Orissa High Court

Cuttack, Aug. 10: The state government’s attempt to bring deposit collection companies under increased government control has come under judicial scrutiny.

The state government had passed an ordinance to repeal the Orissa Self-Help Co- operative Act, 2001, in the wake of the state-wide scam involving fraudulent activities by deposit collection companies.

The high court has issued notices to the state government on two writ petitions challenging the Odisha Self-Help Co-operatives (Repeal) Ordinance, 2013. The government has been given two weeks to reply.

The state government had invoked the ordinance to repeal the 2001 self-help co-operative act and thus bring all co-operative societies under the Orissa Co-operative Act, 1962. This was done in an attempt to regulate all non-banking financial companies functioning under the Orissa Self-Help Co-operative Act, 2001.

Several non-banking financial companies, including co-operative credit societies operating under the 2001 act had been found to be misappropriating depositors’ money. With the repeal of the 2001 act, the government was trying to increase its control over these co-operative credit societies and curb their independent functioning.

On May 14, the state cabinet had, in principle, decided to abolish the 2001 act by promulgating an ordinance. On June 6, the state co-operative department issued a gazette notification to invoke the ordinance, which was signed by governor S.C. Jamir on June 3 to give effect to the Act.

The ordinance had brought 1,634 self-help co-operative societies under the Odisha Co-operative Act, 1962.

Pandit Dindayal Multi-purpose Co-operative Society of Balasore and Athantara Primary Women’s Savings Co-operative Society of Balipatna filed two separate petitions alleging that the ordinance was “unconstitutional”. The petitions sought quashing of the ordinance.

“The division bench of Chief Justice C. Nagappan and Justice Indrajit Mahanty, before which the petition came up yesterday, posted the matter for hearing after two weeks along with the reply of the state government,” one of the petitioner’s counsels Pitambar Acharya told The Telegraph.

The petition stated that after the 1997 constitutional amendment, the right to form a co-operative society had assumed the status of a fundamental right. But the ordinance forced the existing co-operative societies registered under the Self-Help Cooperative Act, 2001 to register under the Odisha Cooperative Act, 1962. This was contrary to the constitutional provision that allows “for voluntary formation and democratic control of cooperatives”, the petition contended.

The ordinance expected the self-help cooperative societies to amend their bylaws according to the Orissa Co-operatives Act, 1962, within three months.

The registrar of co-operative societies would take over the societies that failed to do so within three months from June 6.

The court issued notices to the state’s chief secretary, secretary of co-operation department, the law secretary and the registrar of co-operative societies.

The court will consider on the plea for interim stay order after the respondents file their responses within two weeks.