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2022 DIGILAW 205 (KER)

Varghese M. D S/o Devassy M. T. v. Joint Registrar of Co-Operative Societies (General)

2022-02-28

SUNIL THOMAS

body2022
JUDGMENT : The petitioner is a member of the third respondent Co-operative Bank, which is a class-1 Special Grade Society. The last election to the managing committee of the bank was held on 18/11/2013 and a committee with tenure till 17/11/2018 took charge. While so, the managing committee, in its meeting held on 29/9/2016, nominated the petitioner to the casual vacancy of a managing committee member that arose on 31/8/2016, invoking section 28(1)(j) read with Rule 38(5) of Kerala Co-operative Societies Act and Rules. The petitioner was intimated by communication dated 1/10/2016. However, he claims that he never took charge as the managing committee member and had never attended any managing committee meeting thereafter. While so, in relation to certain transactions entered into by the managing committee, an enquiry was conducted by the Assistant Registrar and a report was submitted under section 66 of the Co-operative Societies Act. The committee was suspended by the Assistant Registrar by order dated 6/10/2016 and a part-time administrator took charge on 7/10/2016. The suspension of the committee and the assumption of the charge by the Part-time administrator was the subject matter of a series of litigation. 2. Regarding the misconduct allegedly committed by the Managing Committee, notices were issued under section 32(1) of the Kerala Co-operative Societies Act to the petitioner and other members of managing committee to appear for a hearing and to show cause as to why the committee shall not be superseded. The petitioner appeared and raised a contention that he had not taken charge as the member of the Managing Committee and that he had not participated in any of its meetings. It was also pointed out by him that he was not a member of the managing committee, against which the report was submitted by the Assistant Registrar. He was nominated to the committee much later. According to the petitioner, even though the authority concluded the proceedings by removing the managing committee, he apprehended disqualification under section 32 (1) (e) of the KCS Act. While so, the committee was removed under section 32(1)(a)(b)(c) of the Act. 3. Hence, claiming that the first respondent ought to have exonerated him from the charges, the petitioner has approached this court seeking the following reliefs; (i). Issue a writ of certiorari calling for the records leading to the issuance of Ext.P6 and quash the same. (ii). While so, the committee was removed under section 32(1)(a)(b)(c) of the Act. 3. Hence, claiming that the first respondent ought to have exonerated him from the charges, the petitioner has approached this court seeking the following reliefs; (i). Issue a writ of certiorari calling for the records leading to the issuance of Ext.P6 and quash the same. (ii). Issue a writ of mandamus or any other appropriate writ, order or direction, directing the 1st respondent to re-consider Ext.P6 taking note of the fact that the petitioner was never took charge as a managing committee member of the 3rd respondent society. (iii). Declare that the committee in office after 31/8/2016 cannot be superseded under section 32 of the Act by the 1st respondent. 4. Heard both sides and examined the records. 5. Essentially, the petitioner is challenging Ext.P6 order by which it was held that though the authority was of the opinion that the managing committee was liable to be removed, since the period of managing committee had expired on 16/11/2018, the managing committee could not be superseded. Hence, the Joint Registrar(General) concluded the proceedings by removing the managing committee and retaining the disqualification under section 32 (1)(e) of the KCS Act. The premise on which challenge was set up was that, the alleged default related to a period much prior to the nomination of the petitioner to the managing committee. The managing committee, which took the objectionable decisions was totally different from the managing committee of which the petitioner was the member. The allegations of misuse of power, mal administration, breach of trust, etc. are serious accusations which are now sought to be cast on the petitioner, which may leave unfair stigma upon the reputation and character of the petitioner, it was contended. Hence, further reliefs were sought. 6. Ext.P6 is the order of the Joint Registrar (General), which is under challenge. By the above proceedings, committee was removed, an administrator was appointed and it was informed that proceedings under S.68(1) of the Act would be issued. It also retained the disqualification under section 32 (1) of the Act. The basis of such a decision was the report of the Assistant Registrar (General) of Kanayannur Taluk, dated 31/7/2015, which was referred in Ext.P6. The vacancy to which the petitioner was nominated arose on 2/8/2016. The petitioner was nominated as the managing committee member on 29/9/2016. It also retained the disqualification under section 32 (1) of the Act. The basis of such a decision was the report of the Assistant Registrar (General) of Kanayannur Taluk, dated 31/7/2015, which was referred in Ext.P6. The vacancy to which the petitioner was nominated arose on 2/8/2016. The petitioner was nominated as the managing committee member on 29/9/2016. Evidently, the report which formed the basis of all the proceedings culminating in Ext.P6 related to a period during which the petitioner was not a member of the managing committee. 7. The learned counsel for the petitioner to contend that , in the light of the above, no liability can be fastened on the petitioner, nor can he be visited with penal consequences, relied on the decision of the Full Bench of this court in Anil M.S. v. Joint Registrar(General) of Co-operative Societies & Ors ( 2021 (4) KHC 119 ). In the above decision, the Full Bench considered the question whether the various disqualifications under section 32 (1)(e) of the Act would be attracted to the members of a managing committee which suffered a deemed or notional supersession, as distinguished from an actual supersession. Full Bench held that once concerned committee ceases to be in office, the action for its removal will not survive and continuation of any action therefor would be otiose. Ultimately, it was held that the usage of the phrase “every member of the committee superseded under this section” carries the legislative intention that in order to incur the disqualification, the member/members concerned should have been a member/members of the superseded committee under Section 32 of the Act. It was held that there was nothing in the KCS Act, which would expressly or impliedly, indicate that the provision for disqualification would with equal force apply in the case of a deemed or notional supersession. The Full Bench considered the question whether such a situation would or could wipe out the liability of the member of such committee on the ground of being a person, who is or was entrusted with the organization or management of society based on their collective action for which committee could have been proceeded and for which they were severally liable. The court held that the answer can only be in the negative. The court held that the answer can only be in the negative. The court referred to the decision in Sivadasan Nair v. Registrar of Co-operative Societies ( 1997(2) KLT 710 ), in which it was held that power under section 32 of the KCS Act is invoked to adjudge whether the existing committee is guilty of the circumstances mentioned in Section 32, more particularly, clauses (a) to (d) or sub section (1) thereof and not for adjudging whether the individual members of the committee were guilty of the same. At the same time, Section 68 of the KCS Act would apply in the latter case. Referring to Rule 44(1)(c) of the KCS Rules, it was held that such consequences would visit such a member of the society, if there occurred an actual supersession. 8. The Full Bench laid down that triple disqualifications under section 32(1)(e) would apply, if the committee is actually superseded, as contemplated under section 32 and not in case of notional supersession. In the case at hand, Ext.P6 clearly shows that though the Joint Registrar has held that the committee was liable to be superseded, since its period had expired on 16/11/2018, it could not be superseded under Section 32 (1) (a)(b) (c). Still, invoking section 32(1), by the above order, the managing committee was removed and the disqualification to the members under section 32 (1)(e) was retained. Hence, being a notional supersession, in the light of the Full Bench decision, the disqualification under section 32 (1)(e) will not be extended in the case of the petitioner. 9. This issue can be viewed from another angle also. The question that arises in this case is whether the consequences arising from the supersession of a committee in relation to a decision taken or action done by the committee can be jointly fastened on a person who was not a party to the decision along with the other members of the committee. The crucial issue is whether it is a joint liability for the decision taken or act done, or based on the principle of vicarious liability. It is evident that under section 32(e), three disqualifications could follow. They are to disqualify from contesting in the election or to be nominated to any committee or to be appointed as an administrator for a period of two years. It is evident that under section 32(e), three disqualifications could follow. They are to disqualify from contesting in the election or to be nominated to any committee or to be appointed as an administrator for a period of two years. Committee which is superseded is also liable for surcharge proceedings under section 68 which applies to the persons who are responsible. Rule 44 of the KCS Rules provides for disqualification of membership of a committee. The apprehension of the petitioner is that by virtue of Ext.P6, various disqualifications under section 32(e) , penal consequences under section 68 and Rule 44 would follow in the case of the petitioner. As indicated earlier, this will not be attracted in the case of a notional supersession, as laid down by the Full Bench in Anil's case (cited supra). 10. The question, whether the effect of section 32, section 68 and Rule 44 would apply to a member of a committee superseded under section 32, but who was not a party to the act/decision which led to its supersession, is the issue which arises in the present case. A perusal of section 32(1)(e) shows that it relates to triple consequences that follows in the case of supersession of a committee under section 32. Section 32(1)(e) provides that “every member of the committee superseded” This prima facie indicates that the supesession apply to every member of the committee, as a whole. It may imply that the consequences under Section 32(1)(e) would fall on every member of the committee and consequently triple disqualifications extend to the members of the committee individually for their collective acts/decisions. However, section 68 uses a slightly different connotation. It states “any person who is or was entrusted with the organization or management of such a society or who is or has at any time been an officer or an employee of the society.............”. It clearly shows that the surcharge proceeding is liable to be initiated against every person referred therein and not a collective liability on all the members of the administrative committee. However, in Rule 44 of the KCS Rules, the term used is “no member of the society shall be eligible...........”. 11. It clearly shows that the surcharge proceeding is liable to be initiated against every person referred therein and not a collective liability on all the members of the administrative committee. However, in Rule 44 of the KCS Rules, the term used is “no member of the society shall be eligible...........”. 11. Reference to the above three provisions clearly show that though supersession is collectively imposed on the administrative committee and it is the committee that is superseded, triple disqualifications under Section 32, surcharge proceedings under section 68 and disqualification under Rule 44 applies to each member, individually. 12. In the case at hand, disputed transaction relates to the period prior to June 2015. The petitioner herein was nominated to the committee only on 29/9/2016. Clearly, the petitioner was not a member of the administrative committee which took the controversial decisions, which were found to be improper, by the enquiry committee. Merely because the petitioner had become a member of the committee after the controversial decision was taken, whether he can be fastened with disqualifications, which have serious civil consequences, is the matter to be considered. In the light of the different phraseology used in section 32 (e), Section 68 and Rule 44 which specifically relates to the members of the committee, rather than the committee as a whole, which is superseded, the consequences that follow should also be only on the persons who were responsible for such acts or decisions. Hence, though the decision to supersede a committee as such is taken, individual consequence should fall only on such members. However, from the very fact that under section 68, the liability is imposed on “any person who is or was entrusted with the organization or management of the society”, the object of the statute is clear. It is not every member of the committee, but it is “any person who is or was entrusted” with the management or made any payment contrary to the Act, who should be liable for its consequences. This clarifies that only those members who were responsible for such conduct can be fastened with liability. It is not every member of the committee, but it is “any person who is or was entrusted” with the management or made any payment contrary to the Act, who should be liable for its consequences. This clarifies that only those members who were responsible for such conduct can be fastened with liability. If the legislature wanted the consequences to follow enbloc in the case of supersession, the wording in section 68 would have been “every member of the committee that is superseded or every member of the committee which has taken the decision under section 68 of the Act.” In the light of the above, the surcharge proceedings can only be against a person who was a party to the decision which ultimately led to the supersession proceedings and not to a person who had ceased to be a member before the decision was taken or who, at a later point of time, was nominated to the administrative committee, who is to be fastened with the liability. 13. In the light of the above, section 32(e) , section 68 and Rule 44 have to be harmoniously interpreted. Hence, disqualification under Rule 44 can only be extended to a person who was a member responsible for surcharge proceedings as under section 68. That should be equally extended in the case of Section 32 (e), Section 68 and Rule 44. Otherwise, there is no reason as to why separate terms should be used in each of the above provisions, instead of using the terms “every member of the superseded committee”. Clearly legislature has used the term “every member “consciously not to fasten enbloc liability on all members of the committee which is superseded, whether or not that member was a party to the disputed decision. Consequences of such serious civil liabilities cannot be fastened collectively merely by reason of being a member of a committee at some point of time. There should be a rational nexus between the membership and the decision. This seems to be the intention of the legislature. 14. Above decision leads to a conclusion that by merely being a part of the committee at some point of time and acts alleged relates to different period, collective liability cannot be fastened on a member of the committee. There should be a rational nexus between the membership and the decision. This seems to be the intention of the legislature. 14. Above decision leads to a conclusion that by merely being a part of the committee at some point of time and acts alleged relates to different period, collective liability cannot be fastened on a member of the committee. Applying the above principle, I am satisfied that the disqualification and the surcharge proceedings as against the petitioner cannot be initiated nor continued when the allegations relate to a period during which he was not a member. Having considered this, I am inclined to grant reliefs Nos. 2 and 3 sought by the writ petitioner . In the light of nature of Ext.P6, I am not inclined to quash Ext.P6 and relief No. 1 cannot be granted. However, there will be a limited declaration that the petitioner cannot be visited with any disqualification under the Act nor be visited with any surcharge proceedings in relation to the misconduct alleged in Ext.P6, specifically referred to as item No. 2 in Ext.P6. Consequently, the authorities under the Co-operative Societies Act are restrained from initiating any proceedings against the petitioner in relation to allegation in Ext.P6. The writ petition is allowed to the above extent.