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2025 DIGILAW 709 (KER)

Sherin Roy v. Joint Registrar Of Co-operative Societies

2025-03-24

HARISANKAR V.MENON

body2025
JUDGMENT : HARISANKAR V. MENON, J. These writ petitions pertain to the affairs of the Poonjar Service Co-operative Bank Limited, No.3963, Kottayam District. The impugned orders under challenge are the proceedings initiated leading to the supersession of the Managing Committee of the bank, the surcharge proceedings initiated, the dismissal of the Secretary, etc. 2. W.P(C) No.3302 of 2019 is filed by the members of the Co-operative Society, who were elected during the election in December 2013. They contend that an audit was conducted in the Society with no adverse remarks till 2016-17 that without incorporating any defects in the audit reports, a list of certain alleged defects were presented in a separate paper, mainly in relation to grant of loans, recovery, etc., that in response to a complaint filed by the Bank, the Joint Director (Audit) issued Ext.P1 constituting a three-member committee to examine the defect, followed with Ext.P2 communication of the Registrar of Co-operative Societies calling for a detailed report in that regard. They further contend that to defeat the directions as above, Ext.P3 was issued by pre-dating the same ordering an inquiry under the Kerala Co-operative Societies Act,1969 (hereinafter referred to as the “Act”). Insofar as the term of the Managing Committee was to expire by 28.12.2018, it was resolved to conduct an election, for which resolution was forwarded to the State Co-operative Election Commission, who in turn issued Ext.P4 election notification on 14.11.2018, as per which the procedure for election commenced and was to culminate on 23.12.2018, by the actual conduct of the election. It is at that point of time, the petitioners point out, that the 1 st respondent issued Ext.P5 under Section 32 of the Act superseding the Managing Committee of the Co-operative Society referred to above and appointing an Administrator. As an offshoot of Ext.P5, Ext.P6 was issued by the Election Commission on 19.12.2018, cancelling the election notification. The petitioners have sought to challenge Exts.P5 and P6 issued as above. 3. The Managing Committee members of the Society have filed W.P(C) No.7312 of 2019 seeking to challenge Ext.P11 order issued by the Joint Registrar under Section 68(1) of the Act. It is the contention of the petitioners that Ext.P11 does not satisfy the pre-requisite under Section 68(1) of the Act. 3. The Managing Committee members of the Society have filed W.P(C) No.7312 of 2019 seeking to challenge Ext.P11 order issued by the Joint Registrar under Section 68(1) of the Act. It is the contention of the petitioners that Ext.P11 does not satisfy the pre-requisite under Section 68(1) of the Act. They have also sought to challenge Ext.P6 order for inquiry under Section 65 of the Act, which is also challenged in the earlier writ petition, apart from challenging Ext.P8 report of inquiry conducted under Section 65 of the Act. 4. The petitioner in W.P(C) No.7349 of 2019 is stated to be the Secretary of the Society who joined the service in 1982 and rose in rank to the post of Secretary on the basis of seniority, in the year 2014. He was to retire on 31.05.2019. On the basis of the proceedings, which are the subject matter of the earlier writ petitions, by Ext.P8 order dated 04.01.2019, the petitioner was suspended. Later, the memo of charges at Ext.P9 was also issued. It is at that point that the afore writ petition is filed before this Court, and during the pendency of the writ petition, Ext.P11 was issued on 31.05.2019, dismissing the petitioner from service. The order of dismissal is sought to be challenged by amending the writ petition, which was permitted by this Court. 5. W.P(C) No.42547 of 2018 is again filed by the Managing Committee members seeking to challenge the supersession under Section 32 of the Act and the cancellation of the election. 6. I have heard Sri. George Poonthottam, the learned senior counsel assisted by Smt.Shilpa Sreekumar, for the petitioner/s in the first 3 cases and Sri.P.V.Baby for the petitioners in W.P(C) No.4254 of 2018. Sri.Haridas represented the Administrator appointed under the impugned proceedings and Sri.Bimal K. Nath, the learned Government Pleader, appeared for the official respondents. 7. Sri.Poonthottam, the learned senior counsel would contend that: - i. The entire proceedings impugned in these writ petitions were the result of a scheme evolved to avoid the democratic process in the Society. ii. Admittedly, the term of the Managing Committee was to expire by 28.12.2018, and the formalities required for conducting the election were completed, the election itself to be conducted on 23.12.2018. iii. The report under Section 65 of the Act dated 15.12.2018 was forwarded by the Assistant Registrar, Pala, to the Joint Registrar, Kottayam, only on 17.12.2018. ii. Admittedly, the term of the Managing Committee was to expire by 28.12.2018, and the formalities required for conducting the election were completed, the election itself to be conducted on 23.12.2018. iii. The report under Section 65 of the Act dated 15.12.2018 was forwarded by the Assistant Registrar, Pala, to the Joint Registrar, Kottayam, only on 17.12.2018. The fact that the order of supersession was issued on the very next day – 18.12.2018, shows the real intention behind the entire action. iv. A reading of the impugned proceeding would show that the requirements under the Act have not been established. It is not the personal satisfaction of the Joint Registrar that is required to initiate the steps under the Act, and the records should disclose the reason for arriving at the satisfaction. v. No valid reasons have been pointed out to invoke the exclusion provision under Section 32(3) of the Act. vi. As regards the steps taken under Section 68 of the Act, Ext.P11 in W.P(C) No.7312 of 2019, would show that the officer was pre-determined to initiate action under Section 68(1) and it is for that purpose, the inquiry under Section 68 was constituted. Even the ingredients under Section 68(1) are absent, from a reading of the impugned proceedings. vii. The suspension/dismissal of the Secretary was quite unwarranted. The order of dismissal, though dated 31.05.2019, was dispatched only on 03.06.2019 and by that time, the petitioner in W.P(C) No.7349 of 2019 (Secretary) had already retired. viii. The Administrator is not having any power or authority to issue a charge memo to an employee. He cannot take any disciplinary steps against the Secretary. ix. He would also rely on the amendment to Section 65 of the Act by the Kerala Co-operative Societies (Amendment) Act, 2023 and contend that the afore procedural requirement, being clarificatory in nature should be held as having retrospective operation. 8. Sri.Baby would adopt the submissions made as above by Sri. Poonthottam. 9. Per contra, Sri.Bimal K.Nath, the learned Government Pleader, would contend as under:- i. The supersession of the Managing Committee under Section 32 of the Act was validly initiated. ii. The invocation of the provision under Section 32(3) of the Act is to be read along with Ext.R5(c) FIR, produced in W.P(C) No.3302 of 2019, in which event, the respondents were perfectly justified in proceeding under the Act without the opportunity/consultation required under the law. ii. The invocation of the provision under Section 32(3) of the Act is to be read along with Ext.R5(c) FIR, produced in W.P(C) No.3302 of 2019, in which event, the respondents were perfectly justified in proceeding under the Act without the opportunity/consultation required under the law. iii. The special report at Ext.R5(a) and the report under Section 65 would show the nature of the malpractices at the hands of the Managing Committee. iv. With respect to the surcharge proceedings under Section 68(1), he contends that the same is only a preliminary step and the petitioner/s are entitled to file objections explaining their stand and hence the writ petition is pre-mature. He relied on the judgment of this Court in Kudayathoor Service Co-operative Bank Ltd. (Reji K. Joshy) v. Joint Registrar of Cooperative Societies (General) [2022 (3) KLT 222 (F.B)] and the judgment in W.A No.1500 of 2021. v. With respect to the writ petition filed by the Secretary of the Society, he would contend that:- a. The remedy of the petitioner lies elsewhere under Section 69 of the Act or Rule 198 of the Rules. b. The order at Ext.P11 was issued on 31.05.2019 itself, since the stay granted by this Court was vacated/clarified only on that date. c. According to him, it is sufficient, if the order is passed and sending the afore order on a later date (03.06.2019) does not make any difference. d. The Administrator is having every power under the Act to take disciplinary proceedings against the petitioner as held by this Court in Mary v. Kuzhur Service Co operative Bank Ltd. [2006 (1) KLT 323] as confirmed by a Division Bench in Elamgulam Service Co operative Bank Ltd. v. Gopinathan Nair [ 2007 (1) KLT 147 ] e. The provisions of Section 32(4) of the Act also empower the Administrator to take steps against the Secretary (employee). 10. Sri.Haridas, the learned counsel for the Administrator, supported the afore contentions raised by the learned Government pleader. He would also rely on the averments in paragraphs 10 and 11 of the counter affidavit filed by the Administrator dated 24.09.2019 to point out about the actual reason for the dispatch of the order of dismissal on 03.06.2019. 11. I have considered the rival submissions as well as the connected records. 12. He would also rely on the averments in paragraphs 10 and 11 of the counter affidavit filed by the Administrator dated 24.09.2019 to point out about the actual reason for the dispatch of the order of dismissal on 03.06.2019. 11. I have considered the rival submissions as well as the connected records. 12. The following issues arise for consideration in these writ petitions: - i. Is the supersession of the Managing Committee under Section 32 justifiable? ii. Is the inquiry ordered under Section 68(1) justifiable? iii. Is the disciplinary proceedings against the Secretary, which culminated in his dismissal, justifiable? 13. The first issue arising for consideration as noticed earlier, is with reference to the legality of the supersession of the Managing Committee under Section 32. The Act under Section 32 entitles the Registrar to supersede the Managing Committee after an inquiry by himself or through his subordinates or on the report of the financing Bank, upon the “satisfaction” of the Registrar that such supersession is required on account of the various reasons pointed out under the section. The Act further provides that before such supersession, the Managing Committee is to be extended an opportunity to state its objection and Sub-section (3) thereto provides that the opportunity of hearing need not be extended to the Managing Committee and the financing Bank, where the Registrar is of the opinion that it is not “reasonably practicable to do so”. 14. In other words, the supersession has to be on the basis of the inquiry, upon verification of which the Registrar is to be satisfied with respect to the requirement for supersession. In the case at hand, the supersession order is issued on the basis of a report, under Section 65, of the Assistant Registrar. This report is placed before the Joint Registrar with a covering letter dated 17.12.2018. In other words, it was only on 17.12.2018 that the Joint Registrar came across the Section 65 report. The inquiry report under Section 65 has been produced along with the counter affidavit in W.P(C) No.3302 of 2019 as Ext.R5(m) dated 15.12.2018. The report under Section 65 is running into as many as 23 pages. Hence, it is on the basis of the afore report that the Joint Registrar has arrived at the requirement to invoke the provisions of Section 62. The report under Section 65 is running into as many as 23 pages. Hence, it is on the basis of the afore report that the Joint Registrar has arrived at the requirement to invoke the provisions of Section 62. The satisfaction required under Section 32 is to be a subjective satisfaction on the basis of the inquiry referred to under Section 32(1). It is hard to believe that the Joint Registrar has arrived at the decision to invoke the power under Section 32, the very next day of the receipt of the inquiry report. Thus, it is clear that there was no application of mind while issuing Ext.P5. 15. In this connection, the question as regards the invocation of the provisions of Section 32(3) in paragraph 13 of Ext.P5 order in W.P(C) No.3302 of 2019 is also to be noticed. The Act requires consultation with the financing Bank and extension of opportunity to the Managing Committee before passing the order of supersession and it is only in a situation of exceptional circumstances that Section 32(3) can be invoked. The exceptional circumstances required out of Section 32(3) are not established in the impugned order, apart from quoting the section and stating that it is not practical to hear the Managing Committee or the concerned financing Bank. 16. The afore findings have to be considered along with the fact that the period of the Managing Committee was to expire by 28.12.2018 and the election was already scheduled to be conducted on 23.12.2018. When the election was so scheduled, the requirement for superseding the committee which was in its last leg, also ought to have been taken into account while issuing the impugned order under Section 32. 17. I also take note of the contents of the Section 65 report and find that even on the face of the alleged adverse findings contained therein the requirement of immediate supersession on the very next day is not made out. In such circumstances, I hold that the supersession under Section 32(1) as per Ext.P5 order dated 18.12.2018 in W.P(C) No.3302 of 2019, without establishing the requirement to invoke the provisions of Section 32(3), is without justification and arbitrary. 18. In such circumstances, I hold that the supersession under Section 32(1) as per Ext.P5 order dated 18.12.2018 in W.P(C) No.3302 of 2019, without establishing the requirement to invoke the provisions of Section 32(3), is without justification and arbitrary. 18. While arriving at the afore conclusion I notice the judgment of the Apex Court in State of Madhya Pradesh v. Sanjay Nagayach and Others[ (2013) 7 SCC 25 ] , wherein the Apex Court has categorically held that the Joint Registrar is obliged to comply with the statutory formalities, including consultation with the financing Bank, etc. without which there cannot be an ouster. 19. The second issue arising for consideration is the challenge raised to Ext.P11 in W.P(C) No.7312 of 2019. By the said order issued by the Joint Registrar, an inquiry under Section 68(1) of the Act has been ordered, relying on the inquiry report under Section 65. According to the petitioner, the requirements to invoke Section 68(1) are not shown to exist in the case at hand. According to the petitioner, the inquiry report under Section 65 essentially alleges various illegalities/ irregularities in sanctioning of the loans, and since such loans are sufficiently secured, proceedings if any, can be only for the realization of such loans and not with reference to the provisions of Section 68 of the Act. 20. However, I notice that the impugned order only constitutes an inquiry under Section 68(1) of the Act. This can only be taken as a step taken in the right direction, on the face of the Section 65 inquiry report. The petitioner would be entitled to file appropriate objections/explanations in that regard. 21. The last issue arising for consideration is with reference to the dismissal of the Secretary/petitioner in W.P(C) No.7349 of 2019. 22. Various contentions have been raised by either side with reference to the legality or otherwise of the order of dismissal. The fact that the petitioner was to retire on 31.05.2019 is not in dispute. He has filed W.P(C) No.7349 of 2019, seeking to quash Exts.P8 and P9 by which he has been suspended from service, followed by the issue of a charge memo, respectively. On 11.04.2019, this Court ordered no action to be taken pursuant to the inquiry against the petitioner until further orders are obtained from this Court. He has filed W.P(C) No.7349 of 2019, seeking to quash Exts.P8 and P9 by which he has been suspended from service, followed by the issue of a charge memo, respectively. On 11.04.2019, this Court ordered no action to be taken pursuant to the inquiry against the petitioner until further orders are obtained from this Court. However, on 31.05.2019, this Court clarified that punishment against the petitioner is not to be imposed or given effect till the final order on the inquiry is issued. The learned Government pleader and Sri.Haridas would contend that it is on the basis of the afore, Ext.P11 was issued on 31.05.2019. True, Ext.P11 is admittedly dated 31.05.2019. However, the question is as to whether mere passing of the said order, assuming it be so, is sufficient or whether it requires to be served on the employee. The petitioner has pointed out that the order at Ext.P11 was dispatched only on the evening of 03.06.2019, as evidenced by Ext.P10 postal receipt in W.P.(C) No.7349 of 2019. 23. A perusal of Ext.P10 postal receipt, shows that the order was dispatched on 03.06.2019 by 17:30. From this, it is clear that the dismissal order is served on the petitioner only after his superannuation. 24. In this connection, I notice the averments contained in the counter affidavit of the Part-time Administrator who issued Ext.P11 order. In paragraph 8 of his counter-affidavit, he states that upon getting communication about the clarification granted by this Court referred to above by around 04:40 PM he had taken the “decision to dismiss the petitioner from service” as under:- “8. The further allegation that I went to the bank at about 4.20 pm on 31-05-2019 for the purpose of attending a fair well party of an employee is not fully correct. It is true that I attended the said function also. I attended the office of the bank with the intention to finalize the disciplinary proceedings against the petitioner, in case this honorable Court permits me to do the same. Anticipating orders from this honorable Court I had made preparations and arrangements for finalizing the proceedings. At about 4.40 PM I got communication from the counsel appearing for the bank that this honourable Court had passed the clarificatory order, permitting to pass final orders on the disciplinary proceedings against the petitioner and implementation of the same only after the disposal of the Writ petition. At about 4.40 PM I got communication from the counsel appearing for the bank that this honourable Court had passed the clarificatory order, permitting to pass final orders on the disciplinary proceedings against the petitioner and implementation of the same only after the disposal of the Writ petition. So the Counsel had advised me that I can pass final orders, subject to implementation of the same only after disposal of the above Writ petition. Immediately on getting the said information, I had taken the decision to dismiss the said petitioner from service, and implementation of the same was kept pending subject to the final disposal of the above case. After taking the decision only I had left the bank. All the allegations to the contrary are wrong and hence denied. The allegation that the reply given by the petitioner had not been considered and no decision was taken on 31-05-2019 are absolutely false. As already submitted above, I had duly considered the explanations given by the petitioner in the light of the materials available and entered into my finding in the order. The decision was taken on 31-05-2019, before 5 PM. I was waiting for the orders of this honorable Court for passing a final orders. Immediately after getting information from the counsel I had taken the decision. All the allegations to the contrary are wrong and hence denied.” But in paragraph 11 of the counter affidavit, it is categorically stated as under: - “11. It is true that the orders were communicated to the petitioner through speed post dispatched on 03-06-2019. As already submitted above, though the final orders on the disciplinary proceedings against the petitioner was passed on 31-05-2010, before 5 PM the same could not be typed on the same the day, due to want of time. 31- 05-2019 was a Friday and the succeeding days being Saturday and Sunday, on those days also the orders could not be got typed. I got typed the order only on Monday. Immediately after the same I had entrusted a copy of the same with one of my office staff for dispatching it to the petitioner. The said staff had dispatched the same to the petitioner.” A reading of the afore would show that, admittedly, the dismissal order was typed on 03.06.2019 by pre-dating the same as one passed on 31.05.2019. 25. Immediately after the same I had entrusted a copy of the same with one of my office staff for dispatching it to the petitioner. The said staff had dispatched the same to the petitioner.” A reading of the afore would show that, admittedly, the dismissal order was typed on 03.06.2019 by pre-dating the same as one passed on 31.05.2019. 25. In this connection, I take note of the judgment rendered by a Division Bench of this Court in Govt. Wood Workshop v. State of Kerala [ 1987 (1) KLT 804 ] , wherein this Court has found as under:- “14. The order of any authority cannot be said to be passed unless it is in some way pronounced or published or the party affected has the means of knowing it. It is not enough if the order is made, signed, and kept in the file, because such order may be liable to change at the hands of the authority who may modify it, or even destroy it, before it is made known, based on subsequent information, thinking or change of opinion. To make the order complete and effective, it should be issued, so as to be beyond the control of the authority concerned; for any possible change or modification therein, This should be done within the prescribed period, though the actual service of the order may be beyond that period.” (underlining supplied) The dictum laid down by this Court would apply to the facts and circumstances of the case at hand also. 26. In the light of the above, there cannot be any dispute about the fact that the order of dismissal was issued only after the superannuation of the petitioner. Hence, Ext.P11 can only be set aside, and I do so. On the whole, the captioned writ petitions are disposed of as under: i. W.P.(C) No.3302 of 2019 and W.P.(C) No.42547 of 2018 are allowed, by setting aside the order of supersession under Section 32 dated 18.12.2018. ii. Since admittedly the term of the Manging Committee was to expire and the election already scheduled to be conducted, the steps to be taken to conduct the election at the earliest. iii. W.P(C) No.7312 of 2019 is dismissed, however clarifying that the petitioners would be entitled to defend the inquiry initiated pursuant to Ext.P11, in accordance with law. iv. ii. Since admittedly the term of the Manging Committee was to expire and the election already scheduled to be conducted, the steps to be taken to conduct the election at the earliest. iii. W.P(C) No.7312 of 2019 is dismissed, however clarifying that the petitioners would be entitled to defend the inquiry initiated pursuant to Ext.P11, in accordance with law. iv. W.P.(C) No.7349 of 2019 is allowed, by setting aside Ext.P11 order passed by the 3 rd respondent.