* THE HON'BLE MR JUSTICE C.V.NAGARJUNA REDDY + WRIT PETITION No.25282 of 2007 % DT.03.02.2011 # Mamillapalli Jyothish Kumar …Petitioner Vs. $ The Deputy Registrar/Officer on Special Duty, District Cooperative Central Bank Limited, Eluru, West Godavari District and others … Respondents ^ Counsel for the Petitioner: Sri Kanakamedala Ravindra Kumar ! Counsel for respondent Nos.1 & 2: Smt.Bobba Vijaya Lakshmi Counsel for respondent No.3: Sri N.Siva Reddy Counsel for respondent No.4: Sri T.N.M.Ranga Rao Counsel for respondent No.7: Sri K.Rajanna < Gist: > Head note: ? Cases referred: THE HON’BLE SRI JUSTICE C.V.NAGARJUNA REDDY WRIT PETITION No.25282 of 2007 Dated 03rd February, 2011 Between: Mamillapalli Jyothish Kumar …Petitioner And The Deputy Registrar/Officer on Special Duty, District Cooperative Central Bank Limited, Eluru, West Godavari District and others …Respondents Counsel for the petitioner: Sri Kanakamedala Ravindra Kumar Counsel for respondent Nos.1 & 2: Smt.Bobba Vijaya Lakshmi Counsel for respondent No.3: Sri N.Siva Reddy Counsel for respondent No.4: Sri T.N.M.Ranga Rao Counsel for respondent No.7: Sri K.Rajanna The Court made the following: ORDER: This writ petition is filed for a mandamus to set aside proceedings in C.B.C.E.P.No.3908/04-05 and C.B.C.E.P.No.3952/04- 05, dated 05.11.2007, of respondent No.1. The facts, in brief, relevant for disposal of this case are as follows: Respondent No.4 borrowed certain monies from respondent No.3 by keeping the properties admeasuring Ac.1.04 cents in R.S.No.64/3 and Acs.2.41 cents in R.S.No.82 of Surappagudem Village, Bhimadolu Mandal, West Godavari District, under charge in terms of Section 36(3) of the A.P.Cooperative Societies Act, 1964 (for short ‘the Act’) on 03.09.1992. Thereafter, on 04.03.1999, respondent No.4 has executed a registered settlement deed in favour of respondent Nos.5 and 6 in respect of Acs.2.41 cents in Survey No.82. Respondent Nos.5 and 6, in turn, sold this property in favour of one Smt.Mamillapalli Anantha Naga Lakshmi, by registered sale deed, dated 27.03.2003. The said Mamillapalli Anantha Naga Lakshmi, in turn, settled the property in favour of the petitioner under settlement deed, dated 18.12.2003. Respondent No.3 approached respondent No.1 for issuance of certificate for recovery of the amounts due from respondent No.4, as the latter has committed default in payment of the dues. Accordingly, a certificate was issued and the above-mentioned two items were brought to sale by a sale notice issued in January, 2007. In pursuance of the said sale notice, auction was held on 22.01.2007, wherein respondent No.7 has emerged as successful bidder. The petitioner filed an application to set aside the sale under Rule 52(14) of the A.P.Cooperative Societies Rules, 1964 (for short ‘the Rules’) before respondent No.1. Initially by order, dated 24.05.2007, respondent No.1 has cancelled the sale. Questioning the said order, respondent No.7 filed W.P.No.14539 of 2007, which was allowed by this Court by order, dated 13.08.2007 and the matter was remanded back to respondent No.1 for fresh consideration. In pursuance of the said remand order, respondent No.1 has held further enquiry and after hearing all the parties concerned passed order, dated 05.11.2007 rejecting the petitioner’s objections and dismissing his application for setting aside the sale. Assailing this order, the petitioner filed the present writ petition. At the hearing, Sri Kanakamedala Ravindra Kumar, learned counsel for the petitioner, advanced two contentions, namely, that since a sum of Rs.35,432/- was shown as due, there was absolutely no necessity for bringing the land admeasuring Acs.2.41 cents to sale, as sale of Ac.1.04 cents in Survey No.64/3 itself was sufficient to satisfy the debt and that no security was created in respect of property in Survey No.82 and therefore, the transactions taken place subsequent to respondent No.4 contracting the debt from respondent No.3 cannot be said to be either illegal or void. The learned counsel further stated that in pursuance of the Debt Relief Scheme introduced by the Government of India in the year 2008, loan waiver was available in respect of debt in question and that sale of the property was illegal. Opposing the above contentions, Smt.Bobba Vijaya Lakshmi, learned counsel representing respondent Nos.1 and 2, and Sri N.Siva Reddy, learned counsel representing respondent No.3, stated that all the transactions which have taken place are void in view of Section 36(3) of the Act and that the petitioner, who claims to have acquired rights over the property under settlement deed, dated 18.12.2003, from the vendees of respondent No.4, has no locus to question the sale, as no title over the property came to be vested in him. The learned counsel for respondent No.3 further stated that though his client has applied for loan waiver scheme in the year 2008, on the objections raised by respondent No.7, who by that time became owner of the property by virtue of sale in the auction, the debt in question was deleted from the application of respondent No.3 for loan waiver on the directions issued by the District Cooperative Central Bank, East Godavari District. In the light of the respective pleadings, the main questions that arise for consideration are whether the petitioner acquired any right over the property in question and he has locus to question the sale. Section 36 of the Act deals with charge on the immovable property of a member of a Society for the loans borrowed by him. Under sub-section (1), which starts with a non-obstante clause, any member owning any land or having interest in any land as a tenant, who applies to a society for a loan, shall make a declaration in the form prescribed creating a charge in favour of the society, on the land or interest specified in the declaration, for the payment of the loan to be granted to him by the society in pursuance of the application and for all future advances, if any, required by him, which the society may grant to him. Sub-section (3) envisages that subject to the provisions of sub- section (1) and to the claim of any person in whose favour a mortgage or a charge has been created before the date of registration of the declaration made under sub-section (1), no land in respect of which such declaration has been made or any part of or any interest in such land shall be sold or otherwise transferred until the entire amount of the loan or advance taken by the member from the society together with interest thereon is paid to the society. It further envisages that any transaction made in contravention of this sub-section shall be void. The fact that respondent No.4 has availed loan from respondent No.3-Society on 03.09.1992 by creating charge over the property in question is not in dispute. Section 36 of the Act creates a statutory charge over the immovable property of all the members, who avail loans and any transaction made in contravention of sub-section (3) is declared as void. The legislative intent in introducing this provision is to ensure that the borrowers do not defraud the society by entering into transactions with third parties subsequent to their availing loans. Such a salutary provision cannot be allowed to become nugatory by entertaining the claims of the persons, who are subsequent transferees, even assuming that they are bona fide transferees. The petitioner, being a transferee claiming under a settlement deed from respondent No.4 subsequent to the loan transaction, has not acquired any right over the property, in view of the statutory declaration that such transaction is void. Therefore, a person claiming through a void transaction does not have any locus to maintain a claim petition. Though the learned counsel for the petitioner stated that there was no charge in respect of the property admeasuring Acs.2.41 cents, a perusal of the claim petition filed by the petitioner shows that no such specific objection was raised by him. The petitioner has merely pleaded that the said property is not liable for sale or attachment. In view of the finding that the petitioner did not acquire any right, it is not permissible for him to raise any further contentions as to the propriety of respondent No.1 in brining this item of property for sale, whether the sale of Ac.1.04 cents itself was sufficient for satisfying the debt amount, and whether there could have been any loan waiver or not. Coming to the claim of respondent No.7, Sri K.Rajanna, learned counsel appearing for the said respondent, submitted that as respondent No.4 ceased to be the owner of the property, the amount in excess of the loan amount recovered by respondent No.3 must be paid to his client. I do not find any merit in this submission. Rule 52(24) of the Rules, provides that the proceeds of every sale held under this rule shall be applied by the Registrar of the district, firstly in payment of all costs, charges and expenses properly incurred by him as incidental to the sale or any attempted sale; secondly to the discharge of the amount due in respect of which the property was sold and lastly, the residue, if any, shall be paid to the person whose property has been sold or if there are more such persons than one, then to such persons according to their respective interests upon their receipt. The expression “shall be paid to the person whose property has been sold” is referable to the person, who legally held the property at the time of sale. As concluded above, it was only respondent No.4 who was holding the property, as all transactions subsequent to 03.09.1992, the date on which the charge was created, are void in view of Section 36(3) of the Act. Therefore, respondent No.4 alone can be recognised as lawful owner of the property, subject, however to the right of his subsequent purchasers to proceed against him for the loss suffered by them on account of the transactions they have entered with him. Therefore, no direction can be given in favour of respondent No.7 for payment of the residue. As noted above, respondent No.7 is entitled to avail the remedies available to him in law before appropriate forum. For the above-mentioned reasons, I do not find any illegality in the order of respondent No.1 and the writ petition is accordingly dismissed. As a sequel to dismissal of the writ petition, the interim order, dated 29.11.2007, granted by this Court in W.P.M.P.No.32965 of 2007, shall stand vacated and W.P.M.P.No.32965 of 2007, 34070 of 2010 and W.V.M.P.No.3257 of 2007 are disposed of as infructuous. C.V.NAGARJUNA REDDY, J 03rd February, 2011 Note: LR copies be marked (b/o) VGB