- 1 - NC: 2025:KHC:11043 WP No. 6756 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF MARCH, 2025 BEFORE THE HON'BLE MR JUSTICE R. NATARAJ WRIT PETITION NO. 6756 OF 2025 (S-RES) BETWEEN: SRI JAGADISH M.K. S/O. SRI. KEMPALAKKEGOWDA. H.K., AGED ABOUT 42 YEARS, CURRENTLY WORKING AS CHIEF EXECUTIVE OFFICER, KARNATAKA CO-OPERATIVE APEX BANK, "UTHUNGA", NO.1, PAMPA MAHAKAVI ROAD, CHAMARAJPET, BENGALURU-560 018. …PETITIONER (BY SRI. JAYAKUMAR S. PATIL, SENIOR ADVOCATE FOR SRI. SRINIVAS V., ADVOCATE) AND: 1. STATE OF KARNATAKA REPRESENTED BY ITS SECRETARY TO CO-OPERATION DEPARTMENT, M.S. BUILDING, BANGALORE-560 001. 2. STATE OF KARNATAKA REP BY ITS SECRETARY TO DEPARTMENT OF PERSONAL AND ADMINISTRATIVE REFORMS, VIKASA SOUDHA, BANGALORE-560 001. 3. THE PRESIDENT THE KARNATAKA STATE CO-OPERATIVE APEX BANK LTD., "UTHUNGA", NO.1, PAMPA MAHAKAVI ROAD, CHAMARAJPET, BENGALURU-560 018. …RESPONDENTS (BY SRI. SHIVAPRABHU HIREMATH, ADDITIONAL GOVERNMENT ADVOCATE FOR RESPONDENT NOS.1 AND 2; Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC:11043 WP No. 6756 of 2025 SRI. VIKRAM HUILGOL, SENIOR ADVOCATE FOR SRI. D.P.MAHESH, ADVOCATE FOR RESPONDENT NO.3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE COMMUNICATION DATED 05.03.2025 BEARING NO.PRESIDENT/PS/ 2024-25/38, ISSUED BY THE 3RD RESPONDENT VIDE ANNEXURE-F, TO THE WRIT PETITION AND ETC. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE R. NATARAJ ORAL ORDER The petitioner has sought for a writ in the nature of certiorari to quash a communication bearing No.President/PS/2024-25/38 dated 05.03.2025 issued by the respondent No.3 by which, he was directed to vacate the office of the Chief Executive Officer of the Karnataka State Co- operative Apex Bank Limited. The petitioner has also sought for a writ in the nature of mandamus to direct the respondent No.3 not to interfere with the discharge of his official duties. 2. (i) The petitioner claims to be a KAS officer in super-time scale and was transferred and posted as "Chief Executive Officer" of the Karnataka State Co-operative Apex - 3 - NC: 2025:KHC:11043 WP No. 6756 of 2025 Bank, Bengaluru (henceforth referred to as 'Apex Bank') vide transfer notification bearing No.¹D¸ÀÄE 08 D¸ÉêÀ 2025 dated 13.01.2025 issued by the respondent No.2. He claims that after he was posted, he assumed charge on 13.01.2025 and was discharging his duties. He contends that the Principal Secretary to the respondent No.1 had sought ratification of the appointment of petitioner from National Bank for Agriculture and Rural Development (henceforth referred to as 'NABARD') and Reserve Bank of India (henceforth referred to as 'RBI') vide letters dated 21.02.2025 and 25.02.2025 respectively. He contends that on 15.01.2025, the respondent No.3 addressed a letter to the concerned officer of RBI seeking clarification regarding posting of the petitioner as Chief Executive Officer, as another person named, Mr. C.N.Devaraj was already appointed as Chief Executive Officer of Apex Bank and his term was in force till 10.06.2025. The petitioner contends that the respondent No.1 vide a communication dated 18.01.2025, had clarified that the President of the Apex Bank was not authorized to seek clarification on administrative matters. (ii) The petitioner contends that the respondent No.3 was hell-bent to trouble him and therefore, addressed - 4 - NC: 2025:KHC:11043 WP No. 6756 of 2025 communication to all the authorities including NABARD. After a letter was received from NABARD, the respondent No.1 furnished a reply detailing the vast experience of the petitioner in the field of co-operation and other service experience and therefore, requested not to entertain any communication from the respondent No.3. The petitioner contends that despite the above, the respondent No.3 issued the impugned communication dated 05.03.2025 directing him to vacate the office of the Chief Executive Officer. Being aggrieved by the same, the petitioner is before this Court. 3. The learned Senior counsel representing the petitioner contended as follows:- (i) that the petitioner was appointed as a Chief Executive Officer of Apex Bank and respondent No.1 had addressed a letter dated 21.02.2025 to NABARD to ratify the action taken by it in appointing the petitioner as a Chief Executive Officer. Following this, it addressed a letter dated 25.02.2025 to RBI seeking ratification of the appointment of the petitioner. Therefore, he - 5 - NC: 2025:KHC:11043 WP No. 6756 of 2025 contends that the impugned communication directing the petitioner to vacate the office of Chief Executive Officer is high-handed and has to be quashed. (ii) that it is for the Board of the Apex Bank to consider the appointment/removal of the petitioner and forward it to RBI and NABARD for approval and the President of the Apex Bank has no authority to compel the petitioner to vacate the office of the Chief Executive Officer. (iii) that under Section 28-C(2)(h) of the Karnataka Co- operative Societies Act, 1959 (henceforth referred to as 'Act, 1959'), it is the Board, which is empowered to appoint a Chief Executive Officer and such other employees as are required to be appointed in the office of Chief Executive Officer of the co-operative society subject to the provisions of Section 29-G. He therefore, contends that the President of the Apex Bank has no authority to issue - 6 - NC: 2025:KHC:11043 WP No. 6756 of 2025 a letter directing the petitioner to vacate the office of the Chief Executive Officer. (iv) that the respondent No.1 on coming to know of the letter issued by the President of the Apex Bank, had addressed a letter dated 13.03.2025 and marked copies to RBI and NABARD and called upon the President of the Apex Bank to convene a meeting of the Board of Directors and place the subject of posting the petitioner as Chief Executive Officer for suitable decision. He therefore, contends that until the Board of Directors of the Apex Bank decides upon the appointment of the petitioner, the President of the Apex Bank has no business to direct the petitioner to vacate the office of the Chief Executive Officer. 4. (i) The writ petition is opposed by the respondent No.3, who has filed a detailed statement of objections contending inter alia that the Karnataka State Co-operative Apex Bank Limited was established under the Karnataka Co- operative Societies Act, 1959 for conducting banking activities - 7 - NC: 2025:KHC:11043 WP No. 6756 of 2025 and is a scheduled bank. An Apex Society is defined under Section 2(a) and Co-operative Credit Structure is defined under Section 2(b-2) of the Act, 1959. It is contended that when the Co-operative Societies engage in banking business, in addition to the regulatory laws applicable to the Co-operative Society, the Central laws governing banking are applicable to an Apex Bank. It is contended that RBI vide Circular dated 25.06.2021, directed the Primary (Urban) Co-operative Banks to appoint Managing Directors/Chief Executive Officers of such banks as per the eligibility criteria prescribed by RBI and remove/terminate all such Managing Directors/Chief Executive Officers of banks, who are not eligible. It is contended that the Apex Bank submitted an application dated 06.07.2024, seeking approval of RBI for re-appointment of Mr. C.N. Devaraj as a Chief Executive Officer of the Apex Bank. This appointment was approved by RBI vide its letter dated 13.11.2024 as per Section 35B(1)(b) read with Section 56 of the Banking Regulation Act, 1949. (ii) In the meanwhile, respondent No.1 appointed the petitioner as a Chief Executive Officer with effect from the date of notification. The said notification also mentioned about the - 8 - NC: 2025:KHC:11043 WP No. 6756 of 2025 replacement of Mr. C.N. Devaraj with immediate effect. The petitioner purportedly assumed charge of the Chief Executive Officer of the Apex Bank during subsistence of tenure of Mr. C.N. Devaraj, though there was no vacancy as the term of Mr. C.N. Devaraj was not terminated by the Board. It is also contended that under Section 29-G of the Act, 1959, a Chief Executive Officer, to an assisted society, is appointed by the State Government and in respect of other societies, a Chief Executive Officer is appointed on the request made by a society. It is contended that the Apex Bank is not an assisted society but is a Co-operative Credit Structure and an Apex Bank and therefore, the appointment of the Chief Executive Officer has to emanate from the bank and the respondent No.1 cannot appoint a Chief Executive Officer. (iii) It is also contended that while Mr. C.N. Devaraj was still in the office as Chief Executive Officer, respondent No.1 had no authority to appoint the petitioner as Chief Executive Officer. In view of the confusion created by the appointment of the petitioner, the respondent No.3 addressed letters dated 15.01.2025 and 17.01.2025 to RBI. In response to the same, a reply dated 21.02.2025 was issued by RBI holding that the - 9 - NC: 2025:KHC:11043 WP No. 6756 of 2025 appointment of the petitioner was without its prior approval and permission and the same is not in accordance with law. NABARD also addressed a communication dated 23.01.2025 to the respondent No.3 enquiring about the approval of RBI to terminate the existing Chief Executive Officer, Mr. C.N. Devaraj and approval of the appointment of the petitioner as a Chief Executive Officer as per Section 35B read with Section 56 of the Banking Regulation Act. (iv) The respondent No.3 contends that on 04.03.2025, it held a meeting with the General Manager, Governance Section (Co-operative Banks and NBFC), Department of Regulation, Central Office, RBI, Mumbai and in the said meeting, the respondent No.3 was directed to address the non- compliance of the relevant provisions of law without any further delay and the President of the Apex Bank was questioned as to why action was not taken immediately on receipt of the letter dated 23.01.2025. The respondent No.3 contends that based on the above, he addressed a letter dated 05.03.2025 requesting the petitioner to vacate the office with immediate effect. It is contended that the respondent No.3 being the head of the institution, has to act in accordance with the Banking - 10 - NC: 2025:KHC:11043 WP No. 6756 of 2025 Regulation Act and is answerable to RBI, as any lapse would result in punitive action and sanction against the bank. Therefore, it is contended that the appointment of the petitioner without prior approval of RBI and NABARD does not confer any right on the petitioner to continue in office and therefore, the impugned communication issued by the respondent No.3 is just and proper. 5. The learned Senior counsel representing the respondent No.3 reiterated the above contentions and contended that under proviso to Section 29-G(1) of the Act, 1959, in respect of co-operative societies, which are not assisted by the State Government, the latter has no power to appoint a Chief Executive Officer. He contended that in respect of co-operative societies not drawing any assistance from the State, the role of the State Government would come only when the co-operative society makes a request for appointment of Chief Executive Officer for a term not less than five years. He therefore, contends that the appointment of the petitioner as a Chief Executive Officer of the Apex Bank is not lawful. In addition, he contends that the appointment of Chief Executive Officer has to be with the prior approval of RBI as prescribed - 11 - NC: 2025:KHC:11043 WP No. 6756 of 2025 under the Banking Regulation Act and since the same was not done in the case of the petitioner, his appointment is not in accordance with law. Besides this, he contends that the term of Mr. C.N. Devaraj, who was appointed as Chief Executive Officer, which was approved by RBI, has not come to an end and hence, the petitioner cannot continue as Chief Executive Officer and therefore, in that circumstance, the impugned communication was issued directing the petitioner to vacate the office of the Chief Executive Officer. 6. A rejoinder to the statement of objections is filed by the petitioner, who inter alia contends that after his posting at respondent No.3 as Chief Executive Officer, no meeting of the Board of respondent No.3 was held and that respondent No.3 is seeking clarification from all corners without placing the subject before the Board. He contends that the Government had directed respondent No.3 to conduct the Board meeting and place the subject of posting the petitioner as Chief Executive Officer. He contends that soon after his posting, any person appointed by the respondent No.3 by whatever name called shall cease to be the Chief Executive Officer, as provided under Section 29-G(2) of the Act, 1959. He contends that the - 12 - NC: 2025:KHC:11043 WP No. 6756 of 2025 appointment of Mr. C.N.Devaraj was not with the prior approval of RBI as claimed by respondent No.3. He contends that Mr. C.N.Devaraj was appointed on 27.06.2024 but his appointment was approved on 13.11.2024. Therefore, he contends that respondent No.3 cannot adopt dual standards. 7. The learned Additional Government Advocate representing respondent Nos.1 and 2 submitted that the respondent No.1 had recommended for approval of the appointment of the petitioner and communications were addressed by respondent No.1 for ex-post facto sanction of the appointment of the petitioner. He therefore, contends that until RBI considers the granting of ex-post facto sanction, the respondent No.3 could not have issued the impugned communication directing the petitioner to vacate the office of the Chief Executive Officer. 8. I have considered the submissions of the learned Senior counsel for the petitioner as well as the learned Senior counsel for respondent No.3 and the learned Additional Government Advocate for respondent Nos.1 and 2. - 13 - NC: 2025:KHC:11043 WP No. 6756 of 2025 9. An "Assisted society" is defined under Section 2(a- 1-1) of the Act, 1959 and the same is extracted below: "Assisted Society means a co-operative society which has received the Government or State assistance in the form of share capital or loan or grant or guarantee for repayment of loan or interest." 10. An "Apex society" is defined under Section 2(a) of the Act, 1959 and the same is extracted below:- "Apex Society means a federal society whose area of operation extends to the whole of the State." 11. Similarly, "Co-operative Credit Structure" is defined under Section 2(b-2) of the Act, 1959, which is extracted below:- "Co-operative Credit Structure means and includes Primary Agricultural Credit Co-operative Societies by whatever name called, Central Co- operative Banks, State Co-operative Bank, Agricultural and Rural Development Banks and State Agricultural and Rural Development Bank." - 14 - NC: 2025:KHC:11043 WP No. 6756 of 2025 12. Under Section 29-G of the Act, 1959, there shall be a Chief Executive Officer for every co-operative society, who could be appointed and be removed by the society. Proviso to Section 29-G(1) reads as follows:- "Provided that.- (i) subject to such rules as may be prescribed in case of an assisted society other than a society in co-operative credit structure, the Government or the Registrar shall have power to appoint and remove the Chief Executives; and (ii) in other cases, the Government or the Registrar may appoint Chief Executives where such Society makes a request for appointment of a Chief Executive for a term which shall not be less than five years; and remove such Chief Executive. Provided further that a society in co-operative credit structure shall have the option of getting the Chief Executive appointed by requesting the Government or the Registrar, as the case may be; Provided also that, if the society fails to do so within three months, the Government or the Registrar, as the case may be, may appoint on its or on his own, a Chief Executive to that Co-operative Society." - 15 - NC: 2025:KHC:11043 WP No. 6756 of 2025 13. A reading of the above makes it more than evident that in respect of an assisted co-operative society, the power to appoint and remove a Chief Executive Officer is exclusively with the Government or the Registrar. In all other cases, the Government or the Registrar may appoint a Chief Executive Officer only when such co-operative society makes a request for appointment. In so far as a co-operative society in Co- operative Credit Structure, it shall have an option of getting the Chief Executive Officer appointed by the Government or the Registrar as the case may be. There is nothing to show that a request was made by the Apex Bank for appointment of the Chief Executive Officer and that the State Government pursuant to such request, had appointed the petitioner. Though the learned Senior counsel for the petitioner contended that the Karnataka State Co-operative Apex Bank is also an "assisted society", but no material is placed on record to show that the Apex Bank was assisted by the State Government in any manner. Therefore, it can safely be held that the Apex Bank is not an "assisted society" and hence, the petitioner could not have been appointed by the respondent No.1 as a Chief Executive Officer. - 16 - NC: 2025:KHC:11043 WP No. 6756 of 2025 14. Under Section 35B(1)(b) of the Banking Regulation Act, appointment, re-appointment, termination of appointment of a chairman, a managing or whole-time director, manager or chief executive officer, shall not have effect unless such appointment, re-appointment or termination of appointment, is made with the previous approval of the Reserve Bank. 15. Admittedly, the appointment of the petitioner was not with the previous approval of RBI. Though the petitioner has placed on record the letters indicating that the respondent Nos.1 and 2 had communicated with RBI for approving the appointment of the petitioner, since the appointment of the petitioner itself was not in accordance with Section 29-G of the Act, 1959, letters addressed by the respondent Nos.1 and 2 to RBI have no consequence. Consequently, the impugned communication issued by the respondent No.3 calling upon the petitioner to vacate the office of the Chief Executive Officer is just and proper. Besides this, the term of Mr. C.N. Devaraj, Chief Executive Officer, is till June, 2025. Therefore, the Apex Bank cannot function with two Chief Executive Officers. Hence, - 17 - NC: 2025:KHC:11043 WP No. 6756 of 2025 the impugned communication issued by respondent No.3 is just and proper and does not warrant any interference. 16. Consequently, there is no merit in this writ petition and the same is dismissed. 17. In view of dismissal of the writ petition, pending I.As., if any, stand disposed off as they do not survive for consideration. Sd/- (R. NATARAJ) JUDGE PMR List No.: 1 Sl No.: 24