KERALA LAND REFORMS AND DEVELOPMENT CO-OPERATIVE SOCIETY LTD., NO.4482 MANKAVU GREENS, MANKAVU P.O., AZHCHAVATTOM, CALICUT, represented by its Chairman v. REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THIRUVANANTHAPURAM; EQUITY OFFICER/JOINT DIRECTOR/CONCURRENT AUDITOR, WAYANAD DISTRICT CO-OPERATIVE BANK

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **THURSDAY, THE 08TH DAY OF AUGUST 2019 / 17TH SRAVANA, 1941** ## **WP(C).No.19579 OF 2019(V)** ## **PETITIONER:** **KERALA LAND REFORMS AND DEVELOPMENT CO-OPERATIVE SOCIETY LTD.NO.4482 MANKAVU GREENS, MANKAVU P.O., AZHCHAVATTOM, CALICUT, REPRESENTED BY ITS CHAIRMAN.** **BY ADVS.SRI.B.S.SWATHY KUMAR SMT.ANITHA RAVINDRAN** ## **RESPONDENTS:** **1 THE REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THIRUVANANTHAPURAM - 695 001. 2 THE EQUITY OFFICER/JOINT DIRECTOR/CONCURRENT AUDITOR, WAYANAD DISTRICT CO-OPERATIVE BANK, WAYANAD, PIN - 673 121.** ## **BY GOVERNMENT PLEADER SMT.C.S.SHEEJA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 08.08.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WPC 19579/19 2 ## **JUDGMENT** ## **Dated this the 8th day of August 2019** In matters relating to the exercise of suo motu jurisdiction by the Registrar of Co-operative Societies under Section 65 of the Kerala Co-operative Societies Act, 1969 ('the KCS Act' for brevity) has already been exhaustively dealt with by a learned Division Bench of this Court in **Melukkara Service Co-operative Bank Ltd.No.PT 152 and Another v. Joint Registrar (General), District Cooperative Society** (2018 (2) KHC 143). 2. The imperative circumspection required to be observed by the Registrar, while ordering a suo motu enquiry under Section 65 of the KCS Act, has been declared unequivocally in **Melukkara Service Co-operative Bank** (supra) in the following paragraphs, which are extracted below, so that repetition of the same can be avoided in this judgment: “As per the provisions of Section 65, discernible from the extracted portion, an inquiry by the Registrar may be ordered either on his own motion or in the contingencies enumerated in sub-clauses (b) to (f) of the said Section. The power to initiate an inquiry under Section 65 of the Act on the motion of the Registrar is contained very pithily in sub clause (a) which says that the Registrar may hold an inquiry by himself or by a person authorised by an order in writing, into the constitution, working and financial condition of the society, if he is WPC 19579/19 3 satisfied that it is necessary to do so. However, the provision clearly ingrains a qualification that such an inquiry need be ordered “only if he is satisfied that it is necessary to to do so.” The words “that it is necessary to do so” in the last portion of Section 65(1) clearly postulates that the power to be exercised by the Registrar has to be done with necessary care, caution and circumspection. It is not permissible on the part of the Registrar to order an inquiry under Section 65 merely because he is competent to do so. The powers vested with him being virtually plenary in nature, the requirement of him being subjectively satisfied that it is necessary to do so is statutorily in-built. As is perspicuous from Section 65 itself, very strict stipulations are provided as to the manner in which the Registrar can initiate action thereunder. It becomes inescapable from its prescriptions that the care and circumspection, while the Registrar exercises jurisdiction under it, has to be very strictly construed. The requirement of being personally satisfied before an inquiry is ordered by the Registrar is implicit in the provision and, therefore, it is essential that before making an order under Section 65, to cause an inquiry into the working of the Society, it is necessary and exigent for the Registrar to be first satisfied that such an inquiry is required and essential. As we have already indicated above, for the Registrar to order an inquiry under Section 65 of the Act, he should be first satisfied that it is necessary to do so. These words, though innocuous, are of great import. Therefore, the issue is as to the nature of the satisfaction the Registrar will have to first enter into and if he can act mechanically upon the complaint of an individual or upon the report of an inferior officer. We are certain that this will not be enough because, as is clear from Section 65(1)(a) to (f), the nature of the reports and the nature of the complaints, on which the Registrar can act, are specified. For instance, under Section 65(1)(b), the Registrar can act only on the inquiry report of the Vigilance Officer appointed under Section 68A and under section 65(1)(d), he can act on the application of the members of the society only if such application is made by the majority of the members of the committee of the society or by not less than one third of the quorum for the general body meeting whichever is less. Obviously, therefore, what is intended under Section 65 is that a complaint which is frivolously made cannot automatically lead to any further action, except after the Registrar satisfies himself as to the essentiality of an inquiry under Section 65, since what is contemplated under that section is a serious inquiry which goes into the working of the society itself and which can lead to other corollary actions under the Act. This consequential action is not quotidian but WPC 19579/19 4 one that can cause major consequences. Therefore, when the mandate of section 65 itself is that the Registrar can act only on the application by the majority of the members of the committee of the society or by not less than one-third of the quorum for the general body meeting, whichever is less, then it becomes luculent that a complaint by an individual member or by a disgruntled person will not be sufficient reason for the Registrar to cause an inquiry simplicitor. The requirement here is that the Registrar will, thereafter, have to be satisfied that such a course is inevitable and that it is absolutely necessary to act suo motu. The responsibility cast upon the Registrar, while he acts suo motu or on his own motion, is, according to us, greater than the responsibility imposed on him while he acts under the provisions of section 65(1)(b) to (f) of the Act. This is because, under the statutory prescriptions, when the Registrar receives an inquiry report from the Vigilance Officer or a report of the Director of the Co-operative Audit or an application of the majority of the members or an application of the apex society, then he will generally have to act, subject to a satisfaction being prima facie arrived at. However, when he acts suo motu, which is to say, when he acts without any of such inquiry reports or applications, then the responsibility will have to be discharged by him with greater circumspection and circumscription. What was required for the Registrar to have done was to take into account all relevant factors and circumstances and to have caused at least an inspection of the records and materials maintained by the society before recording his satisfaction as to whether an inquiry under section 65 of the Act was required. It was not proper on his part to merely rely upon the report of the Assistant Registrar and then to say that he is prima facie satisfied, when it is obvious from Ext.P1 that there was nothing before him, except that report, which could have led him to such a satisfaction and obviously going by the provisions of the statute, the satisfaction of the Assistant Registrar cannot be in lieu of the satisfaction to be personally arrived at by the Registrar, who is vested with the powers to cause an inquiry under section 65 of the Act. It is in this context that the judgment relied upon by Sri.Liju Stephen, namely, **Director General, ESI** (supra) of the Honourable Supreme Court of India would come into relevance. We are certain that since the officer with whom the power is vested under section 65 of the Act - is the Registrar of Co operative Societies, it was not permissible for him to merely rely upon the report of the Registrar to record his “personal satisfaction”, but he could have entered into the necessity WPC 19579/19 5 of an inquiry under section 65 of the Act only after first discharging the statutory burden upon him, to subjectively assess whether it was necessary for doing so in the circumstances and facts presented. What we mean to say is that even assuming that the Registrar had taken into account the report of the Joint Registrar, he should have entered into a subjective satisfaction of the requirement of an inquiry personally and not be solely and perforce be guided by the recommendations in the said report. We do not say that the report of the Assistant Registrar ought not to have been looked into but only that even if that was taken into account, the Registrar should have then personally gone forward to satisfy himself, in terms of the statutory rigour, by an evaluation and assessment of all the relevant records and documents maintained by the society, which would have certainly guided him to a valid conclusion as to the requirement of an inquiry under section 65 of the Act.” (emphasis supplied) 3. Hence, when I deal with these matters, my endeavour is primarily to see whether, while issuing the impugned order, the competent Registrar has borne in mind these principles and whether his actions find this Court's imprimatur, tested from the standards above set by the learned Division Bench. 4. Further, it is now well settled in law that administrative decisions are amenable to judicial review only on grounds of perversity, patent illegality, irrationality, for want of power to take decision and procedural irregularity. I also bear in mind that when such decisions are to be judicially reviewed by this Court, it is not really the decision but the decision making process that must obtain the careful scrutiny of this Court. The Hon'ble Supreme Court has, in a catena of decisions, underscored this without doubt and the latest WPC 19579/19 6 judgment of the Hon'ble Court, reiterating these principles, is **Sarvepulli Ramaiah (Died) as per Legal Heirs and Others v. District Collector, Chittoor District and Others** (Civil Appeal No. 7461/2009). 5. Keeping these fundamental aspects in mind, I proceed to now analyse the legality of the impugned order. 6. The petitioner in this writ petition, which is a Co-operative Society registered under the provisions of the Kerala Co-operative Societies Act, 1969, impugns Exhibit P1 order issued by the first respondent - Registrar of Co-operative Societies, whereby an enquiry under Section 65 of the said Act has been ordered through the second respondent. The petitioner primarily contends that this order is in violation of the above-extracted affirmative conclusions of this Court in **Melukkara Service Co-operative Bank** (supra) and that the same cannot be sustained because, it is virtually identical to the order that was set aside by the learned Division Bench in the said judgment. 7. When I heard the learned counsel for the petitioner on the afore lines, I examined Exhibit P1 order and pertinently nowhere in the said order has it even been recorded that the Registrar has satisfied himself that an enquiry under Section 65 is necessary. Of WPC 19579/19 7 course, it can certainly be argued that even without an express record, this Court can verify whether it is implicitly so available. 8. I, therefore, asked the learned Senior Government Pleader as to the instructions she received from the first respondent and she submitted that, as is evident from Exhibit P1, very serious allegations have been made against the petitioner, including that there has been wide spread corruption in appointments and granting contracts and most of all, that the Society has not maintained the Fluid Reserves as per the KCS Act and Rules, even though more than Rs.27 crores is found to have been eroded from its net worth by the Joint Registrar in his report, referred to as item No.2 in Exhibit P1. She, therefore, prays that Exhibit P1 be allowed to operate without interdiction. 9. Though there may be some force in the factual submissions made by the learned Senior Government Pleader and even if the intention of the Registrar in having issued Exhibit P1 might be supported by the objectives that are justified, it is indubitable that the said order does not record anywhere that the authority had entered into a subjective satisfaction that an enquiry under Section 65 is necessary. Even assuming that an express record of the same is not necessary and that it can be implied, unfortunately, in Exhibit P1, WPC 19579/19 8 even this is lacking. As is clear therefrom, the Registrar has followed the opinion of the Joint Registrar and has adopted all conclusions in the report referred to as item No.2 in Exhibit P1 and then proceeded to order a Section 65 enquiry. I am afraid, whatever be the merits of the contentions of the learned Senior Government Pleader, the contents and conclusions in Exhibit P1 go completely contrary to the declaration of law in **Melukkara Service Co-operative Bank** (supra). 10. Further, it is now well settled in law that when the jurisdiction of this Court for judicial scrutiny is invoked against administrative orders, this Court will only verify if the decision making process has been followed and generally, is not concerned with the merits of the decision itself. Obviously, therefore, unless the procedure is properly followed, even if the decision is right, the impugned orders or proceedings cannot find favour in law. In the afore circumstances, I allow this writ petition and set aside Exhibit P1 order, however, leaving liberty to the Registrar of Cooperative Societies to initiate and pursue further action in terms of law, adverting to the declarations of law in **Melukkara Service Cooperative Bank** (supra) and in such event, nothing contained in this WPC 19579/19 9 judgment will be construed to mean that such rights of the said Officer are, in any manner, fettered or tramelled. Sd/Devan Ramachandran, Judge tkv WPC 19579/19 10 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER RCS/1586/2019/MT-4 DATED 03.07.2019 OF THE 1ST RESPONDENT.** /TRUE COPY/ P.S. TO JUDGE