Court clarified that loss from non-sale of pledged goods must be determined under Section 91 disputes, separate from recovery proceedings under Section 101.

1.All these writ petitions can be decided together by this common judgment.

Rule. Heard finally with consent of counsel for the parties.

2. In Writ Petition No.2673/2018 challenge has been raised to the order dated 27/04/2018 that has been passed by the Deputy Registrar, Co- operative Societies directing issuance of Recovery Certificate under Section 101 of the Maharashtra Co-operative Societies Act , 1960 (for short, the said Act).

The facts briefly stated are that it is the case of the petitioners that they had availed credit facility from the respondent No.3-Bank by pledging goods with it. Agreements in that regard granting short term loan for a period of three months were entered into between 14/03/2016 to 02/05/2016. It is the case of the petitioners that in the eventuality of the amounts borrowed not being repaid within period of three months, the Bank was entitled to sell the goods that were pledged with it. The goods pledged were tur and tur dal. The loan amounts granted were to the extent of 70% of the value of the goods pledged. The petitioners did not repay the amounts due within the period of three months and hence according to the petitioners the Bank ought to have sold off the pledged goods. The Bank did not do so and instead in May 2017 filed proceedings under Section 101 of the said Act. According to the petitioners the value of the goods pledged were considerably reduced with passage of time as a result of which the petitioners were put to monetary loss. In the proceedings that were filed under Section 101 of the said Act the Deputy Registrar on 09/04/2018 rejected the preliminary objection that was raised by the petitioners to the maintainability of the proceedings under Section 101 of the said Act. In the meanwhile each petitioner filed a dispute under Section 91 of the said Act seeking a declaration that by not selling off the pledged goods and by not exercising right under Section 176 of the Indian Contract Act , 1872 (for short, the Act of 1872) the petitioners were required to suffer loss at the instance of the Bank. The petitioners thus sought recovery of damages from the Bank. On 27/04/2018 the Deputy Registrar decided the proceedings under Section 101 of the said Act and directed issuance of Recovery Certificates against the petitioners. Being aggrieved by the issuance of the said Recovery Certificates the same have been challenged in the present writ petition.

3. In Writ Petition Nos.4675/2018 to 4682/2018 the Bank has challenged the order dated 21/05/2018 passed by the Divisional Joint Registrar, Co-operative Societies, Amravati whereby the order dated 09/04/2018 that was passed by the Deputy Registrar, Co-operative Societies rejecting the preliminary objection filed by the petitioners was set aside and preliminary objection as raised to the maintainability of the proceedings under Section 101 of the said Act has been upheld. According to the Bank the stand taken by the petitioners that the Bank ought to have sold off the pledged goods was based on an incorrect premise that the Bank was duty bound to have acted under Section 176 of the Act of 1872. It was the case of the Bank that the amounts were borrowed after each of them executed a Promissory Note and therefore there was a contract to the contrary between the parties due to which and the Bank could not be compelled to sell the pledged goods. According to the Bank the provisions of Section 101 of the said Act had been rightly invoked and the dispute as filed by the petitioners under Section 91 of the said Act was mer