Dismissed

The Managing Committee of Taliparamba Service Co-Operative Bank Ltd., NO.F-1264, Represented by I v. the Joint Registrar of Co-Operative Societies (General), Office of the Joint Registrar of Co-Oper

Kerala HC21 Dec 2023WP(C)/7716/2023

Case brief

AI extract

What is this about?

Writ petition challenging a Section 65 enquiry order against a Co-operative Bank was dismissed. The Single Judge held that the Registrar had personal satisfaction based on reports, justifying a suo motu enquiry, and the larger bench reference was not applicable.

What did the court decide?

The writ petition failing and the impugned Section 65 enquiry order being maintained.

The Managing Committee of Taliparamba Service… — Cooperative Societies | Kerala HC (2023)

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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 N.NAGARESH THURSDAY, THE 21^ST DAY OF DECEMBER 2023 / 30TH AGRAHAYANA, 1945

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WP(C) NO. 7716 OF 2023

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PETITIONER:

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THE MANAGING COMMITTEE OF TALIPARAMBA SERVICE CO-OPERATIVE BANK LTD., NO.F-1264, REPRESENTED BY ITS PRESIDENT, TALIPARAMBA, KANNUR DISTRICT, PIN – 670141.

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BY ADVS. SHRI.P.N.MOHANAN SHRI.C.P.SABARI SMT.AMRUTHA SURESH SHRI.GILROY ROZARIO

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RESPONDENTS:

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1 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES, CIVIL LINES, 3RD FLOOR, KANNUR, PIN - 670002

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*ADDL. 2 DHARANEEDHARAN, S/O. NARAYANAN, RESIDING AT NETAJI HOUSING COLONY, THRICHAMBARAM, TALIPARAMBA, KANNUR DISTRICT, PIN - 670141

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***(ADDITIONAL R2 IS SUO MOTU IMPLEADED AS PER ORDER DATED 22-03-2023)**

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BY ADVS. SHRI.SURESH KUMAR KODOTH SHRI.SUKARNAN(K/001572/2021) SMT.SHEEJA C.S.

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.12.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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N. NAGARESH, J.

W.P.(C) No.7716 of 2023

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Dated this the 21^st day of December, 2023

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J U D G M E N T

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~ ~ ~ ~ ~ ~ ~ ~ ~

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The Managing Committee of Taliparamba Service

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Co-operative Bank Limited is before this Court seeking to quash Ext.P1 and to direct the Joint Registrar to consider Ext.P2 for posts sanction, within the time fixed by this Court.

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The petitioner states that the present Managing Committee of the Bank assumed office on 28.10.2018. One Mr.Dharanendran and Mr. P.V. Narendran made a complaint about the functioning of the Bank on 25.02.2022. On the basis of the said complaint, the Joint Registrar by Ext.P1 order dated 07.02.2023 ordered a Section 65 enquiry. The subject matter of enquiry is of the period commencing from 2005-2006. The period is 18 years back, when another

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Managing Committee was in office then. The petitioner states that a Section 65 enquiry can be ordered only as provided in Rule 66 of the Kerala Co-operative Societies Rules. According to Rule 66(1)(c) of the Kerala Co-operative Societies Rules, specific point or points on which the enquiry or inspection is to be made, should be specified in the order.

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According to Section 65(1)(f), an enquiry can be conducted only against constitution, working and financial condition of the Society. The subject matter of enquiry ordered under Ext.P1 goes beyond Section 65. The petitioner would urge that as per Section 65, an enquiry can be ordered by the Joint Registrar on the basis of the complaint filed by the members consisting of at least one third of the quorum of the General Body. In the case of the petitioner, the one third would be at least 33 members. As far as Ext.P1 enquiry is concerned, it has been ordered at the instance of two persons. There is no subjective satisfaction reflected in Ext.P1 for the Joint Registrar to order suo motu enquiry. Ext.P1 is therefore liable to be set aside.

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The 2^nd respondent resisted the writ petition. The 2^nd respondent submitted that the 1^st respondent had considered the inspection report of the Assistant Registrar dated 11.10.2021 objectively and applied his mind before directing enquiry. The 1^st respondent also conducted inspection and has drawn a report dated 22.11.2022 before ordering enquiry. Ext.P1 order shows 14 specific points to be enquired into.

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The present Committee committed irregularities including advancing of fake loan through proxy and also allowed waiver of interest to such loans. The misappropriation and mismanagement by the present Managing Committee has resulted in weakening of the Society. As per the audit report for the year 2020-2021, the net loss of the Society has come to an approximate amount of ₹15 Crores. Therefore, Ext.P1 order is perfectly justified.

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The 1^st respondent-Joint Registrar also filed a counter affidavit. The 1^st respondent submitted that the Deputy Registrar (Administration) had made a surprise

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inspection in the petitioner's Bank. The Assistant Registrar (General), Taliparamba has submitted a detailed report. Both the report of the Assistant Registrar and the surprise inspection conducted revealed prima facie evidence of existence of allegations. Hence, the 1^st respondent was convinced that a detailed enquiry under Section 65 of the Kerala Co-operative Societies Act is essential. The writ petition is without any merit and it is liable to be dismissed, contended the 1^st respondent.

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I have heard the learned counsel for the petitioner, the learned Government Pleader representing the 1^st respondent and the learned counsel appearing for the 2^nd respondent.

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By Ext.P1 order dated 07.02.2023, the 1^st respondent has ordered a Section 65 enquiry into the affairs of the Taliparamba Service Co-operative Bank Limited. The subjects of enquiry are as follows:-

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(i) One Time Settlement of loan made as per the directions of the Registrar during the year 2005 and 2006.

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(ii) Promotions given to the employees since 2016-2017.

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(iii) Appointment made to the post of Peon from Collection Agents in the light of Rule 185(11) of the Kerala Co-operative Societies Rules.

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(iv) Housing loans given to the employees.

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(v) Advocate fee paid to Sri.C.A. Joseph, Advocate.

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(vi) Amount due under miscellaneous account.

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(vii) Overdue of rent.

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(viii) Membership given outside the area of operation.

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(ix) Nomination to the Managing Committee in terms of Section 28(1J) of the KCS Act.

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(x) Shifting of the Kuppam Branch to Chirava junction.

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(xi) Construction works in 2016-2017.

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(xii) Any other subject which feels fit to the enquiry officer.

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The argument of the petitioner is that the subject

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One Time Settlement of loan relates to incidents during the year 2005 and 2006. It relates to 18 years back, when the present Managing Committee was not in office. It is the further argument that the period of limitation as per Section

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69(4) of the Kerala Co-operative Societies Act read with

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Schedule III of the Kerala Co-operative Societies Act is three years.

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The petitioner would further urge that promotion given to employees and appointment made to the post of Peon from Collection Agents, is beyond the jurisdiction of Joint Registrar since the constitution of Arbitration Court. The petitioner would rely on the judgment of Raveendran v. State of Kerala [2007 (3) KLT 558] and urge that any dispute arising in connection with employment of officers and servants of different classes of societies including their promotion and inter se seniority, is to be decided by the Arbitration Court.

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Ext.P1 is the proceedings ordering Section 15 enquiry. Ext.P1 refers to certain complaints filed by one Sri. P.Dharanendran and Sri. P.V. Narendran before the Registrar of Co-operative Societies. It also refers to a report of the Assistant Registrar and a report of Deputy Registrar in charge of Joint Registrar. The reports indicated that one A Class member of the Bank Advocate C.A. Joseph has been

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given a waiver of interest amounting to ₹4,88,854/- and waiver of penal interest amounting to ₹33,808/-. The said Advocate C.A. Joseph was paid ₹12 lakhs towards professional fee as a lawyer. While paying professional charges, the Bank did not attempt to realise the dues to the Bank from the said Advocate C.A. Joseph.

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The Assistant Registrar reported that the said loanee has no right for any waiver other than of penal interest. The Assistant Registrar further reported that a staff who was in charge of the Secretary of the Bank and another employee availed home loans at nominal interest and that the said employees have not constructed homes utilising the loan advanced. No utility certificates were produced by those employees. The Assistant Registrar further noted that towards collection of rent from the buildings rented out to tenants, more than ₹9 lakhs is pending as arrears and the Managing Committee has miserably failed to take steps for realisation of the rent arrears. It was further noted that loans were advanced to persons who are residing beyond the

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territorial limits of the Bank. The report of the Assistant Registrar indicated further instances of mismanagement.

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Ext.P1 proceedings would show that the Joint Registrar has considered the report of the Joint Registrar in Charge also, to come to a conclusion that Section 65 enquiry is necessary. Ext.P1 discloses personal satisfaction of the Joint Registrar. Reading Ext.P1 proceedings, I am satisfied that the Registrar has ordered Section 65 enquiry suo motu after being convinced of the requirement of holding an enquiry into the working and financial condition of the Society. I find no reason to interfere with Ext.P1 proceedings.

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The petitioner urges that the legal question whether in all cases of suo motu action under Section 65, there should be some personal verification of records by the Registrar, has been referred to Larger Bench as per order dated 02.11.2022 in W.A. No.745/2019 and hence till a final decision is taken by the Larger Bench, final orders should not be passed by the 1^st respondent. However, I find that in the

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enquiry under Ext.P1, the decision of the Joint Registrar is based on a report of the Deputy Registrar in charge of Joint Registrar and hence the legal issue referred to the Larger

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Bench does not arise in this case.

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The writ petition therefore fails and it is consequently dismissed.

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Sd/-

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N. NAGARESH, JUDGE

aks/21.12.2023

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APPENDIX OF WP(C) 7716/2023

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PETITIONER'S EXHIBITS:

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Exhibit P1 A TRUE COPY OF THE ORDER DATED 07.02.2023 OF THE JOINT REGISTRAR Exhibit P2 A TRUE COPY OF THE COVERING LETTER DATED 27.04.2022 ADDRESSED TO THE JOINT REGISTRAR ALONG WITH RESOLUTION NO.18 DATED 27.04.2022 OF THE BANK

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RESPONDENTS' EXHIBITS:

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Exhibit R2 (a) TRUE COPY OF ORDER DATED 18/11/2009 IN CRL.MC NO. 488/2008, Exhibit R2 (b) TRUE COPY OF THE INSPECTION REPORT OF THE ASSISTANT REGISTRAR DATED 11/10/2021 Exhibit R2 (c) TRUE COPY OF THE INSPECTION REPORT DATED 22/11/2022 OF THE FIRST RESPONDENT

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The Managing Committee of Taliparamba Service Co-Operative Bank Ltd., NO.F-1264, Represented by I v. the Joint Registrar of Co-Operative Societies (General), Office of the Joint Registrar of Co-Oper

Case brief

What is this about?

What did the court decide?

The Managing Committee of Taliparamba Service Co-Operative Bank Ltd., NO.F-1264, Represented by I v. the Joint Registrar of Co-Operative Societies (General), Office of the Joint Registrar of Co-Oper

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