THE SECRETARY, K. 1161 KALINGARAYAN PALAYAM PRIMARY AGRICULTURAL CO-OPERATIVE CREDIT SOCIETY LTD. Vs. CHINNUSAMY

JUDGEMENT

(1.) An important legal issue as to whether a Registrar acting under Sec. 87 of The Tamil Nadu Cooperative Societies Act, 1983, while passing an award, could order for payment of interest from the date of institution of the surcharge proceedings at the rate of interest lesser than the rate of contractual interest, has arisen for consideration.

(2.) The petitioner, a Co-Operative Society, governed under the Tamil Nadu Co-Operative Societies Act [in short, "the Act"], initiated a proceeding under Sec. 87 of the Act before the Deputy Registrar/Chief Revenue Officer / Arbitrator, Erode, in A.R.C. No.6982/2003-2004, claiming a sum of Rs.74,19,020.00 with interest at the rate of 17% p.a. and penal interest at the rate of 3% p.a. Admittedly, the respondent had secured loan from the petitioner by mortgaging his properties. In the said mortgage deed, he had agreed to pay interest at the rate of 17% and penal interest at the rate of 3% p.a. The arbitrator passed an award on 26.03.2011 directing the respondent to pay a sum of Rs.74,19,020.00 with interest at the rate of 13.50% p.a. from 27.03.2011 which was the date of institution of the surcharge proceedings. As against the same, the respondent filed a statutory appeal under Sec. 152 of the Act before the Cooperative Tribunal cum Principal District Judge, Erode, in C.M.A.C.S. No.36 of 2011. The tribunal by order dated 22.11.2012 partly allowed the appeal thereby modifying the award of the arbitrator. The cooperative tribunal, while confirming the award relating to the principal amount as claimed by the petitioner, however, reduced the interest to 6% p.a. from the date of initiation of the surcharge proceedings before the arbitrator. The petitioner is aggrieved by the reduction of rate of interest. According to the petitioner, the respondent is liable to pay the contractual rate of interest and neither the arbitrator nor the tribunal has got power to reduce the rate of interest from the contractual rate of interest. As against the said order of the Tribunal, this revision has been filed.

(3.) When this revision petition came up before a learned single Judge of this Court [M. Duraiswamy,J.], the counsel for the revision petitioner contended that as per the judgements of this court in Attur Thuluva Velalar Sangam Vs. S.Duraisamy, 2014 (1) MWN (Civil) 286 and Madurai City Co-operative Housing Society Limited Vs. Special Tribunal for Co-operative Cases, Madurai and others, 1999 (II) CTC 407, the co-operative tribunal ought to have awarded interest at the contractual rate of interest (13.5% p.a.) till the date of decree and the co-operative tribunal was in error in restricting the rate of interest at 6% p.a. from the date of filing of the proceedings till the date of realization of the amount. To the contrary, it was contended by the learned counsel for the 1stst respondent before the learned single Judge that as per the judgements of this court in The Nasiyanur Co-operative Housing Society Limited Vs. Mrs.V.Kolandayammal and others, 2010-1-L.W. 499 and Erode District Central Co-operative Bank Limited Vs. Velayuthasamy Rice Mill and others, (2007) 4 MLJ 927, the co-operative tribunal has jurisdiction to restrict the rate of interest to 6% p.a. from the date of proceedings or the date of award till the date of realisation of the amount.