Madhya Pradesh High Court
Hafiz Zakir Hussain vs The Akola Janta Commercial ... on 17 October, 2007
Equivalent citations: 2008(1)MPHT71
ORDER Subhash Samvatsar, J.
1. This petition is filed by the petitioner challenging auction notice Annexure P-3 issued by the respondent-Bank, whereby the property of the petitioner is put to auction in exercise of powers conferred under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the Act, 2002').
Brief facts of the case are that the petitioner and his brother Hafiz Sakir Hussain are the owners of Block No. 31, Plot No. 23/2 having an area 2621 sq. ft. On 18-6-2007 a show-cause notice was issued to the petitioner under Section 13 of the Act, 2002 for recovery of advance loan amount. The copy of the said notice is Annexure P-2. Petitioner submitted his reply to the said notice. Copy of which is Annexure P-2.
2. Contention of learned Counsel for the petitioner is that without considering reply submitted by the petitioner, auction notice Annexure P-3 is issued putting his aforesaid property to auction. Petitioner claims that he is owner of the said property and was mortgaged by a firm and complaint in this respect is lodged as Annexure P-4. It is also contended that dispute about the mutation of the property is also before the Revenue Authority.
3. Main contention of learned Counsel for the petitioner is that the respondent is a Co-operative Bank and therefore the provisions of the Act, 2002 are not applicable in the present case. In support of his argument, he has relied on judgment of the Apex Court in the case of Manoj Tarwala v. Stale of Madhya Pradesh and Ors. 2006(3) M.P.H.T. 434 (DB), wherein the Division Bench has held that provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short 'the Act, 1993') arc not applicable to the Co-operative Bank.
4. Another judgment relied on by learned Counsel for the petitioner is in the case of Greater Bombay Co-operative Bank Ltd. v. United Yam Tex. Pvt. Ltd. and Ors. 2007 AIR SCW 2325, wherein the Apex Court has also taken the same view.
5. Section 2(d) of the Act, 1993 defines word 'Bank' and as per said Section 'Bank' means-
(i) a banking company;
(ii) a corresponding new bank;
(iii) State Bank of India;
(iv) a subsidiary bank;
(v) a Regional Rural Bank.
6. Contention of learned Counsel for the petitioner is that Co-operative Bank is not covered by the definition of the Bank as defined under Section 2(d) of the Act, 1993. Section 2(e) of the Act, 1993 defines the words 'banking company' and as per definition 'banking company' shall have same meaning assigned in Clause (c) of Section 5 of the Banking Regulation Act, 1949. It is further con-tended by learned Counsel for the petitioner that definition of 'banking company' under the Act, 2002 as defined under Section 2(d) of the Act, 2002 is the same, i.e., 'banking company' shall have same meaning assigned to it in Clause (c) of Section 5 of the Banking Regulation Act, 1949. Hence, it is contended by learned Counsel for the petitioner that same definition is construed by the Division Bench of this Court in the case of Manoj Tarwala (supra) and by the Apex Court in the case of Greater Bombay (supra), therefore, the same will be applicable and the Co-operative Bank will not be covered by the definition as defined under the Act, 2002 and entire action is without jurisdiction and contrary to law, therefore, the impugned auction notice deserves to be set aside.
7. In reply to this argument, Shri Alok Aradhe, learned Senior Counsel for the respondent-Bank has contended that there is a difference between the definition of 'bank' as defined in the Act, 2002 and in the Act, 1993. He contended that the word 'bank' is defined in Section 2(c) of the Act, 2002 and as per said section 'bank' means-
(i) a banking company;
(ii) a corresponding new bank; or
(iii) the State Bank of India; or
(iv) a subsidiary bank; or
(v) such other bank which the Central Government may, by notification, specify for the purposes of this Act.
Thus, under the Act, 2002 the Central Government is empowered to issue a notification in respect of any bank, which is not covered by Clauses 1 to 4 of the definition to include the same for the purpose of the Act, 2002, and accordingly the Central Government has issued the notification dated 28-1-2003, which is published in the Gazette of India (Extra-ordinary) Part II Section 3(ii), dated 28-1-2003. As per said notification, all Co-operative Banks are included in the definition of bank as defined by the Act, 2002, and therefore, Co-operative Bank will be covered under the Act, 2002. In support of his argument, learned Counsel for the respondent has relied on Division Bench judgment of the Bombay High Court in the case of Khaja Industries v. The Stale of Maharashtra and Ors. passed in W.P. No. 2672/2007, dated 3-7-2007, in which the Division Bench of the Bombay High Court after considering the notification and the definition of bank as defined in Section 2(c) of the Act, 2002 has held that Cooperative Banks are covered by the provisions of the Act, 2002 and therefore recovery of dues of the Co-operative Bank can be made under the provisions of the said Act.
8. After hearing learned Counsel for the parties and perusing the judgments of this Court in the case of Manoj Tarwala (supra), and by the Apex Court in the case of Greater Bombay (supra), I find that the question involved before the Division Bench was not in respect of interpretation of the Act, 2002 and the Division Bench after considering whether Co-operative Banks are covered under the provisions of the Act, 1993.
9. In the case of Greater Bombay (supra), the following question was under consideration:
Do the Courts and Authorities constituted under the Maharashtra Co-operative Societies Act, 1960 (the 1960 Act) and the Multi-State Co-operative Societies Act, 2002 (the 2002 Act) continue to have jurisdiction to entertain applications/disputes submitted before them by the Co-operative Banks incorporated under the 1960 Act and the 2002 Act for an order for recovery of debts due to them, after establishment of a Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (the 1993 Act)?
10. Ultimately the Apex Court has answered the said question by holding that cooperative banks established under the Maharashtra Co-operative Societies Act, 1960, the Andhra Pradesh Co-operative Societies Act, 1964 and the Multi State Co-operative Societies 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 Regulations Act, 1949. Therefore, the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are not applicable to them.
11. This is not a situation before this Court. This Court has to decide whether the Act, 2002 is applicable to the Co-operative Banks or not. Section 2(c) of the Act, 2002 reads as under:
(i) a banking company; or
(ii) a corresponding new bank; or
(iii) the State Bank of India; or
(iv) a subsidiary bank; or
(v) such other bank which the Central Government may, by notification, specify for the purposes of this Act.
12. Clause (v) of Section 2 of the Act, 2002 empowers the Central Government to issue a notification for including any other bank within the definition of bank by issuing a notification and Central Government has issued the notification dated 28-1-2003 for the said purpose and included Co-operative Banks within the definition of bank. Therefore, said bank will be fully covered by the said definition and has a right to recover their loans under the provisions of the Act, 2002. In such circumstances, this petition deserves to be dismissed.
13. In the result, petition fails and is dismissed. No costs.