Kerala Advocates Welfare Fund-Anomalies Should Be Cured

(By R. Rajendran, Advocate, National Secretary, Bharatheeya Abhibhashaka Parishad)

The legal profession in India is the only profession which is mentioned in the Constitution of India (See Article 22 of The Indian Constitution). The known Indian leaders like Mahatma Gandhi, Dr. B.R. Ambedkar, Dr. Rajendra Prasad and Sardar Vallabai Patel were lawyers and the present lawyer community can alone enjoy such a legacy compared to any other profession. There are more than 25 lakhs lawyers in India. The lawyers are governed by The Advocates Act, 1961. Bar Council of India and respective Bar Councils of States are the statutory bodies which formulate rules and regulations for the smooth functioning of the profession.

Earlier days, legal profession was a ‘status symbol’ but now a days it became a source of livelihood like any other profession. Today this profession is not at all attractive and the dropouts are very high. Less than 15% of new entrants continue in the profession. Though there are brilliant law degree holders, most of them are not interested in the traditional practice and are more interested in joining multinational Companies or other institutions like Banks or Government departments. The struggle for existence in the field is discouraging the youths from entering the profession. Though the term ‘Officer of the Court’ is existing, the majority of lawyers are struggling for their daily bread.

The importance of a very good welfare fund scheme is warranted in the above circumstances. The Kerala Advocates Welfare Fund Act was implemented with such a motto. The Act was introduced in the year 1980, but even now we can’t sincerely call it a ‘welfare Act’; because there is no actual welfare which each and every member wish. The Act was amended by Kerala Government on 8-11-2016, and after receiving the assent of the Honourable Governor, now the amended Act is in force. The Advocates Welfare Fund Bill 2016 is not unique as claimed by the supporters of Kerala Government. There are so many anomalies in the present Act and in that sense it does not contain any welfare.

Before the present amendment, the maximum benefit available to the member in the fund was ` 5,00,000/-. As per Section 16(1) of the old Act, a member who continuously completes 15 years membership in the fund shall be eligible for an amount of `14,285/- for each completed year and was eligible for a maximum amount of ` 5,00,000/- (14,285x35=4,98,925) which means he has to complete 35 years of membership in the Welfare Fund without any break. If a member retires before completion of 35 years he will not be eligible for five lakhs and he will be eligible for the said ` 14,285/- multiplied by his total years of membership. And as per S.16(2) if a member dies his nominee will be eligible for a minimum of `3,00,000/- and maximum of ` 5,00,000/-. Now this provision has been amended and as per Section 16, the maximum benefit is enhanced as `10,00,000/- but the eligibility period is extended from 35 years to 40 years. A member is eligible for `25,000/- for each completed year and is eligible for a maximum amount of `10,00,000/-(25,000 x 40=10,00,000/-). As per Section 16(2) the minimum amount is enhanced to `5,00,000/-

The present amendment is not beneficial to the members. There were strong demands from various lawyers organizations for enhancing the welfare fund amount to the tune of ` 25,00,000/-. The main objection raised by the authority against enhancing the amount was lack of funds. Prior to this amendment the source to the fund was yearly contribution from the part of welfare fund members, welfare fund stamp fee and a small income from legal benefit fund. Unlike other welfare fund schemes there is no employer contribution or Government contribution to Advocates Welfare Fund. So there was strong demand from Bar Council of Kerala and lawyers organisations for allotting certain percentage from the court fee levied by Government to the fund. Now the Government has amended The Kerala Court Fees and Suits Valuation Act and as per Section 76(1) of the Act, 1% additional court fee will be levied in the cases of suits or petitions which can be valued, and ` 100/- in other cases, towards legal benefit fund fee and from the said fund 50% amount will be given to Advocates Welfare Fund. So the question of source to the fund is somehow settled and it is learned that at least 50 crores of rupees will come under this head. More over yearly contribution is enhanced and Welfare Fund stamp fees is also enhanced. But since the amendment has no retrospective effect, nobody will get the full benefit. The annual amount of ` 25,000/- is calculated only from 8-11-2016 onwards. If a present member who had completed 35 years of membership in the fund thinks that after the completion of next five years of membership, he will be eligible for ` 10,00,000/- is only a dream and this is the major drawback in the amendment. Since there is enough fund in the “WELFARE FUND”, nothing should prevent the authorities from disbursing the said `10,00,000/- with retrospective effect to the members.

Another defect is that, after the completion of 40 years also a member should pay yearly subscription as prescribed by the Act as long as he continues in the profession, but his benefit is limited to `10,00,000/-

By this new amendment a fatal provision is incorporated in the Act by this Government. As per Section 9(gh) a new provision in the name of “Provide assistance to the Advocates Academy” is incorporated. This is a provision for diverting fund from Advocate’s Welfare Fund against the interest of the members of the Fund. Earlier there was no provision for diverting any amount from the “fund” other than disbursement of welfare amount to the members. By this amendment there are every chance for diversion of huge amount from the Fund in the name of Advocates Academy and there is no provision to check or ascertain the day to day affairs of Advocates Academy since both are separately administered by different committees. The members are afraid of miss-utilization or possibility of corruption under the cover of this provision.

Another objectionable amendment is carried out in Section 15(1A). (Section 15 is regarding grant of membership in the fund). Earlier as per Section 15(1A) “An advocate who is eligible for or availed of any kind of retirement benefits for the service under the Central or State Government or any public or private sector undertaking, shall not be admitted as member of the Fund or permitted to resume membership in the fund”. But the new provision incorporated is ‘provided that this sub-section shall not be applicable to a person who was in employment for a period not exceeding five years or if the pension does not exceed five thousand rupees per month’. By this new provision double benefit will be availed by such members. This provision will defeat the real intention of welfare fund. Persons who are availing pension to the tune of ` 50,000/- were also admitted in the Fund through the misinterpretation of this section. By incorporating Section 15(1E), an Advocate who has not joined the fund can join now. But this section is not beneficial to the Lawyers as claimed by the supporters of Government. Those persons can join the fund on payment of annual subscription payable corresponding to the period of practice at the time of such admission multiplied by his actual years of practice together with a fine of Rs.2000/- for every completed year of actual practice. But he will be eligible to claim only up to ten years of his previous actual practice. This provision is no-way beneficial or attractive to the present members or those who intend to make use of this provision.

Regarding treatment expenses, a member will get only an amount `1,00,000/- once in three years for major diseases like cancer or for major surgeries.

The apparent anomaly in the parent Act which is pointed out by lawyers and Abibhashaka Parishad from the very institution of the Act is that if a member of the fund is forced to receive the eligible Welfare Fund amount due to unforeseen reasons before he completes the stipulated period, thereafter he cannot continue as a lawyer. He has to surrender his ‘Sannathu’ for getting the amount and after that he cannot practice as a lawyer. This provision is against the provisions of The Advocates Act 1961, which is a Central Act. As per Advocates Act 1961 a lawyer can continue as a lawyer unless he is disqualified by the reasons stated in the Act. We should allow a member of the FUND who is forced to receive the amount from the fund due to unforeseen reasons to continue as a lawyer without giving any further benefit from the Fund.

The Lawyer community should unite for a comprehensive, unique and beneficial welfare fund scheme.

Kerala High Court on Co-operative Law -- A Digest of Cases, 2016

(By R.Muralidharan, Puducherry Civil Service Officer (Retd.), Director Catalyst [The Training People]

Kerala, the God’s own country, is a forerunner in the development of Co-operative movement and as a natural corollary the development of co-operative law, profounded by the Kerala High Court, through the path-breaking judgments and out of box adjudication of cases. An insight of the judgments will certainly enhance the overall knowledge and its impact on the co-operative movement,per se. This article delineates the judgments rendered by the Kerala High Court, reported during 2016, chapter-wise.

Registration of Co-operative Societies

(i) When the State Government was granting exemption to a Co-operative Society to extend its area of operation, overlapping into the area of operation of other co-operative societies, it cannot be said that the co-operative societies affected by the order of the State Government has no locus standito challenge the order extending area of operation. Power of the State under S.101 is in no way limited or curtained by S.7(1). There is no inhibition in exercise of power under S.101 by the State after registration of the society. Even after registration of the society, if public interest demands and there are cogent reasons, the power of exemption under S.101 can be exercised. Moreover, no such limitation can be read in the wide power given under S.101 which does not contain any limitation except to the conditions mentioned therein, as held by the Division Bench in Pantheerankavu Service Co-operative Bank Ltd. v. State of Kerala(2016 (3) KLT SN 72 (C.No. 61).

(ii) The relief sought in batch of Writ Petitions in Kalpetta Co-operative Urban Society Ltd. v. Joint Registrar of Co-operative Societies(2016 (4) KLT 802) is for a declaration that S.7(1)(c) of the Act which impedes the registration of new Co-operative Societies of similar type in the same area of operation is hit by Art.19(1)(c) of the Constitution, the said provision is illegal and unconstitutional. A consequential direction was sought to command the Joint Registrar to consider the petitioner’s application in the light of the Assistant Registrar’s recommendation.

Section 7(1)(c) refuses to register a co-operative society, it reveals two facets : (i) it compels the members of a proposed society to either join a similar existing society or not join one at all; and (ii) it would suggest that the existing society has a corresponding duty to take such new persons as members who, but for the existing society, would have formed a new society. Therefore, it negates the will of two sets of people: (a) denies desire of non members to form a society, (b) denies the will of existing members to admit those non-members.

The Court held that S.7(1)(c) is ultra viresand unconstitutional for it falls foul of Article 19(1)(c) of the Constitution. The Legislature is at liberty to bring in any regulatory measures-without coming into conflict with the constitutional mandate – to administer the co-operative societies in the sweep of public order and morality. A direction was issued to the authorities to consider petitioners applications without reference to the constitutionality invalidated S.7(1)(c) of the Act.

Membership

Bulk admission of new members in society just prior to election was the issue in Saly Sabu v. Vaikom Taluk Co-operative Agrl. and Rural Development Bank(2016 (2) KLT SN 122 (C.No.143).Judicial mandate and directives of Joint Registrar for consideration of large number of applications within short span of time cannot be said that the managing committee of bank has resorted to bulk enrolment with an eye on impending election. As the issue concerning requirement of active membership was awaiting judgment of the Full Bench, it cannot be a ground to stall the election process.

Management

(i) Section 28 (1D) and (1E) has no application when society was registered for one taluk and by a subsequent event, i.e., by division of taluk, it became society of more than two taluks. In the present case in Adhithya Varma Raja v. Irinjalakuda Co-operative Agricultural & Rural Development Bank Ltd.(2016 (1) KLT SN 78 (C.No.83)) before the DivisionBench, the first respondent bank was already divided into two prior to 2003 when two taluks were separated. In 2013 another taluk was formed. The first respondent society was already registered prior to the formation of new taluk. S.28(1D) thus relates to those societies which were got registered for more than one taluks without bifurcation of assets and liabilities. S.28(1D) is not attracted and S.28(1D) and (1E) cannot be looked into for finding out a procedure for effecting bifurcation in the facts of the present case.

(ii) In Govindan v.Joint Registrar of Co-operative Societies (General)(2016 (1) KLT 905)it was held that S.33 contemplates that the initial term of the administrative committee shall be six months extendable by six more months. The extension is neither mechanical nor mundane. The administrative committee must be in a position to earn the extension; it has to demonstrate that despite its best efforts, it could not hold elections within six months. It is not the question of their not taking steps to hold the election, but it ought to be their inability, despite their best efforts, to hold the election. In the present instance despite the administrative committee’s gross inaction, the first respondent has mechanically extended the term thus rewarding the committee’s inaction and inefficiency too.

(iii) If a candidate is disqualified as on the date of nomination, he cannot get rid of that disqualification by any act that is undertaken by him between the time of filing of the nomination and the time of scrutiny. Fact that candidate has cleared loan subsequently would not remove him from being disqualified. The Court while dealing in John Mathew v. Panamaram Service Co-operative Bank Ltd.(2016 (2) KLT SN 15 (C.No.18)placed reliance on the judgment of the Division Bench in Moosa v. Joint Registrar(1994 (2) KLT 943).

(iv) If an administrator effects a regular appointment in a society that appointment shall be without jurisdiction, ultra viresand void. It may be possible for an administrator or administrative committee to appoint employees on a temporary basis with prior permission of the Registrar. Such appointments will cease to have effect once the administrator or administrative committee vacates office. Their continuance will be till regular recruitment takes place. This was the ruling inRajan v. State of Kerala(2016 (2) KLT SN 74 (C.No.86).

(v) In Titus v. Joint Registrar of Co-operative Societies (General)(2016 (2) KLT SN 83 (C.No.96)it was held that sub-rule (3) of R.16 provides for two contingencies: (i) ineligibility ab initio; (ii) ineligibility subsequent. Sub-rule (4) provides only for ineligibility subsequent. In so far as the first contingency is concerned, the provision admits of no ambiguity. If the disqualification predates the admission of a person as member, the managing committee is competent to rule on the dispute. Sub-rule (3) further empowers the managing committee to examine the dispute of a member becoming ineligible subsequently, a contingency taken care of sub-rule (4). In both sub-rules two different adjudicatory authorities have been specified. In the present instance, the dispute is concentrating disqualification ab initio– the disqualification predates the second respondent’s admission as a member. The petitioner suffered ineligibility on first count, he was a minor when he was admitted into the respondent bank as a member. The petitioner ought to have approached the managing committee complaining of the second respondent’s ineligibility.

(vi) The special officer, an appointee of the Government, is expected to play the role of a catalyst; a transitional executive required to exercise his power to the minimal extent to ensure that the society has become functional and operational, as held in Padmanabhan v. Thalassery Primary Co-operative Agricultural and Rural Development Bank(2016 (2) KLT 803). The enhancement of share value to ` 500 in the inaugural general body meeting under aegis of the special officer cannot be sustained for it is in violation of the statutory mandate under S.28(1E). Consequently exclusion of the member on the premise that they do not remit the enhanced share value cannot be countenanced.

It is evident that the registration of the society shall be with the members of the committee so bifurcated. The special officer shall also constitute the committee elected from among the members of the bifurcated society. The special officer is appointed for a very limited purpose. He is, in fact, a facilitator empowered to do all that is necessary during the transitional period. His role is more limited than that of an administrator. Metaphorically, the special officer is the air host of the society on its ‘next journey’ after its initial landing in the name of bifurcation. The air host, cannot, at any rate be the pilot. The pilot is the managing committee to be elected through the democratic process. The special officer is not empowered to enroll new members at any stage. He is eligible to constitute the committee of the new society after bifurcation only with the existing members who were allotted to the society based on the territorial division.

(vii) It is trite that for any action for disqualification of a member that is taken pursuant to R.16(3) and (4), the disqualification should continue till the date of initiation of action for removal of a member on the ground of the said disqualification. The phraseology used in R.16(4) clearly indicates that the ineligibility should be a continuing one continuing till the time when the Registrar initiates action for declaring that the member concerned has ceased to be a member of the society. In other words, the ineligibility should be one that was suffered by the member subsequent to his acquisition of membership and should be one that continues till the date of initiation of proceedings under R.16(4) against the member, so held in Sivadasan v. Joint Registrar (General) (2016 (3) KLT SN 7 (C.No.6).

(viii)On a harmonious reading of S.30, R.18(a) and R.36(1)(b) of the Rules, it is categorical and clear that, in order to call a special general body proposed by a member or members, there should be a requisition in writing from one fifth of the total number of members of the society. That apart as provided under R.18(a), the managing committee is vested with powers to make inquiries with respect to the complaint made by any member of a society against any other member proposing to bring a resolution against such member. Therefore, after the inquiry made by the committee in accordance with R.18(a) on a proposal from a member and if it decides to constitute a special general body, then it should have a requisition in writing from one fifth of the total number of members, vide Cochin City Service Co-operative Bank Ltd. v. Joint Registrar of Co-operative Societies(2016 (3) KLT SN 51 (C.No.37).

(ix) Looking at the phraseology used in S.33(1A) it is clear that the Registrar on securing permission from the Government is to extend the term of the ‘said administrator or administrative committee’, which means that if already the authority in power was the administrative committee, on the basis of permission secured from the Government, the Registrar has only the power under S.33(1A) to extend the term of the said ‘administrative committee’. In other words, the Registrar is entitled to extend the period of the administrator only if an administrator was appointed under S. 33(1)(b). However, the phraseology used is ‘extend’ in S. 33(1A) and in the second limb of S. 33(1)(b). If the intention was to replace the administrative committee after the expiry of one year period, the term used would have been ‘appoint’. The terms ‘extend’ and ‘appoint’ are two different connotations carrying different meanings, and cannot replace each other, unless it is defined so under the Act is the ruling in Hamsa v. State of Kerala(2016 (3) KLT 429).

(x) Government contribution or share are provided and secured in a society not only to support the society with financial assistance but also ensuring its functioning properly and legally. It is clear that the petitioner is not at liberty to return the shares to suit its convenience. The attempt of the petitioner in Pattanakkad Service Co-operative Bank Ltd., v. Joint Registrar of Co-operative Societies(2016 (3) KLT SN 86 (C.No.74)was to get over the apprehended proceedings under S.32 which thus means since S.65 inquiry was going on, petitioner could not comprehend that it is likely to end in the proceedings under S.32 (1).

Election

(i) Rule 35A(v) clearly states that the persons included in the voters list should be supplied with identification cards and this process shall be stopped two days before the date of polling. It is evident that the identification cards can be issued to the members till the penultimate day of the election. The objection concerning identity cards was rather premature, as held in Jerome Christudas v. State of Kerala(2016 (1) KLT SN 69 (C.No.70).

(ii) If the division of wards has a statutory objective to be achieved, it cannot be denied vis-a-viswomen and other reserved categories of the society. The division of wards in part to the exclusion of women and other reserved categories cannot be sustained. As regards the prejudice being caused of non-division of wards as far as the reserved categories are concerned, it ought to have come from any of the persons affected thereby. In the present instance, neither a woman candidate nor any other reserved category has made out any grievance in that regard. On the other hand, it seems that the candidates of reserved category have already filed their nominations on a non-ward basis. The society’s failure to divide the wards to accommodate the reserved categories does not substantially affect the statutory mandate, going by the doctrine of substantial compliance. In the absence of any challenge by any affected person, the election process cannot be interdicted, as held in Narayanan Kutty v. Joint Registrar of Co-operative Societies(2016 (4) KLT SN 43 (C.No. 46).

(iii) In Thiruvalla East Co-operative Bank Ltd.,v. State Co-operative Election Commission(2016 (4) KLT 965) it was held that the committee is vested with enough powers to pass a resolution sufficiently earlier to the term of expiry of the committee. Moreover, it was the decision of a democratically elected body to surrender office on an earlier date, thus enabling the incoming committee to take over the management and have its full term. Therefore, any manner of interference with the said democratic political will is not expected from an executive authority. Election Commission does not have power to reject a resolution passed by the committee ahead of 60 days before expiry of the term of the committee.

Properties and Funds of the Societies

In Radhakrishna Kurup v. Nadakkal Service Co-operative Bank Ltd. & Ors. (2016 (4) KLT82)it was held that S.56A providing that if society acquires any immovable property during its realizing a loan amount, it shall dispose it of within seven years from then, is unconstitutional being violative of Art.14. It suffers, incurably, from the vice of unreasonable, irrational classification offending the principle of equality guaranteed under Art.14 of the Constitution.

Granted that the co-operative spirit permeates the whole scheme of the legislation, still it is not discernible that at the cost of the welfare of all the members, a defaulter should be rewarded with the sale proceeds of the property just because that it is the bank, rather than a third party, that has bid the property. Therefore, classification by way of segregation of the co-operative bank as a distinct entity to have a restriction imposed that it cannot own the so-called non-banking asset beyond particular period is susceptible on the ground of unreasonable classification, with a taint of hostile discrimination, too.

Audit, Inquiry and Inspection

(i) On a harmonious reading of Ss.65 and 68, it can be seen that the phraseology employed therein is ‘any person who is or was interested with the organization or management’. Therefore, the retirement of the petitioner or continuance in service is not a subject matter to be considered in an inquiry conducted under S.65 by the Registrar in his routine business by virtue of the powers conferred on him under S.65 of the Act. Even if there is an audit report and no discrepancy was found out, still Registrar is vested with powers under S.65 to conduct an inquiry and take appropriate actions in accordance with law, as held in Muraleedharan v. State of Kerala(2016 (3) KLT 339).

(ii) The Joint Registrar appointed an enquiry officer under S. 66(2) and the officer submitted his report two months after his retirement. No procedural parameters followed by the Joint Registrar before appointing vigilance officer subsequently. Joint Registrar cannot take recourse of S.68A once enquiry is initiated under S.66. Appointment of vigilance officer to conduct parallel enquiry was not proper, vide Wayanad District Police Co-operative Society Ltd. v. Registrar of Co-operative Societies, Thiruvananthapuram & Ors.(AIR 2016 (NOC) 604 (Ker).

Surcharge

Going by S.68, it is categorical and clear that in the course of an audit, inquiry or inspection, if it is found that any person, who is or was entrusted with the organization or management of such society or who is or who has at any time been an officer or an employee of the society, has made any payment contrary to the Act, the rules or the bye-laws, or has caused any deficiency in the assets of the society by breach of trust or willful negligence etc., the first respondent is vested with powers to proceed against such persons who have caused the loss and recover the same. The action initiated by the first respondent is in accordance with law, after providing opportunity to the petitioners to contest the proceedings. True, the third respondent bank may have a remedy in terms of agreement, but that will not in any manner circumscribe or whittle down the powers of the first respondent to proceed under S.68 of the Act, is the ruling in Pramod v. Joint Registrar of Co-operative Societies(2016 (3) KLT SN 37 (C.No.31). 

Disputes

(i) The issue for determination in Kerala State Co-operative Agricultural and Rural Development Bank Ltd., v. Joint Registrar of Co-operative Societies(2016 (1) KLT 572) waswhether the first respondent has the inherent jurisdiction to decide the issue of regularisation of the service of the second respondent’s wife and incidentally the conferment of other service benefits. In P.S.Raveendran v. State ofKerala & Ors. (2007 (3) KLT 558), the Division Bench has categorically held that in any matter concerning service dispute, the Registrar or the Joint Registrar, even while exercising their powers under R.176 cannot have any jurisdiction in the light of the exclusionary provision under S. 69. The said judgment is an authority for the proposition that what has been raised by the second respondent, which resulted in the order, was nothing but a service dispute. The issue of regularising the employee’s services or claiming any residuary service benefits is a service dispute and is eminently amenable to the jurisdiction of an arbitrator under S.69 of the Act.

(ii) The principle of forum non convenienscan be pressed into service if territorialjurisdiction is conferred on multiple places. The Courts have uniformly held that convenience of all parties should be considered while determining the place of adjudication. The doctrine of dominus litus yields to the principle of forum non conveniens keeping in view it is always the petitioner who chooses the forum in the first instance, vide Saji Mattathil v. Joint Registrar of Co-operative Societies(2016 (2) KLT 514).

(iii) A person who raised a grievance must show how he has suffered legal injury. Generally a stranger having no right to any post or property cannot be permitted to intervene in the affairs of others. Evidently, it is not only a question of right but also of interest, as held in Jomon Augustin v. State of Kerala(2016 (2) KLT SN 77 (C.No. 88)). 

(iv) Clause (d) of S. 69(2) is quite comprehensive and indeed an efficacious remedy concerningthe service disputes of whatever nature. Even a dispute concerning the misappropriation by an employee is squarely covered by the said provision. The proceedings have been rightly initiated against the second respondent, vide Vaniamkulam Panchayat Vanitha Sahakarana Sangham v. Kerala Co-operative Tribunal(2016 (2) KLT SN 78 (C No.90).

(v) The Arbitration Court is the substitute to a Civil Court and also any other adjudicatory forum concerning the election disputes.It has, therefore, all the necessary trappings and powers of a Civil Court. In Angadi Service Co-operative Bank Ltd., v. Nissamu Kutty (2016 (2) KLT SN 88 (C.No.101)it was held that any restrictive interpretation of the provisions, especially S. 70 and R. 67 would render the Arbitration Court an inferior Tribunal not having the powers of a Civil Court though it is statutory supposed to be a substitute to a Civil Court. The Legislature has not contemplated a situation where a person approaching a Civil Court could get a superior relief, but on the other hand, the same person approaching an alternative forum would be entitled to an inferior relief. The arbitrator is eminently empowered to exercise his powers for the appointment of an expert as deems appropriate to render complete justice.

(vi) In Rema Devi v. Joint Registrar of Co-operative Societies (General)(2016 (3) KLT 50)it was held that the arbitrator under S.70 is conferred with power enabling it to decide on the core issue placed before it for consideration. The said ultimate power provided to the arbitrator is broader, wider and deeper, than trivial, peripheral or an ancillary issue that crop up during the course of the proceedings or thereafter. Viewed in that manner, it can be seen that if the power is vested to decide a more serious issue, then the power to decide an issue to set aside an award or to restore an application dismissed for default is an axiomatic power that is implied and deemed under S.70 of the statute itself. If such implied, deemed and inherent powers are not available to such authorities, justice will be a casualty at their hands. Such proceedings will become uneconomic, cumbersome and delayed. If such power is not exercised by the arbitrator, result will be opening up docket explosion before the appellate tribunal and constitutional Courts. Therefore, merely because an ex parteaward is passed, the arbitrator will not become functus officio. The authority by doing so is not accomplishing the end result of objective evaluation by deciding the dispute on merits and therefore the authority is still vested with power inherently to restore the application or set aside the award and fully discharge the function empowered under the provisions of law.

(vii) The jurisdiction to decide the disputes is not restricted to those disputes provided in clauses (a) to (d) of S. 69(2) alone. An inclusive meaning given to the term dispute does not in any manner take away the jurisdiction to decide the dispute covered by S. 69(1). The term ‘employee’ occurring in S.69(1)(c) cannot be interpreted to mean an employee envisaged under S.80 of the Act and included in the Appendix. As long as the petitioner employer and the second respondent do not dispute that the second respondent was employee under them as collection agent, the complaint of the second respondent against the removal or disengagement can only be one coming under S.69(1)(c) of Act, which is necessarily to be decided by the Arbitration Court. The Joint Registrar cannot in exercise of his powers conferred under the Rules, interfere with or deal with a dispute overriding the exclusion of his authority by virtue of the provisions contained in the Act, by adopting summary procedure under R.176, by rescinding resolution of the petitioner Co-operative Society. This ruling was given in Kanjoor Service Co-operative Bank Ltd., v. Joint Registrar of Co-operative Societies (General)(2016 (3) KLT 73).

(viii) The provision in S.69, if understood in the light of the definition of ‘dispute’ as contained in S. 2(j) would make it clear that the jurisdiction of the Civil Court is excluded in respect of disputes involving matters touching the business, constitution, establishment or management of a society among or between persons enumerated in S. 69 of the Act. A dispute between a society and its agent would certainly falls under S. 69(1)(c), but that by itself is not sufficient to exclude the jurisdiction of the Civil Court. In order to exclude the jurisdiction of the Civil Court, the dispute should primarily be a dispute involving a matter touching the business, constitution, establishment or management of the society. The suit as against the first defendant is a suit for realization of the pecuniary loss caused by the first defendant to the plaintiff on account of the wrongful act committed by the first defendant. The said claim can be regarded only as a suit for realization of damages. Such a suit cannot be said to be a suit involving a matter touching the business of the society and hence the second appeal failed, as held in Hyrunnisa v. Koothali Service Co-operative Bank Ltd.(2016 (3) KLT 255).

(ix) Power of Ombudsman is excluded when the dispute is by and between the bank and its employees or its members, vide Nadathara Farmers Service Co-operative Bank Ltd., v. Kerala Co-operative Ombudsman(2016 (3) KLT SN 113 (C.No.105).

(x) Whether a register in Form 32 on the basis of which the list of 611 members has been prepared has to be gone into under S.69. Similarly, the infraction, if any, of Ss.16A and 19A are also matters to be adjudicated as and when a statutory dispute is raised. The cutoff date for implementation of the amended provision of R.18A has been clarified to be 26.11.2016. The implementation of the amended provisions of the Kerala Co-operative Societies Act and the Rules does not therefore depend on the birth of a co-operative year, as held by the Division Bench in Cherian Eapen v. Thiruvalla East  Co-operative Bank Ltd.(2016 (4) KLT SN 61 (C.No.70).

(xi) On the issue can the petitioner’s appointment be interdicted without an opportunity of hearing to him unless the petitioner was guilty of practicing fraud in securing the appointment, the Court in Jayarani v. Assistant Registrar of Co-operative Societies (2016 (4) KLT 653) held that the petitioner has never been put on notice at any point of time. It is trite to observe that no order without hearing the affected person can be sustained, for the right to prior hearing is an important facet of the natural justice, a quasi-fundamental right. S. 69 (1) is eloquent on the adjudicatory mechanism concerning the service disputes. If the dispute is raised by an employee or any other person than the employer itself, the recourse ought to be the Co-operative Arbitration Court. The remedy, indeed, is efficacious. The Registrar has plenary powers under R.176 to rescind a resolution passed by the managing committee of a society. Evidently, the power conferred on the Registrar or his delegate is a species of subordinate legislation. S.69 on the other hand provides for the dispute resolution mechanism involving the quasi-judicial authorities – service disputes included. An employee of a society or a third party questioning any aspects of service in the society shall approach only the Co-operative Arbitration Court under S.69. Expressed in the negative, the question of a private person approaching the Registrar or the employer, the very society complaining against the appointment of a person does not arise.

Appeal, Revision and Review

The Court has never laid down that 90 days is the period within which a revision petition, in the absence of any statutory period of limitation, has to be filed. More than the length of the delay, the nature and cause of delay assumes importance in considering whether a revision petition has been filed on time. It is more a question of laches than delay. The explanation is to be the satisfaction of the adjudicatory forum. The satisfaction varies from case to case. The Court while exercising its powers of judicial review would be slow to interfere with the discretion exercised by an adjudicatory authority, be it a revisional forum, on the issues such a delay condonation. This view was held in Thalassery Co-operative Rural Bank Ltd., v. State of Kerala(2016 (2) KLT SN 81 (C.No. 93)).

Deduction from Salary

Section 37 provides for remedial mechanism for the creditor bank to straight away deduct from the salary of the principal borrower or the guarantor without recourse to the due process of obtaining an award or a decree and then seeking remittances from the garnishee. The provision begins with a non obstante clause. The moot question in Sukumaran v. Kollam District Co-operative Bank Ltd.(2016 (1) KLT SN 39 (C.No.38)) is whether the retirement benefits partake the character of salary. The Division Bench in 2005 (4) KLT 619 has emphatically held that even guided by S. 37 the term ‘salary’ cannot be extended to the retirement benefits. On the above premises, the first respondent cannot be heard saying that the salary includes the retirement benefits, especially DCRG as well.

Multi State Co-operative Societies

(i) Section 11(4) of MSCS Act only enumerates the items of information that is required by the first respondent to be objectively satisfied concerning the need for amendment of bye-laws of the society. The expression ‘any other particulars’ at best, can only be clarificatory in nature as regards the information thus far produced before the Registrar. It cannot be a compliance altogether on a different plane as regards obtaining an extra-legal consent from an authority extraneous to the scheme of the Act, vide Haldar Vikas Credit Co-operative Society Ltd. v. Central Registrar of Co-operative Societies(2016 (1) KLT SN 77 (C.No. 81).

(ii) A promoter of a proposed Multi-State co-operative society cannot be compelled to obtain a ‘no objection certificate’ from the Registrar of Co-operative Societies of the State concerned(Zeena v. Central Registrar of Co-operative Societies(2016 (1) KLT 811)).

Income Tax Act

A primary agricultural credit society, registered as such under the Kerala Co-operative Societies Act and classified so under that Act is entitled for exemption under S.80P of the Income Tax Act. A return filed by the assessee beyond the period specified under S.139(1) or 139(4) or under S.142(1) or S.148 can also be accepted and acted upon provided further proceedings in relation to such assessments are pending in the statutory hierarchy of adjudication in terms of the provisions of the I.T. Act, as held by the Division Bench in Chirakkal Service Co-operative Bank Ltd., v. Commissioner of Income Tax(2016 (2) KLT 535).

Miscellaneous

(i) The issue that came up for determination in Kadungalloor Service Co-operative Bank v. State of Kerala(2016 (1) KLT 67) was whether the petitioner bank was entitled to open its customer service centre without prior permission of the second respondent in terms of S.74B(2) of the Act and R. 80. The petitioner bank had chosen to call its new place of business which it established without prior permission, a customer service centre. Having held that the services rendered in a customer service centre are also part of the banking operations and that the customer service centre has the trappings of either a branch or an extension counter, the petitioner’s banking operations even in the name of a customer service centre, cannot be countenanced in the absence of prior permission from the second respondent. Any stipulation concerning any financial activities, be it banking or otherwise, requires strict interpretation and afortiori strict compliance with the statutory formalities.

(ii) The question of the husband’s implicitly incurring a liability on the contract entered into by his wife with third party, in the absence of the husband’s express or implied consent thereto does not arise. In this case, the wife contracted the loan having provided the sureties, who do not include her husband. The husband contracted the loan subsequently. The bank’s plea that it bona fidebelieved that the petitioner could offer his property as security is to be discounted. For by the time the wife took the loan, the husband was not at all in the picture, his loan was subservient. Unless a person is a party to loan transaction in whichever capacity the question of bank’s exercising the general lien vis-a-visthe property of that person, even if he or she were the spouse of the contracting party, does not arise. It falls foul of the contractual obligations of the banker and customer. In these circumstances inLonankutty Antony v. Joint Registrar of Co-operative Societies(2016 (2) KLT 281) it was held that the respondent’s bank action of retaining or withholding the petitioner’s title deeds even after his clearing the loan is per seillegal and arbitrary.

(iii) The Court observed that there may soon be some statutory mechanism in the place to protect the interests of bona fidepurchasers by way of title verification even in the case of properties under attachment, litigation, decretal title declarations (Sakthivel v. Marayour Service Co-operative Bank Ltd.(2016 (2) KLT SN 25 (C.No.31)). 

(iv) In Kasaragod Co-operative Educational Society Ltd. v. Registrar of Co-operative Societies (General)(2016 (3) KLT SN 53 (C.No.39),it was held that it is too well established a principle of business practice to be called in question that a creditor may as well impose conditions on the debtors commensurate with their creditworthiness, as well as their past relationship. It is entirely in the commercial wisdom of the respondent bank to insist that the petitioner complies with certain conditions. The Court cannot substitute the bank’s commercial wisdom with its own, even if it has any. Merely because some other bank has accepted the loanee’s proposal on relaxed conditions, the respondent bank’s action per secannot be termed as either discriminatory or arbitrary.

(v) Petition filed by the second respondent in Anil Kumar v. Joint Registrar of Co-operative Societies (General)(2016 (4) KLT SN 25 (C. No.27))was materially suppressed with the mala fideintention of ensuring that the judgment is not restored by the Court in any manner. The said suppression can never be stated to be an innocent mistake on the part of the petitioner since the petitioner is very well aware that the writ petitions filed by the petitioner were disposed of by a common judgment. The act and conduct on the part of the petitioner cannot be viewed lightly. Taking serious note of the fact the petitioner has suppressed material facts, abused the processes of the Court, interfered with the impartial and independent administration of justice, petitioner is not entitled to secure any relief and the Writ Petition is also liable to dismissed with appropriate cost of `50,000.

Employees of Societies

(i) The petitioner does not claim any graduation degree nor is there anything on the record to indicate that he possesses such degree. The only basis of promotion is claimed on the post graduate degree from the open university which cannot be relied nor on that basis it can be held that the petitioner fulfils the qualification as prescribed in R.186. Here the petitioner does not have any degree and has laid his claim for promotion on the basis of post graduate degree obtained from the respondent university which cannot be treated as equivalent to essential qualification as prescribed under R.186. He has never passed and obtained graduate degree qualification. There no error was committed by the Joint Registrar in refusing the approval of the promotion and the direction issued by the learned single Judge directing the Joint Registrar to reconsider cannot be sustained, as held by the Division Bench in Registrar of Co-operative Societies v. Sadananda (2016 (1) KLT SN 32 (C.No.27) .

(ii) The Government or the Registrar has the power to fix the staffing pattern of a society. By extension, it has got the power to sanction the posts as well. Filling up those posts based on the need and necessity is in the domain of the management. The manner and method of recruitment is certainly required to be prescribed by the Government, but not the actual timing of the recruitment. Such power is unavailable either from S.66 or S.66A or even S.80 of the Act. In Sunikuttan v. Ernakulam District Co-operative Bank Ltd.(2016 (1) KLT 448), the respondent bank has not refused to appoint or regularize the employees. Its only concern was that the time was not ripe for the regularisation of the petitioner’s services given the financial condition of the bank. It entirely lies in the domain of the employer to best assess the prospects of the organisation and then go for recruitment or regularisation as the case may be. The Government can guide even lead a society but it cannot take over the very administration of the society. There can be no usurpation.

(iii) In Joby Thomas v. Joint Registrar of Co-operative Societies(2016 (1) KLT SN 71 (C.No.73)) it was held that R.182 (4)(i) mandates that the society shall report the vacancy to the Co-operative Service Examination Board and the applications for appointment shall be invited by the Examination Board through notification in two newspapers in vernacular dailies having wide circulation in the area. The said stipulation applies to the societies covered by S.80B for conducting the examination to the posts over and above the cadre of junior clerks. In the present instance, the recruitment is concerning the post of an attender. 

 (iv) The employee was dismissed from service and was later reinstated. If there was a mere delay and in the absence of any default in remitting the amount, an interest of 12% be charged on amount due from the employer under the scheme. Levy of penal interest at 24% for the intervening period was not justified, vide Peringome Service Co-operative Bank Ltd., v. State Co-operative Employee’s Pension Board (2016 (1) KLT SN 87 (C. No.93).

(v) Rule 185(3) contemplates filling up of vacancies one by one in the ratio of 1:1 by promotion and direct recruitment. The bank is not entitled to take its own decision disregarding the mechanism provided in R.185(3) for deciding as to whether a particular vacancy has to be filled up by promotion or direct recruitment. Upholding the decision of the learned single Judge, the Division Bench in Jameela v. James Joseph (2016 (2) KLT SN 26 (C.No.33)observed that the bank has misinterpreted the rules to the benefit of the promotees which action is unsustainable.

(vi) The employees retiring on their attaining the age of superannuation and those voluntarily retiring cannot be treated as two classes of employees for the purpose of terminal benefits. Both are entitled to a pension, but as regards the family pension, a differentia was introduced. The differentia introduced is without any rational basis. It falls foul of the constitutional mandate of equality – equal protection of the law, vide Kochurani Thomas vs. State of Kerala(2016 (2) KLT SN 69 (C.No.81)

(vii) Mere use of the word ‘posts’ in sub-rule (1) R.185 does not take out the post of General Manager of the society out of the purview of sub-rule (1). Post is covered by rule-rule (1) and that is to be filled up by promotion (Mattanchery Mahajanik Co-operative Urban Bank Ltd. v. Rajendran(2016 (2) KLT SN 93 (C.No.(108)).

(viii) Going by the provisions of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 and the authoritative pronouncement of law made by the Supreme Court, reservation which is not dependant on the identification of the posts should be deemed to have come into operation with effect from the date of commencement of the Act. The vacancies earmarked for physically handicapped under the PWD Act were to be reckoned not from the date of identification of posts, but with effect from the date of commencement of the Act or at least the entrustment of the selection to the said post to the Public Service Commission. The direction given to appoint persons with disabilities against the quota earmarked for the disabled was upheld by the Division Bench. The contention that 3% of vacancies could be filled up only after conducting a special recruitment was not accepted by the Division Bench in Ernakulam Regional Co-operative Milk Producers Union Ltd. v. State of Kerala(2016 (2) KLT 89).

(ix) Enhancement of ceiling limit under S. 4(3) of Payment of Gratuity Act, 1972 to `10 lakhs applies from the date of its original amendment, i.e., 24.5.2010 and not when the said amendment was later adopted by State. Provisions of the Gratuity Act straight away apply to employees of the Co-operative Societies in the State, as held in Nirmala Thomas v. Kerala State Co-operative Consumers Federation Ltd. (2016 (2) KLT SN 115 (C.No.136).

(x) Rule 185(A) read with S.80(B)(4) is introduced to provide employment for short periods with the avowed object of ensuring that unemployment is eradicated to a limited extent. Merely because such a provision is made under law that will not confer any legal right to a person appointed to claim regularization. There is no scheme or provision under law to regularize such services is the view held in Divya Gopinath v. Kerala State Co-operative Agri. & Rural Development Bank Ltd.(2016 (3) KLT 39).

(xi) When the State Government have been a general power to frame rules for regulating the service conditions of employees, service condition can be framed which may also include the procedure and manner for ordering suspension and the Regulation 4(iii) is fully covered by the statutory power given by the State under S.80(8) of the Act. The emergency power given to General Manager to suspend has to survive along with the statutory provision under R.198(6) that is the appointing authority who ultimately retains the power of ratification of suspension. The view of the learned single Judge holding that the General Manager has no power to suspend the employees was faulted by the Division Bench in Thrissur District Co-operative Bank Ltd. v. Sunny(2016 (3) KLT 79).

(xii) In case a person abandoning service without any valid explanation, a limited enquiry as to whether the employee concerned has sufficient explanation for not reporting for duty, after the period of leave had expired or failure on his part on being asked so to do amounts to sufficient compliance with the requirements of principles of natural justice. Merely for the reason that no orders were passed in the leave application does not mean that the delinquent officer can be relieved of the responsibility to join duty, as held in Thodupuzha Taluk Co-operative Rubber Marketing Society v. Kerala Co-operative Tribunal(2016 (4) KLT SN 41 (C.No.44).

(xiii) In Chittur Primary Co-operative Agricultural and Rural Development Bank Ltd.v. State of Kerala(2016 (4) KLT SN 42 (C.No.45)it was held that the provision contained inR.182(4)(viii) is only to the effect that in case the employer co-operative society concerned wants to make any appointment to the post, then necessarily the employer can make such appointments only from among the candidates included in the rank list/selection list so prepared by the board as per rules. This provision in the Rules cannot be understood to impose any obligation or duty on the co-operative society to fill up all or any other vacancies for which the selection process was finalized, all or any of the vacancies, at all costs or that the employer is left with no discretion not to fill up only vacancies etc. The Co-operative Examination Board, constituted in terms of provisions contained in S. 80B and R.182 (4) has not been given any powers by virtue of those provisions to issue any directions or supervisory guidelines to the appointment authorities concerned as to whether or not any or all such vacancies should necessarily be filled up. Its duty is to conduct the fair and meritorious selection process subject to the various guidelines and parameters in the provisions of the Act and Rules and also to ensure about the correctness of such rank list and report to the Joint Registrar about the irregularities, if any.

Rejection of Complaint in Part, Cognizance of Offence A Delusion

(By S. Abdul Khader Kunju,  Asst. Public Prosecutor, Cherthala)

THE CONUNDRUM

What are the courses open to a Magistrate, when he receives a complaint, wherein more persons than the one are made as accused and when he finds that the allegation against some of them is sufficient for further proceedings and insufficient as against the others? What happens, if his judicial mind impels him to take a decision to proceed against some selected accused against whom allegations are sufficient and to abstain from doing his action against the others, to whom the allegations are deficient? Should the Magistrate take or presume to have taken cognizance of the offence, or can it be presumed that the procedure envisaged under Chapter XV of the Cr.P.C. (‘Code’, for short) has been invoked when he decides not to proceed against the accused, against whom the allegations are lacking?

THE BACKGROUND

The Single Bench of the High Court of Kerala, in Balasubramanian v. Biju Kochupaul (2016(3) KLT 220) held that once the Magistrate takes cognizance and embarks upon the procedure embodied in Chapter XV of the Code, he is not competent to revert back to the pre-cognizance stage and avail the power under Section 156(3). The self-same judgement
was followed by the same Judge in P.M.Salim v. George M.J. and Ors. (MANU/KE/0336/2017). The legal fraternity, as they are aware of this settled principle of law as it has been settled for long time, felt nothing special about it. But, if we go further reading those judgments wherein the facts of the case are juxtaposed with this principle, there arises the question whether these decisions convey the law relating to taking cognizance of the offence and the law respecting the course open to the Magistrate when a complaint reveals offence against some of the accused and does not reveal offence against the others, correctly.  My humble opinion is in the negative.

THE  FACTS  AND  THE  DECISION  IN  BALASUBRAMANIAN

The proceedings originated when the complainant filed a complaint in the Court of the Enquiry Commissioner and Special Judge (Vigilance), Thrissur by arraigning 15 accused/respondents. The learned Special Judge passed the order in the matter and by concluding that specific allegations were not raised against respondents 2,3,6,7 and 14 in the complaint, and therefore, as far as the said respondents were concerned, any further proceedings were not required. At the same time the Special Judge, ordered a preliminary inquiry into the allegations against the respondents 1,4,5,8 to 13 and 15 in the complaint, meaning that the Judge made an order u/S.156 (3) of the Code. One of the respondents moved the High Court and the Court observed as hereunder:

“When the court below has finally decided the matter relating to some of the respondents and such respondents were absolved from criminal liability, and has decided to proceed against the petitioner and some other respondents, it is as good as invoking the power of inquiry as contemplated under Chapter XV Cr.P.C. Only through an inquiry, the court below could have decided to avoid some of the respondents from further proceedings. Such a dismissal of the complaint relating to some of the respondents could only be one under S.203 Cr.P.C.”

And the learned Judge held that:

“The entire exercise made by the court below in this matter is per se illegal. The court below ought not have absolved some of the respondents from criminal liability and thereafter forwarded the complaint for quick verification or investigation, as the case may be, under S.156(3) Cr.P.C.”

THE LAW

Let’s examine whether S.203 is the only course before the Magistrate to decide not to proceed against the accused against whom the allegations are lacking. For an easy understanding of the matter under discussion I may quote necessary portion from Section 190 of Code, which comes under its Chapter XIV.

“Section 190–(1) Subject to the provisions of this Chapter, any Magistrate of the first class, and any Magistrate of the second class specially empowered in this behalf under sub-section (2), may take cognizance of any offence-

 (a) upon receiving a complaint of facts which constitute such offence;

 (b)   ****

 (c)   ****

(2)    ****”

 From the plain reading of S.190 (1) (a) it is clear that the Magistrate may take cognizance of any offence subject to the conditions in that section. The word ‘may’ used herein includes may not. Application of this may occurs when there is sufficient ground for proceeding further, and the scope for may not is applicable when there is no such ground. Hence, if the Magistrate, after reading the complaint (which is explained judicially as applying his mind) finds that it does reveal an offence, for which he is empowered to take cognizance, he decides to go further. This does not mean that he has taken cognizance of that offence. Only the moment he decides to examine the complainant, it is said he has taken cognizance. A magistrate is expected to apply his mind meticulously, before he decides to order an investigation u/S.156(3) of the Code, yet his exercise will not amount to taking cognizance. The Magistrate takes cognizance not when he applies his judicial mind, but when he applies his mind for the purpose of proceeding under Chapter XV of the Code.

In R.R.Chari v. The State of Uttar Pradesh (AIR 1951 SC 207) a Three Judges Bench of the Supreme Court giving approval to a Calcutta High Court decision rendered in Superintendent and Remembrancer of Legal Affairs, West Bengal v. Abani Kumar Banerjee (AIR 1950 Cal.437), quoted as follows :-

“ What is taking cognizance has not been defined in the Criminal Procedure Code and I have no desire to attempt to define it. It seems to me clear however that before it can be said that any Magistrate has taken cognizance of any offence under Section 190(1)(a), Criminal Procedure Code, he must not only have applied his mind to the contents of the petition but he must have done so for the purpose of proceeding in a particular way as indicated in the subsequent provisions of this Chapter - proceeding under Section 200 and thereafter sending it for inquiry and report under Section 202. When the Magistrate applies his mind not for the purpose of proceeding under the subsequent sections of this Chapter, but for taking action of some other kind, e.g., ordering investigation under Section 156(3), or issuing a search warrant for the purpose of the investigation, he cannot be said to have taken cognizance of the offence.”

Similarly, when the Magistrate, after reading the complaint (applying his judicial mind) finds that it does not reveal an offence, he may decide not to go further. He can decide not to take cognizance. The abstention of the Magistrate from taking cognizance will be reflected in the form of rejection of the complaint. This rejection cannot be equated with dismissal of the complaint u/S.203 of the Code, which happens after taking cognizance. This is the slot where the dilemma as to the law relating to taking cognizance steps in. This confusion occurs because of the fact that the Code is not explicit as to the nature of disposal of the complaint when the Magistrate decides not to take cognizance.

ANALYSIS

In Balasubramanian (supra) the learned Judge assumed that the Special Court has taken cognizance of the offence before dismissing the complaint against some of the accused while ordering investigation u/S.156(3) of the Code. This assumption can be manifest in the following observation.

“…it is as good as invoking the power of inquiry as contemplated under Chapter XV Cr.P.C. Only through an inquiry, the court below could have decided to avoid some of the respondents from further proceedings. Such a dismissal of the complaint relating to some of the respondents could only be one under S.203 Cr.P.C.”

The position that the Magistrate has power to reject the complaint at the threshold is not a matter res integra. In S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla and Anr. (2005 (4) KLT 209(SC) it was held by the Apex Court that a Magistrate has to consider the complaint before issuing process and he has power to reject it at the threshold, suggests that a complaint should make out a case for issue of process.

 In Biju Purushothaman v. The State of Kerala (2008 (3) KLT 85 = ILR 2008(3) Ker.42) it was held by the High Court of Kerala that:

“If after perusing the complaint, the Magistrate is of opinion that the averments therein do not at all spell out any offence, then he should definitely possess the power to throw away the complaint and terminate the matter then and there. This power is not dismissal but rejection.”

And Biju Purushothaman (supra) gives clarity that the dismissal of the complaint u/S.203 can be only after taking cognizance. 

“The said dismissal at the pre-cognizance stage was presumably under the misconception that Section 203 Cr.P.C. clothes a Magistrate to do so. It is true that barring S.204(1) [sic. 204(4)] Cr.P.C., S.203 Cr.P.C appears to be the only enabling provision which empowers a Magistrate to dismiss a complaint. A dismissal of the complaint under S.204(4) Cr.P.C for failure to pay process is not a dismissal on merits. But a closer reading of Section 203 Cr.P.C. will reveal that dismissal of a complaint can be done only at the post - cognizance stage.”

InAbhinandan Jha & Ors. v. Dinesh Mishra (1967 KLT SN 21 (C.No.39) SC = AIR 1968 SC 117) it held that:

“The use of the words ‘may take cognizance of any offence’, in sub-section (1) of S.190 in our opinion imports the exercise of a ‘judicial discretion’, and the Magistrate, who receives the report, under S.173, will have to consider the said report and judicially take a decision, whether or not to take cognizance of the offence.”

The position is thus clear that in order to order investigation u/S.156(3) of the Code cognizance of the offence cannot be taken, and at the same time, in order to reject the complaint against the accused, invocation of powers under Chapter XV is also not necessary. This position is clear even from the judgment (CREF Finance Ltd. v. Shree Shanthi Homes Pvt. Ltd. and Anr. (2005 (4) KLT SN 55 (C.No.72) SC) relied on by the learned Judge, wherein it was observed that:

“We can conceive of many other situations in which a Magistrate may not take cognizance at all, for instance, a case where he finds that the complaint is not made by the person who in law can lodge the complaint, or that the complaint is not entertainable by that Court, or that cognizance of the offence alleged to have been committed cannot be taken without the sanction of the competent authority etc.etc. These are cases where the Magistrate will refuse to take cognizance and return the complaint to the complainant. But if he does not do so and proceeds to examine the complainant and such other evidence as the complainant may produce before him then, it should be held to have taken cognizance of the offence and proceeded with the inquiry.”   (emphasis supplied)

 When a complaint is received, the Magistrate has at least three options. He can reject the complaint (if the allegations are insufficient), he can order investigation u/S.156(3) of Code (if the allegations would constitute cognizable offence) and he can take cognizance and proceed to examine the complainant u/S.200 of the Code. Out of these three, first two are in the realm of pre-cognizance stage.    

CONCLUSION

When the Magistrate is empowered to reject the complaint if no offence is attributable against the accused, in a complaint where more than one accused are cited and where the facts constituting offence against somebody are available, and as against the others if there are no such facts, he is well within the power to choose to order investigation u/S.156(3) of the Code in respect of the former and to reject complaint relating to the latter, without taking cognizance of the offence. In this regard the order of the learned Special Judge appears to be correct.

In Balasubramanian (supra), from the facts narrated in the judgment, it is clear that the Special Court did not actually conduct any inquiry under Chapter XV of the Code, but proceeded under Chapters XII and XIV, but the High Court assumed that what the Special Judge had done was under Chapter XV of the Code. Moreover, the matter being offences covering Prevention of Corruption Act (PC Act), the observation of the High Court that the court below could not have entered such a dismissal without recording the statements of the complainant and witnesses, if any, also seems to be out of place. Recording statements of the complainant etc., can be done only after taking cognizance, which is barred S.19 (1) of the P.C. Act, except with the previous sanction of the Government.

Hence, I humbly opine that the decision of the Hon’ble High Court of Kerala in Balasubramanian v. Biju Kochupaul (2016(3) KLT 220) does not convey the correct law relating to the Magisterial powers concerning the cognizance of offence and the procedure to be followed by Magistrates when they receive complaints where facts necessary to reveal commission of offences against some of the accused are proper and those are improper in respect of others.

Foot Note:

1. It would be interesting to note that Judge Felix Frankfurter, who penned several landmark judgments and had also rendered advice to Indian Constitution drafters was a native of Vienna, Austria and later a naturalised US citizen. William Howard Taft went on to be Chief Justice of the Supreme Court after serving as US President from 1909 to 1913. Chief Justice Earl Warren was Governor of California and later one of the candidates for a Republican nomination for President. It is said that he stepped down in favour of Eisenhower who went on to become President who then appointed Earl Warren to the Supreme Court respecting a compromise.

2. Richard A. Posner, How Judges Think, Universal Publications 2011 reprint. 

Appointment to the US Supreme Court, A Celebration of Democracy

(By Ajit Joy, Advocate, High Court of Kerala)

49 year old Judge Neil Gorsuch was recently sworn in as an Associate Judge of the US Supreme Court after confirmation by the US Senate on 8th April 2017. High political drama and rivalry in the U.S. Senate was witnessed over this confirmation process which ultimately led to President Trumps’s nominee securing a favourable report from the Senate Judicial Committee and later the full Senate voting in his favour 54-45. Judge Scalia whose seat was being filled had died in office over a year back. So crucial in politics is an appointment to the U.S. Supreme Court that the Republicans in the Senate had stone walled a nomination by President Obama until election of a new President, and now they were ensuring that their nominee succeeded.

The intensity of politics in the appointment of a Judge to the top court of the US would appear rather strange to an outsider. Though the American Constitution does not specify qualifications for Justices such as age, education, profession, native-born citizenship or even a law education¹, the pre-eminent requisite, for appointment to one of the nine posts of Judge of the US Supreme Court seems to be the political affinities of the nominee - whether he or she is a conservative or a liberal. Every President who has nominated a Judge to the Supreme Court has invariably supported a candidate close to his own political colour. In fact Tump’s thoughts and strategy on nomination of judges to the US Supreme Court was a significant plank of his election campaign. For the record however, apart from his political affiliations, Judge Neil Gorsuch is eminently qualified having been educated at Columbia, Harvard and Oxford Universities, followed by experience as a Law Clerk in the US Supreme Court and currently holding a Federal Appellate Circuit Judge position.

It would be easier to understand the sound and fury generated on nominations to the US Supreme Court if one notes that between 1975 and 2005 unanimous judgments were rendered only in 28.4% of the cases by the Supreme Court².  America is highly divided on fundamental issues like abortion, gun control policy, affirmative action, gay rights, immigration and the like around which there is opposing views held by Republican’s and Democrats. This cleavage in opinion is reflected in the Supreme Court too and new appointments are crucially followed to gauge shifts that such appointments would bring to those cardinal issues.

Analysts have placed Gorsuch’s judicial philosophy to be similar or more conservative to that of Antonin Scalia whom he replaces. Interestingly Scalia a colourful hyper conservative was known to have commented thus when questioned about his judgments on homosexuality, “if we cannot have moral feelings against homosexuality can we have it against murder?” With Gorsuch’s appointment, Supreme Court of the US could move to an interesting balance with 4 conservatives in the form of Clarence Thomas, Neil Gorsuch, Samuel A. Alito and Chief Justice John G. Roberts as opposed to the liberals – Stephen G. Breyer, Elena Kagan, Ruth Bader Ginsberg and Sonia Sotomayer with Judge Anthony M. Kennedy (Whose Law Clerk Neil Gorsuch once was) deciding sometimes with the liberals though considered a conservative himself. Pundits point out that with several judges in their late seventies and eighties being on the verge of self retirement or even death, this tenure of President Trump may see other conservative nominations coming up – which, with a Republican majority in the Senate will see an easy sail through in the confirmation process.

Nevertheless, with a security of tenure for life or till such time the judge wants to step down and all other benefits being guaranteed by the Constitution, it is not necessary at all that judges once appointed should tow the line of their political masters. In fact there are several judges who though considered conservative turned liberal after appointment. In any case whatever be the politics behind their appointment of judges, the Supreme Court of the US has stood through for over two centuries as the bulwark in upholding democracy and constitutional rights Unlike India where the judiciary itself has assumed the upper hand in appointment of judges in what can be termed undemocratic, with no public participation, the appointment of US Supreme Court Judges and their confirmation process is a complete contrast providing the flavour of a totally democratic process. Both the Executive and the legislature have a role in the appointment of Judges. Art II Sec. 2 Clause 2 of the US Constitution, also known as the appointment clause states.

“He (President) shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law...”

The appointment process that has been further tempered with centuries of tradition in judicial appointments, involves, nomination by the President, followed by reference to the Senate. In the Senate, first the Senate Judicial Committee deliberates the nomination involving a public hearing after which it sends its recommendation to the full 100 member Senate where the recommendation is put for vote. Once confirmed the Judge is appointed formally by the President. 11 nominees having been rejected by the Senate and with some more being withdrawn by the President realising that an affirmation from the Senate would not take place, the Senate confirmation is one of great seriousness and a prime application of the principle of division of power between the executive and legislature.

The hearing for the confirmation of Judge Gorsuch is a reflection of the kind of grilling that a Judge has to normally go through at the hands of peoples representatives. Apart from his judicial philosophy, conduct and life, every part of which is subject to questioning, the Judge is even sought to be examined on the way he may decide a case in the future or rule on certain policies (though he is not obliged to answer questions on that). Neil Gorsuch, had to go through nearly 20 hours of public grilling by Senators on various aspects of his life, views and legal philosophy.

While without doubt political affiliation of the nominee and the chance of his succeeding at the hands of a divided Upper House seem to play an overwhelming part in the appointment of Judges to the US Supreme Court, one cannot complain that it is not a democratic process. An elected President in whom the people have reposed confidence nominates and the Senate that has an elected representation from every state in the US scrutinises and votes on the nomination. The whole process is transparent with the nation keenly watching, debating and celebrating the confirmation proceedings.

When we contrast the US selection process with the closed, opaque and so to say the incestuous manner in which judges are appointed to our Constitutional Courts, one simply wishes for more of openness transparency and public involvement. Judicial interpretation to Constitutional provisions on appointment of judges to higher courts have sadly been so as to oust not only the prerogative of the executive but their very role. It should be remembered that it is in the elected executive that the people have reposed confidence and from whom results are expected. Fine, if the executive upper hand as the Constitution initially envisaged was undermining the independence of the judiciary, then the Parliament as a compromise and in its collective wisdom had cutting across party lines unanimously proposed an independent body to make higher judicial appointments. But this too has been shot down. With the firming up of the views of the Supreme Court through S.P.Gupta v. Union of India (1981 (Supp) SCC 87) (First Judges Case), Supreme Court Advocates on Record Association v. Union of India ((1993) 4 SCC 441) (Second Judges Case), Re: Special Reference No.1 of 1998 ((1998) 7 SCC 739) (Third Judges Case) and the more recent Supreme Court Advocates on Record Association v. Union of India (2016 (1) KLT 193 (SC)), it appears that for at least the near future, status quo will continue. Nonetheless, the last word has not yet been said on judicial appointments

Judiciary Must Not Support Unbridled Executive Power

(By Thulasi Kaleeswaram Raj, Advocate, High Court of Kerala)

On 27 January 2017, Donald Trump, the President of the United States signed the executive order for “protecting the nation from foreign terrorist entry” primarily on national security grounds. The order imposed restrictions on foreign entry into the US. The Federal Court immediately passed a stay order temporarily freezing the executive order. The Court of Appeals concurred with the Federal Court later.

This instance has led many commentators to reaffirm the conviction that in a constitutional democracy, whenever the Government purports to act against individual freedom, the courts step in to restore it. Further, it has once again provoked the discussion on balancing the obvious conflict between national security and individual rights and how far judicial review must prevail in this conflict.

There are two streams of thought here: one, which argues that the executive should be trusted with making the right decisions in this act of balance. This is mostly grounded on the principle of democratic legitimacy that the Government has been essentially elected by the people and has their mandate. The opposing view however, hesitates to extend this hands-free approach to the executive and proposes that the governmental actions, especially in the guise of national security must be subject to judicial intervention.

Executive bias

There is a predominant reason as to why judicial review of governmental action is desirable. The executive Government is strongly influenced by its inherent political bias. The most important consideration for the executive is its political survival.  In critical times, the Government most often overreact to potential security threats, even where individual liberty is compromised. Michael Ignatieff, makes a significant point in this regard. He notes that “the political costs of under reaction are always going to be higher than the costs of overreaction .... Since no one can know in advance what strategy is best calibrated to deter an attack, the political leader who hits hard—with security roundups and preventive detentions—is making a safer bet, in relation to his own political future, than one who adopts the precautionary strategy of ‘first do no harm.’ ”

A popular executive might not show serious hesitation in torturing a terrorist suspect. The only institution, which will be concerned about the legal impermissibility of torture, is the judiciary. That is a forum where arguments on the legality of torture would come into play.  The court is concerned about constitutional morality, not popular morality. This is because a Government aimed at hollow public approval might consider individual rights to be only secondary. The Government pacifies and patronises. The court, however, preserves liberty.

Two arguments

In this context, the first argument against judicial interference is the ‘specialist’ argument. The claim is that the Government is specially empowered to react to sensitive situations.  In the United Kingdom, for instance, courts have adopted this view that the Government has the better expertise in matters related to national security. 

The Prevention of Terrorist Act, 2005 authorises the UK Government to invoke ‘control orders’ against individuals. Control orders are basically orders imposing severe restrictions on what facilities individuals can use and which places they can access.  Suspected persons may be required to wear electronic tags to enable police monitoring and subjected to strict home curfew up to 16 hours a day.  Such control orders were under challenge in Secretary of State v. A.F. (2009). Lord Scott held, “…the Government has a responsibility for the protection of the lives and well-being of those who live in this country and a duty to promote the enactment of such legislation as it considers necessary for that purpose. It is evident that the Government regards the control order provisions contained in the 2005 Act as being necessary for that purpose. The duty of the courts, however, is rather different. It is not, directly at least, a duty to protect the lives of citizens. It is a duty to apply the law.”

This approach is particularly problematic in as much as it attempts to make a strict demarcation between the ‘political’ and the ‘legal.’ The task of constitutional adjudication by courts in the modern liberal state is very much political. This function is merely performed through the language of the law. The Constitution is a political document that enlists the existing rights of individuals. All that the courts are bound to do is to vigorously protect them. They are, indeed participants of the democratic discourse.

The second argument is based on a ‘one v. many’ approach. It states that in case of national security where the larger public interest is at stake, a compromise in individual rights is acceptable. It is said that is permissible to disfavour an individual if a large number of people benefit from such action. Critical circumstances will necessitate a change in approach to individual rights. A state under emergency threat is a ‘state of exception’, as Girgio Agamben calls it.

However, this argument reduces the human rights concerns to a mere number game. It makes the dangerous concession that human rights can be forfeited and that constitutions can be neglected. A ‘state of exception’ must not be a state without law. The state of law, with its variations is a constant. The change in political circumstances does not warrant overriding superior rights considerations. Aberration from individual rights is not legitimate at any stage. Human rights are universal, pre-existing and non-derogatable.

Indian situation

The domestic environment is not very rights conducive either. A major interference of the Supreme Court in recent times in the realm of personal liberty was Shreya Singhal v. Union of India (2015) in which the Supreme Court struck down S.66A of the Information Technology Act as unconstitutional. But even in Shreya Singhal, the individual was not confronting the State. It was a person vis-à-vis person conflict of sending offensive messages through electronic communication. The characteristic feature of cases involving national security is that the individual and the State are on adversarial margins. In such occasions, the judiciary maintains a manifest silence.

In fact, in Kanhaiya Kumar v. State of NCT of Delhi (2016), the Delhi High Court took the unconventional stand of examining the interlink between freedom of speech and national security in a bail application.  Even so, instead of a legal examination of the issue, the Court went ahead to state, “While dealing with the bail application of the petitioner, it has to be kept in mind by all concerned that they are enjoying this freedom only because our borders are guarded by our armed and paramilitary forces.” Further, the court required the Mr.Kanhaiya Kumar to undertake that he will not undertake in any “anti-national activity” and moreover, that “he will make all efforts within his power to control anti-national activities in the campus.”

The court has not only laid down conditions of bail, but has also demanded how the individual must lead his life in the campus. Remarks of this nature from a constitutional court might be seriously disturbing. They tend to weaken the constitutionally protected guarantees of right to life and liberty under Article 21 and the right to freedom of speech under Article 19 of the Constitution. They also dilute the key moral principle of self-determination, or in the words of Joseph Raz that “the autonomous person is … author of his own life.”

There is an interesting contradiction in the emerging judicial approach in India. On the one hand, the courts are increasingly sidestepping active adjudication on issues involving individual freedom, be it demonetisation or decriminalisaing homosexuality. On the other hand, they are entering a new realm of intruding in individual lives and reducing critical rights issues to a mere binary debate: national or anti-national.

Unbridled executive freedom might not always be able to pass the test of constitutional scrutiny. It is crucial to note that the understanding of democracy as pure will of the majority has undergone a radical change. The contemporary understanding of democracy is guided by constitutionalism, the idea that the actions of the State can only be in compliance with the prescribed constitutional limitations. Taking cue from the US courts, the Indian judiciary must appreciate that democracy is, after all, meant for its dissidents as well.

(This article originally appeared in The Wire on 18 April 2017).