Palok Basu, J.
1. Nagariya Sahkari Bank Ltd., Varanasi (hereinafter referred to as the Bank) is a Primary Urban Co-operative Bank within the meaning of Section 2 of the U. P. Cooperative Societies Act, 1965 (for short, the Act), more specifically defined as Primary Urban Cooperative Bank under Rule (qq) of Rule 2 of the Rules framed under the Act (hereinafter referred to as the Rules). All the petitioners in this bunch of 26 writ petitions are aggrieved by the action of the Bank taken for realising amounts due against the petitioners through recovery certificates/Citations issued by the revenue authorities under the U. P. Public Money (Recovery of Dues) Act, 1972 and in one case the recovery certificate/citation issued by the Registrar Co-operative Societies in proceedings for realisation of loan amount which was initiated by the Bank. Since most of the questions raised in this bunch of cases are
common, as prayed by the learned counsel for the parties, all the cases were bunched and heard together.
2. Sri C.K. Parekh, Sri M.P. Gupta. Sri Salil Kumar Rai. Sri Ramakrishna. Sri A.R. Dubey. Sri G.K. Singh, Sri S.S. Tripathi, Sri Saghir Ahmad, Sri Jai Prakash Singh, Sri P.K. Ganguly and Sri Bajrang Bahadur Singh, have been heard at great length for the respective petitioners. Sri A.K. Singh for the Bank and Sri Vishnu Pratap, learned standing counsel for the State of U. P. and its recovering officials have also been heard at great length. Both sides were permitted to file written arguments which have been filed by Sri Parekh, Sri Rai for the petitioners and by Sri Singh for the Bank.
3. In order to appreciate the points which have been advanced by the learned counsel for the petitioners and the replies submitted by the respondents’ counsel, it should be absolutely necessary to bear in mind few Legislations which cover the controversies raised in these petitions. The Act has denied various Co-operative Societies including ‘Primary Society’ as denied in clause (q1) of Section 2 of the Act. Credit Society is defined in Section 2 (i-1) of the Act and clause (h) of the rules framed under the Act–both read as under :
“Credit Society” means a society which has as its primary object the raising of funds to be lent to its members.”
4. Some controversies had arisen relating to the Banking activities of ‘Banking Company’ or ‘Banking Society’ and in order to remove the doubt and settle those controversies, a new chapter described as Part-V was added in the Banking Regulations Act, 1949 which consists of only one Section 56 which, however, has several clauses and sub-clauses which drastically modify the laws relating to the banking activities of the Co-operative Societies. In view of the said addition as Part-V by Amending Act No. 23 of 1965 (w.e.f. 1.3.1966). Section 3 of the Banking Regulations Act, 1949 which
provided that the Banking Regulations Act was not to apply to various types of Co-operative Societies, stands substantially amended. It may be pointed out right now that while the petitioners on the one hand contended that the Bank was not the type of society on which the provisions of Banking Regulations Act would be attracted, the learned counsel for the respondents argued that the Bank was fully authorised to operate as a Bank within the meaning of Banking Regulations Act inasmuch as materials have been placed through the affidavits in reply indicating that the Bank was granted licence for Banking activities by the Reserve Bank of India under Section 56(O) read with Section 22(1) of the Banking Regulations Act vide Annexure-2 to the counter-affidavit in Writ Petition No. 48885 of 1999. Similarly, it was indicated through the Annexure-C of the same counter-affidavit that branches were opened in pursuance of the permission granted by the Reserve Bank of India under Section 56(P) read with Section 23 of the Banking Regulations Act. It has also been shown by the Bank that guidelines have been issued by the Reserve Bank of India from time to time under Section 35 read with Section 56 of the Banking Regulations Act which have been followed by the Bank. Those guidelines are contained as Annexures-11 and 12 to the aforesaid counter-affidavit in Writ Petition No. 48885 of 1999.
5. In view of the arguments advanced and the pleadings of the parties, it has already been noted above that the Bank is a Primary Urban Co-operative Bank and, therefore, the Banking activities were fully sanctioned by the norms applicable.
6. Coming now to the arguments of the petitioners, three points have been canvassed strongly :
(1) Section 95 of the Act will not apply because the Bank is not an agricultural Credit Society nor is it a Society under Section 34 of the Act. The argument proceeds that Recovery Certificate could not
have been issued by the Bank straight to the Revenue Authorities unless the Bank could have gone to the Registrar and an award was passed and unless the appellate remedy was also exhausted as provided therein, recovery certificate could not have been issued.
(2) Since Bank is not a Banking Company within the meaning of the U. P. Public Money (Recovery of Dues) Act, the Recovery Certificate could not have gone at the behest of the Bank to the Collector/ Revenue authorities which in turn could not issue any citation for recovering the amount shown in the recovery certificate.
(3) Since there was no agreement between the borrowers/ petitioners on the one hand and the Bank on the other permitting the applicability of U. P. Public Money (Recovery of Dues) Act recovering the alleged dues of the petitioners by taking recourse to the provisions of the said Act, the Bank could not have taken recourse to the said Act for recovering dues.
7. During the course of arguments, the petitioners’ counsel enlarged the aforesaid three points by further arguing that the Bank cannot take alternative case as has been pleaded in some of the counter-affidavits. The arguments proceed that the Bank could not take recourse to the Act and to the U. P. Public Money (Recovery of Dues) Act whenever it chose to go in for one or the other. It must fix its stand. The other corollary to the argument was that the words used in the U. P. Public Money (Recovery of Dues) Act and the definition existing therein must be strictly confined to the type of Society mentioned in Section 3 thereof and since the Bank could not be covered in any of those definitions it could not approach the revenue authorities under the said enactment. The learned counsel for the parties
have placed reliance on the following
1. Phoenix Impex v. State of Rajasthan and others, AIR 1998 Raj 100.
2. Jogendra Lal Saha v. State of Bihar and others. AIR 1991 SC 1148.
3. State of Madras v. Cannon Dunkerley and Co., AIR 1958 SC 560.
4. Beedha Singh v. District Registrar, Co-operative Societies, Mathura and others, 1986 UPLBEC 441.
8. In reply the respondents suitably replied to the aforesaid arguments and pleaded that there was no error in any of the recovery proceedings initiated against the petitioners even though in one of the cases it was issued by the Registrar under Section 95 of the Act while in all the other cases it was under the U. P. Public Money (Recovery of Dues) Act.
9. The first argument noted above may now be taken up for discussion. For ready reference. Sections 95 and 95A are quoted
“95. Recovery of sums due to
Government.–(1) All sums due from a Co-operative Society or from an officer or member or past member of a Co-operative Society as such to the State Government or the Central Government including any costs awarded to any such Government under any provision of this Act, may, on certificate issued by the Registrar in this behalf, be recovered in the same manner as arrears of land revenue.
(2) Sums due from a society to the State Government or the Central Government and recoverable under sub-section (1) may be recovered, firstly, from the property of the society ; secondly, in the case of a society the liability of the members of which is limited, from the members, past members or the estates of
deceased members, subject to the limit of their liability ; and thirdly, in the case of other societies, from the members, past members, or the estate of deceased members :
Provided that the liability of past members and the estates of deceased members shall in all cases be subject to the provisions of Section 25.
“95A. Special provision for recovery of certain dues of agricultural society.–(1) The Registrar may, on an application made by society referred to in Section 34 or an agricultural credit society for the recovery of arrears of any loan advanced by it or any instalment thereof to any member and on its furnishing a statement of accounts in respect of such loan and after making such inquiries, if any, as he thinks fit, issue a certificate for recovery of the amount to due.
(2) A certificate issued by the Registrar under sub-section (1) shall be final and conclusive proof of the dues which shall be executable under Section 92.”
10. Section 34 has been referred to in Section 95A of the Act as noted above. Consequently, for ready reference Section 34 is also quoted below :
“Section 34 Nominees of the Government on the Committee of Management :
(1) Where the State Government has :
(a) subscribed directly to the share capital of a Cooperative Society under Chapter VI, or
(b) assisted indirectly in the formation or augmentation of the share capital of a Cooperative Society as provided in Chapter VI, or
(c) given loans or made advances to a Co-operative Society or guaranteed the repayment of principal and payment of the interest on
debentures issued by a Cooperative Society or guaranteed the repayment of principal and payment of interest on loans or advances to a Co-operative Society, the State Government shall have the right to nominate on the Committee of Management of such society not more than two persons one of whom shall be a Government servant, so, however, that the Government servant shall not vote at an election of an office-bearer of the society.
Provided that where the society is engaged in production of sugar and :
(i) the share capital subscribed to by the State Government is not less than one crore rupee, or (ii) the share of the State Government in the share capital of the society exceeds fifty per cent of the total share capital of the society, or
(iii) the State Government has given loans or made advances to the society or guaranteed the repayment of principal or payment of interest on debentures issued by the society or guaranteed the repayment of principal and interest on loans and advances to the society and the amount exceeds fifty per cent in the aggregate of the total amount so borrowed by the society.
the State Government shall also have the right to nominate the Chairman of the Committee of Management, who shall be a Government servant, of such societies and their apex society, namely, the Uttar Pradesh Cooperative Sugar Factories Federation Ltd.
(1-A) x x x (1-B) x x x (2) A person nominated under sub-section (1) shall hold office during the pleasure of the State Government. (3) The right of nomination vested in the State Government under this Section may be delegated by it to any authority specified by it in that behalf."
11. A combined reading of Sections 34, 95 and 95A of the Act leaves no manner of doubt that the empowerment available to a society under Section 95A will be applicable if the Bank can be said to be covered by the terms of the society referred to in Section 34 of the Act. It has already been noted above that the Bank in the instant case has been recognised by the Reserve Bank of India as a Banking Society inasmuch as no effective material, proof or evidence could be produced in denial that the Bank in the instant case is not covered by clause (c) of subsection (1) of Section 34. The State Government, according to the Bank, has from time to lime advanced loans to the Bank and, therefore, it was permissible for the Bank to get shelter under Section 34 and thus move for recovery of arrears of loan under Section 95A of the Act.
12. Simultaneously, it may be noted here that whenever Section 95 was applicable, the dues of the society could be recovered as arrears of land revenue in those cases also. In this connection, reference was made to Section 97 of the Act which permits appeal against award of Registrar. It was contended that unless an award was first obtained by the society. Section 95 or 95A was not available inasmuch as the right of the borrower to go in appeal against the award stands denied by the procedure adopted by the Bank in the instant cases. It should atonce be stated here that party can go for an award only to the extent permitted by
Section 71 which provides that only when there was a dispute amongst the borrower and the Bank that a party may go for an award. Section 95A, as noted above, makes special provisions for recovery of certain dues of a society covered by Section 34 of the Act. As noted above, since the Bank is squarely covered under Section 34 and there is absolutely no challenge to the loans, its right to invoke those special provisions for recovery of dues is fully protected by Section 95A of the Act.
13. Coming to the second argument it may be pointed out that the provisions of U. P. Public Money (Recovery of Dues) Act arc available to all the types of Banks and Institutions which come within the definitions carved out for those Institutions in clauses (c), (d), (e), and (f) of the said enactment. The provisions contained in clause (f) of Section 2 provides that the said Act will apply to “Or a Financing Bank or Central Bank as defined in U. P. Cooperative Societies Act. 1965 not being a Land Development Bank.” It is right time now to refer to the definition of the ‘Primary Urban Cooperative Bank’ as it exists in Rule 2 (qq). It was added by the Notification No. 4410, dated 5.12.1985 :
“2 (qq). ‘Primary Urban Cooperative Bank’ means a Primary Co-operative Society majority of members whereof are non-agriculturists and the primary object whereof is to accept deposits and to raise funds which it may invest and lend to its members.”
14. The Bank in the instant case, therefore, is undoubtedly a Primary Co-operative Society and is entitled to all protections which the law extends for recovering the amount due from its members or others who are borrowers from the said Bank in accordance with Rules and by-laws. The Bank could, therefore, take recourse to the U. P. Public Money (Recovery of Dues) Act. 1972.
15. Coming to the third argument, it has to be mentioned only to be left out from consideration for the simple
reason that it is nobody’s ease that the provisions of the U. P. Public Money (Recovery of Dues) Act are being applied because of any agreement. Why Bank had adopted in all the cases except one to go for recovery proceedings under the U. P. Public Money (Recovery of Dues) Act. 1972 is more obvious because the Bank is fully authorised to follow rules and to go for recovery under those provisions. In one case where it has taken recourse to Section 95 and a Recovery certificate/citation has been issued to the revenue authorities for recovering the arrears, there also the citation alone will go after the recovery certificate was issued by the Registrar. Similarly, under the U. P. Public Money (Recovery of Dues) Act again a citation alone will go after the recovery certificate is issued by the Bank. In this view of the matter, the third point does not arise for consideration at all.
16. Coming now to the citations referred to above, it may be pointed out that none of them is on the point. The Rajas than case was cited repeatedly so as to lend support to the arguments of the petitioners.
The facts of the said case are that the appellant M/s, Phoenix Impex had taken loan from Jodhpur Central Co-operative Bank. It started proceedings against the appellant for recovery of the loan under the Rajasthan Co-operative Societies Act, it was contended that the recovery proceedings were barred because Jodhpur Central Co-operative Bank was covered within the meaning of the word ‘Banking Company’ as defined in the Banking Regulation Act. 1949 and since it was a Central Act it had overriding effect over the State Co-operative Societies Act and, therefore, the recovery proceedings could, have been taken against the appellant only under the provisions of recovery of debts due to Banks and Financial Institutions Act, 1993. It was held that Jodhpur Central Cooperative Bank was not covered within the definition of Banking Company and, therefore, the appellant’s contention that the recovery under the Rajasthan Co-
operative Societies Act could not be made, was repelled.
17. It has already been noted above that on the pleadings of the parties in the instant cases, there cannot but be only one conclusion that Nagariya Sahkari Bank. Varanasi was a Primary Urban Cooperative Sank within the meaning of the Banking Regulation Act as well as U. P. Co-operative Societies Act and the Rules framed thereunder. Therefore, Rajasthan ease does not help the petitioner.
18. Beedha Singh’s case decides that Registrar shall have to follow the principles of natural justice while taking action under Section 95A of the Co-operative Societies Act. In the instant case, the action has been taken under the U. P. Public Money (Recovery of Dues) Act. The case is clearly distinguishable.
19. In view of the aforesaid discussion, none of the points canvassed on behalf of the petitioner is backed up by any of the rulings cited above. Consequently, the recovery proceedings initiated by the Nagariya Sahkari Bank, Varanasi against the petitioner is fully justified, and valid.
20. It was contended by Sri Parekh that since in the Petition No. 49453 of Mohd. Farookh, there is a difference in the amount noted which was first shown as Rs. 10,70,976.50P whereas in the counter-affidavit it has been shown as Rs. 9.73.665, the recovery certificate should be held to be bad. This argument is misconceived because subsequent interest may have been added and, therefore, the difference may have come to exist.
21. Sri G.K. Singh, learned counsel for the petitioner Ram Nawal Pandey stated that the said petitioner was having Rs. 3,78,700 in his account in the Bank and since the citation demands from him Rs. 6,57,771.40P., the said amount in the account should be adjusted. This is a question of fact.
22. The reply of the Bank in the counter-affidavit is quoted below :
“6. That the contents of paragraph No. 6 of the writ petition are admitted only to the extent that the petitioner issued a cheque of Rs. 3,78,000.00 but answering respondent is unable to transfer his amount which pending in branch Urban Cooperative Bank Mughalsarai due to reason, that a circular has been issued by the Reserve Bank of India on 6.7.1999, that without prior approval from the Reserve Bank of India the answering respondent cannot fresh deposits, or agree to or disburse any payment whether in discharge of its liabilities and obligations or otherwise or enter into any compromise or arrangement or sell, transfer, or otherwise dispose of any of its properties or assets except to the extent and in the manner as provided under Circular dated 6.7.1999.’
23. In view of the aforesaid averments, and without going into the correctness of the alleged balance shown, it is directed that, in case the petitioner Ram Nawal Pandey deposits half of the remaining amount due according to the recovery certificate, within one month from today with the Bank, the recovery proceedings for the rest half of the amount shall remain stayed for a period of another six months within which he will pay the said balance in equal monthly instalments provided further that the Bank will then, on the deposit of the first instalment indicated above, approach the Reserve Bank of India for suitable directions with regard to the adjustment of the alleged balance of Rs. 3.78,700 in the Bank account, towards the total outstanding loan amount.
24. From the examination of pleadings of most of the petitioners, it transpires that they are prepared to pay the due amount in instalments. Therefore, apart from the directions regarding Writ Petition No. 49275 of 1999 filed by Ram Nawal Pandey as indicated above which shall be followed in his case only, the recovery proceedings against all other
petitioners in the remaining cases shall remain stayed for a period of one month from today. It is hereby provided that in case the petitioners deposit with the Bank half of the amount shown in their respective citations within the said period of one month, the petitioner will be permitted to deposit the remaining amount in six consecutive equal monthly instalments.
25. All the writ petitions fail and are dismissed on merits subject to paying the due loan amount in instalments as directed above.
26. The parties will bear their own