Conversion of a co-operative bank into a company upheld; certificate of incorporation treated as conclusive and writ relief refused.

Part IX of the Companies Act, 1956 was construed broadly enough to permit a duly constituted multi-State co-operative bank to register as a joint stock banking company when the statutory requirements were met. The certificate of incorporation issued on conversion was treated as conclusive evidence of compliance with the incorporation conditions, so the validity of the new company could not be challenged merely by attacking the certificate. On conversion and statutory vesting, the earlier co-operative society ceased to survive as an existing entity, and the court refused discretionary writ relief because settled rights, passage of time, and third-party interests would be disturbed.

---

---

Issues: (i) Whether a multi-State co-operative bank could be converted into a joint stock banking company under Part IX of the Companies Act, 1956. (ii) Whether the certificate of incorporation issued on such conversion was conclusive and insulated the incorporation from challenge. (iii) Whether the continued existence of the co-operative society survived after conversion, and whether discretionary relief should be granted in the circumstances.

Issue (i): Whether a multi-State co-operative bank could be converted into a joint stock banking company under Part IX of the Companies Act, 1956.

Analysis: Part IX was treated as a code for registration of bodies otherwise duly constituted according to law and consisting of seven or more members. The expression used in that part was held to be broad enough to include a co-operative society, and the court found that the conversion mechanism did not require an express enabling provision in the co-operative law if the statutory requirements under Part IX were satisfied. The relevant filings and resolutions were found to have been made, and the scheme of registration was held to accommodate such conversion.

Conclusion: Yes. The conversion was held to be permissible in law.

Issue (ii): Whether the certificate of incorporation issued on such conversion was conclusive and insulated the incorporation from challenge.

Analysis: The certificate of incorporation was treated as conclusive evidence that the statutory preconditions for incorporation had been complied with. The court held that the validity of incorporation could not be assailed merely by attacking the certificate, and that the proper course, if any, was to proceed under the statutory regime for winding up rather than to unsettle the incorporation itself.

Conclusion: Yes. The certificate of incorporation was held to be conclusive.

Issue (iii): Whether the continued existence of the co-operative society survived after conversion, and whether discretionary relief should be granted in the circumstances.

Analysis: On conversion and statutory vesting, the assets and liabilities of the earlier entity were treated as passing to the new company, and the earlier co-operative registration was held to stand cancelled or cease to exist as a society. The court also took into account the long passage of time, the growth of the converted bank, the rights of shareholders and third parties, and the hardship that would follow if the conversion were now undone. On that basis, relief under article 226 was refused in the exercise of discretion.

Conclusion: No. The earlier society was held not to survive as an existing entity after conversion, and discretionary relief was declined.

Final Conclusion: The writ petitions were rejected because the conversion into a banking company was upheld, the incorporation was treated as legally effective, and the court declined to disturb the settled position created after conversion.

Ratio Decidendi: Part IX of the Companies Act, 1956 was construed broadly enough to permit registration of a duly constituted co-operative society as a company, and once incorporation occurs the certificate is conclusive and the resulting vested rights will not ordinarily be unsettled in the exercise of writ jurisdiction.

---