The question still arises, as to what remedy respondent No. 4 would 9 WP3511/2011 avail if she believed that the auction sale was tainted with irregularity/mistake or fraud and that because of such sale she had sustained substantial injury etc. As mentioned above, as per the provisions of sub-rule 14 (i), respondent No. 4 had an ample opportunity to challenge the legality of the sale on the grounds mentioned above. It is also observed above that soon after the auction sale, she came to this Court by filing Writ Petition No. 5112 of 2009 and this Court dismissed her petition probably on the ground that she had alternate remedy available to her. Despite of the clear suggestion of the Court, unfortunately respondent No. 4 was not given legal advice to approach Recovery Officer by making proper application under sub-rule 14 (i). The enquiry contemplated under sub-rule 14(i) is very important. It allows the applicant to prove her case on facts. After holding such enquiry the Recovery Officer is required to pass a reasoned order. And such order probably could be challenged in a revision under S.154.
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Bombay High Court
The Manager Adarsh mahila nagri sahakari bank ltd vs The State Of Maharashtra on 13 October, 2011
Bench: A.V. Nirgude
Citation;2012(2) ALLMR 566
3. By consent of both the parties, this writ petition is taken up for final hearing and heard finally.
4. This writ petition filed under Articles 226 and 227 of the Constitution of India challenges the order dated 15/01/2011 passed by respondent No.2 Divisional Joint Registrar, Co-operative Societies, Aurangabad on the revision filed by respondent No.4 bearing No. 23/2010. This revision was filed under the provisions of Section 154 of Maharashtra Co-operative Societies Act (Henceforth referred as "the Act").
The facts leading to the litigation are as under :
5. Respondent No.4 availed loan from the petitioner in year 2004 but despite of demands, did not repay the same fully. So, the petitioner Bank started proceeding under section 101 of the Act for getting certificate of recovery. Accordingly, on 29th September, 2006 a certificate under section 101 was issued against respondent No.4 directing her to pay a sum of Rs.
31,77,627/- + interest @ 18% per annum etc. Soon thereafter, the Bank initiated execution of this certificate and the Recovery Officer (Petitioner No.
2) appointed in the matter under provisions of Rule 2 (h), issued an order of attachment of the mortgaged property belonging to respondent No.4. The property in dispute are a flat at Aurangabad and two plots in the vicinity of Aurangabad City. After the properties were attached, respondent No.4 preferred revision against the order of attachment but failed. In the mean time, the Bank urged Recovery Officer to initiate proceeding for auction sale of the properties in dispute. The Recovery Officer thereafter took steps and ultimately published a notice in news paper for auction sale of the properties on 16/04/2009. The auction sale was scheduled on 18/05/2009. The auction took place and the respondents No.5 and 6 apparently succeeded in making highest bid and the Recovery Officer then declared that the 3 WP3511/2011 properties would be sold to them subject to provision of Rule 107 of Maharashtra Co-operative Societies Rules. Soon after the auction, the Recovery Officer issued a notice to respondent No.4 directing her to deposit the dues within 30 days but in vain. Respondent No.4 filed writ petition No. 914/2009 in this Court against the action of auction sale. But the same was dismissed. Thereafter, the Recovery Officer confirmed the sale and executed sale deeds on 03/07/2009 in favour of respondents No.5 and 6. Again respondent No.4 came before this Court filing Writ Petition No. 5112/2009 on 21st July, 2009 challenging the legality of the sale etc. This Court dismissed this Writ Petition holding that respondent No.4 had alternate remedy. Thereafter, respondent No.4 filed revision on 26/10/2009 before the D.J.R. (respondent No.2) who allowed it holding that several serious irregularities had occurred in the proceeding of sale and therefore, he ordered setting aside of the same and directed the Recovery Officer to start the proceeding for sale afresh. Petitioner No.1 Bank and petitioner No.2 Recovery Officer have filed this Writ petition.
6. The first point the learned counsel appearing for the petitioner raised is that the revision was not at all maintainable. He pointed out that the revisional Court could not have gone into the aspects which he examined while deciding the revision. In order to examine as to whether the respondent No.4 could challenge the lawfulness of the sale by filing a revision one must go through the provisions of Rule 107, specially Sub-rule 12, 13 and 14. Sub rule 12, 13 and 14 which are quoted below.
(12) Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property sought to be sold tenders payment of the full amount due together with interest, batta and other expenses incurred in bringing the property to sale, including the expenses of attachment, if any, the Sale Officer shall forthwith release the property after cancelling, where the property has been attached, the order of attachment.
4 WP3511/2011 (13) (i) Where immovable property has been sold by the Sale Officer, any person either owning such property or holding any interest therein by virtue of a title acquired before such sale may apply to have the sale set aside on his depositing with the Recovery Officer:-
(a) for payment to the purchaser a sum equal to 5 per cent of the purchase money; and
(b) for payment to the applicant, the amount of arrears specified in the proclamation of sale as that for the recovery of which the sale was order together with interest thereon and the expenses of attachment, if any, and sale and other costs due in respect of such amount, less amount which may since the date of such proclamation have been received by the applicant.
(ii) If such deposit and application are made within thirty days from the date of sale, the Recovery Officer shall pass an order setting aside the sale and shall repay to the purchaser, the purchase money so far as it has been deposited, together with the 5 per cent deposited by the applicant :
Provided that if more persons than one have made deposit and application under this sub rule, the application of the first depositor to the officer authorised to set aside the sale, shall be accepted.
(iii) If a person applies under sub-rule (14) to set aside the sale of immovable property, he shall not be entitled to make an application under this sub-rule.
(14) (i) At any time within thirty days from the date of the sale of immovable property, the applicant or any person entitled to share in a rateable distribution of the assets or whose interests are affected by the sale, may apply to the Recovery Officer to set aside the sale on the ground of a material irregularity or mistake or fraud in publishing or conducing it:
Provided that no sale shall be set aside on the ground of irregularity or fraud unless the Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud.
(ii) If the application be allowed, the Recovery shall set aside the sale and may direct a fresh one.
(iii) On the expiration of thirty days from the date of sale, if no application to have the sale set aside is made or if such application has been made and rejected, the Recovery Officer shall make an order confirming the sale:
Provided that if he shall have reason to believe that the sale ought to be set aside notwithstanding that no such application has been made or on grounds other than those alleged in any application which has been made and rejected, he may, after recording his reasons to writing, set aside the sale.
(iv) Whenever the sale of any immovable property is not so confirmed or is set aside, the deposit or the purchase money, as the case may be, shall be returned to the purchaser.
(v) After the confirmation of any such sale, the Recovery Officer shall grant a certificate of sale bearing his seal and signature to the purchaser, and such certificate shall state the property sold and the name of the purchaser.
7. After reading these provisions, it is clear to me that respondent No.4 had an opportunity even after the auction sale to challenge it by making an 5 WP3511/2011 appropriate application under sub rule 14 (1) to the Recovery Officer on the ground that material irregularities or mistakes or a fraud had taken place in publishing the notice of auction sale and in conducting the auction sale. He could have pleaded and proved that due to such irregularity/mistake/fraud he had sustained substantial injury. Had he convinced and satisfied Recovery Officer of his case, the Recovery Officer himself would have set aside the sale and had taken steps for a fresh sale. Such an application under sub rule 14 (1) is permissible within 30 days from the date of auction.
Admittedly, respondent No.4 did not take such steps at all. As mentioned above, she first came to the High Court and when the High Court indicated to her that she had alternate remedy for challenging lawfulness etc., she went directly to the revisional authority assuming that she was challenging the order passed by subordinate officer in a proceeding of the inquiry.
8. The question is whether such revision was maintainable and whether even at that time alternate remedy under sub rule 14 was available to her?
The learned counsel appearing for the petitioner asserted after the Recovery Officer confirmed the sale as contemplated in Clause (v) of sub rule 14, respondent No.4 practically had no order which she could have challenged by filing revision under section 154. In order to examine correctness of this submission one must read Section 154. It reads as under.
154. Revisionary powers of State Government and Registrar (1) The State Government or the Registrar, suo motu or on an application, may call for and examine the record of any inquiry or proceedings of any matter, other than those referred to in sub section (9) of section 149, where any decision or order has been passed by any subordinate officer, and no appeal lies against such decision or order for the purpose of satisfying themselves as to the legality or propriety of any such decision or order, and as to the regularity of such proceedings. If in any case, it appears to the State Government, or the Registrar, that any decision or order so called for should be modified, annulled or reversed, the State Government or the Registrar, as the case may be, may, after giving the person affected thereby an opportunity of being heard, pass such 6 WP3511/2011 orders thereon as to it or him may seem just.
(2) Under this section, the revision shall lie to the State Government if the decision or order is passed by the Registrar, the Additional Registrar or a Joint Registrar, and to the Registrar if passed by any other officer.
(2A) No application for revision shall be entertained against the recovery certificate issued by the Registrar under section 101 unless the applicant deposits with the concerned society, fifty per cent, amount of the total amount of recoverable dues. (3) No application for revision shall be entertained, if made after two months of the date of communication of the decision or order. The revisional authority may entertain any such application made after such period, if the applicant satisfies it that he had sufficient cause for not making the application within such period. (4) The State Government may, by order, direct tht the powers conferred on it by this section shall, in such circumstances and under such conditions, if any, as may be specified in the direction, be exercised also by an officer of the rank of Secretary to Government.
9. It is pertinent to note that the revision is possible either sue motu or on application in respect of only an order passed in a inquiry or proceeding by a subordinate officer of the revisional authority. Since respondent No.4 did not avail opportunity under sub rule 13 and did not avail remedy available to her under sub rule 14, the order confirming the sale was mere formality. He was not asked by respondent No.4 not to pass such a order.
Thus, it was not an order in real sense. Order is also an expression of opinion by judicial or quasi judicial authority after hearing the parties and after recording reasons for the same. Before an order is passed a judicial or quasi judicial authority hears submissions made by rival parties, applies his mind to the facts and law and then it comes to a conclusion forming an opinion as to what ultimate action is required to be taken in the case. In view of this, the order confirming the sale can not be said to be an order contemplated under section 154. On the other hand, learned counsel appearing for respondent No. 4 Shri R.T. Nagargoje asserted that his client did not challenge the order of Recovery Officer confirming the sale as contemplated under sub-rule 14 (v). He said that as per a 'direction' of the Registrar Cooperative Societies, Recovery Officer was required to send the 7 WP3511/2011 proposal of sale for confirmation to the District Deputy Registrar. He said that such direction is given to each Recovery Officer by the Registrar vide his order dated 19th January, 2005. This order is issued in the form of Circular, a copy of which shown to this Court today. He said that as per this direction, the Recovery Officer in this case also sent the proposal of sale for confirmation to the District Deputy Registrar and the District Deputy Registrar thereafter passed an order for confirmation of the sale. He suggested that when District Deputy Registrar examined the proposal for confirmation of an auction sale, he is supposed to examine all the pros and cons of such proposal. He said that the District Deputy Registrar then had an ample power to set aside the proposed sale. He said that in this case, the District Deputy Registrar has passed the order confirming the sale on 18th July, 2009. He said that this order was passed without giving notice and hearing to his client, respondent No. 4. He said, it is this order he had challenged before respondent No. 2 - Divisional Joint Registrar. He, therefore, asserted that the revision was maintainable. I am afraid, this submission is completely devoid of merit. The Circular, referred to above, issued by the Registrar Cooperative Societies on 19th January, 2005 has no basis in law, it has no legal sanctity in law. As said above, the Recovery Officer was appointed as per the provisions of Rule 2 (h) of the Rules. Once a person is appointed as Recovery Officer, he becomes the representative of the Registrar having all the powers to do whatever is required to be done under the Rules. He wields all the powers given to him by the Rules. So, if clause (v) of sub-rule 14 empowers him to confirm the sale, such power cannot be diluted or diverted by issuing a Circular. Even the Registrar cannot do so. Sub-rule 14 does not require the Recovery Officer to send the proposal for confirmation to either District Deputy 8 WP3511/2011 Registrar or the Registrar himself. So, by sending Circular, the Registrar could not have limited the powers of the Recovery Officer, lawfully appointed under the provisions of the Act and Rules. So, the procedure adopted by the Recovery Officer in this case for sending the proposal for confirmation to the District Deputy Registrar was unnecessary and had no basis in law. If such step taken by the Recovery Officer was unnecessary, then the order passed pursuant to such unnecessary step has no legal sanctity. The order passed by the District Deputy Registrar confirming the sale is not an order in the eye of law and has no sanctity of law. If such an order was no order in the eye of law, there was no possibility of challenging it before the revisional authority under Section 154 of the Act. In view of this discussion, I hold that the revision filed by respondent No. 4 before respondent No. 2 was not maintainable and the order passed by respondent No. 2 on such revision has no legal sanctity and cannot be upheld. So, apparently since there was no order which was capable of being examined before the revisional court, the revisional authority could not have entertained the revision.
Besides the revisional authority ought to have taken into account the provisions of sub rule 14 which provides a elaborate procedure giving opportunity to the Recovery Officer to examine as to whether he was subjected to fraud while conducting the proceeding for auction sale. He is also given an opportunity to examine as to whether any material irregularity or mistake had taken place during the proceeding, he conducted for auction sale. He then gets an opportunity to examine whether the judgment debtor had sustained substantial injury because of his action of auction sale. This inquiry thus involves questions of fact.
10. The question still arises, as to what remedy respondent No. 4 would 9 WP3511/2011 avail if she believed that the auction sale was tainted with irregularity/mistake or fraud and that because of such sale she had sustained substantial injury etc. As mentioned above, as per the provisions of sub-rule 14 (i), respondent No. 4 had an ample opportunity to challenge the legality of the sale on the grounds mentioned above. It is also observed above that soon after the auction sale, she came to this Court by filing Writ Petition No. 5112 of 2009 and this Court dismissed her petition probably on the ground that she had alternate remedy available to her. Despite of the clear suggestion of the Court, unfortunately respondent No. 4 was not given legal advice to approach Recovery Officer by making proper application under sub-rule 14 (i). The enquiry contemplated under sub-rule 14(i) is very important. It allows the applicant to prove her case on facts. After holding such enquiry the Recovery Officer is required to pass a reasoned order. And such order probably could be challenged in a revision under S.154.
Unfortunately, the important provision of sub-rule 14 is ignored in this case.
Instead an untenable revision was filed before respondent No. 2 - Divisional Joint Registrar. In view of this, the writ petition should succeed and the impugned order should be set aside.
11. However, this is not the end of the road for respondent No. 4. For the reasons mentioned above, I am of the view that respondent No. 4 was not properly advised and could not take steps contemplated under sub-rule 14 (i) in time. She was aggrieved because of the auction sale and instead of filing an application under sub-rule 14 (i), she filed writ petition in this Court. I think, respondent No. 4 should make an attempt to take such steps now subject to limitation. With proper legal advice, I hope, respondent No. 4 might get appropriate order in future. In view of this, Writ Petition No. 3511 of 2001 stands allowed in terms of prayer clause 'A'. with 10 WP3511/2011 liberty to initiate a proceeding under sub-rule 14 (i). Rule accordingly.
12. In view of above, Writ Petition No. 2732 of 2011 and Writ Petition No. 3517 of 2011 stand disposed of.
( A.V. NIR GUDE, J. ) SRM/wp/3511/11/13/10/11ok
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