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IN THE HIGH COURT OF KERALA AT ERNAKULAM
P.B.SURESH KUMAR, C.S. SUDHA, JJ.
Koliyacode Consumer Co-Operative Society Ltd – Appellant
Versus
Joint Registrar Of Co-Operative Societies (General) – Respondent
WA No. 1406 of 2021
Decided on : 03-11-2021
Kerala Co-operative Societies Act, 1969- Section 65(1), Section 66(1) - inquiry into the working of the Society.- Joint Registrar of the Co-operative Societies exercising the powers of the Registrar under the Act - Grounds of challenge were twofold, viz, (i) that the Registrar has not formed a subjective satisfaction regarding the necessity to order an inquiry which is a mandatory precondition to exercise the power under Section 65(1) of the Act in the matter of issuing Ext.P1 order and (ii) that Ext.P2 report, on the basis of which Ext.P1 order was issued, is illegal in as much as the inspection which culminated in Ext.P2 report was one conducted without compliance of the requirements in Rule 66(2) of the Kerala Co-operative Societies Rules, 1969 (the Rules) which mandates that a copy of the order of inspection shall be issued by the Registrar to the President or the Secretary of the Society, as the case may be, by registered post with acknowledgement due.
Finding of the Court: Words used in sub-section (11) of Section 66 of the Act, it can be seen that the same is a provision independent of sub-section (1) of Section 66 providing for supervision and sub-section (2) of Section 66 providing for inspection. In so far as sub-section (11) of Section 66 starts with a non-obstante clause - Provision is intended to enable the Registrar and his subordinate officers to hold an enquiry with the necessary records of the Society, on any petition received, and to inspect the affairs of the Society periodically without following the procedure prescribed for inspection under subsection (2) of Section 66. In other words, while sub-section (2) of Section 66 provides for inspection in respect of the books of a society by the Registrar on his own motion or on the application of a creditor by an order issued by the Registrar in writing in this behalf, sub-section (11) of Section 66 authorises and empowers the officers subordinate to the Registrar to carry on periodic inspections into the affairs of every society without any specific order of the Registrar for the said purpose - as no order is required to be passed by the Registrar for an inspection under sub-section (11) of Section 66, compliance of Rule 66(2) of the Rules is impossible in the case of such an inspection. If compliance of Rule 66(2) of the Rules is impossible for inspection in terms of sub-section (11) of Section 66 of the Act, the argument that Rule 66(2) of the Rules would apply to such inspection also can only be rejected - Rule 66 of the Rules has been in force ever since the introduction of the Rules in the year 1969, whereas sub-section (11) of Section 66 of the Act was a provision introduced to the Act only with effect from 28.04.2010, in terms of Act 7 of 2010 and when sub-section (11) of Section 66 was introduced to the Act to provide for periodic inspection into the affairs of the Society, there was no corresponding amendment in the Rules. There is, therefore, no infirmities in Ext.P2 report as well.
Result: Appeal dismissed
JUDGMENT :
P.B.Suresh Kumar, J.
This writ appeal is directed against the judgment dated 21.10.2021 in W.P.(C)No.21100 of 2021. The petitioners in the writ petition are the appellants. Parties and documents are referred to in this judgment for convenience, as they appear in the writ petition.
2. The first petitioner is a Co-operative Society (the Society) registered under the Kerala Co-operative Societies Act, 1969 (the Act) and the second petitioner is the President of the first petitioner Society. In terms of Ext.P1 order, respondent, the Joint Registrar of the Co-operative Societies exercising the powers of the Registrar under the Act over the area where the Society is located, in exercise of the power under Section 65(1) of the Act, ordered an inquiry into the working of the Society. Ext.P1 order was issued based on Ext.P2 report of inspection submitted by the officer authorised to supervise the working of the Society in terms of Section 66(1) of the Act. Ext.P1 order was under challenge in the writ petition. The grounds of challenge were twofold, viz, (i) that the Registrar has not formed a subjective satisfaction regarding the necessity to order an inquiry which is a mandatory precondition to exercise the power under Section 65(1) of the Act in the matter of issuing Ext.P1 order and (ii) that Ext.P2 report, on the basis of which Ext.P1 order was issued, is illegal in as much as the inspection which culminated in Ext.P2 report was one conducted without compliance of the requirements in Rule 66(2) of the Kerala Co-operative Societies Rules, 1969 (the Rules) which mandates that a copy of the order of inspection shall be issued by the Registrar to the President or the Secretary of the Society, as the case may be, by registered post with acknowledgement due. The learned Single Judge rejected the grounds aforesaid holding that Ext.P1 order was issued after forming a subjective satisfaction as mandated under Section 65(1) of the Act and that Rule 66(2) of the Rules does not apply to Ext.P2 in so far as it was a report on an inspection conducted under sub-section (11) of Section 66 of the Act. The petitioners are aggrieved by the decision of the learned Single Judge and hence this appeal.
3. Heard the learned counsel for the petitioners as also the learned Government Pleader.
4. The ground of the petitioners that the Registrar has not formed a subjective satisfaction regarding the necessity to order an inquiry into the working of the Society has been repelled by the learned Single Judge holding that Ext.P1 order has been passed after evaluating the materials disclosed in Ext.P2 report and thus forming a subjective satisfaction mandated in terms of Section 65(1) of the Act. A reading of Ext.P1 order would show that it is after evaluating the various irregularities reported in Ext.P2 report that the Registrar has ordered the inquiry into the working of the society under Section 65(1) and the same cannot be said to be an order issued without the necessary subjective satisfaction as to the necessity to order such an inquiry. There is, therefore, no infirmity in the finding rendered by the learned Single Judge on this point.
5. Now, we shall deal with the ground of the petitioners that Ext.P2 report is bad in law in as much as the mandatory pre-condition to be satisfied for conducting an inspection in a society under Section 66 of the Act as provided for under Rule 66(2) of the Rules has not been complied with in the matter of conducting the inspection culminated in Ext.P2 report. In order to deal with the ground aforesaid, it is necessary to refer to Section 66 of the Act as also Rule 66 of the Rules. The relevant part of Section 66 of the Act reads thus:
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