1998 Supreme(Bom) 84

IN THE HIGH COURT OF BOMBAY
(AURANGABAD BENCH)
B.H. Marlapalle, J.
Balkisan Manekchand Zaver others ..... Petitioners.
Versus
Jalgaon People’s Co-operative Bank Ltd.
through Manager others .... Respondents.
Writ Petition No. 303 of 1991(A) and Writ Petition No. 639 of 1984(B), decided on 9-2-1998.
Advocates appeared :
R.G. Karmarkar, for petitioner No. 1.
N.H. Patil, for respondent No. 1.

Headnote:Bombay Co-operative Society Act, 1925

       Sections 59-A(1), 54 59(1)(b) and Act of 1960, Sections 98-A, 100, 98 and Rules, 1961, Rules 85(6), (8), (10), (11), (12), (13), (14) and (15)-Property Certificate to Bank-The land transferred to Bank by way of Certificate issued by Collector is not a transfer by sale and such a transfer did not create ownership of land in favour of Bank and the property if unsold, shall be restored to the defaulter. The provisions of Section 59(1)(b) of the old Act correspond to Section 98 of the New Act and the provisions of Section 59-A of the Old Act correspond with Section 100 of the New Act. The Collector by the certificate issued on 15.7.1961 transferred the agricultural land belonging to the petitioners to Respondent Bank under Section 59-A(I) of the Act which corresponds to the provisions of Section 100(1) of the New Act. Section 100(2) of the New Act. States that where property is transferred to the society under sub-section (1), the Court, the Collector or the Registrar as the case may be, may, in accordance with the Rules place the society in possession of the Property transferred and sub-section (3) of Section 100 provides that subject to such rules as may be made in that behalf and to any rights, encumbrances, charge or equities lawfully subsisting in favour of any person, such property or portion thereof shall be held under sub-section (1) by the said society on such terms and conditions as may be agreed upon between the Court, the Collector or the Registrar as the case may be and the said society. As per the said certificate issued by the Collector the land came to be transferred to the Bank in partial satisfaction of the amount due Bank in terms of Rule 85(5) of the Maharashtra Co-operative Societies Rules, 1961 and it will be, therefore, necessary to refer to the provisions of sub-rules (6), (8), (10), (11), (12), (13), (14) and (15) of Rule 85. It is clear that on a combined reading of the Sections 98 and 100 of the New Act and Rule 85, the land transferred to the Bank in pursuance of the certificate issued by the Collector is not a transfer by sale and such a transfer did not create ownership of the said land in favour of the Respondent Bank. The Bank ought to be held to possess the land on its transfer as a Trustee till such time the land was sold by auction sale. Sub-rule 14 of Rule 85 provides that until the property is sold the society to which the property is transferred under sub-rule (5) shall use its best endeavours to lease it or to make any other use that can be made of it so as to derive the largest possible income from it property and sub- rule (15) of the said Rule states that when the society to which property in transferred under sub-rule (5) has realised all its dues, under the order in execution of which the property was transferred, from the proceeds of management of the property, if unsold, shall be restored to the defaulter. In view of these statutory provisions, the findings recorded by the Appellate Court that on transfer of the subject land in favour of the Bank in pursuance of the certificate issued by the Collector, the ownership of the said land vested in favour of the Bank are grossly erroneous.

       Sections 59-A(1), 54 and 59(1) (b)-See Maharashtra Co-operative Societies Act, 1960-Sections 98-A, 100 and 98.

       Bombay Prevention of Fragmentation Act, Consolidation of Holdings Act, 1947

       Sections 9 and 31(3)Maharashtra Co-operative Societies Act, 1960, Section 98(1)-Possession by Bank under certificate of Collector-Bank not a transferee but trustee.

       Section 31-Maharashtra Cooperative Society Rules, Rule 85(b), sub-section (14)-Bombay Co-operative Society Act, 1925, Sections 59(1)(b), 98-A and 91-A-Dispute under Section 91-A before Co-operative Court by petitioner-Written statement by Bank-Claim allowed of Bank-petitioner-By Appellate Court -Ownership of land in favour of Bank-Re- possession of land challenge by petition-Auction by Bank is a private auction and not public auction-Issuance of certificate by Collector in favour of Bank hold illegal under sub-rules (14) and (15)- Provisions of Section 53-A misplaced-Section 31 not to be deemed void of Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947-Held, consideration of certificate issued by Collector illegal-Dispute not barred by limitation as provided under Section 92(2) of New Act deserves to be confirmed-Petition allowed.

       Sections 98 and 100-Maharashtra Co-operative Societies Rules, 1961, Rule 85(5)-Sale of land for reduction of dues without effecting conveyance after possession-Certificate of possession issued by Collector-Balance amount paid by owner of land and prayed for return of land-Held-Ownership not transferred to Bank by Collector-Restoration of land after clearance of dues legal and valid.-Certificate issued by the Collector the land came to the transferred to the bank, in partial satisfaction of the amount due to it from the petitioners. This property came to be transferred to the Bank in terms of Rule 85(5) of the Maharashtra Co-operative Societies Rules, 1961 and it will be therefore, necessary to refer to the previsions of sub-rules (6), (8), (10), (11), (12), (13), (14) and (15) of Rule 85. It is clear that on a combine reading of Sections 98 and 100 of the new Act and Rule 85, the land transferred to the bank in pursuance of the certificate issued by the Collector is not a transfer by sale and such a transfer did not create ownership of the said land in favour of the respondent-Bank. The Bank ought to be held to possess the land on its transfer as a Trustee till such time the land was sold by auction sale. Sub-rule (14) of Rule 85 provides that until the property is sold, the society to which the property is transferred under sub-rule (5) shall use its best endeavours to lease it or to make any other use that can be made of it so as to derive the largest possible income from the property and sub-rule (15) of the said rule states that when the society to which property is transferred under sub-rule (5) has realised all its dues, under the order in execution of which the property was transferred, from the proceeds of management of the property, the property, if unsold, shall be restored to the defaulter. In view of these statutory provisions, the findings recorded by the Appellate Court that on transfer of the subject land in favour of the bank in pursuance of the certificate issued by the Collector, the ownership of the said land vested in favour of the bank are grossly erroneous.

       Rule 107 and Bombay Cooperative Societies Act, 1925, Sections 59-A(1), 54 and 59(1)(b)-Effect of transfer certificate-Certificate issued by Collector not a sale-Ownership of land vested in favour of Bank-Not proper and grossly erroneous-Bank becomes only trustee-Property not sold in auction-Defaulter claim of property remains intact after payment of dues--Bank can take maximum benefit to recover dues in pending sale.-It is clear that on a combined reading of Sections 98 and 100 of the New Act and Rule 85. the land transferred to the Bank in pursuance of the certificate issued by the Collector is not a transfer by the sale and such a transfer did not create ownership of the said land in favour of the respondent Bank. The Bank ought to be held to possess the land on its transfer as a trustee till such time the land was sold by auction sale. Sub-rule 14 of Rule 85 provides that until the property is sold, the society to which the property is transferred under sub-rule (5) shall use its best endeavours to lease it or to make any other use that can be made of it so as to derive the largest possible income from the property and sub-rule (15) of the said Rule states that when the society to which property is transferred under sub-rule (5) has realised all its dues, under the order in execution of which the property was transferred, from the proceeds of a management of the property, the property, if, unsold, shall be restored to the defaulter. In view of these statutory provisions, the findings recorded by the Appellate Court that on transfer of the subject land in favour of the Bank in pursuance of the certificate issued by the Collector, the ownership of the said land vested in favour of the Bank are grossly erroneous.