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2017 DIGILAW 738 (KER)

K. K. GOPINATHAN MASTER, PRESIDENT (SUPERSEDED MANAGING COMMITTEE) v. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)

2017-04-12

ANU SIVARAMAN

body2017
JUDGMENT : 1. The challenge in this writ petition is against Exhibit P8 order by which the Managing Committee of the Sulthanbathery Taluk Primary Co-operative Agricultural and Rural Development Bank (hereinafter referred to as 'PCARDB' for short) has been superseded. The petitioner, who was the President of the Managing Committee challenges the supersession on the ground that it was vitiated by procedural irregularities as also for want of notice as contemplated under Section 32(1) of the Kerala Co-operative Societies Act (hereinafter referred to as 'the KCS Act' for short). 2. Heard the learned counsel for the petitioner and the learned Special Government Pleader for the 1st respondent as well as the learned counsel appearing for the 2nd respondent Society. 3. It is submitted that the society had been formed consequent on the formation of the Sultanbathery Taluk by the bifurcation of the Waynad Taluk PCARDB. Since the society was a newly formed one, it was permitted to make contract appointments by competent orders of the Joint Registrar of the Co-operative Societies, who was also the Special Officer for the purpose of the bifurcation. It is submitted that Exhibits P1 to P4 orders issued by the Joint Registrar would show that the Bank had been granted permission to make appointments. Thereafter, on a complaint raised by one P.R.Jayaprakash before the Enquiry Commissioner and Special Judge, a quick verification was ordered into the affairs of the society and by Exhibit P5 quick verification report dated 14.05.2013 the allegations raised were found to be baseless and no action was recommended against any of the members of the Administrative Committee or the officials of the society. 4. Exhibit P6 notice dated 15.02.2017 was issued to all the members of the Managing Committee as well as the Secretary requiring them to give the details of seven Clerks and one System Administrator who were irregularly appointed and later regularized in the society. The details of their length of service and the amount of salary drawn by them was directed to be informed to the 1st respondent. The notice further stated that if the Managing committee members had anything further to state on the matters referred to in the notice, they are free to make such written submissions as also to be present before the Joint Registrar on 27.02.2017 at 11 a.m. and make oral submissions if required. 5. The notice further stated that if the Managing committee members had anything further to state on the matters referred to in the notice, they are free to make such written submissions as also to be present before the Joint Registrar on 27.02.2017 at 11 a.m. and make oral submissions if required. 5. The members of the Managing Committee submitted Exhibit P7 reply. They stated that the appointments in question had been made at a time when the incumbent in the post of Joint Registrar who had issued Exhibit P6 notice was the Special Officer of the society and under orders of permission granted by the Joint Registrar. The orders issued by the Joint Registrar granting permission for the contract appointments were brought to the notice of the Joint Registrar. It was also stated that the quick verification report in the vigilance case had found the allegations to be false. It is stated that copies of Exhibits P1 to P5 were produced before the Joint Registrar along with Exhibit P7 reply. However, by Exhibit P8 order dated 02.03.2017 the Managing Committee was superseded on the ground that the action of the Managing committee in having regularized the service of the contract employees was the subject matter of a criminal complaint before the Vigilance Court and that an FIR had been registered against the Petitioner and one K.G. Chandrasekharan, who was a Joint Registrar on the basis of the said complaint. It is stated that in view of the FIR registered against the President and the earlier Joint Registrar on the clear findings of the Vigilance and Anti- corruption Bureau, if the Managing Committee, which is guilty of misconduct is allowed to continue, it will lead to tampering and destruction of evidence. It is further stated that the consultation with the financing bank and the circle co operative union is not practical in the facts of the case. It is therefore ordered that the Managing Committee with Sri. K.K. Gopinathan as President should not be permitted to continue in the best interest of the society and for the purpose of taking action against the rampant corruption. 6. The main grounds of challenge against Exhibit P8 are to the effect that it is not preceded by a notice as provided in Section 32(1) of the KCS Act. K.K. Gopinathan as President should not be permitted to continue in the best interest of the society and for the purpose of taking action against the rampant corruption. 6. The main grounds of challenge against Exhibit P8 are to the effect that it is not preceded by a notice as provided in Section 32(1) of the KCS Act. It is also contended that the registration of an FIR against the President and an erstwhile Joint Registrar cannot be a reason for supersesion of the manging Committee since the persistent default or disobedience of orders requiring an action of supersession is to be that of the committee and not of any member thereof. It is further submitted that the pendency of criminal investigation which is not even a ground for disqualification of a person from being a member of the Managing Committee cannot be pressed into service for superseding a managing committee as a whole. It is also contended that the consultation with the financing bank and Circle Co-operative Union which are mandatorily provided under Section 32(2) cannot be dispensed with only for the reason that the compliance thereof is time consuming. On merits also, it is submitted that the finding that the records of the society will be tampered with if the present Committee is allowed to continue is completely unsupported by any material. 7. The learned counsel for the petitioner relied on the decisions of the Apex Court reported in State of Madhya Pradesh and others v. Sanjay Nagayach and others [2013 (2) KLT 733] and of this Court in Selvi v. General Manager [2001 KHC 874] Rajeevan T.V. and others v. K.A.Sukumaran and others [ 2013 (3) KLT 253 ], Krishnan Nair G. v. Joint Registrar of Co-operative Societies, Pathanamthitta and others [ 2014 (1) KLT 116 .] 8. The learned Special Government Pleader would submit that all the members of the society had been served with Exhibit P6 notice and had been required to offer their explanations regarding the regularisation of the 8 employees referred to in the said notice. They had been specifically required to be present on 27.02.2017 to state their explanations in person as directed. None of the details required in Exhibit P6 notice were provided by the Manging Committee members. They had also not availed of the opportunity of personal hearing provided to them. They had been specifically required to be present on 27.02.2017 to state their explanations in person as directed. None of the details required in Exhibit P6 notice were provided by the Manging Committee members. They had also not availed of the opportunity of personal hearing provided to them. It is stated that the Joint Registrar had found that the action of the Managing Committee in having illegally regularized the contract employees was the subject matter of a complaint before the Vigilance Court which had directed the initiation of proceedings against the petitioner as well as the Joint Registrar. The finding in the impugned order, therefore, was that in case the present Managing committee which was guilty of persistent default and misfeasance is allowed to continue, it would lead to tampering and destruction of evidence. It is contended that it is perfectly within the powers of the Joint Registrar to dispense with notice under Section 32 (1) as also the requirement of consultation as provided in Section 32(2). It is submitted that the reasons for dispensing with such notice are clearly seen in Exhibit P8 order itself and that there is no illegally in the order under challenge. It is further contended that the petitioner has an effective alternative remedy of appeal against Exhibit P8 order in terms of Section 83(1)(j) of the KCS Act. 9. The learned counsel appearing for the 2nd respondent Bank would contend that the purpose behind the issuance of Exhibit P6 notice was clearly known to all the members of the Managing Committee. It is stated that the attempt by the Managing Committee was to make it appear that this Court had directed the regularisation in service of the contract employees which was a factually incorrect statement. Documents have been produced by the 2nd respondent to show that the regularisation had been achieved by underhand means by the Committee of the society by suppressing relevant material from the notice of this Court. It is further contended that illegalities committed including matters of appointment had been brought to light in special audit reports in respect of the year 2015-16 and that the order of supersession was issued in the best interest of the society. 10. I have considered the contentions advanced. The issue to be considered is with regard to the adequacy of the notice issued before the order of supercession was rendered. 10. I have considered the contentions advanced. The issue to be considered is with regard to the adequacy of the notice issued before the order of supercession was rendered. Exhibit P6 is purported to be a notice issued to the members of Managing Committee under Section 32(1) of the KCS Act. Section 32(1) specifically provides for an order in writing removing the Committee after giving the Committee an opportunity to state its objection. Such a notice, evidently, has to be one which clearly requires the members of the Managing Committee to show cause as to why the Managing Committee should not be superseded. The Co-operative Societies being conceived as democratic institutions of self governance, the action for supersession of their elected Managing Committee being possible only on cogent grounds of persistent default, willful disobedience, irregular payments or causing or loss or damage to the society or on grounds of misappropriation or tampering with records of causing destruction of the same to cover up any misconduct or malpractice, the requirement of notice before an order of supersession is passed cannot be reduced to a mere formality. Such notice and consequential order should scrupulously adhere to the provisions of the empowering section. 11. It is trite law that the governance of a co-operative society is intended in normal circumstances to be with its democratically elected governing body and the governance by an administrator on the supersession of the elected committee is a situation which is warranted only in exceptional circumstances where the specific requirements as contained in Section 32(1) (a) to (d) are found to the satisfaction of the Joint Registrar. The requirement of Section 32 is specifically that the Registrar should be satisfied that the Committee of the society is responsible for the misconducts as provided in the section. It is therefore abundantly clear that the power under Section 32 is to be exercised in strict conformity with the procedural requirements provided in the section. The departure from the requirement of prior notice as also the consultation as provided in Section 32(2) is warranted only on a specific finding by the Registrar that it is not reasonably practical to give the committee a chance to state its objections and to consult the Union and the financing bank. The departure from the requirement of prior notice as also the consultation as provided in Section 32(2) is warranted only on a specific finding by the Registrar that it is not reasonably practical to give the committee a chance to state its objections and to consult the Union and the financing bank. It has been repeatedly held by this Court that a mere finding that the consultation would entail loss of time is not a justification for dispensing with such consultation. It is only after putting the Committee on notice of the violations committed by it and on considering the objections submitted to the proposal for supersession that an order can legally be issued under Section 32. Though it is true that Section 32(3) makes a provision for dispensing with notice as well as consultation, it has been repeatedly held by this Court as well as the Apex Court that such extraordinary powers of supersession without complying with the procedural requirements can be resorted to only in exceptionally emergent situations and mere statements regarding existence of alarming situations have been held to be insufficient for dispensing with the procedural requirements of notice and consultation. The Apex Court in Sanjay Nagayach's case (supra) has clearly held, construing a provision of law identical to Section 32 of the KCS Act, that such a provision is to be construed strictly and that no procedural requirements can be lightly dispensed with. 12. In the instant case, I am of the opinion that the issuance of Exhibit P6 did not amount to a notice preceding an order of supersession. I am also not impressed with the argument that an alternate remedy of appeal is available since the issue of lack of proper notice clearly vitiates the order and this Court is in no way disabled from exercising its discretionary jurisdiction. In the facts of this case, I do not deem it necessary to consider the existence or otherwise of the statutory remedy which itself is a doubtful preposition since a Division Bench of this Court has held in its order dated 26.05.2011 in W.P.(C).No.32845/2010 that an appeal does not lie from an order under Section 32 of the KCS Act. 13. 13. In the above circumstances, I am of the opinion that the requirement of notice and of the giving of the committee an opportunity to state its objections, if any, to a proposed action for supersession has not been complied with before the issuance of Exhibit P8 order. Moreover, since the consultation with the financing bank has also been given a go bye only on the ground that it would be a time consuming process, I am satisfied that Exhibit P8 order is not in tune with Section 32 of the KCS Act. In the result, the impugned order is unsustainable and is therefore set aside. This writ petition is ordered accordingly.