IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC WEDNESDAY, THE 24TH JUNE 2009 / 3RD ASHADHA 1931 WP(C).No. 6080 of 2009(D) ------------------------- PETITIONER(S): --------------- M/S THAYYIL PHOTOGRAPHICS PVT. LTD., POOLEMANNA P.O., THUVVUR VIA, MALAPPURAM DISTRICT REPRESENTED BY ITS MANAGING DIRECTOR, AHAMMED MUSHTAFA. BY ADV. SRI.P.C.SASIDHARAN RESPONDENT(S): --------------- 1. STATE OF KERALA, REPRESENTED BY ITS SECRETARY TO GOVERNMENT, CO-OPERATION DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM. 2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, OFFICE OF THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM. 3. KERALA STATE CO-OPERATIVE BANK LIMITED, REPRESENTED BY ITS MANAGING DIRECTOR, THIRUVANANTHAPURAM. 4. KERALA STATE CO-OPERATIVE BANK LTD., MALAPPURAM BRANCH, REPRESENTED BY ITS BRANCH MANAGER. ADV. SRI.NAGARAJ NARAYANAN,SC,K.S.CO-OP BANK FOR R3,4 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 24/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ANTONY DOMINIC,J. --------------------- W.P.(C).No.6080 OF 2009 ------------------------ Dated this the 24th day of June, 2009. JUDGMENT Petitioner is a company incorporated under the Companies Act. It is stated that in 2004, the company had availed of a loan of Rs.2,77,08,951/- from the 3rd respondent for industrial purposes, mortgaging agriculture land, as security. The machineries were also hypothicated to the Bank. Petitioner submits that although they made certain remittances, default was committed due to reasons beyond their control. Finally the Bank initiated proceedings under the SARFAESI Act and Ext.P1 is the notice issued under Section 13(2) of the Act. At that stage the petitioner approached this court and by Ext.P2 judgment in WP(c). No.14485/08, taking note of the remittance of Rs.20 lakhs that was made by the petitioner, the Bank was directed to consider the request of the petitioner for the benefit of the WP(c).No.6080/09 2 One Time Settlement Scheme. 2. The matter was accordingly considered and the Bank by Ext.P3 informed the petitioner that they are willing to waive the entire penal interest levied on the petitioner. Petitioner was unsatisfied with the offer made by the Bank and therefore Ext.P3 was challenged before this court as WP(c).No.33854/08 and that writ petition was dismissed by Ext.P4 judgment. Although W.A. No.2262/08 was filed, that also was rejected by the Division Bench. Again the petitioner approached this court by filing WP(c).No.35289/08. That writ petition was disposed of by Ext.P5 judgment dated 28.11.2008 directing the petitioner to remit Rs.1 crore within 45 days and the Bank was ordered to keep further proceedings in pursuance to Ext.P1 in abeyance for two months, in order to enable the petitioner to approach the Debt Recovery Tribunal for reliefs. The Writ Appeal filed before the Division Bench was also dismissed, granting only extension of time for making remittance. WP(c).No.6080/09 3 3. During the two months time prescribed in Ext.P5 judgment, Ext.P6, circular 1/09, was issued by the Registrar of Co-operative Societies on 8.1.2009 introducing a One Time Settlement Scheme. Thereupon, the petitioner submitted Ext.P7 claiming the benefit of Ext.P6. It was at that stage this writ petition was filed claiming that the petitioner should be extended the benefit of Ext.P6. Subsequently, the Registrar issued Ext.P8 clarifying that the benefit of Ext.P6 is available only to loans below 2 lakhs and that loans above 2 lakhs can be settled only with the prior approval of the Registrar and in the manner stated in the letter. Coming to know of Ext.P8, producing the same, the writ petition was got amended incorporating a challenge against Ext.P8 as well. 4. Although, in this writ petition several interim orders were passed requiring remittance of amounts by the petitioner, those orders have not been complied with. 5. When the case was taken up for hearing, the counsel for the petitioner confined his prayer mainly regarding Ext.P8. WP(c).No.6080/09 4 According to him Ext.P6 was issued by the Registrar of Co- operative Societies exercising his powers under Section 66A of the Co-operative Societies Act, and its modification can only be by yet another circular but not by a letter as has been done by issuing Ext.P8. The alternate plea that is raised is that even going by Ext.P8 the Bank is bound to take up the issue before the Registrar for settlement of the liability in terms of clause 2 of the said letter. On behalf of the first respondent Bank the contention raised is that Ext.P8 is also a circular issued under Section 66A of the Act and therefore has the effect of modifying Et.P6. 6. Although, there is a prayer in the writ petition challenging Ext.P8, still having regard to the alternate plea that is raised, I do not consider it necessary to examine the validity of Ext.P8. A reading of clause 2 of Ext.P8 shows that the liability in excess of 2 lakhs can be settled only in terms of the scheme specially approved by the Registrar of Co- operative Societies. Gong by Ext.P9, the statement produced WP(c).No.6080/09 5 by the petitioner, the liability is approximately Rs.5 crores which would have only increased by lapse of time. Therefore, if the liability of the petitioner is to be settled it can be done only in terms of clue (2) of Ext.P8. 7. Counsel for the petitioner submits that no special scheme as contemplated in clause (2) of Ext.P8 has been framed so far. However, the counsel for the Bank submits a scheme has already been framed and that the benefit there of ought to have been availed of by the defaulters before 31.3.2009. In fact he submits that it was extending the benefit of the said scheme that the petitioner was required to remit Rs.3,86,62,304/- before 30.3.2009 and the said benefit has not been availed of by the petitioner. On the other hand, it is submitted by the petitioner that so far the petitioner has not been informed of any special scheme as contemplated in para (2) of Ext.P8, and that in the order dated 19.3.2009 in which the aforesaid offer made by the Bank was recorded also does not refer to any scheme said to have been framed WP(c).No.6080/09 6 by either the Bank or the Registrar. 8. Having regard to the above submissions made, I feel that, if as a matter of fact, no such scheme as contemplated in clause(2) of Ext.P8 has been framed, it is for the Bank to take up the matter with the Registrar of Co-operative Societies, requesting for framing a Scheme and make offer to the petitioner on that basis, so that they can settle the liability in terms there of. However, having regard to the fact that, going by the affidavit of the Bank almost Rs.5 crores is due from the petitioner and hence any such indulgence can be only conditioned. Accordingly, the writ Petition is disposed of as follows; Within 3 weeks from today the petitioner shall remit an amount of Rs.2 crores with the Bank and thereupon, the Bank shall take up the matter with the Registrar for framing a special scheme as contemplated in clause (2) of Ext.P8 and if the scheme is framed the benefit there of shall be extended to the petitioner, giving them a reasonable time to settle the WP(c).No.6080/09 7 liability. On the other hand, if the scheme is already framed, the Bank will explore the possibility of giving the petitioner the benefit of the scheme. It is directed that in the meantime coercive action pursuant to Ext.P1 shall be kept in abeyance. (ANTONY DOMINIC) JUDGE vi/ WP(c).No.6080/09 8