High Court of KeralaDivision Bench2013-02-08Appeal dismissed

The Board of Directors of the Kerala State Co-operative Rubber Marketing Federation Limited vs The Secretary to Government, Department of Co-operation, Government of Kerala; The Registrar of Co-operative Societies; The Joint Registrar of Co-operative Societies; The Kerala State Co-operative Rubber Marketing Federation Ltd; Thrissur District Co-operative Rubber Marketing Society; Sri. K.C. Joseph Master

Case / Petition Number:W.A. No. 1026 of 2012

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: S. SIRI JAGAN, J.
BABU MATHEW P. JOSEPH, J.
Judgment Date: 2013-02-08
Court Decision / Holding: The appeal is dismissed.
Final Disposition: Appeal dismissed

Parties to the Case

Appellants / Petitioners

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

Respondents

The Secretary to Government, Department of Co-operation, Government of Kerala, Thiruvananthapuram
The Registrar of Co-operative Societies, Thiruvananthapuram
The Joint Registrar of Co-operative Societies, Ernakulam
The Kerala State Co-operative Rubber Marketing Federation Ltd, Gandhi Nagar, Ernakulam, Kochi-20 represented by its Managing Director
The Thrissur District Co-operative Rubber Marketing Society Regd. No.MP/285, Ambakkadan Kinar Junction, Thrissur District
Sri. K.C. Joseph Master

Legal Representation & Advocates

Counsels for Petitioners

• Sri K. Ramakumar (Sr.)
• Smt. Smitha George
• Sri. S.M. Prasanth

Counsels for Respondents

• Special Government Pleader Sri. D. Somasundaram
• Adv. Aravindakshan Pillai

Case Synopsis & Summary

This is a Division Bench of the Kerala High Court dealing with a writ appeal (W.A. No. 1026 of 2012, in WP(C) No. 23929/2011) challenging Exts. P1–P3 issued under Sections 66–68 of the Kerala Co-operative Societies Act. A preliminary enquiry into the functioning of the fourth respondent society revealed serious irregularities. Based on Ext. P3 (dated 1-8-2007) and prior reports, Ext. P4 (5-10-2007) directed action by the Registrar of Co-operative Societies. After a prolonged interval, Ext. P1 (13-7-2011) appointed an Enquiry Officer to ascertain losses and fix liability under Section 68(1). The Board of Directors (applicant) challenged Exts. P1–P3, contending Ext. P1 was issued not on personal satisfaction of the Registrar but on government dictates, relying on Panicker Kadavu Co-operative Society Ltd. and Calicut City Service Co-op Bank Ltd. They also argued Ext. P1 was not framed strictly under Sections 66–68, which pertain to individuals, not the Board. The respondents argued Exts. P2 and P3, based on formal enquiries and the government’s reminder (Ext. P4), justified action under the Act, and Ext. P1 reflects liability to recover losses from the responsible persons. The court, after analyzing the records, held that Ext. P1 rested on Exts. P2–P3 and was not issued as a government dictate; it rejected the appellant’s challenges and dismissed the appeal. The final disposition is the dismissal of the writ appeal.

Provisions of Law Cited

Kerala Co-operative Societies Act, Sections 66 to 68Kerala Co-operative Societies Act, Sec. 68(1)

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellant contends Ext. P1 was not issued on the Registrar's personal satisfaction but on the government’s dictates as per Ext. P4. Relying on Panicker Kadavu Co-operative Society Ltd. v. Registrar of Cooperative Societies (1994 (2) KLT 564) and Calicut City Service Co-op Bank Ltd. v. Registrar of Co-operative Societies (2010 (2) KLT 824), it is argued that government dictation would render Ext. P1 infirm. It is further argued that Ext. P1 is not framed strictly under Sections 66–68, which deal with actions against individuals, whereas Ext. P1 targets the Board for irregularities. The Board asserts due process concerns and questions the scope of liability under the Act.

Contentions of Respondents

The respondents contend Exts. P2 and P3 (reports of enquiry) and Ext. P4 (government reminder) justify action under Section 68. They argue the Enquiry Officer was appointed to fix liability for losses and that Ext. P1 was issued after considering the enquiry reports; Ext. P1 is therefore grounded in statutory process and the government’s role is to prompt action, not dictate terms.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Panicker Kadavu Co-operative Society Ltd. v. Registrar of Cooperative Societies	1994 (2) KLT 564	Distinguished	Cited by appellant; court distinguished it on facts, noting Ext. P1 is based on Exts. P2–P3 and not dictated by government.
Calicut City Service Co-op Bank Ltd. v. Registrar of Co-operative Societies	2010 (2) KLT 824	Distinguished	Same reasoning as above; not binding in the present facts.
Elakkal Service Cooperative Bank v State of Kerala	1997 (2) KLT 85	Mentioned Only	Cited by appellant; the judgment contains no substantive discussion of its ratio.

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Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE S.SIRI JAGAN & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH FRIDAY, THE 8TH DAY OF FEBRUARY 2013/19TH MAGHA 1934 W.A. No. 1026 of 2012 IN WP(C).23929/2011 ------------------------------------------AGAINST THE ORDER/JUDGMENT IN WP(C).23929/2011 of HIGH COURT OF KERALA DATED 21-05-2012 ## APPELLANT/PETITIONER: ------------------------------------ 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.) SMT.SMITHA GEORGE SRI.S.M.PRASANTH RESPONDENTS/RESPONDENTS: ----------------------------------------------- 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 LTD, GANDHI NAGAR, ERNAKULAM, KOCHI-20 REPRESENTED BY ITS MANAGING DIRECTOR. 5. THE THRISSUR DISTRICT CO-OPERATIVE RUBBER MARKETING SOCIETY REGD.NO.MP/285, AMBAKKADAN KINAR JUNCTION THRISSUR DISTRICT, PIN-680 OO1 REPRESENTED BY ITS PRESIDENT K.C.JOSEPH MASTER. 6. SRI.K.C.JOSEPH MASTER,, AGED 69 YEARS S/O.LATE CHACKO, PRESIDENT THE THRISSUR DISTRICTCO-OPERATIVE RUBBER MARKETING SOCIETY REGD.285, AMBAKKADAN KINAR JUNCTION, THRISSUR DISTRICT PIN-680 001. BY SPECIAL GOVERNMENT PLEADER SRI. D. SOMASUNDARAM BY ADV. ARAVINDAKSHAN PILLAI THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 08-02-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## **S. SIRI JAGAN & BABU MATHEW P. JOSEPH, JJ.** ====================== **W.A.No. 1026 of 2012** ====================== Dated this the 8th day of February, 2013 **JUDGMENT** ## **S. SIRI JAGAN, J.** The appellant is the petitioner in W.P.(C) No. 23929 of 2011. The matter relates to proceedings under Sections 66 to 68 of the Kerala Co-operative Societies Act. A preliminary enquiry was conducted into the functioning of the 4[th] respondent Co-operative Society and Ext.P2 findings were entered by the joint Registrar of Co-operative Societies, wherein serious irregularities were alleged to be found in the running of the society. Based on the same, the Joint Registrar (Vigilance) of Co-operative Societies conducted a further enquiry and submitted Ext.P3 report to the Registrar of Co-operative Societies. That was on 1-8-2007. The copy of the same was forwarded to the government as well. The Principal Secretary to the Government, Co-operation Department, by Ext.P4 dated 5-10-2007, directed the Registrar of Co-operative Societies to take appropriate action as warranted by law based on Ext.P3 report. Nothing happened for quite sometime thereafter. On 13-7-2011 by Ext.P1, the Registrar of Co-operative Societies appointed an Enquiry Officer to ascertain the loss caused to the Society on account of the ## **W.A.No. 1026 of 2013** -2- irregularities in the running of the society and to fix the liability on the person concerned under Section 68 (1) of the Kerala Co-operative Societies Act. The Enquiry Officer was directed to conduct the enquiry and to submit report within one month from the date of receipt of the said order. The Board of Directors of the Society filed W.P. (C)No. 23929 of 2011 Challenging Exts P1, P2 and P3 which was dismissed by the learned Single Judge. The petitioner in the writ petition has filed this appeal challenging the judgment of the learned Single Judge. 2. The first contention raised is that Ext.P1 has been issued not on the personal satisfaction of the Registrar of Co-operative Societies, but on the dictates of the government by Ext.P4 order. The counsel for the appellant submits that such kind of action has been frowned upon by this court in two decisions i.e. **Panicker Kadavu Co-operative Society Ltd;** v **. Registrar of Cooperative Societies (1994 (2) KLT 564)** and **Calicut City Service Co-op. Bank Ltd; v. Registrar of Co-operative Societies** **(2010 (2) KLT 824).** The second contention is that Ext.P1 has not been issued in accordance with the provisions of Sections 66 to 68 of the Kerala Co-operative Societies Act. It is submitted that the said provisions relate to action against individuals and not against the Board of Directors of the Society as such. On the other hand Ext.P1 **W.A.No. 1026 of 2013** -3- has been issued in respect of the irregularities committed by the Board of Directors and not by any specified individual. Therefore, Ext.P1 order has been issued in violation of the provisions of the Kerala Co-operative Societies Act is the contention raised. The counsel relies on the decision of this Court in **Elakkal Service Cooperative Bank** v. **State of Kerala (1997 (2) KLT 85)** also. 3. We have heard the counsel for the 6[th] respondent as well as the learned Government Pleader. Ext.P2 is the report in the preliminary enquiry conducted. The appellant has no case that the enquiry which resulted in Ext.P2 was conducted under dictates of the government. Pursuant to Ext.P2 the Registrar (Vigilance) of Co-operative Societies conducted another enquiry and submitted Ext.P3 report. The appellant has no case that Ext.P3 report dated 1-8-2007 was under the dictates of the government. A copy of Ext.P3 was forwarded to the government as well. On receipt of the same, on 5-10-2007, the government issued Ext.P4 communication to the Registrar of Co-operative Societies which reads thus: “സ�ചനയ�ല�യ�� ത�ങള�ട� ശ�ദ കണ��ന�. സഹകരണ റബര മ�ര�റ�"ഗ� ട$ഡലറഷന�ല അഴ�മത�യ�" ശകമല��കള�" ന��നത�യ� |കട*ത�യത�ന�ല സ"ഘത�ടനത�ടര|സമയബന�തമ�യ�|ന�യമ�ന|�സ/ത| |---|---|---|---| |ന�പ��കള സ23കര��<br>�നത�ന� പ|�റടമ സ"ഘത�ട4|$*|�കള| ## **W.A.No. 1026 of 2013** -4- നഷട6��ത�യത�ന� ഉതരവ�ദ�കള�യ ഭരണ സമ�ത� അ"ഗങള�ല ന�ന�", ഉലദ<�ഗസനമ�ര�� പങ �ട*ങ�ല അവര�ലന�ന �" നഷ" ഈ��ന �ള അ��യന�ര ന�പ��കള സ23കര�ല�*ത�ണ�. ഭരണസമ�ത�യ�ട� ലപര�ല മറ� ന�യമ�ന�സ/ത ന�പ��കള ആവ�<ടമങ�ല പര�ല��ധ�ചല�ഷ" പ�ന3�� ത3ര�മ�ന��വ�നത�ണ�.” 4. It is four years thereafter, Ext.P1 dated 13-7-2011 was issued. Ext.P1 is stated to be issued based on Exts.P2 and Ext.P3. If that be so, it cannot be stated that Ext.P1 order has been issued under the dictates of the government. We are of the opinion that when the government comes across a finding by the Registrar (Vigilance) of Co-operative Societies, regarding irregularities in a Co-operative Society and no action is taken pursuant to the same, it is the duty of the government to remind the Registrar of Co-operative Societies to take appropriate action in respect of the same. That cannot be stated to be a dictate to the Registrar of Co-operative Societies to take action the way the government wants. Ext. P1 is expressly stated to be based on Exts. P2 and P3, which actions were not on the dictates of the government. In such circumstances, we have no reason to hold that Ext.P1 has been issued on the dictates of the government so as to attract the dictum laid down in the two decisions relied upon by the learned counsel for the appellant. **W.A.No. 1026 of 2013** -5- 5. The learned counsel for the appellant read out Section 68 and stressed the words 'any person' stated therein, to argue that the same would go to show that proceedings under Section 68 can be initiated only against a person and not against the Board of Directors of a Society or the Society as such. On a perusal of Ext.P1 we are not satisfied that Ext.P1 suffers from that illegality. In the first paragraph of Ext.P1 itself it is stated thus: “ലകരള സ"സ�ന സഹകരണ റബര മ�ര�റ�"ഗ� ട$ഡലറഷന�ട� ശപവരതനത�ട� ശകമല��കള സ"ബന�ച� അലന2ഷണ" ന�ത� റ�ല6�രE� സമര6��നത�ന� സഹകരണ സ"ഘ" രജ�സ�ശ��ര ന�രലG�" നലക�യത�ട4 അ��സ�നത�ല എറണ�ക�ള" ആഡ�റ� വ�ഭ�ഗ" ലജ�യ�4� രജ�സ�ശ��ര പര�മര�" (1) ശപക�ര" റ�ല6�രE� സമര6�ച�ര�ന�. �� റ�ല6�രE�ശപക�ര" റബര മ�ര�റ�"ഗ� ട$ഡലറഷട4 ശപവരതനങള�ല ഗ�ര�തരമ�യ ശകമല��കള ന��നത�യ� ലബ�ധ/ട6Eത�ടന ത��രന� സ�പനത�ല സഹകരണ ന�യമ" 66-ഠ0 വക�6� ശപക�ര" പര�ല��ധന ന�ത�നത�ന� സഹകരണ സ"ഘ" രജ�സ�ശ��രവ�ജ��നസ� വ�ഭ�ഗ" ലജ�യ�4� രജ�സ�ശ��ടറ ച�മത�ട6��ത�കയ�" ��യ�ന പര�ല��ധന� റ�ല6�രE� പര�മര�" (2) ശപക�ര" സമര6��കയ�മ�*�യ�. ആയത�ട4 പകര6� സര��ര�ന�" സമര6�� കയ�*�യ�. സഹകരണ റബര മ�ര�റ�"ഗ� ട$ഡലറഷന�ല അഴ�മത�യ�" ശകമല��കള�" ന��നത�യ� കട*ത�യത�ന�ല സ"ഘത�ടനത�ടര ന�യമ�ന�സ/ത ന�പ��കള സ23കര��നത�ന�" സ"ഘത�ട4 $*�കള നഷട6��ത�യത�ന� ഉതരവ�ദ�കള�യ ഭരണസമ�ത� അ"ഗങള�ല ന�ന�" ഉലദ<�ഗസനമ�ര�� പങ�ട*ങ�ല അവര�ലന�ന�" നഷ" ഈ��ന�ള അ��യന�ര ## **W.A.No. 1026 of 2013** -6- ” ന�പ��കള സ23കര��നത�ന�" പര�മര�" (5) ശപക�ര" സര��ര ന�രലG��ച�ര�ന�. 5. Therefore, the direction in Ext.P1 is to specifically recover the loss caused to the society from the persons responsible for the same in the managing committee. Further the operative portion of Ext.P1 order reads thus: “ലകരള സ"സ�ന സഹകരണ റബര മ�ര�റ�"ഗ� ട$ഡലറഷന�ട� ശകമല��കള സ"ബന�ച� പര�ല��ധന ന�ത� പര�മര�" (1), (2), (4) ശപക�ര" സമര6�ച റ�ല6�രE�കള�ട�യ�" പര�മര�" (3) ശപക�രമ�ള സര��ര ന�രലG�ത�ട4യ �" അ��സ�നത�ല ട$ഡലറഷന�ട� ശകമല��കള മ��" ട$ഡലറഷന�*�യ സ�"പത�കനഷ" എശതടയന �" ആയത�ന� ശപത/കമ�ലയ� പലര�കമ�ലയ� ഉതരവ�ദ�കള�യവര ആര�ടണന�" അത�ല ഓലര�ര�തര�ട�യ�" നലഷ�തരവ�ദ�ത2" എശതയ�ടണന�" ന�രണയ�ച� റ�ല6�രE� സമര6��നത�ന� എറണ�ക�ള" ജനറല വ�ഭ�ഗ" ലജ�യ�4� രജ�സ�ശ��ര ശ�3.സ�.ലപ�ള ട�സ�ടയ സഹകരണ ന�യമ" 68 (1) വക�6� ശപക�ര" അലന2ഷണ ഉലദ<�ഗസന�യ� ന�യമ�ച� ഇത�ന�ല ഉതരവ�ക�ന� . അലന2ഷണ ഉലദ<�ഗസന ലകരള� സഹകരണ ന�യമ" 68 (1) ല അന��സ��ന ശപക�ര" അലന2ഷണ" ന�ത� റ�ല6�രE� അന�ബനങള സഹ�ത" ഈ ഉതരവ� കക6റ� ഒര� മ�സത�നക" സമര6�ല�*ത�ണ�.” That order is also to fix the liability for the loss caused to the federation on the persons responsible for the same and to recover the same from such persons under Section 68 (1) of the Kerala Cooperative Societies Act. Therefore, we are not satisfied that Ext.P1 order suffers from that infirmity pointed out by the learned Counsel ## **W.A.No. 1026 of 2013** -7- for the appellant also. In the above circumstances, we do not find any merit in this appeal and accordingly, the appeal is dismissed. Sd/- **S. SIRI JAGAN JUDGE** Sd/- **BABU MATHEW P. JOSEPH JUDGE** kvr/ /True copy/ P.S. to Judge