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2020 DIGILAW 832 (KER)

N. Premakumaran v. Joint Registrar General of Co-operative Societies

2020-10-06

RAJA VIJAYARAGHAVAN V.

body2020
JUDGMENT : Raja Vijayaraghavan V, J. 1. The petitioner, the President of the Akathethara Service Co-operative Bank Ltd., has approached this Court seeking a declaration that the action initiated under Section 32 of the Kerala Co-operative Societies Act, 1969 (“the Act” for short) against the managing committee of the 3rd respondent society is unjustified and further seeks to quash Ext.P8 and P10 notices on the premise that issuance of such notice is a consequence of a malafide exercise of power. 2. The petitioner contends that by Ext.P4 letter, the 1st respondent had directed the 2nd respondent to conduct an enquiry into the functioning of the Bank on the strength of complaint lodged by a certain Raghu, who claimed to be the Secretary of the Akathethara Bank Protection Committee. The 2nd respondent conducted a detailed enquiry and submitted Ext.P5 report noting certain anomalies with regard to the disbursal of loan exceeding valuation and waiver of interest in violation of the circular issued by the Registrar of Co-operative Societies. An explanation was sought for from the Society and the managing committee members. Later, based on directions issued by the 1st respondent, an inspection was conducted by the Unit Inspector and he submitted Ext.P7 report. On receipt of the said report, show cause notice was issued directing the petitioner and other members of the managing committee to appear and show cause as to why action shall not be initiated under Section 32(1)(a) to (c) of the Act. The petitioner, as well as the other members, appeared and filed Ext.P9 explanation reiterating that the entire defects/irregularities stood rectified. The petitioner contends that on receipt of the explanation, the 1st respondent issued copies of Ext.P2 and P7 enquiry reports and the members of the managing committee were directed to personally appear on 06.10.2020 and to furnish their explanation. According to the petitioner, the entire defects made mention of in Ext.P8 stood rectified and there is no circumstance warranting initiation of proceedings under Section 32 of the Act. It is contended that it is with intent to overthrow the democratically elected managing committee that the 1st respondent has ventured to issue the impugned notice. It is in the above background that the petitioner has approached this Court seeking the following reliefs: 1. It is contended that it is with intent to overthrow the democratically elected managing committee that the 1st respondent has ventured to issue the impugned notice. It is in the above background that the petitioner has approached this Court seeking the following reliefs: 1. To issue appropriate writ order or direction declaring that there is no reason warranting or justifying action under Section 32 of the Kerala Co-operative Societies Act, 1969 against the Managing Committee of the 3rd respondent society. 2. to issue a writ of certiorari or other appropriate writ, order or direction quashing Ext.P8 and P10 issued by the 1st respondent as the same is malafide and illegal exercise of power. 3. Sri.K.T.Thomas, the learned counsel for the petitioner submitted that a perusal of Ext.P8 and P9 would reveal that there were no materials justifying the initiation of proceedings under Section 32(1) of the Act. According to the learned counsel, the sequence of the events would show that at the instance of invisible forces, a fresh enquiry was initiated and the issuance of the notice is nothing but an attempt to bring down the committee in a surreptitious manner. According to the learned counsel, the petitioner has submitted Ext.P9 explanation and if the same is looked into objectively, it would be evident that the entire anomalies noted by the Unit Inspector stood rectified. The learned counsel would also place reliance on the judgment of the Apex Court in State of Madhyapradesh and Others v. Sanjay Nagayach and Others (2013) 7 SCC 25 and it was argued that when a statutory authority like the 1st respondent, who is invested with powers, purports to act on its own but in substance the power is exercised by external guidance or pressure, it would amount to non-exercise of power. Placing reliance on a judgment of this Court in State of Kerala v. Board of Directors of Urukunnu Service Co-operative Bank Ltd. 2013 (2) KLT 201 : 2013 (2) KLJ 435 it is submitted that supersession of a democratically elected committee is a very drastic and extreme step and cannot be initiated lightly for minor violations. The learned counsel would take pains to point out that for mere default or negligence in the performance of duties imposed upon the society by the Act, proceedings for supersession cannot be initiated. The learned counsel would take pains to point out that for mere default or negligence in the performance of duties imposed upon the society by the Act, proceedings for supersession cannot be initiated. It has to be shown that there has been default and the same was persistent and prejudicial to the interest of the society. He would further contend that the hearing proposed by the 1st respondent pursuant to Ext.P10 notice is only an empty formality and that in such cases, there is no embargo in entertaining the writ petition. 4. Sri.Bimal K Nath, the learned Government Pleader has very strenuously opposed the prayer. It is submitted that the issuance of notice by the 1st respondent was well within his jurisdiction and none of the contentions raised before this Court merits consideration. The petitioner has furnished his explanation to the show cause notice and a decision shall be taken by the Joint Registrar after properly considering the objections raised and in the light of the precedents cited by the petitioner. He would contend that only if the findings against the committee are such that the continuance of the committee would be extremely prejudicial to the interest of the society that the exceptional and rare action under Section 32 can be taken by the 1st respondent. If the default is minor and negligible and not found to be persistent, an opportunity will be extended to the society to rectify the same. Relying on the judgment of the Hon’ble Supreme Court in Manish S Pardasani(M/s Wine Komder) v. Inspector State Excise and others [ (2019) 2 SCC 660 ], it is contended that this Court will not be justified in issuing directions merely on anticipation of an order being passed by the Joint Registrar. 5. I have anxiously considered the submissions advanced. I find that the challenge in this petition is to the show cause notice issued by the 1st respondent under Section 32(1) of the Act. The petitioner has filed Ext.P9 explanation detailing their objections and clarifying their position. They have been asked to appear before the 1st respondent on 06.10.2020 to submit further explanation, if any, on the matter. Unless exceptional cause is made out, this Court would refuse to exercise its discretionary jurisdiction by entertaining a writ petition questioning a notice to show cause. The petitioner has filed Ext.P9 explanation detailing their objections and clarifying their position. They have been asked to appear before the 1st respondent on 06.10.2020 to submit further explanation, if any, on the matter. Unless exceptional cause is made out, this Court would refuse to exercise its discretionary jurisdiction by entertaining a writ petition questioning a notice to show cause. In the case on hand, the petitioner has no case that the order suffers from any jurisdictional infirmity or any other error. The only assertion of the petitioner is that an adverse order would be passed by the 1st respondent and the society would be superseded. I am of the considered opinion that such apprehension is misconceived. 6. In Manish S Pardasani(supra), the Supreme Court had deprecated the issuance of directions which are essentially passed in anticipation of the order passed by an appellate authority, observing that such orders would interfere with the independence of the authority in deciding the matter before it in accordance with law. It was held thus in para 64 to 67. ‘64. We find that the High Court while disposing of the Writ Petitions also passed the following writ / directions in Para 20 which reads as under: “Since an apprehension is expressed and a serious one by the petitioners, we direct that in the event the fourth respondent passes any orders adverse to the petitioners, then such orders shall not take effect for a period of four weeks from the date they are communicated to the petitioners. Since we have set aside the fourth respondent's interim order and for the present not expressed any opinion on the contentions raised before us, interest of justice demands that the sealing of the premises by the authorities should be set aside. Therefore, the Superintendent or other functionary is directed to remove the seal, lock and key placed on the premises forthwith. This order will ensure to the benefit of such of the petitioners whose licenses are subsisting and are not cancelled. The other licences, which are no longer in operation on account of their termination, the holders thereof cannot avail the benefit of this order. However, we do not express any opinion on the remedies that are available to them and they can avail them as observed and held in the above paragraphs.” (Emphasis Supplied) 65. The other licences, which are no longer in operation on account of their termination, the holders thereof cannot avail the benefit of this order. However, we do not express any opinion on the remedies that are available to them and they can avail them as observed and held in the above paragraphs.” (Emphasis Supplied) 65. In our considered view, the High Court ought not to have issued directions of this nature. It was legally not permissible to do so. Indeed, the High Court by issuing such directions which are essentially passed in anticipation of the order being passed by an appellate authority, interfered with the judicial independence of an appellate authority in deciding the appeals in accordance with law. 66. It is the sole discretion of the appellate authority under the Act to decide the appeal based on the facts involved in the appeal, and legal provisions which eventually result in passing a judicial order. No higher court can pass such directions merely on anticipation of an order being passed by an appellate authority. It is only after the order is passed, that the aggrieved person has a legal right to take recourse to a legal remedy available in law against such order by approaching to a higher forum and pray for grant of appropriate relief against such order. 67. This stage in this case is yet to arrive. The High Court should not have, therefore, pre-empted the passing of any order of the appellate authority, while deciding the Writ Petition. It is a settled law that the Court can stay or quash only those orders, which are impugned in the lis before it. A fortiori the Court cannot stay or/and quash the orders in anticipation before they are passed. We cannot, therefore, uphold such writ/directions issued by the High Court.’ 7. Since the matter is now pending consideration of the 1st respondent, this Court in the light of the observations made above by the Apex Court will not be justified in issuing any directions merely in anticipation of an adverse order being passed. If the petitioner is aggrieved by the order passed by the 1st respondent he has a legal right to take recourse to a legal remedy available in law against such an order. 8. If the petitioner is aggrieved by the order passed by the 1st respondent he has a legal right to take recourse to a legal remedy available in law against such an order. 8. In view of the apprehension expressed by the petitioner that the proceeding initiated under Section 32(1) is premeditated and with a view to supersede the elected committee, the 1st respondent shall do well to remind itself of the principles laid down by the Apex Court as well as this Court. 9. In Sanjay Nagayach (supra), the Supreme Court had occasion to observe that supersession of an elected Managing Committee is an exception and can be resorted only in exceptional circumstances and normally the elected body should be allowed to complete the term for which it is elected. In paragraph No.42 of the judgment, the Apex Court had issued general directions taking note of the mushrooming of cases in various Courts challenging orders of supersession of elected Committees: The general directions are extracted below for easy reference. ‘1) Supersession of an elected managing Committee/Board is an exception and be resorted to only in exceptional circumstances and normally elected body be allowed to complete the term for which it is elected. 2) Elected Committee in office be not penalised for the shortcomings or illegalities committed by the previous Committee, unless there is any deliberate inaction in rectifying the illegalities committed by the previous committees. 3) Elected Committee in Office be given sufficient time, say at least six months, to rectify the defects, if any, pointed out in the audit report with regard to incidents which originated when the previous committee was in office. 4) Registrar/Joint Registrar are legally obliged to comply with all the statutory formalities, including consultation with the financing banks/Controlling Banks etc. Only after getting their view, an opinion be formed as to whether an elected Committee be ousted or not. 5) Registrar/ Joint Registrar should always bear in mind the consequences of an order of supersession which has the effect of not only ousting the Board out of office, but also disqualify them for standing for election in the succeeding elections. Registrar/Joint Registrar therefore is duty bound to exercise his powers bona fide and not on the dictation or direction of those who are in power. Registrar/Joint Registrar therefore is duty bound to exercise his powers bona fide and not on the dictation or direction of those who are in power. 6) Registrar/Joint Registrar shall not act under political pressure or influence and, if they do, be subjected to disciplinary proceedings and be also held personally liable for the cost of the legal proceedings. 7) Public money not to be spent by the State Government or the Registrar for unnecessary litigation involving disputes between various factions in a co-operative society. Tax payers money is not expected to be spent for settling those disputes. If found necessary, the same be spent from the funds available with the concerned Bank.’ 10. In Vallapuzha Service Cooperative Bank Ltd. v. Joint Registrar [ 2009 (3) KLT 838 : 2009 (3) KLJ 9 ], this Court had observed that supersession of a democratically elected committee is a very drastic and extreme step. It is not necessary to cite any judicial precedents to hold that action under Section 32 of the Act cannot therefore be taken lightly for mundane violations. Only if the findings against the Committee are such that the continuance of the Committee would be extremely prejudicial to the interests of the Society, the exceptional and rare action under Section 32 of the Act shall be taken. Findings on the culpability of the Committee on their improper action should inform the action of the Registrar while initiating proceedings under Section 32 of the Act. In other words, the mere finding that the Committee has done the acts alleged alone is not sufficient; the same should be supported by a further finding that they did the same with a culpable mind, failing which the action of the Registrar would be improper. 11. These observations shall be borne in mind by the 1st respondent while hearing the petitioner and other members of the managing committee of the Bank. 12. At this stage, Sri. K.T. Thomas, the learned counsel appearing for the petitioner submitted that orders under Section 144 of the Cr.P.C has been issued by the District Collector and in view of the indiscriminate spread of the COVID 19 pandemic, it would be perilous to insist that the petitioner should appear on 06.10.2020. He seeks for a breathing time. At this stage, Sri. K.T. Thomas, the learned counsel appearing for the petitioner submitted that orders under Section 144 of the Cr.P.C has been issued by the District Collector and in view of the indiscriminate spread of the COVID 19 pandemic, it would be perilous to insist that the petitioner should appear on 06.10.2020. He seeks for a breathing time. The learned Government Pleader submits that the time granted to the petitioner to appear before the 1st respondent can be extended by a period of ten days. The petitioner may inform the 1st respondent the convenient date on which the members of the managing committee including himself can appear either in person or virtually before the 1st respondent. If the date is informed on or before 09.10.2020, the 1st petitioner shall grant an opportunity to furnish their further explanation. In that view of the matter, this writ petition will stand disposed of directing the petitioner to appear before the 1st respondent in terms of the directions issued above and furnish their explanation. The 1st respondent shall consider the same and pass appropriate orders in the light of the observations above.