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IN THE HIGH COURT OF GUJARAT
Bhaskar Bhattacharya, J.B. Pardiwala, JJ.
Issan Overseas Ltd & Ors. - Petitioners
Versus
Abhyuday Co-Operative Bank Ltd & Ors. - Respondents
Special Civil Application No. 7338 of 2010
Decided On : 26-09-2012
Gujarat Co-operative Societies Act, 1961 - Section 115A(1) and 17 - The NOC issued by the RBI to the proposed amalgamation is not contrary to any of the State or Central legislations - NOC was issued by the RBI in public interest and more particularly in the interest of the depositors - The petitioners have failed to make out any case against the answering respondent for the interference of this court - The larger interest of the public and the banking system as well as provisions of the Law of the land have been taken into consideration while issuing NOC to the proposed amalgamation - Hence the petitioners have no cause of action to file the present petition against the RBI and petitioners are not entitled to invoke the extra ordinary jurisdiction under Article 226 of the Constitution of India - Appeal - Held, Rightly observed that legal formulations cannot be enforced divorced from the realities of the fact situation of the case - While administering law, it is to be tempered with equity and if the equitable situation demands after setting right the legal formulations not to take it to the logical end, the High Court would be failing in its duty if it does not notice equitable considerations and mould the final order in exercise of its extraordinary jurisdiction - Any other approach would render the High Court a normal Court of appeal - To declare the merger illegal and to order status quo ante is bound to result into undue hardship and difficulties for one and all, more particularly the depositors - Therefore, in our view, this is a fit case where we should refuse to exercise our discretionary power under Article 226 of the Constitution of India - Petition fails and dismissed.
Facts of the case:
The NOC issued by the RBI to the proposed amalgamation is not contrary to any of the State or Central legislations - NOC was issued by the RBI in public interest and more particularly in the interest of the depositors - The petitioners have failed to make out any case against the answering respondent for the interference of this court - The larger interest of the public and the banking system as well as provisions of the Law of the land have been taken into consideration while issuing NOC to the proposed amalgamation - Hence the petitioners have no cause of action to file the present petition against the RBI and petitioners are not entitled to invoke the extra ordinary jurisdiction under Article 226 of the Constitution of India.
Findings of the case:
Rightly observed that legal formulations cannot be enforced divorced from the realities of the fact situation of the case - While administering law, it is to be tempered with equity and if the equitable situation demands after setting right the legal formulations not to take it to the logical end, the High Court would be failing in its duty if it does not notice equitable considerations and mould the final order in exercise of its extraordinary jurisdiction - Any other approach would render the High Court a normal Court of appeal - To declare the merger illegal and to order status quo ante is bound to result into undue hardship and difficulties for one and all, more particularly the depositors - Therefore, in our view, this is a fit case where we should refuse to exercise our discretionary power under Article 226 of the Constitution of India.
Result: Petition fails and dismissed.
JUDGMENT :
J.B. Pardiwala, J.
By way of this petition under Article 226 of the Constitution, the petitioner No.1, a debtor and a defaulter of a Co-operative Bank, has prayed for an appropriate writ, order or direction to quash and set aside order dated 8.10.2008 passed by the Registrar, Co-operative Societies, Gujarat State, Gandhinagar in exercise of his powers conferred under section 115A(1) read with section 17 of the Gujarat Co-operative Societies Act, 1961, whereby resolution passed by the Manekchawk Co-operative Bank Limited, Ahmedabad in its Special General Meeting held on 11.8.2008 in respect of its merger with the respondent No.1 bank came to be approved and thereby, order of merger of the Manekchawk Co-operative Bank Limited, Ahmedabad with the respondent No.1 bank came to be passed subject to certain terms and conditions.
2. The case made out by the petitioners in this petition may be summerised as under:
2.1 On 12.4.2001, the petitioner No.1 was granted financial facilities by the Manekchawk Co-operative Bank Limited, a State Co-operative Bank registered under the Gujarat Co-operative Societies Act, 1961 (for short “Act, 1961) in the form of cash credit limit upto Rs. 1.50 crore.
2.2 As the petitioners defaulted in making the payment to the bank, the Manekchawk Bank instituted arbitration suit on 13.1.2003 against the petitioner before the learned Board of Nominees under the Act, 1961 for recovery of Rs. 1,77,04,503/- with interest at the rate of 20.75% per annum as per the contract between the parties.
2.3 On 23.6.2003, the learned Board of Nominees passed a decree in favour of the Manekchawk bank.
2.4 On 20.9.2003, the petitioners preferred Appeal No.1270 of 2003 before the Co-operative Tribunal against the decree passed by the Board of Nominees.
2.5 It is the case of the petitioners that they have moved a pursis in the aforesaid appeal for withdrawal, but till this date, no orders have been passed and the appeal as on today is still pending on the file of the Co-operative Tribunal.
2.6 It is also the case of the petitioners that the restoration application No.7 of 2009 was preferred before the Board of Nominees and the said application came to be rejected by the Board of Nominees on 23.2.2010 on the ground of pendency of appeal before the Co-operative Tribunal.
2.7 It is also the case of the petitioners that being aggrieved and dissatisfied with the order dated 23.6.2003 passed in Lavad Suit No.182 of 2003 and order dated 23.3.2010 passed in the Restoration Application No.7 of 2009 by the Board of Nominees, Appeal No.110 of 2010 is pending before the Gujarat Co-operative Tribunal, Ahmedabad.
2.8 According to the petitioners, a circular dated 16.2.2005 came to be issued by the Registrar, Co-operative Societies, Government of Gujarat for merger/amalgamation of Weak/Unviable Urban Co-operative Banks with economically strong banks.
2.9 The Board of Directors of the Manekchawk Bank in its meeting dated 14.10.2006 approved the proposal for merger with other financially sound bank.
2.10 According to the petitioners, thereafter, the Manekchawk Bank Limited got merged with the Abhyoday Co-operative Bank Limited i.e. the respondent No.1 and a Multi State Co-operative Bank registered under Multi State Co-operative Societies Act, 2002 (for short “Act, 2002”) by virtue of order dated 8.10.2008 passed by the Registrar, Gujarat Co-operative Societies under section 115A(1) and section 17 of the Act, 1961.
2.11 It is the case of the petitioners that after the order of merger, the respondent No.1 bank issued a notice dated 23.1.2009 to the petitioners under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short “SARFAESI”) and called upon the petitioners to deposit a sum of Rs. 3,50,32,281/- due and payable as on 3.12.2008.
2.12 In response to the demand notice da
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