Point of Law: Opportunity of hearing” mentioned in Rule 66(5) is necessary not only before passing orders by the Registrar on the apportionment of cost, but it is applicable to the other actions mentioned in Rule 66(5).

ORDER :

P.B.Suresh Kumar, J. (For himself and on behalf of C.S.Sudha, J.)

These matters have come up before the Full Bench in the light of the order of reference dated 31.05.2021 in W.A.No.1751 of 2020, in terms of which a Division Bench of this Court entertained a doubt as to the correctness of the proposition of law laid down by another Division Bench in State of Kerala v. Aravindakshan Nair, 2010 (3) KLT 11 as regards the interpretation of Rule 66(5) of the Kerala Co-operative Societies Rules, 1969 (the Rules) framed under the Kerala Cooperative Societies Act, 1969 (the Act).

2. As we do not propose to deal with individual cases on their merits, it is unnecessary to refer to the facts of each case. Suffice it to say that the facts necessary to consider the correctness of the proposition of law laid down in Aravindakshan Nair alone need to be stated.

3. Section 65(1) of the Act empowers the Registrar of Co-operative Societies (the Registrar) to hold an inquiry by himself or by a person authorised by him by order in writing, into the constitution, working and financial condition of any society, if he is satisfied that it is necessary to do so. Section 65(6) provides that if the Registrar, on completion of the inquiry, finds that there is any major defect in the constitution or working or financial condition of the society, he may initiate action in accordance with the provisions of Section 32 dealing with supersession of committees of societies registered under the Act. Section 66(2) provides that the Registrar may, on his own motion or on the application of a creditor of a society, inspect or direct any person authorised by him by order in writing in this behalf to inspect the books of the society. Section 68 provides, among others, that if it is found in the course of an inquiry or inspection that any person who is, or was entrusted with any organisation or management of a cooperative society or who is or has at any time been an officer or an employee of the society has made any payment contrary to the Act and the Rules or the bye-laws or has caused to any loss or damage in the assets of the society by breach of trust or wilful negligence or mismanagement or has misappropriated or fraudulently retained any money or other property belonging to such society or has destroyed or caused the destruction of the records, the Registrar may, on his own motion, or on the application of the committee, liquidator or any creditor, inquire himself or direct any person authorised by him by an order in writing in this behalf, to inquire into the conduct of such person. Section 68(2) provides that where an inquiry is made under sub-section (1), the Registrar may, after giving the person concerned an opportunity of being heard, by order in writing, require him to repay or restore the money or other property or any part thereof, with interest at such rate or to pay contribution and costs or compensation to such extent, as the Registrar may consider just and equitable.

4. Rule 66 of the Rules deals with the procedure for the conduct of inquiry and inspection under Sections 65, 66 and 68 of the Act. Rule 66(5) provides that the person authorised to conduct the inquiry or inspection shall submit his report to the Registrar on all points mentioned in the order authorising the inquiry or inspection. The said sub-rule also provides that the report shall contain his findings and the reason therefore; supported by such documentary or other evidence as recorded by him during the course of the inquiry or inspection. The sub-rule also provides that the person authorised to conduct the inquiry or inspection shall specify in his report the costs of the inquiry or inspection together with reasons and recommend to the Registrar the manner in which the entire costs or a part thereof may be apportioned amongst the parties specified in Section 67 of the Act. The sub-rule further provides that the Registrar shall pass such orders thereon as may be considered just, a