KERALA HIGH COURT ON CASES INVOLVING CO-OPERATIVES IN 2006

(By R. Muralidharan, Deputy Registrar (Planning & Legal, Puducherry ) 

It is a matter of pride that every year Kerala High Court continues to contribute to the case law section in every branch of law through its innovate, path breaking and social conscious decisions. The year 2006 is no exception. This article catalogues various decisions rendered by the High Court of Kerala in the field of co-operative law. The judgments reported by the Kerala Law Times during the year 2006 on co-operative law are indexed subject-wise. The sections and rules referred to connote the Kerala Co-operative Societies Act, 1969 and Kerala Co-operative Societies Rules, 1969.

Management  of  Co-operative  Societies                                              

What is the correct import of ‘may’ appearing in Rule 44(3) came to decided in Sasisekharan Nair v. Registrar of Co-operative Societies, 2006 (1) KLT 255. R.44(3) specifically provides that the Registrar may (shall) by an order in writing, declare that he shall cease to be a member of the committee concerned from the date of such disqualification. This means, the declaration as to disqualification takes effect from the date of incurring the disqualification in terms of the various disqualifications enumerated in the earlier provisions of Rule 44. The penalty of disqualification of a person has necessarily to be personal and the liability on account disqualification will have to be burdened upon the person disqualified only.

In Mary Thomas v. Jerome Thomas (1995 (1) KLT 674), the Court categorically laid down that once a person has incurred the disqualification enumerated under R.44, it is not within any discretionary province of the Registrar to refuse to issue an order disqualifying such a person. The word “may” occurring in sub-r. (3) of R.44 is essentially a command to the Registrar that he shall, on finding that a person is disqualified in terms of R.44 make a declaration to that effect, however, that he may act either suo motu or on petition by any person.

The petitioners would continue to hold office as members of the board of directors of the bank, until a declaration under R.44(3), if any, is issued, if it is ultimately held that they are disqualified. Such a view gets further intrinsic support from the statute itself since an order under R.44(3) envisages a pre-decisional hearing.

In Ebrahim Syed Mohammed v. Pothanicadu Farmers Co-operative Bank Ltd., 2006 (1) KLT 335, it was held that at least one half of the total strength of the committee shall be present to consider no confidence motion against the President of the society.

R. 43A is a self contained code in so far as removal of President, Vice-President etc., by no confidence motion is concerned. It provides for the notice and its requirement, the provision for the meeting and also fixed the modalities for meeting. R. 43A (v) provides that no meeting under R. 43A shall be held, if at the time appointed under the foregoing provision or, within half an hour from such time, such number of members as shall constituted one half of the total strength of the committee are not present. The provision in R. 43A(v) will have an overriding effect on any provision in the bye laws in the society as regards the quorum for a meeting where a no-confidence motion is considered. When the provision in sub-r.(x) is read in conjunction with the provision in sub-r.(v), it is the requirement that at least one half of the total strength of the committee shall be present and the motion shall not be carried on a simple majority of the members of the committee.

The above view of the learned single Judge was confirmed by the Division Bench in Mathai v. Ebrahim Syed Mohammed, reported in 2006 (1) KLT 696. The plea before the Division Bench was that the lower Court has overlooked S. 28(5) which says that quorum for a meeting of a committee shall be such number of members just above fifty per cent of the total number of the members of that committee. The Division Bench held that S.28AA read with R.43A would show that a no confidence motion can be considered if one half of the total strength of the committee is present. S. 28(5) cannot be imported while dealing with the motion of no confidence against the President. Provisions are laid down in S.28AA read with R. 43A, clause 27(3) of the bye laws is not in consonance with the statutory provisions, S.28AA read with R.43A. Consequently learned single Judge is justified in holding that statutory provision would override the bye laws and there was sufficient quorum for considering the no confidence motion and the Bench rejected the appeal.

The dictum laid down in Renosh Samuel vs. Joint Registrar, 2006 (1) KLT 374, is that if a person is disqualified under the provisions of the bye laws, he can be declared as disqualified only by following the procedure.

R.44 (3) of the Rules provides for a declaration in writing by the Registrar that a member who becomes disqualified to be a member of the committee shall cease to be a member of the board. Such a decision calls for a pre-decisional hearing, which is inbuilt in R.44 (3). R.44 (3) (a) makes Rule 44(1) applicable, to be among the grounds of disqualification. R. 44(1)(j) provides for a ground of disqualification that the said member is disqualified under any other provisions in the bye laws of the society. This means that if a person is disqualified under the provisions of the bye laws of the society, he can be declared as disqualified only following the procedure and by passing a declaration to such effect as enjoined by R.44(3).

The non-compliance of R.38 (4) can be only in exceptionally exceptional situation as in Sadasivan’s case (1994 (2) KLT 238) where the President himself was not available owing to his removal of a no-confidence motion and that by the resignation of the other members, the quorum had fallen below the prescribed limit for transacting the business of the committee. In such cases, the quorum is available, there is no way but to follow R. 38(4) of the Rules.

While S. 30(1) makes it obligatory on the committee to call a special general meeting on the requisition in writing by 1/5th of the members of the society following the prescription in R. 36(1)(b); such compulsion being explicit in the use of the term “shall call such meeting” in S.30(1); the use of the term “shall have power to call such meeting” in S.30(2) makes the legislative intention clear. The Registrar has the power to decide as to whether even in a situation where a requisition is alleged to have been made as provided in S.30(1) a meeting ought to be called or not. May be that the Registrar would not be entitled to sit in judgment on the matters sought to be considered in the special general body meeting that is sought to be called for. While the Registrar shall not refrain from calling such a meeting under normal circumstances, S. 30(2) admits such power with the Registrar to decide as to whether a meeting should be held at least in such cases where it would not be expedient to do so, going by the objects sought to be achieved by the fixation of the time limit in S.30. This view is expressed in Jose Paul v. Joint Registrar, reported in 2006 (1) KLT 976.

S. 28AA(2) provides that a committee shall remove from office President, Vice President or the Treasurer or any other officers of the committee if a motion expressing want of confidence in any or all of them is carried with the support of the majority of the members of such committee in accordance with the procedure as may be prescribed. Going by the definition of “officer” in S.2(n) the term officer includes any person empowered under the bye laws to give directions in regard to the business of the co-operative society. Any member of the committee is also an officer.

The notice of meeting is not intended to provide any further or particular gestation period for the motion, but only to notify the meeting. Unless a particular situation results in failure of justice, lack of notice of a particular number of clear days would make no difference. The provision providing for 15 clear days’ under R.43 (A)(ii) notice is only directory and not mandatory.

One would not get a right to vote in support of or against a no confidence motion against him. There is subtle distinction between a motion seeking confidence of a body and a no confidence motion against a member of that body. He is not entitled to insist that 15 clear days’ notice ought to have been given to him, vide Mattachan v. Joint Registrar (General) (2006 (2) KLT 45). 

In Viswanathan Master v. Registrar of Co-operative Societies, 2006 (3) KLT 99 (SN) it was held that when quorum is lost by resignation of Government nominees an Administrator can be appointed under S.33.

The decision through Mohanan v. Registrar of Co-operative Societies, 2006 (4) KLT 807 is that the Registrar may appoint a single administrator or administrators not exceeding three under S.33(b) and R.44A. Appointment of a single administrator and the nomination of a member from the primary cooperative society are in accordance with the Act and Rules.

Previous sanction is necessary to invest funds for the purpose mentioned in R.54. Even if any prior sanction is required from the Registrar for purchasing property that may be necessary to conduct the business of the society, the power should not be used for refusing the approval. The provisions of S.66 and 66A of the Act empower the Registrar to issue general directions or guidelines to the societies or banks in furtherance of the Act and Rules. The power shall be exercised with due caution and circumspection and only in cases where it is really called for. While deciding so in Thiruvalla East Co-operative Bank v. Joint Registrar, 2006(4) KLT 959, the Court relied on the decisions in Ajit v. State of Kerala (1995 (1) KLT 363 (F.B.) and Elampal Service Co-operative Bank v. Government of Kerala (2000 (3) KLT 389).

Election

A society which has not renewed its affiliation with State Co-operative Union as per S.90 (2) and is not functioning shall not have the right to vote and contest the election in the Circle Co-operative Union. Payment of renewal fee is not an empty formality. Renewal is not automatic, but based on the details furnished in the prescribed statutory form which has to be approved by the managing committee of the State Co-operative Union. Requirement of affiliation is a mandatory requirement to vote and contest in the election to the Circle Co-operative Union. While deciding so in Somarajan v. State of Kerala (2006 (2) KLT 909) the Division Bench held that the decisions rendered by learned Single Judges reported in 1991 (1) KLT 693 and 2004 (3) KLT 62 are not correct and overruled.

Supervision  of  Co-operative  Societies

The issue whether the petitioner is entitled to be heard before the Registrar authorizes another officer to enquire into the conduct of the petitioner or its members is answered in negative in 2005 (3) KLT 69. All that the last limb of S.68(1) provides, while it requires an order in writing to be made, is the delegation of the power to enquire, which otherwise rests with the Registrar. Such delegation of power to conduct an inquiry is not a matter in which the person against whom the inquiry will be conducted is to be heard. This is because he would have got no such opportunity of hearing if the Registrar were to directly conduct the inquiry. Before the Registrar takes a decision under S. 68(1), the society has no right to be heard. This decision is reported in Trivandrum Taluk Taxi Drivers Co-op. Society Ltd. v. State of Kerala, 2006 (1) KLT 986.

Maintainability  of  Writ  Petition  against  a  co-operative  society

The question before the Full Bench was when writ can be issued against a co-operative society. In John v. Liquidator, 2006 (1) KLT 11, the Full Bench held that the words “any person or authority” used in Art.226 are not to be confined only to statutory authorities and instrumentalities of State. They may cover any other person or body performing public duty. A writ will lie against a co-operative society only when the duty owned by the co-operative society is of a public nature or when there is infringement of any statutory rule by such a co-operative society.

Exercise of this extra ordinary jurisdiction vested in the High Court is restricted by wise and clear restrains evolved through judicial decisions and therefore, ordinarily a High Court exercising the jurisdiction under Art.226 of the Constitution will not go beyond those wholesome inhibitions except in such situations which justify a “timely judicial interdict or mandate”. The mentor of law is justice and a potent drug should be judiciously administered.

What is material is the nature of the duty placed on the authority concerned. A writ will lie against a co-operative society only when the duty owned by the co-operative society is of a public nature or when there is infringement of any statutory rules by such a co-operative society.

Writ Petition seeking a direction to a co-operative society to return the title deeds of the properties mortgaged by the petitioners to obtain housing loan is not maintainable under Art. 226. The remedy is not by way of Writ Petition, but lies elsewhere, where the rights and liabilities of the parties are to be examined closely on evidence. The matter being a civil dispute, has to be resolved by the machinery set up under S.69 of the Act which provides for resolving a dispute between the members of the society and the apex society to which the primary society is constituted as well. Therefore, there is an efficacious alternate remedy available to the petitioners. So the Writ Petition cannot be entertained, as the relief sought for fall outside the scope of writ proceedings.

Even in a case where facts are admitted, the jurisdiction will not be exercised unless the authority, against whom a writ is sought for, owes a public duty or a statutory duty to act in a particular manner towards the person who asks for such a writ. 

On  employees  of  Co-operative  Societies

To resolve inter se seniority dispute between employees R.176 cannot be invoked. After 2-1-2003 only the Arbitration Court or Registrar can adjudicate the same. By amendment made to S.69 with effect from 2-1-2003, clause (d) of sub-s.2 of S.69 brought all disputes in connection with the employment, including their promotion and inter se seniority under the canopy of the word ‘dispute’ for the purpose of S.69(1). This is a clear statutory exclusion of the authority under R.176, which otherwise was being exercised in connection with such disputes, as decided in Prakasini v. Joint Registrar (2006 (1) KLT 199).

If the administrator cannot take disciplinary action, how can he maintain discipline? If discipline is not maintained, how can he bring the ship in doldrums on an even keel? Framing this question and answering to this in Mary v. Kuzhur Service Co-operative Bank Ltd. 2006 (1) KLT 323, the Court held that it is the duty of the administrator to take such action as is necessary to enable the society to carry on its functions as enjoined by law so as “to bring on an even keel a ship which was in doldrums”.

By virtue of S.32, the administrator becomes the President, sub-committee and managing committee all rolled into one. Therefore, all the functions to be exercised by the various authorities contemplated in R.198 vests with one authority, namely the administrator. Such authority cannot be denied to the administrator simply because the petitioner would lose a right of appeal. This is a situation where the doctrine of necessity has to be necessarily applied, although the said doctrine is generally invoked in the context of violation of the principles of natural justice, especially bias. This doctrine permits certain judicial, quasi-judicial and administrative actions to be done as a matter of necessity, even though in the ordinary circumstances, such action would have been held as improper and invalid.

Once the power to impose punishments on the employees is conceded to the administrator, the facts that under R.198, the sub-committee is the disciplinary authority and the petitioner has a right of appeal to the managing committee lose all relevance. On the question of doctrine of necessity, the Court quoted with advantage two decisions of the Apex Court, in Election Commission of India & Anr. v. Dr. Subramanyam Swamy & Anr., reported in (1996) 4 SCC 104 and J. Mohapatra & Co. and another v. State of Orissa & Anr., (1984) 4 SCC 103.

The co-operative societies are not free to fix different age for retirement of employees. All societies in the State would follow a uniform age for retirement, i.e. 58 years as laid down in R.183(2). The Registrar was not justified in approving the bye laws reducing the age of retirement from 58 to 55. The Division Bench in Sarada v. Deputy Registrar, 2006 (1) KLT 745, has thus affirmed the decision of a single Judge in Cochin Co-operative Hospitals Society Ltd. v. Registrar of Co-operative Societies (2005 (3) KLT 804) and set aside the judgment of the Court made in WP(C) 20619 of 2003 against which this Writ Appeal was preferred.

Mere exemption from the qualification in regard to the lower post of manager cannot automatically stake a claim for promotion on the basis of the exemption so granted in relation to the lower post under Rules 185 and 186. It is for the committee to take a decision whether in the facts of a particular case a particular candidate is deserving for being granted an exemption from the possession of qualification, with the prior approval of the Registrar, vide Oonnoonny v. State of Kerala (2006 (1) KLT 899).

The year mentioned in R.183 is the co-operative year. Notification inviting applications for various posts in the respondent bank prescribing age as 1st January 2006 is contrary to R.183, as held in Lekha v. Trivandrum Service Co-operative Bank Ltd. - 2006 (4) KLT 109.

In West Quilon Service Co-operative Bank v. State of Kerala, 2006 (4) KLT 950 it was held that R. 185 (8) enables the committee of the society to relax the qualification of the employee. The power to give relaxation is not given to the Registrar or Joint Registrar. The Registrar did only have the power to grant prior approval. Only after such prior approval, the committee could have granted relaxation. The said rule further reveals that relaxation shall be given to an ‘employee’. An order passed by the Registrar granting exemption to a former employee is not in tune with the statute. Even if the Registrar is competent to grant relaxation, it could not have been granted to a retired employee, who is no longer an ‘employee’.

Other Laws applicable to Co-operatives

As per S. 141(1) of the Negotiable Instruments Act, 1881, if the person committing an offence under S.138 is a company every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Explanation to S.141 stated that ‘company’ means any body corporate and includes a firm or other association of individuals. When the explanation is read with S.141(1) it is clear that if the person committing an offence under S.138 is a registered society every person who at the time of offence was committed, was in charge of, and was responsible to the society for the conduct of the business of the society as well as the society shall be deemed to be guilty of the offence and shall be liable to proceeded against and punished accordingly. When the cheques issued by the Secretary of co-operative society for and on behalf of the society was dishonoured, he would be liable under S.138 even if he ceased to be the Secretary. This view is clear from the decision in Shaji v. Kerala State Co-op. Marketing Federation Ltd., 2006 (2) KLT 289.

Banking comes under the exclusive jurisdiction of Central Government covered under List Item 45. When a conflict between two Acts is alleged, a harmonious construction is also required. In this case, there is no conflict. With regard to the registration, winding up of administration etc. provisions of the Co-operative Societies Act are applicable, as State Legislature is competent to legislate. But in so far as co-operative societies are doing the business of banking, the Act and Regulations framed by the Centre is applicable and Central Government has got full jurisdiction to regulate the banking business and, hence, provisions under the Banking Regulation Act regulating the banking business done by co-operative societies are not unconstitutional when Parliament is the competent body to pass legislation on banking. Reserve Bank directions are applicable to primary co-operative banks also, apart from the urban co-operative banks and there is no infirmity in the Circular No.4 of 2003 dated 23-1-2003 issued by the Registrar. The Division Bench in Cherukode Co-operative Rural Bank Ltd. v. Parur Service Co-operative Bank, 2006 (3) KLT 38 has agreed with the decision in Muhammad Usman v. Registrar of Co-operative Societies (2003 (1) KLT 69).

The petitioner, an A class member of Service Co-operative Bank has sought for information, under the Right to Information Act, 2005, copies of the minutes of various meetings of the managing committee. The society took shelter under S.8(1)(d) stating that there was no obligation to give any citizen information including commercial confidence, trade secrets, the disclosure of which would harm the competitive position of a third party. Quoting the definition of information under S.2(f), the Court in Abdul Razack v. State of Kerala (2006 (3) KLT 696) held that the minutes of the managing committee meetings is not pertaining to the commercial confidence, trade secrets or intellectual property and the petitioner is entitled to obtain the information. 

Iron The Creases and Use The Law

(By P.B.Sahasranaman, Advocate, Ernakulam)

The Kerala Protection of River Banks and Regulation of Removal of Sand Act, 2001 (Act 18 of 2001) was published in the Gazette on 29th December, 2001 in Malayalam.

Art.348(1)(b) requires that the authoritative texts of all Bills to be introduced or amendments thereto to be moved in either Parliament or in Assembly and of all Ordinances promulgated and of all orders, rules, regulations and bye-laws issued under the Constitution should be in English. Clause (3) permits usage of any local language other than a translation of the same in English language for use in the Legislature of the State, but requires that a translation of the same in English language to be published under authority. In view of the mandate the State Government is bound to publish the English translation of all the enactments passed in Malayalam.

The awkward situation of not publishing the translation of legislations in English has been noticed by the Kerala High Court as early as in 1995¹.

The situation has not improved in the State. In a public interest litigation filed by a lawyer the High Court has again issued direction to publish English translation of all the enactments².

The said direction has forced the Government of Kerala to publish the English translation of Act 18 of 2001 on 20th March, 2002³. 

Malayalam version of S.23 of this enactment empowers the Police or Revenue Officials to confiscate the vehicles. Whereas in English translation the heading is shown as “ Confiscation of Vehicles”. But in the operative portion it is stated that the vehicle used for the transaction is liable for “ seizure “ by the Police or Revenue Officials. The question is whether the law intended for the confiscation or seizure of the vehicle ?

The legislation is perfect in Malayalam as permitted under Art. 210 of the Constitution. If the translators have given a different meaning to the words in the original statute it will not become another legislation. While interpreting a translated provision of law it is always to remember to the observations of Lord Denning, speaking for the House of Lords made in the case of Seaford Court Estates Ltd. v. Asher (1949) 2 KB 481:

“ Whenever a statute comes up for consideration it must be remembered that it is not within human powers to foresee the manifold sets of facts which may arise, and, even if it were, it is not possible to provide for them in terms free from all ambiguity. The English language is not an instrument of mathematic precision. Our literature would be much the poorer if it were. This is where the draftsmen of Acts of Parliament have often been unfairly criticized. A Judge, believing himself to be fettered by the supposed rule that he must look to the language and nothing else, laments that the draftsman have not provided for this or that, or have been guilty of some or other ambiguity. It would certainly save the Judges trouble if Acts of Parliament were drafted with divine prescience and perfect clarity. In the absence of it, when a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it, and of the mischief when it was passed to remedy, and then he must supplement the written words so as to give “force and life” to intention of the Legislature .............Put into homely metaphor it is this : A Judge should ask himself the question: if the makers of the Act had themselves come across this ruck in the texture of it, how would they have straightened it out ? He must then do as they would have done . A Judge must not alter the material of which it is woven, but he can and should iron out the creases".

The above judgment was quoted in many decisions by the Courts to remind themselves of the said thumb rule. Act 18 of 2001 was an offshoot of the decision of the High Court of Kerala, which has issued various directions to prevent the illegal sand mining from the rivers of Kerala⁴. Of course that is not the final word. What the legislator has intended cannot be taken away by a translator. The general frame work furnished by the statute is to be filled up in for each case by means of interpretation, that is, by following out the principles of the statute. In every case, without exception, it is the business of the court to supply what the statute omits, but always by means of an interpretative function⁵.

AN ANATOMY OF SUDHEEPAN v. STATE OF KERALA

(By *Salim Kambisseri, Advocate, Pathanamthitta)

Introduction 

All the cannons of construction have one aim in view, that is to ascertain the legislative intention of a statute under consideration. “The purpose of a statute is the reasons for its enactment, the spirit of reason of the law is perhaps strictly connected to the legislative intention.”¹ Lord Coke, the first or the best “intention seeker” has, centuries back, propounded the often quoted MISCHIEF RULE in the famous HEYDON’S CASE. Mischief Rule insists that court should adopt the construction which would suppress the mischief and advance the remedy². In the words of Cardozo, “a Judge is not to innovate at pleasure. He is not a knight-errant roaring at will in pursuit of his own ideal of beauty or goodness.” A discussion inconsistent with the intention of legislature or which narrows down the language of a statute and to allow persons to escape from within its purview or through  loopholes should not be encouraged.

Ratio of Sudheepan’s case

In this article I do, with due respect, doubt the correctness of the principles of law enunciated by the Hon’ble High Court of Kerala in Sudheepan v. State of Kerala³. Relying on the decision reported in Surendran v. Excise Inspector ⁴ Hon’ble Justice R. Basant observed as follows:-

“The allegation is only that appellant was in possession of the contraband liquor. Under S.55(a) of the Abkari Act, the prosecution must allege and prove that possession was in connection with export, import, transport or transit of liquor.”

It is most respectfully submitted that interpretation given to S.55(a) of Abkari Act by His Lordship is against the legislative intention and the object sought to be achieved through the said provision. The section nowhere postulates that the possession of contraband liquor must be incidental or in connection with export, import, transport transits of liquor. Mere possession of liquor or intoxicating drug in contravention of the Act or any rule or order shall also come under S.55(a) Abkari Act.

History  of  Legislation

Abkari Act, Act1/1077, contained no provision to regulate the movement of liquor or intoxicating drug from one place in a neighbouring State or Union Territory to another place in the State or Union Territory through the territories of the State of Kerala. As such movement of liquor or intoxicating drug were frequent without the knowledge of the Excise authorities, they were unable to prevent the sale of such goods in the State of Kerala or other malpractices in the course of such movements. So the Abkari Act was amended during the year 1975 by the Act 10/1975.⁵ (see the Statement of Objects and Reasons for Act 10/75). The amendment is as follows:-

Act 10/75.  S.4.  Amendment of S.55:- “In S.55 of the principal Act, in clause (a), for the words “transports” and “or possesses” the words "transports, transits or possesses" "shall be submitted".

So it is crystal clear that, in clause (a) the word "transits" alone was substituted in between the words "transports" and "or possesses" by the amendment.

Printing  mistake  became  law

Unfortunately, in all text books, the amendment was printed, by putting the words “transports, transits or possesses” in brackets. This created confusion even in the judicial mind also. My view is endorsed by the observations of Hon’ble Justice K.P. Balanarayana Marar in Meenakshi v. Excise Circle Inspector⁶ dissenting the view of Hon’ble Justice B.M. Thulasidas in Rajeevan v. State of Kerala⁷. It was held that the words “transports, transits or possesses” used in S.55(a) did not in any way qualify or modify the words “import” and “exports” etc. That is manifested by the comma put after each of the words.  Each of them is an independent act made punishable as such.

Hon’ble Justice M.R. Hariharan Nair in Purushan v. State of Kerala ⁸ had occasion to discuss about this aspect. It was held:-

‘I have seen the amendment of 1975. What is introduced through the amendment is only the word "transit” in S.55 in between the words transports and possesses.”

In this case Hon’ble High Court mainly considered S.55(a) or 58 was attracted in an offence which was committed in 1992. It was also held that in Rajendran’ s case the Court has proceeded on the wrong assumption that all the words were introduced through the same amendment, whereas only one word transits was introduced. Entire trouble were based on the unfortunate mischief by the book  sellers in bracketing the words “transports, transits and possesses”

I am aware of the Division Bench decision Surendran v. Excise Inspector⁹ which discussed the conflict of above decisions and regarding the scope of S.55 and 58 of Abkari Act. The case dealt with illicit possession of 15 litres of arrack in the year 1989, i.e. 18 years back. It may be remembered that S.58 was having lesser punishment at that time. The punishments for S.58 was equalised with S.55(a) by Act 16 of 1997, with effect from 3.6.1997. Actually the crucial question whether a mere possession of liquor or intoxicating drug in contravention of the Act or any rule, may amount to S.55(a) was not considered in detail in this case.

None of the decisions have considered the impact of the presumption under Section 64 of the Abkari Act which says that in prosecution under S. 55B, Section 56, Section 57, Section 58, Section 58A and Section 58B. It shall be presumed until the contrary is proved that the accused person has committed the offence under that Section in respect of any liquor, intoxicating drug or any utensils, implement or apparatus whatsoever for the purpose of manufacture of liquor other than toddy of any intoxicating drug or any such material are ordinarily used in the manufacture of liquor or of any intoxicating drug of the possession of which he is unable to account satisfactorily and the holder of a licence or permit under this Act shall be punishable as well the actual offender for any offence committed by any person in his employ and acting on his behalf under Section 8 or Section 55 or Section 55B or Section 56 or Section 57 per Section 58 of Section 58A or Section 58B as if he had himself committed the same unless he shall establish that all due and reasonable precautions were exercised by him to prevent the commission of such offence.  It is clear from the Section that once the prosecution has proved possession of liquor then the presumption applies and it shall be presumed that the offence under Section 55 (a) of the Act has been committed. The burden is on the accused to account for the possession and also prove the purpose for which he was keeping possession of such article which he is not otherwise entitled to keep possession of under the Act. 

In a recent decision, Paravan v. State of Kerala¹⁰, Hon’ble Justice V. Ramkumar seems to have upheld the view that mere possession contraband liquor, even if not incidental to import, transport or transits may amount to S.55(a) of Abkari Act.

Relevancy  of  Headings

The heading to the S.55(a) is “For illegal import etc.” (emphasis supplied). Headings, like marginal notes are not voted on or passed by the Parliament, but were inserted after the bill has become law. It is well settled that the court cannot use such headings to give a different effect to the clear words in the section. Headings prefixed to sections are regarded as preambles to those sections but they cannot control the plain words of the enacting part of statutes¹¹. 

Appendix

After forwarding my article I had occasion to read the recent Division Bench Decision Mohanan v. State of Kerala reported in 2007 (1) KLT 845. In this case also it seems that their Lordships have proceeded on the assumption that all the words "transports, transists, and possesses" were subsequently added to the words "imports, exports" by a single amendment and that the additions should be read in ejusdem generis to the words "imports or exports".      (para. 9).

Conclusion

The author honestly feels that His lordship may not have gone deep into back ground and intention of legislature and relied on views of Division Bench in Surendran v. State of Kerala. Therefore a judicial interference by a larger bench at the earliest is inevitable.

Foot Note :

Land Reforms (Amendment) Act -- Dream or Nightmare?

(By K.G. Balasubramanian, Advocate, Ernakulam)

An Act farther to amend the Kerala Land Reforms Act?! The preamble says, whereas “if” is expedient to further amend the Land Reforms Act. Expedient to whom? It smells. It reeks. Of abuse. Of cancerous politics. Of dubious intent. Of breach of public trust. Would it not have been more expedient to repeal Land Reforms Act? The amendment takes us away from its original intent.

Think of all those tears shed by rich man and poor man alike from the date of commencement of Land Reforms Act till the date of commencement of Land Reforms (Amendment) Act, 2005? And of those jubilant Land Boards who plundered them? And of Herculean efforts by lawyers and Judges to declare the law on ceiling? And of the hundreds of tons of newsprint containing decisions of the Hon’ble Supreme Court and High Court on the intricacies of ceiling? All undone, at the stroke of a pen!

Less said the better about the economic chaos, past and future, and rupture of agriculture. And the less fortunate but more genuine holders who deserve the benefit of belated protection, some whom the professional fraternity had valiantly fought for. They must be squirming in their graves. Who can wipe their tears? The tears and chaos remain, a stigma on legislative competence and wisdom. More tears to follow, more battles to be fought.

Not to forget the pioneers, known and unknown, who fought on hills, on farms, in paddy fields, in valleys and God knows where all, to usher in social justice, eminent among them being the inimitable Sri. V.R. Krishna Iyer! What do you say Sir, of this latest contribution to “We, the people” of Kerala, undoing, exactly by half, what you achieved with Land Reforms Act?

Limiting the protection of the amendment to acquisitions between two dates u/s 7E has dangerous undertones. It is violative of Article 14. More so, in the light of the provisos to S.84(4). How can you deny the protection to acquisitions made before the 1st of the two dates? And, you make me laugh. What of the acquisitions made between the date of introduction of the bill in the House and the date of commencement of the Act? Last two decades saw wild increase in fabrication of revenue records and deforestation. And shady property deals. The smart guy now gets a Certificate of title to the lands he encroached upon or acquired (?). But Mr. Draftsman, you forgot the key to the house. The certificate does not have the incidents or effect of a purchase certificate. Why?

Tailpiece: If Parasuraman were alive, he would have swung his axe on you-know-who.

Is ‘Stare Decisis’ a Taboo on The Single Bench?

(By P. Chandrasekhar, Advocate, Ernakulam.)

‘Stare decisis’is abbreviation of Latin phrase ‘stare decisis et non quieta movere’ meaning that ‘to stand by decisions and not to disturb settled matters”. Till London Street Tramways v. London County Council  ((1898) AC 375), House of Lords in England was not bound by its own decision. After London Street Tramways case, once the House of Lords had given a ruling on a point of law, the matter was closed unless and until Parliament made a change by statute. On 26th July 1966 Lord Gardiner L.C. on his behalf and on behalf of other Law Lords said that ‘too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law’ and that ‘they propose therefore to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so’ ((1966) 3 All.E.R. 77). The House of Lords has, thereafter, over a number of years, laid down various criteria in the matter of the Practice Statement of 1966 which have been summarized by Dr. Alan Patterson (Dr. Allan Paterson; Law Lords). A constitution bench of the Supreme Court inUnion of India v. Raghubir Singh ((1989) 2 SCC 754)  referred to the criteria as follows:

1. The freedom granted by the 1966 Practice Statement ought to be exercised sparingly;

2. A decision ought not to be overruled if to do so would upset the legitimate expectations of the people who have entered into contracts or settlements or otherwise regulated their affairs in reliance on the validity of that decision;

3.A decision concerning questions of constructions of statutes or other documents ought not to be overruled except in rare and exceptional cases;

4. A decision ought not to be overruled if it would be impracticable for the Lords to foresee the consequences of departing from it;

5. A decision ought not to be over ruled if to do so would involve a change that ought to be part of comprehensive reform of the law;

6. In the interest of certainty, a decision ought not to be overruled merely because the Law Lords consider that it was wrongly decided. There must be some additional reasons to justify such a step;

7. A decision ought not to be overruled if it causes such great uncertainty in practice that the parties’ advisers are unable to give any clear indication as to what the courts will hold the law to be;

8. A decision ought to be overruled if in relation to some broad issue or principle it is not considered just or in keeping with contemporary social conditions or modern conceptions of public policy.

In Raghubir Singh’s case the Supreme Court observed that ‘in order to promote consistency and certainty in the law laid down by the superior court, the ideal condition would be that the entire Court should sit in all cases to decide questions of law’ but ‘having regard to the volume of work demanding the attention of the Court, it has been found necessary in India as a general rule of practice and convenience that the court should sit in divisions’. The Supreme Court also said that ‘it is in order to guard against the possibility of inconsistent decisions on points of law by different Division Benches that the rule has been evolved’ that the statement of the law by a Division Bench is considered binding on Division Bench of the same or less number of Judges. It has also been pointed out that this principle had been followed in India by several generations of judges. Referring to an earlier decision in State of Bombay v. United Motors (AIR 1953 SC 1069) the Court held that if the previous decision was patently erroneous’ there was a duty on court to say so and not to perpetuate the mistake. The Court also referred to Bengal Immunity Company Ltd. v. State of Bihar (AIR 1955 SC 661) wherein the Supreme Court held that one instance where overruling is permissible is a ‘situation where contextual values giving birth to the earlier view had altered substantially’. In Lt. Col. Khajoor Singh v. Union of India (AIR 1961 SC 532) Supreme Court held that if there was fair amount of unanimity that the earlier decision was manifestly wrong departure from earlier interpretation was permissible. In Keshav Mills Co. Ltd. v. C.I.T.(AIR 1965 SC 1636) Supreme Court said that ‘revision of earlier decision would be justified if there were compelling and substantial reasons to do so’. In other words, the Supreme Court has adopted the view of Justice Brandeis in State of Washington v. Dawson & Co. (264 US 393) that stare decisis is ‘not a universal, inexorable command’.

In Central Board of Dawoodi Bohra Community v. State of Maharashtra  (2005 (1) KLT 486 (SC)) a Constitution Bench of the Supreme Court referred to Raghubir Singh’s case and held that what was held in Raghubir Singh’s case was that being highest court of the country, it was open for the Supreme Court not to feel bound by its own previous decisions because if that was not permitted the march of judge-made law and the development of constitutional jurisprudence would come to a stand still. In Dawoodi Bohra Community case the Supreme Court summed up the legal position as follows:

1. The law laid down by the Supreme Court in a decision delivered by a Bench of larger strength is binding on any subsequent Bench of lesser or co-equal strength;

2. A Bench of lesser quorum cannot disagree or dissent from the view of the law taken by a Bench of larger quorum.

3. In case of doubt all that the Bench of lesser quorum can do is to invite the attention of the Chief Justice and request for the matter being placed for hearing before a Bench of larger quorum than the Bench whose decision has come up for consideration.

In so far as High Court is concerned the application of rule of stare decisis is two fold. Law laid down by a Bench of larger strength of the High Court is binding on subsequent Bench of lesser or coequal strength. When a court binds itself the rule is called ‘horizontal stare decisis’. When a court is bound by a precedent of a higher court it is called ‘vertical stare decisis’. A high court is bound by a law declared by the Supreme Court by way of rule of ‘vertical stare decisis’ which is embodied in Article 141 of the Constitution of India.

In Peter v. Sara (2006 (4) KLT 219) the Full Bench was concerned with two major legal questions. One related to the nature of proceedings before Family Court under S.125 of the Code of Criminal Procedure, 1973 (Cr.P.C), and the other was regarding Court fee payable in appeals to the High Court under Land Acquisition Act against awards of civil courts in Land Acquisition references. The matters had been placed before the Full Bench as directed by the Chief Justice at the instance of the learned Single Judge. The Full Bench in Peter’s case has held that the references in the cases before the Full Bench were ‘incompetent since there were binding Full Bench and Division Bench decisions on all the points in the order of reference’. The Full Bench also held that ‘only in limited circumstances and that too stating reasons thereof, a reference is competent to the Division Bench’ and that ‘except in such a situation, Single Bench is normally bound by the decision of another single Bench and definitely bound by the Division Bench and Larger Bench decisions of the same court.’ The Full Bench quoted Benjamin Cardozo and said that ‘adherence to precedent should be the rule and not the exception’.

‘Horizontal stare decisis’ is a rule of practice. It does not find place any where in the Constitution of India. There is no constitutional or legal provision that High Court is bound by its own decision. But for the rule of ‘stare decisis’ the High Court would not be bound by its own previous decision. However, the doctrine of binding precedent has been evolved by the Court to promote certainty and consistency in judicial decision. As pointed by the Supreme Court in Raghubir Singh’s case the question is not whether the Court is bound by its own previous decisions but the question is under what circumstances and within what limits should the Court overturn its own pronouncements. Neither the Kerala High Court Act nor any Rule framed there under stipulates that Full Bench shall consist of three or more judges. What should be the quorum of the Full Bench, as a rule of practice, is a matter left to the Chief Justice, who is the master of the roster. As held by the Constitution Bench of the Supreme Court in Dawoodi Bohra Community case it is not improper for a bench of a lesser quorum to doubt the decision of a larger quorum and invite the attention of the Chief Justice and request the Chief Justice to place the matter before a Bench of larger quorum than the Bench whose decision has been held in doubt by the Bench of lesser quorum. As regards the High Court, it has been held by the Supreme Court in Tribhovandas v. Ratilal  (AIR 1968 SC 372.) that ‘when it appears to a Single Judge or Division Bench that there are conflicting decisions of the same Court or there are decisions of other High Courts in India which are strongly persuasive and take a different view from the view which prevails in his or their High Courts, or that a question of law of importance arises in the trial of a case, the Judge or the Bench passes an order that the papers be placed before the Chief Justice of the High Court with a request to form a special or Full Bench to hear and dispose of the case or the question raised in the case’ and that ‘ for making such a request to the Chief Justice no authority of the Constitution or Charter of the High Court is needed, and by making such a request a Judge does not assume to himself the power of the Chief Justice’. The Supreme Court also held that ‘a Single Judge does not by himself refer the matter to the Full Bench; he only requests the Chief Justice to Constitute a Full Bench for hearing the matter’ and that while constituting the Full Bench if the Chief Justice referred to the case that did not mean that the source of authority is in the order of reference. The law laid down by the Supreme Court gives sufficient freedom to a Single Judge not to feel bound by the decision of a Bench of larger quorum and to request the Chief Justice to place the matter before a larger Bench. The effect of the Full Bench decision in Peter’s case is in fact, to take that freedom away and to make Single Judge bound by the decisions Division Benches and Full Benches so much so that the Single Bench has no other alternative than to follow the decision however manifestly erroneous the decision of the Division Bench or the Full Bench may appear.

“Law must be stable and yet it cannot stand still’ is the universal rule(Dean Roscoe Pound: Interpretation of Legal History.). According to Cardozo, application of stare decisis does not involve matching ‘the colours of the case at hand against the colours of many sample cases spread out upon the desk’. It primary involves the duty to ‘extract from the precedents the underlying principle, the ‘ratio decidendi’. There is also a duty, thereafter, to determine ‘the path or direction along which the principle is to move and develop, if it is not to wither and die’(Benjamin N. Cardozo: The Nature of Judicial Process.). Law laid down by a Full Bench may become redundant by passage of time and if Single Judges from whose decision no intra court appeal is provided, are made absolutely bound by the decision of Full Bench with no freedom to doubt the principle or to refer the matter to Division Bench or to the Chief Justice, in the bargain, theory and practice of ‘horizontal stare decisis’ itself will get defeated putting the growth of law in jeopardy. With due respect, it is submitted that the view taken by the Full Bench in Peter’s case that the Single Bench is definitely bound by the previous decisions of earlier Full Benches and Division Benches does not appear to keep with the well laid down principles of ‘stare decisis’.

Of the two legal questions placed before the Full Bench one related to procedure before Family Court in a proceedings under S.25 Cr.P.C and the other related to payment of court on Land Acquisition Appeals. On the first issue, having found that there are conflicting views of the same Court and other High Courts, the learned Single Judge felt that the important question of law needed an authoritative pronouncement by a larger Bench and ordered that the matter be placed ‘before the Hon’ble Chief Justice for appropriate orders of posting’. The order of the learned Single Judge, obviously, was not an order referring the matter to Full Bench which, of course, could have been done only by a Division Bench under S.4 of the Kerala High Court Act. The order of the learned Single Judge was only to invite the attention of the Chief Justice to the legal issue and to request the Chief Justice to place the matter before a larger Bench , a course which was perfectly open to the learned Single Judge to adopt going by the principles laid down by the Supreme Court in Tribhovandas case and Dawoodi Bohra Community case. In fact, it is apparent that the Chief Justice did accede to the request of the learned Single Judge and constituted Full Bench to hear the matters. Going by the law laid down by the Supreme Court in Tribhovandas case it is apparent that the power of the Chief Justice under Section 6 of the Kerala High Court cannot be restricted to any particular category of cases like ‘public interest, the interest of administration of justice, the exigencies of administration of institution etc.’ as held by the Full Bench in Peter’s case. S.6 could only be clarificatory in nature and is meant to save the power of the Chief Justice which was available, as Supreme Court said, even without any constitutional or statutory provisions in that regard. With due respect it may be submitted that the validity of the orders of the learned Single Judge to place the matter before the Chief Justice and the order of the Chief Justice constituting Full Bench as requested by the learned Single Judge having not been under challenge before the Full Bench, the proper course open to the Full Bench in Peter’s case was to consider the matters paced before it on merit.

In Peter’s case the Full Bench noted that another Full Bench in Sathyabhama v. Ramachandran (1997 (2) KLT 503) had held that proceeding for maintenance before the Family Court is criminal in nature and therefore the subsequent decision in Kunhimohammed v. Nafeesa  (2003 (1) KLT 364) had been rendered per incuriam. However, the Full Bench decision in Sathyabhama’s case had been rendered contrary to an earlier Full Bench decision in Balan Nair v. Valsamma  (1986 KLT 1378). In Balan Nair’s case the Full Bench had held that the proceedings for maintenance under S.125 Cr.P.C. was civil in nature. Full Bench in Balan Nair’s case said so relying on a decision of the Supreme Court in Nanda Lal v. Krishna Lal(AIR 1960 SC 882) wherein the Supreme Court had categorically held that proceedings for maintenance under the Code of Criminal Procedure is civil in nature. The Full Bench in Sathyabhama’s case noticed Balan Nair’s case but did not follow it stating that Balan Nair’s case could not be accepted as an authority wherein the nature of the proceedings under S.125 of Cr.P.C. had been correctly understood and laid down authoritatively. Sathyabhama’s case and Balan Nair’s case were decided by co-equal Benches. In the ordinary course the Full Bench in Sathyabhama’s ought to have followed Balan Nair’s case. Had the Bench in Sathyabhama’s case had felt that Balan Nair’s case had not been correctly decided it was open to the Bench which heard Sathyabhama’s case to refer the matter to Larger Bench. But to strike a different note and lay down a principle contrary to the decision in Balan Nair’s case was not in accord with the principles of ‘stare decisis’ laid down by the Constitution Bench of the Supreme Court in Raghubir Singh’s case. Kunjimohammed’s case which says that the proceedings for maintenance under S.125 Cr.P.C. before the Family Court is a civil procedure lays down the correct position in law going by the Full Bench decision in Balan Nair’s case and Supreme Court decision in Nanda Lal’s case. It was only proper, therefore, to have an authoritative pronouncement by a Larger Bench on the legal issue involved.

The question regarding payment of Court fee on Land Acquisition Appeal is also not free from doubt. Levy and collection of fee is essentially a legislative function. Clear statutory indication is necessary to levy and collect fee lest it shall not fall foul of Art.265 of the Constitution of India. Levy and collection of fee cannot be held to be a matter of mere statutory inference. The Full Bench in Balakrishnan Nambiar v. Madhavan & Ors  (1978 KLT 843) interpreted Section 51 of the Kerala Court Fees & Suit Valuation Act and held that ad valorem court fee could be levied on land acquisition appeals. Section 51, however, does not authorize levy and collection of Court fee. S.51 only deals with mode of computation of Court fee. S.52 of the Act authorises levy of fee on appeal ‘same as the fee that would be payable in the court of first instance on the subject matter of the appeal’. No fee is payable in the court of first instance on a land acquisition reference. There is also no specific provision in the Act or in the Schedule to the Act authorizing levy of Court fee on land acquisition appeal. The learned Single found that, in spite of the Full Bench decision and a subsequent Division Bench decision, the levy of Court fee on land acquisition appeal could not be said to be authorized. Persuaded by judicial pronouncements of other High Courts on the issue the learned Single Judge referred the matter ‘for consideration of the Honourable the Chief Justice, for placing before a Larger Bench’, a course approved by the Supreme Court in Tribhovandas’s case. Obviously, thereby, the Single Judge was not adjourning or referring the matter for being heard by a Larger Bench, but was only requesting the Chief Justice to place the matter before a larger Bench for authoritative pronouncement on the legal issue involved. As held by the Supreme Court in United Motor’s case ‘the issue did not relate to ‘ordinary pronouncement declaring the rights of two private individuals’ but’ adjudication on the taxing power of the State as against the consuming general public’ and therefore ‘if the decision was erroneous the Court ‘owed it to the public to protect them against the illegal tax burdens’ which the State was seeking to impose on the strength of an erroneous decision. Obviously, the question of ‘judicial hands off’ theory based on the rule of ‘stare decisis’ did not, therefore, apply to an erroneous decision regarding payment of Court fee.

It is respectfully submitted that in the light of the Supreme Court decisions in Tribhovandas’s case, Raghubir Singh’s case and Dawoodi Bohra Community case, the decision of the Full Bench in Peter’s case does not appear to lay down the correct position in law and needs reconsideration.