Point of law: No doubt, Section 37 of the "KCS Act" creates a mechanism for deduction only from the salary of a debtor by his employer and for its payment into the loan account with the Co-operative Society.

JUDGMENT :

1. The issue projected in this case by the petitioner is a terse one, but which can have deep repercussions on the rights of the Co-operative Societies operating under the Kerala Co-operative Societies Act (KCS Act), to recover amounts disbursed by them to their members, who are or were Government servants.

2. The petitioner, which is an Urban Co-operative Bank, within the ambit of the “KCS Act” and the Rules thereunder, impugns Exhibit P4 order of the Government dated 04.05.2019 – to the extent to which it relates to Co-operative Societies – which appears to inflexibly mandate that, notwithstanding the statutory consent obtained by the Societies from its members at the time when loans were availed of by the latter -to the effect that 'his employer or the officer disbursing his salary or wages shall be competent to deduct from the salary or retiral benefits payable to him by the employer', recovery cannot be affected against his retiral benefits, unless the said person gives another consent for such purpose, at the time of his retirement, to his Drawing and Disbursing Officer.

3. The apprehension of the petitioner, as revealed from the averments in this writ petition and the submissions made at the Bar, is that even when the aforementioned consent is a statutory one, as per the provisions of Section 37 of the "KCS Act", when another consent is imposed to be obtained at the time of his retirement -which alone is then prescribed to enable recovery from his pensionary benefits -it offers the loanee an undue and unfair advantage of being able to refuse such, thus being in a position to virtually interdict the recovery against him.

4. Sri.George Poonthottam, learned Senior Counsel, instructed by Sri.Reginald Valsalan – learned counsel for the petitioner, argued that Ext.P4 creates an opportunity for a rather deleterious consequence, because it is plausible that a loanee would refuse the consent required under it at the time of his retirement, which would then consequentially trench upon the rights of the Societies, accrued to them under Section 37 of the "KCS Act", to effect recovery against his retiral benefits. The learned Senior Counsel thus submitted that if Ext.P4 is allowed to operate, it is more than likely that many or most government employees will refuse to offer consent at the time of their retirement, thus being able to go free, without settling the loan availed by them from the Cooperative Societies.

5. Smt.M.R.Sreelatha, learned Special Government Pleader appearing for the respondents, responded to the afore contentions of the petitioner, pointing out that Ext.P4 is a general order, thought of by the Government to implicitly conform with the imperative requirements of Rule 2 of Part III of the Kerala Service Rules (KSR) She explained that, normally, under the restrictive provisions of the Payment of Gratuity Act, 1972, no part of the Death-Cum-Retirement Gratuity (DCRG) of a retired employee can be proceeded against and that this is more so since section 37 of the "KCS Act" only permits such against the salary of an employee while in service and not against his retiral benefits. She added that it is, therefore, that Ext.P4 has been issued, mandating that unless a consent is given by an employee under Rule 2 of Part III KSR at the time of his/her retirement, no part of an outstanding loan liability can be recovered and paid to the Society by the Drawing and Disbursing Officer, from his/her retiral benefits.

6. The learned Special Government Pleader further reiterated that since Ext.P4 is intended to operate as a general instruction under Rule 2 of Part III KSR; and since it statutorily provides for such a consent to be obtained before the retiral benefits of an employee can be proceeded against, the Government thought it fit to incorporate the same into it.

7. Smt.M.R.Sreelatha then submitted that there is another reason why Ext.P4 has been issued, namely, that unless a consent is taken from an employee at t