Maharashtra Co-operative Societies Act, 1960 — Sections 98, 156 — Execution of award — Property of judgment-debtor liable to attachment and sale — Challenge to validity of mortgage after award attained finality — Impermissible. (Paras 21–23)
An ex parte award dated 04.04.1994 under Section 91 attained finality; application to set aside the award was rejected. The award operated as a money decree executable under Section 98 as a decree of a Civil Court. The predecessor-in-interest of respondents being a judgment-debtor, his property was amenable to attachment and sale for recovery of decretal dues. Objection regarding absence of prior Government permission for mortgage was held irrelevant at the stage of execution of a final award.
Ratio Decidendi: Once an award under the 1960 Act attains finality and becomes executable as a civil decree under Section 98, property of the judgment-debtor can be attached and sold for realization of dues; validity of the underlying mortgage cannot be re-opened in execution.
Maharashtra Co-operative Societies Act, 1960 — Section 154 — Revisional jurisdiction — Scope — Maintainability against confirmation of sale — Not curtailed by Rule 107 remedies — No pre-deposit required when revision not against recovery certificate. (Paras 24–42)
The legal representatives of the borrower filed revision under Section 154 challenging confirmation of auction sale. It was contended that remedy lay exclusively under Rule 107(13) or (14) of the 1961 Rules and that revision was not maintainable. The Court held that Section 154 confers wide revisional power to examine legality or propriety of any decision or order of a subordinate officer where no appeal lies. Remedies under Rule 107 are applications to set aside sale on specified grounds and do not eclipse statutory revisional power. Pre-deposit under Section 154(2-A) is attracted only when revision is against a recovery certificate; here revision was against confirmation of sale.
Ratio Decidendi: The revisional power under Section 154 of the 1960 Act is plenary and cannot be restricted by procedural remedies under Rule 107; revision is maintainable against confirmation of sale without pre-deposit where challenge is not to the recovery certificate.
Maharashtra Co-operative Societies Rules, 1961 — Rule 107(11)(g) & (h) — Deposit of 15% at auction and balance within stipulated period — Mandatory requirement — Non-compliance renders sale a nullity — No discretion to extend time for balance payment. (Paras 45–48, 55)
Under Rule 107(11)(g), 15% of purchase price must be deposited at the time of sale; under Rule 107(11)(h), the remainder must be paid within 15 days (as applicable at the time). No provision authorises extension of time for payment of the balance purchase money. Consequences of default include forfeiture and resale after fresh proclamation under Rule 107(11)(i) & (j). Relying on Shilpa Shares & Securities v. National Co-operative Bank Ltd. and earlier precedents, the Court affirmed that non-deposit within prescribed time renders the sale void, not merely irregular.
Ratio Decidendi: Compliance with Rule 107(11)(g) and (h) is mandatory; failure to deposit the balance purchase money within the stipulated period vitiates the sale, rendering confirmation a nullity.
Waiver — Applicability — Auction conditions under Rule 107 — Not confined to creditor’s benefit — Serve public purpose — No waiver by borrower. (Paras 50–55)
The auction purchaser relied on General Manager, Sri Siddheshwara Co-operative Bank Ltd. v. Ikbal to contend that time stipulation could be waived. The Court distinguished the decision, noting that Rule 9(4) of the SARFAESI Enforcement Rules expressly permitted extension by written agreement, whereas Rule 107 contains no such provision. Moreover, the stipulation under Rule 107 serves broader public interest in maintaining sanctity of public auctions and preventing manipulation. There was no material indicating waiver by the borrower or his heirs.
Ratio Decidendi: Time stipulation under Rule 107(11)(h) is not merely for the creditor’s benefit and cannot be waived in absence of statutory provision; absence of timely deposit invalidates the sale notwithstanding creditor’s acceptance.
Relief — Consequence of void auction — Appropriate order — Fresh auction — Refund with interest — Protection of equities. (Paras 57–58)
While upholding that the sale and its confirmation were void, the Court modified the High Court’s directions. The property was directed to be put to fresh auction under Rule 107(11)(j). The auction purchaser, having deposited the entire amount as permitted by the Recovery Officer, was held entitled to refund with 6% interest per annum from date of deposit till repayment. Liberty was reserved to the Bank and judgment-debtors to arrive at settlement before the Recovery Officer.
Ratio Decidendi: Upon declaring an auction void for non-compliance with mandatory rules, the proper course is to direct resale in accordance with law and order refund of the purchase money with reasonable interest to the auction purchaser.
Final Order
Auction sale dated 29.01.2005 and confirmation dated 18.03.2005 declared null and void. Property to be re-auctioned under Rule 107(11)(j). Bank to refund Rs.1,51,00,000 to M/s. Adishakti Developers with 6% interest from date of deposit till repayment. Liberty for settlement between decree-holder and judgment-debtors reserved. Appeals disposed of. No order as to costs.
