wp2574-11.doc 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2574 OF 2011 Smt.Pallavi J. Vaity ..Petitioner versus Swagat Sahakari Patpedhi Maryadit and Ors ..Respondents Mr.Pramod J. Pawar for the petitioner. Mr.R.A.Thorat with Mr.P.J.Thorat for respondent No.1. CORAM : S.C.DHARMADHIKARI, J. 12th July 2011. P.C.: . Heard Mr.Pawar appearing on behalf of the petitioner and Mr.Thorat appearing for the contesting respondent No.1. 2 This writ petition under Article 227 of the Constitution of India, challenges the order passed by the Maharashtra State Co-operative Appellate Court dated 10th December 2010 in Appeal No.14 of 2009. wp2574-11.doc 2 3 By the order passed by the lower Appellate Court, the appeal that has been preferred by the 1st respondent to challenge the judgment and award dated 22nd October 2008 in Dispute No.CCT/671/2005 of the Co-operative Court, Thane, has been allowed. The appeal is allowed and the petitioner and respondent Nos.1 and 2 to this writ petition are, jointly and severally, liable to pay to the 1st respondent herein a sum of Rs.2,25,418/- with interest at the rate of 18% from the date of dispute till the realisation. 4 The 1st respondent had filed the aforementioned dispute under section 91 of the Maharashtra Co-operative Societies Act, 1960. It is sated that the petitioner is the original borrower and she submitted the application dated 29th March 2000 for availing of housing loan of Rs.2,00,000/-. The loan proposal was duly scrutinised. Thereafter, sanction was accorded by the petitioner-original disputant for advancing the sum. The amount was to be guaranteed by respondent Nos.2 wp2574-11.doc 3 and 3 as guarantors. It is stated that the requisite loan documents were executed including a promissory note. The loan came to be disbursed on 29th March 2000. It was to be repaid in 180 installments at the rate of Rs.1,111/- per month. The petitioner-original opponent No.1 being employee of the Society agreed to avail of the facility at concessional rate of interest at 12% and in case of termination of services, she will have to repay the amount with interest at the rate of 18% per annum. 5 It is alleged that the petitioner failed to repay the dues of the respondent No.1 despite repeated demands and even after the relationship of employer-employee came to an end, the amount was not repaid. It, therefore, decided to initiate legal proceedings, but, at the relevant time some valuable documents were missing from the file. A police complaint was lodged for requisite enquiry on 21st June 2002. The enquiry was lodged against the staff of the 1st respondent including the son of the petitioner. Thereafter, the legal notice was issued wp2574-11.doc 4 and finding that there is no response thereto, the aforementioned dispute was filed in the competent Co- operative Court. 6 On the summons being served, the petitioner and the respondent Nos.1 and 2 placed the written statement on record. They denied the transaction itself. They alleged that the disputant-Society did not approach the Court with clean hands. According to them the President of the Society Mr.Nilkant B. Patil was looking after the financial affairs. He has played a fraud for monetary gains. The Society was floated in 1997. The siblings and relations of the said Nilkant Patil were members of the managing committee. The registration of the Society received good response from the investor and one Mrs.Meena Mankame was shown on record as staff members. The deposits received from the public were lying idle in the bank account of the Society. Ultimately, the President raised a proposal to utilise these funds for housing project. The Society was informed that a plot being Plot No.58/59 in the CIDCO wp2574-11.doc 5 area at Airoli owned by the father of the President was available for development, but, the members will have to invest Rs.9 lakhs in lieu of allocation of shops or flats in the building. Therefore, each member will contribute Rs.2 lakhs. The funds were to be procured by utilising the deposit of the 1st respondent-Society lying idle in the bank account and it would be shown as if there were loans advanced to the staff members. That is how loan transactions in the name of mother, wife and siblings of the managing committee were prepared under their signatures. The funds were transferred in the account of the developer M/s.Shivani Constructions who later on assigned the work to M/s.Neelpushpa Builders. Both the entities belong to the President Mr.Nilkant Patil. Thus, according to the petitioner and the guarantors, this was not a genuine transaction, whereby loans were availed off from the 1st respondent-Society, but, this was an arrangement so as to show that idle funds are utilised. 7 In view of these pleadings, the issues came to be wp2574-11.doc 6 framed and the trial Court after considering the same held that the 1st respondent has failed to prove its case and allegations and, therefore, proceeded to dismiss the dispute. 8 Aggrieved by this order of the trial Court, the appeal was preferred. The learned appellate Judge found that the 1st respondent has proved that there was a loan transaction and that the relationship between the petitioner, 1st respondent and the other respondents was that of borrower and guarantor. Consistent with these findings and conclusion, he proceeded to allow the dispute. 9 Mr.Pawar appearing on behalf of the petitioner, firstly, submitted that the lower Appellate Court has erred in law in reversing the judgment of the trial Court. The trial Court has found as a matter of fact, that the Vice President of the 1st respondent-Society filed an affidavit. He produced relevant documents of loan transaction. Even the petitioner also stepped in the witness box and filed her examination in chief. wp2574-11.doc 7 She also produced the record pertaining to her employment and a copy of the acknowledgment of the complaint filed with the police. Mr.Pawar submits that the finding of fact recorded by the trial Court was that, the said Kailash Patil during his cross-examination admitted that he was not aware of execution of any mortgage deed. He admitted and showed his inability to point out the amount disbursed being allegedly deposited in account of M/s.Shivani Constructions and he could not produce the documents to show disbursement of the loan to the petitioner-borrower. In such circumstances, there was no reason for the Appellate Court to have reversed such a finding of fact as it was based on the evidence on record. The Appellate Court has, therefore, completely misread and misconstrued the oral and documentary evidence. It has failed to notice that the burden was squarely on the 1st respondent to prove the transaction and the liability of the petitioner. That having not been proved, the dispute was rightly dismissed by the trial Court. The lower Appellate Court on the basis of some stray observations and statements in the deposition of the wp2574-11.doc 8 witnesses, has come to the conclusion that the liability is proved. For all these reasons, the Appellate Court’s order be quashed and set aside. 10 On the other hand, Mr.Thorat appearing on behalf of 1st respondent-Society pointed out that the lower Appellate Court has come to a conclusion that the loan was availed off. The loan was availed off and there is a clear admission of the documents having been signed. In such circumstances, whether the amount was paid over to the builder or not and whether the transaction was not genuine, is a matter which had to be proved not by the 1st respondent, but, by the petitioner. It was their defence. If the amount was disbursed and there are documents to show that the transaction was that of a loan, then, the lower Appellate Court has performed its duty in law by reversing the judgment of the trial Court. For all these reasons and there being clear findings of fact, this Court should not interfere with the order under challenge. Resultantly, the petition be dismissed. wp2574-11.doc 9 11 With the assistance of the learned counsel appearing for the parties, I have perused the petition, annexures thereto and the orders of the Courts below. The lower Appellate Court has come to a conclusion that the scrutiny of the evidence on record shows that funds of Rs.2,00,000/- belonging to the 1st respondent was already utilised by the petitioner and the others, who are guarantors of a loan transaction. The amount was disbursed in favour of the petitioner. Firstly, the defence was that a sum of Rs.2 lakhs was not disbursed in her favour, but, directly paid in the account of the builder for developing the property and putting up a housing project. Inherent in this, is the admission that a sum of Rs.2,00,000/- was indeed advanced, disbursed and received by the petitioner. If there was no loan transaction, then, there was no occasion for the parties to execute any documents. The petitioner was aware of the housing project. Being a member of the Society, they were aware that the funds lying in the Society’s account should be utilised for development of the property. There was some wp2574-11.doc 10 enmity after the construction was completed and particularly when the tenements were not allotted to the petitioners and others. There were police complaints. This is a case of hostility between the then President, the petitioner and the guarantors. That does not mean that there was no transaction as that is evidenced by the documents. If there was no transaction, there was no question of the petitioner and the respondent Nos.2 and 3 to this writ petition, placing their signatures. The signatures are there in the documents which are available in the records from the year 2000. There is complete silence as to why these documents were signed and executed. In such circumstances, the findings of fact that have been recorded by the learned President of the Co-operative Appellate Court, particularly in paras 11 to 13, appear to be consistent with the materials placed before him. The findings of fact are based on oral and documentary evidence being scrutinised in its entirety by the learned President. The Appellate Court has performed its duty as the first Appellate Court and that is how it arrived at a conclusion distinct from that of the trial Court. The learned wp2574-11.doc 11 President has found that once the circumstances prove that the loan was availed off for contribution in the housing project and there was no repayment thereof, then, the trial Court should not have dismissed the dispute. 12 To my mind, with such findings of fact, it is not possible to interfere in the writ jurisdiction. Once Mr.Pawar appearing for the petitioner has not been able to point out any perversity, save and except, the statements in the cross- examination of the witness examined by the 1st respondent- Society, then, I am of the opinion that this is not a fit case for interference in the writ jurisdiction. The finding of fact is not vitiated as contended. In fact, on one occasion, I had suggested that with the concession in the rate of interest, the loan can be repaid by the petitioner in installments. The dispute has been filed in the year 2002. The petitioner and respondent Nos.2 and 3 are held liable to pay the interest on principal sum at 18% from 16th August 2002 till its realisation. The matter was adjourned so as to enable Mr.Pawar to take instructions as to wp2574-11.doc 12 whether the petitioner is ready and willing to repay the amount in installments scaling down the rate of interest suitably. This suggestion did not seem to be acceptable. However, bearing in mind the pendency of the dispute for a long duration, interest of justice would be served if the Appellate Court’s award is modified to the extent that from the date of the dispute till the date of the judgment, the interest would be computed at 18% per annum, but, thereafter till realisation the petitioner will be liable to pay interest at the rate of 6% per annum. Save and except this modification, the award passed by the Appellate Co-operative Court is maintained and writ petition is dismissed. There will be no order as to costs. (S.C.DHARMADHIKARI, J)