O.V.APPACHEN, PRESIDENT, THE BOARD OF DIRECTORS OF THE PALLIKKUNNU KSHEEROLPADAKA SAHAKARANA SANGHAM LIMITED Vs. THE DIARY EXTENSION OFFICER, DEPARTMENT OF DIARY

JUDGEMENT

(1.) The petitioners herein are the elected members of the Board of Directors of the Pallikkunnu Ksheerolpadaka Sahakarana Sangham. They have approached this Court challenging Ext. P15 order by which the 3rd respondent has superseded the Committee invoking its powers under Section 32(1) of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as 'the Act'). The only point raised by the petitioners is that while superseding the committee, the 3rd respondent had failed to comply with the mandatory provisions contained in Section 32(2) of the Act. To be more specific, the petitioners contend that the 3rd respondent ought to have forwarded the show cause notice issued under S.32(1), the explanations/objections given by the Committee to such show cause notice and the tentative findings arrived at by 3rd respondent after considering such explanations/objections to the Financing Bank and the Circle Co-operative Union requesting them to offer their views on the proposal to supersede the Committee. As Ext.P15 order is silent with regard to compliance of Section 32(2) of the Act, on that sole ground, the order is liable to be set aside, is the contention.

(2.) It appears from the records that an enquiry was ordered under Section 65 of the Act into the Constitution, working and financial condition of the Society as per proceedings dated 18.12.2018. The enquiry is stated to have revealed that huge sums were misappropriated by the Chief Executive Officer and Board of Directors of the Society. The report was approved by the 3rd respondent and a copy was forwarded to the petitioners. They furnished a detailed objection explaining their stand and they were also heard. The 3rd respondent after considering the report under Section 65 and the explanation offered by the petitioners was satisfied that the committee was liable to be superseded under Section 32(1) of the Act. Ext.P10 show cause notice was issued on 8.10.2020 by which an opportunity was granted to the committee to state its objections. Simultaneously proceedings under Section 68(1) of the Co-operative Societies Act was initiated which were challenged by the petitioners by filing W.P.(C) No.26617/2020 which petition was disposed of with directions. The petitioners also approached this Court and filed W.P.(C) No.22692 of 2020 seeking to quash the notice issued under section 32(1) and also for a further direction to the 3rd respondent to consider their objection and also to afford them an opportunity of being heard before superseding the committee. This Court by judgment dated 23.10.2020, refused to interfere with the show cause notice. However, having regard to the apprehension expressed by the petitioners, this Court had directed the 3rd respondent to hear the explanation offered by the petitioners herein and to pass orders bearing in mind the principles laid down in State of Madhya Pradesh and Ors. v. Sanjay Nagayach and Ors; [(2013) 7 SCC 25]. and in Vallappuzha Service Cooperative Bank Ltd. v Joint Registrar; (2009 (3) KLT 838). On 17.11.2020 and on the next day, the petitioners were heard and on 27.11.2020, the impugned order was passed superseding the society under Section 32(1) of the Act. The last line of the impugned order reads thus: <IMG>JUDGEMENT_8_LAWS(KER)2_2021_1.JPG</IMG>

(3.) The 2nd respondent has filed a counter affidavit. It is contended that huge amounts were misappropriated by the members of the Committee in the name of Bio village-SHGS, Building Construction, Plant and Machinery Purchase. It is further stated that no proper audit reports were submitted after the financial year 2015-2016 and this fact would be evident from Ext.R2(a). Instead, the society has prepared accounts and the same was approved in the general body meeting. When serious discrepancies were found, an enquiry under Section 65 of the Act was ordered. In the course of the enquiry, it was found that there was misappropriation to the tune of Rs.49,97,238/- carried out by the Chief Executive Officer and the Board of Directors of the Society. The provisions of the Act mandate that previous sanction in writing of the Registrar is mandatory before granting on lease any plant and machinery funded by the Dairy Development Department. In clear violation to the said stipulation, the plant and machinery was given on lease to a certain Prasoon. According to the respondents, the managing committee has persistently been negligent in the performance of the duties and have failed to recoup the amount which has been misappropriated. It is in the said circumstances that notice under Section 32(1) of the Act was served on the petitioners. The reply submitted by the petitioners was found unsatisfactory and hence, the order of supersession was made, after compliance of all mandatory formalities. It is stated that the vigilance department has also registered a case as Case No. VE3/WYD/2020 consequent to the unearthing of the misappropriation. Though the contention of the petitioners that there has not been an effective consultation with the Circle Co-operative Bank and the Financing bank has not been controverted in the counter, the respondents have produced Ext.R2(c) letter issued to the District Co-operative Bank and Ext.R2(b) communication issued by the Financing bank to substantiate that the 3rd respondent had forwarded the records and had consulted the authorities in terms of the mandate under Section 32(2) of the Act.