Baiju O.K. and others v. Joint Registrar of Co-operative Societies (G) Kozhikode, and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SATHISH NINAN** **FRIDAY, THE 8[TH] DAY OF SEPTEMBER 2023 / 17TH BHADRA, 1945** ## **WP(C) NO. 24870 OF 2023** ## **PETITIONERS:** |1|BAIJU, O.K., AGED 46 YEARS, S/O KANNAN KEERAN, ODAMKUZHIYIL,| |---|---| ||KACHERI, MUKKOM, PIN - 673602| |2|SHARAFUDHEEN.T.K., S/O KOYA, AGED 36 YEARS,| ||THARIPPAKKUNNUMMAL HOUSE, NEELESWARAM.P.O., KOZHIKODE, PIN -| ||673572| |3|ABDULLA.A.M, AGED 70 YEARS, S/O AHAMMED HAJI,| ||KUTTAYIKUNNUMMAL HOUSE, NEELESWARAM.P,O., OMASSERY VIA,| ||KOZHIKODE, PIN - 673572| |4|NOUSHAD.V.A., AGED 40 YEARS, S/O AHAMMED KUTTY,| ||POOVATHIRIMMAL HOUSE, KALLURUTTI, KOZHIKODE, PIN - 673582| |5|M.K.MUNEER,AGED 48 YEARS,S/O ABDUL KHADER, MALAKUNNATH HOUSE,| ||P.O.NEELESWARAM, MUKKOM, KOZHIKODE, PIN - 673582| |6|SHAJAN.N.V,AGED 54 YEARS,S/O VARKEY, NEDUMKALEL, NEELESWARAM,| ||KALLURUTTI, KOZHIKODE, PIN - 673572| |7|BALAN,AGED 71 YEARS,NEELESWARAM,KOZHIKODE, PIN - 673572| |8|RUBEENA.E.K.,AGED 40 YEARS,W/O ABDUL BASHEER,| ||ERUMPADAMKANDIYIL HOUSE, KALLURUTTY.P.O., OMASSERY,| ||KOZHIKODE, PIN – 673582.| ||BY ADVS.| ||P.P.JACOB| ||SREEDHAR RAVINDRAN| ## **RESPONDENTS:** 1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (G)KOZHIKODE, OFFICE OF THE JOINT REGISTAR OF CO-OPERTIVE SOCIETIES PUTHIYARA KOZHIKODE, PIN - 673004 **WP(C) NO. 24870 OF 2023 -2-** 2 THE ADMINISTRATOR (SPECIAL GRADE SENIOR INSPECTOR)CRP(1) SECTION, OFFICE OF THE JOINT REGISTAR(GENARAL)KOZHIKODE, MUKKOM, SERVICE CO-OPETAIVE BANK LTD NO.F 1241,MUKKOM, KOZHIKODE, PIN - 673602 ADDL. R3 N.P. SHAMSUDHEEN,AGED 61, S/O. MUHAMMED HAJI, NEERKOTTIPOYIL HOUSE, CHENNAMANGALLUR, POST, MUKKOM, PIN - 673602. (IS IMPLEADED AS ADDL.R3 IN THIS WRIT PETITION AS PER ORDER DATED 31/07/2023 IN IA 01/2023) ADDL. R4 BABURAJAN K.A., AGED 53 YEARS, S/O. APPUTTY, METHALAKKUNNATH HOUSE, KALLURUTTY P.O., OMASSERY, KOZHIKKDE, PIN - 673603. (IS IMPLEADED AS ADDL.R4 IN THIS WRIT PETITION AS PER ORDER DATED 31/07/2023 IN IA 02/2023.) BY ADVS. GOVT. PLEADER SMT.C.S.SHEEJA M.SASINDRAN K.M.FIROZ JAIBY PAUL M.SHAJNA THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **SATHISH NINAN, J.** **= = = = = = = = = = = = = = = = = = W.P.(C) No.24870 of 2023 = = = = = = = = = = = = = = = = = = Dated this the 8[th] day of September, 2023** ## **J U D G M E N T** Order of supersession of the Managing Committee of the Mukkom Service Co-operative Bank is under challenge by the members of the Managing Committee. 2. The Managing Committee assumed office pursuant to the elections held on 11.11.2018. The term of the Committee is to expire on 11.11.2023. In the meanwhile, the board was under suspension from 28.12.2020 and was out of office till 06.12.2021. As per Ext.P5 dated 15.11.2022 the Joint Registrar ordered an enquiry. This was followed by Ext.P9 show-cause notice dated 10.07.2023 issued under Section 32(1) of the Cooperative Societies Act seeking explanation as to why action should not be taken for supersession of the Committee. As per Ext.P10 dated 12.07.2023 the petitioners sought three weeks time to file detailed ## **W.P.(C) No.24870 of 2023** -: 2 :- explanation and for hearing. Thereafter the petitioners filed W.P.(C) No.22997/2023 before this Court, challenging the action. Pending the writ petition, the Joint Registrar-first respondent passed Ext.P11 order of supersession dated 19.07.2023. It is challenging the same that the writ petition has been filed. 3. I have heard learned Senior Counsel Sri.P.Ravindran on behalf of the petitioners, learned Government Pleader for the first respondent, Sri.M.Sasindran for the second respondent, Sri.K.M.Firoz, for the third respondent and Sri.Jaiby Paul for the fourth respondent. 4. As is evident from Ext.P11 order of supersession, the proceedings are initiated based on the report of inspection under Ext.P5 and audit certificates. In the enquiry certain serious irregularities and defects were noticed namely; - _(i)_ Grant of excess interest in violation of the ## **W.P.(C) No.24870 of 2023** -: 3 :- Circular 5/21 of the Registrar of Co-operative Societies resulting in loss to the Bank. _(ii)_ Failure to re-classify the Bank to the lower category and re-arrange staff pattern thus violating Circular 32/13 of the Registrar. _(iii)_ Making appointments without re-classifying the Bank and thus causing loss. _(iv)_ Failure to maintain fluid resource. ## _(v)_ Deficit in stock. 5. The learned Senior Counsel argued that, though the term of office of the Committee was to be from 11.11.2018 till 11.11.2023, even prior to the order of supersession on 19.07.2023 the board was under suspension from 28.12.2020 to 06.12.2021. It was the Administrator who was managing the affairs for most of the time, and no allegations could be levelled against the petitioners. The allegations against illegal appointments were negatived by a Division Bench of this ## **W.P.(C) No.24870 of 2023** -: 4 :- Court in Ext.P3 judgment in W.A. No.1250/2021 and 1310/2021. Therefore the same is not liable to be reopened. Though there is a finding that the Bank did not maintain sufficient fluid assets, the same is disproved even by the report relied on by the respondent. Sufficient opportunity was not granted to the petitioners to submit their explanations even to the report on enquiry under Section 66 and also to the notice under Section 32 of the Act. 6. The learned counsel for the respondents would on the other hand contend that, the irregularities noted are during the period when the petitioners were in management, that when the Administrator was in office the fluid reserve was much higher than the required limit, that there has been a drastic depletion as soon as the petitioners reassumed office. There has been persistent conduct prejudicial to the interests of the society resulting in huge loss, it is contended. Relying ## **W.P.(C) No.24870 of 2023** -: 5 :- on the judgment of the Apex Court in _**Mohinder Singh Gill and Another v. The Chief Election Commissioner, New Delhi and Others (AIR 1978 SC 851)**_ and of the Delhi High Court in _**Satish Chandra Khandelwal v. Union of India and Others AIR 1983 Del.1**_ , it was argued that, grant of opportunity of hearing would only mean a reasonable opportunity as the circumstance would warrant. When there is a need for expedition, the opportunity need not be an elaborate ritual. In the case at hand, it having been revealed that the continuance in management is detrimental and harmful to the interests of the society immediate action was necessary which compelled the authority to grant only a short but sufficient time for the petitioners to respond to the notice and for hearing, it was submitted. 7. I have considered the rival submissions. As contended by the petitioners, Ext.P9 notice for hearing under Section 32 was issued on 10.07.2023 seeking explanation within four days. As per Ext.P10, the ## **W.P.(C) No.24870 of 2023** -: 6 :- petitioners sought three weeks time for objections and hearing. On a reading of the order it is evident that, on the date fixed for hearing the petitioners sought time but was not granted. The findings in respect of which explanations have been sought are serious in nature. An order of supersession being of drastic consequences, sufficient opportunity ought to have been granted to the petitioners to voice their explanations. This is all the more so since even as against the report under Section 66, the petitioners did not get a proper hearing. Of course therein also the conduct of the petitioners was to seek for time. I do not consider it necessary to go into further details regarding the same. The authority could have granted a reasonable opportunity to the petitioners to place their objections and also for a hearing. 8. The proceedings under Section 32 have been initiated based on the report on enquiry and also audit ## **W.P.(C) No.24870 of 2023** -: 7 :- reports. There having not been an effective opportunity for the petitioners to urge their contentions/ explanations, I am of the opinion that the petitioners could be afforded a further opportunity of hearing in terms of Section 32(1) of the Act. However, considering the seriousness of the defects noticed, it is deemed appropriate to keep the committee under suspension till such hearing is conducted and orders passed. 9. Resultantly, the writ petition is disposed of as hereunder :- - _(i)_ Ext.P11 order of supersession dated 19.07.2022 - is quashed. _(ii)_ The petitioners shall file their objections if any to Ext.P9 notice, on or before 18.09.2023. _(iii)_ The petitioners shall appear for hearing before the first respondent at 3.00 p.m. on 20.09.2023. - _(iv)_ The first respondent shall pass orders with due - consideration to the explanations/contentions of the ## **W.P.(C) No.24870 of 2023** -: 8 :- petitioners, on or before 28.09.2023. _(v)_ Till orders are passed in terms of clause(iv) above, the Committee shall be deemed to be under suspension and the Administrator shall continue in office. Sd/- **SATHISH NINAN JUDGE** kns/- //True Copy// P.S. to Judge ## **APPENDIX OF WP(C) 24870/2023** PETITIONER EXHIBITS |Exhibit P1|TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE| |---|---| ||JOINT REGISTRAR DATED 28.12.2020| |Exhibit P2|TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE| ||FIRST RESPONDENT DATED 31.8,21| |Exhibit P3|TRUE PHOTOCOPY OF COMMON JUDGMENT IN| ||W.A.1310/2021 DATED 25.1.22| |Exhibit P4|TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C)| ||27113/21 DATED 4.12.21| |Exhibit P5|TRUE PHOTOCOPY OF THE ORDER DATED 15.11.2022| ||ISSUED BY THE JOINT REGISTRAR| |Exhibit P6|TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C)| ||40784/22 DATED 5.1.23| |Exhibit P7|TRUE PHOTOCOPY OF THE NOTICE ISSUED BY THE| ||FIRST RESPONDENT DATED 13.6.23| |Exhibit P8|TRUE PHOTOCOPY OF THE PRELIMINARY EXPLANATION| ||FILED BY THE PRESIDENT AND SECRETARY OF THE| ||MUKKAM SCB BEFORE THE SECOND RESPONDENT DATED| ||28.6.23| |Exhibit P9|TRUE PHOTOCOPY OF THE NOTICE ISSUED BY THE| ||JOINT REGISTRAR DATED 10.7.23| |Exhibit P10|TRUE COPY OF THE SAID REQUEST MADE BY THE| ||SECRETARY AS WELL AS THE ELECTED PRESIDENT| ||DATED 12.07.2023| |Exhibit P11|TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE| ||FIRST RESPONDENT DATED 19.7.2023| |Exhibit P12|TRUE PHOTOCOPY OF THE OVERDUE STATEMENT AS ON| ||6.12.21 OF THE MUKKAM SCB LTD| |Exhibit P13|TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE,| ||COVER PAGE AND PAGE NO. 5 DATED 29.11.2022| APPENDIX- **WP(C) 24870/2023** -2- |Exhibit P14|TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE,| |---|---| ||COVER PAGE AND PAGE NO. 16 DATED 29.11.2022| ||OF THE MUKKAM SCB LTD.| |Exhibit P15|TRUE PHOTOCOPY OF THE FLUID RESOURCES| ||STATEMENT AS ON 6.12.21 OF THE MUKKAM SCB LTD| |RESPONDENT EXHIBITS|| |EXHIBIT-R4(a)|True copy of the common judgement dated| ||15.06.2022 in Writ Petition No.29977 of 2019| ||and 10415 of 2020.| |EXHIBIT-R4(b)|True copy of the reference letter No.| ||B/1388/2023 dated 19.05.2023 with enquiry| ||report dated 30.04.2023.| |PETITIONER EXHIBITS|| |Exhibit R2(a)|A schedule of the right of interest for fixed| ||deposit| |Exhibit R2(b)|A true copy of the relevant extracts from the| ||minutes of the society, of the meeting dated| ||05.06.2020| |RESPONDENT EXHIBITS|| |Exhibit P16|True photocopy of the circular No. 29/23| ||dated 7.8.23| |Exhibit P17|True photocopy of the circular 29/23 dated| ||7.8.23| -----