Baby Thomas S/o. Thomas vs State of Kerala and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** ## **TUESDAY, THE 19TH DAY OF JANUARY 2021 / 29TH POUSHA, 1942** ## **WP(C).No.23269 OF 2020(G)** ## **PETITIONER:** **BABY THOMAS S/O.THOMAS, KOOVACKAL HOUSE, CHERUKATTOOR P.O., KANNADIMUKKU, PIN-670721, WAYANAD DISTRICT.** **BY ADVS. SRI.K.T.THOMAS SRI.MATHEW B. KURIAN SRI.NIKHIL BERNY** ## **RESPONDENTS:** **1 STATE OF KERALA REP. BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF DAIRY DEVELOPMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001. 2 THE DEPUTY DIRECTOR, DAIRY DEVELOPMENT DEPARTMENT, C BLOCK, CIVIL STATION, KALPETTA NORTH P.O., WAYANAD-673121. 3 PANAMARAM MILK PRODUCERS CO-OP. SOCIETY LTD. NO.C 35(D), APCOS, PANAMARAM P.O., WAYANAD DISTRICT-670721 REP. BY ITS SECRETARY. 4 VARKEY, S/O.JOSEPH, PATTAMKULATHI HOUSE, CHERUKATTU P.O., PANAMARAM, WAYANAD DISTRICT. IS IMPLEADED AS PER ORDER DATED 12-11-2020 IN IA 1/20. R1-2 BY SRI PP THAJUDEEN, GOVERNMENT PLEADER R3 BY ADV. DR.GEORGE ABRAHAM R4 BY ADV. B.S.SWATHI KUMAR** **SRI TK AJITH KUMAR SC** W.P.(C) No.23269/2020 2 **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.P.(C) No.23269/2020 3 ## **J U D G M E N T** Under challenge in this writ petition is Ext.P9 order passed by the 2nd respondent whereby the petitioner herein, who was the President of the Panamaram Milk Producers Co-operative Society, was disqualified of the membership of the Society invoking Rule 44(j) of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as ‘the Rules’ for short) for violation of clause 5 (2)(i) of the bye-laws of the Society. 2. The petitioner states that based on a complaint lodged by a certain Varkey, the additional 4th respondent herein, Ext.P1 notice was issued to him on 15.4.2020 informing him that a sum of Rs.7,49,960.04/- is due from the petitioner to the Society. He was asked to show cause why his membership from the managing committee shall not be cancelled. The petitioner states that the allegations in Ext.P1 notice are unsubstantiated and no amount as stated in the notice was due from him. A meeting of the managing committee was convened and it was decided to request the 2nd respondent to clarify the discrepancies regarding excess payment for the milk supplied by the petitioner. A subcommittee was also formed among the members of the managing committee and the Secretary was entrusted to verify the accounts and submit a report. The petitioner W.P.(C) No.23269/2020 4 states that the subcommittee noticed serious irregularities in its report and sought for detailed examination of the accounts by an officer of the department. An inspection was ordered under Section 66 of the Kerala Cooperative Societies Act, 1969 (hereinafter referred to as ‘the Act’ for short) and a report was submitted before the 2nd respondent by the inspecting officers. In the report so submitted, it was found that a sum of Rs.7,09,912.94/- was due and the petitioner was directed to remit the amount on or before 5.10.2020. Ext.P4 notice was issued informing the petitioner that his failure to remit the amount or offer proper explanation would invite disqualification under Rule 44 of the Rules. The petitioner states that Ext.P5 explanation was submitted by him to Ext.P4 notice and the 2nd respondent was requested to complete the audit of accounts before calling upon the petitioner to pay the amount. The petitioner states that without considering the explanation offered by the petitioner, Ext.P6 notice was issued informing the petitioner that he is a defaulter to the society and in view of the provisions of the bye-laws of the society, he was ineligible to continue as President/member of the managing committee. The petitioner states that on receipt of Ext.P6, he appeared before the 2nd respondent and sought for time to file an explanation and requested that the documents relied on by inspecting officers be handed over to enable him to furnish the explanation. According to the petitioner, without W.P.(C) No.23269/2020 5 considering any of the contentions of the petitioner, the 2nd respondent proceeded to pass Ext.P9 order disqualifying the petitioner. He contends that the principles of natural justice were violated and the issuance of the order impugned is vitiated by mala fides and arbitrariness. It is in the above background that this writ petition is filed seeking for a declaration that Ext.P9 is illegal and for quashing the same. 3. The 2nd respondent has filed a counter-affidavit wherein it is stated that a complaint was filed by the additional 4th respondent stating that excess payments had been made to the petitioner in addition to the amount due to him towards the milk supplied. An enquiry was conducted by the 2nd respondent and it was revealed that a sum of Rs.7,47,960.04/was paid in excess. In the monthly bills issued to the petitioner from the financial year 2015-2016 onwards, it has been mentioned that substantial amounts towards the cattle feed and fodder supplied from the consumer store are due from the petitioner. However, despite issuance of separate notices, the amount due was not paid. While so, the additional respondent approached this Court and filed a W.P.(C) No.35251/2019 seeking directions and by judgement dated 20.12.2019, the 2nd respondent was ordered to consider his complaint and take a decision after hearing all concerned parties including the petitioner. The petitioner was summoned W.P.(C) No.23269/2020 6 and his statement was recorded by the 2nd respondent. Thereafter, Exhibit P1 notice was issued to the petitioner, calling upon him to pay the dues. On 14.5.2020, the petitioner issued Exhibit R2(c) letter narrating the sequence of events and detailing the manner in which payments came into his account. He has stated that he is prepared to remit the amounts considering the overall interests of the society and all that he wanted was some time to effect payment. It is stated that the petitioner as the President of the Society undertook in the Board meeting that the amounts due from him shall be cleared on or before 30.6.2020. On the basis of the above undertaking, Exhibit R2(e) was issued granting time to the petitioner to effect payment. When the petitioner went back on his word, Exhibit R2(f) was issued to the society to take appropriate steps to get back the amount due from the President and the other members. It is further stated that as per the provisions of the Act and Rules, it is the duty of the petitioner in his capacity as the President to maintain the accounts and registers in proper form and keep the cash balance and other assets.As the President, he has a major role in the administration of the society. Instead of protecting the interest of the society and acting as a role model, the petitioner has misappropriated amounts and despite giving an undertaking to pay the amount, has gone back on his word. It is stated that the petitioner has committed default as defined under Rule 2(d) of the Rules W.P.(C) No.23269/2020 7 and hence, the order passed by the respondent disqualifying the petitioner from the membership of the society is in order. 4. The additional 4th respondent has also filed a counter. It is stated that the petitioner has suppressed material facts while filing the writ petition and has disentitled himself from claiming any discretionary relief. It is pointed out that though the petitioner has produced a copy of minutes dated 7.7.2020 as Ext.P2, he has failed to produce Ext.R4(c) decision which was taken on the same day. In Ext.R4(c), the petitioner has admitted in no uncertain terms that the full responsibility for payment of the dues is on him and no one else is responsible. However, for reasons best known to the petitioner, this aspect has been suppressed. It is stated that the allegation in the writ petition that the petitioner was not granted sufficient notice and intimation is incorrect. Pursuant to orders passed by this Court in the writ petition filed by the additional respondent, the 2nd respondent had heard the petitioner and his statement was also recorded. According to the additional respondent, the intention of the petitioner is to ensure that no action is taken against him as a defaulter with a view to make sure that he shall not be disqualified from contesting in the next ensuing election. It is stated that after having admitted that money is due from him to the society, that too, in the general body meeting and after admitting his W.P.(C) No.23269/2020 8 default by his communications addressed to the 2nd respondent, he cannot be heard to contend that the principles of natural justice have been violated. It is further stated that the proceedings have started much earlier to Ext.P1 and the inquiries so far conducted has revealed that the petitioner is guilty of serious irregularities and financial mismanagement. 5. I have considered the submissions advanced and have carefully gone through the records. 6. Admittedly, the petitioner is the President of the 3rd respondent society. The records produced before the is Court reveals that the petitioner used to supply the milk to the society. He also used to make purchases of cattle fodder and other feed from the consumer stores run by the society. The bills are regularly issued to the members. The account details from 2015-2016 till date have revealed that the petitioner has not paid the amounts for the purchases made by him from the consumer store. It was in the said circumstances that several persons including the additional 4th respondent lodged complaints about the excess payment made to the petitioner. Rule 47 of the Rules dealing with custody of cash, securities, sales etc. of the Society states that the functioning of the Society shall be subject to the overall control of the President. The records produced before this Court reveals that the inspection under W.P.(C) No.23269/2020 9 Section 66 of the Act disclosed that a sum of Rs.7,09,912.94/- was due to the society from the petitioner. 7. The main contention of the petitioner in this writ petition is that he was not heard and that the quantum of his liability was not fixed in accordance with law. I am afraid the said contention cannot be sustained. The additional 4th respondent had filed W.P.(C) No.35251/2019 asserting that his complaints were lying unattended by the official respondents and this court, by judgment dated 20.12.2019, had directed the 2nd respondent to take a decision after hearing all concerned. Ext.R2(b) is the statement of the petitioner recorded by the 2nd respondent. In Ext.R2(c) communication issued by the petitioner to the 2nd respondent, the petitioner has stated that it was only much later that he realized that only the first two loads were free and he was bound to make payments for the subsequent loads. He has also stated in unequivocal terms that the amounts towards cattle feed purchased by him was credited to his account. He has also stated that he was trying to avail a loan to settle the amounts due to the society. All that he wanted was some time to clear the dues and he sought for delaying the proceedings under Rule 44 of the Rules. Ext.R2(d) is the copy of the minutes dated 26.6.2020 of the Board meeting wherein it is stated that the petitioner would clear the dues to the W.P.(C) No.23269/2020 10 bank on or before 30.6.2020. Ext.R4(c) is the copy of the minutes which is dated 7.7.2020 wherein the petitioner has stated in no uncertain terms that he acknowledges the entire dues to the society. Interestingly, the petitioner has not chosen to disclose these pertinent aspects in the writ petition filed by him and he has taken a contention that the order was passed behind his back. 8. It is not denied that clause 5.2(i) and 6.1(vi) of the Bye-laws of the society states in clear terms that the members are bound to pay the dues without default and his/her failure is a reason for disqualification from holding membership. Rule 44 of the Rules which provides for disqualification of membership recognizes that a person can be disqualified for violation of provisions of the bye-laws. In the case on hand, the petitioner is in default to the society as defined under Rule 2(d) of the Rules, 1999. Maybe, he is not a defaulter as in order to be categorized as a defaulter, a decree has to be obtained. As discussed earlier, the petitioner has not disputed his liability at any point of time prior to the filing of this writ petition. As held by this Court in **Surendran Nair v. State of Kerala[1]** for attracting the disqualification under Rule 44, a member need only be in default. - 1 [2002 (3) KLT 268] W.P.(C) No.23269/2020 11 9. The contention of the petitioner that unless a surcharge order is passed against him under Section 68 of the Act, he cannot be termed as a person in default does not appeal to me. While dealing with Rule 44, all that is required to be looked into is whether a member was ‘in default’ or was a ‘defaulter’ as defined in Rule 2(d) and 2(e) of the Rules. Surcharge proceedings on the other hand is initiated when in the course of an audit, inquiry or inspection, it is found that a person who was entrusted with the organization or management of such society or who is or has been an officer or an employee of the society has made any payment contrary to the Act, Rules or Bye-laws or is caused any loss or damage in the assets of the society by breach of trust or willful negligence or mismanagement or has misappropriated or fraudulently retained any money or has destroyed or caused the destruction of the records. It is in the said circumstances that the Registrar is empowered to conduct an enquiry and after giving an opportunity to the person being heard, require him to repay or restore money with interest and to pay compensation. Both these provisions operate in two different planes. In that view of the matter, the petitioner cannot be heard to contend that unless surcharge proceedings are initiated and the proceedings are finalized, he cannot be termed as a person ‘in default’. W.P.(C) No.23269/2020 12 Having considered all the relevant facts, I am of the considered opinion that the petitioner has not made out any case for interference. This writ petition will stand dismissed. **Sd/-** **RAJA VIJAYARAGHAVAN V JUDGE** ps/19/1/2021 W.P.(C) No.23269/2020 13 ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 15.04.2020 ISSUED BY 2ND RESPONDENT.** **EXHIBIT P2 TRUE COPY OF THE MINUTES OF THE MEETING DATED 07.07.2020 OF THE MANAGING COMMITTEE.** - **EXHIBIT P3 TRUE COPY OF THE REPORT DATED 16.07.2020 SUBMITTED BY THE SUB COMMITTEE.** - **EXHIBIT P4 TRUE COPY OF THE NOTICE DATED 24.09.2020 ISSUED BY 2ND RESPONDENT.** - **EXHIBIT P5 TRUE COPY OF THE REPLY DATED 07.10.2020 SUBMITTED BY THE PETITIONER.** **EXHIBIT P6 TRUE COPY OF THE NOTICE DATED 14.10.2020 ISSUED BY 2ND RESPONDENT.** - **EXHIBIT P7 TRUE COPY OF THE LETTER DATED 22.10.2020 SUBMITTED BY THE PETITIONER SEEKING TIME.** - **EXHIBIT P8 TRUE COPY OF THE LETTER DATED 22.10.2020 SUBMITTED BY THE PETITIONER FOR ISSUE OF DOCUMENTS** - **EXHIBIT P9 TRUE COPY OF THE ORDER DATED 22.10.2020 ISSUED BY THE 2ND RESPONDENT.** - **RESPONDENT'S/S EXHIBITS:** - **EXHIBIT R4(a): TRUE COPY OF THE COMMUNICATION NO.B3237/2019 DATED 06/03/2020.** - **EXHIBIT R4(b): TRUE COPY OF THE LETTER NO.B-289/2020 DATED 28/05/2020.** - **EXHIBIT R4(c): TRUE COPY OF THE MINUTES OF THE MEETING DATED 07/07/2020.** **EXHIBIT R2A TRUE COPY OF THE LETTER DATED 06.03.2020** W.P.(C) No.23269/2020 14 **EXHIBIT R2B TRUE COPY OF THE STATMENT DATED 19.03.2020 EXHIBIT R2C TRUE COPY OF THE LETTER DATED 14.05.2020 EXHIBIT R2D TRUE COPY OF THE MINUTES DATED 26.06.2020 EXHIBIT R2E TRUE COPY OF THE LETTER DATED 28.05.2020 EXHIBIT R2F TRUE COPY OF THE LETTER DATED 23.06.2020**