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Judgment
Amit Rawal, J
Two (2) writ petitions by the petitioner have been filed for quashing of judgment dated 9.5.2014 rendered in Appeal Nos. 42 and 43 of 2013 of the
Kerala Co-operative Tribunal.
The facts in brief are that the petitioner, a holder of B.Com with co-operation as elective subject as well as M.Com course, was appointed as a
Clerk in the 1st respondent Society from 1.4.1991 to 9.7.1991, on temporary basis. The aforementioned appointment was as per the provisions of
Clause 23(a) of the byelaws of the 1st Society. By taking into consideration her qualification and past experience, she was again appointed on
13.8.2004 on temporary basis, Ext.P1.
Khadi and Village Industries Board is registered under the provisions of Kerala Co-operative Societies Act, 1969. Managing Committee invited
application for filling up the post of Clerk vide publication dated 22.10.2005, Ext.P2. Petitioner submitted an application and ultimately owing to the
indulgence of certain authorities, the process of selection was completed and petitioner, vide appointment order dated 28.4.2006 , was appointed ,with
retrospective effect ie., 24.11.2005 as per Ext.P7. In the meantime, the Society was represented by a new President, which resulted into reduction of
her salary as Rs.100/- per day. Petitioner preferred ARC 23/2007. There was an interim order by the Co-operative Arbitration Court restraining the
Society from reducing the salary. To the utter shock of petitioner, the Project Officer, Respondent No.3 rescinded the resolution dated 28.4.2006, by
which the petitioner's appointment was effected. Having left no other choice, the said order was assailed in this Court vide W.P.(C) No.11497/2007.
This Court vide judgment dated 3.7.2007 set aside the impugned action of the respondent No.3 by issuing directions to Project Officer, who was
arrayed as respondent No.2 in that writ petition to consider the matter afresh with opportunity of hearing to the petitioner, additional third respondent
and the Annamanada Kalimon Vyavasaya Saharkaran Sangham Ltd. and take a decision in accordance with law within a period of one month. The
3rd respondent vide order dated 25.8.2007, directed the 1st respondent Society to terminate the services of the petitioner under the pretext that the the
necessary parties were heard.
Learned counsel appearing on behalf of the petitioner submitted that there was complete infraction of Rule 183(1) of Kerala Co-operative Society
Rules, 1969. In furtherance of the order, the 2nd respondent issued dismissal order dated 1.9.2017. ARC 118/2007 was preferred there was an interim
order against the implementation of order of termination. But despite that, the process of fresh appointment continued. The vacancy was filled up by
appointing one Smt. Minimol. The other ARC 23/2007 preferred against the reduction of salary and ARC 118/2007 were re-numbered as ARC 5/2011
and ARC 6/2011 respectively. Arbitration Court vide common award dated 18.3.2013 set aside the dismissal of the petitioner and directed the
respondent Society to take appropriate steps under law regarding the service benefit of the petitioner. Society preferred the appeals Nos. 42 and 43 of
2013 before the Co-operative Tribunal. Co-operative Tribunal vide common judgment dated 9.5.2014 set aside the award of the Arbitration Court. It is
in these circumstances, two writ petitions have been filed.
It was contended that first respondent Society was never classified despite having coming into force Section 80 of Act 21 of 1962. Project officer
had no power to pass the termination order as there was a jural relationship of employer and employee. The sanction or the necessary approval of the
Registrar or Project Officer is only required for the appointment of Manager as per clause 23(b) of byelaws. No enquiry as envisaged under Rule 198
was initiated. The reliance to the notification dated 28.4.1988 the powers of the Project officer have been misconstrued that the Project officer has
powers of the Registrar of Co-operative Societies except those under Section 32, 69, 71, 72, 73, 74 and 87 of the Act in respect of Khadi and Village
Industries. There was no occasion for the new President to make a complaint with regard to the appointment of the petitioner. The order of the
Project Officer, purportedly, exercising the power under Section 66(5) of Kerala Co-operative Society would also not come into play as it is only for
supervising and management but not for harsher punishment like the one for dismissal ie., the recommendation for dismissal. No domestic enquiry was
conducted by the respondent nor any sub Committee was appointed. The reduction of the salary when the Society was represented by a new
President is the testimony of nursing of rancour.
Respondent supported the order of tribunal under challenge as do not suffer from any infirmity or illegality. Project officer was vide notification
authorized to pass order as registrar.
I have heard the learned counsel for the parties and appraised the paper book. The intimation received by the petitioner from the President dated
1.9.2007, Ext.P18 is required to be extracted. The relevant contents of the same reads thus:
As per the intimation of the Project Officer, Directorate of District Khadi and Village Industries, it was informed that the appointment of Smt.Lekha Varma is
unathorized and contrary to the stipulations provided under Kerala Co-operative Societies Act and Rules. Accordingly, you are hereby informed that you have been
terminated from the service of the society w.e.f 1.9.2007.
Arbitration Court found that nothing was placed on record to establish that the respondents herein and defendants therein conducted an enquiry as
contemplated under Section 198 of the Kerala Co-operative Societies Rules nor any sub committee was constituted. Neither any memo of charges
was ever served on the petitioner of having committed any foul play or malpractices. But the Tribunal found that the Project officer had the powers of
Registrar in view of the notification S.R.O No.549/88. The powers of the Registrar have been defined under Section 66(5) of Kerala Co-operative
Societies Act. Section 65 provides inquiry by the Registrar either through on his own motion or of a Vigilance Officer appointed under Section 68A or
on a report of the Director of Co-operative Audit appointed under Section 63 or on application by the majority of the members of the committee of the
society or on an application by the apex society or financing bank or on an application of a society to which the society concerned is affiliated. The
powers of the Registrar is defined under sub Section 2 of Section 65 that he shall, at all reasonable times, have free access to the books, accounts,
documents, securities, cash and other properties belonging to, or in the custody of the society and may summon any person in possession of these
documents or responsible for the custody of any such books, accounts, documents, securities, cash or other properties, to produce the same at any
place at the headquarters of the society or at any branch thereof or where there is no working office for the society, at the office of the Registrar or
at the office of any of his subordinate officers and may summon any person who, he has reason to believe, has knowledge of any of the affairs of the
society and call for a general body meeting of the society, himself call a general body meeting or require the President or Secretary of the society to
call a general body meeting at such time. As per sub Section 3 the Registrar may communicate the result of the inquiry to the financing bank, if any, to
the society to which such society is affiliated and to the Circle Co-operative Union and when an inquiry made under this section reveals only minor
defects which can be remedied by the society, Registrar shall communicate the result of the inquiry to the society which has to be completed within a
period of six months and on enquiry, it is found that there was a major defect in the constitution or working or financial condition of the society, action
could be initiated under Section 32. Section 66 empowers him to exercise the role of supervisor and inspection pertaining to inspection of books of the
Society whereas sub Section 5 of Section 66 empowers him by order in writing to direct the society or its officers to take such action, as specified. For
the sake of brevity, Section 65 and 66 of the Co-operative Societies Act are extracted herein below:
Section 65.Inquiry by the Registrar.- (1)The Registrar may,-
(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; hold an enquiry by himself or by a person authorized by order in writing, into the
constitution, working and financial condition of the society, if he is satisfied that it is necessary so to do.
(2)The Registrar or the person authorized by him under sub-section (1) shall, for the purpose of an inquiry under this section, have the following powers, namely:-
(a)he shall, at all reasonable times, have free access to the books, accounts, documents, securities, cash and other properties belonging to, or in the custody of the
society and may summon any person in possession of or responsible for the custody of any such books, accounts, documents, securities, cash or other properties,
to produce the same at any place at the headquarters of the society or at any branch thereof or where there is no working office for the society, at the office of the
Registrar or at the office of any of his subordinate officers;
(b)he may summon any person who, he has reason to believe, has knowledge of any of the affairs of the society, to appear before him at any
place at the headquarters of the society or any branch thereof and may examine such person on oath; and
(c) (i) he may, notwithstanding any rule or bye-law specifying the period of notice for a general body meeting of the society, himself call a general body meeting or
require the President or Secretary of the society to call a general body meeting at such time and place at the headquarters of the society or any branch thereof, to
determine such matters as my be directed by him;
(ii)any meeting called under sub-clause (i), shall have all the powers of a general body meeting called under the bye-laws of the society.
(3)When an inquiry is made under this section, the Registrar may communicate the result of the inquiry to the financing bank, if any, to the society to which such
society is affiliated and to the Circle Co-operative Union.
(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.
(5)The inquiry under this section shall be completed within a period of six months 56[which period may at the discretion of the Registrar and for reasons to be
recorded in writing, be extended from time to time, so however that the aggregate period shall not in any way, exceed one year.]
(6)If the Registrar, on completion of the inquiry finds that there is a major defect in the constitution or working or financial condition of the society, he may initiate
action in accordance with the provisions of section 32.
Section 66.Supervision and Inspection.- (1) The Registrar shall supervise or cause to be supervised by a person authorised by him by general or special order in
writing in this behalf, the working of every society as frequently, as he may consider necessary. The supervision under this sub-section may include an inspection of
the books of the society.
(2)The Registrar may, on his own motion, or on the application of a creditor of a society, inspect or direct any person authorized by him, by order in writing in this
behalf, to inspect the books of the society: Provided that no such inspection shall be made on the application of a creditor unless the applicant,- (a)satisfies the
Registrar that the debt is a sum then due and that he has demanded payment thereof and has not received satisfaction within a reasonable time; and (b)deposits with
the Registrar such a sum as security for the costs of the proposed inspection as the Registrar may require.
(3)Where the inspection under sub- section (2) is made on the application of a creditor, the Registrar shall communicate the result of such inspection to such creditor.
(4)The Registrar or any person authorised by the Registrar under sub- section (1) or sub- section (2) shall at all reasonable time have free access to and have power to
inspect the books, records, accounts, documents, securities, cash balance and other properties belonging to the society and may summon any person in possession
of or responsible for the custody of such books, records, accounts , documents, securities, cash balance and other properties, to produce the same for inspection at
any place at the Headquarters of the society or any branch thereof or where there is no working office for the society, at the office of the Registrar or at the office of
any of his subordinate officers. (4A)It shall be the duty of every officer and employee of the society to co-operate with and assist in such supervision or inspection,
to furnish any information that may be required for the purpose and to produce the books, records, cash balance etc. referred to in subsection (4), on demand by such
officer, failing which it shall be treated an offence under sub section (4) of section 94].
(5)The Registrar or the person authorized by him under subsection (1) or sub-section (2) may, by order in writing, direct the society or its officers to take such action,
as may be specified in such order, within the time that may be mentioned in such order.
(6)The Circle Co-operative Union shall have the power to direct that a non-official member thereof shall be present at an inspection under subsection (2): Provided
that such non-official member shall not have the power to make the inspection himself.
(7)Apex Society or Federal Co-operative Society or a financing bank shall have the right to inspect the books of any registered society which is affiliated to it,
through its officers.
(8)An officer of an Apex Society or Federal Co-operative Society or a financing bank, inspecting the books of a society shall at all reasonable times have the access
to the books, accounts, documents, securities, cash and other properties belonging to the society and may call for such information, statements and return, as may be
necessary to ascertain the financial condition of the society and the safety of the sums lent to it.
(9)An officer referred to in sub-section (8) shall also have power to summon any person in possession of or responsible for the custody of any books, accounts,
documents, securities, cash and other properties, referred to in that sub-section to produce the same for inspection or verification at any place at the headquarters of
the society or any branch thereof.
(10)Apex Society or Federal Co-operative Society or the financing bank may also report to the Registrar about the action to be taken against the society, as a result of
the inspection by tits officers.
(11)Notwithstanding anything contained in sub section (1) and (2) above, the Registrar or his subordinate officers authorized by him under sub section (1) shall have
power to hold an enquiry with necessary records of a society, on any petition received, and to inspect the affairs of the society periodically, in such cases, the
inspecting officers shall have same powers as specified in sub section (4)
On perusal of the aforementioned provisions, the enquiry to be conducted by the Registrar ie., in this case Project officer as per the notification, ibid,
is only with regard to the Finances and books of the Society but not with regard to the service conditions. If any member of the Society is aggrieved,
can always raise a plea under Section 69 but as far as action for misconduct is concerned, which include dismissal from the service there has to be
adherence to the provisions of Rule 198 of the Kerala Co-operative Society Rules. It would be apt to reproduce Rule 198, sub Rule 1, 2, 2a, 2b and 3,
which are relevant for the adjudication of the writ petition. The same reads thus:
Disciplinary Action:- (1) Any member of the establishment of a Co-operative Society may for good and sufficient reasons, be punished by imposing any of the
following penalties, namely
(a) Censure;
(b) Fine (in the case of employees in the last grade);
(c) Withholding of increments with or without cumulative effect.
(d) Withholding of promotion;
(e) Recovery from pay of the whole or part of any pecuniary loss caused to the society, by negligence or breach of orders or otherwise;
(f) Reduction to a lower rank; (9) Compulsory retirement;
(h) Dismissal from service.
(2) No kind of punishment shall be awarded to an employee unless he has been informed in writing of the grounds on which it is proposed to take action against and
he has been afforded an opportunity including a personal hearing to defend himself. Every order awarding punishment shall be communicated to the employee
concerned in writing stating the grounds on which the punishment has been awarded
(2A) The committee of a society shall constitute a disciplinary sub-committee consisting of not more than three of its members, of whom one shall be designated as
Chairman, but the President of the committee of the society shall not be a member in the disciplinary sub-committee.
(2B) The disciplinary sub-committee so constituted shall inquire into the charges employee either by themselves or by engaging an external agency
It is a matter of record that the petitioner was regularly appointed by the Managing Committee after having earlier appointed on contractual basis.
Therefore the punishment of dismissal or termination of the services could have been awarded until and unless he/she has been informed in writing of
the grounds on which the proposed action was to be taken after affording opportunity of personal hearing. The committee of the Society is
empowered to constitute a disciplinary sub-committee of not more than three members, of whom one shall be designated as Chairman but the
President of the committee is not authorized to be a member of the disciplinary sub-committee and sub-committee can either inquire into the charges
against the employee by themselves or by an external agency. There are no reference of any alleged enquiry report referred to in the order of the
Tribunal where alleged admission of the petitioner has been noticed or any stand of the respondent is reflected that there was an adherence and
compliance to the provisions of Rule 198. For the sake of brevity, the powers given to the Project Officer by the notification are extracted herein
below:
Notification
No.33395/C3/84/ID Dated, Trivandrum, 28th April, 1988
xxxxxx
Sl.No.4. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Project Officers
All powers of the Registrar of Co- operative Societies except those under Section 32, 69, 71, 72, 73, 74 and 87 of the Act in respect of the Khadi and Village Industries
Co-operative Societies falling within their respective jurisdiction.
In my view the Project Officer, while exercising the power vested with him under sub Section 5 of Section 66, can deal with the books and not with
regard to the jural relationship of the employer and the employee. The entire action of termination of the services and communication thereafter to the
petitioner vide Ext.P18 is without jurisdiction and non-est in law. No evidence has been placed on record that the petitioner's husband played an active
role in appointment of the petitioner. Accordingly, the order of the Co-operative Tribunal is not sustainable and hereby quashed and the award of the
Arbitration Court is restored. The benefits ordered to be granted by the Arbitration court be extended to the petitioner within a period of two months
from the date of receipt of a certified copy of the judgment.