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Judgment
R.S. Ramanathan, J.—The Plaintiff in O.S. No. 315 of 2004 is the Appellant herein. He filed the suit for injunction restraining the
Respondent herein from taking any proceedings for recovery of the amount payable by him without following the procedure established by law or
against the provisions of the Act.
It is admitted by the Plaintiff/Appellant that for doing business he borrowed a sum of Rs. 4,18,000/- from the Respondent co-operative society
and he was also remitting the amount on the due dates. He demanded the details of the remittance made by him and also the copy of the accounts
and that was not given by the Respondent and he also came to know that against the terms of the loan, the Respondent has calculated interest.
Though the Plaintiff has got time to repay the loan as per the agreement, he came to know that the Respondent-Bank is going to take action for
recovery of the amount before the expiry of the period prescribed under the agreement. Hence, he sent a notice dated 23.5.2004 to the
Respondent and that was received by the Respondent and no reply was sent. As the Plaintiff apprehended that the Respondent is trying to take
action against the provisions of the Act, he filed the suit for the relief as stated above.
The Respondent filed a statement stating that the Respondent being a statutory body, it will not indulge in any act against the provisions of the
Act or against law and the loan obtained by the Appellant/Plaintiff belongs to Non-Forming Sector loan category. Therefore, the Government has
issued a circular to recover those loans and take stern action against the defaulters and only to prevent action being taken against the Appellant, the
suit was filed.
The Defendant also denied that they are charging more rate of interest and the payments made by the Plaintiff were not properly accounted for.
It is further stated that as per Section 156 of the Tamil Nadu Co-operative Societies Act, the suit is not maintainable.
The lower Court dismissed the suit holding that the Plaintiff has not stated the steps taken by the Respondent which are against the provisions of
the Act and as the Plaintiff was not specific about the alleged illegal acts or actions taken by the Respondent herein and the Plaintiff is not entitled to
injunction as prayed for. Aggrieved by the same, the Plaintiff filed the appeal in A.S. No. 32 of 2007 before the Sub Court, Sivakasi and the
learned First Appellate Court also concurred with the findings of the lower Court and dismissed the appeal. Hence, the Second Appeal filed by the
Plaintiff.
The Appellant in this Second Appeal has framed the following substantial questions of law in the grounds of appeal:
(1) When the allegations relating to the mala fide of an officer of the co-operative society had been raised in the plaint and spoken to in the
evidence, whether the presumption drawn in favour of the Co-operative Society is established.
(2) When the specific allegations were made against the officers of the Co-operative Society and when no evidence had been let in by the Society,
is not a presumption be drawn as against the allegations made against that society.
(3) When the reliefs sought for by the Plaintiff is one for permanent injunction to restrain the creditor from bringing the properties for sale otherwise
than in accordance with law, whether the dismissal of the suit by the Court is legal and proper.
It is submitted by Mr. S. Subbiah, the learned Counsel for the Appellant that the Appellant apprehended that coercive steps would be taken by
the Respondent as the Appellant had made some complaints against the Respondent-Bank and the Respondent-Bank did not send any reply to the
notice sent by the Appellant and therefore the Appellant apprehended that the Respondent may take some action against the provisions of the Act
and only on that apprehension, the suit was filed and the Appellant did not prohibit the Respondent from taking any action as per the provisions of
the Act and it is always open to the Respondent to take recovery proceedings to recover the amount payable by the Appellant in the manner
known to law. Mr. S. Subbiah, the learned Counsel for the Appellant also brought to my notice that the allegations made in para 6 of the written
statement wherein it has been stated that the Government has issued directions to the Respondent to take coercive action against the defaulters for
recover}'' of the loan and therefore, on the apprehension developed by the Appellant, the suit was filed not to take any proceedings except in the
manner known to law. He further submitted that nowadays the Public Sector Banks are engaging Gundas for recovery of the loan and those
practice was also deprecated by our Hon''ble Supreme Court and our High Court and therefore, only in that context the suit was filed with limited
prayer and without appreciating the same the both Courts have dismissed the suit.
On the other hand, Mr. P. Shanmugaraja Sethupathi, the learned Counsel for the Respondent submitted that the Bank never indulged in taking
any proceedings against the provisions of the Act and in the plaint, it has not been stated the alleged activities taken by the Bank for recovery of the
loan which are illegal according to the Appellant. He further stated that except bald allegations, the Bank is attempting to take action against the
provisions of the Act for recovery of the amount, the Plaintiff cannot file the suit. According to him, there is no cause of action for the Plaintiff to file
the suit. He further submitted that as per Section 156 of the Tamil Nadu Co-operative Societies Act, there is a bar against the party from filing a
suit in Civil Court.
Heard both sides.
Admittedly, the Appellant/Plaintiff prayed for injunction restraining the Respondent-Bank from taking any action against the provisions of the
Act. The Appellant did not ask for the relief of injunction restraining the Respondent-Bank from taking any action for recovery of the loan availed
by the Appellant. It is stated in the prayer that the Defendant or his men shall not proceed against the properties of the Plaintiff against law and in
my opinion, such a prayer is maintainable and it cannot be stated that such a suit is not maintainable.
Therefore, according to me, the substantial question of law that arise for consideration in the second appeal is whether a suit for injunction
restraining the creditor from bringing the properties for sale otherwise than in accordance with law is maintainable or not. According to me, such a
suit is maintainable and even a defaulter is entitled to seek protection against unlawful recovery or initiating proceedings contrary to law and insist
action can be taken against him only in accordance with law. In this case, it has been stated by the Plaintiff/Appellant that he apprehended that the
Defendant-Bank is trying to take coercive steps and on that basis, he filed the suit as prayed for. It is also stated in the written statement that the
Government has given a circular directing the Bank to take stern action against the defaulters. Therefore, it cannot be stated that the apprehension
of the Appellant is not bona fide. Hence, when the Plaintiff alleges that he apprehended that the Defendant-Bank may indulge to take action for
recovery of the loan contrary to the provisions of the Act, he is entitled to file a suit for injunction restraining the Defendant from recovering the loan
except under due process of law. Unfortunately, the trial Court held that the Plaintiff has not stated the actions taken by the Respondent-Bank
which are illegal. Further, the First Appellate Court has also presumed that the Respondent-Bank will not indulge in unlawful acts for recovery of
the loan as it is a registered Society and on that ground dismissed the appeal.
The contention of the learned Counsel for the Respondent that the suit is barred u/s 156 of the Tamil Nadu Co-operative Societies Act is not
accepted. As per Section 156, no suits shall lie against any action taken or direction issued under this Act and in this case, the specific case of the
Appellant is that the Respondent may indulge in taking action against the provisions of the Act. Therefore, the bar provided u/s 156 cannot be
applied to the facts of this case.
Therefore, I hold that the suit for injunction restraining the Defendant from resorting to unlawful means while recovering the loan is maintainable.
At the same time, by granting the relief prayed for by the Appellant the Respondent-Bank is not restrained from taking action for recovery of the
loan as per the provisions of the Tamil Nadu Co-operative Societies Act and other laws applicable to it.
With this observation, the second appeal is allowed. No costs. Consequently, the connected M.P. No. 1 of 2010 is also closed.