1 wp240 ssp IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELATE JURISDICTION WRIT PETITION NO.240 OF 2011 Rupee Co-operative Bank Ltd. ...Petitioner vs. State of Maharashtra and others ...Respondents Mr.K.V.Tembe for the Petitioner Ms M.S.Bane, A.G.P for the respondent nos.1 to 3 Mr.G.J.Sabnis i/b Mr.J.B.Apte for respondent nos.4 and 5. CORAM : A.S.OKA,J. DATE : SEPTEMBER 8, 2011 ORAL JUDGMENT: 1 On 17th June 2011 this Court issued rule. This Court issued rule on interim relief and directed that the petition will be disposed of finally on the returnable date fixed for rule on interim relief. 2 On the application made by the petitioner-bank, recovery certificates under section 101 of the Maharashtra Co-operative Societies Act,1960 (hereinafter referred to as the said Act ) were issued by the Deputy Registrar of Co-operative Societies on 20th January 2003. The Recovery certificates were issued against M/s. Kaveri Engineering Industries through proprietor Virraghavan Sunder Rajan Ayyangar as well as the respondent nos.4 and 5. The respondent nos.4 and 5 are the parents of said Virraghavan. Recovery certificates were issued in the amount of Rs. 9,21,062.52 with interest on the principal amount at 2 wp240 the rate of 18% from 18th June 2001 and in the amount of Rs.10,13,639/- with interest on the principal amount at the rate of 17% per annum from 1st July 2001. The recovery certificates were issued against the respondent nos.4 and 5 in the capacity of guarantors for repayment of loan advanced to their son. 3 In the recovery proceedings initiated on the basis of the recovery certificates, the property of the borrower was attached and sold on 26th April 2005. Possession of the property was handed over to the auction purchaser. In the year 2008, the respondent nos.4 and 5 filed a writ petition for challenging the said recovery certificates. Writ Petition was withdrawn with liberty to file a revision application. In January 2009, the respondent nos.4 and 5 filed a revision application under section 154 of the said Act before the Divisional Joint Registrar for challenging the recovery certificates issue on 20th January 2003. By the impugned Judgment and Order, the Divisional Joint Registrar has set aside the recovery certificates. 4 The learned counsel for the petitioner submitted that there was a gross delay in filing the revision application. Against the recovery certificates issued in January 2003, a revision application was filed in January 2009 along with prayer for condonation of delay. He submitted that the petitioner was not heard before condoning the delay. He submitted that on the basis of the recovery 3 wp240 certificates, immoveable property was attached and sold in the year 2005. He invited the attention of the Court to the reasons recorded by the Divisional Joint Registrar and submitted that the reasons are perverse. He submitted that the issue of illegality of attachment and sale of immoveable property in execution could not have been gone into in the revision application preferred by the respondent nos.4 and 5. He invited the attention of the Court to the averments made in the revision application preferred by the respondent nos.4 and 5. 5 The learned counsel for the respondent nos.4 and 5 supported that the impugned Judgment and Order. He submitted that the respondent nos.4 and 5 are the old persons and they were not heard before issuing the recovery certificates. He submitted that in terms of the liberty granted by this Court, the revision application was preferred where the challenge was to both the recovery certificates as well as the auction sale. He submitted that after finding that auction sale was illegal, recovery certificates and auction sale have been set aside. He, therefore, submitted that no interference is called for. 6 I have perused the impugned order. I have perused the averments made in the revision application. In paragraph 2.8 of the revision application, four contentions were raised. The first contention was that the Deputy Registrar had no jurisdiction to entertain the application under section 101 of the said Act against the guarantors. 4 wp240 The second contention was that the recovery certificate can be issued only against the members of the petitioner. The third contention was that if guarantors are liable, only after the claims against them as guarantors are adjudicated after determining the liquidated liability of the principal borrower. The fourth ground was that the claim against the respondent nos.4 and 5 can be adjudicated only under section 91 of the said Act. 7 In paragraph 2.11, a contention was raised that the proceedings under section 101 of the said Act will not lie against the guarantors and that the Deputy Registrar had no jurisdiction to issue recovery certificates against the respondent nos.4 and 5 who are not members. Reliance was placed on decision of Full Bench of the Co-operative Appellate Court. Perusal of the averments made in the revision application shows that there is no specific challenge to the attachment of the property and auction sale of the property in execution of the recovery certificates. Prayers made in the revision application reads thus : a) Substantial question of law as stated in Para 2.11 and 2.12 above be decided by the Hn.Joint Registrar by interpreting the relevant provisions of M.C.S.Act,1960 b) On the basis of decision of the question of law mentioned above the Recovery Certificates No.ABN/101/RUPEE/349 and 350-2002 dated 20/1/2003 issued by the Respondent no.2 be quashed for execution as against the Applicants or upheld in favour of the Respondent no.1 Bank. 5 wp240 Thus, in the revision application, the challenge was confined only to the recovery certificates. 8 Perusal of the impugned order shows that there is a finding recorded therein that respondent nos.4 and 5 were enrolled as nominal members of the petitioner-bank and thus, they were members within the meaning of the said Act. Therefore, a finding was recorded that the proceedings under section 101 of the said Act was maintainable. The other ground raised in the revision application that the remedy of the petitioner was to file a dispute under section 91 of the said Act has been held by the Divisional Joint Registrar against the respondent nos.4 and 5. The respondent nos.4 and 5 have not challenged the said adverse findings recorded against them in the impugned order. There is no prohibition under section 101 of the said Act to entertain an application for recovery certificates against a guarantor who is a member of the bank. Apart from these two grounds, the Divisional Joint Registrar has recorded a categorical finding that when the application under section 101 of the said Act was heard, both the respondent nos.4 and 5 were present before the Deputy Registrar on 12th November 2002 and they accepted the the liability of the loan. Therefore, the contention of the respondent nos.4 and 5 that they were not heard by the Deputy Registrar before granting recovery certificates has been rightly negatived by the Divisional Joint Registrar. 9 The Divisional Joint Registrar has observed that 6 wp240 the plot which was the subject matter of the attachment and sale was vesting in Maharashtra Industrial Development Corporation and the said Corporation had not granted any consent for mortgaging the said plot. The Divisional Joint Registrar has observed that the Deputy Registrar has not verified who was the owner of the property given as security and whether the petitioner-bank was entitled to take the said property as a security. Apart from the fact that there was no challenge to the attachment and the auction in the revision application, the aforesaid findings of the Divisional Joint Registrar are perverse. He was not concerned with the title to the mortgaged property. If a third party had any interest in the property under attachment, such a party could have raised an objection to the attachment. The grounds pleaded in the revision application were rejected by the Divisional Joint Registrar. Moreover, there is absolutely no finding recorded that the order issuing recovery certificates was illegal. Therefore, impugned Judgment and Order will have to be quashed and set aside on the ground that the same is perverse and illegal. 10 Hence, I pass the following order : i) Impugned Judgment and Order dated 23rd July 2010 is quashed and set aside and the revision application no.5 of 2009 stands dismissed. ii)Rule is made absolute with no order as to costs. JUDGE