Back
1984 Supreme(Bom) 80
IN THE HIGH COURT OF BOMBAY
C.S. Dharmadhikari G.D. Kamat, JJ.
Nivrutti Narayan Bankar... Petitioner.
Versus
Adarsha Padhegaon Vividh Karyakari Seva Sahakari
Society Ltd., others... Respondents.
Writ Petition No. 2249 of 1979, decided on 6-3-1984.
Advocates appeared :
Dr. B.R. Naik with Pramod N. Joshi, for petitioner.
V.D. Govilkar, for respondent No. 1.
W.S. Devnani, A.G.P., for respondent No. 2.
Section 44-A of the Maharashtra Co-operative Societies Act does not apply to a case where the society has not charged interest greater than the principal of the loan at the time of filing the application for a recovery certificate.
Headnote:
Recovery of Loan Amount - Maharashtra Co-operative Societies Act - Section 44-A - The court analyzed section 44-A, which prohibits societies from charging interest greater than the principal of the loan. The court interpreted the phrase 'charge' to mean 'demand' and clarified that it does not refer to the recovery of the amount after it has been crystallized in an award or order. The court concluded that section 44-A does not apply to a case where the society has not charged interest greater than the principal of the loan at the time of filing the application for a recovery certificate.
Fact of the Case:
The petitioner, a member of a cooperative society, was in arrears of a loan amount. The society obtained a recovery certificate and started recovery proceedings. The petitioner challenged the further recovery of the amount, claiming that the society had already recovered more than the principal of the loan. The dispute was initially raised under section 91 of the Maharashtra Co-operative Societies Act, but the appellate court concluded that the dispute was not maintainable. The petitioner sought a writ of prohibition against the society from recovering any further amount. The court rejected the petitioner's contention, stating that section 44-A of the Act does not apply to the present case.
Finding of the Court:
The court analyzed section 44-A of the Maharashtra Co-operative Societies Act, which prohibits societies from charging interest greater than the principal of the loan. The court interpreted the phrase 'charge' to mean 'demand' and clarified that it does not refer to the recovery of the amount after it has been crystallized in an award or order. The court also noted that the recovery certificate issued by the Registrar is operative, and the society had not charged interest greater than the principal of the loan at the time of filing the application for the certificate. The court concluded that section 44-A does not apply to the present case.
Ratio Decidendi: The court held that section 44-A of the Maharashtra Co-operative Societies Act does not apply to a case where the society has not charged interest greater than the principal of the loan at the time of filing the application for a recovery certificate. The court emphasized that the provision is not meant to benefit defaulters who refuse to pay the amount despite a recovery certificate or award.
Result: The court dismissed the petition, ruling that there is no substance in the petitioner's claim. No costs were awarded to either party.
2. Initially for challenging the recovery certificate, the petitioner had raised a dispute under section 91 of the Act. The Judge of the Co-operative Court granted an injunction restraining the society permanently from recovering interest amount greater than the principal of the loan. Being aggrieved by the order of the Co-operative Court, the respondent society filed an appeal before the Maharashtra State Co-operative Appellate Court. The Appellate Court came to the conclusion that the certificate issued under section 101 of the Act being conclusive and final, the dispute under section 91 itself was not maintainable. Therefore, the Appellate Court allowed the appeal and set aside the order passed by the Co-operative Court. It is this order of the Appellate Court which is challenged in the present writ petition.
3. After the original writ petition was filed by an application dated 5-3-1984 the petitioner sought permission to amend the petition, which was allowed. Dr. Naik, the learned Counsel appearing for the petitioner, contended before us that the respondent No. 1 Society is under a statutory obligation under section 44-A of the Act not to recover from the petitioner as and way of interest, in respect of the suit claim, an amount exceeding Rs. 62,863/- which is the principal amount and, therefore, the petitioner is entitled to a Writ of Prohibition against the society from recovering any further amount. It is not possible for us to accept this contention of Dr. Naik. Section 44-A with which we are concerned in this writ petition, reads as under :---
"44-A Notwithstanding anything contained in any agreement or any law for the time being in force, a Society (other than a land development bank) shall not, for any loan given by it to any member for a period not exceeding 15 years (whether the loan was given before or is given after the commencement of the Maharashtra Co-operative Societies (Third Amendment) Act, 1973) charge on account of interest a sum greater than the principal of the loan."
This provision has been inserted in the statute book by Act. No. III of 1974 which came into force from 1-3-1975. The Statement of Objects and Reasons indicates that the new section 44-A was inserted with a view to prohibiting certain societies from charging interest exceeding the amount of loan, in accordance with the well-known principle of 'Damduppat.' The principle of 'damduppat' is well known to Hindu law. The rule of 'damduppat' is branch of the Hindu Law and according to this rule, th
