IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR FRIDAY, THE 11TH DECEMBER 2009 / 20TH AGRAHAYANA 1931 Crl.MC.No. 2858 of 2009() ------------------------- CC.242/2002 of JUDL.FIRST CLASS MAGISTRATE COURT I, PERAMBRA .................... PETITIONER(S): ACCUSED: ----------------------------------------- BABITHA BALRAJ, ADVOCATE, W/O.DR.BALRAJ, MAHALAKSHMI, MENJANYAM AMSOM AND DESOM, PERAMBRA, KOZHIKODE DISTRICT. BY ADVS. MR.GRASHIOUS KURIAKOSE, MR.GEORGE MATHEW. RESPONDENT(S): COMPLAINANT AND STATE: --------------------------------------------------------------------- 1. RESERVE BANK OF INDIA, THROUGH ITS AUTHORISED OFFICER, SRI.P.K.S.NAIR, S/O.KRISHNAN NAIR, DEPUTY GENERAL MANAGER, URBAN BANKS DEPARTMENT, RESERVE BANK OF INDIA, BAKERY JUNCTION, THIRUVANANTHAPURAM. 2. STATE OF KERALA, REP. BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R1 BY ADV.MR.VIVEK VARGHESE P.J. R2 BY PUBLIC PROSECUTOR MR. S.U. NAZAR THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 11/12/2009 ALONG WITH CRMC NO.4029 OF 2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Kss ORDER ON CRL.M.P.NO.4861/2009 IN CRMC.NO.2858/2009 DISMISSED 11/12/2009 SD/- M.SASIDHARAN NAMBIAR,JUDGE /TRUE COPY/ P.S.TO JUDGE Kss M.SASIDHARAN NAMBIAR,J. =========================== CRL.M.C.No. 2858 & 4029 OF 2009 =========================== Dated this the 11th day of December,2009 ORDER Petitioners are the accused except fourth accused in C.C.242/2001, on the file of Judicial First Class Magistrate CourtI Perambra. Tenth accused is the petitioner in Crl.M.C.2858/2009 and petitioners in Crl.M.C.4029/2009 are the remaining accused. It is submitted that the fourth accused is no more. Annexure 10 complaint was filed before Judicial First Class Magistrate Court I, Perambra by the first respondent against the Perambra Co-operative Urban Bank Ltd and its Directors, the co-accused alleging that they committed the offence under section 49A of Banking Regulation Act, 1949. Case of the first respondent is that the Society is carrying on unauthorized banking business punishable under section 46 of Banking Regulation Act 1949 and in terms of Section 7 of the Banking Regulation Act, no co-operative bank can use as part of its name or in connection with the business, any of the word “bank” “banker” or “banking” and no Co- Crl.M.C.2858 & 4029 of 2009 2 operative Society shall carry on the business of banking unless it uses as part of its name at least one of such words and as the Co-operative Society is not authorized to use the word bank and the Society is using the name Bank, society and the Directors, the Secretary and others are liable to be punished for the offence. Learned Magistrate has taken cognizance of the offence. Petitioners filed these petitions under section 482 of the Code of Criminal procedure to quash the complaint as well as the proceedings pending before Judicial First Class Magistrate Court-I, Perambra contending that pursuant to the order of this court in Crl.M.C.2692/2004 the bye-laws of the Co-operative Society was amended removing the word bank and making it a primary co-operative society and in view of the deletion of the word “bank” the prosecution is to be withdrawn. By Annexure IX communication the Joint Registrar of Kozhikode has intimated the Secretary of the Perambra Co-operative Urban Society certifying that amended bye-laws was registered as provided under section 12 of the Kerala Co- operative Societies Act on 13.11.2007. It is contended that as the word “bank” has been deleted from the name of the society, there is compliance with the directions of this court and in such circumstance continuation of the Crl.M.C.2858 & 4029 of 2009 3 proceedings is only an abuse of process of the court. It is also pointed out that as per Annexure VII order in Crl.M.C.118/2004, this court had taken note of the Division Bench decision in Cherukode Co-op.Rural Bank Ltd v. Parur Service Co.op.Bank (2006(3) KLT 38) and quashed an identical prosecution as against Ramanattukara Vanith Co- operative Urban Society Ltd and the said decision squarely applies to the facts of the case and in such circumstance the proceedings, pending before the learned Magistrate is to be quashed. 2. Learned counsel appearing for the petitioners and learned counsel appearing for first respondent were heard. 3. This court in Muhammed Usman v. Registrar of Co- operative Societies (2003(1) KLT 69) construing Section 56,22,36 & 35A of the Banking Regulation Act 1949 held that the Co-operative Society is not entitled to use the name bank or transact banking and it is for the Registrar of Co- operative Societies and the State Government under the Co- operative Societies Act and the Reserve Bank of India under the Banking Regulation to take appropriate steps in the light of the decision. The Division Bench of this court in Cherukode Co-op.Rural Bank Ltd case (supra) finding that no co-operative banks other than Primary Credit Societies can function without licence in the Reserve Bank held that Crl.M.C.2858 & 4029 of 2009 4 none of the Co-operative Banks other than Primary Credit Society can do banking business or use the name bank in their title without getting licence and without following the regulation under the Banking Regulation Act making it clear that if they are taking deposits from the members only and gives loans to the members and not dealing with the public, they can function without using the name in their title and if they do banking business violating the provisions of Banking Regulation Act, they are liable for appropriate action including under the provision of Banking Regulation Act. It was also held that the Reserve Bank of India is entitled to issue directions as empowered under section35A of Banking Regulation Act read with section 56 (10) and the Co-operative Societies can do banking business or even start the business only with the permission of the Reserve Bank of India and Primary Co-operative Banks also will come under section 56 and the directions of the Reserve Bank are applicable to Primary Co-operative Bank apart from the Urban Co-operative Banks. In Crl.M.C.2854/2005 taking note of the fact that the Society has obeyed circular No.4/2003 issued by the Registrar of Co-operative Societies and amended their bye-laws and deleted the word bank from their title and they are not doing banking business, even though they are granting loans Crl.M.C.2858 & 4029 of 2009 5 and accepting deposits only from the members, the proceedings initiated by the Reserve Bank of India as against the society was quashed without prejudice to the right of the Reserve Bank of India to conduct inspection and if they do business with the public violating the provisions of Banking Regulation Act. Similarly in Crl.M.C.413/2005 finding that the Kozhikode Town Co- operative Ltd has changed the name in accordance with the circulars of Registrar of Co-operative Societies to Kozhikode Town Urban Co-operative Society and deleted the provisions in the bye-laws enabling them to take banking business, the proceedings before the Magistrate as against the said society by Annexure VII order taking note of the amendment, in compliance with the circular issued by the Registrar of Co-operative Societies S.T.3124/2001 was also quashed. 4. Learned counsel appearing for the first respondent has no case that Perambra Co-operative Society has not deleted the word Urban Bank from their name or has not amended the bye-laws as directed by the circular taken note of by the Division Bench. Annexure IX communication issued by the Joint Registrar establishes that the circular has been complied with. In such circumstance, continuation of the proceedings as against the society or its Directors or Crl.M.C.2858 & 4029 of 2009 6 the Secretary or other officials is only an abuse of process of the court. In such circumstances, petitions are allowed. C.C.242/2002 on the file of Judicial First Class Magistrate Court-I, Perambra is quashed, making it clear that Reserve Bank of India is entitled to conduct fresh inspection and if it is found that the Society is doing banking business with the public violating of the provisions of Banking Regulation Act, Reserve Bank is entitled to prosecute the society and the responsible Directors and other officials and this order will not be a bar. M.SASIDHARAN NAMBIAR JUDGE tpl/- M.SASIDHARAN NAMBIAR, J. --------------------- W.P.(C).NO. /06 --------------------- JUDGMENT SEPTEMBER,2006