agk WP6438 TO 6442 & 6447-09 (1) IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.6438 OF 2009 Dheeraj Garg & Anr .. Petitioners versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents ALONGWITH WRIT PETITION NO.6439 OF 2009 Manoj Rathod & Anr .. Petitioners versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents ALONGWITH WRIT PETITION NO.6440 OF 2009 Mrs.Kiran D. Jagtiani .. Petitioner versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents ALONGWITH WRIT PETITION NO.6441 OF 2009 Ashim Kumar Dutta & Anr .. Petitioners versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents ALONGWITH WRIT PETITION NO.6442 OF 2009 Narottamal Modi & Anr .. Petitioners versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents agk WP6438 TO 6442 & 6447-09 (2) ALONGWITH WRIT PETITION NO.6447 OF 2009 Manohar Jadhav .. Petitioner versus Vasantdada Shetkari Sahakari Bank Ltd & Ors .. Respondents --- Mr.Vineet B. Naik with Mr.Sukand R. Kulkarni for the petitioner/s in W.P.Nos. 6438/09 to 6442/09. Mr.L.S.Gaikwad for the petitioner in W.P.No.6447/09. Mr.Amit Borkar for respondent No.1 in all the petitions. Mr.S.D.Rayarikar, A.G.P for respondent Nos.3 to 5 in all the petitions. --- CORAM : A.S.OKA, J. DATE : 13th September 2010. JUDGMENT: . On 6th August 2009, this Court issued notice for final disposal at admission stage. The facts of these petitions are more or less identical. Hence, for the purposes of this judgment a reference is made to the facts of the Writ Petition No.6438 of 2009. agk WP6438 TO 6442 & 6447-09 (3) 2 According to the case of the petitioners, one Dinesh Kadakane was the owner of an industrial gala which is the subject matter of dispute. According to the case of the petitioners, the owner executed a Deed of Mortgage on 28th June 2003 in favour of United Commercial Bank (for short “UCO Bank”). The mortgage was executed as a security for repayment of the term loan granted by the UCO Bank to the said owner. It appears that the said UCO Bank took recourse to section 14(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act, 2002(hereinafter referred to as the said Act of 2002). The application made by the UCO Bank was allowed by the learned Chief Metropolitan Magistrate, Mumbai by order dated 28th March 2006. The possession of the said gala was ordered to be taken over. Accordingly, possession was taken over and the gala was put to auction by the UCO Bank. In the auction, one Mr.Rajesh Parekh was the successful bidder who paid necessary price. The said purchaser Mr.Parekh appointed the petitioners as his nominees and on the basis of the nomination, UCO Bank issued a sale certificate in favour of the present petitioners. 3 The petitioners filed an application before the 4th respondent seeking a direction against the 2nd respondent-Industrial Premises Co-operative agk WP6438 TO 6442 & 6447-09 (4) Society to accord membership to the petitioners in accordance with section 22(2) of the Maharashtra Co-operative Societies Act, 1960. On 13th August 2008, the 4th respondent issued direction to the 2nd respondent-Society to transfer the said gala in the name of the petitioners. The 1st respondent approached the 4th respondent and applied for setting aside the said order. The claim of the 1st respondent-Bank is that the original owner had executed a Deed of Mortgage in respect of same gala in favour of the 1st respondent on 11th November 2004. The application made by the 1st respondent was rejected by the 4th respondent. While rejecting the application, an observation was made by the 4th respondent that mortgage in favour of the UCO Bank was executed prior in point of time and auction held under the provisions of the said Act of 2002 was not challenged by the 1st respondent. 4 After the 4th respondent issued a direction for enforcing its earlier order, the 1st respondent filed a revision application under section 154 of the said Act of 1960 before the 3rd respondent. By the impugned judgment and order, the 3rd respondent partly allowed the revision application by setting aside the original order dated 16th April 2008 as well as order of enforcement dated 13th August 2008 passed by the 4th respondent. The 4th respondent agk WP6438 TO 6442 & 6447-09 (5) was directed to investigate the charge created by the owner in favour of the 1st respondent as well as UCO Bank. The revisional authority directed the 4th respondent to decide the matter on the basis of legal provisions and to come to conclusion as to whose charge or lien has to be preferred. After considering these aspects, the revisional authority directed the 4th respondent to consider the issue of grant of membership to the petitioners. 5 The learned counsel appearing for the petitioners submitted that the petitioners are auction purchasers under the provisions of the said Act of 2002 and as of today the 1st respondent has not adopted any proceedings for challenging the auction though the 1st respondent is fully aware about the auction. He submitted that unless the auction was set aside, the status of the petitioners as purchasers of the gala cannot be challenged. He submitted that in the circumstances, no purpose will be served by passing an order of remand. 6 The learned counsel appearing for the 1st respondent-Bank submitted that in view of the clear legal position, a priority will have to be given to the charge created in favour of the 1st respondent by the original owner. He submitted that precisely for the purpose of determining whether the agk WP6438 TO 6442 & 6447-09 (6) charge/lien in favour of the 1st respondent will have to be given priority, the revisional authority passed an order of remand. He submitted that all the issues will be gone into by the 4th respondent after the remand and therefore there is no prejudice to the petitioners. On a query made by the Court, the learned counsel appearing for the 1st respondent on instructions stated that the 1st respondent intends to take out appropriate proceedings for challenging the auction sale of the said gala to the petitioners and appropriate proceedings will be filed within a period of four weeks from today. 7 I have given careful consideration to the submissions. It is not in dispute that the UCO Bank claimed to be mortgagee of the said gala. The possession of the said gala was obtained from the original owner on the basis of an order passed under section 14(1) of the said Act of 2002. There was an auction sale of the said gala and on the basis of the auction purchaser’s letter of nomination, the sale certificate in respect of the said gala has been issued in favour of the petitioners way back on 24th May 2007. As of today the sale certificate declaring the petitioners as auction purchasers stands. On the face of the said sale certificate, it will not be open for the authorities exercising jurisdiction under the said Act of 1960 to go into agk WP6438 TO 6442 & 6447-09 (7) the question of preferential charge/lien claimed by the 1st respondent. Though the sale certificate issued in favour of the petitioner stands, the revisional authority has directed the 4th respondent Deputy Registrar to investigate into lien/charge claimed by the 1st respondent. As the 4th respondent is not competent to go into the question of legality and validity of the auction sale in favour of the petitioners, no purpose is served by passing an order of remand. The 4th respondent passed an order dated 16th April 2008 in exercise of powers under section 22(2) of the said Act of 1960 only on the basis of auction sale under which sale certificate was issued to the petitioners. If the sale certificate is cancelled or set aside in accordance with law, it is obvious that the petitioners will not be entitled to claim any rights in respect of the gala much less a right of membership. Now the 1st respondent has stated that an appropriate proceeding will be filed within a period of four weeks from today for challenging the auction sale of the said gala. It is obvious that the rights of the petitioners and the membership granted to the petitioners will be subject to result of the legal proceedings adopted by the 1st respondent for challenging the auction sale. 8 Subject to what is observed above, the impugned judgment and order will have to be set aside and revision application preferred by the 1st agk WP6438 TO 6442 & 6447-09 (8) respondent will have to be dismissed. 9 Hence, the petitions are disposed of by passing following order: : O R D E R : (a) The impugned judgment is quashed and set aside and the revision application stands dismissed. (b) It is, however, made clear that the rights claimed by the petitioners and the membership granted to the petitioners under the orders of the 4th respondent will be subject to the outcome of the proceedings which may be filed by the 1st respondent for the purposes of challenging the auction sale of the galas in favour of the petitioners. (c) If auction sale is finally set aside, it is obvious that the petitioners will not be entitled to claim any rights in respect of said gala. (d) There will be no orders as to costs. (A.S.OKA, J)