In a recent decision from the Bombay High Court, the case of Amritlal P. Shah versus TJSB Sahakari Bank Ltd. has raised important questions about where co-operative banks should go to recover debts. The case is about whether these banks should go to the Debts Recovery Tribunal (DRT) or the Co-operative Court for claims over ten lakhs. Let's break down the details.
"The main question is whether co-operative banks are 'banks' under the RDB Act, thus requiring them to go to the DRT for large debt recoveries."
Petitioner's View: Amritlal P. Shah argues that co-operative banks should only use the DRT according to the RDB Act, not the Co-operative Court. He refers to the Washim Urban Co-operative Bank case, which agreed with this view.
Respondent's View: TJSB Bank argues that the Washim Urban decision misunderstood the Supreme Court's ruling in Pandurang Ganpati Chaugule, which was about the SARFAESI Act, not the RDB Act.
The Pandurang Ganpati Chaugule case was important because it recognized co-operative banks under central banking laws, but it mainly dealt with the SARFAESI Act.
The Greater Bombay Co-operative Bank decision previously said co-operative banks were not part of the RDB Act, focusing on state control.
Justice Borkar notes the different interpretations and the lack of a Supreme Court decision directly addressing the RDB Act's relevance to co-operative banks. The judgment does not make a final decision, suggesting that a larger group of judges should resolve the issue.
"The foundation of the Greater Bombay Co-operative Bank decision has been questioned, but not officially changed."
The matter is referred to a larger group of judges to decide whether co-operative banks should indeed be governed by the RDB Act for debt recovery, which could change the role of Co-operative Courts.
This case highlights the ongoing legal battle between state and central control over co-operative banks, with significant effects on how these banks recover debts.
Note: This post simplifies complex legal proceedings for easier understanding. For detailed legal advice, consulting a professional is recommended.
