Depositors Can Approach Consumer Fora Despite Co-operative Societies Act Remedies: Kerala High Court

The Kerala High Court on 2 June held that remedies under the Kerala Co-operative Societies Act, 1969 do not bar depositors of co-operative banks from approaching consumer fora under the Consumer Protection Act for redressal of their grievances.

A Division Bench comprising Justices Dr. A.K. Jayasankaran Nambiar and Preeta A.K. dismissed an appeal filed by Puthur Service Co-operative Bank against orders of the consumer fora directing repayment of matured fixed deposits. The judges held:

“...even though the Co-operative Societies Act and the Rules framed thereunder provides for a mechanism for realisation of money by its creditors, the provisions in the Co-operative Societies Act do not oust the right of its creditors to recover the amount by invoking the provisions of the Consumer Protection Act.”

The dispute arose after the bank failed to repay fixed deposits aggregating Rs. 5 lakh, which matured in 2015. The depositor approached the District Consumer Disputes Redressal Commission, Thrissur, which directed the bank to refund the deposit amount with interest, compensation and costs.

The bank challenged the order before the Kerala State Consumer Disputes Redressal Commission after a delay of 825 days, stating that an Administrator controlled the society during that period. The State Commission refused to condone the delay and dismissed the appeal. A further challenge before a Single Judge of the High Court also failed, leading to the present writ appeal.

Before the Division Bench, the bank argued that Section 69 of the Kerala Co-operative Societies Act required disputes to be resolved under the statutory mechanism and excluded the jurisdiction of consumer fora.

The judges rejected the contention and held that the Consumer Protection Act operates as a special welfare legislation intended to protect consumers and applies independently of other statutory remedies. They further held that the Co-operative Societies Act does not override the jurisdiction of consumer fora. They observed:

“...the appellant, a banking institution dealing with public funds owes a duty to its depositors to make prompt payment of the funds deposited by them. In so much as the liability to return the fixed deposit amounts which became due as early as in the year 2015, is not disputed, harping on technicalities to thwart the claim is to be highly deprecated.”

Finding no infirmity in the Single Judge's judgment, the Division Bench dismissed the appeal. However, on the bank's request, the Court granted six months' time to comply with the order and repay the depositor along with the amounts awarded by the consumer fora.

Accordingly, the High Court dismissed the appeal and upheld the orders of the consumer fora.

For Appellant: Advocates M Sasindran and Sreehari Indukaladharan

For Respondents: Advocate K.P Suresh Kumar