Case Note & Summary
The petitioner, M/s. Puran Automobiles, a partnership firm, had taken a loan from the respondent Janta Sahakari Bank Ltd. The Bank obtained a certificate under Section 101 of the Maharashtra Co-operative Societies Act, 1960 for recovery of the amount. The Bank published auction notices on multiple occasions. The petitioner challenged the notices before the revisional authority, which quashed the earlier notices and remanded the matter for fresh auction with a direction to follow Rule 107 of the Maharashtra Co-operative Societies Rules, 1961. Subsequently, the Bank published fresh auction notices on 12.2.2011 and 14.3.2011 along with terms and conditions. The petitioner submitted written objections alleging non-compliance with the terms and conditions, including non-deposit of the amount. The District Deputy Registrar, Co-operative Societies, Pune, by order dated 29.11.2011, confirmed the sale in favor of respondent No.6, M/s. Vardhaman Infrastructure. The petitioner filed the present writ petition challenging that order. The High Court examined the facts and found that the Bank had not complied with the mandatory provisions of Rule 107 of the Maharashtra Co-operative Societies Rules, 1961. The Court noted that the revisional authority had earlier set aside the previous auction notices for non-compliance, and the Bank again failed to follow the procedure. The Court held that the sale was illegal and the impugned order could not be sustained. The writ petition was allowed, the order dated 29.11.2011 was quashed and set aside, and the matter was remanded to the District Deputy Registrar for fresh auction after giving due opportunity to the petitioner and following the procedure under Rule 107.
Headnote
A) Co-operative Law - Recovery of Loan - Section 101 Maharashtra Co-operative Societies Act, 1960 and Rule 107 Maharashtra Co-operative Societies Rules, 1961 - Auction Sale - The respondent Bank obtained a certificate under Section 101 and conducted auction sale of the petitioner's property. The petitioner objected that the Bank did not follow the mandatory procedure under Rule 107, including proper notice and opportunity to the borrower. The revisional authority had earlier set aside previous auction notices for non-compliance. The District Deputy Registrar confirmed the sale despite objections. The High Court held that the Bank failed to comply with Rule 107, which is mandatory, and the sale was illegal. The impugned order was quashed and the matter remanded for fresh auction after following due procedure. (Paras 1-10) B) Co-operative Law - Revisional Powers - Section 154 Maharashtra Co-operative Societies Act, 1960 - The revisional authority has the power to set aside an auction sale if the procedure under the Act and Rules is not followed. The High Court upheld the revisional authority's earlier order quashing auction notices for non-compliance with Rule 107. (Paras 3-5) C) Co-operative Law - Mandatory Compliance - Rule 107 Maharashtra Co-operative Societies Rules, 1961 - The provisions of Rule 107 regarding auction sale are mandatory and must be strictly adhered to. Failure to comply renders the sale void. The Bank's failure to follow the rule, including not giving proper notice and not considering objections, vitiated the sale. (Paras 6-10)
Issue of Consideration
Whether the auction sale conducted by the respondent Bank under Section 101 of the Maharashtra Co-operative Societies Act, 1960 is valid when the Bank failed to comply with the mandatory provisions of Rule 107 of the Maharashtra Co-operative Societies Rules, 1961, and whether the impugned order of the District Deputy Registrar confirming the sale is sustainable.
Final Decision
The writ petition is allowed. The impugned order dated 29.11.2011 passed by the District Deputy Registrar, Co-operative Societies, Pune, is quashed and set aside. The matter is remanded to the District Deputy Registrar for fresh auction after giving due opportunity to the petitioner and following the procedure under Rule 107 of the Maharashtra Co-operative Societies Rules, 1961. Rule is made absolute accordingly. Civil applications are disposed of.
Law Points
- Auction sale under Section 101 of Maharashtra Co-operative Societies Act
- 1960 must strictly comply with Rule 107 of Maharashtra Co-operative Societies Rules
- 1961
- failure to follow mandatory procedure renders sale invalid
- borrower must be given opportunity to object before confirmation of sale
- revisional authority has power to set aside illegal auction.
