The Hindu : Tamil Nadu News : Court stays GO on deposit curbs for farm coop. banks

Online edition of India's National Newspaper
Monday, Jun 14, 2004

Tamil Nadu

Tamil Nadu

Court stays GO on deposit curbs for farm coop. banks

By Our Staff Reporter

CHENNAI, JUNE 13. The Madras High Court has stayed a government order restricting primary agricultural cooperative banks (PACBs), having their own funds of more than Rs. 20 lakhs, from mobilising deposits from members/public.

Justice Prafulla Kumar Misra granted the interim stay and ordered notice to the Registrar of Cooperative Societies, on a petition filed by the Tamil Nadu State Primary Agricultural Cooperative Bank All Employees Union.

The union said the April 22, 2004 order would curtail funds flow for nearly 950 cooperative banks and affect over two lakh farmers and members.

The restriction was applicable only to those banks, which failed to adopt government-approved pay scales for staff. When the government earlier sought to reduce the salaries of the PACB employees, the High Court ruled against it. Entertaining an appeal against the order, the Supreme Court granted status quo.

While so, the petitioner said, the government sought to indirectly implement the same order, placing restrictions on certain banks which had not adopted its decision to reduce pay scales. The present petition said, "as a result of the impugned order restricting PACBs from mobilising deposits from members/public, nearly 950 banks are forced to be liquidated." Two lakh agriculturists/members, who availed themselves of loans and advances for farm operations, were now forced to approach third parties for loans at a higher rate.

The union contended that the banks were started and registered under the Cooperatives Act only for mobilising funds in the form of deposits and to use them for advancing loans for agricultural operations. Under these circumstances, placing curbs on deposit would amount to circumventing the orders of the High Court and the Supreme Court.

"A registered society shall receive deposits and loans to the extent and specifications specified in its bylaws and the impugned order interferes with the society's statutory rights." The union sought to quash the impugned order and, as interim relief, prayed for a stay on its operation.

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