IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE EIGHTEENTH DAY OF DECEMBER TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION NO : 28933 of 1998 Between: The District Cooperative Central Bank Ltd. rep. by General Manager Medak, Sangareddy ..... PETITIONER AND 1 Special Cadre Dy. Registrar/Enforcement Officer A.P. Markfed, Hyderabad 2 The Managing Director A.P.State Coop. Marketing Federation Ltd. Parishrama Bhavan, Basheer Bagh, Hyderabad 3 Mangalparthy Primary Agril. Cooperative Credit Society Ltd Mangalparthy, Medak Dist. 4 Sri Manikonda Raghavendra Rao S/o Ramarao H.No.1-10-187,Ashoknagar, Hyderabad 5 Smt. M. Vidya W & legal heir of late Sri M. Sridhara Rao Mangalparthy, C/o M. Raghavendra Rao, PACS, H.No.1-10-187, Ashoknagar, Hyderabad 6 Sri A. Nageswara Rao S/o Gowrayya Primary Agril. Coop. Credit Society Ltd. Mangalparthy, Manapalli, Eldurthy (M), Medak Dist. 7 Cooperative Tribunal, Chandraviahr, Hyderabad .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a Writ, order or direction, particularly a writ in the nature of Certiorari, calling for the records relating to the order in C.T.A.No.139/96 dt: 6-3-1998 on the file of the 7th respondent Cooperative Tribunal, Hyderabad, confirming the orders of the Ist respodnent herein in A.R.C.No.10/95 dt: 29-3-1996 and quash the same as illegal, Counsel for the Petitioner:MR.K.RAVINDER REDDY Counsel for the Respondent No.: MR.MPAPA REDDY The Court made the following : THE HON'BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION NO : 28933 of 1998 ORDER: The A.P. State Cooperative Marketing Federation Limited, 2nd respondent herein, was entrusted with the supply of fertilizers to the cooperative societies in the State during the year 1993. The 3rd respondent is a primary agricultural co-operative society in Medak District. It approached the 2nd respondent for supply of fertilizers on credit basis. When bank guarantee was insisted, the 3rd respondent approached the petitioner-District Co-Operative Central Bank and accordingly, bank guarantee was furnished to the tune of Rs.1,50,000/- on 14.07.1993. It is stated that there was a specific understanding that any information about the dispatches of the stock and the transactions between respondents 2 and 3 must be passed on to the petitioner instantly. The 3rd respondent lifted fertilizers up to the value of Rs.2,50,000/- but committed default in payment of the amount. Therefore, the 2nd respondent approached the Special Cadre Deputy Registrar, 1st respondent herein, under Section 61 of the Co-operative Societies Act (for short ‘the Act’) for adjudication of the dispute. The same was taken up as A.R.C.No.10 of 1995. Through award, dated 29.03.1996, the 1st respondent held the petitioner herein liable to the extent of Rs.1,50,000/- with interest at the rate of 20.5% per annum. The President and the Secretary of the 2nd respondent society viz., respondent No.4, since died and represented by his legal representative and respondent No.6 herein, and respondent No.5 were also held responsible. The petitioner filed C.T.A.No.139 of 1996 before the A.P. Cooperative Tribunal at Hyderabad against the award in A.R.C.No.10 of 1995. The C.T.A. was dismissed on 06.03.1998. Hence, this writ petition. Heard Sri K.Ravinder Reddy, learned counsel for the petitioner, learned Government Pleader for Co-operation for respondent No.1, Sri M.Papa Reddy, learned counsel for respondent No.2 and Sri P.Viswanath Sastry for respondent No.3. None appears for respondents 4 to 6. The petitioner arranged bank guarantee for a sum of Rs.1,50,000/- in favour of the 2nd respondent for supply of fertilizers to the 3rd respondent. Without insisting on regular payments, the 2nd respondent went on supplying the fertilizers up to the value of Rs.2,50,000/-. The petitioner states that it was not even intimated about the dispatches and deliveries made in favour of the 3rd respondent. In A.R.C.No.10 of 1995, the President and the Secretary of the 3rd respondent-society had admitted that they have failed to remit the cost of the fertilizers to the 2nd respondent. Not only they have furnished written undertakings to repay the amount but also have issued cheques for certain amount during the pendency of the arbitration proceedings. The cheques however were dishonourned. The arbitration before the 1st respondent was comprehensive in nature. It is not as if the petitioner availed the benefit from the 2nd respondent for itself. It has only offered guarantee. Had the 2nd respondent been prompt in insisting on payment of the amount at least, when it supplied fertilizers, over and above the value of Rs.1,50,000/-, things would not have drifted to that level. Be that as it may, the primary responsibility to pay the cost of the fertilizer is squarely with the 3rd respondent and thereby, the erstwhile President and Secretary of the Society alone are liable to pay the amount. During the arbitration proceedings, they have categorically admitted that they alone are liable to pay the amount. Therefore, first efforts have to be made, for recovering the amount from respondents 3,5 and 6 and if they do not fructify, against the petitioner. The rate of interest awarded by the Tribunal is also excessive. In transactions of this nature, interest at the rate of 9% per annum would hold good. Hence, the writ petition is partly allowed modifying the award in A.R.C.No.10 of 1995 as affirmed in C.T.A.No.139 of 1996 to the effect that respondent No.2 shall proceed against respondents 3, 5 and 6 for recovering the amount due as on the date of filing of A.R.C. with interest at the rate of 9% per annum. If the efforts fail, it shall proceed against the petitioner only to the extent of Rs.1,50,000/- with interest at the rate of 9% per annum. The payment if any made during the pendency of the proceedings shall be taken into account. There shall be no order as to costs. _________ 18.12.2008 JSU ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1.2CCs to 2.2CD copies Form-NIC-OGS/WP{BMD} THE HON'BLE MR JUSTICE L.NARASIMHA REDDY WRIT PETITION NO : 28933 of 1998 Date: 18.12.2008 JSU