IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC WEDNESDAY, THE 10TH JUNE 2009 / 20TH JYAISHTA 1931 WP(C).No. 10681 of 2009(E) ----------------------------------------- PETITIONER(S): ------------------------ IRINJALAKUDA SERVICE CO-OPERATIVE BANK LTD., NO. 594, REPRESENTED BY ITS SECRETARY-IN- CHARGE, JYOTHILAL, S/O. E.P. MADHAVAN, ELAMTHOLLY HOUSE, PULLOOR P.O., THRISSUR. BY ADVS. MR.G.S.REGHUNATH, MR.SHEEJO CHACKO. RESPONDENT(S): --------------------------- 1. STATE OF KERALA, REP. BY PRINCIPAL SECRETARY TO CO-OPERATION DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. REGISTRAR OF CO-OPERATIVE SOCIETIES, OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM. 3. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THRISSUR. 4. ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) THRISSUR. 5. KATTOOR SERVICE CO-OPERATIVE BANK LTD., 426, REP. BY ITS SECRETARY, KATTOOR P.O., THRISSUR. R1 TO R4 BY GOVERNMENT PLEADER MR. I.V.PRAMOD R5 BY ADV. MR.D.SOMASUNDARAM THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 10/06/2009 ALONG WITGH WPC.NO.13423 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss WPC.NO.10681/2009 E APPENDIX PETITIONER'S EXHIBITS: P1: COPY OF THE SANCTION ISSUED TO THE PETITIONER ON 16/5/2002 FOR CONDUCTING A NEETHI MEDICAL STORE. P2: COPY OF THE RELEVANT PAGES OF THE BYE-LAWS OF THE PETITIONER BENK. P3: COPY OF THE TRADING ACCOUNT FOR THE YEAR 2007-08. P4: COPY OF THE PROFIT AND LOSS ACCOUNT FOR THE YEAR 2007-08. P5: COPY OF THE BALANCE SHEET OF THE YEAR 2007-08. P6: COPY OF THE RESOLUTION PASSED ON 30/09/2008 BY MANAGING COMMITTEE OF THE PETITIONER BANK. P7: COPY OF THE REPRESENTATION. P8: COPY OF THE LAWYER'S NOTICE. P9: COPY OF THE JUDGMENT IN W.P.C.NO.6537/2009. P10: COPY OF THE LETTER DTD. 23/03/2009. P10(A):COPY OF THE ORDER DTD. 10/10/2008. P10(B):COPY OF THE ORDER DTD. 18/03/2009. P11: COPY OF THE PETITION FILED BEFORE ARBITRATION COURT. P12: COPY OF THE APPLICATION FILED BEFORE THE ARBITRATION. RESPONDENT'S EXHIBITS: R5(A): COPY OF THE AMENDMENT OF BYE-LAWS AND THE ORDERS APPROVING THE AMENDMENTS. R5(B): COPY OF THE NOTICE REGARDING THE OPENING OF THE LABORATORIES. R5(C): COPY OF THE NOTICE REGARDING THE OPENING OF THE LABORATORIES. /TRUE COPY/ P.A.TO JUDGE Kss ANTONY DOMINIC,J. ----------------------------- W.P.(C).Nos.10681 & 13423 OF 2009 ------------------------------ Dated this the 10th day of June, 2009. JUDGMENT WP(c).No.10681/09 is filed by the Irinjalakuda Service Co-operative Bank Ltd. It is stated that on 30.9.2008, the Bank passed a resolution, resolving to start a clinical lab within the municipal town of Irinjalakuda, it being the area of operation of the Society and that the same was sent to the Joint Registrar for approval. It is stated that, coming to know that certain other societies were planning to establish similar units within the area of operation of the petitioner Society, they had also represented to the authorities against sanctioning the same. At that stage apprehending that the Kattoor Service Co-operative Bank Ltd; the petitoner in WP (c).No.13423/09 was attempting to get the bye laws amended to extend the area of its operation into the area of operation of Irinjalakuda Service Co-operative Bank, WP(c).Nos.10681&13423/09 2 they filed WP(c).No.6537/09 before this court, which was dismissed by Ext.P9 judgment, on the ground that the said writ petition was an anticipatory one. 2. It is stated that thereafter the Irinjalakuda Service Co-operative Bank invoked the provisions of the Right to Information Act, sought for certain documents, which were furnished under the cover of Ext.P10. Ext.P10(a) is the proceedings of the Joint Registrar, granting sanction to the Kattoor Service Co-operative Bank to establish a clinical lab, within the Irinjalakuda Municipal area. Similarly, Ext.P10(b) is another proceedings of the Joint Registrar dated 18.3.2009 granting sanction for establishing another clinical lab within the Irinjalakuda Municipal area. It is on record that the clinical labs sanctioned as per Ext.P10(a) was started on 14.12.2008 and as per Ext.P10(b) was started on 23.3.2009. According to the Irinjalakuda Service Co-operative Bank, on receipt of Ext.P10(a), they filed Ext.P11 dated 25.3.2009, a petition under Section 69 of the Kerala Co-operative Societies WP(c).Nos.10681&13423/09 3 Act before the Arbitration Court, which was numbered as ARC.No.52/09. Along with ARC.No.52/09, they also filed Ext.P12, I.A.No.40/09, seeking a direction to the Kattoor Service Co-operative Bank to stop functioning of the clinical laboratories which were already functioning. 3. Immediately after filing Exts.P11 and P12, on 31.3.2009 the Irinjalakuda Service Co-operative Bank filed this writ petition, mainly complainng that despite the urgency of the matter, without praying for a direction to quash Exts.P10(a) and (b) referred to above and to issue directions for stopping the laboratories established by the Kattoor Service Co-operative Bank. On 1.4.2009 and 74.2009, the writ petition came up for orders and on 7.4.2009 a counter affidavit was filed by the 5th respondent, the Kattoor Service Co-operative Bank. Although interim order for stopping the clinical labs were sought , no orders were passed by this court, during the pendency of this writ petition it is stated that on 22.4.2009 an interim order was passed by the Arbitration WP(c).Nos.10681&13423/09 4 Court on Ext.P12 IA.No.40/2009 directing that both the clinical labs should be stopped. 4. In so far as WP(c).No.13423/09 is concerned, that writ petition is filed by the Kattoor Service Co-operative Bank. According to them Ext.P1 is the certificate of amendment of clause 3(2)of the bye laws, enabling them to open establishments within its area of operation and in the adjacent areas subject to the sanction of the Registrar of Co- operative Societies. It is stated that prior to Ext.P1, they had obtained Ext.P2 on 10.10.2008 and Ext.P4 18.3.2009 sanctioning establishment of clinical labs (Exts.P10(a) and Ext.P10(b) in WP(c)No.10681/09). It is stated that on that basis, they had opened the labs on 14.12.2008 and 23.3.1999. According to them subsequently, ARC. No.52/09 was filed and in which Ext.P6 ex-parte order dated 22.4.2009 has been passed which is challenged in this writ petition. It is complained that, by Ext.P6 order passed by the Arbitration court, Kattoor Service Co-operative Bank was restrained WP(c).Nos.10681&13423/09 5 from continuing the functioning of the Clinical Laboratories permitted to be established as per Exts.P2 and P4. Although Ext.P6 referred to above is an interlocutory order, the writ petition has been filed without moving the Arbitration Court for getting the stay order vacated. The justification offered is that the proceedings in ARC.No.52/09 itself is not maintainable and therefore, they are entitled to invoke the extra ordinary jurisdiction of this court under Article 226 of the Constitution of India. The writ petition was moved on 8.5.2009 and this court passed an order of interim stay of Ext.P6 order referred to above for a period of one month. That order was extended subsequently and is in force now. 5. In the facts of these cases as narrated above, in my view, it is necessary for this court to examine the merits of the controversy raised by both the petitioners. This is for the reason that, in so far as WP(c).No.10681/09, filed by Irinjalakuda Service Co-operative Bank is concerned, they filed ARC.No.52/99 on 25.3.2009 along with I.A.No.40/09 and the WP(c).Nos.10681&13423/09 6 IA was posted on 22.4.2009. It was there upon that complaining that though they moved the statutory authority for appropriate relief, the same was not attended to with the urgency that is deserved, the writ petition was filed by them on 31.3.2009. Though the writ petition came up for orders on 1.4.2009 and 7.4.2009, no interim order was passed. The Arbitration Court proceeded to deal with the case and the order dated 22.4.2009 has been passed directing that clinical labs shall be closed. Therefore at this distance of time in view of the fact that, the Arbitration Court considered their case and order has been passed, the WP(c).No.10681/09 has become infructuous and is liable to be dismissed on that basis. 6. In so far as WP(c).No.13423/09 is concerned, that is filed by the Kattoor Service Co-operative Bank. According to them, the Arbitrator was not justified in passing Ext.P6 order dated 22.4.2009. First of all, it is stated that the clinical labs in question were established and commenced functioning as WP(c).Nos.10681&13423/09 7 early as on 14.12.2008 and 23.3.2009 respectively. It is stated that an ex-parte interim order, ought not have passed by the Arbitration Court which has the effect of allowing the ARC itself and that at any rate an order which has the effect of closing down the running establishments should not have been passed. It is also the contention of the petitioner that because of Ext.P1 amendment to their bye laws and Exts.P2 and P4 (Exts.P10(a) and Ext.P10(b) in WP(c)No.10681/09) and Ext.P1 circular, they were entitled to establish clinical labs in question. Yet another contention that is raised is that after the Irinjalakuda Service Co-operative Bank had filed this writ petition on 31.3.2009 and when this court had declined to pass interim orders on 1.4.2009 and 7.4.2009, the Arbitration Court ought not have passed any interlocutory order. It is also their contention that the ARC itself is not maintainable and therefore the order passed by the Arbitrator is without jurisdiction. WP(c).Nos.10681&13423/09 8 7. The Irinjalakuda Service Co-operative Bank, which is impleaded in this writ petition as respondent No.2 challenges the very maintainability of this writ petition. According to them if a statutory authority has passed an interim order, the remedy available to the person aggrieved by such an order, is not to invoke the extra ordinary jurisdiction of this court under Art.226 of the Constitution of India, but to invoke the statutory remedies provided under the Co-operative Societies Act itself. In support of this contention, the counsel relies on the judgment of the Apex Court in Seth Chand Ratan V. Pandit Durga prasad(AIR 2003 SC 2736). In so far as Ext.P11, the circular issued by the Registrar of Co-operative Societies relied on by the Kattoor Service Co-operative Bank is concerned, counsel for the Irinjalakuda Service Co-operative Bank would contend that the said circular is against the provisions of the Co-operative Societies Act and therefore is illegal. Reliance in this context is placed on the decision in Palliman Ksheerulpadak Co-operative Societies Pvt. Ltd. V. WP(c).Nos.10681&13423/09 9 Deputy Director, Diary Developmet Office (2002(3) KLT 193). 8. Yet another plea that is raised by the counsel for the Bank is that, Ext.P11 circular was issued only on 19.5.2009 and therefore that circular will not legitimize Exts.P2 and P4 orders issued on 10.10.2008 and 18.3.2008 respectively. It is contended that the clinical labs in question are established within the municipal town Irinjalakuda which is entirely within the area of operation of Irinjalakuda Society and that the same is impermissible. It is also their contention that, even if Ext.P1 amendment to the bye-laws, is accepted, that does not entitle the Kattoor Service Co-operative Bank to trespass into their area of operation and establish the clinical labs in question. On these contentions, counsel for the Irinjalakuda Service Co- operative Bank would pray for the dismissal of WP(c). No.13423/09. 9. Having heard the contentions raised by the respective parties, I am inclined to think that it is unnecessary for this court to enter into the merits of the respective contentions WP(c).Nos.10681&13423/09 10 raised by both parties. In this writ petition all that is necessary for this court to consider is the validity of Ext.P6, an interim order passed by the Arbitration Court in I.A.No.40/09 in ARC. No.52/09. The said order shows that by this order the Arbitration Court has directed closure of the two clinical labs established by the Kattoor Service Co-operative Bank. The said order has been passed on an ex-parte basis. In my view such an ex-parte order should not have been passed by the Bank for the further reason that by the said order, the Arbitration Court has virtually granted the final relief that could be granted in the ARC. As already noticed, the Kattoor Service Co-operative Bank has valid contentions in the matter and among others the Bank is relying on Ext.P1 amendment to the Bye laws, Exts.P2 and P4 orders and Exts.P10 and P11 circulars issued by the Registrar of Co-operative Societies. In my view, the Arbitration Court ought to have given the Bank an opportunity to file its objections and resist the prayers sought in the ARC. This has not been done and therefore I am WP(c).Nos.10681&13423/09 11 inclined to set aside Ext.P6. 10. In so far as the contention raised by the learned counsel for the petitioner relying on the judgment of the Apex Court in Seth Chand Ratan V. Pandit Durga prasad & Ors.(AIR 2003 SC 2736) is concerned, it is true that if the statute provides for a remedy, the aggrieved party is bound to pursue that statutory remedy. However, in WP(c).No.13423/09, the case pleaded by the petitioner is that the Arbitration Court has no jurisdiction to entertain the Arbitration petition itself. The rule of alternate remedy is a self imposed one. There are exceptions to this rule and one of the recognized exceptions is violation of the principles of natural justice and when the order is without jurisdiction. (See in this connection the Apex Court judgment in 1998(8)SCC 1) Therefore if the order passed by the Arbitration Court is without jurisdiction or the order passed by the Arbitration Court is in violation of the principles of natural justice, certainly that order can be challenged in a writ Petition. In this case, it is evident from WP(c).Nos.10681&13423/09 12 the proceedings that the ARC in question was filed by the Irinjalakuda Service Co-operative Bank on 25.3.2009 and the Kattoor Service Co-operative Bank had filed its counter on 7.4.2009. Despite that, without putting them notice or hearing them Ext.P6 order was passed on 22.4.2009. This is clearly in violation of the principles of natural justice and if that be so, the Kattoor Service Co-operative Bank is justified in approaching this court bye-passing the statutory remedy and for that reason the writ petition is maintainable and cannot be dismissed. In the result WP(c). No.10681/09 filed by the Irinjalakuda Service Co-operative Bank will stand dismissed and WP(c). No.13423/09 is disposed of quashing Ext.P6, order passed in I.A.No.40/09 in ARC.No.52/09. The Arbitration Court is directed to consider I.A.No.40/09 with notice to the parties as expeditiously as possible. Considering the urgency pointed out by the counsel for the Irinjalakuda Service Co-operative Bank, it is directed that within 4 weeks of production of a copy WP(c).Nos.10681&13423/09 13 of this judgment, the Arbitration Court shall pass fresh orders in I.A.No.40/09. (ANTONY DOMINIC) JUDGE vi/ WP(c).Nos.10681&13423/09 14