Mahima
The Kerala High Court upheld ordinances amending the Kerala Cooperative Society Act to merge District Cooperative Banks in the state with the Kerala State Cooperative Banks.
Justice Raja Vijayaraghavan held, “The challenge raised… to the constitutional validity to the amendment made… vide Ordinance 6 of 2020 and repromulgated… has to necessarily fall on all grounds”.
The Government of Kerala proposed a transformation in the existent hierarchy stating that the cooperative banks at district as well as state level were adding to the cost on interest while offering almost negligible benefits to the lower tier, the Primary Agricultural Credit Societies (PACS).
An ordinance amending Section 14 of the Act was promulgated to amalgamate District and State Banks.
Following an unsuccessful challenge to the ordinance, the Malappuram District Cooperative Bank opposed the amalgamation.
The Court highlighted that Article 19(1)(c) protects the rights of citizens to associate and relying on a High Court ruling pointed out, “It is one thing to say that a citizen has a right to form a co-operative society and quite another thing to say that a member society has a right to form a central society”.
The Court added, “Firstly, a co-operative society is not a citizen who alone can have fundamental rights guaranteed under Part III of the Constitution of India and secondly, even a citizen has no fundamental right to be a member of a society”.
The judgment also held that amendment to expedite the process of amalgamation was not outside legislative purview after referring the objects and reasons behind Kerala Cooperative Societies Act.
The Court also held, “By removing the middle tier, the lowermost tier will have a direct role in the decision-making process in the State Level Bank. In other words, the ultimate beneficiary would be the member, who constitutes the DNA of the co-operative structure”.