The court ruled that the respondents were not legally obligated to recover the loan amount from the guarantor's salary, dismissing the writ petition.

JDUGMENT :

(N. NAGARESH, J.)

The writ petition has been filed by a Co-operative Bank seeking to declare that the Bank is entitled to an amount of Rs.4,10,134/- as on 24.08.2022 on account of the default committed by respondents 7 and 8 in the loan transaction arising out of Ext.P10 and the malfeasance and omission in the discharge of statutory duties on the part of respondents 3 to 6 and that the State is liable to make good the loss suffered by the Bank.

2. The 7^th respondent availed a loan of Rs.2 lakhs from the Bank on 24.08.2015. The 8^th respondent stood as a guarantor and offered his Salary Certificate. The 8^th respondent was working as Senior Clerk in the Agricultural Development and Farmers Welfare Department. It is based on the security of the 8^th respondent that the loan was sanctioned, contends the petitioner-Bank.

3. When the 7^th respondent defaulted in making repayment, the petitioner required respondents 3 to 6 to recover monthly instalments from the salary of the 8^th respondent. Respondents 3 to 6 refused to take any action. On the other hand, respondents 3 to 6 permitted the 8^th respondent to go on retirement availing all his terminal benefits. Because of the failure of respondents 3 to 6 to deduct amounts from the salary / terminal benefits of the 8^th respondent and pay to the Bank, the petitioner-Bank has suffered a loss of Rs.4,10,134/- as on 24.8.2022.

4. The petitioner states that under Article 89, Volume-1, Item No.3 of the Kerala Financial Code, which deals with deduction from pay bills of Government servants, the respondents are under legal obligation to deduct amounts from the salary of the 8^th respondent while he was in service so that the loan amount sanctioned to the 7^th respondent is recovered by the Bank, without Bank having to suffer any loss under the loan transaction. The respondents miserably failed to discharge the legal obligation. This has resulted in undue loss to the Bank and undue gain to respondents 7 and 8.

5. Respondents 7 and 8 are financially capable of repaying the loan availed by the 7^th respondent. They are deliberately refraining from repaying the loan. Respondents 3 to 6 have defaulted in exercising the statutory power and duty vested in them. The failure of respondents 3 to 6 to exercise statutory power vested in them has resulted in Bank suffering huge loss. Therefore, the 1^st respondent is compellable to pay an amount of Rs.4,10,134/- as on 24.8.2022 with continuing interest till the actual payment to the Bank.

6. The 1^st respondent resisted the writ petition. The 1^st respondent submitted that intimation regarding the liabilities and the recovery from the salary of 8^th respondent was informed to the office of the 3^rd respondent. On receiving information regarding the dues, the 3^rd respondent served the copy of the same to the 8^th respondent. The 8^th respondent thereupon submitted an application with a request to the 3^rd respondent not to recover from his salary as he was not receiving sufficient gross salary for his survival. There is no dereliction of duty on the part of respondents 1 to 6.

7. The 5^th respondent also resisted the writ petition filing a statement. The 5^th respondent submitted that the 8^th respondent joined the office of the Assistant Director of Agriculture, Neyyattinkara on 01.04.2017 after getting transferred from Principal Agricultural Office, Thiruvananthapuram. The 7^th respondent obtained loan from the petitioner-Bank during 2015, while the 8^th respondent was working as a redeployment staff with Thiruvananthapuram Grama Panchayat.

8. The 5^th respondent submitted that intimation regarding the liabilities and the recovery from the salary of 8^th respondent was informed to the office of the 3^rd respondent. Immediately after receiving information regarding the dues of repayment of loan taken by 7^th respondent from the petitioner, the 3^rd respondent served the copy of the same to the 8^th respondent. Subsequently, the 8^th respondent filed an application with a request t