Board of Directors of Kizhuvilam Service Co-operative Bank Ltd. v. Unit Inspector, Attingal Office of the Assistant Registrar of Cooperative Societies (General), Chirayinke ezh, Thiruvananthapuram-695604; Joint Registrar of Co-operative Societies (General), Thiruvananthapuram-695001; Registrar of Co-operative Societies, Thiruvananthapuram-695001; ADDL.4P.AZEEZ, MASTANVILLA VEEDU, MUDAPURAM P.O., CHIRAYINKEEZH, THIRUVANANTHAPURAM-695304; ADDL.5 ALEN S., (MEMBERSHIP NO.12859) AGED 39 YEARS S/O.SAHADEVAN, KOCHUVEEDU, KOONTHALOOR, MUDAPURAM P.O., CHIRAYINKEEZH, THIRUVANANTHAPURAM- 695304.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **WEDNESDAY,THE 16TH DAY OF JANUARY 2019 / 26TH POUSHA, 1940** ## **WP(C).No. 41332 of 2017** ## **PETITIONER:** **THE BOARD OF DIRECTORS OF THE KIZHUVILAM SERVICE CO-OPERATIVE BANK LTD.No.2405, REPRESENTED BY ITS PRESIDENT, MUDAPURAM P.O., CHIRAYINKEEZH, THIRUVANANTHAPURAM DISTRICT695304.** **BY ADVS. SRI.T.R.HARIKUMAR SRI.ADITHYA RAJEEV SRI.ARJUN RAGHAVAN SRI.JAIBY PAUL** ## **RESPONDENTS:** - **1 THE UNIT INSPECTOR, ATTINGAL OFFICE OF THE ASSISTANT REGISTRAR OF COOPERATIVE SOCIETIES (GENERAL), CHIRAYINKEEZH, THIRUVANANTHAPURAM-695604.** - **2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THIRUVANANTHAPURAM-695001.** - **3 THE REGISTRAR OF CO-OPERATIVE SOCIETIES THIRUVANANTHAPURAM-695001.** ## **W.P.(C)No.41332 of 2017** **:-2-:** **ADDL.4P.AZEEZ, MASTANVILLA VEEDU, MUDAPURAM P.O., CHIRAYINKEEZHU, THIRUVANANTHAPURAM.** **ADDITIONAL R2 IS IMPLEADED AS PER ORDER DATED 10.01.2018 IN I.A.NO.345 OF 2018.** **ADDL.5ALEN S., (MEMBERSHIP NO.12859) AGED 39 YEARS S/O.SAHADEVAN, KOCHUVEEDU, KOONTHALOOR, MUDAPURAM P.O., CHIRAYINKEEZH, THIRUVANANTHAPURAM- 695304. (THIRD PARTY IS IMPLEADED AS ADDITIONAL RESPONDENT NO.5 AS PER ORDER DATED 16.10.2018 IN I.A.NO.3 OF 2018).** **BY ADVS. SMT.MABLE C.KURIEN, SR.GOVERNMENT PLEADER SRI.N.NANDAKUMARA MENON (SR.) SMT.ALICE THOMAS SMT.M.C.SINY SRI.P.K.MANOJKUMAR SMT.SMITHA S.PILLAI SMT.ANITHA RAVINDRAN FOR ADDL.R5 SRI.B.S.SWATHY KUMAR FOR ADDL.R4** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.01.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C)No.41332 of 2017** ## **:-3-:** ## **J U D G M E N T** The petitioner, the Board of Directors of Kizhuvilam Service Co-operative Bank, which is a Society registered under the Kerala Co-operative Societies Act and the Rules made thereunder, has filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P3 order dated 5.10.2016 and Ext.P5 order dated 8.12.2017 of the 2[nd] respondent Joint Registrar, and also Ext.P6 inspection report of the 1[st] respondent Inquiry Officer dated 15.2.2017 filed under Section 66 of the Kerala Co-operative Societies Act, 1969. 2. On 10.1.2018 when this writ petition came up for admission, this Court admitted the matter on file. The learned Senior Government Pleader took notice for respondents 1 to 3 and the additional 4[th] ## **W.P.(C)No.41332 of 2017** ## **:-4-:** respondent, who was impleaded vide order dated 10.1.2018 in I.A.No.345/2018, entered appearance through counsel. This Court granted interim stay of all further proceedings pursuant to Exts.P5 and P6 for a period of three weeks and the learned Senior Government Pleader was granted two weeks' time to file statement. The interim order granted on 10.1.2018, which was extended from time to time, is still in force. By an order dated 16.10.2018 in I.A.No.3/2018, a member of the Society was impleaded as additional 5[th] respondent. 3. A counter affidavit has been filed by the 2[nd] respondent Joint Registrar, opposing the reliefs sought for in this writ petition. A counter affidavit has also been filed by the additional 5[th] respondent. 4. Heard the learned counsel for the petitioner, the learned Senior Government Pleader ## **W.P.(C)No.41332 of 2017** ## **:-5-:** appearing for respondents 1 to 3, the learned counsel for the additional 4[th] respondent and also the learned Senior Counsel for the additional 5[th] respondent. 5. The sole issue that arises for consideration in this writ petition is as to whether any interference is warranted on Ext.P3 order dated 5.10.2016 and Ext.P5 order dated 8.12.2017 of the 2[nd] respondent Joint Registrar, and also Ext.P6 inspection report of the 1[st] respondent Inquiry Officer under Section 66 of the Act. 6. Ext.P3 order is one dated 5.10.2016 issued by the 2[nd] respondent Joint Registrar, invoking his powers under Section 66 of the Act, whereby the scope of the inspection originally ordered vide Ext.P2 order dated 24.9.2016, was widened and various new aspects were included, based on certain complaints received by the said respondent. Ext.P5 ## **W.P.(C)No.41332 of 2017** ## **:-6-:** is a notice issued by the said 2[nd] respondent dated 8.12.2017, based on Ext.P6 inspection report dated 15.2.2017 submitted by the 1[st] respondent Inquiry Officer, after conducting inspection under Section 66 of the Act. 7. In this writ petition, one of the main contentions raised by the petitioner is that Ext.P6 report of the 1[st] respondent Inquiry Officer is _per se_ illegal for the reason that it is one prepared and submitted after the expiry of the extended period in Ext.P4 order. It is also contended that the said report is bad for the reason that all the findings contained therein pertain to aspects which are the subject matter of challenge before this Court and aspects in respect of which correctional measures have already been taken. The document marked as Ext.P7 is the explanation offered by the petitioner on receipt of Ext.P5 notice dated ## **W.P.(C)No.41332 of 2017** ## **:-7-:** 8.12.2017 issued by the 2[nd] respondent Joint Registrar. 8. After referring to the averments in the counter affidavit filed by the 5[th] respondent, the learned Senior Counsel for the said respondent would point out that there are serious allegations of mismanagement and misappropriation of funds against the members of the Board of Directors of the Bank and it was based on various complaints that the 2[nd] respondent Joint Registrar ordered an inquiry under Section 66 of the Act, by appointing the 1[st] respondent Inquiry Officer. The learned counsel for the 4[th] respondent would also point out that it was on account of serious irregularities committed by the members of the Board of Directors of the Bank that such an inquiry has been ordered. Similar contentions are advanced by the learned Senior Government Pleader appearing for the ## **W.P.(C)No.41332 of 2017** ## **:-8-:** official respondents. 9. The pleadings and materials on record would show that on receipt of Ext.P6 report, the petitioner has already submitted an explanation to the 2[nd] respondent, which is placed on record as Ext.P7. When the Inquiry Officer appointed by the 2[nd] respondent, in exercise of his powers under Section 66 of the Act, has already conducted inquiry and submitted his report, which is placed on record as Ext.P6, any illegality or irregularity in the conduct of such inquiry by the 1[st] respondent can very well be raised before the 2[nd] respondent Joint Registrar, at the time of consideration of Ext.P7 explanation offered by the petitioner. 10. The authority of the 2[nd] respondent to order an inquiry under Section 66 of the Act is not in dispute. Even going by the contentions raised by the petitioner, the question that has to be decided ## **W.P.(C)No.41332 of 2017** ## **:-9-:** is as to whether any further course is required to be taken based on the findings of the 1[st] respondent Inquiry Officer in Ext.P6 report and whether the inquiry conducted by the 1[st] respondent Inquiry Officer is in accordance with the statutory mandate. Those issues can very well be raised before the 2[nd] respondent at the time of consideration of Ext.P7 explanation. ## 11. In **State of U.P v. Brahm Datt Sharma** **[(1987) 2 SCC 179]** the Apex Court held that, when the show cause notice was issued under a statutory provision calling upon to show cause, the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued palpably without any authority of law. The purpose of issuing show cause notice is to afford an opportunity of hearing and once cause is shown it is open to the authority to consider the matter ## **W.P.(C)No.41332 of 2017** **:-10-:** in the light of the facts and submission placed before it and only thereafter a final decision in the matter could be taken. Therefore, interference by the Court before that would be premature. ## 12. In **Seimens Ltd v. State of Maharashtra** **[(2006) 12 SCC 33]** the Apex Court held that ordinarily, a writ court may not exercise its discretionary jurisdiction to entertain a writ petition questioning a notice to show cause unless the notice appears to have been without jurisdiction. 13. In **Union of India v. Vicco Laboratories** **[(2007) 13 SCC 270]** the Apex Court held that, normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their contentions before the authorities concerned and satisfy the ## **W.P.(C)No.41332 of 2017** ## **:-11-:** authorities concerned about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exceptions. Where a show cause notice is issued either without jurisdiction or in an abuse of process of law, certainly, in that case, the writ court would not hesitate to interfere even at the stage of issuance of the show cause notice. The interference at the show cause notice stage should be rare and not in a routine manner. The mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication ## **W.P.(C)No.41332 of 2017** ## **:-12-:** would be necessary, interference is ruled out. 14. In view of the law laid down in the decisions referred to supra, no interference under Article 226 of the Constitution of India is warranted on a show cause notice issued under a statutory provision unless the notice is shown to have been issued palpably without any authority of law or that it is an abuse of process of law. The mere assertion in the writ petition that the show cause notice has been issued without any authority of law or that it is an abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, no interference of this Court in exercise of the extraordinary jurisdiction under Article 226 of the Constitution is warranted. 15. Having considered the averments and also the grounds raised in this writ petition, this ## **W.P.(C)No.41332 of 2017** ## **:-13-:** Court finds that the petitioner has not made out a case warranting interference on Ext.P5 notice, in exercise of the extraordinary jurisdiction under Article 226 of the Constitution of India. 16. Learned counsel for the petitioner would submit that the petitioner, who has already submitted Ext.P7 explanation before the 2[nd] respondent, on receipt of Ext.P5 notice, shall submit an additional explanation raising all legal and factual contentions, which may also be directed to be considered along with Ext.P7 by the 2[nd] respondent, before taking a decision as to whether any further course has to be taken based on the findings in Ext.P6 inquiry report submitted by the 1[st] respondent. 17. Learned counsel for the 4[th] respondent and also the learned Senior Counsel for the additional 5[th] respondent would submit that, if any such ## **W.P.(C)No.41332 of 2017** ## **:-14-:** additional explanation is offered, the 4[th] respondent and additional 5[th] respondent may be furnished with a copy of the same, and thereafter, they may also be given an opportunity of hearing while the 2[nd] respondent takes a decision as to the further course to be taken based on the findings in Ext.P5 report. In such circumstances, this writ petition is disposed of with the following directions; i) Within a period of two weeks from the date of receipt of a certified copy of this judgment, the petitioner shall submit an additional explanation to Ext.P5 notice issued by the 2[nd] respondent Joint Registrar, raising all legal and factual contentions, after serving a copy of the same to the 4[th] respondent and also to the additional 5[th] respondent. ## **W.P.(C)No.41332 of 2017** **:-15-:** ii) On receipt of such additional explanation, within the time limit specified as above, the 2[nd] respondent shall conduct a personal hearing and take a decision as to the further course to be taken based on the findings of the Inquiry Officer in Ext.P6 inquiry report. While deciding such issue, the 2[nd] respondent shall consider the legal contentions raised by the petitioner as to the procedural irregularities and as to whether the factual findings in Ext.P6 report are sufficient enough to have further course in the matter. iii) A decision in this regard has to be taken by the 2[nd] respondent, with notice to the petitioner, the 4[th] respondent and also the additional 5[th] respondent, as expeditiously as possible, at any rate within a further period ## **W.P.(C)No.41332 of 2017** ## **:-16-:** of three weeks. It is made clear that this Court has not expressed anything on the merits of the rival contentions and any observations contained in this judgment touching the merits of the rival contentions are made for the sole purpose of disposal of this writ petition. Sd/- **ANIL K.NARENDRAN JUDGE** ami/16.1.19 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER NO.CRP(2)11448/2015 DATED 30-03-2016 OF THE 2ND RESPONDENT. EXHIBIT P2 A TRUE COPY OF THE ORDER NO.CRP(2)11448/2015 DATED 24-09-2016 OF THE 2ND RESPONDENT. EXHIBIT P3 A TRUE COPY OF THE ORDER NO.CRP(2)11448/2015 DATED 05-10-2016 OF THE 2ND RESPONDENT.** ## **W.P.(C)No.41332 of 2017** ## **:-17-:** **EXHIBIT P4** **A TRUE COPY OF THE ORDER NO.CRP(2)11448/2015 DATED 03-11-2016 OF THE 2ND RESPONDENT.** **EXHIBIT P5 A TRUE COPY OF THE ORDER NO.CRP(2)11448/2015 DATED 08-12-2017 OF THE 2ND RESPONDENT.** **EXHIBIT P6 A TRUE COPY OF THE SECTION 66 INSPECTION REPORT DATED 15-02-2017.** **EXHIBIT P7 A TRUE COPY OF THE EXPLANATION SUBMITTED BY THE SOCIETY BEFORE THE 2ND RESPONDENT DATED 17-12-2017.** **RESPONDENTS' EXHIBITS:** **EXHIBIT R4(a) TRUE COPY OF THE COMMUNICATION NO.ATL 964/2016 DATED 13.05.2016 OF THE ASSISTANT REGISTRAR (GENERAL), CHIRAYINKEEZHU.**