STATE OF KERALA Vs. SUDARSANAN

JUDGEMENT

(1.) We heard the above writ appeals on 17th June, 1997 and by an order on that day, we allowed the appeals and set aside the judgment of the learned single Judge. We are giving the reasons for the above order now.

(2.) The above two appeals are filed against two Original Petitions OP Nos. 13900 of 1996 and 13792 of 1996. In both these Original Petitions, the supersession of the managing committee of Pazhayakunnummel Service Cooperative Bank was under challenge. We shall refer to the facts as stated in OP No. 13900 of 1996.

(3.) The Pazhayakunnummel Service Cooperative Bank is a Cooperative Society registered under the Kerala Cooperative Societies Act, hereinafter referred to as the Act. Serious irregularities were pointed out in the appointments of staff made by the managing committee on 21.5.1996. When these complaints were received by the Joint Registrar, he appointed the Assistant Registrar of Cooperative Societies (Planning), Chirayinkeezhu, to enquire into the irregularities and submit a report under S.66 of the Act. The Assistant Registrar submitted a report on 21.6.1996 stating the large scale irregularities had taken place in the appointments. He further reported that there were irregularities in cash transactions, maintenance of registers, appointment of temporary employees and failure in prosecuting bad debts etc. As the Joint Registrar found a detailed enquiry into the irregularities pointed out in the report as necessary, he authorised the Assistant Registrar (General) to conduct another enquiry under S.66 of the Act. The Assistant Registrar (General) submitted a report on 16.7.1996 pointing out the irregularities in the affairs of the Bank. Among other things, the report stated that memberships were issued to persons who were residing outside the area of operation of the Bank and loans were made available in contravention of the bye laws of the Bank. Further, it was reported that the loan ledger was not properly maintained and loans were sanctioned in excess of the maximum limit prescribed. Misappropriation of fund was pointed out in printing of Calendar and irregularities were pointed out in the issuance gold loan. It was also found that annual general body meetings were not held from 1991 and that financial loss was caused to the Bank by way of temporary appointments and unauthorised payment of contributions. After getting these two reports, the Joint Registrar issued a notice to the President of the Bank as to why action under S.32(1) of the Act should not be taken, Ext. P4 is the notice. A perusal of Ext. P4 notice would show that a number of irregularities had been pointed out. These include irregularities in the appointment of staff, granting membership to persons not eligible, loan application register not maintained, no entries were made to loans given on security of gold, loans were given on personal security when such persons had Fixed Deposit in the Bank, fraud in the printing of calander, goods purchased for the members of the executive committee, contributions given without getting receipts and general body meeting was not held since 13.1.1991. To this, the President gave the reply, Ext. P7. The Joint Registrar considered the reply and by Ext. P8 order, he ordered supersession of the committee and appointed an Administrator to conduct the administration of the Society for six months. Both the Original Petitions were filed challenging Ext. P8 order.