Bombay High Court
Devgiri Nagari Sahakari Bank Ltd vs Smt. Zubidabegum W/O Asadulla Khan on 17 July, 2012
Author: R.M. Borde
Bench: R.M. Borde
(1) CRA-12-2012
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
CIVIL REVISION APPLICATION NO. 12 OF 2012
1. Devgiri Nagari Sahakari Bank Ltd.,
"Artha Complex", Kesarsingpura,
Aurangabad
Through its Chief Executive Officer
2. The Special Recovery Officer,
Devgiri Nagari Sahakari Bank Ltd.,
"Artha Complex", Kesarsingpura,
Aurangabad PETITIONERS
(Orig. Deft. 1 and 2)
VERSUS
1. Smt. Zubidabegum w/o Asadulla Khan,
Age : 80 years, Occu.: Household,
R/o. Sajeed Palace, Juna Bazar,
Aurangabad
2. Kulwantsingh S/o Jaswantsingh Khandula,
Age : Major, Occu.: Business,
R/o. Aurangabad
3. The Taluka Deputy Registrar,
Co-operative Societies,
Anjuman Bungalow, Adalat Road,
Aurangabad RESPONDENTS
.....
Mr. S.V. Natu, Advocate h/f. Mr. A.R. Joshi, Advocate for the
petitioners.
Mr. B.N. Patil, Advocate for respondent no.1.
Mr. Rahul Joshi, Advocate for respondent no.2.
None present for respondent no.3, though served.
.....
CORAM : R.M. BORDE, J.
DATED : 17TH JULY, 2012
ORAL JUDGMENT:
1. Rule. With the consent of the parties, the Revision Application is taken up for final hearing.
Heard both sides.
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2. The respondents-plaintiffs instituted a suit against the petitioner-bank and the Special Recovery Officer, so also against the original defendants 3 and 4, claiming a declaration that the attachment of land belonging to the plaintiff to the extent of 4 H out of land gut no.59 of village Jambhali, Tq.Paithan, Dist. Aurangabad, owned and possessed by the plaintiff, is null and void and subsequent sale in favour of defendant no.3 is also null and void and not binding on the plaintiff. The plaintiff also claims a decree of recovery of possession of 4H of land of gut no.59. It is the contention of the plaintiff that she is the owner of the property.
She is neither a borrower nor a guarantor in respect of the transaction allegedly entered into by M/s.
Iceberg Refrigeration Company with petitioner-bank.
The property belonging to the plaintiff has been attached and sold for effecting recovery of dues payable by M/s. Iceberg Refrigeration Company. The property in dispute has already been sold, which was put to auction and the same is purchased by respondent no.3. The auction sale has been confirmed by the Registrar and it appears that the possession ::: Downloaded on - 09/06/2013 18:49:47 ::: (3) CRA-12-2012 of the disputed land also has been handed over to the purchaser. The plaintiff claims that she is a pardanashin lady and has no connection with the transaction entered into between M/s. Iceberg Refrigeration Company and the petitioner no.1-bank.
It is also stated in the plaint that the property has been attached by the defendant no.1-bank, presumably acting under the false and fabricated mortgage deed, allegedly executed by the plaintiff in favour of the bank. The plaintiff contends that if at all the defendant no.1 claims entitlement to the property put to auction, on the basis of mortgage deed, the same is false and fabricated and has not been executed by the plaintiff.
3. The plaintiff had also earlier challenged the action of attachment of the property by presenting an objection as contemplated by section 107 of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as "the M.C.S. Act").
The objection raised by the plaintiff was turned down. The plaintiff preferred a Writ Petition in this Court, challenging the order passed by the Recovery Officer and the Registrar. The Writ ::: Downloaded on - 09/06/2013 18:49:47 ::: (4) CRA-12-2012 Petition, however, came to be dismissed with liberty to the petitioner therein i.e. original plaintiff to present a suit for safeguarding her interest in relation to the property. Acting upon the liberty granted by this Court, the plaintiff has presented Special Civil Suit no. 729 of 2009. In the pending suit, the petitioner herein i.e. defendant nos. 1 and 2 raised an objection that the suit is not tenable in view of the non-compliance of provisions of section 164 of the M.C.S. Act. It is contended that the subject matter of the suit touches the business of the society. It is canvassed that prayer clause (B) contained in the plaint claiming a declaration that the sale of the property in favour of defendant no.2 is null and void, relates to the transaction touching the business of the society and as such the suit is not entertainable, without transmitting previous notice, as contemplated by section 164 of the M.C.S. Act .
4. The trial Court after hearing the parties, turned down the objection in view of the order passed on 02.12.2011.
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5. I have heard the arguments advanced by the counsel appearing for the parties and perused the impugned order passed by the trial Court. On perusal of the pleadings contained in the plaint, it transpires that the plaintiff specifically contend that the property in question has been put by the society/bank to auction for recovery of dues payable by M/s Iceberg Refrigeration Company. Paragraph no.3 of the plaint refers to the recovery certificate and the proclamation issued by the recovery officer for sale of the land. The plaintiff also contends that the attachment and sale of the property is without following the procedure prescribed under Rule 107 of the M.C.S. Act. It is contended that since the defendant has not complied with the requirements of law, the attachment and sale of the property for recovery of dues from M/s. Iceberg Refrigeration Company is not binding on the plaintiff. Section 164 of the M.C.S. Act reads thus:-
"164. Notice necessary in suits No suit shall be instituted against a society, or any of its officers, in respect of any act touching the business of the society, until the expiration of two months next after notice in writing ::: Downloaded on - 09/06/2013 18:49:47 ::: (6) CRA-12-2012 has been delivered to the Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left."
6. It is the contention of the respondent-
plaintiff, that she is neither a member of the society nor the borrower or guarantor in respect of the loan allegedly advanced to M/s. Iceberg Refrigeration Company and therefore the bar contained under section 164 of the M.C.S. Act will not be attracted. That sofar as entertainability of the suit by the plaintiff, the same cannot be questioned, however, the presentation of the suit shall be subject to observance of the conditions prescribed by section 164 of the M.C.S. Act. In the absence of notice as required under section 164 of the M.C.S. Act, the suit will not be entertainable. It is also contended by the respondents that the challenge raised in the suit does not relate to the business of the society. On perusal of the plaint, it transpires that the petitioner is questioning the action of attachment and sale of the property effected by the petitioner for recovery of dues. It is not disputed ::: Downloaded on - 09/06/2013 18:49:47 ::: (7) CRA-12-2012 that certificate under section 101 of the M.C.S. Act has been secured by the petitioner for effecting recovery of dues and that the suit property was attached and sold by conducting auction. The activity of advancement of loan and effecting recovery of dues, is part of the banking business of petitioner.
The question of legality and correctness of attachment and sale is a different issue and that can be dealt with on its merits by the competent forum.
At the stage of examination of issue of tenability of suit which has been presented without ensuring compliance of section 164 of the M.C.S. Act, it cannot be considered as to whether the action of the bank of attachment and sale of the property, is valid or otherwise.
7. On consideration of the contentions raised in the plaint, it transpires that the nature of the challenge is in respect of the issues touching the business of the society and therefore, the notice as contemplated by section 164 of the M.C.S. Act is essential. Reliance is placed on the judgment in the matter of Jijamata Sahakari Sakhar Karkhana Ltd. Vs. Sukhdeo Rambhau Fulzade and anr. 2011(3) Bom.C.R. ::: Downloaded on - 09/06/2013 18:49:47 ::: (8) CRA-12-2012 413, wherein the suit was instituted for recovery of the sum from the sugar factory in respect of the agreement relating to transportation of sugarcane.
The sugar factory raised a contention that the suit is not entertainable, on account of want of notice as contemplated by section 164 of the M.C.S. Act, since, the transaction which is impeached in the suit is part of the business of the society. The learned Single Judge of this Court upheld the objection and set aside the orders passed by the Courts below.
Reference also is made to the judgment in the matter of Suprabhat Co-operative Housing Society Ltd. and anr. Vs. Span Builders and anr. 2002 (6) Bom.C.R.
257. An application tendered by the defendants for rejection of the plaint under Order VII Rule 11(d) of the Code of Civil Procedure, was turned down by the trial Court and the said order was subjected to challenge before the High Court. Suit was instituted by the plaintiff, claiming damages on account of delay in payment of the contract work done for the co-operative society. The plaintiff-builder entered into an agreement with the housing society and had undertaken the work of construction of houses on the ::: Downloaded on - 09/06/2013 18:49:47 ::: (9) CRA-12-2012 plots allotted to the members of the society. In the pending suit, an objection was raised by the co-
operative society, questioning the maintainability of the suit in view of non-compliance of section 164 of the M.C.S. Act. Although, the objection was turned down by the trial Court, the High Court upheld the objection, referring to the judgments in the matter of Deccan Merchants V. Dalichand reported in 1968 Bom.L.R 418. The learned Single Judge in the matter of Suprabhat Co-operative Housing Society Ltd. and anr. (cited supra) has observed in paragraph no.9 as under:
"9. The basic principle which has been formulated by the Supreme Court is that whether a particular dispute touches the business of the society would depend upon the nature of the society and the rules and bye-laws governing it. In the case before the Supreme Court, the society was a Co-operative Bank. The Supreme Court held that ordinarily, a Co-operative Bank cannot be said to be engaged in a transaction which touches the business of the society when it lets out properties owned by it. Therefore, a dispute between a tenant of a member of the bank in a building which had subsequently been acquired by the bank was held not to touch the business of the bank. The Supreme Court in the observation which has been extracted above, however, also considers a case where it is the business of a society to construct and buy houses and let them ::: Downloaded on - 09/06/2013 18:49:47 ::: (10) CRA-12-2012 out to its members. The Supreme Court held that in such a case letting out of property is the business of the society.
The distinction between the two types of cases has to be borne in mind. The distinction is premised in the nature of the society as evidenced by its objects and bye laws."
. In the matter before the learned Single Judge, the applicant was a co-operative society and the object of the society was to provide plots to the members for housing and/or dwellings/houses/flats. It was also one of the object of society to buy or take on lease plots and to construct flats thereon for allocation to the members. Contract was entered into with the plaintiff therein was in furtherance of and for achieving the object of the society. It was therefore recorded in the judgment that the subject matter of the suit instituted by the plaintiff touches the business of the society and as such, the suit is not tenable without observing the mandatory provisions of section 164 of the M.C.S. Act.
8. In the matter of Mohan Meakin Ltd. Bombay Vs. The Pravara Sahakari Sakhar Karkhana Ltd.
reported in 1987 Mh.L.J. 503, the dispute raised by the petitioner-original plaintiff was in respect of ::: Downloaded on - 09/06/2013 18:49:47 ::: (11) CRA-12-2012 manufacturing and sale of alcoholic drinks and beverages including whisky by the co-operative society. It was case of the plaintiff that the defendants were selling their goods under the trade-
mark 'Black Knight'. The plaintiff sought an injunction against the defendants on the ground that they were also manufacturing whisky and adopted label mark comprising the words "Royal Knight". The objection was raised by the society to the entertainability of the suit on the ground of non-
compliance of provisions of section 164 of the M.C.S. Act. Upholding the objection, the Division Bench of this Court held that the society which was carrying the business of the manufacturing the alcoholic products i.e. whisky and that being the business of the society, the provisions of section 164 of the M.C.S. Act were attracted. One of the objects of the society in addition to the manufacturing of sugar was manufacturing of complementary products. The alcoholic products manufactured out of molasses by the defendant-co-operative society is a complementary product and the said business fairly and squarely fell within the ambit of the bye-laws of the society.
::: Downloaded on - 09/06/2013 18:49:47 :::(12) CRA-12-2012 It was therefore held that the provision of M.C.S. Act and in particular, section 164 must apply and in the absence of service of statutory notice under section 164, the suit was not maintainable.
9. In the instant matter also, the business of the petitioner-society is to advance loan and to effect recovery of the amount. The property allegedly attached and sold in execution of the recovery certificate issued by the Registrar under the provisions of section 101 of the M.C.S. Act. The subject matter of the suit touches to business of the society. The objection raised by the petitioners to the maintainability of the suit therefore needs to be upheld. The Civil Revision Application deserves to be allowed and the same is accordingly allowed. The order passed by 4th Joint Civil Judge Senior Division, Aurangabad on 02.12.2011 is set aside.
10. The plaintiff shall have liberty to avail of the remedy for protection of her interest, after complying with the mandatory requirements of the M.C.S. Act. It would also be open for the defendants, if the plaintiff proceeds to file appropriate ::: Downloaded on - 09/06/2013 18:49:47 ::: (13) CRA-12-2012 proceedings, to raise all legally sustainable objections. Rule is accordingly made absolute.
There shall be no order as to costs.
Sd/-
[R. M. BORDE, J.] arp/ ::: Downloaded on - 09/06/2013 18:49:47 :::