Narsinha N.Naik & Anr } vs The Divisional Joint Registrar }
2012 Latest Caselaw 483 Bom

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY

                 WRIT PETITION NO.6498 OF 1998




                                                     
     1. Narsinha N.Naik & anr                  }
     2. Smt Nirmala N.Naik
        both residing at Flat no.4/99          }
        Prashanti Mangaldham Coop
        Hsg Scty Ltd,Chunabhatti               }




                                        
        S ion, Mumbai-400 022.
                         ig                    }
                                                               ...        Petitioners
                   vs
                       
     1. The Divisional Joint Registrar     }
     Coop Societies, Mumbai
     District (Appeals) Mumbai             }
      


     2. Jankalyan Sahakari Bank Limited
     140,Vivek Darshan, Sindhi Scty     }
   



     Opp Bhakti Bhavan Chembur,
     Mumbai-400 071                      }





     3. Mr. H.N.Kulkarni Sales Officer & Special
     Recovery Officer, Jankalyan Sahakari
     Bank Ltd, 140,Vivek Darshan, Sindhi }
     Scty, Opp Bhakti Bhavan, Mumbai-400 071.





     4. M/s Konkan Gas Enterprises             }
     (Through Partners Mr.Madhukar
     Sawant and Mrs Jayashree M.               }
     Sawant now residing at C/35,
     MIDC, Mirjole Ratnagiri-415 630           }




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     5. Mr.Chintamani Kedar                      }
     residing at Flat no.4/100,




                                                                                       
     PrashantiMangaldham Coop                    }
     Housing Society,Mumbai-400 022.




                                                        
                                                 }
     6. Mrs.Sugandha Pralhad Purandare
     residing at Plot No.461,Old
     Deshpandewadi Kumbharwada                    }




                                                       
     Chembur, Mumbai-400 071.
                                                 }
                                                      .. Respondents
     Mr.Mayur Khandeparkar i/b Lokhandwalla & Co for Petitioners
     Ms.P.S.Cardozo AGP for Respondent no.1




                                       
     Mr.Rahul Rao for Respondent nos. 2 and 3
     Ms.Sweta Prabhu for Respondent no.4
                       
                       ....

CORAM: B.P.DHARMADHIKARI, J DATED 12th December, 2012

13th December, 2012 & 14th December, 2012 ORAL JUDGMENT

1. By this Petition filed under Article 226 and 227 of Constitution of

India, petitioners who claim to be owners of Flat No.4/99 in complex of one Prashanti Mangaldham Co-operative Society Ltd. have questioned the

order passed by Divisional Joint Registrar, Co-operative Societies, Mumbai in Revision Application No. 36/1998 dismissing their revision and thereby confirming their proclamation for sale issued on 22 nd November, 1997. It is not in dispute that said proclamation is issued by the Dy. Registrar in

exercise of powers under Section 156 read with Section 101 of Maharashtra Co-operative Societies Act,1960 and Rule 107 of 1961 rules framed thereunder. (Said Act is referred to as 1960 Act hereinafter). This Court has on 21st December, 1998 granted ad-interim relief and stayed that

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proclamation. Said interim order continues to operate even today.

2. Case of Petitioner is he has been placed in possession of suit flat on

7th February, 1995 by Partner of respondent no.4. The said Partner namely Mr. Madhukar Sawant has entered into an agreement for sale with him on 20th December, 1994. The petitioner got knowledge on 2 nd January, 1995

about the recovery proceedings initiated by respondent no.2 against said Madhukar when their application for grant of membership was rejected by the above mentioned Prashanti Mangaldham Society. The application

under Section 154 filed by petitioners in the matter was ultimately allowed

by Divisional Joint Registrar and the order dated 23rd January, 1996 passed by Dy. Registrar rejecting petitioner's appeal was set aside. The case was

remanded back to said Dy. Registrar for further consideration of the matter. On 4th December, 1997 ultimately the petitioner no.1 was admitted as member and petitioner no.2 came to be admitted as co-member.

3. On 22nd November, 1997 respondent no.2 issued the impugned proclamation under Section 156 read with Rule 107 of above mentioned

rules and attached said flat. This action was in furtherance of Revenue Recovery Certificate dated 7th November, 1996 issued by Assistant Registrar, i.e. Competent Authority in Recovery Case No. 556/1994 under Section 101 of the Co-operative Societies Act.

4. For the purposes of present proceedings it can be stated that loan was applied for by respondent no.4 on 27th June, 1991 and on 22nd October,

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1991 respondent no.2 Society sanctioned the same. The undertaking to

create equitable mortgage was then executed by Madhukar Sawant in favour of respondent no.2 on 31st October, 1991. The above mentioned

Society namely Prashanti Society had on 12th July, 1991 issued necessary no objection to enable respondent no.4 to raise that loan and also to enable Madhukar Sawant to give necessary undertaking to respondent no.2.

13th December, 2012

5.

Today the petitioner has invited attention of Court to a Deed of Confirmation dated 14th September, 1995 which is duly registered with

Sub-Registrar on 7th October, 1995. He points out that agreement for sale dated 20th December, 1994 has also been registered as a part of this confirmation deed and accordingly the shares certificates were also then

transferred to petitioner. It is urged that thus title of petitioner to suit flat

from 20th December, 1994 or in alternative from date on which he was placed in possession or then in any case from 14 th September, 1995 was

never in dispute.

6. It is informed that two copies of these documents are already supplied to the Counsel representing respondent no.2 Bank and the same

are being produced in present petition with proper affidavit.

7. Leave granted.

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8. In the above background, learned counsel for the Petitioner has urged that the RRC taken out by the Respondent no.2 on 7.11.1996 against

Respondent no.4 or then subsequent proclamation issued by him under section 156 on 22.11.1995 is not binding and cannot be executed against the suit property. Emphasis is placed upon the language of section 156 to

urge that the said provisions permits Respondent no.2 to proceed against the property if the defaulter is the owner of that property. Submission is that as admittedly Respondent no.4 had ceased to be owner much prior to

the issuance of RRC or proclamation, the said proclamation dated

22.11.1997 is liable to be quashed and set aside.

9. Attention has also been invited to reply filed by Respondent no.2 society to demonstrate that the said Respondents never pleaded any mortgage by deposit of title deeds by Respondent no.4 in its favour.

Learned counsel has relied upon Judgment of the Hon'ble Apex Court in

(2006) 1 Supreme Court Cases 697 (R.JANAKIRAMAN VS. STATE REPRESENTED BY INSPECTOR OF POLICE CBI, SPE,MADRAS)

to demonstrate how a mortgage is required to be created and demonstrated.

10. Attention of the Court is also been invited to loan sanction document dated 22.10.1991 and the undertaking given by Respondent no. 4

on 31.10.1993 to deposit shares. Petitioner submit that on appreciation of these documents and consequential conclusion reached by the authorities that these documents enable the Respondent no.2 to proceed even against

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property belonging to present Petitioners is unsustainable. Lastly it is

contended that in these facts provisions of section 99 of Maharashtra Cooperative Societies Act cannot be applied and cannot save situation for

Respondent no.2.

11. Learned counsel for Petitioner has invited attention to earlier order

passed in Revision No.120/1996 between the parties on 11.2.1997 and submitted that all issues relevant for the present adjudication are already settled finally in that order and as that order was never challenged by

Respondent no.4, they cannot seek any deviation or variation in those

findings from the authorities in latter litigation. It is contended that the impugned order passed in revision on 3.11.1998 which overlooks this

binding effect of earlier adjudication is also liable to be quashed and set aside on that count. Learned counsel therefore prays for allowing the petition.

12. Mr.Rao has relied heavily upon application for loan submitted by Respondent no.4 on 27.6.1991. Loan sanction order dated 22.10.1991

particularly clauses 4,13 and clauses 26 therein are pressed into service to submit that Respondent no. 4 had unequivocally undertaken to create a mortgage on Suit property to safeguard the interest of Respondent no.2. The undertaking dated 31.10.1993 given by him and assurance of collateral

security is also read out with the submission that by the said document in fact, a collateral security has been given and charge as contemplated by section 100 of Transfer of Property Act has been created on the suit

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property. No objection Certificate issued in favour of Respondent no.4 by

its society for such purpose and a Letter dated 30.10.1991 issued by the Secretary of society of Respondent no.4 are also relied on to demonstrate

that even Share Certificate of Madhukar Sawant was agreed to be forwarded to Respondent no.2. Undertaking given by two partners of Respondent no. 4 to create a mortgage charge on flat No.4/99 on

31.10.1991 is also shown. It is contended that though technically requirement of law for creation of mortgage may not be strictly or fully satisfied here a charge as envisaged has already been created in favour of

Respondent no.2 society.

13. It is pointed out that the agreement between present Petitioner and,

is dated 2.12.1994 and objection to transfer was raised by present Respondent on on 29.12.1994 itself. Proceedings under section 101 were initiated by Respondent no.2 on 23.3.1994 and in those proceeding on

8.1.1995 present Petitioner had applied for intervention. That intervention

was rejected and on 7.11.1995 and then a RRC came to be issued under section 101 on 7.11.1996. On 8.11.1996, demand notice was then served

by Respondent no.2. Petitioner's appeal under section 23 for membership was rejected by DDR on 23.1.1996 and thereafter his revision in the matter was allowed on 11.2.1997.

14. Certain other dates on which interim orders were passed and RRC could not be executed are also pressed into service. It is pointed out that present Petitioner had filed a dispute under section 91 on other hand vide

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C.C. No.747/95 and it was dismissed on 30.8.1997. According to the

Petitioner the dispute was returned for want of jurisdiction. There is some dispute between the parties about fate of said section 91 dispute and

whether any Appeal before the Co-operative Appellate Court in the matter is pending or not ? However that dispute is not relevant for the present adjudication.

15. To substantiate his contention that a charge under section 100

of Transfer of Property stands created in favour of Respondent no.1. Mr.Rao has relied on 1985 CALCUTTA 512, 1969 AIR (SC) 1147

(ABDUL JABBAR SAHIB VS VENKATU SASTRI) : 1969 (1) SCC 573

(ABDUL JABBAR SAHIB VS VENTAKU SASTRI) and to urge that the Petitioner cannot be treated as bonafide purchaser without notice. Support is being taken from the Judgment of the Hon'ble Apex Court

(ABDUL SHUKOOR reported in AIR 1963 SUPREME COURT 1150.

SAHEB VS ARJI PAPA RAO &ORS)

16. Learned Counsel submits that the Petitioner had knowledge

that loan liability was incurred by Madhukar Savant and Respondent no 4. Transfer was opposed by these Respondents and inspite of that Petitioner did not make any inquiry with society namely Prashanti

Mangaldham Cooperative Housing Society. Contention is thus that conduct of the Petitioner is full of malafides. Lastly, Judgment cited by the Petitioner is sought to be distinguished by contending that the

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view expressed therein turns only on the facts and it cannot be

treated as binding precedent. At any rate, Mr.Rao submitted that Respondent no.2 has to recover amount of Rs.5,38,549.95 from

Respondent no.4. He submitted that considering the appreciation in the market value of the suit flat, the Petitioner should settle the controversy by paying this amount.

17. In reply argument, the Petitioner has submitted that when

claim of membership was rejected on 2.1.1995 Petitioner got knowledge of the liability of Respondent no. 4 and Madhukar Sawant

and till then there was no reason for him to make any inquiry.

Without prejudice it is submitted that till this date Respondent no.2 Society has not urged that purchase by present Petitioner was not bonafide or is fradulent one. The judgment in AIR 1963 SUPREME

COURT 1150 (ABDUL SHUKOOR SAHEB VS ARJI PAPA RAO &

ORS) supra cited by Respondents is sought to be explained with contention that in fact it supports the plea of the Petitioner.

18. Taking up the contention of section 100 of the Transfer of Property Act, learned counsel submitted that this plea that a charge should have been treated as created and this Court should accept

that there is such charge on suit flat has been raised for the first time. It is urged that such a contention needed to be raised when Revision Application No.120/1996 was decided on 11.2.1997 and as

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that issue has not been raised at that juncture, arguments based

upon it cannot be entertained by this Court for the first time. It is submitted that the charge under section 100 of Transfer of Property

Act is not on property but on its proceeds. By placing reliance on AIR 1925 Rangoon 58 (MA HLI & ANR VS MOKSODALI) it is submitted that the transaction or a document which fails even

technically as a mortgage cannot be viewed as a charge thereby.

19. Counsel appearing for Respondent no.4 has attempted to demonstrate that Respondent no.4 has honestly tried to clear most of

the dues of Respondent no.2.

20. The question for consideration by this Court is about the scope of the provisions of section 156 of the Maharashtra Cooperative

Societies Act,1960 and then section 99 thereof. Respondent nos. 2

society could have reached the suit flat because of these provisions only.

21. The first proceeding under section 101 of 1960 Act were initiated by Respondent no.2 against Respondent no.4 on 21.3.1994. Therein Respondent no.4 had filed a reply and denied creation of

any mortgage. Even perusal of reply of Respondent no.2 here reveals a statement that flat owner Savant had agreed to mortgage the suit flat. Respondent no.2 has not pointed out any where the plea that

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transfer of suit flat by Respondent no.4 in favour of present

petitioner is fradulent and therefore liable to be ignored.

22. A perusal of the earlier order delivered by Divisional Joint Registrar in Revision Application No.120 of 1996 on 11.2.1997 reveals that the said revision was filed by present Petitioner against

Prashanti Mangaldham Co-operative housing society, present Respondent no.2 and Dy.Registrar. He had challenged the order

dated 23.1.1996 by which his appeal against rejection of membership of Prashanti Mangaldham Society preferred under

section 23 of the Maharashtra Cooperative Societies Act was

dismissed. Its perusal shows that the letter dated 22.10.1991 (wrongly mentioned as 22.1.1991) has been appreciated by that authority with various clauses therein the authority noted that

present Respondent no. 4 had only agreed to mortgage the suit flat.

It has then referred to the Agreement of hypothecation and found that the said document did not clearly reveal that Flat No.4/99 was mortgaged to Respondent no.2 bank. It also observed that the Deed

of Hypothecation was not registered.

The authority therefore, has proceeded to record that

Respondent no.2 bank had not created any charge on flat No.4/99 in Prashanti Mangaldham Co-operative society and it fails to establish any claim against the said flat. It therefore concluded that

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Respondent no.2 had no legal right to prohibit transfer of flat No.

4/99 in favour of present Petitioner.

23. In the light of these findings when provisions of section 99 of the Maharashtra Cooperative Societies Act are seen, the said provision invalidates any private transfer of property made after

issuance of certificate. Such transfer statutorily is declared void against society like Respondent no.2. The said provisions deals with

transfer or encumberance or charge made or created after issue of certificate by Registrar, Civil Court, or by Assistant Registrar under

section 98 of the Act. A perusal of section 98 reveals that it provides

a procedure for recovery of money. It deals with orders passed by the Official Assignee to derecognized society under sub section 3 of section 21 (a), the order passed by the Registrar or a person

authorised by him under section 88 or by any Registrar of Co-

operative society under section 95 or then by co-operative Court under section 96. Similarly execution of every order passed in appeal against orders in these proceedings and every order passed by

the Liquidator under section 105, and every order passed by the State Government in Appeal against an order under section 105 and every order passed in Revision under section 154 can be carried out

in the manner prescribed in this section. Certificate issued by said authority is deemed to be a decree of a Civil Court and is to be executed in same manner as if it is a decree of that Court. It also, in

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the alternative, permits execution and recovery as arrears of land

revenue. What is important to note is that section 98 does not cover certificate issued under section 101 of the Co-operative Societies Act.

24. Section 101 of the Co-operative societies Act deals with recovery of arrears due to certain societies as arrears of land

revenue. Its opening part shows that it begins with non-obstente clause and therefore overrides provisions contained in sections 91,

93 and 98. The Scope of jurisdiction available to the authority exercising powers under section 101 has been considered by the

Division Bench of this Court and the said Judgment is reported in

2012 MH.L.J. Page 347 (M/s TOP TEN & ANR vs STATE OF MAHARASHTRA) this Court there has upheld the validity of Rule 86 E (I) which prohibits Cross-examination of any of the parties in

those proceedings. It has been held that scope of those proceedings is

extremely narrow and therefore disputed questions cannot be resolved by the authority under section 101.

25. When disputed questions cannot be looked into under section 101 of the said Act, is apparent that when certificate issued under the said provision is put to execution under section 156, the said

dispute also cannot be resolved by the authority which has been entrusted with that job. Thus, the Registrar while exercising powers under section 156 (1) (e) when attempting to recover sums

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mentioned in section 101, certificate cannot resolve the controversies

which are outside the purview of section101.

26. Here in the light of the arguments advanced and documents produced question whether the said flat continues to vest with the respondent no.4 or has been transferred by him to the Petitioner

arises for determination. The said document is in the nature of agreement dated 2.12.1994 and it refers to the Petitioner as

purchaser. The Petitioner has been put in possession on 7.2.1995 and ultimately document is registered as conveyance on 14.9.1995 In

fact, vesting of the title in the Petitioner was never seriously in

dispute even before this Court. Effort of the Petitioner was to show that as property vested in him, action under section 156 against it is not legally permissible. Effort of Respondent no.2 bank is to

demonstrate that transfer by Respondent no.4 Madhukar Sawant in

favour of the petitioner needs to be ignored because of mandate of section 99 of M.C.S.Act.

27. Today Advocate Mr.Rao has invited attention to the Judgment reported in AIR 1975 SUPREME COURT 1470, 1989 (RAMESH JIMMATLAL SHAH VS HARSUKH JADHAVJI JOSHI) (2) BCR 460

and 1990 Volume 3 BCR 389 (USHA ARVIND DONGRE VS SURESH RAGHUNATH KOTWAL) in an attempt to urge that the date of vesting property in the Petitioner can at the most be the date

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on which the Petitioner was enrolled as a member i.e. on 4.12.1997.

It is apparent that even this issue could not have been looked into by Respondent no. 2 in exercise of jurisdiction of section 156 of the

Maharashtra Cooperative Societies Act.

28. A perusal of section 99 read with section 98 above show that

the said section 99 is not available in present proceedings where certificate sought to be executed is not issued under any of the

provisions stipulated in section 98 but has been issued under section

101. As such transfer by Respondent no.4 or Madhukar Sawant in

favour of the Petitioner cannot be presumed to be void or

inoperative for the purposes of the Maharashtra Cooperative Societies Act. Or then its section 156.

29. Various judgments cited by respective counsel to demonstrate

when a document can or cannot be be construed as a mortgage or then a statutory charge can be said to have been created are not relevant in the present matter as Respondent no.2 in exercise of

jurisdiction under section 156 of the Maharashtra Cooperative Societies Act could not have embarked upon that inquiry.

30. It is therefore, apparent that order of attachment dated 22.11.1997 issued by Respondent no.2 against the suit flat is unsustainable. Same is accordingly quashed and set aside.

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31. Needless to mention that therefore order passed by Revisional

Authority on 3.11.1998 is also quashed and set aside.

32. Rule made absolute. Accordingly, there will be no order as to costs.

                        ig                  (B.P.Dharmadhikari, J)