Kerala High Court
K.S.Purushothaman vs State Of Kerala on 17 January, 2025
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 K.V. JAYAKUMAR
Friday, the 17th day of January 2025 / 27th pousha, 1946
WA NO. 2045 OF 2024
AGAINST JUDGMENT DATED 11/09/2024 IN WP(C) 27185/2022 OF THIS COURT
APPELLANT(S)/PETITIONERS IN WP(C)::
1. K.S.PURUSHOTHAMAN AGED 83 YEARS S/O. SANKARAN, VATTAPARAMBIL HOUSE,
MALAYALAPPUZHA, THAZHAM P.O., PATHANAMTHITTA-689 666, PIN - 689666
2. C.K. SUBHASHINI, AGED 76 YEARS W/O. K.S. PURUSHOTHAMAN,
VATTAPARAMBIL HOUSE, MALAYALAPPUZHA, THAZHAM P.O.,
PATHANAMTHITTA-689 666, PIN - 689666
BY ADVS M/S D.KISHORE (AMICUS CURIAE), MEERA GOPINATH, R.MURALEEKRISHNAN
(MALAKKARA)
RESPONDENT(S)/RESPONDENTS IN WP(C)::
1. STATE OF KERALA REPRESENTED BY ITS SECRETARY, DEPARTMENT OF
COOPERATION, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM-695 001, PIN
- 695001
2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, JAWAHAR SAHAKARANA BHAVAN,
KOCHAR ROAD, DPI JUNCTION, VAZHUTHACADU, THIRUVANANTHAPURAM-695 014,
PIN - 695014
3. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF
THE JOINT REGISTRAR, MINI CIVIL STATION, PATHANAMTHITTA-689 533, PIN
- 689533
4. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES. MINI CIVIL
STATION, KONNI, PATHANAMTHITTA-689 691, PIN - 689691
5. THE MYLAPRA SERVICE CO-OPERATIVE BANK LTD NO. 639, REPRESENTED BY
ITS SECRETARY, MYLAPRA TOWN P.O., PATHANAMTHITTA-689 678, PIN -
689678
6. THE SECRETARY, MYLAPRA SERVICE CO-OPERATIVE BANK LTD NO. 639,
MYLAPRA TOWN P.O., PATHANAMTHITTA-689 678, PIN - 689678
7. THE BRANCH MANAGER, MYLAPRA SERVICE CO-OPERATIVE BANK LTD NO. 639,
MANNARAKULANJI BRANCH, MANNARAKULANJI, PATHANAMTHITTA-689 678, PIN -
689678
8. ADDL R8: DEPUTY DIRECTOR, DIRECTORATE OF ENFORCEMENT, KOCHI IS SUO
MOTU IMPLEADED AS ADDL R8 AS PER ORDER DATED 15/01/2025 IN WA
2045/2024
BY ADV VIPIN DAS, SPECIAL GOVERNMENT PLEADER FOR R1 TO R4
SRI BIMAL K NATH FOR R5
SRI JAISHANGAR V NAIR FOR ADDL R8
This writ appeal again coming on for orders along with
connected cases on 17/01/2025 ,upon perusing the appeal memorandum, and
this court's order dated 15/01/2025,the court on the same day passed the
following:
WA.2045/2024 & con. cases
1
AMIT RAWAL & K.V JAYAKUMAR, JJ
--------------------------
W.A. Nos. 2045, 2028, 2070, 1845 & 1861 of 2024
-------------------------
Dated this the 17th day of January, 2025
ORDER
AMIT RAWAL, J.
1. Mr. T. P. Pradeep, learned Counsel appearing on behalf of
the 6th respondent, Secretary-in-Charge of Kumplampoika Service
Co-operative Bank Ltd., Pathanamthitta district, filed an affidavit
pursuant to the order of this Court dated 15.01.2025. It is stated that
one Praveen Prabhakaran, the Manager-in-Charge of the branch
during the year 2018, had misappropriated an amount of Rs.4.33
Crore and on realizing this, the depositors had withdrawn an amount
of Rs.14 Crores from the bank. A FIR bearing No.455/2018 had
already been registered in Malayalappuzha Police Station against the
above said Praveen Prabhakaran for commission of the offences
WA.2045/2024 & con. cases
punishable under Sections 406, 409, 420, 465, 468 and 471 of IPC,
much less, surcharge proceedings under Section 68(1) of the Co-
operative Societies Act have also been initiated against three(3)
former employees and eleven(11) former Managing Committee
members and it has been found that a sum of Rs.9,65,06,958/-
including the element of interest, is the loss sustained by the Bank.
The details/breakup of the liabilities against the former Managing
Committee members and employees have been enumerated in
paragraph No. 3 of the Affidavit.
2. It has been also stated that about 547 loans were
disbursed from the Bank for an outstanding amount with interest of
Rs.33,94,79,074/- and now an amount of Rs. 31,01,92,216/- is
defaulted from the loanees. The Bank has filed 280 arbitration cases
against the defaulters for recovery of an amount of Rs 21,84,49,913/-
and obtained 259 Awards for an amount of Rs.20,08,13,891/- and 232
execution proceedings are pending for realization of an amount of
Rs.19,04,68,239/-. A Special Sale Officer, as per the Order of this
WA.2045/2024 & con. cases
Court in W.P.(C) No. 22064 of 2021, was appointed for the recovery
and an amount of Rs.2,38,40,531/- has been disbursed to 61 writ
petitioners as 40% of their deposited amount and a balance amount
of Rs.3,00,53,670/- is due to them. There are about 703 fixed
deposits with the bank amounting to Rs.9,91,71,798/-, due to the
deposit holders. An amount of Rs. 3,50,67,956/- is due to the savings
bank account holders also. Only 61 deposit holders had approached
this Court and till now, an amount of Rs. 89,58,996/- has been realized
by the Bank. An amount of Rs.2,62,037/- was incurred for conducting
the elections of the Managing Committee held on 31.12.2021. The
appellant has already been disbursed Rs.8,00,000/- (Rupees Eight
Lakhs only) and now, out of Rs.20,42,859/-, an amount of
Rs.12,42.859/- is due to the appellant.
W.A. Nos. 2045 & 2028 of 2024
3. In these writ appeals filed on behalf of the depositors, Mr.
Bimal K. Nath, learned counsel appearing on behalf of 5th respondent,
WA.2045/2024 & con. cases
Mylapra Service Co-operative Bank Ltd., Pathanamthitta district, has
filed an affidavit pursuant to the aforesaid order of this court dated
15.01.2025. The contents of the affidavit are not only alarming but,
startling to notice that the financial status of the Society is at peril. It
is stated that the Audit certificate of the society has shown a loss of
Rs.36,72,03,760.80/- and the loan outstanding amount is
Rs.72,43,85,797.25/-. As per the contents of paragraph No. 16 of the
affidavit, the Society is in a serious financial crisis as the total
overdue amount is about Rs.31.32 Crores. It was a leading Society
but now, is on the verge of collapse due to various reasons including
the mismanagement and irregularities committed by the erstwhile
Managing Committee and former Secretary. Crime Case Nos.
0827/2023 and 553/2024 have been registered by the Pathanamthitta
Police against the erstwhile Managing Committee members and
Former Secretary and the matter is pending before the Crime Branch
(Economics Offence Wing), Pathanamthitta. The properties of the
former President and his family members have been attached by the
WA.2045/2024 & con. cases
3rd respondent, Joint Registrar of Co-operative Societies,
Pathanamthitta vide order dated 04.05.2024 and 07.05.2024
respectively.
4. Mr.D.Kishore, learned counsel representing the fixed
depositors, has not only rendered assistance with regard to the
grievance of the depositors but, in general, pointed out that even
the Revival Scheme and the Minimum Guarantee Scheme are
defective. In this regard, our attention had been brought to Section
12(3) of the Revival Scheme incorporated as per the provisions of
Section 57E of the Kerala Co-operative Societies Act, 1969 whereby,
either the Administrator or the existing members of the Managing
Committee or the President have also been a part of the Monitoring
Level Committee. In other words, there is no guarantee, even the
newly elected Managing Committee may or may not indulge in this
misappropriation and the element of ruling out of biasness has not
been taken care of.
5. We have been also confronted with similar other claims
WA.2045/2024 & con. cases
made by the fixed depositors. Learned Single Bench, vide common
Order, had disposed of numerous writ petitions by issuing the
following directions;
11. These writ petitions are accordingly disposed of with the
following directions:-
(i) The Co-operative Societies/Banks in these writ petitions are
directed to prepare a project document for revival under the
Kerala Co-operative Revival Fund Scheme, 2024 and submit the
same to the State High Level Committee through the Registrar
with a recommendation from the District Level Monitoring
Committee. The Co-operative Societies/Banks shall submit such
Scheme within a period of six weeks from today.
(ii) The Scheme along with the recommendation of the District
Level Monitoring Committee should be forwarded to the State
High Level Committee through the Registrar within a further
period of four weeks. The State High Level Committee shall
scrutinise and process the Applications and make necessary
recommendation for sanctioning of the amount in specified
conditions.
(iii) The Societies/Banks are further directed to make a
proposal/Scheme for availing funds under the Kerala Co-
operative Deposit Guarantee Scheme, 2018 in accordance with
the provisions of the revised Regulations / Scheme under G.O.(P)
No.175/2024/Co-Op dated 03.09.2024. Such proposal shall be
made within a period of six weeks.
(iv) In the meanwhile, the Societies / Banks / Administrators /
Administrative Committees will be at liberty to recover the
amounts otherwise due to the Banks through the ordinary means
under the Kerala Cooperative Societies Act, 1969 and the
Societies will be at liberty to repay the Fixed Deposits / Savings
Bank Deposits to the petitioners as per the priorities followed by
the Societies.
WA.2045/2024 & con. cases
It has been pointed out that these directions would not serve the
purpose at the best, under both the Schemes, the Minimum
Guarantee or Revival Scheme, the amounts due to the depositor is in
lakhs and will be compensated only Rs.2 lakhs each and it would not
serve the purpose.
6. All the Societies have various assets and it is high time
that the Government should come up with concrete process for
liquidating the Societies for the reason that the role of the Centre
has already been done away vide the Judgment of the Gujrat High
Court and the control and management of the Society as per the VIIth
Schedule, is the domain of the State. It is further pointed out that,
since this Court has already attached the assets of the Society, they
can be sold off and the dues of depositors including the employees,
not more than 15 in every Society, can be taken care of, by giving
them lump sum under the guise of VRS.
7. Mr.Jai Shankar, the learned Counsel for the Enforcement
Department, who has been requested to appear in pursuance of the
WA.2045/2024 & con. cases
Order, informed that there are more than 20 Societies who are
already facing the proceedings under the Prevention of Money
Laundering Act, 2002 and various orders under the provisions of the
Act and few of the matters, in this court, are pending for
consideration of bail. But the fact remains that there is a completely
different procedure for attachment and disposal of the property,
which can take place only when the trial is completed.
W.A. Nos. 1845 and 1861 of 2024
8. In these matters an affidavit has been filed by the
Collector, Kollam as directed by this Court vide Order dated
04.12.2024 pointing out that there have been a case where instead
of availing the remedy under Section 69 of the Kerala Revenue
Recovery Act, 1968 for obtaining the Arbitration Award by the
depositors for realizing their dues, had approached the Ombudsman
established and constituted under the Kerala Co-operative Societies
Act, 1969 and as per the amendment in Section 76 of the Co-operative
Societies Act, an order of the Ombudsman is equivalent to a decree
WA.2045/2024 & con. cases
and the power to execute is with the Collector concerned under the
Kerala Revenue Recovery Act, 1968. However, as per the contents of
paragraph No. 6 of the Affidavit, the requisition from the concerned
Requisition Authority i.e. the Joint Registrar in Form 24 under
Section 69(2) of the Kerala Revenue Recovery Act, 1968 is still
awaited.
9. An affidavit by the Superintendent of Police, Vigilance &
Anti-Corruption Bureau, Southern Range, Thiruvananthapuram has
also been filed as directed by this Court vide Order dated 04.12.2024
stating that the Investigating Officer has filed the report before the
Court of Enquiry Commissioner and Special Judge (Vigilance),
Thiruvananthapuram for adding more accused in the array of accused
in VC No. 3 of 2021 and the investigation in the case is progressing
and about 218 witnesses were examined as on today and 1650
documents have been seized including the suspected loan
documents related to 187 loan recipients, out of which 1412
documents related to 128 forged loans, 30 undisputed loans and 19
doubtful loans. Specimen signatures of 128 individuals including 4
WA.2045/2024 & con. cases
accused have been collected along with admitted signatures of 114
persons from various documents. As per the investigation, it is borne
out that by sanctioning 187 loans, an amount of Rs.15,26,82,428/- has
been branded under suspicious circumstances; Rs.9,98,189/- had
been not even remitted to the loan accounts concerned; fixed
deposit of 4 account holders amounting to Rs.3,00,000/- has not
been properly accounted; concession on interest with respect to one
time settlement was granted illegally against 70 loan accounts
without the knowledge and consent of the actual loanees resulting
in a loss of Rs.37,11,786/-; an amount of Rs.2,17,74,061/- has been
disbursed as loan to 14 ineligible 'A' Class members, creating
mortgage loans totaling to Rs.3,13,42,994/- was illegally sanctioned
against the properties owned by the relatives of the accused at a
higher market rate than the prevailing rate; Rs.42,50,000/- was
granted as loans to 9 members of the Society without obtaining any
securities incurring a loss of Rs. 72,17,990/-; 10 numbers of loans are
yet to be identified and questioned. The ledgers, minutes of books,
WA.2045/2024 & con. cases
deposit account ledgers, cash books are yet to be collected. There is
an undertaking that the remaining investigation shall be
meticulously conducted.
10. Similar affidavit of the Secretary of the Edamulackal
Service Co-operative Bank Ltd. has been filed stating that out of 70
ARC cases, 18 cases have already been adjudicated by the Arbitrator
and there are 52 cases still pending for consideration of the Assistant
Registrar, Co-operative Societies, Punalur. The amount involved in
the 52 arbitration cases is Rs. 6,74,04,978/- and the amount involved
in those 62 execution petitions is Rs. 2,29,19,254/-. The details of the
case file list and the Arbitration Award have also been annexed.
11. Affidavit of the Joint Secretary to Government, Department
of Co-operation has been filed and it has been stated that the
Edamulackal Service Co-operative Society, for availing the financial
assistance, has not filed any application for taking the benefit of Co-
operative Revival Fund Scheme, though the application was
submitted by the Society before the Office of the Assistant Registrar
WA.2045/2024 & con. cases
(General) only on 10.12.2024 and had been returned due to certain
defects. It has been resubmitted on 09.01.2025 and the same has
been forwarded to the Joint Registrar, Kollam on 10.01.2025.
Similarly, 18 applications of various Societies have also been received
in the Office of the Registrar of the Co-operative Societies for
availing the financial assistance from the Co-operative Revival Fund
Scheme. But only seven applications have been submitted by the
recommendation of the District Level Committee. The remaining
eleven applications have been returned to the concerned Officer for
submitting before the District Level Committee and scrutiny of the
seven applications are in progress.
12. Looking into the dire states of the Societies and the
conduct of the former and the present Managing Committee and on
cumulative perusal of the contents of the Affidavits, we are of the
view that it is a fit case where the Court should bring succor and
needs the proper and transparent assistance. Accordingly, we
appoint Mr. D. Kishore who is present in the Court as an Amicus
WA.2045/2024 & con. cases
Curiae in all these matters and any other future matters which are of
similar nature which would come before us against the Order of the
Single Bench, as, numerous other writ petitions along with the writ
petitions out of which the present writ appeals have been filed, have
been disposed off. He has pointed out to us, the provisions of
Section 71 of the Co-operative Societies Act, which empowers the
Registrar to take action for winding up in case of financial condition
of the Society.
13. He pointed out that while looking at the affidavits of the
Society, all the aforementioned Societies would not be able to fall
within the parameters and the guidelines of the already promulgated
scheme as well as the Minimum Guarantee Scheme and Revival
Scheme. There is no likelihood that the pending execution
proceedings and the pending arbitration cases would culminate so
soon rather are going at a very slow pace and there is no likelihood
of coming to a logical conclusion and this mundane is likely to continue
for infinite period, in case the order under challenge is permitted to
WA.2045/2024 & con. cases
be kept in force. Accordingly, we, for the time being, stay the order
of the learned Single Bench.
14. Since we have already passed the attachment orders of the
properties of all the Societies and it is borne out from the affidavit of
the Joint Registrar that 18 more Societies have also filed an
application for revival scheme, we call upon on Mr. Vipin Das, Special
Government Pleader to give the details of those Societies and also
with the particulars of the outstanding amounts to be recovered
from the debtors and as well as the amount due to the depositors.
Let this affidavit be filed within a period of one week. It will also
apprise stage of execution and non grant of permission to the
collector in proceeding with pending execution petitions. It is made
clear that, in case if the affidavit does not satisfy the conscience of
this Court viz-a-vis the grievance of the depositors, this Court may be
constrained to take suo motu action of appointment of a provisional
liquidator with the assistance of the Amicus Curiae and other lawyers
representing the parties.
WA.2045/2024 & con. cases
15. We also direct the Special Secretary to monitor the
proceedings pending before the various authorities for execution
and arbitration awards and issue directions to the competent
authorities to fast-track the said proceedings and also give a
reasoning as to why the concurrent authority as per the affidavit of
the Collector is not sending the requisition as prescribed under
Section 24 of the Section 69(2) of the Kerala Revenue Recovery Act,
1968.
16. Mr.Jai Shankar is also directed to assist this Court by filing
an affidavit with regard to the pending cases before the Enforcement
Directorate. The Affidavit shall also indicate the details of the
Societies which are running under huge loss.
Post this matter for further consideration on 30.01.2025.
Sd/-
AMIT RAWAL, JUDGE
Sd/-
K.V JAYAKUMAR, JUDGE
Svn
17-01-2025 /True Copy/ Assistant Registrar
