Kerala High Court
M/S.Mary Matha Education Society vs The State Of Kerala on 18 February, 2016
Author: Alexander Thomas
Bench: Alexander Thomas
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE ALEXANDER THOMAS
THURSDAY, THE 18TH DAY OF FEBRUARY 2016/29TH MAGHA, 1937
WP(C).No. 4198 of 2010 (Y)
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PETITIONERS:
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1. M/S.MARY MATHA EDUCATION SOCIETY,
(REG.NO.T-284/97) HAVING ITS REGISTERED OFFICE
AT 'RAJCOT' THYCAUD, THIRUVANANTHAPURAM
REPRESENTED BY ITS CHAIRMAN R. MURUGAN.
2. R.MURUGAN B.SC (ENGG) M.I.E., CHAIRMAN,
MARY MATHA EDUCATION SOCIETY REG.NO.T-284/97,
'RAJCOT' THYCAUD, THIRUVANANTHAPURAM.
BY ADVS.SRI.R.S.KALKURA
SRI.M.S.KALESH
SRI.HARISH GOPINATH
SRI.V.VINAY MENON
SMT.KVP.JAYALEKSHMY
SRI.M.AJAY (IRUMPANAM)
RESPONDENTS:
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1. THE STATE OF KERALA, REP. BY THE
SECRETARY, DEPARTMENT OF CO-OPERATION
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM.
2. THE REGISTRAR, OFFICE OF THE REGISTRAR
OF CO-OPERATIVE SOCIETIES, BEHIND SECRETARIAT, STATUE
THIRUVANANTHAPURAM.
3. THE ASST. REGISTRAR/ARBITRATOR,
THIRUVANANTHAPURAM DISTRICT CO-OPERATIVE, BANK LTD.
HEAD OFFICE, EAST FORT, THIRUVANANTHAPURAM.
4. THE ARBITRATOR, THIRUVANANTHAPURAM
DISTRICT CO-OPERATIVE BANK LTD., HEAD OFFICE
EAST FORT, THIRUVANANTHAPURAM.
5. THE THIRUVANANTHAPURAM DISTRICT
CO-OPERATIVE BANK LTD., HEAD OFFICE, EAST FORT
THIRUVANANTHAPURAM, REP.BY ITS GENERAL MANAGER.
(CNTD.........2)
WP(C).No. 4198 of 2010 (Y)
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6. THE OFFICER IN CHARGE OF ADALATH/2009,
THIRUVANANTHAPURAM DISTRICT CO-OPERATIVE BANK LTD.
HEAD QUARTERS, EAST FORT, THIRUVANANTHAPURAM.
7. THE SALE OFFICER, THIRUVANANTHAPURAM
DISTRICT CO-OPERATIVE BANK LTD., HEAD QUARTERS
EAST FORT, THIRUVANANTHAPURAM.
R5 & R6 BY ADV. SRI.THOMAS ABRAHAM, SC, TVM. DIST. CO.OP BANK LTD.
R5 & R6 BY ADV. SRI.C.K.JAYAKUMAR, SC, TVM. DIST. CO.OP BANK LTD,
R5 & R6 BY ADV. SRI.T.R.HARIKUMAR, SC, TVM. DIST. CO.OP. BANK LTD.
R5 & R6 BY ADV. SRI.K.G.RADHAKRISHAN, SC, TVM. DIST. CO.OP. LTD.
R1 TO R4 & R7 BY GOVERNMENT PLEADER SRI.P.V.ELIAS
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18-02-
2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No. 4198 of 2010 (Y)
APPENDIX
PETITIONER'S EXHIBITS:
EXT.P1: REGISTRATION CERTIFICATE OF MARY MATHA EDUCATION
SOCIETY, REG.NO.T.284/97.
EXT.P2: AGREEMENT DTD. 5.6.2008 ENTERED INTO BETWEEN THE 2ND
PETITIONER AND THE THEN GOVERNING BODY MEMBERS OF THE SOCIETY.
EXT.P3: LETTER DTD. 9.9.2008 ISSUED BY THE 1ST PETITIONER SOCIETY,
TO THE REGISTRAR OF SOCIETIES, WITH THE ACKNOWLEDGEMENT OF
REGISTRAR OF SOCIETIES.
EXT.P4: RESOLUTION ADOPTED BY THE GOVERNING BODY OF THE
PETITIONER ON 5.6.2008 AT 10:00 A.M.
EXT.P5: RESOLUTION ADOPTED BY THE GENERAL BODY OF THE
PETITIONER ON 5.6.08 AT 2:00 PM.
EXT.P6: AWARD DTD. 30.12.1999 IN ARC.NO.8/1999 ISSUED BY R4.
EXT.P7: CIRCULAR BEARING NO.1/2009 DTD. 8.1.2009 ISSUED BY R2.
EXT.P8: CIRCULAR BEARING NO.5/09 DTD. 29.01.09 ISSUED BY R2.
EXT.P9: CIRCULAR NO.35176/09 DTD. 1.10.2009 ISSUED BY R2.
EXT.P10: REPRESENTATION DTD. 23.10.2009 SUBMITTED BY THE
PETITIONER TO R4.
EXT.P11: REPRESENTATION DTD. 28.10.2009 SUBMITTED BY THE
PETITIONER BEFORE R6.
EXT.P12: LETTER DTD. 14.10.2009 ISSUED BY R5 TO THE 1ST PETITIONER.
EXT.P13: SALE DEED NO.2356/01 DTD. 16.11.2001.
EXT.P14: SALE DEED NO. 2357/01 DTD. 16.11.2001.
EXT.P15: PETITION DTD. 10.11.2009 SUBMITTED BY THE PETITIONER
BEFORE R2.
EXT.P16: LETTER DTD. 10.11.2009 ISSUED BY R5 TO THE PETITIONER.
EXT.P17: REPRESENTATION DTD. 23.1.2010 SUBMITTED BY THE PETITIONER
BEFORE R2.
EXT.P18: ATTACHMENT NOTICE DTD. NIL OF R7.
.........
// TRUE COPY //
P. A TO JUDGE.
ALEXANDER THOMAS, J.
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W.P.(C).No.4198 Of 2010
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Dated this the 18th day of February, 2016.
J U D G M E N T
One Sri.Wilson Lazar, Seline (W/o. Wilson), Jose (S/o Wilson) and Bina had availed a cash credit facility from the 5th respondent- Thiruvananthapuram District Co-operative Bank, which was sanctioned by the said Bank as per resolution dated 11.03.1994, after executing the formal agreement in that regard and deposit of title deed of the property covered in the subject matter of the impugned sale in this writ proceedings. The upper cap of the cash credit facility was enhanced to Rs.10 lakhs from Rs.5 lakhs on 08.05.1995, for which also the loanees had executed the necessary declaration agreement, guarantee bond, promissory note, etc. On default of the said loan transaction by way of the aforestated cash credit facility having the upper limit of Rs.10 lakhs, the 5th respondent-Bank proceeded against the defaulting loanees by resort to Arbitral Proceedings under Sec.69 of the Kerala Co-operative Societies Act, 1969. The loanees defaulted a sum of Rs.16,90,643/- as per the agreement including the interest of Rs.250/- etc., as per the averments of the respondent-Bank in the ::2::
W.P.(C).No.4198 Of 2010 arbitration case. The statutory Arbitral Tribunal as per Ext.P-6 dated 30.12.1999 had passed the final award in the aforestated Arbitration Reference Case, ARC No. 8/1999, the operative portion of which reads as follows:
"For the reasons above and evidences before me the plaint is proved. I hereby order in favour of the plaintiff Bank to realise a sum of Rs.16,91,393/- (ie. Principal outstanding of Rs.16,90,643/- + Notice charge of Rs.250/- + Arbitration fee Rs.500/-) and with future interest @ 21%for Rs.16,90,643/- from 7.2.98 from the movable and immovable assets of the Defendants including hypothecated properties."
It is clearly admitted in Ext.P-17 representation submitted by the present petitioner that the aforesaid cash credit loan facility was availed by the loanees purely in their individual capacity. It so happened that the loanees are also the members of the Managing Committee of a Society established for running certain educational institutions and it is also the admitted case of the petitioners that the said Society was registered only in the year 1997, which is after availing of the above said loan facility. The loanees had subsequently sold the aforestated mortgaged property coming to an extent of 10 acres and 63 cents property, to the aforestated educational society by virtue of the sale deed dated 16.11.2001 without the consent and knowledge of the 5th respondent-Bank. It is the case of the petitioner that subsequently the ::3::
W.P.(C).No.4198 Of 2010 management of the above educational society faced a lot of financial and other problems and the second petitioner and the aforestated loanees (who were then in charge of running of the educational society) had entered into Ext.P-2 agreement dated 5.6.2008, whereunder it was agreed between those parties that the second petitioner and his nominees will be inducted into the managing committee of the said educational society and the aforestated loanees would give way to accomodate the second petitioner and his nominees on condition that the second petitioner would pump in Rs.19.50 crores to the educational society so as to facilitate the clearance of the existing liabilities of the Society. It is the case of the second petitioner that he had duly fulfilled his obligation to bring his assured contribution of Rs.19.50 crores to the Society, but that the aforestated loanees had not disclosed certain other liabilities owed by the said educational societies which are also more than Rs.22 crores and the second petitioner and the new members of the Managing Committee of the Society had also brought extra funds to clear such extra liabilities. The first petitioner herein is the Educational Society and the second petitioner is the Chairman of the said Society, after working out the aforestated re- constitution of the Society pursuant to Ext.P-2 agreement. It is the ::4::
W.P.(C).No.4198 Of 2010 specific case of the second petitioner that the aforestated loan liability incurred by the aforestated loanees as reflected in Ext.P-6 award was also one of the liabilities to be settled out of Rs.19.5 crores contributed by the second petitioner to the educational society pursuant to Ext.P-2 agreement. It is also common ground that no statutory appeal under Sec. 82 has been preferred by any of the aggrieved parties, before the Co-operative Tribunal, to challenge Ext.P-6 award and that Ext.P-6 award had become final and conclusive. Since the mortgaged property was sold to the petitioner-Educational Society, it is the admitted case of the petitioners that the petitioner society is liable to clear off the liabilities pursuant to Ext.P-6 award.
2. The aforestated liabilities covered by Ext.P-6 award were not cleared by the petitioner-society. Later, the 2nd respondent- Registrar of Co-operative Societies, had issued Ext.P-7 Circular No.1/09 dated 08.01.2009, Ext.P-8 Circular No.5/09 dated 29.01.2009 and Ext.P-9 guidelines dated 01.10.2009, whereby the terms and conditions of One Time Settlement of loan liabilities incurred by various Co- operative Societies were laid down. Para 3(ii) of Ext.P-7 Circular dated 08.01.2009 has stipulated that loans, wherein advances were above Rs.5 lakhs are to be settled after taking into account the principal ::5::
W.P.(C).No.4198 Of 2010 amount and adding interest equivalent to the said principal amount and another amount of 50% of the interest portion to be treated as administrative charges or assess the amount taking into account the capital amount of the loan with interest to be charged in accordance with the deposit rate prevailing at the time of availing of loan calculated up to date and administrative expenses at the rate of 10% to be added to the amount and from out of two modes, grant to the loanees an offer whichever is less. It is the case of the petitioners that on coming to know the said One Time Settlement Scheme as stated in Exts.P-7, P-8 and P-9, they have submitted Ext.P-10 representation dated 23.10.2009 before the Arbitrator of the 5th respondent-Bank praying that permission may be granted for settling the loan transaction covered by Ext.P-6 award under the One Time Settlement Scheme at the Adalath. Since there was no immediate response from the 4th and 5th respondents, the petitioners preferred Ext.P-11 representation dated 28.10.2009 before the 6th respondent Adalath Officer of the said District Co-operative Bank. As per Ext.P-11, the petitioners undertook to pay an amount of Rs.25 lakhs in terms of para 3(ii) of Ext.P-7 and paras 3(ii)(iii) of Ext.P-8 and also sought to return the title deeds.
Subsequently, the 5th respondent, vide Ext.P-12 letter dated 14.10.2009, ::6::
W.P.(C).No.4198 Of 2010 informed the 2nd petitioner that the said request would be considered on payment of the amount due under the One Time Settlement Scheme subject to furnishing of the appropriate court directions from the competent court. The petitioners again submitted Ext.P-15 representation dated 10.11.2009 before the 2nd respondent-Registrar of Co-operative Societies to issue necessary directions in the matter of settlement of loan transactions with the 5th respondent-Bank. The 5th respondent-Bank as per Ext.P-16 dated 10.11.2009 informed the petitioners that the loan exceeding Rs.5 lakhs are to be settled by collecting the principal amount plus an equal amount of interest plus 50% of the interest for establishment charges and that in terms of Ext.P-6 award dated 30.12.2009, the principal amount is Rs.16,90,643/- and hence the amount due under the One Time Settlement Scheme covered under Exts.P-7 to P-9 will be Rs.16,90,643/- plus an equal amount as interest plus 50% of the amount and to deduct the amount already paid, if any, to the Bank. Accordingly, the 5th respondent Bank directed the petitioners to avail this "Golden Opportunity" on or before 30.11.2009, which was the extended-time limit for availing of the said One Time Settlement Scheme. The petitioners have taken the stand that though they are satisfied with the ::7::
W.P.(C).No.4198 Of 2010 positive stand taken by the 5th respondent-Bank in Exts.P-12 and P-16 to the extent that the Bank has rightly conceded that the petitioners are entitled for the benefit of Ext.P-7 One Time Settlement scheme, their limited prayer is that the correct figure of the principal amount in terms of para 3(ii) of Ext.P-7 scheme is only Rs.10 Lakhs and not Rs.16,90,643/-. According to the petitioners, since the upper cap of the cash credit facilities availed by the petitioners has never exceeded Rs.10 lakhs, which is the upper limit, the principal amount will only be Rs.10 lakhs for the purpose of para 3(ii) of Ext.P-7 and that the said amount of Rs.16,90,643/-, mentioned in Ext.P-6 award, is the figure after capitalisation of the interest due and that this aspect is crystal clear from a mere reading of Ext.P-6 award. In Ext.P-6 itself it has been conclusively found that the limit of the cash credit availed by the loanees was only Rs.10 lakhs on 08.05.1995. The 5th respondent-Bank took the stand that the figure of the principal amount stipulated in Ext.P-6 is the correct one. Whereas the petitioners insisted that the correct figure of the principal amount in terms of para 3(ii) of Ext.P-7 scheme is only Rs.10 lakhs, in which case, the total amount due under the One Time Settlement scheme would be the principal amount of Rs.10 lakhs + an equal amount of Rs.10 lakhs + 50% of the said amount ::8::
W.P.(C).No.4198 Of 2010 of Rs.10 lakhs, totally coming to Rs.25 lakhs. The petitioners submitted Ext.P-17 representation dated 23.01.2010 before the 2nd respondent- Registrar of Co-operative Societies, claiming that the necessary guidelines and directions may be issued to the 5th respondent-Bank so as to correct the aforestated principal amount for working out the One Time Settlement Scheme so as to avoid the impugned sale of the mortgaged property. Thereafter, the notified Sale Officer had issued the impugned Ext.P-18 proceedings to conduct the sale of the aforestated mortgaged property covered by Ext.P-13 sale deed. It is the specific case of the petitioners that they were fully ready and willing to pay the entire amount of Rs.25 lakhs. It is in the light of these facts and circumstances, that the petitioners had filed the instant Writ Petition (Civil) in 08.02.2010, seeking the following reliefs:
"i) issue a writ of certiorari or any other appropriate writ, order or direction in the nature of certiorari quashing Ext.P16 as grossly illegal and wrong.
ii) to issue a writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the 5th respondent to issue appropriate order permitting the One Time Settlement proposal of the petitioners in terms of Ext.P7 to P9 circular and intimate the petitioners within a time limit affording the petitioner sufficient time to pay off the amount with One Time Settlement Scheme.
iii) to issue a writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the 2nd respondent to take appropriate action against the 5th respondent for not implementing Exts.P7 to P9 circulars in the case of the petitioner and granting benefit to them.
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W.P.(C).No.4198 Of 2010
iv) to issue a writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the 7th respondent not to proceed against the properties of the 1st petitioner Society and bring the same to sale in pursuance of Ext.P6 award till the One Time Settlement proposal of the petitioners is duly considered and appropriate orders passed therein by the 2nd respondent.
v) to issue a writ of mandamus or any other appropriate writ, order or direction in the nature of mandamus directing the 5th respondent to hand over all the prior title deeds pertaining to the property of the petitioners covered by Ext.P13 and P14 tot he 2nd petitioner immediately on deposit of One Time Settlement amount.
vi) Grant such other reliefs which are appropriate and incidental to this proceedings and which this Honourable Court deem fit and proper."
It is the specific case of the petitioners that ever since they have submitted Ext.P-11 representation dated 28.10.2009 they are fully willing and ready to pay the entire amount of Rs.25 lakhs to the 5th respondent-Bank, so as to avail the benefit of the One Time Settlement Scheme. The petitioners sought interim relief in this Writ Petition to stay all proceedings in execution of Ext.P-6 award by the 7th respondent, till the final disposal of the Writ Petition.
3. This Court admitted the Writ Petition on 09.02.2010 and had later granted stay for two months as per order dated 30.03.2010 and later extended the said stay until further orders as per order dated 28.05.2010.
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W.P.(C).No.4198 Of 2010
4. The 5th respondent District Co-operative Bank has filed statement in the matter, which reads as follows:
"1. All the averments in the writ petition, except those expressly admitted hereunder are denied.
2. The writ petition itself is not maintainable on ground that the petitioner has no locustandi to challenge the proceedings of the bank. The petitioner is not a loanee. One Wilson and Selin, Bina and Jose availed a cash credit facility of the bank and committed default in repaying the loan. Hence the bank filed arbitration case as ARC No.8/1999 dated 30.12.1999. As per the award, the bank was allowed to realise Rs.16,91,393/- which was outstanding under the cash credit with interest. The property having an extent of 10 Acres and 63 cents of land in Kazhavoor Village, Neyyattinkara Taluk, which was offered as security was transferred illegally, even without obtaining prior permission of the bank. The said transfer itself is illegal and not binding on the bank.
3. Even though the bank took a lenient view and granted the benefit of one time settlement scheme whereby the defaulters were allowed to remit the amount calculating Rs.16,90,643/- as principal + an equal amount as interest + 50% of the interest - (minus) the amount already paid in the bank. But the petitioners were not ready to remit the amount. Instead of remitting the amount as offered by the bank, the petitioners filed a representation before the bank and did not even remitted the admitted amount by the petitioners, according to their calculation. Now more than 6 years lapsed and the period of the scheme is already expired. The petitioner never approached the bank subsequently till date. It is submitted that the only intention of the petitioners is to delay the payment due to the bank. Now as on 31-01-2016, an amount of Rs.76,73,872/-.
In the circumstances, it is prayed that this Honourable Court may be pleased to dismiss the writ petition with cost.
All the facts stated above are true to the best of my knowledge and belief."
5. Heard Sri.R.S.Kalkura, learned counsel appearing for the petitioners, the learned Government Pleader appearing for respondents 1 to 4 and 7 and Sri.T.R.Hari Kumar, learned Standing Counsel for the ::11::
W.P.(C).No.4198 Of 2010 Thiruvananthapuram District Co-operative Bank appearing for respondents 5 and 6. Sri.R.S.Kalkura, learned counsel for the petitioner, has reiterated the submissions and contentions of the petitioners as reflected in the pleadings in this case.
6. It is urged by the learned Standing Counsel appearing for the 5th respondent-District Co-operative Bank that all the prayers except prayer no. (iii) are directed against the 5th respondent-District Co-operative Bank, which is a Co-operative Society, registered under the Kerala Co-operative Societies Act, 1969, and therefore no writ would lie against the said 5th respondent-District Co-operative Bank. In this regard, the learned Standing Counsel would place reliance on the rulings of the Full Bench of this Court in P. Bhaskaran & others v. Addl.
Secretary & others [1987(2) KLT 903 (FB)], John v. Liquidator [2006(1) KLT 11 (FB)] and the Larger Bench ruling of this Court (five Judges) in Association of Milma Officers v. State of Kerala 2015(1) KLT 849 (LB). In paras 30 and 31 of the Full Bench ruling in the case P. Bhaskaran & others v. Addl. Secretary & others reported in 1987(2) KLT 903 p.913, it has been held as follows:
'30. We, therefore, hold that no writ will lie against a Co-operative Society governed by the Kerala Co-operative Societies Act and these writ petitions will have to be dismissed on that score.
31. The counsel appearing for the societies have, however, assured that they ::12::
W.P.(C).No.4198 Of 2010 will mould relief to the petitioners and persons similarly situate in their respective societies in accordance with the principles settled by this Court in this decision on the interpretation of rule 200. In view of the fact that the Circular already issued by the Registrar and impugned in these writ petitions are quashed, the Registrar will issue fresh Circulars incorporating the principles stated in this Judgement and communicate the same to all Societies. These Original Petitions are disposed of accordingly.' In paras 8, 9 and 11 of Full Bench Ruling in John v. Liquidator reported in 2006(1) KLT 11 (FB), the Full Bench held that a writ will lie only when the duty owed by the Co-operative Society is of public nature or when there is any violation of statutory rules by such a body and further in para 14 it has been specifically held as follows:
"14. The petitioners have not been able to point out to us any bye-law, regulation, rule or any provision in the Act by which a duty is cast on the third respondent to return the title deeds deposited with it by the primary co-operative society on demand by a member of the primary co-operative society who had availed of a housing loan from the primary society which had been ultimately sanctioned by the Apex Society, on his mere showing that he had remitted the entire loan amount to the primary society. The petitioners also do not dispute the declaration that they had made in the application for loan -- Ext.R2(a), wherein it had been undertaken to permit all the officials of the third respondent to inspect the property at any point of time. Thus a relation with the third respondent is created by this conduct. Added to this, is the provisions in the Regulations mentioned supra, governing the grant of loan as availed of by the petitioners, which mandated the documents being deposited with the third respondent. The petitioners cannot, therefore, plead ignorance of an eventuality of a sub-mortgage of the properties, which they had mortgaged to the second respondent, in favour of the third respondent. Thus, when there is such a knowledge about the sub-
mortgage, they cannot contend that the third respondent is a party unconnected with the transaction and the retention of the title deeds by the third respondent is unauthorised. In such circumstances, the remedy is not by way of Writ Petition, but lies elsewhere, where the rights and liabilities of the parties are to be examined closely on evidence. So this Writ Petition cannot be entertained, as the relies sought for fall outside the scope of writ proceedings."
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W.P.(C).No.4198 Of 2010
7. In the Larger Bench ruling of this Court in Association of Milma Officers v. State of Kerala reported in 2015(1) KLT 849 (LB) it has been held in paras 13 & 19, as follows:
"13. Thus the Full Bench in paragraphs 27 to 30 of Bhaskaran (supra) has noticed the test to determine as to whether a body is an authority under Article 12 or not. There cannot be any dispute to the proposition, as laid down by the Full Bench in the above paragraphs, regarding the broad tests for determining a authority under Article 12. But, as referred above, present is not a case where there is any foundation laid down that respondents 2 to 4 are 'authority' within the meaning of Article 12. In Bhaskaran (supra), the Full Bench held that the Co- operative Society did not fulfill the test of Article 12. The discussion in the judgment was confined to only one aspect that is whether the Co-operative Society was authority within the meaning of Article 12 or not. Thus, the said ratio of the Full Bench judgment has to confine only to the effect that the Writ Petition shall lie against a Co-operative Society when it is an authority within the meaning of Article 12. We shall hereinafter consider further judgments and law laid down by the Apex Court regarding maintainability of Writ Petition under Article 226, even if the Co-operative Society does not come under Article 12. Writ Petition has been entertained in several other circumstances and facts. Hence the Full Bench judgment cannot be read as holding that Writ Petition will lie only against Co- operative Society which is State or authority within the meaning of Article 12. Upto that extent, we approve the law laid down by the decision in Bhaskaran (supra).
x x x x x
19. Coming to Part IXB of the Constitution which has been inserted by the 97th Amendment, it contains several constitutional provisions which regulate incorporation, number and term of members, election of the members of the Board and superannuation. Obviously, any action of any Co-operative Society if it is in breach of any of the constitutional provisions, that can be made subject matter of the Writ Petition. Present is not a case where there is any issue pertaining to any violation of Part IXB. In view of the foregoing discussion, our answer to the above questions are as follows:
i) The Writ Petitions against Co-operative Societies are maintainable in certain circumstances. When the action complained in the Writ Petition is of any statutory violation on the part of the Co-operative Society, a Writ Petition will lie. The action ::14::
W.P.(C).No.4198 Of 2010 of the Co-operative Society, if falls in a public domain or breach of the public duty is complained of, writ may also lie. However, in the absence of breach of any statutory duty or public duty, a Writ Petition cannot be entertained against a Co- operative Society.
ii) The judgment of the Full Bench in Bhaskaran (supra) confines to only consideration of a Co-operative Society under Article 12. In regard to Co-
operative Society which does not fall under Article 12, writ cannot be maintainable against the Co-operative Society on that basis. However, as we have already observed by considering issue No.(i), Writ Petition may be maintainable against Co-operative Society in the circumstances mentioned therein. Thus the ratio of the judgment in Bhaskaran (supra) is approved only to above extent.
iii) The Full Bench judgment in John (supra) lays down the correct law and we approve the said judgment.
iv) The present Writ Petition is not maintainable under Article 226 of the Constitution of India."
It is also submitted by the learned Standing Counsel appearing for the 5th respondent-District Co-operative Bank that the currency period of Exts.P-7 to P-9 One Time Settlement scheme has already expired on 30.11.2009 as pointed out in Ext.P-16 and that the provisions of the said circular as per Exts.P-7 to P-9 issued in the year 2009 did not have any statutory flavour in so far as the provisions in Sec.66A of the Act were amended only as per Act No.720/10 with effect from 28.04.2010, whereby the Registrar was authorised to issue general directions and guidelines to all or any of the Co-operative Society in furtherance and purposes or for implementing government policies for the benefit of ::15::
W.P.(C).No.4198 Of 2010 members and general public, etc. That prior to this amendment, the provision contained in Section 66A which was introduced as per Act No.1/10 which was made effective from 27.09.2001 as per SRO 262/06 published in Kerala Gazette 648 dated 27.3.2006 was only that the Registrar may issue general directions and guidelines to the Co- operative Societies in furtherance and purposes of this Act. In view of this aspect, the Division Bench of this Court in the case Kallettumkara Service Co-operative Bank v. Registrar of Co-operative Societies reported in 2005(3) KLT 483 held that the Registrar has no jurisdiction to issue such circulars directing the Co-operative Societies to permit the borrowers to settle their outstanding loan liabilities at the document rate or the then existing rate, whichever is less, for excluding penal interest and compound interest. Accordingly, it is pointed out by the learned Standing Counsel for the 5th respondent Bank that it is only to be held that at the time of the currency of Ext.P-7 One Time Settlement scheme, the same did not have any statutory backing or flavour in so far as the amendment in that regard was introduced under Sec.66 A only subsequently with effect from 28.04.2010 and in that regard the learned Standing Counsel placed reliance on the Division Bench ruling of this Court in Kallettumkara Service Co-operative Bank (supra) reported ::16::
W.P.(C).No.4198 Of 2010 in 2005(3) KLT 483. On this basis, it is contended that the impugned orders or the decision making process is not amenable to judicial review under Article 226 of the Constitution of India in so far as there is no statutory flavour in the transactions between the parties which are essentially in the realm of a transactions between the loanees and the lender.
8. True that Exts.P-7 to P-9 OTS Scheme was current only up to 30.11.2009 and that new provisions under Sec.66A empowering the Registrar to issue general directions and guidelines to the Societies in furtherance of the purposes of this Act or for implementing government policies for the benefit of the members and the general public, etc., have been brought into force only on 28.4.2010. Sec.66A, as it stood prior to the amendment made on 28.4.2010, reads as follows:
"Subject to the provisions contained in the Act and the Rules made thereunder the Registrar may issue general directions and guidelines to the Co- operative Societies in furtherance of the purposes of this Act."
This was inserted by Act 1 of 2000 published in Kerala Gazette No.1 dated 1.1.2000, which came into force from 27.9.2001 as per GO(P). No.65/06 Coop dated 27.3.2006 published in Kerala Gazette No.648 dated 27.3.2006 (SRO 262/06). It is to be noted that the Division Bench in the judgment dated 16.6.2005 in the case Kallettumkara Service Co-
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W.P.(C).No.4198 Of 2010 operative Bank v. Registrar of Co-operative Societies reported in 2005 (3) KLT 483 has clearly noted in para 4 thereof that at the time of consideration of the said case, Sec.66A though inserted by Act of 1 of 2000, was not then given effect to. It is only after the pronouncement of the judgment dated 16.6.2005 by the Division Bench in that case that the State Government has issued SRO No.262/06 in Kerala Gazette No. 648 dated 27.3.2006, whereby Act 1 of 2000 was brought into force with effect from 27.9.2001. Therefore, it is not as if at the time of issuance of Exts.P-7 Circular dated 8.1.2009 and P-8 Circular dated 29.1.2009, there was no statutory backing whatsoever for the Registrar to issue such Circulars, as the unamended Sec.66A had come into force by then. More importantly, further consideration of this aspect of the matter need not detain this Court any further in view of certain other crucial aspects of the matter and therefore, this Court need not express any final opinion on that aspect of the matter regarding the statutory flavour of Exts.P-7 to P-9 circulars. More crucially, it is to be seen that the 5th respondent-Society themselves has clearly and unequivocally agreed in Ext.P-16 dated 10.11.2009 that the petitioners are eligible for OTS Scheme as per Exts.P-7 to P-9. The only dispute between the petitioner and the 1st respondent-Bank is as to what exactly is the ::18::
W.P.(C).No.4198 Of 2010 principal amount to be reckoned for working out the actual benefit of OTS formula.
9. The Writ Petition was admitted by this Court as early as in 9.2.2010 and interim stay was granted on 30.3.2010 and it was extended until further orders as per order dated 28.5.2010. The matter is pending here for such a long time. Therefore, since this Court is convinced that as a strong case has been made out by the petitioners on the aspects based on Ext.P-16, it is only just and fair that this Court considers the matter on merits so as to protect the interests of both parties. If there was no dispute as regards the figure of the principal amount to be reckoned for calculating the OTS formula, then the 5th respondent-Bank would have fully accepted the OTS scheme in favour of the petitioners and the liabilities could have been cleared at least by the end of November, 2009. Since the dispute on this narrow point between the parties is pending for a long time, it is only better in the interest of justice and fairness, that this Court does not shirk off its responsibility from adjudicating the merits of the matter. Moreover, in many cases relating to even SARFAESI proceedings, this Court would exercise its discretion in such a manner that interests of both parties are protected by granting some reasonable opportunity to the defaulters to ::19::
W.P.(C).No.4198 Of 2010 clear off the liabilities in instalments, to avoid sale of their properties. Therefore, on the merits of the matter, the main question to be decided is as to whether the figure of the principal amount to work out the OTS formula is Rs.16,90,643/- as mentioned in Ext.P-16 or Rs.10 Lakhs as calculated by the petitioner in Ext.P-15. From a reading of Ext.P-6 award, it is clear that the limit of the cash credit loan facility availed by the predecessor-in-interest of the petitioners was only Rs.10 Lakhs. The figure of Rs.16,90,643/- mentioned in Ext.P-6 award is the principal amount plus subsequent interest capitalised thereof in terms of the procedure to be adopted for calculation of such liabilities on the arbitral proceedings and terms and conditions between the parties. Therefore, it is crystal clear from a mere reading of page 2 of Ext.P-6 award (see page 30 of the paper book) that the initial cash credit facility owed by the predecessors-in-interest of the petitioners is only Rs.5 Lakhs and it was subsequently extended as Rs.10 Lakhs on 8.9.1995. Therefore, the upper limit of the cash credit facility was Rs.10 Lakhs since 8.9.1995. In this view of the matter this Court is of the considered opinion that the stand taken by the petitioners that the figure of the principal amount to be reckoned can only be treated as Rs.10 Lakhs in the cash credit transaction and not Rs.16,90,643/- (as mentioned in Ext.P-16) as the ::20::
W.P.(C).No.4198 Of 2010 said figure is arrived by including capitalisation of the interest also. In that view of the matter the stand taken by the petitioners in Ext.P-15 that the total figure of the amount to be cleared in the OTS formula is Rs.25 Lakhs is correct as the principal amount is Rs.10 Lakhs and the equal interest amount will come to Rs.10 Lakhs and towards administrative charges Rs.5 Lakhs and therefore, the total amount payable by the petitioner is Rs.25 Lakhs in terms of the formula laid down in clause (ii) of para 3 of Ext.P-7 and in terms of P-8 OTS Schemes.
10. However, there is one crucial aspect of the matter in which justice should be effectively rendered in favour of the 5th respondent-
Bank. Petitioners' consistent case was that they were fully ready and willing to pay the entire amount of Rs.25 Lakhs even as in November, 2009. It is their case that they were disabled from making this payment as the 5th respondent-Bank insisted that the said amount has to be calculated on the basis of details shown in Ext.P-16 and that they refused to accept the offer of the petitioners and that therefore, even if the petitioners had paid the said amount, the bank authorities would not have given the title deed to the petitioners and would have proceeded with the proceedings. But the petitioners should have atleast ::21::
W.P.(C).No.4198 Of 2010 deposited the money before this Court or should have requested this Court to direct the 5th respondent-Bank to accept the above said amount of Rs.25 Lakhs at the time of issuance of interim stay order without prejudice to the contentions of either side so that the bank would not have lost huge interest on the said amount of Rs.25 Lakhs during the pendency of this Writ Petition for the last more than 6 years. True, that this Court had granted an unconditional interim stay order on 30.3.2010 and the same was extended until further orders on 28.5.2010. But it was solely the look out of the petitioners to realise that the only dispute was for any liability over and above Rs.25 Lakhs.
The petitioner should have ensured timely payment of the said admitted amount of Rs.25 Lakhs so that the 5th respondent-Bank would not have lost such huge interest during the pendency of this Writ Petition for the last more than 6 years. The petitioners have enjoyed the benefit of the stay order during the pendency of this Writ Petition and therefore, this Court is obliged to ensure that justice and equity is properly worked out between the parties as otherwise it would amount to miscarriage of justice against the rights and interests of 5th respondent-Bank. It is well known that the deposits are made in Service Co-operative Banks like the 5th respondent-Bank by ordinary hardworking people like farmers, ::22::
W.P.(C).No.4198 Of 2010 salaried personnel having limited income, pensioners, self employed persons, etc., and it is their money earned from hardwork which is deposited with the bank so that the banks can themselves involve in the business of lending. Therefore, the rights and interest of the bank should be equitably recompensed in the facts and circumstances of this case.
11. The learned counsel for the petitioners was given opportunity on more than one occasion during the hearing of this case to get specific instructions from the petitioners as to the interest payable by them on the said amount of Rs.25 Lakhs for the period from the expiry of the OTS scheme (30.11.2009) up to the date of actual payments. This Court has pointed out that as discernible from Ext.P-6 award, the rate of future interest which is to be granted after the decree is @ 21% per annum as per the norms and procedures regulating such arbitral process and whether the petitioners would act out of fairness to pay the said interest @ 21%. Today, when the matter was taken up for consideration Sri.R.S.Kalkura, learned counsel for the petitioners, submits that interest @ 21% is on the higher side and this Court may fix the rate of interest @ 6% per annum. This Court has no hesitation to hold that interest @ 6% per annum will amount to total injustice and ::23::
W.P.(C).No.4198 Of 2010 unfairness as far as the 5th respondent-Bank is concerned. It is clearly admitted by the petitioners in Ext.P-17 that the original loanees had availed loan in 1994 purely in their individual capacities. It may be noted that the loanees also happened to be members of the Managing Committee of the Educational Society, which was registered subsequently in the year 1997 after availing the loan in the year 1994. The property coming to 10 acres and 63 cents was mortgaged by the loanees to the 5th respondent-Bank. It is without the consent and knowledge of the bank the original loanees had sold the property of 10.63 acres to the Educational Society as per Exts.P-13 & P-14 sale deed dated 16.11.2001. Ext.P-6 award was passed on 30.12.1999 which is much prior to the execution of those sale deeds. Ext.P-6 award has become final and conclusive between the parties. Ext.P-2 agreement for inducting the 2nd petitioner and his nominees to take over the management of the Educational Society after replacing the original loanees was on 5.6.2008. But for the OTS Scheme, the liability as on Ext.P-6 award dated 30.12.1999 was Rs.16,91,393/- along with future interest @ 21% for Rs.16,94,643/- from 7.2.1998 onwards. As per the statement filed by the 5th respondent-Bank the outstanding loan calculated on the basis of the award as on 31.1.2016 comes to ::24::
W.P.(C).No.4198 Of 2010 Rs.76,73,872/-. Therefore, this Court is of the considered opinion that prima facie, in the facts and circumstances of the case, the interest payable should be 21% from 1.12.2009 up to the date of actual payment. This Court is guided in that regard by the interest rate shown in Ext.P-6. The petitioner also has a case that in case the land in question is sold as per the impugned sale proceedings, then the recognition of the Engineering College run by the petitioner-society will also be detrimentally affected. However, in view of the fact that this Court had not imposed any conditions while granting the interim stay and in view of the long pendency of the matter and in view of the submission made by the counsel for the petitioner that the College Management is now in financial doldrums, this court would scale down the said interest rate to 18% per annum.
12. In this view of the matter, it is ordered that the petitioners shall pay the entire OTS amount of Rs.25 Lakhs due as on 30.11.2009 along with interest @ 18% per anum from 1.12.2009 up to the actual date of payment. Entire amount in this regard should be cleared off by the petitioners on or before 31.5.2016. It will be open to the 5th respondent-bank to give credit to amounts, if any, already paid towards the above said loan liability as indicated in Ext.P-16. It is further made ::25::
W.P.(C).No.4198 Of 2010 clear that in case the petitioners do not clear off the aforestated entire liability amounts (inclusive of interest as directed above) on or before
31.5.2016, then the respondents will be at liberty to proceed with the impugned Ext.P-18 sale proceedings and the petitioner will forfeit the right to claim any benefit under the OTS scheme and the entire liability on the basis of Ext.P-6 award could be worked out effectuating the impugned Ext.P-18 sale proceedings. In the event of the petitioners clearing off the entire aforestated liability amount on or before 31.5.2016, then the impugned Ext.P-18 sale proceedings will stand rescinded and the 5th respondent-Bank shall return back the original of the title deed, to the petitioners without any further delay.
With these observations and directions, this Writ Petition (Civil) stands finally disposed of.
ALEXANDER THOMAS, Judge.
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