BY AD v. P.N.MOHANAN

Sri. P.N. Mohanan, the learned counsel appearing for the petitioner, would refer to relevant provisions and specifically to Rule 66(3) of the Rules, and it is urged that the Registrar was required to grant an extension of time before the expiry of the period provided for completing the inspection. Inviting the attention of this Court to Ext.P3, it is urged that the extension was granted only on 21.11.2023, while the period granted under Ext.P2 for submitting the report had expired on

25.10.2023. It is further submitted that in view of the law laid down in Kizhathadiyoor Service Co-Operative Bank Ltd v Joint Registrar of Co-Operative Societies and Others1, an enquiry under Section 66(2) could have been ordered only at the instance of a creditor or suo 1 (2019 (4) KLT 48) WP(C) NO. 42006 OF 2023 4 motu relating to the non-payment of the amount to a creditor on demand and not otherwise. It is submitted that nowhere in Ext. P2 it has mentioned that the complaint based on which Ext. P2 was issued was at the instance of a creditor and for the reasons contemplated under Section 66(2) of the Act.

6. In response, the learned Government Pleader pointed out that unlike section 65 of the Act, no time frame is fixed under the statute to conclude an inquiry as ordered under section 66 of the Act. Referring to the contention of the learned counsel that an enquiry under section 66 (2) could be initiated only at the instance of a creditor, it is submitted that in K. G. Sadasivan v. Joint Registrar of Cooperative Societies and Others2, this Court had held that the question whether the Joint Registrar or Registrar of Cooperative Societies has the power to act on his own motion is not within the province of judicial review to search for the source of the material which triggered a suo motu action. It is submitted that if a member of a society makes a complaint based on the same, the Registrar is notified of a certain fact situation which triggers action under S.66(2), that procedure is only one which could be treated as suo motu.

7. I have considered the submissions advanced and have gone through the records.

8. The first contention of the learned counsel concerns the 2 [2008 (1) KHC 556] WP(C) NO. 42006 OF 2023 5 justifiability of ordering an inspection otherwise than at the instance of a creditor. To substantiate the contention, much reliance is placed on the law laid down in Kizhathadiyoor (supra). To appreciate the significance of the contention, it would be apposite to refer to Section 66 of the Act, which reads as under: 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 authorised 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.

9. In K.G.Sadasivan v. Joint Registrar3, this Court had occasion to hold that if a member of a Society makes a complaint to the Registrar, inspection under Section 66(2) can be commenced by him even if the 3 [2008 (1) KHC 556] WP(C) NO. 42006 OF 2023 6 audit is completed. One of the contentions raised before the Court was that Section 66(2) provides only for proceedings on the application of a creditor of a Society or the Registrar acting on his own motion. While disposing of the matter, this Court had occasion to hold as under:

6. On to the question of jurisdiction, when the Joint Registrar or Registrar of Cooperative Societies has the power to act on his own motion, i.e., suo motu, it is not within the province of judicial review to search for the source of the material which triggered a suo motu action. The plethora of instances which have been considered by this Court would show that material information may reach the Registrar of Cooperative Societies or the Joint Registrar, including from non traceable sources. If a member of a society makes a complaint and if by that complaint, the Registrar is notified of certain fact situation which triggers action under S.66(2), that procedure is only one which could be treated as suo motu, the Registrar or Joint Registrar acting on his own motion. The provision that such an inspection under S.66(2) can be commenced on an application of a creditor of a society does not place any embargo on the power of the Joint Registrar or Registrar to act as aforesaid.

10. It is undisputed that in the instant case, the complaint was lodged by a member of the society. As held above, if a member of a society makes a complaint and if the Registrar is notified of a certain fact situation which triggers action under Section 66(2), the procedure is only one which could be treated as suo motu or in other words, the Registrar or the Joint Registrar acting on his own motion. The provision that such WP(C) NO. 42006 OF 2023 7 an inspection under Section 66(2) can be commenced on an application of a creditor of a society does not place any embargo on the power of the Joint Registrar or Registrar to act as aforesaid. The law laid down by the learned Single Judge in Sadasivan (supra) was discussed and approved by a Division Bench of this Court in Sivasankaran K. v. Joint Registrar of Co-operative Societies (General), EKM and Ors.4. While deciding Kizhathadiyoor (supra), the binding precedent in Sadasivan (supra) was not brought to the notice of the learned Single Judge. Furthermore, Sadasivan (supra) has been approved by the Division Bench, as noted above. In that view of the matter, the first contention advanced by the learned counsel cannot be sustained.

11. The next contention as regards the grant of an extension of time. The records would disclose that Ext.P2 order was issued on

26.8.2023 and the Registrar had ordered that the enquiry shall be concluded on or before 60 days from the date of order. Rule 66 provides for the procedure for the conduct of inquiry and inspection. Rule 66(3) would be relevant. The said Rule reads as under: 66(3): If the inquiry or inspection cannot be completed within the time specified in the order referred to in sub-rule (1)(c), the person conducting the inquiry or inspection shall submit an interim report stating the reasons for failure to complete the inquiry or inspection, and the Registrar, if he is satisfied, may grant such extension of time as he may deem necessary or he may withdraw the inquiry or Inspection from the 4 [2022 (2) KHC 426] WP(C) NO. 42006 OF 2023 8 officer to whom it is entrusted and hold the inquiry or inspection himself or entrust to such other person as he deems fit.

12. Ext.P3 would disclose that on 6.10.2023, much prior to the expiry of the period, the enquiry officer submitted an interim report before the Joint Registrar, and it was based on the same that extension was granted on 21.11.2023. It has to be immediately noticed that, unlike Section 65 of the Act, wherein statutorily a time limit is prescribed for concluding the inquiry, no such time frame is fixed in Section 66 of the Act. The said provision clearly states that the enquiry shall be completed within six months, which period could, at the discretion of the Registrar, be extended; however, the aggregate period cannot exceed one year. Rule 66 deals with both Section 65 inquiry and Section 66 inspection, and that probably is the reason why, in sub-rule 3 of Rule 66, a particular procedure is prescribed for granting an extension of time. In the case on hand, as an interim report has been filed well within time and time extension was sought. In that view of the matter, the grant of sanction by the Registrar cannot be said to be illegal.

13. The contention that the audit, which was conducted for the year 2022-2023, did not reveal any of the defects pointed out in Ext.P2 is of no significance. This Court in Sadasivan (supra) has held that an inspection under Section 66(2) can be commenced even after the audit has been completed. WP(C) NO. 42006 OF 2023 9

14. In view of the discussion above, I do not find any jurisdictional error or legal infirmity while issuing Ext.P2 order. This writ petition will stand dismissed. However, I direct that any action pursuant to the submission of the report shall be strictly in accordance with law and after giving prior notice. Sru Sd/- RAJA VIJAYARAGHAVAN V JUDGE WP(C) NO. 42006 OF 2023 10 PETITIONERS EXHIBITS Exhibit P1 Exhibit P2 Exhibit P3 Exhibit P4 Exhibit P5 Exhibit P6 APPENDIX OF WP(C) 42006/2023 THE RELEVANT PORTION OF THE AUDITED BALANCE SHEET OF THE YEAR 2022 - 2023. TRUE COPY OF THE ORDER DATED 26.08.2023 OF THE JOINT REGISTRAR. TRUE COPY OF THE ORDER DATED 21.11.2023 OF THE JOINT REGISTRAR. TRUE COPY OF THE JUDGMENT OF KEEZHTHADIYOOR SCB V. JOINT REGISTRAR. TRUE COPY OF THE RELEVANT PORTION OF THE AUDIT NOTE OF THE YEAR 2022 - 2023. TRUE COPY OF THE JUDGMENT OF MELUKKARA SCB V. JOINT REGISTRAR REPORTED IN ILR 2018 (2) KER 335.