Siddhikul Akbar and others v. Joint Registrar of Co-operative Societies (General), Ernakulam and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE** ## **WEDNESDAY, THE 17TH DAY OF JULY 2013/26TH ASHADHA, 1935** ## **WP(C).No. 9752 of 2013 (T)** ## **---------------------------** **PETITIONER(S): -----------------------** **1. SIDDHIKUL AKBAR, PRESIDENT, BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO. 292, KUTTILANJI, ERNAKULAM DISTRICT.** ## **2. SAJI JOSEPH, MEMBER,** **BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292, KUTTILANJI, ERNAKULAM DISTRICT.** **3. K. P. MOHAMMED, MEMBER, BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO. 292, KUTTILANJI, ERNAKULAM DISTRICT.** **4. P. M. ABDUL SALAM, MEMBER, BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292, KUTTILANJI, ERNAKULAM DISTRICT.** ## **5. C. A. MAKKAR, MEMBER,** - **BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292 , KUTTILANJI, ERNAKULAM DISTRICT.** **6. ASHA SATHYAN, MEMBER, BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292, KUTTILANJI, ERNAKULAM DISTRICT.** **..2/-** **Kss** **..2...** ## **WPC.NO.9752/2013 (T)** **7. K. K.JAYAKUMAR, MEMBER, BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292,KUTTILANJI,** **ERNAKULAM DISTRICT.** ## **8. RAJAPPAN K.M., MEMBER,** - **BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292, KUTTILANJI,** - **ERNAKULAM DISTRICT.** **BY SRI.K.RAMAKUMAR,SENIOR ADVOCATE BY ADVS.SRI.S.M.PRASANTH SMT.SMITHA GEORGE** **RESPONDENT(S): ---------------------------** **1. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)ERNAKULAM, ERNAKULAM DISTRICT CO-OPERATIVE BANK BUILDING, ERNAKULAM, KOCHI-682 016.** **2. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES, KOTHAMANGALAM, ERNAKULAM DISTRICT-686 691.** **3. THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO 292, REP BY ITS SECRETARY, KUTTILANJI, ERNAKULAM DISTRICT -686 691.** ## **4. SRI. K. E. HASSAN, MEMBER,** - **BOARD OF DIRECTORS OF THE KUTTILANJI SERVICE CO-OPERATIVE BANK LTD NO. 292 , KUTTILANJI, ERNAKULAM DISTRICT, RESIDING KAMBATHU VEEDU, CHERUVATTOOR , PIN-686 691, ERNAKULAM DISTRICT.** **5. SRI K. M. MOHAMMED, KOCHUKUDIYIL HOUSE, NELLIKKUKZHI P O, KOTHAMANGALAM-686 691.** ## **6. SRI P. G. ANIMON,** ## **THAZTHEVEETTIL, CHERUVATTOOR P O, KOTHAMANGALAM-686 692.** **7. SRI M. A. KAREEM, MANIYATTUKUDI, NELLIKKUZHI P O, KOTHAMANGALAM-686 691.** **R1 & R2 BY GOVERNMENT PLEADER SRI.D.SOMASUNDARAM R3 BY ADVS. SRI.M.M.MONAYE** **SRI.M.PAUL VARGHESE** **SRI.DESI MATTHAI R5 BY ADV. SRI.GEORGE POONTHOTTAM** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14/06/2013, THE COURT ON 17/07/2013 DELIVERED THE FOLLOWING:** **Kss** ## **WP(C).No. 9752 of 2013 (T) ------------------------------------------** ## **APPENDIX** **PETITIONER(S)' EXHIBITS: -------------------------------------** **EXT.P1:-TRUE COPY OF THE CIRCULAR NO.18/91 DTD 7/6/1991.** **EXT.P2:-TRUE COPY OF THE ORDER OF THE IST RESPONDENT DTD 25/5/2012.** **EXT.P3:-TRUE COPY OF THE NOTICE DTD 25.5.2012 OF THE IST RESPONDENT.** **EXT.P4:-TRUE COPY OF THE MINUTES OF THE MEETING(PAGES 227 TO 229) HELD ON 11/5/2012.** **EXT.P5:-TRUE COPY OF THE EXPLANATION DTD 1/6/2012 SUBMITTED BY THE PETITIONERS.** **EXT.P6:-TRUE COPY OF THE ADDITIONAL EXPLANATION DTD 15/6/2012 SUBMITTED BY THE PETITIONERS.** **EXT.P7:-TRUE COPY OF THE ORDER DTD 6/6/2012 OF THE IST RESPONDENT.** **EXT.P8:-TRUE COPY OF THE JUDGMENT DTD 11/6/2012 IN WPC NO. 13386/ 2012.** **EXT.P9:-TRUE COPY OF THE ORDER NO. CRP (1)10151/2010 DTD 27/7/2012 ISSUED BY R1.** **EXT.P10:-TRUE COPY OF THE JUDGEMENT DTD 23/3/2013 IN WPC 18016 OF 2012.** **EXT.P11:-TRUE COPY OF THE MINUTES OF THE MEETING OF THE MANAGING COMMITTEE HELD ON 4/4/2012.** **EXT.P12:-TRUE COPY OF THE NOTICE DTD 4/4/2013 PUT IN THE NOTICE BOARD REGARDING ELECTIONS.** **EXT.P13:-TRUE COPY OF THE RESOLUTION PASSED BY THE MANAGING COMMITTEE OF THE 3RD RESPONDENT SOCIETY REGARDING CONDUCT OF ELECTIONS.** **EXT.P14:-TRUE COPY OF THE ORDER DTD 3/4/2013 ISSUED BY R1.** ## **RESPONDENT(S)' EXHIBITS:** **------------------------------------------** **R1(A): COPY OF THE OPINION OF THE FINANCING BANK DTD. 6/04/2013.** **R3(A): COPY OF THE RECEIPT DTD. 5/04/2013 ISSUED BY INSPECTOR OF POLICE, KOTHAMANGALAM.** **/TRUE COPY/** **P.A.TO JUDGE** **Kss** ## **A.M.SHAFFIQUE, J** *** * * * * * * * * * * * *** W.P.C.No.9752 of 2013 ---------------------------------------Dated this the 17[th] day of July 2013 ## **J U D G M E N T** The petitioner challenges Ext.P14 order passed by the Joint Registrar (General) exercising the power under Section 32 (1) of the Co-operative Societies Act 1969 (hereinafter referred to as the Act). In an earlier round of litigation when the petitioner challenged an order passed by the Joint Registrar superseding the Managing Committee by exercising similar powers as per order dated 27/07/2012 produced as Ext.P9, this Court had occasion to consider the factual situation involved in the matter and by judgment dated 23/03/2013 this Court had quashed the said impugned order dated 27/07/2012 without prejudice to the right of Registrar to take appropriate action following the prescribed procedure. Though several contentions were urged in W.P.C No.18016 of 2012 challenging Ext.P9 this Court observed that in regard to the findings of fact by the first respondent W.P.C..No.9752/2013 2 this Court cannot interfere and the allegation of bias was also found against the petitioners. However, this Court found that the impugned order was bad for non-compliance of Section 32(2) of the Act and hence the impugned order was quashed. 2. Pursuant to the above judgment which is produced as Ext.P10, the first respondent passed Ext.P14 order after complying with the provisions of Section 32(2) of the Act which is under challenge. The main contention urged by the petitioner is that though Section 32(2) requires the Registrar to consult the financing bank and the Circle Co-operative union or the State Co-operative Union before passing an order under Section 32(2) of the Act, it is stated in the impugned order that consultation was made with the Kuttilanji Circle Co-operative Union and the Financing Bank and recommendation was given by the Circle Co-operative Union. There is no consultation as envisaged under Section 32(2) of the Act. It is contended that the consultation ought W.P.C..No.9752/2013 3 to be meaningful and purposeful after reference to the relevant facts involved in the matter and there has to be some discussion on merits on such consultation which is lacking in the case on hand. Reference is also made to judgment of the Supreme Court in **State of Gujarat and Another v. Justice R.A.Mehta (Retd.)** [( _2013) 3 SCC 1]_ and **Justice Chandrashekaraiah Janekere C. Krishna and Others** [( _2013) 3 SCC 117]_ , for the proposition that when a statute prescribes a consultation to give effect to the provisions of the statute, such consultation should be meaningful and after considering the entire matters including the opinion expressed during consultation, all materials received from the consultee should be verified, discussed and then only after complying with such procedure, the authority concerned can act in terms of the Statute. 3. Reference is made to paragraphs 137 and 138 of **Chandrashekaraiah** (Supra) which reads as under: W.P.C..No.9752/2013 4 _**137.** How is this “consultation” to take place? There are absolutely no “consultation” guidelines laid down in the Act. But the high Court seems to endorse the view that consultation ought to take place across a table or through correspondence. It was also suggested by the learned counsel for the State that it would be more appropriate that all constitutional authorities have a meeting where the suitability of the person recommended for appointment may be discussed._ _**138.** I do not think it necessary to circumscribe the manner of consultation. The Chief Minister may consult the other constitutional authorities collectively or in groups or even individually - this hardly matters as long as there is meaningful and effective consultation. Similarly, I do not think it necessary to restrict the mode of consultation. It may be in a meeting or through correspondence. Today, with available technology, consultation may even be through a video link. The form of consultation or the venue of consultation is not important - what is important is the substance of the consultation. The matter has to be looked at pragmatically and_ W.P.C..No.9752/2013 5 _not semantically. It is important, as held by the High Court, that no constitutional authority is kept in the dark about the name of any candidate under consideration and each constitutional authority mentioned in Section 3(2)(b) of the Act must know the recommendation made by one another for appointment as an Upa-Lokayukta. In addition, they must have before them (as Fazal Ali, J. concluded in S.P.Gupta) full and identical facts. As long as these basic requirements are met, “consultation” could be said to have taken place.”_ 4. Counter affidavit is filed by the 1[st] respondent supporting the stand taken by them in Ext.P14 order. 5. The short question involved in the present writ petition is whether there is proper consultation in terms of section 32(2) of the Act. 6. It is pointed out by the learned senior counsel for the petitioner that the only document produced to show consultation is Ext.R1(a) which is the letter issued by the Ernakulam District Co-operative Bank stating that, being a W.P.C..No.9752/2013 6 financing bank there are no separate views with reference to the letter received by the bank from the Joint Registrar (General). In Ext.R1(a) reference is made to letter dated 27/03/2013. It is argued that the impugned order is passed on 03/04/2013 whereas the letter from the Ernakulam District Co-operative Bank is dated 06/04/2013. It is also submitted that in the absence of receiving the reply from the financing bank the 1[st] respondent should not have proceeded further. That apart it is argued that there is no such intimation from the Circle Co-operative Union. During the course of argument this Court had requested the learned Special Government Pleader appearing on behalf of the 1[st] respondent to place the files relating to the impugned order before this Court. On a perusal of the files relating to the impugned order it could be seen that a notice dated 27/03/2013 had been prepared and sent to the Circle Cooperative Union as well as the Ernakulam District Cooperative Bank indicating the details of the allegations W.P.C..No.9752/2013 7 against the members of the Managing Committee in terms of Section 32(1) of the Act. The concerned Co-operative Union as well as the District Co-operative Bank were asked to give a reply within seven days. A letter dated 03/04/2013 issued by the Circle co-operative union Kothamangalm is available in the file forwarding their decision in respect of the request made in terms of letter dated 27/3/2013. It is stated that they have decided to approve the decision taken in terms with Section 32(1) of the Act against the Managing Committee and two persons had expressed their dissent. 7. On this basis it is argued that there was proper consultation and both the organisations had agreed to such action being taken in this regard. In regard to the reply from the District Co-operative Bank it is submitted that when a request is made for consultation on 27/03/2013 a week's time was granted and there is no mandate that the Registrar should wait till a reply is received and hence the impugned order was passed on 03/04/2013. W.P.C..No.9752/2013 8 8. The learned counsel for the petitioner also relied upon the judgment of the Supreme Court in **State of M.P v. Sanjay Nagayach** _[2013(2) KLT 733 (SC)]_ and a Division Bench judgment of this Court in **State of Kerala v. Urukunnu Service Co-operative Bank** _[2013(2) KLT 74]._ 9. In **Sanjay Nagayach** (Supra) the Supreme Court was considering an almost similar position wherein the Supreme Court held as under: _“The Registrar/Joint Registrar after complying with all the formalities including consultation with financing banks/Controlling Banks etc. Only after getting their view, an opinion be formed as to whether an elected Committee be ousted or not.”_ In that case, Sub Section (1) of Section 53 required the Registrar to consult the Madhya Pradesh State Co-operative Bank Ltd or the financing bank and was entitled to take action if there was failure to communicate its views within 30 days from the date from which the request was made soliciting consultation. There was also a provision in the W.P.C..No.9752/2013 9 form of a proviso under Section 53(1) which required that the order of supersession shall not be passed without previous consultation with the Reserve Bank of India. Another proviso indicated that if the communication containing the views of the RBI is not received within 30 days it shall be presumed that the RBI agreed with the said views. It is held that when the outcome of the proposed action is to oust a democratic elected body and the expression used is “shall not be passed without previous consultation” the provision is to be construed as mandatory. That was a case in which though a copy of the show cause notice was sent to the Reserve Bank of India the action proposed to be taken was not communicated and the Reserve Bank of India wrote to the Joint Registrar to inform the outcome of the reply submitted by the Bank to the show cause notice. The Reserve Bank of India wanted to get sufficient particulars which were not forwarded by the Joint Registrar and it took several years to pass the order of W.P.C..No.9752/2013 10 supersession. Such a factual situation is not available in this case. The provisions available under the Act stands on a different footing. As per Section 32(2) consultation with the financing bank and the Circle Co-operative Union or the State Co-operative Union is mandatory in view of the use of the words “the Registrar shall consult”. In the case on hand there was consultation, but the question is whether there was a meaningful consultation. No time limit is specified in the Act or in the Rules framed thereunder to complete the process of consultation. Therefore it is open for the Registrar/Joint Registrar to call upon the consultees to provide their opinion within a time stipulated by the Registrar/Joint Registrar. 10. As I find from the records the consultees were required to give a reply within 7 days. No doubt when consultation process is mentioned it should not be a mere formality. The consultees should have to apply their mind and take a decision and their opinion should be forwarded to W.P.C..No.9752/2013 11 the Registrar/Joint Registrar. It is true that in the case on hand the opinion of the District Co-operative Bank was not available at the relevant point of time whereas it can be seen that the particulars had been sent to the consultees on 27/03/2013 requesting for their opinion within seven days. On the 7[th] day the impugned order is passed. In **Urukunnu Service Co-operative Bank Ltd.** (Supra) reference is made to paragraph 13 of the judgment. It is held that it is mandatory for the Joint Registrar to state in his order the opinion of the financing bank on the proposal to supersede the managing committee under Section 32. 11. Having regard to the factual circumstances involved in the matter and the legal position now argued the the question to be considered is regarding the nature of consultation required in the matter. Consultation process has to be considered in the light of the nature of consultation required keeping in mind the provisions of the Act. It is not in dispute that the power that could be W.P.C..No.9752/2013 12 exercised by the Registrar/Joint Registrar under Section 32 for removing an elected body should be based on sufficient materials when the Registrar is of the opinion that the committee of any society has either persistently made default or is negligent in the performance which is imposed by the Act, Rules or bye laws or does anything prejudicial to the interest of the society or wilfully disobeys or fails to comply with any lawful order or direction issued under the Act or makes any payment contrary to the Act or misappropriation or destroys the records etc. Such a decision can be taken only after issuing notice to the persons in charge. However there is a provision for dispensing with such notice only under certain circumstances where it is not reasonably practical to do so. There are different procedures under the Act for conducting an enquiry into various allegations raised against the members of the managing committee in terms of Section 65, 66 and surcharge proceedings in terms of Section 68 etc. In W.P.C..No.9752/2013 13 an instance where the proceedings under Section 32 has been taken after a preliminary enquiry in terms of Section 65 or 66 and thereafter action is initiated after complying with the procedure under Section 32(1), the consultation required from the Circle Co-operative Union and the financing bank is to find out whether they have any objection to the proposed action. They might object to such supersession on account of various contingencies and if there is such an objection, necessarily such objection have to be considered by the Registrar before passing an order of supersession. There is no mandate that the Registrar is bound by the opinion expressed by the Circle Co-operative Union or the financing bank but definitely their opinion shall weigh for the purpose of coming to a conclusion as to whether an order of supersession is to be passed. The judgments in **Justice R.A Mehta's case** (supra) and **Justice Chandra Sekharayya's case** (supra)are with reference to consultation on a different context and while W.P.C..No.9752/2013 14 considering the question of appointment of Lok Ayuktha and the nature of consultation that is required with the Chief Justice of the High Court. Every statute may provide for a consultation process with another authority and the nature of consultation which is required to be made depends upon the nature of statute involved. In the case on hand, Section 32(2) provides for consultation with the Central Co-operative Union and financing bank. No separate time limit is specified other than stating that the Registrar shall consult such institutions before proceeding further it does not state the manner in which the said consultation has to be made. 12. This is a case in which proceedings under Section 32(1) has been taken after conducting a preliminary enquiry by the Assistant Registrar (General). When an order of supersession was passed on 06/06/2012 after issuing a show cause notice dated 25/05/2012, the same was challenged and this court by setting aside the order of supersession directed the respondent to pass orders after W.P.C..No.9752/2013 15 giving sufficient opportunity to give explanation which resulted in Ext.P9 order which was again set aside as per Ext.P10 judgment and thereafter the impugned order is passed. Having regard to the aforesaid factual situations and the fact that the consultees had replied to the process of consultation issued by the Registrar, I am of the view that there is substantial compliance of Sec.32(2) of the Act and therefore the petitioners are not entitled to invoke the jurisdiction of this Court to challenge Ext.P14. In the result, the writ petition is dismissed. (sd/-) ## **(A.M.SHAFFIQUE, JUDGE)** jsr W.P.C..No.9752/2013 16 W.P.C..No.9752/2013 17