Cooperative banks can recover fees: court
NEW DELHI: In a major verdict allowing them to recover their fees by selling the assets of defaulters like other banks, on Tuesday it ruled that the Securitization and Reconstruction and Compliance Act (SARFAESI) also applies to these banks.
A constitutional bank of five justices of Justices Arun Mishra, Vineet Saran, MR Shah and Aniruddha Bose held that cooperative banks registered under state law will fall within the scope of the SARFAESI Act enacted by Parliament to establish a special mechanism for the prompt recovery of bank fees.
Under Section 13 of the Act, you are open to the bank to enforce security interests without court or tribunal intervention and an appeal is filed. It allows banks to take possession of the securities awarded for financial assistance and to sell or take over management in the event of default. The SC said that cooperative banks are in the banking business and are included in the definition of bank under the Act.