State control test for co-operative societies under depositor protection law limits exclusion to real, pervasive government control.

Section 2(4) of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 excludes only a co-operative society owned or controlled by the State Government or the Central Government. A society registered under the Karnataka Co-operative Societies Act, 1959 remains a body corporate governed by its bye-laws and managed by its general body and managing committee. Mere registration, audit supervision, or regulatory oversight by the Registrar does not amount to the real, deep and pervasive State control required for exclusion. On the facts, the society was not shown to be an assisted society or otherwise under State control, so it remained within the definition of financial establishment and the request to quash the proceedings was rejected.

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Issues: Whether the petitioner's co-operative society was a financial establishment within the meaning of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004, or stood excluded as a co-operative society owned or controlled by the State, so as to justify quashing of the criminal proceedings.

Analysis: Section 2(4) of the Karnataka Protection of Interest of Depositors in Financial Establishment Act, 2004 excludes only a co-operative society owned or controlled by the State Government or the Central Government. A society registered under the Karnataka Co-operative Societies Act, 1959 remains a body corporate governed by its bye-laws and managed by its general body and managing committee. Mere statutory registration, audit supervision, or regulatory control by the Registrar does not amount to direct or indirect State control. The test is one of real, deep and pervasive control, not ordinary supervisory regulation. On the facts, the petitioner's society was not shown to be an assisted society or otherwise under State control.

Conclusion: The petitioner's society was not shown to be owned or controlled by the State and therefore did not fall outside the definition of financial establishment. The request to quash the proceedings was rejected.

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