Prof. Dr. Jacob George v. State of Keralam

The above writ petition is filed seeking the following reliefs:

1. Issue a writ of certiorari or any other appropriate writ or order or direction calling for the records leading to Exhibit P9 Order No.CRB 1081/2016 dated 24.08.2026 issued by the 3rd respondent and quash the same;

2. Issue a writ of certiorari or any other appropriate writ or order or direction calling for the records leading to Exhibit P4 order bearing number CRB 1081/2026 dated 07.08.2026 issued by the 3rd respondent and quash the same;

3. Declare that the petitioners are entitled to function as members of the Managing Committee/ Board of Directors of Tiruvalla East Co-operative Bank Ltd. No.3260 till expiry of their term on 27.11.2026 in continuation of their assumption of office on 28.11.2021;

4. Dispense with the translation of the documents in Malayalam; and 5. Grant such and further reliefs that are deemed fit and proper in the facts and circumstances of the case.

2. The present writ petition is filed essentially challenging Ext.P9 order issued by the 3^rd respondent whereby the Managing Committee of the 6^th respondent bank has been superseded. The petitioners were the members of the Director Board (Managing Committee) of the 6^th respondent, Tiruvalla East Co-operative Bank Ltd., an Urban Co-operative Bank, as defined under Section 2(ta) of the Kerala Co-operative Societies Act, 1969 (for short “the Act”) and it conducts banking business under the license issued by the Reserve Bank of India. After the change of the political executive in the Government of Kerala, under the influence of the former director board members, an inquiry under Section 65 and Section 66 of the Act was ordered by the 3^rd respondent as per Ext.P2, which was received on 13.08.2026. The petitioners would submit that an illegible copy of Ext.P2 was served on them. Since the content of Ext.P2 was not readable, by Ext.P3, a readable copy was sought for. Thereafter, by Ext.P4, a legible copy of Ext.P2 order was made available on 17.08.2026. In Ext.P4 order, reference is made to an order dated 07.07.2026 directing preliminary inquiry and the preliminary inquiry report dated 01.08.2026 of the Assistant Registrar. It is the case of the petitioners that a copy of the said order dated 07.07.2026 and the preliminary inquiry report dated 01.08.2026, were never served on the petitioners or made available to the Bank. On the basis of the same, it is contended that, Ext.P4 order is bad for non-issuance of the preliminary inquiry order as well as the preliminary inquiry report. As per Ext.P4, the 4^th respondent has been appointed as the inquiry officer, and the said inquiry officer, as per Ext.P5 letter dated 11.08.2026, directed the Managing Director of the Bank to submit the original as well as certified copies of 64 documents before 4 p.m. on 13.08.2026. Ext.P5 letter was placed before the Managing Committee. The petitioners would submit that out of the 64 documents sought for, 12 documents are the documents including the inspection reports issued by the Reserve Bank of India (RBI) and further that the documents to be submitted include documents related to five years. Thereupon, Ext.P6 letter was submitted by the Managing Director of the Bank to the inquiry officer to allow reasonable time to comply with the directions. Thereafter, an urgent Director Board meeting was convened and, as per Ext.P7 decision, a letter was submitted to the General Manager, Reserve Bank of India, on 17.08.2026 through Ext.P8 e-mail communication, requesting advice as to whether the attested copies of 12 documents marked as confidential by the RBI can be submitted to the inquiry officer. Though an extension of time was sought by the Bank, the inquiry officer has extended the time limit only up to 17.08.2026. As the Bank was closed on 15^th and 16^th August, being Independence Day and Sunday, all documents except the 12 documents were collected and compiled and were kept in the office for submission. The inquiry officer came to the office on 17.08.2026 at 3 p.m. and scrutinised the documents and informed the Managing Director that they may collect the documents on the next day and left the office. While leaving the bank, the inquiry officer issued Ext.P8(a), a typed letter intimating that the non-production of the documents by the bank is an attempt to prevent a proper inquiry in the matter. The petitioners would submit that the averments in the above letter reveal the malafides of the inquiry officer in the subject matter. Thereafter, no communication was received from the inquiry officer by the Bank, and on 24.08.2026, the Joint Registrar came to the Bank and handed over Ext.P9 order of supersession under Section 32 of the Act, to the 1^st petitioner.

3. Sri. K. Gopalakrishna Kurup, the learned Senior Counsel appearing for the petitioners, would contend that Ext.P9 order of supersession is based on an erroneous appreciation of the factual situation and the applicable law, and that the said order was issued on the assumption that the Board of Directors and the Managing Director of the Bank have prevented the inquiry officer from proceeding with the inquiry ordered as per Ext.P4 order by refusing to furnish the documents sought by the inquiry officer. The petitioners would submit that by Ext.P2, an illegible copy of the order was served on the Bank on 11.08.2026. The next day was a public holiday. On the very next working day, a legible copy of the order was requested, and in the meanwhile, on 13.08.2026, the inquiry officer sought production of 64 documents pertaining to a period of over 5 years. A legible copy of Ext.P2 was served only on 17.08.2026. Reasonable time was sought on 13.08.2026 for collection, compiling and submission of the said documents, which included 12 documents marked as confidential by the RBI. On 17.08.2026, the Reserve Bank of India was addressed on the said aspect and thereafter, though the inquiry officer granted time up to 17.08.2026 for production of documents, 15.08.2026 and 16.08.2026 were public holidays. In spite of this, all the documents, except the 12 documents in respect of which the advice of the RBI had been sought, were collected, compiled and kept ready at the Bank for submission to the inquiry officer on 17.08.2026. But with a malafide intention, Ext.P8(a) letter was issued pointing out that the bank has not submitted necessary documents. The petitioners would submit that Ext.P9 order does not reflect the existence of any circumstance warranting invocation of supersession under Section 32 of the Act and that the same has been issued in violation of Section 32(1), which provides an opportunity to the Board of Directors to submit their objection to the proposed supersession and appointment of an Administrator and also Section 32(2), which provides for a consultation with the Financing Bank and the Circle Cooperative Union before the issuance of an order of supersession. The circumstances explained in Ext.P9 order do not come within the parameters of the words used in Section 32(3) of the Act that “it is not reasonably practicable”, to dispense with notice and consultation as provided therein. The petitioners further submit that in Ext.P9, four reasons have been stated for superseding the Managing Committee of the bank. The petitioners would also submit that these are not valid reasons for superseding the Committee; had the petitioners, i.e., the Managing Committee and the Bank, been given a reasonable opportunity to submit their objections, as provided under Section 32(1) of the Act, a valid reply could have been given by the petitioners, and the said supersession as per Ext.P9 could have been avoided. The petitioners in the writ petition have given answers to various reasons stated in Ext.P9 for the supersession of the Committee, which read as follows:

I. The Managing Director was appointed as per the ‘fit and proper criteria’ of the RBI as envisaged in circular No. RBI/2021-22/60 DOR. GOV. REC. 25/12. 10. 000/2021. His appointment was after due process of law with notification calling applications for the appointment of Managing Director, published in two newspapers. Three applications were received and the person selected is the retired Deputy General Manager (DGM) of the Kerala Bank. He was working in the Bank as General Manager before he was appointed as Managing Director. The termination of the erstwhile managing director was challenged by her before this Honorable Court by WP (C) 2093/2023, in which an order dated 16.02.2023 was passed by this Honorable Court ordering that the appointment pursuant to the said notification would be subject to the result of the writ petition. A true copy of the order dated 16.02.2023 of this Honorable Court in WP (C) 2093/2023 is produced herewith and marked as Exhibit P-10. The petitioner in WP (C) 2093/2023 was earlier suspended from office, which was subject matter of WP (C) 25123 of 2021, the judgment in her favour in which resulted in WA 433 of 2022. The judgment in WP (C) 25123 of 2021 was stayed in the said writ appeal. The said writ appeal as well as WP(C) 2093 of 2023 were considered together and disposed of as per common judgment dated 22.06.2026. A true copy of the common judgement dated 22.06.2026 in WA 433 of 2022 and W P (C) 2093 of 2023 is produced herewith and marked as Exhibit P-11. During the pendency of the aforementioned proceedings before this Honorable Court, the original term of office of the incumbent managing director was over and he was re-appointed. The appointment as well as the reappointment was intimated to the RBI for approval in time. However, the RBI began processing the approval applications only after Exhibit P11 common judgment.

III. One Time Settlement has been sanctioned by the Audit Committee and the Board on the basis of the One Time Settlement policy accepted by the Board relying upon the Compromise Settlement Policy of the RBI. True copy of the RBI policy viz., Frame Work for Compromise Settlements and Technical Write Offs dated 08.06.2023 is produced herewith and marked as Exhibit P-13. Sri. Sankar, Assistant General Manager of the RBI who was appointed as an Additional Director in the Board and Audit Committee was also part and parcel of all the decisions of the Board and Audit Committee.

IV. The Head Office and own Branch buildings were renovated with the prior permission of the Joint Registrar of Co-operative Societies. The proposal of sanction was firstly submitted to the General Manager, RBI for approval vide letter No. 2435/2024 dated 19.03.2024. RBI informed the Bank that prior permission of the RBI is not needed and the Bank can proceed with the adherence of statutory requirements issued by other regulators regarding utilization of funds from building fund through letter No. TVM.DOS.SED.No. S20/12.04.1222/2024-25 dated 08.04.2024. The Bank approached the Joint Registrar and permission was granted by the Joint Registrar to utilise the building fund vide Order No. JRGPA/1479/2024-CRB dated 20.01.2025. True copy of the Order No. JRGPA/1479/2024- CRB dated 20.01.2025 of the 3rd respondent is produced herewith and marked as Exhibit P-14.”

It is on the said grounds that the petitioners have sought for setting aside Exts.P4 and P9.

4. A detailed counter affidavit has been filed by the 3^rd respondent, wherein it is stated that the petitioners have an effective alternative remedy of filing an appeal under Section 83(1) (j) of the Act, 1969 challenging Ext.P9. Sri. Mohammed Shah, the learned Additional Advocate General, based on the counter affidavit, would submit that various complaints were received and an enquiry was conducted, in which various illegalities were found. It is further submitted that time was sought by the bank for production of various documents and, though time was granted till 13.08.2026 and, on the request made by the bank, time was extended till 17.08.2026, no steps were taken by the bank to produce the documents sought for by the inquiry officer. Further, it is stated that Ext.P9 was issued taking note of the said conduct of the Bank and the petitioners in not supplying the documents sought for, and on the basis of a reasonable apprehension that they would attempt to tamper with the documents or destroy evidence if further time is granted. Therefore, invoking Section 32(3), the requirement of hearing the petitioners as well as consulting the Financing Bank and the Circle Cooperative Union was dispensed with, and the Managing Committee of the Bank was superseded.

5. Sri. George Poonthottam, the learned Senior Counsel appearing for the Administrator, the 5^th respondent, submits that this Court, on 29.09.2026, after hearing the rival contentions on both sides, did not interfere with Ext.P9 order, but made it clear that the order of supersession shall (for the present) be treated purely as an order suspending the elected Managing Committee and directed the 5^th respondent Administrator to file an affidavit specifically indicating the steps he intends to take for holding elections to the Managing Committee of the Bank. It is further submitted that the term of the present Managing Committee is due to expire on 27.11.2026 and that this Court has sufficiently protected the interests of the petitioners by treating Ext.P9 order of supersession only as an order of suspension of the elected Managing Committee. Therefore, the disqualification attached to an order of supersession, i.e., the disqualification of the petitioners from contesting the ensuing elections, would not apply, and no serious prejudice is caused to the petitioners, inasmuch as the term of the Managing Committee is due to expire on 27.11.2026. It is further pointed out that the interim order dated 29.09.2026 was challenged in W.A.No.2155 of 2026, but the Division Bench of this Court did not interfere with the order passed by the learned Single Judge. It is also submitted that based on the allegations raised against the Managing Committee, even if an opportunity of hearing is afforded to the petitioners as provided under Section 32(2), the same would be an empty formality. The learned Senior Counsel relies on the judgment of the Apex Court in S.L.Kapoor v. Jagmohan and others [1980 (4) SCC 379] and Aligarh Muslim University and Ors. v. Mansoor Ali Khan [2000 (7) SCC 529] in support of his contentions. Based on the affidavit filed, as directed by this Court, the 5^th respondent would submit that the bank has more than 58,000 members, while elections were held in the year 2021 and submits that the Form 6B Register, which is the conclusive proof of the voting right of a member, is kept in the Bank in a scrambled manner and unless the Form 6B register is orderly prepared, it will be difficult to conduct a fair election and further it was necessary to issue fresh identity cards to all those members for having increased share value of Rs.50/-, which is a cumbersome process and will consume lot of time and man power and therefore, the said process will take some more time and at least 90 days time is required to conduct elections to the Managing Committee.

6. I have heard the rival contentions on both sides.

7. This Court is considering the validity of Ext.P9 order of supersession, essentially on the contention of the petitioners regarding the non-compliance of Section 32(1) of the Act, which provides an opportunity to the Committee to state its objections and also regarding non-compliance of Section 32(2), which provides for consultation with the Financing Bank and the relevant Circle Co-operative Union or State Co-operative Union before issuing Ext.P9 supersession order. The stand taken by the respondents is that though Sections 32(1) and 32(2) of the Act ordinarily require the Registrar to provide the petitioners with an opportunity to file their objections and a hearing, and to consult the Financing Bank and the Circle Co-operative Union or State Co-operative Union, as the case may be, before issuing an order of supersession, Section 32(3) confers upon the Registrar the power to dispense with these procedural requirements if the Registrar is of the opinion that compliance with them is not reasonably practicable. The reason stated for excluding such an opportunity to file the objection and consultation, as discernible from Ext.P9 order is that since the petitioners were reluctant to produce the necessary documents sought for by the inquiry officer, the Joint Registrar is of the view that the attempt of the bank and the Managing Committee is to tamper with the files, so as to destroy the evidence. By Ext.P2, Sections 65 and 66 inquiry was initiated by the Registrar on 07.08.2026. The petitioners were served with Ext.P2 on 13.08.2026, which was an illegible copy. As per the averment in the writ petition, a legible copy of Ext.P2, produced as Ext.P4, was served on the petitioners only on 17.08.2026, that too on the request made by the Managing Director of the bank as per Ext.P3 on 13.08.2026. In the meantime, the Inquiry Officer on 11.08.2026, i.e., even before the issuance of a legible copy of Ext.P2, intimated the bank to produce copies of 64 documents before 4 p.m. on 13.08.2026, granting two days’ time. Since the 64 documents include inspection reports issued by the Reserve Bank of India and many of the documents sought for were prior to 5 years, a request was made as per Ext.P6 seeking reasonable time to collect, compile and to submit the documents. Since certain documents were classified by the RBI, based on the resolution of the Managing Committee, the Reserve Bank of India was addressed as per Ext.P8, seeking its advice as to whether the said documents could be given to the Inquiry Officer. The Inquiry Officer had extended the time for production of the documents till 17.08.2026, though 15.08.2026 and 16.08.2026 were holidays, all the documents were made ready by 17.08.2026. The case of the petitioners is that the inquiry officer did not receive the said documents, but instead issued Ext.P8(a) and later on issued Ext.P9, superseding the Committee. This Court is of the view that the Bank and the Managing Committee have only asked for a reasonable time for production of the documents sought for by the Inquiry Officer. The only reason stated in Ext P9 to dispense with the grant of opportunity to file objections and consultation with the financing bank and the circle cooperative union as provided in Section 32(2) is that if such time is granted, it will result in tampering with the documents, resulting in destroying the evidence.

8. It is settled law that a cooperative society is to be governed by a democratically elected committee and supersession of a committee shall be resorted to only in exceptional circumstances. The supersession also results in serious civil consequences on the Managing Committee Members since it attracts disqualification from contesting future elections. Taking note of these aspects, sufficient safeguards have been incorporated in the Statute as per Section 32(1) and (2) to grant an opportunity to file an objection and consultation before an order of supersession is issued. Taking into consideration the reply given by the petitioner to various objections raised in Ext P9, which has been extracted in Para 3 of this judgment, I am of the opinion that, had the said reply been considered by the Joint Registrar, a different view could have been possible. In the above said background, this Court has to consider as to whether the reason stated in Ext P9 for dispensing with the mandate of Section 32(1) and (2) of the Act will come within the purview of the words “it is not reasonably practicable to do so” obtaining in Section 32(3) of the Act.

9. The Apex Court in State of M.P. and others v. Sanjay Nagaiach [2013 KHC 4422] was considering an order of supersession of a managing committee of a society and held in paragraphs 31, 35 and 36 as follows:

“31. The Registrar/Joint Registrar, while exercising powers of supersession has to form an opinion and that opinion must be based on some objective criteria, which has nexus with the final decision. A statutory authority shall not act with pre-conceived notion and shall not speak his masters’ voice, because the formation of opinion must be his own, not somebody else in power, to achieve some ulterior motive. There may be situations where the Registrar/Joint Registrar are expected to act in the best interest of the society and its members, but in such situations, they have to act bona fide and within the four corners of the Statute. In our view, the impugned order will not fall in that category.

xxx xxx xxx

35. In such circumstances of the case, we are inclined to dismiss both the appeals with costs directing re-instatement of the first respondent Board of Directors back in office forthwith and be allowed to continue for the period they were put out of office by the impugned order which has been quashed. We also direct the State of Madhya Pradesh to pay an amount of Rs.1,00,000/- to the Madhya Pradesh Legal Services Authority within a period of one month by way of costs and also impose a cost of Rs.10,000/- as against the Joint Registrar, Co-operative Societies, Sagar, the officer who passed the order, which will be deducted from his salary and be deposited in the Panna DCB within a period of two months from today.

36. Ordered accordingly. Further, we are inclined to give the following general directions in view of the mushrooming of cases in various Courts challenging orders of supersession of elected Committees:

1) Supersession of an elected managing Committee / Board is an exception and be resorted to only in exceptional circumstances and normally elected body be allowed to complete the term for which it is elected.

7) Public money not to be spent by the State Government or the Registrar for unnecessary litigation involving disputes between various factions in a co – operative society. Tax payers money is not expected to be spent for settling those disputes. If found necessary, the same be spent from the funds available with the concerned Bank.”

A similar issue was considered by this Court in State of Kerala and Others v. Board of Directors of Urukunnu Service Co-operative Bank Ltd., Kollam and others (2013 (2) KHC 201) wherein this Court held in paragraphs 12 and 13 as follows:

“12. Even apart from that, we are satisfied that Ext. P7 order is bad for non-compliance with the mandatory provisions of Section 32(2) of the Act. Section 32(2) stipulates that the Registrar shall consult the Financing Bank and Circle Co-operative Union or State Co-operative Union, as the case may be, before passing an order under sub-section (1) of Section 32. Of course under sub-section (3) of Section 32, the Registrar is given the power to dispense with consultation with the unions and the financing bank, where the Registrar is of opinion that it is not reasonably practicable to do so. Here, the third respondent Joint Registrar has chosen to dispense with the requirement under sub-section (2) in one sentence which reads as follows:

“സൂചന 9 പ്രകാരം പ്രസിഡന്റിനേയും, ഭരണസമിതി അംഗങ്ങളേയും വീണ്ടും നേരില്‍ കേള്‍ക്കുകയും, വിശദീകരണം ബോധിപ്പിക്കുന്നതിന് അവസരം നല്കിയിട്ടുള്ളതുമാണ്. പ്രസ്തുത വിഷയത്തില്‍ ധനസഹായ ബാങ്കിനോടും, സര്‍ക്കിള്‍ സഹകരണ യൂണിയനോടും അഭിപ്രായം ആരായുന്നത് അപ്രായോഗികമാണെന്ന് (സഹകരണ നിയമം വകുപ്പ് 32(3)) ബോദ്ധ്യപ്പെട്ടു കാണുന്നു.”

We are of opinion that insofar as the Co-operative Societies should normally be managed by elected representatives, the very drastic step of superseding the managing committee under Section 32 can be resorted to only in exceptional circumstances, that too only after scrupulously following the procedure prescribed in Section 32. In fact, if a managing committee is superseded under Section 32 that attracts disqualification of every member of the managing committee in the matter of contesting future elections to the managing committee for two consecutive terms. It is in view of the drastic nature of the power that the Legislature has incorporated safeguards in the matter of exercise of such powers, so that it will not be arbitrary. Therefore, we are of opinion that sub-section (2) is mandatory unless the Joint Registrar gives very cogent and acceptable reasons for dispensing with such requirement. The least that is expected of the third appellant is to give some indication in the order itself as to why the Joint Registrar had chosen to dispense with the consultation with a Financing Bank and Circle Co-operative Union. As admitted in Ext. P7 itself that procedure has not been complied with and no reasons worth mentioning has been stated in the order.

13. Of course, the learned Government Pleader had made a valiant attempt to justify the dispensing with the requirements, stating that it was logically not possible to consult the Financing Bank insofar as the Joint Registrar himself is the administrator of the Financing Bank and therefore, one cannot be found fault with for not consulting oneself. We are unable to agree with the same. As administrator of the Financing Bank, the third appellant Joint Registrar is in a better position than anybody else to state the opinion of the Financing Bank as to the financial implications which the Financing Bank may suffer on account of the supersession of the bank financed by the Financing Bank. It is all the more so, when the supersession was at a time when the society was running at a profit. Therefore, it is mandatory for the Joint Registrar to state in his order the opinion of the financing bank on the proposal to supersede the first respondent under Section 32. Further no valid explanation is forthcoming as to why it was not reasonably practicable to consult the circle Co-operative Union. Circle Co-operative union is an expert body. Under Rule 139 of the Kerala Co-operative Societies’ Rules, one of the functions of a Circle Co-operative Union is to offer their views on matters relating to supersession of committees. When such functions are conferred on the Circle-Co-operative Union, which have been incorporated in the Rules with a purpose, the Joint Registrar cannot lightly exclude such consultation without very cogent and convincing reasons. Therefore, it was mandatory on the part of the Joint Registrar to consult that expert body before taking the drastic step of superseding a managing committee of a democratically elected managing committee of a Co-operative Society. For dispensing with the same, there must be very cogent and acceptable reasons. A learned Single Judge of this Court has in Selvi v. District Industries Centre, 2001 KHC 874 (Ker.): 2001 (2) KLJ 429: 2001 (3) KLT SN 37: AIR 2002 Ker. 172, after noting several foreign decisions and the decisions of the Supreme Court held that a mere statement in the order that an ‘alarming situation’ is present is not enough to do away with procedural requirements while taking the drastic step of superseding a committee under Section 32. A Division Bench of this Court has held in Sahadevan v. Padmanabhan, 2004 KHC 37 (Ker.): 2004 (1) KLT 192: ILR 2004 (2) Ker. 169 on the question of compliance with sub-section (2) of Section 32 thus: “Sub-section (2) of Section 32 provides that the Registrar shall consult the Financing Bank and the Circle Co-operative Union or the State Co-operative Union as the case may be before passing an order under sub-section (1) of Section 32. It is seen from Ext. P6 that a copy of the notice dated 24/09/2003 issued under sub-section (1) of Section 32 of the Act was sent to the General Manager, Palakkad District Co-operative Bank (Financing Bank) and the Secretary, Co-operative Union, Palakkad. Apart from sending a copy of the notice, no further request or direction was made. Ext. P8 order of the Joint Registrar shows that the views of the financing bank and the Circle Co-operative Union were not received on time and therefore, the Joint Registrar proceeded on the assumption that they had nothing to say in the matter. Learned Single Judge, relying on the decisions in Jose Kuttiyani v. Registrar, Co-operative Societies, AIR 1982 Ker. 12 and Elakkal Service Co-operative Bank v. State of Kerala, 1997 (2) KLT 85 held that the mere sending of the copy of the show cause notice to the consultees would not satisfy the requirement of the provisions contained in sub-section (2) of Section 32 of the Act. According to the learned Single Judge, the notice, the reply and the tentative findings of the Joint Registrar should be forwarded to the consultees so that they can form an opinion and inform the same to the Joint Registrar. The learned Single Judge has also pointed out that the impugned order, Ext. P8, does not show that any such consultation was made. There is no case for the appellant that, apart from sending a copy of Ext. P6 notice to the Financing Bank and the Circle Co-operative Union, the Joint Registrar had forwarded to them the explanations/objections given on behalf of the Committee and the tentative findings arrived at by the Joint Registrar after considering the explanations/objections of the Committee. Therefore, we have to proceed on the basis that, apart from sending a copy of Ext. P6 to the Financing Bank and the Circle Co-operative Union, no further action was taken by the Joint Registrar as part of the consultation process contemplated under sub-section (2) of Section 32 of the Act. The consultation contemplated under sub-section (2) of Section 32 of the Act can be effective and meaningful only if the show cause notice issued under Section 32(1), the explanations/objections given by the Committee to such how cause notice and the tentative findings arrived at by the Joint Registrar after considering such explanations/objections are also forwarded to the Financing Bank and the Circle Co-operative Union requesting them to offer their views on the proposal to supersede the Committee. Such a consultation process has not taken place in this case. Therefore, the provisions of sub-section (2) of Section 32 of the Act have been violated. Hence, Ext. P8 order was liable to be set aside on the second ground mentioned by the learned Single Judge.” .

The issue as to whether the opportunity to file objection and consultation with the Financing Bank and Circle Cooperative Union could be dispensed with, also came up for consideration before the Division Bench of this Court in Rajeevan T.V. and others v. K.A.Sukumaran and others [2013 (3) KHC 46], wherein this Court considered the words ‘reasonably practicable’ occurring in Section 32(3) and rejected the stand taken by the Government that the practicability mentioned under Section 32(3) of the Act is not physical practicability, but, logical practicability, and held that the words ‘it is not reasonably practicable to do so’ qualifies the opportunity to the Committee to state its objections and nothing else and that an exception in a Section of an enactment has to be construed strictly. The Court held that despite there being serious allegations, only in instances where it is not practically possible to issue notice to the Managing Committee on account of various factors like failure of the Managing Committee in not accepting notice, the members of the Managing Committee not available to take notice that an immediate seizure of all the books of the bank is required for verification etc., that such serious attempts can be made to supersede an elected body. Paragraphs 8 and 9 of the said judgment reads as follows:

“8. Time and again, Courts have held that supersession of an elected managing committee/board is an exception and can be resorted to only in very exceptional circumstances and normally, an elected body shall be allowed to complete the term, for which it is elected. This position of law has been reiterated by the Supreme Court in Sanjay Nagayach’s case (supra). Even prior to that, this Court had also in Urukunnu Service Co-operative Bank’s case (supra), had stated the same thing. It is also not a secret that in the co-operative scene in Kerala or even in India, there is excessive politicisation, resulting in the political party in power trying to overthrow the political rivals in power in a co-operative society on flimsy reasons by invoking Section 32 of the Act. It is in the said background that these cases have to be considered.

9.Section 32 of the Act 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 bye-laws or does anything which is prejudicial to the interests of the society; or (b) wilfully 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 of wilful 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 a new committee consisting of not more than three members of the society in its place or, appoint not more than three administrators, who need not be members of the society, to manage the affairs of the society for a period not exceeding six months, as may be specified in the order, which period may, at the discretion of the Registrar, be extended from time to time, so however that the aggregate period does not exceed one year.

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

(3) Notwithstanding anything contained in sub-s.(1) or sub-s.(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 bye-laws 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”. (underlining supplied) We are not inclined to subscribe to the contention of the learned Government Pleader that the practicability mentioned in Section 32 (3) of the Act is not physical practicability, but, logical practicability, taking into account all the facts including the seriousness of the allegations raised against the members of the managing committee and the probable result of giving such an opportunity, granting them time, which has to be considered while deciding to dispense with the opportunity. We are of the opinion that the words “it is not reasonably practicable to do so”, qualifies the opportunity to the committee to state its objections and nothing else. It is settled law that an exception in a Section of an enactment has to be construed strictly.

The learned single Judge had, in paragraph 23 of the Judgment, considered this aspect of the matter thus: “23. What is relevant is whether it is practically not possible to issue notice and give an opportunity to explain. It is not the gravity of allegations or irregularities noticed during inspection that matters, to avoid issuance of the notice. Notice contemplated under Section 32(1) can be dispensed only if it is not practical to issue notice to the managing committee and not based on the allegations in the report. Despite the fact that there are serious allegations, only in an instance where it is not practically possible to issue notice to the managing committee on account of various factors like failure of the managing committee in not accepting notice, the members of the managing committee not available to receive notice that an immediate seizure of all the books of the bank is required for verification etc. that such serious attempt can be made to supersede an elected body. The fact that the statute itself had given an opportunity in the form section 32(1) to the managing committee to explain the irregularities or the mistakes or the defaults which are brought to their notice during inspection by itself indicates that it is not the allegations in the report that matters in order to avoid a notice but the practical difficulty in issuing notice to the members of the committee.”

We fully agree with the view of the learned single Judge”

(underline supplied)

In Rajeevan‘s case, cited supra, the contention raised by the Government that, if there is any reason for conducting malpractice and for falsification of documents and evidence, granting an opportunity to state its objections would result in serious consequences, was also considered by the Division Bench and held in paragraphs 10 and 11 as follows:

“10. In Ext.P13, the reasons for dispensing with the opportunity to the committee to state its objections are stated thus:

‘1969-ലെ കേരള സഹകരണ സംഘം നിയമം വകുപ്പ് 32(1), (2) എന്നിവയില്‍ പറയുന്ന പ്രകാരം കമ്മറ്റിക്ക് നല്‍കേണ്ട നോട്ടീസ് സര്‍ക്കിള്‍ സഹകരണ യൂണിയന്‍, ധനസഹായ ബാങ്ക് എന്നിവരുമായി നടത്തേണ്ട ആലോചനകള്‍ നടത്തേണ്ടത് പ്രായോഗികമല്ല എന്നതും ഭരണസമിതിക്ക് തുടര്‍ന്ന് ക്രമക്കേടുകള്‍ നടത്തുന്നതിനും രേഖകളില്‍ കൃത്രിമം നടത്തുന്നതിനും അനുവദിക്കുന്നത് സംഘത്തിന്റെയും സംഘാംഗങ്ങളുടെയും ഉത്തമതാല്‍പര്യത്തിന് വിരുദ്ധമാണെന്ന് എനിക്ക് ബോധ്യം വന്ന സാഹചര്യത്തില്‍ സഹകരണ നിയമ വകുപ്പ് 32(3) പ്രകാരം എന്നില്‍ നിക്ഷിപ്തമായ അധികാരം ഉപയോഗിച്ച് 1969-ലെ കേരള സഹകരണ സംഘം നിയമം വകുപ്പ് 32(1), (2) എന്നിവ പ്രകാരം പാലിക്കേണ്ട നടപടിക്രമങ്ങള്‍ ഇല്ലാതെ സംഘത്തിന്റെ ഭരണ ചുമതല സഹകരണ നിയമം വകുപ്പ് 32-ല്‍ പറയുന്ന പ്രകാരമുള്ള അഡ്മിനിസ്‌ട്രേറ്ററെ നിയമിച്ച് ഇതിനാല്‍ ഉത്തരവാകുന്നു.’

Of course, the learned Government Pleader would contend that the earlier reason stated in the same order is also to be considered for the same, which reads thus:

“മേല്‍പറഞ്ഞ സംഗതികള്‍ എല്ലാം തന്നെ നിയമാവലി നിബന്ധന 25 ന്റെ വ്യക്തമായ ലംഘനവും അതില്‍പ്രകാരം വിവക്ഷിക്കുന്ന അധികാരങ്ങളും കര്‍ത്തവ്യങ്ങളും നിറവേറ്റുന്നതില്‍ വരുത്തിയ തുടര്‍ച്ചയായതും ബോധപൂര്‍വ്വവുമായ വീഴ്ചയായും കണക്കാക്കാവുന്നതുമാണ്. മാത്രമല്ല പരിശോധന സമയത്ത് ഏതാനും ഭരണസമിതി അംഗങ്ങള്‍ പ്രവര്‍ത്തി തടസ്സപ്പെടുത്തുകയും രേഖകള്‍ തരുന്നതില്‍ നിന്നും ജീവനക്കാരെ ഭീഷണിപ്പെടുത്തുകയും ചെയ്തതുമൂലം മുഴുവന്‍ രേഖകളും പരിശോധനക്ക് ലഭിച്ചിട്ടില്ല.”

As far as the first part is concerned, we are of the opinion that the said apprehension will be applicable to any proceedings under Section 32 of the Act. If such a contention is accepted, then, it will cause havoc to the co-operative movement in Kerala insofar as in every case, under Section 32 of the Act, the Joint Registrar is likely to dispense with the valuable right of the committee to state its objections, arbitrarily for political reasons to please his political masters. It is for obviating such arbitrary decisions that such a right has been incorporated in Section 32 of the Act, which cannot be dispensed with on such reasons. As far as the latter part is concerned, no specific instance is mentioned, but only a vague and general allegation is given. Apart from the same, even assuming that it is correct, that will not be a reason to apprehend that it is impracticable to give the committee an opportunity to state its objections. Therefore, we are of the opinion that the reasons given in Ext.P13 order for dispensing with the opportunity to the committee to state its objections are not sustainable in law.

11. In fact, in Urukunnu Service Co-operative Bank’s case, this Court further held that it is mandatory on the part of the Joint Registrar to consult expert bodies like financing bank and circle co-operative union and for dispensing with the same, there must be very cogent and acceptable reasons and not just a single statement that an alarming situation is present. Here, along with the dispensing with the opportunity to the committee to state its objections, consultation with the financing bank and the circle cooperative union also has been dispensed with. The consultation has been held to be mandatory and serves a very important and vital purpose in the context of the action to supersede an elected managing committee of a Society. Therefore, when the dispensing with the opportunity to the committee to state its objections results in non-consultation with the financing bank and the circle cooperative union, that also is a reason to hold that dispensing with the opportunity to the committee to state its objections cannot be lightly resorted to”

(underline supplied)

Rejecting the said contention raised by the State, the supersession order was set aside and the Court issued the following directions:

“12. In the result, we are of the opinion that the reasons given by the Joint Registrar for dispensing with the valuable right of the managing committee to state their objections are not sustainable in law. Consequently, we do not find any infirmity in the judgment of the learned single Judge and the same is confirmed. But, we are inclined to issue further directions in the matter as follows:

(1) The Joint Registrar and respondents 1 to 3 shall treat Ext.P13 as a notice calling upon the committee to state their objections against the proposed action under Section 32 of the Act and respondents 1 to 3 shall file their objections within two weeks from today.

(2) Thereupon, the Joint Registrar shall consider the objections, after complying with the procedure contemplated under Section 32 of the Act, like consulting with the circle co-operative union and the financing bank as expeditiously as possible.

(3) While consulting with the circle co-operative union and the financing bank, the Joint Registrar shall strictly comply with the decision of the Supreme Court in Sanjay Nagayach’s case (supra) as also that of this Court in Urukunnu Service Co-operative Bank’s case (supra).

(4) We further direct that during the period when the managing committee continues in power as per the judgment of the learned single Judge, as confirmed by us, except for day-to-day activities, they shall not take any policy decisions, affecting the society. They shall not also withdraw any cases already filed by the society during the period when the administrator was in charge of the society.

(5) Compliance with the above directions shall not be taken as an excuse to comply with the direction to permit the managing committee to continue in office and to discharge their functions in the meantime. In other words, the managing committee shall be put back in power forthwith”

Recently, the Division Bench Judgment of this Court in W.A.No.1948/2026, taking note of the judgment in Rajeevan‘s case cited Supra and also the Apex Court in Sanjay Nagaiach‘s case cited Supra, interfered with the order of supersession with a consequential direction to initiate the proceedings, after complying with the procedure envisaged under Section 32(1) and (2) of the Act and pass orders after affording an opportunity of hearing to the parties. In the light of the above, the reason stated in Ext P9 to dispense with the mandate of Section 32(1) and (2) of the Act is only to be rejected.

10. The supersession of the Committee will result in serious consequences for its members, including disqualification from contesting future elections. Section 65 and 66 inquiry was initiated as early as on 07.08.2026 and the supersession of the committee was on 24.08.2026 and the inquiry officer had sufficient time to inspect, verify and take into custody any documents which he feels necessary to submit a report. Further, this Court did not interfere with the order of supersession, but only directed that the order of supersession shall be treated as an order of suspension. The order of supersession is dated 24.08.2026. Almost two months have elapsed since the issuance of Ext.P9, during which period the Administrator was in charge, and the Inquiry Officer had nearly two months to conduct an inquiry and seize any document which was relevant for adjudication of the allegations against the petitioner.

11.Since the supersession of the Committee would entail serious consequences for the members of the Managing Committee, including disqualification from contesting future elections, this Court is of the opinion that an opportunity to file their objections ought to have been granted to the petitioners and the Bank. In the above circumstances, I am not inclined to agree with the contention of the learned Senior Counsel appearing for the Administrator relying on the judgments in S.L. Kapoor and Aligarh Muslim University‘s cases (cited supra), since opportunity to file objections, as provided under Section 32(1) and consultation as per Section 32(2) are safeguards provided against illegal supersession of a committee and had an opportunity to file an objection been granted to the petitioners and the Bank, they could have explained to the Joint Registrar that the reasons stated for superseding the committee is not tenable in law. Such opportunity being inbuilt in the Statute could not have been dispensed with for unsustainable reasons. Further on the contention based on the interim order passed by this Court, I am of the view that the same has been issued based on Tomy Joseph v. Joint Registrar of Co-operative Societies [2024 KHC 1129] and I find that the said judgment was delivered on 20.03.2024, but the said provision available under Section 32 to suspend a Managing Committee has been deleted from the statute book on 07.06.2024, i.e., after the judgment in Tomy Joseph‘s case cited Supra. Based on that also, I am not inclined to accept the contention of the learned Senior Counsel appearing for the Administrator that the writ petition can be disposed of in the light of the interim order.

12. In the above facts and circumstances of the case, I am inclined to hold that the Committee ought to have been granted sufficient opportunity to file their objections, and the Joint Registrar ought to have followed the procedure as contemplated under Section 32(1) and (2) of the Act, before issuing Ext.P9 order. Accordingly, the writ petition is disposed of as follows:

1. Ext.P9 order is set aside.

2. The Managing Committee shall be reinstated replacing the Administrator.

3. So as to enable the inquiry officer to seize any files or records pertaining to the inquiry under Section 65 of the Act, five days time i.e., till 17.11.2026, is granted and the order of reinstatement of the Managing Committee in place of the Administrator as per Direction No. 2 shall be implemented only after the above-said time granted, i.e. on 18.11.2026.

4. Thereafter, the Joint Registrar shall issue fresh proceedings under Section 32 of the Act, strictly following the mandate of Sections 32(1) and (2) of the Act.

5. In the said proceedings, liberty is granted to the petitioners to raise all contentions including the contention that Ext.P4 order was issued without following the procedures and in violation of the Principles of natural justice.

6. The Managing Committee after reinstatement as directed above shall confine its activities only to the day-to-day affairs of the society and shall not take any policy decisions, affecting the society, till a fresh proceedings are issued by the 3^rd respondent in place of Ext P9 order.