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2015 (6) TMI 150 - RAJASTHAN HIGH COURTFinancial and banking activities undertaken by Credit Cooperative Societies - No licence as per provisions of the Banking Regulation Act, 1949 - Held that:- We are of the view that activities carried out by the respondents Nos.9 to 12 as Cooperative Societies may be within the purview of legitimate business under the Rajasthan Cooperative Societies Acdt, 2001 and the Multi-State Cooperative Societies Act, 2002 and the registered bye-laws, these activities in accepting for the purpose of lending and investment, the deposit from the public, repayment on demand and its withdrawal, fall within the definition of “banking” under Section 5(b) of the Act of 1949. The word “public” in the definition of the word “banking” cannot be restricted to general public. The word “public” will also include those persons who are nominal members, ordinary members and the members of any category under the bye-laws of the Cooperative Society so long as deposits are accepted without any restriction from such members who may be enrolled as members on the same day at the time of accepting deposits. Even the person enrolled as nominal member, does not fall outside the purview of the word “public” and that any deposits from the members on interest and for which amount is to be repayable on demand or otherwise, is an activity which amounts to banking activity. The activities of the Cooperative Societies in the State of Rajasthan have clearly demonstrated that the deposits and investments of general public, who can become nominal members and ordinary members of the Cooperative Societies, and for them lucrative schemes are being floated by the Cooperative Societies are at risk. Their investments are not covered by any protection. The provisions under the Multi-State Cooperative Societies Act, 2002 restrict the deposits upto ten times the paid up capital and the reserve. This condition is not sufficient to protect the deposits if the reserves can be advanced as loans without sufficient security. If such a restriction was sufficient, the entire banking activity could be carried out without obtaining licence under the Act of 1949. The Reserve Bank of India circulars and directives are binding on all the banks which are licensed under the Act of 1949. This protection must apply to all kind of banking activities which is defined under Section 5(b) of the Act of 1949. We do not agree with the submission of learned counsel appearing for the respondent No.9 that under the legislative scheme, Multi-State Cooperative Society is permitted to carry out banking activity which does not fall within the meaning of Section 5(b) of the Act of 1949. He submits that legislative policy provides Multi-State Cooperative Society to carry out the activities of taking deposits from its members on interest and that so long legislative scheme permits such activity, the respondent is not violating the provisions of the Act of 2002. The argument is devoid of any substance. So far as the allegation against the petitioner is concerned, this Court has already directed the Superintendent of Police of the concerned district to enquire about the complaints of the investors. In case the petitioner has committed any misconduct under the Regulation of Bar Council of India, a complaint can be made against him to the Bar Council of Rajasthan. These allegations against the petitioner was not detain us to decide the writ petition in the larger public interest. - Decided partly in favour of appellant.
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