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2020 Supreme(Ker) 1093

IN THE HIGH COURT OF KERALA
Raja Vijayaraghavan V, J.
N. Premakumaran – Petitioner
Versus
Joint Registrar General of Co-operative Societies and Anr. – Respondents
W.P.(C). No. 20810 of 2020
Decided On : 06-10-2020

Important Points

Supersession of an elected Managing Committee is an exception and can be resorted to only in exceptional circumstances, and the elected body should be allowed to complete its term unless there is deliberate inaction in rectifying illegalities committed by the previous committees.

Subject

Co-operative Societies - Supersession of Managing Committee

Act Referred

CRIMINAL PROCEDURE CODE : S.144
KERALA CO-OPERATIVE SOCIETIES ACT : S.32, S.32(1)(a), S.32(1)(b), S.32(1)(c)

Headnote

Section 32 - Kerala Co-operative Societies Act, 1969 - Ext.P8 and P10 - The court discussed the challenge to the show cause notice issued under Section 32(1) of the Act and emphasized the principles laid down by the Apex Court and the High Court in similar cases. The court highlighted that supersession of an elected Managing Committee is an exception and can be resorted to only in exceptional circumstances. It also emphasized that the elected body should be allowed to complete its term unless there is deliberate inaction in rectifying illegalities committed by the previous committees. The court directed the 1st respondent to consider the explanation provided by the petitioner and pass appropriate orders.

Fact of the Case:

The petitioner, President of the Akathethara Service Co-operative Bank Ltd., sought a declaration that the action initiated under Section 32 of the Kerala Co-operative Societies Act, 1969 against the managing committee of the 3rd respondent society is unjustified and further sought to quash Ext.P8 and P10 notices on the premise that issuance of such notice is a consequence of a malafide exercise of power.

Finding of the Court:

The court refused to entertain the writ petition questioning the notice to show cause, emphasizing that unless exceptional cause is made out, it would not exercise its discretionary jurisdiction. The court directed the petitioner to appear before the 1st respondent and furnish their explanation, and the 1st respondent to consider the same and pass appropriate orders.

Issues: The challenge to the show cause notice issued under Section 32(1) of the Kerala Co-operative Societies Act, 1969.

Ratio Decidendi: The court emphasized the principles laid down by the Apex Court and the High Court in similar cases, highlighting that supersession of an elected Managing Committee is an exception and can be resorted to only in exceptional circumstances. It also directed the 1st respondent to consider the explanation provided by the petitioner and pass appropriate orders.

Final Decision: The writ petition was disposed of directing the petitioner to appear before the 1st respondent and furnish their explanation, and the 1st respondent to consider the same and pass appropriate orders.

Advocates:
Advocate Appeared:
For the Petitioner: K T Thomas, Nikhil Berny
For the Respondent: Bimal K Nath (Sr. GP)

JUDGMENT :

Raja Vijayaraghavan V, J.

1. The petitioner, the President of the Akathethara Service Co-operative Bank Ltd., has approached this Court seeking a declaration that the action initiated under Section 32 of the Kerala Co-operative Societies Act, 1969 (“the Act” for short) against the managing committee of the 3rd respondent society is unjustified and further seeks to quash Ext.P8 and P10 notices on the premise that issuance of such notice is a consequence of a malafide exercise of power.

2. The petitioner contends that by Ext.P4 letter, the 1st respondent had directed the 2nd respondent to conduct an enquiry into the functioning of the Bank on the strength of complaint lodged by a certain Raghu, who claimed to be the Secretary of the Akathethara Bank Protection Committee. The 2nd respondent conducted a detailed enquiry and submitted Ext.P5 report noting certain anomalies with regard to the disbursal of loan exceeding valuation and waiver of interest in violation of the circular issued by the Registrar of Co-operative Societies. An explanation was sought for from the Society and the managing committee members. Later, based on directions issued by the 1st respondent, an inspection was conducted by the Unit Inspector and he submitted Ext.P7 report. On receipt of the said report, show cause notice was issued directing the petitioner and other members of the managing committee to appear and show cause as to why action shall not be initiated under Section 32(1)(a) to (c) of the Act. The petitioner, as well as the other members, appeared and filed Ext.P9 explanation reiterating that the entire defects/irregularities stood rectified. The petitioner contends that on receipt of the explanation, the 1st respondent issued copies of Ext.P2 and P7 enquiry reports and the members of the managing committee were directed to personally appear on 06.10.2020 and to furnish their explanation. According to the petitioner, the entire defects made mention of in Ext.P8 stood rectified and there is no circumstance warranting initiation of proceedings under Section 32 of the Act. It is contended that it is with intent to overthrow the democratically elected managing committee that the 1st respondent has ventured to issue the impugned notice. It is in the above background that the petitioner has approached this Court seeking the following reliefs:

1. To issue appropriate writ order or direction declaring that there is no reason warranting or justifying action under Section 32 of the Kerala Co-operative Societies Act, 1969 against the Managing Committee of the 3rd respondent society.

2. to issue a writ of certiorari or other appropriate writ, order or direction quashing Ext.P8 and P10 issued by the 1st respondent as the same is malafide and illegal exercise of power.

3. Sri.K.T.Thomas, the learned counsel for the petitioner submitted that a perusal of Ext.P8 and P9 would reveal that there were no materials justifying the initiation of proceedings under Section 32(1) of the Act. According to the learned counsel, the sequence of the events would show that at the instance of invisible forces, a fresh enquiry was initiated and the issuance of the notice is nothing but an attempt to bring down the committee in a surreptitious manner. According to the learned counsel, the petitioner has submitted Ext.P9 explanation and if the same is looked into objectively, it would be evident that the entire anomalies noted by the Unit Inspector stood rectified. The learned counsel would also place reliance on the judgment of the Apex Court in State of Madhyapradesh and Others v. Sanjay Nagayach and Others (2013) 7 SCC 25 and it was argued that when a statutory authority like the 1st respondent, who is invested with powers, purports to act on its own but in substance the power is exercised by external guidance or pressure, it would amount to non-exercise of power. Placing reliance on a judgment of this Court in State of Kerala v. Board of Directors of Urukunnu Service Co-o

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