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2010 Supreme(Ori) 231
2010 (I) OLR — 947
A.S. NAIDU AND B.N. MAHAPATRA, JJ.
Kartika Kisan and others...Petitioners
Versus
State of Orissa and others...Opp. Parties
O.J.C. No.4741 of 2002
Decided on 16th April, 2010.
For Petitioners:M/s. R. P. Mohapatra and D. Mohapa¬tra
For Opp.Parties:M/s. Jitamitra Mohanty, A. K. Panigrahi and A. N. Upadhaya (O.Ps.3 & 4)
M/s. P. K. Rath, R. C. Jena, P. K. Satpathy, R. N. Parija and A. K. Rout (O.P. No.5)
Headnote:1. ORISSA CO-OPERATIVE SOCIETIES ACT, 1962 - Sec. 91 - Orissa Co-operative Societies Rules, 1965 - Rule 141 - Issuance of notice as contemplated under Sub-rule (3) of Rule 141 comes only after expiry of 3 months from the date of notice under clause (a) of Sub-section (2) of Section 91 - Notice as contemplated under Sub-rule (3) of Rule 141 is not the same notice as contemplated under Section 91(2)(a) of the Act. (Para - 10)
2. ORISSA CO-OPERATIVE SOCIETIES RULES, 1965 - Rule 141(3) - Only after receipt of the application, the Principal Officer shall give notice in writing by Registered post to all persons named in the application that he intends to sell property giving particulars of the property to be sold, if the amount claimed by the bank including expenses incurred by it in service of the notice is not paid within a time to be allowed by him. (Para - 12)
3. PROPERTY - Condition precedent for taking away someone's property or disposing of the secured asset is that the authority must ensure compliance of the statutory provisions. (Para - 8)
4. STATUTE - When the action of the State or its instrumentalities is not on par with the rules or regulations and supported by the statute, the Court must exercise its jurisdiction to declare such an act to be illegal and invalid.
Whenever any action of the authority is in violation of the provisions of the statute or the action is constitutionally illegal, it cannot claim any sanctity in law; and there is no obligation on the part of the Court to sanctify such an illegal act. Wherever the statutory provision is ignored, the Court cannot become a silent spectator to such an illegality and it becomes the solemn duty of the Court to deal with the persons violating the law with heavy hands. (Para - 8)
5. ORISSA CO-OPERATIVE SOCIETIES ACT, 1962 - Sec. 91 - Orissa Co-operative Societies Rules, 1965 - Rule 141 - While a mortgaged property is put to sale in public auction to realise the defaulted amount, utmost care should be taken to protect the interest of the owner of the property - Sub-rule (7) of Rule 141 of O.C.S. Rules provides that the sale officer shall have the power to decide the property in the lots as he thinks it necessary in the interest of the debtor or the Bank. (Para - 15)
6. PUBLIC MONEY - Public money has to be recovered from the defaulters who do not repay the loan amount to the financial institutions - This does not mean that financial institutions are at liberty to dispose of the secured asset of the defaulters in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions and principles of natural justice. (Para - 8)
7. WRIT - Jurisdiction - It is discretionary in nature and must be exercised in furtherance of justice - Court has to keep in mind that its order should not defeat the ends of justice nor it should permit an order to secure dishonest advantage or perpetuate an unjust gain or approve an order which has been passed in contravention of the statutory provisions. (Para - 7)
JUDGMENT
B.N. MAHAPATRA, J. — This writ petition has been filed with a prayer for quashing the order of confirmation of sale (Annexure-2), passed by the Principal Officer of the Co-operative Department in the district of Sambalpur and ARCS, Sambalpur Circle, under Section 103 (4) Schedule-1 of Orissa Co-operative Societies Act, 1962 (Orissa Act II of 1963) (in short, the ‘O.C.S. Act’) in E.P. No.674/1999-2000 and the entire proceedings taken by the opposite parties in connection with the said order.
2. The facts and circumstances giving rise to the present writ petition are that opposite party No.6, Munikisan, had availed a loan of Rs.50,000/- from the O.P.-Bank to install a Flour Mill. The petitioners stood guarantors by mortgaging their properties described in the R.O.R. under Annexure-1. Opposite Party No.6 could not repay the said loan as per the terms of the loan agreement. As the opposite party No.6 defaulted to pay back the loan amount, opposite party No.3, Asst. Registrar, Co-operative Societies, Sambalpur Circle, sold the property in favour of opposite party No.5, Narayan Mohapatra, in public auction held on 29.6.2001 against an amount of Rs.90,500/-. Consequently, the Principal Officer of the Co-operative Depart¬ment confirmed the said sale on 6th October, 2001 by the impugned order passed under Annexure-2. Being aggrieved, the petitioner-guarantors have filed the present writ petition.
3. Miss. Deepali Mohapatra, learned counsel appearing on behalf of the petitioners vehemently argued that actions of the opposite parties, inasmuch as the order of confirmation of sale of immovable properties under Annexure-2 and the proceedings initiated by the opposite parties are illegal, arbitrary and unsustainable in law. She strenuously argued that the properties of the petitioners were sold without complying the provisions of Section 91(2)(a)(ii) of the O.C.S. Act and Rule 141 of Orissa Cooperative Societies Rules (in short ‘O.S.C. Rules’). The peti¬tioner are poor Scheduled Tribe and illiterate people and their properties have been sold without complying with the relevant provisions of the Statue and in violation of the principles of natural justice. The O.P.-Bank assumes no jurisdiction to sell the properties of the petitioners to Opp.Party No.5 without following due process of law. The petitioners had no knowledge that their properties had been mortgaged by opposite party No.6 for taking loan from opposite party No.3. They are all along in possession of the properties in question and possession has not been delivered to opposite party No.3. Only when opposite party No.5 tried to take possession of the properties, the petitioners could know about the sale and filed this writ petition on 26.4.2002, i.e., before the sale certificate was issued on 13.05.2002. This Court vide order dated 6.5.2002 granted interim order of status quo. Opposite Party No.3 has not complied with the provisions of Rule 141 of the Orissa Co-operative Societies Rules, (in short, ‘O.C.S. Rules’). One Benga Kisan and one Ura Kisan died during pendency of the proceedings who had share in the joint family property and their properties were sold without following due process of law. Ac.15.00 of land was sold at a throw away price ignoring the petitioner’s interest.
4. Learned Counsel appearing on behalf of opposite parties 3 and 4- Bank, submitted that the petitioners executed a mortgage bond and one Gonga Kisan, brother of Muni Kisan, had attested the mortgage bond and the non-encumbrance certificate for twelve years was also produced. All the co-sharers executed a ‘Kartaship’ declaration in favour of Muni Kisan. Thereafter oppo¬site party No.4, Bank disbursed Rs.50,000/- to Muni Kisan who paid only Rs.1630/- till 7.1.1999. Since the loan amount was not cleared up in time, on 7.1.1999, the Committee of Management of Jharsuguda CARD Bank Ltd., resolved to initiate a case under Section 91 of the OCS Act. Thereafter, the Secretary, Jharsuguda Co-operative Ag
