IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.T.SANKARAN MONDAY, THE 7TH JUNE 2010 / 17TH JYAISTHA 1932 WP(C).No. 30295 of 2009(F) PETITIONERS: --------------- 1. KANNUR DISTRICT CO-OPERATIVE BANK LTD., KANNUR-1, REPRESENTED BY ITS GENERAL MANAGER-IN CHARGE. 2. THE PRESIDENT, KANNUR DISTRICT CO-OPERATIVE BANK LTD., KANNUR-1. 3. THE MANAGER, KANNUR DISTRICT CO-OPERATIVE BANK LTD., TOWN BRANCH, KANNUR-1. BY ADV. SRI.P.NARAYANAN SRI.M.C.RATNAKARAN SMT.M.R.JAYALATHA RESPONDENTS: --------------- 1. T.OOMMAN PANICKER, TOPS MANOR, PANAVELI, KOTTARAKKARA, KOLLAM DISTRICT. 2. KERALA LOK AYUKTA, REPRESENTED BY ITS REGISTRAR, THIRUVANANTHAPURAM. R1 BY ADV. SRI.P.P.JACOB SRI.T.P.GOPAKUMAR THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/06/2010, ALONG WITH WPC NOS.6646 AND 7392 OF 2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX IN W.P.(C) NO.30295 OF 2009,10 PETITIONERS' EXHIBITS: EXT.P1 COPY OF THE AWARD IN A.R.C.NO.160 OF 2008. EXT.P2 COPY OF THE ORDER DATED 29.1.2009 IN I.A.NO.14/2009 IN R.P.NO.8/09 PASSED BY THE CO-OP. ARBITRATION TRIBUNAL. EXT.P3 COPY OF THE WRIT PETITION FILED BY THE FIRST RESPONDENT IN W.P.(C) NO.12509 OF 2009. EXT.P4 COPY OF THE JUDGMENT IN W.P.(C) NO.12509 OF 2009. EXT.P5 COPY OF THE NOTICE DATED 12.10.2009 IN COMPLAINT NO.1218 OF 2009 ISSUED BY THE SECOND RESPONDENT. EXT.P6 COPY OF THE COMPLAINT NO.1218/2009 ON THE FILE OF THE SECOND RESPONDENT. EXT.P7 COPY OF THE ORDER DATED 12.10.2009 IN I.A.NO.526/2009 IN COMPLAINT NO.1218/2009 PASSED BY THE SECOND RESPONDENT. EXT.P8 COPY OF THE ORDER DATED 18.11.2009 IN COMPLAINT NO.1218/2009 PASSED BY THE SECOND RESPONDENT. EXT.P9 COPY OF THE NOTICE OF PERSONAL APPEARANCE DATED 19.4.2010 ISSUED BY THE KERALA LOK AYUKTA. RESPONDENTS' EXHIBITS: EXT.R1(a) PHOTOCOPY OF THE RECEIPT ISSUED BY THE PETITIONER BANK. //TRUE COPY// AHZ/ K.T.SANKARAN, J. ------------------------------------------------------ W.P.(C). NO. 30295 of 2009 and W.P.(C) Nos.6446 & 7392 OF 2010 ------------------------------------------------------ Dated this the 7th day of June, 2010 JUDGMENT W.P(C) Nos.6446 & 7392 of 2010 are filed by T.Oommen Panicker against the Kannur District Co-operative Bank Ltd. and others. W.P(C) No.30295 of 2009 is filed by the Kannur District Co- operative Bank Ltd. and others against T.Oommen Panicker and the Kerala Lok Ayukta. 2. T.Oommen Panicker (hereinafter referred to as “the defaulter”) availed a loan from the Kannur District Co-operative Bank (hereinafter referred to as “the bank”). The loan was for Rs.15,00,000/-, which was availed on 17/8/2005. The defaulter did not pay any amount to the loan account. Therefore, the bank initiated arbitration proceedings. In A.R.C.No.160/2008, the arbitration proceedings, an award was passed for Rs.21,08,678/- together with interest and costs against the defaulter. The defaulter challenged the award before the Kerala Co-operative Arbitration W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 2 :: Tribunal in R.P.No.8/2009. The Tribunal granted a stay of further proceedings pursuant to the award, on condition of payment of Rs.15,00,000/- by the defaulter on or before 26/2/2009. The defaulter did not pay the amount as directed by the Tribunal. Therefore, proceedings for recovery of the amount were initiated. The defaulter filed W.P(C) No.12509 of 2009 challenging the recovery proceedings and the sale notice dated 6/4/2009. 3. W.P(C) No.12509 of 2009 was disposed of by the judgment dated 8/7/2009. It was noticed by the learned single judge that the defaulter withdrew all his contentions in challenge of the award and the defaulter only sought for an opportunity to move the bank for waiver of the penal interest. It was also submitted on behalf of the defaulter for providing installment facility to discharge dues. The learned single judge held thus: “I heard the counsel appearing for the first respondent also. Having regard to the submissions made, I dispose of this writ petition with the following directions. i) I record submission of the counsel for the petitioner that he is giving up the challenge in ARC.No.160/08 against Ext.P2 award. W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 3 :: ii) It is directed that the petitioner will be permitted to pay the amount due under Ext.P2 award in 5 equal monthly installments, first of which shall be paid on or before the 30thJuly, 2009 and the subsequent instalments shall be paid on or before 30th every succeeding month. iii) Subject to payment as above, recovery proceedings pursuant to Ext.P4 shall be kept in abeyance and in case any default is committed in paying the instalments as above, Bank will be free to continue the recovery already initiated. iv) It is also made clear that this judgment will not stand in the way of the petitioner approaching the Bank for waiver of the penal interest levied on the him and it is entirely up to the Bank to consider the same.” 4. The defaulter did not comply with the directions contained in the judgment dated 8/7/2009. Therefore, proceedings for recovery of the amounts were continued against the defaulter. 5. On 9/10/2009, the defaulter filed complaint No.1218 of 2009 before the Kerala Lok Ayukta challenging the sale notice dated 5/9/2009. Stay of sale was also applied for before the Lok Ayukta. The defaulter did not disclose before the Lok Ayukta about the filing of W.P(C) No.12509 of 2009, the judgment passed by this Court on 8/7/2009 and also the default committed by him to comply with the W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 4 :: directions in the judgment. The Lok Ayukta passed an order of stay on 12/10/2009. On 23/10/2009, the bank filed W.P(C)No.30295 of 2009 before this Court challenging the stay order passed by the Lok Ayukta and also the complaint filed by the defaulter before the Lok Ayukta. The bank also prayed for a declaration that the Lok Ayukta has no power or jurisdiction to entertain a complaint of the nature filed by the defaulter. On 27/10/2009, this Court granted an interim stay of operation of the stay order passed by the Lok Ayukta and also stayed all further proceedings in the complaint pending before the Lok Ayukta. It would appear that the Lok Ayukta extended the stay order thereafter. Probably, nobody brought to the notice of the Lok Ayukta about the interim order granted by this Court. 6. On 7/1/2010, the bank issued a sale notice for sale of the property belonging to the defaulter. It is stated that on 14/1/2010, the Registrar of Co-operative Societies issued Circular No.2/2010 to extend the benefit of One Time Settlement facility with effect from 1/02/2010 in favour of the defaulters including the defaulters against whom arbitration proceedings and execution proceedings were pending. As per the sale notice dated 7/1/2010, the sale was to be W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 5 :: held on 16/2/2010. In the meanwhile, on 25/1/2010, this Court passed the following order in W.P.(C) No.30295 of 2009: “Heard the learned counsel for the petitioner and the learned counsel for the 1st respondent. The learned counsel for the petitioner pointed out that as per Exhibit P4 Judgment 1st respondent was allowed to clear the loan amount in 5 equal monthly instalments starting from 30thJuly,2009. It is submitted that suppressing the same the 1st respondent approached the Lok Ayukta and obtained Exhibit P7 order staying the recovery proceedings. I am satisfied that the contentions raised by the petitioner are correct. The learned counsel for the 1st respondent submitted that if sufficient time is granted he will clear the arrears. There will be a direction to the 1st respondent to remit an amount of Rs.5 lakhs on or before 15-2.2010. Post on 20.2.2010.” 7. The defaulter complied with the order dated 25/1/2010 and deposited Rs.5 lakhs within the time. However, on the next day, namely, 16/2/2010, the Sale Officer conducted the sale of the property belonging to the defaulter, having an extent of 10.05 acres. In the auction sale, P.E. Sreejayan, the fifth respondent in WP(C) No.7392 of 2010 (hereinafter referred to as “the auction purchaser”) bid in auction for a sum of Rs.40,20,000/-. He deposited 15% of the W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 6 :: bid amount. On 16/2/2010, the Sale Officer issued a notice to the defaulter intimating him about the purchase of the property by the auction purchaser and directing the defaulter to deposit the entire dues within 30 days from 16/2/2010. It was mentioned that if the entire amount due was not paid within 30 days from the date of the sale, the sale would be confirmed. 8. On 25/2/2010, the defaulter filed W.P(C) No.6446 of 2010 challenging the sale notice dated 7/1/2010. It is to be noted that on the date on which the Writ Petition was filed, the sale had already taken place on 16/2/2010. In W.P(C) No.6446 of 2010, there is also a prayer for extending the benefit of One Time Settlement Scheme in favour of the petitioner. Challenging the notice dated 16/2/2010 issued by the Sale Officer directing the defaulter to pay the entire dues within 30 days from the date of sale, the defaulter filed W.P(C)No.7392 of 2010. In that Writ Petition also, there is a prayer for extending the benefit of One Time Settlement Scheme in favour of the defaulter. 9. When the Writ Petitions referred to above came up for W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 7 :: hearing on 10/03/2010, the learned Single Judge passed the following order: “Having heard the counsel for the petitioner Mr.P.P.Jacob, Adv.P.Narayanan, the counsel for the bank and Adv.P.C.Sasidharan who appears for the 5th respondent in W.P.(C) No.7392/2010 at length, I find that there is serious dispute between the parties regarding the exact amount that is liable to be paid by the petitioner as One Time Settlement of his dues to the bank. It is absolutely necessary that the exact amount is quantified so as to give an opportunity to the petitioner to avail the benefits of the One Time Settlement Scheme evidenced herein by Ext.P10. Therefore, there will be an interim direction to the third respondent-Joint Registrar of Co-operative Societies (G) Kannur, to convene and conduct a special Adalath and to determine the exact amount that the petitioner is liable to pay by way of One Time Settlement of his dues in accordance with Ext.P10 scheme. On such determination, the petitioner shall pay the amount due on 15.3.2010. The parties shall appear before the Joint Registrar, Kannur at 4 p.m on 12.3.2010, without further notice. The 5th respondent in W.P.(C) No.7392/2010, who is the auction purchaser is free to approach the Sale Officer for a suitable extension of the time for deposit of the balance purchase price. Post on 15.3.2010.” 10. The Writ Petition again came up for hearing on 15/03/2010. By that time, the special Adalath was held. The learned Single Judge passed the following order on that date: W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 8 :: “In accordance with the directions in the interim order dated 10.3.2010, it is submitted that a special Adalath was conducted and that the exact amount due and payable by the petitioner has been determined by the third respondent Joint Registrar. The amount is Rs.22,38,800/-. The counsel for the petitioner has today handed over two demand drafts for a total amount of Rs.13 lakhs. For the balance amount, the counsel for the petitioner has handed over a banker's cheque. The demand drafts as well as the banker's cheque have been received by the counsel for the first respondent subject to the liability of the petitioner to pay 5% of the purchase price for which the petitioner's property has been sold in accordance with Rule 82 of the Co-operative Societies Rules. The counsel for the petitioner disputes the claim of the counsel for the bank for the 5% amount under Rule 82. According to the petitioner the payment has been made under protest to save his property from sale. This is recorded. Post on 17.3.2010.” 11. There is a dispute between the parties as to whether the defaulter is liable to pay 5% of the bid amount as provided in Rule 82 of the Kerala Co-operative Societies Rules. The defaulter had filed a petition before the Joint Registrar to set aside the sale under Rule 83 of the Kerala Co-operative Societies Rules, alleging irregularity and fraud in conducting the sale. However, in view of the settlement of the case under One Time Settlement Scheme and in view of the agreement arrived at between the parties before the W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 9 :: Special Adalath, the Assistant Registrar/Sale Officer passed an order dated 12/4/2010 setting aside the sale, invoking the power under Rule 82 of the Rules. The defaulter was directed to deposit 5% of the purchase price, the amount being Rs.2,01,000/-, within 45 days. The defaulter has challenged the order dated 12/4/2010 passed by the Assistant Registrar/Sale Officer in W.P(C)No.14941 of 2010 and that Writ Petition is pending. 12. In view of the pendency of W.P(C) No.14941 of 2010, it is not proper and it is not necessary also to deal with the rival contentions made by the parties as to the liability of the defaulter to pay 5% of the bid amount. According to the defaulter, he had filed a petition under Rule 83 before the Joint Registrar, the authority who has to decide the question under Rule 83. Instead of disposing the application under Rule 83, a short cut was adopted and the petition was disposed of by the Assistant Registrar under Rule 82 of the Rules. It is submitted by the defaulter that the Assistant Registrar has no jurisdiction to deal with the application for setting aside the sale. Moreover, the defaulter contended that since the full bid amount was not deposited by the defaulter, there is no question of W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 10 :: payment of 5% of the bid amount. As stated earlier, it is not necessary to decide upon these points in this Writ Petition, particularly, when W.P(C) No.14941 of 2010 is pending disposal. 13. The defaulter also raised a contention that instead of reckoning Rs.15 lakhs as principal amount, the bank had taken Rs.21,08,678/- as the principal amount as on 1/1/2008 and interest was calculated on that amount. Therefore, according to the defaulter, the amount arrived at in One Time Settlement is excessive and he is entitled to get back the excess amount paid. The bank raised a contention that there is no factual foundation for such a plea and this is a disputed question of fact. While disposing of these Writ Petitions, I do not propose to adjudicate upon this question, since this is not a question which is required to be decided in the Writ Petitions. If the defaulter is aggrieved by the amount at which O.T.S benefit was extended to him, he may seek appropriate remedies, if any, available under law. All the contentions of the parties on this point are left open. 14. Since the sale had taken place and since the O.T.S W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 11 :: benefit had been extended in favour of the defaulter, the relief prayed for in W.P(C) No.6446 of 2010 need not be considered now and the reliefs prayed for by the defaulter have become infructuous. In so far as W.P(C) No.7392 of 2010 is concerned, the main relief prayed for by the defaulter is to quash Exhibit P10, the order dated 16/2/2010 issued by the Assistant Registrar/ Sale Officer directing the defaulter to deposit Rs.40,20,000/-, the bid amount within 30 days from the date of sale. Since the One Time Settlement was arrived at and since the sale was set aside and since the defaulter had paid the full amount claimed by the bank under the One Time Settlement, it is not necessary to consider the challenge against notice dated 16/2/2010. The other reliefs prayed for in W.P(C) No.7392 of 2010 have become infructuous. 15. The Lok Ayukta had entertained the complaint filed by the defaulter without being informed about the disposal of W.P(C) No.12509 of 2009 by this Court. The Lok Ayukta had passed an interim order of stay. This Court granted stay of that order and also stayed all further proceedings before the Lok Ayukta. Thereafter, One Time Settlement took place and the defaulter paid W.P.(C) NOS.30295/2009 AND 6446 & 7392 OF 2010 :: 12 :: the entire amounts due to the bank. Therefore, the prayer made by the defaulter before the Lok Ayukta does not survive now. It is agreed by the defaulter that he does not intend to prosecute the complaint before the Lok Ayukta. I record the submission and close W.P(C) No. 30295 of 2009 accordingly. It is also made clear that in view of the subsequent developments, the complaint before the Lok Ayukta has become infructuous. Accordingly, complaint No.1218 of 2009 pending before the Lok Ayukta is closed. The Writ Petitions are disposed of as above. (K.T.SANKARAN) Judge scm/ahz/