Case Note & Summary
The petitioners, Mr. Sadanand Belvalkar and another, were guarantors to a loan sanctioned by Vidya Sahakari Bank Limited (respondent no. 2) to M/s Mbells Labs (respondent no. 3). The bank obtained a recovery certificate under Section 101 of the Maharashtra Co-operative Societies Act, 1960 on 14 July 2017. Subsequently, the petitioners filed a dispute under Section 91 of the Act before the Co-operative Court, Pune on 10 June 2018, seeking a declaration that the bank was bound to extend the benefit of a one-time settlement (OTS) as per Government Resolution dated 25/11/2017, and for issuance of a no due certificate. The bank raised an objection under Order 7 Rule 11(d) of the Code of Civil Procedure, 1908, contending that the dispute was not maintainable. The Co-operative Court rejected the objection on 10 December 2018. The bank appealed to the Maharashtra State Co-operative Appellate Court, Mumbai bench at Pune, which allowed the appeal and returned the plaint as not maintainable. The petitioners challenged this order under Article 227 of the Constitution. The High Court held that once a recovery certificate under Section 101 is issued, the dispute under Section 91 is not maintainable as it no longer touches the business of the society. The court also noted that the provisions of CPC are applicable to co-operative courts under Section 164 of the Act. The petition was dismissed, and the order of the Appellate Court was upheld.
Headnote
A) Co-operative Law - Maintainability of Dispute - Section 91, 101 Maharashtra Co-operative Societies Act, 1960 - Once a recovery certificate under Section 101 is issued, the dispute under Section 91 is not maintainable as the matter is no longer a dispute touching the business of the society - The Co-operative Court correctly rejected the bank's objection but the Appellate Court rightly reversed it - Held that the dispute is not maintainable (Paras 1-10).
B) Civil Procedure - Order 7 Rule 11(d) CPC - Applicability to Co-operative Courts - The provisions of CPC are applicable to co-operative courts by virtue of Section 164 of the Maharashtra Co-operative Societies Act, 1960 - The plaint was rightly returned for want of maintainability (Paras 4-8).
C) Constitutional Law - Supervisory Jurisdiction - Article 227 of Constitution of India - The High Court in supervisory jurisdiction will not interfere with an order that is correct in law and does not suffer from any jurisdictional error - The Appellate Court's order was upheld (Paras 1, 10).
Issue of Consideration
Whether a dispute filed by a guarantor under Section 91 of the Maharashtra Co-operative Societies Act, 1960, seeking direction to the bank to accept one-time settlement, is maintainable after a recovery certificate under Section 101 of the Act has been issued.
Final Decision
The High Court dismissed the writ petition, upholding the order of the Maharashtra State Co-operative Appellate Court returning the plaint as not maintainable. Rule discharged with no order as to costs.
Law Points
- Maintainability of dispute under Section 91 of Maharashtra Co-operative Societies Act
- 1960 after issuance of recovery certificate under Section 101
- Scope of supervisory jurisdiction under Article 227 of Constitution of India
- Applicability of Order 7 Rule 11(d) CPC to co-operative disputes
Case Details
2022 LawText (BOM) (01) 80
WRIT PETITION (ST) NO. 4057 OF 2020
Mr. Sachin Mandlik a/w Sayali Phansikar a/w Upendra Mahadik i/by Fast Track Legal – Advocate for the Petitioners, Mr. A. P. Vanarse – AGP for the Respondent No. 1-State, Mr. Shrivallabh Panchpor a/w Mr. Ankit Dhindale – Advocate for Respondent No. 2
Mr. Sadanand Belvalkar & Anr.
The State of Maharashtra and Ors.
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Nature of Litigation
Writ petition under Article 227 of the Constitution challenging the order of the Maharashtra State Co-operative Appellate Court returning the plaint as not maintainable.
Remedy Sought
The petitioners sought to quash the order of the Appellate Court and restore the order of the Co-operative Court rejecting the bank's objection.
Filing Reason
The petitioners, being guarantors, filed a dispute under Section 91 of the Maharashtra Co-operative Societies Act, 1960 seeking direction to the bank to accept one-time settlement and issue no due certificate.
Previous Decisions
The Co-operative Court rejected the bank's objection under Order 7 Rule 11(d) CPC on 10 December 2018. The Appellate Court allowed the bank's revision and returned the plaint as not maintainable on 17 December 2019.
Issues
Whether the dispute filed by the guarantor under Section 91 of the Maharashtra Co-operative Societies Act, 1960 is maintainable after issuance of recovery certificate under Section 101 of the Act.
Whether the order of the Appellate Court is open to interference under Article 227 of the Constitution.
Submissions/Arguments
The petitioners argued that the dispute was maintainable as it touched the business of the society and the bank was bound to consider the OTS proposal.
The bank contended that after the recovery certificate under Section 101, the dispute under Section 91 is not maintainable and the plaint was rightly returned.
Ratio Decidendi
Once a recovery certificate under Section 101 of the Maharashtra Co-operative Societies Act, 1960 is issued, a dispute under Section 91 of the Act is not maintainable as it no longer touches the business of the society. The provisions of Order 7 Rule 11(d) CPC are applicable to co-operative courts under Section 164 of the Act.
Judgment Excerpts
The only issue arise in this petition is whether order passed by the Maharashtra State Co-operative Appellate Court, Mumbai bench at Pune in Revision Application No. 27 of 2019 dated 17/12/2019 is open for interference in a supervisory jurisdiction under Article 227 of the Constitution.
The bank has obtained recovery certificate on 14 July 2017 under Section 101 of Maharashtra Co-operative Societies Act, 1960.
The present Petitioner being guarantor to the loan has filed a dispute on 10 June 2018 before Co-operative Court Pune by taking recourse to the provisions of Section 91 of Maharashtra Co-operative Societies Act, 1960.
Procedural History
The bank obtained a recovery certificate under Section 101 of the Maharashtra Co-operative Societies Act, 1960 on 14 July 2017. The petitioners filed a dispute under Section 91 on 10 June 2018. The bank raised an objection under Order 7 Rule 11(d) CPC, which was rejected by the Co-operative Court on 10 December 2018. The bank filed a revision before the Maharashtra State Co-operative Appellate Court, which allowed the revision and returned the plaint on 17 December 2019. The petitioners challenged this order by way of writ petition under Article 227 of the Constitution.
Acts & Sections
- Maharashtra Co-operative Societies Act, 1960: Section 91, Section 101, Section 164
- Code of Civil Procedure, 1908: Order 7 Rule 11(d)
- Constitution of India: Article 227
