The Kerala High Court recently ruled that banks handling public money have a responsibility towards their depositors to ensure timely payment of their funds. This judgement stemmed from a case filed by a man from Thrissur, who complained that his Rs 5 lakh fixed deposit (FD) which matured in 2015, was not repaid by the bank due to some technical issues.
This grievance led him to file a case in the consumer commission and eventually to pursue the matter in court against the bank. On June 2, 2026, a larger bench of the Kerala High Court ruled in his favour and ordered the bank to repay the FD with 12% interest and Rs 10,000 compensation. The court also agreed to the bank's lawyer's request for a six-month extension to make the repayment.
What led to this FD dispute?
Mr Sethumadhavan from Mullamkunnath Kavu, Thrissur, had invested Rs 5 lakh in Fixed Deposits (FDs) and these were all to mature on June 2, 2015. However, when Sethumadhavan approached the bank to get the money, the bank failed to return it, citing technical reasons.
Feeling aggrieved, Sethumadhavan filed a case with the District Consumer Disputes Redressal Commission, Thrissur (case no. 746 of 2015). After considering the materials on record, the Consumer Disputes Redressal Commission, Thrissur passed an order dated December 31, 2021, directing the bank to pay Rs 5 lakh with 12% interest and Rs 10,000 as cost and compensation.
Even though the consumer commission had passed the order, the bank still did not repay the FD and filed an appeal in Kerala High Court after a delay of 825 days. The bank wanted the high court to condone this delay.
The bank claimed that the big delay in filing the appeal was entirely due to their management being under an administrator from December 10, 2014 to May 7, 2022. A single bench of the Kerala High Court rejected the bank's contentions and ordered it to repay the FD as per the consumer commission's order.
Despite this, the bank still did not repay the FD and opted to appeal to a larger bench of the Kerala High Court. This time, the bank changed their legal contention and argued that since they are a co-operative bank, Section 69 of the Kerala Co-operative Societies Act, 1969 is applicable, which means the single bench judge of the Kerala High Court lacks jurisdiction.
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On June 2, 2026, a larger bench of the Kerala HIgh Court rejected the bank's contentions and upheld the consumer commission's order. As a result, the bank now has to repay the Rs 5 lakh FD with 12% interest and Rs 10,000 compensation within six months.
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Kerala High Court larger bench order and discussion
The Kerala High Court in its judgement (case no. 2026:KER:38148, dated June 2, 2026) said that it is a well settled principle that the Consumer Protection Act, 1986 and its successor, the Act of 2019 is a Special law that has been enacted by Parliament to protect consumers' interest.
Therefore, the provisions of the special legislation takes precedence over the provisions of Section 69 and Section 100 of Kerala Co-operative Societies Act, 1969.
The high court said that even if we assume that the Consumer Protection Act is a general law, it is a settled position of law that if there is any inconsistency between two legislations, the later law, even if general in nature, would override an earlier Special law.
Thus the high court ruled that merely because the rights and liabilities are created between the members and the management of the Society under the Act and Forums are provided, it cannot take away or exclude the jurisdiction conferred on the Forums under the Consumer Protection Act which is provided intentionally to serve a definite cause in terms of the objects and reasons of the Act.
Section 3 of the 1986 Act which corresponds to Section 100 of the 2019 Act provides that the provisions of the Consumer Protection Act is in addition to and not in derogation of the provisions of any other law for the time being in force.
Therefore, the Kerala High Court said that even though the Cooperative Societies Act and the Rules framed thereunder provides for a mechanism for realisation of money by its creditors, the provisions in the Co-operative Societies Act do not oust the right of its creditors to recover the amount by invoking the provisions of the Consumer Protection Act.
The Kerala High Court also said that a banking institution dealing with public funds is duty-bound to its depositors to make prompt payment of the funds deposited by them.
The high court said: "In so much as the liability to return the fixed deposit amounts which became due as early as in the year 2015, is not disputed, harping on technicalities to thwart the claim is to be highly deprecated."
Order:
- In the result, the high court said that they find themselves in complete agreement with the view taken by the single bench judge.
- However, taking note of the submission made by the counsel for the bank seeking 6 months time to comply with the order directing repayment with interest, the high court granted 6 months time to the bank to comply with the order.
- The Writ Appeal therefore fails and is accordingly dismissed. No costs
