WA No. 1296 of 2021: The Managing Committee of Vellamunda Service Co-operative Bank Ltd. No.C.530 (represented by its President) and Vellamunda Service Co-operative Bank Ltd. No.C.530 (represented by its Secretary) vs Joint Registrar of Co-operative Societies (General) and The Enquiry Officer to Vellamunda Service Co-operative Bank Ltd., Panamaram Unit

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE AMIT RAWAL** ## **&** ## **THE HONOURABLE MRS. JUSTICE C.S. SUDHA** **THURSDAY, THE 25[TH] DAY OF JANUARY 2024 / 5TH MAGHA, 1945** ## **WA NO. 1296 OF 2021** ## **AGAINST THE JUDGMENT IN WP(C) 17348/2021 OF HIGH COURT OF KERALA** ## **APPELLANTS/PETITIONERS:** 1 THE MANAGING COMMITTEE OF VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD NO.C.530, REP.BY ITS PRESIDENT, P.O.KATTAYAD, WAYANAD 670 731 2 VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD NO.C.530 REP.BY ITS SECRETARY, P.O.KATTAYAD, WAYANAD 670 731 BY ADV P.N.MOHANAN ## **RESPONDENTS/RESPONDENTS:** 1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL) OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, KALPATTA NORTH, WAYANADU 673 121 2 THE ENQUIRY OFFICER TO VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD. NO.C.530, PANAMARAM UNIT INSPECTOR, OFFICE OF THE ASSITANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), MANATHAVADI, WAYANAD 670 645 ## **OTHER PRESENT:** SR GP SRI T K VIPINDAS THIS WRIT APPEAL HAVING COME UP FOR HEARING ON 25.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **WA NO. 1296 OF 2021** **2** ## JUDGMENT ## Amit Rawal, J. 1. The instant intra court appeal is preferred against the judgment of the Single Bench whereby the claim of the appellants, petitioners laying challenge to Ext.P7 enquiry report dated 30.4.2021 and order dated 19.7.2021 of the Joint Registrar, Ext.P9 ordering the initiation of surcharge proceedings under Section 68 of the Kerala Co-operative Societies Act (KCS Act), have been rejected. 2. Facts leading to the filing of the writ petition at the instance of the appellants,petitioners, in brief are as under. Petitioners are President and Secretary of the Managing Committee of the Vellamunda Service Co-operative Bank consisting of 9 (nine) members and their term would expire on 21.9.2024. The departmental auditor appointed under Section 63 of the KCS Act for the year 2019-2020 on audit found out certain book adjustments were made by the then Secretary while submitting the report dated 27.11.2020, Ext.P1. In other words, the Auditor found that it was a case of misappropriation committed by the then Secretary, though the Committee was **WA NO. 1296 OF 2021** **3** not found responsible. The Auditor also recommended to initiate enquiry as per Section 65 of the KCS Act. 3. Consequence thereof, Secretary vide order dated 26.12.2020, Ext.P2 was placed under suspension and charge sheet was issued much less the domestic enquiry. The punishment of reversion to the post of Head Clerk was imposed. The then Secretary also refunded the amount of Rs.12,30,555/- allegedly misappropriated on different dates as evident from Ext.P4. 4. The Joint Registrar Co-operative Society, 1[st] respondent, on the basis of the audit report vide order dated 6.1.2021, Ext.P5 ordered an enquiry as per Section 65 of the KCS Act. The aforementioned order was challenged in this Court vide W.P.(C) No.2547 of 2021 which was dismissed. The order aforementioned contained time line for completion of the enquiry of one month ie., on or before 5.2.2021. The enquiry officer / 2[nd] respondent did not complete the enquiry within the stipulated period but submitted a letter for extension of the term of enquiry up to 30.4.2021. The said request was accepted by the Joint Registrar vide order dated **WA NO. 1296 OF 2021** **4** 25.6.2021, Ext.P6. 5. It was done in purported compliance of provisions of sub Rule (3) of Rule 66 of the KCS Rules prescribing the procedure for conducting an enquiry ie., an enquiry ordered to be conducted within a prescribed period and submission of an interim report stating the reasons for failure and only thereafter, on recording of the satisfaction, extension may be granted. Since the expiry of the term of the enquiry expired on 5.2.2021, enquiry officer became functus officio and in the absence of any post sanction, the entire procedure was vitiated. 6. However, the enquiry officer submitted an interim report dated 15.4.2021 as enquiry was to be completed on 30.4.2021, Ext.P6. But the said interim report was without jurisdiction as the time line was over and thereafter submitted a final report dated 30.4.2021, Ext.P7. 7. Learned Single Judge noticing the decision rendered in Full Bench in Riji G. Nair (Dr.) v. State of Kerala and Ors. (2020 96) KHC 633) endorsing the retrospective exemption, dismissed the writ petition. **WA NO. 1296 OF 2021** **5** 8. Learned counsel appearing on behalf of the appellants in support of the memorandum of appeal besides the points raised in the writ petition submitted that learned Single Judge did not assign any reasons with regard to the provisions of sub Rule (3) of Rule 66 of the KCS Act which is a mandatory requirement of law and non compliance of any requirements would render the entire inspection or enquiry invalid/vitiated. Mandatory requirements of passing an order under sub Rule (5) of Rule 66 of the KCS Rules, to be followed on receipt of the enquiry, has also gone unnoticed, as the report did not contain a balance sheet. 9. Learned Singe Judge failed to note that the power conferred on the Registrar to extend time is governed by the procedure prescribed under Section 66 and Rule 66 of the KCS Act and the Rules. Regarding the misappropriation, the enquiry report only accuses the Secretary but not the Managing committee, therefore the consequent proceedings vide Ext.P7 ordering the surcharge under Section 68 are unsustainable. 10. We have heard the learned counsel for the parties **WA NO. 1296 OF 2021** **6** and appraised the paper book. Section 65(5) of the KCS Act reads thus: 65(5). The enquiry under this section shall be completed within a period of six months (which period may at the discretion of the Registrar and for reasons to be recorded in writing, be extended from time to time, so however that the aggregate period shall not in anyway, exceed one year). 11. The administrative action of the Registrar / Joint Registrar cannot be termed to be fatal and erroneous to the procedure adopted by the enquiry officer and branded to be functus officio, for, the first order of holding the enquiry was 6.1.2021, requiring to submit a report within a period of one month which expired on 5.2.2021. In fact the six months period would have expired on 5.7.2021 and one year on 5.1.2022. The enquiry concededly was not completed by the enquiry officer and request was submitted on 15.4.2021 to extend the term of the enquiry upto 30.4.2021 which was extended vide order dated 25.6.2021, Ext.P6. Immediately on issuing Ext.P6, submitted the enquiry report dated 30.4.2021, Ext.P7 indicating not only the Secretary but the members of the Managing Committee, thus contention that the valuable right of the Managing Committee or the Secretary has been **WA NO. 1296 OF 2021** **7** taken away on account of the non compliance of the procedure prescribed in sub Section 5 of Section 66 of KCS Act cannot be countenanced. The provisions of Rules 66 deals with the submission of the interim report which was submitted. The question which now raised is “whether there is a prohibition against exercising of the power after expiry of the period”. The answer to this fact has already been given against the petitioners by the Full Bench in Riji G. Nair v. State of Kerala and Others (supra) wherein in paragraph 35, it has been held as under: 35. In fact, Section 101 of the Act, empowers the Government with wide powers, to ensure smooth functioning of the societies as envisaged under the statute. At times, there might be difficulty faced by a society or societies in complying with the provisions of the statute, in which event, the statute itself has provided a machinery to set right such deficiencies. Such power can be exercised only in public interest, which of course is a matter to be considered on a case to case basis. Therefore, the power to be exercised under Section 101 of the Act, can occur in some cases only after the event had occurred. For example, in the case on hand, the Registrar could not complete the enquiry within the time limit specified under **Section 65(5)** , on account of the fact that voluminous documents had to be verified to prepare a report. Is it that the enquiry should be stopped or should he ask the Government to exempt the society from the limitation of time specified to complete the report. If the WP(C) No. 36951/2017 & WA No.1554/2017 enquiry is stopped after the specified time, the Government will not have the advantage of monitoring the accounts of the society, which is not the purport of the statutory scheme. The Registrar could ask for exemption from the provision under Section 65(5) only after the time limit has expired. Therefore, taking into account the statutory scheme in which Government and the statutory authorities have control over the functioning of the societies, **WA NO. 1296 OF 2021** **8** though not expressly stated, Government's power to issue orders of exemption under Section 101 retrospectively is implicit. 12. On expiry of the period, no vested right would accrue in favour of the Managing Committee or the Secretary. It cannot be said to have been violated or taken away as per the extension granted by the Registrar vide order dated 25.6.2021. No harm and prejudice in our considered view has been caused. As far as the ground of laying challenge to the proceedings for initiating surcharge proceedings, the report attributes certain allegations against the Managing Committee and that cannot be a ground for interference as the appellants would have a right to take all the pleas in the pending surcharge proceedings. We do not find any illegality or perversity in the judgment of the Single Bench to form different opinion. Writ appeal sans merit and is accordingly dismissed. SD/- AMIT RAWAL, JUDGE SD/- sab C.S. SUDHA, JUDGE