Judgment :- J.B. Koshy, J. As a policy of the Government after due deliberation it was decided to start job oriented courses including those in Medicine and Engineering in the Co-operative Sector. For enabling this an autonomous society called "Co-operative Academy of Professional Education" registered under the Societies Registration Act was decided to be constituted. Accordingly Ext. P4 Memorandum of Association was framed for the above Academy. Managing Committee consists of Minister for Co-operation, Secretary of Co-operative Department, Registrar of Co-operative Societies, Managing Director of State Co-operative Bank, Directors of Technical and Medical Education and Presidents of various District Co-operative Banks and State Co-operative Bank. For financing this project of starting professional colleges by Ext. P5, the Registrar of Cooperative Societies has given permissive sanction to disburse Rs. 75 lakhs by District Co-operative Banks at Thiruvananthapuram, Alappuzha, Kottayam, Ernakulam and Kannur, Rs. 50 lakhs each by all other District Co-operative Banks and by Kerala State Co-operative Bank Rs.1 Crore. It is also mentioned that contributions can be made to the Co-operative Academy of Professional Education from the existing/ anticipated common good fund. Further direction is that "if sufficient funds are not available in the common good fund, balance may be met from the General Fund for the time being pending recoupment." 2. Contentions of the petitioners are that Ext. P5 is beyond the powers of the Registrar of Co-operative Societies and is without jurisdiction. It is submitted that Ss.56 & 57 of the Co-operative Societies Act deal with disposal of net profit and investment of funds. S.56 reads as follows: "56. Disposal of net profit:- (1) A society shall, out of its net profits in any year (a) transfer an amount not being less that fifteen per cent of the net profits to the reserve fund; and (b) credit such portion of the net profits, not exceeding five per cent, as may be prescribed, to the Co-operative Education Fund referred to in Clause (xix) of sub-s.(2) of S.109. (2) The balance of the net profits may be utilised for all or any of the following purposes, namely: (a) payment of dividents to members on their paid up share capital at such rate (not exceeding twenty per cent) as may be prescribed. (2) The balance of the net profits may be utilised for all or any of the following purposes, namely: (a) payment of dividents to members on their paid up share capital at such rate (not exceeding twenty per cent) as may be prescribed. (b) 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-laws; (c) constitution of, or contributions to, such special funds as may be specified in the bye-laws; (d) donations of amounts not exceeding ten per cent of the net profits for any charitable purpose as defined in S.2 of the Charitable Endowments Act 1890 (Central Act 6 of 1890); and (e) payment of bonus to employees of the society to the extent and in the manner specified in the bye-laws or in the Payment of Bonus Act, 1965 (Central Act 21 of 1965), as the case may be. 3. It is the contention of the petitioners that under S.56(1) a compulsory disposal of the net profits of certain amounts are mentioned and balance amount has to be set apart for payment of dividents, payment of bonus, constitution of, or contributions to special funds and donations of amounts not exceeding ten per cent of the net profits for any charitable purpose. It is further contended that even though a special fund can be constituted or contribution can be made to a special fund, it should be permitted in the bye-laws as provided in S.56(2)(c). Donations to charitable institutions can be under S.56(2)(d) i.e. ten per cent of the net profits alone can be donated to charitable Society. It is also contended that Working Capital is defined under R.2(k) and the above working Capital cannot be used or utilised for giving donations. R.54 of the Co-operative Societies Rules deals with the manner of investment of funds. R.61 deals with object of reserve fund and disposal thereof. Therefore, it is contended that the funds of the society shall not be invested in any manner other than that is mentioned under R.54 and reserve fund cannot be used except in the manner suggested under R.61 and the working capital should be used for working of the Bank and the only amount that is set apart under statute as well as the Bye-laws. There is no provision in the Act for granting permissible sanction in respect of donations to charitable institutions. Petitioners cited a decision of this Court in Janardhanan v. Joint Registrar (1990(1) KLT 530) in support of the same. 4. It is the contention of the learned Advocate General that by Ext. P5 no compulsory directions are given to the District Co-operative Banks to give donations, it is only a permissible sanction. It is for the managing committee of the Bank to finally decide to give donation or not. Since it is only a permission and the Banks are to independently decide the matter no interference is required. It is also contended that this is a policy decision announced in the floor of the legislative assembly and since most of the students of Kerala are going outside for professional education, it is necessary to the professional colleges in the state and discussions decided to start colleges with the help of the Co-operative Banks to avoid allegations of exploitation and hence academy was formed with participation of State and District Co-operative Banks in the managing committee. Large amount of funds are required for starting professional colleges. As a policy it was decided that Co-operative Banks should take its lead and make initial contributions. Since it is a policy decision the Court should not interfere in such matters. 5. Nobody can object to the wisdom of the policy so long as it is not illegal or unconstitutional. In fact a laudable object is sought to be achieved by the policy to start Academy for establishing more professional colleges in the State. A policy to start the Medical Colleges and Engineering Colleges in the State in Co-operative Sector cannot be stated to be arbitrary in sense. In fact it is a welcome decision. In State of Punjab and Ors. v. Ram Lubhaya Bagga and Ors. ((1998) 4 SCC 117) Supreme Court held that wisdom of the policy cannot be judicially scrutinised by the Court. Only if it is arbitrary or violative of provisions of law, the Court can interfere in the same. Therefore, on the basis of the policy taken by the Government issuing Ext. P5 this Court cannot interfere. Counsel for the petitioners fairly submitted that they are not questioning the policy behind Ext. P5 nor they are against starting of professional colleges in State in Co-operative sector or by the academy. Therefore, on the basis of the policy taken by the Government issuing Ext. P5 this Court cannot interfere. Counsel for the petitioners fairly submitted that they are not questioning the policy behind Ext. P5 nor they are against starting of professional colleges in State in Co-operative sector or by the academy. But according to them directions issued in Ext. P5 are illegal and contrary to law and arbitrary. 6. The next question to be considered is whether permissive sanction can be given by the Registrar. The decision cited by the petitioners in 1990(1) KLT 530 is not applicable because that was a case where permissive sanction was given by the Joint Registrar to amend the Bye-laws and increasing the share value. There are specific provisions contained in the Act for the same, hence there is no need for permissive sanction. Apart from that even in Ext. P2 circular (in O.P. No. 18026/1999) it is stated that if donations are to be given beyond the prescribed limit, prior permission of the Registrar is necessary. Therefore, merely because permissive sanction is given, Ext. P5 cannot be set aside. 7. It is contended that sanction in Ext. P5 to donate large amount by the Banks is against Ss.56 & 57 and other provisions of the Act and Rules. In this context I record the following assurance mentioned in the statement filed by the Government: "The permission in Ext. P5 circular is not to transfer the amount from General Fund of the bank but only to make contribution from common good fund created from earlier year's profit as per S.56(2)(c) of Kerala Co-operative Societies Act, 1969. It is not part of general fund." I also note the following statement: "The entire authority for decisions on making contribution from the fund is with the Director Board of the Bank." It is also stated that R.B.I guidelines did not prohibit or restrict the utilisation of the common good fund. This assurance makes it clear that what can be donated is only from the amount available in common good fund. Common good fund can be created by the Co-operative Society under S.56(2)(c) only if it is permitted by the bye-laws; within the limitations made in the bye-laws of each Bank. This assurance makes it clear that what can be donated is only from the amount available in common good fund. Common good fund can be created by the Co-operative Society under S.56(2)(c) only if it is permitted by the bye-laws; within the limitations made in the bye-laws of each Bank. If a particular bank has accordingly created a common good fund, and there is balance in the common good fund, the same would be reflected and specifically mentioned in the approved audited balance sheet. If there is no fund existing or if there is no balance in the fund, no contributions can be made by the bank Inspite of the permissive sanction in Ext. P5. For example the balance sheet of Thiruvananthapuram District Co-operative Bank is produced. The balance sheet shows that there is no common good fund existing there and there was no transfer of fund from previous year's to that fund. In-fact in the year 1997-98 budget, provision for donation was only for Rs. 25,000/-, but more than one lakh was actually given as donations and there was no money is set apart for common good fund in the statement regarding disposal and allocation of net profits for 1997-98. Therefore, despite the terminology used in Ext. P5 the committee of the Co-operative Bank while deciding the matter, need give donations on the basis of permissive sanction but only if any amount is available in the common good fund on the basis of the audited balance sheet and profit and loss account. If no balance is transferred from the previous year, common good fund can be created for this year subject to the restriction in the bye-laws and statute after giving appropriations as mentioned under S.56 & 57 of the Co-operative Societies Act. In other words financial indiscipline cannot be practiced by the Bank while giving donations dehors the provisions of the Act, Rules and Bye-laws. What is contemplated under the Act is general supervision by the Registrar to see whether society banks are working as per the provisions of the Act, Rules and Bye-laws, so that interest of members are not affected and the Registrar cannot give a direction to violate the provisions of the Act & Rules and if the directions are for doing the same, it has to be set aside. But here it is clarified that Ext. But here it is clarified that Ext. P5 is only a sanction, but Board has to take final decision according to law. 8. I also refer to the Division Bench decision of this Court in State of Kerala v. Raju (1979 KLT 58). There the question was whether the committee can take a decision to donate the ex gratia gift of article to the members of the Society from the net profits of the Society. This Court held that Clause (c) permits the constitution of, or contributions to, such special funds as may be specified in the bye-laws. Under Clause(d) the society can make donations of amounts not exceeding ten per cent of the net profits for any charitable purpose. And Clause(e) empowers the society to make payment of bonus to employees of the society to the extent and in the manner specified in the bye-laws, the ex gratia distribution of stainless steel utensils to members of the Society on the occasion of the General Body meeting will not fall within any of the Clauses(a) to (e) and it was not therefore, competent for the committee of the society to incur any expenditure out of the net profits of the Society for making such ex gratia gift of articles to the members of the Society. The Working Capital or General Fund of the Society also cannot be utilised in a way not authorised by the Act, Rules and bye-laws. As mentioned in the statement what can be contributed is from the available fund in the common good fund created. In view of the permissible sanction none of the District Cooperative Bank or State Co-operative Bank cannot give away funds violating the existing statutory provisions or bye-laws. Contributions can be given within the permissible limit in Ext. P5 from the funds available in the common good fund created as per S.56(2)(c) or ten per cent of the profits which can be given as contributions from the Co-operative Society for the charitable purposes under S.56(2)(d). Working fund of the Society can be used only for the working of the society mentioned in the bye-laws or as authorised by the Act and Rules. General Fund cannot be utilised for payment of donations. What can be given as contribution is given in S.56(2)(c) and (d) of the Act. In view of the above, I hold that the directions in Ext. General Fund cannot be utilised for payment of donations. What can be given as contribution is given in S.56(2)(c) and (d) of the Act. In view of the above, I hold that the directions in Ext. P5 that if sufficient funds are not available in the common good fund, balance may be met from the General Fund for the time being pending recoupment is illegal and last sentence in Ext. P5 cannot be given effect to. As submitted by the learned Advocate General and as clarified in the statement filed by the Registrar of Co-operative Societies Ext. P5 is only a permissive sanction and it is for the Director Board of each bank to take the final decision according to law in conformity with the provisions of the Act, Rules and Bye-laws. Since the banks are receiving large amount of deposit from the public, its fiduciary relationship cannot be ignored and financial indiscipline cannot be tolerated. Since these institutions are doing banking business, they are bound by the instructions of Reserve Bank of India. If they are getting financial assistance from NABARD, they may have to look into the conditions for the same. It is for the Board of Directors of each bank to consider whether there is any binding restriction in giving donations as incorporated by the Reserve Bank of India or NABARD. Suffice to say that as submitted by the learned Advocate General Ext. P5 is only a permissive sanction and it is for each bank to take a decision regarding actual contribution and such decision should be according to law. Both the Original Petitions are disposed of accordingly.