MAIN POINTS
There is no provision in the Karnataka Cooperative Societies Act, 1959 or the Karnataka Cooperative Societies Rules for appeal against confirmation of sale by competent authority.
An order passed in appeal binds the party which prefers the appeal.
Appeal preferred against decision of the Competent Authority (ARSC) confirming auction sale under Rule 38 of the Karnataka Cooperative Societies Rules before the Deputy Registrar (CS) is not maintainable under Section 106 of the Karnataka Cooperative Societies Act, 1959.

Headnote:(a) Karnataka Cooperative Societies Act, 1959 – Section 89A r/w Rule 38, Karnataka Cooperative Societies Rules – Debtor defaulting in payment of loan – Mortgaged property put to auction sale – Debtor not availing remedy of appeal under the Act and the rules requiring him to deposit the awarded amount together with interest thereon with the Recovery Officer – Competent authority conforming the auction sale – Sale becoming final – No remedy of appeal against such order of sale provided in the Act or the Rules – Debtor filing appeal before Deputy Registrar who not only entertained but allowed the appeal – Order without jurisdiction. (Para 23, 24)
       (b) Karnataka Cooperative Societies Rules – Rule 38(6)(a) – Debtor failing to comply with order of Deputy Registrar to deposit Rs.59,46,965/- along with interest thereon within the specified time – Therefore even assuming that the order of Deputy Registrar is ascribable to Rule 38(6)(a) it became ineffective. (Para 25)
       (c) Administration of justice – Appeal – An order passed in appeal – Binds the party which prefers the appeal – Thus the debtor was bound by the order passed on appeal filed by him and he had to comply with the same. (Para 26)
       (d) Karnataka Cooperative Societies Rules – Rule 38 and section 106, Karnataka Cooperative Societies Act, 1959 – Appeal preferred by debtor before the Deputy Registrar (CS) against decision of the Competent Authority confirming auction sale – Not maintainable under Section 106 – Sale could be set aside only by the Authority referred to in Rule 38, that too before confirming the auction sale. (Para 30, 31)
       (e) Administration of justice – Judicial propriety – Auction sale becoming final – Order of High Court cannot extricate the debtor from the consequences of the auction sale – Debtor depositing some amount but the entire amount as directed cannot help him – Writ appeals filed by auction purchaser and the lender Bank – High Court, in guise of clarification, could not have passed any order at the instance of the debtor. (Para 32, 33)
       (2014) 6 SCC 397; (2014) 5 SCC 651; (2014)5 SCC 660 – Distinguished
       Facts of the case:
       These cross appeals have been filed by the debtor (Keshva N. Kotian) and auction-purchaser (P.M. Abubakar).
       As the debtor committed default in repayment of loan to the Bank (Mahalakshmi Co-operative Bank Limited), recovery proceedings were initiated by the Bank. Ultimately the mortgaged property was sold by auction.
       After many rounds of litigation the Division Bench of the High Court directed the ARCS to repay the auction purchaser and the Bank with interest as directed.
       Finding of the Court:
       There is manifest error in the impugned judgment.
       Result: The appeals preferred by the auction purchaser (P.M. Abubakar) allowed.

JUDGMENT :

A.M. Khanwilkar, J.

Delay condoned.

2. Leave granted.

3. These cross appeals have been filed by the debtor (Keshva N. Kotian) and auction-purchaser (P.M. Abubakar). As the debtor committed default in repayment of loan to the Bank (Mahalakshmi Co-operative Bank Limited), recovery proceedings were initiated by the Bank. That culminated with an award passed by the Joint Registrar Co-operative Societies, Mysore dated 02.01.2004 against the debtor for recovery of Rs. 13, 65,899.70 with interest at 19% p.a. As the debtor failed to pay the amount in terms of the award, execution petition was filed. The debtor, however, filed an appeal being Appeal No. 419 of 2004 before the Karnataka Appellate Tribunal, Bangalore. On 21.06.2004, the Tribunal passed a conditional order of stay requiring the debtor to deposit 40% of the awarded amount within eight weeks, failing which the stay would stand vacated. The debtor failed to deposit that amount. Therefore, the bank after obtaining valuation report relating to the mortgage property, issued notice on 2.2.2005 in Form No. 6. In spite of notice, no payment was made by the debtor. As a result, the Bank issued notice of attachment in Form No. 7 on 25.02.2005. The notice of attachment was followed by a notice of auction issued on 3.3.2005, fixing the auction date as 11.04.2005. On 7.3.2005, the debtor’s brother (Shri Anand Kotian) filed an objection to the said proceedings. According to him, the property was a joint family property. This objection was enquired into and rejected on 22.3.2005.

4. The debtor submitted letters dated 6.4.2005 and 8.4.2005 requesting to stay the auction in view of the financial difficulties faced by him and paid only Rs. 25,000/- in the execution case filed against him. The auction sale was postponed pursuant to the request made by the debtor. The execution case was then transferred to the Assistant Registrar Co-operative Societies (hereinafter referred to as ‘ARCS’), as per the revised Government notification. A fresh notice was issued on 9.5.2005 for auction sale to be held on 17.6.2005, as no further payment was made by the debtor till that date.

5. The debtor’s brother filed a Writ Petition before the High Court of Karnataka at Bangalore being Writ Petition No. 15737 of 2005, challenging the sale proclamation. The High Court passed an interim order on condition of payment of 25% of the awarded amount within two weeks. In view of the interim order passed by the High Court, the auction sale scheduled on 17.6.2005 stood postponed. The Writ Petition filed by debtor’s brother was, however, disposed of on 29.6.2005 with an observation to consider his objection.

6. In the meantime auction sale was proposed to be held on 18.8.2005, but in view of the aforementioned High Court order the auction sale was postponed. The objection filed by the debtor’s brother was considered on eight dates. He, however, filed a memo before ARCS on 21.12.2006 for withdrawal of his objection. The said objection was finally dismissed on 16th July, 2007.

7. On 30.4.2007, appeal preferred by the debtor challenging the award dated 2.1.2004 was dismissed by the Karnataka Appellate Tribunal, Bangalore. That decision has not been challenged.

8. Once again a notice for auction sale of the mortgage property was issued on 18.7.2007, fixing the date of auction on 28.08.2007. The debtor filed a Writ Petition No. 13204 of 2007 (CS-DAS), challenging the sale proclamation. The High Court by order 27.08.2007 granted interim protection to the debtor on condition of depositing 40% of the awarded amount within two weeks, failing which the protection would stand vacated. The debtor had deposited Rs.1,00,000/- on 21.8.2007. He deposited further amount of Rs. 50,000/-on 27.8.2007 and assured to pay Rs. 50,000/- on 30.8.2007. On his request the auction sale fixed on 28.8.2007 was postponed.

9. As the debtor failed t

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2016 Supreme(SC) 905

Cases Referred (3)