IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) TUESDAY, THE SIXTEENTH DAY OF JUNE TWO THOUSAND AND NINE PRESENT THE HON'BLE MR JUSTICE GHULAM MOHAMMED and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR WRIT PETITION NO : 7225 of 2009 Between: Dasari Appa Rao, S/o. Late Appala Swamy, r/o. Antyakula Street, Bobbili, Vizianagaram District. ..... PETITIONER AND 1 The District Cooperative Officer, Vizianagaram, Vizianagaram District. 2 The Vizianagaram Co-op Bank Ltd. Bobbili Branch, Antyakula Street, Vizianagaram District. rep by its Authorised Officer/ Branch Manager .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ, order or direction more particularly one in the nature of Writ of Mandamus declaring the notice dated 5-2-2009 issued by the 2nd respondent bank herein under the provisions of Securitistion and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as illegal, arbitrary and without jurisdiction and liable to be set aside and consequently direct the 2nd respondent in release the tile deed in favour of the petitioner in respect of the property bearing No. 17-23-/A, situated at Antyakula Street, Bobbili, Vizianagaram District and pass Counsel for the Petitioner:MR.V.V.N.NARAYANA RAO Counsel for the Respondent No.: GP FOR COOPERATION The Court made the following : THE HON'BLE MR JUSTICE GHULAM MOHAMMED and THE HON'BLE MR JUSTICE VILAS V. AFZULPURKAR W.P.No.7225 of 2009 ORDER: (Per Ghulam Mohammed, J) This writ petition is filed seeking a writ of Mandamus to declare the notice dated 5.2.2009 issued by the second respondent bank under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (for short ‘the SARFAESI Act’), as illegal and arbitrary and consequently direct the second respondent to release the title deed in favour of the petitioner in respect of the property bearing No.17-23/A situated at Antyakula Street, Bobbili, Vizianagaram District. 2. The brief facts of the case are that the petitioner is the member of the Bobbili Cooperative Urban Bank Limited, Bobbili, wherein he is having share capital. The said Bank was registered under the provisions of the A.P. Cooperative Societies Act, 1964. The petitioner availed loan on 11.02.2002 from the said Bank for establishment of business by mortgaging his residential property bearing D.No.17-23/A with assessment No.2591 situated at Antyakula Street, Bobbili, Vizianagaram District. The petitioner is said to have made regular payments towards discharge of the loan amount and the entire loan amount was paid in the year 2005 itself. He made several representations to the respondent Bank to release the title deed in his favour by cancelling the mortgage, but in vain. In the meanwhile, the first respondent conducted an enquiry under Section 51 of the Andhra Pradesh Cooperative Societies Act into the affairs of the respondent Bank and the enquiry was ultimately set aside by this court in W.P.No.24104 of 2004, for that reasons the Bank authorities expressed their inability to cancel the mortgage. While things stood thus, the petitioner received a notice dated 5.2.2009 under Section 13 (2) of the SARFAESI Act from the second respondent Bank directing him to pay an amount of Rs,15,20,454/- within 60 days from the date of receipt of the said notice. It was mentioned in the notice that the Bobbili Cooperative Urban Bank Limited has been merged with the Visakhapatnam Cooperative Urban Bank Limited on 15.11.2007 by virtue of proceedings of the Reserve Bank of India and the Registrar of Cooperative Societies, Andhra Pradesh, Hyderabad. The petitioner has no knowledge about the merger of the Bobbili Cooperative Urban Bank Limited with the Visakhapatnam Cooperative Urban Bank Limited. The contention of the petitioner is that initially the Visakhapatnam Cooperative Urban Bank Limited was constituted under the provisions of A.P. Cooperative Societies Act, 1964 and after advent of Mutually Aided Cooperative Societies Act, 1995 , the said urban bank was converted into Visakhapatnam Cooperative Bank under the provisions of Mutually Aided Cooperative Societies Act, 1995, as such, the second respondent ought to have invoked the provisions of Mutually Aided Cooperative Societies Act,1995, instead of invoking the provisions of SARFAESI Act, since the second respondent bank does not fall within the meaning of Banking Company as defined under Section 5 (c) of the Banking Regulation Act, 1949. 3. The learned counsel for the petitioner vehemently contended that the second respondent ought not to have invoked the provisions of the SARFAESI Act when the respondent bank is governed by the provisions of the Mutually Aided Cooperative Societies Act,1995 and the same was brought to the notice of the respondent bank by giving explanation on 14.03.2009, but in vain. 4. Heard the learned counsel on either side. It is relevant to extract definition of ‘Bank’. 5. Definition of ‘Bank’ under Section 2 (d) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, reads as under: “A banking company; a corresponding new bank; State Bank of India; a subsidiary bank; or a Regional Rural bank.” 6. Definition of ‘Bank’ under Section 2 (c) of the SARFAESI Act, reads as under: “A banking company; or a corresponding new bank; or the State Bank of India; or a subsidiary bank; or such other bank which the Central Government may, by notification, specify for the purposes of this Act. ” 7. We have perused the definition of ‘Bank” in both the Acts. The definition of ‘Bank’ under the SARFAESI Act authorized the Parliament to exercise its power by issuing notification to bring the Cooperative Banks within the purview of the SARFAESI Act. This aspect is also considered by the Apex Court in Greater Bombay Cooperative Bank Limited v. M/s.United Yarn Tex, Pvt. Ltd. And others,[1] which reads as under: “Entry 43 list of 1 speaks of banking, insurance and financial corporations etc. but expressly excludes cooperative societies from its ambit. The constitutional intendment seems to be that the cooperative movement was to be left to the States to promote and legislate upon and the banking activities of cooperative societies were also not to be touched unless Parliament considered it imperative. The BR Act deals with the regulation of the banking business. There is no provision whatsoever relating to proceedings for recovery by any bank of its dues. Recovery was initially governed by the Code of Civil Procedure by way of civil suits and after the RDB Act came into force, the recovery of the dues of the banks and financial institutions was by filing applications to the Tribunal. The Tribunal has been established with the sole object to provide speedy remedy for recovery of debts of the banks and financial institutions since there has been considerable difficulties experienced therefore from normal remedy of Civil Court.” 8. The learned counsel for the petitioner has drawn out attention to the judgment reported in V.Krishnaswamy & another Vs. Karnataka Rajya Kajgarika Sahakara Bank Niyamitha, Bangalore and another, [2] wherein it was held that the cooperative banks are excluded from the purview of SARFAESI Act and the SARFAESI Act is not applicable to loans advanced by Cooperative Banks. 9. On the other hand, the learned counsel for the second respondent has drawn our attention to the Judgment of the Bombay High Court in M/s.Khaja Industries Vs. State of Maharastra and another , [3] wherein it was held as under: “A conjoint reading of Section 2(1)(c()(v) of the Securitisation Act, the Notification dated 28.01.2003 and Section 56 (c) (i) read with Section 5 of the B.R.Act, shows that the Securitisation Act also applies to cooperative Banks.” 10. We have examined the provisions of the SARFAESI Act under which the notice was issued by the second respondent asking the petitioner to clear off the debt, for which he has given a reply stating that the provisions of the SARFAESI Act does not apply. But as referred above, Section 2 (c) of the SARFAESI Act empowers the Parliament to issue notification so as to bring the Cooperative Banks within the purview of the SARFAESI Act. In this case, notification was issued by the Parliament by virtue of the power conferred under Section 2 (c) of the SARFAESI Act. Once notification was issued by the Central Government as envisaged under the provisions of the SARFAESI Act, it cannot be said that the provisions of the SARFAESI Act, cannot be invoked in the present case. The Apex Court in Greater Bombay Cooperative Bank Ltd’ case (1 supra) held the same view and subsequently the Bombay High Court in M/s.Khaja Industries Vs. State of Maharastra and another, (3 supra) has taken a view in conformity with the judgment rendered by the Apex Court. The view taken by the Karnataka High court in V.Krishnaswamy and another Vs. Karnataka Rajya Kajgarika Sahakara Bank Niyamitha, Bangalore and another, (2 supra) is opposed to the view taken by the Apex Court i n Greater Bombay Cooperative Bank Ltd’ case (1 supra). With great respect, we are not prepared to accept the judgment in V.Krishnaswamy and another Vs. Karnataka Rajya Kajgarika Sahakara Bank Niyamitha, Bangalore and another (2 supra). In the circumstances, we do not find any infirmity in issuing the notice under Section 13 (2) of the SARFAESI Act by the respondent bank. 11. Hence, the writ petition is dismissed. However, since the petitioner has given reply to the notice under Section 13 (2) of the SARFAESI Act, with respect to other aspects, the bank may pass appropriate orders under Section 13(4) of the SARFAESI Act and on such orders being passed, the petitioner can avail the remedy as per law. No costs. ___________________ GHULAM MOHAMMED,J ___________________ VILA V. AFZULPURKAR,J 16-06-2009 Stp ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1) 2 CD copies Form-NIC-OGS/WP{RLD} [1] 2007 (3) ALT 1 (SC), [2] AIR 2008 Karnataka 20 [3] AIR 2008 (NOC) 44 (Bombay)