Pathanamthitta District Thozhil Dayaka Kshema Sahakarana Sangam (JOBCO) and Dr. V. R. Mohanan Nair v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V** ## **WEDNESDAY, THE 09TH DAY OF DECEMBER 2020 / 18TH AGRAHAYANA, 1942** ## **WP(C).No.26711 OF 2020(L)** ## **PETITIONERS:** **1 PATHANAMTHITTA DISTRICT THOZHIL DAYAKA KSHEMA SAHAKARANA SANGAM (JOBCO) NO.P T 277, RANNI P.O., RANNI - 689 672, REP. BY SECRETARY, SREEJA KUMARI K.V., RESIDING AT SREE SADANAM, KATTOOR P.O., RANNI** **2 DR.V.R.MOHANAN NAIR S/O.RAGHAVAN NAIR, PRESIDENT, PATHANAMTHITTA DISTRICT THOZHIL DAYAKA KSHEMA SAHAKARANA SANGAM (JOBCO), NO. P T 277, RANNI P.O., RANNI - 689 672, RESIDING AT VANIYAMPARAMBIL HOUSE, MUNDURUNNI, RANNI** **BY ADVS. SMT.SINDHU SANTHALINGAM SRI.A.D.SHAJAN** ## **RESPONDENTS:** **1 STATE OF KERALA REPRESENTED BY SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM - 695 001.** - **2 JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), O/O OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, PATHANAMTHITTA - 689 645.** - **3 ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), RANNI, PATHANAMTHITTA DISTRICT - 689 672.** - **4 STATE CO-OPERATIVE ELECTION COMMISSION, 3RD FLOOR, CO-BANK TOWERS, VIKAS BHAVAN P.O., THIRUVANANTHAPURAM 695 033. REP. BY ITS SECRETARY R1 TO R3 BY SRI K P HARISH, SR. GP R4 BY SRI R LAKSHMI NARAYAN, SC** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 09.12.2020, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.26711 OF 2020(L) 2** ## **JUDGMENT** The Pathanamthitta District Thozhil Dayaka Kshema Sahakarana Sangam and its President are before this Court seeking a direction to the respondents 1 to 3 to appoint an Administrative Committee in the 1st petitioner’s Society till the election to the Managing Committee, which was adjourned due to various reasons, is conducted by the 4th respondent in accordance with the provisions of the Kerala Co-operative Societies Act, 1969 and the Rules framed thereunder. 2. The petitioners state that the Society was registered on 25.03.2015 and the election to the Managing Committee was held on 19.06.2015. Before the expiry of the term of the Managing Committee, the petitioners resolved to hold the election on 17.06.2020. Due to the lockdown imposed, various orders were issued by the Government extending the period of Committee for 6 more months. The term of the Committee scheduled to end on 19.12.2020. The 4th respondent based on requisition made by the petitioners have scheduled the election and it was later to be held on 08.12.2020. Meanwhile, the elections to the Local Self Government Institutions were declared and the Electoral Officer and the Returning Officer were put in charge of conducting the election to the local bodies in Pathanamthitta District. Later, by Ext.P3 communication, the 3rd respondent, has informed that the elections to the Managing Committee of the 1st petitioner can be held only after the completion of election to the local body. Immediately thereafter **WP(C).No.26711 OF 2020(L) 3** the petitioners have requested the respondents 3 and 4 to tentatively fix the election to the 1st petitioner Society on 15.02.2021. They contend that taking advantage of the situation and due to political considerations, attempts are being made to appoint an administrator in the Society. It is in the afore circumstances that the petitioners are before this Court seeking the following reliefs: b) issue a writ of mandamus or appropriate writ, order or direction, directing respondents 1 to 3 to appoint an administrative committee in the 1st petitioner’s society till the election is conducted immediately after the Panchayat Election is over. c) Declare that the present move of the authorities to appoint an administrator by succumbing to the political pressure is arbitrary, illegal and without jurisdiction. 3. I have heard Smt.Sindhu Santhalingam, the learned counsel appearing for the petitioners and the learned Senior Government Pleader. 4. Smt.Sindhu Santhalingam, the learned Counsel appearing for the petitioners submitted that the functioning of the Society till date has been in an impeccable manner and no enquiry or inspection has been ordered by the official respondents in relation to the working of the Society. She contended that the election was adjourned due to no fault of the petitioners. She would point out that the stalemate has occurred not because of any reasons made mention of in Section 33(1) of the Co-operative Societies Act, 1969 but because of the supervening circumstances. It is her submission that the 2nd respondent be directed to appoint any three members of the Managing Committee of the Society under Section 33 of **WP(C).No.26711 OF 2020(L) 4** the Act during the interregnum till election to the Society are held as it would only aid in strengthening the co-operative institution by maintaining its democratic setup. 5. Sri. Bimal K. Nath, the learned Senior Government Pleader has strenuously opposed the prayer. It is submitted that the interim prayer sought for by the petitioners is unsustainable for the reason that this Court in exercise of powers under Article 226 of the Constitution of India will not be justified in interfering with the discretion which has been given to the Registrar vis-a-vis the administration and working of the Societies. It is further contended that the members of the present Managing Committee, whose term would expire cannot be permitted to continue as Administrative Committee members which would only amount to giving them power through the back door. 6. I have considered the submissions. 7. From the narration of facts above, it is apparent that the election could not be held initially owing to the imposition of the lockdown and later due to the declaration of elections to the Local Self Government Institutions. It is borne out that the term of the existing Committee is due to expire on 19.12.2020 and it is impossible for holding the election to the Managing Committee prior to that. I find that the Registrar has no case that the functioning of the Society is riddled with issues as described in Section 33 (1) of the Act or that any adverse inquiries or audit reports are pending against them. It is also undisputed that no proceedings for surcharge have been initiated against the members of the **WP(C).No.26711 OF 2020(L) 5** Managing Committee of the Society casting any stigma. In such a situation, the Registrar in terms of Section 33 (1)(b) of the Act is required to constitute an ad hoc Committee to manage the affairs of the Co-operative Society till proper elections are conducted and a new Managing Committee is put in place. It is the specific contention of the petitioners that instead of appointing an ad hoc Committee comprising of strangers, members of the Managing Committee themselves be appointed to manage the Society in the interregnum. In this context, it would be apposite to take note of the observations of a Division Bench of this Court in judgment dated 7.7.2017 in WP (C) 18310/2017, wherein it was held as follows. “6. The term of the Committee has completed. The election ought to have been conducted, but because of the pendency of amendment of the bye laws, it could not be so done. The result is that in such a situation the Registrar, in terms of Section 33(1)(b), is required to constitute an adhoc committee to manage the affairs of the Co-operative Society till proper elections are conducted and a new Managing Committee is put in place. Thus, the appointment of ad hoc committee was not on account of any maladministration or misfeasance on the part of the Committee, but only on account of the correction of the bye- laws. Otherwise, there is no default on the part of the Co-operative Society. Thus, even though the Registrar has a discretion to appoint an adhoc committee of maximum three persons, one among them as a convenor, who need not be member of the society to manage the affairs of the society, it does not bar the members of the Co-operative Society itself. Considering that the Co-operative Society is a democratic institution by and for the benefit of the members themselves, it would ordinarily be desirable that members of the Co-operative Society be considered, if not otherwise disqualified. Why **WP(C).No.26711 OF 2020(L) 6** should a foreigner to the Co-operative Society be considered, if there are competent persons in the Co-operative Society itself. Discretion conferred by Section 33(1)(b) is not an arbitrary or a fanciful discretion. It has to be exercised on some principles, one of which would be to avoid administration of a society by non members, even on an adhoc basis, unless there are good reasons to avoid the members.” ## 8. Further, in **Board of Directors of Koliyoor Service Co-operative** **Bank Ltd. , Tvm and Another v. Returning Officer, Koliyoor Service Cooperative Bank Ltd. Tvm and Others** [ 2015 (5) KHC 450], this Court had occasion to hold that there is no taboo for a member of the Managing Committee to be part of the Administrative Committee appointed on failure to constitute a Managing Committee to succeed in time. It was observed thus in paragraph No.6 of the judgment. The second question to be considered is as to whether the three members of the erstwhile managing committee could be included in the administrative committee as raised in WP (C) No. 23813/2015. A cursory look at S.32(1)(e) and S.33(1) (b) of the Act is needed for answering this question and the provisions germane are extracted herein below: "32. Supersession of Committee.-- xxxx xxxx xxxx (e) Every member of the committee superseded under this section shall from the date of order of such supersession stand disqualified to contest in the election to or to be nominated to the committee of any Society or to be appointed as an administrator in any society for two consecutive terms. xxxx xxxx xxxx 33. Appointment of new committee or administrator on failure to constitute committee, etc.-- (1) Where the term of **WP(C).No.26711 OF 2020(L) 7** office of a committee has expired and a new committee has not been constituted, or where a no - confidence motion is passed by the general body against the existing committee or where the existing committee resigns enbloc or where vacancies occur in the committee either by resignation or otherwise and the number of remaining members cannot constitute the quorum for the meeting of the committee, or where the committee fails to hold its regular meeting consecutively for six months or where the Registrar is satisfied. xxxx xxxx xxxx (b) that a new committee is prevented from entering upon office or a new committee fails to enter upon office, on the date on which the term of office of the existing committee expires, the Registrar may, either suo motu or on application of any member of the society, after intimating the Circle Co - operative Union, appoint one Administrator or an administrative committee consisting of not more than three individuals, who need not be member of the society, one among them as convener to manage the affairs of the society, for a period not exceeding six months as may be specified in the order, which period may, at the discretion of the Registrar and for reasons to be recorded in writing, be extended, from time to time, so, however, that the aggregate period shall not, in any case, exceed one year or till a new committee enters upon office, whichever is earlier." (emphasis supplied) S.32 of the Act envisages the appointment of an administrator or administrative committee to a Society where the term of the managing committee is yet to expire and has instead been superseded. S.33 of the Act envisages the appointment of an administrator or administrative committee to a Society on failure to constitute a managing committee in time. Only when the managing committee is superseded in terms of S.32 of the Act does any of its members incur a disqualification to be included in the administrative committee soon after. The disqualification lingers on for two consecutive terms under S.32(1)(e) of the Act and such member of the managing committee superseded cannot aspire to be in the administrative committee till such time. But there is no such embargo for any member of the managing committee to be **WP(C).No.26711 OF 2020(L) 8** included in the administrative committee appointed in terms of S.33(1)(b) of the Act. A wide discretion is vested in the Registrar to appoint an administrator or an administrative committee consisting of not more than three individuals under S.33(1)(b) of the Act. The Statute is specific that the three members 'need not be' a member of the Society implying thereby that any member whomsoever could be included in the administrative committee. There is no taboo for a member of the managing committee to be part of the administrative committee appointed on failure to constitute a managing committee to succeed in time. 7. Much was argued by the petitioner in WP (C) No. 23831/2015 on the basis of the decision in Joint Registrar v. Chatha, 1999 (3) KLT 139 wherein the following observations can be found: "In view of the above rulings, we are of the view that the members of the present managing committee, whose term has already expired, cannot be permitted to continue as administrative committee which would only amount to giving them power through back door." The 'rulings' relied on in the above decision are none other than Kottappady Service Co - op. Bank's case, (1994 (2) KLJ 795 (DB) and Kaithari Neithu Sahakarana Sangam's case, (1999 (1) KLJ 885) (DB) cited supra. The said decisions dealt only with the question as to whether a managing committee of a Society could be permitted to continue in office after the expiry of its term when the Act is silent. The question whether the administrative committee appointed in terms of S.33 of the Act could take in members of the erstwhile managing committee was never considered. The omnibus observation in Chatha's case hat the members of the managing committee cannot continue in administrative committee has no precedential support. The same is obviously made without comprehending the ratio decidendi in Kottappady Service Co - op. Bank's case and Kaithari Neithu Sahakarana Sangam's case relied on. The distinction between S.32(1)(e) and S.33(1)(b) of the Act in the matter of disqualification for members of the managing committee has been overlooked. I have no hesitation to hold that the decision in Chatha's case does not **WP(C).No.26711 OF 2020(L) 9** lay down the correct law and is without reference to the statutory provisions applicable. It can safely be declared that the decision in Chatha's case is per incurium (See: A. R. Antulay v. R. S. Nayak (AIR 1988 SC 1531) and Govt. of Andhra Pradesh v. B. Satyanarayana Rao, (AIR 2000 SC 1729). 8. It is the admitted case of either parties that no proceedings for surcharge have hitherto been initiated against the members of the erstwhile managing committee of the Society casting any stigma. This Court had cautioned in its interim order in WP (C) No. 22460/2015 that no members against whom proceedings for surcharge are pending shall be included in the administrative committee. The discretion exercised by the Registrar in appointing the three members of the erstwhile managing committee of the Society in the administrative committee later cannot be faulted with. Xxxxxxxxxx” 9. The Co-operative Society registered under the Act is bound to function as a democratic institution and conduct its affairs based on democratic principles. Democratic member control is one of the main co-operative principles as enunciated under Schedule 2 framed under section 2 (eccc) of the Act. As observed by the Division Bench above, considering that the Co-operative Society is a democratic institution by and for the benefit of the members themselves, it would ordinarily be desirable that members of the Co-operative Society be considered, if not otherwise disqualified. Why should a foreigner to the Cooperative Society be considered, if there are competent persons in the Cooperative Society itself, particularly in view of the contextual facts in the instant case. However, these are matters to be considered by the 2nd respondent. 10. Having considered the entire facts and circumstances, I direct the **WP(C).No.26711 OF 2020(L) 10** 2nd respondent to explore the possibility of constituting an Administrative Committee comprising of the present Managing Committee to manage the affairs of the 1st petitioner Society, in the event of the 2nd respondent choosing to exercise his discretion under Section 33 (1) of the Act. This is however subject to the condition that no proceedings for surcharge are pending against the members of the Managing Committee who are to be included in the Administrative Committee when formed. After the completion of the election to the LSGI, the respondents 2 to 4 shall initiate appropriate steps to hold the elections to the 1st petitioner Society. This petition is disposed of. **Sd/-** **RAJA VIJAYARAGHAVAN V** **JUDGE** DSV **WP(C).No.26711 OF 2020(L) 11** ## **APPENDIX** ## **PETITIONERS' EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF THE ORDER DTD. 6/11/2020 ISSUED BY THE 4TH RESPONDENT** |**EXHIBIT P1**|**A TRUE COPY OF THE ORDER DTD. 6/11/2020**<br>**ISSUED BY THE 4TH RESPONDENT**| |---|---| |**EXHIBIT P2**|**A TRUE COPY OF THE ELECTION SCHEDULE DTD**| ||**6.11.2020 FIXED BY THE 4TH RESPONDENT**| |**EXHIBIT P3**|**A TRUE COPY OF THE COMMUNICATION DTD.**| ||**16/11/2020 ISSUED BY THE ASSISTANT**| ||**REGISTRAR (GENERAL) RANNI TO THE**| ||**PETITIONERS**| |**EXHIBIT P4**|**A TRUE COPY OF THE RESOLUTION**| ||**NO.561/2020 DTD. 24/11/2020 OF THE**| ||**PATHANAMTHITTA DISTRICT THOZHIL DAYAKA**| ||**KSHEMA SAHAKARANA SANGAM (JOBCO)**| |**EXHIBIT P5**|**A TRUE COPY OF THE ORDER DATED 9/10/2020**| ||**IN WP(C) NO.20804/2020 OF THE HON'BLE**| ||**HIGH COURT OF KERALA**| **RESPONDENTS' EXHIBITS: NIL** **//TRUE COPY//** **PA TO JUDGE**