FAYAZA AHMED Vs. MUSLIM CO-OPERATIVE BANK LTD.

JUDGEMENT

(1.) Petitioner availed loan of Rs. 8,00,000/- from the respondent. Since there is default in the matter of payment of the loan instalments, the respondent having issued a notice dated 7-10-2013, the petitioner submitted a reply dated 15-10-2013. A further notice having been served by the respondent on 7-11-2013 and petitioner having remitted Rs. 10,000/- on 21-11-2013, this writ petition was filed on 23-12-2013, questioning the 7 days' notice dated 21-12-2013 issued by the respondent, notifying the petitioner that his name will be published in the newspaper after 28-12-2013 and possession of the secured property would be taken and dealt with in accordance with law. As per the impugned notice, the petitioner is overdue Rs. 97,239/-, out of the full due balance of Rs. 8,23,913/-. Sri H.S. Santhosh, learned Advocate for the petitioner, by placing reliance on the decision in the case of Greater Bombay Co-operative Bank Limited v. M/s. United Yarn Tex. Private Limited and Others, 2007 AIR(SC) 1584 : , contended that the respondent being a Co-operative Bank, established under the Karnataka Co-operative Societies Act, 1959, the impugned proceedings are ultra vires and hence, interference is warranted. Alternatively, learned Counsel contended that the petitioner having paid substantial amount and in view of the dire circumstances in which he is placed, being unable to pay an instalment amount due, the respondent is unjustified in serving the notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, the Act) on 7-10-2013 and also serving a 7 days' notice vide Annexure-A on 21-12-2013. Learned Counsel contended that the impugned action being arbitrary and illegal, writ petition may be entertained and appropriate relief granted.

(2.) In the case of The Authorised Officer/General Manager, Shri Basaveshwar Co-operative Bank Limited, Belgaum v. Balappa Fakkirappa Gurlahosur,201 3 KarLJ 300, the appellant, which is a Co-operative Bank, issued demand notice to the respondent/borrower and in view of the default committed, initiated proceedings under the Act. Learned Single Judge having been approached for relief by the borrower, the writ petition having been allowed, by holding that the Bank cannot invoke the provisions of the Act, the Bank filed writ appeal, wherein the point for consideration being that, the recovery proceedings having been initiated by the appellant-Bank under the Act, whether a Co-operative Bank could fall under the definition of a Bank as contemplated under Section 2(1)(c)(iv) of the Act. The Division Bench has held that, when once there is a Notification dated 28-1-2003 prior to the grant of loan to the respondent, describing 'Co-operative Bank' as 'Bank' attracting the provisions of the Act, for all practical purposes of the Act, the appellant-Co-operative Bank also falls under the category of "Banks" attracting the provision of the Act and therefore, the proceedings initiated under the Act by the appellant-Co-operative Bank against the respondent is justified. The order passed by learned Single Judge impugned in the writ appeal was set aside and the writ petition was dismissed, more particularly, after referring to the decision of the Apex Court in the case of Greater Bombay.

(3.) In the case of Karnataka Rajya Kaigarika Sahakara Bank Niyamita, Bangalore and Another v. V. Krishnaswamy and Another,2012 ILR(Kar) 4638 (DB), it has been held that, whether a Bank is in public sector or private sector or in Co-operative sector, the problem is the same and the Karnataka Co-operative Societies Act, 1959 also does not provide any machinery for similar purpose. Therefore, by virtue of the power conferred, the Parliament has enacted the SARFAESI Act as banking falls within List I of Seventh Schedule and the constitutional validity of the Act having been upheld by the Apex Court in the case of Mardia Chemicals Limited v. Union of India and Others, 2004 AIR(SC) 2371, the proceedings initiated by the Bank was held as justified and the writ petitions filed by borrowers were dismissed. Incidentally, the decision of the Apex Court in the case of Greater Bombay was also noticed apart from catena of judgments of the Supreme Court on the subject-matter.