The Managing Committee, Santalinga Nagar Ksheerolpadaka Co-operative Society Limited No. P 156 (D) APCOS v. Deputy Director, Dairy Development, Palakkad District; Addl. R2 Impleaded Athiswaramoorthy

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** **&** **THE HONOURABLE MRS. JUSTICE SHOBA ANNAMMA EAPEN TUESDAY, THE 30[TH] DAY OF AUGUST 2022 / 8TH BHADRA, 1944** **WA NO. 380 OF 2022** **AGAINST THE JUDGMENT DATED 10.03.2022 IN WP(C).NO.7498/2022 OF HIGH COURT OF KERALA** ## **APPELLANT/WRIT PETITIONER:** **THE MANAGING COMMITTEE THE SANTHALINGA NAGAR KSHEEROLPADAKA, CO-OPERATIVE SOCIETY LIMITED NO. P 156 (D) APCOS, OZHALAPATHI POST, CHITTUR TALUK, PALAKKAD DISTRICT -678 101 , REPRESENTED BY ITS PRESIDENT.** **BY ADVS. GEORGE POONTHOTTAM (SR.) ARUN CHANDRAN NISHA GEORGE** ## **RESPONDENT/RESPONDENT:** - **1 DEPUTY DIRECTOR, DAIRY DEVELOPMENT, CIVIL STATION, PALAKKAD DISTRICT-678 541.** - **2 *ADDL.R2 IMPLEADED,** **ATHISWARAMOORTHY, AGED 45 YEARS,S/O. DANDAPANI, HOUSE NO. 294, ANUPOORKALAM, OZHALAPATHY P.O., PALAKKAD - 678 557 .** ***THE ABOVE RESPONDENT IS IMPLEADED AS ADDITIONAL 2ND RESPONDENT AS PER ORDER DATEE 10/8/22 IN I.A.NO.1/2022 IN WA 380/22.** **BY ADV R.SUDHISH** **SRI T.K.VIPINDAS-SR.GP** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON** **30.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **ALEXANDER THOMAS & SHOBA ANNAMMA EAPEN, JJ.** ================== ## **W.A.No.380 of 2022** _[arising out of the impugned judgment dated 10.03.2022 in W.P.(C).No.7498 of 2022]_ ================== Dated this the 30[th] day of August, 2022 ## **J U D G M E N T** ## ALEXANDER THOMAS, J. The subject matter of challenge in this intra court appeal instituted under Section 5(i) of the Kerala High Court Act is the judgment rendered by the learned Single Judge on 10/03/2022 dismissing the instant Writ Petition (Civil) No.7498/2022, whereby the main plea of the petitioner for quashment of the impugned Ext.P14 show cause notice dated 28/02/2022 has not been granted, but certain directions have been given regarding the consideration of the aspects for further action in relation to Ext.P14 show cause notice. Being aggrieved by the said judgment rendered on 10/03/2022, dismissing the above Writ Petition (Civil), the petitioner therein has filed the instant intra court appeal. 2. Heard Sri.George Poonthottam, learned Senior Counsel instructed by Sri.Arun Chandran, learned counsel appearing for the appellant in the W.A/ petitioner in W.P.(C), Sri.T.K.Vipindas, learned Senior Govt. Pleader appearing for official respondent No.1 in W.A.No.380 of 2022 - : 2 :- W.A/sole respondent in the W.P.(C) and Sri.R.Sudheesh Kumar, learned counsel appearing for additional respondent No.2 in the Writ Appeal. ## 3. The prayers in the instant Writ Petition (Civil), ## W.P.(C).No.7498 of 2022 read as follows: - _“i). Issue a writ in the nature of certiorari calling for the records leading to Exhibit P14 and to quash the same;_ - _ii). Declare that there exist no circumstances to invoke the proceedings under Section 32 of the KCS Act against the managing committee of the society as they have complied with all lawful directions issued by the respondent by way of Exhibit P14;_ - _iii) To direct the respondent Deputy Director of Dairy Cooperative Societies, Palakkad not to proceed with against the managing committee of the society under the provisions of Section 32 of the KCS Act without putting the members of the managing committee on notice, pending disposal of the writ petition._ - _iv). Issue a writ declaring that initiation of action under Section 32(1) of the KCS Act based on the interim report is nothing but abuse of the authority and hence bad in law;_ - _v) Issue a writ declaring that the recording of satisfaction, existing of the ingredients that are provided in Section 32(1)(a)(b)(c) and (d) in Exhibit PI will vitiate the action and therefore bad in law;_ - _vi). Grant such other reliefs as this Court deems fit in the facts and circumstances of the case.”_ 4. The order under challenge is the show cause notice at Ext.P14 issued on 28/02/2022 directing the appellant to show cause as to why measures of supersession in the Managing Committee Society in terms of Section 32 shall not be rendered. Going by the factual aspects that projected in Ext.P14, it appears that Ext.P5 dated W.A.No.380 of 2022 - : 3 :- 11/10/2021 has been issued by the 1[st] respondent herein, intimating the Society that the inspection has revealed grave irregularities in the functioning of the Society, etc. Later, this was followed by an enquiry ordered under Section 65 of the Kerala Co-operative Societies Act, 1969 (The KCS Act). Ext.P11 is the interim report dated 24/11/2021 submitted in the said Section 65 enquiry proceedings. It is thereafter that Ext.P14 show cause notice has been issued proposing supersession measure in view of the facts and circumstances narrated therein. 5. The writ appellant/writ petitioner would point out that the alleged irregularities and illegalities were committed by the then Secretary, who was later suspended from service and even proceedings as per the Arbitration Reference Case (ARC) has been initiated under Section 69 of the KCS Act for recovery of the money from her. Further, various defects pointed out in the reports mentioned in Ext.P14 have already been cured and therefore it is argued that the proposed supersession measures in terms of Ext.P14 show cause notice should be dropped. Further, it is also contended that in matters of this nature, there would not be any effective consideration of the objections of the affected party like the appellant, W.A.No.380 of 2022 - : 4 :- by the decision making authority. 6. The learned Senior Government Pleader would point out that apart from Ext.P11 interim enquiry report issued at Section 65 enquiry, certain other reports are also pointed out in Ext.P14 like the inspection report dated 15.07.2021 as well as Ext.P11 inspection report dated 11/10/2021 etc. That the aspects stated in Ext.P14 is more than sufficient for issuing a show cause notice in terms of Section 32(1)(c) and it is for the writ petitioner / writ appellant to respond to the same at the time of hearing and thereafter the decision taking authority will take its final decision and that it is not right and proper for this Court sitting in judicial review jurisdiction to interfere in the matter at the show cause notice stage, as the one involved in this case, since Ext.P14 is essentially only a show cause notice. 7. Yet another contention is raised before us that the main material relied on in Ext.P14 is Ext.P11, which is only an interim enquiry report conducted in terms of Section 65 and final report of the Section 65 enquiry is not yet issued, and that the facts revealed at the time of Ext.P11 have undergone a sea change now and that therefore, Ext.P14 may not be justifiable on the basis of the previous decision like Ext.P11. W.A.No.380 of 2022 - : 5 :- 8. Certain other submissions are also made on behalf of the appellant, which we will deal later. 9. The operative portion of Section 32(1) without the proviso thereto, stipulates as follows: _32._ _**Supersession of Committee** .- (1) If the Registrar, after an inquiry by himself or through his subordinates or on a report of the financing bank, or the Vigilance and Anticorruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society,-_ - _(a) persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or does anything which is prejudicial to the interests of the society; or_ - _(b) wilfully disobeys or fails to comply with any lawful order or direction issued under this Act or the rules; or_ - _(c) makes any payment contrary to this Act or the rules or the bye- laws or causes any loss or damage to the assets of the society by breach of trust or wilful negligence; or_ - _(d) misappropriates or destroys or tampers with the records or causes the destruction of records to cover up any misconduct or malpractice,_ _He may, after giving the committee an opportunity to state its objections, if any, by order in writing, remove the committee and, appoint in its place, one administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months:_ - _(e) Every member of the committee superseded under this section shall from the date of order of such supersession sand disqualified to contest in the election to or to be nominated to the committee of any Society or to be appointed as an administrator in any society for two consecutive terms._ 10. A reading of supra Section 32(1) would indicate that if the Registrar, after an inquiry by himself or through his subordinates or W.A.No.380 of 2022 - : 6 :- on a report of the financing bank, or the Vigilance and Anti-Corruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society, is involved in certain actions mentioned in clauses (a) to (d) thereunder, then steps for the proposed supersession measure could be taken as envisaged therein. Section 32 (1) would make it clear that even in the absence of materials like enquiry conducted by the Registrar or through his subordinates or on a report of the financing bank or that of the Vigilance wing as mentioned therein, even on certain other contingencies also, jurisdictional facts under Section 32(1) could be assumed, since that is clearly disclosed by the words “or otherwise” appearing in Section 32(1). Even construing the unamended provisions Section 32(1), it has been held by the Division Bench of this Court in decisions as in _**State of Kerala vs. Sudarsanan** [1997 (2) KLT 522]_ that it will not be necessary for the Registrar or Assistant Registrar to exercise powers under Sections 63, 64, 65 and 66 before invoking measures in terms of Section 32. Further, the learned Single Judge, after hearing both sides, has held that whether any of the circumstances covered by clauses (a) to (d) appended to Section 32(1) has arisen or not are matters to be essentially W.A.No.380 of 2022 - : 7 :- considered by the notified Registrar, in terms of the materials after hearing the affected Managing Committee. Hence, the learned Single Judge noted that essentially, it is for this purpose that impugned Ext.P14 show cause notice has been issued and that therefore, the notice for hearing mentioned in Ext.P14 is in due compliance of the requirement of Section 32(1). In the light of these aspect, the learned Single Judge held that it will be open for the writ petitioner to urge all contentions against the sustainability or otherwise of the proposed proceedings in the said hearing, and that at this stage, there is no warrant for the apprehension raised by the petitioner that the objections would not be considered by the authority and that the authority is bound in law to give effective consideration of the objections. 11. In the light of these aspects the learned Single Judge has concluded that interference in judicial review would not be right and proper course of action, in terms of Article 226 of the Constitution of India, in the facts and circumstances of this case. Hence, the learned Single Judge left open all rights of the writ petitioner to urge the objections in the hearing proposed in terms of Ext.P14 and the writ petition has been dismissed. W.A.No.380 of 2022 - : 8 :- 12. After hearing both sides, we are not in a position, in any manner, to hold that the abovesaid considered views of the learned Single Judge are illegal or unreasonable. 13. Earlier, we had requested the learned Senior Government Pleader to get instructions as to the present stage of Section 65 enquiry in which Ext.P11 interim report was earlier issued on 24/11/2021. Now, we are apprised by the learned Senior Government Pleader on the basis of instructions that, the enquiry process is almost over and the final report in terms of Section 65 is being drawn up and should be ready by the second week of September 2022 . Further, the learned Senior counsel appearing for the appellant also pointed out that the audit report in pursuance of Ext.P5 proceedings dated 11/10/2021 (referred to as Item No.10 in Ext.P14), has now been finalized and according to the appellant, the said audit report would disclose that the irregularities alleged in this case are not disclosed in the audit etc and that the said aspects in relation to the final audit report in pursuance of Ext.P5 would also be relevant in determining the issues in pursuance of Ext.P14. 14. We have made it clear that, we are not inclined to interfere with the considered findings of the learned Single Judge in W.A.No.380 of 2022 - : 9 :- the impugned judgement in this case. However, in view of the efflux of time since the final enquiry report in terms of Section 65 is expected to be ready within a short time, the ends of justice would be advanced, if the respondent Joint Registrar will consider whether the said aspects may also be duly taken into account. Hence, it is ordered that after receipt of the Section 65 final enquiry report in the matter, the 1st respondent may consider whether the facts and circumstances disclosed therein would also be relevant and germane for deciding the issues in relation to Ext.P14. If that be so, the respondent Joint Registrar will take into consideration those aspects as well, before finalising action and in which case, the copy of the said Sec.65 final enquiry report is also to be given to the appellant, before finalising action. As regards the plea of the writ petitioner based on the above-said final audit report, the 1[st] respondent may consider those aspects now urged by the appellant and it will be open to the writ appellant to urge contentions on the basis of the said audit report and it is for the 1[st] respondent to duly take into account the aspects based on that. Needless to say, that opportunity of hearing should be given to the writ petitioner before the action is finalized in terms of Section 32. No other orders and directions are called for in the facts and W.A.No.380 of 2022 - : 10 :- circumstances of the case. With these observations and directions, the above Writ Appeal will stand disposed of. Sd/- **ALEXANDER THOMAS, JUDGE** Sd/- **SHOBA ANNAMMA EAPEN, JUDGE** AS