G SUBHODHAN Vs. STATE OF KERALA

JUDGEMENT

(1.) WHEN an elected delegate of the primary society ceases to be a member of the Board of Directors of the Apex Society, on the basis of the "default" committed by the affiliated primary society under Rule 46 (2) of the Kerala Co-operative Societies Rules, is the question considered in this case. Appellant is a member of the Board of Directors of the 3rd respondent, Thiruvananthapuram District Co-operative Bank representing a primary society namely Handloom Weavers Co-operative Society under Rule 44 A of the Kerala Co-operative Societies Rules, 1969 (hereinafter referred to as the "rules" ). He was elected by the above affiliated primary society to be member of the 3rd respondent Bank which is an Apex Co-operative society. The 3rd respondent Bank of the appellant's primary society. Ext. P1 notice was issued by the 2nd respondent, Registrar of Co-operative Societies, that the primary society in which appellant is registered committed default and therefore he ceased to be a member of the Board of Directors (Managing Committee) of the Co-operative Bank under Rule 46 (e) and Clause 27 (b) of the Byelaws of the 3rd respondent Bank. There were three loan accounts for the above primary society with the 3rd respondent Bank. Out of the three accounts, two accounts were not renewed in time, therefore it became NPA, and therefore, society became a defaulter, The third account is the Onam Cash Credit which was sanctioned on 10. 9. 2005. An amount of R. 1 lakh was withdrawn on 13. 10. 2005. Promissory note was also executed to repay the amount and it was also agreed to make payment of monthly interest. It fell into arrears from 1. 11. 2005. It was renewed giving the maximum time for closing the loan account upto 15. 7. 2006. But payment was made only on 17. 7. 2006. In the reply Ext. P2, appellant contended that 15. 7. 2006 was a Saturday. Society was ready to pay the amount on 15. 7. 2006. The appellant reached the Bank after 12 noon for paying the amount. There was dearth of staff in Bank and appellant was not able to remit the amount. 16. 7. 2006 was a holiday being Sunday and on the next day it was paid back. In any event, before issuance of notice (Ext. P1) the amount was paid. Hence society cannot be declared as defaulter. With regard to 2 NPA accounts, it was also stated that the 2 NPA accounts were renewed subsequently on the basis of Government Order applicable to all Handloom Societies. Notice was issued without any basis. Ext. P1 notice was issued only on 1. 12. 2006. The primary society was not in default after 17. 7. 2006. The Registrar by Ext. P6 order found that appellant was not entitled to continue as a member of the Board of Directors in the 3rd respondent Bank in view of the disqualification of his primary society under Section 46 (e) of the KCS Rules. Registrar mainly relied on the prudential norms fixed by the Reserve Bank of India or NABARD to find that the above society was defaulter. Appeal filed before the Government was also dismissed by Ext. P11 order. Hence he approached this Court. The learned Single Judge found that prudential norms fixed by the RBI of NABARD cannot be a ground for disqualification of membership. Therefore learned Judge found that two loans became NPA is not a ground for disqualification. But the learned Single Judge was of the opinion that appellant ceased to be a member of the Director Board of the Apex Society because primary society he was representing failed to pay back the loan taken from Onam Cash Credit on the due date and was in default from 15. 7. 2006. It is not disputed that the primary society he was representing ought to have been repaid the loan on or before 15. 7. 2006. According to him, he tendered the money after the banking hours (after 12 p. m.) on 15. 7. 2006. But it was not accepted. 15. 7. 2006 was Saturday. It was paid only on 17. 7. 2006. Therefore, his society was not in default as immediately after the due date, loan amount was paid back. In any event, it is his case that notice was issued only on 1. 12. 2006 and on the date of issuance of notice, he was not a defaulter and based upon the decisions of this Court in Thommen Itticheriyanthu v. State of Kerala (1978 KLT 887), Rasheed v. State of Kerala (1988 (1) KLT 190), Gangadharan v. Joint Registrar 1990 (2) KLT Short Note 18 Page No. 13), it was argued that date of issuance of notice is an important criteria and on the date of issuance of notice, if the primary society is not in default, it cannot be declared as a defaulter and disqualification under Rule 46 (e) is not applicable.

(2.) NOW we will come to the meaning of the word "default" as defined under Rule 2 (d) of the Kerala Co-operative Societies Act which is as follows:

(3.) THE three decisions (supra) referred to by the learned counsel for the appellants relate to disqualification and membership of a committee under Rule 44. Based upon the wordings of that rule, it was held that to attract disqualification under the above rule on issuance of notice he should not be a defaulter. Section 44 reads as follows: 44. Disqualification of membership of committee :-