TMI Blog2018 (6) TMI 1766X X X X Extracts X X X X X X X X Extracts X X X X ..... irs will be governed and controlled by the Board of Management constituted under Section 28(A) of the KCS Act. Merely because the society is required to be registered under a particular statute or that it is required to submit its audited report to the particular Department of the Government annually, would by itself not make the society as the one under the direct control of the State. Even though the present petitioner Society is also a Body Corporate, but under KCS Act, the final Authority of the said Society vests in the General Body of its members and under Section 28A of the KCS Act. The Societies managed by the Managing Committee constituted in terms of the bye-laws. Final Authority so far as the petitioner-Society is the general body and not the Registrar of Co-operative Societies or State Government. Therefore, merely because the petitioner-Society is regulated in its activities by the Registrar or Joint Registrar of Co-operative Societies, but the same cannot be said that the said regulatory act is by any means a direct or indirect control over the affairs of the Society bringing it within the ambit of the definition of Section 2(4) of KPID Act as the Co-operative Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Special Court in taking cognizance of the matter, the present petitioner has challenged with a prayer to quash the entire proceedings pending before the Special Court. 4. The 1st respondent is appearing as a party in person. The 2nd respondent/State is being represented by the learned High Court Government Pleader. 5. Though this matter was listed in the admission list, however with the consent from both sides, the matter is taken for its final disposal. 6. Heard the arguments from both sides. 7. Learned counsel appearing for the petitioner in his arguments mainly canvassed a single point that the definition of 'Financial Establishment' as defined under Section 2(4) of the KPID Act excludes Co-operative Society controlled by the State. Since the Societies of the present petitioner are controlled by the State, KPID Act is not applicable. As such, entire proceedings pending before the Special Court deserves to be quashed. 8. Sri. Nana Dhondiba Desai, respondent No. 1, who is appearing as a party-in-person, in his submissions submitted that there are no material to show that the petitioner-Society is being controlled by the State. Further in the State o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ety registered under KCS Act is a Society controlled by the State. 11. Learned counsel for the petitioner in his arguments relied upon two judgments of Hon'ble Apex Court in his support. 12. In Soma Suresh Kumar v. Government of Andhra Pradesh and Others reported in (2013) 10 SCC 677 at para 17, to which the attention of this Court was drawn the Hon'ble Apex Court was pleased to observe as below : 17. The learned counsel for the petitioner raised a further contention that Vasavi Cooperative Bank Ltd. does not come within the definition of financial establishment under Section 2(C) of the Andhra Act. We find it difficult to accept that contention. What has been excluded from that definition is a company registered under the Companies Act or a corporation or a cooperative society owned and controlled by any State Government or the Central Government. The society in question does not fall in that category. Consequently, the Co-operative Bank in question is also governed by the provisions of the Andhra Act. 13. A reading of the above judgment go to show that though the provisions of Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the KCS Act. Even though the petitioner Society is required to file its audit returns to the Registrar of Cooperative Societies and with respect to its accounts, it is subject to the provision and control of the Registrar of Cooperative Societies under Section 2A(6) of the KCS Act. Still it cannot be ignored of the fact that the society would have its own management to run its business and its entire management would vest in the Board constituted under Section 28A of the KCS Act. The Society would run its activities as per the bye-law framed by it. As such, the Society will frame the bye-law though on par the model bye-law, to conduct its business in the manner recognized under the law. Its internal management and affairs will be governed and controlled by the Board of Management constituted under Section 28(A) of the KCS Act. Merely because the society is required to be registered under a particular statute or that it is required to submit its audited report to the particular Department of the Government annually, would by itself not make the society as the one under the direct control of the State. In this regard, I rely upon a judgment of the Hon'ble Apex Court in Thala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 9 of AIR SCW) 9. It is not in dispute that the Society has not been constituted under an Act. Its functions like any other co-operative society are mainly regulated in terms of the provisions of the Act, except as provided in the bye-laws of the Society. The State has no say in the functions of the Society. Membership, acquisition of shares and all other matters are governed by the bye-laws framed under the Act. The terms and conditions of an officer of the co-operative society, indisputably, are governed by the Rules. Rule 56, to which reference has been made by Mr. Vijay Kumar, does not contain any provision in terms whereof any legal right as such is conferred upon an officer of the Society. 10. It has not been shown before us that the State exercises any direct or indirect control over the affairs of the Society for deep and pervasive control. The State furthermore is not the majority shareholder. The State has the power only to nominate one Director. It cannot, thus, be said that the State exercises any functional control over the affairs of the Society in the sense that the majority Directors are nominated by the State. For arriving at the conclusion that the Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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