Joint Registrar of Co-operative Societies (General) v Koovappally Service Co-operative Bank Ltd & Abraham K. Mathew

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR** ## **&** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **FRIDAY, THE 07TH DAY OF FEBRUARY 2020 / 18TH MAGHA, 1941** ## **WA.No.670 OF 2019** **AGAINST THE JUDGMENT DATED 25.10.2017 IN WP(C) 25315/2012(L) OF HIGH COURT OF KERALA** ## **APPELLANT/1ST RESPONDENT:** **JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES , KOTTAYAM P.O.686 001.** **BY GOVERNMENT PLEADER SRI.RENIL ANTO KANDAMKULATHY** ## **RESPONDENTS/PETITIONER & 2ND RESPONDENT IN W.P.(C):** **1 KOOVAPPALLY SERVICE CO-OPERATIVE BANK LTD.NO.3949 REPRESENTED BY THE PRESIDENT, KOOVAPPALLY P.O., KOTTAYAM, DISTRICT 686 518. 2 ABRAHAM K.MATHEW, KADAKUZHA HOUSE, KOOVAPPALLY P.O., KOTTAYAM 686 518.** ## **R2 BY ADV.SRI.LIJI J.VADAKKEDAM** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 07.02.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A.No.670 of 2019 2 ## **JUDGMENT** ## **Ravikumar, J.** The judgment dated 25.10.2017 in W.P.(C)No.25315 of 2012 is called in question in the captioned appeal. The appellant was the first respondent in the said writ petition which was moved by the first respondent herein. The writ petitioner/first respondent herein filed the writ petition seeking quashment of Exts.P4 and P6 besides a declaration that the petitioner society is not liable to pay any amount as demanded by the Joint Registrar under Exts.P4 and P6 and the oral direction to remit Rs.68,970/- towards the expenses to send notices to 2299 members on the basis of Ext.P1 complaint of a third party/the 2[nd] respondent. 2. A statement was filed by the appellant herein in the said writ petition. A perusal of the statement would reveal that essentially, the appellant herein/first respondent in the writ petition, had attempted to support the decision in Exts.P4 and P6 and get them sustained. However, the learned Single Judge after considering the rival contentions upheld the contentions of the writ petitioner and set aside the orders impugned viz., Exts.P4 and P6 whereby the writ petitioner W.A.No.670 of 2019 3 was called upon to remit cost of the proceedings under Rule 16(4) of the Kerala Co-operative Societies Rules (for short 'KCS Rules'). Obviously, even after quashing the said orders the learned Single Judge observed thus:- “All the stipulations and parameters provided in W.P. (C)No.695/2013 will apply to the petitioners also.” 3. Heard the learned Government Pleader appearing for the appellant and the learned counsel appearing for the first respondent. 4. A succinct narration of the basic facts is required for a proper disposal of this writ appeal. The second respondent in the appeal preferred Ext.P1 complaint before the appellant contending that 2299 persons were ineligible to be enrolled as members of the first respondent society by virtue of being non-residents within the area of operation of the first respondent, and therefore, they are liable to be removed from the membership of the society viz., Koovappally Service Co-operative Bank. Indisputably, such a complaint regarding the ineligibility of members is a matter which falls within the jurisdiction of the appellant herein and he is bound to pass orders on that issue invoking the power under the KCS Rules. Shortly stated, the second respondent herein has virtually, called upon by the appellant herein to discharge his statutory duty in terms of the provisions under Rule 16(4) W.A.No.670 of 2019 4 **-** of the KCS Rules. Rule 16(4) of the KCS Rules reads thus: “ **16.(4)** Where a member of a society becomes ineligible to continue as such, the Registrar may of his own motion or on a representation made to him by any member of the society or by the financing Bank, by an order in writing declare that he has ceased to be a member of the society from the date of his order. The Registrar shall give such person an opportunity to state his objection, if any, to the proposed action and if the person wishes to be heard, he shall be given an opportunity to be heard before passing an order as aforesaid.” The appellant obviously decided to consider the said complaint rightfully as he is under a legal obligation coupled with duty to consider that application submitted by the second respondent. But, at the same time, Ext.P4 would reveal that the first respondent society was called upon by the appellant herein to bear the expenses of issuance of notices to all the 2299 persons. On receipt of Ext.P4 carrying such a demand the first respondent/writ petitioner society submitted Ext.P5 objection dated 19.10.2012. They have virtually, raised a contention under Ext.P5 that there is no provision enabling/empowering the appellant to call upon the society to bear the expenses for the purpose of issuing notices to the aforesaid persons. That apart, it is stated therein that normally, the rule is that such expenses have to be born by W.A.No.670 of 2019 5 the complainant. According to the first respondent, at any rate, in the absence of any specific provisions empowering the appellant to demand payment of costs in the said proceedings and in view of the normal settled position the demand made under Ext.P4 cannot be sustained. It is on receipt of Ext.P5 objection on Ext.P4 that Ext.P6 order was issued. It is aggrieved by Exts.P4 and P6 that the first respondent herein approached this Court by filing the writ petition which resulted in the impugned judgment. We have carefully gone through the grounds raised in this appeal to mount challenge against the impugned judgment. 5. The learned Government Pleader drew our attention to ground 'B' raised in this appeal. Apart from that the learned Government Pleader drew our attention to Section 64 of the Kerala Cooperative Societies Act also. The contention is that the scheme and intention of KCS Act & Rules in the State of Kerala is to supervise, inspect or conduct enquiry in regard to the affairs of various Cooperative Societies. It is also stated that in such circumstances when State exercise such powers it is the duty of the society concerned to provide the cost of such proceedings to the Co-operative Department. According to the appellant, such an intention is reflected in Section 63 W.A.No.670 of 2019 6 of the KCS Act and also in Sections 64 & 65. Section 63 of the KCS Act confers the power to conduct audit through the Director of Co-operative Department. Section 64 deals with the scope of audit, powers of the Director of Co-operative Audit and procedure for audit. Sub-section (6) thereof reads thus:- “ **64.(6)** The amount of fee or cost for the audit of accounts of society for each year shall be such, as may be fixed by the Director of Co-operative Audit, in accordance with the rules made in this behalf.” Section 65 is the provision for inquiry by Registrar in respect of matters falling thereunder. Section 66 confers the power of the Registrar to supervise or cause to be supervised by a person regarding the working of every society making it clear that the power of supervision thereunder would include inspection of the books of the society concerned. Though the learned counsel took us through the said provisions, on a careful scanning of the said provisions we could not find any indication thereunder or any specific provision therein empowering the Registrar/appellant herein to call for the first respondent society to bear the expenses for issuing notices in a complaint filed by someone else, in this case by the 2[nd] respondent, to the persons whose enrollment as members in the first respondent society, rather, their eligibility to become members of the said society is W.A.No.670 of 2019 7 under challenge. In short, we have no hesitation to hold that the said provisions did not specifically authorise/empower the appellant herein to direct the first respondent to bear the expenses for issuance of notices of proceedings in a complaint filed by someone else. The facts expatiated earlier would reveal that it was the 2[nd] respondent herein who invoked the power of the appellant through Ext.P1 complaint. The appellant herein got necessary power to go into the grievance thereunder in invocation of the power under Rule 16(4) of the KCS Rules. In other words, it is evident that the 2[nd] respondent only called upon the appellant to exercise his statutory duty. When that be the circumstances we are at a loss to understand how the appellant could call for the first respondent society to bear the expenses for issuing notices in a proceeding initiated before him by the 2[nd] respondent herein. Virtually, the complaint is against the society. In such circumstances, the Society can only be an opposite party in the said proceedings based on that complaint. 6. On consideration of the provisions relied on by the learned Government Pleader dealing with audit and inspection, we find that specific provisions are there in the KCS Act permitting charging of necessary fee and also for realisation of costs in view of the inspection. W.A.No.670 of 2019 8 At the same time, the fact is that, there is no such specific provisions empowering the appellant to call for the opposite side in a proceedings before him to pay the costs for issuance of notice in that proceedings under Rule 16(4) of the KCS Rules. In the light of the discussion as above, we do not find any illegality or perversity in the order of the learned Single Judge in interfering with Exts.P4 and P6 orders requiring the writ petitioner/first respondent herein to bear the expenses for issuance of notices to the parties in the proceedings under Rule 16(4) of the KCS Rules. The learned Government Pleader, in a last ditch effort relied on the judgment of a Division Bench of this court in **Joint Registrar of Co-operative Societies (General), Kottayam v. - Akalakunnam Village Service Co operative Bank Ltd No.3857 and Another** reported in **2018(3) KLT 849** to get sustained Exts.P4 and P6 orders. Evidently, the said decision is relied on to contend that the impugned judgment invites a modification in view of the said decision. True that, in the impugned judgment, the learned Single Judge held that “All the stipulations and parameters provided in W.P. (C).No.695/2013 will apply to the petitioners also.” It is submitted that the judgment rendered in W.P.(C).No.695/2013 was taken up in appeal as Writ Appeal No.1450/2018 and the judgment in **Akalakunnam** W.A.No.670 of 2019 9 **Village Service Co-operative Bank's** case (supra) was relied on in the said appeal. We have carefully gone through the said judgment. In fact, our view that, the Joint Registrar is not justified in demanding expenses from the society to issue notice in a matter where the Joint Registrar was invited to invoke the power under Rule 16(4) of the KCS Rules, is virtually fortified by the said decision. In the said decision, the Division Bench held thus:- “It is true that expenses may have to be incurred for issuing notices to the members complained of since the Registrar is obliged to give them an opportunity to file objections or of being heard before passing an order. But that by itself may not be a justification to demand expenses from the member of the Society or the financing Bank on whose representation was the inquiry initiated by the Registrar.” But at the same time, the Division Bench went on to hold that, in case the complaint is found to be ill-founded, the expenses could be recovered from the member who filed the representation. In the light of the said decision and in view of the indisputable position that the complaint involved in this case was preferred by the 2[nd] respondent and not the 1[st] respondent herein, applying the dictum laid down by this court in **Akalakunnam Village Service Co-operative Bank's** case (supra), the decision of the learned Single Judge cannot be said to be faulty. But at the same time, the learned Government Pleader is W.A.No.670 of 2019 10 justified in contending that the judgment requires a modification inasmuch as, the learned Single Judge held that the stipulations and parameters provided in W.P.(C).No.695/2013 would apply to the case of the petitioner. When once it is evident that W.P.(C). No.695/2013 was taken up in appeal, which culminated in the decision in **Akalakkunnam Village Service Co-operative Bank's** case(supra) of the Division Bench the directions and other parameters on the subject in question are not covered by the judgment in W.P.(C). No.695/2013, whereas based on the doctrine of merger they should be treated as covered by the judgment in W.A.No.1450/2018. The said position is clarified as above or, in other words, it is made clear that the stipulations and parameters provided in the judgment in W.A.No.1450/2018 would apply to the petitioner in W.P.(C). No.25315/2012 viz, the first respondent herein as also to the 2[nd] respondent. The Writ Appeal has to fail in the said circumstances. 7. We are also of the view that the writ petition is liable to fail on another score as well. A perusal of the impugned judgment would reveal that, as per the same, besides W.P.(C). No.25315/2012, W.P.(C) No.30868/2012 was also disposed of. Thus, it is obvious that it is a common judgment. The judgment in both the writ petitions were W.A.No.670 of 2019 11 covered by the conditions stipulated thereunder. However, the appellant herein has not chosen to file any appeal against the judgment in W.P.(C).No.30868/2012. Whatever that be, in the light of the discussion as above, we find no reason to interfere with the impugned judgment. Resultantly, this appeal stands dismissed. Sd/- **C.T.RAVIKUMAR Judge** Sd/- **N.NAGARESH Judge** TKS/uu