The court established that parties must wait for further actions based on inquiry reports before raising objections, promoting procedural fairness under the Kerala Co-operative Societies Act.

JUDGMENT

W.P.(C)No.32636 of 2024 has been filed challenging Ext.P4 order initiating enquiry under Section 65 of the Kerala Co-operative Societies Act, 1969 (in short ‘the 1969 Act’), while W.P.(C) No.29330 of 2025 has been filed challenging the report under of the 1969 Act. 2. One of the questions considered by the Full Bench of this Court in Kudayathoor Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies (General), 2022 (3) KLT 222 (FB), was regarding the stage at which an order / report of enquiry under of the 1969 Act could be challenged. This Court held as follows:

17. As noted, Section 66 of the Act empowers the Registrar, on his own motion or on the application of a creditor of a society, to inspect or direct any person authorised by him by order in writing in its behalf to inspect the books of the society. Similarly, Section 65 empowers the Registrar, on his own motion or on any of the circumstances mentioned in clauses (b) to (f) of sub-section (1) of , to order an inqury by himself or by a person authorised by an order in writing into the constitution, working into the constitution, working and financial condition of the society, if he is satisfied that it is necessary to do so. also empowers the Registrar to supersede the Managing Committee of a society in accordance with the provisions contained in Section 32 , if any major defect in the constitution or working or financial condition of the society is noticed in an inquiry under (1). Section 68 provides that if in the course of an inquiry or inspection it is found that any person who is or was entrusted with any organisation or management of co-operative societies 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 or 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 willful 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. (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. The aforesaid provisions would indicate that the Registrar would be competent to supersede the Managing Committee of the society under of the Act or surcharge the members of the Managing Committee or others under based on the report of the inquiry under or inspection under . No doubt, supersession of the Managing Committee of a society and surcharge of the members of the Managing Committee and others are drastic measures involving adverse civil consequence as far as the parties are concerned which include infraction of property, personal rights and material deprivation. But it is seen that an opportunity of hearing is provided for under of the Act before the Managing Committee of a society is superseded under that provision except in exceptional circumstances referred to therein. Similarly, a further inquiry under (1) of the Act is provided for, based on the report of inquiry under or inspection under and an opportunity of hearing is required to be given in terms of (2) before a person is called upon to repay or restore the money or other property as found recoverable from him. Rule 66(7)(ii) also provides that on getting the report of inquiry or inspection, as the case may be, the Registrar shall give the person or persons concerned a