Kakkur Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies (General), Kozhikode; Assistant Registrar of Co-operative Societies (General), Kozhikode; District Collector, Kozhikode; Tahsildar, Kozhikode Taluk Office, Kozhikode

W.P.(C)No.30242 of 2021 1 ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE T.R.RAVI** **TUESDAY, THE 6[TH] DAY OF JUNE 2023/16TH JYAISHTA, 1945** ## **WP(C) NO. 30242 OF 2021** ## **PETITIONER:** THE KAKKUR SERVICE CO-OPERATIVE BANK LTD. NO. LL33 REPRESENTED BY ITS SECRETARY, KAKKUR P.O, KOZHIKODE DISTRICT, PIN 673 613 BY ADVS. SRI T.R.HARIKUMAR SRI ARJUN RAGHAVAN ## **RESPONDENTS:** 1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KOZHIKODE, PIN 673 020 2 THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KOZHIKODE, PIN 673 020 3 THE DISTRICT COLLECTOR COLLECTORATE, CIVIL STATION, KOZHIKODE, PIN 673 020 4 THE TAHSILDAR, KOZHIKODE TALUK OFFICE, CIVIL STATION, KOZHIKODE, PIN 673 020 BY SMT.MABLE C.KURIAN, SR.GOVT.PLEADER THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21.10.2022, THE COURT ON 06.06.2023 DELIVERED THE FOLLOWING: W.P.(C)No.30242 of 2021 2 **T.R. RAVI, J. -------------------------------------------W.P.(C)No.30242 of 2021 -------------------------------------------Dated this the 6th day of June, 2023** ## **JUDGMENT** The petitioner is a Primary Agricultural Credit Society, with 13000 members, having its head office near Kozhikode-Balussery road. The office was functioning in an old building in 9 cents of land. An additional 22 cents of land, which is a hilly area, is also owned by the Society. It is stated that since the building was in a dilapidated condition and required reconstruction, the head office was shifted to a rented building in 2012. Ext.P3 is the Bye-laws of the Society, and it permits the purchase of property for the purpose of business. By Ext.P1 resolution dated 30.9.2019, the General Body of the society decided to construct a new building and, if necessary to purchase sufficient land for the said purpose. The petitioner invited tenders from persons interested in selling property by issuing a notification on 23.10.2019 in leading daily newspapers. Four persons submitted tenders. By Ext.P2 resolution dated 08.11.2019, it was resolved to purchase 8.75 cents of land adjacent to the head office for Rs.9,60,000/- per cent from Sri.Pariary, Kurumboyilmeethal. On 28.11.2019, the petitioner submitted Ext.P4 W.P.(C)No.30242 of 2021 3 application before the 1[st] respondent for approval of Ext.P2, under Rule 54 of the Kerala Co-operative Societies Rules, along with relevant documents. The petitioner submits that no reply was received. Ext.P5 sale deed was executed on 16.6.2020. Thereafter, the petitioner received Ext.P6 communication dated 14.07.2020 from the Joint Registrar calling for certain details. The petitioner sent Ext.P7 reply on 29.07.2021. The petitioner has produced, along with the writ petition, the valuation certificate and other communications between the petitioner and the respondents. Since the petitioner could not make constructions on the property purchased, the writ petition was filed. 2. The prayers in the writ petition are for issuance of a writ of certiorari quashing Ext.P11; a writ of mandamus directing respondents 3 and 4 to issue valuation certificate for Ext.P5 property; and for a direction to the 1[st] respondent to approve the price of Ext.P5 sale deed based on Ext.P8. Ext.P11 is a letter issued by the 1[st] respondent stating that the application cannot be considered as it was submitted without following Circular No.26/18 issued by the Registrar of Co-operative Societies. 3. A statement has been filed by the 1[st] respondent stating that the Society is under the supervisory control of the 1[st] respondent. It is stated that the application submitted by the W.P.(C)No.30242 of 2021 4 petitioner was examined under the provisions contained in Circular No.26/2018 dated 04.05.2018 of the Registrar of Co-operative Societies and that the petitioner has not complied with the requirements laid down in the Circular. It is stated that valuation certificates issued by approved valuers, though accepted by Nationalised Banks and certain Central Government agencies, the said practice is not approved by the Registrar of Co-operative Societies. 4. Heard Sri T.R.Harikumar, counsel for the petitioner and Smt.Mable C.Kurian, Senior Government Pleader. 5. Rule 54 of the Kerala Co-operative Societies Rules (hereinafter referred to as the 'KCS Rules') requires a society to get prior sanction from the Registrar for investing its funds for the purchase of land, construction, or renewal of any building that may be necessary to conduct its business. The proviso to the Rule says that no such sanction is required if the objects stated in the society’s bye-laws include such purchase or construction. The counsel for the petitioner pointed out that Ext.P2 bye-laws of the petitioner society authorise the purchase of movable and immovable property to meet the requirements of the Bank. Reliance is placed on the decisions of this court in **T.K.Udayabhanu vs. State of** **Kerala & Ors.[WP(C)No.11158 of 2010], The Board of** W.P.(C)No.30242 of 2021 5 **Directors of Chennamangalam Service Co-operative Bank vs. The Registrar of Co-operative Societies & Ors. [WP(C)No.21798 of 2008], Cochin Co-operative Hospital Society Limited v. State of Kerala & Anr. [WP(C)No.22073 of 2003], The Elampal Service Co-operative Bank Ltd & Anr. vs. The Assistant Registrar of Co-operative Societies & Ors. [WP(C)No.37165 of 2016], E.J. Thomas & Anr. vs. The State of Kerala& Ors. [WP(C)No. 40266 of 2017]** and the judgment of the Hon’ble Supreme Court in **The Bengal Secretariat Cooperative Land Mortgage Bank and Housing Society Ltd. Vs. Sri Aloke Kumar & Anr. [C.A.No.7261 of 2022]** , in support of his contentions. 6. In **Udayabhanu (supra),** a learned Single Judge set aside an order rejecting permission to amend the bye-laws of a Society by including the right to purchase or sell property and held that the Society has such power under Rule 54 of the KCS Rules. **Chennamangalam (supra)** , was a case similar, in its facts, to the present writ petition. The Society had purchased land, and construction had also begun. An audit objection had been raised regarding the purchase stating that there was no prior approval. The Society approached the Registrar for approval. The request was rejected on the ground that no valuation was produced. The W.P.(C)No.30242 of 2021 6 learned Single Judge, in the judgment, referred to Rule 54(1)(b) and set aside the order of the Joint Registrar and held there was no requirement for approval, and declared that the Managing Committee’s decision to purchase the property to have been approved. In **Cochin Co-operative Hospital (supra)** , this Court held that the scope of Rule 54 could not be enlarged or widened by stipulation in a Circular and that the Court cannot read the provision by adding that construction shall only be after approval of the estimate and the approval of the plan. In **Elampal (supra)** , a learned Single Judge noticed the view taken in the aforesaid decisions but was of the view that the use of the word “such” in Rule 54(1)(b) is of significance. The learned Judge took the view that it is only in the cases of Societies that have as its object the purchase/lease of lands/buildings and expressed an opinion that the issue needs to be addressed by a Division Bench. The order of the learned Judge was rendered on 27.11.2020. However, on a later occasion, the same learned Judge in **E.J.Thomas (supra)** , on 13.10.2021, observed that the view taken by this Court, as of now, is that if the bye-laws contain a provision enabling acquisition of property, the previous sanction is not necessary. The Court held that the failure to obtain prior sanction could not amount to a violation of the rules. W.P.(C)No.30242 of 2021 7 7. I am in respectful agreement with the views expressed in the judgments in **Udayabhanu (supra), Chennamangalam (supra),** and **Cochin Co-operative Hospital (supra)** . A reading of Rule 54 in its entirety does not warrant a different construction. Rule 54(1) enables a Society to invest the whole or any portion of its funds in the purchase or lease of land etc., that may be necessary to conduct its business. The sub-rule further says that the amount of funds invested shall be recouped on such terms as may be determined in each case by the Registrar. There are three provisos to the above general provision contained in the sub-rule, which are in the nature of exceptions. The first proviso (a) says that the sub-rule shall not apply to immovable properties purchased by a society at a sale held for recovery of any sum due to it and to immovable property purchased by a Financing Bank at a sale in execution for the recovery of any sum due to it or at a sale by or on behalf of the liquidator of such society. The above proviso facilitates recouping amounts due to society by means of the purchase of assets during execution. It is clearly in the interest of the society. The first proviso (b) says that the sub-rule shall not apply to the purchase or lease of lands or purchase, construction or remodeling of buildings or a Society whose objects, according to its bye-laws include such purchase, lease construction, or remodeling. The above W.P.(C)No.30242 of 2021 8 proviso does not state that the very object of the society should be “such purchase, lease construction.” The word “such” can only apply to the words “purchase or lease” used at the beginning of the proviso (b). This is clear from reading the rule further. The second proviso takes away the requirement for recouping contained in the earlier part of the rule in cases where the investment is made from funds raised out of net profits as per the bye-laws or by a society other than a credit society in which the share capital raised from the members is intended to build up such special kind of business for which it has been registered. Rule 54(2), however, provides that no society shall dispose of any immovable property acquired by the society without the prior sanction of the general body and of the Registrar. It can thus be seen that if the objects of the society stated in the bye-laws permit investment in the nature of the purchase of land and building or the construction of a building; the same can be done without the prior sanction of the Registrar. Even if the bye-laws permit the sale of land of the society, it can be done only with the prior sanction of the General Body and the Registrar. An exception is provided for the above restriction regarding sale in the proviso to Rule 54(2), in the case of Housing Societies. 8. In the case on hand, the sale has already taken place as per Ext.P5 registered sale deed. The sale is also approved by the W.P.(C)No.30242 of 2021 9 General Body. As there is no requirement of prior sanction and the purchase comes within the exceptions contained in Rule 54, the petitioner is entitled to succeed. The writ petition is allowed. Ext.P11 is quashed. The purchase of the property as per Ext.P5 sale deed on the basis of the valuation certificate issued as per Ext.P8 shall stand approved. **==> picture [320 x 54] intentionally omitted <==** Sd/- **T.R. RAVI JUDGE** dsn W.P.(C)No.30242 of 2021 10 ## **APPENDIX OF WP(C) 30242/2021** PETITIONER EXHIBITS - Exhibit P1 A TRUE COPY OF THE RESOLUTION NO. 10 DATED 3009-2019 OF THE GENERAL BODY OF THE PETITIONER SOCIETY - Exhibit P2 A TRUE COPY OF THE RESOLUTION NO. 1 DATED 0811-2019 OF THE MANAGING COMMITTED OF THE PETITIONER SOCIETY - Exhibit P3 A TRUE COPY OF THE RELEVANT PAGES OF THE BYELAW OF THE PETITIONER SOCIETY - Exhibit P4 A TRUE COPY OF THE REPRESENTATION FILED BY THE PETITIONER SOCIETY BEFORE THE 1ST RESPONDENT DATED 28-11-2019 - Exhibit P5 A TRUE COPY OF THE SALE DEED NO.749/1/2020 DATED 16-06-2020 - Exhibit P6 A TRUE COPY OF THE COMMUNICATION NO. C.R.P(1) 2691/20 DATED 14-07-2020 ISSUED BY THE 1ST RESPONDENT - Exhibit P7 A TRUE COPY OF THE REPLY SUBMITTED BY THE SOCIETY BEFORE THE 1ST RESPONDENT DATED 29-072021 - Exhibit P8 A TRUE COPY OF THE VALUATION CERTIFICATE - ISSUED BY THE VALUATOR OF THE STATE BANK OF INDIA DATED 11-02-2021 - Exhibit P9 A TRUE COPY OF THE APPLICATION FILED BY THE PETITIONER SOCIETY BEFORE THE 3RD RESPONDENT DATED 21-07-2020 ALONG WITH RESOLUTION DATED 13-06-2020 - Exhibit P10 A TRUE COPY OF THE APPLICATION FILED BY THE PETITIONER SOCIETY BEFORE THE 4TH RESPONDENT DATED 16-06-2020 ALONG WITH RESOLUTION DATED 13-06-2020 - Exhibit P11 A TRUE COPY OF THE COMMUNICATION FILE NO. JRGKKD/1650/2021-CRP(1) DATED 07-11-2021 ISSUED BY THE 1ST RESPONDENT. - Exhibit P12 A TRUE COPY OF THE REQUEST DATED 28.4.2022, SUBMITTED BY THE PETITIONER BEFORE THE IST RESPONDENT ALONG WITH RESOLUTION DATED W.P.(C)No.30242 of 2021 11 8.4.2022 Exhibit P13 A TRUE COPY OF THE ORDER NO CRP 1650/2021 DATED 30.4.2022, ISSUED BY THE IST RESPONDENT Exhibit P14 A TRUE COPY OF THE ORDER NO CRP 1650/2021 DATED 21.5.2022, ISSUED BY THE IST RESPONDENT Exhibit P15 A TRUE COPY OF THE JUDGMENT DATED 4.4.2012 IN WPC NO 2924 OF 2012 OF THIS HON'BLE COURT Exhibit P16 A TRUE COPY OF THE BOOKLET