SHANMUGALINGAM COMMISSIONER OF COOPERATIVEDEVELOPMENT AND OTHER
COURT OF APPEALJAYAWICKREMA, J.
RAJA FERNANDO. J.
C.A. (PHC) 63/99JANUARY 16™. 2000
Removal of a Member from Board of Directors – Cooperative SocietiesLaw 5 of 1972 amendment 11 of 1992 – S. 46 Inquiry – S. 53. S. 60(A),S. 60(B). After S. 46 Inquiry is a second Inquiry necessary?
The 1st Respondent had initiated an inquiry under S. 46 of the Co-operativeSocieties Law. Thereafter on the.findings the Petitioner was charge sheeted,and after the Petitioner/ answered the charges, the 1st Respondent withoutholding an inquiry rejected the explanation and found the Petitioner guiltyof the charges preferred against him.
The application made to the High Court seeking to quash the decision ofthe 1* Respondent was dismissed.
(i) In terms of S. 60BofAct 11 of 1992 a second Inquiry after the inquiryunder S. 46 must be held.
APPEAL from an order of the Provincial High Court.
Faiz Musthapa RC.. with Dr. Jayampathy Wickremaratne for thePetitioner Appellant.
A. Gnanadasan D. S. G.. with A. Ameen S. C., for the 1st Respondent.
Cur. ado. vult.
March 20, 2001.
RAJA FERNANDO, J.The Petitioner – appellant hereinafter referred to as theAppellant was the President of the 2nd Respondent Co – operativeSociety having been elected last on 23. 10. 93 for a period of3 years.
Sri Lanka Law Reports
120011 3 Sri L.R.
The next election to the posts was due on or about23. 10. 96 but was not held by the Is* Respondent theCommissioner of Co – operative Development and Registrar ofCo – operative Societies. North and East Provinces.
As the election was not held on time, in terms of theBy – laws of the 2nd Respondent – Society the Appellant andthe other Directors of the Society had continued to function asPresident and Directors.
The 1st Respondent has then initiated an inquiry andinvestigated into the affairs and finances of the 2nd Respondent-Co -operative Society in terms of Section 46 of the Co -operativeSocieties law. Thereafter, the 1st Respondent has on the findingsof the inquiry into the 2nd Respondent Co – operative Societycharged the Petitioner – Appellant along with the Directors,under Section 60B as amended by Act No. 11 of 92 for nonperformance of their duties in a proper manner.
The Petitioner has answered the charges by letter dated25. 11. 97.
On the show cause letter and the answer filed by thePetitioner – Appellant the Is' Respondent without holding aninquiry has rejected the explanation and found the Petitionerguilty of the charges preferred against the Petitioner – Appellant .
The Is1 Respondent has thereafter taken steps to convenea meeting of the General Body of delegates of the 2nd RespondentSociety and to report to it the finding that the petitioner -Appellant and the directors are guilty of tire charges in the showcause letter to enable the General Body to remove the Board ofDirectors/ Manager including the Petitioner – Appellant and toelect a new Directorate.
According to the Petitioner – Appellant the meeting of theGeneral body summoned by the Is' Respondent for 22. 02. 98for the purpose of removing tire Petitioner and other Directorsby the General body did not take place as not a single memberturned up for the meeting.
Ismail v. Shanmugaltngam Commissioner of Cooperative
Development and other (Raja Fernando, Ji)
In the meantime the Is' Respondent Respondent has issuedletter dated 18. 02. 98 removing the Petitioner from the post ofPresident/Director of the 2nd Respondent Society acting underSection 60B of the Co – operative Societies law as amended byAct No. 11 of 1992 and appointed 3rd, 4th and 5th Respondentsas Directors of the Board of Management of the said 2ndRespondent Society.
The Petitioner – Appellant filed Application No. HC/ NEP/Amp/Writ Application No. 73/98 in the High Court of Amparaifor orders in the nature of Writ of Certiorari, quashing the actsof the 1st Respondent – Respondent removing the Petitioner -Appellant from his post of President/Member of the 2ndRespondent-Respondent.
The High Court having heard submissions of both thePetitioner and the Respondents dismissed the Petition of thePetitioner – Appellant.
This appeal is against the order of the learned High CourtJudge made on 18.01.99 dismissing the Petitioner’s applicationto the High Court.
It would appear from the journal entries that elections forthe Board of Directors of the 2nd Respondent Society is due tobe held shortly (26. 03. 2001).
The removing of the Petitioner – appellant from the Boardof Directors and the appointment of the 3, 4 and 5 Respondent-Respondents as directors of the 2nd Respondent society willhence be merely academic as their term has already expired.
In this appeal the reliefs sought by die petitioner – Appellantsare to set aside the order of the learned High Court Judge dated18. 02. 99 where the application to quash the order of the Is1Respondent – Respondent was refused and to make order settingaside the removal of the Petitioner – Appellant and K. Rajcndranfrom the Board of Management of the 2nd Respondent – Societyand the appointment of the 3rd, 4lh, 5 ,h Respondents -Respondent as Directors of the 2nd Respondent Society.
Sri Lanka Law Reports
120011 3 Sri L.R.
As stated earlier with the expiration of the period of office ofthe Board of Directors of the 2nd Respondent Society on31. 07. 00 the Petitioner, Mr. Rajaratnam and the 3rd, 4,h and5th Respondents have all ceased to be directors of the 2ndRespondent society and therefore an order of this court toprevent the Petitioner – Appellant from being removed from theBoard of Directors of the 1st Respondent society of removing the3rd, 4th and 5th Respondents from the same board does not arise.
However, in terms of by – laws 53 of the 2nd respondentSociety and Section 60A (2) of the Co – operative Societies Act amember who has been removed from the management of asociety after an inquiry under Section 46 shall not be eligiblefor re – election to office of any Registered Society for a period offive years from the date of such removal.
Therefore it will be necessary to inquire into the legality ofthe removal of the Petitioner by the 1st Respondent by his letterdated 18. 02. 98.
The first submission of the Petitioner is that the 2ndRespondent Society is not a society operating with state fundsand hence the 1st Respondent could not have removed thePetitioner and the rest of the Committee under Section 60A (2).
"State funds" has been defined in the Act to mean loans,advances and grants by the Government and includes any loan,grant of advance out of funds referred to in Sections 48 and57 of the Act.
The learned High Court Judge has come to the conclusionthat the 2nd Respondent Co – operative is one which operateswith state funds on the basis of documents 1R4 and 1 R5 andthat the 1st Respondent has complied with the requirements ofSection 60B prior to deciding on the removal of the Petitionerfrom the 2nd Respondent Society.
Ismail u. Shanmugalingam Commissioner of Cooperative
Development and other (Raja Fernando. J':)
Section 60B of the Act reads thus:
"If the Registrar is of the opinion after an inquiry andinspection into the books of the registered society underSection 46, that any officer or employee of any registeredsociety is not performing his duties in a proper manner, oris unfit or otherwise unable to discharge his dutiesefficiently, he may notwithstanding anything to the contraryin this Law, the Co – operative Employees Commission Act,No. 12 of 1972 or any other Law after giving such officer oremployee, an opportunity to state their objections, by orderin writing suspend or interdict, as the case may be suchofficer or employee pending such inquiry as may benecessary and after such inquiry remove such officer oremployee from office :
Provided that any employee aggrieved by an order ofremoval made under this subsection, may appeal therefromto the Co – operative Employees Commission establishedunder Act, No. 12 of 1972 within a period of thirty days,and the decision of such Commission shall be final.
(2) Where any employee is removed under subsection (1) andwhere such order for removal has been affirmed by theCo -operative Employees Commission or no appeal againstsuch order has been preferred within thirty days, anotheremployee may be appointed, in accordance with theprovisions applicable in respect of such appointment."
Accordingly it is clear that after the inquiry under Section46 where the Registrar (1st Respondent) is of the opinion thatany officer or employee is not performing his duties in a propermanner after giving such officer or employee an opportunity tostate their objections and after such inquiry remove such officeror employee from office.
Section 60B clearly contemplates a second inquiry afterthe inquiry under Section 46 which the Is' Respondent hasfailed to hold.
Sri Lanka Law Reports
120011 3 Sri L.R.
The learned High Court Judge lias refused the petitioner'sapplication to set aside the Order of the Is' Respondent madeon 18. 01. 99 on the basis that a second inquiry was notnecessary and that the inquiry under Section 46 was sufficient.
The above finding of the learned High Court Judge iscontrary to the provisions of Section 60B of the Co – operativeSocieties Act as amended by Act No. 11 of 1992.
Therefore on the ground that an inquiry was not held underSection 60B after giving such officer an opportunity to statetheir objection the Order of the Is' Respondent – Respondent isbad. Hence the order of the learned High Court Judge made on18. 01. 99 is set aside. We also set aside the Order of (he 1stRespondent – Respondent finding the Petitioner – Appellantguilty of non performance of his duties to the 2n<l Respondent -Respondent Society in a proper maimer without an inquiry.
If the Is' Respondent – Respondent requires to take actionagainst the Petitioner – Appellant he could do so after an inquiryunder Section 60 B of the Co – operative Societies Act.
The Commissioner of Co-operative Development andRegistrar of Co -operative Societies. North and East Province isfree to elect or appoint the Board of Directors to the 2nclRespondent Society according to the Co-operative Societies lawNo. 5 of 1972 as amended, as scheduled.
The petition of the Petitioner – Appellant is allowed to theextent of setting aside the findings of the 1M Respondent -Respondent that the Petitioner – Appellant is guilty of nonperformance of his duties to the 2ntl Respondent Society in aproper manner.
JAYAWICKRAMA, J. 1 agree.
Appeal partly allowed.