IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN MONDAY, THE 4TH AUGUST 2008 / 13TH SRAVANA 1930 WP(C).No. 18335 of 2008(G) --------------------------------------- PETITIONERS: -------------------- 1. K.KRISHNANKUTTY NAIR , MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. 2. R.RADHAKRISNAN NAIR, MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. 3. P.THANKACHAN MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. 4. KUNNATHOOR BALAN MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. 5. G.JESUDASAN, MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. 6. A.HAMEEDKUTTY, MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. W.P.(C). NO.18335/2008-G: 7. K.R.SYAMALA, MEMBER, BOARD OF DIRECTORS, THE SASTHAMCOTTA CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD Q-373, SASTHAMCOTTA, KOLLAM DISTRICT. BY ADV. SRI.GEORGE POONTHOTTAM. RESPONDENTS: ----------------------- 1. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIIES (G) KOLLAM. 2. THE SASTHAMCOTTA CO-OPERATIVE AGRICULTUAL AND RURAL DEVLOPMENT BANK LTD Q-373 SASTHAMCOTTA ,KOLLAM DISTRICT, REPRESENTED BY THE SECRETARY. 3. THE ADMINISTRATOR (ASST.REGISTRAR OF CO-OPERATIVE SOCIETIES (G) SASTHAMCOTTA , THE SASTHAMCOTTA CO-OPERATIVE AGRICULTUAL AND RURAL DEVLOPMENT BANK LTD Q-373 SASTHAMCOTTA KOLLAM DISTRICT. R1 & R3 BY SPL.GOVT.PLEADER SMT. A.G. ANEETHA, R2 BY ADV. SRI.P.C.SASIDHARAN. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 11/07/2008, THE COURT ON 04/08/2008 DELIVERED THE FOLLOWING: W.P.(C). NO.18335/2008-G: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE NOTICE NO. C.R.B. 6307/06 DTD. 24/04/08. EXT.P.2: COPY OF THE REPLY DTD. 09/05/08. EXT.P.3: COPY OF THE REPLY DTD. 09/05/08 GIVEN BY THE P.1. EXT.P.4: COPY OF THE ORDER NO. C.R.B. 6307/06 DTD. 12/06/2008. EXT.P.5: COPY OF THE COMMUNICATION NO. C.R.B.798/2008 DTD. 07/06/2008. EXT.P.6: COPY OF THE RECEIPT DTD. 02/11/2006. EXT.P.7: COPY OF THE ORDER NO. C.R.B.7031/05/K. DIS. DTD. 07/01/2006. EXT.P.8: COPY OF THE SCHEME OF REPAYMENT APPROVED AND CIRCULATED TO ALL THE PRIMARY CO-PERATIVE BANKS UNDER THE KERALA STATE CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT. RESPONDENTS' EXHIBITS: EXT.R1.1: COPY OF THE SUMMARY OF DEFECTS ISSUED BY THE AUDITOR DURING 2006-07. EXT.R1.2: COPY OF THE LR. NO. 620/2008 DTD. 23/01/2007 SENT BY THE ASSISTANT REGISTRAR (GENERAL) SASTHAMCOTTA. EXT.R1.3: COPY OF THE SECTION 65 ENQUIRY REPORT. EXT.R1.4: COPY OF THE LR. NO. CRB:6307/2006 DTD. 17/05/2008 SENT TO THE CIRCLE CO-OP: UNION AND KERALA STATE CO-OPERATIVE AGRICULTURAL & RURAL DEVELOPMENT BANK, THIRUVANANTHAPURAM. EXT.R1.5: COPY OF THE VOUCHER NO. 122 DTD. 23/11/2005 FOR RS.22,000/-. EXT.R1.6: COPY OF THE VOUCHER NO. 1095 DTD. 31/10/2006 FOR RS.30,000/-. EXT.R1.7: COPY OF THE APPENDIX - 3 IN RESPECT OF ADVANCE ACCOUNT DUE TO ATTACHED TO AUDIT REPORT 2006-07. EXT.R1.8: COPY OF THE ESTIMATE AND PLAN CERTIFIED BY THE ASSISTANT ENGINEER. //TRUE COPY// P.S. TO JUDGE. prv. THOTTATHIL B. RADHAKRISHNAN, J. = = = = = = = = = = = = = = = = = = = = = = = = W.P.(C)No.18335 of 2008-G = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 4th day of August, 2008. JUDGMENT 1.Petitioners are the members of the Board of Directors of the second respondent, a co- operative bank. They challenge Ext.P4 order of supersession issued under Section 32 of the Kerala Co-operative Societies Act, 1969. They also challenge Ext.P1 notice issued preceding that order. 2.In view of the nature of the orders being issued hereunder, I do not deem it necessary or even appropriate to refer to the entire facts touching the allegations against the petitioners, as also the objections filed by them to those allegations, vis-a-vis, the findings in Ext.P4. 3.In terms of Section 32 of the Act, the officer WP(C)18335/2008 -: 2 :- exercising the powers of Registrar, has to consult the financing bank and the Circle Co- operative Union unless such procedure is dispensed with. Pre-decisional notice also can, in certain cases, be dispensed with. 4.Going by the decisions of this Court in Ellakkal Service Co-op. Bank v. State of Kerala [1997 (2) KLT 85] and Sahadevan v. Padmanabhan [2004 (1) KLT 192], the consultation provided by Section 32 of the Act includes a complete procedure of consultation in as much as the allegations against the committee proposed to be superseded, their reply to the allegations and the tentative decision of the Registrar on that matter have to be put to the consultees, namely, the Circle Co- operative Union and the financing bank enabling those authorities to make their recommendation on the basis of such materials. 5.In the case in hand, Ext.P1 notice calling upon the petitioners to show cause against action WP(C)18335/2008 -: 3 :- under Section 32 was issued on 24-4-2008. Exts.P2 and P3 replies thereto, were placed on 9-5-2008. It was thereafter, on 17-5-2008, that the consultees, namely, the financing bank and the Circle Co-operative Union were addressed by the Joint Registrar on 17-5-2008 as per Ext.R1(4) calling for their opinion. A perusal of Ext.R1(4) would show that a copy of Ext.P1 show cause notice under Section 32 was forwarded to the consultees even earlier and that the objections filed by the President and the members of the committee were being forwarded along with Ext.R1 (4). The consultees were required as per Ext.R1 (4) to examine the notice and the replies given by the President and the members of the Board of Directors and to state their opinion. Therefore, the indisputable fact remains that even as per Ext.R1(4), no tentative decision of the Joint Registrar was communicated to the consultees after considering Exts.P1, P2 and P3. This was in spite of the fact that the petitioners were heard on 14-5-2008 by the Joint Registrar. Even then, WP(C)18335/2008 -: 4 :- the tentative decision was not forwarded. The decision in Sahadevan (supra) clearly lays down the law that the tentative decision of the authority exercising the power under Section 32 on the basis of the committee's reply to the show cause notice, has also to be forwarded to the consultees, in the process of consultation and it is on such tentative decision that the consultees have to give their opinion, having regard to the allegations in the show cause notice, the replies given thereto and such tentative decision. Short of this, the impugned Ext.P4 cannot stand. 6.One more aspect needs to be noticed in this case. As regards the President of the Board, he was found to be disqualified from continuing as a member of the Board. That decision was on 27-2- 2008 even before Ext.P1 notice dated 24-4-2008. He challenged it before this Court in WP(C). 7245/2008. That was dismissed on 4-6-2008. It was in the interregnum that the petitioners were heard by the Joint Registrar on 14-5-2008, in WP(C)18335/2008 -: 5 :- relation to the proposal to supersede. On 7-6- 2008, the same officer has issued Ext.P5 directing the Secretary of the second respondent bank to convene a meeting of the committee to elect a President, in view of the fact that this Court had dismissed WP(C).7245/2008. The uncontroverted assertion of the petitioners in this writ petition is that Ext.P5 was received in the office of the bank only on 13-6-2008. It was in the meanwhile that Ext.P4 order was issued on 12-6-2008 and served on 13-6-2008. If an officer, namely, the first respondent, had heard the petitioners on 14-5-2008 and had issued Ext.R1(4) communication to the consultees on 17-5-2008, the issuance of the communication dated 7-6-2008 to elect the President of a committee which, according to the first respondent, has to be superseded, appears to be an action that would indicate that the Joint Registrar had never decided the matter at any point of time, having regard to the entire facts, allegations, replies etc. In the common course of human conduct, one WP(C)18335/2008 -: 6 :- would not expect the Joint Registrar to have issued Ext.P5 on 7-6-2008, had he been at least of the tentative view that the committee of the bank is to be superseded. This adds strength to the case of the petitioners that the impugned Ext.P4 order issued on 12-6-2008 does not satisfy the tests of credibility and that the same is liable to be criticized as vitiated by non- application of mind and absence of due application of mind. 7.In the aforesaid circumstances, without expressing anything on the merits of the allegations against the petitioners as are contained in Ext.P1 and their defence thereto, as are contained in Exts.P2 and P3, Ext.P4 has to be quashed. 8.One of the allegations attempted to be advanced by the petitioners is that the proceedings under Section 32 for supersession cannot be an automatic outcome of a report under Section 65. WP(C)18335/2008 -: 7 :- Ext.R1(3) report under Section 65 was placed on 20-2-2008. Sub-section (6) of Section 65 authorizes initiation of proceedings for supersession, if such grounds are available on the basis of a report under Section 65. It may not be possible for this Court to hold that the action of issuance of Ext.P1 notice is unsustainable. That stands. In the result, this writ petition is allowed quashing Ext.P4 with liberty to the first respondent to hear the petitioners de novo and take such appropriate action as may be found necessary in accordance with law. No costs. THOTTATHIL B. RADHAKRISHNAN, JUDGE. Sha/020808