Panamaram Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies (General), Wayannad; and The Inquiry Officer, Panamaram Unit, Office of the Assistant Registrar of Co-operative Societies (General), Mananthavady

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **WEDNESDAY, THE 29TH DAY OF MAY 2019 / 8TH JYAISHTA, 1941** # **WP(C).No. 14590 of 2018** ## **PETITIONER:** **PANAMARAM SERVICE CO-OPERATIVE BANK LTD. NO.C.6643, PANAMARAM.P.O, WAYANAD, REPRESENTED BY ITS PRESIDENT.** **BY ADVS.SRI.B.S.SWATHY KUMAR SMT.ANITHA RAVINDRAN SRI.HARISANKAR N UNNI** ## **RESPONDENTS:** **1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, (GENERAL), WAYANAD, WAYANAD,PIN-673561. 2 THE INQUIRY OFFICER, PANAMARAM UNIT INSPECTOR OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), MANANTHAVADY, WAYANAD,PIN-673562.** **BY SRI BIMAL K NATH-SR GP** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 29.05.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WPC 14590/18 2 ## **JUDGMENT** 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 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 Co-operative Society** (2018 (2) KHC 143). 2. The imperative circumspection required to be observed by the Registrar, while ordering a suo motu inquiry under Section 65 of the Act, has been declared unequivocally in **Melukkara Service Cooperative Bank** (supra) in the following paragraphs, which are extracted below, so that a 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 subclause (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 satisfied that it is necessary to do so. However, the provision clearly ingrains a qualification that such an inquiry need be ordered “only if WPC 14590/18 3 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 one that can cause major consequences. Therefore, WPC 14590/18 4 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 14590/18 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 decision 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 14590/18 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 orders. 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 P4 order issued by the first respondent - Joint Registrar of Co-operative Societies, whereby an enquiry under Section 65 of the 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 this order 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 these lines, I carefully examined Exhibit P4 order and notice that except for saying that the Joint Registrar of Co-operative Societies has seen the WPC 14590/18 7 reports of the Assistant Registrar of Co-operative Societies, referred to as Item Nos.7 and 8 therein, and the complaints of certain individuals referred as Item Nos.1, 2 and 6 therein, nothing is stated as to the reasons that have guided him to conclude that a Section 65 enquiry is necessary,. The only available stated is a single line in Exhibit P4 that, on going through the aforementioned reports and complaints, the Joint Registrar satisfied that an enquiry under Section 65 is necessary. The order is completely silent as to why he feels so and on what basis he has satisfied himself as to such requirement. The highlighted portions of the judgment afore-extracted would, therefore, certainly render Exhibit P4 invalid and since I am bound by the said judgment, I have no other option but to allow this writ petition and set aside Exhibit P4. In the afore circumstances, I allow this writ petition and set aside Exhibit P4, however, leaving liberty to the Joint Registrar of Cooperative Societie **s** to initiate and pursue further action in terms of law, if it is so required. Sd/Devan Ramachandran, Judge tkv WPC 14590/18 8 ## **APPENDIX** **PETITIONER'S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE ORDER NO.CRP 1600/13 DATED 27-6-2017 OF THE 1ST RESPONDENT** **EXHIBIT P2 TRUE COPY OF THE ORER NO.CRP 2233/16/K.DIS DATED 25-1-2018 OF THE 1ST RESPONDENT.** **EXHIBIT P3 TRUE COPY OF THE ORDER NO.CRP 3141/17 DATED 7-11-2017 OF THE 1ST RESPONDENT** **EXHIBIT P4 TRUE COPY OF THE ORDER NO.CRP NO.3141/17 DATED 13.4.2018 OF THE 1ST RESPONDENT** **EXHIBIT P5 TRUE COPY OF THE ORDER IN W.P. (C)NO.27836/2017 DATED 16.11.2017.** RESPONDENT'S EXHIBITS: EXT. R1(a) TRUE COPY OF THE LETTER ISSUED BY THE REGISTRAR OF CO-OPERATIVE SOCIETIES DATED 16.03.2015 EXT. R1(b) TRUE COPY OF THE LETTER NO.V(1)706/2015 DATED 05.05.2017 /TRUE COPY/ P.S. TO JUDGE