Kerala High Court
The Managing Committee vs The Joint Registrar Of Co ... on 31 May, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
WA NO. 1021 OF 2020
AGAINST THE JUDGMENT IN WP(C)13602/2020 DTD. 4.8.2020
OF HIGH COURT OF KERALA
APPELLANT/3RD RESPONDENT:
0
E.S.BOSE,S/O.SKARIA, RESIDING AT ERAKUZHAYIL,
SOUTH KATHIPARA P.O., IDUKKI.
BY ADVS.B.S.SWATHI KUMAR
SMT.ANITHA RAVINDRAN
SRI.HARISANKAR N UNNI
RESPONDENTS/PETITIONER/RESPONDENTS 1 & 2:
1 THE MANAGING COMMITTEE (UNDER ORDER OF
SUSPENSION),THE VELLATHOOVAL SERVICE CO-OPERATIVE
BANK LTD.NO.K.71, VELLATHOOVAL P.O., IDUKKI
DISTRICT - 685563 REPRESENTED BY ITS PRESIDENT.
2 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL)OFFICE OF THE JOINT REGISTRAR OF CO-
OPERATIVE SOCIETIES (GENERAL), PAINAVU, IDUKKI
DISTRICT - 685 603.
3 THE PART TIME ADMINISTRATOR/ASSISTANT REGISTRAR OF
CO-OPERATIVE SOCIETIES (GENERAL)
IDUKKI, DEVIKOLAM, IDUKKI DISTRICT - 685 613 THE
VELLATHOOVAL SERVICE CO-OPERATIVE BANK
LTD.NO.K.71, VELLATHOOVAL P.O., IDUKKI DISTRICT -
685 563.
R1 BY ADVS.SRI.GEORGE POONTHOTTAM (SR.)
SMT.NISHA GEORGE
R2 & R3 BY SPL.G.P.SRI.MOHAMAD HASHIM
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 31.05.2021,
ALONG WITH WA.1031/2020 & 1060/2020, THE COURT ON THE SAME
DAY DELIVERED THE FOLLOWING:
W.A.Nos.1021, 1031 & 1060 of 2020 2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
WA NO. 1031 OF 2020
AGAINST THE JUDGMENT IN WP(C) 13602/2020 DTD. 4.8.2020
OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
THE MANAGING COMMITTEE,
0
THE VELLATHOOVAL SERVICE CO-OPERATIVE BANK LTD.
NO.K.71, VELLATHOOVAL P.O., IDUKKI DISTRICT-
685563, REPRESENTED BY ITS PRESIDENT.
BY ADVS.GEORGE POONTHOTTAM (SR.)
SMT.NISHA GEORGE
RESPONDENTS/RESPONDENTS:
1 THE JOINT REGISTRAR OF CO OPERATIVE SOCIETIES
(GENERAL)
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), PAINAVU, IDUKKI DISTRICT-
685603.
2 THE PART TIME ADMINISTRATOR/ASSISTANT REGISTRAR OF
CO-OPERATIVE SOCIETIES (GENERAL), IDUKKI,
DEVIKOLAM, IDUKKI DISTRICT-685613, THE
VELLATHOOVAL SERVICE CO-OPERATIVE BANK
LTD.NO.K.71, VELLATHOOVAL P.O., IDUKKI DISTRICT-
685563.
W.A.Nos.1021, 1031 & 1060 of 2020 3
3 E.S.BOSE,S/O.SKARIA, RESIDING AT ERAKUZHAYIL,
SOUTH KATHIPARA P.O., IDUKKI DISTRICT-685562.
R3 BY ADV SRI.B.S.SWATHI KUMAR
R1 & R2 BY SPL.G.P.SRI.MOHAMAD HASHIM
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 31.05.2021,
ALONG WITH WA.1021/2020 & 1060/2020, THE COURT ON THE SAME
DAY DELIVERED THE FOLLOWING:
W.A.Nos.1021, 1031 & 1060 of 2020 4
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
&
THE HONOURABLE MR. JUSTICE K.HARIPAL
MONDAY, THE 31ST DAY OF MAY 2021 / 10TH JYAISHTA, 1943
WA NO. 1060 OF 2020
AGAINST THE JUDGMENT IN WP(C)13602/2020 DATED 4.8.2020
OF HIGH COURT OF KERALA
APPELLANT/1ST RESPONDENT:
THE JOINT REGISTRAR OF CO OPERATIVE SOCIETIES
0
(GENERAL), OFFICE OF THE JOINT REGISTRAR OF CO-
OPERATIVE SOCIETIES(GENERAL), PAINAVU, IDUKKI
DISTRICT, PIN- 685603.
BY SPL.GOVERNMENT PLEADER SRI.MOHAMAD HASHIM
RESPONDENTS/PETITIONER & RESPONDENTS 2 & ADDL. RESPONDENT 3:
1 THE MANAGING COMMITTEE, (UNDER ORDER OF
SUSPENSION)
THE VELLATHOOVAL SERVICE CO-OPERATIVE BANK LTD
NO.K.71, VELLATHOOVAL PO, IDUKKI DISTRICT, 685563,
REPRESENTED BY ITS PRESIDENT.
2 THE PART-TIME ADMINISTRATOR/ASSISTANT REGISTRAR OF
CO-OPERATIVE SOCIETIES,(GENERAL), IDUKKI,
DEVIKULAM, IDUKKI DISTRICT -685613, THE
VELLATHOOVAL SERVICE CO-OPERATIVE BANK LTD
NO.K.71, VELLATHOOVAL P O, IDUKKI DISTRICT-685563.
W.A.Nos.1021, 1031 & 1060 of 2020 5
3 ADDL.R.3, E.S.BOSE
S/O. SKARIA, RESIDING AT ERAKUZHAYIL, SOUTH
KATHIPARA P O, IDUKKI-685562.
BY ADVS.SRI.GEORGE POONTHOTTAM (SR.)
SRI.B.S.SWATHI KUMAR
SMT.NISHA GEORGE
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 31.05.2021,
ALONG WITH WA.1021/2020 & 1031/2020, THE COURT ON THE SAME
DAY DELIVERED THE FOLLOWING:
W.A.Nos.1021, 1031 & 1060 of 2020 6
"C.R."
JUDGMENT
Ravikumar, J.
All the captioned appeals arise from the judgment dated
4.8.2020 in W.P.(C)No.13602 of 2020. The first among them was filed
by Member No.8532 of Vellathooval Service Co-op. Bank Ltd.No.K.71
(for short 'the Bank') who got impleaded in the writ petition as
additional 3rd respondent. The second one among them was filed by the
petitioner in the said writ petition viz., The Managing Committee of the
Bank which was placed under suspension for a period of six months
from 3.7.2020, the date of the impugned Ext.P7 order bearing
No.CRP.7051/19. The last among the appeals was filed by the first
respondent in the writ petition viz., the Joint Registrar of Co-operative
Societies (General), Painavu, Idukki District. The writ petitioner viz.,
the appellant in W.A.No.1031 of 2020 filed the above mentioned writ
petition seeking the following reliefs:-
i. Issue a writ of certiorari calling for the records leading to
Exhibit P7 and to quash the same.
ii. Issue a writ declaring that Exhibit-P7 is the end result of
colourable excercise of power and therefore bad in law;
iii. Issue an order declaring that the Exhibit P7 passed without
notice, consultation with the financial bank and hearing is
illegal and therefore bad in law.
W.A.Nos.1021, 1031 & 1060 of 2020 7
iv. Issue a writ declaring that ExhibitP7 is an abuse of process
so as to over reach the contents of Exhibit-P6 judgment of
this Honourable Court and thus the action of the 1 st
respondent would amount to colourable exercise of power."
2. Before adverting to the impugned judgment of the
learned Single Judge it is only appropriate to refer to the factual
scenario that constrained the appellant in W.A.No.1031 of 2020 to file
W.P.(C)No.13602 of 2020, succinctly. The appellant in W.A.No.1031 of
2020 viz., the writ petitioner is the Managing Committee of the Bank
which was suspended under the order impugned in the writ petition
viz., Ext.P7 dated 3.7.2020. The Board of Directors of the Bank was
elected to office on 30.12.2018 and they assumed charge on 1.1.2019.
In terms of Section 28 of the Kerala Co-operative Societies Act, 1969
(for short 'KCS Act'), under normal circumstances, the term of the said
committee would expire only on 31.12.2024. Based on various
complaints an inquiry was conducted under Section 65 of the KCS Act
against the previous committee of the Bank. However, before any
action for supersession of the said committee was initiated its term got
expired and subsequently, the present committee under suspension
assumed charge. Thereupon, one P.K.Ibrahimkutty and 35 others filed
a complaint dated 11.11.2019 and consequently, the first respondent in
the writ petition, the Joint Registrar of Co-operative Societies (General),
Painavu, Idukki (Appellant in W.A.No.1060 of 2020) directed the
Assistant Registrar (General), Devikulam to conduct a preliminary
inquiry and to submit a report. Consequently, the Assistant Registrar
submitted a preliminary report before the Joint Registrar. Upon its
receipt, holding the view that continuance of the present Managing
Committee that assumed office on 1.1.2019 would hamper the smooth
conduct of the inquiry under Section 65 of the KCS Act and therefore, it
is expedient to suspend the said committee to augment smooth conduct
of the inquiry after dispensing with issuance of notice under Section
32(1) of the KCS Act, the present Managing Committee was suspended
for a period of six months from 3.7.2020 as per the impugned Ext.P7
order dated 3.7.2020. In and vide the said order simultaneous with the
suspension of the Managing Committee the Assistant Registrar
(General), Idukki was appointed as Administrator of the Bank. It is in
the aforesaid circumstances that raising various factual and legal
contentions W.P.(C)No.13602 of 2020 was filed.
3. After considering the rival contentions the learned Single
Judge as per the impugned judgment set aside Ext.P7 order suspending
the Committee of the Bank and issued the following further directions:-
"(B) The petitioner as well as 1st respondent shall treat Exhibit
W.A.Nos.1021, 1031 & 1060 of 2020 9
P7 as a notice under Section 32(1) of the Act. The
petitioner shall file their objections within two weeks from
today. The first respondent shall consider the objections
and after complying with the procedure contemplated
under Section 32 of the Act and in strict compliance with
the decision of the Apex Court in Sanjay Nagayach
(supra) shall pass appropriate orders.
(C) The petitioner shall be put back in power forthwith and
during the period of the inquiry, they shall not take any
policy decisions affecting the society, but shall confine
themselves to carrying out the day-to-day activities.
(D) The petitioner shall fully cooperate with the inquiry and
shall diligently comply with Section 65(2) of the Act to
facilitate the completion of the inquiry."
It is against the judgment on the aforesaid lines that the writ petitioner,
the third respondent and the first respondent filed the above appeals.
4. Heard the learned counsel on both sides. For the sake of
convenience, hereafter in this judgment the parties are referred to in
accordance with their status in W.P.(C)No.13602 of 2020 unless
otherwise specifically mentioned.
5. The petitioner viz., the Managing Committee under
suspension filed W.A.No.1031 of 2020 challenging the judgment passed
thereon dated 4.8.2020 to the extent it was directed thereunder to
treat Ext.P7 as a notice under Section 32(1) of the KCS Act; and the
petitioner/appellant was directed to file objections to the said notice,
within the time stipulated thereunder and the first respondent - Joint
Registrar of Co-operative Societies was directed to consider the
W.A.Nos.1021, 1031 & 1060 of 2020 10
objection and pass appropriate orders thereon after complying with the
procedure contemplated under Section 32 of the Act. The appellants in
the other two appeals are aggrieved by the quashment of Ext.P7 order
suspending the Managing Committee of the Bank and hence, they pray
for setting aside the judgment of the learned Single Judge in W.P.
(C)No.13602 of 2020. According to the appellant-writ petitioner, the
order of suspension issued under Ext.P7 is contrary to the mandate
under Section 32(3) of the KCS Act. The appellant would further
contend that since the learned Single Judge virtually accepted the
contention that the allegations are general in nature and linked mostly
and mainly to the actions on the part of the previous committee, in the
light of the decision in State of Madhyapradesh and others v.
Sanjay Nagayach and others [(2013) 7 SCC 25] and after setting
aside Ext.P7, the further directions to treat Ext.P7 as notice under
Section 32(1) of the KCS Act and to the first respondent to consider the
objections, permitted to be filed within two weeks from 4.8.2020, in
terms of the procedures under Section 32 of the KCS Act ought not to
have been issued. So also, it is contended that after ordering to restore
the committee in power the learned Single Judge ought not to have
restrained the Committee viz., the appellant from taking policy
decisions affecting the society and ordered to confine the administration
W.A.Nos.1021, 1031 & 1060 of 2020 11
only to carry out the day to-day affairs. According to the appellant-writ
petitioner, there is no distinction between an order of 'supersession'
and an order of 'suspension' as their effect is one and the same. The
appellant would also refute the allegation that the inquiry officer was
not provided with the facilities to conduct the inquiry under Section 65
of the KCS Act. That apart, it is contended that only after completing
the inquiry under Section 65, evaluating the report independently,
issuing directions to rectify the defects, if any, disclosed in such inquiry
and upon failure of the Committee to rectify the defects that
proceedings under the KCS Act could be initiated. At any rate,
according to them, there was absolutely no reason to suspend the
Managing Committee of the Bank assigning the reason that continuance
of the Committee would obstruct the smooth conduct of the inquiry
under Section 65 of the KCS Act.
6. Per contra the appellants in the other appeals, who were
respondents in the aforementioned writ petition, would contend that the
reasons specifically mentioned in Ext.P7 were sufficient to suspend the
committee of the Bank and there is no illegality in waiving notice
contemplated under Section 32(3) of KCS Act as it is legally permissible
in case in the opinion of the Registrar it is not reasonably practicable to
give an opportunity to the committee to state its objections and also to
W.A.Nos.1021, 1031 & 1060 of 2020 12
consult the Unions and the financial banks. The first respondent viz.,
the appellant in W.A.No.1060 of 2020 would contend that the learned
Single Judge ought to have considered the fact that pursuant to the 97 th
Amendment to the Constitution of India, Part IXB was inserted and
Article 243ZL permits the administrative/supervisory authorities to
supersede and suspend the Board. We may hasten to consider whether
the said contention based on Article 243ZL is now available to the first
respondent/the appellant in W.A.No.1060/2020? The High Court of
Gujarat by judgment dated 22.4.2013 in W.P.(PIL)166/2012 declared
that the Constitutional Ninety Seventh Amendment Act inserting Part
IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of
India for not taking recourse to Article 368(2) of the Constitution
providing for ratification by the majority of the State Legislatures.
Against the said judgment S.L.P.Nos.25266-25267 are filed and they
are pending before the Hon'ble Supreme Court. In the said
circumstances, the question is whether what is the impact of the
declaration of insertion of Part IXB containing Articles 243ZH to 243ZT
by the Constitution (Ninety Seventh Amendment) Act, 2011, as ultra
vires the Constitution of India, by the High Court of Gujarat. In that
regard, the decision of the Hon'ble Apex Court in Kusum Ingots and
Alloys Ltd. v. Union of India and Another reported in (2004) 6
W.A.Nos.1021, 1031 & 1060 of 2020 13
SCC 254 assumes relevance. Paragraph 22 of the said decision which
is relevant in regard to the aforesaid question, reads thus:-
"The Court must have the requisite territorial
jurisdiction. An order passed on a writ petition
questioning the constitutionality of a Parliamentary Act,
whether interim or final keeping in view the provision
contained in clause (2) of Article 226 of the Constitution
of India, will have effect throughout the territory of
India subject, of course, to the applicability of the Act."
A Single Bench of this Court in Benny Peruvanthanam v. Kerala
State Co-operative Consumers Federation Ltd. reported in 2013
(4) KLT 987 considered the question whether the judgment dated
22.4.2013 referred above, of the Gujarat High Court holding the
insertion of Part IXB containing Articles 243ZH to 243ZT by the
Constitution (Ninety Seventh Amendment) Act, 2011, as ultra vires the
Constitution of India, will apply on other territories of India, obviously in
the light of the dictum laid down by the Apex Court in Kusum Ingots
and Alloys Ltd., case (supra). On such consideration it was held that
the said decision is having application throughout India. A Full Bench of
this Court in Pradeep v. Kerala State Co-operative Election
Commission [2016(3) KLT 561 (F.B)] held:-
"Any High Court is having jurisdiction to declare a law as
unconstitutional, even beyond its territories and it will be
applicable throughout the country."
In Kusum Ingots and Alloys Ltd. case (supra), the Apex Court
W.A.Nos.1021, 1031 & 1060 of 2020 14
considered the scope of Article 226(2) of the Constitution of India and
held that the order passed by any Court in writ petition questioning
constitutionality of the Parliamentary Act (whether the order be interim
or final), will have effect throughout the territory of India, subject to
the applicability of the Act. Applying the dictum laid down in Kusum
Ingots and Alloys Ltd. case (supra), the Full Bench decision in
Pradeep's case (supra), to the judgment dated 22.4.2013 of the
Gujarat High Court it can only be held that the decision of the Gujarat
High Court in W.P.(PIL)No.166 of 2012 is having application throughout
India, subject to the applicability of the Act and outcome of the verdict
to be passed by the Apex Court in SLP Nos.25266-25267/2013 now
pending before the Apex Court. In short, the first respondent viz., the
appellant in W.A.No.1060/2020 cannot now raise contention founded on
Article 243ZL to support the contention that the Registrar could
supersede and suspend the Managing Committee of the Bank in
question.
7. Now, we will refer to the other contentions of the first
respondent. It is the contention of the first respondent that Section 32
of the KCS Act empowers the Registrar to supersede or suspend, a
committee of a society. It is the further contention of the first
respondent that the words 'supersession' and 'suspension' are not
W.A.Nos.1021, 1031 & 1060 of 2020 15
defined in the KCS Act and their meanings are entirely different and
that it is not necessary to hear the committee before issuing an order of
suspension. To buttress the said contention the first respondent relied
on the decision of this Court in Hameed Kutty v. Joint Registrar of
Co-operative Societies (2017 (1) KLT 511) which was confirmed by
a Division Bench in Hameed Kutty v. Joint Registrar of Co-op.
Societies (General) (2018 (3) KLT 149). According to the first
respondent, the decision in Sanjay Nagayach case (supra) is totally
inapplicable to the instant case and it applies only in a case of
supersession of a Committee under Section 32(1) of the KCS Act.
Further, the first respondent raised grounds (G) and (H), as follows, to
contend that the learned Single Judge had gone wrong in quashing
Ext.P7 order of suspension of the appellant-Managing Committee:
"(G) In fact, managing committee in office for the year
2013-2018 was served with a notice dated
01.02.2018 under Section 32 of the Kerala Co-
operative Societies Act, 1969 and the said notice is
challenged by the managing committee then in office
before this Hon'ble Court in W.P.(C)No.5739/2018.
The above Writ Petition was filed on 18.02.2018.
Notice dated 01.02.2018 was issued based on section
66 Inspection Report dated 03.10.2017 and
inspection was ordered on 08.03.2017. When the
above case came up for hearing on 21.02.2018, this
Hon'ble Court directed the appellant to defer Section
32 Proceedings. The pendency of the Writ Petition
and operation of the interim order resulted in the
delay of completing Section 32 proceedings. Finally,
W.A.Nos.1021, 1031 & 1060 of 2020 16
this Hon'ble Court vide judgment dated 05.12.2018
had disposed of the said writ petition holding that the
petitioners failed to make out a case warranting
interference on Exhibit P3 show cause notice and
further directed the Joint Registrar (General) of Co-
operative Societies to consider the objection raised
by the managing committee and pass appropriate
orders in accordance with law. However, the period
of the said committee expired on 29.12.2019 and the
new managing committee assumed office on
01.01.2019. Therefore, the authority was unable to
proceed further against the former managing
committee.
(H) The learned Single Judge failed to appreciate the act
of the petitioner in not keeping the records and
books properly and that if they are put back in office
they will be able to whitewash the illegalities and
tamper with the records disabling a proper inquiry to
bring out the truth. It is pointed out that the learned
Single Judge has taken into account only Exhibit P2
report dated 18.12.2019 and not Annexure R1(a)
interim report dated `15.06.2020 relied on while
passing Exhibit-P7 order as can be seen from
reference No.5 therein. So, it cannot be said that no
action can be taken against the petitioner who
assumed charge on 01.01.2019 is not sustainable."
8. The third respondent who is the appellant in
W.A.No.1021 of 2020 virtually, endorsed the contentions of the first
respondent. Additionally, he would contend, relying on the decision in
Gurcharan Singh v. State of Haryana and others reported in AIR
1979 Punjab & Haryana 61 that suspension and supersession are
entirely different and suspension would not invite any consequence
whereas supersession would invite disqualification for two terms.
W.A.Nos.1021, 1031 & 1060 of 2020 17
9. We will firstly consider the common contention of
respondents 1 and 3 and the contra-contention of the appellant-writ
petitioner in regard to the nature and consequences of 'supersession'
and 'suspension', of a committee of a society. The appellant-writ
petitioner sought for quashment of Ext.P7 in W.P.(C)No.13602 of 2020
and obviously, as per the impugned judgment it was quashed. A
scanning of the same would reveal that it was an order suspending the
committee of the Bank for a period of six months holding that the
continuance of the committee in power would hamper the smooth
conduct of the inquiry under Section 65 of the KCS Act. Before
adverting to the rival contentions in regard to the nature and
consequences of an order of supersession and an order of suspension
as mentioned above, we will refer to the impugned judgment to see
whether the contention of the respondents that the impugned judgment
is founded on the misconception that Ext.P7 is an order of supersession
is correct or not. The opening sentence and paragraph 18 of the
impugned judgment would make it appear that the aforesaid contention
of the respondents is wholly correct. They read thus:
"Questions posed for consideration in this writ
petition filed by the Managing Committee of the
Vellathooval Service Co-operative Bank Ltd.No.K701G
('Bank' for short) is whether the order of
supersession of the Managing Committee invoking the
exceptional powers of the Registrar under Section
32(3) of the Kerala Co-operative Societies Act, 1969
('the Act' for short) is justified in the facts and
circumstances."
That apart, in paragraph 18 it is stated thus:-
"Since the impugned order has resulted in the
supersession of a society which was elected on
democratic principles, this Court is required to
minutely scrutinise the order and to decide whether
extraordinary action on the part of the 1 st respondent
was warranted in the facts and circumstances.....
...........................................................................
.... The scheme of the Act is that the Societies are
required to be managed by elected representatives
and that being the mode of functioning as envisaged,
the very drastic step of superseding the Managing
Committee under Section 32 of the Act can be
resorted to only in exceptional circumstances, that
too only in strict compliance with the mandatory
procedure prescribed in Section 32 of the Act. The
significance of insisting with calling for objection and
consultation is that if a Managing Committee is
superseded under Section 32 of the Act, it will result
in disqualification of every member of the Managing
Committee in the matter of contesting future elections
to the Managing Committee for two consecutive
terms."
10. The further recitals in paragraph 18 also would give
such an impression as contended by the respondents. It is also true
that the learned Single Judge has relied on decisions of this Court in
Rajagopalan Nair v. State of Kerala (1995 (2) KLT 184); in
Vallapuzha Service Cooperative Bank Ltd. v. Joint Registrar
(2009 (3) KLT 838); in Rajeevan T.V. And others v.
K.A.Sukumaran and Others (2013 (3) KHC 46); and also the
decision of the Hon'ble Apex Court in State of Madhya Pradesh and
others v. Sanjay Nagayach and others [(2013) 7 SCC 25] which
are all rendered on the subject of supersession of the committee of a
society. However, the second sentence in the opening paragraph as
also paragraph 19, of the impugned judgment would undoubtedly go to
show that the learned Single Judge has duly taken note of the fact that
Ext.P7 was an order suspending the committee of the society in
question for a period of six months, by the Registrar. They read thus:-
"The incidental question is whether the discretion
exercised by the Registrar to proceed with the
suspension of the Managing Committee without
providing an opportunity to the Committee to state its
objections and without consulting the Unions and
financing Banks is arbitrary and liable to be interfered
with by this Court.
............................................................................
......
19. In the light of the above principles, if Ext.P7 order
is examined, it would be apparent that the Committee
which assumed office on 1.1.2019 was suspended for
a period of 6 months mainly for the laches of the
previous Managing Committee. This fact is clearly
evident from Ext.P2 report which is dated 18.12.2019.
The Registrar chose to suspend the petitioner without
complying with the mandatory formalities like calling
for objection and consultation as according to him, the
Society would manage to interfere with the inquiry
which is being conducted under Section 65 of the Act."
W.A.Nos.1021, 1031 & 1060 of 2020 20
11. It is a fact that the learned Single Judge did not hold in
clear terms as to whether Ext.P7 is an order of suspension or whether it
is an order of supersession, of the Committee, as can be seen from the
afore-extracted portions from the impugned judgment. The latter part
of paragraph 19 that "The Registrar chose to suspend the petitioner
without complying with the mandatory formalities like calling for
objection and consultation as according to him, the Society would
manage to interfere with the inquiry which is being conducted under
Section 65 of the Act" and the action in placing reliance on the
aforesaid decisions would suggest that the learned Single Judge has
actually treated Ext.P7 as order of suspension and not as an order of
supersession though the afore-mentioned decisions were relied on to
quash Ext.P7 and to issue further directions, referred to hereinbefore.
12. Now, we will revert to the contention of the appellant -
writ petitioner that there is no distinction between an order of
suspension and order of supersession and the contra-contention of the
respondents that they are entirely different. We have already referred
to the decisions relied on by the respondents to resist the said
contention of the petitioner. According to us, the word "suspension" is
not a synonym to the word "supersession" and the act involved and the
consequences therefor, in respect of suspension and supersession are
W.A.Nos.1021, 1031 & 1060 of 2020 21
different and distinct though both when occasioned in the case of a
democratically elected body like the Managing Committee of a Co-
operative Society/Co-operative Bank got serious consequences. In the
decision in State of Orissa v. Titaghur Paper Mills Co. Ltd. reported
in AIR 1985 SC 1293 the meaning of the word 'superseded' is
explained by the Apex Court. In the shorter Oxford English Dictionary,
3rd Edition, Page 2084 the word 'supersession' is defined as "the action
of superseding or condition of being superseded" and it was taken note
of by the Apex Court. Further in paragraph 66 therein it is stated:-
"............ Some of the meanings given to the word
'supersede' on the same page in that Dictionary which
are relevant for our purpose are "to put a stop to; to
render superfluous or unnecessary; to make of no
effect; to annul; to take the place of (something set
aside or abandoned); to succeed to the place occupier
by; to supply the place of a thing." Webster's Third
New International Dictionary at page 2296 defines the
word "supersession" as "the state of being superseded:
removal and replacement."
The meaning of the word 'suspension' and its consequences were
considered by a Full Bench of Gujarat High Court in the decision in
Nasirkhan Nivas Khan Pathan v. District Development Officer,
Bharuch and others reported in AIR 2002 Gujarat 143. Paragraphs
17, 18 and 19 of the said decision read thus:-
"17. In absence of any statutory definition of the
expression "suspension", we have to resort to the
W.A.Nos.1021, 1031 & 1060 of 2020 22
Dictionary meaning. Dictionary meaning of
expression "suspend" is to debar, usually for a time,
from any privilege from the execution of an office or
from the enjoyment of such a position or status and
resultant benefit of the office. In short, it is a
temporary deprivation of office and its privileges. It
is true that by reason of suspension, the person
suspended does not lose his office, nor his status or
position. He does not suffer any de-gradation in one
sense. However, he ceases to exercise the powers
and to discharge his duties of the office temporarily.
His powers, functions and privileges remain in
abeyance.
18. The word "suspension" according to latest Oxford
Dictionary means, "action of debarring or state of
being debarred, especially, for a time, from a function
or privilege; temporary deprivation of one's office or
position, or again, state of being temporarily kept
from doing or deprived of something. The meaning of
the word 'suspend', therefore, as per the Dictionary
meaning would mean "debar usually for a time from
the exercise of function or enjoyment of privilege,
specially to deprive temporarily of one's office or
again to interdict. The object of suspension is to
remove any person holding the elected office or public
office temporarily from his sphere of enjoyment of
status, position, power and privilege.
19. However, it must be noted that suspension brings
to bear on the elected person or holder of the public
office by election, serious consequences, sometimes
more severe penalties prescribed and at times
disasterous impact on fair name and good reputation
obtained and acquired in course of public life. An
elected person enjoying his office on the strength of
the verdict of the public in his constituency,
obviously, would require serious and strict
consideration and interpretation. The authority
empowered to suspend is obliged to exercise the
power of suspension of a public office holder by
W.A.Nos.1021, 1031 & 1060 of 2020 23
election, after full application of mind and within the
permissible legal parameters or statutory ambit. We
are taken through the provisions of S.59 of the
Gujarat Panjayats Act, 1993. We have, also closely,
examined and scrutinised the provisions of S.59. It
empowers the District Development Officer to
suspend from office the Sarpanch or Up-Sarpanch of
a village Panchayat against whom any criminal
proceedings in respect of an offence involving moral
turpitude have been instituted. Prima facie, the use
of expression "have been instituted" in literal sense
may mean to, before or after the election of the
holder of the public office. Nonetheless, this prima
facie, literal interpretation relied on by the learned
Advocate for the respondents is required to be,
seriously, examined, analysed and construed in the
context of the legislative intent, the concept of
functioning of a holder of public office by election, in a
democratic set up and in the background of the
conceptual and philosophical institutionalised
democratic set up and pattern and with the help of
the principle of text-contextualised interpretation."
13. In the contextual situation it is also relevant to refer to
the decision of this Court in Hameed Kutty's case (supra) reported in
2017 (1) KLT 511 which was confirmed by a Division Bench in the
decision in Hameed Kutty's case (supra) reported in 2018 (3) KLT
149. In paragraph 9 of Hameed Kutty's case (supra) reported in
2017 (1) KLT 511 the writ court held:-
"As noted above, S.32(1) provides that if any one of
the circumstances referred to in clauses (a) to (d) of
S.32(1) exists, the Registrar may remove the managing
committee from office. Going by the tenor of S.32(1), the
W.A.Nos.1021, 1031 & 1060 of 2020 24
removal contemplated by the statute is perpetual removal.
If the Registrar is empowered to remove the managing
committee of a society perpetually on satisfaction of the
existence of the circumstances referred to in S.32(1), there
is no reason for me to think that the Registrar is not
empowered to remove the managing committee for a short
period. It is, therefore, clear that the expression 'remove'
contained in S.32(1) of the Act is susceptible to different
meanings and therefore, the third proviso to the said
provision can certainly be used as a guide to its
interpretation, further, since the word used in the main
part of the statute is "removal", according to me, even in
the absence of the words "kept under suspension" in the
third proviso, it is possible to infer that the power of
removal takes in within its scope removal for a short period
as well, where a perpetual removal of the managing
committee is not warranted. Above all, I am unable to find
any reason for the use of the words "Kept under
suspension" in the third proviso to Section 32(1) of the
Act, if such a power was not intended to be conferred on
the Registrar. Further, while S.32 of the Act provides that
the committee shall be given an opportunity to state their
objections and the financing bank and the concerned circle
co-operative union have to be consulted before the power
under S.32(1) is invoked by the Registrar, S.32(3) clarifies
that it shall not be necessary to comply with the said
provisions in cases where the Registrar is of the opinion
that it is not reasonably practicable to do so. In the light of
the said provisions, the interpretation of the provision as
aforesaid will also take care of situations where the
managing committee of a society needs to be removed
forthwith and it is necessary to hear the managing
committee and consult the financing bank and the circle
co-operative union before a final decision is taken as to
whether they are to be removed perpetually from office. In
such cses, the managing committee can be heard and the
financing bank and circle co-operative union can be
consulted after placing the managing committee under
suspension before a final decision is taken as to whether
the managing committee is to be removed perpetually. In
the said circumstances, I am constrained to hold that the
W.A.Nos.1021, 1031 & 1060 of 2020 25
power of the Registrar to remove a managing committee
from office includes the power to place the managing
committee under suspension also. Needless to say that the
said power can be exercised only in exceptional cases
where such a course is necessary to protect the interests
of the members of the society."
(underline supplied)
In the appeal, in the decision reported in 2018 (3) KLT 149 the
Division Bench held:-
"The grounds under which the Registrar can remove
the managing committee in office and appoint in its place
one administrator or an administrative committee are
explicitly spelt out above. The removal of the managing
committee can either be by way of supersession or
suspension which in the former case is permanent and in
the latter case is temporary capable of reinstatement. The
term 'remove' in the section means 'abolish' or 'eliminate'
which takes within its fold both supersession as well as
suspension as clarified in the third proviso to S.32(1) of
the Act.
2. The effect of the third proviso to S.32(1) of the
Act is that the managing committee shall not be
superseded or kept under suspension where there is no
Government share holding in the co-operative society. So
is the case where the society has not availed of any loan
or financial assistance or any guarantee by the
Government or any Board or Institutions constituted by
the Government. The financial assistance includes that
from the various Boards or Corporations or Institutions
under the control of the State or Central Government
specified in Explanation 1. The third proviso carves out an
exception to the main provision in regard to the categories
of society aforesaid which otherwise would fall within
S.32(1) of the Act. The word 'or' appearing in the third
proviso to S.32(1) of the Act implies that supersession and
suspension should not coalesce for the same period. The
supersession of the Board of a society can follow the
suspension if there are just grounds and not vice versa
W.A.Nos.1021, 1031 & 1060 of 2020 26
unless the superseded committee is reinstated in office. It
should be noted that S.32(1) of the Act was amended
empowering suspension in additional to supersession in
tune with Article 243ZL of the Constitution of India."
(underline supplied)
14. Thus, it is obvious that the Division Bench approved the
decision of the writ court in Hameed Kutty's case reported in 2017
(1) KLT 511 and repelled the contention of the appellants regarding
lack of power of suspension of a committee of a society. A careful
perusal of the Division Bench decision in Hameed Kutty's case
reported in 2018 (3) KLT 149 would further reveal that it was
rendered taking note of the fact that the committee which was placed
under suspension in that case was later issued with a notice of
supersession after revoking the suspension. Consequently, the Division
Bench held that the writ appeal challenging the orders keeping the
Board of the Society under suspension had become infructuous since
the period had already expired.
15. For a proper consideration of the issues and disposal of
the appeals it is relevant to refer to Section 32 of the KCS Act and it
reads thus:-
"32. Supersession of committee.- (1) If the Registrar,
after an inquiry by himself or through his subordinates or
on a report of the financing bank, or the Vigilance and Anti-
corruption Bureau of the Government or the Vigilance
Officer or otherwise, is satisfied that the committee of any
W.A.Nos.1021, 1031 & 1060 of 2020 27
society,-
(a)persistently makes default or is negligent in the
performance of the duties imposed on it by this Act or the
rules or the bye-laws or does anything which is prejudicial
to the interests of the society; or
(b)willfully disobeys or fails to comply with any lawful
order or direction issued under this Act or the rules; or
(c) makes any payment contrary to this Act or the rules
or the bye-laws or causes any loss or damage to the assets
of the society, by breach of trust or willful negligence; or
(d) misappropriates or destroys or tampers with the
records or causes the destruction of records to cover up
any misconduct or malpractice,
He may, after giving the committee an opportunity to
state its objections, if any, by order in writing, remove the
committee and, appoint in its place, one administrator or
an administrative committee consisting of not more than
three individuals, one among them as convener, who need
not be members of the society, to manage the affairs of the
society for a period not exceeding six months.
Provided that in the case of co-operative society,
carrying on the business of banking the provisions of the
Banking Regulations Act,1949 (Central Act 10 of 1949)
shall also apply;
Provided further that in the case of a co-operative
society, carrying on the business of banking, appointment
of administrator/administrative committee shall not exceed
one year in the aggregate:
Provided also that the Board of Co-operative Society
shall not be superseded or kept under suspension where
there is no Government Share holding or loan or financial
assistance or any guarantee by the Government or any
Board or Institutions constituted by the Government.
Explanation I.- For the purposes of this proviso, financial
assistance includes any financial assistance from the Kerala
Co-operative Development and Welfare Fund Board,
W.A.Nos.1021, 1031 & 1060 of 2020 28
Deposit Guarantee Scheme implemented by the Kerala Co-
operative Deposit Guarantee Fund Board, Kerala Co-
operative Risk /Fund Scheme implemented by the Kerala
Co-operative Development and Welfare Fund Board,
National Bank for Agriculture and Rural Development,
National Co-operative Development Corporation and any
other financial institution under the control of the State or
Central Government and also any financial assistance
guaranteed by the said institutions.
Explanation II: A notice and an order given as per
this clause to the President, in his absence to the Vice
President or any committee member who is holding charge
of President or Vice President or to the Chief Executive of a
society shall be treated as an order given to the committee
of the society.
(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.
(2)The Registrar shall consult the financing bank and
circle cooperative union or State Co-operative Union, as the
case may be, before passing an order under sub-section
(1).
(3) Notwithstanding anything contained in sub-section
(1) or subsection (2) it shall not be necessary to give an
opportunity to the committee to state its objections and to
consult the Unions and financing banks, in cases where the
Registrar is of the opinion that it is not reasonably
practicable to do so, subject however to the condition that
in such cases, the period of supersession shall generally be
for six months and in case a new committee cannot be
constituted or enter upon office in accordance with the bye-
laws of the society within the period of supersession the
period may be extended for a further period not exceeding
six months--
(a) in the case of a Co-operative society only after
consulting the Circle Co-operative Union concerned; and
(b) in the case of an Apex Society or a Central Society
only after consulting the State Co-operative Union.
(4) The committee or administrator or administrators so
appointed shall, subject to the control of the Registrar and
to such instructions as he may from time to time give,
40g[have power to exercise all or any of the powers and
functions] of the committee or of any officer of the society
and take all such action as may be required in the interests
of the society.
(5) The committee or administrator or administrators
shall, before the expiry of its or his or their term of office,
arrange for the constitution of a new committee in
accordance with the bye-laws of the society.
(6)Every order made by the Registrar under sub-section
(1) shall be communicated to the circle co-operative
union."
(Underline supplied)
16. In the light of the aforesaid decisions and Section 32 of
the KCS Act at no stretch of imagination the contention of the
appellant-writ petitioner that there is no distinction between
supersession and suspension can be upheld. So also it cannot be said
that at no circumstances the Registrar or the authority exercising the
power of Registrar, under Section 32 of the KCS Act got no power to
suspend a committee of a society for the mere reason that except in
the third proviso to Section 32(1) the exercise of power of suspension
was mentioned. In other words, in exceptional circumstances for
protecting the interests of the members of the society it would become
inevitable to keep a committee of a society under suspension. In the
W.A.Nos.1021, 1031 & 1060 of 2020 30
case of supersession of a committee of a Society/Bank invoking the
power under Section 32(1) of the KCS Act there is no question of the
committee of the society coming back to power after any particular
period unless the order of supersession is interfered with and the
superseded committee is reinstated in service, upon a challenge against
the said order. In other words, removal of a Managing Committee by
way of supersession is permanent and in such eventuality the
committee would be substituted by an Administrator or an
Administrative Committee, with the main aim to conduct fresh election
and put in power a new committee. However, in the case of suspension
of a committee of a Bank/Society invoking the aforesaid power the
committee would be reinstated on expiry of the period unless the period
of suspension is not extended or the committee suspended was not
superseded thereafter. At any rate, it is temporary and the suspended
committee may be restored into office. Still, we are of the firm view
that suspension of a committee of a Co-operative Society or Co-
operative Bank is a very serious issue having serious consequences.
When it is ordered based on financial dealings it may have disastrous
impact on the fair name and good reputation, not only of the
democratically elected members constituting the committee but also on
the very Bank. Depositors and account holders may run on the Bank
and may spoil its very business. Without specifying the compelling
reason the power of suspension cannot and shall not be exercised, for
various reasons. We will deal with the issue, with reference to Ext.P7 a
little later. It is true that a bare perusal of Ext.P7 would undoubtedly
make it clear that it is an order suspending the committee of the Bank
for a period of six months from 3.7.2020 and it cannot be understood
or construed as an order superseding the committee of the Bank.
17. When once it is found that "suspension" and
"supersession", of a committee of a society are different and distinct in
nature and consequences and the power to remove conferred under
Section 32 of the KCS Act takes within its fold both 'supersession' and
'suspension' and the procedures mandatorily to be followed to
supersede a committee and the exceptional situation enabling non-
adherence, are specifically mentioned in the Act in respect of
supersession of a committee, the question is whether they are to be
followed mandatorily for suspending a committee of a society, even in
the absence of specific mandate therefor, in the KCS Act or in KCS
Rules. Evidently, even the contention of the respondents is that the
procedures prescribed under Section 32 are not required to be followed
for suspending a committee and they are to be adhered only for
supersession. Obviously, the respondents relied on the decision of a
W.A.Nos.1021, 1031 & 1060 of 2020 32
Single Bench of this Court in Hameed Kutty's case (supra) (2017 (1)
KLT 511) which was confirmed by a Division Bench decision reported
in 2018(3) KLT 149, to buttress the same. It is to be noted that while
approving the decision of the writ court in Hameed Kutty's case
(2017 (1) KLT 511) and repelling the contention of the appellants
therein regarding absence of power of suspension the Division Bench in
the decision in 2018 (3) KLT 149, did not go into the question as to
whether the procedures prescribed to be followed before superseding a
committee of a society should be followed before suspending the
committee of a society and if not, whether any procedure is required to
be followed for suspending the committee of a society. In paragraph 3
of the judgment the Division Bench held that the appeal challenging the
order keeping the Board of the society under suspension had become
infructuous owing to its subsequent supersession. In such
circumstances, we are of the view that in the absence of a
consideration in detail by the Division Bench on that issue the question
is whether the direction to treat Ext.P7 as a notice under Section 32(1)
of the KCS Act could be sustained taking note of the fact that
admittedly, Section 65 inquiry is still pending. According to the
authority conducting the inquiry more time is required for completing
the same. Annexure-R1(a) produced by the first respondent who
W.A.Nos.1021, 1031 & 1060 of 2020 33
issued Ext.P7 order of suspension itself besides Ext.P7 go to show that
Section 65 inquiry is still going on in 'the Bank' and it will take more
time for completion. In the context of the direction issued by the writ
court to treat Ext.P7 as a notice under Section 32(1) and requiring the
petitioner to file objections and further directing the first respondent to
consider the objections after complying with the procedures
contemplated under Section 32 and in strict compliance with the
decision of the Apex Court in Sanjay Nagayach case (supra) and the
aforesaid position with respect to Section 65 inquiry, the aforesaid issue
has to be considered. For its proper consideration it is only apposite to
refer to Section 65 of the KCS Act. Sub-section (1) thereof deals with
the aspects which could be inquired into. Going by the same what
could be inquired into by the Registrar or by a person authorised by
order in writing is with respect to the constitution, working and financial
condition of the society, provided he is satisfied that it is necessary to
do so. That apart, it would indicate that such an inquiry under Section
65 of the KCS Act can be done by Registrar:-
(a) on his own motion; or
(b) on an inquiry report of the Vigilance Officer appointed under Section
68A; or
(c) on a report of the Director of Co-operative Audit appointed under
Section 63; or
W.A.Nos.1021, 1031 & 1060 of 2020 34
(d) on an application by the majority of the members of the committee
of the society, or by not less than one third of the quorum for the
general body meeting, whichever is less; or
(e) on an application by the apex society or financing bank of which
such society is a member; or
(f) on an application of a society to which the society concerned is
affiliated.
18. Sub-section (2) of Section 65 deals with the powers of
the Registrar or the person authorised by him under sub-section (1) for
the purpose of the inquiry. Sub-section (4) thereof deals with what the
Registrar should do when the inquiry made under Section 65 reveals
only minor defects which in the opinion of the Registrar, could be
remedied by the society. In such cases, going by sub-section (4) he
shall direct the society or its officers to take such action within the time
specified therein to rectify the defects disclosed in such inquiry. Sub-
section (6) of Section 65 is relevant as far as these appeals are
concerned. It reads thus:-
"If the Registrar, on completion of the inquiry finds that,
there is major defect in the constitution or working or
financial condition of the society, he may initiate action in
accordance with the provisions of Sec.32."
(underline supplied)
The words 'on completion of the inquiry' used in sub-section (6) of
Section 65 would undoubtedly reveal that initiation of action in
W.A.Nos.1021, 1031 & 1060 of 2020 35
accordance with the provisions of Section 32, based on an inquiry under
Section 65 is permissible only on completion of the inquiry. In the case
on hand both Annexure-R1(a) and Ext.P7 would reveal that the inquiry
under Section 65 is going on and it would take more time for
completion. When that be the admitted and indisputable position with
respect to the stage of inquiry under Section 65 in the light of the
specific provision under sub-section (6) of Section 65 initiation of action
in accordance with the provisions of Section 32, based on inquiry under
Section 65 is not permissible. Whether it should be initiated is a matter
which could be decided by the Registrar only on completion of the
inquiry and subject to his satisfaction regarding its requirement. In the
case on hand, such a stage has not reached. In such circumstances,
issuing a direction to treat Ext.P7 as notice and requiring the petitioner
to file objections and directing the first respondent Joint Registrar to
consider the objections after complying with the procedure
contemplated under Section 32 of the KCS Act, without further
clarification on the scope of such consideration, would amount to
predetermination of the necessity of initiation of action in accordance
with the provisions of Section 32 and conferring such a power before
the completion of inquiry under Section 65 against the specific mandate
under sub-section (6) of Section 65 of the KCS Act. Presuming such a
W.A.Nos.1021, 1031 & 1060 of 2020 36
necessity even before completion of the inquiry under Section 65,
taking into account the position that it is exclusively within the domain
of power of the Registrar, would amount to interference with the
jurisdiction of the Registrar.
19. Now, we will consider the position if the direction of the
learned Single Judge to treat Ext.P7 and the consequential further
directions are taken as one specifically for considering the objections as
to whether suspension is required or not. The third respondent relied
on the decision of a Full Bench of the High Court of Punjab & Haryana in
Gurcharan Singh v. State of Haryana and Others reported in AIR
1979 Punjab & Haryana 61 to contend that prior notice or
opportunity of being heard is not necessary for suspending a member
or a committee of a Co-operative Society. According to us, the decision
in Gurcharan Singh's case (supra) is inapplicable in the case on hand
for more than one reason. The opening sentence in the said decision
reads thus:-
"Whether an opportunity to show cause is imperative
before suspending a member or a committee of a Co-
operative Society during the course of proceeding for
supersession under Section 27 of the Punjab Co-
operative Societies Act, 1961 (as applicable in Haryana)
is the significant question which falls for determination
in this reference to the Full Bench."
(underline supplied)
W.A.Nos.1021, 1031 & 1060 of 2020 37
Thus, it is obvious that the question mooted and decided with reference
to the specific provision under the Punjab Co-operative Societies Act, as
applicable in Haryana was whether an opportunity to show cause is
imperative before suspending a member or a committee of a Co-
operative Society during the course of proceedings for supersession.
Clearly the question herein is totally different. In the case on hand,
though the facts borne out from records would reveal that proceedings
for supersession under Section 32 were virtually initiated and a notice
therefor was issued to the previous committee of the Bank in question
the admitted case is that it could not be effectuated owing to the expiry
of its term and thereafter no proceedings for supersession was
specifically initiated against the present Managing Committee. What is
going is an inquiry under Section 65 of the KCS Act. It will be illegal
and impermissible to treat such proceedings initiated at the time of the
tenure of the previous committee as one during the period of the
present committee and further to continue with such proceedings for
supersession of the present committee. In fact, there is no such case
for the first respondent. We have also taken note of the fact that the
inquiry initiated under Section 65 of the Act was mainly and mostly on
the alleged irregularities occurred during the tenure of the previous
committee. We say so, on perusal of Annexure-R1(a), Exts.P7 and P8.
W.A.Nos.1021, 1031 & 1060 of 2020 38
20. Before adverting to the aforesaid contentions and issues
it is only appropriate to refer to certain other relevant aspects, to be
borne in mind, while considering the cases on hand. As per Constitution
(Ninety Seventh Amendment) Act, 2011 with effect from 15.2.2012 the
right to form Co-operative Societies is inserted as Clause (c) in Article
19(1) of the Constitution. 'The Co-operative Societies' is a subject
enumerated in Entry 32 of the State List of the Seventh schedule of the
Constitution and the KCS Act was enacted by the State of Kerala with
the purpose revealed from the preamble to the KCS Act. Going by the
preamble it was enacted with a view to provide for the orderly
development of co-operative movement in accordance with the co-
operative principles as self governing, democratic institutions, to
achieve the objects of equity, social justice and economic development,
as envisaged in the Directive Principles of State policy of the
Constitution of India. It is taking into account all the aforesaid aspects
and scheme of the KCS Act that the Hon'ble Apex Court in the decision
in Joint Registrar of Co-operative Societies v. T.A.Kuttappan
reported in 2000 (2) KLT 480 held that a Co-operative society is
expected to function in a democratic manner through an elected
committee of management. Hence, this should be the normal rule and
administration by an Administrator or an Administrative Committee can
W.A.Nos.1021, 1031 & 1060 of 2020 39
be effected in a Co-operative Society only rarely and in exceptional
circumstances. Statutorily, the situations that require supersession of
an elected committee and its substitution for a particular permissible
period through an Administrator or an Administrative Committee is
provided in Section 32 as also Section 33 of the KCS Act. Section 28 of
the KCS Act provides for constitution of a committee for a society.
Circumstances wherein supersession of the elected committee in
administration of a Co-operative society/bank and consequential
entrustment of management with an Administrator or an Administrative
Committee are contemplated under the provisions under Sections 32
and 33 of the KCS Act. We refer to the aforesaid position to drive home
the point that when the impact of suspension of a society is that it
would deprive the democratically elected committee of the society
concerned from holding the elected office and to discharge the power
and duties, the power to suspend a committee of a society should be
exercised only in rare and exceptional circumstances and not merely
because proceedings for supersession were initiated against the
previous committee, but could not be effectuated. In such
circumstances, we are also of the view that removal, be it suspension
or supersession, of a committee of a society, is a very drastic step and
therefore, it could be resorted to only in very exceptional circumstances
W.A.Nos.1021, 1031 & 1060 of 2020 40
by scrupulously following the procedures.
21. In Nasirkhan Nivas Khan Pathan's case (supra) the
Full Bench of Gujarat High Court held that the object of suspension is to
remove any person holding the elected office or public office
temporarily from his sphere of enjoyment of status, position, power and
privilege. Furthermore, it was held therein: ".......... it must be noted
that suspension brings to bear on the elected person or holder of the
public office by election, serious consequences, sometimes more severe
penalties prescribed and at times disasterous impact on fair name and
good reputation obtained and acquired in course of public life. An
elected person enjoying his office on the strength of the verdict of the
public in his constituency, obviously, would require serious and strict
consideration and interpretation. The authority empowered to suspend
is obliged to exercise the power of suspension of a public office holder
by election, after full application of mind and within the permissible
legal parameters or statutory ambit." We are of the considered view
that the same would be the position in respect of suspension of an
elected body. In terms of the provisions under Section 28 of the KCS
Act the General Body of a Society/Bank is to constitute a committee for
a period of five years in accordance with the by-laws to entrust the
management of the affairs of the society concerned. Hence, power of
W.A.Nos.1021, 1031 & 1060 of 2020 41
suspension, when the procedure for its exercise is not very expressly
provided under the KCS Act, shall be exercised only in very, very
exceptional circumstances.
22. As noticed hereinbefore, the appellant in
W.A.No.1031/2020 mainly sought for quashment of Ext.P7, the nature
of which is not in dispute. A scanning of Ext.P7 would reveal that it is
not an order superseding the committee of the Bank and in fact, what is
specifically stated in Ext.P7 is that on satisfying that the continuance of
the committee in power would hamper the smooth conduct of the
inquiry under Section 65 of the KCS Act, waiving the notice under
Section 32(1) and by invoking the provisions under Section 32(3) of the
KCS Act the committee is suspended for a period of six months.
Consequently, the Assistant Registrar (General), Idukki was appointed
as the Administrator of the Bank. It is relevant to note that in Ext.P7
what exactly is the power for suspending a committee available under
the KCS Act is not specifically mentioned. The question is whether the
word 'suspension' is a synonym of the word 'supersession' employed
under Section 32 of the KCS Act. We have already found that the
expression 'suspension' is distinct and different from the expression
'supersession' and that the power of suspension of a committee of a
society should be exercised only sparingly and only in very, very
W.A.Nos.1021, 1031 & 1060 of 2020 42
exceptional circumstances. The third proviso to Section 32(1)(b) itself
would reveal that they are different and distinct. The said proviso is
extracted herein-below, at the risk of repetition:-
"Provided also that the Board of a Co-operative
Society shall not be superseded or kept under
suspension where there is no Government share
holding or loan or financial assistance or any
guarantee by the Government or any Board of
Institution constituted by the Government."
In fact, it was only under the afore-extracted proviso that the word
'suspension' is used in Section 32 of the KCS Act in regard to the Board
of a Co-operative Society and nowhere else the said expression has
been used in Section 32. Under the aforesaid provision what is stated
is that a society shall not be kept under suspension when there is no
Government share holding or loan or financial assistance or any
guarantee by the Government or any Board or institutions constituted
by the Government. The rest of the provisions under Section 32 of the
KCS Act would reveal that what was actually dealt with under Section
32 is the power and manner of exercise of the power of supersession of
a committee of a society. In other words, it is the expression used
under the aforesaid proviso in the negative sense that is claimed as the
source of power to suspend a committee but then, unlike in the case of
supersession as relates suspension no procedure is specifically
W.A.Nos.1021, 1031 & 1060 of 2020 43
prescribed. It is therefore, all the more necessary to be more cautious
and careful in passing an order of suspension of a committee of a
society, especially in view of the position specifically noted by us with
respect to inquiry under Section 65 of the KCS Act. When once it is
found that the power of suspension exists, absence of specific provision
dealing with procedures in the matter of suspending a committee of a
society cannot be a reason for its arbitrary or unreasonable exercise.
In that context, it will not be inappropriate to consider Annexure-R1(a),
Exts.P7 and P8. The specific reason assigned for suspending the
committee of the society in Ext.P7 is that its continuance in power
would hamper the smooth conduct of inquiry under Section 65 of the
KCS Act. It is also relevant to note that one of the grounds raised by
the first respondent who issued Ext.P7, to challenge the judgment is
that Annexure-R1(a) was not at all looked into by the learned Single
Judge. Ext.P7 and Annexure-R1(a) would reveal the foundation for
ordering inquiry under Section 65 of the KCS Act in the society as the
order of the Joint Registrar (General) Idukki dated 7.1.2020, complaint
dated 11.11.2019 of one P.K.Ibrahimkutty and 34 other members of
the society and certain other complaints specifically referred to
thereunder. In Annexure-R1(a), going by the order for inquiry under
Section 65, the matters to be inquired into have been specifically
W.A.Nos.1021, 1031 & 1060 of 2020 44
mentioned as hereunder:-
"1. ബ ങ ന ഘടന, പവർതന , ന ലവലള സ മതക സത .
2. ജവനക രനട 1.04.2016 മതലള ന യമനവ നപ മമ ഷന .
3. 01.04.2016 മതലള വ യ വതരണ ന മ&പങളനട പലശ.
4. 01.04.2016 മതൽ ബ ങ ൽ ന,ക-/ഡമ - ഡ ഫ- എനവയനട കള&ൻ, ഡസ7ണ-.
5. ന യമ നസരണ സ വരണ പ ലക നത ന യമന നടതയത- സ ബന ച-.
6. 01.04.2016 മതൽ ന യമ വല വ;വസ ഇല നത വ യ നൽക യത- സ ബന ച-.
7. 01.04.2019 മതലള പ>ൺ, അറൻഡർ തസകയനല ന യമന നടപടകൾ.
8. അമനDഷണ മവളയൽ കനണതന മറ വഷയങൾ."
Further, it is stated in Annexure-R1(a) that in respect of the issues
referred to in the complaint for inquiry and on the subjects dealt with in
the complaints the President/Secretary of the society were required to
give explanation, as per letter dated 27.1.2019. In this context, it is to
be noted that the committee which was suspended as per Ext.P7 was
elected to office only on 30.12.2018 and they assumed charge on
1.1.2019. In other words, such an explanation was called for pursuant
to the order for inquiry on the 26 th day of assumption of office by the
present committee which was suspended. The aforesaid facts would
indicate that virtually explanation was called from them mostly and
mainly with respect to the transactions, dealings and appointments
effected, during the period of the previous committee. The points for
inquiry would undoubtedly reveal the said position. On receipt of letter
dated 27.1.2019 explanation was given by the President and Secretary
of the society on 10.2.2020. It is true that after pointing out the
W.A.Nos.1021, 1031 & 1060 of 2020 45
defects noted during the inquiry including defects noted in respect of
audit for the year 2018-2019 what is stated is that the suspended
committee had not taken steps for curing the defects. At this juncture
it is relevant to refer to Section 65(4) of the KCS Act which mandates
thus:-
"65.(4) When an inquiry made under this section
reveals only minor defects which in the opinion of the
Registrar, can be remedied by the society, he shall
communicate the result of the inquiry to the society and
the society, if any, to which that society is affiliated. He
shall also direct the society or its officers to take such
action within the time specified therein to rectify the
defects disclosed in such inquiry."
The question is when did the suspended committee which assumed
charge on 1.1.2019 was informed of the defects occurred during the
period of previous committee as also during its period and called for
curing the defects ? If it was called for curing defects it would suggest
that defects noted during those periods are curable. Then the further
questions that may require to be answered are what was the time limit
granted for curative purpose and in what manner they were required to
be cured. No such details, which could be used against the committee
under suspension is discernible from Annexure-R1(a), Exts.P7 and P8.
The major defects founded during inquiry could be relied on for
supersession, going by sub-section (6) of Section 65 only after the
completion of the inquiry. Above all, what is noteworthy is that
Annexure-R1(a) is nothing but an interim report and as per the same,
the inquiry officer requested for extension of time for completing the
inquiry by two more months. Ext.P8 is dated 25.9.2019 and the
extracts of the defects noted therein would also indicate that the
alleged defects pertain mainly to the period of the previous committee.
Though we have carefully gone through Annexure-R1(a), Exts.P7 and
P8 we could not find anything indicating that instructions were
specifically issued earlier with details of defects to the committee under
suspension and requiring it to cure the defects within a specified time.
It is in this context that the decision of the Hon'ble Apex Court in
Sanjay Nagayach case (supra) assumes relevance. True that it was
not a case directly dealing with the power of suspension.
23. In the decision in Vallapuzha Service Co-operative
Bank Ltd. v. Joint Registrar (2009 (3) KLT 838) a learned Single
Judge of this Court relying on two Division Bench decisions of this Court
viz., in Sivadasan Nair v. Registrar of Co-operative Societies
(1997 (2) KLT 710) and the judgment dated 6.8.2004 in
W.A.No.1363 of 2004 (K.V.Mohanan v. State of Kerala) it was held that
even if some of the members of the present committee of a society were also
members of the previous committee Section 32 of the KCS Act could not be
W.A.Nos.1021, 1031 & 1060 of 2020 47
initiated against the present committee. In Sivadasan Nair case
(supra) and in the decision in Urukunnu Service Co-operative Bank
Ltd. v. State of Kerala reported in 2012 (4) KLT 941 it was held by
this Court, a committee of a society cannot be superseded for mistakes
or lapses committed by the previous committee. In short, the settled
position is that for the deeds of a previous Managing Committee a
subsequent committee cannot be superseded by invoking the provisions
under Section 31 of the KCS Act. This settled position applies with
equal force or more force in the case of suspension of an existing
committee, especially when an inquiry under Section 65 of the KCS Act
is pending where most of the points for inquiry pertain to the period of
previous committee. In Ext.P7 order of suspension the reason for
suspending the committee of the society is given as its continuance in
office would hamper the smooth conduct of inquiry under Section 65 of
the KCS Act and therefore, it is essential to keep it under suspension.
True that, it is also stated therein that in respect of the defects
committed by the previous committee no steps were taken to cure
them. That apart it is stated that the previous committee as also the
existing committee did not take steps to protect the property of the
society. As noticed hereinbefore and as held by the learned Single
Judge such statements in that regard contained in Ext.P7 are vague and
W.A.Nos.1021, 1031 & 1060 of 2020 48
not at all specific. Whether the committee under suspension was given
time bound instruction to cure defects with details is not at all stated or
discernible from Ext.P7 or Annexure-R1(a). It is also not discernible
from Ext.P7 as to how the continuance of the democratically elected
committee in office would hamper the smooth conduct of the inquiry
under Section 65. In that regard, the following recital in Annexure-
R1(a) also assumes relevance :-
"മമൽ പരമശ ധന സമയത- ആവശ;മ യ മരഖകൾ ബ ങ ൽ ന ന നൽകവ ൻ
ഭരണസമ ത അ ഗങള ഉമO; ഗസര തയ റ യല. അമനDഷണവമ യ യ നത ര
വധതല സ ഘ സഹകരകനല. ബനനTട വ യ അമപ&കൾ ഉൾനTനടയള
മരഖകൾ മബ ധപർവ മറചവയനത യ മബ ധ;നTട. ആയത ന ൽ സമയത-
അമനDഷണ പർതയ ക ൻ കഴ ഞ ടല."
The above extracted recital in Annexure-R1(a) would reveal that it also
contains only vague statement with respect to the non-co-operation
from the part of the members of the suspended committee as also
officers of the society. It is also to be noted that such a reason is
vaguely given virtually as a reason for not completing the inquiry under
Section 65 of the KCS Act within time.
24. The question is whether assigning such reasons in
vague a democratically elected committee could be suspended and
thereby disabled from discharging its duties and obligations ? We have
already held that though it could not be held that a committee of a
society could not be suspended at any circumstances suspension of a
W.A.Nos.1021, 1031 & 1060 of 2020 49
committee of a Co-operative Society could be effected only in very rare
circumstances. Needless to say that even when such power is
exercised in exceptional circumstances, in the absence of specific
procedures or guidelines on the matter, taking note of the fact that
suspension would disable the democratically elected committee from
functioning and that such suspension got disasterous consequences,
referred hereinbefore, extreme care should be taken to ensure whether
it is inevitable for public interest and such consideration should be
reflected in the order of suspension. In view of the circumstances
obtained in the case more particularly, taking note of the fact that the
inquiry under Section 65 had not matured into a final report so as to
enable the Registrar to form opinion as to the necessity to invoke
Section 32 of the KCS Act for superseding the committee of the society
and that the inquiry under Section 65 of the KCS Act is pending we are
of the view that the learned Single Judge has erred in directing to treat
Ext.P7 as a notice issued under Section 32(1) of the KCS Act. Taking
into account the aforementioned aspects we have also no hesitation to
hold that the same also cannot be ordered to be treated as a notice as
to why suspension should not be ordered for the simple fact that as per
Ext.P7 assigning the reasons already mentioned in a vague manner and
that continuation of the existing committee would hamper the smooth
W.A.Nos.1021, 1031 & 1060 of 2020 50
conduct of inquiry under Section 65 of the KCS Act the committee was
placed under suspension thereunder for a period of six months and in
substitution of the committee the Assistant Registrar (General), Idukki
was appointed as the Administrator of the society. If in a vague
manner the reason for suspension is stated in an order for suspending a
democratically elected committee of a society pending an inquiry under
Section 65 of the KCS Act and when the materials on record would
undoubtedly suggest that the subject of the inquiry is mostly and
mainly in respect of dealings and transactions occurred during the
period of the previous committee one cannot say that it is an
exceptional circumstance to exercise the power of suspension. If the
said power, in the absence of specific guidelines or procedures, is
allowed to be exercised in the like manner it will not only result in
arbitrary exercise of power but also a perennial threat for democracy as
Co-operative Societies are considered to be democratic institutions at
the grass root level.
25. The upshot of the discussion as above is that the
learned Single Judge is perfectly justified in quashing Ext.P7 and in
ordering to put back the suspended committee in power, forthwith.
Ergo, if the direction to put back the suspended committee in power is
not so far complied with it shall be done, forthwith, on
W.A.Nos.1021, 1031 & 1060 of 2020 51
receipt/production, of a copy of this judgment. However, in the
circumstances explained hereinbefore, we have no hesitation to hold
that the direction that the petitioner as well as the first respondent shall
treat Ext.P7 as a notice under Section 32(1) of the KCS Act and the
consequential directions issued as a necessary sequel, requiring the
petitioner to file objections to Ext.P7 and to the first respondent to
consider the objections after complying with the procedures
contemplated under Section 32 of the Act require interference. Hence,
the said directions stand vacated. As per the impugned judgment while
ordering the petitioner - Managing Committee of the society to be put
back in power forthwith the learned Single Judge put a rider in the
matter of its functioning that during the period of inquiry it shall not
take policy decisions affecting the society and shall confine its
administration to carrying out the day-to-day activities. We find no
reason to restrain the petitioner, a democratically elected committee of
a society from taking policy decisions and also to confine themselves to
carrying out of day-to-day activities in the circumstances obtained in
this case. Hence, while confirming quashment of Ext.P7 and the
direction to put back the petitioner committee in power we vacate the
other limbs of direction No.(C) restraining the committee that during
the period of inquiry they shall not take any policy decisions affecting
W.A.Nos.1021, 1031 & 1060 of 2020 52
the society but shall confine themselves to carrying out the day-to-day
activities. We make it clear that we shall not be understood to have
made any opinion or observation with respect to the ongoing inquiry
under Section 65 of the KCS Act and the references about the same are
made only for the purpose of the disposal of the appeals. In the said
circumstances, the direction that the petitioner should fully co-operate
with the inquiry and facilitate completion of the inquiry is not interfered
with. We may also hasten to add that this observation will not take
away or prejudice the right of the petitioner to take up all legal and
factual contentions in case any step is taken based on the report of
inquiry under Section 65 of the KCS Act.
In the result, W.A.No.1031 of 2020 is allowed as above and
W.A.Nos.1021 & 1060 of 2020 are dismissed.
Sd/-
C.T.RAVIKUMAR
Judge
Sd/-
K.HARIPAL
Judge
TKS
