AMRITLAL P SHAH AND ORS v. THE TJSB SAHAKARI BANK LTD
Jurisdictional Conflict: Recovery Proceedings by State Co-operative Banks - RDB Act vs. MCS Act; Reference to Larger Bench for Authoritative Determination.
Court: Bombay High Court
Citation: 2025:BHC-AS:56903
Decision Date: 23-12-2025
List of Laws
Recovery of Debts and Bankruptcy Act, 1993; Maharashtra Cooperative Societies Act, 1960; Banking Regulation Act, 1949; Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); Constitution of India
- Facts: A cooperative bank, registered under the Maharashtra Cooperative Societies Act, advanced loans to its member-borrowers. The outstanding amount exceeded ₹10 lakh. The bank initiated recovery proceedings in the Cooperative Court under Section 91 of the MCS Act. The borrowers challenged the Cooperative Court's jurisdiction, arguing that the Debts Recovery Tribunal (DRT) under the Recovery of Debts and Bankruptcy Act (RDB Act) had exclusive jurisdiction. The Cooperative Appellate Court, relying on Pandurang Ganpati Chaugule, held that the bank was a "bank" under the RDB Act, barring the Cooperative Court's jurisdiction. The bank then challenged this ruling via a writ petition. A Single Judge agreed with the Appellate Court, citing Pandurang Ganpati Chaugule. The original respondent in the writ petition (the present petitioner) filed a review petition.
- Procedural Posture: This is a review petition filed in the High Court of Judicature at Bombay, challenging the judgment and order of a single judge of the same court, which had upheld the decision of the Maharashtra State Cooperative Appellate Court. The single judge's decision had the effect of restoring a money decree in favor of the respondent bank. The review petition seeks reconsideration of the judgment. The single judge, Amit Borkar, J., refers the matter to a larger bench.
- Issue: The primary issue is whether a cooperative bank is a "bank" under the RDB Act, thereby conferring exclusive jurisdiction on the DRT for debt recovery exceeding ₹10 lakh, and consequently ousting the jurisdiction of the Cooperative Court under Section 91 of the MCS Act. A related issue is whether the Pandurang Ganpati Chaugule and Washim Urban judgments require reconsideration by a larger bench. The specific question referred to the larger bench is: "Whether, and to what extent, recovery proceedings initiated by State co-operative banks are governed by the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, and whether the jurisdiction of the Co-operative Court under Section 91 of the Maharashtra Co-operative Societies Act, 1960 stands excluded by reason of Sections 17, 18 and 34 of the said Central Act...".
- Holding: The court did not provide a final holding on the merits of the case. Instead, the single judge referred the matter to a larger bench for an authoritative decision, finding that the issue involved significant questions of law concerning the interpretation of central and state laws and the scope of constitutional entries.
- Reasoning: The court reasoned that the issue of whether the RDB Act applies to State co-operative banks, thereby excluding the jurisdiction of Cooperative Courts under Section 91 of the MCS Act, is complex and requires careful consideration of competing arguments on constitutional powers. The court noted the absence of a clear provision in the RDB Act expressly including State co-operative banks or excluding the jurisdiction of Cooperative Courts. The court also considered the conflicting interpretations of previous Supreme Court decisions, particularly Pandurang Ganpati Chaugule and Greater Bombay Co-operative Bank Ltd., and the impact of the striking down of Part IX-B of the Constitution. The court emphasized the need for a proper balance between Parliament's power to legislate on banking under Entry 45 of List I and the States' power to regulate co-operative societies under Entry 32 of List II. The court found that a final and conclusive answer could not be given without a more thorough examination of these issues by a larger bench.
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