Kerala High Court
G.Francis vs Arayoor Service Co-Operative Bank Ltd on 27 May, 2024
Author: Amit Rawal
Bench: Amit Rawal
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE AMIT RAWAL
&
THE HONOURABLE MR. JUSTICE EASWARAN S.
Monday, the 27th day of May 2024 / 6th Jyaishta, 1946
WA NO. 226 OF 2024
AGAINST JUDGMENT DATED 16/01/2024 IN WP(C) 30401/2022 OF THIS COURT
APPELLANT(S)/PETITIONER:
G.FRANCIS AGED 63 YEARS F.M.NIVAS, EANTHIKALA, ARAYOOR.P.O,
AMARAVILA(VIA), NEYYATTINKARA, THIRUVANANTHAPURAM., PIN - 695122
BY ADVS.M/S.SWATHI KUMAR B.S., ANITHA RAVINDRAN & HARISANKAR N UNNI
RESPONDENT(S)/RESPONDENTS:
1. ARAYOOR SERVICE CO-OPERATIVE BANK LTD ARAYOOR.P.O, AMARAVILA,
THIRUVANANTHAPURAM-695122, REPRESENTED BY ITS SECRETARY., PIN -
695122
2. THE PART-TIME ADMINISTRATOR, ARAYOOR SERVICE CO-OPERATIVE BANK
LTD.NO.692, ARAYOOR.P.O, AMARAVILA, THIRUVANANTHAPURAM-695122., PIN
- 695122
3. THE SECRETARY, ARAYOOR SERVICE CO-OPERATIVE BANK LTD.NO.692,
ARAYOOR.P.O, AMARAVILA, THIRUVANANTHAPURAM-695122., PIN - 695122
4. THE BRANCH MANAGER, PLAMOOTTUKADA BRANCH, ARAYOOR SERVICE CO-
OPERATIVE BANK LTD.NO.692, PLAMOOTTUKADA,
THIRUVANANTHAPURAM-695122., PIN - 695122
5. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL),
NEYYATTINKARA, THIRUVANANTHAPURAM-695121., PIN - 695121
6. ADDL.R6. KERALA BANK (ERSTWHILE AS THIRUVANANTHAPURAM DISTRICT CO-
OPERATIVE BANK) UDAYANKULANKARA BRANCH, S.L.TOWERS, UDAYANKULANGARA,
THIRUVANANTHAPURAM 695 122 REPRESENTED BY ITS BRANCH MANAGER. ADDL
R6 IMPLEADED AS PER ORDER DATED 29-11-2022 IN IA 1/2022 IN
WP(C)30401/2022., PIN - 695122
7. ADDL.R7.STATE OF KERALA, REPRESENTED BY THE SECRETARY TO THE
GOVERNMENT, DEPARTMENT OF CO-OPERATION, SECRETARIAT,
THIRUVANANTHAPURAM. ADDL R7 IS SUO MOTO IMPLEADED AS ADDITIONAL
SEVENTH RESPONDENT AS PER ORDER DATED27/05/2024 IN W.A. 226/2024.
BY ADV.SRI.M.SASINDRAN FOR R1 AND R3
GOVERNMENT PLEADER FOR R5 & ADDL.R7.
SRI.THOMAS ABRAHAM, STANDING COUNSEL FOR ADDL.R6
Prayer for interim relief in the Writ Appeal stating that in the
circumstances stated in the appeal memorandum, the High Court be pleased
to stay the operation and implementation of the judgment in W.P.(c)No.
30401/2022 dated 16-1-2024 pending disposal of the Writ Appeal.
This Writ Appeal again coming on for orders on 27.05.2024 upon
perusing the appeal memorandum and this court s order dated 22/05/2024,
the court on the same day passed the following:
AMIT RAWAL & EASWARAN S., JJ.
==============================
W.A. No. 226 of 2024
==============================
DATED THIS THE 27TH DAY OF MAY, 2024.
ORDER
AMIT RAWAL, J.
This is a classic case of bungling at the hands
of the respondent Co-operative Society, which had the
audacity of challenging the relief sought for by the
petitioner, who is none else but a simplicitor
depositor, who deposited an amount of
Rs.1,55,05,836/- (Rupees one crore fifty five lakhs
five thousand eight hundred and thirty six only) as
fixed deposit and on maturity, was expecting the
release of the amount with interest to enjoy the
fruits of his hardwork and labour. But that did not
fructify in as much as that on request, the co-
operative society flatly refused.
2. Faced with the situation, petitioner
approached this Court and objection was taken on
behalf of the respondents qua maintainability of the
writ petition in view of the provisions of Section 69
of the Kerala CO-operative Societies Act, 1969 (for
short, the 'KCS Act). The learned Single Judge
accepted the objection and dismissed the writ
petition. It is in that background, this Writ Appeal
has been filed.
3. At the time of the preliminary/admission
hearing of the writ appeal, similar objection was
taken on behalf of the learned counsel representing
the Co-operative Bank and this Court vide detailed
order rejected the aforementioned objection. The
order reads as under:-
"1. Appellant-petitioner had preferred the writ
petition against the Co-operative Bank by claiming
following reliefs:
"i) to declare that the respondents 1 to 4 are
legally and statutorily bound to repay the
fixed deposit with applicable interest of the
petitioner to him forthwith and that the
petitioner is legally entitled to receive the
fixed deposit back on demand with interest;
ii) issue a writ of mandamus or any other
appropriate writ, order or direction
commanding and compelling the respondents 1 to
4 to repay the fixed deposit made by the
petitioner as per Exts P2 and P3 with applicable
interest;
iii) issue such other appropriate writ order or
direction as this Honourable Court may deem
fit and proper to meet the ends of justice."
2. The aforementioned relief was based upon the
averments that the appellant is an 'A' Class Government
Contractor doing the work of Public Work Department
(PWD) for last many years. Fixed deposit of various
amounts with the respondent-Co-operative Society of
Rs.1,55,05,836/-(Rupees one crore fifty five lakhs five
thousand eight hundred thirty six only) was made. The
appellant-petitioner has approached the Bank for release
of fixed deposit for the purpose of conducting the
marriage of his daughter. But the bank has not paid the
amount and accordingly the wedding was postponed. A
legal notice was sent and out of the total principal
amount of fixed deposit, the bank repaid only an amount
of Rs.6,73,454/- (Rupees six lakhs seventy three
thousand four hundred fifty four only) and an amount of
Rs.1,48,32,367/- (Rupees one crore forty eight lakhs
thirty two thousand three hundred sixty seven only) is
due. Respondent-Bank resisted the aforementioned writ
petition on the ground that the financial position of
the Bank is not sound, therefore, is not in a position
to return the entire amount of deposit to all the
depositors. Approximately Rs.60 crores had been returned
to all the depositors but in view of the weak financial
position, applications for return of fixed deposits are
considered according to the payments received from the
other sources. The writ petition would not lie for
issuance of direction to the Society to repay the amount
covered by the fixed deposit with future interest. The
writ petition was dismissed being not maintainable and
present appeal has been filed.
3. Learned counsel appearing on behalf of the
appellant submitted that in all the judgments cited in
the judgment in the writ petition, there was a dispute
whereas in the instant case, the bank in the reply did
not deny the liability and came out with a plea of
financial constraints and therefore should not have been
relegated to avail the remedy under Section 69 of the
Co-operative Societies Act. In Meenachil Rubber
Marketing and Processing Co-operative Society Limited
No.K118 and another v. Choondachery Service Co-operative
Bank Limited No.167 and another [2018 (2) KHC 180] the
Division Bench held that writ petition is maintainable
against the co-operative societies when there is breach
of any public duty or violation of any statutory
provisions by the society. In the present case there is
a breach of statutory provision to repay the amount. In
Gandhigram Agro Based Industrial Co-operative Society
Limited v. Marangattupilly Service Co-operative Bank
Limited and Others [2019 (3) KHC 60] it has been held
that the writ petition is maintainable when the bank
refused to repay the amount. But the Supreme Court in
Pandurang Ganpati Chaugule v. Vishwasrao Patil Murgud
Sahakari Bank Ltd [2020 (2) KHC 664], held that the co-
operative bank both at State level and multi-state level
would be considered as bank for the applicability of
SARFAESI Act.
4. In support of the contention, also relied upon
the judgment of Supreme Court in Food Corporation of
India and Others v. SEIL Ltd., and Others [2008 (3) SCC
440] to contend that contractual disputes involving
public law element are amenable to writ jurisdiction. It
was a case where sugar was supplied to the department in
view of the statutory order and the bills submitted by
the contractor was processed but payment was not made by
raising flimsy excuses. By noticing all contentions and
the fact that Article 14 of the Constitution of India
has received liberal interpretation over the years and
its scope has also been expanded by creative
interpretation of the Court, it has been held that when
there is no disputed question of fact involved, High
Court in appropriate cases can grant relief which the
writ petitioner would be entitled to in law as well as
in equity without availing the alternative remedy. Has
relied upon the judgment on similar lines.
4. On the other hand, learned counsel appearing
on behalf of the respondent said that the writ appeal is
liable to be dismissed in view of the non
maintainability, relying upon the case laws referred to
in the impugned judgment.
5. We have heard the learned counsel for the
parties and of the view that this is a fit case where
notice before admission is liable to be issued as the
bank had admitted the liability and there is no question
of relegating the parties to the alternative remedy. As
an interim measure, for a period of one week order to
attach the account of the society with a direction to
them to file affidavit by giving a time line for
honouring the liability of the appellant and other
depositors in a phased manner.
Post this matter for further consideration on 28.02.2024."
4. During the course of hearing, it was
pointed out by the learned counsel representing the
petitioner that petitioner's daughter's marriage was
on the anvil and needed certain amount of money.
This Court by interim order ordered for release of
Rs.30,00,000/- (Rupees thirty Lakhs only). However,
the said order was also not complied with. The Co-
operative Bank indulged into forum shopping during
the currency of summer vacations, moved an
application I.A. No.1/2024 with the following
prayer:-
"For the reasons stated in the accompanying
affidavit it is humbly prayed that this Hon'ble
Court may be pleased to modify the order dated
09.04.2024, in so far as it directs to pay Rs.30
lakhs to the appellant and reducing the amount to
Rs. 7 lakhs."
5. We confronted the learned counsel for the
Co-operative Bank, why such an application was
filed. Answer was that the time granted in the order
for release of Rs.30,00,000/- (Rupees thirty Lakhs
only) was expiring. However, the payer as extracted
above would not reflect such request, but to reduce
the amount.
6. A faint attempt was made to overcome such
hurdle by submitting that it was an attempt to
protect the co-operative society from contempt
proceedings. We are conscious of this fact, the
contempt proceedings could not have been initiated
in Court during summer vacation but only on the
opening. If the time granted in the order had
expired there was no bar for the society to move an
application for extension to avoid the wrath of the
contempt.
7. The society has come out with an excuse
that they have to recover crores of Rupees from the
defaulters who had taken loans, but have not repaid
the amounts. Kerala Co-operative Bank has also
filed an affidavit giving the trace that they had
extended the loan facility of Rs.9,40,00,000/-
(Rupees Nine crores forty lakhs only). But the
society had been in default in not paying the
amount.
8. We have come across many cases where the
State Co-operative Department had been very vigilant
in initiating the action of surcharge as provided
under Sections 65 and 68 of the KCS Act. Day in and
day out there has been spate of litigations. But in
this case, we have found the following misgivings:-
i) The Kerala Bank has not taken any steps for
recovery of the amount of Rs.9,40,00,000/-
(Rupees Nine crores forty lakhs only) from
the respondent Co-operative Bank.
ii) The State or its instrumentality has also
not taken any steps for recovery of the
amount.
iii) The respondent co-operative society has
been remiss in not informing the Court as
to why proceedings under the SARFAESI Act,
which are now permissible for a Co-
operative Bank to take steps for recovery
against the defaulter, had not been taken.
9. It is a sheer case of mishandling and
mismanagement and calls for liquidation of the Co-
operative Bank under Section 72 of the KCS Act.
Before that the Court is required to take steps for
winding up of the Co-operative Society.
10. We thus issue a show cause notice to the
Society why the winding up proceedings for
mismanagement may not be initiated and direct the
society to file short reply to the observations
recorded above. However, as an interim measure, we
appoint Sri.K.Sathyan, 22/37, Saranga Republic Road,
Near Samooham High School, North Parur, Ernakulam
PIN 683 513 (Mob.94474 17071); former District Judge
as an interim Administrator. We restrain the
Managing Committee of the Co-operative Society from
taking any decision to run the co-operative society
at this stage and in lieu thereof, the interim
Administrator, Sri.K.Sathyan is ordered to take over
the control and management of the society till the
final proceedings for winding up are not fructified.
11. On request, the State of Kerala,
represented by the Secretary to the Government,
Department Of Co-Operation, Secretariat,
Thiruvananthapuram is suo motu impleaded as an
additional respondent in the Writ Appeal and is also
directed to file affidavit with regard to the
observations recorded above. Mr.SwathiKumar B.S.,
the learned counsel for the petitioner is directed
to give a copy of the writ appeal to Sri.Vipin Das,
the learned Government Pleader.
12. Let this order be given under hand by the
counsel representing the respective parties. Post
this matter on 19.06.2024 for filing of the
affidavit. The interim order dated 19.02.2024 will
continue to be in force till 19.06.2024.
Registry to communicate the order to the
interim Administrator for compliance.
Sd/-
AMIT RAWAL
JUDGE
sd/-
EASWARAN S.
JUDGE
DCS/27.05.2024
27-05-2024 /True Copy/ Assistant Registrar
