Baby Thomas vs State Of Kerala
2021 Latest Caselaw 1938 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                               PRESENT

          THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

    TUESDAY, THE 19TH DAY OF JANUARY 2021 / 29TH POUSHA, 1942

                      WP(C).No.23269 OF 2020(G)


PETITIONER:

               BABY THOMAS
               S/O.THOMAS, KOOVACKAL HOUSE,
               CHERUKATTOOR P.O., KANNADIMUKKU,
               PIN-670721, WAYANAD DISTRICT.

               BY ADVS.
               SRI.K.T.THOMAS
               SRI.MATHEW B. KURIAN
               SRI.NIKHIL BERNY

RESPONDENTS:

      1        STATE OF KERALA
               REP. BY THE SECRETARY TO GOVERNMENT,
               DEPARTMENT OF DAIRY DEVELOPMENT, SECRETARIAT,
               THIRUVANANTHAPURAM-695001.

      2        THE DEPUTY DIRECTOR,
               DAIRY DEVELOPMENT DEPARTMENT, C BLOCK,
               CIVIL STATION, KALPETTA NORTH P.O.,
               WAYANAD-673121.

      3        PANAMARAM MILK PRODUCERS CO-OP. SOCIETY LTD.
               NO.C 35(D),
               APCOS, PANAMARAM P.O., WAYANAD DISTRICT-670721
               REP. BY ITS SECRETARY.

      4        VARKEY,
               S/O.JOSEPH, PATTAMKULATHI HOUSE,
               CHERUKATTU P.O., PANAMARAM, WAYANAD DISTRICT.

               IS IMPLEADED AS PER ORDER DATED 12-11-2020 IN IA
               1/20.

               R1-2 BY SRI PP THAJUDEEN, GOVERNMENT PLEADER
               R3 BY ADV. DR.GEORGE ABRAHAM
               R4 BY ADV. B.S.SWATHI KUMAR

               SRI TK AJITH KUMAR SC
 W.P.(C) No.23269/2020         2



     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
19.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 W.P.(C) No.23269/2020                     3




                                 JUDGMENT

Under challenge in this writ petition is Ext.P9 order passed by the

2nd respondent whereby the petitioner herein, who was the President of

the Panamaram Milk Producers Co-operative Society, was disqualified of the

membership of the Society invoking Rule 44(j) of the Kerala Co-operative

Societies Rules, 1969 (hereinafter referred to as 'the Rules' for short) for

violation of clause 5 (2)(i) of the bye-laws of the Society.

2. The petitioner states that based on a complaint lodged by a

certain Varkey, the additional 4th respondent herein, Ext.P1 notice was

issued to him on 15.4.2020 informing him that a sum of Rs.7,49,960.04/- is

due from the petitioner to the Society. He was asked to show cause why

his membership from the managing committee shall not be cancelled. The

petitioner states that the allegations in Ext.P1 notice are unsubstantiated

and no amount as stated in the notice was due from him. A meeting of

the managing committee was convened and it was decided to request the

2nd respondent to clarify the discrepancies regarding excess payment for

the milk supplied by the petitioner. A subcommittee was also formed

among the members of the managing committee and the Secretary was

entrusted to verify the accounts and submit a report. The petitioner

states that the subcommittee noticed serious irregularities in its report and

sought for detailed examination of the accounts by an officer of the

department. An inspection was ordered under Section 66 of the Kerala Co-

operative Societies Act, 1969 (hereinafter referred to as 'the Act' for short)

and a report was submitted before the 2nd respondent by the inspecting

officers. In the report so submitted, it was found that a sum of

Rs.7,09,912.94/- was due and the petitioner was directed to remit the

amount on or before 5.10.2020. Ext.P4 notice was issued informing the

petitioner that his failure to remit the amount or offer proper explanation

would invite disqualification under Rule 44 of the Rules. The petitioner

states that Ext.P5 explanation was submitted by him to Ext.P4 notice and

the 2nd respondent was requested to complete the audit of accounts

before calling upon the petitioner to pay the amount. The petitioner states

that without considering the explanation offered by the petitioner, Ext.P6

notice was issued informing the petitioner that he is a defaulter to the

society and in view of the provisions of the bye-laws of the society, he was

ineligible to continue as President/member of the managing committee.

The petitioner states that on receipt of Ext.P6, he appeared before the 2nd

respondent and sought for time to file an explanation and requested that

the documents relied on by inspecting officers be handed over to enable

him to furnish the explanation. According to the petitioner, without

considering any of the contentions of the petitioner, the 2nd respondent

proceeded to pass Ext.P9 order disqualifying the petitioner. He contends

that the principles of natural justice were violated and the issuance of the

order impugned is vitiated by mala fides and arbitrariness. It is in the

above background that this writ petition is filed seeking for a declaration

that Ext.P9 is illegal and for quashing the same.

3. The 2nd respondent has filed a counter-affidavit wherein it is

stated that a complaint was filed by the additional 4th respondent stating

that excess payments had been made to the petitioner in addition to the

amount due to him towards the milk supplied. An enquiry was conducted

by the 2nd respondent and it was revealed that a sum of Rs.7,47,960.04/-

was paid in excess. In the monthly bills issued to the petitioner from the

financial year 2015-2016 onwards, it has been mentioned that substantial

amounts towards the cattle feed and fodder supplied from the consumer

store are due from the petitioner. However, despite issuance of separate

notices, the amount due was not paid. While so, the additional respondent

approached this Court and filed a W.P.(C) No.35251/2019 seeking

directions and by judgement dated 20.12.2019, the 2nd respondent was

ordered to consider his complaint and take a decision after hearing all

concerned parties including the petitioner. The petitioner was summoned

and his statement was recorded by the 2nd respondent. Thereafter, Exhibit

P1 notice was issued to the petitioner, calling upon him to pay the dues. On

14.5.2020, the petitioner issued Exhibit R2(c) letter narrating the sequence

of events and detailing the manner in which payments came into his

account. He has stated that he is prepared to remit the amounts

considering the overall interests of the society and all that he wanted was

some time to effect payment. It is stated that the petitioner as the

President of the Society undertook in the Board meeting that the amounts

due from him shall be cleared on or before 30.6.2020. On the basis of the

above undertaking, Exhibit R2(e) was issued granting time to the petitioner

to effect payment. When the petitioner went back on his word, Exhibit

R2(f) was issued to the society to take appropriate steps to get back the

amount due from the President and the other members. It is further stated

that as per the provisions of the Act and Rules, it is the duty of the

petitioner in his capacity as the President to maintain the accounts and

registers in proper form and keep the cash balance and other assets.As the

President, he has a major role in the administration of the society. Instead

of protecting the interest of the society and acting as a role model, the

petitioner has misappropriated amounts and despite giving an undertaking

to pay the amount, has gone back on his word. It is stated that the

petitioner has committed default as defined under Rule 2(d) of the Rules

and hence, the order passed by the respondent disqualifying the petitioner

from the membership of the society is in order.

4. The additional 4th respondent has also filed a counter. It is

stated that the petitioner has suppressed material facts while filing the writ

petition and has disentitled himself from claiming any discretionary relief.

It is pointed out that though the petitioner has produced a copy of minutes

dated 7.7.2020 as Ext.P2, he has failed to produce Ext.R4(c) decision which

was taken on the same day. In Ext.R4(c), the petitioner has admitted in no

uncertain terms that the full responsibility for payment of the dues is on

him and no one else is responsible. However, for reasons best known to

the petitioner, this aspect has been suppressed. It is stated that the

allegation in the writ petition that the petitioner was not granted sufficient

notice and intimation is incorrect. Pursuant to orders passed by this Court

in the writ petition filed by the additional respondent, the 2nd respondent

had heard the petitioner and his statement was also recorded. According

to the additional respondent, the intention of the petitioner is to ensure

that no action is taken against him as a defaulter with a view to make sure

that he shall not be disqualified from contesting in the next ensuing

election. It is stated that after having admitted that money is due from him

to the society, that too, in the general body meeting and after admitting his

default by his communications addressed to the 2nd respondent, he cannot

be heard to contend that the principles of natural justice have been

violated. It is further stated that the proceedings have started much

earlier to Ext.P1 and the inquiries so far conducted has revealed that the

petitioner is guilty of serious irregularities and financial mismanagement.

5. I have considered the submissions advanced and have carefully

gone through the records.

6. Admittedly, the petitioner is the President of the 3rd respondent

society. The records produced before the is Court reveals that the

petitioner used to supply the milk to the society. He also used to make

purchases of cattle fodder and other feed from the consumer stores run by

the society. The bills are regularly issued to the members. The account

details from 2015-2016 till date have revealed that the petitioner has not

paid the amounts for the purchases made by him from the consumer

store. It was in the said circumstances that several persons including the

additional 4th respondent lodged complaints about the excess payment

made to the petitioner. Rule 47 of the Rules dealing with custody of cash,

securities, sales etc. of the Society states that the functioning of the

Society shall be subject to the overall control of the President. The

records produced before this Court reveals that the inspection under

Section 66 of the Act disclosed that a sum of Rs.7,09,912.94/- was due to

the society from the petitioner.

7. The main contention of the petitioner in this writ petition is that

he was not heard and that the quantum of his liability was not fixed in

accordance with law. I am afraid the said contention cannot be sustained.

The additional 4th respondent had filed W.P.(C) No.35251/2019 asserting

that his complaints were lying unattended by the official respondents and

this court, by judgment dated 20.12.2019, had directed the 2nd

respondent to take a decision after hearing all concerned. Ext.R2(b) is the

statement of the petitioner recorded by the 2nd respondent. In Ext.R2(c)

communication issued by the petitioner to the 2nd respondent, the

petitioner has stated that it was only much later that he realized that only

the first two loads were free and he was bound to make payments for the

subsequent loads. He has also stated in unequivocal terms that the

amounts towards cattle feed purchased by him was credited to his

account. He has also stated that he was trying to avail a loan to settle the

amounts due to the society. All that he wanted was some time to clear the

dues and he sought for delaying the proceedings under Rule 44 of the

Rules. Ext.R2(d) is the copy of the minutes dated 26.6.2020 of the Board

meeting wherein it is stated that the petitioner would clear the dues to the

bank on or before 30.6.2020. Ext.R4(c) is the copy of the minutes which is

dated 7.7.2020 wherein the petitioner has stated in no uncertain terms that

he acknowledges the entire dues to the society. Interestingly, the

petitioner has not chosen to disclose these pertinent aspects in the writ

petition filed by him and he has taken a contention that the order was

passed behind his back.

8. It is not denied that clause 5.2(i) and 6.1(vi) of the Bye-laws of

the society states in clear terms that the members are bound to pay the

dues without default and his/her failure is a reason for disqualification from

holding membership. Rule 44 of the Rules which provides for

disqualification of membership recognizes that a person can be

disqualified for violation of provisions of the bye-laws. In the case on

hand, the petitioner is in default to the society as defined under Rule 2(d)

of the Rules, 1999. Maybe, he is not a defaulter as in order to be

categorized as a defaulter, a decree has to be obtained. As discussed

earlier, the petitioner has not disputed his liability at any point of time prior

to the filing of this writ petition. As held by this Court in Surendran Nair

v. State of Kerala1 for attracting the disqualification under Rule 44, a

member need only be in default.

1 [2002 (3) KLT 268]

9. The contention of the petitioner that unless a surcharge order is

passed against him under Section 68 of the Act, he cannot be termed as a

person in default does not appeal to me. While dealing with Rule 44, all

that is required to be looked into is whether a member was 'in default' or

was a 'defaulter' as defined in Rule 2(d) and 2(e) of the Rules. Surcharge

proceedings on the other hand is initiated when in the course of an audit,

inquiry or inspection, it is found that a person who was entrusted with the

organization or management of such society or who is or has been an

officer or an employee of the society has made any payment contrary to

the Act, Rules or Bye-laws or is caused any loss or damage in the assets of

the society by breach of trust or willful negligence or mismanagement or

has misappropriated or fraudulently retained any money or has destroyed

or caused the destruction of the records. It is in the said circumstances

that the Registrar is empowered to conduct an enquiry and after giving an

opportunity to the person being heard, require him to repay or restore

money with interest and to pay compensation. Both these provisions

operate in two different planes. In that view of the matter, the petitioner

cannot be heard to contend that unless surcharge proceedings are initiated

and the proceedings are finalized, he cannot be termed as a person 'in

default'.

Having considered all the relevant facts, I am of the considered

opinion that the petitioner has not made out any case for interference.

This writ petition will stand dismissed.

Sd/-

RAJA VIJAYARAGHAVAN V JUDGE

ps/19/1/2021

APPENDIX PETITIONER'S/S EXHIBITS:

EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 15.04.2020 ISSUED BY 2ND RESPONDENT.

   EXHIBIT P2           TRUE COPY OF THE MINUTES OF THE MEETING
                        DATED 07.07.2020 OF THE MANAGING
                        COMMITTEE.

   EXHIBIT P3           TRUE COPY OF THE REPORT DATED 16.07.2020
                        SUBMITTED BY THE SUB COMMITTEE.

   EXHIBIT P4           TRUE COPY OF THE NOTICE DATED 24.09.2020
                        ISSUED BY 2ND RESPONDENT.

   EXHIBIT P5           TRUE COPY OF THE REPLY DATED 07.10.2020
                        SUBMITTED BY THE PETITIONER.

   EXHIBIT P6           TRUE COPY OF THE NOTICE DATED 14.10.2020
                        ISSUED BY 2ND RESPONDENT.

   EXHIBIT P7           TRUE COPY OF THE LETTER DATED 22.10.2020
                        SUBMITTED BY THE PETITIONER SEEKING
                        TIME.

   EXHIBIT P8           TRUE COPY OF THE LETTER DATED 22.10.2020
                        SUBMITTED BY THE PETITIONER FOR ISSUE OF
                        DOCUMENTS

   EXHIBIT P9           TRUE COPY OF THE ORDER DATED 22.10.2020
                        ISSUED BY THE 2ND RESPONDENT.

   RESPONDENT'S/S EXHIBITS:

   EXHIBIT R4(a):       TRUE COPY OF THE COMMUNICATION NO.B-
                        3237/2019 DATED 06/03/2020.

   EXHIBIT R4(b):       TRUE COPY OF THE LETTER NO.B-289/2020
                        DATED 28/05/2020.

   EXHIBIT R4(c):       TRUE COPY OF THE MINUTES OF THE MEETING
                        DATED 07/07/2020.

   EXHIBIT R2A          TRUE COPY OF THE LETTER DATED 06.03.2020




   EXHIBIT R2B          TRUE COPY OF THE STATMENT DATED
                        19.03.2020

   EXHIBIT R2C          TRUE COPY OF THE LETTER DATED 14.05.2020

   EXHIBIT R2D          TRUE COPY OF THE MINUTES DATED
                        26.06.2020

   EXHIBIT R2E          TRUE COPY OF THE LETTER DATED 28.05.2020

   EXHIBIT R2F          TRUE COPY OF THE LETTER DATED 23.06.2020