Karnataka High Court
Yellapur Prathamika Pattina ... vs The State Of Karnataka on 13 December, 2021
Bench: N.S.Sanjay Gowda
IN THE HIGH COURT OF KARNATAKA
DHARWAD BENCH
DATED THIS THE 13THDAY OF DECEMBER 2021
BEFORE
THE HON'BLE MR.JUSTICE N.S.SANJAY GOWDA
WRIT PETITION NO.104197/2021 (CS RES)
BETWEEN:
YELLAPUR PRATHAMIKA PATTINA
SAHAKARI SANGHA NIYAMITA, YELLAPUR,
UTTAR KANNADA DISTRICT,
BY ITS SECRETARY,
MAHABALESHWAR SUBRAY HEGDE,
S/O. SUBRAY HEDGE, AGE 49 YEARS,
R/O PURANAJADDI,POST- BALGIMANE,
TQ. YELLAPUR,DIST. UTTARA KANNADA - 581359.
...PETITIONER
(BY SRI GURUDAS KANNUR, SENIOR COUNSEL FOR
SRI NARAYAN V. YAJI, ADVOCATE)
AND :
1. THE STATE OF KARNATAKA
DEPT. OF CO-OPERATIVE SOCIETIES,
M.S. BUILDING,BENGALURU-01,
BY ITS SECRETARY.
2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES,
NO.1, ALI ASKER ROAD,BANGALORE-560052.
3. THE DEPUTY REGISTRAR CO-OPERATIVE SOCIETY,
SARASWATI SADAN,2ND FLOOR,
HABBUWADA,KARWAR,
DIST. UTTAR KANNADA-581 301.
:2:
4. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETY,
SIRSI,DIST. UTTARA KANNADA - PIN-581 301.
5. NANDOLLI PRATHAMIKA KRISHI PATTINA
SAHAKARI SANGHA NIYAMITA, NANDOLLI,
TQ. YELLAPUR, DIST. UTTARA KANNADA-581 459,
REPRESENTED BY ITS CHAIRMAN.
6. SHRI SIDDHIVINAYAK PRATHAMIKA KRISHI
PATTINA SAHAKARI SANGHA, CHANDGULI,
TQ. YELLAPUR, DIST. UTTAR KANNADA-581 359,
REPRESENTED BY ITS CHAIRMAN.
...RESPONDENTS
(BY SRI V.S.KALASURMATH, HCGP FOR RESPONDENT NOS.1 TO 4)
(BY SRI MALLIKARJUNSWAMY B.HIREMATH, ADVOCATE FOR
RESPONDENT NOS.5 AND 6)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT IN
THE NATURE OF CERTIORARI AND QUASH THE IMPUGNED ORDER
PASSED BY THE 4TH RESPONDENT DATED 21.09.2021 VIDE
ANNEXURE-S6 AND THE ORDER DATED 21.09.2021 VIDE
ANNEXURE-S7 AND REGISTRATION CERTIFICATE DATED
21.09.2021 VIDE ANNEUXRE-S8 AND REGISTRATION
CERTIFICATE DATED 21.09.2021 VIDE ANENXURE-S9 TO THE
WRIT PETITION RESPECTIVELY AS IT IS ILLEGAL AND
UNCONSTITUTIONAL AND ISSUE A WRIT IN THE NATURE OF
MANDAMUS, DIRECTING THE RESPONDENT NO.2 TO CONSIDER
AND TO TAKE APPROPRIATE ACTION IN PURSUANCE OF THE
REPRESENTATION SUBMITTED BY THE PETITIONER DATED
05.10.2021 BEARING NO.NIL VIE ANNEXURE-S10 THE WRIT
PETITION EXPEDITIOUSLY.
:3:
THIS PETITION COMING ON FOR ORDERS, THIS DAY, THE
COURT MADE THE FOLLOWING:
ORDER
The petitioner, which is a Co-operative Society, has
presented this petition challenging the order by which the
Assistant Registrar has permitted registration of the 5th and
6th respondents as a Co-operative Society under Section 7 of
the Karnataka Co-operative Societies Act, 1959 (for short,
'the KCS Act').
2. It is the specific case of the petitioner-society that
the Chief Promoters of 5th and 6th respondents were all
members of the petitioner-society and they had made an
application and they had promoted the formation of the 5th
and 6th respondents and sought for its registration. The
averment in the writ petition in this regard is as follows :
"It is submitted that, the respondent Nos.5 and 6
who are the chief promoters of their respective
proposed society and other promoters with them all are
the members of the petitioner Society alone.
It is submitted that, the list of proposed members
submitted by the respondent Nos.5 and 6 with the 4th
respondent are almost all the members of the petitioner
society. Besides being so all the proposed members
even including the chief promoter and promoters also
members as well as taken loan on different heads from
the petitioner society being members of it. The majority
of the members of the proposed societies are defaulters
with the petitioner society."
3. It is thus clear that the petitioner-society is aggrieved
by a faction of its members in deciding to form a new Co-
operative Society and seek for its registration. At the outset
before considering the contentions advanced by the petitioner
on the merits or demerits of the registration made by the
authorities, it would have to be essentially decided as to
whether the petitioner-Society as locus standi the question
there is a registration of another Co-operative Society.
4. The learned Senior Counsel Sri Gurudas Kannur
contended that the petitioner-Society has a right to challenge
the registration granted in favour of the 5th and 6th
respondents since they would also be operating within the
same jurisdiction and this would not make the respondent
Nos.5 and 6 viable.
5. He also contended that the registration if permitted,
would directly lead to an unhealthy atmosphere and would be
against the principles of co-operative moment. He sought to
highlight that one of the consideration for registering as
Society was the prevention of overlapping of jurisdictions of
similar co-operative Society as envisaged under Rule 3-B(iii)
of the Karnataka Co-operative Societies Rules, 1960 (for
short, 'the Rules, 1960').
6. He also sought to contend that if the entire process of
registration was examined, it would be clear that the same
had been done in gross violation of the circulars issued by the
Government.
7. The learned Senior Counsel also made a submission
that the question of locus standi should not be gone into
since the writ petition filed by the petitioner-Society on an
earlier occasion had been entertained by this Court and infact
the writ petitions were allowed and the matters were
remanded to the registering authority at the instance of the
petitioner-society, to reconsider the question of registration
of respondent Nos.5 and 6.
8. Learned Senior counsel places reliance on the
decision of a co-ordinate bench of this Court passed in the
case of Prathamik Krushi Pattin Sahakari Sangh Niyamit,
Chamakeri of others vs. The State of Karnataka and others,
reported in 2019 (2) KLJ 49.
9. Learned counsel Sri Mallikarjunswamy B. Hiremath,
appearing for respondent Nos.5 and 6 sought to support the
order passed in their favour. He also raised the ground of lack
of locus standi of the petitioner-Society to challenge the
registration of the 5th and 6th respondents and he placed
strong reliance on the Judgment rendered by the Hon'ble
Supreme Court in the case of Jasbhai Motibhai Desai v.
Roshan Kumar Haji Bashir Ahmed and others, reported in
(1976) 1 SCC 671.
10. As stated above, the primary question to be
considered is as to whether a rival Co-operative Society
possesses the locus standi to question the registration of a
competing co-operative Society.
11. It is to be borne in mind that the Karnataka Co-
operative Societies Act, 1959(for short, 'the Act') was enacted
with the objective to promote voluntary formation of
autonomous functioning, democratic control and professional
management of Co-operative Societies. The objective behind
forming of a co-operative moment is essentially to encourage
the co-operative moment which would result in common
benefit to all the members who work collectively. The very
essence of the Co-operative moment is to encourage
formation of the co-operative societies.
12. It is for thus precise therein, there is no bar on the
number of co-operative Societies that can be registered in an
area. The Act essentially seeks to regulate the registration of
a co-operative society and the manner in which the co-
operative societies are to be managed and also in ensuring
the rights and liabilities of the members are protected.
13. Section 6 of the Act provides for filing of an
application with the Registrar in the prescribed form seeking
for registration of a co-operative society. The applicants are
required to furnish all such information as required by the
Registrar. One of the requirements is that, in respect of a co-
operative Society which has the object of creation of funds to
be lent to its members, is that of the applicants should reside
in the same village or the town or in the proposed area of co-
operation of the co-operative society.
14. There is absolutely no requirement of the society of
the applicant to indicate the existence of any rival society in
the area within which it intends to operate. On the basis of
the information furnished by the promoters, the Registrar is
required to be satisfied that the proposed Society has a
reasonable chance of success and would be economically
viable and if he so satisfied, he may register the society.
15. No doubt, the Registrar is required to take into
consideration certain factors such as population in the area of
the operation of the proposed co-operative society, the
assessment of economic and financial feasibility, like
collection of share, funds from the shareholders and also the
overlapping of the existing similar co-operative societies.
16. The factors prescribed under Rule 3-B of the Rules,
1960 are essentially factors, which would aid in determining
whether the proposed society has a reasonable chance of
success and is likely to be to economically viable. It is for the
applicant to satisfy the financial viability and the likelihood of
chances of success of the proposed society by production of
relevant material.
17. By the very nature of the rule, it is obvious that a
rival competing co-operative society would be able to
establish the negative i.e., the proposed Society cannot
succeed or cannot be financially viable. Obviously, every
competing Society would put forth the plea that the proposed
Society would not be financially viable only to protect its own
turf and prevent kind of competition. It is quite probable that
an existing society would want to create or maintain a
monopoly and would not like any competition or the
probability of a competitor eating into its business.
18. The provisions of the Act and Rules are designed to
enable the Registrar to satisfy himself regarding the
financially viability and likelihood of a reasonable chance of
success of the applicant society basis and for this purpose the
only criteria would be the material produced by the applicant.
If the Registrar is satisfied that the proposed applicant meets
the prescribed criteria, registration cannot normally be
refused.
19. It is also relevant to notice that the appeal that is
provided under S. 106 against an order passed under Section
7 of the Act can obviously relate only to a refusal to register.
The provisions for filing of an appeal does not provide for
filing of an appeal by any person or by an aggrieved person.
Section 106 merely states that an appeal would lie against an
order passed under S. 7 of the Act. Since in the matter of
registration, the lis can only be with the applicant and the
Registrar and no other person or entity would have the lis
and consequently have a right to prefer an appeal.
20. It is to be stated here that there cannot be any
person aggrieved by the registration of the co-operative
society. This is fundamentally because the Act does not give
any semblance of right to any other person to have a say in
the registration of another co-operative society. It is
therefore clear that the petitioner being a competing co-
operative society, would have absolutely no locus standi to
question the registration of the co-operative society.
21. The Judgment relied upon by the learned Senior
counsel in the case of Parathamik Krushi Pattin Sahakari
Sangh Niyamit and others v. The State of Karnataka and
others, reported in 2019(2) KLJ 49 can also be no avail
because in that case this Court did not examine whether a
rival competing co-operative society had the locus standi to
challenge the registration of another co-operative Society. No
doubt, in that case, the Court has stated that registering
authority is required to hear the existing credit co-operative
Society also at the time of registration. However, that was a
case in which the Court was examining whether the Assistant
Registrar of co-operative societies was right in permitting the
respondent Nos.5 and 6 societies therein to collect initial
share funds. In that decision, there is absolutely no
examination of the legal right of an existing co-operative
society to challenge the registration of another co-operative
society.
22. The reliance placed on Rule 3-B of the Rules, 1960
regarding the overlapping of the existing similar co-operative
society as a factor to be considered by the registering
authority in order to confer locus on the petitioner-society
cannot also be accepted. The factor of overlapping of existing
similar co-operative societies is to be considered by the
registering authority so as to only satisfy him regarding the
financial viability of the proposed society. If the registering
authority is satisfied that the proposed society has a
reasonable chance of success and can be financially viable, it
would be permissible for him to grant registration
notwithstanding the fact that there exist similar co-operative
societies in the same area of operation. It is to be kept in
mind that allowing one co-operative society to oppose the
creation of another co-operative society would basically be
against very essence of the co-operative moment.
23. On the other hand, the Judgment relied upon by the
learned counsel for the respondent Nos.5 and 6 stated supra,
would be aptly applicable to the present case. The Hon'ble
Supreme Court in paragraph No.36 has stated as follows :
36. ........To have a "standing to sue", which
means locus standi to ask for relief in a court
independently of a statutory remedy, the plaintiff must
show that he is injured, that is, subjected to or
threatened with a legal wrong, Courts can intervene
only where legal rights are invaded. "Legal wrong"
requires a judicially enforceable right and the
touchstone to judiciability is injury to a legally protected
right. A nominal or a highly speculative adverse affect
on the interest or right of a person has been held to be
insufficient to give him the "standing to sue" for judicial
review of administrative action. Again the "adverse
affect" requisite for "standing to sue" must be an "illegal
effect". Thus, in the undermentioned cases, it was held
that injury resulting from lawful competition not being a
legal wrong, cannot furnish a "standing to sue" for
judicial relief."
24. This enunciation of the law by the Hon'ble Supreme
Court makes it clear that the petitioner-society has not
suffered a legal wrong so as to empower it to approach this
court. I am therefore of the view that the petitioner has no
locus standi to challenge the registration of respondent Nos.5
and 6. The writ petition is therefore dismissed.
Sd/-
JUDGE
CKK
