HC directs Aurangabad bank to disburse loans to farmers for Kharif season

In a relief to thousands of farmers who feared losing the opportunity to cultivate crops during the ongoing Kharif season, a division bench of the Bombay high court

In a relief to thousands of farmers who feared losing the opportunity to cultivate crops during the ongoing Kharif season, a division bench of the Bombay high court (HC) has directed the Aurangabad District Central Cooperative Bank to disburse loans to farmers with immediate effect.

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The bank had refused to disburse fresh loans as it was waiting to recover interest on loans that were waived off by the government under the Mahatma Phule Karj Mukti Yojana. The waived loans were disbursed by the bank between January 1, 2019, and October 1, 2019. The court held that the issue of interest could be decided in a later hearing.

The division bench of justice SV Gangapurwala and justice RG Avachat of the HC at its Aurangabad bench, while hearing a public interest litigation (PIL) filed by agriculturist Kishore Tangade through senior advocate SB Talekar, was informed that the sowing season had commenced in June. Talekar submitted that thousands of agriculturists were eligible for loans but only 49.62% had been approved by the bank after they paid interest on loans taken the previous year.

The bench was informed that though loans of the previous year had been waived off by the state government, the bank insisted on collecting interest accrued, and only those agriculturists who had paid the amount – some by selling their gold ornaments – had been disbursed a fresh loan amount.

Talekar submitted that though the state government, under section 79A of the Maharashtra Cooperative Societies Act, had directed the banks to disburse loans to eligible agriculturists on January 17, 2020, the bank had not complied. As a result of this, thousands of agriculturists were unable to undertake sowing activities, which would result in no crops and future losses.

The state, through government pleader DR Kale, reiterated the petitioner’s submissions and said that though the bank had already been compensated for the waived amount, it had held back disbursement of fresh loans. Kale further submitted that the bank was bound to comply with the January order of the government.

The bank, however, submitted that it was considering challenging the January order of the government. Representing the bank, advocate RS Deshmukh submitted that the decision not to disburse fresh loans was taken by the board of directors. He claimed that if the interest was not collected and fresh loans were disbursed, the bank would suffer financial losses.

After hearing the submissions, the court observed that as the January order was in force, the bank was bound to comply, even if it planned to challenge it. HC directed the bank to disburse the loans to eligible agriculturists, sought a compliance report and posted the matter for hearing on July 20.