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2003 DIGILAW 434 (GUJ)

APEX ELECTRICALS LTD. v. I. C. I. C. I. BANK LTD.

2003-07-30

JAYANT PATEL

body2003
JAYANT PATEL, J. ( 1 ) IN all these petitions challenge is made by the concerned petitioners to the action taken by the concerned respondent bank or Financial Institution, as the case may be, under the Act. In majority of the cases the action under challenge is at a stage of issuance of notice under sec. 13 (2) of "the Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest Act, 2002" (hereinafter referred to as "the act"), requiring the borrower, by notice in writing, to discharge full liabilities of secured creditors. Only in few cases which shall be dealt with at the appropriate stage, there is challenge to other actions of Bank in addition to the action for challenging the notice. The challenge is also to the action of the Bank of taking steps under Sec. 13 (4) of the Act of either sealing secured assets and/or for taking possession of the secured assets. It is also an admitted position that as per the information supplied to the Court that none of the petitioners has approached Debts Recovery Tribunal (hereinafter referred to as "d. R. T. ") against the action of the Bank under Sec. 13 (4) of the Act by preferring appeal under sec. 17 of the Act and all these petitions are preferred under Art. 226 of the constitution of India before this Court. ( 2 ) I have heard the learned Counsel appearing for the parties namely, Mr. Mihir H. Joshi, Mr. N. K. Majmudar, Mr. Bhagat, Mr. M. S. Shah, Mr. S. S. Shah, Mr. P. S. Champaneri, Mr. Marshal, Mr. J. T. Trivedi, Mr. A. M. Parekh, Mr. C. L. Soni, Mr. Kapadia, Mr. A. M. Raval, and Mr. Jayesh Dave, and other learned Advocates appearing on behalf of the petitioners who are mainly representing borrowers or loanees or the guarantors. I have also heard learned Counsel, Mr. M. J. Thakore, with Mr. Sangi, Mr. S. N. Soparkar, with Mr. Amar Bhatt, Mr. K. S. Nanavati with Mr. Chudgar, Mr. Panesar, Mr. P. V. Nanavati, and Mr. G. S. Thakkar, and other learned advocates appearing for Financial Institution, Nationalized Banks, Other Banks and the Co-operative Banks, as the case may be. ( 3 ) THE other learned Counsel appearing for the petitioners have adopted the submissions made by the aforesaid learned Advocates Mr. K. S. Nanavati with Mr. Chudgar, Mr. Panesar, Mr. P. V. Nanavati, and Mr. G. S. Thakkar, and other learned advocates appearing for Financial Institution, Nationalized Banks, Other Banks and the Co-operative Banks, as the case may be. ( 3 ) THE other learned Counsel appearing for the petitioners have adopted the submissions made by the aforesaid learned Advocates Mr. M. H. Joshi and others appearing either for the borrowers or the guarantors, as the case may be, and the learned Counsel appearing for the Banks, may be Nationalized Banks or Co-operative Banks or other Banks, as the case may be, have adopted the submissions made by aforesaid learned Advocates appearing for Banks namely mr. M. J. Thakore and others. ( 4 ) THE contentions raised by the learned Counsel appearing for the parties shall be considered and dealt with to the extent they are relevant for deciding the questions and the points involved in these petitions, in the subsequent portion of the judgment hereinafter. ( 5 ) IT was already indicated to the learned Counsel appearing for the parties that the matters are being considered for final disposal, and therefore, the learned counsel have accordingly made submissions for such purpose, and therefore, they are being decided finally. ( 6 ) WHEN the hearing of the group had begun, it was already notified to all the learned Advocates appearing for the parties that the hearing of the present group of petitions which is under the Act has already started and those who want to address the Court may make submissions and if the learned Advocates are desirous to give notes for distinguishing facts, they may also give one page note for such purpose. ( 7 ) THE perusal of the prayers made in the petitions and more particularly keeping in view notes submitted by the learned Advocates for giving distinguishing facts it appears that the present group of petitions can be classified into various categories on facts as under : (a) the petitions wherein challenge to the constitutionality of the provisions of the Act is attempted to be made by filing applications for amendment in the main Special Civil Applications; (b) the petitions wherein the legality and validity of the notification dated 28-1-2003 issued by the Government of India for specifying "co-operative bank" as "bank" for the purpose of the Act, is under challenge; (c) the petitioners wherein the action of the Bank of issuing notice under Sec. 13 (2) of the Act is challenged, but no reply to the said notice is given by the concerned petitioners; (d) the petitions wherein the action of Bank of issuing notice under Sec. 13 (2) is challenged and the reply is submitted by the concerned petitioners to the Bank, but Bank has not taken any action under Sec. 13 (4) of the Act; (e) the petitions wherein Bank has taken action under Sec. 13 (4) of the Act, and the matter is before the action of sale is taken or at a stage where proceedings for sale of the secured assets are going on; (f) the petitions wherein Bank has resorted to the remedy under Sec. 13 (2) of the Act, but the earlier proceedings initiated by the Bank are either pending before the D. R. T. or before the Registrars Board of Nominees or before the Gujarat State Co-op. Tribunal or Appellate Forum or Higher Forum under any other law for the time-being in force for the recovery of the money by the Financial Institutions or the Bank against the borrowers; (g) the petitions wherein there is a binding decision of either of D. R. T. or of its Appellate Forum or of Registrars Board of Nominee or of the tribunal, as the case may be, on facts of adjudicating the outstanding amount and either the recovery certificate is issued or the award is passed which is in the process of execution; (h) the petitions wherein the contentions raised are that the condition precedent of the default or of classifying the debts as non-performing assets is not specified; (i) the petitions wherein the contentions of the petitioners are that the secured assets in respect of whom the notice is issued is not mortgaged at all to the Bank; (j) the petitions wherein pendency or reference before B. I. F. R. is sought to be contended as bar in proceedings under the present Act for enforcement of the security interests in the secured assets. (k) The petitions are filed by guarantor of the loan challenging the action of banks either under Sec. 13 (2) or 13 (4) of the Act. ( 8 ) LEARNED Counsel, Mr. A. M. Raval and Mr. Kapadia and Mr. K. H. Baxi for the petitioners press for the challenge to the constitutional validity of the Act. In this regard it is pertinent to note that prior to the enactment of the Act, earlier"the Securitisation and Reconstruction of Financial Assets and Enforcement of security Interest (Second) Ordinance, 2002" was inoperation being Ordinance no. 3 of 2002 (hereinafter referred to as "ordinance") having the pari-materia provisions of the present Act. The constitutional validity of the said ordinance is already examined by the Division Bench of this Court (Coram : D. S. Sinha, C. J. (as he was then) and J. M. Panchal, J.) in the proceedings of Spl. C. A. No. 9769 of 2002 decided on 8-10-2002 in the case of "m. R. Utensils v. Union of India"and the Division Bench of this Court has observed as under :"4. C. A. No. 9769 of 2002 decided on 8-10-2002 in the case of "m. R. Utensils v. Union of India"and the Division Bench of this Court has observed as under :"4. Section 13 of the Ordinance provides that notwithstanding anything contained in Sec. 69 or Sec. 69a of the Transfer of Property Act, 1882 (IV of 1882), any security interest created in favour of any secured creditor may be enforced, without the intervention of Court or Tribunal, by such creditor in accordance with the provisions of the Ordinance. Sub-section (2) of Sec. 13 of the Ordinance contemplates that action by the secured creditor against the borrower may be initiated by a notice in writing calling him to discharge in full his liabilities within sixty days from the date of notice, failing which the secured creditor has been empowered to exercise all or any of the rights under sub-sec. (4) of Sec. 13 of the Ordinance. 5. Under sub-sec. (4) of Sec. 13 of the Ordinance, the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely :- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale and realise the secured asset; (c) appoint any person (hereafter referred to as the manager), to manage the secured assets the possession of which has been taken over by the secured creditor; (d) require at any time by notice in writing, any person who has acquired any of the secured assets from the borrower and from whom any money is due or may become due to the borrower, to pay the secured creditor, so much of the money as is sufficient to pay the secured debt. 6. Sub-section (3) of Sec. 13 mandates to communicate to the borrower the details of the amount payable by him and the secured assets intended to be enforced by the secured creditor in the event of non-payment of secured debts by the borrower. 7. Section 17 of the Ordinance confers upon the borrower, aggrieved by any of the measures referred to in sub-sec. 7. Section 17 of the Ordinance confers upon the borrower, aggrieved by any of the measures referred to in sub-sec. (4) of Sec. 13 by the secured creditor or his authorised officer, right of appeal to the Debts Recovery Tribunal having jurisdiction in the matter, within forty-five days from the date on which such measures had been taken. However, the right of appeal has been circumscribed 1797 by the provisions of sub-sec. (2) of Sec. 17 of the Ordinance, which provides that the appeal shall not be entertained by the Debts Recovery Tribunal unless the borrower has deposited with the Debts Recovery Tribunal seventy-five percent of the amount claimed in the notice referred to in sub-sec. (2) of Sec. 13. But, the embargo of deposit by the borrower with the Tribunal seventy-five percent of the amount claimed in the notice is not absolute. Proviso to sub- sec. (2) of Sec. 17 empowers the Tribunal to waive or reduce the amount to be deposited by the borrower for the reasons to be recorded in writing. 8. Section 18 of the Ordinance confers upon the person aggrieved by any order made by the Debts Recovery Tribunal under Sec. 17 the right of further appeal to the Appellate Tribunal within thirty days from the date of receipt of the order of the Debts Recovery Tribunal. 9. Under Sec. 19 of the Ordinance the Debts Recovery Tribunal or the appellate Tribunal, as the case may be, on an appeal filed under Sec. 17 or sec. 18, is empowered to direct the secured creditor to return the secured assets to the concerned borrower, if it finds that the possession of the secured assets by the secured creditor was wrongful. This Sec. further provides that the borrower shall be entitled to payment of such compensation and costs as may be determined by such Tribunal or the Appellate Tribunal. 10. The submission of the learned Counsel, tested on the touchstone of the provisions of the Ordinance, does not hold water. The provisions regarding notice to the borrower, two appeals, restitution and compensation, contained in Secs. 13, 17, 18 and 19 of the Ordinance, sufficiently and adequately take care of the interest of the borrower against the action taken against him by the secured creditor under Sec. 13 of the Ordinance. In the opinion of the court, the impugned Ordinance does not suffer from the vice of arbitrariness. 13, 17, 18 and 19 of the Ordinance, sufficiently and adequately take care of the interest of the borrower against the action taken against him by the secured creditor under Sec. 13 of the Ordinance. In the opinion of the court, the impugned Ordinance does not suffer from the vice of arbitrariness. It is not in dissonance with the provisions of Art. 14 of the Constitution in any manner. " ( 9 ) IN view of the above, since constitutional validity of the Ordinance is already upheld and the present Act is nothing but a substitute of the Ordinance by Act, the challenge to the constitutionality of the Act cannot be entertained since the constitutionality of the pari-materia provisions of the very Ordinance which is substituted by the Act is already upheld by the Division Bench of this Court. In any case, the view taken by the Division Bench upholding the constitutional validity of the Act is binding to this Court. ( 10 ) MR. Kapadia appearing for the petitioners could not show any of the distinguishing provisions of the Act vis-a-vis the provisions of the Ordinance. However, he only submitted that in view of the observations made by the Division bench in the aforesaid judgment at Para 11 that the exercise of examining the validity or even otherwise was academic, and therefore, it cannot be concluded that the Division Bench in the case of "m. R. Utensils " (supra) upheld the constitutional validity of Sec. 13 of the Act which is challenged by him. In my view, the observations made from Para 4 to 10 which have been reproduced earlier shows that the Division Bench did examine the challenge to the pari- materia provisions of the Ordinance, and therefore, the binding effect of the view of the Division Bench of this Court upon this Court cannot be diluted, and therefore, the said contention of Mr. Kapadia fails, and hence, rejected. ( 11 ) EVEN otherwise also, amendment sought to be inserted in the memo of petitions by the learned Counsel appearing for the petitioners challenging the vires of certain provisions of the Act lacks bona fide inasmuch as the petitioners who arerepresented by the learned Counsel, Mr. A. M. Raval, Mr. Kapadia and Mr. Kapadia fails, and hence, rejected. ( 11 ) EVEN otherwise also, amendment sought to be inserted in the memo of petitions by the learned Counsel appearing for the petitioners challenging the vires of certain provisions of the Act lacks bona fide inasmuch as the petitioners who arerepresented by the learned Counsel, Mr. A. M. Raval, Mr. Kapadia and Mr. K. H. Baxi have pressed the amendment only at the time when S. C. A. No. 2786 of 2003 was already heard on 25-6-2003 and was placed for dictation of orders. Not only that, but initially all the petitions which are preferred by the petitioners represented by Mr. A. M. Raval, Mr. Kapadia and Mr. Baxi, without making any prayer for challenging the constitutional validity of the Act. Not only that, but the initial orders including interim orders were pressed before the Bench of the learned single Judge and the matter is accordingly entertained and appropriate orders are also passed. It is only at the time when the matters are being heard finally by the Court, challenge to the constitutional validity of certain provisions of the Act is pressed on behalf of the respective petitioners. If any litigant is approaching a forum and not only that, but is also surrendering to the jurisdiction of that forum by pressing for the order in the proceedings initiated by such litigant and on the basis of such representation appropriate orders are also passed and the benefit to that extent is enjoyed by such litigant, thereafter, at the time when the matter is taken up for final disposal by the Court or is being heard with the other group of the same challenge and at that stage to press for challenge to the constitutional validity of certain provisions of the Act, and thereby, creating a situation, so that the matter may be required to be segregated and transferred to the other forum and thereby, to continue to enjoy the benefits of the initial order until the another Forum finally decides the matter can be said as a dilatory practice and tactics of continuing with the proceedings which cannot be entertained or encouraged by the Court. If such practice or tactics are entertained, it would result into allowing the litigant to take undue benefits of delay in the proceedings and enjoyment of the initial or interim orders passed by adopting dilatory practice and tactics and such cannot be said to be bona fide action on the part of any litigant in the Court of law. Therefore, since such challenge to the vires of certain provisions of the Act by the petitioners, who are represented by Mr. A. M. Raval, Mr. Kapadia and Mr. Baxi lacks bona fide. Such amendment in the petition by bringing challenge to the vires of the provisions of the Act which is otherwise also concluded by the decision of the Division Bench of this Court, and therefore, also should not be allowed and deserves to be rejected. ( 12 ) THE aforesaid takes me to examine the contentions raised by the learned counsel appearing for the parties on the premise that the Act is intra vires to the powers under the Constitution of India. Before I consider the challenge and the contentions raised, some background beyond the Ordinance and the Act is required to be taken note of and such would enable the Court to interpret and examine various challenges made keeping in view the intention of the parliament for legislating the Act. In the case of K. P. Varghese v. Income- tax Officer, Ernakulum and Anr:, reported in AIR 1981 SC 1922 , the Apex Court, while considering the principles for interpretation of the Statutes, has observed that the proceeding of the legislature are relevant as it throws considerable light on the object and purpose of enactment of Statute. ( 13 ) WHILE presenting the bill of the present Act in the Parliament the detail given, inter alia, shows that a new bill on Banking Sector Reforms was proposed to be introduced in the Parliament in strengthening creditors right through foreclosure and enforcement of securities by Banks and Financial Institutions. The same was also on the basis of Narasimham Committee and Andhyarujina committee reports which, inter alia, provided that legal framework should be kept pace with changing commercial practice and with the Financial Sector reforms. The said reports and recommendations also provide that the Bank should have power of taking of possession and sale of securities without the intervention of Court of the mortgaged properties. The said reports and recommendations also provide that the Bank should have power of taking of possession and sale of securities without the intervention of Court of the mortgaged properties. Therefore, if the background is seen, it shows mat as on September 30, 2001 the Debts Recovery Tribunals had disposed of 18703 cases involving Rs. 14026 crore, but the recovery made was rs. 3,527 crore. In this regard, it is worthwhile to consider that in Narasimham committees second report it was recommended that Global financial integration would call for a greater measure of competitive efficiency in our financial system. A strong and efficient financial system is necessary both to strengthen the domestic economy and make it more efficient and also to enable it to meet the challenges posed by financial globalisation. On the question of legal framework, it was suggested that legal framework should be kept pace with changing commercial practice. The Committee has recommended as under :"under the head of legal framework it should be kept that in our system, the evolution of the legal frame has not kept pace with changing commercial practice and with the financial sector reform. As a result, the economy has not been able to reap the full benefits of the reforms process. "the Committee quoted some portion from the Report of Real Property security Law of the Banking Laws Committee (Chairman Dr. P. V. Rajamannar) wherein the report has stated that -"the situation that prevailed at the time of the enactment of the Transfer of Property Act, 1882 justified the legislative action of the then Government of India in limiting the right of sale without the intervention of the Court only to such class of mortgages. But this situation became totally out of context with subsequent developments. Our economic conditions have vastly changed since the enactment of the Transfer of Property Act, 1882. The role of unscrupulous money-lenders dominating in the field of credit is no longer valid. It is not the village money-lenders who is primarily required to extend credit in the mofussil. With our reliance on the industrialisation of credit, Banks and our financing institutions are the major lenders of credit today. In their dealings with their mortgagors, it is anachronistic to assume that they will adopt the unscrupulous methods which are characteristic of unscrupulous money-lenders. It is not the village money-lenders who is primarily required to extend credit in the mofussil. With our reliance on the industrialisation of credit, Banks and our financing institutions are the major lenders of credit today. In their dealings with their mortgagors, it is anachronistic to assume that they will adopt the unscrupulous methods which are characteristic of unscrupulous money-lenders. In fact, in extending credit, the necessity for suitable safeguards to Banks and other financial institutions is now rightly stressed. It is understandable that the legal framework essentially conceived to deal with credit given by Banks and other financial institutions, whose motivation is essentially not profit but socio- economic development. "on the question of vesting of the power of sale in D. F. I. s/banks the committee observed that the power of sale in certain institutions like Land development Banks and State Finance Corporations, has been vested through special statute. The Committee suggested that this approach should be extended to other Development Financial Institutions and if possible to Banks through the Banking Regulation Act. ( 14 ) THE background and the speech of the Honble Finance Minister in the Parliament which has been referred to in the book of Low Relating to securitisation and Reconstruction of Financial Assets and Enforcement of Security interest by Taxmanns V. S. Datey shows that the same is enacted with a view to speed up the recoveries of the Banks and financial Institutions outstanding by realisation of the security interest without intervention of the Court and is to provide legal framework for securitisation of the assets. The relevant portion of the statement of the objects when the bill came to be introduced read as under :"the Financial Sector has been one of the key drivers of Indias efforts to achieve success in rapidly developing its economy. While the Banking industry in India is progressively complying with the international prudential norms and accounting practices, there are certain areas in which the Banking and financial sector do not have a level playing field as compared to other participants in the financial markets in the world. There is no legal provision for facilitating securitisation of financial assets of Banks and financial institutions. Further, unlike international Banks, the Banks and financial institutions in India do not have power to take possession of securities and sell them. There is no legal provision for facilitating securitisation of financial assets of Banks and financial institutions. Further, unlike international Banks, the Banks and financial institutions in India do not have power to take possession of securities and sell them. Our existing legal framework relating to commercial transactions has not kept pace with the changing commercial practices and financial sector reforms. This has resulted in slow pace of recovery of defaulting loans and mounting levels of non- performing assets of Banks and financial institutions. Narasimham Committee i and II and Andhyarujina Committee constituted by the Central Government for the purpose of examining Banking sector reforms have considered the need for changes in the legal system in respect of these areas. "the aforesaid clearly goes to show that with a view to enable the Banks and Financial Institutions for recovery of the loans and for reducing the level of non-performing assets the Act has been enacted. ( 15 ) ON behalf of the petitioners challenging the action of the Co-operative banks, it was contended that the notification dated 28-1-2003 issued by Ministry of Finance, Government of India in exercise of power under Item V of clause- c of sub-sec. (1) of Sec. 2 of the Act of specifying Co-operative Bank as the Bank under the Act is ultra vires the powers of the Constitution inasmuch as, so far as the Co-operative Banks are concerned, it would fall under Entry 32 of the State List and the same would not fall either under Entry 43 or under Entry 45 of the Central List. ( 16 ) ON the other hand, the learned Counsel appearing for the Co-operative banks submitted, inter alia, that the Co-operative Banks are even otherwise covered under the Banking Regulations Act, and therefore, Co-operative Banks, even in absence of such notification, can invoke the provisions of the Act since they are covered as the Banks under the provisions of Banking Regulations Act. It was also submitted on behalf of the Co-operative Banks that the matter pertaining to transaction of Banking includes the recovery of loans, and therefore, when the procedure is provided for recovery of loans or recovery of the Bank dues, it is not a matter under Entry 32, but it is a matter under Entry 45. It was also submitted on behalf of the Co-operative Banks that the matter pertaining to transaction of Banking includes the recovery of loans, and therefore, when the procedure is provided for recovery of loans or recovery of the Bank dues, it is not a matter under Entry 32, but it is a matter under Entry 45. The scrutiny of the aforesaid contention shows that the Act is enacted with the object, inter alia, for enforcement of the security interest of the Bank or financial Institution. In the case of Delhi Cloth and General Mills Co. Ltd. v. Union of India and Ors. , reported in AIR 1983 SC 937 , the Apex Court has observed as under :"when a law is impugned on the ground that it is ultra vires the powers of the legislature which enacted it, what has to be ascertained is the true character of the legislation. To do that one must have regard to the enactment as a whole, to its objects and to the scope and effect of its provisions. To resolve the controversy if it becomes necessary to ascertain to which entry in the three lists, the legislation is referable, the Court has evolved the doctrine of pith and substance. If in pith and substance, the legislation falls within one entry or the other, but some portion of the subject-matter of the legislation incidentally trenches upon and might enter a field under another list, then it must held to be valid in its entirety, even though, it might incidentally trench on matters which are beyond its competence. " ( 17 ) THE statement of the objects of the Act as referred to hereinabove further shows that the Act is enacted with a view to enable the Banks and Financial institutions to realise long-term assets, manage problems of liquidity, asset liability mismatches and recovery by exercising powers to take possession of securities, sell them and reduce non-performing assets by adopting measures for recovery or reconstruction. In this regard, if the provisions of the Banking regulations Act (hereinafter referred to as "b. R. A. ") are examined, by virtue of Sec. 56 of the Act, certain provisions of the B. R. A. are made applicable to Co-operative Societies dealing in Banking business. In this regard, if the provisions of the Banking regulations Act (hereinafter referred to as "b. R. A. ") are examined, by virtue of Sec. 56 of the Act, certain provisions of the B. R. A. are made applicable to Co-operative Societies dealing in Banking business. Section 18 of B. R. A. which is made applicable for Co-operative Banks provides for maintenance of cash reserves, Sec. 20 applicable for Co-operative Bank provides for restrictions on loans and advances by Co-operative Bank, Sec. 24 provides for maintenance of cash balance and other securities, Sec. 35 provides for inspection by the reserve Bank of India (R. B. I.), Sec. 35a provides for binding effect of the directives of R. B. I. Therefore, Sec. 56 of B. R. A. , providing that with certain modifications, the provisions of B. R. A. is applicable to the Co-operative Banks, in my view, goes to show that in substance the provisions of Part-II of the b. R. A. relating to business of the Banking Companies are made applicable with modifications to all Co-operative Banks. It can hardly be legitimately disputed that method provided for recovery of loan by realisation of secured assets, and thereby, to provide mode for reduction of non-performing assets by the Co- operative Bank would not be a matter pertaining to Banking business, merely because a Bank is a Co-operative Bank. The law pertaining to regulating Banking business would, by natural construction, include the method and manner of recovery of loans and realisation of assets and also the non-performing assets, and hence, it would not be sufficient to construe that Parliament has no power to legislate upon the method and manner of Regularisation and Enforcement of Security Interest which also includes recovery by the Co-operative Banks and it would fall under Entry 32 of State List. As such if a matter pertains to incorporation, regulations and winding-up of Co-operative Societies, it would fall under Entry 32 of the State List, but the law providing the remedy of realisation of secured assets by the Co-operative Bank can be said to be a subject touching to Banking. As such if a matter pertains to incorporation, regulations and winding-up of Co-operative Societies, it would fall under Entry 32 of the State List, but the law providing the remedy of realisation of secured assets by the Co-operative Bank can be said to be a subject touching to Banking. It is well settled that the entry should be given the widest possible interpretation, and in my view, the Banking wouldinclude various activities of the Bank namely receiving monies from the depositors, providing for loan, maintaining of the cash reserves, assets, recovery of loans, realisation of secured assets, reduction of non-performing assets by realisation of monies etc. , are various subjects, which can be said as touching to banking provided under Entry 45 of Central List. An attempt was made to submit that if the law pertaining for recovery of the Co-operative Bank dues are treated as under Entry 45, then in that case, the validity of the provisions of Sec. 96 of the Gujarat Co-operative Societies act can be questioned. I am not required to examine the said aspect as the same is not issue before this Court to test the validity of Sec. 96 of the Gujarat co-operative Societies Act, but the pertinent aspect is that as per the provisions of Sec. 37 of the Act, the provisions of the Act and the Rules made thereunder are in addition and not in derogation of any other law for time-being in force, and therefore, even otherwise also as such there is no conflict. Moreover, Sec. 96 of the Act provides for resolving disputes between society and its members and such societies may not be Co-op. Banks also. ( 18 ) MUCH reliance was placed on behalf of the petitioners upon the judgment of the Division Bench of this Court in the case of Kheralu Nagarik Sahakari bank Limited v. State of Gujarat, reported in 1998 (2) GLR 1517 to contend that such item squarely falls under Entry 32 of the State List and would not fall under Entry 45 of the Central List. In the case Kheralu Nagarik Sahakari bank Limited (supra), the Division Bench of this Court was considering whether the State legislature can provide for making provisions for seeking permission of the Government for making certain investment by a Co-operative Bank. In the case Kheralu Nagarik Sahakari bank Limited (supra), the Division Bench of this Court was considering whether the State legislature can provide for making provisions for seeking permission of the Government for making certain investment by a Co-operative Bank. The court interpreted Entry 43 of List-I and observed that Co-operative Societies are excluded from Entry 43 of Central List, and therefore, it would fall under entry 32 of State list. In my view, the decision in the case of Kheralu Nagarik sahakari Bank (supra) cannot be read as holding that the matter pertaining to banking business of a Co-operative Bank would not fall under Entry 45 of central list, and therefore, the said judgment is of no help to the petitioners. In exercise of the power under Sec. 2 (1) (c) (v) of the Act, the Central Government has included by the impugned notification, the Co-operative Banks in the definition of Bank and the same, in my view, is within the scope and ambit of the legislative competence of Parliament and cannot be said to be ultra vires the powers under the Constitution of India. The notification is subordinate legislation and the purpose of the enactment of the main Act itself is for providing procedure for regulation and realisation of security interest in secured assets by the Banks and when the Central Government in its legislative wisdom has found it proper to include Co-operative Banks also within the definition of the word "bank" for attaining the object in the field of Co-operative Banks, it cannot be said that such piece is of subordinate legislation as per the impugned notification is beyond the scope and ambit of the Act itself, and therefore, challenge to the legality and validity of the notification dated 28-1-2003 on the ground that it is ultra vires to powers of Parliament or Central Government fails, and hence, rejected. ( 19 ) RELIANCE was also placed on behalf of the petitioners upon the judgment of the Apex Court in the case of R. C. Tiwari v. M. P. State Co-op. Marketing federation Ltd. and Ors. , reported in 1997 (5) SCC 125 to contend that when special provision is made normal remedy gets excluded. It was submitted that since the provisions for recovery is already made under the Gujarat Co-operative societies Act, the remedy under any other law is excluded. Marketing federation Ltd. and Ors. , reported in 1997 (5) SCC 125 to contend that when special provision is made normal remedy gets excluded. It was submitted that since the provisions for recovery is already made under the Gujarat Co-operative societies Act, the remedy under any other law is excluded. Such contentions, while considering the provisions of the Act, deserves to be rejected on the face of it, because as observed earlier, the provisions of the Act are in addition to any other law for time-being in force and by the present Act as additional mode of recovery and realisation of securities have been provided, and therefore, when there is express provision under the Act, such general principles and the decision providing for such general principles cannot be made applicable. It was also sought to be contended on behalf of the petitioners that so far as co-operative Banks are concerned, the rights and liabilities of the member of a Bank are governed by the provisions of the bye-laws and such bye-laws, inter alia, provides for filing of the suits before the Nominee, which cannot be nullified by the provisions of the present Act enabling the Co-operative Banks to resort to the provisions of the Act. In my view, such contention also deserves to be rejected because no bye-law can operate on the face of statutory provisions and it is otherwise within the power of legislature to enact a law even though the existing bye-laws provides for such governing of a relationship. Even if the bye-laws are treated as an agreement between the member and a Co-operative bank, which is a Co-operative Society, then also as per the provisions of Sec. 35 of the Act, the provisions of the present Act shall have the effect notwithstanding other law for the time-being in force and/or an instrument having effect by virtue of such law. Moreover, the method providing for remedial measure is for realisation of security interest in secured assets of a Co-operative bank and such method/procedure is in addition to the provisions of any other law for the time-being in force, therefore, it cannot legitimately be contended that the Co-operative Banks cannot resort to the provisions of the Act for realisation of their secured assets as per the present Act. ( 20 ) THE learned Counsel for the petitioners have contended, inter alia, that the operation of the Act is prospective in nature and is not retrospective. In furtherance to the said submission, it has been contended that unless the apparent intention of the legislature is to make any statute retrospective, a normal presumption would be to treat it as prospective. It was submitted that the language- used under Sec. 13 (2) "makes any defaults" and the language "such debt is classified" are sufficient to show the intention of the Parliament to make the provisions of the Act as prospective. It was also submitted on behalf of the petitioners that certain provisions of the Act, more particularly Chapter IV is not even brought into force requiring for maintenance of registration of securities etc. , and therefore, it was submitted that such circumstances also throw light upon the intention of the Parliament to make the Act prospective and not retrospective, and therefore, it was submitted that it is only in case where the default is after the Act coming into force and the debt which has accrued after the Act has come into force and the loan transaction which has taken place after the Act came into force, would be covered by the provisions of the Act and not the default or the loan transaction or the debt prior to the Act, as the case may be. .