Kerala High Court Rules: Co-opted Members in Co-operative Societies Can Only Be Removed via No-Confidence Motion

Court Upholds Registrar's Power to Rescind Illegal Resolutions

In a significant ruling on co-operative society governance, the Kerala High Court has clarified that the removal of a co-opted member from a managing committee must strictly adhere to the no-confidence motion procedure under Rule 43-A of the Kerala Co-operative Societies Rules, 1969. The court, presided over by Justice K. Babu, dismissed two interconnected writ petitions on December 2, 2025, affirming the Joint Registrar's authority to rescind resolutions that violate statutory provisions using Rule 176. This decision reinforces procedural safeguards in co-operative management while balancing regulatory oversight.

Case Background and Parties Involved

The case originated from internal disputes at the Indira Gandhi Co-operative Hospital, a unit of the Mambaram Co-operative Hospital Society Ltd. No. C952, located in Thalassery, Kannur district. The society's Board of Directors was elected on December 5, 2021, and assumed office shortly thereafter.

C.T. Sajith, aged 59 and a professional director at the hospital, was co-opted to the managing committee on March 30, 2022, under Section 28(1G) of the Kerala Co-operative Societies Act, 1969, which allows co-option of experts in specified fields like management and healthcare. On October 10, 2024, the managing committee unanimously resolved to remove Sajith without prior notice or agenda inclusion, citing performance concerns (though no reasons were detailed in the resolution). Subsequently, on November 29, 2024, the committee co-opted Dr. Ranjith Ramakrishnan, a 56-year-old gynecologist at the hospital, as his replacement.

Sajith challenged his removal in W.P.(C) No. 46208 of 2024, seeking reinstatement and a declaration that Dr. Ramakrishnan's appointment was illegal. Conversely, the hospital society and Dr. Ramakrishnan filed W.P.(C) No. 24928 of 2025, seeking to quash the Joint Registrar's order (Exhibit P14, dated June 13, 2025) that rescinded the removal resolution. The Joint Registrar of Co-operative Societies, Kannur, was the primary respondent in both petitions, with the State of Kerala also impleaded.

The court treated W.P.(C) No. 24928/2025 as the lead case, noting the interlocking parties: Sajith as petitioner in one and respondent in the other, and the hospital/Dr. Ramakrishnan in reverse roles.

Key Arguments from Both Sides

Petitioners' (Hospital Society and Dr. Ramakrishnan) Contentions:
Senior Counsel George Poonthottam argued that co-opted members serve at the managing committee's pleasure, drawing on the Supreme Court's ruling in Om Narain Agarwal v. Nagar Palika, Shahjahanpur (1993) 2 SCC 242, which applied the "pleasure doctrine" to nominated municipal members. He asserted the committee's right to evaluate performance and terminate membership if unbeneficial, emphasizing Dr. Ramakrishnan's expertise in healthcare as advantageous to the society. The counsel further contended that challenges to committee resolutions fall under Section 69 of the Act, not Rule 176, and invoked the society's autonomy as per Aji v. State of Kerala (1995 KHC 59).

Respondent's (Sajith) and Registrar's Positions:
Counsel Kaleeswaram Raj, representing Sajith, labeled the removal arbitrary, lacking reasons or notice, and not included in the meeting agenda (held under "any other matter"). He argued that Rule 43-A provides the exclusive removal mechanism via no-confidence motion, citing precedents like Bhavnagar University v. Palitana Sugar Mill (P) Ltd. (2003) 2 SCC 111 and Raj Soni v. Air Officer Incharge Admn. (1990) 3 SCC 261, which mandate strict adherence to statutory procedures. Senior Government Pleader C.S. Sheeja reinforced that the Act and Rules form a self-contained code, rejecting the pleasure doctrine and upholding the Registrar's broad powers under Rule 176 to rescind resolutions contrary to law or societal interests. She highlighted violations of natural justice principles, as Sajith received no hearing.

Legal Precedents and Principles Applied

The court distinguished Om Narain Agarwal (supra), noting the absence of a "pleasure doctrine" in the Kerala Co-operative Societies Act or Rules, unlike the municipal law context. It emphasized Rule 43-A's mandatory no-confidence procedure for removing any committee member, whether elected or co-opted, as the sole mechanism—requiring one-third member signatures, Registrar-notified meetings, quorum, and majority support.

Justice Babu referenced Sumitha Mathew v. Kanjirappally Co-operative Agricultural and Rural Development Bank Ltd. (2022 KHC 781), affirming the Registrar's expansive Rule 176 powers to intervene in resolutions that are ultra vires, against the Act/Rules/bye-laws, or detrimental to the society. This overrode arguments from Joseph Mathew v. State of Kerala (2025 KHC 53), which limited Rule 176 in service disputes under Section 69.

The judgment clarified that while societies enjoy autonomy (per Aji v. State of Kerala Full Bench), the Registrar is not a "passive spectator" and can act on procedural lapses, such as agenda exclusions or backdoor decisions, which violate natural justice ( State of U.P. v. Sudhir Kumar Singh (2021) 19 SCC 706; Dharampal Satyapal Ltd. v. CCE (2015) 8 SCC 519).

A pivotal excerpt underscores the reasoning:
> "Rule 43-A of the Rules prescribes the only manner in which a member of the committee of a society may be removed. The petitioner-society should not have removed respondent No.2 from the committee without adhering to the mandatory procedures."

The court rejected the challenge to the Assistant Registrar's report (Exhibit P11) as foundational, viewing it merely as an input, not an appealable order ( Edukanti Kistamma v. S. Venkatareddy (2010) 1 SCC 756).

Court's Final Decision and Implications

The Kerala High Court upheld Exhibit P14, the Joint Registrar's June 13, 2025, order rescinding the October 10, 2024, removal resolution. Sajith's removal was deemed illegal for bypassing Rule 43-A, and the subsequent co-option of Dr. Ramakrishnan was invalidated. Sajith continues as a co-opted member, with the writ petitions disposed accordingly—no costs awarded.

This ruling strengthens procedural integrity in co-operative societies, ensuring removals protect against arbitrary actions while empowering Registrars to safeguard statutory compliance. It may influence similar disputes in Kerala's vast co-operative sector, particularly in healthcare institutions, by limiting informal terminations and promoting transparency. Legal experts note it balances democratic committee functions with regulatory checks, potentially reducing internal conflicts but increasing reliance on formal motions.

The judgment was delivered alongside related proceedings, with all parties represented by noted advocates including Kaleeswaram Raj, George Poonthottam (Sr.), and Senior Government Pleader C.S. Sheeja.