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2024 Supreme(Online)(KER) 44306
HIGH COURT OF KERALA
K.S.THOMAS – Appellant
Versus
THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) – Respondent
WP(C) 35413/2022
Writ petitions are maintainable against Co-operative Societies/Banks for immediate relief despite statutory remedies, due to their financial incapacity to honor deposits.
Headnote:(A) Kerala Co-operative Societies Act, 1969 - Section 57E - Writ petitions filed by depositors seeking release of Fixed Deposits and Savings Bank amounts due to financial difficulties of Co-operative Societies/Banks - Petitioners argue that statutory remedy under Section 69 is not efficacious - Court acknowledges the financial crisis of Societies/Banks and the Government's revival measures. (Paras 2, 3, 4, 10, 11)
(B) Writ Jurisdiction - Maintainability of writ petitions in cases of financial disputes with Co-operative Societies - Court refers to precedents allowing writs when repayment is refused. (Paras 3, 4)
Facts of the case:
Petitioners made Fixed Deposits and Savings Bank deposits in Co-operative Societies/Banks, which are unable to honor these due to financial issues. The petitioners seek a directive for immediate release of their funds.
Findings of Court:
Co-operative Societies/Banks can apply for benefits under the Kerala Co-operative Revival Fund Scheme, 2024, to discharge liabilities to depositors.
Issues: The main issues include the maintainability of writ petitions against financial institutions and the efficacy of statutory remedies.
Ratio Decidendi: The court ruled that despite the existence of a statutory remedy, the financial plight of the Societies/Banks justifies the maintainability of writ petitions for immediate relief.
Result: Writ petitions disposed of with directions for Societies/Banks to prepare revival schemes.
JUDGMENT
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All these writ petitions have been filed by the petitioners, who have made Fixed Deposits in the respective Co-operative Societies / Banks. Some of the petitioners have : 312 : made deposits in SB Accounts also.
2. Due to various factors, the Co-operative Societies / Banks are in financial doldrums and are not in a position to honour Fixed Deposits on their maturity or the cheques drawn by the petitioners to withdraw amounts from their Savings Bank Accounts. The petitioners are therefore before this Court seeking to direct the Societies/Banks to release the Fixed Deposit / SB Deposit amounts to the petitioners forthwith.
3. The counsel for the petitioners would urge that though a statutory remedy under Section 69 of the Co- operative Societies Act is available to the petitioners, the said remedy is not an efficacious alternate remedy. A Division Bench of this Court in Gandhigram Agro Based Industrial Co-operative Society Limited v. Marangattupilly Service Co-operative Bank Limited and others [2019 (2) KLJ 908] has held that a writ petition is maintainable when the Co- operative Societies/Banks refuse to repay the amounts deposited by members of the Society.
4. The Special Government Pleader representing the State would contend that a Division Bench of this Court has held in the judgment inMeenachil Rubber Marketing and Processing Co-operative Society Limited and others v. The Choondachery Service Co-operative Bank Limited No.167 and others [2018 (2) KHC 180] that a dispute between a Society and its member relating to any transaction connected to the Society, should be resolved through arbitral proceedings provided under Section 69 of the Kerala Co-operative Societies Act . A writ petition under Article 226 of the Constitution of India is not maintainable in such commercial transactions.
5. Be that as it may, the fact remains that the hard earned money of the petitioners deposited with the Co- operative Societies/Banks cannot be withdrawn now in view of the financial condition of the Societies/Banks.
6. The Government of Kerala, taking note of the peculiar situation in the Co-operative sector, has taken measures to offer financial assistance to the Co-operative Societies for the purpose of reviving the Co-operative Societies which are financially weaker or remain in dormant position due to extraordinary situation.
7. The Government of Kerala, in exercise of the powers conferred by Section 57E of the Kerala Co-operative Societies Act , 1969, has framed the Kerala Co-operative Revival Fund Scheme, 2024. The Scheme has been notified as per Notification GO(P) No.168/2024/Co-op dated 29.08.2024.
8. Paragraph 4 of the Kerala Co-operative Revival Fund Scheme, 2024 reads as follows: 4. Terms and Conditions for providing financial assistance -
(1) A co-operative society registered under the Act shall be eligible to be considered for the benefits under this Scheme.
(2) When a society’s operations has become sluggish due to operational inefficiencies, lack of working capital and short-term liquidity issues, it shall formulate a revival scheme.
(3) Only those co-operative societies that are weaker or remain dormant but viable and capable of gaining strength shall be considered for revival.
(4) In addition to the financial assistance that may be provided from the Scheme, societies facing crisis are also eligible to utilize any reserve funds they have accumulated, subject to conditions if any specified by the Registrar.
(5) The amount sanctioned under the Scheme shall be granted a moratorium on repayment for the first two years. The repayment period ranges from five to ten years. The State High Level Committee shall be competent to determine the installment structure and interest rates from time to time.
(6) Application Form for availing financial assistance from this Scheme shall be as specified by the Registrar.
In view of the Co-operative Revival Fund Scheme, 2024, the Co-operative Societies/Banks concerned in these writ
