Karnataka HC Orders Co-op Society’s DCC Bank Vote Counted, Says Payments Since March 31 Count Toward 50% Threshold

The appellant, a primary agricultural credit co-operative society and member of the Kolar-Chikkaballapur District Co-operative Central Bank (“DCC Bank”), was notified on 7 April 2025 that it had to pay ₹12,95,55,000 by 6 May 2025 to avoid disqualification from voting in the DCC Bank election.

The appellant made payments between 3 April and 9 May 2025, totalling ₹14,69,52,000; the DCC Bank also acknowledged the payments by letter dated 16 May 2025.

The Single Judge dismissed the appellant’s writ petition, finding that payments made before the notice should be excluded and that the appellant had not paid the demanded amount.

In this appeal, the Division Bench considered whether the appellant had discharged the statutory payment requirement; the election had taken place, and the appellant’s vote had been kept in a separate ballot box.

Section 20(2)(b)(iv) of the Karnataka Co-operative Societies Act, 1959 provides that a co-operative society whose principal object is to advance loans is disentitled to vote if its recovery percentage is below 50% of the relevant total demand, or if it fails to pass on to the financing bank or credit agency 50% of the demand or the entire portion recovered, whichever is higher, at least 15 days before the meeting or election, after receiving notice of at least 30 days.

The applicable payment requirement must be understood in light of that statutory provision and the demand identified in the notice.

The notice stated that the total demand as at 31 March 2025 was ₹27,98,64,000 and acknowledged ₹1,03,77,000 as already paid; it therefore required payment of the balance necessary to reach 50% of that demand, namely ₹12,95,55,000.

The appellant’s payments, including those made before the notice, exceeded the required 50% threshold of ₹13,99,32,000, and the DCC Bank acknowledged the payments.

The Single Judge therefore erred in excluding payments made before 7 April 2025: the relevant question was whether the appellant had discharged 50% of the demand outstanding as at 31 March 2025, not whether it had made the entire required payment after receiving the notice.

As the election had been held but the result for the relevant constituency had not been declared, the Court directed that the appellant’s separately recorded vote be counted and the result declared accordingly.