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TMI Blog2018 (6) TMI 1766X X X X Extracts X X X X X X X X Extracts X X X X ..... red under the provisions of Karnataka Co-operative Societies Act, 1959 (henceforth for brevity referred to as 'KCS AcT') and governed by the provisions of the said Act and bye-laws framed under it. 3. The present respondent, as a complainant, has filed a private complaint under Section 18 of KPID Act before the Special Court for the offence punishable under Sections 3, 4, 6, 7, 8 and 9 of the said Act alleging that the present petitioner, who is in charge of Krantiveera Sangolli Rayanna Credit Co-operative Society Ltd., and also Gajaraj Credit Cooperative Society has failed to refund a sum of Rs. 66,27,282/- to the various depositors who had deposited the said amount with the said Co-operative Societies. It is further alleged in the complaint that the present petitioner, who is the accused before the Special Court has invested the money of the depositors, collected by him, in real estate business said to have been run by him. Thus, he has cheated the general public/investors by misappropriation of the fund deposited by them. The Special Court took the cognizance of the said private complaint under Section 18 of the KPID Act and issued summons to the accused mentioned there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ambit the petitioner's Society. Preamble of KPID Act reads as below : "An Act to provide for protection of interest of depositors in financial establishments and matters relating thereto. Whereas, it is expedient to provide for protection of interest of the depositors in financial establishments and the matters relating thereto and for the purpose hereinafter appearing." Section 2(4) of the KPID Act defines 'Financial Establishment' as below : Section 2(4) "Financial Establishment" means any person or a group of individuals accepting deposit under any scheme or arrangement or in any other manner but does not include a corporation or a cooperative society owned or controlled by any State Government or the Central Government or a banking company as defined under clause (c) of Section 5 of the Banking Regulation Act, 1949 (Central Act 10 of 1949);" 10. A reading of the above definition shows that the definition of the term 'Financial Establishment' does not include a Co-operative Society which is either owned or controlled by State Government or the Central Government. In the instant case, what is to be looked into is whether the petitioner Society which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under Article 12 of the Constitution of India. In that regard, at paragraph 24, their Lordship was pleased to observe as below : "24. When we discuss "pervasive control", the term "control" is taken to mean check, restraint or influence. Control is intended to regulate, and to hold in check, or to restrain from action. The word "regulate", would mean to control or to adjust by rule, or to subject to governing principles." 15. Taking the analogy of the above judgment in Balmer Lawrie & Company Limited (supra), the learned counsel for the petitioner submitted that in the case on hand also since the petitioner Society is registered under KCS Act and is required to submit its audited report to the Registrar, Co-operative Societies and shall run its business as per the law prescribed under KCS Act, 1959, the petitioner-society is required to be considered as a Co-operative Society controlled by the State Government. As such, it is excluded from the definition of Financial Establishments under Section 2(4) of the KPID Act. 16. It is not in dispute that the petitioner Society is a registered Co-operative Society under KCS Act, 1959. Admittedly, the petitioner-Society is not an assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as such types of Societies are concerned, as Statute says, is the general body and not the Registrar of Cooperative Societies or State Government. 17. Societies are, of course, subject to the control of the statutory authorities like Registrar, Joint Registrar, the Government, etc. but cannot be said that the State exercises any direct or indirect control over the affairs of the society which is deep and all pervasive. Supervisory or general regulation under the statute over the co-operative societies, which are body corporate does not render activities of the body so regulated as subject to such control of the State so as to bring it within the meaning of the "State" or instrumentality of the State. Above principle has been approved by this Court in S.S. Rana v. Registrar, Cooperative Societies and another (2006) 11 SCC 634 : (2006) AIR SCW 3723). In that case this Court was dealing with the maintainability of the writ petition against the Kangra Central Co-operative Society Bank Limited, a society registered under the provisions of the Himachal Pradesh Co-operative Societies Act, 1968. After examining various provisions of the H.P Co-operative Societies Act this Court held as f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Societies, with which we are concerned in these appeals, will not fall within the expression "State" or "instrumentalities of the State" within the meaning of Article 12 of the Constitution and hence not subject to all constitutional limitations as enshrined in Part III of the Constitution. We may, however, come across situations where a body or organization though not a State or instrumentality of the State, may still satisfy the definition of public authority within the meaning of Section 2(h) of the Act, an aspect which we may discuss in the later part of this Judgment." 17. A reading of the above observation makes it very clear that 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- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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