BOARD OF MANAGEMENT OF THE KANDALA SERVICE CO-OPERATIVE BANK LTD. Vs. JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES

JUDGEMENT

(1.) The Board of Management of the 2nd petitioner Society and the Society have preferred this writ petition. They are aggrieved by the proceedings initiated under Sec. 32 of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the Act). This litigation has a chequered career. The Society had, in its meeting held on 25/11/2002, decided on the feeder categories with respect to the service under the Society. The decision was approved on 30/1/2004 by the 1st respondent, as seen from Ext.P13. On 22/8/2009, the 2nd respondent issued Ext.P14 notice to the Society seeking a report regarding the appointment of persons without sanction for the post. The Society submitted Ext.P15 explanation stating that appointments have been made only for the posts permitted in the approved feeder category. Thereafter, the 1st respondent permitted appointment to the post of Security Personnel as per Ext.P16 dtd. 3/3/2010. On 6/2/2012, the 1st respondent issued Ext.P1 order directing an enquiry under Sec. 65 of the Act into six aspects specified in the notice. The notice was challenged in W.P.(C)No.4403 of 2012 by the President of the Society and by Ext.P2 order dtd. 27/2/2022, this Court directed status quo to be maintained. It is submitted that the said order was in force till 27/10/2021 on which day this Court, by Ext.P5 judgment, closed the writ petition in view of the order in Contempt Case No.1468 of 2021. Ext.P4 is the order in the Contempt Case, which was closed recording paragraph 10 of the affidavit filed by the 1st respondent requesting to withdraw Ext.P1 order and the subsequent order dtd. 4/8/2021 produced as Ext.P3 in this writ petition, with liberty to issue fresh enquiry order and requesting to exonerate the contemnor from further proceedings in the matter. It can be seen from Ext.P3 that it had been issued based on the same set of facts, which led to Ext.P1.

(2.) During the pendency of W.P.(C)No.4403 of 2012, the 1st respondent had issued orders including the 2nd petitioner Society as a Class I society under Rule 36 Appendix III of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as the Rules). The Bank is also running a hospital by the name Kandala Co-operative Hospital as a separate unit of the Bank for which sub-rules were approved by the 1st respondent by Ext.P18 order dtd. 2/6/2015. It is stated that the Bank has constructed various buildings and purchased vehicles with proper valuation certificates and sanctions. The documents relating to the same have been produced as Exts.P19 to P21. After Ext.P5 judgment, the 1st respondent issued Ext.P12 order dtd. 24/1/2021 directing an enquiry under Sec. 65 of the Act. According to the petitioners, even though the Enquiry Officer was convinced that the allegations in Ext.P12 were not correct, Ext.P6 report was filed with a finding as to certain irregularities. It can be seen from Ext.P6 that the enquiries were ordered into appointments made allegedly without sanction, failure to re-classify the Bank with effect from 20/11/2012, making unauthorised constructions, the improper sanction of loan to Maranelloor Ksheerolpadaka Society, apart from aspects like financial position of the Society, the grant of loans, conduct of MDS, proceeding on deposits, giving excessive interest on deposits causing loss to the Bank and regarding the constitution, functioning, administration and financial stage of the Society. According to the petitioners, Ext.P6 was not communicated to the President or the Committee members, and their explanations were also not sought. It is also stated that pages 1 to 3 of Ext.P6 were not communicated to the 2nd petitioner along with Ext.P6.

(3.) On 11/5/2022, the 2nd petitioner submitted Ext.P7 explanation to Ext.P6 report pointing out that the contents of Ext.P6 are not correct and that the Bank has been functioning satisfactorily for the past several years. It is also requested that further action based on the Sec. 65 report may be dropped. Thereafter, the 1st respondent issued Ext.P8 notice asking the petitioners to show cause why action should not be taken under Sec. 32(1)(a)(c) of the Act based on Ext.P6 report and directing appearance on 28/6/2022. The writ petition has been filed challenging Exts.P12, P6, and P8 whereby Sec. 65 enquiry was initiated, the report filed, and it was proposed to take further action on the report.