MANAGING COMMITTEE, VADI FISHERMEN DEVELOPMENT WELFARE CO-OPERATIVE SOCIETY LTD. NO.DF(Q) 42/92, VADDI KACHERY P.O., KOLLAM-691001 v STATE OF KERALA & OTHERS

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **MONDAY, THE 18TH DAY OF FEBRUARY 2019 / 29TH MAGHA, 1940** ## **WP(C).No. 25121 of 2018** ## **PETITIONERS:** |**1**|**MANAGING COMMITTEE, VADI FISHERMEN DEVELOPMENT**| |---|---| ||**WELFARE CO-OPERATIVE SOCIETY LTD. NO.DF(Q)**| ||**42/92, VADDI KACHERY P.O., KOLLAM-691001,**| ||**REPRESENTS BY ITS PRESIDENT.**| |**2**|**VADI FISHERMEN DEVELOPMENT WELFARE CO-**| ||**OPERATIVE SOCIETY LTD. NO.DF(Q) 42/92, VADDI**| ||**KACHERY P.O., KOLLAM - 691001,**| ||**REPRESENTS BY ITS HONORARY SECRETARY.**| ||**BY ADV. SRI.UNNI. K.K. (EZHUMATTOOR)**| |**RESPONDENTS**<br>**:**|| |**1**|**STATE OF KERALA,**| ||**REPRESENTED BY SECRETARY TO GOVERNMENT,**| ||**CO-OPERATIVE DEPARTMENT, GOVT. SECRETARIAT,**| ||**THIRUVANANTHAPURAM-695001.**| |**2**|**SECRETARY TO GOVERNMENT,**| ||**FISHERIES DEPARTMENT, GOVERNMENT OF KERALA,**| ||**GOVT.SECRETARIAT, THIRUVANANTHAPURAM -695001.**| |**3**|**THE DIRECTOR,**| ||**DEPARTMENT OF FISHERIES, FISHERIES**| ||**DIRECTORATE, MANACAUD,**| ||**THIRUVANANTHAPURAM -695009.**| |**4**|**JOINT DIRECTOR (SOUTHERN REGION),**| ||**DEPARTMENT OF FISHERIES, FISHERIES**| ||**DIRECTORATE, MANACAUD,**| ||**THIRUVANANTHAPURAM -695009.**| |**5**|**ASST.REGISTRAR OF FISHERIES,**| ||**KOLLAM-691001.**| |**6**|**FISHERIES DEVELOPMENT OFFICER,**| ||**O/O.JOINT DIRECTOR OF FISHERIES, MANACAUD,**| ||**THIRUVANANTHAPURAM -695009.**| ||**SRI HARISH K.P.,SENIOR GOVERNMENT PLEADER**| **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 18.02.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 WP(C)25121 OF 2018 ## **JUDGMENT** The 1[st] petitioner is the Managing Committee of the 2[nd] petitioner Society, which is a Society registered under the Kerala Co-operative Societies Act, 1969 and the Rules made thereunder. The petitioners have filed this writ petition under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P28 order dated 06.07.2018 of the 4[th] respondent, whereby an inquiry under Section 65 of the Kerala Co-operative Societies Act has been ordered in the working of the 2[nd] petitioner Society for the matters enumerated therein. For conducting such an inquiry, the 5[th] respondent has been appointed as the Inquiry Officer. The petitioners have also sought for a declaration that there is no need to conduct an inquiry under Section 65(1) of the Act in view of Ext.P9 to P15 and P26 documents and the explanations offered by the petitioner Society; a declaration that, after filing a memo before this Court in W.P.(C) No.1980 of 2017, withdrawing Ext.P21 order of inquiry, issuing a new order of inquiry on the same day on same set of facts is illegal and with ulterior motives; and a writ of certiorari to quash Ext.P6 report dated 16.05.2015 and Ext.P25 special audit report holding that there 3 WP(C)25121 OF 2018 is no power for the same under the Act and Rules. 2. On 26.07.2018, when this writ petition came up for admission, the learned Senior Government Pleader sought time to get instructions. 3. On 08.08.2018, when this writ petition came up for consideration, the learned Senior Government Pleader sought further time to file counter affidavit. This Court has ordered that, the inquiry pursuant to Ext.P28 shall go on. However, further proceedings pursuant to that inquiry was ordered to be deferred, for a period of three weeks. The said interim order, which was extended from time to time, is still in force. 4. During the pendency of this writ petition, 5[th] respondent Inquiry Officer has submitted Ext.P34 report dated 21.12.2018. Based on the said report, the 4[th] respondent has issued Ext.P35 show-cause notice dated 23.01.2019, whereby the petitioners have been asked to show-cause why further proceedings under Section 32(1) of the Act shall not be initiated, based on the findings in Ext.P34 inquiry report. On receipt of Ext.P35 show-cause notice, the petitioners have submitted Ext.P36 explanation dated 08.02.2019, which is one stated to be sent by speed post to the 4[th] respondent on 4 WP(C)25121 OF 2018 11.02.2019. 5. A counter affidavit has been filed by the 3[rd] respondent, opposing the reliefs sought for in this writ petition. The petitioners have also filed a reply affidavit. Along with I.A.No.1 of 2019, the petitioners have also produced Exts.P34 to P36, as additional documents. 6. Heard the learned counsel for the petitioners and also the learned Senior Government Pleader, appearing for the respondents. 7. The issue that arises for consideration in this writ petition is as to whether any interference is warranted on Ext.P28 order dated 06.07.2018 of the 4[th] respondent, whereby the inquiry under Section 65 of the Act has been ordered in the working of the Society for the matters enumerated therein, by appointing the 5[th] respondent as the Inquiry Officer. In terms of the interim order of this Court dated 08.08.2018, the inquiry has proceeded further, during the pendency of this writ petition, and the Inquiry Officer has also submitted Ext.P34 report. 8. The procedure for conduct of an inquiry under Section 65 or inspection under Section 66 of the Kerala Co- 5 WP(C)25121 OF 2018 operative Societies Act, is provided under Rule 66 of the Kerala Co-operative Societies Rules. Sub-rule (1) of Rule 66 deals with inquiry under Section 65 or inspection under Section 66 of the Act. Sub-rules (1) and (2) of Rule 66 read thus: - “66. Procedure for the conduct of inquiry and inspection:- (1)(i) An order, authorising inquiry under Section 65 or inspection under Section 66 shall among other things, contain the following: - (a) the name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; - (b) the name of the person authorised to conduct the inquiry or inspection; - (c) in specific point or points on which the inquiry or inspection is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Registrar; - (d) costs of inquiry or inspection; - (e) any other matter relating or pertaining to the inquiry or inspection. - (2) A copy of every order authorising inquiry under Section 65 or inspection under Section 66 shall be issued to the President or the Secretary of the Society concerned by registered post with acknowledgment due. A copy of the order shall also be made available to the Central Society or societies, to which the society in respect of which the order is issued, is affiliated.” 9. A reading of provisions under sub-rule (1) of Rule 6 WP(C)25121 OF 2018 66 would make it explicitly clear that the order in writing for an inquiry under Section 65 or inspection under Section 66 of the Act shall among other things, contain the matter enumerated in sub-clauses (a) to (e) of clause (i) of sub-rule (1), which includes specific point or points on which the inquiry or inspection is to be made. 10. In the context of the provisions under Section 65 of the Act and sub-rule (1)(i) of Rule 66 of the Rules, this Court in **Cheranellur Co-operative Society Ltd v. Deputy Registrar [1976 KLT 353]** held that, under Section 65 of the Act, the Registrar or any other officer of the department to whom the powers of the Registrar are delegated by the notification can order an inquiry. But in ordering an inquiry the specific point or points on which the inquiry is to be made are to be made known in the proceedings that is issued. This is what is insisted by Rule 66(1)(c) of the Rules. Not only that, without indicating the proceedings that is to precede an inquiry, the point or points on which inquiry is to be conducted, it goes without saying that no proper inquiry will be possible. Again, for the society and its office bearers to face the inquiry in a just manner the indication of the point or points on which 7 WP(C)25121 OF 2018 the inquiry is to be conducted in the proceedings is only essential. Paragraphs 4 and 5 of the said decision reads thus: “4. Shri Siby Mathew, learned counsel for the petitioner, contends that the 2[nd] respondent cannot overlook the mandatory provisions contained in Rule 66(1) of the Rules in issuing the proceedings like Ext.P1 ordering an enquiry under Section 65 of the Act. Rule 66 (1) of the Rules reads: “66. Procedure for the conduct of inquiry and inspection.-(1)(i) An order, authorising inquiry under Section 65 or inspection under Section 66 shall among other things, contain the following: - (a) the name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; - (b) the name of the person authorised to conduct the inquiry or inspection; (c) the specific point or points on which the inquiry or inspection is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Registrar; - (d) costs of inquiry or inspection; - (e) any other matter relating or pertaining to the inquiry or inspection.” Learned Government Pleader has no specific answer to the above contention raised by the learned counsel for the petitioner. The stand taken by the learned Government Pleader is that there are charges of 8 WP(C)25121 OF 2018 misappropriation in the petitioner society which are being enquired into by the Vigilance Department and in the above circumstances an enquiry under Section 65 of the Act cannot be said to be out of place. 5. No doubt, under Section 65 of the Act, the Registrar or any other officer of the department to whom the powers of the Registrar are delegated by the notification can order an enquiry. But in ordering an enquiry the specific point or points on which the enquiry is to be made are to be made known in the proceedings that is issued. This is what is insisted by Rule 66(l)(c) of the Rules. Not only that, without indicating in the proceedings that is to precede an enquiry, the point or points on which enquiry is to be conducted, it goes without saying that no proper enquiry will be possible. Again, for the society and its office bearers to face the enquiry in a just manner the indication of the pointer points on which the enquiry is to be conducted in the proceedings is only essential. In this view of the matter, Ext.Pl proceedings cannot be sustained. Hence I quash Ext.Pl.” 11. Viewed in the light of the law laid down in the decisions referred to supra, conclusion is irresistible that there is no procedural violation, warranting an interference on Ext.P28 order of the 4[th] respondent, whereby an inquiry under Section 65 of the Act has been ordered in the working of the 2[nd] petitioner Society. 9 WP(C)25121 OF 2018 12. The Inquiry Officer has submitted Ext.P34 report. Based on that report, the 4[th] respondent has issued Ext.P35 show-cause notice, whereby the petitioners were asked to show-cause, why proceedings under Section 32(1) of the Act shall not be initiated, based on the findings in Ext.P34 report. On receipt of Ext.P35 show-cause notice, the petitioners have submitted Ext.P36 explanation, which has already been forwarded to the 4[th] respondent on 11.02.2019. 13. In **State of M.P. v. Sanjay Nagayach [(2013) 7 SCC 25]** the Apex Court, in the context of Section 53 of the Madhya Pradesh Co-operative Societies Act, 1960 held that, the Registrar/Joint Registrar, while exercising powers of supersession has to form an opinion and that opinion must be based on some objective criteria, which has nexus with the final decision. A statutory authority shall not act with preconceived notion and shall not speak his masters' voice, because the formation of opinion must be his own, not somebody else in power, to achieve some ulterior motive. There may be situations where the Registrar/Joint Registrar are expected to act in the best interest of the society and its members, but in such situations, they have to act bona fide 10 WP(C)25121 OF 2018 and within the four corners of the Statute. In paragraph 42 of the judgment (SCC @pages 44 & 45), the Apex Court laid down the general directions in the matter of supersession of the elected committee. 14. In **Sanjay Nagayach's case (supra)** , the order of supersession was passed by the Joint Registrar after a period of two and a half years of the issuance of show cause notice and most of the charges levelled against the Board of Directors were related to the period when the previous committee was in office and even the charges based on the audit report dated 25.9.2008 were also rectified by the Board of Directors by addressing the primary societies. Based on the decision of the Apex Court In **Sanjay Nagayach's case** , the Registrar of Cooperative Societies has issued Circular No.45/13 dated 12.07.2013. 15. Therefore, it is for the 4[th] respondent to consider Ext.P36 explanation offered by the petitioners, with notice to the petitioners and also to the members of the Managing Committee and to take a decision as to the further course to be taken in the matter, taking note of the law laid down by the Apex Court in **Sanjay Nagayach's case** _supra_ . 11 WP(C)25121 OF 2018 16. The learned counsel for the petitioners would submit that the petitioners require a personal hearing at the time of consideration of Ext.P36 explanation. 17. The learned Senior Government Pleader would submit that the 4[th] respondent shall consider the explanation offered by the petitioners after affording them an opportunity of being heard. 18. Having considered the submissions made by the learned counsel on both sides, this writ petition is disposed of with the following directions; (i) The challenge made in this writ petition against Ext.P28 order dated 06.07.2018 of the 4[th] respondent is rejected as the petitioners failed to make out a case warranting interference on that order, in exercise of the writ jurisdiction of this Court under Article 226 of the Constitution of India. (ii) The 4[th] respondent shall consider Ext.P36 explanation offered by the petitioners to Ext.P35 show-cause notice, on the findings of the 5[th] respondent Inquiry Officer in Ext.P34 inquiry report submitted under Section 65 of the Act, with notice to WP(C)25121 OF 2018 12 the petitioners and after affording them an opportunity of being heard. (iii) Thereafter, the 4[th] respondent shall take a decision as to the further course to be taken in the matter, taking note of the law laid down by the Apex Court in **Sanjay Nagayach's case** _supra_ . (iv) A decision in this regard shall be taken, as expeditiously as possible, at any rate, within three weeks from the date of receipt of a certified copy of this judgment. (v) The decision so taken shall be communicated to the petitioners forthwith. Sd/- **ANIL K. NARENDRAN JUDGE** **yd** 13 WP(C)25121 OF 2018 ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** **EXT.P1TRUE COPY OF THE DEFECT NOTE OF THE AUDIT CERTIFICATE FOR THE YEAR 20142015 EXT.P2TRUE COPY OF THE DEFECT NOTE WITH REGARD TO THE SOCIETY FOR THE YEAR 2010-11 EXT.P3TRUE COPY OF THE DEFECT NOTE WITH REGARD TO THE SOCIETY FOR THE YEAR 2011-12 EXT.P4TRUE COPY OF THE DEFECT NOTE WITH REGARD TO THE SOCIETY FOR THE YEAR 2012-13 EXT.P5TRUE COPY OF THE MINUTES DATED 20/6/2013 EXT.P6TRUE COPY OF THE REPORT DATED 16/5/2015 OF THE DEVELOPMENT OFFICER EXT.P7TRUE COPY OF THE NOTICE DATED 5/6/2015 EXT.P8TRUE COPY OF THE REPLY DATED 15/6/2015 EXT.P9TRUE COPY OF THE NOTICE DATED 1/1/2016 EXT.P10TRUE COPY OF THE PERMISSION DATED 15/7/2016 OF THE 4TH RESPONDENT EXT.P11TRUE COPY OF THE SANCTION ISSUED BY THE DISTRICT MANAGER, MATSYAFED DATED 26/2/2015 EXT.P12TRUE COPY OF THE PERMISSION DATED 14/11/2014 EXT.P13TRUE COPY OF THE PERMIT DATED 13/02/2012 ISSUED BY THE CORPORATION** 14 WP(C)25121 OF 2018 **EXT.P14TRUE COPY OF THE INFORMATION PROVIDED BY THE TALUK SUPPLY OFFICER DATED 3/3/2016. EXT.P15TRUE COPY OF THE REPLY DATED 18/1/2016 EXT.P16TRUE COPY OF THE NOTICE DATED 4/3/2016 EXT.P17TRUE COPY OF THE REPLY DATED 14/3/2016 EXT.P18TRUE COPY OF THE JUDGMENT IN WRIT PETITION NO 1846/2016 DATED 9/8/2016 EXT.P19TRUE COPY OF THE NOTICE DATED 18/11/2016 EXT.P20TRUE COPY OF THE REPLY SUBMITTED BY THE SOCIETY EXT.P21TRUE COPY OF THE ORDER DATED 18/11/2016 OF THE 4TH RESPONDENT EXT.P22TRUE COPY OF THE JUDGMENT DATED 9/7/2018 IN WP(C) 1980/17 EXT.P23TRUE COPY OF THE LETTER OF FISHERIES DEPUTY DIRECTOR. EXT.P24TRUE COPY OF THE AGREEMENT EXT.P25TRUE COPY OF THE SPECIAL AUDIT REPORT DATED 23/1/2018 EXT.P26TRUE COPY OF THE REPLY FILED BY THE PETITIONERS EXT.P27TRUE COPY OF THE ORDER DATED 8/6/2018 OF THE 4TH RESPONDENT.** **EXT.P28TRUE COPY OF THE ORDER DATED 6/7/2018 OF THE 4TH RESPONDENT. EXT.P29TRUE COPY OF THE DEFECT NOTE IN AUDIT CERTIFICATE FOR THE YEAR 2015-16. EXT.P30TRUE COPY OF THE STOCK VERIFICATION REPORT DATED 31.03.2018 ISSUED BY THE SENIOR COOPERATIVE INSPECTOR OF FISHERIES.** 15 WP(C)25121 OF 2018 **EXT.P31TRUE COPY OF THE REQUEST SUBMITTED TO THE 4TH RESPONDENT ON 15.01.2019. EXT.P32TRUE COPY OF THE REQUEST SUBMITTED ON 15.01.2019 TO THE 5TH RESPONDENT. EXT.P33TRUE COPY OF THE VOUCHER DATED 21.12.2018. EXT.P34TRUE COPY OF THE ENQUIRY REPORT DATED 21.12.2018. EXT.P35TRUE COPY OF THE NOTICE DATED 23.01.2019. EXT.P36TRUE COPY OF THE REPLY DATED 08.02.2019. 3RD RESPONDENT'S EXHIBITS: EXHIBIT.R3(A) TRUE COPY OF THE LETTER ISSUED BY THE ASSISTANT REGISTRAR OF FISHERIES DATED 01.01.2016. EXHIBIT.R3(B) TRUE COPY OF THE REPLY SEND BY THE PRESIDENT OF THE SOCIETY TO THE ASSISTANT REGISTRAR DATED 05.01.2016. EXHIBIT.R3(C) TRUE COPY OF THE RESOLUTION DATED 06.06.2009. EXHIBIT.R3(D) TRUE COPY OF RESOLUTION DATED 05.06.2010. EXHIBIT.R3(E) TRUE COPY OF THE VOUCHER NO.3340 DATED 28.09.2016. TRUE COPY P.A. TO JUDGE**