The petitioner in W.P(C)31087/2006 is a Bank which is aggrieved with Ext.P16 order passed by the Joint Registrar(General) of Co-operative Societies in a petition filed by the petitioners in W.P (C) 12765/2013. Admittedly, the petitioners in W.P (C) No.12765/2013 availed a loan from the Bank and committed default. Pursuant to the default, recovery proceedings were initiated and the Bank purchased the mortgaged property in the sale conducted. The respective parties are referred to as creditor and borrowers. 2. The loan was availed in the year 1998 and the mortgage of the property, was created as security for the loan, by Ext.P1 agreement. Default having been committed, the creditor-Bank was before the Arbitrator under Section 69 of the Co-operative Societies Act, (Kerala) 1969. Notice was issued to the borrowers who remained ex-parte before the Arbitrator. Ext.P2 award was passed on 13.10.2000. The creditor-Bank then initiated proceedings for recovery on the basis of the award passed. Recovery proceedings initiated by the creditor-Bank culminated in Ext.P3 notice of sale and Ext.P4 order by which the Bank was permitted to purchase the property for Rs.15,01,000/- as against the upset price of Rs.15,00,000/-. Ext.P4, the order of the Sale Officer, is dated 19.11.2003, pursuant to which Ext.P5 certificate of sale was issued on 10.08.2004. The Bank also has obtained the property conveyed in its name, as is indicated in Ext.P6. Mutation too was effected, which is evidenced by Ext.P7 and P8.
3. Long after such proceedings concluded, the borrowers by Ext.P9 dated 16.01.2006 approached the General Manager for recoveyance of the property. The Bank made an application before the Registrar of Co-operative Societies for sanctioning the re- coveyance, which was granted as per the order of the Registrar CG(3)12259/06 dated 31.03.2006 as evidenced by the covering letter Ext.P10.The borrowers had also approached this Court with a writ petition for expeditious consideration of the same. Ext.P11 directed consideration of the application before the Bank. A resolution was also passed by the respondent Bank by Ext.P13 to reconvey the property, on the specific terms stated therein. However, the borrowers did not pay off the amounts as agreed.
4. After seeking re-conveyance of the property, which would have been considered only on equitable grounds; the borrowers sought to challenge the decision of the creditor-bank before the Registrar (General). The borrowers relied on Ext.P12 circular issued in 2006 for availing a One Time Settlement as indicated in the said circular. The borrowers hence, were before the Joint Registrar with Ext.P16 seeking rescinding of Ext.P13 resolution, under Rule 176 of the Kerala Co-operative Societies Rules, 1969, which was directed to be considered by Ext.P15 and which eventually resulted in Ext.P16, which order is assailed by the creditor-Bank.
5. It is to be primarily noticed; from the statement of facts aforementioned, that the sale was concluded long before the borrowers had approached the Bank for re-conveyance of the property. The Bank in all fairness, agreed to reconvey the property on certain conditions, which are evidenced by Ext.P13. A reading of Ext.P13 indicates that, at that point of time, the Bank had agreed to settle the entire loan transactions on levying 15% interest on the balance amounts due, as against the agreement prescription of 20%. The Bank further demanded 12% interest on the expenses incurred in the recovery proceedings as also obtaining conveyance of the property. It was also insisted that the entire loan amount would have to be paid before 15.04.2006.
6. Admittedly, the borrowers did not pay the amounts within that period, but however, chose to approach the Registrar with an application under Rule 176 of the KCS Rules to rescind such resolution which was considered in Ext.P16. The Registrar considering the application under Rule 176, proceeded as if deciding a monetary claim under Section 69. It was found that the Bank had charged compound interest on the borrowers. It was also found on verification of the documents, that the initial loan availed was only Rs.1,95,000/- which was renewed on the same becoming overdue by sanctioning an enhanced loan of Rs.5,00,000/-, when the first loan was defaulted. The enhanced loan was granted for satisfying the entire default in the initially granted loan. The process was repeated when again the loan was defaulted. It was in such circumstances, that the allegation of compound interest was raised.
7. It is to be noticed that it was the borrowers, who defaulted the loans availed, from the creditor Bank. On default occurring, the borrowers voluntarily executed documents for an enhanced amount of loan so as to satisfy the principal and the interest levied on the earlier loan. No allegation of levy of compound interest could have been validly raised on the facts afore cited. It is also to be noticed that the default having occurred in the loan account after two renewals, the creditor Bank was before the Arbitrator, under Section 69, who had passed an award, which was got executed by the creditor-Bank. There was no warrant for the Registrar to tamper with the award passed, the interest levied or enter into a finding that compound interest is levied on the loan account.
8. True; as noticed by the Registrar in Ext.P16, the Bank could not have sought for any further interest than that allowed in the award. But, however, on the same principle the Registrar could not have reduced the interest levied; from that allowed in the award. Ext.P2 circular has absolutely no relevance since loan stood substantially satisfied by reason of the sale conducted and if at all a One time settlement could be arrived at, that could be only for the balance amounts due in the loan account. Re- conveyance of the property is purely within the discretion of the creditor-Bank.
9. Rule 176 grants specific power to the Registrar to rescind the resolution only if such resolution is ultra vires the objects of the society, or against the provisions of the Act, Rules, Bye-laws or of any direction or instructions issued by the Department or calculated to disturb the peaceful and orderly working of the society or is contrary to the better interest of the society. Ext.P16 discloses only a ground that the proceedings of the Bank is against the clear departmental instructions and the Registrar's circulars. However, but for a bland assertion, no instruction or circular is specifically referred; to find that the action of the bank is in any manner, violative of such instruction or circular.
10. The other findings with respect to charging of compound interest and the renewal of the loan, so as to satisfy the earlier debts, could not have been made by the Registrar; to interfere with the resolution passed under Rule 176, since the same is finally settled by an award passed under Section 69, which has not been challenged by the borrowers. The terms for reconveyanc was more liberal than the recovery allowed in the award.
11. Ext.P13 resolution, passed by the Managing Committee of the bank, was eminently fair, considering the principles of equity. This was only to enable the original property owner to get resumption of the property and at the same time, satisfy the loan availed from the Bank. As was noticed earlier, despite the agreement providing for 20% interest and the award too entitling the recovery of such interest; the bank had reduced the same to 15%.
12. Ext.P16 for all the above reasons, is found to be not within the scope of the powers of the Registrar and not within the scope of the powers conferred under Rule 176. Ext.P16 would stand set aside as an order passed without jurisdiction. W.P.(C) 31087/2006 would be allowed.
13. W.P(C) No.12765/2013 is filed by the borrowers against the creditor-Bank challenging the action of the creditor-Bank, in further attempting to sell the property. There would be absolutely no difficulty or bar in the respondent Bank attempting to sell the property since the Bank has purchased the property in a valid proceeding and had obtained conveyance and the sale has acquired finality. However, the learned counsel for the respondent Bank fairly took instruction from the respondent Bank and submitted before Court, that, they are even now, willing to restore the property to the borrowers on the borrowers paying interest for Rs.15,01,000/-, the sale consideration @ 15% from the date of sale and the balance dues @20%, till the date of payment. The Bank also insists on the Bank being reimbursed with interest @12% from the date of sale, the expenses incurred, including the stamp duty spent for conveyance of the property, in the name of the Bank. The learned counsel for the borrowers, on instructions, agrees to such proposal. Definitely credit has to be given for the payment made in pursuance to Ext.P11 judgment produced in W.P(C) No.31087/2006.
14. In such circumstances, the respondent Bank shall compute the amounts due as on 10.01.2015 levying interest @ 15% on Rs15,01,000/- from the date of sale and 20% interest on the balance amounts remaining due in the loan account as on 27.10.2003. The respondent Bank shall also include in the statement, the amounts incurred in the recovery proceedings as also the sale and levy interest @ 12% from the date of sale till 10.01.2015. The amounts paid by the borrower shall be given credit to but shall be first appropriated towards the interest.
15. The statement as aforesaid shall be issued to the borrowers within a period of two weeks, from the date of receipt of copy of this judgment. The Bank shall sent the statement by registered post if need be. The Bank shall grant six installments to satisfy the arrears. The first installment shall commence on the last day of every succeeding month, starting from January 2015. If one default is committed; the Bank would be entitled to appropriate any amounts paid, towards the balance dues and shall also be entitled to retain the property . If the amounts are paid in accordance with the above directions, the bank shall, after the satisfaction of the installments as directed above, issue a further statement for the future interest from 10.01.2015 @ 12% and the same shall be satisfied as the 7th installment. If the entire installments are paid, as per the above directions, the borrowers shall be given re-conveyance of the property, the expenses of which shall be exclusively borne by the borrowers.
W.P(C) No. 12765/2013 is disposed of with the above directions. If the directions as above are not complied with, the Bank needless to say, would have the right to deal with the property as the Bank deems fit.
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(K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge