Kerala High Court
Mariyakutty vs State Of Kerala on 6 March, 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
Thursday, the 6th day of March 2025 / 15th Phalguna, 1946
WA NO. 1845 OF 2024
AGAINST JUDGMENT DATED 09/10/2024 IN WP(C) 24545/2023 OF THIS COURT
APPELLANT(S)/PETITIONERS:::
1. MARIYAKUTTY AGED 73 YEARS W/O GEROGE.O, MOOLAVATTATHUVEEDU,
PERINGALLOORE, OZHUKUPARAKKAL PO, AYOOR,KOLLAM, PIN - 691533
2. K VIJAYAMMA AGED 65 YEARS W/O . JOHN K.I, MOOLAVATTOM,
PERINGALLOORE, OZHUKUPARAKKAL PO, AYOOR, KOLLAM, PIN - 691533
3. JOHN KI AGED 65 YEARS S/O. KORATH IDICHERIYA MOOLAVATTOM,
PERINGALLOORE, OZHUKUPARAKKAL PO, AYOOR,KOLLAM, PIN - 691533
4. MINI ABRAHAM AGED 50 YEARS W/O. BAIJU GEORGE, MOOLAVATTATHUVEEDU,
PERINGALLOORE, OZHUKUPARAKKAL PO, AYOOR,KOLLAM, PIN - 691533
5. BAIJU GEORGE AGED 55 YEARS S/O. GEORGE.O, MOOLAVATTATHUVEEDU,
PERINGALLOORE, OZHUKUPARAKKAL PO, AYOOR,KOLLAM, PIN - 691533
BY.ADV.LIJU. M.P
AMICUS CURIAE ADV D KISHORE
RESPONDENT(S)/RESPONDENTS:
1. STATE OF KERALA REP. BY CHIEF SECRETARY, GOVERNMENT SECRETARIATE,
THIRUVANANTHAPURAM, PIN - 695001
2. THE DISTRICT COLLECTOR, CIVIL STATION, KOLLAM, PIN - 691013
3. THE REGISTRAR, OFFICE OF REGISTRAR OF CO-OPERATIVE SOCIETIES,
JAWAHAR SAHAKARANA BHAVAN, THYCADU, THIRUVANANTHAPURAM, PIN - 695014
4. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES(GENERAL), CIVIL
STATION KOLLAM, PIN - 691013
5. 5. THE EDAMULAKKAL SERVICE CO-OPERATIVE BANK LTD NO.2047, AYOOR
BRACH, AYOOR PO, KOLLAM REP. BY ITS SECRETARY., PIN - 691533
6. THE SECRETARY THE EDAMULAKKAL SERVICE CO-OPERATIVE BANK LTD NO.2047,
EDAMULAKKAL, AYOOR PO, KOLLAM, PIN - 691533
BY SENIOR GOVERNMENT PLEADER SRI. T.K VIPINDAS FOR R1 TO R4
ADVS BIMAL K NATH,.SANTHOSH KUMAR FOR R5
Prayer for interim relief in the Writ Appeal stating that in the
circumstances stated in the appeal memorandum, the High Court be pleased
to direct the respondent No.5 and 6 to disburse the 1st instalment of due
amounts as mentioned in Ext.P1 to P6 orders in the Writ petition to
respective appellants, pending disposal of this Writ appeal.
This Writ appeal again coming on for orders along with connected
cases on 06/03/2025 upon perusing the appeal memorandum and this court's
order dated 30/01/2025, the court on the same day passed the following:
AMIT RAWAL & K.V.JAYAKUMAR, JJ.
---------------------------------------------
W.A.Nos. 185 and 141 of 2025
and
W.A.Nos. 1845, 1861, 2028, 2045, 2070 of 2024
-----------------------------------------------
Dated this the 06th day of March, 2025
ORDER
AMIT RAWAL, J.
1. Mr.D.Kishore, Amicus Curiae has filed his
report dated 27.02.2025 by giving chapter-wise details of
the provisions of various Acts like Kerala Co-operative
Societies Act and Rules, Central Chit Funds Act and
Kerala hit Fund Rules, Promulgation of Co-operation of
the Kerala Co-operative Deposit Guarantee Scheme,
2018 and Minimum Guarantee Scheme as well as the
fact that there have been tax evasion by the Co-operative
Societies under the guise of the monthly deposit scheme.
Before he could read out the contents of the report, he
fairly conceded that at the earlier point of time he
represented few of the petitioners but realising that this
Court has appointed him as an Amicus Curiae, has
withdrawn his vakkalath, therefore, as of now, is not
W.A. Nos.185 of 2025 and con.cases
representing any of the petitioners. We were also
brought to the notice that the factum of an order when
an aggrieved party had challenged this aspect before the
Honourable Supreme Court whereby the liberty has been
granted to raise the issue and since the Amicus Curiae
has already withdrawn his vakkalath nama, the issue no
longer survives.
2. As per the contents of the report, it is
discerned that various Co-operative Societies in the state
are indulging into various types of activities and major
activities are accepting the deposits i.e., multi- deposits
scheme and as well as giving away the loans to the
desired members, at a higher rate as compared to the
nationalized banks. Besides the aforementioned activity
it is also running chitty business which is recognized
under the Chit Funds Act, 1982.
3. All the Societies while carrying on the
aforementioned activities are drawing the power by
W.A. Nos.185 of 2025 and con.cases
virtue of the provisions of Section 66A of the Kerala Co-
operative Societies Act, whereby Registrar has granted
the permission to do the business, but pointed out that
Section 2(b) of the 1982 Act defines the 'Chit' and
Section 4 under Chapter 2 of the Act provides
registration of the Chits and commencement and conduct
of the Chit business. Section 4 envisages that no Chit
shall be commenced or conducted without obtaining the
previous sanction of the State Government within whose
jurisdiction the Chit is to be commenced or conducted.
The sanction can be obtained under the Sub-section if
the chit is not registered within twelve(12) months from
the date of such sanction or with further period or
exceeding not six months in aggregate. We were also
taken to the provisions of Rule 4 of the Kerala Chit Fund
Rules, 2012, akin to the provisions of Section 4 of the
Act, whereby every application for obtaining the previous
sanction for commencement or conduct of the chit under
Section 4 of the Act has to be in Form 1 and addressed to
W.A. Nos.185 of 2025 and con.cases
the Deputy Registrar, Chits of District concerned. In
other words, procedure has been prescribed for the
purpose of commencement of such proceedings. As per
Section 2(84) of the Central Government Sales Tax Act,
2017 a person besides various other defined under the
Act would also include a Co-operative Society registered
under law relating to the Co-operative Society i.e.,
Section 2(84)(i). It is submitted that all these registered
co-operative societies while conducting the chitty
business are evading the payment of not only the GST
but as well as Registration charges and Stamp Duty.
Thus, a very serious loss has been caused both to the
Central and State Governments.
4. We would not be further commenting upon the
report as it would be subject to the reply of the State and
the counsel representing the Societies. In this view of
the matter, we adjourn the matter by giving chance to
reply and also direct the State Counsel while replying to
W.A. Nos.185 of 2025 and con.cases
the aforementioned report, give the details of each and
every Society with regard to this registration under the
Chit Fund Act as to whether they are exigible under the
GST Act and have been paying the stamp duties as well
as the registration charges.
5. In order to ascertain the truth, we also deem it
appropriate to suo motu implead the following additional
respondents in W.A.185 of 2025 as it has been taken as
the lead case:
Addl. R7: Registrar of Chits, Inspector General of
Registration, Vanchiyoor P.O., Thiruvananthapuram -
695035, Kerala.
Addl.R8: Union of India through Central Board of
Indirect taxes and Customs, North Block, New Delhi.
Addl.R9: Chief Commissioner of Central GST,
Central Excise and Customs, Thiruvananthapuram Zone,
C R Buildings, I S Press Road, Cochin -18.
Mr.T.K.Vipindas, learned Senior Government Pleader
W.A. Nos.185 of 2025 and con.cases
accepts notice on behalf of the Registrar of the Chits,
Addl.R7. Mr.V.Girishkumar, Sr. Standing Counsel
accepts notice for Addl.R8 and R9.
6. The affidavit of the State as well as of the Co-
operative Societies will also explain as to whether
accounts of all the societies has been subjected to
Regular Audits as provided under Section 63 of the
Kerala Co-operative Societies Act, keeping in view the
fact that it has come on record, in one of the Societies,
i.e., Mylapra Service Co-operative Bank, the audit has
not been done for many years. Though in the previous
affidavit the stages of the surcharge proceedings and the
crime stages have been detailed, but it appears that the
cases either of criminal and surcharge proceedings much
less the recovery proceedings initiated by the Co-
operative Societies for recovery of the amount by seeking
execution of the arbitration award are moving at the
snail's pace.
W.A. Nos.185 of 2025 and con.cases
7. In order to expedite the aforementioned
processes we call upon the counsel representing the
parties to come out with a holistic approach/solution as
to how recovery process and criminal cases can be
expedited. Let the affidavits/reply to the report by the
State as well as by the Co-operative Societies much less
by the Central Board of indirect Taxes and Customs
represented by Mr.V.Girishkumar, particularly regarding
the non-charging of the GST be filed within a period of
two weeks from today.
8. Post these matters for further consideration on
27.03.2025.
9. It has been informed that the appellant -
petitioner is a cancer patient. Against the deposit, more
than Rs.10,00,000/- (Rupees Ten lakhs only) along with
the interest is due from the Society and out of that an
amount of Rs.4,75,000/- (Rupees four lakh Seventy five
W.A. Nos.185 of 2025 and con.cases
thousand only) has been released.
10. Mr.Santhoshkumar, learned Standing Counsel
appearing on behalf of the Edamulackal Service Co-
operative Bank Limited, seeks two weeks time. We
direct the bank to pay the balance amount within a
period of one week from today. Liberty granted to the
counsel for the appellant to apprise this Court in case the
direction of this Court is not complied as all the
connected matters are being adjourned for two weeks.
Sd/-
AMIT RAWAL
JUDGE
Sd/-
K.V.JAYAKUMAR
vv JUDGE
06-03-2025 /True Copy/ Assistant Registrar
