M/S.Sampada Enterprises Hyd and 5 Ors. v. Arbitrator Div Coop Officer Hyd and Anr.
Case brief
What is this about?
The Court held that debt recovery is an essential function of banking, placing it within the Union's exclusive legislative field under Entry 45 of List I, not the State's field under Entry 32. Consequently, a cooperative bank is a 'banking company' under the RDBFI Act, 1993, and the Debts Recovery Tribunal has exclusive jurisdiction. Provisions of the A.P. Cooperative Societies Act, 1964, conferring jurisdiction on the Registrar for such recoveries were struck down as ultra vires. The words 'or financing bank' in Section 71(1) were severed, and remaining provisions were read down to exclude judicial relief over banking debts.
What did the court decide?
The words 'or financing bank' in Section 71(1) of the A.P. Cooperative Societies Act, 1964 were struck down. Sections 61 and 71(1) were read down to deny the Registrar jurisdiction over recovery of debts due to cooperative banks. Jurisdiction over such claims was vested exclusively in the Tribunal under the RDBFI Act, 1993.