Creditors Can Recover Deposits From Co-operative Societies By Invoking Consumer Protection Act: Kerala High Court
The Kerala High Court recently clarified that the creditors of a co-operative society can recover the amounts deposited by invoking Consumer Protection Act, 2019.
The Division Bench of Dr. Justice A.K. Jayasankaran Nambiar and Justice Preeta A.K. observed that the provisions of the Co-operative Societies Act, 1986 do not take away the rights of creditors to invoke the Consumer Protection Act to recover the deposits.
“Section 3 of the 1986 Act which corresponds to Section 100 of the 2019 Act provides that the provisions of the Consumer Protection Act is in addition to and not in derogation of the provisions of any other law for the time being in force. Therefore, 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 Court observed.
The appellant before the Court was a co-operative bank where the 1st respondent had made fixed deposits to the tune of Rs. 5 lakhs. Even though the deposit matured in 2015, the co-operative bank failed to return the amount and the 1st respondent approached the District Consumer Disputes Redressal Commission.
In 2021, the District Commission directed the appellant to return the 5 lakhs with 12% interest and to pay Rs. 10,000 as cost and compensation. Three years later, the appellant approached the 2nd respondent State Consumer Dispute Redressal Commission in appeal along with a petition to condone a delay of 825 days. However, the State Commission dismissed the delay condonation petition.
Aggrieved, the appellant filed a writ petition before the Single Judge. It was contended that the delay in filing the appeal was due to the fact that the appellant society was under the management of an Administrator for almost 7.5 years. However, the Single Judge dismissed the plea after finding that the State Commission's reasoning was not per se illegal or perverse warranting interference. The appellant society had then preferred the present writ appeal.
The appellant argued that the 1st respondent ought to have preferred an appeal under Section 69 of the Kerala Co-operative Societies Act instead of the Consumer Commission. It was pointed out that the Single Judge did not consider the issue of lack of jurisdiction of the District Consumer Commission in entertaining the 1st respondent's complaint.
The Court took note of the fact that the Consumer Protection Act is a special legislation enacted to protect consumers and its provisions overrides the Co-operative Societies Act. It also observed that since the Consumer Protection Act is later law, even if it were a general law, it would override an earlier special law.
“Merely because the rights and liabilities are created between the members and the management of the Society under the Act and Forums are provided, it cannot take away or exclude the jurisdiction conferred on the Forums under the Consumer Protection Act which is provided intentionally to serve a definite cause in terms of the objects and reasons of the Act,” the Court added.
The Court further remarked that the appellant had the duty to return the deposits made by its creditors and ought not to have tried to hinder a valid claim:
“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.”
It thus dismissed the appeal and upheld the Single Judge's judgment. At the request of the appellant, the Court granted a period of 6 months to repay the amount in accordance with the Commission's award.
Case No: WA 1152 of 2026
Case Title: Puthur Service Co-operative Bank Ltd. v. Sethumadhavan and Anr.
Citation: 2026 LiveLaw (Ker) 315
Counsel for the appellant: M. Sasindran, Sreehari Indukaladhara
Counsel for the respondents: K.P. Suresh Kumar