HIGH COURT OF ORISSA: CUTTACK RVWPET No.25 of 2010, OJC No.1545 of 1999 & OJC No.872 of 2000 In the matter of an application for review of the order dated 04.12.2009 passed by this Court in O.J.C. No.872 of 2000. ---------- Sri Nakula Charan Gochhayat, S/o Late Dinabandhu Gochhayat, Village: Alana, PO: Alanahat, PS:Naugaon, Dist: Jagatsinghpur … Petitioner. -Versus- Secretary, Jagatsinghpur Sub-Divisional House Building Cooperative Society Limited., & others … Opp. Parties For Petitioner : M/s Biplab Ku. Dash, S.R.Subudhi & J.Sahoo For Opp. Parties : M/s A.K.Mishra, A.K.Sharma, M.K.Dash, P.K.Dash & S.Mishra (For O.Ps. 1 to 3) M/s K.R.Mohapatra, S.Ghosh, A.P.Mishra, D.Panigrahi & A.R.Panigrahi (For O.P. No.4) ---------- O.J.C. No. 1545 of 1999 In the matter of an application under Articles 226 and 227 of the Constitution of India read with provisions of Sections 68, 109, 112 & 103 of the Orissa Cooperative Societies Act, 1962 & Rules of 1965. Sri Nakula Charan Gochhayat, S/o Late Dinabandhu Gochhayat, Village: Alana, PO: Alanahat, PS:Naugaon, Dist: Jagatsinghpur … Petitioner. -Versus- Assistant Registrar, Cooperative Societies, Jagatsinghpur Circle, AT/PO/PS/Dist: Jagatsinghpur & others … Opp. Parties For Petitioner : M/s M.K.Mallick, B.K.Mohanty, J.Sahoo, B.K.Dash, S.R.Subudhi, B.M.Mohapatra & S.Lenka For Opp. Parties : M/s A.K.Mishra & A.K.Sharma, (For O.P. No.2) M/s M.K.Mishra, P.K.Das, B.Mishra (For O.P. No.4) --------- O.J.C. No. 872 OF 2000 In the matter of an application under Article 226 of the Constitution of India. ------------- Sri Arendra Kumar Jena At- Alana-I, P.S. Alanahat, Dist: Jagatsinghpur …. Petitioner. Vrs. Secretary, Jagatsinghpur Sub-Divisional House Building Co-operative Society Ltd. At/P.O./Dist. Jagatsinghpur & others. ……….. Opp. Parties. For Petitioner -- M/s. S. N. Mohapatra, K.R. Mohapatra & S. Ghosh. For Opp.parties -- M/s. S.Mantry, A.K. Mishra, A.K. Sahu, M.K. Dash & R.N. Prusty ( For O.P. no.1) M/s. K.C. Lenka, S.Lenka, B.K.Dash & J. Sahoo. (For O.P.No.4) ----------- 2 R E S E N T: THE HONOURABLE THE CHIEF JUSTICE SHRI V.GOPALA GOWDA AND THE HONOURABLE SHRI JUSTICE B.N.MAHAPATRA Date of Judgment :13.05.2011 B.N.Mahapatra,J. The Review petition has been filed with a prayer to review the order dated 04.12.2009 passed in O.J.C. No.872 of 2000 and for de novo hearing of O.J.C. No.872 of 2000 along with O.J.C. No.1545 of 1999 filed by the review petitioner. 2. While the Review petition was being heard, learned counsel for the parties appearing in the writ petitions were directed to make submission on merits, as the prima facie case for review of the order passed in O.J.C. No.872 of 2000 was made out by the petitioner. 3. The fact of this case in a nutshell is that the petitioner-Nakula Charan Gochhayat, who belongs to Scheduled Caste community, applied for a loan in the year 1986-87 to Jagatsinghpur House Building Cooperative Society Ltd., Jagatsinghpur (for short, ‘Society’) and availed a loan of Rs.38,000/- by mortgaging his homestead land and building constructed thereon. In order to avail the loan, he executed a mortgage deed dated 23.05.1986 in favour of the Society. As he defaulted in payment of instalment towards the loan amount, as per the terms of the agreement executed between the petitioner and the Secretary of the Society (O.P. No.1), the latter filed Dispute Case No.1353/87 before O.P. No.3-Assistant 3 Registrar, Cooperative Societies, Jagatsinghpur (for short, ‘ARCS’) for realization of the defaulted amount and an award was passed against the petitioner. Since the petitioner did not make any payment pursuant to award, Execution Proceeding No.567/88-89 was initiated for realization of Rs.46,254.10. During pendency of the aforesaid Execution Proceeding, the petitioner filed a petition before the Grievance Cell of the Hon’ble Chief Minister of Orissa which was forwarded to O.P. No.3, before whom the said Execution Proceeding was pending. The E.P. Case was disposed of on 20.06.1992 with a direction to the petitioner to pay O.D. loan for Rs.10,560/- in monthly instalment of Rs.300/-. Assailing the said order, the petitioner preferred Revision Case No.26/94 under Section 112 of the Orissa Cooperative Societies Act, 1962 (for short, ‘Act’) which was also dismissed on 31.12.1996 on the ground of non-maintainability of the same. Being aggrieved, the petitioner again agitated the self-same grievance before the Registrar of the Societies in Revision Case No.3/97, which was also dismissed directing him to approach the appropriate forum. The petitioner thereafter moved the Orissa Cooperative Tribunal (for short, ‘Tribunal’) in T.A. No.10/97 and the same was dismissed vide order dated 07.01.1999. Due to the default of the petitioner in repayment of loan, the Society published an advertisement on 30.07.1994 in Oriya Daily ‘Dharitri” for sale of the property in question in public auction. Since no buyer came forward, the Society itself purchased the property of the petitioner at a valuation of 4 Rs.90,205/- on 19.09.1994. Thereafter, on negotiation, the Secretary of the Society sold the property in question to O.P. No.4-Arendra Jena for a consideration of Rs.93,000/- and executed a registered sale deed in favour of O.P. No.4 on 11.10.1996. 4. Further case of the petitioner is that he has filed O.J.C. No.1545 of 1999 with a prayer to set aside the demand of the Society, auction dated 19.09.1994, confirmation of the said auction dated 01.07.1995 and sale certificate issued on 19.09.1995 and to set aside the order of the Tribunal dated 07.01.1999 passed in T.A. No.10 of 1997. While the said writ petition filed by the petitioner was pending, O.P. No.4-third party purchaser filed O.J.C. No.872 of 2000, with a prayer to direct the Society to handover vacant possession of the property in question in his favour free from all encumbrances within a stipulated period. This Court by an order dated 04.12.2009 directed O.P. No.3- ARCS to issue necessary writ of delivery of possession of the property and also directed the Superintendent of Police, Jagatsinghpur to grant necessary police assistance in order to avoid breach of law and order situation at the time of taking delivery of possession of the property. After knowing about the order dated 04.12.2009, on 28.01.2010, the petitioner requested the O.P.- authorities to wait for a month and also filed Misc. Case No.54 of 2010 on 09.02.2010 along with Misc. Case Nos.57 and 58 of 2010 for condonation of delay in filing Misc. Case No.54 of 2010 and stay of the order dated 5 04.12.2009 respectively. However, this Court vide order dated 16.02.2010, dismissed the said Misc. Case No.54 of 2010 granting liberty to the petitioner to work out his remedies in accordance with law. Hence, the present Review Petition. 5. Learned counsel for the review petitioner, Mr.Dash vehemently argued that the petitioner being a ‘Doma’ belongs to Scheduled Caste community. He availed the loan of Rs.38,000/-. The first instalment of the loan amounting to Rs.7,600/- was disbursed to the petitioner on 28.06.1986 and Rs.30,400/- was disbursed on 01.08.1986 towards 2nd and 3rd instalment with 13.5% interest per annum repayable in forty consecutive half-yearly instalments at the rate of Rs.950/-. Thus, twenty years time was allowed to clear up the loan which was to complete in the year 2006. Against the said loan, the petitioner mortgaged his homestead land and building by executing a bond on 23.05.1986. With the loan amount, he has constructed the building over an area of 1000 Sqft. However, due to petitioner’s misfortune, he could not repay the installments regularly. His misfortune started with the death of his mother on 14.02.1987. Though he gave marriage of his daughter on 23.06.1988, she was drove out of by her husband and divorced in the year 1989. On 18.04.1989 elder son of the petitioner fell down in the well and expired. On the next day, i.e. 19.04.1989 due to insect bite to the eyes of the petitioner, he became sick and admitted into S.C.B. Medical College and Hospital, 6 Cuttack. Due to the serious illness of his wife she was bedridden from 1987 to 1992. On 10.02.1993, his minor daughter was kidnapped from School at Alana hat. These are all matters of record. Due to set fire to his house on 08.02.1993, the kitchen and store rooms were completely burnt and other portion of the house was damaged. Further, due to the massive flood occurred on 14.07.1994 the entire area including the residential house of the petitioner was submerged. 6. The petitioner raised his grievance in Dispute Case No.1353 of 1987 in the Court of the ARCS but in that case an ex parte award was passed and the Society filed E.P. Case No.567 of 1988-89. Annual income of the petitioner was Rs.4,500/- against the loan of Rs.38,000/-. He has repaid about Rs.90,000/- in 20 years. Filing of Dispute Case No.1353 of 1987 was not maintainable as the petitioner was not a defaulter in the year 1987. When the petitioner approached the Grievance Cell of the Hon’ble Chief Minister, direction was given to the ARCS to reconsider the case of the petitioner and accordingly the ARCS passed an order to pay Rs.10,560/- in 36 monthly installments at the rate of Rs.300/- per month. The petitioner thereafter started to pay the said installments in spite of his misfortunes. After the order dated 20.06.1992, the petitioner arranged a cash of Rs.600/- and when wanted to pay, the Secretary of the Society refused to accept the same. Finding no other alternative, the petitioner sent an amount of Rs.600/- by way of money order vide receipt No.1827 dated 7 11.07.1994, but the same was not accepted. Similarly, a Demand Draft of Rs.600/- was sent by regd. post which the Secretary of the Society also returned to him by post. Thereafter, the petitioner received a demand notice from the Society on 31.03.1994 for Rs.83,342/- as calculated on 01.01.1994 and the petitioner was intimated that if the said amount would not be paid his house will be auctioned. On receiving said demand notice, petitioner filed Revision Case No.26/94. The said Revision Case was dismissed on 31.12.1996 on the ground of maintainability. Thereafter, the petitioner filed T.A. No.10/97 in the Tribunal on 20.03.1997. On 07.01.99, the Tribunal dismissed the Appeal No.10/97 without appreciating the facts of the case in proper perspective, upheld the order of the Sale Officer as well as sale conducted and confirmed by the Principal Officer, ARCS on 01.07.1995 and the sale certificate issued on 19.09.1995 in favour of the decree-holder Society for Rs.90,805/- as no other bidder came up to participate in the auction to purchase the mortgaged property. Subsequently, the said property was sold to O.P. No.4-Arendra Kumar Jena for Rs.93,000/-. 7. It is further submitted by the petitioner’s counsel that no reasonable opportunity of hearing was afforded to the petitioner and the procedures laid down in Rule 123 and Rule 124 of the Orissa Co-operative Societies Rules (hereinafter called as the “Rules” in short) were not followed before selling the property of the petitioner to O.P. No.4. Therefore, it is 8 contented that sale confirmed in favour of O.P. No.4-Arendra Kumar Jena is illegal and void. The Secretary of the Society has committed an error in refusing to receive the money order and bank draft. While the ARCS being the Principal Officer vide order dated 20.06.1992 allowed the petitioner to pay the balance amount of Rs.10,560/- in 36 installments at the rate of Rs.300/- per month, it is very surprising how the said balance of Rs.10,560/- was inflated to Rs.83,342/- on 01.01.1994 within a period of one and half years. This conduct of the O.P.-Society is enough to show how it has harassed the petitioner. In support of his contention, learned counsel for petitioner relied upon a judgment of this Court in Kartika Kissan Vs. State of Orissa & Ors., 2010 (I) OLR 947. When a loan of Rs.38,000/- was taken in the year 1986 and repayment time was allowed 20 years with 13.5% interest per annum the O.P.-Society has committed an error in filing the dispute case in the year 1987, though the petitioner was not in default. Though the payments were made, same were not taken into account and the amount of outstanding dues the same was not reduced. With a mala fide intention, the petitioner’s land and building was sold to O.P. No.4 without any public auction. The Tribunal’s finding in its order that there was proper compliance of all procedure in conducting the public auction for sale of the property is an error of law, as the same relates to movable property. The market value of the property of the petitioner is worth Rs.8 to 9 lakhs as 9 per Annexure-10, which has been illegally given to the said Society at Rs.90,805/-. Sale of the petitioner’s property to O.P. No.4 on negotiation by the Society at Rs.93,000/- speaks volumes of illegal activities of the O.P.- Society. The confirmation of sale of the property in favour of opposite party No.4 is the outcome of fraud and collusion and therefore, it being illegal and void is liable to be set aside. 8. Mr.Mishra, learned counsel appearing for O.P.-Society submitted that the petitioner is a chronic defaulter in repaying the loan advanced to him by the Society. Secretary of the Society proceeded with the E.P. Case against the loanee. When the bidder did not turn up due to various reasons, the sale of the mortgaged property was adjourned from time to time and in compliance of the provisions of Rule 108 of the Rules fresh proclamation has been issued and ultimately, when no bidder turn up on 19.09.1994, the mortgaged land and building was sold to the decree- holder Society for Rs.90,805/-. The sale of the property of the petitioner has been confirmed by Principal Officer-ARCS on 01.07.1995. Subsequently, the Society sold the property to one Arendra Kumar Jena- opp. party No.4. It is the case of the Society that in spite of opportunities given to the petitioner, he did not avail the same to settle the loan amount and therefore, the Society was compelled to put the property to sale. Therefore, it cannot be said that no notice was given to the Review petitioner in E.P. Case. Relying upon Section 103(4) of the Act read with 10 Schedule ‘I’ attached to the Act, Mr.Mishra vehemently argued that if the petitioner was in any way aggrieved with the action of the Society in selling his immovable property within 30 days of such sale, he could have applied to the Auditor General to set aside the sale of the property on the ground of material irregularity, or mistake or fraud. According to Mr.Mishra, there is no infirmity and illegality in the action of Society in selling the property of the petitioner to the 3rd party, opposite party No.4-Arendra Kumar Jena as well as in the order passed by the Tribunal and therefore, there is no need to quash the same as prayed by the petitioner. 9. Opposite party No.3-Asst. Registrar, Co-operative Societies, Jagatsinghpur Circle, Jagatsinghpur in his affidavit dated 10.11.2000 stated that on 19.09.1994, the auction was held for sale of the property of the loanee-petitioner. Since, no bidder came forward to take part in the auction for the immovable property along with building of the petitioner, opposite party No.3-Asst. Registrar as the Principal Officer issued sale confirmation certificate under Section 114(1) of the Act, 1962 in favour of opposite party No.1-Secretary of the Society for Rs.90,805/-. The third party purchaser purchased the said land and building from opposite party No.1-Secretary on 11.10.1996 for Rs.93,000/- vide Registered Deed No.1367 dated 11.10.1996 in the Sub-Registrar Office, Devidol. 10. Mr. K.R.Mohapatra, learned counsel appearing for the 3rd party purchaser-A.K.Jena supported the stand taken by the Society and 11 vehemently argued that there is no illegality or infirmity in the action taken by the Society in selling the property of the petitioner to opposite party No.4. Pursuant to sale, he has taken delivery of possession of the property. Since the sale has been completed and possession of the property has been taken by the 3rd party purchaser, this Court should not set aside such sale by exercising its discretionary and supervisory power under Articles 226 and 227 of the Constitution of India. 11. On the rival factual and legal contentions urged on behalf of the parties, the questions that fall for consideration by this Court are as follows:- (i) Whether in the facts and circumstances, a case for review of order dated 04.12.2009 passed in OJC No. 872 of 2009 is made out? (ii) Whether before selling the property of the petitioner- loanee to opposite party No.4-3rd party purchaser- Arendra Kumar Jena, the statutory provisions of the Act and Rules were duly complied with? (iii) Whether the action of opposite party No.1-Secretary, Jagatsinghpur Sub-Divisional House Building Co- operative Society Ltd. in retaining the property in its favour for the reason that no bidder came forward in the public auction and further in entering into an agreement with the 3rd party purchaser on 20.09.1994 to sell the property of the petitioner without putting the property in 12 question to public auction and also before issuance of the sale certificate by opposite party No.3 in favour of opposite party No.1 is collusive and fraudulent? (iv) Whether noncompliance of statutory provisions and adoption of fraud and collusion by opposite party No.1- Secretary while dealing with the property of the petitioner vitiate the confirmation of the sale made in favour of opposite party No.4-3rd party-purchaser? (v) What order? 12. Question No.(i) relates to review of order dated 04.12.2009 passed in OJC No. 872 of 2009. Though the scope of review of an order passed by this Court is limited, in the instant case, we find that the impugned order was passed ex parte against the review petitioner in OJC No.872 of 2009 in which various material facts were suppressed. In course hearing, we found that the property of the review-petitioner has been sold in flagrant violation of the statutory provisions and contrary to the settled position of law. It is further noticed that opp. party-authorities have sold the property of the petitioner in collusion with third party purchaser by committing fraud without putting the same in public auction, the details of which will dealt hereinafter. In view of the above, the Review Petition is allowed as a case for review is clearly made out. 13 13. Question No.(ii) is as to whether the statutory provisions are complied with before selling of the property of the petitioner to the 3rd party purchaser, Arendra Kumar Jena. In this connection, the relevant provisions of Rules 123 and 124 of the Orissa Co-operative Societies Rules, 1965 (in short, “Rules”) are extracted below:- “123. Proclamation before Sale -- Proclamation of sale shall be published by affixing a notice in the office of the Principal Officer of the area at least 30 days before the date fixed for the sale and also by beat of drum or other customary mode in the said village on the date previous to the date of sale and on the date of the sale prior to the commencement of the sale. A copy of the proclamation may also be sent to the nearest Revenue Officer having jurisdiction over the village for affixing the same in the Notice Board. The proclamation shall state the time and place of sale and specify as fairly and as accurately as possible– (i) the property to be sold; (ii) any liability to which the property is subject; (iii) the amount of the recovery of which the sale is ordered; and (iv) any other particulars which the Sale Officer considers material for a purchaser to know in order to judge of the nature and value of the property 124. Sale to be by public auction – (1) When any immovable property is sold under the rules the sale shall be subject to the prior encumbrances of the property, if any. The sale shall be by public auction to the highest bidder provided that it shall be upon to the Sale Officer to decline to accept highest bid where the price offered appears to be unduly low or for other reasons to be recorded in writing and provided also that the Principal Officer or the Sale Officer may in his discretion, adjourn the sale to a specified day and hour, recording his reasons for such adjournment. Where a sale is so 14 adjourned for a longer period than 15 days or where there is a service of short adjournments which taken in aggregate, amount to more than 15 days, a fresh proclamation under Rule 123 shall be made unless the defaulter consents to waive it in writing in the presence of two witnesses. The time of sale shall be fixed by the Principal Officer and the sale shall be held after the expiry of not less than 30 days calculated from the date on which notice of the proclamation was affixed in the office of the Principal Officer and the place of sale shall be the village where the property to be sold is situated or such adjoining prominent place of public resort as may be fixed by the Principal Officer of the area. (2) The Sale Officer shall have the power to divide the property into lots if he thinks it necessary in the interests of the defaulter or the decree-holder. Where the property is divided into lot for purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot. When in the proclamation of sale, the separate lot are mentioned and the order of sale of each lot is mentioned, the Sale Officer shall not vary the lots in the sale and shall not make any departure in the order of the sale in the lots unless the decree-holder and defaulter give their consent in writing in the presence of two witnesses.” 14. Under the Orissa Co-operative Societies Rules, 1965 the interest of the defaulter is well protected. Rule 123 of the said Rules provides wide publication of proclamation of sale. As per the said Rules, proclamation of sale of the property shall be published by affixing a notice in the office of the Principal Officer of the area at least 30 days before the date fixed for sale and also by beat of drums or other customary mode in the said village on the date previous to the date of sale and on the date of sale prior to the commencement of the sale. It also further provides that a copy of the proclamation should be sent to the nearest Revenue Officer having jurisdiction over the village for affixing the same in the notice board 15 to bring to the notice of the public that the property will be sold in public auction. The proclamation shall state the time and place of sale and other particulars about the property decided to be put in public auction. Rule 124 of the said Rules, 1965 provides, that where the price offered by the highest bidder appears to be low, the Principal Officer or the Sale Officer shall adjourn the date of sale to some other date and in case where the sale is adjourned for a period of more than 15 days, a fresh proclamation under Rule 123 shall be made unless the defaulter waives it in writing in the presence of two witnesses. Rule 124(2) empowers the Sale Officer to divide the property in lots in the interest of the defaulter and decree holder. 15. A conjoint reading of Rules 123 and 124 of the Rules make it amply clear that the legislative intent is to protect the interest of the defaulter, whose property is decided to be sold by all possible means. In other words, the Society must see that maximum price, should be fetched to the property which can be achieved only through wide publicity of the intended sale. Needless to say that all possible steps should be taken by the Sale Officer before depriving the defaulter of his right to the property, which is a constitutional right. 16. Needless to say that public money has to be recovered from the defaulters, who do not repay the loan amount to the financial institutions. This does not