bsb 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 WRIT WRIT PETITION NO. 4848 OF 2008 PETITION NO. 4848 OF 2008 PETITION NO. 4848 OF 2008 Shri David Parasu Awale ... Petitioner v/s Shri Yashwant Colony Nagari Sah. Patsanstha Ltd., Ichalkaranji & ors. ... Respondents Mr.P.D.Dalvi for the petitioner. Mr.Tejpal Ingale for respondent Nos.1 and 2. Ms.S.S.Bhende, A.G.P. for respondent Nos.4 to 8. CORAM: CORAM: CORAM: SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. SMT.NISHITA MHATRE, J. DATED: DATED: DATED: 17TH DECEMBER, 2008 17TH DECEMBER, 2008 17TH DECEMBER, 2008 P.C. P.C. P.C.: 1. This petition challenges the order passed by the Deputy Registrar, Co-operative Societies issuing the sale certificate dated 26.4.2006 in the order dated 5.1.2008 passed in revision. 2. The petitioner obtained a loan of Rs.4,80,000/- from the respondent No.1 Society. The recovery certificate was issued under Section 101 of the Maharashtra Co-operative Societies Act (in short, the M.C.S. Act") in view of the failure of the petitioner to repay the loan obtained by him from the 1st respondent. A 2 settlement was arrived at between the parties on 21.6.2005 and the petitioner deposited Rs.4,80,000/- with the Society. This amount was not adjusted against the dues payable by the petitioner. Instead, the amount was adjusted towards the loan transaction of his son. Thereafter the petitioner’s house property was put up for auction on 30.11.2005 by the 1st respondent. This auction was held and respondent No.3 purchased the property for Rs.6,50,000/-. 15% of the purchasing price was paid by respondent No.3 on the same date i.e. on 3.11.2005. He paid rest of the amount on 3.1.2006 and thereafter on 19.4.2006 he paid the stamp duty. A sale certificate was obtained on 26.4.2006. An application was made by the 1st respondent to put respondent No.3 in possession of the premises on 12.3.2007. Accordingly, the orders were passed informing the petitioner that the property would be handed over to respondent No.3 on 28th December, 2007. Aggrieved by the action taken by the respondent, the petitioner filed a revision application under Section 154 of the Act challenging the sale certificate. The revisional authority rejected the application filed by the petitioner. Hence this petition. 3. The main contention of the petitioner is that the sale is a nullity since the procedure required to be 3 adopted under Rule 107(11) the M.C.S. Act had been breached. Rule 107(11)(g) and (h) read as under: "Rule "Rule "Rule 107(11)(g): 107(11)(g): 107(11)(g): A sum of money equal to 15 per cent of the price of the immoveable property shall be deposited by the purchaser in the hands of the Sale Officer at the time of the purchase, and in default of such deposit, the property shall forthwith be re-sold: Provided that, where the applicant is the purchaser and is entitled to set off the purchase money under clause (k) the Sale Officer shall dispense with the requirements of this clause." "Rule "Rule "Rule 107(11)(h): 107(11)(h): 107(11)(h): The remainder of the purchase money and the amount required for the general stamp for the sale certificate shall be paid within fifteen days from the date of sale: Provided that, the time for payment of the cost of the stamp may, for good and sufficient reasons, be extended at the discretion of the Recovery Officer upto thirty days from the date of sale: Provided further that, in calculating the amounts to be paid under this clause, the purchaser shall have the advantage of any set off to which he may be entitled under clause (k)." Thus, the amount equal to 15% of the price determined at the auction must be deposited by the purchaser with the Sale Officer at the time of the auction i.e. at the time of the sale. The remainder i.e. 85% must be deposited within 15 days from the date of the sale. The amount for the stamp duty for the sale is also required to be deposited within 15 days from the date of the sale. However, this period of payment for the stamp 4 duty may be extended at the discretion of the Recovery Officer for good and sufficient reasons upto 30 days from the date of the sale. 4. In the present case, the auction was held on 3.11.2005. The amount of 15% of the sale price was deposited on that very date. The balance amount plus the stamp duty was expected to be deposited by 18.11.2005. Instead the balance amount has been deposited on 30.1.2006, almost two and half months later. The stamp duty was deposited on 19.4.2006 which is beyond the period of 30 days even if one considers that good and sufficient cause had been made out by the auction purchaser to deposit the amount beyond that period. 5. Reliance is placed by the learned advocate for the petitioner on the judgment of the Supreme Court in the case of M/s.Shilpa Shares and Securities & ors. v/s The M/s.Shilpa Shares and Securities & ors. v/s The M/s.Shilpa Shares and Securities & ors. v/s The National National National Co-operative Bank Ltd. & ors., reported in Co-operative Bank Ltd. & ors., reported in Co-operative Bank Ltd. & ors., reported in 2007(3) 2007(3) 2007(3) ALL.MR 832 and on the judgment of the Division ALL.MR 832 and on the judgment of the Division ALL.MR 832 and on the judgment of the Division Bench Bench Bench in the case of Sunil Seth & anr. v/s Niranjan D. in the case of Sunil Seth & anr. v/s Niranjan D. in the case of Sunil Seth & anr. v/s Niranjan D. Woody Woody Woody & ors., reported in 2007(2) Bom.C.R. 430, in & ors., reported in 2007(2) Bom.C.R. 430, in & ors., reported in 2007(2) Bom.C.R. 430, in support of his submissions that the sale is a nullity. 6. The Supreme Court in the case of M/s.Shilpa Shares M/s.Shilpa Shares M/s.Shilpa Shares 5 and and and Securities Securities Securities (supra) has observed that, while reiterating its rule in Balram v/s Ilam singh & ors., Balram v/s Ilam singh & ors., Balram v/s Ilam singh & ors., reported reported reported in 1996(5) SCC 705, in 1996(5) SCC 705, in 1996(5) SCC 705, held that the obligation of the purchaser to deposit the full purchase money within time is a mandatory requirement and non-compliance of the rule renders the sale a nullity. It is a mere irregularity. The Supreme Court observed that since the auction sale was a nullity, there was no valid auction sale. The sale was set aside. 7. The Division Bench of this Court has interpreted the term "at the time of purchase" in Clause (g) and the expression "the date of sale" in clause (h) of the sub-rule (11) of Rule 107. The Division Bench did not accept the submission made before it that these expressions must mean "the date of confirmation of sale". It has been held that the aforesaid expressions must mean "at the time of sale" i.e. at the time of auction. 8. In view of these judgments, the auction held in the present case will have to be set aside. The learned counsel for the respondent Society has contended that the petitioner had not made any application under sub-rule (14) of Rule 107 and, therefore, it would be impermissible to set the clock at this stage. He points 6 out that an application must be made within 30 days from the date of a sale for setting aside the sale on the ground of any material irregularity in the sale of any property. The Supreme Court has observed that the non-payment of the sale price within the time stipulated in sub-rule (11) of Rule 107 is not a mere irregularity but renders the sale a nullity. Thus, where the sale is a nullity as in the present case, it could be set aside even if no application has been made within 30 days from the date of sale. The time for payment of the stamp duty can be extended upto 30 days from the date of sale i.e. from the date of the auction. Unless there is a default in compliance of Clauses (g) and (h) of sub-rule (11) of Rule 107 the question of making an application for setting aside on the ground that it is a nullity would not arise. 9. In this view of the matter, the petition must succeed. 10. It must be noted that, although respondent No.3 was served with a notice that the petition would be finally disposed of at the stage of admission, nobody has appeared for the respondent No.3. An affidavit of service on the respondent No.3 has been filed by the petitioner. 7 11. The property may be auctioned after advertising it in accordance with law and after compliance with the procedure laid down in Rule 107 of the M.C.S. Rules. 12. The auction shall be completed within three months from today. 13. Writ petition allowed accordingly.