You can take co‑operative banks to consumer court, the Kerala High Court has ruled

Ruling on petition related to non-payment of matured deposit by co-operative bank, court says Consumer Protection Act operates ‘in addition to and not in derogation of’ other laws.

The Puthur Service Co‑operative Bank argued that disputes involving co‑operative societies should be handled only under Section 69 of the Kerala Co‑operative Societies Act | Illustration: Sonali Dub/ThePrint

New Delhi: The Kerala High Court has held that disputes against co‑operative banks are maintainable before consumer commissions, notwithstanding the dispute‑resolution mechanism under the Kerala Co‑operative Societies Act.

In a clear reaffirmation on consumer jurisdiction, the judgment on a writ petition by a division bench of Justices Dr AKJ Nambiar and Preeta A.K. ruled that the Consumer Protection Act operates “in addition to and not in derogation of” other laws. The Co-operative Societies Act does not oust the right of its creditors to recover the amount by invoking the provisions of the Consumer Protection Act, and therefore a depositor retains the right to seek redress under consumer law, they ruled.

One Sethumadhavan had placed ₹5,00,000 in fixed deposits with the Puthur Service Co‑operative Bank. Despite the deposits maturing in 2015, the bank withheld repayment for six years.

The District Consumer Commission then ordered the bank to repay the amount with 12 per cent interest and ₹10,000 compensation. Instead of complying, the bank waited more than two years to file an appeal.

The bank argued that disputes involving co‑operative societies should be handled only under Section 69 of the Kerala Co‑operative Societies Act. But the High Court rejected this argument decisively.

The court emphasised that the Consumer Protection Act is a special law designed to protect consumers. Section 3 of the Act makes it clear that consumer remedies are “in addition to and not in derogation of” other laws. Even if another law provides a mechanism for dispute resolution, it does not take away the consumer’s right to approach consumer commissions.

The court noted that a banking institution dealing with public funds has a duty to make prompt payment to depositors. The judgment states that “harping on technicalities to thwart the claim is highly deprecated”. Dismissing the bank’s appeal, the court granted it six months to comply with the repayment order.

(Edited by Nardeep Singh Dahiya)