Kerala High Court
Kandala Service Co-Operative Bank vs Directorate Of Enforcement on 11 July, 2025
OP(CRL.) NO. 39 0F 2025
2025 : KER: 51785
IN THE HIGH COUR= OF RERAIA AT ERNAKUIAM
PRESET
THE HONOuRABIE MR. .usTlcE p.v.Kt7NialKRlsENAN
mlDAr, "E 11" DAr oF drurL¥ 2025 / 20" AsmDHA, 1947
op(CEL.) ro. 39 oF 2o25
CRIIG NO.726/2023 0F Maranallor Police Station,
Thiruvananthapuran
AGAINST TEIE ORDER/ruDcaGNT DziTED IN sc cASEs (rna) NO.1
oF 2o24 oF spEclAI. c see/CBI-I&3 ADDITlorunl, DlsmlcIT couRT / I
aeDITloNAI, iroTOR accll>ENT clAIMs TRIBunml./RENT CoNTRol.
JuppELLATE AUTHORITY , ERIIAKUIIAM
RETITIONER/S:
KANDAILh SERVICE CO-OPERATIVE BANK
REPRESENtED By ITs sECRETARy BAleuRA4zLN, KaNDAIA,
pE t"Kul4aM, KtJVAI.AssERy.p.o. , TRlvANDRI", plN -
695512
KZINI>Aln sERvlcE cO-OpERATlvE ELENK, I-ig7
TorIN BENCH , inRmiAI,I,con, mlvmiDRt", REPRESENTED Br
ITs sECRETARyBAIrt7Rliomi, AGED 46, s/O RA4AyyEN, plN
- 695512
BY ADVS .
SRI . R . I . PRADEEP
SMT . M . BINDtJDZIS
sml.NIEN4EN I. pRAD=Ep
OP(CRL.) NO. 39 0F 2025
202 5 : KER: 517 8 5
REspcrmENI/s:
DIRECTORATE OF ENFORCRENT
REPRESENTEI> By I)EpuTy DIRECTOR, GOvEm"ENT OF INDIA,
COCHIN ZONAII OFFICE, KANOOS CZISTLE, A.K. SHESHAI)RI
ROAD (Mul,IAssERy cAlaAI, RonD VEST) , E AKulLAM,
COCHIN, PIN - 682011
N. BEIAsuRmiGaN
(THEN PRESIDENT , KANDALZL SERVICE CO-OPERATIVE BZLNK) ,
BHAs", imRANALI.OOR, KuvAI.AssERy. p.O. , TRlvaeiDRUM,
H. No.Tc -42/1267/2, A-13, CHITRzi NAGaR,
pco-AEiun.p.o. , TRlvanRUM, plN - 695ol2
AKIIILJITH . T . a .
S/o SHRI. N. BHAstnENGEN, BHjistJRA, inRalunLLcoR,
Kt7vAlnssER¥.p.o. , mlvANDRI7M H. No.Tc -42/1267/2,
A-13, cHlmA NAGAR, p004Apt]RA.p.O. , TRIVILNI>RUM -
695ol2. CRAVI Mul.TI culslRE RESTAUENT, I.AKsrmJ S
ARCADE , OPPOSITE PAREEKSHABEIAEN , P00JAPURA,
TRI-R"
dATAKtnnRI . a .
W/o SHRI. N. BustlENGEN, BHASuRA, emRmiAI[I.COR,
KUVAIASSERY.El.O. , TRIVANDRUM, PIN -695512
ASRATHY R.a
D/O sml. N. BHZLsuENGEN, v -5 HOREs, MID clTy
ApanTMENTs, 4c, Dpl ruNCTION, KUKKI.IyooR IANE,
VAZHUTHAKKAD, TRIVZ\NDRI", PIN - 695014
BAILAin7RUGaN . v
S/O v. RAVEENDEN, v-5 HOREs, MID clT¥ APARnmaTs,
4C, DPI JUNCTION, KUREIIiYcOR IANE, VAZHUTHZIKKAI),
mlvENDRUM, FIN - 695ol4
OP(CRL.) NO. 39 0F 2025
2 02 5 : KER : 517 8 5
aeHlm.M.a.
D/o SHRI. N. BusuENGEN, BIIzisuRA, bmENAII,con,
KtJVAIAssER¥.p.o. , mlvANDRI" STAFF QUARTERs, SREE
NARAYANzl lcDICAli COLLEGE , CHALAICKA, KtJNNUKARA,
I AKUIAM, PIN - 695512
8¥ revs .
SHRI.ARt7N mlsHNA DHZLN
SRI.ARTUN SREEDEu\R
SHRI . I . K . SANDREP
SRI . ALEX ABRAHZIM
SHRI . HARIKRISENAN P . a .
SHRI.AMJITH C.M.
SMT. SREEI.AKsmel SHIBU
OTRER PRESENT :
SRI JAISHANKAR V RAIR, SC
THIs Op (CRIMINAI.) HAvlNG CORE up FOR ADmssloN ON
11.o7.2o25, THE cotnT ON THE SAME Day DEI,IVERED THE sol.I.owlN6:
OP(CRL.) NO. 39 0F 2025
2025 : KER : 5178 5
P.V.KUNHIKRISHNAN, I
-11,I,I1,I,-I,I,I,llIIIIII,~111111II,,
O.P. (Crl.) No. 39 of 2025
IIIII,III1,,IIII--I~I1----llIII,IIIIll
Dated this the llth day of July, 2025
JUDGMENT
The above original petition is filed with following Prayers :
i. '`To set aside Exhibits pl and p2.
ii. To direct the lst Respondent to release the movable
and immovable pl-opeTties of Respondents 2 to 6 which are the subject matter of Exhibit Pl and P2 to the petitioners I;orthwith so ais to enable the pel:itioners to proceed agaiinst those properties to realize the amount due on the loans taiken by I.espondents 2 to 6 and to pay off the unpaid depositors,. iii. Such other relief ;s which this Hon'ble court may deem fit and proper in the interest of justice." [sic]
2. The lst petitioner is a Co-operative Society registered under the Co-operative Societies Act, 1969. The 2nd OP(CRI..) NO. 39 0F 2025 2025 : KER: 51785 petitioner is the town branch (Maranalloor branch, Thiruvananthapuram) of the lst petitioner-society. It is alleged that the former president of the bank and the members of his family looted the society by swindling the funds of the bank in the fonn of loans and other means. Criminal cases were registered at the instance of unpaid depositors of the bank alleging offences under Sec. 420 IPC. The offence being a scheduled offence under Prevention of Money Laundering Act, 2002 (for short PMIA), proceedings were initiated as per the PMLA. The movable and immovable properties of respondent Nos. 2 to 6, who are former President and members of his family were provisionally attached by the Enforcement Directorate in the proceedings under PMIA and the attachment was confirmed by the adjudicating authority by Ext.Pl and Ext.P2 is the consequential notice of taking possession of the immovable properties. According to the petitioners, the respondent Nos. 2 to 6 had executed Gehan OP(CRL.) NO. 39 0F 2025 2025 : KER: 51785 with respect to their immovable properties in favour of the society and the society has got statutory charge over those properties under Sec. 36A of the Kerala Co-operative Societies Act, 1969 (for short 'Act'). It is submitted that the Gehan has all the characteristic features of a mortgage under the provisions of the Transfer of Property Act. The special charge under Sec.36A of the Act would have predominance over any other charge pertaining to the property is the submission of the petitioners. It is the submission of the petitioners that the society has got banker's lien over the movable properties of respondent Nos. 2 to 6. It is also contended by the petitioners that they raised the same before the adjudicating authority to release the properties to the society, over which the society has got banker's lien and statutory charge. It is the case of the petitioners that Ext.Pl was passed by-passing the claim of the petitioners. The respondent mos. 2 to 6 are heavily indebted to the society for the loan taken by them. It is the case of the OP(CRL.) NO. 39 0F 2025 2025 : KER: 51785 petitioners that there are about 2500 unpaid depositors lining in the society craving for return of deposit without even interest. The society is unable to proceed against the properties to liquidate the liability of respondent Nos. 2 to 6 and pay off the unpaid depositors for the reason of Exts.Pl and P2 is the submission. The properties cannot be confiscated to Government under PMIA in the wake of entitlement of society to proceed against the properties to realise the amount due on the loans taken by respondent Nos.
2 to 6 and those properties are not proceeds of the crime nor involved in money laundering is the submission. Hence, the petitioners challenged Exts.Pl and P2.
3. Heard the learned counsel for the petitioners, the Standing Counsel appearing for the lst respondent and the counsel appearing for the respondent Nos.2 to 6.
4. The short point raised by the petitioners is that in the light of Sec.36A of the Act, the petitioner-society OP(CRL.) NO. 39 0F 2025 2 0 2 5 : KER : 517 8 5 has got statutory charge. Sec.36A of the Kerala co-operative Societies Act is extracted hereunder :
"36A. Charge on movable or immovable property of borrower by creaitlng Gehan.-
Notwithstanding anything contained in any other provisions of this Act charge on movable or immovable propertyr of a boITower in favour of the Kerala State Co-operative Bank or a Primary Agricultural Credit Society or a Primary Housing Society or an UI.ban Co-operative Bank or any Primary Co- operative Societies dealing with credit activities may be created by Gehan in respect of which the provisions of sections 9 to 15 (both inclusive) and 19 to 28 (both inclusive) of the Kerala Staite Co-opel`ative Agricultural and Rural Development Banks Act, 1984 (20 of 1984), as amended from time to time, shall apply with the modificaition of substituting the words Keraila State Cooperative Bank, Primary Agricultural Credit Society or Primary Housing Society `'ol. an Urban Co-operative Bank or any Primary Co-operative Societies dealing with credit actiwities'', `'Society" and ``said Bank or. Society'', respectively, fior the words "Agricultural and Rural Development Bank'', "primary bank", ''bank" and '`sald banks" occurring in the said sections."
5. The lst respondent filed an affidavit in this case. It will be better to extract the relevant portion of the above affidavit. OP(CRL.) NO. 39 0F 2025 2025 : KER: 51785 `'3. It is submitted that although the petitioners have pref;erred C.M.P. No 186 of 2024 in S.C. (PMLA) No. 1 of 2024 bef;ore the Special Court (PMIA) invoking Section 8(8) of the Prevention of Money Laundering Act. 2002, seeking restoration of the property, the same is not being taken up I;or consideration, ais contended by the petitioner, in view of the statutory maindate under Section 8(8) of the Act:, read with Rules 3 aind 4 of I;he Prevention of Money Laundering (Restoration of Property) Rules, 2016, which stipulates that such an applicaition can be aidiudicated only subsequent to the fleming of charges by the Special Count.
4. It is respectfully submitted that the Directorate of Enforcement does not obof ect to the claim of the petitioners insofal. as it pertains to the assertion of a valid banker.'s lien and statutory charge under Section 36A of Kel.ala Co-operative Societies Act, 1969, over. the properties mortgaged to the society by the respondents 2 to 6.
5. The petitioners aire admittedly a co-operaitive society aind its branch and the properties under attachment, as asserted by the petitioners. were mortgaged in their favour fior availing credit faicilities. As per Section 36A of the Kerala Co-operative Societies Act, 1969, a staitutory charge is created in fiaivoiir of the society over such moitgaged assets.
6. It is submitted that the Directorate does not seek to froistrate any bonafide claim of recovery or. enfbrcement of charge by the petitioner.s over properties that were lawfiilly OP(CRli.) NO. 39 0F 2025 10 2025 : KER: 51785 mortgaged prior to the initiation of proceedings under the PMIA, unless the claimant is not involved in the offence of money laundering.
7. The Respondent shall abide by any orders or directions passed by this Hon'ble Court in relation to the petitioners entitlement over. the properties suftyect to aitta:chment, subject to compliance wil:h applicable legal fbrmalities as to the validity of their claims."
6. A reading of the above affidavit would show that the Directorate of Enforcement does not object to the claim of the petitioners insofar as it pertains to the assertion of a valid banker's lien and statutory charge under Sec.36A of the Act over the properties mortgaged to the society by respondent Nos. 2 to 6. If that is the case, I am of the considered opinion that there can be an order restoring the properties to the petitioners over which there is lien and statutory charge in favour of the petitioners. I am forced to pass such an order because the petitioners cannot approach the jurisdictional Special Court for restoration of the OP(CRL.) NO. 39 0F 2025 11 2025 : KER: 51785 properties because that is possible, only after framing the charge. Even now, the charge is not framed as against accused Nos. 1 and 2. As far as the case against the other accused, investigation is going on. Therefore, I am of the considered opinion that it is a fit case in which this Court can exercise the extraordinary jurisdiction under Article 226 of the Constitution of India. The petitioners already approached the PMIA Special Court with Ext.P3 application, in which a schedule of properties is mentioned, in which there is attachment as Table A, 8 and C and the same can be released.
The table in Ext.P3 application will be part of this order.
Therefore, this original petition is disposed of with the foll`owing directions :
1) The lst respondent is directed to release the movable and immovable properties of respondent Nos.2 to 6, which are the subject matter of Exts.Pl and P2 as evident from Table A, a and C in Ext.P3 application as OP(CRI..) NO. 39 0F 2025 12 2025 : KER : 517 8 5 expeditiously as possible, at any rate, within three weeks from the date of receipt of a certified copy of this judgment.
Sd/.
P.V.KUNHIKRISHNAN JUDGE SKS OP(CRI..) NO. 39 0F 2025 13 2025 : KER: 51785 APPENDIX OF OP(CRL. ) 39/2025 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF OE®ER I)ATED 25. 6. 2024 CONE I RMINC THE PROVI S I ONA14 ATTACRENT OREER NO. 4/2024 DARED 18.1. 2024 BY ELI.OWING O.C. NO. 2179/2024 BY THE ADJUDICATING AUTHORITY UNDER PBdA Exhibit P2 TRUE COE>Y 0F NOTICE DATED 24.09.2024 0F TAKING POS SE S S ION OF THE IENOVABI.I pRopERT I E s t7NDER ATTnc RENT 8¥ 1sI RESPONDENT Exhibit P3 TRtJE COPY OF C.M.P. NO.186/2024 DATED 8.6.2o24 IN s.c. (rna) No.1/2o24 Flu=I> B¥ THE PET I I I ORER SEEKING RE S TORAT I ON OF ioovziBLE AND IioaovABLE pRopERTIES BEFORE SPECIAI, COURT FOR mod cASEs, I AKULm4 (CBI counT-I) Exhibit P4 TRUE COPY OF THE MINUTES OF THE MEETING HELD ON 28.10.2023 UNDER IHE AUSPICES OF JOINT REGISTRAR ( GENERAI. ) , THIRuvaNANTEIApuRAM Echibit P5 TRUE COPY OF OREER DATED 18. 3. 2024 RECONSTI"TING THE COMMITTEE BY JOINT REGISTRAR (GENERAL) Exhibit P6 TRUE copy oF .uDenNT DATED 11.9.2o24 IN W.P. (C) NO.6273/2023 ANI) IN THE CONNECTED BATCH OF WRIT PETITIONS BY The HON'BLE HIGH COURT OF RERAIA OP(Crl.) 39/2025-Exhibit P3 (Page-110) Sl.No. Descrlption of Properties In the name Of Registeredvalue(lnRs.)
1. 5.87 Ares of land situated in Old Shri ` N. 39,00'000/-
Survey No.328, Re-Survey No,253 of Bhasurangan & Maranalloor V"age, Neyyattlnkara Smt. a. Taluk, Trivandrum District, Kerala Jayakumari State, reglstered with Ooruttambalam Sub-Registrar Office vide Document No.193/2013 0n 04`02.2013 and •f-- 3,500 sq.ft. Of house thereon.
2. 24 Ares df land situated ln old a, Jayakumari-.>I".``=.:` 6,65.280/-
Survey No.3634, 3635 &'3636 of
3. Akhjljffh;r.B.'`•++\+ 5'00'000/-
#?aen#Sr°.VIE,:I,::#!!u:ak`#:¥hi:# /,` TerL#:tne¢#mwltBjs6r:#L#ine::,\,:.Tnft{§;aut& R:=j:t:;2ro23°gLC:„V}f2e623Ei¥_e,Pt, 4' Flat No.8B on the Eighth Floor Smt. Abhima V.B. 22'72,400/-
bearing Door No.2/554_-B8 (4/362-
88) having a super built up arcs of rL`, 111..11 Sq, Mtr§. Including the proportionate share of common areas and facilities along with the exclusive right fo park vehlcle in the parking slot earmarked as Parking slut No.8B in the multi storied building called as .Khadef's AQUA BREEZE) reg7stered with Aluva SRO vide Document No.1062/2020 dated 15.06.2020.
5` 4.05 Ares of land situated in OldSurveyNo.2268ofMuttathara Shri V.R.Balamurugan 2,00,000,-
V"age, Thlruvananlhapuram Taluk, Trivandrum District, Kerala State, registered with Thiruvananthapuram Sub Registrar Office vide Document OP(Crl.) 39/202 5-Exhibit P3 (Page-111) No.4757A2003 on 22.12`2003.
6. 1 Cent of land situated ln Old Survey Shri V.R. 1,3,000/-
No.2268 of Muttathare VIllage. Balamurugan Thiruvahanth apiiram Taliik.
Trivandrum District, Kerala State.
registered with Thirwananthap'uram Sub-Ftegistrar Office vide Document No.3565A2011 on 24.09.2011.
TOTAL tAI _ 76,67,680/-
MO\IABLE PROPERTIES
TABLE - a
(Mercedez Benz in the name of Shri Akhi||lth J.B,) Sl. Description of Date Of Value {ln Rs.) Loan Taken (in No. Property Purchase Rs.) 1 M ercedez Benz .i:blue.ry<ap4t,9fr,,rf\42.00,000,. 26 Lakhs taken GLA, 2019 Model .
loan from
a-,,i ` ,
vehicle Number I t}J\`,. Sundaram
KL-01-CK-223 I,i'''.'<q: Plnance having
•¥~'
/, -i`,+`1 ,
contact
I :b 'l
lT-t No.N026600426
)I Date23.01.2019
I
``
Total '8) 25'00'000/- 111111111111-
(Dct;ife`ofFffi*)
S'. Address Of the premises searohed Total Value of seked
NO. oropertie8 (in Rs,)
1. Gold Jewellery totally wortli Rs.3,57,718/- 3,57,718/-
seked from Kandala Serviee Co-operative Bank, Kandala, Perumkulam, Kuvalaesery PO, Trivandrum -695512.
2. Gold Jewellery totally worth Rs.4.42,000/- 4,42,000/-
Seized from Kandala Service Cooperative Bank, T-197, Town Branch, Maranalloor.
TOTAL (C) 7,99,718/-