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2021 Supreme(Online)(KER) 40421
HIGH COURT OF KERALA
SUNIL THOMAS, J
K.MATHEW JOHN – Appellant
Versus
STATE OF KERALA – Respondent
WP(C)/16403/2020
SRI.JACOB P.ALEX, SRI.JOSEPH P.ALEX, SHRI.MANU SANKAR P.
Depositors' rights are protected under cooperative law, compelling financial institutions to meet their obligations even amidst financial difficulties.
Headnote:
Banking - Depositors' Rights - Kerala Co-operative Societies Act - Sections 32, 69 - The court emphasized liability under fixed deposits, ruling that depositors have rights that require enforcement through cooperative law, irrespective of the financial difficulties of the bank.
Fact of the Case:
The petitioners, depositors of a cooperative bank, claimed non-payment of their principal and interest upon maturity of fixed deposits. The bank argued financial difficulties and denied being a state entity under the Constitution.
Finding of the Court:
The court dismissed the bank's argument regarding its status and financial difficulties, emphasizing the existence of a clear liability towards depositors, mandating payment or action under the Cooperative Societies Act.
Issues: Is the bank considered a 'State' under Article 12? Are the petitioners entitled to relief through a writ petition given the provisions of the Kerala Co-operative Societies Act?
Ratio Decidendi: The existence of a fixed liability by the bank towards depositors, combined with statutory provisions under the Kerala Co-operative Societies Act, entitles depositors to seek redress, regardless of the bank's financial status.
Final Decision: Writ petitions disposed with directions for bank compliance and payment to depositors within six months.
COMMON JUDGMENT
[ WP(C).16204/2020, WP(C).16223/2020, WP(C).16342/2020, WP(C).16373/2020, WP(C).16374/2020, WP(C).16380/2020, WP(C).16403/2020, WP(C).16498/2020, WP(C).16604/2020, WP(C).16642/2020, WP(C).16699/2020 ]
Dated this the 10th day of February 2021 The petitioners herein are the depositors of the fifth respondent - Co-operative Bank. Each of the petitioners or their family members have deposited substantial portion of their savings and earnings in the bank on agreed interest. They have been issued with the Fixed Deposit Receipts, copies of which are produced and marked in each of the writ petition.
2. The grievance of the petitioners is that, in spite of the completion of the period of maturity, neither the principal amount nor the interest have been paid to the petitioners. Hence, the writ petitions were filed. A common counter has been filed by the bank in W.P(C)No.16342/2020.
3. The deposit of money in Fixed Deposits, the amount payable and the existence of the liability to repay the amount with agreed interest, are not seen disputed. The main contention set up by the learned counsel for the petitioners is that, the Bank is not a 'State' or an 'instrumentality of State' under Article- 12 of the Constitution of India and hence a writ petition is not sustainable against the society. It was further contended that, in the light of Section 69 of the Kerala Co-operative Societies Act , which provides for an efficacious relief, a writ petition is not maintainable for the relief as sought by the petitioners. It was further contended that, the question whether a writ petition is sustainable against a society is a matter pending before the Full Bench and the Court may wait till the final decision is rendered. Another contention projected by the learned counsel for the Bank was that, the Bank is in utter financial difficulties due to series of irregularities committed in the functioning of bank during 2004-2014. The present Managing Committee took charge only few months back and several awards passed in favour of the Bank by the arbitrators are pending execution. Unless those amounts are recovered, liability of petitioners cannot be discharged.
4. The learned counsel for the Bank vehemently contented that, the writ petition is not maintainable and that the Bank does not come under the definition of State, against whom a writ is maintainable. He relied on the decision of the Hon'ble Supreme Court reported in 2013(16) SCC 82, wherein it was held that, societies though subject to control of statutory authorities, do not fall within the ambit of State or instrumentality of State. This was the law laid down inFederal Bank Ltd v Sagar Thomas [ 2003(10)SCC 733 ], the larger bench decision in 2015 (1) KHC 779, and seven Judges Bench decision inPradeep Kumar Biswas v Indian Institute of Chemical Biology [2002(5)SCC 111].
5. The Writ Petition, as framed shows that apart from the Society, State and officers of Co-operative department are arrayed as respondents. The main relief sought is to enforce the direction of Joint Registrar in Ext.P4 and to take necessary steps pursuant to Ext.P3 complaint. The second prayer is to direct second respondent Registrar to initiate action under Section 32 of Kerala Co-operative Societies Act and to appoint an Administrator. In the light of the relief sought, which is against statutory authorities, I find no reason to hold that the writ petition as framed is not sustainable and the question whether Bank is a 'State' or 'Instrumentality of State' need not be gone into.
6. The next contention of the learned counsel for the respondent was that, the petitioners have got another efficacious remedy by virtue of Section 69 of the Kerala Co- operative Societies Act. Counsel placed reliance onU.P State Co-operative Land Development Bank Ltd V Chandra Bhan Dubey & Others [1999(1)SCC 741], Nivedita Sharma v Cellular Operators Association of India & Others [2011(14) SCC 337] to substantiate this contention. This conte
