SECURITISATION ACT
Guest
(Querist) 14 January 2010
This query is : Resolved
MY QUESTION IS THAT IF THERE IS A SEPERATE REMEDY IS AVAILABLE TO CO -OPERATIVE BANKS UNDER THE ACT (LIKE GUJARAT CO OPERATIVE SOCIETIES ACT) TO TAKE ACTION FOR RECOVERY OF AMOUNT AGAINST BORROWER,
IN THAT SITUATION CAN CO OPERATIVE BANKS CAN TAKE RECOURSE OF SARFEASI ACT FOR RECOVERY OF THEIR DUES?
A V Vishal
(Expert) 14 January 2010
As per S 2(f) of the SAFAESI ACT "borrower" means any person who has been granted financial assistance by
any bank or financial institution or who has given any guarantee or created
any mortgage or pledge as security for the financial assistance granted by
any bank or financial institution and includes a person who becomes
borrower of a securitisation company or reconstruction company consequent
upon acquisition by it of any rights or interest of any bank or financial institution in relation to such financial assistance;
A plain reading of the definition says any person, THEREFORE A PERSON NEED NOT BE AN INDIVIDUAL & LIVING PERSON, it can be a person defined under the general clauses act states that a "Person" shall include any company or association or body of individuals, whether incorporated or not.
In view of the aforesaid, a co-operative society can be a person under the SARFAESI ACT who can be proceeded against under this Act.
N RAMESH.
(Expert) 14 January 2010
//IF THERE IS A SEPERATE REMEDY IS AVAILABLE UNDER THE ACT LIKE (GUJARAT CO OPERATIVE SOCIETIES ACT) TO TAKE ACTION AGAINST BORROWER IN THAT SITUATION CAN CO OPERATIVE BANKS CAN INITIATE PROCEEDINGS UNDER SARFEASI ACT?//
Yes, If two remedies are available, the society/bank can choose any action which is effective.
Adinath@Avinash Patil
(Expert) 15 January 2010
Bank have choice either to Initiate proceeding under co-op Act or Initiate proceeding under sarfasi Act.
Manish Singh
(Expert) 15 January 2010
Co-operative Banks fall within the definition of a secured creditor under SARFAESI Act by virtue of the definition contained in section 2(1)(c )(v) of the Act in view of the notification No. S O.105(E) dated 28th January, 2003 of the Central Government declaring Co-operative Bank as defined in clause (cci) of section 5 of Banking Regulation Act, 1949 to be a bank for the purposes of SARFAESI.
But it must be kept in mind that only three kinds of co-operative banks fall under the said notification which have been given rights to proceed under SARFAESI.
that are 1. state co-operative bank, 2. Central C-operative Bank or 3. Primary C-operative Banks.
for being primary coperative bank u must fulfill three conditions under Banking Regulation Act
Section 5(ccv) :- “Primary co-operative bank means a co-o perative society, other than primary agricultural credit society.
1. Primary objects or principal business of which is the transaction of banking business :
2. The paid up share capital and reserves of which are not less than of Rs.
3. Bye-laws of which do not permit Admission of any other co-operative society as a member provided that this clause shall apply to the admission of a co-operative bank member by reason of such co-operative bank subscribing to the share capital of such co-operative society out of funds provided by the State Government for that purpose.
Section 13 of SARFAESI Act, 2002, authorizes the secured creditors to enforce any security interest created in favour of it by the borrower without the intervention of the Court or Tribunal in accordance with provisions of the Act.
Guest
(Querist) 15 January 2010
thanks manish for your valuable suggession
B K Raghavendra Rao
(Expert) 15 January 2010
Notification of the Central Government dated 28.01.2003 so far as it is applicable to the co-operative banks is challenged in a writ petition before the Hon'ble High court of Karnataka. Consequently, proceedings initiated by the Malleswaram Co-operative Bank Ltd., against a borrower under Securitisation Act has been stayed.
Guest
(Querist) 15 January 2010
as per your reply it might be possible that notification dated 28.1.2003 may be challenged in other High courts also... what about position in Gujarat?
if it is possible please send me copy of notification in my mail: rahulbmistry321@yahoo.com
Manish Singh
(Expert) 15 January 2010
The Notification :
In exercise of its powers conferred under Section 2(1)(c)(v), the
Central Government issued a notification dated 28-1-2003, which reads as under:
NOTIFICATION UNDER SECTION 2(1)(c)(v):
NOTIFICATION No. SO 105(E), DATED 28-1-2003 In exercise of the powers
conferred under item (v) of Clause (c) of Sub-section (1) of Section 2 of the
Securitisation and Reconstruction of Financial Asset and Enforcement of Security
Interest Act, 2002 (54 of 2002), the Central Government hereby specifies "Co-
operative Bank" as defined in Clause (cci) of Section 5 of Banking Regulation
Act, 1949 (10 of 1949) as 'bank' for the purpose of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002 (54 of 2002).
Also amendment to the Banking Regulation Act has also done after which Sec 56 of the Banking Re. Act reads as :
APPLICATION OF THE ACT TO CO-OPERATIVE BANKS
56. Act to apply to co-operative societies subject to modifications. - The provisions of this Act, as in force for the time being, shall apply to, or in relation to, co-operative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely : (c) in Section 5, -
i) after Clause (cc), the following clauses shall be inserted, namely:
"(cci) 'Co-operative Bank' means a State Co-operative Bank, a Central Co-
operative Bank and a Primary Co-operative Bank;
also in the judgment of the Greater Bombay
Cooperative Bank Ltd. v. United Yarn Tex. Pvt. Ltd. and Ors. 2007 AIR SCW 232 the Apex court has also ruled that SARFAESi shall apply to the co-operative banks.
Guest
(Querist) 15 January 2010
thanks manish for judgment i have just get the copy of it from supreme court website.
I THINK THAT POINT IS STILL NOT DECIDED
[Para 89] [869-G-H; 870-A]
"For the reasons stated above and adopting pervasive and
meaningful interpretation of the provisions of the relevant
Statutes and Entries 43, 44 and 45 of List I and Entry 32 of List II of the Seventh Schedule of the Constitution, we answer
the Reference as under:-
"Co-operative banks" established under the Maharashtra
Co-operative Societies Act, 1960 [MCS Act, 1960]; the Andhra
Pradesh Co-operative Societies Act, 1964 [APCS Act, 1964];
and the Multi-State Co-operative Societies Act, 2002 [MSCS
Act, 2002] transacting the business of banking, do not fall
within the meaning of "banking company" as defined in
Section 5 (c) of the Banking Regulation Act, 1949 [BR Act].
Therefore, the provisions of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 [RDB Act] by
invoking the Doctrine of Incorporation are not applicable to the
recovery of dues by the co-operatives from their members.
The field of co-operative societies cannot be said to have
been covered by the Central Legislation by reference to Entry
45, List I of the Seventh Schedule of the Constitution. Co-
operative Banks constituted under the Co-operative Societies
Acts enacted by the respective States would be covered by co-
operative societies by Entry 32 of List II of Seventh Schedule of
the Constitution of India."
The Registry of this Court shall place these matters
before Hon’ble the Chief Justice of India for constitution of an
appropriate Bench for early disposal of these cases.
Manish Singh
(Expert) 15 January 2010
You can have reference to :
Khaja Industries vs State Of Maharashtra And Anr. 2008 (2) BomCR 860, 2007 (6) MhLj 712
Manish Singh
(Expert) 15 January 2010
i have sent you the case
Guest
(Querist) 15 January 2010
I RECEIVED THE COPY OF JUDGEMENT SENT BY YOU.
NOW IT'S CLEAR.
Guest
(Querist) 15 January 2010
Guest
(Expert) 16 January 2010
NANDKUMAR B.SAWANT.M.COM.LL.B.(MUMBAI),ADVOCATE
MOBILE.09325226691, 09271971251
e.mail.adv.nbsawant@yahoo.co.in
e.mail.nandkumarbs@sify.com
REGARDING THE SECURITISATION ACT KINDLY NOTE THAT.
1.GOVT.ENACTED THIS ACT TO HELP BANKS TO RECOVER LOAN OUTSATANDINGS.MOST OF THE PROVISIONS ARE IN FAVOUR OF BANKS PLEASE NOTE.
2.BANKS AND OTHER FINANCIAL INSTITUTIONS AS ALREADY DISCUSSED ABOVE MAY INITIATE ACTION UNDER PROVISIONS OF SAID ACT.BUT KINDLY NOTE THAT DEBTS RECOVERY TRIBUNALS HAVE JURISDICTION FOR THE MATTER.AND LOAN ARREARS ABOVE 10 LAKHS CAN BE REFERRED TO DRT FOR RECOVERY OF LOAN ARREARS.
3.KINDLY NOTE THAT A NOTICE TO REPAY LOAN ARREARS WITHIN SIXTY DAYS OF SERVICE OF NOTICE IS SENT TO BORROWER OF LOAN UNDER PROVISIONS OF SAID ACT .
4.AFTER THIS SIXTY DAYS PERIOD IS OVER THE MORTGAGED PROPERTY IS ATTACHED BY THE BANK AND FURTHER NOTICE OF SALE OF SAID ATTACHED PROPERTY AFTER 45 DAYS IS PUBLISHED IN LOCAL NEWS PAPERS AND THEN THE SAID PROPERTY IS SOLD AND THE LOAN ARREARS ARE RECOVERED.PLEASE NOTE.
5.KINDLY NOTE THAT NO OTHER CIVIL COURTS HAVE JURISDICTION IN THE SAID MATTER.HENCE THIS NOTICE MUST BE TAKEN SERIOUSLY BY THE BORROWERS.
4.KINDLY NOTE THAT HIGH COURTS MAY INTERFERE AND SAVE THE BORROWER IN EXCEPTIONAL CASES.
I SUCCEEDED IN GETING STAY TO THE NOTICE UNDER SECURITISATION ACT FROM HIGH COURT BOMBAY ,BENCH AURANGABAD FOR MY CLIENT IN MATTER OF CHOPDA COOP BANK VS.PRAKASH S.AGARWAL CASE PLEASE NOTE.
IN CASE ANY FURTHER HELP IS REQUIRED YOU MAY WRITE OR SEND DETAILS.
WITH BEST REGARDS TO YOU YOUR FAMILY AND FRIENDS.
THANKING YOU
YOURS SINCERELY
NANDKUMAR B.SAWANT.M.COM.LL.B.(MUMBAI),ADVOCATE
