Kerala High Court
The Managing Director vs Molly Kumar.D on 10 August, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR
&
THE HONOURABLE MR. JUSTICE SHAJI P.CHALY
WEDNESDAY, THE 10TH DAY OF AUGUST 2022 / 19TH SRAVANA, 1944
WP(C) NO. 2382 OF 2021
PETITIONER:
THE MANAGING DIRECTOR,
AYIROOPPARA FARMERS SERVICE CO-OPERATIVE BANK LTD.NO.2154,
POTHENCODE (P.O),
THIRUVANANTHAPURAM-695584.
BY ADVS. SRI. G. BIJU
SRI.V.A.VINOD
RESPONDENTS:
1 MOLLY KUMAR D.,
W/O. LATE A.PREM KUMAR,
PARAYIL VEEDU, NETAJIPURAM (PO), POTHENCODE,
THIRUVANANTHAPURAM-695584.
2 THE JOINT REGISTRAR/SECRETARY (FUND MANAGER),
KERALA STATE CO-OPERATIVE DEVELOPMENT AND WELFARE FUND BOARD,
T.C.25/357(4), MARIAMMAN KOVIL,
STATUE, THIRUVANANTHAPURAM-695014.
3 THE ASST. REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL),
CIRCLE CO-OPERATIVE UNION BUILDING, CHENGAL CHOOLA,
THIRUVANANTHAPURAM-695001.
4 S.VIJAYAN, S/O.SOMAN,
FORMER BRANCH MANAGER, VAVARAMBALAM BRANCH,
AYIROOPPARA FARMERS SERVICE CO-OPERATIVE BANK LTD.NO.2154,
POTHENCODE (P.O), THIRUVANANTHAPURAM-695584,
RESIDING AT PRANAVAM, MATAVOORPPARA,
KATTAYIKKONAM (P.O),
THIRUVANANTHAPURAM-695584.
WP(C): 2382/2021 -:2:-
R1 BY ADVS. SRI. S. SADASIVAN
SRI. K. J. SAJI ISAAC
DR. ELIZABETH VARKEY
SRI. JITHIN SAJI ISAAC
R2 BY ADV. SRI. P.C.SASIDHARAN
R3 BY SENIOR GOVT. PLEADER SRI. K.P.HARISH
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.08.2022,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C): 2382/2021 -:3:-
JUDGMENT
S. Manikumar, CJ
Instant writ petition is filed by the 2nd respondent in Complaint
No.551/2013 on the file of the Kerala Lok Ayukta, challenging the orders
passed by Upa Lok Ayukta dated 05.11.2020, and 16.12.2020 in R.P.
No.2/2020 (Exhibits-P7 & P8 in the Writ Petition).
2. Reliefs sought for in the writ petition are as under:
(i) issue a writ of certiorari or any other appropriate order or
direction, calling for the records leading to Exhibits-P7 and P8
and quash the same;
(ii) issue any other appropriate writ, order or direction, declaring
that the benefit of Risk Fund Scheme is to be given by the Kerala
State Co-operative Development and Welfare Fund Board to its
beneficiaries and the direction contained in Exhibit-P7 order
directing the petitioner Bank to give the benefit of Risk Fund
Scheme to the complainant is illegal and opposed to the concept
and object of Exhibit-P3 Risk Fund Scheme;
(iii) issue any other appropriate writ, order or direction, declaring
that the Petitioner is not liable to extend the benefit of Risk Fund
Benefit Scheme to the complainant, in view of the finding and
direction contained in Exhibit-P4 order;
(iv) issue any other appropriate writ, order or direction, directing the
2nd respondent to refund the amount of Rs.1 lakh and its interest
paid by the petitioner Bank to close the loan account of the first
respondent/complainant by sanctioning the benefit of the Risk
Fund Scheme to the complainant.
3. Basic material facts for disposal of the writ petition are as under:
3.1. Husband of the 1st respondent/complainant availed a loan from
Ayirooppara Farmers Service Co-operative Bank Ltd., Pothencode,
Thiruvananthapuram, and during the loan tenure, he died on 24.11.2010.
According to the 1st respondent/complainant, a loan of Rs.5 lakhs was
admittedly released to late Premkumar on February 6, 2009, with a
stipulation to repay the same in sixty equal monthly installments; the last
installment being payable on February 6, 2014.
3.2. It is also the admitted position that late Premkumar was
prompt in repayment of equal monthly installments towards the loan
account till his death. But the question that arose for consideration in the
complaint was as to whether the complainant/1 st respondent herein, the
widow of late Premkumar, who had availed loan from the petitioner Bank
is entitled to the benefit of Kerala Co-operative Risk Fund Scheme, 2008.
3.3. According to the 1st respondent, with a view to settle the loan
account, she approached the petitioner in February, 2011, requesting its
Branch Manager to provide her the benefit of Risk Fund Scheme, 2008. It
was the case of the 1st respondent before the Lok Ayukta that, the then
Branch Manager had directed her to remit the sum of Rs.1,59,455/- being
the total amount payable, excluding the risk fund of Rs.1 lakh and interest
thereto, which she was entitled to get under the scheme.
3.4. It is also the case of the 1st respondent that she had remitted the
above sum of Rs.1,59,455/- on 11.02.2011 and requested the Branch
Manager to release the title deeds of the property furnished towards
security by her late husband. However, the Manager refused to release
the documents and directed her to remit the entire balance amount
payable to the loan account, which thus means, the Manager was of the
view that the 1st respondent was not entitled to get the benefit of the
scheme, since her husband while availing the loan did not become a
member of the Risk Fund Scheme.
3.5. It was further contended by the 1 st respondent that even though
she had approached the Managing Director of the petitioner Bank
claiming to grant the benefit of Risk Fund Scheme, the Managing director
was also of the opinion that her husband being not a member of the
Scheme, is not entitled to the benefit of the Scheme.
3.6. The case projected by the 1 st respondent before the Lok Ayukta
was that under the Scheme, 2008, if the loanee dies before repayment of
the loan to the bank during the loan period, a sum to the extent of Rs.1
lakh towards the amount payable, with interest thereto, will be paid out
of the risk fund to the credit of the loan account. It was also the
contention that the legal heirs of the loanee would be entitled to the
benefit of Rs. 1 lakh with interest to be credited to the loan account in the
Bank. The 1st respondent has produced Exhibit-P2, relevant extract of the
Risk Fund register maintained by the Branch Manager of Ayirooppara
Farmers Co-operative Bank Ltd., respondent No.4 herein, which would
clearly reveal that her husband late Premkumar had remitted a sum of
Rs.250/- being the contribution or membership fee payable to the Risk
Fund and thus, become eligible to get the benefit of the Scheme.
3.7. It was further contended that in view of the adamant stand
taken by the petitioner and Branch Manager, the complainant/1 st
respondent submitted Exhibit-P5 written representation to the Managing
Director of Ayirooppara Farmers Service Co-op. Bank, on 25.01.2013.
Along with the said representation, she has enclosed the Death Certificate
and Legal Heirship Certificate of her late husband, in support of the claim.
However, the said representation was not considered by the Bank. These
are the background facts which prevailed upon the 1 st respondent to file a
complaint before the Lok Ayukta.
3.8. The Joint Registrar/Secretary (Fund Manager) of the Kerala
State Co-operative Development and Welfare Fund Board constituted
under the Scheme, the 2nd respondent herein (1st respondent in the
complainant), has filed a written statement, wherein it was contended
that the Bank, which was advanced the loan, had not remitted the Risk
Fund premium of Rs.250/- in respect of late Premkumar, to the Board, in
order to get the benefit of the Scheme, and therefore, the Board is not in a
position to extend the benefit of the Scheme to the legal heirs of the
loanee. That apart, it was contended that the complainant has not
produced any evidence regarding compliance of Clause 11 of the Scheme,
i.e. the remittance of contribution by the loanee to the corpus fund.
3.9. Sum and substance of the contention advanced by the Joint
Registrar was that Exhibit-P2 and alleged extract of the loan register, will
not be sufficient to extend the benefit of the Risk Fund Scheme to the
complainant.
4. Petitioner had filed a written statement before the Lok Ayukta,
contending that late Premkumar was not a member of the Scheme, and
therefore, he is not entitled to get the benefit of the Scheme. It was also
contended that in February, 2009, when the loan was sanctioned and
released to late Premkumar, the Bank was not a member of the Scheme.
The Bank became a member of the Scheme only with effect from 5.5.2020,
as could be seen from Exhibit-R2(b) document produced before the Lok
Ayukta. It was also contended that even though the Scheme was published
on 18.11.2008 and brought into force with retrospective effect from
1.4.2008, it did not become operative, in the absence of relevant rules for
its implementation.
5. That apart, it was contended that the Kerala Co-operative
Societies Act, 1969, was suitably amended by inserting Section 57D with
effect from 28.04.2010 only. It was also the contention of the Bank that
after its enrollment as a member, the Bank had remitted a sum of Rs.1
lakh towards contribution in May, 2010 to that fund, as could be seen
from Exhibit-R2(b).
6. It was further contended that the records in the 4 th respondent
Branch of the Bank would reveal that late Premkumar had received the
loan amount of Rs. 5 lakhs on February 6, 2009 and at the time of release
of the loan, he remitted a sum of Rs.5,000/- towards additional share
required for grant of the loan. He had also remitted Rs.250/- towards
Gahan's Scheme, Rs.2,500/- towards service charges and Rs.500/- towards
charges for property valuation and expenses for registration of security
bond. Petitioner herein has also produced Exhibits-R2(c) and R2(d)
documents before the Lok Ayukta, evidencing the payments made by late
Premkumar at the time of availing of the loan.
7. It was further asserted that the Bank records, including the cash
book, day book etc., did not contain any entry of payment of contribution
to the scheme.
8. The Assistant Registrar of Co-operative Societies (General),
Thiruvananthapuram, respondent No.3 herein, has filed a written
statement in the complaint stating that the loan in question was
sanctioned by his predecessor, in February, 2009. He took charge in the 4 th
respondent Branch as Manager on 19.04.2012 and he continued there only
till December 20, 2013. According to the 4th respondent, the 1st respondent
along with some of her relatives had approached him on 23.04.2012, i.e.,
three days after assumption of charge in the Branch, and demanded for
grant of benefits of the scheme. However, he requested the 1 st respondent
to approach the President and Managing Director of the Bank and secure
an appropriate order in that regard. But, the 1 st respondent/complainant
came back on the next day and submitted an application to provide a copy
of the relevant page of Risk Fund Register. According to the 4 th
respondent, the said application was returned to the complainant with
instructions to submit it through the Managing Director. Consequently,
the application was resubmitted with the endorsement "Director Board
Members", instead of 'Managing Director', who according to the
complainant was out of Station.
9. Anyhow, it is the admitted position that Exhibit-P2 extract of the
Risk Fund Register was provided to the complainant by respondent No.4
Mr. Vijayan. It was also contended by the 4 th respondent in the written
statement that the complainant and her relatives had forcefully obtained
his signature and seal of the Bank in Exhibit-P2. According to the 4 th
respondent, Exhibit-P2 was a computer generated document taken out by
him from the system in the Branch. But, he admitted in his statement
that a perusal of the records revealed that the Bank was not enrolled in
the Risk Fund Scheme at the time when the loan was sanctioned to late
Premkumar.
10. Before the Upa Lok Ayukta, 1st respondent was examined as PW1
and Exhibits-P1 to P6 documents were marked on her side. The Managing
Director of the Bank was examined as RW1 and Exhibits-R2(a) to R2(k)
series were marked on his side. Respondent No. 4 was examined as RW2
and Exhibit-R4 was marked on his side. One member of the then Board of
Directors was also examined in the case as RW3.
11. After closure of the oral evidence, I.A. No.1743/2016 was filed by
the 1st respondent/complainant with a prayer to issue appropriate
direction to respondents 2 and 4 i.e., Managing Director and Branch
Manager, to produce the Computer Hard Disc and further order to verify
through any computer expert such as Cyber Cell, to recover the true and
original recording entered into the computer with respect to the loan
transaction, and more specifically, the particular page of the Register
maintained by the Bank, giving details of the Risk Fund recovered from
the husband of the complainant (Exhibit-P2) as it was originally recorded.
Likewise, I.A. No.1839/2016 has been filed by respondent No.4 seeking
similar directions.
12. Records further reveal that, after considering the submissions,
an order was passed by Upa Lok Ayukta on 19.10.2017 directing the
Director, C-DAC, Thiruvananthapuram, to depute a competent senior
officer under him to examine the hard disc maintained by the 4 th
respondent branch and also in the head office for the relevant period i.e.,
February 1, 2009 till December 31, 2010 and file a report before the forum.
Accordingly, a Cyber Forensics Analysis Report was filed by C-DAC on
11.01.2018 and along with the same, a DVD was produced in a sealed
cover. After analysing the rival submissions and evidence on record, Lok
Ayukta has arrived at certain findings as per its interim order dated
26.03.2019, relevant portion of which reads as under:
"25. It has been noticed already that though the scheme came
into force with retrospective effect from April 1, 2008 pursuant to
issuance of Ext.P6/R1(a), respondent no.2 Bank had failed to
become a member under the scheme. Though respondent no.2
admittedly started collecting membership fee from the loanees
from October, 2009 and applied for membership in the same
month, respondent no.2 was admitted to the scheme only in May,
2010. Unfortunately the fact might have been that late
Premkumar was not aware of the Scheme at the time when he
availed of the loan in February, 2009. His legal representative
(complainant) would have been the beneficiary if only he had
been told by the Bank about the Scheme at that time since
naturally late Premkumar might not have grudged or refused to
pay membership fee of Rs.250/- also at that time. It is on record
that he had remitted Rs.3250/- at that time as directed by
respondent no.4 Branch of the Bank under various heads. Why I
have referred to the above aspect is only on consideration of the
entire oral and documentary evidence adduced by the parties on
record and more so because of the following observation made in
the written statement filed by respondent no.1, the Fund
Manager. Interestingly this written statement was filed by the
Joint Registrar/Secretary herself in the form of an affidavit. The
crucial sentence reads thus-
"However since the second respondent has committed
serious lapse in effectively subscribing the corpus fund,
the said Bank is liable to compensate the petitioner for
the loss sustained by her in view of the stipulations in
Ext.P3 circular."
The above crucial/significant observation made by respondent
No.1 in my view, will give a different dimension to the case on
hand. A perusal of the various clauses in the scheme will show
that it is the Managing Committee of the Risk Fund Board which
has to release or sanction the benefit under the Scheme to the
legal heirs of the loanee, of course through the Society which has
advanced the loan. Clause (12) further provides that if the society
fails to take action on the request for grant of the benefit under
the scheme by itself, the Board is empowered to take a decision in
the matter at the instance of the applicant. More importantly sub
clause (6) of clause (2) of Ext.P6 scheme stipulates or provides that
it will be open to the Registrar of Cooperative Societies to give
concession to the legal heirs of the loanee in respect of any of the
clauses of the Scheme in appropriate cases subject to the
recommendation to be made by the Managing Committee of the
Risk Fund Board. In my view this is a fit case in which the
Managing Committee of the Risk Fund Board (respondent no.1)
has to necessarily consider the entire aspects of the issue involved
in this case and make a suitable recommendation, if so advised, to
the Registrar of Cooperative Societies.
26. While doing so the Board shall ensure that the Risk Fund
Register and all other related documents maintained in
respondent no.2 Bank as well as at its Branch (respondent no.4)
are scrutinized and examined to see whether Ext.P2 was
fabricated or forged as alleged by respondent no.3. Reference has
been made to the above aspect only in the light of the categorical
assertion made by Sri. Vijayan while he was in the witness box as
RW-2, he had personally verified the Risk Fund Register and
found the relevant entry of remittance of the entrance fee of
Rs.2501- made by late Premkumar. Significantly respondent no.2
has produced only two Risk Fund Registers - 1) From 3.4.2010 to
31.8.2010 2) From 29.1.2010 till 7.5.2014. The Register relating to
the year 2009 has not been produced though admittedly entrance
fee was collected from loanees in 2009 itself.
27. Anyhow, the Board shall take a well-considered decision
after looking into the entire documents and materials available
on record in the Bank and after hearing an authorised
representative of the Bank. Needless to mention that the report
filed by CDAC and the Hard Disk produced by it shall also be
considered appropriately.
28. In this context, it may not be justified if I fail to take note of
the observations and conclusions made by CDAC in its Cyber
Forensics Analysis Report CSG No.2017-02 HC. But, I am
constrained to observe that none of the parties did bother to give
assistance to this Forum in either understanding or appreciating
the so-called conclusions arrived at by CDAC. In my view
respondents 1 and 2 ought to have taken a keener interest and
active role in bringing to light the actual result of the Forensics
Analysis Report. I refrain from making any further observations
at this juncture. However the analysis results and following
conclusions in the report are extracted hereunder:-
"Analysis results (Evidence Number:01 (WDC WD1600AAJS-
22WAA0, Capacity: 160 GB-office of the Ayirooppara farmers
service cooperative Bank, Vavarambalam Branch].
• All the available contents created/accessed/Modified between
Feb 1, 2009 and December 31, 2010 were extracted from the Hard
Disk (Evidence Number: 01).
• 301 'db' database files were found. During the analysis the
keyword "risk fund" were found in these. Db files from the hard
disk.
• These database files are in a proprietary format developed for
the bank by a software company. For decoding these database
files in viewable/readable format software support from the
company is required.
• No specific information relating to the case could be obtained
due to non availability of decryption key for the database.
• All the extracted files are stored to a DVD (labeled as DVD01) at
the following location.
DVD01/Evd01/Harddisk/Q1/"
29. Thus, while holding that the complainant has failed to
establish that her husband late Premkumar had become a
member of the Scheme, 2008, it is held that this is a fit case in
which family of late Premkumar shall not be denied the benefit of
the scheme for default, particularly in view of the noble object
that was sought to be achieved while introducing the Scheme in
2008.
30. Therefore, I deem it just and proper to issue an interim
direction to respondent no.1 Board to take a decision in the
matter as directed above and file an Action Taken Report along
with the decision that may be taken by the Board in this regard.
Ordered accordingly.
For A.T.R, call on 28.05.2019.
Communicate the order to respondent no.1"
13. Presumably, on the basis of the directions issued by Upa Lok
Ayukta, the Joint Registrar of Co-operative Societies (Risk Fund Board) has
filed an Action Taken Report dated 19.07.2019.
14. Taking into account all the above aspects, Upa Lok Ayukta has
passed a final order dated 05.11.2020, which is apparently made as a
sequel to the interim order passed by the forum on 26.03.2019. Relevant
portion of the said order reads as under:
"3. It is not necessary to refer to or deal with the various
contentions raised by the parties in support of their rival
contentions since in the elaborate order passed by this Forum
after due consideration of the oral and documentary evidence
adduced by the parties it was held:-
"This is a fit case in which the family of late Premkumar shall
not be denied the benefit of the Scheme for default
particularly in view of the noble object that was sought to be
achieved while introducing the Scheme in 2008."
The above conclusion was made after an elaborate discussion
of the material facts and circumstances in the case, in
paragraphs 24 to 28 of the order. This Forum directed that
the Board (respondent no.1) shall take a well considered
decision after looking into the entire documents and
materials available on record in the Bank and after hearing
an authorised representative of the Bank. Accordingly,
respondent no.1 Board was directed to file an Action Taken
Report along with the decision that may be taken by it in this
regard.
4. But curiously on May 25, 2019 the Joint Registrar /
Secretary of the Board (respondent no.1) forwarded a copy of
the decision taken by the Board on May 14, 2019 (Decision
No.7) to the Additional Registrar of this Forum. According to
the Joint Registrar, the Board had considered the direction
issued by this Forum and taken the above decision. By the
said decision, the Board held that since the Bank had not
deposited the Risk Fund Contribution paid by the loanee to
the Board, the Bank alone was liable and the Board was
totally exonerated from the liability. The decision further
categorically held that if the family of the loanee lost the
benefit of the Risk Fund, the Bank was solely responsible to
make good the loss to the family.
5. But since the Board had not filed an Action Taken Report
along with the copy of the Resolution, this Forum by its order
dated June 24, 2019 directed the Joint Registrar who was in
fact personally present to comply with the order dated March
26, 2019 passed by this Forum in letter and spirit.
6. Thereafter the Joint Registrar/Secretary of the Board has
filed an ATR on November 12, 2019. The Board after referring
to the materials available in the Bank held that the
complainant had not produced any evidence regarding
compliance of Clause 11 of the Scheme in the matter of
remittance of the contribution of the loanee to the corpus
fund. Respondent no.1 also took the view that "the alleged
recovery of an amount of Rs.250/- from the loanee as
evidenced by Ext.P2 is not sufficient to extend the benefit
under the Risk Fund Scheme whereas the amount so
recovered should have been deposited in the District Co-
operative Bank and a statement to that effect should have
been made available to the 1" respondent. In the absence of
compliance of the aforesaid two conditions as envisaged
under Clause 11(B) (3) and (4) of the Scheme, no liability can
be caused to the 1st respondent."
7. Still further, the Board took the view that there was serious
lapse on the part of respondents 2 and 4 to become a member
of the Risk Fund Scheme that came into force with effect
from April 1, 2008. The Board further took the view that
respondent no.2 ought to have joined the scheme in time and
collected the amount of premium and remitted the same to
the corpus fund maintained by the Board. This observation
was made since admittedly respondent no.2 had become a
member of the Scheme only in September 2009. Curiously,
after coming to the above conclusion and making the above
observations, respondent no.1 in its ATR stated that the
complaint was liable to be closed, reserving the right of the
petitioner to proceed against respondents 2 and 4 as provided
in Exhibit P3 Circular.
8. Statement of objection has been filed by the complainant
as well as respondent no.2- the Bank, to the Action Taken
Report. I have carefully considered the above statements. In
its statement of objection respondent no.2 has harped on the
alleged "forgery" or "fabrication" of Ext P2 receipt by Its
Branch Manager and contended that the Bank was not liable
to extend the benefit of the Scheme to the complainant and
the family of the deceased loanee for the said sole reason. will
revert to this aspect a little late.
9. After filing of the ATR by respondent no.1, the complainant
had filed LA.No.128/2020 with a prayer to pass an order
directing the respondents to write off the outstanding loan
and to release the title deeds furnished by the loanee at the
time of release of the loan amount. Respondent no.2 has filed
a detailed objection to the above Interlocutory Application
repeating or reiterating the earlier contention that Ext.P2
was fabricated by the Branch Manager(respondent no.4) in
collusion with the complainant and her relatives and
therefore no liability can be fastened on respondents 2 and 4.
It is further contended that fake entries as regards payment
of the Risk Fund Contribution was made by the members of
the staff on November 26, 2010, i.e. two days after the death
of the complainant's husband.
10. It is pertinent to note that the case of respondent no.2 is
that disciplinary action has been initiated against the
Manager of the 4th respondent Manager of the Branch for the
alleged forgery or fabrication. Copy of the show cause notice
issued to the then Manager and the decision of the Director
Board taken thereafter as regards institution of disciplinary
proceeding have already been produced by respondent no.2
along with the version filed by it [Ext.R2(g) and (h)]. It is the
further case of respondent no.2 that appropriate action will
be taken against the members of the staff who were involved
in this foul play for creating or fabricating documents to
support the claim of the complainant. I do not propose to
deal with the above issue any further since it is a matter
pertaining to the internal affairs of the Bank and its
employees. It will be open to the Director Board of the Bank
(respondent no.2) to take an appropriate decision in the
matter, if so advised.
11. But as regards the claim of the complainant I have no
hesitation to hold that the complainant and her family
cannot be made to suffer because of the alleged foul play of
the employees of the Bank. It cannot be believed that a widow
would have gone to the Branch of the Bank on the second day
of the death of her husband and colluded with the Manager
to fabricate Ext.P2 document as contended by respondent
no.2. The subsequent conduct of the complainant as revealed
from the documents produced by her and while making the
claim for benefit of the Scheme will reveal that she is not
adept in such unholy or illegal means. More importantly,
since respondent no.2 has conceded that its employees in its
Branch (respondent no.4) had committed foul play, the
principal employer viz., Respondent no.2 Bank has to
necessarily bear the brunt.
12. Interestingly this view has been taken by respondent no.1
Board in Ext.P7 Resolution dated 14.5.2019 also. The said
Resolution has not yet been revoked and it still stands. The
ATR is only as regards the various procedures followed in the
matter for examination of the records. Therefore the
suggestion or observation made by the Joint Registrar
(respondent no.1) in the ATR to close the complaint reserving
the right of the complainant to proceed against respondents
2 and 4 is rejected.
13. In this context attention of respondent no.1 Joint
Registrar is specifically drawn to Ext.P3 Circular dated June
25, 2010 Issued by the Registrar of Co operative Societies
alerting and directing all Joint Registrars in the Department
to ensure that all Co-operative Societies / Banks did become
members of the Scheme which had come into force with
effect from April 1, 2008, and that they had remitted the
contributions collected from the loanees as stipulated in the
Scheme. They were further directed to file the district-wise
list as regards the number of members in the Scheme, the
number of loans sanctioned by the Banks etc as well as
monthly progress reports. Therefore in the case on hand, it is
obvious, the Joint Registrar of the District concerned had
failed to discharge his/her duties in the case of respondent
no.2 Bank. According to respondent no.2 the Bank had
become a member of the Scheme only in September 2019,
more than 1 ½ years after the Scheme came into force.
Therefore do not propose to elaborate further because the
duties and responsibilities of the officials in the Department
are clear from the various clauses in the Scheme and
particularly Ext.P3 Circular. Curiously in the version filed by
respondent no.1 in the complaint an attempt was made to get
itself absolved from the liability by stating that since
respondent no.2 had "committed serious lapse in effectively
subscribing to the corpus fund the said Bank is liable to
compensate the petitioner for the loss sustained by her in
view of the stipulations in Ext.P3 Circular." Apparently the
above contention is to cover up the administrative failure of
respondent no.1 in taking effective steps to get respondent
no.2 Bank enrolled under the Scheme. In that view of the
matter, the so-called "advice" given by respondent no.1 to
instruct the complainant to proceed against respondent no.2
and 4 is totally uncalled for, to say the least.
14. Thus having considered the Action Taken Report and
other relevant materials on record, respondent no.2 and/or
respondent no.4 are directed to give the benefit of the
Scheme to the complainant forthwith. In the peculiar facts
and circumstances of the case the complainant is entitled to
claim interest at the rate of 6% from the date of death of her
husband. The amount shall be released within 15 days from
the date of receipt of a copy of this order, failing which it will
be open to the complainant to initiate action in contempt
against respondents 2 and 4. It is made clear that the above
payment shall be without prejudice to the right of
respondent no.2 to initiate appropriate disciplinary or
administrative action against the so called culprits in the foul
play in forging or fabricating documents and such other
illegal activities."
15. Therefore, it could be deduced that Upa Lok Ayukta has entered
into a finding that since the Bank has not become a member of the Risk
Fund Scheme, in accordance with the circular and other stipulations
contained therein, though late Premkumar-the loanee has not paid any
contribution to the Risk Fund Scheme, the Bank is liable to compensate
the complainant. Various other directions were also issued, in view of the
fabrication of documents made etc.
16. The petitioner Bank being aggrieved by the order dated
05.11.2020, has filed Review Petition No.2/2020, which was dismissed as
per Exhibit-P8 order dated 16.12.2020 holding that the issues raised by the
petitioner Bank were considered by the Lok Ayukta in the orders and
there is no error apparent on the face of record to interfere with the
orders in a review petition. It is thus Challenging the legality and
correctness of Exhibits-P7 and P8 orders passed by the Upa Lok Ayukta,
instant writ petition is filed for the reliefs stated supra.
17. The paramount contention raised by the Bank in the writ
petition is that the Bank has filed an Action Taken Report stating that the
complainant/1st respondent is not entitled to get the benefit of the
scheme since the petitioner Bank did not join the scheme at the time of
disbursal of loan amount. However, the Upa Lok Ayukta directed the
petitioner to provide the 1st respondent the benefit of the scheme along
with 6% interest.
18. That apart, it is contended that the direction contained in
Exhibit-P7 order, directing the petitioner Bank to provide the benefit of
Risk Fund Scheme, 2008 to the 1st respondent is opposed to the object of
the scheme itself and the same is liable to be interfered with by this Court.
It is also contended that though in Exhibit-P4 order dated 26.03.2019, the
Upa Lok Ayukta has found that there is no direct evidence much less any
clinching document to substantiate the contention of the complainant/1 st
respondent that her late husband has become a member, in order to avail
the benefit of the scheme, the Upa Lok Ayukta had directed the Bank to
pay the amount since the Bank has failed to become a member of the Risk
Fund Scheme at the relevant point of time.
19. It is further contended that the stipulations contained in the
scheme enable the Registrar of Co-operative Societies to give concession
to the legal heirs of the loanee in respect of any of the clauses contained
in the scheme in appropriate cases, upon the recommendation of the Risk
Fund Board. It is also contended that the complainant/1 st respondent had
colluded with the 4th respondent Branch Manager, to secure Exhibit-P2, a
fabricated document, in order to non-suit the pleadings in the complaint,
and therefore, she was not entitled to the benefit of the scheme.
20. Refuting the averments in the writ petition, 1 st respondent/
complainant has filed a counter affidavit, wherein it is contended that
after the death of her husband on 24.11.2010, she approached the
petitioner Bank in February, 2011 and requested for settling the benefit of
Kerala Risk Fund Scheme, 2008. However, the then 4 th respondent Bank
Manager asked the 1st respondent to pay an amount of Rs.1,59,455/-, being
the rest of total repayment, excluding the risk fund of Rs.1 lakhs and
interest thereto. Pursuant to the same, 1st respondent deposited the said
amount on 11.02.2011 with the 4th respondent Branch. After depositing
the said amount, she approached the Branch Manager for release of the
title deeds deposited with the Branch. However, the 4 th respondent
refused to release the documents and demanded the complainant to
further remit the balance risk fund amount of Rs.1 lakh with interest
thereto.
21. It is her further contention that the statement of the Board in its
Action Taken Report (ATR) that the complainant had not produced any
evidence regarding compliance of clause (11) of the scheme in the matter
of remittance of contribution of the loanee to the corpus fund is contrary
to their own finding dated 14.05.2019 in the enquiry conducted by them
as per the direction of Lok Ayukta through an interim order dated
26.03.2019 (Exhibit-P4) to file the ATR. The finding on 14.05.2019 by the
Board is to the effect that the receipt affixed as Exhibit-P2 in the
complaint, by the 1st respondent as proof of risk fund contribution is true.
She would also contend that the further observations by the Board quoted
in paragraph 12 in the writ petition culminating in the sentence; "in the
absence of compliance of the aforesaid two conditions as envisaged under
clauses 11(B)(3) and (4) of the scheme, no liability can be caused to the 1 st
respondent", cannot be faulted because the default was solely by the
petitioner, Managing Director of the Bank, in not remitting the collected
contributions with the District Co-operative Bank and not enrolling as a
member as per the mandate of the Scheme, 2008 in time.
22. It is also the contention of the 1st respondent that it is evident
on record that as per the admission of the petitioner himself that the
Bank has become a member only on 5.5.2010 (inter-alia as per their own
admission at para (7) of their reply statement before the Lok Ayukta
annexed at page 55 of this writ petition), whereas, the receipts issued for
collections of subscriptions produced by the petitioner herein as Exhibit-
R2(k) 8(1) to 8(50) evidence that collections were made from 01.10.2009,
i.e., much before becoming a member of the scheme on 5.5.2010.
23. Respondent No.1 has also contended that the collected amounts
ought to have been deposited in the District Co-operative Bank by the
petitioner in the very next month, as per the mandate as explained by the
Board in its ATR, as well as Exhibit-P7 report dated 14.5.2019, submitted
to the Lok Ayukta as per interim order dated 26.03.2019. This deposit is
not so done by the petitioner, but mismanaged the funds, without
accounting anywhere.
24. Added to above, it was contended that the Bank has never
maintained a special register showing the deposit of subscription amount
to the Risk Fund by the loanees, as mandated by clause 13(1) of the
Scheme, 2008. In place of producing the said register, the petitioner and
respondent Nos.2 to 4 produced other documents of the bank accounts to
show that the husband of respondent No.1 has not paid the subscription.
So also, the petitioner has evidently collected the contribution from her
husband and perhaps many others, in the beginning, and did not even
issue receipts by false reasons and mismanaged those funds too. Under
such circumstances, as per the mandates of the Scheme, 2008 and Circular
No.33 of 2010, the liability and responsibility squarely fall on the
petitioner, and therefore, the Board is within their right and power to
make the captioned observation as per law.
25. Apart from the above, various other contentions were raised by
the 1st respondent in the counter affidavit.
26. Respondent No.4 has also filed a counter affidavit, inter alia,
contending as under:
"A. The 4th respondent had assumed charge as the Branch
Manager of the Vavarambalam Branch, petitioner Bank on
19.04.2012. The loan was released to the husband of the 1 st
respondent, Premkumar, on 06.02.2009 by the predecessor of
the petitioner herein. The 4th respondent did not have any role
in the remittances made by the husband of the 1 st respondent.
The petitioner and some of her relatives approached the 4 th
respondent on 23.04.2012 and demanded to grant benefits of
the scheme. Since the 4th respondent had taken charge only
three days prior, the 4th respondent requested the 1 st
respondent to approach the Managing Director and President
of the petitioner herein. The 1st respondent then submitted an
application for the relevant page of the risk fund register,
which was returned by the 4 th respondent for submitting it
through the Managing Director. The application was
resubmitted along with the endorsement of two director
board members, as the Managing Director was out of station,
according to the petitioner.
5. Since the Board members of the petitioner Bank directed
the 4th respondent to issue the certificate of risk fund, the 4 th
respondent obtained a print out of the extract of the risk fund
register from the computer maintained in the Branch. Though
the 4th respondent was a bit hesitant to issue the extract, the
1st respondent and her relatives insisted on the 4th
respondent signing and affixing a seal of the Bank on the said
extract. The 4th respondent was constrained to do so as the
Board Members of the petitioner Bank had directed to give the
extract to the 1st respondent. Other than taking a print out as
directed in Exhibit R4(a), the 4th respondent did not have any
role and was only discharging his official functions.
6. Though the 4th respondent did not have any role and had
only given a print out from the computer of the petitioner in
the Branch, the petitioner Bank had made the 4 th respondent
to remit an amount of Rs.1,00,000/-, by denying the pension
and other benefits of the 4th respondent after his retirement
on 31.05.2020. Even now, the leave benefits of the 4 th
respondent have not been given.
27. Heard Mr. G. Biju, learned counsel for the petitioner, Mr. S.
Sadasivan, learned counsel for the 1st respondent/complainant, Mr. P.C.
Sasidharan, learned counsel for the 2 nd respondent - Joint Registrar of Co-
operative Societies, Mr. Saji Isaac K.J., learned counsel for the 4 th
respondent, and perused the material on record.
28. Before adverting to the submissions, let us consider the object of
the Kerala Risk Fund Scheme, 2008.
29. Kerala Co-operative Debt Relief Scheme/Kerala co-operative
Risk fund Scheme, 2008 is a scheme introduced mainly relating to those
borrowers who availed agricultural loan and loan other than for
agricultural purposes (but excludes gold loan and loan taken from fixed
deposits) and dies before completion of the loan period, the outstanding
loan amount as on the date of their demise will be written off to help
them from the liability.
30. Member is defined under clause (3) of the scheme to mean
Member Societies which represents each borrower and joins the scheme
of Kerala Co-operative Debt Relief Scheme, 2008.
31. Clause (4) - object of the scheme, inter alia, states that if a
member, who has availed loan and dies during the completion of the loan,
an amount upto Rs.1,00,000/- which is outstanding in the principal
amount and its interest will be given from the fund. Clause (4) would also
state that if the borrower, after availing the loan, had defaulted
remittances of the loan installments for more than six months even if the
borrower dies during the loan period, he shall not be entitled for the
benefits of this scheme. In those cases, which the borrower was promptly
remitting the loan installments without any default and due to some
serious illness of the borrower or due to some unforeseen circumstances,
the borrower could not repay the further installments and loan amount is
outstanding and if the borrower happen to die within 90 days from the
last date stipulated for repayment, the outstanding liability shall be met
from the Risk Fund.
32. Clause (5) of the scheme deals with eligibility and it states that
eligibility to get the benefit of the scheme will be available only to those
loans in which the loan availed was in the name of the deceased and the
loan period has not expired and the loan period will expire before the
borrower attains the age of 65 years. The benefit of this scheme will not
be applicable to those borrowers who got the benefit of OTS and have
closed the same and those loan amounts that have already been paid
before the approval and notification of this Scheme. The maximum
amount that is permissible under this scheme shall be Rs.1,00,000/- and
its interest.
33. Clause 6 of the scheme states that without considering the limit
of the borrowed amount, all those loans can be included in the scheme.
But, the eligibility shall be limited for a maximum amount of Rs.1,00,000/-
on the principal loan amount. It further states that those cases in which
the borrowers suffer from serious illness and due to that reason could not
repay the loan amount also can be included in this scheme.
34. Clause 7 states that to get the protection of this scheme to those
existing loans on the date of commencement of this scheme, an
application has to be submitted along with an amount equivalent to 0.2%
and not more than Rs.200/- of the loan amount as on 1 st April, 2008,
within three months from the date of notification of the scheme. The
borrower concerned has to pay an amount equivalent to the rate of 0.2%
for availing a loan amount upto Rs.1,00,000/- after the commencement of
this scheme and at the rate of 0.2% and not more than Rs.250/- in the
society to those loan amount which exceeds an amount of Rs.1,00,000/-
before accepting the loan amount. The said clause further states that
irrespective of the fact that the amount borrowed by the borrower is less
or higher, when the amount calculated as per the proportionate
percentage comes to less than Rs.50/- a minimum amount of Rs.50/- has
to be paid. The amount to be paid has been fixed as per the rate upto
Rs.1,00,000/- as Rs.200/- and amount exceeding Rs.1,00,000/- as Rs.250/-.
The amount accumulated as described above and also the amount
received as grant from the Government or other institutions or
contributions together constitutes the fund for the scheme.
35. Clause 12 of the scheme deals with Authorised Authority for
sanctioning the financial benefit and it states that the Managing
Committee of the Welfare Development Fund Board shall be the authority
to sanction the financial benefit after verifying the applications. After
sanctioning the loan, the amount covered under the benefit scheme has to
be transferred to the society concerned. It was also stated that if the
society fails to consider the application and take steps submitted for the
financial benefit covered under the scheme, the application can be
submitted directly to the Fund Manager and he shall consider the same
and take necessary steps in the matter.
36. Clause 13 deals with Miscellaneous and it reads as under:
"1) The Co-Operative Society has to keep a separate register
and enter the details of the contribution of the borrower to
the Risk Fund and deposit it in the Corpus Fund of the Bank
and keep it safe. The details of the deposit of the contribution,
and further deposit in the Corpus Fund of the Bank etc., also
has to be entered in the statement of the loan installment.
Monthly statements relating to the contribution of the Risk
Fund, details of the deposit in the Corpus Fund of the Bank
etc., have to be forwarded to the Secretary of the Board and all
General Managers of the District Co- Operative Banks.
2). If the borrower dies, the balance loan amount due from the
deceased along with interest as on the date of his death shall
be paid to the Society from the Corpus Fund. Along with this
the Society has to take necessary steps to write off the penal
interest and other expenses with the sanction of the General
Body and approval of the Registrar.
3). The details with respect to the contribution from the
Societies, contribution from the Government, financial help
received from other sources, financial help received from
funds shall be entered in a separate register and kept safe by
the Welfare Development Fund Board. The accounts relating
to the deposits have to be ascertained each month by the
board.
4). The Director of Co -Operative Audit has to audit the
accounts relating to the Risk Fund.
5). The detail Statement / Report of the progress relating to
the Fund Amount, Balance Amount, the amount deposited in
the fund of that particular month, amount sanctioned from
the fund of that particular month, balance amount, societies
for which financial help was sanctioned to each district has to
be submitted by the Registrar, the following month.
6). The Registrar of Co-operative Society shall have the power
to relax any of the conditions stipulated in the Risk Fund
Scheme subject to the recommendation of the Managing
Committee of the Board. None of the conditions stipulated in
the scheme shall be altered or amended without the prior
permission of the Government."
37. The Action Taken Report filed by the Joint Registrar/Secretary,
Kerala Co-operative Development and Welfare Fund Board,
Thiruvananthapuram, as per the interim direction of the Upa Lok Ayukta
in Exhibit-P4 order dated 26.03.2019 is reproduced hereunder:
"1. As per the directions of the Hon'ble Upa Lok Ayukta, the
managing committee of the Risk Fund Board (1 st respondent)
has to examine and scrutinize the Risk Fund Register and all
other related documents maintained by the 2nd and 4th
respondents dated 30.09.2019. No receipt of Risk Fund
Premium has been seen in the records maintained by the 2 nd
and 4th respondent's Bank. It is on record that the deceased
Premkumar had remitted Rs.5000/- as share capital, Rs.2500/-
as service charges, Rs.500/- as Valuation Fee and Rs.250/- as
Gehan charges and above said various heads of amount was
entered in Cash Book, Subsidiary Day Book and main Day Book
kept by the 4th respondent Bank also. At the time of examining
the records, no receipts of premium amount have been
recovered from the 4th Respondent Bank and its 2nd
respondent Bank. After examining and scrutinizing the
records kept by the 2nd and 4th respondents, the 1st
respondent Board have came to know that Ext.P2 was
fabricated and forged documents made by the staff of the 4th
respondent Bank. Ext. P2 is a computer printout copy and it
was installed on 22.01 2010 onwards by the 4th respondent
Bank in the option of Installing Risk Fund premium amount.
The Installation of computerization in the 4 th respondent Bank
made by Cochin Computing Studio & Research Centre Pvt. Ltd.
as per Ext. R1(a). As per entries in the computer shows that
Membership No.16299 is deceased Premkumar as Scroll No.932
dated 06.02.2009 was entered in the computer, but its option is
installed in computer shows that it is not tallied in the
aforesaid premium fund Installation in the computer and the
above entered risk fund premium amount was not enrolled in
the Cash Book and Audit kept by the 4th respondent's record.
So the above entries shown in the computer scroll 26-18-2010
are fake entries made by the staff on 26.10.2011 purposefully
for proving receipt of risk fund premium. No entries were
seen in the Cash Book. Subsidiary Day and Audit Report in the
4th respondent Bank at the time of examining the records by
the 1st Respondent Board.
2. As per Ext.P5, 2nd respondent refused to release the title
deeds of the complainant even after she deposited the
demanded amount of Rs.1,59,455/- on 11.02.2011. After the
rejection of the request of the complainant submitted before
the 2nd respondent, she did not file any further complaint
before the Government Authorities concerning the matter.
There is no original application for risk fund and other
documents are not produced before the 1st respondent bank by
the 4th respondent. Forum A statement included documents
like death certificate, legal heirship certificate, original
application of risk fund and receipt of risk fund premium
should be submitted before the 1st Respondent Board after the
verification of the concerned Assistant Registrar office by the
4th respondent. In this case, above said records are not to be
submitted by the 4th respondent bank and 2nd respondent
before the Board. On 20.03.2012, the petitioner filed a request
before the 2nd respondent for getting Risk Fund, but the said
request was rejected by the 4th respondent Bank for the reason
of this Bank did not Join Risk Fund Scheme. The Managing
Director ie, 2nd respondent rejected as Ext. R1(b) letter.
3. The Kerala Co-operative Risk Fund Scheme, 2008 came into
existence with effect from 01.04.2008 as per G.O. No.248/2008
dated 18.11.2008. The duty of the 1 st respondent is to
implement the above said scheme as per provision laid down
in the Rules. The scheme is to provide assistance to loans
availed by the loanees from Co-operative Societies, who expire
before the period of loan. The Co-operative Societies issuing
loans should collect a specified amount from the loanee
towards the Risk Fund premium and to remit the same to the
corpus fund of the Board within the stipulated time.
4. The assistance as per this scheme is against the outstanding
loan amount at the time of the death of the loanee subject to a
maximum of one lakh prior to the amendment made on
30.03.2012. The Registrar of Co-operative Societies as per
Ext.P3 circular dated 25.06.2010 instructed all Credit Co-
operative Societies to join the scheme, collect the Risk Fund
premium from the loanees at the time of disbursement of the
loan and remit to the corpus fund of the Board in time.
5. It is submitted that if any risk fund premium is deducted
from the loanee Sri. A.Padmakumar at the time of
disbursement of loan on 6.2.2009, the 2 nd respondent bank
ought to have remitted the amount to the Board by the 5 th
March, 2009. The 2nd respondent bank has not remitted any
amount pertaining to the loan in question. It is submitted that
the Scheme is running as an insurance Scheme and hence in
the absence of premium remittance, the Board is not in a
position to provide assistance to the loan of
Sri.A.Padmakumar. The Registrar of Co-operative Societies has
issued Ext.P3 prescribing the manner in which such cases are
to be dealt with.
6. In the instant case, the petitioner has not produced any
evidence regarding compliance of Clause 11 of the scheme in
the matter of remittance of the contribution of the loanee to
the corpus fund. The petitioner also has not produced any
documents in proof of remittance of the contribution to the
corpus fund by the 2nd respondent in the account maintained
by the 1st respondent in the District Co-operative Bank. The
alleged recovery of an amount of Rs.250/- from the loanee as
evidenced by Ext. P2 is not sufficient to extend the benefit
under the Risk Fund scheme whereas the amount so recovered
should have been deposited in the District Co-operative Bank
and a statement to that effect should have been made
available to the 1st respondent. In the absence of compliance of
the aforesaid two conditions as envisaged under Clause 11(B)
(3)and (4) of the scheme, no liability can be caused to the 1st
respondent. However, since the 2nd and 4th respondents have
committed seriously to become a member of the Risk Fund
Scheme came into force w.e.f. 01.04.2008, the bank have
applied for membership in September, 2009 only. The bank
ought to have to join the scheme in time and to collect the
amount of premium and to remit the same in the corpus fund
maintained by the Board.
7. Since the Risk Fund Board has not yet received any
application from the 4th respondent bank in the prescribed
form with necessary documents, the board is not in a position
to grant assistance to the complainant.
8. In the above circumstances it is respectfully submitted that
the Complaint is liable to be closed reserving the right of the
petitioner to proceed against the 2 nd and 4th respondents Bank
as provided in Ext.P3 Circular.
After verification of all the relevant records there is no
piece of evidence for the remittance of any amount as the Risk
Fund Premium by the 4th respondent in the name of the
complainant and hence the 1st respondent has no liability to
pay any amount as claimed in this complaint. In these the 1st
respondent is unable to pay anything to the complainant from
the Risk Fund Scheme."
38. Exhibit-P8 is the order dated 16.12.2020 in R.P. No.2 of 2020
passed by the Upa Lok Ayukta, wherein it was observed as under:
"Significantly, it is the admitted position that the
Bank conceded that the then Secretary and certain other
employees were responsible for the mischief and it was
these officials who had created or fabricated documents
and also issued a receipt for Rs.25/- towards contribution to
the Risk fund Scheme. The Department had also adverted to
this aspect and held that the Bank should proceed against
these employees. All these aspects were taken note of by
this Forum while passing two orders, especially the last
order dated November 5, 2020. It was after considering all
these circumstances and looking into the gamut of the issue
that this Forum had ordered that the complainant who is a
widow (her late husband was the loanee) was entitled to get
6% interest on the sum of Rs.1 lakh from the date of death
of her husband. I do not find any error apparent on the fact
of the record. There is no merit in any of the contentions
raised by the review petitioner.
Accordingly, the Review Petition is dismissed."
39. The sole question to be considered in this writ petition is as to
whether any interference is required to the orders of the Upa Lok Ayuka.
40. Apparently, Exhibit-P4 order dated 26.03.2019 was passed by the
Upa Lok Ayukta after taking evidence and finding that Exhibit-P2
computer extract produced is a fabricated document to appear that the
loanee, late Mr. Premkumar, has contributed Rs.250/- towards the Risk
Fund Benefit Scheme. It was also found that the Bank became a member
of the scheme only on May 5th, 2010, whereas the loan was released to late
Premkumar on 6.2.2009. It was also found by the Upa Lok Ayukta that late
Premkumar had not contributed Rs.250/- towards the scheme. It was
accordingly after realising the situation that the Bank was not a member
of the Risk Fund Scheme, directions were issued as per the interim order
dated 26.03.2019, which is extracted above.
41. Going through the Action Taken Report filed by the Joint
Registrar/Secretary (Fund Manager) of the Risk Fund Scheme, it is clear
that Exhibit-P2 computer extract produced by the 1 st respondent before
the Upa Lok Ayukta was a fabricated and forged document made by the
staff of the branch of the Bank. It is clearly stated in the said report that
the option of installing risk fund premium amount was made only on
22.01.2010 onwards, and therefore, when late Premkumar availed the
loan, on 6.2.2009, there was no option for entering the risk fund
contribution in the system available with the branch.
42. The Action Taken Report (ATR) submitted by the Joint Registrar
further makes it clear that entries in the computer show that Membership
No.16299 is deceased Premkumar, and it was entered as Scroll No.932
dated 6.2.2009 in the computer, but its option installed in the computer
shows that it is not tallied in the aforesaid premium fund installation in
the computer. It was also pointed out that the risk fund premium amount
was not incorporated in the cash book and audit records kept by the 4 th
respondent, and therefore, the entries shown in the computer scroll are
fake entries made by the staff later , purposefully for proving receipt of
risk fund premium.
43. It was taking into account the said statements contained in
Exhibit-P5 Action Taken Report, Lok Ayukta has arrived at the finding
that the Risk Fund Board is not liable to pay any amount to the Bank since
the Bank has not enrolled late Premkumar as a member of the Risk fund
Scheme and since the Bank itself had become a member, much later in the
year 2009, which was accepted by the Risk Fund Board in May, 2010.
44. Anyhow, the Managing Director of the Bank has filed a writ
petition basically contending that late Premkumar was not entitled to the
benefit of the scheme since he was not enrolled as a member.There is no
much deliberation required to the said aspect because even though
Exhibit-P2 document was produced by the 1st respondent/complainant
before the Lok Ayukta, it was found to be a fabricated one, done at the
behest of the 4th respondent, who was the Branch Manager of the Bank in
the year 2012.
45. It is an admitted fact that even though late Premkumar died on
24.11.2010, the 1st respondent/complainant has approached the Branch
Manager only on 23.04.2012, after assumption of charge as Branch
Manager by the 4th respondent. On a perusal of Exhibit-R1 scheme, it is
clear that in order to get the benefits of Risk Fund Scheme, the Bank has
to enroll itself in the scheme. According to the petitioner, the Bank did
not enroll because, no rule was in force at that point of time, as to the
manner in which the enrollment is to be made and further that there was
no provision in the Co-operative Societies Act providing the Bank to
enroll and only after amendment of the Act, incorporating Section 57D,
that the Bank has taken steps to enroll itself.
46. Now, the question remains to be considered is whether since the
Bank was not a member of the Risk Fund Board and since late Premkumar
has not made any contribution for being enrolled as a member, can any
liability be fastened on the Bank.
47. It is true that the objective of the Risk Fund Scheme, 2008 is to
protect the interest of the family of loanees, that is to say, if during the
loan period the loanee dies, the Risk fund Board shall provide an amount
upto Rs.1 lakh, which is outstanding in the principal amount and its
interest will be given from the Fund. However, Clause (7) of the Scheme
makes it clear that the Risk Fund Board fund is constituted by
contribution of Rs.1 lakh by the Bank and the contribution made by the
loanee at the rate of 0.25% of the loan amount and upto a maximum of
Rs.250/-. Admittedly, after its enrollment as a member, the Bank has
made a contribution of Rs. 1 lakh towards Risk Fund only in November,
2009 and the said membership was accepted by the Risk Fund Board in
May, 2010 only.
48. As of now, it stands undisputed and clear from the evidence let
in before the Upa Lok Ayukta and the findings rendered in its orders that
contribution of Rs.250/- was not made by late Premkumar at the time of
availing of the loan. Therefore, totality of the facts and circumstances
would show that at the time of release of loan amount to late Premkumar,
Bank was not a member of the Risk Fund Board and late Premkumar has
not made the contribution of Rs.250/-, which form the fund of the Risk
Fund Board to avail the benefits of the scheme.
49. From the above, it could be deduced that the Risk fund Board
was not at all liable to pay the amount. However, the deliberations made
above would show that there was no willful negligence or laches on the
part of the responsible officer of the Bank, in order to enroll itself as a
member of the Risk Fund Board. If at all there was any laches to collect
Rs.250/- from the loanee, it was negligence on the part of the
Manager/Office of the Bank, who handled the loan transaction with late
Premkumar. It is also significant to note that without the bank being
allowed to be a member of the scheme by the board, the bank could not
have made its contribution to the scheme. Therefore since the bank was
not a member when late Premkumar availed the loan, it cannot be said
that there was any maladministration on the part of the bank to extend
the benefits of the scheme to the first respondent.
50. Considering the peculiar facts and circumstances, and the
materials on record, we are of the view that the liability of payment of the
amount under the Risk Fund Scheme could not have been attributed by
the Upa Lok Ayukta on the petitioner Bank. In that view of the matter, we
have no hesitation to hold that interference is required to Exhibit-P7
order of the Upa Lok Ayukta dated 05.11.2020 passed in Complaint
No.551/2013. Accordingly, we set aside the said order directing the
petitioner Bank to provide the benefit of the scheme to the 1 st
respondent/complainant, and consequently Exhibit P8 order in review.
In the circumstances, if the Bank had made any payment towards the loan
in question as per the directions of the Upa Lok Ayukta, liberty of the
Bank is left open to recover the same.
Writ petition will stand allowed to the above extent.
Sd/-
S. MANIKUMAR
CHIEF JUSTICE
Sd/-
SHAJI P.CHALY
JUDGE
krj
APPENDIX
PETITIONER'S EXHIBITS:-
P1 COPY OF THE COMPLAINT NO.551/2013 DATED 14.12.2012 FILED BEFORE
THE KERALA LOK AYUKTA, THIRUVANANTHAPURAM ALONG WITH TRUE
ENGLISH TRANSLATION OF THE MALAYALAM PORTION IN EXHIBIT P1.
P2 COPY OF THE WRITTEN STATEMENT DATED 18.2.2014 FILED BY THE
PETITIONER BANK IN COMPLAINT NO.551/2013 ALONG WITH TRUE ENGLISH
TRANSLATION OF THE MALAYALAM PORTION IN EXHIBIT P2.
P3 COPY OF THE RISK FUND SCHEME, 2008 ALONG WITH ITS TRUE ENGLISH
TRANSLATION.
P4 COPY OF THE ORDER DATED 26.03.2019 IN COMPLAINT NO.551/2013 PASSED
BY THE HON'BLE UPA LOK AYUKTA.
P5 COPY OF THE ACTION TAKEN REPORT SUBMITTED BY 2ND RESPONDENT
DATED 11.10.2019.
P6 COPY OF THE OBJECTION TO THE ACTION TAKEN REPORT DATED
19.07.2019.
P7 COPY OF ORDER DATED 05.11.2020 PASSED BY THE UPA LOK AYUKTA.
P8 COPY OF THE ORDER DATED 16.12.2020 IN R.P.NO.2/2020 IN COMPLAINT
NO.551/2013.
RESPONDENTS' EXHIBITS:-
R1(A):- COPY OF THE REJOINDER IN COMPLAINT NO.551/2013 DATED 9-1-2015
FILED BY THE RESPONDENT NO.1 BTO THE REPLY BY THE PETITIONER
BEFORE THE HPN'BLE LOK AYUKTA.
R1(B):- COPY OF THE WRITTEN STATEMENT IN COMPLAINT NO.551/2013 DATED
09-10-2013 FILED BY THE 4TH RESPONDENT BEFORE THE LOK AYUKTA.
R1(C):- COPY OF THE REPLY STATEMENT IN COMPLAINT NO.551/2013 DATED
18.02.2014 FILED BY THE 1ST RESPONDENT HEREIN BEFORE THE
HON'BLE LOK AYUKTA WITH ENGLISH TRANSLATION.
R1(D):- COPY OF REPLY STATEMENT IN COMPLAINT NO.551/2013 DATED 3-4-2014
FILED BY RESPONDENT NO.3 BEFORE THE HON'BLE LOK AYUKTA WITH
ENGLISH TRANSLATION.
R1(E):- COPY OF THE REJOINDER IN COMPLAINT NO.551/2013 FILED BY TYHE
COMPLAINANT TO THE REPLY STATEMENT OF THE RESPONDENT NOS.1,
3 AND 4 BEFORE THE LOK AYUKTA.
R1(F):- COPY OF THE DATE OF EVENTS AND FACTS OF THE CASE SUBMITTED
BEFORE THE LOK AYUKTA IN COMPLAINT NO.551/2013 ON 18.07.2017 AND
24.05.2018.
R1(G):- COPY OF I.A. NO.128/2020 IN COMPLAINT NO.551/2013 FILED BEFORE THE
HON'BLE LOK AYUKTA ANNEXING THE DECISION OF THE BOARD DATED
14-5-2019 WITH ENGLISH TRANSLATION.
R1(H):- COPY OF THE R.P. NO.2/2020 IN COMPLAINT NO.551/2013 FILED BY THE
PETITIONER BEFORE THE HON'BLE LOK AYUKTA DATED 14.12.2020.
R1(I):- COPY OF THE OBJECTIONS FILED BY THE 1ST
RESPONDENT/COMPLAINANT TO R.P. NO.2/2020 IN COMPLAINT
NO.551/2013 FILED BY THE PETITIONER BEFORE THE LOK AYUKTA DATED
14.12.2020.
R1(J):- COPY OF THE COUNTER AFFIDAVIT BY 2ND RESPONDENT IN COMPLAINT
NO.551/2013 ALONG WITH THE RECEIPTS OF CONTRIBUTIONS TO THE
RISK FUND SCHEME, 2008 FILED BY THE PETITIONER/RESPONDENT NO.2
BEFORE THE HON'BLE LOK AYUKTA WITH ENGLISH TRANSLATION.
R1(K):- COPY OF THIS COURT'S ORDER DATED 6-8-2021.
R1(L):- COPY OF THE HON'BLE SUPREME COURT'S ORDER DATED 15-10-2020.
R1(M):- COPY OF THE HON'BLE LOK AYUKTA'S ORDER DATED 28-10-2021.
R4(A):- COPY OFTHE APPLICATION SUBMITTED BY THE 1ST RESPONDENT DATED
20.04.2012 TO THE 4TH RESPONDENT.
R4(B):- COPY OF THE RECEIPT DATED 19.03.2021 ISSUED BY THE PETITIONER.
//TRUE COPY//
P.A. TO CJ
