In view of the above submissions & Ors. v. Dilipbhai Nathjibhai Patel

In view of the above submissions, the Court has considered all the relevant provisions of the three Acts. Section 5 of the Banking Regulation Act, 1949 (hereinafter referred to as “the Banking Act”) defines “banking” and “banking company” as under:- “banking” means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise; “banking company” means any company which transacts the business of banking in India; It is pertinent to note that the Banking Act includes Part V which is applicable only to cooperative banks. Section 56 in the said Part V, reads as under:-

Act to apply to cooperative societies subject to modifications. - The provisions of SCA/3040/2006 JUDGMENT this Act, as in force for the time being, shall apply to, or in relation to, cooperative societies as they apply to, or in relation to, banking companies subject to the following modifications, namely: - ... .. ... ... ... .. “cooperative bank” means a State (cci) cooperative bank, a Central cooperative bank and a primary cooperative bank; (ccii) “co-operative credit society” means a cooperative society, the primary object of which is to provide financial accommodation to its members and includes a cooperative land mortgage bank; “primary co-operative bank” means a co- (ccv) operative society, other than a primary agricultural credit society, - (1) the primary object 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 one lakh of rupees; and (3) the bye-laws of which do not permit admission of any other co-operative society as a member ; “central co-operative bank”, “co- (ccvii) operative society”, “primary rural credit society” and “State co-operative bank” shall have the meanings respectively assigned to them in the National Bank for Agriculture and Rural Development Act, 1981;” (emphasis supplied) SCA/3040/2006 JUDGMENT In view of the aforesaid provisions of the Banking Act, it is now necessary to consider the provisions of the National Bank for Agriculture and Rural Development Act, 1981 (hereinafter referred to as “the NABARD Act”) and the relevant provisions are as under:-

Definitions. - (d) “Central co-operative bank” means the principal co-operative society in a district in a State, the primary object of which is financing of other co-operative societies in that district; (f) “co-operative society” means a society registered or deemed to be registered, under the Co-operative Societies Act, 1912 or any other law relating to co-operative societies for the time being in force in any State ; (n) “primary rural credit society” means a cooperative society, by whatever name called, - (1) which has as its object or business the provision of financial accommodation to its members for agriculture or agricultural operations or for the marketing of crops, or for rural development; and (2) the bye-laws of which do not permit admission of any other co-operative society as member; (u) “State co-operative bank” means the principal co-operative society in a State, the primary object of which is the financing of other co-operative societies in the State ; SCA/3040/2006 JUDGMENT To recapitulate, Section 2(3) of the Gujarat Cooperative Societies Act, 1961 defines “central bank” as a cooperative bank, the objects of which include the creation of funds to be loaned to other societies. On the other hand, a primary cooperative bank is a cooperative society doing the business of banking, but which is not allowed to enroll any cooperative society as its member (Section 56 (ccv) of Banking Regulation Act). It is, therefore, clear that apart from the fact that by the very nature of its constitution, functions, location and statutory provisions, an urban cooperative bank cannot enroll as its member a cooperative society and stands on a different footing from a district central cooperative bank which has funds to be loaned to other cooperative societies and more particularly for giving credit to societies for agricultural and allied activities. On the other hand, as the name itself would imply an urban cooperative bank would cater to the banking business in an urban area.

Mr Raval for the respondent-bank has also pointed out that because the district central cooperative banks are not considered as cooperative banks, the provisions of Section 115-G regarding establishment of the Urban Bank Credit Equalization SCA/3040/2006 JUDGMENT Fund and contribution by an urban cooperative banks to the said fund are not applicable to or applied to the respondent-bank.

Having regard to the scheme of the Gujarat Cooperative Societies Act, Banking Regulation Act and the NABARD Act and also considering the fact that the Gujarat Act provides for separate chapters - Chapter XA for insured cooperative banks, Chapter XB contains certain other provisions relating to urban cooperative banks, Chapter XI contains provisions for land development banks and Chapter XIA contains provisions for elections of committees and officers of certain societies specified in Section 74C which include District central cooperative banks, it is clear that the Legislature intended that the elections to the committees of the societies specified in Section 74C are to be governed by the provisions contained in Chapter XIA of the Act and the rules framed thereunder and that the Legislature did not intend to apply the provisions of newly inserted Chapter XB to the District Central Cooperative Banks. It is true that Section 115-J contained in Chapter XB provides that the provisions of this Chapter shall have effect notwithstanding anything to the contrary contained in the other provisions of the Act or the rules made thereunder or the byelaws of the bank. However the overriding effect given to the provisions of the Chapter is in SCA/3040/2006 JUDGMENT relation to urban cooperative banks and not other banks nor other cooperative societies.

Mr Patel for the petitioners has submitted that the objects and reasons for insertion of Chapter XB indicate that the said chapter was added to the Act in view of the serious irregularities which had taken place in the working of certain cooperative banks in the State and that there were irregularities in the working of the Panchmahals District Central Cooperative Bank Ltd.. The objects and reasons relied upon read as under:-

Objects and reasons: During the years 2001- 2002, serious irregularities had taken place in the working of certain urban co-operative banks in the State of Gujarat so as to threaten their very existence. With a view to preventing such serious irregularities taking place in the working of banks in future, it was considered necessary to make, certain other provisions relating to urban co-operative banks in the Gujarat Co-operative Societies Act, 1961.

Even if what is urged is correct, merely because irregularities were also committed in the management of a district cooperative bank, it does not necessarily mean that the Legislature intended to apply Chapter XB to all cooperative banks in the State of Gujarat. If that was the intention, the Legislature would have simply made the provisions in Chapter XB applicable to “cooperative banks” without SCA/3040/2006 JUDGMENT specifically indicating that the provisions were relating to “urban cooperative banks”.

The principle laid down by the Apex Court in State of Gujarat vs. Dilipbhai Nathjibhai Patel, AIR 1998 SC 1429 that the Court cannot add words to a statute or read words into it which are not there, is a principle which goes against the petitioners' argument because what the petitioners want the Court to do is to delete the word “urban” from the title to the Chapter and the definition of “Bank” as contained in Section 115-B(a).

As regards the definition of “Urban Cooperative Bank” contained in clause (f) of Section 115-B, the same cannot be read in isolation. It has to be read in the context of the statutory provisions contained in the Banking Regulation Act, 1949 and also the provisions of the NABARD Act as indicated hereinabove. Read in the said context, it is clear that the District Central Cooperative Bank having as its members, primary cooperative societies and giving credit to such primary cooperative societies is envisaged for agricultural and allied activities in the district, such a bank cannot be considered as an urban cooperative bank which cannot enroll as its member a cooperative society. An urban cooperative bank would by necessary implication be excluded from carrying on the business of giving credit to SCA/3040/2006 JUDGMENT agricultural cooperative societies in the district and would, therefore, have its field of business in urban areas.

Of course, if the Legislature is of the view that the provisions contained in Chapter XB of the Act should be made applicable to all cooperative banks in the State, there is nothing to prevent the Legislature from doing so, but the provisions contained in Chapter XB as they stand today and read in juxtaposition with the provisions of Section 74C and Chapter XIA of the Gujarat Cooperative Societies Act and Part V of the Banking Regulation Act read with the provisions of the NABARD Act do not support the petitioners' contention that the District Central Cooperative Bank is also covered by the provisions of Chapter XB of the Act, which makes provisions only relating to urban cooperative banks.

In view of the above discussion, the petition is dismissed. Notice is discharged. (M.S. SHAH, J.) (SHARAD D DAVE, J.) zgs/-