IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN THURSDAY, THE 29TH MAY 2008 / 8TH JYAISHTA 1930 OP.No. 33014 of 2001(E) --------------------------------- PETITIONER: ------------------- THE KOTTAYAM CO- OPERATIVE URBAN BANK LIMITED, NO.421, REP.BY ITS GENERAL MANAGER, THIRUNAKAR, KOTTAYAM. BY ADV. SRI.SURIN GEORGE IPE RESPONDENTS: ------------------------ 1. THE KERALA CO - OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM. 2. THE ASSISTANT REGISTRAR OF CO- OPERATIVE SOCIETIES (GENERAL), (ARBITRATOR), KOTTAYAM. 3. SABU V.JOSE, PROPRIETOR, ALIED RUBBER INDUSTRIES, CHENGALAM P.O., KOTTAYAM - 686 585. R1 & R2 BY GOVERNMENT PLEADER SRI.P.K.RAVIKRISHNAN R3 BY ADV. SRI.WILSON URMESE THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 29/05/2008, ALONG WITH WPC NO. 33095 OF 2006 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP. NO.33014/ 2001 ORDER ON CMP. NO.53914/2001 IN OP. 33014/2001 DISMISSED 29/05.2008 SD/- THOTTATHIL B.RADHAKRISHNAN, JUDGE APPENDIX PETITIONERS EXHIBITS EXT.P1:- COPY OF THE AWARD PASSED BY THE SECOND RESPONDENT IN A.R.C. 60/97 DT. 24.11.1999. EXT.P2:- COPY OF THE REVISION MEMO FILED BY THE 3RD RESPONDENT BEFORE THE TRIBUNAL DT. 5.6.2000. EXT.P3:- COPY OF THE OBJECTION STATEMENT FILED BY THE PETITIONER BEFORE THE IST RESPONDENT IN RP. NO.98/2000 DT. 17.8.2000. EXT.P4:- COPY OF THE ORDER PASSED BY THE IST RESPONDENT IN RP. NO.98/2000 DT. 23.6.2001. EXT.P5:- COPY OF THE LETTER DT. 12.6.2001 SUBMTITED BY THE 3RD RESPONDENT TO THE PETITIONER. /TRUE COPY/ P.A. TO JUDGE tss Thottathil B. Radhakrishnan, J. ================================== O.P.No.33014 of 2001 & W.P.(C)No.33095 of 2006 ================================== Dated this the 29th day of May, 2008. JUDGMENT Petitioner in the latter is a debtor of the petitioner in the former. 2. The creditor, a Co-operative Bank, filed an arbitration case. That resulted in an award. The creditor is not shown to have filed any written statement in that case though he participated. All that the debtor sought for was for further time to pay the amount. However, against that award in A.R.C.No.60 of 1997 on the file of the Assistant Registrar of Co-operative Societies (General), Kottayam, the debtor filed R.P.No.98 of 2000 before the Kerala Co-operative Tribunal. That was disposed of on 23-6-2001 remitting the matter to the Arbitrator on the premise that the debtor did O.P.33014/01&WPC33095/06 -:2:- not have appropriate opportunity of being heard though he has an arguable case. 3. The creditor challenged the aforesaid order of remand in O.P.No.33014 of 2001. This Court granted an interim order of stay of operation of that remand order in that case. Thereafter, on the assumption that the said stay order had preserved the award, execution proceedings followed and distress action reached the doors of the debtor. He, therefore filed W.P(C).33095 of 2006 challenging the distress action on the ground that the award does not survive the remand order of the Tribunal. 4. Having heard the learned counsel for the parties, I was under the impression that the order of the Tribunal, being only one of remand, it would be appropriate to relegate the parties to the Arbitrator. On a deeper consideration of the O.P.33014/01&WPC33095/06 -:3:- materials on record and the arguments advanced on behalf of the parties, I deem it appropriate to consider further, the case on merits. 5. The case projected by the debtor before the Tribunal was that the creditor had a liability under the term of the contract between the parties to pay the insurance premium and keep the insurance of the hypotheca under the transaction live and that the creditor had failed to do so. This, according to the debtor, had deprived him of due insurance amount of certain loss by fire in the business premises. It needs to be noticed that the debtor deals in rubber. It has also to be at once noticed that though such a case was projected before the Tribunal, there was no such pleadings by the debtor before the Arbitrator. It was not a case where the debtor was set ex-parte by the Arbitrator. O.P.33014/01&WPC33095/06 -:4:- 6. Going by the materials placed on record in these two writ petitions, it can be seen that following ARC No.60 of 1997 from which these writ petitions arise, the debtor had filed ARC No.1/98 before the same Arbitrator claiming damages, essentially on the alleged breach of the duties of the creditor under the terms of the contract, including the alleged responsibility to pay the insurance premium. That arbitration case was dismissed and that has become final. 7. Not only that, in answer to W.P.(C) No.33095 of 2006, the creditor has filed a counter affidavit producing documents, including the report of the loss assessor in relation to the fire incident in question which shows that the loss assessed was around Rs.60,000/-. This amount requires to be contrasted against the total outstandings of about Rs.18,00,000/- which have grown from the principal amount of Rs.10,00,000/- O.P.33014/01&WPC33095/06 -:5:- availed by the debtor. The uncontroverted materials on record as are placed by the creditor also includes evidence that, as per the terms of the contract between the parties, the responsibility to pay the insurance premium was with the debtor and not the creditor. 8. On the aforesaid premise, no useful purpose will be served even if the matter is relegated for further consideration by the Arbitrator, that too, in a proceeding initiated more than a decade ago. 9. Even if the dispute as to the liability to pay the premium is answered in favour of the creditor, the loss assessor has fixed the loss at R.60,000/- sometime wayback in 1997 and it will be too late for the debtor to challenge that report at this distant point of time. At any rate, a challenge to the report of the loss assessor under O.P.33014/01&WPC33095/06 -:6:- the insurance law does not appear to be permissible in arbitration proceedings under the Kerala Co- operative Societies Act, 1969, having regard to the law governing loss assessment by authorised assessors under the insurance law, going by the different precedents governing the field, including those rendered by the Apex Court. Not only that, if the creditor bank, being aware of the fact that the account has become sticky and extends such benevolent consideration as are available within the framework of law, such ameliorative benefits could result in slashing at least a portion of the outstandings, interest and other dues for the debtor to pay off the outstandings without further delay. 10. For the aforesaid reasons, Ext.P2 in W.P. (C)No.33095 of 2006 has to be held as one having been made in excess of jurisdiction in as much as such a decision was not available on the materials O.P.33014/01&WPC33095/06 -:7:- on record. The same is liable to be set aside. In the result, Ext.P2 in W.P.(C)No.33095 of 2006 is quashed. Ext.P4 in O.P.No.33014 of 2001 is also quashed. 11. Having regard to the nature of the directions being issued hereunder, the proceedings as per Ext.P3 in WP(C)No.33095 of 2006 will stand deferred and would be governed by the directions that follow this. 12. If the debtor makes appropriate representation within three weeks requesting for slashing of the total outstandings, the creditor bank will consider and extend to the petitioner such benefits as are found available and also give the petitioner an opportunity to pay off such outstandings in such manner as the bank may decide. Further enforcement of Ext.P3 in WP(C)No.33095 of 2006 will stand regulated and modified by the O.P.33014/01&WPC33095/06 -:8:- decisions that the creditor bank may take as directed above and if the debt is satisfied as aforesaid, enforcement proceedings will stand dropped. Writ petitions are disposed of in the above terms. No costs. Thottathil B.Radhakrishnan, Judge. sl/2/6/08