Nakodar Hindu Urban Co-operative Bank Ltd. vs Deputy Registrar, Co-operative Societies and Another

Kanwaljit Singh Ahluwalia, J.—Counsel for the parties are in agreement that four writ petitions bearing Civil Writ Petition Nos. 21328, 21556, 21572 and 21330 of 2008 can be decided by one common order, as on facts and law these writ petitions are similar, except that respondent No. 2 in all the four writ petitions is different.

In these writ petitions, petitioner-Bank has approached for setting aside impugned order dated 5.2.2008, Annexure-P5 passed by the Deputy Registrar, Co-operative Societies, Jalandhar. Before the controversy is determined, it is essential to advert to the facts of the case.

Counsel for the parties are further in agreement that for adjudication of these writ petitions, facts can be gathered from Civil Writ Petition No. 21328 of 2008. Respondent No. 2 availed cash credit limit of Rs. one lac in the year 1994 from the petitioner-Bank by way of equitable mortgage. On default committed in re-payment of the loan, loan account of respondent No. 2 was declared as non-performing asset. Case of the petitioner-Bank is that u/s 2(1)(c)(v) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter to be referred as, ''SARFAESI Act'') the Co-operative Bank is competent to issue demand notice and repossess the property. In consonance with the provisions of the SARFAESI Act, on 20.4.2007 demand notice u/s 13(2) was issued to respondent No. 2 and his two brothers. Copy of the demand notice is Annexure-P1. The demand notice states that on 31.1.2007 the amount outstanding against respondent No. 2 is Rs. 3,89,898/-. Thereafter possession notice Annexure-P2 was issued and inventory and panchnama were also prepared. The copy of possession notice was published in a newspaper "Ekta Lehar''. On 30.12.2007, Annexure-P4, possession-cum-sale notice (by Public Tender) was issued. Aggrieved respondent No. 2 approached the Deputy Registrar, Co-operative Societies by filing a petition under Sections 55 and 56 of the Punjab Co-operative Societies Act, 1961 (hereinafter to be referred as, ''the Act'') read with Rule 51 of the Punjab Co-operative Societies Rules, 1963 for setting aside the claim of petitioner-Bank to the tune of Rs. 3,89,898/-.

Ms. Jyoti Sareen appearing for the petitioner-Bank has stated that Deputy Registrar, Co-operative Societies, Jalandhar has no jurisdiction to entertain the dispute under the SARFAESI Act. Respondent No. 2 if aggrieved could only approach the Debt Recovery Tribunal u/s 17(1) of SARFAESI Act by filing an appeal. It has been stated that by issuance of notification on 28.1.2003 petitioner-Co-operative Bank was competent to invoke SARFAESI Act as u/s 2(1)(c)(v) of the SARFAESI Act, the Bank which, can invoke SARFAESI Act is the one which the Central Government by notification may specify. She state that a notification was issued on 28.1.2003 and the Central Government specified the Co-operative Bank as the one Bank which is entitled to act under SARFAESI Act.

This matter now, has been concluded by the judgment of Hon''ble Apex Court in Greater Bombay Co-op. Bank Ltd. Vs. United Yarn Tex. Pvt. Ltd. and Others, . This Court is of the view that once the Bank has opted to proceed against the defaulter under the SARFAESI Act, the defaulter can only avail remedy which is provided under the SARFAESI Act and cannot approach any other authority which is not recognised under the SRFAESI Act. Para 41 of Greater Bombay Co-op. Bank Ltd.''s case (supra) read as under:

Parliament had enacted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ("the Securitisation Act") which shall be deemed to have come into force on 21-6-2002. In Section 2(d) of the Securitisation Act same meaning is given to the words "banking company" as is assigned to it in Clause (e) of Section 5 of the BR Act. Again the definition of "banking company" was lifted from the BR Act but while defining "bank", Parliament gave five meanings to it u/s 2(c) and one of which is "banking company". The Central Government is authorised by Section 2(c)(v) of the Act to specify any other bank for the purpose of the Act. In exercise of this power, the Central Government by notification dated 28-1-2003, has specified "co-operative bank" as defined in Section 5(cci) of the BR Act as a "bank" by lifting the definition of "co-operative bank" and "primary co-operative bank" respectively from Section 56, clauses 5(cci) and (ccv) of Part V. Parliament has thus consistently made the meaning of "banking company" clear beyond doubt to mean "a company engaged in banking, and not a cooperative society engaged in banking" and in Act 23 of 1965, while amending the BR Act, it did not change the definition in Section 5(c) or even in Section 5(d) to include co-operative banks; on the other hand, it added a separate definition of "co-operative bank" in Section 5(cci) and "primary co-operative bank" in Section 5(ccv) of Section 56 of Part V of the BR Act. Parliament while enacting the Securitisation Act created a residuary power in Section 2(c)(v) to specify any other bank as a bank for the purpose of that Act and in fact did specify "co-operative banks" by notification dated 28-1-2003.

Counsel has further relied upon a Single Bench judgment of Kerala High Court in A.P. Varghese and Vs. The Kerala State Co-operative Bank Ltd. and Others and etc., wherein the Court placing reliance on Greater Bombay Co-op. Bank Ltd. Vs. United Yarn Tex. Pvt. Ltd. and Others, in para 13 held as under:

As a consequence, in view of the notification issued by the Central Government on 28.1.2003 (Ext.P6 in W.P. (C) 31919/2007), the provisions of the SARFAESI Act are available to those institutions, namely, the Kerala State Co-operative Bank Ltd., the District Cooperative Banks and the Urban Co operative Banks, to be invoked as enjoined by Section 13 of that Act.

Ms. Sushma Chopra appearing for respondent No. 2 has stated that u/s 55 of the Act, respondent No. 2 is entitled to refer the dispute for arbitration and accordingly respondent No. 2 had approached the Deputy Registrar, Co-operative Societies. She has placed reliance upon Section 82 of the Act to say that Punjab Co-operative Societies Act, 1961 bars jurisdiction of any other Court and if any dispute is raised u/s 55 and is referred to the Registrar, then no civil or revenue Court can entertain the dispute. To controvert this, Ms. Jyoti Sareen has cited para 41 of Greater Bombay Co-op. Bank Ltd. Vs. United Yarn Tex. Pvt. Ltd. and Others, and has stated that it was concluded by the Hon''ble Apex Court that Co-operative Banks can invoke the provisions of SARFAESI Act.

Since the matter has been concluded up to the Hon''ble Apex Court, there is no other option but to allow these writ petitions and hold that Deputy Registrar, Co-operative Societies had no jurisdiction to entertain the dispute where the Bank had invoked the provisions of SARFAESI Act. Accordingly, the writ petitions are allowed and the impugned orders are quashed.