Jitendra Bahadur Pal v. District Co-operative Bank Ltd
1985-01-29
J.N.DUBEY, R.M.SAHAI
body1985
DigiLaw.ai
JUDGMENT J.N. Dubey, J. - The petitioners have filed this petition under Article 226 of the Constitution for quashing recovery proceedings under the U.P. Agricultural Credit Act, 1974 (hereinafter referred to as the Act). 2. The petitioner No. 1 is a member of Sadhan Sahkari Samiti Sakrecha while petitioners Nos. 2 and 3 are members of Sadhan Sahkari Samiti, Tama, district Basti. Both the societies are members of District Co-operative Bank, Basti (hereinafter referred to as the Bank). According to the petitioners, they took certain loans from their respective societies during the years 1971 to 1973 on personal security. Most of the loan amount along with the interest had been paid and only a sum of few hundred rupees was outstanding against them. On 30-5-1975 the Bank served a demand notice on petitioner No. 1 for a sum of Rs. 25.357.66 claiming that the said amount was due against the petitioners upto 30-6-1974 towards its aforesaid members-societies. He was called upon to pay the entire amount within fifteen days failing which it would be recovered from his salary. The petitioners filed a detailed objection against the said demand to the opposite party No. 1 but instead of discharging the notice the Bank initiated proceeding for recovery of the said amount as arrears of land revenue under S. 11-A of the Act. 3. We have heard the learned counsel for the parties and have perused the record. 4. The learned counsel for the petitioners contended that the Act provides procedure for recovery of amount due to a Bank on account of financial assistance given to an agriculturist and as the petitioners had taken financial assistance from the Co-operative Societies and not from the Bank the recovery proceedings initiated against them under the Act are wholly without jurisdiction. Both the terms 'Bank' and 'Co-operative Society' are defined under Section 2 of the Act and there is no dispute between the parties on the point that while opposite party No. 1 is a Bank opposite parties Nos. 2 and 3 are Co-operative Societies within the meaning of the Act. There also appears to be no controversy between the parties on the point that the petitioners were given financial assistance by the opposite parties Nos. 2 and 3 and not by the opposite party No. 1.
2 and 3 are Co-operative Societies within the meaning of the Act. There also appears to be no controversy between the parties on the point that the petitioners were given financial assistance by the opposite parties Nos. 2 and 3 and not by the opposite party No. 1. What has been claimed by the opposite parties is that the amount which was given as financial assistance to the petitioners by the opposite parties Nos. 2 and 3 had come to them from the Bank and, therefore, the Bank was entitled to recover the same by the procedure prescribed under the Act. 5. Chapter IV of the Act deals with the financial assistance by Banks to agriculturists while Chapter V deals with financing of Co-operative Societies by the Banks. Different modes are prescribed under these chapters for recovery of dues by Banks from the agriculturist and from the Co-operative Societies. Section II-A under which the opposite party is trying to recover the amount from the petitioners falls in Chapter IV of the Act and as this chapter as a whole deals with the recovery of amount due to a Bank on account of financial assistance given to an agriculturist the amount to the Co-operative Societies on account of assistance given to the petitioners could not be recovered by the procedure prescribed in this Chapter. Moreover, from the language of S. 11 A also it is quite clear that it is only the amount of financial assistance granted by a Bank to an agriculturist which can be recovered from him as arrears of land revenue. Since the petitioners had taken financial assistance from the opposite parties Nos. 2 and 3 which are Co-operative Societies within the meaning of the Act and not the opposite party No. 1, the entire recovery proceeding, initiated against the petitioners under S. IIA of the Act are wholly without jurisdiction. It is true that the petitioners are agriculturists and the amount given to them by the opposite parties Nos. 2 and 3 as financial assistance had come to them from the Bank but it is of no legal consequence inasmuch as separate procedure has been prescribed tinder Chapter V for recovery of such amount by the Bank from the Co-operative Societies and in certain conditions even from the agriculturists to whom the amount was given as financial assistance by the Co-operative Societies.
Sections 15 to 18 provide the procedure for recovery of amount by a Bank from the Co- operative Societies while S. 19 empowers the Bank to proceed against defaulting members of a Co-operative Society. Normally if the opposite parties Nos. 2 and 3 had failed to repay the amount taken by them from opposite party No. 1 it should have proceeded against them under S. 15 but even assuming that the co-operative society had failed to repay the amount of debt to opposite party No. 1 on account of the failure of the petitioners to pay their dues no amount could legally be recovered by it from the petitioners as arrears of land revenue under S. 11A or any other provision of Chapter IV. The only remedy of the opposite party No. 1 was to take recourse of provisions of S. 19 of the Act which runs as under: "19. Power of a bank to proceed against defaulting members of a co-operative society :- (1) If a co-operative society is unable to pay its debts to a bank from which it has borrowed, by reason of its members defaulting in the payment of the moneys due by them, the hank may direct the committee of such society to proceed against such members by taking action under the Uttar Pradesh Co-operative Societies Act, 1965 (U.P. Act No. XI of 1966). (2) If the committee of the co-operative society fails to proceed against its defaulting members within a period of ninety days from the date of receipt of such direction from the bank, the bank itself may proceed against such defaulting members, in which event, the provisions of the Uttar Pradesh Co-operative Societies Act, 1965, the rules and the bye-laws made thereunder shall apply as if all references to the society or :its committee in the said provision, rules and bye-laws were reference to the bank. (3) (Notwithstanding anything in the Uttar Pradesh Co-operative Societies Act, 1965, where a bank) has obtained decree or award against a Co-operative Society indebted to it the bank may proceed to recover such-moneys firstly from the assets of the co-operative society and secondly from the members of the Co- operative society to the extent of their debts due to the society.
(Provided that if any such member who was not a party to any proceedings referred to in sub-section (2) disputes the existence or amount of debt due from him to the society, the objection shall be decided in the appropriate execution proceedings.) 6. It is noticeable that while sub-section (1) of S. 19 of the Act authorises a Bank to direct a Co-operative society to proceed against the defaulting member under the U.P. Co- operative Societies Act, 1965, sub-section (2) authorises it to proceed against the defaulting member under that Act if the Co-operative Society fails to comply with the directions issued to it under sub-section (1) within 90 days. Thus, even S. 19 does not authorise the opposite party No. 1 to recover any amount from the petitioners under this Act without taking recourse of the general provisions of the U.P. Co-operative Societies Act. In other words, the amount due to a Co-operative society on account of financial assistance given to an agriculturist can be recovered only by taking recourse to the provisions of the U.P. Co- operative Societies Act, normally by the concerned co-operative society and in certain cases by the Bank which had financed that Co- operative society with the help of S. 19 of the Act. As the petitioners can be granted relief on this ground alone it is not necessary for us to decide other points raised in the writ petition. 7. In the result, the writ petition succeeds and is allowed. The recovery proceedings initiated by the Bank against the petitioners under section 11A of the Act including demand notice are quashed. The petitioners shall be entitled to the cost of the writ petition.