Kannur co-operative society denies scam allegations, says no deposits taken

The Halal Fayidha Co-operative Society Limited in Kannur, an initiative launched under the leadership of the CPI(M), has firmly denied allegations that it has collapsed or that an investment scam took place. In a clarification issued on August 16, the society stated that it never accepted deposits from the public and that all funds collected from members were strictly in the form of share capital.

The denial came in response to a complaint filed by K.P. Nasser, a resident of Mayyil, who alleged that money invested in the society had not been returned. Nasser submitted his complaint to Taliparamba MLA T.K. Govindan, who later forwarded it to Chief Minister V.D. Satheesan, bringing the issue into the public domain. After the matter was reported in the media, the society returned the money to Nasser, following which he withdrew his complaint. However, the MLA has sought a formal inquiry into the broader allegations, citing claims from other shareholders who reportedly felt cheated.

Society president C. Abdul Kareem described the allegations of financial irregularities as baseless. He said the society was registered on August 25, 2017, and began operations on November 13 of the same year. While the bylaws permitted the acceptance of deposits, no deposits were ever taken from anyone. The only funds collected from members were share capital raised to meet the society's stated objectives, he explained.

According to Kareem, the society collected ₹17.28 lakh through 6,913 shares. Of this amount, ₹6.65 lakh was spent on operational facilities, including office infrastructure, furniture, fixtures, and computer equipment. He stressed that the society's accounts were audited by the Cooperation department for the financial years 2017-18, 2018-19, and 2019-20, and that no financial irregularities were found in the audit reports. The 2018-19 audit report, in particular, noted that the management committee had successfully advanced the organisation's initial activities.

The society had originally planned to establish a large-scale meat-processing plant. It had applied for land through KINFRA, prepared a project report, and submitted a registration application. However, the project could not move forward due to circumstances including the COVID-19 pandemic and severe floods.

Kareem clarified that under the society's bylaws and general rules, shareholders can request withdrawal of their share amount after completing three years. He said that all such requests from members had been honoured. A new management committee took charge on March 6, 2025, and has begun efforts to revive the society and strengthen its activities. A shareholders' meeting is scheduled for September to discuss and decide the organisation's future course.

“Halal Fayidha will remain strong in Kannur,” Kareem asserted, adding that the management would ensure that no shareholder suffers a loss. The management also urged shareholders not to fall prey to what it termed “misleading propaganda” about the society's collapse or an alleged investment fraud. It reiterated that the society would continue its efforts to revive its operations.

Co-operative societies in Kerala are governed by the state's Co-operative Societies Act and are subject to periodic audits by the Cooperation department. The Halal Fayidha initiative was notable for being positioned as an Islamic banking venture, though it maintained that it did not accept deposits. The controversy highlights the need for clear communication between co-operative institutions and their members, especially regarding the nature of funds collected and the risks involved in share capital.