THE SECRETARY v. KERALA CO-OPERATIVE TRIBUNAL

SMT.A.R.PRAVITHA SMT.D.S.THUSHARA RESPONDENTS: 1 2 3 KERALA CO-OPERATIVE TRIBUNAL, THIRUVANANTHAPURAM - 695 001, REPRESENTED BY ITS SECRETARY. ARBITRATOR / SENIOR INSPECTOR OF CO-OPERATIVE SOCIETIES, OFFICE OF THE ASSISTANT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), CHITTUR, PALAKKAD - 678 101. M.VIJAYAN, VISMAYA 29/362, NEAR SEVANA SAMAJAM, MOOTHANTHARA,VADAKANTHRA P.O., PALAKKAD DISTRICT - 678 012. BY ADVS. SRI.N.RAGHURAJ SRI.A.V.RAVI SRI.VENUGOPAL V, GP THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.01.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 26709 OF 2015 2 JUDGMENT The Secretary, Koduvayoor Urban Credit Co-operative Society Limited, has approached this Court challenging Ext.P4 order of the Kerala Co-operative Tribunal allowing appeal No.87 of 2014 filed by the 3rd respondent challenging Ext.P2 award of the Arbitrator in proceedings under Section 69 of the Kerala Co-operative Societies Act,

1969. The brief facts are as follows:-

2. The 3rd respondent was working as the Secretary of the Koduvayoor Urban Credit Co-operative Society Limited (hereinafter referred to as ‘the Society’). The Society raised certain claims on account of losses suffered by the Society, alleging that the said losses were suffered by the Society on account of action or inaction on the part of the 3rd respondent while working as the Secretary. The Arbitrator, by Ext.P2 award, found that in respect of two of the claims (out of the four raised before him) the 3rd respondent was liable. The Arbitrator awarded Rs.1,19,026/- on account of loss allegedly sustained by the Society on account of the fact that the 3rd respondent had returned the security documents (documents of title) in respect of a property offered as security for the loan extended by the Society to WP(C) NO. 26709 OF 2015 3 one Krishnaveni. He also awarded a sum of Rs.34,468/-, which was the loss sustained by the Society on account of delay in EPF remittance in respect of employees of the Society by the 3rd respondent.

3. The 3rd respondent filed appeal No.87/2014 before the Kerala Co-operative Tribunal under Section 82 of the Kerala Co- operative Societies Act, 1969 and the Tribunal by Ext.P4 order allowed the appeal. The Society is thus before this Court seeking to quash Ext.P4 order.

4. The learned counsel appearing for the petitioner would submit that Ext.P4 order of the Kerala Co-operative Tribunal allowing the appeal of the 3rd respondent is clearly unsustainable in law. It is submitted that the Tribunal has proceeded on the basis that the Arbitrator has not marked the documents nor given their description, date, and number in the award. It is submitted that the finding of the Tribunal that the award was silent regarding the documents marked as Exhibits and the details regarding the witnesses examined by the Tribunal on behalf of the Petitioner, as well as the 3rd respondent, is absolutely incorrect. It is submitted that the Tribunal has clearly come to the conclusion that the documents of title in respect of the property WP(C) NO. 26709 OF 2015 4 belonging to the aforesaid Krishnaveni had been returned by the 3rd respondent. It is submitted that on the basis of the said finding, the Tribunal ought to have upheld the finding of the Arbitrator that the loss caused to the Society on account of the said action of the 3 rd respondent is recoverable from him. It is submitted that there is also clear material to suggest that on account of the delay in remitting PF dues, the Society had suffered a loss of Rs.34,468/-, which again was on account of lapses on the part of the 3rd respondent. In such circumstances, the Tribunal ought to have dismissed the appeal filed by the 3rd respondent and upheld the order of the Arbitrator, is the submission.

5. The learned counsel appearing for the 3rd respondent would submit that the 3rd respondent had returned the documents of title relating to the property mortgaged by the aforesaid Krishnaveni. Still, the same could not have caused any loss to the Society as there is a clear finding by the Tribunal that the mortgage was created not by deposit of title deeds but by an agreement relatable to Section 36A of the Kerala Co-operative Societies Act, 1969. It is submitted that under Section 36A of the Kerala Co-operative Societies Act, 1969, a charge could be created on immovable property in favour of the Society by WP(C) NO. 26709 OF 2015 5 executing a gehan and since a gehan was admittedly executed in the facts of this case by the aforesaid Krishnaveni, the fact that the documents of title had been returned to her by the 3rd respondent could not be seen as an act of the 3 rd respondent, which caused loss to the Society. It is also submitted that the documents of title relating to the aforesaid Krishnaveni were returned by the 3rd respondent following directions issued by the General Manager. It is submitted that in so far as the delay in remittance of Provident Fund contributions is concerned, there was no managerial lapse on the part of the 3rd respondent in making such remittance. It is submitted that the 3rd respondent was only working as a Secretary of the Society, and there were superior officers, including the General Manager, who could have overseen any managerial lapse by the 3rd respondent.

6. Having heard the learned counsel appearing for the petitioner and the learned counsel appearing for the 3rd respondent, I am confident that the Tribunal has committed no error in allowing the appeal filed by the 3rd respondent in so far as the claim on account of the first issue is concerned. The provisions of Section 36A of the Kerala Co-operative Societies Act, 1969 will indicate that a mortgage can be created in favour of a Co-operative Society by executing a WP(C) NO. 26709 OF 2015 6 gehan and deposit of title deeds is not a sine qua non for creation of a mortgage. It is not disputed before me that the aforesaid Krishnaveni had executed a gehan in favour of the Society. In such circumstances, the charge of the Society over the immovable properties of the aforesaid Krishnaveni continued even if the documents of title had been returned to her by the 3rd respondent. Therefore, it cannot be said that the Tribunal has committed any error in holding that the fixation of liability upon the petitioner for the alleged loss caused to the Society on account of the act of the 3rd respondent in returning the title documents of the aforesaid Krishnaveni is incorrect in law.

7. Coming to the case of delay in remitting the Provident Fund contribution, the 3rd respondent has no case that he is not the person responsible for remitting the amounts payable under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The amount demanded is Rs.34,468/- which was the interest paid on delayed contribution to the Provident Fund. Therefore, the finding of the Tribunal that the 3rd respondent cannot be made liable for the said sum does not appear to be supported by any reason. Therefore, Ext.P4 is set aside in part. It is held that the 3 rd respondent will be liable to pay a sum of Rs.34,468/- to the Society. In all other respects, WP(C) NO. 26709 OF 2015 7 the challenge against Ext.P4 is rejected. The writ petition will stand disposed of as above. DK Sd/- GOPINATH P. JUDGE WP(C) NO. 26709 OF 2015 8 APPENDIX OF WP(C) 26709/2015 PETITIONER EXHIBITS EXT.P-1: EXT.P-2: EXT.P-3: EXT.P-4: EXT.P-5: TRUE COPY OF THE PROCEEDINGS OF THE PETITIONER FIXING THE LIABILITY ON THE 3RD RESPONDENT DATED 2.7.2003 TRUE COPY OF THE ORDER DATED 24.9.2014 IN ARC 1348/2005 WITH ENGLISH TRANSLATION TRUE COPY OF THE APPEAL FILED AS AP 87/2014 DATED 5.11.2014 TRUE COPY OF THE ORDER OF THE IST RESPONDENT IN APPEAL 87/2014 DATED 31.7.2014 TRUE COPY OF THE LETTER SENT BY THE 3RD RESPONDENT TO THE PETITIONER DATED 17.8.2015