1 wp 1234-10 jpc IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1234 OF 2010 Jankalyan Sahakari Bank Limited and others .. Petitioners Versus 1. The Divisional Joint Registrar, Co-operative Societies & others. .. Respondents Mr. Ashish Kamat i/by V. Deshpande & Co. for the Petitioner Ms. S.M. Dandekar, AGP, Respondent Nos. 1, 2 and 9 CORAM: S. J. KATHAWALLA, J. DATED: 6 th October, 2010 ORAL ORDER 1. Heard learned Advocates for the parties. Perused records. 2. By this Writ Petition, the Petitioners have impugned the judgment and order dated 25th November, 2009 passed by the Revisional Authority i.e. Respondent No.1(Divisional Joint Registrar, Cooperative Societies) inter alia setting aside/revoking the recovery certificates issued by Respondent No.2 against Respondent Nos.3 and 4 and remanding the matter back to Respondent No.2 for fresh hearing on merits. 2 wp 1234-10 3. The relevant facts giving rise to the present Writ Petition are as follows: 4. On 30 th July, 2002, the Petitioner No.1 advanced to Respondent No.3 the following credit facilities: (i) Cash credit of Rs.50,00,000/-; (ii) Working Capital of Rs.30,00,000/- ; and (iii)Term loans of Rs.41,00,000/-and Rs.6,00,000/- respectively. The lending is secured by hypothetication of the plant and machinery and all movable properties of Respondent No.3 and mortgage of the immovable properties set out in Paragraph 3(e) of the Petition. 5. Respondent Nos.4 to 8 executed continuing guarantees vide Guarantee Agreement dated 16 th September, 2002, guarantying repayment of the lending granted to Respondent No.3. The guarantees entitled the Petitioner No.1 to vary and/or modify the terms of the lending/credit granted to Respondent No.3. 6. In the year 2004 Respondent No.3 defaulted in repayment of the dues. Hence with the consent of the Petitioners two mortgaged properties i.e. Flat No.4, Triveni Apartment, Andheri (E) and Industrial Gala and Machinery at Panvel were sold, thereby realising a sum of Rs. 48,60,000/- which was appropriated towards the loan accounts and for which due credit was given to the Respondents. However, an amount of Rs.29,37,070/- still remained outstanding. 3 wp 1234-10 7. In the year 2005 the Petitioner No.1 filed Recovery Application Nos. 7068 and 7069 of 2005. The challenge in this Petition relates to Recovery Application No. 7069 of 2005. Respondent No.2 (the Asstt. Registrar of Cooperative Societies) by his order dated 10th August, 2006 allowed the Recovery Application only against Respondent No.3 and 4 and directed issuance of recovery certificates. The other guarantors i.e. Respondent Nos. 5 to 8 were discharged on the ground that since, Petitioner No.1 renewed credit facilities of Respondent No.3 and/or sold properties of the Respondents, without consent of the guarantors, they were entitled to be discharged from their liability as guarantors. 8. Being aggrieved by the order passed by Respondent No.2, the Petitioners filed Revision Application No. 618 of 2006 before Respondent No.1. In the said Application, the challenge to the order dated 10th August, 2006 was restricted only to not granting recovery certificates against Respondent Nos.5 to 8 i.e. the guarantors. The Respondent No.1, by his impugned order dated 25th November, 2009 held that the guarantees executed by the Respondent Nos. 5 to 8 are continuing in nature and are to remain in full force till the entire loan of Respondent No. 3 is repaid. It is further held that Respondent No.2 ought to have scrutinised the guarantees carefully, instead of wrongly concluding that the same are not renewed by the Respondent Nos. 5 to 8. It is further held that the Respondent No.2 in his order erred in not scrutinizing the loan documents and ought not to have relieved the Respondent Nos. 5 to 8 from their respective liabilities as guarantors. However, the 4 wp 1234-10 Respondent No.1, by his order dated 25th November, 2009 instead of setting aside the order only a against Respondent Nos. 5 to 8, has set aside the entire order dated 10th August, 2006 passed by the Respondent No.2 and has remanded the matter back to the Respondent No.2 for fresh consideration. In view thereof, the Respondent No.1 has wrongly set aside the order passed by the Respondent No.2 against the Respondent Nos. 3 and 4 though the order passed against Respondent Nos. 3 and 4 was not the subject matter of challenge before the Respondent No.1 and the said order had attained finality. The Petitioners have therefore filed the present Writ Petition for quashing and setting aside the order passed by the Respondent No.1 to the extent the same is applicable to the Respondent Nos. 3 and 4. 9. The Respondent Nos. 5, 6 and 8, before this Court, impugned the order passed by the Respondent No.1 dated 25.11.2009 by filing Writ Petition Nos. 1219 and 1220 of 2010 on the ground that the order passed by the respondent No.1 is without issuing any notice to the said Respondents. The said writ petitions are disposed of by an order of this Court dated 24 th August, 2010, whereby the order passed by the Respondent No.1 against the Respondent Nos. 5, 6 and 8 has been set aside and the respondent No.1 is directed to decide the Revision Application filed by the Petitioners against Respondent Nos. 5, 6 and 8 afresh. 5 wp 1234-10 10. The learned Advocate appearing for the Petitioner has therefore submitted that in the above circumstances, the order passed by Respondent No.1 setting aside the order of Respondent No.2 even against Respondent Nos. 3 and 4 which was not impugned before him is erroneous and perverse and the same needs to be quashed and set aside. 11. Respondent Nos. 3, 4 and 7 have not appeared before this Court though as directed by this Court by its order dated 30th August, 2010, Respondent Nos. 3,4 and 7 have been served by substituted service as set out in the Affidavit of service dated 16.9.2919. Respondent Nos. 5, 6 and 8 have been served. The learned Advocate appearing for the Respondent Nos. 5, 6 and 8 has, on an earlier occasion, informed this Court that Respondent Nos.5, 6 and 8 do not propose to make any submissions in this Writ Petition. 12. I have therefore considered the submissions advanced by the Petitioner Bank. Paragraph 2 of the Revision Application as well as prayers of the Revision Application make it amply clear that the challenge to the order dated 10 th August, 2006 by the Petitioners was restricted only to the non grant of recovery certificates against Respondent Nos. 5 to 8 and the grant of recovery certificates against Respondent Nos. 3 and 4 was not the subject matter of challenge before the Respondent No.1. The Respondent Nos. 3 and 4 have not challenged the order dated 10 th August, 2006 and hence the order dated 10 th August, 2006 in as much as 6 wp 1234-10 to the extent granting recovery certificates against Respondent Nos. 3 and 4 has attained finality. In view thereof the Respondent No.1 had no authority and/or jurisdiction to set aside the Recovery Certificates issued against the Respondent Nos. 3 and 4. 13. In the circumstance, the order passed by the Respondent No.1 is quashed and set aside to the extent of setting aside the Recovery Certificates issued against the Respondent Nos. 3 and 4 and remanding the matter back to the Respondent No.2 14. Under the circumstances, the Rule issued is made absolute in the above terms and the Writ Petition is disposed of. ( S. J. KATHAWALLA, J.)