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Judgment
P V Kunhikrishnan, J
The petitioner is a society registered under the Co-Operative Societies Act. The husband of the 3rd respondent availed a loan from the petitioner
society in the year 2007. Out of the loan amount, an amount of Rs.22,727/- was paid. The husband of the 3rd respondent died on 23.8.2010. The loan
availed by the husband of the 3rd respondent was covered by LIC Group Insurance. But, according to the Society, the husband of the 3rd respondent
did not remit the premium amount for the year 2010-11. Hence, the loan availed by the 3rd respondent was excluded from the coverage of LIC Group
Insurance. Subsequently, the 3rd respondent filed Ext.P2 before the 1st respondent for getting the amount covered by LIC Group Insurance policy to
clear the dues. The petitioner filed objection. The grievance of the petitioner is that without properly considering the prayer in Ext.P2 petition, the 1st
respondent issued Ext.P4 order directing to recover the entire amount due from the husband of the 3rd respondent to the bank from the Secretary and
the Board of Directors of the petitioner society on the ground that the petitioner failed to deduct contribution towards Risk Fund Scheme. Aggrieved
by Ext.P4, this Writ Petition is filed.
Heard the learned counsel for the petitioner, the learned Government Pleader and the learned counsel for the 3rd respondent.
The learned counsel for the petitioner submitted that the prayer in Ext.P2 petition filed before the Ombudsman is to get the benefit of General
Insurance Scheme. But the Ombudsman passed the order based on the Risk Fund Scheme, which is not an issue raised in Ext.P2 petition. According
to the petitioner, the Bank was not able to substantiate their contention about the details of Risk Fund Scheme before the 1st respondent.
The learned counsel for the 3rd respondent submitted that as per Circular No.33/2010, the Registrar of Co-operative Societies reiterated that the
contribution of the Risk Fund Scheme should be recovered by the society from the borrower and if there is any failure is caused in this regard, the
Chief Executive Officer of the Society and the Board of Directors are responsible. Moreover, the learned counsel also submitted that the exclusion of
the husband of the 3rd respondent from the Insurance Scheme was also not intimated to the 3rd respondent or her husband.
The learned Government Pleader submitted that the Circular No.33/2010 is binding on all societies. The Government Pleader takes me through the
relevant portion of the Circular, in which it is specifically stated that if there is any default on the part of the Society to recover the amount as per Risk
Fund Scheme, the Secretary and other Board of Directors are responsible.
It is true that in Ext.P2 application, the prayer of the 3rd respondent is to give her the benefits of LIC General Insurance Claim. But the
Ombudsman taking note of the Circular, considered the matter in detail and passed the following order:-
 “The case of the complainant is that her deceased husband had availed a loan to the tune of Rs.50,000/- on 2007 from the respondent society and he repaid a
sum of Rs.22,727/-. On 23.8.2010, he died due to illness. The respondent bank received the insurance premium for assurance with regard to the repayment of loan in
case of the death of the borrower. Photocopy of the receipt also produced.
The respondent society filed their statement contending that the society prepared a scheme for the borrowers. Every eligible employee/member of society is entitled
to get the benefits of scheme for a period of one year from the date of commencement of the payment of contribution by the member. As per the term of the group
insurance scheme, it shall be renewed every year. The deceased Mohankumar had not paid the contribution during the period of 2010-2011. It is the fact that the
payment of loan was due for a period of 8 months due to the illness of deceased Mohankumar. During the payment of loan on 27.11.2020 no premium was paid
towards group insurance or risk fund framed under the scheme of Risk Fund 2008.
As per Circular No.33/2010, the Registrar of Co-operative Societies reiterated that the contribution of the Risk Fund Scheme should be recovered by the society from
the borrower. If any failure is caused in this regard, the Chief Executive Officer of the society and the Board of Directors will be held responsible.
I find that there is deficiency of service caused on the part of the respondent towards the complainant and her deceased husband. The negligence in joining in the
Risk Fund Scheme is caused on the part of the respondent sombre shadowed the future of the family of deceased Mohankumar. The failure to collect risk fund
contribution from deceased Mohankumar during the disbursement of loan caused deficiency of service on the part of the respondent. I hereby issuing an order to
take steps by the respondent to recover the entire debt of deceased Mohankumar from the Secretary and Board of Directors of the respondent society with immediate
effect.â€
The Ombudsman relied Circular No.33/2010 in which it is specifically stated that if there is any default on the part of the society in collecting the
contribution of the Risk Fund Scheme, the Secretary and the Board of Directors are responsible. Consequently, the Ombudsman passed Ext.P4 order
by which it is directed to take steps by the Bank to recover the entire debts of deceased Mohankumar to the Society from the Secretary and Board of
Directors of the respondent society with immediate effect.
The short point raised by the petitioner is that the petitioner or the Secretary or other Board of Directors were not able to submit any thing about the
Risk Fund Scheme because that was not raised in Ext.P2. The counsel for the petitioner also submitted that, before passing Ext.P4 order, the
Secretary and the Board of Directors were not heard. I think there is some force in it. In the said circumstances, according to me, Ext.P4 order can
be set aside and the Ombudsman can be directed to consider the matter afresh, after hearing the petitioner, then Secretary, then Board of Directors of
the Society. The petitioner will furnish the details of the then Secretary and then Board of Directors to the Ombudsman within a time frame.
Thereafter, the Ombudsman will consider the entire matter after hearing all the parties. There can be a time limit also to dispose of the matter.
Therefore, this Writ Petition is disposed of in the following manner:-
(i) Ext.P4 order is set aside.
(ii) The petitioner will furnish the name and the present address of the then Secretary and the then Board of Directors of the Society at the relevant time before the
Ombudsman within one month from today.
(iii) The Ombudsman will issue notice to all the parties and thereafter, consider the entire issue afresh after hearing the petitioner, 3rd respondent and other affected
parties. Thereafter, the 1st respondent will pass final order within six months.
(iv) While passing orders, the Ombudsman shall consider Circular No.33/2010 of the Registrar of Co-operative Societies.
(v) All the contentions of the 3rd respondent are left open.