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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUREPALLI NANDA, J.
M/s S.K. Industries Cotton Merchant and Commission Agent – Petitioner
Versus
The State of Telangana and Others – Respondents
W.P. No. 4379 of 2021
Decided On : 16-08-2023
CO-OPERATIVE SOCIETIES - LIQUIDATION - PAYMENT OF DUES - DELAY - INTEREST - SECTION 121(2) OF A.P. CO-OPERATIVE SOCIETIES ACT 1964 - INTERPRETATION - COURT'S DISCRETION TO GRANT LEAVE TO FILE SUIT - FACTORS CONSIDERED - MENTAL AND FINANCIAL DISTRESS OF CLAIMANT - INACTION OF AUTHORITIES - REASONABLE SETTLEMENT.
Fact of the Case:
Petitioner, a cotton merchant, supplied cotton to a co-operative spinning mill. The mill issued a cheque for the payment, which was dishonored. The mill went into liquidation, and the state government invited bids for the sale of its assets. The petitioner filed a writ petition challenging the notification, which was disposed of with a direction to deposit the sale proceeds in the A.P. Public Enterprise Department and receive claims of unpaid traders. The petitioner submitted a claim, but it was not paid. He filed a money suit, which was disposed of with a direction to approach the Registrar of Cooperative Societies for leave to continue the suit. The petitioner submitted a representation to the Registrar, but leave was not granted. He filed a writ petition challenging the Registrar's order, which was allowed, and the matter was remanded back for reconsideration. The Registrar passed an order stating that the petitioner had given an undertaking to accept 50% of the claim amount and that he could not seek a modified settlement. The petitioner challenged this order by filing the present writ petition.
Finding of the Court:
The court found that the Registrar failed to consider the mental and financial distress suffered by the petitioner due to the non-settlement of dues for over 20 years. The court also found that the Registrar's offer to pay only 50% of the claim amount after such a long delay was not reasonable.
Issues: 1. Whether the Registrar erred in refusing to grant leave to the petitioner to file a suit for recovery of his dues from the co-operative spinning mill in liquidation? 2. Whether the Registrar's offer to pay only 50% of the claim amount after a delay of over 20 years was reasonable?
Ratio Decidendi: 1. Section 121(2) of the A.P. Co-operative Societies Act 1964 empowers the Registrar to grant leave to file a suit against a co-operative society in liquidation. However, this power is discretionary, and the Registrar must consider all relevant factors before exercising it. 2. In the present case, the Registrar failed to consider the mental and financial distress suffered by the petitioner due to the non-settlement of dues for over 20 years. The Registrar also failed to consider that the petitioner had given the undertaking to accept 50% of the claim amount under duress and in the hope that the dues would be settled immediately. The Registrar's offer to pay only 50% of the claim amount after such a long delay was not reasonable.
Final Decision: The court allowed the writ petition, set aside the Registrar's order, and directed the Registrar to reconsider the petitioner's representation and pass appropriate orders within two weeks.
ORDER :
1. Heard the learned Senior Counsel Sri Chandrasen appearing on behalf of the Petitioner and the learned Government Pleader for Industries and Commerce appearing on behalf of the Respondents.
2. This Writ Petition is filed praying to issue a Writ of Mandamus/certiorari to set-aside the order dated 17.06.2020 vide proceedings No. R.C. No. 5218/03-S1, of the 2nd respondent by declaring the same as illegal, arbitrary, violative of Article 14, 21 of the Constitution of India and section 121 (2) of A.P. Co-operative Societies Act 1964 and consequently direct the respondents to pay a sum of Rs. 1,15,78,745/- with interest calculated 18% interest to the petitioner forthwith.
3. The case of the Petitioner, in brief, is as follows:
(b) The said spinning mills issued a cheque for Rs. 75,92,620/- dated 30.1.1999. The said cheque was dishonored. The said spinning mills went on liquidation and the erstwhile State of Andhra Pradesh issued a Notification dated 24.08.2000 inviting bids for the sale of assets of the said co-operative spinning mills, Adilabad.
(c) Subsequently, the petitioner filed W.P. No. 1458 of 2001 before this High Court questioning the said Notification. This court was pleased to dispose the said W.P on 08.05.2001 directing to deposit the sale proceeds of said spinning mills in the A.P. Public Enterprise Department and receive the claims of unpaid traders.
(d) On 03.08.2001, the petitioner received a letter from the Chairman A.P. Public Enterprise Department asking the petitioner to submit his claim. Accordingly, the Petitioner made a claim demanding Rs. 75,92,620/- along with interest @ 18 % per annum i.e. total Rs. 1,15,78,748/- but the same was not paid to the Petitioner. Aggrieved by the same, the petitioner issued a legal notice dated 16.03.2002 to the concerned authorities of State of AP and then filed a money suit i.e. O.S. No. 16 of 2010.
(e) The 3rd Respondent, in the above-mentioned money suit, stated that the liquidation proceedings of the Adilabad Cotton Grower Co-operative Spinning Mills Adilabad was already completed and the assets of said spinning mills were already sold to some third party in auction sale. Thus, the court was please to dispose O.S. No. 16 of 2010 on 06.10.2015, observing that the leave of the Registrar Cooperative Societies is essential for continuation of said proceedings in O.S. No. 16 of 2010 and accordingly liberty was given to the petitioner to approach concerned authorities for redressal.
(f) On 30.01.2016, the petitioner submitted a representation before the 2nd Respondent, who is acting as Registrar for co-operative societies for the State of Telangana, requesting to grant leave to proceed in O.S. No. 16 of 2010. However, the 2nd Respondent failed to grant leave.
(g) Aggrieved by the same, the petitioner filed W.P. No. 5880 of 2016 before this High Court, but at admission stage this Court was pleased to dispose said W.P on 26.02.2016 directing the 2nd Respondent to pass appropriate orders on the representation request dated 30.01.2016 within a period of four weeks from the date of receipt of the copy of the order.
(h) Consequently, the Petitioner received a copy of proceedings issued by the 2nd Respondent herein vide Rc. No. 5218/2003-S dated 29.03.2016, wherein it was informed that the 2nd Respondent cannot grant the leave to the petitioner under section 121(2) of A.P. Co-operative societies Act to file petition before the Family court cum IV Additional District & Sessions Judge Adilabad for recovery of claimed amount. It was informed that further action will be initiated as per the Liquidation norms b
The Registrar's power to grant leave to file a suit against a co-operative society in liquidation under Section 121(2) of the A.P. Co-operative Societies Act 1964 is discretionary and must be exercis....
A Court cannot grant an injunction to secure a debt, which is yet to be finally determined, to the detriment of a third party.
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