1985 Supreme(AP) 184

Andhra Pradesh High Court
Judges : A.SEETHARAM REDDY, PUNNAIAH
B.Suryanarayana - Appellant
Versus
Kollur Parvathi Co-operative Bank Ltd.and Ors. - Respondent
Decided On : 04-12-85

THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT ARE APPLICABLE TO CO-OPERATIVE BANKS AND THE STATE LEGISLATURE IS COMPETENT TO ENACT THE SAME - THE WINDING UP OF AN ELIGIBLE CO-OPERATIVE BANK CAN BE DONE ONLY WITH THE PREVIOUS SANCTION OF THE RESERVE BANK - THE REGISTRAR OF CO-OPERATIVE SOCIETIES HAS THE POWER TO WIND UP A CO-OPERATIVE BANK UNDER SECTION 64 OF THE ACT - THE DECISION OF THE RESERVE BANK TO WIND UP THE BANK IS PROPER AND JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE.

Headnote:

CO-OPERATIVE BANK - WINDING UP - JURISDICTION - CO-OPERATIVE SOCIETIES ACT, 1964, SECTION 64 - BANKING REGULATION ACT, 1949, SECTIONS 38, 45A, 56 - DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION ACT, 1961, SECTIONS 2(GG), 13D - ANDHRA PRADESH CO-OPERATIVE SOCIETIES ACT, 1964, SECTIONS 115A, 115B - HELD, THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT ARE APPLICABLE TO CO-OPERATIVE BANKS AND THE STATE LEGISLATURE IS COMPETENT TO ENACT THE SAME - THE WINDING UP OF AN ELIGIBLE CO-OPERATIVE BANK CAN BE DONE ONLY WITH THE PREVIOUS SANCTION OF THE RESERVE BANK - THE REGISTRAR OF CO-OPERATIVE SOCIETIES HAS THE POWER TO WIND UP A CO-OPERATIVE BANK UNDER SECTION 64 OF THE ACT - THE DECISION OF THE RESERVE BANK TO WIND UP THE BANK IS PROPER AND JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE.

Fact of the Case:

THE PETITIONERS ARE MEMBERS AND DEPOSITORS OF KOLLUR PARVATHI CO-OPERATIVE BANK LTD. THE BANK IS AN URBAN CO-OPERATIVE BANK ESTABLISHED IN THE YEAR 1915 AT KOLLUR, TENALI TALUK. AS ON 31/07/1976, THERE WERE 1,001 MEMBERS IN THE SOCIETY WITH A PAID-UP SHARE CAPITAL OF RS. 4,22,537. THE BANK ACCEPTS CURRENT, SAVINGS, FIXED, RECURRING, DAILY DEPOSITS AND KALPATARUVU DEPOSITS BOTH FROM MEMBERS AND NON-MEMBERS. THE DEPOSITS IN THE SOCIETY WERE TO THE TUNE OF RS. 31,70,158 AS ON 31/07/1976. THE LOANS OUTSTANDING AS ON 31/07/1976, ARE RS. 28,25,000. THE STATE GOVERNMENT HOLDS SHARE CAPITAL OF TWO LAKHS RUPEES. THE SECOND RESPONDENT BY PROCEEDINGS DATED 1/08/1976, ORDERED AN EQUIRY UNDER SECTION 51 OF THE CO-OPERATIVE SOCIETIES ACT AND AFTER THE ENQUIRY REPORT WAS SUBMITTED ON 24/07/1977, AND 26/09/1977, THE SECOND RESPONDENT BY HIS PROCEEDINGS DATED 20/06/1971, INITIATED SURCHARGE PROCEEDINGS UNDER SECTION 60 OF THE ACT. AS A RESULT OF THE SURCHARGE PROCEEDINGS AND ENQUIRY REPORTS, IT WAS FOUND THAT THERE WAS DEFALCATION OF RS. 6,74,433. 85. SUBSEQUENT TO THE RECEIPT OF THE REPORT, THE SECOND RESPONDENT ISSUED A SHOW-CAUSE NOTICE TO THE FIRST RESPONDENT BANK AS TO WHY IT SHOULD NOT BE WOUND UP. THEREUPON, THE FIRST RESPONDENT CALLED FOR A GENERAL BODY MEETING OF THE MEMBERS ON 25/03/1980. THE GENERAL BODY DECIDED AGAINST THE WINDING-UP AND COMMUNICATED THE DECISION TO THE SECOND RESPONDENT. HOWEVER, THE SECOND RESPONDENT BY HIS ORDER DATED 16/04/1980, ORDER WINDING-UP OF FIRST RESPONDENT AND APPOINTED THE TALUK CO-OPERATIVE SUB-REGISTRAR AS LIQUIDATOR OF THE FIRST RESPONDENT. ON 14/08/1976, THE THEN PRESIDENT OF THE FIRST RESPONDENT BANK ADDRESSED A LETTER TO THE RESERVE BANK OF INDIA, FOURTH RESPONDENT HEREIN, THAT HE SUSPECTS MISAPPROPRIATION TO THE TUNE OF RS. 3,44,200 DUE TO WILFUL ACTS AND OMISSIONS OF THE EMPLOYEES WITH A REQUEST THAT THE FOURTH RESPONDENT MAY APPOINT A SENIOR OFFICER TO RECTIFY THE MATTER. THE FOURTH RESPONDENT DID NOT TAKE ANY ACTION IN THIS REGARD. IN EVERY AUDIT EITHER BY THE THIRD RESPONDENT OR BY THE FOURTH RESPONDENT, THE AUDIT REPORT CERTIFIED THAT THE FIRST RESPONDENT BANK IS AN "A" CLASS BANK.

Finding of the Court:

THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT ARE APPLICABLE TO CO-OPERATIVE BANKS AND THE STATE LEGISLATURE IS COMPETENT TO ENACT THE SAME - THE WINDING UP OF AN ELIGIBLE CO-OPERATIVE BANK CAN BE DONE ONLY WITH THE PREVIOUS SANCTION OF THE RESERVE BANK - THE REGISTRAR OF CO-OPERATIVE SOCIETIES HAS THE POWER TO WIND UP A CO-OPERATIVE BANK UNDER SECTION 64 OF THE ACT - THE DECISION OF THE RESERVE BANK TO WIND UP THE BANK IS PROPER AND JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE.

Issues: 1. WHETHER THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT ARE APPLICABLE TO CO-OPERATIVE BANKS? 2. WHETHER THE STATE LEGISLATURE IS COMPETENT TO ENACT THE SAME? 3. WHETHER THE WINDING UP OF AN ELIGIBLE CO-OPERATIVE BANK CAN BE DONE ONLY WITH THE PREVIOUS SANCTION OF THE RESERVE BANK? 4. WHETHER THE REGISTRAR OF CO-OPERATIVE SOCIETIES HAS THE POWER TO WIND UP A CO-OPERATIVE BANK UNDER SECTION 64 OF THE ACT? 5. WHETHER THE DECISION OF THE RESERVE BANK TO WIND UP THE BANK IS PROPER AND JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE?

Ratio Decidendi: 1. THE PROVISIONS OF THE CO-OPERATIVE SOCIETIES ACT ARE APPLICABLE TO CO-OPERATIVE BANKS AND THE STATE LEGISLATURE IS COMPETENT TO ENACT THE SAME. 2. THE WINDING UP OF AN ELIGIBLE CO-OPERATIVE BANK CAN BE DONE ONLY WITH THE PREVIOUS SANCTION OF THE RESERVE BANK. 3. THE REGISTRAR OF CO-OPERATIVE SOCIETIES HAS THE POWER TO WIND UP A CO-OPERATIVE BANK UNDER SECTION 64 OF THE ACT. 4. THE DECISION OF THE RESERVE BANK TO WIND UP THE BANK IS PROPER AND JUSTIFIED IN THE CIRCUMSTANCES OF THE CASE.

Final Decision: THE WRIT PETITION IS DISMISSED WITH COSTS.