Case Note & Summary
The petitioner, Sunil Sitaram Mahajan, filed a writ petition challenging the order dated 20.01.2015 passed by the Divisional Joint Registrar, Cooperative Societies, Kolhapur Division, Kolhapur. By that order, the Joint Registrar allowed the revision application filed by respondent No.1 (Suryakant Pandurang Badave) and set aside the notice of hearing dated 23.01.2014 issued under Section 101 of the Maharashtra Cooperative Societies Act, 1960. The factual background is that respondent No.4 (Pooja Annaso Jadhav) was the borrower from respondent No.3 (Shahu Corner Nagari Sahakari Path Sanstha Maryadit), and respondent No.1 was the guarantor. Upon default, proceedings under Section 101 were initiated, resulting in a certificate dated 01.06.2010 for Rs.11,09,258 with interest at 16% per annum from 01.10.2005. Recovery proceedings were initiated against the guarantor, and a notice of hearing was issued on 23.01.2014. Respondent No.1 filed a revision application before the Joint Registrar, who allowed it on the ground that the borrower had died and the proceedings could not continue against the guarantor alone. The petitioner, who was the auction purchaser of the property, challenged this order. The court framed the issue of whether the Joint Registrar was justified in setting aside the notice. The petitioner argued that the liability of a guarantor is co-extensive with that of the principal debtor and continues even after the borrower's death. The respondent contended that the proceedings abated upon the death of the borrower. The court analyzed Section 101 and the nature of guarantor's liability, holding that the liability of a guarantor is independent and survives the death of the principal debtor. The court found that the Joint Registrar had erred in allowing the revision application and setting aside the notice. Consequently, the court quashed the order dated 20.01.2015 and restored the notice of hearing dated 23.01.2014. The writ petition was allowed, and rule was made absolute.
Headnote
A) Cooperative Law - Guarantor's Liability - Section 101, Maharashtra Cooperative Societies Act, 1960 - Liability of Guarantor After Death of Principal Debtor - The court considered whether proceedings under Section 101 of the Act could continue against the guarantor after the death of the principal borrower. The court held that the liability of a guarantor is co-extensive with that of the principal debtor and continues even after the death of the principal debtor. The notice of hearing issued to the guarantor was valid and the revision application was wrongly allowed. (Paras 4-8) B) Cooperative Law - Revision - Section 154, Maharashtra Cooperative Societies Act, 1960 - Scope of Revision - The court examined the scope of revisional powers under Section 154 of the Act. The court held that the revisional authority could not set aside a notice of hearing on the ground that the borrower had died, as the liability of the guarantor survives. The revision application was allowed erroneously. (Paras 5-8)
Issue of Consideration
Whether the Divisional Joint Registrar was justified in allowing the revision application and setting aside the notice of hearing under Section 101 of the Maharashtra Cooperative Societies Act, 1960, on the ground that the borrower had died and the proceedings could not continue against the guarantor alone.
Final Decision
The writ petition is allowed. The order dated 20.01.2015 passed by the Divisional Joint Registrar, Cooperative Societies, Kolhapur Division, Kolhapur is quashed and set aside. The notice of hearing dated 23.01.2014 is restored. Rule is made absolute accordingly.
Law Points
- Liability of guarantor continues despite death of principal debtor
- Section 101 of Maharashtra Cooperative Societies Act
- 1960
- Revision jurisdiction under Section 154 of Maharashtra Cooperative Societies Act
- Notice of hearing under Section 101
- Guarantor's liability is co-extensive with that of borrower
