Molsy Eldhose v. Secretary, Valakom Service Co-operative Bank Ltd & Others

**-CR-** ## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **FRIDAY, THE 02ND DAY OF AUGUST 2019 / 11TH SRAVANA, 1941** ## **WP(C).No.20845 of 2019** ## **PETITIONER:** **MOLSY ELDHOSE, AGED 48 YEARS W/O. ELDHO VARGHESE, IDATHALA KUZHUMBIL HOUSE, KUNNACKAL P.O, VALAKOM, PIN 682 316** **BY ADVS. SRI.S.SUDHISH KUMAR SRI.K.B.DAYAL** ## **RESPONDENTS:** |**1**|**THE SECRETARY,**| |---|---| ||**VALAKOM SERVICE CO-OPERATIVE BANK LTD NO.E108, KUNNACKAL P.O,**| ||**MUVATTUPUZHA, PIN 682 316**| |**2**|**THE RETURNING OFFICER (A AND E) INSPECTOR,**| ||**OFFICE OF THE ASST. REGISTRAR (GENL.)**| ||**CO-OPERATIVE SOCIETIES, MUVATTUPUZHA, PIN 682 316) VALAKOM**| ||**SERVICE CO-OPERATIVE BANK LTD, NO. E108**| ||**KUNNACKAL P.O, MUVATTUPUZHA, PIN 682 316**| |**3**|**THE ASST. REGISTRAR(GENL.) CO.OP SOCIETIES,**| ||**OFFICE OF THE ASST. REGISTRAR (GENL.) CO-OPERATIVE SOCIETIES,**| ||**MUVATTUPUZHA, PIN 682 316) ELECTORAL OFFICER, VALAKOM SERVICE**| ||**CO-OP BANK LTD, NO. E108, KUNNACKAL P.O, MUVATTUPUZHA,**| ||**PIN 682 316**| |**4**|**THE STATE CO-OPERATIVE ELECTION COMMISSION,**| ||**3RD FLOOR, CO/BANK TOWERS, VIKAS BHAVAN,**| ||**THIRUVANANTHAPURAM 695 033**| ||**BY ADVS.**| ||**SRI.T.R.HARIKUMAR**| ||**SRI.ARJUN RAGHAVAN**| |**OTHER PRESENT**<br>**:**|| **SRI.R.LAKSHMI NARAYAN SC, SMT.C.S.SHEEJA -SR.GP** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 02.08.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **WP(C).No.20845 of 2019** **2** **-CR-** ## **J U D G M E N T** There is a SALUTORY provision in the Kerala Co-operative Societies Rules ('KCS Rules' for short), that no member of a Society shall be eligible for being elected or appointed as a member of its Managing Committee, if he/she is in default to the said Society or to any other Society in respect of any loan or loans taken by him/her or loan in which he/she has stood surety, for such period as is prescribed by the Bye-laws of the Society or in any case, for a period exceeding three months or is a defaulter to the Society. 2. The afore is clearly mandated in Rule 44(1)(c)(i) of the KCS Rules and there can be no doubt that the nomothetic philosophy behind this is to deny a person, who voluntarily and persistently defaults in payment of loans, the opportunity to contest in the elections, thereby granting no premium to dishonesty. 3. Pertinently, noticing the specific statutory edict, this Court has, in several judgments, including in **Abdul Rasheed v State of Kerala [1998(1) KLT 190],** held that a surety to a loan stands on a slightly different footing and cannot be **WP(C).No.20845 of 2019** **3** subjected to the rigour of this Rule without him/her being informed of the default committed by the principal borrower, which perspicuously has been so declared on account of the fact that a surety may not always be aware that the principal borrower has committed default in repayment of the loan. 4. In effect, the surety to a loan stands protected to this extent solely because of the benefit of doubt that he/she may not be aware of the default committed by the principal borrower, particularly because the primary obligation of repayment of a loan is always on the principal borrower and it is only on commission of default by the said borrower will the surety be mulcted with the liability, which then certainly is joint and several. 5. It is, therefore, irrefutable that the purpose, reason and intent behind this judicial declaration is that a surety, who may not be even aware of the default committed by the principal borrower, should not be denied the opportunity of contesting in an election. To ensure this, the judgments declare that unless the surety is given a prior notice by the Society concerned, the rigour of Rule Rule 44(1)(c)(i) of the KCS Rules will not apply to him/her even though the said Rule provides no such specific **WP(C).No.20845 of 2019** **4** protection. 6. I have opened this judgment with the above prologue, because, this case presents a singular factual scenario, where the petitioner concedes that her daughter had availed of a certain loan from the Society of which she is a serving member of its Managing Committee, on the strength of a guarantee executed by her and that her daughter has committed default in payment of the same. However, the petitioner asserts that she was not aware of this and therefore, that since she has not been concededly given a prior notice informing her of the said default, the rigour of Rule 44(1)(c)(i) of the KCS Rules cannot be applied to her. She thus assails the action of the Electoral Officer in having rejected her nomination for the elections to the new Managing Committee of the Society, scheduled on 04.08.2019, as being untenable and contrary to law. She consequently, prays that the Electoral Officer be directed to include her name also in the List of Candidates in the ensuing elections and that this Court declare that she is not under any disability on the strength of the dictum in **Abdul Rasheed** (supra) 7. In opposition to this, Sri. T.R.Harikumar, learned **WP(C).No.20845 of 2019** **5** standing counsel appearing for the respondent - Bank, submits that the petitioner is admittedly a member of the present Managing Committee of the Society and is certainly aware that her daughter is in default, which is evident from Ext.R1(g) Minutes of the meeting of the Managing Committee held on 20.12.2018, whereby, it was decided to issue notices to all the defaulters who are shown in Ext. R1(h) list, which includes her daughter as serial No.27. He says that, as is clear therefrom, the petitioner and a person by name "Binish" were authorized by the Managing Committee to serve notices on all the defaulters shown therein, including her daughter; and therefore, that she is thus fully aware of the fact of the default in re-payment of the loan. He asserts, therefore, that the benefit of **Abdul Rasheed** (supra) cannot be extended to the petitioner. 8. Sri.R.Lakshmi Narayan, learned standing counsel appearing for the State Co-operative Election Commission, submits that as is luculent from the order impugned in this writ petition, the Electoral Officer heard the petitioner consequent to the directions of this Court in the judgment in her earlier writ petition, namely, Ext.P1; and that in the resultant Ext.P3 order, it has been found that since the petitioner is a member of the **WP(C).No.20845 of 2019** **6** Managing Committee and since her daughter is staying along with her, it is incredulous that she was not aware of the default committed by her daughter. He says that, in fact, if the petitioner had any honourable intention, she could have even paid off the entire amounts of default on 27.07.2019 itself when she was heard by the Electoral Officer and that her refusal in doing so clearly indicates that her contentions herein are confutative. He, therefore, prays that this Court dismiss this writ petition without entertaining into any opinion on the petitioner's challenge, particularly in view of the judgments of the Hon'ble Supreme Court in **Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Uptadak Sanstha and another v. State of Maharashtra and others [2001 KHC 1667],** wherein the jurisdiction of this Court has been declared to be inhibited once the election process is underway. 9. I have considered the afore submissions with great amount of care since I understand that what is at stake is the right of the petitioner to contest in the elections to the Society. I am also cognizant that the petitioner claims to have been a member of the Managing Committee of the Society for the last **WP(C).No.20845 of 2019** **7** fifteen years and therefore, that the decision that I arrive at in this judgment is crucial to her re-election. 10. When I examine the order impugned, namely, Ext.P3, there can be no doubt that the Electoral Officer had considered the germane aspects involved and had found that the petitioner cannot contend that she was not aware of the default in payment of the loan by her daughter, of which she is a surety, because they are living together and also since she is a member of the present Managing Committee. The Electoral Officer has also recorded therein that if the petitioner's contention, that she was not aware of the default by her daughter, is credible, then nothing stopped her from paying off the loan overdues on 27.07.2019, when she was heard and that her refusal to do so, demonstrates that her true intentions were not to clear off the liability but to seek re-election notwithstanding the statutory prohibition. 11. I find substantial force in the afore submissions because, as I have already indicated above, the intent and purpose of the pronouncement through **Abdul Rasheed** (supra) **,** that a surety must have been given prior notice of the default in repayment of the loan, before his/her nomination is **WP(C).No.20845 of 2019** **8** rejected under Rule 44(1)(c)(i) of the KCS Rules, is solely to ensure that a surety is not unfairly victimized or put to prejudice on account of the default committed by the principal borrower unknown to him/her. Clearly, therefore, it is the knowledge or otherwise of the default, which is important because, if the surety is demonstrated or found to be fully aware of it, then the prescriptions of Rule 44(1)(c)(i) of the KCS Rules would apply even without a formal notice having been issued to him/her by the Society. This is beyond contest because, the Rule does not provide for any such prior notice to be issued to the surety but this Court made the judicial declaration solely on account of the afore recorded ratiocination. 12. Of course, I am also aware of the contention of Sri.Sudheesh Kumar, learned counsel for the petitioner, that the proviso to Rule 44(2)(a) of the KCS Rules must apply to Rule 44(1)(c)(i) of the said Rule also, but this argument has been already repelled by this Court in **Rajasekharan Nair v. Returning Officer and Another [2008 (4) KHC 1003],** wherein, it has been unequivocally held that the provisions of this proviso, which has been endrafted under Rule 44(2), cannot be imported to Rule 44(1)(c)(i) of the KCS Rules. **WP(C).No.20845 of 2019** **9** 13. That said, since the factum of a prior notice not having been issued to the petitioner being admitted, it does not matter whether the proviso to Rule 44(2) is applicable to Rule 44(1)(c)(i) of the KCS Rule or otherwise, because the only relevant question, even assuming such a notice is mandatory, is whether the petitioner was aware of the default in re-payment of the loan by her daughter, in which she is admittedly a surety, but conveniently pretends and asserts otherwise. 14. I am afraid that I cannot, prima facie, offer imprimatur to the version of the petitioner, particularly when she did not in the writ petition contest the statement in Ext.P3 that her daughter is also staying along with her, though, in the subsequent additional affidavit filed by her, she says that her daughter is staying in Chennai; but this, having not been averred in the writ petition or in her objections before the Electoral Officer, namely Ext.P2, would have to be taken with a pinch of salt. That said, even if this belated averment in the additional affidavit of the petitioner, that her daughter is living in Chennai, is accepted, it would be of no avail for the purpose of the prayers in this writ petition because Exts.R3(g) and R3(h) documents show, at least prima facie, that the petitioner was **WP(C).No.20845 of 2019** **10** aware of the default in repayment of the loan by her daughter. In the afore circumstances, I do not deem it prudent to allow the petitioner to contest in the elections on 04.08.2019 because I am of the firm opinion that if a surety of a loan is in full knowledge of the default in repayment by the borrower, it would, even if a prior notice has not been issued to him/her, invite the full rigour of Rule 44(1)(c)(i) of the KCS Rules and would consequently justify the action of the Electoral Officer in rejecting his/her candidature under this Rule. Any interpretation by this Court to the contrary, in my view, would defeat the very purpose of this Rule, which has a very laudatory intent behind it. In summation, since I am prima facie drawn to the conclusion that the petitioner had knowledge of the default committed by her daughter, I dismiss this writ petition; however, leaving liberty to her to initiate all statutory remedies that may be available to her in law to establish to the contrary and assail the elections, through cogent and reliable evidence and documents; reiteratingly making it clear that my observations and findings on the facts of this case are only prima facie, based on the pleadings, submissions and materials on record and **WP(C).No.20845 of 2019** **11** singularly for enabling me to decide if the petitioner ought to be allowed to contest in the elections and nothing more. **Sd/-** rp **DEVAN RAMACHANDRAN JUDGE** **WP(C).No.20845 of 2019** **12** ## **APPENDIX** ## **PETITIONER'S/S EXHIBITS:** **EXHIBIT P1 TRUE COPY OF THE JUDGMENT OF THIS HONOURABLE COURT IN WPC NO. 19997/2019 DATED 26-07-2019.** **EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT SUBMITTED BY THE PETITIONER DATED 27-07-2019.** **EXHIBIT P3 TRUE COPY OF THE ORDER NO. M 526/2019 DATED 2907-2019 REJECTING THE NOMINATION OF THE PETITIONER.** ## **RESPONDENT'S/S EXHIBITS:** **EXHIBIT R1(A) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AS LOAN ACCOUNT NO. 11792, AVAILED BY CHRISTINA E. ELDHOSE ON 18.08.2017. EXHIBIT R1(B) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AS LOAN ACCOUNT NO. 11794, AVAILED BY BIDHO K. ONACHAN ON 21.08.2017. EXHIBIT R1(C) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AS LOAN ACCOUNT NO. 12724, AVAILED BY SARAMA VARKEY ON 08.09.2018.** **EXHIBIT R1(D) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AVILED BY VARKEY A.V. ON 08.09.2018 AS LOAN ACCOUNT NO. 12723.** **EXHIBIT R1(E) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AS LOAN ACCOUNT NO. 12272, AVAILED BY ELDHOSE VARGHESE ON 13.03.2018. EXHIBIT R1(F) A TRUE COPY OF THE LOAN APPLICATION AND LOAN STATEMENT, AS LOAN ACCOUNT NO. 13177, AVAILED BY THE PETITIONER ON 13.03.2019. EXHIBIT R1(G) A TRUE COPY OF THE RELEVANT PAGES OF THE MINUTES OF THE MANAGING COMMITTEE MEETING HELD ON 07.01.2019. EXHIBIT R1(H) A TRUE COPY OF THE LIST OF DAFAULTERS, TO WHOM NOTICE ARE SERVED BY THE PETITIONER.**