Allowed

K.R.Suresh Kumar, v. the Joint Registrar of Cooperative Societies (General)

Kerala HC20 Dec 2022WP(C)/3937/2022

Case brief

AI extract

What is this about?

Justices V.G. Arun quashed an order superseding the elected managing committee of Elappully Service Co-operative Bank Ltd. The Court held that the statutory consultation process under Section 32(2) was not adhered to as reasons for rejecting consultee opinions were not stated. Furthermore, the order was passed without jurisdiction by a Registrar who had not heard the committee members, unlike the

What did the court decide?

The impugned order of supersession (Ext.P15) was quashed, and the elected managing committee members were directed to be restored to office forthwith.

K.R.Suresh Kumar, Vs the Joint Registrar of Cooperative… — Cooperative Societies | Kerala HC (2022)

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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 V.G.ARUN

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TUESDAY, THE 20^TH DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944

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WP(C) NO. 3897 OF 2022

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PETITIONERS:

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1 CHAITHANYA KRISHNAN.A., THEJAS, ELAPPULLY 1, ELAPPULLY, PALAKKAD, PIN-678 622.

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2 VARIJAKSHAN, PALACHIRAKALAM, MANNUKLAD, VENGODI P.O., ELAPPULLY 1, PALAKKAD, PIN-678 622.

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3 RANI.K., 75, PACHAMALAYIL HOUSE, NOMBIKODE, ELAPPULLY 2, PALAKKAD, PIN-678 622.

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4 VISHALAKSHI, VISMAYA NIVAS, PATTACHAMKAVU, ELAPPULLY P.O., PALAKKAD, PIN-678 622. BY ADVS. N.RAGHURAJ SAYUJYA

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RESPONDENTS:

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1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) PALAKKAD, OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), CIVIL STATION, PALAKKAD-678 002. 2 THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), JAWAHAR BAHVAN, EAST FORT ROAD, PALAKKAD-678 001. 3 THE ADMINISTRATIVE COMMITTEE, THE ELAPPULLY SERVICE CO-OPERATIVE BANK LTD.NO.F 1193, ELAPPULLY P.O., PALAKKAD, PIN-678 622, REPRESENTED BY THE COMMITTEE CONVENOR.

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4 THE ELAPPULLY SERVICE CO-OPERATIVE BANK LTD.NO.F 1193, ELAPPULLY P.O., PALAKKAD, PIN-678 622, REPRESENTED BY ITS SECRETARY.

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BY ADV ADVOCATE GENERAL OFFICE KERALA

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W.P.(C) Nos. 3897 & 3937/2022

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OTHER PRESENT:

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SPL.GP CO-OPERATION.P.P.THAJUDHEEN

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2022, ALONG WITH WP(C).3937/2022, THE COURT ON 20.12.2022 DELIVERED THE FOLLOWING:

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W.P.(C) Nos. 3897 & 3937/2022

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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 V.G.ARUN

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TUESDAY, THE 20^TH DAY OF DECEMBER 2022 / 29TH AGRAHAYANA, 1944

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WP(C) NO. 3937 OF 2022

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PETITIONERS:

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1 K.R.SURESH KUMAR, AGED 57 YEARS S/O.RAMANKUTTY, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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2 M.JAMEESHA, AGED 56 YEARS S/O.C.A.MOHAMMED HANEEFA, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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3 DEVADAS.K., AGED 43 YEARS S/O.KANNAN, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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4 N.KRISHNADAS, S/O.NARAYANAN, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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5 K.ARAVINDAKSHAN, AGED 57 YEARS S/O.KRISHNAN, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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6 SREEDHARAN.U., AGED 79 YEARS S/O.UNNY, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622.

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7 C.MURALIKUMAR, S/O.CHAMI, MEMBER, MANAGING COMMITTEE ELAPPULLY SERVICE CO OPERATIVE BANK LTD. NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622. BY ADVS. ARUN CHANDRAN NISHA GEORGE CHITHRA P.GEORGE

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W.P.(C) Nos. 3897 & 3937/2022

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REGINALD VALSALAN HANA KARNOLIA MADONA CYRIL GEORGE POONTHOTTAM (SR.)

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RESPONDENTS:

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1 THE JOINT REGISTRAR OF COOPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT REGISTRAR OF CO OPERATIVE SOCIETIES(GENERAL), KENATHUPARAMBU, KUNATHURMEDU, CIVIL STATION, PALAKKAD DISTRICT, PIN CODE-678 013.

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2 THE ASSISTANT REGISTRAR OF CO OPERATIVE SOCIETIES (GENERAL), JAWAHAR BHAVAN, EAST FORT ROAD, PALAKKAD DISTRICT, PIN CODE-678 001.

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3 THE ELAPPULLY SERVICE CO OPERATIVE BANK LIMITED NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622, REPRESENTED BY ITS SECRETARY.

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4 THE ADMINISTRATIVE COMMITTEE, THE ELAPPULLY SERVICE CO OPERATIVE BANK LIMITED NO.F 1193, ELAPPULLY P.O., PALAKKAD DISTRICT, PIN CODE-678 622, REPRESENTED BY ITS CONVENOR.

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BY ADV ADVOCATE GENERAL OFFICE KERALA

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 14.12.2022, ALONG WITH WP(C).3897/2022, THE COURT ON 20.12.2022 DELIVERED THE FOLLOWING:

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W.P.(C) Nos. 3897 & 3937/2022

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JUDGMENT

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Dated this the 20^th day of December, 2022

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The petitioners are the elected Managing Committee

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members of the Elappully Service Co-operative Bank. They are aggrieved by the supersession of the Committee under Section 32 of the Co-operative Societies Act, 1969 ('the Act' for short).

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Heard Senior Adv. George Poonthottam and Adv. N. Raghuraj for the petitioners and Adv. P.P. Thajudheen, Special Government Pleader (Co-operation) for the respondents.

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Although various contentions were raised assailing the order of supersession, including the contention that the impugned order is motivated by personal animosity and political rivalry, those contentions based on disputed facts cannot be decided in a writ petition under Article 226 are concerned. Similarly the gravity of the charges alleged and the acceptability of the explanation offered are not open for

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W.P.(C) Nos. 3897 & 3937/2022

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consideration, they being disputed facts. The contentions I find worthy of consideration are; (i) the order for inquiry under Section 65 was issued under dictation (ii) the consultation mandated under Section 32(2) of the Act was not done properly (iii) The order is issued in violation of the principles of natural justice and fair play since the order is not issued by the officer who heard the petitioners.

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In order to consider the challenge, it is essential to have an understanding of the scheme of the Co-operative Societies Act. As discernible from the preamble to the Act, Co-operative Societies are meant to be self-governing democratic institutions. No doubt, Co-operative Societies should function within the framework of the Act and the Rules and are bound to abide by the orders and circular instructions issued by the Registrar of Co-operative Societies. Whenever the Societies deviate from its objectives as declared by the bye-laws and are found to be violating the mandatory stipulations under the Act and the Rules and fails to abide by the Government Orders and circular instructions, resulting in

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W.P.(C) Nos. 3897 & 3937/2022

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loss to the Society and its members, the Registrar has the power to conduct enquiry or inspection and to initiate further action, which may ultimately result in the Managing Committee being superseded or the persons responsible for causing loss to the Society, being proceeded against. Except under the above circumstances, there cannot be any unnecessary intervention into the affairs of co-operative Societies. Even in such circumstances, action can be initiated only in accordance with the procedure prescribed under the Act and Rules.

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The first ground of challenge is that the order for enquiry under Section 65 was issued under dictation. In my opinion, having participated in the enquiry and the subsequent proceedings under section 32, the petitioners are estopped from raising that contention at this stage. The principles of acquiescence and waiver deprives the petitioners’ right to raise such a challenge.

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The next contention is that the order under Section 32 was passed without considering the opinion of the

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W.P.(C) Nos. 3897 & 3937/2022

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consultees. For considering this challenge, it is essential to carefully scrutinize the impugned order. A reading of the order reveals that for the purpose of consultation, the notice under Section 32(1) along with documents were forwarded to the State Co-operative Bank and the Circle Co-operative Union, Palakkad. The State Co-operative Bank approved the decision to supersede the Managing Committee while the Circle Co-operative Union opined that the explanation offered by the Bank should be accepted in its face value and opportunity given to cure the defects, rather than superseding a democratically elected Committee. Other than extracting the opinion of the consultees, there is absolutely no discussion in the order as to how the opinion is dealt with. It is not stated as to whether the opinion of the Circle Co-operative Union was rejected and if so, the reason for doing so. In this context, it may be profitable to refer to the decision in Jose Kuttiyani v. Registrar of Co-operative Societies [AIR 1982 Ker. 12] which is considered to be the locus classicus on the procedure and powers under Section 32 of the Act. Paragraph 23 of the

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decision being contextually relevant is extracted hereunder;

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“23. The word 'consult implies a conference of two or more persons or an impact of two or more minds in respect of a topic in order to enable them to evolve a correct or at least a satisfactory, solution- see R. Pushpam v. State of Madras (AIR 1953 Mad. 392). This meaning was approved by the Supreme Court in Union of India v. Sankalchand (AIR 1977 SC 2328. Para 39) and then their Lordships added-

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"In order that the two minds may be able to confer and produce a mutual impact, it is essential that each must have for its consideration full and identical facts which can at once constitute both the source and foundation of the final decision."

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In a case that arose under a similar provision in the Tamil Nadu Cooperative Societies Act a single Judge of the Madras High Court has in K. Thangavelu v Jt Registrar, Cooperative Societies (AIR 1976 Mad. 280) considered the nature and occasion of consultation

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with the financing Bank. The aspect is stated thus at P. 281, para 4.

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"At the stage of the issue of the above show cause notice no one knows as to what is going to happen ultimately. It is only the first respondent makes up his mind after due enquiry in relation to the irregularities referred to in the show cause notice, that the financing bank has to be consulted with regard to the action proposed to be taken. If the consultation is before the issue of show cause notice and if the first respondent ultimately finds that the irregularities referred to in the show cause notice have not been established, the consultation earlier obtained will become a mere formality and it would be a sheer waste of time."

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We think the principle is correctly stated in this case and we agree with it.”

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The Apex Court also had occasion to consider the meaning and ambit of the term 'consultation', though in a

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W.P.(C) Nos. 3897 & 3937/2022

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different context. In Ram Tawakya Singh v. State of Bihar and Ors. [(2013) 16 SCC 206) the Supreme Court made the following observation at paragraphs 29 and 30;

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“29. The word "consultation" used in Sections 10(2) and 12(1) of the BSU Act and Sections 11(2) and 14(1) of the PU Act is of crucial importance. The word "consult" implies a conference of two or more persons or impact of two a or more minds in respect of a topic/subject. Consultation is a process which requires meeting of minds between the parties involved in the process of consultation on the material facts and points to evolve a correct or at least satisfactory solutions. Consultation may be between an uninformed person and an expert or between two experts. In either case, the final decision is with the consultor, but he will not be generally ignoring the advice of the consultee except for good reasons.

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In order for two minds to be able to confer and produce a mutual impact, it is essential that each must have for its consideration fully and identical facts,

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W.P.(C) Nos. 3897 & 3937/2022

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which can at once constitute both the source and foundation of the final decision. Such a consultation may take place at a conference table or through correspondence. The form is not material but the substance is important. If there is more than one person to be consulted, all the persons to be consulted should know the subject with reference to which they are consulted. Each one should know the views of the other on the subject. There should be meeting of minds between the parties involved in the process of consultation on the material facts and points involved. The consultor cannot keep one consultee in dark about the views of the other consultee. Consultation is not complete or effective before the parties thereto make their respective points of view known to the other and discuss and examine the relative merit of their views.”

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Going by the above decisions, the 'consultation' mandated under Section 32(2) is not an empty formality. Though not bound by the opinion of the consultees, the Registrar should clearly state the reasons for not accepting the opinion. In the case at hand although consultation is effected,

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W.P.(C) Nos. 3897 & 3937/2022

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the opinion of the consultees is not taken into consideration before arriving at the final decision. If such procedure is adopted that would render the consultation process otiose. Therefore, I hold that the consultation process mandated in Section 32(2) was not adhered to.

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Coming to the challenge on the ground that the impugned order was passed by a officer other than the one who had heard the petitioners, it is to be noted that the respondents do not dispute the fact that the notice under Section 32(1) was issued and the hearing conducted by M. Sabaridas, while the order under challenge is passed by a person named M.P. Hiran, who succeeded M. Sabaridas as joint Registrar, Palakkad. The requirement under Section 32 is of the Registrar being satisfied that the Committee is guilty of the actions enumerated as (a) to (d) under Section 32(1). Such satisfaction has to be arrived at based on the available material. Thereafter, the Registrar has to give an opportunity to the Committee to state its objections. If the Registrar is not satisfied with the explanation offered by the Committee, then

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W.P.(C) Nos. 3897 & 3937/2022

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the Committee can be removed. The above procedure indicates that satisfaction of the officer is fundamental for initiating action under Section 32 and for superseding the Committee. Such satisfaction is essential for finding that the Committee is liable to be superseded and should continue to exist even after hearing the explanation offered by the members of the committee. Here, the Joint Registrar who issued Section 32(1) notice had arrived at the satisfaction that the Committee is liable to be removed. He had also heard the explanation offered by the Committee, but did not decide to supersede the Committee in spite of the explanation submitted by the members. On the other hand, the officer who passed the impugned order had neither arrived at the satisfaction regarding the requirement of removing the committee nor had occasion to hear the explanation offered by the members of the Committee. As such, the order is passed merely based on the records available. Considering the gravity of the action taken and its implications, the order of supersession should not have been passed without the officer

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being satisfied that the Committee was bound to be superseded despite the explanation. In view of the element of subjectiveness involved, it is imperative for the officer who passed the order to have heard the Committee members in person before taking a decision. The law on this point is laid down by the decision in Jesudasan v. Joint Registrar of Cooperative Societies (2009 (2) KLT 86), wherein it was held as follows;

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“20. In cases of supersession under S.32(1) of the Act, the occurrence of the statutory facts among the different clauses in the said section is a matter about which the Registrar has to be satisfied, if the order that he passes has to stand on a jurisdictional issue. That finding has necessarily to be rendered after taking stock of facts and materials in relation to the functioning of a co-operative society, when the committee to which an opportunity to state objections is given, shows cause as to why the committee shall not be superseded and states its objections with reference to materials, it is the bounden duty of the

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Registrar to decide on the matter after looking into the materials in the light of the objections. As in the case in hand, even oral evidence may be tendered. As noted by the Division Bench in Marico Industries Ltd. (supra), a decision on those materials cannot be exclusively of the head or of the heart. Not only that, the decision under S.32 is not to be rendered either by the Government or by any other body of persons. It is not a collective decision that is contemplated or provided for. It is the satisfaction of the Registrar, who is an officer appointed by the State Government under S.3 of the Act or on whom the powers of the Registrar are conferred under that provision. Therefore, there is no ground to hold that the decision to be rendered under S.32 could be an institutional one. Hence, the officer who hears the objections of a committee to the notice proposing supersession under S.32(1) shall himself decide on the matter. The impugned order, admittedly rendered by one, after the committee of which the petitioner was the President was heard by another, is without jurisdiction.”

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W.P.(C) Nos. 3897 & 3937/2022

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Although the learned Special Government Pleader relied on the decision in Sudheer T v. M.V. Susheela and Ors. [2009 (3) KHC 991] to contend that hearing need not always be personal hearing and unless prejudice is shown, violation of the principles of natural justice, ipso facto , will not be accepted as a ground for quashing a decision. The principle laid down in that decision will not apply to the case at hand. As discussed earlier, the scheme of the Co-operative Societies Act indicates that there can be intervention with the functioning of Co-operative Societies only on the Registrar being satisfied that such intervention is warranted. Supersession of the Committee under Section 32 being a drastic action visiting the Committee members with adverse consequences, the satisfaction can be arrived at only after hearing the affected persons and being convinced that, in spite of their explanation, the Committee is liable to be removed. No such exercise having been undertaken by the officer who passed the impugned order, the order under challenge is liable to be quashed.

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W.P.(C) Nos. 3897 & 3937/2022

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In the result, the writ petitions are allowed. Ext.P15, Order No. JRGPKD/3817/2020/CRP2 dated 24.01.2022 is quashed, reserving the respondent's liberty to continue the proceedings from the stage of Section 32(1) notice. In view of

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the above finding, the elected Committee shall be restored to office forthwith.

Sd/-

V.G.ARUN JUDGE

W.P.(C) Nos. 3897 & 3937/2022

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APPENDIX OF WP(C) 3897/2022

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PETITIONER EXHIBITS

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Exhibit P1	TRUE PHOTOCOPY OF THE ORDER BEARING
	NO,JRGPKD/3991/2020/CRP2 DATED 05.10.2020 ISSUED BY THE 1ST RESPONDENT.
Exhibit P2	TRUE PHOTOCOPY OF THE INTERIM ORDER DATED 22.10.2020 IN WPC NO.22630 OF 2020.
Exhibit P3	TRUE PHOTOCOPY OF THE ORDER BEARING NO.JRGPKD/3817/2020-CRP2 DATED 12.07.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P4	TRUE PHOTOCOPY OF THE INQUIRY REPORT DATED 17.09.2021.
Exhibit P5	TRUE PHOTOCOPY OF THE NOTICE BEARING NO.JRGPKD/3817/2020-CRP 2 DATED 01.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P6	TRUE PHOTOCOPY OF THE REQUEST DATED 13.10.2021 SUBMITTED BY THE PETITIONERS AND OTHERS.
Exhibit P7	TRUE PHOTOCOPY OF REQUEST DATED 16.10.2021 SUBMITTED BY THE 1ST PETITIONER AND ANOTHER.
Exhibit P8	TRUE PHOTOCOPY OF THE SHOW CAUSE NOTICE BARING NO.JRGPKD/3817/2020-CRP 2 DATED 26.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P9	TRUE PHOTOCOPY OF REPLY OF 1ST PETITIONER.
Exhibit P10	TRUE PHOTOCOPY OF THE REPORT DATED 23.11.2021.
Exhibit P11	TRUE PHOTOCOPY OF THE RECEIPT DATED 22.11.2021.
Exhibit P12	TRUE PHOTOCOPY OF THE RECEIPT DATED 23.07.2021.
Exhibit P13	TRUE PHOTOCOPY OF THE LETTER DATED 19.11.2021.
Exhibit P14	TRUE PHOTOCOPY OF THE ORDER BEARING NO.2013/2010/CRP DATED 03.08.2010.
Exhibit P15	TRUE PHOTOCOPY OF THE ORDER BEARING
	NO.JRGPKD/3817/2020/CRP 2 DATED 24.01.2022

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W.P.(C) Nos. 3897 & 3937/2022

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ISSUED BY THE 1ST RESPONDENT. Exhibit P16 TRUE PHOTOCOPY OF THE RESOLUTION NO.1 OF THE CIRCLE CO OPERATIVE UNION PALAKKAD DATED 04.01.2022. Exhibit P17 TRUE PHOTOCOPY OF THE REPLY BEARING NO.JRGPPD/955/2021-CRP2 DATED 11.08.2021 ISSUED BY THE PUBLIC INFORMATION OFFICER. Exhibit P18 TRUE PHOTOCOPY OF THE REPLY BEARING NO. JRGPKD/955/2021-CRP2 DATED 11.08.2021. Exhibit P19 TRUE PHOTOCOPY OF THE RECEIPT ISSUED BY THE 4TH RESPONDENT BANK TO SMT. NIRMALA A.V. DATED 11.11.2021. Exhibit P20 TRUE COPY OF THE NOTIFICATION DATED 30/11/2022, PUBLISHED IN DESHABHIMANI DAILY DATED 12/12/2022

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W.P.(C) Nos. 3897 & 3937/2022

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APPENDIX OF WP(C) 3937/2022

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PETITIONER EXHIBITS
Exhibit P1	TRUE COPY OF THE ORDER NO.JRGPKD/3817/2020- CRP 2 DATED 12.07.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P2	TRUE COPY OF THE SECTION 65 REPORT ON INQUIRY DATED 17.09.2021.
Exhibit P3	TRUE COPY OF THE NOTICE NO.,JRGPKD/3817/2020- CRP 2 DATED 01.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P4	TRUE COPY OF THE REQUEST SUBMITTED BY THE PETITIONERS AND OTHERS TO THE 1ST RESPONDENT DATED 13.10.2021.
Exhibit P5	TRUE COPY OF THE REQUEST DATED 16.10.2021 SUBMITTED BY THE PRESIDENT TO THE 1ST RESPONDENT ALONG WITH ENCLOSURES.
Exhibit P6	TRUE COPY OF THE NOTICE NO.JRGPKD/3817/2020- CRP 2 DATED 26.10.2021 ISSUED BY THE 1ST RESPONDENT.
Exhibit P7	TRUE COPY OF THE EXPLANATION DATED 15.11.2021 SUBMITTED BY THE PRESIDENT FOR AND ON BEHALF OF THE BOARD OF DIRECTORS, ALONG WITH THE SECRETARY OF THE BANK.
Exhibit P8	TRUE COPY OF THE REPORT SUBMITTED BY THE BOARD OF DIRECTORS DATED 23.11.2021 BEFORE THE 1ST RESPONDENT.
Exhibit P9	TRUE COPY OF THE RECEIPT DATED 23.07.2021 ISSUED BY THE BANK EVIDENCING THE REMITTANCE OF THE AMOUNTS.
Exhibit P10	TRUE COPY OF THE ORDER NO.KRGPKD/3817/2020/CRP 2 DATED 24.01.2022 ISSUED BY THE 1ST RESPONDENT.
Exhibit P11	TRUE COPY OF THE REFERENCE ORDER DATED 31.05.2021 IN WA NO.1751/2020 PASSED BY THIS HON'BLE COURT.
RESPONDENT EXHIBITS
Annexure	Annexure R1 (a)

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RESPONDENT EXHIBITS Exhibit R1(a) True copy of the communication dated 23.12.2021

K.R.Suresh Kumar, v. the Joint Registrar of Cooperative Societies (General)

Case brief

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K.R.Suresh Kumar, v. the Joint Registrar of Cooperative Societies (General)

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