The court upheld the validity of inquiry proceedings under the Kerala Co-operative Societies Act, confirming that affected parties are entitled to a hearing before any adverse action is taken.

JUDGMENT :

(N. NAGARESH, J.)

W.P.(C) No.21514 of 2021 was filed by a member of the 7^th respondent-Paravur Co-operative Bank seeking to direct the 2^nd respondent-Registrar of Co- operative Societies to take action on Exts.P11 and P11(a) complaints and to initiate enquiry under Section 65 of the Kerala Co-operative Societies Act to terminate Governing Council members and to appoint an Administrator /Administrative Committee to manage the Bank.

2. W.P.(C) No.24688 of 2023 has been filed by the Managing Committee of the 7^th respondent-Bank in W.P.(C) No.21514 of 2021 seeking to quash Ext.P4 order in revision. The Revision Petition was filed by the Managing Committee to the Government, challenging Ext.P2 proceedings whereby an enquiry is ordered under Section 68(1) of the Kerala Co-operative Societies Act, 1969. The Revision Petition stands rejected as not maintainable. The parties to these writ petitions and exhibits are referred to in this judgment as they appear in W.P.(C) No.21514 of 2021 (unless otherwise specified) for clarity.

3. In Exts.P11 and P11(a) complaints filed by the petitioner to the Registrar of Co-operative Societies, the petitioner alleged that there occurred large scale corruption in the income tax dealings of the Bank for the years 2009 to 2018. It was reported in the 2017-2018 General body that Rs.79,50,000/- has been spent for income tax. Enquiry revealed that much amount has not been paid as income tax. It is alleged that an amount of Rs.1,32,00,000/- has been spent towards tax and advocate fee violating the Reserve Bank’s criteria.

4. The petitioner further alleged that a loan has been advanced to Sri. Sudheerkumar and Smt. Shainaja Sudheerkumar on the security of a landed property which stood already attached by a court order and consequently, the Bank is not in a position to recover Rs.50 lakhs from the loanees. This transaction is filled with corruption.

5. The Secretary of the Bank filed a Counter Affidavit. The Secretary submitted that there was failure on the part of the Bank in submitting income tax returns. The Income Tax Department ordered a survey under Section 133A of the Income Tax Act. The Income Tax Department assessed a liability of Rs.13,32,73,120/- and issued a Demand Notice for that amount. The Income Tax Department granted the Bank benefit of Section 80(P) and the liability was settled for a much lesser amount. The expenditure was approved by the General body of the Society.

6. As regards the loan given to Sri.Sudheerkumar and Smt. Shainaja Sudheerkumar, the Secretary submitted that the loan was advanced in the year 2006 by accepting mortgage of a property. The Title Deed of the property is with the Society and the Society is having first charge over the property.

7. Government Pleader submitted that Section66(2) inspection was ordered into the income tax expenditure of the Bank and the loan advanced to Smt.Shainaja Sudheerkumar. The Unit Inspector submitted a report dated 10.08.2022. Thereupon, Section 68(1) proceedings were initiated as per order dated 09.01.2023 of the Joint Registrar General.

8. The Managing Committee of the Bank filed Revision Petition against the said order dated 09.01.2023. The Revision Petition stands rejected as per Ext.P4 order in W.P.(C) No.24688 of 2023, by the Government. The Managing Committee of the Bank challenged Ext.P4 order in W.P.(C) No.24688 of 2023 contending that a Revision Petition is maintainable under Section 87 of the Kerala Co- operative Societies Act, 1969 against any proceedings of the Joint Registrar.

9. I have heard the learned counsel for the petitioner in W.P.(C) No.21514 of 2021, the learned counsel for the petitioner in W.P.(C) No.24688 of 2023, the learned counsel for the Managing Committee and the learned Government Pleader representing the Joint Registrar.

10. The prayer of the petitioner in W.P.(C)No.21514 of 2021 is to hold a Section 65 inquiry as regards the allegations raised by the petitioner. I find that an enquiry was ordered and the Un