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2024 Supreme(Online)(KER) 39403
HIGH COURT OF KERALA
N. NAGARESH, J
PRASANTH KAIMAL – Appellant
Versus
KERALA STATE LEGAL METROLOGY LICENSEES & TECHNICIANS COOPERATIVE SOCIETY LTD.NO:4473 – Respondent
WP(C) 31995/2024
M.G.JEEVAN, HEERA MURALEEDHARAN K., SRI.P.P TAJUDHEEN
A writ petition is maintainable when a Co-operative Society refuses to repay deposits, despite the existence of statutory remedies.
Headnote:(A) Kerala Co-operative Societies Act, 1969 - Section 57E - Writ petition filed seeking direction for release of Fixed Deposits by a Co-operative Society in financial distress - The petitioner argued that statutory remedy under Section 69 is not efficacious, citing precedent that writs are maintainable in similar cases (Para 3).
(B) The court noted the financial condition of the Society and highlighted the Kerala Co-operative Revival Fund Scheme, 2024, which provides financial assistance to Co-operative Societies in crisis (Paras 6-10).
(C) The court directed the Society to prepare a revival project document and submit it to the State High Level Committee (Para 11).
Facts of the case:
The petitioner, having made Fixed Deposits with the Society, is unable to withdraw funds due to the Society's financial condition.
Findings of Court:
The Society can apply for assistance under the Kerala Co-operative Revival Fund Scheme to discharge liabilities towards depositors.
Issues: The main issues were the availability of statutory remedies versus the efficacy of a writ petition, and the financial obligations of the Society to its members.
Ratio Decidendi: The court ruled that the financial constraints of the Society necessitate a revival scheme to ensure depositors can recover their funds, asserting that the Society must follow the prescribed procedures for financial assistance (Para 11).
Result: Writ petition disposed of with directions.
J U D G M E N T
Dated this the 29th day of October, 2024
This writ petition has been filed by the petitioner who has made Fixed Deposits in the 1st respondent-Co-operative Society.
2. Due to various factors, the 1st respondent-Co-operative Society is in financial doldrums and is not in a position to honour Fixed Deposits on their maturity or the cheques drawn by the petitioner to withdraw amounts from his Savings Bank Accounts. The petitioner is therefore before this Court seeking to direct the 1st respondent-Society to release the Fixed Deposits to the petitioner forthwith.
3. The Counsel for the petitioner would urge that though a statutory remedy under Section 69 of the Co-operative Societies Act is available to the petitioner, 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 petitioner deposited with the Co-operative Society cannot be withdrawn now in view of the financial condition of the 1st respondent.
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 instalment 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 1st respondent-Co-operative Society can make appropriate application for the benefits under the Scheme, with the aid of which the Society ca
