Allowed

The Manager, K.S.F.E.Main Branch v. Shalu John and Others

Kerala HC22 Sept 2016WP(C)/26832/2007

Case brief

AI extract

What is this about?

The High Court allowed this writ petition challenging a Lok Ayukta order that restrained a financial enterprise from recovering dues from a surety's salary. Relying on the exclusion of contractual matters from the Ayukta's jurisdiction, the Court quashed the impugned order and restored the petitioner's right to initiate recovery proceedings under the contract.

What did the court decide?

Ext.P3 order restraining recovery from the 1st respondent's salary is set aside; the writ petition is allowed.

The Manager, K.S.F.E.Main Branch Vs… — Constitutional and Fundamental Rights | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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THURSDAY, THE 22ND DAY OF SEPTEMBER 2016/31ST BHADRA, 1938

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WP(C).No. 26832 of 2007 (T)

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PETITIONER(S):

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THE MANAGER, K.S.F.E. MAIN BRANCH, SHANTHI NAGAR, THIRUVANANTHAPURAM.

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BY ADVS.SRI.M.SASINDRAN SRI.TOJAN J. VATHIKULAM

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SRI.LAL GEORGE

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RESPONDENT(S):

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1. SHALU JOHN, 'SHALY' BHAVAN, KUZHIMATTIKKADU, EZHIKONE P.O., KUNDARA, KOLLAM.

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2. THE DEPUTY TAHSILDAR (RR),

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K.S.F.E. CHIRAKULAM ROAD, STATUE, THIRUVANANTHAPURAM.

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3. RESHMI MADHAVAN, 'SHANTHI', K.P.NO.156, N.C.C.ROAD, PEROORKADA, THIRUVANANTHAPURAM.

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4. SANTHAKUMARI A.K., 'SHANTHI', K.P.NO.156, N.C.C.ROAD, PEROORKADA, THIRUVANANTHAPURAM.

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5. RAJESWARI G., JOINT SECRETARY, HIGHER EDUCATION DEPARTMENT, SECRETARIAT, THIRUVANANTHAPURAM.

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6. KERALA LOK-AYUKTA-REPRESENTED BY ITS SECRETARY, THIRUVANANTHAPURAM.

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R1 BY ADVS. SRI.P.K.JOSE

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SMT.TESSY JOSE

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R2 & R6 BY GOVERNMENT PLEADER SMT.PRINCY XAVIER

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 22-09-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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msv/

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WP(C).No. 26832 of 2007 (T)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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P1 TRUE COPY OF THE COMPLAINT FILED BY THE FIRST RESPONDENT BEFORE THE LOK AYUKTA.

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P2 TRUE COPY OF THE STATEMENT FILED BY THE PETITIONER.

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P3 TRUE COPY OF THE ORDER DTD.29.6.2007.

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P4 TRUE COPY OF THE APPLICATION SUBMITTED BY THE FIRST RESPONDENT.

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P5 TRUE COPY OF THE COMMUNICATION DTD.18.10.2001.

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RESPONDENT(S)' EXHIBITS

NIL

//TRUE COPY//

P.S.TO JUDGE

Msv/

P.V.ASHA J.

-------------------------------------------W.P.(C).No.26832 of 2007

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---------------------------------------------

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Dated this the 22^nd day of September, 2016

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J U D G M E N T

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The Manager, Kerala State Financial Enterprises has filed this writ petition challenging Ext.P3 order by which the Lok Ayukta restrained the petitioner from effecting recovery from the salary of the 1^st respondent who stood as a surety for 3^rd respondent, in a transaction relating to prized chitty and directed the petitioner to take steps to recover the dues from the properties belonging to respondents 3 and 4 in this writ petition.

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First respondent submitted Ext.P1 complaint before the Kerala Lok Ayukta stating that she had stood as a surety in a chitty auctioned by the 3^rd respondent, with the petitioner herein. When recovery from her salary started, she filed Ext.P1 complaint saying that proceedings for recovery were initiated only against her and that no proceedings were initiated against the 3^rd respondent, who is the principal debtor or against respondents 4 or 5, who are the other sureties. In Ext.P1 complaint she alleged 'partialism, favouritism and maladministration by respondents 1 and 2' in initiating revenue recovery steps against her. Even though the petitioner herein

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W.P.(C).No.26832 of 2007

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who was the first respondent, filed a counter statement Ext.P2 denying the allegations and stating that as a surety her liability is joint and several and that she had furnished the employment certificate in which she agreed for recovery from her salary in the event of default at the instance of the 3^rd respondent, the Lokayukta did not consider those contentions.

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The 3^rd respondent was the subscriber of the chitty for a sala of Rs.4 lakhs comprising of 40 instalments of Rs.10,000/- per month. She had initially applied for a loan in the chitty in which petitioner and respondents 4 and 5 stood as sureties. In the counter statement the petitioner submitted that while the application for loan was being processed, the chitty was prized by 3^rd respondent and she got payment of the prized money offering the same sureties. Since she defaulted the payment of monthly instalments, notices were issued to 3^rd respondent who is the principal debtor and the sureties-the first respondent as well as respondents 4 and 5 and it was thereafter the proceedings for recovery from the salary of first respondent was effected on the basis of the consent given by her in writing. The petitioner stated that there was no mal administration in proceeding against her and that proceedings were initiated against the principal debtor as well as the other sureties, who are respondents 3 to 5.

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W.P.(C).No.26832 of 2007

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But the Lok Ayukta found that there was no evidence to show that the first respondent had agreed to deduct any amount from her salary towards the defaulted instalments and therefore the petitioner as well as the Revenue Recovery Tahsildar were not entitled to recover any amount from her salary. Lok Ayukta also found that when attachment was effected over the property of the 4^th respondent who was also a surety, there was no reason for proceeding with that and for effecting any recovery from the salary without taking proceedings for sale of the attached property. It was thereupon that the Lok Ayukta restrained respondents 1 and 2 in the complaint from recovering any amount from the salary of the 1^st respondent herein and directed to recover the dues from the properties belonging to respondents 3 and 4.

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The petitioner has produced the employment certificate of the 1^st respondent as Ext P4, which includes an agreement for recovery from salary, in case of default of payment of monthly instalments in chitty. This certificate along with the agreement is seen furnished on 07.08.2001. The employment certificate is furnished along with the application of the 3^rd respondent who prized the chitty, furnishing the details of the 1^st respondent who was offered as surety and in this application chitty number as well as the sala were also

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W.P.(C).No.26832 of 2007

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given. In addition to that there is another letter Ext.P5 dated 18.10.2001 in which the petitioner has informed the manager saying that she had already given a salary certificate to the 3^rd respondent to stand as surety to a chitty loan from chitty No.78/2001. But even before the loan was sanctioned the chitty was prized in her favour and therefore she expressed her willingness to stand as surety to the chitty. On the strength of Exts.P4 and P5, the petitioner submits that proceedings for recovery from salary was initiated in accordance with law and Lok Ayukta did not have any jurisdiction over a matter involving contract entered into between the parties or to issue any directions.

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The learned counsel appearing for the petitioner referred to the provisions contained in Section 8(1) of the Kerala Lok Ayukta Act, 1999 which provides for matters on which investigation shall not be conducted by the Lok Ayukta or Upa-Lok Ayukta in cases where action relates to any matter specified in the Second Schedule. Clause (c) in the Second Schedule reads as follows:

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“Administrative action taken in matters which arise out of the terms of a contract governing purely commercial relations of the administration with customers or suppliers except where the complainant alleges harassment or

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W.P.(C).No.26832 of 2007

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gross delay in meeting contractual obligation.”

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Therefore the contention of the learned counsel for the petitioner is that the proceedings for effecting recovery from the salary of the 1^st respondent was specifically excluded under Clause (c) of the Second Schedule even under Section 8 (1) of the Kerala Lok Ayukta Act, 1999.

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Learned counsel also relied on the judgment of this

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Court in State of Kerala v. Bernard (2002 [3] KLT 254) wherein, after referring to the various provisions of the Kerala Lok Ayukta Act and the interpretation of the expression allegation arising therein, this Court found that the Lok Ayukta has neither adjudicatory power, nor power to enforce the recommendation or finding. It was held that barring the area of investigation of a complaint involving allegation i.e., a complaint with regard to corruption, improper mortgage, nepotism, favouritism etc., the Lok Ayukta does not have any authority to adjudicate or enforce its recommendation or finding. In the light of this judgment the learned counsel argues that the order issued by the Lok Ayukta restraining the petitioner from effecting recovery and directing recovery from respondents 3 and 4 are without authority.

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On a perusal of Ext.P1 complaint, it can be seen that the only averment of the 1^st respondent is that the action was

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W.P.(C).No.26832 of 2007

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initiated against her alone for effecting recovery on account of partialism and favouritism and mal administration of respondents 1 and 2 in the complaint. But in Ext.P3 there is no finding as to any mal administration, partialism or any other factor on account of which the Lok Ayukta can investigate into the matter. Moreover it is a case where 1^st respondent has furnished her consent agreeing for effecting recovery from her salary towards the defaulted instalments. It is settled law that the liability of a surety is joint and several. As evident from Exts.P4 and P5, the impugned proceedings arose out of contracts entered into between the parties, which are excluded from the purview of Lok Ayukta, under clause (c) of 2^nd schedule of the Act and Lok Ayukta should not have entertained the complaint Ext P1. As rightly contended by the learned Counsel for the petitioner, relying on Bernard's case (supra) it was not proper for the Lok Ayukta to pass orders as contained in Ext P3.

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In the above circumstances, Ext.P3 is set aside and writ petition is allowed.

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P.V.ASHA, JUDGE.

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The Manager, K.S.F.E.Main Branch v. Shalu John and Others

Case brief

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The Manager, K.S.F.E.Main Branch v. Shalu John and Others

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