K. K. Muraleedharan v. Joint Registrar of Co-operative Societies (General) and Addl. R2, Kudayathoor Service Co-operative Bank Limited

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE MURALI PURUSHOTHAMAN WEDNESDAY, THE 16[TH] DAY OF NOVEMBER 2022 / 25TH KARTHIKA, 1944`** ## **`WP(C) NO. 33662 OF 2022`** ## **`PETITIONER:`** ``` K.K.MURALEEDHARAN PRESIDENT, MANAGING COMMITTEE, THE KUDAYATHOOR SERVICE CO-OPERATIVE BANK LIMITED NO.3316, KUDAYATHOOR POST, THODUPUZHA, IDUKKI DISTRICT,PINCODE-685 590 BY ADVS. GEORGE POONTHOTTAM (SR.) NISHA GEORGE SIDHARTH.R.WARIYAR ``` ## **`RESPONDENTS:`** ``` 1THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL) OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), PAINAVU, IDUKKI DISTRICT, PINCODE-685 603 2ADDL.R2: V.S.KURUVILLA, S/O.DEVASSIA, VERUNKAL HOUSE, KUDAYATHOOR P.O., THODUPUZHA, IDUKKI DISTRICT-685 590 ``` ``` (ADDL.R2 IMPLEADED AS PER ORDER DATED 03-11-2022 IN IA 1/2022.) ``` ``` BY ADVS. ``` ``` P.RAVINDRAN (SR.) M.R.SABU LAKSHMI RAMADAS APARNA RAJAN SREEDHAR RAVINDRAN SPL.G.P- SRI.P.P.THAJUDEEN ``` ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 16.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` W.P. (C) No.33662 /2022 2 ## **JUDGMENT** The petitioner, the president of Kudayathoor Service Co-operative Bank Limited (hereinafter referred to as 'Society' for short), a Society registered under the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the 'Act'), has filed this writ petition challenging Ext. P9 notice issued by the 1[st] respondent Joint Registrar of CoSocieties measures operative proposing supersession under section 32 pursuant to enquiry under section 65 of the Act. 2. The managing committee of the Society assumed office on 25.03.2018. Based on a complaint filed by the additional respondent and other members of the Society, the Joint Registrar ordered a section 65 enquiry against the Society as per Ext. P1. The petitioner challenged Ext. P1 before this Court in W.P.(C) No.20699/2019 and the W.P. (C) No.33662 /2022 3 same was dismissed. Though a writ appeal was filed, the Division Bench did not interfere with the judgment of the learned Single Judge. 3.The Enquiry officer completed the enquiry and submitted Ext. P5 report dated 15.11.2019. Based on the said report, the Joint Registrar issued Ext. P3 notice dated 13.01.2020 to the petitioner under section 32 (1) of the Act. 4.The petitioner challenged Ext. P3 notice before this Court in W.P. (C) No. 2435 of 2020 contending, _inter alia,_ that the findings/allegations in the report, as against the functioning of the Society relate to the period during which the earlier managing committee was in office; and the irregularities noted in the report are only curable and therefore, a proceeding under section 32 for supersession of the Committee is not warranted and cannot be W.P. (C) No.33662 /2022 4 sustained. This Court, by Ext. P4 judgment, dismissed the writ petition observing that the correctness or otherwise of the findings in the enquiry report is a matter to be considered in the hearing under section 32 of the Act. 5. Ext. P4 judgment was challenged by the petitioner in W.A. No.1751 of 2020 and the matter was referred to the Full Bench to consider the correctness of the proposition of law laid down in **State of Kerala** _**v**_ **. Aravindakshan Nair** [2010 KHC 545: 2010 (3) KLT 11] as regards the interpretation of Rule 66(5) of the Kerala Cooperative Societies Rules, 1969 ('the Rules' for short). The _**v**_ Full Bench [reported in **Reji K. Joshy and others . Joint Registrar of Co-operative Societies (General) Kollam and others** [2022 (3) KHC 317: 2022 (3) KLT 222: ILR 2022 (2) Ker.553], held that service of copy of enquiry report under section 65 is mandatory W.P. (C) No.33662 /2022 5 before an action is taken under section 32 of the Act. The Full Bench affirmed the dictum in **Aravindakshan Nair** (supra) and on declaration of law, the Division Bench disposed of W.A. No.1751 of 2020 by judgment dated 31.08.2022. Paragraphs 18 to 20 of the said judgment read as under: “18. In these 3 cases, Section 65 inquiry process have been completed and thereafter, in view of the allegations disclosed in those inquiry reports, the impugned notices have been issued, proposing supersession measures at the Section 32(1) stage. So, the respondent- Joint Registrar will be at liberty to proceed further with the matter, in accordance with law. It is urged before us by the learned Senior Counsel appearing for the appellants, that the copy of the adverse inquiry reports, at Section 65 stage, was never served by the respondent-Joint Registrar and the appellants could secure it otherwise and the same was produced only in these writ appeals by the respondents concerned. As held herein above, the respondent- Joint Registrar was under the legal obligation to provide copies of such Section 65 inquiry W.P. (C) No.33662 /2022 6 reports, since copies of the inquiry reports have already been served to the appellants, in these writ appellate proceedings to obviate further delay, there may not be any necessity to again serve them copies. Thus, we say so, as on being queried, the learned Senior Counsel appearing for the appellants, would fairly submit that though there is a breach of legal obligation, on the part of the respondent-Joint Registrar, there may not be any necessity to again serve copies of this reports, as such copies of such reports were served at this writ appellate stage. 19. Further, it is also ordered that all materials, on the basis of such adverse findings, that have been made in the Section 65 inquiry report should be evenly given by the respondent-Joint Registrar to the appellants and it should be duly completed within one week from the date of receipt of a copy of this judgment. Thereafter, it is for the appellants to give written submissions on the matter as to why the alleged allegations and irregularities, noted in Section 65 inquiry report, are wrong and not reliable and as to why the extreme measure of supersession of the managing committee of the society, is not warranted or justified in the facts and circumstances of the case. W.P. (C) No.33662 /2022 7 Thereafter, the respondent-Joint Registrar will afford reasonable opportunity being heard to the appellants either in person or through their authorised representatives/counsel, if any, and then should take a considerable decision as to whether the conditions enumerated in Clauses (a) to (d) of Section 32(1) are made out in these cases and also as to whether the facts and circumstances of the case would justify the serious measure of supersession of the Society etc. Decision in that regard may be duly taken by the respondent-Joint Registrar, after completing the hearing process. 20. Further, as held in the other cases, the adverse findings in Section 65 inquiry report shall not be treated as final and binding on the respondent-Joint Registrar and the same can only be provisional fact findings and the correctness or otherwise of those adverse findings will have to be evaluated and decided by the respondentJoint Registrar in the decision making process, as above.” 6. The Joint Registrar issued Ext. P9 notice enclosing the copy of Ext. P5 enquiry report and the documents relied on in the enquiry report and calling for explanation W.P. (C) No.33662 /2022 8 from the petitioner on Ext. P3 notice under section 32, failing which, the petitioner was informed that proceedings under section 32 would be initiated. The date for hearing slated in Ext. P9 is adjourned to 18.11.2022 and the petitioner on behalf of the Society has submitted Exts. P10 and P11 reply/statement before the Joint Registrar. 7. The petitioner contends that, Ext. P9 does not indicate the essential pre-requisites for issuing a notice under section 32 of the Act inasmuch as it does not speak about the reasons for issuing the show cause notice and does not disclose the satisfaction of the Registrar requiring the initiation of an action under section 32. It is further contended that, Ext. P5 enquiry report does not indicate negligent or persistent default in performing the duties of the committee or any willful disobedience or W.P. (C) No.33662 /2022 9 failure to comply with the lawful orders/directions or allegation of misappropriation or any other ingredients to invoke section 32(1) of the Act and there is total nonapplication of mind in issuing Ext. P9 notice. The petitioner, therefore, seeks to set aside Ext. P9. 8. Heard Sri. George Poonthottam, the learned senior counsel for the petitioner, Sri. P. Ravindran, the learned senior counsel for the additional respondent and Sri.Thajudeen P.P, the learned Special Government Pleader, Co-operation. 9. Sri. George Poonthottam, the learned senior counsel contends that, none of the conditions enumerated in clauses (a) to (d) of section 32(1) is made out for issuance of Ext. P9 notice. Referring to Ext. P5 report, the learned senior counsel contends that, even if the enquiry report is taken to be true on its face value and accepted in W.P. (C) No.33662 /2022 10 its entirety, that will not warrant initiation of a proceedings under section 32. It is further contended that Ext. P9 does not indicate the essential pre-requisites for issuing a notice under section 32 and does not state the relevant factors that weighed with the Joint Registrar to issue such notice. Sri. George Poonthottam would then submit that supersession is not the only medicine against the alleged irregularities and the committee should be given opportunity to cure the alleged defects. The learned senior counsel relied on the decisions of this Court in **Jose Kuttiyani** _**v**_ **. Registrar of Cooperative Societies** [1981 KHC 210: AIR 1982 Ker. 12] and **Rajagopalan Nair** _**v**_ **State of Kerala** [1995 (2) KLT 184] in support of his contentions. 10. Per contra, Sri. P. Ravindran, the learned senior counsel would submit that Ext. P3 is the show cause W.P. (C) No.33662 /2022 11 notice issued under section 32 (1) and Ext. P9 notice is issued in terms of the judgment of the Division Bench in W.A. No.1751 of 2020 and that as per the decision of the Full Bench in **Reji K. Joshy** (supra), there is no need for a hearing before a tentative decision is taken on the action based on the enquiry report. The senior counsel contends that the petitioner has to submit his reply to Ext. P9 and the present writ petition is premature and no interference under Article 226 of the Constitution is called for against a show cause notice. 11. Sri. Sri.Thajudeen, the learned Special Government Pleader would contend that Ext. P9 is issued in compliance with the directions of the Division Bench in the judgment in W.A. No.1751 of 2020. 12.In the _inter partes_ judgment of the Division Bench, it is held that, since section 65 enquiry has been W.P. (C) No.33662 /2022 12 completed and in view of the allegations disclosed in the enquiry report, Ext. P3 notice has been issued proposing supersession measures under section 32(1), the Joint Registrar will be at liberty to proceed further with the matter, in accordance with law. The Division Bench further ordered that all materials on the basis of which adverse findings were made in the section 65 enquiry report should be given by the Joint Registrar to the petitioner and thereafter, it is for the petitioner to give written submissions on the matter as to why the alleged allegations and irregularities, noted in Section 65 enquiry report, are wrong and not reliable and as to why the extreme measure of supersession of the managing committee of the Society, is not warranted or justified in the facts and circumstances of the case. Thereafter, the Joint Registrar will afford reasonable opportunity being W.P. (C) No.33662 /2022 13 heard to the petitioner either in person or through authorised representative/counsel, if any, and then should take a considerable decision as to whether the conditions enumerated in clauses (a) to (d) of section 32(1) are made out and also as to whether the facts and circumstances of the case would justify the serious measure of supersession of the Society _etc_ . The Division Bench also held that, the adverse findings in section 65 inquiry report shall not be treated as final and binding on the Joint Registrar and the same can only be provisional fact findings and the correctness or otherwise of those adverse findings will have to be evaluated and decided by the Joint Registrar in the decision making process. 13.Taking note of Ext. P5 report under section 65 and Ext. P3 notice under section 32(1), the Division Bench granted liberty to the Joint Registrar to proceed further 14 W.P. (C) No.33662 /2022 with the matter. It is pursuant to the said direction of the Division Bench that Ext. P9 is issued. As directed by the Division Bench, the documents relied on in the section 65 inquiry report are given by the Joint Registrar to the petitioner along with Ext. P9 notice. Thereafter, it is for the petitioner to give written submissions on the matter as to why the alleged allegations and irregularities, noted in Ext. P5 inquiry report, are wrong and not reliable and as to why the supersession of the managing committee of the Society is not warranted or justified in the facts and circumstances of the case. The petitioner on behalf of the managing committee has given Exts. P10 and P11 written submissions before the Joint Registrar. Now, the Joint Registrar has to afford reasonable opportunity of being heard to the petitioner and take a considerable decision as to whether the conditions enumerated in clauses (a) to (d) W.P. (C) No.33662 /2022 15 of section 32(1) are made out and also as to whether the facts and circumstances of the case would justify the serious measure of supersession of the Society _etc_ . For the said purpose, the Joint Registrar can proceed pursuant to Ext. P9. 14. The petitioner will get reasonable opportunity of hearing to put forth his contentions before the Joint Registrar. In the light of the judgment of the Division Bench in W.A. No.1751 of 2020, no interference is called for under Article 226 of the Constitution of India on Ext. P9 show cause notice. In **State of M.P.** _**v**_ **. Sanjay Nagayach and others** [(2013) 7 SCC 25], the Hon'ble Supreme Court, in the context of the Madhya Pradesh Cooperative Societies Act, 1960 has laid down the general directions in the matter of supersession of the elected committee. While proceeding pursuant to Ext. P9, the 1[st] W.P. (C) No.33662 /2022 16 respondent shall bear in mind the law laid down by the Hon'ble Supreme Court in **Sanjay Nagayach** (supra) and comply with the directions in the _inter partes_ judgment of the Division Bench in W.A. No.1751 of 2020. 15. All legal and factual contentions of the petitioner are left open to be raised before the 1[st] respondent at appropriate stage. With the above observations, the writ petition is dismissed. There will be no order as to costs. Sd/- **MURALI PURUSHOTHAMAN Judge** spc/ W.P. (C) No.33662 /2022 17 ## **`APPENDIX OF WP(C) 33662/2022`** ## `PETITIONER EXHIBITS` ``` Exhibit P1TRUE COPY OF THE ORDER NO.CRP.3244/19 DATED 26.06.2019 ISSUED BY RESPONDENT. Exhibit P2TRUE COPY OF THE JUDGMENT DATED 24.10.2019 PASSED BY THE DIVISION BENCH IN W.A. NO. 2116 OF 2019. Exhibit P3TRUE COPY OF THE NOTICE NO. CRP.3244/19 DATED 13.01.2020 ISSUED BY RESPONDENT. Exhibit P4TRUE COPY OF THE JUDGMENT DATED 03.12.2020 ISSUED BY THIS HON'BLE COURT IN W.P.(C) NO. 2435 OF 2020. Exhibit P5TRUE COPY OF THE ENQUIRY REPORT OF THE PETITIONER'S SOCIETY DATED 15.11.2019. Exhibit P6TRUE COPY OF THE CHART OF PROGRESS IN RESPECT OF THE PETITIONER'S BANK. Exhibit P7TRUE COPY OF THE PROCEEDINGS NO. C.R.P./1089/12 K. DIS DATED 13.03.2012 ISSUED BY THE JOINT REGISTRAR. Exhibit P8TRUE COPY OF THE AMENDMENT OF THE BYELAWS AND THE PROPOSAL FOR THE SAME DATED 13.03.2015 WITH ENCLOSURES. Exhibit P9TRUE COPY OF THE NOTICE BEARING NO. JRGIDK/978/2021-CRP DATED 06.10.2022 ISSUED BY THE JOINT REGISTRAR. Exhibit P10TRUE COPY OF THE REPLY/LETTER NO. 99/19-20 DATED 13.11.2019 ISSUED BY THE PETITIONER WITH ENCLOSURES. Exhibit P11TRUE COPY OF THE STATEMENT GIVEN BY THE PETITIONER BEARING NO.97/19-20 DATED 14.11.2019 Exhibit P12TRUE COPY OF THE AMENDMENT OF THE BYLAWS OF THE PETITIONER’S SOCIETY WITH ENCLOSURES. Exhibit P13TRUE COPY OF THE LETTER NO.28/22-23 DATED 26-10- 2022 GIVEN BY THE PRESIDENT OF THE BANK ALONG WITH ALL ENCLOSURES. Exhibit P14TRUECOPYOFTHENOTICEBEARING NO.JRGIDK/978/2021-CRP DATED 27-10-2022 ISSUED BY THE JOINT REGISTRAR. ```