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IN THE HIGH COURT OF BOMBAY
M.G. Sewlikar, J.
Munjaji S/o Kondiba Chate – Appellant
Versus
State Of Maharashtra and Others – Respondents
W. P. No. 570 of 2012
Decided On : 30-07-2021
The court analyzes the provisions of Rule 107 of the Maharashtra Co-operative Societies Rules, which govern the attachment and sale of immovable property. The court finds that the auction proceedings violated several provisions of the rules, including the requirement to give proper notice, the need for a fresh proclamation when the auction is adjourned for more than seven days, and the mandatory deposit of the remainder of the purchase money within 15 days. The court also examines relevant case law and precedents, including the Supreme Court's decision in M/s Shilpa Shares and Securities and others vs. National Co-operative Bank Ltd. and others, which held that non-compliance with the requirement to deposit the remainder of the purchase money within the specified time renders the sale a nullity. The court concludes that the auction was conducted in violation of the rules and sets aside the auction.
Fact of the Case:
The petitioner challenges the validity of the auction proceedings in which their properties were sold in auction to the highest bidder. The petitioner argues that there were several illegalities committed during the auction process, including the failure to give proper notice, the adjournment of the auction without issuing a fresh proclamation, and the delay in depositing the remainder of the purchase money. The respondents argue that the petitioner did not follow the proper procedure for challenging the auction and that the auction was conducted in accordance with the rules. The court examines the relevant provisions of the Maharashtra Co-operative Societies Act and Rules and concludes that the auction was indeed conducted in violation of the rules. The court sets aside the auction and orders the refund of the purchase price to the highest bidder.
Finding of the Court:
The court analyzes the provisions of Rule 107 of the Maharashtra Co-operative Societies Rules, which govern the attachment and sale of immovable property. The court finds that the auction proceedings violated several provisions of the rules, including the requirement to give proper notice, the need for a fresh proclamation when the auction is adjourned for more than seven days, and the mandatory deposit of the remainder of the purchase money within 15 days. The court also examines relevant case law and precedents, including the Supreme Court's decision in M/s Shilpa Shares and Securities and others vs. National Co-operative Bank Ltd. and others, which held that non-compliance with the requirement to deposit the remainder of the purchase money within the specified time renders the sale a nullity. The court concludes that the auction was conducted in violation of the rules and sets aside the auction.
Ratio Decidendi: The court holds that the auction proceedings were conducted in violation of the provisions of Rule 107 of the Maharashtra Co-operative Societies Rules. The court finds that the failure to give proper notice, the adjournment of the auction without issuing a fresh proclamation, and the delay in depositing the remainder of the purchase money rendered the auction null and void. The court sets aside the auction and orders the refund of the purchase price to the highest bidder.
Result: The court allows the writ petition, sets aside the auction sale, cancels the sale certificate, and orders the respondent bank to refund the purchase price to the highest bidder with interest. The court stays the operation of the order for six weeks.
JUDGMENT :
1. Rule. Rule made returnable forthwith.
2. By consent, heard both the sides finally at the admission stage.
3. By this petition under Article 227 of the Constitution of India, petitioner is challenging the validity of the auction proceedings vide which, properties mortgaged with the bank-respondent No. 4 came to be sold in auction to respondent No. 9.
4. Facts leading to this petition can be summarised as under :—
5. It is further contended that the Special Recovery Officer-respondent No. 5 decided to sell the mortgaged lands i.e. block No. 440, 437 and 102. He, therefore, issued a proclamation dated 9th September, 2010, for auctioning the aforesaid properties. This proclamation came to be published on 14th September, 2010 in newspaper namely daily “Zunzar Neta”.
6. It is further contended that in the meantime, petitioner had filed Revision Application No. 58/2010 before the Divisional Joint Registrar, Co-operative Societies, Latur, against sanction dated 26th July, 2010 given by the District Deputy Registrar, Co-operative Societies, Beed. The Divisional Joint Registrar, Latur, vide order dated 28th September, 2010, was pleased to stay the sanction and proclamation of auction dated 9th September, 2010. This revision was dismissed by the Divisional Joint Registrar on 23rd November, 2010.
7. Respondent No. 5 attached the property of petitioner vide proclamation dated 26th May, 2010. Auction was scheduled on 14th September, 2010 and tenders were to be filled in by 29th September, 2010. The auction was held on 29th November, 2010 and respondent No. 9 being the highest bidder at the auction, purchased the lands for Rs.1,26,00,000/-. 15% of the purchase price, as required by Rule 107(11)(g) of the Maharashtra Co-operative Societies Rules, 1961 (for short “MCS Rules”) was deposited on the same day. Remainder 85% of the purchase price was deposited on 12th January, 2011 by respondent No. 9 and sale-deed was executed on 19th January, 2011.
8. It is the contention of petitioner that illegalities have been committed while issuing proclamation. Proclamation of auction was issued on 9th September, 2010. However, it was published in Dainik Zunzar Neta on 14th September, 2010. In this proclamation, the date of auction is not mentioned. As per Rule 107(11)(e) of the MCS Rules, thirty days notice ought to have been given for holding auction. However, in the present case, the date of auction was not published. The date of calling tenders was mentioned as 28th September, 2010. It is further contended that actual auction took place on 29th November, 2010. The auction was to be held on 28th September, 2010 but actually it was held on 29th November, 2010. In terms of proviso to Rule 107(11)(e) of the MCS Rules, if auction is not conducted within seven days from the scheduled date, fresh proclamation has to be issued. This procedure is not followed in the present case. Upset price was fixed at Rs.98,10,000/-. The purchaser deposited 15% of the price immediately. As per Rule 107(11)(h), the remainder 85% amount was to be deposited. However, the same was not deposited within the period prescribed by Rule 107(11)(h). It was deposited on 12th January, 2011. It is contended that all these illegalities have been committed by the Special Recovery Officer – respondent No. 5 because of which, the entire auction needs to be quashed and set aside. According to the petitioners,
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