IN THE HIGH COURT OF KERALA AT ERNAKULAM
WP(C).No. 2069 of 2009(U)
1. THE KERALA STATE CO-OPERATIVE BANK LTD,
... Petitioner
Vs
1. THE KERALA STATE FARMERS DEBT RELIEF
... Respondent
2. K.K.MOYEDU, S/O.AMMED, KAYALAKANDI
For Petitioner :SRI.NAGARAJ NARAYANAN
For Respondent :SMT.G.KRISHNAKUMARI
The Hon'ble MR. Justice THOTTATHIL B.RADHAKRISHNAN
Dated :20/10/2009
O R D E R
THOTTATHIL B. RADHAKRISHNAN, J.
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W.P.(C).No.2069 of 2009-U
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Dated this the 20th day of October, 2009.
JUDGMENT
“CR”
1.The petitioner, a scheduled bank, extended a
housing loan to the second respondent. Though she
was repaying it, she sought relief under the
Kerala Farmers’ Debt Relief Commission Act, 2006,
hereinafter referred to as the “Act” in relation
to that loan and another facility availed from a
different establishment. By the impugned Ext.P3
order, the Kerala Farmers’ Debt Relief
Commission, hereinafter, the “Commission”, for
short, directed, among other things, that the
second respondent herein is entitled to debt
relief to the extent of 50% in so far as the
housing loan is concerned. This is under
challenge.
2.The petitioner’s contentions are two fold. First
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is that the Act does not apply to housing loans
in view of the definition of ‘debt’ as contained
in the Act. Next, is that the action taken under
Section 5 of the Act is without jurisdiction in
as much as a scheduled bank, if at all, could be
subjected only to proceedings Sections 9 or 10 of
the Act providing only for rescheduling of loans,
one time settlement etc. No order granting any
relief by slashing the outstandings, it is
contended.
3.In her counter affidavit, the second respondent
does not dispute the petitioner’s plea that it is
a scheduled bank. She states that she had been
discharging the debt due to the petitioner to the
best of her ability. She contends that the plea
of the petitioner that a housing loan does not
fall within the provisions of the Act, is
untenable.
4.The petitioner is a scheduled bank. It is,
therefore, an “institutional creditor” in terms
WPC2069/09 -: 3 :-
of Section 2(xvi) of the Act. “Debt”, as defined
in Section 2(vii), includes any sum payable to an
institutional creditor. This inclusive component
is prescribed after stating that debt means any
liability, whether secured or unsecured due from
a farmer on or before the commencement of the
Act, whether payable under a contract, or under a
decree or order of any Court or Tribunal, or
otherwise. Petitioner does not dispute that the
second respondent is a farmer as defined in
Section 2(xiii) of the Act.
5.Does a housing loan amount to a debt for the
purpose of the Act?
6.The exclusionary clause in Section 2(vii) becomes
relevant. After defining a debt by stating as to
what it means and also by enumerating what it
includes, Section 2(vii) provides that debt does
not include any loan amount taken by the farmer
for commercial purposes or luxury other than
agricultural allied commercial purposes, to
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augment his income and the amount payable to
Central or State Governments or other State
Governments or Governments of Union Territories
and the amount due to Local Self Government
Institutions, Statutory Bodies, Central or State
Public Sector Undertakings and other Institutions
as may be specified by the Government by
notification. The petitioner does not have a case
that it falls within the scope of any of the
institutions so excluded. It is a co-operative
bank. It is a scheduled bank. “Debt”, as already
noticed, means any liability. The exclusion is of
loan amounts taken for commercial purposes or
luxury, other than agricultural allied commercial
purposes, to augment income. The words “other
than agricultural allied commercial purposes” in
the second limb of Section 2(vii), essentially
qualify the phrase “for commercial purposes”.
Therefore, loan amounts taken for commercial
purposes other than agricultural allied
commercial purposes are excluded from the
definition of debt. The loan amounts taken for
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luxury are also excluded. Housing loan is nether
a loan for a commercial purpose nor one taken to
augment income. The purpose is to provide a home.
It is not a luxury. The State shall strive to
promote the welfare of the people by securing and
protecting as effectively as it may, a social
order in which justice, social, economic and
political, shall inform all the institutions of
the national life. The State shall regard the
raising of the standard of living of its people
as among its primary duties. The State shall, in
particular, direct its policy towards securing
that the ownership and control of the material
resources of the community are so distributed as
best to subserve the common good and that the
operation of the economic system does not result
in the concentration of wealth to the common
detriment. These principles are well engraved in
the Directive Principles of State Policy which
stand to advise the national growth. Right to
shelter is a fundamental right, which springs
from right to residence under Article 19(1)(e)
WPC2069/09 -: 6 :-
and right to life under Article 21. Food, shelter
and clothing are minimal human right. The right
to residence and settlement is a fundamental
right under Article 19(1)(e) and it is an
inseparable and meaningful facet of right to life
under Article 21. To make this right meaningful
to the poor, the State has to provide facilities
and opportunities to build a house. Profitable
reference could be made in this context to the
decisions of the Apex Court in U.P.Avaz Evam
Vikas Parishad v. Friends Co-op. Housing Society
Ltd., 1995 Supp (3) SCC 456; P.G.Gupta v. State
of Gujarat, 1995 Supp (2) SCC 182; State of
Karnataka v. Narasimhamurthy, (1995) 5 SCC 524.
The provision by way of loan to such sector is
never a luxury. The purpose of a home loan and
the objects sought to be achieved by extending
such home loans by financial institutions,
including institutional creditors, that too,
through the co-operative sector, cannot be
treated as providing a luxury. Such a loan is not
one availed for luxury. Therefore, a housing loan
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does not fall within the exclusionary clause in
Section 2(vii) of the Act. It is, therefore, a
debt to which the provisions of the Act apply.
7.In the case in hand, the amount of loan availed
by the second respondent is only Rs.1 lakh. I
notice this to assure that this is not a loan
that could be characterised as a luxurious one
even in the housing sector. May be that the
principles of law and the constitutional
conspectus noted by me in the preceding paragraph
would not apply to housing loans which are loans
for luxurious houses when compared to the ground
reality situation of providing a homestead as a
shelter.
8.Can a debt availed by a farmer from an
institutional creditor be subjected to Section 5
of the Act? If not, what provisions, if any,
applies?
9.In enumerating the powers and functions of the
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Commission, the Act keeps the institutional
creditors away from the jurisdiction of the
Commission under Section 5. Sub-sections (1) and
(2) of Section 5 clearly exclude debts of farmers
due to institutional creditors from the purview
of those provisions. Therefore, no action can be
taken by the Commission as are referable to sub-
sections (1) to (5) of Section 5 of the Act, as
against an institutional creditor or in relation
to a debt payable by a farmer to an institutional
creditor.
10.Section 9 provides special provisions in respect
of settlement of certain loans taken by farmers
and Section 10 provides for rescheduling of loans
taken by a farmer from a financial institution.
Unlike in Section 5, there is no exclusion of
institutional creditors from the purview of those
provisions. Those provisions, to the extent they
could be applied, could regulate the loans
availed by farmers from institutional creditors
and the Commission would be within its
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jurisdiction to do the needful in accordance with
law in terms of those provisions.
11.For the aforesaid reasons, the challenge to
Ext.P3 partly succeeds, i.e., to the extent that
the Commission has ordered debt relief in so far
as it relates to the housing loan availed by the
second respondent from the petitioner.
In the result, this writ petition is ordered
quashing Ext.P3 in so far as it is against the
petitioner and it is further ordered that this
judgment will not stand in the way of the second
respondent obtaining relief from the Commission
in terms of Sections 9 and 10 of the Act as
regards the housing loan availed by her from the
petitioner. No costs.
THOTTATHIL B.RADHAKRISHNAN,
JUDGE.
Sha/191009
