B. N. MALLIKARJUNA, J. ( 1 ) AS the order questioned in all the Writ Petitions is one and the same, common judgment would dispose of all the 52 petitions. ( 2 ) ORDER dated January 12, 1996 of the Registrar of Co-operative Societies in Karnataka (one of the respondents in all the writ petitions) is challenged by various co-operative societies in State in these 52 Writ Petitions. State of Karnataka is the other respondent. ( 3 ) REGISTRAR of Co-operative Societies, by impugned order, in exercise of the power under section 30-B of the Karnataka Co-operative Societies Act (the 'act' for short), directs the societies in the State which is earning profit to contribute 5% of the profit to the funds to be called as "sahakara Kalyana Nidhi. " It is stated that there is need to constitute such fund to provide certain benefits to such of those persons who have contributed in the development of co-operative movement in the State and who have rendered selfless service. It is also stated that the direction of this type would encourage others in the co-operative field to render selfless service. Some of the petitioners are co-operative societies functioning under the provisions of the co-operative Societies Act and some other are the institutions registered under the Act but functioning under the terms and conditions of licence granted to them under the Banking regulation Act. Petitioners challenge the order almost on similar grounds. They contend that the order is illegal; without the authority of law and outside the purview of powers conferred under section 308 of the Act. It is further contended that the societies are voluntary association of members registered under the Act. Provisions of Section 57 (4) of the Act provides for direction for Co-operative Education Fund which is now managed by Karnataka State Cooperative federation. Certain provisions in the Act and Rules provide for distribution of profits by each one of the institution and further bye-law provides for making provision as to how the profits should be distributed and in such circumstances Registrar has no power under Section 30-B to issue direction directing the societies to contribute 5% of the profit for constituting a common fund. ( 4 ) COUNTER is filed on behalf of the respondents. ( 4 ) COUNTER is filed on behalf of the respondents. It is contended that direction under Section 30-B of the Act is issued in the public interest and for the purpose of securing proper implementation of co-operative movement and other development programmes. It is to be administered by the committee to be constituted by the Government and at any rate it would not be administered by the Government. The societies will have indirect control over the administration of the fund as the committee may consist of representatives of co-operative institutions. State Government has undertaken the work to uplift the co-operative movement. The fund would be utilised for the benefit of such of those members who have rendered services in the co-operative field and intended to recognise the service of co-operators for a longer period and also to encourage other co-operators to continue their selfless service in the co-operative field. It is further contended that in view of Section 40 of the Act, it is the duty of the State Government to encourage and promote the co-operative movement including encouragement of co-operative forming. Direction is issued with the sole intention of achieving the object of co-operative movement and to involve many more persons to render selfless service. Certain institutions have sent their contribution with their free-will and wish and as such there is no illegality in issuing the direction under Section 30-B of the Act. ( 5 ) HEARD the learned Counsel for the petitioners and the learned Government Pleader for respondents. ( 6 ) BEFORE adverting to the rival contentions, it would be necessary to refer to the order in question which reads thus:. . (VERNACULAR MATTER OMMITED ). . ( 7 ) FURTHER, guide-lines are also formulated which says amongst other things that the contribution should be only from the net profit and the fund is intended to be utilised to meet the medical expenses of such of those corporators who are incapable of meeting such expenses like medical expenses, expenses of education of their children and also for providing loans to acquire sites and to construct houses. ( 8 ) SECTION 30-B of the Act confers power on the State Government or such officer on whom power is conferred, to issue direction on being satisfied that such direction is in public interest or for the purpose enumerated therein. ( 8 ) SECTION 30-B of the Act confers power on the State Government or such officer on whom power is conferred, to issue direction on being satisfied that such direction is in public interest or for the purpose enumerated therein. Sub-section (2) of Section 30 also empowers the government to modify or cancel any direction issued under Sub-section (1 ). Section 30-B reads thus: "30-B. Powers to give direction in public interest - (1) Where the State Government is satisfied that in public interest or for the purpose of. securing proper implementation of cooperative and other development programmes approved or undertaken by the State Government or to secure the proper management of the business of the co-operative society generally or for preventing the affairs of the co-operative' society being conducted in a manner detrimental to the interests of the members or of the depositors or of the creditors thereof, it is necessary, to issue directions to any class of co-operative societies generally or to any co-operative society or co-operative societies in particular it may issue directions from time to time and ail such co-operative societies or the co-operative society concerned shall be bound to comply with such directions. (2) The State Government may modify or cancel any direction issued under Sub-section (1) and in modifying or cancelling such directions may impose such conditions as it may deem fit. (3) The State Government may, by notification, delegate its power under this section to the registrar subject to such restrictions and conditions as may be specified in the notification. " ( 9 ) IN view of the rival contentions, the point that would arise for determination is whether the issuance of direction be upheld as the one issued under the legitimate exercise of power under section 30-B of the Act. In the context, it would be useful to refer to certain provisions in the act relating to the management of the affairs of the society and also the funds. Chapter IV of the act consisting of Sections 26 to 31 deals with the management of co-operative societies. Chapter vii consisting of Sections 56 to 62 deals with the properties and funds of the co-operative societies. Chapter V of the Karnataka Co-operative Societies Rules deals with funds of co-operative societies. Chapter IV of the act consisting of Sections 26 to 31 deals with the management of co-operative societies. Chapter vii consisting of Sections 56 to 62 deals with the properties and funds of the co-operative societies. Chapter V of the Karnataka Co-operative Societies Rules deals with funds of co-operative societies. Provisions of Section 57 of the Act and Rules 21, 22 and 23 make it clear that in the matter of distribution of profits by way of payment of dividend to members, payment of bonus to members as well as paid employees, restrictions have been placed by law and the same is maintained at a reasonable level and considerable portion of the net profit is apportioned and require to be carried to various accounts of funds like Co-operative Education Fund, Reserve fund etc. , Rule 23 speaks of the object and investment of reserve fund. In the case of petitioners before Court, some of the societies have also made provisions for contributing certain percentage to the. welfare fund, charitable fund established with the object of serving the needs of the public and past members as well, for instance, petitioners in W. P. 29949/96, 29952/96, 29956/96, 30153/96 and 24292/96 have made provisions in their respective bye-laws for contributing certain amount from out of the net profit towards charitable trust, welfare fund and common good fund. ( 10 ) LEARNED Government Pleader, inviting my attention to Section 40 of the Act argued that duty of the State being to encourage and promote the co-operative movement including encouragement of co-operative forming, the order impugned is made. I fail to understand how by making this impugned order co-operative farming would be encouraged. Whatever that may be, the very object of every co-operative society registered under the Act is the promotion of economic interest of its members and Section 57 and Rule 22 of the Rules not only provide for payment of dividend on shares and bonus to its members but also provide for payment of bonus to the employees. But this object of promoting economic interest of the members has to be achieved by following co-operative principles where the profit motive will be restricted to a reasonable level. But this object of promoting economic interest of the members has to be achieved by following co-operative principles where the profit motive will be restricted to a reasonable level. When the object of each society registered under the Act is to serve the needs of its members, would it be proper to issue such direction for constituting a common fund and whether such direction is permissible. Provisions of the Act and Rules do not provide for creation of a common fund for the benefit of the past members or the employees of all the societies in the State. The net profit of the societies in. the State would not be uniform, it may vary from society to society for various reasons. In such circumstances, if a direction were to be issued, to contribute 5% of the net profit for a common fund to meet certain necessities of the past members of all the societies, even the society which earns more interest may not continue to have the same enthusiasm to earn the interest in future. Therefore, by issuing such direction, interest of an individual society or members of an individual society will not be served. A direction under Section 30-B of the Act can only be issued if it is not detrimental to the interest of particular society. Section 57 of the Act stipulates as to how the net profits of the societies will have to be distributed. Sub-section (2) of Section 57 provides for contribution to reserve fund and it is a mandate. Every society is required to contribute not less than 25% to reserve fund. Rule 23 stipulates the purpose for which the reserve fund is created. It says that it is to meet the unforseen events. Sub-section (3) of Section 57 enumerates certain factors for which balance of net profit may be utilised. It says the balance may be utilised for all or any of the purposes contained in Sub-section (c) to (f) of Sub-section (3 ). Sub-section (d) provides for constitution of or contribution to such special funds as may be specified in the bye-laws. Rule 5 (1) (h) and (1)requires every co-operative society to make bye-laws to provide for the purpose for which its funds may be utilised and the disposal of net profits. Sub-section (d) provides for constitution of or contribution to such special funds as may be specified in the bye-laws. Rule 5 (1) (h) and (1)requires every co-operative society to make bye-laws to provide for the purpose for which its funds may be utilised and the disposal of net profits. Rule-21 contemplates disposal of un-appropriated profits and it says that it shall forthwith be credited by a co-operative society to its reserve fund. Thus, a reading of these provisions clearly make out the intention of the legislature as to how the net profits of a society should be utilised. It can only be utilised by making relevant provisions in the bye-law. Neither the Act nor the Rules provide for issuing directions notwithstanding what is contained in the Act and Rules, directing the societies to contribute for constituting a common fund. Further, a close look at Section 306 of the Act also makes it clear that it does not take within its definition, the purpose which the impugned order intends to achieve. There are clear guidelines and directions both in the Act and Rules framed, thereunder as to how the net profit of an institution established and functioning under the Act should be apportioned, and distributed, they do not permit intervention or meddling in the matter either by the State Government or its nominee and issuance of a direction by resorting to Section 30-B of the Act. Further, those provisions make it abundantly clear that proper care is taken in the matter of distribution of net profits of a society with the sole object of achieving the desired object and in accelerating the co-operative movement, keeping also in mind the interest of the members and the employees of the society as well. In the instant case, the impugned order is, not only vague, it would also fail to serve the interest of both past and present members of a society and being contrary and inconsistent with the provisions of the Act and Rules, is certainly illegal and not sustainable in law. The order is not even in the nature of instructions to the societies to provide for creation of a 'sahakara Kalyana nidhi' in their bye-law. The direction is to contribute for constitution of a common fund and that is not the intendment of the Act nor the provisions in the Act and Rules referred to above provide for. The order is not even in the nature of instructions to the societies to provide for creation of a 'sahakara Kalyana nidhi' in their bye-law. The direction is to contribute for constitution of a common fund and that is not the intendment of the Act nor the provisions in the Act and Rules referred to above provide for. Hence the petitioners succeed. ( 11 ) IN the result, these petitions are allowed. Order dated January 12, 1996 of the Registrar of co-operative Societies is hereby quashed.