MARAYAMUTTOM SERVICE CO-OPERATIVE BANK LTD. NO. 984, NEYYATTINKARA v. JOINT REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **THURSDAY,THE 13TH DAY OF SEPTEMBER 2018 / 22ND BHADRA, 1940** ## **WP(C).No. 10128 of 2018** ## **PETITIONERS** **1 THE MARAYAMUTTOM SERVICE CO-OPERATIVE BANK LTD. NO. 984, MARAYAMUTTOM P.O, NEYYATTINKARA, REPRESENTED BY ITS PRESIDENT.** **2 THE MANAGING COMMITTEE OF THE MARAYAMUTTOM SERVICE CO-OPERATIVE BANK LTD NO. 984, MARAYAMUTTOM P.O, NEYYATTINKARA REPRESENTED BY ITS PRESIDENT.** **BY ADVS.SRI.B.S.SWATHY KUMAR SMT.ANITHA RAVINDRAN SRI.HARISANKAR N UNNI** ## **RESPONDENT** **THE JOINT REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES, THIRUVANANTHPAURAM, PIN 695 001.** **BY SENIOR GOVERNMENT PLEADER: SMT.C.S.SHEEJA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13.09.2018, ALONG WITH WP(C).19381/2018 AND WP(C).24791/2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).Nos.10128,19381 & 24791 of 2018** -2- ## **JUDGMENT** W.P.(C)No.10128 of 2018:- The 1[st] petitioner is a Cooperative Society registered under the provisions of the Kerala Co-operative Societies Act, 1969 (for brevity,'the Act') and the 2[nd] petitioner is the Managing Committee of that Society. The petitioners have filed this writ petition under Article 226 of the Constitution of India seeking a declaration that Ext.P4 inspection report dated 27.01.2018 submitted by the officers authorised by the respondent Joint Registrar of Co-operative Societies under sub-section (2) of Section 66 of the Act is highly illegal, violative of the mandatory provisions of Section 66 of the Act and Rule 66 of the Kerala Co-operative Societies Rules, 1969 (for brevity, 'the Rules'), hence legally unsustainable and liable only to be quashed. The petitioners have also sought for a writ of certiorari to quash Ext.P4 inspection report and a writ of mandamus commanding the respondent not to initiate any proceedings based on Ext.P4 inspection report. 2. On 11.09.2018, when this writ petition came up for admission, the learned counsel for the petitioner submitted that based on Ext.P6 notice dated 06.04.2018 issued by the respondent (produced along with I.A.No.6982 ## **WP(C).Nos.10128,19381 & 24791 of 2018** -3- of 2018) the respondent may proceed against the 1[st] petitioner Society for supersession of the Committee. Based on the said submission, this Court granted an interim order in I.A.No.6982 of 2018, directing the respondent to proceed against the 1[st] petitioner Society only in accordance with law and no supersession shall follow against the petitioners on the basis of Ext.P6 notice. It was made clear that the interim order shall not interdict any action in accordance with law, after issuing proper notice to the petitioners. Opposing the reliefs sought for in this writ petition, the respondent Joint Registrar has filed a statement. - 3. W.P.(C)No.19381 of 2018: The petitioners in W.P.(C)No.10128 of 2018 have filed this writ petition seeking a declaration that Ext.P9 notice dated 31.05.2018 issued by the 1[st] respondent Joint Registrar is highly illegal, violative of the mandatory provisions stipulated in Section 32 of the Act, vitiated with extraneous considerations, political dictates and issued to circumvent Ext.P7 interim order of this Court in I.A.No.6982 of 2018 in W.P.(C) No.10128 of 2018. The petitioners have also sought for a writ of certiorari to quash Ext.P9 notice and writ of mandamus commanding the ## **WP(C).Nos.10128,19381 & 24791 of 2018** -4- respondents not to initiate any proceedings based on Ext.P9 notice. On 13.06.2018, when this writ petition came up for admission, the learned Government Pleader was directed to get instructions and the matter was ordered to be posted to 18.06.2018 for further consideration. It was ordered that, in the meantime, status quo shall be maintained. The said interim order, which was extended from time to time, is still in force. The respondent Joint Registrar has filed a counter affidavit opposing the reliefs sought for in this writ petition. One Gopakumar S. has filed I.A.No.10970 of 2018 seeking an order to implead him as additional 2[nd] respondent in this writ petition. The petitioners have filed counter affidavit opposing the relief sought for in that interlocutory application. 4. W.P.(C)No.24791 of 2018:The petitioner, who is a member of the 1[st] petitioner Society in W.P.(C)Nos.10128 and 19381 of 2018, has filed this writ petition seeking a declaration that the present Managing Committee of the Society is liable to be superseded on the basis of Ext.P19 inspection report dated 27.01.2018 (Ext.P4 inspection report in W.P.(C)No.10128 of 2018) submitted under Section 66 of the Act and to suspend the Committee ## **WP(C).Nos.10128,19381 & 24791 of 2018** -5- till the culmination of proceedings initiated as per Ext.P23 notice dated 31.05.2018 (Ext.P9 notice in W.P. (C)No.19381 of 2018) issued under Section 32 of the Act. The petitioner has also sought for other consequential reliefs. On 25.07.2018, when this writ petition came up for admission, the learned Senior Government Pleader took notice for respondents 1 to 4. The learned Counsel for the Society entered appearance for respondents 5 and 6 and notice on admission by special messenger was ordered to respondents 7 to 16. A counter affidavit has been filed by respondents 5 to 16 opposing the reliefs sought for in this writ petition. 5. Heard the learned counsel for the petitioners in the respective writ petitions, the learned Senior Government Pleader appearing for the official respondents and also the learned counsel for the party respondents. 6. The sole issue that arises for consideration in W.P.(C)Nos.10128 and 19381 of 2018 is as to whether any interference is warranted on Ext.P4 inspection report in W.P.(C)No.10128 of 2018, which is an inspection report submitted by the officers authorised by the respondent Joint Registrar, under sub-section (2) of Section 66 of the Act, and Ext.P9 notice dated 31.05.2018 in W.P. **WP(C).Nos.10128,19381 & 24791 of 2018** -6- (C)No.19381 of 2018 issued by the respondent Joint Registrar, under Section 32 of the Act. 7. Ext.P4 inspection report in W.P.(C)No.10128 of 2018 is one submitted by the officers authorised by the respondent Joint Registrar, under sub-section (2) of Section 66 of the Act. None of those officers are made parties to this writ petition. Ext.P9 notice dated 31.05.2018 in W.P.(C)No.19381 of 2018 is one issued by the respondent Joint Registrar, under Section 32 of the Act. On receipt of said notice, the 1[st] petitioner Society has already submitted a detailed explanation before the respondent Joint Registrar, along with Ext.P15 covering letter dated 20.06.2018. If the petitioners have a case that no proceedings under Section 32 of the Act can be initiated against the Managing Committee, based on the findings in Ext.P4 inspection report in W.P.(C)No.10128 of 2018, it is for them to raise such contentions before the respondent Joint Registrar at the time of consideration of their explanation to Ext.P9 notice dated 31.05.2018 in W.P.(C)No.19381 of 2018. Therefore, no interference is warranted on Ext.P4 inspection report in W.P.(C)No.10128 of 2018. 8. In **State of U.P. v. Brahm Datt Sharma [(1987) 2** ## **WP(C).Nos.10128,19381 & 24791 of 2018** -7- **SCC 179]** the Apex Court held that, when the show cause notice was issued under a statutory provision calling upon to show cause, the courts should be reluctant to interfere with the notice at that stage unless the notice is shown to have been issued palpably without any authority of law. The purpose of issuing show cause notice is to afford an opportunity of hearing and once cause is shown it is open to the authority to consider the matter in the light of the facts and submission placed before it and only thereafter a final decision in the matter could be taken. Therefore, interference by the Court before that would be premature. 9. In **Seimens Ltd v. State of Maharashtra [(2006) 12 SCC 33]** the Apex Court held that ordinarily, a writ court may not exercise its discretionary jurisdiction to entertain a writ petition questioning a notice to show cause unless the notice appears to have been without jurisdiction. 10. In **Union of India v. Vicco Laboratories [(2007)** **13 SCC 270]** the Apex Court held that, normally, the writ court should not interfere at the stage of issuance of show cause notice by the authorities. In such a case, the parties get ample opportunity to put forth their ## **WP(C).Nos.10128,19381 & 24791 of 2018** -8- contentions before the authorities concerned and satisfy the authorities concerned about the absence of case for proceeding against the person against whom the show cause notices have been issued. Abstinence from interference at the stage of issuance of show cause notice in order to relegate the parties to the proceedings before the authorities concerned is the normal rule. However, the said rule is not without exceptions. Where a show cause notice is issued either without jurisdiction or in an abuse of process of law, certainly, in that case, the writ court would not hesitate to interfere even at the stage of issuance of the show cause notice. The interference at the show cause notice stage should be rare and not in a routine manner. The mere assertion by the writ petitioner that notice was without jurisdiction and/or abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, interference is ruled out. 11. In view of the law laid down in the decisions referred to supra, no interference under Article 226 of the Constitution of India is warranted on a show cause notice issued under a statutory provision unless the **WP(C).Nos.10128,19381 & 24791 of 2018** -9- notice is shown to have been issued palpably without any authority of law or that it is an abuse of process of law. The mere assertion in a writ petition that the show cause notice has been issued without any authority of law or that it is an abuse of process of law would not suffice. It should be prima facie established to be so. Where factual adjudication would be necessary, no interference of this Court in exercise of the extraordinary jurisdiction under Article 226 of the Constitution is warranted. 12. Having considered the averments and also the grounds raised in W.P.(C)No.19381 of 2018, this Court finds that the petitioners have not made out a case warranting interference on Ext.P9 notice dated 31.05.2018 issued by the respondent Joint Registrar under Section 32 of the Act, under the extra ordinary jurisdiction of this Court under Article 226 of the Constitution of India. 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 ## **WP(C).Nos.10128,19381 & 24791 of 2018** -10- 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 and within the four corners of the Statute. In paragraph 42 of the judgment (SCC at 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 **WP(C).Nos.10128,19381 & 24791 of 2018** -11- 12.07.2013. 15. The learned counsel for the petitioners in W.P. (C)Nos.10128 and 19381 of 2018 would submit that, the 1[st] petitioner Society has already submitted its explanation before the respondent Joint Registrar to Ext.P9 notice in W.P.(C)No.19381 of 2018 along with Ext.P16 covering letter dated 20.06.2018, and that, the 2[nd] petitioner Managing Committee shall also submit its explanation to the said notice, within one week, which may also be considered by the 1[st] respondent Joint Registrar. 16. In such circumstances, these writ petitions are disposed of with the following directions; i) The respondent Joint Registrar in W.P. (C)Nos.10128 and 19381 of 2018 shall pass orders pursuant to Ext.P9 notice dated 31.05.2018 issued under Section 32 of the Act, after considering the explanation offered by the 1[st] petitioner Society along with Ext.P16 covering letter dated 20.06.2018 in W.P.(C)No.19381 of 2018 and also the explanation, if any, offered by the 2[nd] petitioner Managing Committee within **one week from the date of this judgment** , strictly in accordance with law, taking note of the law laid down by the Apex Court in **State of M.P. v. Sanjay Nagayach [(2013) 7 SCC 25]** , with notice to the petitioners in W.P.(C)Nos.10128 and 19381 of 2018 and also the petitioner in **WP(C).Nos.10128,19381 & 24791 of 2018** -12- W.P.(C)No.24791 of 2018, as expeditiously as possible, at any rate, within **one week thereafter** . ii) The decision so taken shall be communicated to the petitioners without any delay. All legal and factual contentions raised by the petitioners are left open to be raised before the respondent Joint Registrar at appropriate stage. Sd/- **ANIL K. NARENDRAN JUDGE** ## **APPENDIX** ## **PETITIONERS' EXHIBITS** **EXHIBIT P1 TRUE COPY OF THE LETTER SUBMITTED BY THE 1ST PETITIONER BEFORE THE RESPONDENT DATED 13-11-2017** **EXHIBIT P2 TRUE COPY OF THE ORDER DATED 1-1-2018 ISSUED BY THE INSPECTING OFFICER TO THE 1ST PETITIONER** **EXHIBIT P3 TRUE COPY OF THE ORDER IN W.P(C) NO. 270/2018 DATED 15-1-2018** **EXHIBIT P4 TRUE COPY OF THE ENQUIRY REPORT DATED 27-1-2018 SUBMITTED BY THE INSPECTING OFFICER** **EXHIBIT P5 TRUE COPY OF THE AUDIT CERTIFICATE FOR THE YEAR 2014-15 DATED 28-10-2015** **EXHIBIT P6 TRUE COPY OF THE NOTICE NO.CRP(1)/8593/17 DATED 28-03-2018 OF THE RESPONDENT** **EXHIBIT P7 TRUE COPY OF THE ORDER NO.CRP(1)/8593/17** **WP(C).Nos.10128,19381 & 24791 of 2018** -13- **DATED 28-11-2017 OF THE RESPONDENT** **EXHIBIT P8 TRUE COPY OF THE ORDER CRP(1)/8593/17 DATED 05-01-2018 OF THE RESPONDENT** ## **RESPONDENT'S EXHIBITS: NIL** **//TRUE COPY//** **P.A. TO JUDGE** ## **bpr**