Failure to deduct loan repayments as per statutory duties under the Kerala Co-operative Societies Act constitutes a breach of duty by the employer.

K. NATARAJAN . J This Writ appeal is filed by the appellant/petitioner as against the judgment passed by the learned Single judge of this Court in W.P.(C)No.28516/2022 dated 07.01.2025 for having dis-

miss the Writ Petition.

2. We have heard the arguments of the learned counsel for the appellant as well as the learned counsel for the respondent Nos.7 and 8 and the learned Senior Government pleader appear-

ing for the respondent Nos. 1 to 6.

3. The case of the appellant before the learned Single Judge in the writ petition was that respondent No. 7 was a bor- rower of a loan from the petitioner. Respondent No. 8, who is the husband of respondent No. 7, was an employee under respondent No. 1 and was working under respondents 3 to 5. Respondent No. 7 defaulted in repayment of the loan, and respondent No. 8 had stood as guarantor for the said loan. Due to the default in pay-

ment, the petitioner approached the Arbitrator by filing an arbi- tration petition. The petitioner also acted upon the non-liability certificate issued by the employer, respondent No. 3, and issued a recovery notice dated 17.10.2016 (Ext. P2) seeking deduction of a sum of Rs. 1,45,099/- from the salary of respondent No. 8. How- ever, upon receipt of the notice, the employer, namely respon- dents 3 to 6, did not act upon it and did not deduct any amount from the salary of respondent No. 8 and remit the same to the pe- titioner. Subsequently, the petitioner came to know that respon- dent No. 8 was likely to retire. Therefore, the petitioner issued an- other notice directing respondents 3 to 6 not to disburse the re- tirement benefits of respondent No. 8. Even then, respondents 3 to 6 ignored the petitioner’s letter and disbursed the retirement benefits to respondent No. 8. The petitioner is also said to have filed a complaint before the local authority; however, no action was taken. Hence, the petitioner approached the learned Single Judge of this Court by filing a writ petition seeking a direction to hold respondent Nos. 3 to 6 are liable to compensate the loss suf-

fered by the petitioner- bank to the tune of Rs. 4,10,134/- as on the date of filing of the writ petition. After service of notice and hearing the arguments, the learned Single Judge dismissed the writ petition. Hence, the petitioner has approached this Court by filing the present appeal.

4. The learned counsel for the appellant/petitioner stren-

uously contended that respondent Nos. 3 to 6 had issued a non- liability certificate in favour of respondent No. 8. Based on the salary certificate of respondent No. 8, the appellant bank had granted a loan to respondent No. 7, who is none other than the wife of respondent No. 8. However, they defaulted in repayment of the loan. Therefore, the petitioner issued notices, Exts. P2 to P9, directing respondents 3 to 6 to deduct the salary of respondent No. 8 and remit the same to the bank, but they failed to do so. As per Section 37 of the Kerala Co-operative Societies Act , 1969, the employer is duty-bound to deduct the salary and remit the same to the bank in respect of such protected loans. Further, under sub-section (5) of Section 94 of the said Act, if the amount is not deducted from the salary, or even if deducted, is not remitted within seven days without sufficient cause, the employer is liable to pay a penalty to the bank. Moreover, Rule 52 of the Kerala Co- operative Societies Rules, 1969 prescribes the procedure for de- duction of salary and remittance to the bank. Despite these statu- tory provisions, respondents 3 to 6 failed to deduct the salary of respondent No. 8 and disbursed the retirement benefits without notice to the petitioner/appellant. Therefore, they are liable to pay the amount due from respondents 7 and 8 to the bank. It was fu