Bombay High Court
Chhatrapati Sambhaji Maharaj ... vs Assistant Registrar Of ... on 21 October, 2011
Bench: A.S. Oka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELATE JURISDICTION
WRIT PETITION NO. 1883 OF 2011
Chhatrapati Sambhaji Maharaj Sahakari
Patsanstha Maryadit. .. Petitioner
Vs
Assistant Registrar of Co-operative
Societies, Satara, and Another. .. Respondents
--
Shri A.J. Kenjale for the Petitioner.
Mrs. P.S. Cardozo, AGP for the Respondents.
--
CORAM ; A.S. OKA, J
SUBMISSIONS WERE HEARD ON : 11TH OCTOBER, 2011
JUDGMENT PRONOUNCED ON : 21ST OCTOBER, 2011
JUDGMENT :
. Heard learned counsel appearing for the Petitioner and the
learned AGP for the Respondents.
2. On 22nd August, 2011, the notice for final disposal of this
Petition was issued.
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3. The controversy involved in this Petition is very narrow.
The Petitioner is a Credit Society duly registered under the Maharashtra
Co-operative Societies Act, 1960 ( hereinafter referred to as "the said
Act"). A Recovery Certificate under Section 101 of the said Act was
obtained by the Petitioner against a borrower. The property of the
defaulter was attached in execution of the Recovery Certificate. On
26th October, 2009, the first Respondent-the Assistant Registrar of the
Co-operative Societies passed an order under Section 100 of the said
Act read with Rule 85(5) of the Maharashtra Co-operative Societies
Rules, 1961 ( hereinafter referred to as "the said Rules") by which the
first Respondent transferred the attached property to the Petitioner.
4. By the impugned order dated 9th November, 2011, the
Collector, Satara passed an order in purported exercise of powers under
Section 100 of the said Act by which he directed that the Assistant
Registrar of the Co-operative Societies shall execute a registered
document of transfer of the said property to the Petitioner and shall
recover stamp duty in accordance with Article 25 of the Bombay Stamps
Act, 1958 ( hereinafter referred to as "the said Act of 1958") from the
Petitioner. The Collector directed that the stamp duty under Article 25
of the said Act of 1958 will be payable on the market value of the
property or the amount due and payable under the Recovery Certificate,
whichever is more. The challenge in this Petition is to this order.
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5. The learned counsel appearing for the Petitioner relied
upon a decision of this Court in the case of Balkisan Manekchand Zaver
& Others v. Jalgaon People's Co-operative Bank Ltd., through Manager
& Others, (1998(3) Bom.C.R. 70). He submitted that the transfer of
the property in accordance with Section 100 of the said Act does not
amount to a sale or conveyance and, therefore, Article 25 of Schedule I
of the said Act of 1958 is not attracted. He submitted that on the
transfer under Section 100 of the said Act, the Petitioner will hold the
property only as a Trustee. He invited attention of the Court to
Section 100 of the said Act and the Rule 85 of the said Rules. He
submitted that in any case, direction to pay stamp duty cannot be issued
in exercise of power under Section 100 of the said Act.
6. The learned AGP submitted that the effect of order under
Section 100(1) of the said Act is that the property stands transferred to
the Petitioner and in effect, there is a sale of the property in favour of
the Petitioner. The learned AGP submitted that no interference is
called for.
7. I have considered the submissions. Section 100 of the said
Act reads thus:-
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"100. Transfer of property which cannot be sold.-
(1) When in any execution of an order sought to
be executed under section 98 [or in the
recovery of any amount under section 101 or
section 137], any property cannot be sold for
want of buyers, if such property is in
occupancy of the defaulter, or of some person
in his behalf, or of some person claiming under
a title created by the defaulter subsequently to
the issue of the certificate of the Registrar;
[Court], Liquidator or the Assistant Registrar,
under clause (a) or (b) of section 98, [or
under section 191 or 137], the Court or the
Collector or the Registrar as the case may be,
may, notwithstanding anything contained in
any law for the time being in force, direct that
the said property or any portion thereof, shall
be transferred to the society which has applied
for the execution of the said order, in the
manner prescribed.
(2) Where property is transferred to the society
under the foregoing sub-section or where
property is sold under section 98 [101 or 137],
the Court Collector, or the Registrar, as the
case may be, may, in accordance with the
rules, place the society or the purchaser, as the
case may be, in possession of the property
transferred or sold.
(3) Subject to such rules as may be made in this
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. Subject to the general or
special orders of the State Government, the
Collector or the Registrar may delegate to an
officer, not below the rank of an Assistant or
the Deputy Collector or the Assistant Registrar,
powers exercisable by the Collector or the
Registrar under this section."
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8. The transfer of the property contemplates under Sub-
section 1 of Section 100 of the said Act can be made when a property
cannot be sold for want of buyers in execution of the Recover Certificate
under Section 101 of the said Act. Sub-section (1) of Section 100 of
the said Act provides that the Court or the Collector or the Registrar, as
the case may be, is empowered to direct that such property or any
portion thereof shall be transferred to the Society which had applied for
the execution of the said order, in the manner prescribed. Sub-section
(2) of Section 100 thereof provides that where such property is
transferred to the Society, the Collector or the Registrar, as the case may
be, shall place the Society in possession of the property transferred or
sold. Sub-section (1) of Section 100 provides that the transfer has to
be effected in the manner prescribed. Therefore, the Rule 85 of the said
Rules becomes relevant inasmuch as the transfer has to be effected in
terms of the said Rule. Sub-rule 13 of the Rule 85 of the said Rules
provides that after the transfer, the Society shall use its best endeavour
to sell the property as soon as the practicable to the best advantage of
the society as well as that of the defaulter. It also provides that the
first option shall be given to the defaulter. Sub-rule 14 of the said
Rules provides that until the property is sold, the Society to which the
property is transferred shall use its best endeavour to lease it or to make
any other use in such a manner that it derives the largest possible
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income from the property. Sub-rule 15 is important which provides
that when the Society realizes all its dues under the order sought to be
executed from the proceeds of management of the property and if the
property is unsold, the property shall be restored to the defaulter. Thus,
a transfer under Sub-section (1) of Section 100 of the said Act is in that
sense not an absolute transfer or sale of the property in favour of the
Society. Neither Section 100 of the said Act nor Rule 85 of the said
Rules uses the word "sale". The object of transfer is that the property
which cannot be sold in execution could be used by the Society for
recovery of dues. Therefore, the Society is under an obligation to make
an endeavour to sell the property and to realize the dues. Till the
property is sold, it is the obligation of the Society to either lease the
property or to use the same in such a manner that it derives profit. If
the income derived from the property is sufficient to clear the dues of
the Society, after the dues are cleared if the property remains unsold,
the Society is under an obligation to restore the same to the defaulter.
The language used in Sub-rule 13 of Rule 85 of the said Rules that an
endeavour should be made to sell the property to the best advantage of
the Society as well as that of the defaulter shows that a property which
is transferred under Sub-section (1) of Section 100 of the said Act is
held by the Society as a Trustee. In this behalf, it will be necessary to
make a reference to Paragraph 7 of the decision of this Court in the case
of Balkisan Manekchand Zaver (supra). The relevant part of Paragraph
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7 of the said decision reads thus:-
"7. It is clear that on a combine reading of section
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 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 property, if unsold,
shall be restored to the defaulter."
( underline supplied)
9. By the impugned order, the Collector has directed that
Article 25 of the Schedule I of the said Act of 1958 which provides for
stamp duty payable on "conveyance" is applicable to the aforesaid
transfer. The word "Conveyance" has been defined under Clause (g) of
Section 2 of the said Act of 1958 which reads thus:-
"2(g) "Conveyance" includes, -
(i) a conveyance on sale,
(ii) every instrument,
(iii) every decree or final order of any Civil Court,
(iv) every order made by the High Court under
section 394 of the Companies Act, 1956, [in
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respect of amalgamation or reconstruction of
companies; and every order made by the
Reserve Bank of India under section 44A of
the Banking Regulation Act, 1949 in respect of
amalgamation or reconstruction of Banking
Companies;]
by which property, whether movable or immovable,
or any estate or interest in any property is
transferred to, or vested in, any other person, inter
vivos, and which is not otherwise specifically
provided for by Schedule I;
Explanation. - An instrument whereby a co-
owner of any property transfers his interest to
another co-owner of the property and which is not
an instrument of partition, shall, for the purposes of
this clause, be deemed to be an instrument by which
property is transferred inter vivos;]"
10. It cannot be said that by the transfer under Section 100(1)
of the said Act, the property stands absolutely transferred to the Society
or the estate in the property is vested in the Society. The said transfer
is not a sale. The transfer under the provision of Section 100(1) of the
said Act is for realisation of the dues payable to the Society. Therefore,
such a transfer will not be a conveyance under Section 2(g) of the said
Act of 1958.
11. Hence, the impugned order holding that Article 25 of the
Schedule I of the said Act of 1958 is applicable will have to be quashed
and set aside. However, it is made clear that the issue whether stamp
duty will be payable under any other Article of the said Act of 1958 is
not decided by this Court and the same has been kept open.
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12. Subject to what is observed above, the Rule is made
absolute in terms of prayer clause (a).
13. On the basis of the order under Sub-Section (1) of Section
100 of the said Act, further steps shall be taken by the concerned
Authority.
( A.S. OKA, J )
