MARATHWADA GRAMIN BANK vs MAHARASRTRA STATE CO-OPERATIVE BANK LTD.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2006 Supreme(Bom) 2056

IN THE HIGH COURT OF BOMBAY
(P.V. Hardas and R.M. Savant, J J.)
MARATHWADA GRAMIN BANK - Petitioner
Versus

MAHARASRTRA STATE CO-OPERATIVE BANK LTD. and others - Respondents
W. P. Nos. 5632, 5633, 6039,6674 and 7020 of 2006
Decided on 19-12-2006
Advocates appeared
For petitioners : S. V. Adwant (W. P. Nos. 5632 and 5633 of 2006)
M. V. Deshpande (W. P. No. 6674 of 2006)
P. M. Shah, Senior Counsel with M. S. Kulkarni (W. P. No. 6039 of 2006),
S. S. Choudhari (W. P. No. 7020 of 2006)
For State : N. B. Khandare, G. P. (W. P. No. 6039 of 2006)
K. M. Suryawanshi, AGP (W. P. Nos. 5633 and 6674 of 2006)
N. B. Patil, AGP (W. P. Nos. 5632 and 7020 of 2006)
For respondents: R. N. Dhorde for respondents Nos. 1 and 2 (W. P. Nos. 5632 and 6039 of 2006) respondent No.2 (W. P. No. 6039 of 2006) respondent No. 5 (W. P. 6674 of 2006) S. V. Adwant for respondent No.6 (W. P. No. 6039 of 2006) K. J. Suryawanshi holding for D. N. Suryawanshi for applicant/Intervenor (W. P. Nos. 5632 and 5633 of 2006)

Headnote:Constitution of India - Article 226 - Writ jurisdiction - Exercise of - Alternative remedy available - Rule of alternative remedy before grant of a writ - A rule of self imposed limitation - A rule of policy and discretion - Than a rule of law. - The rule of alternate remedy before a writ is granted is a rule of self imposed limitation, a rule of policy and discretion than a rule of law.
Maharashtra Co-operative Societies Act, 1960 - Section 101 - Securitisation and Reconstruction of Financial Assets and Enforcement of Securitisation Interest Act, 2002, Sections 17, 18, 34 and 35 - Constitution of India, Articles 226 and 246(1), Schedule VII, List I, Entry 42, List II, Entry 33 - Issue of notice to a secured creditor by MSEB under Section 13(2) of Securitisation Act, 2002 - Recovery of Rs. 40.83 crores - Direction to repay loan amount within a period of 30 days - Central and State enactments - Securitisation Act being Central Act overrides the Maharashtra Co-operative Societies Act - Central Act will predominate under Article 246(1) of Constitution of India. - By virtue of the non-obstante clause in Article 246(1) of the Central Act will predominate. Therefore, the Securitisation Act, 2002 has overriding effect over the MCS Act, 1960 and High Court was also fortified by the Division Bench judgment of High Court reported in 2005 (2) All MR 721. The issue in the said case was whether in view of the certificate issued under Section 101 of the MCS Act 1960 the bank can resort to the provisions of the Securitisation Act, 2002. The Division Bench held that the Securitisation Act, 2002 will override the provisions of MCS Act.

JUDGMENT

R. M. SAVANT, J. :- Rule in all the petitions. Rule with the consent of the parties in all the petitions made returnable forthwith and heard. The subject matter of the above petitions are the assets of the Shankar Sahakari Sakhar Karkhana Ltd. Waghalwada Tq. Umari District Nanded. The said petitions therefore raise common question of fact and law which according to us can be conveniently dealt with together and disposed of.

2. Since the interest of each of the petitioners in the above petitions vis-avis the said assets is slightly different in its content it would be necessary to narrate such of the facts which are necessary for adjudication of the issues raised in each of the said petitions and the submissions of the learned counsel in the said petitions. Since in the process we would be concerned with the Maharashtra Cooperative Societies Act, 1960 and the Securitisation and Reconstructions of the Financial Assets and Enforcement of Securitisation Interest Act, 2002 and also the Recovery of Debts Due to Banks Act, 1993 it would be necessary to refer to the said Acts in their abbreviated form namely MCS Act, 1960, the Securitisation Act, 2002 and the RDB Act, 1993. It would also be necessary to refer to the said Shankar Sahakari Sakhar Karkhana Ltd. as the said Karkhana and the respondent No.1 i.e. Maharashtra State Co-operative Bank Ltd. as the MSCB for brevities sake.

(I) WRIT PETITION NO. 5632 of 2006 AND WRIT PETITION NO. 5633 of 2006

The said two petitions are filed by the Marathwada Gramin Bank through it's Branch Manager at Bhokar Dist. Nanded and Bank of Maharashtra through its Branch office at Dharmabad Tq. and District Nanded respectively. The said petitions have been filed challenging the notice dated 28-7-2006 published in Daily Sakal by the MSCB for leasing out the premises and machineries of the said Karkhana. It is also prayed in the said two petitions that the property both movable and immovable of the said Karkhana should be directed to be handed over to the liquidator appointed under section 105 of the MCS Act, 1960 and also for a declaration that the measures taken under section 13(4) of the Securitisation Act, 2002 against properties of the said Karkhana are illegal.

Both the petitioner Banks had disbursed loans to the harvesting labour contractors of the said Karkhana in the year 2000 for which the said Karkhana had stood guarantee. The total loan amount involved in respect of both the Banks was to the tune of about Rs. 2.40 Crores which according to the petitioner Banks has now accumulated to about Rs. 7 Crores. It appears that on default committed by the said harvesting contractors and the said Karkhana the Banks proceeded against the Karkhana by way of filing Civil Suits for recovery of the amounts disbursed to the said harvesting contractors. The Bank in Writ Petition No. 5632 of 2006 filed 87 suits out of which 25 suits were decreed. The Bank in Writ Petition No. 5633 of 2006 filed 113 Suits out of which 89 Suits were decreed. The claim was directed only against the said Karkhana which had' stood guarantee for the disbursed amounts. It appears that Banks have thereafter filed execution proceedings pursuant to which attachment has been levied by the execution Court vide its order dated 2-8-2006.

According to the petitioner Banks MSCB claims to have taken possession of the assets of the said Karkhana on 18-3-2006 pursuant to the notice issued under section 13(4) of the Securitisation Act, 2002. It is further stated by the petitioner Banks that interim order of appointment of liquidator has been issued by the Commissioner of Sugar on 21-3-2006 and a final order of appointment of liquidator to facilitate the winding up of the said Karkhana came to be issued on 21-7-2006. According to the Banks the impugned notice in the Daily Sakal has been issued by the MSCB after the final order of liquidation came to be passed by the Commissioner of Sugar.

(II) WRIT PETITION NO. 6039 OF 2006

The said Writ Pet

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2006 Supreme(Bom) 2056

Cases Referred (4)