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2016 Supreme(AP) 654
IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH
A. Ramalingeswara Rao, J.
Charminar Co-operative Urban Bank Limited – Appellant
Vs.
Shyam Trading Company and Ors. – Respondents
Writ Petition No. 659 of 2005
Decided On : 16-12-2016
For the Appellant : Abhinand Kumar Shavili, Counsel
For the Respondent: E.V.V.S. Ravi Kumar, Counsel
Headnote:
Banking Regulation Act - Section 21-A - Code of Civil Procedure, 1908 - Section 34 - Andhra Pradesh Cooperative Societies Act - Section 61 - Banking Regulation Act, 1949 – Sections 5(c), 56 and 3 - Petition was filed by the Charminar Co-operative Urban Bank Limited challenging the order of the Andhra Pradesh Co-operative Tribunal Hyderabad in to the extent of reducing the rate of future interest facts leading to the said order first respondent obtained a loan of from the petitioner Bank and as security to the said was mortgaged. Respondents stood as guarantors in their personal capacity - Respondent did not repay the debt arbitration proceedings were initiated before and an award was passed directing the first respondent to pay the amount - Challenging the said award, the first respondent filed before the Andhra Pradesh Cooperative Tribunal, Hyderabad and the Tribunal in granted stay of further proceedings subject to the condition of the first respondent depositing a sum within one month - But he paid only an amount - Petitioner submits that in view of limited power given to the proceedings under the Andhra Pradesh Co-operative Societies Act applying few provisions of Code of Civil Procedure - He further submits that in view of Section 21-A of the Banking Regulation Act - Tribunal has no power to reduce the rate of interest agreed between the parties - He relied on Central Bank State Co-operative – Held, Court was considering the quantification of interest and capitalization of unpaid interest and the meaning given to the principal sum on the date of suit within the meaning of Section - Tribunal in reducing the rate of future interest from the stage of Section 71 proceedings and fixing the interest at the rate of 6% p.a. on the purported ground of exercise of discretionary jurisdiction by the Tribunal under the provisions of Code of Civil Procedure - Judges attention was not brought to the decision of this Court Judge relied on a decision of the Supreme Court reported reasons given by the said learned single Judge appears to be not correct in view of the decision reported in Nellore District Co-operative wherein it was held that the Arbitrator and Tribunal do not come under the meaning of Civil Court in order to attract the application of Section - Tribunal constituted the provisions of Cooperative Societies Act is not a Civil Court and the provisions of Section 34 CPC are not applicable to it in order to enable it to reduce the future rate of interest. Section of the Banking Regulation Act comes into operation. Consequently, the order passed by the A.P. Co-operative Tribunal - Petition is accordingly allowed.
A. Ramalingeswara Rao, J.
1. This Writ Petition was filed by the Charminar Co-operative Urban Bank Limited challenging the order of the Andhra Pradesh Co-operative Tribunal, Hyderabad in C.T.A. No. 239 of 2003 dated 14.07.2004 to the extent of reducing the rate of future interest from 21% p.a., to 6% p.a. The facts leading to the said order are as follows: The first respondent obtained a loan of Rs. 25,00,000/- on 08.01.1999 from the petitioner Bank and as security to the said loan, an extent of 300 sq. yards of land together with building having 2880 sq. feet of plinth area, situated in Plot No. 60, Survey No. 160, Tirumulgherry, Secunderabad was mortgaged. Respondents 3 to 5 stood as guarantors in their personal capacity. Since the first respondent did not repay the debt, arbitration proceedings were initiated before the Deputy Registrar/Arbitrator, Hyderabad in A.R.C. No. 81 of 2000 and an award was passed on 06.05.2000 directing the first respondent to pay the amount of Rs. 27,24,810/- together with interest at 21% p.a., as on 01.10.1999. Challenging the said award, the first respondent filed C.T.A(SR) No. 6370 of 2001 before the Andhra Pradesh Cooperative Tribunal, Hyderabad and the Tribunal in I.A.(SR) No. 6371 of 2001 granted stay of further proceedings on 18.01.2001 subject to the condition of the first respondent depositing a sum of Rs. 7,50,000/- within one month. But, he paid only an amount of Rs. 1,00,000/- and in view of the default committed by the first respondent, the interim order dated 18.01.2001 stood vacated. Execution Proceedings were initiated in E.P. No. 21 of 2001 and the property mortgaged was put to auction on 24.08.2002. The sale was confirmed in favour of one M. Krishna on 06.02.2003. Challenging the proceedings in E.P. No. 21 of 2001, the first respondent filed W.P. No. 15814 of 2002 and this Court disposed of the said Writ Petition on 06.09.2002 recording the undertaking of the first respondent that the balance amount would be paid on or before 07.01.2003, but he did not comply with the said undertaking. However, he preferred C.T.A. No. 239 of 2003 before the Co-operative Tribunal challenging the award dated 06.05.2000 passed in A.R.C. No. 81 of 2000 and an order was passed by the Co-operative Tribunal on 14.07.2004 reducing the rate of interest agreed between the parties to 6% p.a. The same is challenged in the present Writ Petition on the ground that the reduction of rate of interest from 21% p.a., to 6% p.a., is contrary to Section 21-A of the Banking Regulation Act. It was further stated that Section 34 of the Code of Civil Procedure is not applicable to the proceedings under the Andhra Pradesh Co-operative Societies Act, 1964 as it is a special enactment and only the limited powers given under the Act with regard to the application of provisions of C.P.C. are applicable in a limited sphere.
2. Since the above facts are not disputed, learned counsel for the petitioner as well as the respondents advanced their arguments on the points of law.
3. Learned counsel for the petitioner submits that in view of limited power given to the proceedings under the Andhra Pradesh Co-operative Societies Act, applying few provisions of Code of Civil Procedure, Section 34 of CPC has no application. He further submits that in view of Section 21-A of the Banking Regulation Act, the Tribunal has no power to reduce the rate of interest agreed between the parties. He relied on Central Bank of India v. Ravindra (2002) 1 SCC 367 : 2002 (1) ALT 19.1 (DN SC), A.P. State Co-operative Bank Limited v. Cooperative Tribunal (2002) 4 ALT 580 and State Bank of Hyderabad v. Advath Sakru (1993) 1 ALT 608 (FB).
4. Learned counsel for the respondents submitted that the Tribunal has got jurisdiction to reduce the rate of interest and he relied on a decision reported in Andhra Pradesh Co-operative Societies Housing Federation Ltd., v. Sapna Cooperative Housing Society Ltd. 2008 (1) ALT 383.
5. In the light of the above contentions
