SHINE P.D. Vs. STATE OF KERALA

JUDGEMENT

(1.) The petitioners herein are the members of the Managing Committee of the Moonnilavu Service Cooperative Bank Ltd. No. K-163. They have approached this Court seeking to interdict the proceedings under Section 68(1) of the Co-operative Societies Act, 1969 (hereinafter referred to as 'the Act'), initiated against the petitioners.

(2.) The petitioners state that alleging mismanagement in the distribution of loans by the society, an inquiry under Section 65 of the Act was ordered and it ended up in an adverse report. Since major defects touching the working and financial condition of the society was reported, the Registrar initiated proceedings to supersede the committee and on its conclusion, a part-time administrator was appointed. Thereafter, surcharge proceedings were initiated against the petitioners and the same is pending. The petitioners have appeared before the 3rd respondent and have furnished their objections. According to the petitioners, the main allegation against the petitioners is that they have sanctioned loans without considering the genuineness of the security offered and disproportionate to the value of property offered as security. It is contended that these are all factual issues which can be ascertained only after initiating proceedings for the recovery of loan by the society. According to them, the bank is prevented from resorting to coercive legal remedies for recovery of the loans on account of the policy decisions taken by the 1st respondent. It is contended that a moratorium has been declared in the matter of recovery of amounts due to the societies. The petitioners would point out that Exhibits P5 to P5 (e) are the various circulars issued by the 2nd respondent interdicting the recovery of loans and according to them, this is what has contributed to the financial crisis of the bank. It is in the afore circumstances that they are before this Court seeking the following reliefs:

(3.) I have heard Sri.T.M.Raman Kartha, the learned senior counsel appearing for the petitioners as also Sri.Bimal K. Nath, the learned Senior Government Pleader.