:1: :1: :1: IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION WRIT PETITION NO. 706 OF 2008 M/s.Vilas Transport Co.and anr. ...Petitioners Versus Special Recovery Officer & Sales Officer, Sangli Sahakari Bank Ltd and Ors. ....Respondents ====== Mr.D’vitre, Sr.Counsel i/by. M/s. T.N.Tripathi and Co. Adv. for the petitioners. Mr.B.A.D’lima i/by. M/s. D’lima Associates Adv. for respondent no.1. Mr.J. Mitra i/by. M/s.D’lima Associates, Adv. for respondent no.2. Mr.Venkatakrishna i/by.Kundaru & Kundaru, Adv. for respondent nos.3 to 5. Mr.Nusrat Shah a/w. Mr.A.R.Gupta, Mr.V.A.Almedia, Ms.Ema Almedia, Mr.Maqsood Ansari, Ms. Pravin Contractor i/by M/s. N.N.Shah for respondent no.8. CORAM: S.C.DHARMADHIKARI, J. DATED: 3RD MARCH, 2008. P.C. P.C. P.C. : : : 1. This writ petition under Article 226 and 227 :2: :2: :2: of the Constitution of India is directed against an Auction Notice dated 13.5.2006, copy of which is at Exhibit-B. It is issued by the Special Recovery Officer as well as the 2nd Respondent-Bank. 2. This officer was proceeding under Rule 107 of the Maharashtra Co-operative Societies Rules as is evident from the fact that the said bank applied for issuance of Recovery Certificate against one M/s.Acrit Exim P.Ltd, M/s. Vilas Transport Co. and three Recovery Certificates have been issued in its favour. There is a default committed in payment of the dues under the Recovery Certificate, inasmuch as, the petitioners before me are M/s. Vilas Transport Co. and one Prakash Shivaji Shendage. This Prakash Shivaji Shendage is the member of the Maharashtra Legislative council whereas Jayprakash D. Shendage was the Director of the Respondent No.2-Bank for about 10 years and also its Chairman for a tenure of three years. Thus, the said Prakash, Jayprakash and others from the Shengade Family got the loans sanctioned. The credit facilities were availed of and renewed from time to time. Since the outstanding amount was in crores of :3: :3: :3: rupees, the Bank moved and applied for the Recovery Certificates which was granted as early as in September, 2002. Thereafter, the Demand Notice was issued on 18.9.2002. Even during the course of the execution proceedings, there was no Application made to raise the attachment nor were the orders of the said Recovery Officer challenged by institution of Revisional proceedings. In December 2002, the said Special Recovery Officer, as well as, the Sales Officer advertised the Auction of the attached properties in two leading newspapers. There were bids from the public but for want of adequate price, the auction was deferred. The petitioners and other persons, so also, the sister concerns did not impugn this Auction or the Notices issued, but, on the other hand the petitioner no.2 addressed a letter dated 25.7.2005 assuring the Respondent no.2 that he would pay a sum of Rs.5 crores within 15 days. 3. Since, the amount was not paid and the dues amounted to more than 25 crores, the 2nd Respondent moved the First Respondent and requested him to initiate proceedings for Auction. Once again, Auction :4: :4: :4: Notice dated 13.5.2006 was issued in three local newspapers, one in Marathi, one in English and one in Gujrathi. The Auction Notice reads thus :- " TENDER TENDER TENDER NOTICE NOTICE NOTICE SEALED tenders are invited for the sale of property attached against unrecovered Bank loan on as is where is basis Name of Defaulters Details of immoveable property for Sale M/s.Vilas Transport Agril, Padgavat, Padik Co.Mumbai Land 4-04-0 Hector at Village Veshwi, Tal-Uran, Dist-Raigad N/s.Accrate Exim 1)Agril Land, 0-86-08 P.Ltd: Mumbai Hector at Village- Dighode, Tal-Uran Dist-Raigad M/s.Shivalik Transport 2)Non-Agril/Pad Lad Co.,Mumbai 6-38-02 Hector at Village-Pohi, Tal.Uran Dist.Raigad Note: 1) Blank tender forms, terms and Conditions of tender & 7/12 of land will be availaibale on payment of Rs.200/- at Head Office of the bank at above address during working from 15.05.2006. 2) For Details of the property contact the recovery dept of the bank between 10.30 a.m. and 5.30 p.m. :5: :5: :5: 3) Last date of receiving tenders is 31.5.2006 upto 3.00 p.m. and tenders will be opened on the same day at 4.00 p.m. " 4. It is pointed out that against this Auction Notice, a Writ Petition was moved before this court being Writ Petition No. 4543 of 2006 and an order was passed on 11.6.2007 adjourning the matter for 4 weeks as settlement talks were in progress. That petition was placed before this court on 30.8.2007 and it has been disposed off by the following order :- "1. Heard Learned Counsel for the petitioner and leanread Counsel for respondent no.2. 2. This petition is filed by the petitoner challenging the Proclamation for sale of its properties which was issued at the istance of respondent no.2-Creditor Bank. Learned Counsel for respondent no.2 states that respondent no.2 would not proceed with the auction sale of the property in pursuance of the proclamation dated 13th May, 2006 but would take steps for issuance of a fresh proclamation in accordance with law. In view of this, nothing survives in this petition. Writ Petition is disposed of. " 5. I am informed that the very Auction Notice was impugned in the Writ Petition No. 4543 of 2006. :6: :6: :6: Further, the petitioners in the Writ Petition have averred that they filed a Revision Application under Section 154 of the Maharashtra Co-operative Societies Act, 1960 challenging the Recovery Certificates, but, the Divisional Joint Registrar, Co-operative Societies, Mumbai did not entertain the said Revisional proceedings because the petitioners failed to deposit 50% of the sums under the Recovery Certificate. 6. Mr.D’vitre, learned Senior Counsel appearing for the petitioners in this Writ Petition contended that the earlier Writ Petition was disposed off by this court on the basis of the statement of the Respondent no.2. The statement was that the Respondent no.2 will not proceed with the Auction Sale in pursuance of the the Proclamation dated 13.05.2006 but would take steps for issuance of fresh Proclamation in accordance with law. He submits that in the light of this statement, the Writ Petition preferred by the petitioners was disposed off. However, the Respondnet no.2 has not abided by this statement, but, proceeded to auction and dispose off the properties mentioned in the subject Auction Notice. That Auction Notice suffers from a :7: :7: :7: patent infirmity. In his submission, the Auction Notice purports to sell the properties of Shivaji Transport Co., Mumbai and one Accrit Exim Pvt. Ltd alongwith that of petitioner no.1. He submits that such clubbing of Debtors/Borrowers and their properties is not permissible in law. He further submits that assuming without admitting that the Auction could have taken place in pursuance of such a Notice, yet, it could not proceed unless the Reserve price was fixed. The Reserve price/up-set price has to be determined prior to the property being put up for auction and the said price must be mentioned in the Notice. That is admittedly not mentioned. Mr. D’vitre further contended that without prejudice to the condition, even if the Auction were to go through, yet, the same has to be in confirmity with Rule 107(11)(g) of the Maharashtra Co-operative Societies Rules, 1961. He submits that the said Rules are very clear, inasmuch as, they do not permit tendering of the price/purchase price as stated therein, beyond the period stipulated in the Rules. At the time of purchase a sum equal to 15% of the price of immovable properties shall be deposited by the purchaser in the hands of the Sale :8: :8: :8: Officer and in default, the property shall forthwith be resold. He submits that the Proviso is inapplicable. Further, Rule 107(11)(h) mandates that remainder of the purchase money and the amount required in general stamp for the sale Certificate shall be paid within 15 days from the date of sale. Mr.Dwitre submits that the Auction Notice is dated 13.05.2006. On the own showing of Respondent no.2, the sale with regard to the properties situated at Village-Vesvi was on 28.76.2006 in favour of respondent no.7 for Rs.2.40 crores. The purchase price was not tendered in time limit specified in the Rules. Further, the properties situated at Dighoda were sold by public auction on 28.6.2006 in favour of respondent no.9 who deposited a sum of 15% immediately but the later sums have not been paid within 15 days. Hence, the auction sale is void. 7. Mr.D’vitre relies upon the following decisions in support of the above contentions. (i) 2007(9) SCC 593 [Popcorn Entertainment V/s. City Industrial Development Corpn.] :9: :9: :9: (ii) 2007(6) SCC 172 [M.P.State Agro Industries Development Corp.Ltd V/s. Jahan Khan] (iii) 1998(8) SCC 1 [Whirpool Corporation V/s. Registrar of Trade Marks, Mumbai] (iv) 2003(2) SCC 107 [Harbanslal Sahania V/s. Indian Oil Corporation Ltd] (v) 2007 AIR (SC) 1874 [Shilpa Shares and Securities V/s. National Co-operative Bank Ltd] (vi) 2006(5) BCR 587 [Niranjan D.Woody v/s. South Indian Co-operative Bank Ltd] (vii) 2005(2) BCR 819 [Nandkishor D. Shelke V/s. Baban Vitthal Mhaske] (viii) 2001(4) BCR 730 [Smita J.Thacker V/s. Commissioner of Registrar, Madeavarte :10: :10: :10: Karyalaya] 8. He contends that the law laid down is very clear. The period prescribed is mandatory. There is no question of any extension being granted. Therefore, the petitioner can challenge the sale by the present Writ Petition. 9. In his submission, there is no need to avail or exhaust the alternate remedies, inasmuch as, the facts are admitted and even the legal position. Therefore, this court should exercise its power under Article 226 and 227 and set aside the sale. 10. On the other hand, Mr. Mitra appearing for respondent no.2 invites my attention to the Affidavit-in-reply and more particularly Exhibit 1 thereto. He also contends that as of today, the liability of the petitioners and that of the Sister concerns is Rs.24,50,00,000/- approximately. He submits that nothing has been paid and the petitioners are indulging in litigation. This is nothing but a :11: :11: :11: harassment of the respondent No.2 and that of the purchasers. He also contended that there is a Conveyance Deed executed in regard to both properties and the respective purchasers are put in possession. Further, he submits that the Revision Application No. 353 of 2006 and 354 of 2006 were preferred by the petitioners, which were rejected by an order dated 6.7.2006. Thus, the attempt to challenge the Recovery Certificate and the auction has failed. He submits that the Revision Application has been rejected, admittedly, after the Auction Notice. 11. His other contention is that the present petition is not maintainable because the Maharashtra Co-operative Societies Rules 1961 and more particularly Rule 107(13) and (14) provided for a remedy in case the petitioner is aggrieved by the sale. Further, he submits that the Recovery Officers action is amenable to the revisionary powers of the Registrar and the State Government under Section 154 of the Maharashtra Co-operative Societies Act. Both remedies are alternate and equally efficacious. Therefore, the Writ Petition should not be entertained. :12: :12: :12: 12. I have given my anxious consideration to the rival contentions. The Writ Petition in the present case is instituted to challenge the Proclamation dated 13.05.2006. Admittedly, the Proclamation is with regard to the auction of the immovable properties specifically mentioned therein. Considering the submissions of Mr.D’vitre with regard to the infirmities therein, so also clubbing of properties of defaulter, in my view, disputed questions of facts are clearly involved. The Writ Petition under Article 226 and 227 is not the remedy to resolve the same. The plea of the petitioners with regard to clubbing of the properties and the infirmities in the Auction Notice have been clearly denied. The argument of the second respondent is that petitioners were well aware of the Auction Notice and that the properties in the respective villages were to be sold and were indeed sold with their knowledge. Thus, the infirmity in the Auction Notice with regard to the clubbing of the properties of the defaulters, so also, there being no upset/reserve price fixed allegedly are matters which cannot be resolved by this court in its jurisdiction :13: :13: :13: under Article 227 of the Constitution of India. The sale is not challenged only on the ground that the purchasers has failed to tender the sums within the period stipulated by law. The petitioner has admittedly on the earlier occasions availed of the remedies under Section 154 of the Maharashtra Co-operative Societies Act. 13. Mr.D’vitre’s contentions that there are admitted facts and therefore this court should not relegate the petitioner to alternate remedies, are not well founded. There are disputes as regard the alleged infirmity in the Auction Notice. The contents of the Documents, relied upon and the material regarding the sale being vitiated on account of clubbing of liability, fixation of Reserve Price, tendering of Purchase Price after the stipulated period, will have to be proved in law. In these circumstances, it is not possible for this court to entertain the factual disputes. 14. Further, it is not as if the petitioner cannot point out either in proceedings under Section :14: :14: :14: 107(13)(i) or under Section 154 of the Maharashtra Co-operative Societies Act, the Mandate, if any, flowing from the earlier Rules and subject Rules. In these circumstances, it is not possible to entertain this Writ Petition. 15. There is substance in the contention of Mr.Mitra, that with a view to by pass the alternate remedies which may require the petitioner to deposit certain sums, that the Writ Petition has been filed. Rule 107(13)(i)(a) and (b) is clear. Further, if the petitioners were to challenge the Recovery Certificate even then, they, will have to comply with Section 154(2A) of the Act. The Divisional Joint Registrar can be very well approached under Section 154. The pleas with regard to prior deposit can be gone into even by those Authorities. It is not as if the petitioner has no remedy, merely because conveyances have been executed. The conveyances have been executed in favour of the third party purchasers. If the petitioner has any grievance with regard to their actions, then certainly Writ Petition is not the remedy to challenge these conveyances and actions. It is thus not :15: :15: :15: necessary to enter into any larger controversy. The Writ Petition is dismissed on the ground that alternate and equally efficacious remedy is available to the petitioners. 16. Mr.D’vitre places reliance upon the decision of the Hon’ble Supreme Court in the case of Whirlpool Whirlpool Whirlpool Corporation Corporation Corporation vs. Registrar of Trade Marks, Mumbai vs. Registrar of Trade Marks, Mumbai vs. Registrar of Trade Marks, Mumbai reported reported reported in 1998(8) SCC 1. in 1998(8) SCC 1. in 1998(8) SCC 1. He also relies upon the later decision in the case of Popcorn Entertainment Popcorn Entertainment Popcorn Entertainment V.s, V.s, V.s, City Industrial Development Corporation reported City Industrial Development Corporation reported City Industrial Development Corporation reported in in in 2007(9) SCC 593. 2007(9) SCC 593. 2007(9) SCC 593. 17. The decision in Whirpool Corporation case is on the issuance of a Show Cause Notice to M/s. Whirlpool. Whirlpool challenged the Show Cause Notice and the view taken by this court was that the Writ Petition would not lie against a Show Cause Notice. More so, when a party has further opportunity available to meet the allegations in the Show Cause Notice. This view has been overruled and the judgment of the Hon’ble Supreme Court proceeds on the basis that there is no absolute proposition that no writ can be issued :16: :16: :16: questioning a Show Cause Notice. If the Show Cause Notice issued is without jurisdiction and the Authority issuing it had no power or authority to issue the same, then, depending upon other facts, a Writ Petition can be entertained. It is a decision rendered in the peculiar facts of the case pertaining to M/s. Whirpool Corporation. In fact the Hon’ble Supreme Court in the said Decision has observed that : "20. Much water has since flown under the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, inspite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation. 21. That being so, the High Court was not justified in dismissing the writ Petition at the initial stage without examining the contention that the show-cause notice issued to the Appellant was wholly without jurisdiction and that the Registrar, in the circumstances of the case, was not justified in acting as the "Tribunal". 18. The said decision has been followed in the :17: :17: :17: case of "Popcorn Entertainment." Reliance placed thereupon, is in the context of CIDCO allotting certain plots. The Appellant before the Supreme Court made an Application requesting for allotment of plot, The Appellant made a request on 8.6.2004 and CIDCO in pursuance thereof called for a Progress Report which was furnished and a Letter of Intent was issued. The Appellant was called upon to pay E.M.D. of Rs.20,77,000/- within 15 days. The Appellant made that payment and thereafter allotment was approved. It is contended before the Supreme Court that the allotment was made in terms of Land Disposal Regulations. A Corrigendum was issued and thereafter a further sum was demanded. After payment of Rs.2,08,72,420/- that CIDCO issued a Show Cause Notice seeking to cancel the agreement. The argument before the court was that contractual disputes are involved and therefore Writ Petition is not the remedy. It is in such factual backdrop, that relying upon the "Whirlpool" and and finding that even PopCorn’s pleas are with regard to the Show Cause Notice, that the Supreme Court made observations relied by Mr.D’vitre. Even this Decision is distinguishable on facts. The facts in the instant :18: :18: :18: case contemplate an investigation and inquiry into the disputed questions. It is not as if the petitioners’ allegations with regard to the infirmity in the Auction Notice are admitted. Further, there is a dispute with regard to the other facts as well. I need not repeat the same once again. In such circumstances, these decisions are of no assistance to the petitioners. In the result, the Writ petition is dismissed leaving open to the petitioners, alternate remedies. All contentions on merits are kept open. 19. It is clarified that the petition is restricted to only two immovable properties, one is at Village- Veshwi and Village-Dighoda. No costs. **********