IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
TH
THURSDAY, THE 25 DAY OF AUGUST 2022 / 3RD BHADRA, 1944
WP(C) NO. 18515 OF 2017
PETITIONER:
CHIEF MANAGER, KERALA FINANCIAL CORPORATION
VELLAYAMBALAM, THIRUVANANRHAPURAM-695 033
BY ADVS.DHANYA P.ASHOKAN
ADV. VENUGOPAL.M.R
RESPONDENTS:
1 C.JAYADAS, SUDHA MANDIRAM,
KARAKONAM,THIRUVANANTHAPURAM-695 504.
2 THE REGISTRAR, KERALA LOK AYUKTHA, LEGISLATURE COMPLEX,
VIKAS BHAVAN, THIRUVANANTHAPURAM-695 033.
BY ADVS.SRI.K.RAJESH KANNAN
SMT.RENU. D.P., SC, LOK AYUKTA
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
25.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C) NO. 18515 OF 2017
:: 2 ::
JUDGMENT
Dated this the 25th day of August 2022 Shaji P Chaly, J.
This writ petition is filed by the Kerala Financial Corporation, a State Government undertaking, challenging Exts.P9 and P11 orders passed by Upa LokAyukta in Complaint No.166/2010 B dated 30 th day of January 2017 and order dated 15 th May 2017 whereby, Upa LokAyukta directed the writ petitioner to refund an amount of Rs.41,269/- to the complainant/first respondent, which is alleged to be recovered from the complainant on account of a loan transaction by and between the petitioner and the first respondent. It is thus challenging the legality and the correctness of the said orders, this writ petition is filed.
2. In fact Ext.P9 is an interim order passed by the Upa LokAyukta to pay the said amount and directed to report settlement by 17.2.2017. Whereas Ext.P11 is the final order passed directing to pay the said amount.
3. For convenience and brevity, Ext.P11 order dated 15 th May 2017 is extracted hereunder:
WP(C) NO. 18515 OF 2017 :: 3 ::
"COMPLAINT No. 166/2010 B ORDER Sri. Vipin Aliyas Accounts Manager of KFC is present to explain regarding the addition of interest subsequent to the waiver of post switch over interest and penal interest accrued on loan and consequent closing of the account by payment of entire balance. The learned counsel for the respondent after consultation with the Accounts Manager submitted that the amount due as on 01.01.2006 including interest and penal interest is Rs.25,37,341/- and that the amount shown just beneath that on 04.02.2006 is remission given to the complainant and that is Rs. 6,59,629/- and that Rs.159/- shown beneath that on the same date is expense remitted towards notice cost etc. which was paid in cash along with repayment of Rs.19,18,822/-. All the above namely remission given and deposits made are on the same date. Counsel for the respondent submits that the amount of Rs.36,714/- and Rs.4,555/- shown in the debit column are post switch over interest and penal interest accrued for the period from 01.01.2006 to 04.04.2006 and that, that amount also is taken within Rs.6,59,629/- which is given as remission/waiver. When as on the date of settlement on 04.02.2006 remission of Rs.6,59,629/- which takes in post switch over interest and penal interest as on 04.02.2006 is stated to be given including it within Rs.6,59,629/- for which remission was given, I fail to understand how after giving such remission/waiver Rs.36,714/- and Rs.4,555/- are snatched by the KFC from out of the remission given as on that date.
2. The explanation gatherable from the statement is that on payment of Rs.19,18,822/- towards closing the loan account, an amount of Rs.41,269/- was found as excess. When cash has come into the hands of KFC which is similar to any other usurious financiers, they wanted to avoid returning of that excess amount and they have cleverly discovered a method of snatching that excess amount from the amount given as remission classifying it as post switch over interest and penal interest from 01.01.2006 to WP(C) NO. 18515 OF 2017 :: 4 ::
4.02.2006 which in total makes up the excess amount of Rs.41,269/- repayable to the complainant. In the light of the explanation given by the counsel after consulting the Accounts Manager, it is beyond comprehension as to how when remission is given of Rs.6,59,629/- taking into account also interest and penal interest up to 04.02.2006, Rs.36,714/- can be recovered from therein as post switch over interest for period up to 04.02.2006 and finding that there is still a balance of Rs.4,555/- remaining as excess, then adjusting that amount as penal interest. In other words what was given by way of remission by the right hand as on 04.02.2006 is Rs.6,59,629/- and out of that they have taken back Rs.36,714/- and Rs.4,555/- by the left hand so as to bring down the amount repayable to the party as "nil". This is gross mal administration on the part of the KFC and their officials. They are bound to return the excess amount of Rs. 44,269/- recovered on account of the loan to the complainant and they shall repay it within a period of two weeks from today failing which it shall carry interest @ 8% per annum. Make payment and report on 05.06.2017.
Posted to 05.06.2017."
4. The paramount contention advanced by the writ petitioner is that the petitioner Corporation allowed one time settlement to the unit for an amount of Rs.19,18,981/- by sacrificing an amount of Rs.6,59,629/-. The respondent remitted the said amount of Rs.19,18,822/- on 3.2.2006 as one time settlement amount and balance of Rs.159/- was paid on 4.2.2006. The interest calculation mode of the loan account is quarterly mode and i.e, the interest be accrued only in WP(C) NO. 18515 OF 2017 :: 5 ::
three months period. In the case on hand, earlier, interest accrued only on 1.1.2006 and the balance outstanding as on 1.1.2006 was Rs.25,37,341/- and the next interest due was on 1.4.2006. However, the loan was closed on 4.2.2006 and therefore, according to the writ petitioner, the first respondent was liable to pay interest and penal interest from 1.1.2006 to 4.2.2006. The interest upto 3.2.2006 on which date the one time settlement amount was paid by the first respondent substantially, was Rs.36,714/- and penal interest upto 4.2.2006 was Rs.4,555; thus the total interest plus penal interest comes to Rs.41,269/- which the respondent was liable to pay to the Corporation on closure of the account on 4.2.2006. According to the petitioner, the Upa LokAyukta misunderstood that the said amount is an excess payment made by the first respondent to the Corporation and the Corporation has wilfully accepted the same knowing that the complainant is not liable to pay the said amount. It is also pointed out that eventhough the statement of account was produced before the Upa LokAyukta and filed a detailed statement and additional statement, the LokAyukta failed to consider the significance of the said amount in terms of the provisions of the loan account. It is also submitted that the finding WP(C) NO. 18515 OF 2017 :: 6 ::
rendered by the Upa LokAyukta that there is gross maladministration on the part of the Kerala Financial Corporation and the officials is not correct, and without taking into account the real issues involved in the matter. Without causing prejudice to the above contentions, it is submitted that even if there is a mistake in the calculation of a loan transaction it cannot be assumed that there is maladministration in the matter of claiming the amounts due to it. That apart, it is submitted that the calculation of interest for the amounts due against the loanees is done by a software and in this case, the manual calculation is only done for the interest and penal interest for the period from 1.1.2006 to 4.2.2006. Therefore, the petitioner seeks interference with the orders of the LokAyukta.
5. We have heard Smt.Dhanya P. Ashokan for the petitioner and Sri.Rajesh Kannan for the first respondent and perused the pleadings and material on record.
6. The sole question to be considered is whether any interference is required to the orders passed by the Upa LokAyukta. Infact Upa LokAyukta has arrived at the conclusions in Ext.P11 final order on the basis that there was maladministration on the part of the Kerala WP(C) NO. 18515 OF 2017 :: 7 ::
Financial Corporation and its officials and therefore, they are bound to return the excess amount of Rs.44,269/-. In order to understand the implications of maladministration defined under the Kerala LokAyukta Act, 1999, it is better to extract the definition of maladministration, which reads thus:
Section 2(k) of the Kerala Lok Ayukta Act, 1999 defines 'maladministration' as follows:
"(k) "maladministration" means action taken or purporting to have been taken in the exercise of administrative functions in any case where,-
(i) such action or the administrative procedure or practice adopted in such action is unreasonable, unjust, oppressive or improperly discriminatory; or
(ii) there has been willful negligence or undue delay in taking such action or the administrative procedure or practice adopted in such action involves undue delay."
7. Here is a case where a loan was advanced to the first respondent by the Kerala Financial Corporation after executing a contract by and between the parties and in the matter of the repayment of the same with interest, and also penal interest in case of failure of payment of the amount in accordance with the loan transaction. It is clear from the statement filed before the Upa WP(C) NO. 18515 OF 2017 :: 8 ::
LokAyukta that calculation of interest was done by the petitioner in terms of a quarterly payment of interest and the penal interest suffered on account of non payment of the amount during the quarter. True, there was a settlement arrived at by and between the parties under the one time settlement scheme then available. However, till such time, the O.T.S amount was paid by the first respondent, interest till the date of payment during the quarter had to be paid by the petitioner along with the penal interest. It is accordingly that the amount of Rs.44,269/- was calculated manually and paid by the first respondent. There was no case projected by the petitioner in the complaint before the LokAyukta that the respondent is not liable to pay interest and penal interest in terms of the contract executed by and between the parties. We are of the considered opinion that when amounts are recovered from a loanee on the basis of the contract executed by and between the parties, it cannot be said that there is any maladministration. Even assuming that there was a calculation error, or amount was charged in excess, it cannot be treated as a maladministration. Here in this case, the explanation offered by the Corporation before the Upa Lokayukta and this court makes it clear that the Corporation was entitled to WP(C) NO. 18515 OF 2017 :: 9 ::
calculate the interest and penal interest for the quarter in question and therefore, we are of the definite opinion that the Upa LokAyukta was not right in stating that there is maladministration in the matter of recovery of the said amount and consequential directions issued to repay the same to the first respondent. Needless to say, the petitioner is entitled to succeed in the writ petition. Accordingly, writ petition is allowed and Exts.P9 and P11 orders of the LokAyukta specified above are herewith quashed.
Writ petition is allowed.
sd/-
S.MANIKUMAR CHIEF JUSTICE sd/-
SHAJI P. CHALY JUDGE jes WP(C) NO. 18515 OF 2017 :: 10 ::
APPENDIX PETITIONER'S EXHIBITS:
EXHIBIT P1 TRUE COPY OF THE COMPLAINT NO. 166/2010 FILED BY THE RESPONDENT BEFORE THE KERALA LOK AYUKTHA EXHIBIT P2 TRUE COPY OF THE STATEMENT SUBMITTED BY THE PETITIONER EXHIBIT P3 TRUE COPY OF THE REPLICATION FILED BY THE RESPONDENT DTD 07/12/2010.
EXHIBIT P4 TRUE COPY OF THE AFFIDAVIT FILED BY THE PETITIONR. EXHIBIT P5 TRUE COPY OF THE REPLY AFFIDAVIT FILED BY THE RESPONDENT WITH ENGLISH TRANSLATION.
EXHIBIT P6 TRUE COPY OF THE APPLICATION FOR ACCEPTING ADDITIONAL DOCUMENTS EXHIBIT P7 TRUE COPY OF THE ORDER DATED 14.09.15 PASSED BY THE UPA LOK AYUKTHA.
EXHIBIT P8 TRUE COPY OF THE ADDITIONAL STATEMENT FILED BY THE PETITIONER.
EXHIBIT P9 TRUE COPY OF THE ORDER DTD 30/01/2017 OF THE UPA LOK AYUKTHA.
EXHIBIT P10 TRUE COPY OF THE PROVISIONAL STATEMENT OF ACCOUNTS OF THE RESPONDENTS LOAN FROM 01/02/2998 28/02/2006. EXHIBIT P11 TRUE COPY OF THE ORDER DATED 15/03/7 OF THE UPA LOK AYUKTHA.
// TRUE COPY // P.S. TO JUDGE