Case Note & Summary
The petitioner, M/s. Shewalkar Developers Ltd., a company incorporated under the Companies Act, 1956, was engaged in land development and construction. The respondent, Rupee Cooperative Bank Ltd., issued a notice on 9 July 2012 demanding Rs.5,12,76,485.43 along with interest, threatening proceedings under Section 101 of the Maharashtra Cooperative Societies Act, 1960 (MCS Act). The petitioner disputed the claim, asserting that the bank owed it Rs.2,77,61,896 towards maintenance charges and refund of a long-standing claim. On 12 September 2012, the petitioner filed a dispute under Section 91 of the MCS Act before the Cooperative Court, challenging the notice. The Cooperative Court granted ad-interim relief staying the execution of the notice. On 8 October 2012, after hearing both parties, the court confirmed the ad-interim relief and allowed the temporary injunction application. Instead of challenging this order, the bank issued a notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) on 3 January 2013, demanding Rs.5,53,78,135.43. The petitioner then filed a writ petition challenging the SARFAESI notice. The Cooperative Appellate Court reversed the injunction order on 12 September 2013, leading to the present writ petition. The High Court examined whether the Cooperative Court had jurisdiction to grant interim relief despite the SARFAESI proceedings. It held that the Cooperative Court's jurisdiction under Section 91 of the MCS Act is not ousted by the SARFAESI Act, as the dispute pertains to the recovery of amounts claimed by the bank, which is a matter within the purview of the Cooperative Court. The court noted that the bank had not challenged the injunction order but instead initiated SARFAESI proceedings, which amounted to an attempt to circumvent the Cooperative Court's order. The High Court found that the Appellate Court's order reversing the injunction was not justified, as the Cooperative Court had properly considered the prima facie case and balance of convenience. The High Court set aside the Appellate Court's order and restored the injunction granted by the Cooperative Court, directing the bank to maintain status quo pending the disposal of the dispute.
Headnote
A) Cooperative Law - Jurisdiction - Section 91 of Maharashtra Cooperative Societies Act, 1960 - Interim Injunction - The Cooperative Court has jurisdiction to entertain a dispute regarding recovery of amounts claimed by a cooperative bank, and the pendency of proceedings under the SARFAESI Act does not oust such jurisdiction. The court can grant interim relief to protect the interests of the parties pending adjudication. (Paras 5-10) B) Cooperative Law - Appellate Court's Powers - Reversal of Interim Order - The Appellate Court must not interfere with a well-reasoned interim order passed by the Cooperative Court unless it is perverse or based on no evidence. The Appellate Court's order reversing the injunction was set aside as it failed to consider the balance of convenience and prima facie case. (Paras 11-15)
Issue of Consideration
Whether the Cooperative Court has jurisdiction to grant interim injunction restraining the bank from proceeding under the SARFAESI Act when a dispute under Section 91 of the MCS Act is pending, and whether the Appellate Court was justified in reversing the injunction order.
Final Decision
The High Court allowed the writ petition, set aside the Appellate Court's order dated 12 September 2013, and restored the interim injunction granted by the Cooperative Court on 8 October 2012. The bank was directed to maintain status quo pending the disposal of the dispute.
Law Points
- Jurisdiction of Cooperative Court under Section 91 of MCS Act is not ousted by SARFAESI Act
- Interim injunction can be granted to maintain status quo pending adjudication of dispute
- Appellate Court cannot reverse well-reasoned order without valid grounds
