WP(C) No. 17348 of 2021 – The Managing Committee of Vellamunda Service Co-operative Bank Ltd. and Vellamunda Service Co-Operative Bank Ltd v. Joint Registrar of Co-operative Societies (General) and Enquiry Officer to Vellamunda Service Co-Operative Bank Ltd

**C. R.** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SATHISH NINAN** **WEDNESDAY, THE 15[TH] DAY OF SEPTEMBER 2021 / 24TH BHADRA, 1943** ## **WP(C) NO. 17348 OF 2021** ## **PETITIONERS:** 1 THE MANAGING COMMITTEE OF VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD. NO. C. 530 REPRESENTED BY ITS PRESIDENT, P.O, KATTAYAD, WAYANAD - 670731. 2 VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD NO.C. 530. REPRESENTED BY ITS SECRETARY, P.O, KATTAYAD, WAYANAD - 670731. BY ADVS. P.N.MOHANAN C.P.SABARI AMRUTHA SURESH ## **RESPONDENTS:** 1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, KALPATTA NORTH, WAYANADU - 673121. 2 THE ENQUIRY OFFICER TO VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD NO. C.530, PANAMARAM UNIT INSPECTOR, OFFICE OF THE ASSISTANT REGISTRAR OF COOPERATIVE SOCIETIES(GENERAL), MANANTHAVADI, WAYANAD - 670645. BY SMT.SHEEJA C.S., SR. GOVT. PLEADER THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15.09.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **C. R.** ## **SATHISH NINAN, J.** **= = = = = = = = = = = = = = = = = = W. P. (C) No.17348 of 2021** **= = = = = = = = = = = = = = = = = = Dated this the 15[th] day of September, 2021** ## **J U D G M E N T** Section 65(1) of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as “the Act”) provides for holding of an enquiry by the Registrar into the constitution, working and financial condition of a Society. The Section enables conduct of enquiry by the Registrar himself or by a person authorised by him in writing. Section 65(5) of the Act requires the enquiry to be completed within six months, which period is extendable by the Registrar up to one year in the aggregate. In a case where the period fixed by the Registrar expired but the enquiry is not over, can the Registrar extend the period retrospectively after the expiry of the period, or whether the power to extend could be exercised only prior to the expiry of the period, is the short question for determination in the **W. P. (C) No.17348 of 2021** -: 2 :- writ petition. 2. The first petitioner is the Managing Committee of the second petitioner Society. The term of the committee is up to 21.09.2024. The Registrar, on the basis of Ext.P1 audit report dated 27.11.2020, as per Ext.P5, ordered an enquiry under Section 65 of the Act. As per Ext.P5 order, the Unit Inspector in the Office of the Assistant Registrar (General), Mananthavady was authorised to hold the enquiry. Ext.P5 order is dated 06.01.2021. The period for enquiry, as fixed in Ext.P5, was one month from the date of the order. The enquiry could not be completed within the period, and extension was granted on 17.03.2021. Ext.P7 enquiry report was submitted on 30.04.2021. Thereafter, Ext.P6 order of extension (the second order of extension) was passed on 25.06.2021 which is after the expiry of the period, extending the period up to 30.04.2021. According to the petitioner, on the expiry of the period fixed, the person authorised to conduct enquiry ceased to have any ## **W. P. (C) No.17348 of 2021** -: 3 :- authority to conduct the enquiry; the power of the Registrar to extend the period could be exercised only before the expiry of the period fixed and not after its expiry. Ext.P7 report is thus bad in law, is the contention. 3. Heard learned counsel Sri.P.N.Mohanan on behalf of the petitioner and Sri.Bimal K. Nath and Smt.Sheeja C.S the learned Senior Government Pleaders on behalf of the respondents. 4. Since the issue involved centers around Section 65(5) of the Act, I deem it appropriate to extract the same. Section 65(5) of the Act reads thus:- _“(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 anyway, exceed one year.”_ **W. P. (C) No.17348 of 2021** -: 4 :- 5. As per the Section, the enquiry is to be completed within six months. The period is extendable for a maximum period of one year in the aggregate. If an enquiry could not be completed within one year, then, under Section 101 of the Act, it shall be open for the Government to exempt the Society from the operation of Section 65(5). Once such an order is passed, the one year restriction will not apply. The question as to whether such an order of exemption could be passed after the expiry of one year from the commencement of enquiry, thus giving retrospective exemption, came up for consideration before a Full Bench of this Court in _**Riji G. Nair (Dr.) v. State of Kerala and Ors. [2020 (6) KHC 633]**_ . The Full Bench answered it in the affirmative. Since the said decision has much significance in answering the issue in this case, the same is being adverted hereunder in a bit of detail. 6. In Riji Nair's case (supra), the one year period fixed under Section 65(5) had expired. Thereafter, the **W. P. (C) No.17348 of 2021** -: 5 :- Government, invoking powers under Section 101 of the Act exempted the Society from the application of Section 65(5). The exemption was granted retrospectively, that is, with effect from the date of expiry of the one year period, up to a future period. After an elaborate discussion into the scheme of the Act, the purpose of enquiry under Section 65, the rights of the parties involved etc., the Full Bench held that exemption could be granted even after expiry of the period and with retrospective operation i.e. with effect from the date of expiry of the period. To arrive at the conclusion, the Full Bench took note of various factors/ circumstances including :- (a) The object of the provisions in the Act, that it is for an orderly development/functioning of the Cooperative Societies. Paragraph 30 of the judgment, which discusses the same reads thus:- _“30. Apparently, the provisions under the Act, has been made keeping in mind the orderly_ **W. P. (C) No.17348 of 2021** -: 6 :- _development of co-operative sector in the State. The Statute takes care of the formation and registration of co-operative societies, rights and liabilities of the members, election of managing committee members, conduct of meetings, supersession of managing committee, proper upkeep of its properties, audit, inquiry into its functioning, imposition of surcharge, settlement of disputes, winding up etc.”_ (b) Section 65 provides for only an enquiry into the constitution, working and financial condition of the Society; it does not affect or interfere with any vested rights. - (c) The time limit specified under Section 65(5) - for conduct of enquiry is only the part of a procedure under the statutory scheme. (d) A request for exemption from the time limit fixed under Section 65(5) could be made only on the expiry of the time limit. **W. P. (C) No.17348 of 2021** -: 7 :- 7. The above deductions/observations of the Full Bench, while holding that there could be retrospective extension of period, are of significance while considering the powers of the Registrar to extend the period. 8. In addition to the matters mentioned in (a) to - (d) above, the following aspects are also significant:- (e) Even if the period expires, there is no vesting of rights. Unlike a situation where remedy is barred on the expiry of the period of limitation, a fresh S.65 enquiry could be initiated even after the expiry of the period. (f) Registrar has been given the power to extend the period up to one year. There is no prohibition against exercising the power after expiry of the period. (g) Rule 66(3) requires an interim report to be filed stating the reasons for failure to complete the inspection within the time originally granted. It is possible that in many cases, the reasons could be stated **W. P. (C) No.17348 of 2021** **==> picture [34 x 10] intentionally omitted <==** or would be available to be stated only on the expiry of the period granted. (h) Rule 66(3) requires reasons to be stated “for failure to complete the enquiry”. The words refer to some event in the past; a failure to have the enquiry completed within the period fixed. This is in tune with the observation of the Full Bench noted as clause (d) above. Of course, the first portion of the rule states, “cannot be completed”. This need only be understood to mean that a request for extension could be made before the expiry of the period also. (i) The heading of Rule 66 reads thus, “ _**Procedure for the conduct of inquiry and inspection**_ ”; thus fortifying the observation of the Full Bench referred in clause (c) above that, the prescription of time falls only in the realm of procedure and that retrospective grant of time, unless prohibited or interfering with vested rights, cannot be held to be bad. **W. P. (C) No.17348 of 2021** -: 9 :- 9. Power has been conferred on the Registrar to extend the time. There is no prohibition against the exercise of power after the expiry of the period originally fixed. The grant is only procedural and does not interfere with any vested rights. Therefore, in the light of the foregoing discussions, I am of the opinion that the Registrar has the power to extend the period even after the expiry of the period originally fixed. Once it is held that the Registrar has the power to grant retrospective extension, the challenge raised against Ext.P7 on the ground of authority of the officer, does not survive. To conclude, the challenge as against Ext.P7 report on the aforesaid grounds fail. 10. The petitioner has a further contention that as per Ext.P7 report, the Secretary of the Society has been found to be at fault and that he has recouped the loss caused to the Society and therefore, the consequent proceedings ordering Section 68 enquiry is unsustainable. A perusal of Ext.P7 report shows that **W. P. (C) No.17348 of 2021** -: 10 :- there are findings against the Managing Committee. As regards the challenge against the report under Section 65 on the merits, the law as it stands, is as laid down in _**State of Kerala v. Aravindakshan Nair [2010 (3) KLT 11]**_ that, the stage to challenge is in the course of hearing under Section 68(2). Therefore, the challenge against Section 65 report on its merits, is not liable to be entertained at this stage. It is open for the petitioner to raise his challenge against the report at the stage of Section 68(2). On the afore discussions, the writ petition fails and is accordingly dismissed. Sd/- **SATHISH NINAN JUDGE** kns/- //True Copy// P.S. to Judge ## **APPENDIX OF WP(C) 17348/2021** PETITIONER EXHIBITS |Exhibit P1|A TRUE COPY OF THE AUDIT|REPORT DATED| |---|---|---| ||27.11.2020 OF THE YEAR 2019-2020 OF THE|| ||DEPARTMENT.|| |Exhibit P2|A TRUE COPY OF THE SUSPENSION|ORDER DATED| ||26.12.2020 OF THE BANK.|| |Exhibit P3|A TRUE COPY OF THE RESOLUTION NO.1 DATED|| ||07.07.2021 OF THE SUB COMMITTEE.|| |Exhibit P4|TRUE COPIES OF THE REMITTANCE|MADE BY THE| ||SAID SRI.MODU DATED 16.03.2020, 15.05.2020,|| ||30.05.2020,<br>16.07.2020,|21.07.2020,| ||22.07.2020,<br>24.07.2020,|07.08.2020,| ||28.10.2020, 03.11.2020 & 01.01.2021.|| |Exhibit P5|A TRUE COPY OF THE ORDER DATED|06.01.2021 OF| ||THE JOINT REGISTRAR.|| |Exhibit P6|A TRUE COPY OF THE ORDER DATED|25.06.2021 OF| ||THE JOINT REGISTRAR.|| |Exhibit P7|A TRUE COPY OF THE ENQUIRY|REPORT DATED| ||30.04.2021<br>SUBMITTED<br>BY|THE<br>SECOND| ||RESPONDENT.|| |Exhibit P8|A TRUE COPY OF THE ORDER DATED|31.05.2021 IN| ||WA NO. 1751/2020.|| |Exhibit P9|A TRUE COPY OF THE ORDER DATED|19.07.2021 OF| ||THE JOINT REGISTRAR.|| |Exhibit P10|A TRUE COPY OF THE RESOLUTION|NO.14 DATED| ||26.07.2021 OF THE MANAGING COMMITTEE.|| -----