The Cooperative Ombudsman cannot adjudicate disputes that are covered by specific sections of the Kerala Cooperative Societies Act.

JUDGMENT

The petitioner Bank, which is a Society registered under the Kerala Co-operative Societies Act, 1969, has approached this Court in this writ petition filed under Article 226 of the Constitution of India, seeking a writ of certiorari to quash Ext.P9 order dated 01.12.2014 of the Kerala Co-operative Ombudsman, Thiruvananthapuram in Complaint No.462 of 2014; a declaration that the petitioner Bank is justified in seeking to recover the claims due to the principal debtor from the 2nd respondent and that, the 1st respondent Co-operative Ombudsman has no authority to entertain the complaints of the nature, which lead to the passing of Ext.P9, as the same is outside the purview of the Scheme under which the Ombudsman is created.

2. A counter affidavit has been filed on behalf of the 2nd respondent opposing the reliefs sought for in this writ petition.

3. Heard the learned counsel for the petitioner, the learned Senior Government Pleader appearing for the 1st respondent and also the learned counsel appearing for the 2nd respondent.

4. The sole issue that arises for consideration in this writ petition is as to the legality or otherwise of Ext.P9 order passed by the 1st respondent Co-operative Ombudsman in Complaint No.462 of 2014.

5. The pleadings and materials on record would show that one G.Madhusoodanan Nair was sanctioned a loan for ₹1,80,000/- from the Thycaud Branch of the petitioner Bank on 23.03.2001. As per the terms of repayment, he was required to repay the loan in 65 monthly installments of ₹2,769/-, which was to carry interest at the rate of 16.5% per annum. Ext.P1 is the loan agreement. Ext.P2 document would show that the 2nd respondent herein stood as one of the sureties in the said loan transaction, agreeing to be severally liable for realisation of the said amount, reserving the liberty with the Bank to sue either of them without joining the others. The 2nd respondent has also consented for recovery of the amount from his salary, as provided under Section 37 of the Kerala Co-operative Societies Act, 1969 (for brevity, 'the Act') which as evidenced by Ext.P3 certificate dated 07.07.2001. When there was default on the part of the borrower in repayment of monthly instalments, recovery proceedings were initiated by the petitioner Bank, which has resulted in the issuance of Ext.P5 notice.

6. Challenging the recovery steps initiated by the petitioner Bank, the 2nd respondent had approached the Co- operative Ombudsman by filing Complaint No.462 of 2014. In the said complaint, the Ombudsman passed Ext.P9 order, which is under challenge in this writ petition. The operative portion of Ext.P9 order reads thus :

“Under Section 146 of the Indian Contract Act 'co sureties are liable to contribute equally.' 'The provision says when two or more persons are co sureties for the same debt or duty, either jointly or severally or whether under the same or different contracts and whether with or without the knowledge of each other, the co sureties, in the absence of any contract to the contrary, are liable as between themselves to pay each an equal share of the whole debt, or that part of it which remains unpaid by the principal.'

According to the respondent the amount remaining to be recovered out of the loan is Rs.2,70,669/-, i.e., the principal Rs.1,21,441/- along with interest of Rs.1,49,228/-. An amount of Rs.2,40,000/- (Two lakh forty thousand) is already recovered from the petitioner who is one among the sureties. So from the statement of respondent, it is seen that the total amount to be recovered out of the loan debt is Rs.5,10,669/- (Five lakh ten thousand six hundred and sixty nine) as per the statements furnished before the forum. As strictly following Section 146 of the Indian Contract Act the petitioner is liable to pay one third of the total amount due, i.e., Rs.1,70,223/- (One lakh seventy thousand two hundred and twenty three - calculated as per information furnished before the forum). So the petitioner is entitled to get