Kerala State Co-operative Rubber Marketing Federation Limited v. Mutholy Service Co-operative Bank Limited and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR** **&** **THE HONOURABLE MR.JUSTICE N.NAGARESH** **WEDNESDAY, THE 18[TH] DAY OF AUGUST 2021 / 27TH SRAVANA, 1943** **WA NO. 84 OF 2019** **AGAINST THE ORDER/JUDGMENT IN WP(C) 6520/2017 OF HIGH COURT OF KERALA** **APPELLANT/S:** **THE KERALA STATE CO-OPERATIVE RUBBER MARKETING FEDERATION LIMITED REPRESENTED BY ITS MANAGING DIRECTOR, POST BOX NO.15, GANDHI NAGAR KOCHI-682 020.** **BY ADV JAGAN ABRAHAM M.GEORGE** ## **RESPONDENT/S:** - **1 THE MUTHOLY SERVICE CO-OPERATIVE BANK LIMITED NO.1631, THEKKEMURI, PULIYANNOOR P.O., KOTTAYAM DISTRICT, REPRESENTED BY ITS SECRETARY-686 573.** - **2 THE SECRETARY TO GOVERNMENT, CO-OPERATIVE DEPARTMENT, SECRETARIAT, TRIVANDRUM695 001.** - **3 THE REGISTRAR OF CO-OPERATIVE SOCIETIES THIRUVANANTHAPURAM-695 001.** **THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 18.08.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** W.A No.84/2019 2 ## **JUDGMENT** ## **Ravikumar, J.** This appeal is directed against the judgment dated 9.2.2018 in W.P.(C)No.6520 of 2017. The 3[rd] respondent therein viz., the Kerala State Co-operative Rubber Marketing Federation Limited is the appellant. The facts of the case, in succinct, are as follows:- The appellant is an Apex Society and it is registered under the Kerala Co-operative Societies Act, 1969 (for short ‘KCS Act’ only). The first respondent herein viz., the writ petitioner is a Primary Cooperative Society registered under the KCS Act. Going by the case of the first respondent/ the writ petitioner on 22.3.1997 the Registrar of Co-operative Societies, the 3[rd] respondent herein issued Circular No.11/97 permitting the Primary Agricultural Credit Societies to make deposits with the appellant. Later, the 3[rd] respondent issued communication dated 23.4.1998 requiring all the Joint Registers of Cooperative Societies in Kerala to advise Primary Agricultural Credit Societies in Kerala to deposit their surplus funds with the appellant. Taking the conjoint effect of the said circular and the communication as a general permission issued by the Registrar in terms of Section 57 of the KCS Act authorising Primary Co-operative Societies to invest surplus funds the first respondent made fixed deposits with the W.A No.84/2019 3 appellant. Years after maturity of the fixed deposits and despite repeated demands the appellant failed to disburse the amounts with accrued interest and this made the first respondent to file the above mentioned writ petition with the prayer to direct the appellant to immediately disburse the entire amounts covered by various deposits. The appellant did not deny the liability, but took up a contention in the counter affidavit that the first respondent (writ petitioner) had only invested Rs.5 crores in fixed deposits and it is ready to repay the said amount with interest after the expiry of the period of rubber market intervention operations undertaken by it. That apart, the appellant raised certain contentions based on Exts.R3(a) to R3(d). Based on Ext.R3(a) it was stated therein the Government though had agreed to pay an amount of Rs.25.5.crores in a meeting held on 15.1.2013 so far the said amount had not been paid. Ext.R3(b) would reveal that the appellant had also attempted to get financial assistance of Rs.83 crores with a view to settle the issue of repayment of amounts deposited for fixed terms. Based on Ext.R3(c) it was stated therein that the Hon’ble Chief Minister of Kerala had agreed to pay an amount of Rs.25.5.crores in addition to the like sum agreed to be paid in the meeting held on 15.1.2013. Ext.R3(d) order dated 11.2.2015 reveal that the W.A No.84/2019 4 Government had accorded sanction to the appellant to effect sale of some of its properties to settle the issue of repayment of amounts deposited for fixed terms. The indisputable factual position would reveal that such allegedly taken steps and offers of financial assistance did not materialise and the first respondent is yet to receive very huge sum. In the said circumstances, relying on the decision in **Muthalapuram Service Co-operative Bank Ltd. v. Kerala State Co-operative Rubber Marketing Federation Ltd. and Others [2017 (4) KHC 805** the learned Single Judge ordered the writ petition on the following lines:- “7. In such circumstances, and following the ratio in _**Muthalapuram Service Co-operative Bank Ltd.**_ (supra), I order this writ petition and direct the 3[rd] respondent to pay the amounts mentioned in Ext.P8 confirmation, along with the applicable interest, to the writ petitioner within a period of 8 months from the date of receipt of a certified copy of this judgment. If the 3[rd] respondent fails in doing so, the petitioner would be entitled to invoke the jurisdiction of the competent Authority under he Act, for taking action against the 3[rd] respondent in terms of the provisions relating to liquidation and appropriation of assets of the society, for the purpose of paying off the debts in terms of law.” 2. Heard the learned Counsel on both sides. 3. The learned counsel for the appellant virtually reiterated the contentions unsuccessfully raised before the writ Court before us. W.A No.84/2019 5 Additionally, he contended that the learned Single Judge has failed to consider the maintainability of the writ petition based on Section 69 of the KCS Act and that in view of the said alternative efficacious remedy the writ petition ought not to have been entertained. It is further submitted that the learned Single Judge ought to have appreciated the fact that the amounts were collected by way of fixed deposits from the first respondent and other depositors for the purpose of investing in farmer oriented projects and farmer oriented activities like procurement of produce of the farmers and arraying the inputs to them at reasonable price would be jeopardized in case of withdrawal of any amount from the fixed deposits. The learned counsel for the first respondent strongly opposed the contentions and submitted that in the light of the decision of a Division Bench of this Court in **Gandhigram Agro Based - Industrial Co operative Society Ltd. v. Marangattupilly Service - Co operative Bank Ltd., and others [2019 (3) KHC 60]** in which one among us, (C.T.Ravikumar.J.), was a party, the contentions raised by the appellant are unsustainable and that the judgment of the learned Single judge did not call for any appellate interference. 4. Upon hearing the learned counsel on both sides and considering the rival contentions we have no doubt at all the aforesaid W.A No.84/2019 6 arguments raised by the appellant to assail the judgment of the writ court are to be held against the appellant in the light of the decisions of this Court in **Muthalapuram Service Co-operative Bank Ltd. case** and **Gandhigram’s case** (supra). The appellant, the 3[rd] respondent had filed counter affidavit in the writ petition. We have carefully gone through the same. A bare perusal of the same would reveal that the appellant is not disputing the factum of investment of amounts in fixed deposits by the 1[st] respondent Bank. In respect of any fixed deposit there is no room for any doubt regarding the amount deposited, the rate of interest, the date of maturity etc. and in fact, in the case on hand also on those aspects there is no dispute. In the counter affidavit, what is stated is that pursuant to the direction from the Co-operative Department, the appellant accepted fixed deposits from the 1[st] respondent and similarly situated primary Co-operative Societies/Banks for the market intervention operation in rubber, in tune with the direction of Government of Kerala. That apart, it is stated specifically thus in paragraph 2 of the counter affidavit thus: “When the market intervention period was over, this respondent was ready to repay the fixed deposit amount to the petitioner as this respondent Federation was having funds with it at that time.” That apart, in respect of compliance with the directions in the judgment W.A No.84/2019 7 in W.P.(C)No.17793 of 2009 filed by the 1[st] respondent, whereunder this Court directed the appellant to release an amount of Rs.1.10 crores it is stated thus in paragraph 3 of the counter affidavit thus: “As the Federation was passing through severe financial crisis and funds shortage, this Respondent has requested the Petitioner to grant time till NCDC loan amount of Rs.83 Crore is sanctioned. Against the request of this Respondent the Petitioner approached this Honourable Court for getting deposit refunded without waiting for the release of NCDC Loan vide judgment in W.P.(C) No.17793 of 2009. Even in the worst financial condition of the Federation in obedience to the judgment in the above Writ Petition fully repaid the claimed amount of Rs.1.10 Crore in eleven equal monthly installments from the working capital of this Respondent.” 5. Furthermore, a perusal of the pleadings in the counter affidavit would reveal that without disputing the claim of the writ petitioner/1[st] respondent herein what is stated therein is that the appellant is ready to settle the claim of the petitioner. It is also stated therein that due to non-availability of funds the appellant has sought for financial assistance from NCDC to the tune of Rs.83 crores and has also taken steps to dispose of some of its properties to settle the fixed deposit issues. Exts.R3(b) and R3(c) are produced by the appellant in the writ proceedings to canvass the position that Government of Kerala have offered financial assistance to the tune of more than Rs.50 crores W.A No.84/2019 8 to the appellant to enable it to tide over the situation. The statements to the aforesaid effect made in paragraph 9 of the counter affidavit would reveal that the offer from the Government and request for financial assistance were all made more than six years ago. The fact is that even now crores of rupees are remaining to be paid to the 1[st] respondent. In short, a perusal of the counter affidavit filed by the appellant in the writ proceedings would only depict financial crisis. Therefore, the question is can that be raised as a ground by the appellant to say that the direction of the learned Single Judge in the judgment are unsustainable when taking note of the absolute absence of dispute regarding the receipt of amounts in fixed deposits and its liability to return the same with interest. Direction is issued by the Writ Court only to pay the amount mentioned in Ext.P8 confirmation along with applicable interest within the time limit. As noticed hereinbefore, besides the said direction the learned Single Judge has only declared that in case of failure on the part of the appellant to comply with the aforesaid direction, the writ petitioner/the 1[st] respondent herein would be entitled to invoke the jurisdiction of the competent authority under the Act, for taking action against the 3[rd] respondent in terms of the provisions relating to liquidation and appropriation of assets of the W.A No.84/2019 9 Society, for the purpose of paying off the debts in terms of law. 6. One of the contentions of the appellant is that it is not in a position to effect repayment owing to its present financial crisis. We have already noted that the claim of the writ petitioner was not at all disputed and the liability to pay the amount claimed is also not under dispute. In such circumstances, we are at a loss to appreciate the contentions of the appellant that the learned Single Judge went wrong in not relegating the 1[st] respondent to avail the remedy under Section 69 of the KCS Act. In a situation, near to the one on hand, this Court in the decision in **Gandhigram’s case** (supra) held that the appellant Society therein would be justified in contending that the appellant Bank should be relegated to avail the remedy under Section 69 of the KCS Act. After considering the contentions in the light of the provisions under the Act and also various authorities on the subject this Court held that in the absence of dispute on the amount deposited, the rate of interest and also the date of maturity of the fixed deposits there would be nothing to be adjudicated in exercise of the power under Section 69 of the KCS Act and in such circumstances, a party cannot be relegated to avail the remedy thereunder. We have no hesitation to hold that in such circumstances, it will be nothing but a farce to compel a party to W.A No.84/2019 10 avail the said remedy as the well nigh settled position is that Courts will not compel a party to do a thing in futility. In the light of the decision in **Gandhigram's case** (supra) and taking note of the contentions of the appellant as mentioned above, we are of the considered view that they are absolutely unsustainable. The appellant cannot be permitted to wriggle out of its duty coupled with liability to repay the amount deposited by the 1[st] respondent along with interest at the assured rate. Upon scanning the contentions raised and the arguments advanced on behalf of the appellant and on perusing the impugned judgment, we find no illegality or perversity in the judgment which warrants an appellate interference. Obviously, as per the impugned judgment, the learned Single Judge only directed the appellant to effect repayment of the amount along with applicable interest within the period stipulated thereunder. The declaration that the appellant would be entitled to invoke the jurisdiction of the competent authority under the Act for taking action against the 3[rd] respondent in terms of the provisions relating to liquidation and appropriation of assets of the Society for the purpose of paying off the debts cannot be said to be illegal. According to us, it is nothing but an inevitable sequel to the direction for repayment. The judgment was passed on 9.2.2018. At the instance of W.A No.84/2019 11 the appellant this Court granted adjournments umpteen number of times. On all such circumstances, the appellant was seeking time to effect repayment. But the fact is that despite availing such opportunities the appellant has not chosen to effect repayment of the amount covered by the fixed deposits made by the 1[st] respondent. In the aforesaid circumstances and in view of lack of merits, the appeal must fail. In case, the appellant fails to effect repayment as ordered in the impugned judgment within two months from the date of receipt of a copy of this judgment, the 1[st] respondent would be at liberty to invoke the jurisdiction of the competent authority as ordered in the judgment in W.P.(C) No.6520 of 2017. Subject to the above, this appeal is dismissed. Sd/- **C.T.RAVIKUMAR Judge** Sd/- **N.NAGARESH Judge** TKS