BOARD OF DIRECTORS OF THE PALLIKKUNNU KSHEEROLPADAKA SAHAKARANA SANGHAM LTD Vs. DIARY EXTENSION OFFICER

JUDGEMENT

(1.) The petitioner, the Board of Directors of the Palikkunnu Ksheerolpadaka Sahakarana Sangham Ltd. No. D 1940 has approached this Court seeking to quash Exhibit P11 notice issued under Section 32(1) of the Kerala Co-operative Societies Act, 1969 ("the Act" for short) and also for a further declaration that Section 32 (1) of the Act will not empower the 3rd respondent to proceed against the present managing committee for the misconduct allegedly committed by the previous managing committee. The petitioners have also sought for a direction to the 3rd respondent to consider Exhibit P10 representation and afford an opportunity of being heard to the petitioner under Section 65(5) of the Act and also to keep in abeyance the proceedings under Section 32 (1) of the Act till such time.

(2.) The petitioner states that the petitioner society is administered by an elected committee of nine members. During the year 2014-2015, the then Committee implemented a scheme with financial assistance from the Diary Development Department and the NABARD for the construction of a building and for installation of plant and machinery. However due to lack of funds, the plant and machinery had to be kept idle and could not be operated. By resolution dated 25.5.2009, the Board of Directors after much deliberation resolved to hand over the plant and machinery on rental basis to a certain Sri. Prasoon on the understanding that the milk measured by the society would be purchased by him for a better price. The resolution was placed before the General Body, which authorised the Committee to proceed with the arrangement. Consequently Exhibit P3 deed was executed between the society and the 3rd respondent on 16.6.2020. However, the 3rd respondent, issued Exhibit P4 letter informing the petitioner that the agreement was entered into without seeking previous permission and sought for their explanation. Exhibit P5 reply was issued by the committee explaining their stand. However, without considering the explanation given by the petitioner, Exhibit P6 order was issued on 24.9.2020 calling upon the petitioner to cancel the lease arrangement and to operate the plant and machinery as originally envisaged. It is stated that an enquiry was ordered by the 3rd respondent without fulfilling the mandate under Rule 66 of the Co-operative Societies Rules. Exhibit P6 order was thus challenged by the petitioner by filing W.P.(C).No.12288/2020 and the same is pending. The petitioner states that later Exhibit P8 order was served upon them, and according to them, the proceedings were held behind their back. According to the petitioner, they have submitted a detailed representation before the 3rd respondent requesting that an opportunity be granted to them as provided under Section 65(5) of the Act. However, without providing any such opportunity, the 3rd respondent has issued Exhibit P11 notice under Section 32(1) of the Act. The petitioner contends that the entire proceeding initiated against the petitioner is contrary to law and against the precedents governing the subject. Exhibit P12 is the explanation offered by the petitioner which is pending before the 3rd respondent. According to the petitioner, there was no justification on the part of the 3rd respondent to issue the notice under Section 32 (1) of the Act in respect of misdeeds committed by the previous managing committee. They would state that the respondent No.3 is proceeding with the matter without even consulting the Financing Bank and the Circle Co- operative Union and for that reason alone the proceedings are liable to be interdicted. It is stated that it is with intent to overthrow the democratically elected managing committee that the 3rd respondent has ventured to issue the impugned notice. It is in the above background that the petitioner has approached this Court seeking the following reliefs:

(3.) Sri.P.P.Jacob,the learned counsel for the petitioner would vehemently submit that the present committee in office came into power only on 26.5.2018 and as is evident from Exhibit P11 proceedings, they are being proceeded against for the misconduct of the previous managing committee. It is further contended that the enquiry under Section 65 of the Act was conducted behind the back of the petitioner and they were not given an opportunity to contradict the same. Failure to consult the Financing Bank and the Circle Co-operative Union is also highlighted by the learned counsel and it is argued that the same would vitiate the entire proceedings . According to Sri. P.P. Jacob, mere negligence or omission allegedly committed by the committee in office is not a reason to initiate the drastic action under section 32(1) of the Act. The learned counsel would also place reliance on the judgment of the Apex Court in State of Madhyapradesh and Others v. Sanjay Nagayach and Others [(2013) 7 SCC 25] and it was argued that when a statutory authority like the 3rd respondent, who is invested with powers, purports to act on its own but in substance the power is exercised by external guidance or pressure, it would amount to non-exercise of power. Placing reliance on a judgment of this Court in State of Kerala v. Board of Directors of Urukunnu Service Co-operative Bank Ltd .[2013 (2) KLT 201] it is submitted that supersession of a democratically elected committee is a very drastic and extreme step and cannot be initiated lightly for minor violations. The learned counsel would take pains to point out that for mere default or negligence in the performance of duties imposed upon the society by the Act, proceedings for supersession cannot be initiated. Reliance is placed on a decision of this Court in Vallapuzha Service Co-operative Bank Ltd v Joint Registrar (2009 (3) KLT 838) and it was argued that the Managing Committee in office cannot be subjected to Section 32 proceeding on the allegation of misconduct on the part of the earlier committee. It has to be shown that there has been default and the same was persistent and prejudicial to the interest of the society. He would further contend that the hearing proposed by the 3rd respondent pursuant to Ext.P11 notice on 30.10.2020 is only an empty formality as it is evident that the 3rd respondent will ignore the valid objections and explanations submitted by the petitioner as borne out by Exhibit P12.