Co-operative banks can recover dues: Court

Amit Anand Choudhary | TNN | May 6, 2020, 06:51 IST

NEW DELHI: In an important verdict empowering co-operative banks to recover their dues by selling the assets of defaulters like other banks, the Supreme Court on Tuesday ruled that Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act is applicable to these banks as well.
A five-judge Constitution bench of Justices Arun Mishra, Indira Banerjee, Vineet Saran, M R Shah and Aniruddha Bose held that co-operative banks registered under the state law will come within the ambit of SARFAESI Act enacted by Parliament for setting up of special mechanism for speedy recovery of bank dues.
Under Section 13 of the Act, it is open to the bank to enforce the security interest without intervention of court or tribunal and appeal to Debts Recovery Tribunal is provided. It allows banks to take possession of securities given for financial assistance and sell or take over management in the event of default. The SC said cooperative banks are in the business of banking and included in the definition of bank under the Act.