Prior approval is required for land purchases by Co-operative Societies, but existing ownership and improved financial status may justify reconsideration for construction.

JUDGMENT :

N.NAGARESH, J.

The petitioner, a Co-operative Society, challenges the refusal of the 2^nd respondent to permit construction of a building for accommodating a Branch of the Bank on the ground that while purchasing the land the then Management has not taken permission for purchase.

2. The petitioner states that the Society, by a resolution passed on 09.12.2013, decided to purchase an extent of 3.64 Ares of land situated adjacent to the building in which the Branch was functioning, for a price of Rs.27.9 lakhs. The petitioner would urge that the market value of the property was much higher. Kolencheri Housing Society had purchased a nearby property at a higher price and the said purchase was approved by the Department.

3. The Society did not seek prior approval for purchase of land since the bye-laws of the Society contemplated purchase of land as one of its objects. The petitioner-Society is now owner of 3.64 Ares of land for the last about 10 years.

4. The Society submitted application for approval of purchase as per Ext.P4 resolution dated 27.10.2016. The 3^rd respondent, as per Ext.P3, required the petitioner to produce documents relating to the valuation and transaction details of nearby properties. The Society gave Ext.P6 reply. The 1^st respondent issued Ext.P7 pointing out certain discrepancies in purchase. The Society gave Ext.P8 explanation. Subsequently, the Joint Registrar General issued Ext.P13 communication holding that expost facto permission cannot be granted for purchase of land since enquiry is contemplated against the Managing Committee Members and the Secretary.

5. The Society again submitted Ext.P14 request to the Joint Registrar seeking permission to construct Branch office at the site. The Joint Registrar again rejected the request as per Ext.P15 holding that the purchase of land has not been approved. The petitioner therefore seeks to declare that the Society cannot be prevented from utilising the landed property purchased and to command the 2^nd respondent to permit the Society to make construction of building for housing the Branch which is now running in a rented building.

6. The 2^nd respondent resisted the writ petition filing Statement. The 2^nd respondent stated that as per Rule 54 of the KCS Rules, a Society may with the previous sanction in writing of the Registrar, invest the whole or any portion of its funds in the purchase or lease of land, on the acquisition, construction or renewal of any building that may be necessary to conduct its business. The amount of fund so invested shall be recouped on such terms as may be determined in each case by the Registrar. According to the provisions enumerated in Rule 54, an investment of funds in immovable property by the Society could be made only with the previous permission of the 2^nd respondent. Though manner of investment is a policy decision of the Board, the same should be made as provided in the Kerala Co-operative Societies Act , Rules and the Circular directions of the Registrar of Co-operative Societies from time to time and the method adopted for investment need to be overviewed and scrutinised by the 2^nd respondent. This is only for protecting and securing the pecuniary interest of those investors, who are having potential chance to gain or lose money through such investments.

7. The Board had purchased this property in 2014 out of the funds of the Society, without any valuation from any approved authority. The Society had spent Rs.27,90,000/- in the year 2014, while their financial position is very weak. The Society has no liquid assets to cover its short term liabilities and has no reserve cash available to spare for depositors and other dues within next one year. The then Board, with an intention to gain personal gains, decided to purchase the property to the extent of 9 Cents in violation of the directions in Circular No.16/2011.

8. I have heard the learned counsel for the petitioner and the learned Senior Government Pleader representing respon