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IN THE HIGH COURT OF ALLAHABAD
VIVEK CHAUDHARY, MANISH KUMAR, JJ.
Union Bank Of India - Petitioner
Versus
M/s. D.V. Poultry Farm Thru Prop. Mr. Dharamvir Sharma And Ors. - Respondents
Writ C. No. 3820 Of 2019
Decided On : 20-12-2023
SARFAESI - Recovery of Loan - U.P. Co-operative Societies Act, 1965, Sec. 70, Sec. 71A - The judgment discussed the impugned order passed under Section 70 and 71A of the U.P. Co-operative Societies Act, 1965. It highlighted the statutory alternative remedy available to the petitioner Bank under Section 98 of the Act, 1965 and the simultaneous proceedings under the Recovery of Debts and Bankruptcy Act, 1993 and the SARFAESI Act. The court emphasized the jurisdictional limitations of the authority under the Act, 1965 and the absence of an arbitration agreement between the parties.
Fact of the Case:
The petitioner Bank sought to quash the impugned order passed under Section 70 of the U.P. Co-operative Societies Act, 1965, which directed the Bank to release the mortgaged property to the borrower. The borrower had defaulted on the loan, leading to the Bank declaring the loan account as Non Performing Assets and initiating recovery proceedings under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act, 1993.
Finding of the Court:
The court found that the impugned order was without jurisdiction as it pertained to directions issued against the petitioner Bank, which was an outsider to the dispute between the borrower and the Society. The court also emphasized the statutory alternative remedy available to the petitioner Bank under Section 98 of the Act, 1965 and the simultaneous proceedings under the Recovery of Debts and Bankruptcy Act, 1993 and the SARFAESI Act.
Issues: The key issue was whether the authority under the U.P. Co-operative Societies Act, 1965 had jurisdiction to pass the impugned order against the petitioner Bank, which was an outsider to the dispute between the borrower and the Society.
Ratio Decidendi: The court held that the impugned order was without jurisdiction as the authority under the Act, 1965 was empowered to decide disputes between the Society and its members, and the petitioner Bank was not a member of the Society or its Committee of Management. The court also emphasized the statutory alternative remedy available to the petitioner Bank under Section 98 of the Act, 1965 and the simultaneous proceedings under the Recovery of Debts and Bankruptcy Act, 1993 and the SARFAESI Act.
Final Decision: The writ petition was allowed, and the impugned order dated 23.10.2018 passed by the authority under the U.P. Co-operative Societies Act, 1965 was quashed.
JUDGMENT :
1. Present petition has been preferred by the petitioner-Bank for quashing of the impugned order dated 23.10.2018 passed by the respondent no. 3-Mediator/Assistant Housing Commissioner/Assistant Registrar, Avas and Vikas Parishad, 104, Mahatma Gandhi Marg, Lucknow under Section 70 of the U.P. Co-operative Societies Act, 1965 hereinafter referred to as ( the Act,1965) by which the respondent no. 3 had directed the respondent no. 1-Shri Dharamveer Sharma, the proprietor of M/s D.V. Poultry Farm (Mortgagor) to contact the Bank (present petitioner) for payment of loan in accordance with law. It was further directed to the respondent no. 2/ Bank (present petitioner) to release the Plot No. C-120 and give physical possession to Shri Dharamveer Sharmaproprietor of respondent no. 1 in the present writ petition.
2. The brief facts of the case are that Mr. Dharamveer Sharma, the proprietor of respondent no. 1 purchased a plot no. C-120 admeasuring area 248.33 Sq. Yards from respondent no. 2-Air Force Hindon Cooperative Housing Society Limited, Defense Colony Bhopura, Ghaziabad.
3. The respondent no. 1 approached the petitioner-Bank for cash credit facility of Rs. 30 Lac for working capital requirements of running a poultry unit and Term Loan of Rs. 110 lac for construction of poultry shed and installation of machinery. The request of respondent no. 1 was considered by the petitioner-Bank and the aforesaid limits were sanctioned to the respondents on certain terms and conditions stipulated in C.S.I. dated 25.10.2011.
4. The respondent no. 1 had again approached the petitioner Bank for another Term Loan Facility of the Rs. 24 lac for the purpose of construction of poultry shed at Village Pelokhurd, Tehsil Behat, District Saharanpur, U.P., which was sanctioned by the petitioner-Bank on 13.09.2012.
5. The aforesaid Cash Credit Limit Facility and Term Loan Facility were secured by mortgage of properties i.e. land admeasuring area 0.646 hectare out of Khasra No. 280/282/292 and Rakba No. 0.779/0.287/0.041, Mauza-Pelokhurd, Tehsil Behat, District Saharanpur, U.P. and also House No. C-120 built on Plot admeasuring area 248.33 square yards, situated in Village Brahmpura(Bhopura), Pargana-Loni, Tehsil and District Ghaziabad known as Defense Colony (Hindon), Ghaziabad, U.P which is subject matter in present dispute.
6. The proprietor of respondent no. 1 made default in payment of loan amount due to which the loan account of the proprietor of respondent no. 1 was declared as Non Performing Assets on 13.10.2014.
7. The petitioner-Bank had proceeded against the respondent no. 1 by issuing a demand notice dated 28.11.2014 under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (hereinafter referred to as, the Act of 2002). The respondent no. 1 neither raised any objection nor made the payment in the account due to which the petitioner-Bank had taken symbolic possession of the secured property i.e. C-120 situated in Village Brahmpura (Bhopura), Pargana-Loni, Tehsil and District Ghaziabad known as Defense Colony (Hindon), Ghaziabad, U.P on 21.02.2015.
8. The petitioner Bank had filed a Original Application No. 247 of 2015 for recovery of bank dues under Section 19 of the the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter referred to as, the Act, 1993) before the Debts Recovery Tribunal, New Delhi. During the pendency of O.A. No. 247 of 2015, the petitioner Bank had obtained an order dated 30.12.2015 for physical possession of the mortgaged property under Section 14 of the Act, 2002.
9. Against the demand notice dated 28.11.2014 issued under Section 13 (2) of the Act, 2002 and subsequently proceedings for taking possession of mortgaged property in terms of notice dated 04.03.2015 under Section 13 (4) of the Act, 2002, the respondent no. 1 had filed a SARFAESI Application No. 100 of 2016 (M/s D V Poultry Farm Vs. Corporation Bank before the Debts Recovery Tribun
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