1 MNM IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.7161 OF 2008 Gopi Nathuram Aswani ...Petitioner Vs. Chandrakumar Hotchand Ratlani & Ors. ...Respondents Ms. Manjiri S. Parasnis, Advocate for the Petitioner Mr. A.M. Kulkarni, Advocate for the Respondent No.1 Mr. Sarang Aradhye, Advocate for the Respondent No.2 Mr. Nitesh Butekar i/b. Mr. U.P. Warunjikar, Advocate for the Respondent No.3 Ms. P.S. Cardozo, A.G.P for the Respondent No.4 CORAM : SMT. ROSHAN DALVI, J. DATED : 10TH MARCH, 2010 P.C. : 1. The Petitioner has bid at an auction conducted by the Respondent No.3 Bank pursuant to Recovery Certificates obtained by the Bank against the Respondents 1 and 2 under the provisions of Section 101 of the Maharashtra Co-operative Societies Act, 1960 (the Act). The Petitioner had made payment of only Rs.1 lakh to the Bank as against the off-set price of Rs.11.50 lakhs upon his offer of Rs.12.50 lakhs. The Petitioner has not made any further payment as required under the rules framed under the 2 Act and hence though the Petitioner calls himself “the auction purchaser” he is not an auction purchaser. The Petitioner only seeks to purchase the property of the Respondent No.1 and 2 under the auction. Upon compliance with the rules relating to auction purchase, the Petitioner would become an auction purchaser. 2. The auction is stated to have taken place on 3rd September 2007. The Petitioner claims his rights thereunder upon payment of Rs.1 lakh as aforesaid. It is contended on behalf of the Respondent No.1 and it is seen from the admitted facts that Rule 107(11)(e & f) of the Rules framed under the Act (the Rules) are not complied. A short chronology of admitted dates would make this position absolutely clear :- 1. The proclamation was issued on 31st July 2007. It was published on 1st August 2007. 2. The auction was to take place on 20th August 2007 within 30 days of the publication of the document. This is not in compliance with the Rule 107(11)(e) which requires at least 30 days period to transpire before the auction sale is fixed after the proclamation of sale is published. 3. Seeing that position a fresh publication was made on 22nd August 2007. It was published on 25th August 2007. Consequently, a fresh auction was fixed on 3rd September 2007. The auction has actually been held on 3rd September 2007. 3 3. It can be seen that the initial publication on 1st August 2007 required the auction sale to be held on or after 31st August 2007. This was by way of an adjournment of the auction sale which was initially to be held on 20th August 2007. However a fresh auction which has been fixed pursuant to re-publication is more than 7 days after the initial auction. Hence in fact, the initial auction has been adjourned for a period longer than 7 days. Consequently, a fresh proclamation has been issued under Rule 107(11(e). A fresh proclamation would require once again not less than 30 days for the auction sale to be held. Hence the second auction could not have been fixed on 3rd September 2007. It could have been fixed on any date on or after 24th September 2007 to allow the 30 days period to expire between the republication and the actual auction under proviso to Rule 107(11)(f) of the Rules. 4. From the aforesaid dates it can be seen that the auction has not been held as per procedure established by law. It falls foul of the procedure. It has been set aside upon considering the aforesaid rules. The Petitioner has not shown how the impugned order quashing the proclamation cannot be sustained. The Respondent No.3 Bank, therefore, cannot proceed for execution of the Recovery Certificate under the auction sale in which the Petitioner claims to be the auction purchaser. 5. The auction sale itself, is even otherwise not shown to be carried out in accordance with law and the procedure by the Petitioner or 3rd Respondent Bank. The two letters of the Bank dated 3rd September 2007 and 25th 4 January 2008 show complete lack of bonafides. The Petitioner claims to be the highest bidder. The letter of the Bank shows that he was the only bidder. The Recovery Certificates are for more than Rs.25 lakhs. The offset price is fixed at Rs.11.50 lakhs. The letters show only what the Bank has put on record without any substantiating evidence. The Petitioner was directed to deposit 25% of the amount of the bid within one week from 3rd September 2007 and 75% within one week thereafter. The auction amount has not been deposited on the ground that the sale was challenged on 3rd September 2007 itself and a stay order was obtained by the Respondent No.1. The stay order initially granted by the Divisional Joint Registrar pending the Revision Application filed by Respondents 1 and 2 was thereafter vacated. The bank by its letter dated 25th January 2008 informed the Petitioner that the stay was vacated and called upon the Petitioner to deposit 25% of the remaining amount payable to the Bank within one week of the receipt of the letter and 75% within one month of the letter. The Petitioner has not deposited any further amount. So much for the bonafides of the Petitioner. 6. The Divisional Joint Registrar, Co-operative Societies, Pune proceeded with the hearing of the Revision Application filed by the Respondents 1 and 2 challenging the Recovery Certificate as well as the auction sale without deposit of the mandatory 50% of the total dues of the Bank under the Recovery Certificate payable until then. The learned A.G.P has not shown how such an action could be justified. The Divisional Joint Registrar has rejected the prayer for setting aside the Recovery Certificate after considering the entire case on merits and passing a detailed order setting 5 out the contentions of all the parties. This needless effort was not required to be undertaken. It is an illegal exercise of jurisdiction. The Divisional Joint Registrar has partly allowed the application of Respondents 1 and 2 and set aside the auction proclamation dated 22nd August 2007 and directed the Bank to proceed under Rule 107 of the Rules. This order is without jurisdiction in as much as the 50% amount is not deposited and hence the derivative action under the Recovery Certificate could not have been challenged as per the judgment of this Court in the case of the Greater Bombay Co-operative Bank Limited Vs. Dhillon P. Shah 2004(1) ALL MR 25. 7. However the Petitioner’s case has been seen on merits. On merits indeed no case for confirming the auction allegedly held on 3rd September 2007 is made out. The Bank cannot proceed upon such an auction sale. The Bank shall have to re-auction or otherwise follow the procedure for recovery of its dues under the Recovery Certificates obtained by the bank against the Respondents 1 and 2. 8. It may be mentioned that the Respondent No.1 has not only failed to deposit the mandatory amount before filing the Revision Application No. 346/2007, he has sought to file a joint application with the Respondent No. 2. The application is however signed only by the Respondent No.1. The Vakalatnama in favour of the Advocate of Respondent No.1 is also signed only by the Respondent No.1. The Respondent No.2 has filed an application that the application of the Respondent No.1 is false and bogus and manipulated. Bank has proceeded against the property of Respondent No. 6 2. A property of Respondent No.2 is stated to have been auctioned. However if the liability of Respondents 1 and 2 was joint and several, the Bank may still be entitled in law to proceed against both of them for the balance payments not made to the Bank under the Recovery Certificates obtained by it. 9. Despite the able agruments of Ms. Parasnis on belief of the Petitioner, the Petitioner would not be entitled to the Writ claimed by him. The Writ Petition is dismissed. 10.It is only clarified that the Bank shall be entitled to proceed in accordance with law for execution of the Recovery Certificates against Respondent No. 1 and/or 2. (SMT. ROSHAN DALVI, J.)