SC To Decide On Forced Mergers Of District Co-op Banks With State Co-op Banks

The Supreme Court has ordered a halt to the compulsory merger of Malappuram District Cooperative Bank with Kerala State Cooperative Bank.

A Bench led by Chief Justice D.Y. Chandrachud has agreed to review the legality of the amendments permitting the forced merger of district cooperative banks with state cooperative banks.

This decision came in response to a petition filed by MLA U.A. Latheef, the former president of Malappuram District Cooperative Bank. Represented by advocate Haris Beeran, Latheef challenged a Kerala High Court Division Bench ruling from February 29, which upheld a Single Bench decision.

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

The petition argues, "The key public issue is whether the State government can forcibly merge district cooperative banks, especially those with licenses under Section 22 of the Banking Regulation Act, into state cooperative banks through undemocratic methods and unconstitutional amendments, without adhering to legal procedures, solely to achieve arbitrary state objectives."

The plea also questions whether these amendments exceed the legislative powers of the State Assembly.

Additionally, the petition raises concerns about whether Section 74H of the 1969 Act conflicts with provisions of the Deposit Insurance and Credit Guarantee Corporation Act of 1961.