1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD WRIT PETITION NO.5293 OF 2010 Advocate Kailash s/o Shankarrao Shevale .. Petitioner Versus The State of Maharashtra and others ..Respondents Mr.V.D.Salunke, Advocate for petitioner Mr.K.J.Ghute Patil, A.G.P. for respondent Nos.1 and 2 Mr.R.N.Dhorde, Advocate holding for Mr.V.R.Dhorde, Advocate for respondents 3 and 4 Mr.C.K.Shinde, Advocate for respondent No.5 - WITH - WRIT PETITION NO.5255 OF 2010 Arvind s/o Chandumal Patel ..Petitioner Versus Union of India and others ..Respondents Mr.S.P.Deshmukh, Advocate for petitioner Mr.Alok Sharma, Assistant Solicitor General for respondent No.1 Mr.R.N.Dhorde, Advocate holding for Mr.V.R.Dhorde, Advocate for respondent Nos.2 and 3 Mr.C.K.Shinde, Advocate for respondent No.4 - WITH - WRIT PETITION NO.5171 OF 2010 Rashtriya Sakhar Kamgar Sangh, Karjat, through its President .. Petitioner Versus 2 The State of Maharashtra and ors. ..Respondents Mr.A.S.Shelke, Advocate for petitioner Mr.K.J.Ghute Patil, A.G.P. for respondent No.1 Mr.R.N.Dhorde, Advocate holding for Mr.V.R.Dhorde, Advocate for respondents 2 and 3 Mr.C.K.Shinde, Advocate for respondent No.4 CORAM : P.V. HARDAS AND N.D. DESHPANDE, JJ DATE OF RESERVING THE ORDER : 23.6.2010 DATE OF PRONOUNCING THE ORDER : 6.7.2010 ORDER (PER P.V.HARDAS, J.) 1. Since all these petitions seek practically the same relief, all these petitions are being decided by this common order. 2. Writ Petition No.5293 of 2010 has been filed by the petitioner who challenges the advertisement issued by the respondent – Bank in the local daily Lokmat dated 22.5.2010 which is for inviting tenders for the sale of property of Shri Jagdamba Sahakari Sakhar Karkhana Ltd., Jagdamba Factory. Taluka Karjat, District Ahmednagar for recovery of arrears of the dues to the Bank to the extent of Rs.19,37,940.00/-. Accordingly, the petitioner seeks the relief vide prayer clause (B) to the petition for issuing a writ of certiorari for quashing the said tender 3 notice dated 22.5.2010 and also for quashing of the auction proceedings which are fixed on 23.6.2010. Vide prayer clause (C) to the petition, the petitioner prays for issuance of a writ of mandamus directing respondents 1 to 4 not to auction the property of respondent No.5 – sugar factory and to direct the respondent to start the crushing season as per the decision taken in the Ministers Committee on 14.12.2009. 3. In Writ Petition No.5255 of 2010, the petitioner vide prayer clause (A) to the petition prays for issuance of a writ of certiorari for quashing and setting aside the tender notice published in local daily Sakal dated 22.5.2010 issued by respondents 2 and 3. The petitioner also prays for issuance of a writ declaring that the exercise of power by respondents 2 and 3 purportedly pursuant to Securitisation Act & Reconstruction of Financial Assets and Enforcement of Security Interest Act is improper, untenable, unconstitutional, illegal and incompatible in the face of the other remedies being prosecuted by respondents 2 and 3. 4. Writ Petition No.5171 of 2010 has been filed by a registered recognised and approved trade union of the respondent No.4 – sugar factory and prays for issuance of a writ of mandamus for quashing and setting aside the tender notice dated 22.5.2010 published in local daily Sakal and also prays for 4 issuance of writ of mandamus restraining respondents 2 and 3 from initiating any coercive steps in respect of the property of respondent No.4 sugar factory as described in the notice dated 22.5.2010 without settling the legal dues of the employees of the sugar factory first in priority. 5. Writ Petition No.5293 of 2010 has been filed by the petitioner for the aforesaid reliefs and the petitioner claims to be an agriculturist and a sugarcane producer member of the sugar factory. According to the petitioner, for various reasons like inadequate rainfall and resultant scarcity of water the sugarcane production was decreased and owing to which the factory was forced to be closed due to non availability of sugarcane. The petitioner states that during this period the outstanding loan of the respondent – Bank remained unpaid. It is stated that the Registrar of Sugar, Pune issued order of liquidation of sugar factory on 27.11.2005. It is stated that the Chairman of the sugar factory had executed a mortgage deed in favour of the respondent – Bank regarding the immovable property at Gut No. 392 admeasuring 68 Hectares, 8 Ares and also property of village Taju from Gut No.231/9 comprising of area of 12 Hectares 14 Ares. It is also stated that the employees of the sugar factory have filed Writ Petition No.2759 of 2007 in this Court and the matter is admitted and is pending final hearing. It is stated that 5 the present respondent – Bank is a party to the said petition and despite this the aforesaid tender notice has been issued. It is the contention of the petitioner that in meeting held on 14.12.2009 the Committee of Ministers has taken a decision to give factory on rental basis. It is stated that for the year 2010-11, the factory is scheduled to be given on rental basis. It is stated that the respondent – Bank has not taken permission from the State Government regarding the proceedings for sale of the factory. It is lastly urged before us that the land belonging to the sugar factory is a land as per the grant of the Government and, therefore, the respondent – Bank is not permitted to sell the aforesaid land which is mortgaged to the Bank. Learned Counsel for the petitioner has placed reliance upon the judgment of Supreme Court in Rajureshwar Associates V/s State of Maharashtra to urge before us that in a similar situation the sale of the land was struck down on the ground that no permission from the government was obtained. 6. Writ Petition No.5255 of 2010 has been filed by the petitioner who claims to be the creditor of the respondent – sugar factory and claims to have obtained a decree against the sugar factory. Undisputedly, the proceedings in respect of the execution of the said decree are pending in the competent Court. The petitioner in this petition submits that the action of the 6 respondent – Bank is contrary to the provisions of the Securitisation Act and in the face of the fact that the said property is now attached in execution, the respondent – Bank cannot alienate the said property. It is further stated that the respondent – Bank had initiated proceedings under the provisions of the Maharashtra Co-operative Societies Act for recovery of its dues and in the face of such proceedings which are pending, the respondent – Bank cannot resort to the provisions of the Securitisation Act. Mr.Deshmukh, learned Counsel for the petitioner has placed reliance on the Division Bench judgment of this Court in Smt.Nikhahat Parvin w/o.Sekh Khalil Vs. Union of India & Ors., 2010 (3) ALL MR 903. 7. Writ Petition No.5171 of 2010 has been filed by the employees who claim that since the salary and the arrears of salary of the employees of the petitioner – union were not paid, proceedings under Section Section 33 (C) (2) of the Industrial Disputes Act were lodged and consequently, orders regarding payment of arrears of salary came to be passed. It is stated that the necessary recovery certificate was obtained and the same has been forwarded to the Collector for execution. It is further stated that the aforesaid property i.e. the assets of the sugar factory would be sole for recovery of the dues of the petitioner as arrears of land revenue under Section 169 of the Maharashtra 7 Land Revenue Code. Mr.Shelke further states that the dues regarding the provident fund i.e. Rs.2,25,53,463/- have already been deposited in this Court in the light of the orders which are passed in the pending proceedings between the petitioner and the respondent -Bank. It is further stated by Mr.Shelke, learned Counsel for the petitioner that the present dues of the employees is Rs.4,48,95,057/-. It is the contention of the learned Counsel for the petitioner that unless and until the aforesaid dues are realised, the respondent – Bank cannot dispose of the assests of the sugar factory under the Securitisation Act. It is further stated that under the Act, i.e. the Securitisation Act, no priority in respect of the recovery of the dues is made out. Reliance is placed on the judgment of the Supreme Court in Central Bank of India versus State of Kerala and others, (2009) 4 Supreme Court Cases 94. 8. Mr.R.N.Dhorde, learned Counsel for the respondent – Bank has urged before us that merely because the petitioner had availed the other remedy available to the petitioner in law that would not disentitle the petitioner in law to invoke the provisions of Securitisation Act. Reliance is placed on the Division Bench judgment of this Court in Marathwada Gramin Bank Vs. Maharashtra State Co-operative Bank Ltd., and others, 2007 (2) Mh.L.J.594 and the Division Bench of this Court in M/s 8 Asha Oil Foods Pvt.Ltd., Vs. The Jalgaon Janta Sahakari Bank Ltd., & Ors., 2005 (2) ALL MR 721. Mr.Dhorde, learned Counsel for respondent – Bank has urged before us that the petitioners have adequate remedies available to them in law of filing an appeal under the Securitisation Act, if according to the petitioners, the action of the respondent – Bank is not in accordance with the provisions of law. It is, therefore, urged before us that the writ petitions be dismissed. Mr.Dhorde, learned Counsel for the respondent – Bank has further placed reliance upon the judgment of Supreme Court in Union of India (UOI) and Ors. Vs. SICOM Ltd.,and anr. to urge before us that none of the debts which is alleged by the petitioners in the petition is a crown debt which would have precedence over the claim of the respondent – Bank and, therefore, the petitions deserve to be dismissed. It is further stated that the execution of the recovery certificate of recovering an amount under the certificate under Section 169 of the Maharashtra Land Revenue Code cannot be equated with recovery of the dues of the government. The recovery is not the recovery of arrears of land revenue but the manner of recovery of arrears of land revenue is made applicable to recovery of the dues of the employees. Reliance is placed on several judgments which is not necessary at this stage to be adverted to. 9 9. The petitioners have contended that since the respondent – Bank had resorted to the provisions of the Maharashtra Co- operative Societies Act seeking recovery of its dues, the respondent – Bank is disentitled in law to invoke the provisions of the Securitisation Act. In this regard reliance is placed upon the judgment of the Division Bench of this Court in Smt.Nikhahat Parvin w/o Sekh Khalil (supra). The Division Bench of this Court in the said judgment recorded a finding that the Bank had resorted to the procedure under the Co-operative Societies Act up to the stage of certificate under Section 101 and thereafter could not have resorted to the provisions of Section 14 of the Act and that too without complying with the provisions of the Act of 2002. At paragraph 3 of the aforesaid judgment, the Division Bench had held as under : “3. Admittedly, the provisions of the Act of 2002 have not been invoked by the bank for recovery by issuing notice under section 32 of that Act.” Obviously, the journal reporting the said judgment has inadvertently typed section 32 instead of section 13(2), as section 32 of the 2002 Act deals with protection of action taken in good faith and does not contemplate issuance of any notice. Section 13(2) of the 2002 Act contemplates issuance of the notice. 10 Therefore, in our opinion the reliance placed on the aforesaid judgment is not applicable to the facts of the present case. In the present case notice under Section 13(2) has been issued and thereafter the Bank has taken the proceedings under the Act. Obviously, in the reported judgment the respondent – Bank had not resorted to the provisions of Section 13(2) but had straightaway taken action under Section 14 of the Act of 2002 and, therefore, the Division Bench of this Court allowed the petition and quashed and set aside the order impugned therein. 10. The facts of the present case stand squarely covered by the two judgments of the Division Bench of this Court in Marathwada Gramin Bank Vs. Maharashtra State Co-operative Bank and others (Supra) to which one of us (P.V.Hardas, J.) was a member. In the said judgment, the Division Bench has held that the Securitisation Act 2002 has overriding effect over the Co-operative Societies Act and the petitioners have alternate efficacious remedies under the Securitisation Act 2002 as well as the labour legislature. Admittedly, in this case, the employees had not obtained necessary orders from the labour court. However, the fact remains that this Court has held that the provisions of the Securitisation Act would have an overriding effect over the Co- operative Societies Act. Similarly, the Division Bench of this Court in M/s Asha Oil Food Pvt.Ltd. Vs. The Jalgaon Janta Sahakari Bank 11 Ltd., & Ors (supra), has held that the Securitisation Act overrides Co-operative Societies Act and despite the recovery certificate issued under the Co-operative Societies Act, the Bank can take action against the borrowers under Section 13 of the Securitisation Act. In that light of the matter, therefore, according to us the action of the respondent – Bank on that score cannot be faulted. 11. It is also urged before us that the Committee of the Ministers had taken a decision to lease out the respondent – sugar factory and, therefore, the action of the respondent – Bank under the provision of the 2002 Act would be bad in law. According to us the action taken by the respondent – Bank is under the provisions of law. Mere decision of the Committee of the Ministers to lease the sugar factory would not cause an impediment to the respondent – Bank in exercising its right under the statute of 2002. The petitioner may have adequate remedies in law but the remedy of writ petition i.e. for enforcing the decision of Ministers and relegating the respondent – Bank to abide the same would not be available. 12. It is urged before us by Mr.Shelke, learned Counsel for the petitioner that the recovery of the arrears of salary of the employees of the sugar factory would have precedence over the 12 claim of the respondent – Bank as the said amount is being recovered under Section 169 of the Maharashtra Land Revenue Code. Section 169 of the Maharashtra Land Revenue Code reads as under : “169. Claims of State Government to have precedence over all others :- (1) The arrears of land revenue due on account of land shall be a paramount charge on the land and on every part thereof and shall have precedence over any other debt, demand or claim whatsoever, whether in respect of mortgage, judgment-decree, execution or attachment, or otherwise howsoever, against any land or the holder thereof. (2) The claim of the State Government to any monies other than arrears of land revenue, but recoverable as a revenue demand under the provisions of this Chapter, shall have priority over all unsecured claims against any land or holder thereof.” In the present case what is sought to be recovered is not the land revenue or the arrears of land revenue, the mechanism provided under Section 169 of the Maharashtra Land Revenue Code for recovery of land revenue has been made applicable for recovery of the arrears of salary of the employees of the sugar factory. Merely because that mechanism or that modus has been 13 resorted to would not make the said recovery as recovery of land revenue. In such circumstances, according to us the petitioners cannot claim to have any precedence whatsoever over the claim of the respondent – Bank. 13. Mr.Salunke, learned Counsel for the petitioner urged before us that the land which was granted to the sugar factory was agricultural land and, therefore, the respondent – Bank cannot dispose of the said land without prior permission of the State Government. Learned Counsel for the respondent – Bank has relied upon Section 36 (4) of the Maharashtra Land Revenue Code which reads as under : “36 (4) Notwithstanding anything contained in sub-section (1) or in any other provisions of this Code, or in any law for the time being in force it shall be lawful for an Occupant-Class-II to mortgage his property in favour of the State Government in consideration of a loan advanced to him by the State Government under the Land Improvement Loans Act, 1883, the Agriculturists Loans Act, 1884, or the Bombay Non-Agriculturists Loans Act, 1928 or in favour of a co-operative society or the State Bank of India constituted under Section 3 of the State Bank of India Act, 1955, [or a corresponding new bank within the meaning of clause (d) of Section 2 of the Banking Companies (Acquisition and Transfer of 14 Undertakings) Act, 1970, or the Maharashtra State Financial Corporation established under the relevant law] in consideration of a loan advanced to him by such co-operative society [State Bank of India, corresponding new bank, or as the case may be, Maharashtra State Financial Corporation] and without prejudice to any other remedy open to the State Government, [the co-operative society, the State Bank of India, the corresponding new bank, or as the case may be, the Maharashtra State Financial Corporation] in the event of such occupant making default in payment of such loan in accordance with terms on which such loan is granted, it shall be lawful for the Stage Government [the co-operative society, the State Bank of India, the corresponding new bank, or as the case may be, the Maharashtra State Financial Corporation] to cause the occupancy to be attached and sold and the proceeds to be applied towards the payment of such loan. The Collector, may, [on the application of the co-operative society, the State Bank of India, the corresponding new bank or the Maharashtra State Financial Corporation], and payment of the premium prescribed by the State Government in this behalf, by order in writing reclassify the occupant as Occupant – Class I; and on such reclassification, the occupant shall hold the occupancy of the land without any restriction on transfer under this Code. 15 Explanation :- For the purposes of this section, “Scheduled Tribes” means such tribes or tribal communities or parts of, or groups within, such tribes or tribal communities as are deemed to be Scheduled Tribes in relation to the State of Maharashtra under Article 342 of the Constitution of India [ and persons, who belong to the tribes or tribal communities, or parts of or groups within tribes or tribal communities specified in Part VIIA of the Schedule to the order [made under] the said Article 342, but who are not resident in the localities specified in the Order who nevertheless need the protection of this section and Section 36A (and it is hereby declared that they do need such protection) shall, for the purposes of those sections be treated in the same manner as members of the Scheduled Tribes.]” Even otherwise, as per the terms of the grant, it is clearly indicated that the land is not an agricultural land but is a non agricultural land and it has been assessed accordingly. In the light of the provisions of the Act, i.e. 36 (4) of the Maharashtra Land Revenue Code, according to us, there is no merit in the present contention. 14 Mr.Salunke, learned Counsel for the petitioner has contended that the entire action of the respondent – Bank inviting tenders for the sale of the assets of the sugar factory is illegal as no permission of the Government has been obtained. Reliance is 16 placed upon the judgment of the Supreme Court in Rajureshwar Associates Vs. State of Maharashtra (supra). According to us, this contention on behalf of the petitioner is without any merit. In the present case, the assets were mortgaged to the respondent – Bank and the statute permits the respondent – Bank to take steps in accordance with the provisions of the Act of 2002. In the reported judgment, the liquidator therein had sought to dispose of the property, in the face of the order of Collector about resumption of land. The facts of the aforesaid judgment, therefore, are different from the facts of the present case and the ratio laid down therein cannot be made applicable to the facts of the present case. 15. Undisputedly, the petitioners have remedy available to them under the Securitisation Act of 2002 for filing appeal against the action of the respondent – Bank. Under the provisions of the Act, it is open to the petitioners to question the correctness of the steps taken by the respondent – Bank as not being in accordance with the provisions of the Act. The Division Bench of this Court in Marathwada Gramin Bank (supra) has held that alternate efficacious remedy by way of appeal is available. In that light of the matter, therefore, according to us, the rights of the petitioners are adequately protected by the provision of appeal. It would be essential and appropriate in the circumstances that if 17 the petitioners are aggrieved by the action of the responent – Bank, the petitioners may resort to the remedy available to them in law. We make it clear that any observations made by us on merits should not be taken into consideration any findings rendered thereon in the event an appeal is filed questioning the action taken by the respondent – Bank. 16. After considering the rival submissions of the learned Counsel for the parties, according to us, there is no merit in the petitions and the petitions deserve to be dismissed and are accordingly dismissed with no order as to costs. ( N.D.DESHPANDE ) ( P.V.HARDAS ) JUDGE JUDGE (vvr/5293.2010wp)