@#@#@#@#@#@#@ HONOURABLE DR JUSTICE G.YETHIRAJULU WRIT PETITION NO:11791 of 1998 DATED: 22-01-2008 Between: A.Lakshma Reddy ..... PETITIONER AND 1. Cooperative Tribunal, Chandra Vihar Complex, Mozamjahi Market Road, Hyderabad, and 4 others. .....RESPONDENTS @#@#@#@#@#@#@ ORDER: This is a writ petition filed by the petitioner calling for the records of the first respondent in C.T.A.No.88 of 1997 dated 04-03-1998 confirming the order of the second respondent in A.R.C.No.4 of 1994-95 dated 30-06-1994 and quashing the same as being illegal, arbitrary and vitiated by errors of jurisdiction. The petitioner was the President of Primary Agricultural Co-operative Society, Vellore. He approached Markfed (Marketing Federation) for supply of fertilizers to the society to enable him to distribute them to the members of the society. Accordingly, the fertilizers were supplied by the Markfed on the undertaking of the petitioner that he will recover the amount and pay the same to the society, if he fails to pay the said amount, the Markfed is at liberty to recover the amount from out of his personal assets. On the assurance given by the petitioner the fertilizers were supplied from 26-02-1992 to 25-02-1994 under various spells. In pursuance of the indent placed by the petitioner, on 18-12-1992 the petitioner entered into an agreement and also executed a personal bond on 30-08- 1993. The Markfed issued a notice to the petitioner on 21-03-1994 demanding the payment of the amount which remained due, but no reply was given by the petitioner. The Markfed filed A.R.C.No.4 of 1994-95 before the Arbitrator and in the proceedings before the Arbitrator the petitioner admitted his liability and promised to pay Rs.10,000/- within one month and the balance amount within six months after recovering from the members, but failed to pay the same. He preferred C.T.A.No.88 of 1997 and it was dismissed by the Co-operative Tribunal on 04-03-1998 confirming the order of the second respondent. Being aggrieved by the same, the petitioner approached this Court. As per the order of the Arbitrator the society as well as the petitioner are made liable jointly and severally. Learned counsel for the petitioner submitted that the petitioner approached Markfed representing the society on behalf of the members to facilitate them to have the fertilizers and placed indent before Markfed for the supply of fertilizers and in pursuance of the indent they supplied the fertilizers and the society in turn distributed them to the members of the society. He further submitted that the petitioner acted in the capacity of the president but not in his individual capacity, therefore, he cannot be made personally liable to pay the amount, if any, due to the Markfed. Learned counsel for the respondents submitted that at the time of issuing the fertilizers the petitioner gave a personal undertaking to repay the amount payable towards cost of the fertilizers in a letter of indent on 18-12-1992 which discloses that in the event of the members failing to pay the amount within time the amount can be recovered from his movable and immovable properties. Basing on the said indent and the undertaking the Markfed released the fertilizers in favour of the petitioner who represented the society. Learned counsel for the petitioner submitted that the letter cannot be treated as a document legally binding on the petitioner and if it is treated as a bond it is not admissible in evidence as it was not executed on proper stamp etc., therefore, he is not legally liable to pay the amount. He further submitted that there is no contract between the Markfed and himself for payment of the cost of the fertilizers, therefore, he is not personally liable. Learned counsel for the respondents submitted that but for the undertaking given by the petitioner in the indent itself the Markfed would not have supplied the fertilizers and as the petitioner undertook to pay the amount in the event of failure of the members to pay the amount the fertilizers were supplied, he cannot avoid the liability on this ground. The petitioner represents that when he was working as the president he was able to collect some amount and pay the same to the Markfed and as his tenure as president was over he could not make further collections, therefore, the remaining amount, if any, due has to be collected from the society by taking necessary legal steps for recovery of the amount. The Arbitrator considered all the contentions raised by the petitioner and he came to a conclusion that the petitioner cannot avoid liability in addition to the society, therefore, he fixed the joint and several liability to the society as well as the petitioner. The Co- operative Tribunal also discussed various points raised by the petitioner and came to a conclusion that the order passed by the Arbitrator cannot be disturbed. After going through the entire record, I am made to understand that the petitioner prevailed on the Markfed to release the fertilizers by going to the extent of giving an assurance to the Markfed that the amount can be recovered from his movable and immovable properties also in the event of failure of the members to pay the amount. Though there is no legally enforceable bond, the indent itself is indicating that he undertook to pay the amount on behalf of the members if they fail to pay the same. He also did not give a reply to the notice given by the Markfed denying the liability to pay the amount before the Arbitrator and he did not dispute the liability and he also made a promise to show his bona fides that he will pay the amount within six months. The sequence of events clearly indicates that the petitioner came forward to bear the liability and undertook to pay the amount if the members of the society fail to pay the same. After going through the orders, I do not find any illegality in the orders passed by the Tribunal as well as the Arbitrator. The petitioner being the President ought to have taken necessary precautions to see that the debt can be recovered by the society against the members legally and ought to have obtained necessary documents which would have bind the members legally to pay the amount. He did not take such steps which resulted in committing default by the members. As per the rules the interest is inevitable consequence when there is belated payment or default in payment of the amount due to the society. But the Arbitrator appeared to have fixed interest at 20.5% by treating it as a commercial transaction. But the members of the society are agriculturists and the Arbitrator is not supposed to fix 20.5% interest against the agriculturists and the usual rate of interest would be not more than 6% p.a. In the light of the above circumstances, the writ petition is allowed in part. The orders of the Tribunal as well as the Arbitrator are confirmed so far as the liability is concerned. But regarding the rate of interest, I am inclined to interfere and reduce the rate of interest to 6% p.a. from the date of default till the date of payment. The amount, if any, paid shall be credited to the amount due to the Markfed and no interest shall be collected on that amount from the date of payment. No order as to costs. _________________ 22nd January, 2008 SKM