1. The Kerala State Cashew Workers Apex Industrial Co- operative Society Limited ('CAPEX' for short), on the directions of the 2nd respondent, notified the vacancy in the post of Managing Director as per Ext.P2. The Selection Committee constituted with the Principal Secretary, Labour as Chairman and the Director, DPE and the Managing Director, Travancore Cochin Chemicals as members, completed the selection process and published a rank list containing 29 candidates in which the petitioner was shown against Sl.No.7. An interview was conducted. Sri R.Jayachandran was selected and appointed as the Managing Director of CAPEX as per Ext.P3 order dated 06.11.2007. Sri.Jayachandran, who was working in KSEB at that point in time, was not willing to join CAPEX on a permanent basis and by Ext.P4, he requested the Secretary, Labour, to permit him to join as MD of CAPEX on a deputation basis. The request was declined by the Government. Thereafter, the petitioner was appointed as MD of CAPEX in the pay scale of Rs.13610-20700, as can be seen from Ext.P5. The petitioner took charge on 04.01.2008.

2. On 27.08.2010, the benefit of pay revision was granted to the petitioner, as can be seen from Ext.P6. By Ext.P7, the Government accorded sanction to fix the remaining terms and conditions of appointment since no terms and conditions were fixed at the time of appointment. It can be seen from Ext.P7 that the MD is entitled to Contributory Provident Fund, Medical facilities, Surrender of Earned Leave and terminal benefits as per the norms of the CAPEX apart from HRA at State Government rate and TA/DA admissible to the State Government employees. The counsel for the petitioner submits that the post of Managing Director is a permanent one.

3. By Exts.P8 and P9, the petitioner was appointed as Managing Director of Autokast Ltd., Cherthala and Sri.Jayachandran was appointed in his place on deputation. Five years later, the petitioner was again appointed as the Managing Director of the CAPEX, by Ext.P10 order dated 08.07.2016. The petitioner submits that there had been no break of service while the petitioner took charge at Autokast Ltd and later at CAPEX.

4. The petitioner was placed under suspension by Ext.P11 order. The allegation was that CAPEX procured Raw Cashew Nut ('RCN' for short) from a PWD contractor, instead of procuring the same from the Plantation Corporation and farms under SC/ST Departments, etc. It is alleged that the procurement by such a deviation involved a higher price and violated the procurement directions issued by the Government, resulting in financial loss to CAPEX. The petitioner submitted representations requesting to exonerate him from the charges. The petitioner was paid subsistence allowance during the period of suspension, as can be seen from Ext.P12. The petitioner was thereafter reinstated in service on the condition that, in case the report of the Accountant General finds that loss was caused to the Government due to dereliction of duty, proceedings will be initiated in accordance with the Code of Criminal Procedure. Since the petitioner's subsistence allowance had not been paid for a long period, after being reinstated in the post of Managing Director, the petitioner withdrew the subsistence allowance in his capacity as a Self-Drawing Officer, with due concurrence and recommendations of the Finance and Account Departments of CAPEX. The petitioner continued as Managing Director in CAPEX.

5. On 14.02.2022, the petitioner was again placed under suspension as per Ext.P14 order. Two charges were raised, one being the procurement of RCN in deviation of the Government direction, causing financial loss to CAPEX, and the other regarding the drawing of subsistence allowance in a wrongful manner. It is also alleged that the petitioner had not informed about the purchase of RCN to the Board of Directors.

6. The audit conducted by the Accountant General for the years 2016-2019 shows that there was no malpractice in the procurement of RCN. The petitioner submits that the audit covers the entire period relating to which the allegations are made against the petitioner. After accepting the explanations submitted by the CAPEX to the queries in the audit report, the Accountant General dropped all the actions regarding the irregularities pointed out.

7. The petitioner approached the 2nd respondent requesting to disburse subsistence allowance, to revoke the suspension and to effect reinstatement. Ext.P15 is the representation. The 1st respondent thereafter sent Ext.P16 communication on 13.5.2022 stating that the request of the petitioner for subsistence allowance is pending with the Finance Department and a decision will be taken after receiving intimation from the Finance Department. The petitioner thereupon filed W.P.(C)No.35509 of 2022, challenging the action of the respondents. The audit report has been produced as Ext.P17, and an erratum issued on 30.08.2019 has been produced as Ext.P18. By judgment dated 09.06.2023, this Court disposed of the writ petition directing the competent authority of the Government to complete the proceedings initiated as per Ext.P16 after hearing the petitioner. True copy of the judgment has been produced as Ext.P21.

8. Ext.P22 is the statement filed by the Joint Secretary to the Department of Industries in W.P(C).No.9720 of 2021, wherein it is stated that the petitioner was appointed through a valid selection process and is competent and has a lien with the CAPEX. Paragraph 12 of Ext.P22 says that the appointment was permanent in nature, and he can be reinstated only to the post which he was holding at the time of suspension. In paragraph 15 of the statement, it is admitted that the audit has accepted the explanation furnished by CAPEX and dropped the audit query regarding the procurement of RCN. Regarding the allegation of procuring cashew for a higher price, the supplier M/s.Mahsooq Trading Company had filed W.P(C).No.19763 of 2022 seeking direction to CAPEX to disburse the amount due to them in connection with the supply of cashew. In the said writ petition this Court had called for the report of the Director of Vigilance and Anti-Corruption Bureau and the copy of the report is produced as Ext.P24. After considering Ext.P24, the writ petition was disposed of by Ext.P25 judgment directing the 1st respondent to consider the claim of the petitioner therein, taking note of the report of the Accountant General that there were no malpractices in the procurement of RCN.

9. While so, the respondents invited applications for the post of Managing Director for 15 Public Sector Undertakings, including CAPEX. The petitioner submits that his rightful claim is sought to be defeated by appointing others. The petitioner hence filed W.P(C)No.32826 of 2023, challenging the notification for the appointment of the new Managing Director. W.P. (C).No.32787 of 2023 was also filed seeking reinstatement on the ground that no charge memo had been issued till the date of filing of the said writ petition. Since an interim order staying all further proceedings for the appointment of Managing Director was not granted in the writ petition, the petitioner approached the Division Bench by filing W.A.No.2043 of 2023. The Division Bench was also not inclined to interfere with the denial of the interim relief. On 12.03.2024, the 4th respondent issued Ext.P28 order. The order says that the petitioner is entitled to get an amount of Rs.14,25,140/- as subsistence allowance from 15.02.2022 to 29.02.2024, from which an amount of Rs.12,67,876/- is liable to be deducted under various heads, including amounts drawn in excess as subsistence allowance.

10.    Challenging the above-said deduction of amounts, the petitioner has preferred W.P. (C)No.31506 of 2024. In the meanwhile, a person claiming to be a union leader filed W.P(C).No.6659 of 2024, challenging Ext.P23 Government order granting subsistence allowance to the petitioner, and this Court ordered that the amount paid as subsistence allowance pursuant to Ext.P10 therein will be subject to the result of the writ petition. The petitioner submits that the subsistence allowance has not been paid to him from March 2024 onwards.

11. Soon after Ext.P27 judgment in Writ Appeal No.2043 of 2023, the 1st respondent issued Ext.P32 order on 30.01.2024 appointing the 5th respondent as the Enquiry Officer. The petitioner was issued with notice, and the petitioner appeared and submitted his version and prayed that he may be exonerated from the charges. The 5th respondent submitted Ext.P33 report recommending the removal of the petitioner from service. The reason for the recommendation is the allegation regarding the purchase of RCN. Though Ext.P33 does not bear any date, the contents of the report would show that it could have been filed only after 31.05.2024, on which date the petitioner's statement was taken. The petitioner was thereafter issued with Ext.P34 show cause notice on 13.08.2024, to which the petitioner submitted Ext.P35 reply on 21.08.2024. Though the petitioner had challenged the Ext.P33 report in WPC No.32457 of 2024, the same was disposed of by Ext.P36 judgment dated 12.09.2024, finding that it cannot be presumed that the 1st respondent will pass orders without considering the explanations submitted by the petitioner. Thereafter, by Ext.P37 order dated 29.09.2024, the 2nd respondent terminated the petitioner from service. The writ petition has been filed in the above circumstances seeking to quash the Ext.P37 order of termination and for a direction to reinstate the petitioner in the post of Managing Director of CAPEX in view of Exts.P20 and P24 and the stand taken by the 2nd respondent in Ext.P22.

12.    The counsel for the petitioner submitted that the reasoning in the Ext.P37 order is contrary to the Ext.P22 statement filed before this Court. As per Ext.P22, the petitioner was placed under suspension based on a prima facie view that there was a serious violation of procurement directions while procuring RCN by the CAPEX. Ext.P22 also says that the audit team had evaluated the issue in detail, accepted the details furnished by CAPEX, and dropped the audit query regarding the procurement of RCN/Kerala origin RCN contained in Part-II-B of the "Other Audit Observations" for the period 2016-19. It is further stated that the allegation of deviation by CAPEX in procuring RCN by paying more than the indicated price is unfounded and non-existent. Ext.P22 is a statement filed on 31.08.2021. In view of the categoric statement, it is submitted by the counsel for the petitioner that the finding in Ext.P33 that there were discrepancies in the purchase of RCN was without any basis. Ext.P37 order accepts the report Ext.P33 and does not consider the fact that the allegations against the petitioner regarding the discrepancy in the purchase of RCN were no longer there, and the audit team itself had dropped the query regarding the same.

13.    On the question whether the remedy of the petitioner is to approach the Arbitration Court under Section 69 of the Kerala Co-operative Societies Act ('KCS Act' for short), the counsel for the petitioner contended that the said provision will not apply since Ext.P37 is not an order of termination issued by the Society and the petitioner was neither appointed nor terminated by the Society. It is submitted that since the appointment as well as the termination were by the Government, the petitioner cannot approach the Arbitration Court under Section 69 of the KCS Act. In support of the above submission, the counsel for the petitioner also referred to the bye-laws of the Society. Clause 15 of the bye-laws of the Society, which deals with the post of Managing Director, says that the Society is to have a full-time Managing Director who is to be appointed by the Government. Reference is made to Ext.P12 order of the Government, which says that the Government had expressed doubt as to whether action can be taken against the petitioner as per the Kerala Civil Service Rules or the Kerala Civil Service (Classification, Control and Appeal) Rules. The Law Department had clarified that action can only be taken under the above-mentioned Rules. It is hence submitted that if action is contemplated under the Kerala Service Rules, necessarily, the petitioner cannot be said to have a remedy under Section 69 of the KCS Act. The counsel for the petitioner further submitted that this is a case where there has been no enquiry and no enquiry report, except Ext.P33 report, which is not a report prepared after conducting a full-fledged inquiry, in a manner known to law.

14. Reliance was placed on the judgment of the Hon'ble Supreme Court in Satyendra Singh v. State of UP [2024 SCC OnLine SC 3325], which says that the evidence recorded in a preliminary inquiry cannot be used in a regular enquiry, since the delinquent was neither associated with the preliminary enquiry, nor granted an opportunity to cross-examine the witnesses in the preliminary enquiry. In the said case, the Hon'ble Supreme Court had also held that the contents of documentary evidence against a delinquent should be proved by examining witnesses, and mere production of documents is not sufficient. The relevant paragraphs are extracted hereunder;

                  “16. In the case of Nirmala J. Jhala, this Court held that evidence recorded in a preliminary inquiry cannot be used for a regular inquiry as the delinquent is not associated with it and the opportunity to cross-examine persons examined in preliminary inquiry is not given. Relevant extract thereof reads as under:—

                  “42. A Constitution Bench of this Court in Amalendu Ghosh v. North Eastern Railway [AIR 1960 SC 992], held that the purpose of holding a preliminary inquiry in respect of a particular alleged misconduct is only for the purpose of finding a particular fact and prima facie, to know as to whether the alleged misconduct has been committed and on the basis of the findings recorded in preliminary inquiry, no order of punishment can be passed. It may be used only to take a view as to whether a regular disciplinary proceeding against the delinquent is required to be held.

                  43.     Similarly in Champaklal Chimanlal Shah v. Union of India [AIR 1964 SC 1854] a Constitution Bench of this Court while taking a similar view held that preliminary inquiry should not be confused with regular inquiry. The preliminary inquiry is not governed by the provisions of Article 311(2) of the Constitution of India. Preliminary inquiry may be held ex parte, for it is merely for the satisfaction of the Government though usually for the sake of fairness, an explanation may be sought from the government servant even at such an inquiry. But at that stage, he has no right to be heard as the inquiry is merely for the satisfaction of the Government as to whether a regular inquiry must be held. The Court further held as under : (AIR p. 1862, para 12)

                  “12. … ... There must therefore be no confusion between the two enquiries and it is only when the government proceeds to hold a departmental enquiry for the purpose of inflicting on the government servant one of the three major punishments indicated in Article 311 that the government servant is entitled to the protection of that article [, nor prior to that].”

                  44. In Narayan Dattatraya Ramteerthakhar v. State of Maharashtra [(1997) 1 SCC 299 : 1997 SCC (L&S) 152 : AIR 1997 SC 2148] this Court dealt with the issue and held as under:

                  “… a preliminary inquiry has nothing to do with the enquiry conducted after issue of charge-sheet. The preliminary enquiry is only to find out whether disciplinary enquiry should be initiated against the delinquent. Once regular enquiry is held under the Rules, the preliminary enquiry loses its importance and, whether preliminary enquiry was held strictly in accordance with law or by observing principles of natural justice of (sic) nor, remains of no consequence.”

                  45.     In view of the above, it is evident that the evidence recorded in preliminary inquiry cannot be used in regular inquiry as the delinquent is not associated with it, and opportunity to cross-examine the persons examined in such inquiry is not given. Using such evidence would be violative of the principles of natural justice. (emphasis supplied).

                  17. Thus, even in an ex-parte inquiry, it is sine qua non to record the evidence of the witnesses for proving the charges. Having tested the facts of the case at hand on the touchstone of the Rules of 1999, and the law as expounded by this Court in the cases of Roop Singh Negi and Nirmala J. Jhala, we are of the firm view that the inquiry proceedings conducted against the appellant pertaining to charges punishable with major penalty, were totally vitiated and non-est in the eyes of law since no oral evidence whatsoever was recorded by the department in support of the charges.”

15. Sri. P.C.Sasidharan, appearing for the 4th respondent, submitted that a writ petition against an Apex Society will lie only if there is a public duty and the remedy available to the petitioner is only under common law. It is submitted that Articles 309 and 311 will not apply in the case of the petitioner. The counsel placed reliance on the judgment of a Division Bench of this Court in K.S. Sofhi v. Fertilizers and Chemicals Travancore Limited and Others [1984 KHC 59], wherein a Division Bench of this Court considered the question whether the FACT was a 'State' under Article 12 and amenable to the writ jurisdiction under Article 226 of the Constitution of India.

16.    Sri. Antony Mukkath, Senior Government Pleader appearing for respondents 1 to 3 and 5 contended that no enquiry is contemplated under Rule 198 of the Kerala Co- operative Societies Rules. It is contented that the writ petition is not maintainable against a Co-Operative Society going by the judgment of a Larger Bench of this Court in Association of Milma Officers, Ksheerabhavan, Trivandrum & Anr. v. State of Kerala & Ors. [2015 (1) KHC 779]. It is submitted that Ext.P37, although issued by the Government, is in accordance with the Society's bye-laws. Reliance is placed on the judgment in Mathew Ignitious v. Catholic Syrian Bank Ltd, Thrissur and others [2019 (5) KHC 835], wherein a Division Bench of this Court held that no writ petition is maintainable against a scheduled Bank and that a dispute arising out of a contract of personal service is not amenable to the writ jurisdiction under Article 226 of the Constitution of India. In K.K. Saksena v. International Commission on Irrigation and Drainage & Ors. [(2015) 4 SCC 670], the Hon'ble Supreme Court held that even if a body performing public duty is amenable to writ jurisdiction, all its decisions are not subject to judicial review. Only those decisions that have a public element can be judicially reviewed under the writ jurisdiction. The Apex Court carved out the following three exceptions in the case of a contract for personal service, which is not generally amenable to writ jurisdiction; (1) A public servant working under the Union of India or State, (2) A person employed by an authority/body, which is a 'State' within the meaning of Article 12 of the Constitution of India and (3) A workman within the meaning of Section 2(S) of the Industrial Disputes Act, 1947 who raises a dispute regarding the termination by invoking the machinery under the Act. It is hence submitted that the remedy of the petitioner is to approach the Civil Court rather than approaching this Court under Article 226 of the Constitution of India.

17. The contentions raised by Sri P.C. Sasidharan are not fully relevant in this case. Admittedly, the appointment and the dismissal of the petitioner were by the State. As such, the question whether CAPEX is a State does not really arise. For the same reason, the contention raised by Sri Antony Mukkath that a writ petition is not maintainable against a Co-operative Society also does not require any consideration. The judgments in K.S. Sofhy (supra), Association of Milma Officers (supra), Mathew Ignitious (supra) and K.K. Saksena (supra) do not hence apply to the present case. We are concerned with a situation where; after suspending the petitioner pending enquiry, the Government itself appointed an Enquiry Officer as per Ext.P32 and directed him to conduct an enquiry and submit a report. It is thereafter that the Ext.P33 report was submitted, and relying on which, the Ext.P37 order of termination was issued.

18.    The question for consideration is whether the principles that apply to a departmental enquiry apply in this case. The petitioner cannot be termed as an employee of CAPEX, since he was not appointed by CAPEX. Being a Managing Director, he is also not a workman. Though the appointment was made by the State, no orders were issued fixing the terms of appointment. Even the period of appointment is not stated in the order of appointment. The following facts evidence the above. Admittedly, the petitioner's first appointment as Managing Director of CAPEX was as per Ext.P5, which only stated the scale of pay. The conditions of service were later fixed as per Ext.P7, which says that the petitioner was entitled to HRA at the State Government rate, TA/DA admissible to State Government employees, and contributory provident fund, medical facilities, surrender of earned leave and terminal benefits as per the norms in force in CAPEX. The petitioner was thereafter appointed as Managing Director of Autokast Ltd., Cherthala. He was again appointed as Managing Director of CAPEX by Ext.P10 order. Ext.P10 order again says that the terms and conditions of appointment will be issued separately. No such orders are later seen to have been issued. It is at that stage that the petitioner was initially suspended from service as per Ext.P11. The suspension was later revoked, and he was reinstated as Managing Director as per Ext.P13 order issued by the Government. Even at that stage, no orders, fixing the terms and conditions of service, had been issued. The facts that followed later have been narrated in the previous paragraphs and are not being reiterated. Suffice to say that, by Ext.P32 order, the Government appointed an Enquiry Officer for enquiring into the conduct of the petitioner as Managing Director, in the light of certain reports submitted by the Finance Department and the Vigilance and Anti-Corruption Department. The only conclusion possible is that general legal principles governing the service law will have to be applied, which would include the principles relating to initiation and finalisation of departmental enquiry.

19. The legal principles that need to be followed while conducting an inquiry of such nature are no longer res integra. In Sathyendra Singh (supra), the Hon'ble Supreme Court spoke about the nature of the evidence that is to be considered. The Hon'ble Supreme Court held that using evidence recorded in a preliminary inquiry is not permissible and that even in an ex parte inquiry, it is necessary to record evidence of the witnesses to prove the charges. The Court was concerned with the issuance of a major penalty like termination from service.

20. In State of Uttar Pradesh V. Ram Prakash Singh [2025 SCC OnLine SC 891], the Hon’ble Supreme Court considered the requirements of a disciplinary/departmental enquiry in detail. The first and second issues that were considered by the Apex Court were (i) whether, in pursuance of a purported enquiry where there was none to present the case of the department, no witness was examined in support of the charges and no document was formally proved, any order of punishment could validly be made and (ii) whether the disciplinary authority was justified in placing reliance on a report of enquiry prepared by the Enquiry Officer who had looked into documents which were not provided to the respondent and had arrived at findings of guilt only based on the charge-sheet, the reply thereto of the respondent and such documents?. The Apex Court referred to its earlier decisions in Bareilly Electricity Company Limited v. The Workmen [1971 (2) SCC 617], wherein it was held that no materials can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to cross-examination by the party against whom they are sought to be used, Roop Singh Negi v. Punjab National Bank 2009(2) SCC 570, wherein it was held that an officer conducting an enquiry has a duty to arrive at findings in respect of the charges upon taking into consideration the materials brought on record by the parties, State of Uttar Pradesh v. Saroj Kumar Sinha 2010(2) SCC 772, and Nirmala J.Jhala v. State of Gujarat 2013(4) SCC 301, and held that only such materials can be considered which are brought on record in a manner known to law, that evidence tendered by witnesses must be recorded in the presence of the delinquent employee, and that he should be given opportunity to cross-examine the witnesses and that no document should be relied on by the prosecution without giving copy thereof to the delinquent; all of the above being the basic principles of natural justice and fair play in action. The court further held that the documents referred to in the list of documents forming part of the annexures to the chargesheet, on which the department seeks to rely in the enquiry, cannot be treated as legal evidence worthy of forming the basis for a finding of guilt if the contents of such documents are not spoken to by persons competent to speak about them, since a document does not prove itself.

21. In the case at hand, the impugned order refers to several documents. Going by the dictum laid down by the Apex Court in the aforesaid judgment, as no enquiry was conducted and none of the documents were proved in the manner laid down by the law, the respondents could not have relied on the said documents to decide to terminate the petitioner. The petitioner is hence entitled to succeed. However, the prayer for reinstatement in service as Managing Director cannot be granted at this stage, in view of the judgment in W.A.No. 2043 of 2023.

                  The writ petition is allowed in part. Ext.P37 order is set aside. The respondents shall reconsider the issue from the stage of Ext.P32 order whereby the 5th respondent was appointed as Enquiry Officer and complete the process, in accordance with the law laid down by the Hon’ble Supreme Court and the law stated in the previous paragraphs, at the earliest, at any rate within three months from the date of receipt of a certified copy of this judgment.