WP-3[SECTION]8-18.odt IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.3[SECTION]8 OF 2018 Maratha Sahakari Bank Ltd. ) Matushree Co-operative Housing ) Society Ltd. Near Natraj Studio, ) 196, Sir M.V. Road, Andheri (East), ) Mumbai - 400 069 through its ) Authorized representative ) Mr. [ENTITY] ) Petitioner Versus 1.The Divisional Joint Registrar, ) Co-operative Societies, ) Malhotra House, 6th Floor, ) Opp. G.P.O., Fort, Mumbai - 400001 ) 2.Deputy Registrar, ) [ENTITY] 1/14 Uploaded on - 22/10/2018 Downloaded on - 25/10/2018 23:18:47 WP-3[SECTION]8-18.odt Co-operative Societies, ) The Gr. Mumbai Nagari Sahakari ) Bank Association Ltd. ) 4th Floor, Bhartiya Krida Mandir ) Building, Naigaon Road No.26, ) Wadala, Mumbai - 400 031. ) 3.M/s Ganesh Stores ) (Partnership Firm) ) 121, Mallet Bunder, [ENTITY], ) Opp. Hanuman Mandir, ) Dockyard Road (E), ) Mumbai - 400 009. ) [ENTITY] (Partner A/25, [ENTITY] CHS, ) Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) [ENTITY] 2/14 Uploaded on - 22/10/2018 Downloaded on - 25/10/2018 23:18:47 WP-3[SECTION]8-18.odt 5.Mr. [ENTITY] (Partner) ) A/11, [ENTITY] CHS., ) Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) 6.Mr. [ENTITY] (Partner) ) A/11, [ENTITY] CHS., ) Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) 7.Mr. [ENTITY] (Partner) ) A/27, [ENTITY] CHS., ) Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) 8.Mrs. [ENTITY] (Co-borrower) ) A/11, [ENTITY] CHS., ) [ENTITY] 3/14 Uploaded on - 22/10/2018 Downloaded on - 25/10/2018 23:18:47 WP-3[SECTION]8-18.odt Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) 9.Mrs. [ENTITY] ) (Co-borrower) ) A/25, [ENTITY] CHS., ) Sarvoday Nagar, Mulund (W), ) Mumbai - 400 080. ) 10.Mr. [ENTITY] ) (Guarantor) ) 1385, Gr.Floor, M.H.B. Colony, ) Building No.20, Abhyudaya Nagar, ) Mumbai - 400 033. ) 11.Mr. [ENTITY] (Guarantor 12, Ambardarshan Building, ) G.G. Road, Gaondevi, Dombivali (W), ) [ENTITY] 4/14 Uploaded on - 22/10/2018 Downloaded on - 25/10/2018 23:18:47 WP-3[SECTION]8-18.odt Thane - 121 202. ) Respondents Mr. [ENTITY] for Petitioner in all petitions. Mr. [ENTITY] for the Respondent Nos.3 to 5, 7 to 9. Mr. [ENTITY], AGP for the State. CORAM : [ENTITY] & [ENTITY] JJ. DATE : 19 OCTOBER, 2018 ORAL JUDGMENT : [Per [ENTITY], J.]
The question that falls for consideration in this Petition under [SECTION] of the [ACT] is, "whether execution of a certificate issued under [SECTION] of the [ACT] (In short 'Said Act') could be subject to judgment and award in a [CASE NUMBER]." 2 The facts of the case are as under:
A certificate under [SECTION] of the said Act was issued by Respondent No.2 in Recovery Application No.[SECTION]/2480/2013 against Respondent Nos.4 to 11 on 20.10.2015 upon an application WP-3[SECTION]8-18.odt by the Petitioners. The said application was filed on 13.12.2013.
Respondent No.3 is the borrower-firm of which Respondent Nos.4 to 7 are partners; whereas Respondent Nos.8 and 9 are co-borrowers;
and Respondent Nos.10 and 11 are the guarantors. The certificate of recovery is in sum of Rs.2,31,97,449/-. The certificate contains a condition that execution of recovery certificate is subject to judgment and award in [CASE NUMBER]. Clause 9 of the said recovery certificate reads as under:
"ojhy fuosnukoj fuca/kdkapk vfHkizk;& mifuca/kd dk;kZy;kl myVrikl.khps vf/kdkj ukghr- gh ckc lgdkj U;k;ky;kP;k d{ksr ;srs- izzfroknh ;kauh lgdkj U;k;ky;kr nkok dza- CC-IV/70/2015 nk[ky dsyk vkgs- lnj nkok gk vtZnkj cWadsus ekx.kh dsysY;k jdesP;k laca/khr vkgs- lgdkj U;k;ky;krhy nkO;kP;k vafre fudkykps vf/ku jkgwu olqyh nk[kyk nsr vkgs-
laca/khr nkok fudkyh fu?kkyk vkgs o R;kojhy dks.krhgh dk;Zokgh lgdkj U;k;ky;kr izaychr ukgh ;kph [kk=h olqyh vf/kdkjh ;kauh olqyhiqohZ djkoh-"
3 That pending recovery proceedings under [SECTION] of the said Act, Respondents filed disputes in the Co-operative Court, inter-alia disputing the recovery. In view of this, the recovery certificate was issued subject to the judgment and award in the disputes. A note of caution was underlined whereby Recovery Officer WP-3[SECTION]8-18.odt was directed to execute recovery certificates only if no dispute is pending in the Co-operative Court.
4 It may be stated that the Special Recovery Officer issued demand notice dated 13.11.2015 under [SECTION] of the said Act read with [SECTION] of the [ACT] to the borrowers and the sureties, who are Respondent Nos.3 to 11 for recovery of due amount.
5 The Respondent No.3 herein filed [CASE NUMBER] against the demand notice dated 13.11.2015 which was allowed by the Divisional Joint Registrar, who, vide order dated 9.8.2016 quashed and set aside demand notice dated 13.11.2015 on the following grounds:
" Hence, it seems that the Respondent Deputy Registrar have passed conditional orders. Further it seems that the aforesaid disputes are pending before Hon'ble Co-op. Court for adjudication. It is pertinent to note that the decision of the Hon'ble Court shall be binding upon the concerned parties. Further the aforesaid Recovery Certificates have been issued on 20/10/2015, however it is not brought notice that the aforesaid Recovery Certificates have been challenged before the Court/Authority of competent jurisdiction and the aforesaid two conditions laid by the Respondent Deputy WP-3[SECTION]8-18.odt Registrar has been deleted/canceled. Therefore, the said Recovery Certificates are subsisting in the eyes of law. Therefore, until the disputes pending before Hon'ble Co-op. Court are decided, the recovery execution initiated by the Respondent SRO is improper."
6 It may be stated that the Petitioner-Bank had filed [CASE NUMBER] on 25.1.2017 under [SECTION] of the [ACT] and challenged Clause 9 of the certificate as stated here-in-above, however, withdrew it on 15.1.2018. 7 In the disputes filed in Co-operative Court, it is averred that the cause of action arose when the bank issued notices demanding the entire purported loan amount. In the said dispute, a declaration is sought in the form of perpetual, mandatory and prohibitory injunction against the bank from proceeding any further in recovery application no.[SECTION]/2480/2013 and [SECTION]/95/2013 under [SECTION] of the said Act.
8 Petitioners being aggrieved by Clause 9 as aforesaid have preferred this Writ Petition inter-alia seeking following reliefs:
WP-3[SECTION]8-18.odt "(a) This Hon'ble Court may kindly be pleased to issue writ of Certiorari or any other writ, direction or order in the like nature thereby quashing and setting aside the order dated 20.10.2015 passed by the Deputy Registrar to the extent of condition imposed at Para 9 of the said order and order dated 09.08.2016 by Divisional Joint Registrar;
(b) This Hon'ble Court may please to call the record and proceeding of both the matter dispose of by Deputy Registrar and the Divisional Joint Registrar for examining the legality of the order;
(c) This Hon'ble Court may further please to direct the Hon'ble Co-operative Court to dispose of the matter filed by Respondent Nos.3 to 11 against the present Petitioner in expedite manner;
(d) This Hon'ble Court may please to pass any order or direction may be given in favour of Petitioner Bank for execution of recovery certificate to be taken place in expedite manner.
(e) Any other further order be granted as this Hon'ble Court may deem fit and proper."
9 Heard the learned counsel for the Petitioner, contesting Respondents and the learned AGP for the State. 10 The issue as framed in paragraph 7, here-in-above fell for consideration before the Division Bench of this Court in the case of [PRECEDENT] td. And Ors. [PRECEDENT] wherein it is held in paragraph 6 that WP-3[SECTION]8-18.odt 'the provisions of [SECTION] and [SECTION] are separate and distinct and act in different spheres. By virtue of [SECTION], a summary and speedy remedy has been provided to certain types of societies. Further, it is to be noted that by virtue of [SECTION], finality is attached to the certificate granted by the Registrar under this section'. In paragraph 6, the Division Bench has held that 'the opening words of [SECTION] i.e., "Notwithstanding anything contained in [SECTION], [SECTION] and [SECTION]" gives overriding effect to the said section' and further held that 'only remedy of the party aggrieved is to file revision application under [SECTION] of the [ACT].' 11 In the case in hand, though the recovery certificate itself is not subject matter of dispute but clause 9 of the recovery certificate and the pleadings in the dispute shows contesting respondents have invoked the jurisdiction of the Co-operative Court under [SECTION] during the pendency of the recovery proceeding under [SECTION] of the said. The pleadings in a dispute application as well as clause 9 of the recovery certificate would show that issue in the dispute is the [ENTITY] WP-3[SECTION]8-18.odt same, i.e., recovery of amount due and payable by the borrowers to the Bank.
12 In view of these facts, we are of the opinion that clause 9 is contrary to the object and the scheme of [SECTION] of the said Act. In the course of the argument, the learned counsel appearing for Respondents conceded to a fact that jurisdiction under [SECTION] and [SECTION] are distinct in nature and do not overlap each other. Thus, Clause 9 in the recovery certificate, is on the face of it, runs counter to scheme and object of [SECTION] of the Said Act. [SECTION] was inserted in the statute book by [ACT]. Intention of legislature while enacting the provisions of [SECTION] was to provide speedy remedy to class of societies referred to in section against the defaulting members. Moreover, opening words of [SECTION] gives overriding effect to the said Section. Insertion of such clause and making the execution of recovery certificate subject to disputes pending in the Co-operative Court which admittedly relates to the recovery proceedings is illegal and, therefore, we quash [ENTITY] WP-3[SECTION]8-18.odt and set aside the same.
13 It may be stated that contesting respondents had participated in the recovery proceedings through their advocates but simultaneously filed a dispute under [SECTION] which, in our view, was ill-advised and, with sole intention to stall the recovery proceedings initiated under [SECTION] of the said Act. 14 The learned counsel for contesting respondents would submit that petitioners have not approached writ Court with clean hands in-as-much as Petitioners have not disclosed a fact that earlier Writ Petition for same relief was withdrawn by them. It is, therefore, submitted that Petitioners are not entitled to approach this Court being under [SECTION] which is extraordinary, equitable and discretionary jurisdiction. He has thus relied upon the judgment of the Supreme Court in the cases of (1) K.D.Sharma v. Steel Authority of India Ltd. & Ors.
2009 AIR (SC)(Supp)1309;
(2) [PRECEDENT];
[ENTITY] WP-3[SECTION]8-18.odt (3) [PRECEDENT].
15 It may be stated that the bank had filed [CASE NUMBER] on 25.1.2017 and withdrew the same on 15.1.2018. This petition was filed on 22.12.2017 under [SECTION] of the [ACT] and first petition was withdrawn after filing of the present Petition. Admittedly, as in the first petition, subject issue was not addressed or dealt with, we do not see any reason to hold that the petitioners have not approached this Court with clean hands. On the contrary, it may be stated that contesting respondents have approached the Co-operative Court under [SECTION] when the proceedings under [SECTION] of the said Act were pending against them and as such, ensured that the recovery certificate is not executed against them. In the circumstances, we do not see any merit in the contention of the contesting respondents. 16 That for the reasons aforesaid, we allow the petition and quashed and set aside Clause 9 of the Recovery Certificate [ENTITY] WP-3[SECTION]8-18.odt 2480/2013. We make it clear that execution of the recovery certificate no.[SECTION]/2480/2013 dated 20.10.2015 issued by Respondent No.2 is not subject to [CASE NUMBER] and/or any matter relates thereto if pending in the Co-operative Court. 17 Writ petition is allowed in the aforesaid terms and disposed of accordingly with no order as to costs.
([ENTITY], J.) ([ENTITY], J.) [ENTITY]