M.K. Jayapal, VK Raju, P K Nazeer Padinjare Valia Veed, RD Radhakrishnan Ramalayam v. Registrar of Co-operative Societies (General), Alappuzha and Pattanakkad Service Co-Operative Bank Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** **TUESDAY, THE 03RD DAY OF NOVEMBER 2020 / 12TH KARTHIKA, 1942** ## **WP(C).No.23477 OF 2020(H)** ## **PETITIONER/S:** - **1 M.K.JAYAPAL, AGED 53 YEARS MANAKKAL VADAKKETHIL, PATTANAKKAD PO, CHERTHALA, ALAPPUZHA.** - **2 V K RAJU VADAKKE VEETTIL, ANDAKARANAZHI PO, CHERTHALA, ALAPPUZHA.** - **3 P K NAZEER PADINJARE VALIYA VEEDU, PATTANAKKAD PO, CHERTHALA, ALAPPUZHA.** - **4 R D RADHAKRISHNAN RAMALAYAM, PATTANAKKAD PO, CHERTHALA, ALAPPUZHA.** **BY ADVS. SRI.B.S.SWATHI KUMAR SMT.ANITHA RAVINDRAN SRI.HARISANKAR N UNNI** ## **RESPONDENT/S:** - **1 THE REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) ALAPPUZHA, PIN-688001.** - **2 PATTANAKKAD SERVICE CO-OPERATIVE BANK LTD NO.1144, PATTANAKKAD PO, CHERTHALA, ALAPPUZHA.-PIN-688531, REPRESENTED BY ITS SECRETARY.** ## **OTHER PRESENT:** ## **SRI KP HARISH SR GP** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.11.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.23477 OF 2020** **2** ## **JUDGMENT** In this petition filed under Article 226 of the Constitution of India, the petitioners herein, who are the Managing Committee members of the Pattanakkad Service Co-operative Bank challenges Ext.P3 order by which they have been disqualified for the reason that an order of surcharge has been passed against them under Section 68 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as ‘the Act’). Ext.P3 order would show that the impugned order has been issued under Rule 44(3) of the Kerala Co-operative Societies Rules (hereinafter referred to as ‘the Rules). 2. I have heard Sri. B.S.Swathi Kumar, the learned counsel appearing for the petitioners, who contends that the order impugned cannot be sustained as no opportunity for a pre-decisional hearing was granted to the petitioners as contemplated under Rule 16(4) and Rule 44 (3) of the Rules. 3. Sri. K.P.Harish, the learned Senior Government Pleader submitted on instructions that the fact that the petitioners have been surcharged by order dated 15.2.2019 is not in dispute. According to the learned Government Pleader, there is no case for the petitioners that the order of surcharge was interfered with by any superior authority. It is contended that no useful purpose would be served by giving the petitioners an opportunity of hearing before declaration of **WP(C).No.23477 OF 2020** **3** disqualification on the ground of surcharge as the statute mandates that a person against whom a surcharge order has been issued would be disentitled even to the membership of the society in terms of Rule 16(2) of the Rules. 4. I have considered the submissions advanced. Rule 16 and 44 of the Rules mandate that no order declaring disqualification or cessation of membership is to be issued without a prior opportunity to state objections, and, if sought for, an opportunity of hearing. Even a person who has been surcharged will have to be granted an opportunity for a pre-decisional hearing. This has been held to be so in **Abdulla Haji A. V. Joint Registrar of Cooperative Societies (G), Kannur and Anr** . [2009 KHC 666]. In the above report, this Court through Justice Thottathil B. Radhakrishnan, as he then was, had occasion to observe as follows: “3. The view in the impugned order that the petitioner having been heard in the course of the surcharge proceedings, it is unnecessary to give him an opportunity of hearing before disqualifying him on the basis of the surcharge order, may contain a spoon of wisdom since, in one view of the matter, it could be contended that it would be futile to extend a dual opportunity of hearing on the same set of facts. This is also the submission of learned Government Pleader. At the first blush, that argument may fall for consideration with considerable force. Adopting a functional approach to consider the applicability of natural justice to persons affected by decisions of administration, has commended recognition. A survey of the precedents would show that the plea of the administration that an opportunity of hearing need not be extended in cases where the outcome is indisputable has found some favour. If only one conclusion is possible on the admitted and **WP(C).No.23477 OF 2020** **4** indisputable facts and under the law, only one penalty is permissible, then the Court may not compel the observance of the natural justice rule of hearing. This is not because it approves the non observance of natural justice but because the Courts would not issue futile writs. Some support in this line could be found in S. L. Kapoor v. Jagmohan, 1980 KHC 770 : AIR 1981 SC 136 : 1980 (4) SCC 379 and State of Karnataka v. Mangalore University Non Teaching Employees' Association, 2002 KHC 1189 : 2002 (3) SCC 302 : AIR 2002 SC 1223.’ 4. But, that defence is impermissible when the statute law provides a definite and specific rule prescribing and directing pre decisional hearing. When the statute under which an authority functions, itself lays down a procedure for the authority to follow, then that procedure has, necessarily, to be followed. R.16(2)(f) prescribes surcharge under S.68 of the Act as an ineligibility from admission as a member of the co-operative society. R.44(1)(1) prescribes surcharge as a disqualification for a member of a society from being appointed as a member of the committee of the society. R.16(4) and R.44(3) provide that the declaration as to such ineligibility and cessation of such status and office shall be made only after the person is given an opportunity to state his objections, if any, to the proposed action and if he wishes to be heard, he shall be given an opportunity to be heard. 5. Even in cases where the prescribed procedure falls deficient in any norms of natural justice, the Courts have adopted the progressive approach of routing the principles of natural justice into the unoccupied interstices of the statute unless there is a clear mandate to the contrary. If the statutory procedure is detailed, fair and complete, that may give rise to an implication that natural justice has been excluded and nothing more than the statutorily prescribed procedure need be followed by the concerned authority. If an evaluation of the **WP(C).No.23477 OF 2020** **5** statutorily prescribed procedure with reference to natural justice shows that the salutary cannons of natural justice have not been excluded, the better approach is to conceptualise the procedure in such cases, by filling any of the gaps therein, by bringing in the norms of natural justice. Profitable reference to **Institute of Chartered Accountants of India v. L. K. Ratna** (AIR 1987 SC 71), **Paul Wallis Furnell v, Whangarei High School's Board** (AC 1973 660), **Subhas Oil Industries v. State of U.P.** (AIR 1954 Allahabad 19) is apposite in this context. **Furnell** (supra) which adopted the restrictive approach of excluding natural justice in the wake of availability of statutory rules does not appear to stand with much support, as of now, since with the passage of time, the progressive approach of supplying the deficiency in the statutory rules by incorporating the norms of natural justice, except in cases of clear exclusion, express or implied, has gained foot in judicial thinking in India and abroad. In his classic work on Administrative Law, Sir William Wade, appears to characterise the Furnell decision as not free from doubt. It could therefore be treated as a principle of complete justice in the rule of hearing to say that while it may be open to import norms of natural justice where the procedure prescribed falls deficient of any of those norms and supplement the rules of procedure with rules of natural justice in cases where the functional approach to the given problem would call for such intervention, the procedure which is prescribed by a statute, if there is one, has to be naturally followed. 6. R.16 and 44 contain the statutory mandate that no order declaring disqualification or cessation of membership is to be issued without, a prior opportunity to state objections and, if sought for, an opportunity of hearing. Those pieces of subordinate legislation would not give way for any rule of wisdom not amounting to any superior statute law, which may be primary legislation under which those rules are framed, or may be, an overriding legislation and, of course, a **WP(C).No.23477 OF 2020** **6** constitutional provision. The dictate of the subordinate legislation in hand is that even a person under the cover of a surcharge order has to be heard before an order declaring his disqualification is issued on the ground of being one who is surcharged. The legislative wisdom in the rules under construction may be that, by the time an action for disqualification is taken with reference to a surcharge, the person proceeded against would have purged himself of the consequence of surcharge or would have got an order from a superior authority in his favour. Whatever be the reason, the rules under consideration do not permit any exclusion of the opportunity to show cause and of hearing, if sought for. If the contrary has to be assumed; as a corollary, this Court would be rendering those rules otiose in cases where declaration as to disqualification and cessation is proposed on the ground of surcharge. This is just impermissible. 7. It is profitable in this context to refer to the decision of the Apex Court in **Chintapalli Agency Taluk Arrack Sales Cooperative Society Ltd. v. Secretary (Food and Agriculture) Government of Andhra Pradesh and Others** (AIR 1977 SC 2313). That was a case that arose from a revisional decision of the Government, issued without giving notice to the party against whom such order was passed. That power of revision was coupled with the duty that no order prejudicial to any person shall be passed unless such person has been given an opportunity of making his representation. In that case, the affected party had made a representation to the Government, touching the matter. Yet, the procedure fell short of the fact that the Government had not given any notice, calling upon him to make representation, if any. It is apposite to quote the following paragraph delivered by the Apex Court in that context: “21. Even though the appellant had filed some representations in respect of the matter, it would not absolve the Government from giving notice to the appellant to make **WP(C).No.23477 OF 2020** **7** the representation against the claim of the respondents. The minimal requirement under S.77(2) is a notice informing the opponent about the application and affording him an opportunity to make his representation against whatever has been alleged in his petition. It is true that a personal hearing is not obligatory but the minimal requirement of the principles of natural justice which are ingrained in S.77(2) is that the party whose rights are going to be affected and against whom some allegations are made and some prejudicial orders are claimed should have a written notice of the proceedings from the authority disclosing the grounds of complaint or other objection preferably by furnishing a copy of the petition on which action is contemplated in order that a proper and effective representation may be made. This minimal requirement can on no account be dispensed with by relying upon the principle of absence of prejudice or imputation of certain knowledge to the party against whom action is sought for”. 8. The aforesaid case related to a rule which provides only for an opportunity to make a representation and not even for personal hearing. But the rules in hand provide for an opportunity to state objections, if any, to the proposed action and if he wishes to be heard, an opportunity of being heard. The law of the land as laid by the Apex Court as noticed above, applies with more vigor to the case in hand. 5. As held in **Abdulla Haji** (supra), when the statute under which an authority functions, itself lays down a procedure for the authority to follow, then that procedure has necessarily to be followed. Rule 16(4) and 44(3) of the Rules provides that the declaration as to such eligibility and cessation of such status and **WP(C).No.23477 OF 2020** **8** office shall be made only after the person is given an opportunity to state his objections, if any, to the proposed action and if he wishes to be heard, he shall be given an opportunity to be heard. There being a gross failure to adhere to the provisions of the statute, Ext.P3 will stand quashed. However, this judgment will not stand in the way of the 1st respondent initiating appropriate proceedings in accordance with law. This writ petition will stand allowed however subject to the above directions. There will be no order as to costs. **Sd/-** ## **RAJA VIJAYARAGHAVAN V** ## **JUDGE** IAP **Continued ...(9)** **WP(C).No.23477 OF 2020** **9** The **'Ext.P3'** made mention of in paragraph Nos. 1 and 5 of the judgment dated 03.11.2020 in WP(C) No. 23477/2020 is corrected as **'Ext.P2'** as per order dated 11.11.2020 in I.A.No.1/2020 in WP(C) No.23477/2020. Sd/- Deputy Registrar. **WP(C).No.23477 OF 2020** **10** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1** **TRUE COPY OF THE NEWS ITEM PUBLISHED IN DESABHIMANI DAILY DATED 29/10/2020.** **EXHIBIT P1(a) TRUE COPY OF THE NEWS ITEM PUBLISHED IN MALAYALA MANORAM DAILY DATED 30.10.2020. EXHIBIT P2 TRUE COPY OF THE ORDER NO. CRP(1)7882/2015(2) DATED 28/10/2020 OF THE 1ST RESPONDENT.**