SC to hear if State can forcibly merge district co-op banks with State co-op banks

The Supreme Court has ordered the status quo in the compulsory merger of Malappuram District Cooperative Bank with Kerala State Cooperative Bank.

The Bench headed by Chief Justice D.Y. Chandrachud has agreed to examine the legality of amendments in law which allows for the compulsory merger of district cooperative banks with State cooperative banks.

The order came in a petition filed by MLA U.A. Latheef, former president of the Malappuram District Cooperative Bank.

The lawmaker, represented by advocate Haris Beeran, has challenged a judgment pronounced by a Division Bench of the Kerala High Court on February 29 confirming a Single Bench decision.

The Single Bench had upheld the amendments to the Kerala Cooperative Societies Act, 1969 and affirmed the order of the Registrar of Cooperative Societies for the compulsory amalgamation of the district cooperative banks with the State banks.

“The seminal question of public importance is whether the State government can compulsorily amalgamate the district cooperative banks, particularly those having licences under Section 22 of the Banking Regulation Act, to the State cooperative banks through State largesse resorting to undemocratic methods and unconstitutional amendments without following due procedure of law solely to achieve arbitrary State objectives by any means,” the petition said.

The plea questioned whether such amendments were beyond the legislative competence of the State Assembly.

The petition also raised the issue of whether the provisions of Section 74H of the 1969 Act were inconsistent with the sections of Deposit Insurance and Credit Guarantee Corporation Act of 1961.