The main legal point established in the judgment is that the initiation of the S.65 inquiry was without jurisdiction, there were violations of mandatory rules of procedure as prescribed under R.66, and the recommendations in the report of the enquiry officer were beyond the scope of his powers and without jurisdiction. The court also emphasized the importance of effective consultation and the absence of persistent or wilful defect or negligence or disobedience or commission of acts prejudicial to the interest of the society.

J.B. Joshy, J.

O.P. No. 7269 of 1997 was filed by the President of the Ellakkal Service Cooperative Bank Ltd. (hereinafter referred to as 'the bank'). Election to the committee of the Bank was held on 3.2.1996 and the Board of Directors took charge on 6.2.1996. They received Ext. P1 notice initiating action under S.65 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as "the act" ). According to the petitioners, while general body meeting of the Bank was being held on 27.7.1996 and when the meeting was going on, the then Secretary of the Bank who was on medical leave along-with his colleagues disturbed the general body meeting and he was suspended pending enquiry and because of that 2nd respondent unnecessarily interfered and petitioners approached this Court by filing O.P. No. 19335/96. Even at that time, 2nd respondent threatened that unless action is withdrawn necessary consequences will have to be faced and Ext. P1 notice itself was issued as a consequence of the malafide action on the part of the 2nd respondent. It is also stated that Ext. P1 was issued as mentioned in that order at the instance of the Assistant Registrar who has not conducted any inspection. It is also submitted that while conducting the enquiry in pursuance of Ext. P1 notice, procedure prescribed under R.66 of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as "the rules") was not complied with in various respects, since mandatory provisions of R.66 of the Rules were not complied with, the enquiry is vitiated. Further, the first enquiry officer submitted an interim report. It is alleged that without their knowledge, another enquiry officer was appointed after submission of the preliminary report by the first enquiry officer. Ext. P4 is the report by the enquiry officer and Ext. P5 notice was issued under S.32(1) of the Act. It is also the case of the petitioners that the report prepared and submitted is incorrect and against the procedure. No balance sheet was attached to the report. It was also submitted that they have took charge only in February, 1996. Thereafter, the Bank was running on a profit and more than Rs. two lakhs were earned as profit. According to the petitioners, they took charge of the management of the Bank when it had a loss of more than Rs. nine lakhs and because of their sincere action more than Rs. two lakhs were earned as profit and this was not taken into account and relevant considerations were not given. They were n6t given sufficient time to cure the defects. The interim reply was not considered. Therefore, according to the prayers in O.P. No. 7269/97, the enquiry report as well as the notice issued under S.32(1) of the Act should be quashed.

2. In O.P. No. 8695/97, the main challenge is against Ext. P7 order superseding the managing Committee under the provisions of S.32(1) of the Act and appointing an administrator. It is submitted that statutory provisions for supersession were not complied with and on merits also the order is liable to be set aside as the enquiry report based on which action was taken itself is illegal.

3. In O.P. No. 7269/97 there was a petition for injunction and an order of status quo was ordered on 22.5.1997 against the appointment of an Arbitrator. It is the case of the petitioners that after the receipt of the order, Administrator took charge. The administrator filed an affidavit stating that he took charge on 19.5.1997 itself before the order of status quo was communicated to him. On behalf of respondents 1 and 2 a detailed counter affidavit was filed denying all the allegations raised by the petitioners. Allegations of malafides were refuted and stated that only because of grave irregularities as found in the enquiry, action was taken.

4. Now, I may consider the serious contentions raised in the original petitions. The first contention raised was that Ext. P1 notice issued under S.65 of the Act itself is without jurisdiction. Action can be taken