Part-Time Administrator, Adat Farmers Service Cooperative Bank Ltd. v. Vipin K. Hari
2022-12-01
ALEXANDER THOMAS, SHOBA ANNAMMA EAPEN
body2022
DigiLaw.ai
JUDGMENT : ALEXANDER THOMAS, J. The instant intra court appeal has been instituted under Sec. 5(i) of the Kerala High Court Act, to impugn the judgment dated 10.8.2020, rendered by the learned Single Judge, disposing of the Writ Petition (Civil) WP(C). No. 9550/2020. The appellants herein are R-2 & R-3 in the WP(C). R-1 & R-2 in the appeal are the two writ petitioners and official respondent No.3 in the appeal is official respondent No.1 in the WP(C). 2. Heard Sri.P.C.Sasidharan, learned counsel appearing for the appellants in the W.A. [R-2 & R-3 in the WP(C)], Sri.George Poonthottam, learned senior counsel instructed by Ms.Hana Karnolia Madona Cyril, learned counsel appearing for R-1 & R-2 in the W.A. (writ petitioners) and Sri.Saigi Jacob Palatty, learned Senior Government Pleader appearing for official respondent No.3 in the W.A. (The Joint Registrar of Co-operative Societies). 3. It is the case of the two petitioners in the WP(C) that they are members of the appellant Co-operative Society and that, the Administrator of the said Co-operative Society has issued the impugned notices, as per Ext.P-1 dated 18.3.2020 and Ext.P-2 dated 18.3.2020, that 4464 members of the said Co-operative Society, including the two writ petitioners, have been directed to offer their explanation as to why they shall not be removed from the membership rolls of the said Society, as they were enrolled by the Part-Time Administrator during the period 2011 -2014 and that, they should give their explanation to the said notices within 10 days from the date of publication of such notices in newspapers. The writ petitioners have taken the plea that the said impugned notices as per Exts.P-1 & P-2 are illegal and ultra vires and have been issued without authority, as the Administrator has no jurisdiction to remove any members on the grounds stated in the notices and that, the proposed action for removal of such members, including the writ petitioners, will not come within the jurisdictional parameters of Rule 16(3) of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as “The KCS Rules”) inasmuch as the appellants cannot have any case that the said members were either ineligible at the time of their admission or they have subsequently acquired any ineligibility, etc.
Further that, the membership right is a personal right and any such drastic step of removal can only be on the basis of the statutory registered notice, in terms of Sec.104 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as “The KCS Act or The Act”), which postulates registered notice and that, mere publication of such notices to 4464 members, without individual registered notices to each one of them, is illegal and ultra vires, etc. Further that, the writ petitioners and others were initially given only Class-C membership by the Administrator which is without voting rights and later, after the elected Committee had assumed power, their admissions to the membership rolls were regularized by the elected Managing Committee and later, was also approved by the General Body of the Society, etc. It is in the light of these aspects that respondents 1 & 2 herein have preferred the instant Writ Petition (Civil) with the following prayers: “i. Call for the records leading to Exhibit P1 and notices/publications and similar notices and to quash the same by issuing a writ of Certiorari. ii. Call for the proceedings issued by the 1st respondent Joint Registrar directing the 2nd respondent Part Time Administrator to remove those 4464 members who were admitted to the rolls of the society by the then Part Time Administrator for the purpose of availing loans and whose enrollments were subsequently approved and ratified by the elected Managing Committee as well as the General Body of the 3rd respondent society. iii. Declare that the 2nd respondent is not clothed with any power to remove the members who are in the rolls of the society and thus the proceedings dated 18.03.2020 which led to the issuance of P-1 and P2 paper publications are without any legal backing and cannot withstand the scrutiny of law. iv. Grant such other reliefs as this Court deems fit in the facts and circumstances of the case.” 4.
iv. Grant such other reliefs as this Court deems fit in the facts and circumstances of the case.” 4. The learned Single Judge, after hearing both sides, has held that membership in a co-operative society is a personal right and that, when action for removal is proposed, in terms of Rule 16(3), such a member has a right to be heard and that he/she should be put on notice regarding the proposed removal and that registered notice in terms of Sec.104 of the Act would be necessary and mere publication of notice in the newspapers, as has been done in the instant case, by the issuance of Exts.P-1 & P-2, would be illegal. Further that, on merits, it was held that the allegation that the writ petitioners and others were initially given membership by the Administrator and not by the elected Managing Committee, cannot be a ground for removal from membership as envisaged in Rule 16(3) of the KCS Rules, inasmuch as action would be permissible in that regard only in a case where the persons concerned were ineligible for membership in terms of the criteria in Rule 16(2) or that, after such admission, they have subsequently acquired such ineligibility and that, admission given to the members by the Administrator cannot be a ground for taking action for removal in terms of Rule 16(3). 5. From the pleadings and materials on record, it appears that only the two writ petitioners, among the 4464 persons mentioned in Exts.P-1 & P-2, have alone challenged Exts.P-1 & P-2 by the institution of the present writ proceedings. It is the specific case of the appellants that the impugned action, in terms of Exts.P-1 & P2, have been finalized by considering explanation of members who had responded and final proceedings have been issued, as per Anx.A2 dated 21.7.2020, removing such members from the membership roll, as the Administrator, who granted the membership, has no jurisdiction whatsoever, to grant membership to any such person. Further that, all the other 4462 members have not challenged such proceedings, as per Anx.A2, in the manner known to law, though they had statutory remedy to approach the respondent Joint Registrar by preferring a petition under Rule 176 of the KCS Rules and thereafter, a statutory appeal, etc. 6.
Further that, all the other 4462 members have not challenged such proceedings, as per Anx.A2, in the manner known to law, though they had statutory remedy to approach the respondent Joint Registrar by preferring a petition under Rule 176 of the KCS Rules and thereafter, a statutory appeal, etc. 6. In the instant case, though the learned Single judge has clearly found, in para 6 of the impugned judgment, that membership in a co-operative society is a personal right, while granting relief, he has quashed Exts.P-1 & P-2 giving an impression that the impugned Exts.P-1 & P-2 notices affect all the 4464 members, even though only two of them have approached this Court by filing the instant WP(C). However, it has been observed in the judgment that this shall be without prejudice to the rights of the authorities to initiate appropriate proceedings in accordance with law. The operative portion of the directions and orders passed by this Court are contained in the concluding para 9 of the judgment, whichs read as follows: “9. Be that as it may, on the finding that the notices in the nature of Exts.P1 and P2 do not satisfy the requirement of law and that individual notices are to be issued to the members whose membership is proposed to be revoked, and on the finding that proceedings under Rule 16(3) does not lie since ineligibility in terms of Rule 16(2) is not alleged, Exts.P1 and P2 notices are hereby quashed. The proceedings for removal from membership of the persons alleged to be inducted by an incompetent authority, initiated under Rule 16(3), under and as mentioned in Exts.P1 and P2 are set aside. However, this shall be without prejudice to the right of the authorities to initiate appropriate proceedings in accordance with law.” 7. A reading of the aforequoted para 9 would make it clear that the proceedings for removal from membership of the persons alleged to be inducted by an incompetent authority, initiated under Rule 16(3), as mentioned in Exts.P-1 & P-2, are set aside. Hence, it clearly implies that Exts.P-1 & P-2, to the extent it is directed as against all the 4464 members, will stand quashed. We have heard both sides in extenso. We have considered the rival submissions as well as the pleadings on record. 8.
Hence, it clearly implies that Exts.P-1 & P-2, to the extent it is directed as against all the 4464 members, will stand quashed. We have heard both sides in extenso. We have considered the rival submissions as well as the pleadings on record. 8. Following are the issues to be resolved in this case: (I) The first issue to be determined is as to whether the two petitioners have the locus to challenge Exts.P-1 and P-2, not only to the extent it affected them but also to the extent it affected all the other 4462 members; Consequently, as to whether it was right and correct to entertain a plea in writ proceedings, for quashment of Exts.P1 and P2 proceedings to the extent that it is directed not only as against the two petitioners but also as against the entire 4464 members covered thereby, though only two of them had challenged Exts.P1 and P2, by the institution of the present writ proceedings. (II)(a) The next issue to be considered is as to whether an Administrator of a co-operative society, like the 1st appellant/ R-2 in the W.P.(C)., has the power and jurisdictional competence to remove persons, who have been enrolled as members, at the instance of a previous Administrator/ administrative committee. (b) Consequently, it has also to be decided as to whether Rule 16(3) would confer power on a committee to remove persons from the membership roll, on the ground that they have been granted admission by the Administrator and whether such impugned action would come within the jurisdictional parameters of Rule 16(3) of the KCS Rules. (III) The third issue is as to whether the issuance of a registered notice, as contemplated in Sec. 104 of the KCS Act, is mandatory and imperative, in a case where action is taken to remove persons who have been enrolled as members of a cooperative society, at the instance of an Administrator/ Administrative Committee or whether non issuance of such a registered notice, by itself, would vitiate the process; (IV) The last issue would be as to what could be the nature of the reliefs that could be granted in the writ proceedings.
(I) Whether the two petitioners have the locus to challenge Exts.P-1 and P-2, not only to the extent it affected them but also to the extent it affected all the other 4462 members; Consequently, as to whether it was right and correct to entertain a plea in writ proceedings, for quashment of Exts.P1 and P2 proceedings to the extent that it is directed not only as against the two petitioners but also as against the entire 4464 members covered thereby, though only two of them had challenged Exts.P1 and P2, by the institution of the present writ proceedings. 9. According to the pleadings and materials on record, Exts.P-1 & P-2 notices have been issued as against 4464 persons who are said to have been given membership in the appellant Co-operative Society by a previous Administrator. It is beyond dispute that only 2 out of them have preferred the instant petition. None of the other 4462 persons, covered by Exts.P-1 & P-2 have challenged the said impugned proceedings, by filing any writ proceedings. The specific case of the appellants is that the impugned action, as per Exts.P-1 & P-2 notices, were duly finalized as against all the other 4462 persons and that some of them had responded to the notices. That, Anx.A1 is the explanation of one such person who had responded. That, the explanations of all the persons who had responded were duly considered and the appellants have finalized the proceedings, pursuant to Exts.P-1 & P-2 notices as against all the other 4462 members by issuing proceedings in the nature of Anx.A2 dated 21.7.2020. Further that none of such 4462 persons have challenged such proceedings in the nature of Anx.A2 in the manner known to law, by instituting any proceedings including writ proceedings, though they have a statutory remedy to approach the respondent Joint Registrar of Co-operative Societies by filing a petition in terms of Rule 176 of the KCS Rules and thereafter, an appeal, etc. Since we need now to proceed only on the premise that only 2 out of 4464 persons have challenged Exts.P-1 & P-2, by the institution of the present writ proceedings, the learned Single Judge has rightly held in the impugned judgment that membership is a personal right of a person who has been granted membership.
Since we need now to proceed only on the premise that only 2 out of 4464 persons have challenged Exts.P-1 & P-2, by the institution of the present writ proceedings, the learned Single Judge has rightly held in the impugned judgment that membership is a personal right of a person who has been granted membership. Therefore, an action proposing to remove the person from membership can be challenged only by such a person and not by any other member of the society. Of course, the Division Bench of this Court, as per common judgment dated 30.6.2022 in WP(C).No. 27469/2021 and connected cases, has held that, where the action for removal of such members of cooperative society initiated by the notified Registrar is challenged at the instance of a co-operative society in appropriate proceedings, then the co-operative society can maintain such challenge, as the said co-operative society has given membership to the persons concerned. Hence, in the judgment dated 30.6.2022 in WP(C).No.27469/2021 and connected cases, we have held that the co-operative society may have the locus to challenge for and on behalf of such persons, who are affected by the said notices and who have been given membership by the co-operative society. This is mainly so, as Sec.9 of the KCS Act mandates that registration of a society shall render it a body corporate by a name under which it is registered, having perpetual succession, etc. and so, a registered co-operative society is, thus, a body corporate. Certainly, such a co-operative society is capable of maintaining action for and on behalf of its members, etc. Such is not the instant case. Since membership is a personal right, there is no question of another individual member challenging the proposed removal of another member and it is for the latter to challenge it, in the manner known to law, or if the cooperative society itself deems it fit to defend the action for and on behalf of such persons who have been granted membership by the society, then it may be feasible. So, in the instant case, there is no question of the two writ petitioners having any locus to challenge the impugned Ext.P-1 & P-2 notices for and on behalf of the other remaining 4462 members. Certainly, the two writ petitioners have the locus to challenge Exts.P-1 & P-2, to the extent it detrimentally affects them.
So, in the instant case, there is no question of the two writ petitioners having any locus to challenge the impugned Ext.P-1 & P-2 notices for and on behalf of the other remaining 4462 members. Certainly, the two writ petitioners have the locus to challenge Exts.P-1 & P-2, to the extent it detrimentally affects them. In other words, the direction given by the learned Single Judge for quashing Exts.P-1 & P-2 notices, to the extent it is directed as against all the remaining 4462 members, is legally not tenable and unsustainable and is liable for interdiction. Hence, the said direction in the impugned judgment, for quashment of Exts.P-1 & P-2, to the extent it is directed as against the other remaining 4462 members (the persons other than the two writ petitioners), will stand set aside. (II)(a) The next issue to be considered is as to whether an Administrator of a co-operative society, like the 1st appellant/ R-2 in the W.P.(C)., has the power and jurisdictional competence to remove persons, who have been enrolled as members, at the instance of a previous Administrator/ administrative committee. (b) Consequently, it has also to be decided as to whether Rule 16(3) would confer power on a committee to remove persons from the membership roll, on the ground that they have been granted admission by the Administrator and whether such impugned action would come within the jurisdictional parameters of Rule 16(3) of the KCS Rules. 10. In the instant case, earlier, the elected Managing Committee of the Co-operative Society was superseded by invoking Sec.32 of the KCS Act by the respondent Joint Registrar, by proceedings dated 22.10.2011. The Part-Time Administrator continued in office for the period from 22.10.2011 to 22.5.2012. Yet another Administrator was also appointed later, in lieu of the Committee, who held office as the Administrator for the period from 23.5.2012 to 28.3.2014. It appears that these two Administrators had given membership to totally 4464 persons during their respective tenures and the details in that regard are stated in para 8 on page 5 of the counter affidavit dated 30.5.2020, filed by the respondent Cooperative Society in the WP(C). The said details, as contained in the tabular column therein, reads as follows: Period Name of Administrator Numbers Given Admission with resolution Numbers given admission without resolution Total Nos. admitted Numbers given loan among them.
The said details, as contained in the tabular column therein, reads as follows: Period Name of Administrator Numbers Given Admission with resolution Numbers given admission without resolution Total Nos. admitted Numbers given loan among them. 22-10-2011 to 22-05-2012 T.V.Rajeev, Assistant Registrar, Thrissur 586 43 629 111 23-05-2012 to 28-03-2014 Ramachandran, Senior Inspector 1017 2818 3835 170 TOTAL 1603 2861 4464 281 Various legal flaws have been pointed out in the counter affidavit of the respondent Co-operative Society, in regard to the action done by the previous Administrators, in granting membership to those persons. The matter was caused to be enquired into by the respondent Joint Registrar, which resulted in Ext.R-2(a) report. Thereafter, the respondent Joint Registrar issued Ext.R-2(b) proceedings dated 5.3.2020 authorizing the first appellant, who was subsequently appointed as Administrator, to take action for removal of such persons from the membership roll, as the Administrator has no jurisdiction whatsoever to grant such membership going by the settled legal position. It is in pursuance thereof that the appellants have issued Exts.P-1 & P-2 notices dated 18.3.2020, which have been published in newspapers. 11. It is the case of the appellants that the two writ petitioners are two among such 4464 members, who have been granted membership by the previous Administrator and that, Exts.P-1 & P-2 have been issued for finalizing action in regard to the proposal for removal of such 4464 persons from the membership roll, including the two writ petitioners. So, there is no factual dispute that the 4464 members were given membership by the then Administrator concerned and not by the elected Managing Committee. Further, it appears from the pleadings in para 5 on pages 2 & 3 of the abovesaid counter affidavit filed in the WP(C), that 6 types of memberships are granted, in the case of the second appellant Co-operative Society. Class A membership is said to be full membership with rights including voting rights, whereas Class C is only for availing certain financial services, like loans etc. and it does not confer any voting rights. It is the case of the writ petitioners that, the abovesaid 4464 persons were given only Class C membership by the then Administrator and that, the subsequently elected Managing Committee, which came into power had only regularized those admissions and the General Body had approved the same, etc.
and it does not confer any voting rights. It is the case of the writ petitioners that, the abovesaid 4464 persons were given only Class C membership by the then Administrator and that, the subsequently elected Managing Committee, which came into power had only regularized those admissions and the General Body had approved the same, etc. Whereas, the appellants/R-1 & R-2 in the WP(C) have asserted, in para 4 on page 2 of their counter affidavit, that the first writ petitioner was admitted as Class A member of the Society on 21.4.2012 by the Part Time Administrator, by Resolution No. 1(4) and the second writ petitioner was admitted as Class A member on 16.1.2014 by Resolution No. 3(2), etc. The applications submitted by the two writ petitioners and the resolutions in regard to grant of membership to them have been produced as Anxs.A3, A4, A5, A6, etc. in the additional affidavit dated 15.8.2022, filed by the appellants in this case. We do not propose to resolve any such factual issues pertaining to the class of membership of the two writ petitioners, in view of the decision that is proposed to be taken in this case. We have only now stated the versions of both sides. For the present purpose, there is no dispute that the 4464 persons were given membership by the then Administrator who was holding office. It is by now well settled that an Administrator has no power or jurisdictional competence to grant membership to any person in a co-operative society and the said power is within the exclusive domain of the elected Managing Committee. The Apex Court has held, in the decision in The Joint Registrar of Co-operative Societies v. T.A.Kuttappan & Ors. [ AIR 2000 SC 2378 = (2000) 6 SCC 127 ], that the Administrator has got no power to enrol new members to a co-operative society and that a co-operative society is mandated to function in a democratic manner and that the elected Managing Committee alone is empowered to enrol new members.
[ AIR 2000 SC 2378 = (2000) 6 SCC 127 ], that the Administrator has got no power to enrol new members to a co-operative society and that a co-operative society is mandated to function in a democratic manner and that the elected Managing Committee alone is empowered to enrol new members. In the decision in Prakashkumar v. State Co-operative Election Commission [ 2014 (1) KLT 68 ] it has been categorically held that the power to enrol members is definitely conferred exclusively on the democratically elected Managing Committee and the mere reason that a co-operative society was continued under the management of an Administrator or the Administrative Committee, does not, by sheer weightage of number of years in which such management continued, confer any authority on the Administrator or on the Administrative Committee to enrol members and then, on ratification by the General Body, grant the right to such members to exercise franchise. It may be pertinent to refer to the decision of this Court in Prakashkumar's case supra [ 2014 (1) KLT 68 , paras 13 & 14], which read as follows : “13. The role of the Administrator or a Committee appointed by the Registrar, while the Committee of Management is under supersession, as has been held in K. Shantharaj (supra) and reiterated in T.A. Kuttappan (supra) was to “bring on an even keel a ship which was in doldrums” (sic). Enrolment of new members is not a power specifically conferred on the Administrative Committee; nor is it intended, especially, in the nature of the functioning of a Co-operative Society, which definitely should be in a democratic manner. Hence, going by the binding decisions cited above, of a Full Bench of this Court and the Hon'ble Supreme Court, the Administrative Committee cannot enrol-members, which would involve alteration of the composition of the Society itself. The members in the Administrative Committee itself were not members of the Society; which is permissible under the provisions of the Act. But, that is not to say that when they are in power by virtue of an order of supersession by the Department, they could go ahead and enrol themselves and others to the membership of the Society.
The members in the Administrative Committee itself were not members of the Society; which is permissible under the provisions of the Act. But, that is not to say that when they are in power by virtue of an order of supersession by the Department, they could go ahead and enrol themselves and others to the membership of the Society. As has been noticed, they are independent Administrators appointed to bring the Society out of its travails, and not persons who are to embroil themselves in a campaign for membership to eventually come back to power, with the aid of the members they have enrolled and to whom they have sanctioned and disbursed loans. This would destroy the very democratic set up of the Society. 14. That the members were enrolled by the Administrative Committee calls for no roving enquiry. The contention is that such enrolment has been ratified by the General Body. The resolutions said to have been moved by the individual member and the cherished desire of the Administrative Committee as is disclosed from the report are all with respect to conferring such members enrolled by the Administrative Committee; the power to exercise franchise. That is precisely what was laid down by a Division Bench of this Court when declaring that all members are not necessarily voters. The power to enrol members is definitely conferred exclusively on the democratically elected Managing Committee and the mere reason that the instant Society was continued under the management of an Administrator or the Administrative Committee appointed under S. 32, does not by the sheer weightage of the number of years in which such management was continued, confer any authority on the Administrative Committee to enrol members and then on ratification by the General Body grant the right to such members to exercise franchise.[Emphasis supplied] The vesting of final authority on the General Body of the Society under S. 27 read with the proviso; in the teeth of the binding precedents referred above, is of no avail.” 12. The abovesaid Single Bench verdict of this Court in Prakashkumar's case supra [ 2014 (1) KLT 68 ] has been approved by the Division Bench of this Court in the decision in Kuniyil Sreeja v. State Co-operative Election Commission [ILR 2022 (1) Kerala 669, para 25]. 13.
The abovesaid Single Bench verdict of this Court in Prakashkumar's case supra [ 2014 (1) KLT 68 ] has been approved by the Division Bench of this Court in the decision in Kuniyil Sreeja v. State Co-operative Election Commission [ILR 2022 (1) Kerala 669, para 25]. 13. Further, in Viswanathan v. Assistant Registrar [ 2001 (3) KLT 215 ] this Court, after placing reliance on the decision in Hassan v. Joint Registrar of Co-operative Societies [ 1998 (2) KLT 746 (FB)] and also the decision of the Apex Court in the afore cited T.A.Kuttappan's case supra [ AIR 2000 SC 2378 ], has categorically held that Administrator has got no right to enrol members. 14. The Full Bench of this Court in the afore cited Hassan v. Joint Registrar of Co-operative Societies [ 1998 (2) KLT 746 (FB)], after placing reliance on the Apex Court's decision in T.A.Kuttappan's case supra, has also categorically held the same legal position that the Administrator is not having the jurisdiction to enrol new members to a Co-operative Society, as it falls within the exclusive domain of the democratically elected Committee. So, it is now well established that an Administrator has no jurisdiction to enrol new members to a Co-operative Society as it falls within the exclusive province and domain of the democratically elected Committee. In this case, it appears that the earlier Administrator had given membership to the abovesaid 4464 persons. Later, the elected Managing Committee had assumed office and it was subsequently that the present first appellant has been appointed as Administrator of the Co-operative Society. It is the present Administrator [the first appellant/R-2 in the WP(C)] who has taken action for proposing to remove such members, in terms of Exts.P-1 & P-2, in pursuance of the authorization ordered as per Ext.R-2(b). The crucial issue in this case is as to whether such an Administrator has the jurisdictional competence to remove persons from the membership roll, who were earlier granted membership by a previous Administrator/ Administrative Committee. 15. The learned Single Judge of this Court (Kurian Joseph, J. as His Lordship then was) has exhaustively and comprehensively considered this issue in the decision in Gopinathan Nair v. Joint Registrar [ 2002 (2) KLT 817 ]. Before dealing with that decision, it may be pertinent to refer to a few of the relevant provisions of the KCS Act and the Rules.
Before dealing with that decision, it may be pertinent to refer to a few of the relevant provisions of the KCS Act and the Rules. Sec.2(l) of the KCS Act defines “member” as follows: “member” means a person joining in the application for the registration of a co-operative society or a person admitted to membership after such registration in accordance with this Act, the rules and the bylaws and includes a nominal or associate member;” Sec.2(eccc) defines “Co-operative Principles” to mean the co-operative principles listed in Schedule II appended to the Act. Schedule II, framed in accordance with Sec.2(eccc), enumerates the Co-operative Principles as follows: “Co-operative Principles 1. Open and Voluntary membership. 2. Democratic Member Control. 3. Member Economic Participation. 4. Autonomy and Independence. 5. Education, Training and Information. 6. Co-operation among Co-operatives. 7. Concern for community” 16. Sec.16 of the Act deals with persons who may become members. Sec.16(1) may be more pertinent in our present case and the same reads as follows: “Sec.16. Persons who may become members:- (1) No person shall be admitted as a member of a society except the following, namely:- (a) an individual- (i) who has attained the age of eighteen years: Provided that this sub clause shall not apply in the case of a society formed exclusively for the benefit of the students of any school or college.
Persons who may become members:- (1) No person shall be admitted as a member of a society except the following, namely:- (a) an individual- (i) who has attained the age of eighteen years: Provided that this sub clause shall not apply in the case of a society formed exclusively for the benefit of the students of any school or college. (ii) who is not of unsound mind; (iii) who is a resident within, or is in occupation of land in, the area of operation of the society, (b) any other society, (ba) a local Self government (c) the government, and (d) any body of persons, whether incorporated or not and whether or not established by or under any law, if such body is approved by the Government in this behalf by general or special order: Provided that in a society formed for the promotion of the economic interests of members through a specified activity no person other than one who is likely to be benefited directly by such activity may be admitted as a member of such society unless such admission is permitted specifically by rules; Provided further that where a society is formed exclusively for the benefit of persons engaged in any particular industry, no person who is not an actual worker in the industry shall be admitted in excess of such percentage of the total membership of the society as may be prescribed: Provided also that the Coffee Board, the Rubber Board and any other statutory or non-statutory Board, Committee or Corporation constituted for the purpose of the development of an industry, may be admitted as a member of a society engaged in marketing and processing of the products of the industry concerned and formed for the workers and growers of such industry, so however that no such Board, Committee or Corporation shall be admitted as a member of a co-operative credit society. Provided also that in the case of hospital Co-operative Societies, industrial and commercial establishments and other organizations, registered under any other law may be admitted as members. Explanation: For the purpose of this sub-section hospital co-operative society means a society, the main object of which is to run a hospital or to conduct medical or para medical courses or to run medical shops.” 17.
Explanation: For the purpose of this sub-section hospital co-operative society means a society, the main object of which is to run a hospital or to conduct medical or para medical courses or to run medical shops.” 17. Chapter III of the KCS Rules deals with the rights and liabilities of members of Co-operative Societies and Rule 16 thereunder deals with conditions to be complied with for admission for membership in a Co-operative Society. Rule 16 of the KCS Rules is provided as follows: “Rule 16. Conditions to be complied with for admission for membership:-(1) No person shall be admitted as a member of a society unless- (a) he has applied in writing in the form if any laid down by the society. (b) his application is approved by the committee of the society; (c) he has fulfilled all other conditions laid down in the Act, Rules and Bye-laws; (d) in the case of other societies or a body of persons, whether incorporated or not, and any statutory or non-statutory Board, approved by the Government, Committee or Corporation constituted for the development of any industry the application for membership shall be accompanied by a resolution authorising it to apply for such membership. (2) No person shall be eligible for admission as a member of a cooperative society, if he,- (a) has not attained the age of 18 years; (b) is not a resident of or does not own or possess land within the area of operation of the society, provided that this clause shall not apply in the case of a society formed exclusively for the students of any School or College; (d) has been sentenced for any offence, other than an offence of a political character or an offence not involving moral turpitude and a period of five years has not elapsed from the date of expiry of the sentence; or (e) is a paid employee of the Society or of its financing Bank or of any society for which it is the Financing Bank provided that the restriction shall not apply to Co-operative Motor Transport Societies, Co-operative Workshops, Societies for the employees of Financing Banks and Societies formed for benefit of actual workers; or (f) has been surcharged under S. 68 and a period of 3 years has not elapsed since the payment of money or restoration of property as directed in the said order of surcharge.
(3) Where a person already admitted to membership is seen to have been ineligible for membership at the time he was so admitted as a member or if he subsequently becomes ineligible for membership the Committee of the Society may remove the person from membership after giving him an opportunity for making his representation if any, and the person concerned shall thereupon cease to be a member of the society. (4) Where a member of a society becomes ineligible to continue as such, the Registrar may of his own motion or on a representation made to him by any member of the society or by the financing Bank, by an order in writing declare that he has ceased to be a member of the society from the date of his order. The Registrar shall give such person an opportunity to state his objection, if any, to the proposed action and if the person wishes to be heard, he shall be given an opportunity to be heard before passing an order as aforesaid." 18. Sec.33(3) of the KCS Act mandates that the Administrator or Administrative Committee shall arrange for the constitution of a new Committee or for the entering upon office of the new Committee as the case may be. Construing the abovesaid provisions, it has been held in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ], that taking note of the expression “may” appearing in Rule 16(3), it is the statutory duty of the Committee and only a person eligible to be a member, alone is entitled to be in the Co-operative Society, as a Society members and hence the expression “may” has to be understood as “shall” and it is an obligation of the Committee to remove ineligible members. It has been further held that it is for this reason that Rule 16(4) mandates that the society fails to carry out the statutory obligation of removing the ineligible persons, the power is vested to the notified Registrar to intervene in the matter. Hence, it has been held that only members, as contemplated as per the Act and the Rules could be part of the democratic institution of a Co-operative Society. Further, it has been held that a member should be an eligible member, as otherwise, in the place of orderly development, there will be disorderly functioning which the law does not permit. 19.
Further, it has been held that a member should be an eligible member, as otherwise, in the place of orderly development, there will be disorderly functioning which the law does not permit. 19. It was further held that there is a statutory duty cast on the Administrator/Administrative Committee, under Sec.33(3) to arrange for the constitution of a new Committee, and that “members” mean not persons on the rolls but the eligible members of a society, because only eligible members should have a say in the affairs of the society. Hence, viewed from that angle, it has been held that the moment a member of a society becomes ineligible to be a member of the society, such a person is liable to be removed from membership and such a person should not be allowed to participate in the affairs of the society or partake in the interests of the society as the cooperative society is meant only for the welfare of its members. 20. Further, it has been held, in para 6 thereof, that removal from membership is to be made following the procedure prescribed under Rule 15(3) and that on acquisition of ineligibility, a person does not cease to be a member of the society, etc. 21. This Court, thereafter, noted the dictum laid down by the Apex Court in T.A.Kuttappan's case supra [ AIR 2000 SC 2378 ] that the duty of such a committee or an Administrator is to set right the default, if any, and to enable the society to carry on its functions, as enjoined by law and so the role of the Administrator or a Committee appointed by a Registrar while the Committee or Management is under supersession, is only to bring on an even keel a ship which was in “doldrums." Hence, it was observed that such enrollment of ineligible members would be bound to create doldrums and it can be brought to an even keel by removing such persons who were granted membership illegally by the administrator. Further, it was held that the removal of such ineligible members would in no way alter the composition of the Society as it would only compose the society properly. It will be pertinent to refer to the relevant portions of para 5 and para 6 of the decision in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ], which read as follows: “5. .......
It will be pertinent to refer to the relevant portions of para 5 and para 6 of the decision in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ], which read as follows: “5. ....... .....For the purpose of analysis of the situation in the instant case it is not necessary to quote S.33 except to state that in certain given situations S.33 also provides for appointment of an Administrator/ Administrative Committee. Sub-s. (2) of S.33 is literally the same as sub-s. (4) of S.32. The only difference is in the matter of constitution of a new committee and under S.33(3) it is provided that "the Committee or Administrator or Administrators shall arrange for the constitution of a new committee or for the entering upon office of the new committee as the case may be." It is to be noted that the Administrator or Administrative Committee has to arrange for the constitution of a new committee. The committee is constituted by the general body of a society. It has to be seen that only the members constitute the general body; members means not the persons on the rolls but the eligible members of a society because only the eligible members should have a say in the affairs of the society. Viewed from that angle it has to be held that the moment a member of a society becomes ineligible to be a member of the society, that person is liable to be expelled from membership. Such a person should not be allowed to participate in the affairs of the society or partake the benefits of the society. The society is meant for the welfare only of its members. 6. The expulsion from membership is to be made following the procedure provided under R. 16. It is pertinent to note that on acquisition of ineligibility, a person does not automatically ceases to be a member in the society. He is removed from membership only "after giving him an opportunity for making his representation". There is no question of any subjective satisfaction. Law provides for objectivity and transparency. In that situation it cannot be held that the Administrator or Administrative Committee cannot objectively consider the question of ineligibility of a member and take steps to remove such ineligible members. The Administrator/Administrative Committee is the committee under R. 16(3) while exercising such statutory duty/function/power.
There is no question of any subjective satisfaction. Law provides for objectivity and transparency. In that situation it cannot be held that the Administrator or Administrative Committee cannot objectively consider the question of ineligibility of a member and take steps to remove such ineligible members. The Administrator/Administrative Committee is the committee under R. 16(3) while exercising such statutory duty/function/power. It is also to be noted that if any such person who is removed from membership if aggrieved, can certainly invoke R. 176 of the Rules requiring the Registrar to rescind any resolution of any meeting of any society or the Committee of any society if it appears to him that such resolution is ultra vires of the objects of the society or is against the provisions of the Act, Rules or bye-laws of the society. The statute having provided such safeguards it will not be proper to restrict the duty and power of the Administrator or Administrative Committee in the matter of removing ineligible members. As held by the Supreme Court in Kuttappan's case ( 2000 (2) KLT 480 ) "the duty of such a Committee or an administrator is to set right the default, if any, and to enable the society to carry on its functions as enjoined by law. Thus, the role of an administrator or a committee appointed by the Registrar while the Committee of management is under supersession, is as pointed out by this Court, only to bring on an even keel a ship which was in doldrums." The ship containing ineligible members is bound to be in doldrums and it can be brought to an even keel only if it deballast such burdens. It is significant to note that the apex court emphasised the point of the lack of power for the Administrator to enroll members since "enrolment of new members would involve alteration of the composition of the society itself and such a power should be exercised by an elected committee rather than by an Administrator or a Committee appointed by the Registrar." The expulsion of ineligible members would in no way alter the composition of the Society. It would only compose the society properly.
It would only compose the society properly. It may be noted that the very appointment of Administrator under S. 32 could also be for a reason of the Committee being negligent in the performance of the duties imposed on it by the Act or when it does something which is prejudicial to the interests of the society. Admission of ineligible members and extending them the benefits of the society is certainly negligence on the part of the committee and which is something prejudicial to the interests of the society. Unless such prejudice or consequence of the negligence are set right the Administrator or Administrative Committee cannot constitute a new committee. If it is a case of admission of large number of new members certainly it might change the composition of the society and that way it would amount to interfering with the functioning of a democratic institution. But expulsion of an ineligible member would only be in promotion of the democratic values in a democratic institution. An Administrator/ Administrative Committee and for that matter the Committee of a society and the general body are bound to uphold the democratic values in a co-operative society. Expulsion of an ineligible member on following the procedure contemplated under the Rules is only in furtherance of the pursuit of democratic values and it is a statutory duty cast on the committee, the Administrator, the Administrative Committee or to the Registrar as the case may be.” 22. So, it has to be noted that Sec.2(l) of the KCS Act clearly mandates that “member” means only such a person who either joins with the application for registration of such a co-operative society or a person admitted to membership after such registration in accordance with the Act, the Rules and the Byelaws and includes a nominal or associate member. In other words, a person who is admitted after the registration of a co-operative society should be one who is admitted in accordance with the KCS Act, KCS Rules and the Byelaws of the co operative society. Further, the cardinal parameters of co-operative principles, as flowing out from Sec.2(eccc) read with Schedule II thereof are open and voluntary membership and democratic member control. 23.
Further, the cardinal parameters of co-operative principles, as flowing out from Sec.2(eccc) read with Schedule II thereof are open and voluntary membership and democratic member control. 23. The substratum of the reasonings of the afore cited decisions, that an Administrator does not have the jurisdictional competence to grant membership to persons to a co-operative society and that it is within the sole domain of the democratically elected committee, is that the democratic component of the membership phase of co-operative societies would be seriously and detrimentally affected if the Administrator admits members, while he is holding office for a limited period, in lieu of the elected Managing Committee. To maintain democratic member control, the power for conferment of membership is exclusively on the elected Managing Committee. The fact that the committee is elected by the General Body, in accordance with law, is the assurance that the further membership to be granted is also regulated by democratic control. If the Administrator grants membership, then it will certainly erode the democratic member control and it would affect the very democratic composition of the membership phase of the co-operative society. It is for this basic jurisprudential reason that the Apex Court, the Full Bench and various decisions of this Court have consistently held that an Administrator/Administrative Committee has no jurisdiction, whatsoever, to confer membership. That position of the matter is well settled. Further, the Administrator/Administrative Committee is also cast with the statutory duty and obligation that it shall arrange for the constitution of a new committee, etc. Therefore, the next elected committee should also be elected only on the basis of members who have been lawfully given membership. A membership granted to a person by the Administrator/Administrative Committee without authority cannot be said to amount to grant of membership, in accordance with the KCS Act, KCS Rules and Byelaws of the Cooperative Society, as understood under Sec.2(l) of the KCS Act. Therefore, the elected Managing Committee or the Administrator, who is subsequently in charge, is under the statutory obligation to ensure that the abovesaid democratic member control is maintained in accordance with law, so that persons, who have been granted membership illegally and without authority by a previous administrator, should also be removed from the membership, but after following the due procedure.
Rule 16 of the KCS Rules should be construed in the light of the provisions contained in the KCS Act, more particularly Sec.2(l), Sec.16 and the other provisions cited hereinabove. 24. The clear impact of Sec.2(l) of the Act is that, if a person is conferred membership in a co-operative society, not in accordance with law but in violation of law, then there is no question of the said person having an eligible and valid membership. So, the scope and ambit of Rule 16(3) will have to be adjudged, not merely on the basis of the conditions envisaged in Rule 16(2). As a matter of fact, most of the conditions stipulated in Rule 16(2) are only conditions of disqualification, which are not to be incurred by a person, who is aspiring for membership. For instance, the conditions in clauses (a) to (g) are that, no aspiring applicant shall be eligible, if he has not attained the age of 18 years or that he is not a resident, within the area concerned, etc., or has applied to be adjudicated as an insolvent or is an undischarged insolvent or any of the offences envisaged therein, or is a paid employee of the Society/financing Bank, as envisaged in that clause or has been surcharged under Sec.68, etc., or has been expelled under Sec.17(1), etc., as the case may be. Whereas, Rule 16(1) speaks about the basic conditions to be fulfilled by an aspiring applicant for getting his application for membership considered, inasmuch as clause (a) stipulates that he should have made the application in writing in the form, if any, laid down by the society, as per clause (b) that his application should be duly approved by the Committee of the Society and as per clause (c), he should have fulfilled the other conditions laid down in the Act, Rules and the byelaws, etc. Some of these conditions, which incur disqualification, are also envisaged in some other clauses in Sec.16(1) of the Act. The provisos to Sec.16(1) envisage various other eligibility conditions depending upon the nature of the society.
Some of these conditions, which incur disqualification, are also envisaged in some other clauses in Sec.16(1) of the Act. The provisos to Sec.16(1) envisage various other eligibility conditions depending upon the nature of the society. Sec.17(1) of the Act envisages that any member of a society, who has acted adversely to the interests of the society, or has failed to comply with the provision of the bye-law, may be expelled by the resolution of the general body passed at a special meeting for the purpose, by following the requisite procedure, etc. 25. The core of the matter is that the power under Rule 16(1) (b), for approval of the application admitting a person to membership, can be exercised only by a democratically elected committee of the society and not by the administrator/administrative committee. Hence, if the administrator/administrative committee grants membership, then the same would be against the provisions of Rule 16(1)(b) and such membership granted in violation of Rule 16(1) (b) would be in violation of Sec. 2(l) as well as the Rules. So such a person cannot be said to be a member within the meaning of Sec.2 (l) of the KCS Act, inasmuch as he has been given membership in violation of the provisions of the Act and Rules, more particularly Rule 16(1)(b). Hence, such a person given membership by the administrator/ administrative committee in violation of Rule 16(1)(b), could also be removed in accordance with the procedure envisaged under Rule 16(3) of the Act. 26. Sec.2(l) of the Act defines 'member' and in the case of those persons admitted to membership, after registration of the cooperative society, would insist that such a person should be admitted, after such registration, in accordance with the Act, the Rules and the bye-laws, etc. In other words, in view of the second limb of Sec.2(l), after the registration of the co-operative society, a person can be admitted to membership, only in accordance with the KCS Act, KCS Rules and the bye-laws of the Society. We are told that clause 6 (2) of the registered bye-laws of the appellant-co-operative society stipulates that the application for membership should be approved on the basis of the decision of the Board of Directors/Managing Committee of the appellant-Co-operative Society.
We are told that clause 6 (2) of the registered bye-laws of the appellant-co-operative society stipulates that the application for membership should be approved on the basis of the decision of the Board of Directors/Managing Committee of the appellant-Co-operative Society. So, both Rule 16(1) (b) of the KCS Rules as well as clause 6(2) of the bye-laws of the appellant-Society mandates that such a person can be admitted to membership only on the basis of the decision of the Committee/ Board of Directors of the Co-operative Society. 27. It is well-settled, by the aforecited series of case laws, settled by the Apex Court, the Full Bench of this Court and various other decisions, that the elected committee alone has the jurisdiction to confer membership to the applicants concerned. So, if the Administrator is giving membership to a person, then such membership would be in blatant violation of the mandatory requirements in Rule 16(1)(b) of the KCS Rules as well as clause 6(2) of the registered bye-laws, etc. In other words, such membership granted by the Administrator will be against the provisions of the KCS Act, inasmuch as the membership process is regulated not only by the provisions contained in Sec.16 and other provisions of the KCS Act, but also as per the prescriptions in the Rules framed as per the KCS Rules as well as the bye-laws. Membership granted by an administrator would be an action which is ultra-vires Sec. 2(l), Rule 16(1)(b) and the applicable provisions in the bye-laws. 28. A Three Judges' Bench of the Apex Court, in para 39 of a recent decision rendered in the case in Bengal Secretariat Co. operative Land Mortgage Bank & Housing Society Ltd. v. Aloke Kumar & anr. [2022 SCC Online SC 1404] = [2022 (5) KLT Online 1178 (SC)], has enumerated the seven cardinal principles of co-operatives and the same reads as follows : "39.The Statement further provides for the ‘seven co-operative principles’ as guidelines by which the co-operatives put their values into practice. Following are the principles: “1st Principle: Voluntary and Open Membership.— Cooperatives are voluntary organizations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination. 2nd Principle: Democratic Member Control.—Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions.
2nd Principle: Democratic Member Control.—Cooperatives are democratic organizations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary cooperatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organized in a democratic manner. 3rd Principle: Member Economic Participation.—Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all of the following purposes : developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership. 4th Principle: Autonomy and Independence.—Cooperatives are autonomous, self-help organizations controlled by their members. If they enter to agreements with other organizations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their cooperative autonomy. 5th Principle: Education, Training and Information.— Cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives. They inform the general public -particularly young people and opinion leaders -about the nature and benefits of cooperation. 6th Principle: Cooperation among Cooperatives.— Cooperatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures. 7th Principle: Concern for Community.— Cooperatives work for the sustainable development of their communities through policies approved by their members.” 29. The aspects regarding voluntary and open membership, democratic member control, member economic participation, autonomy and independence, co-operation among co-operatives, concern for community, etc., are the main highlights of the cardinal principles of co-operatives and one of the core aspect of the matter is democratic member control, which has implications even in respect of parameters, like voluntary and open membership, member economic participation, autonomy and independence, co-operation among co-operatives, concern for community, etc.
The consistent legal position settled by the Apex Court, Full Bench of this Court and various decisions of this Court, including Division Benches, that it is only the elected Managing Committee, which has the power to confer membership in a co-operative society and not Administrators, would also flow out from the core of the co-operative principles relating to democratic member control, which also has implications on the other parameters. Hence, the aspect that membership can be conferred only by an elected Managing Committee and not by the Administrators, is one of the core and basic features of the principles of co-operative movement, which are embedded in the various provisions of the Kerala Co-operative Societies Act and the KCS Rules framed thereunder, which are also reflected in the bye-laws. Hence, the jurisprudential foundation for the abovesaid well-settled legal position that Administrators cannot confer membership and the same is within the sole domain of the elected Managing Committee, etc., would flow from these basic cardinal principles of co-operatives, the main of which is democratic member control. Since democratic member control is one of the cardinal parameters of co-operative principles, if there is no provision to deal with a ultra-vires action, which would deleteriously and detrimentally affect the democratic membership control of the society and there are no provisions for removing them, it would affect the very nature of the democratic member control required for a co-operative society. So, as per the provisions of the Act, more particularly Sec.33(3), it is not merely the elected committee, but even the administrator, who has the statutory responsibility to arrange for the constitution of a new committee, etc. Such arrangement, for the constitution of a new committee, should be to ensure that the democratic base of the membership is retained and adhered to and any step required for remedying a deleterious action, which has eroded the democratic member control, inasmuch as an administrator has given membership, in violation of the law that such membership should have been granted only by a democratically elected committee, then to ensure that the remedial steps in that regard are taken, the competent authority concerned will have the jurisdiction to remove such persons, who have been admitted without the authority of law and against the law and such members should have been treated as “ineligible members”, for this purpose.
For this purpose, if the elected committee is in charge, then it is for the elected committee to take the decision at that time and if, for any reason, the administrator or administrative committee is in office at the relevant time, then it shall be the duty of the administrator or administrative committee to take remedial steps to ensure that such unlawfully admitted persons are removed from membership, but subject to the due procedure. The main procedure envisaged is the one under Rule 16(3). Therefore, the provisions contained in Rule 16(3) cannot be read in vacuum and in abstract and it has to be evaluated, not only in terms of the conditions not to incur disqualifications, as envisaged in Rule 16(2), alone but also on the basis of the conditions in Rule 16 (1) for taking remedial action, in terms of Rule 16(3). 30. If, assuming for a moment that such a hyper-technical approach as contended by the writ petitioners is to be adopted, then the law would demand that the committee will have the inherent power to remedial situation, by removing such persons, who have been admitted by the administrator, who has no authority in that regard. But it goes without saying that such an action can be taken, only in accordance with a fair procedure, which would mandate that a reasonable opportunity should be given to the elected party concerned. So also, if at that time, the elected committee is not in office, but an administrator or administrative committee is in office, then the administrator or administrative committee, as the case may be, has the duty to discharge the duties and functions, which are otherwise enjoined on an elected committee, for the purpose of removing such members, who have been unlawfully admitted by the previous administrator. For these reasons, we are in full agreement with the perspective and well-considered views of the learned Single Judge rendered in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ]. Hence, the legal position, already well-settled in the matter, is that the administrator/administrative committee has no power or jurisdictional competence to grant membership to a co-operative society, for that is within the exclusive domain of a democratically elected committee.
Hence, the legal position, already well-settled in the matter, is that the administrator/administrative committee has no power or jurisdictional competence to grant membership to a co-operative society, for that is within the exclusive domain of a democratically elected committee. So also, not only the elected managing committee, but also the administrator or administrative committee, as the case may be, if the latter is in charge at the relevant time, will have the jurisdictional competence to take remedial measures to ensure that persons, who have been given membership by the administrator, are removed from the membership, by following the procedure envisaged in Rule 16(3) of the Act. As rightly held in para 6 of the case in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ],such an action taken by the elected managing committee or administrator or administrative committee, removing such persons from the membership roll can be challenged by such an admitted person by filing an appropriate petition before the notified Registrar, in terms of Rule 176 of the KCS Rules. The violation of the norms, for grant of membership, for exercising the discretion in terms of Rule 16(3), should be adjudged not only in relation to the parameters mentioned in Rule 16(2), but also vis-a-vis Rule 16(1). 31. It is well-settled that the elected Managing Committee of a co-operative society alone has the jurisdictional competence to confer membership to aspiring persons concerned and it is also well-settled that the membership granted by an Administrator would be against the provisions of the Act and therefore, such persons are liable to be removed. Nobody can have any dispute if the elected Managing Committee of the co-operative society takes a decision to remove such persons who were granted membership by the Administrator. If the findings of the learned Single Judge, as per the impugned judgment, that only those persons who have acquired any disqualification, etc., as envisaged in Rule 16(2), alone can be removed in terms of Rule 16(3) & Rule 16(4), etc., are accepted as correct, then the inexorable consequence is that persons who have been granted membership by an Administrator, cannot be removed even by the elected Managing Committee.
Such cannot be the consequence, as it goes against the elementary legal position settled by the Apex Court, the Full Bench of this Court and a series of decisions of this Court, including Division Bench decisions, that the Administrator has no jurisdictional competence to confer membership to persons concerned and the membership can be conferred only by the elected Managing Committee. So, there has to be some process for removing persons who have been granted membership by the Administrator and for that purpose, there cannot be any dispute that such power is being exercised by the elected Managing Committee. Therefore, the impugned findings of the learned Single Judge, that the removal of persons from membership, in terms of Rule 16(3), can be confined only to those who do not fulfill the conditions envisaged in Rule 16(2), is not correct. This is so, as there is no condition in Rule 16(2) that membership can be granted only by the Committee and not by the Administrator. Whereas, the prescription that the application for membership is to be decided and approved by the Committee of the Society, is made out in Rule 16(1)(b). Hence, the scope and ambit of the power conferred under Rule 16(3) has to be understood with reference to the conditions envisaged not only in Rule 16(2), but also in Rule 16(1), as well as any other relevant provisions of the Act, byelaws, etc. 32. We are told that after Rule 176 decision by the notified Registrar, a statutory appeal is also provided in terms of Sec.83(1)(j) of the KCS Act before the State Government. Accordingly, it is ordered and declared that the legal position laid down by the learned Single Judge in that regard, in Gopinathan Nair's case supra [ 2002 (2) KLT 817 ], reflects the correct legal position and the same is approved. Consequently we are rejecting the contentions of the writ petitioners that the administrator or the administrative committee, does not have the jurisdiction to remove ineligible members. So the findings in the impugned judgment accepting the above contentions of the writ petitioners will stand set aside. 33.
Consequently we are rejecting the contentions of the writ petitioners that the administrator or the administrative committee, does not have the jurisdiction to remove ineligible members. So the findings in the impugned judgment accepting the above contentions of the writ petitioners will stand set aside. 33. Further, a Division Bench of this Court in para 25 of the decision in Kuniyil Sreeja's case supra [ILR 2022 (1) Kerala 669] has approved the dictum laid down by a learned Single Judge in para 14 of Prakash Kumar's case supra [ 2014 (1) KLT 68 ], wherein it has been held that mere reason that a society was continued under the management of an administrator or administrative committee does not, by the sheer weightage of the number of years in which such management was continued, confer any authority on the administrator or administrative committee, to enroll members and then, on ratification by the General Body grant right to such members to exercise the franchise. The issues in relation to items II(a) & (b) supra are answered accordingly. (III) Whether issuance of registered notice, as envisaged in Sec.104 of the KCS Act is mandatory and imperative in a case where action is to be taken by an elected committee or administrator to remove members, who have been enrolled as members of a co-operative society, at the instance of the administrator/administrative committee and whether non-issuance of such registered notice by itself, will vitiate the process. 34. Sec.104 of the KCS Act provides as follows : “Sec.104. Service of notice:-Every notice or order issued or made under this Act may be served on any person, by properly addressing it to the last known place of residence or business of such person preparing and posting by registered post a letter containing the notice or order and, unless the contrary is proved, such service shall be deemed to have been effected at the time at which the letter would be delivered in the ordinary course.” 35. Dealing with the scope and impact of Sec.104 of the KCS Act, this Court has held, in the decision in Karunakaran v. Special Sale Officer [ 1986 KLT 701 ], that Sec.104 of the Act permits service of notice by registered post and prescribes that, in such a case, actual service or delivery need not be separately proved.
Dealing with the scope and impact of Sec.104 of the KCS Act, this Court has held, in the decision in Karunakaran v. Special Sale Officer [ 1986 KLT 701 ], that Sec.104 of the Act permits service of notice by registered post and prescribes that, in such a case, actual service or delivery need not be separately proved. But that this is different from holding that service by registered post is the only permissible statutory method and Sec.104 does not exclude the other well-known methods of effecting service such as service through a bearer or process-server, etc. It will be pertinent to refer to para 5 of the decision of this Court in Karunakaran's case supra [ 1986 KLT 701 ], which reads as follows : “5. S.104 reads:- “Service of notice -Every notice or order issued or made under this Act may be served on any person, by properly addressing it to the last known place of residence or business of such person preparing and posting by registered post a letter containing the notice or order and, unless the contrary is proved, such service shall be deemed to have been effected at the time at which the letter would be delivered in the ordinary course.” All that the Sections says is that: (i) notices may be served by registered post; (ii) when it is shown that such notice is posted in a properly addressed cover, there will be a presumption that it is duly served; (iii) the time of effecting service can be taken as the time at which such a registered cover would have been delivered to the addressee in the ordinary course; and (iv) the above presumption can be rebutted by adequate evidence. In other words, the Section permits service of notice by registered post and prescribes that in such a case, actual service or delivery need not be separately proved. This is different from saying that service by registered post is the only permissible statutory method. The Section does not exclude other well-known methods of effecting service such as service through a bearer or process-server. Even in Ravindranatha Pillai v. Co-op. Tribunal ( 1979 KLT 486 ), relied on by counsel, this Court did not go to the extent of holding that service of summons under O. V of the Code of Civil Procedure would not be sufficient.” 36.
Even in Ravindranatha Pillai v. Co-op. Tribunal ( 1979 KLT 486 ), relied on by counsel, this Court did not go to the extent of holding that service of summons under O. V of the Code of Civil Procedure would not be sufficient.” 36. The effect of Sec.104 in the KCS Act has been considered in detail in an another decision of this Court, in the case in Kunhikrishnan v. Secretary, Nadapuram Service Cooperative Bank. Ltd. [ 1987 (1) KLT 201 ]. The said decision considered the impact of Sec.104 of the KCS Act, vis-a-vis, Rule 35 of the KCS Rules, as it stood then, which regulated the procedure for conduct of election in a committee of a society and Sub-rule 3(a) thereof stipulated that the Returning Officer shall send intimation regarding the details of the election, etc. It was held by this Court, in paras 14 and 15 of the decision in Kunhikrishnan's case supra [ 1987 (1) KLT 201 ], that the term 'notice' connotes something more concrete than a mere disclosure or intimation and wherever, there is serious impact on valuable rights of parties, the term 'notice' has been associated with direct, specific and definite intimation effectively given. That, a perusal of the provisions of the KCS Act would show that a notice as such is visualised in context where consequences of a serious nature are involved. In relation to the election (which no doubt involves a serious matter, as regards the exercise of franchise by a member), the Legislature has contemplated a less rigorous provision, which combines fairness with practicality, inasmuch as only 'intimation' is envisaged. It will be pertinent to refer to para 15 of Kunhikrishnan's case supra [ 1987 (1) KLT 201 ], which reads as follows : "15. A perusal of the provisions of the Kerala Co-operative Societies Act will show that a notice as such is visualised in contexts where consequences of a serious nature are involved. A notice in writing is to be given to members when a resolution is passed to change the form or extent of liability. (See S.11). Notice is required in the context of amalgamation, transfer of assets, liabilities and division of Societies (S.14), appointment of new committee or administrator (S.33), enforcement of charge (S.75) and proceedings before the Tribunal by way of revision or review (S.84 and 85).
(See S.11). Notice is required in the context of amalgamation, transfer of assets, liabilities and division of Societies (S.14), appointment of new committee or administrator (S.33), enforcement of charge (S.75) and proceedings before the Tribunal by way of revision or review (S.84 and 85). Reference to notice occurs in R.18 (Expulsion of member), R.35(3)(g) (withdrawal of candidature), R.67 (Reference of disputes). R.71 (application for enforcement of charge), R.74, 76, 78, 79 and 81 (Procedure for execution of decision, award or Order etc), R.129, 155, 157, 167 and 169 (Election of members of the Circle Co-operative Union and allied matters), S.33(b) dealing with appointment of new committee or administrator, R.9 (Procedure regarding amendment of byelaws), R.76 (Intimation of the place, day and hour of sale in execution proceedings) and R.129(e) (Election of members to circle Cooperative Union), employs the term ‘intimation’. It is thus evident that in relation to the election, (which no doubt involves a serious matter as regards the exercise of franchise by a member) the legislature has contemplated a less rigorous provision, which combines fairness with practicality. It is in that context that the rule subtly speaks only of intimation and not of notice. Consistent with practicalities, the rules insist only on ‘intimation’ being given. A certificate of posting is insisted upon to ensure that intimation in relation to election has been given. Ordinarily, and in the absence of any foul play or deceitful means, any member to whom the intimation of the election is sent by a letter under certificate of posting, would get such intimation. That would be fair enough procedure. If in relation to such an election, actual service is insisted upon, it may virtually result in an undue delay in, if not altogether a defeat of, the election process. It would therefore appear that the legislature and the rule making authority have consciously made a distinction between notice and intimation, depending upon the context in which information on an aspect has to be disclosed. In that view of the matter, there is no inconsistency between R.35(3)(a) and S.104 of the Act." 37. We are in full agreement with the abovesaid well-considered views explicated in the abovesaid Single Bench verdicts of this Court in para 5 of the decision in Karunakaran's case supra [ 1986 KLT 701 ], para 15 of Kunhikrishnan's case supra [ 1987 (1) KLT 201 ], etc. 38.
We are in full agreement with the abovesaid well-considered views explicated in the abovesaid Single Bench verdicts of this Court in para 5 of the decision in Karunakaran's case supra [ 1986 KLT 701 ], para 15 of Kunhikrishnan's case supra [ 1987 (1) KLT 201 ], etc. 38. Sec.17(1) of the Act deals with 'expulsion of members'. In a case where a member of a Society has allegedly acted adversely to the interests of the society or has failed to comply with the provisions of the bye-laws, etc., then it envisages expulsion of members by the prescribed procedure. Sub-sec (2) of Sec.17 speaks about opportunity of making representation. Rule 16(3) also speaks about opportunity for making representation. Rule 16(4) speaks about opportunity to state objections. The contingency envisaged in Sec.17(1) is for expulsion of a member of a society, who has acted adversely, which has very serious consequences. Even therein the Legislature has guardedly not used the word 'notice', but that the affected party should be given opportunity for making representation, as can be seen from a reading of Sec.17(2). Rule 16(3) envisages about the removal of members. Even under Rule 16(3), it envisages not “notice” but “opportunity of making representation”. This is also the case in regard to the contingency envisaged in Rule 16(4), which empowers the notified Registrar to act in the matter. 39. Where the matter is for getting a party excluded from the membership, on account of acting adversely to the interest of the society, the terminology used is 'expulsion', as can be seen from Sec.17(1). But where ineligible persons have been given membership, the terminology employed in Rule 16(3) is “removal from the membership”. Rule 16(4) empowers the notified Registrar to declare that the person concerned has ceased to be a member of the society from the date of his order, etc. Since the Legislature themselves have envisaged, even for the very serious action of expulsion of a member, for adversely acting against the interests of the society, which casts very serious stigma on him and even entails very serious adverse consequence of not eligible for re-admission for a period of one year from the date of expulsion, as can be seen from Sec.17(5) and the Legislature has guardedly used the expression 'opportunity for making representation' and not for 'issuance of a notice'.
Hence, reading the provisions contained in Rule 16(3) & Rule 16(4) as well as Sec.17(1) vis-a-vis the provisions contained in Sec.104 and taking note of the dictum laid down by this Court in Kunhikrishnan's case supra [ 1987 (1) KLT 201 ], para 15, we are of the view that, what is envisaged in taking adverse action in terms of Rule 16(3) & Rule 16(4), etc., is intimation to the party concerned, so as to enable him to get an opportunity to make his representation and to state his objections. 40. In other words, the provisions of the Act and Rules do not contemplate or mandate that the affected person concerned should necessarily be given registered notice, as envisaged in Sec.104, before the authorized body can take action, in terms of Rule 16(3). Sufficient intimation should be given to the affected party concerned so that he is put to alert and in order to enable him to get an opportunity to make his representation before the body authorized to take decision under Rule 16(3), etc. Hence, the impugned judgment in accepting the contentions of the writ petitioners that any proposed adverse action in terms of Rule 16(3) should necessarily and compulsorily adhere to issuance of registered notice in terms of Sec.104 of the KCS Act, does not reflect the correct legal position. As to whether or not registered notice should be sent to the parties concerned, will be a matter within the discretion of the competent body concerned, namely, the elected committee or the administrator/ administrative committee, as the case may be, for taking action in terms of Rule 16(3). Where the number of affected persons is very few in number and manageable size, certainly, in its discretion, the committee/administrator can consider whether registered notice could be given to the party concerned. What is essential and imperative is that there should be a reasonable process of intimating the affected party concerned in order to enable him to get an opportunity to make his representation before the authorized body, as envisaged in Rule 16(3).
What is essential and imperative is that there should be a reasonable process of intimating the affected party concerned in order to enable him to get an opportunity to make his representation before the authorized body, as envisaged in Rule 16(3). Where the number of affected persons are very large and unwieldy the committee/administrator may assess the situation as to whether sending of registered notices to such large and multifarious persons is really called for and a decision will be taken thereon, taking into account various relevant aspects, including the cost-process involved in that and a reasonable mode of intimating the parties concerned could be appropriately taken. In other words, the direction in the impugned judgment, that the impugned Exts.P-1 & P-2 should be held as illegal and ultra vires, merely on the ground that registered notice was not sent, cannot be countenanced. 41. Of course, if the affected party has a case that the mode of intimation adopted by the committee/administrator other than registered notice, was not a reasonable mode of such intimation in the facts of that case, then certainly, he can raise such an objection in any proceedings that he might set in motion to challenge the adverse action under Rule 16(3). Then, it is for the other side to establish that the mode of intimation was fair and reasonable and is not liable for interdiction. So, it is essentially for the committee/administrator to decide on the reasonable mode of giving intimation to the affected party concerned, so as to enable him to make representation against the proposed action. A decision on the reasonableness or otherwise of the mode of such intimation is to be taken on the facts and circumstances of each case. Further, we are apprised by the appellants that the impugned proceedings, contemplated in Exts.P1 & P2 notices, could not be finalised, as against the two writ petitioners, in view of the interim orders granted in this writ proceedings. Whereas, the same has been finalised as against all the other remaining 4462 persons. 42.
Further, we are apprised by the appellants that the impugned proceedings, contemplated in Exts.P1 & P2 notices, could not be finalised, as against the two writ petitioners, in view of the interim orders granted in this writ proceedings. Whereas, the same has been finalised as against all the other remaining 4462 persons. 42. The appellants have a case that about 1007 persons out of the balance 4462 persons have responded to Exts.P1 & P2 notices, as can be seen from explanations as per Anx.A1 and that the said impugned proceedings as against them, in pursuance of Exts.P1 & P2 notices, have already been finalised by the appellant administrator as per the proceedings in the nature of Anx.A2 orders and that thus the said remaining 4462 persons have been duly removed from the membership role of the society, as they were admitted by the previous administrator. Further that, none of such 4462 persons have challenged the said proceedings of their removal from the membership role, in the manner known to law, either by instituting any proceedings in the nature of Rule 176 of the KCS Rules before the respondent Joint Registrar or by any other proceedings, like writ litigative proceedings, etc. and that the said proceedings have become final and conclusive, as against them, etc. 43. We need not get into those aspects for the simple reason that the said 4462 persons are not parties to this proceedings and we have already held that the two writ petitioners herein can champion only their cause and not the grievances of the other 4462 persons. The appellants point out that affected persons, other than the two writ petitioners, have not challenged the adverse proceedings against them in the manner known to law. It is trite that if the said adverse proceedings are not challenged by the aggrieved persons concerned, in the manner known to law, then they may be barred by the principles of delay, laches, acquiescence, estoppel, etc. from raising any such challenge belatedly. In the present writ proceedings we have already held that the present writ proceedings can impugn only the legality and correctness of the actions taken against the two writ petitioners. (IV) Nature of the reliefs to be granted in this writ proceedings: 44. It is the admitted case of the petitioners that Exts.P1 & P2 notices have been published in the news papers on 18.03.2020.
(IV) Nature of the reliefs to be granted in this writ proceedings: 44. It is the admitted case of the petitioners that Exts.P1 & P2 notices have been published in the news papers on 18.03.2020. It is also the case of the appellant co-operative society, as per para No.19 of the counter affidavit filed in the W.P.(C), that the said notices were also published in the head office of the society and its branch offices and two supermarkets and also before the office of the Assistant Registrar (General) of Co-operative Societies, concerned, etc., and also in all leading news dailies, etc. 45. The most crucial aspect of the matter is that the two petitioners herein have challenged Exts.P1 & P2 dated 18.3.2020, by filing the instant writ petition (civil) on 21.03.2020. Therefore, indisputably, petitioners have been apprised and alerted within 3-4 days about the issuance of Exts.P1 & P2 notices dated 18.3.2020. 46. Instead of giving the explanation to Exts.P1 & P2, they have chosen to file the instant writ petition on 21.03.2020. We are not now taking any final view as to whether the mode of intimation given in terms of Exts.P1 & P2 for taking the proposed action under Rule 16(3) as against the petitioners, was a reasonable mode, in the facts of this case. 47. To avoid any further controversy, it is ordered that, in case the appellants want to finalise the action contemplated in terms of Exts.P1 & P2, in terms of Rule 16(3), as against the two writ petitioners, then the competent authority among the appellants may issue intimation to the two writ petitioners calling upon them to give their explanation to enable the appellants to consider action under Rule 16(3), on the premise that the membership granted to them by the erstwhile administrator was without jurisdiction and is liable for removal in terms of Rule 16(3), etc. The appellants may issue such necessary intimation without much delay, preferably within one week from the date of receipt of a copy of this judgment. Thereupon the writ petitioners may give their explanations in the matter, in writing, if they so desire. They will be at liberty to raise all the contentions, factual and legal open to them other than the issues already concluded in this judgment.
Thereupon the writ petitioners may give their explanations in the matter, in writing, if they so desire. They will be at liberty to raise all the contentions, factual and legal open to them other than the issues already concluded in this judgment. It is also ordered that the competent authority among the appellants may also afford reasonable opportunity of being heard to the writ petitioners. The issue as to whether the membership granted to the two writ petitioners by the erstwhile administrator was Class A membership or Class C membership, etc. and such other related issues may also be canvassed by the writ petitioners. Thereafter, the competent authority among the appellants may take a considered decision in the matter, for the proposed finalisation of the proceedings under Rule 16(3) as against the two writ petitioners, without much delay, preferably within a period of one month. The direction of the learned Single Judge, quashing Exts.P1 & P2, to the extent it is directed against the writ petitioners will also stand set aside. 48. The upshot of the above discussion may be summed up as follows: (i) The two writ petitioners have no locus to champion the cause of the remaining 4462 persons covered by Exts.P1 & P2 and individual grievances to be settled in this writ proceedings are confined only to that of the two petitioners herein. (ii) The finding of the learned Single Judge, in the impugned judgment, that Exts.P1 & P2 notices, will stand quashed, as against the entire 4464 persons covered thereby including the two writ petitioners, will stand set aside. (iii) An administrator or administrative committee or the elected committee of the co-operative society has the power and jurisdictional competence to remove persons, who have been granted membership by a previous administrator/administrative committee. (iiia)The legal position declared by the learned Single Judge in Gopinathan Nair v. Joint Registrar [ 2002 (2) KLT 817 ] reflects the correct legal position and the same is approved by us. (iv) The scope and ambit of the power conferred under Rule 16(3) to remove persons from the membership roll, could also be exercised not only by the elected managing committee but also by the administrator/administrative committee to remove persons who have been granted membership by the erstwhile administrator/ administrative committee.
(iv) The scope and ambit of the power conferred under Rule 16(3) to remove persons from the membership roll, could also be exercised not only by the elected managing committee but also by the administrator/administrative committee to remove persons who have been granted membership by the erstwhile administrator/ administrative committee. The scope and ambit of Rule 16(3) has to be understood not merely within the conditions not to incur the disqualifications as envisaged in Rule 16(2) but also the conditions envisaged in Rule 16(1) and should also be read in the light of Sec. 2(l), Sec.16 and the other provisions of law, etc. This is so, as a person given membership by an administrator cannot be said to be “member” as defined in Sec. 2(l) of the KCS Act, as membership can be granted as per Rule 16(1) of the KCS Rules, only by the elected committee and not by an administrator/ administrative committee. (v) The finding in the impugned judgment, that the impugned action is illegal and ultra vires, as the power under Rule 16(3) to remove ineligible members can be exercised only if the persons are ineligible in terms of Rule 16(2), at the time of the membership or they had subsequently acquired such individual membership vis-a-vis Rule 16(3), etc. is not correct. In other words, the power under Rule 16(3) can be invoked not only if persons are ineligible, at the time of grant of membership or they have subsequently acquired such ineligibility, etc. but also in cases where memberships have been granted in violation of Rule 16(1), etc. (vi) The procedure contemplated in Rule 16(3) is one that should enable the elected person to secure an opportunity for making representation, if any, against the proposed action, and therefore, what is involved is that an intimation by a reasonable mode should be given to the affected person to enable him to avail such an opportunity to make representation. So, for the purpose of complying with the procedure under Rule 16(3), registered notice in terms of Sec.104 of the KCS Act, is not mandatory and imperative and what is required is only a reasonable mode of intimation to enable the party to avail the opportunity to make representation.
So, for the purpose of complying with the procedure under Rule 16(3), registered notice in terms of Sec.104 of the KCS Act, is not mandatory and imperative and what is required is only a reasonable mode of intimation to enable the party to avail the opportunity to make representation. The issue as to whether a particular mode of intimation other than registered notice, in terms of Rule 16(3) adopted by the committee/ administrator is reasonable or not, is a question of fact to be determined in the facts and circumstances of each case. Hence, the direction issued by the learned Single Judge, interfering with Exts.P1 & P2 on the ground that registered notice in terms of Sec.104 was not given, will also stand set aside. (vii) The issue as to whether issuance of notices, as per Exts.P1 & P2 is a reasonable mode of intimation is not decided in this case and to avoid any further controversy, it is ordered that the appellants may issue intimation to the two writ petitioners calling upon them to file explanation to the action proposed to remove them from membership in terms of Rule 16(3) for taking action against them under Rule 16(3). Consequently, the contra findings made by the learned Single Judge in the impugned judgment dated 10.8.2020 will stand set aside. The parties will be at liberty to raise all contentions, factual and legal, open to them, other than issues already concluded in this judgment, in the manner known to law, when they respond to the appellant for the above proposed action. Accordingly, the impugned judgment rendered in this W.P.(C). will stand set aside. With these observations and directions, the above writ appeal will stand finally disposed of.