Madras High CourtWP/11047/2020disposed of

P.V.Saravanan, v. The Registrar Of Cooperative Societies,

2020-10-28Honourable Mr Justice N. Anand Venkatesh16 pages

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 28.10.2020

CORAM

THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH W.P.NO.11047 OF 2020 P.V.Saravanan ... Petitioner Vs.

The Registrar of Cooperative Societies, Kilpauk, Chennai-10.

The Joint Registrar of Cooperative Societies, Erode Region, Erode.

The Managing Director, Erode District Central Cooperative Bank, Erode, Erode District.

The Regional General Manager, NABARD, No.48, Mahathma Gandhi Road, Post Box No.6074, Nungambakkam, Chennai-34.

The Managing Director, TNSC Bank, Parry's, Chennai.

... Respondents Prayer:

Writ petition filed under Article 226 of the Constitution of India, praying for the issuance of Writ of Certiorari, calling for the entire records relating to the impugned order passed by the first respondent in his proceedings Na.Ka.3039/2020/Ma.Va.Ko.1, dated 27.07.2020 and quash the same. For Petitioner : Mr.C.Prakasam For Respondent : Mr.P.H.Aravindh Pandian Nos.1 to 3 Additional Advocate General of Tamilnadu Assisted by Mr.L.P.Shanmuga Sundaram Special Government Pleader For Repondent No.4 : Mr.Shoban M.Padmanaban For R5 : No Apperance

O R D E R

This Court passed the following order dated 28.08.2020 and disposed of the writ petition. For proper appreciation, the entire order is extracted hereunder:- ''This Writ Petition has been filed challenging the proceedings of the first respondent dated 27.07.2020, wherein the withdrawal of the loan amount by the members of the Society, who are mainly the farmers across the State of Tamil Nadu, has been structured in such a way that the members will have to open a Mirror Account with the fifth respondent - District Central Cooperative Bank and the loan amount can be withdrawn only through a card called Kisan Credit Card. This withdrawal will be done from an ATM. The main grievance of the petitioner is that this system has been introduced all of a sudden and implemented immediately without giving time to the farmers to get themselves prepared for the change in the system to withdraw the loan amount. In view of the introduction of this new procedure, many farmers are not in a position to withdraw the loan amount right from July 2020 onwards.

When the matter came up for admission, this Court directed the learned Special Government Pleader to take instructions from the respondents and explain this Court as to why such a system came to be implemented. The learned Special Government Pleader today has sent a 'Position Note' through E-mail for the perusal of this Court. The relevant portions of the 'Position Note' are extracted hereunder:- "2. National Bank for Agriculture and Rural Development (NABARD) in its letter No.NB.Dor-Policyl2386l152t2}19-20, dated:

30.12.2019 has instructed that from 01.01.2019 to 31.03.2020 the Short Term Agri loans issued to farmers only through KCC scheme alone will be eligible for Government of India's 2% Interest Subvention, (lS) and 3% Prompt repayment Incentive (PRl). Hence, all the District Central Cooperative Banks in the State were instructed to implement the instructions of the NABARD and to issue only KCC loans to its members in order to avail the Government of India's 2% Interest Subsidy and 3% Prompt Repayment Incentive vide Registrar of Cooperative Societies letter

R.C.No.303gtzO2OlCBP.1 dated: 22.01.2020 and 09.06.2020. It is further stated in the circular that the PACCS in the State are not in Core Banking Solution platform.

Hence, they were not in a position to issue KCC cards which are used to withdraw the loan amount from the Bank through ATM facilities. Hence, it has been instructed to the PACCS to inform their members to open mirror account, i.e., a Savings Bank Account in the District Central Cooperative Bank Branches in their respective area to get ATM cards for withdrawal of the loan amount sanctioned and credited in their respective Savings Bank Accounts.

3. The Tamil Nadu Primary Agricultural Cooperative Credit Societies employees Union staged demonstration and went on a strike to reconsider the above scheme wherein the farmers have to travel 25 k.m.

from the place dwelling to the Central Cooperative Banks Branches for withdrawal of KCC Agriculture loan amount. Hence, the 1st respondent herein had issued a circular to simplify the above scheme.

4. In the circular, i.e., impugned order herein, it was instructed that all PACCS shall process crop loan applications and sanction only under KCC scheme as per NABARD instructions and the loan amount sanctioned to be withdrawn through ATMs using Rupay Kisan Credit Card.

5. Further, it has been instructed in places where ATM facilities are not available, the District Central Cooperative Banks officials i.e Field Managers, Circle Supervisors and Field Officers shall arrange for micro ATMs/ POS (Point of Sale) within the society premises and disburse cash to the farmers. The farmers may either use the above facility or they can withdraw cash using withdrawal slips / cheques.

6. It has been clearly mentioned that the farmers may either use the District Central Cooperative Bank facilities or through the alternative measure arranged to

withdraw loan amount in their PACCS premises itself. It is clear that the farmers can withdraw their loan amount wholly, their loans are sanctioned only in their respective PACCS accounts. It is incorrect to say that every time the farmers have to move to headquarters of the District Central Cooperative Bank for their loan needs.

7. It is pertinent to note that the District Central Cooperative Banks are having atleast one branch in every block in the revenue district. Further, it is stated that the farmers shall still submit their loan applications in their respective PACCS, get sanctioned and withdraw their loan amount.

8. The District Central Cooperative Banks shall take the burden of security arrangements and transit insurance for the movement of cash from the branches of the District Central Cooperative Banks to the respective Primary Agricultural Cooperative Credit Societies.

9. The impugned order is only an alternative arrangement made to the farmers to receive the KCC loans without any hindrances and within their societies premises."

Mr.C.Prakasam, learned counsel appearing on behalf of the petitioner submitted that the farmers are not against the new procedure for withdrawal of the loan amount. The learned counsel further submitted that considering the present pandemic situation and also the fact that the farmers will have to get themselves ready to follow the new system, the same has to be effected by giving some time. The learned counsel submitted that considering the volume of agricultural loans availed by the farmers and the corresponding availability of the staff in Primary Agricultural Cooperative Credit Societies, this process will take some time for effecting implementation. The learned counsel, therefore, submitted that the current procedure can be adopted for some more time and this new system can be implemented from the month of November 2020.

Per contra, the learned Special Government Pleader appearing on behalf of the respondents (Cooperative) submitted that the new system was implemented due to the instructions received from NABARD. That apart, by issuing loan to the farmers under the new system, there will be a proper accountability and the middle man can be avoided and the entire money can directly go to the farmers. The learned counsel further submitted that the new system that is introduced will be more safer and beneficial to a farmer in order to avail agricultural loan. 5.

This Court has carefully considered the submissions made on either side and perused the materials available on record.

A careful reading of the 'Position Note', which has been extracted supra, shows that the respondents are implementing the new system pursuant to the instructions received from NABARD. As rightly contended by the learned Special Government Pleader, the new system brings about a foolproof method for disbursement of the loan to farmers. This system will effectively take care of the interference of middle man and the farmers will be getting the entire loan amount directly from their accounts, which is termed as a 'Mirror Account'. The farmers will have access to the ATM Card and they can withdraw the amount as and when necessary and they don't need to handle / withdraw the amount at one stroke.

This Court also finds force in the submissions of Mr.C.Prakasam, learned counsel for the petitioner. The learned counsel is perfectly right in saying that the system can be implemented only after the stakeholders are given sufficient time to understand the same; and opening of a 'Mirror Account' and operating ATM Card for a farmer cannot be adopted overnight and it requires some time. Therefore, as fairly stated by the learned counsel for the petitioner, there can be no objection to the new System coming into force and the only request made is that some more time must be given to implement it, so that the stakeholders will get ready to acclimatise themselves to the new System.

On a careful consideration of the submissions made on either side and in order to maintain a balance to ensure that the new procedure is implemented and at the same time the stakeholders are also given some

time, this Court thought it fit to request the first respondent to implement the impugned letter dated 27.07.2020 from the 1st of November 2020. In the mean time, the opening of Mirror Account and the issuance of ATM Card can take place. The current procedure adopted for disbursement of loan can continue till the new procedure is implemented from the 1st of November 2020. 9.

This Writ Petition is disposed of with the above directions. No costs. Consequently, connected Miscellaneous Petition is closed.''

2. The above order was taken on appeal in W.A.No,759 of 2020 and the writ appeal was partly allowed by order dated 14.09.2020. For proper appreciation, the entire order is extracted hereunder:- ''Heard Shri Arvind Pandian, learned Additional Advocate General for the appellants and Shri C.Prakasam, learned counsel for the first respondent.

2. The second respondent viz., The Regional General Manager, National Bank for Agriculture and Rural Development (NABARD) had not been put to notice by the learned Single Judge and the writ petition was disposed of finally.

3. The appellants are aggrieved by the directions issued by the learned Single Judge contained in paragraph

(8) in the impugned judgment, as the same were issued in the absence of NABARD, which had to be necessarily heard, keeping in view the nature of the relief sought by the first respondent/petitioner, and more particularly that the appellants are bound by the directions issued by the NABARD.

4. Having considered the same and having heard Shri C.Prakasam, learned counsel, who contends that the disbursement of loans has been impeded considerably, the new system should be allowed to percolate gradually, and for that gestation period should be given and therefore, the learned Single Judge has not committed any error in proceeding to issue directions in paragraph (8) of the impugned judgment.

5. Having considered the submissions raised, we are of the opinion that learned counsel for the appellants is correct in his submissions that the guidelines issued by the NABARD dated 25.9.2017, and then followed on 30.12.2019, have not been taken into consideration by the

learned Single Judge while issuing directions inextended by the NABARD vide Circulars dated 13.3.2020 and 2.6.2020, the copies whereof have been brought on record by learned counsel for the appellants.

6. In these circumstances, the disposal of the writ petition, without putting the second respondent to notice may have to be revisited in the light of the above. We, accordingly, partly allow the appeal and set aside the directions contained in paragraph (8) of the impugned judgment with a request to the learned Single Judge to rehear the matter after giving an opportunity to the second respondent herein.

7. Shri C.Prakasam, learned counsel for the first respondent submits that he will take out notice on the second respondent and therefore, he may be permitted to serve a copy of the writ petition and other papers on the second respondent so that the matter may be expeditiously disposed of. We permit to do so. The writ petition shall stand restored to its original number and shall be preferably listed within two weeks at the convenience of the Hon'ble Single Judge giving permission to that effect and within this period, learned counsel for the parties may exchange their pleadings.

8. The records of this writ appeal and the typed set of papers filed by the appellants may also be placed along with the records of the writ petition before the learned Single Judge, in the event any assistance is required from these records.

The appeal is partly allowed, as above. No costs. Consequently, C.M.P.No.10069 of 2020 is closed.''

3. Pursuant to the above orders passed in the Writ Appeal, the matter was again remanded and this Court passed the following order on 09.10.2020:- ''The Hon'ble First Bench has passed an order in WA No.759 of 2020 dated 14.09.2020 and remitted the matter back to this Court. The Hon'ble First Bench has held that the NABARD should be heard before passing final orders in the writ petition.

The learned counsel for the petitioner submitted that the private notice has been served on NABARD and proof of service has also been filed.

Post this case on 13.10.2020 @ 2.15 p.m. In the meantime, the Registry is directed to verify if any one has entered appearance on behalf of the NABARD and print the name of the counsel. Mr.Arvind Pandian, learned Additional Advocate General appearing on behalf of the respondents submitted that status report will be filed before this Court explaining the various steps taken by the respondents to implement the directions issued by NABARD. The Registry is directed to place the entire records in WA No.759 of 2020 before this Court, since such a direction has been given at paragraph of the order.''

4. When the matter came up for hearing on 13.10.2020, this Court passed the following order:- ''The status report provides the particulars with regard to the disbursement of crop loans. It is clear from the status report that a farmer in order to avail the loan must have a mirror account and the amount is credited to this account. Only after the amount gets credited, it is either directly taken by the farmer by using ATM card or the farmer can approach the Primary Agricultural Co-operative Society, who will permit the farmer to withdraw it by way of cash.

The main grievance that has been expressed in this writ petition is that there is no sufficient infrastructure to open the mirror account for all the farmers in order to avail the loan facility and therefore, there is an inordinate delay in getting the loan and consequently, the farmers have been put to untold hardship. This Court therefore wants to understand the steps taken by the respondents to open the mirror account for the farmers and how fast the process can be completed. Getting these details will enable this Court to give necessary directions to expedite the whole process. The learned Additional Advocate General is requested to circulate a short note in this regard during the next date of hearing. The Registry is directed to print the name of Mr.Padmanaban M Shoban for 4th respondent.

Post this case on 16.10.2020 at 2.15 p.m.''

5. The matter was again taken up for hearing on 16.10.2020. After going through the report of the first respondent, the following order was passed:-

''Pursuant to the earlier orders passed by this Court on 13.10.2020, a note has been circulated by the 1strespondent explaining the various steps taken for opening the mirror account for the farmers, who want to avail the loan facility.

2.Paragraph 7 in the note explains the arrangements that have been made by the Central Co-operative banks for opening mirror accounts for the farmers residing in the rural areas. For proper appreciation, the same is extracted hereunder :- ●The Concerned Primary Agricultural Cooperative credit societies Secretary provide savings bank application form of Central Co-operative Banks to the farmers and held them to fill up the particulars in the application form.

●The Secretaries of the Primary Agriculatural Cooperative Credit Societies after verifying the duly filled applications, sent it to Central Cooperative Bank Branches. ●On the basis of applications received from the farmers through the concerned Primary Agricultural Co-operrative Credit Societies, the Saving Bank account is opened in the branches of Central Cooperative Bank. 3.The details provided along with the note with regard to the crop loans that has been disbursed from 1.08.2020 to 30.09.2020 shows that in 36 districts, a total of 2,90,033 farmers have availed of the loan after opening of the mirror account and a total of Rs. 2256.21 crores have been disbursed.

4.The main concern that has been expressed is that there are nearly 4450 Primary Agricultural Co-operative Societies in Tamil Nadu consisting of nearly 90 lakh members. The manpower that is available in the Primary Agricultural Co-operative Society is totally disproportionate to the total number of farmers, who want to avail the farm loan and therefore, it will take a long time to open mirror account to each and every one of the farmer. Therefore, some method has to be devised to see if the process of opening the mirror account can be expedited by bringing in more manpower to collect the applications from the farmers and submit the same to the Central Co-operative Bank branches.

5.Mr. Arvind Pandian, Learned Additional Advocate General submitted that he will take specific instructions in this regard and report to this Court during the next date of hearing.

6.The Learned Counsel appearing on behalf of NABARD is also directed to take instructions and provide assistance by getting details with regard to the manner in which the process is carried out in other states. Ultimately, a combined effort by NABARD and the other respondents can result in providing a solution to this problem. The learned Additional Advocate General can instruct the Registrar of Co-operative Societies to file a report in this regard suggesting the ways and means to expedite the process of opening the mirror accounts.

7.Post this case on 28.10.2020 at 2.15 pm.''

6. When the matter was taken up for hearing today, the learned Additional Advocate General brought to the notice of this Court, the note/report filed by the first respondent. The relevant portions in the report is extracted hereunder:- ''4. At the outset this respondent wish to submit the following with regard to admission of members in Primary Agricultural Cooperative Credit Societies.

As per subsection (1) of Section 21, any individual competent to contract under section 11 of the Indian Contract Act , 1872 (Central Act IX of 1872) and possessing such further qualifications as may be specified in the rules or the bylaws and who does not incur any of the disqualification specified in section 23 is eligible for admission. As per rule 31 of the Tamil Nadu Cooperative Societies Rules, 1988 no individual other than an individual who is qualified for admission with reference to the Principal object of the society shall be eligible for admission as a member of the society .

As per bylaw 3 (1) of the bylaws of a Primary Agricultural Cooperative Credit Society its Principal objects are,

(1) Issue of loans for agriculture and allied activities like cattle breeding, fish rearing, silkworm rearing, honey bee keeping etc. cottage industries, village industries, small industries, Marriage, Medical and Funeral expenses and other activities specified by the Registrar and the financing bank.

(2) To inculcate thrift habits among members.

(3) For transfer payment

(4) To work as agent for insurance companies as permitted by the Registrar.

It is respectfully submitted that, (i) all the members of Primary Agricultural Cooperative Credit Societies are not borrowers; and (ii) all the borrowers of Primary Agricultural Cooperative Credit Societies are not crop loan borrowers .

5.It is submitted that the number of farmers who have availed crop loans from Primary Agricultural Cooperative Credit Societies during the past five years are detailed below:- Year No of farmers 2015 - 2016 1074419 2016 - 2017 762772 2017 - 2018 1063821 2018 - 2019 1237393 2019 - 2020 1302412 It is submitted that there are about 79.37 lakhs farmers in the State. Out of this, only about 14.60 lakhs farmers are availing crop loans in the Primary Agricultural Cooperative Credit Societies. The Saving Bank account in Central Cooperative Banks is to be opened, only to those farmers who avail crop loans from the Primary Agricultural Cooperative Credit Societies.

10. It is submitted that there are 79.37 lakhs farmers in the State and only about 14.60 lakhs farmers are availing crop loans from the Primary Agricultural Cooperative Credit Societies. It is submitted that because of the various efforts taken by this respondent to open the Saving Bank account in Central Cooperative Bank branches for the crop loan borrowing members of the Primary Agricultural Cooperative Credit Societies, even before 31.03.2020, saving bank account were opened to 10.36 lakhs farmers. From 01.04.2020 to 15. 10.2020 Saving Bank account opened to 1.88 lakhs new farmers, who availed crop loan. For the remaining 2.36 lakhs farmers, Saving Bank account in the Central Cooperative Bank branches will be opened while disbursing crop loans to

them. The total number of crop loan borrowing farmers in Primary Agricultural Cooperative Credit Societies in the state, number of farmers to whom opened Saving Bank account before 31.03.2020, number of farmers to whom Saving Bank account opened from 01.04.2020 to 15.10.2020 and number of farmers to whom Saving Bank account is yet to be opened in Central Cooperative Bank branches are detailed below:- Progress in Saving Bank accounts opening in Central Cooperative Banks Out of Column

(4) No.

of farmers to whom SB a/c opened from 01.04.20 20 to 15.10.20 20 in CCB branches Out of Column

(4) No.

of farmers to whom SB ale opened upto 31.03.2 in CCB branche s Total No. of Crop Loan borrowi ng farmers in PACCS Total No.of farmers to whom SB a/c opened in CCB branche s No. of farmers to whom SB a/c yet to be opened in CCB branch Tota l No.

Of PACC S Name of the District Central Cooperative Bank Sl.

No (1) (2) (3) (4) (5) (6) (7) (8) Coimbatore 33600 25947 29781 Tiruppur 26400 17228 23283 Cuddalore 85648 68016 73954 11694 Dharmapuri 50687 40150 46472 Krishnagiri 27865 23009 27306 Dindigul 42204 35697 41618 Erode 67510 55888 64862 Tiruppur 67510 19126 22200 Kancheepuram 22209 10879 Chengalpattu 11905 14888 15405 Tiruvallur 16091 23988 26091 Kanyakumari 27914 65908 33470 99378 Nagapattinam 107906 19430 12715 32145 Thanjavur 35282 11716 Tiruvarur 14489 16706 11267 27973 Madurai 24351 27990

Out of Column

(4) No.

of farmers to whom SB a/c opened from 01.04.20 20 to 15.10.20 20 in CCB branches Out of Column

(4) No.

Of PACC S Name of the District Central Cooperative Bank Sl.

No (1) (2) (3) (4) (5) (6) (7) (8) Theni 13775 12909 13746 Nilgiris 32764 27709 30510 Pudukottai 41574 27413 32618 Ramanathapur am 21806 17769 19454 Salem 93439 63460 12298 75758 17681 Namakkal 54857 48111 51978 Sivagangai 27874 18314 Thanjavur 38686 25714 35260 Tiruvarur 18132 16275 Thoothukudi 15617 11223 15027 Trichy 58056 35489 42670 15386 Karur 32574 22935 30299 Perambalur 35196 26507 28537 Ariyalur 24619 19642 19833 Tirunelveli 10245 10167 Tenkasi 25566 23563 25124 Tiruvannamal ai 57830 62113 15670 Ranipet 28225 24936 26496 Vellore 30391 21783 23575 Tirupatthur 23766 19765 21777

Villupuram 58802 20461 20677 38125 Kallakurichi 45944 12512 12627 33317 Virudhunagar 19975 19975 19975 Total 4449 1460452 1036993 188116 1225109 235343

11. It is submitted that during 2019 -20, out of the 79.37 Lakhs farmers in the State, only 13,02,412 farmers availed crop loans in the Primary Agricultural Cooperative Credit Societies. Based on the previous year's loan disbursement, it is expected that about 14.60 lakhs farmers will avail crop loans in the Primary Agricultural Cooperative Credit Societies during the current financial year i.e., 2020-21. Since Saving Bank account were opened to 12.25 lakhs farmers till 15. 10.2020, the Savings Bank for the remaining 2.53 lakhs farmers the Savings Bank account will be opened in the ensuing months. It is respectfully submitteq that for the new farmers who wish to avail crop loans, the Saving Bank account will be opened with the existing staff in position in Primary Agricultural Cooperative Societies and that there is no need to bring more man power to collect applications from the farmers and submit the same to the Central Cooperative Bank branches.

7. Mr.P.H.Aravindh Pandian, learned Additional Advocate General submitted that based on the figures analyzed for the previous years, it is expected that about 14.60 lakh farmers will avail crop loan facility in the Primary Agricultural Cooperative Credit Societies during the current financial year 2020-2021. The learned Additional Advocate General further Submitted that already Bank accounts have been opened for about 12.25 lakh farmers till 15.10.2020. The bank accounts are yet to be opened for the remaining 02.53 lakh farmers and it will be done at the earliest. The learned Additional Advocate General submitted that the available man power is enough to collect the applications from the farmers and submit the same to the Central Cooperative Bank Branches.

8. The learned counsel appearing on behalf of NABARD submitted that the present system evolved for disbursed of crop loan is more in the nature of a policy decision taken by the Government of India and it was done to ensure that no middle men is involved in the process and the amount directly reaches the mirror account of the farmers. The learned counsel submitted that all efforts are being taken to assist the State Government in implementing the present system of disbursement of crop loan. The learned counsel submitted that the same procedure is adopted

in all the States across India. The learned counsel further submitted that NABARD has chosen on a trial basis 300 Primary Agricultural Credit Societies and is attempting to computerise the bank accounts in order to form the core banking facility. The learned counsel submitted that once such a core banking facility is made available, it will expedite the process of the disbursement of the crop loan. The learned counsel submitted that the proposal is now pending with the State Government and effective steps are being taken to implement the same.

9. This Court has carefully considered the reports submitted by the respondents and also the submissions made on either side.

10. This Court is aware of the limitations while dealing with the policy decisions of the Government. If the Government has decided to adopt a particular procedure for disbursement of crop loan, this Court cannot sit on Judgment upon such a policy decision. This Court only wanted to understand the various steps taken by the respondents to ensure that the new procedure does not cause undue hardship to the farmers in getting the farm loan. This Court is convinced with the various steps taken by the respondents and an appreciable progress has been made in opening the mirror account for the farmers to avail the crop loan. The same is evident from the reports filed before this Court. Therefore, no further orders can be passed in the present writ petition.

11. This Writ Petition is disposed of accordingly. No costs. Sd/- Assistant Registrar(CS III) //True Copy// Sub Assistant Registrar rli To 1.

The Registrar of Cooperative Societies, Kilpauk, Chennai-10.

The Joint Registrar of Cooperative Societies, Erode Region, Erode.

The Managing Director, Erode District Central Cooperative Bank, Erode, Erode District.

The Regional General Manager, NABARD, No.48, Mahathma Gandhi Road, Post Box No.6074, Nungambakkam, Chennai-34.

The Managing Director, TNSC Bank, Parry's, Chennai.

+1cc to Mr.L.P.Shanmuga Sundaram, Advocate, S.R.No.35275 +1cc to the Special Government Pleader, S.R.No.35023 W.P.No.11047 of 2020 MG(CO) CS/10/12/2020