Vellamunda Service Co-Operative ... vs The Joint Registrar Of ...
2021 Latest Caselaw 11295 Ker

              IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                 PRESENT

              THE HONOURABLE MR. JUSTICE SUNIL THOMAS

    THURSDAY, THE 08TH DAY OF APRIL 2021 / 18TH CHAITHRA, 1943

                      WP(C).No.2547 OF 2021(P)


PETITIONER:

              VELLAMUNDA SERVICE CO-OPERATIVE BANK LTD NO.C.530
              KATTAYAD P.O.,
              WAYANAD-670731,
              REPRESENTED BY ITS SECRETARY-IN-CHARGE.

              BY ADVS.
              SRI.B.S.SWATHI KUMAR
              SMT.ANITHA RAVINDRAN
              SRI.HARISANKAR N UNNI
              SHRI.SARANGADHARAN P.

RESPONDENT:

              THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
              (GENERAL)
              NORTH KALPETTA,
              WAYANAD, PIN-673121.

              R1 BY GOVERNMENT PLEADER

OTHER PRESENT:

              SR.GP K.P HARISH

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 31-03-
2021, THE COURT ON 08-04-2021 DELIVERED THE FOLLOWING:
 W.P(C).2547/2021
                                    2




                             JUDGMENT

This Writ Petition is filed by a Co-operative Society registered

under the Kerala Co-operative Societies Act 1969. In the report of the

concurrent auditor for the period 2019-2020, gross misappropriation

and mismanagement on the part of the Society was found out. Alleging

that the Secretary of the Society was responsible for the gross

misappropriation to the tune of Rs.11 lakhs, Ext.P1 show cause notice

was issued to him on 21.11.2020 by the Society. Ext.P2 reply dated

26.11.2020 was issued by him accepting the responsibility and

acknowledging that, he was ready and willing to accept any action

taken by the managing committee. Considering the nature of the

allegations the managing committee by Ext.P3 order placed him under

suspension and decided to conduct disciplinary proceedings. In the

meanwhile, the petitioner Society was served with Ext.P4 dated

06.04.2021, by the respondent, the Joint Registrar of Co-operative

Societies directing an enquiry under section 65 of the KCS Act to be

initiated stated to be on the basis of a letter from the Joint Director of

Audit Wayanad and Executive Officer, Kerala State Co-operative bank.

2. The above order under section 65 of the Co-operative

Societies Act is challenged in this Writ Petition contending that the

enquiry was ordered and S.65 of the KCS Act was invoked solely on the W.P(C).2547/2021

basis of the audit report. It was contended that, it was initiated with an

ulterior motive as a prelude to superseding the committee, due to

political reasons. It was further contended that the misappropriation

was clearly attributable to the Secretary evidenced by Exts.P1 to P3.

Necessary action was initiated against the Secretary which clearly

showed that the Society was acting bonafide. It was further contended

that, it has been held in Mellukara Service Co-operative Bank Ltd.

No.PT 1152 and Another v. Joint Registrar (General), District Co-

operative Society (2018(2) KLT 640) that, S.65 of the Act is clear

that, it can be issued only on proper satisfaction by the Joint Registrar

regarding the allegations. It was also contended that, in Elakkal

Service Co-operative Bank Ltd. v. State of Kerala (1997(2) KLT

85) it was held that, it was not sufficient for the Registrar to act solely

upon the reports of other officers, when there is nothing else on record

to show that he had entered into a subjective satisfaction as required

under S.65 of the KCS Act to cause an inquiry. It was contended that

the allegations raised are vague, the order was passed under S.65 of the

KCS Act mechanically by the Joint Registrar without due application of

mind and consequently, the order is liable to be set aside. It was

contended that the order, except stating that the authority bonafide

believed that S.65 enquiry was necessitated, did not give any reasons.

3. A detailed counter was filed by the respondent contending

that the Joint Registrar had properly applied his mind, perused the W.P(C).2547/2021

materials placed before him and consciously arrived at a decision. It

was stated that from the audit special report submitted by the

concurrent auditor and the inspection report of the financing bank, it

was very clear that the officers of the bank including the Secretary and

Board of Directors were directly involved in the misappropriation

committed in the bank. It was against the genuine interest of hundreds

of depositors and members of the bank. The respondent bonafide

believed that the misappropriations were made by the Secretary and the

Board of Director for illegal gain. Referring to various allegations, it

was contended that, Ext.R1(a) Audit Special report clearly found out

misappropriation to the tune of Rs.11,80,094/- during the above period.

It was also contended that, simultaneous to the above audit, the Kerala

State Co-operative bank had inspected the bank through their Executive

Officer and found out large scale misappropriation of funds. It revealed

the mismanagement of the Board in the distribution of various loans in

violation of the Rules.

4. It was further contended that, Ext.P4 order was passed after

carefully considering all relevant documents brought before the

respondent and the documents referred to earlier. On going through

the said documents, the respondent was convinced about the financial

misappropriation done by the previous Secretary as well as the

mismanagement functioning of the bank. After scrutiny of the report, to

prevent further loss, a detailed enquiry was necessary and respondent W.P(C).2547/2021

passed an order under S.65 of the KCS Act 1965.

5. It was contended that, in the decision reported in Managing

Committee, Vellathooval Service Co-operative bank Ltd. v. Joint

Registrar of Co-operative Societies (General) and Another

(2020(1) KHC 746) it was held that the Society could not be said to be

a person aggrieved at this stage of the notice under S.65 of the Act,

merely on the basis of an apprehension, howsoever strong, that the

proceedings initiated under S.65 will ultimately culminate in the order

prejudicial to its interests. It was also contended that, in an unreported

decision in The Tirurangadi Co-operative Agricultural and Rural

Development Bank Ltd. v. The Joint Registrar of Co-operative

Societies (G), Civil Station, Malappuram in W.P(C).17086 of

2020, a copy of which judgment was produced as Ext.R1(b), it was held

that, necessity of conducting an enquiry under S.65 of the KCS Act was

enumerated in S.66 of the Kerala Co-operative Societies Rules

regarding the procedure. It indicates that, once the Registrar satisfies

himself of the necessity of holding an enquiry, the order authorizing the

enquiry has to be complied with. It was also contended that Melukkara

Case (referred supra), relied on by the Managing Committee, has no

application to the facts of this case.

6. Having considered the above facts, it is clear that, there was

a specific allegation of misappropriation. It is true that, in Ext.R1(a) at

page 14, there is a specific reference that misappropriation of a sum of W.P(C).2547/2021

Rs.11,80,094/- was committed by the Secretary during the relevant

time. It is seen that, there were some materials before the authority to

arrive at a prima facie finding that Society was also responsible. Merely

because the petitioner/society is led by the opposite political party, that

does not mean that, every proceeding against the Society initiated

would be prejudiced or malafide. In the above circumstance, I feel that

the enquiry should proceed. Learned Government Pleader also

submitted at the time of hearing that, enquiry has progressed and is

almost on the verge of completion. In the light of the above, the

contention of the learned counsel for the petitioner that Ext.P4 was

issued without reckoning the impact of Exts.P1 and P3 does not appear

to be convincing. Having considered this, I am inclined to dismiss the

Writ Petition, however, making it specifically clear that, no finding is

rendered regarding the nature of allegations and the truth of allegation

raised against the petitioner/society.

The Writ Petition is accordingly dismissed.

Sd/-

                                               SUNIL THOMAS

Sbna                                                 JUDGE
 W.P(C).2547/2021





                         APPENDIX
PETITIONER'S EXHIBITS:

EXHIBIT P1           TRUE COPY OF THE NOTICE DATED 21.11.2020
                     ISSUED BY THE PETITIONER.

EXHIBIT P2           TRUE COPY OF THE REPLY DATED 26.11.2020
                     SUBMITTED   TO THE  PRESIDENT  OF   THE
                     PETITIONER.

EXHIBIT P3           TRUE COPY OF THE ORDER DATED 26.12.2020 OF
                     THE PETITIONER.

EXHIBIT P4           TRUE      COPY       OF      THE      ORDER
                     NO.JRGWYD/3174/2020/CRP DATED 06.01.2021 OF
                     THE RESPONDENT.