St. Thomas Cathedral Kuries Irinjalakuda v. State of Kerala and Reserve Bank of India

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** **THE HONOURABLE MR.JUSTICE V.G.ARUN** **MONDAY, THE 25[TH] DAY OF JULY 2022 / 3RD SRAVANA, 1944** **WP(C) NO. 18930 OF 2018** ## **PETITIONERS:** ST. THOMAS CATHEDRAL KURIES IRINJALAKUDA, REP. BY ITS VICAR, REV. FR.ANTU ALAPPADAN,AGED 50 YEARS, S/O.ANTHONY, ST.THOMAS CATHEDRAL,IRINJALAKUDA, THRISSUR DISTRICT. BY ADV SRI.V.M.KRISHNAKUMAR ## **RESPONDENTS:** 1 STATE OF KERALA REPRESENTED BY SECRETARY, TAXES (C) DEPARTMENT, SECRETARIAT,THIRUVANANTHAPURAM, PIN 695 001. 2 RESERVE BANK OF INDIA REP. BY ITS GOVERNOR, 6, SANSAD MARG, NEW DELHI,PIN110001. BY ADV SRI.MILLU DANDAPANI ## **OTHER PRESENT:** GP RIYAL DEVASSY **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 25.07.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** WP(C) No.18930/2018 2 ## **V.G.ARUN J.** ------------------------------------- **W.P.(C) No.18930 of 2018 ---------------------------------** Dated this the 25[th] day of July 2022 ## **JUDGMENT** The petitioner is an establishment conducting chits/kuries from the year 1846 onwards. According to the petitioner, the kuries are being conducted as part of the mission of the Roman Catholic Church for the economic and social development of the parishioners and public at large, especially those in the low income group. The income generated by running the kuries is utilised for charitable purposes such as medical relief, educational and religious services etc. The petitioner claims to have completed more than 700 chits/kuries, including monthly, halfyearly and pooval kuries over the past 170 years, without giving rise to any complaint. 2. The Chit Funds Act 1982 ('the Act' for short) came into force in Kerala with effect from 30/4/2012, pursuant to the judgment of the Supreme Court in _**State of Kerala & Others v. Mar Appraem Kuri Company Ltd. & others(AIR 2012 SC 2375)**_ . The petitioner laments that due to the restrictions contained in Sections 11, 12 & 13 of the Act, WP(C) No.18930/2018 3 the petitioner is disabled from starting new kuries. Faced with such a situation, petitioner submitted Ext.P6 request seeking exemption from the provisions of the Act. Alleging that the request is not being considered, the petitioner along with other Kuri companies filed W.P. (C) No.39391/2015 before this Court. That writ petition was disposed of directing the Government to consider the representation. Thereupon the Government passed Ext.P8 order stating that individual applications for exemption are not being entertained, since the Government is considering the scope of formulation of general rules of exemption, in consultation with the Reserve Bank of India. Aggrieved by Ext.P8, the petitioner along with other kuri companies approached this Court in W.P.(C) No.40580 of 2016 . The said writ petition was also disposed of directing consideration of the individual representations. Thereupon the Government passed Ext.P9 order stating that the proposal for exempting certain societies and trusts has been forwarded to the Reserve Bank of India for its opinion and a decision regarding exemption under Section 87 of the Act will be taken based on the opinion rendered by the RBI. While so, the petitioner came across Ext.P11 order granting exemption to an identically placed charitable establishment named Onnukure Ayiram Yogam, Kodungallur. Thereupon, the petitioner submitted a fresh WP(C) No.18930/2018 4 representation requesting to grant exemption under section 87, as has been done in the case of the Onnukure Ayiram Yogam. Later, the first respondent issued Ext.P13 order stating that the RBI did not give exemption for the petitioner establishments in W.P.(C)No.40580 of 2016 and hence, rejected the request for exemption. Aggrieved this writ petition was filed seeking the following reliefs ; i). Call for records leading to Ext.P13 and issue a writ in the nature of certiorari quashing Ext.P13 ii). Issue a writ in the nature of mandamus commanding the respondent to exempt the petitioner from Sections 11,12 and 13 of Chit Funds Act 1980 exercising powers under Sect.87 of Chit Funds Act. iii). Issue such other orders, writs or directions as are deemed fit by this Hon'ble court. 3. Advocate Ranjith Thampan, learned Senior Counsel appearing for the petitioner, contended that Ext.P13 is per se illegal inasmuch as the order is rendered without considering the exemption granted to Onnukure Ayiram Yogam, which undisputedly is a similar establishment. It is submitted that the crucial fact that the income generated from the kuries is being utilised only for charitable purposes WP(C) No.18930/2018 5 was also not taken into consideration. Moreover, the statement in Ext.P13 that Reserve Bank did not favour the exemption is factually incorrect, since no consultation was made with the RBI. It is hence contended that Ext.P13 is liable to be set aside for non- application of mind and the first respondent ought to be directed to consider Ext.P12 request afresh. 4.Adv.Millu Dandapani, learned Standing Counsel for RBI submitted that the provisions of the Chit Funds Act have to be strictly followed while conducting chits/kuries in the State. Exemption from the provisions is granted only in rare cases, that too for convincing reasons. It is submitted that the first respondent has so far not consulted the RBI with respect to the request for exemption submitted by the petitioner. 5. Learned Government Pleader submitted that the petitioner's representation was considered twice by the Government and rejected. As such there is no scope for directing fresh consideration. 6. A careful perusal of Ext.P13 shows that no reference is made therein to the petitioner's contention that income from the kuries is being utilised for charitable purposes. Like wise, no reference is seen made to Ext.P11 order by which exemption was granted to the Onnukure Ayiram Yogam . Moreover, the statement in Ext.P13 that the RBI did WP(C) No.18930/2018 6 not agree to give exemption also seems to be incorrect in view of the RBI stand that the petitioner's request for exemption was not forwarded to the RBI for opinion. As such I find substantial merit in the challenge against Ext.P13 as well as the request for reconsideration of the petitioner's representation. In the result, the writ petition is disposed of directing the first respondent to take a decision on Ext.P12 request for exemption under section 87 of the Act after due consultation with the Reserve Bank of India. While taking such decision, the first respondent shall advert to Ext.P11 order by which an identically placed charitable establishment has been exempted from the provisions of Sections 11, 12 and 13 of the Act. The decision, as directed above, shall be taken within three months of receipt of a copy of this judgment. Sd/- **V.G.ARUN Judge** dpk WP(C) No.18930/2018 7 ## **APPENDIX OF WP(C) 18930/2018** PETITIONER EXHIBITS EXHIBIT.P1 TRUE COPY OF THE LIST OF KURIES THAT SI EVEN NOW RUNNING BY THE PETITIONER. - EXHIBIT.P2 TRUE COPY OF THE NOTICE RELATING TO HALF YEARLY KURIES PAYABLE ON 16.01.2018 - EXHIBIT.P3 TRUE COPY OF INCOME & EXPENDITURE ACCOUNT OF THE PETITIONER FOR THE YEAR ENDING 31ST MARCH 2011. - EXHIBIT.P4 TRUE COPY OF THE INCOME & EXPENDITURE ACCOUNT OF THE PETITIONER FOR THE YEAR ENDING 31ST MARCH 2017. - EXHIBIT.P5 TRUE COPY OF THE BALANCE SHEET OF THE PETITIONER FOR THE YEAR ENDING ON 31.03.2017 - EXHIBIT.P6 TRUE COPY OF THE APPLICATION IN PRESCRIBED FORMAT FILED BY THE PETITIONER IN JUNE 2013 - EXHIBIT.P7 TRUE COPY OF APPLICATION DATED 29.08.2016 BEFORE THE HON'BLE FINANCE MINISTER WITHOUT ENCLOSURE. - EXHIBIT.P8 TRUE COPY OF GOVERNMENT ORDER G.O. (RT.)NO.768/2016/TD, DATED 01.10.2016 - EXHIBIT.P9 TRUE COPY OF THE GOVERNMENT ORDER G.O. (RT.)NO.817/2017/TAXES, DATED 06.10.2017 - EXHIBIT.P10 TRUE COPY OF THE REPRESENTATION FILED BY ONNUKURE AYIRAM YOGAM KODUNGALLUR TO THE SECRETARY, TAXES DEPARTMENT DATED 06.10.2014. EXHIBIT.P11 TRUE COPY OF THE GOVERNMENT ORDER DATED 07.09.2015. EXHIBIT.P12 TRUE COPY OF THE REPRESENTATION SUBMITTED BY THE PETITIONER DATED 20.11.2017. EXHIBIT.P13 TRUE COPY OF THE G.O. (RT.)NO.248/2018/TAXES DATED 31.03.2018. WP(C) No.18930/2018 8 EXHIBIT P14 COPY OF THE REGISTRATION CERTIFICATE DATED 29/06/2016. RESPONDENT EXHIBITS - EXHIBIT R2(a) TRUE COPY OF THE NOTIFICATION BEARING NO.DFC.(COC) NO.99/ED(JRP)-97 DATED MARCH 6, 1997. - EXHIBIT R2(b) TRUE COPY OF THE RBI MASTER CIRCULAR NO. DNBS.PD.CC NO.336/03.02.004/2013-14 DATED JULY 1, 2013. - EXHIBIT R2(c) TRUE COPY OF THE DIRECTIONS ISSUED BY THE RBI, BEARING NO. DNBS(PD) CC.NO.159/03.03.01/2009-10 DATED AUGUST 28, 2009 PROHIBITING THE CHIT FUND COMPANIES FROM ACCEPTING DEPOSITS. - EXHIBIT R2(d) TRUE COPY OF THE LETTER BEARING NO.DNBS(T) NO. 367/02.16.002/2015-16 DTD.21 OCTOBER 2015 ISSUED BY THE RESERVE BANK TO THE PRINCIPAL SECRETARY TO THE STATE GOVERNMENT OF KERALA, TAXES (C) DEPARTMENT. - EXHIBIT R2(e) TRUE COPY OF THE LETTER BEARING NO. DNBR.PD.CO NO.296/03.10.001/2017-19 DTD. AUGUST 09,2017 ISSUED BY RBI. - EXHIBIT R2(f) TRUE COPY OF THE REPLY BEARING NO. DNBS(T) NO.1173/02.16.002/2014-15 DATED MARCH 25, 2015 TENDED BY RESERVE BANK TO THE STATE GOVERNMENT. - EXHIBIT R2(g) TRUE COPY OF THE LETTER BEARING NO. DNBS(t) NO.368/02.16.003/2017-18 DTD. NOVEMBER 9,2017 ISSUED BY RBI.