<p>The Supreme Court on Tuesday ruled that the cooperative banks would come under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which prescribed a faster procedure for recovery of dues.</p>.<p>A five-judge Constitution bench presided over by Justice Arun Mishra said that the recovery was an essential part of banking, so the procedure prescribed under the SARFAESI Act would be applicable to the cooperative banks, established under a state law or multi-state level cooperative societies.</p>.<p>"The Parliament has legislative competence to provide additional procedures for recovery with respect to cooperative banks," the bench said.</p>.<p>The court said the cooperative banks, involved in the activities related to banking, were covered within the meaning of 'Banking Company' under the Banking Regulation Act, 1949.</p>.<p>The cooperative banks, thus, cannot carry on any activity without compliance of the provisions of the Banking Regulation Act, 1949 and any other legislation applicable to such banks.</p>.<p>Earlier, the procedure for recovery of dues was differently provided for general banks and the cooperative banks through the Civil Court or Tribunal. </p>.<p>In the SARFAESI Act, a procedure has been prescribed without the intervention of the court or tribunal to keep pace with the time. In this way, the malady of the inordinate delay was sought to be redressed. </p>.<p>Apart from that, it is permissible for the Parliament to enact the law to provide recovery procedures for bank dues that have been done by providing speedy recovery of secured interest without intervention of the court or tribunal, the court noted.</p>.<p>"We are of the opinion that recovery of dues would be an essential function of any banking institution and the Parliament can enact a law as the activity of banking done by cooperative banks is within the purview of Entry 45 of List I," the bench said. </p>.<p>The court rejected the contention recovery procedure could not be prescribed by Parliament on the ground that it was within the domain of the State legislature. </p>.<p>The five-judge bench, also comprising Justices Indira Banerjee, Vineet Saran, M R Shah and Aniruddha Bose, answered the reference made on February 26, 2016 by a three-judge bench due to previous conflicting decisions on the issue.</p>
<p>The Supreme Court on Tuesday ruled that the cooperative banks would come under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, which prescribed a faster procedure for recovery of dues.</p>.<p>A five-judge Constitution bench presided over by Justice Arun Mishra said that the recovery was an essential part of banking, so the procedure prescribed under the SARFAESI Act would be applicable to the cooperative banks, established under a state law or multi-state level cooperative societies.</p>.<p>"The Parliament has legislative competence to provide additional procedures for recovery with respect to cooperative banks," the bench said.</p>.<p>The court said the cooperative banks, involved in the activities related to banking, were covered within the meaning of 'Banking Company' under the Banking Regulation Act, 1949.</p>.<p>The cooperative banks, thus, cannot carry on any activity without compliance of the provisions of the Banking Regulation Act, 1949 and any other legislation applicable to such banks.</p>.<p>Earlier, the procedure for recovery of dues was differently provided for general banks and the cooperative banks through the Civil Court or Tribunal. </p>.<p>In the SARFAESI Act, a procedure has been prescribed without the intervention of the court or tribunal to keep pace with the time. In this way, the malady of the inordinate delay was sought to be redressed. </p>.<p>Apart from that, it is permissible for the Parliament to enact the law to provide recovery procedures for bank dues that have been done by providing speedy recovery of secured interest without intervention of the court or tribunal, the court noted.</p>.<p>"We are of the opinion that recovery of dues would be an essential function of any banking institution and the Parliament can enact a law as the activity of banking done by cooperative banks is within the purview of Entry 45 of List I," the bench said. </p>.<p>The court rejected the contention recovery procedure could not be prescribed by Parliament on the ground that it was within the domain of the State legislature. </p>.<p>The five-judge bench, also comprising Justices Indira Banerjee, Vineet Saran, M R Shah and Aniruddha Bose, answered the reference made on February 26, 2016 by a three-judge bench due to previous conflicting decisions on the issue.</p>
