Partly allowed

Ombatthugulli Milk Producers Co. Operative Society Ltd. v. the State of Karnataka

Karnataka HC10 Dec 2024WP/33522/2024

Case brief

AI extract

What is this about?

The High Court quashed an order by the Joint Registrar enforcing amendment of bye-laws under Section 12(6) of the Karnataka Co-operative Societies Act, 1959, because the Administrator failed to convene a General Meeting as mandated by Rule 6(6) of the Rules. The Court directed the Administrator to call a Special General Meeting to consider the proposed amendments.

What did the court decide?

Writ petition partly allowed. Order passed by the Joint Registrar under Section 12(6) of the Karnataka Co-operative Societies Act, 1959, is quashed. The Administrator is directed to call a Special Gen

Ombatthugulli Milk Producers Co. Operative Society… — Cooperative Societies | Karnataka HC (2024)

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NC: 2024:KHC:51064 WP No. 33522 of 2024

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 10^TH DAY OF DECEMBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE SURAJ GOVINDARAJ WRIT PETITION No.33522 OF 2024 (CS-RES)

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BETWEEN:

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OMBATTHUGULLI MILK PRODUCERS CO OPERATIVE SOCIETY LTD, BY ITS PRESIDENT RAMAREDDY, S/O VENKATAREDDY, AGED ABOUT 56 YEARS, R/OFFICE AT OMBATTHUGULI, BANGARPET TALUK, KOLAR.

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YADANANAHALLI MILK PRODUCERS CO-OPERATIVE SOCIETY LTD., BY ITS PRESIDENT GOPALAGOWDA, S/O SHIVAPPA, AGED ABOUT 36 YEARS, R/OFFICE AT YAADAANAHALLI, HUTTURU HOBLI, KOLARA TALUK, KOLAR DISTRICT.

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Digitally signed by SHWETHA RAGHAVENDRA Location: HIGH COURT OF KARNATAKA

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BELAGAANAHALLI MILK PRODUCERS CO-OPERATIVE SOCIETY LTD., BY ITS PRESIDENT B.K. SURESH, S/O LATE KRISHNAPPA, AGED ABOUT 42 YEARS, R/OFFICE AT BELAGAANAHALLI, HUTTURU HOBLI, KOLARA TALUK, KOLAR DISTRICT.

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PETITIONERS

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(BY SRI. MR. RAJGOPAL, SENIOR ADVOCATE FOR SRI. HN BASAVARAJU, ADVOCATE)

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AND:

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THE STATE OF KARNATAKA DEPARTMENT OF CO-OPERATION, M.S. BUILDING, DR. B.R AMBEDKAR VEEDHI, BENGALURU - 560001.

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REP. BY ITS PRINCIPAL SECRETARY.

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THE JOINT REGISTRAR OF CO-OPERATIVES SOCIETIES, BANGALORE DIVISION, NO.146, SAHAKARA SOUDHA, MARGOSA ROAD, MALLESHWARAM, BENGALURU 560003.

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KOLAR DISTRICT CO-OPERATION MILK PRODUCERS UNION, KOLAR, KOLAR DISTRICT 563010, BY ITS ADMINISTRATOR.

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KOLAR DISTRICT CO-OPERATIVE MILK PRODUCERS UNION, KOLAR BYE IT'S MANAGING DIRECTOR KOLAR, SRI. DR. GOPAL S/O NOT KNOWN TO THE PETITIONER, DISTRICT KOLAR 563101.

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RESPONDENTS

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(BY SRI. PRATHIMA HONNAPURA., AGA ALONG WITH SRI. YOGESH D NAYAK., AGA FOR R1 AND R2;

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SRI. JAYAKUMAR S PATIL., SENIOR ADVOCATE FOR SRI. DEVI PRASAD SHEETY FOR C/R3 AND R4.)

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THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER PASSED BY THE R-2 THAT IS JOINT REGISTRAR CO OPERATIVE SOCIETIES, BANGALORE DIVISION, BANGALORE DTD. 29.11.2024 IN NO. JRB/AMD/SECTION 12(6)/2024-25/08 AS PER ANNX-E AND ETC,.

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THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE SURAJ GOVINDARAJ

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ORAL ORDER

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Petitioners are before this Court seeking for the following reliefs:

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“Wherefore the petitioner most respectfully prays this Hon’ble Court be pleased to:

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a. Issue a writ in the nature of certiorari or any other writ to quash the order passed by the 2^nd respondent that in Joint Registrar Co-operative Societies, Bangalore Division, Bangalore dated 29.11.2024 in No. JRB/AMD SECTION 12(6)/2024-25/08 as per Annexure-E.

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b. Issue a writ in the nature of mandamus or any other writ to restore the order of the 2^nd respondent to the stage of issuing notice and convening General Body by the 3^rd Respondent Administrator in terms of the order under Section 12(5) of the Act as passed by the 2^nd Respondent dated 29.10.2024 in number JRB/AMD/SECTION 12(5)/02/2024-25 as per Annexure-D.

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c. Issue any appropriate writ, order or direction as this Hon’ble Court deems fit and proper in the fact and circumstances of the case and allow this writ petition in the ends of justice and equity.”

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The petitioners claim to be the primary societies affiliated with respondent No.3 - Kolar District Cooperation Milk Producers Union, Kolar. Registrar of Cooperative Societies vide communication dated 29.10.2024 at Annexure-D issued under Sub-section (5) Section 12 of the Karnataka Co-operative Societies Act, 1959 (hereinafter referred as to ‘Act’) called upon respondent Nos.3 / 4 to effect certain

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amendments to the bye-laws for the reason that earlier there was a single federal society for the unified District of Kolar, on the district of Kolar being bifurcated there are two separate Federal Societies formed for Chikkaballapur and Kolar districts.

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Respondent No.3 being the Federal Society for Kolar District, all taluks more particularly the taluk known as KGF not being represented by the Federal Society vide the said communication dated 29.10.2024 at Annexure-D, the registrar called upon the Federal Cooperative Society to carryout the amendment to the bye-laws. The amendment not having been carried out within a period of thirty days as prescribed under Sub-section (5) Section 12 of the Act, vide order dated 29.11.2024 under Sub-section (6) of Section 12 of the Act the registrar issued a certificate of amendment. The notice under Sub-section (5) Section 12 of the Act and the order under Sub-section (6) Section 12 of the Act are challenged in the present proceedings.

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The submission of learned Senior counsel Sri. MR. Rajgopal, learned counsel appearing for the petitioners is

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that any amendment which is carried out to the bye-laws of the Federal Cooperative Society would have bearing and impact on the members of the Federal Cooperative Society that is the petitioners herein and it is therefore, required for the petitioners to be given an opportunity to submit any objections that they may have to the amendment proposed by the Registrar.

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No meeting having been held in terms of Sub-section (5) Section 12 of the Act when the members could have made known their opinion and or grievance as regard the proposed amendment, the petitioners have been deprived of this opportunity and as such on account of default on the part of the administrator of respondent No.3 the registrar has passed an order under Sub-section (6) Section 12 of the Act. Therefore, it is the petitioners who being effected by the amendment are required to be given an opportunity to make their submissions as regards the proposed amendment.

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Learned Senior counsel Sri. Jayakumar S Patil, appearing for respondent Nos.3 and 4 which are one and the same in

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as much as respondent No.3 is the Federal Society represented by the administrator, respondent No.4 is the very same Federal Society represented by it’s managing director submits that the bifurcation of the earlier Federal society having been made for Chikkaballapur and Kolar districts. The amendment which has been suggested by the Registrar is for equal representation of all the talukas in the new society formed namely respondent No.3 for the district of Kolar.

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The Administrator who has been appointed is not on account of any default but on account of statutory requirement as per proviso to the Sub-section (5) of Section 28(A) of the Act in as much as respondent No.3 – Society having been formed on account of division of an existing Cooperative Society, the registrar is mandated to appoint an Administrator to the said cooperative society and in pursuance thereof the administrator having been appointed the question of the petitioners claiming as members, being primary co-operative societies would not be entitled to participate and or make any grievance as regard the proposed amendment. The amendment being

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necessitated to provide equal representation for all the taluks.

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His submission is that the amendment which has been proposed by the Registrar is for the purpose of giving effect to the provisions of the Act which would include the representation of all the taluks, the procedure under Rule 6 of the Karnataka Cooperative Societies Rules 1960 (hereinafter referred as to ‘Rules’) for the amendment to be placed before the members of the Cooperative Society and a resolution to be passed with 2/3^rd majority for approving the amendment would not be applicable in the present facts and circumstances. The mandate of proviso to Subsection (5) of Section 28(A) would not include a meeting of the members to be called, it is only after the elections are held that a meeting of the general body could be called and until then it is for the registrar to issue such directions as may be required for the purpose of implementation of the Act.

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Learned Additional Advocate General Smt. Prathima Honnapura, appearing for respondent Nos.1 and 2 would

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also reiterate the submissions made by learned Senior counsel Sri. Jayakumar S Patil, appearing for respondent Nos.3 and 4. Her submission is also that the decision rendered by this Court in The Milk Producer CoOperative Society Ltd. and Others Vs. State of Karnataka¹ and other connected matter dated 22.11.2024 would be made applicable and the registrar would provide an opportunity of hearing to the respondent No.3 Federal Cooperative Society before any orders are passed on the amendment proposed.

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Heard Sri. MR Rajgopal, learned Senior counsel for Sri. HN Basavaraju, learned counsel for the petitioners and Smt. Prathima Honnapura, learned Addistional Advocate General along with Sri. Yogesh D Naik, learned AGA for respondent Nos.1 and 2, Sri. Jayakumar S Patil, learned Senior counsel for Sri. Devi Prasad Shetty, learned counsel for respondent Nos.3 and 4 and perused the records.

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The short question that would arise for consideration is,

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1 WP.No.30242/2024

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‘Whether the petitioners who claim to be members of Federal Cooperative Society would be entitled under Sub-section (6) of Section 12 of the Act to submit their objections on the amendment, when an amendment proposed by the registrar under Sub-section (5) of Section 12 of the Act has not been given effect to by the Cooperative society either by the board elected or by the administrator appointed?’

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Section 12 of the Act is hereunder reproduced for easy

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reference:

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“12. Amendment of bye-laws of a co-operative society.

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(1) A co-operative society may amend its bye-laws in conformity with the provisions of this Act, and the rules made thereunder from time to time:

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Provided that every co-operative society shall make amendments to its bye-laws in conformity with the amendments made to this Act or the rules from time to time within ninety days from the date of coming into force of the said amendments.

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(1-A) Every proposal for such amendment shall be accompanied by such fee as may be prescribed, and different fees may be prescribed for different class or classes of co-operative societies.

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(2) Every proposal for such amendment shall be forwarded to the Registrar and if the Registrar is satisfied that the proposed amendment,-

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(i) is not contrary to the provisions of this Act and the rules;

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(ii) does not conflict with co-operative principles;

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(iii) satisfies the requirements of sound business;

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(iv) will promote the economic interests of the members of the society; and

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(v) is not inconsistent with the principles of social justice;

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[he shall, within a period of three months from the date of receipt of the proposal, register the amendment.]

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(2-A) If the Registrar is unable to dispose of such application within the period specified in sub-section (1), the amendment of bye-laws shall be deemed to have been registered.

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(3) When the Registrar registers an amendment of the bye- laws of a society or where an amendment of the bye-laws is deemed to have been registered, he shall issue to the society a copy of amendment certified by him and such certificate shall be conclusive evidence that the amendment of the bye-law has been duly registered or deemed to be registered, as the case may be.]

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(4) Where the Registrar refuses to register an amendment of the bye-laws of a co-operative society, he shall communicate the order of refusal, together with the reasons therefor, to the society.

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(5) If it appears to the Registrar that any amendment of the bye-laws of a Co-operative Society is necessary or desirable to give effect to the provisions of the Act made thereunder, the Registrar may, by order, may direct the Co-operative Society, to make the amendment proposed by him in such manner as may be prescribed and within such time as he may specify.

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(6) If such amendment is not made by the Co-operative Society within time specified in the said order, notwithstanding anything contained in the Act, the Registrar may, after giving the Co- operative Society an opportunity of being heard, register the said amendment and forward a copy thereof to the Cooperative Society along with a certificate signed by him which shall be conclusive evidence that the amendment has been duly registered.”

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A perusal of Sub-section (1) of Section 12 indicates that a co-operative society may amend its bye-laws in conformity with the provisions of the Act and Rules made thereunder in the time and the manner and methodology prescribed in Sub-sections (1), 1(a), 2, 2(a) and 3.

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Sub-section (4) of Section 12 of the Act provides for the registrar to refuse to register any amendment or any byelaws which have been approved by the cooperative society. Therefore, Sub-sections (1) to (4) of Section 12 of the Act deals with amendments voluntarily made by the Cooperative Society and it is in relation thereto that sub rules (1) to (5) of Rule 6 of the Rules would be applicable since it deals with a situation where a Cooperative Society proposes to amend its bye-laws that is to say the amendment is voluntarily made on part of the Cooperative Society and in that regard that the members of the society would have a right to participate in a meeting and vote on the said amendment and before so voting to make their position clear.

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Rule 6 of the Karnataka Co-operative Societies Rules, 1960

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reads as under:

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"Rule6: Procedure regarding amendment of byeLaws(1)

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Where a Co-operative Society proposes to amend its bye-laws, no such amendments shall be made save by a resolution passed by a two-thirds majority of the members present and voting, at a general meeting of the society;

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(2) No such resolution shall be valid, unless notice of clear fifteen days of the text of the existing byelaw, the text of the proposed amendment and reasons therefore" has been given to the members of the society in accordance with the bye-laws;

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(3) In every case in which a society proposes to amend its bye-laws, an application shall be made to the Registrar together with-

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(a) a copy of the resolution referred to in sub-rule (1);,

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(b) such number of copies of the proposed amendment as may be specified by the Registrar in this behalf;

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(bb) a treasury challan or Demand Draft in favour of the Registrar for having remitted the fee specified below:

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Area of Society	operation of a	Amount of fees
(1)	Less than a taluk	Rs.1000/-
(2)	Taluk and above but less than a district	Rs.2,500/-
(3)	District and above but less than region	Rs.5,000/-

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(4) Region and above	Rs.12,500/-

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(c) a certificate signed by the Presiding Authority of the meeting that the procedure specified in sub-rule (1) and sub-rule (2) and in the bye-laws has been followed; and

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(d) any other particulars that may be required by the Registrar in this behalf.

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(4) Every such application shall be made within sixty days from the date of the general meeting at which such amendment was passed:

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Provided that the Registrar may condone the delay, if any, for sufficient cause.

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(5) When the Registrar registers an amendment of the bye-laws of a Co-operative Society he shall send a copy thereof to the financing bank, if any, to which the Co-operative Society is affiliated.

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(6) Where the Registrar proposes any amendment to the bye-laws of a Co-operative Society under SubSection (5) of section 12, the authority competent to convene the general meeting shall place such proposal before the annual or special general meeting, as the case may be, and a decision on such proposal shall be taken at such meeting and the Co-operative Society shall carry out amendment of bye-laws as directed by the Registrar as per section 12(5)of the Act."

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A perusal of sub Rule (1) to (5) would indicate that the same relate to voluntary amendments made by the society. A perusal of sub Rule (6) above would indicate that even where the Registrar were to propose any amendments to the Bylaws, that is to say, that the amendment is not voluntary but at the instance of the

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Registrar, then in that event the authority competent to convene the General Meeting, shall place such proposal before the Annual or Special General Meeting, as the case may be and the decision on such proposal shall be taken at such meeting.

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The above would mandate that there is a duty cast on the Board, if Board were to be elected or an Administrator were to be appointed to place any proposal for amendment suggested or recommended by the Registrar before the Annual or Special General Meeting and it is the said Annual or Special General Meeting of the members who can take a decision on such proposal to carry out the amendment or not.

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It is in the event of the said Annual or Special General Meeting not approving the amendment, that Sub-Section (6) of Section 12 would come into play and the amendment if not made by the Co-operative Society within the time specified by the Registrar in the order, the Registrar after giving Co-operative Society an opportunity

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of being heard can direct the amendment and forward a copy thereof to the Co-operative Society.

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In the present case, the mandate under Sub Rule (6) of Rule 6 of the Rules 1960 has not been complied with by the authority competent to convene the Special General Meeting in this case the administrator who had been appointed in terms of proviso to Sub-Section (5) of Section 28 (A).

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There was a duty which was cast on the administrator to convene an Annual or Special General Meeting and place the proposal and also the order of the Registrar made under Sub-Section (5) of Section 12 before the said annual or special general meeting.

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In that view of the matter, I am of the considered opinion that this procedure not having been followed the petitioners cannot be deprived of their right for the Annual or Special General Meeting to be convened and for them to vote on the said proposal/order of the Registrar.

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In the event of the general meeting approving the proposal/order of the Registrar, the question of the

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procedure under Sub-Section (6) of Section 12 being required to be followed would not at all arise.

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It is in event of the Annual or Special General Meeting, in this case the special general meeting not approving the proposals/order of the Registrar, then it would be for the Registrar to follow the procedure under Sub-Section (6) of Section 12 which has been dealt with by this Court in

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The Milk Producer Co-Operative Society Ltd. and Others Vs. State of Karnataka² . its order dated 27.11.2024 in W.P.No.30242/2024 and in such a situation it is for the Registrar to provide an opportunity by issuing notice and hear the Society and not the members. In that view of the matter, I pass the following:

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ORDER

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i. Writ petition is partly-allowed.

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ii. A certiorari is issued, the order passed by the 2^nd respondent-Joint Registrar Co-operative Societies, Bangalore Division, Bangalore

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2 WP.No.30242/2024

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dated 29.11.2024 in No.JRB/AMD/SECTION 12(6)/2024-25/08 at Anneuxre-E is hereby quashed.

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iii. The 3^rd respondent-Administrator is directed to call for a special General Meeting by issuing necessary notices to the concerned primary members giving the notice as required under the Act.

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iv. Notice to be issued within on or before 25^th December 2025.

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SD/(SURAJ GOVINDARAJ) JUDGE

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PNV/TMP List No.: 1 Sl No.: 22

Ombatthugulli Milk Producers Co. Operative Society Ltd. v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

Ombatthugulli Milk Producers Co. Operative Society Ltd. v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

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