Reconsideration of loan settlement request must comply with statutory provisions and prior judicial directions, invalidating arbitrary government interference.

JUDGMENT

Dated this the 10^th day of April, 2026 The writ petition is filed by a person in respect of a loan of ₹7,50,000/- availed by one Harish from the 4^th respondent Society. The 1^st petitioner was the absolute owner in possession of 50 cents of property in Re.Sy.No.103/pt of Karuvambram village, Malappuram and the 2^nd petitioner was the absolute owner of 25 cents of property in Re.Sy.No. 168/1/pt of Karuvambram Village, Malappuram District. The above extent of 75 cents of land belonging to the petitioners was offered as security by way of mortgage to the 1^st respondent Bank towards the industrial loan availed by the said Harish.

2. On account of default in repayment of the loan, proceedings in ARC No.4/03-04 were initiated, which culminated in a decree. Thereafter, in execution proceedings in E.P. No.81 of 2008 before the Sub Court, Manjeri, the petitioners’ property was brought to sale and purchased in auction by the Bank. In such circumstances, the petitioners approached this Court. The sale was confirmed on 18.01.2012, and thereafter Ext.P1 was issued. Subsequently, the petitioners approached the Bank seeking reconveyance of the property, and the Bank, taking into consideration the financial hardship of the petitioners, took a decision to accept ₹16 lakhs towards reconveyance of the property.

3. However, the said decision was not acted upon. Accordingly, the petitioners approached this Court by filing W.P.(C) No.24030 of 2017. By judgment dated 27.07.2017, this Court directed the Registrar of Co- operative Societies to finalize the proceedings pursuant to the communications referred to therein within a period of six weeks, after affording an opportunity of hearing to all concerned.

4. Even thereafter, the Registrar issued proceedings as per Ext.P3, stating that the property would be reconveyed in terms of Rule 54(2) of the Co-operative Societies, based on the decision of the General Body and subject to approval by the Government. Despite the same, no further action was taken. The petitioners, therefore, filed W.P.(C) No.5533 of 2018, which was disposed of by judgment dated 22.03.2018 directing the respondents to comply with Ext.P3 and to permit the petitioners to remit the amount due, as quantified and intimated, within one week from the date of receipt of a copy of the judgment.

5. In compliance with the said direction, the General Body of the respondent Bank, in its meeting held on 29.09.2018, passed Resolution No.12, deciding to reconvey the property to the petitioners on receipt of ₹16 lakhs towards full and final settlement. However, the Government issued Ext.P9 stating that the property could not be reconveyed for ₹16 lakhs and directed that reconveyance be effected only in favour of a person willing to pay ₹30 lakhs. This was challenged by the petitioners in W.P.(C) No.14582 of 2019. By judgment dated 17.06.2019, this Court set aside the said order and directed the Registrar of Co-operative Societies to consider the resolution dated 29.09.2018 and take an appropriate decision after affording an opportunity of hearing to the petitioners as well as the officials of the Bank.

6. Subsequently, by Ext.P11, it was observed that reconveyance of the property for ₹16 lakhs would result in loss to the Bank, as the minimum amount required to settle the liability at the relevant time was ₹29,96,088/-. On that basis, the request of the Bank to reconvey the property for ₹16 lakhs was declined. The present writ petition is filed challenging the said order.

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