IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC THURSDAY, THE 13TH AUGUST 2009 / 22ND SRAVANA 1931 WP(C).No. 23646 of 2007(M) -------------------------- PETITIONER(S): --------------- 1. P.O. POULOSE, PAYAPPAN HOUSE, CHATTIKULAM P.O. 2. LILLY, PAYAPPAN HOUSE, CHATTIKULAM P.O. 3. RHINY JOSEPH, KARIPPAI HOUSE, KUTTIKAD P.O. 4. RINU JOSEPH, KARIPPAI HOUSE, KUTTIKAD P.O. 5. ITTEEWRA, VENNATTUPARAMBIL HOUSE, KUTTIKAD P.O. 6. JOY K.T., KARIPPAI HOUSE, MOTHIRAKANNY P.O. 7. M.I. DAVIS, MALAKARAN HOUSE, CHATTIKULAM P.O. 8. AIMY, MALAKARAN HOUSE, CHATTIKULAM P.O. 9. P.K. JOSEPH, POTTAKKARAN HOUSE, KUTTIKAD P.O. 10. M.P. DAVIS, MALIAKKAL HOUSE, KUTTIKAD P.O. 11. SHOLY K.P., KALLELY HOUSE, KUTTIKAD P.O. 12. K.D. JACOB, KARIPPAI HOUSE, KUTTIKAD P.O. 13. SHEELA VARGHESE, WIFE OF VARGHESE, PULLELY HOUSE, MURINGOOR P.O. 14. SHEEBA LOUIS, CHATHELY HOUSE, THAZHEKKAD, KALLETTUMKARA. 15. SHIMA JACOB, WIFE OF SHAJAN PLACKA, VENNOOR, ALATHOOR P.O. 16. FRAICY VARGHESE, KOZHIPPADAN HOUSE, KUTTIKAD P.O. 17. MARY, WIFE OF SAVY PARIYADAN, KUTTIKAD P.O. 18. P.D. SAVY, PARIYADAN HOUSE, KUTTIKAD P.O. 19. K.V. JOY, KUTTIPUZHA HOUSE, KUTTIKAD P.O. 20. M.P. TOMY, MALIEKKAL HOUSE, KUTTIKAD P.O. 21. K.O. PORINCHU, KAITHARATH HOUSE, MOTHIRAKANNY P.O. 22. P.D. CHERIAN, PALATTY HOUSE, KANJIRAPPILLY P.O. 23. POULOSE, SON OF KAVUNGAL VARU, KUTTIKAD P.O. 24. PREETHI, WIFE OF SHAJU, THARAYIL HOUSE, KORAPPADAM, KUTTICHIRA. BY ADV. SRI.P.RAMAKRISHNAN RESPONDENT(S): --------------- 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. ADV. SRI.GEORGE VARGHESE (MANACHIRACKEL) FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13/08/2009 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX Ext.P1. True copy of the scheme published by the Ist respondent. Ext.P2. True copy of the Notice inviting deposits published by the Ist respondent. Ext.P3. True copy of the details of the investments made by the petitioners Ext.P4. True copy of the notice received by the Ist petitioner on 28.9.2005 from the Ist respondent. Ext.P5. True copy of the circular No.9/03 of the Registrar of Co-operative Societies. Ext.P6. True copy of Joint representation dated 24.10.2005 made by the petitioners before the 2nd respondent. Ext.P7. True copy of the order dated 28.12.2006 issued by the 2nd respondent. // true copy // P.A to Judge. ANTONY DOMINIC,J. --------------------- W.P.(C).No.23646 OF 2007 ------------------------ Dated this the 13th day of August, 2009. JUDGMENT The prayer sought for in this writ petition is to quash Exts.P4 and P7 and to hold that Ext.P5 circular has only prospective application and the reduction of interest rates on deposits in existence, as on the date of Ext.P5, is arbitrary and illegal. 2. Petitioners' case is that the first respondent Bank had different schemes for accepting deposits and pursuant to Exts.P1 and P2, the petitioners made deposits. The details of such deposits are given in Ext.P3. Ext.P3 also shows that such deposits were made in 1992 and 1996. Despite the agreed rate of interest, the petitioners were issued Exts.P4 and P5, whereby the first respondent informed them that the rate of interest has been reduced. According to the petitioners, reduction in the rate of WP(c).No.23646/07 2 interest ordered as per Ext.P5 has only prospective effect and cannot affect the existing deposits made by them. 3. Raising the above contention they moved the 2nd respondent by filing Ext.P6. Later they approached this court by filing WP(c).No.15744/06 and pursuant to the directions of this court, second respondent considered the issue and passed Ext.P7 order directing that the contract rate of interest should be paid till 22.2.2003, the date of Ext.P5 and thereafter , the interest as provided in Ext.P5. It is in these circumstances the writ petition has been filed seeking to quash Exts.P5 and P7. 4. A counter affidavit has been filed by the first respondent. In so far as the competence of the first respondent to vary the contract rate of interest is concerned, the first respondent submits that clause 9 of Ext.P1 enables the Bank to reduce the rate of interest. It is also stated that in terms of clause 10, any amount in deposit for more than 2 years can be settled by paying interest at the rate as decided by the Bank. The Bank contends that the petitioners have WP(c).No.23646/07 3 agreed to the conditions in Ext.P1 and in Ext.P1 itself they were given the freedom to alter the rate of interest and if that be so, it is not open to the petitioners now to contend that, it was incompetent for the Bank to vary the rate of interest. It is stated that although the agreed rate of interest was 15%, in view of the reduction in the lending rates, it had become impossible for the Bank to continue payment at the agreed rate and it was therefore that the Bank resolved to reduce the interest acting upon Ext.P5. 5. A reply affidavit has been filed by the petitioner disputing the contentions raised in the counter affidavit. 6. Although the petitioner challenges the validity of Ext.P7, the contention raised in the writ petition is mainly that Ext.P5 has only prospective effect and therefore cannot affect any deposit that is already accepted by the first respondent on the date when the said order was issued namely 22.2.2008. However, a reading of Ext.P1, the conditions subject to which the deposits were made by the petitioner and accepted by the Bank shows that, condition No.9 itself enables the Bank to WP(c).No.23646/07 4 vary the rate of interest, taking into account the circumstances prevailing. This condition has been accepted by the depositors. In the counter affidavit the Bank has explained the circumstances leading to reduction in the lending rates and deposit rates and according to the Bank, they are justified in ordering reduction of interest as done in this case. Therefore, the Bank had the competence to reduce interest and the circumstances also justified the same. If that be so, the direction issued in Ext.P7 requiring the Bank to pay interest at the contract rate till the date of Ext.P5 and to pay the reduced rate of interest subsequent to Ext.P5 cannot be said to be faulty. Therefore, I see nothing erroneous for interference. Writ petition fails and is dismissed. (ANTONY DOMINIC) JUDGE vi/ WP(c).No.23646/07 5