The Board of Directors of the Kerala State Co-operative Rubber Marketing Federation Limited v. The Secretary to Government, Department of Co-operation, Government of Kerala; The Registrar of Co-operative Societies, Thiruvananthapuram; The Joint Registrar of Co-operative Societies, Ernakulam; The Kerala State Co-operative Rubber Marketing Federation Limited, Gandhi Nagar Ernakulam, Kochi-20 represented by its Managing Director; The Thrissur District Co-operative Rubber Marketing Society, Thrissur District represented by its President, K. C. Joseph Master; Addl. R5 & R6 impleaded

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.N.RAVINDRAN** ## **MONDAY, THE 21ST DAY OF MAY 2012/31ST VAISAKHA 1934** ## **WP(C).No. 23929 of 2011 (M) -----------------------------------** ## **PETITIONER(S): --------------------** **THE BOARD OF DIRECTORS OF THE KERALA STATE CO-OPERATIVE RUBBER MARKETING FEDERATION LIMITED,GANDHI NAGAR,ERNAKULAM KOCHI -20 REPRESENTED BY ITS PRESIDENT T.H.MUSTHAFFA.** **BY ADVS.SRI.K.RAMAKUMAR (SR.) SRI.T.RAMPRASAD UNNI SMT.SMITHA GEORGE** ## **RESPONDENT(S): ---------------------** **1. THE SECRETARY TO GOVERNMENT,DEPARTMENT OF CO-OPERATION,GOVERNMENT OF KERALA THIRUVANANTHAPURAM 695 001.** **2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM,PIN 695 001.** **3. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,ERNAKULAM 682 016.** **4. THE KERALA STATE CO-OPERATIVE RUBBER MARKETING FEDERATION LIMITED,GANDHI NAGAR ERNAKULAM,KOCHI-20,REPRESENTED BY ITS MANAGING DIRECTOR.** - **ADDL. R5 & R5 IMPLEADED** **5. THE THRISSUR DISTRICT CO-OPERATIVE RUBBER MARKETING SOCIETY, REG. MP/285, AMBAKKADAN KINAR JUNCTION, THRISSU DISTRICT, REP. BY ITS PRESIDENT, K. C. JOSEPH MASTER.** **Svs** **........2/-...** **: 2 :** ## **WPC. NO.23919/2011** **6. K. C. JOSEPH MASTER, AGED 69, S/O. LATE CHACKO, PRESIDENT, THRISSUR DISTRICT CO-OPERATIVE RUBBER MARKETING SOCIETY, REG. NO.285, AMBAKKADAN KINAR JUNCTION, THRISSUR DISTRICT.** - **ADDL. R5 & R6 ARE IMPLEADED AS PER ORDER DATED 19/12/2011 IN I.A. NO.14948/2011.** **R1 TO R3 BY SPL. GOVT. PLEADER SRI. D. SOMASUNDARAM R5 & R6 BY ADV. SRI.S.P.ARAVINDAKSHAN PILLAY BY ADV. SMT.N.SANTHA BY ADV. SRI.S.A.ANAND** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 28/02/2012, THE COURT ON 21-05-2012 DELIVERED THE FOLLOWING:** **svs** ## **W.P.(C). NO. 23929/2011** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE ORDER DATED 13/07/2011 ISSUED BY R2.** - **P2: COPY OF THE REPORT OF THE JOINT REGISTRAR(AUDIT), ERNAKULAM DATED 04/05/2007.** - **P3: COPY OF THE REPORT OF THE REPORT OF THE JOINT REGISTRAR (VIGILANCE) THIRUVANANTHAPURAM DATED 01/28/2007.** - **P4: COPY OF THE LETTER DATED 05/10/2007 FROM THE GOVERNMENT.** - **P5: COPY OF THE REPORT OF THE JOINT REGISTRAR (GENERAL), ERNAKULAM DATED 07/02/2011.** ## **RESPONDENT'S EXHIBITS: NIL** ## **/TRUE COPY/** ## **P.A. TO JUDGE.** **svs** ## **P.N.RAVINDRAN, J.** ## **----------------------------------------W.P(C).No.23929 of 2011 ----------------------------------------Dated this the 21[st] day of May, 2012** ## **JUDGMENT** The Board of Directors of the Kerala State Co-operative Rubber Marketing Federation Limited, hereinafter referred to as “the Federation” for short, represented by its President has filed this writ petition mainly challenging Ext.P1 order passed by the Registrar of Co-operative Societies on 13.7.2011 ordering an enquiry under section 68(1) of the Kerala Co-operative Societies Act, 1969, hereinafter referred to as “the Act” for short. The brief facts of the case are as follows. 2. Sri.Monce Joseph, MLA and Sri.Sebastian Jose filed separate complaints before the Registrar of Co-operative Societies raising various allegations regarding the functioning of the Federation. The Registrar of Co-operative Societies to whom the complaints were submitted, forwarded them to the Joint Registrar of Co-operative Societies (Audit) Ernakulam, for enquiry. He conducted a preliminary enquiry and submitted Ext.P2 report dated 4.5.2007 to the Registrar of Co-operative Societies. The **W.P(C).No.23929 of 2011** ## -:2:- Registrar of Co-operative Societies thereupon passed an order dated 5.6.2007 authorising the Joint Registrar of Co-operative Societies (Vigilance), Trivandrum to conduct an inspection under section 66 of the Act. The said officer, after inspection, submitted Ext.P3 report dated 1.8.2007 to the Registrar of Co-operative Societies, who forwarded a copy of the report of inspection to the Government. The Government thereupon sent Ext.P4 letter dated 5.10.2007 to the Registrar of Co-operative Societies with instructions to take action pursuant to the report and to take steps to recover the loss caused to the Federation from the office bearers and employees. Long thereafter, the Registrar of Cooperative Societies forwarded a copy of the report of enquiry together with the accompanying papers to the Joint Registrar of Co-operative Societies (Audit), Ernakulam, who in turn submitted Ext.P5 report dated 7.2.2011. The Registrar of Co-operative Societies thereafter issued Ext.P1 order dated 13.7.2011 ordering an enquiry under section 68(1) of the Act. Hence this writ petition challenging Ext.P1 order and Exts.P2 and P3 reports and seeking the following reliefs:- _i) To call for the records leading upto Exhibits P1, P2 and P3 and quash the same by the issuance of a writ of certiorari or any other appropriate_ **W.P(C).No.23929 of 2011** ## -:3:- _writ, order or direction._ _ii) To issue a writ of mandamus forbearing the respondents from conducting or continuing with any enquiry under section 68._ 3. The main contention raised by the petitioner is that the enquiry under section 68(1) of the Act was ordered on the dictates of the Government, that no circumstances existed warranting initiation of an enquiry under section 68(1) of the Act and therefore, the impugned order and the reports are liable to be set aside. It is contented that the enquiry is not confined to the facts referred to in the reports of enquiry or inspection, but on the directions issued by the State Government, an enquiry under section 68(1) of the Act has been ordered on extraneous considerations for political reasons and therefore, for that reason also, the impugned order and the reports are liable to be set aside. 4. I heard Sri.K.Ramakumar, learned Senior Advocate appearing for the petitioner and Sri.D.Somasundaram, learned Speci9al Government Pleader appearing for the respondents. I also heard Sri.S.P.Aravindakshan Pillai, learned counsel appearing for additional respondents 5 and 6. Sri.K.Ramakumar, learned Senior Advocate appearing for the petitioner, contended that the ## **W.P(C).No.23929 of 2011** -:4:- Registrar of Co-operative Societies has issued Ext.P1 order pursuant to Ext.P4 letter dated 5.10.2007 issued by the State Government whereby the Government directed him to order an enquiry under section 68(1) of the Act against the members of the Board of Directors and the office bearers of the Federation, that the Registrar of Co-operative Societies has acted on the dictates of the Government and therefore, the impugned order is liable to be set aside on that short ground. The learned Senior Advocate contended that action under section 68 of the Act is not warranted in the instant case for the reason that the conditions precedent for exercise of the power under section 68 of the Act do not exist. _**-**_ Relying on the decision of this Court in _**Calicut City Service Co - operative Bank Ltd., v. Registrar of Co operative Societies, Trivandrum and others**_ , 2010 (2) KLT 824 the learned Senior Advocate appearing for the petitioner contended that the Registrar of Co-operative Societies has acted solely on the basis of the directions issued by the Government, that there has been no proper application of mind by the Registrar of Co-operative Societies and therefore, Ext.P1 order, which was issued pursuant to the directions issued by the Government, is liable to be set aside. Per contra, learned counsel appearing for the respondents ## **W.P(C).No.23929 of 2011** -:5:- contended that the officer authorised to conduct an inspection under section 66 of the Act had submitted Ext.P3 report dated 1.8.2007, that a copy thereof was also forwarded to the Government and that even without the intervention of the Government, in the light of the findings and observations in Ext.P3 report, the Registrar of Co-operative Societies could have ordered an enquiry under section 68(1) of the Act and therefore, the mere fact that the Government had years ago sent Ext.P4 letter dated 5.10.2007 to the Registrar of Co-operative Societies reminding him of his obligations under the Act is not a reason to hold that the Registrar of Co-operative Societies has acted on the dictates of the Government. 5. I have considered the submissions made at the Bar by the learned counsel appearing on either side. The pleadings and the materials on record disclose that pursuant to complaints received from a Member of the Legislative Assembly and another person, a preliminary enquiry into the various matters referred to in the complaints was held by the Joint Registrar of Co-operative Societies (Audit), Ernakulam, who submitted Ext.P2 report dated 4.5.2007 to the Registrar of Co-operative Societies, Trivandrum. After considering the said report, the Registrar of Co-operative ## **W.P(C).No.23929 of 2011** -:6:- Societies ordered an inspection under section 66 of the Act and authorised the Joint Registrar of Co-operative Societies (Vigilance), Trivandrum to conduct the inspection. The said officer, after inspection, submitted Ext.P3 report dated 1.8.2007 wherein he found serious irregularities in the functioning of the Federation. The Registrar of Co-operative Societies forwarded a copy of the said report to the Government along with letter dated 9.8.2007 as can be seen from Ext.P4 itself. The Government thereafter sent Ext.P4 letter dated 5.10.2007 to the Registrar of Co-operative Societies directing him to take further action in the matter. For nearly four years, the Registrar of Co-operative Societies did not take any action in the matter. Later, the Registrar of Co-operative Societies issued Ext.P1 order dated 13.7.2011 ordering an enquiry under section 68(1) of the Act and authorised the Joint Registrar of Co-operative Societies (Audit), Ernakulam to conduct the enquiry. In my opinion in view of the findings and observations in Ext.P3 report which justified initiation of action under section 68(1) of the Act, the mere fact that the Government had at an earlier point of time (on 5.10.2007) nearly four years before the impugned order was passed, directed the then Registrar of Co-operative Societies to take further action in ## **W.P(C).No.23929 of 2011** -:7:- the matter is not a reason to hold that the Registrar of Cooperative Societies, who issued the impugned order nearly four years thereafter, has acted on the dictates of the Government. The Registrar of Co-operative Societies has in the impugned order (Ext.P1) referred to the findings and observations in Ext.P3 report and has come to the conclusion that in the light of the findings and observations in Ext.P3 report, which are referred to therein, an enquiry under section 68(1) of the Act is required. In such circumstances the mere fact that nearly four years before the impugned order was passed, the then Government had directed the Registrar of Co-operative Societies to take further action pursuant to Ext.P3 report is not a reason to hold that the Registrar of Co-operative Societies has acted solely on account of Governmental interference. Sub-section (1) of Section 68 of the Act, which authorises the Registrar of Co-operative Societies to initiate surcharge proceedings reads as follows:- _“68._ _**Surcharge** :-(1) If in the course of an audit, inquiry, inspection or the winding up of a society, it is found that any person, who is or was entrusted with the organisation or management of such society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to the Act and the rules or the bye-_ ## **W.P(C).No.23929 of 2011** ## -:8:- _laws, or has caused any loss or damage in the assets of the society by breach of trust or wilful negligence or mismanagement or has misappropriated or fraudulently retained any money or other property belonging to such society or has destroyed or caused the destruction of the records, the Registrar may, of his own motion or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorised by him by an order in writing in this behalf, to inquire into the conduct of such person.”_ It is evident from a reading of sub-section (1) section 68 of the Act that if in the course of an inspection it is found that any person who is or was entrusted with the management of the society or who is or has at any time been an officer or an employee of the society, has made any payment contrary to the Act and the rules or byelaws, or has caused any loss or damage in the assets of the society by breach of trust, or wilful negligence or mismanagement, the Registrar of Co-operative Societies is empowered to order an enquiry into the conduct of such person. In the instant case, Ext.P3 report is sufficient to hold that the decision taken by the Registrar of Co-operative Societies to order an enquiry under section 68(1) of the Act cannot be said to be unwarranted. In such circumstances, the mere fact that years ## **W.P(C).No.23929 of 2011** -:9:- before the impugned order was passed, the Government had directed the then Registrar of Co-operative Societies to take further follow up action pursuant to Ext.P3 report is not a reason to hold that, thereafter the Registrar of Co-operative Societies could not have taken any action in the matter. Having regard to the time frame that elapsed between Ext.P4 letter and Ext.P1 order it cannot be said that the Registrar of Co-operative Societies has acted solely on the dictates of the Government. That apart, as noticed earlier, the Registrar of Co-operative Societies has in Ext.P1 order referred to in detail the findings and observations in Ext.P3 report and has stated that he is satisfied that circumstances exist warranting initiation of action under section 68(1) of the Act. I therefore, find no merit in the challenge to the impugned order. I accordingly hold that there is no merit in the writ petition. The writ petition fails and is accordingly dismissed. **P.N.RAVINDRAN, Judge.** ## **ahg.** **P.N.RAVINDRAN, J. --------------------------W.P(C).No.23929 of 2011 ----------------------------** ## **JUDGMENT** **21[st] May, 2012**