SURESH K.V. Vs. STATE OF KERALA

JUDGEMENT

(1.) This writ petition has been filed challenging recovery proceedings initiated against the petitioner under the provisions of the Kerala State Co-operative (Agricultural and Rural Development Banks) Act, 1984 (hereinafter referred to as the 'CARD Act'). According to the petitioner, the provisions of Sec. 19 of the CARD Act enable a Bank to which the provisions of the said Act apply to bring mortgaged property to sale without the intervention of any Court, and since the provisions of the CARD Act do not create a mechanism for the adjudication of disputes, the provision is arbitrary and unconstitutional. It is contended that the provision is also in conflict with certain provisions of the Kerala Co-operative Societies Act, 1969 (hereinafter referred to as the '1969 Act').

(2.) The petitioner availed a house maintenance loan from the 6th respondent, a Primary Co-operative Agricultural Development Bank. Alleging default in repayment of the loan, the 6th respondent initiated action under the provisions of the CARD Act and brought the property of the petitioner that was mortgaged to sale. According to the petitioner, the 6th respondent itself purchased the property in the auction for an amount that is considerably below the actual market value of the property. The petitioner also states that the 6th respondent had charged interest on the loan beyond contractual rates.

(3.) Sri. V. Sethunath, the learned counsel appearing for the petitioner, contends that the provisions of Sec. 19 of the CARD Act confer unbridled and arbitrary powers on the Primary Credit Societies, as the Societies are empowered to sell properties that have been mortgaged to secure the repayment of a loan without the intervention of the Court and without any adjudication. It is submitted that Banks/Primary Credit Societies like the 6th respondent are therefore empowered to determine for themselves the amount due from the borrower and also to sell the property that has been mortgaged to recover such amount, in some cases even without fixing a reserve price. It is submitted that this Court, in Sosamma John v. Thrissur Co-operative Agricultural and Rural Development Bank and Others, 2018 (2) KHC 498, has taken the view that the sale of property without fixing a reserve price cannot be sustained in law. The learned counsel for the petitioner contends that without resorting to the procedure under Sec. 69 of the 1969 Act, a Bank/Primary Credit Society exercising powers under Sec. 19 of the CARD Act cannot proceed to sell properties that are mortgaged.