Kerala High Court
The President, Managing Committee vs The Joint Registrar Of Co-Operative ... on 31 May, 2021
C.T.RAVIKUMAR &
K.HARIPAL, JJ.
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W.A.No. 1751 of 2020
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Dated 31st May, 2021 ORDER OF REFERENCE Ravikumar, J.
The above appeal is directed against the judgment dated 3.12.2020 in W.P.(C)No.2435 of 2020. In the writ petition the challenge was against Ext. P6 notice dated 13.1.2020 issued by the Joint Registrar of Co-operative Societies (General), Idukki District, the first respondent, under Section 32 of the Kerala Co-operative Societies Act, 1969, for brevity 'the Act' only. As a matter of fact, it is the second round of litigation for the appellant on the issue involved. Earlier, the appellant herein filed W.P.(C)No.20699 of 2019 seeking quashment of proceedings whereby and whereunder an enquiry under Section 65 of the KCS Act was ordered in Kudayathoor Service Co-operative Bank Ltd. No.3316 viz., Ext.P1 therein. A declaration to the effect that Ext.P1 did not satisfy the fundamentals of law governing the field and that it is in contravention of the settled legal positions, was also sought therein besides seeking issuance of a writ of Mandamus commanding the respondents therein to drop the inquiry ordered thereunder. Aggrieved by the nature of the disposal of the said writ petition W.A.No.2116 of W.A.No.1751 of 2020 2 2019 was filed. During the course of argument in that appeal a contention was raised that as the enquiry under Section 65 of the KCS Act, conducted following the procedure under Rule 66 of the Kerala Co- operative Societies Rules, 1969 (for short 'the KCS Rules'), may lead to drastic consequences including supersession of the Managing Committee in power of the Society concerned, before taking any action based on the report submitted, after such enquiry person/persons likely to be affected by any such order to be passed based on the said report should be furnished with copy of the said report and should also be afforded with an opportunity to be heard, to adhere to the salutary principles of natural justice, more particularly, the provisions under Rule 66(5) of the KCS Rules. The said contention was resisted by the respondents therein contending that the same is untenable in view of the decision of a Division Bench of this Court in State of Kerala v. Aravindakshan Nair reported in 2010 (3) KLT 11. It was contended by them that going by the said decision Rule 66 , more particularly Rule 66(5) of the KCS Rules, did not contemplate granting of any opportunity of being heard to any society or any person except in a situation where the report carries a recommendation for distribution of the cost of inspection amongst the parties specified in Section 67 of the KCS Act. That apart, the learned Government Pleader and the learned counsel for the 4th respondent therein submitted that such a situation W.A.No.1751 of 2020 3 had not arisen at that stage as the inquiry ordered under Section 65 of the KCS Act was not yet completed by then. The learned counsel for the appellant therein contended that the legislative intention could not be understood as one confining the mandate for affording opportunity of being heard only in a case where the report in the inquiry under Section 65 of the KCS Act carries a recommendation for distribution of cost of inspection amongst the parties specified under Section 67 of the KCS Act. After considering the said rival contentions on that issue and taking note of the fact that based on Ext.P1 order, marked as such therein, no report was submitted after conducting the inquiry, as per the judgment dated 24.10.2019 the question whether the decision in Aravindakshan Nair case (supra) requires reconsideration was left open to be raised at the appropriate time, if such a contingency arises in future, on the considered view that there was no reason to presume that outcome of the enquiry under Ext.P1 would be adverse to the appellant. After considering the other contentions mounted to challenge the judgment in W.P.(C)No.20699 of 2019 the said appeal was dismissed. Subsequently, on Ext.P7 report submitted after conducting inquiry under Section 65 of the KCS Act the Joint Registrar issued Ext.P6 notice under Section 32 of the KCS Act. It is challenging the same that W.P.(C) No.2435 of 2020 was filed. The learned Single Judge held that Ext.P6 reveals allegations / findings regarding violation of the W.A.No.1751 of 2020 4 bye-laws of the Society and the Co-operative Societies Rules and their correctness is a matter to be considered in the hearing under Section 32 of the KCS Act. Furthermore, it was held:-
"As to whether the irregularities occurred/committed while the present committee was in office and also as to whether the irregularities pointed out are rectifiable irregularities and whether they are sufficient enough to attract supersession, are all matters to be considered in the enquiry under Section 32."
Obviously, the learned Single Judge also referred to the decision in Aravindakshan Nair case (supra) and noted that the law laid down thereunder is that opportunity to challenge a report under Rule 66 of the KCS Rules (be it a report under Section 65 of the KCS Act or under Rule 66 of the KCS Rules), arises only in a proceeding under Section 32 or Section 68 of the KCS Act while dismissing W.P.(C)No.2435 of 2020 with the observation that it is sure that the authorities would bear in mind the directions of the Apex Court in State of M.P. and Ors. v. Sanjay Nagayach and Ors. reported in (2013) 7 SCC 25. It is in the said circumstances that the learned Senior Counsel appearing for the appellant raised the question 'whether the decision in Aravindakshan Nair case (supra) requires reconsideration' availing the liberty granted under Ext.P5 judgment or in other words, raising the question that when the enquiry under Section 65 of the KCS Act conducted following the procedure under Rule 66 of the KCS Rules may W.A.No.1751 of 2020 5 lead to drastic consequences including supersession of the Managing Committee in power of the Society concerned whether before taking any action based on the report submitted after such enquiry the person/persons likely to be affected by any such order to be passed based on the said report should be furnished with copy of the said report and should also be afforded with an opportunity to be heard, to adhere to the salutary principles of natural justice, more particularly, the provisions under Rule 66(5) of the KCS Rules and whether the right to be heard on such a report could be confined only in cases where the report in the inquiry under Section 65 of the KCS Act carries recommendation for distribution of cost of inspection amongst the parties specified under Section 67 of the KCS Act ?
2. Normally, when consideration and consequential action on a report can lead to drastic consequences strict adherence of principles should be the rule. Whether it is suffice to satisfy its adherence by issuing a notice after proposing the consequential action and seeking explanation as to why the proposed action should not be taken? This question assumes relevance taking note of the fact that a report in an inquiry conducted under Section 65 of the KCS Act, following the procedures under Rule 66 of the KCS Rules, may lead to supersession of the Managing Committee of the Society concerned or to initiation of surcharge proceedings against the members of the said W.A.No.1751 of 2020 6 committee and such other persons allegedly responsible for the irregularities, violations and illegalities mentioned in the report.
3. In such circumstances, the question is whether an opportunity is to be given, after providing the copy of the report, but before arriving at a tentative decision on the action to be taken based on the report or after taking a tentative decision and then for explaining as to why the said decision should not be finalised.
4. For considering the aforesaid questions it is worthy to refer to Rule 66(5) of the KCS Rules. It reads thus:-
"66. Procedure for the conduct of inquiry and inspection:- (1).........
(5) The person authorised to conduct the inquiry of inspection shall submit his report to the Registrar on all points mentioned in the order referred to in clause
(c) to sub-rule (1). The report shall invariably contain a latest balance sheet of the society and the last known addresses of the members of the Committee and of the Secretary. The report shall also contain his findings and the reason therefore; supported by such documentary or other evidence as recorded by him during the course of the injury or inspection. He shall also specify in his report the costs of the inquiry or inspection together with reasons and recommend to the Registrar the manner in which the entire cost or a part thereof may be apportioned amongst the parties specified in Section 67. The Registrar shall pass such orders thereon as may be considered just after giving a reasonable opportunity of being heard to the society, person or persons concerned."
5. It is true that in Aravindakshan Nair case (supra) a Division Bench of this Court held that Rule 66, more particularly Rule W.A.No.1751 of 2020 7 66(5) of the KCS Rules did not contemplate affording of an opportunity of being heard to any society or any person, except in a situation where the report in the inquiry under section 65 of the KCS Act carries a recommendation for distribution of cost of inspection amongst the parties specified under Section 67 of the KCS Act. According to us , it requires a reconsideration. It is to be noted that recommendation for distribution of cost amongst the parties specified in Section 67 of the KCS Act cannot strictly be regarded as a drastic consequence arising from the report and, as the provision suggest, it is only a recommendation for recovering the cost of inspection from the specified parties. Is there any real difference in impact when an opportunity is given to the parties concerned before any tentative decision is taken on the report received after the inquiry under Section 65 of the Act and after a tentative decision is taken and then opportunity is provided. These aspects were not gone in detail and no specific reason is assigned as to why an opportunity should be confined only in cases where the report in the inquiry under Section 65 of the KCS Act carries a recommendation for distribution of cost of inspection amongst the parties specified under Section 67 of the KCS Act. Whether the statutory mandate for issuance of notice if proceedings are initiated based on such a report for supersession under Section 32 of the Act or for surcharging under Section 68 of the Act notice would be issued to W.A.No.1751 of 2020 8 the party concerned, be a reason for holding that Rule 66, more particularly Rule 66(5) of the KCS Rules did not contemplate affording of an opportunity of being heard to any society or any person, except in a situation where the report in the inquiry under Section 65 of the KCS Act carries a recommendation for distribution of cost of inspection amongst the parties specified under Section 67 of the KCS Act. It is true that the view taken in Aravindakshan Nair case was followed in the decisions in Registrar of Co-operative Societies, Thiruvananthapuram v. N.P.Paulose and others (ILR 2017 (3) Kerala 317) and in Prabhakaran Pillai v. Asst. Registrar of Co- operative Societies (General) (2017 (2) KLT 620).
For all these reasons we are of the considered view that the decision in Aravindakshan Nair case (supra) requires reconsideration. Hence, place this matter before the Hon'ble the Chief Justice for appropriate orders.
Sd/-
C.T.RAVIKUMAR Judge Sd/-
K.HARIPAL Judge TKS