in the Kerala Gazette Extraordinary No. 1023 dated 1" April, 2020.

8. The Hon'ble High Court of Kerala in its interim order, passed in certain Writ Petitions, directed the Reserve Bank of India not to proceed further as per the provisions of the Ordinance. Moreover, the recent scenario of lockdown introduced throughout the country, also affected the completion of merging process. Hence the merging process could not be completed within a period of 3 months from the date of commencement of the Ordinance. Hence Government decided to make suitable amendments.

9. As the Legislative Assembly of the State of Kerala was not in session and as the said proposal had to be given effect immediately the Kerala Co- operative W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 67 Societies (Second Amendment) Ordinance, 2020 was promulgated by the Hon'ble Governor on the 9 th day of April, 2020 and was published as Ordinance No.27 of 2020 in the Kerala Gazette Extraordinary No.1048 dated 11th April, 2020.

10. As a Bill to replace the said Ordinance by an Act of the State Legislature could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 24th day of August, 2020 and ended on the same day and in order to keep alive the provisions of the said Ordinance, the Kerala Co-operative Societies (Second Amendment) Ordinance, 2020 was promulgated by the Hon'ble Governor of Kerala on the 28th day of September, 2020 and was published as Ordinance No.58 of 2020 in the Kerala Gazette Extraordinary No.2194 dated 28th September, 2020.

11. Though Bill No.274 of 2021 of the Fourteenth Kerala Legislative Assembly was published to replace the said Ordinance by an Act of the State Legislature, the same could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 31st day of December, 2020 and ended on the same day and during its session which commenced on the 8th day of January, 2021 and ended on 22nd January, 2021 due to paucity of time.

12. In order to keep alive the provisions of the said Ordinance, the Kerala Co-operative Societies (Amendment) Ordinance, 2021 was promulgated by the Governor of Kerala on the 9 th day of February, 2021 and the same was published as Ordinance No.24 of 2021 in the Kerala Gazette Extraordinary No.649 dated 10th W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 68 February, 2021.

13. As a Bill to replace the said Ordinance by an Act of the State Legislature could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 24 th day of May, 2021 and ended on the 10 th day of June, 2021 and in order to keep alive the provisions of the said Ordinance, the Kerala Co-operative Societies (Amendment) Ordinance, 2021 (92 of 2021) was promulgated by the Hon'ble Governor of Kerala on 2nd day of July, 2021 and the same was published in the Kerala Gazette Extraordinary No.1954 dated 3rd July, 2021.

14. There exists two types of Primary Dairy Co- operative Societies, i.e., traditional Dairy Co-operative Societies and Anand Pattern Co-operative Societies (APCOS). As per G.O. (P) No.183/79/AD dated 27 th April, 1979, it was directed to take necessary steps to amend the Kerala Co-operative Societies Act, 1969 with regard to the establishment and functioning of Anand Pattern Dairy Co-operative Societies, Regional Co-operative Milk Producers' Unions and State Federation.

15. The expert committee under the Chairmanship of former Dairy Development Commissioner Smt. Lida Jacob, IAS (Rtd.), constituted to conduct a comprehensive study on the three-tier Dairy Co-

operative structure in the Kerala State recommended for limiting the term of members of the managing committee to a maximum of 3 terms, women participation etc. The same was reiterated in the report submitted by the High Level Committee consisting of experts from all fields of Animal Husbandry and Dairy W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 69 Sectors.

16. In the above circumstances, with a view to strengthen the functioning of the Primary Dairy Co- operative Societies and the Regional Co-operative Milk Producers' Union, to ensure that only the real dairy farmers can become the active members of the Dairy Co-operative Societies and its managing committees, to limit the term of the members of the managing committees of Regional Co-operative Milk Producers' Union to a maximum of three terms, to ensure women participation in these societies and to constitute recruitment committees to ensure fair recruitment process in the Regional Co-operative Milk Producers' Union, new provisions were needed to be incorporated in the Kerala Co-operative Societies Act, 1969 (21 of 1969) by amending sections 2, 8A, 16, 28, 28AB, 64 and by inserting new sections 16B and 80BB.

17. As the Kerala Legislative Assembly of the State of Kerala was not in session and as the said proposals had to be given effect immediately, the Kerala Co-operative Societies (Second Amendment) Ordinance, 2021 was promulgated by the Governor of Kerala on the 12th day of February, 2021 and published as Ordinance No.32 of 2021 in the Kerala Gazette Extraordinary No.725 dated 12th February, 2021. Due to inadvertent omission, certain clerical errors were crept in certain provisions of the said Ordinance. Hence, the Government have decided to make necessary amendments in the relevant provisions to rectify the clerical errors. As the Legislative Assembly of the State of Kerala was not in session and as the said proposals had to be given W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 70 effect immediately, the Kerala Co-operative Societies (Third Amendment) Ordinance, 2021 was promulgated by the Hon'ble Governor of Kerala on the 24 th day of February, 2021 and published as Ordinance No.47 of 2021 in the Kerala Gazette Extraordinary No.945 dated 24th February, 2021.

18. A Bill to replace the said two Ordinances by an Act of the State Legislature could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 24 th day of May, 2021 and ended on 10th day of June, 2021.

19. As the Legislative Assembly of the State of Kerala was not in session and as the said proposals had to be given effect immediately the Kerala Co-operative Societies (Second Amendment) Ordinance, 2021 (93 of 2021) was promulgated by the Hon'ble Governor on 2 nd day of July, 2021 and the same was published in the Kerala Gazette Extraordinary No. 1952 dated 3 rd July, 2021.

20. Though a Bill to replace the Ordinance Nos.92 of 2021 and 93 of 2021 by an Act of State Legislature was published as Bill No.9 of the Fifteenth Kerala Legislative Assembly by conjoining the provisions of Ordinances, same could not be introduced in and passed by the Kerala Legislative Assembly during its session which commenced on the 22nd day of July, 2021 and ended on the 13th day of August, 2021 due to paucity of time.

21. In order to keep alive the provisions of the said Ordinance, the Kerala Co-operative Societies W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 71 (Amendment) Ordinance, 2021 was promulgated by the Governor of Kerala on the 23rd day of August, 2021 and the same was published as Ordinance No.117 of 2021 in the Kerala Gazette Extraordinary No.2477 dated 25 th August, 2021.

22. The Bill seeks to replace the above said Ordinance No.117 of 2021 by an Act of State Legislature.

FINANCIAL MEMORANDUM The Bill, if enacted and brought into operation, would not involve any additional expenditure from the Consolidated Fund of the State.

MEMORANDUM REGARDING DELEGATED LEGISLATION Sub-section (1)(a) of section 74H proposed to be inserted in the principal Act by clause 3 of the Bill seeks to empower the Registrar to issue order of merger.

2. Sub-section (1) of section 80BB proposed to be inserted in the principal Act by clause 10 of the Bill empowers the Government to constitute Recruitment Committees for the entire selection and recruitment process of all permanent employees of the Regional Co-operative Milk Producers' Union.

3. The matter in respect of which notifications or orders may be issued or rules may be made are matter of procedure and are of routine and administrative in nature. Further, the rules to be made are subject to the scrutiny of the Kerala Legislative Assembly. The delegation of Legislative power is therefore, of a normal character."

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 72

34. Learned Single Judge very extensively dealt with in every arguments raised by the appellants/petitioners with regard to the domain of the Legislature and applicability of the Entries 43 and 45 of List-I of the seventh schedule and Entry 32 and on analysis of the case law, in our considered opinion, has rightly rejected the contention of the appellants.

35. We do not find any illegality, impropriety or perversity in the judgment of the Single Bench. We cannot lose sight of the fact that all the other thirteen district Co- operative Societies voluntarily agreed to amalgamate with the State Co-operative or with the intend of de-layering and permission granted by the RBI continue to exist. In these circumstances, it is fully intriguing under what circumstances the RBI filed a writ appeal by challenging judgment of the Single Bench. Perhaps it was under some confusion by that time the amendment under Section 44A was caused but in view of our findings there is no such confusion. Accordingly, the appeal filed by the RBI is dismissed.

W.A.Nos.1957, 1962, 1975, 1977 & 2114 of 2023 73 Other writ appeals lack merit. Accordingly, all writ appeals are dismissed.

Sd/-

AMIT RAWAL JUDGE Sd/-

C.S. SUDHA JUDGE skj

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