1 WP2265/11with2276/11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE, BENCH AT AURANGABAD WRIT PETITION NO. 2265 OF 2011 Maharashtra State Co-operative Bank Limited, Having its Registered Office at 9, Maharashtra Chamber, Commerce Lane, Mumbai – 23 and Regional Office at P-11, M.I.D.C. Satpur, Nashik, Through its Deputy Manager Petitioner V E R S U S 1. M/s Sanjay Sahakari Sakhar Karkhan Ltd. Dhule, Shindkheda- Amalner Ltd, Through its liquidator Assistant Registrar Co-operative Society, Dhule, Talukar and District Dhule 2. M/s Mahadu Nago Brothers Kusumba, Taluka and District Dhule, Through its G.P.A. Holder, Mahadu Nago Choudhari, Aged 84 years, Occupation Business, Resident of Kusumba, Taluka and District Dhule Respondents WITH WRIT PETITION NO. 2276 OF 2011 Maharashtra State Co-operative Bank Limited, Having its Registered Office at 9, Maharashtra Chamber, Commerce Lane, Mumbai – 23 and Regional Office at P-11, M.I.D.C. Satpur, Nashik, Through its Deputy Manager Petitioner V E R S U S 1. M/s Sanjay Sahakari Sakhar Karkhan Ltd. Dhule, Shindkheda- Amalner Ltd, Through its liquidator Assistant Registrar Co-operative Society, Dhule, Talukar and District Dhule 2. M/s Mahadu Nago Brothers Kusumba, Taluka and District Dhule, Through its G.P.A. Holder, Mahadu Nago Choudhari, Aged 84 years, Occupation Business, Resident of Kusumba, Taluka and District Dhule Respondents Mr. R.N. Dhorde, Advocate, holding for Mr. V.R. Dhorde, Advocate for the petitioner Smt. R.K. Ladda, AGP for respondent No. 1 / State Mr. V.D. Hon, Advocate for respondent No.2 CORAM : A.V. NIRGUDE, J. DATED : 8th July, 2011 2 WP2265/11with2276/11 ORAL JUDGMENT 1. Heard. 2. Rule. Rule made returnable forthwith. By consent of parties, taken up for final hearing. 3. Both these petitions can be disposed of by this common Judgment, because the parties are same and the nature of the order under challenge is also same. 4. Respondent No. 1 is a Co-operative Sugar Factory, which is now under liquidation. The order of liquidation was passed sometime in May, 1997. Respondent No. 2 is a firm carrying on business of civil contractor. Respondent No. 2 erected respondent No. 1 – Factory prior to 1986. However, they were not paid. They filed two civil suits for recovery of amounts of Rs.25 Lac and 3 Lac, respectively. Both the suits were decreed in 1998. Respondent No. 2 initiated execution proceedings before the civil Court against respondent No. 1. Since at that time respondent No. 1 was under liquidation, the Liquidator was notified of these Regular Darkhasts. The Liquidator immediately took objection to the proceedings pointing out that after the order of liquidation was passed, the civil Court would have no jurisdiction to entertain or to proceed with a proceeding of this nature. He was obviously referring to Chapter 10 of the Maharashtra Co-operative Societies Act, 1960, specially the provisions of Section 102 read with Section 107 of the Act. Section 107 of the Act reads as under : 107. Bar of suit in winding up and dissolution matters Save as expressly provided in this Act, no Civil Court shall take cognizance of any matter connected with the winding up or dissolution of a society under this Act: and when a winding up 3 WP2265/11with2276/11 order has been made no suit or other legal proceedings shall lie or be proceeded with against the society or the liquidator, except by leave of the Registrar, and subject to such terms as he may impose : Provided that, where the winding up order is cancelled, the provisions of this section shall cease to operate so far as the liability of the society and of the members thereof to be sued is concerned, but they shall continue to apply to the person who acted as Liquidator. 5. The record of the Civil Court shows that respondent No. 2 showed their anxiety to get the decretal amount by executing a decree by putting respondent No. 1’s property to auction sale. The record also shows that the Civil Court initially asked the Liquidator to furnish on record other claims against respondent No. 1 of various parties and their priority etc. The Liquidator submitted some information to the Court and assured the Court that he would take steps for liquidating the assets etc. But, the Liquidator did not take further steps. Therefore, at the request of respondent No. 2, Civil Court passed further order in the execution, and, an order of attachment of respondent No.1’s immovable property was passed in 2004. The Liquidator had opposed such order by raising the bar of Section 107 of the Act. But, the learned Judge of the execution Court rejected such objection and passed the order of attachment on 3rd September, 2004. (A copy of this order is annexed to the petition at Page No. 56). Unfortunately, the Liquidator did not challenge this order in the higher Court. The order of attachment of property of respondent No. 1 thus remained in force. Thereafter, respondent No. 2, on 17th April, 2009, moved an application to the execution Court that the property attached should be put to sale. Again the Liquidator raised objection based on Section 107 of the Act and again 4 WP2265/11with2276/11 the learned Judge of the execution Court brushed aside such objection and issued proclamation for sale of respondent No.1’s land by public auction etc. The present petitioner was not party to the execution till then. They learnt about the proclamation from advertisement published in a newspaper. They came to the execution Court raising an objection that they too have claim against respondent No. 1 and that their claim has priority etc. They came also with a case that they are already in possession of the lands which were proposed to be sold in auction. This objection was rejected by the impugned order dated 11th January, 2011, and as against this, the writ petitions are filed. 6. It is obvious that the learned Judges of the execution Court did not realize the importance of the provisions of Chapter 10 of the Act, referred to above. They brushed aside this objection raised by the Liquidator mainly on the ground that the Liquidator was not taking steps for liquidating respondent No. 1 and its property and to satisfy the claims of the creditors. Indeed, the Liquidator is apparently guilty of lethargy. There is nothing on record to show that he has taken any meaningful steps in liquidation. As said above, he has neither challenged the obviously erroneous orders passed by the Civil Court. On the other hand, respondent No. 2 is obviously in hurry to proceed with the auction sale so that they would have some hope of recovery of their dues. 7. The learned Advocate appearing for respondent No. 2 pointed out that the petitioner, who was not party to the execution proceeding, are not challenging the earlier orders of 2004 and 2010. He said, they have no locus to do so. He further pointed out that since the Liquidator did not challenge those orders, the orders attained finality, and he urged the Court 5 WP2265/11with2276/11 not to disturb the same, because the writ petitions are not filed challenging those orders. I am afraid, this argument is rather superficial. When this Court comes to know that a gross illegality had been committed by the Courts below, it would be it’s duty to utmost correct the illegalities committed by the Courts below. I am therefore inclined to set aside above orders dated 3rd September, 2004 and 30th January, 2010. 8. While I was hearing these petitions, Shri V.D. Hon, learned Advocate appearing for respondent No. 2 produced on record a copy of order passed by the Regional Joint Director and Joint Registrar Co-op. Society, Aurangabad, dated 25th April, 2011, granting leave under Section 107 of the Act in favour of respondent No. 2 to proceed with the Regular Darkhast which they had filed in 1998. The learned A.G.P. is not aware of this order. The petitioner obviously is not aware of this order. This order is suddenly produced before the Court by respondent No.2. Respondent No. 2 had ample opportunity to file an additional affidavit to bring this fact on record. In any case, respondent No. 2 should be directed to give copies of this order to other parties to the petition. Even though the orders, above mentioned, are set aside, I am not inclined to dismiss the Regular Darkhasts filed by respondent No. 2 in the execution Court. But, till 25th April, 2011, the Civil Court had no jurisdiction to proceeding such Darkhasts. The Division Bench of this Court in the case of The Fertilizer Corporation of India v. Kolaba Zilla Sahakari Kharedi Vikri Sangh Ltd., and others (1980 CPJ 371) has taken similar view. However, I am also required to take cognizance of the fact that leave contemplate under Section 107 of the Act has been obtained by respondent No. 2 to proceed with Special Darkhasts. Following order would suffice the purpose of the petitions : 6 WP2265/11with2276/11 ORDER 1. Both the writ petitions are allowed. 2. The impugned order dated 11th January, 2011, as well as, orders dated 3rd September, 2004 and 30th January, 2010 passed by the Execution Court in Special Darkhast Nos. 123 of 1998 and 124 of 1998 are set aside. 3. In view of the order passed by the Regional Joint Director and Joint Registrar Co-op. Society, Aurangabad, dated 25th April, 2011, in favour of respondent No. 2, they are now at liberty to proceed with the execution proceedings, subject to objections raised by the Liquidators and other claimants like the petitioner. 4. In view of the order passed by the Regional Joint Director and Joint Registrar Co-op. Society, Aurangabad, dated 25th April, 2011, the observations made in respect of the impugned order in this Judgment shall not come in the way of respondent No. 2 when they would proceed with the execution proceedings. 5. In view of the long pendency of the claim of respondent No. 2, the Liquidator as well as all the concerned parties are directed to take steps in the case, expeditiously, in accordance with Law. C.A. No. 4930 of 2011 and C.A. No. 4986 of 2011 for amendment are not pressed. Rule is made absolute. ( A.V. NIRGUDE, J. ) SRM/wp/2265with2276/11/8/7/11ok