Andhra Pradesh High Court – Amravati
The Krishna District Cooperative … vs Dasari Venkata Srinivasa Rao on 20 May, 2025
IN THE HIGH COURT OF ANDHRA PRADESH AMARAV
TUESDAY, THE TWENTIETH DAY OF MAY I
TWO THOUSAND AND TWENTY FIVE
PRESENT
HON'BLE SRI JUSTICE DHIRAJ SINGH THAKUR, THE CHIEF JUSTICE
AND
HON'BLE SRI JUSTICE RAVI CHEEMALAPATI
WRIT APPEAL NO: 693 OF 2024
Writ Appeal under clause 15 of the Letters Patent the against the order
in W.P.No.5957 of 2024, dated 09.07.2024 on the file of the High Court.
Between:
1. The Krishna District Cooperative Central Bank Limited, Rep. by its
Manager, Avanigada Branch, Krishna District.
2. The Krishna District Co-Operative Central Bank Limited, Rep by its
Chief Executive Officer, Machilipatnam, Krishna District.
...APPELLANTS/RESPONDENTS
AND
1. Dasari Venkata Srinivasa Rao, S/o. Nagaswara Rao, R/o. Kothapeta
Avanigada, Krishna District.
...RESPONDENT/PETITIONER
2. The State of Andhra Pradesh, Rep. by its Principal Secretary Co-
Operative Department, Velagapudi Amaravathi, Guntur District.
3. Deputy Registrar/Officer on Special Duty, The Krishna District Co-
Operative Central Bank Ltd., Machilipatnam, Krishna District.
4. The Assistant Registrar/Sale Officer, The Krishna District Co-Operative
Central Bank Limited., Nuzvid Branch, Krishna District.
...RESPONDENTS
lA NO: 1 OF 2024
Petition under Section 151 CPC praying that in the circumstances
stated in the affidavit filed in support of the petition, the High Court may be
pleased to suspend the operation of the order in W.P.No.5957 of 2024,
dated 09.07.2024 pending disposal of the Writ Appeal.
V T Gounsel for the Appellants : SRI P. VEERA REDDY SENIOR CONSEL
■ appearing VICE SRI S. DILIP JAVA RAM
?■>
V Counsel for the Respondent No.1 : SRI GANTA PRASAD
Counsel for the Respondent No.2 : GP FOR CO OPERATIVE
Counsel for the Respondent Nos.3 & 4 : NONE APPEARED
The Court made the following: JUDGMENT
APHC010352472024 Bench
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI
Sr.No:- 7
[3483]
WRIT APPEAL NO: 693 of 2024
The Krishna District Cooperative Central Bank Limited and others ...Appellants
Vs.
Dasari Venkata Srinivasa Rao and others ...Respondents
**********
Advocate for Appellants: Mr. P. Veera Reddy, Ld. Senior Counsel
appearing vice Mr. S. Dilip Jaya Ram
Advocates for Respondents: Mr. Ghanta Prasad, GP for Cooperation
CORAM :THE CHIEF JUSTICE DHIRAJ SINGH THAKUR
SRI JUSTICE RAVI CHEEMALAPATI
DATE :
PER DHIRAJ SINGH THAKUR. CJ:
The present Writ Appeal has been preferred against judgment and
order dated 09.07.2024 passed in writ petition No.5957 of 2024.
2.
The learned single Judge has allowed the writ petition and held that the
Registrar of Cooperative Societies had no jurisdiction to invoke its powers
under the Andhra Pradesh Cooperative Societies Act, 1964 (hereinafter
referred to as, "the Act of 1964") for recovery of debt due from the petitioner -
respondent N0.I herein and that respondent No.5 in the writ petition that is the
Krishna District Cooperative Central Bank Limited would have to resort to the
procedure as prescribed under the Debt Recovery Tribunals Act, 1993
(hereinafter referred to as "the Act of 1993"). For arriving at the
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aforementioned conclusion, reliance was placed by the learned single Judge
on a Constitution Bench judgment of the Apex Court, in the case of
Pandurang Ganpati Chauguie vs. Vishwasrao Patil MurgudSahakari
Bank LimitedV
3.
With a view to understand the issue in the backdrop of which the
present controversy has risen, it is necessary to briefly state the material facts:
4.
The petitioner, Dasari Venkata Srinivasa Rao, respondent No.1 herein
availed a loan of Rs.25 Lakhs from the appellant Bank in the year 2019.
Having committed a default in the payment of the instalments fixed,
proceedings were initiated by the appellant Bank in terms of the provisions of
the Act of 1964. Needless to say that the appellant is a Cooperative Society
registered under the Andhra Pradesh Cooperative Societies Act, 1964 and is
engaged in the business of banking. The banking business of the appellant -
society is limited to its Members who may be advanced loans on such terms
as are prescribed under law. The disputes between the Society and its
Members in regard to any claim or debt, is governed by Chapter VIII and in
particular Section 61, which envisages such a dispute to be referred to the
Registrar for decision.
5. Chapter X of the Act of 1964 deals with execution of Decisions, Decrees
and Orders passed by the authorities mentioned under the said Chapter.
While sub-section (1) of Section 70 envisages the power of the Registrar or
'(2020) 9 see 215
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any person authorised by him to order a recovery of amounts as envisaged in
the contingency in sub-clauses (a) to (f) of Section 70 (1), sub-section (2) of
Section 70 envisages the mode and method of execution of the Decisions
made under Sections 60, 71, 76, 77 and 78 through either a Civil Court having
local jurisdiction on a certificate signed by the Registrar or any person
authorised by him as if the order or decision were a decree of that Court, or by
the Collector on an application made to him within prescribed time.
Sub-clause (c) of sub-section (2) of Section 70 also envisages recovery
by the Registrar in the manner provided under sub-section (1). Further,
Section 70(1) falling under Chapter X envisages as under:
"70. Power of the Registrar to recover certain amount by
attachment and sale of property and execution of orders:--
(1) The Registrar or any person authorised by him in this behalf may,
without prejudice to any other mode of recovery provided by or under
this Act, recover--
(a) any amount due under a decision or an order of the Registrar, or
any person authorised by him, or an arbitrator;
(b) any amount ordered to be paid towards the expenses of a
general meeting of a society called under Section 32;
(c) any amount awarded by way of costs under Section 56 to a
society including a financing bank or a Federal society;
(d) any amount payable 1 [xxx] towards fees under Section 58;
(e) any amount ordered under Section 60 to be repaid to a society or
recovered as a contribution to its assets ; or
(f) any amount ordered under Section 66 to be recovered as a
contribution to its assets, together with the interest, if any, due on
such amount and the costs of process by the attachment and sale or
by sale without attachment of the property of the person or the
society against whom such decision or order, has been passed or
obtained."
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6. Section 71 envisages the provisions for recovery of debts inter alia by a
Society for recovery of any sum advanced to any of its Members. Under
Section 71, the Registrar is vested with the power to issue a certificate for
recovering any amount which is stated to be due from any of its Members,
after making an enquiry in that regard. A certificate issued after enquiry, in
terms of Section 71 (3), is deemed to be final and conclusive proof of the
arrears stated to be due and the certificate is envisaged to be executed in the
manner specified in sub-section (2) of Section 70.
7.
In the present case, the appellant - Society having approached the
Registrar of Cooperative Societies, issued a certificate in terms of Section 71
of the Act, which came to be challenged by the petitioner before the learned
single Judge on the ground that it had no jurisdiction to entertain the
proceedings under the A.P. Cooperative Societies Act.
8.
The stand taken by the petitioner was that the Cooperative Society was
carrying on a banking business and thus fell within the definition of Section
5(c) of the Banking Regulations Act, 1949. The case set up was that since
banking falls within the legislative field of the Union, the State Legislature had
no competence to legislate on a subject pertaining to recovery of debts to a
Cooperative Bank, which otherwise fell exclusively within legislative domain of
the Union. Reliance in this regard was placed upon a Full Bench judgment of
the Andhra Pradesh High Court rendered in the case of M. Babu Rao and
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others vs. Deputy Registrar of Cooperative Societies^, which inter alia
held as under:
138. On the analysis above, we conclude, declare and hold:
(a) That recovery of monies (whether called a debt, arrears or by any
other name) due to a banking institution including a Co-operative
Bank is a matter that integrally falls within the core and substantative
area of the legislative field Banking in Entry-45, List-I of the Seventh
Schedule of the Constitution.
(b) The above subject matter is therefore excluded from the State
legislative field in Entry-32, List-ll of the Seventh Schedule.
(c)...
(d) A Co-operative Bank as defined in Section 5(cci) of the Banking
Regulation Act, 1949 (as amended by Act 23 of 1965) is a Bank and
a Banking company within the meaning of Section 2(d) and (e) of the
Recovery of Debts due to Banks and Financial Institutions Act, 1993.
(e) A Tribunal constituted under the provisions of the Recovery of
Debts due to Banks and Financial Institutions Act, 1993 has
exclusive jurisdiction, powers and authority to entertain and decide
application from a Co-operative bank for recovery of debts due to
such bank, subject to the pecuniary limits of jurisdiction specified by
or under the said Act.
(f) Section 71(1) of the 1964 Act in so far as it expressly confers
power on the Registrar to issue a certificate for recovery of arrears of
any sum advanced by a financing bank to its members, is beyond
the legislative competence of the State.
(i) (a) No claim, application or other proceedings lodged or instituted
before the Registrar, by a Co-operative Bank for recovery of the
amount/ debt due from a member or other person pursuant to
advances made in the course of its banking business could be
entertained or determined by the Registrar."
9.
The learned single Judge by virtue of the judgment and order impugned
dated 09.07.2024, allowed the writ petition by placing reliance upon the
Constitution Bench judgment in the case of Pandurang Ganpati
Chaugule(supra) and held that the appellant - Bank had to invoke the
^2005 see OnLine AP 491 : (2005) 4 ALD 582
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jurisdiction of the Debts Recovery Tribunal or resort to the provisions of the
SARFAESI Act for realisation of the amount in accordance with law.
10. At this stage, we deem it appropriate to refer to some of the relevant
provisions of the Banking Regulations Act, 1949 (for short, the BR Act of
1949) as also the provisions of the Recovery of Debts and Bankruptcy Act, ■
1993 (for short, "the RDB Act, 1993").
Provisions of the RDB Act, 1993:
The RDB Act of 1993 was enacted with a view to alleviate the problems
being faced by banks and financial institutions in recovering the loans and
enforcing the securities charged with them. The issue was examined by a
committee who suggested remedial measures, including setting up of Special
Tribunals for recovery of dues of the banks and financial institutions by
following a summary procedure. The need to set up Special Tribunals was felt
in view of the fact that approximately Fifteen Lakh cases filed by Public Sector
Banks and a large number of cases filed by financial institutions involving
more than Rs.5900 Crores andwith a view to unlock the huge amount of public
money in litigation and to recycle the funds for purposes of development of the
country. The Act called as the Recovery of Debts and Bankruptcy Act, 1993
initially it was enacted as the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993. The nomenclature of 'the RDDB and FI Act of 1993'
was amended in the year 2016 and now reads as the Recovery of Debts and
Bankruptcy Act, 1993 (for short, "RDB Act of 1993").
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Section 2(d) of the said Act defines banks to mean (i) banking company;
(ii) a corresponding new bank; (iii) State Bank of India; (iv) a subsidiary bank;
or (v) a Regional Rural Bank.
Section 2(e) envisages that a banking company shall have the meaning
assigned to it in Clause (c) of Section 5 of the BR Act of 1949.
Sections 3 and 8 falling under Chapter II of the Act envisaged the
establishment of Tribunals to be known as Debts Recovery Tribunals and
Debts Recovery Appellate Tribunals, respectively.
Section 17, falling under Chapter III, specifies the jurisdiction and
powers exercisable by the Tribunal for recovery of dues due to banks and
financial institutions.
Section 18 deals with bar of jurisdiction and reads as under;
"18. Bar of Jurisdiction:- On and from the appointed day, no court or
other authority shall have, or be entitled to exercise, any jurisdiction,
powers or authority (except the Supreme Court, and a High Court
exercising jurisdiction under articles 226 and 227 of the Constitution)
in relation to the matters specified in section 17:
[Provided that any proceedings in relation to the recovery of
debts due to any multi-State co-operative bank pending before the
date of commencement of the Enforcement of Security Interest and
Recovery of Debts Laws (Amendment) Act, 2012 (1 of 2013) under
the Multi-State Co-operative Societies Act, 2002 (39 of 2002) shall
be continued and nothing contained in this section shall, after such
commencement, apply to such proceedings.]''
11. Provisions of Banking Regulations Act of 1949:
Section 5 of the BR Act, defines 'banking', 'banking company', as under:
"(b) "banking" means the accepting, for the purpose of lending or
investment, of deposits of money from the public, repayable on
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demand or otherwise, and withdrawable by cheque, draft, order or
otherwise;
(c) "banking company" means any company which transacts the
business of banking 4 [in India];"
Section 56 falling under Part V of the BR Act reads as under;
"56. Act to apply to co-operative societies subject to modifications.--
[Notwithstanding anything contained in any other law for the time
being in force, the provisions of this Act], shall apply to, or in relation
to, co-operative societies as they apply to, or in relation to, banking
companies subject to the following modifications, namely:--
(a) throughout this Act, unless the context otherwise requires,--
references to a "banking company" or "the company" or
"such company" shall be construed as references to a
co-operative bank.
(ii)
12. Before proceeding further, we deem it appropriate to briefly refer to the
development of law after the decision of the Full Bench of the Andhra Pradesh
High Court rendered in the case of M. Babu Rao(supra).
13. The Apex Court in the case of Greater Bombay Cooperative Bank
Limited vs. United Yarn Textile (P) Ltd. and others^ was answering a
reference on the following two issues which were framed:
1) Whether the RDB Act applies to debts due to co- operative banks
constituted under the MCS Act, 1960; the MSCS Act, 2002 and
the ARCS Act, 1964?
2) Whether the State Legislature is competent to enact legislation in
respect of co-operative societies incidentally transacting business of
banking in the light of Entry 32, List II of Seventh Schedule of the
Constitution?
^(2007) 6 see 236
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Needless to say that the view expressed by the Full Bench of the
Andhra Pradesh High Court, along with the view expressed by the Bombay
High Court on the said issue came to be considered by the Apex Court in the
case, of Greater Bombay Cooperative Bank Limited(supra).
14. The Apex Court in Greater Bombay Cooperative Bank
Limited(supra) held that the provisions of 56(a) of the Banking Regulations
Act, 1949, which were incorporated with effect from 01.03.1966, were made
only to make applicable the provisions for regulating the banking companies to
cooperative banks also and further that the object was not to define a
cooperative bank to mean a banking company.
It proceeded to hold that since the definition of "banking company" in
Section 5(c) of the Banking Regulations Act, 1949 had not been altered and
was kept intact and that additional definitions were added at Section 56 (c)
whereby "Co-operative Bank" was separately defined by newly inserted
Clause (cci), the meaning of "banking company", therefore necessarily had to
be restricted and confined to the banks used in section 5(c) of the Banking
Regulations Act. What was held in paragraph 73 is as under:
"73. ...The meaning of 'banking company' must, therefore,
necessariiy be strictly confined to the words used in Section 5(c) of
the BR Act. It would have been the easiest thing for Parliament to
say that 'banking company' shall mean 'banking company' as defined
in Section 5 (c) and shall include 'co-operative bank' as defined
in Section 5 (cci) and 'primary co-operative bank' as defined
in Section 5 (ccv). However, the Parliament did not do so. There was
thus a conscious exclusion and deliberate omission of co-operative
banks from the purview of the RDB Act. The reason for excluding co-
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operative banks seems to be that co-operative banks have
comprehensive, self- contained and less expensive remedies
available to them under the State Co-operative Societies Acts of the
States concerned, while other banks and financial institutions did not
have such speedy remedies and they had to file suits in civil courts."
On the issue regarding legislative competence of the state legislature to
provide for a recovery mechanism for recovering of dues to a cooperative
bank, the Apex Court held that, while Entry 43 of List I of the Seventh
Schedule spoke of banking, insurance in financial corporations etc. but
excluded expressly cooperative societies from its ambit, with an intention that
the cooperative movement was left to the States for promotion. It further held
that the Banking Regulations Act dealt with the regulation of banking business
and that there was no provision whatsoever relating to the proceedings for
recovery by Bank or its dues. The Apex Court held:
72. The distinction between peoples' co-operative banks
serving their members and corporate banks doing commercial
transactions is fundamental to the constitutional dispensation and
understanding co-operative banking generally and in the context of
cooperative banking not coming under the ambit of the BR Act. Thus,
even if the co-operatives are involved in the activity of banking which
involves lending and borrowing, this is purely incidental to their main
co-operative activity which is a function in public domain.
97. For the reasons stated above and adopting pervasive
and meaningful interpretation of the provisions of the relevant Statutes
and Entries 43, 44 and 45 of List I and Entry 32 of List II of the Seventh
Schedule of the Constitution, we answer the Reference as under:
"Co-operative banks" established under the Maharashtra Co
operative Societies Act, 1960 [MCS Act, I960]; the Andhra Pradesh
Co-operative Societies Act, 1964 [ARCS Act, 1964]; and the Multi-
State Co-operative Societies Act, 2002 [MSCS Act, 2002] transacting
the business of banking, do not fall within the meaning of "banking
company" as defined in Section 5 (c) of the Banking Regulation Act,
1949 [BR Act]. Therefore, the provisions of the Recovery of Debts Due
to Banks and Financial Institutions Act, 1993 [RDB Act] by invoking the
Doctrine of Incorporation are not applicable to the recovery of dues by
the co-operatives from their members.
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98. The field of co-operative societies cannot be said to
have been covered by the Central Legislation by reference to Entry 45,
List I of the Seventh Schedule of the Constitution, Co-operative Banks
constituted under the Co-operative Societies Acts enacted by the
respective States would be covered by co- operative societies by Entry
32 of List II of Seventh Schedule of the Constitution of India."
15. In Pandurang Ganpati Chaugule(supra), the following were the issues
which fell for Apex Court's consideration:
I. Whether 'cooperative banks', which are cooperative societies also, are
governed by Entry 45 of List I or by Entry 32 of List II of the Seventh
Schedule of the Constitution of India, and to what extent?
II. Whether 'banking company' as defined in Section 5(c) of the BR Act,
1949 covers cooperative banks registered under the State Cooperative
Laws and also multi-State Cooperative Societies 29 (1955) 1 SCR 773,
30 (1964) 5 SCR 975?
III. (a)Whether cooperative banks both at the State level and multi-State
level are 'banks' for applicability of the SARFAESI Act?
III. (b)...
In the case of Pandurang Ganpati Chaugule, it was held that the Apex
Court in Greater Bombay Cooperative Bank Limited had not considered in
depth the various provisions of the Bank Regulations Act more particularly
those contained in Section 56 of the Act, did not accept the findings recorded
on various aspects and further held the same to be not binding. It was held
that the Cooperative Societies were doing the banking business, which was
not an incidental activity, but the main and the only activity. In paragraph 60, it
was held;
"60. ... No doubt about it that every commercial activity cannot be
brought within the scope of 'banking' in Entry 45 of List I. 'Banking'
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itself has a wide meaning, and the activity of cooperative banks
is definitely, beyond an lota of doubt, covered by Entry 45 of List I,"
Further it went on to hold that recovery of dues would be an essential
function of any bank, financial institution and the Parliament could enact a law
under List I Entry 45 to provide for a remedy of recovery.
However, with regard to the "incorporation, regulation and winding up"
of the cooperative societies, in terms of Entry 32 of List 11 of the Seventh
Schedule, it was held:
"87. It is apparent that 'incorporation, regulation and winding up' of
the cooperative societies are covered under Entry 32 of List II of the
Seventh Schedule of the Constitution of India, whereas 'banking' is
covered by Entry 45 of List I. Thus, aspect of 'incorporation, regulation
and winding up' would be covered under Entry 32 of List II. However,
banking activity of such cooperative societies/banks shall be governed
by Entry 45 of List I. The said banks are governed and regulated by
legislation related to Entry 45 of List I, the BR Act, 1949 as well as
the Reserve Bank of India Act under Entry 38 of List I. In the matter of
licencing and doing business, a deep and pervasive control is carved
out under the provisions of the BR Act, 1949 and banking activity done
by any entity, primary credit societies, is a bank and is required to
submit the accounts to the Reserve Bank of India, and there is
complete control under the aforesaid Act. For activity of banking, these
banks are governed by the legislation under Entry 45 of List I. Thus,
recovery being an essential part of the banking, no conflict has been
created by providing additional procedures under Section 13 of the
SARFAESI Act. It is open to the bank to adopt a procedure which it
may so choose. When banking in pith and substance is covered under
Entry 45 of List I, even incidental trenching upon the field reserved for
State under Entry 32 List II is permissible."
As regards whether the cooperative banks registered under the State
Cooperative laws as also multi-state Cooperative Societies, are banking
companies as defined under Section 5(c) of the Banking Regulations Act,
1949, the Apex Court in Pandurang Ganpati Chaugule(supra) held:
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"103. ... Thus, when we apply the provisions of the Act of 1949 to a
cooperative bank, the definition of 'banking company' has to be read
to include a cooperative bank. Section 56(a) becomes part
of Section 5(c), although it is located in a separate place. As
only Part V of the Act applies to the cooperative banks, Section
56(a) amends the definition of the 'banking company,' and it
becomes an integral part of Section 5(c), as the full effect is required
to be given.
122. The cooperative banks, which are governed by the BR Act,
1949, are involved in banking activities within the meaning of Section
5(b) thereof. They accept money from the public, repayable on
demand or otherwise and withdrawal by cheque, draft, order or
otherwise. Merely by the fact that lending of money is limited to
members, they cannot be said to be out of the purview of banking.
They perform commercial functions. A society shall receive deposits
and loans from members and other persons. They give loans also,
and it is their primary function. Thus, they are covered under
'banking' in Entry 45 of List 1."
16. On a composite reading of the judgment rendered by the Full Bench of
the High Court of Andhra Pradesh in the case of M. Babu Rao(supra), the
judgment of the Apex Court in Greater Bombay Cooperative Bank
Limited(supra) as also the Constitution Bench judgment in Pandurang
Ganpati Chaugule(supra), it becomes clear that the banking activity carried
on by cooperative banks is covered at Entry 45 of List I and further that the
provisions of the Banking Regulation Act, 1949, do apply to a cooperative
bank and that the definition of a banking company has to be read to include a
cooperative bank.
17. it also becomes clear that the power of a banking company to recover
its arrears and dues from its members being an essential part of banking
activity could be provided for by the Parliament in terms of Entry 45 List I. It
, was in that context held by the Apex Court that the SARFAESI Act, 2002,
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enacted by the Parliament providing for an additional procedure for recovery
under Section 13 of the SARFAESI Act was not ultravires the Constitution.
18. It can be seen that the definition clauses of the SARFAESI Actand in
particular 2(c) which defined a "bank" and 2(d) which defined a "banking
company" are similar to Clauses 2(d) and 2(e) which define a bank and a
banking company under the RDB Act, 1993.
19. Learned counsel for the appellant, Mr. P. Veera Reddy, would submit
that the ratio of the judgment in Pandurang Ganpati Chaugule{supra) did
not in so many words hold that the recovery procedure enabling the
cooperative societies to recover their dues in the light of the provisions made
by the Parliament under the SARFAESI Act, were no longer available to the
Registrar. In fact, a lot of emphasis was placed on paragraph 142.4 of the
judgment of the Apex Court to buttress the point that at best the provision
made by the Parliament by enacting the SARFAESI Act could be said to be
only an additional procedure for recovery made available to cooperative
banks. For facility of reference paragraph 142.4 of the judgment is reproduced
hereunder:
"142.4. (3)(b) The Parliament has legislative competence under
Entry 45 of List I of the Seventh Schedule of the Constitution of India
to provide additional procedures for recovery under Section 13 of
the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 with respect to co
operative banks. The provisions of Section 2(1)(c)(iv-a), of
Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, adding "ex abundanti
cautela", "a multi-State cooperative bank" is not ultra vires as well as
the Notification dated 28.1.2003 issued with respect to the co
operative banks registered under the State legislation."
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20. It can be seen that what was being considered by the Apex Court in
Pandurang Ganpati Chaugule' case was primarily the issue as to whether
the cooperative banks were governed by Schedule 7 of List I at Entry 45 and
to what extent and further, "whether banking company as defined under
Section 5(c) of the Banking Regulation Act, 1949 covered cooperative banks
registered under the State Cooperative laws and also the Multi State
Cooperative Societies". It was also considering the issue as to whether the
cooperative banks at the State level and the multi-State level were banks for
applicability of the SARFAESI Act. It is in that context that the Apex Court held
that the banking business essentially fell within the Seventh Schedule of List I
at Entry 45 and further that the SARFAESI Act would cover the cooperative
banks both at State Level and multi-State Level.
21. The provisions of the RDB Act were not specifically gone into by the
Apex Court in Pandurang Ganpati Chaugule, in fact, the argument advanced
by the learned Senior Counsel is unsustainable in the context of the RDB Act,
in view of the specific provisions of Sections 17, 18 and 19 of the said Act,to
which a brief reference become necessary.
Section 17, falling under Chapter III of the RDB Act deals with
Jurisdiction, Powers and Authority of the Tribunals, it envisages the Tribunal
to decide applications from banks and financial institutions for recovery of
debts due to such banks and financial institutions.
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Section 18 of the Act pertains to Bar of Jurisdiction and reads as under:
"18. Bar of jurisdiction.--On and from the appointed day. no
court or other authority shall have, or be entitled to exercise, any
jurisdiction, powers or authority (except the Supreme Court, and a
High Court exercising jurisdiction under articles 226 and 227 of the
Constitution) in relation to the matters specified in section 17:
[Provided that any proceedings in relation to the recovery of
debts due to any multi-State co-operative bank pending before the
date of commencement of the Enforcement of Security Interest and
Recovery of Debts Laws (Amendment) Act, 2012 (1 of 2013) under
the Multi-State Co-operative Societies Act, 2002 (39 of 2002) shall
be continued and nothing contained in this section shall, after such
commencement, apply to such proceedings.]''
Section 19 falling under Chapter IV, envisages the Procedure to be
followed by the Tribunals.Whereas Sections19 (1A) and 19 (IB)envisages as
under:
"(1A) Every bank being, multi-State co-operative bank referred to in
sub-clause (vi) of clause (d) of section 2, may, at its option, opt to
initiate proceedings under the Multi-State Co-operative Societies Act,
2002 (39 of 2002) to recover debts, whether due before or after the
date of commencement of the Enforcement of the Security Interest
and Recovery of Debts Laws (Amendment) Act, 2012 (1 of 2013)
from any person instead of making an application under this Chapter.
(IB) In case, a bank being, multi-State co-operative bank referred to
in sub-clause (vi) of clause (d) of section 2 has filed an application
under this Chapter and subsequently opts to withdraw the application
for the purpose of initiating proceeding under the Multi-State Co
operative Societies Act, 2002 (39 of 2002) to recover debts, it may
do so with the permission of the Tribunal and every such application
seeking permission from the Tribunal to withdraw the application
made under sub-section (1A) shall be dealt with by it as
expeditiously as possible and disposed of within thirty days from the
date of such application;''
22. On a reading of the aforementioned provisions, it thus becomes clear
that except the Tribunal as established under the RDB Act, no Court or other
authority would be entitled to exercise any jurisdiction, power or authority,
otherwise vested under Section 17 which deals with the power and authority
17
HCJ & RCJ
WA 693 2024
of the Tribunal to entertain and decide applications from banks and financial
/nsfitutions for recovery of debts. The only exception made is in favour of the
multi-state Cooperative Societies who had initiated proceedings in regard to
recovery of its debts which were pending on the date of commencement of the
Enforcement of Security Interest and Recovery of Debts Laws (Amendment)
Act, 2012 under the Multi-State Cooperative Societies Act, 2002, only those
proceedings would be permitted to continue and nothing contained under
Section 18 would apply to such proceedings.
On a reading of the aforementioned provisions, it would be clear that
the option to approach either the Tribunal established under the RDB Act or
resort to the mechanism provided under the multi-State Cooperative Societies
Act is limited only in the case of multi-State Cooperative Societies and not the
other cooperative banks, who are obliged for purposes of recovery to
approach the Tribunal as established under the provisions of the RDB Act for
recovery of such dues. The aforementioned provisions appear not to have
been noticed by the counsel appearing for the appellant which clearly create
the bar of jurisdiction on a Court or any other 'authority', which authority in the
context of the provisions of the Andhra Pradesh Cooperative Societies Act
would be the Registrar, from entertaining and deciding any claim as regards
the debt due to a cooperative bank.
23. Even when a multi-State Cooperative Bank in terms of Section 19 (1A)
has been given the option to opt to initiate proceedings either under the multi-
18
HGJ & RCJ
WA_693 2024
State Cooperative Society Act or to lay its claim before the Tribunal under the
RDB Act. yet, in the case of a cooperative bank other than a multi-State
Cooperative Bank there is no such exception made muchless an option given
to such a Cooperative Bank. In our opinion, the remedy as provided under the
provisions of the Andhra Pradesh Cooperative Society Act, 1964, for purposes
of recovery of debt due from its members is no longer available and the
remedy would lie only under the provisions of the RDB Act, 1993 as recovery
of dues by Cooperative Banks being an essential feature of a banking activity
as held by the Apex Court in the case of Pandurang Ganpati Chaugule,
could be dealt with only by an enactment framed by the Parliament in terms of
List I Entry 45 of the Seventh Schedule.
24.
Be that as it may, we find no merit in the present writ appeal which is
accordingly, dismissed.
No order as to costs. Pending miscellaneous applications, if any, in this
appeal shall stand closed.
Sd/- M.S.V. NAVEEN CHANDRA
//TRUE COPY// DEPUTY REGISTRAR
SECTION OFFICER
To,
1. One CC to Sri S. Dilip Jaya Ram, Advocate [OPUC]
2. One CC to Sri Ganta Prasad, Advocate [OPUC]
3. Two CCs to GP for Co Operative, High Court of Andhra Pradesh. (OUT)
4. Three C.D. Copies.
Cnr
f... ■
HIGH COURT
DATED:20/05/2025
'k 13 W 2025 m
09
& . Current Sectton ^
ORDER
WA.No.693 of 2024
DISMISSING THE WRIT APPEAL
WITHOUT COSTS
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