Judgment:
K. Thankappan, J.
1. Petitioner bank challenges Ext.P9 order, by which the 1st respondent Joint Registrar rejected the request of the petitioner for sanction to purchase a new vehicle.
2. Petitioner bank is having its Head Office at Eraviperoor, Thiruvalla and has got 15 branches. The total deposits of the petitioner bank are more than Rs. 100 crores and the share capital is Rs. 212.5 lakh. The staff strength of the petitioner bank is 17, including two drivers. The bank has got two vehicles, one jeep and one car. Since the car started having mechanical problems, the Managing Committee of the petitioner bank decided to sell the car and to purchase a new vehicle as per resolution dated 27-5-2006. The resolution was forwarded to the 1st respondent with a covering letter requesting for sanction to purchase a new vehicle. The 1st respondent by Ext.P6 order directed the petitioner not to proceed with the steps for the purchase of the new vehicle pending disposal of the complaint filed by the 2nd respondent alleging that the Board of Directors of the petitioner bank has resolved to purchase a new vehicle against the conditions stipulated in the circulars of the Registrar of Co-operative Societies and without seeking prior approval of the Joint Registrar. Therefore, the petitioner bank had approached this Court by filing W.P.C. No. 15218/2006. This Court directed the 1st respondent Joint Registrar to consider the matter and pass appropriate orders. The 1st respondent after considering the report of the Assistant Registrar and after hearing the petitioner bank as well as the 2nd respondent, rejected the request of the petitioner bank for purchase of a new car.
3. A counter affidavit for and on behalf of the 1st respondent has been filed. In the counter affidavit it is stated that 'no sanction was obtained from the Joint Registrar of Co-operative Societies (General) Pathanamthitta for the purchase or disposal of the remaining vehicles'. It is also stated that 'it was established that the Bank is perpetuating gross negligence of the law and directions of the Registrar of Co-operative Societies and is acting against the provisions of the Sub-rules prevailing in the bank.'
4. Learned Counsel for the petitioner bank submits that one of the vehicles was sold, as it started having mechanical problems and consequent upon the sale of the sale of the vehicle, it became difficult for the officers and staff who had been using the vehicle for recovery of arrears from defaulters. The learned Counsel also submits that since one of the vehicles was sold, it has to be replaced with another vehicle and therefore objection against replacement of the existing vehicle is without any basis. The learned Counsel further submits that the 1st respondent is not empowered to consider any complaint filed by a third party like the 2nd respondent and the report now received from the Assistant Registrar is not in accordance with any of the provisions of the Kerala Co-operative Societies Act or the Rules. It is submitted that in Ext.P9 the 1st respondent had considered only the audit report of the bank for the period 2003-'04 to find that the bank is running at a loss. It is also submitted that the reasons stated by the 1st respondent in Ext.P9 order to reject the request of the petitioner bank is on extraneous consideration.
5. Learned Government Pleader submits that the 1st respondent had passed Ext.P9 order on the basis of the report received from the Assistant Registrar and as per Sections 66 and 66A of the Kerala Co-operative Societies Act, the 1st respondent has power to issue such order.
6. The question to be decided in this writ petition is with regard to the jurisdiction of the 1st respondent to pass Ext.P9 order.
7. Rule 54 of the Co-operative Societies Rules stipulates that the society may, with the previous sanction in writing of the Registrar, invest the whole or any portion of its funds in the purchase or lease of land on the acquisition, construction or renewal of any building that may be necessary to conduct its business. The request made by the petitioner is to sanction for purchase a new car. This is for the reason that consequent upon the sale of the car, it became difficult for the officers and the staff to recover arrears from defaulters. Otherwise the officers and the staff had to depend on taxi, which is not economically feasible and it will cause escalation in expenses. Chapter VIII Part B deals with inquiry, suspension, investigation and surcharge. Section 65 deals with inquiry by the Registrar. Section 66 deals with supervision and inspection. Section 66-A of the Act empowered the Registrar to issue directions. It reads as follows:
Subject to the provisions contained in the Act and the rules made thereunder the Registrar may issue general directions and guidelines to the Co-operative Societies in furtherance of the purposes of the Act.
With regard to the power of the Registrar under Section 66, a Full Bench of this Court in a decision reported in Aji v. State of Kerala 1995 (1) KLT 363 held as follows:
20. We make it clear that though Section 66(1)(a) gives the power enabling the Registrar to supervise the working of the society he cannot act in an arbitrary and capricious manner. He should not forget the importance of the fact that the society has its own autonomy and the supreme power is vested with the General Body. In other words, on flimsy reasons or on extraneous considerations the Registrar should not misuse the powers under Section 66(I)(a). That power should be exercised with due caution and circumspection and only in cases where it is really called for.
In another decision of this Court reported in Elampal Service Co-operative Bank Ltd. v. Government of Kerala 2000 (3) KLT 389 this Court held that 'if large volume of business is carried on by a society, sufficient staff is required for doing that work, whether the society is working on loss or profits'. This Court also held that loss was not the sole criteria for refusing the approval. This yardstick is applicable in the case of purchase of accessories necessary for the business purpose of the society.
8. It is seen that the inquiry was ordered by the 1st respondent is on the basis of a complaint filed by the 2nd respondent. Under Section 65 of the Kerala Co-operative Societies Act, 1969, Registrar may hold an enquiry on his own motion or on an inquiry report of the Vigilance Officer or on a report of the Director of Co-operative Audit or on an application by the majority of the members of me committee of the society or on an application of a society. Hence, the inquiry ordered by the 1st respondent is irregular. Further it is seen that the report filed by the Assistant Registrar is based on the audit report for the year 2003-'04. Hence, Ext.P9 order passed by the 1st respondent requires re-consideration.
9. Yet another point to be decided is with regard to obtain prior sanction for purchase of the car. This Court already found in this judgment that previous sanction is necessary for the purpose mentioned in Rule 54 of the Rules. Even if any prior sanction is required from the Registrar for purchasing property that may be necessary to conduct the business of the society, the power should not be used for refusing the approval. The provisions of Section 66 and 66-A of the Act empower the Registrar to issue general directions or guidelines to the societies or banks in furtherance of the Act and the Rules. As per the dictum laid down by this Court in Aji 's case (cited supra) the power shall be exercised with due caution and circumspection and only in cases where it is really called for.
10. In the above circumstances, this Court is of the view that Ext.P9 order passed by the 1st respondent is beyond jurisdiction and hence it is liable to be set aside.
11. Hence, Ext.P9 is set aside and the 1st respondent is directed to consider Ext.P5 afresh and pass appropriate orders as per law as early as possible, at any rate within 30 days from the date of receipt of copy of this judgment. Accordingly, the Writ Petition is allowed.