IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.BALAKRISHNAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN THURSDAY, THE 6TH AUGUST 2009 / 15TH SRAVANA 1931 WA.No. 1734 of 2009() --------------------- AGAINST THE JUDGEMENT/ORDER IN WPC.13946/2009 Dated 24/06/2009 .................... APPELLANT(S): PETITIONER: ------------------------- COCHIN SERVICE CO-OPERATIVE BANK LTD.E.760, CO-BANK TOWER, KALOOR, COCHIN-17, REPRESENTED BY ITS SECRETARY. BY ADV. SMT.P.A.REZIYA SRI.A.A.MOHAMMED NAZIR RESPONDENT(S): --------------- STATE OF KERALA, REPRESENTED BY ITS SECRETARY, CO-OPERATIVE (B) DEPARTMENT, THIRUVANANTHAPURAM. GOVERNMENT PLEADER SMT.A.G.ANEETHA THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 06/08/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: K.BALAKRISHNAN NAIR & C.T.RAVIKUMAR, JJ. ```````````````````````````````````````````````````` W.A. No. 1734 OF 2009 ```````````````````````````````````````````````````` Dated this the 6th day of August, 2009 J U D G M E N T Balakrishnan Nair, J. The appellant is the writ petitioner. It is a Co-operative Society. The writ petition was filed challenging an amendment brought to sub-rule 2 of Rule 53 of the Kerala Co-operative Societies Rules, 1969 as per Ext.P1 notification issued by the government on 23.7.2008. 2. The amendment to Rule 53(2) introduced by Ext.P1 reads as follows:- “ 2. Amendment of the Rules :- In the Kerala Co-operative Societies Rules, 1969, in rule 53, in sub-rule (2), after clause (b), the following clause shall be inserted, namely:- “ (ba) In the case of the failure of remittance of Co-operative Education Fund as aforesaid, the Chief Executive and the President of the Society making such default WA.1734/09 : 2 : shall be liable to pay a penal interest at the rate of 6% per annum on the default amount.” 3. The substantive provision in the Act, based on which, the aforementioned Rule, to the extent it concerns the Co- operative Education Fund is framed, is Section 56. The relevant portion of the said section reads as follows:- “ 56. Disposal of net profit - (1) A society shall, out of its net profits in any year (a) transfer an amount not be in less than fifteen per cent of the net profits to the reserve fund; and (b) credit such portion of the net profits, not exceeding five per cent, as may be prescribed, to the Co-operative Education Fund referred to in clause (xix) of sub- section (2) of S.109. (c) pay, in the case of a Central Society, including a District Co-operative Bank, divided to its members, on their paid up share capital at such rate not exceeding WA.1734/09 : 3 : twenty percent.” 4. Section 109 of the Act deals with the rule making power of the Government. Clause (xix) of sub-section 2 of Section 109 reads as follows:- “ (xix). The constitution of the Co- operative Education Fund, the payment to be made to the fund by a society out of its net profit and the mode of its investment.” 5. Going by section 56(1) quoted above, if a Society is making profit, a portion of net profit not exceeding 5% is liable to be transferred to the Co-operative Education Fund. If this mandatory duty is not discharged, now, the President and Secretary of the Society will be personally liable to pay 6% interest for the defaulted amount, in view of the impugned amendment introduced as per Ext.P1. The appellant submits if there is a default made by the Society, the consequences should fall only on the Society and not on the President or Secretary. So, the impugned provision is not authorised by any of the provisions of the Co-operative Societies Act and, therefore, ultravires and unenforcible. So, the appellants pray the impugned amendment to WA.1734/09 : 4 : the Rule may be declared as ultra vires and unenforceable and also prays for a direction to State not to enforce it. 6. We notice that the above contentions were considered and rejected by the learned Single Judge. Learned Judge took the view that the government should be conceded incidental power to frame rules providing for penal consequences for default, so that default is reduced substantially. So, the provision, framed against the President and Secretary, which is impugned herein advances the object of the parent statutory provision, it was held. Feeling aggrieved by the said judgment, this appeal is filed raising the aforementioned contentions which we have already noted above. 7. The grounds for impugning a subordinate legislation are well settled. A Division Bench of this court in Pankajakshy & Others Vs. George Mathew & Others [1987 (2) KLT 723] has pithily stated the grounds available for successfully challenging a subordinate legislation. The relevant portion of the said judgment reads as follows:- “ 12. Thus, the rule made under a statute by an authority delegated for the purpose can be challenged on the ground (1) WA.1734/09 : 5 : that it is ultra vires of the Act; (2) it is opposed to the Fundamental rights; (3) it is opposed to other plenary laws. To ascertain whether a rule is ultra vires of the Act, the Court can go into the question (a) whether it contravenes expressly or impliedly any of the provisions of the statute; (b) whether it achieves the intent and object of the Act; and (c) whether it is “unreasonable” to be manifestly arbitrary, unjust or partial implying thereby want of authority to make such rules.” 8. The above principles have been recently considered and reiterated by a Division Bench of this court in Suresh C. Vs. State of Kerala [2009 (3) ILR 381]. Going by the pleadings and arguments, we find that no ground, available for impugning a subordinate legislation, has been raised in the writ petition. But, learned counsel for the appellant would submit that the newly introduced amendment to Rule 53 is ultravires of the relevant provisions of the statute. We find it difficult to agree with the submission. Where the statute provides for mandatory payment of WA.1734/09 : 6 : an amount and if the rule making authority thinks that certain provisions should be there, which are penal in nature, and which shall befall on the officers responsible for the default, we think the said provisions will definitely come under section 109(1) even if it does not fall under section 109(2) (xix). The Rule will definitely advance the object of section 56(1). Therefore, we find no reason to interfere with Ext.P1 or the judgment under appeal. Accordingly, the writ appeal fails and it is dismissed. Sd/- (K.BALAKRISHNAN NAIR, JUDGE) Sd/- (C.T.RAVIKUMAR, JUDGE) aks // True Copy // P.A. to Judge