High Court of KeralaDivision Bench2018-07-26Writ Appeals disposed of; Ext P4 benefit grante...

Nissar A.K. and Sunaitha Nissar v Paravur S.N.V Regional Co-operative Bank Ltd & Ors

Case / Petition Number:WA.No. 600 of 2014 in WPC. 2760/2013 (and related WAs: 1900/2016, 667/2017, 668/2017 & 722/2017)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: V. Chitambaresh
Sathish Ninan
Judgment Date: 2018-07-26
Court Decision / Holding: Writ appeals allowed. The appellants are found eligible for the benefit of Ext P4; Ext P3 order is set aside. The accounts are to be closed upon payment of the principal plus interest equal to the principal and 10% establishment charges, with no entitlement to refund. The earlier deposits and interim orders are acknowledged as fulfilling the scheme’s establishment-charge requirement, and the matter is disposed accordingly.
Final Disposition: Writ Appeals disposed of; Ext P4 benefit granted to appellants; Ext P3 order set aside; accounts to be closed; no further payments required; no refunds.

Parties to the Case

Appellants / Petitioners

Nissar A.K. (S/o Abdul Karim)
Sunaitha Nissar (W/o Nissar)

Respondents

The Paravur S.N.V Regional Co-operative Bank Ltd No 1685 (represented by its Secretary)
The Assistant Registrar of Co-operative Societies (General) Office of the Assistant Registrar of Co-operative Societies, Kollam-691013
Sulthana (died) represented by legal heir Sunaitha Nissar

Legal Representation & Advocates

Counsels for Petitioners

• K.K.Chandran Pillai (Sr.)
• A.S.Shammy Raj

Counsels for Respondents

• S. Suresh Kumar
• K.R.DeePa (Senior Government Pleader)

Case Synopsis & Summary

This Division Bench of the Kerala High Court deals with writ appeals challenging the grant of a settlement benefit under Ext P4, a circular issued by the Registrar of Co-operative Societies to borrowers of Cooperative Banks. The appellants, Nissar A.K. and Sunaitha Nissar, had availed loans from the Paravur S.N.V Regional Co-operative Bank and sought the benefit of Ext P4. Ext P4 laid down a scheme for settlement: an account must be Non-Performing Asset (NPA) and the loan amount must not exceed Rs. 5 lakhs; upon payment of the principal and interest, plus 10% towards establishment charges, the account could be closed. Ext P4 was withdrawn by Ext P13 in 2013, but this Court found that the scheme was in force when the appellants sought its benefit. The Bank contended Ext P3 (the Assistant Registrar’s order) was unauthorized and that Ext P4’s grant was discretionary and not mandatory; reliance was placed on Kallettumkara Service Co-Operative Bank v Registrar (2005 (3) KLT 483). The Court, however, held that Ext P4 was issued under Section 66A of the Co-operative Societies Act, that the appellants satisfied the two conditions, and that the challenge to authority should not defeat eligibility. The Court noted Abdurahiman Nagar Service Co-Operative Bank v State of Kerala as a precedent upholding a similar 66A-based notification. Consequently, the appellants are entitled to the Ext P4 benefit, Ext P3 order is set aside, and the writ appeals are disposed of accordingly, with no refund of amounts already paid and with the accounts proposed to be closed.

Provisions of Law Cited

Section 66A of the Co-operative Societies Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The appellants contended that Ext P4 circular was in force at the relevant time, prescribing two clear conditions for eligibility: (i) the account must be an NPA; (ii) the loan amount must be not more than Rs. 5 lakhs. Having satisfied these, Ext P3’s grant of benefit could not be denied on discretionary grounds. They argued that Ext P4, issued under Section 66A of the Co-operative Societies Act, could not be scuttled by the Bank’s unilateral discretion, and that the Bank’s reliance on the Kallettumkara decision was misplaced since Ext P4 post-dated that decision and was grounded in 66A. They also highlighted interim deposits and prior orders directing consideration of the relief.

Contentions of Respondents

The Bank contended Ext P3 was not binding and that Ext P4’s grant was discretionary, subject to the Registrar’s authority. It relied on the Kallettumkara decision to argue lack of authority to issue such circulars and urged that Ext P3 order should stand unless supported by statutory authority. It argued that the scheme’s applicability was not automatic and that discretion could exclude ineligibles; it relied on the statements in the associated judgments and the need to examine the ring-fenced eligibility criteria and the time-frame of the scheme’s validity.

Cited Precedents (2)

Case Name	Citation	Treatment	Explanation
Kallettumkara Service Co-Operative Bank v Registrar of Co-Operative Society	2005(3) KLT 483	Distinguished	The court distinguished this pre-66A decision as not applicable to the Ext P4 scheme enacted under Section 66A.
Abdurahiman Nagar Service Co-Operative Bank v State of Kerala	2014(1) KLT 664	Positive	Cited as having upheld a similar 66A-based notification, aligning with the present court’s view on the Ext P4 scheme.

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Extracted Judgment Text

Exact text extracted from official judgment records.

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR.JUSTICE V.CHITAMBARESH &** **THE HONOURABLE MR. JUSTICE SATHISH NINAN** **THURSDAY, THE 26TH DAY OF JULY 2018 / 4TH SRAVANA, 1940** **WA.No. 600 of 2014 IN WPC. 2760/2013** **AGAINST THE JUDGMENT IN WP(C) 2760/2013 of HIGH COURT OF KERALA DATED 13-03-2014** ## **APPELLANT/RESPONDENTS 1 AND 2** - **1 NISSAR A.K** - **S/O.ABDUL KHARIM, VADAKKEBHAGAM VEEDU,** - **THEKKUMBHAGAM P.O., PARAVUR, KOLLAM 691301.** - **2 SUNAITHA NISSAR** - **W/O.NISSAR, VADAKKEBHAGAM VEEDU, THEKKUMBHAGAM P.O.,** - **PARAVUR, KOLLAM-691301.** **BY ADVS.SRI.K.K.CHANDRAN PILLAI (SR.)** - **SRI.A.S.SHAMMY RAJ** ## **RESPONDENT(S/PETITIONER AND 4TH RESPONDENT:** **1. THE PARAVUR S.N.V REGIONAL CO-OPERATIVE BANK LTD NO 1685** - **S.PARAVUR P.O., KOLLAM 691301, REPRESENTED BY ITS SECRETARY.** **2. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES, CIVIL STATION, KOLLAM-691013.** **3. SULTHANA (DIED) REPRESENTED BY LEGAL HEIR SUNAITHA NISSAR, W/O.NISSAR, VADAKKEBHAGAM VEEDU, THEKKUMBHAGAM P.O., PARAVUR, KOLLAM-691301.** **R1 BY ADV. SRI.B.SURESH KUMAR** **R2 BY SENIOR GOVERNMENT PLEADER SMT.K.R.DEEPA** **THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 23-07-2018 ALONG WITH W.A Nos.1900/2016, 667/2017, 668/2017 & 722/2017, THE COURT ON 26-07-2018 DELIVERED THE FOLLOWING:** **vdv** **V.Chitambaresh & Sathish Ninan, JJ. ============================== W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017 ========================== Dated this the 26[th] day of July, 2018** ## **JUDGMENT** ## **Sathish Ninan, J** Ext P4 circular No.49/2010 dated 20.08.2010 was issued by the Registrar of Co-operative Societies offering scheme for settlement to borrowers from Co-operative Societies/Banks. The scheme was later withdrawn as per Ext P13 circular No.59/2013 dated 25.09.2013 of the Registrar. The appellants in the respective writ appeals had availed loans from the first respondent Bank. Seeking the benefit of Ext P4 circular they approached this Court in W.P(C) Nos.10543 of 2012, 10588 of 2012 and 10600 of 2012. **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 10] intentionally omitted <==** This Court as per judgment dated 07.09.2012 directed the Assistant Registrar to consider the issue and pass appropriate orders. Pursuant thereto Ext P3 order dated 01.12.2012 was passed by the Assistant Registrar granting the benefit of Ext P4 circular to the appellants. The same was challenged by the Bank in writ petition. The Learned Single Judge held that the grant of benefit under the circular is a discretion of the Bank and accordingly interfered with Ext P3 order of the Assistant Registrar. The same is under challenge by the appellants- borrowers. 2. Though there is a challenge that the appellants are not eligible for the benefit of the scheme since the same was not in force at the time the appellants sought for its benefit, as is evident from the dates of Ext P4 and Ext P13 referred to supra, it admits of no doubt that the scheme was in vogue when the appellants **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 11] intentionally omitted <==** ## sought for its benefit. 3. Though the learned counsel for the Bank, relying upon the judgment of this Court in **Kallettumkara Service Co-Operative Bank v Registrar of Co-Operative Society (2005(3) KLT 483)** , contend that Ext P3 circular is not valid in view of lack of authority for the Registrar to issue such circulars, we notice from paragraph 4 of the said judgment itself that the circular under challenge therein was issued at a point of time when Section 66A of the Co-operative Societies Act was not in force. Ext P4 circular is apparently issued under Section 66A of the Co-operative Societies Act and hence the challenge against the authority of the Registrar, does not stand. Apart from the same, it is to be noticed that in W.P(C) No.6906 of 2013 from which Writ Appeal No.1900 of 2016 arises, there was a **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 9] intentionally omitted <==** specific challenge against Ext P4 circular, which was turned down by the learned Single Judge. The same has not been appealed against by the Bank. Therefore, Ext P4 stands. Incidently we also notice that the decision in **Kallettumkara Service Co-Operative Bank v Registrar of Co-Operative Society (2005(3) KLT 483)** referred to supra was distinguished and a notification similar to Ext P4 issued under Section 66A of the Co-operative Societies Act was upheld by a Division Bench of this Court **Abdurahiman Nagar Service Co-Operative Bank v State of Kerala** ( **2014(1) KLT 664)** . 4. Coming to the merits of the claim of the appellants, Ext P4 circular requires satisfaction of two conditions for the applicability of the scheme namely; 1. The account must be a Non-Performing Asset. 2. The loan amount should not be more than Rs.5 lakhs. **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 10] intentionally omitted <==** It is not in dispute that the appellants satisfy these two conditions. We are unable to agree with the learned Single Judge that the appellants are not eligible for the benefit of Ext P4 scheme. There is nothing in the scheme suggesting that the grant of the benefit is at the discretion of the Bank. There is no reason to deny the benefit of the scheme to the appellants. For the reasons as stated above we hold that the appellants are eligible for the benefit of Ext P4 circular. 5. As per the scheme the borrowers are required to pay the principal amount and interest equal to the principal amount and 10% of the interest towards establishment charges. Upon such payment the account is liable to be closed. Pursuant to the interim order passed in the writ petitions in the first round of litigation namely W.P(C) Nos. 10543 of 2012, 10588 of 2012 and 10600 of 2012, the principal amount with **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 11] intentionally omitted <==** interest equal to the principal amount has been deposited by the appellants on 08.05.2012. It is not in dispute that at the time of passing of Ext P3 order by the Assistant Registrar all that remained for payment by the appellants is the establishment charges referred to supra. Pursuant to an interim order passed by this Court in the writ petitions, admittedly total amount of `5 lakhs has since been paid, which would undisputedly satisfy the establishment charges. 6. We have already held that the appellants are eligible for the benefit of the scheme in question. On arriving at our conclusion, we suggested that the amounts in question be closed without requiring any further payments and that the appellants will not be entitled for any refund. The counsel on either sides accept the suggestion. **W.A Nos.600 of 2014, 1900 of 2016, 667 of 2017, 668 of 2017 & 722 of 2017** **==> picture [66 x 9] intentionally omitted <==** In view thereof, the judgment of the learned Single Judge is set aside and the writ appeals are disposed of as above. **Sd/- V.Chitambaresh, Judge** **Sd/- Sathish Ninan, Judge** vdv