ash 1 wp-1883.11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION WRIT PETITION NO. 1883 OF 2011 Chhatrapati Sambhaji Maharaj Sahakari Patsanstha Maryadit. .. Petitioner Vs Assistant Registrar of Co­operative Societies, Satara, and Another. .. Respondents ­­ Shri A.J. Kenjale for the Petitioner. Mrs. P.S. Cardozo, AGP for the Respondents. ­­ CORAM ; A.S. OKA, J SUBMISSIONS WERE HEARD ON : 11TH OCTOBER, 2011 JUDGMENT PRONOUNCED ON : 21ST OCTOBER, 2011 JUDGMENT : . Heard learned counsel appearing for the Petitioner and the learned AGP for the Respondents. 2. On 22nd August, 2011, the notice for final disposal of this Petition was issued. ash 2 wp-1883.11 3. The controversy involved in this Petition is very narrow. The Petitioner is a Credit Society duly registered under the Maharashtra Co­operative Societies Act, 1960 ( hereinafter referred to as “the said Act”). A Recovery Certificate under Section 101 of the said Act was obtained by the Petitioner against a borrower. The property of the defaulter was attached in execution of the Recovery Certificate. On 26th October, 2009, the first Respondent­the Assistant Registrar of the Co­operative Societies passed an order under Section 100 of the said Act read with Rule 85(5) of the Maharashtra Co­operative Societies Rules, 1961 ( hereinafter referred to as “the said Rules”) by which the first Respondent transferred the attached property to the Petitioner. 4. By the impugned order dated 9th November, 2011, the Collector, Satara passed an order in purported exercise of powers under Section 100 of the said Act by which he directed that the Assistant Registrar of the Co­operative Societies shall execute a registered document of transfer of the said property to the Petitioner and shall recover stamp duty in accordance with Article 25 of the Bombay Stamps Act, 1958 ( hereinafter referred to as “the said Act of 1958”) from the Petitioner. The Collector directed that the stamp duty under Article 25 of the said Act of 1958 will be payable on the market value of the property or the amount due and payable under the Recovery Certificate, whichever is more. The challenge in this Petition is to this order. ash 3 wp-1883.11 5. The learned counsel appearing for the Petitioner relied upon a decision of this Court in the case of Balkisan Manekchand Zaver & Others v. Jalgaon People’s Co­operative Bank Ltd., through Manager & Others, (1998(3) Bom.C.R. 70). He submitted that the transfer of the property in accordance with Section 100 of the said Act does not amount to a sale or conveyance and, therefore, Article 25 of Schedule I of the said Act of 1958 is not attracted. He submitted that on the transfer under Section 100 of the said Act, the Petitioner will hold the property only as a Trustee. He invited attention of the Court to Section 100 of the said Act and the Rule 85 of the said Rules. He submitted that in any case, direction to pay stamp duty cannot be issued in exercise of power under Section 100 of the said Act. 6. The learned AGP submitted that the effect of order under Section 100(1) of the said Act is that the property stands transferred to the Petitioner and in effect, there is a sale of the property in favour of the Petitioner. The learned AGP submitted that no interference is called for. 7. I have considered the submissions. Section 100 of the said Act reads thus:­ ash 4 wp-1883.11 “100. Transfer of property which cannot be sold.­ (1) When in any execution of an order sought to be executed under section 98 [or in the recovery of any amount under section 101 or section 137], any property cannot be sold for want of buyers, if such property is in occupancy of the defaulter, or of some person in his behalf, or of some person claiming under a title created by the defaulter subsequently to the issue of the certificate of the Registrar; [Court], Liquidator or the Assistant Registrar, under clause (a) or (b) of section 98, [or under section 191 or 137], the Court or the Collector or the Registrar as the case may be, may, notwithstanding anything contained in any law for the time being in force, direct that the said property or any portion thereof, shall be transferred to the society which has applied for the execution of the said order, in the manner prescribed. (2) Where property is transferred to the society under the foregoing sub­section or where property is sold under section 98 [101 or 137], the Court Collector, or the Registrar, as the case may be, may, in accordance with the rules, place the society or the purchaser, as the case may be, in possession of the property transferred or sold. (3) Subject to such rules as may be made in this behalf, and to any rights, encumbrances, charges or equities lawfully subsisting in favour of any person, such property or portion thereof, shall be held under sub­section (1) by the said society on such terms and conditions as may be agreed upon between the Court, the Collector or the Registrar, as the case may be, and the said society. Subject to the general or special orders of the State Government, the Collector or the Registrar may delegate to an officer, not below the rank of an Assistant or the Deputy Collector or the Assistant Registrar, powers exercisable by the Collector or the Registrar under this section.” ash 5 wp-1883.11 8. The transfer of the property contemplates under Sub­ section 1 of Section 100 of the said Act can be made when a property cannot be sold for want of buyers in execution of the Recover Certificate under Section 101 of the said Act. Sub­section (1) of Section 100 of the said Act provides that the Court or the Collector or the Registrar, as the case may be, is empowered to direct that such property or any portion thereof shall be transferred to the Society which had applied for the execution of the said order, in the manner prescribed. Sub­section (2) of Section 100 thereof provides that where such property is transferred to the Society, the Collector or the Registrar, as the case may be, shall place the Society in possession of the property transferred or sold. Sub­section (1) of Section 100 provides that the transfer has to be effected in the manner prescribed. Therefore, the Rule 85 of the said Rules becomes relevant inasmuch as the transfer has to be effected in terms of the said Rule. Sub­rule 13 of the Rule 85 of the said Rules provides that after the transfer, the Society shall use its best endeavour to sell the property as soon as the practicable to the best advantage of the society as well as that of the defaulter. It also provides that the first option shall be given to the defaulter. Sub­rule 14 of the said Rules provides that until the property is sold, the Society to which the property is transferred shall use its best endeavour to lease it or to make any other use in such a manner that it derives the largest possible ash 6 wp-1883.11 income from the property. Sub­rule 15 is important which provides that when the Society realizes all its dues under the order sought to be executed from the proceeds of management of the property and if the property is unsold, the property shall be restored to the defaulter. Thus, a transfer under Sub­section (1) of Section 100 of the said Act is in that sense not an absolute transfer or sale of the property in favour of the Society. Neither Section 100 of the said Act nor Rule 85 of the said Rules uses the word “sale”. The object of transfer is that the property which cannot be sold in execution could be used by the Society for recovery of dues. Therefore, the Society is under an obligation to make an endeavour to sell the property and to realize the dues. Till the property is sold, it is the obligation of the Society to either lease the property or to use the same in such a manner that it derives profit. If the income derived from the property is sufficient to clear the dues of the Society, after the dues are cleared if the property remains unsold, the Society is under an obligation to restore the same to the defaulter. The language used in Sub­rule 13 of Rule 85 of the said Rules that an endeavour should be made to sell the property to the best advantage of the Society as well as that of the defaulter shows that a property which is transferred under Sub­section (1) of Section 100 of the said Act is held by the Society as a Trustee. In this behalf, it will be necessary to make a reference to Paragraph 7 of the decision of this Court in the case of Balkisan Manekchand Zaver (supra). The relevant part of Paragraph ash 7 wp-1883.11 7 of the said decision reads thus:­ “7. It is clear that on a combine reading of section 98 and 100 of the New Act and Rule 85, the land transferred to the Bank in pursuance of the certificate issued by the Collector is not a transfer by sale and such a transfer did not create ownership of the said land in favour of the respondent­bank. The Bank ought to be held to possess the land on its transfer as a Trustee till such time the land was sold by auction sale. Sub­rule (14) of Rule 85 provides that until the property is sold, the society to which the property is transferred under sub­Rule(5) shall use its best largest possible income from the property and sub­rule (15) of the said Rule states that when the society to which property is transferred under sub­rule (5) has realised all its dues, under the order in execution of which the property was transferred, from the proceeds of management of the property, the property, if unsold, shall be restored to the defaulter.” ( underline supplied) 9. By the impugned order, the Collector has directed that Article 25 of the Schedule I of the said Act of 1958 which provides for stamp duty payable on “conveyance” is applicable to the aforesaid transfer. The word “Conveyance” has been defined under Clause (g) of Section 2 of the said Act of 1958 which reads thus:­ “2(g) “Conveyance” includes, ­ (i) a conveyance on sale, (ii) every instrument, (iii) every decree or final order of any Civil Court, (iv) every order made by the High Court under section 394 of the Companies Act, 1956, [in ash 8 wp-1883.11 respect of amalgamation or reconstruction of companies; and every order made by the Reserve Bank of India under section 44A of the Banking Regulation Act, 1949 in respect of amalgamation or reconstruction of Banking Companies;] by which property, whether movable or immovable, or any estate or interest in any property is transferred to, or vested in, any other person, inter vivos, and which is not otherwise specifically provided for by Schedule I; Explanation. ­ An instrument whereby a co­ owner of any property transfers his interest to another co­owner of the property and which is not an instrument of partition, shall, for the purposes of this clause, be deemed to be an instrument by which property is transferred inter vivos;]” 10. It cannot be said that by the transfer under Section 100(1) of the said Act, the property stands absolutely transferred to the Society or the estate in the property is vested in the Society. The said transfer is not a sale. The transfer under the provision of Section 100(1) of the said Act is for realisation of the dues payable to the Society. Therefore, such a transfer will not be a conveyance under Section 2(g) of the said Act of 1958. 11. Hence, the impugned order holding that Article 25 of the Schedule I of the said Act of 1958 is applicable will have to be quashed and set aside. However, it is made clear that the issue whether stamp duty will be payable under any other Article of the said Act of 1958 is not decided by this Court and the same has been kept open. ash 9 wp-1883.11 12. Subject to what is observed above, the Rule is made absolute in terms of prayer clause (a). 13. On the basis of the order under Sub­Section (1) of Section 100 of the said Act, further steps shall be taken by the concerned Authority. ( A.S. OKA, J )