IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 7TH SEPTEMBER 2011 / 16TH BHADRA 1933 WA.No. 2193 of 2009() --------------------- AGAINST THE JUDGEMENT IN WPC.23646/2007 Dated 13/08/2009 .................... APPELLANTS/PETITIONERS 1,2,5 TO 11, 17-21,23&24: -------------- 1. P.O.POULOSE, PAYAPPAN HOUSE, CHATTIKULAM P.O. 2. LILLY ,PAYAPPAN HOUSE, CHATTIKULAM P.O. 3. ITTEERA, VENNATTUPARAMBIL HOUSE, KUTTIKKAD P.O. 4. JOY K.T., KARIPPAI HOUSE, MOTHIRAKANNY P.O., 5. M.I. DAVIS, MALAKARAN HOUSE, CHATTIKULAM P.O. 6. AIMY, MALAKARAN HOUSE, CHATTIKULAM P.O. 7. P.K. JOSEPH, POTTAKKARAN HOUSE, KUTTIKKAD P.O. 8. M.P. DAVIS,KALIKKAL HOUSE, KUTTIKKAD PO 9. SHOLEY K.P. KALLELY HOUSE, KUTTIKKAD P.O. 10. MARY, W/O. SAVY PARIYADAN, KUTTIKKAD P.O. 11. P.D. SAVY, PARIYADAN, KUTTIKKAD P.O. 12. K.V. JOY, KUTTIPPUZHA HOUSE, KUTTIKKAD P.O. 13. M.P. TOMY, MALIEKKAL HOUSE,KUTTIKKAD PO 14. K.O. PORINCHU, KAITHARATH HOUSE, MOTHIRAKANNY P.O. (WA 2193/2009) 15. POULOSE, S/O. KAVUNGAL VARU, KUTTIKKAD P.O., 16. PREETHI, W/O. SHAJU, THARAYIL HOUSE, KORAPPADAM, KUTTICHIRA. BY ADV. SRI.GEORGE POONTHOTTAM RESPONDENTS/RESPONDENTS&PETITIONERS 3,4,12,13,14,15,16&22: --------------- 1. KUTTIKKAD FARMERS SERVICE CO-OPERATIVE BANK LIMITED NO. 572, P.O. KUTTIKKAD, VIA- CHALAKKUDY, THRISSUR, REPRESENTED BY ITS MANAGING DIRECTOR. 2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), THRISSUR. 3. RHINY JOSEPH, KARIPPAI HOUSE, KUTTIKKAD PO. 4. RINU JOSEPH, KARIPPAI HOUSE, KUTTIKAD P.O. 5. K.D. JACOB, KARIPPAI HOUSE, KUTTIKAD P.O. 6. SHEELA VARGHESE, W/O. VARGHESE, PULLELY HOUSE, MURINGOOR P.O. 7. SHEEBA LOUIS, CHATHELY HOUSE, THAZHEKKAD, KALLETTUMKARA. 8. SHIMA JACOB, W/O. SHAJAN PLACKA, VENNOOR, ALATHOOR P.O., 9. FRAICY VARGHESE, KOZHIPPADAN HOUSE, KUTTIKAD P.O., 10. P.D. CHERIAN, PALATTY HOUSE, KANJIRAPPILLY P.O. ADV. SRI.GEORGE VARGHESE FOR R1 G.P. SRI.D.SOMASUNDARAM FOR R2 THIS WRIT APPEAL HAVING BEEN FINALLY HEARD ON 07/09/2011, ALONG WITH WA NO.2421 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... Writ Appeal Nos.2193 & 2421 of 2009 .................................................................... Dated this the 7th day of September, 2011. JUDGMENT Ramachandran Nair, J. Connected Writ Appeals are filed against judgment of the learned Single Judge declining to grant the relief prayed for by the appellants which is to direct the first respondent-Bank to pay interest at the agreed rate as shown in the Deposit Receipts until maturity of the deposits from date of deposit. We have heard counsel appearing for the appellants and Standing Counsel appearing for the first respondent- Bank. 2. The first respondent issued Ext.P1 scheme for acceptance of long term deposit at fancy rates of interest. Appellants are depositors of various amounts for 180 months, whereby on the maturity date after 15 years and two months they will get 10 times the deposit amount. However, the Registrar of co-operative Societies probably to save the societies from liquidation on account of excess interest paid on deposits and consequent depletion of capital issued Ext.P5 limiting the rate of W.A. 2421&2193/09 2 interest that could be given by co-operative Banks to depositors. It is seen that the maximum rate of interest provided under Ext.P5 Circular issued by the Registrar on 22.2.2003 is 8% p.a. Even after the issuance of Ext.P5 by the Registrar fixing the maximum rate of interest at 8% p.a., the first respondent offered a liberal settlement to appellants by stating that agreed rate will be paid until 31.3.2005 and thereafter rate payable will be in accordance with the Circular issued by the Registrar. However, appellants have filed W.P.(C)s challenging Ext.P4 issued by the Bank and Ext.P7 issued by the Joint Registrar of Co-operative Societies upholding the Bank's orders on the ground that appellants are entitled to full maturity amount on expiry period of 15 years from date of deposit. In other words, appellants insist on first respondent honouring the commitment given in the deposit receipts. The learned Single Judge, however, found that deposits are taken under Ext.P1 scheme which in clause 9 gives freedom to the Board of Directors to alter the terms of the deposit scheme. Based on this flexibility clause unilaterally vested with the first respondent, the learned Single Judge declared that appellants are entitled to interest W.A. 2421&2193/09 3 only in terms of Ext.P7 issued by the Joint Registrar. After hearing both sides what we notice is that Circular is binding on the society because the Registrar issued the same keeping in mind the financial stability of the societies in general and interest reduction is made looking at the scenario in the financial market. Probably payment of high rate of interest will lead to financial loss and eventual liquidation of the societies. In any case what we notice is that the Bank had provided a safety clause in Ext.P1 whereunder the Board of Directors are free to modify the terms and conditions of deposits. In view of this clause, the reliance on the Circular may not be required for the Board of Directors to reduce the interest. It is seen from Ext.P4 that inspite of Ext.P5 Circular issued by the Registrar on 22.2.2003, the Bank has taken a liberal approach by honouring their commitments upto 31.3.2005. We do not find any justification for declining the relief granted to the appellants by the Bank itself. So much so, we feel the Bank is liable to treat the deposits as having matured on 31.3.2005 and credit the matured amount in the Savings Bank account of the appellants. For the period from 1.4.2005 onwards the appellants are W.A. 2421&2193/09 4 entitled to interest at the rate of 8% on the maturity amount so credited. Since neither interest nor deposit is paid to the appellants, we direct the Bank to pay interest on interest payable after 1.4.2005 by adding interest component to the deposit amount in the end of every financial year. In other words, interest at 8% should be paid on annual compounding after 1.4.2005. Writ Appeals are allowed in part by modifying judgment of the learned Single Judge as above. The parties are free to either close the deposits or otherwise renew the same on fresh terms and conditions as prevalent as of now. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms