Dismissed

A.K.Sasidharan Nair v. State of Kerala

Kerala HC27 Jul 2016WP(C)/17320/2007

Case brief

AI extract

What is this about?

The High Court of Kerala dismissed a writ petition challenging surcharge orders passed under the Kerala Co-operative Societies Act. The court found that the petitioners were afforded adequate opportunity of hearing before the passing of the orders and held that no illegality or arbitrariness warranted judicial intervention.

What did the court decide?

The writ petition was dismissed, and the impugned orders were upheld.

A.K.Sasidharan Nair Vs State of Kerala — Cooperative Societies | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 27TH DAY OF JULY 2016/5TH SRAVANA, 1938

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WP(C).No. 17320 of 2007 (J)

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PETITIONER(S):

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1. A.K.SASIDHARAN NAIR, T.C.54/2074, ASOKAVANAM, CGS NAGAR, VISWAMBARAN ROAD, PAPPANAMCODE, THIRUVANANTHAPURAM - 695 018.

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2. G.VISWANATHAN, DRAFTSMAN, THIRUVANANTHAPURAM CENTRAL CIRCLE, CENTRAL PUBLIC WORKS DEPARTMENT, POONKULAM, CGO COMPLEX, THIRUVANANTHAPURAM.

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3. N.R.SADASIVAN PILLAI, 'SIVAGIRI', HOUSE NO.1, CGS NAGAR, VISWAMBARAN ROAD, PAPPANAMCODE, THIRUVANANTHAPURAM.

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BY ADV. SRI.ELVIN PETER P.J.

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RESPONDENT(S):

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1. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.

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2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM.

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3. C.P.W.D.STAFF CO-OPERATIVE HOUSING SOCIETY LTD.NO.T.874, KESAVADASAPURAM, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY. (DELETED)

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(THE 3RD RESPONDENT IS REMOVED FROM THE PARTY ARRAY AT THE RISK OF PETITIONER AS PER ORDER DATED 20/02/2013 BY THE HONORABLE MR.JUSTICE K.SURENDRA MOHAN IN IA 2514/2013).

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R1 & R2 BY GOVERNMENT PLEADER SRI.T.R.RAJESH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 20-07-2016 THE COURT ON 27-07-2016, DELIVERED THE FOLLOWING:

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msv/

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WP(C).No. 17320 of 2007 (J)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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P1 : TRUE COPY OF THE REPORT DTD.11.2.1991 EXTRACTED BY THE 1ST PETITIONER FROM THE ORIGINAL OF THE REPORT THAT WAS AVAILABLE WITH THE JOINT REGISTRAR.

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P2 : TRUE COPY OF THE COMMUNICATION DTD.30.3.1991 ISSUED BY THE 2ND RESPONDENT.

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P3 : TRUE COPY OF THE GIST OF THE ENQUIRY REPORT SEND ALONG WITH EXT.P2.

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P4 : TRUE COPY OF ORDER G.O. DTD.2.3.1994 ISSUED BY THE GOVERNMENT.

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P5 : TRUE COPY OF THE REPRESENTATION DTD.19.3.1994 SUBMITTED BY THE 2ND PETITIONER TO THE REGISTRAR.

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P6 : TRUE COPY OF THE COMMUNICATION DTD.9.5.1994 ISSUED BY THE JOINT REGISTRAR.

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P7 : TRUE COPY OF THE JUDGMENT DTD.11.2.2002 IN OP.NO.6864/1994 OF THIS HON'BLE COURT.

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P8 : TRUE COPY OF THE ORDER DTD.18.12.2004 ISSUED BY THE JOINT REGISTRAR.

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P9 : TRUE COPY OF THE APPEAL DTD.4.3.2005 FILED BY THE PETITIONERS BEFORE THE GOVERNMENT.

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P10: TRUE COPY OF ORDER G.O.(RT) NO.112/07/CO-OP. DTD.20.2.2007 ISSUED BY THE GOVERNMENT.

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RESPONDENT(S)' EXHIBITS:

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------------------------

NIL

//TRUE COPY//

P.S.TO JUDGE

Msv/

SHAJI P. CHALY, J.

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W.P.(C). No. 17320 of 2007

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----------------------------------------

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Dated this the 27^th day of July, 2016

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JUDGMENT

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Petitioners have filed this writ petition seeking to

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quash Exts.P8 and P10 orders passed by the second

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and first respondents respectively and also to declare that petitioners are not liable to be imposed with any

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surcharge and no amount can be recovered from petitioners under the provisions of the Kerala Cooperative Societies Act and Rules (hereinafter referred to as ' the Act' and 'the Rules').

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Material facts for the disposal of the writ

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petition are as follows:-

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On the basis of petition filed by some members of the

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CPWD Staff Co-operative Housing Society Ltd. No. T 874, Thiruvananthapuram (hereinafter referred to as' the Society) an enquiry under Section 65 of the Act was

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conducted by the Assistant Registrar of Co-operative

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W.P.(C). No. 17320 of 2007

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Societies (General), Thiruvananthapuram. All the

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petitioners were employees of the Central Public Works Department and petitioners 1 and 3 retired from service on 31.1.1997 and 1.2.1998. The second petitioner was in service while the writ petition was filed.

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The Society is one registered under the Kerala Co-operative Societies Act in the year 1984 and started operation on 5.12.1984 by the petitioners along with other members of the Society. During the period from 1985-86 to 1987-88 while petitioners were members of the Managing Committee of the Society, an enquiry into the affairs of the Society was conducted by the second respondent under Section 68 of the Act. According to petitioner, the said enquiry was conducted since certain members of the General Body who had ill will against the petitioners and other members of the Managing Committee. There were 90 members in the Society. Among the said members 64 members were

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employees of Central Public Works Department. The other 24 members were employees of other Government of India Organisation. The Board of Directors of the Society was constituted by the employees of the Central Public Works Department. Since the members of the General Body of the Society, who were working in other Central Government Organisation did not succeed in getting elected to the managing Committee of the Society, they filed petitions before the second respondent against the members of the Board of Directors with the intention to harass them.

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On the said basis, an enquiry under Section 65 of the Act was conducted by the Assistant Registrar of Co-operative Societies (General), Thituvananthapuram. In the said enquiry, according to petitioners no notice was given to the members of the Board of Directors of the Society personally. On the other hand, notice was

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given only to the Society. Along with Section 65 enquiry conducted, an audit was also conducted by the Senior Auditor of Co-operative Societies, Thiruvananthapuram. It is the submission of petitioners that, Senior Auditor did not find any irregularity in the functioning of the Society. The Audit report was furnished only after Section 65 enquiry conducted by the Assistant Registrar was over.

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The Assistant Registrar (Audit) opined to conduct a re-audit and accordingly a Junior Auditor was appointed. In the said re-audit conducted, certain observations were made against certain members of the Board of Directors including petitioners without giving notice to the members of the Board of Directors. Thus based on Section 65 enquiry conducted by the Assistant Registrar (General), wherein he made adverse remarks against the Board of Directors of the Society and the reaudit report submitted by the Auditor, a detailed enquiry

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under Section 68 was ordered by the Joint Registrar of Co-operative Societies.

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The Assistant Registrar (General)

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Thiruvananthauram conducted an enquiry under Section 68 (1) of the Act after issuing notice to the Society and the members of the Board of Directors. To the said notice issued by the Assistant Registrar(General), a detailed reply was given by the then Secretary of the Society and replies were given by the members of the Board of Directors. After considering the said reply the Assistant Registrar (General) submitted a report before the second respondent recommending further enquiry under Section 68(2) of the Act. Thereafter, the Joint Registrar (General) considered the entire issues and heard the Society as well as members of the Board of Directors and prepared a report dated 11.2.1991 absolving the petitioners as well as other members of the Board of Directors from the charge levelled against

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them, evident from Ext.P1. It is also contended that, only a gist of the report was provided by the second respondent while petitioners were exonerated. Covering letter and the gist of the enquiry report are evident from Exts.P2 and P3.

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Against the order absolving petitioners from the liabilities, first respondent invoking power under Section 87 of the Act, issued a Government Order dated 2.3.1994 setting aside Ext.P2 proceedings and remanded the matter to the second respondent for fresh disposal, evident from Ext.P4. According to petitioners, the only reason stated in Ext.P4 order is that, Ext.P2 is not a speaking order and the same does not assign any reason for exonerating petitioner and other members of the Board of Directors. Therefore, according to petitioners, Ext.P4 order was absolutely illegal, unfair and unreasonable. That, Ext.P4 is passed without considering the report and without calling for the report

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from the Joint Registrar. As a matter of fact, a copy of the enquiry report had not been served on the petitioners and other members of the Society. In that circumstances, petitioners submitted a representation before the Registrar on 19.3.1994 seeking to issue a copy of the enquiry report, evident from Ext.P5. However, Ext.P5 was dismissed by Ext.P6 order.

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Aggrieved by Ext.P4 order, second petitioner approached this Court by filing O.P.No.6864/1994. The said Original Petition was disposed of as per Ext.P7 judgment dated 11.2.2002, directing the second respondent to pass fresh orders without conducting a further enquiry , but, on the basis of the enquiry report dated 11.2.1991. According to petitioners, second respondent without considering Ext.P1, and without referring to the findings contained therein, and the directions in Ext.P7, issued a notice dated 13.10.2004 proposing to impose surcharge on the petitioners and

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other members of the Board of Directors under Section 68(2) of the Act, and accordingly passed Ext.P8 order imposing surcharge on the petitioners.

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Aggrieved by Ext.P8 order, petitioners filed Ext.P9 appeal under Section 83(e) of the Act before the first respondent. The specific contention in Ext.P9 appeal was that, the petitioners have been exonerated by the Joint Registrar (General) and as per Ext.P1 the entire issue was considered in depth. According to petitioners, Ext.P8 order is passed without referring to Ext.P1 enquiry report. However, the Government as per Ext.P10 order dismissed Ext.P9 appeal preferred by the petitioners. It is thus aggrieved by Exts.P8 and P10 , petitioners have preferred this writ petition.

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Even though the Society was made a party in the writ petition, notice could not be served on the Society, and later, the Society was removed from the array of parties on the basis of a petition submitted by

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petitioners, at the risk of the petitioners.

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Heard learned counsel for petitioners, learned Government Pleader and perused the pleadings and documents on record.

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The question to be considered is whether any manner of interference is required in Exts.P8 and P10 orders passed by second and first respondents respectively. As stated earlier, Ext.P8 order is the outcome of an enquiry conducted under Sections 65 and 68 of the Act. On a perusal of enquiry report it is categoric and clear that, second respondent has examined the entire documents and details with respect to the eqnuiry and has passed the said order. It is also seen that, the Society has suffered loss consequent to the inaction on the part of the petitioners, who were Director Board members. The details of the irregularities and the loss suffered are enumerated in Ext.P8. Learned counsel for petitioners has a contention that petitioners

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were not heard before passing Ext.P8 order. On a perusal of the said order it is categoric and clear that, petitioners were heard on 23.1.2014, 2.12.2004 and 6.12.2004. It is also mentioned that, petitioners were represented by advocates and petitioners have filed statements narrating their grievances. The subject matter of the statements submitted by petitioners are also taken note of in Ext.P8. Therefore, the prime contention advanced by petitioners that, they were not heard before Ext.P8 order was passed, cannot be sustained. In that view of the matter, contention advanced by petitioners that, Ext.P8 order is violative of principles of natural justice and therefore, arbitrary and illegal, cannot be sustained.

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Yet another contention advanced by learned counsel is that, there was a direction issued by this Court in Ext.P7 judgment, whereby the proceedings of the enquiry was directed to be taken note of before

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passing any orders and on perusal of Ext.P8, it is not discernible whether the enquiry report and the attendant documents were perused by the second respondent. However, on evaluation of the narration of facts and other findings rendered by the second respondent in Ext.P8, it is categoric and clear that, second respondent has perused also the enquiry file and has arrived at the findings in Ext.P8. That apart another contention advanced by learned counsel is that, in Ext.P8 there is no reference with respect to Ext.P1 enquiry report. Merely because, the reference is not made in respect of Ext.P1 that does not mean that the second respondent has not adverted to the enquiry report. As stated earlier, the narration of facts in Ext.P8 establishes that, the second respondent has adverted to Ext.P1 report. So also it is contended that, since as per Ext.P1 report petitioners were exonerated from all liabilities proposed, second respondent ought to have

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pointed out how the second respondent proposes to interfere with Ext.P1 report. In my considered opinion when the petitioners were heard and the petitioners were provided with an opportunity to file their statements, it cannot be heard to say that when the second respondent has decided to interfere with the findings as per Ext.P1 report, no second opportunity was provided under law.

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That apart, another contention advanced by learned counsel for the petitioners is that, as per Section 68(2) of the Act, petitioners were entitled to get an opportunity. Whether such an opportunity was provided to the petitioners can be sorted out by referring material portion of Ext.P8, which are as follows:-

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“Consequent to the detoriation in working capital of the society, circulars were issued, which was violated and thereupon, it was decided that, the loss suffered is to be recouped from the responsible person and thereupon notice

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under Section 68(2) was issued asking the Director Board members to show cause as to why no action shall be initiated against them in compliance with the directions issued by the High Court. Notice dated 13.10.2004 was issued to the Director Board members shown as reference No.5 in Ext.P8 and it was thereupon that, petitioners were heard through respective advocates on 23.10.2004, 2.12.2004 and 6.12.2004. Except one person namely G. Balakrishnan Nair, all other Director Board members were represented and statements were filed.”

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This fact situations and circumstances narrated in Ext.P8 is not disputed anywhere in the writ petition. Therefore, it can be legally presumed that, petitioners were given sufficient opportunity as provided under Section 68(2) of the Act.

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Learned counsel has invited my attention to a judgment of the Apex Court in Punjab National Bank v. S.P. Goel [ 1998(2) KLT SN 39(C.No.47)], there the Apex Court was considering a question with respect to a disciplinary enquiry conducted and held that if the

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disciplinary authority decided to enter into a different finding than entered by the enquiry officer, then the disciplinary authority is bound to issue show cause notice with respect to the action proposed to be initiated against the delinquent employee. So also, the Division Bench of this Court in Steel Authority v. Surendradas [2014(2) KLT 851] is pressed into service which was also dealing with a case of enquiry proceedings and the formalities to be complied with by the disciplinary authority if disagreeing with the enquiry report. That apart , learned counsel has brought to my notice judgment of this Court in State of Kerala and others v. M. Aravindakshan Nair and others [2010(3) KLT 11] wherein the consideration was with respect to the surcharge proceedings under section 68 (2) of the Act, and in paragraph 6 it is held as follows:-

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“However, this argument cannot be accepted because, wherever action is contemplated based on inspection report, whether it is the supersession of the management

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of the society under S.32 or whether it is the surcharge on the officers or employees concerned under S.68(2), separate opportunity of hearing specifically contemplated under the relevant sections has to be afforded. In fact, in this case, the action proposed against the respondents is based on surcharge under S.68(2) and for this the section itself provides that, the Registrar shall pass order surcharging a person only after giving the person concerned an opportunity of being heard. This provision provides effective opportunity to file objections and hearing and if required, to adduce evidence by the persons concerned. The fact that action under S.68(2) is initiated against any person concerned based on inspection report does not mean that the Registrar cannot give it up on being satisfied that there is no case is made out by him in the notice based on the report. In otherwords, in the course of adjudication under S.68, it is upto the Registrar to accept the contention of the aggrieved persons and turn down or reject the findings in the inspection report. It is to be noted that, the opportunity referred to in S.68(2) is specifically mentioned in R.66(7)(ii) of the Rules, which is a repetition of the opportunity referred to in S.68(2) of the Act.”

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Learned counsel has also invited my attention to a judgment of this Court in Thiruvananthapuram Taluk Taxi Drivers Co-operative Ltd. v. State of Kerala (2006 KHC 294): [2006(1)KLT 986] : ILR 2006 (1) Kerala 796 : [2006(1) KLJ 764], specifically to paragraph 5 wherein it is held as follows:-

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“The jurisdictional fact on which an action commences under S.68 of the Act could be any among the different situations that are provided for in sub-s(1) of S.68, which is the provision authorising surcharge. When any among the different situations contemplated in sub-s (1) of S.68 is found, the Registrar may either on his own application or on the application of the committee, liquidator or any creditor, inquire himself. When an enquiry is made under sub-S.(1) of S.68, sub-s(2) thereof enjoins an opportunity of pre decisional hearing before surcharging by an order in the nature as is provided for in sub-s.(2) of S.63. This, means that when the Registrar proceeds to decide as to whether any person is to be surcharged, such person has to be heard before passing the surcharge order. Neither

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among sub.s.(1) and (2) of S.68 contemplates a hearing of the parson against whom surcharge proceedings is being initiated even before the Registrar issuing to him a notice providing an opportunity for pre decisional hearing, before passing the final order or surcharge. So much so, an order under S.68(1) by which the Registrar authorises another person (an officer) to conduct the enquiry is merely an order by which the conduct of the enquiry prior to the order of surcharge is being delegated by the Registrar to such officer.”

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In paragraph 6 of the said judgment, the judgment in W.A.No.603/2000 was referred to which held that, while adjudicating a question under Section 68, whether a person is entitled to get a copy of an enquiry report that formed the foundation of a proceeding for surcharge under Section 68, and held that a person was entitled to a notice of such portion of the report while being heard in proceedings under Section 68(2) for surcharge. Going by the principles laid down by the judgments discussed (supra) and

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considering the same with the facts of the case, it can be seen that, petitioners were provided with an opportunity of hearing under Section 68(2) and thereafter only Ext.P8 order was passed. When the petitioners were heard through lawyers, definitely, all these aspects were discussed and then only Ext.P8 order was passed.

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Any how, petitioners have taken the matter in appeal before the first respondent and the first respondent has passed Ext.P10 order. On a perusal of Ext.P9 appeal memorandum, it is clear that petitioners have taken contentions with respect to the nonconsideration of report by the second respondent before passing Ext.P8 order but, there is no complaint with respect to non issuance of copy of enquiry report under Sections 65 and 68 of the Act. Moreover, the remand order was challenged in an Original Petition, leading to Ext.P7 judgment, and therein the petitioners did not

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have a case that reports are not served on them. If at all the petitioners had any such case, there is no finding in Ext.P7, with respect to the same, which thus means, it is declined by this Court. Therefore, petitioners cannot now in this writ petition take advantage of any such situation, since being barred by principles of resjudicata . Moreover, from Ext.P9 appeal memorandum, it is clear that, petitioner wanted the authority to consider the issue without even issuing a fresh notice under Section 68(2) of the Act. Moreover, it is for the first time that a contention is raised accordingly in the writ petition. True, in Ext.P2 dated 23.3.1991 it is seen that a gist of the report alone is forwarded. That apart it is seen that, as per Ext.P5 second petitioner has requested for copy of an detailed enquiry report, which was declined as per Ext.P6 dated 9.5.1994. However, thereafter at no point of time such a grievance was put forth. On further probe into Ext.P10 it can be seen that,

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each and every point raised by the petitioners were considered by the first respondent, and observations thereunder establish that, the details with respect to Section 65 enquiry and corresponding proceedings were verified by the first respondent and found that the findings entered in the re-audit report, revealed that there were serious misappropriation of funds by the office bearers and their serious mismanagement of the affairs of the Society were reflected. First respondent has also in Ext.P10 order provided the nutshell of the arguments advanced by the petitioners in the appeal and therefore, it is categoric and clear that, the first respondent has examined and re-appreciated the proceedings leading to Ext.P8 order and has entered into conclusive findings.

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I do not find any illegality, arbitrariness or illogical circumstances of law and facts in Exts.P8 and P10 orders warranting interference of this Court. On

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evaluation of facts and circumstances and the

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arguments made across the Bar, I am of the considered opinion that, petitioners could not establish any case before this Court so as to enable this Court to invoke the power of judicial review under Article 226 of the Constitution of India.

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Sequel to the above discussion is that the writ petition fails and accordingly, the same is dismissed.

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Sd/-

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SHAJI P. CHALY, JUDGE

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dlk/19/7/

A.K.Sasidharan Nair v. State of Kerala

Case brief

What is this about?

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A.K.Sasidharan Nair v. State of Kerala

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