Karthikeyan and Sujatha M.K. v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE P.B.SURESH KUMAR** **TUESDAY, THE 13TH DAY OF DECEMBER 2016/22ND AGRAHAYANA, 1938** ## **WP(C).No. 26064 of 2016 (G)** **------------------------------------------** **PETITIONER(S) :** - **-------------------------** **1. KARTHIKEYAN, S/O. GOPALAN, PARAMJYOTHI KIZHAKKEATHIL VEEDU, EYYAL PO., THRISSUR DISTRICT, REPRESENTED BY HIS POWER OF ATTORNEY HOLDER, SUJATHA.M.K., W/O. KARTHIKEYAN, PARAMJYOTHI KIZHAKKEATHIL VEEDU, EYYAL PO., THRISSUR DISTRICT.** **2. SUJATHA.M.K., W/O. KARTHIKEYAN, PARAMJYOTHI KIZHAKKEATHIL VEEDU, EYYAL PO., THRISSUR DISTRICT.** ## **BY ADV. SRI.DINESH MATHEW J.MURICKEN** **RESPONDENT(S) :** - **----------------------------** **1. STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM -695 001.** **2. JOINT REGISTRAR (GENERAL) CO- OPERATIVE SOCIETIES, OFFICE OF THE JOINT REGISTRAR (GENERAL), SAHAKARANA BHAVAN, THRISSUR -680 003.** **3. THRISSUR URBAN CO-OPERATIVE BANK MISSION QUARTERS BRANCH, REPRESENTED BY ITS GENERAL MANAGER, HEAD OFFICE, P.B. NO. 86, THRISSUR- 680 001.** **4. THE ASSISTANT REGISTRAR (GENERAL), CO-OPERATIVE SOCIETIES, OFFICE OF THE ASSISTANT REGISTRAR (GENERAL), SAHAKARANA BHAVAN, THRISSUR-680 003.** - **R1, R2 & R4 BY SPL. GOVERNMENT PLEADER SRI. K.S.MOHAMMED HASHIM R3 BY ADV. SRI.C.D.DILEEP** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 13-12-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** Msd. ## **WP(C).No. 26064 of 2016 (G)** ## **------------------------------------------** ## **APPENDIX** ## **PETITIONER(S)' EXHIBITS :** **EXHIBIT P1: TRUE COPY OF THE MEDICAL CERTIFICATE ISSUED BY DR. S.S. SUBRAMANIAN DATED 04.11.2015.** - **EXHIBIT P2: TRUE COPY OF THE JUDGMENT PASSED BY THIS HONOURABLE COURT IN W.P(C).NO. 18692/2008 DATED 23.06.2008.** - **EXHIBIT P3: TRUE COPY OF LETTER ISSUED BY THE 3RD RESPONDENT DATED 06.06.2015.** - **EXHIBIT P4: TRUE COPY OF THE JUDGMENT PASSED BY THIS HONOURABLE COURT IN W.P.(C)NO. 23266/2015 DATED 31.07.2015.** - **EXHIBIT P5: TRUE COPY OF THE COMPLAINT SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 11.08.2015.** - **EXHIBIT P6: TRUE COPY OF THE CIRCULAR NO.82/2013 ISSUED BY THE REGISTRAR (CO-OPERATIVE SOCIETIES) DATED 03.01.2014.** - **EXHIBIT P7: TRUE COPY OF THE REPLY GIVEN BY THE 2ND RESPONDENT TO THE PETITIONER'S COMPLAINT DATED 08.05.2015.** - **EXHIBIT P8: TRUE COPY OF THE LETTER ISSUED BY THE 4TH RESPONDENT DATED 28.09.2015.** - **EXHIBIT P9: TRUE COPY OF THE LETTER ISSUED BY THE 2ND RESPONDENT DATED 29.09.2015.** - **EXHIBIT P10: TRUE COPY OF THE JUDGMENT PASSED BY THIS HONOURABLE COURT IN W.P(C).NO. 35393/2015 DATED 02.02.2016.** - **EXHIBIT P11: TRUE COPY OF THE LETTER ISSUED BY THE 3RD RESPONDENT DATED 18.07.2016.** - **EXHIBIT P12: TRUE COPY OF THE COMMUNICATION ISSUED BY THE 2ND RESPONDENT DATED 05.07.2016.** **RESPONDENT(S)' EXHIBITS :** - **EXHIBIT R3(A): A TRUE COPY OF THE NOTICE DATED 25.10.2006 ISSUED BY THE RESERVE BANK OF INDIA TO THE 3RD RESPONDENT BANK.** - **EXHIBIT R3(B): A TRUE COPY OF THE NOTICE DATED 16.02.2009 ISSUED BY THE RESERVE BANK OF INDIA TO THE 3RD RESPONDENT BANK.** **EXHIBIT R3(C): A TRUE COPY OF THE CIRCULAR NO. 5/2015 DATED 22.01.2015.** |**WP(C).No. 26064 of 2016 (G)**|**WP(C).No. 26064 of 2016 (G)**| |---|---| |**------------------------------------------**|| |**EXHIBIT R3(D):**|**A TRUE COPY OF THE LOAN APPLICATION**| ||**DATED 23.04.1999.**| |**EXHIBIT R3(E):**|**A TRUE COPY OF THE INTERIM ORDER IN**| ||**I.A.NO. 1826 OF 2009 IN S.A.NO. 419 OF 2009.**| |**EXHIBIT R3(F):**|**A TRUE COPY OF THE STATEMENT DATED 15.11.2016.**| ||**//TRUE COPY//**| ||**P.A.TO JUDGE.**| Msd. ## **P.B. SURESH KUMAR, J.** ## **--------------------------------------------------** **W.P.(C) No.26064 of 2016 -------------------------------------------------Dated this the 13[th] day of December, 2016** ## **JUDGMENT** The first petitioner had availed a term loan from the third respondent Bank in the year 1999. The second petitioner was the surety to the said loan. The third respondent Bank is a co-operative society registered under the Kerala Co-operative Societies Act. As per Ext.P6 circular, the Registrar of Co-operative Societies issued guidelines for one-time settlement of the liabilities in the loan accounts of co-operative societies engaged in banking business. In Ext.P6, it is provided that the outstanding in the accounts of loans upto Rs.5 lakhs can be settled by accepting the principal amount outstanding in the loan account and equal amount by way of interest. The W.P.(C) No.26064 of 2016 -2- grievance of the petitioners concerns the inaction on the part of the third respondent Bank in extending them the benefit of Ext.P6 circular for settlement of their loan liability. The petitioners, therefore, seek directions in that regard in this writ petition. 2. A counter affidavit has been filed by the third respondent Bank. The stand taken by the third respondent Bank in the counter affidavit is that they are doing banking business in accordance with the Banking Regulation Act, under the control of the Reserve Bank of India and that they are not bound by the circulars in the nature of Ext P6 issued by the Registrar of cooperative societies. It is, however, stated by the third respondent Bank in the counter affidavit that if the petitioners make a one-time payment of Rs.5,93,258/- (Rupees five lakh ninety three thousand two hundred and fifty eight only), the bank is prepared to settle the loan liability as per the guidelines followed by them. W.P.(C) No.26064 of 2016 -3- 3. Heard the learned counsel for the petitioners, the learned Government Pleader as also the learned counsel for the third respondent Bank. 4. The learned counsel for the petitioners, relying on the decision of this Court in **Abdurahiman Nagar Service Co-operative Bank Ltd v. State of Kerala** [2014 KHC 2529] contended that circulars issued by the Registrar of Co-operative Societies are binding on all societies and that therefore, the third respondent Bank cannot take a stand that Ext P6 circular will not be given effect to. Per contra, the learned counsel for the third respondent Bank contended that the Registrar of Cooperative Societies himself has clarified that there is no compulsion for banking institutions governed by the Banking Regulation Act to follow circulars in the nature of Ext.P6. 5. The fact that the third respondent Bank is a banking institution governed by the provisions contained in W.P.(C) No.26064 of 2016 -4- the Banking Regulation Act, under the control of the Reserve Bank of India, is not in dispute. Ext.R3(a) is a communication issued by the Reserve Bank of India to the third respondent Bank, after obtaining the views of the Registrar of cooperative societies in the context of implementing a similar one-time settlement scheme. It is indicated in Ext.R3(a) circular that the Registrar of Cooperative Societies has clarified that there will not be any compulsion for banks governed by the Banking Regulation Act to follow one time settlement schemes formulated by the Registrar for settlement of the liabilities of other cooperative societies. In so far as there is no compulsion for the third respondent Bank to follow the circular issued by the Registrar of Co-operative Societies, the petitioners will not get a corresponding right to settle their liabilities in accordance with the said circular. The fact that there is no compulsion for banks governed by the Banking Regulation Act to follow schemes in the nature of Ext P6 is discernible W.P.(C) No.26064 of 2016 -5- from Ext R3(c) circular issued by the Registrar. It is clarified in Ext R3(c) circular that such banks can give effect to schemes of this nature only in accordance with the guidelines issued by the Reserve Bank of India. The petitioners have no case that Ext P6 scheme would not go against the guidelines issued by the Reserve Bank of India nor do they have a case that the Reserve Bank of India has consented to implement the said scheme in the third respondent Bank. The decision rendered by this Court in **Abdurahiman Nagar Service Co-operative Bank Ltd v. State of Kerala** [2014 KHC 2529] has no application to the facts of the present case, for, the issue arose in the said case was only whether the Registrar of Cooperative Societies has the authority to issue general guidelines to cooperative societies for implementing the Government policies. None of the issues raised in this writ petition arose for consideration in the said case. In the said view of the matter, the petitioners are not entitled to the relief W.P.(C) No.26064 of 2016 -6- sought for in the writ petition and the writ petition is, accordingly, dismissed. Sd/- **P.B. SURESH KUMAR JUDGE** bpr