Arbitration and Conciliation Act
Whether the Amendment under Section 12 Fulfils the Need of the Time

(By Jasla Kabeer, Advocate, Kollam)

 Arbitration and Conciliation Act has been enacted intending to be the feasible short cut to obtain relief which otherwise is tiresome and expensive. In the changed scenario of commerce and industry it mainly applied and started to operate in the field of hire purchase, and all the financiers started to invoke the remedy under the Arbitration and Conciliation Act. At the time of the purchase of the vehicle or of any such item of movable property of value, the buyer is always a person in need, and the financier stands in a higher position. The purchaser has in his pocket only an amount coming around 15% to 20% and the financier extends the loan facility for the whole remaining. Since the financial burden of the buyer at the time of purchase is meager, and the dealings of the financier is such that the buyer is able to get the delivery of the vehicle or the other property instantaneously or in speedy, the buyer has no reluctance or unreliability in the following of the direction being given by the financier. After the share of amount being parted with by the purchaser, the next phase is the signing of agreement with the financier. Since his amount is already paid, and the delivery of the article depends on the release of money by the financier the buyer becomes constrained to act as per the directions of the financier. In most of the cases the buyers are hailing from ordinary class, not well versed or even familiar with the technicalities of such transactions, they know only that they should sign the papers as shown by the financier. Even the raising of any doubts or putting any question regarding the contents of the papers where he is directed to sign, the financier becomes harsh, and may cause to deny the loan facility to the purchaser, hence the buyer silently signs in the printed agreement at the spots wherever pointed out by the financier. The transaction between the financier and the purchaser completes hardly within half an hour, and the knot to tighten goes to the exclusive custody of the financier. The agreement pointed to be signed runs to several pages and numerous clauses which in the ordinary course is impossible and discernible for an ordinary man who comes with a smaller amount intending the purchase without undergoing any burdensome proceedings. The agreement which contains numerous clauses in printed form and in a font not easily legible in English language is strange to such a purchaser, and moreover columns are there left blank capable of being filled at any time according to the convenience of the financier. The most important clause in the agreement is as to the resolving of dispute arising if any related to the transaction when the repayment is defaulted by the purchaser. It is always provided by the appointment of the arbitrator. The agreement always provide for the appointment of only a sole arbitrator column remaining unfilled thereby with liberty to the financier to fill in the name of his own choice. At the time of issue of notice for the reference, name of the arbitrator is being filled in by the financier in the column left, and the purchaser may not have any option or say in the matter. Thus the purchaser is forced and constrained to go to a person to decide his matter appointed by the opposite side. The present amendment u/S.12 of the Act to some extent interferes with the earlier position, and makes available certain grounds for the purchaser to raise questions as to the impartiality of the arbitrator. But these grounds provided are limited and not capable of being stretched or extended to the relationship between the arbitrators which might be clandastaneous and behind the curtain. The sole arbitrator can at any time be subject of partiality and influence, as the person appointed has no accountability or not committed to impartiality, and cannot be made liable in any manner of his delinquency, to the sufferer or cannot be subjected to any disciplinary action. Similarly, the venue of arbitration is also decided by the financier which might have already put in illegible font as one of the clause as if looking no much importance, but it goes to the crux. The venue of arbitration in most of the cases is a far away place beyond the reach of the purchaser, and resultantly the matter becomes ex parte, a remediless imposition on the purchaser. When the award is proceeded in execution, and the purchaser is put in the clutches of coercive steps of enforcement, the purchaser understands that he has no remedy against it except to surrender and to wait at the door steps of the financier for his mercy; but it is seldom shown. 

 When an Act is being promulgated, State is bound to protect the interest of its subjects, and cannot leave him at the mercy of the powerful. When the State wants to protect the financial interest of the businessmen who conducts the business of lending money on interest, at the same time the State should ensure that the borrower should not be exploited by the creditor. An arbitrator is only a temporary arrangement for a particular case and the arbitrator being in such position is naturally more interested inclined to protect his own interest by favouring the powerful and the rich. This cannot be put to an end unless the amendment extends to cover this field to curb any chances of being partial. First of all, the dealings between the financier and the purchaser should have all its transparency from the initial stage of entering in the agreement. The printed form of agreement being used by the financier should be made available in advance to the purchasers by affixing it in the office of the financier or by publishing it in the website of the financier. It should be printed in a font of legible size both in English and in the regional language. No column should be left capable of being filled subsequent to the signing; and to ensure this the copy of the agreement signed by both should be supplied to the purchaser instantaneously of its signing. The venue of arbitration should be confined to the place of suing as provided under the Code of Civil Procedure, and not a place being opted by the financier at his convenience. If the financier can take the shelter of law to execute the decree at a place where the purchaser resides, it is only justifiable that for the arbitration proceedings also the same can be fixed. Further there should be an option to file petition to set aside the ex parteaward with a provision for appeal from such an order if the same is dismissed by the arbitrator. Lastly and more importantly, at any cost and under no occasion the agreement should not provide column for the filling the name of the arbitrator, but it should be a computer print out with names included with options of preference. The sole arbitrator system should be done away with at least in the cases when the amount is above Rs. one lakh. The provisions should be made for the appointment of one arbitrator by the financiers, the other by the purchaser, and the third unanimaously by both parties or if not possible by both the arbitrators. A provision should be made for the setting aside of the award on the ground of perversity of fact or apparent unreasonableness in the matters involving substantial amounts. Over and above, the newly added proviso as S.34(2A) exempting erroneous application of law in passing the award as the ground for setting aside the award is against the need of the time. This incorporation instead of being a proviso should have been a ground for setting aside the award which only will fulfill the need of the time especially in the cases where award is passed by the sole arbitrator, or the award is ex parte. It is not at all prudent or desirable for a welfare State to make a law providing that an executable award should not be set aside on the ground of erroneous application of law. This makes a general impression that erroneous application of law should prevail and such an award should sustain. This might give possibilities of the arbitrator tend to be partial and subject to influence and favouritim. The nature of relationship described in the newly added schedules tending to have the scope of favouritism cannot become exhaustive. Any sort of relationship can deteriorate the character of total impartiality, and even a mere acquaintance can create inclinations in the human conduct, and such cases may affect the merit of output of the arbitration, and will stand incurable. A better supervision and scrutiny by judiciary alone will solve this problem. 

It is shocking and disgraceful to our legal system that the powerful is pointing to a person before whom the person standing in lower position should attend, and all matters will be decided in his chamber where the influential and the powerful has all access including to dictate, and the result of such proceeding becomes a decree and being made enforceable strictly by the mighty arms of a court of law. This is an outdated law in the matter of loan transaction between the powerful financier and starving borrower. The printed form stereotypes agreements unless published in advance are only to be treated as the one signed by the debtor without proper understanding, and such contentions by the debtor are to be appreciated and benefits to be extended in favour of the debtor while passing decisions. The arms of court should not be stretched to the poor by all its vigour at the instance of the powerful on an award passed by his own person, but the law should be changed to free the poor from all such chance of exploitations and oppressions.

A Socialist Lawyer with Social Commitment -- A Tribute to MKD

(By Adv. Parvathi Sanjay, High Court of Kerala)

A banyan tree has got uprooted......a tree with its vast expanse, grand presence, evergreen and drought resistant feature that provided security for years for the entire society especially the legal fraternity of this State has succumbed to the law of nature. Senior counsel Mr.M.K.Damodaran is no more. Not until the vaccum of disbelief was filled with the horror of comprehension did any of us realise how much we identified ourselves with this loss, even apart from personal friendship/relationship. He was a pillar of strength and a source of reassurance for all who approached him for help, advise, guidance, donations and solutions irrespective of their caste, religion, creed, race, economic background or political affiliation.

Damodaran Sir fondly known as ‘Damuettan’ alias ‘MKD’ hailed from an aristocratic family in Malabar and plunged into politics during his student days. He soon became a well reckoned leader and even underwent imprisonment during the period of Emergency in the country. His public relations were amazing and he was successful in maintaining it the right way. His commonsense approach and grasp of the basic facts of a case coupled with his intelligent, prudent interpretation of statute and law helped him rise to be one of the most successful lawyers of this State. His charming countenance and unperturbed disposition were text book features of advocacy. Shrewd examination skills and refusal to get provoked in the court room were his hall marks. Its a much talked incident that a Division Bench of the Honourable High Court of Kerala hearing criminal cases in the early eighties had provoked Damodaran Sir while he was arguing a murder appeal before them. They countered each and every point raised by Sir and expressed irritation and disagreement at every argument by Sir.Damodaran Sir is heard to have withstood the ‘attitude’ pleasantly and handled the court pleasingly. Later after pronouncement of the judgment, one of the Judges of the said Division Bench apparently told Sir that he had a bet with his brother Judge whether Sir would remain calm and cool inspite of severe provocation from the Court.

The methodical manner in which his office functioned helped his junior lawyers to be self sufficient, efficient and confident when they became independent. He was an administrator par excellence which he proved during his 5 year stint as the Advocate General of this State. His criteria while choosing/deciding his team of lawyers to work with him (when he was Advocate General) were purely their academic bent, integrity and commitment. Even when he remained a tough taskmaster, he would always own up his juniors or his team and would never let them down before the clients and beaurocrats for their omissions or faults. He maintained the dignity and decorum of the office of the Advocate General and was very particular that his team of Government Pleaders functioned meticulously with their heads high. He refused to be a puppet in the hands of politicians and beaurocrats while he was the Advocate General and always kept them at their place. The Government received all privileges of a client. All the same he made it clear through his conduct and deeds that the Advocate General and the Government Pleaders were not their subordinates. He was always ready to respect and accept the individuality in a person even if it was in conflict with his concepts and principles. There were never false hopes or promises from him and anyone who approached him for any kind of help would be told at the outset the possible outcome of it. His refusal to accept one’s suggestions would be plain and on his face. He was frank but never hurtingly blunt. He was stern but never rude. He used to face controversies and issues with matured grace. His client dealing was a treat to watch and learn. His mediation skills bore fruit in many tough issues-political, legal and social. He has had to face setbacks from many whom he had helped. He would then smile away his hurt by stating that it merely reflected their culture. He had seasoned his mind to think and act above prejudices and pettiness. He had tremendous respect for women and the old and is never heard to have used abusive or uncivic language.

MKD’s office was once like the land where the sun never set. His juniors (three of them have adorned the Bench of this Honourable Court) are heard to say that they have had to work overnight many days and while leaving office during the early hours would be reminded by Sir to report early in the morning which was just 2-3 hours away. MKD effectively blended his legal and political background and has been the cause for many mile stone events in the social history of this State. It was at his instance that a Human Rights forum with a national banner comprising of retired Judges of various High Courts outside this State visited Koothuparambu following the mob firing incident in 1994 and conducted an informal inquiry into it. The inquiry sittings by this Forum proved to be a platform for the family and associates of the victims of the firing to vent out their emotions freely and receive first aid reliefs by way of words and deeds. The report of this informal inquiry was placed before the then concerned authorities which received the right acknowledgement it deserved. He had a unique strategy to solve problems. He hardly preoccupied himself on the symptoms but used to probe into the root cause of the issue and he saw to it that the issue was eradicated once and for all without a chance for relapse. Inspite of his sterling quality of being approachable, he was discrete in his attitude and meted out respect and affection only to those who deserved it. He never let others take him for granted. He was witty and had remarkable sense of humour.

MKD’s contributions to the overall welfare of the lawyer community include his effective tenure as Bar Council (Kerala State) Chairman (ex-officio), his efforts to build the Chamber complex for the lawyers, his timely and strong intervention in issues relating to the lawyers’ welfare fund and the High Court building construction.

MKD era has ended. I am sure the loss on his death is just not for his family, his relatives, clients, friends and the bar. His office at Kacheripady was a one stop destination for a common man as well as a politician or a beaurocrat where he was assured solace to his anxiety and a solution to his issues. That is lost for ever.

It is hard to eulogize any man that is, to capture in words not just the facts and the dates that make his life, but the essential truth of a person and his unique qualities that illuminate his soul. Albert Einstein is heard to have said, “The value of a man should be seen in what he gives and not in what he is able to receive”. MKD always gave...gave much to his work, to his comrades, to his colleagues, to his friends, family and relatives and to the society in whole. He was every lawyer’s pride and a common man’s guide.

Sir, we knew that we would have to lose you at some point of time in the journey of life but we confess, our loss is unimaginable, irreparable and irreplaceable. You will always be remembered by this God’s own country as a great socialist lawyer with immense social values and commitment, a father figure, a guardian and a Guru in toto..... Our Pranams to you.

Privacy as a Public Value

(By Thulasi K. Raj, Advocate, High Court of Kerala)

Nine Judges of the Supreme Court of India are deliberating on the status of the constitutional right to privacy and its link with the Aadharscheme. The arguments made and the questions raised will have significant ramifications on our democracy. The Supreme Court proceedings have posed certain academic suspicions, even among legal scholars. For instance, Prashant Reddy seriously argues that the Supreme Court has “divorced” the privacy issue from “the Aadhar challenge.” (Prashant Reddy, The Wire, 20.07.2017). Another surfacing argument is that the Court is embarking on a theoretical debate without assessing the Aadhar scheme with its nitty-gritties. I think both the apprehensions are premature. This is because a conceptual debate on the meaning and nature of the right to privacy is exactly what was lacking in Indian jurisprudence. Moreover, the conventional approach that rights can be violated only by the State or the State organs and not by private individuals also needs to be debunked.

For instance, when you walk down the street and part of your face suffered a bad burn. Do you have a right to privacy that the other people on the street do not see your face? Obviously not. This is because people on the street cannot be reasonably expected to anticipate this and not look at a stranger’s face. Imagine you wear a face veil to conceal the injury. A man walking past, lifts your face veil out of sheer curiosity. The intuitive response is that there has been a violation of the right to privacy.

A good theory of privacy must not conceive this right as merely private without any societal bearing. Privacy has a significant communitarian value that the morally autonomous individuals engage in greater social interaction. Privacy, establishes collective societal development (Regan P., ‘Legislating Privacy’, 1995) and an empowered and inspired society. It seems plausible to argue that without a reasonable promise of privacy, meaningful social relationships and interactions tend to diminish. Privacy is, therefore, also a public value.

Two questions

This brings us to at least two complex questions- questions that will tilt the balance in the Aadhar case in interesting ways - Firstly, is privacy a free standing right, separable from other related rights? And secondly, what does the right to privacy entail? It will be interesting to observe which approach and which conception of the right to privacy will the Supreme Court subscribe. In fact, the court’s adjudication on the Aadhar will and ideally should, depend upon a convincing theory of privacy.

Derivative or Distinctive ?

The content of privacy has been interpreted in varied ways. The strong contenders in this area are the reductionist and distinctiveness views. The former argues that the right to privacy protects no special interest and other rights such as the right to property are sufficient to capture privacy interests. The latter views privacy as protecting distinctive rights and does warrant separate recognition.

The reductionists argue that there is no free standing right to privacy. A strong privacy sceptic, J.J.Thomson argues that privacy is a derivative right and part of cluster of other rights, and “it is possible to explain in the case of each right in the cluster how come we have it without ever once mentioning the right to privacy.”(J.J.Thomson,‘ The Right to Privacy’, 1975) She examines the example of a man who owns a pornographic picture who does not want anyone else to know that he has the picture. She says that if we train our X-ray device on the wall-safe and look in, we would violate his privacy. But she contends that what is violated is his right to property which includes a negative right that others shall not look at it. Hence, she argues that every seemingly privacy violation is in reality a violation of some other right, in this case, a right to property.

But surely this account must be false. The problem with her argument is that a claim to privacy is not dependent upon other rights. Ownership could often be useful, but not absolutely material in making a privacy claim. Ann, a robber certainly has the right against another person installing a camera to glimpse at the stolen articles collected in her house. This right remains irrespective of whether she owns the articles in question or not.  Her right to privacy is therefore, not derivative of her (non-existing) right to property.

Another example could be this: In a public place, be it the street, or the restaurant, I whisper to my friend a secret that could not wait. Another person who uses a listening device to access the information is certainly invading my privacy. But this violation is not caused by factors like ownership or even possession. The intruder has violated my personal space, which is momentarily and spontaneously created. Thomas Scanlonseems to be very persuasive as he contends, “ownership is relevant in determining the boundaries of our zone of privacy, but its relevance is determined by norms whose basis lies in our interest in privacy, not in the notion of ownership.” (Thomas Scanlon, ‘Thomson on Privacy ’, 1975).

One would hope that the Court adopts a non-derivative approach to the right to privacy. If so, the Court will not require the petitioners to show the violation of any other right, such as the right to property. If the derivative line is chosen, the Court will require that something more, in addition to the so-called right to privacy be shown.

Conceptions of privacy

Privacy has been conceived by some as the ‘access account’, the  right to access to an individual. This account states that if you can determine as to who has access to you, then your privacy stays intact. In connection, privacy is viewed as non-interference and the absence of unwarranted intrusion or the “right to be let alone”(Warren and Brandeis, ‘The Right to Privacy’, 1890).

This idea of privacy has been quite easily challenged by what is commonly called the ‘control account’ of privacy. Control theorists demonstrate it through a contemporary example.  Imagine that an unknown individual collects your personal information. Imagine further that she stores this information, but chooses not to use it for the time being. Even though she does not use it, your privacy is violated by the mere fact that you know that somebody possesses your information without your consent, even with the possibility of use at a later point of time.

In the novel 1984, George Orwell creates a fictional society where the thoughts of individuals are monitored by the ‘thought police’ of the State. He says that there was no way of knowing if , at a given point of time, you are monitored by the State or not.  This is why it has been rightly argued by some of the petitioners before the court that mere surveillance or storage of information itself can create a chilling effect on your actions. It will disturb your private space in dangerous ways.

A   balanced access-control theory, which captivates both information and access, does seem appropriate to absorb major privacy infractions. Adam Mooreprovides a satisfactory definition. According to him, “a right to privacy is a right to control access to and uses of —places, bodies, and personal information.”(Adam Moore, ‘Defining Privacy’, 2008).
This seems to address both - collection of information and use of information.

Implications

Aadhar is said to be probably the largest database system in the world of storing biometric information.  The 12-digit Aadhar number creates and facilitates one’s digital identity. According to the government, more than 99% of Indian adults have enrolled in Aadhar. (The Hindu, 27.01.2017). This is crucial while examining the allegations of Aadhar data leakage and the privacy implications associated with it.

Whatever the Supreme Court might decide on the issue, the present case invariably has far reaching implications on India’s constitutional law and politics for the years to come. The court seems to be siding towards a liberal – as opposed to a rigid-approach to constitutional interpretation. For those who are skeptical about this methodology can probably find solace in the words of Ronald Dworkin, an influential legal philosopher of the twentieth century. In the introduction to his book ‘Freedom’s law: The Moral Reading of the American Constitution,’ he says that the “moral reading” is the  ideal way of “reading and enforcing a political constitution.…So when some novel or controversial constitutional issue arises….people who form an opinion must decide how an abstract moral principle is best understood...The moral reading therefore brings political morality into the heart of constitutional law.”

(This article originally appeared inBar & Bench on 31 July 2017).

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.