Kerala High Court
Mumthas C vs Tahsildar on 11 February, 2021
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE N.NAGARESH
THURSDAY, THE 11TH DAY OF FEBRUARY 2021/22ND MAGHA,1942
WP(C).No.32296 OF 2016(J)
PETITIONERS:
1 MUMTHAS C,
AGED 52 YEARS,
PD TEACHER ALP SCHOOL, VADAKKUMMURI,
W/O.AHAMMEDKUTTY, HABEEBA MANZIL,
UGRAPURAM P.O., ARECODE (VIA),
ERNAD TALUK, MALAPPURAM DISTRICT.
2 BINDU ELLARTHODI,
PD TEACHER,
GOVT. BOYS HIGHER SECONDARY SCHOOL, MANJERI,
VADAKKETHODI HOUSE, KOVILAKOMKUNDU SOUTH,
MAJERI P.O., ERNAD TALUK,
MALAPPURAM DISTRICT.
BY ADVS.
SRI.P.SAMSUDIN
SRI.JITHIN LUKOSE
RESPONDENTS:
1 TAHSILDAR, REVENUE RECOVERY,
KERALA STATE FINANCIAL ENTERPRISES LTD.,
PALAKKAD-678 001, PALAKKAD DISTRICT.
2 MANAGER KERALA STATE FINANCIAL ENTERPRISES
LTD., PANDIKKAD BRANCH, PANDIKKAD P.O-676 541,
MALAPPURAM DISTRICT.
3 THE HEAD MASTER,
ALP SCHOOL VADAKUMMURI,
URANGATTIRIR, PIN-673 639,
MALAPPURAM DISTRICT.
W.P.(C) No.32296/2016
:2:
4 THE HEAD MASTER,
GOVT. BOYS HIGHER SECONDARY SCHOOL,
MANJERI, MANJERI P.O.-676 121,
MALAPPURAM DISTRICT.
5 SIJU THOMAS,
VEERALASSERI HOUSE, THOTTUMUKKOM PO-673324,
KOZHIKODE DISTRICT.
6 AYISHA,
W/O.RAHMATHULLA, AMBAZHATHINGAL HOUSE,
IRIYATTU PARAMBU, VADAKKUMMURI,
URANGATTIRI, ARECODE-676 510,
MALAPPURAM DISTRICT.
ADDL. 7 KERALA STATE FINANCIAL ENTERPRISES LTD.,
REPRESENTED BY ITS GENERAL MANAGER,
HEAD OFFICE, THRISSUR-680 020.
ADDL. 8 THE GENERAL MANAGER,
KERALA STATE FINANCIAL ENTERPRISES LTD.,
HEAD OFFICE, THRISSUR-680 020.
ADDITIONAL R7 AND R8 ARE IMPLEADED VIDE ORDER
DATED 04-01-21 IN IA No.2/2020
R1 BY ADV. SRI.ABDUL SHUKOOR MUNDAMBRA
R1 BY ADV. SRI.BABU VARGHESE SR.
R5 BY ADV. SRI.T.MADHU
R6 BY ADV. SRI.P.K.MOHAMED JAMEED
R1 BY ADV. SRI.M.RAGHUKUMAR
BY SRI.ALEXANDER.C.V., SC, KERALA STATE
FINANCIAL ENTERPRISES
R2 BY SURYA BINOY, SC, KSFE LTD.
R2 BY ADV. SRI.BABU VARGHESE (SR.), SC
R1 BY GOVERNMENT PLEADER SMT. DEEPA NARAYANAN
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY
HEARD ON 11-02-2021, THE COURT ON THE SAME DAY
DELIVERED THE FOLLOWING:
W.P.(C) No.32296/2016
:3:
N. NAGARESH, J.
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W.P.(C) No.32296 of 2016
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Dated this the 11th day of February, 2021
JUDGMENT
~~~~~~~~~
Petitioners 1 and 2, who are Primary Departmental
Teachers working in Ugrapuram and Manjeri in Malappuram
District, have filed this writ petition seeking to quash Exts.P1
and P2 communications issued by the 2nd respondent-
Manager, Pandikkad Branch of the Kerala State Financial
Enterprises Limited, directing the employers of the petitioners
to recover the entire loan dues of the 5 th respondent, who is a
subscriber of a chitty, from the salary of the petitioners at the
rate of `10,000/- per month.
2. The petitioners state that they have no
transactions with the 2nd respondent-Pandikkad Branch of the
W.P.(C) No.32296/2016
KSFE, though they are subscribers of chitty conducted by the
KSFE, Manjeri Branch. The petitioners were enrolled in the
chitty by one Rahmathulla, who is the husband of the 6 th
respondent. The 6th respondent is a Staff Nurse in
Government service. The 6th respondent is also a subscriber
of chitty of KSFE. The petitioners state that Rahmathulla, the
husband of the 6th respondent, compelled the petitioners to
stand as surety for the chitty prized by the 6 th respondent.
The petitioners gave their salary certificates as surety for the
chitty of the 6th respondent.
3. The petitioners contend that the said Rahmathulla
misused the salary certificates of the petitioners and
submitted documents to show that the petitioners have
agreed to stand as guarantors to the chitty-loan of the 5 th
respondent. The manipulations were made with the
connivance of the then Branch Manager of the KSFE,
Pandikkad Branch. The petitioners swear that they have not
gone to the Pandikkad Branch office of the KSFE and have
not signed or executed any documents in the Branch Office
W.P.(C) No.32296/2016
so as to create any guarantee or security in favour of the 5 th
respondent. While using the salary certificates of the
petitioners as guarantors to the 5th respondent, no documents
were forwarded to the employers of the petitioners for cross
checking.
4. As a bolt from the blue, the 2 nd respondent-
Manager of the Pandikkad Branch of KSFE issued letters to
employers of the petitioners seeking to recover `10,000/-
from their salary. When the petitioners made enquiries with
the 6th respondent, she gave evasive replies. The petitioners
learnt that a fraud has been played on them by the 5 th
respondent, 6th respondent, Rahmathulla and the 2 nd
respondent.
5. The petitioners submitted Exts.P3 and P4
complaints to the Manager, KSFE, pointing out the fraud
played on them. The petitioners specifically stated that they
gave their salary certificates for standing as surety of the 6 th
respondent. They further stated that Rahmathulla and his
wife, the 6th respondent, came to their residence, stated that
W.P.(C) No.32296/2016
marriage of Rahmathulla's daughter has been fixed on
15.02.2015 and salary certificates of the petitioners are
required to renew and enhance the loan in the name of the
6th respondent. Though the petitioners were reluctant, since
it was for marriage of the young daughter of Rahmathulla,
the petitioners gave their salary certificates. It was misusing
the salary certificates that the petitioners were made sureties
of the 5th respondent.
6. The petitioners submitted complaints to the
Vigilance and Anti Corruption Bureau also as evidenced by
Ext.P5. On a discreet enquiry on that complaint, the Dy.S.P.,
VACB found the allegations to be prima facie true. The
Dy.S.P., VACB forwarded Ext.P6 letter to the Director,
Vigilance and Anti Corruption Bureau, Thiruvananthapuram
recommending to register a case and investigate. While
investigation is pending in the matter, the 2 nd respondent took
coercive steps against the petitioners for recovery of the
amount due from the 5th respondent. The petitioners
thereupon submitted Exts.P7 and P8 complaints to their
W.P.(C) No.32296/2016
employers. As the response of the employers was not
encouraging, the petitioners have approached this Court.
7. The 5th respondent in respect of whose dues
recovery is sought to be made from the salary of the
petitioners, filed a counter affidavit. The 5 th respondent
stated that he subscribed to chitty. Chitty instalments were
being paid directly to Rahmatullah. The said Rahmatullah
was in dire need of money in connection with the marriage of
his daughter and took money from the 5th respondent. He
agreed to repay the amount availing loan from KSFE.
Subsequently, Rahmathulla handed over a KSFE cheque to
the 5th respondent drawn in favour of the 5th respondent
informing that he himself availed a chitty loan from KSFE,
Pandikkad Branch and he got the cheque issued in the name
of the 5th respondent. When the 5th respondent asked as to
how KSFE can issue a cheque in his favour, in respect of
chitty amount payable to Rahmathulla, the said Rahmathulla
informed that if the cheque is issued in the name of
Rahmathulla, his banker will appropriate the money towards
W.P.(C) No.32296/2016
debt due. Rahmathulla also informed the 5 th respondent that
if a written request is made by the chitty holder, cheque can
be drawn by KSFE in favour of a third party.
8. The 5th respondent further stated in his affidavit
that subsequently, after the marriage of his daughter,
Rahmathulla committed suicide. Thereafter, the 5 th
respondent came to know that the Rahmathulla subscribed a
chitty in the name of the 5th respondent without his
knowledge and obtained money from KSFE, which was paid
by Rahmathulla to the 5th respondent pretending that the
money is in respect of Rahmathulla's chitty and he is paying
money to the 5th respondent in discharge of his debt. The 5th
respondent was later issued with a revenue recovery notice
by the KSFE authorities seeking recovery of money. The 5 th
respondent stated that he is also a victim to the fraud
committed by Rahmathulla.
9. The 6th respondent, who is the wife of the said
Rahmathulla, filed a counter affidavit. The 6 th respondent
stated that her husband Rahmathulla was an Agent of the 2 nd
W.P.(C) No.32296/2016
respondent-KSFE for 15 years. Rahmathulla even misused
the salary certificate of the 6 th respondent in connivance with
the officers of the 2nd respondent-KSFE and made the 6 th
respondent as a surety for many chitty transactions without
the knowledge of the 6th respondent. The husband of the 6 th
respondent committed suicide due to heavy debt he incurred
while working as Agent of KSFE. The 6 th respondent filed
Ext.R6(a) and a criminal complaint against the employees of
the KSFE alleging offences punishable under Sections 419,
465 and 468 read with Section 34 of the Indian Penal Code.
The Chief Judicial Magistrate, Manjeri forwarded the
complaint to Manjeri police, who registered Crime
No.485/2017 against the officials of the KSFE as evidenced
by Ext.R6(b) FIR .
10. The 2nd respondent-Manager of KSFE, Pandikkad
Branch filed a counter affidavit. The 2nd respondent
contended that the writ petition is not maintainable. The
disputes raised by the petitioners are questions of fact and
cannot be agitated in a writ petition. The 2 nd respondent
W.P.(C) No.32296/2016
stated that as per the records available, the 5 th respondent
had availed loan from KSFE. The petitioners have provided
employment certificate agreeing to stand as sureties to the
5th respondent. Exts.R2(b) and R2(c) employment certificates
were signed by the petitioners and their employers. The
petitioners have executed Ext.R2(f) chitty loan agreements
agreeing to be sureties of the 5th respondent. The petitioners
are now disputing their civil liability. There is no progress in
the investigation conducted by the police in the criminal case.
11. The counsel for the petitioners argued that the
transactions under which the petitioners are made sureties to
the 5th respondent are fraught with fraud. The petitioners
have never consented to stand as sureties to the 5 th
respondent. Rahmathulla made the petitioners to impart with
their salary certificates and made them sign documents,
making the petitioners to believe that their signatures are
obtained to stand as surety to the 6th respondent. After a
preliminary discreet enquiry, the Dy.S.P. of Police, Vigilance
and Anti Corruption Bureau has recommended to register
W.P.(C) No.32296/2016
criminal cases against the fraudsters. Rahmathulla was an
Agent of the KSFE and therefore the KSFE cannot shirk off
the consequences of the fraud committed by their Agent. It
would be unjust if recovery proceedings are made and huge
amounts are recovered from the salary of the petitioners.
12. Learned Standing Counsel for the 2 nd respondent,
on the other hand, contended that the Police has so far not
completed the investigation proceedings. Therefore, it
cannot be said that there was a fraud at all. The documents
signed by the petitioners would show that they have stood as
surety to the 5th respondent. Relying on the judgments of
this Court in Chinnaswamy S. v. State of Kerala and
others [2009 (1) KLJ 511], Kerala Small Industries
Development Corporation Ltd. v. Prakasan [2011 (3) KLT
893] and a judgment of this Court in W.P.(C) No.24586/2019,
the learned counsel for the 2nd respondent argued that a
dispute of this nature cannot be decided by this Court in
exercise of the discretionary jurisdiction under Article 226 of
the Constitution of India. Hence, the writ petition is liable to
W.P.(C) No.32296/2016
be dismissed. The petitioners will have to approach civil
court to establish fraud.
13. I have heard the learned counsel for the
petitioners, learned Government Pleader representing the 1 st
respondent, the learned Standing Counsel for respondents 2
to 4 and the learned counsel appearing for respondents 5
and 6.
14. The fact that Rahmathulla, who is alleged to have
manipulated the transactions, was an Agent of the 2 nd
respondent, is not seen disputed by the respondents. The
specific case of the petitioners is that they were made to
believe that they are being supplied as sureties to the 6th
respondent, who is the wife of Rahmatullah, for the purpose
of enabling them to avail money from the chitty which he
required to conduct the marriage of his daughter. The said
documents were manipulated by the deceased Rahmatullah
and submitted in the office of the 2 nd respondent, making
them appear that the petitioners have stood as sureties to
the 5th respondent.
W.P.(C) No.32296/2016
15. The 5th respondent in his counter affidavit has
stated that he himself was cheated by deceased
Rahmathulla. After obtaining signatures of the 5 th
respondent, the late Rahmathulla, without the knowledge of
the 5th respondent, opened a chitty account in the name of
the 5th respondent and obtained a cheque in favour of the 5 th
respondent and then handed over it to the 5 th respondent
pretending that the cheque is being given to the 5 th
respondent in discharge of the dues payable by
Rahmathulla. It was only when revenue recovery
proceedings were initiated by the 1 st respondent for default in
repayment of chitty amounts that the 5 th respondent came to
know that he has been made the victim of a fraud.
16. The 6th respondent, who is none other than the
wife of late Rahmathulla, who is working as a Staff Nurse in a
Government institution, filed an affidavit stating that the
salary certificates of the 6th respondent were also
manipulated by her deceased husband and made use for
defrauding the KSFE. The 6th respondent herself is facing
W.P.(C) No.32296/2016
the heat as a result of the fraudulent transactions made by
her late husband.
17. It has also come out that complaints were made to
the Vigilance and Anti Corruption Bureau, which has made
discreet enquiries in the matter and recommended a
thorough investigation in the subject. It is an admitted
position that Police has registered a Crime in respect of the
fraudulent transactions carried out by Rahmathulla. Who are
all involved in the fraudulent transactions will come out only
after the culmination of criminal proceedings. While the facts
are so, it will be a travesty of justice if the 2 nd respondent is
permitted to proceed to recover amounts from the salary of
the petitioners, who are victims of the fraud.
18. The stand of the 2nd respondent is that as per their
records, the petitioners have stood as guarantors to the 5 th
respondent and executed agreements. The 2 nd respondent is
relying on employment certificates attached to Ext.R2(b) and
Ext.R2(c). The petitioners would contend that signatures
were obtained on Ext.R2(b) and R2(c) without making it
W.P.(C) No.32296/2016
known that the petitioners are being made sureties of the 5 th
respondent. Exts.R2(b) and R2(c) documents would only
show that the employers of the petitioners have certified the
genuineness of the employment, date of retirement and
salary of the petitioners. According to the petitioners,
signatures in Ext.R2(f) agreement were obtained from them
without disclosing the true facts.
19. In the light of the affidavits filed by respondents 5
and 6, it is evident that the 5 th respondent has not bona fide
made any application to join KSFE chitty and to make the
petitioners surety of the 5th respondent. However,
manipulating the situation, the late Rahmathulla has not only
enrolled the 5th respondent in the chitty but received money
on behalf of the 5th respondent making it appear that the
petitioners have agreed to stand as Sureties to the 5th
respondent. The 6th respondent, who is the wife of the
deceased Rahmathulla, swears that Rahmathulla has
similarly conducted manipulations and frauds in the 2 nd
respondent-Branch of KSFE on a large scale. The 6 th
W.P.(C) No.32296/2016
respondent would swear that her own salary certificates were
taken by her late husband and misused and the 6 th
respondent is facing the consequences. There is no reason
to disbelieve the statements made by respondents 5 and 6 in
their affidavits filed before this Court.
20. In the counter affidavit filed by the 2 nd respondent,
the 2nd respondent has not denied the allegation that the
deceased Rahmathulla was an Agent of the 2 nd respondent.
The only defence of the 2 nd respondent is that as per their
records, the petitioners have signed documents to stand as
sureties of the 5th respondent. It is to be noted that making of
the 5th respondent as a chitty subscriber by itself, is by fraud.
The deceased Rahmathulla being an Agent of the 2 nd
respondent, the 2nd respondent cannot pretend to be
oblivious of the manipulative transactions made by the Agent
and feign ignorance of the fraud committed by the late
Rahmathulla whether it is with or without the connivance of
the officials of the 2nd respondent-Branch.
W.P.(C) No.32296/2016
21. The late Rahmathulla is admittedly an Agent of
KSFE and was working for the 2 nd respondent. If the said
Rahmathulla has committed any manipulations or fraud
during the course of his engagement as Agent of KSFE, the
KSFE has vicarious liability.
22. In Principal-Agent relationship, a responsibility is
imposed on the Principal on the acts of Agent. The
responsibility is based on common law principle "respondeat
superior" ("let the master answer"). Employers are
vicariously liable for acts and omissions of their employees.
The imposition of liability is based on three reasons. Firstly,
the Principal selects the Agent; secondly, the Principal has
delegated performance of certain acts to the Agent and
when the Principal enjoys the benefits of the acts of his
Agent, he should bear the risk also; and thirdly, the Principal
has given the Agent general authority to act.
23. The 2nd respondent cannot pretend that he is not
responsible for the fraudulent acts committed by the Agent.
The 2nd respondent nowhere in his affidavit has stated that
W.P.(C) No.32296/2016
the late Rahmathulla has not manipulated the records as
alleged by the petitioners. The only defence of the 2 nd
respondent is that as per the records maintained by them,
the petitioners are sureties and this being a disputed
question of fact, the Court should not exercise its jurisdiction
under Article 226 of the Constitution.
24. The allegation of the petitioners is that late
Rahmathulla was an Agent of the 2nd respondent-KSFE.
They have asserted the same in Exts.P2 to P4 complaints.
The 6th respondent, who is the wife of late Rahmathulla, has
stated in her affidavit as well as in Ext.R6(a) complaint filed
before the Court of the Chief Judicial Magistrate, Manjeri that
the Rahmathulla was an Agent of the KSFE. The 2 nd
respondent has not denied the fact that late Rahmathulla
was an Agent of KSFE. The 2 nd respondent has also not
disputed the material allegations made by the petitioners as
regards the conduct of Rahmathulla. Therefore, the 2 nd
respondent cannot be heard to contend that these are
disputed questions of fact. The 2 nd respondent is vicariously
W.P.(C) No.32296/2016
liable to the misconduct or fraudulent conduct of their Agent.
In the circumstances of the case, it would be a travesty of
justice if the 2nd respondent is permitted to recover the
amount defrauded by their Agent from the salary of the
petitioners.
In the circumstances, the writ petition is allowed.
Exts.P1 and P2 communications are set aside. The 2 nd
respondent will be at liberty to recover the amounts due to
KSFE by any means known to law, other than by way of
recovering the amounts from the salary of the petitioners.
Sd/-
N. NAGARESH, JUDGE
aks/05.02.2021
W.P.(C) No.32296/2016
APPENDIX
PETITIONERS' EXHIBITS:
EXHIBIT P1: TRUE COPY OF THE DEMAND NOTICE ISSUED
BY THE 2ND RESPONDENT TO THE 3RD
RESPONDENT.
EXHIBIT P2: TRUE COPY OF THE DEMAND NOTICE ISSUED
BY THE 2ND RESPONDENT TO THE 4TH
RESPONDENT.
EXHIBIT P3: TRUE COPY OF THE COMPLAINT DATED 23-
1-2016 SUBMITTED BY THE 1ST
PETITIONER BEFORE THE 2ND RESPONDENT.
EXHIBIT P4: TRUE COPY OF THE COMPLAINT SUBMITTED
BY THE 2ND PETITIONER BEFORE THE 2ND
RESPONDENT
EXHIBIT P5: TRUE COPY OF THE COMPLAINT SUBMITTED
BY THE 2ND PETITIONER BEFORE THE DY
SP, VIGILANCE AND ANTI CORRUPTION
BUREAU, MALAPPURAM.
EXHIBIT P6: TRUE COPY OF THE LETTER DATED 23-7-
2016 SEND BY THE DY.SP VACB
MALAPPURAM TO THE DIRECTOR VACB,
THIRUVANANTHAPURAM.
EXHIBIT P7: TRUE COPY OF THE COMPLAINT DATED 28-
1-2016 SUBMITTED BY THE 1ST
PETITIONER BEFORE THE 3RD RESPONDENT.
EXHIBIT P8: TRUE COPY OF THE COMPLAINT DATED 4-2-
2016 SUBMITTED BY THE 2ND PETITIONER
BEFORE THE 4TH RESPONDENT.
RESPONDENTS' EXHIBITS:
EXHIBIT R6(a): THE TRUE COPY OF THE PRIVATE
COMPLAINT FILED BEFORE THE CHIEF
JUDICIAL MAGISTRATE COURT, MANJERI.
W.P.(C) No.32296/2016
EXHIBIT R6(b): THE TRUE COPY OF THE FIR IN CRIME
NO.485/2017 OF MANJERI POLICE
STATION.
EXHIBIT R2(a): TRUE COPY OF THE LOAN APPLICATION
DATED 23.01.2015 FILED BY THE 5TH
RESPONDENT.
EXHIBIT R2(b): TRUE COPY OF THE APPLICATION FORM
ALONG WITH EMPLOYMENT CERTIFICATE AND
AGREEMENT FOR RECOVERY FROM SALARY
EXECUTED BY THE 1ST PETITIONER AS
WELL AS THE 3RD RESPONDENT DATED
28.11.2015
EXHIBIT R2(c): TRUE COPY OF THE APPLICATION FORM
ALONG WITH EMPLOYMENT CERTIFICATE AND
AGREEMENT FOR RECOVERY FROM SALARY
EXECUTED BY THE 2ND PETITIONER AS
WELL AS THE 4TH RESPONDENT DATED
23.01.2015
EXHIBIT R2(d): TRUE COPY OF THE COMMUNICATION DATED
07.02.2015 ISSUED BY THE OFFICE OF
THE 2ND RESPONDENT TO THE 3RD
RESPONDENT TO CONFIRM THE GENUINENESS
OF THE GUARANTOR IN RESPECT OF THE
5TH RESPONDENT'S NCL ACCOUNT
EXHIBIT R2(e): TRUE COPY OF THE COMMUNICATION DATED
07.02.2015 ISSUED BY THE OFFICE OF
THE 2ND RESPONDENT TO THE 4TH
RESPONDENT TO CONFIRM THE GENUINENESS
OF THE GUARANTOR IN RESPECT OF THE
5TH RESPONDENT'S NCL ACCOUNT
EXHIBIT R2(f): TRUE COPY OF THE CHITTY LOAN
AGREEMENT EXECUTED BY THE PETITIONERS
AS WELL AS THE 5TH RESPONDENT DATED
19.02.2015
EXHIBIT R2(g): TRUE COPY OF THE IDENTITY CARD
SUBMITTED BY THE 5TH RESPONDENT
EXHIBIT R2(h): TRUE COPY OF THE IDENTITY CARDS
SUBMITTED BY THE 1ST PETITIONER
EXHIBIT R2(i): TRUE COPY OF THE IDENTITY CARDS
SUBMITTED BY THE 2ND PETITIONER
SR
