| Headnote |
Constitution of India – Seventh Schedule – List I, Entry 45; List II, Entry 32 – Power of the Parliament to legislate – Applicability of SARFAESI Act, 2002 to co-operative banks – Held: Co-operative banks registered under the State legislation and multi-State level co-operative societies registered under MSCS Act w.r.t ‘banking’ are governed by the legislation relatable to Entry 45, List I, Seventh Schedule – Co-operative banks run by co-operative societies registered under the State legislation w.r.t the aspects of ‘incorporation, regulation and winding up’, in particular, w.r.t the matters outside the purview of Entry 45, List I, Seventh Schedule, are governed by the said legislation relatable to Entry 32, List II, Seventh Schedule – Co-operative banks involved in activities related to banking are covered within the meaning of ‘Banking Company’ defined u/s.5(c) r/w s.56(a) of the 1949 Act, a legislation relatable to Entry 45, List I – Co-operative banks cannot carry on any activity without compliance of said Act and any other legislation applicable to such banks relatable to ‘Banking’ in Entry 45, List I and the RBI Act relatable to Entry 38, List I, Seventh Schedule – Co-operative banks under the State legislation and multi-State co-operative banks are ‘banks’ u/s.2(1)(c), SARFAESI Act – Recovery is an essential part of banking; as such, the recovery procedure prescribed u/ s.13 of the said Act, a legislation relatable to Entry 45, List I, Seventh Schedule, is applicable – Parliament has legislative competence u/ Entry 45, List I, Seventh Schedule to provide additional procedures for recovery u/s.13 SARFAESI Act, with respect to co-operative banks – s.2(1)(c)(iva), SARFAESI Act adding “ex abundanti cautela”, ‘a multi-State co-operative bank’ and notification dtd. 28.01.03 issued with respect to the co-operative banks registered under the State legislation are not ultra vires – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – ss.2(c), (d), 2(1)(c)(iva), 2(1)(c)(v), 2(1)(d), 13 – Multi-State Cooperative Societies Act, 2002 – ss.3(f), 84 –Banking Regulation Act, 1949 – Part II, V – ss.5(b), (c), 5A, 6, 11, 18, 19, 22, 23, 35A(1)(c), 56(a)-(c), (e) – Interpretation of Statutes – Doctrine of Pith and Substance; Incorporation by reference – Recovery of Debts and Bankruptcy Act, 1993 – Doctrine of Colourable Legislation – Banking Laws [Application of Cooperative Societies Act, 1965 (Act No.23 of 1965)] – Reserve Bank of India Act, 1934 – ss.2(bii), 2(biii), 2(biv), 2(ciii), 2(civ) – National Bank for Agriculture and Rural Development Act, 1981 – State Bank of India Act, 1955 – Banking Companies Act, 1949 – Transfer of Property Act, 1882Banking Regulation Act, 1949 – ss.5(b), (c), 6, 56(a) – Held: s.6 is not a provision of the conferral of the status of the banking company – Definitions of ‘banking’ and ‘banking company’ are contained in s.5(b) & 5(c) respectively, and when reading with s.56(a), it means co-operative banks also – Co-operative bank falls within the definition of s.5(c), and its activity is of banking, and in addition a co-operative bank may engage in any of the business as enumerated in s.6.Constitution (Ninety Seventh Amendment) Act, 2011 – Arts. 43B, 243ZI, 243ZL, 243ZL(1); and Entry 45, List I, Seventh Schedule – Held: Art. 43B was added concerning the management of cooperative societies – Art.243ZI provides that the legislature of a State may, by law, make provisions with respect to ‘incorporation, regulation and winding up’ of co-operative societies – Art.243ZL deals with supersession and suspension of the board and interim management – Constitutional provision itself makes distinction between a co-operative bank and other co-operative societies and applied law enacted u/Entry 45, List I, Seventh Schedule – It set at rest any controversy concerning the applicability of the Act 1949 to banks run by co-operative societies – It also makes it clear that such banks are governed by Entry 45, List I, Seventh Schedule – Banking Regulation Act, 1949.Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – ss.2(1)(c), (d) – Held: Term ‘bank’ has been defined in s.2(1)(c) to mean ‘banking company’, a corresponding new bank, a subsidiary bank or a multi State co-operative bank or such other bank which the Central Government may by notification specify for the Act – Term ‘banking company’ u/s.2(d) shall have the meaning assigned to it in s.5(c) 1949 Act – Thus, the definition of ‘banking company’ stands incorporated in s.2(1)(d), SARFAESI Act – Banking Regulation Act, 1949 – s.5(c). |
