Kerala High Court

The Thrissur District ... vs Thomas.T.J on 12 April, 2023

                 IN THE HIGH COURT OF KERALA AT ERNAKULAM
                                PRESENT
                 THE HONOURABLE MR. JUSTICE AMIT RAWAL
                                      &
                THE HONOURABLE MRS. JUSTICE C.S. SUDHA
    WEDNESDAY, THE 12TH DAY OF APRIL 2023 / 22ND CHAITHRA, 1945
                          WA NO. 338 OF 2021
 AGAINST THE JUDGMENT DATED 03.12.2020 IN WP(C) 11151/2009 OF HIGH
                            COURT OF KERALA

APPELLANT/RESPONDENT NOS.1,2 &6:

    1        THE THRISSUR DISTRICT CO-OPERATIVE BANK LTD.,
             ERUMAPPETTY BRANCH, REPRESENTED BY ITS SECRETARY,
             ERUMAPPETTY, TRISSUR-680022.
    2        THE SPECIAL SALE OFFICER, TRISSUR DISTRICT CO-OPERATIVE
             BANK, HEAD OFFICE, TRISSUR-680001.
    3        KERALA STATE CO-OPERATIVE BANK LIMITED,
             REPRESENTED BY ITS MANAGING DIRECTOR PR NO.6515, CO-BANK
             TOWERS, PALAYAM, THIRUVANANTHAPURAM-695033.
             BY ADV SRI.P.C.SASIDHARAN, SC, THRISSUR DISTRICT
             CO.OPERATIVE BANK LTD.


RESPONDENTS/PETITIONER & RESPONDENT NOS.3,4&5:

    1        THOMAS.T.J
             S/O.OUSEPH, THARAYIL HOUSE, KARIYANNUR VILLAGE,
             THALAPPILLY TALUK, THRISSUR.
    2        JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,
             OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,
             TRISSUR-680001.
    3        A.V.SUBHASH,
             PARIYANGAD ANGOTHU VEEDU, MARATHUKUNNU,
             VADAKKANCHERY, TRISSUR-680023.
    4        KERALA STATE CO-OPERATIVE BANK LTD.,
             (ERSTWHILE THRISSUR DISTRICT CO-OPERATIVE BANK),
             THRISSUR REGIONAL BRANCH, REGIONAL OFFICE, SAHAKARNA
             SATHABDHI MANDIRAM, KOVILAKATHUMPADAM P.O.,
             THIRUVAMBADI, THRISSUR-680022, REPRESENTED BY ITS
             REGIONAL MANAGER.
             BY ADVS.
             SRI.ANIL K.NAIR, P.K.SOYUZ, SRI.ASWIN.P.JOHN,
             SRI.R.ANANTHAPADMANABAN, SHRI.THAYYIB SHA P.S.,
             SRI.P.RAVINDRAN (SR.),E.V.BABYCHAN, JELSON J.EDAMPADAM

             SR GP SRI T K VIPINDAS


     THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.04.2023,

ALONG WITH WA.483/2021, THE COURT ON THE SAME DAY DELIVERED THE

FOLLOWING:
 Writ Appeal Nos. 338 & 483 of 2021
                                     2


              IN THE HIGH COURT OF KERALA AT ERNAKULAM
                              PRESENT
               THE HONOURABLE MR. JUSTICE AMIT RAWAL
                                 &
               THE HONOURABLE MRS. JUSTICE C.S. SUDHA
    WEDNESDAY, THE 12TH DAY OF APRIL 2023 / 22ND CHAITHRA, 1945
                         WA NO. 483 OF 2021
  AGAINST THE THE JUDGMENT 03.12.2020 IN WP(C) 11151/2009 OF HIGH
                          COURT OF KERALA

APPELLANT/4TH APPELLANT:

             A.V.SUBASH,
             AGED 48 YEARS,S/O.VIJAYAN,PARIYANGAD ANGOTHU
             VEEDU,MARATHUKUNNU,ERKAKADU,
             VADAKANCHERY,THRISSUR DISTRICT.
             BY ADVS.
             P.K.SOYUZ
             E.V.BABYCHAN
             JELSON J.EDAMPADAM
             RAJU JOSEPH (SR.)


RESPONDENTS/PETITIONER/RESPONDENTS 1,2,3,5 & 6:

     1       THOMAS T.J.,
             S/O.OUSEPH,THARAYIL HOUSE,KARIYANNUR VILLAGE,THALAPPILLY
             TALUK,THRISSUR-680 022.
     2       THE THRISSUR DISTRICT CO-OPERATIVE BANK LTD.,
             ERUMAPPETTY BRANCH,REPRESENTED BY ITS
             SECRETARY,ERUMAPPETTY,THRISSUR-680 022.
     3       THE SPECIAL SALE OFFICER,
             THRISSUR DISTRICT CO-OPERATIVE BANK,HEAD
             OFFICE,THRISSUR-680 001.
     4       JOINT REGISTRAR OF CO-OPERATIVE SOCIETIES,
             OFFICE OF THE JOINT REGISTRAR OF CO-OPERATIVE
             SOCIETIES,THRISSUR-680 001.
     5       THE KERALA STATE CO-OPERATIVE BANK LIMITED,
             REPRESENTED BY ITS MANAGING DIRECTOR,PR NO.6515,CO-BANK
             TOWERS,PALAYAM,THIRUVANANTHAPURAM-695 033.
     6       THE KERALA STATE CO-OPERATIVE BANK LTD.,
             (ERSTWHILE THRISSUR DISTRICT CO-OPERATIVE BANK),THRISSUR
             REGIONAL BRANCH,REGIONAL OFFICE,SAHAKARANA SATHADHI
             MANDIRAM,KOVILAKATHUMPADAM P.O.,THIRUVAMBADI,THRISSUR-
             680 022,REPRESENTED BY ITS REGIONAL MANAGER.
             BY ADVS.
             ANIL K.NAIR
             ASWIN.P.JOHN

THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 12.04.2023, ALONG
WITH WA.338/2021, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
 Writ Appeal Nos. 338 & 483 of 2021
                                          3




                   AMIT RAWAL & C.S.SUDHA, JJ.
                ------------------------------------------------------
                    Writ Appeal Nos. 338 & 483 of 2021
                -----------------------------------------------------
                   Dated this the 12th day of April, 2023

                               JUDGMENT

C.S.Sudha, J.

These intra-court appeals filed under Section 5 of the Kerala High

Court Act, 1958 are against the judgment dated 03/12/2020 in W.P.(C)

11151/2009. The appellants in W.A.No.338/2021 are respondents 1, 5 and

6 respectively; the appellant in W.A.No.483/2021, the 4 th respondent and

the 1st respondent herein, the petitioner in the Writ Petition. The parties and

the documents will be referred to as described in the writ petition.

2. The petitioner had availed himself of a loan from the

first respondent (R1), Co-operative Bank, by mortgaging three items of his

immovable property having a total extent of 92.134 cents. The petitioner

committed default in the repayment of the loan. ARC.No.497/2005 filed by

R1-Bank, for recovery of the loan amount, resulted in award dated

21/011/2005 for an amount of ₹14,67,813/-. In execution of the said award,

the property mortgaged by the petitioner was auctioned on 21/08/2008. The Writ Appeal Nos. 338 & 483 of 2021

property was purchased by the 4th respondent-auction purchaser(R4) for an

amount of ₹32,52,000/-. The sale held on 21/08/2008 was challenged by

the petitioner on the ground that clause (h) of Rule 81 of the Co-operative

Societies Rules, 1969 (the Rules) has been violated in as much as the

balance purchase money had not been paid by R4 within the time stipulated

under the Rule and hence the same will have to fail. The petitioner therefore

prayed for the quashing of Ext.P8(a) and Ext.P9 orders by which the second

respondent - Sale Officer(R2) permitted R4 to deposit the balance purchase

money beyond the period stipulated and thereafter confirmed the sale and,

for a declaration that the sale of the mortgaged properties conducted on

21/08/2008 and its confirmation is illegal as it is against the mandatory

provisions of the Kerala Co-operative Societies Act, 1969 and the Rules.

3. R1- Bank filed an affidavit dated 11/05/2009 in which

it is averred that the petitioner is a chronic defaulter of the loan, which was

availed as early as in the year 2003. On 08/04/2009 when the writ was

admitted, an interim order was issued by this Court staying the confirmation

of the sale on condition that the petitioner deposits the auction amount and a

further amount of ₹2,00,000/-. The petitioner never complied with the said

order. Instead, he filed a petition seeking extension of time. On

24/04/2009 another interim order was passed by which the petitioner was Writ Appeal Nos. 338 & 483 of 2021

granted two weeks' time from the said day to comply the order dated

08/04/2009, subject to the condition that he deposited a sum of ₹5,00,000/-

on 27/04/2009. It was also directed that in the event of such deposit being

made, the time fixed for depositing the bid amount and the additional sum

of ₹2,00,000/- would stand extended for a period of two weeks from

24/04/2009. Pursuant to the same, the petitioner remitted an amount of

₹5,00,000/- on 27/04/2009. However, the balance amount was not remitted

and therefore R1-Bank contended that the petitioner was not entitled to any

further reliefs.

4. The auction purchaser, namely, R4, filed a counter

affidavit in which he contended that there was no illegality in the sale

conducted by R1-Bank. By Ext.P9 order, the sale in his favour has been

confirmed. Pursuant to the directions in Ext.P6 judgment, the petitioner

had filed Ext.P8 application before the Sale Officer for setting aside the

sale. On receipt of the application, the officer concerned issued notice to all

the parties and thereafter conducted a hearing on 09/12/2008. On the said

day the parties entered into a compromise by which it was agreed that, in

case the petitioner deposited the entire amount within 15 days, the sale

would be set aside. However, the petitioner did not comply with the

condition in the compromise and hence on 26/12/2008 by Ext.R4(b) order, Writ Appeal Nos. 338 & 483 of 2021

Ext.P8 application was dismissed.

5. The learned Single Judge found infraction of clause (h)

of Rule 81 of the Rules in as much as R4, the auction purchaser, had not

deposited the balance purchase money within 15 days of the conduct of the

sale and hence held the sale to be a nullity. The mortgaged property was

directed to be reverted/restituted to the owner, namely, the petitioner. The

purchase money paid by R4 to R1-Bank was directed to be returned. The

learned Single Judge, noticing that 12 years had elapsed since the date of

sale, directed R1-Bank to pay interest on the amount @ 6% per annum from

12/01/2009, the date of payment of the balance purchase money. R4 was

directed to vacate the property in question. The execution proceedings was

directed to be restored and R1-Bank was held to be at liberty to realize the

decree debt with interest. It has also been made clear that the property

would continue to retain the character of a mortgaged property, liable to be

proceeded against afresh for realization of the debt. Aggrieved by the

aforesaid judgment, the respondents have come up in appeal.

6. Heard the learned counsel for all the parties.

7. It is argued by the learned counsel appearing for the

respondents, namely, R1-Bank and R4- auction purchaser, that the

impugned judgment has been passed without considering the chequered Writ Appeal Nos. 338 & 483 of 2021

history/past in this case. The petitioner, a chronic defaulter, had approached

this Court seeking extension of time to make necessary payments to save

his property. Virtually all such requests of the petitioner had also been

granted. Despite the same, he failed to make the necessary payments. The

balance purchase money was not deposited by R4 only because of the

pendency of the proceedings initiated by the petitioner before this Court.

Therefore, for the fault of the petitioner, neither R1-Bank nor R4-auction

purchaser can be penalized. At best, the learned Single Judge could have

directed forfeiture of 15% of the amount deposited by R4 on the date of the

sale and ought not to have ordered return of the amount to R4 and then

mulcting R1-Bank with the liability to pay interest for no default on their

part.

8. Per contra it was submitted by the learned counsel for the

petitioner that compliance of the provisions of Rule 81 is mandatory.

Admittedly, the same has not been complied with in this case. Therefore,

the sale is a nullity and hence the learned Single Judge was perfectly

justified in passing the impugned judgment.

9. We have anxiously considered the pleadings as well as

the submissions made by either side. There cannot be any quarrel on the

proposition that compliance of clause (h) of Rule 81 is mandatory, which Writ Appeal Nos. 338 & 483 of 2021

reads-

"81. Procedure in attachment and sale of immovable property - In the attachment and sale or sale without attachment of immovable property, the following rules shall be observed -

(h) The remainder of the purchase money and the amount required for the general stamp for the certificate under sub-rule (5) of R.83 shall be paid within 15 days from the date of sale:

Provided that the time for payment of the cost of the stamp may, for good and sufficient reason, be extended at the discretion of the Registrar upto thirty days from the date of sale:

Provided further that in calculating the amount to be paid under this rule, the purchaser shall have the advantage of any set off to which he may be entitled under clause (k)."

Admittedly the balance purchase money has not been deposited within a

period of 15 days from the date of sale. Let us now examine the reasons for

the same. As stated earlier, Ext.P1 award dated 21/11/2005 for an amount

of ₹14,67,813/- was passed in ARC.No.497/2005. R1-Bank filed

E.P.No.727/2006 for realization of the amount. On receipt of notice in the

E.P., on 26/11/2007 the petitioner filed a revision petition, namely,

R.P.No.136/2007 before the Kerala Co-operative Tribunal. The Tribunal

on 30/11/2007 passed an interim order staying further proceedings on

condition that the petitioner pays an amount of ₹4,00,000/- on or before

30/01/2008. The petitioner did not pay the said amount. On 21/07/2008,

Ext.P2 sale notice was issued. On 18/08/2008, the petitioner filed Writ

Petition No.24863/2008 seeking extension of time granted by the Tribunal Writ Appeal Nos. 338 & 483 of 2021

to pay the amount. This Court by Ext.P3 judgment dated 18/08/2008

dismissed the writ petition. On 21/08/2008, auction/sale was conducted. R4

was the successful bidder, to whom the property was sold for an amount of

₹32,55,000/-. On the same day, that is, 21/08/2008, R4 deposited 15% of

the purchase money. R4 as per clause (h) was obliged to pay the balance

purchase money within a period of 15 days, that is, by 05/09/2008. On

28/08/2008, the petitioner gave Ext.P4 letter to R1-Bank seeking

permission to clear the defaulted amount in installments. Alleging that R1

without considering his request was taking steps to confirm the sale, the

petitioner on 03/09/2008 filed W.P.(C)No.26918/2008 seeking extension of

time. This Court directed the petitioner to withdraw R.P.No.136/2007

pending before the Tribunal. On 17/09/2008, the petitioner filed Ext.P5

affidavit to the effect that the R.P has been withdrawn. On 19/09/2008, it

was submitted on behalf of R1-Bank that they had purchased the property

in the auction. Based on the said submission, the writ petition was closed

directing R1-Bank to consider the petitioner's request for re-conveying the

property. On 23/09/2008, the order dated 19/09/2008 was recalled by this

Court as it was brought to its notice that the submission made on

19/09/2008 by R1-Bank that they had purchased the property was a mistake

and that it was R4 who had purchased the property. On 24/09/2008, R4 Writ Appeal Nos. 338 & 483 of 2021

was impleaded in the writ, on which day the Tribunal was directed to

dispose of R.P.No.136/2007 on merits. Thereafter, as per Ext.P6 order

dated 03/11/2008, writ petition No.26918/2008 was disposed off giving

liberty to the petitioner file an application to set aside the sale beyond the

time stipulated in the Rules, which course was not objected to by R4. The

confirmation of sale was deferred for three months, within which time, the

application for setting aside the sale was directed to be decided on merits by

the sale officer.

10. On 14/11/2008, the petitioner is stated to have filed

Ext.P8 application under Rule 83 for setting aside the sale/auction.

Ext.P8(a) the proceedings of the Special Sale Officer, Thrissur, shows that

Ext.P8 application was taken up for consideration on 09/12/2008. The

order of the said date reads -

"All the parties appeared and argued the matter in detail. After detailed hearing defaulter requested 45 days' time to deposit the amount. Auction purchaser was not ready to give 45 days to the defaulter. After that all the parties entered into a compromise. As per the compromise defaulter agreed to pay the amount within 15 days from today (24/12/08)."

Thereafter on 26/12/2008 the following order is seen passed -

"Defaulter did not pay the amount. Hence the petition to set aside the sale dismissed and permitted the auction purchaser to pay the balance amount. File closed on 26/12/08."

Writ Appeal Nos. 338 & 483 of 2021

11. During the course of arguments, it was submitted that

pursuant to the order dated 26/12/2008 in Ext.P8(a), the balance purchase

money has been deposited by R4 on 12/01/2009.

12. Rule 83 (1) under which Ext.P8 application for setting

aside the sale was filed reads -

Rule 83: Application to set aside sale on ground of irregularity or fraud. (1) At any time, within thirty days from the date of sale of immovable property, the decree holder or any person entitled to share in a rateable distribution of the assets or whose interest are affected by the sale, may apply to the Registrar to set aside the sale, on the ground of a material irregularity or mistake or fraud in publishing or conducting it:

Provided that no sale shall be set aside on the ground aforesaid unless the Registrar is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud."

Admittedly no application under the aforesaid Rule was filed within a

period of 30 days from the date of sale, which was on 21/08/2008. Ext.P8

application for setting aside the sale does not bear any date. It is submitted

that the same was filed on 14/11/2008, which is apparently much after the

expiry of 30 days mentioned in the aforesaid Rule. No provision has been

shown to us as per which the petitioner could file an application under the

aforesaid Rule beyond the period of 30 days stipulated therein. Ext.P8 was

entertained by the authority concerned only because of the liberty granted Writ Appeal Nos. 338 & 483 of 2021

by this court in Ext.P6 order dated 03/11/2008, the relevant portion of

which reads-

"5. For the aforesaid reasons, sustaining the directions to the Kerala Co-operative Tribunal issued as per the order dated 23/09/2008 in this case, this writ petition is ordered directing that the confirmation of the sale will stand deferred, if the petitioner submits an application within two weeks from today, before the competent Sale Officer, to have the sale set aside. The said application will be considered on merits, after issuing notice and giving adequate opportunity of hearing to the Bank, the debtor and the auction purchaser, the additional 4 th respondent herein. Having regard to the lapse of time with the pendency of this writ petition, the learned counsel for the additional 4 th respondent has very fairly stated that it may be directed that the application to set aside the sale shall be considered on merits without treating it as time barred. Having regard to the different enabling provisions, and in view of the justice in the situation, it is ordered that the application to set aside the sale would be entertained and considered without taking into consideration any time limit. If such application is filed within the time frame fixed above, the confirmation of sale would stand deferred by three months, within which time, the application to set aside the sale would be considered and disposed of. It is also clarified that this judgment, in no way, exempts the petitioner from complying with the statutory conditions attached to the application to set aside the sale." (Emphasis supplied)

13. Therefore, all the indulgence necessary to be shown or

given and much more has been given to the petitioner. The petitioner failed

to pay the necessary amounts to save his property despite several

opportunities being granted. In Ext.P8 application no ground under Rule Writ Appeal Nos. 338 & 483 of 2021

81(h) is seen taken. There is only reference to certain procedural

irregularities committed and that for realizing the debt there was no

necessity for selling the entire extent of property mortgaged. It was

submitted by the learned counsel for the petitioner that the ground under

Rule 81(h) was not taken up in Ext.P8 application, only because the

petitioner never knew about its infraction and it was only when R4 filed his

counter affidavit along with Ext.R4(a) [Ext.P8(a)], the petitioner came to

know of the same. Even assuming it to be so, the need of the petitioner all

along seems to have been to somehow buy time to clear the loan

transaction, for which he cannot be faulted with as any person would make

all efforts to save his property. But having explored all the said options

including the option to file an application for setting aside the sale much

beyond the period contemplated as per the Rules; repeatedly seek time for

settlement, which requests are also seen liberally granted; failing to make

good the several opportunities given and then to turn around and say that

the sale is a nullity, as R4 failed to comply with the mandatory provision

contained in clause(h) of Rule 81, cannot be countenanced. Apparently, the

auction/ sale formalities could not be completed because of the pendency of

the proceedings initiated by the petitioner before this Court. It is also

pertinent to note that W.P.(C)No.26918/2008 was filed on 03/09/2008, Writ Appeal Nos. 338 & 483 of 2021

apparently before the expiry of 15 days contemplated under clause (h) of

Rule 81. R1-Bank as well as R4-auction purchaser must have been under

the legitimate belief that further proceedings or steps in the auction/sale

need not be taken in the light of the directions in Ext.P6 judgment. In such

circumstances neither R1-Bank nor R4-auction purchaser can be faulted

with for not moving ahead with the sale formalities. Therefore, we find no

default on the part of R1-Bank or R4-auction purchaser.