Trivandrum District Co-Operative Bank Limited vs State of Kerala

A.V. Ramakrishna Pillai

Exts.P4 and P5 orders are under challenge.

The 5th respondent applied for a term loan to the tune of Rs.7.2 lakhs and he availed Rs.6.92 lakhs from the petitioner bank. The 5th respondent defaulted in repaying the amount as per the agreement. The bank filed ARC No.32 of 1999. In the proceedings, the arbitrator passed Ext.P1 award dated 27.11.2000. As the 5th respondent failed to remit the amount as per the award, the petitioner initiated execution proceedings against the 5th respondent. The property of the 5th respondent was attached. As a result he remitted the amount to close the loan account. Thereafter the 5th respondent approached the third respondent contending that the amount recovered by the bank is very high and necessary directions be issued to refund the excess amount recovered. The Joint Registrar of the Co-operative Societies allowed the petition as per Ext.P4 order. Against that the petitioner filed a revision before the Government. However, the Government as per Ext.P5 order dismissed the revision petition confirming Ext.P5 order. It is with this background, the petitioner has come up before this Court.

In the counter affidavit filed by the 5th respondent, it was contended that as per the hypothecation agreement, guarantee bond and a promissory note executed by him at the time of availing the loan, the agreed rate of interest was 12.5% per annum with half yearly interest plus penal interest at the rate of 2% on defaulted payment of principal interest. According to him, the amount arrived at was after calculating interest on over due interest at the rate of 17% which was not agreed in the loan agreement. Therefore, according to him, he made a request to the bank to return the amount which was taken from him by the bank by charging interest on over due interest. According to him, his grievance was considered by the Joint Registrar and after conducting an elaborate enquiry and hearing ordered the bank to repay Rs.12,29,888/- with interest at 12% within one month from the date of the order. In the order it was held that the interest levied in the case of the 5th respondent is not justifiable. The same view was approved by the Government also. Therefore, according to the 5th respondent, there is no justifiable reason for interference with the orders under challenge.

Arguments have been heard.

Admittedly, the 5th respondent was a defaulter. Therefore, the petitioner bank filed an arbitration case and the arbitrator passed an award allowing the petitioner to realise the amount as per the award.

It is crucial to note that the 5th respondent has not challenged the award by filing an appeal before the Co-operative Tribunal. Thus, the award has become final.

It is settled law that a decree or award can be modified only by the appellate forum. Even the execution court has no power to go beyond the decree or award as the case may be.

It is true that the 5th respondent has approached this Court with Writ Petition No.380/2006 after filing the representation before the Joint Registrar. The said writ petition was disposed of as per Ext.P3 directing the second respondent to consider and take a decision in the matter in accordance with law, after hearing the petitioner, the third respondent and the fourth respondent. It did not give any authority or power to the Joint Registrar to annul or modify Ext.P1 award which was not at all challenged in an appeal. When an award is passed allowing the bank to recover the amount on the basis of method of calculation in the award, the Joint Registrar cannot come to a conclusion that even if the award allows the bank to recover the amount with 17% interest, it cannot be recovered since there is no clause in the agreement. The said finding is incorrect. On a consideration of the entire materials now placed on board, this Court is of the definite view that the petitioner is entitled to get the reliefs as prayed for.

In the result, this writ petition is allowed. Exts.P4 and P5 are quashed.