Bombay High Court Dismisses Challenge to Remand Order in Recovery Certificate Proceedings Under Section 101 of Maharashtra Co-operative Societies Act Due to Absence of Final Adjudication. Section 101 Recovery Proceeding Remand Upheld as the Court Finds No Final Determination on Genuineness of No Dues Certificate Warrants Interference.

Writ petitions under Article 226 of the Constitution of India challenging orders of the Divisional Joint Registrar allowing revision applications and remanding recovery proceedings under Section 101 of the Maharashtra Co-operative Societies Act, 1960 for fresh decision.

Petitioners sought quashing of the remand order dated 31 December 2021 and maintenance of the Assistant Registrar's order dated 22 November 2019 rejecting the recovery application.

The Divisional Joint Registrar had set aside the Assistant Registrar's order rejecting the recovery application and remanded for a fresh decision, which according to the petitioners would subject them to summary recovery proceedings despite the existence of a 'No Dues Certificate' and 'Release Deed' and disputed questions of fact that cannot be adjudicated in such proceedings.

Assistant Registrar rejected the recovery application on 22 November 2019, holding that the 'No Dues Certificate' and 'Release Deed' indicated no amount was due and that the Registrar lacked jurisdiction to determine genuineness of such documents. Divisional Joint Registrar by order dated 31 December 2021 allowed the revision and remanded the matter back to the Assistant Registrar for a fresh decision.

Whether disputed questions of fact regarding the genuineness of a 'No Dues Certificate' and authority to execute a 'Release Deed' can be adjudicated in summary proceedings under Section 101 of the Maharashtra Co-operative Societies Act, 1960. Whether the Assistant Registrar has jurisdiction to record detailed evidence (examination-in-chief and cross-examination) in recovery certificate proceedings. Whether the existence of a 'No Dues Certificate' and 'Release Deed' constitutes a prima facie defence sufficient to bar issuance of a recovery certificate under Section 101. Whether the Credit Society should be relegated to the alternate remedy of a dispute under Section 91 of the Maharashtra Co-operative Societies Act, 1960 for a detailed adjudication on the validity of the documents.

Petitioners argued that the Divisional Joint Registrar erred in setting aside the Assistant Registrar's order, as disputed questions regarding the genuineness of 'No Dues Certificate' and 'Release Deed' cannot be decided in summary recovery proceedings under Section 101. They contended that they had made out a prima facie case through these documents and that the Credit Society had an alternate efficacious remedy by filing a dispute under Section 91 of the Act where full evidence could be adduced. Reliance was placed on the Division Bench decision in Top Ten Vs. State of Maharashtra. The rejection of temporary injunction in Special Civil Suit No.51/2019 was cited to show lack of prima facie case. The remand order was challenged as effectively directing the Assistant Registrar to issue recovery certificates, ignoring lawful defences. The respondent Credit Society argued that the impugned orders were merely orders of remand and not recovery certificates, causing no prejudice. All defences could be raised before the Assistant Registrar. The Society contended that the 'No Dues Certificates' were fake and issued without authority, the Release Deeds were executed without any resolution of the managing committee, and there was no evidence of repayment. It submitted certified extracts of loan accounts showing outstanding amounts and alleged fraud.

Ratio not explicitly mentioned

The Assistant Registrar proceeded to pass order dated 22nd November 2019 holding that since the Respondent-bank had issued ‘No Dues Certificate’ on 11th July 2016 and executed Release Deed, no amount was due or payable from Petitioners. It was further held that the Assistant Registrar did not have jurisdiction to rule on genuineness of ‘No Dues Certificate’, Release Deed, etc. It was held that evidence in the form of examination-in-chief and cross-examination cannot be recorded before the Assistan t Registrar. That, disputed questions relating to genuineness of ‘No Dues Certificate’ and authority to execute Release Deed on behalf of the Respondent-bank, cannot be decided in recovery proceedings under Section 101 of the Act of 1960.

Petitioners, members of the respondent Credit Society, availed a loan of Rs. 14,00,000/- in 2015, executing promissory note, loan agreements, and a mortgage deed. They claimed full repayment, relying on a ‘No Dues Certificate’ dated 24 October 2016 and a Release Deed dated 11 July 2016. The Society disputed these documents, alleging unauthorized actions by its Branch Manager, and filed Special Civil Suit No. 51/2019 seeking declarations that the Release Deeds were void and for cancellation of subsequent sale deeds. The application for temporary injunction was rejected on 30 April 2019; an interim status-quo order was passed in Appeal from Order No. 656 of 2019. The Society separately initiated recovery proceedings under Section 101 before the Assistant Registrar (Application No. 101/95/537/2019). The Assistant Registrar by order dated 22 November 2019 rejected the application, holding that no amount was due and that it lacked jurisdiction to decide the genuineness of the documents. The Society filed a revision before the Divisional Joint Registrar, who on 31 December 2021 allowed the revision and remanded the matter to the Assistant Registrar for a fresh decision. Aggrieved, the petitioners filed the present writ petitions challenging the remand order.

• Maharashtra Co-operative Societies Act, 1960: 101, 91