w w w . L a w y e r S e r v i c e s . i n



E.S. Bose & Others v/s The Managing Committee (Under Order of Suspension), The Vellathooval Service Co-Operative Bank Ltd. Idukki, Represented by Its President & Others

    WA. Nos. 1021, 1031 & 1060 of 2020

    Decided On, 31 May 2021

    At, High Court of Kerala

    By, THE HONOURABLE MR. JUSTICE C.T. RAVIKUMAR & THE HONOURABLE MR. JUSTICE K. HARIPAL

    For the Appearing Parties: B.S. Swathi Kumar, Anitha Ravindran, Harisankar N. Unni, Nisha George, Advocates, George Poonthottam, Sr. Advocate, Mohamad Hashim, Spl. G.P.



Judgment Text

Ravikumar, J.

1. All the captioned appeals arise from the judgment dated 4.8.2020 in W.P.(C)No.13602 of 2020. The first among them was filed by Member No.8532 of Vellathooval Service Co-op. Bank Ltd.No.K.71 (for short 'the Bank') who got impleaded in the writ petition as additional 3rd respondent. The second one among them was filed by the petitioner in the said writ petition viz., The Managing Committee of the Bank which was placed under suspension for a period of six months from 3.7.2020, the date of the impugned Ext.P7 order bearing No.CRP.7051/19. The last among the appeals was filed by the first respondent in the writ petition viz., the Joint Registrar of Co-operative Societies (General), Painavu, Idukki District. The writ petitioner viz., the appellant in W.A.No.1031 of 2020 filed the above mentioned writ petition seeking the following reliefs:-

i. Issue a writ of certiorari calling for the records leading to Exhibit P7 and to quash the same.

ii. Issue a writ declaring that Exhibit-P7 is the end result of colourable excercise of power and therefore bad in law;

iii. Issue an order declaring that the Exhibit P7 passed without notice, consultation with the financial bank and hearing is illegal and therefore bad in law.

iv. Issue a writ declaring that ExhibitP7 is an abuse of process so as to over reach the contents of Exhibit-P6 judgment of this Honourable Court and thus the action of the 1st respondent would amount to colourable exercise of power.”

2. Before adverting to the impugned judgment of the learned Single Judge it is only appropriate to refer to the factual scenario that constrained the appellant in W.A.No.1031 of 2020 to file W.P.(C)No.13602 of 2020, succinctly. The appellant in W.A.No.1031 of 2020 viz., the writ petitioner is the Managing Committee of the Bank which was suspended under the order impugned in the writ petition viz., Ext.P7 dated 3.7.2020. The Board of Directors of the Bank was elected to office on 30.12.2018 and they assumed charge on 1.1.2019. In terms of Section 28 of the Kerala Co-operative Societies Act, 1969 (for short 'KCS Act'), under normal circumstances, the term of the said committee would expire only on 31.12.2024. Based on various complaints an inquiry was conducted under Section 65 of the KCS Act against the previous committee of the Bank. However, before any action for supersession of the said committee was initiated its term got expired and subsequently, the present committee under suspension assumed charge. Thereupon, one P.K.Ibrahimkutty and 35 others filed a complaint dated 11.11.2019 and consequently, the first respondent in the writ petition, the Joint Registrar of Co-operative Societies (General), Painavu, Idukki (Appellant in W.A.No.1060 of 2020) directed the Assistant Registrar (General), Devikulam to conduct a preliminary inquiry and to submit a report. Consequently, the Assistant Registrar submitted a preliminary report before the Joint Registrar. Upon its receipt, holding the view that continuance of the present Managing Committee that assumed office on 1.1.2019 would hamper the smooth conduct of the inquiry under Section 65 of the KCS Act and therefore, it is expedient to suspend the said committee to augment smooth conduct of the inquiry after dispensing with issuance of notice under Section 32(1) of the KCS Act, the present Managing Committee was suspended for a period of six months from 3.7.2020 as per the impugned Ext.P7 order dated 3.7.2020. In and vide the said order simultaneous with the suspension of the Managing Committee the Assistant Registrar (General), Idukki was appointed as Administrator of the Bank. It is in the aforesaid circumstances that raising various factual and legal contentions W.P.(C)No.13602 of 2020 was filed.

3. After considering the rival contentions the learned Single Judge as per the impugned judgment set aside Ext.P7 order suspending the Committee of the Bank and issued the following further directions:-

“(B) The petitioner as well as 1st respondent shall treat Exhibit P7 as a notice under Section 32(1) of the Act. The petitioner shall file their objections within two weeks from today. The first respondent shall consider the objections and after complying with the procedure contemplated under Section 32 of the Act and in strict compliance with the decision of the Apex Court in Sanjay Nagayach (supra) shall pass appropriate orders.

(C) The petitioner shall be put back in power forthwith and during the period of the inquiry, they shall not take any policy decisions affecting the society, but shall confine themselves to carrying out the day-to-day activities.

(D) The petitioner shall fully cooperate with the inquiry and shall diligently comply with Section 65(2) of the Act to facilitate the completion of the inquiry.”

It is against the judgment on the aforesaid lines that the writ petitioner, the third respondent and the first respondent filed the above appeals.

4. Heard the learned counsel on both sides. For the sake of convenience, hereafter in this judgment the parties are referred to in accordance with their status in W.P.(C)No.13602 of 2020 unless otherwise specifically mentioned.

5. The petitioner viz., the Managing Committee under suspension filed W.A.No.1031 of 2020 challenging the judgment passed thereon dated 4.8.2020 to the extent it was directed thereunder to treat Ext.P7 as a notice under Section 32(1) of the KCS Act; and the petitioner/appellant was directed to file objections to the said notice, within the time stipulated thereunder and the first respondent – Joint Registrar of Co-operative Societies was directed to consider the objection and pass appropriate orders thereon after complying with the procedure contemplated under Section 32 of the Act. The appellants in the other two appeals are aggrieved by the quashment of Ext.P7 order suspending the Managing Committee of the Bank and hence, they pray for setting aside the judgment of the learned Single Judge in W.P. (C)No.13602 of 2020. According to the appellant-writ petitioner, the order of suspension issued under Ext.P7 is contrary to the mandate under Section 32(3) of the KCS Act. The appellant would further contend that since the learned Single Judge virtually accepted the contention that the allegations are general in nature and linked mostly and mainly to the actions on the part of the previous committee, in the light of the decision in State of Madhyapradesh and others v. Sanjay Nagayach and others [(2013) 7 SCC 25] and after setting aside Ext.P7, the further directions to treat Ext.P7 as notice under Section 32(1) of the KCS Act and to the first respondent to consider the objections, permitted to be filed within two weeks from 4.8.2020, in terms of the procedures under Section 32 of the KCS Act ought not to have been issued. So also, it is contended that after ordering to restore the committee in power the learned Single Judge ought not to have restrained the Committee viz., the appellant from taking policy decisions affecting the society and ordered to confine the administration only to carry out the day to-day affairs. According to the appellant-writ petitioner, there is no distinction between an order of 'supersession' and an order of 'suspension' as their effect is one and the same. The appellant would also refute the allegation that the inquiry officer was not provided with the facilities to conduct the inquiry under Section 65 of the KCS Act. That apart, it is contended that only after completing the inquiry under Section 65, evaluating the report independently, issuing directions to rectify the defects, if any, disclosed in such inquiry and upon failure of the Committee to rectify the defects that proceedings under the KCS Act could be initiated. At any rate, according to them, there was absolutely no reason to suspend the Managing Committee of the Bank assigning the reason that continuance of the Committee would obstruct the smooth conduct of the inquiry under Section 65 of the KCS Act.

6. Per contra the appellants in the other appeals, who were respondents in the aforementioned writ petition, would contend that the reasons specifically mentioned in Ext.P7 were sufficient to suspend the committee of the Bank and there is no illegality in waiving notice contemplated under Section 32(3) of KCS Act as it is legally permissible in case in the opinion of the Registrar it is not reasonably practicable to give an opportunity to the committee to state its objections and also to consult the Unions and the financial banks. The first respondent viz., the appellant in W.A.No.1060 of 2020 would contend that the learned Single Judge ought to have considered the fact that pursuant to the 97th Amendment to the Constitution of India, Part IXB was inserted and Article 243ZL permits the administrative/supervisory authorities to supersede and suspend the Board. We may hasten to consider whether the said contention based on Article 243ZL is now available to the first respondent/the appellant in W.A.No.1060/2020? The High Court of Gujarat by judgment dated 22.4.2013 in W.P.(PIL)166/2012 declared that the Constitutional Ninety Seventh Amendment Act inserting Part IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures. Against the said judgment S.L.P.Nos.25266-25267 are filed and they are pending before the Hon'ble Supreme Court. In the said circumstances, the question is whether what is the impact of the declaration of insertion of Part IXB containing Articles 243ZH to 243ZT by the Constitution (Ninety Seventh Amendment) Act, 2011, as ultra vires the Constitution of India, by the High Court of Gujarat. In that regard, the decision of the Hon'ble Apex Court in Kusum Ingots and Alloys Ltd. v. Union of India and Another reported in (2004) 6 SCC 254 assumes relevance. Paragraph 22 of the said decision which is relevant in regard to the aforesaid question, reads thus:-

“The Court must have the requisite territorial jurisdiction. An order passed on a writ petition questioning the constitutionality of a Parliamentary Act, whether interim or final keeping in view the provision contained in clause (2) of Article 226 of the Constitution of India, will have effect throughout the territory of India subject, of course, to the applicability of the Act.”

A Single Bench of this Court in Benny Peruvanthanam v. Kerala State Co-operative Consumers Federation Ltd. reported in 2013 (4) KLT 987 considered the question whether the judgment dated 22.4.2013 referred above, of the Gujarat High Court holding the insertion of Part IXB containing Articles 243ZH to 243ZT by the Constitution (Ninety Seventh Amendment) Act, 2011, as ultra vires the Constitution of India, will apply on other territories of India, obviously in the light of the dictum laid down by the Apex Court in Kusum Ingots and Alloys Ltd., case (supra). On such consideration it was held that the said decision is having application throughout India. A Full Bench of this Court in Pradeep v. Kerala State Co-operative Election Commission [2016(3) KLT 561 (F.B)] held:-

“Any High Court is having jurisdiction to declare a law as unconstitutional, even beyond its territories and it will be applicable throughout the country.”

In Kusum Ingots and Alloys Ltd. case (supra), the Apex Court considered the scope of Article 226(2) of the Constitution of India and held that the order passed by any Court in writ petition questioning constitutionality of the Parliamentary Act (whether the order be interim or final), will have effect throughout the territory of India, subject to the applicability of the Act. Applying the dictum laid down in Kusum Ingots and Alloys Ltd. case (supra), the Full Bench decision in Pradeep's case (supra), to the judgment dated 22.4.2013 of the Gujarat High Court it can only be held that the decision of the Gujarat High Court in W.P.(PIL)No.166 of 2012 is having application throughout India, subject to the applicability of the Act and outcome of the verdict to be passed by the Apex Court in SLP Nos.25266-25267/2013 now pending before the Apex Court. In short, the first respondent viz., the appellant in W.A.No.1060/2020 cannot now raise contention founded on Article 243ZL to support the contention that the Registrar could supersede and suspend the Managing Committee of the Bank in question.

7. Now, we will refer to the other contentions of the first respondent. It is the contention of the first respondent that Section 32 of the KCS Act empowers the Registrar to supersede or suspend, a committee of a society. It is the further contention of the first respondent that the words 'supersession' and 'suspension' are not defined in the KCS Act and their meanings are entirely different and that it is not necessary to hear the committee before issuing an order of suspension. To buttress the said contention the first respondent relied on the decision of this Court in Hameed Kutty v. Joint Registrar of Co-operative Societies (2017 (1) KLT 511) which was confirmed by a Division Bench in Hameed Kutty v. Joint Registrar of Co-op. Societies (General) (2018 (3) KLT 149). According to the first respondent, the decision in Sanjay Nagayach case (supra) is totally inapplicable to the instant case and it applies only in a case of supersession of a Committee under Section 32(1) of the KCS Act. Further, the first respondent raised grounds (G) and (H), as follows, to contend that the learned Single Judge had gone wrong in quashing Ext.P7 order of suspension of the appellant-Managing Committee:

“(G) In fact, managing committee in office for the year 2013-2018 was served with a notice dated 01.02.2018 under Section 32 of the Kerala Cooperative Societies Act, 1969 and the said notice is challenged by the managing committee then in office before this Hon'ble Court in W.P.(C)No.5739/2018. The above Writ Petition was filed on 18.02.2018. Notice dated 01.02.2018 was issued based on section 66 Inspection Report dated 03.10.2017 and inspection was ordered on 08.03.2017. When the above case came up for hearing on 21.02.2018, this Hon'ble Court directed the appellant to defer Section 32 Proceedings. The pendency of the Writ Petition and operation of the interim order resulted in the delay of completing Section 32 proceedings. Finally, this Hon'ble Court vide judgment dated 05.12.2018 had disposed of the said writ petition holding that the petitioners failed to make out a case warranting interference on Exhibit P3 show cause notice and further directed the Joint Registrar (General) of Cooperative Societies to consider the objection raised by the managing committee and pass appropriate orders in accordance with law. However, the period of the said committee expired on 29.12.2019 and the new managing committee assumed office on 01.01.2019. Therefore, the authority was unable to proceed further against the former managing committee.

(H) The learned Single Judge failed to appreciate the act of the petitioner in not keeping the records and books properly and that if they are put back in office they will be able to whitewash the illegalities and tamper with the records disabling a proper inquiry to bring out the truth. It is pointed out that the learned Single Judge has taken into account only Exhibit P2 report dated 18.12.2019 and not Annexure R1(a) interim report dated `15.06.2020 relied on while passing Exhibit-P7 order as can be seen from reference No.5 therein. So, it cannot be said that no action can be taken against the petitioner who assumed charge on 01.01.2019 is not sustainable.”

8. The third respondent who is the appellant in W.A.No.1021 of 2020 virtually, endorsed the contentions of the first respondent. Additionally, he would contend, relying on the decision in Gurcharan Singh v. State of Haryana and others reported in AIR 1979 Punjab & Haryana 61 that suspension and supersession are entirely different and suspension would not invite any consequence whereas supersession would invite disqualification for two terms.

9. We will firstly consider the common contention of respondents 1 and 3 and the contra-contention of the appellant-writ petitioner in regard to the nature and consequences of 'supersession' and 'suspension', of a committee of a society. The appellant-writ petitioner sought for quashment of Ext.P7 in W.P.(C)No.13602 of 2020 and obviously, as per the impugned judgment it was quashed. A scanning of the same would reveal that it was an order suspending the committee of the Bank for a period of six months holding that the continuance of the committee in power would hamper the smooth conduct of the inquiry under Section 65 of the KCS Act. Before adverting to the rival contentions in regard to the nature and consequences of an order of supersession and an order of suspension as mentioned above, we will refer to the impugned judgment to see whether the contention of the respondents that the impugned judgment is founded on the misconception that Ext.P7 is an order of supersession is correct or not. The opening sentence and paragraph 18 of the impugned judgment would make it appear that the aforesaid contention of the respondents is wholly correct. They read thus:

“Questions posed for consideration in this writ petition filed by the Managing Committee of the Vellathooval Service Co-operative Bank Ltd.No.K701G ('Bank' for short) is whether the order of supersession of the Managing Committee invoking the exceptional powers of the Registrar under Section 32(3) of the Kerala Co-operative Societies Act, 1969 ('the Act' for short) is justified in the facts and circumstances.”

That apart, in paragraph 18 it is stated thus:-

“Since the impugned order has resulted in the supersession of a society which was elected on democratic principles, this Court is required to minutely scrutinise the order and to decide whether extraordinary action on the part of the 1st respondent was warranted in the facts and circumstances..... ...........................................................................

....

The scheme of the Act is that the Societies are required to be managed by elected representatives and that being the mode of functioning as envisaged, the very drastic step of superseding the Managing Committee under Section 32 of the Act can be resorted to only in exceptional circumstances, that too only in strict compliance with the mandatory procedure prescribed in Section 32 of the Act. The significance of insisting with calling for objection and consultation is that if a Managing Committee is superseded under Section 32 of the Act, it will result in disqualification of every member of the Managing Committee in the matter of contesting future elections to the Managing Committee for two consecutive terms.”

10. The further recitals in paragraph 18 also would give such an impression as contended by the respondents. It is also true that the learned Single Judge has relied on decisions of this Court in Rajagopalan Nair v. State of Kerala (1995 (2) KLT 184); in Vallapuzha Service Cooperative Bank Ltd. v. Joint Registrar (2009 (3) KLT 838); in Rajeevan T.V. And others v. K.A.Sukumaran and Others (2013 (3) KHC 46); and also the decision of the Hon'ble Apex Court in State of Madhya Pradesh and others v. Sanjay Nagayach and others [(2013) 7 SCC 25] which are all rendered on the subject of supersession of the committee of a society. However, the second sentence in the opening paragraph as also paragraph 19, of the impugned judgment would undoubtedly go to show that the learned Single Judge has duly taken note of the fact that Ext.P7 was an order suspending the committee of the society in question for a period of six months, by the Registrar. They read thus:-

“The incidental question is whether the discretion exercised by the Registrar to proceed with the suspension of the Managing Committee without providing an opportunity to the Committee to state its objections and without consulting the Unions and financing Banks is arbitrary and liable to be interfered with by this Court. ............................................................................ ......

19. In the light of the above principles, if Ext.P7 order is examined, it would be apparent that the Committee which assumed office on 1.1.2019 was suspended for a period of 6 months mainly for the laches of the previous Managing Committee. This fact is clearly evident from Ext.P2 report which is dated 18.12.2019. The Registrar chose to suspend the petitioner without complying with the mandatory formalities like calling for objection and consultation as according to him, the Society would manage to interfere with the inquiry which is being conducted under Section 65 of the Act.”

11. It is a fact that the learned Single Judge did not hold in clear terms as to whether Ext.P7 is an order of suspension or whether it is an order of supersession, of the Committee, as can be seen from the afore-extracted portions from the impugned judgment. The latter part of paragraph 19 that “The Registrar chose to suspend the petitioner without complying with the mandatory formalities like calling for objection and consultation as according to him, the Society would manage to interfere with the inquiry which is being conducted under Section 65 of the Act” and the action in placing reliance on the aforesaid decisions would suggest that the learned Single Judge has actually treated Ext.P7 as order of suspension and not as an order of supersession though the afore-mentioned decisions were relied on to quash Ext.P7 and to issue further directions, referred to hereinbefore.

12. Now, we will revert to the contention of the appellant - writ petitioner that there is no distinction between an order of suspension and order of supersession and the contra-contention of the respondents that they are entirely different. We have already referred to the decisions relied on by the respondents to resist the said contention of the petitioner. According to us, the word “suspension” is not a synonym to the word “supersession” and the act involved and the consequences therefor, in respect of suspension and supersession are different and distinct though both when occasioned in the case of a democratically elected body like the Managing Committee of a Cooperative Society/Co-operative Bank got serious consequences. In the decision in State of Orissa v. Titaghur Paper Mills Co. Ltd. reported in AIR 1985 SC 1293 the meaning of the word 'superseded' is explained by the Apex Court. In the shorter Oxford English Dictionary, 3rd Edition, Page 2084 the word 'supersession' is defined as “the action of superseding or condition of being superseded” and it was taken note of by the Apex Court. Further in paragraph 66 therein it is stated:-

“............ Some of the meanings given to the word 'supersede' on the same page in that Dictionary which are relevant for our purpose are “to put a stop to; to render superfluous or unnecessary; to make of no effect; to annul; to take the place of (something set aside or abandoned); to succeed to the place occupier by; to supply the place of a thing.” Webster's Third New International Dictionary at page 2296 defines the word “supersession” as “the state of being superseded: removal and replacement.”

The meaning of the word 'suspension' and its consequences were considered by a Full Bench of Gujarat High Court in the decision in Nasirkhan Nivas Khan Pathan v. District Development Officer, Bharuch and others reported in AIR 2002 Gujarat 143. Paragraphs 17, 18 and 19 of the said decision read thus:-

“17. In absence of any statutory definition of the expression “suspension”, we have to resort to the Dictionary meaning. Dictionary meaning of expression “suspend” is to debar, usually for a time, from any privilege from the execution of an office or from the enjoyment of such a position or status and resultant benefit of the office. In short, it is a temporary deprivation of office and its privileges. It is true that by reason of suspension, the person suspended does not lose his office, nor his status or position. He does not suffer any de-gradation in one sense. However, he ceases to exercise the powers and to discharge his duties of the office temporarily. His powers, functions and privileges remain in abeyance.

18. The word “suspension” according to latest Oxford Dictionary means, “action of debarring or state of being debarred, especially, for a time, from a function or privilege; temporary deprivation of one's office or position, or again, state of being temporarily kept from doing or deprived of something. The meaning of the word 'suspend', therefore, as per the Dictionary meaning would mean “debar usually for a time from the exercise of function or enjoyment of privilege, specially to deprive temporarily of one's office or again to interdict. The object of suspension is to remove any person holding the elected office or public office temporarily from his sphere of enjoyment of status, position, power and privilege.

19. However, it must be noted that suspension brings to bear on the elected person or holder of the public office by election, serious consequences, sometimes more severe penalties prescribed and at times disasterous impact on fair name and good reputation obtained and acquired in course of public life. An elected person enjoying his office on the strength of the verdict of the public in his constituency, obviously, would require serious and strict consideration and interpretation. The authority empowered to suspend is obliged to exercise the power of suspension of a public office holder by election, after full application of mind and within the permissible legal parameters or statutory ambit. We are taken through the provisions of S.59 of the Gujarat Panjayats Act, 1993. We have, also closely, examined and scrutinised the provisions of S.59. It empowers the District Development Officer to suspend from office the Sarpanch or Up-Sarpanch of a village Panchayat against whom any criminal proceedings in respect of an offence involving moral turpitude have been instituted. Prima facie, the use of expression “have been instituted” in literal sense may mean to, before or after the election of the holder of the public office. Nonetheless, this prima facie, literal interpretation relied on by the learned Advocate for the respondents is required to be, seriously, examined, analysed and construed in the context of the legislative intent, the concept of functioning of a holder of public office by election, in a democratic set up and in the background of the conceptual and philosophical institutionalised democratic set up and pattern and with the help of the principle of text-contextualised interpretation.”

13. In the contextual situation it is also relevant to refer to the decision of this Court in Hameed Kutty's case (supra) reported in 2017 (1) KLT 511 which was confirmed by a Division Bench in the decision in Hameed Kutty's case (supra) reported in 2018 (3) KLT 149. In paragraph 9 of Hameed Kutty's case (supra) reported in 2017 (1) KLT 511 the writ court held:-

“As noted above, S.32(1) provides that if any one of the circumstances referred to in clauses (a) to (d) of S.32(1) exists, the Registrar may remove the managing committee from office. Going by the tenor of S.32(1), the removal contemplated by the statute is perpetual removal. If the Registrar is empowered to remove the managing committee of a society perpetually on satisfaction of the existence of the circumstances referred to in S.32(1), there is no reason for me to think that the Registrar is not empowered to remove the managing committee for a short period. It is, therefore, clear that the expression 'remove' contained in S.32(1) of the Act is susceptible to different meanings and therefore, the third proviso to the said provision can certainly be used as a guide to its interpretation, further, since the word used in the main part of the statute is “removal”, according to me, even in the absence of the words “kept under suspension” in the third proviso, it is possible to infer that the power of removal takes in within its scope removal for a short period as well, where a perpetual removal of the managing committee is not warranted. Above all, I am unable to find any reason for the use of the words “Kept under suspension” in the third proviso to Section 32(1) of the Act, if such a power was not intended to be conferred on the Registrar. Further, while S.32 of the Act provides that the committee shall be given an opportunity to state their objections and the financing bank and the concerned circle co-operative union have to be consulted before the power under S.32(1) is invoked by the Registrar, S.32(3) clarifies that it shall not be necessary to comply with the said provisions in cases where the Registrar is of the opinion that it is not reasonably practicable to do so. In the light of the said provisions, the interpretation of the provision as aforesaid will also take care of situations where the managing committee of a society needs to be removed forthwith and it is necessary to hear the managing committee and consult the financing bank and the circle co-operative union before a final decision is taken as to whether they are to be removed perpetually from office. In such cses, the managing committee can be heard and the financing bank and circle co-operative union can be consulted after placing the managing committee under suspension before a final decision is taken as to whether the managing committee is to be removed perpetually. In the said circumstances, I am constrained to hold that the power of the Registrar to remove a managing committee from office includes the power to place the managing committee under suspension also. Needless to say that the said power can be exercised only in exceptional cases where such a course is necessary to protect the interests of the members of the society.”

(underline supplied)

In the appeal, in the decision reported in 2018 (3) KLT 149 the Division Bench held:-

“The grounds under which the Registrar can remove the managing committee in office and appoint in its place one administrator or an administrative committee are explicitly spelt out above. The removal of the managing committee can either be by way of supersession or suspension which in the former case is permanent and in the latter case is temporary capable of reinstatement. The term 'remove' in the section means 'abolish' or 'eliminate' which takes within its fold both supersession as well as suspension as clarified in the third proviso to S.32(1) of the Act.

2. The effect of the third proviso to S.32(1) of the Act is that the managing committee shall not be superseded or kept under suspension where there is no Government share holding in the co-operative society. So is the case where the society has not availed of any loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government. The financial assistance includes that from the various Boards or Corporations or Institutions under the control of the State or Central Government specified in Explanation 1. The third proviso carves out an exception to the main provision in regard to the categories of society aforesaid which otherwise would fall within S.32(1) of the Act. The word 'or' appearing in the third proviso to S.32(1) of the Act implies that supersession and suspension should not coalesce for the same period. The supersession of the Board of a society can follow the suspension if there are just grounds and not vice versa unless the superseded committee is reinstated in office. It should be noted that S.32(1) of the Act was amended empowering suspension in additional to supersession in tune with Article 243ZL of the Constitution of India.”

(underline supplied)

14. Thus, it is obvious that the Division Bench approved the decision of the writ court in Hameed Kutty's case reported in 2017 (1) KLT 511 and repelled the contention of the appellants regarding lack of power of suspension of a committee of a society. A careful perusal of the Division Bench decision in Hameed Kutty's case reported in 2018 (3) KLT 149 would further reveal that it was rendered taking note of the fact that the committee which was placed under suspension in that case was later issued with a notice of supersession after revoking the suspension. Consequently, the Division Bench held that the writ appeal challenging the orders keeping the Board of the Society under suspension had become infructuous since the period had already expired.

15. For a proper consideration of the issues and disposal of the appeals it is relevant to refer to Section 32 of the KCS Act and it reads thus:-

“32. Supersession of committee.- (1) If the Registrar, after an inquiry by himself or through his subordinates or on a report of the financing bank, or the Vigilance and Anticorruption Bureau of the Government or the Vigilance Officer or otherwise, is satisfied that the committee of any society,-

(a)persistently makes default or is negligent in the performance of the duties imposed on it by this Act or the rules or the bye-laws or does anything which is prejudicial to the interests of the society; or

(b)willfully disobeys or fails to comply with any lawful order or direction issued under this Act or the rules; or

(c) makes any payment contrary to this Act or the rules or the bye-laws or causes any loss or damage to the assets of the society, by breach of trust or willful negligence; or

(d) misappropriates or destroys or tampers with the records or causes the destruction of records to cover up any misconduct or malpractice,

He may, after giving the committee an opportunity to state its objections, if any, by order in writing, remove the committee and, appoint in its place, one administrator or an administrative committee consisting of not more than three individuals, one among them as convener, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months.

Provided that in the case of co-operative society, carrying on the business of banking the provisions of the Banking Regulations Act,1949 (Central Act 10 of 1949) shall also apply;

Provided further that in the case of a co-operative society, carrying on the business of banking, appointment of administrator/administrative committee shall not exceed one year in the aggregate:

Provided also that the Board of Co-operative Society shall not be superseded or kept under suspension where there is no Government Share holding or loan or financial assistance or any guarantee by the Government or any Board or Institutions constituted by the Government.

Explanation I.- For the purposes of this proviso, financial assistance includes any financial assistance from the Kerala Co-operative Development and Welfare Fund Board, Deposit Guarantee Scheme implemented by the Kerala Cooperative Deposit Guarantee Fund Board, Kerala Cooperative Risk /Fund Scheme implemented by the Kerala Co-operative Development and Welfare Fund Board, National Bank for Agriculture and Rural Development, National Co-operative Development Corporation and any other financial institution under the control of the State or Central Government and also any financial assistance guaranteed by the said institutions.

Explanation II: A notice and an order given as per this clause to the President, in his absence to the Vice President or any committee member who is holding charge of President or Vice President or to the Chief Executive of a society shall be treated as an order given to the committee of the society.

(e) Every member of the committee superseded under this section shall from the date of order of such supersession stand disqualified to contest in the election to or to be nominated to the committee of any Society or to be appointed as an administrator in any society for two consecutive terms.

(2)The Registrar shall consult the financing bank and circle cooperative union or State Co-operative Union, as the case may be, before passing an order under sub-section (1).

(3) Notwithstanding anything contained in sub-section (1) or subsection (2) it shall not be necessary to give an opportunity to the committee to state its objections and to consult the Unions and financing banks, in cases where the Registrar is of the opinion that it is not reasonably practicable to do so, subject however to the condition that in such cases, the period of supersession shall generally be for six months and in case a new committee cannot be constituted or enter upon office in accordance with the byelaws of the society within the period of supersession the period may be extended for a further period not exceeding six months—

(a) in the case of a Co-operative society only after consulting the Circle Co-operative Union concerned; and

(b) in the case of an Apex Society or a Central Society only after consulting the State Co-operative Union.

(4) The committee or administrator or administrators so appointed shall, subject to the control of the Registrar and to such instructions as he may from time to time give, 40g[have power to exercise all or any of the powers and functions] of the committee or of any officer of the society and take all such action as may be required in the interests of the society.

(5) The committee or administrator or administrators shall, before the expiry of its or his or their term of office, arrange for the constitution of a new committee in accordance with the bye-laws of the society.

(6)Every order made by the Registrar under sub-section (1) shall be communicated to the circle co-operative union.”

(Underline supplied)

16. In the light of the aforesaid decisions and Section 32 of the KCS Act at no stretch of imagination the contention of the appellant-writ petitioner that there is no distinction between supersession and suspension can be upheld. So also it cannot be said that at no circumstances the Registrar or the authority exercising the power of Registrar, under Section 32 of the KCS Act got no power to suspend a committee of a society for the mere reason that except in the third proviso to Section 32(1) the exercise of power of suspension was mentioned. In other words, in exceptional circumstances for protecting the interests of the members of the society it would become inevitable to keep a committee of a society under suspension. In the case of supersession of a committee of a Society/Bank invoking the power under Section 32(1) of the KCS Act there is no question of the committee of the society coming back to power after any particular period unless the order of supersession is interfered with and the superseded committee is reinstated in service, upon a challenge against the said order. In other words, removal of a Managing Committee by way of supersession is permanent and in such eventuality the committee would be substituted by an Administrator or an Administrative Committee, with the main aim to conduct fresh election and put in power a new committee. However, in the case of suspension of a committee of a Bank/Society invoking the aforesaid power the committee would be reinstated on expiry of the period unless the period of suspension is not extended or the committee suspended was not superseded thereafter. At any rate, it is temporary and the suspended committee may be restored into office. Still, we are of the firm view that suspension of a committee of a Co-operative Society or Cooperative Bank is a very serious issue having serious consequences. When it is ordered based on financial dealings it may have disastrous impact on the fair name and good reputation, not only of the democratically elected members constituting the committee but also on the very Bank. Depositors and account holders may run on the Bank and may spoil its very business. Without specifying the compelling reason the power of suspension cannot and shall not be exercised, for various reasons. We will deal with the issue, with reference to Ext.P7 a little later. It is true that a bare perusal of Ext.P7 would undoubtedly make it clear that it is an order suspending the committee of the Bank for a period of six months from 3.7.2020 and it cannot be understood or construed as an order superseding the committee of the Bank.

17. When once it is found that “suspension” and “supersession”, of a committee of a society are different and distinct in nature and consequences and the power to remove conferred under Section 32 of the KCS Act takes within its fold both 'supersession' and 'suspension' and the procedures mandatorily to be followed to supersede a committee and the exceptional situation enabling nonadherence, are specifically mentioned in the Act in respect of supersession of a committee, the question is whether they are to be followed mandatorily for suspending a committee of a society, even in the absence of specific mandate therefor, in the KCS Act or in KCS Rules. Evidently, even the contention of the respondents is that the procedures prescribed under Section 32 are not required to be followed for suspending a committee and they are to be adhered only for supersession. Obviously, the respondents relied on the decision of a Single Bench of this Court in Hameed Kutty's case (supra) (2017 (1) KLT 511) which was confirmed by a Division Bench decision reported in 2018(3) KLT 149, to buttress the same. It is to be noted that while approving the decision of the writ court in Hameed Kutty's case (2017 (1) KLT 511) and repelling the contention of the appellants therein regarding absence of power of suspension the Division Bench in the decision in 2018 (3) KLT 149, did not go into the question as to whether the procedures prescribed to be followed before superseding a committee of a society should be followed before suspending the committee of a society and if not, whether any procedure is required to be followed for suspending the committee of a society. In paragraph 3 of the judgment the Division Bench held that the appeal challenging the order keeping the Board of the society under suspension had become infructuous owing to its subsequent supersession. In such circumstances, we are of the view that in the absence of a consideration in detail by the Division Bench on that issue the question is whether the direction to treat Ext.P7 as a notice under Section 32(1) of the KCS Act could be sustained taking note of the fact that admittedly, Section 65 inquiry is still pending. According to the authority conducting the inquiry more time is required for completing the same. Annexure-R1(a) produced by the first respondent who issued Ext.P7 order of suspension itself besides Ext.P7 go to show that Section 65 inquiry is still going on in 'the Bank' and it will take more time for completion. In the context of the direction issued by the writ court to treat Ext.P7 as a notice under Section 32(1) and requiring the petitioner to file objections and further directing the first respondent to consider the objections after complying with the procedures contemplated under Section 32 and in strict compliance with the decision of the Apex Court in Sanjay Nagayach case (supra) and the aforesaid position with respect to Section 65 inquiry, the aforesaid issue has to be considered. For its proper consideration it is only apposite to refer to Section 65 of the KCS Act. Sub-section (1) thereof deals with the aspects which could be inquired into. Going by the same what could be inquired into by the Registrar or by a person authorised by order in writing is with respect to the constitution, working and financial condition of the society, provided he is satisfied that it is necessary to do so. That apart, it would indicate that such an inquiry under Section 65 of the KCS Act can be done by Registrar:-

(a) on his own motion; or

(b) on an inquiry report of the Vigilance Officer appointed under Section 68A; or

(c) on a report of the Director of Co-operative Audit appointed under Section 63; or

(d) on an application by the majority of the members of the committee of the society, or by not less than one third of the quorum for the general body meeting, whichever is less; or

(e) on an application by the apex society or financing bank of which such society is a member; or

(f) on an application of a society to which the society concerned is affiliated.

18. Sub-section (2) of Section 65 deals with the powers of the Registrar or the person authorised by him under sub-section (1) for the purpose of the inquiry. Sub-section (4) thereof deals with what the Registrar should do when the inquiry made under Section 65 reveals only minor defects which in the opinion of the Registrar, could be remedied by the society. In such cases, going by sub-section (4) he shall direct the society or its officers to take such action within the time specified therein to rectify the defects disclosed in such inquiry. Subsection (6) of Section 65 is relevant as far as these appeals are concerned. It reads thus:-

“If the Registrar, on completion of the inquiry finds that, there is major defect in the constitution or working or financial condition of the society, he may initiate action in accordance with the provisions of Sec.32.”

(underline supplied)

The words 'on completion of the inquiry' used in sub-section (6) of Section 65 would undoubtedly reveal that initiation of action in accordance with the provisions of Section 32, based on an inquiry under Section 65 is permissible only on completion of the inquiry. In the case on hand both Annexure-R1(a) and Ext.P7 would reveal that the inquiry under Section 65 is going on and it would take more time for completion. When that be the admitted and indisputable position with respect to the stage of inquiry under Section 65 in the light of the specific provision under sub-section (6) of Section 65 initiation of action in accordance with the provisions of Section 32, based on inquiry under Section 65 is not permissible. Whether it should be initiated is a matter which could be decided by the Registrar only on completion of the inquiry and subject to his satisfaction regarding its requirement. In the case on hand, such a stage has not reached. In such circumstances, issuing a direction to treat Ext.P7 as notice and requiring the petitioner to file objections and directing the first respondent Joint Registrar to consider the objections after complying with the procedure contemplated under Section 32 of the KCS Act, without further clarification on the scope of such consideration, would amount to predetermination of the necessity of initiation of action in accordance with the provisions of Section 32 and conferring such a power before the completion of inquiry under Section 65 against the specific mandate under sub-section (6) of Section 65 of the KCS Act. Presuming such a necessity even before completion of the inquiry under Section 65, taking into account the position that it is exclusively within the domain of power of the Registrar, would amount to interference with the jurisdiction of the Registrar.

19. Now, we will consider the position if the direction of the learned Single Judge to treat Ext.P7 and the consequential further directions are taken as one specifically for considering the objections as to whether suspension is required or not. The third respondent relied on the decision of a Full Bench of the High Court of Punjab & Haryana in Gurcharan Singh v. State of Haryana and Others reported in AIR 1979 Punjab & Haryana 61 to contend that prior notice or opportunity of being heard is not necessary for suspending a member or a committee of a Co-operative Society. According to us, the decision in Gurcharan Singh's case (supra) is inapplicable in the case on hand for more than one reason. The opening sentence in the said decision reads thus:-

“Whether an opportunity to show cause is imperative before suspending a member or a committee of a Cooperative Society during the course of proceeding for supersession under Section 27 of the Punjab Cooperative Societies Act, 1961 (as applicable in Haryana) is the significant question which falls for determination in this reference to the Full Bench.”

(underline supplied)

Thus, it is obvious that the question mooted and decided with reference to the specific provision under the Punjab Co-operative Societies Act, as applicable in Haryana was whether an opportunity to show cause is imperative before suspending a member or a committee of a Cooperative Society during the course of proceedings for supersession. Clearly the question herein is totally different. In the case on hand, though the facts borne out from records would reveal that proceedings for supersession under Section 32 were virtually initiated and a notice therefor was issued to the previous committee of the Bank in question the admitted case is that it could not be effectuated owing to the expiry of its term and thereafter no proceedings for supersession was specifically initiated against the present Managing Committee. What is going is an inquiry under Section 65 of the KCS Act. It will be illegal and impermissible to treat such proceedings initiated at the time of the tenure of the previous committee as one during the period of the present committee and further to continue with such proceedings for supersession of the present committee. In fact, there is no such case for the first respondent. We have also taken note of the fact that the inquiry initiated under Section 65 of the Act was mainly and mostly on the alleged irregularities occurred during the tenure of the previous committee. We say so, on perusal of Annexure-R1(a), Exts.P7 and P8.

20. Before adverting to the aforesaid contentions and issues it is only appropriate to refer to certain other relevant aspects, to be borne in mind, while considering the cases on hand. As per Constitution (Ninety Seventh Amendment) Act, 2011 with effect from 15.2.2012 the right to form Co-operative Societies is inserted as Clause (c) in Article 19(1) of the Constitution. 'The Co-operative Societies' is a subject enumerated in Entry 32 of the State List of the Seventh schedule of the Constitution and the KCS Act was enacted by the State of Kerala with the purpose revealed from the preamble to the KCS Act. Going by the preamble it was enacted with a view to provide for the orderly development of co-operative movement in accordance with the cooperative principles as self governing, democratic institutions, to achieve the objects of equity, social justice and economic development, as envisaged in the Directive Principles of State policy of the Constitution of India. It is taking into account all the aforesaid aspects and scheme of the KCS Act that the Hon'ble Apex Court in the decision in Joint Registrar of Co-operative Societies v. T.A.Kuttappan reported in 2000 (2) KLT 480 held that a Co-operative society is expected to function in a democratic manner through an elected committee of management. Hence, this should be the normal rule and administration by an Administrator or an Administrative Committee can be effected in a Co-operative Society only rarely and in exceptional circumstances. Statutorily, the situations that require supersession of an elected committee and its substitution for a particular permissible period through an Administrator or an Administrative Committee is provided in Section 32 as also Section 33 of the KCS Act. Section 28 of the KCS Act provides for constitution of a committee for a society. Circumstances wherein supersession of the elected committee in administration of a Co-operative society/bank and consequential entrustment of management with an Administrator or an Administrative Committee are contemplated under the provisions under Sections 32 and 33 of the KCS Act. We refer to the aforesaid position to drive home the point that when the impact of suspension of a society is that it would deprive the democratically elected committee of the society concerned from holding the elected office and to discharge the power and duties, the power to suspend a committee of a society should be exercised only in rare and exceptional circumstances and not merely because proceedings for supersession were initiated against the previous committee, but could not be effectuated. In such circumstances, we are also of the view that removal, be it suspension or supersession, of a committee of a society, is a very drastic step and therefore, it could be resorted to only in very exceptional circumstances by scrupulously following the procedures.

21. In Nasirkhan Nivas Khan Pathan's case (supra) the Full Bench of Gujarat High Court held that the object of suspension is to remove any person holding the elected office or public office temporarily from his sphere of enjoyment of status, position, power and privilege. Furthermore, it was held therein: “.......... it must be noted that suspension brings to bear on the elected person or holder of the public office by election, serious consequences, sometimes more severe penalties prescribed and at times disasterous impact on fair name and good reputation obtained and acquired in course of public life. An elected person enjoying his office on the strength of the verdict of the public in his constituency, obviously, would require serious and strict consideration and interpretation. The authority empowered to suspend is obliged to exercise the power of suspension of a public office holder by election, after full application of mind and within the permissible legal parameters or statutory ambit.” We are of the considered view that the same would be the position in respect of suspension of an elected body. In terms of the provisions under Section 28 of the KCS Act the General Body of a Society/Bank is to constitute a committee for a period of five years in accordance with the by-laws to entrust the management of the affairs of the society concerned. Hence, power of suspension, when the procedure for its exercise is not very expressly provided under the KCS Act, shall be exercised only in very, very exceptional circumstances.

22. As noticed hereinbefore, the appellant in W.A.No.1031/2020 mainly sought for quashment of Ext.P7, the nature of which is not in dispute. A scanning of Ext.P7 would reveal that it is not an order superseding the committee of the Bank and in fact, what is specifically stated in Ext.P7 is that on satisfying that the continuance of the committee in power would hamper the smooth conduct of the inquiry under Section 65 of the KCS Act, waiving the notice under Section 32(1) and by invoking the provisions under Section 32(3) of the KCS Act the committee is suspended for a period of six months. Consequently, the Assistant Registrar (General), Idukki was appointed as the Administrator of the Bank. It is relevant to note that in Ext.P7 what exactly is the power for suspending a committee available under the KCS Act is not specifically mentioned. The question is whether the word 'suspension' is a synonym of the word 'supersession' employed under Section 32 of the KCS Act. We have already found that the expression 'suspension' is distinct and different from the expression 'supersession' and that the power of suspension of a committee of a society should be exercised only sparingly and only in very, very exceptional circumstances. The third proviso to Section 32(1)(b) itself would reveal that they are different and distinct. The said proviso is extracted herein-below, at the risk of repetition:-

“Provided also that the Board of a Co-operative Society shall not be superseded or kept under suspension where there is no Government share holding or loan or financial assistance or any guarantee by the Government or any Board of Institution constituted by the Government.”

In fact, it was only under the afore-extracted proviso that the word 'suspension' is used in Section 32 of the KCS Act in regard to the Board of a Co-operative Society and nowhere else the said expression has been used in Section 32. Under the aforesaid provision what is stated is that a society shall not be kept under suspension when there is no Government share holding or loan or financial assistance or any guarantee by the Government or any Board or institutions constituted by the Government. The rest of the provisions under Section 32 of the KCS Act would reveal that what was actually dealt with under Section 32 is the power and manner of exercise of the power of supersession of a committee of a society. In other words, it is the expression used under the aforesaid proviso in the negative sense that is claimed as the source of power to suspend a committee but then, unlike in the case of supersession as relates suspension no procedure is specifically prescribed. It is therefore, all the more necessary to be more cautious and careful in passing an order of suspension of a committee of a society, especially in view of the position specifically noted by us with respect to inquiry under Section 65 of the KCS Act. When once it is found that the power of suspension exists, absence of specific provision dealing with procedures in the matter of suspending a committee of a society cannot be a reason for its arbitrary or unreasonable exercise. In that context, it will not be inappropriate to consider Annexure-R1(a), Exts.P7 and P8. The specific reason assigned for suspending the committee of the society in Ext.P7 is that its continuance in power would hamper the smooth conduct of inquiry under Section 65 of the KCS Act. It is also relevant to note that one of the grounds raised by the first respondent who issued Ext.P7, to challenge the judgment is that Annexure-R1(a) was not at all looked into by the learned Single Judge. Ext.P7 and Annexure-R1(a) would reveal the foundation for ordering inquiry under Section 65 of the KCS Act in the society as the order of the Joint Registrar (General) Idukki dated 7.1.2020, complaint dated 11.11.2019 of one P.K.Ibrahimkutty and 34 other members of the society and certain other complaints specifically referred to thereunder. In Annexure-R1(a), going by the order for inquiry under Section 65, the matters to be inquired into have been specifically mentioned as hereunder:-

“MALAYALAM”

Further, it is stated in Annexure-R1(a) that in respect of the issues referred to in the complaint for inquiry and on the subjects dealt with in the complaints the President/Secretary of the society were required to give explanation, as per letter dated 27.1.2019. In this context, it is to be noted that the committee which was suspended as per Ext.P7 was elected to office only on 30.12.2018 and they assumed charge on 1.1.2019. In other words, such an explanation was called for pursuant to the order for inquiry on the 26th day of assumption of office by the present committee which was suspended. The aforesaid facts would indicate that virtually explanation was called from them mostly and mainly with respect to the transactions, dealings and appointments effected, during the period of the previous committee. The points for inquiry would undoubtedly reveal the said position. On receipt of letter dated 27.1.2019 explanation was given by the President and Secretary of the society on 10.2.2020. It is true that after pointing out the defects noted during the inquiry including defects noted in respect of audit for the year 2018-2019 what is stated is that the suspended committee had not taken steps for curing the defects. At this juncture it is relevant to refer to Section 65(4) of the KCS Act which mandates thus:-

“65.(4) When an inquiry made under this section reveals only minor defects which in the opinion of the Registrar, can be remedied by the society, he shall communicate the result of the inquiry to the society and the society, if any, to which that society is affiliated. He shall also direct the society or its officers to take such action within the time specified therein to rectify the defects disclosed in such inquiry.”

The question is when did the suspended committee which assumed charge on 1.1.2019 was informed of the defects occurred during the period of previous committee as also during its period and called for curing the defects ? If it was called for curing defects it would suggest that defects noted during those periods are curable. Then the further questions that may require to be answered are what was the time limit granted for curative purpose and in what manner they were required to be cured. No such details, which could be used against the committee under suspension is discernible from Annexure-R1(a), Exts.P7 and P8. The major defects founded during inquiry could be relied on for supersession, going by sub-section (6) of Section 65 only after the completion of the inquiry. Above all, what is noteworthy is that Annexure-R1(a) is nothing but an interim report and as per the same, the inquiry officer requested for extension of time for completing the inquiry by two more months. Ext.P8 is dated 25.9.2019 and the extracts of the defects noted therein would also indicate that the alleged defects pertain mainly to the period of the previous committee. Though we have carefully gone through Annexure-R1(a), Exts.P7 and P8 we could not find anything indicating that instructions were specifically issued earlier with details of defects to the committee under suspension and requiring it to cure the defects within a specified time. It is in this context that the decision of the Hon'ble Apex Court in Sanjay Nagayach case (supra) assumes relevance. True that it was not a case directly dealing with the power of suspension.

23. In the decision in Vallapuzha Service Co-operative Bank Ltd. v. Joint Registrar (2009 (3) KLT 838) a learned Single Judge of this Court relying on two Division Bench decisions of this Court viz., in Sivadasan Nair v. Registrar of Co-operative Societies (1997 (2) KLT 710) and the judgment dated 6.8.2004 in W.A.No.1363 of 2004 (K.V.Mohanan v. State of Kerala) it was held that even if some of the members of the present committee of a society were also members of the previous committee Section 32 of the KCS Act could not be initiated against the present committee. In Sivadasan Nair case (supra) and in the decision in Urukunnu Service Co-operative Bank Ltd. v. State of Kerala reported in 2012 (4) KLT 941 it was held by this Court, a committee of a society cannot be superseded for mistakes or lapses committed by the previous committee. In short, the settled position is that for the deeds of a previous Managing Committee a subsequent committee cannot be superseded by invoking the provisions under Section 31 of the KCS Act. This settled position applies with equal force or more force in the case of suspension of an existing committee, especially when an inquiry under Section 65 of the KCS Act i

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s pending where most of the points for inquiry pertain to the period of previous committee. In Ext.P7 order of suspension the reason for suspending the committee of the society is given as its continuance in office would hamper the smooth conduct of inquiry under Section 65 of the KCS Act and therefore, it is essential to keep it under suspension. True that, it is also stated therein that in respect of the defects committed by the previous committee no steps were taken to cure them. That apart it is stated that the previous committee as also the existing committee did not take steps to protect the property of the society. As noticed hereinbefore and as held by the learned Single Judge such statements in that regard contained in Ext.P7 are vague and not at all specific. Whether the committee under suspension was given time bound instruction to cure defects with details is not at all stated or discernible from Ext.P7 or Annexure-R1(a). It is also not discernible from Ext.P7 as to how the continuance of the democratically elected committee in office would hamper the smooth conduct of the inquiry under Section 65. In that regard, the following recital in Annexure- R1(a) also assumes relevance :- “MALAYALAM” The above extracted recital in Annexure-R1(a) would reveal that it also contains only vague statement with respect to the non-co-operation from the part of the members of the suspended committee as also officers of the society. It is also to be noted that such a reason is vaguely given virtually as a reason for not completing the inquiry under Section 65 of the KCS Act within time. 24. The question is whether assigning such reasons in vague a democratically elected committee could be suspended and thereby disabled from discharging its duties and obligations ? We have already held that though it could not be held that a committee of a society could not be suspended at any circumstances suspension of a committee of a Co-operative Society could be effected only in very rare circumstances. Needless to say that even when such power is exercised in exceptional circumstances, in the absence of specific procedures or guidelines on the matter, taking note of the fact that suspension would disable the democratically elected committee from functioning and that such suspension got disasterous consequences, referred hereinbefore, extreme care should be taken to ensure whether it is inevitable for public interest and such consideration should be reflected in the order of suspension. In view of the circumstances obtained in the case more particularly, taking note of the fact that the inquiry under Section 65 had not matured into a final report so as to enable the Registrar to form opinion as to the necessity to invoke Section 32 of the KCS Act for superseding the committee of the society and that the inquiry under Section 65 of the KCS Act is pending we are of the view that the learned Single Judge has erred in directing to treat Ext.P7 as a notice issued under Section 32(1) of the KCS Act. Taking into account the aforementioned aspects we have also no hesitation to hold that the same also cannot be ordered to be treated as a notice as to why suspension should not be ordered for the simple fact that as per Ext.P7 assigning the reasons already mentioned in a vague manner and that continuation of the existing committee would hamper the smooth conduct of inquiry under Section 65 of the KCS Act the committee was placed under suspension thereunder for a period of six months and in substitution of the committee the Assistant Registrar (General), Idukki was appointed as the Administrator of the society. If in a vague manner the reason for suspension is stated in an order for suspending a democratically elected committee of a society pending an inquiry under Section 65 of the KCS Act and when the materials on record would undoubtedly suggest that the subject of the inquiry is mostly and mainly in respect of dealings and transactions occurred during the period of the previous committee one cannot say that it is an exceptional circumstance to exercise the power of suspension. If the said power, in the absence of specific guidelines or procedures, is allowed to be exercised in the like manner it will not only result in arbitrary exercise of power but also a perennial threat for democracy as Co-operative Societies are considered to be democratic institutions at the grass root level. 25. The upshot of the discussion as above is that the learned Single Judge is perfectly justified in quashing Ext.P7 and in ordering to put back the suspended committee in power, forthwith. Ergo, if the direction to put back the suspended committee in power is not so far complied with it shall be done, forthwith, on receipt/production, of a copy of this judgment. However, in the circumstances explained hereinbefore, we have no hesitation to hold that the direction that the petitioner as well as the first respondent shall treat Ext.P7 as a notice under Section 32(1) of the KCS Act and the consequential directions issued as a necessary sequel, requiring the petitioner to file objections to Ext.P7 and to the first respondent to consider the objections after complying with the procedures contemplated under Section 32 of the Act require interference. Hence, the said directions stand vacated. As per the impugned judgment while ordering the petitioner - Managing Committee of the society to be put back in power forthwith the learned Single Judge put a rider in the matter of its functioning that during the period of inquiry it shall not take policy decisions affecting the society and shall confine its administration to carrying out the day-to-day activities. We find no reason to restrain the petitioner, a democratically elected committee of a society from taking policy decisions and also to confine themselves to carrying out of day-to-day activities in the circumstances obtained in this case. Hence, while confirming quashment of Ext.P7 and the direction to put back the petitioner committee in power we vacate the other limbs of direction No.(C) restraining the committee that during the period of inquiry they shall not take any policy decisions affecting the society but shall confine themselves to carrying out the day-to-day activities. We make it clear that we shall not be understood to have made any opinion or observation with respect to the ongoing inquiry under Section 65 of the KCS Act and the references about the same are made only for the purpose of the disposal of the appeals. In the said circumstances, the direction that the petitioner should fully co-operate with the inquiry and facilitate completion of the inquiry is not interfered with. We may also hasten to add that this observation will not take away or prejudice the right of the petitioner to take up all legal and factual contentions in case any step is taken based on the report of inquiry under Section 65 of the KCS Act. In the result, W.A.No.1031 of 2020 is allowed as above and W.A.Nos.1021 & 1060 of 2020 are dismissed.
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