Kerala High Court
For Information Purpose Only vs Trivandrum Co-Operative ... on 9 March, 2021
IA/2/2021 IN WP(C) 4559/2021 1 / 11
IN THE HIGH COURT OF KERALA AT ERNAKULAM
Present:
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
Tuesday,the 9th day of March 2021/18th Phalguna, 1942
IA.No.2/2021 IN WP(C)No.4559/2021 (T)
For information purpose only
PETITIONERS/PETITIONERS
1. TRIVANDRUM CO-OPERATIVE DISTRICT WHOLESALE SOCIETY
LTD. NO. 4,SASTHAMANGALAM P.O, THIRUVANANTHAPURAM,
REPRESENTED BY ITS PRESIDENT.
2. THE BOARD OF DIRECTORS OF THE TRIVANDRUM
CO-OPERATIVE DISTRICT WHOLESALE SOCIETY LTD NO.4.
SASTHAMANGALAM P.O, THIRUVANANTHAPURAM,
REPRESENTED BY ITS PRESIDENT.
RESPONDENTS/RESPONDENTS
1. KERALA STATE CO-OPERATIVE ELECTION COMMISSION,
3RD FLOOR, CO-BANK TOWERS, VIKAS BHAVAN,
THIRUVANANTHAPURAM - 695033, REPRESENTED BY ITS SECRETARY.
2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (G),
D.P.I. JUNCTION, THIRUVANANTHAPURAM - 695014.
Application praying that in the circumstances stated in the affidavit filed
therewith the High Court be pleased to direct the 2nd respondent to appoint 3
members of the 2nd petitioner as the Administrative Committee of the 1st
petitioner on the expiry of the term of the 2nd petitioner.
This application coming on for orders upon perusing the application and the
affidavit filed in support thereof, and upon hearing the arguments of
M/S.B.S.SWATHI KUMAR, SARANGADHARAN P., ANITHA RAVINDRAN,
CHITHRA C.P. & HARISANKAR N. UNNI, Advocates for the petitioner in
IA/WP(C) SRI.LAKSHMI NARAYANAN, Advocate for R1 and of GOVERNMENT
PLEADER for R2, the court passed the following:
[p.t.o]
msv/2 10.3.21
RAJA VIJAYARAGHAVAN V, J
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I.A.No.2 of 2021
in
W.P.(C).No.4559 of 2021
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Dated this the 9th day of March, 2021
For information purpose only
ORDER
I have heard Sri.B.S.Swathi Kumar, the learned counsel appearing
for the petitioner, Sri.Lakshmi Narayan, the learned Standing Counsel
appearing for the 1st respondent and the learned Government Pleader.
2. Under challenge in the Writ Petition is Ext.P9 order passed
by the 1st respondent refusing to issue the Election Notification in view
of the interim order passed by this Court in W.P.(C).No.23908 of 2019.
3. It is contended that the term of the 2nd petitioner is due to
expire on 19.03.2021 and much prior to the expiry of the term, the 2nd
respondent had resolved by resolution dated 14.01.2021 to conduct the
election on 18.03.2021. When no action was taken the petitioners had
approached this Court and had filed W.P.(C).No.3329 of 2021. It was
during the pendency of the said Writ Petition that Ext.P9 order was
issued. It is contended that the Co-operative Societies must be
administered on democratic principles and the elected Board of
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Directors must be permitted to manage the affairs till a new Board of
Directors assumes the charge. According to the petitioners, since the
election could not be conducted before the expiry of the term, the
For information
Registrar purpose
may appoint an Administrator only
under Section 33 of the Act.
According to the learned counsel, none of the members of the 2nd
petitioner are facing any inquiry under Section 65 or 66 of the Kerala
Co-operative Societies Act. No proceedings for surcharge have been
initiated against the members of the Managing Committee thereby
casting any stigma on them. It is in the above background that the
instant application is filed seeking a direction to the 2nd respondent to
appoint three members of the 2nd petitioner as the Administrative
Committee of the 1st petitioner on the expiry of the term of the 2nd
petitioner.
4. The learned Government Pleader has strenuously opposed the
prayer. It is submitted that the interim prayer sought for by the
petitioners is unsustainable for the reason that this Court in exercise of
powers under Article 226 of the Constitution of India will not be
justified in interfering with the discretion which has been given to the
Registrar vis-a-vis the administration and working of the Societies. It is
further contended that the members of the present Managing
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Committee, whose term would expire cannot be permitted to continue
as Administrative Committee members which would only amount to
giving them power through the back door.
For information
5. I have considered the purpose
submissions. only
6. It appears that the petitioners have carried out certain
amendments to the byelaws of the 1st petitioner Society. The Registrar,
by Ext.P5 order has concluded that Clause (5) of the byelaw, as per
which other Societies having consumer wings were to be considered as
A class sharers was in the teeth of Section 2(d) Co-operative Societies
Act and Rule 15(3) of Rules. W.P.(C).No.23908 of 2019 was filed by a
certain V.Santhosh challenging the order of the Registrar limiting the
order to the extent of Societies having consumer wings. It was his
contention that central society could have had as its members only other
societies and declared as such by the Registrar or the Government. This
Court had passed an interim order and it was on its basis that the 1st
respondent had rejected the request of the petitioners to issue the
election notification. However, the pleadings are not complete in the
said writ petitions and the same is still pending consideration.
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7. I find that the Registrar has no case that the functioning of
the Society is riddled with issues as described in Section 33 (1) of the
Act or that any adverse inquiries or audit reports are pending against
For
them. information
It is also undisputed that nopurpose onlyhave been
proceedings for surcharge
initiated against the members of the Managing Committee of the Society
casting any stigma. In such a situation, the Registrar, in terms of
Section 33 (1)(b) of the Act, is required to constitute an ad hoc
committee to manage the affairs of the Co-operative Society till proper
elections are conducted and a new Managing Committee is put in place.
In this context, it would be apposite to take note of the observations of
a Division Bench of this Court in judgment dated 6.7.2017 in
W.A.No.1410 of 2017 wherein it was held as follows.
"6. The term of the Committee has completed. The
election ought to have been conducted, but because of the
pendency of amendment of the bye laws, it could not be so
done. The result is that in such a situation the Registrar, in
terms of Section 33(1)(b), is required to constitute an adhoc
committee to manage the affairs of the Co-operative Society till
proper elections are conducted and a new Managing Committee
is put in place. Thus, the appointment of ad hoc committee was
not on account of any maladministration or misfeasance on the
part of the Committee, but only on account of the correction of
the bye- laws. Otherwise, there is no default on the part of the
Co-operative Society. Thus, even though the Registrar has a
discretion to appoint an adhoc committee of maximum three
persons, one among them as a convenor, who need not be
member of the society to manage the affairs of the society, it
does not bar the members of the Co-operative Society itself.
Considering that the Co-operative Society is a democratic
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institution by and for the benefit of the members themselves, it
would ordinarily be desirable that members of the Co-operative
Society be considered, if not otherwise disqualified. Why should
a foreigner to the Co-operative Society be considered, if there
are competent persons in the Co-operative Society itself.
Discretion conferred by Section 33(1)(b) is not an arbitrary or a
fanciful discretion. It has to be exercised on some principles,
For information purpose only
one of which would be to avoid administration of a society by
non members, even on an adhoc basis, unless there are good
reasons to avoid the members."
8. Further, in Board of Directors of Koliyoor Service
Co-operative Bank Ltd., Tvm and Another v. Returning Officer,
Koliyoor Service Co-operative Bank Ltd. Tvm and Others [ 2015 (5)
KHC 450], this Court had occasion to hold that there is no taboo for a member
of the Managing Committee to be part of the Administrative Committee
appointed on failure to constitute a Managing Committee to succeed in time.
It was observed thus in paragraph Nos.6,7 and 8 of the judgment.
The second question to be considered is as to whether
the three members of the erstwhile managing committee could
be included in the administrative committee as raised in WP (C)
No. 23813/2015. A cursory look at S.32(1)(e) and S.33(1)(b) of
the Act is needed for answering this question and the provisions
germane are extracted herein below:
"32. Supersession of Committee.--
xxxx xxxx
xxxx
(e) Every member of the committee superseded
under this section shall from the date of order of such
supersession stand disqualified to contest in the election to or to
be nominated to the committee of any Society or to be appointed
as an administrator in any society for two consecutive terms.
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xxxx xxxx
xxxx
33. Appointment of new committee or administrator on
failure to constitute committee, etc.-- (1) Where the term of
office of a committee has expired and a new committee has not
been constituted, or where a no - confidence motion is passed by
For information purpose only
the general body against the existing committee or where the
existing committee resigns enbloc or where vacancies occur in
the committee either by resignation or otherwise and the number
of remaining members cannot constitute the quorum for the
meeting of the committee, or where the committee fails to hold
its regular meeting consecutively for six months or where the
Registrar is satisfied.
xxxx xxxx
xxxx
(b) that a new committee is prevented from
entering upon office or a new committee fails to enter upon
office, on the date on which the term of office of the existing
committee expires, the Registrar may, either suo motu or on
application of any member of the society, after intimating the
Circle Co - operative Union, appoint one Administrator or an
administrative committee consisting of not more than three
individuals, who need not be member of the society, one among
them as convener to manage the affairs of the society, for a
period not exceeding six months as may be specified in the
order, which period may, at the discretion of the Registrar and
for reasons to be recorded in writing, be extended, from time to
time, so, however, that the aggregate period shall not, in any
case, exceed one year or till a new committee enters upon office,
whichever is earlier." (emphasis supplied)
S.32 of the Act envisages the appointment of an
administrator or administrative committee to a Society where the
term of the managing committee is yet to expire and has instead
been superseded. S.33 of the Act envisages the appointment of
an administrator or administrative committee to a Society on
failure to constitute a managing committee in time. Only when
the managing committee is superseded in terms of S.32 of the
Act does any of its members incur a disqualification to be
included in the administrative committee soon after. The
disqualification lingers on for two consecutive terms under
S.32(1)(e) of the Act and such member of the managing
committee superseded cannot aspire to be in the administrative
committee till such time. But there is no such embargo for any
member of the managing committee to be included in the
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administrative committee appointed in terms of S.33(1)(b) of the
Act. A wide discretion is vested in the Registrar to appoint an
administrator or an administrative committee consisting of not
more than three individuals under S.33(1)(b) of the Act. The
Statute is specific that the three members 'need not be' a
member of the Society implying thereby that any member
whomsoever could be included in the administrative committee.
For information purpose only
There is no taboo for a member of the managing committee to
be part of the administrative committee appointed on failure to
constitute a managing committee to succeed in time.
7. Much was argued by the petitioner in WP (C) No.
23831/2015 on the basis of the decision in Joint Registrar v.
Chatha, 1999 (3) KLT 139 wherein the following observations
can be found:
"In view of the above rulings, we are of the view that the
members of the present managing committee, whose term has
already expired, cannot be permitted to continue as
administrative committee which would only amount to giving
them power through back door."
The 'rulings' relied on in the above decision are none
other than Kottappady Service Co - op. Bank's case, (1994 (2)
KLJ 795 (DB) and Kaithari Neithu Sahakarana Sangam's case,
(1999 (1) KLJ 885) (DB) cited supra. The said decisions dealt
only with the question as to whether a managing committee of a
Society could be permitted to continue in office after the expiry
of its term when the Act is silent. The question whether the
administrative committee appointed in terms of S.33 of the Act
could take in members of the erstwhile managing committee was
never considered. The omnibus observation in Chatha's case hat
the members of the managing committee cannot continue in
administrative committee has no precedential support. The same
is obviously made without comprehending the ratio decidendi in
Kottappady Service Co - op. Bank's case and Kaithari Neithu
Sahakarana Sangam's case relied on. The distinction between
S.32(1)(e) and S.33(1)(b) of the Act in the matter of
disqualification for members of the managing committee has
been overlooked. I have no hesitation to hold that the decision in
Chatha's case does not lay down the correct law and is without
reference to the statutory provisions applicable. It can safely be
declared that the decision in Chatha's case is per incurium (See:
A. R. Antulay v. R. S. Nayak (AIR 1988 SC 1531) and Govt. of
Andhra Pradesh v. B. Satyanarayana Rao, (AIR 2000 SC 1729).
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8. It is the admitted case of either parties that no
proceedings for surcharge have hitherto been initiated against
the members of the erstwhile managing committee of the Society
casting any stigma. This Court had cautioned in its interim order
in WP (C) No. 22460/2015 that no members against whom
proceedings for surcharge are pending shall be included in the
administrative committee. The discretion exercised by the
For information purpose only
Registrar in appointing the three members of the erstwhile
managing committee of the Society in the administrative
committee later cannot be faulted with. Xxxxxxxxxx"
9. The Co-operative Society registered under the Act is bound
to function as a democratic institution and conduct its affairs based on
democratic principles. Democratic member control is one of the main
co-operative principles as enunciated under Schedule 2 framed under
Section 2 (eccc) of the Act. As observed by the Division Bench above,
considering that the Co-operative Society as a democratic institution by
and for the benefit of the members themselves, it would ordinarily be
desirable that members of the Co-operative Society be considered, if not
otherwise disqualified. Why should a foreigner to the Co-operative Society
be considered, if there are competent persons in the Co-operative Society
itself, particularly in view of the contextual facts in the instant case.
10. After considering the entire facts in all its perspectives, as
an interim measure, I direct the 2nd respondent to explore the possibility
of constituting an Administrative Committee comprising of the present
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Managing Committee to manage the affairs of the Trivandrum
Co-operative District Wholesale Society Ltd. No.4 in the event of the 2nd
respondent choosing to exercise his discretion under Section 33 (1) of the
For information
Act. This is however subject to purpose
the condition that only
no inquiry under
Section 65 or 66 of the Act is proceeding against the Society and further
no proceedings for surcharge are pending against the members of the
Managing Committee who are to be included in the Administrative
Committee when formed.
The learned Government Pleader shall communicate the order to
respondent No.2 with immediate effect.
Sd/-
RAJA VIJAYARAGHAVAN V
JUDGE
sru
/true copy/ Sd/- ASSISTANT REGISTRAR
KLHC010125362021 11 / 11
EXHIBIT P9 - TRUE COPY OF THE ORDER NO.E(2)703/2021/SCEC DATED
15.02.2021 OF THE 1ST RESPONDENT.
For information purpose only
