Kerala High Court
Managing Committee vs State Of Kerala on 7 January, 2025
Author: N. Nagaresh
Bench: N.Nagaresh
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 7TH DAY OF JANUARY 2025 / 17TH POUSHA, 1946
WP(C) NO. 21514 OF 2021
PETITIONER:
N.MOHANAN,
AGED 53 YEARS
S/O. NANDAKUMAR,
(MEMBER SHIP NO.11011 OF PARAVUR CO-OPERATIVE BANK NO.
1759), RESIDING AT JAYA BHAVAN, VANIYAKKADU, MANNAM
P.O, NORTH PARAVUR, ERNAKULAM DISTRICT-683 513
BY ADVS.
ANOOP.V.NAIR
RAMESH CHAND
DEVI P.
A.K.ANANDA KRISHNAN
RESPONDENTS:
1 THE STATE OF KERALA,
REPRESENTED BY SECRETARY TO GOVERNMENT,
CO-OPERATIVE SOCIETIES DEPARTMENT,
GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM-695 001
2 THE REGISTRAR OF CO-OPERATIVE SOCIETIES
OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES,
JAWAHAR SAHAKARANA BHAVAN,
DPI JUNCTION, THYCAUD,
THIRUVANANTHAPURAM-695 014.
3 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL),
OFFICE OF THE JOINT REGISTRAR, 5TH FLOOR,
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:2:
NEW BLOCK, CIVIL STATION, KAKKANAD,
ERNAKULAM DISTRICT-682 030
4 THE JOINT REGISTRAR (AUDIT),
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
SOCIETIES (AUDIT), ERNAKULAM DISTRICT-682 030
5 THE ADDITIONAL REGISTRAR (ICDP),
(INCHARGE OF CO-OPERATIVE VIGILANCE OFFICER),
OFFICE OF THE CO-OPERATIVE VIGILANCE OFFICER,
CO-OPERATIVE SOCIETY VIGILANCE WING,
STATE CO-OPERATIVE BANK BUILDING,
OVER BRIDGE, THIRUVANANTHAPURAM-695 001
6 THE ASSISTANT DIRECTOR (AUDIT),
OFFICE OF THE ASSISTANT REGISTRAR OF CO-
OPERATIVE SOCIETIES,
MOOKAMBIKA TEMPLE ROAD,
NORTH PARAVUR-683 513
7 THE PARAVUR CO-OPERATIVE BANK NO. 1759,
NORTH PARAVUR, ERNAKULAM DISTRICT-683 513,
REPRESENTED BY ITS SECRETARY
8 THE PRESIDENT,
THE PARAVUR CO-OPERATIVE BANK NO. 1759,
NORTH PARAVUR, ERNAKULAM DISTRICT-683 513
9 THE SECRETARY,
THE PARAVUR CO-OPERATIVE BANK NO. 1759,
NORTH PARAVUR, ERNAKULAM DISTRICT-683 513
10 THE ASSISTANT REGISTRAR (GENERAL),
OFFICE OF THE ASSISTANT REGISTRAR OF CO-
OPERATIVE SOCIETIES, NORTH PARAVUR,
ERNAKULAM DISTRICT-683 513
*ADDL.11 SEENA AJITH
SENIOR INSPECTOR (SPECIAL GRADE)
ASSISTANT REGISTRAR OF COOPERATIVE SOCIETIES
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(GENERAL), SAHAKARIBHAVAN, MOOKAMBI ROAD,
NORTH PARAVUR, ERNAKULAM DISTRICT-683 513
(ADDITIONAL 11TH RESPONDENT IS IMPLEADED AS
PER ORDER DATED 07.01.2025)
BY ADVS.
SRI. P.C. SASIDHARAN, STANDING COUNSEL
SMT. M. ANIMA, GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
ADMISSION ON 27.11.2024, ALONG WITH WP(C).24688/2023 AND
THE COURT ON 07.01.2025 DELIVERED THE FOLLOWING:
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
TUESDAY, THE 7TH DAY OF JANUARY 2025 / 17TH POUSHA, 1946
WP(C) NO. 24688 OF 2023
PETITIONER:
MANAGING COMMITTEE
PARAVUR CO-OPERATIVE BANK LTD NO.1759,
NORTH PARAVUR, ERNAKULAM DISTRICT,
REPRESENTED BY ITS SECRETARY,
PIN - 683513
BY ADV P.C.SASIDHARAN
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT,
DEPARTMENT OF CO-OPERATION, SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001
2 JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES
(GENERAL), ERNAKULAM, PIN - 682025
3 ENQUIRY OFFICER/ALANGAD UNIT INSPECTOR
APPOINTED UNDER SECTION 66(2) OF THE
COOPERATIVE SOCIETIES ACT,
OFFICE OF THE ASSISTANT REGISTRAR (GENERAL) OF
CO-OPERATIVE SOCIETIES NORTH PARAVUR,
ERNAKULAM, PIN - 683513
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ADDL R4 N. MOHANAN,
AGED 53 YEARS, S/O. NANDAKUMAR,
(MEMBER SHIP NO. 11011 OF PARAVUR CO-OPERATIVE
BANK NO. 1759), RESIDING AT JAYA BHAVAN,
VANIYAKKADU, MANNAM P.O, NORTH PARAVUR,
ERNAKULAM DISTRICT - 683 513
(ADDITIONAL 4TH RESPONDENT IS IMPLEADED AS PER
ORDER DATED 16/08/2023 IN IA 1/23 IN WP(C))
BY ADVS.
SRI. ANOOP.V.NAIR
SMT. TANOOSHA PAUL
SRI. ROHITH C.
SMT. AVANTHIKA R.
SMT. M. ANIMA, GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 27.11.2024, ALONG WITH WP(C).21514/2021 AND THE
COURT ON 07.01.2025 DELIVERED THE FOLLOWING:
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N. NAGARESH, J.
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W.P.(C) Nos.21514 of 2021 and 24688 of 2023
`````````````````````````````````````````````````````````````
Dated this the 7th day of January, 2025
JUDGMENT
~~~~~~~~~
W.P.(C) No.21514 of 2021 was filed by a
member of the 7th respondent-Paravur Co-operative Bank
seeking to direct the 2nd respondent-Registrar of Co-
operative Societies to take action on Exts.P11 and P11(a)
complaints and to initiate enquiry under Section 65 of the
Kerala Co-operative Societies Act to terminate Governing
Council members and to appoint an Administrator /
Administrative Committee to manage the Bank.
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2. W.P.(C) No.24688 of 2023 has been filed
by the Managing Committee of the 7 th respondent-Bank in
W.P.(C) No.21514 of 2021 seeking to quash Ext.P4 order in
revision. The Revision Petition was filed by the Managing
Committee to the Government, challenging Ext.P2
proceedings whereby an enquiry is ordered under Section
68(1) of the Kerala Co-operative Societies Act, 1969. The
Revision Petition stands rejected as not maintainable. The
parties to these writ petitions and exhibits are referred to in
this judgment as they appear in W.P.(C) No.21514 of 2021
(unless otherwise specified) for clarity.
3. In Exts.P11 and P11(a) complaints filed by
the petitioner to the Registrar of Co-operative Societies, the
petitioner alleged that there occurred large scale corruption
in the income tax dealings of the Bank for the years 2009 to
2018. It was reported in the 2017-2018 General body that
₹79,50,000/- has been spent for income tax. Enquiry
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revealed that much amount has not been paid as income
tax. It is alleged that an amount of ₹1,32,00,000/- has been
spent towards tax and advocate fee violating the Reserve
Bank's criteria.
4. The petitioner further alleged that a loan
has been advanced to Sri. Sudheerkumar and Smt. Shainaja
Sudheerkumar on the security of a landed property which
stood already attached by a court order and consequently,
the Bank is not in a position to recover ₹50 lakhs from the
loanees. This transaction is filled with corruption.
5. The Secretary of the Bank filed a Counter
Affidavit. The Secretary submitted that there was failure on
the part of the Bank in submitting income tax returns. The
Income Tax Department ordered a survey under Section
133A of the Income Tax Act. The Income Tax Department
assessed a liability of ₹13,32,73,120/- and issued a Demand
Notice for that amount. The Income Tax Department granted
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the Bank benefit of Section 80(P) and the liability was settled
for a much lesser amount. The expenditure was approved by
the General body of the Society.
6. As regards the loan given to
Sri.Sudheerkumar and Smt. Shainaja Sudheerkumar, the
Secretary submitted that the loan was advanced in the year
2006 by accepting mortgage of a property. The Title Deed of
the property is with the Society and the Society is having first
charge over the property.
7. Government Pleader submitted that Section
66(2) inspection was ordered into the income tax
expenditure of the Bank and the loan advanced to
Smt.Shainaja Sudheerkumar. The Unit Inspector submitted a
report dated 10.08.2022. Thereupon, Section 68(1)
proceedings were initiated as per order dated 09.01.2023 of
the Joint Registrar General.
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8. The Managing Committee of the Bank filed
Revision Petition against the said order dated 09.01.2023.
The Revision Petition stands rejected as per Ext.P4 order in
W.P.(C) No.24688 of 2023, by the Government. The
Managing Committee of the Bank challenged Ext.P4 order in
W.P.(C) No.24688 of 2023 contending that a Revision
Petition is maintainable under Section 87 of the Kerala Co-
operative Societies Act, 1969 against any proceedings of the
Joint Registrar.
9. I have heard the learned counsel for the
petitioner in W.P.(C) No.21514 of 2021, the learned counsel
for the petitioner in W.P.(C) No.24688 of 2023, the learned
counsel for the Managing Committee and the learned
Government Pleader representing the Joint Registrar.
10. The prayer of the petitioner in W.P.(C)
No.21514 of 2021 is to hold a Section 65 inquiry as regards
the allegations raised by the petitioner. I find that an enquiry
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was ordered and the Unit Inspector has found irregularities.
Pursuant thereto, Section 68 Surcharge proceedings were
also initiated. Therefore, W.P.(C) No.21514 of 2021 has
practically become infructuous.
11. The Managing Committee would submit
that against the order imposing Section 68(1) proceedings,
they have filed a Revision Petition before the Government
and the Government has dismissed the revision as not
maintainable as per Ext.P4 order in W.P.(C) No.24688 of
2023. The Managing Committee would urge that a revision is
maintainable against the order under Section 87 of the
Kerala Co-operative Societies Act, 1969. Section 68 of the
Kerala Co-operative Societies Act, 1969 reads as follows:
"68. Surcharge - (1) If in the course of an audit,
inquiry, inspection or the winding up of a society,
it is found that any person, who is or was
entrusted with the organization or management
of such society 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 and
the rules or the bye-laws, or has caused any loss
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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, of
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.
(2) 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.
(3) Where the money, property, interest, cost or
compensation is not repaid or restored as per
sub-section (2), the Registrar shall take urgent
steps to recover such amounts from the
concerned persons as arrears of public revenue
due on land as specified in Section 79 of the Act."
12. An order under Section 68(1) is an order of
inquiry. As per Section 68, when an inquiry is ordered under
Section 68(1), the persons affected by the order will get an
opportunity of being heard. Therefore, I do not find any
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illegality in Ext.P4 order passed by the Government rejecting
the Revision Petition filed by the Managing Committee
against Ext.P2 order.
The writ petitions are therefore dismissed.
Sd/-
N. NAGARESH, JUDGE
aks/06.01.2025
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APPENDIX OF WP(C) 21514/2021
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE REPORT NO. P
1031/21, RECEIVED FROM THE OFFICE OF
THE 10TH RESPONDENT TO THE
PETITIONER, DATED 20.09.2021.
Exhibit P2 TRUE COPY OF THE ANNUAL REPORT OF
2015-2016.
Exhibit P3 TRUE COPY OF THE ANNUAL REPORT FOR
THE YEAR 2017-2018.
Exhibit P4 TRUE COPY OF THE ANNUAL REPORT OF
2018-2019.
Exhibit P5 TRUE COPY OF THE AUDIT CERTIFICATE
AND AUDIT MEMORANDUM FOR THE YEAR
2016-17.
Exhibit P6 TRUE COPY OF THE AUDIT CERTIFICATE
AND AUDIT MEMORANDUM FOR THE YEAR
2017-2018.
Exhibit P7 TRUE COPY OF THE AUDIT CERTIFICATE
AND AUDIT MEMORANDUM FOR THE YEAR
2018-19.
Exhibit P8 TRUE COPY OF THE AUDIT CERTIFICATE
AND AUDIT MEMORANDUM FOR THE YEAR
2019-20
Exhibit P9 TRUE COPY OF THE JUDGMENT DATED
08.02.2019 IN O.S.NO. 186/2019 PASSED
BY TH COURT OF PRINCIPAL SUB-JUDGE,
NORTH PARAVUR.
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Exhibit P10 TRUE COPY OF THE ENCUMBRANCE
CERTIFICATE DETAILS DATED 26.08.2021
ON THE MORTGAGED PROPERTY OF MR.
SUDHEER KUMAR AND MRS. SHYNAJA
SUDHEER KUMAR ISSUED BY THE
REGISTRATION DEPARTMENT.
Exhibit P11 TRUE COPY OF THE REPRESENTATION DATED
04.08.2021 SUBMITTED TO THE 2ND
RESPONDENT BY THE PETITIONER.
Exhibit P11(A) TRUE COPY OF THE REPRESENTATION DATED
03.09.2021 SUBMITTED TO THE 2ND
RESPONDENT BY THE PETITIONER.
Exhibit P12 TRUE COPY OF THE REPRESENTATION DATED
NIL GIVEN TO THE 3RD RESPONDENT.
Exhibit P13 TRUE COPY OF THE REPRESENTATION DATED
NIL GIVEN TO THE 6TH RESPONDENT.
Exhibit P14 TRUE COPY OF THE ACKNOWLEDGMENT
RECEIPT DATED 28.09.2021 ISSUED FROM
THE OFFICE OF THE 5TH RESPONDENT TO
THE PETITIONER ACKNOWLEDGING THE
COMPLAINT RECEIVED FROM THE
PETITIONER.
Exhibit P15 TRUE COPY OF THE QUESTIONNAIRE,DATED
10.9.2021 SUBMITTED BY ONE MR.MADHU
V.S. UNDER RTI,
Exhibit P16 TRUE COPY OF THE ANSWERS AND THE
DOCUMENTS DATED 7.10.2021 RECEIVED
FROM RTI,
Exhibit P17 TRUE COPY OF THE ORDER DATED
10/01/2022 ISSUED BY THE 3RD
RESPONDENT.
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Exhibit P18 TRUE COPY OF THE AUDIT CERTIFICATE
AND AUDIT MEMORANDUM OF THE YEAR
2020-2021 OF THE 7TH RESPONDENT BANK
THAT CONTAINS THE AUDIT OBJECTIONS.
Exhibit P19 TRUE COPY OF THE ENQUIRY REPORT
SUBMITTED BY THE DEPUTY SUPERINTEND
OF POLICE VACB ERNAKULAM UNIT TO
HON'BLE MUVATTUPUZHA ENQUIRY
COMMISSIONER AND SPECIAL
JUDGE(VIGILANCE) DATED 13.03.2024
Exhibit P20 TRUE COPY OF THE ORDER PASSED BY THE
ENQUIRY COMMISSIONER AND SPECIAL
JUDGE (VIGILANCE MUVATTUPUZHA) IN CMP
NO.249/2021 DATED 13.03.2024
Exhibit P21 TRUE COPY OF THE FIR FILED BY THE
VIGILANCE AND ANTICORRUPTION BEAURO
ERNAKULAM BEFORE THE COURT OF ENQUIRY
COMMISSIONER AND SPECIAL JUDGE
MUVATTUPUZHA ON 11.03.2024
RESPONDENTS' EXHIBITS
Exhibit R7(A) TRUE COPY OF THE PROCEEDINGS DATED
06/08/2014 ISSUED BY THE INCOME TAX
DEPARTMENT.
Exhibit R7(B) TRUE COPY OF THE INTERIM ORDER DATED
08/08/2014 IN WPC.NO.20629/2014
ISSUED BY THIS HON'BLE COURT.
Exhibit R7(C) TRUE COPY OF THE REGISTRATION OF
MORTGAGE.
Exhibit R7(D) TRUE COPY OF THE GAHAN DATED
11/05/2018.
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Annexure R3(A) TRUE COPY OF THE ORDER
NO.HM/1919/2021 DATED 02.12.2021
Annexure R3(B) TRUE COPY OF THE ORDER
NO.HM/1919/2021 DATED 28.01.2022
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APPENDIX OF WP(C) 24688/2023
PETITIONER EXHIBITS
Exhibit P1 TRUE COPY OF THE PROCEEDING ISSUED BY
THE JOINT REGISTER OF COOPERATIVE
SOCIETIES (GENERAL), ERNAKULAM, NO.
H.M.1919/2021 DATED 28/01/2022
Exhibit P2 TRUE COPY OF THE PROCEEDINGS ISSUED
BY THE 2ND RESPONDENT, NO. H.M.-
1919/2021 DATED 09/01/2023
Exhibit P3 TRUE COPY OF THE REVISION PETITION
PREFERRED BEFORE THE GOVERNMENT DATED
30/01/2023
Exhibit P4 TRUE COPY OF THE COMMUNICATION ISSUED
BY THE GOVERNMENT, NO COOP-
C2/68/2023-CO-OP DATED 19/06/2023
