A sale officer may proceed to sell a defaulter's properties other than mortgaged property in applying for debt recovery if suitable under the cooperative society's regulations.

1The question that arises for consideration in this original petition is, whether a member of a cooperative society, who availed of a non agricultural loan after executing a declaration creating a charge on all his properties, would be legally justified in preventing the sale officer from proceeding with the sale of his other properties without proceeding against the mortgaged property for realisation of the amount covered in the arbitration award? In other words, whether, under Ss.36 and 76 of the Kerala Cooperative Societies Act read with R.51, 72, 74 and 75 of the Rules framed thereunder, the sale officer can legally proceed with the sale of other immovable properties of the defaulter first, without proceeding against the properties mortgaged for realising the amount covered in the arbitration award? The answer is, yes, the sale officer can.

2The facts necessary for the disposal of the original petition are as follows: The petitioner applied for a loan of Rs. 10,000/- on 23-4-1986, for the construction and repairs of her house. She, along with her husband Chacko, executed a guarantee bond making a charge on all their properties for repayment of the loan amount. Along with the application, the petitioner had produced an encumbrance certificate for a period of 13 years from 1974 to 1986. The board of directors, as per the resolution dated 25-4-1986, sanctioned the loan. The petitioner, along with her husband, executed a mortgage in favour of the bank in respect of 64 cents of land comprised in Sy.No.684/1 of Enanellur Village. On 26-5-1986, the loan amount was disbursed to the petitioner. Since default was committed in repaying the loan amount, the bank filed A.R.C.No.309 of 1988 under S.69 of the Kerala Cooperative Societies Act against the petitioner and her husband as defendants 1 and 2. The arbitrator issued notice to both the petitioner and her husband, but they remained ex parte. No evidence was also adduced on their behalf. On 25-3-1988, the arbitrator passed Ext. P1 award in favour of the first respondent bank, awarding the entire claim made by the bank with interest and costs. The arbitrator also charged all the immovable properties of the defendants for the amount decreed. Neither the petitioner nor her husband took up the matter in appeal under S.82 of the Act before the Cooperative Tribunal. Thereafter, the first respondent bank initiated execution proceedings before the Assistant Registrar of Cooperative Societies, who appointed the second respondent as Sale Officer. The second respondent issued notice to the petitioner to pay the entire amount awarded as per Ext. P1. Though notice was served on the petitioner, she did not pay the amount. Thereafter, the second respondent issued another notice dated 2-12-1988 to the petitioner proposing proceedings against the property covered in Sy.No.684/1 of Enanellur Village. Then it was found that the said property was not available for attachment or sale for realising the amount covered by Ext. P1 award. The said property belonged to the husband of the petitioner. In the year 1961, he executed Settlement Deed No.2760/61 of Moovattupuzha Sub Registry assigning the entire property in favour of his son, Jose, but reserving a life interest in the said property. On 13-11-1961, possession was given to Jose. Thereafter, in the year 1964, Jose executed Sale Deed No. 2900/64 of Kothamangalam Sub Registry alienating the property on consideration to a third party. The petitioner's husband also joined in that transaction by selling the life estate reserved for him in favour of a third party. Thus, by 1964, neither the petitioner, her husband nor their son had any interest over the said 64 cents of land in Sy.No.684/1. It was suppressing this fact, a mortgage deed was executed in favour of the 1st respondent bank by the petitioner along with her husband in respect of the said property. The encumbrance certificate produced by the petitioner also did not disclose the earlier settlement dee