High Court of KeralaSingle Judge2020-11-18Writ petition allowed; 68A investigation quashe...

C.K. Biju v. State of Kerala and Others

Case / Petition Number:WP(C).No.7892 of 2011 (J)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Sathish Ninan
Judgment Date: 2020-11-18
Court Decision / Holding: Writ petition allowed. The 68A investigation leading to Ext.P8 report dated 23.12.2010 is quashed for being initiated on ministerial dictates rather than Registrar-satisfaction. However, the court holds that this quashing does not bar ongoing 68 or 69 proceedings under the statute. The bench notes that the continuation of other legal processes is not affected, and the 68A inquiry cannot stand where initiation was not based on the Registrar’s independent satisfaction.
Final Disposition: Writ petition allowed; 68A investigation quashed; Ext.P8 report quashed; other 68/69 proceedings may continue within their respective statutes.

Parties to the Case

Appellants / Petitioners

C.K. Biju, President, Oorukkaray Service Co-operative Bank Ltd.

Respondents

State of Kerala, represented by the Secretary to Government, Department of Co-operation, Government Secretariat, Thiruvananthapuram
The Joint Registrar of Co-operative Societies (General), Alappuzha
The Deputy Superintendent of Police Co-operative Vigilance, South Zone, Alappuzha
The Registrar of Co-operative Societies, Thiruvananthapuram
The Co-operative Vigilance Officer, Thiruvananthapuram
Prasadachandran Pillai, S/O Govinda Kurup
Easwarankutty C., S/O Govindan Nair

Legal Representation & Advocates

Counsels for Petitioners

• Sri N. Raghuraj
• Smt. K. Amminikutty

Counsels for Respondents

• Sri K.S. Mohamad Hashim
• Adv. T. Kabil Chandran

Case Synopsis & Summary

This writ petition challenges a Section 68A vigilance inquiry under the Co-operative Societies Act initiated against the Oorukkary Service Co-operative Bank, of which C.K. Biju was president, for alleged irregularities in the procurement and disposal of paddy during 2004-05. The bank procured about 9,083 quintals of paddy at an alleged price of Rs 750 per quintal, the support price fixed by the government, but disposed of the stock at a much lower rate following a decision by the Managing Committee. Reports indicate excess procurement without adequate godown facilities, lifting of paddy before full payment, and dishonor of cheques for the balance price. The petition notes prior Section 66 inspections and related civil/criminal actions, including Section 138 NI Act proceedings and ARC under Section 69 for recovery. The petitioner contends the 68A inquiry was not based on a reference by the Registrar on his satisfaction, but on ministerial dictates, a point supported by Calicut City Service Co-operative Bank Ltd. v. Registrar of Co-operative Societies (2010 (2) KLT 824). The court reviews evidence showing the Minister forwarded the complaint to the Registrar and the preface to the 68A enquiry suggests initiation by ministerial directive, not Registrar satisfaction. Consequently, the court quashes the Ext.P8 68A report dated 23.12.2010, while noting that other proceedings under 68 or 69 may continue. The court also directs disclosure of certain records relied upon in 2017 but maintains the quashing of the 68A investigations as the remedy herein.

Provisions of Law Cited

Section 68A of the Co-operative Societies ActSection 66 of the Co-operative Societies ActSection 138 of the Negotiable Instruments ActSection 69 of the Co-operative Societies Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner submits that the initiation of the 68A investigation was dictated by ministerial order rather than a satisfaction recorded by the Registrar, rendering the exercise void under Section 68A. He cites Calicut City Service Co-operative Bank Ltd. v. Registrar (2010 (2) KLT 824) to argue that ministerial directions vitiate the statutory discretion. The absence of a recorded Registrar order initiating the investigation, and the reliance on ministerial correspondence, are highlighted as fatal procedural defects. The petition seeks quashing of Ext.P8 (the 23.12.2010 68A report) and to prevent any coercive action under 68A on this basis; he notes the need for the Registrar’s independent satisfaction and urges that the earlier 2017 order seeking production of the Registrar’s 13.04.2010 order remains unmet, undermining the process.

Contentions of Respondents

The respondents contend that the 68A inquiry was properly initiated by the Registrar upon a complaint transmitted by the Minister, with the Minister forwarding the matter for Registrar action. They assert that the Registrar exercised discretionary power within the statutory framework and that the 68A proceedings are valid despite any ministerial oversight. They rely on the recorded history of approvals and actions within the vigilance machinery and argue that the absence of a public registrar order on record does not vitiate the proceedings, as the initiation occurred through proper channels and the matter can proceed under the statute.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Calicut City Service Co-operative Bank Ltd. v. Registrar of Co-operative Societies	2010 (2) KLT 824	Positive	Quoted as controlling authority to illustrate that ministerial dictates behind 68A initiation void the exercise of power; the present case applies this principle to quash Ext.P8.

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Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE SATHISH NINAN** **WEDNESDAY, THE 18TH DAY OF NOVEMBER 2020 / 27TH KARTHIKA, 1942** ## **WP(C).No.7892 OF 2011(J)** ## **PETITIONER:** **C.K.BIJU, PRESIDENT,** **OORUKKARAY SERVICE CO-OPERATIVE, BANK LTD.NO.129, OORUKKARY P.O., PIN-689 595, ALAPPUZHA DISTRICT.** **BY ADVS. SRI.N.RAGHURAJ SMT.K.AMMINIKUTTY** ## **RESPONDENTS:** - **1 THE STATE OF KERALA, REP. BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF CO-OPERATION, GOVERNMENT, SECRETARIAT, THIRUVANANTHAPURAM-695001.** - **2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), ALAPPUZHA-688001.** - **3 THE DEPUTY SUPERINTENDENT OF POLICE CO-OPERATIVE VIGILANCE, SOUTH ZONE, ALAPPUZHA-688001.** ## *** ADDL. RESPONDENTS 4 AND 5** - **4 THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM.** - **5 THE CO-OPERATIVE VIGILANCE OFFICER, THIRUVANANTHAPURAM.** ## **** ADDL. RESPONDENT No.6** - **6 PRASADACHANDRAN PILLAI, S/O.GOVINDA KURUP, AGED 65 YEARS, RESIDING AT AMBACADU HOUSE, OORICKKARY P.O, ALAPPUZHA DISTRICT.** ## **WP(C).No.7892 OF 2011(J) -2-** ## **# ADDL. RESPONDENT No.7** **7 EASWARANKUTTY.C, AGED 57 YEARS S/O.GOVINDAN NAIR, EASWARAVILASAM, OORIKKARA P.O, RAMANKARY, ALAPPUZHA.** *** [ADDL. RESPONDENTS 4 AND 5 ARE IMPLEADED AS PER ORDER DATED 25.03.2011 IN IA 5261/2011]** **** [ADDL. RESPONDENT NO.6 IS IMPLEADED AS PER ORDER DATED 01/04/2011 IN I.A.5856/2011]** **# [ADDL.RESPONDENT NO.7 IS IMPLEADED AS PER ORDER DATED 24.01.2020 IN I.A.2/2019 IN WP(C)]** **R1-3 BY SRI.K.S.MOHAMAD HASHIM,** **SPL. GOVERNMENT PLEADER (CO-OPERATION) R4 BY ADV. T.KABIL CHANDRAN** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **SATHISH NINAN, J.** ## **= = = = = = = = = = = = = = = = = = W.P.(C) No.7892 of 2011** **= = = = = = = = = = = = = = = = = = Dated this the 18[th] day of November, 2020** ## **JUDGMENT** Enquiry and investigation by the Vigilance Officer under Section 68A of the Co-operative Societies Act is challenged on the ground that the same was initiated on dictation and not on a reference by the Registrar on his satisfaction. 2. Heard Sri.N.Reghuraj, learned counsel for the petitioner and Sri.K.S.Mohamad Hashim, the learned Special Government Pleader (Co-operation). 3. The facts involved pertains to the period 2004-05 and relate to the procurement and disposal of paddy by the Oorukkary Service Co-operative Bank of which the petitioner was the president. The allegation is that, approximately 9083 quintals of paddy procured by the Society at the rate of `750/per quintal, which was the support price for paddy fixed by the Government, was disposed of by the Society at a much lower price on a decision by the Managing Committee. Excessive quantity of rice was W.P.(C) No.7892 of 2011 -: 2 :- procured without proper godown. The paddy was permitted to be lifted even before payment of the entire purchase price. Only a part of the agreed purchase price was paid to the Society and the balance remain unpaid. The cheques issued towards the balance purchase price were dishonoured. These are in essence the allegations leading to Section 68A investigation. 4. Section 66 inspection was conducted and a report filed. Though the same was challenged by the petitioner herein before this Court in W.P.(C) No.13774/2007, the same was disposed of permitting the proceedings to continue. It appears that the Society initiated proceedings under Section 138 of the N.I. Act for dishonour of the cheques and have also initiated ARC proceedings under Section 69 for recovery of the unpaid amounts due from the purchasers. Details of all those proceedings are not being adverted to as they are not necessary for the disposal of this writ petition. 5. The short ground on which the 68A investigation is challenged is that, the W.P.(C) No.7892 of 2011 -: 3 :- proceedings commenced not on a reference by the Registrar on his satisfaction, but on the dictates of minister. In _**Calicut City Service Co-operative Bank Ltd. v. The Registrar of Co-operative Societies [2010 (2) KLT 824],**_ it was held that, where the Registrar has ordered investigation merely in obedience to the directions of the Minister, there is no exercise of the discretion by the statutory authority and hence is not a proper exercise of power under Section 68A of the Cooperative Societies Act. 6. In the present case, admittedly a complaint was lodged by certain members of the Board before the Minister for Department of Co-operation. The Minister forwarded the same to the Registrar for action which is implicitly obeyed by the Registrar by causing the 68A investigation to be held, is the allegation. 7. This Court had, on 26.07.2017, passed the following order:- ## _“Learned Government Pleader is directed_ _to make available copy of the order dated_ W.P.(C) No.7892 of 2011 -: 4 :- _13.04.2010 issued by the Registrar of Co-_ _operative Societies and the Co-operative Vigilance Enquiry and also a copy of the complaint received by the Minister.”_ 8. Pursuant to the said order, a copy of the complaint afore referred to has been produced along with the memo dated 04.08.2017. However, copy of the order dated 13.04.2010 by the Registrar initiating the investigation under Section 68A is not placed on record. It is only the said order which would reflect the application of mind or the satisfaction entered into by the Registrar to cause investigation under Section 68A. A reading of paragraph (1) of the preface to the enquiry report under Section 68A by the vigilance, would indicate that the proceedings were initiated as directed by the Minister. It does not give any indication regarding the satisfaction arrived at by the Registrar to cause such initiation. Under such circumstances, proceedings initiated under Section 68A, based on which Ext.P8 report dated 23.12.2010 W.P.(C) No.7892 of 2011 -: 5 :- has been filed, is liable to be interfered with and I do so. Consequently, Ext.P8 report also has to go. In the result, the writ petition is allowed. The investigation under Section 68A of the Cooperative Societies Act leading to Ext.P8 report dated 23.12.2010, and Ext.P8 report, are hereby quashed. However, this will not affect initiation/ continuance of proceedings under Section 68 or any other provisions under the statute as the case may be. Sd/- **SATHISH NINAN JUDGE** kns/- //True Copy// P.S. to Judge ## **APPENDIX OF WP(C) 7892/2011** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE PHOTOCOPY OF THE NOTIFICATION PUBLISHED IN MANGALAM DAILY DATED 5.5.2005. EXHIBIT P2 TRUE PHOTOCOPY OF THE RESOLUTION DATED 11.05.2005. EXHIBIT P3 TRUE PHOTOCOPY OF THE REPRESENTATION DATED 06.03.2007 SUBMITTED BY THE PETITIONER. EXHIBIT P4 TRUE PHOTOCOPY OF THE ORDER BEARING CRP(2)/3886/06 DATED 19.10.2006. EXHIBIT P5 TRUE PHOTOCOPY OF THE REPORT. EXHIBIT P6 TRUE PHOTOCOPY OF THE INTERIM ORDER IN WP(C)13774/07 DT. EXHIBIT P7 TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE FOR 2004-2005. EXHIBIT P7(a) TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE FOR 2005-2006. EXHIBIT P8 TRUE PHOTOCOPY OF REPORT DATED 23.12.2010.** -----