Kerala High Court

Baiju O.K vs The Joint Registrar Of ... on 8 September, 2023

                 IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                 PRESENT
                 THE HONOURABLE MR. JUSTICE SATHISH NINAN
         FRIDAY, THE 8TH DAY OF SEPTEMBER 2023 / 17TH BHADRA, 1945
                         WP(C) NO. 24870 OF 2023
PETITIONERS:


     1      BAIJU, O.K., AGED 46 YEARS, S/O KANNAN KEERAN, ODAMKUZHIYIL,
            KACHERI, MUKKOM, PIN - 673602

     2      SHARAFUDHEEN.T.K., S/O KOYA, AGED 36 YEARS,
            THARIPPAKKUNNUMMAL HOUSE, NEELESWARAM.P.O., KOZHIKODE, PIN -
            673572

     3      ABDULLA.A.M, AGED 70 YEARS, S/O AHAMMED HAJI,
            KUTTAYIKUNNUMMAL HOUSE, NEELESWARAM.P,O., OMASSERY VIA,
            KOZHIKODE, PIN - 673572

     4      NOUSHAD.V.A., AGED 40 YEARS, S/O AHAMMED KUTTY,
            POOVATHIRIMMAL HOUSE, KALLURUTTI, KOZHIKODE, PIN - 673582

     5      M.K.MUNEER,AGED 48 YEARS,S/O ABDUL KHADER, MALAKUNNATH HOUSE,
            P.O.NEELESWARAM, MUKKOM, KOZHIKODE, PIN - 673582

     6      SHAJAN.N.V,AGED 54 YEARS,S/O VARKEY, NEDUMKALEL, NEELESWARAM,
            KALLURUTTI, KOZHIKODE, PIN - 673572

     7      BALAN,AGED 71 YEARS,NEELESWARAM,KOZHIKODE, PIN - 673572

     8      RUBEENA.E.K.,AGED 40 YEARS,W/O ABDUL BASHEER,
            ERUMPADAMKANDIYIL HOUSE, KALLURUTTY.P.O., OMASSERY,
            KOZHIKODE, PIN - 673582.

            BY ADVS.
            P.P.JACOB
            SREEDHAR RAVINDRAN


RESPONDENTS:


     1      THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (G)KOZHIKODE,
            OFFICE OF THE JOINT REGISTAR OF CO-OPERTIVE SOCIETIES
            PUTHIYARA KOZHIKODE, PIN - 673004
 WP(C) NO. 24870 OF 2023                 -2-


     2      THE ADMINISTRATOR (SPECIAL GRADE SENIOR INSPECTOR)CRP(1)
            SECTION, OFFICE OF THE JOINT REGISTAR(GENARAL)KOZHIKODE,
            MUKKOM, SERVICE CO-OPETAIVE BANK LTD NO.F 1241,MUKKOM,
            KOZHIKODE, PIN - 673602

 ADDL. R3   N.P. SHAMSUDHEEN,AGED 61, S/O. MUHAMMED HAJI, NEERKOTTIPOYIL
            HOUSE, CHENNAMANGALLUR, POST, MUKKOM, PIN - 673602.

            (IS IMPLEADED AS ADDL.R3 IN THIS WRIT PETITION AS PER ORDER
            DATED 31/07/2023 IN IA 01/2023)

 ADDL. R4   BABURAJAN K.A., AGED 53 YEARS, S/O. APPUTTY, METHALAKKUNNATH
            HOUSE, KALLURUTTY P.O., OMASSERY, KOZHIKKDE, PIN - 673603.

            (IS IMPLEADED AS ADDL.R4 IN THIS WRIT PETITION AS PER ORDER
            DATED 31/07/2023 IN IA 02/2023.)

            BY ADVS.

            GOVT. PLEADER SMT.C.S.SHEEJA
            M.SASINDRAN
            K.M.FIROZ
            JAIBY PAUL
            M.SHAJNA


     THIS   WRIT   PETITION   (CIVIL)    HAVING   COME   UP   FOR   ADMISSION   ON
08.09.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
                      SATHISH NINAN, J.
            = = = = = = = = = = = = = = = = = =
                 W.P.(C) No.24870 of 2023
            = = = = = = = = = = = = = = = = = =
         Dated this the 8th day of September, 2023

                          J U D G M E N T

Order of supersession of the Managing Committee of

the Mukkom Service Co-operative Bank is under challenge

by the members of the Managing Committee.

2. The Managing Committee assumed office pursuant

to the elections held on 11.11.2018. The term of the

Committee is to expire on 11.11.2023. In the meanwhile,

the board was under suspension from 28.12.2020 and was

out of office till 06.12.2021. As per Ext.P5 dated

15.11.2022 the Joint Registrar ordered an enquiry. This

was followed by Ext.P9 show-cause notice dated

10.07.2023 issued under Section 32(1) of the Co-

operative Societies Act seeking explanation as to why

action should not be taken for supersession of the

Committee. As per Ext.P10 dated 12.07.2023 the

petitioners sought three weeks time to file detailed W.P.(C) No.24870 of 2023

explanation and for hearing. Thereafter the petitioners

filed W.P.(C) No.22997/2023 before this Court,

challenging the action. Pending the writ petition, the

Joint Registrar-first respondent passed Ext.P11 order of

supersession dated 19.07.2023. It is challenging the

same that the writ petition has been filed.

3. I have heard learned Senior Counsel

Sri.P.Ravindran on behalf of the petitioners, learned

Government Pleader for the first respondent,

Sri.M.Sasindran for the second respondent,

Sri.K.M.Firoz, for the third respondent and Sri.Jaiby

Paul for the fourth respondent.

4. As is evident from Ext.P11 order of

supersession, the proceedings are initiated based on the

report of inspection under Ext.P5 and audit

certificates. In the enquiry certain serious

irregularities and defects were noticed namely;

(i) Grant of excess interest in violation of the W.P.(C) No.24870 of 2023

Circular 5/21 of the Registrar of Co-operative Societies

resulting in loss to the Bank.

(ii) Failure to re-classify the Bank to the lower

category and re-arrange staff pattern thus violating

Circular 32/13 of the Registrar.

(iii) Making appointments without re-classifying the

Bank and thus causing loss.

(iv) Failure to maintain fluid resource.

(v) Deficit in stock.

5. The learned Senior Counsel argued that, though

the term of office of the Committee was to be from

11.11.2018 till 11.11.2023, even prior to the order of

supersession on 19.07.2023 the board was under

suspension from 28.12.2020 to 06.12.2021. It was the

Administrator who was managing the affairs for most of

the time, and no allegations could be levelled against

the petitioners. The allegations against illegal

appointments were negatived by a Division Bench of this W.P.(C) No.24870 of 2023

Court in Ext.P3 judgment in W.A. No.1250/2021 and

1310/2021. Therefore the same is not liable to be

reopened. Though there is a finding that the Bank did

not maintain sufficient fluid assets, the same is

disproved even by the report relied on by the

respondent. Sufficient opportunity was not granted to

the petitioners to submit their explanations even to the

report on enquiry under Section 66 and also to the

notice under Section 32 of the Act.

6. The learned counsel for the respondents would on

the other hand contend that, the irregularities noted

are during the period when the petitioners were in

management, that when the Administrator was in office

the fluid reserve was much higher than the required

limit, that there has been a drastic depletion as soon

as the petitioners reassumed office. There has been

persistent conduct prejudicial to the interests of the

society resulting in huge loss, it is contended. Relying W.P.(C) No.24870 of 2023

on the judgment of the Apex Court in Mohinder Singh Gill and

Another v. The Chief Election Commissioner, New Delhi and Others (AIR

1978 SC 851) and of the Delhi High Court in Satish Chandra

Khandelwal v. Union of India and Others AIR 1983 Del.1, it was

argued that, grant of opportunity of hearing would only

mean a reasonable opportunity as the circumstance would

warrant. When there is a need for expedition, the

opportunity need not be an elaborate ritual. In the case

at hand, it having been revealed that the continuance in

management is detrimental and harmful to the interests

of the society immediate action was necessary which

compelled the authority to grant only a short but

sufficient time for the petitioners to respond to the

notice and for hearing, it was submitted.

7. I have considered the rival submissions. As

contended by the petitioners, Ext.P9 notice for hearing

under Section 32 was issued on 10.07.2023 seeking

explanation within four days. As per Ext.P10, the W.P.(C) No.24870 of 2023

petitioners sought three weeks time for objections and

hearing. On a reading of the order it is evident that,

on the date fixed for hearing the petitioners sought

time but was not granted. The findings in respect of

which explanations have been sought are serious in

nature. An order of supersession being of drastic

consequences, sufficient opportunity ought to have been

granted to the petitioners to voice their explanations.

This is all the more so since even as against the report

under Section 66, the petitioners did not get a proper

hearing. Of course therein also the conduct of the

petitioners was to seek for time. I do not consider it

necessary to go into further details regarding the same.

The authority could have granted a reasonable

opportunity to the petitioners to place their objections

and also for a hearing.

8. The proceedings under Section 32 have been

initiated based on the report on enquiry and also audit W.P.(C) No.24870 of 2023

reports. There having not been an effective opportunity

for the petitioners to urge their contentions/

explanations, I am of the opinion that the petitioners

could be afforded a further opportunity of hearing in

terms of Section 32(1) of the Act. However, considering

the seriousness of the defects noticed, it is deemed

appropriate to keep the committee under suspension till

such hearing is conducted and orders passed.

9. Resultantly, the writ petition is disposed of as

hereunder :-

(i) Ext.P11 order of supersession dated 19.07.2022

is quashed.

(ii) The petitioners shall file their objections if

any to Ext.P9 notice, on or before 18.09.2023.

(iii) The petitioners shall appear for hearing before

the first respondent at 3.00 p.m. on 20.09.2023.

(iv) The first respondent shall pass orders with due

consideration to the explanations/contentions of the W.P.(C) No.24870 of 2023

petitioners, on or before 28.09.2023.

(v) Till orders are passed in terms of clause(iv)

above, the Committee shall be deemed to be under

suspension and the Administrator shall continue in

office.

Sd/-

SATHISH NINAN JUDGE

kns/-

//True Copy// P.S. to Judge APPENDIX OF WP(C) 24870/2023

PETITIONER EXHIBITS

Exhibit P1 TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE JOINT REGISTRAR DATED 28.12.2020

Exhibit P2 TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE FIRST RESPONDENT DATED 31.8,21

Exhibit P3 TRUE PHOTOCOPY OF COMMON JUDGMENT IN W.A.1310/2021 DATED 25.1.22

Exhibit P4 TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C) 27113/21 DATED 4.12.21

Exhibit P5 TRUE PHOTOCOPY OF THE ORDER DATED 15.11.2022 ISSUED BY THE JOINT REGISTRAR

Exhibit P6 TRUE PHOTOCOPY OF THE JUDGMENT IN W.P.(C) 40784/22 DATED 5.1.23

Exhibit P7 TRUE PHOTOCOPY OF THE NOTICE ISSUED BY THE FIRST RESPONDENT DATED 13.6.23

Exhibit P8 TRUE PHOTOCOPY OF THE PRELIMINARY EXPLANATION FILED BY THE PRESIDENT AND SECRETARY OF THE MUKKAM SCB BEFORE THE SECOND RESPONDENT DATED 28.6.23

Exhibit P9 TRUE PHOTOCOPY OF THE NOTICE ISSUED BY THE JOINT REGISTRAR DATED 10.7.23

Exhibit P10 TRUE COPY OF THE SAID REQUEST MADE BY THE SECRETARY AS WELL AS THE ELECTED PRESIDENT DATED 12.07.2023

Exhibit P11 TRUE PHOTOCOPY OF THE ORDER ISSUED BY THE FIRST RESPONDENT DATED 19.7.2023

Exhibit P12 TRUE PHOTOCOPY OF THE OVERDUE STATEMENT AS ON 6.12.21 OF THE MUKKAM SCB LTD

Exhibit P13 TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE, COVER PAGE AND PAGE NO. 5 DATED 29.11.2022 APPENDIX-WP(C) 24870/2023

Exhibit P14 TRUE PHOTOCOPY OF THE AUDIT CERTIFICATE, COVER PAGE AND PAGE NO. 16 DATED 29.11.2022 OF THE MUKKAM SCB LTD.