Provisions Of Kerala Co-operative Societies Act For Determining Continuance Of Membership Are Mandatory: High Court

The Kerala High Court on Friday declared that when specific provisions have been provided under the Kerala Co-operative Societies Act, 1969 for determining the continuance of a person as a member of Society, the same would have to be adhered to. 

Justice T.R. Ravi, while allowing the petition filed by members of the Walayar Milk Producers Cooperative Society, thus observed, 

"When specific provisions are set out in the Act, to deal with different situations regarding the continuance of a person as a member of Society, action can be taken only in accordance with the said provisions".

Factual Background

The Court in this case was dealing with two writ petitions - one by the aggrieved members of the Walayar Milk Producers Cooperative Society Ltd. in W.P. (C) 21721/2021, and the other by the said Society in W.P. (C) 16425/2021.

It was averred by the aggrieved members that the President of the Society misappropriated and diverted its funds and thus, 6 members of the Managing Committee of the Society had resigned signalling their protests for the said acts. Upon elections, the President of the Managing Committee itself occupied the post of Society's President. This was challenged by one member, seeking to set aside the election under the provisions of the Kerala Co-operative Societies Act, 1969, and the matter is pending consideration.

Meanwhile, it is averred by the aggrieved members that the President started harassing them and notices were issued to them under Rule 16(3) of the Kerala Co-operative Societies Rules, 1969, directing them to show cause why they should not be removed from the membership of the Society, on the allegation that they had obstructed the functioning of the Society, and assaulted the employees and insisted on the issuance of receipt in the name of others, in respect of milk supplied by them.

Subsequently, on 7th January 2020, a notice was issued removing the aggrieved members in exercise of powers under Rule 16(3) of the Rules.

The High Court had earlier directed the Deputy Director, Dairy Development Department (2nd respondent herein), to consider and pass orders on the complaint raised by the aggrieved members against the action of the Society. The 2nd respondent accordingly, cancelled the decision of the Committee expelling the aggrieved members. Two other members had also preferred a writ W.P. (C) 9740/2020, in which the Court had issued an interim order permitting them to supply milk to the Society in their capacity as members of the Society. The Court had also directed the Government to dispose of the appeal and stay petition preferred by the Society.  Even though the petitioners were entitled to similar treatment, they were not permitted to supply milk, which led to the filing of W.P. (C)No.21721 of 2020. 

The appeals from W.P. (C) 9740/2020, were considered by the Government and thereupon rejected. The order of the Deputy Director rescinding the decision of the Society was also upheld.

It is in this scenario that W.P. (C) 16452/2021 was filed by the Society. 

 Findings of the Court

The Court perused Section 17 which stipulates that a member who has acted adversely to the interest of the Society or has failed to comply with the provisions of the bye-laws, may be expelled by a resolution of the General Body passed at a special meeting convened for the purpose, with votes not less than 2/3rd of the total number of members present and voting at the meeting, while Rule 18 lays down the procedure for the same. 

Rule 16(3) of the Rules provides that where an admitted member is seen to have been ineligible for membership at the time he was admitted as a member or subsequently becomes ineligible, the Committee of the Society may remove him from membership after giving him an opportunity for making his representation.

It was the contention of the aggrieved members, represented by Advocates K.T. Thomas, Mathew B. Kurian, and Nikhil Berny, that Rule 16 (3) had been invoked solely for the purposes of avoiding the rigour of the procedure contained in Rule 17, which was also conceded by the 2nd respondent, through the order dated 19th March 2020, which cancelled the decision of the Committee by invoking Rule 176 of the Rules. 

When an appeal was preferred by the Society to the Secretary, Dairy Department, the same was rejected as per order dated 12th June 2021, which emphatically laid down that Rule 16(3) could be invoked only in cases where a member subsequently becomes ineligible.

"Since action is taken for acting against the interests of the Society, Section 17 alone applies, which can be invoked only by the General Body of the Society", it had been stated therein.

The Court in this case, however, found that neither of the aforementioned orders were in accordance with the law. 

"The 3rd respondent has no case that the petitioners had "subsequently become ineligible" to be members. When the above jurisdictional fact was not available, no action could have been taken under Rule 16(3)", the Court found.

Further, the Court found that the contentions raised by the Society against the orders issued by the Deputy Director, holding that Rule 16(3) could not be invoked, were also found to be not legally sustainable.

The Court thus found that since the petitioners were entitled to continue as members in the Society, they were also entitled to supply milk, and directed the respondents to thus, accept the same. 

Senior Government Pleader Bimal K. Nath, Advocates N. Raghuraj and A.V. Ravi appeared on behalf of the respondents in W.P. (C) 21721/2020.

Case Title: Selvara A. & Ors. v. State of Kerala & Ors. and Walayar Milk Producers Cooperative Society Ltd. v. State of Kerala & Ors. 

Citation: 2022 LiveLaw (Ker) 518 

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