Debts recovery tribunal & co-operative banks.

 Nilesh Shah Writes:
Cell: 92246-59941
E Mail: nilesh63@vsnl.com

Debts recovery tribunal do not have jurisdiction to try cases
relating to recovery of dues due to a co-operative bank.

The dues of co-operatives and recovery proceedings in connection
therewith are covered by specific Acts such as the Andhra Pradesh Co-
operative Societies Act, 1964, and the Maharashtra Co-operative
Societies Act, 1960, which are comprehensive and self-contained
legislations. Similarly, for multi-State co-operatives there is a
specific enactment in the form of the Multi-State Co-operative
Societies 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 dealing
with issues pertaining to co-operatives and especially when co-
operative banks are not specifically covered by the provisions of the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993,
there is no justification for covering co-operative banks under the
provisions of that Act by invoking the doctrine of incorporation.

The Recovery of Debts Due to Banks and Financial Institutions Act,
1993, was passed in 1993 when Parliament had before it the provisions
of the Banking Regulation Act, 1949, as amended by Act No. 23 of
1965. Parliament was fully aware that the provisions of the Banking
Regulation Act, 1949, apply to co-operative societies as they apply
to banking companies. Parliament was also aware that the definition
of "banking company" in section 5(c) had not been altered by Act No.
23 of 1965 but was kept intact, and in fact additional definitions
were added by section 56(c). "Co-operative bank" was separately
defined by the newly inserted clause (cci) and "primary co-operative
bank" was similarly separately defined by clause (ccv). Parliament
was simply assigning a meaning to the words ; it was not
incorporating or even referring to the substantive provisions of the
Banking Regulation Act, 1949. The meaning of "banking company" must,
therefore, necessarily be strictly confined to the words used in
section 5(c) of the Banking Regulation Act, 1949. Parliament could
have but did not say that "banking company" shall mean "banking
company" as defined in section 5(c) and shall include "co-operative
bank" as defined in section 5(cci) and "primary co-operative bank" as
defined in section 5(ccv). There was thus a conscious exclusion and
deliberate omission of co-operative banks from the purview of the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
The amendments in section 56 of the Banking Regulation Act, 1949 by
Act No. 23 of 1965 inserting "co-operative bank" in clause (cci)
and "primary co-operative bank" in clause (ccv) do not either
expressly or by necessary intendment apply to co-operative banks
transacting business of banking.

The reason for excluding co-operative banks was that co-operative
banks had comprehensive, self-contained and less expensive remedies
available to them under the State Co-operative Societies Acts of the
States concerned, while other banks and financial institutions did
not have such speedy remedies and they had to file suits in civil
courts. The Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 was, therefore, designed to deal with other banks and
financial institutions which had to have recourse to the time-
consuming process of the civil courts. Disputes between co-operative
banks and their members being taken care of by the State Co-operative
Acts were to remain where they were.

The Co-operative Societies Acts on the one hand and the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 on the other
cannot be regarded as supplemental to each other : the provisions of
the said Acts cannot be said to be in pari materia.

The Recovery of Debts Due to Banks and Financial Institutions Act,
1993 is concerned with the general banks and their creditors/loanees
while the Maharashtra Co-operative Societies Act, 1960, the Andhra
Pradesh Co-operative Societies Act, 1964 and the Multi-State Co-
operative Societies Act, 2002 are concerned with the regulation of
societies only. The language of the sections in these enactments
defining "banking company" is plain, clear and explicit.

Entry 43 of List I speaks of banking, insurance and financial
corporations, etc., but expressly excludes co-operative societies
from its ambit. The constitutional intendment seems to be that the co-
operative movement was to be left to the States to promote and
legislate upon and the banking activities of co-operative societies
were also not to be touched unless Parliament considered it
imperative. 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.

Yours Sincerely,

Nilesh Shah