Kuzhalmannam Block Rural Credit Co-operative Society Ltd. v. State of Kerala & Ors.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS** ## **&** ## **THE HONOURABLE MR.JUSTICE C. JAYACHANDRAN MONDAY, THE 29[TH] DAY OF MAY 2023 / 8TH JYAISHTA, 1945** **WA NO. 1689 OF 2022** ## **WP(C) 14015/2021 OF HIGH COURT OF KERALA** ## **APPELLANT/RESPONDENT NO.3** THE KUZHALMANNAM BLOCK RURAL CERDIT CO-OPERATIVE SOCIETY LTD.NO.P.1321, KANNANUR,KANNADI P.O.,PALAKKAD-678702, REP.BY ITS SECRETARY. BY ADVS. K.T.THOMAS MATHEW BOB KURIAN ## **RESPONDENTS/PETITIONERS & RESPONDENT NOS.1,2 & ADDL.RESPONDENTS** ## **4 TO 9** 1 N.VINESH, AGED 41 YEARS S/O.NEELAKANTAN,ERATTUKULAM,KADAKURISSY,KANNADI678701,PALAKKAD DISTRICT. 2 ABUTHAYAR S., AGED 43 YEARS,S/O.SULAIMAN,CHATHAN KULAANGARA PARAMBU,KANNADI P.O.,PIN-678701,PALAKKAD DISTRICT. 3 P.UDAYASANKAR, AGED 65 YEARS,SREE CHITHRA,KADAKKURISSI,KANNADI P.O.,PIN-678701,PALAKKAD DISTRICT. 4 V.SADASIVAN, AGED 72 YEARS,S/O.VELAYUDHAN,KALOTTIL HOUSE,KULAVANMOKKU,KUZHALMANNAM P.O.,PALAKKAD. 5 N.BHAVADASAN, AGED 65 YEARS,S/O.NARAYANAN,RAMANCHENNATH HOUSE,KANNADI P.O.,PIN-678701,PALAKKAD DISTRICT. WA 1689 of 2022 2 - 6 K.B.PREMAKRISHNAN, - S/O.BALARAM,KUNNUKAD HOUSE,THENKURISSI P.O.,PALAKKAD-678702. - 7 N.BALAKRISHNAN, - AGED 72 YEARS,KOLUMPARAMBIL,THARUVAKURUSSI,KANNADI P.O.,PIN-678701,PALAKKAD DISTRICT. - 8 R.JAYAKUMAR, AGED 52 YEARS,S/O.RAGHAVAN,THEKKUVEED,KANNANNOOR P.O.,PIN-678701,PALAKKAD DISTRICT. - 9 DHAKSHAYANI, AGED 41 YEARS, - W/O.CHANDRAN,KOLLANGOTTUPARAMBU,KANNADI P.O.,PIN678701,PALAKKAD DISTRICT. - 10 STATE OF KERALA. REPRESENTED BY ITS SECRETARY TO - GOVERNMENT,DEPARTMENT OF CO-OPERATION - (C),GOVERNMENT SECRETARIAT,THIRUVANANTHAPURAM DISTRICT,PINCODE-695001. - 11 THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT REGISTRAR OF COOPERATIVE SOCIETIES,PALAKKAD,PIN-678001. - 12 SRINIVASAN, - S/O.T.M.KRISHNAN,MULLAKKAL HOUSE,VANOOR,ALATHUR TALUK,PALAKKAD DISTIRCT-678671. - 13 PRAKASAN M., - S/O.MANIKKAN,KONKALATHUKALAM,CHERUTHAPPALLUR,THENK URISSI,ALATHUR TALUK,PALAKKAD-678671. - 14 CHANDRAN, - S/O.GOVINDAN,196/2,K.G.NIVAS,AMBALANADA,THENKURISS I,PALAKKAD DISTRICT-678671. - 15 A.S.VIJAYALAKSHMI, - W/O.P.R.UNNI,RESIDING AT UJJWALA,WEST YAKKARA,PALAKKAD-678001. - 16 REMYA MOL, - W/O.VINEETH VIJAYAN,RESIDING AT KATTARAMGAD WA 1689 of 2022 3 HOUSE,THACHANGAD P.O.,MATHUR-11 VILLAGE.ALATHUR TALUK,PALAKKAD DISTRICT-678571. 17 SALEENA M., W/O.SAJADH SAHEER,NEDUVAKKAD KALAM,KHASSERI P.O., KANNADI,PALAKKAD DISTRICT-678701. BY ADVS. RAJESH VIJAYENDRAN SRI.P.P.THAJUDEEN, SPECIAL GOVERNMENT PLEADER (B/O) BIJOY SAM GEORGE ASOK CHACKO THOMAS(K/471/2011) THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 29.05.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WA 1689 of 2022 4 ## **ALEXANDER THOMAS & C.JAYACHANDRAN, JJ. -----------------------------------------------------------------** ## **W.A.No.1689 of 2022** _(arising out of the impugned judgment dated 26.7.2022 in W.P.(C).No.14015/2021 and order dated 3.11.2022 in R.P.No.1007/2022)_ ------------------------------------- Dated this the 29[th] day of May, 2023 ## **JUDGMENT** ## Alexander Thomas, J. The above captioned Writ Appeal is filed at the instance of R3 in the Writ Petition and is directed against the impugned judgment dated 26.7.2022 rendered by the learned Single Judge in the instant W.P. (C).No.14015 of 2021 to the limited extent that it has directed the appellant/Co-operative Society to disburse the matured proceeds of the Fixed Deposits on an out of turn basis to the contesting respondents 4 to 9 in the W.P.(C). 2. Heard Sri.K.T,Thomas, learned counsel appearing for the appellant/R3 in the W.P.(C), Sri.Rajesh Vijayendran, the learned counsel appearing for respondents 1 to 9, except R3 in the Writ Appeal, Sri.P.P.Thajudeen, the learned Special Government Pleader (Co-operation) appearing for R10 and R11 in the Writ Appeal and Sri.G.Hariharan, the learned counsel appearing for R12 to R16 in the Writ Appeal. 3. The only direction challenged in this Appeal, at the behest of the appellant/Co-operative Society (R3) in the W.P.(C), is the one contained WA 1689 of 2022 5 in the last para of the impugned judgment in the W.P.(C), which reads as follows : _“..........Therefore, as an adscititious direction, I direct the Society to consider the plea of respondents 4 to 9 in W.P.(C).No.14015/2021 and to disburse to them all eligible amounts, subject to verification of the authenticity of their deposits, within a period of two months from the date of receipt of a copy of this judgment. I make it reiteratingly clear that this shall be done without waiting for the decision of the Government or that of the competent Authority in terms of the afore directions.”_ 4. The matter in issue to the above extent is covered by the judgment dated 25.8.2022 rendered by the Division Bench of this Court in W.A.No.614 of 2022 and connected cases (The Mavelikkara Taluk Cooperative Bank Ltd and Ors. v. Rajeswari S.Kumar and Ors.). It is important to refer to para Nos 10 to 17 of the above W.A.No.614 of 2022, which read as follows :- _“10. After hearing both sides, it has to be borne in mind that, it is by now well established that the 1[st] appellant Bank will not fulfill the definition of the 'other authorities' within the meaning of Article 12 of the Constitution of India. Further, the action of the 1[st] appellant Bank regarding non adjustment of Fixed Deposits and Savings Bank Accounts held by the contesting respondents in the WP(C) towards the loan dues of the writ petitioner with the 1[st]_ WA 1689 of 2022 6 _appellant Bank, cannot be said to be amenable to public law remedy as per Article 226. At any rate, the transactions in question would essentially fall within banking transactions, which ordinarily may not be amenable to public law remedy. The writ petitioner has no case that any statutory provision has been violated on account of the stand of the appellant Bank. Further, as urged by the appellants, it can be seen that, effective alternate statutory remedy is available to contesting respondents 6 & 7 for realization of Fixed Deposits by filing Arbitration Reference Case in terms of Sec.69 of the Kerala Co-operative Societies Act. The Full Bench of this Court in the decision in_ _**Shanmukha Sundaram Pillai S. v. Meenachil Rubber Marketing & Processing Co-operative Society Ltd. & Ors.** [2022 (3) KHC 121 (FB)] has held that the Registrar has no power to pass orders in individual cases to direct the co-operative society to release the matured Fixed Deposit amounts by taking recourse to Sec.66A._ _11. Further, if the writ petitioner has any grievance regarding the award passed in the ARC, filed under Sec.69 at the instance of the appellant, it could have been challenged in an appeal or revision before the Co-operative Appellate Tribunal, which is headed by a judicial officer of the rank of District Judge. The afore remedies have not been availed either by the writ petitioner or the contesting respondents in the WP(C) in the manner known to law._ WA 1689 of 2022 7 _12. The counsel for the writ petitioner would now urge that, the writ petitioner has not been served with the notice in the ARC No.65/2017 and also copy of the award has not been served on her._ _13. If that be so, it is for the writ petitioner to avail the steps in that regard, by approaching the adjudicatory authority under Sec.69, to furnish the details of the award in ARC No.65/2017, on the file of the Assistant Registrar of Co-operative Societies, Mavelikkara, and then workout the statutory remedy in accordance with law._ _14. Further, it has been noted that the total Fixed Deposit amount to be honoured by the appellant Bank is more than Rs. 117 Crores, which may also include the misappropriated Fixed Deposit amounts to the tune of Rs.34 Crores. Whereas, the loan liabilities owed by the borrowers to the appellant Bank is only about Rs. 35 Crores. Hence, there is great force in the submissions of the counsel for the appellants and the learned Special Government Pleader (Co-operation) that, if such inter se private party adjustments are directed to be acted upon by the appellant Bank, on account of the understanding between borrowers like the writ petitioner and the Fixed Deposit holders like the contesting respondents in the WP(C), then it may seriously affect the financial viability of the appellant Bank in view of the present precarious financial crisis. There is also force_ WA 1689 of 2022 8 _in their submissions that such directions may not be permitted in writ proceedings, which are essentially in the realm of discretionary jurisdiction, as the transactions are mainly in the realm of banking transactions. We find force in these submissions. Hence, we are of the considered view that, the impugned directions in the judgment in the WP(C) would deserve interdiction. This is all the more so, in view of the great financial crisis now faced by the Bank by a series of misappropriation and embezzlement of Fixed Deposit amounts said to have been committed by the persons concerned._ _15. The counsel for the contesting respondents in the WP(C) would submit that the viability scheme sanctioned by the Government, without standing guarantee, may not be right and proper, and that it is learnt that, in respect of certain other cooperative institutions like the Karuvannur Co-operative Society Ltd., Thrissur District, the Government has taken a very lenient view, etc._ _16. This is denied by the learned Special Government Pleader (Co-operation) pointing out that, in respect of the said co-operative institution concerned, they have sufficient immovable properties owned by them without any encumbrances which can meet the huge liabilities faced by them, and hence the said co-operative institution could avail financial assistance from the State Apex Co-operative Bank and other co-operative_ WA 1689 of 2022 9 _institutions for their revival/revitalization. We need not get into those issues except to hold that, if any such Fixed Depositors like the respondents in the WP(C) have any such grievance regarding the efficacy of the revival scheme, those are all matters that can be canvassed before the State Government by filing appropriate representation. Hence, those issues need not detain our consideration._ _17. The upshot of the above discussion is that, the impugned verdict in the above WP(C) would require to be interdicted. In that view of the matter, it is ordered that the impugned judgment dated 23.2.2022 rendered by the learned Single Judge in WP(C).No.3624/2022 will stand set aside. It is also made clear that, the writ petitioner and the contesting respondents in the WP(C) will be at liberty to avail remedies in the matter in accordance with law. All contentions available to them in that regard are left open to be raised and decided in other appropriate proceedings in the manner known to law.”_ 5. Hence, the impugned direction has been issued in favour of the contesting respondents in the W.P.(C). and not in favour of the writ petitioners. Moreover, the directions are to pay the proceeds for the matured Fixed Deposits to those parties, on an out of turn basis and other payments are also there. Matters relating to loan transactions, Fixed Deposit transactions etc., in a Bank or Co-operative Society are essentially WA 1689 of 2022 10 relating to banking transaction or commercial transaction, which may not fall within the province of public law remedy. Moreover, adequate and efficacious remedy is envisaged in the Kerala Co-operative Societies Act, in terms of Sec.69 of the Act, whereby an aggrieved person can file an Arbitration case, akin to a Suit for recovery of money, which will be heard and decided by the notified authority. Thereafter, an Appeal or Revision is also envisaged before the Co-operative Appellate Tribunal, which is a forum to be presided over by a serving District Judge. Therefore, it is for the beneficiaries of the above said direction to avail those remedies. Moreover, from the submission of the official respondents, it appears that the Joint Registrar of the Co-operative Societies is taking steps to constitute a monitoring committee to consider as to whether some Scheme or directions could be issued on a general basis to deal with the priority for making payments of matured Fixed Deposits to the FD holders of the Co-operative Banks. We need not get into those aspects, except to say that if any such Scheme is so framed by the respondent/ Joint Registrar, then the above said contesting respondents/the beneficiaries of the interim directions as above, will be at liberty to avail such beneficial directions, in accordance with law 6. Accordingly, the impugned direction, contained in the last para of the verdict of the learned Single Judge, directing out of turn disbursal of Fixed Deposit proceeds to the above contesting respondents in the W.P.(C), WA 1689 of 2022 11 will stand set aside. With these observations and directions, the impugned judgment of the learned Single Judge will stand modified. No other issues are raised in this Appeal, inasmuch as it is not filed by the writ petitioners but by the above contesting respondents in the W.P.(C). The impugned judgment of the learned Single Judge will stand modified to the limited extent as above. With the above observations and directions, the Writ Appeal will stand disposed of. _Sd/-_ **ALEXANDER THOMAS JUDGE** _Sd/-_ **C. JAYACHANDRAN JUDGE** Mrcs WA 1689 of 2022 12 ## **APPENDIX** RESPONDENT ANNEXURE AnnexureR11(a) True copy of the order of formulation of Monitoring Committee.