2004 (1) TMI 697 - SC - Indian Laws

Summary

Issues:
1. Interpretation of Section 71 of the Gujarat Co-operative Societies Act in relation to investments by a cooperative bank.
2. Conflict between the Gujarat Co-operative Societies Act and the Banking Regulation Act, 1949.
3. Validity of investments made by a cooperative bank in Mutual Funds.
4. Jurisdiction of the High Court in issuing a writ of mandamus for non-compliance with statutory rules.

Analysis:
1. The judgment revolves around the interpretation of Section 71 of the Gujarat Co-operative Societies Act, which specifies the institutions in which a cooperative bank can invest its funds. The appellant bank sought permission to invest in an institution outside the specified categories, but the State Government declined. Despite this refusal, the bank invested in Mutual Funds, leading to notices for non-compliance with Section 71.

2. The conflict between the Gujarat Co-operative Societies Act and the Banking Regulation Act, 1949 is analyzed. The appellant argued that as per the Banking Regulation Act, it is entitled to engage in banking activities based on the norms under that Act, not as per the investment norms under the Gujarat Co-operative Societies Act. The court examined the provisions of both Acts to determine any repugnancy or inconsistency.

3. The court emphasized that Section 71 of the Gujarat Co-operative Societies Act was not in derogation of the Banking Regulation Act but an additional provision. The State Act was considered the dominant legislation, and there was no repugnancy between the two Acts. The judgment highlighted that the State Act aimed to strengthen existing laws and protect cooperative bank members' interests by regulating investments.

4. The High Court's jurisdiction in issuing a writ of mandamus for non-compliance with statutory rules was upheld. The court affirmed that statutory norms must be followed, and any violation should be addressed by the appropriate authorities. The High Court's decision to issue a writ of mandamus directing action against the appellants for breaching Section 71 of the Act was deemed justified, emphasizing the importance of adherence to statutory regulations.

In conclusion, the appeals were dismissed as lacking merit, and parties were directed to bear their own costs. The judgment underscores the significance of complying with statutory rules, the non-repugnancy between the Gujarat Co-operative Societies Act and the Banking Regulation Act, and the authority of the High Court to intervene in cases of statutory non-compliance.