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2018 DIGILAW 171 (KER)

MELUKKARA SERVICE CO-OPERATIVE BANK LTD. v. JOINT REGISTRAR (GENERAL), DISTRICT CO-OPERATIVE SOCIETY, PATHANAMTHITTA

2018-02-21

DEVAN RAMACHANDRAN, P.N.RAVINDRAN

body2018
JUDGMENT : Devan Ramachandran, J. The pre-conditional sine qua non for the Registrar of Cooperative Societies to invoke jurisdiction under Section 65 of the Kerala Co-operative Societies Act, 1969, so as to cause an inquiry suo motu into the working of a co-operative society registered under it, is the issue that the petitioner calls our attention to in this writ petition; his assertion on law being that the Registrar can initiate any such inquiry only after he is “satisfied subjectively” of its need and requirement, based on a personal evaluation of the relevant factual factors, materials and circumstances that are presented before him, seeking a warrant for such an inquiry. As a necessitous corollary, the nature and manner of such “subjective satisfaction” is also requested into consideration by the petitioner. 2. The relevant facts first. 3. Melukara Service Co-operative Bank Limited, which is a society registered under the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as “the Act” for short) as the first appellant and its President as the second appellant, have filed this appeal calling into question the judgment of the learned single Judge in W.P.(C) No. 17976 of 2017, dated 7.7.2017, whereby the action ordered by the Joint Registrar of Co-operative Societies, the respondent herein, to initiate an inquiry under Section 65 of the Act, was granted imprimatur. 4. The appellants vociferously contend that the order impugned herein, by which the Joint Registrar has sanctioned an inquiry under section 65 of the Act, is per se illegal and unlawful, since under the mandate of the said section, he could have done so only within the specified parameters prescribed therein. The appellants assail the order of the Joint Registrar, a copy of which has been appended to the writ petition as Ext.P1, on the specific ground that an inquiry under Section 65 of the Act was ordered by him without there being any material on record justifying it and without being first subjectively satisfied that such an action was necessary. 5. We heard Sri Liju V.Stephen, learned counsel for the appellant and Sri Sunilkumar Kuriakose, learned Government Pleader appearing for the respondent. 6. Since the fulcrum on which the entire case of the appellants revolves is the manner in which Section 65 of the Act is to be interpreted, we deem it idoneous to extract the same as under: “65. 5. We heard Sri Liju V.Stephen, learned counsel for the appellant and Sri Sunilkumar Kuriakose, learned Government Pleader appearing for the respondent. 6. Since the fulcrum on which the entire case of the appellants revolves is the manner in which Section 65 of the Act is to be interpreted, we deem it idoneous to extract the same as under: “65. Inquiry by Registrar.--(1) The Registrar may,-- (a) on his own motion; or (b) on an inquiry report of the Vigilance Officer appointed under Sec.68A; or (c) on a report of the Director of Co-operative Audit appointed under Sec.63; or (d) on application by the majority of the members of the committee of the society, or by not less than one third of the quorum for the general body meeting, whichever is less; or (e) on an application by the apex society or financing bank of which such society is a member; or (f) on an application of a society to which the society concerned is affiliated,- hold an inquiry by himself or by a person authorised by order in writing, into the Constitution, working and financial condition of the society, if he is satisfied that it is necessary to do so.” 7. As per the provisions of Section 65, discernible from the extracted portion, an inquiry by the Registrar may be ordered either on his own motion or in the contingencies enumerated in sub-clauses (b) to (f) of the said Section. The power to initiate an inquiry under Section 65 of the Act on the motion of the Registrar is contained very pithily in sub-clause (a) which says that the Registrar may hold an inquiry by himself or by a person authorised by an order in writing, into the constitution, working and financial condition of the society, if he is satisfied that it is necessary to do so. However, the provision clearly ingrains a qualification that such an inquiry need be ordered “only if he is satisfied that it is necessary to do so.” The words “that it is necessary to do so” in the last portion of Section 65(1) clearly postulates that the power to be exercised by the Registrar has to be done with necessary care, caution and circumspection. It is not permissible on the part of the Registrar to order an inquiry under Section 65 merely because he is competent to do so. It is not permissible on the part of the Registrar to order an inquiry under Section 65 merely because he is competent to do so. The powers vested with him being virtually plenary in nature, the requirement of him being subjectively satisfied that it is necessary to do so is statutorily in-built. 8. As is perspicuous from Section 65 itself, very strict stipulations are provided as to the manner in which the Registrar can initiate action thereunder. It becomes inescapable from its prescriptions that the care and circumspection, while the Registrar exercises jurisdiction under it, has to be very strictly construed. The requirement of being personally satisfied before an inquiry is ordered by the Registrar is implicit in the provision and, therefore, it is essential that before making an order under Section 65, to cause an inquiry into the working of the Society, it is necessary and exigent for the Registrar to be first satisfied that such an inquiry is required and essential. 9. Sri Liju V. Stephen, learned counsel for the appellants submits that in the case at hand the facts would show that the Registrar did not apply his mind at all independently, while issuing Ext.P1 order. According to him, there was only a complaint by a disgruntled member of the society making certain allegations against its working and that the said complaint was mechanically referred by the Registrar to the Assistant Registrar for a preliminary inquiry. Sri Liju V. Stephen also states that the Assistant Registrar made a report in some manner before the Registrar, wherein an inquiry was perhaps and presumably recommended. The Registrar, thereafter simply accepted the recommendation of the Assistant Registrar made in his report and then issued Ext.P1 stating cursorily that prima facie he is “satisfied that an inquiry under Section 65 is warranted”. Sri Liju V. Stephen asserts vehemently that apart from the mere mention that the Registrar is “prima facie satisfied” that an inquiry is necessary under section 65, the order does not say how that satisfaction was arrived at and on what basis was such satisfaction considered and established. 10. The learned Government Pleader appearing for the respondent submits that the rigor of section 65(1)(a) of the Act is only that the Registrar may on his own motion hold an inquiry into the working of the society. 10. The learned Government Pleader appearing for the respondent submits that the rigor of section 65(1)(a) of the Act is only that the Registrar may on his own motion hold an inquiry into the working of the society. According to him, the only pre-condition for the Registrar in calling for such an inquiry is that there must be some material before him which would satisfy his judgment that such an inquiry is necessary. The learned Government Pleader asserts that in this case the Registrar did not act upon the complaint made by the member but that he sent the complaint for causing an inquiry by the Assistant Registrar. According to him, this is all the Registrar could have done because he is busy with other works and it is not possible for him to enter into the validity and suitability of every complaint and information for ordering a suo motu inquiry under Section 65. 11. We have considered the various submissions made at the Bar by the learned counsel on either side as above. 12. There is no doubt that Section 65(1)(a) invests the Registrar of Co-operative Societies with great powers, while ordering an inquiry under its mandate, to the working of the society. The words “on his own motion” in sub-clause (a) are not qualified in any manner except that in the last portion of sub-clause (f), it is mandated that he shall order an inquiry only if he is satisfied that it is necessary to do so. A combined reading of these two provisions would make it ineluctable that the Registrar can order an inquiry into the working of a society on his own motion, provided he is first satisfied that it is necessary to do so. 13. The axiomatic question, therefore, before us is as to the nature of the consideration that a Registrar should first commit himself to, before ordering an inquiry under Section 65, on the ground that he is satisfied that it is necessary to do so. This issue has already been considered by this court in several cases, though on different sets of facts and circumstances. 14. In the judgment in Panicker Kadavu Consumer Co-op. This issue has already been considered by this court in several cases, though on different sets of facts and circumstances. 14. In the judgment in Panicker Kadavu Consumer Co-op. Society Ltd. v. Registrar of Co-operative Societies ( 1994 (2) KLT 564 ) a learned Judge of this court concluded that an inquiry under Section 65 ordered by the Registrar merely on the dictation of the Minister for Co-operation is illegal and unlawful. The reasoning for that conclusion, as is evident from the judgment itself, is that the Registrar has to act independently even when he acts on his own motion and the satisfaction he has to enter into before making such an order is virtually a personal satisfaction based on the relevant documents. 15. Subsequently, in Elakkal Service Co-operative Bank Ltd. v. State of Kerala ( 1997 (2) KLT 85 ) a learned Judge had occasion to consider this issue again. In the said judgment this court had considered the issue as to whether a Registrar, while acting suo-motu and on his own motion can depend upon the report of an inferior officer and then avouch that his satisfaction is complete. It was clearly held in the said judgment that it is not sufficient and proper that the Registrar acts solely upon the reports of inferior officers where there is nothing else on record to show that he had entered into a subjective satisfaction, as required under Section 65, to cause an inquiry. 16. Sri Liju V. Stephen, learned counsel for the appellants fortifies in his submission by relying upon the judgment of the Honourable Supreme Court in Director General, ESI and another v. T.Abdul Razak { (1996) 4 SCC 708 } and relies on paragraphs 14 and 15 thereof to contend that the powers delegated to a particular officer cannot be further delegated by him and that any action which is caused to be taken based on such delegation is illegal and impermissible in law. The ratio of this judgment is indubitable that when a power is invested upon a particular Authority, that Authority itself will have to exercise that power without delegating it further. 17. As we have already indicated above, for the Registrar to order an inquiry under Section 65 of the Act, he should be first satisfied that it is necessary to do so. These words, though innocuous, are of great import. 17. As we have already indicated above, for the Registrar to order an inquiry under Section 65 of the Act, he should be first satisfied that it is necessary to do so. These words, though innocuous, are of great import. Therefore, the issue is as to the nature of the satisfaction the Registrar will have to first enter into and if he can act mechanically upon the complaint of an individual or upon the report of an inferior officer. We are certain that this will not be enough because, as is clear from Section 65(1)(a) to (f), the nature of the reports and the nature of the complaints, on which the Registrar can act, are specified. For instance, under Section 65(1)(b), the Registrar can act only on the inquiry report of the Vigilance Officer appointed under Section 68A and under section 65(1)(d), he can act on the application of the members of the society only if such application is made by the majority of the members of the committee of the society or by not less than one third of the quorum for the general body meeting whichever is less. Obviously, therefore, what is intended under Section 65 is that a complaint which is frivolously made cannot automatically lead to any further action, except after the Registrar satisfies himself as to the essentiality of an inquiry under Section 65, since what is contemplated under that section is a serious inquiry which goes into the working of the society itself and which can lead to other corollary actions under the Act. This consequential action is not quotidian but one that can cause major consequences. Therefore, when the mandate of section 65 itself is that the Registrar can act only on the application by the majority of the members of the committee of the society or by not less than one-third of the quorum for the general body meeting, whichever is less, then it becomes luculent that a complaint by an individual member or by a disgruntled person will not be sufficient reason for the Registrar to cause an inquiry simplicitor. The requirement here is that the Registrar will, thereafter, have to be satisfied that such a course is inevitable and that it is absolutely necessary to act suo motu. 15. The requirement here is that the Registrar will, thereafter, have to be satisfied that such a course is inevitable and that it is absolutely necessary to act suo motu. 15. The responsibility cast upon the Registrar, while he acts suo motu or on his own motion, is, according to us, greater than the responsibility imposed on him while he acts under the provisions of section 65(1)(b) to (f) of the Act. This is because, under the statutory prescriptions, when the Registrar receives an inquiry report from the Vigilance Officer or a report of the Director of the Co-operative Audit or an application of the majority of the members or an application of the apex society, then he will generally have to act, subject to a satisfaction being prima facie arrived at. However, when he acts suo motu, which is to say, when he acts without any of such inquiry reports or applications, then the responsibility will have to be discharged by him with greater circumspection and circumscription. 16. Further, it is also now established law that when a statute prescribes the manner in which a particular action has to be done, it has to be done in that manner and no other. (See for reliance the judgment of the Honourable Supreme Court in Ramachandra Keshav Adke (dead) by LRS and Others v. Govind Goti Chavare and Others [ (1975) 1 SCC 559 ] and Deep Chand v. State of Rajasthan [ AIR 1961 SC 1527 ]). 17. In the facts at hand, we notice that the entire proceedings were initiated based on the complaint of one individual who claims to be a member of the society. Of course, certain very vague allegations are made against the working of the society. The query before us is whether that would by itself be sufficient for the Registrar to initiate an action under section 65 of the Act. We see that the Registrar, on receipt of the said complaint, referred the matter to the Assistant Registrar of Co-operative Societies, having jurisdiction over the area of operation of the society, and sought for a report from him. We do not have a copy of the report of the Assistant Registrar on record but we must presume, from the way Ext.P1 order is worded, that the said officer had recommended some kind of an inquiry, including an inquiry under section 65 of the Act. We do not have a copy of the report of the Assistant Registrar on record but we must presume, from the way Ext.P1 order is worded, that the said officer had recommended some kind of an inquiry, including an inquiry under section 65 of the Act. It is pertinent that the order impugned before us, namely Ext.P1, does not say how the Registrar, thereafter, entered into a satisfaction as to the requirement for an inquiry under section 65 of the Act. It does not say in any manner that he had personally assessed or evaluated the records of the society or that he had caused any inspection of the same on his own but that he merely accepted the recommendation made by the Assistant Registrar of Cooperative Societies in his report. Therefore, it is absolutely clear that the satisfaction, which is recorded in Ext.P1, is not really the satisfaction of the Registrar but the satisfaction of the Assistant Registrar of Co-operative Societies, since the Registrar has ordered section 65 inquiry merely because the Assistant Registrar had, in his report, recommended such action. 18. This, we are certain, would not be sufficient to satisfy the rigour and mandate of section 65 of the Act. 19. What was required for the Registrar to have done was to take into account all relevant factors and circumstances and to have caused at least an inspection of the records and materials maintained by the society before recording his satisfaction as to whether an inquiry under section 65 of the Act was required. It was not proper on his part to merely rely upon the report of the Assistant Registrar and then to say that he is prima facie satisfied, when it is obvious from Ext.P1 that there was nothing before him, except that report, which could have led him to such a satisfaction and obviously going by the provisions of the statute, the satisfaction of the Assistant Registrar cannot be in lieu of the satisfaction to be personally arrived at by the Registrar, who is vested with the powers to cause an inquiry under section 65 of the Act. 20. It is in this context that the judgment relied upon by Sri. Liju Stephen, namely, Director General, ESI (supra) of the Honourable Supreme Court of India would come into relevance. 20. It is in this context that the judgment relied upon by Sri. Liju Stephen, namely, Director General, ESI (supra) of the Honourable Supreme Court of India would come into relevance. We are certain that since the officer with whom the power is vested under section 65 of the Act is the Registrar of Co-operative Societies, it was not permissible for him to merely rely upon the report of the Registrar to record his “personal satisfaction”, but he could have entered into the necessity of an inquiry under section 65 of the Act only after first discharging the statutory burden upon him, to subjectively assess whether it was necessary for doing so in the circumstances and facts presented. What we mean to say is that even assuming that the Registrar had taken into account the report of the Joint Registrar, he should have entered into a subjective satisfaction of the requirement of an inquiry personally and not be solely and perforce be guided by the recommendations in the said report. We do not say that the report of the Assistant Registrar ought not to have been looked into but only that even if that was taken into account, the Registrar should have then personally gone forward to satisfy himself, in terms of the statutory rigour, by an evaluation and assessment of all the relevant records and documents maintained by the society, which would have certainly guided him to a valid conclusion as to the requirement of an inquiry under section 65 of the Act. 21. In the overview of the above and in the narrative of our observations afore, it becomes inescapable that Ext.P1 order, now issued by the Registrar of Co-operative Societies, cannot find favour in law and is in violation of the specific stipulations contained in section 65 of the Act. For such reason we are compelled, without being left with any other option, to set aside Ext.P1 order, however, leaving liberty to the Registrar of Co-operative Societies to initiate further action in terms of law, if it is so required from his side to do so. This writ appeal is thus allowed setting aside the judgment of the learned single Judge but in the peculiar facts and circumstances, we make no order as to costs.