George Mathew and Rosamma Mathew V. Assistant Registrar (General) of Co-operative Societies and Registrar of Co-operative Societies and Ullala Service Co-operative Bank Limited No: 1142

WP(C)/35035/2017

AI Insights

The case involves George Mathew and Rosamma Mathew, petitioners who are members of the Ullala Service Co-operative Bank Ltd., who applied for a loan of Rs.20,00,000 for business purposes, offering their property as collateral. The bank sanctioned the loan but disbursed only Rs.2,00,000. The petitioners filed a complaint with the Assistant Registrar of Co-operative Societies, who directed the bank to disburse the loan amount. The bank, however, did not comply, leading to this writ petition seeking enforcement of the Assistant Registrar's decision and action against the bank under the Kerala Co-operative Societies Act. The bank contested the Assistant Registrar's decision, claiming it was issued without proper notice and violated natural justice.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 690619 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 13-12-2017
• Assessment Year: misc
• Laws Referred To: Kerala Co-operative Societies Act 1969
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: BIMAL NATH; J XAVIER; FIROZ ROBIN
• Assessee Lawyers: K M SATHYANATHA MENON; KAVERY THAMPI
• Keywords: Co-operative Bank; Collateral security; Loan disbursement; Natural Justice; Writ of Mandamus
• Section: 66B

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN WEDNESDAY, THE 13TH DAY OF DECEMBER 2017/22ND AGRAHAYANA, 1939 WP(C).No. 35035 of 2017 (D) ------------------------------------------ PETITIONER(S) : -------------------------- 1. GEORGE MATHEW, 37 YEARS, S/O. MATHEW K.S, MADATHIPARAMBIL HOUSE, KOTHAV ARA P.O, VAIKOM, KOTTAYAM DISTRICT. 2. ROSAMMA MATHEW, 67 YEARS, W/O. MATHEW K.S, MADATHIPARAMBIL HOUSE, KOTHAV ARA P.O, VAIKOM, KOTTAYAM DISTRICT. BY ADVS. SRI.K.M.SATHYANATHA MENON SMT.KAVERY S THAMPI RESPONDENT(S) : ----------------------------- 1. ASSISTANT REGISTRAR (GENERAL) OF CO-OPERATIVE SOCIETIES, OPPOSITE TO SEETHARAM AUDITORIUM, VAIKOM, KOTTAYAM - 686 141. 2. THE REGISTRAR OF CO-OPERATIVE SOCIETIES, THIRUVANANTHAPURAM - 695 001. 3. THE ULLALA SERVICE CO-OPERATIVE BANK LIMITED NO: 1142, THALAY AZHAM P.O, VAIKOM, PIN : 686 607, REPRESENTED BY ITS SECRETARY. R1 & R2 BY SR.GOVERNMENT PLEADER SRI.BIMAL K.NATH R3 BY ADVS. SRI.J.JULIAN XAVIER SRI.FIROZ K.ROBIN THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 13-12-2017, ALONG WITH W.P(C).NO. 37350 OF 2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Msd. WP(C).No. 35035 of 2017 (D) ------------------------------------------ APPENDIX PETITIONER(S)' EXHIBITS : EXHIBIT P1 TRUE COPY OF THE ENCUMBRANCE CERTIFICATE ISSUED TO THE 1ST PETITIONER FROM THE REGISTRATION DEPARTMENT DATED 25/7/2017. EXHIBIT P2 TRUE COPY OF THE COMPLAINT DATED 27.09.2017 SUBMITTED BY THE 1ST PETITIONER BEFORE THE 1ST RESPONDENT. EXHIBIT P3 TRUE COPY OF THE COMMUNICATION NO.3301/2017(1) DATED 28/09/2017 ISSUED BY THE 1ST RESPONDENT TO THE 1ST PETITIONER. EXHIBIT P4 A TRUE COPY OF THE COMMUNICATION NO.3301/2017 DATED 28/09/2017 ISSUED BY THE 1ST RESPONDENT TO THE ULLALA SERVICE COOPERATIVE BANK LIMITED NO: 1142, THALAYAZHAM. EXHIBIT P5: TRUE COPY OF THE ACKNOWLEDGMENT OF INCOME TAX RETURN SUBMITTED BY THE 1ST PETITIONER FOR ASSESSMENT YEAR 2015-2016. EXHIBIT P6: TRUE COPY OF THE ACKNOWLEDGMENT OF INCOME TAX RETURN SUBMITTED BY THE 1ST PETITIONER FOR ASSESSMENT YEAR 2016-2017. EXHIBIT P7: TRUE COPY OF THE GEHAN NO. G1019/2016 EXECUTED IN FAVOUR OF THE 3RD RESPONDENT BY SMT.KANAKAMMA. EXHIBIT P8: TRUE COPY OF THE FAIR VALUE LIST PERTAINING TO PROPERTY FALLING IN SY.NOS.156/3, 156/3/3 AND 156/4. EXHIBIT P9: TRUE COPY OF THE GEHAN NO.G994/2016 EXECUTED IN FAVOUR OF THE 3RD RESPONDENT BY SRI.SATHYAN. EXHIBIT P10: TRUE COPY OF THE FAIR VALUE LIST PERTAINING TO PROPERTY FALLING IN OLD SY.NO. 14/8B/2. EXHIBIT P11: TRUE COPY OF THE GEHAN NO.G 1082/2016, EXECUTED IN FAVOUR OF THE 3RD RESPONDENT BY SRI.DEEPESH. EXHIBIT P12: TRUE COPY OF THE FAIR VALUE LIST PERTAINING TO PROPERTY FALLING IN OLD SURVEY NO. 219/4/6/1. EXHIBIT P13: TRUE COPY OF THE GEHAN NO.G 1016/2016, EXECUTED IN FAVOUR OF THE 3RD RESPONDENT BY SRI.RENJEEV. WP(C).No. 35035 of 2017 (D) ------------------------------------------ EXHIBIT P14: TRUE COPY OF THE FAIR VALUE LIST PERTAINING TO PROPERTY FALLING IN OLD SURVEY NO. 174/21. RESPONDENT(S)' EXHIBITS : NIL //TRUE COPY// P.S.TO JUDGE. Msd. ANIL K. NARENDRAN, J. ----------------------------------------------- W.P(C)Nos.35035 & 37350 of 2017 ----------------------------------------------- Dated this the 13th day of December, 2017 J U D G M E N T W.P.(C)No.35035 of 2017:- The petitioners, who are members of Ullala Service Co-operative Bank Ltd. No.1142, the 3rd respondent-Bank, had applied for loan for an amount of Rs.20,00,000/- for business purpose, offering their property having a total extent of 25 cents at Kothavara, Thalayazham Village as the collateral security. According to the petitioners, the respondent- Bank had sanctioned loan for an amount of Rs.10,00,000/- to the 1st petitioner-son and a further amount of Rs.10,00,000/- to the 2nd petitioner-mother. As directed by the 3rd respondent-Bank the petitioners had executed 'gehan' in favour of the Bank. Though Ext.P1 encumbrance certificate dated 25.7.2017 would show execution of 'gehan' in favour of the Bank for an amount of Rs.10,00,000/- each, the Bank disbursed only an amount of Rs.2,00,000/- as loan, in the month of August, 2017. The 1st petitioner submitted Ext.P2 complaint dated 27.9.2017 before the Assistant Registrar (General) of Co-operative Societies, Vaikom, the W.P(C)Nos.35035 & 37350 of 2017 :-2-: 1st respondent. On 28.9.2017, the 1st petitioner was informed vide Ext.P3 communication dated 28.9.2017 of the 1st respondent- Assistant Registrar that necessary directions have already been issued to the 3rd respondent-Bank to disburse the loan amount. A copy of Ext.P4 communication dated 28.9.2017 of the 1st respondent-Assistant Registrar addressed to the 3rd respondent- Bank was also enclosed along with Ext.P3. Since the 3rd respondent-Bank has not taken any action as per Ext.P4, the petitioners have filed this writ petition under Article 226 of the Constitution of India, seeking a writ of mandamus commanding the 1st respondent-Assistant Registrar to implement Ext.P4 decision dated 28.9.2017 at the earliest and to arrange disbursement of the balance loan amount by the 3rd respondent- Bank at the earliest. The petitioners have also sought for a writ of mandamus commanding the 1st respondent to take action under Section 66B of the Kerala Co-operative Societies Act 1969 against the officers of the 3rd respondent-Bank for non-compliance of Ext.P4. W.P(C)Nos.35035 & 37350 of 2017 :-3-: 2. On 6.11.2017 when this writ petition came up for admission, this Court admitted the matter on file. The learned Government Pleader took notice for respondents 1 and 2 and notice by special messenger was ordered to the 3rd respondent. 3. The 3rd respondent-Bank has filed counter affidavit opposing the reliefs sought for in this writ petition and the petitioners have also filed a reply affidavit reiterating the contentions raised in the writ petition. The petitioners have also produced certain additional documents along with their rely affidavit. 4. W.P.(C)No.37350 of 2017:- The 3rd respondent-Bank in W.P(C)No.35035 of 2017 has filed this writ petition seeking a writ of certiorari to quash Ext.P2 order/letter dated 28.9.2017 issued by the Assistant Registrar (General) of Co-operative Societies, Vaikom, which is Ext.P4 in the other writ petition, contending that the said order/letter issued by the Assistant Registrar without notice to the Bank is liable to be set aide for the sole reason that it has been issued in violation of the principles of natural justice W.P(C)Nos.35035 & 37350 of 2017 :-4-: and that, the interference made by the Assistant Registrar with the day-today administration of the Bank is illegal and without any jurisdiction. The Bank has also raised various contentions justifying their action in not disbursing loan amount in excess of Rs.2,00,000/-. 5. Heard the learned counsel for the petitioner in W.P.(C) No.35035 of 2017, the learned Government Pleader for respondents 1 and 2 and also the learned counsel for the 3rd respondent-Bank/petitioner in W.P.(C)No.37350 of 2017. 6. Since Ext.P4 sought to be implemented in W.P.(C) No.35035 of 2017 is under challenge in W.P.(C)No.37350 of 2017, the legality or otherwise of the said order/letter, which is marked as Ext.P2 in W.P.(C)No.37350 of 2017, has to be decided first. 7. The specific stand taken by the 3rd respondent-Bank is that the said order/letter dated 28.9.2017 is one issued without notice to them and as such, the same is liable to be set aide as it has been issued in violation of the principles of natural justice. 8. The fact that such an order/letter has been issued W.P(C)Nos.35035 & 37350 of 2017 :-5-: without notice to the the 3rd respondent-Bank is not in dispute. As evident from the order/letter dated 28.9.2017, the 1st petitioner moved a complaint before the Assistant Registrar on 27.9.2017 highlighting his grievance against non-disbursement of the entire loan amount. Based on the said complaint, the Assistant Registrar issued the aforesaid order/letter on the very next day, i.e., 28.9.2017. Once it is found that the order/letter dated 28.9.2017 of the Assistant Registrar is one issued in violation of the principles of natural justice, the same cannot be sustained in law. 9. The learned counsel for the 3rd respondent-Bank would submit that, since the value of the property mortgaged is very meager it was decided not to disburse the entire loan without getting sufficient security and the said fact was intimated to the 1st petitioner in W.P.(C)No.35035 of 2017. However he did not care to furnish additional security and hence the petitioner Bank took a decision on 12.9.2017 not to disburse the amount. Thereafter, the Bank has also cancelled the 'gehan' executed by the 2nd petitioner-mother on 26.10.2017, and the said fact was W.P(C)Nos.35035 & 37350 of 2017 :-6-: also intimated to the 1st petitioner-son. Per contra, the learned counsel for the petitioners in W.P.(C)No.35035 of 2017 would contend that, the petitioners are not issued with any such communication from the 3rd respondent Bank. 10. Having considered the rival submissions, these writ petitions are disposed as follows; (i) The 3rd respondent-Bank shall communicate to the petitioners in W.P.(C)No.35035 of 2017, within a period of one week from the date of receipt of a certified copy of this judgment, a copy of its decision dated 12.9.2017 not to disburse the entire loan without getting sufficient security and also its communication dated 26.10.2017 addressed to the 1st petitioner-son regarding cancellation of the 'gehan' executed by the 2nd petitioner-mother. It would be open to the petitioners to challenge the said decision/ communication before appropriate forum, in accordance with law. (ii) The order/letter dated 28.9.2017 of the 1st respondent- Assistant Registrar (Ext.P2 in W.P(C).No.37350 of 2017/Ext.P4 in W.P.(C)No.35035 of 2017) is set aside, as it has been issued in violation of the principles of natural justice, and the 1st respondent-Assistant Registrar is directed to reconsider the complaint dated 27.9.2017 made W.P(C)Nos.35035 & 37350 of 2017 :-7-: by the 1st petitioner (Ext.P2 in W.P.(C)No.35035 of 2017) and pass appropriate orders thereon, strictly in accordance with law, with notice to the petitioners and also to the 3rd respondent-Bank, as expeditiously as possible, at any rate, within a period of four weeks from the date of production of a certified copy of this judgment. All the contentions raised by both sides are left open to be raised before the appropriate forum. Sd/- ANIL K. NARENDRAN JUDGE //True Copy// P.A to Judge ab "