SUBHADRAMMA Vs. STATE OF KERALA

JUDGEMENT

(1.) A bidder, who took part in a public auction for sale of immovable property of a Cooperative Society which is stated to be under liquidation is challenging Ext. P9 letter written by the Principal Secretary to Government to the Director of Industries and Commerce to take steps to stay the liquidation proceedings initiated against the Society and also Ext. P10 order dated 01/02/2006 of the Government appointing an Administrative Committee to the said society under S.101 of the Cooperative Societies Act, 1969 (Act 21 of 1969) for short the Act. According to the petitioner, she is an unfortunate lady who happened to come across a notification dated 14/11/2005 published by the 4th respondent liquidator in this writ petition by which he ordered public auction of 5.80 Ares ( 14.25 cents) of property belonging to Progressive Industrial Cooperative Society Ltd. No. S. Ind Q. 329, Kollam situated near the National Highway 47 Ramankulangara Sakthikulangara Village.

(2.) The following are the material averments in the writ petition. M/s.Progressive Industrial Cooperative Society Ltd. was registered on 18/08/1976. It started functioning on 24/10/1976. The Society was formed by a group of unemployed youths in the locality with a share capital of Rs.5,31,800/- The State gave an amount of Rs. 4,28,000/- as share participation. The Society started a foot wear manufacturing unit. Subsequently that was abandoned and the Society started manufacturing metres for the Electricity Board. The Society was managed by an administrative committee consisting of 7 members of which two were nominees of Industries Department. The Society became defunct. The General Body meeting of the Society authorised the administrative committee to initiate steps to dissolve the society and to pay off the debts due from the Society by selling the assets of the society and then to distribute balance if any on a pro rata basis to the members. The assets of the society include 16.894 cents (14.25 cents) comprised in Sy. No. 474/1 and 474/2 of Sakthikulangara Village with the building situated thereon as well as the movables, machinery, furniture etc and also standing timber. Ext. P2 memorandum was submitted by the President and members of the administrative committee members to the Hon'ble Minister for Industries as authorised by the general body on 16/04/1997. The Government examined Ext. P2 and ordered wining up. Winding up orders were passed by the General Manager, District Industries Centre, Kollam on 19/02/1999. Liquidator was appointed. Liquidation proceedings started and the movable properties were sold on 07/11/2002 and 15/02/2003. 4th respondent Liquidator sought permission to sell the immovable property and by letter dated 06/09/2005, the General manager accorded sanction to sell the properties and based on that sale notification by public auction was published in the newspaper. Petitioner submitted her quotation and deposited an amount of Rs.25,000/- as earnest money deposit. Quotations were opened. Petitioner was the highest offerer. She was directed to remit an amount of Rs.3,00,000/- being the 15% of the total value quoted. Petitioner remitted Rs.3,00,000/- by cheque No. 003551 dated 07/12/2005 drawn on Indus Ind Bank, Kollam branch. The balance amount was directed to be paid within 15 days. In between on 05/12/2005, the second respondent issued a communication to the third respondent to stay the auction and to take steps to appoint an administrative committee under S.101 of the Kerala Cooperative Societies Act for revival of the Society. Yet another notice was issued to the second respondent on 01/02/2006 directing constitution of an administrative committee which is marked as Ext. P10. In the meanwhile, respondents 5 and 6 filed WP (C) No. 35160 of 2005 and obtained an order of interim stay of auction. Petitioner got herself impleaded in that writ petition. According to the petitioner, Exts. P9 and P10 orders are passed by second respondent without jurisdiction. Winding up proceedings started in the year 1999. It is an appealable order and no appeal was preferred by anybody. If any revitalisation programmes are to be initiated, it ought to have been initiated within one year from the date of Ext. P3. But no such programme was initiated within the time limit. The movable assets as well as standing timber were already sold by the 4th respondent. So the orders passed by the respondents invoking S.101 of the Act to get over the period of limitation and the failure to file the appeal are bad. Petitioner is having a direct subsisting and substantial right in the assets notified through Ext. P1. Hence the petition to quash Exts. P9 and P10 orders.

(3.) 3rd respondent filed a counter affidavit admitting the formation of the Society and also its activities. It was averred that the Society reached a standstill position during 1997 (wrongly typed as 1977). The General Manager, District Industries Centre, Kollam, posted an officer to explore the possibility of the revival of the Society. As there was no possibility for reviving the society, the General Manager, District Industries Centre, Kollam initiated liquidation proceedings on 19/02/1999. The liquidator sold the movable assets by public auction after giving sufficient publicity. On 16/11/2005 the Liquidator published the auction notice in two vernacular dailies notifying the auction sale of immovable properties having an extent of 5.80 ares. The liquidator made all arrangements to conduct the auction. In the meanwhile, Government directed to issue orders to stay the liquidation proceedings and also to appoint an administrative committee consisting of three members. Government direction was communicated to the General Manager, District Industries Centre, Kollam on 17/11/2005 for taking urgent steps. General Manager replied that any proposal for revival of the Society ought to have been initiated within one year from the date of appointing the liquidator in view of the provisions contained in S.71(3) of the Act. It was also contended that under S.83 of the Act, the order appointing a liquidator is an appealable order but no appeal was filed. He took up the matter with the Government. Government by letter dated 05/12/2005 again directed to stay liquidation proceedings and also to appoint an administrative committee. The General Manager, District Industries Centre reported that there is no provision for staying the liquidation proceedings by the Registrar and it can be stayed by the Registrar only after getting Special / General Government order. The General Manager continued the liquidation proceedings and the liquidator conducted the public auction. The public auction was conducted on 07/12/2005 at 3 p.m. 8 bidders participated. Petitioner was the highest bidder. The auction was confirmed in her favour. She remitted an amount of Rs.3,25,000/- towards 15% of the value of the bid amount. In the meanwhile, the additional 8th respondent filed WP (C) No. 35160 of 2005 before this Court and this Court stayed the liquidation proceedings. Subsequently, Government by order G. O. (Rt) No. 129/06/ID dated 01/02/2006 constituted an administrative committee consisting of three members. The same was communicated to the General Manager District Industries Centre, Kollam-I on 14/02/2006 for taking urgent steps to hand over the charge of the Society to the administrative committee. The Liquidator handed over charge of the society to the newly appointed administrative committee on 20/02/2006 and at present, the society is administered by the newly appointed administrative committee. It was contended that the Government has power to exempt any society in public interest from any of the provisions of the Act.