1992 (8) TMI 291 - HC - Indian Laws

Co-op Bank not 'State' under Constitution: Writ petition dismissed.

The Shamrao Vithal Co-Operative Versus Padubidri Pattabhiram Baht And Another

The court held that a multi-State co-operative bank is not considered 'State' under Article 12 of the Constitution, and therefore, a writ petition is not ... - Issues Involved:1. Whether the appellant bank is 'State' under Article 12 of the Constitution.2. Whether a writ petition is maintainable against the appellant bank.Issue-Wise Detailed Analysis:1. Whether the appellant bank is 'State' under Article 12 of the Constitution:The primary issue was whether the Shamrao Vithal Co-operative Bank Ltd., a multi-State co-operative society, falls within the definition of 'State' under Article 12 of the Constitution. The learned single Judge initially held that the appellant bank was 'State' under Article 12, making it subject to writ jurisdiction. However, the Division Bench referred this issue to a larger bench for determination.The court examined various precedents to understand when a corporate body can be considered 'State' under Article 12. In Ramana Davaram Shetty v. The International Airport Authority of India, the Supreme Court provided several factors to determine if a corporation is an instrumentality or agency of the Government, including financial assistance from the State, State control over management and policies, and whether the corporation performs public functions closely related to governmental functions. However, these factors are not exhaustive, and the cumulative effect of these factors must be considered.In Ajay Hasia v. Khalid Mujib Sehravardi, the Supreme Court reiterated these tests but cautioned against stretching the definition too far to include every autonomous body with some nexus to the Government. The court emphasized that the test is whether the corporation is an instrumentality or agency of the Government, not how it is created.The court also reviewed the constitution and functioning of the appellant bank under the Maharashtra Co-operative Societies Act, 1960, the Multi-State Co-operative Societies Act, 1984, and the Banking Regulation Act, 1949. The court noted that the ultimate control and management of a multi-State co-operative society vests in the general body of its members, not the State. The court found no deep and pervasive State control over the appellant bank, which is a crucial factor in determining whether it is 'State' under Article 12.The court also examined similar cases where various High Courts and the Supreme Court held that co-operative societies and banks do not fall under the definition of 'State' under Article 12. For instance, the Kerala High Court in P. Bhaskaran v. Additional Secretary, Agricultural (Co-operation) Department, Trivandrum, and the Orissa High Court in Banabihari Tripathy v. Registrar of Co-operative Societies concluded that co-operative societies are not instrumentalities of the State due to the lack of deep and pervasive State control.The court also considered the argument that the appellant bank performs public functions, which should make it 'State' under Article 12. However, the court rejected this broad proposition, noting that performing public functions alone is insufficient to confer 'Statehood.' The court emphasized that other factors, such as the extent of State control and whether the organization is entirely financed by the State, must also be considered.In conclusion, the court held that the appellant bank does not fall within the expression 'State' under Article 12 of the Constitution.2. Whether a writ petition is maintainable against the appellant bank:Given the conclusion that the appellant bank is not 'State' under Article 12, the court held that a writ petition is not maintainable against the appellant bank. The court emphasized that writ jurisdiction applies to bodies that fall within the definition of 'State' under Article 12, and since the appellant bank does not meet this criterion, the writ petition filed by the first respondent is dismissed.Conclusion:The court concluded that a co-operative society registered under the Maharashtra Cooperative Societies Act, 1960, and the Multi-State Co-operative Societies Act, 1984, which carries on the business of banking and is governed by the Banking Regulation Act, 1949, does not fall within the expression 'State' under Article 12 of the Constitution of India. Consequently, a writ cannot be maintained against the appellant bank. The appeal was allowed, and the writ petition was dismissed with no order as to costs.