Disposed

The Primary Agricultural Seva Sahakara v. the State of Karnataka

Karnataka HC14 Aug 2012WP/47963/2011

Case brief

AI extract

What is this about?

In writ petitions seeking a direction to a State Bank and the State to disburse a loan to a co-operative society facing liquidation, the High Court did not grant immediate relief and reserved the disposal pending the society's reply to a pending show cause notice under the Co-operative Societies Act.

What did the court decide?

Order reserved for two months pending reply to show cause notice under Section 72(2)(b) of the Co-operative Societies Act.

The Primary Agricultural Seva Sahakara Vs the State… — Company and Corporate | Karnataka HC (2012)

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE

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DATED THIS THE 14TH DAY OF AUGUST 2012

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BEFORE

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THE HON'BLE MR. JUSTICE HULUVADI G.RAMESH

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WRIT PETITION NOS.47963 OF 2011 & 48156-163 OF 2011

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(CS-RES)

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BETWEEN :

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1 THE PRIMARY AGRICULTURAL SEVA SAHAKARA SANGHA LTD., YELLAMPAALI, BAGEPALLI TALUK BY ITS SECRETARY

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SRI NARASIMHAPPA, S/O VENKATARAYAPPA AGED 55 YEARS

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2 THE PRIMARY AGRICULTURAL SEVA SAHAKARA SANGHA LTD YELLAMPALLI, BAGEPALLI TALUK BY ITS PRESIDENT SRI.L.R.CHANDRASHEKAR REDDY S/O R N RANGAREDDY, 64 YRS

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3 VENKATASHIVAPPA 48 YRS , S/O VENKATAPPA DIRECTOR, P.A.S.S.S

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4 S P MUNISWAMY, 50 YRS

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S/O VENKATARAYAPPA DIRECTOR, P.A.S.S.S

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5 D N SHANKARA, 35 YRS S/O DANDUNARASIMHAPPA MEMBER, P.A.S.S.S

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6 CHINNAPPAIAH, 48 YRS S/O PEDDAPPAIAH MEMBER, P.A.S.S.S

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7 GANGARAJAPPA, 40 YRS S/O NARASAPPA DIRECTOR, P.A.S.S.S

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8 ADINARAYANAPPA, 40 YRS S/O DANDUNARASIMHAPPA MEMBER, P.A.S.S.S

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9 GANGAPPA, 60 YRS S/O CHINNADODDAPPA DIRECTOR, P.A.S.S.S ...PETITIONERS

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( By Sri. M JAIPRAKASH REDDY, ADV ) AND :

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1 THE STATE OF KARNATAKA BY ITS SECRETARY DEPARTMENT OF CO-OPERATION VIDHANA SOUDHA, BANGALORE

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2 KOLAR & CHIKKABALLAPUR DISTRICT

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CO-OPERATIVE CENTRAL BANK LTD KOLAR - BY ITS CEO ...RESPONDENTS

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( By Sri.H VENKATESHA DODDERI, GA FOR R-1 Sri. G F HUNASIKATTIMATH &

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Sri. M S RUDRAIAH, ADVS FOR R-2 )

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THESE WRIT PETITIONS ARE FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION PRAYING TO DIRECT RESPONDENTS 1 & 2 TO DISBURSE THE LOAN AMOUNT IN FAVOUR OF THE PETITIONER SOCIETY AS PER SANCTION ORDER DATED 22.9.2011 VIDE ANNEXURE-C ISSUED BY R2.

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THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE FOLLOWING:

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O R D E R

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Petitioners have sought for issuance of writ of mandamus

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directing respondents 1 and 2 to disburse the loan amount in favour of

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the 1^st petitioner-Society as per the sanction order dated 22.9.2011 at

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Annexure 'C' issued by the 2^nd respondent and for such other orders.

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Heard the learned counsel for the petitioners, learned

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Government Pleader and the learned counsel representing the 2^nd

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respondent.

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According to the learned counsel for the petitioners,

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petitioner-Co-operative Society is registered under the provisions of the Karnataka Co-operative Societies Act of 1959 and also acts as a Co-operative Bank. The State Government has come out with a plan to sanction loan through Apex banks and also through the 2^nd respondent to the primary members of the Primary Co-operative Societies in the State at lowest rate of interest for agricultural purpose. The petitioner-Society has applied for sanction of loan to its 53 members as per the direction of the 2^nd respondent itself under the Kissan Credit Card Loan on 14.9.2011 and even the 1^st petitioner has also submitted the details regarding the beneficiaries, their status, the mode of cultivation and the crops grown and also has prepared the 53 members/beneficiaries to execute a mortgage in favour of their loans as a matter of security as per the scheme and accordingly, all the 53 beneficiaries have executed mortgage deed in favour of the 1^st

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petitioner-Society as per the direction of the 2^nd respondent-Bank.

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These members are are very small holders and agriculturists

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and belong to Scheduled Caste and Scheduled Tribe and have incurred substantial expenses for obtaining necessary documents to avail the loan and in view of the mortgage deed executed in favour of the 1^st petitioner-Society, they are unable to secure loan from any other nationalised or co-operative bank. As such, counsel for the petitioners has prayed for a direction to the 1^st and 2^nd respondents to disburse the loan in favour of the 1^st petitioner-Society so as to enable it to disburse the loan to its beneficiaries/members who have executed necessary documents in its favour.

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In a detailed objection filed by 2^nd respondent it is stated that, the 2^nd respondent is acting as a custodian of the depositors money and it has to safeguard the depositors interest. The Government of India has appointed a committee under the leadership of Prof. Vaidyanathan

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to study the issues relating to banking sector. The committee has submitted the report to the Government. The Government has constituted the Implementing Committee at national level as well as State level and having studied the working and financial conditions of the Primary Agricultural Credit Co-operative Societies based on certain criteria, has identified 219 ineligible Primary Agricultural Cooperative Societies, out of which, 98 Societies belong to 2^nd respondent and petitioner-Society is one among them. The Deputy Registrar of Co-operative Societies at Chickballapur, based on the reports of his sub-ordinates, has formed an opinion that 1^st petitionerSociety is not active and if it is continued, no purpose would be served and in this regard, a show cause notice has been issued by the Deputy Registrar of Co-operative Societies as per Section 72(2)(b) of the CoOperative Societies Act. As such, petitioner-Society is not entitled to compel the 2^nd respondent-Bank for advancement of loan out of the depositors money unless the bank is satisfied of the repayment capacity of the borrower.

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However, according to the petitioners, as required, they have forwarded the applications of the beneficiaries to the 2^nd respondent as per the scheme available for disbursement of loan for development of agricultural activities and also they have obtained mortgage deed from the beneficiaries, of immovable properties, as a matter of security for loan. In this regard, despite application has been submitted, their case has not been considered for grant /release of loan in favour of the petitioner-Society, in turn to release it to the beneficiaries.

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However, according to the 2^nd respondent, banking activity is

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not at all carried out by the 1^st petitioner and it is in the stage of liquidation and the Society has become defunct. Acting under Section 72(2) (b) of the Co-operative Societies Act, the Deputy Registrar of the Co-operative Societies has issued a show cause notice and so far no reply has been submitted by the petitioner-Society. The 2^nd respondent has also got report from the Special Committee appointed wherein it is stated that the 1^st petitioner-Society is identified as one of

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the societies whose financial condition is not satisfactory and has been considered for closure by way of liquidation having found it ineligible.

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It is stated, pursuant to the Show Cause Notice issued as per Section 72(2)(b) of the Act, petitioner-Society has submitted its reply on 11.1.2012. In the circumstances, it is for the 1^st and 2^nd respondents to reply and also to consider the grievance of the petitioners regarding release of loan, in accordance with law and, to take appropriate decision, within two months from the date of receipt of this order.

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Accordingly, these petitions are disposed of. The order copy be issued subject to payment of deficit court fee.

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JUDGE

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Bkp

The Primary Agricultural Seva Sahakara v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

The Primary Agricultural Seva Sahakara v. the State of Karnataka

Case brief

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What did the court decide?

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