Managing Committee of Naruvamoodu Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies (General), Office of the Registrar of Co-operative Societies, Kaithamukku, Thiruvananthapuram, and Shajikumar

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE A.MUHAMED MUSTAQUE** **WEDNESDAY, THE 16TH DAY OF OCTOBER 2019 / 24TH ASWINA, 1941** ## **WP(C).No.3370 OF 2019(U)** ## **PETITIONER/S:** **THE MANAGING COMMITTEE OF NARUVAMOODU SERVICE COOPERATIVE BANK LTD., REPRESENTED BY ITS PRESIDENT, NARUVAMOODU P.O.695528, THIRUVANANTHAPURAM.** **BY ADVS. SRI.P.N.MOHANAN SRI.C.P.SABARI SMT.AMRUTHA SURESH** ## **RESPONDENT/S:** |**1**|**THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES**| |---|---| ||**(GENERAL),**| ||**OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES,**| ||**KAITHAMUKKU, THIRUVANANTHAPURAM-695024.**| |**2**|**SHAJIKUMAR,**| ||**MEMBER NO.4909, SHAJI BHAVAN, MUKKAMPALAMOODU,**| ||**NARUVAMMODU P.O., THIRUVANANTHAPURAM-695528.**| ||**R1 BY GOVERNMENT PLEADER SR GP CS SHEEJA**| ||**R2 BY ADV. SMT.N.P.ASHA**| **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 15.10.2019, THE COURT ON 16.10.2019 DELIVERED THE FOLLOWING:** ## **J U D G M E N T** ## **[ WP(C).3370/2019]** ## **Dated this the 16th day of October 2019** This writ petition is filed challenging an order of inquiry by the Joint Registrar (General) of Co-operative Society under Section 65 of the Co-operative Societies Act, 1969 (for short, the “Act”). Ext.P2 is the said order. This order is called in question on the ground that the Joint Registrar (General) ordered such an inquiry on a complaint made by the second respondent-Shajikumar and also on the ground that the Registrar, without an application of mind acted upon the report of the Assistant Registrar (General) to order the inquiry under Section 65 of the Act. 2. The learned counsel for the petitioner, placing reliance upon the judgment of the Division Bench of this Court in **Melukkara Service Co-operative Bank Ltd. No.PT.152 and Another v. Joint** **WP(C).3370/2019** ## **-:2:-** ## **Registrar (General), District Co-operative Society [2018 (2) KHC** **143 (DB)]** submitted that the satisfaction of the Assistant Registrar cannot substitute the satisfaction to be personally arrived at by the Registrar under Section 65 and, therefore, the order of inquiry is vitiated by non application of mind. Further, it was submitted that one of the inquiry is related to appointment and, such inquiry is beyond the scope of inquiry under Section 65 of the Act. 3. The Registrar can order inquiry under Section 65 of the Act on being satisfied that such inquiry is necessary in regard to the constitution, working and financial condition of the Society. The Registrar can enter satisfaction only based on enumerated circumstances referred to as clauses (a) to (f) in Section 65(1). Section 65 (1) is reproduced hereunder for a fair understanding of the scope of inquiry for ordering an enquiry: “65. **Inquiry by the Registrar.-** (1) The Registrar may,- (a) on his own motion; or (b) on an inquiry report of the Vigilance Officer appointed under section 68A; or (c) on a report of the Director of Co-operative Audit appointed under section 63; or **WP(C).3370/2019** ## **-:3:-** (d) on an 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; or (e) on an application by the apex society or financing bank of which such society is a member; or (f) on an application of a society to which the society concerned is affiliated,- hold an enquiry by himself or by a person authorized by order in writing, into the Constitution, working and financial condition of the society, if he is satisfied that it is necessary so to do.” 4. The Registrar cannot place reliance on an individual complaint made by a member of the Society. However, nothing prevents the Registrar verifying himself the information gathered from such complaint and, act on his own motion to order an inquiry. That means, after gathering information and materials independent of such complaint, he himself must be satisfied for ordering an inquiry under Section 65 of the Act. The Registrar in such circumstances can act on his own motion based on the information gathered and other materials for ordering inquiry. What is prevented under law is that the Registrar cannot merely act upon a complaint made by a member of the Society without independently acting on his own motion. ## **WP(C).3370/2019** ## **-:4:-** ## 5. The Division Bench in **Melukkara Service Co-operative** ## **Bank's** case ( _supra_ ) at para.22 held as follows: “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.” What was deprecated by the Division Bench in the above case was an action on the part of the Registrar in surrendering his authority of satisfaction, to the satisfaction of the Assistant Registrar who prepared the report. 6. However, in the case in hand, the Assistant Registrar prepared a report based on the direction issued by the first respondentJoint Registrar. The Joint Registrar placed reliance upon the report of **WP(C).3370/2019** ## **-:5:-** the Assistant Registrar. He referred to the report and satisfied himself that an inquiry is necessary. It is to be noted that the Assistant Registrar's report contains all details regarding the irregularity which was also highlighted in the impugned order. The satisfaction of the Registrar with regard to the materials relied upon by the Assistant Registrar while preparing the report would be sufficient for ordering an inquiry under Section 65. It is not a case where the Assistant Registrar has prepared a report without any materials. If there is an application of mind as to the Assistant Registrar's report, that would be sufficient to hold that there was satisfaction on the part of the Registrar. This is only a stage of inquiry. The validity of tentative findings for ordering the inquiry can be subjected to test at an appropriate stage. 7. In regard to the petitioner's objection that the appointment in the Society cannot be the subject matter of such inquiry, I am of the view that such an argument is unsustainable. Section 65 of the Act permits the conduct of an inquiry in relation to constitution, working and financial condition of the Society. Any irregularity relating to the appointment would also reflect on the functioning of the Society if the **WP(C).3370/2019** ## **-:6:-** appointment made was in negation of the statutory provisions or bylaw. In what manner the appointment could be interfered is the subject matter of totally different proceedings. But if the appointment was made in non-adherence of the Rules and Regulations and by-laws, it certainly could be a subject matter of an inquiry under Section 65 of the Act. In such circumstances, the writ petition must fail. Accordingly, it is dismissed. **Sd/-** **A.MUHAMED MUSTAQUE** **JUDGE** ms ## **APPENDIX OF WP(C) 3370/2019** **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE RELEVANT PORTION OF THE AUDIT CERTIFICATE OF THE YEAR 2016-2017** **EXHIBIT P2 A TRUE COPY OF THE ORDER DATED 17.10.2018 OF THE JOINT REGISTRAR EXHIBIT P3 A TRUE COPY OF THE JUDGMENT DATED 23.1.2019 IN W.A.2431/2018** **EXHIBIT P4 A TRUE COPY OF THE POSTS SANCTION ORDER DATED 30.7.2014 O APPRAISER** **EXHIBIT P5 A TRUE COPY OF THE DETAILS OF THE ACCOUNTS CLOSED** **EXHIBIT P6 A TRUE COPY OF THE PAYMENT DETAILS IN RESPECT OF MR.VIJAYAN AMOUNTING TO RS.11,34,080/-, IN RESPECT OF MR.VIPIN RAJ AMOUNTING TO RS.32,395/-, IN RESPECT OF MR. VISAKH AMOUNTING TO RS.14,375/-** **RESPONDENT'S/S EXHIBITS:** **EXHIBIT R2 (a)** A TRUE COPY OF THE COMPLAINT FILED BY THE 2ND RESPONDENT DATED 07.01.2019. **EXHIBIT R2 (b)** A TRUE COPY OF THE REPORT SUBMITTED BY THE ASSISTANT REGISTRAR DATED 03.05.2018. **ANNEXURE R1 (a)** :- THE TRUE COPY OF THE ENQUIRY REPORT DATED 25.02.2019