2023 Supreme(Ker) 552
IN THE HIGH COURT OF KERALA AT ERNAKULAM
AMIT RAWAL, C.S. SUDHA, JJ.
Thrissur District Co operative Bank Ltd. - Appellant
Versus
Thomas - Respondent
W.A. No. 338 & 483 of 2021
Decided On : 12-04-2023
For the Appellant :Raju Joseph (Sr. Advocate), P.C. Sasidharan, P.K. Soyuz, E.V. Babychan & Jelson J. Edampadam.
For the Respondents: T.K. Vipinda (Government Pleader), Anil K. Nair & Aswin P. John.
Headnote:- Kerala Co-operative Societies Act, 1969 - Rule 81 Subject: - Auction Sale of Mortgaged Property ACT SECTION LIST - Kerala High Court Act, 1958 - Section 5; Kerala Co-operative Societies Act, 1969 - Rule 81 SUMMARY The court addressed the auction sale of mortgaged property and the compliance with Rule 81 of the Kerala Co-operative Societies Act, 1969. The petitioner defaulted on a loan from a cooperative bank, leading to an auction of the mortgaged property. The court found that the auction purchaser had not deposited the balance purchase money within the stipulated time as per Rule 81(h), rendering the sale a nullity. However, considering the history of default and multiple opportunities granted to the petitioner for payment, the court held that neither the bank nor the auction purchaser were at fault. Consequently, it set aside the earlier judgment and dismissed the writ petition.
Fact of the Case:
The case involved a defaulted loan from a cooperative bank leading to an auction sale of mortgaged property.Finding of the Court:
The court found that while there was non-compliance with Rule 81(h) regarding depositing balance purchase money within stipulated time, neither the bank nor auction purchaser were at fault due to multiple opportunities granted to the petitioner for payment. ISSUES Compliance with Rule 81(h) of Kerala Co-operative Societies Act, default on loan repayment, and validity of auction sale.Ratio Decidendi:
Non-compliance with statutory provisions does not automatically render actions by other parties invalid if they have acted in good faith and have been given ample opportunity for compliance by defaulting party. FINAL DECISION The impugned judgment was set aside and Writ Petition No.11151/2009 was dismissed.JUDGMENT :
C.S. Sudha, J.
These intra-court appeals filed under Section 5 of the Kerala High Court Act, 1958 are against the judgment dated 03/12/2020 in W.P.(C) 11151/2009. The appellants in W.A.No.338/2021 are respondents 1, 5 and 6 respectively; the appellant in W.A.No.483/2021, the 4th respondent and the 1st respondent herein, the petitioner in the Writ Petition. The parties and the documents will be referred to as described in the writ petition.
2. The petitioner had availed himself of a loan from the first respondent (R1), Co-operative Bank, by mortgaging three items of his immovable property having a total extent of 92.134 cents. The petitioner committed default in the repayment of the loan. ARC.No.497/2005 filed by R1-Bank, for recovery of the loan amount, resulted in award dated 21/011/2005 for an amount of Rs.14,67,813/-. In execution of the said award, the property mortgaged by the petitioner was auctioned on 21/08/2008. The property was purchased by the 4th respondent-auction purchaser (R4) for an amount of Rs.32,52,000/-. The sale held on 21/08/2008 was challenged by the petitioner on the ground that clause (h) of Rule 81 of the Co-operative Societies Rules, 1969 (the Rules) has been violated in as much as the balance purchase money had not been paid by R4 within the time stipulated under the Rule and hence the same will have to fail. The petitioner therefore prayed for the quashing of Ext.P8(a) and Ext.P9 orders by which the second respondent - Sale Officer (R2) permitted R4 to deposit the balance purchase money beyond the period stipulated and thereafter confirmed the sale and, for a declaration that the sale of the mortgaged properties conducted on 21/08/2008 and its confirmation is illegal as it is against the mandatory provisions of the Kerala Co-operative Societies Act, 1969 and the Rules.
3. R1- Bank filed an affidavit dated 11/05/2009 in which it is averred that the petitioner is a chronic defaulter of the loan, which was availed as early as in the year 2003. On 08/04/2009 when the writ was admitted, an interim order was issued by this Court staying the confirmation of the sale on condition that the petitioner deposits the auction amount and a further amount of Rs.2,00,000/-. The petitioner never complied with the said order. Instead, he filed a petition seeking extension of time. On 24/04/2009 another interim order was passed by which the petitioner was granted two weeks’ time from the said day to comply the order dated 08/04/2009, subject to the condition that he deposited a sum of Rs.5,00,000/- on 27/04/2009. It was also directed that in the event of such deposit being made, the time fixed for depositing the bid amount and the additional sum of Rs.2,00,000/- would stand extended for a period of two weeks from 24/04/2009. Pursuant to the same, the petitioner remitted an amount of Rs.5,00,000/- on 27/04/2009. However, the balance amount was not remitted and therefore R1-Bank contended that the petitioner was not entitled to any further reliefs.
4. The auction purchaser, namely, R4, filed a counter affidavit in which he contended that there was no illegality in the sale conducted by R1-Bank. By Ext.P9 order, the sale in his favour has been confirmed. Pursuant to the directions in Ext.P6 judgment, the petitioner had filed Ext.P8 application before the Sale Officer for setting aside the sale. On receipt of the application, the officer concerned issued notice to all the parties and thereafter conducted a hearing on 09/12/2008. On the said day the parties entered into a compromise by which it was agreed that, in case the petitioner deposited the entire amount within 15 days, the sale would be set aside. However, the petitioner did not comply with the condition in the compromise and hence on 26/12/2008 by Ext.R4(b) order, Ext.P8 application was dismissed.
5. The learned Single Judge found infraction of clause (h) of Rule 81 of the Rules in as much as R4, the auction purchaser, had not deposited the balance purchase m