Surcharge proceedings under Section 68(2) of the KCS Act require specific findings on individual liability and compliance with statutory requirements. Liability cannot be fixed on deceased persons without involving their legal representatives.

JUDGMENT :

The issues involved in the above three writ petitions are intrinsically connected, and the writ petitions are heard and disposed of together. The petitioners were elected to the Managing Committee of the Arayoor Service Co-operative Bank Limited in an election that was held on 04.11.2018. The term of office is for five years. In 2021, proceedings were initiated for surcharging the Committee. The surcharge order was issued under Section 68(2) of the Kerala Co-operative Societies Act, 1969 (KCS Act) on 16.6.2021. An order of surcharge is a disqualification to the Committee to continue in office. The Unit Inspector was hence appointed as an Administrator to manage the Society. The order imposing the surcharge and the order appointing the Administrator was the subject matter of challenge before this Court in W.P.(C)No.12783 of 2021. This Court set aside the order by judgment dated 21.02.2022. Pending the litigation, the term of the Administrator has been extended. The Court directed the Joint Registrar of Co-operative Societies to pass fresh orders based on the findings entered by the Court after affording an opportunity of hearing to the parties. Regarding the appointment of the Administrator, this Court held that since the Administrator had been in management from 18.6.2021, he shall continue in office subject to the outcome of the proceedings.

2. The judgment of the learned Single Judge was challenged in appeal by the petitioners as well as the respondents by filing W.A.No.300 and 443 of 2022. The appeals were heard together and disposed of by judgment dated 6.4.2022 upholding the direction of the learned Single Judge permitting the Administrator to continue in office subject to the outcome of the proceedings. On 25.3.2022, pending the decision, the Joint Registrar passed two separate orders, one directing the Committee members to remit the amount determined and the other surcharging the petitioners and ordering recovery from their assets. The above two orders are challenged in W.P.(C)No.14402 of 2022. The challenge is on the ground that surcharge proceedings are confined to the petitioners alone, excluding the legal heirs of one deceased former Managing Committee member and one former President, though they would also be liable based on the judgment of the learned Single Judge. Another reason is that the earlier quantification had already been found to be not legal and set aside, and hence, without a fresh quantification, apportionment of liability cannot be done. The third reason is that surcharge proceedings cannot be issued in the name of deceased persons without hearing the legal heirs of the deceased. On 10.5.2022, this Court passed an interim order staying the orders dated 25.3.2022. According to the petitioners, once orders have been issued, the term of the Administrator will come to an end, going by the judgment of this court in W.P.(C)No.12783 of 2021, as affirmed in the judgment in W.A.No.300 of 2022. It is submitted that the petitioners assumed office by recording a resolution on 30.5.2022 in the minutes book.

3. There were issues regarding the assumption of office since records were not handed over to the petitioners. It is submitted that the records were taken custody of by the Police. The Joint Registrar issued proceedings dated 30.5.2022, authorising the Assistant Registrar to initiate Section 34 proceedings to secure the possession of the minutes book and to take further action. The petitioners thereafter filed W.P.(C)No.17689 of 2022 seeking to quash the order dated 30.5.2022 issued by the Joint Registrar and praying for a direction to the Circle Inspector of Police who had taken possession of the minutes book of the Society to hand over the same to the Managing Committee members. On 1.6.2022, this Court issued an interim order staying the further proceedings pursuant to the order of the Joint Registrar dated 30.5.2022.

4. The Joint Registrar took a stand that the term of the Administrator is till 20.6.