Decided on November 12,2013

Deepak Kumar Agarwal And Another Appellant
Almora Urban Cooperative Bank Ltd. And Others Respondents


Sudhanshu Dhulia, J. - (1.) The petitioners were the guarantors of a loan taken by respondent No. 5 from Almora Urban Cooperative Bank Ltd. This loan has not been repaid by him and consequently, the Bank has initiated proceedings against the petitioners under Sections 70 and 71 of the Uttaranchal Co-operative Societies Act, 2003. The above referred provisions are being quoted for the ready reference:- "70. Disputes which may be referred to arbitration:- (1) Notwithstanding anything contained in any law for the time being in force, if any dispute relating to the constitution, management or the business of a co-operative society other than a dispute regarding disciplinary action taken against a paid servant of a society arises. (a) among members, past members and person claiming through members and deceased members; or (b) between a member, past member or any person claiming through a member, past member or deceased member, and the society, its Committee of Management or any officer, agent or employee of the society, including any past officer, agent or employee; or (c) between the society or its committee and any past committee, any officer, agent or employee or any past officer, past agent or past employee or the nominee, heir or legal representative of any deceased office, deceased agent or deceased employee of the society; or (d) between a cooperative society and any other co-operative society or societies, such dispute shall be referred to the Registrar for action in accordance with the provision of this Act and the rules and no court shall have jurisdiction to entertain any suit or other proceeding in respect of any such dispute: Provided that a dispute relating to an election under the provisions of this Act or rules made thereunder shall not be referred to the Registrar until after the declaration of the result of such election. 71. Reference of dispute to arbitration:- (1) On receipt of a reference under sub-section (1) of Section 70, to the Registrar may, subject to the provision of the rules, if any- (a) decide the dispute himself; or (b) refer it for decision to an arbitrator appointed by him; or (c) refer it, if the parties so request in writing, for decision to a board of arbitrators consisting of the persons to be appointed in the prescribed manner."
(2.) This Court has been informed that the matter has not only reached to the Registrar of Cooperative Societies, but also in view of Section 71 of the Uttaranchal Co-operatives Societies Act, 2003 the Registrar has appointed an Arbitrator, who is presently looking into the matter inter alia to the petitioners, who are the guarantors to the loans. Instead of appearing before the Arbitrator, the petitioners filed the present writ petition taking a legal submission that the respondents have proceeded wrongly against the petitioners as the actual recourse available to them to proceed against the petitioners under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as SARFAESI Act).
(3.) The argument of the learned counsel for the petitioners is that even a cooperative bank is a bank under the SARFAESI Act and the Central Government has issued a notification that all the cooperative banks are also bank under the SARFAESI Act. On this point it is absolutely no dispute that cooperative banks are bank, as defined under the SARFAESI Act. The only question is that if the respondent is a Bank under the SARFAESI Act, will it be restrained from proceeding to recover its loan from any other manner except as provided under Sections 35 and 37 of the SARFAESI Act, which reads as under:- "35. The provisions of this Act to override other laws- The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 36. .. 37. Application of other laws not barred - The provisions of this Act or the rules made thereunder shall be in addition to, and not to derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities and Exchange Board of India Act 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993) or any other law for the time being in force.";

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