Vinayak Credit Cooperative Society Limited v. State Of Rajasthan And Others

Order

1. Permission to file SLPs is granted.

2. It is, inter alia, argued by the learned counsel for the petitioners, appearing in these petitions, that a three-Judge Bench of this Court in Greater Bombay Coop. Bank Ltd. v. United Yarn Tex (P) Ltd. (2007) 6 SCC 236 has held that cooperative societies constituted under the State Cooperative Societies Acts or the Multi-State Cooperative Societies Act, 2002, are not “banking companies” as defined under Section 5(c) of the Banking Regulation Act, 1949, and therefore, direction of the High Court in the impugned judgment 2015 SCC OnLine Raj 7085 asking the petitioners to seek licences under Section 22 of the Banking Regulation Act, 1949, are clearly wrong and these societies cannot even be granted such a registration when they are not covered under the Banking Regulation Act, 1949.

3. In view of the submissions of the learned counsel including the aforesaid submissions specifically taken note of, though we are inclined to issue notice, at the same time we find that there is also a need to regulate the activities of the petitioners' societies appropriately having regard to the manner in which these societies are functioning, as demonstrated, in paras 7, 15 and 17 in particular, in the impugned judgment 2015 SCC OnLine Raj 7085. It also needs to be considered as to whether the activities amount to “banking business” and therefore, these petitioners can undertake these activities at all or not and insofar as deposits from the members is concerned, in what manner they can be regulated to avoid any malpractices.

4. Issue notice on special leave petitions as well as on prayer for interim relief, returnable within four weeks.

5. In the meantime, there shall be stay of directions contained in paras 19 and 20 of the impugned judgment 2015 SCC OnLine Raj 7085 subject to the following arrangement in the interregnum:

(i) Earlier interim order dated 18-3-2015 passed by the High Court in Sajjan Singh Bhati v. State Of Rajasthan & Ors. 335 shall continue in the meantime;

(ii) It is specifically reiterated that the petitioners shall not carry on “banking” activity as defined under Section 5(b) of the Banking Regulation Act, 1949;

(iii) No deposits shall be taken from the nominal members;

(iv) No deposits shall be taken from the public i.e. non-members;

(v) The fresh deposits that shall be taken from the members, shall carry such rate of interest that would not exceed the interest rate allowed by Reserve Bank of India for nationalised banks.