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Judgment
R.K. Deshpande, J.—The Deputy Registrar, Co-operative Societies (City-1), Nagpur, has issued a certificate of recovery under Section 101 of the Maharashtra Co-operative Societies Act, 1960 (for short, "the said Act") in Recovery Proceedings No. 31 of 2003. This is the subject-matter of challenge in the present petition.
On 24-9-2003, this Court passed an order as under :
" Heard learned Advocate appearing for the petitioner.
Rule.
Learned Counsel appearing for the petitioner requested for interim relief.
Considering the Division Bench Judgment of this Court in the matter of Shamrao Vithal Co-operative Bank Ltd. Vs. Star Glass Works, , Rule on stay. Meanwhile ad interim relief in terms of prayer clause (b) returnable within two weeks."
In view of the aforesaid order, the proceedings for recovery in pursuance of the certificate issued under Section 101 of the said Act are stayed.
On 27-2-2004, this Court passed the further order as under :
" On 24.09.2003, this Court issued Rule and granted ad-interim relief in terms of prayer clause (B), considering a Division Bench Judgment of this Court in the case of Shamrao Vithal Co-operative Bank Ltd. Vs. Star Glass Works, . Thereafter, the issue involved in the said case of Shamrao Vithal Cooperative Bank was referred to Full Bench of this Court, and the Full Bench of this Court held that after the constitution of the Debt Recovery Tribunal, the Authorities under the Maharashtra Cooperative Societies Act, 1960 will not have jurisdiction to entertain claims for recovery involving a sum of more than Rs. 10/- lacs instituted by Cooperative Banks. In Special Leave Petition (Civil) No. 886 of 2004, the Supreme Court on 16.01.2004, granted special leave to file appeal against the judgment in Full Bench and while issuing notice on the prayer for interim relief, granted ad-interim stay to the operation of the judgment of Full bench of this Court. I am also informed that the said matter in the Apex Court has been kept on 22.03.2004, for hearing as to interim relief.
Considering the fact that the Apex Court is going to hear the matter regarding continuation of stay granted to the Full Bench judgment, it will not be proper to hear this petition today for considering the prayer for interim relief. Hence adjourned to 29.03.2004."
Thereafter, on 20-9-2004, the following order is passed :
" Heard Shri Naik, Advocate for the petitioner and Mrs. Venkatraman, Advocate for respondent No. 1.
This Civil Application is moved by Respondent No. 1 for modification of order dated 24.9.2003. By the said order, this Court while issuing Rule, granted ad interim relief in terms of prayer clause (B) and thereby stayed the effect and operation of order dated 29.5.2003 passed by Respondent No. 2 under Section 101 of the Maharashtra Co-operative Societies Act, 1960, and further consequential proceedings thereof.
By this application, the learned counsel for respondent No. 1 points out that the view taken in relation to the recovery matters for the amount extending Rs. 10 lakhs under Co-operative law by Full Bench, has been stayed by the Hon''ble apex Court and therefore, this order granting stay needs to be vacated. She has placed on record the copy of order passed by the apex Court and further a copy of order dated 7.6.2004 passed in Writ Petition No. 1973 of 2003 passed by the Division Bench of this Court at Bombay thereafter. By the said order, the Division Bench has permitted the recovery under Cooperative Act to proceed further. She points out that even the Benches at Nagpur have already passed similar orders.
In that view of the matter, ad interim order dated 24.0.2003 is hereby vacated. The authorities are permitted to proceed further with recovery under Section 101 of the Maharashtra Cooperative Societies Act, 1960.
Civil Application is disposed of."
The interim order passed by this Court was vacated on 20-9-2004, but it seems that the recovery proceedings have not commenced against the petitioner, who is the guarantor for the amount outstanding against one M/s. Bhagwati Construction, which is not a party to the present petition.
On merits of the matter, both the learned counsels are at consensus ad idem that the jurisdiction of the competent authority issuing a certificate under Section 101 of the said Act, is available. Hence, the challenge to the order passed issuing a recovery certificate is required to be considered on its own merits. Sub-section (2A) of Section 154 provides a revision against the order passed under Section 101 of the said Act. The said provision is reproduced below along with the proviso therein :
"154. Revisionary powers of State Government and Registrar
...
(2A) No application for revision shall be entertained against the recovery certificate issued by the Registrar under section 101 or certificate issued by the Liquidator under section 105 unless the applicant deposits with the concerned society, fifty per cent amount of the total amount of recoverable dues:
Provided that, in case of such revision where revisional authority has granted a stay to the recovery of dues, the authority shall as far as may be practicable, dispose of such revision application as expeditiously as possible but not later than six months from the date of the first order."
In the present case, undisputedly, the revision has not been preferred under Section 154 , and there is no order passed under sub-section (2A) therein by this Court directing deposit of the amount covered by the certificate issued under Section 101 of the said Act. The certificate is for a total amount of Rs. 40,81,683.04, shown to be recoverable on 9-5-2003. Shri Ghare, the learned counsel appearing for the respondent No. 1, has pointed out the statement showing the outstanding amount of Rs. 1,78,89,969.30 against the borrower as on 18-9-2015. Shri Naik, the learned counsel appearing for the petitioner, submits that the petitioner has made out a case under Section 133 of the Indian Contract Act, 1872 for discharge as a guarantor because of variance in the terms of the contract. He further submits that no findings are recorded by the authority passing an order under Section 101 of the said Act on the plea raised by the petitioner. According to him, at the most, the liability of the guarantor would be to the extent of Rs. 15 lacs only.
Perusal of the order passed under Section 101 of the said Act shows that it is totally cryptic in nature. It does not decide the controversy raised before the authority. In fact, no reasons are recorded in support of fixation of liability upon the guarantor. The matter is pending before this Court since 2003, and till this date, there is no recovery. Keeping in view the factual background of the case, the provision of sub-section (2A) of Section 154 , and the nature of the order passed under Section 101 of the said Act, the order will have to be set aside with an order of remand. The petitioner will have to deposit some amount to show his bona fides. Hence, the order of remand shall be conditional, i.e. upon deposit of an amount of Rs. 10 lacs by the petitioner before the Deputy Registrar.
In the result, the order dated 29-5-2003 passed by the Deputy Registrar, Co-operative Societies (City-1), Nagpur, under Section 101 of the Maharashtra Co-operative Societies Act, 1960, is hereby quashed and set aside. The matter is remitted back to the Deputy Registrar for decision in the recovery proceedings afresh after giving the parties an opportunity of being heard in the matter. The petitioner shall deposit an amount of Rs. 10 lacs before the Deputy Registrar within a period of eight weeks from today, which shall be taken into consideration while passing the ultimate order of recovery, if it is so found. The parties to appear before the Deputy Registrar on 26-10-2015. If the amount is not deposited within the stipulated period, the competent authority shall be at liberty to strike out the defence and if the amount is deposited, it shall proceed to decide the matter as per the procedure laid down in Chapter VIII-A under the said Act.
Rule is made absolute in above terms. No order as to costs.