Court affirms state legislative competence, dismisses challenge to Kerala Cooperative Societies Acts
In a landmark judgment, the Kerala High Court has dismissed an appeal challenging the constitutionality of the Kerala State Co-operative Societies Act, 1969, and the Kerala State Co-operative Agricultural Development Banks Act, 1984. The Division Bench, comprising Justices N. Nagaresh and Johnson John, ruled that the enactment of these Acts, which enable banking activities within the cooperative sector, does not violate the legislative competence of the State Legislature.
The appellant, Thomas M.K, argued that cooperative banks operating outside the regulatory framework of the Banking Regulation Act, 1949, are unconstitutional. He contended that banking is a subject under List-I of the Seventh Schedule of the Constitution of India, which falls under the legislative purview of the Union. The appellant further claimed that the exclusion of civil court jurisdiction under the Kerala Acts is unconstitutional, as it prevents citizens from seeking adjudication by competent civil courts.
The High Court, however, found these arguments untenable. Referencing previous judgments by the Supreme Court and other High Courts, the Bench highlighted that cooperative societies performing banking functions are not unconstitutional. It emphasized that cooperative societies are governed by Entry 32 of List-II, allowing them to conduct banking operations under state legislation.
The Court also addressed the exclusion of civil court jurisdiction, stating that such provisions are permissible in law. The adjudicating authorities under the Acts are granted powers akin to civil courts, a common feature in numerous statutes, which does not render the Acts unconstitutional.
Furthermore, the Court noted that the appellant's writ petition was akin to a public interest litigation, as it sought to declare legislative enactments unconstitutional without complying with procedural requirements for such filings. The judgment emphasized that the appellant failed to demonstrate any direct grievance, instead focusing solely on the constitutionality of the Acts.
Ultimately, the Kerala High Court upheld the validity of the Kerala State Co-operative Societies Act, 1969, and the Kerala State Co-operative Agricultural Development Banks Act, 1984, dismissing the writ appeal. This decision reinforces the state's legislative authority to regulate cooperative banking activities and affirms the legal framework governing these institutions.
Bottom line:-
Banking business by Co-operative Societies under the Kerala Co-operative Societies Act, 1969 and the Kerala State Co-operative Agricultural Development Banks Act, 1984 is not unconstitutional and does not contravene the legislative competence of the State Legislature. Exclusion of Civil Court jurisdiction under these Acts is permissible in law.
Statutory provision(s): Article 13, Article 246, Article 254 of the Constitution of India; Kerala Co-operative Societies Act, 1969; Kerala State Co-operative Agricultural Development Banks Act, 1984; Banking Regulation Act, 1949
Thomas M.K v. Govt. of Kerala, (Kerala)(DB) : Law Finder Doc id # 2892358
