Siri Jagan, J.

WA Nos. 2131/12 & 2137/12

1. These two writ appeals are filed by the fourth respondent and respondents 1 and 2 respectively in Writ Petition No.28258/2011, challenging the judgment of the learned single Judge in that writ petition. The writ petition was filed by respondents 1 to 3 in these appeals, challenging the proposed action of the appellants in WA No.2137/12 in Superseding the managing committee of the ADAT Farmer Service Co-operative Bank, under Section 32 of the Kerala Co-operative Societies Act (hereinafter referred to as the Act) During the pendency of the writ petition, Ext.P13 order under Section 32 of the Act was served on respondents 1 to 3. Thereafter, they amended the writ petition, incorporating a challenge against Ext.P13 order also. The primary contention of respondents 1 to 3 in the writ petition was that Ext.P13 order was passed without complying with the mandatory provisions of Section 32(1) & (2) of the Act, stipulating an opportunity to the managing committee to state their objections against the proposal to supersede and consultation with the Circle Co-operative Union and the Financing Bank. The appellants in these appeals took the stand that the appellants in WA No. 2137/12 had, by giving reasons for the same, exercised its discretion under Section 32(3) of the Act, to dispense with the opportunity to the respondents 1 to 3 to state their objections and therefore, Ext.P13 order is proper and Valid. That contention did not find favour with the learned single Judge and the learned single Judge held that Ext.P13 order has been passed in violation of the provision of Section 32(1) and (2) of the Act and consequently, quashed Ext.P13, directing that the managing committee be permitted to continue in office to discharge its functions. But , the learned single Judge left it open to the Joint Registrar of Co-operative Societies to take fresh action in accordance with Section 32(1) of the Act, after complying with the prescribed procedure. That judgment is under challenge in WA.Nos.2131 and 2137 of 2012.

2. After the judgment of the learned single judge, there was a dispute as to whether the Administrator had taken charge or not, pursuant to Ext.P13 order before the judgment was pronounced. The petitioner in WP(C) No. 2725/13, who is the Branch Manager of one of the branches of the Co-operative Bank in question, was caught in the crossfire, attracting the wrath of the members of the managing committee and he has filed the writ petition, seeking police protection to discharge his duties as Branch Manager, alleging that the members of the managing committee had assaulted him and prevented him from discharging his duties.

3. We shall first consider the writ appeals.

4. The learned Government pleader, on behalf of the appellant in WA No.2137/12 would contend that the Joint Registrar has correctly exercised his powers under Section 32(3) of the Act. According to him, the Joint Registrar has given cogent and convincing reasons in Ext. P 13 order itself for dispensing with the opportunity to the members of the managing committee to state their objections and the same being his subjective satisfaction, cannot be a subject matter of judicial review. It is further submitted that the words not reasonably practicable occurring in Section 32 (3) of the Act is not merely the physical impracticability, but also the logical improbability. The contention is that the charges levelled against the members of the managing committee are very serious in nature, involving loss of crores of rupees to the society and if the Joint Registrar has to take time for giving an opportunity to the committee to state its objections, that would seriously affect the very existence of the society insofar as the managing committee would continue to mismanage the society and is also likely to manipulate records to defeat the action. Therefore, the joint Registrar has rightly dispensed with the opportunity to the committee to state its objections and the learned single judge has erred himself in holding that the dispensation with the opportunity is unsustainable. He also specifically points out that in Ext. P 13 order, the Joint Registrar has specifically found that that the managing committee members had obstructed the enquiry officer, who was deputed by the Joint Registrar to conduct the enquiry and the documents necessary for the enquiry were, therefore, not made available to the enquiry officer also. It is also submitted that the managing committee members prevented the officers from handing over the records to the enquiry officer. That is a very serious situation, which warrants dispensing with the opportunity to the committee to state its objections, is the contention raised.

5. The learned counsel for the appellants in WA No.2137/12. While adopting the arguments of the learned Government Pleader, would further contend that the granting of opportunity to the managing committee members is an empty formality, insofar as the managing committee members themselves had admitted that they have waived crores of rupees of interest due to the society from mill owners, who had purchased paddy from the society, the price of which was due to the society from the mill owners. He relies on the decision of the Supreme Court in S.L.Kapoor v. jagmohan (1980) 4 SCC 379 [LQ/SC/1980/396] ), wherein the Supreme Court had held that where, on the admitted or indisputable facts, only one conclusion is possible and under the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because courts do not issue futile writs. In support of his contention, he points out that in Ext.P13, it is specifically stated that arecanut key loans are granted to certain parties without obtaining adequate security, as a result of which, the society suffered very huge loss running into crores of rupees. It is further submitted that although the mill owners had entered into an agreement with the society for paying the amounts due from them to the Society and post dated cheques were issued for the same, those post dated cheques were not presented in time, which is also an undisputed fact. According to the learned counsel, in view of the said undisputed facts, the giving of opportunity to state objections against the action is a futile procedure to enforce, which, this Court may not issue a writ.

6. On the other hand, the learned counsel for respondents 1 to 3 would contend that the statutory right to make a representation against the proposed action under Section 32 of the Act is a very valuable right, which cannot be lightly dispensed with, merely on the allegation that the managing committee members are likely to mismanage the society or tamper with the records. According to the learned counsel, insofar as the documents have already been perused and the allegations have already been detailed in Ext.P13, there is no chance of tampering with the records at all. It is further submitted that the impracticability of giving an opportunity to the committee to state its objections is the impracticability of issuing notice to the managing committee members and it does not extend to the merits of the allegations against the managing committee members and if it is construed so, then, in every proceedings under Section 32 of the Act, the valuable right conferred on the managing committee members under Section 32 can be easily dispensed with. If the same is permitted, the co-operative movement in this State would be in absolute shambles, insofar as the political party in power, with the help of the officers of the co-operative department, is likely to invoke Section 32(3) in every case where the society is managed by their political rivals. That cannot be the intention of the Legislature in incorporating such a valuable right with a power to dispense with such right only in very exceptional circumstances like reasonable impracticability of giving the opportunity to state their objections, which must be confined to stage of giving such opportunity and not what may happen if the managing committee is likely to do during the interim period and the seriousness of the charges levelled against the managing committee. According to them, before giving the opportunity to state the objections of the managing committee, the Joint Registrar cannot conclude that the managing committee is guilty of the allegations. According to the learned counsel, the Joint Registrar has not been able to give any convincing reasons for dispensing with such valuable right of the managing committee members. The learned counsel for respondents 1 to 3 also relies on the decision of the Supreme Court in State of MP v. Sanjay Nagayach (2013(2) KLT 733 (SC) as also the decision of a Division Bench of this Court in State of Kerala v. Board of Directors of Urukunnu Service Co-operative Bank (2013(1) KHC 201(DB), in support of his contentions. It is further submitted that all the allegations in Ext.P 13 can be controverted if an opportunity is given to respondents 1 to 3 to state their objections as permitted in Section 32 of the Act itself and therefore, the entire action of the Joint Registrar is mala fide and politically motivated. Therefore, he argues for sustaining the judgment of the learned single Judge.

7. We have considered the rival contentions in detail.

8. Time and again, Courts have held that supersession of an elected managing committee/board is an exception and can be resorted to only in very exceptional circumstances and normally, an elected body shall be allowed to complete the term, for which it is elected. This position of law has been reiterated by the Supreme Court in Sanjay Nagayachs case (supra). Even prior to that, this Court had also in Urukunnu Service Co-operative Banks case (supra), had stated the same thing. It is also not a secret that in the co-operative scene in Kerala or even in India, there is excessive politicisation, resulting in the political party in power trying to overthrow the political rivals in power in a co-operative society on flimsy reasons by invoking Section 32 of the Act. It is in the said background that these cases have to be considered.

9. Section 32 of the Act reads thus :

32. Supersession of Committee (1) If the Registrar, after an inquiry by himself or through his subordinates or on a report of the financing bank, or the Vigilance and Anticorruption Bureau of the Government or the Vigilance Officer or otherwise is satisfied that the Committee of any society -

(a) persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or bye-laws or does anything which is prejudicial to the interests of the society ; or

(b) wilfully disobeys or fails to comply with any lawful order or direction issued under this Act or the rules ; or

(c) makes any payment contrary to this Act or the rules or the bye-laws or causes any loss or damage to the assets of the society by breach of trust of wilful negligence; or

(d) misappropriates or destroys or tampers with the records or causes the destruction of records to cover up any misconduct or malpractice,

he may, after giving the committee an opportunity to state its objections, if any, by order in writing, remove the committee and, appoint a new committee consisting of not more than three members of the society in its place or, appoint not more than three administrators, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months, as may be specified in the order, which period may, at the discretion of the Registrar, be extended from time to time, so however that the aggregate period does not exceed one year.

(2) The Registrar shall consult the financing bank and Circle Co-operative Union or State Co-operative Union as the case may be before passing an order under sub-s.(1)

(3) Notwithstanding anything contained in sub-s.(1) or sub-s.(2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in cases where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases the period of supersession shall generally be for six months and in case a new committee, cannot be constituted or enter upon office in accordance with the bye-laws of the society within the period of supersession the period may be extended for a further period not exceeding six months

(a) in the case of a co-operative society only after consulting the Circle Co-operative Union concerned, and

(b) in the case of an Apex Society or a Central Society only after consulting the State Co-operative Union.

(underlining supplied)

We are not inclined to subscribe to the contention of the learned Government Pleader that the practicability mentioned in Section 32 (3) of the Act is not physical practicability, but, logical practicability, taking into account all the facts including the seriousness of the allegations raised against the members of the managing committee and the probable result of giving such an opportunity, granting them time, which has to be considered while deciding to dispense with the opportunity. We are of the opinion that the words it is not reasonably practicable to do so, qualifies the opportunity to the committee to state its objections and nothing else. It is settled law that an exception in a Section of an enactment has to be construed strictly. The learned single Judge had, in paragraph 23 of the Judgment, considered this aspect of the matter thus :

23. What is relevant is whether it is practically not possible to issue notice and give an opportunity to explain. It is not the gravity of allegations or irregularities noticed during inspection that matters, to avoid issuance of the notice. Notice contemplated under Section 32(1) can be dispensed only if it is not practical to issue notice to the managing committee and not based on the allegations in the report. Despite the fact that there are serious allegations, only in an instance where it is not practically possible to issue notice to the managing committee on account of various factors like failure of the managing committee in not accepting notice, the members of the managing committee not available to receive notice that an immediate seizure of all the books of the bank is required for verification etc. that such serious attempt can be made to supersede an elected body. The fact that the statute itself had given an opportunity in the form section 32(1) to the managing committee to explain the irregularities or the mistakes or the defaults which are brought to their notice during inspection by itself indicates that it is not the allegations in the report that matters in order to avoid a notice but the practical difficulty in issuing notice to the members of the committee.

We fully agree with the view of the learned single Judge.

10. In Ext.P13, the reasons for dispensing with the opportunity to the committee to state its objections are stated thus:

MALAYALAM

Of course, the learned Government Pleader would contend that the earlier reason stated in the same order is also to be considered for the same, which reads thus:

MALAYALAM

As far as the first part is concerned, we are of the opinion that the said apprehension will be applicable to any proceedings under Section 32 of the Act. If such a contention is accepted, then, it will cause havoc to the co-operative movement in Kerala insofar as in every case, under Section 32 of the Act, the Joint Registrar is likely to dispense with the valuable right of the committee to state its objections, arbitrarily for political reasons to please his political masters. It is for obviating such arbitrary decisions that such a right has been incorporated in Section 32 of the Act, which cannot be dispensed with on such reasons. As far as the latter part is concerned, no specific instance is mentioned, but only a vague and general allegation is given. Apart from the same, even assuming that it is correct, that will not be a reason to apprehend that it is impracticable to give the committee an opportunity to state its objections. Therefore, we are of the opinion that the reasons given in Ext P 13 order for dispensing with the opportunity to the committee to state its objections are not sustainable in law.

11. In fact, in Urukunnu Service Co-operative Banks case, this Court further held that it is mandatory on the part of the Joint Registrar to consult expert bodies like financing bank and circle co-operative union and for dispensing with the same, there must be very cogent and acceptable reasons and not just a single statement that an alarming situation is present. Here, along with the dispensing with the opportunity to the committee to state its objections, consultation with the financing bank and the circle co-operative union also has been dispensed with. The consultation has been held to be mandatory and serves a very important and vital purpose in the context of the action to supersede an elected managing committee of a Society. Therefore, when the dispensing with the opportunity to the committee to state its objections results in non-consultation with the financing bank and the circle co-operative union, that also is a reason to hold that dispensing with the opportunity to the committee to state its objections cannot be lightly resorted to.

12. In the result, we are of the opinion that the reasons given by the Joint Registrar for dispensing with the valuable right of the managing committee to state their objections are not sustainable in law. Consequently, we do not find any infirmity in the judgment of the learned single Judge and the same is confirmed. But, we are inclined to issue further directions in the matter as follows :

(1) The Joint Registrar and respondents 1 to 3 shall treat Ext. P 13 as a notice calling upon the committee to state their objections against the proposed action under Section 32 of the Act and respondents 1 to 3 shall file their objections within two weeks from today.

(2) Thereupon, the Joint Registrar shall consider the objections, after complying with the procedure contemplated under Section 32 of the Act, like consulting with the circle co-operative union and the financing bank as expeditiously as possible.

(3) While consulting with the circle co-operative union and the financing bank, the Joint Registrar shall strictly comply with the decision of the Supreme Court in Sanjay Nagayachs case (supra) as also that of this Court in Urukunnu Service Co-operative Banks case (supra).

(4) We further direct that during the period when the managing committee continues in power as per the judgment of the learned single Judge, as confirmed by us, except for day-to-day activities, they shall not take any policy decisions, affecting the society. They shall not also withdraw any cases already filed by the society during the period when the administrator was in charge of the society.

(5) Compliance with the above directions shall not be taken as an excuse to comply with the direction to permit the managing committee to continue in office and to discharge their functions in the meantime. In other words, the managing committee shall be put back in power forthwith.

13. It is pointed out that in respect of the violation of the directions of the learned single Judge, contempt cases have been filed, which have been referred by the learned single Judge to the Division Bench, hearing contempt cases. We do not express any opinion regarding the same. It is for the parties to raise all their contentions before the Bench hearing the contempt cases.

WP (C) No.2725/13

14. The petitioner herein is an unfortunate employee of the bank, who was caught in the crossfire of respondents 1 to 3 and the officer of the co-operative department, who has been appointed as Administrator. We are of the opinion that insofar as the writ petitioner is in no way connected with the proceedings under Section 32 of the Act, he shall not be unnecessarily victimized by respondents 1 to 3 or any of the members of the managing committee. Therefore, we direct that the managing committee members, on restoration of power, shall not, in any way harass the writ petitioner and no disciplinary proceedings shall be continued against him until the proceedings under Section 32 of the Act are finalised as directed above. If the writ petitioner apprehends any danger to his person, in the discharge of his duties as an employee of the bank or otherwise, on filing a complaint, respondents 1 and 2 shall take prompt and immediate action to avert such danger. It will also be open to the writ petitioner to approach this Court by filing a petition in this writ petition itself for appropriate remedial relief if he is harassed contrary to the above directions. As far as the case registered by the police in respect of the happenings in the society, we are not interfering with the same and the law shall take its own course.

The writ petition is disposed of with the above directions.