The Bombay High Court also held that the Bank was free to pursue the recovery proceedings against 16 farmers in accordance with law, irrespective of a letter issued by the Maharashtra Legislative Secretary or the minutes of the meeting of the Committee on Petitions
Mumbai: The Bombay High Court has held that the Committee on Petitions, constituted under Maharashtra Legislative Council rules, has no jurisdiction to interdict recovery process resorted to by banks against farmers, reports PTI.
The court was hearing a plea filed by Sangli-based Dr Annasaheb Choughle Urban Cooperative Bank seeking a direction to the Committee on Petitions to refrain from entertaining an application filed by Mohan Joshi, MLA, and representation of 16 agriculturalists, who had to repay loans taken by them.
Justice RY Ganoo and Justice Ajay Khanvilkar also held that the Bank was free to pursue the recovery proceedings against 16 farmers in accordance with law, irrespective of a letter issued by the Maharashtra Legislative Secretary or the minutes of the meeting of the Committee on Petitions.
The judges, however, made it clear that they are not expressing any opinion either way with regard to the correctness and legality of the agreement arrived at for and on behalf of the bank by the Chairman, Vice Chairman and Chief Executive Officer to modify the rate of interest payable by the farmers.
If that action is challenged in any proceedings, being illegal or prejudicial to the interests of investors, members or creditors of the Bank, it will have to be considered on its own merits, in accordance with the law, the judges opined while disposing of a petition filed by the bank.
The bank had urged the Court to direct the Committee on Petitions to refrain from entertaining the applications of the farmers and Joshi.
The alternative relief claimed was to direct Secretary of Maharashtra Vidhan Bhavan to place the Bank's representation before the Committee with a guideline that the same be heard and disposed of in a time-bound manner.
The Bank had advanced Rs90 lakh to 20 borrowers on 29 March 2004. It advanced another sum of Rs9 lakh to three other borrowers on 30 March 2007. That sum was given against the security of mortgage created by each of the 23 persons in the Bank's favour. In due course, however, the loan amount became hopelessly irregular and non performing assets (NPAs).
As a result, the bank processed the proposal of the 23 borrowers and found that 16 of them fell in the category of small/marginal farmers as defined in loan waiver scheme of the Government.
As on 31 December 2007, the 16 agriculturalists were collectively eligible for loan waiver of Rs30.33 lakh. The bank, accordingly, gave credit of the corresponding amount in the respective accounts of these persons.
After the said adjustment, as on 31 March 2010, a sum of Rs28.52 lakh still remained due and payable by them to the bank collectively.
So far as the seven remaining persons, who were not small farmers, they were eligible for a partial waiver of 25% of the outstanding amount in their accounts as on 31 December 2007.
However, all the seven failed to deposit the necessary amount of Rs1.17 crore in order to become entitled for loan waiver.
Since the payment became over due, the Bank initiated proceedings under Section 101 of the Maharashtra Cooperative Societies Act, 1960.
The Registrar of Cooperative Societies, after hearing the Bank and the 23 defaulters, issued Recovery Certificates under Section 101 of the Act.
On the basis of these Certificates, the Bank resorted to execution of Recovery under Rule 107 of Maharashtra Cooperative Societies Rules.
According to the bank, these were judicial proceedings and steps taken by it to recover the outstanding dues, against all its borrowers, as per law. It argued that the borrowers could have resorted to remedy of revision application under Section 154 of the Act, against these proceedings. Instead, however, the farmers, approached Joshi, an MLA, on 24 July 2010.
He, in turn, requested the chairman of the Committee on Petitions to place the application made by the 16 farmers before the committee.
Accordingly, the matter proceeded before the Committee which considered the said application and ordered stay of recovery of defaulted amount from the 16 farmers until further orders to be passed by it.
The Principal Secretary, Department of Cooperation, Government of Maharashtra, was summoned by the Committee on Petitions, which met on 8 September 2010.
The Committee, upon considering the submissions made before it, including by the Bank, ordered that recovery of the defaulted loan deserved to be stayed.
Being aggrieved, the bank moved the High Court.