CHIDANANDA ULLAL, J. ( 1 ) THE petitioner, House Building Co-operative Society herein have filed the instant Writ Petition with a prayer that the Notification bearing no. CMW 242 CLM/92 Bangalore dated 30. 4. 1993 published in the gazette extraordinary dated 30. 4. 1993, copy as at Annexure-F to writ Petition, be quashed. In issuing the same Rule 20 (e) of the cooperative Societies Rules came to be added below Rule 20 (d) to say that the Co-operative Societies shall contribute 2% out of its net profit of the year as contribution for Co-operative Educational Fund provided dividend declared is above 10%. ( 2 ) I heard the learned Counsel for the petitioner, Sri K. Suman and the learned Additional Government Advocate, Sri P. G. C. Chengappa, appearing for the respondent No. 1, the State, the respondent No. 2, the Registrar of Co-operative Societies and the respondent No. 3, the Joint Registrar of Co-operative Societies. ( 3 ) THE learned Counsel for the petitioner, Sri Suman had taken me through the facts of the case and further the impugned amendment of the Rule 20 (e) of the Karnataka Co-operative Societies rules (hereinafter referred to as the 'rules') In urging the grounds made out in the instant Writ Petition, Sri Suman argued that the very amendment of the rule is totally in negation of sub-section (4) of Section 57 of the Karnataka Co-operative Societies Act (hereinafter referred to as the 'act' ). It was argued by Sri Suman that under the said provision of law, the maximum percentage out of the net profit that had to be contributed by the Societies towards the cooperative education fund was 1 1/2%, whereas by the impugned rule that came to be amended to add Rule 20 (e) below Rule 20 (d ). Thus same shall be 2% to the Fund in case of declaration of dividend beyond 10%. Therefore, he submitted that the impugned amended rule has to go as the same was opposed to sub-section (4) of section 57 of the Act. Hence, he prayed that the instant Writ Petition be allowed by striking down the said amended Rule. Thus same shall be 2% to the Fund in case of declaration of dividend beyond 10%. Therefore, he submitted that the impugned amended rule has to go as the same was opposed to sub-section (4) of section 57 of the Act. Hence, he prayed that the instant Writ Petition be allowed by striking down the said amended Rule. ( 4 ) THE learned Additional Government Advocate on the other side submitted that the amended Rule came to be made in view of the Authority vested in the State under Section 129 of the Act for making of Rule and that it is in the interest of the Co-operative movement that the proposed percentage was enhanced from 2% to 1 1/2% in the matter of contribution to the Co-operative Educational fund out of the net profit of the society. According to him, there is justification on the part of the State in amending the Rules, rather the learned Additional Government Advocate had supported the impugned notification amending the Rule in question. ( 5 ) IN the light of the above submissions made, the sole question before me is: whether the amended Rule 20 (e) of the Rules is sustainable in the light of the provision in sub-section (4) of Section 57 6f the Act or not. ( 6 ) I feel it appropriate to quote Section 57 of the Act as it stood earlier to the amendment of the section by Act 25 of 1998. The same reads as hereunder:"57. Net profits and their disposal.- (1) The net profits of cooperative Societies shall be determined in accordance with such rules as may be prescribed and different rules may be made for different classes of Co-operative Societies. (2) A Co-operative Society shall, out of its net profits, in any year transfer an amount not being less than twenty-five percent of the profits to the reserve fund. (2) A Co-operative Society shall, out of its net profits, in any year transfer an amount not being less than twenty-five percent of the profits to the reserve fund. (3) The balance of the net profits may be utilised for all or any of the following purposes, namely- (a) payment of dividend to members on their paid-up share capital at a rate not exceeding the prescribed limit; (b) payment of such percentage of the net profits as may be specified in the bye-laws to the Co-operative Education Fund constituted under the rules; (c) payment of bonus to members on the amount or volume of business done by them with the society to the extent and in the manner specified in the bye-law; provided that no bonus shall be payable to members in a credit society; (d) constitution of, or contributions to, such special funds as may be specified in the bye-laws; (e) donations of amounts not exceeding ten per cent of the net profits for any charitable purpose as defined in Section 2 of charitable Endowments Act, 1890 (Central Act VI of 1890) 1; and (f) payment of bonus to employees of the society, to the extent and in the manner specified in the bye-laws: provided that the bonus payable in any year to any employee shall not exceed two months' pay. " ( 7 ) I also feel that it is proper to quote how the amended Rule had occurred in the impugned notification. The same reads as hereunder:"amendment to Rule 20.- In table (d) of Rule 20 the following rule 20 (d) and (e) shall be substituted. (d) If the rate of dividend for any year exceeds 5% but does not exceed 10% - 1 1/2 percent of the net profit of the year. (e) If the rate of dividend for any year exceeds 10 percent - 2 per cent of the net profit of the year. " ( 8 ) IF we co-relate sub-section (4) of Section 57 of the Act and Rule 20 (e) quoted as above, it appears to rne that the amended rule is totally in negation of sub-section (4) of Section 57 of the act, for the said provision of law prescribes the maximum percentage 1 1/2% out of the net profit as the contribution by the Society for the co-operative Educational Fund. No doubt, the State has got power to amend the Rule 20 (e) of the Rules, but nevertheless, it cannot frame the Rules in contravention of the very provision of the Act. That exactly what the State did in the case in hand. ( 9 ) THAT being the position, I do not think, the impugned rule amendment to add Rule 20 (e) below Rule 20 (d) of the Rules can sustain. In this context, I also feel it appropriate to quote what the state had contended in filing its objection statement. In para (6) thereof, it is contended as hereunder:"6. It is submitted that the amendment is not contrary to Section 57 (4) of the Act, as the rate of contribution to the education fund is enhanced exercising the powers vested under the Act, 1959. It is true that the maximum contribution prescribed in the statute is less than the amount enhanced in the amended rule. The 1st respondent is empowered to make rules and amend the existing rules without affecting the statute. Therefore, the amendment to rule 21 is affected with a broad vision to strengthen the co-operative movement in the State. Therefore, the Notification amending the Rule 20 is not violative of any of the provisions of the Act or Rules and is not against to the interest of any societies or any of the members. " ( 10 ) FROM the above, it is clear that in filing detailed objection statement, the State had fairly conceded that it would not have framed the Rules to say that the percentage of contribution towards the Fund out of the net profit beyond what had been set out i. e. , 1 1/2 in the Act. In that view of the matter, I pass the following: order (I) Sub-Rule (e) of Rule 20 of the Rules is hereby declared as illegal and ultravires the statute in sub-section (4) of Section 57 of the Act and the same is hereby struck down as prayed for in the writ Petition. (ii) In so far as prayer (ii) is concerned, the petitioner-society is given liberty to approach the respondents for the purpose of issuance of appropriate order in its favour to pay the remaining 3%, of the dividend to its members for the Co-operative year 1993-94 and 1994-95. (ii) In so far as prayer (ii) is concerned, the petitioner-society is given liberty to approach the respondents for the purpose of issuance of appropriate order in its favour to pay the remaining 3%, of the dividend to its members for the Co-operative year 1993-94 and 1994-95. But the petitioner is directed to make such a representation within one month from this day. The respondents are directed to consider such a representation and pass consider order thereon within a period of 3 months from that date of presentation in view of the above declaration as to the Sub-Rule (e) of Rule 20 of the Rules. The Writ Petition therefore succeeds in part and accordingly allowed in part in the above terms. --- *** --- .