IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN WEDNESDAY, THE 2ND JULY 2008 / 11TH ASHADHA 1930 WP(C).No. 15685 of 2008(P) ------------------------------------------ PETITIONERS: ---------------------- 1. P.J.MOHANAN, PRESIDENT OF THE SUPERCEDED MANAGING COMMITTEE OF THE NETHAJI KSHEEROLPADAKA SAHAKARANA SANGHAM (LTD)NO.A.86 (D) APCOS, VADAKKANARYAD P.O., ALLEPPEY. 2. NETHAJI KSHEEROLPADAKA SAHAKARANA SANGHAM LIMITED NO.A.86(D) APCOS, VADAKKANARYAD P.O., ALLEPPEY, REPRESENTED BY ITS SECRETARY IN CHARGE (HONORARY) BY ADV. SRI.V.G.ARUN SRI.T.R. HARIKUMAR RESPONDENT: ------------------------ THE DEPUTY DIRECTOR, DAIRY DEVELOPMENT, ALLEPPEY. BY ADDL.ADVOCATE GENERAL BY GOVERNMENT PLEADER SRI. P.K.BABU THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 02/07/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.15685/2008 P APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF THE MINUTES OF THE MEETING HELD ON 17/10/2007. EXT.P2: COPY OF THE RESIGNATION LETTER DTD. 17/10/2007. EXT.P3: COPY OF THE COMPLAINT DTD. 22/10/2007. EXT.P4: COPY OF THE COVERING LETTER WITH THE ORDER DTD. 12/11/2007. EXT.P5: COPY OF THENOTICE NO.E.3467/07 DTD. 17/04/2008. EXT.P6: COPY OF THE RESOLUTION DTD. 8/05/2008. EXT.P7: COPY OF THE REQUEST DTD. 8/05/2008. EXT.P8: COPY OF THE ORDER NO.E.3467/07 DTD. 24/05/2008. RESPONDENT'S EXHIBIT: EXT.R1: COPY OF LETTER REJECTING HER REPRESENTATION DTD. 5/05/2008. /TRUE COPY/ P.A.TO JUDGE Kss Thottathil B. Radhakrishnan, J. ================================== W.P.(C)No.15685 of 2008 ================================== Dated this the 2nd day of July, 2008. JUDGMENT This writ petition is filed challenging Ext.P8 decision issued under Section 32 of the Kerala Co- operative Societies Act, 1969, hereinafter referred to as the “Act”, superseding the managing committee of the second petitioner society which came into office on 17-9-2007. 2. On 17-10-2007, the secretary of the society resigned on being faced with charges of mis-appropriation during the course of the meeting of the company. On 22-10-2007, Ext.P3 signed by nearly 30 persons was submitted raising various allegations against the committee. This was followed by Exts.P4 and P4(2) being issued on 14- 11-2007 for inspection under Section 66 of the Act. Following the appointment of the Diary Extension WPC15685/08 -:2:- Officer to conduct that inspection, an interim report was given on 12-12-2007. I call that an interim report in view of the statements regarding that report in the counter affidavit which characterizes that only as an interim report. In answer to Ext.P5 notice giving 15 days time for reply, the committee sought more time in view of the allegations and Ext.P8 supersession order was issued on 24-5-2008. In support of the writ petition, the legal issues advanced are that proceedings under Section 32 cannot be germinated from an inspection under Section 66 and that proceedings under Section 66 can lead only to an enquiry and consequential direction for rectification under Section 65 of the Act; the impugned order has not been issued in consultation with Circle Co-operative Union and the financing bank and also without such consultation being dispensed with in accordance with law under sub- section 3 of Section 32 of the Act; that many of WPC15685/08 -:3:- the attributes, or almost all, in Ext.P1 notice and Ext.P8 order are relatable to periods before the present managing committee came into office and Ext.P8 decision is wholly irrational, arbitrary, unreasonable and unsustainable being perverse. 3. The respondent has filed a counter affidavit producing therewith Ext.R1 and stating that though the secretary of the society had represented that she was pressurized by the committee to resign, on enquiry, the respondent found that her plea was incorrect and baseless and accordingly Ext.R1 was issued rejecting her representation in that regard. It is specifically pleaded in paragraph 6 that the letter submitted by the inspecting officer dated 12-12- 2007 contained an interim report mentioning all serious charges except the statements of the former secretary and first signatory of mass petition. The respondent instructed the enquiry officer to WPC15685/08 -:4:- produce the statements of the former secretary and first signatory of the mass petition at the earliest and extended the term of enquiry by two months. It is the specific contention of the respondent in paragraph 7 of the counter affidavit that the Circle Co-operative Union and the District Co-operative Bank were not consulted but intimated. The stand taken in the counter affidavit is that it is not necessary to consult the unions and financing bank in cases where the Registrar is of the opinion that it is not practicable to do so. With the support of that counter affidavit on record, the learned senior Government Pleader argued that in the context of the nature of the powers available under Section 32, the seriousness of the allegations were by themselves sufficient for prompt action and it was not necessary for any consultation and dispensation of consultation was a matter of subjective satisfaction of the Registrar. It is further argued that there is no legal WPC15685/08 -:5:- impediment for the proceedings under sub-section 2 of Section 32 being initiated on the basis of the materials under Section 66 and therefore the plea in that regard is only to be rejected. It is more pithily attempted to be pointed out that even in the first meeting of the committee, the members of the committee were aware of the financial situation, including the mis-management and had mulcted the responsibility on the secretary of the society and neither the secretary nor the members of the committee could wriggle out of the liability flowing out of the situation. Learned Government Pleader also advanced an argument that irregularities were not matters unearthed for the first time through the interim report, but the committee in office was well aware of the allegations, even going by Ext.P1 whereby the committee attempted to pass it on to the secretary. 4. In further reply, it is argued on behalf WPC15685/08 -:6:- of the petitioners that having issued Ext.R1, the respondent holding that the secretary was liable and that her plea that she was forced to resign by the committee is unsustainable, the respondents' contentions are insufficient to sustain the impugned order. 5. In the matter of judicial review of an order in the nature of Ext.P8 issued under Section 32 of the Act, it needs to be first considered as to whether the statutory provisions under Section 32 have been duly complied with. 6. It is the admitted situation that the Circle Co-operative Union and the financing bank have not been consulted though it is pleaded that they were intimated. The requirement of the provision of law is consultation and not intimation. What is provided in sub-section 3 of Section 32 is the authority for the Registrar to WPC15685/08 -:7:- dispense with opportunity of pre-decisional hearing as also consultation with the unions and the financing banks in cases where the Registrar comes to the opinion that it is not reasonably practicable to do so. The Registrar has to formulate an opinion in that regard. The opinion has to be that it is not reasonably practicable to undertake the procedure of consultation. The reasonableness of that decision has necessarily to be founded on reasons which a reasonably prudent administrative authority, bestowed with the power under Section 32, would arrive at. The clear test to establish proper course of reasonable exercise of such power is that the opinion has to be expressed and the same has to be supported. The expression of such opinion has necessarily to be in the decision itself. That is, essentially, a safety mechanism whereby the purity of the process can always be sustained. Even if I were to assume that it was the subjective satisfaction of the WPC15685/08 -:8:- Registrar which need not be reflected in the impugned order, even the counter affidavit does not say the reason why the Registrar thought that it is not reasonably practicable to consult the consultants enumerated in Section 32. It has been pithily laid by the Division Bench of this Court in Sahadevan v. Padmanabhan (2004 (1) KLT 192) that the process of selection is a very vital aspect of Section 32. The Registrar has to issue notice, call for objections, formulate the tentative decision and communicate the tentative decision to the consultants along with objection that the committee of the society has placed before the Registrar. Short of placing all such materials, the consultants cannot opine on the matter being consulted upon. This has not just been done in this case. 7. On the question whether proceedings under WPC15685/08 -:9:- Section 66 would be sufficient foundation for exercise of authority under Section 32, it has to be noted that the powers under Section 32 of the Act are very wide. Greater the power, the greater shall be the restraint. Therefore, if the Registrar comes across materials, that would trigger action under Section 32, he may have the jurisdiction to do so, but it does not mean that in all cases Section 32 proceedings can be initiated on the basis of Section 66. This is all the more so because, in the normal course, following an inspection under Section 66, if it is found necessary to secure the interest of the society, there could be an enquiry under Section 65; there could be directions for rectifications and calling for report regarding compliance of directions. Recourse to Section 32 is also conceived, going by judicial precedents, in cases where directions for rectifications etc. are not properly carried out. Therefore, the scope of jurisdiction available WPC15685/08 -:10:- under Section 32 is not one that could be exercised at the drop of the hat because there has to be every endeavour to ensure that the society runs in a democratic process and under the supervision and guidance of the statutory authorities. Viewed in this angle, based on Ext.P3 complaint, the Diary Extension Officer had only given what even the Registrar calls it as an interim report. This means that there could be a different version if the committee were to be heard on the interim report or the final report in the inspection. Such material like the interim report in the case in hand is wholly insufficient to invoke the authority under Section 32 of the Act. 8. Grave allegations may be there. Opportunity to reply needs to be given appropriately. The period of allegations range from 2006 to 2007. The allegations are on the basis of an interim report in an inspection. On WPC15685/08 -:11:- the whole, the petitioners did not even have sufficient opportunity of being heard as is envisaged in the concept of the rule of fair hearing. For the aforesaid reasons, the writ petition succeeds and the impugned Ext.P8 is quashed. The committee as per the impugned order will stand restored to office forthwith. No costs. Thottathil B.Radhakrishnan, Judge. sl.