Kerala High Court
The Paravur S.N.V Regional ... vs The Kerala Co-Operative Ombudsman on 6 June, 2013
Author: Siri Jagan
Bench: S.Siri Jagan, K.Ramakrishnan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE S.SIRI JAGAN
&
THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN
THURSDAY, THE 17TH DAY OF OCTOBER 2013/25TH ASWINA, 1935
WA.No. 1039 of 2013
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[AGAINST THE JUDGMENT IN W.P.(C).NO.13846/2013 DATED 06-06-2013
OF THIS HON'BLE COURT]
....................
APPELLANT/PETITIONER IN W.P.(C):
----------------------------------------------------
THE PARAVUR S.N.V REGIONAL CO-OPERATIVE BANK LTD NO. 1685,
S.PARAVUR P.O., KOLLAM- 691 301,
REPRESENTED BY ITS SECRETARY.
BY SRI.K.R.B.KAIMAL, SENIOR ADVOCATE,
ADV.SRI.B.SURESH KUMAR.
RESPONDENTS/RESPONDENTS IN THE W.P.(C):
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1. THE KERALA CO-OPERATIVE OMBUDSMAN,
OFFICE OF THE KERALA CO-OPERATIVE OMBUDSMAN,
FORT P.O., THIRUVANANTHAPURAM-695 023.
2. AJITH KUMAR .S,
KADAVUMTHALAKKAL HOUSE,
CHAVARA SOUTH, KOLLAM-691 585.
3. THE STATE OF KERALA,
REPRESENTED BY ITS PRINCIPAL SECRETARY TO -
THE CO-OPERATIVE DEPARTMENT,
SECRETARIAT, FORT P.O., THIRUVANANTHAPURAM-695 023.
4. THE REGISTRAR OF CO-OPERATIVE SOCIETIES,
OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES,
FORT P.O., THIRUVANANTHAPURAM-695 023.
5. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL),
OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,
CIVIL STATION, KOLLAM-691 013.
Prv.
W.A. NO.1039/2013:
6. THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES-
(GENERAL),
OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE-
SOCIETIES, CIVIL STATION, KOLLAM-691 013.
R1, R3 TO R6 BY GOVERNMENT PLEADER SMT. P.A. RAZIYA,
R2 BY ADV. SRI.M.K.CHANDRA MOHANDAS.
THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON
17-10-2013, THE COURT ON THE SAME DAY DELIVERED
THE FOLLOWING:
Prv.
W.A. NO.1039/2013:
APPENDIX
PETITIONER'S ANNEXURE:
ANNEXURE A1: A TRUE COPY OF INTERIM ORDER DTD. 30/09/2013
PASSED IN W.P.(C).NO.16063/2013.
RESPONDENTS' ANNEXURES: NIL.
//TRUE COPY//
P.S. TO JUDGE.
Prv.
S. Siri Jagan & K. Ramakrishnan, JJ.
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W.A. No. 1039 of 2013
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Dated this, the 17th day of October, 2013.
J U D G M E N T
Siri Jagan, J.
A co-operative bank, which accepted fixed deposits from depositors, who are members of the bank , agreeing to pay a definite sum after a definite number of years, has filed this appeal challenging the judgment of a learned Single Judge, directing the bank to pay the maturity value of the deposit at the rate originally agreed upon.
2. The 2nd respondent herein was a depositor of the appellant-Bank. The bank published a scheme by name "Sumangali Fixed Deposit Scheme" in the year 1990-91, offering to pay 27 times the deposit amount after 21 years to depositors, who are willing to deposit money under that scheme. The 2nd respondent deposited Rs. 25,000/-. The maturity value of the deposit was Rs. 6,75,000/-. The 2nd respondent demanded the maturity value of the deposit on expiry of the period of the deposit. Since the 2nd respondent was not paid the maturity value, he approached the 1st respondent-Kerala Co-operative Ombudsman constituted under the Kerala Co-operative Ombudsman Scheme, 2010, seeking appropriate relief in respect of the same. The appellant took the stand that the Ombudsman does not have powers to deal with such complaint and it is a matter entirely coming within the purview of Section 69 of the Kerala Co-operative Societies Act. They also took the stand that the general body took a decision to return the deposit with W.A. No. 1039 of 2013 -: 2 :- reduced rate of interest, which is in accordance with the directions of the authorities under the Co-operative Societies Act. But, by Ext. P7 order, the Ombudsman rejected the contentions of the appellant and directed the appellant to pay the maturity value of the deposit as appearing in the fixed deposit receipt issued by the appellant-bank. The appellant filed W.P(C) No. 13846/2013 before this Court, challenging the order of the Ombudsman. A learned Single Judge of this Court dismissed the writ petition. The judgment of the learned Single Judge is under challenge in this writ appeal.
3. The first contention raised by the appellant is that the Co-operative Ombudsman does not have powers to deal with the complaint filed by the 2nd respondent under the Kerala Co-operative Ombudsman's Scheme. It is submitted that the Ombudsman has powers only to consider a complaint as defined in Section 2(c) read with Section 7(e) of the Scheme. It is pointed out that by Ext. P2 dated 27.7.2010, the Registrar of Co-operative Societies had fixed interest payable on fixed deposits, which is binding on the appellant-bank as well. Subsequently, Ext. P3 circular was also issued threatening stringent action, if more than the interest stipulated by the Registrar is paid to depositors. In order to comply with the directions in Exts. P2 and P3, the appellant issued notices to all the depositors under the scheme for attending a general body meeting, wherein the reduction of interest for the Sumangali Fixed Deposit Scheme was to be considered. That notice only was challenged by the 2nd respondent before the Ombudsman. W.A. No. 1039 of 2013 -: 3 :- The Ombudsman did not have any power to consider that complaint, is the first contention.
4. The next contention is that the bank is duty bound to comply with the directions of the Registrar of Co- operative Societies, who had directed the appellant to reduce the interest rate, which only the appellant had done, which cannot be subject matter of a complaint before the Ombudsman also. It is also submitted that notices were issued to all the 4585 depositors under the scheme, out of whom, 3215 have accepted the maturity value with reduced rate of interest and the notices issued to others were returned unserved. That being so, some of the depositors cannot now turn around and take the stand that they are not bound by the decision of the general body, is the next contention raised. It is also submitted that being a member of the appellant-bank, the 2nd respondent is also bound by the decision of the general body.
5. We have considered the rival contentions in detail.
6. Clause 2(c) of the Kerala Co-operative Ombudsman Scheme, 2010, reads thus:
"2. Definitions:- (1) In this Scheme, unless the context otherwise requires,-
(a) xx xx xx
(b) xx xx xx
(c) "Complaint" means a representation in Writing or through Electronic means containing a grievance alleging deficiency in Co-operative Banking Service as mention in paragraph 5 of the scheme.
xx xx xx"
W.A. No. 1039 of 2013 -: 4 :-
Clause 7(e) reads thus:
"7. Grounds of complaint:- (1) Any person may file a complaint before the Ombudsman or Ombudsmen having jurisdiction on anyone or more of the following grounds, namely:-
(a) xx xx xx
(b) xx xx xx
(c) xx xx xx
(d) xx xx xx
(e) non-observance of the rate of interest/penal interest
on loans and advances and rate of interest on deposits as fixed by the Registrar or Reserve Bank of India, as the case may be.
xx xx xx"
The contention of the appellant is that the Ombudsman have power to consider complaints regarding non-observance of the rate of interest/penal interest on loans and advances and rate of interest on deposits as fixed by the Registrar or the Reserve Bank of India as the case may be. Here, the interest rate now offered to the 2nd respondent is the rate fixed by the Registrar, is the contention. Insofar as such a complaint will not come under clause 7(e), the Ombudsman does not have power to entertain a complaint, is the contention raised. We are not inclined to accept the said contention. According to us, the rate of interest on deposits as fixed by the Registrar in clause 7(e) is the rate of interest prevailing at the time when the scheme was proclaimed and a contract was entered into between the appellant and the 2nd respondent regarding the deposit and the rate of interest thereof. Once that contract is concluded, then the deposit has been accepted only at the rate of interest fixed by the Registrar. Thereafter, the appellant cannot W.A. No. 1039 of 2013 -: 5 :- unilaterally change the terms of the contract. If the appellant does so, the complaint would squarely come within Clause 7(e) of the Scheme. Apart from that, even the question as to whether the rate of interest as fixed by the Registrar has been paid or not itself is a complaint, which can be considered by the Ombudsman. As such, the Ombudsman have the power to consider the complaint of the 2nd respondent under the Kerala Co-operative Ombudsman Scheme, 2010.
7. Acceptance of fixed deposits is a contract between the bank and the depositors. In this case, the bank has proclaimed a scheme called "Sumangaly Fixed Deposit Scheme" , offering to pay 27 times of the deposit amount after 21 years. The 2nd respondent accepted the offer and entered into a contract with the bank with a fervent hope that after 21 years, the 2nd respondent would get 27 times of the deposit amount. The terms of that contract cannot be unilaterally changed by the appellant- bank. Perhaps, on finding that the Scheme is not a viable one, the appellant could have foreclosed the scheme itself and offered to pay the outstanding amount at the rate of interest originally proclaimed. But, the appellant cannot unilaterally reduce the maturity amount. The contention that Ext. P2 rate of interest prescribed by the Registrar of Co-operative Societies applies to the fixed deposit of the 2nd respondent does not appeal to us. A reduction of rate of interest by the Registrar cannot govern the fixed deposits already accepted in specific terms agreed upon. Ext. P2 can be applicable only prospectively in respect of fixed deposits, W.A. No. 1039 of 2013 -: 6 :- which have been accepted subsequent to the date of Ext. P2. As such, the question of violation of Ext. P2 in respect of fixed deposit made by the 2nd respondent, years prior to Ext.P2 does not arise at all. Once the appellant had promised the 2nd respondent that if he deposits an amount, the bank will return to him after 21 years, 27 times of the deposit amount, the appellant is bound by that offer, which was accepted by the 2nd respondent, which is an enforceable contract. The appellant cannot unilaterally resile from the contract and say that they will give the deposit back only at a lesser rate of interest. If such a contention is accepted, that would be detrimental to the depositors of amounts in banks including co-operative banks, which cannot be countenanced at all. In fact, that would be against the normal banking practice and against public policy also.
8. As far as the contention that as a member of the bank, the 2nd respondent is bound by the resolutions of the general body, we are of opinion that that resolution cannot affect the concluded contract between the bank and the depositors. The depositors can be members and non- members. Non-members are in anyway bound by the resolution of the general body of which they are not members. If the Bank treats members and non-members differently in the matter of return of fixed deposits, that would amount to discrimination as well.
In the above circumstances, We do not find any merit in the challenge against the judgment of the learned Single Judge and accordingly the appeal is dismissed. W.A. No. 1039 of 2013 -: 7 :-
The 2nd respondent presses for awarding costs. We are not inclined to award costs, in the peculiar facts and circumstances of the case.
Sd/- S. Siri Jagan, Judge.
Sd/- K. Ramakrishnan, Judge.
Tds/