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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Ujjal Bhuyan, J.
Rajesh B Yemkanmardi & Ors. - Appellants
Versus
Praful J Padiya & Ors. - Respondents
Writ Petition No. 1434 of 2015
Decided On : 09-06-2020
CO-OPERATIVE SOCIETIES - AUCTION SALE - REVISION APPLICATION - MAINTAINABILITY - SALE CERTIFICATE - CONFIRMATION OF SALE - JURISDICTION OF REVISIONAL AUTHORITY - FRAUD - COLLUSION - BURDEN OF PROOF - RES JUDICATA - OTS - EFFECT - PUBLIC AUCTION - VALIDITY - PROCEDURE - RULE 107 OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES RULES, 1961 - SECTION 154 OF THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT, 1960.
Fact of the Case:
Petitioners participated in an auction sale conducted by the Special Recovery Officer under Section 156 of the Maharashtra Co-operative Societies Act, 1960 (the Act) and Rule 107 of the Maharashtra Co-operative Societies Rules, 1961 (the Rules) to recover dues from respondent Nos. 1 to 13, who were the original borrowers. Petitioners emerged as the highest bidders and purchased the property. The sale certificate was issued in their favor. Respondent Nos. 1 to 13 filed a revision application before the Divisional Joint Registrar of Co-operative Societies, Kolhapur Division, Kolhapur (respondent No. 17) challenging the sale certificate. Respondent No. 17 allowed the revision application and set aside the sale certificate. Petitioners filed a writ petition in the High Court challenging the order of respondent No. 17. The High Court allowed the writ petition and set aside the order of respondent No. 17. Respondent Nos. 1 to 13 filed a revision application before respondent No. 17 again, after impleading the petitioners as parties. Respondent No. 17 allowed the revision application and set aside the sale certificate again. Petitioners filed the present writ petition challenging the order of respondent No. 17.
Finding of the Court:
1. A revision application under Section 154 of the Act against confirmation of sale and issuance of sale certificate is not maintainable. Confirmation of sale and issuance of sale certificate are not orders within the meaning of Section 154 of the Act. An aggrieved person has an adequate and efficacious remedy under Rule 107(14)(i) of the Rules. 2. In the absence of fraud, a revision application under Section 154 of the Act against confirmation of sale and issuance of sale certificate is not maintainable. The revisional authority acts without jurisdiction in entertaining such a revision application and passing an order. 3. Once an auction sale is confirmed by the competent authority, it is not open to the authority to exercise power under Rule 107(13) of the Rules to set aside the sale. It would be against the spirit of legislative intent of giving finality to the auction sale process upon passing of an order of confirmation of sale. 4. Respondent Nos. 1 to 13 could not have re-agitated the decided issue of public auction sale by challenging the sale certificate which was nothing but a formality and a consequential action, as the recovery certificates and the auction sale had attained finality. 5. Respondent No. 17 was not justified in passing the impugned order ignoring the orders of the revisional authority in affirming the recovery certificates and the auction sale.
Issues: 1. Whether a revision application under Section 154 of the Act is maintainable against confirmation of sale and issuance of sale certificate? 2. Whether the revisional authority has jurisdiction to interfere with the sale certificate in the absence of fraud? 3. Whether respondent Nos. 1 to 13 could re-agitate the decided issue of public auction sale by challenging the sale certificate?
Ratio Decidendi: 1. The language of Section 154 of the Act shows that a revision application under Section 154 of the Act is possible either suo motu or on an application against any decision or order passed in an enquiry or proceeding by a subordinate officer. Confirmation of sale and issuance of sale certificate are not orders in the real sense. Therefore, confirmation of sale and issuance of sale certificate cannot be construed to be orders contemplated within the meaning of Section 154 of the Act. 2. In the absence of fraud, a revision application under Section 154 of the Act against confirmation of sale and issuance of sale certificate is not maintainable. The revisional authority acts without jurisdiction in entertaining such a revision application and passing an order. 3. Once an auction sale is confirmed by the competent authority, it is not open to the authority to exercise power under Rule 107(13) of the Rules to set aside the sale. It would be against the spirit of legislative intent of giving finality to the auction sale process upon passing of an order of confirmation of sale.
Final Decision: The writ petition was allowed. The order of respondent No. 17 setting aside the sale certificate was set aside and quashed.
JUDGMENT
Ujjal Bhuyan, J. - Heard Mr. Pankaj Savant, learned senior counsel for the petitioners; Mr. P. S. Dani, learned senior counsel for respondent Nos.1 to 13; Mr. S. R. Ganbavale, learned counsel for respondent Nos.14 and 15; and Mr. C. D. Mali, learned AGP for respondent Nos.16 to 19.
2. By filing this petition under Article 227 of the Constitution of India, petitioners seek quashing of order dated 24.12.2014 passed by the Divisional Joint Registrar of Co-operative Societies, Kolhapur Division, Kolhapur in Revision Application No.483 of 2012.
3. Be it stated that by the said order dated 24.12.2014, Divisional Joint Registrar of Co-operative Societies, Kolhapur Division, Kolhapur i.e., respondent No.17 allowed the revision application filed by respondent Nos.1 to 13 being Revision Application No.483 of 2012 whereby the sale certificate dated 04.08.2012 issued by the Deputy Registrar of Co-operative Societies, Kolhapur has been set aside.
4. Facts as projected by the petitioners may be noted.
5. Respondent Nos.1 to 13 are the original owners of the property situated at C.S.Nos.9081, 9082, 9083 and 9084 admeasuring 3796.13 square feet situated at Ichalkaranji, Taluka Hatkanangale in the District of Kolhapur (briefly referred to as ''the said property'' hereinafter). Respondent No.15 is a Co-operative Bank but the same is now under liquidation and is being looked after by the Liquidator. Respondent No.15 was engaged in banking business, extending loans to its members. Respondent Nos.1 to 13 are members of respondent No.15. Respondent No.14 is the Special Recovery Officer appointed under Section 156 of the Maharashtra Co-operative Societies Act, 1960 (referred to hereinafter as ''the Act'').
6. Respondent Nos.1 to 12 as the original borrowers had obtained loan from respondent No.15. However, the said borrowers defaulted in the repayment of the loan amounts. As the loan amounts were not repaid, respondent No.15 obtained recovery certificates dated 12.03.2004 against respondent Nos.1 to 12. Thereafter respondent No.14 started recovery proceedings under Rule 107 of the Maharashtra Co-operative Societies Rules, 1961 (briefly ''the Rules'' hereinafter). As a consequence, the said property was attached by respondent No.14 for auction sale to recover the dues.
7. Respondent No.14 thereafter obtained valuation report in respect of the said property from a government approved valuer by the name of Sandeep A. Tare, Architect. By his valuation report dated 19.09.2011 the government approved valuer assessed the valuation of the said property at Rs.1,52,14,000.00.
8. After obtaining the valuation report, respondent No.14 put the said property into public auction. In this connection a proclamation of sale was published by affixing a notice in the office of respondent No.14 as well as in the Taluka office on 05.03.2012 scheduling the auction on 09.04.2012. It is stated that the said notice was also served upon the borrowers on 05.03.2012 itself.
9. According to the petitioners, respondent No.14 put all the conditions contemplated under Rule 107 (11)(g) of the Rules in the auction notice. The public auction was held on 09.04.2012 as scheduled. 7 persons including petitioner No.1 participated in the auction sale. The bid offered by petitioner No.1 was Rs.1,57,00,000.00 and was found to be the highest. Being the highest bidder, bid of petitioner No.1 was accepted subject to confirmation.
10. In terms of Rule 107(11)(g), petitioners deposited 15% of the price of the immovable property. Accordingly, a sum of Rs.24,00,000.00 was deposited on 09.04.2012 itself. Thereafter the remaining amount i.e., Rs.1,33,00,000.00 was paid by petitioner No.1 on 19.04.2012. As such, the entire purchase money was paid by petitioner No.1 to the Sale Officer. Respondent No.14 thereafter gave notice to the original borrowers informing them that the said property was auctioned for Rs.1,57,00,000.00, giving them 30 days time to deposit the dues along with 5% interest on
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