[Cites 12, Cited by 0]
Kerala High Court
Tattamangalam Service Co-Operative ... vs State Of Kerala on 4 December, 2025
2025:KER:93887
WP(C) NO. 32931 OF 2025 1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE GOPINATH P.
THURSDAY, THE 4TH DAY OF DECEMBER 2025 / 13TH AGRAHAYANA, 1947
WP(C) NO. 32931 OF 2025
PETITIONER/S:
1 TATTAMANGALAM SERVICE CO-OPERATIVE BANK LTD. NO.P 502
TATTAMANGALAM, PALAKKAD,
REPRESENTED BY ITS SECRETARY SMT. K.JYOTHY, PIN -
678102
2 THE VICE PRESIDENT, MANAGING COMMITTEE,
TATTAMANGALAM SERVICE CO-OPERATIVE BANK LTD. NO.P 502,
TATTAMANGALAM,PALAKKAD., PIN - 678102
BY ADVS.
SRI.K.T.THOMAS
SRI.NIKHIL BERNY
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT,
CO-OPERATION DEPARTMENT, SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001
2 JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL)
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES, CIVIL STATION, PALAKKAD, PIN - 678001
3 ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL)
OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), MINI CIVIL STATION, CHITTUR,
PALAKKAD, PIN - 678101
2025:KER:93887
WP(C) NO. 32931 OF 2025 2
4 BLISSON C DAVIS
ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL),
OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE
SOCIETIES (GENERAL), ALATHUR, PALAKKAD, PIN - 678541
5 MOHANAN K. ,AGED 66 YEARS, S/O.KESAVAN,
POLANI KALAM, TATTAMANGALAM P.O., PALAKKAD- 678102.
IS IMPLEADED AS ADDL.R5 AS PER ORDER DATED 20/11/2025
IN IA/2/2025 IN THE WP(C)
6 KITTUCHAMI K. ,AGED 73 YEARS, S/O.KANDAN,
VALLANGIPADAM, TATTAMANGALAM P.O., PALAKKAD- 678102.
IS IMPLEADED AS ADDL.R6 AS PER ORDER DATED 20/11/2025
IN IA/2/2025 IN THE WP(C)
7 PARVATHY K. , AGED 40 YEARS, W/O.RAMESH, POOKADY,
TATTAMANGALAM P.O., PALAKKAD -678102.
IS IMPLEADE AS ADDL. R7 A PER ORDER DATED 20/11/2025
IN IA/2/2025 IN THE WP(C)
BY ADVS.
SRI.LIJI.J.VADAKEDOM
SHRI.ATHUL V. VADAKKEDOM
SMT. RESMI THOMAS, GP
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION
ON 04.12.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
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WP(C) NO. 32931 OF 2025 3
JUDGMENT
The petitioners have approached this Court, challenging
Exhibit P3, which directs an inspection under Section 66 of the
Kerala Co-operative Societies Act, 1969 ('the 1969 Act') in
respect of the points mentioned therein as also Exhibit P12
order, directing that further proceedings be taken in terms of
the provisions contained in Section 68 of the 1969 Act, based
on the findings in Exhibit P3. It is the principal contention of
the learned counsel appearing for the petitioners, as also the
learned counsel appearing for the additional respondent Nos.
5 to 7 that, during the course of the proceedings under Section
66 of the 1969 Act, the inspector had issued notices to the
members of the Board as also to the Secretary of the Society,
calling upon them to submit their explanations to certain
issues referred in the notices. Reference is made in this regard
to Exhibits P4 and P7 notices produced along with the writ
petition. The learned counsel appearing for the petitioners
submits that, despite the issuance of notices, without giving
sufficient time to the petitioners to submit their reply,
proceedings under Section 68 of the 1969 Act have been
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initiated. It is submitted that though Section 66 of the 1969
Act does not contemplate any hearing, when the inspectors
had decided to issue notices and call for explanations, it was
their bounden duty to consider the explanations before
finalising the report. It is submitted that the report does not
even mention that notices were issued to the members of the
Managing Committee and the Secretary of the Bank. It is
submitted that the concept of fairness demands that if a notice
had been issued, a reasonable time should be granted for
furnishing a reply, and that such a reply is considered before
finalising the report under Section 66 of the 1969 Act.
2. The learned Government Pleader submits that
Section 66 of the 1969 Act does not contemplate any personal
hearing before finalising a report, and the petitioners will get
every opportunity to submit their explanations, if and when a
show cause notice is issued to them under Section 68(2) of the
1969 Act. It is submitted that, going by the Full Bench
judgment of this Court in Kudayathoor Service Co-
operative Bank Ltd V. Joint Registrar of Co-operative
Societies (General); 2022 (3) KLT 222 (F.B), the
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petitioners have no locus standi to challenge the order
directing an inspection issued under the provisions of Section
66 of the 1969 Act or the order issued under Section 68(1) of
the 1969 Act. It is also pointed out that the explanation was
submitted only on 16.8.2025, after Exhibit P12 order was
issued on 08.08.2025.
3. Having heard the learned counsel appearing for the
petitioners, the learned Government Pleader appearing for
the official respondents, and the learned counsel appearing for
additional respondent Nos. 5 to 7, I am of the view that the
learned Government Pleader is right in contending that, in
light of the law laid down by the Full Bench in Kudayathoor
Service Co-operative Bank Ltd (supra), the right of the
petitioners to object to any finding in the report under Section
66 of the 1969 Act or to object to the initiation of proceedings
under Section 68 of the 1969 Act can be exercised before the
competent authority at the stage of issuance of a show cause
notice under Section 68(2) of the 1969 Act. This Court cannot
be called upon to examine the contentions taken in objection
to the report prepared under Section 66 of the 1969 Act, at
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the stage of issuance of an order under Section 68(1) of the
1969 Act. It is settled law that, following proceedings under
Section 65 or 66 of the 1969 Act, the Authorities may take
action either under Sections 32 or 68 of the 1969 Act. While
proceedings under Section 32 of the 1969 Act relate to the
collective responsibility of the Managing Committee, the
proceedings under Section 68 of the 1969 Act relate to fixing
of individual liability on members of the Board of Directors or
officials of the Society, for the purposes of recouping the loss
caused to the Society on account of acts or omissions by
members of the Managing Committee or by officials of the
Society. The proceedings under Section 68 of the 1969 Act
are akin to misfeasance proceedings under Section 543 of the
Companies Act, 1956/Section 340 of the Companies Act, 2013,
where the individual liability of the Directors of the Company
is determined. In Kudayathoor Service Co-operative Bank
Ltd (supra), while considering the provisions of Sections 32,
65, 66, and 68 of the 1969 Act, a Full Bench of this Court held
thus:-
"17. As noted, Section 66 of the Act empowers the
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Registrar, on his own motion or on the application
of a creditor of a society, to inspect or direct any
person authorised by him by order in writing in its
behalf to inspect the books of the society. Similarly,
Section 65 empowers the Registrar, on his own
motion or on any of the circumstances mentioned in
clauses (b) to (f) of sub-section (1) of Section 65, to
order an inquiry by himself or by a person
authorised by an order in writing into the
constitution, working and financial condition of the
society, if he is satisfied that it is necessary to do
so. Section 65 also empowers the Registrar to
supersede the Managing Committee of a society in
accordance with the provisions contained in Section
32, if any major defect in the constitution or
working or financial condition of the society is
noticed in an inquiry under Section 65(1). Section
68 provides that if in the course of an inquiry or
inspection it is found that any person who is or was
entrusted with any organisation or management of
co-operative societies or who is or has at any time
been an officer or an employee of the society has
made any payment contrary to the Act or the Rules
or the bye-laws or has caused to any loss or damage
in the assets of the society by breach of trust or
wilful negligence or mismanagement or has
misappropriated or fraudulently retained any
money or other property belonging to such society
or has destroyed or caused the destruction of the
records, the Registrar may, on his own motion, or
on the application of the committee, liquidator or
any creditor, inquire himself or direct any person
authorised by him by an order in writing in this
behalf, to inquire into the conduct of such person.
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Section 68(2) provides that where an inquiry is
made under sub-section (1), the Registrar may,
after giving the person concerned an opportunity of
being heard, by order in writing, require him to
repay or restore the money or other property or any
part thereof, with interest at such rate or to pay
contribution and costs or compensation to such
extent, as the Registrar may consider just and
equitable. The aforesaid provisions would indicate
that the Registrar would be competent to supersede
the Managing Committee of the society under
Section 32 of the Act or surcharge the members of
the Managing Committee or others under Section
68 based on the report of the inquiry under Section
65 or inspection under Section 66. No doubt,
supersession of the Managing Committee of a
society and surcharge of the members of the
Managing Committee and others are drastic
measures involving adverse civil consequence as far
as the parties are concerned which include
infraction of property, personal rights and material
deprivation. But it is seen that an opportunity of
hearing is provided for under Section 32 of the Act
before the Managing Committee of a society is
superseded under that provision except in
exceptional circumstances referred to therein.
Similarly, a further inquiry under Section 68(1) of
the Act is provided for, based on the report of
inquiry under Section 65 or inspection under
Section 66 and an opportunity of hearing is
required to be given in terms of Section 68(2)
before a person is called upon to repay or restore
the money or other property as found recoverable
from him. Rule 66(7)(ii) also provides that on
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getting the report of inquiry or inspection, as the
case may be, the Registrar shall give the person or
persons concerned an opportunity of hearing before
issuing an order of surcharge. In other words, the
Act contemplates an opportunity of hearing to all
affected persons before action is taken on the
report of inquiry or inspection, whether it be under
Section 32 or under Section 68, except in situations
provided for in Section 32 where the Registrar is
empowered to dispense with the opportunity of
hearing. Section 32 empowers the Registrar to
dispense with the opportunity of hearing before a
committee is superseded only in cases where the
Registrar is of the opinion that it is not reasonably
practical to do so. The relevant provision contained
in sub-section (3) of Section 32 reads thus:
"Notwithstanding anything contained in sub-section
(1) or sub-section (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
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(b) in the case of an Apex Society or a Central Society
only after consulting the State Co-operative Union."
The exceptional situation provided for in sub-
section (3) of Section 32 being one of the exceptions
to the rule audi alteram partem, the scheme of the
Act can certainly be understood as one providing
for an opportunity of hearing to the persons
concerned before an action is taken on the report of
inquiry or inspection. True, the statute does not
expressly provide for an opportunity of hearing to
parties on the acceptability of the report of inquiry
or inspection before the opportunity of hearing
provided for under Sections 32 and 68. As noted,
while the requirement of giving reasonable
opportunity of being heard to the party affected
before an order is made by an administrative or a
quasi-judicial or judicial authority cannot be
dispensed with, there can be exceptions to the said
requirement and the extent and its application
cannot be put in a straight jacket formula. In other
words, the question whether the principle has to be
applied and if so, to what extent and at what stage
it is to be done etc. are matters to be decided
bearing in mind the express language and the basic
scheme of the provision conferring the power, the
nature of power conferred, the purpose for which
the power is conferred, and the final effect of the
exercise of that power on the rights of the person
affected. As noted, insofar as proceedings under
Sections 32 and 68 are contemplated and provided
for under the Act based on the report of inquiry or
inspection, it is obligatory on the part of the
Registrar initiating steps under Section 32 or
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Section 68, to give copy of the report, on the basis
of which the action is proposed, to the parties
concerned. This proposition has not been disputed
by the learned State Attorney, although there was
dispute between the counsel appearing for the
parties on either side as to whether such reports
are in reality being served to the parties concerned.
Similarly, the fact that there is no provision in the
Act and Rules obligating the Registrar under
Sections 32 and 68 to provide copy of report of
inquiry or inspection is also not disputed by the
learned State Attorney. The only argument put
forward by the State Attorney in this context is Rule
24 of the Rules which enables the parties concerned
to obtain copies of such reports. Rule 24 of the
Rules reads thus:
"24. Right to obtain documents from
Registrar's Office:--
(1) Any person may on payment of fees at the rates
as may be prescribed by the Registrar obtain a
certified copy of any public document not being a
document privileged under the Indian Evidence Act,
filed in the office of the Registrar, provided that no
such person shall be entitled to the supply of such
copy unless he satisfies the Registrar that he
requires it to seek redress in any matter in which he
is aggrieved or for any other lawful purpose.
(2) The application fee shall be paid in the shape of Court
Fee Stamps.
(3) Along with every application for copies, copying
sheets of the prescribed value for preparing the
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copies shall be supplied. Note:- Each statement,
account, report, petition, order or the like shall be
treated as a separate document and shall be written
on separate copying stamp paper.
(4) Copies must be transcribed only on the front
page of every copying paper."
A reading of the extracted Rule would only show
that any person may on payment of fees at the rates
as may be prescribed, obtain a certified copy of any
public document filed in the office of the Registrar.
Even the said provision clarifies that no such person
shall be entitled to the supply of such copies unless
he satisfies the Registrar that he requires it to seek
redress in any matter in which he is aggrieved or
for any other lawful purpose. In other words, the
Rule does not confer an absolute right on an
applicant under the same to claim copies of the
documents filed in the office of the Registrar. The
said Rule, according to us, does not satisfy the
statutory obligation on the part of the Registrar
under the Act to provide a copy of the report of
inquiry or inspection before initiating action under
Section 32 or Section 68, as the case may be, on the
basis of the findings in the report of inquiry or
inspection. Needless to say that if the committee of
a society is superseded under Section 32 of the Act
based on the factual findings rendered in a report of
inquiry or inspection without providing to the party
concerned a copy of the report of inquiry or
inspection, the order of supersession would be
plainly illegal. Similarly, if any person mentioned in
Section 68(1) of the Act is surcharged based on the
finding in an order of inquiry under Section 65 or
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inspection under Section 66 without giving to him a
copy of the report of inquiry or inspection as also
the report of inquiry under Section 68(1), the
surcharge order would also be illegal. The
argument advanced by the learned State Attorney
that the party concerned, if chooses to obtain copy
of the report of inquiry or inspection, he will have to
obtain it under Rule 24 of the Rules cannot be
accepted. But that does not mean that the statute
contemplates an implied obligation on the part of
the Registrar to afford an opportunity of hearing as
to the acceptability or otherwise of the report of
inspection before initiating proceedings pursuant to
the same whether it be under Section 32 or under
Section 68 of the Act. The scheme of the Act
appears to us to be that the correctness or
otherwise of the report of inquiry or inspection,
shall be canvassed by the parties concerned in the
hearing provided to them on the further action
taken pursuant to the report, for the hearing would
not serve any purpose if the Registrar does not
propose any action based on the report. Even if the
Registrar proposes any action, be it under Sections
32 or 68, the said action being one on the basis of
the report of inquiry or inspection, the essential
purpose of the opportunity of hearing in the
proceedings initiated for taking action being to
enable the parties concerned to canvass for the
correctness of the findings in the report of inquiry
or inspection, there is no need for a hearing before
a tentative decision is taken on the action based on
the report. Needless to say, it is unnecessary to
have two hearings for the same purpose. In other
words, we are of the view that the nature of the
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statutory duty imposed on the authorities under the
Act does not imply any obligation to hear the
parties concerned on the acceptability or otherwise
of the report of inquiry or inspection as the case
may be, before a tentative decision is taken on the
further action on the report."
It is evident from the legal principles established by the Full
Bench in Kudayathoor Service Co-operative Bank Ltd,
(supra) that the right of the petitioners or additional
respondent Nos. 5 to 7 to raise objections to the findings
presented in the report under Section 66 of the 1969 Act will
only arise at a time when a show cause notice is issued either
under Section 32 or Section 68(2) of the 1969 Act. Currently,
although a report has been prepared against the members of
the Managing Committee, the proceedings have not yet
resulted in an order of surcharge. It is possible that, while
considering the explanations submitted by the members of the
Managing Committee to the show cause notice that may be
issued under Section 68(2) of the 1969 Act, the proceedings
will be discontinued against them or some of them. Since the
proceedings are still in progress, the petitioners cannot assert
that there are numerous flaws in the preparation of the
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reports, particularly when it is not disputed that the
petitioners are entitled to raise all contentions raised in this
writ petition before the Competent Authority as and when a
show cause notice is issued under Section 68(2) of the 1969
Act.
Consequently, reserving the liberty of the petitioners or
any other individual to whom a show cause notice under
Section 68(2) of the 1969 Act may be issued to raise all
contentions, including those raised in this writ petition, before
the Competent Authority, if and when a notice is issued to
them under Section 68(2) of the 1969 Act, this writ petition
will stand dismissed.
Sd/-
GOPINATH P.
JUDGE
ajt
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APPENDIX OF WP(C) NO. 32931 OF 2025
PETITIONER EXHIBITS
EXHIBIT-P1 TRUE COPY OF THE REPORT DATED 18.03.2025
SUBMITTED BY 3RD RESPONDENT TO 2ND
RESPONDENT
EXHIBIT-P2 TRUE COPY OF THE ORDER DATED 23.04.2025
ISSUED BY 2ND RESPONDENT
EXHIBIT-P3 TRUE COPY OF THE ORDER NO .ARGCTR/24/2025-
UI(2) DATED 28.04.2025 ISSUED BY 3RD
RESPONDENT
EXHIBIT-P4 TRUE COPY OF THE NOTICE DATED 03.07.2025
ISSUED BY 3RD RESPONDENT
EXHIBIT-P5 TRUE COPY OF THE LETTER DATED NIL SUBMITTED
BY PRESIDENT
EXHIBIT-P6 TRUE COPY OF THE LETTER DATED NIL SUBMITTED
BY VICE PRESIDENT
EXHIBIT-P7 TRUE COPY OF THE NOTICE DATED 07.07.2025
ISSUED BY 3RD RESPONDENT
EXHIBIT-P8 TRUE COPY OF THE LETTER DATED 10.07.2025
SUBMITTED BY SECRETARY OF SOCIETY
EXHIBIT-P9 TRUE COPY OF THE EXPLANATION DATED
16.08.2025 SUBMITTED BY PRESIDENT AND
MANAGING COMMITTEE MEMBERS TO 3RD RESPONDENT
EXHIBIT-P10 TRUE COPY OF THE APPLICATION DATED
05.07.2025 SEEKING RECLASSIFICATION OF THE
SOCIETY
EXHIBIT-P11 TRUE COPY OF THE ORDER DATED 21.12.2016
ISSUED BY 2ND RESPONDENT
EXHIBIT-P12 TRUE COPY OF THE ORDER NO.JRGPKD/650/2025-
CRP2 DATED 08.08.2025 ISSUED BY 2ND
RESPONDENT
EXHIBIT-P13 TRUE COPY OF THE INSPECTION REPORT DATED
18.07.2025 SUBMITTED BY INSPECTORS
RESPONDENT EXHIBITS
Exhibit R5(a) The copy of the judgment dated 16.2.2021 in
W.P.(C) 13032 of 2020 in K.K. Abraham and
Others Vs. State of Kerala and Others
