Kerala High Court
The Kudayathoor Service Co-Operative ... vs The Joint Registrar Of Co-Operative on 30 September, 2019
Author: Anu Sivaraman
Bench: Anu Sivaraman
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN
MONDAY, THE 30TH DAY OF SEPTEMBER 2019 / 8TH ASWINA, 1941
WP(C).No.20699 OF 2019(J)
PETITIONERS:
1 THE KUDAYATHOOR SERVICE CO-OPERATIVE BANK
LIMITED NO.3316,
KUDAYATHOOR POST, THODUPUZHA, IDUKKI DISTRICT,
PIN CODE - 685 590, REPRESENTED BY SECRETARY.
2 THE BOARD OF DIRECTORS,
THE KUDAYATHOOR SERVICE CO-OPERATIVE BANK
LIMITED NO.3316, KUDAYTHOOR POST, THODUPUZHA,
IDUKKI DISTRICT, PIN CODE - 685 590,
REPRESENTED BY ITS PRESIDENT.
BY ADVS.
SRI.GEORGE POONTHOTTAM (SR.)
SRI.ARUN CHANDRAN
SMT.NISHA GEORGE
RESPONDENTS:
1 THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES(GENERAL)
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), PAINAVU, IDUKKI DISTRICT,
PIN - 685 603.
2 THE ASSISTANT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL)
OFFICE OF THE ASSISTANT REGISTRAR OF CO-
OPERATIVE SOCIETIES (GENERAL), PAINAVU, IDUKKI
DISTRICT, PIN - 685 581.
W.P.(C).No.20699/19
2
3 THE INQUIRY OFFICER,
UNIT INSPECTOR, (A UNIT), OFFICE OF THE
ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL), PAINAVU, IDUKKI DISTRICT, PIN - 685
581.
4 ADDL.R4.V.S.KURUVILLA
AGED 77, S/O. DEVASIA, RESIDING AT VERUNKAL
HOUSE, KUDAYATHOOR.P.O., IDUKKI DISTRICT.
(IS IMPLEADED AS PER ORDER DATED 25-09-2019 IN
I.A. 1/2019).
R1-3 BY GOVERNMENT PLEADER
R4 BY ADV. LIJI.J.VADAKEDOM
R4 BY ADV. SRI.JOICE GEORGE
R4 BY ADV. SRI.RAJEEV JYOTHISH GEORGE
R4 BY ADV. SRI.TOM E. JACOB
OTHER PRESENT:
SR. GP C.S SHEEJA
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
30.09.2019, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
W.P.(C).No.20699/19
3
JUDGMENT
Dated this the 30th day of September 2019
1. A Primary Co-operative Agricultural Society and its Board of Directors are before this Court challenging an order passed by the 1st respondent directing an enquiry to be conducted under Section 65 of the Kerala Co-operative Societies Act (the KCS Act, for short) into the matters specified therein. Exhibit P1 is the order under challenge. It is submitted that on the basis of a complaint submitted by 30 members, the Joint Registrar has mechanically passed an order directing an enquiry to be conducted under Section 65.
2. Heard Sri.George Poonthottam, the learned Senior Counsel appearing for the petitioner and Smt.C.S.Sheeja, the learned Government Pleader, as well as Sri.Lijy J Vadakkedam, the learned counsel for the additionally impleaded 4th respondent.
3. It is submitted by the learned Senior Counsel for the petitioner that a Section 65 enquiry into the affairs and functioning of the society cannot be ordered mechanically or simply because W.P.(C).No.20699/19 4 a complaint has been submitted. The section specifically provides that such enquiry will be ordered only if the competent officer is satisfied that such an enquiry is necessary. It is contended that Exhibit P1 order does not reveal any application of mind by the 1st respondent as to any necessity for conduct of an enquiry and that as such, the order is bad in law.
4. The learned Senior Counsel placed reliance on the decision of a Division Bench of this Court in Melukkara Service Co- operative Bank Ltd.v. Joint Registrar (General), District Co-operative Society [2018 (2) KLT 640] to contend that in ordering the enquiry, there has to be subjective satisfaction of the Registrar and in the absence of such subjective satisfaction and where the Registrar acts upon a complaint of an individual or on a report of the inferior officer, the enquiry cannot be sustained. The Division Bench has held that it is the settled position that there must be subjective satisfaction of the officer ordering the enquiry that it is necessary to do so. It was held that what is intended under Section 65 is that a W.P.(C).No.20699/19 5 complaint which is frivolously made cannot automatically lead to any further action, expect after the Registrar satisfies himself as to the essentiality of an inquiry under Section 65. It is, therefore, contended that the action of the Registrar in having directed an enquiry on the receipt of a complaint under Section 65(1)(d), without any ascertainment as to the requirement so to do, was completely unjustifiable. It is stated that a reading of the order itself would show that on receipt of the complaint, the Registrar has mechanically proceeded to direct an enquiry only on the ground that such a complaint has been received.
5. A counter affidavit has been placed on record by the 1 st respondent. It is stated that the enquiry has been ordered on the basis of Exhibit R1(a) complaint dated 15.6.2019 raised by a former President of the Society and 29 other members. It is stated that the complaint contained various allegations, including the admission of ineligible members against bye- law provisions, distribution of loans without considering valuation of the property, unauthorised constructions, W.P.(C).No.20699/19 6 promotion and appointment of employees and lapses in the payment of retirement benefits and in the payment of tax. It is stated that since the complaint was submitted by 30 members of the society, which constitutes not less than one third of quorum for the general body meeting, an enquiry had been ordered under Section 65(1)(d) of the Act. It is stated that the Registrar had specifically considered the complaint and had entered a satisfaction that it is essential to conduct an enquiry and that as such, an enquiry had been ordered and the enquiry officer has already started the proceedings and that the hearing of the retired and present employees is almost complete.
6. The 4th respondent has also placed a counter affidavit on record. It is submitted that Annexure 1 complaint submitted by Member No.821 and 29 other members of the society have raised several allegations of serious nature with regard to the functioning of the society. It is stated that a reading of the decision of the Division Bench in Melukkara Service Co- operative Bank Ltd.'s case (supra) would show that what is W.P.(C).No.20699/19 7 required is only the subjective satisfaction of the officer concerned and in case there is a complaint under Section 65(1)(d) by the required number of members, what is required is only a prima facie satisfaction that an enquiry is necessary. Paragraph 18 of the said decision reads as follows:-
"The responsibility cast upon the Registrar, while he acts suo motu or on his own motion, is, according to us, greater than the responsibility imposed on him while he acts under the provisions of S.65(1)(b) to (f) of the Act. This is because, under the statutory prescriptions, when the Registrar receives an inquiry report from the Vigilance Officer or a report of the Director of the Co-operative Audit or an application of the majority of the members or an application of the apex society, then he will generally have to act, subject to a satisfaction being prima facie arrived at. However, when he acts suo motu, which is to say, when he acts without any of such inquiry reports or applications, then the responsibility will have to be discharged by him with greater circumspection and circumscription."
7. It is stated that in the case dealt with by the Division Bench, the facts were that the proceedings have been initiated on the complaint of one individual who claimed to be a member of the society. The Bench found that vague allegations were made against the working of the society and that the ordering of the enquiry, suo motu, under Section 65(1)(a) of the Act was not W.P.(C).No.20699/19 8 justified, since the satisfaction of the Registrar as to the necessity for conduct of enquiry was evidently required. It is contended that in the instant case, the enquiry is ordered under Section 65(1)(d) and all is required is prima facie satisfaction that there is merit in the complaint preferred by the required number of members of the society and once such satisfaction is entered, there can be no interdiction with regard to the conduct of the enquiry.
8. I have considered the contentions advanced. Exhibit P1 specifically stated that a complaint had been received on 15.6.2019 from 30 members of the society requiring the conduct of an enquiry as provided in Section 65(1)(d). The impugned order states that there were serious allegations in the complaint with regard to the functioning of the society. Thereafter, the Joint Registrar proceeds to order the conduct of the enquiry and specifies the matters into which the enquiry is to be conducted. Section 65 provides for an enquiry either suo motu by the Registrar or on an enquiry report of the Vigilance Officer, on a report of the Director of Co-operative W.P.(C).No.20699/19 9 audit or on an application by Apex Society of financing bank of which the Society is a member, or on an application of a society to which the society is affiliated. Section 65(1)(d) provides for an enquiry on an application by the majority of the members of the committee of the society or by not less than one-third of the quorum of the general body meeting, whichever is less. In the instant case, the enquiry is ordered on the basis of a complaint submitted by the 4 th respondent and 29 other members. It is not disputed that it is application by not less than one third of the quorum of the general body meeting. The judgment of the Division Bench is to the effect that the suo motu enquriy under section 65(1)(a) cannot be ordered by the Joint Registrar unless he has some material to enter a satisfaction that a conduct of such an enquiry is necessary. The Division Bench, in its judgment, has specifically stated that where an enquiry is ordered under clauses (b) to (f) of Section 65(1), then all that is required is a prima facie satisfaction that such an enquiry is necessary. In Exhibit P1, the Joint Registrar specifically states that on an examination of the complaint preferred by 30 members of the society, he is W.P.(C).No.20699/19 10 satisfied that it is absolutely essential to conduct an enquiry. The contention of the learned Senior Counsel for the petitioner is that even for ordering an enquiry under section 65(1)(d), there has to be material collected by the Joint Registrar to record the satisfaction that an enquiry is necessary. However, on a reading of Section 65(1) and the judgments on the point, I am unable to accept the contention that where a complaint is preferred by the majority of the members of the committee or not less than one third of the quorum of the general body of the Society, the Registrar has to send the matter for any inspection to record a satisfaction that an enquiry is required to be conducted. I am of the opinion that such a procedure is not called for where the enquiry is ordered under the provisions of Section 65(b) to (f) and all that is required is prima facie satisfaction that there is some merit in the complaint. Such a satisfaction has been recorded by the Joint Registrar in Exhibit P1 order itself.
9. In the above view of the matter, I am of the opinion that the challenge against Exhibit P1 order on the ground that there is W.P.(C).No.20699/19 11 no satisfaction recorded as to the necessity of the conduct of the enquiry has to fail. Ordered accordingly. However, it is made clear that the enquiry will be conducted only in accordance with the prescriptions of the statute and the rules and that proper opportunity will be given to the petitioners to participate in the enquiry and no action shall be taken against them except after complying with all due procedure in accordance with law.
Sd/-
Anu Sivaraman, Judge sj W.P.(C).No.20699/19 12 APPENDIX PETITIONERS' EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE PROCEEDINGS BEARING NO.CRP.3244/19 DATED 26.06.2019 ISSUED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES.
EXHIBIT P2 TRUE COPY OF THE AUDIT MEMORANDUM FOR THE YEAR 2017-18.
RESPONDENT'S EXHIBITS:
EXHIBIT R1 A TRUE COPY OF THE COMPLAINT DATED 15.06.2019 GIVEN BY THE MEMBERS REFERRED TO IN EXHIBIT P1 ORDER.
EXHIBIT R4 THE COPY OF THE COMPLAINT DATED
15/06/2019 SUBMITTED BY MEMBER NO.821
AND ANOTHER 29 MEMBERS OF THE 1ST
PETITIONER SOCIETY BEFORE TH REGISTRAR
OF CO-OPERATIVE SOCIETIES, IDUKKI.
True copy
PS to Judge