Vinay Kumar Singh and anr. Vs. the State of Jharkhand and ors. - Court Judgment

Excerpt:
- motor vehicles act, 1988[c.a.no.59/1988] section 166; [a.k. patnaik, cj, a.k. gohil & s. samvatsar, jj] application for compensation for personal injury death of injured claimant subsequently for some other reasons held, claim for personal injury will abate on the death of claimant. claim will not survive to his legal representative except as regards claim for pecuniary loss to estate of claimant. - it has also been argued that at best section 2(d), which includes both the district & state level central co-operative bank limited is applicable and not section 2(u) of the nabard act, 1981. 5. it has been further submitted on behalf of the petitioners that the impugned resolution, as contained in memo no. however, this does not mean that the state governments can, at their whim and.....orderajit kumar sinha, j.1. in the instant case the main prayer of the petitioners is to quash the resolution as contained in memo no. 1428 dated 3.8.2007, whereby and whereunder, the jharkhand state government has taken a decision in its cabinet meeting for upgrading the dhanbad central co-operative bank limited into jharkhand state co-operative bank ltd.2. the petitioner no. 1 is the chairman of the tetuliya, lakhiabad primary agriculture credit co-operative society, for short hereinafter referred to as the tetuluiya, lakhiabad pacs and the petitioner no. 2 is the chairman of the ojhadih katamia primary agriculture credit co-operative society, for short hereinafter referred to as the ojhadih katamia pacs, both the societies are registered under the co-operative societies act having.....

Judgment:
ORDER

Ajit Kumar Sinha, J.

1. In the instant case the main prayer of the petitioners is to quash the resolution as contained in Memo No. 1428 dated 3.8.2007, whereby and whereunder, the Jharkhand State Government has taken a decision in its Cabinet meeting for upgrading the Dhanbad Central Co-operative Bank Limited into Jharkhand State Co-operative Bank Ltd.

2. The petitioner No. 1 is the Chairman of the Tetuliya, Lakhiabad Primary Agriculture Credit Co-operative Society, for short hereinafter referred to as the Tetuluiya, Lakhiabad PACS and the petitioner No. 2 is the Chairman of the Ojhadih Katamia Primary Agriculture Credit Co-operative Society, for short hereinafter referred to as the Ojhadih Katamia PACS, both the Societies are registered under the Co-operative societies Act having their area of operation, respectively within the administrative block of Nirsa and Tundi in the District of Dhanbad. The societies of the petitioner No. 1 and 2 are the shareholders of the Dhanbad Central Cooperative Bank Ltd. Dhanbad (respondent No. 7), for short hereinafter referred to as the Dhanbad Bank, and by virtue of the same are also the members of its General Body which is its Supreme decision taking body.

3. The main thrust of the argument raised by the learned Sr. Counsel Sri Anil Kumar Sinha on behalf of the petitioners is that the State of Jharkhand does not have competence/jurisdiction to issue annexure-9 i.e. the impugned memo dated 3.8.2007 under Section 2(u) of the National Bank for Agriculture and Rural Development Act, 1981 (hereinafter referred to as 'NABARD Act') According to him it defines only State Cooperative Bank and it does not give any competence/jurisdiction to the State Government to declare any District Cooperative Bank as State Cooperative Bank. The next contention raised by the petitioner is that the request of Jharkhand State Government for granting Banking license to the Jharkhand State Cooperative Bank Ltd. under Section 22(2) of the Banking Regulation Act, 1949 has been turned down by the Reserve Bank of India vide its letter dated 8.1.2005. It has further been contended on behalf of the petitioner that there was no direction by the Reserve Bank of India in its order dated 8.1.2005 to issue order under Section 2(u) of the NABARD Act. The learned Counsel for the petitioner further submits that NABARD Act and the provisions thereto does not apply and Section 2(u) which is a definition clause cannot be utilized for the purpose of upgradation of Dhanbad Central Cooperative Bank Ltd. to Jharkhand State Cooperative Bank Ltd.

4. It has further been contended that Section 2(u) of the NABARD Act, 1981 and the proviso thereto, applies to other Cooperative Societies and not the Banking Co-operative Societies. It has also been argued that at best Section 2(d), which includes both the District & State level Central Co-operative Bank Limited is applicable and not Section 2(u) of the NABARD Act, 1981.

5. It has been further submitted on behalf of the petitioners that the impugned resolution, as contained in Memo No. 1428 dated 3.8.2007, is illegal and against the provisions, as contained in Section 44AK of the Jharkhand Co-operative Societies Act, which stipulated that no order sanctioning a scheme of compromise or arrangement or of amalgamation or reconstruction or of division or transfer of assets and liabilities of a Co-operative Bank shall be made without the previous sanction in writing of the Reserve Bank.

6. Learned Senior Counsel for the petitioners has further referred to and relied upon a judgment, reported in : AIR2004SC141 and in particular paragraph Nos. 11, 12 and 13. In the aforesaid background, the submission made is that the power exercised under Section 2(u), which is a definition clause and inapplicable, for up-gradation under the impugned order dated 3.8.2007 is devoid of jurisdiction, nullity and is liable to be quashed.

7. Learned Senior Counsel Sri V. Shivnath for respondent No. 7, which is Dhanbad Central Co-operative Bank Limited, has supported the case of the petitioners and has reiterated the argument as raised by the petitioners. He further submits that under Section 56 CCI of the Banking Regulation Act it applies only to a Co-operative Society in a State other than the Banking Society. He has further referred to and relied upon the provisions of NABARD Act and according to him, it nowhere contemplates upgradation and even under Section 2(u) and the proviso thereto of the NABARD Act the same applies to a Co-operative Society in a State only. He has also referred to Section 56 CC VII to justify his argument

8. Learned Senior counsel for respondent No. 7 further referred to and relied upon a decision of the Hon'ble Apex Court, rendered in the case of Apex Cooperative Bank of Urban Bank of Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Bank Ltd. and Ors. as reported in : AIR2004SC141 and in particular para- 32, which is quoted as under, to support the contention that the impugned notification dated 3.8.2007 issued under Section 2(u) of the NABARD Act was illegal and devoid of jurisdiction.

32. Further, under the NABARD Act a State cooperative bank has to be the principal cooperative society in the State, the primary object of which must be financing other cooperative societies in that State. The proviso to Section 2(u) cannot and does not derogate from the main definition. The proviso merely enables the State to declare, in addition to an existing principal society in the State or where there is no principal society in the State, any one or more cooperative Banks as State cooperative banks. However, this does not mean that the State Governments can, at their whim and fancy, declare any cooperative society to be a 'State cooperative bank'. Before such a declaration can be made the State Government must necessarily be satisfied (a) that it is a principal cooperative society in the State; (b) that it is carrying on business in the State; and (c) the business must be of financing other cooperative societies in that State.

9. The learned Advocate General, appearing on behalf of the State, submits that petitioner Nos. 1 and 2 are Chairman of Agriculture Bank Co-operative Society, which are itself registered under the Co-operative Societies Act and they cannot have any authority to file a petition in their individual capacity. He has also referred to and relied upon Section 21 of the Banking Regulation Act to support the contention that the NABARD Act does apply and has further submitted that it is in these backgrounds that it has not been included in Schedule IX of the Bihar Re-organization Act. It has further been contended by the learned Advocate General appearing on behalf of the State that no agriculture loan is being granted by the Dhanbad Central Co-operative Bank and that is why the refinancing under Section 21 of the NABARD Act was refused and the loan to be granted at a very low rate of interest was stopped. The entire notification was issued in public interest so that the refinancing by way of loan and advances were given to the agriculturist and that could have been possible only when the District Level Central Co-operative Society is upgraded to State Level Central Co-operative Society as provided and/or required under Section 21 of the NABARD Act, 1981.

10. He has also referred to the circular issued by the NABARD wherein it is specifically stated that any such District Central Cooperative Society, which has been granted license by the Reserve Bank of India and has a positive net worth, can be upgraded and it is in these background that Dhanbad Central Co-operative Society was chosen and Section 2(u) was invoked. He has referred to page 37 of the counter affidavit, wherein, NABARD itself has suggested that only Dhanbad Central Co-operative Bank was eligible since it also had the license from Reserve Bank of India. He has drawn my attention to the definition under the NABARD Act and in particular Sections 2(d), (e) & (f) to show that the Central Co-operative Bank operates in a district only and respondent No. 7 is clearly included under the definition of Section 2(f) and, thus, Section 2(u) was rightly invoked in public interest. It is further contended that the State Co-operative Society, which has a larger means and includes all the districts, will certainly include Dhanbad Central Cooperative Society as well. He has further submitted that there is no cause of action for the petitioners to file this writ petition for upgradation since it is only for enlargement of operational area from district level to State level expanding the horizon. The apprehension that it will be taken over or it will affect their Board or the share is of no consequence as the same will continue as it is and a public purpose will be served by grant of loan to coagriculturist based on refinancing under Section 21 by the NABARD Act, which is subject to the same being upgraded to State Level Co-operative Society. He has also submitted that the decision as rendered in the case of Apex Cooperative Bank of Urban Bank of Maharashtra & Goa Ltd. v. Maharashtra State Cooperative Bank Ltd. and Ors. (supra), as referred to and relied upon by the petitioners, actually supports the case of the State since that was with reference to a multi Co-operative society and not a District or State Level Co-operative Society.

11. I have considered the pleadings and rival contentions/ arguments raised by the counsel for the petitioners as well as the respondents. Before adverting to the same it is relevant to quote the relevant definition / section which has been referred to and relied upon by both the sides of the National Bank for Agricultural and Rural Development Act, 1981.

2(d) 'Central Cooperative Bank' means the principal cooperative society in a district in a State, the primary object of which is the financing of other cooperative societies in that district: Provided that in addition to such principal society in a district, or where there is no such principal society in a district, the State Government may declare any one or more cooperative societies carrying on the business of financing other cooperative societies in that district to be also or to be a central cooperative bank or central cooperative banks within the meaning of this definition;

2(f) 'cooperative society' means a society registered, or deemed to be registered under the Cooperative Societies Act, 1912 (2 of 1912), or any other law relating to cooperative societies for the time being in force in any State;

2(u) 'State cooperative bank' means the principal cooperative society in a State, the primary object of which is the financing of other cooperative societies in the State;

Provided that in addition to such principal society in a State, or where there is no such principal society in a State, the State Government may declare any one or more cooperative societies carrying on business in that State to be also or to be a Sate cooperative bank or State cooperative banks within the meaning of this definition.

12. On perusal of the aforesaid definitions, section 2(d) defines Central Cooperative Bank and included Principal Cooperative Society in a district in a State with its object to finance other Cooperative Societies in that district. Under Section 2(f) Cooperative Society is a registered society under the Cooperative Societies Act but under section 2(u) the definition relates to State cooperative bank which means the principal cooperative society in a State. On a bare comparison of section 2(d) with section 2(u) the two clear distinctions as spelt out in the definition are;

(a) in section 2(d) Central Cooperative Bank is a Principal Cooperative Society in a district in a State where in section 2(u) the State Cooperative Bank is a principal cooperative society in a State.

(b) the second distinction is that the Central Cooperative Bank under section 2(d) has a primary object to finance other Cooperative Societies in that district whereas in section 2(u) the primary object is to finance other Cooperative Societies in the State. However, in the proviso to section 2(u) an additional situation is provided in a State where there is no such principal society in a State meaning thereby the proviso to Section 2(u) clearly contemplates and empowers the State Government to declare any one or more Cooperative Societies carrying on business in that State which certainly will include the Cooperative Societies/Central Cooperative Bank functional in that State. This situation is contemplated only by conferring an additional power where there is no such principal society functional in the State. It is this very section and the proviso thereto under Section 2(u) of the NABARD Act which has been invoked in order to upgrade the Dhanbad Central Cooperative Bank into a State Cooperative Bank within the meaning of the definition under the power prescribed for such declaration.

13. It appears that the necessity to declare the same arose in public interest. The entire object of the Dhanbad Central Cooperative Bank running in the district is to grant agricultural loan to poor agriculturists. Under section 21 of the NABARD Act the Reserve Bank may provide by way of refinance loans and advances repayable on demand to State Cooperative Banks (Central Cooperative Bank, Regional Rural Banks or any Financing Institutions etc.) on the condition that the same are approved by the Reserve Bank of India in this behalf. The refinancing is dependent upon two conditions that it has to be a State Cooperative Bank and/or a Central Cooperative Bank in the State, secondly it has been approved by the Reserve Bank of India and license has been granted.

14. The fact remains that Dhanbad Central Cooperative Bank running in the district is the only eligible bank and its object is to provide agricultural loan to poor and it has got license by the Reserve Bank of India and approved by the Reserve Bank of India and in order to get the refinance / loans etc. unless the same is upgraded to State Cooperative Bank the question of grant of loan or refinance by the Reserve Bank of India was impermissible.

15. The societies are formed in rural areas to allow small farmers and marginal farmers to have access to easy agriculture credit flow. Farmers get credit through cooperative societies and or large area multi purpose society which in turn get credit from the district Central Cooperative Bank which in turn receive concessional credit flow from the State cooperative bank. In turn the latter receives refinance from NABARD. NABARD channels the credit facility only through the State Cooperative Bank and in the absence of State Cooperative Bank in the State of Jharkhand NABARD is not extending cooperative facilities to the farmers of Jharkhand. As such the farmers are being denied of following agricultural credit facility which will not only be against public interest but it has certainly and adversely affected the rural economy and cooperative movement in the State. That once the Jharkhand Co-operative Bank is formed and starts functioning credit flow to the farmers shall begin and help the farmers to increase their production and the State will become self sufficient in the agrarian sector. In the absence of a state cooperative Bank, Co-operative credit flow in the State has been choked. That the creation of State Co-operative Bank is a step toward setting up a two tier system of Co-operative Banks in the State. The State Government aims to a two tier system instead of three tier system. This would lower the rate of interest on which the farmers would be provided loans as each tier charges commission of its own. Upgradation does not change the nature and character of the Bank instead it reaches out to more people and more area and the ultimate object is to reach out the credit flow to the poor farmers in the agrarian sector and the notification is clearly in public interest and cannot be interfered with. Thus the contention raised by the petitioners and respondent No. 7 is misconceived, erroneous and unsustainable in the eyes of law. The Hon'ble Supreme Court in : AIR2004SC141 (Apex Coop. Bank of Urban Bank of Maharashtra & Goa Ltd. v. Maharashtra State Coop. Bank Ltd.) at paragraph 45 held as under:

45. It is to be seen that RBI can only give a licence to a State cooperative bank which has been so declared by a particular State. As the definition of cooperative societies in the NABARD Act is restricted to cooperative societies registered under State Acts and as the provision is for a State to declare a cooperative society as a 'State cooperative bank' the licence, which can be issued by RBI, can only be in respect of that State....

16. It is clear that under the NABARD Act a State cooperative bank has to be the principal cooperative society in the State and its primary object should be financing other cooperative societies in that State and in view of the fact that there is no principal cooperative society of the State, any one of the existing principal cooperative society as in the district of Dhanbad can be upgraded and declared as a State Cooperative Society. The only pre-condition is that such upgradation of a Cooperative Bank should be approved and licensed by the Reserve Bank of India and R-7 Dhanbad Central Cooperative Bank Ltd. fulfills the requirement to be validly upgraded.

17. Considering the aforesaid facts and circumstance of the case this writ petition is devoid of any merit and is accordingly dismissed but without any order as to costs.