Three Related Borrowers Who Partly Repaid Co-op Loans Lose Challenge To Recovery Awards: Madras High Court

The petitioners, who are related, borrowed Rs.5,00,000, Rs.3,30,000 and Rs.5,00,000 respectively from the second respondent Co-operative Society in 2013.

The loans were repayable within six months, with interest at 14.5% per annum.

After making only partial repayments, the petitioners defaulted on the outstanding amounts.

The Deputy Registrar, acting as arbitrator under Section 90 of the Tamil Nadu Co-operative Societies Act, 1983, passed arbitral awards on 25 March 2019.

The Co-operative Tribunal dismissed the petitioners’ appeals under Section 152(1)(a) and affirmed the awards.

The petitioners then challenged the Tribunal’s orders under Article 227 of the Constitution.

Section 90 of the Tamil Nadu Co-operative Societies Act, 1983, provides the statutory basis for the Deputy Registrar’s determination of the loan disputes by arbitration; Section 152(1)(a) provides for an appeal to the Co-operative Tribunal from the relevant decision.

The High Court’s supervisory jurisdiction under Article 227 is not a further appeal on the merits; interference requires a material irregularity or procedural infirmity in the decision-making process.

No judicial precedents were cited.

The Court noted that the petitioners had borrowed from the Society, made only partial payments, and failed to clear the outstanding liability within the stipulated period.

It found that the Tribunal’s reasons disclosed no material irregularity or procedural infirmity that could justify supervisory intervention.

The petitioners therefore failed to establish grounds for interference under Article 227.

No costs were awarded, and the connected Civil Miscellaneous Petitions were closed.