Rohan S/O Anil Salave Vs the State of Karnataka

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NC: 2025:KHC-D:1577 WP No. 100510 of 2025

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH

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DATED THIS THE 27^TH DAY OF JANUARY, 2025

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BEFORE

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THE HON'BLE MR. JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 100510 OF 2025 (CS-RES)

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BETWEEN:

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ROHAN S/O. ANIL SALAVE, AGE. 45 YEARS, OCC. AGRICULTURE, CHIEF PROMOTER, PROPOSED SHRI VISHWANATHRAV SALAVE VIVIDODESH PRATHAMIK GRAMEEN KRUSHI SAHAKARI SANGH NIYAMI, NIPPANI, AT. NIPPANI, TQ. CHIKKODI, DIST. BELAGVI- 591237.

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…PETITIONER

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(BY MISS. SANJANA S. MUDHOL, AND SRI. ANAND A. BAGEWADI, ADVOCATES)

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AND:

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Digitally signed by VISHAL NINGAPPA PATTIHAL Location: High Court of Karnataka, Dharwad Bench

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THE STATE OF KARNATAKA, REPRESENTED BY ITS SECRETARY DEPARTMENT OF CO-OPERATION, M.S. BUILDING, BENGALURU- 560001.

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THE ASSISTANT REGISTRAR OF CO-OPRATIVE SOCIETY, CHIKKODI SUB DIVISION, CHIKKODI, AT. CHIKKODI, DIST. BELAGAVI. PIN. 591201.

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…RESPONDENTS

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(BY SMT. KIRTHILATHA R. PATIL, HCGP)

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THIS WRIT PETITION IS FILED UNDER ARTICLE 226 AND 227 OF THE CONSTITUTION OF INDIA IS PRAYING TO, TO ISSUE WRIT IN THE NATURE OF CERTIORARI TO QUASH THE IMPUGNED ORDER DATED 20/01/2024 IN NO. AR-11/RSR/114/2023-24 PASSED BY THE 2^ND RESPONDENT VIDE ANNEXURE-D. TO ISSUE WRIT IN THE NATURE OF MANDAMUS DIRECTING THE RESPONDENT NO. 2 TO GRANT PERMISSION TO FLOATING OF THE SHARE AMOUNT FOR

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PRE-REGISTRATION OF THE SOCIETY IN THE NAME OF THE PROPOSED SHRI VISHWANATHRAV SALAVE VIVIDODESH PRATHMIK GRAMEEN KRUSHI SAHAKARI SANGH NIYAMIT, NIPPANI, TQ. NIPPANI, DIST. BELAGAVI, BY ALLOWING THIS WRIT PETITION IN THE INTEREST OF JUSTICE AND EQUITY. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THERIN AS UNDER:

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ORAL ORDER

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(PER: THE HON'BLE MR. JUSTICE M.NAGAPRASANNA)

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The petitioner is before this Court, calling in question an order 20.01.2024, by which permission for collection of share amount in the stage of pre-registration of Society, is declined.

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The learned counsel, Miss Sanjana S. Mudhol appearing for the petitioner, submits that, in plethora of cases, the Coordinate Benches of this Court has passed several orders, which would enure to the benefit of the petitioner. The orders so passed, are as follows:

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W.P.NO. 104197/2021

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“The petitioner, which is a Co-operative Society, has presented this petition challenging the order by which the Assistant Registrar has permitted registration of the 5th and 6th respondents as a Co-operative Society under Section 7 of the Karnataka Co-operative Societies Act, 1959 (for short, 'the KCS Act").

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2 It is the specific case of the petitioner-society that the Chief Promoters of 5th and 6th respondents were all members of the petitioner-society and they had made an application and they had promoted the formation of the 5th and 6th respondents and sought for its registration. The averment in the writ petition in this regard is as follows:

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"It is submitted that, the respondent Nos.5 and 6 who are the chief promoters of their respective proposed society and other promoters with them all are the members of the petitioner Society alone.

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It is submitted that, the list of proposed members submitted by the respondent Nos.5 and 6 with the 4 respondent are almost all the members of the petitioner society. Besides being so all the proposed members even including the chief promoter and promoters aiso members as well as taken loan on different heads from the petitioner society being members of it. The majority of the members of the proposed societies are defaulters with the petitioner society."

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3. It is thus clear that the petitioner-society is aggrieved by a faction of its members in deciding to form a new Co-operative Society and seek for its registration. At the outset before considering the contentions advanced by the petitioner on the merits or demerits of the registration made by the authorities, it would have to be

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essentially decided as to whether the petitioner-Society as locus standi the question there is a registration of another Co-operative Society.

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4. The learned Senior Counsel Sri Gurudas Kannur contended that the petitioner-Society has a right to challenge the registration granted in favour of the 5th and 6th respondents since they would also be operating within the same jurisdiction and this would not make the respondent Nos.5 and 6 viable.

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5. He also contended that the registration if permitted. would directly lead to an unhealthy atmosphere and would be against the principles of cooperative moment. He sought to highlight that one of the consideration for registering as Society was the prevention of overlapping of jurisdictions of similar cooperative Society as envisaged under Rule 3-B(iii) of the Karnataka Co-operative Societies Rules, 1960 (for short, 'the Rules, 1960').

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6. He also sought to contend that if the entire process of registration was examined, it would be clear that the same had been done in gross violation of the circulars issued by the Government.

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7. The learned Senior Counsel also made a submission that the question of locus standi should not be gone into since the writ petition filed by the petitioner-Society on an earlier occasion had been entertained by this Court and infact the writ petitions were allowed and the matters were remanded to the registering authority at the

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instance of the petitioner-society, to reconsider the question of registration of respondent Nos.5 and 6.

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8. Learned Senior counsel places reilance on the decision of a co-ordinate bench of this Court passed in the case of Prathamik Krushi Pattin Sahakari Sangh Niyamit, Chamakeri of others vs. The State of Karnataka and others, reported in 2019 (2) KLJ 49.

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9. Learned counsel Sri Mallikarjunswamy B. Hiremath, appearing for respondent Nos.5 and 6 sought to support the order passed in their favour. He also raised the ground of lack of locus standi of the petitioner-Society to challenge the registration of the 5th and 6th respondents and he placed strong reliance on the Judgment rendered by the Hon'ble Supreme Court in the case of Jasbhai Motibhai Desai v. Roshan Kumar Haji Bashir Ahmed and others, reported in (1976) 1 SCC 671.

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10. As stated above, the primary question to be considered is as to whether a rival Co-operative Society

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possesses the locus standi to question the registration of a competing co-operative Society.

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11. It is to be borne in mind that the Karnataka Cooperative Societies Act, 1959 (for short, 'the Act') was enacted with the objective to promote voluntary formation of autonomous functioning, democratic control and professional management of Co-operative Societies. The objective behind forming of a co-operative moment, is essentially to encourage the co-operative moment which would result in common benefit to all the members

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who work collectively. The very essence of the Cooperative moment is to encourage formation of the cooperative societies.

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12. It is for thus precise therein, there is no bar on the number of co-operative Societies that can be registered in an area. The Act essentially seeks to regulate the registration of a co-operative society and the manner in which the co-operative societies are to be managed and also in ensuring the rights and liabilities of the members are protected.

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13. Section 6 of the Act provides for Bling of application with the Registrar in the prescribed form seeking for registration of a co-operative society. The applicants are required to furnish all such information as required by the Registrar. One of the requirements is that, in respect of a co. operative Society which has the object of creation of funds to be lent to its members, is that of the applicants should reside in the same village or the town or in the proposed area of co. operation of the co-operative society.

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14. There is absolutely no requirement of the society of the applicant to indicate the existence of any rival society in the area within which it intends to operate. On the basis of the information furnished by the promoters, the Registrar is required to be satisfied that the proposed Society has a reasonable chance of success and would be economically viable and if he so satisfied, he may register the society.

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15. No doubt, the Registrar is required to take into consideration certain factors such as population in the area of the operation of the proposed co-operative society, the assessment of economic and financial feasibility, like collection of share, funds from the shareholders and also the overlapping of the existing similar co-operative societies.

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16. The factors prescribed under Rule 3-8 of the Rules, 1960 are essentially factors, which would aid in determining whether the proposed society has a reasonable chance of success and is likely to be to economically viable. It is for the applicant to satisfy the financial viability and the likelihood of chances of success of the proposed society by production of relevant material.

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17. By the very nature of the rule, it is obvious that a rival competing co-operative society would be able to establish the negative i.e., the proposed Society cannot succeed or cannot be financially viable. Obviously, every competing Society would put forth the plea that the proposed Society would not be financially viable only to protect its own turf and prevent kind of competition. It is quite probable that an existing society would want to create or maintain a monopoly and would not like any competition or the probability of a competitor eating into its business.

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18. The provisions of the Act and Rules are designed to enable the Registrar to satisfy himself regarding the financially viability and likelihood of a reasonable chance

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of success of the applicant society basis and for this purpose the only criteria would be the material produced by the applicant If the Registrar is satisfied that the proposed applicant meets the prescribed criteria, registration cannot normally be refused.

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19. It is also relevarit to notice that the appeal that is provided under S. 106 against an order passed under Section 7 of the Act can obviously relate only to a refusal to register. The provisions for filing of an appeal does not provide for filing of an appeal by any person or by an aggrieved person. Section 106 merely states that an appeal would lie against an order passed under S. 7 of the Act. Since in the matter of registration, the lis can only be with the applicant and the Registrar and no other person or entity would have the lis and consequently have a right to prefer an appeal.

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20. It is to be stated here that there cannot be any person aggrieved by the registration of the co-operative society. This is fundamentally because the Act does not give any semblance of right to any other person to have a say in the registration of another co-operative society. It is therefore clear that the petitioner being a competing co-operative society, would have absolutely no locus standi to question the registration of the co-operative society.

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21. The Judgment relied upon by the learned Senior courisel in the case of Parathamik Krushi Pattin Sahakari Sangh Niyamit and others v. The State of Karnataka and others, reported in 2019(2) KLJ 49 can also be no avail

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because in that case this Court did not examine whether a rival competing co-operative society had the locus standi to challenge the registration of another co-operative Society. No doubt, in that case, the Court has stated that registering authority is required to hear the existing credit co-operative Society also at the time of registration. However, that was a case in which the Court was examining whether the Assistant Registrar of co-operative societies was right in permitting the respondent Nos.5 and 6 societies therein to collect initial share funds. In that decision, there is absolutely no examination of the legal right of an existing co-operative society to challenge the registration of another co-operative society.

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22. The reliance placed on Rule 3-B of the Rules, 1960 regarding the overlapping of the existing similar cooperative society as a factor to be considered by the registering authority in order to confer locus on the petitioner-society cannot also be accepted. The factor of overlapping of existing similar co-operative societies is to be considered by the registering authority so as to only satisfy him regarding the financial viability of the proposed society. If the registering authority is satisfied that the proposed society has a reasonable chance of success and can be financially viable, it would be permissible for him to grant registration notwithstanding the fact that there exist similar co-operative societies in the same area of operation. It is to be kept in mind that allowing one co-operative society to oppose the creation of another co-operative society would basically be against very essence of the co-operative moment.

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23. On the other hand, the Judgment relied upon by the learned counsel for the respondent Nos.5 and 6 stated supra, would be aptly applicable to the present case. The Hon'ble Supreme Court in paragraph No.36 has stated as follows:

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36. …..To have a "standing to sue", which means locus standı to ask for relief in a court Independently of a statutory remedy, the plaintiff must show that he is injured, that is, subjected to or threatened with a legal wrong, Courts can intervene only where legal rights are Invaded. "Legal wrong" requires a judicially enforceable right and the touchstone to judiciability is injury to a legally protected right. A nominal or a highly speculative adverse affect on the interest or right of a person has been held to be insufficient to give him the "standing to sue" for judicial review of administrative action. Again the "adverse affect" requisite for "standing to sue" must be an "illegal effect". Thus, in the undermentioned cases, it was held that injury resulting from lawful competition not being a legal wrong, cannot furnish a "standing to sue" for judicial relief."

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24. This enunciation of the law by the Hon'ble Supreme Court makes it clear that the petitioner-society has no suffered a legal wrong so as to empower it to approach this court. I am therefore of the view that the petitioner has no locus standi to challenge the registration

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of respondent Nos.5 and 6. The writ petition is therefore dismissed.”

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W.P. NO. 100493/2024

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“The petitioner who intends to establish a cooperative society submitted an application with the 3rd respondent seeking permission for collection of share amount. Based on the report submitted by the Sale Officer, respondent No.3 rejected the proposal stating that existing societies are likely to be affected. Hence, this petition.

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2. Heard the learned counsels for the parties.

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3. The petitioner submitted an application only for permission to collect shares with an intention to establish a co-operative society and at this stage respondent No.3 ought not to have rejected the application since the question of economic viability and chances of success of the co-operative society to be established is a matter, which requires to be considered at the time of registration.

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4. Rule 3 of the Karnataka Co-operative Societies Rules, 1961, deals with formalities for registration and sub-rule (3) states that the registrar on being satisfied that the proposed society has reasonable chances of success and is going to be economically viable may permit the chief promoter to collect such amount of share capital from such number of persons intending to become the members of the proposed society within such period as he may specify. In other words, the registrar is under an

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obligation to hear the petitioner to satisfy himself that the proposed society has reasonable chances of success and is going to be economically viable.

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5. In the instant case, respondent No.3 without giving an opportunity of hearing to the petitioner to satisfy that the proposed society has reasonable chances of success and is going to be economically viable, has rejected the application and the same is in violation of principles of natural justice.

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6. Accordingly, the writ petition is allowed. The impugned order dated 22.12.2023 passed by the 3rd respondent at Annexure-E is hereby quashed.

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7. Respondent No.3 to grant permission to collect the of share amount for pre-registration Vividhoddesha Prathamik Grameena Krushi Sahakari Sangha Niyamita, Hombaradi, Nippani talulka, subject to petitioner satisfying other requirements of law, after providing an opportunity of hearing to the petitioner.

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8. Petitioner to be present before respondent No.3 on 20.02.2024 at 11.00 a.m. without awaiting for further notice from respondent No.3.”

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W.P.NO. 103087/2024

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“Heard the learned counsel for the petitioner Miss.Sanjana S. Mudhol and the learned HCGP for the respondents.

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2. The petitioner is an agriculturist and permanent resident of Arabyanwadi village, Chikkodi takuk, district

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Belagavi. He was not enrolled as member of any of the Primary Co-operative Societies. The petitioner and other similarly situated farmers have called for a Gram Sabha meeting at Arabyanwadi village to address their grievances and problems suffered by the farmers in the village and therefore, decided to form a society in the name of Shri Halsiddeshwar Vividodesh Prathmik Grameen Krushi Sahakari Sangh Niyamit, Arabyanwadi to the welfare of the farmers in the village.

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3. In view of the same, the petitioner made a representation to respondent No.2 on 17.10.2023 to grant permission for floating the share collection from the eligible farmers for registration of the Co-operative Society in the name of Shri Halsiddeshwar Vividodesh Prathmik Grameen Krushi Sahakari Sangh Niyamit, Arabyanwadi. Respondent No.2 sent a letter to the Co-operative Inspector requesting him to submit a report regarding economic viability of the proposed society by a letter dated 08.11.2023 without hearing the petitioner or notifying the petitioner. The Co-operative Inspector submitted a report which was also without notice and knowledge of the petitioner and based on the said report, respondent No.2 without hearing the petitioner passed the impugned order and rejected the proposal for grant of floating of the share collection to the proposed permission of the society by order dated 22.12.2023, which is impugned herein.

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4. It is contended by the learned counsel for the petitioner that respondent No.2 has rejected the proposal for floating of the share collection only on the reason that it is not viable and there could be overlapping of the

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society, that there are already five societies registered in the same area. Therefore, the question of the present society being successful for overlapping other Co-operative Societies already existing with the same qualities which is against the guidelines prescribed by NABARD.

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5. Learned counsel for the petitioner contends that the said reasoning provided by respondent No.2 is arbitrary, illegal and unsustainable. It is without application of judicial mind. There is no such requirement forthcoming under the Act or the Rules for permitting floating of shares as to there being a chance of success of Co-operative Society and economic viability. There is no application of mind by the respondent while passing the impugned order and is without even hearing and notifying the petitioner has out rightly rejected the proposal for floating of share collection for formation of the society.

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6. Learned counsel for the petitioner relies upon the judgment of a Co-ordinate Bench of this Court in WP No. 100493/2024 dated 06.02.2024 wherein in similar matter on similar grounds the Assistant Registrar of Co-operative Societies has rejected the application without giving an opportunity to the petitioner to satisfy the requirement and chances of success and viability. The writ petition came to be allowed. Another judgment has been also relied by the learned counsel for the petitioner in WP No.104197/2021 which also goes in favour of the petitioner for the reason that while considering the application for economic viability and success of the floating of shares, the respondent may not look into the existence of societies or viability of the other Co-operative

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Societies. It is only on the basis of information furnished by the promoters that the Registrar is required to be satisfied on the proposed floating of shares by the Society to have reasonable chance of success and economic viability that is required to be satisfied which has to be considered by the Registrar, which is not been done in the present case.

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7. It is also not the case of the respondent that there are other rival Co-operative Societies which have filed any complaint or objection to the floating of shares of the present petitioner or formation of the societies. Under these circumstances, there is force in the argument put forth by the learned counsel for the petitioner and is appreciated by this Court for allowing the petition. Hence, the petition is required to be allowed. Accordingly, it is allowed. Hence, I pass the following order:

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ORDER

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i) The petition is allowed.

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ii) The impugned order dated 22.12.2023 in No.AR11/RSR/117/2023-24 passed by respondent No.2 vide Annexure-C is hereby quashed.

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iii) The respondent is directed to collect the share amount for floating of the shares of society for registration subject to the petitioner satisfying other requirements of the law and providing an opportunity to the petitioner before passing any such orders.”

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In the light of the orders of the Coordinate Benches

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(supra), the petition deserves to succeed.

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For the reasons aforementioned, I pass the

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following:

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ORDER

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i. Petition is allowed.

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ii. The impugned order dated 20.01.2024 passed by the 2^nd respondent at Annexure-D, is hereby quashed.

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iii. Respondent No.2 to grant permission to collect the share amount for pre-registration of Society in the name Shri Vishwanathrav Salave Vividodesh Prathmik Grameen Krushi Sahakari Sangh Niyamit, nippani, Tq. Nippani, Dist. Belagavi, subject to petitioner satisfying other requirements of law, after providing an opportunity of hearing to the petitioner.

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iv. Petitioner to be present before the respondent No.2 on 20.02.2025 at 11.30 a.m., without awaiting for further notice from respondent No.2.

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Sd/(M.NAGAPRASANNA) JUDGE

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KGK / List No.: 1 Sl No.: 39

Rohan S/O Anil Salave v. the State of Karnataka

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Rohan S/O Anil Salave v. the State of Karnataka

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