Chandrakant Shankerlal Shah Thro ... vs Liquidator Anand Peoples ...
2023 Latest Caselaw 5994 Guj

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               IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

                R/SPECIAL CIVIL APPLICATION NO. 18361 of 2018

                                    With
                R/SPECIAL CIVIL APPLICATION NO. 18367 of 2018
                                    With
                R/SPECIAL CIVIL APPLICATION NO. 18364 of 2018

FOR APPROVAL AND SIGNATURE:


HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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1 Whether Reporters of Local Papers may be allowed to see the judgment ?

2 To be referred to the Reporter or not ?

3 Whether their Lordships wish to see the fair copy of the judgment ?

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

========================================================== CHANDRAKANT SHANKERLAL SHAH THRO POA KANTIBHAI P THAKKAR Versus LIQUIDATOR ANAND PEOPLES CO-OPERATIVE BANK LTD & 5 other(s) ========================================================== Appearance:

MR MASOOM K SHAH(6516) for the Petitioner(s) No. 1 MS JEENAL ACHARYA, AGP for the Respondent(s) No. 4,5 MR ARVIND R YADAV WITH MR MIT S THAKKAR(11223) for the

MR P B PRAJAPATI(11275) for the Respondent(s) No. 3 MR. MH SHEKHAWAT(7194) for the Respondent(s) No. 3

MR AMIT R JOSHI for the Respondent(s) No. 3 & 4( SCA NO.18364/2018) ==========================================================

CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA

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Date : 18/08/2023

CAV JUDGMENT

1.Heard learned advocate Mr. Masoom K. Shah for

the petitioner, learned advocate Mr. Arvind

R. Yadav for Mr. Mit S. Thakkar for

respondent no.1, learned advocate Mr. Amit R.

Joshi for respondent nos. 3 and 4 in Special

Civil Application No.18364/2018 and learned

Assistant Government Pleader Ms. Jeenal

Acharya for the respondent State.

2.Rule returnable forthwith. Learned advocate

Mr. Arvind R. Yadav for Mr. Mit S. Thakkar,

learned advocate Mr. Amit R. Joshi and

learned Assistant Government Pleader Ms.

Jeenal Acharya waives service of notice of

rule for the respective respondents.

Considering the issue arising in a narrow

compass with the consent of the learned

advocates, these petitions are taken up for

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hearing.

3.As the controversy arising in these petitions

are similar with regard to the challenge to

the Judgment and Order dated 12.09.2018

passed by the Gujarat State Cooperative

Tribunal, Ahmedabad (For short "the

Tribunal") in Appeal No.21 of 2013 as well as

order dated 11.11.2009 passed by the

Registrar Cooperative Societies, Gandhinagar

and orders dated 02.11.2015 and 19.11.2015

passed by the State Government for extending

the term of liquidation of Anand Peoples Co-

Operative Bank Ltd. (In Liquidation), the

same were heard analogously and are disposed

of by this common judgment.

4.Special Civil Application No. 18361/2018 is

treated as a lead case and the facts taken

from the said matter are as under:

4.1) The petitioner was guarantor of the

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Anand Peoples Co-Operative bank Ltd. (In

Liquidation) (For short "the bank").

4.2) On 22.02.2001, the respondent no.1

bank sanctioned the hypothecation loan in

favour of respondent no.2 for an amount of

Rs. 40 Lakh. Respondent no.3 and the

petitioner stood as guarantors for the said

loan.

4.3) As respondent no.2 failed to pay the

outstanding dues of the bank, Lavad Case

No.1558 of 2005 was filed by the liquidator

of the bank before the Board of Nominees

under the provisions of Gujarat Co-operative

Societies Act, 1961 (For short, "the Act,

1961") for recovery of Rs.42,36,920.86.

4.4) By Judgment and Order dated

27.04.2010, the Board of Nominees, Anand,

passed the decree against respondent nos. 2,

3 and the petitioner to make payment of

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outstanding dues of the bank.

4.5) The petitioner preferred an appeal

under section 102 of the Act, 1961 on

11.09.2012 before the Tribunal challenging

the order passed by the Board of Nominees

with an application to condone the delay.

4.6) The Tribunal by order dated

29.01.2013 refused to condone the delay in

Misc. Application (Delay) No. 26 of 2012.

4.7) The petitioner therefore preferred

Special Civil Application No.8307 of 2013

before this Court challenging the said order.

This Court, by order dated 14.10.2013 allowed

the said petition by condoning the delay in

preferring the appeal against the final

judgment and order passed by the Board of

Nominees, Anand in Lavad Case No.1558 of

2005.

4.8) The Tribunal by judgment and order

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dated 12.09.2018 rejected the appeal of the

petitioner upholding the Judgment and Decree

passed by the Board of Nominees.

4.9) It is the case of the petitioner

that on 22.10.2005 the final order of

liquidation qua the bank was passed under

section 107 of the Act, 1961 by the

Registrar, Cooperative Societies and

liquidator was appointed for three years.

Thereafter by order dated 04.09.2008

proceedings for the purpose of winding up was

extended for a further period of one year

from 27.10.2008 to 26.10.2009 which was

further extended for one year by order dated

11.11.2009 and 19.09.2011 and thereafter

extended by order passed in October 2012 and

subsequently, it was extended from time to

time every year upto 26.10.2017 by passing

orders under section 114 of the Act, 1961.

The State Government thereafter extended the

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liquidation period from 27.10.2017 to

26.10.2018 by order dated 18.10.2017

exercising powers under section 161 of the

Act, 1961. The petitioners therefore

contended that there is illegal extension of

liquidation process initiated in the year

2005 with regard to the winding up process

of the bank and it has continued till the

date of filing of the petition.

5.Learned advocate Mr. Masoom Shah for the

petitioner submitted that the respondent

authorities could not have exercised powers

under sections 114 and 161 of the Act, 1961

to extend the time to complete the

liquidation process contrary to the

provisions of the Act, 1961. It was submitted

that in view of illegal extension of

liquidation process, the respondent bank

cannot continue the recovery process against

the petitioners as respondent no.1 liquidator

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of the bank is not empowered to continue the

winding up process in view of such orders of

extension passed by the respondent

authorities being contrary to law.

5.1) However, learned advocate Mr. Shah

fairly submitted that the issue now is

concluded by the decision of Hon'ble Supreme

court in case of Goa State Cooperative Bank

Limited v. Krishna Nath A. (Dead) through

legal representatives and others reported in

(2019) 20 Supreme Court Cases 38 wherein

while dealing with pari materia provisions of

Maharashtra Cooperative Societies Act, 1960

the Hon'ble Supreme Court has held that

recovery rights of the bank are not defeated

under the provisions of the said Act by

virtue of liquidation/winding up provisions

prescribed in sections 109 and 110 of the

Act.

5.2) In view of such submission, the main

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grievance of the petitioners would not

survive as the Hon'ble Supreme Court after

detailed analysis and discussion has held

that recovery right can be pursued by the

Registrar of Cooperative Societies or

liquidator of the bank as under:

"(15.) The Society and the liquidator had filed recovery cases against all the defaulting members of the society to whom loans were advanced. The bank in total advanced Rs.250 lakhs to the society and on taking charge by the Bank as liquidator of the said society, the bank had outstanding of Rs.241 lakhs as principal amount and Rs.233 lakhs towards interest. The arrears due to the efforts of the liquidator bank were reduced to Rs.37 lakhs towards principal and Rs.154 lakhs towards interest. It is pertinent to mention that the bank has further pointed out that out of the cases filed against the defaulting members, in 42 cases appeals had been filed before the Cooperative Tribunal wherein stay orders were granted. It is also pointed out that 80 cases were pending with the Zonal Recovery Offices, i.e., Assistant Registrar, Cooperative Society s Sales and Recovery Officer under section 156 of the Act. Therefore, the termination of the winding up under section 109 of the Act, cannot be

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strictly applied so as to defeat the very purpose of the legislative intent of recovery of amount.

(16.) It is also submitted that by lapse of time under section 109(1) of the Act, recovery proceedings cannot come to an end. It is further pointed out that the recovery of public money from defaulting members is absolutely necessary failing which huge financial loss would be caused to the appellant bank. The interim stay granted by the tribunal cannot come to the prejudice of the bank. Thus, the provisions of Section 109 have to be construed in such a fashion so as to enable continuance of the proceedings for recovery. As the interim order of the court cannot work to the prejudice of any of the parties, the provision of section 109 of the Act should be construed in a manner that it is not used to interdict recovery from the defaulting members.

(17.) It is apparent from the facts of the instant case that the winding up of the Society has been ordered and liquidator has been appointed as the Society has utterly failed to achieve its avowed objectives in disbursement of loans to proper persons and in its recovery. No doubt about it that the liquidation of the Society has come to an end after a particular period of time as fixed under section 109. However, on lapse of time as fixed under sub

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section (1) of section 109 of the Act, proceedings have to be terminated by the Registrar on receipt of final report from the liquidator as ordered under section 109(2). However, at the same time, the Registrar has power to extend the period of 6 years fixed under section 109(1), not exceeding one year at a time and four years in the aggregate, and maximum for 10 years. In case time is not extended, the winding up comes to an end on the expiry of 6 years or at the end of the extended period. The total period can be 10 years. The second proviso to section 109 makes it clear that if the Registrar comes to a conclusion that the work of liquidation could not be completed by the liquidator due to the reasons beyond his control, he shall call upon the liquidator to submit his report. After getting the report, if the Registrar is satisfied that the realisation of assets, properties, sale of properties still remains to be realised, he shall direct the liquidator to complete the entire work and carry out the activities only for the purposes of winding up and submit his report within such period not exceeding one year reckoned from the date of receipt of the report from the liquidator.

(18.) Section 109(2) of the Act contains a non obstante clause which empowers the Registrar to terminate the liquidation proceedings on receipt of the final report from the

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liquidator. The liquidator shall state in the report that the liquidation proceedings of the society have been closed, and how the winding up has been conducted and the property and the claims of the society have been disposed of and shall include a statement showing a summary of the account of the winding up including the cost of liquidation, the amount, if any, standing to the credit of the Society in liquidation, after paying off its liabilities including the share or interest of members and suggest how the surplus should be utilised.

(19.) Section 110 of the Act deals with disposal of surplus assets. They should either be divided by the Registrar, with the previous sanction of the State Government, amongst its members, if they specify that such a surplus shall be utilised for the particular purpose or may be utilised for both the purposes.

(20.) It is apparent that on the termination of the liquidation proceedings, liability of the members for the debts taken by them does not come to an end. There is no such provision in the Act providing once winding up period is over, the liability of the members for loans obtained by them which is in their hands, and for which recovery proceedings are pending shall come

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to an end. No automatic termination of recovery proceedings against the members is contemplated. On the other hand, on completion of the period fixed to liquidate the society, final report has to be submitted as to the amount standing to the credit of the society in liquidation after paying off its liabilities including the share or interest of members. Thus, even in the case of liquidation the accountability remains towards surplus and liabilities do not come to an end. Even if the period fixed for liquidation of society is over, that does not terminate the proceedings for recovery which have been initiated and appeals are pending.

(21.) It is a settled law that when there is stay of proceedings by court, no person can be made to suffer for no fault on his part and a person who has liability but for the interim stay, cannot be permitted to reap the advantages on the basis of interim orders of the court. In Amarjeet Singh v. Devi Ratan, (2010) 1 SCC 417, it was held that no person can suffer from the act of court and unfair advantage gained by a party of interim order must be neutralised. The Court should never permit a litigant to perpetuate illegality by abusing the legal process. It is the bounden duty of the court to ensure that dishonesty and any attempt to abuse the legal process must be

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effectively curbed and the court must ensure that there is no wrongful, unauthorised or unjust gain for anyone by the abuse of process of the court. No one should be allowed to use the judicial process for earning undeserved gains or unjust profits. The object and true meaning of the concept of restitution cannot be achieved unless the courts adopt a pragmatic approach in dealing with the cases. The Court observed:

"18. In Ram Krishna Verma v. State of U.P. (1992) 2 SCC 620, this Court examined the similar issue while placing reliance upon its earlier judgment in Grindlays Bank Ltd. v. ITO, (1980) 2 SCC 191 and held that no person can suffer from the act of the court and in case an interim order has been passed and the petitioner takes advantage thereof and ultimately the petition is found to be without any merit and is dismissed, the interest of justice requires that any undeserved or unfair advantage gained by a party invoking the jurisdiction of the court must be neutralised."

(emphasis supplied)

(22.) The principle of restitution enjoins a duty upon the courts to do complete justice to the party at the time of final decision, and to do away with the effect of interim

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order in the fact situation of the case. In South Eastern Coalfields Ltd. v. State of M.P., (2003) 8 SCC 648, it was observed that no party can take advantage of litigation, it has to disgorge the advantage gained due to delay, in case lis is lost.

(23.) The concept of restitution is a common law principle and it is a remedy against unjust enrichment or unjust benefit. The court cannot be used as a tool by a litigant to perpetuate illegality. A person who is on the right side of the law, should not have a feeling that in case he is dragged in litigation, and wins, he would turn out to be a loser and wrong doer as a real gainer, after 20 or 30 years. Thus, the members who have obtained stay in appeal or on recovery proceedings or the case is pending, cannot take advantage of the fact that the period fixed for Liquidator under the Act is over.

(24.) Once a report has been submitted, the Registrar has to take action in terms of the report and in such circumstances when the proceedings for recovery are pending against the members and the Society has taken loan from the banks for its member, the actual money has to go to the creditor i.e., to the bank who is going to be benefited by recovery of public money in the hands of members. In such cases it would be appropriate for the

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Registrar to send notice of the proceedings to a person who is to be benefited from the recovery. In the instant case, the bank itself is a prime lender cum liquidator. The proceedings cannot come to the end. Thus, in our considered opinion, it is open to the bank to continue with the recovery proceedings and make recoveries from the defaulting members. Merely on the liquidation of Society, or the factum that the period fixed for liquidation is over, liability of the members for the loans cannot be said to have been wiped off. The disbursement of loan in an arbitrary manner and failure to recover was the very fulcrum on the basis of which winding up of the Society was ordered.

(25.) The decision of the High Court to the contrary, deserves to be and is hereby set aside. Though the Liquidator cannot continue once the proceedings are over. Notice in such cases should be issued by the Registrar to the creditors and to persons for whose benefit recovery is to be made, to continue the pending proceedings in the instrumentality of court/ tribunals/ recovery officers etc. We hold that appellant Bank can continue the pending proceedings. The appeal is allowed to the aforesaid extent."

5.3) Learned advocate Mr. Shah further

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submitted that the respondent bank could not

have initiated the proceedings under the

provisions of the Act, 1961 as the respondent

bank was required to initiate the proceedings

under the provisions of section 13 of the

Securitisation and Reconstruction of

Financial Assets and Enforcement of Security

Interest Act, 2002 (For short "the SARFAESI

Act") or under the provisions of Recovery of

Debts and Bankruptcy Act, 1993 in view of the

decision of the Apex Court in case of

Pandurang Ganpati Chaugule v. Vishwasrao

Patil Murgud Sahakari Bank Limited reported

in (2020) 9 Supreme Court Cases 215.

5.4) It was therefore, submitted that the

respondent bank is required to comply with

the provisions of the Banking Regulation Act,

1949 in view of definition of 'bank' as

provided in section 2(1)(c) of the SARFAESI

Act which has been amended by the parliament

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to include Multi-State Cooperative bank by

inserting sub-clause(iv-a) which would also

cover cooperative bank registered under State

law and multi-State Cooperative bank

registered under Multi-State Cooperative

Societies Act, 2002 in section 5(c) of the

Banking Regulation Act, 1949. It was

therefore, submitted that the impugned orders

passed by the Tribunal and the Board of

Nominees could not be enforced by respondent

no.1.

5.5) Reliance was also placed on the

judgment of Andhra Pradesh High Court dated

31.12.2021 passed in W.A. No.1680/2017 and

allied matters, wherein it is held that in

view of the judgment delivered by the

Constitution Bench of the Hon'ble Supreme

Court in case of Pandurang Ganpati Chaugule

(supra), the action initiated under the

Andhra Pradesh Cooperative Societies Act,

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1964 was certainly a nullity and the bank was

having a remedy of filing an application

under the Recovery of Debts and Bankruptcy

Act, 1993 and the order passed by the learned

Single Judge was quashed and set aside by the

Division Bench and the writ petitions were

allowed by quashing and setting order passed

by the Tribunal declaring that the Sale

Certificate issued to the petitioners were

held valid and they were held to be entitled

to delivery of possession of the property

mentioned therein from the borrower or other

persons in possession thereof.

5.6) Relying upon the aforesaid decision,

it was submitted that the impugned orders

passed by the Board of Nominees and Tribunal

are required to be quashed and set aside and

respondent no.1 should file an application

under the provisions of the Recovery of Debts

and Bankruptcy Act, 1993 or under the

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provisions of SARFAESI Act and no recovery

proceedings should be continued against the

petitioner pursuant to the orders passed by

the Board of Nominees and the Tribunal.

5.7) Learned Advocate Mr. Shah submitted

that Board of Nominees passed the judgment

and decree without providing any opportunity

of hearing as the petitioner could not file

an application for leave to defend before the

Board of Nominees. It was submitted that the

Tribunal also did not entertain the appeal as

the right to defend was not available with

the petitioner without entering into the

merits.

5.8) Learned advocate Mr. Shah in support

of such submissions referred to and relief

upon the decision of Apex Court in case of

G.N.R. Babu alias S.N.Babu v. Dr. B.C.

Muthappa and Others reported in 2022 SCC

OnLine SC 1158 wherein in context of

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provisions of Order IX Rule 13 of the Code of

Civil Procedure, 1908 (For short "the Code"),

question was decided as to whether it was

open for the defendants to agitate in the

regular appeal against the decree that the

trial Court had no justification for

proceeding ex-parte against the appellant

when the defendant did not avail the remedy

under Order IX Rule 13 of the Code. The Apex

Court held that in such case though the

appellant would not be entitled to lead

evidence in appeal for making out a

sufficient cause for his absence before the

trial Court, he can always argue on the basis

of the record of the suit that either the

suit summons was not served upon him or that

even otherwise also, the trial Court was not

justified in proceeding ex- parte against

him. It was therefore, submitted by the

learned advocate Mr. Shah that the Tribunal

could not have dismissed the appeal of the

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petitioner without considering the plea of

the petitioner as to whether the summons

issued by the Board of Nominees was served

upon the petitioner or not. It was therefore,

submitted that in this context, the impugned

Judgment and Order passed by the Tribunal is

required to be quashed and set aside.

6.On the other hand, learned advocate Mr.

Arvind R. Yadav with learned advocate Mr. Mit

S. Thakkar for the respondent no.1 submitted

that in view of decision of the Apex Court in

case of Goa State Cooperative Bank Limited

(supra), the main contention of the

petitioner with regard to extension of

winding up process by the respondent

authorities would fail and therefore, the

petition deserves to be dismissed on that

ground.

6.1) It was further submitted that the

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submissions made by the petitioner on merits

cannot be accepted as the petitioner did not

avail the opportunity to defend Lavad suit

and therefore, the petitioner is bound by the

Judgment and Decree passed by the Board of

Nominees.

6.2) With regard to the contention raised

on behalf of the petitioner of deciding the

appeal by the Tribunal without considering

the ground of service of summons upon the

petitioner is concerned, it was submitted

that the petitioner has not raised such plea

before the Tribunal and therefore, the same

could not have been raised before this Court

in writ petition filed under Article 227 of

the Constitution of India.

6.3) With regard to the reliance placed

by the petitioner upon the decision of Apex

Court in case of Pandurang Ganpati

Chaugule(supra), it was submitted that the

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said decision does not negate the provisions

of the Act, 1961 ultra vires the Constitution

as alleged and sought to be declared by the

petitioner. It was submitted that the remedy

for recovery of dues provided under the

provisions of SARAFESI Act and the

proceedings under the Act, 1961 would co-

exist and the respondent bank has already

initiated the proceedings under the

provisions of the Act, 1961. Respondent no.1

is entitled to effect the recovery of the

dues of the bank in liquidation from the

petitioner, borrowers and other guarantors.

6.4) It was further submitted that the

directions came to be imposed by the Reserve

Bank of India under section 35A of the

Banking Regulation Act, 1949 upon the bank on

30.08.2022 precluding the bank from carrying

out banking business and activities including

selling, transferring or otherwise disposing

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of any of its properties or assets without

prior permission from RBI and thereafter

license of the bank was also cancelled by

order dated 26.10.2005 under section 22 of

the Banking Regulation Act, 1949 by the RBI.

It was therefore, submitted that winding up

proceedings were initiated against the bank

and the liquidator was appointed by the

Registrar, Cooperative Societies in exercise

of powers conferred under the provisions of

section 115A(2) read with sections 107 and

108 of the Act, 1961 by order dated

27.10.2005 and hence in such circumstances,

as the bank was not entitled to carry on the

banking business, the only remedy available

to respondent no.1 is to file Lavad Suit

before the Board of Nominees and recovery

procedure initiated would continue to subsist

under the provisions of Act, 1961 and the

Rules framed thereunder in addition to

recourse to SARFAESI Act for recovery of dues

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of the bank from the defaulting borrowers. It

was therefore, submitted that respondent no.1

is entitled to continue the recovery

proceedings and the petitions therefore,

deserve to be dismissed.

6.5) Learned advocate Mr. Thakkar

referred to and relied upon the decision of

this Court in case of Modi Harnishkumar

Hasmukhlal v. People's Cooperative Credit

Society Ltd. reported in (2014) 3 GLH 778,

wherein it is held that when the Tribunal

concluded that the petitioner lost the

opportunity to defend the suit, the

petitioner cannot challenge the condition

imposed while granting leave to defend. The

said decision is followed in case of

Rohitbhai Jayantilal Shah and others v.

Dhrangadhra People's Cooperative bank Limited

and others (Order dated 02.12.2016 passed in

Special Civil Application No.6995/2015),

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wherein it is held as under:

"5. In Modi Harnishkumar Hasmukhlal vs. People State Co-operative Society Limited. [2014 (3) GLR 1996], this Court held that once the defendant failed to deposit the money as condition imposed by the Board of Nominees, he would lose right to defend the suit.

5.1 The Court held as under,

"12. There appears a difference between the provisions of Order 37 of the Code and Section 99(4) (5) of the Act as well as Rule 41A of the Rules as regards condition for leave to defend and the effect of non-compliance of the condition. Under the provisions of Order 37, discretion is available with the Court to grant unconditional leave whereas subsection (4) and (5) of section 99 of the Act with Rule 41-A mandates to impose condition of deposit of 33.5% amount of the claim of dispute or such less amount as may be fixed by the learned Board of Nominees. Clause (e) of sub section (5) of section 99 of the Act provides that non- compliance of the condition may result in passing of award against the defendant as if the defendant has not been granted leave to defend.

13. From the above provisions of the Act and Rules, what appears

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is that the defendant would lose his right to defend the suit if he does not comply with the condition of deposit of the amount for leave to defend. Such right would not be revived if the order imposing condition for leave to defend is allowed to attain finality by not challenging the same byway of revision application during the pendency of the suit.

14. There is no provision in the Act or the Rules like Order XLIII, Rule 1A of the Code which gives right to a party to challenge non appealable orders while challenging the final decree entitling the party to lavad suit to challenge any order made in the suit when appeal is filed before the Tribunal against the final award passed in the suit. Mr. Parikh however relied on Regulation No. 6(4) (f) of the Gujarat State Cooperative Tribunal Regulations, 1964 to contend that such order imposing condition can be challenged in appeal against the final award.

Such contention cannot be accepted. In the appeal under section 102 of the Act, the grounds available are to challenge the final award. In such appeal, the petitioners are not entitled to challenge the order imposing condition of deposit of amount for leave to

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defend the suit. The Tribunal has therefore, rightly held that the petitioners cannot challenge the condition for leave to defend. The Tribunal has also not committed any error in refusing to remand the matters to Board of Nominees. Simply because the petitioners were desirous to deposit the amount as per the condition for leave to defend is no ground to remand the matter to Board of Nominees. For remand of the matter, the Tribunal is to be satisfied that rehearing is necessary to meet with the ends of justice. No such case was made out by the petitioners. The petitions are therefore required to be dismissed. However, the amount deposited by the petitioners pursuant to the order dated 4.10.2013 passed in the present petitions shall be required to be adjusted towards the dues outstanding against the petitioners."

5.2 The aforesaid law laid down by this Court disentitles the petitioners who lost their right to defend the suit. It is held that such right cannot be revived by showing the readiness to deposit the amount in appeal. In Modi Harnishkumar (supra), the Court upheld the order of the Tribunal on the aforesaid ground.

6. Even otherwise, on attentively considering the facts on record and

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on carefully perusing the impugned judgment and order of the Tribunal, it could be noticed that, the transaction of loan was proved by virtue of the documents executed in favour of the Bank. The petitioners were the guarantors of the loan amount. The loan was given at 18% interest by executing hypothecation deed, letter of lien, memorandum of deposit of title deeds and others documents accepting the loan transaction. The fact that the petitioners stood as guarantors could not be disputed. The petitioners did not avail the right to defend and lost such right. The Board of Nominees passed the decree legally and on the basis of the evidence. The judgment and order in appeal was also found to be proper and legal. From no stand-point, the petitioners could challenge the impugned judgment and decree and the confirmation thereof by the Tribunal as per the impugned order."

7.Learned Assistant Government Pleader Ms.

Jeenal Acharya adopted the arguments advanced

by learned advocate Mr. Mit Thakkar.

8.Having heard the learned advocates for the

respective parties and having considered the

controversy arising in these petitions in

light of the provisions of the Act, 1961,

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SARFAESI Act, the Banking Regulation Act,

1949 as well as decision of the Apex Court in

relation to exercise of the remedy to recover

the dues of the bank is concerned, the Apex

Court in case of Pandurang Ganpati

Chaugule(supra) after considering the various

provisions has come to the conclusion that

the cooperative bank can also initiate the

proceedings for recovery under the provisions

of SARFAESI Act. However, the Apex Court has

not precluded the cooperative society to

initiate the proceedings under the provisions

of Act, 1961 by filing Lavad Suit before the

Board of Nominees so as to get the Judgment

and Decree.

9.In facts of the case, the petitioner has

failed to appear before the Board of Nominees

and lead any evidence by filing an

application for leave to defend as provided

under the provisions of the Act, 1961 and

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therefore, the petitioner cannot now raise

any issue with regard to the merits of the

matter, more particularly, when the

petitioner has failed to demonstrate before

the Tribunal as well as before this Court

with regard to the non-service of summons by

the Board of Nominees. The Tribunal has

therefore, rightly rejected the appeal filed

by the petitioner without considering the

same on merits as the petitioner for the

first time has raised the controversy with

regard to the guarantee issued by him for the

amount borrowed by respondent no.2 from the

bank in these petitions.

10. Reliance placed by the petitioner on the

decision of the Apex Court in case of G.N.R.

Babu alias S.N.Babu(supra) would not apply to

the facts of the case as the petitioner has

failed to demonstrate before the Tribunal

about the fact with regard to service of

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summons. The Tribunal has therefore, rightly

rejected the appeal.

11. It is also pertinent to note that the

petition is also filed by the power of

attorney holder of the petitioner namely,

Shri Kantibhai Thakkar who filed appeal

before the Tribunal challenging the order

passed by the Board of Nominees who passed an

ex-parte order in the year 2010 with an

application to condone the delay. This Court

(Coram: Hon'ble Mr.Justice C.L. Soni, As His

Lordship was then) while allowing the Special

Civil Applications condoning the delay in

preferring the appeal before the Tribunal

held that considering the fact that the

advocate of the petitioner was not present

when the decision was pronounced by the Board

of Nominees and therefore, it cannot be said

that such decision was communicated to the

petitioner in view of Rule 41(4)(c) of the

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Gujarat Cooperative Societies Rules, 1965.

Therefore, in absence of such communication,

the petitioner was entitled to file appeal

with delay which is required to be condoned.

12. Therefore, in view of the above findings

to condone delay cannot be justified to quash

and set aside the impugned Judgment and Order

passed by the Tribunal on merits which has

dismissed the appeal of the petitioner on the

ground of not defending the case before the

Tribunal.

13. The petitioner has also not been able to

point out with regard to the issue of service

of summons upon him by the Board of Nominees

as it is recorded in the impugned order of

the Board of Nominees that the advocate of

the petitioner remained present but no

defense was filed. The Board of Nominees has

also recorded in the Judgment and Order that

the summons were already served upon the

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petitioner.

14. In such circumstances, no interference

is warranted in the impugned Judgment and

Decree passed by the Board of Nominees as

well as the Appellate order of the Tribunal

on merits while exercising extra ordinary

jurisdiction under Article 227 of the

Constitution of India.

15. The Division Bench of this Court in case

of Smitaben Mahin Modi v. State of Gujarat &

Ors. (Judgment dated 10.02.2021 passed in LPA

No.1011/2015 and allied matters) after

considering the decision of Apex Court in

case of Goa State Cooperative Bank Limited

(supra) disposed of the Letters Patent Appeal

in same terms as held by the Apex Court

confirming the order passed in Special Civil

Application by the learned Single Judge.

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16. As held by this Court in case of

Rohitbhai Jayantilal Shah and others(supra),

the petitioner is dis-entitled to defend the

suit when the petitioner has lost its right

to defend the suit before the Board of

Nominees and such right cannot be revived

even if the petitioner shows readiness to

deposit the amount in appeal, more

particularly, when the bank has proved the

transaction of loan by virtue of documents

executed in its favour and when the

petitioner was the guarantor of the loan

amount by executing hypothecation deed,

letter of lien, and other documents and the

fact that the petitioner stood as guarantor

is not in dispute. As the petitioners failed

to avail the right to defend the suit and

lost such right, the Judgment and Decree

passed by the Board of Nominees and confirmed

by the Tribunal on the basis of evidence

cannot be set aside by remanding the matter

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as the Judgment and Order in appeal was also

found to be proper and legal.

17. In view of foregoing reasons, the

petitions deserve to be dismissed and are

accordingly dismissed. Rule is discharged. No

order as to costs.

(BHARGAV D. KARIA, J)

Learned advocate Mr. Parth Thummar for

learned advocate Mr. Masoom K. Shah submitted

that by order dated 3.12.2018, this Court passed

the order in terms of para-9(B) whereby the

impugned Judgment and Order dated 12.09.2018

passed by the Gujarat State Cooperative Tribunal

was stayed.

It was therefore, submitted that the interim

relief granted during the pendency of the

petitions may be continued for a further period

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of four weeks.

Learned advocate Mr. Arvind Yadav for

respondent no.1 submitted that after grant of

interim relief by this Court, the Hon'ble Supreme

Court in case of Goa State Cooperative Bank

Limited v. Krishna Nath A. (Dead) through legal

representatives and others reported in (2019) 20

Supreme Court Cases 38 has negatived the

contention of the petitioner with regard to issue

of extension of time of respondent no.1 under the

provisions of Gujarat Co-operative Societies Act,

1961.

During the course of hearing also, learned

advocate Mr. Masoom Shah has fairly submitted

that in view of decision of Goa State Cooperative

Bank Limited (supra), the issue with regard to

extension of time of respondent no.1 was squarely

covered by the aforesaid decision.

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In view of above, the request to extend the

interim relief granted by this Court on 3.12.2018

is not accepted and accordingly refused.

(BHARGAV D. KARIA, J)

RAGHUNATH R NAIR