Bombay High Court
Balkisan Manekchand Zaver & Others vs Jalgaon People'S Co-Operative Bank ... on 9 February, 1998
Equivalent citations: 1998(3)BOMCR70, (1998)1BOMLR279, 1998(2)MHLJ147
Author: B.H. Marlapalle
Bench: B.H. Marlapalle
ORDER B.H. Marlapalle, J.
1. The present petitioners are sons of Manekchand Zavar, who was a borrower of respondent No. 1 - Bank and he died on 20-8-1952. An award came to be passed on 20-12-1953 for recovery of Rs. 12.195/- {with principal amount of Rs. 10,000/- and interest of Rs. 2,195/-) under section 54 of the Bombay Cooperative Societies Act, 1925 against the present petitioners. On 14-4-1957 the respondent No. 1 obtained a certificate of execution under section 59(1)(b) of the Bombay Co-operative Societies Act, 1925 (hereinafter referred to the Old Act for short). Consequently on 15-7-1961, the Collector, Jalgaon issued certificate of transfer under section 59-A(1) of the old Act in respect of agricultural land belonging to the petitioners and admeasuring 11 acres, 18 gunthas in S. No. 242 (Gat No. 403) of village Paldhi, Taluka Erandol, District Jalgaon for partial satisfaction of Rs. 8,000/- out of the total Award of Rs. 1 2.195/-. The said land came to be transferred to respondent No, 1 Bank in pursuance of the certificate of transfer issued by the Collector. Respondent No. 1 Bank arranged for an auction of the said agricultural land transferred from petitioners to respondent Bank on 15-2-1963 and as there was no bid for the expected amount, the auction was cancelled. The respondent Bank arranged for a fresh auction on 20-2-1964 of the said agricultural land admeasuring 11 acres, 18 gunthas and reportedly the petitioner No. 1 was present at the time of both these auctions held by the respondent Bank. Respondent No. 2 was the highest bidder at Rs. 70,251/- in the auction held on 20-2-64 and hence, the said bid was accepted by respondent No. 1 Bank. The respondent No. 1 paid an amount of Rs. 4,325/- (25% of the bid amount) on 20-2-64 to the respondent No. 1 Bank and another instalment of Rs. 6,000/- was paid by the respondent No. 2 to respondent No. 1 on 21-10-64. On payment of Rs. 10.325/- by respondent No. 2 to respondent No. 1 Bank, the Bank handed over possession of the land to respondent No. 2 on 24-10-1964 itself without executing any sale-deed and without receiving the full amount of the bid.
2. Respondent No. 1 Bank filed Special Darkhast No. 7/69 against the petitioners for recovery of Rs. 11,191/- and a certificate was issued by the Registrar on 5-9-1969 under section 98-A of the Maharashtra Co-operative Societies Act, 1960 (hereinafter referred to as new Act lor short). The petitioner has taken plea of limitation in the Special Darkhast and the same was accepted. The Bank therefore, appealed on 6-7-1972 and the High Court remanded the case for fresh adjudication. The petitioners therefore, filed W.R No. 1912/83 which came to be renumbered by this Bench as Writ Petition No. 3206/89 challenging, inter alia the vires of section 98-A and this Court had granted conditional stay inasmuch as the petitioner was directed to pay an amount of Rs. 11,191/- during the intervening period. The said amount was paid by the petitioner and subsequently Writ Petition No. 1912/83 (3206/96) came to be withdrawn by the present petitioners on 25-7-1996. Thus, the proceedings in Special Darkhast No. 7/69 came to an end.
3. On 2-9-1973, the petitioners filed Special Civil Suit No. 96/93 in the Court of Civil Judge (S.D.) Jalgaon for re-possession of the land which was handed over to respondent No. 2 by the Bank on 24-10-64. It appears that some time in January 1974, the bank filed its written statement and challenged the tenability of the Special Civil Suit. Realising this legal position, the petitioners filed a withdrawal purshis before Civil Judge (S.D.) and after inviting the say of the bank, the suit was allowed to be withdrawn subject to payment of costs for fresh suit, if any, in terms of order dated 30.10.74. Sometime in November 1974 the petitioners submitted an application regarding reference of dispute, before the Registrar, Co-operative Societies at Jalgaon and prayed for the dispute being referred for adjudication for the reliefs as stated therein including the relief of possession of the land which was handed over to respondent No. 2. The said application was numbered as ABN/JGA/5 of 1974 and it came to be referred to the Court of Officer on Special Duty, Co-operative Department at Jalgaon and re-registered as ABN/7280/1974. The respondent Bank appeared before the Court of Officer on Special Duty, Co-operative Department and filed its Written Statement on 16-1-1975 opposing the claim of the petitioners. On constitution of Co-operative Courts in the State of Maharashtra on the introduction of section 91-A in the new Act, the dispute came to be listed before the Co-operative Court and reregistered as Arbitration (Lawad) Suit No. ABN/JGA/5 of 1975. On perusal of the oral and documentary evidence adduced by the parties and on hearing them at length, the learned Judge of the Co-operative Court was pleased to allow the dispute referred for adjudication by his judgment and order dated 30-9-96. The learned Judge of the Cooperative Court held that the property was transferred by the Collector, Jalgaon to the Bank in satisfaction of the debt and the said property was not lawfully transferred to respondent No. 2 and the Bank was bound to render accounts to the present petitioners in respect of the income and also to restore the land to them if the debt was satisfied. The learned Judge further held that the claim having been filed within 12 years was not barred by limitation. As the claim of the petitioner was partly allowed by the learned Judge of the Co-operative Court, they filed Appeal No. 143/77 and the respondents filed Appeal No. 145/77 challenging the judgment of the Co-operative Court before the Maharashtra State Co-operative Court, Bombay. By judgment and order dated 11-11-83 Appeal No. 143/77 which was filed by the petitioners came to be dismissed and Appeal No. 145/77 which was filed by the respondents came to be allowed. The petitioners have challenged the legality of the said judgment dated 11-11-83 passed by the Maharashtra State Co-operative Appellate Court, Bombay.
4. In the impugned judgment the Appellate Court held that the respondent Bank had become the owner of the land and it had legally auctioned the land to respondent No. 2, the auction sale of the subject land was not in contravention of the provisions of the Bombay Prevention of Fragmentation and Consolidation of Holding Act, 1947 (hereinafter referred to as the Act of 1947 for short), though the land was transferred without a sale-deed being registered, in view of section 53-A of the Transfer of Property Act, the sale cannot be treated to be invalid and the Bank was debarred from claiming any right in respect of subject land, the reference of dispute made by the petitioners before Registrar, Co-operative Societies which subsequently came to be referred for adjudication by the Co-operative Court was not tenable in view of the order passed by the learned Joint Civil Judge, (S.D.), Jalgaon on 30-10-74 in as rnuch as it was a condition precedent for the petitioners to pay costs before fresh suit was filed and the dispute instituted by the petitioners which came to be adjudicated by the Co-operative Court was hit by limitation.
5. It is also pertinent to note the issues framed by the trial Court (Co-operative Court) in its judgment which was reversed by the Appellate Court. In para 7 of the said judgment the following issues were framed :
(1) Whether the property in question was lawfully transferred to the first defendant and in what capacity?
(2) Whether the property was lawfully sold by public auction as per the provisions of Rule 85 of the Maharashtra Co-op. Societies Rules, 1961, and was, therefore, lawfully transferred to the second defendant.?
(3) Whether the plaintiff was entitled to ask for accounts of the property and was entitled to retransfer of the same on payment of the dues upto date to the first defendant.?
(4) What order.?
The learned Judge of the Co-operative Court answered the issue No. 1 in , affirmative, inasmuch as the bank came in possession of the subject property as a creditor towards the satisfaction of debt under the provisions of section 59(1 )(b) of the old Act and under section 100 of the New Act and the learned Judge further answered issue No. 2 in negative and issue No. 3 in the affirmative. As observed thereinabove, the learned Judge of the Co-operative Court also held that the dispute before him brought at the instance of the petitioners was not hit by limitation, though, such an issue was not framed specifically.
6. It is also pertinent to note at this stage that the impugned order of the Appellate Court was challenged by the petitioners before this Court on 3-12-83 and the petition originally came to be registered as W.P. No. 639/84 (on transfer the same came to be re-registered as W.P. No. 303/91 by this Bench). After filing of this petition the respondent No. 2 admittedly paid the balance amount of the bid on 29-12-1983 for the first time and the sale-deed was executed between respondent Nos. 1 and 2 and registered on the same day. The petitioners have therefore, prayed for setting aside the order passed by the Appellate Co-operative Court and for re-possession of the subject land admeasuring 11 acres, 18 gunthas which is in possession of respondent No. 2 right from 24-10-64 and in respect of which the sale-deed was signed and registered for the first time on 29-12-83.
7. The provisions of section 59(1)(b) of the Old Act correspond to section 98 of the New Act and the provisions of section 59-A of the Old Act correspond with section 100 of the New Act. The Collector by the certificate issued on 15-7-1961 transferred the agricultural land belonging to the petitioners to respondent bank under section 59-A(1) of the Old Act, which corresponds to the provisions of section 100(1) of the New Act. Section 100(2) of the New Act, states that where property is- transferred to the society under sub-section (1), the Court, the-Collector or the Registrar as the case may be, may, in accordance with the Rules, place the society in possession of the property transferred and sub-section (3) of section 100 provides that subject to such rules as may be made in that behalf and to any rights, encumbrances, charges or equities lawfully subsisting in favour of any person, such property or portion thereof shall be held under sub-section (1) by the said society on such terms and conditions as may be agreed upon between the Court, the Collector or the Registrar as the case may be and the said society. As per the said certificate issued by the Collector the land came to be transferred to the Bank in partial satisfaction of the amount due to it from the petitioners. This property came to be transferred to the Bank in terms of Rule 85(5) of the Maharashtra Co-operative Societies Rules, 1961 and it will be therefore, necessary to refer to the provisions of sub-rules (6), (8), (10), (11), (12), (13), (14) and (15) of Rule 85. It is clear that on a combine reading of sections 98 and 100 of the New Act and Rule 85, the land transferred to the Bank in pursuance of the certificate issued by the Collector is not a transfer by sale and such a transfer did not create ownership of the said land in favour of the respondent-Bank. The Bank ought to be held to possess the land on its transfer as a Trustee till such time the land was sold by auction sale. Sub-rule (14) of Rule 85 provides that until the property is sold, the society to which the property is transferred under sub-Rule (5) shall use its best endeavours to lease it or to make any other use that can be made of it so as to derive the largest possible income from the property and sub-rule (15) of the said Rule states that when the society to which property is transferred under sub-rule (5) has realised all its dues, under the order in execution of which the property was transferred, from the proceeds of management of the property, the properly, if unsold, shall be restored to the defaulter. In view of these statutory provisions, the findings recorded by the Appellate Court that on transfer of the subject land in favour of the Bank in pursuance of the certificate issued by the Collector, the ownership of the said land vested in favour of the Bank are grossly erroneous.
8. The Bank was in possession of the subject land for about 3 years and during this period it had rendered no accounts to the petitioners. For the first bid held on 15-2-1963 a public notification was published in the local weekly newspaper 'Batmidar' on January 26, 1963 but for the second auction held on 20-2-1964 there was no evidence brought before the trial Court to show that notification was published by the bank. As the auction sale was held on 20-2-1964 provisions of Chapter XII of the Maharashtra Co-operative Societies Rules, 1961 were required to be followed and more particularly the provisions of Rule 107 as applicable for sale of immovable property. The bank was required to approach the Registrar for appointment of a Sale Officer and arrange for a public auction. From the evidence brought before the trial Court, it is evident that the auction held on 20-2-64 was" held by the Bank on its own and hence, it was a private auction and not a public auction. The total bid price was not paid even within the stipulated period of 15 days from the date of the auction sale. As observed in the foregoing paragraphs the first instalment of Rs. 4,321/- was paid on 20-2-64, second instalment of Rs. 6.000/- was paid on 21-10-64 and the last instalment was paid only on 29-12-83 when the sale-deed was signed and registered. As against this the subject land was handed over to respondent No. 2 on 24-10-64. No sale-deed was executed for about 19 years i.e. from 20-2-64 to 29-12-83 and the auction sale has not been confirmed by the Registrar till this date. The sale-deed was not signed and registered even when the impugned order was passed by the Appellate Court. For all these reasons, the trial Court rightly held that the auction sale held on 20-2-64 was illegal and the findings of the Appellate Court in this'regard are contrary to the provisions of law and hence, cannot be accepted.
9. The reliance of the Appellate Court on the provisions of section 53-A of the Transfer of Property Act to hold that the transfer by sale of the subject land to respondent No. 2 without a sale-deed being registered was legal is totally mis-placed. When a special statute like the Maharashtra Co-operative Societies Act and the rules framed thereunder mandate that the auction sale amount is required to be paid within a prescribed time and the sale-deed has to be signed and registered again within a stipulated time and the sale has to be confirmed by the Registrar, the provisions of section 53-A of the Transfer of Property Act cannot be made applicable to hold that the transfer by sale of the suit land in favour of respondent No. 2 was legal. The provisions of section 53-A of the Transfer of Property Act cannot be read in an isolation and without considering the provisions of the New Act as well as the Rules framed thereunder.
As per section 31 of the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947 : Notwithstanding anything contained in any law for the time being in force, no holding allotted under this Act, nor any part thereof shall save as otherwise provided in this section, be transferred, whether by way of sale (including sale in execution of a decree of a Civil Court or for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue) or by way of gift, exchange, lease or otherwise without the previous sanction of the Collector. Section 31AA of the said Act provides that the transfers or partitions or sub-divisions of any land in contravention of the provisions of the Act made before the 15th day of November 1965, shall, notwithstanding the provisions of section 9 or of section 31, not be deemed void merely on the ground of the contravention of any of the provisions of the Act, if the person in possession of the land at the aforesaid date by virtue of any transfers or partitions or sub-divisions pays to the State Government within the prescribed period a penalty equal to one per cent of the consideration of the land transferred, partitioned or sub-divided, or Rs. 100/-, whichever is less. Section 9 of the Act states that the transfer or partition of any land contrary to the provisions of this Act shall be void. In the instant case the findings of the trial Court that the transfer of the subject land to respondent No. 2 was hit by the provisions of section 31 of the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947 has been reversed by the Appellate Court on the ground that in view of section 31(3) the provisions of subsection (1) were not applicable and the Appellate Court further dealt with the issue of fragmentation which was uncalled for. There is no dispute that in pursuance of the Maharashtra Government Gazette of 14-3-63 the scheme of consolidation of agricultural holdings of village Paldhi, Taluka Erandol, Dist. Jaigaon was confirmed on 6-3-63 and therefore, transfer of any holdings from the said village fall within the ambit of section 31 of the said Act. The transfer of the subject land to the respondent bank in terms of certificate issued by the Collector on 15-7-61 was by way of partial satisfaction of the decreetal amount and the Bank was in possession of the said land only as a Trustee and/or as a mortgagee. Such a transfer cannot be brought within the ambit of sub-section (1) or sub-section (3) of section 31 and the transfer to respondent No. 2 of the suit land will certainly fall within the ambit of section 31 of the said Act. Reference may be usefully made in this regard to the judgment of this Court in the case of Shiva Martand v. Arun Nanakchand, reported in 1968 Maharashtra Law Journal 883 and in the case of Vinayakrao Ganpatrao Pimplapure v. State of Maharashtra, reported in 1975 Maharashtra Law Journal 566. The transfer of the suit land in favour of the Bank under section 98(1) of the New Act cannot come within the ambit of the term "otherwise" as is used in section 31. The respondent No. 2 was in possession of the subject land prior to 15-11 -65 and the said respondent has not taken the benefit of section 31AA of the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947 and the resultant conclusion therefore, is that the sale of the subject land to respondent No. 2 is void in terms of section 9 of the said Act. 10. Corning to the finding recorded by the Appellate Court that the reference of dispute made at the instance of the petitioner was not tenable in view of the order passed by the learned Joint Civil Judge, (S.D.), Jaigaon on 30-10-74, it is necessary to refer to the said order which reads as under ;
"Heard both the sides. Permission to withdraw the case granted with liberty to bring fresh suit on the same cause of action. Plaintiff shall pay half cost of the defendants, the defendants Nos. 1 and 2 be held as one set of defendants for the purpose of cost. Payment of cost is made condition precedent for the fresh suit if any."
The Appellate Court proceeded erroneously on the presumption that the dispute referred at the instance of the petitioner to the Co-operative Court amounted to a fresh suit. A number of authorities have been relied upon by the Appellate Court in this regard and the said reliance is totally misplaced in view of the facts of the present case. As per the scheme of the New Act, Chapter XI deals with the settlement of disputes. Under section 91 of the New Act, the disputes have been defined and the Co-
operative Court has discretion to refer such a dispute to the Civil Court for being tried and decided as a civil suit in certain cases and therefore, a dispute filed before the Cooperative Court is not the same as a civil suit filed before in Civil Court. If the order dated 30-10-74 passed by the learned Joint Civil Judge, (S.D.), Jalgaon which has been relied upon by the Appellate Court is read with the say filed by the respondent Bank on the application of the petitioners to withdraw the civil suit, it is clear that what was contemplated by the learned Civil Judge was a fresh civil suit for which the payment of cost was made a condition precedent. The say filed by the respondent Bank reads as under :
"The defendants Nos. 1 and 2 have no objection for withdrawal of the suit. But permission to file another suit should not be given because there is no formal defect in the plaintiffs' suit and because under the provisions of the Maharashtra Co-operative Societies Act the plaintiffs have to file a suit before the Registrar and it is only the Registrar exercises his discretion to refer the parties to Civil Court that the plaintiffs' suit will come to Civil Court. Hence, the plaintiffs cannot ask to withdraw the suit with a permission to file another suit."
Under the circumstances, the non-payment of costs by the petitioners will not be fatal to the dispute referred by the Registrar to the Co-operative Court at the instance of the petitioners.
11. The suit land was transferred to the respondent Bank in pursuance of the Certificate issued by the Collector and the Bank was deemed to be in possession of the said land till 23-10-64 and it was only on 24-10-64 that the land was handed over to the respondent No. 2 by way of auction sale held on 20-2-1964. It is therefore, clear that the date of adverse possession of the suit land is 24-10-64. The possession of the suit land by the Bank in pursuant of the certificate granted by the Collector on 15-7-61 cannot be considered for counting the period of limitation in respect of the dispute filed by the present petitioners. What is applicable in the present case is Article 65 of the Limitation Act, 1963 and not Article 64 of the said Act. The possession of the suit land based on title was transferred in favour of respondent No. 2 only on 24-10-64 and the period of limitation of 12 years ought to be counted trom that date. The transfer of the suit land in favour of the respondent Bank, as observed hereinabove, was only by way of a Trustee and the land was liable to be restored to the petitioner on payment of the Award amount at any time before the auction sale and that the said transfer did not create an ownership right in favour of the respondent Bank, Article 64 cannot be brought into force to count the limitation period of 12 years. The Appellate Court was therefore, wrong in referring to Article 64 of the Limitation Act and findings of the trial Court that dispute before the Co-operative Court was not barred by limitation as provided under section 92(2) of the New Act deserve to be confirmed.
12. In the result, the petition succeeds and the impugned judgment and order passed by the lower Appellate Court is hereby quashed and set aside. It is directed that the subject land admeasuring 11 acres, 18 gunthas be handed over to the petitioners within two months from today, by the respondents and free from any encumbrances. Rule made absolute accordingly with costs to be borne by respondent Bank. The Collector, Jalgaon is directed to ensure the implementation of this order and submit a report to this Court within a period of three months.
13. Petition allowed.