Suspension Under S.32 Kerala Cooperative Societies Act Not Dependent On Completion Of Inquiry If Compelling Circumstances Exist: High Court

The Kerala High Court on Monday held that an order of suspension under Section 32 of the Kerala Co-operative Societies Act, 1969 (hereinafter, 'the Act') is not dependent on the completion of the inquiry under Section 65 and the power can, for grave and compelling reasons, be exercised even when the inquiry is pending.

The Single Judge Bench of Justice Gopinath P., in this case was considering a writ petition filed by the president of the Managing Committee of the Idukki District Dealers Co-operative Society, who was aggrieved by the order of the Joint Registrar of Cooperative Societies (General), Idukki (1st respondent herein) placing the elected Managing Committee of the Society under suspension in the exercise of jurisdiction under Section 32 of the Act, pending completion of an inquiry under Section 65 of the Act. 

"The very nature of an order of suspension indicates that such power is to be exercised to meet an emergent situation where it may be necessary to keep an elected Managing Committee out of office in order to complete the inquiry under Section 65. If it were to be held that such power can be exercised only after the inquiry is completed under Section 65, it might even defeat the purpose for which an inquiry is contemplated. A reading of Ext.P2 (order of the Joint Registrar) clearly shows that the officer had taken a view that it was necessary to keep the Managing Committee under suspension pending inquiry under Section 65 as it would be difficult to complete the inquiry in a proper manner if the elected Managing Committee is allowed to continue in office pending inquiry", it was observed. 

It was contended by the counsels for the petitioner the action taken by the 1st respondent was contrary to law and Section 65 of the Act. The counsels stressed that as per Section 65(6), action under Section 32 could be initiated only on completion of the inquiry.

The counsels pointed out that in the case of Bose E.S v. Managing Committee (Under Order of suspension), Vellathooval Service Co-Operative Bank Ltd & Ors (2021), the Division Bench had held that the provisions of Section 65 of the Act read with the provisions of Section 32 of the Act do not contemplate taking of any action under Section 32 of the Act based on any preliminary report of inquiry under Section 65 of the Act.

The counsels argued that in this case, the order issued by the 1st respondent did not even suggest why the inquiry under Section 65 of the Act could not be completed without suspending the Committee by invoking the power under Section 32(3) of the Act read with the 3rd proviso to Section 32(1) of the Act. The counsels further submitted that the copies of the preliminary reports, which had been relied upon by the Joint Registrar were also not supplied to the petitioner or any other member of the elected Managing Committee. The counsels urged that since the inquiry under Section 65 of the Act had not yet been completed, the action taken by the 1st respondent was without jurisdiction and ought to be set aside by the Court. 

The Senior Government Pleader C.S Sheeja appearing on behalf of the respondents however, submitted that the order of the 1st respondent did not suffer from any vice warranting interference with it under Article 226 of the Constitution of India. It was argued that the power under Section 32 of the Act includes the power of suspension, as well, which was to be exercised only in exceptional cases and where the situation so warrants.

It was submitted on behalf of the respondents that a reading of Section 64(4A) of the Act and Rule 47(d) of the Kerala Co-operative Societies Rules would indicate that even assuming without conceding that the various acts of omission and commission which form the subject matter of the inquiry under Section 65 of the Act, were done without the knowledge of the Managing Committee, the Managing Committee had a responsibility to ensure that the officers of the Society work strictly in accordance with the provisions of the Rules, Acts and instructions, governing the business of the Society. Several precedents were also relied upon to buttress the arguments. 

In reply, it was submitted by the counsels for the petitioner that after an inquiry is commenced under Section 65 of the Act and when the preliminary reports in that inquiry form the basis of the issuance of the impugned order, it was not open to the 1st respondent to contend that an action under Section 32 of the Act is independent of the action under Section 65 of the Act. The counsels submitted that as per Bose E.S. case (supra), and Reji K. Joshy & Ors. v. Joint Registrar of Co-operative Societies (General) Kollam & Ors. (2022), once an inquiry under Section 65 of the Act is commenced, action under Section 32 or 68 of the Act can be taken only after the inquiry is completed and after a copy of the inquiry report has been made available to the Managing Committee members and they have been given an opportunity to show cause against the findings in the inquiry report.

Findings of the Court

The Court in this case observed that the petitioner had not made out any case for interference in the matter. The Court disagreed with the counsels for the petitioner regarding the position in Bose E.S., and stated that the said decision had laid down that Suspension and Supersession are not synonymous, and that the power under Section 32 includes the power to suspend a Managing Committee, which is to be used sparingly and in exceptional circumstances. The decision had also not prescribed any procedure for issuing an order of suspension.

"I, therefore, hold that an order of suspension under Section 32 of the Act is not dependent on the completion of the inquiry under Section 65 and the power can, for grave and compelling reasons, be exercised even when the inquiry is pending", it declared. 

It went on to note that in the present case, the order of the 1st respondent clearly indicated that the officer was of the view that it was necessary to keep the Managing Committee under suspension pending inquiry under Section 65 since it would be difficult to complete the inquiry in a proper manner if they were allowed to continue.

"Considering the reasons which compelled the 1st respondent to take such a view, I am not inclined to hold that the power was exercised maliciously or capriciously or for extraneous or irrelevant considerations", it held. 

The Court added that in Reji K. Joshi (supra), the Full Bench had taken the view that when an inquiry is ordered under Section 65, the committee is entitled to a copy of the report, on completion of the inquiry.

"This procedure obviously applies in a case where, on the basis of the report of the inquiry, action is contemplated for supersession (under Section 32) or action under Section 68 of the Act is proposed. If this procedure is required to be followed when an emergent situation arises to suspend an elected Managing Committee, the very purpose of recognizing a power to suspend under Section 32 would be lost", the Court declared while dismissing the writ petition. 

The petitioner in this case was represented by Senior Advocate George Poonthottam, and Advocates Nisha George and Anshin K.K. Senior Government Pleader Bimal K. Nath also appeared in this case. 

Case Title: Tomy Joseph v. The Joint Registrar of Cooperative Societies (General), Idukki & Anr. 

Citation: 2023 LiveLaw (Ker) 71

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