AI Drafter 
TaxTMI 
TaxTMI 
2007 (12) TMI 545
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....rent Clauses of Section 2(1), forming the interpretation Clause of that Act are relevant in this context. Clause (zf) defines "security interest". Clause (zd) defines a "security creditor" to mean any bank or financial institution or any consortium or group of banks or financial Institutions in whose favour security interest is created for due repayment, by any borrower, of any financial assistance and includes the different entities enumerated in Sub-clauses (i) to (iii) thereof. Clause (c) defines a "bank" to mean, among other things, going by sub-clause (v), such other bank which the Central Government may, by notification, specify for the purposes of the SARFAESI Act. The Co-operative Banks, the rights of which are dealt with in these writ petitions, can be banks for the purpose of the SARFAESI Act, only if they stand on the strength of notification in terms of Clause (c)(v). 3. The Central Government, through the Ministry of Finance and Company Affairs (Department of Economic Affairs)(Banking Division), have issued notification dated 28-1-2003, in exercise of powers conferred under item (v) of Clause (c) of Sub-section (1) of Section 2 of the SARFAESI Act. Thereby, the Cent....
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....in Section 5 of the BR Act, "Primary Co-operative Bank" means a Co-operative Society other than a primary agricultural credit society; (1) the primary object or principal business of which is the transaction of banking business; (2) the paid-up share capital and reserves of which are not less than one lakh of rupees; and (3) the bye-laws of which do not permit admission of any other Co-operative Society as a member. 10. An "Urban Co-operative Bank", going by Section 2(ta) of the KCS Act, means a Society registered under that Act and having its area of operation in the urban areas and which undertakes banking business. It is not the allegation of the petitioners that the bye-laws of the Urban Co-operative Banks permit admission of any other Cooperative Society as a member or that the paid-up share capital and reserves of those banks are less than one lakh of rupees. Therefore, the Urban Co-operative Banks are Primary Co-operative Banks as defined in Clause (ccv) in Section 5 of the BR Act and hence, Co-operative Banks as defined in Section 5(cci) of that Act. The Urban Co-operative Banks also, therefore, fall within the impugned notification. 11. On the strength of Section 80(....
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....e Union to make a primary legislation touching co-operative societies, the power of the Central Government to issue a notification in terms of Section 2(1)(c)(v)(1) of the SARFAESI Act, does not include the power to notify a Co-operative Bank as a bank for the purpose of that Act. The Central Government's notification dated 28-1-2003 is also specifically challenged in some of these writ petitions. 15. In support of the challenge, considerable reliance is placed on the decision of the Apex Court in Greater Bombay Co-op. Bank Ltd. v. United Yarn Tex (P) Ltd. AIR 2007 SC 1584, hereinafter referred to as the "GBCB". Reference was also made on behalf of the petitioners to the decision of the Apex Court in Virendra Pal Singh v. District Assistant Registrar (1980) 4 SCC 109 and the decision of the Bombay High Court in Nagpur District Central Co-operative Bank Ltd. v. Divisional Joint Registrar, Co-operative Societies AIR 1971 Bom 365 laying down that the provisions for banking activities by co-operative societies, do not take the U.P. Co-operative Societies Act, 1965 and Maharashtra Cooperative Societies Act, 1960, respectively, out of the purview of the Entry 32 in List II. 16.....
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....ed in Section 2 of that Act, would show that the said legislation is not a statute that merely creates an alternate mode of recovery, or provides for Courts, Tribunals or authorities with exclusive Jurisdiction and thereby changes the forum of adjudication, unlike what has been essentially done by the legislation of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, hereinafter referred to as the "RDB Act". Section 2(2) of the SARFAESI Act provides that the words and expressions used and not defined in that Act, but defined in the Indian Contract Act or the T. P. Act or the Companies Act or the Securities and Exchange Board of India Act shall have the same meanings respectively assigned to them in those Acts. The right of a secured creditor created by Section 13 of the Act with the support of the overriding effect of the SARFAESI Act provided by Section 35 thereof, is the creation of an Interest In property and not merely a modus for recovery. The creation of that interest, which is called "security interest", is made by providing that such interest shall have effect, over and above Sections 69 and 69A of the T.P. Act, which provisions provide a right for the ....
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....a Entry 32, in List II, in GBCB (supra), to notice that the statutes relating to the field of co-operative societies that fell for consideration provided a mechanism under those legislations for resolution of disputes and that therefore, any exclusion of the jurisdiction of those authorities by the operation of the RDB Act is constitutionally impermissible in view of the exclusiveness given to the for a provided by those State legislations. In rendering that verdict, Their Lordships appreciated a classic and nice distinction between the provisions of the SARFAESI Act and the RDB Act. This can be noticed on a clear reading of the assimilation of those statutes in paragraphs 26 to 28 of that judgment. Dealing with the SARFAESI Act, the Apex Court noticed, among other things, as follows: The Central Government is authorised by Section 2(c)(v) of the Act to specify any other bank for the purpose of the Act. In exercise of this power, the Central Government by Notification dated 28-1-2003, has specified "co-operative bank" as defined in Section 5(cci) of the BR Act as a "bank" by lifting the definition of co-operative bank' and 'primary cooperative bank' respectivel....