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Andhra Pradesh High Court
Judges : G.S.SINGHVI, C.V.NAGARJUNA REDDY
Reserve Bank of India, Central Office - Appellant
Versus
Pattem Surya Prakash Rao - Respondent
Decided On : 10/10/2007
Case No : WRIT APPEAL Nos. 1053, 1072, 1086, 1095, 1116, 1165, 1213 and 1227 of 2005, WRIT APPEAL (SR) No. 103185 of 2006 & WRIT PETITION Nos. 6214 of 2005, 18180, 18553 and 20607 of 2006, 737 and 5329 of 2007
Andhra Pradesh Mutually Aided Cooperative Societies Act 1995 – Section 22 - Recovery of the loan amount - Preliminary objections – Writ Petition are filed against the interlocutory orders of the Andhra Pradesh Cooperative Tribunal whereby it rejected the preliminary objections raised by the petitioners on the maintainability of the Original Petitions filed by the Bank for recovery of the loan amount two writ petitions are referred by the learned Single Judge to the Bench on the representation made on behalf of the petitioners that they are seeking to settle the dispute under OTS scheme of the fact that the Batch of cases in which OTS scheme is one of the issues involved, is pending before the Division Bench Writ Petition is filed by two individual depositors of the Bank questioning the approval given by the RBI for One Time Settlement (OTS) Scheme formulated by the State of Andhra Pradesh Writ Petition is filed by some of the Depositors of the Bank questioning the OTS scheme of 2007 introduced by the State of Andhra Pradesh Writ petition is filed by an individual seeking implementation framed by the Liquidator of the Bank with the approval of the Registrar Bank was registered as a Co-operative Society and later on it was converted into a Mutually Aided Cooperative Society under the provisions of Andhra Pradesh Mutually Aided Cooperative Societies Act 1995 it was granted licence to carry on banking business under Section 22 of the Banking Regulation Act 1949 As a part of its annual inspection, the RBI conducted its XXII statutory inspection of the books of accounts of the Bank with reference to the latter’s financial position as inspection report revealed deteriorating financial position of the Bank and its violation of the various provisions of the 1949 Act and directions issued thereunder report also revealed the Bank’s failure to repay the matured deposits –Held, learned counsel could not further demonstrate before us as to how clause (ii), which permits reduction of interest to 18% simple against the contracted rate of interest from the date of disbursement of loan instead of recovering the loan at the contracted rate of interest up the date on which the NPAs are classified as doubtful or loss asset, is per se bad warranting our interference while exercising our power of judicial review. It is needless to emphasize that this Court does not possess the expertise in financial matters to judge whether a particular condition in the settlement scheme is in the interest of the institution/its creditors or not. Unless the decision of the public authority is shown to be demonstrably arbitrary, irrational or malafide Courts would not examine the reasonableness or otherwise of the terms of such scheme and substitute its opinion to that of the decision of the experts in the field. The only allegation made while assailing the introduction of OTS schemes was that the scheme is intended to help the big borrowers plea is not substantiated by producing necessary material, in the absence of which, we are not impressed by this submission of the learned counsel. Moreover, from the letters addressed by the RBI from time to time following its statutory inspections, reference to which was already made in the foregoing, we are wholly satisfied that though the bank is holding securities to cover the debts, substantial part of the loans has become unrealizable in view of the poor “asset quality” throwing the reliability of property mortgaged to the bank in doubt letter of the Deputy General Manager, RBI, referred to supra. Even the writ petitioners admitted that as at present the bank is not in a position to repay the debts to its depositors – Writ Appeal No.1116 of 2005 is dismissed.
C.V. Nagarjuna Reddy, J.
Introduction:
This batch of 15 cases involves common issues and hence, they are disposed of by a common judgment.
Writ Appeal No.1053 of 2005 is filed by the Reserve Bank of India (for short “the RBI”) against common order of the learned Single Judge in Writ Petition No.23156 of 2004. The learned Single Judge disposed of the said writ petition alongwith Writ Petition No.24346 of 2004, 2501 of 2005 and W.P.M.P.No.2333 of 2005 in Writ Petition No.23156 of 2004.
Writ Appeal No.1072 of 2005 is filed by M/s. Prudential Cooperative Bank Limited (for short ‘the Bank’) and the Official Liquidator against common order in Writ Petition No.2501 of 2005.
Writ Appeal No.1086 of 2005 is filed by Bank and the Official Liquidator against common order in Writ Petition No.23156 of 2004.
Writ Appeal No.1095 of 2005 is filed by the Commissioner and Registrar of Cooperative Societies (for short “the Registrar”) against the common order in Writ Petition No.23156 of 2004.
Writ Appeal No.1116 of 2005 is filed by the Depositors Association of Prudential Cooperative Bank (twin cities) (represented by its President K. Srinivasulu) against Writ Petition No.24346 of 2004, being partly aggrieved by the order of the learned single judge in not disposing of the issue relating to the validity of cancellation of licence of the Bank by the RBI.
Writ Appeal No.1165 of 2005 is filed by the Government of Andhra Pradesh and the Commissioner and Registrar of Cooperative Societies against the common order in Writ Petition No.2501 of 2005.
Writ Appeal No.1213 of 2005 is filed by the RBI against common order in Writ Petition No.24346 of 2004.
Writ Appeal No.1227 of 2005 is filed with leave against the common order in Writ Petition No.2501 of 2004 by M/s.Hyderabad Tulaman Limited and Others (borrowers).
Writ Appeal (SR) No.103185 of 2006 is filed by two individual depositors against the order of the learned Single Judge in Writ Petition No.6214 of 2005.
Writ Petition No.6214 of 2005 is filed by the Depositors Welfare Association of the Bank whereunder the petitioner inter alia sought for a direction to the Official Liquidator of the Bank not to disburse the loan amounts till it received a sum of Rs.250 Crores towards insurance from the 1st respondent therein.
W.P.M.P.No.30259 of 2005 in W.P.No.6214 of 2005 is filed by the Bank through its Liquidator to review the order dated 26.4.2005 passed in Writ Petition No.6214 of 2005.
Writ Petition No.18180 of 2006 and Writ Petition No.18553 of 2006 are filed against the interlocutory orders of the Andhra Pradesh Cooperative Tribunal, Hyderabad whereby it rejected the preliminary objections raised by the petitioners on the maintainability of the Original Petitions filed by the Bank for recovery of the loan amount. These two writ petitions are referred by the learned Single Judge to the Bench on the representation made on behalf of the petitioners that they are seeking to settle the dispute under OTS scheme, in view of the fact that the Batch of cases in which OTS scheme is one of the issues involved, is pending before the Division Bench.
Writ Petition No.20607 of 2006 is filed by two individual depositors of the Bank questioning the approval dated 10.11.2005 given by the RBI for One Time Settlement (OTS) Scheme formulated by the State of Andhra Pradesh.
Writ Petition No.737 of 2007 is filed by some of the Depositors of the Bank questioning the OTS scheme of 2007 introduced by the State of Andhra Pradesh.
Writ petition No.5329 of 2007 is filed by an individual seeking implementation of OTS scheme 2007 framed by the Liquidator of the Bank with the approval of the Registrar.
The Background:
The Bank was registered as a Co-operative Society on 5.4.1921 and later on it was converted into a Mutually Aided Cooperative Society under the provisions of Andhra Pradesh Mutually Aided Cooperative Societies Act 1995 (for short ‘the 1995 Act’) on 9.4.1997. On 23.9.1998 it was granted licence to carry on banking business unde
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