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TMI Blog2017 (3) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the secured creditor, the petitioner has suppressed the above facts, in the supporting affidavit and feigned ignorance of the same. As rightly contended by the Bank, the petitioner, who has approached this Court, with unclean hands, suppressed knowledge of the loan transaction, steps taken by the bank for recovery, is not entitled to any equitable relief. During the hearing of this writ petition, the writ petitioner has undertaken not to make any alteration to the building and in this regard, Mr.T.P.Prabhakaran, learned counsel appearing for the petitioner has made submissions. While dismissing the writ petition, it is made clear that the statement made across the bar, shall not be breached. If there is any breach, the bank is at liberty to seek for appropriate relief, including invoking the provisions of the Contempt of Courts Act, 1971. - W.P.No.40041 of 2016 - - - Dated:- 12-1-2017 - MR. S.MANIKUMAR AND MR. M.GOVINDARAJ, JJ. For The Petitioners: Mr.T.P.Prabhakaran For The Respondents: Mr.P.Suresh ORDERORDERORDERORDERORDER (Order of the Court was made by S.MANIKUMAR, J.) Writ petition has been filed to issue a writ of certiorari, to call f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serving of possession notice to his father on 09.12.2014. Only after receipt of the said notice, the petitioner came to know of the above mentioned proceedings initiated by the bank. He further submitted that after the death of his father, he has paid a sum of ₹ 7,94,650/- to the respondents co-operative bank, towards discharge of liabilities. 6. After receiving the above said amount, the third respondent has issued a letter, dated 14.09.2016, instructing the petitioner not to erect any machinery or make alteration to the building failing which the bank would be forced to take necessary legal steps against him, as per law. Aggrieved over the same, the present writ petition has been filed. After setting out the facts in brief, on the issue, as to whether, a Co-operative Bank has jurisdiction to invoke the provisions of SARFAESI Act, 2002, on 15.11.2016, we issued notice to the respondents, returnable by 22.11.2016 and recorded as follows: Mr.T.P.Prabakaran, learned counsel for the petitioner made statement across the bar that the petitioner would not make any alteration to the building. Submission is placed on record. 6. On the aspect, as to whether, the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any shall have the meaning assigned to it in clause (e) of Section 5 of the Bank Regulation Act, 1949 (10 of 1949). Accordingly, Pondicherry State Co-operative Bank Limited, can invoke the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. 11. The bank has decided to invoke the Provisions of the SARFAESI Act, 2002. A demand notice, dated 10.10.2014, was issued for settlement of the dues. Despite the same, no steps were taken by the borrower to pay the amount in installments. In order to recover the dues, two possession notices dated 09.12.2014 were issued, under Sub Section (4) of section 13 of the Act. Possession notices were duly acknowledged by the borrower, by affixing his signature, along with two witnesses and that the petitioner's family was well aware of the facts. The Petitioner has been living with his father, as joint family in Embalam Village. During the life of his father, after acknowledging The Possession Notice on 09.12.2014, when the petitioner's father sought time till 31.01.2015, in his written communication, dated 06.01.2015, made to the bank, the petitioner herein stood as a witn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the rules, framed thereunder. 16.The Bank has further submitted that possession notice issued, invoking the Provisions of the SARFAESI Act, 2002, is valid, as the words, Banking Company shall have the meaning, as assigned to it, in clause (c) of Section 5 of the Banking Regulation Act, 1949 (10 of 1949). The respondents have further submitted that irrespective of the fact, as to whether a bank, Co-operative, Private or Public, as the case may be, every bank is regulated by the same Banking Laws and therefore, a Co-operative Bank can very well invoke the Provisions of the SARFAESI Act, 2002. Therefore, it is contended that the proceedings initiated by the respondent's Co-operative Bank are sustainable and valid in eye of law. 17.It is also submitted that vide S.O.105, dated 28th January, 2003, published in the Gazette of India, Extra, Pt. II Se, 3 (ii) dated 28th January 2003, Central Government have specified that co-operative banks, as defined in clause (cci) of Section 5 of Banking Regulations Act, 1949, as banks, within the meaning of section 2(1)(c) of SARFAESI Act, 2002. This notification finds reference in the decision of the Hon'ble Supreme Court in Greate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y which transacts the business of banking in India; Subsequently, instead of amending the original Clause (c) of Section 5 of the B.R. Act, a separate Clause (cci) was added in Section 5 to cover the Co-operative Bank, to mean a State co-operative bank, a Central co-operative bank and a primary co-operative bank . In the introduced Clause (ccv) of Section 5, primary co-operative bank means a co-operative society, other than a primary agricultural credit society . The above said Clauses 5(cci) and (ccv) were noticed by the Supreme Court in the said decision (2007(6)SCC 236) in the case of Greater Bombay Coop. Bank Ltd. , wherein the Apex Court observed that the primary object or the principal business of the Co-operative bank should be the transaction of banking business. 17. There is no definition of bank under the B.R. Act, though it defines the 'banking' under Section 5(b), 'banking company' under Section 5(c) and 'banking policy' under Section 5(ca). 'Banking company' has also been defined under Section 2(e) of RDB Act and Section 2(d) of the SARFAESI Act, as per which, the 'banking company' shall have the meaning assign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of validity of Section 5(c)(v) of the SARFAESI Act has not been doubted by the Supreme Court in the said case (2007 (6) SCC 236). For this purpose, it is necessary to quote relevant observations of the Supreme Court in the said case, as hereunder: The Banking Regulation Act, 1949 (the BR Act) 37. This Act was brought into force on 16-3-1949. Section 3 of the BR Act clearly provides that the Act would apply to cooperative societies in certain cases, subject to the provisions of Part V of the Act. The BR Act defines banking company under Section 5(c) as follows: 5.(c) banking company means any company which transacts the business of banking in India; 38. In Section 5(d) company means any company as defined in Section 3 of the Companies Act, 1956 (1 of 1956) and includes a foreign company within the meaning of Section 591 of that Act. 39. Chapter V of the BR Act was inserted by Act 23 of 1965 w.e.f. 1-3-1966. Section 56. Section 56 of the Act provides that the provisions of this Act, as in force for the time being, shall apply to, or in relation to, banking companies subject to the following modifications, namely: 56.(a) throughout this Act, unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties are basically cooperative societies. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (the Securitisation Act) 41. Parliament had enacted the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ( the Securitisation Act ) which shall be deemed to have come into force on 21-6-2002. In Section 2(d) of the Securitisation Act same meaning is given to the words banking company as is assigned to it in clause (e) of Section 5 of the BR Act. Again the definition of banking company was lifted from the BR Act but while defining bank , Parliament gave five meanings to it under Section 2(c) and one of which is banking company . The Central Government is authorised by Section 2(c)(v) of the Act to specify any other bank for the purpose of the Act. In exercise of this power, the Central Government by notification dated 28-1-2003, has specified cooperative bank as defined in Section 5(cci) of the BR Act as a bank by lifting the definition of cooperative bank and primary cooperative bank respectively from Section 56, clauses 5(cci) and (ccv) of Part V. Parliament has thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Banks also, in bringing the Co-operative Banks under the discipline of the Reserve Bank of India and other authorities. A Co-operative Bank shall be construed as a 'banking company' in terms of Section 56 of the B.R. Act. This is because, the various provisions of regulating banking business were to be made applicable to Co-operative Banks also. As per the said Section 56 of the B.R. Act, though it may not be bring the Co-operative Banks within the meaning of the 'banking company', but that does not preclude the Central Government to bring a Co-operative Bank under the definition of banking as distinct from the 'banking company'. 21. Under Entry 32 of List II (State List) of Seventh Schedule of the Constitution of India, though the State has been empowered with regard to Co-operative Societies , but under Entry 43 read with Entry 45 of List I (Union List) of Seventh Schedule of the Constitution of India, the Central Government has the power of regulation in making laws with regard to banking , distinct from banking business . Therefore, it cannot be asserted that the Central Government had no power to introduce Section 2(c)(v) of the SARFAESI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l ER Rep 548 (CA)], it was held: (All ER pp. 555 I-556 D) When one asks on what principle this is supposed to be based, one receives in answer the maxim that anyone coming to equity must come with clean hands. I think the expression clean hands is used more often in the textbooks than it is in the judgments, though it is occasionally used in the judgments, but I was very much surprised to hear that when a contract, obtained by the giving of a bribe, had been affirmed by the person who had a primary right to affirm it, not being an illegal contract, the courts of equity could be so scrupulous that they would refuse any relief not connected at all with the bribe. I was glad to find that it was not the case, because I think it is quite clear that the passage in Dering v. Earl of Winchelsea [(1787) 1 Cox Eq Cas 318: 2 Bos P 270], which has been referred to, shows that equity will not apply the principle about clean hands unless the depravity, the dirt in question on the hand, has an immediate and necessary relation to the equity sued for. 14. In Halsbury s Laws of England, 4th Edn., Vol. 16, pp. 874-76, the law is stated in the following terms: 1303. He who seeks equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emerits. 23.In Udayami Evan Khadi Gramodyog Welfare Sanstha v. State of U.P., reported in 2008 (1) SCC 560, at Paragraph 16, the Hon'ble Supreme Court held as follows: 15. A writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should not suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. In Advocate General, State of Bihar v. M/s.Madhya Death Khair Industries and Anr. [1980 (3) SC 311, this Court was of the opinion that such a repeated filing of writ petitions amounts to criminal contempt. 24.As rightly contended by the Bank, the petitioner, who has approached this Court, with unclean hands, suppressed knowledge of the loan transaction, steps taken by the bank for recovery, is not entitled to any equitable relief. 25.During the hearing of this writ petition, the writ petitioner has undertaken not to make any alteration to the building and in this regard, Mr.T.P.Prabhakaran, learned counsel appearing for the petitioner has made submissions. While dismissing the writ petition, it is made clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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