High Court of Judicature at Bombay Considers Petitions Challenging Order Allowing Revision Against Auction Under Maharashtra Co-operative Societies Act, 1960. The Court examined the revision order's grounds regarding non-compliance of auction procedures and the finality of un-challenged recovery certificates under Section 101.

Challenge to the order of the Divisional Joint Registrar setting aside an auction sale of properties conducted by the bank under the Maharashtra Co-operative Societies Act, 1960.

The petitioners (bank and auction purchasers) sought to quash and set aside the Divisional Joint Registrar's order dated 5 November 2015, which had allowed the borrowers' revision applications and set aside the auction held on 10 April 2015.

The Divisional Joint Registrar set aside the auction on grounds of non-compliance of procedural rules, which the petitioners contended was contrary to law and without jurisdiction as the recovery certificates were unchallenged.

The Assistant Registrar issued recovery certificates under Section 101 of the MCS Act, which were not challenged by the borrowers. The Divisional Joint Registrar allowed the revision applications under Section 154 of the MCS Act and set aside the auction by order dated 5 November 2015. The sale was confirmed and sale certificates were issued on 13 July 2015, and sale deeds were executed on 20 August 2015.

Whether the revision applications under Section 154 of the Maharashtra Co-operative Societies Act, 1960 were maintainable after the recovery certificates under Section 101 had attained finality. Whether the auction conducted on 10 April 2015 complied with the mandatory requirements of Rule 107(11) of the Maharashtra Co-operative Societies Rules, 1961 regarding notice, service, and upset price fixation.

Borrowers had not challenged the recovery certificates under Section 101, so revision applications were not maintainable and the Divisional Joint Registrar acted beyond jurisdiction. Reliance placed on Ramchandra Vs Janata Nagari Sahakari Patsanstha Ltd. Hupari, 2018(2) Mh.L.J. 245. Borrowers did not avail the opportunity to pay the highest bid plus 5% within the time prescribed under the rules, nor did they make any payment pursuant to the notice of demand dated 10 April 2015.

The Divisional Joint Registrar passed an order on 5th November, 2015 thereby allowing the said Revision Applications filed by the borrowers on the ground that the notice of auction was not in accordance with the provisions of Section 107(11)(e) of the said Rules and on the ground that there was no proof of service of the said notice on the borrowers as well as guarantors. It was also held by the Divisional Joint Registrar that the provisions of Rule 107(11)(D-1)(IV) of the said rules was followed by the Special Recovery Officer only in respect of publishing Z form notice for taking possession. The procedure in issuing of notice for taking possession was not followed. It is also held that the said price was not fixed as per the rules 107(11)(f) of the said rules and the auction was carried out on the time barred upset price. He submitted that the borrowers thus could not have filed revision application challenging the auction proceedings under Section 154 of the said Act before the Divisional Joint Registrar directly. None of these revision applications were thus maintainable. The Divisional Joint Registrar thus acted beyond the jurisdiction and has allowed those revision applications illegally. In support of these submissions, learned counsel for the petitioner placed reliance on the judgment of this Court in Ramchandra Vs Janata Nagari Sahakari Patsanstha Ltd. Hupari reported in 2018(2) Mh.L.J. 245 and more particularly paragraph Nos. 25, 26, 33 and 35 to 37.

The borrowers had taken loans from Palus Sahakari Bank Ltd. and defaulted. The bank filed applications under Section 101 of the MCS Act before the Assistant Registrar, who issued recovery certificates; the borrowers did not challenge these certificates. The District Deputy Registrar fixed upset prices for the properties after issuing hearing notices in January 2014. The Special Recovery Officer attached the properties, took possession on 2 February 2015, and published a public notice on 10 February 2015. A sale notice under Rule 107(ii)(c) was issued on 4 March 2015 and auction notice published on 5 March 2015. The auction was held on 10 April 2015, and the highest bidders were the auction purchasers. On 10 April 2015, notice was given to the borrowers to pay the highest bid amount plus five percent within 30 days, but they did not pay. The borrowers filed revision applications under Section 154 on 15 April 2015 before the Divisional Joint Registrar. The sale was confirmed and sale certificates issued on 13 July 2015, and sale deeds were executed on 20 August 2015. The Divisional Joint Registrar passed an order on 5 November 2015 setting aside the auction on procedural grounds. The bank and auction purchasers then filed separate writ petitions in 2016 challenging this order. The High Court heard arguments and reserved judgment on 3 April 2018, pronouncing it on 3 May 2018.

• Maharashtra Co-operative Societies Act, 1960: Section 101, Section 154
• Maharashtra Co-operative Societies Rules, 1961: Rule 107(11)(e), Rule 107(11)(f), Rule 107(11)(D-1)(IV), Rule 107(ii)(c)