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2023 Supreme(Online)(KER) 435
HIGH COURT OF KERALA
N. NAGARESH, J
ANILKUMAR.P.C – Appellant
Versus
THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL) – Respondent
WP(C) 24657/2020
T.R.HARIKUMAR, SHEEJA C.S – SENIOR GOVERNMENT PLEADER, SURIN GEORGE IPE - FOR R2
A co-operative society must honor deposit liabilities unless legally absolved, and it can initiate recovery against persons responsible for financial misconduct.
Headnote:
Co-operative Societies - Deposits - Kerala Co-operative Societies Act - 68(3), 69
Fact of the Case:
The petitioners deposited money in a Co-operative Society, which failed to repay the fixed deposits despite demands. The society claimed to have financial issues due to fraud by a former secretary.
Finding of the Court:
The court found grounds for directing the society to recover the misappropriated funds from the former secretary, allowing the petitioners to receive their deposited amounts.
Issues: Whether the co-operative society can be compelled to repay the deposits to the petitioners after noting the fraudulent conduct of the former secretary.
Ratio Decidendi: The court emphasized that once deposits were collected with a promise of repayment, the society is obligated to fulfill this commitment, and it can pursue recovery actions against responsible parties.
Final Decision: The court directed the society to initiate recovery proceedings and disburse the owed amounts to the petitioners upon recovery.
JUDGMENT
Dated this the 21st day of December, 2023 [
W.P.(C) Nos. 24439/2020, 24445/2020, 24463/2020, 24500/2020, 24569/2020, 24631/2020, 24632/2020, 24634/2020, 24635/2020, 24657/2020, 24668/2020, 24697/2020, 24792/2020, 24801/2020, 24824/2020, 24834/2020, 24929/2020, 24982/2020, 25026/2020 and 15033/2021]
The petitioners in all these writ petitions are persons, who have deposited money in the Vaikom Taluk Vanitha Co-operative Society Limited, Kaduthuruthy. The petitioners state that the Society has received deposits from the petitioners and others and they are disbursing loan to its members. In spite of the demand made by the petitioners, the Fixed Deposits made by them have not been repaid. The financial position of the Society has come to a stand still. In the circumstances, unless this Court direct the 2nd respondent-Society to disburse the amount deposited by the petitioners as Fixed Deposits along with accrued interest within a time limit, the petitioners will be put to irreparable loss and undue hardship.
2. Counsel appearing for the petitioners pointed out that this Court in judgment inthe Gandhigram Agro Based Industrial Co-Operative Society Limited v. Marangattupilly Service Co-Operative Bank Limited and others [2019 (3) KHC 60 DB] had declared that a writ petition is maintainable if the Society is not disbursing the amount lying as Fixed Deposit. This Court made it clear that once deposits were collected with an assurance to repay the same with interest, the Society cannot wriggle out from its liability and take a stand that the same has to be realised resorting to proceedings under Section 69 of the Kerala Co-operative Societies Act .
3. Standing Counsel entered appearance on behalf of the 2nd respondent-Society and submitted that a former Secretary of the Society had committed large scale fraud in the finance of the Society, due to which the Society's financial capacity dwindled. As soon as the irregularities were noted, the Secretary was suspended from service, an enquiry was conducted and the Secretary stands terminated from service.
4. Standing Counsel appearing for the 2nd respondent-Society also submitted that surcharge proceedings have been initiated against the former Secretary and surcharge order was passed on 10.11.2021. Against the said order, the said Secretary preferred an appeal before the Government. The Secretary had also approached this Court filing W.P.(C)
No.13613 of 2023. The said writ petition was disposed of by this Court on 13.04.2023 directing to dispose of Ext.P3 appeal within a period of one month.
5. It is an admitted position that the said appeal preferred by the former Secretary stands dismissed as per order dated 07.07.2023 by the Joint Secretary to the Government. 6. As the appeal preferred by the delinquent Secretary stands rejected by the Government, there is no Bar for the respondents now to proceed with the surcharge proceedings and recover the amount misappropriated by the Secretary, in exercise of the powers under Section 68 (3) of the Kerala Co- operative Societies Act.
In that view of the matter, the writ petitions are disposed of directing the 2nd respondent-Society to forward a requisition for Revenue Recovery of the amount found due from the delinquent Secretary, to the District Collector, Kottayam who is impleaded as additional respondent in these writ petitions. The District Collector, Kottayam, the Tahsildar, Vaikom and the Village Officer, Kaduthuruthy are directed to take expeditious steps to recover the amounts due from the former Secretary, under the Revenue Recovery Act. The 2nd respondent-Society shall make a requisition to the District Collector, Kottayam for recovery of the amount found as per the Audit Report or Section 68 (3) report, whichever is higher. The 2nd respondent-Society shall disburse the amount found due to the petitioners within a period of two months after the actual recovery of the amount from the former Secretary, depending upon the availability of
