The Maneed Service Co-operative Bank Ltd and The Managing Committee of Maneed Service Co-operative Bank Ltd v. Joint Registrar of Co-operative Societies (G) and Others

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **&** **THE HONOURABLE MR.JUSTICE BASANT BALAJI FRIDAY, THE 14[TH] DAY OF JANUARY 2022 / 24TH POUSHA, 1943** **WA NO. 17 OF 2022** **AGAINST THE ORDER/JUDGMENT DATED 4.1.2022 IN WP(C)** **21/2022 OF HIGH COURT OF KERALA** ## **APPELLANTS/PETITIONERS:** - **1 THE MANAGING COMMITTEE OF THE MANEED SERVICE COOPERATIVE BANK LTD NO. E 59, MANEED P.O, PIRAVOM, ERNAKULAM REPRESENTED BY ITS PRESIDENT** - **2 MANEED SERVICE CO-OPERATIVE BANK LTD NO. E 59, MANEED P.O, PIRAVOM , ERNAKULAM, REPRESENTED BY ITS SECRETARY** - **BY ADVS.** - **B.S.SWATHI KUMAR ANITHA RAVINDRAN HARISANKAR N UNNI** ## **RESPONDENTS/RESPONDENTS:** - **1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (G), CIVIL STATION , KAKKANAD, ERNAKULAM 682 030** - **2 THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), MUVATTUPUZHA, ERNAKULAM 686 661** - **3 THE UNIT INSPECTOR, KOOTHATTUKULAM, OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (G), MUVATTUPUZHA, ERNAKULAM 686 661** ## **ADV.T.K.VIPINDAS SR.GP.** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 14.01.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** 2 Writ Appeal No.17 of 2022 ## **P.B.SURESH KUMAR & BASANT BALAJI, JJ.** ## **----------------------------------------------Writ Appeal No.17 of 2022** **-----------------------------------------------** **Dated this the 14[th] day of January, 2022.** ## **JUDGMENT** ## **P.B.Suresh Kumar, J.** This writ appeal is directed against the judgment dated 04.01.2022 in W.P.(C) No.21 of 2022. The appellants are the petitioners in the writ petition. Parties and documents are referred to in this judgment for convenience, as they appear in the writ petition. 2. The second petitioner is a Co-operative Society registered under the Kerala Co-operative Societies Act, 1969 (the Act) and the first petitioner is the Managing Committee of the second petitioner Society (the Society). On receipt of complaints alleging irregularities in the functioning of the 3 Writ Appeal No.17 of 2022 Society, the first respondent, the Joint Registrar of Co-operative Societies, exercising the powers of the Registrar over the Society, called for reports from the concerned Assistant Registrar and ordered an inspection of the books of the Society under Section 66(2) of the Act. Ext.P11 is the order issued by the first respondent in this regard. Ext.P11 order was under challenge in the writ petition mainly on the grounds that an inspection in terms of Section 66(2) cannot be ordered on the basis of complaints other than complaints lodged by the creditors of the Society and that the points for inspection formulated in Ext.P11 order are all matters beyond the scope of the inspection under Section 66(2) of the Act. 3. The learned Single Judge dismissed the writ petition holding that Ext.P11 order is one issued based on the reports obtained from the Assistant Registrar, and not based on the complaints referred to therein and that the points formulated for inspection in Ext.P11 order are well within the scope of Section 66(2). The petitioners are aggrieved by the 4 Writ Appeal No.17 of 2022 decision of the learned Single Judge. 4. Heard the learned counsel for the appellants as also the learned Government Pleader. 5. The learned counsel for the appellants asserted that the basis of Ext.P11 order is the complaints referred to therein, and argued that an inspection under Section 66(2) of the Act can be ordered by the Registrar only on his own motion or on an application of a creditor. The learned counsel has relied on the decision of this Court in **Kizhathadiyoor Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies,** 2019 (3) KLT 32, in support of the said argument. It was also argued by the learned counsel that matters in respect of which inspection was ordered in terms of Ext.P11 order are not matters which would fall within the scope of Section 66(2) of the Act. It was further argued by the learned counsel that one of the complaints referred to in Ext.P11 is an anonymous one and another was an ill-motivated one lodged by the husband of an employee who is placed under suspension. Writ Appeal No.17 of 2022 5 According to the learned counsel, at any rate, an inspection under Section 66(2) of the Act ought not have been ordered on such complaints. It was also argued by the learned counsel that the joint Registrar is contemplating a roving enquiry into the various matters specified in the order and that roving enquiry on matters is not provided for under Section 66 (2) of the Act. 6. We have examined the arguments advanced by the learned counsel for the appellants. 7. Insofar as the order impugned in the writ petition was one issued under Section 66 of the Act, it is necessary to refer to the said statutory provision. The relevant portion of Section 66 of the Act reads thus: **66.Supervision and Inspection** .- (1) The Registrar shall supervise or cause to be supervised by a person authorised by him by general or special order in writing in this behalf, the working of every society as frequently as he may consider necessary. The supervision under this sub-section may include an inspection of the books of the society. (2) The Registrar may, on his own motion, or on the application of a creditor of a society, inspect or direct any person authorized by him by order in writing in this behalf to 6 Writ Appeal No.17 of 2022 inspect the books of the society: Provided that no such inspection shall be made on the application of a creditor unless the applicant- (a)satisfies the Registrar that the debt is a sum then due and that he has demanded payment thereof and has not received satisfaction within a reasonable time and (b)deposits with the Registrar such a sum as security for the costs of the proposed inspection as the Registrar may require. x x x x x [(11)Notwithstanding anything contained in sub-section (1) and (2) above, the Registrar or his subordinate officers authorized by him under sub section (1) shall have power to hold an enquiry with necessary records of a society, on any petition received, and to inspect the affairs of a society periodically, in such cases the inspecting officers shall have same powers as specified in sub-section (4). Explanation 1- The “affairs of a society” for the purpose of this sub section includes, among other things, matters relating to administration, management and the business of a society. Explanation 2- The duty of the officers and chief executive of a society and the nature of offences and penalties mentioned in [sub-section (4A) shall be applicable to this sub-section also]. ## It is evident from the extracted provision that an inspection Writ Appeal No.17 of 2022 7 under Section 66(2) of the Act can be ordered by the Registrar either on his own motion or on the application of a creditor of the Society. It is seen from the recitals in Ext.P11 order that the Joint Registrar has received a few complaints concerning the functioning of the society and he has obtained reports of the Assistant Registrar on the complaints. It is also seen from the recitals in Ext.P11 order that it is based on the reports of the Assistant Registrar that inspection has been ordered in respect of the matters referred to therein. Such an order, according to us, cannot be said to be one passed based on the complaints referred to therein. Orders of this nature would only fall under the category of orders issued by the Joint Registrar on his own motion. 8. Rule 29 of the Kerala Co-operative Societies Rules, 1969 (the Rules) prescribes the books to be maintained by a Society in connection with its business. What is provided for under Section 66(2) of the Act is an inspection of the said records in relation to the points to be specified in the order. 8 Writ Appeal No.17 of 2022 Merely for the reason that inspection of the books of the Society could be ordered under Section 66(2) based on an application made by a creditor of a Society, it cannot be said that an inspection can be ordered only in respect of the financial matters of the Society. If the expression “inspect the books of the Society” contained in Section 66(2) of the Act is understood in the light of Rule 29 of the Rules, there cannot be any doubt that an inspection of the books of the Society could be ordered under Section 66(2) of the Act in respect of matters other than matters relating to the finance of the Society also. 9. As noted, in terms of the order impugned in the writ petition, the Joint Registrar has only ordered an inspection of the books of the Society in relation to certain affairs of the society and the petitioners cannot be heard to contend that the said order is bad in any manner, even if it is accepted that the complaints referred to in the order are ill-motivated. According to us, going by the scheme of the Act, the Joint Registrar, exercising the powers of the Registrar, is obliged to ensure that 9 Writ Appeal No.17 of 2022 every Society is functioning in accordance with the provisions of the Act and for the purpose of discharging the said duty, the Joint Registrar should necessarily have the discretion to invoke the provisions of the Act, whenever irregularities are brought to his notice, irrespective of the source of information. 10. True, there cannot be any roving enquiry on any of the points under Section 66(2) of the Act and as noted, what is provided for under the said provision is only inspection of the books of the Society. The writ appeal, in the circumstances, is dismissed with the above observation. Sd/- ## **P.B.SURESH KUMAR, JUDGE.** Sd/- **BASANT BALAJI, JUDGE.** YKB