# THE APEX CO-OPERATIVE BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD v. THE MAHARASHTRA ST A TE CO-OPERATIVE BANK LTD. AND ORS

- **Citation:** [2003] Supp. 4 S.C.R. 1071
- **Court:** Supreme Court of India
- **Decided:** 2003-10-29
- **Bench:** S.N. Varia Va, H.K. Sema
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-apex-co-operative-bank-of-urban-bank-of-maharashtra-and-goa-ltd-v-the-19493
- **Pages:** 33

## Headnote

A
B
National Bank for Agriculture and Rural Development Act, 1981Section 2(4)-Banking Regulation Act, 1949-Multi State Co-operative C
Societies Act, 1984-Co-operative Societies Act, 1912-Cooperative Bank
Registered under Multi State Act-Grant of banking licence by RBI to carry
on activity in other States as well, where the same is not recognized as State
Co-operative Bank-Its declaration as State Cooperative Bank under
NA BARD Act-Propriety of grant of licence and the declaration by State- D
Held : RBI cannot give license to a co-operative Bank unless the same is
declared as State Co-operative Bank under NABARD Act~tate could not
have declared the Bank as State Co-operative Bank under NABARD Ad
as the same was neither registered under Co-operative Societies Ad, 1912
nor under local or State laws relating to Co-operative societies~ociety
registered under Multi-State Act cannot be declared as State Cooperative E
Bank as the same is not local law-As the definition of Co-operative
Societies is restricted to Co-operative Societies under State Laws, RBI can
give licence only in respect of the State where it is declared as State Cooperative Bank and not for operation in other States-Multi-unit Cooperative Societies Act, 1942.
F
Interpretation of Statute :
Meaning of a term-Interpretation of~When a term is specifically
defined in a statute, for the purposes of that statute that term cannot !Jear G
a meaning assigned to it in another statute-Where the legislature intends
to restrict the scope of a provision, the same cannot be expanded by process
of interpretation.
Appellant Bank made application to RBI to start Apex Bank. RBI
by its letter stated that it required registration under Multi State Co- H
1071
1072
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A operative Societies Act, 1984. Pursuant to letter of R.B.I. they got
registered as Multi State Co-operative Society under Multi State Act.
However, they were not registered under Banking Regulation Act,
1949. State by Notification declared them as State Co-operative Bank
within the meaning of Section 2(u) of National Bank for Agriculture
B and Rural Development Act, 1981 (NABARD Act). By two orders,
Commissioner for Co-operation and Registrar of Co-operative Societies
directed deployment of funds by all Urban Co-operative Banks to the
appellant. RBI gave banking licence to appellants u/ss. 22(1) r/w. 56(o)
of Banking Regulation Act for the State of Maharashtra and Goa.
C
Respondent No. 1 challenged the Notification, the two directions
and grant of licence by RBI by filing Writ Petition in High Court
wherein the Notification and the two orders were quashed and setaside and the licence was permitted to remain operative till fresh
decision was taken by RBI. High Court also concluded that "carrying
D on business" must mean carrying on banking business.
In appeal to this Court, the questions for consideratfon were : (a)
whether a co-operative society registered under the Multi State Act can
be granted a licence by the RBI to commence and carry on banking
E business, (b) whether a co-operative society registered under the Multi -
State Ad can be recognized and notified by the State Government as
a State Co-operative Bank and (c) whether a co-operative society
registered under the Multi State Act, which has been recognized, and
notified by one State Government as a State Co-operative Bank for
that State, can be granted a licence by the RBI to commence and carry
F on banking activities in other States in which it has not been recognized
as a State Co-operative Bank.
Disposing of the appeals, the Court
G
HELD : 1. RBI by virtue of its power under Section 22 of the
Banking Regulation Act, 1949 cannot grant a licence to any .cooperative bank unless it is a state co-operative bank or a central'cooperative bank or a primary co-operative bank. It would be necessary
that a declaration under the National Bank for Agriculture and Rural
H Development Act, 1981 (NABARD) be first obtained. RBI can only

## Text

_Characters 0–39,842 of 74,755. This is a partial read: ask again with offset=39842 for what follows._

-
THE APEX CO-OPERATIVE BANK OF URBAN BANK
OF MAHARASHTRA AND GOA LTD.
v.
THE MAHARASHTRA ST A TE CO-OPERATIVE
BANK LTD. AND ORS.
OCTOBER 29, 2003
(S.N. VARIA VA AND H.K. SEMA, JJ.]
A
B
National Bank for Agriculture and Rural Development Act, 1981Section 2(4)-Banking Regulation Act, 1949-Multi State Co-operative C
Societies Act, 1984-Co-operative Societies Act, 1912-Cooperative Bank
Registered under Multi State Act-Grant of banking licence by RBI to carry
on activity in other States as well, where the same is not recognized as State
Co-operative Bank-Its declaration as State Cooperative Bank under
NA BARD Act-Propriety of grant of licence and the declaration by State- D
Held : RBI cannot give license to a co-operative Bank unless the same is
declared as State Co-operative Bank under NABARD Act~tate could not
have declared the Bank as State Co-operative Bank under NABARD Ad
as the same was neither registered under Co-operative Societies Ad, 1912
nor under local or State laws relating to Co-operative societies~ociety
registered under Multi-State Act cannot be declared as State Cooperative E
Bank as the same is not local law-As the definition of Co-operative
Societies is restricted to Co-operative Societies under State Laws, RBI can
give licence only in respect of the State where it is declared as State Cooperative Bank and not for operation in other States-Multi-unit Cooperative Societies Act, 1942.
F
Interpretation of Statute :
Meaning of a term-Interpretation of~When a term is specifically
defined in a statute, for the purposes of that statute that term cannot !Jear G
a meaning assigned to it in another statute-Where the legislature intends
to restrict the scope of a provision, the same cannot be expanded by process
of interpretation.
Appellant Bank made application to RBI to start Apex Bank. RBI
by its letter stated that it required registration under Multi State Co- H
1071
1072
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A operative Societies Act, 1984. Pursuant to letter of R.B.I. they got
registered as Multi State Co-operative Society under Multi State Act.
However, they were not registered under Banking Regulation Act,
1949. State by Notification declared them as State Co-operative Bank
within the meaning of Section 2(u) of National Bank for Agriculture
B and Rural Development Act, 1981 (NABARD Act). By two orders,
Commissioner for Co-operation and Registrar of Co-operative Societies
directed deployment of funds by all Urban Co-operative Banks to the
appellant. RBI gave banking licence to appellants u/ss. 22(1) r/w. 56(o)
of Banking Regulation Act for the State of Maharashtra and Goa.
C
Respondent No. 1 challenged the Notification, the two directions
and grant of licence by RBI by filing Writ Petition in High Court
wherein the Notification and the two orders were quashed and setaside and the licence was permitted to remain operative till fresh
decision was taken by RBI. High Court also concluded that "carrying
D on business" must mean carrying on banking business.
In appeal to this Court, the questions for consideratfon were : (a)
whether a co-operative society registered under the Multi State Act can
be granted a licence by the RBI to commence and carry on banking
E business, (b) whether a co-operative society registered under the Multi -
State Ad can be recognized and notified by the State Government as
a State Co-operative Bank and (c) whether a co-operative society
registered under the Multi State Act, which has been recognized, and
notified by one State Government as a State Co-operative Bank for
that State, can be granted a licence by the RBI to commence and carry
F on banking activities in other States in which it has not been recognized
as a State Co-operative Bank.
Disposing of the appeals, the Court
G
HELD : 1. RBI by virtue of its power under Section 22 of the
Banking Regulation Act, 1949 cannot grant a licence to any .cooperative bank unless it is a state co-operative bank or a central'cooperative bank or a primary co-operative bank. It would be necessary
that a declaration under the National Bank for Agriculture and Rural
H Development Act, 1981 (NABARD) be first obtained. RBI can only give
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD.,. MAHARASHTRA ~TATE
j 073
OPERATIVE BANK.
a licence as provided in Section 22(1) i.e. to a co-operative bank. The A
term "co-operative bank" has been defined in the Banking Regulation
Act and includes a state co-operative bank or a central co-operative
bank or a primary co-operative bank. Reference to the term "Cooperative bank" in the Multi State Cooperative Societies Act, 1984 is
of no assistance. When a term is specifically defined in a statute then B
for purposes of that statute that term cannot bear a meaning assigned
to it in another statute. One cannot ignore the specific definition given
in the Banking Regulation Act and apply some other definition set out
in some other statute. Thus, so far as the Banking Regulation Act is
concerned the term "co-operative bank" must have the meaning
assigned to it i11 Section S(cci). RBI cannot go by any other meaning C
given to the term "co-operative bank" for purposes of Jicencing under
the Banking Regulation Act. The RBI has to go by the meaning given
to this term in the Banking Regulation Act. (1087-B-C, 1086-F-H]
2.1. State Government could not have declared the Appellants as D
a State co-operative bank under NABARD Act. Under NABARD Act,
a co-operative society is a society which is registered or deemed to be
registered under the Co-operative Societies Act, 1912 or under any
other law relating to co-operative societies for the time being in force
in any State. Admittedly appellants were not registered under co- E
operative Societies Act. Appellants also could not be said to be a society
registered under any other law relating to co-operative societies for the
time being in force in any State. (1091-C-E]
2.2. Under NABARD Act Legislature has provided separately in
respect of the Co-operative Societies Act, 1912 and used the words "in F
any State" in order to indicate its intention that the term "any other
law relating to co-operative societies for the time being in force in any
State" did not include all laws relating to co-operative societies. If the
intention was to rope in all societies registered under all laws relating
to co-operative societies in force, then there was no necessity to use the G
additional words "in any State" or ,to separately provide for Cooperative Societies Act, 1912. Mere use of the words "any other law
relating to co-operative societies for the time being in force" would
have been sufficient. The legislature was clearly emphasizing that it is
only co-operative societies registered under local or state laws relating H
1074
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A to co-operative societies which would be covered. This interpretation
is supported by the fact that the provision pertaining to a state cooperative bank provides for a declaration only by the State Government.
If a declaration is by the State Government it must be in respect of
a society which. is registered in that State and which can be regulated
B by the Registrar of that State. A society which is registered under an
Act, like the Multi State Act, would not be under the regulation of the
Registrar of the State. The words "in any State" indicate that the cooperative society must be registered under the law in force in any State
in which it wants to operate. [1091-F-H, 1092-A-C, 1092-E]
c
2.3. Under the provisions of the Co-operative Societies Act, 1912
the registration could only be in one State and the co-operative Society
registered under it cannot operate in more than one State. The Cooperative Societies Act, 1912 dealt with local societies. As it was found
that even though the registration could only be in one State, the
D societies also operated in other States, the Legislature enacted the
Multi-Unit Co-operative Societies Act, 1942. After the enactment of the
Multi-Unit Act, the Co-operative Societies Act, 1912 only dealt with cooperative societies confined to one province. Societies with objects not
confined to one province were deemed registered under the Multi-Unit
E Act. Thus the use of the words "Co-operative societies Act, 1912" in
the NABARD Act also indicates that the definition is restricted to
societies registered under the law relating to co-operative societies .in
the State in which they want to operate. This is clear because
significantly the Legislature has not provided that Societies registered
F under the Multi-Unit Act would be included. [1092-F-H, 1093-A-D)
2.4. It cannot be said that a purposive interpretation should be
given so that the definition takes into consideration even new laws.
Where the intention of the Legislature is clearly to restrict the
provisions of the NABARD Act to co-operative Societies Act, 1912 or
G to societies which were registered under the State laws relating to cooperative societies, one cannot by process of interpretation expand the
scope. (1093-D-F]
2.5. The term "any other law relating to co-operative societies for
H the time being in force in any State" necessarily means only a State
...
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD. v. MAHARASHTRA STATE
} 075
OPERATIVE BANK.
law is further reinforced by the use of this term in the Multi State Act. A
A reading of the previsions of the Multi State Act makes it clear.that
the words "under any other law relating to co-operatives societies in
· force in any State" as used in the Multi State Act, applies to societies
registered under the State laws relating to co-operative societies.
NABARD Act is of 1981 whereas the Multi-State Act is of 1984. The B
definition as used in 1984 Act cannot be used for the purposes of
interpreting the 1981 Act. The definition in the 1981 Act is being
interpreted on its own provisions but the use of the same term in the
1984 Act with the same meaning reinforces the interpretation given to
the 1981 Act. (1093-F-G, 1094-E-F]
2.6. Under the NA BARD Act a state co-operative bank has to be the
principal co-operative society in the State, the primary object of which
must be financing other co-operative societies in that State. The proviso
c
to Section 2(u) of NABARD Act cannot and does not derogate from the
main definition; The proviso merely enables the State to declare, in addition D
to an existing principal society in the State or where there is no principal
society in the State, any one or more co-operative bank as the state cooperative banks. However, this does not mean that the State Government,
can at their whim and fancy, declare any co-operative society to be a
"state co-operative bank". Before such a declaration can be made the E
State Government must necessarily be satisfied (a) that it is a principal
co-operative society in the State; (b) that it is carrying on business in the
State, and (c) the business must beoffinancing other co-operative societies
in that State. (1094-G-H, 1095-Al
2. 7. High Court is not right in concluding that the words "carrying F
on business" must mean carrying on banking business. If the Legislature
had so intended they would have so specifically provided as they have
done in Section 3(e) of the Multi State Act and Section 80P(2)(i) of the
Income Tax Act, 1961. However, a reading of the provision make it
clear that what is necessary is that co-operative society must be G
carrying on the business of financing other co-operative societies. If
read in the light of the main provision it is clear that even though
banking business, as understood in the strict sense, may not be carried
on, yet the business of financing other co-operative societies in the State
must be carried on. (1096-E-Gl
H
1076
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A
2.8. A new society intending to c&rry on business in further having
merely accepted entrance fee and share subscription could not be declared
as State co-operative Bank. Mere intention to carry on such a business in
the future would not be sufficient. Carrying on of the business must be
prior to the State Government declaring a society as & State co-operative
B bank otherwise there would be no criteria on the basis of which the State
Government could judge whether the society proposed to be so declared
will or will not perform its task truly and efficiently. The test for the
Government has to be past performance. 11097-A-D]
C
R.C. Cooper v. Union of India, 11970) SCC 248; Sajjan Bank v.
Reserve Bank of India,
AIR (1961) Madras 14; Vanguard Fire and
General Insurance Co. Ltd. Madras v. Mis. Frazer and Ross andAnr., AIR
(1960) SC 971, referred to.
D
Sarjlax Ltd. (1979) 1 Ch.D. 592, referred to.
3.1. RBI can only give a license to a state co-operative bank which
has been so declared by a particular State. As the definition of cooperative societies in the NABARD Act is restricted to co-operative
societies registered under State Acts and as the provision is for a State
E to declare a co-operative society as a "state co-operative bank", the
license, which can be issued by the RBI, can only be in respect of that
State. Merely because one State declares a co-operative society as a
"state co-operative bank" would not enable the RBI to issue that
society a license to carry on banking business in other States or in the
F rest of the country, In the present case, RBI was wrong in issuing a
license to the Appellants for the States of Maharashtra and Goa when,
admittedly, the Appellants had not been declared a state co-operative
bank in the State of Goa. Thus, banking license could not have been
issued for the State of Goa. 11102-E-GI
G
3.2. In view of the contrary stand taken by RBI, it cannot now
be left to discretion of RBI to cancel the license granted by it. High
Court was in error in not striking down the issuance of the license by
RBI to the Appellants. RBI is directed to forthwith revoke the banking
H license granted to the Appellants. [1102-B-C)
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOAL TD. v. MAHARASHTRA STATE
1077
OPERATIVE BANK. (VARJAVA. I.I
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 439 of A
1997.
From the Judgment and Order dated 19.12.96 of the Bombay High
Court,in W.P. No 2120 of 1996 .
..
,~ .. ,.
WITH
C.A. No. 8478 of 2003.
B
R.N. Trivedi, Additional Solicitor General, T.R. Andhyarujina, G.L.
Sanghi, K. Rajendra Chowdhary, Harish N. Salve, Bhimrao Naik, K. C
Parasaran, R.K. Sanghi, N.M. Sharma, Rajesh Prasad Singh, Rakesh K.
Sharma, Prashant Naik, R.K. Sharma, H.S. Parihar, Kuldeep Parihar, S.V.
Deshpande and Mukesh K. Giri for the appearing parties.
The Judgment of the Court was delivered by
D
'
S.N. V ARIA VA, J. : Leave granted.
Both these Appeals are being disposed of by this common Judgment
as they arise out of the Judgment of the Bombay High Court dated 19th E
December, 1996. In this judgment the parties are being referred to in their
capacity in Civil Appeal No. 439 of 1997.
Briefly stated the facts are as follows:
On 28th of August, 1993, the Appellants appear to have made an F
application to the Reserve Bank of India (hereinafter referred to as RBI)
for a license to s~art an Apex Bank for Maharashtra and Goa. The RBI
by its letter dated 25th April, 1994 inter alia stated as follows:
"2. As you are aware, the proposed bank requires to be got G
registered under the Multi State Co-operative Societies Act, 1984
since its area of operation extends beyond the boundaries of a
State and as such it would not be a co-operative Bank as defined
. in the Banking Regulation Act, 1949 (as applicable to Cooperative Societies), at present. Hence an amendment to the H
A
B
c
1078
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
Banking Regulation Act, 1949 is considered necessary.
The
Government oflndia has already been apprised of the amendments
needed in the context of establishment of National Co-operative
Bank of India (NCBI) registered under the Multi-State Cooperative Societies Act, 1984 and other similar banks.
3. In view of the foregoing, you may please approach the Reserve
Bank only after the needed legislative amendments are carried out
by government of India to bring the NCBI as also other Banks
similar to those proposed by you within the definition of Cooperative bank's under the Banking Regulation Act, 1949 (as
applicable to Co-operative Societies)."
The Appellants then got themselves registered as a Multi State Cooperative Society under the Multi State Co-operative Societies Act, 1984
(hereinafter referred to as the Multi State Act) on 10th October, 1994. After
D the Appellants got themselves registered they accepted some entrance fees
and some shares subscription from members. This was the only activity
carried on by the Appellants. By a Notification dated 30th December, 1995,
issued by the State of Maharashtra the Appellants were declared as a State
Co-operative Bank within the meaning of Section 2(u) of the National
E Bank for Agriculture and Rural Development Act, 1981 (hereinafter
referred to as the NABARD Act). Thereafter, two directions/orders dated
25th January, 1996 and 14th May, 1996 were issued by the Commissioner
for Co-operation and Registrar of Co-operative Societies, Maharashtra
State advising/directing deploying of funds by all Urban Co-operative
Banks to the Appellants. These directions were issued under Section 70
F of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred
to as the MCS Act). On 22nd March, 1996 the RBI gave a banking licen.se
to the Appellants under Section 22(1) read. wit~ 56(o) of the
Banking Regulation Act, 1949. This was for the States of Maharashtra and
Goa.
G
The lst Respondent filed a Writ Petition challenging the Notification
dated 30th December, 1995; two directions/orders dated 25th January,
1996 and 14th May, 1996 and the grant of License by the RBI on 22nd
March, 1996. By the impugned Judgment the Writ Petition has been partly
H allowed inasmuch as the Notification dated 30th December, 1995, as well
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOAL TD. v. MAHARASHTRA STATE
l 079
OPERATIVE BANK. [VARJAVA, !.]
'
as Orders/directions dated 25th January, 1996 and 14th May, 1996, are A
quashed and set aside. The RBI was directed to review its decision of
granting License to the Appellants in the light of the fact that the
Notification dated 30th December, 1995 had been quashed.
In the
impugned Judgment it is clarified that till RBI takes a fresh decision the
license granted on 22nd March, 1996 was to remain operative.
B
Civil Appeal No. 439 of 1997 has been filed by the Appellants
challenging the impugned Judgment. Civil Appeal No.
of2003
arising out of SLP (C) No. 4877 of 1997 has been filed by the lst
Respondent against that portion whereby the license granted by the RBI
has not been quashed.
C
On 27th January, 1997 this Court passed the following Order:
"There will be ad-interim stay of the operation of impugned
judgment.
We may record that the directions of the High Court in
relation to the Notifications dated 25th January, 1996 and 14th
May, 1996 are not questioned before us by the learned counsel
for the petitioners."
Thus, in these Appeals there is now no challenge to quashing of the
directions/orders dated 25th January, 1996 and 14th May, 1996.
D
E
The questions which arise for considerations are: (a) whether a cooperative society registered under the Multi_ State Act can be granted a F
license by the RBI to commence and carry on banking business, (b)
whether a co-operative society registered under the Multi State Act can be
recognized and notified by the State Government as a State Co-operative
Bank and ( c) whether a co-operative society registered under the Multi
State Act, which has been recognized and notified by one State Government G
as a State Co-operative Bank for that State, can be granted a License by
the RBI to commence and carry on banking activities in other St:.:-.tes in
which it has not been recognized as a State Co-operative Bank.
Question (a): whether a Co-operative Society registered under the
Multi State Act can be granted a License by the RBI to commence and carry H
1080
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A on banking business.
As set out hereinabove the RBI in its letter dated 25th April, 1994
had taken the stand that a co-operative society registered under the Multi
State Act would not be a co-operative bank as defined in the Banking
B Regulation Act. The same stand had been reiterated by the RBI in its
affidavit before the High Court. However, surprisingly in its submission
before this Court a contrary stand has been taken by RBI.
For a consideration of this question the relevant provisions of the
Banking Regulation Act need to be .looked at. Section 5(b) and Section
C 22 of the Banking Regulation Act, 1949 read as follows:
"5. lntetjJretation: In this Act, unless there is anything repugnant
in the subject or context, -
D
(a)
xxxxxx
E
F
G
H
(b)
(c)
"banbng" means the accepting for the purpose of lending
or investment, of deposits of money from the· public, repayable
on demand or otherwise, and withdrawal by cheque, draft,
order or otherwise;
xxxx
(cci) "co-operative bank" means a state co-operative bank, a
central co-operative bank and a primary co-operative bank;
(ccvii) "central co-operative bank", "co-operative society", 'primary
rural credit society' and "state co-operative bank" shall have the
meanings respectively assigned to them in the National Bank for
Agriculture an~ Rural Development Act, 1981 ;"
"22. Licensing of co-operative banks :-
(1)
Save as hereinafter provided, no co-operative society shall
carry on banking business in India unless -
(a)
it is a primary credit society, or
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD. v. MAHARASHTRA STATE
1081
OPERATIVE BANK IV ARIA VA. J.I
(b) it is co-operative bank and holds a License issued in A
that behalf by the Reserve Bank, subject to such
conditions, if any, as the Reserve Bank may deem fit
to impose :
Provided that nothing in this sub-section shall apply to a co- B
operative society, not being a primary credit society or a cooperative bank carrying on banking business at the commencement
of the Banking Laws (Application to Co-operative Societies) Act,
1965, for a period of one year from such commencement.
(2)
Every co-operative society carrying on business as co- C
operative bank at the commencement of the Banking Laws
(Application to Co-operative Societies) Act, 1965, shall
before the expiry of three months from such commencement,
every co-operative bank which comes into existence as a
result of the division of any other co-operative society D
carrying on business as a co-operative bank or the
amalgamation of two or more co-operative societies carrying
on banking business·shall, before the expiry of three months
from its so coming into existence, every primary credit
society which becomes a primary co-operative bank after E
such commencement shall before the expiry of three months
from the date on which it so becomes a primary co-operative
bank and every co-operative society other than a primary
credit society shall before commencing banking business in
India, apply in writing to the Reserve Bank for a License
under this section :
F
Provided that nothing in clause (b) of sub-section (I) shall be
deemed to prohibit -
(i)
a co-operative society carrying on business as a co- G
operative bank at the commencement of the Banking
Laws (Application to Co-operative Societies) Act, 1965;
or
(ii) a co-operative bank which has come into existence as
a result of the division of any other co-operative society H
A
B
c
D
1082
SUPREM~ COURT REPORTS [2003] SUPP. 4 S.C.R.
carrying on business as a co·operative bank, or the
. amalgamation of two or mor~ co-operative societies :
carrying on banking business at the commencement of·
the Banking Laws (Application to Co-_operative
Societies) Act, 1965, or at any time thereafter; or
(iii) a ·primary credit society which becomes a primary cooperative bank after such commencement, from carrying
on ·banking business until it is granted a License in ·
pursllance of this section or is, by a notice in writing
notified by the Reserve Bank that the License cannot
be granted to it. .
xxx
xxx
xxx
xxx
xxx
·-xxx
Und_er Section 22, as it stood prior to the amendment brought about
by the Amendment Act of 68 wherein Section 56 was! inserted, the RBI
had right to issue license to companies io carry out banking business and
no company could carry on a banking business unless it held a license
· E issued by the RBI. . After the amendment certain types of co-operative
· societies, as were brought within the purview of the Banking Regulation
Act, could be issued a license by the RBI. Section 22 as amended prohibits
co-operative societies from carrying on banking business. The term "cooperative society", as used in Section 22, would include all types of coF operative societies. _In other words no co-operative society can carry on
banking business unless it falls within the permitted categories set out in
Section 22. The term "co-operative bank" has been defined under Section
5( cci) as a state co-operative bank, a central co-operative bank and a
primary co-operative bank. Thus the term "co-operative bank" does not
include all co-operative societies. It only includes the above mentioned
G three types of societies. By virtue of Section 5(ccvii) the term "state cooperative bank" is to be understood as a state co-operative bank as defined
in the NABARD Act Thus unless a co-operative society is a state cooperative bank or a ce_ntral co-<>perative bank or a primary co-operative
bank (as defined under the NABARD Act), no license can be issued by
H the RBI. In view of these clear provisions it will have to be.held that the
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD. v. MAHARASHTRA STATE
} 083
OPERATIVE BANK [VARJAVA,J.I
stand taken by the RBI in its letter dated 25th April, 1994 was and is the A
correct stand.
It must be mentioned that the Appellants accept this to be the correct
provision. They only contest 1st Respondent's claim that the Appellants
could not be declared a state co-operative bank under Section 2(u) of B
NABARD Act.
In this behalf the relevant portions of the written
submissions given by the learned Attorney General read as follows:
"10. It is submitted that a perusal of the BRAct and the NABARD
Act would reveal the followin.i~cheme:
(i)
for the Appellant to carry on banking business, Reserve
Bank of India [hereinafter referred to as RBI] has to grant
a license;
c
(ii) · In order to get an RBI license, according to BR Act, the D
Appellant has to .be a co-operative.bank i.e. in this case a
State Co-operative Bani<;
i
(iii) For the Appellant to be a State Co-operative Bank, it has
to be notified as such under Section 2(u) of the NABARD E
Act;'".
Written submissions on behalf of the Appellants given. by Mr.
Andhyarujina also need to be noted. The relevant portion reads as follows: .
"According to the scheme of the BR Act, fo~ the grant of a license F
to the Appellant, it has to first come within the meaning of a
"cooperative bank" i.e. either a state cooperative bank, central
cooperative bank or a primary cooperative bank. It is only after
a notification under section 2(u) of NABARD is issued the
cooperative society becomes a cooperative bank within the meaning G
of section 5(cci) of the BR Act as amended by section 56(c) of
the BR Act and thus became eligible to for license from the RBI
under section 22 of the BR Act read with section 56(0). of the
BR Act.
Thus a notification under section 2(u) in these
circumstances necessarily precedes the gran!_of a license by the H
'• I
·-··
1084
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A
RBI."
We hold that this is the correct position.
On behalf of the RBI it is h9.wever submitted that RBI is competent
B to license a co-operative bank under the Multi State Act. It is submitted
that Section 2 of the Banking Regulation Act, I 949 lays down that, "the
provisions of this Act shall be in addition to and not, save as hereinafter
expressly provided, in derogation of, any other law for the time being in
force". It is submitted that the phrase "any other law for the time being
in force," would cover subsequent legislation. In support of this reliance
C is placed on the case of Sir Dinshaw Manekji Petit v. GB Badkas reported
in AIR 1969 Bombay 151(paragraph8). It is submitted that Section 2(b)
of the Multi State Act lays down that the Act shall apply to all multi state·
co-operative societies and Section 3(e) defines co-operative bank to mean
a multi state co-operative society which undertakes banking business. It
D is submitted that Section 3(g) defines co-operative society, and Section 3(k)
defines multi-state co-operative society to mean a so'ciety registered or
'
deemed to be registered under that Act. It is submitted that the word
"undertakes" means making an attempt. Jn support of this reliance is placed
on : (a) Words and Phrases Permanent Edition Volume 43 page 198 and
E 206; (b) The Law Lexicon by P Ramanatha Aiyar, page 1931; and (c)
Black's Law Dictionary, page I 526. It is pointed out that Section I I 0 of
the Multi State Act repeals the Multi Unit Co-operative Societies Act, I 942.
On this basis it is submitted that multi state co-operative society which is
a co-operative bank under the Multi State Act is subject to the Iicendng
F power of the RBI.
It is further submitted that this position becomes clear when one notes
that Section 15 of the Multi State Act provides that the RBI can require
the central registrar to order moratorium, amalgamation and reorganization
of a co-operative bank under the Multi State Act and Section 78 of the
G Multi State Act empowers the RBI to require the Central Registrar to wind ·
up a co-operative bank if circumstances mentioned in Section 13D of the
Deposit Insurance and Credit Guarantee Corporation Act, I 96 I exist.
Reference is also made to Section 13D of the Deposit Insurance Act which
· provides for circumstances in which winding up can be ordered. It is
H submitted that a conjoint reading of Section !3D read with.2(gg) of the
'
APEX CO-OP. BANK OF URBAN BANKOfMAHARA.SHTRAANDOOA LTD."- MAHARASHTRA ST A TE
I 085
·- OPERATIVE BANK. (VARJAVA, J J
Deposit Insurance Act indicates that RBI can exercise power in respect of A
matters mentioned therein. It is pointed out that Section 48(7) of the Multi
State Act, empowers, RBI to supersede a co-operative bank. It is submitted
that all the above mentioned provisions show that RBI has got the power,
to. regulate the functioning of·a co-operative bank, supersede, order
moratorium, amalgamation or winding up, as the case may be. We are B
unable to accepi this submission. The power to regulate, supersede, order
moratorium, amalgamation or winding are exercisable only be in respect
of a co-operative bank. Such power cannot be exercised in respect of any
co-operative society which is not a co-operative bank. Far from supporting
the case now sought to be made out, this shows that it is only~ ·co-operative
bank which can be licensed and then controlled by RBI.
C
It is next submitted that Section 22(1 )(b) of the Banking Regulation
·Act, lays dow;, that "save as hereinafter provided, no co-operative society
shall carry on banking business in India unless it is a co-operative bank
and holds a license issued in that behalf by_the Reserve Bank subject to D,
such conditions, if any, as the .Reserve Bank may deem fit to impose. It
is submitted that sub-section 2 of Section 22 lays· down the requirement
of obtaining of license by vario~s co-operative so~eties. It is· submitted
that ihe last category was relevant.. Reliance was pl~ced on the portion
which reads as follows:
E
" ......... any every co-operative societ}- other than primary
credit society shall before commencing banking business in India,
. apply in writing to the RBI for a license under this Section."
It is submitted that this makes it clear that whereas under sub-section I of F
Section 22 every co-operative society which is a co-operative bank cannot
carry on banking business without a license; under sub-section 2 of Section
22 every co-operative society other than a primary credit society has to
obtain a license before commencing banking business in India. It is
submitted that a wider meaning should be given to the word 'co-operative G
bank' to include other co-operative banks (including on~ which is registered
under the Multi State Act) so that no co-operative society (including a cooperative society under the Multi State Act) can commence banking
business without a license. It is submitted that this would be in consonance
with the principle of purposive interpretation and harmonious construction H .
.·
1086
SUPREME COURT REPORTS [2003] SUPP. 4 S.C.R.
A of statutes. It is submitted that although Section 5(cci) defines a cooperative bank to mean a state co-?perative bank, a central co-operative
bank and a primary co-operative bank in view of the scheme of the Multi
State Act read with Section 22(1) & (2) of the BR Act, the phrase 'cooperative bank' has to be construed in a broad sense especially in view of
B the fact that Section 5 starts with the following words "in this Act, unless
there is anything repugnant in this subject or context". It is submitted that
in the object and context of contemporaneous legislation viz. Multi State
Act, 1984, the term "co-operative bank" must be held to include a bank
registered under the Multi State Act. It is submitted that if the RBI did
C not have such power, the consequence would be, that a C~perative Bank
under the Multi State Act would not require a license for conducting
banking business. It is submitted that such an interpretation should be
eschewed. It is submitted that a purposive inteqiretation of Banking
Regulatgtion Act and Multi State Act must be given. It is submitted that
D a contrary interpretation would render, the Multi State Act, so far as it
relates to Co-operative Banks redundant.
We are unable to accept these submissions also.
The portion
extracted above does not detract from what is provided in Section 22(1).
Under Section 22(1) a primary credit society can carry on banking
E business. However, if a co-operative society is not a primary credit society
then to carry on banking business it must be a co-operative bank and hold
a license issued by the RBI. The above extracted portion of Section 22(2)
merely exphasis that a co-operative society, other than a primary credit
society, has to apply to the RBI for license before it can commence banking
F business. However, this does not mean that RBI can give to any or all cooperative societies, a banking license. RBI can only give a license as
provided in Section 22(1) i.e. to a co-operative bank. The tenn "Cooperative Bank" has been defined in the Banking Regulation Act and only
includes a state co-operative bank or a central co-operative bank or a
G primary co-operative bank. Reference to the term "co-operative bank" in
the Multi State Act is of no assistance. When a term is specifically defined
in a statute then for purposes of that statute that term cannot bear a meaning
assigned to it in another statute. One cannot ignore the specific definition
given in the Banking Regulation Act and apply some other definition set
H out in some other statute. Thus, so far as .the Banking Regulation Act is
I
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOAL TD. v. MAHARASHTRA STA TE
108 7
OPERATIVE BANK. IVARJAVA. I.]
concerned the term "co-operative bank" must have the meaning assigned A
to it in Section 5( cci). RBI cannot go by any other meaning given to the
term "co-operative bank" for purposes of licencing under the Banking
Regulation Act. The RBI has to go by the meaning given to this term in
the Banking Regulation Act.
In view of the above, we hold that the RBI by virtue of its power
under Section 22 cannot grant a license .to any co-operative bank unless
it is a state co-operative bank or a central co-operative bank or a primary
co-operative bank. It would be necessary that a declaration under the
NABARD Act be first obtained.
Question (b) - Whether a Co-operative Society registered under the
Multi State Act can be recognized and notified by the State Government
as a State Co-operative Bank
B
c
To answer this question, apart from the provisions of the NABARD D
Act, one would also need to look at the various laws relating to Cooperative Societies.
The earliest Act pertaining to co-operative appears to be the Cooperative Credit Societies Act, 1904. However, that appears to be not
relevant for our purposes and it has not been shown to us by any party. E
In order to give societies a corporate existence, without resort to the
Companies Act, the Co-operative Societies Act, 1912 was enacted. This
Act did not define a co-operative society. It however provided that State
Governments .would appoint, for the State, a Registrar of Co-operative p
Societies. Sections 4 & 6 provide as follows:
"4. Societies which may be registered - Subject to the provisions
contained, a society which has its object the promotion of the
economic interests of its members in accordance with co-operative
principles, or a society established with the object of facilitating G
the operation of such a society, may be registered under this Act
or without limited liability :
Provided that unless the [State Government] by general or
special erder Otherwise directsH
A
B
c
D
E
1088
SUPREME COURT REPORTS (2003] SUPP. 4 S.C.R.
(1)
the liability of a society of which a member is a registered
society shall be limited;
(2)
the liability of a society of which the object is the creation
of funds to be lent to its members, and of which the majority
of the members are agriculturists, and of which no member
is a registered society, shall be unlimited."
"6. Conditions of registration - (1) No society, other than a society
of which a member is a registen::d society, shall be registered
under this Act which does not consist of at least ten persons above
the age of eighteen years and where the object of the society
is the creation of funds to be lent to its members, unless such
persons -
(3)
(a) reside in the same town or village or in the same group
of villages; or
(b) save where the Registrar otherwise directs, are members
of the same tribe, caste or occupation.
The word "limited" shall be the last word in the name of
every society with limited liability registered under this
Act."
rrus the Act was essentially dealing with Societies whose members were
residing in the same town or village or group or village or whose members
were from the same tribe, class, caste or occupation. The object of the
F Society had to be promotion of interests of its members. This shows that
the Co-operative Societies Act, 1912 was enacted for local societies.
Apart from the Co-operative Societies Act, 1912 different provinces
had enacted their own laws governing co-operative societies in that
G province. It was however found that some societies operated in more than
one State, even though they were registered in only one State. Thus the
Multi-Unit Co-operative Societies Act, 1942 was enacted. This Act applied
to "all co-operative societies with objects not confined to one province
incorporated, before the commencement of the Act, under the Co-operative
Societies Act, or under any law relating to Co-operative Societies Act, in
H force in any province." To be noted that on this date, apart from the CoI
APEX CO-OP. BANK OF URBAN BANK OF MAHARASHTRA AND GOA LTD v MAHARASHTRA STATE
} 089
OPERATIVE BANK. [VARIAVA. J.I
operative Societies Act, 1912, there was no other law relating to Co- A
operative Societies which was in force in the whole of India.