Case Note & Summary
The writ petition arose from recovery proceedings initiated by Rupee Cooperative Bank against the borrower company. The borrower had filed a dispute in the Cooperative Court and obtained an ex-parte injunction restraining issuance of a recovery certificate under Section 101 of the Maharashtra Cooperative Societies Act, without any deposit. Subsequently, the bank issued a notice under Section 13(2) of the SARFAESI Act, which the borrower challenged in the present writ petition on the ground of lack of jurisdiction and the pending Cooperative Court injunction. An earlier Division Bench had stayed the Cooperative Court injunction, terming it preposterous and based on extraneous reasons, and called upon the borrower to show cause why it should not be quashed under Article 227. The borrower’s Special Leave Petition to the Supreme Court was later withdrawn. Meanwhile, the bank preferred an appeal before the Cooperative Appellate Court; due to non-availability at Nagpur, the matter was heard by the President at Mumbai, who stayed the Cooperative Court order. The borrower successfully challenged that stay before a Single Judge at the Bombay Principal Seat, who restored the Cooperative Court order. When the writ petition again came up for hearing, the Division Bench questioned the territorial jurisdiction of the Single Judge at the Principal Seat to entertain a challenge arising from Nagpur, emphasizing that the Mumbai appellate authority had acted only as incharge of the Nagpur Bench. The court framed a specific question on the vice of territorial jurisdiction and proceeded to decide the matter.
Headnote
A) Civil Procedure – Grant of Injunction – Blanket Injunction Without Deposit – Maharashtra Cooperative Societies Act, 1960, Section 101 – The Cooperative Court granted blanket injunction restraining issuance of recovery certificate without requiring any deposit; the Division Bench found the order based on extraneous reasons and contrary to the law laid down in Shiv Kumar Chadha v. MCD (1993) 3 SCC 161, stayed it, and called upon the petitioner to show cause why it should not be quashed under Article 227 (Paras 5-6). B) Banking Law – SARFAESI Proceedings – Challenge to Section 13(2) Notice – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Section 13(2) – The petitioner challenged the notice under SARFAESI despite a prior Cooperative Court injunction; the Division Bench questioned whether the petitioner could avoid deposit when the principal amount exceeded Rs. 4.41 crores, noting that stay of recovery required compelling reasons and compliance with parameters for injunction (Paras 4-5). C) Constitutional Law – Writ Jurisdiction – Territorial Jurisdiction of High Court – Constitution of India, Article 226/227 – The Division Bench considered whether the Single Judge at the Principal Seat at Bombay could validly set aside an order of the Cooperative Appellate Court, Mumbai, which had exercised jurisdiction as incharge for the Nagpur Bench; questions of territorial competence and the binding nature of such judgment were raised for determination (Para 8).
Issue of Consideration
Whether the Cooperative Court's blanket injunction order was valid; Whether the notice under Section 13(2) of SARFAESI Act could be challenged without deposit; Whether the Single Judge at Bombay Principal Seat had territorial jurisdiction to set aside the Cooperative Appellate Court order passed as incharge of Nagpur Bench
Law Points
- blanket injunction without deposit against bank recovery is contrary to settled legal position
- order based on extraneous reasons liable to be quashed under Article 227
- territorial jurisdiction of High Court Principal Seat over matters from Nagpur Bench when appellate authority exercised jurisdiction as incharge
