R. Radhakrishnan v. Nedumangad Housing Co-operative Society Ltd & Others

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** **&** **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN** **THURSDAY, THE 5[TH] DAY OF OCTOBER 2023 / 13TH ASWINA, 1945** **WA NO.1382 OF 2023 JUDGMENT IN WP(C) 12586/2012 OF HIGH COURT OF KERALA DATED 8.6.2023** **-----------------** ## **- APPELLANT/PETITIONER :** R.RADHAKRISHNAN, AGED 63 YEARS S/O.RAMASWAMI CHETTIYAR, SHARON, VENKAVILA, PAZHAKUTTY P.O., NEDUMANGAD, THIRUVANANTHAPURAM, PIN – 695 561. BY ADVS. T.R.HARIKUMAR ARJUN RAGHAVAN ## **- RESPONDENTS/RESPONDENTS :** 1 THE NEDUMANGAD HOUSING CO-OPERATIVE SOCIETY LTD NO.T 364, REPRESENTED BY ITS SECRETARY, NEDUMANGAD P.O, THIRUVANANTHAPURAM DISTRICT, PIN – 695 541. 2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THIRUVANANTHAPURAM, VANCHIYOOR P.O, THIRUVANANTHAPURAM DISTRICT, PIN – 695 561. 3 THE KERALA CO-OPERATIVE TRIBUNAL JAWAHAR SAHAKARANA BHAVAN, VAZHUTHACAUD-POOJAPPURA RD, DPI, THIRUVANANTHAPURAM DISTRICT, PIN – 695 014 BY ADV M.HEMALATHA BY SRI.V.TEKCHAND, SR.GP THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 20.9.2023, THE COURT ON 5.10.2023 DELIVERED THE FOLLOWING: WA NO.1382 OF 2023 -: 2 :- ## **JUDGMENT** ## **Dated this the 5th day of October, 2023** ## **Anu Sivaraman, J.** Heard the learned counsel for the appellant and the learned counsel appearing for the 1[st] respondent Society. 2. The appellant entered service of the 1[st] respondent Society as Clerk on 3.5.1982. From 10.5.1982 onwards he was working as paid Secretary. The 1[st] respondent is a primary housing Society. From 1985 onwards, the Society started business of purchase and sale of building materials. When the business was found to be running at a loss, the Society stopped further purchase with effect from 10.12.1989. By Resolution dated 10.7.1993, the Board of Directors decided to close down the sales depot and stop all business activities. The Board of Directors coerced the appellant to take over the entire stock of building materials kept in the sales depot and the godown, it is submitted. The Board decided to treat the total value of stock of goods entrusted with the appellant as a loan to be repaid in 28 instalments of Rs.26,785/- each and they compelled the appellant to execute registered mortgage deeds offering 131 cents of land WA NO.1382 OF 2023 -: 3 :- with a building belonging to the appellant as security for the repayment. When a Section 65 enquiry was initiated into the affairs of the Society as evidenced by Ext.P9, the Board of Directors fastened the entire blame on the appellant and suspended him from service. Thereafter, Ext.P1 arbitration case was instituted by the 1[st] respondent Society. Annexure I written statement was filed by the appellant. Ext.P3 argument note was also placed on record. However, without considering any of these, Ext.P4 award was passed, it is contended. The 3[rd] respondent Tribunal rejected the challenge against Ext.P4 award by Ext.P8 order. Though the appellant filed the writ petition, the same was also dismissed by the learned Single Judge affirming Exts.P4 and P8. 3. The primary contention urged by the learned counsel for the appellant is that the appellant's contentions should have been considered in the light of Ext.P9 enquiry initiated under Section 65 of the Co-operative Societies Act. It is submitted that the specific case raised by the petitioner that he had been coerced into agreeing to purchase the entire stock of the Society only as a ruse for the members of the Committee to escape from the liability which would have been fastened on them, had not WA NO.1382 OF 2023 -: 4 :- been considered by the Arbitrator at all. It is submitted that the Joint Registrar who had issued Ext.P9 proceedings was himself considering the proceedings of arbitration and therefore, the said aspect ought to have been considered by the Arbitrator. It is further contended that the written objections filed by the appellant and Ext.P3 argument note submitted have not even been referred to by the Arbitrator while passing Ext.P4 award. 4. The learned counsel for the appellant places reliance on the various judgments of this Court. An unreported judgment dated 4.3.2016 in W.P.(C) No.26734/2009 is relied on to contend that only a matter which falls within the definition of 'dispute' under Section 2(i) of the Co-operative Societies Act is liable to be considered by the Arbitrator under Section 69 and when there is no dispute that can be resolved through the proceedings existing between the parties, the Arbitrator would have no power to consider the matter. In this context, the contention of the appellant that there is no _bona fide_ dispute capable of being adjudicated between the parties and that the ARC was filed only as a ruse to escape the Section 65 enquiry ought to have been considered by the Arbitrator. WA NO.1382 OF 2023 -: 5 :- 5. Further, the decision of the Apex Court in **Farid Ahmed Abdul Samad** v. **Municipal Corporation of the City of Ahmedabad** [1976 KHC 892] is relied on to contend that the principles of natural justice are not limited to an opportunity to submit the objections but extends to a proper consideration of such objections and a finding on the same. The decision in **Asha John Divianathan** v. **Vikram Malhotra and others** [2021 SCC Online SC 147] is also relied on to contend that the act of the Committee of the Society in extending a loan to the appellant, who was not a member of the Society, was _per se_ an illegal act since Rule 180 of the Co-operative Societies Rules envisages the permission of the Registrar for doing any act which is not specifically provided for in the bye-laws of the Society. It is, therefore, contended that no remedy would have been available to the Society to enforce an illegal contract. It is submitted that this aspect has been raised, but not considered in Ext.P4. 6. The decision in **Misbah Salam** v. **President, Erattupetta Aided School Teachers Co-operative Society Ltd. and others** [2012 (4) KHC 474] is relied on by the learned counsel for the appellant to contend that Rule 54 of the Kerala Co-operative Societies Rules provides for previous sanction in WA NO.1382 OF 2023 -: 6 :- writing of the Registrar for investment of the funds of a Society and that where there is no such permission in writing, the investments of the funds would itself be illegal and the contract entered into by the Society with the appellant would then become an illegal contract which is incapable of being enforced. The decision of a Division Bench of this Court in W.A. No.778/2021 is relied on to contend that the non-consideration of an additional objection filed by the assessee amounts to violation of the principles of natural justice which would render the award non est in law. 7. The decision of the Apex Court in **B.A. Linga Reddy and others** v. **Karnataka State Transport Authority and others** [(2015) 4 SCC 515] is also relied on to contend that the objections raised are to be specifically referred to and considered to meet the requirements of principles of natural justice. It is contended that in **Makhan Lal Bangal** v. **Manas Bhunia and others** [2001 KHC 1039] the Apex Court has specifically found that the refusal to frame issues which have arisen for consideration in a dispute between the parties would violate the requirements of adherence to the principles of natural justice. The learned counsel for the appellant ably canvassed the position WA NO.1382 OF 2023 -: 7 :- that the varied contentions raised by the appellant were not specifically referred to in Ext.P4 award and that the award stood vitiated by the non-consideration of the specific contentions. 8. However, the learned counsel for the 1[st] respondent contended that the legal contentions urged in this writ appeal are irrelevant in the facts of the case and in view of the fact that the entire findings in the award were specifically based on the admissions made by the appellant himself before the Society as well as the Arbitrator and that the valiant attempt now made by the learned counsel for the appellant cannot change the admissions made by the appellant before the Society and before the Arbitrator as evidenced by the records themselves. Ext.R1(b), which is the submission made by the appellant before the Society agreeing to take over the entire stock of building materials available in the Society as well as Exts.R1(c), R1(d) and R1(e) letters, which are written by the appellant himself accepting his liability are produced and relied on by the 1[st] respondent to contend that the stand of the appellant with regard to his liability was clear from the said documents. It is submitted that the appellant was not issued with any loan from the Society in the usual course of its business. It is submitted that when WA NO.1382 OF 2023 -: 8 :- misappropriation of amounts and maladministration of the affairs including the business of trade in building materials was found by the Society, the appellant had made a request before the Society that the amount found to be his liability may be treated as a loan and that he may be permitted to pay off the amounts in instalments. The report of a sub committee as well as the replies submitted by the appellant to the notices issued to him from the Society are also produced as Exts.R1(g) and R1(h). The Resolution of the Committee enabling the transaction with the petitioner treating the amount of liability as a loan is also produced as Ext.R1(a). 9. The learned counsel also took us to the findings in Ext.P4 award. It is submitted that a specific issue had been raised whether the dispute is maintainable and the contention raised by the appellant that he was coerced into signing the agreement with the Society had been specifically considered and answered in Ext.P4. It is submitted that even in the written objections filed by the appellant to the ARC, which is produced as Annexure I, the appellant had admitted the transactions and had only raised a contention that there was a depot manager who was primarily responsible for the misappropriation. It is submitted WA NO.1382 OF 2023 -: 9 :- that it was after considering extensive documents produced as Exts.P1 to P36 by the Secretary in charge of the Society and after examining the appellant as DW1 that Ext.P4 award was passed. 10. Having considered the contentions advanced and in view of the admissions made by the appellant which form part of the records of the arbitration as well, we are of the opinion that the contention of the appellant that his objections have not been considered and specifically adverted to cannot be accepted under any circumstances. The appellant was given every opportunity to submit his objections and to adduce evidence in support of his contentions. True, there was delay in disposing of the ARC and it was only on the appellant approaching this Court and a direction issued by this Court on his writ petition that the matter was considered. However, from a reading of Ext.P4 award and the materials produced by the respondents before this Court, it is clear that the appellant had been granted an opportunity to adduce evidence as well, which was availed of by the appellant only by examining himself as DW1. It is after considering the materials on record as well as the contentions of the parties that the award has been passed. WA NO.1382 OF 2023 -: 10 :- In the above factual situation, we are of the opinion that the contention raised by the appellant at this stage, after reconcurrence of findings of fact against him, cannot be accepted. The writ appeal fails and the same is, accordingly, dismissed. However, all contentions of the parties in the other pending matters are left open. **Sd/ANU SIVARAMAN Sd/C. JAYACHANDRAN JUDGE** **JUDGE** Jvt/29.9.2023 WA NO.1382 OF 2023 -: 11 :- ## **APPENDIX OF WA 1382/2023** PETITIONER ANNEXURES Annexure-I A TRUE COPY OF THE WRITTEN STATEMENT FILED BY THE APPELLANT IN ARC NO.49 OF 1994 DATED 06-04-1996, ALONG WITH TYPED COPY