S. Jayaprakash and others v. The Joint Registrar of Co-operative Societies (General), Kottayam

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN TUESDAY, THE 3RD DAY OF APRIL 2018 / 13TH CHAITHRA, 1940** **WP(C).No. 7054 of 2018** **PETITIONER(S):** **==> picture [364 x 483] intentionally omitted <==** **----- Start of picture text -----**<br> 1 S.JAYAPRAKASH, PRESIDENT,<br> BRAHMAMANGALAM GRAMASWARAJ SERVICE<br> CO-OPERATIVE BANK LTD. NO.2966,<br> BRAHMAMANGALAM.P.O., KOTTAYAM- 686 614<br>2 T.V.SURENDRAN, VICE PRESIDENT,<br> BRAHMAMANGALAM GRAMASWARAJ SERVICE<br> CO-OPERATIVE BANK LTD. NO.2966,<br> BRAHMAMANGALAM.P.O., KOTTAYAM- 686 614<br>3 ADVOCATE P.V.SURENDRAN,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD. NO.2966,<br> BRAHMAMANGALAM.P.O., KOTTAYAM- 686 614<br>4 SHAJI,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD.NO.2966,<br> BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614<br>5 K.J SUNNY,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD.NO.2966,<br> BRAHMAMANGALAM .P.O., KOTTAYAM-686 614<br>6 RASHEED MANGADAN,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD.NO.2966,<br> BRAHMAMANGALAM.P.O., KOTTAYAM- 686 614<br>7 K.C.THOMAS,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD.NO.2966,<br> BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614<br>8 S.SHYAMKUMAR,<br> MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM,<br> GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD. NO.2966,<br> BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614<br>**----- End of picture text -----**<br> **2/-** **-2-** ## **WP(C).No. 7054 of 2018** ## **9 VASU,** **MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM, GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD.NO.2966, BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614** **10 T.K.OMANA, MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM, GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD. NO.2966, BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614** **11 VIJAYA PRASANTHAN, MANAGING COMMITTEE MEMBER OF BRAHMAMANGALAM, GRAMASWARAJ SERVICE CO-OPERATIVE BANK LTD. NO.2966, BRAHMAMANGALAM .P.O., KOTTAYAM- 686 614** **BY ADVS.SRI.P.N.MOHANAN SRI.C.P.SABARI SMT.J.LAKSHMI** ## **RESPONDENT :** **THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KOTTAYAM-686 001** **BY SR GOVERNMENT PLEADER SMT.C.S.SHEEJA** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03-04-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts 4/4/2018** ## **WP(C).No. 7054 of 2018 (F)** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS** - **EXHIBIT P1 A TRUE COPY OF THE JUDGMENT REPORTED IN 2017(1) KLT 82. EXHIBIT P2 A TRUE COPY OF THE JUDGMENT DATED 19.12.2017 IN WPC NO.40423/2017 EXHIBIT P3 A TRUE COPY OF THE ORDER DATED 27.12.2017 OF THE ELECTION COMMISSIONER** - **EXHIBIT P4 A TRUE COPY OF THE ORDER DATED 3.1.2018 OF THE ASSISTANT REGISTRAR EXHIBIT P5 A TRUE COPY OF THE RESOLUTION NO.121 DATED 6.1.2018 OF THE MANAGING COMMITTEE EXHIBIT P6 A TRUE COPY OF THE JUDGMENT DATED 16.1.2018 IN WPC NO.858/2018 EXHIBIT P7 A TRUE COPY OF THE JUDGMENT DATED 6.7.2017 IN WA.NO.1410/2017.** ## **RESPONDENT'S EXHIBITS: NIL** ## **/TRUE COPY/** ## **P.S.TO JUDGE** **sts 4/4/2018** ## **ANIL K.NARENDRAN, J.** ## **----------------------------------------------W.P.(C)No.7054 of 2018 -----------------------------------------------** Dated this the 3[rd] day of April, 2018 ## **J U D G M E N T** The petitioners, who are the President, Vice President and the members of the managing committee of Brahmamangalam Gramaswaraj Service Co-operative Bank, which is a Society registered under the Kerala Co-operative Societies Act, 1969 (for brevity, 'the Act') have approached this Court in this writ petition filed under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the respondent Joint Registrar of Cooperative Societies to appoint an administrative committee consisting of three persons from the present managing committee to manage the affairs of the Bank, in the light of Ext.P7 judgment dated 6.7.2017 of a Division Bench of this Court in W.A.No.1410/2017. The petitioners have also sought for a consequential declaratory relief. 2. The reliefs sought for in this writ petition are opposed by the respondent by filing a counter affidavit. 3. Heard the learned counsel for the petitioners and also W.P.(C)No.7054 of 2018 :-2-: the learned Senior Government Pleader appearing for the respondent. 4. The term of the present managing committee of the Bank will expire on 07.04.2018. The managing committee of the Bank took a decision to conduct election on 28.01.2018. The Assistant Registrar of Co-operative Societies forwarded the said request to the Co-operative Election Commission. The Bank filed W.P.(C)No.40423 of 2017 before this Court seeking a writ of mandamus commanding the Co-operative Election Commission to consider the said request, in the light of the judgment of this Court in **Porinchu v. State Co-operative Election Commission** **[2017 (1) KLT 82]** . The said writ petition was disposed of by Ext.P2 judgment dated 19.12.2017, whereby the Election Commission was directed to take an appropriate decision on the request made by the Bank, taking note of the law laid down by this Court in **Porinchu's case (supra)** . The Election Commission issued Ext.P3 order dated 27.12.2018, whereby the said request to conduct election on 28.01.2018 stands rejected. 5. The managing committee of the Bank took another W.P.(C)No.7054 of 2018 :-3-: decision to conduct election on 04.03.2018 and the same was forwarded to the Assistant Registrar for onward transmission to the Election Commission. The Assistant Registrar returned the same vide Ext.P4 order dated 03.01.2018, pointing out certain defects, as the request was to conduct election on ward basis. Accordingly, the managing committee took Ext.P5 resolution dated 06.01.2018, and the same was forwarded to the Assistant Registrar. While the matter was pending consideration before the Assistant Registrar, the Bank filed W.P.(C)No.858 of 2018 before this Court seeking a writ of mandamus commanding the Assistant Registrar to forward Ext.P5 resolution to the Election Commission, in order to conduct election on 04.03.2018, by appointing an Electoral Officer and a Returning Officer. 6. By Ext.P6 judgment dated 16.01.2018, this Court disposed of W.P.(C)No.858 of 2018 by recording the submission made by the learned Senior Government Pleader that Ext.P5 resolution dated 06.01.2018 of the managing committee of the Bank has already been forwarded to the Election Commission, by the Assistant Registrar and that, the Election Commission shall W.P.(C)No.7054 of 2018 :-4-: take necessary action on the said resolution in accordance with law. By Ext.P6 judgment, the Election Commission was directed to take appropriate decision to conduct election to the managing committee of the Bank, based on Ext.P5 resolution dated 06.01.2018, as expeditiously as possible, at any rate, within a period of two weeks from the date of receipt of a certified copy of that judgment. 7. Subsequent to Ext.P6 judgment, the Election Commission and the Assistant Registrar filed I.A.No.2569 of 2018 in W.P.(C)No.858 of 2018 seeking extension of the time limit prescribed in the said judgment for a further period of six months from 03.02.2018. In the said interlocutory application, this Court passed an order dated 26.03.2018, whereby the Election Commission was granted extension of time by three months from the date of that order, to take appropriate decision to conduct election to the managing committee of the Bank. It was also ordered that, the Bank shall take necessary steps to enable its members to remit enhanced share value. As per the said order, the entire process in this regard shall be completed by the Bank W.P.(C)No.7054 of 2018 :-5-: within one month and the steps taken by the Bank in this regard shall be monitored by the Assistant Registrar and, if found necessary, by the Joint Registrar. 8. In the order dated 26.03.2018 in I.A.No.2569 of 2018 in W.P.(C).No.858 of 2018, this Court noticed that, the Election Commission received two complaints, one dated 01.12.2017 from Sri.Renjith Rajappan and another dated 20.01.2018 from Sri.K.V. Remesan, wherein it has been complained that several members of the Bank are removed from membership, without giving them an opportunity to remit the enhanced share value; who were also not given an opportunity to represent against such illegal removal from membership. Even prior to Ext.P6 judgment dated 16.01.2018, the Election Commission, vide letter dated 28.12.2017 directed the Assistant Registrar to submit a report on the complaint dated 01.12.2017. Accordingly, the Assistant Registrar submitted a report dated 01.01.2018, wherein it has been stated that many members of the Bank have been removed from membership in gross violation of the provisions in the Act and the rules made thereunder. Many members were not allowed W.P.(C)No.7054 of 2018 :-6-: to remit the enhanced share value and for that reason, they are removed from membership without giving them an opportunity to represent, as provided under Section 17 of the Act, read with Rule 16(3) of the Kerala Co-operative Societies Rules, 1969 (for brevity, 'the Rules'). Even in the case of those members, who had approached the Bank to remit enhanced share value, the Bank did not receive the same. On 27.01.2018, the Election Commission visited the Bank and verified the authenticity of the complaints and the facts reported by the Assistant Registrar, which were found true and correct. 9. In the order dated 26.03.2018 in I.A.No.2569 of 2018 in W.P.(C).No.858 of 2018, this Court noticed further that, an enquiry under Section 66(2) of the Act was conducted in the working of the Bank, which culminated in a report dated 30.12.2017 of the Unit Inspector, Vadayar, wherein certain irregularities in the matter of enrollment of members, payment of additional share value by the existing members, etc. were noticed. The learned Senior Government Pleader has pointed out that, a copy of the report dated 30.12.2017 of the Unit Inspector W.P.(C)No.7054 of 2018 :-7-: is yet to be furnished to the Bank, as contemplated under Section 66(5) of the Act and that, no further proceedings were taken pursuant to that report, since the request made by the Bank to conduct election to its managing committee was pending consideration and that, appropriate proceedings will be initiated in due course. In the order dated 26.03.2018, this Court has also noticed that, the grievance of some of the members of the Bank, who are the petitioners in W.P.(C).No.6258 of 2018 is that, they were not permitted to pay the enhanced share value, despite their requests, and that based on resolution dated 24.06.2017, they are excluded from membership and their share value is transferred to a suspense account. They have also pointed out that, despite the stand taken by the Bank in the counter affidavit dated 06.02.2018 in I.A.No.2569 of 2018 that, if any member is interested to subscribe the balance share value amounting to ₹90/-, they will be permitted to be enrolled as members, the applications made by some of the members are turned down or kept pending with the sole intention to see that such members are prevented from exercising their voting right. W.P.(C)No.7054 of 2018 :-8-: 10. During the pendency of I.A.No.2569 of 2018 in W.P. (C).No.858 of 2018, pursuant to the order of this Court dated 20.03.2018, the President of the Bank has filed an affidavit dated 21.03.2018, wherein it has been stated that, if any member is interested to subscribe balance share value of 90/- they will also₹ be permitted to enroll as members and that, such facilities are being given sixty days prior to election. This Court noticed that, as per Rule 28(1) of the Rules, no member of a society shall be eligible to vote on the meeting fixed for the election of the managing committee of the society, unless sixty days prior to the date of such meeting he acquires the number of shares for membership as may be provided by the bye-laws of the society of which he is a member. Therefore, even if the Bank is prepared to accept additional share value from its members, who are willing to enhance their share value from 10/- to 100/- in order to have₹ ₹ voting rights, such payment will have to be made sixty days prior to the date of election. 11. Since the term of the present managing committee will expire on 07.04.2018 and since the resolution taken by the Bank, W.P.(C)No.7054 of 2018 :-9-: which has already been forwarded to the Election Commission, is one for conducting election on 04.03.2018, this Court found that, election to the managing committee of the Bank can be conducted only on the basis of a fresh resolution, after affording the members, who are willing to pay the additional share value, an opportunity to make such payment. In such circumstances, this Court by the order dated 26.03.2018 in I.A.No.2569 of 2018 in W.P.(C).No.858 of 2018 deemed it appropriate to grant extension of time by three months from that date to the Election Commission to take appropriate decision to conduct election to the managing committee of the Bank. It was also ordered that, the Bank shall take necessary steps to enable its members to remit enhanced share value and that, the entire process in this regard shall be completed within one month and that, the steps taken by the Bank in this regard shall be monitored by the Assistant Registrar and, if found necessary, by the Joint Registrar. 12. In the counter affidavit filed by the respondent it is contended that in the inspection conducted under Section 66(2) of the Act into the affairs of the Bank, it was found that the W.P.(C)No.7054 of 2018 :-10-: members of the present managing committee were acting against the provisions of the Act, the Rules and the bye-laws of the Bank, in matters such as distribution of membership, increase of 'A' class share value, appointment of staff, payment of loan, etc. The committee was also found guilty of enrolling members outside the area of operation of the Bank and there are allegations that the managing committee has illegally removed more than 4,000 members from the membership, without complying with Section 17 of the Act and Rule16(3) of the Rules, and those members are denied voting rights. Since the allegation is raised against all the members of the managing committee, if an administrative committee consisting of any three members of the present managing committee is appointed, it may adversely affect a democratic process of election. 13. Section 33 of the Act deals with appointment of a new committee or administrator on failure to constitute committee, etc. As per sub-section (1) of Section 33 of the Act, where the term of office of a committee has expired and a new committee has not been constituted, or where a no-confidence motion is W.P.(C)No.7054 of 2018 :-11-: 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 other wise 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 that a new committee cannot be constituted before the expiry of the term of office of the existing committee; or there is stalemate in the constitution or functions of the committee; 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 the application of any member of the society, after intimating the Circle Cooperative Union, appoint one administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be member of the society 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 W.P.(C)No.7054 of 2018 :-12-: 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. 14. The first proviso to sub-section (1) of Section 33 of the Act provides that, before making such order, the Registrar shall publish a notice on the notice board of the head office of the society, inviting objections to the making of the order within a period specified in the notice and consider such objections. The second proviso provides further that, it shall not be necessary to publish such notice in cases where the Registrar is satisfied that it is not reasonably practicable to do so. The third proviso provides also that, where a committee, administrator or administrators, as the case may be, is in office at the commencement of the Kerala Co-operative Societies (Amendment) Act, 1992, the Registrar may extend the term of such committee, administrator or administrators, as the case may be, for a further period not exceeding one year from the date of such commencement. 15. Therefore, the provisions under sub-section (1) of W.P.(C)No.7054 of 2018 :-13-: Section 33 of the Act envisage appointment of an administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be member of the society, 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, where the term of office of a committee of the society has expired and a new committee has not been constituted. Under sub-section (1) of Section 33 of the Act discretion has been conferred on the Registrar to appoint an administrator or an administrative committee. 16. Relying on Ext.P7 judgment of a Division Bench of this Court, the learned counsel for the petitioner would contend that the respondent Joint Registrar has to appoint an administrative committee consisting of three members of the present managing committee of the Bank. The learned counsel would contend W.P.(C)No.7054 of 2018 :-14-: further that, in case the respondent Joint Registrar finds that the members of the present managing committee cannot be appointed as members of that administrative committee, officers in the Department of Co-operation may be nominated as members of the administrative committee. 17. Per contra, relying on the judgment of another Division Bench of this Court dated 07.02.2018 in W.A.No.177 of 2018, the learned Senior Government Pleader would contend that the members of the present managing committee who were acting against the provisions of the Act, the Rules and the bye-laws of the Bank, in matters such as distribution of membership, increase of 'A' class share value, appointment of staff, payment of loan, etc. as found in the report dated 30.12.2017 of the Unit Inspector, cannot be appointed as the members of the administrative committee, as it may adversely affect a democratic process of election. 18. A reading of Ext.P7 judgment in W.A.No.1410 of 2017 relied on by the learned counsel for the petitioner would show that, in that case the Division Bench was dealing with a case in W.P.(C)No.7054 of 2018 :-15-: which election to the managing committee of the society could not be conducted on account of the fact that the amendment made to the bye-laws of that society, in order to bring it in consonance with the amended provisions under Section 13A of the Act, was pending registration before the Registrar of Co-operative Societies. In para.6 of the said judgment, the Division Bench noticed that the appointment of _ad hoc_ committee was not on account of any maladministration or misfeasance on the part of the present managing committee of that society, but only on account of the amendment of its bye-laws. Para.6 of the said decision reads thus; “6. The term of the Committee has completed. The election ought to have been conducted, but because of the pendency of the 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 _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. 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 W.P.(C)No.7054 of 2018 :-16-: 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 _ad hoc_ committee of maximum three persons, one among them as a convener, 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 should a foreigner to the Cooperative 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 nonmembers, even on an _ad hoc_ basis, unless there are good reasons to avoid the members.” (underline supplied) 19. A reading of the judgment dated 07.02.2018 in W.A.No.177 of 2018 relied on by the learned Senior Government Pleader would show that, in that case the Division Bench was dealing with a case in which the managing committee of the society was removed from office invoking the power under Section 33(1)(aa) of the Act on the ground that there is a stalemate in W.P.(C)No.7054 of 2018 :-17-: the functioning of the society. In the said case, the Joint Registrar was directed to constitute a three member administrative committee consisting of the Vice President of the society and two other members, who are not disqualified to be the members of the managing committee, since in the normal course, the term of the committee which was removed from office, would have come to an end on the next day, i.e., 08.02.2018. Para.5 of the said judgment reads thus; “5. A reading of the impugned order discloses that it is for the reason that the General Body of the Society did not approve many among the items in the Agenda that the order of removal was passed. It is also not in dispute that a criminal case has been registered against three persons, including the President of the Society, who incidentally is the first appellant/first petitioner. Having regard to the fact that the order of removal was not on any other ground, we deem it appropriate to dispose of the writ appeal with a direction to the Joint Registrar of Co-operative Societies (General), Thiruvananthapuram to constitute a three member Administrative Committee consisting of the Vice President of the Society (the second petitioner in the writ petition) and two other members who are not disqualified to be members of the managing committee of the Society. The second petitioner in the writ petition shall be the W.P.(C)No.7054 of 2018 :-18-: Convener of the committee thus constituted. The said committee shall take an appropriate decision regarding the conduct of the elections and do the needful in the matter to ensure that the elections are held at the earliest. The State Election Commission shall also do the needful in the matter to ensure that the elections are held at the earliest. We also deem it appropriate to clarify that until the elections are held and a new managing committee is constituted, the Administrative Committee constituted pursuant to this judgment shall not take major policy decisions or enroll members or make appointments and shall only attend to the day-to-day affairs of the Society.” (underline supplied) 20. Sub-section (1) of Section 33 of the Act confers wide discretion on the Registrar to appoint an administrator or an administrative committee consisting of not more than three individuals to manage the affairs of the society. The Registrar has to exercise such discretion considering the fact situation in each case. 21. In the instant case, the term of the elected managing committee will expire on 7.4.2018. In terms of the order of this Court dated dated 26.03.2018 in I.A.No.2569 of 2018 in W.P. (C).No.858 of 2018 the Election Commission has to take an W.P.(C)No.7054 of 2018 :-19-: appropriate decision to conduct election to the managing committee of the Bank within three months from the date of that order. As per the said order, the Bank has to take necessary steps to enable its members to remit enhanced share value and the entire process in this regard has to be completed within one month from the date of that order, and the steps taken by the Bank in this regard will have to be monitored by the Assistant Registrar and, if found necessary, by the Joint Registrar. In such circumstances, it is for the respondent Joint Registrar to appoint an administrative committee consisting three members, as provided under sub-section (1) of Section 33 of the Act, to manage the affairs of the Bank. The members of that administrative committee shall be either the members of the present managing committee or the members of the society against whom there are no allegations, or the officers of the Department of Co-operation nominated by the respondent Joint Registrar. 22. The respondent Joint Registrar shall take an appropriate decision in this regard on 05.4.2018, after giving an W.P.(C)No.7054 of 2018 :-20-: opportunity of being heard to the President of the Bank who shall appear in person in the office of the respondent Joint Registrar at **11.00 a.m.** on **05.04.2018** . The respondent Joint Registrar shall pass appropriate orders on 05.04.2018 itself, and a copy of the order shall be served on the President of the Society, on that day itself. Sd/- **JUDGE** **ANIL K. NARENDRAN** ami/3.4.18 //True copy// P.A.to Judge