S. Ajayakumar v. Joint Registrar of Co-operative Societies (General), Thiruvananthapuram

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** **THURSDAY, THE 10TH DAY OF OCTOBER 2013/18TH ASWINA, 1935** ## **WP(C).No. 2532 of 2013 (N)** **---------------------------** **PETITIONER(S): -----------------------** **ADV.S.AJAYAKUMAR, FORMER PRESIDENT, PARASUVAKKAL SERVICE CO-OPERATIVE BANK LTD NO. 663, (COMMITTEE UNDER SUPERSESSION)PARASUVAKKAL, THIRUVANANTHAPURAM DISTRICT.** **BY ADV. SRI.GEORGE POONTHOTTAM** **RESPONDENT(S):** **---------------------------** **THE JOINT REGISTRR OF CO-OPERATIVE SOCIETIES(GENERAL), THIRUVANANTHAPURAM-695 001.** ## ***ADDL.R2 IMPLEADED:** **R2. A.T.GEORGE, AGED 60 YEARS,** **S/O.THANKAPPAN NADAR, BISHA COTTAGE, VETTUVILA, PARASSALA.P.O., THIRUVANANTHAPURAM -695 502.** ***ADDL. R2 IS IMPLEADED AS PER ORDER DATED 13/03/2013 IN IA NO.2414/2013.** **R1 BY GOVERNMENT PLEADER SRI.D.SOMASUNDARAM ADDL.R2 BY ADVS. SRI.V.G.ARUN** **SRI.T.R.HARIKUMAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31/05/2013, THE COURT ON 10/10/2013 DELIVERED THE FOLLOWING:** **Kss** ## **WPC.NO.2532/2013 (N)** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE INSPECTION REPORT NO.CRP(1) 7935/11 DTD. 13/06/2012.** - **P2: COPY OF THE NOTICE NO.CRP.(1)7935/2011 DTD. 24/12/2012 ISSUED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANTHAPURAM.** - **P3: COPY OF THE COMMUNICATION NO.CRP(1)5349/12/K.DIS. DTD.28/11/2012 ISSUED BY THE JOIINT REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANAPURAM.** - **P4: COPY OF THE COMMUNICATION NO.CRP(1) 8377/12/K.DIS. DTD.30/11/2012.** - **P5: COPY OF THE REPLY GIVEN TO THE RESPONDENT BY THE PETITIONER ON 15/01/2013.** - **P6: COPY OF THE ORDER NO.C.R.P.(1) 7935/2011 DTD. 19/10/2013 ISSUED BY THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM.** - **P7: COPY OF THE ORDER NO.CRP(1)5349/12/K.DIS. DTD.28/11/2012.** - **P8: COPY OF THE ORDER NO.ICDP/10957/10 DTD. 11/06/2010.** - **P9: COPY OF THE ORDER NO.ICDP/60778/2009 DTD. 30/06/2010.** - **P10: COPY OF THE COMMUNICATION NO.2141/11 DTD. 25/10/2011.** ## **RESPONDENT'S EXHIBITS:** ## **R1(A): COPY OF THE OPINION OF THE FINANCING BANK.** **R1(B): COPY OF THE OPINION OF THE CIRCLE CO-OPERATIVE UNION.** - **R2(A): COPY OF THE QUESTIONS RAISED BY THE 2ND RESPONDENT AND THE ANSWERS GIVEN BY THE HONOURABLE MINISTER FOR CO-OPERATION.** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** ## **A.M.SHAFFIQUE, J** ## *** * * * * * * * * * * * *** W.P.C.No.2532 of 2013 ---------------------------------------- Dated this the 10[th] day of October 2013 ## **J U D G M E N T** This writ petition is filed challenging Ext.P6, an order issued by the respondent superseding the Managing Committee of the society under Section 32(1) of the Cooperative Societies Act (hereinafter referred to as the Act). 2. The petitioner is the former President of the Society. The facts would disclose that he was elected as the President of the Managing Committee in February 2009. Inspection was conducted by the Assistant Registrar under Section 66 of the Act. On finding certain omissions and commissions which were against the procedure prescribed and in violation of the Rules, a notice under Section 32(1) was issued to the members of the Committee on 24/12/2012. According to the petitioner, none of the charges levelled against the members of the Managing Committee was justifiable. Hence a detailed explanation W.P.C.No.2532/2013 2 was submitted pointing out all the aspects and answering the charges levelled against the committee. Ext.P2 is the notice and Ext.P5 is the reply. A hearing was held on 17/01/2013 and thereafter Ext.P6 order came to be passed. 3. The main contention urged by the petitioner is that Ext.P6 order is passed without application of mind as the respondent has not considered the matter on the basis of the explanation offered. It is further contended that there was no consultation with the Financing Bank and the Circle Co-operative Union before issuing the order of supersession as provided under Section 32(2) of the Act. It is contended that forwarding a copy of the show cause notice to the District Co-operative Bank of the Circle Co-operative Union is not sufficient and is not in compliance with the requirement of consultation as provided under the Statute. 4. It is also contended that the allegations contained in Ext.P2 will only demonstrate that they are technical in nature and no one has a case that the society has sustained W.P.C.No.2532/2013 3 any loss or that the Committee had acted in a manner prejudicial to the interest of the society. 5. Counter affidavit is filed by the first respondent supporting the stand taken in Ext.P6 order. According to the respondent, there was large scale violation of the Bye law provisions, Act, Rules, the circulars and instructions issued by the Registrar of Co-operative Societies. Hence they are justified in issuing notice under Section 32(1) of the Act. It is further contended that the explanation offered was not satisfactory. The respondents have also indicated in the counter affidavit the reasons for arriving at the findings by the respondent in Ext.P6 order. It is also contended that consultation was made with the financing bank as well as the Circle Co-operative Union in terms of Section 32(2) of the Act. Further the respondent contended that the petitioner has an efficacious alternative remedy of filing an appeal. W.P.C.No.2532/2013 4 6. An elected member of the Parassala Legislative Assembly Constituency has impleaded as additional respondent in the writ petition who supported the stand taken by the respondent. 7. Heard Sri.George Poonthottam, the learned counsel for the petitioner, Sri.Somasundaram, the learned senior Government Pleader and Sri.V.G.Arun, the learned counsel appearing for additional respondent. 8. Though the learned counsel for the petitioner highlighted the fact that the reasons for passing an order under Section 32(1) of the Act was not justifiable, I do not think that there is any necessity to go into the factual issues involved in the matter as the petitioner always has an appellate remedy of filing an appeal before the Government under Section 83(1)(j) of the Act. Hence if the petitioner intends to agitate the questions of fact, necessarily the petitioner will have to approach the appellate authority. W.P.C.No.2532/2013 5 9. The learned counsel for the petitioner however emphasizes the point that though a copy of the show cause notice was issued to the financing bank as well as the Circle Co-operative Union, the same would not amount to effective consultation as provided under Section 32(2) of the Act. The learned counsel placed reliance upon the judgment in **Rajagopalan Nair v. State of Kerala** _[1995(2) KLT 184]_ . This is a judgment of a learned Single Judge of this Court wherein it is held that an order of supersession can be passed only if the Committee makes persistent defaults or if the committee is negligent in the performance of duties. The persistence in defaults or negligence in the performance relates to the duties under the Act or the Rules or bye laws. It has to be found that any such acts on the part of the members of the Committee should be found to be prejudicial to the interest of the society. 10. Another judgment relied upon is **Sahadevan v. Padmanabhan** [ _2004(1) KLT 192]._ This is a Division Bench W.P.C.No.2532/2013 6 ## judgment of this Court wherein it is held as under: _“5. Sub-s.(2) of S.32 provides that the Registrar shall consult the Financing Bank and the Circle Co-operative Union or the State Cooperative Union as the case may be before passing an order under sub-s.(1) of S.32. It is seen from Ext.P6 that a copy of the notice dated 24.9.2003 issued under sub-s.(1) of S.32 of the Act was sent to the General Manager, Palakkad District Co-operative Bank (Financing Bank) and the Secretary, Co-operative Union, Palakkad. Apart from sending a copy of the notice, no further request or direction was made. Ext.P8 order of the Joint Registrar shows that the views of the financing bank and the Circle Co-operative Union were not received on time and therefore, the Joint Registrar proceeded on the assumption that they had nothing to say in the matter. Learned Single Judge, relying on the decisions in Jose Kuttiyani v. Registrar, Co-operative Societies (AIR 1982 Ker. 12) and Elakkal Service Cooperative Bank v. State of Kerala (1997 (2) KLT 85) held that the mere sending of the copy of the_ W.P.C.No.2532/2013 7 _show cause notice to the consultees would not satisfy the requirement of the provisions contained in sub-s.(2) of S.32 of the Act. According to the learned Single Judge, the notice, the reply and the tentative findings of the Joint Registrar should be forwarded to the consultees so that they can form an opinion and inform the same to the Joint Registrar. The learned Single Judge has also pointed out that the impugned order, Ext.P8, does not show that any such consultation was made. There is no case for the appellant that, apart from sending a copy of Ext.P6 notice to the Financing Bank and the Circle Co-operative Union, the Joint Registrar had forwarded to them the explanations/objections given on behalf of the Committee and the tentative findings arrived at by the Joint Registrar after considering the explanations/objections of the Committee. Therefore, we have to proceed on the basis that, apart from sending a copy of Ext.P6 to the Financing Bank and the Circle Cooperative Union, no further action was taken by the Joint Registrar as part of the consultation process contemplated under sub-s.(2) of S.32 of_ W.P.C.No.2532/2013 8 _the Act. The consultation contemplated under sub-s.(2) of S.32 of the Act can be effective and meaningful only if the show cause notice issued under S.32(1), the explanations/objections given by the Committee to such how cause notice and the tentative findings arrived at by the Joint Registrar after considering such explanations/objections are also forwarded to the Financing Bank and the Circle Co-operative Union requesting them to offer their views on the proposal to supersede the Committee. Such a consultation process has not taken place in this case. Therefore, the provisions of sub-s.(2) of S.32 of the Act have been violated. Hence, Ext.P8 order was liable to be set aside on the second ground mentioned by the learned Single Judge."_ 11. Another judgment relied upon is **State of M.P v. Sanjay Nagayach** _[2013(2) KLT 733]_ wherein the Supreme Court held that service of copy of show cause notice alone is not sufficient. 12. On a perusal of the impugned order at Ext.P6, it could be seen that notice under Section 32(1) was preceded W.P.C.No.2532/2013 9 by an enquiry under Section 66. It is thereafter, having found that there was serious laches on the part of the members of the Managing Committee that Ext.P2 notice came to be issued. It is along with the show cause notice that the respondent had consulted the Financing Bank as well as the Circle Co-operative Union. Subsequently, the members of the Managing Committee appeared before the respondent and the matter was heard on 17/01/2013. On a perusal of Ext.P2 it is clear that it contains all the allegations which had been raised against the Managing Committee members. There is also reference to the explanation offered by the President of the Society to the Assistant Registrar. Therefore, the Circle Co-operative Union as well as the financing bank were informed about the explanation offered by the society in regard to the alleged acts. In the show cause notice the action contemplated was also indicated. Ext.R1(a) and R1(b) are the replies received from the Circle Co-operative Union and the Thiruvananthapuram District Co- W.P.C.No.2532/2013 10 operative Bank Ltd. respectively. As far as Circle Cooperative Union is concerned, according to them, in respect of allegations 1 to 4 since the reports are not available along with the notice, they were unable to discuss the matter. Further it is indicated that the Society is functioning properly in accordance with the Rules and the procedure of supersession under Section 32(1) should be avoided. The District Co-operative Bank which is the financing bank had sent a reply stating that if the society had indulged in any of the activities stated therein, necessary action could be taken in accordance with the action contemplated. 13. The short question to be considered in this writ petition is whether the respondent was under obligation to send all the records to the consulting bank and Circle Cooperative union and whether the judgment in **Sahadevan** 's case has any application to the facts in issue. 14. It is not in dispute that the respondent had sent only a copy of the show cause notice to the consultees. W.P.C.No.2532/2013 11 Whether that would suffice or should other documents be sent is a matter which requires consideration. Apparently, in **Sahadevan** 's case (supra) a Division Bench of this Court was of the opinion that copies of all of the records have to be forwarded. This again will depend upon the facts and circumstances of each case. If the show cause notice contains all materials on the basis of which a consultee can form an opinion in regard to the steps to be taken under Section 32(1), necessarily the show cause notice will suffice. If other documents are relied upon by the respondents for exercising the power of supersession and such documents forms part of the decision making process, necessarily the consultee should be given the advantage of verifying such records also. 15. But, the question would be whether failure to give such records would be fatal to an order passed under Section 32(1) of the Act. This is a case in which members of the managing committee are informed in advance about the W.P.C.No.2532/2013 12 allegations against them and they have given their respective replies. The show cause notice indicates the allegations as well as the replies given to the said charges. But it is relevant to note that in the present case, Ext.P2 is issued to the members of the Managing Committee on 24/2/2012. A copy of the said show cause notice is forwarded to the Circle Co-operative Union and the Financing Bank. Having gone through the provisions of Section 32(2), I do not think that the consultation contemplated is not merely forwarding a copy of the show cause notice. Before consulting the Circle Co-operative Union and the Financing Bank, the respondent should consider the objection of the members of the Managing Committee and form an opinion that an order of supersession is required. It is thereafter that a consultation as envisaged under Section 32(2) arises. As held by the Supreme Court and this Court in the judgments referred above, it is not a mere formality. In order to have a W.P.C.No.2532/2013 13 meaningful consultation the records available with the respondent, especially the show cause notice and its reply along with any other documents which might be relied upon are to be forwarded in order to enable the consultees to arrive at a proper decision in the matter. Having not done so, I am of the view that the relief sought for by the petitioner is to be allowed. Accordingly the writ petition is allowed. Ext.P6 is set aside, however with liberty to the respondent to initiate fresh action after consulting the Circle Co-operative Bank and the District Co-operative Bank in the light of what is stated above. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr W.P.C.No.2532/2013 14