A.RAJAPPAN Vs. THE SECRETARY TO GOVERNMENT

JUDGEMENT

(1.) Above writ petitions are intrinsically connected and therefore I propose to pass a common judgment. The orders under challenge are passed by the second and first respondents respectively. The facts discernible from W.P.(C)No. 4449/2004 are recited and wherever separate facts are required, same will be stated separately. Petitioners are members of Board of Directors of the 4th respondent Bank in both these writ petitions for the period upto 4.9.1997. On 4.9.1997, the Board of Directors of the 4th respondent Bank was superseded by invoking Section 32 of the Kerala Co- operative Societies Act (hereinafter referred to as 'the Act'). Later, third respondent was appointed as enquiry officer to enquire into the allegations of financial irregularities allegedly occurred in the 4th respondent Bank. The enquiry was conducted in exercise of powers conferred under Section 65 of the Act. According to petitioners, an enquiry under section 65 can be invoked only if the Registrar choses to do so in his own motion or consequent to an enquiry report of the Vigilance officer appointed under Section 65A of the Act or on a report of the Director of the Co-operative Auditor appointed under Section 63 of the Act or on an application by the majority of the members of the committee or the society or by not less than 1/3rd members in the general body meeting whichever is less, or an application by the Apex Society or financing bank of which such society is a member, or on an application of the society to which the society concerned is affiliated.

(2.) According to petitioners, in the instant case none of the jurisdictional pre-conditions for invoking the powers vested under Section 65 of the Act are available. In that view of the matter, the very initiation of the enquiry under Section 65 is vitiated for want of power or jurisdiction to initiate the same. That apart it is also contended that, the parameters provided under Rule 66 of the Kerala Co-operative Societies Rules (hereinafter referred to as 'the Rules') are also mandatory and since there is breach of conditions of the said Rule, the enquiry under Section 65 would stand invalidated. That, there is no order as provided under Rule 66 and therefore, the very initiation of the enquiry under Section 65 is vitiated. That apart, despite the repeated requests of the petitioners for furnishing the copy of the report under Section 65 of the Act, same has not been considered and till date they are not furnished with the enquiry report, conducted under Section 65 of the Act.

(3.) It is also urged that, after sometime, third respondent issued another notice dated 10.9.1998 purporting to be one under Section 68(1) of the Act, evident from Ext.P2. Ext.P2 refers to a report said to have been prepared by the third respondent in purported exercise of powers under Section 65 of the Act, but, no details of the enquiry report have been referred to in Ext.P2 notice. But, the notice intimated the petitioners that, liability to the tune of Rs.27,49,450/- has been proposed on them, and the petitioners were directed to show cause as to why tentative liability shall not be finalised against them. Pursuant to the same, petitioners have submitted Ext.P3, in which they have pointed out that, the entire proceedings have been initiated against them in violation of the principles of natural justice. That part it is also contended that, the Board of Directors of the 4th respondent Bank did not act illegally or irregularly and they have acted in compliance with the provisions of the Act, Rules and byelaws of the society. Apart from other circumstances, petitioners have disputed the alleged sanctioning of the loans without adequate securities and again requested for the copy of the enquiry report alleged to have been prepared. Thereafter, petitioner was served with Ext.P4 notice dated 23.2.2000. Ext.P4 refers to the details of the amounts outstanding by way of loan and it is clearly stated thereunder the particular officers in charge of the particular section of the bank who were responsible for the loss caused to the Bank. However, after entering a positive finding accordingly, second respondent has chosen to fasten the liability on the petitioners on the reasoning that, the petitioners did not take effective steps to prevent the officers from misappropriating the funds. Petitioners have submitted Ext.P5 reply to Ext.P4, wherein also petitioners repeated the request for furnishing copy of the enquiry report under Section 65 of the Act and the enquiry report under Section 68(1) of the Act, and further that, they may be provided with sufficient time to submit a detailed and effective reply to Ext.P4. It was also stated therein that, petitioners have no manner of liability for the loans advanced by the officers to the loanees especially, in Ext.P4, the officers who are responsible are identified. Petitioners also claimed protection of their bonafide action under Section 106 of Act which provides immunity for the acts done or purporting to done in good faith. That apart, it is stated that, instead of complying with the request sought for in Ext.P5, Ext.P6 notice was issued to which petitioners have submitted Ext.P7 reply again requesting to furnish copies of the reports as sought for in Ext.P5. According to petitioners, report under Section 65 or 68 (1) are not privileged documents and despite this the respondents did not choose to provide copies of the report requested to by the petitioners thus effectively preventing the petitioners from defending their case. Thereafter, as per Ext.P8, the Joint Registrar rejected the request of the petitioners and passed an award on 14.7.2000 fastening liability to the tune of Rs.29,15,126/-.