Disposed

Manuel Shaji v. the Kerala State Co-Operative Bank Ltd.

Kerala HC27 Jul 2016WP(C)/5440/2014

Case brief

AI extract

What is this about?

This writ petition challenged a bank's demand for a large loan settlement sum. The High Court held that while the petitioner did not have an absolute right to the bank's scheme guidelines, considering the petitioner's *bonafides* and prior payments, the court fixed a reduced balance of Rs. 7,37,528/- to be paid off with interest within two months.

What did the court decide?

To remit a balance of Rs. 7,37,528/- along with 6% interest from 31.03.2016 within two months.

Manuel Shaji Vs the Kerala State Co-Operative Bank Ltd. — Banking and Recovery | 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 A.M.SHAFFIQUE

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WEDNESDAY, THE 27TH DAY OF JULY 2016/5TH SRAVANA, 1938

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WP(C).No. 5440 of 2014 (D)

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PETITIONER :

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MANUEL SHAJI S/O.M.M.ANTONY, MATTATHIL HOUSE, OPP. K.V.M HOSPITAL, CHERTHALA, ALAPPUZHA 688 524.

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BY ADVS.SRI.H.HAMZA ROWTHER SRI.V.K.PEERMOHAMED KHAN SRI.H.SUNIL

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RESPONDENT :

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THE AUTHORISED OFFICER THE KERALA STATE CO-OPERATIVE BANK LTD, ERNAKULAM REGIONAL OFFICE, DORAISWAMY IYER ROAD, KOCHI 682 035.

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R1 BY ADV. SRI.GEORGE POONTHOTTAM, SC, KERALA STATE CO.OP BANK LTD.

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 27-07-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 5440 of 2014 (D)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1. COPY OF THE SANCTION LETTER ISSUED BY THE RESPONDENT BANK THROUGH THE ALAPPUZHA BRANCH

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EXHIBIT P2. COPY OF THE CIRCULAR ISSUED BY THE GOVERNMENT OF KERALA AS PER 'ASHWAS - 2014' SCHEME

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EXHIBIT P3. COPY OF THE SALE NOTICE ISSUED BY THE RESPONDENT UNDER SARFEASI ACT

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EXHIBIT P4. COPY OF THE SALE NOTICE PUBLISHED IN KERALA KAUMUDI DAILY DATED 23.01.14.

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EXHIBIT P5. COPY OF THE POSTAL COVER RECEIVED BY THE PETITIONER CONTAINING EXT. P3 SALE NOTICE

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EXHIBIT P6. COPY OF THE REQUEST SUBMITTED BY THE PETITIONER ALONG WITH THE POSTAL ACKNOWLEDGMENT CARD.

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EXHIBIT P7. COPY OF THE RECEIPTS ISSUED BY THE RESPONDENT BANK FOR PAYMENT OF THE AMOUNT OF RS.1,00,000/- AND ANOTHER FOR AN AMOUNT OF RS.6,40,000/-.

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EXHIBIT P8. COPY OF THE ASHWAS-2016 SCHEME IMPLEMENTED BY THE GOVT. OF KERALA UNDER CIRCULAR NO.53/2015.

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RESPONDENT(S)' EXHIBITS :

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EXHIBIT R1(a). COPY OF THE ASWAS SCHEME FOR THE YEAR 2016.

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EXHIBIT R1(b) . COPY OF THE LETTER DATED 21.03.2016 ISSUED BY THE BANK TO THE PETITIONER.

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EXHIBIT R1(c). COPY OF THE AGREEMENT ENTERED INTO BY THE PETITIONER AND THE RESPONDENT BANK

/TRUE COPY/

P.A TO JUDGE

A.M.SHAFFIQUE, J.

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W.P.(C).No.5440 of 2014

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----------------------------------- Dated this the 27^th day of July, 2016

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J U D G M E N T

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The petitioner has approached this Court seeking benefit of Circular No.53/2015 known as Ashwas-2016. The Circular was published by the Registrar of Co-operative Societies on 17.12.2015 by which certain guidelines had been formulated for settlement of various types of loans by giving certain concessions to the loanees. The guidelines have been formulated to enable the Banks to recover the loan amounts as early as possible and giving certain benefits like waiver of interest to the loanees. The scheme was in existence from 01.01.2016 to 31.03.2016. In fact, the writ petition was filed at a time when a former scheme was in operation. However, during the pendency of the writ petition, petitioner amended the writ petition claiming the benefit of the 2016 Scheme.

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According to the petitioner, the respondent Bank without taking note of the benefit granted under 2014 and 2016 Ashwas Scheme had called upon the petitioner to pay substantially large amount without giving any waiver as per the guidelines. By notice dated 21.03.2016, he was called upon to remit ₹14,77,528/whereas according to the petitioner, his liability was only to pay the principal amount and interest equal to the principal amount which would come to 7,40,000/-. The petitioner submits that he had₹

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W.P.(C).No.5440 of 2014

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deposited the said amount, but still the loan account had not been settled. As a result of which, the petitioner has approached this Court seeking the aforesaid relief.

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Counter affidavit and additional counter affidavit had been filed by the respondent Bank. According to them, though Ashwas Scheme came in the form of certain guidelines, the Bank had, on that basis, prepared their own scheme which is produced as Ext.R1 (a). Insofar as the petitioner's loan was a cash credit facility, Ext.R1 (a) scheme provided for settlement of cash credit facilities up to 25₹ lakhs by reducing the interest by 1% and waiving penal interest. On that basis when a request was made by the petitioner, the Bank had called upon the petitioner to pay 14,77,528/-. However, the₹ petitioner made his own calculation and had remitted certain amounts which is not enough to satisfy the debt. Now that the period of scheme has expired, the petitioner cannot claim the benefit of the scheme Ext.R1(a).

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Heard the learned counsel for the petitioner and the learned counsel appearing for the respondent Bank. It is true that if Ext.P8 scheme is applied, the liability of the petitioner would be limited to ₹7,40,000/- as the loan was for less than 5 lakhs and as per the₹ scheme, the interest should not exceed the principal amount. However, according to the Bank, they did not apply the guidelines as per Circular No.53/2015, whereas, they have formulated their

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W.P.(C).No.5440 of 2014

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own scheme as evident from Ext.R1(a) and they got it approved by the Joint Registrar of Co-operative Societies. It is contended by the counsel that the Bank had not given any concession to any person based on Circular 53/2015, whereas, they have applied the scheme in terms with Ext.R1(a) alone.

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Having regard to the aforesaid submission, I don't think that this Court will be justified in issuing any direction as sought for by the petitioner. Though the terms of the Circular No.53/2015 is laudable, insofar as guidelines had been framed for settlement of loans granted by the State Co-operative Banks, District Co-operative Banks and other Co-operative Banks, whether the guidelines have to be applied taking into consideration the financial position of the Bank is a matter to be considered by each Bank. Apparently, when certain guidelines had been formulated by the Bank themselves based on the circular issued and which is approved by the Joint Registrar, Bank cannot be forced to rely upon the aforesaid Circular and give the concessions as stated in the circular itself. That apart, the circular is only for general application and cannot be termed as a right by the loanee to insist that the Bank has to apply the said guidelines and provide the benefits in terms with the said circular.

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Under such circumstances, I don't think that any direction as sought for can be granted to the petitioner. However taking into account the fact that the petitioner had been agitating the issue for

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W.P.(C).No.5440 of 2014

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quite a long time and the petitioner had with all bonafides remitted ₹7,40,000/- before 31.03.2016, it would only be appropriate to permit the petitioner to remit the balance amount as stated in Ext.R1(b).

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Learned counsel for the respondent Bank however would submit that since the scheme is already over, the benefit under Ext.R1(a) guidelines cannot be extended to the petitioner. However taking into account the fact that the petitioner had been prosecuting the matter bonafide , I am of the view that some indulgence can be shown to the petitioner and accordingly, this writ petition is disposed of as under :

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The liability of the petitioner shall be settled on the petitioner remitting 7,37,528/- (₹ ₹14,77,528/- - 7,40,000/-)₹ with interest @ 6% from 31.03.2016 till the date of payment. Payment shall be made within a period of two months from the date of receipt of a copy of this judgment, failing which, the petitioner will not be entitled for the benefit of this judgment.

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Sd/-

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A.M.SHAFFIQUE, JUDGE.

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Manuel Shaji v. the Kerala State Co-Operative Bank Ltd.

Case brief

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Manuel Shaji v. the Kerala State Co-Operative Bank Ltd.

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