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The Thodupuzha Primary Co-Op.Agriculture v. a.P.James

Kerala HC6 Aug 2016WP(C)/27382/2009

Case brief

AI extract

What is this about?

The High Court of Kerala disposed of a writ petition challenging a Debt Relief Commission order granting debt relief to a bank member running a copra oil mill. The court held the activity is an allied agricultural purpose but clarified the relief applies only to penal interest, directing the bank to release accounts reflecting the state's contribution.

What did the court decide?

Petitioner directed to provide statement of accounts for balance principal and normal interest, taking into account Rs. 50,000 remitted by the State Government; mortgage property to be released on pay

The Thodupuzha Primary Co-Op.Agriculture Vs a.P.James — Cooperative Societies | 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 MR. JUSTICE SHAJI P.CHALY

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SATURDAY, THE 6TH DAY OF AUGUST 2016/15TH SRAVANA, 1938

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WP(C).No. 27382 of 2009 (P) ----------------------------

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PETITIONER(S):

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THE THODUPUZHA PRIMARY CO-OPERATIVE AGRICULTURE AND RURAL DEVELOPMENT BANK LTD.4388, THODUPUZHA, IDUKKI DISTRICT, REPRESENTED BY ITS SECRETARY.

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BY ADVS.SRI.P.V.BABY SRI.R.KIRAN

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RESPONDENT(S):

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1. A.P.JAMES, S/O.PAILY, ARACKAL HOUSE, KODIKKULAM P.O., THODUPUZHA, IDUKKI DISTRICT.

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2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), OFFICE OF THE JOINT, REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), IDUKKI

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3. THE KERALA STATE FARMERS' DEBT RELIEF COMMISSION, THIRUVANANTHAPURAM, REPRESENTED BY ITS SECRETARY.

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R1 BY ADV. SRI.A.X.VARGHESE R2 & R3 BY GOVERNMENT PLEADER SRI.T.R. RAJESH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 26/7/2016,THE COURT ON 06-08-2016 DELIVERED THE FOLLOWING:

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WP(C).No. 27382 of 2009 (P)

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APPENDIX

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PETITIONER'S EXHIBITS :

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P1:	COPY OF THE APPLICATION FOR LOAN DT 15/6/1998 SUBMITTED BY THE R1 BEFORE THE PETITIONER.
P2:	COPY OF THE LOAN SANCTION ORDER DT 15/10/1998 OF THE KERALA STATE CO-OPERATIVE AGRICULTURAL AND RURAL DEVELOPMENT BANK LTD., REGIONAL OFFICE, IDUKKI.
P3:	COPY OF THE JUDGMENT DT 4/6/2003 IN O P NO. 11989/2003 OF THIS HON'BLE COURT.
P4:	COPY OF REPRESENTATION DT 25/2/2007 SUBMITTED BY THE R1 BEFORE THE PETITIONER.
P5:	COPY OF THE INTIMATION DT 9/3/2005 SENT BY THE PETITIONER TO THE R1.
P6:	COPY OF THE ACKNOWLEDGMENT CARD FOR HAVING RECEIVED EXT P5.
P7:	COPY OF REPLY DT 8/11/2008 SENT BY THE PETITIONER TO THE R3.
P8:	COPY OF THE ACKNOWLEDGMENT CARD FOR HAVING RECEIVED EXT.P7.
P9:	COPY OF THE ORDER DT 23/7/2008 OF THE R3.
P10:	COPY OF THE COMMUNICATION DT 31/7/2009 OF THE R2.
P11:	COPY OF THE COMMUNICATION DT 20/8/2009 OF THE R2.

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RESPONDENT'S EXHIBITS : --------------------

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EXT.R1(A): COPY OF THE ORDER DT 14/6/2007 IN APPL. NO. 0157/2007. EXT.R1(B): COPY OF THE INTIMATION DT 22/1/2009. EXT.R1(C): COPY OF THE ORDER DT 31/7/2009. EXT.R1(D): COPY OF THE LETTER DT 18/8/2009. EXT.R1(E): COPY OF THE REPRESENTATION DT 26/8/2009.

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WP(C).NO. 27382 OF 2009 (P)

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EXT.R1(F):	COPY OF THE DEMAND DRAFT DT 25/8/2009.
EXT.R1(G):	COPY OF THE COMPLAINT DT 29/8/200.
EXT.R1(H):	COPY OF THE NOTICE DT 29/8/2009.
EXT.R1(I):	COPY OF THE JUDGMENT DT 14/12/2009 IN WPC 25837/2009.
EXT.R1(J):	COPY OF THE COUNTER AFFIDAVIT FILED BY THE RESPONDENT NO. IN WPC 25837/2009 DT 26/9/2009.

//TRUE COPY//

P.A. TO JUDGE

SHAJI P. CHALY, J.

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W.P.(C). No.27382 of 2009

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----------------------------------------------Dated this the 6^th day of August, 2016

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JUDGMENT

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This writ petition is filed by the petitioner challenging Ext.P9 order passed by the 3^rd respondent, Kerala State Farmers' Debt Relief Commission, Thiruvananthapuram dated 23.7.2008 in application No.157/2007/ID, and Exhibits P10 and P11 orders issued by the 2^nd respondent, consequentially.

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Material facts for the disposal of the writ petition are thus; 1^st respondent is a member of the petitioner bank. 1^st respondent has submitted Ext.P1 application for availing a loan of Rs.6,00,000/- for starting an industry. An amount of Rs.4,00,000/- was sanctioned as per Ext.P2 and the repayment period was 7 years. Since 1^st respondent defaulted repayment, proceedings were initiated for recovery of the amount. Thereupon, 1^st respondent approached this court and secured Ext.P3 judgment, whereby 1^st respondent was permitted to repay the entire amounts that are due in 10 equal monthly installments commencing from 10.7.2003.

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W.P.(C). No.27382 of 2009

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However, 1^st respondent has not complied with the direction so issued by this court. Thereafter as per Ext.P5 dated 9.3.2005, the Secretary of the petitioner bank intimated the 1^st respondent with respect to a One Time Settlement Scheme launched by the petitioner and requested the 1^st respondent to avail the said opportunity. Even though 1^st respondent was provided with the facility of OTS, he did not avail of the said opportunity also.

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It was after all these exercise that 1^st respondent approached the 3^rd respondent and filed an application seeking to extend the benefits of the settlement scheme as provided under the Kerala Farmers Debt Relief Commission Act (hereinafter called the “Debt Relief Act”). Petitioner filed Ext.P7 reply objecting to the relief sought for by the 1^st respondent basically contending that the loan availed by the 1^st respondent from the petitioner is an industrial loan, for which 1^st respondent is not entitled to get any relief by resorting to Debt Relief Act. However, 3^rd respondent has passed Ext.P9 impugned order which read thus:

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W.P.(C). No.27382 of 2009

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“Party present. Bank did not appear in the commission hearing on 23.7.08 in spite of the fact that notice was given in time as per Act Provisions. The applicant appeared and pleaded for getting the case settled in the Commission's sitting.

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The applicant availed an agri-based business of processing the coconut, copra and sale of coconut oil. The loan amount is 4 lakh on 1998. On 26/12/07 the bank served recovery notice on the applicant for amount of Rs.3,99,872/- including principal amount, interest and penal interest citing that the loan is in the non-agricultural category.

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But the commission feels that the loan is for doing Agri-based small farmer trading and post harvest processing. Hence the interest charged heavily on the borrower may be waived completely by the lending bank and let applicant free.

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The commission in this regard has good faith to protect the Agri-based product trader and sanction a nominal amount of Rs.50,000/as debt relief and recommend the Bank to waive the interest to settle the case taking into account only principal amount balance and normal interest in this case.:

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W.P.(C). No.27382 of 2009

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Consequent to Ext.P9, Exts. P10 and P11 orders were issued by the 2^nd respondent directing the bank to comply with the order of the 3^rd respondent and it is thus challenging Exts.P9 to P11, this writ petition is filed.

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1^st respondent has filed a counter affidavit refuting the allegations and statements contained in the writ petition. According to the 1^st respondent, 1^st respondent is entitled to get the benefit of the relief as provided under the Debt Relief Act since 1^st respondent has availed the loan for the purpose of an agri-based unit. According to the 1^st respondent, 1^st respondent is carrying on an oil mill extracting oil from copra and therefore, the same is an agricultural product, which is also taken care of under the Debt Relief Act. Therefore, the writ petition has no legal or factual basis and the petitioner is bound to comply with the order passed by the 3^rd respondent Commission. That apart it is contended that 1^st respondent has already remitted an amount of Rs.5,93,389/- towards the principal amount, interest and penal interest. That, 1^st respondent has in the interregnum entered into a sale

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W.P.(C). No.27382 of 2009

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agreement to sell the property mortgaged with the petitioner bank admeasuring more than 2 acres. Ultimately Ext.R1(I) judgment was passed by this court directing the petitioner to release an extent of 2.10 acres of property to the 1^st respondent after retaining 4 cents and a building situated in Sy.No.1332/7-4 of the respective village. According to the 1^st respondent, the said judgment was not complied with by the petitioner. However, it is submitted that the document pertaining to the property is released to the 1^st respondent.

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Learned Government Pleader on instructions submitted that in compliance with the directions contained in Ext.P9 judgment, Government already remitted an amount of Rs.50,000/- to the account of the bank.

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Heard learned counsel for the petitioner, learned counsel appearing for the 1^st respondent, learned Government Pleader appearing for the 2^nd respondent and perused the pleadings and documents on record.

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The question to be considered is whether any interference is required to Ext.P9 order passed by the

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W.P.(C). No.27382 of 2009

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Commission. True, as per Ext.P1 loan application, it is seen that 1^st respondent has applied for a loan to start an oil mill for production of coconut oil and coconut oil cake. According to the petitioner, the said loan is an industrial loan and the same has nothing to do with any 'agricultural' activities described under the Kerala Farmers' Debt Relief Commission Act. Learned counsel has also invited my attention to the definition of 'agriculture' provided under the Act and contended that at any stretch of imagination, the oil mill started by the 1^st respondent is not taken care of under the Act. The definition of agriculture as per Section 2(i) is extracted hereunder for the sake of convenience.

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(i) “agriculture” includes horticulture, farming and growing of medicinal plants, crops and intercrops, fruits, vegetables, flowers, grass, fodder grass and tress or any kind of cultivation of soil, conducting nursery, breeding and keeping of livestock including fish, mussel, bees, silkworm, poultry, duck, cattle or pig and the use of land for agriculture allied activities or any other agricultural purposes.”

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W.P.(C). No.27382 of 2009

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On a reading of the said definition clause, it is categoric and clear that the 'agriculture' defined thereunder will not take care of an industry started. But however, it is stated therein that, allied activities or any other agricultural purposes. Therefore, according to the learned counsel for the petitioner, allied activities or any other agricultural purposes will not include an oil extraction unit, which is an industry. 1^st respondent could not prove before the Commission or either before this court that the agricultural product produced by the 1^st respondent alone is used in the oil mill for extraction of oil and manufacture of oil cake. Therefore, the counsel contends that the 1^st respondent can never be termed as 'farmer' to avail the facility of relief provided under the Debt Relief Act. That apart it is also contended by the learned counsel for the petitioner that 1^st respondent has secured Ext.P3 judgment from this court to remit the entire outstanding amount in 10 equal monthly installments. Thereafter 1^st respondent was provided with an opportunity to pay the amount under the OTS scheme, which was also not

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W.P.(C). No.27382 of 2009

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utilized by the 1^st respondent. Therefore, according to the learned counsel for the petitioner, the claims put forth by the 1^st respondent before the Debt Relief Commission is barred by principles of res judicata.

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On the other hand, learned counsel for the 1^st respondent contended that 1^st respondent is entitled to get the benefit of the Debt Relief Commission Act since allied activities described thereunder will take in an oil based industry since the manufacturing activity that takes place in the industry is that of an agricultural product. That apart it is contended that 1^st respondent has already paid principal amount plus interest and penal interest and thus altogether 1^st respondent has paid an amount of Rs.5,93,389/-. Learned Government Pleader has pointed out that, in compliance with the direction in Ext.P9, Rs.50,000/- was remitted.

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After evaluating the submissions made across the Bar, reckoning the factual and legal circumstances and on perusal of Ext.P9 order, it is categoric and clear that, what the Commission has done is, an amount of Rs.50,000/- was

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W.P.(C). No.27382 of 2009

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sanctioned as debt relief and recommended the bank to waive the interest to settle the case taking only principal amount remaining due and normal interest. Therefore, on a deeper probe into the said order, it is categoric and clear that, 1^st respondent is not absolved from the complete liability. At the most it can be seen that, petitioner bank was directed to waive the penal interest. Since the Government has already remitted Rs.50,000/- in the account of the bank, and the penal interest only has been taken away, I do not think that the petitioner bank is largely affected by Ext.P9 order. At the same time, petitioner is entitled to recover the balance principal amount and normal interest from the 1^st respondent. That apart since the unit of the petitioner is an agri based industry, there is force in the contention raised by the 1^st respondent that, it is an allied agricultural activity, and therefore, is entitled to benefit of the Act and the Scheme thereunder. In that view of the matter, I think this writ petition can be disposed of directing the petitioner to provide a statement of accounts to the 1^st respondent enumerating the

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W.P.(C). No.27382 of 2009

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balance principal amount if any and the normal interest due from the 1^st respondent to the petitioner bank. While calculating the principal amount and normal interest, Rs.50,000/-, if already provided by the State Government shall be taken into account. The same shall be done by the petitioner bank within three weeks from the date of receipt of a copy of this judgment. On payment of amounts if any directed so, needless to say, the property under mortgage and the title deed shall be released without any delay. However, I make it clear that, if the petitioner bank is entitled to make any claim on account of, providing benefits under the Scheme to the 1^st respondent, from the State Government or any other authority, same is left open.

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Writ petition is disposed of accordingly.

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Sd/- SHAJI P. CHALY JUDGE

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smv 27.07.2016

The Thodupuzha Primary Co-Op.Agriculture v. a.P.James

Case brief

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The Thodupuzha Primary Co-Op.Agriculture v. a.P.James

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