Court dismisses bank's plea on loan recovery from salary

The Madurai Bench of Madras High Court has rejected plea of the TN Industrial Co-op Bank Ltd, Madurai seeking direction to respondents – Southern Railway and Madurai Corporation — to deduct loan instalments from salary of defaulting employees, who were liable to repay loans availed from petitioner-bank.

Dismissing writ petitions from the bank pleading that employees of Southern Railway and Madurai Corporation had availed themselves of personal loan from them, a registered society, and they had failed to repay same, Mr Justice K. Chandru held that present petitions were “exercise in futility”. Though the bank had said they had agreement with the respondents to deduct loan amount from their salary, it was stated by the Senior Divisional Personnel Officer, Southern Railway, Madurai, that they did not authorise any of their employees to avail themselves of loans from banks and other agencies without prior sanction of the railway administration.

The petitioner-bank contended that despite reminders, respondents loan amounts had not been deducted and paid to them.

U/s 48 of the TN Co-op Societies Act, 1983, deduction from wages, salary, etc was permissible on certain grounds. Such deduction could be made only when there was agreement between the employer and the society and a requisition was made in pursuance of agreement, the judge said.

The Railways had stated that their authorised officers had not signed and the Railways did not bind themselves for granting such deduction.

The judge wondered whether under the Societies Act, the petitioner-bank did not have wherewithal to seek for arbitration u/s 90 and after getting award from the arbitrator to make use of execution machinery u/s 167 to recover amounts due to them.

The writ petitions of the Society (bank) were misconceived and were not maintainable.

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