High Court of KeralaSingle Judge2011-12-23Writ petition allowed; relief granted to petiti...

Ramachandran v. Kottayam District Co-operative Bank Ltd.

Case / Petition Number:W.P.(C) No. 22395 of 2009

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: A.M. Shaffique
Judgment Date: 2011-12-23
Court Decision / Holding: The writ petition is allowed. The first respondent bank is directed to pay the balance DCRG of Rs. 2,33,011 to the petitioner with interest at 9% per annum from the date the amount became due until payment, to be completed within one month from receipt of a copy of the judgment.
Final Disposition: Writ petition allowed; relief granted to petitioner; recovery from DCRG declared wrongful and ordered to be refunded with interest.

Parties to the Case

Appellants / Petitioners

Ramachandran, P., S/o Padmanabhan, Retired Branch Manager, Vaikom Morning & Evening Branch, Kottayam District Co-operative Bank Ltd.

Respondents

Kottayam District Co-operative Bank Ltd., represented by its General Manager
Registrar of Co-operative Societies, Thiruvananthapuram
Joint Registrar of Co-operative Societies (General), Kottayam

Legal Representation & Advocates

Counsels for Petitioners

• Smt. Rekha Vasudevan
• Sri. P.A. Kumaran

Counsels for Respondents

• Sri. T.A. Shaji (SC)
• Smt. P.K. Radhika
• Sri. Jithesh (Addl. Government Pleader)
• Smt. Nirmal V. Nair

Case Synopsis & Summary

The petitioner, Ramachandran, a retired branch manager, stood as guarantor for Krishnan in respect of cash credit and overdraft facilities provided by the first respondent bank. The bank recovered an amount of Rs. 2,33,011 from the petitioner’s gratuity (DCRG), pursuant to Ext. P14. The petitioner contends that the bank had no authority to recover from his gratuity and that there was no written consent or agreement permitting such deduction from the DCRG. The bank relies on a continuing guarantee and on consent/authorization embedded in an agreement that it could recover amounts from salary and assets, including DCRG. The petitioner relies on prior precedents: Manni v. Divisional Forest Officer, and Surendran v. Mavelikara P. Coop. Bank, arguing that no valid written consent existed to permit recovery from retirement benefits. The court notes the arguments and the cited authorities, distinguishing the controlling facts from the present case. It ultimately holds that there is no material showing written consent for recovery from DCRG and that the recovery was wrongful. The writ petition is allowed, directing the bank to pay the balance DCRG of Rs. 2,33,011 along with 9% interest from the date the amount became due, to be paid within one month."

Provisions of Law Cited

Section 37 of the Cooperative Societies Act, 1969Rule 3, Part III, Kerala Co-operative Societies Rules (K.S.R.)

Legal Doctrines & Maxims

Continuous guarantee (a continuing guarantee)
Consent in writing is required to recover from DCRG under Rule 3, Part III, K.S.R.
Salary does not include DCRG (Surendran v. Mavelikara Primary Cooperative Agricultural & RD Bank Ltd)

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioner contends that the bank had no authority to recover any amount from his gratuity (DCRG) since there was no written consent/agreement permitting such deduction. He argues that the retirement benefit cannot be appropriated for recovery absent explicit consent in writing, especially since he is retired and DCRG cannot be treated as salary. He relies on Surendran v. Mavelikara P. Coop. Bank Ltd and argues that no unconditional consent exists to recover from DCRG beyond the stipulated arrangement.

Contentions of Respondents

The bank asserts that the guarantee was a continuing one and that the agreement allowed recovery from salary and assets, including DCRG, through the bank’s right to recover from the guarantor’s dues. It relies on Manni v. Divisional Forest Officer to contend that conditional/statutory consent could suffice for such recovery; it maintains that the discharge of the guarantor’s liability extends to retirement benefits as provided by the agreement and K.S.R. provisions.

Cited Precedents (3)

Case Name	Citation	Treatment	Explanation
Manni v. Divisional Forest Officer	2008 (4) KLT 955	Distinguished	The court notes the argument based on Manni that unconditional consent to recover from retirement benefits could suffice; however, in the present facts there is no material showing such written consent, hence the case is distinguished from the present decision.
Surendran v. Mavelikara Primary Cooperative Agricultural & RD.Bank Ltd.	2005(4) KLT 619	Positive	The Division Bench held that salary does not include DCRG and that recovery from DCRG requires written consent; the present court relies on this principle to require written consent for recovery from DCRG and to find the recovery here wrongful.
Judgment in WP(C) No. 36554 of 2007	WP(C) No. 36554 of 2007	Mentioned Only	Cited as an earlier related decision exhibited (P17); not central to the present reasoning.

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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 A.M.SHAFFIQUE** ## **FRIDAY, THE 23RD DAY OF DECEMBER 2011/2ND POUSHA 1933** ## **WPC.No. 22395 of 2009 (T)** **========================= PETITIONER(S)** **============= RAMACHANDRAN,P, S/O.PADMANABHAN, AGED 60 YEARS, BRANCH MANAGER (RETIRED), VAIKOM MORNING & EVENING BRANCH, KOTTAYAM DISTRICT CO-OPERATIVE BANK LIMITED., KOTTAYAM RESIDING AT CHALUVELIL HOUSE, VADAYAR PO., THALAYOLAPPARAMBU, KOTTAYAM DISTRICT-686 605.** **BY ADVS.SMT.REKHA VASUDEVAN, SRI.P.A.KUMARAN.** ## **RESPONDENT(S)** **=================** **1. THE KOTTAYAM DISTRICT CO-OPERATIVE BANK LTD., REPRESENTED BY ITS GENERAL MANAGER, DISTRICT CO.OPERATIVE BANK BUILDING, PB.NO.140, KOTTAYAM 686 001.** **2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM.** **3. THE JOINT REGISTRAR OF CO.OPERATIVE SOCIETIES (GENERAL), KOTTAYAM.** ## ***ADDL.R4 IMPLEADED:** - **R4. O.N.KRISHNAN, OLAPPURACKAL, K.S.PURAM, KADUTHURUTHI, KOTTAYAM.** ## **(*ADDL.R4 IS IMPLEADED AS PER ORDER DTD. 27/09/2010 IN I.A.NO.13140/10)** **R1 BY ADV.SRI.T.A.SHAJI, SC, KOTTAYAM DIST.CO-OP.BANK, BY ADV.SMT.P.K.RADHIKA R2 & R3 BY GOVERNMENT PLEADER SRI.JITHESH ADDL.R4 BY ADV. SRI.NIRMAL V NAIR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 14-12-2011 , THE COURT ON 23/12/2011 DELIVERED THE FOLLOWING:** ## **Kss** ## **WPC.NO.22395/2009 T** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** - **P1: COPY OF THE LETTER DTD. 6/01/2000 ADDRESSED TO THE 1ST RESPONDENT BY THE PETITIONER.** - **P2: COPY OF THE APPLICATION DTD. 13/3/2000 ALONG WITH THE AGREEMENT EXECUTED BY THE PETITIONER AS GUARANTOR.** - **P3: COPY OF THE APPLICATION DTD.22/06/2001 ALONG WITH THE AGREEMENT EXECUTED BY THE PETITIONER.** - **P4: COPY OF THE REPRESENTATION DTD. 18/11/2002 ALONG WITH THE COPY OF THE ACKNOWLEDGEMENT CARD.** - **P5: COPY OF THE REPRESENTATION DTD. 25/11/2002 SUBMITTED BY THE PETITIONER ALONG WITH ANOTHER.** - **P6: COPY OF THE ORDER NO.E.S.T.926/2003-04 DTD. 10/09/2003 ISSUED BY THE 1ST RESPONDENT.** - **P7: COPY OF THE REPRESENTATION DTD. 12/2/2007 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT.** - **P8: COPY OF THE REPRESENTATION DTD. 15/2/2007 SUBMITTED BY MR.KRISHNAN.** - **P9: COPY OF THE RESOLUTION DTD. 10/04/2007 OF THE COMMITTEE OF THE 1ST RESPONDENT BANK.** - **P10: COPY OF THE LETTER DTD. 10/04/2007 ISSUED BY THE KOTTAYAM DISTRICT ` CO-OPERATIVE BANK EMPLOYEES CO-OPERATIVE SOCIETY TO THE 1ST `` RESPONDENT.** - **P11: COPY OF THE REPRESENTATION DTD. 10/04/2007 SUBMITTED BY THE PETITIONER TO THE 1ST RESPONDENT.** - **P12: COPY OF THE NOTICE NO.EST/50/2007-08 DTD. 13/04/2007 ISSUED BY THE 1ST RESPONDENT BANK.** - **P13: COPY OF THE INTERIM ORDER DTD.28/01/2008 OF THE HON'BLE LOK AYUKTA.** - **P14: COPY OF THE ORDER NO.EST/11/2/2007-08 DTD. 29/02/2008 ISSUED BY THE 1ST RESPONDENT.** - **P15: COPY OF THE LETTER NO.P10/04/2008-09 DTD. 15/04/2008 ISSUED BY THE PUBLIC INFORMATION OFFICER.** - **P16: COPY OF THE ORDER DTD. 16/03/2009 OF THE LOK AYUKTA.** - **P17: COPY OF THE JUDGMENT DTD. 7/04/2008 IN WP(C) NO.36554 OF 2007 OF THIS HONOURABLE COURT.** **RESPONDENT'S EXHIBITS: N I L** **/TRUE COPY/** **P.S.TO JUDGE** **Kss** ## **A.** M.SHAFFIQUE, J. ----------------------------------------------------------W.P.(C) No. 22395 of 2009 – T ----------------------------------------------------------Dated this the 23[rd] day of December, 2011 ## **J U D G M E N T** The petitioner retired from service on 31.01.2007. He was the guarantor of one Mr.Krishnan, in respect of cash credit and overdraft facilities sanctioned by the 1[st] respondent bank. The petitioner now challenges Ext.P14 by which liability had been fixed on the petitioner at Rs.2,33,011/- and recovering the said amount from the gratuity of Rs.3,50,000/-. According to the petitioner, the respondents have no authority to recover any amount from the gratuity payable to the petitioner . The 1[st] respondent has inter alia contended that the petitioner had executed an agreement with the Bank by which permission had been granted to the Bank to recover even amounts from the Death-cum-Retirement Benefit (DCRG). The said portion of the agreement is extracted in paragraph 8 of the counter affidavit of the 1[st] respondent as hereunder: 2 W.P.(C) 22395/2009 “I, P. Ramachandran, the Kottayam District Cooperative Bank Ltd., Kottayam agree to pay and satisfy to you two days after demand upto the amount hereinafter mentioned all moneys and liabilities already advanced, paid, incurred on such account or which you may at any time advance pay or incur together with interest which may be or become payable in connection there nevertheless that my liability on the guaranty shall not exceed in the whole the sum of Rs.1,00,000/- (Rs.One lakh only) and interest therein at the rate of 12% per annum from the date on which demand for payment shall have been made by you upon me”, that the guarantee shall be a continuing guarantee and in full course until te borrower have cleared the liability in full.”. “I hereby understand and agree the Bank is at liberty to realize the amount due under the above Cash credit/Overdraft account and also any other sum due to the Bank on account of the said Cash Credit/Overdraft account opened in favour of the borrower from both my salary and assets”. 3 W.P.(C) 22395/2009 2. The counsel for the 1[st] respondent also relies upon the judgment of this Court reported in **Manni** v. **Divisional Forest Officer** (2008 (4) KLT 955) to contend that if the employee gives a consent to the creditor organization unconditionally agreeing for recovering any amount from the retirement benefits it will be sufficient compliance of Ruling 1 of R.3 Part III K.S.R. 3. The counsel for the petitioner relying upon a Division Bench judgment in **Surendran** v. **Mavelikara Primary Cooperative Agrl. & R.D.Bank Ltd.** (2005(4) KLT 619), contends that no such agreement as envisaged in the judgment in **Manni's** case had been given by the petitioner. The petitioner had, in the said agreement only permitted the Bank to recover the amount from the salary and assets. In so far as, the petitioner had retired and no salary is payable, DCRG cannot be the subject matter of recovery of any amount due to a creditor. In Surendran's case (supra), the Division Bench considered the question as to whether the word 'salary' includes DCRG under S.37 of the Cooperative Societies Act, 1969 and found that the salary does not include DCRG. The 4 W.P.(C) 22395/2009 Division Bench had also indicated that as per Ruling I Rule 3 Part III K.S.R. permits recovery from DCRG only with the consent of the employee concerned in writing. 4. I do not think that there is any material to show that the petitioner had agreed in writing that any amount payable to him as DCRG can be recovered from the gratuity. Even the words 'assets' does not include DCRG. As such the petitioner is entitled for the reliefs prayed for. Since the recovery is wrongful the 1[st] respondent is liable to pay interest for the delayed payment which I fix at 9% from the date when the DCRG has become payable. The writ petition stands allowed as follows: - (i) The 1[st] respondent is directed to pay the balance amount of DCRG, i.e. Rs.2,33,011/- to the petitioner with interest at the rate of 9% per annum from the date when the amount has become due till payment. - (ii) The payment may be made within a period of one month from the date of receipt of a copy of this judgment. ## A.M. SHAFFIQUE, JUDGE rka 5 W.P.(C) 22395/2009