Right to challenge inspection findings arises only post-show cause notice under Section 68(2) of the Kerala Co-operative Societies Act, ensuring fairness in proceedings.

JUDGMENT

The petitioners have approached this Court, challenging Exhibit P3, which directs an inspection under Section 66 of the Kerala Co-operative Societies Act , 1969 (‘the 1969 Act’) in respect of the points mentioned therein as also Exhibit P12 order, directing that further proceedings be taken in terms of the provisions contained in Section 68 of the 1969 Act, based on the findings in Exhibit P3. It is the principal contention of the learned counsel appearing for the petitioners, as also the learned counsel appearing for the additional respondent Nos. 5 to 7 that, during the course of the proceedings under of the 1969 Act, the inspector had issued notices to the members of the Board as also to the Secretary of the Society, calling upon them to submit their explanations to certain issues referred in the notices. Reference is made in this regard to Exhibits P4 and P7 notices produced along with the writ petition. The learned counsel appearing for the petitioners submits that, despite the issuance of notices, without giving sufficient time to the petitioners to submit their reply, proceedings under of the 1969 Act have been initiated. It is submitted that though of the 1969 Act does not contemplate any hearing, when the inspectors had decided to issue notices and call for explanations, it was their bounden duty to consider the explanations before finalising the report. It is submitted that the report does not even mention that notices were issued to the members of the Managing Committee and the Secretary of the Bank. It is submitted that the concept of fairness demands that if a notice had been issued, a reasonable time should be granted for furnishing a reply, and that such a reply is considered before finalising the report under of the 1969 Act.

2. The learned Government Pleader submits that Section 66 of the 1969 Act does not contemplate any personal hearing before finalising a report, and the petitioners will get every opportunity to submit their explanations, if and when a show cause notice is issued to them under Section 68 (2) of the 1969 Act. It is submitted that, going by the Full Bench judgment of this Court inKudayathoor Service Co- operative Bank Ltd V. Joint Registrar of Co-operative Societies (General); 2022 (3) KLT 222 (F.B), the petitioners have no locus standi to challenge the order directing an inspection issued under the provisions of of the 1969 Act or the order issued under (1) of the 1969 Act. It is also pointed out that the explanation was submitted only on 16.8.2025, after Exhibit P12 order was issued on 08.08.2025.

3. Having heard the learned counsel appearing for the petitioners, the learned Government Pleader appearing for the official respondents, and the learned counsel appearing for additional respondent Nos. 5 to 7, I am of the view that the learned Government Pleader is right in contending that, in light of the law laid down by the Full Bench inKudayathoor Service Co-operative Bank Ltd (supra), the right of the petitioners to object to any finding in the report under Section 66 of the 1969 Act or to object to the initiation of proceedings under Section 68 of the 1969 Act can be exercised before the competent authority at the stage of issuance of a show cause notice under (2) of the 1969 Act. This Court cannot be called upon to examine the contentions taken in objection to the report prepared under of the 1969 Act, at the stage of issuance of an order under (1) of the 1969 Act. It is settled law that, following proceedings under Section 65 or 66 of the 1969 Act, the Authorities may take action either under Sections 32 or 68 of the 1969 Act. While proceedings under Section 32 of the 1969 Act relate to the collective responsibility of the Managing Committee, the proceedings under of the 1969 Act relate to fixing of individual liability on members of the Board of Directors or officials of the Society, for the purposes of recouping the loss caused to the Society on account of acts or omissions by