The main legal point established in the judgment is that there is no repugnancy or inconsistency between the State Act and the Central Act, specifically regarding the investment of funds by the cooperative bank.

Judgment

H. K. Sema, J.

( 1 ) CIVIL APPEAL NO. 3040 OF 1998. This appeal is against the judgment and order dated 16. 4. 1998 passed by the Division Bench of the High Court. The facts of this case may be briefly recited :-

THE appellant-society was registered under the Gujarat co-operative Societies Act, 1961 (hereinafter referred to as the act ). It was carrying on the banking activities. Section 71 (1) (a) to (f) of the Act enumerates various institutions in which a co-operative bank is to make investments. Clause (g) of Section 71 (1) empowers the State Government to permit any society to invest the funds in any institution other than those mentioned in clauses (a) to (f) of the Section. Section 71 of the Act is relevant for the purpose of disposal of the present appeal. We shall be dealing with this Section in detail t an appropriate time. The appellant-bank sought permission of the State government to invest funds in an institution outside those falling under clauses (a) to (f) of Section 71 (1) of the Act. However, the government declined the request. Inspite of the refusal, the appellant-bank invested the funds in Mutual Fund, which was outside the purview of clauses (a) to (f) of Section 71 of the act. It is stated that for non-compliance of Section 71 of the act, notices were issued to the appellants calling for an explanation as to why action should not be initiated against them as contemplated under the Act. It is also stated that the appellants have not filed their replies to those notices and the matter is still pending with which we are not concerned in this appeal.

( 2 ) THE appellant-bank undisputedly is a Corporation Bank and is also a Central Co-operative Bank. The Banking Regulation Act, 1949 was amended by the Central Act No. 23 of 1965, which came into force with effect from 1st March, 1966. By the aforesaid amending act, Part V was inserted in the Banking Regulation Act, 1949, providing for application of the Act of cooperative banks.

( 3 ) MR. K. G. Vakharia, learned Senior counsel for the appellants, contended that Section 5 (b) of the Banking Regulation Act, 1949 defines "banking" and provides that "banking" means the accepting, for the purpose of lending or investment of deposit of money from the public. He further argued that sub-section (1) (a) of Section 6 of the Banking Regulation Act, 1949 provides fro business of banking companies which will include cooperative banks. He, therefore, urged that the appellant-bank is entitled to be engaged in baking business in terms of the norms contemplated under sections 5 and 6 of the Banking Regulation Act and not according to the norms of investment enumerated under Section 71 of the gujarat Co-operative Societies Act.

( 4 ) THE whole contention of the learned Senior counsel for the appellants is based on repugnancy and inconsistency between the central Act and the State Act. In other words, the conflict is between Section 71 of the Gujarat Co-operative Societies Act and sections 5 (b)and 6 (1)9a) of the Banking Regulating Act. To answer the aforesaid question it will be relevant to make a quick survey of the relevant provisions of the Gujarat Co-operative Societies act and the Banking Regulation Act.

( 5 ) TO appreciate the controversy in proper perspective Sections 5 (b) and 6 (1) (a) of the Banking Regulation Act and Section 71 of the Gujarat Societies Act are extracted :-

"5. Interpretation.- In this Act, unless there is anything repugnant in the subject or context.- (a ). . . . . . . (b) "banking" means the accepting, for the purpose of lending or investment, of depositors of money from the public, repayable on demand or otherwise, and withdrawal by cheque, draft, order or otherwise; -------------"

"6. Forms of business in which banking companies may engage.- (1) in addition to the business of banking a banking company may engage in any one or more of the following forms of business, namely :- (a) the borrowing, raising, or taking up of money; the lending or