Case Note & Summary
The petitioners, M/s Anjali Tours & Travels and Others, filed a writ petition before the Bombay High Court challenging an attachment order issued by the Recovery Officer of Respondent No.2 bank under Section 156 of the Maharashtra Cooperative Societies Act, 1960 read with Rule 107 of the Maharashtra Cooperative Societies Rules, 1961. The attachment order was in pursuance of a recovery certificate issued under Section 101 of the Societies Act. The petitioners had previously challenged the recovery certificate in a revision before the Divisional Joint Registrar of Cooperative Societies, but that challenge was repelled on the ground of non-deposit of 50% of the amount. The principal ground for challenging the attachment order was that Respondent No.2 had already availed of a remedy under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) by putting the mortgaged property to auction, and thus could not be permitted to execute the recovery certificate against other properties. The court noted that it was not in dispute that the mortgaged property was put to auction but could not fetch any offer and the sale could not be completed. The court held that there is nothing in law to prohibit a creditor from executing a recovery certificate against any available property of the debtor, and the creditor can proceed under both enactments. The court distinguished the judgment in Gandhi Trading v. Assistant Commissioner of Income Tax (1999 SCC OnLine Bom 967) relied upon by the petitioners, as that case dealt with provisional attachment under Section 281B of the Income Tax Act, 1961, which is not applicable here. The court dismissed the writ petition, upholding the attachment order.
Headnote
A) Cooperative Law - Recovery of Dues - Simultaneous Remedies - Sections 101, 156 Maharashtra Cooperative Societies Act, 1960 read with Rule 107 of Maharashtra Cooperative Societies Rules, 1961 - Petitioner challenged attachment order on ground that respondent bank had already availed remedy under SARFAESI Act - Court held that there is nothing in law to prohibit a creditor from executing a recovery certificate against any available property of the debtor, and the creditor can proceed under both enactments - Held that the petition was dismissed (Paras 2-4).
Issue of Consideration
Whether a creditor who has initiated proceedings under the SARFAESI Act against mortgaged property can simultaneously execute a recovery certificate under the Maharashtra Cooperative Societies Act against other properties of the debtor.
Final Decision
The writ petition is dismissed. The attachment order is upheld.
Law Points
- Creditor can execute recovery certificate against any available property of debtor
- No legal prohibition to proceed under both SARFAESI Act and Cooperative Societies Act
- Section 156 of Maharashtra Cooperative Societies Act
- 1960
- Rule 107 of Maharashtra Cooperative Societies Rules
- 1961
- Section 101 of Maharashtra Cooperative Societies Act
Case Details
Writ Petition (L) No.796 of 2019
Mr. Sunny Shah a/w Mr. Viral Shukla, Mrs. Priti Shukla, Mr. Darshan Shah and Ms. Heena Jewani i/b M/s Shukla & Associates for the Petitioners; Mr. Ashutosh R. Gole for Respondent No.2.
M/s Anjali Tours & Travels and Others
The Recovery Officer, Cooperative Societies, Dept. Of Maharashtra and Others
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Nature of Litigation
Writ petition challenging an attachment order issued by the Recovery Officer under Section 156 of the Maharashtra Cooperative Societies Act, 1960 read with Rule 107 of the Maharashtra Cooperative Societies Rules, 1961.
Remedy Sought
Petitioners sought to quash the attachment order on the ground that the respondent bank had already availed remedy under the SARFAESI Act.
Filing Reason
The attachment order was passed in pursuance of a recovery certificate under Section 101 of the Societies Act, and the petitioners contended that the bank could not simultaneously proceed under both enactments.
Previous Decisions
The recovery certificate was challenged in revision before the Divisional Joint Registrar of Cooperative Societies, but the challenge was repelled on the ground of non-deposit of 50% of the amount.
Issues
Whether a creditor who has initiated proceedings under the SARFAESI Act against mortgaged property can simultaneously execute a recovery certificate under the Maharashtra Cooperative Societies Act against other properties of the debtor.
Submissions/Arguments
Petitioners argued that having sought to recover dues from mortgaged property under SARFAESI Act, the respondent bank cannot be permitted to execute the recovery certificate on other properties.
Petitioners relied on Gandhi Trading v. Assistant Commissioner of Income Tax to argue that attachment should be limited to properties necessary to satisfy the debt.
Respondent bank submitted that the mortgaged property could not be sold and thus they are entitled to proceed against other available properties.
Ratio Decidendi
There is nothing in law to prohibit a creditor from executing a recovery certificate against any available property of the debtor. A creditor can simultaneously proceed under the SARFAESI Act and under the Cooperative Societies Act for recovery of dues.
Judgment Excerpts
There is nothing in law to prohibit a creditor from executing a recovery certificate against any available property of the debtor.
Learned Counsel for the Petitioner is unable to point out any legal provision which restricts the creditor's right to do so.
Procedural History
The Recovery Officer issued a recovery certificate under Section 101 of the Maharashtra Cooperative Societies Act, 1960 in favour of Respondent No.2 bank. The petitioners challenged the recovery certificate in revision before the Divisional Joint Registrar of Cooperative Societies, which was repelled on the ground of non-deposit of 50% amount. Subsequently, the Recovery Officer passed an attachment order under Section 156 of the Act read with Rule 107 of the Rules. The petitioners filed the present writ petition challenging the attachment order.
Acts & Sections
- Maharashtra Cooperative Societies Act, 1960: Section 101, Section 156
- Maharashtra Cooperative Societies Rules, 1961: Rule 107
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002:
- Income Tax Act, 1961: Section 281B
