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2001 DIGILAW 373 (KER)

M. Selvi v. General Manager

2001-07-13

J.B.KOSHY

body2001
Judgment :- J.B. Koshy, J. Petitioner in these two original petitions was the elected President of Thrikkannapuram Handloom Weavers Industrial Co-operative Society Ltd. which is a Society registered under the Co-operative Societies Act. She was elected to the Managing Committee of the Society in the election conducted on 22.5.1999. The term of the previous committee was over on 28.2.1999. That committee on 28.9. 1998 in the absence of regular Secretary appointed a temporary Secretary for a period of four months on a consolidated pay of Rs.1,500/-. That appointment was questioned and this court directed the Society to appoint a regular Secretary within four months from the date of the judgment (Ext.P3 in O.P. No.3996/2000). Learned Judge also observed that there is no illegality in the temporary appointment. Consequently by order dated 2.12. 1998 departmental sanction was received to appoint a Secretary as can be seen from Ext.P2. A writ appeal was filed by the General Manager and Division Bench directed the Society to appoint the Secretary within eight weeks from the date of the judgment (Ext.P4). Meanwhile earlier committee was issued with a notice dated 10.2.1999, just 15 days prior to the date of expiry of their term, asking them to show cause why they should not be superseded. 2. It is the case of the petitioner that the action for supersession of the previous committee was taken malafide with a plan to see the then committee members should not contest the election again and the committee should be administered by the Administrator for the political party favouring the General Manager during that time. The petitioner approached this court and considering the prima facie nature of the contentions, this court held that even though proceedings for supersession can go on, if adverse order is passed that should not be implemented for a period of two weeks so that they can take further proceedings as can be seen from Ext.P5 judgment in O.P. No.3905/1999 dated 16.2.1999. In view of the above judgment the plan for superseding the earlier committee and thus disabling the Managing Committee members to contest the election next time was spoiled and therefore no supersession orders were also passed. The committee's term came to an end on 28.2.1999. 3. Previous committee has taken a decision to conduct the election as their term will be over on 28.2.1999. But no Returning Officer was appointed for completing the formalities. The committee's term came to an end on 28.2.1999. 3. Previous committee has taken a decision to conduct the election as their term will be over on 28.2.1999. But no Returning Officer was appointed for completing the formalities. That also shows a malafide nature of the General Manager at that time in not appointing Returning officer in time as per the resolution passed by the previous committee. They filed O.P. No. 2625/1999 for compelling the appointment of Returning Officer. The above writ petition was disposed of recording the submission of the Government Pleader that returning officer was already appointed and election will be conducted on 25.2.1999 before the expiry of the term of the previous committee, i.e. 28.2.1999. It is contended that only after the judgment in O.P. No. 2625/99 dated 5.2.99 notice for suppression dated 10.2.1999 was made malafide for preventing the committee members from contesting the election. On 26.2.1999 C.M.P.No. 8593/99 in O.P. No. 2625/99 for extending the time for conducting the election. By Ext.P6 dated 1.3.1999 time was extended on condition that elected committee will continue till new election is over. 4.Disregarding the above directions in Ext.P6 and also without getting permission from this court an Administrator was appointed violating the court in utter contempt of this court's order. Contempt of Court Petition (C.C.C.No. 137/99) was filed. By that time against the interim order a Writ Appeal was filed and in the Writ Appeal the court ordered deleted the direction of the learned single judge that the existing Manging Committee will continue till the election is over by Ext.P5 judgment. But court ordered following directions: "The administrator will be in charge of the day to day affairs and management of the society and shall not take any policy decision or incur huge expenditure. He shall not make appointments to any post till the next committee take charge.The administrator shall conduct the election and complete the entire process of election including the declaration of results etc. within two months from today. The time now granted will not be extended on any ground. The appellant shall see that the election is conducted in a fair and proper manner and without giving any room for any complaint from any quarters. Writ Appeal is disposed of on the above terms. within two months from today. The time now granted will not be extended on any ground. The appellant shall see that the election is conducted in a fair and proper manner and without giving any room for any complaint from any quarters. Writ Appeal is disposed of on the above terms. Since Administrator was appointed when order of the learned single Judge was in force, in C.C.C. No. 137/99 this court admonished the General Manager and Junior Co- operative Inspector. While dropping the proceedings in view of Ext.P8 judgment, Division Bench while disposing of the Contempt of Court Case ordered as follows: "But we think it necessary to warn the respondents that such a conduct will not be appreciated or tolerated in future and it is their duty to know what exactly is the order that passed by this court before taking further steps regarding a matter pending in the court or covered by any direction, interim or otherwise of the court." By the time when the judgment was pronounced on 27.5.1999 election was already conducted and new committee headed by the petitioner has already taken charge. All these facts which are not disputed clearly show that there was malafide and victimization on the part of the General Manager. 5. In accordance with the directions of this court to appoint a regular Secretary, steps were taken by the previous committee and it was continued by the present committee. Meanwhile, an employee of the Industries Department was deputed as Secretary when the Administrator was in charge. He without considering the proceedings already taken by the elected committee legally in appointing a Secretary, issued fresh steps to appoint a Secretary. Meanwhile interview was conducted by the elected President and selection list was made. It is contended by the respondents that these averments of the petitioner are not correct. In fact in pursuance of the decision of the Managing Committee fresh notificaton was published in Malayala Manorama and 25 applications were received. But ignoring the same the President continued with the earlier proceedings and fixed interview. Since that is not the subject matter of these original petitions, I am not going into the correctness of these proceedings. It is submitted that selection process for appointment of the Secretary is under challenge in another original petition. Notice was issued to the petitioner as well as other committee members for stopping the selection process. Since that is not the subject matter of these original petitions, I am not going into the correctness of these proceedings. It is submitted that selection process for appointment of the Secretary is under challenge in another original petition. Notice was issued to the petitioner as well as other committee members for stopping the selection process. It is the case of the petitioner that such notice was not received by her. Information regarding the same was also not received in time. Files were called for. The returned covers show that notices issued to them were not in their residential addresses. Such covers returned saying that 'no such addressee'. Appointments were not made in view of Ext.R1(c) order passed by the General Manager. 6. Thereafter an order of supersession was passed superseding the newly elected committee within seven months of the election without issuing notice and without complying with the statutory formalities. The following is the operative part of the order: " In view of the alarming situation prevailing the management of the affairs of the society and the urgency in resorting to earn remedial measures to safeguard the interest of the members in the society and investments and interest of Government and the Bank, it is considered that it is not feasible and practicable to give further opportunity to state its objections if any in taking action against them. The consultation with the Financing Bank viz. the District Co-op. Bank, Trivandrum and with the Circle Co- operative Union are also dispensed with the steps as contemplated under Sub Sections (1) and (2) of Section 32 and this order is issued under Sub Section (3) of Section 32 and also after dispensing with serving of notice to the committee and consultation with the Financing Bank." An Administrator was appointed. O.P. No. 3996/2000 was filed mainly challenging the order of supersession. As repeatedly held by this court the provision for supersession has to be used very cautious as a Society has to be ruled by an elected body. It cannot be superseded by flimsy reasons. The position was relterated by this court in Rajagopalan Nair v. State of Kerala (1995 (2) Klt 184.) 7. Here in this case the main allegation against the Society is non- receipt of the orders from the Registrar (General Manager) and willful disobeyance of the Orders of the Registrar. It cannot be superseded by flimsy reasons. The position was relterated by this court in Rajagopalan Nair v. State of Kerala (1995 (2) Klt 184.) 7. Here in this case the main allegation against the Society is non- receipt of the orders from the Registrar (General Manager) and willful disobeyance of the Orders of the Registrar. This is only one solitary instance of appointment of one Secretary. Here also final appointment was not done. We have already seen the malafide attitude of the General Manager in this matter. Even if the allegations are true, is it a matter requiring supersessions of an elected committee? What is willful negligence is clearly mentioned by the Supreme Court in the decision in Pollachi Cooperative Marketing Society v. K.N. Valuswami and Others (1994 Supp. (3) S.C.C. 134) In the decision reported in 1997 (1) KLJ 607 (T.T. James and Ors. V.Joint Registerar & 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 willful negligence and willful disobedience. A similar view was taken in the decision reported in P.Govindankutty & Ors. V. State & Ors. (1990 (1) KLJ 474). Here as already stated that the order which was said to be not obeyed was sent and returned unserved. No final appointment was made. In any event, that cannot be contituted as a major willful default warranting supersession of the committee. 8. Section 32 of the Co- operative Societies Act provides as follows: 32. (1990 (1) KLJ 474). Here as already stated that the order which was said to be not obeyed was sent and returned unserved. No final appointment was made. In any event, that cannot be contituted as a major willful default warranting supersession of the committee. 8. Section 32 of the Co- operative Societies Act provides as follows: 32. Supersession of Committee.-(1) If the Registrar, after an inquiry by himself or through his subordinates or on a report of the financing bank,or the Vigilance Anticorruption Bureau of the Government or the Vigilance Officer or otherwise is satisfied that the committee of any society,- (a) persistenly makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or bye-laws or does anything which is prejudicial to the interests of the society; or (b) Wilfully disobeys or fails to comply with any lawful order or direction issued under this Act or the rules; or (c) Makes any payment contrary to this Act or the rules or the bye-laws or causes any loss or damage to the assets of the society by breach of trust of wilful negligence; or (d)misappropriates or destroys or tampers with the records or causes the destruction of records to cover up nay misconduct or malpractice, he may, after giving the committee an opportunity to state its objections if any, by order in writing, remove the committee and, appoint an new committee consisting of not more than three members of the society in its place or, appoint not more than three administrators, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months, as may be specified in the order, which period may, at the discretion of the Register, be extended from time to time, so however that the aggregate period does not exceed one year.) (2) The Register shall consult the financing bank and Circle Co-opertive Union or State Co-operative Union or state Co-operative Union as the case may be before passing an order under sub-section(1). (3) Notwithstanding anything contained in sub-section (1) or sub-section (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 Co-Operative 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 nay of the powers and functions) of the committee or any of officer of the society and take such action as may be required in the interest 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 sub-section (1) shall be communicated to the Circle Co-operative Union." 9. Within seven months of election to the managing committee of the society, without giving a chance to explain, it was superceded even without issuing a show cause notice violating the principles of natural justice. Admittedly no show cause notice was issued. Statutory rules contemplated for giving notice to Co-operative union etc. were also violated. A reading of Section 32 itself show that legislature has prescribed very strict formalities before superesession of the elected body. Provisions for relaxing such procedural formalities can be done only in emergent situations. Even without the formalities prescribed under Section 32, principles of natural justice should have been followed before superceding the elected committee. were also violated. A reading of Section 32 itself show that legislature has prescribed very strict formalities before superesession of the elected body. Provisions for relaxing such procedural formalities can be done only in emergent situations. Even without the formalities prescribed under Section 32, principles of natural justice should have been followed before superceding the elected committee. 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 enshried 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 especially when there is every likelihood of prejudice. In General Medical Council v. Spackman (1943 A.C. 627) it was held by Lord Wrigt as follows: "If the principle 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." Theory of ' no likelihood of prejudice' even if some of the procedures are not complied with is also not applicable on the facts of the case. 10. As held by the Supreme Court in Hira Nath Misra & Ors. The decision must be declared to be no decision." Theory of ' no likelihood of prejudice' even if some of the procedures are not complied with is also not applicable on the facts of the case. 10. 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 Mills v. Union of India (AIR 1981 SC 818) where the statute under which an authority funcations 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 decision of the Supreme Court in Ramana v. The internation Airport Authority of India (AIR 1979 SC 1628) it was held as follows: "…………………It is 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 enuciated by Mr. Justice Frankfurther in Viterelli v. Seaton ((1959) 359 US 535:3 L ED 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. Ahulwalia v. State of Punjab ((1975) 3 SCR 82): (AIR1975 SC 984) and in subsequent decision given in Sukhdev v. Bhagatram (( 1975) 3 SCR 619): (AIR 1975 SC 1331). (para 10). If mandatory principles of natural justice enshrined in the statute are to be dispensed with, it is for respondents to explain with cogent reasons. When procedural formalities prescribed in Section 32 are to be dispensed with, burden of authorities are very heavy. 11. This Court had occasion to consider the scope of enquiry by the court into the Registrar's satisfaction about matters referred in ss. When procedural formalities prescribed in Section 32 are to be dispensed with, burden of authorities are very heavy. 11. This Court had occasion to consider the scope of enquiry by the court into the Registrar's satisfaction about matters referred in ss. (1) before passing an order of supersession in Jose Kuttiyani & others v. The Registrar of Co- Opertive Societies, Kerala Trivandrum & Others (AIR 1982 Kerala 12.) It was observed as follows: " No doubt whether these conditions exist or not it is for the Registrar to be satisfied. No doubt the satisfaction maybe subjective, but it shall not be arbitrary." A mere statement in the order that 'an alarming situation' is present is not enough in doing away with procedural requirements while taking a drastic step of remaining an elected body even before it completes 1/4 of the elected term. Mere assertions are not enough. 12. In Barium Chemicals Ltd. v. Company Law Board (AIR 1967 S.C. 295) the scope of judicial review of the exercise of the power depending upon the satisfaction on the existence of one or the other ground has been considered and it was observed as follows: "The words "in the opinion of the Central Government" Indicate that the opinion must be formed by the Central Government and it is of course implicit that the opinion must be an honest opinion. The next requirement is that "there are circumstances suggesting, etc." There words indicate that before the central Government forms its opinion it must have before it circumstances suggesting certain inferences." "It is not sufficient to assert that the circumstances exist and give no clue what they are because the circumstances must be such as to lead to conclusions of certain definiteness." In Jaswanth Singh v. State of Punjab & others (AIR 1991 S.C. 385) Supreme Court considered a case arising under clause (b) of the second proviso under Art. 311 of the Constitution. C1. (b) provides that reasonable opportunity of being heard to be given to the delinquent as per Article 311 (2) can be dispensed with where the authority empowered to dismiss or remove a person or reduce him in rank is satisfied that for some reason, to be recorded by that authority in writing, it is not reasonably practicable to hold such enquiry. It was observed that when the satisfaction of the concerned authority is challenged in a court of law, it is incumbent on those who support the order to show that the satisfaction is based on certain objective facts and is not the outcome of the whim or caprice of the concerned officer. 13. In S.J. Meshram v. Union of India & others (1987 (supp) S.C.C. 164) Supreme Court considered a case where the appellant was removed from service for alleged misconduct without conducting departmental enquiry on the ground that it is not reasonably practicable to hold the enquiry. One of the reasons given for coming to the above conclusion was that the appellant may destroy the evidence. The apex court took the view that for such reasons, it cannot be held that departmental enquiry is not reasonably practicable. There is elaborate discussion as to the meaning of the term 'reasonably practicable' in Union of India v. Tulsiram Patel ((1985) 3 S.C.C. 398) by a Constitutional Bench, while discussing the scope of clause (b) in the second proviso to Article 311 (2). Some of the circumstances under which it can be taken that conduct of an enquiry contemplated under Art. 311 (2) is not reasonably practicable are also discussed therein. This decision is also an authority for the legal position that an opinion formed by the authority concerned that it is not reasonably practicable to conduct an enquiry is amenable to judicial review. 14. On the facts of this case there was no 'alarming situation' for superseding an elected managing committee dispensing with even a show cause notice and other procedural requirements. Otherwise in every case such a step can be used and violating the principles of natural justice and procedural formalities, elected body can be superseded arbitrarily. No emergency was here to make such a supersession without notice on the facts of the case. Real prejudice was caused to the petitioner in not giving an opportunity to explain. Nothing would have taken place if at least a week's time was allowed to explain. There is no allegation that there is misappropriation by the committee members or because of their act the Co-operative Society was running in a loss. Absolutely no personal allegations were there. The supersession order was passed in continuation of the Secretary. Nothing would have taken place if at least a week's time was allowed to explain. There is no allegation that there is misappropriation by the committee members or because of their act the Co-operative Society was running in a loss. Absolutely no personal allegations were there. The supersession order was passed in continuation of the Secretary. Therefore, I see no ground to uphold the order of supersession passed against the Society and I set aside the order of supersession passed (Ext.R1(e) and O.P.No.3996/2000) is allowed. However, this is without prejudice to the right of the department to pass fresh order after complying with procedural formalities required under Section 32 if facts of the case warrant so. 15. After supersession of the committee, steps taken to elect a new committee. In view of the supersession of the committee, the then members are debarred from contesting the election again. Therefore, challenging the new election process O.P. No. 26651/2000 was filed. This court has stayed the election by an interim order. Since order of supersession was already set aside, as a natural consequence, elected members wrongly superseded has to be reinstated in office and they can continue in office till their statutory term is over or till they are superseded as per law. Hence then should be reinstated forthwith. Managaing Committee elected on 22.5.1999 shall take charge and administrator is directed to hand over charge to the elected committee immediately . Since there is an elected committee, whose statutory term is not over and whose supersession was setaside, there is no need to conduct a fresh election. Hence Ext.P2 challenged in O.P. No.26651/2000 is set aside. 16. Learned counsel appearing for the first respondent submitted that challenging the election of the Managing Committee headed by the petitioner on 22.5.1999 there was an election dispute and Ext.R1A order was passed on 28th June,2000. In the above case it is seen that even though a prima facie view was taken by the Arbitrator that returning officer (who was appointed by the department) conducted the election without proper records, no final decision was taken. After noticing that committee whose election was challenged was superseded, Arbitrator disposed of the suit as infructuous. He held as follows: "As the managing committee is not in force, there is no need to continue the suit. After noticing that committee whose election was challenged was superseded, Arbitrator disposed of the suit as infructuous. He held as follows: "As the managing committee is not in force, there is no need to continue the suit. The suit is accordingly disposed." Even though Ext.R1A was not specifically challenged by the respondents, since Election suit was disposed of without a final decision only on the ground that committee was superseded and order of supersession is set aside by this court, as a corollary, in the interest of justice Ext.R1A is also set aside. Arbitrator may issue notice to the parties and re-hear the matter de novo and fresh award de novo and fresh award be passed in A.R.C. No. 1/1999 expeditiously. Both the original petitions are disposed of accordingly.