Case Note & Summary
The proceedings arose from a suit instituted by the respondent-plaintiff, an 80-year-old pardanashin lady, claiming that her land was illegally attached and sold by the petitioner-bank in recovery proceedings against a third party, M/s. Iceberg Refrigeration Company. She contended that she was neither a borrower nor a guarantor, and that any mortgage deed in favour of the bank was fabricated and not executed by her. Earlier, her objections under Section 107 of the Maharashtra Co-operative Societies Act, 1960 were rejected, and her writ petition was dismissed with liberty to file a suit. Subsequently, she filed Special Civil Suit No. 729 of 2009 seeking a declaration that the attachment and sale were null and void, and for recovery of possession. The defendant-bank raised a preliminary objection that the suit was not maintainable for want of mandatory notice under Section 164 of the Act. The trial court rejected this objection by order dated 02.12.2011. The defendants filed the present civil revision application before the High Court. The core legal issue was whether the suit, which challenges the attachment and sale effected by the bank for loan recovery, ‘touches the business of the society’ thereby requiring a prior notice under Section 164. The petitioner-bank argued that the activity of advancing loans and recovering dues is its core business, so the suit squarely touches its business and notice is mandatory. The respondent-plaintiff contended that she was a stranger to the loan transaction and therefore the bar of Section 164 should not apply. The High Court examined the pleadings and earlier precedents. It held that the test for determining whether an act touches the business of the society is based on the nature of the society, its objects and bye-laws. Since the petitioner is a cooperative bank, its business includes loan recovery. The suit directly challenged an act of recovery, and therefore it touched the business of the society. The Court underscored that at the stage of examining tenability, the merits of the attachment or sale are irrelevant. Non‑compliance with Section 164 is fatal to the maintainability of the suit. Relying on judgments in Jijamata Sahakari Sakhar Karkhana Ltd. v. Sukhdeo Rambhau Fulzade, Suprabhat Cooperative Housing Society Ltd. v. Span Builders, and Mohan Meakin Ltd. v. The Pravara Sahakari Sakhar Karkhana Ltd., the Court concluded that the suit was not entertainable. As a result, the revision application was allowed, the trial court’s order was set aside, and the plaint along with the application (Exh.67) was directed to be returned to the plaintiff for compliance with Section 164 and re‑presentation to the appropriate court. To protect the plaintiff’s interest in the meantime, the Court directed that status quo regarding the disputed property be maintained until the appropriate court decides the matter.
Headnote
A) Cooperative Law - Notice under Section 164 - Mandatory Requirement - Maharashtra Co-operative Societies Act, 1960, Section 164 - The suit challenged attachment and sale of property by the bank for recovery of dues; the act of loan recovery is part of the banking business of the society; Held that the suit touches the business of the society, and thus the mandatory notice under Section 164 is a precondition; non‑compliance renders the suit not entertainable at the threshold, irrespective of the merits of the attachment (Paras 5-9). B) Civil Procedure - Return of Plaint - Remedy for Non-Compliance with Statutory Notice - Code of Civil Procedure, 1908, Order VII Rule 10 - When a suit is filed without complying with a mandatory statutory notice, the proper course is to return the plaint for presentation to the appropriate court after compliance, rather than outright dismissal; the plaint and the accompanying application (Exh.67) were returned to the plaintiff for compliance with Section 164 and re‑presentation (Paras 10-11). C) Interim Protection - Status Quo - Preservation of Subject Matter Pending Compliance - The Court directed that status quo in respect of the disputed property be maintained by the parties until the appropriate court decides the matter; this ensures that the plaintiff’s rights are not extinguished while she takes steps to comply with the notice requirement (Para 11).
Issue of Consideration
Whether the suit filed by the plaintiff challenging attachment and sale of her property by the cooperative bank is maintainable without prior notice under Section 164 of the Maharashtra Co-operative Societies Act, 1960, given that the plaintiff alleges she is neither a borrower nor a guarantor and the transaction is not binding on her
Final Decision
The revision application allowed. The trial court's order dated 02.12.2011 set aside. The plaint and application (Exh.67) returned to the plaintiff for compliance with Section 164 of the Maharashtra Co‑operative Societies Act and presentation of the suit afresh before the appropriate court. Status quo in respect of the disputed property to be maintained until the appropriate court decides the matter.
Law Points
- Legal points not extracted
- Section 164 of Maharashtra Co-operative Societies Act
- 1960 is mandatory before instituting suit against society in respect of any act touching its business
- whether or not plaintiff is member or borrower
- the expression 'touching the business of the society' depends on nature of society
- its objects and bye-laws
- loan recovery is part of banking business
- non-compliance renders suit not entertainable
- plaint to be returned for compliance and presentation to proper court
- interim status quo may be granted
