The Manager, Real Industrial Corporation Industrial Estate, Pappanamcode, Thiruvananthapuram v. The Vellanadu Service Co-Operative Bank Ltd, etc.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR** **FRIDAY, THE 27TH DAY OF MAY 2016/6TH JYAISHTA, 1938** **WP(C).No. 26927 of 2004 (E) ----------------------------** ## **PETITIONER(S):** **--------------** **THE MANAGER, REAL INDUSTRIAL CORPORATION INDUSTRIAL ESTATE, PAPPANAMCODE, THIRUVANANTHAPURAM REP. BY A.MADHAVAN PILLAI, (REPRESENTED BY POWER OF ATTORNEY HOLDER, DR.S.RAJALAKSHMI, PLOT NO.34, SUBHASH NAGAR, PETAH, THIRUVANANTHAPURAM** **BY ADV. SRI.D.KISHORE** ## **RESPONDENT(S):** **--------------** **1. THE VELLANADU SERVICE CO-OP.BANK LTD. BANK LTD., NO.2379, VELLANADU P.O., THIRUVANANTHAPURAM REPRESENTED BY ITS, PRESIDENT.** **2. MR.V.SASIDHARAN NAIR, EX-PRESIDENT, VELLANADU SERVICE C0-OPERATIVE BANK, VALIYARA VEEDU, VELLANADU P.O., THIRUVANANTHAPURAM.** **3. SREEKUMARAN NAIR,EX-SECRETARY IN CHARGE, VELLANADU SERVICE CO-OPERATIVE BANK, KOLLARA VEEDU,, VALIYARA,VELLANADU P.O., THIRUVANANTHAPURAM.** **4. THE ASST.REGISTRAR OF CO-OPERATIVE SOCIETIES, OFFICE OF JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL ADMINISTRATION), THIRUVANANTHAPURAM.** **5. THE KERALA CO-OPERATIVE TRIBUNAL THIRUVANANTHAPURAM.** ## **ADDL. R6 IMPLEADED** **ADDL.R6 THE ADMINISTRATIVE COMMITTEE VELLANADU SERVICE CO-OPERATIVE BANK LTD.NO.2379 VELLANADU PO, THIRUVANANTHAPURAM - 695 543** **(IS IMPLEADED AS ADDITIONAL R6 AS PER ORDER DATED 10.09.2015 IN IA No.12731/2015.)** **R,R1 BY ADV. SRI.THOMAS ABRAHAM R,R1 BY ADV. SRI.DIPU.R R2 BY ADV. DR.K.P.SATHEESAN (SR.) R2 BY ADV. SRI.P.MOHANDAS (ERNAKULAM) R2 BY ADV. SRI.ANOOP.V.NAIR R2 BY ADV. SRI.S.VIBHEESHANAN R2 BY ADV. SRI.K.SUDHINKUMAR** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27-05-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WP(C).No. 26927 of 2004 (E)** ## **----------------------------** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:-** **-------------------------** - **P1 COPY OF THE PETITION FILED BY THE PETITIONER BEFORE THE 4TH RESPONDENT ARC No,45/96** - **P2 COPY OF THE WRITTEN STATEMENT FILED BY THE 1ST RESPONDENT IN ARC 45/96 DT,04.12.98** - **P3 COPY OF THE ORDER DATED 11.11.96 IN ARC 45/96** - **P4 COPY OF THE ORDER DT. 16.3.98 IN RP No.54/97 OF THE KERALA COOERATIVE TRIBUNAL, THIRUVANANTHAPURAM** - **P5 COPY OF THE ORDER DATED 16.11.99 IN ARC 45/96** - **P6 COPY OF THE ORDER DT. 23.01.2004 IN AP No.23/00 OF THE KERALA CO-OP. TRIBUNAL, THIRUVANANTHAPURAM.** ## **RESPONDENTS' EXHIBITS:-** ## **------------------------** ## **NIL** // True copy // PA to Judge das ## **A.K.JAYASANKARAN NAMBIAR, J.** =========================================== **W.P.(C). No. 26927 of 2004** ===================================================== **Dated this the 27[th] day of May, 2016** ## **JUDGMENT** The petitioner is a proprietary concern engaged in the manufacture and sale of various steel and wooden furniture. It is the case of the petitioner in the writ petition that the 1[st] respondent bank had placed an order with the petitioner on 17.01.1995 for the purchase of 5000 numbers of metal savings boxes at the rate of Rs.50/- per box. The boxes were supplied to the 1[st] respondent bank in stages and, as and when a consignment of boxes was delivered, the payments for the same were being made by the 1[st] respondent bank. It is submitted that, after taking delivery of 2,250 boxes, the 1[st] respondent bank stopped taking delivery of the balance number of boxes although the petitioner had intimated the 1[st] respondent bank of the fact that the boxes had been manufactured and kept ready for delivery. When despite a considerable period of time, the 1[st] respondent bank did not honour the terms of the purchase order, by taking delivery of the balance boxes that had been manufactured and kept ready for delivery by the petitioner, the petitioner moved the Joint Registrar of Cooperative Societies through an application under Section 69 (1) (f) of the Kerala Co-operative Societies Act (hereinafter referred to as -2- W.P.(C). No. 26927 of 2004 “the Act” for short), claiming an amount of Rs.1,82,290/- towards the costs of the boxes which had to be supplied to the 1[st] respondent. While the 1[st] respondent bank preferred Ext.P2 objections to the claim preferred by the petitioner, the Arbitrator proceeded to pass Ext.P3 award, holding inter alia that the dispute raised by the petitioner was one that was maintainable under Section 69 of the Act, and further holding that the petitioner was entitled to the amount claimed by him from the respondent Bank. The claim was thus allowed by the Arbitrator in Ext.P3 award. Against Ext.P3 award, the 1[st] respondent bank filed a revision before the Kerala Co-operative Tribunal. By Ext.P4 order dated 12.01.1998, the said Tribunal found that the award of the Arbitrator had been passed without affording an opportunity of hearing to the respondent bank and therefore, set aside the award and remanded the matter to the Arbitrator for a fresh determination of the claim of the petitioner. In the remanded proceedings, the Arbitrator proceeded to pass Ext.P5 award dated 16.11.1999 wherein, the Arbitrator found in favour of the petitioner both, on the issue of maintainability of the claim under Section 69(1)(f) of the Act and also on merits, and found the petitioner entitled to an amount of Rs.1,37,500/- in respect of the -3- W.P.(C). No. 26927 of 2004 boxes that remained to be delivered to the 1[st] respondent bank, and further directed payment of interest @ 18% per annum on the delayed payment and a further interest @ 5% as per Section 4 of the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act. A sum of Rs.500/- was also directed to be paid to the petitioner by way of cost. Aggrieved by Ext.P5 award of the Arbitrator, the respondent bank preferred an appeal before the Kerala Co-operative Tribunal. The appeal was disposed by Ext.P6 judgment of the Tribunal, wherein, the Tribunal found against the petitioner on the issue of maintainability of the dispute under Section 69(1)(f) of the Act and also found that, on a consideration of the evidence that was adduced before the Arbitrator, it could not be said that there was a contract between the petitioner and the respondent bank, which obliged the respondent bank to take delivery of the remaining boxes at the price, which was fixed in the purchase order. Ext.P6 order of the Tribunal is impugned in the writ petition, both with regard to its finding on the maintainability of the dispute under the Act as also with regard to its findings on the merits of the matter. 2. I have heard Sri. D.Kishore, the learned counsel -4- W.P.(C). No. 26927 of 2004 appearing for the petitioner as also Sri. K.P. Satheeshan, the learned senior counsel appearing for the respondent Bank. 3.On a consideration of the facts and circumstances of the case as also the submissions made across the bar, I find from Section 69 (1)(f) of the Act, that “the disputes that can be decided by the Registrar under Section 69 (1) (f) of the Act, are inter alia one that arises between the Society and a person, other than a member of the Society, who has been granted a loan by the Society, or with whom the Society has or had business transaction or any person claiming through such a person”. Section 100 of the Act also makes it clear that “no civil or revenue court shall have any jurisdiction in respect of any matter for which a provision is made in the Act”. The term “dispute” is defined in Section 2(i) of the Act as meaning “any matter touching the business, constitution, establishment or management of a Society capable of being the subject of litigation and includes a claim in respect of any sum payable to or by a society, whether such claim be admitted or not”. In the instant case, it is evident from a consideration of the claim that was raised by the petitioner before the Arbitrator that it was a claim for money in respect of a transaction that had been entered -5- W.P.(C). No. 26927 of 2004 into between the petitioner and the 1[st] respondent bank. There cannot be any dispute that the placement by the respondent bank, of the purchase order with the petitioner for purchase of metal savings boxes, was one that was in connection with the banking business that was carried on by the respondent bank. It is evident, therefore, that the petitioner's claim was a dispute in respect of a sum payable to him by the Society and which sum the Society was not admitting. The dispute was also one that was between the Society and the petitioner, with whom the Society admittedly had a business transaction in that there was a firm purchase order that was placed by the Society on the petitioner and from the terms of which the Society had not expressly resiled at any time before the claim was raised by the petitioner. In my view, therefore, the dispute fell within the scope of Section 69 (1) (f) of the Act for the purposes of conferring jurisdiction on the Arbitrator to adjudicate upon the issue. The Arbitrator in Ext.P5 Award award, considered the dispute on merits and found that, inasmuch as the respondent bank had placed the purchase order on the petitioner for 5000 metal savings boxes and the petitioner had delivered 2,250 boxes to the respondent bank pursuant to the said purchase order and the said boxes had been taken delivery of by the respondent bank -6- W.P.(C). No. 26927 of 2004 and further, there was no indication from the Society that there was no further requirement of boxes from the petitioner, the claim of the petitioner that there was a binding contract for supply of 5000 boxes had to be allowed. As a matter of fact, it is apparent from a reading of Ext.P5 award that, at no point of time before the raising of the claim by the petitioner, had the respondent bank indicated that it did not require the balance number of boxes from the petitioner, or that there was no agreement between the petitioner and the respondent bank with regard to the supply of balance number of boxes mentioned in the purchase order. Under the said circumstances, when there is a supply by the petitioner of boxes to the respondent bank, pursuant to a purchase order that was placed by the Society on the petitioner, and the conduct of the respondent bank did not give any indication as to a variation in the terms of supply that was stipulated in the purchase order, even on the principles of promissory estoppel, it would be inequitable to permit the respondent bank to refuse to take delivery of the balance number of metal boxes and effect payment for the same to the petitioner. The conduct of the respondent bank, as well as the evidence on record, led the Arbitrator to find in favour of the petitioner in respect of the claim put forward before by him. The -7- W.P.(C). No. 26927 of 2004 Arbitrator therefore, directed the respondent bank to pay the petitioner the amount of Rs.1,37,500/- which represented the value of the balance number of boxes that had to be supplied to the respondent bank and also directed the payment of interest at the rates mentioned in Ext.P5 award. In the writ petition Ext.P6 judgment of the Tribunal, which was passed in an appeal filed by the respondent bank before the said Tribunal, is impugned. A perusal of the order of the Tribunal indicates that the Tribunal found against the petitioner with regard to the issue of maintainability of the dispute before the Arbitrator. It is found that the nature of the purchase effected by the respondent bank, of boxes from the petitioner, could not be held as a business transaction between the petitioner and the 1[st] respondent. It is seen that the Tribunal placed reliance on the decision of this Court in T.V. Sundaram Iyyankar and Sons v. Cannannoore District Wholesale Co-operative Consumer Stores Ltd. **[1998 (1) KLT 942]** wherein it was held that “in relation to a claim of refund of money arising out of a contract between the Society and the claimant, the remedy of proceeding under Section 69 would not be available”. It is not very clear as to how the said -8- W.P.(C). No. 26927 of 2004 decision would have enabled the Tribunal to hold that there was no commercial transaction between the petitioner and the respondent bank, for it is not in dispute that the respondent bank had in fact placed a purchase order on the petitioner, and it was pursuant to the said purchase order that the petitioner had effected the supply of 2250 metal boxes, the delivery of which was initially taken by the respondent bank. The only issue to be considered was whether the respondent bank was under any obligation to lift the balance number of metal boxes which, though mentioned in the purchase order, had not actually been delivered by the petitioner along with the earlier lot. In other words, there was no doubt whatsoever with regard to the underlying transaction, to which both the petitioner and the respondent were a party, namely, the transaction pursuant to the purchase order that was placed by the respondent bank on the petitioner. The Tribunal, therefore, erred in holding that there was no business transaction at all and that, under the said circumstances, the remedy of the petitioner lay in filing a civil suit before the appropriate civil court. The erroneous appreciation of facts and evidence by the Tribunal led it to arrive at a wrong conclusion with regard to maintainability of the dispute under Section 69 (1) (f) of the Act. As the said Tribunal order -9- W.P.(C). No. 26927 of 2004 cannot be legally sustained, I quash Ext.P6 order and restore Ext.P5 award of the Arbitrator. Resultantly, the respondent bank is held liable to pay to the petitioner the amounts directed in Ext.P5 award, together with the interest directed in the said award till the date of actual payment. The writ petition is allowed as above. Sd/- **A.K.JAYASANKARAN NAMBIAR JUDGE** das /27.5.2016