Kochi: The Kerala High Court on Friday dismissed a petition challenging the government decision to grant a loan of Rs 130 crore to the KSRTC from the Pathanamthitta District Co-operative Bank. “The guarantee offered by the state government shall in every sense be the fullest guarantee offering to repay the amount in the event of failure of the KSRTC to repay the amount in accordance with the contract," the court observed.
Mr M.N. Vaishakha Kumar, leader of All- Kerala District Co-operative Bank Employees, moved the court alleging that the decision is illegal as loans or advance can be issued to members of the bank only. The petitioner argued that the maximum lending limit of the bank, according to the by-law, is only Rs 40 lakh. It was also contended that KSRTC is a sinking public sector undertaking which finds it difficult to pay salary and pension to its employees, and hence the order passed by the government is illegal.
The state government submitted that the entire action was based on the request made by the KSRTC to extend the guarantee subject to required permission by the respective authorities. The decision was in accordance with law. There was no prohibition created under the Banking Regulation Act to provide a loan to a non-member of a society. The court observed that the petitioner had failed to make out any case of illegality.
