AzhaKathu Thomas Jose v. Joint Registrar of Co-operative Societies (General) & The Thidanadu Service Cooperative Bank Ltd. & The Committee of The Thidanadu Service Cooperative Bank Ltd. & Mathew Joseph @ Benny S/o Joseph

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH TUESDAY, THE 14[TH] DAY OF MARCH 2023 / 23RD PHALGUNA, 1944** ## **WP(C) NO. 20877 OF 2021** ## **PETITIONER:** AZHAKATHU THOMAS JOSE AGED 65 YEARS S/O.THOMAS, AZHAKATHU HOUSE, THIDANADU P.O., KOTTAYAM DISTRICT. BY ADVS. GEORGE SEBASTIAN PHILIA KOSHY ## **RESPONDENTS:** - 1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, COLLECTORATE P.O., KOTTAYAM, PIN - 686 002. - 2 THE THIDANADU SERVICE CO-OPERATIVE BANK LTD. REPRESENTED BY ITS SECRETARY, THIDANADU, KOTTAYAM DISTRICT, PIN - 686123. - 3 THE COMMITTEE OF THE THIDANADU SERVICE COOPERATIVE BANK LTD. THIDANADU, KOTTAYAM DISTRICT, PIN - 686 123, REPRESENTED BY ITS PRESIDENT. - 4 MATHEW JOSEPH @ BENNY S/O.JOSEPH, KANNATTUKUNNEL, CHEMMALAMATTOM P.O., KONDUR VILLAGE, KOTTAYAM DISTRICT, PRESENTLY WORKING AS SECRETARY, THE THIDANADU SERVICE COOPERATIVE BANK LTD., THIDANADU, KOTTAYAM DISTRICT, PIN - 686 123. BY ADVS. R1 TO R3 SHAJI THOMAS R4 GEORGE MATHEW M.D.SASIKUMARAN WP(C) No.20877/2021 -:2:- MATHEW K.T. SUNIL KUMAR A.G GEORGE K.V. DIPU JAMES STEPHY K REGI PRAVEEN S. JEN JAISON THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 1.03.2023, THE COURT ON 14.03.2023 DELIVERED THE FOLLOWING: WP(C) No.20877/2021 -:3:- **==> picture [118 x 10] intentionally omitted <==** Dated this the 14[th ] day of March, 2023 Ext.P4 order passed by the 3[rd] respondent declining sanction under section 19 of the Prevention of Corruption Act, 1988 (for short, the PC Act) is under challenge in this writ petition. 2. The petitioner is a member of the 2[nd] respondent society. The 4[th] respondent is the Secretary of the 2[nd] respondent society. The petitioner filed Ext.P1, a private complaint, at the Court of Enquiry Commissioner and Special Judge, Kottayam (for short, the court below), alleging financial irregularities and misconduct by the 4[th] respondent in connection with the gold loans availed by his wife. As per Ext.P2 order, the court below directed the petitioner to produce the order of sanction under section 19 of the PC Act. Accordingly, the petitioner gave Ext.P3 representation to the 3[rd] respondent, the sanctioning authority, to accord sanction to proceed against the 4[th] respondent. The 3[rd] respondent, as per Ext.P4 order, declined sanction. The said order WP(C) No.20877/2021 ## -:4:- is under challenge in this writ petition. 3. Heard Sri.George Sebastian, the learned counsel for the petitioner, Sri.Shaji Thomas, the learned counsel for the 1[st] , 2[nd] and 3[rd] respondent, Sri.George Mathew, the learned counsel for the 4[th] respondent as well as Sri.A.Rajesh, the learned Special Public Prosecutor for VACB. 4. The learned counsel for the petitioner submitted that severe allegations of corruption and misconduct had been levelled against the 4[th] respondent, and the petitioner has also furnished materials to substantiate the same. Thus, the 3[rd] respondent ought to have accorded sanction for prosecution. The counsel further submitted that the 3[rd] respondent had passed Ext.P4 order without considering the relevant materials and applying its mind, and thus, it is liable to be set aside. 5. On the other hand, the learned counsel for the 1[st] , 2[nd] and 3[rd] respondent and the 4[th] respondent submitted that the allegation made against the 4[th] respondent in Ext.P1 complaint is false and baseless, and even if the entire allegations in the complaint are believed in toto, no offence under the PC Act is WP(C) No.20877/2021 -:5:- attracted and thus, the 3[rd] respondent was absolutely justified in declining sanction. 6. It is not in dispute that the wife of the 4[th] respondent availed nine gold loans from the 2[nd] respondent society while the 4[th] respondent was in charge of the gold loans of the 2[nd] respondent society. According to the petitioner, the 4[th] respondent deliberately closed those loans without receiving the entire amount due to the Bank and thereby caused substantial financial loss to the society and pecuniary advantage to his wife. The petitioner's wife, who is also a member of the 2[nd] respondent, filed a complaint to the Registrar of Co-operative Societies in this regard. In response to one of such complaints, the Joint Registrar (General) of Co-operative Societies conducted an enquiry through the Assistant Registrar of Co-operative Societies, Meenachil and submitted Ext.P5 report. The reply given by Assistant Registrar of Co-operative Societies, Meenachil to the petitioner’s wife is produced as Ext.P6. A perusal of Exts.P5 and P6 would show that nine gold loans availed by the wife of the 4[th] respondent were closed without receiving the entire loan amount. WP(C) No.20877/2021 -:6:- There was a shortage of `2,307/-. Exts.P4 and P6 would show that the wife of the 4[th] respondent paid the sum of `2,307/- later, and the 4[th] respondent tendered an apology. It would further show that, on account of the incident, the 4[th] respondent was suspended from service and later got reinstated. The learned counsel for the petitioner submitted that though Exts.P5 and P6 were produced as document Nos.5 and 6 along with Ext.P1 complaint, the 3[rd] respondent, while passing Ext.P4 order, did not look into those documents at all. Thus, there is total nonapplication of mind, submitted the counsel. 7. S.19(1) of the PC Act says that no court shall take cognizance of an offence punishable under sections 7, 10, 11, 13 and 15 alleged to have been committed by a public servant, except with the previous sanction of the competent authority referred to in subsection (a), (b) and (c). The question of sanction is of paramount importance for protecting a public servant who has acted in good faith while performing his duties. The purpose of obtaining sanction is to see that the public servant is not entangled in false and frivolous cases. The grant of sanction is WP(C) No.20877/2021 -:7:- not a mere formality but a solemn act which affords protection to the government servant against frivolous prosecution. All the relevant records and materials for the grant of sanction must be made available to the sanctioning authority, which must undertake complete and conscious scrutiny of those records and materials independently applying its mind before deciding whether to grant sanction or not. The order of granting or declining sanction should reflect that the sanctioning authority was furnished with all relevant facts and materials and applied its mind to all those materials. The validity of the sanction would therefore depend upon the materials placed before the sanctioning authority and on the application of mind by the sanctioning authority to those materials and facts of the case. On going through the materials and facts, the sanctioning authority has to apply its own independent mind to generate genuine satisfaction whether the prosecution has to be sanctioned or not. When the order granting or declining sanction is challenged before a court, the court must determine whether there has been an application of mind on the part of the sanctioning authority concerned with the materials placed before it. The order of WP(C) No.20877/2021 -:8:- sanction must ex facie disclose that the sanctioning authority had considered the facts and all relevant materials placed before it ( _See_ _**Central Bureau of Investigation v. Ashok Kumar Aggarwal**_ (2014) 14 SCC 295, _**Mansukhlal Vithaldas Chauhan v. State of Gujarat**_ 1997 KHC 1065 and _**CBI v. Ashok Kumar Aggarwal**_ 2013 KHC 4983). 8. In Ext.P2 order, the court below observed that serious offence of corruption is alleged against the 4[th] respondent. Ext.P4 would show that disciplinary action was taken against the 4[th] respondent. It would further show that the Bank suffered a financial loss since the 4[th] respondent closed the gold loans availed by his wife without receiving the entire amount due. The sanction was declined, mainly holding that the complaints of the petitioner were enquired into and were rejected by the authorities holding that those complaints were baseless. But there is nothing on record to show that any of the authorities entered into the petitioner’s complaints and were rejected. Those complaints' details are not mentioned in Ext.P2 order. The 3[rd] respondent did not state in Ext.P4, which are the documents relied on by it, to WP(C) No.20877/2021 ## -:9:- conclude that the complaints of the petitioner are baseless. A reading of Ext.P5 would clearly show that while the 4[th] respondent was in charge of the gold loan, his wife availed of gold loans, and they were closed without receiving the entire amount due to the Bank. His wife had indeed repaid the amount, and the 4[th] respondent had tendered an apology. Merely because the amount was repaid and the departmental action against the 4[th] respondent was dropped as he tendered an apology, it cannot be said that the offence under the PC Act is not attracted. The question whether the action of the 4[th] respondent would amount to misconduct or corruption must be examined by the 3[rd] respondent independently based on the materials on record. The 3[rd] respondent has access to all the documents pertaining to the gold loan transaction. But it appears that none of those documents was verified before taking a decision on Ext.P3 representation. It appears that the 3[rd] respondent passed Ext.P4 order without considering the documents produced by the petitioner along with Ext.P1. Thus, there is total non-application WP(C) No.20877/2021 ## -:10:- of mind on the part of the 3[rd] respondent. For the reasons stated above, Ext.P4 order declining sanction cannot be sustained. Accordingly, it is set aside. The matter is remitted back to the 3[rd] respondent for reconsideration to pass a fresh order in accordance with the law. Writ petition is allowed as above. **Sd/DR. KAUSER EDAPPAGATH** **JUDGE** **Rp** WP(C) No.20877/2021 ## -:11:- ## **APPENDIX OF WP(C) 20877/2021** |PETITIONER EXHIBITS|| |---|---| |Exhibit P1|A TRUE COPY OF THE COMPLAINT| ||(C.M.P.NO.512/2020) OF THE COURT OF THE| ||ENQUIRY COMMISSIONER AND SPECIAL JUDGE,| ||KOTTAYAM.| |Exhibit P2|A TRUE COPY OF THE ORDER DATED| ||07/01/2021 IN C.M.P.NO.512/2020 PASSED| ||BY THE COURT OF THE ENQUIRY COMMISSIONER| ||AND SPECIAL JUDGE, KOTTAYAM.| |Exhibit P3|A TRUE COPY OF THE REPRESENTATION DATED| ||19/01/2021 SUBMITTED BY THE PETITIONER| ||BEFORE THE 3RD RESPONDENT.| |Exhibit P4|A TRUE COPY OF THE ORDER BEARING NO.677| ||DATED 17/3/2021 OF THE 3RD RESPONDENT.| |Exhibit P5|A TRUE COPY OF THE REPORT DATED| ||19/2/2020 SUBMITTED BY THE 1ST| ||RESPONDENT TO THE REGISTRAR OF CO-| ||OPERATIVE SOCIETIES.| |Exhibit P6|A TRUE COPY OF THE COMMUNICATION DATED| ||21/10/2020 ISSUED BY THE ASSISTANT| ||REGISTRAR (GENERAL) MEENACHIL, PALA.|