Kerala High Court
Thomas M.K vs Govt. Of Kerala on 29 October, 2025
2025:KER:81484
W.P (C) No.16450 of 2025 -1-
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
WEDNESDAY, THE 29TH DAY OF OCTOBER 2025 / 7TH KARTHIKA, 1947
WP(C) NO. 16450 OF 2025
PETITIONER/S:
THOMAS M.K, AGED 69 YEARS
MUTTAPPALLIL; KURAVILANGAD P.O. MOB: 9447 420 634;
WATTSAPP 8848 249 106; [email protected];
MASKED AATHAR NO: .... 2096., PIN - 686633
BY ADV THOMAS M.K(PARTY-IN-PERSON)
RESPONDENT/S:
1 GOVT. OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY,
ROOM NO 202 SECRETARIAT, NORTH SANDWICH BLOCK
THIRUVANTHAPURAM KERALA., PIN - 695001
2 COOPERATION DEPARTMENT OF KERALA
REPRESENTED BY ITS SECRETARY, ROOM NO. 397;
1ST FLOOR; MAIN BLOCK; SECRETARIAT; THIRUVANANTHAPURAM
TELEPHONE: 0471-233 3833, 233 1685 MOBILE: 94470 50543
E-MAIL: [email protected], PIN - 695001
3 REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES, KERALA
OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES
JAWAHAR SAHAKARAN BHAVAN; DPI JUNCTION; JAGATHY;
THYCAUD P.O.; THIRUVANANTHAPURAM PH: 0471-233 1982
EMAIL: [email protected]
WEBSITE: WWW.COOPERATION.KERALA.GOV.IN, PIN - 695014
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W.P (C) No.16450 of 2025 -2-
4 ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES [GENERAL]
OFFICE OF THE ASSISTANT REGISTRAR [GENERAL],
MINI CIVIL STATION, PALA P.O. KOTTAYAM DT.
04822-21 2236 E-MAIL : [email protected],
[email protected], PIN - 686575
5 SPECIAL SALE OFFICER
OFFICE OF THE CO-OPERATIVE SOCIETIES ASSISTANT REGISTRAR
[GENERAL], MINI CIVIL STATION,
PALA P.O. KOTTAYAM DT., PIN - 686575
6 KURAVILANGAD SERVICE CO-OPERATIVE BANK LTD 1049
REPRESENTED BY ITS SECRETARY, KURAVILANGAD P.O.
KOTTAYAM DT. PH: 04822 23 1367;
[email protected], PIN - 686633
7 UNION OF INDIA ,PRESENTED BY ITS SECRETARY,
MINISTRY OF COOPERATION ATAL AKSHAY URJA BHAWAN;
8TH FLOOR; CGO COMPLEX; LODHI ROAD; BEHIND NIA BUILDING;
NEW DELHI. . PH: 011 208 49035, 208 49036
[email protected] ; [email protected] ;
HTTPS://WWW.COOPERATION.GOV.IN, PIN - 110003
8 CGM-IN-CHARGE AND SECRETARY
SECRETARY'S DEPARTMENT RESERVE BANK OF INDIA 16TH FLOOR,
CENTRAL OFFICE BUILDING SHAHID BHAGAT SINGH MARG MUMBAI
PH: 022 226 61872 [email protected], PIN - 400001
BY ADV SMT.V.K.HEMA, CGC
SRI. P.P.THAJUDHEEN, SPL.GP
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 29.10.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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W.P (C) No.16450 of 2025 -3-
JUDGMENT
This writ petition has been filed seeking the following
reliefs:-
''1. Issue mandamus order under Article 226 and declare
with Articles 246(1); 254(1)(2) of the Constitution of India to
the respondents, that the Acts "The Kerala State Co-operative
Societies Act 1969" and "The Kerala State Co-operative
Agricultural Development Banks Act, 1984" are
unconstitutional and illegal and so inconsistent and so void
from the commencement and enactment of the Acts.
2. Issue mandamus order under Article 226 and declare
with Articles 227(1); 235; 246(1); 254(1)(2) of the
Constitution of India that the "Cooperative Arbitration Court"
and Jurisdiction made under "The Kerala State Co-operative
Societies Act 1969" and "The Kerala State Co-operative
Agricultural Development Banks Act, 1984" misused for
banking are unconstitutional and illegal and so void from the
commencement and enactment of the Acts.
3. Grand such other reliefs as this Honorable Court
deems fit for the issues in proper in the circumstances of the
case, remedy for cheating by Govt., infiltrated into and
hijacked the Legislature System, Executive System, Judiciary
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System and Administration by The Government of Kerala, and
the employees party union and the hijacked Cooperative
Society, converted to unconstitutional and illegal Bank,
including the costs and expenses of this special WP(C). ''
2. The petitioner appears party-in-person. He submits
that the functioning of Co-operative Banks outside the
regulatory framework of the Banking Regulation Act, 1949 is
illegal and unconstitutional. He refers to Article 246 of the
Constitution of India and submits that the subject of
'banking' is a subject in List-I of the 7th Schedule of the
Constitution of India subject and that the enactment of the
Kerala Co-operative Societies Act 1969 (hereinafter referred
to as 'the 1969 Act) and the Kerala State Co-operative
Agricultural and Rural Development Banks Act, 1984
(hereinafter referred to as 'the CARD Bank Act') enabling
banking activity in the co-operative sector is beyond the
legislative competence of the State Legislature. It is
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submitted that by virtue of sub-clause (2) of Article 13 of the
Constitution of India, any law that takes away or abridges the
rights conferred by Part-III of the Constitution shall be void
to the extent of contravention. The petitioner also referred to
the provisions of Article 254 of the Constitution of India and
submits that where the State law is inconsistent with any
Central law, the State law shall be void to the extent of
inconsistency. It is submitted that the 1969 Act and the
CARD Bank Act contain provisions excluding jurisdiction of
all courts, including the High Court and the Supreme Court,
and this is impermissible under the Constitution. It is
submitted that the Co-operative Banks are engaging in
banking business without a license from the Reserve Bank of
India. It is submitted that the Co-operative Banks and CARD
Banks are causing a debt trap for borrowers, and that
valuable properties are being sold/purchased by the bank in
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auction at throwaway prices, causing loss to the borrowers.
It is also submitted that the Co-operative Banks and CARD
Banks are also proceeding against the personal property of
the borrowers, and this violates Article 21 of the Constitution
of India. It is submitted that on these grounds, the prayers
sought for in this writ petition are liable to be granted.
3. Sri. P P. Thajudheen, the learned Special Government
pleader, who appears for respondent Nos.1 to 4 would
submit that the contentions taken by the petitioner are
without any legal basis. It is submitted that the petitioner
has availed credit facilities from the 6 th respondent bank. It
is submitted that, on failure to repay the loan amount, the
bank has initiated action in accordance with the law against
the petitioner, prompting the petitioner to approach this
Court by filing the above writ petition. It is submitted that
the issue of Co-operative banks engaging in banking activity
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was considered by this Court in Lathif U.A., MLA and
another V. State of Kerala and Others; ILR 2023 (4)
Kerala 673. It is submitted that 'co-operation' is a List-II 1
subject and therefore, the question of inconsistency does not
arise. It is submitted that, Article 254 of the Constitution of
India applies only when the allegedly inconsistent
legislations are on subjects relatable to the 'Concurrent List'
(List III) and not where the legislations which are apparently
irreconcilable are relatable to subjects in List-I or List-II,
where the Union Parliament and the State legislatures enjoy
the authority to make laws without being inhibited in any
manner.
4. Having heard the petitioner, who appears party-in-
person and the learned Special Government Pleader
appearing for the official respondents, I am of the view that
the petitioner has not made out any case for admission of
1 Any reference to List I or II in this judgment is to the Lists under the Seventh Schedule of the
Constitution of India.
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this writ petition. The contention of the petitioner with
reference to the provisions of Articles 246 and 254 of the
Constitution of India is misplaced. The subject of 'Co-
operation' is a subject included in Entry 32 of List-II, while
Entry 45 of List-I deals with the subject of 'banking'. Entry
43 of List-I deals with the incorporation, regulation and
winding up of trading corporations, including banking,
insurance and financial corporations, but specifically
excludes co-operative societies. I had occasion to consider
this issue in Lathif U.A (supra) where this Court held as
follows:-
''9. When the provisions of legislative enactment are questioned
before the Court, the Court has to examine the matter with reference
to the aforesaid grounds. The legislature is never before the Court.
The counter-affidavits filed by the executive and other authorities do
not represent the views of the legislature. They only represent the
understanding of the executive or the authority regarding the law
made by the Legislature. In Sanjeev Coke Manufacturing Company v.
Bharat Coking Coal Limited, it was held:--
"No one may speak for the Parliament and Parliament is never
before the court. After Parliament has said what it intends to say,
only the court may say what the Parliament meant to say. None
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else. Once a statute leaves Parliament House, the Court is the only
authentic voice which may echo (interpret) the Parliament. This
the court will do with reference to the language of the statute and
other permissible aids. The executive Government may place
before the court their understanding of what Parliament has said
or intended to say or what they think was Parliament's object and
all the facts and circumstances which in their view led to the
legislation. When they do so, they do not speak for Parliament. No
Act of Parliament may be struck down because of the
understanding or misunderstanding of parliamentary intention by
the executive Government or because their (the Government's)
spokesmen do not bring out relevant circumstances but indulge in
empty and self-defeating affidavits. They do not and they cannot
bind Parliament. Validity of legislation is not to be judged merely
by affidavits filed on behalf of the State, but by all the relevant
circumstances which the court may ultimately find and more
especially by what may be gathered from what the legislature has
itself said."
Therefore, it is not necessary to set out in any detail the views
expressed by the State and the Reserve Bank of India through
counter affidavits filed in this Court except to the extent they aid or
assist this Court in considering the validity of the impugned
legislation. As already noticed, the only ground raised in these writ
petitions to challenge the constitutional validity of the impugned
provisions of the 1969 Act is lack of legislative competence and it
was argued with reference to Entry 45 of List-I of Seventh Schedule
to the Constitution of India and with reference to the amendment
made to Section 3 of the Banking Regulation Act, 1949, (in 2020)
that Co-operative banks engaged in the business of banking and
using the words 'bank, banker and banking' and acting as drawee of
the cheques will squarely fall within the legislative control of law
made under Entry 45 of List-I (the Banking Regulation Act, 1949)
and any provision in the law made with reference to Entry 32 of List-
II cannot, therefore, provide for the amalgamation of a Cooperative
Bank contrary to and against the provisions contained in the Banking
Regulation Act, 1949.
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10. Entry 43 of List-I of the Seventh Schedule to the
Constitution of India deals with the incorporation, regulation and
winding up of Corporations including banking, insurance and
financial corporations but not including Co-operative Societies.
Entry 45 of List I deals with the subject of banking. A reading of the
aforesaid two Entries of List-I would clearly suggest that matters
relating to incorporation and regulation and winding up of all sorts of
corporations including banking corporations and any law touching
upon the aspect of banking would be exclusively subject to law made
by Union Parliament. However, Entry 43 of List-I specifically
excludes Co-operative Societies. Therefore, in respect of a banking
company other than a Co-operative Society, the aspect of
incorporation, regulation and winding up as well as any law
regulating banking activities would both be subject to law made by
Parliament with reference to Entries 43 and 45 of List-I. To take the
example of the State Bank of India, the said bank is a banking
company incorporated under the State Bank of India Act, 1955. It is
a company engaged in the business of banking. Therefore, all
matters relating to the incorporation, regulation and winding up of
the State Bank of India as well as its banking activities would both be
subject to laws made by the Union Parliament with reference to
Entries 43 and 45 of List-I. In other words, the Banking Regulation
Act, 1949 or any other law made by parliament could regulate the
affairs of banking as well as aspects relating to incorporation,
regulation and winding up of banking corporations with reference to
Entries 43 and 45 of List-I. However, when it comes to a Co-
operative Society engaging itself in the business of banking, the laws
relating to incorporation, regulation and winding up of such Co-
operative Societies would be subject only to laws made by the State
Legislature with reference to Entry 32 of List-II. Entries 43 and 45 in
List-I and Entry 32 in List-II are extracted hereunder:
Entry 43, List-I (Union List) Incorporation, regulation and
winding up of trading
corporations, including banking,
insurance and financial
corporations, but not including co-
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operative societies
Entry 45, List-I (Union List) Banking
Entry 32, List-II (State List) Incorporation, regulation and
winding up of corporations, other
than those specified in List I, and
universities; unincorporated
trading, literary, scientific,
religious and other societies and
associations; co-operative
societies.
Section 3 of the Banking Regulation Act, 1949 prior to the Banking
Regulation (Amendment) Act, 2020 read as follows:--
"3. Act to apply to co-operative societies in certain cases
Nothing in this Act shall apply to-
(a) a primary agricultural credit society.
(b) a co-operative land mortgage bank; and
(c) any other co-operative society, except in the manner and to the
extent specified in Part V."
Following the 2020 Amendment, Section 3 of the Banking
Regulation Act, 1949, reads as follows:--
"3. Act not to apply to certain co-operative societies
Notwithstanding anything contained in the National Bank for
Agricultural and Rural Development Act, 1981 (61 of 1981) this
Act shall not apply to-
(a) a primary agricultural credit society; or
(b) a co-operative society whose primary object and principal
business is providing of long-term finance for agricultural
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development, if such society does not use as part of its name, or in
connection with its business, the words "bank", "banker" or
"banking" and does not act as drawee of cheques."
Therefore, the effect of the amendment is that while the provisions of
the Banking Regulation Act, 1949 (before the amendment) were not
applicable to the Primary Agricultural Societies or Co-operative
Societies whose primary object and principal business is the
provision of long-term finance for agricultural development and to
any other Co-operative Society except to the manner and to the
extent specified in Part V of the Banking Regulation Act, 1949, after
the amendment, the Banking Regulation Act, 1949 does not apply to
a Primary Agricultural Credit Society or a Co-operative Society
whose primary object and principal business is the provision of long-
term finance for agricultural development but it will apply if the Co-
operative Society in question uses as part of its name or in
connection with its business the words "bank", "banker" or
"banking" and acts as a drawee of cheques. The primary contention
raised for the petitioners is that following the 2020 Amendment to
the Banking Regulation Act, 1949, the entire activity of a Co-
operative Society which is a bank had come under the purview of the
Banking Regulation Act, 1949 and therefore all provisions of the
Banking Regulation Act, 1949 including the provisions requiring
prior permission of the Reserve Bank of India before a Co-operative
Bank is amalgamated with another Co-operative Bank will apply even
if the bank in question is a bank constituted as a Cooperative Society
under the law made by State Legislature with reference to Entry 32
of List-I. In the context of this submission, it may be useful to refer to
the decision of a Division Bench of the Punjab and Haryana High
Court in Sant Sadhu Singh v. State of Punjab. In that case, the Court
was concerned with a challenge to certain provisions of the Punjab
Co-operative Societies (Amendment) Act, 1969 on the ground that
the State Legislature did not have the competence to enact any law
relating to Banking Corporations even if they were co-operative
societies constituted under a law made by the state legislature. The
findings in paragraphs 8 and 13 are relevant and they are extracted
below:--
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"8. Before proceeding to deal with the respective contentions
of the learned counsel for the parties, it may be mentioned that
any legislation regarding the banking business as such can only be
undertaken under entry No. 45, List I, whereas regulation of
Corporations doing Business of Banking falls under entry No. 43.
But Co-operative Societies are excluded from this entry and have
been put in entry No. 32, List II, Schedule VII. This is also evident
from the Banking Companies Act, as amended up to date, and the
Reserve Bank of India Act. The Co-operative Societies doing
banking business are put on par so far as entry No. 45. List I is
concerned, with other banking institutions. While construing entry
No. 45, the Federal Court of India in Bank of Commerce, Ltd.
Khulna v. Nripendra Nath Datta, AIR 1945 PC 7, observed as
follows:--
''On a reasonable construction, the entry must be limited to
laws which affect the conduct of the business of banks qua
banks."
Their Lordships were considering entry No. 38. List I of the
Government of India Act, 1935, which is in these terms:--
"Banking, that is to say, the conduct of banking business by
corporations other than corporations owned or controlled by
a Federated State and carrying on business only within that
State."
* * * * *
13. Keeping in view these principles, the meaning and scope of
entry No. 43 has to be ascertained. The contention of the learned
counsel for the petitioners is that the various provisions in the
Ordinance, which has been replaced by the Amending Act, impinge
on the business of banking inasmuch as the entire control of the
management is more or less vested with the Registrar and the right
of the shareholders to elect their representatives has been taken
away. This is so. It is evident that entry No. 43 and entry No. 45
relate to different heads of legislation. Whereas entry No. 45 gives
the power to the Central Legislature to legislate qua banking
business, entry No. 43, on the other hand, gives power to the Central
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Legislature to legislate regarding corporations. It is immaterial
whether those Corporations were doing the banking business or not.
In other words, Central Legislature is competent to legislate with
regard to Corporations engaged in the business of banking, in view
of entry No. 43. List I. But so far as the Co-operative Societies are
concerned, they were taken out of the ambit of entry No. 43 and put
in entry No. 32, List II. The word 'regulation' in entry No. 43 is of a
wide import and would include how a Cooperative Society is to work.
In other words, it will include the constitution of a Co-operative
Society and any matter relating to its constitution would naturally be
the subiect-matter of legislation by the State Legislature. In a broad
sense, the controlling of the working of a Society doing banking
business will in some measure concern the business of banking and
thus may bring it within the ambit of entry No. 45. List I. Thus there
would be some overlapping. But in order to give a harmonious
construction to both the entries, Nos. 43 and 44, it must be held that
only business of banking as such falls within the ambit of entry No.
45; whereas the incorporation of the Corporations and other matters
relating to them fall within the ambit of entry No. 43. Therefore, the
constitution of the Societies and their working would have fallen
within the ambit of entry No. 43 but for the fact that Co-operative
Societies are excluded from its purview. The very fact that in entry
No. 43, Corporations engaged in the business of banking are
specifically mentioned, it clearly follows that Cooperative Societies
doing that business were taken out of entry No. 43. List I, and
deliberately put in entry No. 32, List II. In view of the clear wording
of the two entries, I am unable to agree with the contention of the
learned counsel for the petitioners, that the State Legislature has no
jurisdiction to regulate the functioning of the Co-operative Societies
engaged in the business of Banking."
(Emphasis supplied)
11. A similar question arose before the Bombay High Court in
Nagpur District Central Co-op. Bank Ltd., Nagpur v. Divisional
Joint Registrar, Co-operative Societies, Nagpur. There, certain
notices issued to a Cooperative Society engaged in banking business
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under the provisions of Section 78 of the Maharashtra Co-operative
Societies Act, 1960 were challenged on the ground that the notices
were without jurisdiction, as a Co-operative Society engaged in the
business of banking could be regulated only under the provisions of
the Banking Regulation Act, 1949 and not by reference to the
provisions in the Maharashtra Co-operative Societies Act. While
rejecting this contention, it was held:
"9. It is contended that the matters regarding incorporation,
regulation and winding up of banking societies registered under
the Co-operative Societies Act would fall under Entry No. 43 and
in any case under Entry 45 which has a very wide import and
would, cover a very large field with respect to the business of
banking and all matters ancillary to or incidental to the same. It is
further urged that Entry No. 32 in List II empowers the State
Legislature to make laws with respect to the co-operative societies
excluding the societies doing business of banking. It is urged on
the basis of art. 246 of the Constitution that if a particular topic or
matter falls under List I in the Seventh Schedule, then the
Parliament has the exclusive power to make laws with respect to
that matter and the State is deprived of the power to make any
law with respect to any matter enumerated in the List I. Under cl.
(3) of art. 246 of the Constitution, the power of the State
Legislature is subject to cls. (1) and (2) and if the power to
legislate on a particular topic is to be found in List I, evidently the
State Legislature would not be empowered to legislate on the very
same topic and the law made by the Parliament will have to
prevail. Of course, this presupposes that the subject is covered by
the entries in List I. The learned counsel cited A.G. of Alberta v.
A.G. of Canada, A.G. of Alberta v. A.G. of Canada, and State of
Orissa v. M.A. Tulloch & Co. The first case dealt with British
North America Act, 1867 and ss. 91 and 92(1) thereof. It was held
that if a given subject-matter fell within any class of subjects
enumerated in s. 91, it could not be treated as covered by any of
those within s. 92.
(Emphasis supplied)
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* * * * *
12. We are, therefore, in agreement with the learned counsel
for the petitioners on the authority of this decision that if this
subject with which we are dealing is covered by the entries in the
List I and is thus within the exclusive powers of the Central
Legislature, then whether the Central Legislature has occupied
that field or not, the State Legislature would be denuded of the
powers with respect to that subject and would not be competent
to legislate on that topic. It is not necessary that the Central
Legislature must have legislated on that subject so as to deprive
the State Legislature of its powers to legislate on that topic
provided that topic falls within List I.
13. We agree with the learned counsel for the petitioners
that the entries in the list should be construed broadly and, not in
a narrow pedantic sense. It cannot be disputed that the entries in
the various Lists of the Seventh Schedule must be given widest
possible interpretation. It also cannot be disputed that while
making law under any entry in the Schedule it is competent to the
Legislature to make all such incidental and ancillary provisions as
may be necessary to effectuate the law. The Supreme Court has
clearly laid down these propositions in Waverly Jute Mills v.
Raymon & Co., Board of Revenue, Madras v. R.S. Jhaver and
Harakchand v. Union of India. It has also been laid down in this
last decision that if some of the entries in the different lists or in
some list overlap or may appear to be in direct conflict with each
other, it is the duty of the Court to reconcile the entries and bring
about a harmonions construction. An endeavour must be made to
solve the conflict by having recourse to the context and scheme of
the Act and a reconcilation attempted between two apparently
conflicting jurisdictions by reading the two entries together and
by interpreting and where necessary, modifying the language of
the one by that of the other. A general power ought not to be so
strict as to make a nullity of a particular power conferred by the
same Act and operating in the same field when by reading the
former in a more restricted sense effect can be given to the law in
its natural and ordinary meaning. Similar observations are to be
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found in Waverly's case in para. 11 where it is observed that
where there are two entries, one general in its character and the
other specific, the former must be construed as excluding the
latter. It would thus be seen that 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 in the first list, then
the general entry in the first list must be so read as to exclude the
specific power from it so that general power may cover or occupy
all the field excepting the field under the specific power under the
second list and the specific power must be preserved to the
Legislature which is empowered under that list. It is in the light of
these guiding principles the impugned provision is to be looked at.
14. It is urged on behalf of the petitioners that Entry No. 43
in List I covers the whole field with respect to incorporation,
regulation and winding up, of trading corporations as also
banking, insurance and financial corporations and excludes only
the co-operative societies. It is urged that entry No. 43 therefore
would empower the Central Legislature to legislate in respect of
banking corporations which would also cover banking co-
operative societies and what is excluded is only the non-banking
co-operative societies, that is, societies which do not deal in the
business of banking. Now we do not think that entry No. 43 can be
read in that sense. In our opinion, entry No. 43 excludes all co-
operative societies including the trading, banking, insurance and
financial co-operative societies and those are put in entry No. 32
of List II. There is no warrant to say that entry No. 43 excludes
only non-banking co-operative societies, but includes within its
sweep banking co-operative societies. If that were so, then there
was no need for entry No. 45. Then it is urged that entry No. 45
which is 'banking' ordinarily takes within its sweep everything,
relating to banking. Banking, however, would not mean the
banking corporations, but would mean only the conduct of
banking business by corporations.
(Emphasis supplied)
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12. In Greater Bombay Coop. Bank Ltd. v. United Yarn Tex
(P) Ltd., the decisions in Sant Sadhu Singh (supra) and Nagpur
District Central Co-op. Bank Ltd. (supra) were relied upon to hold
that co-operative banks established under the Maharashtra Co-
operative Societies Act, 1960 and the Andhra Pradesh Cooperative
Societies Act, 1964, transacting the business of banking do not fall
within the meaning of "banking company" as defined in Section 5(c)
of the Banking Regulation Act, 1949 and therefore, the provisions of
the Recovery of Debts and Bankruptcy Act, 1993 do not apply to the
recovery of dues by co-operative banks from their members.
Interestingly while holding that Greater Bombay Coop. Bank Ltd.
(supra) was wrongly decided, the Court in Pandurang Ganpati
Chaugule (supra) holds thus:--
"98. In Greater Bombay Coop. Bank Ltd. , the Court relied
upon the decisions in Sadhu Singh v. State of Punjab, and Nagpur
District Central Coop. Bank Ltd. v. Registrar of Coop. Societies .
In Sadhu Singh, the amendment made to the Punjab Cooperative
Societies Act, 1961, which curtailed the rights and powers of the
shareholders in managing the cooperative society, was under
challenge. Thus, the question involved was related to the
management aspect of the bank governed by the Cooperative
Societies Act for which the State had the exclusive legislative
competence under List II Entry 32. Whereas in Nagpur District
Central Coop. Bank Ltd., the question arose whether the Registrar
had the power under Section 78 of the Maharashtra Cooperative
Societies Act to issue show-cause notice to any committee of the
society or any member of such committee including the Directors
in respect of any default or negligence in the performance of the
duties imposed on it or him by the Act or the rule or the bye-laws
and power of the Registrar to remove the Committee or the
members thereof if any such action is called for. The argument
was rejected that the cooperative societies indulged in the
banking business, hence, the State did not have the legislative
competence under List II Entry 32, and only Parliament had the
legislative competence under List I Entry 45. The question
involved as to management was clearly covered under List II
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Entry 32. It was with respect to incorporation, management, and
winding up of a society. Thus, both the abovementioned decisions
could not be said to be applicable with regard to the aspect of
banking and were wrongly relied upon while forming an opinion in
Greater Bombay Coop. Bank Ltd.
99. At the same time, we are unable to accept the argument
raised on behalf of the respondents. The Sarfaesi Act is relatable
to Entry 6 of List III considering the provisions contained in
Sections 69 and 69-A of the Transfer of Property Act, 1882. We
are of the opinion that it relates to Schedule VII List I Entry 45 of
the Constitution of India.
100. The learned counsel for the appellants has also placed
reliance on Virendra Pal Singh, in which the provisions relating to
the recruitment, emoluments, terms, and conditions of service,
including disciplinary control of employees working in the
cooperative societies involved in the banking were considered.
Thus, the question of management/regulation of the cooperative
societies was involved. The aspect of the banking business of the
cooperative banks was not involved. A question was raised as to
the legislative competence of the State to enact. In that context,
the Court held that, in pith and substance, the U.P. Cooperative
Societies Act dealt with incorporation, management and winding
up and that if it incidentally trenches upon banking, would not
take the legislation beyond the competence of the State
Legislature. For the proper financing and effective functioning of
cooperative societies, there must also be cooperative societies
that do banking business to facilitate the working of other
cooperative societies merely because they do banking business,
they do not cease to be cooperative societies. It was opined : (SCC
p. 114, para 10)
"10. We do not think it necessary to refer to the abundance of
authority on the question as to how to determine whether a
legislation falls under an entry in one List or another entry in
another List. Long ago in Prafulla Kumar Mukherjee v. Bank of
Commerce Ltd., the Privy Council was confronted with the
2025:KER:81484
question whether the Bengal Money-Lenders Act fell within
Schedule VII List II Entry 27 to the Government of India Act,
1935, which was "money-lending", in respect of which the
provincial legislature was competent to legislate, or whether it fell
within Entries 28 and 38 in List I which were "promissory notes"
and "banking" which were within the competence of the Central
Legislature. The argument was that the Bengal Money Lenders
Act was beyond the competence of the Provincial Legislature
insofar as it dealt with promissory notes and the business of
banking. The Privy Council upheld the vires of the whole of the
Act because it dealt, in pith and substance, with money-lending.
They observed : (SCC OnLine PC)
'Subjects must still overlap, and where they do the
question must be asked what in pith and substance is the
effect of the enactment of which complaint is made, and
in what List is its true nature and character to be found.
If these questions could not be asked, much beneficent
legislation would be stifled at birth, and many of the
subjects entrusted to provincial legislation could never
effectively be dealt with.'
Examining the provisions of the U.P. Cooperative Societies Act in the
light of the observations of the Privy Council we do not have the
slightest doubt that in pith and substance the Act deals with
"cooperative societies". That it trenches upon banking incidentally
does not take it beyond the competence of the State Legislature. It is
obvious that for the proper financing and effective functioning of
cooperative societies there must also be cooperative societies which
do banking business to facilitate the working of other cooperative
societies. Merely because they do banking business such cooperative
societies do not cease to be cooperative societies, when otherwise
they are registered under the Cooperative Societies Act and are
subject to the duties, liabilities and control of the provisions of the
Cooperative Societies Act. We do not think that the question
deserves any more consideration and, we, therefore, hold that the
U.P. Cooperative Societies Act was within the competence of the
State Legislature. This was also the view taken in Nagpur District
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Central Coop. Bank Ltd. v. Registrar of Coop. Societies and Sadhu
Singh v. State of Punjab."
13. In Pandurang Ganpati Chaugule (supra), the question that
arose for consideration was whether the provisions of the
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter referred to
as the SARFAESI Act) would apply to Cooperative Banks. It was
squarely held that since the recovery of loans is part of banking
activities, a law in the nature of the SARFAESI Act would be
applicable to Co-operative Banks as the banking activity of Co-
operative Banks was clearly subject matter of law made with
reference to the Entry 45 of List-I. However, the decision in
Pandurang Ganpati Chaugule (supra) clearly holds that any
aspect other than banking and touching upon the aspects of
incorporation, regulation and winding up of Co-operative Societies
which are also banks could be regulated only by law made with
reference to Entry 32 of List-II and not with reference to Entry 43 of
List-I. Paragraphs 87 and 88 of Pandurang Ganpati Chaugule
(supra) read thus:--
"87. It is apparent that "incorporation, regulation and winding up"
of the cooperative societies are covered under Schedule VII List II
Entry 32 of the Constitution of India, whereas "banking" is
covered by List I Entry 45. Thus, aspect of "incorporation,
regulation and winding up" would be covered under List II Entry
32. However, banking activity of such cooperative
societies/banks shall be governed by List I Entry 45. The said
banks are governed and regulated by legislation related to List I
Entry 45, the BR Act, 1949 as well as the Reserve Bank of India
Act under Entry 38 of List I. In the matter of licensing and doing
business, a deep and pervasive control is carved out under the
provisions of the BR Act, 1949 and banking activity done by any
entity, primary credit societies, is a bank and is required to submit
the accounts to Reserve Bank of India, and there is complete
control under the aforesaid Act. For activity of banking, these
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banks are governed by the legislation under List I Entry 45.
Thus, recovery being an essential part of the banking, no conflict
has been created by providing additional procedures under
Section 13 of the Sarfaesi Act. It is open to the bank to adopt a
procedure which it may so choose. When banking in pith and
substance is covered under List I Entry 45, even incidental
trenching upon the field reserved for the State under Entry 32 List
II is permissible."
(Emphasis supplied)
"88. There can be various aspects of an activity. The cooperative
societies may be formed under the provisions of the State
Cooperative Acts. The State law provides for "incorporation,
regulation and winding up" under List II Entry 32, a
membership registration, and other matters can be
governed by List II Entry 32, and, at the same time, the
aspects relating to the banking, licensing, accounts, etc.
can be covered under Entry 45 List I."
(Emphasis supplied)
The decision of the Constitution Bench in Pandurang Ganpati
Chaugule (supra) is, therefore, clear authority for the proposition
that in all aspects relating to banking, Co-operative Banks would be
the subject matter of regulation under the provisions of the Banking
Regulation Act, 1949. The fact that Section 3 of the Banking
Regulation Act, 1949 was amended as noticed above after the
judgment of the Supreme Court in Pandurang Ganpati Chaugule
(supra) does not in any manner change the situation.
14. It is settled law that while interpreting the Entries in the various
Lists in the Seventh Schedule to the Constitution of India, it must be
borne in mind that the Entries are only fields of legislation and each
Entry must be given the widest scope and each general word should
extend to all ancillary and subsidiary matters which can fairly and
reasonably be comprehended in it. The Banking Regulation Act,
1949, is undoubtedly a law relatable to Entry 45 of List-I. Section
44A of the Banking Regulation Act, 1949, sets out the procedure for
the amalgamation of Banking Companies. Part V of the Banking
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Regulation Act, 1949, makes the provisions of the Act applicable to
Co-operative Societies subject to modifications specified in the
provisions of Section 56 which is the only provision in Part V. The
fact that the provisions of Section 56 provide that the Banking
Regulation Act, 1949, will apply to Cooperative Societies subject to
the modifications specified in Section 56 is, in my view, sufficient
indication that the Parliament sought to bring Cooperative Societies
within the field of Banking Regulation Act, 1949, in only as much as
it relates to the carrying out of banking activities and for no other
purpose. Certain provisions of the Banking Regulation Act, 1949
applicable to other Banking Companies have been specifically
excluded in the application of the Act to Co-operative Societies, for
example, Section 35B of the Banking Regulation Act, 1949, is
specifically excluded. Section 36(1)(b) is also specifically excluded
from its application to Co-operative Societies by the virtue of the
provisions contained in Section 56. This fortifies my view that while
in all aspects of banking, Co-operative Societies which are banks
would specifically come within the purview of law made by Union
Parliament with reference to Entry 45 of List-1, and in all other
aspects, they would be controlled and regulated by law made with
reference to Entry 32 of List-II.''
The decision of this Court in Lathif U.A (supra) has been
affirmed by a Division Bench of this Court, and therefore, the
contention of the petitioner that Co-operative banks and
CARD banks are functioning without license and without
being regulated in any manner by the Banking Regulation
Act does not appear to be tenable.
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6. The contention of the petitioner that the Act contains
provisions either excluding the jurisdiction of civil courts or
granting the power of civil court to adjudicating Authorities
under the Act cannot be a ground to hold that the provisions
are unconstitutional. The exclusion of jurisdiction of the civil
courts is permissible in law. The grant of specified powers
conferred on civil Courts under the Code of Civil Procedure
to adjudicating Authorities is a common feature in many
statutes, and I do not see any reason to hold that the grant of
such power to Adjudicating Authorities would result in the
provisions being declared unconstitutional.
7. The contention of the petitioner that the co-operative
banks and CARD banks are proceeding against the
properties for recovery of amounts and are selling those
properties for a throw-away price is too general a statement
and at any rate cannot be a ground for declaring the
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provisions of those enactments unconstitutional.
For all the aforesaid reasons, the writ petition is
dismissed in limine.
Sd/-
GOPINATH P.
JUDGE
AMG/ajt
2025:KER:81484
APPENDIX OF WP(C) 16450/2025
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF 'THE KERALA STATE CO-OPERATIVE
SOCIETIES ACT 1969'
Exhibit P2 TRUE COPY OF 'THE KERALA STATE CO-OPERATIVE
AGRICULTURAL DEVELOPMENT BANKS ACT, 1984'
Exhibit P3 TRUE COPY OF RBI NOTIFICATION FROM LEADING
NEWSPAPERS IS AND ITS TRANSLATION
Exhibit P4 TRUE COPY OF THE RECENT MALAYALAM BROCHURE OF TWO
PAGES OF KURAVILANGAD SERVICE CO-OPERATIVE BANK
LTD. NO.1049' AT KURAVILANGAD, WITH ITS
APPROXIMATE ENGLISH TRANSLATION.
Exhibit P5 TRUE COPY OF THE OPENING PAGES OF SAVINGS BANK
PASS BOOK ISSUED TO THE PETITIONER FROM
KURAVILANGAD SERVICE CO-OP BANK.
Exhibit P6 TRUE COPY OF ONE CHEQUE LEAF ISSUED TO THE
PETITIONER FROM KURAVILANGAD SERVICE CO-OP BANK.
Exhibit P7 TRUE OF THE GEHAN AS LAND MORTGAGE TO KURAVILANGAD
SERVICE CO-OP BANK AND THE LAST ACTIVE REGISTERED
GEHAN NO: G510/1/2014 ON 19-3-2014
Exhibit P8 TRUE COPY OF THE SUMMONS AND PETITION, ARC FILE
NO: 662/21 WITH 'KSCS ACT 1969' SECTION 69 AND
ALSO 67 ISSUED TO THE PETITIONER BY SPECIAL SALE
OFFICER FROM AR COURT ON 1-12-2023 WITH ITS
TRANSLATION
Exhibit P9 TRUE COPY OF THE CHARGE AND THE JUDGMENT BY THE
SPECIAL SALE OFFICER WITH ARC FILE NO: 662/21 WITH
'KSCS ACT 1969' SECTION 69 AND 67 AND ORDER FOR
THE REVENUE RECOVERY ON 14-1-2025 WITH ITS
TRANSLATION
Exhibit P10 copy of transfer judgment of transfer petition
(civil) Nos 659-678 of 2022 In The Supreme Court
of India
