Point of Law: If any major defect in the constitution, working or financial condition of the society is found in the inquiry under Section 65(1) of the Act, the Joint Registrar is empowered even to initiate steps for superseding the managing committee under Section 32 of the Act.

JUDGMENT :

P.B. SURESH KUMAR, J.

1. This writ appeal is directed against the judgment dated 02.02.2022 in W.P. (C) No. 2474 of 2022. The appellant was the petitioner in the writ petition.

2. The appellant is the President of a Primary Cooperative Agricultural Credit Society registered under the Kerala Co-operative Societies Act, 1969 (the Act). As per Ext.P1 order, the Joint Registrar of Co-operative Societies exercising powers of the Registrar of Co-operative Societies under the Act over the Society of which the appellant is the President, ordered an inquiry under Section 65(1) of the Act into the loan transactions of the Society commencing from 01.01.2020 and also into the financial structure and stability of the Society. Ext.P1 order was issued on the basis of the reports dated 14.09.2021 and 12.11.2021 of the Unit Inspector attached to the office of the concerned Assistant Registrar of Co-operative Societies disclosing the irregularities noticed in the course of his inspections in the Society. The writ petition was one instituted challenging Ext.P1 order. Having regard to the materials on record, the learned Single Judge found that the satisfaction arrived at by the Joint Registrar for ordering an inquiry under Section 65(1) of the Act cannot be said to be baseless or unfounded. Consequently, the writ petition was dismissed. The appellant is aggrieved by the decision of the learned Single Judge and hence this writ appeal.

3. The learned Senior Counsel for the appellant contended that in the absence of any of the reports and applications referred to in clauses (b) to (f) of Section 65(1) of the Act, an inquiry under Section 65(1) could be ordered by the Joint Registrar only “on his own motion” as provided for in clause (a) of Section 65(1) on his subjective satisfaction that it is essential to order an inquiry under that provision into the constitution, working and financial condition of the society. The learned counsel elaborated the said submission pointing out that when an inquiry is ordered by the Joint Registrar invoking clause (a) of Section 65(1), the order should reflect the materials, on the basis of which the Joint Registrar has arrived at the subjective satisfaction as to the requirement of ordering an inquiry under that provision and the same shall be based on materials independently collected by him. It was argued by the learned counsel that Ext.P1 order does not disclose the materials independently sourced by the Joint Registrar and the said order was issued solely based on the reports of the Unit Inspector, which is per se illegal and unsustainable. The learned counsel has relied on the decision of this Court in Melukkara Service Co-operative Bank Ltd. vs. Joint Registrar (General), District Co-operative Society, 2018 (2) KHC 143, in support of the said contention. Placing reliance on the averments in paragraphs 11 to 13 of the writ petition, it was also contended by the learned counsel that the exercise of the power under Section 65(1) in the State is always selective, having regard to the political affiliation of the managing committee, and the power is invoked only with a view to find grounds for superseding the management of societies which do not owe allegiance to the political parties in power in the State. According to the learned counsel, the impugned order is therefore, vitiated by malice as well.

4. We have examined the arguments advanced by the learned Senior Counsel for the appellant.

5. Section 65 of the Act reads thus:

“65. Inquiry by Registrar:

(1) The Registrar may:

(a) on his own motion.

(b) on an inquiry report of the Vigilance Officer appointed under section 68A.

(c) on a report of the Director of Co-operative Audit appointed under section 63.

(d) on an application by the majority of the members of the committee of the society, or by not less than one third of the quorum for the general body meeting, whichever is less.

(e) on an application by the apex society or financing bank of which such society is