9911796707
TMI Blog2002 (12) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... hamrao Vithal Co-operative Bank Ltd. a Scheduled Multi State Co-operative Bank is the 1st petitioner in the writ petition. M/s Star Glass Works respondent No. 1 is a partnership firm registered under the Partnership Act, 1932 carrying on the business of manufacturing of Glass Containers for cosmetics, foods, beverages and pharmaceutical industries. Respondent Nos. 2 and 3 are the partners of the 1st respondent partnership firm. The 1st respondent firm is said to have availed loan facility from the 1st petitioner-bank. The loan of Rs. 32,00,000 was sanctioned to the 1st respondent by the 1st petitioner-bank on the terms and conditions incorporated in Term Loan Agreement dated 17th January, 1998. The 1st respondent as well as its partners are alleged to have failed to pay the instalments under the agreement and according to the petitioners in the month of April 2001 a sum exceeding Rs. 29 lakhs was outstanding which remained to be paid by the respondents. The petitioners herein filed an application being Original Application No. 568 of 2001 before the Debt Recovery Tribunal III at Mumbai for recovery of the outstanding amount from the respondents. The Presiding Officer, Debt Recovery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajasthan [1985] 4 SCC 404, (v) Reserve Bank of India v. Peerless General Finance [1997] 1 SCC 424, (vi ) Mayor, Aldermen & Burgesses of the Borough of Portsmouth & Charles Bovill Smith H.L. (E) (Vol. X) 1885 and (vii ) Co-operative Bank Employees Union v. Saraswat Co-operative Bank Ltd. 1983 (47) F.L.R. 348. The learned senior counsel, thus, submitted that Debt Recovery Tribunal was not justified in holding that it has no subjectwise jurisdiction in respect of the 1st petitioner-Bank being Co-operative Bank. 4. Mr. P.K Samdani, learned counsel appearing for the respondents, on the other hand, justified the orders passed by Debt Recovery Tribunal and Debt Recovery Appellate Tribunal. He contended emphatically that definition of "bank" under section 2(d) of the Act of 1993 is restricted and confined to the categories set out therein. It is so because the Legislature has used expression "means". Mr. Samdani would urge that "banking company" incorporated in section 2(e) of Act of 1993 has to be given the same meaning as is given in section 5(c) of the Banking Regulation Act, 1949 which means any company as provided in clause (d) of section 5 transacting banking business in India. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 655, (iii) Bolani Ores Ltd. v. State of Orissa [1974] 2 SCC 777, (iv) Onkarlal Nandlal v. State of Rajasthan [1985] 4 SCC 404, (v) Reserve Bank of India v. Peerless General Finance & Investment Co. Ltd. [1987] 1 SCC 424, ( vi) P. Kasilingam v. P.S.G. College of Technology AIR 1995 SC 1395, (vii) Ichchapur Industrial Co-operative Society's case (supra) and (viii) Pheonix Impex v. State of Rajasthan AIR 1998 Raj. 100. 5. We thoughtfully reflected over the matter and considered the submissions made by the learned senior counsel and the learned counsel appearing for the parties. The controversy raised in writ petition can only be resolved by consideration and understanding of relevant provisions of the Act of 1993, Banking Regulation Act, 1949, and the mode of legislation by incorporation. We would first, therefore, refer to provisions of Act of 1993. Act of 1993 was enacted to provide for establishment of Tribunals for expeditious adjudication of recovery of debts due to Banks and Financial Institutions and for the matters connected therewith or incidental thereto. Section 2(d) and (e) of Act of 1993 define "bank" and "banking company" respectively which read thus : "2( d)'bank' m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perative bank. The controversy that centres round the aspect is that according to the petitioners the meaning of expression "banking company" as understood under Banking Regulation Act at the time of incorporation has to be given while construing the expression "banking company" under section 2(e) while the respondents contend that the meaning given to the expression "banking company" in clause (c) of section 5 of the Banking Regulation Act, 1949 alone has been incorporated in section 2(e) of Act of 1993 and other provisions of Banking Regulation Act, 1949 including part V cannot be seen for the purpose. The legislation by incorporation of an earlier Act into a later Act is well known legislative device adopted for the sake of convenience in order to avoid verbatim reproduction of the provisions of the earlier Act into the later Act. Mary Roy v. State of Kerala AIR 1986 SC 1011. In Ramsarup v. Munshi AIR 1963 SC 553, it has been held "when an earlier Act or certain of its provisions are incorporated by reference into a later Act, the provisions so incorporated become part and parcel of the later Act as if it has been "bodily transposed into it." Woods Estate, Ex-parte, Works & Bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion provided in the profit and loss account . . . .' (p. 314) 11. In U.P. Avas Evam Vikas Parishad's case (supra), R.H. Sahai, J., carved out the following principle :- "The determination if a legislation was by way of incorporation or reference is more a matter of construction by the courts keeping in view the language employed by the Act, the purpose of referring or incorporating provision of an existing Act and the effect of it on the day-to-day working. Reason for it is the courts prime duty to assume that any law made by the Legislature is enacted to serve public interest." 12. In Bolani Ores Ltd.'s case (supra) upon which strong reliance was placed by Mr. Samdani Paragraph 29 of the report held thus : '. . . If this be the purpose and object of the Taxation Act, when the motor vehicle is defined under section 2(c) of the Taxation Act as having the same meaning as in the Motor Vehicles Act, 1939, then the intention of the Legislature could not have been anything but to incorporate only the definition in the Motor Vehicles Act as then existing namely, in 1943, as if that definition was bodily written into section 2(c) of the Taxation Act. If the subsequent Orissa Motor Vehi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears in the General Clauses Act, their lordships think that the principle involved is as applicable in India as it is in this country. It seems to be no less logical to hold that where certain provisions from an existing Act have been incorporated into a subsequent Act, no addition to the former Act, which is not expressly made applicable to the subsequent Act, can be deemed to be incorporated in it, at all events, if it is possible for the subsequent Act to function effectually without the addition. . . ." (p. 152) 14. In Co-operative Bank Employees Union's case (supra), the learned Single Judge of this Court was dealing with question whether inclusion of part V in Banking Regulation Act, 1949 with effect from March 1, 1966 by Amending Act 23 of 1965 would enable Saraswat Co-operative Bank Ltd. to claim that the provisions of B.I.R. Act were no longer applicable to them. The learned Single Judge in order to decide that issue referred to the relevant provisions of B.I.R. Act and Banking Regulation Act, 1949 and observed that the effect of the amendment of the Banking Regulation Act, 1949 is to include the "Co-operative Bank" in the expression "banking company" in section 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary to get an exact conception of the aim, scope and object of the whole Act; to consider, according to Lord Coke; 1. What was the law before the Act was passed, 2. What was the mischief or defect for which the law had not provided; 3. What remedy Parliament has appointed; and 4. The reason of the remedy; "The reference here is to Heydon's case (1584) 3 W. Rep 16. These are principles well settled, and were applied by this Court in "The Bengal Immunity Company Ltd. v. State of Bihar (3). This decision was followed by a Division Bench of this Court in the decision reported in 1962(1) Labour Law Journal Page 61 between Bipat Beni and Sawarkar (P.D.). A reference can be useful made to the observation of the Supreme Court in the case reported in 1976 (1) Labour Law Journal page 463 between workmen of National and Grindlays Bank Ltd., and the National and Grindlays Bank Ltd. Mr. Justice Bhagwati, speaking for the Bench observed : "It is well settled rule of interpretation that when the Legislature uses certain words which has acquired a definite meaning over a period of time, it must be assumed that those words have been used by the Legislature in the same sense. Relying upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the section incorporated as an exception or proviso. In this backdrop of legal position when we examine the Act of 1993 which defines expressions "bank" and "banking company" in section 2(d) and 2(e ) respectively inter alia the "bank" means a banking company, and "banking company" shall have same meaning assigned to it in clause (c) of section 5 of the Banking Regulation Act, 1949; section 5(c) of the Banking Regulation Act, 1949 wherein "banking company" means any company transacting business of banking in India; the "company" under section 5(d) of Banking Regulation Act which means any company as defined in section 3 of the Companies Act, 1956 and includes a foreign company within the meaning of section 591 of that Act and section 56(a) of the Banking Regulation Act which provides that references to a "banking company" or "company" or "such company" in Banking Regulation Act shall be construed as references to a "Co-operative Bank" unless the context otherwise requires, the "banking company" in section 5(c) without hesitation would include co-operative bank. While reading the definition of "banking company" in clause (c) of section 5 of Banking Regulation Act and to find the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ghout Banking Regulation Act, the references to "banking company", "the company" or "such company" shall be construed as references to co-operative bank. This is logical as well because the Legislature while introducing the banking laws applicable to the Co-operative Banks intended to confer the same benefits to them as available to the banking companies since the co-operative banks were also made subject to supervisory control of Reserve Bank of India. When we see the background in which Part V was included in Banking Regulation Act with effect from March 1, 1966 by Act 23 of 1965 we find that amending Act 23 of 1965 was passed with a view to bring co-operative banks within the ambit of Banking Regulation Act. The statement of objects and reasons for the amending Act reads thus : "The provisions of the Banking Companies Act, 1949, are not now applicable to or in relation to Co-operative Banks. The deposits and working funds of Co-operative Banks are now so large that the extension of more important provisions of the Banking Companies Act, 1949 (and of certain other allied provisions of Reserve Bank of India, 1934) to these banks will be in the public interest. The Bill seeks acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... slature would have said so-expressly, also does not merit acceptance since when the Legislature stated that "banking company" shall have same meaning as assigned under section 5(c) of Banking Regulation Act, 1949, the legislature was aware that section 5(c) has already been expanded by insertion of part V, particularly section 56(a)( i) and it was not necessary, therefore, to expressly provide for co-operative banks. There are different ways of drafting legislation. Sometimes draftsmen thinks what is implicit need not be said expressly. In Bolani Ores Ltd.'s case (supra) upon which strong reliance was placed by Mr. Samdani also the Apex Court while considering the expression "has the same meaning as in the Motor Vehicles Act, 1939" observed that when the 'Motor vehicle' is defined under section 2(c) of Taxation Act as having the same meaning as in the Motor Vehicles Act, 1939 then the intention of the Legislature was to incorporate the definition in the Motor Vehicles Act as then existing obviously any change in the definition in earlier Act after incorporation could not be read in the later Act. In so far as the definition of "banking company" in section 5(c) of Banking Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asthan High Court held that by Act 23 of 1965 and insertion of section 56 in the Banking Regulation Act, the definition of "banking company" under section 5(c) did not change. It is not the question of change of definition of "banking company" under section 5(c)-the question is, can you ignore section 56(a)( i) already existing on statute book while considering the meaning assigned to "banking company" under section 5(c). We do not think blind eye can be turned to the existing section 56(a)(i ) which provides that references to "banking company" or "the company" or "such company" shall be construed as references to co-operative bank throughout the Banking Regulation Act. Moreover, in view of Rajasthan High Court, a co-operative bank, may be called a banking company by fiction as it is engaged in banking business yet it does not become a "company" formed and registered under the Companies Act and as such under section 2(d), a co-operative bank shall not fall within definition of the "Bank". This reasoning does not appeal us and rather appears to be fallacious. It is obvious that Legislature was alive to the distinction between "banking company" and "co-operative bank" as these are t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
