{"id":72697,"date":"2008-08-22T00:00:00","date_gmt":"2008-08-21T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/o-devassy-vs-joint-registrar-of-co-operative-on-22-august-2008"},"modified":"2017-09-17T01:07:52","modified_gmt":"2017-09-16T19:37:52","slug":"o-devassy-vs-joint-registrar-of-co-operative-on-22-august-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/o-devassy-vs-joint-registrar-of-co-operative-on-22-august-2008","title":{"rendered":"O.Devassy vs Joint Registrar Of Co-Operative on 22 August, 2008"},"content":{"rendered":"
Kerala High Court<\/div>\n
O.Devassy vs Joint Registrar Of Co-Operative on 22 August, 2008<\/div>\n
       \n\n  \n\n  \n\n \n \n  IN THE HIGH COURT OF KERALA AT ERNAKULAM\n\nWP(C).No. 22606 of 2007(N)\n\n\n1. O.DEVASSY,S\/O.OUSEPH,AGED 70 YEARS,\n                      ...  Petitioner\n2. V.M.HAMZA,S\/O.MUHAMMED,\n3. DEVASSY JOSEPH,S\/O.JOSE,\n4. N.A.IBRAHIMKUTTY,S\/O.AHMED,AGED 70,\n5. MOLLY VARHGESE,W\/O.VARGHESE,AGED 48,\n\n                        Vs\n\n\n\n1. JOINT REGISTRAR OF CO-OPERATIVE\n                       ...       Respondent\n\n2. THE RETURNING OFFICER,\n\n3. THE KERALA STATE CO-OPERATIVE HOUSING\n\n                For Petitioner  :SRI.JOHN JOSEPH VETTIKAD\n\n                For Respondent  :SRI.A.K.CHINNAN\n\nThe Hon'ble MR. Justice PIUS C.KURIAKOSE\n\n Dated :22\/08\/2008\n\n O R D E R\n                        PIUS C. KURIAKOSE, J.\n               -----------------------------------------------\n                 W.P.(C)Nos. 22606 & 24584 OF 2007\n               -----------------------------------------------\n                 Dated this the        day of July, 2008\n\n                            J U D G M E N T\n<\/pre>\n
      The petitioners in WP(C). No. 22606 of 2007 are five members of<\/p>\n
the Managing Committee of Kunnathunadu Taluk Housing Co-operative<\/p>\n
Society Ltd. No. 307 (hereafter referred as the Society).              First<\/p>\n
respondent in that writ petition is Joint Registrar of Co-operative<\/p>\n
Societies (General), second respondent is the Returning Officer and<\/p>\n
the third respondent is the Kerala State Co-operative Housing<\/p>\n
Federation Ltd.   The petitioner in WP(C).24584 of 2004 is also an<\/p>\n
elected member of the Managing Committee of the same Society and<\/p>\n
the respondents therein are the Joint Registrar (R1), the Society (R2)<\/p>\n
and the Administrator appointed for the Society (R3). The Managing<\/p>\n
Committee of the Society has been ordered to be superseded by the<\/p>\n
first respondent and the order of the supersession           is produced as<\/p>\n
Ext.P8 in WP(C). No. 22606 of 2007 and as Ext.P3 in WP(C). No.<\/p>\n
24584 of 2007.\n<\/p>\n
      2. I shall refer to the facts as they are stated in WP(C). No.<\/p>\n
22606 of 2007.     The Society is a primary society affiliated to the<\/p>\n
Kerala State Housing Federation Ltd. The Society was registered in<\/p>\n
the year 11-1-1973 and at present the Society has 2835 members.<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -2-<\/span><\/p>\n
The share capital of the Society is Rs.49,99,620\/- and its working<\/p>\n
capital is Rs.4,73,07,053.75. The society was adjudged as the best<\/p>\n
primary society in Ernakulam District by the Apex Society. Exts.P1<\/p>\n
and P1(a) certificates of merit issued by the Apex Society on 12-7-<\/p>\n
2003 and 28-7-2004 are relied on in this context. Durind the last 10<\/p>\n
years the Society has advanced a sum of Rs.14,03,49,250\/- in 2317<\/p>\n
loans. The present Managing Committee was elected on 12-8-2002.<\/p>\n
Since he terms of the Committee was due to expire a resolution was<\/p>\n
adopted on 28-4-07 to conduct election to the Managing Committee on<\/p>\n
29-7-2007. Request was made to the Election Commission to take<\/p>\n
necessary steps for conduct of election. The Election Commission has<\/p>\n
published time schedule Ext.P2 dated 19-6-2007. The election is to<\/p>\n
be held for electing members to the Managing Committee. Pursuant<\/p>\n
to Ext.P2 19 candidates      submitted nomination papers and after<\/p>\n
withdrawal only 9 candidates remained in the list. Ext.P3 notice dated<\/p>\n
13-7-2007 has been published by the Returning Officer. Referring to<\/p>\n
Rule 35(h) of the KCS Rules the petitioners claimed that all the 9<\/p>\n
candidates in Ext.P3 are entitled to be declared as elected before 29-7-<\/p>\n
2007. Ext.P4 copy of letter dated 9-2-2007 was issued by the first<\/p>\n
respondent Joint Registrar on the basis of an urgent inspection<\/p>\n
conducted in the Society by the Unit Inspector.       Under Ext.P4 the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -3-<\/span><\/p>\n
Society is directed to cure certain defects pointed out in the report of<\/p>\n
the Inspector. To Ext.P4 the President of the Society submitted Ext.P5<\/p>\n
detailed reply explaining the steps which had been taken for curing the<\/p>\n
defects pointed out and also stating that certain defects have already<\/p>\n
been cured. The petitioners submit that for the past many years the<\/p>\n
Board of Directors of the Society consists entirely of persons owing<\/p>\n
allegiance to political parties opposed to the present ruling front. In<\/p>\n
the present election also the 9 candidates who are entitled to be<\/p>\n
declared elected owe allegiance to political parties opposed to the<\/p>\n
present ruling front. The petitioners point out that the President of<\/p>\n
the Society is also a member of the Board of Directors of the Apex<\/p>\n
Society, the Kerala State Co-operative Housing Federation in his<\/p>\n
capacity as a representative of the primary society. It is alleged that it<\/p>\n
was with the intention of somehow wresting power from the petitioners<\/p>\n
by superseding the elected Managing Committed consisting mainly of<\/p>\n
the petitioner and to appoint an administrator and thereby stall the<\/p>\n
election process which are already started that the inspection was<\/p>\n
conducted unauthorisedly by the Deputy Registrar of Co-operative<\/p>\n
Societies (Vigilance, Ernakulam) which was challenged in this court by<\/p>\n
filing WP(C). No. 18570 of 2007. It is submitted that the enquiry<\/p>\n
conducted was in clear violation of sections 65 and 66 of the KCS Act<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -4-<\/span><\/p>\n
and Rule 66 of the KCS Rules. Another intention was to capture power<\/p>\n
in the Apex Court by destroying the quorum in the Apex Society which<\/p>\n
can be done by removing the President of the Society, an object which<\/p>\n
can be achieved only superseding the Society.        On receiving show<\/p>\n
cause notice under section 32(1) requiring them and other Managing<\/p>\n
Committee members as to why the Managing Committee members<\/p>\n
should not be superseded the petitioners approached this Court by<\/p>\n
filing WP(C). No.19153 of 2007.       This Court disposed of that writ<\/p>\n
petition directing the Registrar to consider the objections filed by the<\/p>\n
petitioners and to pass final orders only after giving the petitioners an<\/p>\n
opportunity of being heard. Ext.P6 is true copy of the show cause<\/p>\n
notice and Ext.P7 is true copy of the reply submitted by the petitioners<\/p>\n
to Ext.P6.    As apprehended the petitioners committee is now<\/p>\n
superseded and Ext.P8 is the supersession order. According to the<\/p>\n
petitioners the point of time at which Ext.P8 has been issued, the<\/p>\n
undue haste and the manner in which the same has been issued will<\/p>\n
demonstrate the mala fides, the ulterior motives and also the<\/p>\n
arbitrariness which taint Ext.P8. The petitioners submit that Ext.P8 is<\/p>\n
based on a report allegedly submitted by the Deputy Registrar of Co-<\/p>\n
operative Society (Vigilance) and that the said report is clearly<\/p>\n
violative of sections 65 and 66 of the KCS Act and Rule 66 of KCS<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -5-<\/span><\/p>\n
Rules. Copy of the report have never been served on the petitioners<\/p>\n
nor was the contents of the reveal to the petitioners. The report has<\/p>\n
been made in violation of the statutory rules and behind the back of<\/p>\n
the petitioners. Ext.P8 order passed on the basis of such a report is<\/p>\n
illegal and is liable to be quashed.  The following were the prayers in<\/p>\n
WP(C). No. 22606 of 2007 as filed it originally.\n<\/p>\n
       i.  Issue a writ of certiorari or direction in the nature thereof
\n           calling for the records relating to Ext.P8 and quash the
\n           same.\n<\/p>\n
       ii. Direct the respondents to forbear from interfering n the
\n           election process for the conduct of the election to the
\n           members of the managing committee of Kunnathunadu
\n           Taluk Housing Co-operative Society Ltd. No.307.\n<\/p>\n
\nOn considering WP(C). No. 22606 of 2007 for admission this court<\/p>\n
passed on 24-7-2007 the following interim order.\n<\/p>\n
       “Admit.\n<\/p><\/blockquote>\n
             2. Learned Special Government Pleader for Co-operation
\n       accepts notice for respondents 1 and 2.          Issue notice to
\n       respondent No.3 by speed post with acknowledgment due
\n       returnable within ten days.\n<\/p><\/blockquote>\n
             3. Heard learned counsel for the petitioners and learned
\n       Special Government Pleader.\n<\/p><\/blockquote>\n
             4. Ext.P8 order passed under Section 32(1) of Kerala Co-
\n       operative Societies Act is impugned in this writ petition by the
\n       Board of embers of the Kunnathunadu Taluk Housing Co-<\/p><\/blockquote>\n
       operative Society. It is contended by the petitioners that Ext.P8
\n       order has been passed hastily with ulterior motives.       Ext.P2
\n       notification   issued  by   the   State   Co-operative   Election<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -6-<\/span><\/p>\n
     Commission on June 19 2007 will show that the election process
\n     to the society had already commenced. Preliminary voters’ list
\n     was published on July 2, 2007. As per the schedule all other
\n     proceedings except polling is over. Voting is scheduled to be
\n     held on July 29, 2007, if it becomes necessary. It is brought to
\n     my notice that polling may not be necessary at all, since only
\n     nine candidates remain in the fray for the nine seats in the
\n     Board.     The specific contention of the petitioners is that the
\n     entire exercise by the department is aimed at nullifying the
\n     nomination of the delegate of the society to the Kerala State
\n     Co-operative Housing Federation, respondent No.3 herein.<\/p>\n
            5. Learned Special Government Pleader submits that the
\n     Administrator had already assumed charge on the next day of
\n     the order viz. July 17, 2007. It is also submitted by the learned
\n     Special Government Pleader that she has been informed today
\n     that the Administrator has already initiated action to revoke the
\n     decision of the Board nominating its delegate to the Federation.
\n     Learned counsel for the petitioners asserts that no such order
\n     has so far been served on the Society or its President till now.<\/p>\n
            Having carefully perused the impugned order and having
\n     heard learned counsel for the parties, I am of the view that the
\n     Administrator who has reportedly assumed charge (which has
\n     not been disputed by the petitioners) shall ensure that the
\n     election process which has already commenced, is not disrupted
\n     in any manner. The Administrator and respondent No.2 shall
\n     ensure that the process of election in the society is completed
\n     and results are declared as per the schedule notified by the
\n     Election Commission in Ext.P2. Administrator shall only attend
\n     to the day today affairs of the Society. He shall not take any
\n     action to revoke the decision of the Society nominating its
\n     delegate to the Kerala State Co-operative Housing Federation,
\n     Kochi without obtaining orders from this Court.\n<\/p>\n
\nThe petitioners produced Exts.P10 toP13 and got the writ petition<\/p>\n
amended by incorporating additional paragraphs 19 to 22, additional<\/p>\n
grounds 18 to 22 and additional prayer 1(b) as follows:<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -7-<\/span><\/p>\n
      “1(b).Issue a writ of certiorary order or direction in the nature
\n            thereof and calling for the records relating to Ext. P10 and
\n            quashed the same.\n<\/p>\n
\nAmendment was sought for on the reason that though the first<\/p>\n
petitioner was permitted pursuant to the interim order dated 24-7-07<\/p>\n
to participate in the executive committee meeting of the third<\/p>\n
respondent Federation held on 27-7-07 and 30-7-07 after the<\/p>\n
completion of the meeting on 30-7-2007 the Managing Director in<\/p>\n
charge of the third respondent Federation handed over a copy of the<\/p>\n
communication dated 26-7-2007 informing the petitioner that<\/p>\n
membership of the first petitioner ceased to exist from the date when<\/p>\n
the administrator took charge in the Society. Ext.P10 is copy of the<\/p>\n
said letter dated 26-7-2007 issued by the third respondent. Ext.P11 is<\/p>\n
true copy of the notice dated 26-7-2007 issued by the third<\/p>\n
respondent regarding meeting of the executive committee to be held<\/p>\n
on 8-8-2007 at Thiruvananthapuram. In Ext.P11 item No.22 in the<\/p>\n
agenda was regarding implementation of this court’s interim order<\/p>\n
dated 24-7-2007. It was stated in the amendment application that<\/p>\n
pursuant to the interim order of this court result of the election was<\/p>\n
declared on 29-7-007 and the administrator entrusted the charge of<\/p>\n
the Society to the newly elected committee on 31-7-2007 and on the<\/p>\n
same day the newly elected committee was convened and the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                     -8-<\/span><\/p>\n
committee elected the first petitioner himself as the delegate of the<\/p>\n
Society to the Federation. Ext.P12 is true copy of the covering letter<\/p>\n
sent to the Federation along with copy of the resolution of the society<\/p>\n
dated 31-7-2007. It is stated further that the committee of the Co-<\/p>\n
operative Housing Federation resolved that the decision of the society<\/p>\n
is without consulting the federation is wrong and that in view of the<\/p>\n
interim order of this Court there is nothing wrong in conducting<\/p>\n
election. Ext.P13 is relevant portion of the minutes of the meeting of<\/p>\n
the Board of Directors of the Co-operative Housing Federation. The<\/p>\n
following are the prayers sought for in WP(C). No. 24584\/07:<\/p>\n
      i. Issue a writ of certiorari to quash Ext.P3.\n<\/p><\/blockquote>\n
      ii. Issue a writ declaring that Ext.P3 order has been passed in
\n          total violation of the requirements of law including the
\n          requirement of consultation and hence the order is bad.\n<\/p><\/blockquote>\n
      Iii. Issue a writ declaring that Ext.P3 has been passed for other
\n          oblique reasons which is no justification for invoking the
\n          power under section 32 of the KCS Act.\n<\/p><\/blockquote>\n
The first respondent Joint Registrar has filed counter affidavits in both<\/p>\n
the cases. In WP(C). No. 22606 of 2007 while it is not disputed that<\/p>\n
the committee of the Society took steps for conduct of elections and<\/p>\n
that a Returning Officer was appointed by the Election Commission in<\/p>\n
that regard and also that the said Returning Officer initiated action it is<\/p>\n
submitted that when inspection conducted in the Society by the Deputy<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -9-<\/span><\/p>\n
Registrar of Co-operative Societies (Vigilance) as a part of her duty on<\/p>\n
the 24th, 25th, 26th, 28th and 29th of May, 2007 it was found that the<\/p>\n
committee of the Society had committed serious irregularities in the<\/p>\n
working of the Society and submitted a report in that regard. It is<\/p>\n
pointed out that the first petitioner who is the President of the Society<\/p>\n
has given to himself three house construction loans of Rs.1 lakh, Rs.3<\/p>\n
lakhs and Rs.3,50,000\/- respectively on 28-12-1996, 30-10-2000 and<\/p>\n
22-10-2005. The first loan was given to him for the construction of a<\/p>\n
residential house on his house plot in Vengoor Village and was to have<\/p>\n
been repaid within a period of 15 years.        The first petitioner did<\/p>\n
construct house on the property by utilising the loan amount. But he<\/p>\n
repaid the loan after a period of 4 years of the drawal of the loan and<\/p>\n
within even closed the loan account. The second loan application was<\/p>\n
sanctioned to him by a circulated resolution and the entire loan amount<\/p>\n
was released to him in one instalment (contrary to the practice of<\/p>\n
releasing housing loan amounts in instalments according to the<\/p>\n
progress of the construction).      This loan was repaid by the first<\/p>\n
petitioner in full on the 5th year though the period of the loan was 15<\/p>\n
years. The third loan application was submitted by the first petitioner<\/p>\n
at a time when himself was the President of the Committee and was<\/p>\n
sanctioned to him by a circulated resolution. It is pointed out that<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -10-<\/span><\/p>\n
along with the subsequent loan application the first petitioner had not<\/p>\n
submitted documents which are otherwise required for sanctioning of<\/p>\n
housing loans. It is pointed out that as per the rules of the Apex<\/p>\n
Society, plan, estimate, location sketch, encumbrance certificate,<\/p>\n
possession certificate, income certificate, title documents of the plot<\/p>\n
are all to be submitted. Such documents were submitted by the first<\/p>\n
petitioner only in connection with the first loan. It is pointed out that<\/p>\n
the second and third loans were regarding construction on the very<\/p>\n
plot and in which he constructed house utilising the first loan and since<\/p>\n
he has not constructed any house as per the loan amount drawn by<\/p>\n
him as per the second and third applications, it is clear that the entire<\/p>\n
loan amount drawn under the second and third loans was misutilised<\/p>\n
by him. It is pointed out that as per byelaw17 adoption of resolution<\/p>\n
by circulation is to be resorted to only in emergencies.       The non-<\/p>\n
verification by the Committee as to whether houses were constructed<\/p>\n
by the first petitioner utilising the loan amount is a major lapse. It is<\/p>\n
then contended that the second petitioner who was also a member of<\/p>\n
the Committee was sanctioned a house repair loan of Rs.62,500\/- on<\/p>\n
27-11-2007 which had been kept in arrears by him till 18-12-2006, but<\/p>\n
on 19-12-2006 he closed that loan and immediately thereupon applied<\/p>\n
for another loan of Rs.1,10,000\/- for construction of a house. Though<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -11-<\/span><\/p>\n
the purpose of the loan has not been specified in the loan application<\/p>\n
the Committee sanctioned the loan and released the amount in one<\/p>\n
instalment. Second petitioner did not construct any house utilising this<\/p>\n
amount.      In this case also he had not submitted the necessary<\/p>\n
documents and thus it can be seen that the committee was negligent in<\/p>\n
the performance of their duties in the sanctioning and utilising of the<\/p>\n
loan.\n<\/p>\n
       It is then pointed out in the counter that while as per byelaw 26<\/p>\n
of the Society the maximum cash balance which can be retained in the<\/p>\n
Society by the Secretary is only Rs.50,000\/- the amount far in excess<\/p>\n
of Rs.50,000\/- was retained in the Society by the Secretary. But the<\/p>\n
Committee never took any action against the Secretary for recovery of<\/p>\n
penal interest on amount kept in excess of the limit. It is pointed out<\/p>\n
that an evening branch of the Ernakulam District Co-operative Bank is<\/p>\n
functioning adjacent to the Society and hence there is absolutely no<\/p>\n
justification for keeping cash in excess of the limits in the bank itself.<\/p>\n
It is then alleged that though as on 30-9-2006 a total amount of<\/p>\n
Rs.3,38,00,000\/- was realisable from 513 loanees which includes a<\/p>\n
sum of Rs.1,20,00,000\/- kept in arrears by them the Committee did<\/p>\n
not take effective action for realising the heavy overdue of loans from<\/p>\n
its members. It is pointed out that amounts are due to the State Co-<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -12-<\/span><\/p>\n
operative Housing Federation which did not approve the action of the<\/p>\n
Society re-scheduling the repayment of 51 loans for the purpose of<\/p>\n
reducing the overdue position.\n<\/p>\n
      It is then alleged that the committee of the Society was indulging<\/p>\n
in the practice of admitting members at the time of election and<\/p>\n
removing members so admitted immediately after the election. This<\/p>\n
practice has been resorted to in 2002 for the purpose of enabling the<\/p>\n
Committee Members to secure majority in the election. It is submitted<\/p>\n
that on 16-1-2007, 116 new members were admitted and that these<\/p>\n
members never require any loan from the Society. Section 24 of the<\/p>\n
KCS Act is referred to and it is stated that share capital of admitted<\/p>\n
members is to be refunded        only after a period of three years of<\/p>\n
admission. It is alleged that this section has been violated in the case<\/p>\n
of 38 members admitted on 19-2-2002 and 20-2-2002. Referring to<\/p>\n
rule 63 of the KCS Rules it is      contended that the Committee has<\/p>\n
violated that rule which insists that 20% of the fixed deposit collected<\/p>\n
by the Society shall be kept as fluid resources so that demands for<\/p>\n
withdrawal can be honoured immediately has been violated. The total<\/p>\n
loss of the Society for the year 2002-2003 is Rs.62.88 lakhs and it is<\/p>\n
alleged that the Committee did not take any steps for reducing the<\/p>\n
loss. Referring to rule 47(d) of the KCS Rules it is submitted that it is<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -13-<\/span><\/p>\n
the Committee of the Society which primarily responsible for the<\/p>\n
proper functioning of the Society and it is alleged that the members of<\/p>\n
the Committee are working in the manner detrimental to the Society<\/p>\n
and against the provisions of the KCS Rules, byelaws and sub-rules of<\/p>\n
the Apex Society. When these irregularities were brought to the notice<\/p>\n
of the first respondent the first respondent bona fide felt that allowing<\/p>\n
the Committee to continue in the office will be detrimental to the<\/p>\n
Society and hence they should be removed at the earliest. This was<\/p>\n
why show cause notice under section 32 (1) of the Act was given to the<\/p>\n
members of the Committee. Explanations in writing submitted by the<\/p>\n
petitioners in response to that notice was considered, the petitioners<\/p>\n
were personally heard and thereafter only the order of supersession<\/p>\n
was passed.      It is claimed that the Circle     Co-operative Union,<\/p>\n
Kunnathunadu and the Kerala State Co-operative Housing Federation<\/p>\n
have been consulted in the matter. The counter affidavit goes on to<\/p>\n
repudiate the various grounds raised in the writ petition. It is claimed<\/p>\n
that the election process was not in any way stalled by the<\/p>\n
administrator of the Society. The allegation that the very object in<\/p>\n
issuing Ext.P8 supersession order is to keep power in the apex<\/p>\n
federation by destroying the quorum in the federation is stoutly denied.<\/p>\n
It was within the powers of the Deputy Registrar (Vigilance) to inspect<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -14-<\/span><\/p>\n
the Society and detected irregularities and to report the matter to the<\/p>\n
first respondent Joint Registrar. What has been did in this case has<\/p>\n
been in accordance with the rules. Principles of natural justice also<\/p>\n
have been complied with in the matter. Since it was found that the<\/p>\n
President and Committee members were misusing the Society’s funds<\/p>\n
and were violating the rules and the byelaws the first respondent had<\/p>\n
no option other than to remove them, so that the interest of the<\/p>\n
Society could be safeguarded.           Second respondent in WP(C)<\/p>\n
No.22606\/07 (Returning Officer) is Inspector of Co-operative Societies,<\/p>\n
Mazhuvannur Unit. He was appointed for conduct of elections. The<\/p>\n
Deputy Registrar (Vigilance) conducted inspection in the Society in<\/p>\n
discharge of her duty which is to detect irregularities by conducting<\/p>\n
visits. Answering the allegation that principles of natural justice have<\/p>\n
been violated and that the Circle Co-operative Union and Kerala State<\/p>\n
Housing Federation have not been consulted it is claimed that the<\/p>\n
details of the irregularities reported        by the Deputy Registrar<\/p>\n
(Vigilance) had been enumerated in the show cause notice and that the<\/p>\n
Circle Co-operative Union as well as the financing institution have been<\/p>\n
meaningfully consulted by forwarding copies of all relevant papers to<\/p>\n
them including the tentative opinion formed by the first respondent<\/p>\n
and that despite giving sufficient time for offering remarks they did not<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -15-<\/span><\/p>\n
give any remarks on the basis of which it was presumed that they have<\/p>\n
no objection in the proposal to supersede the Society. It is stated that<\/p>\n
though the Administrator took charge of the Society on 17-7-2007 he<\/p>\n
became obliged to conduct the election and he has handed over the<\/p>\n
charge of the Society to the newly elected Committee on 31-7-2007,<\/p>\n
but since some of the members of the earlier Committee which has<\/p>\n
been superseded are members of the new Committee the first<\/p>\n
respondent has become duty bound to proceed in accordance with law<\/p>\n
for disqualifying those members    from membership. Referring to the<\/p>\n
interim orders passed by this court on 24-7-07 and 22-8-07<\/p>\n
respectively that the Administrator shall not take any action to cancel<\/p>\n
the delegation of the first petitioner to the Committee of the Apex<\/p>\n
Society and to the Apex Society to allow that petitioner to continue in<\/p>\n
the Committee of the Apex Society. The counter affidavit refers to rule<\/p>\n
46(b) of the KCS Rules. It is submitted on the basis of that rule that a<\/p>\n
delegate of one Society sitting on the Committee of another Society<\/p>\n
shall cease to be a member of such Committee in case he is elected as<\/p>\n
a delegate by the Society on the supersession of such Society under<\/p>\n
section 32. Thus there is automatic cessation of membership of the<\/p>\n
first petitioner in the Committee of the third respondent federation.<\/p>\n
Therefore it is not proper to permit the first petitioner to continue in<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                      -16-<\/span><\/p>\n
the committee. The natural consequence of the supersession order is<\/p>\n
that the newly elected committee of the Society will have to elect a<\/p>\n
new delegate to the third respondent federation. The petitioners have<\/p>\n
filed a reply affidavit to the above counter affidavit reiterating their<\/p>\n
averments and grounds. It is submitted therein that as per the election<\/p>\n
schedule Ext.P2 published by the Kerala State Co-operative Election<\/p>\n
Commission the election process started as early as on 19-6-2007 and<\/p>\n
the date of submission of nomination paper was on 11-7-2007. As on<\/p>\n
that date all the petitioners were fully qualified to contest the election.<\/p>\n
Disability of candidate is to be determined as on the date of submission<\/p>\n
of nomination paper. Ext.P8 was issued on 16-7-07 with the oblique<\/p>\n
motive of disqualifying the petitioners. Ext.P8 cannot have adverse<\/p>\n
effect on the eligibility and qualification of the petitioners to contest the<\/p>\n
election.   Meeting the claim in the counter affidavit that Ext.P8 order<\/p>\n
has been passed after considering Ext.P7 reply submitted by the<\/p>\n
petitioners it is contended that in Ext.P8 there is not even a casual<\/p>\n
reference to the various contentions raised in Ext.P7.            It is only<\/p>\n
vaguely stated that the reply is not acceptable. Registrar is legally<\/p>\n
bound to deal with every explanation and objection and to discuss the<\/p>\n
merits of the explanations and objections and to record his reason for<\/p>\n
rejecting the explanations and objections. The reply reiterates that the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -17-<\/span><\/p>\n
mandatory consultation with the Circle Co-operative Union and the<\/p>\n
financing bank has not been done in this case. Ext.P14 letter dated 16-<\/p>\n
7-2007 of the Kunnathunadu Circle Co-operative Union is relied on in<\/p>\n
the reply affidavit.  It is alleged that no enquiry as envisaged by<\/p>\n
section 65 has been conducted in this case and that the Deputy<\/p>\n
Registrar (Vigilance) conducted the alleged inspection and enquiry on<\/p>\n
his own with the intention of discovering some reason for superseding<\/p>\n
the Committee.     Undue haste has been shown in passing Ext.P8.<\/p>\n
Sufficient time was never given to the consultees for expressing their<\/p>\n
views.\n<\/p>\n
      One K.Janardhanan Nair, Member of the Managing Committee of<\/p>\n
Vellanad Rural Housing Society Ltd. and its President filed application<\/p>\n
for impleadment as the additional 4th respondent in the writ petition.<\/p>\n
He is the delegate of Vellanad Rural Housing Co-operative Society to<\/p>\n
the general body of the Kerala State Co-operative Housing Federation,<\/p>\n
the apex society and he claims to be interested vitally in the affairs of<\/p>\n
the apex society. According to him the order superseding the Society<\/p>\n
was passed by the passed by the first respondent on valid grounds. He<\/p>\n
points out that this court did not grant stay of the operation of the<\/p>\n
supersession order noticing the situation that the Administrator had<\/p>\n
taken charge. He also refers to the direction of this court that the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -18-<\/span><\/p>\n
Administrator shall not take action for revoking the decision of the<\/p>\n
Society nominating its delegate to the apex society without obtaining<\/p>\n
any orders from the court.         He contends that the moment the<\/p>\n
Administrator assumed office in the Society the first petitioner who had<\/p>\n
been elected as delegate of the superseded Society ceased to be a<\/p>\n
member and Managing Committee Member of the apex society since<\/p>\n
the delegation itself became inoperative. He contends that despite the<\/p>\n
order dated 22-8-2007 passed by this court in I.A.11267\/08 that the<\/p>\n
first petitioner shall continue to be a member of the Board of Directors<\/p>\n
of the Apex Society in view of the statutory disability of the members<\/p>\n
of the superseded committee under section 22 to contest the election<\/p>\n
for a period of one year the very election of the first petitioner and the<\/p>\n
other petitioners to the Board of Directors of the Society is legally<\/p>\n
ineffective. It is also pointed out that the nomination of the petitioners<\/p>\n
is only to the general body of the Apex Society. He alleges that the<\/p>\n
first petitioner is in reality an usurper to the Committee of the Apex<\/p>\n
Society and that his continuance solely on the basis of interim order<\/p>\n
issued by this court on 22-8-2007 is to be vacated forthwith.<\/p>\n
          To the above I.A. the petitioners filed a counter affidavit<\/p>\n
contending that the petitioner in the I.A. is not a necessary party at all<\/p>\n
and that the very filing of the impleadment application is mischievous<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -19-<\/span><\/p>\n
and intended to harass the petitioners. Since the Apex Society itself is<\/p>\n
a party in the writ petition it is not at all necessary to implead the<\/p>\n
petitioner who is at the most only a delegated member of the general<\/p>\n
body of the Apex Society.\n<\/p>\n
        On behalf of the third respondent Apex Society its Managing<\/p>\n
Director has filed a detailed counter affidavit. It is pointed out in that<\/p>\n
counter affidavit that the third respondent is an Apex Co-operative<\/p>\n
Society whose members are primary housing societies like the society<\/p>\n
in question. The main object of the Apex Society and the member<\/p>\n
societies is to raise funds by way of loans from various financing<\/p>\n
agencies or deposits from public and to grant loans to members as<\/p>\n
provided in the loan regulations. Copy of the codified loan regulation is<\/p>\n
produced as Ext.R3(a). It is submitted that the first petitioner was<\/p>\n
elected as delegate of Kunnathunadu Taluk Housing Society and the<\/p>\n
general body of the third respondent federation elected him as director<\/p>\n
representing Ernakulam Revenue District as provided in byelaw II of<\/p>\n
the Federation. Later as provided in byelaw 14 the Board of Directors<\/p>\n
of the federation elected him as member of the Executive Committee.<\/p>\n
After this court passed stay order the first petitioner was elected as<\/p>\n
Vice President of the third respondent federation in a vacancy which<\/p>\n
had arisen to that post due to the resignation of the former Vice<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -20-<\/span><\/p>\n
President. The counter affidavit refers to rule 46(1) and submits that<\/p>\n
the delegate of one society sitting in the committee of another Society<\/p>\n
shall cease to be a member of such committee if the Society which<\/p>\n
sends him as delegate is in default to the Committee to which he is<\/p>\n
delegated. The Government of Kerala exempted all primary housing<\/p>\n
societies from the operation of rule 46(e) for a period of six months<\/p>\n
and upon the expiry of the period of exemption three directors of the<\/p>\n
third respondent including the first petitioner filed a writ petition before<\/p>\n
this court and     that writ petition was disposed of by Ext.R3(b)<\/p>\n
judgment virtually extending the period of stay by three more months.<\/p>\n
Later when the Registrar issued notice to the petitioners in R3(b) on<\/p>\n
the basis of the report of the Joint Registrar they approached this court<\/p>\n
again apprehending disqualification. This court disposed of that writ<\/p>\n
petition by R3(c) judgment. The petitioners should be aware that as<\/p>\n
per rule 44(1)C and 45(1) defaulters are not entitled to contest the<\/p>\n
election and to get appointment as delegate and the Society therefore<\/p>\n
reduced the arrears due to the federation for averting disqualification<\/p>\n
of each delegate.      The Registrar disqualified Sri.C.P.Michael and<\/p>\n
Sri.K.G.Bhaskaran as per his order against which they have filed writ<\/p>\n
petition No. 31718 of 2007 which pending before this court. Ext. R3(d)<\/p>\n
common judgment of this Court in writ petitions challenging Ext.P6<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -21-<\/span><\/p>\n
notice issued by the Joint Registrar is produced and it is stated that in<\/p>\n
obedience to the order of the President the Managing Director did not<\/p>\n
send any remarks to the Joint Registrar to the notice dated 14-6-2007<\/p>\n
and that it is thereafter that Ext.P8 order of supersession was passed<\/p>\n
and Administrator was appointed who took charge on 17-7-2007.<\/p>\n
Referring to rule 46(b) of KCS Rules and by byelaw 12(d) of the<\/p>\n
federation it is contended that a delegate of primary society shall cease<\/p>\n
to be a member of the committee of the federation if he incurs any of<\/p>\n
the disqualifications under rule 46. It is claimed in the counter affidavit<\/p>\n
that upon assumption of charge of the Society by the Administrator the<\/p>\n
Managing Director informed Sri.O.Devassy over phone that his<\/p>\n
membership in the board\/committee of the federation had come to an<\/p>\n
end by operation of law. Sri.Devassy. Sri.Devassy informed him that<\/p>\n
he will not be attending the meeting of the Executive Committee<\/p>\n
scheduled for 24-7-2007. This was why revised notice of the postponed<\/p>\n
meeting of 27-7-2007 was not issued to Sri.Devassy. Such a notice<\/p>\n
was unnecessary in view of Rule 46(b) of KCS Rules and byelaw 12(d)<\/p>\n
of the Federation. While so on 25-7-2007 the first petitioner himself<\/p>\n
came to the office and handed over a closed cover to the Deputy<\/p>\n
General Manager (Admn.) who opened the cover and handed over the<\/p>\n
cover with its content to the Managing Director. The cover contained<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -22-<\/span><\/p>\n
copy    of  this  court’s  order   dated   24-7-2007   restraining  the<\/p>\n
Administrator from taking any action to revoke the decision of the<\/p>\n
Society nominating its delegate       to the Kerala State Co-operative<\/p>\n
Housing Federation, Kochi without obtaining orders from this court.<\/p>\n
The petitioner never handed over copy of the writ petition to the<\/p>\n
Managing Director. Certified copy of the interim order dated 24-7-<\/p>\n
2007 issued by this court or of the writ petition was not served on the<\/p>\n
federation or its counsel. Subsequently on 7-8-2007 notice of the writ<\/p>\n
petition alone was received from the court. Even then the order dated<\/p>\n
24-7-2007 was never sent to the Managing Director or the federation<\/p>\n
by the court. Out of respect and regard to this court the Managing<\/p>\n
Director decided to seek legal opinion of the counsel for the federation<\/p>\n
in the matter in view of Executive Committee meeting scheduled on<\/p>\n
27-7-2007 for which he did not invite or intimate Sri.O.Devassy on the<\/p>\n
belief that his membership had come to an end on 17-7-2007. Ext.R3<\/p>\n
(e) is the written legal opinion furnished by the federation’s counsel in<\/p>\n
this court on 25-7-2007 and as stated in the counter affidavit it<\/p>\n
concludes by saying that by operation of rule 46(b) Sri.O.Devassy has<\/p>\n
ceased to be a member of the committee of the federation.          It is<\/p>\n
submitted that relying on Ext.R3(e) Ext.P10 letter was prepared by the<\/p>\n
Managing Director and the same was handed over along with a copy of<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -23-<\/span><\/p>\n
Ext.R3(e) to the Deputy General Manager to be handed over to the<\/p>\n
first petitioner. Instruction was given to the Deputy General manager<\/p>\n
to send over Ext.P10 by post also to the first petitioner. Since the<\/p>\n
Managing Director fell ill the two Deputy General Managers who were<\/p>\n
assisted the President and on arrival of Sri.Devassy, Ext.P10 letter was<\/p>\n
handed over to Sri.Devassy by them and Sri.Devassy accepted it. But<\/p>\n
the President who had instructed the Managing Director not to send<\/p>\n
remarks to the Joint Registrar allowed the petitioner to attend the<\/p>\n
meeting of the Committee          ignoring Ext.P10 letter and also to<\/p>\n
participate and sign in the minutes. Ext.R3(f) is copy of a joint report<\/p>\n
submitted by the two Deputy General Managers who were present in<\/p>\n
the meeting. An item regarding the interim order issued by this court<\/p>\n
was included in the agenda as per notice dated 30-7-2007 so that the<\/p>\n
board members can note the order and examine the scope of the<\/p>\n
order. It is alleged that the first petitioner Devassy forcefully attended<\/p>\n
the meeting ignoring Ext.P10 letter with the permission of the<\/p>\n
President and assistance of the other members and signed the<\/p>\n
minutes. Payment of T.A. and D.A. to ineligible members is likely to<\/p>\n
attract audit objection and the Managing Director may become liable to<\/p>\n
reimburse the amount.       Therefore by letter dated 31-7-2007 the<\/p>\n
matter was reported to the Registrar who is empowered under rule<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -24-<\/span><\/p>\n
176 to rescind the resolution\/decision.\n<\/p>\n
       The counter affidavit refers to the proceedings in C.C. No. 1142<\/p>\n
of 2007 filed by the first petitioner before this court accusing the<\/p>\n
Managing Director for contempt of this court’s order. It is submitted<\/p>\n
that the Managing Director personally appeared on 8-8-2007 on the<\/p>\n
day fixed for appearance and subsequent dates of postings in this court<\/p>\n
and filed affidavit on 6-3-2007 denying accusation. It is stated that<\/p>\n
Ext.P10 letter has been withdrawn by the Managing Director by a<\/p>\n
separate letter Ext.R3(g). Ext.P10 letter had been sent to the first<\/p>\n
petitioner out of courtesy and gentlemanliness since earlier notice<\/p>\n
dated 10-7-2007 had already been sent to him inviting him to attend<\/p>\n
the meeting of the Executive Committee prior to Ext.P8 order of<\/p>\n
supersession.    It is also stated in the counter affidavit that the<\/p>\n
Managing Director did not and could not understand that this court by<\/p>\n
its interim order intended to retain the first petitioner in the committee<\/p>\n
or board in violation of rule 46(a).\n<\/p>\n
       In WP(C) No.24584 of 2007 the first respondent has filed a<\/p>\n
counter affidavit justifying the supersession order. It is stated therein<\/p>\n
that a notice containing the tentative opinion of the Joint Registrar<\/p>\n
regarding the show cause notice issued to the petitioner and the<\/p>\n
objections received from the petitioners to the same enclosing a copy<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -25-<\/span><\/p>\n
of the explanation offered by the petitioners was sent over to the Circle<\/p>\n
Co-operative Union and the Housing Federation. Ext.R1(a) is copy of<\/p>\n
that notice with enclosures. Though one week’s time was given in<\/p>\n
Ext.R1(a)   to both the consultees neither of them gave reply.        No<\/p>\n
communication has been received from either of the consultees in the<\/p>\n
matter of Ext.R1(a) before 16-7-07, the date of the supersession order<\/p>\n
or even afterwards. It is contended that neither in the statute nor in<\/p>\n
any of the judicial pronouncements contemplate hearing of the<\/p>\n
petitioner after consultation with the consultees. The only condition<\/p>\n
imposed by the judicial pronouncement is that for for an effective<\/p>\n
consultation copies of the notice, the explanations submitted by the<\/p>\n
parties and the tentative opinion of the Registrar have to be sent to<\/p>\n
the consultees. Such a procedure has been complied with in this case<\/p>\n
as can be seen from Ext.R1(a). It is further submitted that even if the<\/p>\n
consultees    give any opinion what is relevant for a decision under<\/p>\n
section 32 is the subjective satisfaction of the Registrar and not the<\/p>\n
opinion of the consultees. The counter affidavit denies the contention<\/p>\n
that the District Co-operative Bank is a financing bank and therefore a<\/p>\n
a mandatory consultee in the matter.          Ext.R1(b) communication<\/p>\n
received by the Joint Registrar from the   District Co-operative Bank is<\/p>\n
produced. It is stated on the basis of R1(b) that the Society has only a<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -26-<\/span><\/p>\n
share having a value of Rs.100\/- in the District Co-operative Bank and<\/p>\n
no financial assistance has been given by the District Co-operative<\/p>\n
Bank to the Society. Ext.R1(c) letter dated 22-1-08 issued by the<\/p>\n
Society to the Assistant Registrar (General), Kunnathunad is also relied<\/p>\n
on in this context. This counter affidavit reiterates all the contentions<\/p>\n
raised by the Joint Registrar through the counter affidavit filed in WP<\/p>\n
(C) No. 22606\/07. It is stated that personal hearing was conducted on<\/p>\n
25-6-2007 on the basis of the report of the Deputy Registrar<\/p>\n
(Vigilance)  and that written explanations were received from six<\/p>\n
committee members who were present. It is thereafter that opinion of<\/p>\n
the Kerala State Co-operative Housing Federation and the Circle Co-<\/p>\n
operative Union was sought for regarding action under section 32 and<\/p>\n
supersession order was passed only when it was noticed that no reply<\/p>\n
was received. It is contended that there is no legal impediment in<\/p>\n
implementing the supersession order though election procedure has<\/p>\n
started in the society. The administrator took charge and election was<\/p>\n
conducted on schedule and new committee was given charge on 31-7-<\/p>\n
2007.    The Joint Registrar has not interfered with the election<\/p>\n
proceedings. The only action as contemplated in the statute has been<\/p>\n
taken against the Society and its members and the Joint Registrar has<\/p>\n
never acted against the provisions of the Act, Rules or judgments of<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -27-<\/span><\/p>\n
this Court.\n<\/p>\n
      I have heard the submissions of Sri.John Joseph Vettikkad and<\/p>\n
Sri.George Poonthottam, learned counsel for the petitioners in the writ<\/p>\n
petitions,    Sri.C.P.Sudhakara Prasad, learned Advocate General,<\/p>\n
Smt.A.G.Anitha, Special Govt. Pleader, Co-op., Sri.P.C.Sasidharan,<\/p>\n
Counsel for the prospective additional respondent in WP(C). No. 22606<\/p>\n
of 2007. It was argued by the learned counsel for the petitioners that<\/p>\n
the ingredients provided in section 32 are completely absent in this<\/p>\n
case. The allegations in the show cause notice and in the order of<\/p>\n
supersession even if true are not sufficient to show persistent defaults<\/p>\n
or willful negligence in performance of the duties of the committee. It<\/p>\n
was argued that the power under section 32 is an extraordinary power<\/p>\n
expected to be invoked only very sparingly. This power cannot be<\/p>\n
used on the ground of technical violation of the rules. The oblique<\/p>\n
motive behind the passage of Ext.P8 and P3 supersession orders is<\/p>\n
evident from the time and the manner in which the same has been<\/p>\n
issued.    The Registrar is expected to discuss the merits of the<\/p>\n
explanations and the objections received      in response to the show<\/p>\n
cause notice is also expected to record his reasons why rejecting such<\/p>\n
explanations and objections. The Registrar has failed to do so in this<\/p>\n
case and therefore there has been no fair consideration of the case by<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -28-<\/span><\/p>\n
him. It is then submitted that Ext.P8 and P3 supersession orders and<\/p>\n
passed solely on the basis of an illegal enquiry.     Deputy Registrar<\/p>\n
(Vigilance) is not conferred with any power under the Kerala Co-<\/p>\n
operative Societies Act or Rules to conduct enquiry suo motu. Enquiries<\/p>\n
are capable of being conducted only as provided under sections 65 and<\/p>\n
66.    These provisions are inbuilt     safeguard for preserving the<\/p>\n
autonomy of Co-operative Societies and to prevent illegal intervension<\/p>\n
by the executive Government into the autonomous functioning of Co-<\/p>\n
operative Societies. It was argued that there was no effective and<\/p>\n
meaningful consultation with the mandatory consultees Kunnathunadu<\/p>\n
Circle Co-operative Union and the financing institution, viz., the<\/p>\n
housing federation.     The Circle Co-operative Union and the Co-<\/p>\n
operative Housing Federation are democratically elected bodies. They<\/p>\n
were not given sufficient time for convening their meetings for<\/p>\n
discussing the issues and to give their opinion. There has been undue<\/p>\n
haste in the matter of seeking consultation and such haste will speak of<\/p>\n
volumes about the mala fides, which taint the action of the Joint<\/p>\n
Registrar culminating in the supersession orders.     Ext.P16 Malayala<\/p>\n
Manorama News item was highlighted by the learned counsel for the<\/p>\n
petitioners to show that the Chief Political Executive in the Co-<\/p>\n
operative Department, the Minister was bent upon seeing that the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -29-<\/span><\/p>\n
society is superseded. The learned counsel for the petitioners relied on<\/p>\n
the judgment of a Division Bench of this Court in Jose Kuttiyani and<\/p>\n
others v. The Registrar of Co-operative Societies, Kerala, AIR<\/a> 1982<\/p>\n
Ker. 12 the judgment of this Court in Rajagopalan Nair v. State of<\/p>\n
Kerala<\/a> 1985(2) KLT 184, the judgment of another Division Bench of<\/p>\n
this Court in Sahadevan v. Padmanabhan,<\/a> 2004(1) KLT 192 and the<\/p>\n
judgment of Justice Koshy in Ellakkal Service Co-op. Bank v. State of<\/p>\n
Kerala,<\/a> 1997(2) KLT 85 in support of the various propositions<\/p>\n
advanced     by  them.      Learned    Additional  Advocate     General<\/p>\n
Mr.C.P.Sudhakara Prasad would resist all the submissions of the<\/p>\n
counsel for the petitioners on the basis of the pleadings raised by the<\/p>\n
Joint Registrar in both these cases. My attention was drawn by the<\/p>\n
learned Advocate General to the various documents placed on record<\/p>\n
by the Joint Registrar. Drawing my attention to section 32 of the Co-<\/p>\n
operative Societies Act learned Advocate General argued that the<\/p>\n
condition precedent for exercising power under section 32 is only that<\/p>\n
the Registrar on materials placed before him should be satisfied that<\/p>\n
the grounds mentioned in section 32 exist for      supersession of the<\/p>\n
committee. It is not necessary for this purpose that the Registrar or<\/p>\n
the Assistant Registrar should exercise the powers under sections 63,<\/p>\n
64, 65 and 66.    Smt.Anitha, Special Govt. Pleader would support the<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -30-<\/span><\/p>\n
submissions of the learned Advocate General. Sri.P.C.Sasidharan,<\/p>\n
learned counsel for the impleading petitioner in WP(C). No. 22606 of<\/p>\n
2007 was also allowed to make submissions in support of the orders of<\/p>\n
supersessions and also the stand of the Joint Registrar that the<\/p>\n
supersession order amounts to automatic cessation            of the first<\/p>\n
petitioner’s delegation to the general body and committee of the Apex<\/p>\n
Society. Mr.Sasidharan relied on the judgment of this court in Aliyar v.<\/p>\n
Returning Officer, 1999(3) KLT 707 and the judgment of a Division<\/p>\n
Bench of this Court in John v. Joint Registrar of Co-op. Societies<\/a> 1996<\/p>\n
(1)KLT 479. I have considered the rival submissions in the light of the<\/p>\n
various judicial precedents cited at the Bar. I will scan the pleadings<\/p>\n
raised by the parties as well as the various documents placed on<\/p>\n
 record.\n<\/p>\n
      The submission of the learned Advocate General that an enquiry<\/p>\n
and report under sections 65 and 66 is not a condition precedent for<\/p>\n
exercising power under section 22 of the Co-operative Societies Act<\/p>\n
and that it is open to the Registrar to take action on the basis of<\/p>\n
reports submitted to him by the Assistant Registrar regarding the<\/p>\n
irregularities noticed in a routine inspection is correct and has support<\/p>\n
of the judgment of a Division Bench of this Court in State of Kerala v.<\/p>\n
Sudarsanan,<\/a>     1997(2)    KLT   522.   So   also,   the  submission  of<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -31-<\/span><\/p>\n
Mr.P.C.Sasidharan and Mr.A.K.Chinnan that a delegate sent by the<\/p>\n
primary society to the apex society will automatically cease to be a<\/p>\n
member of the general body of the central society the moment the<\/p>\n
delegate ceased to be a member of the managing committee of the<\/p>\n
primary society which delegates him is founded on rules 44A and 46(f)<\/p>\n
of the Kerala Co-operative Societies Rules and has received judicial<\/p>\n
endorsement by judgment of a Division Bench of this Court in John v.<\/p>\n
Joint Registrar of Co-operative Societies,<\/a> 1996(1) KLT 479. So also the<\/p>\n
argument of Mr.Sasidharan that a member entails a disqualification for<\/p>\n
being elected as a member of the committee as envisaged under rule<\/p>\n
44(1)(k) once order of supersession is passed and that such liability is<\/p>\n
not affected by the non-implementation of the order of supersession on<\/p>\n
account of said order issued by court gets apparent support from the<\/p>\n
judgment of this court in Aliyar v. Returning Officer, 1999(3) KLT 707.<\/p>\n
But the all important question in this case will be whether Ext.P8 order<\/p>\n
of supersession has been validly issued for superseding the committee<\/p>\n
of the petitioners society.  Judgment of the Division Bench in Jose<\/p>\n
Kuttiyani v. Registrar, Co-operative Societies, AIR<\/a> 1982 Kerala 12 is a<\/p>\n
leading light regarding the condition precedent for exercising power of<\/p>\n
supersession under section 32 and also regarding the scope for judicial<\/p>\n
interference on orders passed by the Registrar superseding a society<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -32-<\/span><\/p>\n
under section 32. It has been held by the Division Bench that the<\/p>\n
power to supersede a committee is really an extraordinary power<\/p>\n
which is    not to be resorted to unless      there is an extraordinary<\/p>\n
situation. The jurisdiction of the Registrar depends on the satisfaction<\/p>\n
of the Registrar that any one of the conditions enumerated in section<\/p>\n
32, viz., (1) the committee of the society persistently makes default or<\/p>\n
is negligent in the performance of the duties imposed on it by the Act<\/p>\n
or the rules or bye-laws or does anything which is prejudicial to the<\/p>\n
interests of the society or (2) wilfully disobeys or fails to comply with<\/p>\n
any lawful order or direction issued under the Act or the rules, or (3)<\/p>\n
makes any payment contrary to the Act or the rules or the bye-laws or<\/p>\n
causes any loss or damage to the assets of the society by breach of<\/p>\n
trust o wilful negligence,or (4) misappropriates or destroys or tampers<\/p>\n
with the records or causes the destruction of records to cover up any<\/p>\n
misconduct or malpractice.       Even though the satisfaction of the<\/p>\n
Registrar regarding the existence of the necessary conditions for<\/p>\n
exercise of power may be subjective, the same shall not be arbitrary.<\/p>\n
Though the court under article 226 is not expected to function as an<\/p>\n
appellate authority and investigate into the sufficiency of the materials<\/p>\n
on which the Registrar arrived at the satisfaction referred to in<\/p>\n
subsection (1) of section 32 the court can certainly consider whether<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                             -33-<\/span><\/p>\n
the Registrar had applied his mind to the question whether there were<\/p>\n
materials on the basis of which he could have arrived at such a<\/p>\n
satisfaction. If there are materials or circumstances which will show<\/p>\n
that the power under section 32 has been exercised for a purpose or<\/p>\n
with an intention beyond the scope and contemplation of section 32<\/p>\n
the court can certainly interfere with the action since such exercise of<\/p>\n
power will constitute a fraud on the power or a colourable exercise of<\/p>\n
the power. If on a scrutiny of the materials the court comes to the<\/p>\n
conclusion that noone could have reasonably arrived on the basis of<\/p>\n
such materials that there is warrant for exercise the extraordinary<\/p>\n
power of supersession then also or if the materials level that the<\/p>\n
Registrar was biased or had pre-judged the issue then also the court<\/p>\n
can interfere. The Division Bench also rules that in order that the<\/p>\n
mandatory consultation with the financing bank and the co-operative<\/p>\n
union is an effective and meaningful one it is necessary that the<\/p>\n
Registrar should consult to the consultees by sending copies of all<\/p>\n
relevant papers to them along with                his own prima facie opinion<\/p>\n
regarding the issue.\n<\/p>\n
……………………………………..<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -34-<\/span><\/p>\n
        The 6th allegation in Ext.P6 is regrading enrollment of new<\/p>\n
members on the eve of the election and removing them from<\/p>\n
membership after the election. It is seen that in Ext.P7 this allegation<\/p>\n
has been completely refuted and it is specifically contended that during<\/p>\n
the past 25 years like complaints were never raised. It should be<\/p>\n
noticed that the present committee cannot be superseded for alleged<\/p>\n
mas enrollment of members by committees which rule the society<\/p>\n
during the past years. Whatever that be, the defence based on clause<\/p>\n
8(a)(i) of the bye laws appears to be a correct one. Under clause 8(a)<\/p>\n
(i) of the bye laws if members make application for return of their<\/p>\n
share money and if there are outstanding amounts due to the society<\/p>\n
from them and if the members declare that they do not propose to<\/p>\n
avail any loan from the society, the society is bound to return their<\/p>\n
share value.     The submissions of the learned counsel for the<\/p>\n
petitioners that only applications from 38 members for return of share<\/p>\n
values was allowed during the regime of the present committee is not<\/p>\n
disputed. The 7th allegation in Ext.P6 is that Rule 63 of the Kerala Co-<\/p>\n
operative Societies Rules has been violated. In that, the society has<\/p>\n
not retained the requisite 20% of the total Fixed Deposit as fluid<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -35-<\/span><\/p>\n
resources so that in the event of the demands for withdrawal from the<\/p>\n
depositors being received the society can honour such demands. The<\/p>\n
8th allegation in Ext.P6 that the society’s expenditure exceeds its<\/p>\n
income and that the society,       which is running at a loss,     is not<\/p>\n
devolving new scheme for increasing its income so that the loss can<\/p>\n
be reduced.     In Ext.P7 the allegation that fluid resources are not<\/p>\n
retained is answered by contending that substantial amounts are due<\/p>\n
to the society from the housing federation of the apex society and that<\/p>\n
because of the belief that these amounts will be released by the apex<\/p>\n
society that loans were disbursed to the members. It is undertaken in<\/p>\n
Ext.P7 that the amounts due from the apex society will be collected<\/p>\n
immediately and that fluid resources will be kept. The allegation that<\/p>\n
the society is running at a loss and that steps are not being taken by<\/p>\n
the committee for reducing the loss is denied.       It is contended that<\/p>\n
the society is included in clause (i) of the schedule to the Co-operative<\/p>\n
Societies Rules which is eligible to have the post of one Secretary, one<\/p>\n
Accountant, one Senior Clerk, one Junior Clerk and one Attender.<\/p>\n
Though the post of Accountant fell vacant in 2002, the society has<\/p>\n
chosen not to fill up that post as austerity       measure.     The loss<\/p>\n
highlighted in Ext.P6, it is contended, is technical and has resulted<\/p>\n
from the reduction in the quantum of recoveries of the amounts due to<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                 -36-<\/span><\/p>\n
the society. In Ext.P7, it is stated that the recoveries became less<\/p>\n
because of schemes introduced by the Government from time to time<\/p>\n
for one term settlement, stoppage of proceedings for attachment and<\/p>\n
sale.  It is pointed out that as against    a sum of Rs.1,25,0000\/-<\/p>\n
( Rupees One Crore Twenty Five Lakhs) due to the society from its<\/p>\n
loanees the society owes 34 lakhs to the apex federation. It is also<\/p>\n
pointed out that while the balance sheet reveals loss of 62.88 Lakhs<\/p>\n
there is reserve of 80 Lakhs with the society. It is claimed that new<\/p>\n
scheme like hire purchase scheme, gold loans, monthly deposits<\/p>\n
schemes have been evolved and that the decision has been taken for<\/p>\n
sale of building materials and that the said decision will be<\/p>\n
implemented as soon as a building is available. I do not think that the<\/p>\n
above explanation offered by the society has been             sincerely<\/p>\n
considered by the Joint Registrar while entering into the satisfaction<\/p>\n
which is requisite under Section 32 before issuing the order of<\/p>\n
supersession.      As already indicated, the consultation with the<\/p>\n
Financing Bank and Circle Co-operative Union is mandatory before<\/p>\n
the Registrar passes order of supersession under Section 32 (1). In<\/p>\n
this case the financing bank is the third respondent apex federation<\/p>\n
and the    Kunnathunadu    Circle Co-operative Union.     The learned<\/p>\n
Advocate General would argue on the basis Ext.R1(a) that though<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -37-<\/span><\/p>\n
Ext.R1(a) was sent to the Circle Co-operative Union and the financing<\/p>\n
bank,   there was no reply from them.        According to the learned<\/p>\n
Advocate General, consultation does not mean coordination. Though<\/p>\n
it is true   that what is envisaged under Section        32(2) is only<\/p>\n
consultation with the financing bank and the       Circle or State Co-<\/p>\n
operative Union, as the case may be, and that consultation does not<\/p>\n
mean that the consultee should agree with the tentative      opinion of<\/p>\n
the Registrar forwarded to them,       I am not prepared to accept the<\/p>\n
argument that the Registrar as in this case complied with the<\/p>\n
mandates of Section 32(2). It is seen from Ext.R1(a) that the said<\/p>\n
document is dated 28.6.2007. Ext.P14 produced by the petitioners<\/p>\n
along with the reply affidavit is a letter which the Kunnathunadu Co-<\/p>\n
operative Union has sent to the Joint Registrar in response to Ext.R1<\/p>\n
(a). Ext.P14 will show that Ext.R1(a), in which the Circle Co-operative<\/p>\n
Union had been directed to submit reply to Ext.R1(a) on or before<\/p>\n
4.7.2007, was received by the Circle Co-operative Union only on<\/p>\n
1.7.2007 if not later.    In   Ext.P14, the Circle Co-operative Union<\/p>\n
informs the Joint Registrar that they did not get time enough before<\/p>\n
4.7.2007 to convene the meeting so that the issue referred by the<\/p>\n
Joint Registrar could be discussed and a proper reply submitted to the<\/p>\n
Joint Registrar. In Ext.P14 it is requested that the time be granted so<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -38-<\/span><\/p>\n
that the meeting of the Circle Co-operative Union can be convened for<\/p>\n
discussing Ext.R1(a) as an item on the agenda and for the opinion<\/p>\n
emerging from the discussions. The Housing Co-operative Federation<\/p>\n
and the Circle Co-operative Union are both elected bodies. When they<\/p>\n
are consulted by the Joint Registrar under sub section 2 of Section 32<\/p>\n
in the contest of a proposed supersession of a primary society the<\/p>\n
consultees are expected to consider the materials forwarded to them<\/p>\n
by the Joint Registrar as part of the consultative process in their<\/p>\n
meeting so that the opinion to be submitted to the Joint Registrar will<\/p>\n
be considered as opinion of the consultees.       In this case the Joint<\/p>\n
Registrar has not contended that he has received Ext.P14. Having<\/p>\n
received Ext.P14, in which apparently good reason is stated by the<\/p>\n
Circle Co-operative Union for their inability to submit their opinion on<\/p>\n
Ext.R1(a) before the stipulated date of 4.7.2007, the Joint Registrar<\/p>\n
could have granted a reasonable time and ensured thereby that the<\/p>\n
Circle Co-operative Union discussed Ext.R1(a) and submitted their<\/p>\n
considered opinion which also should have been taken into account by<\/p>\n
the Joint Registrar in the matter of entering satisfaction regarding the<\/p>\n
existence conditions required for passing a highly consequential order<\/p>\n
of super session.   The consistent allegation of the writ petitioners is<\/p>\n
that the very motive of the Joint Registrar in initiating super session<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -39-<\/span><\/p>\n
proceedings against the the petitioners society was to place his<\/p>\n
political masters in the Government by removing the President of the<\/p>\n
Society from membership of the Board            of Directors of the third<\/p>\n
respondent Federation.        The events which have taken place<\/p>\n
subsequent to the institution of these writ petitions will indicate that<\/p>\n
the allegation of the petitioners is not totally without force. This court<\/p>\n
on 24.7.2007 passed an interim order that the administrator appointed<\/p>\n
pursuant to Ext.P8 and the 2nd respondent returning officer shall<\/p>\n
ensure that the process of the election is completed and the results are<\/p>\n
declared as per the schedule notified by the election commission.<\/p>\n
Considering the complaint of the petitioners that the action has been<\/p>\n
taken for    revoking     the   decision of the society nominating its<\/p>\n
delegates to the Kerala State Co-operative Housing Federation this<\/p>\n
court Ordered that no action shall be taken for revoking the decision<\/p>\n
of the society nominating its delegates to the Kerala State Co-<\/p>\n
operative Federation without obtaining orders from this court.          It<\/p>\n
appears that on the basis of that interim order, the first petitioner was<\/p>\n
permitted to participate in the Executive Committee meeting of the<\/p>\n
third    respondent   Federation held on 27.7.2007 and in another<\/p>\n
meeting held on 30.7.2007.       After the meeting on 30.7.2007 was<\/p>\n
completed, the Managing Director in charge of the third respondent<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -40-<\/span><\/p>\n
Federation would handover Ext.P10 order to the first petitioner issued<\/p>\n
on the basis of the administrator’s letter dated 17.7.2007 informing<\/p>\n
the first petitioner that his membership in the   director board of the<\/p>\n
third respondent the Housing Federation has seized with effect from<\/p>\n
the date in which the administrator took charge in the society.<\/p>\n
Interestingly though Section 32 of the Co-operative Societies Act and<\/p>\n
the Rule 46 (b) are frequently referred to in Ext.P10, in Ext.P10 does<\/p>\n
not refer at all to the interim orders passed by this court in these writ<\/p>\n
petitions.\n<\/p>\n<\/p>\n
                                        (PIUS.C.KURIAKOSE,JUDGE)
\ndpk<\/p>\n
It is seen from Ext.P11 that the third respondent had convened a<\/p>\n
meeting of the executive committee of the federation to be held on 8-<\/p>\n
8-2007, the agenda being discussion regarding the order of this court<\/p>\n
not to revoke the delegate membership of the first petitioner in the<\/p>\n
committee of the third respondent federation.       Obviously the third<\/p>\n
respondent was aware of the pendency of the writ petition challenging<\/p>\n
Ext.P8 order and also about the passage of the interim order<\/p>\n
restraining revocation of the delegate membership of the first<\/p>\n
petitioner. I am unable to see how the third respondent could have a<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                    -41-<\/span><\/p>\n
“discussion” over the interim order passed by this court and take any<\/p>\n
decision (unless it is a decision to implement the order) without<\/p>\n
seeking permission from this court.\n<\/p>\n
      The following circumstances and subsequent events also lend<\/p>\n
support to the allegation of the petitioners that the design in<\/p>\n
superseding the society after the election process was on        was to<\/p>\n
somehow or other ensure that the equations of power in the third<\/p>\n
respondent federation are upset. Result of the election was declared<\/p>\n
on 29-7-2007 pursuant to interim orders of this court and the<\/p>\n
administrator entrusted the charge of the society to the newly elected<\/p>\n
committee on 31-7-2007.          On that very day the newly elected<\/p>\n
committee was convened and the committee elected.              The first<\/p>\n
petitioner himself as the delegate of the society          to the third<\/p>\n
respondent federation. Ext.P10 letter will show that the copy of the<\/p>\n
resolution electing the first petitioner as the delegate was given to the<\/p>\n
third respondent alleging that the third respondent is diffident to<\/p>\n
recognise the first petitioner as a delegate member of the board of<\/p>\n
directors of the third respondent. I.A.11267\/07 was filed before this<\/p>\n
court on 22-8-2007 and interim order was passed to the effect that<\/p>\n
the first petitioner shall continue as member of the board of directors<\/p>\n
and member of the executive committee of the housing federation<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                   -42-<\/span><\/p>\n
until further orders. Accusing that the third respondent has prevented<\/p>\n
the first petitioner from participating in the meeting of the board of<\/p>\n
directors of the third respondent in disobedience of the orders of this<\/p>\n
court C.C.C. No. 1142\/07 was filed by the petitioners before this<\/p>\n
court . The third respondent filed a detailed counter affidavit in which it<\/p>\n
was ultimately stated that the letter which he had given to the first<\/p>\n
petitioner raising objections to the first petitioner’s attending the<\/p>\n
meeting of the board of the third respondent is being withdrawn. The<\/p>\n
C.C.C. Was closed in view of the withdrawal of objections by the third<\/p>\n
respondent as stated in his counter affidavit. It is seen that the first<\/p>\n
respondent has served Ext.P15 notice dated 29-9-07 on petitioners 1<\/p>\n
to 5 seeking to show cause against issuing a declaration that the<\/p>\n
petitioners having entailed disqualification under rule 44(3) of the<\/p>\n
Kerala Co-operative Societies Rules since they are members of a<\/p>\n
committee which has been superseded under section 32(1). Ext.P15 is<\/p>\n
issued on the basis of Ext.P8 supersession order. Respondents are<\/p>\n
aware of the pendency of this writ petition in which Ext.P8 is under<\/p>\n
challenge. They also are aware of the various interim orders passed in<\/p>\n
this writ petition including interim order permitting the petitioners to<\/p>\n
function as delegates in the committee of the third respondent society.<\/p>\n
Despite all these, the first respondent has issued Ext.P15. This in my<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                                  -43-<\/span><\/p>\n
opinion is a circumstance that due support to the allegation of the<\/p>\n
petitioners that the real motive in initiating supersession proceedings<\/p>\n
even after the election process was on was somehow to see that the<\/p>\n
existing political equations in the managing committee of the third<\/p>\n
respondent housing federation are upset.\n<\/p>\n
      Jose Kuttiyani’s case was one where nomination papers<\/p>\n
submitted     by members of the superseded committee were rejected<\/p>\n
by the Registrar on the ground that by virtue of the supersession order<\/p>\n
the candidates had become disqualified. This court by interim orders<\/p>\n
permitted the candidates to participate in the election. Ultimately this<\/p>\n
court found that the supersession order was bad and it was held that<\/p>\n
the necessary conclusions is that the candidates are not disqualified in<\/p>\n
contesting election.\n<\/p>\n
      The result of the above discussions is that both the writ petitions<\/p>\n
will stand allowed. Ext.P8 in WP(C) No. 22606 of 2007 and Ext.P3 in<\/p>\n
WP(C). No. 24584 of 2007 are quashed. It is declared that petitioners<\/p>\n
1 to 5 in WP(C). No. 22606 of 2007 have been duly elected to the<\/p>\n
managing committee of the Kunnathunadu Taluk Housing Co-operative<\/p>\n
Society No. 307, Kunnathunadu in the election held pursuant to Ext.P2<\/p>\n
election schedule produced in WP(C). No. 22606 of 2007.<\/p>\n
WP(C)N0s. 22606 & 24584\/07
\n                              -44-<\/span><\/p>\n
                           (PIUS C.KURIAKOSE, JUDGE)<\/p>\n","protected":false},"excerpt":{"rendered":"
Kerala High Court O.Devassy vs Joint Registrar Of Co-Operative on 22 August, 2008 IN THE HIGH COURT OF KERALA AT ERNAKULAM WP(C).No. 22606 of 2007(N) 1. O.DEVASSY,S\/O.OUSEPH,AGED 70 YEARS, … Petitioner 2. V.M.HAMZA,S\/O.MUHAMMED, 3. DEVASSY JOSEPH,S\/O.JOSE, 4. N.A.IBRAHIMKUTTY,S\/O.AHMED,AGED 70, 5. MOLLY VARHGESE,W\/O.VARGHESE,AGED 48, Vs 1. JOINT REGISTRAR OF CO-OPERATIVE … Respondent 2. THE RETURNING OFFICER, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,21],"tags":[],"class_list":["post-72697","post","type-post","status-publish","format-standard","hentry","category-high-court","category-kerala-high-court"],"yoast_head":"\nO.Devassy vs Joint Registrar Of Co-Operative on 22 August, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/o-devassy-vs-joint-registrar-of-co-operative-on-22-august-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"O.Devassy vs Joint Registrar Of Co-Operative on 22 August, 2008 - 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