(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)
1. The petitioner is before this Court calling in question
2. The learned counsel, Miss Sanjana S. Mudhol
which would enure to the benefit of the petitioner. The orders so
"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").
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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 4 respondent are almost all the members of
the petitioner society. Besides being so all the
proposed members even including the chief promoter
and promoters aiso 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
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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 reilance 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
Societypossesses 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
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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 Bling of 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 3-8 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
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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 relevarit 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
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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 standı 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
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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 no 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."
"The petitioner who intends to establish a co-operative
society submitted an application with the 3rd respondent seeking
permission for collection of share amount. Based on the report
submitted by the Sale Officer, respondent No.3 rejected the
proposal stating that existing societies are likely to be affected.
Hence, this petition.
2. Heard the learned counsels for the parties.
3. The petitioner submitted an application only for
permission to collect shares with an intention to establish a co-
operative society and at this stage respondent No.3 ought not to
have rejected the application since the question of economic
viability and chances of success of the co-operative society to be
established is a matter, which requires to be considered at the
time of registration.
4. Rule 3 of the Karnataka Co-operative Societies Rules,
1961, deals with formalities for registration and sub-rule (3)
states that the registrar on being satisfied that the proposed
society has reasonable chances of success and is going to be
economically viable may permit the chief promoter to collect
such amount of share capital from such number of persons
intending to become the members of the proposed society within
such period as he may specify. In other words, the registrar is
under an obligation to hear the petitioner to satisfy himself that
the proposed society has reasonable chances of success and is
going to be economically viable.
5. In the instant case, respondent No.3 without giving an
opportunity of hearing to the petitioner to satisfy that the
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proposed society has reasonable chances of success and is going
to be economically viable, has rejected the application and the
same is in violation of principles of natural justice.
6. Accordingly, the writ petition is allowed. The impugned
order dated 22.12.2023 passed by the 3rd respondent at
Annexure-E is hereby quashed.
7. Respondent No.3 to grant permission to collect the of
share amount for pre-registration Vividhoddesha Prathamik
Grameena Krushi Sahakari Sangha Niyamita, Hombaradi, Nippani
talulka, subject to petitioner satisfying other requirements of
law, after providing an opportunity of hearing to the petitioner.
8. Petitioner to be present before respondent No.3 on
20.02.2024 at 11.00 a.m. without awaiting for further notice
from respondent No.3."
"Heard the learned counsel for the petitioner Miss.Sanjana
S. Mudhol and the learned HCGP for the respondents.
2. The petitioner is an agriculturist and permanent resident
of Arabyanwadi village, Chikkodi takuk, district Belagavi. He was
not enrolled as member of any of the Primary Co-operative
Societies. The petitioner and other similarly situated farmers
have called for a Gram Sabha meeting at Arabyanwadi village to
address their grievances and problems suffered by the farmers in
the village and therefore, decided to form a society in the name
of Shri Halsiddeshwar Vividodesh Prathmik Grameen Krushi
Sahakari Sangh Niyamit, Arabyanwadi to the welfare of the
farmers in the village.
3. In view of the same, the petitioner made a representation
to respondent No.2 on 17.10.2023 to grant permission for
floating the share collection from the eligible farmers for
registration of the Co-operative Society in the name of Shri
Halsiddeshwar Vividodesh Prathmik Grameen Krushi Sahakari
Sangh Niyamit, Arabyanwadi. Respondent No.2 sent a letter to
the Co-operative Inspector requesting him to submit a report
regarding economic viability of the proposed society by a letter
dated 08.11.2023 without hearing the petitioner or notifying the
petitioner. The Co-operative Inspector submitted a report which
was also without notice and knowledge of the petitioner and
based on the said report, respondent No.2 without hearing the
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petitioner passed the impugned order and rejected the proposal
for grant of floating of the share collection to the proposed
permission of the society by order dated 22.12.2023, which is
impugned herein.
4. It is contended by the learned counsel for the petitioner
that respondent No.2 has rejected the proposal for floating of the
share collection only on the reason that it is not viable and there
could be overlapping of the society, that there are already five
societies registered in the same area. Therefore, the question of
the present society being successful for overlapping other Co-
operative Societies already existing with the same qualities which
is against the guidelines prescribed by NABARD.
5. Learned counsel for the petitioner contends that the said
reasoning provided by respondent No.2 is arbitrary, illegal and
unsustainable. It is without application of judicial mind. There is
no such requirement forthcoming under the Act or the Rules for
permitting floating of shares as to there being a chance of
success of Co-operative Society and economic viability. There is
no application of mind by the respondent while passing the
impugned order and is without even hearing and notifying the
petitioner has out rightly rejected the proposal for floating of
share collection for formation of the society.
6. Learned counsel for the petitioner relies upon the
judgment of a Co-ordinate Bench of this Court in WP No.
100493/2024 dated 06.02.2024 wherein in similar matter on
similar grounds the Assistant Registrar of Co-operative Societies
has rejected the application without giving an opportunity to the
petitioner to satisfy the requirement and chances of success and
viability. The writ petition came to be allowed. Another judgment
has been also relied by the learned counsel for the petitioner in
WP No.104197/2021 which also goes in favour of the petitioner
for the reason that while considering the application for economic
viability and success of the floating of shares, the respondent
may not look into the existence of societies or viability of the
other Co-operative Societies. It is only on the basis of
information furnished by the promoters that the Registrar is
required to be satisfied on the proposed floating of shares by the
Society to have reasonable chance of success and economic
viability that is required to be satisfied which has to be
considered by the Registrar, which is not been done in the
present case.
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7. It is also not the case of the respondent that there are
other rival Co-operative Societies which have filed any complaint
or objection to the floating of shares of the present petitioner or
formation of the societies. Under these circumstances, there is
force in the argument put forth by the learned counsel for the
petitioner and is appreciated by this Court for allowing the
petition. Hence, the petition is required to be allowed.
Accordingly, it is allowed. Hence, I pass the following order:
ORDER
i) The petition is allowed.
ii) The impugned order dated 22.12.2023 in No.AR-
11/RSR/117/2023-24 passed by respondent No.2 vide
Annexure-C is hereby quashed.
iii) The respondent is directed to collect the share
amount for floating of the shares of society for
registration subject to the petitioner satisfying other
requirements of the law and providing an opportunity
to the petitioner before passing any such orders."
4. Learned AGA Sri. Ramesh Chagri would not dispute
the position.
5. In the light of the orders of the Coordinate Benches
(supra), the petition deserves to succeed.
6. For the reasons aforementioned, I pass the following:
ORDER
i. Petition is allowed.
ii. The impugned order dated 08.07.2025 passed by the
2nd respondent at Annexure-D, is hereby quashed.
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iii. Respondent No.2 to grant permission to collect the
share amount for pre-registration of Society in the
name Karnataka Vividdodesh Prathmik Grameen
Krushi Sahakari Sangh Niyamit, Ghatge Tota Artal,
Tq. Athani, subject to petitioner satisfying other
requirements of law, after providing an opportunity of
hearing to the petitioner.
iv. Petitioner to be present before respondent No.2 on
08.12.2025 at 11.30 a.m., without awaiting for
further notice from respondent No.2.
Sd/-
(M.NAGAPRASANNA)
JUDGE
kmv
CT:ANB
