IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 3RD JUNE 2011 / 13TH JYAISHTA 1933 WP(C).No. 33642 of 2007(E) ---------------------------------------- PETITIONER(S): ------------------------ NEDUMATTOM SERVICE CO-OPERATIVE BANK LTD.NO.1292, VANDAMATTOM P.O., THODUPUZHA, IDUKKI, REPRESENTED BY ITS SECRETARY, LUCY THOMAS, D/O. THOMAS, AGED 55 YEARS, VETTIKUZHIYIL HOUSE, EZHALLOOR P.O., THODUPUZHA. BY ADV. SRI.THOMAS M.JACOB SRI.G.RAJAGOPAL RESPONDENT(S): -------------------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, CO-OPERATION DEPARTMENT, GOVERNMENT SECRETARIAT, TRIVANDRUM. 2. REGISTRAR OF CO-OPERATIVE SOCIETIES, TRIVANDRUM. 3. ASSISTANT REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES, THODUPUZHA. 4. K.E.SASI, AGED ABOUT 53 YEARS, S/O. ETTA, KAVANAPARAMBIL, WEST KODIKKULAM P.O., THODUPUZHA, PIN-685 582. 5. PARUKUTTY, AGED ABOUT 87 YEARS, W/O. ETTA, KAVANAPARAMBIL, WEST KODIKKULAM P.O., THODUPUZHA, PIN-685 582. R1 TO R3 BY GOVERNMENT PLEADER SRI. ANTONY MUKKATH R4 & R5 BY ADV. SMT.K.V.RESHMI THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03/06/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts 2/- -2- WP(C)NO.33642/2007 APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF THE ORDER NO.C/1637/02 DATED 10/7/2003 PASSED BY THE 3RD RESPONDENT. P2 COPY OF THE APPEAL FILED BEFORE THE 2ND RESPONDENT. P3 COPY OF THE ORDER NO.7623/04 PASSED BY THE 2ND RESPONDENT. P4 COPY OF THE APPEAL DATED 8/9/2006 SUBMITTED BEFORE THE 1ST RESPONDENT. P5 COPY OF THE ORDER NO.G.O.(RT)NO.479/07/CO-OP DATED 24/7/07. P6 COPY OF THE CIRCULAR NO.35/01 DATED 27/9/2001 P7 COPY OF THE CIRCULAR NO.CB(1)27812/01 DATED 12/10/2001. P8 COPY OF THE LETTER DATED 21/01/2003 ISSUED BY THE SECRETARY OF THE BANK TO THE PARTY RESPONDENTS. RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts S. SIRI JAGAN, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No. 33642 of 2007 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 3rd day of June, 2011 J U D G M E N T The petitioner is a Co-operative Bank. The respondents 4 & 5 took loans from the bank. The bank initiated arbitration proceedings against them to recover the arrears of loan amounts. When arbitration cases were so filed, respondents 4 & 5 approached the bank to close the defaulted loans by paying the interest portion and allowing them to pay the principal amount by way of adjustment from fresh loans to be granted to them. The bank accepted the proposal and granted them further loans adjusting the said loan amounts against the principal amount accepting the interest paid by respondents 4 & 5. Consequently the liability under the loan except the interest portion continued by way of the 2nd loans although the 1st loans were closed. W.P.(C)No. 33642 of 2007 -2- According to the petitioner bank, the respondents 4 & 5 did not apply for closing the loan under the One Time Settlement Scheme as per Exts.P6 & P7 orders. The petitioner points out that as per Ext.P7 for availing of the benefit of One Time Settlement Scheme, the borrower has to apply for the same by paying an amount not less than the 10% of the outstanding amount. Respondents 4 & 5 never submitted an application by paying not less than 10% amount. But by Ext.P1, the 3rd respondent - Assistant Registrar of Co-operative Societies, directed the bank to give to the respondents 4 & 5 the benefit of One Time Settlement Scheme for the 1st loans and to refund the alleged excess amounts paid by the respondents 4 & 5. Against that direction, the petitioner bank filed Ext.P2 appeal. In the meanwhile, the 2nd respondent - Registrar of Co-operative Societies issued Ext.P3 directing the bank to refund alleged excess amounts after giving benefit of the One Time Settlement Scheme to respondents 4 & 5. Subsequently by Ext.P5 order, the Government rejected the W.P.(C)No. 33642 of 2007 -3- appeal filed by the bank. It is under the above circumstances the petitioner has filed this writ petition seeking the following reliefs: “I) Declare that respondents 4 and 5 are not entitled to the benefits of One Time Settlement Scheme in the above case and set aside Ext.P-1, P-3 and P-5 orders. II) Issue a Writ of Certiorari or such other appropriate Writ, Order or direction, quashing Ext.P-1, P-3 and P-5 orders;” 2. A counter affidavit has been filed by the 1st respondent supporting the impugned orders. According to them, once the entire amount of loan is paid by the borrower, the borrower is entitled to the benefit of One Time Settlement Scheme as claimed by Ext.P6, which only has been directed as per the impugned orders. Although no counter affidavit has been filed by the respondents 4 & 5, the counsel appearing for them also stoutly supports the impugned orders. 3. I have considered the rival contentions in detail. 4. Before dealing with the contentions of the parties, I must mention one dismal situation which Co-operative banks are facing in the State. Writ petitions are W.P.(C)No. 33642 of 2007 -4- pending in this court against more than 30 Co-operative banks filed by the depositors of the bank complaining that the banks are not returning the deposits of the depositors, allegedly on the ground of financial stringencies. It appears that the Government and the officers are more concerned about the borrowers getting their liability reduced than to see that the depositors who like honeybees put their small savings in co-operative banks get their deposit back. In fact in those writ petitions, in spite of specific directions, the Government was not able to do anything to give justice to the poor depositors. I am of opinion that this case has to be appreciated in that background. 5. Admittedly, in this case the respondents 4 & 5 have not applied for benefits of One Time Settlement Scheme. In Ext.P7 circular issued by the Registrar of Co-operative Societies, Clause 6 specifically states that, within the prescribed period, the borrower has to file an application for One Time Settlement Scheme by paying not less than 10% of the outstanding amount. In this case, what W.P.(C)No. 33642 of 2007 -5- the respondents 4 & 5 have done is not to apply for the One Time Settlement Scheme, but to request the bank to close the 1st loan accounts by accepting the interest portion and adjusting the principal amount from further loans to be granted to them. Consequently the loan still survives with fresh dates of availing of loan. That cannot be stated to be payment of the loan amounts under the One Time Settlement Scheme. In the above circumstances, I do not think that the 3rd respondent or the 2nd respondent could have in law directed the bank to refund amounts credited in the loan accounts as in satisfaction of the loan accounts on the ground that the respondents 4 & 5 are eligible for benefit of One Time Settlement Scheme and therefore excess amount paid by them has to be refunded to them. In fact there is no payment from respondents 4 & 5, bank's money is being only adjusted from one loan to another loan which cannot be termed as payment of the outstanding loan amount by the borrowers. Therefore, I am satisfied that Exts.P1, P3 & P5 are totally unjust and unreasonable in the W.P.(C)No. 33642 of 2007 -6- facts of the case. Accordingly they are quashed. The writ petition is allowed as above. Sd/- S. SIRI JAGAN JUDGE //True copy// P.A. TO JUDGE shg/