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TMI Blog2015 (7) TMI 1390X X X X Extracts X X X X X X X X Extracts X X X X ..... WITH MR AMAR N BHATT, ADVOCATE , MR SN SOPARKAR, SENIOR ADVOCATE WITH MR AMAR N BHATT, ADVOCATE, MR SN SOPARKAR, SENIOR ADVOCATE WITH MR AMAR N BHATT, ADVOCATE, MR HARSHIL SHUKLA , AGP , MR HARSHIL SHUKLA , AGP ,MR DHARMESH V SHAH & MR VIRAL K SHAH, MR DHARMESH V SHAH & MR VIRAL K SHAH FOR THE RESPONDENT JUDGMENT COMMON ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) As common question of law and facts arise in this group of Letters Patent Appeals and as such they arise out of the impugned common judgment and order passed by the learned Single Judge dated 23/02/2010 in Special Civil Application No.4260 of 2009 and Special Civil Application No.6978 of 2009, all these appeals are decided and disposed of by this common judgment and order. 2. Feeling aggrieved and dissatisfied with the judgment and order passed by the learned Single Judge in SCA No.4260 of 2009, the liquidator of the Visnagar Nagrik Cooperative Bank Limited (under liquidation) has preferred the present Letters Patent Appeal No.1300 of 2010. 2.1 Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the learned Single Judge in SCA NO.4260 OF 2009, the original Petitioner-Depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid Banks were insured Cooperative Banks governed by the provisions of Section 115A of the Gujarat Cooperative Societies Act, 1961 and both the banks were ordered to be liquidated under the provisions of the Gujarat Cooperative Societies Act and the respective liquidators were holding the charge of affairs of both the banks. 3.2 It is not in dispute that the original petitioner-DICGC made the payment of Rs. 1 Lac to each of the depositors of the aforesaid banks as per the DICGC Act. Therefore, according to the original petitioners, before making any payment to the depositors / creditors or employees, after realizing the amount by the concerned liquidators, the original petitioner-Corporation-DICGC was required to be repaid first after making provisions for expenses. However, the liquidators of the aforesaid banks, in exercise of the power under Sections 107 to 115 of the Gujarat Cooperative Societies Act fixed up the priority by the respective impugned decisions (impugned in the main SCA) and in the said decision the liquidator had put up the claim of the original petitioner-Corporation- DICGC in the category of creditor after secured creditor and the government dues as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liquidation and / or concerned workman and for government dues. 4. Heard learned Advocates appearing for the respective parties at length: 4.1 At the outset, it is required to be noted that while disposing of the aforesaid SCAs and directing the concerned liquidators to disburse the amount by determining the priorities of various classes of creditors separately or classify various debts separately, the learned Single Judge has observed in paragraph Nos.8, 9, 11, 12 and 13 as under: "8. It can hardly be accepted that the liquidation proceedings of any society would be altogether different than that of any insolvency proceedings either under Provisional Insolvency Court Act or Presidential Insolvency Court Act or the Winding Up of any Company. The laws prevailing in the matter of insolvency proceedings or in the matter of winding up proceedings would be required to be taken into consideration by the Liquidator while classifying the creditors and tracing the debts of such creditors. It is only thereafter the priority is to be fixed by the Liquidator. Even at the time of fixing the priority the laws relating to the insolvency proceedings and winding up proceedings are required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he identification of various classes of the creditors, including their respective debts. The debts can broadly be classified into secured debts and unsecured debts. In the same manner the creditors can be classified broadly into two categories; secured creditors and unsecured creditors. It is within those two classes there may be the crown debt as the secured or the crown debt as unsecured creditor. If by express provisions of statute the charge is created over the property for any revenue or taxes or other Government dues, it can be termed as crown debt as secured creditor and amongst secured creditors, the crown debt having secured by way of express charge provided by any statute will have priority over other (other than crown) secured creditors. Same position will prevail for two categories within the classes of unsecured creditors namely; the debts of crown as unsecured creditor and the other debts (other than that of the crown) as unsecured creditors. The crown debt as unsecured creditors will have priority over other unsecured creditors. It may also be recorded that the claim of any of the secured creditors will be to the extent of security so available and to the extent of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to apply such priority to the depositors while getting back the money from such cooperative banks, when the payment is to be made to unsecured creditors. Therefore, the claim of depositors may stand in priority over other unsecured debts of private persons. The last would be the distribution of share money amongst the shareholders of the Society. 13.The aforesaid can be a broad parameters for the Liquidator to decide the priority generally for cooperative societies and specifically for cooperative banks, which are also otherwise governed by the provisions of BR Act as per the observations made hereinabove." 4.2 By impugned judgment and order, the learned Single Judge has also negatived the claim / contention on behalf of the DICGC that after making provisions for expenses payable by that time, the liquidator has to discharge the liability to declare the dividend to each of the depositors and therefore the payment will be required to be made immediately after making provisions for expenses to the respondent-Corporation. By impugned judgment and order, the learned Single Judge has also negatived/rejected the claim of DICGC that the claim of the Corporation should be treated as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving a decree/award in their favour with respect to the amount deposited by them by way of Fixed Deposit and/or in the Bank Account, can still be considered as unsecured creditor. Therefore, even if the said depositor -original petitioner of SCA No.6978 of 2009 is permitted to proceed further with the execution petition, in that case also in light of the decision of the Hon'ble Apex Court referred to herein above, DICGC will have to be repaid first, the amount paid by them to the concerned depositors paid under Regulations 1961, before any payment is made to the depositors, creditors (secured and unsecured) and even the workmen and government dues. 7. Having heard learned Advocates appearing for the respective parties and considering the impugned common judgment and order passed by the learned Single Judge and as observed herein above, the main issue in the present LPAs, is with respect to the priority claimed by the DICGC over the depositors, creditors (secured and unsecured creditors), workmen and government dues, with respect to the amount paid by them to the concerned depositors paid under Regulations 1961, however except the amount of expenses incurred by the liquidator. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date on which the liquidation order is passed or from the day on which he takes charge, whichever is later and within two months from the date on which the details are submitted to the Corporation, the Corporation has to make payment to the above extent either to the depositors directly or to them through the Official Liquidator. 21. Thus, as per the above referred Scheme, each depositor, including each original petitioner, must have received Rs. 1 lakh from the Official Liquidator. Initially, upon the bank being ordered to be woundup, the original petitioners and other depositors had a right to recover Rs. 1 lakh or the amount deposited, whichever was less, from the Official Liquidator and the said amount must had been paid to them when the petitions were filed. 22. According to the provisions of the Act, after payment to the above extent is made to each depositor, if any amount is available at the disposal of the Official Liquidator, which he might have recovered from the borrowers or from other sources, he has to pay the said amount to the extent to which the amount had been paid by the Corporation as per the provisions of Section 21 of the Act. Section 21 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noring the aforestated statutory provision. 27. The Corporation was not represented before the learned Single Judge, but at least before the Division Bench, the learned counsel appearing for the Official Liquidator had drawn attention of the Bench to the aforestated legal provisions of the Act. Moreover, provisions of Regulation 22 of the Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 (hereinafter referred to as 'the Regulations') had also been referred to by the learned counsel. The said Regulation 22 reads as under : "22. The amounts repayable to the Corporation under subsection (2) of section 21 of the Act shall be paid from time to time by, (a) the liquidator as soon as the realisations and other amounts in his hands, after making provision for expenses payable by that time, are sufficient to enable him to declare a dividend of not less than one paisa. in the Rupee to each depositor. (b) the insured bank or the transferee bank, as the case may be, as soon as the realisations and other amounts in its hands, after making provision for expenses payable by that time in respect of such realisations or other amounts in its hands are sufficien ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirmed by the Division Bench, which gave rise to the appeal(s) before the Hon'ble Supreme Court and in the aforesaid appeals, it is observed and held as above. 9. Considering the aforesaid decision of the Hon'ble Supreme Court, which is directly on the point, the impugned common judgment and order passed by the learned Single Jude, taking the contrary view cannot be sustained and the same deserves to be quashed and set aside and the concerned liquidator of the concerned Bank in liquidation is required to be directed to disburse the amount recovered, as per the provisions of Regulation22 of the Deposit Insurance and Credit Guarantee Corporation General Regulations, 1961 i.e., the concerned liquidator, after making necessary provisions for the expenses in relation to the liquidation proceedings and for declaration of dividend has to first make payment to the Corporation and only thereafter any amount in excess can be paid to the other creditors as per the priority provided under the provisions of the Gujarat Cooperative Societies Act. 9.1 Even, the concerned depositor/s in the present case, petitioner of Special Civil Application No.7617 of 2009 (Letters Patent Appeal No.2 ..... 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