WA NO. 1381 OF 2021

## **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. 1381 OF 2021** **AGAINST THE JUDGMENT IN WP(C) 25444/2020 OF HIGH COURT OF KERALA** ## **APPELLANTS/PETITIONERS:** 1 T.KOSHY AGED 61 YEARS S/O. THOMAS PANICKER, PARATHUNDIYIL VEEDU, PORUVAZHI NORTH, CHATHAKULAM P.O., KOLLAM-690 520. 2 H. ABDUL HALEEL AGED 49 YEARS S/O. HANEEFA RAWTHER, SAJITHA MANZIL, SOORANAD NORTH, THEKKUMURI, SOORANAD P.O., KOLLAM-690 522. 3 AYANTHIYIL SHIHAB AGED 40 YEARS S/O. HANEEFA RAWTHER, PORUVAZHI KAMBALADI, PORUVAZHI P.O., KOLLAM-690 520. 4 A.ABABIYA BEEVI AGED 55 YEARS D/O. SHAHUL HAMEED RAWTHER, KIZHAKKEVILAYIL, SOORANAD NORTH, THEKKEMURI, SOORANAD P.O., KOLLAM-690 522. BY ADVS. K.C.SANTHOSHKUMAR K.K.CHANDRALEKHA ## **RESPONDENTS/RESPONDENTS:** 1 STATE OF KERALA REPRESENTED BY THE SECRETARY TO GOVERNMENT, COOPERATIVE DEPARTMENT, GOVERNMENT OF KERALA, THIRUVANANTHAPURAM-695 001. 2 THE REGISTRAR OF CO-OPERATIVE SOCIEITES THIRUVANANTHAPURAM-695 001. **WA NO. 1381 OF 2021** **2** 3 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), KOLLAM-691 001. 4 PORUVAZHI SERVICE CO-OPERATIVE BANK LTD.NO.1132 PORUVAZHI, SASTHAMCOTTA, KOLLAM-691 001 REPRESENTED BY CONVENOR, ADMINISTRATIVE COMMITTEE 5 THE ENQUIRY OFFICER (UNIT INSPECTOR) SASTHAMCOTTA UNIT, OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) SASTHAMCOTTA, KOLLAM DISTRICT-691 001. 6 THE ENQUIRY OFFICER (UNIT INSPECTOR) SOORANAD UNIT, OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), SASTHAMCOTTA, KOLLAM DISTRICT-691 001. BY ADV S.SREEJITH (S-3453) ## **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. 1381 OF 2021** **3** ## JUDGMENT ## Amit Rawal, J. Appellants in the present intra court appeal are stated to be the members of the Managing Committee of Poruvazhi Service Co-operative Bank, 4[th] respondent. 2. The facts leading to challenge of the enquiry and report dated 31.7.2019, Ext.P4 held under Section 65 of the Kerala Co-operative Societies Act (KCS Act), Ext.P6 notice under Section 68(1) of the KCS act and Ext.P9 dated 2.8.2021 granting exemption under Section 101 of the Act orders, in brief, are as under. 3. With effect from 8.7.2017 the appellant No.1 was the President of the Committee whereas the appellant No.2 to 4 are members of the former Managing Committee. On 26.4.2018, 1[st] appellant, received a complaint from two account holders against the then Secretary, of the 4[th] respondent that he was not allowing them to withdraw the amount from their respective accounts. Enquiry was conducted on behalf of the appellants and it was found that the Secretary besides other charges was holding the charge of Cashier and had in fact withdrawn the amount, which was sought to be withdrawn. On the basis of **WA NO. 1381 OF 2021** **4** enquiry, was placed under suspension on 2.5.2018. Even an FIR bearing No.0749 of 2018, Ext.P3 for commission of offences punishable under Section 420 and 409 of IPC has also been registered. The aforementioned facts were brought to the notice of the Registrar. Registrar on receipt of the information vide order dated 17.4.2019 ordered for enquiry under Section 65 of the KCS Act. However the Enquiry Officer, Unit Inspector ie., the 5[th] respondent proceeded to finalize the report after the expiry of period ie., on 31.7.2019 on an assumption that retrospective extension would be granted by the Government. But as a matter of fact, no such extension was granted after 17.4.2019, thus, for all intents and purposes, on the date of submission of the report, he had become functus officio. Before that, interim report dated 31.7.2018 was also submitted. 4. Petitioners submitted representation Ext.P5 to Joint Registrar against the conduct of the Enquiry Officer but was served with a notice requiring them to appear before the Enquiry officer ie., the 6[th] respondent in connection with the proceedings initiated under Section 68(1) of the KCS Act ie., surcharge proceedings vide Ext.P6 dated 14.10.2020. Reply dated 19.10.2020 Ext.P7 was submitted. On the basis of the **WA NO. 1381 OF 2021** **5** aforementioned fact, it was urged before the Single Bench that Rule 66(5) mandates that the report shall invariably contain the latest balance sheet of the Society and the last known members of the Committee and of the Secretary. Enquiry officer did not have any authority to conduct the enquiry beyond 17.4.2019 as no extension was granted by the authority who appointed the enquiry officer. 5. The explanation offered by the enquiry officer was that the request pending before the Government was flagrant violation of Rule 66 of the KCS Rules. The entire process, commencement, conduct and culmination of the enquiry under Section 65 by the 5[th] respondent, ie, the enquiry officer was absolutely illegal and without adherence to mandatory procedure. The action of the 6[th] respondent in respect of surcharge proceedings, in lieu of the notice Ext.P6, is wholly vitiated in law. During the pendency of the writ petition, request was made to amend the writ petition by laying challenge to the order dated 2.8.2021, Ext.P9 passed under Section 101 of the Act whereby exemption for applicability of the period of conducting an enquiry as prescribed under Section 65(5) of the KCS Act was granted. **WA NO. 1381 OF 2021** **6** 6. Learned Single Bench rejected the aforementioned prayer and dismissed the writ petition by noticing all the provisions of the Act as well as on account of the ratio decidendi culled out in the judgment in Riji G. Nair (Dr.) v. State of Kerala and Ors. (2020 96) KHC 633) . 7. Learned counsel appearing on behalf of the appellants in support of the memorandum of appeal raised the following submissions: Learned Single Judge failed to notice the fact that Ext.P4 report dated 31.7.2019 was without jurisdiction as the Enquiry officer by that time had already become functus officio. His one year period had expired in April 2019. Surcharge proceedings initiated vide Ext.P6 were primary in nature as it was not based upon a valid report as required to be submitted under Section 65 of the Act. The remarks of the enquiry officer, on the premise that the request for extension of time beyond 17.4.2019, was in flagrant violation of the statutory provisions of Rule 66. The provisions of Rule 68(1) do not authorize invocation of powers unless and until it is found that particular persons who is or was entrusted with organization or management of such society or who is or has at any time been **WA NO. 1381 OF 2021** **7** an officer or an employee of the society, made any payment contrary to accepted Rules or bye-laws. Once the report Ext.P4 was without jurisdiction, the consequential proceedings of surcharge were also invalid and unsustainable. 8. We have heard the learned counsel for the appellants and appraised the paper book and of the view that there is no force and merit for, the reason is not one but many. 9. Section 101 of the Act empowers the Government to grant exemption with regard to the applicability of the period of one year as prescribed under Section 65(5) of the Act. Section 65(5), Rule 66(5) as well as Section 101 of the Act reads as under: Section 65(5) The inquiry 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 any way, exceed one year.] Rule 66(5) The person authorised to conduct the inquiry or inspection shall submit his report to the Registrar on all points mentioned in the order referred to in clause (c) to sub-rule (1). The report shall invariably contain a latest balance sheet of the society and the last known addresses of the members of the Committee and of the Secretary. The report shall also contain his findings and the reason therefore; supported by such documentary or other evidence as recorded by him during the course of the inquiry or inspection. He shall also specify in his report the costs of the inquiry or inspection together with reasons and recommend to the Registrar the manner in which the entire cost or a part thereof may be apportioned amongst the parties specified in Section 67. The Registrar shall pass such orders thereon as may be considered just after giving a **WA NO. 1381 OF 2021** **8** reasonable opportunity of being heard to the society, person or persons concerned. 101.Power to exempt societies.- The Government may, if they are satisfied that it is necessary so to do in the public interest, by general or special order for reasons to be recorded, exempt any society or any class of societies from any of the provisions of this Act or direct that such provisions shall apply to such society or class of societies subject to such modifications as may be specified in the order. ## 10. It is in that background, order dated 2.8.2021, Ext.P9 ## was passed. Relevant portion of the same reads thus: ## G.O.(P)No.120/2021/Co-op dated 2.8.2021 WHEREAS, under sub section (5) of section 65 of the Kerala Cooperative Societies Act, 1969 (21 of 1969), the enquiry under this section shall be completed within a period of six months which period may at 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; AND WHEREAS, the Joint Registrar of Co-operative Societies (General), Kollam reported through the Registrar of Cooperative Societies that the enquiry ordered under sub-section (5) of section 65 of the above said Act into various irregularities found in the Poruvazhy Service Co-operative Bank for the period up to 16 deg April, 2019 was not completed. The irregularities found in the above said Bank was very serious in nature, the employees involved in the irregularities arrested by the police and remanded and released them on bail after one month on the condition that, they could not enter the Taluk for ninety days. Therefore, the Enquiry Officer was unable to record the statement of the employees and to obtain the required documents for the enquiry and hence the enquiry could not be completed within the period; AND WHEREAS, the Joint Registrar of Co-operative Societies (General), Kollam has requested the Government through the Registrar of Co-operative Societies to extend the period of enquiry for a further period from 17th April, 2019 to 31[st] July, 2019; AND WHEREAS, the Government have examined the matter in detail and are satisfied that it is necessary, in public interest, to direct that sub-section (5) of section 65 of the Kerala Cooperative Societies Act, 1969 (21 of 1969) shall apply to the Poruvazhy Service Co-operative Bank with certain modifications **WA NO. 1381 OF 2021** **9** and to extend the period of enquiry as per the above said section for a further period from 17th April, 2019 to 31[st] July,2019; Now THEREFORE, in exercise of the powers conferred by section 101 of the Kerala Co-operative Societies Act, 1969 (Act 21 of 1969), the Government of Kerala hereby direct that the provisions of sub-section (5) of section 65 of the said Act, as so modified, permit the Joint Registrar of Co- operative Societies (General), Kollam to extend the period of enquiry in the Poruvazhy Service Co-operative Bank for a further period from 17[th] April, 2019 to 31[st] July, 2019. 11. Thus the argument that the report dated 31.7.2019 was without jurisdiction as the enquiry officer had become functus officio pales into insignificance. Rule 47(d) of the KCS Rules leaves no manner of doubt that not only the Secretary but all the members of the Committee or person who had been in charge of the control and affairs of the Society are liable for misappropriation or financial irregularities. It is too premature to comment upon the pending proceedings under Section 68 of the Act as all the appellants would have the right including the one who had not approached this Court to defend and take all possible pleas. But the fact remains once an order under Section 101 has been passed, time line as prescribed under Section 65(5) of the KCS Act would not take away the alleged vested right. The Full Bench in Riji G. Nair (supra) has already upheld the power of the Government to grant **WA NO. 1381 OF 2021** **10** retrospective extension by clarifying that the vested rights cannot be divested, for, the fixation of time line is for the purpose of holding enquiry is only a matter of procedure. Mere lapse of enquiry consequent on the expiry of time does not take away any vested right of the member of the Committee as a fresh enquriy can always be held. 12. As an upshot of the findings, we do not find any illegality or perversity in the judgment of the Single bench. No ground for interference is made out. Writ appeal is accordingly dismissed. Sd/- AMIT RAWAL JUDGE sab sd/C.S. SUDHA JUDGE