THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. v. V. MOHANAN, Registrar of Co-operative Societies, Joint Registrar of Co-operative Societies (General), and State of Kerala

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN TUESDAY, THE 4TH DAY OF FEBRUARY 2014/15TH MAGHA, 1935 WA.No. 142 of 2014 (V) IN WP(C).24577/2013 -------------------------------------------AGAINST THE JUDGMENT IN WP(C) 24577/2013 of HIGH COURT OF KERALA DATED 24-12-2013 APPELLANT(S)/RESPONDENTS 1 TO 7: -------------------------------------------------------- 1. THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD, NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAD DISTRICT REPRESENTED BY ITS SECRETARY - 673 592. 2. THE SECRETARY, - THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAD DISTRICT - 673 592. 3. THE ADMINISTRATIVE COMMITTEE, - THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAD DISTRICT - 673 592. 4. THE CONVENER, - THE ADMINISTRATIVE COMMITTEE THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAD DISTRICT - 673 592. 5. N.M. VIJAYAN - CONVENER THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAD DISTRICT - 673 592. 6. T.J.JOSEPH, - MEMBER, ADMINISTRATIVE COMMITTEE THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAND DISTRICT - 673 592. 7. T.S. GEORGE, MEMBER, ADMINISTRATIVE COMMITTEE THE SULTHAN BATHERI SERVICE CO-OPERATIVE BANK LTD. NO.LL11, SULTHAN BATHERI PO., KALPETTA WAYANAND DISTRICT - 673 592. BY ADV. SRI.GEORGE POONTHOTTAM ## WA.142/14 RESPONDENT(S)/PETITIONERS AND RESPONDENTS 8 TO 10: -------------------------------------------------------------------------------------------- 1. V.MOHANAN, AGED 58 YEARS S/O.KESAVAN NAIR, VALIYAVATTOM HOUSE, NENMENI PO. SUTHAN BATHERI - 673 592. 2. P.C. MOHANAN MASTER,, AGED 63 YEARS S/O.BALAKRISHNAN NAIR, PUTHALATHU HOUSE, KOLIYADI NENMENI PO., SULTHAN BATHERI - 673 592. 3. T.N. VIJAYAN,, AGED 38 YEARS S/O.NARAYANAN, TEENUR HOUSE, PUTHENKUNNU P.O. SULTHAN BATHERI - 673 592. 4. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES THIRUVANANTHAPURAM - 695 001. 5. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) NORHT KALPETTA PO., WAYANAD DISTRICT - 673 592. 6. STATE OF KERALA, - REPRESENTED BY THE SECRETARY CO-OPERATIVE DEPARTMENT, GOVERNMENT SECRETARIAT THIRUVANANTHAPURAM - 695 001. R1 -R 3 BY ADV. SRI.K.K.CHANDRAN PILLAI (SR.) R1 -R 3 BY ADV. SRI.THOMAS JAMES MUNDACKAL R1 -R 3 BY ADV. SRI.ARUN ANTONY R1 -R 3 BY ADV. SMT.S.AMBILY R1 -R 3 BY ADV. SMT.K.V.SHENU R4 TO R6 BY SP. GOVT. PLEADER SRI.D.SOMASUNDARAM THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 04-02-2014, ALONG WITH WA. 143/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ANTONY DOMINIC & ANIL K.NARENDRAN, JJ. ----------------------------------W.A.Nos.142 & 143 of 2014 ----------------------------------Dated this the 4[th] day of February, 2014 ## JUDGMENT ## Antony Dominic, J. - 1.These writ appeals are filed against the common judgment of the learned single Judge in W.P(C). Nos.24577/13 and 28603/13, rendered on 24.12.2013. W.A.142/14 is filed by respondents 1 to 7 in W.p(C). 24577/13 and W.A.143/14 is filed by respondents 1 to 3 in W.p(C).28603/13. - 2.In so far as W.P(C).24577/13 is concerned, the prayers sought for in the writ petition reads thus: - i. Call for all records relating to this case and peruse the same. - ii. Issue a Writ in the nature of certiorari or such other appropriate writ order or direction quashing Ext.P1 and P2 to the extent it provides for amendment of byelaws of the 1st respondent for affecting division of the 1st respondent as provided under Section 14(1)(b) and all further proceedings taken pursuant thereto. - iii.Issue a Writ in the nature of Certiorari or such other appropriate writ, order or direction quashing WA.142/14 & 143/14 2 Ext.P14 to the extent it provides for continuing with the proceedings for division of the 1st respondent society stated to be on the basis of Resolution taken in the meeting stated to have been conducted on 14.8.2013. - iv.Issue a Writ in the nature of Certiorari or such other appropriate Writ, order or direction quashing the entire proceedings taken by respondents 1 to 4 for dividing the 1st respondent Society on the basis of Exts.P1 and P2. - v. Issue a Writ in the nature of mandamus or such other appropriate Writ, order or direction commanding 9th respondent not to approve any bylaw amendment stated to have been carried in the meeting stated to beheld on 14.8.2013 of the 1st respondent seeking for approval of the division of the 1st respondent if presented before him for approval. - vi.Issue a Writ in the nature of mandamus or such other appropriate Writ, order or direction commanding 9th respondent to issue appropriate direction to respondents 1 to 4 to give copies of the records to the petitioners as requested for in Exts.P10 to P13, P15 and P16. - vii.Issue a Writ in the nature of mandamus or such other appropriate Writ, order or direction commanding the 9th respondent to take action against respondents 3 to 7 for acting against the WA.142/14 & 143/14 3 provisions of the Acts, the Rules and Byelaws of the 1st respondent. - viii.To declare by the issuance of appropriate writ order or direction that the 3rd respondent has no power to take any decision touching amendment of the byelaws for dividing the 1st respondent society. - ix.To declare by the issuance of appropriate writ, order or direction that no Annual General Body Meeting is validly convened and conducted of the 1st respondent on 14.8.2013 and also to declare that no business has been transacted in the above meeting. - x. To grant such other reliefs that are found just and proper to be granted in the facts and circumstances of this Writ Petition and as may be prayed for during the pendency of the above Writ Petition before this Hon'ble Court. - 3.The factual background which led to the filing of W.P (C).24577/13 are that the affairs of the first appellant society are being administered by the Administrative Committee, the Convenor and the members of which are appellants 4 to 7. Based on the decision taken by the Administrative Committee, the Secretary of the bank issued Ext.P1 notice for Annual General meeting, which, inter alia, contained WA.142/14 & 143/14 4 proposals for the amendment of the bye-laws and for completing procedures under Section 14B of the Kerala Co-operative Societies Act, 1969 (hereinafter, the 'Act', for short) read with Rule 41 of the Kerala Cooperative Societies Rules, 1969 (hereinafter, the 'Rules', for short). These two items as contained in Ext.P1 notice read thus: - “10. ÈßÏÎÞÕÜß çÍÆ·Äß/ÉáÄßÏ ÈßÏÎÞÕÜß ¥¢·àµøßAW (ÕßÖÆÕßÕø¢ çÈÞGàØí çÌÞVÁßW) 11. 14 Ìß ÕµáMí ºG¢ 41 ®KßÕ Ø¢ÌtߺîáU È¿É¿ßdµÎBZ” - 4.While, according to the respondents who filed the writ petition, for various reasons which may not be relevant, the meeting did not take place, according to the appellants, the meeting did take place and was attended by 321 members of the bank and the resolutions proposed in Ext.P1 were carried. While the matters stood thus, the Convenor of the Administrative Committee issued Ext.P14, a notice under section 14(1)(b) of the Act, proposing to complete the proceedings under section 14 for the division of the society in the manner as proposed. WA.142/14 & 143/14 5 It was at that stage, W.P(C).24577/13 was filed with the prayers mentioned above. - 5.During the pendency of W.P(C).24577/13, the petitioners therein also filed W.P(C).28603/13 seeking a direction to the Administrative Committee to conduct the election to the Board of Directors of the bank on an expeditious basis. - 6.The matters were contested before the learned single Judge and by the impugned judgment, learned Judge held that everything done in pursuance of Exts.P1 and P2 in W.P(C).24577/13 were invalid and W.p(C). 28603/13 was disposed of by directing that election be conducted on an expeditious basis. It is aggrieved by this common judgment, these appeals are filed by the society, its Secretary, Administrative Committee, its Convenor and the members of the Administrative Committee. - 7.Heard the learned counsel for the appellants, learned counsel appearing for the petitioners in the writ petitions and the learned special Government Pleader WA.142/14 & 143/14 6 appearing for the State of Kerala and the official respondents. 8.In so far as W.p(C).24577/13, against the judgment of which WA.142/14 is filed, is concerned, the primary issue to be resolved is the validity of Ext.P1, the notice for Annual General Meeting. To the extent it is relevant, this notice contains a proposal for the amendment of the bye-laws of the first appellant. If this proposal is found to be illegal, proposal at clause 11 will also be consequentially illegal. We have already extracted clause 10 of Ext.P1 notice, where the proposal for amendment of the bye-laws has been published by the society, in the purported compliance of Rule 9(ii) of the Rules. This Rule, being relevant, reads thus: “9. **Procedure regarding amendment of bye-laws** -(i) Every proposal . . . . . . . . . . . . . (ii) No such resolution shall be valid, in the case of a society having not more than two thousand members, unless intimation of the amendment proposal has been given to the members of the society either in person and their full signature in token of having received the same has been obtained, or by post under WA.142/14 & 143/14 7 certificate of posting and in other cases, it shall be sufficient if the date, time, place and agenda of such general Body meeting with details of the amendment proposed are published in two vernacular dailies having wide circulation in the area of the operation of the society, in the notice board of the society, at the head office and branches and also in the notice board of the office of the Assistant Registrar of Cooperative Societies of the circles within which the area of the operation of the society falls.” (emphasis supplied) 9.Both sides agree that the society has more than 12000 members on its rolls. In the case of such a society, as mandated in the latter part of this Rule, it is necessary that the date, time, place and agenda of the General Body meeting with details of the amendment proposed shall be published in two vernacular dailies having wide circulation in the area of the operation of the society, apart from the notice board of the society and at every place specified in the Rules. The rule is a mandatory one and its non-compliance will render the notice and everything done on the basis of the notice illegal. The question in this case is whether the details given in Ext.P1 are sufficient to comply with the WA.142/14 & 143/14 8 requirements of Rule 9(ii). In our considered opinion, clause 10 of Ext.P1, which does not contain details of the amendment proposed, does not satisfy the requirement of publication of the details of the amendment proposed to be considered in the General Body meeting of the society. Therefore, anything that was done in pursuance of the said notice in relation to item No.10 therein are not in compliance with the requirements of rule 9(ii) of the Rules and are illegal. Once this position is accepted, Ext.P14, which is a later stage of the proceedings, also will have no legs to stand. - 10.The second issue which arises for consideration is whether the Administrative Committee is entitled to proceed afresh with its proposal to divide the assets of the society in terms of the provisions contained in section 14 of the Act and Rule 41 of the Rules. - 11.The justification for piloting such a proposal, as projected in the pleading and pressed into service at the Bar, is that in view of the provisions contained in section 2(oaa) read with section 7(1)(c) WA.142/14 & 143/14 9 and section 13A of the Act, the area of operation of the society should be restricted to Sulthan Bathery panchayat, whereas it is now spread over not only in Sulthan Bathery panchayat, but also in Nenmeni and Noolpuzha panchayats. It is also stated that in Nenmeni and Noolpuzha panchayats, similar societies have been registered in 2003 as per Exts.R4(a) and R4 (b). 12.On the other hand, the contention raised by the contesting respondents in the appeal is that in view of the first proviso to section 2(oaa), the restriction in the area of operation introduced in that section is inapplicable to the society since the society was already in existence at the time of the amendment of the Act in 2000. They also contended that the Administrative Committee is incompetent to take such policy decisions, particularly concerning the devision of the Bank, which was rejected by the general body in 2003. - 13.Although the aforesaid justifications for piloting the proposal are offered, learned counsel for the WA.142/14 & 143/14 10 appellants was unable to satisfy us that there existed any urgency, compelling the Administrative Committee, whose duty, as held by the Apex Court in Jt. Registrar of Co-operative Societies v. T.A.Kuttappan [2000 (2) KLT 480], is; “to set right the default, if any, and to enable the society to carry on its functions as enjoined by law. Thus, the role of an administrator or a committee appointed by the Registrar while the Committee of management is under supersession is as pointed out by this Court, only to bring on an even keel a ship which was in doldrums. If that is the objective and is borne in mind, the interpretation of these provisions will not be difficult.” 14.We also take note of the fact that a similar proposal made in 2003 was rejected by the General Body of the society. Further, according to the contesting respondents, in view of the first proviso to section 2(oaa), the restriction in the area of operation is inapplicable to the society. In other words, the appellants do not have any material whatsoever to justify the hurried manner in which WA.142/14 & 143/14 11 they are insisting on proceeding with the proposal for the division of the society at a time when the society was administered by an Administrative Committee and the election is already ordered to be held. Therefore, irrespective of whether they are statutorily empowered or not, at this stage, there is absolutely no justification made out by the Administrative Committee to proceed with its proposal to divide the society, which action can have far reaching consequences. Therefore, in the facts of this case, we are fully satisfied that the appellants shall not proceed with the proposal until the election is held and elected body assumes office. For these reasons, WA.142/14 is dismissed. 15.In the judgment in W.p(C).28603/13 against which WA.143/14 has been filed, this Court has directed that election to the Board of Directors be completed on an expeditious basis. Although this appeal has been filed, we see absolutely no reason why anybody should take exception to the direction of the learned Judge to elect the office bearers of the first WA.142/14 & 143/14 12 appellant bank. Therefore, we do not find any merit in this appeal. 16.The judgment of the learned Judge contain certain criticism against the officers of the department and the learned Special Government Pleader took serious exception to those observations. However, in the absence of any appeal filed by those who are aggrieved by such observations, we do not think that the learned special Government Pleader is justified in raising this contention in the appeal filed by somebody else. We, therefore, decline to entertain those objections raised by the learned Government Pleader. Appeals are dismissed. Sd/ANTONY DOMINIC, Judge. Sd/- ANIL K.NARENDRAN, Judge. kkb. /True copy/ PS to Judge