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2004 Supreme(Online)(AP) 12
ANDHRA PRADESH HIGH COURT
Unsure, J
M/s. Taraporewalla Agencies – Appellant
Versus
Government of Andhra Pradesh – Respondent
W.P. No. 23069 of 2003 | W.P. No. 23290 of 2003 | W.P. No. 23300 of 2003 | W.P. No. 23480 of 2003 | W.P. No. 23481 of 2003 | W.P. No. 23681 of 2003
For the Appellants/Petitioners: Sri P. Venugopal
For the Respondents: Ms. B. Vijayalakshmi, Sri P.S. Rajasekhar
Borrowers with outstanding awards against them cannot claim entitlement to One Time Settlement proposals, which require approval and do not confer automatic rights to acceptance by banks.
Headnote:(A) A.P. Co-operative Societies Act, 1964 - Section 115-B - Reconstruction scheme for Charminar Cooperative Bank Ltd. formulated by Government of Andhra Pradesh under Section 115-B(i) - Petitioners challenge recovery certificates issued for loan arrears after invoking this reconstruction scheme - Court addresses the legality of awards issued by Joint Registrar and the applicability of One Time Settlement scheme (OTS) - It concludes that while petitioners may have applied for OTS, the bank was not obliged to accept any proposals, particularly for borrowers with awards against them (Paras 45(i) and 45(v)).
(B) Availability of Remedies - Specific provisions regarding statutory recovery procedures under the Act and the lack of merit in claiming entitlement to OTS for borrowers with outstanding awards reaffirm the court's position against unwarranted claims (Paras 44).
(C) Judicial Review - Court asserts that it refrains from interfering with awards issued when effective alternative remedies exist under the Act, thus upholding proper administrative structure (Paras 45(vi)).
(D) Requirement for Submission of Documentation - The court confirms that the bank’s request for income-related documentation is justified under OTS guidelines (Paras 41).
Findings of Court:
The reconstruction scheme under Section 115-B of the A.P. Co-operative Societies Act requires prior approval from RBI and mandates a structured approach to OTS proposals. Illegal or unjustified awards cannot be quashed merely based on the application of the OTS.
Issues: The court primarily addressed the enforceability of recovery certifications issued by the registrar and the validity of the petitioners’ claims regarding OTS eligibility despite existing awards.
Ratio Decidendi: The court held that proposals for OTS do not automatically confer rights to acceptance, and the bank's authority extends to executing recovery actions against borrowers with outstanding awards (Paras 45).
Result: Writ petitions dismissed; petitioners are given liberty to seek remedies under the A.P. Co-operative Societies Act.
| Table of Content |
|---|
| 1. writ petitions filed to challenge recovery certificates. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8) |
| 2. details of the reconstruction scheme for the bank. (Para 9 , 10 , 11 , 12 , 13 , 14) |
| 3. notification and execution process regarding proposals for ots. (Para 15 , 16 , 17 , 18) |
| 4. arguments regarding the legality and scope of ots. (Para 19 , 20 , 21 , 22 , 23 , 24) |
| 5. court's analysis of statutory provisions regarding reconstruction. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34) |
| 6. discussion on the effectiveness of recovery certificates. (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44) |
| 7. summary of findings regarding the petitions. (Para 45) |
| 8. final decision to dismiss the petitions. (Para 46) |
1. This common order shall dispose of all the six writ petitions as grounds urged in support of the writ petitions in the light of the provisions of A.P. Co - operative Societies Act, 1964 (hereinafter called 'the Act') and in the background of reconstruction scheme for Charminar Co - operative Bank Limited ('bank' for brevity) formulated by Government of Andhra Pradesh (hereinafter called 'GoAP') in accordance with S.115 - B of the Act are same. The Respondents, GoAP and Bank, represented by its Administrator filed common counters in all the writ petitions and it would be expedient to deal with factual as well as legal issues together. Be it noted, the cases came to be filed challenging certificates for recovery of loan amount (petitioners call them Award) of different dates issued by fourth respondent and seeking to quash them by Writ of Certiorari. As the amounts borrowed by various petitioners (proprietary concerns) are different and for different business purposes, a brief reference to the facts of each case would be necessary.
W. P. No. 23069 of 2003
2. The petitioner M/s. Taraporewalla Agencies is a proprietary concern. The bank sanctioned demand loan facility for the purpose of petitioner's business after taking necessary security for the loan. The bank faced threat of liquidation due to combination of factors and the Reserve Bank of India (hereafter called 'RBI') imposed restriction on normal banking operations. Though the schedule of repayment was still very much in currency, the bank approached the Joint Registrar of Co - operative Societies / OSD (fourth respondent) requesting for certificate of recovery of arrears of loan amount in a sum of Rs. 2,83,66,471/- (Rupees two crores, eighty three lakhs, sixty six thousand, four hundred and seventy one only) upto 30-6-2002. The Joint Registrar issued notices to the petitioner and two others who are presumably guarantors. Petitioner appeared through a counsel on 5-5-2003 and sought time for filing counter. The matter was adjourned, but the petitioner and two others remained ex parte. Therefore, the Joint Registrar in exercise of powers under sub-section (1) of S.71 of the Act, in A. R. C. No. 86 of 2003 dated 28-6-2003 ordered that the amount mentioned hereinabove is due as arrears to the bank by the petitioner and two others and directed them to pay the said amount with further interest at 22% per annum compounded quarterly from 1-7-2002 till the date of payment within 15 days from the date of receipt of the Certificate. It was also observed that if the petitioner and others fail to pay the arrears jointly and severally, it would be open to the Respondent Bank to execute Certificate for Recovery under S.70(2) of the Act and realize the amount by selling mortgaged properties. The petitioner assails the said order in this writ petition.
W. P. No. 23290 of 2003
3. The petitioner M/s. ATLAS Builders, is a proprietary concern who availed demand loan facility from the Bank in September 1999 for the purpose of its business. After the RBI imposed restrictions on the banking transactions, the Bank approached the Joint Registrar for Certificate of Recovery. Notices were issued and on 28-4-2003, petitioner appeared through a counsel and filed a memo to the effect that the
