INDER RAJ AGARWAL Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS Writ Petition is filed to declare the notification issued by the Union of India dated 28.01.2003, exercising powers under Section 2(1)[c](v) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the SARFAESI Act for short), bringing Cooperative Banks within the purview of the SARFAESI Act, and the notice dated 21.02.2015 issued by the 3rd respondent -bank under Section 13(4) and Section 12 of the SARFAESI Act, as arbitrary, illegal and without jurisdiction. In seeking this relief, the petitioner places reliance on a Division Bench judgment of the Gujarat High Court in Administrator, Shri Dhakdi Group Cooperative Cotton Seed v. Union of India, 2014 2 BankCas 303). The petitioner seeks a consequential direction to set aside the notification dated 28.01.2003 issued by the Union of India, and the notice dated 21.02.2015 issued by the 3rd respondent -bank under Section 13(4) of the SARFAESI Act as illegal.

(2.) THE petitioner claims to be the absolute owner of the subject property, admeasuring 200 square yards on Plot No.F8, Fatehnagar, Balanagar, acquired by him through sale deed dated 15.04.1966, and to be in possession and enjoyment thereof from the date of its purchase. It is his case that the 4th respondent, a partnership firm carrying on business in the manufacture of sugar, had obtained a loan from the 3rd respondent -bank for which he had stood as a guarantor mortgaging the subject property. Reference is made by him, in the affidavit filed in support of the Writ Petition, to W.P.No.235 of 2003, W.P.No.16201 of 2004 and W.A.No.4161 of 2004 filed by the 4th respondent and M/s.Laxmi and Company before this Court, to submit that the 3rd respondent had proceeded against the 4th respondent under the A.P. Cooperative Societies Act till the year 2006, and had filed an execution petition which was not pursued later; thereafter in the year 2010 the 3rd respondent -bank invoked the provisions of the SARFAESI Act for recovery of the loan; they had caused publication in the newspapers to auction the subject property; a notice was issued by the 3rd respondent -bank on 12.12.2014 for auction of the subject property on 20.01.2015 for recovery of the outstanding dues of Rs.45.00 Lakhs with interest; the auction was to be conducted on an as is where is basis, and the reserve price was fixed at Rs.45.00 Lakhs; questioning the said notice dated 12.12.2014, he had filed W.P.No.27 of 2015; and since the 3rd respondent had issued a fresh notice dated 21.02.2015, under Section 13(4) and Section 12 of the SARFAESI Act, W.P.No.27 of 2015 had become infructuous.

(3.) IT is the petitioners case that the 3rd respondent -bank was registered as a Cooperative Society with the Registrar of Cooperative Societies on 30.09.1989; the Central Government had, in the exercise of its powers under Section 2(1)[c](v) of the SARFAESI Act, issued the notification dated 28.01.2003 including Cooperative Banks within the definition of banks; on the basis of the said notification dated 28.01.2003, the 3rd respondent -bank had invoked the provisions of the SARFAESI Act; the Supreme Court, in Greater Bombay Co - operative Bank Ltd. v. M/s.United Yarn Tex. Pvt. Ltd., 2007 6 SCC 236, held that the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (DRT Act for short) did not apply to cooperative banks in view of the language employed in the Cooperative Societies Act, the Banking Regulation Act and the DRT Act; cooperative societies could not be said to be covered by Central Legislation with reference to Entry 45 of the List I of the VII Schedule to the Constitution of India; and cooperative banks, constituted under the Cooperative Societies Act, were covered under Entry 32 of List I of the VII Schedule to the Constitution of India.