Tamil Nadu cooperative banks move Madras high court challenging ordinance bringing such banks under RBI
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Tamil Nadu cooperative banks move Madras high court challenging ordinance bringing such banks under RBI
Sureshkumar | TNN | Jul 14, 2020, 19:35 IST+1AA
RBICHENNAI: Two cooperative banks in Tamil Nadu, which are over 100 years old, have approached the Madras high court challenging an ordinancepromulgated by the Centre bringing such banks under the supervision of the RBI.
Admitting the pleas, the first bench of Chief Justice A P Sahi and Justice Senthilkumar Ramamoorthy on Tuesday posted the pleas to July 20 for passing orders on the interim relief sought by the banks to stay the operation of the ordinance till the final disposal of the petitions.
REMOVE ADSThe petitioners are Big Kanchipuram Cooperative Town Bank Ltd and the Velur Cooperative Urban Bank Ltd. The former is the first cooperative bank started in India. The then Madras Governor P Rajagopalachari registered the society in 1904 to organise cooperative movement, senior counsel representing the banks P H Arvind Pandian said.
“The ordinance deals with matters which are within the exclusive domain of the state list, List II of Schedule VII of the Constitution, over which the parliament has no legislative competence,” Arvind said.
He added that the legislations are without legislative competence and are also contrary to principles of federalism, which is a basic feature of the Constitution as per the judgment of the Supreme Court in the S R Bommai case.
Opposing the arguments, senior counsel A L Somayaji representing the RBI contended that a cooperative society might be a state subject when it does other activities. But when it involves in banking activities, then it falls under the purview of the parliament, according to him.
“There are over 1,937 such banks which handle over Rs 7.27 lakh crore of loans primarily provided to agriculturists and middle class people. The ordinance has been passed only to bring the banks under the banking regulations and protect the interest of the public,” Somayaji said.
Concurring with his submissions, additional solicitor general of India R Sankaranarayanan also submitted that when such societies exclusively do banking activity, they fall within the purview of the parliament.
To this, the bench wondered why the RBI was granting licences to such societies all along to do the banking activity if they believed public interests are not protected.
The court also asked the ASG what would be the status of societies that are involved in other activities as well in addition to banking.
