The Trivandrum Co-operative Urban Bank Ltd. v. Kerala Co-operative Ombudsman and Sri Chandramohanan

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN** **MONDAY, THE 19TH DAY OF FEBRUARY 2018 / 30TH MAGHA, 1939** **WP(C).No. 99 of 2015** ## **PETITIONER:** **THE TRIVANDRUM CO-OPERATIVE URBAN BANK LTD.NO.1959, M.G.ROAD, THIRUVANANTHAPURAM-695 001, REPRESENTED BY THE GENERAL MANAGER.** **BY ADV.SRI.GEORGE POONTHOTTAM** **RESPONDENT(S):** **1. THE KERALA CO-OPERATIVE OMBUDSMAN, OFFICE OF THE KERALA CO-OPERATIVE OMBUDSMAN, THIRUVANANTHAPURAM-695 001, REPRESENTED BY ITS SECRETARY.** **2. SRI.CHANDRAMOHANAN, SEETHA NIVAS, MANOORKONAM P.O., NEDUMANGAD, THIRUVANANTHAPURAM DISTRICT.PIN-695 101.** **R1 BY SR GOVERNMENT PLEADER SRI.BIMAL K.NATH R2 BY ADVS. SRI.SHABU SREEDHARAN SRI.S.VIJAYAN SRI.N.MUHAMMAD SAJU SRI.C.PAULOSE SRI.SREEDHARAN KARATTA SMT.RESHMA ABDUL RASHEED** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-02-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts 27/3/2018** ## **WP(C).No. 99 of 2015 (J)** **APPENDIX** ## **PETITIONER(S)' EXHIBITS** **EXHIBIT P1: TRUE COPY OF THE LOAN AGREEMENT DATED 23.3.2001.** **EXHIBIT P2: TRUE COPY OF THE AGREEMENT DATED 23.3.2001.** **EXHIBIT P3: TRUE COPY OF THE CERTIFICATE DATED 7.7.2001.** **EXHIBIT P4: TRUE COPY OF THE AWARD DATED 15.5.2006.** **EXHIBIT P5: TRUE COPY OF THE COMMUNICATION DATED 10.2.2011.** **EXHIBIT P6: TRUE COPY OF THE COMMUNICATION NO.27/2010-11 DATED 27.5.2010. EXHIBIT P7: TRUE COPY OF THE COMMUNICATION NO.71/14-15 DATED 16.6.2014. EXHIBIT P8: TRUE COPY OF THE ORDER NO.335/06(2) DATED 14.2.2014.** **EXHIBIT P9: TRUE COPY OF THE ORDER DATED 1.12.2014 IN COM.NO.462/2014 PASSED BY THE KERALA CO-OPERATIVE OMBUDSMAN, THIRUVANANTHAPURAM.** ## **RESPONDENT'S EXHIBITS:** **EXHIBIT R2(1): TRUE COPY OF THE REPRESENTATION DATED 8/4/2014 EXHIBIT R2(2): TRUE COPY OF THE REPRESENTATION DATED 26/4/2014 EXHIBIT R2(3): TRUE COPY OF THE SAID COMPLAINT DATED 23/7/2014** ## **/TRUE COPY/** **P.A.TO JUDGE** **sts 27/3/2018** **'CR'** ## **ANIL K. NARENDRAN, J. ----------------------------------------------W.P.(C).No.99 of 2015 -----------------------------------------------** Dated this the 19[th] day of February, 2018 ## **JUDGMENT** The petitioner Bank, which is a Society registered under the Kerala Co-operative Societies Act, 1969, has approached this Court in this writ petition filed under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P9 order dated 01.12.2014 of the Kerala Co-operative Ombudsman, Thiruvananthapuram in Complaint No.462 of 2014; a declaration that the petitioner Bank is justified in seeking to recover the claims due to the principal debtor from the 2[nd] respondent and that, the 1[st] respondent Co-operative Ombudsman has no authority to entertain the complaints of the nature, which lead to the passing of Ext.P9, as the same is outside the purview of the Scheme under which the Ombudsman is created. 2. A counter affidavit has been filed on behalf of the 2[nd] respondent opposing the reliefs sought for in this writ petition. W.P.(C)No.99 of 2015 :-2-: 3. Heard the learned counsel for the petitioner, the learned Senior Government Pleader appearing for the 1[st] respondent and also the learned counsel appearing for the 2[nd] respondent. 4. The sole issue that arises for consideration in this writ petition is as to the legality or otherwise of Ext.P9 order passed by the 1[st] respondent Co-operative Ombudsman in Complaint No.462 of 2014. 5. The pleadings and materials on record would show that one G.Madhusoodanan Nair was sanctioned a loan for 1,80,000/-₹ from the Thycaud Branch of the petitioner Bank on 23.03.2001. As per the terms of repayment, he was required to repay the loan in 65 monthly installments of 2,769/-, which was to carry₹ interest at the rate of 16.5% per annum. Ext.P1 is the loan agreement. Ext.P2 document would show that the 2[nd] respondent herein stood as one of the sureties in the said loan transaction, agreeing to be severally liable for realisation of the said amount, reserving the liberty with the Bank to sue either of them without joining the others. The 2[nd] respondent has also consented for W.P.(C)No.99 of 2015 :-3-: recovery of the amount from his salary, as provided under Section 37 of the Kerala Co-operative Societies Act, 1969 (for brevity, 'the Act') which as evidenced by Ext.P3 certificate dated 07.07.2001. When there was default on the part of the borrower in repayment of monthly instalments, recovery proceedings were initiated by the petitioner Bank, which has resulted in the issuance of Ext.P5 notice. 6. Challenging the recovery steps initiated by the petitioner Bank, the 2[nd] respondent had approached the Cooperative Ombudsman by filing Complaint No.462 of 2014. In the said complaint, the Ombudsman passed Ext.P9 order, which is under challenge in this writ petition. The operative portion of Ext.P9 order reads thus : “Under Section 146 of the Indian Contract Act 'co sureties are liable to contribute equally.' 'The provision says when two or more persons are co sureties for the same debt or duty, either jointly or severally or whether under the same or different contracts and whether with or without the knowledge of each other, the co sureties, in the absence of any contract to the contrary, are liable as between themselves to pay each an equal share of the whole debt, or that part of it which remains unpaid by the principal.' W.P.(C)No.99 of 2015 :-4-: According to the respondent the amount remaining to be recovered out of the loan is Rs.2,70,669/-, i.e., the principal Rs.1,21,441/- along with interest of Rs.1,49,228/-. An amount of Rs.2,40,000/- (Two lakh forty thousand) is already recovered from the petitioner who is one among the sureties. So from the statement of respondent, it is seen that the total amount to be recovered out of the loan debt is Rs.5,10,669/- (Five lakh ten thousand six hundred and sixty nine) as per the statements furnished before the forum. As strictly following Section 146 of the Indian Contract Act the petitioner is liable to pay one third of the total amount due, i.e., Rs.1,70,223/- (One lakh seventy thousand two hundred and twenty three - calculated as per information furnished before the forum). So the petitioner is entitled to get back Rs.69,777/- (Sixty nine thousand seven hundred and seventy seven) which he paid in excess of what he is liable to pay under the contract of guarantee. So I direct the respondent to return back the excess amount recovered from the petitioner as the liability is co extensive. I further direct the respondent bank to stop all proceedings against the petitioner forthwith. Case disposed off accordingly by considering the special circumstances no cost is ordered.” By Ext.P9 order, the Co-operative Ombudsman has directed the petitioner Bank (respondent therein) to return back the excess amount to the 2[nd] respondent (petitioner therein), as the liability W.P.(C)No.99 of 2015 :-5-: is co-extensive. The petitioner Bank was further directed to stop all proceedings against the 2[nd] respondent forthwith. 7. The main contention raised by the learned counsel for the petitioner is that the Co-operative Ombudsman has absolutely no jurisdiction or authority to entertain the complaint made by the 2[nd] respondent, since the grievance in that complaint falls beyond the scope of the powers conferred on the Ombudsman under the Kerala Co-operative Ombudsman Scheme. The learned counsel for the petitioner would place reliance on Para.7 of the said Scheme, which deals with the grounds of complaint. 8. The Kerala Co-operative Ombudsman Scheme, 2010 is formulated by the Government in exercise of the powers conferred by sub-section (1) of Section 69A of the Act. Section 69 of the Act deals with the disputes to be decided by the Co-operative Arbitration Court and the Registrar and Section 69A deals with the Co-operative Ombudsman. Section 69 A reads thus; “ **69A. Co-operative Ombudsman** :- (1) The Government may, by notification in the official Gazette, frame a scheme to be called the “Kerala Co-operative Ombudsman Scheme” with the object of enabling redressal of complaints relating ## W.P.(C)No.99 of 2015 :-6-: to deficiency in banking or other services rendered by cooperative societies dealing with banking business. (2) The Government may appoint one or more persons as Ombudsman or Ombudsmen to carry out the functions entrusted to them by or under the scheme. (3) The term of office of the Ombudsman or the Ombudsmen, as the case may be, be shall be three years from the date of their entering office or sixty five years, whichever is earlier. (4) The Ombudsman or Ombudsmen so appointed under sub-section (2) shall be a person or persons having experience and expertise in banking or co-operative field and shall have a degree in management or law. (5) The functions, powers, duties, etc. of the Ombudsman shall be such, as may be specified in the scheme. (6) The Ombudsman shall be under the control of the Government.” (underline supplied) 9. The provisions under sub-section (5) of Section 69A of the Act makes it explicitly clear that the functions, powers, duties, etc. of the Ombudsman shall be such, as may be specified in the Scheme. It is in exercise of the said provision under Section 69A of the Act that the Government has formulated the Kerala Cooperative Ombudsman Scheme, 2010 (for brevity, 'the Scheme'). Para.5 of the Scheme, which deals with the functions of the W.P.(C)No.99 of 2015 :-7-: ## Ombudsman or Ombudsmen, which reads thus; “5. Functions of Ombudsman or Ombudsmen:- (1) The Ombudsman or Ombudsmen shall receive and consider complaints relating to the deficiencies in the business or services of societies filed on the grounds mentioned in paragraph 7 and facilitate their satisfaction or settlement by agreement or through conciliation and mediation between the societies concerned and the complainants or by passing an order in accordance with this Scheme. (2) The Ombudsman or Ombudsmen shall send to the Government, through the Registrar of Co-operative Societies, a report as on the 31[st] day of December every year containing a general review of the activities of his/their office and shall furnish such other information as the Government may require before 31[st] March of the next year. The Registrar shall send to the Government a summary report of the working of the Ombudsman or the Ombudsmen before the 31[st] day of March every year.” (underline supplied) As per Para.5(1) of the Scheme, the Ombudsman or Ombudsmen shall receive and consider complaints relating to the deficiencies in the business or services of societies filed on the grounds mentioned in Para.7 of the Scheme and facilitate its satisfaction or settlement by agreement or through conciliation and mediation between the societies concerned and the complainants or by passing an order in accordance ## W.P.(C)No.99 of 2015 :-8-: with the Scheme. 10. Chapter IV of the Scheme deals with the procedure for redressal of grievance. Para.7 of the Scheme, which deals with the grounds of complaint reads thus : - “7. Grounds of complaint:- (1) Any person may file a complaint before the Ombudsman or Ombudsmen having jurisdiction on any one or more of the following grounds namely:- - (a) non-payment or inordinate delay in payment or repayment of money in respect of share, deposits of any kind, advances, etc. for which the complaint is eligible; - (b) non-payment or inordinate delay in payment or collection of cheque, drafts, bills, etc.; - (c) non-adherence to prescribed working hours; - (d) not providing or negligence to provide or inordinate delay in providing banking facility including loans and advances for which the complainant is eligible; - Explanation:- Where loan application is received by a society but loan is not granted in time or there is inordinate delay in granting loan or the loan application is rejected without sufficient and reasonable grounds, such a complaint will be treated as grievance. - (e) non-observance of the rate of interest/penal interest on loans and advances and rate of interest on deposits as fixed by the Registrar or Reserve Bank of ## W.P.(C)No.99 of 2015 :-9-: India, as the case may be; - (f) complaints from Non-Residents Indians having accounts in India in relation to their remittances from abroad, deposits and other bank related matters; - (g) refusal to open deposit accounts without any valid reason; - (h) levying of charges without adequate prior notice to the customer; - (i) levying of apprising charges, insurance charges, fee for loan application, valuation fees, Gehan writing fee, document writing fee, etc., by societies in excess of the rate fixed by the Registrar or levying such fees without the sanction of the Registrar; - (j) non-disbursement or delay in disbursement of pension; - (k) forced closure of deposit accounts without due notice or without sufficient reasons; - (l) refusal to close or causing delay in closing the accounts when requisitioned; - (m) deficiency of service in matters pertaining to Automated Teller Machine, Credit Card/Debit Card, etc; and - (n) any violation of the directives issued by the Registrar or other department officers exercising the powers of the Registrar as per the Act and the rules made there under in relation to the business done or services provided by a society which causes grievance to a ## W.P.(C)No.99 of 2015 :-10-: customer. - (2) No complaint to the Ombudsman or Ombudsmen shall - - lie if, - (a) a complaint on the subject matter involving the same parties has been previously filed before the Ombudsman or Ombudsmen; or - (b) the subject-matter of the complaint has been previously disposed of by the Ombudsman or Ombudsmen or has been under the consideration of or has been previously disposed of by any civil court or labour court; or - - (c) a complaint on the same subject matter has been filed under Sections 69, 70 and 82 of the Act; or - (d) the complaint is frivolous or vexation in nature; or - (e) the complaint is in the nature of a dispute under Section 69 of the Act or in the nature of an appeal petition under Sections 82 and 83 of the Act; or - (f) the subject-matter of the complaint is beyond five years.” (underline supplied) 11. As per Para.7(1) of the Scheme, any person may file a complaint before the Ombudsman or Ombudsmen having jurisdiction on any or more of the grounds enumerated in clauses (a) to (n) thereof. However, Para.7(2) of the Scheme makes it explicitly clear that no complaint to the Ombudsman or Ombudsmen shall lie in respect of the matters enumerated in W.P.(C)No.99 of 2015 :-11-: clauses (a) to (f) thereof. Going by sub-clause (e) of Para.7(2), no complaint to the Ombudsman is maintainable if the complaint is in the nature of a dispute under Section 69 of the Act or in the nature of an appeal petition under Section 82 and 83 of the Act. In the instant case, the complaint made by the 2[nd] respondent is hit by clause (e) of Para.7(2) of the Scheme. The said fact is not in serious dispute. 12. Para.13 of the Scheme, which deals with rejection of complaint, reads thus; - “13. Rejection of the complaint:- The Ombudsman or Ombudsmen may reject a complaint at any stage if it appears that the complaint made is,- - (a) not on any of the grounds stated in paragraph; or - (b) beyond the jurisdiction of the Ombudsman or Ombudsmen under this Scheme or is beyond the period of limitation; or - (c) frivolous or vexatious or mala fide; or - (d) without any sufficient cause; or - (e) in the opinion of the Ombudsman or Ombudsmen that there is no loss or damage or inconvenience caused to the complainant; or - (f) one requiring consideration of elaborate documentary and oral evidence and the proceedings before the W.P.(C)No.99 of 2015 :-12-: Ombudsman or Ombudsmen, as the case may be, are not appropriate for adjudication of such complaint; or (g) otherwise be disposed of under the provisions of the Act.” (underline supplied) As per clause (b) of Para.13 of the Scheme, if it appears to the Ombudsman or Ombudsmen that the complaint made is beyond its jurisdiction under the Scheme or is beyond the period of limitation, the Ombudsman or Ombudsmen may, at any stage, reject that complaint. 13. In **Kanwar Singh Saini v. High Court of Delhi [(2012) 4 SCC 307]** the Apex Court reiterated that, conferment of jurisdiction is a legislative function and it can neither be conferred with the consent of the parties nor by a superior court, and if the court passes order/decree having no jurisdiction over the matter, it would amount to a nullity as the matter goes to the roots of the cause. Such an issue can be raised at any belated stage of the proceedings, including in appeal or execution. The finding of a court or tribunal becomes irrelevant and unenforceable/inexecutable once the forum is found to have no jurisdiction. Acquiescence of a party equally should not be W.P.(C)No.99 of 2015 :-13-: permitted to defeat the legislative animation. The Court cannot derive jurisdiction apart from the statute. 14. The Co-operative Ombudsman set up under Section 69A of the Act is the creature of the Statute, which shall exercise the functions, powers, duties, etc., as may be specified in the Scheme framed by the Government in exercise of its powers under sub-section (5) of Section 69A of the Act. Going by Para.5(1) of the Scheme framed under section (5) of Section 69A of the Act, the function of the Ombudsman or Ombudsmen is to facilitate satisfaction of the complaints relating to the deficiencies in the business or services of societies filed on the grounds mentioned in Para.7 of the Scheme. As per clause (e) of Para.7(2) of the Scheme, no complaint to the Ombudsman is maintainable if the complaint is in the nature of a dispute under Section 69 of the Act or in the nature of an appeal petition under Sections 82 and 83 of the Act. Clause (b) of Para.13 of the Scheme provides that the Ombudsman or Ombudsmen may reject that complaint at any stage if it appears that the complaint made is beyond the jurisdiction of the Ombudsman or Ombudsmen under the Scheme W.P.(C)No.99 of 2015 :-14-: or is beyond the period of limitation. Therefore, if the complaint filed before the Ombudsman or Ombudsmen is in respect of any of the matters enumerated in clauses (a) to (f) of Para.7(2) of the Scheme, the Ombudsman or Ombudsmen has to reject such complaint under clause (b) of Para.13 of the Scheme. The Cooperative Ombudsman, which is the creature of the Statute, cannot assume powers, which are inconsistent with the express provisions of the Scheme, especially when its functions, as per Para.5(1) of the Scheme, is confined to the complaints relating to the deficiencies in the business or services of societies filed on the grounds mentioned in Para.7 of the Scheme. 15. The learned counsel for the 2[nd] respondent would contend that before the Co-operative Ombudsman the petitioner Bank never raised any objection as to the maintainability of the complaint. Having subjected to the jurisdiction of the Co-oprative Ombudsman, the petitioner Bank cannot challenge Ext.P9 order passed by the Ombudsman, on the ground of maintainability, by invoking the extraordinary jurisdiction of this Court under Article 226 of the Constitution of India. W.P.(C)No.99 of 2015 :-15-: 16. In **Zuari Cement Ltd. v. Regional Director, Employees’ State Insurance Corporation [(2015) 7 SCC 690]** the Apex Court held that, neither the order of the High Court nor the act of ESI Corporation subjecting itself to the jurisdiction of ESI Court would confer jurisdiction upon ESI Court to determine the question of exemption from the operation of the ESI Act. By consent, the parties cannot agree to vest jurisdiction in the court to try the dispute when the court does not have the jurisdiction. The Apex Court held further that, the objection as to want of jurisdiction can be raised at any stage when the court lacks jurisdiction, the fact that the parties earlier acquiesced in the proceedings is of no consequence. Where there is want of jurisdiction, the order passed by the court/tribunal is a nullity or non-est. What is relevant is whether the court had the power to grant the relief asked for. 17. In the instant case, Complaint No.462 of 2014 filed by the 2[nd] respondent is hit by clause (e) of Para.7(2) of the Scheme, as the complaint is in the nature of a dispute under Section 69 of the Act, which is beyond the jurisdiction of the Ombudsman under W.P.(C)No.99 of 2015 :-16-: the Scheme, which ought to have been rejected under clause (b) of Para.13 of the Scheme, as one beyond its jurisdiction. 18. In the result, this writ petition is disposed of by setting aside Ext.P9 order of the Co-operative Ombudsman in Complaint No.462 of 2014 and the said complaint will stand rejected under clause (b) of Para.13 of the Scheme, however, without prejudice to the right of the 2[nd] respondent to raise the dispute under Section 69 of the Act before the appropriate forum. No order as to costs. It is made clear that this Court has not expressed anything touching the merits of the dispute that has to be raised under Section 69 of the Act before the appropriate forum. Sd/- **ANIL K. NARENDRAN JUDGE** AV