Judgment :- J.B. Joshy, J. O.P. No. 7269 of 1997 was filed by the President of the Ellakkal Service Cooperative Bank Ltd. (hereinafter referred to as 'the bank'). Election to the committee of the Bank was held on 3.2.1996 and the Board of Directors took charge on 6.2.1996. They received Ext. P1 notice initiating action under S.65 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as "the act" ). According to the petitioners, while general body meeting of the Bank was being held on 27.7.1996 and when the meeting was going on, the then Secretary of the Bank who was on medical leave along-with his colleagues disturbed the general body meeting and he was suspended pending enquiry and because of that 2nd respondent unnecessarily interfered and petitioners approached this Court by filing O.P. No. 19335/96. Even at that time, 2nd respondent threatened that unless action is withdrawn necessary consequences will have to be faced and Ext. P1 notice itself was issued as a consequence of the malafide action on the part of the 2nd respondent. It is also stated that Ext. P1 was issued as mentioned in that order at the instance of the Assistant Registrar who has not conducted any inspection. It is also submitted that while conducting the enquiry in pursuance of Ext. P1 notice, procedure prescribed under R.66 of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as "the rules") was not complied with in various respects, since mandatory provisions of R.66 of the Rules were not complied with, the enquiry is vitiated. Further, the first enquiry officer submitted an interim report. It is alleged that without their knowledge, another enquiry officer was appointed after submission of the preliminary report by the first enquiry officer. Ext. P4 is the report by the enquiry officer and Ext. P5 notice was issued under S.32(1) of the Act. It is also the case of the petitioners that the report prepared and submitted is incorrect and against the procedure. No balance sheet was attached to the report. It was also submitted that they have took charge only in February, 1996. Thereafter, the Bank was running on a profit and more than Rs. two lakhs were earned as profit. According to the petitioners, they took charge of the management of the Bank when it had a loss of more than Rs. It was also submitted that they have took charge only in February, 1996. Thereafter, the Bank was running on a profit and more than Rs. two lakhs were earned as profit. According to the petitioners, they took charge of the management of the Bank when it had a loss of more than Rs. nine lakhs and because of their sincere action more than Rs. two lakhs were earned as profit and this was not taken into account and relevant considerations were not given. They were n6t given sufficient time to cure the defects. The interim reply was not considered. Therefore, according to the prayers in O.P. No. 7269/97, the enquiry report as well as the notice issued under S.32(1) of the Act should be quashed. 2. In O.P. No. 8695/97, the main challenge is against Ext. P7 order superseding the managing Committee under the provisions of S.32(1) of the Act and appointing an administrator. It is submitted that statutory provisions for supersession were not complied with and on merits also the order is liable to be set aside as the enquiry report based on which action was taken itself is illegal. 3. In O.P. No. 7269/97 there was a petition for injunction and an order of status quo was ordered on 22.5.1997 against the appointment of an Arbitrator. It is the case of the petitioners that after the receipt of the order, Administrator took charge. The administrator filed an affidavit stating that he took charge on 19.5.1997 itself before the order of status quo was communicated to him. On behalf of respondents 1 and 2 a detailed counter affidavit was filed denying all the allegations raised by the petitioners. Allegations of malafides were refuted and stated that only because of grave irregularities as found in the enquiry, action was taken. 4. Now, I may consider the serious contentions raised in the original petitions. The first contention raised was that Ext. P1 notice issued under S.65 of the Act itself is without jurisdiction. Action can be taken under S.65 of the Act only on four conditions: 1) By his own motion by the Registrar; 2) On majority of the members of the Committee of the society; 3) On the application of not less than one-third of the total number of members of the society; 4) The number of members required for the quorum of the general body whichever is less. 5) In this connection, S.65(1) and (2) are relevant which are extracted below: "65. Inquiry by Registrar:- (1) The Registrar may, of his own motion or on the application of a society to which the society concerned is affiliated, by himself or by a person authorised by him by order in writing hold an inquiry into the constitution, working and financial condition of the society. (2) An inquiry of the nature referred to in sub-s.(1) shall beheld on the application of: (a) a majority of the members of the committee of the society; or (b) not less than one-third of the total number of members of the society or the number of members required for the quorum of the general body whichever is less. Ext. P1 states that it was issued on the commendation of the Assistant Registrar of Co-operative Societies, Devikulam. It is not stated that the Joint Registrar was satisfied because of the recommendation. Therefore, the contention is that Ext. P1 was issued not suo motu. There is no contention by the respondents that majority of the members or number of members required for the quorum of the general body was requested for such an enquiry. In the counter affidavit it is stated that three members had submitted an application before the Joint Registrar and on that basis the complaint was forwarded to the Assistant Registrar of Co-operative Societies, Devikulam to verify the genuineness and the Assistant Registrar was again deleged and got this complaint enquired into through the Inspector and submitted the report. Therefore, S.65(1) notice was issued. According to petitioners S.65 inquiry can be initiated at the instance of the members only if there is majority or at least one-third of the members of the society or the number of persons required for the quorum of the general body meeting. Now, in view of the clear statement in the counter affidavit, it can be seen that it is initiated only at the instance of the three members of the society. Nowhere it is stated that the Joint Registrar was satisfied that an enquiry is necessary. Therefore, petitioners contention is that it is not a suo moto enquiry and there is no satisfaction by the Joint Registrar to start the enquiry proceedings itself and therefore, the enquiry is liable to be set aside. Nowhere it is stated that the Joint Registrar was satisfied that an enquiry is necessary. Therefore, petitioners contention is that it is not a suo moto enquiry and there is no satisfaction by the Joint Registrar to start the enquiry proceedings itself and therefore, the enquiry is liable to be set aside. On going through the files also it is seen that the complaint was filed by three members only and not by one-third members or number, of members required for quorum as prescribed by the Act. Merely because the Assistant Registrar recommended without further applying mind, show cause notice was issued and it cannot be stated that he acted suo mote. Even the Assistant Registrar also did not conduct the enquiry by himself but he further delegated the Unit Inspector to conduct the enquiry and thereafter Assistant Registrar recommended action under S.65 and without going through the details merely and without satisfying himself on the recommendation of the Assistant Registrar, S.65 enquiry was started. There is no provision in S.65 of the Act to initiate 'enquiry on the recommendation of Assistant Registrar. I see substantial force in the contentions of the petitioners in the above. Before initiating action under S.65, statutory authority did not apply his mind and initiation of action itself was against the provisions of the Act. I also refer to the decision reported in 1994 (2) KLT 564. 6. R.66 of the Rules prescribes the procedure for conduct of inquiry under S.65. R.66 is as follows: "66. Procedure for the conduct of inquiry and inspection - (1)(i) An order, authorising inquiry under S.65 or inspection under S.66 shall among other things, contain the following: (a) the name of the society whose affairs are to be inquired into or whose books of accounts are to be inspected; (b) the name of the person authorised to conduct the inquiry or inspection; (c) the specific point or points on which the inquiry or inspection is to be made, the period within which the inquiry or inspection is to be completed and report submitted to the Registrar; (d) costs of inquiry of inspection; (e) any other matter relating or pertaining to the inquiry or inspection. (2) A copy of every order authorising inquiry under S.65 or inspection under S.66 shall be issued to the President or the Secretary of the Society concerned by registered post with acknowledgement due. (2) A copy of every order authorising inquiry under S.65 or inspection under S.66 shall be issued to the President or the Secretary of the Society concerned by registered post with acknowledgement due. A copy of the order shall also be made available to the Central Society or societies, to which the society in respect of which the order is issued, is affiliated: (3) If the inquiry or inspection cannot be completed within the time specified in the order referred to in sub-r.(1)(c) the person conducting the inquiry or inspection shall submit an interim report stating the reasons for failure to complete the enquiry or inspection, and the Registrar, if he is satisfied, may grant such extension of time as he may deem necessary or he may withdraw the inquiry or inspection from the officer to whom itis entrusted and hold the inquiry of inspection himself or entrust it to such other person as he deems fit: (4) On receipt of the orders referred to in sub-r.(1) the person authorised to conduct the inquiry or inspection shall proceed to examine the relevant books of accounts and other documents in the possession of the society or any of its officers, members, agents or servants and obtain such information or explanation from any such officers, members agents or servants of the society in regard to the transaction and working of the society as he deems necessary for the conduct of such inquiry or inspection; (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) of sub-r.(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 S.67. 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 S.67. The Registrar shall pass such orders thereon as may be considered just after giving a reasonable opportunity-of being heard to the society, person or persons concerned." Defects pointed out by the petitioners are that name of the person authorised to conduct the enquiry or inspection was not mentioned in Ext. P1 notice. Cost of inquiry or inspection was not mentioned. Under sub-r.(2) of R.66 it is stated that copy of every order authorising inquiry under S.65 shall be issued to the President or the Secretary of the Society concerned by registered post with acknowledgement due. Admittedly, Ext. P1 notice was not sent by registered post with acknowledgement due. If the enquiry or inspection cannot be completed within the time stipulated, the person conducting the inquiry or inspection shall submit an interim report and apply for extension of time and the Joint Registrar may withdraw the inquiry or inspection from the enquiry officer and conduct the inquiry by himself or entrust it to other person. In this case, first enquiry officer had submitted an interim report and asked for further time. Another enquiry officer was appointed. According to the petitioners, it was not withdrawn from the first enquiry officer and entrusted to second enquiry officer to continue the enquiry. There is no withdrawal of inquiry. Itis also contended that regarding the second inquiry there is no information and the second enquiry officer's name was also not informed. According to sub-r.(5) of R.66 the report of inquiry should invariably contain the latest balance sheet of the society. Here, latest balance sheet of the society was not attached to the report. Nowhere in the report, it is stated that balance sheet is attached. Even in the covering letter wherein the report was forwarded it is not mentioned that balance sheet is attached. Further improvement of financial position after the petitioners took charge will be a relevant factor and this was not considered because that will only be helpful to the petitioners and there are clear violations of mandatory rules. 7. Even in the covering letter wherein the report was forwarded it is not mentioned that balance sheet is attached. Further improvement of financial position after the petitioners took charge will be a relevant factor and this was not considered because that will only be helpful to the petitioners and there are clear violations of mandatory rules. 7. First of all, it is contended by the learned Advocate appearing for the first two respondents that the procedure mentioned in R.66 are not mandatory but directory and if there is substantial compliance, it cannot be interfered. Even though the name of the person authorised to conduct the inquiry or inspection was not mentioned, his designation was indicated and therefore, there is substantial compliance of that provision. It is also submitted that because name of the officer was not intimated, no prejudice is caused to the petitioners. With regard to the contention that a copy of the order was not served by registered post as mentioned in sub-r.(2), it is the submission of the contesting respondents that it is not disputed. Once, it is received and reply was given by the management, there is no prejudice caused. Merely by a procedural infirmity, this cannot be quashed. Contention that the appointment of second enquiry officer was not informed to the petitioners, cannot be accepted because from the files I see a petition filed by the President of the society objecting the appointment of 2nd enquiry officer. Even in that case, it is the contention of the petitioners that name of the 2nd enquiry officer was also not mentioned in the notice and that notice was also not served by registered post acknowledgement due. When the second enquiry officer was appointed there was no withdrawal as mentioned in sub-r.(5) which is a mandatory provision. 8. First question is whether the procedure prescribed under R.66 are mandatory or mere directory. Sub-r.(1) of R.66 says that an order authorising inquiry under S.65 shall among other things contain the following. The word used is 'shall'. Therefore, it is contended by the petitioners that question of prejudice or non-prejudice cannot be looked into because the word 'shall' used indicates that there are mandatory procedural rules. The name of the enquiry officer should be intimated is a mandatory requirement of the statute. Whether any prejudice at all was caused is entirely a different matter. Therefore, it is contended by the petitioners that question of prejudice or non-prejudice cannot be looked into because the word 'shall' used indicates that there are mandatory procedural rules. The name of the enquiry officer should be intimated is a mandatory requirement of the statute. Whether any prejudice at all was caused is entirely a different matter. Joint Registrar who is a creature of the statute cannot say that such a rules unnecessary as informing the name of the person who is authorised to conduct the inquiry makes no different and no prejudice will be caused. There is clear violation of sub-r.(1)(b) of R.66. It is specifically mentioned in R.66(1)(b) that the name of the person authorised to conduct the inquiry shall be informed. According to me, this is a mandatory provision. Whether that provision is unnecessary or whether that provision should have been deleted or not, is a question before me. So long as that rule stands, Joint Registrar should have complied with the same. For any reason if Joint Registrar was unable to inform the name question of substantial compliance could have been considered. But, in no such circumstances, Joint Registrar can say that such a rule is not necessary as no purpose will be served by mentioning the name. Admittedly, R.66(1)(d) was not complied with. But, with regard to the contention that the notice was not served by registered post acknowledgement due as provided under R.66(2). It is true that there is non-compliance of the above rule which is mandatory. Notice was sent by ordinary post only. S.104 of the Act also provides that such notice shall be served by registered post. I cannot understand why notice in this case was not served by joint Registrar as provided under S.104 or R.66(2). However, since the petitioner accepted nonce and replied the same on merits, on that ground alone enquiry cannot be set aside as no prejudice is caused by non-observance of the, above procedure. 9. With regard to the contentions regarding violation of R.66(3), the first enquiry officer submitted an interim report and also requested for extension of time. Then another enquiry officer was appointed on the ground that the first enquiry officer was transferred. The second enquiry officer was asked to continue the proceedings, There is no specific provision to ask the second enquiry officer to continue the proceedings. Then another enquiry officer was appointed on the ground that the first enquiry officer was transferred. The second enquiry officer was asked to continue the proceedings, There is no specific provision to ask the second enquiry officer to continue the proceedings. The procedure stated under R.66(3)is to withdraw the proceedings and conduct the inquiry by the Registrar himself or entrust with another officer. In the order appointing second enquiry officer, it is not stated that the enquiry is withdrawn. In the interim report, with regard to some of the points there are findings in favour of the petitioners and in some against. Petitioners also allege that in view of the points in favour of the petitioners, the first enquiry officer was transferred. Because first enquiry officer was transferred to another place, another officer was appointed and it cannot be said to be motivated by malafides. There is procedural violation in the sense that there was no withdrawal of first enquiry and strict compliance under R.66(3). I also note that name of the second enquiry officer was also not intimated. 10. With regard to the contention that balance sheet was not attached, it is seen that in the report, there is no mention that balance sheet is attached. In the order communicating the decision it is not mentioned that balance sheets enclosed. Balance sheet was not enclosed when notice was issued under S.65(5). In the files, immediately after the report now there is a balance sheet. That was not attached to the report. Further, that is a balance sheet as on 31.10.1996. It is an un audited balance sheet signed by the Secretary. The Committee itself took over only on 6.2.1996. Financial Position of the society as per the balance sheet after the managing committee took over charge was not discussed at all. Even under the above balance sheet, there was a profit of more than Rs. 1,65,000/-. The rule specifically states that the report shall invariably contain a latest balance sheet of the society. The words 'invariably contain' show that it is absolutely necessary and should contain a balance sheet. That was not there with the report. Nor it was sent to the persons when notice was sent. Hence, there is violation of rule 66(5) of the Rules also in the order. 11. It is also contended that findings are one sided. The words 'invariably contain' show that it is absolutely necessary and should contain a balance sheet. That was not there with the report. Nor it was sent to the persons when notice was sent. Hence, there is violation of rule 66(5) of the Rules also in the order. 11. It is also contended that findings are one sided. I am not going to the above contention as this Court is not functioning as an appellate authority. But, I see that the enquiry officer after finding all points referred to him against the petitioners also recommended action against them. This is without jurisdiction and it may be pointer towards bias. In Sudarsanan & Ors. v. State & Ors. (1997 (1) KLJ 475) it is held that recommendation of action in an enquiry or inspection report under S.65 and 66 is beyond the scope of recommendation. I also note that even the enquiry itself was started on the basis of recommendation of the Assistant Registrar. 12. In Ridge v. Baldwin (1964 A.C. 40) House of Lords pointed out the extent of the area where the principles of natural justice have to be followed and judicial approach has to be adopted, must depend, principally on the nature of the jurisdiction and the power conferred on the authority or body by statutory questions to deal with the question affecting the rights of citizens. Unlike general principles of natural justice, when principles of natural justice are enshrined in a statutory provision, the statutory authorities are bound to obey the rule strictly. As held in Wiseman & anr. v. Borneman & Ors. (1971 A.C. 297) it is well established that when a statute has conferred on anybody the power to make any decisions affecting individuals, court will ensure that the procedural safeguards as mentioned in the rules are followed. It is true that procedural objections are often raised by unmeritorious parties. Judges may then be tempted to refuse relief on the ground that a fair hearing could have made on difference to the result. But, in principle, it is vital that the procedure and the merits should be kept strictly apart, since otherwise the merits may be prejudiced unfairly. It is true that procedural objections are often raised by unmeritorious parties. Judges may then be tempted to refuse relief on the ground that a fair hearing could have made on difference to the result. But, in principle, it is vital that the procedure and the merits should be kept strictly apart, since otherwise the merits may be prejudiced unfairly. In General Medical Council v. Spackman (1943 A.C. 627) it was held by Lord Wright as follows: "If the principles of natural justice are violated in respect of any decision it is, indeed, immaterial whether the same decision would have been arrived at in the absence of the departure from the essential principles of justice. The decision must be declared to be no decision." It is not explained why the statutory rules as prescribed in R.66 were not complied with strictly. 13. The learned Government Pleader cited the decision of the Supreme Court reported in State Bank of Patiala and ors. v. S.K. Sharma (AIR 1996 SC 1669) where the Supreme Court exhaustively dealt with the matter and argued that substantial compliance of the rule will be enough even if there is violative of statutory rule regarding the procedure unless the rule itself is considered to be mandatory. In this case, the word used in the above rule is 'shall'. Apart from the above, here, it is not the non-compliance of one provision by mistake; but almost all provisions of the procedure prescribed. As held by the Supreme Court in Hira Nath Misra & Ors. v. Principal, Rajendra Medical College, Ranchi (AIR 1973 SC 1260 at page 1264) and Swadeshi Cotton Millsv. Union of India (MR. 1981 SC 818) where the statute under which an authority functions provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner. In the often quoted decision of the Supreme Court in the International Airport Authority's case (AIR 1979 SC 1628) It was held as follows: "It is a well settled rule of administrative law that an executive authority must be rigorously held to the standards by which it professes its actions to be judged and it must scrupulously observe those standards on pain of invalidation of an act in violation of them. This rule was enunciated by Mr. This rule was enunciated by Mr. Justice Frankfurter in Viterelli v. Seaton (1959) 359 US 535:3 LEd 2d 1012 where the learned judge said: "An executive agency must be reigorously held to the standards by which it professes its action to be judged Accordingly, if dismissal from employment is based on a defined procedure, even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed. This judicially evolved rule of administrative law is now firmly established and, if I may add, rightly so. He that takes the procedural sword shall perish with the sword." This Court accepted the rule as valid and applicable in India in A. S. Ahluwalia v. State of Punjab ((1975) 3 SCR 82): (AIR 1975 SC 984) and in subsequent decision given in Sukhdevv. Bhagatram ((1915 ) 3 SCR 619): (AIR 1975 SC 1331). "(Para. 10) Here, there is violation of all the mandatory procedural provisions under statutory R.66. A combined violation of all these provisions would also lead to some support for the arguments of the petitioners regarding malafides. Otherwise, why a statutory authority has not followed the statutory provisions is not clear. 14. Based on the enquiry proceedings, a notice was issued as provided under S.65(5) of the Act. According to the petitioners such a notice was sent only because Joint Registrar himself found that defects were minor. S.65(5) of the Act reads as, follows: "65. Inquiry by Registrar : (5) When an inquiry made under this section reveals only minor defects which in the opinion of the Registrar, can he remedied by the society he may communicate the result of the inquiry to the society and the society, if any to which that society is affirmed. He may also direct the society or its officers to take such action within the time specified therein to remedy the defects disclosed in such inquiry". (underlined only for emphasis) The managing committee has replied the notice after curing majority of the defects. With regard to others, they wanted time. But only seven days' time was granted and proceedings under S.32 of the Act were initiated. One of the major charges proved was that loan's were given to ineligible members. According to the petitioners, the alleged ineligible members as mentioned in the notice were enrolled before the present board members took charge. With regard to others, they wanted time. But only seven days' time was granted and proceedings under S.32 of the Act were initiated. One of the major charges proved was that loan's were given to ineligible members. According to the petitioners, the alleged ineligible members as mentioned in the notice were enrolled before the present board members took charge. For removing them, and getting back the loan amount after employing with the statutory provisions, time was required. Such time was not given for curing the defects. Here also, there is substance in the arguments as contended by the board members. After they took charge the membership started from SI. No. 4990. Alleged ineligible members to whom loans were sanctioned were all members admitted to be society before the present Board of Directors took charge. The members who were in the rolls were given loans as per the procedure. They were not at all aware that some members were ineligible members as no action was taken by the earlier Board for taking ineligible members. For removal of a member from the society, procedure prescribed under the statute has to be followed and within 15 day's time it cannot be complied with. These facts were brought to the notice of the Registrar. That was not looked into and further time was denied. I also note that out of the 22 charges made earlier, except eight, others were cured, as under S.32 nostice only when eight charges are mentioned. 15. Now, we will analyse whether supersession of the Committee as per S.32 was in order even if the findings of the enquiry officer are correct and the enquiry under S.65 was proper. S.32 of the Act reads as follows: "32. 15. Now, we will analyse whether supersession of the Committee as per S.32 was in order even if the findings of the enquiry officer are correct and the enquiry under S.65 was proper. S.32 of the Act reads as follows: "32. Supersession of Committee:- (1) If the Registrar is satisfied that the committee of any society persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or bye-laws or commits any act which is prejudicial to the interests of the society or wilfully disobeys or wilfully fails to comply with any lawful order or direction issued under this Act or the rules, the Registrar may, after giving the committee and opportunity to State its objections, if any, by order in writing remove the committee and - (a) appoint a new committee consisting of not more than three members of the society in its place; or (2) The Registrar shall consult the financing bank and circle Co-operative Union or state Co-operative Union as the case may be before passing an order under sub-s.(1). (3) Notwithstanding anything contained in sub-s.(1) or sub-s.(2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in cases where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases the period of supersession shall generally be for six months and in case a new committee, cannot be constituted or enter upon office in accordance with the bye-laws of the society within the period of supersession the period may be extended for a further period not exceeding six months - (a) in the case of a co-operative society only after consulting the circle co-operative union concerned; and (b) in the case of an Apex Society or a Central Society only after consulting the State Cooperative Union. (4) The Committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give have power to exercise all or any of the functions of the committee or of any officer of the society and take such action as may be required in the interests of the society. (5) The committee or administrator or administrators shall before the expiry of its or his or their term of office, arrange for the constitution of a new committee in accordance with the bye laws of the society. (6) Every order made by the Registrar under subs. (1) shall be communicated to the Circle Co-operative Union." The Registrar shall consult the financing bank and Circle Co-operative Union or State Co-operative Union as the case may be before passing an order under sub-s.(1) of S.32. This is a mandatory rule and it was explained by this Court that it should be an effective conclusion. 16. A Division Bench of the Court in the decision reported in Jose Kuttiyani & Ors. v. Registrar of Co-operative Societies Kerala (AIR 1982 Kerala 12) held that what opinion the Apex Bank can give on seeing the mere allegations in Ext. P3 is not clear. In order that there may be a legal consultation the allegations, the objections, the full materials in support of the allegations and the tentative conclusion of the Registrar should be followed to have a meaningful consultation. Again, in paragraph 24, on the facts of the case, it was held as follows: "24. On the facts of this case, and in the light of the above decisions we hold that there has not been a conclusion as required by law. The Registrar never consulted the financing Bank after considering the explanation and for prima facie conclusion on the matter. So, the order of supersession is invalid". Here, admittedly, when notices were issued for consultation of these Apex Bank and Co-operative Union only the notice as issued under S.32 was forwarded. Latest balance sheet of the bank for the reply of the petitioners was not sent. The tentative conclusion of the Registrar after considering the reply was also not sent. Therefore, following the Division Bench decision, there was no effective consultation. Therefore, even if S.65 enquiry and findings are correct, the mandatory provisions like consultation were not followed. 17. It is stated that the apex bank has requested for time. No time was granted. Even the reasons for asking for time were very reasonable and genuine. With regard to the letter addressed to the Circle Co-operative Union, the letter was addressed to the Chairman, Circle Co-operative Union. 17. It is stated that the apex bank has requested for time. No time was granted. Even the reasons for asking for time were very reasonable and genuine. With regard to the letter addressed to the Circle Co-operative Union, the letter was addressed to the Chairman, Circle Co-operative Union. Chairman, Circle Co-operative Union immediately replied stating that very high opinion about the managing committee of the bank and against superseding the managing committee. He also filed a counter affidavit here. It is stated that it is one of the best banks during the tenure of the managing committee which is now superseded. That opinion was not considered at all on the contention that it was not the opinion of the committee after convening the board meeting. But, the letter addressed to the circle Co-operative Union shows that opinion of the chairman was specifically asked (). That was given. If that was not enough, it was for the Joint Registrar to ask specifically for the Committee's report. Further, his subordinate officer, Assistant Registrar has to convene the meeting of the Co-operative Union and petitioners cannot be found fault with in not convening the meeting of the Co-operative Union as mentioned in the counter. In fact, the opinion of the Chairman of the Co-operative Union was not considered at all and if the Chairman was consulted his reply would have been in favour of the managing committee and not for superseding the Committee. It was also pointed out by the Chairman of the Cooperative Union that by the effort of the new committee took charge on 6.2.1996, loss of lacks of rupees were wiped off and became profitable. The entire acts are for profiting the bank and in the interests of the bank and action under S.32 will be against the members of the bank. See Ext. P6 in O.P. No. 8695/97. Therefore, there is no effective conclusion and in view of the observations of the Division Bench of this Court earlier referred to as well as on the facts of this case, it can be seen that the formalities were made in appearance just to complete the supersession. It assumes importance when allegations of malafides were already there. Therefore, there is no effective conclusion and in view of the observations of the Division Bench of this Court earlier referred to as well as on the facts of this case, it can be seen that the formalities were made in appearance just to complete the supersession. It assumes importance when allegations of malafides were already there. No valid reasons are given to find that effective consultation was not reasonably practicable or such irregularities were there that any lapse of time for completing the formalities will affects the interest of the bank. A bank which was incurring heavy loss and in red became profitable during the tenure of the present managing Committee which was superseded and no grounds are made out. Petitioners took charge of the bank on 6.2.97 when more than Rs. Nine lakhs was in loss and within one year this was wiped off and more than lakhs of rupees was earned as profit. By a hasty action, such a board cannot be superseded. S.32(3) was not invoked. There is no effective consultation under S.32(2) and on that court also, the supersession cannot be accepted. 18. It has been held by this Court in the decision reported in Rajagopalan Nair v. State of Kerala (1995 (2) KLT 184) that the provision of supersession is to be considered as an exceptional and rare action. In the decision reported in 1997 (1) KLJ 607 (T. T. James and Ors. v. Joint Registrar & Ors.) it was held by this Court that mere default or disobedience or failure to comply with the provisions assuming to be found to be true cannot be a ground for supersession unless it is shown that there is persistent and wilful negligence and wilful disobedience. A similar view was taken in the decision reported in P. Govindankutty & Ors. v. State & Ors. (1990 (1) KLJ 474). In the decision reported in Pollachi Co-operative Marketing Society v. K.N. Valuswami (1994 Supp. (3) SCC 134) the Supreme Court held that to constitute wilful negligence and wilful disobedience the act done or omitted to be done must involve such reckless disregard of duty as to imply bad faith. The records show that there is no wilful or persistent default by the managing committee members as alleged. In any event, there is no such finding also. The records show that there is no wilful or persistent default by the managing committee members as alleged. In any event, there is no such finding also. The defects pointed out were cured as far as possible and they have taken steps for curing the same and requested for sufficient time. Another six names were shown pointed out that loans were given to ineligible members even after show cause notice was issued. But, those persons were also admitted as members before the present committee took charge and the present committee was not aware that they were ineligible members. Therefore, even if the enquiry report was correct, there are not enough materials for superseding the committee and in any event, there was no effective consultation. 19. In this connection, I may just look into the allegations of malafides. The Secretary of the bank was charge-sheeted and suspended pending enquiry. The Joint Registrar interfered with the same. The allegation is that the Joint Registrar asked the President that unless the Secretary is taken back they will have to face consequences. I am not affirming the above allegations as correct or not. But, it is a fact that when the Joint Registrar tried to intervene in the disciplinary action taken against an employee, the managing committee members filed original petition before this Court and thereafter steps were taken to supersede the committee. Immediately after the supersession, the secretary was reinstated also. These allegations will have to be viewed in the background of procedural infirmities, lack of effective consultation and other facts proved in the case and there is enough material to show that there is abuse or misuse of power without any valid and legal reason which lead to a finding of want of good faith. 20. These allegations will have to be viewed in the background of procedural infirmities, lack of effective consultation and other facts proved in the case and there is enough material to show that there is abuse or misuse of power without any valid and legal reason which lead to a finding of want of good faith. 20. From the pleadings of the parties, arguments and scrutiny of the files produced before me by the learned Government Pleader, I have found that; (1) Initiation of enquiry under S.65 was without jurisdiction; (2) There are violation of mandatory rules of procedure as prescribed under R.66; (3) Recommendations in the report of enquiry officer is beyond the scope of his powers and without jurisdiction: (4) No sufficient and reasonable time was given to cure the defects under S.65(5): (5) No effective consultation was made under S.32(2): (6) There is no persistent or wilful defect or negligence or disobedience or commission of acts prejudicial to the interest of the society. There is total non-application of mind; (7) There is enough material to show that there is abuse and misuse of power suggesting want of good faith. Each one of the above findings are independently enough to set aside the orders as prayed for. In view of these reasons supersession of the elected managing committee cannot be accepted and therefore, the original petitions are allowed. Ext. P4 report and consequent action challenged in O.P. No. 7269/97 and Ext. P7 order in O.P. 8695/97 are set aside with consequential reliefs. 21. There was an order of status quo in C.M.P. No. 14771/97 in O.P. No. 7269/ 97 passed on 22.5.1997. Allegation is that despite that order the Administrator took charge. Assistant Registrar was appointed as the Administrator. He was-impleaded as additional 3rd respondent in his personal name. He was the 2nd respondent in O.P. There also he is made a party in his official capacity as Assistant Registrar and part-time administrator. He is represented in the Court not by a Government Pleader but by a separate lawyer. He filed an affidavit to the effect that immediately on receipt of Ext. P7 order dated 15.5.1997 of the joint Registrar appointing him as the Administrator before the order of status quo he assumed charge on 19.5.1997. He is represented in the Court not by a Government Pleader but by a separate lawyer. He filed an affidavit to the effect that immediately on receipt of Ext. P7 order dated 15.5.1997 of the joint Registrar appointing him as the Administrator before the order of status quo he assumed charge on 19.5.1997. (17th and 18th May, 1997 were public holidays.) This Court has only to appreciate the officer who has taken prompt action on the basis of the order of the Joint Registrar. Since I am setting aside the order superseding the committee, the Administrator shall hand back the charge forthwith promptly with the same speed to the managing committee. Both the original petitions are allowed with consequential reliefs.