S. Jayendrakumar and others v Joint Registrar of Co-operative Societies (General), The Assistant Registrar of Co-operative Societies (General), The Chayam Service Co-Operative Bank Ltd., and State of Kerala

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **WEDNESDAY, THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941** ## **WP(C).No. 9733 of 2019** ## **PETITIONER/S:** |**1**|**S.JAYENDRAKUMAR,**| |---|---| ||**AGED 63 YEARS**| ||**S/O.SREEDHARAN, ROHINI, KOPPAM, VITHURA P.O.,**| ||**THIRUVANANTHAPURAM DISTRICT, PIN - 695 551.**| |**2**|**N.PUSHPANGADHAN NAIR,**| ||**S/O.NARAYANA PILLAI, PRANAV MANDIRAM, MANKADU,**| ||**PARAPPA P.O., THIRUVANANTHAPURAM DISTRICT, PIN - 695**| ||**551.**| |**3**|**S.SREEDHARAN KANI,**| ||**S/O.SEETHANKAN KANI, THADATHARIKATH VEEDU,**| ||**KARINBINKALA, PACHA, PALUVALLY P.O.,**| ||**THIRUVANANTHAPURAM DISTRICT, PIN - 695 562.**| |**4**|**A.M.SALIM,**| ||**S/O.ABDUL MAJEED, SHEERA HOUSE, THOTTUMUKKU, VITHURA**| ||**P.O., THIRUVANANTHAPURAM DISTRICT, PIN - 695 551.**| ||**BY ADVS.**| ||**SRI.T.R.HARIKUMAR**| ||**SRI.ARJUN RAGHAVAN**| ## **RESPONDENT/S:** |**1**|**THE JOINT REGISTRAR OF CO-OPERATIVE**| |---|---| ||**SOCIETIES(GENERAL),**| ||**THIRUVANANTHAPURAM, PIN - 695 001.**| |**2**|**THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES**| ||**(GENERAL),**| ||**NEDUMANGAD, THIRUVANANTHAPURAM, PIN - 695 545.**| |**3**|**THE PART-TIME ADMINISTRATOR/UNIT INSPECTOR,**| ||**(CHAYAM SERVICE CO-OPERATIVE BANK LTD.NO.1514),**| ||**VITHURA UNIT, OFFICE OF THE ASSISTANT REGISTRAR OF**| ||**CO-OPERATIVE SOCIETIES (GENERAL), NEDUMANGAD,**| ||**THIRUVANANTHAPURAM, PIN - 695 545.**| **WP(C).No. 9733 of 2019** **2** **4 THE CHAYAM SERVICE CO-OPERATIVE BANK LTD.NO.1514, REPRESENTED BY ITS SECRETARY, CHETTACHAL P.O., THIRUVANANTHAPURAM, PIN- 695 551.** **5 STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, COOPERATION DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695 001.** - **6 ADDL. R6 IMPLEADED:** **V.BHARGHAVAN PILLAI S/O. LATE VISWANATHA PILLAI, 'ASWATHI', MARUTHUMOOD, CHETTACHAL P.O., VIA VITHURA, THIRUVANANTHAPURAM [IMPLEADED AS ADDITIONAL RESPONDENT NO.6 AS PER ORDER DATED 3.4.2019 IN I.A.NO.1/2019]** **BY ADV. SRI.K.B.PRADEEP** ## **OTHER PRESENT:** **SMT.C.S.SHEEJA-SR.GP, SRI. K.B.PRADEEP-ADDL.R6** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 03.04.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No. 9733 of 2019** **3** ## **JUDGMENT** ## **C.R.** The operational interplay of the provisions in the Kerala Co-operative Societies Act ('KCS Act' for short) and the Kerala Co-operative Societies Rules ('KCS Rules' for short), in the realm of disqualification and consequential cessation of office of the members of a Managing Committee of a Co-operative Society, has been put under the spotlight in the writ petition. 2. The provisions of Rule 44 of the KCS Rules are in itself a complete Code for all matters relating to the disqualification of membership to the Managing Committee of Societies registered under the KCS Act; and sub rule (1) thereof enumerates the specific disqualifications for a person for being elected or appointed as a member of the said committee. The said sub rule stipulates various types of disqualifications and mandates that when any person suffers any of them, he/she shall not be eligible for being appointed or elected as a member of the Managing Committee. After so providing, sub rule (2) of Rule 44 ordains **WP(C).No. 9733 of 2019** **4** that a member of the Managing Committee of any Society, which obviously refers to a person already in office, shall cease to hold his office if he becomes disqualified under sub rule (1). 3. Ineluctably, the sum total effect of these two provisions is that a person, who had been earlier elected validly to the Managing Committee of a Society but has subsequently suffered any of the disqualifications enumerated in Rule 44 (1) of the KCS Rules, will then cease to hold his office. However, there is a check to this declaratory provision through the mandate of sub rule 3 of Rule 44 and since this is the provision on which the contentions of all the parties are edificed, I deem it appropriate to extract it as under: 3. If any person is or becomes disqualified to be a member of the committee, the Registrar may on his won motion or on a representation made to him by any member of the society or by its Financing Bank by an order in writing declare that he shall cease to be a member of the committee of the society concerned from the date of such disqualification. Before passing an order, the Registrar shall give such person an opportunity to state his objections, if any, against the proposed action and if the person wishes to be heard he shall be given an opportunity to be heard. 4. I have begun this judgment with the afore exordium because the petitioners in this writ petition claim to be the members of the Managing Committee of the 4[th] respondent Service Co-operative Bank (hereinafter referred to as 'Society' **WP(C).No. 9733 of 2019** **5** for short), who allege that they are now being attempted to be removed from office by the Authorities under the KCS Act, in violation of Rule 44 (3) of the KCS Rules. 5. The petitioners admit that proceedings to surcharge them, under Section 68 of the KCS Act, were initiated on certain allegations, finally leading to a report being finalized by the competent Authority under Section 68 (2) of the KCS Act, a copy of which report is on record as Ext.P8. They then allege that merely for the reason that Ext.P8 report has been finalized against them, the Joint Registrar of Co-operative Societies has, without any proceedings being initiated under the above extracted provisions of Rule 44 (3) of the KCS Rules, issued Ext.P11 order, ostensibly invoking his powers under Section 33 (1) of the KCS Act, removing the entire Managing Committee and placing a Part Time Administrator to be in charge of the affairs of the Society, recording the reason for doing so as being that since the petitioners are disqualified under Rule 44(1) of the KCS Rules, the Managing Committee will obtain no quorum to function further. 6. The petitioners contend that even assuming that they have acquired any disqualification under Rule 44 (1) of the KCS **WP(C).No. 9733 of 2019** **6** Rules, on account of Ext.P8 surcharge report having been finalized against them under Section 68(2) of the KCS Act, they cannot be construed to have ceased to be in office automatically, except through the process sanctioned under Rule 44 (3) of the KCS Rules. They thus impugn Ext.P11 as having been issued by the Joint Registrar of Co-operative Societies without jurisdiction and in excess of the powers vested in him. 7. I have heard Sri. T.R. Harikumar, the learned counsel appearing for the petitioners; Sri. K.B. Pradeep, the learned counsel appearing for respondent No.6 and the learned Senior Government Pleader appearing for respondents 1 to 3 and 5. 8. Sri. T.R. Harikumar, the learned counsel for the petitioners, commenced his submissions in tune with the afore indited factual pleadings available on record, reiterating that, even if it is conceded that his clients have acquired any disqualification under Rule 44 (1) of the KCS Rules, they cannot be removed from office unless the Registrar of Co-operative Societies initiates and completes proceedings as per the mandate of Rule 44 (3) of the KCS Rules. Sri. Harikumar reads Rule 44 (3) afore extracted to argue that, as is clear from the way it is worded, when a person becomes disqualified to be a **WP(C).No. 9733 of 2019** **7** member of a Managing Committee, the Registrar may, either on his own motion or in the other modes enumerated therein, issue an order in writing declaring that the said person has ceased to be a member of the said Committee. Sri. Harikumar thus vehemently contends that it is only thereafter will there arise a vacancy in the membership of the Managing Committee and therefore, that the allegation of lack of quorum is irrelevant and impossible until the members of the Committee are removed in such a fashion by the Registrar through the mandatory process under Rule 44 (3). 9. After asserting as above on the legal position, Sri. T.R. Harikumar, pointing to the facts of the present case, submits that, even though admittedly, there is an order under Section 68(2) of the KCS Act, surcharging the petitioners, no proceedings were thereafter initiated by the Registrar under Rule 44(3) of the KCS Rules, leading to the declaration that they have ceased to be in office; and therefore, that the statement in Ext.P11 order that there obtains no quorum for the Managing Committee to function is not legally tenable. He predicates that until and unless the petitioners are removed as per the procedure under Rule 44 (3), there can be no lack of quorum in **WP(C).No. 9733 of 2019** **8** the Managing Committee and resultantly, that Ext.P11, which has been issued under Section 33 (1) of the KCS Act, cannot be allowed to operate any further. 10. In answer to the various submissions of Sri. T.R. Harikumar as afore, Smt. C.S.Sheeja, the learned Senior Government Pleader, submits that the petitioners cannot be heard to impugn Ext.P11 because, concededly, they now face disqualification under Rule 44 (1) of the KCS Rules. She says that as long as Ext.P8 report and the surcharge order under Section 68 (2) of the KCS Act remain, it is indubitable that the petitioners are disqualified from continuing as members of the Managing Committee and she seeks support for this submission from the provisions of Rule 44 (2) of KCS Rules. She argues that, as is luculent from the said Rule, any member of a Managing Committee will cease to hold office as soon as he/she is disqualified under Rule 44 (1). She, therefore, asserts that it is inescapable that the petitioners, having been admittedly disqualified under Rule 44 (1), on account of the surcharge order against them, have ceased to be in office automatically and that no further orders are required from the Registrar to declare so. She thus supports Ext.P11 order and pleads that the said order **WP(C).No. 9733 of 2019** **9** be left undisturbed by this court. 11. Sri. K.B Pradeep, the learned counsel appearing on behalf of the additional 6[th] respondent, affirms all the afore submissions of Smt. C.S. Sheeja, the learned Senior Government Pleader, and adds that the provisions of Rule 44 (3) afore extracted, cannot be used by the petitioners to hang on to office even after they have concededly acquired the disqualification under Rule 44 (1). According to him, Rule 44 (3) is only a formal declaration of the disqualification of a member; while the mandate of Rule 44 (2) is that such disqualification happens automatically on the member suffering any of the enumerated disabilities under Rule 44 (1). In its crux, therefore, the submission of Sri. Pradeep is that the petitioners, who have admittedly acquired a disqualification under 44 (1), cannot be allowed to continue in office and that, adverting to the unequivocal declaration in Rule 44 (2), this court should hold that they have automatically ceased to be in office even without an order under Rule 44(3), because according to him, such an order is required to be issued by the Registrar of Co-operative Societies only if a disqualified person obstinately refuses to vacate office. **WP(C).No. 9733 of 2019** **10** 12. I have considered the submissions of the various learned counsel as afore very intently and I am certainly of the view that a proper reconciliation of the stipulations in Rules 44 (1), 44(2) and 44 (3) of the KCS Rules will require to be obtained before the factual issues in this case can be affirmatively concluded upon. 13. As has been indicated above, Rule 44 (1) lists the disqualifications for a person for being elected or appointed as a member of the Managing Committee of a Society and therefore, it is inescapable that these disqualifications are of the perelection/pre-appointment stage. There is also no doubt that a surcharge order, under Section 68 of the KCS Act, is a disqualification under Rule 44(1)(l) and it means, therefore, that if a person has already been surcharged, he cannot contest the election or aspire to be nominated to the Managing Committee of a Society. That said, Section 44 (2) operates against a person, who had been earlier validly elected as a member of the Managing Committee, but who subsequently suffers one or more of the disqualifications enumerated under Rule 44 (1); and it then provides that such a member shall then cease to hold his office. There, therefore, can be no doubt that in the event of a **WP(C).No. 9733 of 2019** **==> picture [15 x 8] intentionally omitted <==** surcharge order being issued, a member of the Managing Committee of a Society certainly acquires disqualification to continue as such; but the pivotal question is whether this will automatically lead to cessation of office by the said member and whether it would amount to a vacancy in the membership of the Managing Committee, thus leading to a resultant loss of quorum. 14. It is here, that the real issue has its genesis. 15. The answer to the afore query will depend upon the manner in which this Court is able to reconcile the provisions of Rules 44 (2) and 44 (3) of the KCS Rules. If I am to hold that a person, on acquiring disqualification under Section 44 (1), would automatically cease to be in office, then the provisions of Rule 44 (3) would virtually become redundant. I say so because, if a person is construed to have ceased to be in office automatically on account of Rule 44 (2), it would be superfluous for the Registrar then to again declare him to have ceased to be a member of the Managing Committee suo motu or on the application of a member of the Society or the financing bank, under Rule 44(3) of the KCS Rules. Obviously, therefore, the framers of the Rule intended very clearly that in the event of a disqualification being suffered by a member of a Managing **WP(C).No. 9733 of 2019** **12** Committee under Rule 44 (1), the statutory consequence is that he/she will cease to hold office; but such consequence will gain effect only through the procedural mechanism as postulated under Rule 44 (3). This becomes incontestable since Rule 44 (3) firmly provides that a member, against whom action thereunder is proposed, should be given a notice of hearing by the Registrar before he/she is declared to have ceased to be a member of the Managing Committee, thus making the forensic position absolutely limpid that until and unless a member is actually removed through the process under 44 (3), he/she will continue to be a member of the Managing Committee, though he/she has legally suffered disqualification under Rules 44(1) and 44(2). This view has already obtained the imprimatur of a Division Bench of this Court in **Rajagopalan v. Baby Alex [1994 (2) KLT 974]** , which has, in paragraph 5, stated succinctly as under: 5. “Even otherwise, an order of disqualification of a sitting member of the managing committee can be passed only in the manner provided by sub-rule-(3) of R.44, which provides that if any person is or becomes disqualified to be a member of the managing committee, the Registrar may, on his own motion, or on a representation made to him by any member of the society, or by its financing bank, by an order in writing declare that he shall cease to be a member of the committee of the society concerned from the date of such disqualification. Such an order can be passed only after giving the person affected an opportunity to state his **WP(C).No. 9733 of 2019** **13** objections to the proposed action and of being heard, if he so wished. A declaration after following the procedure prescribed by sub-rule (3) is required for the person ceasing to be a member of the managing committee. Such a declaration is imperative and till such declaration is made, the person shall continue to be a member of the committee. There is no dispute that such rule (3) applies to the case on hand in which case the appellant, is a duly elected member of the managing committee, could cease to be a member only by the Registrar passing an order to that effect. Therefore and till the Joint Registrar passes order on Ext.P10 disqualifying the appellant from membership of the managing committee, he continues to a member of the committee entitled to take part in its deliberation and to vote at the meetings.” 16. Viewed from the afore perspective, there are three distinct concepts involved in the interplay of the statutory provisions. The first is the disqualification suffered under Rule 44(1); the second, the consequential loss of legal competence to continue as a member of the Managing Committee of a Society under Rule 44(2); and the third, being declared to have ceased as a member of the Managing Committee of the Society by the Registrar of Co-operative Societies under Rule 44(3). 17. In fact, these issues, though not in the same context, have also been considered by a learned Judge of this court in **Abdulla Haji A. v. Joint Registrar of Co-operative Societies (G), Kannur and Anr [2009 KHC 666]** , wherein the reasons for the requirement of a pre-decisional hearing, before a member of a Managing Committee is declared to have ceased to be in Office have been stated in paragraph 6 thereof, which reads as **WP(C).No. 9733 of 2019** **14** ## under: 6. R.16 and 44 contain the statutory mandate that no order declaring disqualification or cessation of membership is to be issued without, a prior opportunity to state objections and, if sought for, an opportunity of hearing. Those pieces of subordinate legislation would not give way for any rule of wisdom not amounting to any superior statute law, which may be primary legislation under which those rules are framed, or may be, an overriding legislation and, of course, a constitutional provision. The dictate of the subordinate legislation in hand is that even a person under the cover of a surcharge order has to be heard before an order declaring his disqualification is issued on the ground of being one who is surcharged. The legislative wisdom in the rules under construction may be that, by the time an action for disqualification is taken with reference to a surcharge, the person proceeded against would have purged himself of the consequence of the surcharge or would have got an order from a superior authority in his favour. Whatever be the reason, the rules under consideration do not permit any exclusion of the opportunity to show cause and of hearing, if sought for, if the contrary has to be assumed; as a corollary, this Court would be rendering those rules otiose in cases where declaration as to disqualification and cessation is proposed on the ground of surcharge. This is just impermissible. 18. Assessed from such standpoint, it is only if a member is removed from the Managing Committee through the procedure under Rule 44 (3) of the KCS Rules, can there be a vacancy in the said Committee, leading to other consequences including loss of quorum. This is irrefutable because, as long as a member continues in the Managing Committee, the provisions of Section 33 (1) of the Act cannot be invoked citing loss of quorum, **WP(C).No. 9733 of 2019** **15** 19. Applying the afore statutory fabric on the specific facts of this case, makes it evident that the petitioners are, as of now, disqualified under Rule 44 (1) of the KCS Rules, because they have been surcharged under Section 68 of the KCS Act. However, in Ext.P11 order, the Joint Registrar of Co-operative Societies has presumed that there is an automatic cessation of membership of the petitioners in the Managing Committee and has then entered into a conclusion that consequently, the said Committee has lost the quorum to conduct its affairs. He, therefore, issued Ext.P11, invoking Section 33 (1) of the KCSAct, appointing a Part - Time Administrator to be in charge of the Society. 20. I am afraid, from the co-action of the afore discussed provisions of Rule 44 of the KCS Rules, Ext.P11 cannot find my favour because the petitioners, who are concededly the elected members of the Managing Committee of the Society, have not yet been removed from its membership, through the process under Rule 44 (3), by the Registrar of Co-operative Societies; and axiomatically, unless that happens, the provisions of Section 33 (1) of the KCS Act cannot be invoked, because no one has a case that even if the petitioners are not removed from the **WP(C).No. 9733 of 2019** **16** membership of the Managing Committee of the Society, it will still not obtain the necessary quorum. 21. The declaration of law being thus made, the corollary consideration for me is as to the nature of the consequential directions, buttressing it on the imperative judicial requirements. I say this because, even though the petitioners admit that they have been surcharged under Section 68 of the KCS Act and are thus now suffering disqualification under Rules 44 (1) and 44 (2) of the KCS Rules, they assert that they have already invoked their appellate remedy against the surcharge proceedings and that the same is still pending before the competent Authority. I am also cognizant of the contention of Sri. T.R. Harikumar that therefore, unless and until the appellate proceedings are completed, his clients cannot be construed to be finally disqualified to hold office and resultantly, that they should be allowed to continue, particularly since, even as per the above rendered view of this Court, they have yet not been declared to have ceased their membership in the Managing Committee. 22. I am afraid that I cannot countenance this, singularly because the allegations against the petitioners are serious and grave in nature, without in any manner saying that it has become **WP(C).No. 9733 of 2019** **17** final, since an appeal against it is still pending; but it will not be prudent for this court to disturb the present status quo at this time, since a Part-Time Administrator has, admittedly, taken office consequent to Ext.P11 order. That said, however, I cannot allow the Part-Time Administrator to be in office forever, unless the procedure under Rule 44 (3) of the KCS Rules is properly complied with. 23. To obtain a balance between these dialectical necessities, I am of the view that the Part-Time Administrator should continue to be in charge of the affairs of the Society, but under the orders of this Court for a period not more than one month from the date of receipt of a copy of this judgment, so that the Registrar of Co-operative Societies can issue necessary notice under Rule 44 (3) of the KCS Rules to the petitioners and complete the proceedings there-under, after affording them reasonable opportunity of being heard. Once the Registrar of Cooperative Societies thus takes a decision as to if the petitioners have ceased to be in office or otherwise; and in the event his decision is that they have so ceased, then the competent Joint Registrar of Co-operative Societies will forthwith decide the manner in which the Society will be further administered, either **WP(C).No. 9733 of 2019** **==> picture [15 x 9] intentionally omitted <==** through the Part-Time Administrator or through an Administrative Committee comprising of the former members of the Managing Committee who have faced no disqualification under Rule 44 (1). I, however, clarify that since the materials on record indicate that except the petitioners, the other former members of the Managing Committee suffer no disqualification under Rule 44(1), the Joint Registrar will consider the appointment of an Administrative Committee, comprised of such members to take charge of the Society, specifically before deciding to allow the Part-Time Administrator to continue. 24. It goes without saying that if, on the contrary, the Registrar of Co-operative Societies finds that the petitioners have not ceased to be the members of the Managing Committee of the Society, then the necessary orders reinstating the said Committee in Office, after removing the Part Time Administrator, shall be issued by the competent Authority forthwith thereafter. Needless to say, the petitioners will be at liberty to place all their contentions as also the documents and materials in their possession, including any orders to be obtained by them from the Appellate Authority in the appeal filed against the surcharge proceedings; and that the Registrar of Co-operative Societies will **WP(C).No. 9733 of 2019** **19** consider all such inputs, while completing the proceedings under Rule 44 (3) of the KCS Rules. This writ petition is thus ordered. **Sd/-** **DEVAN RAMACHANDRAN** shg **JUDGE** **WP(C).No. 9733 of 2019** **20** ## **APPENDIX** ## **PETITIONERS'/S EXHIBITS:** **EXHIBIT P1 A TRUE COPY OF ORDER NO.V773/2016 DATED 27/02/2017 OF THE 2ND RESPONDENT. EXHIBIT P2 A TRUE COPY OF ORDER NO.CRP(2)3808/16 DATED 17/10/2017 ISSUED BY THE 1ST RESPONDENT. EXHIBIT P3 A TRUE COPY OF NOTICE NO.V 601/18 DATED 05/04/2018 ISSUED BY THE 2ND RESPONDENT.** - **EXHIBIT P4 A TRUE COPY OF THE INTERIM ORDER DATED 13/04/2018 IN WP(C) NO.13735 OF 2018.** **EXHIBIT P5 A TRUE COPY OF THE NOTICE NO.CRP(2)3808/16 DATED 23/09/2018 ISSUED BY THE 1ST RESPONDENT.** **EXHIBIT P6 A TRUE COPY OF THE EXPLANATION SUBMITTED BY THE PETITIONERS BEFORE THE 2ND RESPONDENT DATED 10/10/2018.** - **EXHIBIT P7 A TRUE COPY OF THE JUDGMENT DATED 22/01/2019 IN W.A.NO.114 OF 2019 AND CONNECTED CASES.** - **EXHIBIT P8 A TRUE COPY OF THE ORDER NO.C.R.P. (2)3808/16 DATED 25/02/2019 ISSUED BY THE 1ST RESPONDENT.** **EXHIBIT P9 A TRUE COPY OF THE APPEAL AND STAY PETITION FILED BEFORE THE 5TH RESPONDENT DATED 20/03/2019.** **EXHIBIT P10 A TRUE COPY OF THE RECEIPT DATED 20/03/2019 ISSUED BY THE 5TH RESPONDENT SHOWING THE ACCEPTANCE OF EXT.P9 APPEAL.** **EXHIBIT P11 A TRUE COPY OF THE ORDER NO.CRP(2)2473/19 DATED 19/03/2019 ISSUED BY THE 1ST RESPONDENT.**