IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC TUESDAY, THE 23RD JUNE 2009 / 2ND ASHADHA 1931 WP(C).No. 27815 of 2007(J) --------------------------------------- PETITIONER: ------------------- THE KOOTHATTUKULAM HOUSING CO-OPERATIVE SOCIETY LTD.NO.E 728, KOOTHATTUKULAM, ERNAKULAM DISTRICT, REPRESENTED BY ITS SECRETARY RANI THOMAS. BY ADVS. MR.P.V.BABY, MR.A.N.SANTHOSH. RESPONDENTS: ------------------------ 1. P.U.BABY, S/O.ULAHANNAN, PATTUPALAYIL HOUSE, KARIMBANA P.O., PALAKUZHA VILLAGE, MUVATTUPUZHA TALUK, ERNAKULAM DISTRICT. 2. THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES (GENERAL), ERNAKULAM. 3. THE TAHSILDAR, MUVATTUPUZHA. 4. THE VILLAGE OFFICER, PALAKUZHA VILLAGE, MUVATTUPUZHA TALUK. 5. JOSEPH, S/O.ABRAHAM, ELECHIKUNNEL HOUSE, PALAKUZHA VILLAGE, MUVATTUPUZHA TALUK, ERNAKULAM DISTRICT. R2 TO R4 BY GOVERNMENT PLEADER MR. I.V. PRAMOD, R5 BY ADVS. MR.T.A.UNNIKRISHNAN, MR.P.P.BIJU. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 18/06/2009, THE COURT ON 23/06/2009 DELIVERED THE FOLLOWING: W.P.(C). NO.27815/2007-J: APPENDIX PETITIONERS' EXHIBITS: EXT.P.1: COPY OF THE REGISTERED MORTGAGE DEED NO. 1567/1992 OF THE KOOTHATTUKULAM SUB REGISTRY OFFICE DTD. 05/08/1992 EXECUTED BY THE R1. IN FAVOUR OF THE PETITIONER. EXT.P.2: COPY OF THE ENCUMBRANCE CERTIFICATE DTD. 07/02/1992 ISSUED FROM THE KOOTHATTUKULAM SUB REGISTRY OFFICE. EXT.P.3: COPY OF THE POSSESSION CERTIFICATE DTD. 24/02/1992 ISSUED BY THE R.4. EXT.P.4: COPY OF THE AWARD DTD. 16/05/1997 ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.5: COPY OF THE NOTICE DTD 30/11/1998 ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.6: COPY OF THE ENCUMBRANCE CERTIFICTE DTD. 17/01/2000 ISSUED FROM THE KOOTHATTUKULAM SUB REGISTRY OFFICE. EXT.P.7: COPY OF THE AUCTION NOTICE ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.8: COPY OF THE AUCTION NOTICE DTD. 11/01/2001 ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.9: COPY OF THE DEMAND NOTICE DTD. 23/05/2007 ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.10: COPY OF THE ENCUMBRANCE CERTIFICATE DTD. 12/09/2007 ISSUED FROM THE KOOTHATTUKULAM SUB REGISTRY OFFICE. EXT.P.11: COPY OF THE AUCTION NOTICE DTD. 12/09/2007 ISSUED BY THE ARBITRATOR/INSPECTOR OF CO-OPERATIVE SOCIETIES FOR ARBITRATION AND EXECUTION, MUVATTUPUZHA. EXT.P.12: COPY OF THE ATTACHMENT ORDER DTD. 17/09/2007 ISSUED BY THE SALE OFFICER. RESPONDENTS' EXHIBIT: EXT.R5.A: COPY OF THE PROCEEDINGS OF THE REVENUE DIVISIONAL OFFICER, MUVATTUPUZHA DTD. 31/05/2007. //TRUE COPY// P.A. TO JUDGE. Prv. ANTONY DOMINIC, J. ------------------------- W.P.(C.) No.27815 of 2007 --------------------------------- Dated, this the 23rd day of June, 2009 J U D G M E N T The petitioner is a Co-operative Society. The prayer sought in this writ petition is to declare that the proceedings of the revenue authorities auctioning the property mortgaged to it as per Ext.P1 registered mortgage deed are arbitrary and void. The petitioner also seeks a declaration that in view of Section 35 of the Kerala Co- operative Societies Act, the Society has first charge over the property mentioned in Ext.P1. 2. Facts of the case are that the 1st respondent had availed of a loan of Rs.75,000/- from the petitioner Bank mortgaging 10 cents of land and a building therein as security. Ext.P1 is the mortgage deed registered on 05/08/1992, and the loan was availed for construction of a house. Ext.P2 is the encumbrance certificate and Ext.P3 is the possession certificate furnished to the Bank. It is stated that default was committed in the repayment and an arbitration case was filed by the Bank for realising an amount of WP(C) No.27815/2007 -2- Rs.89,672.45. Before the Arbitrator, the 1st respondent remained exparte, and finally Ext.P4 award was passed on 16/05/1997. The 1st respondent neither challenged the award nor paid the amount. Thereupon, the petitioner Bank filed E.P.No.193/1998 for realising its dues. In pursuance thereof, Ext.P5 notice was issued by the Sale Officer, and even at that stage, the 1st respondent did not pay the amount. Ext.P7 is the auction notice that was published by the Sale Officer scheduling auction on 25/05/2000. At that stage, the 1st respondent remitted a portion of the amount due, and the sale was adjourned. Again default was committed and Ext.P8 auction notice scheduling auction on 16/02/2001 was published. On that occasion also, a portion of the amount was remitted and the 1st respondent and got the sale adjourned. Again default was committed and Ext.P9 demand notice was issued, and as per Ext.P11 notice, auction was scheduled on 25/10/2007. 3. At that stage, the Bank obtained Ext.P10 encumbrance certificate from which it was disclosed that the 3rd respondent had auctioned the property for recovery of dues towards the Sales Tax Department, and that the 5th respondent had bid the property in WP(C) No.27815/2007 -3- auction. They also came to know that the sale certificate was registered in favour of the 5th respondent on 01/02/2007. It was at that stage, the writ petition was filed. 4. The main contention raised by the petitioner Bank is that it is entitled to priority in respect of its debt, on the strength of Section 35 of the Kerala Co-operative Societies Act. 5. The learned Government Pleader produced the file (B4/489/99). According to the learned Government Pleader, the total liability which was sought to be realised was Rs.42,46,760/-. It is stated that in the mahazar prepared at the time of sale, the dues were shown as Rs.1,44,067/-, and that property was sold for Rs.2,54,250/-, although the auction started at the upset price of Rs.2,81,794/-. Thus the effort of the learned Government Pleader was to impress upon this Court that in the process of sale, huge loss was caused to the revenue. 6. As far as the priority of debt which the Bank claims is concerned, it will depend upon the terms of Section 35 of the KCS Act. Section 35 provides first charge only on certain assets on the Society, which are as provided in sub sections (1)(a) & 1(b) of the WP(C) No.27815/2007 -4- said Section. It does not provide for any first charge in respect of any immovable property, as claimed by the Bank. If that be so, the priority of debt claimed by the Bank is devoid of any merit, and is only to be rejected. 7. What remains to be considered is whether on the materials available, the sale is vitiated as contended by the learned Government Pleader. First of all, having gone through the files (B4/489/99) produced by the learned Government Pleader, I do not understand how the liability of the 1st respondent came to Rs.42,46,760/-. The history of the case shows that default to the sales tax department was committed by Mr.P.U.Rajan, brother of the 1st respondent. His liability was Rs.1,44,067/- being the sales tax dues for the period 1986-1989. It is seen that proceeding were initiated against him under Section 65 of the Revenue Recovery Act, and he was arrested. At that stage, he was enlarged on bail and the 1st respondent was one of the sureties. The bail bond dated 03/07/1999 shows that the sureties bound themselves for Rs.2,37,653/- only. Nothing in the file disclosed that the 1st respondent was in any manner responsible for any amount other WP(C) No.27815/2007 -5- than what is mentioned in the bail bond. If that be so, the maximum liability of the 1st respondent has to be limited to the amount mentioned in the bail bond. Consequently, the liability of the 1st respondent could not have been Rs.42,46,760/- as contended by the learned Government Pleader. It is seen from the file that after getting the property valued, the auction started at Rs.2,81,794/-, and ultimately the sale was settled at Rs.2,54,250/-. Therefore, on the materials produced, I do not find anything vitiating the sale. Therefore, the writ petition is only to be dismissed and I do so. (ANTONY DOMINIC, JUDGE) jg