# r_ '> GREATER BOMBAY C() ()P. BANK L lD v. MIS UNITED YARN TEX. PVT. L lD. & ORS - **Citation:** [2007] 4 S.C.R. 823 - **Court:** Supreme Court of India - **Decided:** 2007-04-04 - **Bench:** B. N. Agrawal, P.P. Naolekarand B Lokeshwar Singh Pant A - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/r-greater-bombay-c-p-bank-l-ld-v-mis-united-yarn-tex-pvt-l-ld-ors-22798 - **Pages:** 48 ## Headnote '?- ~. Constitution of India, 1950: Seventh Schedule, List /!-Entry 32-List /-Entries 43 and 45-He/d, c Co-operative Banks are not covered by Entry 45 of List /, dealing with 'banking'-Entry 43, List I dealing with banking, financial corporation etc., expressly excludes co-operative societies from its ambit-Subject of Cooperative Societies is covered under Entry 32 of List II-Co-operative forms a specie of genus 'corporation', and as such co-operative societies, with D objects. not confined to one State read in with the Union as provided in Entry .; ; I 44 of List I, MSCS Act, 2002 governs such multi state co-operativesMaharashtra Co-operative Societies Act, 1960-Andhra Pradesh Co-operative Societies Act, 1 964-Mu/ti State Co-operative Societies Act, 2002-Recovery of Debts Due to Banks and Financial Institutions Act, 1993- Banking Regulation Act, 1949. E Doctrine of occupied field-Held, co-operative Societies cannot be said to have been c .. vered by centra/legislation by reference of Entry 45, List 1 Doctrine of pith and substance-Held, a co-operative bank is not a F l'· 'banking company' under s.5(c) of B.R. Act- Even if the co-operatives are involved in activity of banking which involves lending and borrowing, this is purely incidental to their main co-operative activity which is a function in public domairr-Banking Regulation Act, 1949-s.5(c). Co-operative Societies: G Co-operative Banks-Recovery of dues of-Applicability of RDB Act- 'I Held, dues of co-operative societies and recovery proceedings in connection therewith are covered by specific Acts, namely, MCS Act, 1960, APCS Act, 823 H '- ~ i 824 SUPREME COURT REPORTS [2007) 4 S.C.R. .... A 1964 and MCSC Act, 2002, which are comprehensive and self-contained ~· .... ·- •• t . • • I • legislations-Even if co-operative banks are involved in certain banking activities of lending and borrowing, this is purely incidental to their main , ' co-operative activity which is a function in public domain-Therefore, provisions of RDB Act, by invoking doctrine of incorporation are not B applicable to recovery of dues by co-operatives from their membersMaharashtra Co-operative Societie~ Act, 1960-Andhra Pradesh Co-operative Societies Act, 1964- Mu/ti State Co-operativ_e Socif!ties Act, 2002 Recovery of Debts Due to Banks and Financial Institutions Act, 1993- Banking "': Regulation Act, 1949-/nterpretation of Statutes- Doctrine of incorporation. ""' c Maharashtra Co-operative Societies Act, /960/Andhra Pradesh Cooperative Societies Act, 1964: S.91/ss. 61, 62, 70 and 71-Registrar or an officer designated by him or an arbitrator not 'civil courts'. .· . D 'Banking Regulat~on Act, 1949: S. 5(c)-"Banking Company"-Held, "Co-operative banks" established "" under MCS Act, 1960; APCS Act, 1964 and MSCS Act, 2002, transacting the business of banking do not fall within' the meaning of 'banking company' as defined fn s.5(c) of the B.R. Act. . .• E Words and Phrases: 'Court '-Connotation of in the context. of RDB Act, 1993. Co-operative banks established und~r the Maharashtra Co-operative F Societies Ad, 1960 (MCS Act, 1960), the Andhra Pradesh Co-operative Societies Act, 1964 (APCS Act, 1964) and the Multi-State Co-operative Societies Act, 2002 (MSCS Act, 2002), advanced loans to the respondent ·'f Companies which were the members of the respective Co-operative Societies. When the Co-operative Banks sought to recover their dues, writ petitions were filed before tbe High Courts cllallenging the jurisdiction of he authorities G under the respective Co-operative Societies Act to recover the dues. The Full Bench or the Bombay High Court held that on and· from the date the Debts Recovery Tribunal was constituted un~er the Recovery or Debts Due to Banks and Financial Iristitutions Act, 1993 (RJ>B Act, 1993), the Courts and authorities under the Co-operative Societies Acts would cease to have ),:'. H jurisdiction to entertain ;:pplications submitted by Co-operative Banks for \ GREA TEll BOMBAY C~P. BANK L ## Text _Characters 0–39,905 of 125,912. This is a partial read: ask again with offset=39905 for what follows._ • I .r_ .... '> GREATER BOMBAY C()..()P. BANK L lD. A v. MIS UNITED YARN TEX. PVT. L lD. & ORS. APRIL 4, 2007 [B. N. AGRAWAL, P.P. NAOLEKARAND B LOKESHWAR SINGH PANT A, JJ.} '?- ~. Constitution of India, 1950: Seventh Schedule, List /!-Entry 32-List /-Entries 43 and 45-He/d, c Co-operative Banks are not covered by Entry 45 of List /, dealing with 'banking'-Entry 43, List I dealing with banking, financial corporation etc., expressly excludes co-operative societies from its ambit-Subject of Cooperative Societies is covered under Entry 32 of List II-Co-operative forms a specie of genus 'corporation', and as such co-operative societies, with D objects. not confined to one State read in with the Union as provided in Entry .; ; I 44 of List I, MSCS Act, 2002 governs such multi state co-operativesMaharashtra Co-operative Societies Act, 1960-Andhra Pradesh Co-operative Societies Act, 1 964-Mu/ti State Co-operative Societies Act, 2002-Recovery of Debts Due to Banks and Financial Institutions Act, 1993- Banking Regulation Act, 1949. E Doctrine of occupied field-Held, co-operative Societies cannot be said to have been c .. vered by centra/legislation by reference of Entry 45, List 1 Doctrine of pith and substance-Held, a co-operative bank is not a F l'· 'banking company' under s.5(c) of B.R. Act- Even if the co-operatives are involved in activity of banking which involves lending and borrowing, this is purely incidental to their main co-operative activity which is a function in public domairr-Banking Regulation Act, 1949-s.5(c). Co-operative Societies: G Co-operative Banks-Recovery of dues of-Applicability of RDB Act- 'I Held, dues of co-operative societies and recovery proceedings in connection therewith are covered by specific Acts, namely, MCS Act, 1960, APCS Act, 823 H '- ~ i 824 SUPREME COURT REPORTS [2007) 4 S.C.R. .... A 1964 and MCSC Act, 2002, which are comprehensive and self-contained ~· .... ·- •• t . • • I • legislations-Even if co-operative banks are involved in certain banking activities of lending and borrowing, this is purely incidental to their main , ' co-operative activity which is a function in public domain-Therefore, provisions of RDB Act, by invoking doctrine of incorporation are not B applicable to recovery of dues by co-operatives from their membersMaharashtra Co-operative Societie~ Act, 1960-Andhra Pradesh Co-operative Societies Act, 1964- Mu/ti State Co-operativ_e Socif!ties Act, 2002 Recovery of Debts Due to Banks and Financial Institutions Act, 1993- Banking "': Regulation Act, 1949-/nterpretation of Statutes- Doctrine of incorporation. ""' c Maharashtra Co-operative Societies Act, /960/Andhra Pradesh Cooperative Societies Act, 1964: S.91/ss. 61, 62, 70 and 71-Registrar or an officer designated by him or an arbitrator not 'civil courts'. .· . D 'Banking Regulat~on Act, 1949: S. 5(c)-"Banking Company"-Held, "Co-operative banks" established "" under MCS Act, 1960; APCS Act, 1964 and MSCS Act, 2002, transacting the business of banking do not fall within' the meaning of 'banking company' as defined fn s.5(c) of the B.R. Act. . .• E Words and Phrases: 'Court '-Connotation of in the context. of RDB Act, 1993. Co-operative banks established und~r the Maharashtra Co-operative F Societies Ad, 1960 (MCS Act, 1960), the Andhra Pradesh Co-operative Societies Act, 1964 (APCS Act, 1964) and the Multi-State Co-operative Societies Act, 2002 (MSCS Act, 2002), advanced loans to the respondent ·'f Companies which were the members of the respective Co-operative Societies. When the Co-operative Banks sought to recover their dues, writ petitions were filed before tbe High Courts cllallenging the jurisdiction of he authorities G under the respective Co-operative Societies Act to recover the dues. The Full Bench or the Bombay High Court held that on and· from the date the Debts Recovery Tribunal was constituted un~er the Recovery or Debts Due to Banks and Financial Iristitutions Act, 1993 (RJ>B Act, 1993), the Courts and authorities under the Co-operative Societies Acts would cease to have ),:'. H jurisdiction to entertain ;:pplications submitted by Co-operative Banks for \ GREA TEll BOMBAY C~P. BANK L TI>. v. VNJTED Y AAN TEX. PVT. L m. 825 recovery of their dues. Similarly, the Full Bench of the Andhra Pradesh High A ;>• Court held that the Tribunal constituted under the RDB Act had 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 jurisdiction specified under the said Act. The Andbra Pradesh High Court further declared sections 61 and 71 of the APCS Act, 1964 being B beyond legislative competence of the State Legislature and also in direct and clear conflict with the provisions of the RDB Act. Both these decisions were ,. challenged in appeals before the Supreme Court. The Division Bench before ~ which the appeals came to be listed, felt that the matter required to be considered by a Larger Bench and, thus, the appeals were heard by the present ,. three-Judge Bench. c On the questions: (a) whether the RDB Act applies to debts due to cooperative banks constituted under the MCS Act, 1960; the MSCS Act, 2002 and the APCS Act, 1964, and (b) 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 D the Constitution. f .. Answering the reference, the Court HELD: 1.1. The dues of co-operatives and recovery proceedings in connection therewith are covered by specific Acts, such as the MCS Act, 1960 E and the APCS Act, 1964, which are comprehensive and self-contained legislations. Similarly, for Multi-State Co-operatives there is a specific enactment in the form of the MSCS Act, 2002 comprehensively providing the legal framework in respect to issues pertaining to such co-operatives. Therefore, when there is an admittedly existing legal framework specifically F dealing with issues pertaining to co-operatives and especially when the co- ..., operative banks are, in any case, not covered by the provisions of the RDB Act specifically, there is no justification of covering the co-operative banks -l under the provisions of the RDB Act by invoking the Doctrine of Incorporation. (Para 55} rss7-G-H; 858-AJ G Surana Steels Pvt. Ltd etc. v. Deputy Commissioner of Income Tax & Ors. etc., (1999) 4 SCC 306, relied on. ~ Mls Fatehchand Himmatlal & Ors. v. State of Maharashtra, (1977) 2 SCC 670; Mls Hoechst Pharmaceutical Ltd & Ors. v. State of Bihar & Ors., {1983}4 sec 45, cited; H 826 SUPREME COURT REPORTS (2007] 4 S.C.R. A The Shamrao Vithal Co-operative Bank Limitedv. Mls Star Glass Works & Ors., (2003) 1 MLJ 1, overruled. 1.2. 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 B generally and in the context of cooperative banking not coming under the ambit of the BRAct. 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. (Para 57) [858-C-D) c Zoroastrian Co-operative Housing Society Ltd. v. District Registrar, Cooperative Societies (~Jrban), (2005) 5 SCC 632, referred to. 1.3. The RDB Act was designed to deal with other banks and fmancial institutions which had to have recourse to the tim~onsoming process ofthe D Civil Courts. The Co-operative Societies Ads on the one hand and RDB Act on the other hand, cannot be regarded as supplemental to each other viz., the provisions of the said ActSs.cannot be sajd to be pari-materia. The RDB Act is consistent with the general banks and their creditorslloanees while the MCS Act, 1960; the APCS Act, 1964 and the MSCS Act, 2002 are concerned with the regulation of Co-operative societies only. The language of the sections in E these enactments defining 'banking company' is plain, clear and explicit. It does not admit any doubtful interpretation as the intention of the legislature is clear. [Paras 59, 60 and 69] (859-B, E; 861-H; 862-A] Virendra Pal Singh v. District Assistant Registrar, (1980) 4 SCC 109, relied on. F 1.4. Section 31 ofRDB Act clearly refers to transfer of 'every suit or other proceedicg pending before any court'. The word 'court', in the context of the RDB Act, signifies 'civil court'. It is clear that the Registrar, or an officer designated by him or an arbitrator under Sections 61, 62, 70 and 71 G ofthe APCS Act, 1964 and under Section 91 and other provisions of Chapter IX of the MCS Act, 1960 are not 'civil courts'. (Para 621 [860-G-H) Harinagar Sugar Mills v. Shyam, (1962)2 SCR 339; Ram Rao & Anr. v. Narayan & Anr., AIR [1969) SC 724; Kihoto Hol/ohan v. Zachillhu & Ors., [1992) Supp. 2 SCC 651 Para 98 and Supreme Court Legal Aid Committee H representing undertrial prisoners v. Union of India, (1994] 6 SCC 731, relied ...:· >: ~ ' .... . " ~ .. ..... i '( ~ ~· GREATER BOMBAY CQ.OP. BANK L TO. v. UNITED Y AA.N TEX. PVT. LTD 827 on. Thakur Jugal Kishore v. Sitamarhilt, [1967] 3 SCR 163, held inapplicable. 1.5. The RDB Act was passed in 1993 when Parliament had before it A the provisions of the BR Act as amended by Act No. 23 of 1965 by addition of B some more clauses in Section 56 of the Act. The Parliament was fully aware that the provisions of the BRAct apply to C(H)perative societies as they apply to banking companies. The Parliament was also aware that the definition of 'banking company' in Section 5 (c) had not been altered by Act No. 23 of 1965 and it was kept intact, and in fact additional definitions were added by Section C 56( c). "C()o(lperative bank" was separately defined by the newly inserted clause (cci) and "primary co-operative bank" was similarly separately defined by clause (ccv). The Parliament was simply assigning a meaning to words; it was not incorporating or even referring to the substantive provisions of the BRAct. The meaning of 'banking company' must, therefore, necessarily be strictly confined to the words used in Section S(c) of the BRAct. There was D a conscious exclusion and deliberate omission of co-operatic banks from the purview of the RDB Act. It could not be said that Amendments in Chapter V, Section 56 of the RDB Act by Act No. 23 of 1965 inserting "co-operative bank" in Clause (cci) and "primary co-operative bank" in Clause (ccv) either expressly or by necessary intentment apply to the co-operative banks transacting business of banking. (Paras 70] [858-E-G; 862-C) E 1.6. "Co-operative banks" established under the Maharashtra Cooperative Societies Act, 1960 [MCS Act, 1960]; the Andhra Pradesh Cooperative Societies Act, 1964 (APCS Act, 1964]; and the Multi-State Cooperative Societies Act, 2002 [MSCS Act, 2002) transacting the business of banking, do not fall within the meaning of "bimking company" as defined in F 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. [Para 89) [869-G-H; 870-A) G 2.1. The constitutional validity of an Act can be challenged only on two grounds, viz. (i) lack of legislative competence; and (ii) violation of any of the Fundamental Rights guaranteed in Part m of the Constitution or ofany other constitlltional provision. [Para 71] [862-D] H 828 SUPREME COURT REPORTS [2007] 4 S.C.R. A State of A.P & Ors. v. McDowell & Co. & Ors., (1996) 3 SCC 709, relied on. 2.2. Power to enact a law is derived by the State Assemb'y from List II of the Seventh Schedule to the Constitution of India. Entry 32 ofList n confers B upon a State Legislature the power to constitute co-operative societies. The State of Maharashtra and the State of Andhr:~ Pradesh both have enacted the MCS Act, 1960 and the APCS Act, 1964 in exercise of the power vested in them by Entry 32 of List II of the Seventh Schedule to the Constitution. [Para 72] [862-F) ,. ..... c Subramanyan Chettiar v. Muttuswami Goundan, AIR (1941) FC 47; A. S. Krishna v. State of Madras, [1957) SCR 399 and State of Rajasthan v. Chawala, [1959) (Suppl. 1) SCR 904, relied on. State of Bihar & Ors. v. Bihar Distillery Ltd. C?rs., [1997) .2 SCC 453, referred to. D 2.3. Entry 43 List of I speaks of banking, insurance and financial corporations etc. but expressly exclud~ co-operative societies from its ambit the constitution! intendment seems to be that the co-operative movement was ~ - to be left to the States to promote and leg.islate upon and the banking activities of co-operative societies were also not to be touchtd unless Parliament E considered it imperative. The BRAct deals with the regulation of the bimking business. There is no provision whatsoever relating to proceedings for recovery by any bank of its dues. Recovery was initially governed by the Code or Civil Procedure by way of civil suits and after the RDB Act came into force, the recovery of the dues of the banks and financial institutions was by filing F of applications to the Tribunal. The Tribunal has been establishW. with the sole object to provide speedy remedy for recovery of debts of the banks and financial institutions since there has been considerable difficulties experienced therefore from normal remedy of Civil Court. [Para 79] (86>E-G) G 2.4. Therefore, the express exclusion of co-operative societies in Entry 43 of List I and the express inclusion of co-operative societies in Entry 32 of List II separately and apart from but along with corporations other than those specified in List I and universities, clearly indicated that the constitutional scheme was designed to treat co-operative societies as institutions distinct '..; from corporations. Co-operative Societies, incorporation, regulation and H winding up are State subjects in the ambit of Entry 32 of List II of Seventh \ , .,. GREATER BOMBAY CO.OP. BANK LTI>. v. UNITED YARN TEX. PVT. l TO. 829 Schedule to the Constitution of India. Co-operatives form a specie of genus A 'corporation' and as such co-operative societies with objects not confined to one State read in with the Union as provided in Entry 44 of List I of the Seventh Schedule of the Constitution, MSCS Act, 2002 governs such multi-state cooperatives. [Para 80)(865-H; 866-A-BJ R. C. Cooper, etc. v. Union of India, (197011 sec 248, referred to. B 2.5. 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 to the Constitution. The co-operative banks performing functions for the public with a limited commercial function as opposed to corporate C banks cannot be covered by Entry 45 of List I dealing with "banking". Cooperative 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 to the Constitution. [Paras 90 and 811 Associated Timber Industries & Ors. v. Central Bank of India & Anr., D [2000}7 SCC 93; State of Maharashtra v. Laljit Rajshi Shah and Ors., [2000) 2 SCC 699 and Union of India v. Delhi High Court Bar Association, [2002) 4 sec 275, held inapplicable. The Life Insurance Corporation of India v. D. J. Bahadur & Ors., AIR {19801 SC 2181; ITC Ltd. v. Agricultural Produce Market Committee & Ors., E [2002) 9 sec 232, referred to. CIVIL APPEALLATE JURISDICTION: Civil Appeal No. 432 of2004. From the Final Judgment and Order dated 06.10.2005 of the High Court of Judicature of Kamataka at Ban galore in Writ Appeal Nos. 5271 & 5724 of F 2002. WITH Civil Appeal No.433t2004, Civil Appeal No.434t2004, Civil Appeal No.436/ 2004, SLP (C) Nos.l5651-15652t2005, SLP (C) No.5592t2004, SLP (C) No.5598/ G 2004, SLP (C) No.5890t2004, Civil Appeal No.36t2006, Civil Appeal No.37t2006, Civil Appeal No.38/2006, Civil Appeal No.916/2006, Civil Appeal No.2819/ '=1< 2006, Civil Appeal No.2820/2006, Civil Appeal No.282l/2006, Civil Appeal No.282212006 and SLP (C) Nos.25246-25247t2005]. [Civil Appeal No.6069/2005, Civil Appeal No.6077/2005 and SLP (Crl.) H t 830 SUPREME COURT REPORTS [2007] 4 S.C.R. A No. 2071/2006- Not on board] S. Ganesh, Bhim Rao Naik, T.R. Andhyarujina, Shek.har Naphade, S.B. Sanyal, V.A. Bobde, Dr. N.M. Ghatate, U.U. Lalit, J.V. Suryananrayana, Dr. Rajeev Dhawan, A.V. Sawant, Raju Ramachandran and K.N. Bhatt, Siddhartha Chowdhury, Samrat Nigam, Satyajit Ghone, Y.R. Naik, Rakesh K. Sharma, B Shivaji M. Jadhav, Himanshu Gupta, Brij Kishor Sah, T.V. Ratnam, K. Subba Rao, A.H. Ramakrishna Rao, Ashish Chugh, Raghavendra S. Srivatsa, Balraj "" Dewan, Shweta Gupta, Abhijit P. Medh, Pramit Saxena, Anuradha Rustogi, " S.V. Deshpande, T. Raja, Vinay Navare, Jay Savla, Meenakshi Ogra, Reena Bagga, D. Bharathi Reddy, P. Vinay Kumar, Sneha Bhaskaran, Sanjiv Sen, c Praveen Swarup, Manik Karanawala, K. Maruthi Rao, K. Radha, Anjani Aiyagari, K. Shivraj Chou@uri, P.S. Narasimha, P. Sridhar, Avijeet Kr. Lala Sriram P. Mu~y, John Mathew, Venkatarangadas Kanur, T. Lakshminarayana, Venkateswara Rao Anumolu, I Amar Dave, E.C. Agrawala, S. Ashokanand Kumar. S. Udaya Kumar Sagar, Bina Madhavan (for M/s. Lawyer's Knit & Co.) San jay V. Kharde, Chandan Ramamurthi, Aniruddha P. Mayee, Sanjeev Kumar D Chaudhary, Sanjay Visen, Amit Yadav, Satyajit A. Desai, Sunil Kumar Verma, Anagha S Desai, S.S. Shinde, Mukti Chowdhary, V.N. Raghupathy, Ravindra ": ...... Keshavrao Adsure, S. Nanda Kumar, Brij Kishore Shah, Santha Kumar, Ananda Selvam, Naresh Kumar, S.A. Desai, Kavin Gulati, Mahesh Agrawal, Rishi Agrawal, Dr. P.B. Vijaya Kumar, I Madhavi, Saravbh Suman Sinha, B.V. Desai, E Nupur Kanungo, Rahul Gupta, D. Mahesh Babu, Balraj Dewan, M.J. Paul, H.S. Parihar, Kuldeep Parihar, Amar Dave, Mehul Vakharia and Ravinder Shah for the appearing parties. The Judgment of the Court was delivered by F WKESHW AR SINGH PANT A, J. 1. Civil Appeal No.6069/2005, Civil Appeal No.6077/2005 and SLP (Crl.) No.2071/2006 are taken on board. .,.... 2. A Bench of two judges before which this batch of twelve civil appeals and five special leave petitions came up for consideration was of the view that looking to the issues involved and the far-reaching consequences G which such a decision will leave, these matters require consideration by a larger Bench. This is what the Bench observed in the order dated 1st December, 2005. "This batch of appeals/SLPs involved an important issue regarding '? right of recovery of debts by the co-operative banks constituted H under the Co-operative Societies Acts of the States· of Maharashtra G.REATERBOMBAYCO-•. UNITED YARN TEX. PVT. LTD. [lOKESHWARSINGH PANT A, J.J8JJ the premises of the r~spondent-Company on I st February, 2003 for effecting A recovery by way of attachment and sale of property specified in the Schedule attached thereto. 7. In January 2003, the respondent-Company filed a Writ Petition No. 727/2003 before the High Court of Bombay impugning the recovery certificate dated 3rc! December, 2002. Learned Single Judge of the High Court vide order B dated 31st January, 2003 passed an ad-interim ex parte order restraining the Special Recovery and Sales Officer, in any manner, from proceeding with or in pursuant to recovery certificate dated 3rd December, 2002. It appears from the order of the High Court that the Division Bench of the High Court in The Shamrao Vithal Co-operative Bank Limited v. Mls Star Glass Works & Ors., C (2003) 1 MLJ 1 held that the Debts Recovery Tribunal constituted under the RDB Act has the jurisdiction to entertain an application submitted by a cooperative bank for recovery of its debts. The Division Bench on consideration of the provisions of Section 56 of the Banking Regulation Act, 1949 [ for short "the BR Act"] came to the conclusion that 'Co-operative Bank' falls within D the meaning of Section 2(d) of the RDB Act and, therefore, the only remedy available in tenns of the provisions of the RDB Act to a co-operative bank after the constitution of the Tribunal under the RDB Act for recovery of debts due to it, is to apply to such a tribunal for an order. 8. The order of the High Court reveals that one Narendra Kanti Lal filed E Writ Petition No. 6079/2002 in the High Court praying for setting aside the recovery certificate dated 6th September, 2000 issued by the Assistant Registrar (Co-operative Societies) in exercise of his powers under Section 101 of the MCS Act, 1960 and the warrant of attachment issued pursuant thereto on the application made by Jan Kalyan Sahakari Bank Limited, one of the respondents in the said petition. When that petition came up for admission before the F learned Single iudge of the Bombay High Court, the petitioner therein brought to the notice of the learned Single Judge the earlier judgment of the Division Bench in Shamrao Vithalrao Co-operative Banks' case (supra). The learned Single Judge, however, was of the opinion that the Division Bench in its judgment did not consider that the MCS Act, 1960 has been enacted by the G State Legislation under Entry 32, List II of the Seventh Schedule of the Constitution of India. The learned Single Judge having considered the importance of the question involved in the matter directed to place the matter before Hon'ble the Chief Justice of the High Court for Reference before the Full Bench. It appears that in the meantime, some more Writ petitions came H up before the Division Bench raising the same question. Hon'ble Chief Justice 834 SUPREME COURT REPORTS [2007] 4 S.C.R. A of the High Court decided to refer the matters to the Fall Bench. This is how all the petitions were placed before the Full Bench for deciding the referred questions. 9. The Full Bench, after hearing the learned counsel for the parties and having gone through the various provisions of the Statutes and Entries 43, B 44 and 45, List I of Seventh Schedule of the Constitution of India, answered the reference as under:- c D "For all these reasons, therefore, we hold that on and from the date on which the Debts Recovery Tribunal was constituted under the 1993 Act, the courts and authorities under the 1960 Act as also the 2002 Act would cease to have jurisdiction to entertain the applications submitted by the Co-operative Banks for recovery of their dues." 10. However, the High Court held that the State Legislature was competent to enact the MCS Act, 1960. II . In Civil Appeal No. 36/2006 titled A. P. State Co-operative Bank Limited v. Samudra Shrimp (P) Ltd. & Ors., after detailed examination of the various submissions before it, Full Bench of the Andhra Pradesh High Court in a batch of writ petitions, writ appeals and civil revision petitions struck down the constitutional validity of Sections 61 and 71 of the APCS Act, 1964. E In the concluding portions, the High Court culled out as follows:- F G H "(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 substantive area of the legislative field Banking in Entry-45, List-1 of the Seventh Schedule of the Co11stitution. (b) The above subject matter is therefore excluded from the State '('' legislative field in Entr)r-32, List-ll of the Seventh Schedule. (c) Recovery of monies due to a Co-operative Bank is not a matter that falls within the incidental' and ancillary areas of the State legislative field in Entry-32, List-ll of the Seventh Schedule. (d) A Co-operative Sank 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) & (e) of the Recovery of Debts Due to Banks and Financial \ - GREATER BOMBAYC().()P. BM'K LTD. •· UNITED YARN TEX PVT LTD. (LOKESKWAR SINGH PANT A. J. 1835 ~,. Institutions Act, 1993. A (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 applications from a Co-operative Bank for recovery of debts due to such bank, subject to the pecuniary limits of jurisdiction B 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. c (g) The words "or financing bank" in Section 71(1) of the Andhra ·- Pradesh Co-operative Societies Act, 1964 expressly result in the provisions of the Section transgressing the State's legislative limits. These words being severable are therefore declared invalid. (h) The provisions of Sections 61 and 7 J {after striking down of the D .A ·r words in Section 71 (1) } are restrictively construed as excluding .. any jurisdiction, powers or authority in the Registrar in respect of recovery of debts or arrears dW' to a Co-operative Bank, its members or others which are advanced lent or otherwise made over to such member or person, during the course of the banking E business of such Co-operative Bank (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 F -., entertained or determined by the Registrar (b) Any award or order passed, certificate issued or an order in execution proceedings, by the Registrar on any claim or application of a Co-operative Bank, is patently and inherently without jurisdiction, null, void and inoperative. G (j) During the pendency of these writ petitions, by virtue of various ':; court orders certain amounts have been deposited by some of the writ petitioners. At no point of time these writ petitioners have disputed the liability or the amount already deposited with the banks in pursuance of the orders of the Court. Therefore, we H A B c D E F G H 836 SUPREME COURT REPORTS [2007] 4 S.C.R. direct that the amounts deposed shall be retained by the concerned banks and adjusted against the liabilities, if any, that remain to be determined pursuant to proceedings initiated by the respective banks in accordance with this judgment. (k) In view of the declaration in this judgment, the respondent-banks are at liberty to proceed with the recovery of debts due to them, before the appropriate forum and under the appropriate law, in accordance with this judgment. (I) As the proceedings initiated before the Registrar or any other authority under the 1964 Act were bona fide and as considerable time had been consumed in the litigation in this case also, the respondent-banks shall be entitled to set off the period spent in pursuing their claims before the Registrar or other fora and before this Court, in computing the period for filing appropriate applications/cla!Jns before the appropriate authorityffribunal." 12. The Full Bench of the Andhra Pradesh High Court declared Sections 61 and 71 ofthe APCS Act, 1964 invalid being beyond legislative competence of the State and also in clear and direct conflict with the provisions of 'the RDB Act'. In interpreting the provisions of the two enactments, the Bench has employed the 'Doctrine of Reading Down '. 13. We have carefully perused the judgments of the Full Benches of the . High Courts of Bombay and Andhra Pradesh impugned before this Court by the aggrieved parties. Before proceeding further to consider the legal question referred to the larger Bench, the provisions of the various Statutes relevant for our purpose may be first noticed. THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT. I960 [the MCS ACT. 1960] 14. The MCS Act, 1960 was promulgated and came into force on 26th day of January, 1962 relating to co-operative societies with a view to providing for the systematic development of the co-operative movement in the State of Maharashtra in accordance with the Directive Principles of State Policy enunciated in the Constitution of India. The object and the working of the co-operative banks had become so large that it was found necessary to extract more important provisions of the Banking Regulation Act, 1949 ['the BRAct'] and allied provisions of the Reserve Bank of India Act, 1934 ['the ..>.; 1-.. ..,: -- ').:' I \ I 1 GREATER BOMBAY CO-OP. BANK l.TD. •· UNITED YARI'J TEX. P\'T.l.TD. [LOKESHWAJl SINGH PANT A. J. ) 837 RBI Act'] to the co-operative banks in public interest. 15. Section 2 (10) of the MCS Act, 1960 defines "co-operative bank" to mean a society which is doing the business of banking as defined in clause A (b) of sub-section ( 1) of Section 5 of the Banking Companies Act, 1949 and includes any society which is functioning or is to function as a Co-operative Agriculture and Rural Multi-purpose Development Bank under Chapter XI. In B Section 2(6) of the MCS Act, 1960- "Central Bank" means a co-operative bank, the objects of which include the creation of funds to be loaned to other societies; but does not include the urban co-operative bank. Section 91 of the MCS Act, 1960 in Chapter IX deals with settlement of any dispute touching the constitution, conduct of general meetings, management or business of a C society etc. to the Co-operative Court. Section I 01 provides for recovery of arrears due to certain societies as arrears of land revenue in pursuance of the certificate granted by the Registrar. Under Section l8A of the Act, the Registrar is competent to amalgamate one or more co-operative banks in public interest or in _?rder ·to secure their proper management. D 16. Section 36 under Chapter IV makes every registered society as a corporate body having perpetual succession and common seal which acts through a Committee for management with rest of its authority being in General Body of members in meetings as provided in Sections 55, 72 and 73. Section 43 provides that a society shall receive deposits and loans from · members and other persons, only to such extent, and under such conditions, E as may be prescribed or specified by bye-laws of the society. Section 44 regulates the loan making policy of a society. This Section provides that the society shall not make a loan to any person other than a member, or on the security of its own shares, or on the security of any person who is not a member. It empowers the Government to prohibit, restrict or regulate the F lending of money by any society or class of societies on the security of any property. Section 50 under Chapter V provides for direct subscription by the State Government to the share capital of a society with limited liability upon such tenns and conditions as may be agreed upon. Section 64 provides that no part of the funds other than the net profits of a society shall be paid by way of bonus or dividend, or otherwise distributed among its members. G Chapter VII deals with Management of Societies. Section 72 provides that the final authority of every society shall, subject to the provisions of this Act and the Rules vests in the general body of members in general meeting. Section 73 empowers Committee to manage the society. Chapter VIII deals with Audit, Inquiry, Inspection and Supervision of the societies. Section 81 provides that H 838 SUPREME COURT REPORTS [2007) 4 S.C.R. A the Registrar shall audit, or cause to be audited at least once in each co- .... operative year, by a person authorized by him by general or special order in ' writing in this behalf the account of every society which has been given financial assistance including guarantee by the State Government. Section 83 empowers the Registrar to conduct an inquiry into the constitution, working B and financial conditions of a society. Chapter IX 'deals with Settlement of Disputes. A dispute touching the constitution, ele~tions of the Committee or its officers other than election of committees of the specified societies including its officer, conduct of general meetings, management or business of "' a society is covered under sub-section (I) of Section 91 ofthe MCS Act, 1960. The settlement of disputes including the recovery of loan by a society from c its members or sureties lies with the Co-operative Court. The Civil Court has no jurisdiction to try and entertain the suit in regard to the dispute which fall both in the purview of sub-section (1) of Section 91 of the Act. Section 92 regulates the period of limitation for different types of disputes mentioned in it and the disputes of the nature as provided in Section 91 has to be tried D as a suit by the Co-operative Court as a Civil Court.- Section 94 lays down the procedure for settlement of disputes and power of Co-operative Court. The Co-operative Court or the Registrar or the authorized person, as the case may be, if satisfied on inquiry or otherwise that a party to such dispute or ~ \- the person against whom proceedings are pending under Section 88, with intent to defeat, delay or obstruct the execution of any award or the carrying E out of any order that may be made is empowered to direct additional attachment of the property under Section 95. Any party aggrieved by any decision of the Co-operative Court or order passed by the Co-operative Court or the Registrar or the authorized person under Section 95 is at liberty to file appeal before the Co-operative Appellate Court under Section 97. Section 98 provides that F orders mentioned therein if not carried out on a certificate signed by the Registrar or the Co-operative Court or a liquidator shall be executed in the same manner as a decree of civil court and shall be executed in the same manner as a decree of such court or be executed according to law and under y:: the Rules for the time being in force for the recovery of arrears of land revenue. An application for such a recovery to be made to the Collector shall G be accompanied by a certificate signed by the Registrar and shall be made within twelve years from the date fixed in the order an~ if no such date is ftxed from the date of the order. Recovery Certifica~e is issued by the Registrar under sub-section (I) of Section I 0 l of the MCS Act, 1960 and the mode for recovery of the amount is under Section 156 of the Act. Chapter X deals with .-_.: liquidation of the societies. Section 102 empowers the Registrar to issue an H interim order of winding up of the society. An appeal against the winding up -t GREATER BOMBAY CO-OP. BANK LTD. v. UNITED YARN TEX. PVT.LTD. [LOKESHWAR SINGH PANT A, l.J 839 ."'.:c. ,. of the society shall be made by the aggrieved party to the State Government A under Section 104.