The Citizen'S Cooperative Bank ... vs Manohar Lal
2023 Latest Caselaw 2274 j&K

                                                                           Sr. No.



        HIGH COURT OF JAMMU & KASHMIR AND LADAKH
                         ATJAMMU

OWP No.1176/2012
                                                 Reserved on: 05.10.2023
                                                 Pronounced on:12.10.2023


      The Citizen's Cooperative Bank Ltd.
      117 A/D Gandhi Nagar, Jammu,                              .....Petitioner(s)
      Through its Managing Director,
      Sh. Ashok Goswami

                                Through :- Mr. Sanjay Kakkar, Advocate

        V/S
      1. Manohar Lal S/O Babu Ram
         R/O Village Chowadhi,                                 .....Respondent(s)
         Tehsil & District Jammu
      2. Ashok Kumar S/O Krishan Dev
         R/O H. No.631/4 Housing Colony,
         Channi Himmat, Jammu
      3. Arun Jinsi S/O Chaman Lal Jinsi
         R/O Village Sunjwan,
         Tehsil & District, Jammu
      4. J&K Special Tribunal, Jammu

                                Through :- Mr. S. M. Choudhary, Advocate.

CORAM: HON'BLE MR. JUSTICE M A CHOWDHARY, JUDGE

                                  JUDGMENT

1. In this writ petition filed under Article 226 of the Constitution of India

read with Section 103 of Constitution of J&K State, the petitioner-Bank has

prayed for the following writs/reliefs:

a. Certiorari seeking to quash Order dated 30.12.2011 passed by

respondent no.4; setting aside order dated 28.05.2008 passed by ld.

Registrar and also order dated 10.09.2005 passed by Addl.

Registrar Cooperative Societies.

b. Mandamus directing Respondent Nos. 1-3 to pay back an amount

of Rs.11,05,444/- upto 30.06.2012 along with interest to the

Petitioner Bank on account of Transport Loan availed by

Respondent No.1.

2. The facts of the case, in nutshell, are that the petitioner-Bank had

advanced transport loan for an amount of ₹4,26,000/- @ 18% interest per annum

to the respondent No.1 for purchase of a Tipper on 27.05.1998. It is averred that

the respondent No.1 after paying some installments defaulted the loan

installments, much to the chagrin of petitioner-Bank. The last installment paid

by the respondents no.1 was on 03.03.2001. When reminders/legal notices sent

to the respondent No.1 and his two guarantors for dissuading them not to default

loan payments, fell on deaf ears and failed to evoke any response, the petitioner-

Bank, left with no alternative, had to seize the vehicle i.e. Tipper No.JK02J-

8884 financed by it.

3. It is averred by the petitioner-Bank that the seized Tipper was sold

through auction for an amount of ₹1,10,000/-. The said amount was credited into

the loan account of respondent no.1, and for the balance amount, the petitioner

Bank filed a petition under Sections 70/72 of Cooperative Societies Act, before

learned Registrar Cooperative Societies, Jammu; that the said petition was

disposed of, vide order dated 10.09.2005, by the learned Addl. Registrar

Cooperative Societies, Jammu, with the direction that ₹2,00,000/- be further

credited to the loan account of respondent No.1. A further direction was issued

to the petitioner Bank to hold an enquiry into the auction/bid procedure adopted

at the time of auction of vehicle and fix the responsibility on erring officials of

the bank and recover the said ₹ 2,00,000/- from them to make good the loss to

Bank.

4. Aggrieved of the order dated 10.09.2005, the petitioner-Bank

approached the learned Registrar Cooperative Societies, Jammu with a review

petitioner, who vide order dated 28.05.2008 upheld the order passed by the

learned Additional Registrar Cooperative Societies, which compelled the

petitioner-Bank to file a Revision Petition before J&K Special Tribunal, Jammu.

The revision petition filed by the petitioner-Bank was dismissed by the learned

Tribunal on 30.12.2011. Petitioner-Bank through the medium of this writ

petition seeks, setting aside all the aforestated order dated 30.12.2011 passed by

the learned Tribunal; the order dated 28.05.2008 passed by the Registrar,

Cooperative Societies, Jammu; and the order dated 10.09.2005 passed by the

Additional Registrar Cooperative Societies.

5. Mr. Sanjay Kakkar, learned counsel for the petitioner, while

reiterating the grounds whereon the impugned orders have been challenged,

argued that the order impugned is against the facts and law; that it has been

wrongly recorded that the petitioner-Bank had not made its endeavour to recover

the loan amount from the respondents and that the bank officials have not

conducted the auction of the aforesaid Tipper as per procedure. He further

argued that the petitioner-Bank had taken all the steps for recovering of the loan

from the respondents by issuance of various reminders/legal notices/ time bound

notices and auction notices but despite of its endeavour, the respondents were

completely reluctant to pay the loan amount; that Bank officials had observed all

the conditions required legally in the auction proceedings including a notice to

the respondents besides public notice published in the 'Daily Excelsior' and

'Kashmir Times' in their editions dated 30.10.2001, inviting open bids from the

public at large; that the respondent-loanee had also been intimated that in case

he liquidates the outstanding amount before the date of auction i.e. before

06.11.2001, the proposed auction shall stand cancelled qua the said vehicle. It

was further argued that loss to the petitioner-Bank who is a custodia legis of the

public money, has every right to recover its money advanced to the loanees and

finally it was prayed that the impugned orders be set aside and the petitioner-

Bank be allowed to recover the outstanding amount from the respondents.

6. Mr. S. M. Choudhary, learned counsel for the respondents argued that

since in the arbitration proceedings before learned Additional Registrar

Cooperative Societies, the respondents had proved to the satisfaction of the

Arbitrator that the petitioner-Bank had auctioned the Tipper of the loanee at a

throwaway price, as such, taking note of the factual aspect of the matter, learned

Arbitrator ordered for a further adjustment of Rs.2,00,000/- besides the auction

money of an amount of Rs.1,10,000/- deposited in the account of the loanee; that

the conduct of the Bank officials had come under cloud when they had not

conducted the auction proceedings in a proper way with regard to a Tipper

having been purchased only in the year 1998 was auctioned for a paltry sum of

Rs.1,10,000/- without fixing any minimum price of the vehicle or in case of poor

response did not go for a second auction; he has argued that the finding returned

by the arbitrator on factual aspects was upheld by the learned Registrar,

Cooperative Societies in a review petition. He further argued that so much so

that the J&K Special Tribunal Jammu in revision petition No. STJ/434/2009

vide order dated 30.12.2011, accepted the factual aspects of the case and upheld

the orders passed by both the authorities under the J&K Cooperative Societies

Act. It was urged that the petition has no merit and the same was prayed to be

dismissed.

7. Heard, perused the record produced by the learned counsel for the

petitioner-Bank and considered.

8. It is an admitted case that the respondent no.1 had raised a loan in the

amount of Rs.4.26 lakhs for the purchase of a Tipper on 27.05.1998 from the

petitioner-Bank, who is a registered cooperative society and that the respondents

2 and 3 had stood as his guarantors. The loan was sanctioned with the condition

that it shall be repaid in 60 installments @ ₹11,360/- per month. The loanee,

after purchase of the vehicle Tipper which was registered as JK02J-8884, started

his business, paid some installments and thereafter defaulted in the repayment of

loan. The petitioner-Bank, as such, was left with no option but to seize the

vehicle, which had been financed and hypothecated by it. The bank officials

conducted the auction of the vehicle and sold the same for an amount of

₹1,10,000/- to one S. Gurdeep Singh. Before putting the vehicle to auction, the

loanee had been issued a notice on 20.06.2001 asking him to adjust his account

within ten days of the service of the notice, otherwise the Bank would be left

with no option except to auction the vehicle and recover the outstanding amount.

The copy of this notice was also sent to the guarantors.

9. The petitioner-Bank, after adjusting the auction amount of ₹1,10,000/-

into the loan account of the borrower, calculated ₹2,93,963/- as an amount due

towards the loanee on 04.12.2001. To recover the outstanding amount of

₹3,42,825/- as on 30.06.2002, the petitioner-Bank filed a petition under Section

70 read with Section 72 of the Jammu & Kashmir Cooperative Societies Act,

seeking award against the respondents.

10. The learned Additional Registrar, however, vide his order dated

10.09.2005 observed that the applicant-Bank has not produced the record

pertaining to the bid of Tipper and concluded that no proper procedure was

adopted at the time of auction and the connivance of the Bank officials could not

be ruled out, as such, besides the auction money of ₹1,10,000/- it was ordered

that a further amount of ₹2,00,000/- be adjusted in loan account of the loanee

and rest of the amount be recovered along with interest at the agreed rate of 18%

per annum from the date of the auction of the vehicle i.e. 04.12.2001 and

payable within one year from the date of award, with further direction that the

amount of ₹2,00,000/- as ordered to be adjusted was directed to be recovered

from the bank officials after fixing the liability of the erring officers/officials of

the Bank. Aggrieved of this award, the petitioner-Bank filed a review petition

before the Registrar, J&K Cooperative Societies, who also upheld the order and

the petitioner-Bank, through the medium of a revision petition, approached

Jammu & Kashmir Special Tribunal, Jammu, seeking quashment of the orders

impugned passed by the learned Additional Registrar as well as learned

Registrar Cooperative Societies, Jammu.

11. The learned Tribunal, in its order dated 30.12.2011, after taking notice

of the orders passed by the statutory authorities under the J&K Co-operative

Societies Act, recording that finding of facts that Tipper been plied for only

30,000 Kms at the time of its auction and that there was no evidence that the

Tipper was out of order or was in a bad condition and that no notice had been

given to the borrower from whom the vehicle was seized before taking up the

auction, dismissed the review petition. The Tribunal has rightly held that the

officials of Bank and financial institutions are meant for helping the borrowers

in repaying the loan, being custodian of the hypothecated goods, and are

expected to follow proper procedure under law, to extract maximum amount on

hypothecated goods on auction. The Tribunal has candidly recorded that in the

present case some mischief has been played by bank officials while auctioning

the Tipper, in question, for just an amount of ₹1,10,000/- though the vehicle was

in a running condition.

12. It appears that the Authorities under the Cooperative Societies Act

have dealt with the matter in a pragmatic manner after having regard to the age

of the vehicle and its mileage in Kms being just 30000 kms and there being no

defect in the vehicle, have rightly concluded that the auction was not conducted

in a fair manner to the detriment of the interest of the loanee and his guarantors.

The Bank officers/officials, being public functionaries, are not expected to have

caused damage to the interest of their loanee by auctioning the Tipper for a

pittance of ₹1,10,000/- on 04.12.2001 just within three years of its purchase. The

Registrar, Cooperative Societies had ordered an inquiry to be conducted by

District Audit Officer, Jammu in the matter, which has also been upheld by the

J&K Special Tribunal.

13. On perusal of the record produced by the learned counsel for the

petitioner-Bank, it is found that no proper separate file with regard to auction of

the vehicle has been maintained and some papers in a joint file of auction with

regard to seized vehicles, have been found regarding the vehicle in question

only. Merely issuing notice to the loanee or his guarantors and publication of the

public notice, do not make the auction proceedings fair as the officials should

not have accepted the low bids to finalise the auction in first round only and in

view of poor response, rather they should have gone for second round inviting

more bidders. Also the minimum price should have been fixed.

14. In view of the factual aspects not favouring the petitioner-Bank and

there being no pleading or urging of any illegality, this petition is found devoid

of any merit and substance. The impugned orders passed by all the authorities

below including the Jammu & Kashmir Special Tribunal are found to have been

passed perfectly in accordance with law. The impugned orders are thus upheld.

15. As a result, the petition is found without any merit and substance and

is thus hereby dismissed along with connected application(s). Interim

direction(s), if any, shall stand vacated.

16. Record be returned to learned counsel for the petitioner.

(M A Chowdhary) Judge

JAMMU 12.10.2023 Raj Kumar

Whether the order is speaking: Yes Whether the order is reportable: Yes