Cheriyan Mathew and Others v. Joint Registrar of Co-operative Societies (General), Kottayam and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **THURSDAY,THE 14TH DAY OF FEBRUARY 2019 / 25TH MAGHA, 1940** ## **WP(C).No. 14513 of 2018** ## **PETITIONERS:** - **1 CHERIYAN MATHEW PRESIDENT, MANAGING COMMITTEE, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **2 P.G. CHANDRASEKHARAN NAIR VICE PRESIDENT, MANAGING COMMITTEE, KANAKKARY SERVICE CO-OPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **3 BIJUMON MATHEW MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **4 V.J. ANTONY MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **5 SHAJI M.D.** **MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **6 SAIJU K.J.** - **MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **7 V. SAM KUMAR MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** **W.P.(C)No.14513 of 2018** **:-2-:** - **8 REMA JAGAJITH MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **9 MURALEEDHARAN V.D.** **MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **10 SURESH D. MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** - **11 AMBIKA SUKUMARAN** **MEMBER, BOARD OF DIRECTORS, KANAKKARY SERVICE COOPERATIVE BANK LIMITED NO. 3831, VEMPALLY P.O., KOTTAYAM DISTRICT.** ## **BY ADV. SRI.GEORGE POONTHOTTAM (SR.)** ## **RESPONDENTS:** - **1 THE JOINT REGISTRAR OF CO OPERATIVE SOCIETIES (GENERAL), KOTTAYAM - 686 001.** - **2 THE UZHAVOOR UNIT INSPECTOR (ENQUIRY OFFICER) OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), MEENACHIL, PALA, KOTTAYAM - 686 577.** - **ADDL.3 E.T BALAKRISHNAN MEMBER NO.19124, KANAKKARI SERVICE CO-OPERATIVE BANK LTD.NO.3831, KANAKKARI, VEMBALLY P.O., KOTTAYAM, RESIDING AT EDAYATTUPARAMBIL HOUSE, KADAPPOOR, VATTUKULAM P.O., KOTTAYAM. (ADDL.R3 IS IMPLEADED AS PER ORDER DTD.4.7.2018 IN IA 11346/2018)** **BY ADVS.** **SRI.P.C.SASIDHARAN SRI MOHAMMED HASHIM, SPECIAL GOVERNMENT PLEADER** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C)No.14513 of 2018** ## **:-3-:** ## **J U D G M E N T** The petitioners, who are members of the Managing Committee of Kanakkari Service Cooperative Bank, which is a Society registered under the Kerala Co-operative Societies Act, 1969 and the rules made thereunder, have filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P1 order dated 14.9.2017 of the 1st respondent Joint Registrar, ordering inquiry under Section 65 of the Act on the working of the Society on the matters enumerated therein; Ext.P4 order dated 16.3.2018 of the 1st respondent ordering inquiry under Section 68 of the Act based on the findings in the inquiry report under Section 65 of the Act; and also Ext.P6 report of the Inquiry Officer, i.e., the Unit Inspector, Pala Unit, in the office of the Assistant Registrar, Pala, filed under Section 65 ## **W.P.(C)No.14513 of 2018** **:-4-:** of the Act. The petitioners have also sought for a declaration that Ext.P1 does not contain the satisfaction of the Registrar, as contemplated under the Act, than a mechanical statement, which does not meet the statutory requirements and therefore, Ext.P1 is bad in law; a declaration that Ext.P4 does not contain the necessary prerequisites for an action under Section 68(1) of the Act and therefore, the order issued as per Ext.P4 is bad in law; and also a declaration that Ext.P6 does not satisfy the minimum requirements of a report under Section 65 of the Act and the rules made thereunder and therefore, Ext.P6 is bad in law and no action could be taken based on Ext.P6 invoking the provisions of the Act. 2. On 27.4.2018 when this writ petition came up for admission, this Court admitted the matter on file. The learned Government Pleader took notice ## **W.P.(C)No.14513 of 2018** **:-5-:** for the respondents. This Court granted an interim stay of all further proceedings pursuant to Exts.P4, P5 and P6, for a period of two months. The said interim order, which was extended from time to time, is still in force. 3. By the order dated 4.7.2018 in I.A.No.11346/2018, a member of the Society was impleaded as the additional 3rd respondent. 4. A counter affidavit has been filed by the 1st respondent, opposing the reliefs sought for in this writ petition. 5. Heard the learned counsel for the petitioners, the learned Special Government Pleader appearing for respondents 1 and 2 and also the learned counsel for the additional 3rd respondent. 6. The issue that arises for consideration in this writ petition is as to whether any interference is warranted on Ext.P1 order dated ## **W.P.(C)No.14513 of 2018** **:-6-:** 14.9.2017 and Ext.P4 order dated 16.3.2018 of the 1st respondent Joint Registrar and Ext.P6 inquiry report under Section 65 of the Act submitted by the Inquiry Officer. 7. Ext.P1 order is one issued by the 1st respondent Joint Registrar, in exercise of his powers under Section 65 of the Act, ordering inquiry into the working of the Society on the matters enumerated in that order. In this writ petition filed on 25.4.2018, the petitioners have made a belated challenge against Ext.P1 order dated 14.9.2017, after the Inquiry Officer has submitted Ext.P6 inquiry report. Though Ext.P6 inquiry report is under challenge, the Inquiry Officer, i.e., the Unit Inspector, Pala Unit, in the office of the Assistant Registrar of Co-operative Societies, Pala, is not a party to this writ petition. 8. Based on Ext.P1 order, the Inquiry Officer ## **W.P.(C)No.14513 of 2018** **:-7-:** submitted Ext.P6 inquiry report. It was based on the findings in that inquiry report that the 1st respondent Joint Registrar has issued Ext.P4 order dated 16.3.2018, whereby the 2nd respondent Unit Inspector, Uzhavoor Unit, in the office of the Assistant Registrar of Co-operative Societies has been appointed as the Inquiry Officer to conduct inquiry under Section 68(1) of the Act. 9. The procedure for conduct of an inquiry under Section 65 or inspection under Section 66 of the Kerala Co-operative Societies Act, is provided under Rule 66 of the Kerala Co-operative Societies Rules. Sub-rule (1) of Rule 66 deals with inquiry under Section 65 or inspection under Section 66 of the Act and sub-rule (7) of Rule 66 deals with inquiry under Section 68 of the Act. Sub-rules (1), (2) and (7) of Rule 66 read thus: “66. Procedure for the conduct of inquiry and inspection:(1)(i) An order, ## **W.P.(C)No.14513 of 2018** ## **:-8-:** authorising inquiry under Section 65 or inspection under Section 66 shall among other things, contain the following: (a) the name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; (b) the name of the person authorised to conduct the inquiry or inspection; (c) in specific point or points on which the inquiry or inspection is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Registrar; (d) costs of inquiry or inspection; (e) any other matter relating or pertaining to the inquiry or inspection. (2) A copy of every order authorising inquiry under Section 65 or inspection under Section 66 shall be issued to the President or the Secretary of the Society concerned by registered post with acknowledgment due. A copy of the order shall also be made available to the Central Society or **W.P.(C)No.14513 of 2018** **:-9-:** societies, to which the society in respect of which the order is issued, is affiliated. xxx xxx xxx (7)(i) The order in writing for an inquiry under sub-section (1) of Section 68 of the Act shall among other things contain the following:- (a) name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; (b) name of the person authorised to conduct the inquiry; (c) the specific point or points on which the inquiry is to be made; (d) the period within which the inquiry is to be completed and report submitted to the Registrar; (e) costs of inquiry or inspection (f) any other matter relating or pertaining to the inquiry. (ii) On getting the inquiry report, the Registrar shall give the person or persons concerned an opportunity of being heard before issuing an order for surcharge. The order for surcharge shall be in writing and shall be sent under registered post with ## **W.P.(C)No.14513 of 2018** ## **:-10-:** acknowledgement due. The order shall among other things contain the following: - (a) name of society; (b) name/names of person/persons responsible or repay or restore the money or any property or any part thereof, by mentioning clearly the total amount involved due from each; (c) the rate of interest if any, to be clearly specified; (d) the amount of cost or compensation to be specified; (e) the period within which the amount is to be realised; (f) in case the person responsible is not remitting the amount within the time-limit so fixed, the society shall report the matter to the Registrar forthwith and the Registrar shall realise the amount as per the Revenue Recovery Act.” 10. In the context of the provisions under Section 65 of the Act and sub-rule (1)(i) of Rule 66 of the Rules, this Court in **Cheranellur Co-** **operative Society Ltd v. Deputy Registrar [1976 KLT** ## **W.P.(C)No.14513 of 2018** **:-11-:** **353]** held that, under Section 65 of the Act, the Registrar or any other officer of the department to whom the powers of the Registrar are delegated by the notification can order an inquiry. But in ordering an inquiry, the specific point or points on which the inquiry is to be made are to be made known in the proceedings that is issued. This is what is insisted by Rule 66(1)(c) of the Rules. Not only that, without indicating the proceedings that is to precede an inquiry, the point or points on which inquiry is to be conducted, it goes without saying that no proper inquiry will be possible. Again, for the society and its office bearers to face the inquiry in a just manner the indication of the point or points on which the inquiry is to be conducted in the proceedings is only essential. Paragraphs 4 and 5 of the said decision reads thus: “4. Shri Siby Mathew, learned counsel for the petitioner, contends that the 2nd respondent **W.P.(C)No.14513 of 2018** ## **:-12-:** cannot overlook the mandatory provisions contained in Rule 66(1) of the Rules in issuing the proceedings like Ext.P1 ordering an enquiry under Section 65 of the Act. Rule 66 (1) of the Rules reads: “66. Procedure for the conduct of inquiry and inspection.-(1)(i) An order, authorising inquiry under Section 65 or inspection under Section 66 shall among other things, contain the following: (a) the name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; (b) the name of the person authorised to conduct the inquiry or inspection; (c) the specific point or points on which the inquiry or inspection is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Registrar; (d) costs of inquiry or inspection; (e) any other matter relating or pertaining to the inquiry or **W.P.(C)No.14513 of 2018** ## **:-13-:** inspection.” Learned Government Pleader has no specific answer to the above contention raised by the learned counsel for the petitioner. The stand taken by the learned Government Pleader is that there are charges of misappropriation in the petitioner society which are being enquired into by the Vigilance Department and in the above circumstances an enquiry under Section 65 of the Act cannot be said to be out of place. 5. No doubt, under Section 65 of the Act, the Registrar or any other officer of the department to whom the powers of the Registrar are delegated by the notification can order an enquiry. But in ordering an enquiry the specific point or points on which the enquiry is to be made are to be made known in the proceedings that is issued. This is what is insisted by Rule 66(l)(c) of the Rules. Not only that, without indicating in the proceedings that is to precede an enquiry, the point or points on which enquiry is to be conducted, it goes without saying that no proper enquiry will be possible. Again, for the society and its office bearers to face the enquiry in a just manner the indication of the ## **W.P.(C)No.14513 of 2018** ## **:-14-:** pointer points on which the enquiry is to be conducted in the proceedings is only essential. In this view of the matter, Ext.Pl proceedings cannot be sustained. Hence I quash Ext.Pl.” 11. Ext.P4 order is one issued by the 1st respondent Joint Registrar ordering inquiry under sub-section (1) of Section 68 of the Act, based on the findings in Ext.P6 inquiry report. The question that has to be decided is as to whether Ext.P4 order can be treated as one issued in conformity with the provisions of sub-rule (7) of Rule 66 of the Kerala Co-operative Societies Rules. A reading of provisions under sub-rule (7) of Rule 66 would make it explicitly clear that the order in writing for an inquiry under Section 68 of the Act shall among other things, contain the matter enumerated in sub-clauses (a) to (f) of clause (i) of sub-rule (7) of Rule 66, which includes specific point or points on which the inquiry or inspection is to be ## **W.P.(C)No.14513 of 2018** **:-15-:** made. 12. Viewed in the light of the law laid down in the decision referred to supra and also the provisions under sub-rule (7) of Rule 66 of the Rules, conclusion is irresistible that Ext.P4 order, which does not contain the specific point or points on which the inquiry is to be made under sub-section (1) of Section 68 of the Act, cannot be treated as one issued as per the statutory mandate of Rule 66 of the Rules. On that sole ground, the said order is liable to be set aside; however, without prejudice to the right of the 1st respondent Joint Registrar to issue a fresh order, after complying the statutory mandate of Rule 66. In such circumstances, this writ petition is disposed of by setting aside Ext.P4 order dated 16.3.2018 of the 1st respondent Joint Registrar for the reasons stated hereinbefore, and by permitting **W.P.(C)No.14513 of 2018** **:-16-:** the said respondent to pass a fresh order, after complying with the statutory mandate of sub-rule (7) of Rule 66 of the Co-operative Societies Rules. Sd/- **ANIL K.NARENDRAN** **JUDGE** ami/ ## **W.P.(C)No.14513 of 2018** ## **:-17-:** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE ORDER NO. C.R.P(1)4213/17 DATED 14.09.2017 PASSED BY THE 1ST RESPONDENT.** **EXHIBIT P2** - **TRUE COPY OF THE NOTICE NO. P.2345/2017 DATED 23.10.2017 ISSUED FROM THE OFFICE OF THE ASSISTANT REGISTRAR.** **EXHIBIT P3** **TRUE COPY OF THE LETTER DATED 02.11.2017 ISSUED BY THE 1ST PETITIONER.** **EXHIBIT P4** **TRUE COPY OF THE ORDER NO. C.R.P(1) 4213/17 DATED 16.03.2018 PASSED BY THE 1ST RESPONDENT.** - **EXHIBIT P5 TRUE COPY OF THE NOTICE NO. U 662/2018 DATED 05.04.2018 ISSUED BY THE 2ND RESPONDENT.** **EXHIBIT P6 TRUE COPY OF THE ENQUIRY REPORT UNDER SECTION 65 OF THE KCS ACT.** **EXHIBIT P7 TRUE COPY OF THE REQUEST DATED 21.04.2018 SUBMITTED BY THE PETITIONERS TO THE 2ND RESPONDENT.**