JUDGMENT : P.M.MANOJ, J. 1. Primarily, these writ petitions challenge the Kerala Co-operative Deposit Co-op. Guarantee Scheme, 2012 introduced in compliance with Section 57 (B) of the Kerala Co-op. Societies Act, 1969. 2. WP(C) No.8495 of 2014 preferred by Thalappalam Service Co- Op. Bank Ltd. No. 3937, is designated as the lead case, and the documents marked in this writ petition will be used for ease of reference. 3. All the writ petitions are preferred by Primary Co-op. Societies registered under the provisions of the Kerala Co-op. Societies Act, 1969 (for Short ‘the Act’). The Deposit Guarantee Scheme was inserted into the Co-op. Societies Act as per Section 57B through an amendment carried out to the Co-op. Societies Act, by Act 1 of 2000, published in the Kerala Gazette Extra Ordinary No.1811/2000, which came into force on 02.01.2001. The said Section reads as follows : “ 57B.Deposit Guarantee Scheme .- (1)The Government may, by notification in the Gazette, frame a scheme to be called “the Deposit Guarantee Scheme” specifying the purpose of the scheme and shall be administered in such manner, as may be specified therein. (2)A society may contribute to the Deposit Guarantee Scheme at such rates as may be provided in the said scheme.] [(3) All societies covered under the Deposit Guarantee Scheme shall enroll and contribute towards the scheme within six months from the date of commencement of the Kerala Co-operative Societies (Amendment) Act, 2013 failing which the societies have no right to accept deposit from depositors and the Registrar shall be competent to issue prohibition order, restraining the society from accepting deposits for such period specified in the order: Provided that before making such order, the Registrar shall give an opportunity to the chief executive of the society to state his objections, if any, to the proposed action. (4)Notwithstanding anything contained in sub section (3) the Registrar may exempt any society for a period up to one year by general or special order from enrolling such societies under the Deposit Guarantee Scheme with reasons to be recorded: Provided that if any society violate the prohibition order under sub- section (3) the Registrar shall be competent to demand a sum of rupees five thousand only as penalty. If any society fails to pay such penalty, within two weeks from the date of receipt of demand notice, the Registrar shall be competent to issue direction to the financing bank to recover the amount from the account maintained in the financing bank by the society, or to recover the amount under the provisions of the Kerala Revenue Recovery Act, 1968 (15 of 1968). If the violation is a continuing one, a further penalty of rupees one thousand for every day shall be levied, after the first day during which the violation continues.]” Sub Clause (1) itself says that the Government, by Notification in the official gazette, shall frame a scheme to be called ‘the Deposit Scheme’, specifying the purpose of the Scheme, and that it shall be administered in accordance with the specification given in such scheme. Accordingly, by Ext.P1 Government Order, i.e. GO(P) No.03/2012/Co-op. dated 11.01.2012, issued in exercise of the powers conferred under Section 57B of the Act and in supersession of the Deposit Guarantee Scheme issued under GO(P) No.162/2000/Co- op. dated 29.12.2000, the Government floated the Scheme. The title of the scheme was Kerala Co-op. Deposit Guarantee Scheme, 2012 (for short KCDG Scheme, 2012’). 4. In Ext.P1, the purpose of the Scheme is described as “to provide guarantee for deposits made in Co-op. Credit Societies, and for creating confidence among the depositors and for attracting more deposits.” The applicability of the Scheme was restricted to all Credit Societies, except those that were defunct, dormant, or under liquidation. 5. For that purpose, a Deposit Guarantee Fund was constituted under Paragraph 5 of the Government Order. For its administration, a Board was also constituted as per Ext.P3 GO(P) No. 81/2012/Co-op. dated 02.07.2012. Paragraph 5(2) specifically provides that the corpus of the fund shall be built up by contributions from the Societies specified in paragraph 4 of the Scheme at the rate of 10 paise for every hundred rupees or parts thereof outstanding at the end of each financial year. The initial contribution to the fund, payable by the credit societies, shall be remitted either in a lump sum or in two annual installments. Paragraph 5(5) of the Scheme provides that the initial contribution is to be made only for the outstanding amount of deposits of the credit societies at the beginning of the financial year in which the scheme came into force. Paragraph 5(5) of the Scheme provides that the initial contribution is to be made only for the outstanding amount of deposits of the credit societies at the beginning of the financial year in which the scheme came into force. The subsequent contribution is to be made based on the deposits outstanding at the end of each financial year. 6. All contributions shall be remitted to the account of the Board in the manner provided by the regulations framed by the Board. It is stipulated that credit societies shall remit the contribution to the fund within three months after the completion of a financial year, calculated at the rate specified under Paragraph 2. Failure to comply will render the Chief Executive liable to pay interest on the defaulted contribution at the rate of 12% per annum until payment is made, and the amount so paid will then form part of the fund. Moreover, failure to pay the annual contribution within the stipulated period will result in the exclusion of that society's deposits from the guarantee cover for the period of such delay. It is also clarified that no portion of the contribution remitted shall be refunded to the credit society for any reason. The amounts so collected by the Deposit Guarantee Fund will be maintained with the Kerala State Co-operative Bank, the District Co-operative Bank concerned, or the government treasury. 7. Paragraph 9 of the Scheme provides for the utilisation of the fund. Thereby, the fund shall be utilised for the settlement of claims in respect of the deposits which are guaranteed. The amount guaranteed per depositor shall not exceed Rs.1 lakh. Paragraph 13 provides details of the deposits, which include all types of deposits of any duration in primary agricultural co-op societies, as well as Rural Banks, Farmer Service Co-op Bank, Non-agricultural Credit Societies. Urban Co-op. Societies and Employees Credit Societies are categorised under Rule 15 of the Kerala Co-op. Societies' Rules, 1969, except Chitty, Monthly Deposit Scheme, group deposit and credit scheme shall be covered by the scheme. 8. In order to regulate the functioning of the scheme, further Circulars were issued by the Kerala Co-op. Guarantee Fund Board as per Ext.P4 dated 22.01.2013 and the Registrar of Co-op Societies by Ext.P5 Circular No.29/2013. The Circular issued by the Co-op. 8. In order to regulate the functioning of the scheme, further Circulars were issued by the Kerala Co-op. Guarantee Fund Board as per Ext.P4 dated 22.01.2013 and the Registrar of Co-op Societies by Ext.P5 Circular No.29/2013. The Circular issued by the Co-op. Registrar further restrained the activity of the primary Credit Co-op Societies from accepting deposits, if such societies failed to enrol themselves within six months from the introduction of the Scheme, as empowered by sub-section (3) of Section 57B , inserted by Act 8/2013, published in Kerala Gazette, Volume II, No.432, dated 14.02.2013, with effect from the said date. 9. The grievance voiced in these writ petitions is primarily that the guarantee under the Scheme is limited to Rs.1 lakh, irrespective of the total amount deposited by the depositor, which will defeat the purpose of the Scheme. Further, it complains about the coverage of SB Account deposits and current account deposits, for which premium is required to be paid. However, the depositor may withdraw the said amounts at any point of time, resulting in heavy loss to the society. Moreover, the society is not permitted to collect the amounts paid towards the premium from the depositors. The society is required to pay the premium for even the previous years' deposit, which they are not permitted to collect from the depositors, imposing a heavy burden on the profit of the society. In case of failure to remit the amount, the society will be prevented from collecting deposits during the defaulted period. Thereby, it is alleged that the sole intention behind the introduction of the scheme appears to be the collection of huge amounts from the societies, rather than helping either the society or the depositor. In order to achieve the intention of introducing such a scheme, a proportionate coverage shall be given to the entire deposit, rather than restricting to Rs.1 lakh or the subsequent increased amounts. Moreover, the penal provision under Clause 6 of paragraph 5, by which the responsibility of non-remittance is fastened on the Secretary or the Chief Executive Officer amounts to arbitrariness in the light of Section 27 of the Kerala Co-op. Societies Act, which entrusts the entire responsibility of the Society with the general body of the society. Moreover, the Government or the Registrar has no power to impose a penalty on an employee of the society. 10. Societies Act, which entrusts the entire responsibility of the Society with the general body of the society. Moreover, the Government or the Registrar has no power to impose a penalty on an employee of the society. 10. Over and above, the defunct/dormant societies under liquidation are not liable to pay contributions. However, they are entitled to receive compensation under the Scheme. That itself shows that with the funds of properly functioning societies, the societies that fell into defunct/dormant societies under liquidation due to malfunctioning are benefited. Moreover, credit societies like the petitioners are liable to pay huge amounts from their profits every year against the deposits available with the bank at the end of each financial year, even though no benefit is received from the fund. These are the circumstances in which these writ petitions are preferred, challenging the constitutional validity of the Scheme. 11. In response to the contentions, a counter affidavit has been filed and adopted in all the writ petitions on behalf of the 2 nd respondent-Registrar. It is stated therein that all eligible co-op banks as defined in Section 2 (gg) of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 , are covered by deposit insurance scheme established by the Deposit Insurance and Credit Guarantee Corporation, a wholly owned subsidiary of the Reserve Bank of India. Primary Agricultural Credit Co-op Societies, like the petitioners, which do not possess licence from the RBI, are not covered under any of the deposit guarantee scheme framed by statutory authorities. In these circumstances, the Government of Kerala had introduced a deposit guarantee scheme vide GO(MS) No.59/292/Co-op. dated 07.07.1992. However, the majority of the societies had not enrolled themselves under the Scheme. 12. When such a situation arose in which 37 Societies in Kerala were unable to make repayment to the depositors, the approximate amount in this regard will come to about Rs.30 Crores and numerous litigations have come up before this Court in that regard, the Government came up with Ext.P1 G.O. in compliance with Section 57B of the Act, 1969. The purpose of the scheme is to provide a guarantee for deposits made in credit societies and to instil confidence among depositors. For that purpose, a fund was constituted under paragraph 5 to provide insurance protection to depositors free of cost. The purpose of the scheme is to provide a guarantee for deposits made in credit societies and to instil confidence among depositors. For that purpose, a fund was constituted under paragraph 5 to provide insurance protection to depositors free of cost. Moreover, sub-para 6 of paragraph 13 specifically states that, in case of failure on the part of a Society, the depositor can approach the Board for financial assistance. But such assistance is restricted to Rs.1 lakh. It also compels societies to enrol under the scheme, with an intention to protect the interests of the depositors. The non- enrolled societies are not permitted to accept deposits. For that purpose, the Registrar is empowered to issue prohibition orders for a certain period. 13. However, the primary thrust of the argument raised by the learned Government Pleader, as well as the learned counsel appearing for the Deposit Guarantee Fund Board, was with respect to the maintainability of these writ petitions, since Ext.P1 scheme has been superseded by 2018 Scheme, whereby the amount guaranteed by the depositor has been enhanced to Rs.2 lakhs. In the meanwhile, an amendment was carried out to the 2012 Scheme by GO(P) No.126/2014/Co-op. dated 24.10.2014 whereby the sum was enhanced to Rs.1,50,000/-. 14. The new regulations to administer the scheme were introduced by Circular No. 9/19, as ordered by the Registrar of Co-op. Societies in Order No. G1/7498/18 dated 27.02.2019. Subsequently, the Deposit Guarantee Scheme, 2018, was amended by GO(P) No. 181/2023/Co-op. dated 06.07.2023. This amendment substituted the prescribed deposit guarantee amount of Rs.2 lakhs, which was outlined in Clause (a) of paragraph 1 of paragraph 9, with Rs.5 lakhs. 15. Similarly, a further amendment was carried out to the 2018 Scheme as per GO(P) No.155/2024/Co-op. dated 09.08.2024. Finally, the Deposit Guarantee Scheme, 2018, was further amended to include more beneficial provisions by GO(Rt) No. 219/2025/Co-op. dated 28.04.2025. Even the apprehension of the petitioners that they would be liable to pay premium on the enhanced compensation has also been answered by the learned counsel for the 4 th respondent Fund, stating that, as per the 2019 amendment, it has been clarified that subsequent contribution shall be made on the incremental amount of deposits outstanding at the end of each financial year, at the rate of Rs.10 ps for every deposit of Rs.100/- or part thereof. 16. 16. However, none of these amendments, nor the scheme itself has been challenged in these writ petitions. Therefore, these writ petitions have virtually become infructuous, and their consideration will not serve the purpose of the challenge made against the 2012 Scheme. Hence, sought to dismiss all these writ petitions as infructuous. 17. I have heard Sri.P.V. Baby, Sri.O.D. Sivadas, Sri T.R. Harikumar and Sri.Mathew John for the learned counsel for the petitioners and Sri.Imam Gregorious Karatt, the learned Government Pleader and Sri. Sasikumar K learned counsel for the 4 th respondent Fund Board. 18. The issue pertains to the guarantee given to the deposits of members of Primary Credit Co-op. Societies through an insurance scheme floated under Section 57B of the Act. It will be apposite to consider the basic principle of insurance. The basic principle of insurance is risk pooling, where a group of people pays premiums into a collective fund to cover the financial losses of a few members who experience an unfortunate event. The system relies on several other fundamental principles, including utmost good faith, insurable interest, indemnity, subrogation, contribution, proximate cause and loss minimisation, which ensure fairness. Normally, the insurance runs on the principle of fairness. Here, the pooling is done by the primary credit co-op. Societies, as a group, by paying their premiums as prescribed under the Scheme as stipulated under Ext.P3 GO dated 02.07.2012. 19. However, the apprehension voiced in these writ petitions is against the disproportionality of the compensation in relation to the loss suffered by a member of the Society. This is because the compensation is restricted to a stipulated amount, rather than being on a pro rata basis reflecting the actual loss incurred by the member. That apprehension, however, has been alleviated to a greater extent by the recent enhancement of the guaranteed amount to Rs. 5 lakhs. Even now, the basic grievance voiced by the petitioners remains, i.e. if a member of a Society deposited a higher amount, and that amount cannot be repaid due to unforeseen reasons, such as mismanagement, the amount guaranteed against such a loss is limited to Rs.5 lakhs as of today. However, the condition prevailing at the time of filing these writ petitions was only Rs.1 lakh. 20. However, the condition prevailing at the time of filing these writ petitions was only Rs.1 lakh. 20. Hence, it is a matter of serious concern for this Court that, when floating a Scheme under Section 57B of the Kerala Co-operative Societies Act, 1969 , the State should have ensured proportionate compensation. This is particularly true since contributions are accepted from all Co-operative Societies, as contemplated under Clause 5(2) of Ext. P3 GO dated 02.07.2012. Since insurance is based on utmost good faith and fairness, there is no point in the contention by the Societies that the amounts paid by them are used to compensate the loss of defunct or dormant societies under liquidation due to malfunctioning. 21. By effecting payments to the fund as provided under Paragraph 5(2) and paragraph 4 of Ext.P1 GO, a slight reduction in their profits occurred to the societies which was ultimately done in good faith to secure even the interest of the members of the petitioner society, which cannot be mitigated by saying that the amounts paid by them will be used to compensate the other societies which are defunct, dormant societies under liquidation. Therefore, the apprehensions concerning the mandated contribution are unwarranted within the field of insurance. 22. Going by the counter affidavit preferred by the 4 th respondent, the other apprehension, with respect to the liability to pay the premium on the enhanced compensation, is also out of place. This is because the 19 th Scheme clarifies that subsequent contributions shall be made on the incremental amounts of deposit outstanding at the end of each financial year at the rate of 10 paise for every deposit of Rs. 100/- or part thereof. 23. Whereas, the contention with respect to the maintainability of these writ petitions on the basis that Ext.P1 Scheme has been superseded by subsequent amendments carried out in 2014, 2018 and finally in 2019 cannot be taken for granted. The basic principle of Proportionality is a matter to be considered by the Government, since the principles of insurance are based on the principles of fairness, indemnity, utmost good faith, subrogation, proximate cause etc. Hence, merely on the ground that Ext.P1 Scheme was modified and superseded subsequently, the basic contentions or the basic apprehensions made against the disproportionality of the compensation cannot be ignored. 24. Under these circumstances, I deem it appropriate to dispose of all the writ petitions. Hence, merely on the ground that Ext.P1 Scheme was modified and superseded subsequently, the basic contentions or the basic apprehensions made against the disproportionality of the compensation cannot be ignored. 24. Under these circumstances, I deem it appropriate to dispose of all the writ petitions. Taking note of the observations above, the Government may consider ensuring the proportionality in the compensation given under the Scheme. Specifically, this compensation should be proportionate to the actual loss suffered by the members of the Society, based on the amount they deposited, rather than being limited by a stipulated amount that leads to disproportionality. Accordingly, all the writ petitions are disposed of.