A multi-state cooperative society registered under the Central Act cannot takeover a cooperative society registered under a State Act, held the Gujarat High court, early this week.
The Court was dealing with a case where a petitioner had challenged order of a single judge of High Court rejecting his plea against notice of auction of his property mortgaged with a state cooperative bank, that was later acquired by a multi-state cooperative bank.
Division bench of Chief Justice Bhaskar Bhattacharya and Justice J B Pardiwala were deciding on point whether a multi-state cooperative bank registered under Multi-State Cooperative Societies Act, 2002, having taken over a cooperative bank registered under Gujarat Cooperative Societies Act, 1961, could legally enforce a money decree under provisions of the State Act.
"Section 17 of the Multi-State Cooperative Societies Act does not permit or empower a Multi-State Cooperative Society to take over any cooperative society," the court observed in its order.
"This aforesaid fact is also confirmed by the Reserve Bank of India in its Circular dated February 2, 2005, saying that there are no specific provision in the State Acts or the Central Act for the merger of a cooperative society under the State Acts with that under the Central Act," it added.
The court ruled in favour of the petitioner and held that the multi-state cooperative bank had no power to proceed with the auction of the petitioner's property. It also set aside the order of the single judge.
According to case details, the petitioner, Jagdhish Rochani, had taken a loan of Rs 7 lakh in 1999 from one Unnati Cooperative Bank Limited (UCBL), registered under the Gujarat Cooperative Societies Act, 1961. Since, Rochani was not able to pay the monthly installments, the UBCL had attached his property.
The UCBL later in 2006 got merged with Cosmos Cooperative Bank Limited (CCBL), a multi schedule bank registered under the Multi-State Cooperative Societies Act, 2002. CCBL in September 2009 issued notice for auction of Rochani's property as he had defaulted on monthly repayments.
Following this Rochani approached the court and challenged the auction notice on the ground that the he had obtained loan from UCBL, a bank registered under Gujarat Cooperative Societies Act, 1961, and not from CCBL a multi-state cooperative bank. Hence, provisions of a Multi-State Cooperative Societies Act, 2002 would apply in his case.
So, CCBL was not entitled to take resort to the provisions of Gujarat Cooperative Societies Act, 1961, and issue auction notice for his property, Rochani had claimed in his petition. He had wanted the notice to be quashed.
However, a single judge had ruled against Rochani, following which he had appealed against the order before a division bench of High Court.
