Bombay High Court
M/S. Top Ten vs State Of Maharashtra on 9 December, 2011
Bench: B. P. Dharmadhikari, P. D. Kode
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH, NAGPUR.
WRIT PETITION Nos. 92 & 1230 OF 2009.
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WRIT PETITION No. 92 OF 2009.
1. M/s. Top Ten, A Partnership Firm,
Near Variety Square, Sitabuldi, Nagpur
through its Partner Smt. Savitaben w/o
Narsidas Katkoria, Aged about 74 years
Occupation - Business, R/o. B/2, Lane-II,
Kanchan Sagar Cooperative Housing
Society, Balraj marg, Dhantoli,
Nagpur.
2. Shri Narsidas s/o Motichand Katkoria,
Aged about 75 years
Occupation - Business, R/o. C/o.
M/s. Surati Farsan, Abhyankar Road,
Sitabuldi, Nagpur. ....PETITIONERS.
VERSUS
1. State of Maharashtra,
through its Chief Secretary,
Mantralaya, Mumbai-32.
2. State of Maharashtra,
through Minister for Cooperation
& Textiles, Mantralaya, Mumbai-32.
3. Commissioner for Cooperation and
Registrar, Cooperative Societies,
Maharashtra State, Central Building,
Pune.
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4. Deputy Registrar, Cooperative Societies
(City-1), 185, Ayurvedic Layout, Bhande
Plots, Umrer Road, Nagpur.
5. Shikshak Sahakari Bank Limited,
Near Gandhi Sagar, Mahal, Nagpur
through its Chief Executive Officer.
6. Shikshak Sahakari Bank Limited,
through its Branch Manager,
Sitabuldi Branch, Nagpur
7. Smt. Babita Kisan Kumar Agrawal,
aged about 37 years, r/o. Plot
No.79, Opp. Radhakrishna Mandir,
Wardhman Nagar, Nagpur.
8. Shri Kisankumar Inderchand Agrawal,
aged about 41 years, Occupation Business,
r/o. Plot No.79, Opp. Radhakrishna Mandir,
Wardhman Nagar, Nagpur. .....RESPONDENTS
.
--------------------------
Mr. A.S. Jaiswal, Advocate for Petitioners.
Mrs. B.H. Dangre, Addl. Govt. Pleader for Respondent Nos. 1 & 2.
Mr. A.M. Ghare, Advocate for Respondent Nos. 5 and 6.
Respondents Served.
-----------------------
WITH
WRIT PETITION No. 1230 OF 2009.
1. Sou. Kanta w/o Deepak Kate,
Aged adult, Occupation - Household,
r/o. Yashodhan, Jatharpeth, Akola
Tahsil and District Akola.
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2. Shri Deepak s/o. Balranji Kate,
Aged adult, Occupation - Advocate
r/o. Yashodhan, Jatharpeth, Akola
Tahsil and District Akola. ....PETITIONERS.
VERSUS
1. The Nishant Sahakari Gramin
Credit Cooperative Society Ltd.,
Akola, a Cooperative Society
Duly registered under the provisions
of the Maharashtra Co-op. Societies Act,
1960 through its General Manager,
Head Office at 2nd Floor, Nishant
Tower, Godhi Road, Akola,
Tahsil and District Akola.
2. The Assistant Registrar,
Cooperative Societies, Akola,
Tahsil and District Akola.
3. Smt. Suhasini w/o Ganesh Pathak,
aged adult, Occ -Advocate,
r/o. Near Pipale Compound,
Jatharpeth, Akola
Tahsil and District Akola. .....RESPONDENTS
.
--------------------------
Mr. A.S. Chandurkar, Advocate for Petitioners.
Shri A.B. Patil, Advocate for Respondent no.1.
Mrs. B.H. Dangre, Addl. Govt. Pleader for Respondent No 2.
Mr. P.C. Madkholkar, Advocate for Respondent No. 3.
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CORAM : B.P. DHARMADHIKARI
& A.P. BHANGALE, JJ.
Date of reserving the Judgment. - 23.11.2011
Date of Pronouncement. - 09.12.2011
JUDGEMENT. (Per B.P.Dharmadhikari, J).
In both these petitions, filed under Articles 226 and 227 of
the Constitution of India, challenge is to the provisions of Rule 86E of
the Maharashtra Cooperative Societies Rules, 1961 (hereinafter referred
to as "the 1961 Rules" for short), with prayer to declare it as ultra
vires to Article 14 of the Constitution of India. Petitioners in both the
matters are creditors, and the Cooperative Society from whom they
have borrowed loan, have instituted proceedings under Section 101 of
the Maharashtra Cooperative Societies Act, 1960 (hereinafter referred
to as "the 1960 Act" for short). One of their objection is, about
availability of alternative remedy under Section 154 of the 1960 Act.
Petitioners have urged that as constitutional validity of Rule 86E has
been assailed, that remedy is not equally efficacious. The creditors
assert that challenge is frivolous and only to avoid deposit of 50% of the
amount claimed as mandated under Section 154(2). Accordingly we
have proceeded further to consider the challenge.
2. In Writ Petition No. 92/2009, a certificate for recovery under
Section 101 of the 1960 Act, has been issued on 11/13.08.2008, and
thereafter a notice of seizure of immovable property dated 22.10.2008
and 05.01.2009 has also been issued. In this background, the
petitioners - debtors who claim that there was one time settlement,
have assailed the said order dated 11.08.2008 contending that
opportunity of cross-examination needed to be granted to bring truth
on record, and as it has not been so granted, and Rule 86E of 1961
Rules prohibit it, that Rule is bad. In this petition, this Court has issued
notice and granted status quo on 15.01.2009. On 22.09.2010 this
Court directed petitioner to deposit sum of Rs. 5,00,000/- within 4
weeks and on 27.04.2011 that amount was directed to be invested in
fixed deposit with creditor Bank itself.
3. Petitioners in Writ Petition No.1230/2009 have denied
everything in their reply to the application by creditor society under
Section 101 of the 1960 Act. They have stated that they have repaid
more than Rs. 1,10,000/- from time to time and that repayment needed
to be adjusted against the principal amount. Other defence is though
blank cheques were obtained from them, the same were not forwarded
for clearance. Repayment of Rs. 10,000/- was in cash, but at that time
no receipt was issued. Last defence is about, respondent no.3 signing
on blank document under bonafide impression. Appropriation and
calculation of interest is also alleged to be illegal and wrong. In
paragraph no.9 of the reply, it is claimed that repayment of Rs.
1,17,000/- has been done. In this background, an application for
framing of issue was moved and by order dated 30.01.2009, because of
the nature of proceedings, that application has been rejected. Petition
has then been filed. In this petition, this Court has granted status quo
on 20.03.2009 and it continues to operate even today.
4. In this background as jointly requested, both the petitions
have been taken up for final disposal at the stage of admission with
consent of the parties. Hence, Rule is made returnable forthwith.
5. Shri A.S. Jaiswal, learned Counsel for petitioners in Writ
Petition No.92/2009 and Shri A.S. Chandurkar, learned Counsel for
petitioners in other petition, have pointed out relevant provisions in
1960 Act and 1961 Rules. According to them, certificate for recovery
issued under Section 101 is final, and cannot be reopened before any
other authority or Court. Liability mentioned therein, therefore, is
irreversible and hence, opportunity of cross-examination must be
granted so as to extend fair and reasonable opportunity to debtors and
creditors to substantiate their defence. They have invited attention to
provisions in Section 91, Section 101 and Section 154 to substantiate
their contentions. The judgment of Hon'ble Apex Court reported at AIR
2008 SC 876 (New India Assurance Co. Ltd. .vs. Nusli Nerville Wadia
and another), AIR 1984 SC 273 (K.L. Tripathi .vrs. State Bank of India
and others) and (1977) 2 SCC 777 (State of Kerala .vs. K.T. Shaduli
Grocery Dealer Etc.) are relied upon to urge that compliance with
principles of natural justice in such circumstances is essential, the
opportunity of cross examination must be made available and Rule 86E
which denies it, therefore, must be held to be arbitrary and in breach of
principles of natural justice. As it denies fair opportunity to a debtor, it
must be declared as violative of Article 14 of the Constitution of India.
Our attention has also been invited to the Division Bench judgment of
this Court reported at 1970 Mh.L.J. 116 (Ramchandra and another .vrs.
Collector, Nagpur and others) to point out as to how the provisions of
identical Section i.e. Section 137 of the 1960 Act have been understood
by the said Division Bench. They urge that as said certificate cannot be
questioned even under Section 91 of the 1960 Act, provisions of Rule
86E which denies effective opportunity of defence to the petitioners,
must be declared to be bad and un-constitutional.
6. Shri A.M. Ghare, learned Counsel appearing on behalf of
respondent nos. 5 and 6 in Writ Petition No.92/2009 has contended
that Section 101 is a provision for expeditious recovery only of arrears
and hence, a limited enquiry as envisaged therein and as is clear from
the provisions of Chapter VIII-A of the 1961 Rules, is only open, there is
no question of any opportunity of cross examination in that enquiry.
He states that the party aggrieved by recourse to Section 101 has got
remedy to move the Cooperative Court under Section 91 of the 1960
Act, and once such dispute under Section 91 is filed, the Authority
proceeding under Section 101 has to find out whether it is appropriate
for it to proceed further with summary enquiry under that Section.
Judgment of Division Bench of this Court reported at 2009 (2) Mh.L.J.
216 (Shri Basaveshwar Cooperative Credit Society Ltd., Kolhapur vrs.
Jayant Shivlal Banchhode) has been relied upon for said purpose. He
further contends that in present matter defence of one time settlement
is, nothing but a farce. A frivolous plea has been raised only to defeat
the recovery and hence, this Court should not interfere in such matters.
He is relying upon the judgment of Hon'ble Apex Court reported at
(2006) 9 SCC 252 (State Bank of India .vs. Allied Chemical Laboratories
and another) to urge that, when challenge is on the ground of refusal of
cross examination, statutory appeal or revision is equally efficacious
and alternative remedy.
7. Mrs. B.H. Dangre, learned Additional Government Pleader
appearing on behalf of the respondent State and also on behalf of the
Advocate General, has relied upon the judgment of Division Bench of
this Court reported at 2010 (4) Mh.L.J. 381 (Vijay Shamrao Bhokre
.vrs. Shri Mumbadevi Jilla Nagari Sahakari Pat Sanstha Maryadit,
Kopargaon and others), to contend that proceedings under Section 101
cannot be questioned under Section 91. She has urged that it is a
speedy remedy provided by legislature in the interest of Cooperative
Societies of particular type and in appropriate circumstances the
Registrar has been authorized even to take suo motu recourse to it.
This nature and feature of Section 101, therefore, makes it a unique
remedy for cooperative societies and looking to the same, a very limited
enquiry has been contemplated. It is urged that challenge to Rule 86E
in this background is unsustainable and the petitions are liable to be
dismissed. It is further contended that as defence of respective
petitioners in both the matters do not show any disputed questions,
which need adjudication after a proper trial, issuance of Section 101
certificate cannot be said to be without jurisdiction. The petitioners,
therefore, must be asked to take recourse to remedy of revision under
Section 154 of 1960 Act. She has relied upon the provisions of Section
94 (4) and (5), as also provisions of Rule 77E and F, to demonstrate her
stand. She has therefore, prayed for dismissal of both the petitions.
8. We will first like to deal with the contention about
availability of alternate remedy.
Provisions of Section 154 permit petitioners to file revision
before the Divisional Joint Registrar against such certificate. Sub-
section (2A) also mandates that such revision cannot be entertained
unless the revision applicant deposits with the concerned society 50% of
the amount recoverable under such certificate. However, it is settled
law that when a provision of any statute or rule is questioned on the
ground of it being violative of Article 14 of the Constitution of India,
and it's constitutionality is otherwise assailed, such authority
functioning under the Act cannot examine that challenge. Here in both
the petitions, there is prayer to declare Rule 86E of 1961 Rules as
unconstitutional. The judgment of Hon'ble Apex Court in the case of
State Bank of India .vs. Allied Chemical Laboratories and another( supra)
relied upon by Shri Ghare, learned Counsel shows a challenge to order
of D.R.T., on the ground that it violated principles of natural justice by
not permitting debtor to cross-examine the witness, whose evidence on
affidavit was accepted. The High Court there had rejected the objection
that appeal could have been preferred against the said order and it held
that where principles of natural justice had been violated, jurisdiction of
High Court under Articles 226 and 227 of the Constitution of India
could have been invoked. The Hon'ble Apex Court has reversed the said
view of High Court and observed that such a ground could have been
raised in appeal and Appellate Authority could have appreciated it.
However, the said judgment shows that there was no challenge to the
constitutionality or validity of any legal provision in the said matter.
Hence this judgment is not useful in present facts.
9. The other judgment relied by Shri Ghare, learned Counsel in
the case of Shri Basaveshwar Cooperative Credit Society Ltd., Kolhapur
vrs. Jayant Shivlal Banchhode (supra), shows that it is delivered in
Letters Patent Appeal and those proceedings arose out of a notice to
recover arrears dated 28.07.2006 issued to respondent - Jayant.
Jayant, had then filed a dispute under Section 91 in 2006 itself. During
the pendency of this dispute, the appellant Society approached D.D.R.,
under Section 101 of the 1960 Act. Jayant then filed interim
application for injunction before the Cooperative Court and Cooperative
Court passed ex-parte ad-interim order. Cooperative Appellate Court
stayed the order of the Cooperative Court in Appeal against said order.
Jayant then approached the learned Single Judge of this Court in Writ
Petition and the same was disposed of on 14.12.2007. The High Court
through its learned Single Judge directed Jayant to deposit amount of
Rs. 95,00,000/- and also directed the Cooperative Court to decide the
application for temporary injunction expeditiously. This order of the
learned Single Judge was then questioned in Letters Patent Appeal by
the Society. The Division Bench of this Court has in paragraph no.4
noted circular dated 03.03.2001 which contained guidelines to be
followed by the Authorities issuing certificate under Section 101.
Clause 16 of those guidelines has been noted. It's sub-clause [v]
visualized filing of a dispute under Section 91 for accounts and passing
of interim orders therein. Registrar dealing with Section 101
proceedings was expected to stay the hearing before him till decision of
such dispute. It is therefore, apparent that provisions of Chapter VII-A
of 1961 Rules, which came on statute book w.e.f. 18.05.2007 did not
form subject matter of said consideration and the Division Bench has
decided the controversy in the light of the guidelines contained in the
above mentioned circular. After 18.05.2007 the position has
undergone change. This judgment therefore, also is of no use here.
10. Mrs. Dangre, learned Additional Government Pleader has
pointed out that the Division Bench judgment in the case of (Vijay
Shamrao Bhokre .vrs. Shri Mumbadevi Jilla Nagari Sahakari Pat Sanstha
Maryadit, Kopargaon and others (supra). Said Division Bench has
looked into provisions of Sections 91, 101, 154(2-A) and 163 of the
1960 Act. Provisions of Section 93[2] are also noted. The Division
Bench has noticed that object behind putting Section 101 in statute
book is to provide a speedy remedy for a particular class of societies for
recovery of its dues. After appreciating the precedents, said Division
Bench has found that the legality of proceedings under Section 101 as
also legality of certificate issued thereunder, cannot be challenged by
filing a dispute under Section 91 of the 1960 Act. None of the counsel
have attempted to urge otherwise. The view of this Court as settled,
therefore, is that legality of those proceedings and certificate issued
therein, is not open to challenge under Section 91 before the
Cooperative Court. Section 101[3] itself stipulates that such certificate
is final and a conclusive proof of arrears stated to be due therein.
Section 152 deals with appeals and it does not envisage any appeal
against any order or certificate under Section 101 proceedings.
However, by Maharashtra Act No. XXXVII of 1965, sub-section [4] has
been added to this Section 152, which stipulates that every other order
against which appeal is not provided, is final, but always subject to
provisions for revision. The provisions of Section 2 of the "Amending
Act" stipulates that this sub-section shall be deemed always to have
been enacted in this form in Section 152. Therefore, though Section
101[3] makes the certificate final, because of Section 152[4], it is open
to revision under Section 154. Section 163 bars the jurisdiction of Civil
Court in such matters and its sub-section [3] again confers finality on
orders or awards passed under 1960 Act.
11. This brings us to the consideration of challenge as raised in
present petitions.
Rule 86E of the 1961 Rules which deals with the procedure
for hearing applications reads as under :
"86E. Procedure for Hearing of application.
(1) On receipt of the statement in defence of
the opponent the applicant society shall prove
contents of the application and also deal with the
contention of defences. The opponent likewise may
file reply in support of the defence on the next date,
if he desires. No cross examination of any of the
parties shall be permitted.
(2) On receipt of the replies, the Registrar
shall proceed to hear oral arguments of the parties
and shall close the proceeding for the order.
(3) Every endeavor shall be made by the
Registrar to decide the application within three
months from the first date of hearing. However, the
Registrar may decide the application beyond the
period of three months for the reasons to be
recorded in writing."
It is added on 18.05.2007 when Chapter VIII-A dealing with
grant of certificate for recovery under Section 101 came to be added to
1961 Rules. The judgment of Hon'ble Apex Court in the case of New
India Assurance Co. Ltd. .vs. Nusli Nerville Wadie and another (supra), in
paragraph no.44 and onwards deals with natural justice issue. It states
that if some facts are to be proved by landlord, indisputably the
occupant should get opportunity to cross examine. The Hon'ble Apex
Court has added that such opportunity may not be provided by a
statute, but it being part of principles of natural justice, should be held
to be indefeasible right. This judgment considers Public Premises
(Eviction of Unauthorized Occupants) Act, 1971. However, the Hon'ble
Apex Court was not required to consider a provision like Rule 86E,
which expressly denied cross examination to any of the parties.
In K.L. Tripathi .vrs. State Bank of India and others (supra),
the Hon'ble Apex Court has considered the concept of fair play in
action, administrative, judicial or quasi-judicial nature. Right of cross
examination is found to be inevitable part of fair play when there is lis
regarding facts. However, the Hon'ble Apex Court has also observed
that when there is no dispute on facts and no real prejudice has been
caused to a party aggrieved by absence of formal opportunity of cross
examination, per-se it is not sufficient to invalidate the decision arrived
at fairly. Again the observations are in absence of of any express
provision like Rule 86E.
In judgment reported at 2001 (7) SCC 69 (Rajinder Pershad
(dead) by Lrs. vs. Darshana Devi), the Hon'ble Apex Court has found
that if correctness of a statement of witness is to be disputed, such
witness needs to be given an opportunity in cross examination to
explain his statement. This issue of confronting a witness is not
relevant in present matter.
In State of Kerala .vs. K.T. Shaduli Grocery Dealer Etc.
( supra), provisions of Section 17[3] of Kerala General Sales Tax Act,
1963 are looked into. The enquiry envisaged is found to be in two
stages. In first stage, Sales Tax officer has to come to a conclusion that
return submitted by assessee is, incorrect or incomplete, thereby
warranting a best judgment assessment. The Hon'ble Apex Court has
noted that the Sales Tax Officer was obliged to extend to the assessee a
reasonable opportunity to prove the correctness or completeness of such
return. The usual mode recognized by law "to prove" a fact is by
production of evidence and therefore, right to examine witness and
hence, a right to cross examine. These facts therefore, show that again
an express provision negating right of cross examination has not been
construed by the Hon'ble Apex Court.
12. Section 91 appears in Chapter IX of 1960 Act and it deals
with settlement of disputes. None of the parties before us have urged
that a creditor cooperative society cannot file a dispute under Section
91 of the 1960 Act in the present matter. Section 91 dealing with
disputes opens with non obstante clause and its opening words which
are relevant for present purposes read "(1) Notwithstanding anything
contained in any other law for the time being in force, any dispute
touching.." Thus a exclusive jurisdiction has been conferred to take
cognizance of such disputes upon Cooperative Court. The words "any
other law" highlighted by us above, clearly show legislative intent to
override the provisions of Section 9 of the Code of Civil Procedure in-
relation to such disputes. But as this position is not in dispute before
us, it is not necessary for us to go into more details. Attention can
however, be invited to proviso which appears after Section 91[1][e]. It
enumerates certain types of disputes and lays down that same cannot
be treated as "dispute" for the purpose of Section 91. Any proceeding
for recovery of amount as arrears of land revenue on a certificate
granted by the Registrar under sub-section [1] or [2] of Section 101
finds place therein and is, therefore, not a "dispute" for the purpose of
Section 91. It is therefore, obvious that adjudication under Section 101
cannot be subjected to scrutiny of Cooperative Court under Section 91.
13. Perusal of Section 101 reveals that it is the last Section in
Chapter IX of 1960 Act. It's heading is "Recovery of arrears due to
certain societies as arrears of land revenue". Important words to be
noted are "arrears due to certain societies". Sub-section [1] then
contains a long list of various types of societies and it is not in dispute
that the respondent credit cooperative society before this Court are
covered thereunder. After this list of societies, again the important
words appear and those words are "and on the society concerned
furnishing a statement of accounts in respect of the arrears." Thus
the society which invokes this remedy has to file statement of accounts
showing how it is entitle to recover those arrears. Thereafter the
Registrar has been given authority to make enquiry in such manner as
may be prescribed. Depending upon outcome of that enquiry, he can
issue a certificate for recovery of amount stated in the certificate as due
towards arrears. The procedure prescribed for undertaking such
enquiry is envisaged in Chapter VIII-A of 1961 Rules. The petitioners as
also respondents accept that this is a speedy remedy of summary nature
envisaged by the legislature. We find sub-section [2] of Section 101
important. It enables the Registrar to issue such certificate on his own
motion, after undertaking enquiry, if he is satisfied that concerned
society has failed to take action under the foregoing sub-section in
respect of any amount due as arrears. This power given to the
Registrar to recover amount of arrears due to a society itself shows the
desire with which this provision has been inserted in the statute book.
The language itself shows that the recovery contemplated is of arrears
due to society. The recovery is again by a speedy remedy by treating it
as arrears of land revenue.
14. Section 91 noted above enables the Cooperative Court to
decide disputes about the amounts claimed by the society as arrears.
Recovery of loan is also possible under Section 91. Section 94 deals
with procedure for settlement of disputes and power of Cooperative
Court. Section 94[4] states that - save as otherwise directed by the
State Government in any case or class of cases, every dispute shall be
decided in such summary manner as may be prescribed and as
expeditiously as possible. Sub-section [1-A] obliges the Cooperative
Court to decide dispute within 6 months. Sub-section [1] confers upon
Cooperative Court a power to summon and enforce attendance of
witness, to compel them to give evidence on oath, affirmation or
affidavit and to compel production of documents.
15. Division Bench of this Court in 1998 (2) LJ 628 (Madhav
Karmarkar .vs. State of Maharashtra and others), has held that the
Cooperative Courts are established to decide civil disputes and are part
and parcel of Civil Courts function. The procedure to be followed by
the Cooperative Court is envisaged in Chapter VIII of 1961 Rules. Rule
77E, prescribes procedure for hearing and decision of disputes. Rule
77F prescribes summary procedure for deciding disputes. Any dispute
for recovery of a debt upon promissory note, Hundi, Bill of exchange or
bond with interest accrued in such instrument, or under bye-law and
certain other types of recovery disputes, can be tried as summary
disputes. It is not necessary for this Court to go into details of the
procedure prescribed, but then briefly stating, the procedure is not
different than one prescribed under Order XXXVII of the Code of Civil
Procedure. Section 98 of 1960 Act provides the mode and manner in
which money can be recovered. Section 93[1] of 1960 Act enables the
President of the Cooperative Appellate Court to withdraw and transfer
any dispute from one Cooperative Court to any Cooperative Court.
Sub-section [2] enables a party to a dispute to apply to the Cooperative
Court, pointing out that a complicated question of law and fact is
required to be adjudicated. The Cooperative Court in that situation can
suspend the proceedings before it to enable such party to move the Civil
Court for getting it adjudicated. However, if such civil suit is not filed
within 2 months, the Cooperative Court has to continue with
adjudication before it.
16. Section 101 which opens with non obstante clause reads
"101[1]. Notwithstanding anything contained in Sections 91, 93
and 98, on an application made by". Thus this Section gives an
additional remedy to particular types of societies as enumerated
therein. Normal remedy envisaged is under Section 91. Dispute filed
by such society can be tried as a regular dispute as per Rule 77E or then
as a summary dispute under Rule 77F. Rule 77F contemplates and
identifies a particular type of disputes for summary disposal. Thus from
otherwise, large types of disputes which may be filed before the
Cooperative Court and disposed of under Rule 77E, a category is carved
out for expeditious disposal where the debtor like the present petitioner
has to seek a leave to defend, as per Rule 77F[3]. Section 101 carves
out a still narrower type of dispute or controversy. It speaks of arrears
due to certain societies and its recovery as land revenue. Therefore, it
proceeds on "arrears due" and only for that purpose the concerned
society has to furnish a statement of account in respect of the arrears.
The Registrar has to make an enquiry only in relation to those arrears.
It is, therefore, obvious that the legislature which thought it proper to
extend to a debtor/borrower an opportunity of claiming leave to defend
under Section 94[4] of the 1960 Act, read with Rule 77F, has itself
provided this remedy whee very narrow enquiry is required. The
legislature obviously has given importance to cooperative movement
and pubic interest which is evident from sub-section [2] of Section 101.
The enquiry contemplated by the registrar is, therefore, extremely
narrow. The learned Additional Government Pleader appearing on
behalf of the respondent State has pointed out that wherever necessary
legislature has expressly conferred power upon the authority to record
evidence. Section 94[1] and Section 144D are pointed out to be
instances of such use of power by the legislature. It is an admitted
position here that Chapter VIIIA of 1961 Rules or then Section 101 of
1960 Act, do not confer such power upon the Registrar while
conducting enquiry as necessary under Section 101.
17. Chapter VIIIA of 1961 Rules vide its Rule 86A shows
procedure for filing application for grant of certificate for recovery. The
form in which it is to be filed is also prescribed and documents which
must accompany are also stipulated. Form "U" in which application
under Section 101 is required to be filed shows the requirement of
disclosure of relevant facts by the concerned society; all necessary facts
which make the respondents before that authority either borrower or
guarantor; the procedure followed for sanctioning loan, securities
furnished, documents executed. The applicant then has to point out
failure to repay principal amount and interest upon it and
demand/demands made by the concerned society. A resolution of the
Board of Directors to file an application under Section 101 is, also
required to be pleaded. Details of loan transaction are also required to
be pointed out as part and parcel of this application. The application is
required to be supported by affidavit of responsible officer of a
cooperative society. Rule 86B contemplates scrutiny of such
application by the Registrar. Registrar cannot issue notice to other side,
if such application is incomplete in material respect. The other side is
expected to file written statement. Rule 86-C contemplates appearance
of party, either personally or through an Advocate and consequence of
failure to appear. Rule 86D enables both the parties to file documents.
It also enables the Registrar to call for such other documents from
opposite party by order in writing, if production of such document is
found essential. Request for such production from opponent cannot be
entertained before he files his written statement. Adverse inference
can be drawn if the document is not produced, after such direction.
The applicant Society has to prove contents of its application and also
show how the contentions raised in defence by other side are not
correct. After this exercise is undertaken by the applicant Society, the
opponent has been given opportunity to file reply in support of his
defence, and after such reply, Registrar has to hear oral arguments.
Then he has to deliver a reasoned judgment under Rule 86F. If he
issues certificate, it has to be in Form "V". Rule 86E specifically
stipulates that no cross examination of any of the parties is permitted.
18. Use of both words i.e., "arrears and due" together in Section
101 is itself manifestation of very limited inquiry felt necessary under
Section 101 before issuing the certificate. In plain English, both words
may be synonymous. New Oxford Advanced Learner's Dictionary gives
following meaning of these words. "Arrears" means a money which has
not been paid at right time. "Due" is stated to mean it must be paid
immediately, owed to somebody as it is their right or they have done
something to deserve it. In Chambers 20th Century Dictionary, word
"Arrear" means that which remains unpaid or undone. Word "Due"
means - owed, that ought to be paid to another. Blacks Law Dictionary
(9th Ed.) states "Arrears" means the state of being behind in payment of
a debt or the discharge of an obligation, an unpaid or overdue debt,
Word "Due" means immediately enforceable, owing or payable,
constituting a debt. Advanced Law Lexicon by P. Ramanatha Aiyyar 3rd.
Ed. also shows same meaning of word "Due". It also points out that said
word has different meanings and that meaning has to be put on it
which fits in with the context. Meaning of arrears shows that which
remains unpaid though due. T.P. Mukherjee's Law Lexicon states
"Arrears" means payment remaining unpaid at the due time. It also
explains "due" to mean amount which has matured and is in arrears.
AIR 1974 S.C. 1613 (Dhan Singh Ramkrishna Chaudhuri v.
Laxminarayan Ramkrishan) shows that arrears means money unpaid at
due time. Here, it is beyond doubt that both these words do not signify
same state of affairs i.e., non-payment. Word "Due" therefore is not
duplication of what is conveyed by word "arrears". It indicates that
amount which is found or determined to be outstanding and hence,
recoverable. Thus statement of accounts and other facts essential under
Rules to be disclosed by the concerned Society and to be looked into by
the Registrar reveal that said amount of arrears has to be "due" i.e.,
payable. This quasi-judicial exercise is made final by legislature and not
kept open under Section 91 only because of possibility of determination
of the limited aspect about arrears due without adjudication on any
disputed questions of facts. Such factual disputes can not and have not
been subjected to and fall out side the procedure under Section 101.
Thus, either the arrears are already declared due by some authority or
then can be ascertained on the basis of statement of accounts and other
material on record by Registrar. Moment it is demonstrated to Registrar
that a bonafide and genuine defense about said arrears is raised which
calls for a finding on disputed facts, need for cross examination surfaces
and Section 101 ceases to apply. Procedure laid down for enquiry under
Section 101 itself manifests said legislative intention. It can not be even
urged that legislature made that certificate final while denying the right
to dispute the facts cardinal for its determination and intended to
fasten the recovery as liability upon a person having bonafide and valid
defence. Section 101(2) again indicates this as it expects the Registrar
to be satisfied about the failure of concerned society to take steps under
its Sub-section (1) in respect of any amount "due as arrears".
19. Thus very small types of disputes in which only limited
question is of quantification of arrears due, is to be looked into by such
Registrar while undertaking enquiry under Section 101. Importance
therefore, is to statement of accounts. The enquiry undertaken is only
aimed at ascertaining whether amount disclosed in statement of
accounts as arrears, is correct and due. The limited opportunity of
defence is, therefore, extended to the borrower like petitioners. The
correctness of amount shown as arrears can be verified from the
accounts and from accounts of the society and from receipts produced
by other side. Denial of cross examination in this situation only shows
legislative intent that if a genuine and disputed question of facts is
found arising by the Registrar, he cannot proceed to resolve that
question. The concerned society, in such circumstances, has to take
recourse to filing of a dispute under Section 91, where such disputed
questions can be gone into. Hence, a bonafide defence being raised by
a borrower or other person against whom such certificate is sought,
cannot be resolved by the Registrar under this jurisdiction. If he finds
such dispute arising, he has to deny the recovery certificate by passing
appropriate judgment under Rule 86F.
In Ramchandra and another .vrs. Collector, Nagpur and others
(supra), the Division Bench of this Court has looked into the provisions
of Section 137. Section 137 [1] was earlier a provision pari materia
with provisions of Section 101. Section 137[1] enables the Registrar to
make such enquiry 'as he deems fit.' Section 101 was also containing
same phrase till 10.05.2006. On that date, the said words have been
replaced and Registrar, is obliged to conduct enquiry in such manner as
may be prescribed. Thereafter, Chapter VIII-A has been added to 1961
Rules, prescribing the mode of enquiry. Thus, said Division Bench
judgment is no longer relevant for interpreting the scheme of Section
101. Paragraph 26 of this Division Bench judgment on which the
petitioners have placed reliance, however, does not show any express
finding about need of extending an opportunity of cross examination.
Moreover, there is no provision either in 1960 Act or in 1961 Rules,
prohibiting such cross examination in Section 137 enquiry. This
judgment, therefore, is of no assistance in present situation.
20. We may now briefly refer to some other judgments which
may have bearing on the present adjudication.
In 2011 (2) LJ Soft (URC) 166 (Ravindra Waman Ingle .vs.
Sahakar Mitra), the learned Single Judge of this Court has held that
when dispute under Section 91 is already instituted before application
under Section 101 came to be filed, the Registrar has to take into
account said factor to find out the desirability of continuing Section 101
proceedings.
In 2010 (6) All MR 550 (Sundeep Polymers Pvt Ltd. .vrs.
State of Maharashtra), the Division Bench has found that when
Registrar issues certificate ex-parte, without following the procedure
prescribed in Chapter VIII-A of 1961 Rules, the certificate is
unsustainable.
In 2011 (2) Mh.L.J. 194 (Vithal Laxman Fatangade and
another .vrs. State of Maharashtra and others), the learned Single
Judge of this Court has found recovery certificate issued without
following due procedure and ensuring proper notice to opponents, as
bad.
21. We have not seen any repugnancy or inconsistency inter-se
between Section 91 and Section 101 of 1960 Act. Section 91 is a
general remedy and general law covering all disputes; while Section
101 governs extremely a small type or nature therefrom, where only
possible dispute is about the quantum of arrears demonstrated to be
due. If any other type of dispute requiring an adjudication arises, it is
not possible for the Registrar or his delegate functioning under Chapter
VIII-A to entertain such application and the application in that event
needs rejection. The concerned society has then to move the
Cooperative Court under Section 91 for said recovery. Language of
both the provisions is plain and unambiguous and both the provisions
can be construed harmoniously in this manner. Both the provisions
begin with non obstante clause and do not militate with each other, but
proceed to advance the legislative intention of enabling a society to
have a speedy remedy for recovery of arrears due as land revenue.
Therefore, only the legislature has envisaged very limited verification,
which even does not call for any cross examination of either of the
parties. The express bar of such cross examination under Rule 86E is
because of this very narrow scope of enquiry open to the Registrar
under Section 101 read with Chapter VIII-A of 1961 Rules. As already
held above, if the scope of enquiry is required to be enlarged, the
legislative intent will itself get frustrated. If the Registrar or his
delegate finds disputed questions of facts, genuinely arising in such
proceedings, and the same cannot be resolved without cross
examination, it is apparent that the application under Section 101 itself
cannot be entertained. In that event it has to be held that claim made
by the concerned applicant-society is not in respect of arrears due to it
as envisaged under Section 101 of the 1960 Act.
22. In matters before us, no arguments have been advanced
about the nature of defence raised and about need of cross
examination, if that defence is to be substantiated. It has not been
demonstrated as to why said defence cannot be viewed as genuine and
bonafide. The respective creditor societies have also not attempted to
demonstrate how the defence raised are not genuine or bonafide.
They have raised objection to the tenability of petitions, pointing out
that alternate remedy under Section 154 of the 1960 Act is available.
As we have found nothing wrong with the legislative design of not
permitting cross examination in Section 101 enquiry, the challenge to
the constitutionality of Rule 86E has to fall. Once said challenge falls,
the petitioners have other remedy prescribed by the statute, open to
them. Parties can demonstrate before said Forum the substance in or
frivolous nature of defence raised and how it is vital or irrelevant, in so
far as jurisdiction under Section 101 of 1960 Act is concerned. Hence,
leaving the petitioners to invoke that remedy for redressal of their
respective grievances, we dismiss both the petitions. The amount of Rs.
5,00,000/- deposited by the petitioners in Writ Petition No.92/2009
with interest accrued upon it, is allowed to be withdrawn by the
respondent no.5 Creditor - Cooperative Society.
Both the petitions are accordingly dismissed. Rule
discharged. However, in the facts and circumstances of the case, there
shall be no order as to costs.
JUDGE JUDGE
23. Shri Sirar, learned Counsel holding for Shri Jaiswal, learned
Counsel for the petitioners prays for stay of judgment pronounced today
for a period of eight weeks from today so as to enable the petitioners to
take further appropriate steps. Shri Ghare, learned Counsel appearing
on behalf of respondent nos. 5 and 6 is opposing the request.
24. We do not find any merit in the request being made by Shri
Sirar, learned Counsel. The same is, therefore, rejected.
JUDGE JUDGE
Rgd.
