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2018 DIGILAW 486 (KER)

Hameed Kutty M. S. v. Joint Registrar of CO-OP. Societies (General), Ernakulam

2018-06-26

SATHISH NINAN, V.CHITAMBARESH

body2018
JUDGMENT : Chitambaresh, J. 1. Orders suspending the Board of Co-operative Society for a period of six months issued by the Joint Registrar (General) under Section 32(1) of the Kerala Co-operative Societies Act, 1969 ['the Act' for short] are impugned. The statutory provision is as follows: “32. Super-session 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 and Anticorruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society,- (a) 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 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 any 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 in its place, one administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be members of the society, to manage the affairs of the society for a period of not exceeding six months. Provided that in the case of Co-operative Society, carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (Central Act 10 of 1949) shall also apply; Provided further that in the case of a Cooperative Society, carrying on the business of Banking, appointment of Administrator/administrative committee shall not exceed one year in the aggregate: Provided also that the Board of Co-operative Society shall not be superseded or kept under suspension where there is no Government share holding or loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government. Explanation I.- For the purposes of this proviso, financial assistance includes any financial assistance from the Kerala Co-operative Development and Welfare Fund Board, Deposit Guarantee Scheme implemented by the Kerala Cooperative Deposit Guarantee Fund Board, Kerala Co-operative Risk Fund Scheme implemented by the Kerala Co-operative Development and Welfare Fund Board, National Bank for Agriculture and Rural Development, National Co-operative Development Corporation and any other financial institution under the control of the State or Central Government and also any financial assistance guaranteed by the said institutions. Explanation II.-A notice and an order given as per this clause to the President, in his absence to the Vice President or any committee members who is holding charge of President or Vice President or to the Chief Executive of a society shall be treated as an order given to the committee of the society. (e) Every member of the committee superseded under this section shall from the date of order of such super-session stand disqualified to contest in the election to or to be nominated to the committee of any Society or to be appointed as an administrator in any society for two consecutive terms.” (emphasis supplied) The grounds under which the Registrar can remove the managing committee in office and appoint in its place one administrator or an administrative committee are explicitly spelt out above. The removal of the managing committee can either be by way of super-session or suspension which in the former case is permanent and in the latter case is temporary capable of reinstatement. The term 'remove' in the section means 'abolish' or 'eliminate' which takes within its fold both super-session as well as suspension as clarified in the third proviso to Section 32(1) of the Act. 2. The effect of the third proviso to Section 32(1) of the Act is that the managing committee shall not be superseded or kept under suspension where there is no Government share holding in the co-operative society. So is the case where the society has not availed of any loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government. So is the case where the society has not availed of any loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government. The financial assistance includes that from the various Boards or Corporations or Institutions under the control of the State or Central Government specified in Explanation I. The third proviso carves out an exception to the main provision in regard to the categories of society aforesaid which otherwise would fall within Section 32(1) of the Act. The word 'or' appearing in the third proviso to Section 32(1) of the Act implies that super-session and suspension should not coalesce for the same period. The super-session of the Board of a society can follow the suspension if there are just grounds and not vice versa unless the superseded committee is reinstated in office. It should be noted that Section 32(1) of the Act was amended empowering suspension in addition to super-session in tune with Article 243ZL of the Constitution of India. It reads as follows: “243ZL. It should be noted that Section 32(1) of the Act was amended empowering suspension in addition to super-session in tune with Article 243ZL of the Constitution of India. It reads as follows: “243ZL. Super-session and suspension of board and interim management.- (1) Notwithstanding anything contained in any law for the time being in force, no board shall be superseded or kept under suspension for a period exceeding six months: Provided that the board may be superseded or kept under suspension in case- (i) of its persistent default; or (ii) of negligence in the performance of its duties; or (iii) the board has committed any act prejudicial to the interests of the Co-operative Society or its members; or (iv) there is a stalemate in the constitution or functions of the board; or (v) the authority or body as provided by the Legislature of a State, by law, under clause (2) of Article 243ZK, has failed to conduct elections in accordance with the provisions of the State Act: Provided further that the board of any such co-operative society shall not be superseded or kept under suspension where there is no Government shareholding or loan or financial assistance or any guarantee by the Government: Provided also that in case of a co-operative society carrying on the business of banking, the provisions of the Banking Regulation Act, 1949 (10 of 1949) shall also apply; Provided also that in case of a co-operative society, other than a Multi-State Co-operative Society, carrying on the business of banking, the provisions of this clause shall have the effect as if for the words “six months”, the words “one year” had been substituted. (2) In case of super-session of a board, the administrator appointed to manage the affairs of such co-operative society shall arrange for conduct of elections within the period specified in clause (1) and handover the management to the elected board. (3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator.” We approve the decision in Hameed Kutty M.S. and others v. Joint Registrar of Co-operative Societies and others [ 2017(1) KLT 511 ] and repel the contention of the appellants that there is no power of suspension. 3. (3) The Legislature of a State may, by law, make provisions for the conditions of service of the administrator.” We approve the decision in Hameed Kutty M.S. and others v. Joint Registrar of Co-operative Societies and others [ 2017(1) KLT 511 ] and repel the contention of the appellants that there is no power of suspension. 3. The period of suspension of the Board of the co-operative society in W.A.No.14/2017 is from 6.10.2016 to 6.4.2017 and in W.A.No.66/2018 is for a period of six months from 25.10.2017. It appears that the society in W.A.No.14/2017 has been served with a notice of super-session dated 28.12.2016 which has been responded to and the proceedings are to be taken to a logical end. The Board of the society in W.A.No.66/2018 has been superseded on 5.3.2018 after revoking the suspension which is challenged in W.P.(C).No.9480/2018 pending. We do feel that the above writ appeals challenging the orders keeping the Board of the society under suspension have become infructuous since the period has already expired. Suffice it to say that the contentions of the appellants are left open to be considered in the challenge to the proceedings for super-session initiated by the Joint Registrar. The writ appeals are dismissed. No costs.