Co-operative Bank Arbitration Valid Without Managing Committee Resolution: Kerala HC

Antony Wazhson Vs Mayyanad Regional Co-operative Bank No-94 (Kerala High Court)

Summary: The petitioners challenged the order of the Kerala Co-operative Tribunal dismissing Appeal No.263/2024 as barred by limitation and also questioned the validity of proceedings initiated by Mayyanad Regional Co-operative Bank No-94 under Section 69 of the Kerala Co-operative Societies Act, 1969. The underlying proceedings concerned credit facilities availed by the 2nd petitioner and her late husband, Wazhson. An award dated 17.11.2021 in ARC No.972/2021 had held the late Wazhson and the 2nd petitioner liable for Rs.21,27,842/- together with future interest at 16% per annum.

The petitioners contended that the award had never been communicated to them as required by Rule 68 of the Kerala Co-operative Societies Rules, 1969 and that the 2nd petitioner obtained its copy only pursuant to an application under the Right to Information Act, 2005. The Kerala High Court accepted this contention, holding that Rule 68, particularly after its amendment with effect from 02.05.2000, required the Arbitrator to communicate the award/order itself to the defendant by registered post within 15 days.

Since there was nothing on record showing communication in the prescribed manner, the Court held that limitation for the appeal before the Tribunal ought to have been reckoned from the date on which the 2nd petitioner received the award pursuant to her RTI application. The petitioners also contended that the bank lacked proper authorisation because the resolution relied upon was dated 06.05.2021 whereas ARC No.972/2021 had been filed on 17.03.2021. The Court rejected this challenge. It held that the Secretary, being the Chief Executive Officer of the Society, was competent to initiate legal proceedings even in the absence of specific authorisation and that Rule 67(2) of the 1969 Rules, although using the expression “shall”, was directory rather than mandatory.