High Court
Facts
( 1 ) wp2746.23IN THE HIGH COURT OF JUDICATURE AT BOMBAYBENCH AT AURANGABADWRIT PETITION NO. 2746 OF 2023Aayan Multi Trade LLP,..PetitionerSamsherpur,Tq. & Dist. Nandurbar,Through its Authorized Officer,Shri Padmakar Bhanudas TapareVERSUS1.Sunitabai Madhukar Patil..RespondentsAge. Major, Occ. Household,R/o. Nandarkheda, Tal. Shahada,Dist. Nandurbar.2.The Pushpadanteshwar SahakariSakhar Karkhana Ltd., Samsherpur,Tq. & Dist. Nandurbar,Through its Liquidator. WITHCIVIL APPLICATION NO. 12491 OF 2024WITH WP/12959/2017AAYAN MULTI TRADE LLP THROUGH ITS AUTHORIZED OFFICERVERSUSSAILABI AJIT PATIL AND ANOTHERWITHWRIT PETITION NO. 2767 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSVIMALBEN SUDAM PATEL AND ANOTHERWITHWRIT PETITION NO. 2784 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPARE ( 2 ) wp2746.23VERSUSMADHUKAR LAXMAN PATIL AND ANOTHER WITHWRIT PETITION NO. 2749 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSSANGITABAI SANDIP PATIL AND ANOTHER WITHWRIT PETITION NO. 2757 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSUSHABEN KASHINATH PATIL AND ANOTHER WITHWRIT PETITION NO. 2768 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSAARTI PRAMOD PATIL AND ANOTHER WITHWRIT PETITION NO. 2751 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSKASHINATH DAGADU PATIL AND ANOTHER WITHWRIT PETITION NO. 2750 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSRAMCHANDRA DASHRATH PATIL AND ANOTHER ( 3 ) wp2746.23WITHWRIT PETITION NO. 2785 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSSANDIP KASHINATH PATIL AND ANOTHER WITHWRIT PETITION NO. 2748 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSSANJITABEN JAYESH PATIL AND ANOTHER WITHWRIT PETITION NO. 2753 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSSAMIR KASHINATH PATIL AND ANOTHERWITHWRIT PETITION NO. 2754 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSRADHABAI UKHA PATIL AND ANOTHER WITHWRIT PETITION NO. 2756 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPAREVERSUSSARIKABEN ARVIND PATIL AND ANOTHERWITHWRIT PETITION NO. 2783 OF 2023AAYAN MULTI TRADE LLP SAMSHERPUR THROUGH ITS AUTHORIZEDOFFICER PADMAKAR BHANUDAS TAPARE ( 4 ) wp2746.23VERSUSSADHANA SAMIR PATIL AND ANOTHER Mr.V.D. Sapkal, Sr. Advocate i/b. Mr.Prashant N.Khedkar, Advocate for thepetitioner.Mr.G.D. Jain, Advocate for respondent No.1.Mr.K.N. Lokhande, AGP for respondent-State.CORAM:KISHORE C. SANT, J.RESERVED ON:17.02.2025PRONOUNCED ON:20.03.2025JUDGMENT :-01.Rule. Rule made returnable forthwith by the consent of theparties.02.The petitioner in all these petitions is the same andrespondent No.2 is also same. Facts in all these petitions are similar.The judgments under challenge are also identical and therefore all thesepetitions are taken up together.03.To understand controversy between the parties, the factsfrom Writ Petition No. 2746 of 2023 are discussed, as a representativepetition. ( 5 ) wp2746.2304.The petitioner is a limited liability partnership firm, who haspurchased a property of respondent No.2 – Sugar Factory. RespondentNo.1 claims to be a depositor who has filed dispute in the CooperativeCourt against respondent No.2 for recovery of deposit amount. In thedispute, the petitioner and its predecessor were not made party. Thedispute was allowed directing Sugar Factory to pay an amount to thedisputant, with interest thereon @ 20% p.a. The petitioner preferredappeals to the Cooperative Appellate Court. However, all the appealscame to be dismissed. The petitioner is, thus, before this Court.05.It is a case of the petitioner that respondent No.2 – Factoryhad raised loan from the Maharashtra State Cooperative Bank [for short“MCS Bank”] . Since the loan could not be repaid, action was initiated bythe MCS Bank under the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002 [for short“Securitisation Act”] for recovery of the dues. Pursuant to said action,the MCS Bank, took possession of the assets of the factory, includingplant and machinery. The MCS Bank, thereafter, issued sale notice on30.10.2010, calling for bidders. One Astoria Agro and Allied IndustriesPvt. Ltd. [for short “Astoria”] participated in the bid. The bid of Astoria ofRs.45.48 crores was finalized. The property of the factory thus became ( 6 ) wp2746.23property of Astoria. The sale certificate also came to be issued underRule 9(6) and 7(2) of the Security Interest (Enforcement) Rules, 2002 formovable and immovable properties. Said certificate was issued on30.08.2011. In view of the certificate, the property was handed overAstoria by following procedure. Even a letter was issued by the Officer ofthe factory, showing that the possession is handed over. Later-on, thepresent petitioner purchased the property from Astoria on 22.06.2018and became owner of the factory and its assets.06.In the meantime, respondent No.1 (depositor) on 16.07.2010filed a dispute only against the factory in the Cooperative Court, Jalgaonbearing CC No. 35 of 2010 for recovery of amount along with interest.The depositor, however, did not make MCS Bank as a party. The fact oftaking over possession and the action under the Securitisation Act alsowas suppressed. In written statement by the factory, it is stated that theproperty is in possession of MCS Bank since 21.06.2010, pursuant toaction under the Securitisation Act. The Cooperative Court, Jalgaonallowed claim of the depositors by judgment dated 28.03.2011 anddirected the factory to pay an amount of Rs.1,33,250/- along withinterest @ 21% p.a. to the depositor. ( 7 ) wp2746.2307.Thereafter, the depositor also filed RD No. 12 of 2013. Samecame to be dismissed by order dated 15.03.2014 with liberty to file freshDarkhast by making the liquidator party as by that time the liquidatorwas appointed on the bank. Thereafter, the depositor again filed RD No.23 of 2015 in the Court of CJSD, Nandurbar for recovery of decretalamount.08.Learned CJSD, thereafter, issued an attachment order underOrder 21 Rule 54 of the CPC and prohibited the Astoria from transferringor changing nature of the factory. In the meantime, Astoria receivedshow cause notice from the Executing Court. It is, thereafter, it came tothe knowledge that the dispute was filed by the depositor and the samecame to be allowed. The Astoria, therefore, filed an appeal in theCooperative Appellate Court challenging the judgment and decree passedin the dispute, mainly on the ground that the MCS Bank was not a partyto the dispute. Since Astoria was not party to the original dispute, it wasrequired to file application seeking leave to appeal bearing MCA No. 78 of2016. The learned Judge, Cooperative Court, however by order dated23.12.2016 dismissed the application. Writ Petition No. 3961 of 2018was, therefore, filed and the same came to be allowed. The appeal cameto be remanded to the Cooperative Appellate Court by order dated ( 8 ) wp2746.2315.04.2019.09.On 22.06.2018, Astoria executed sale-deed in favour ofpresent petitioner and in that view name of the petitioner wassubstituted in the proceeding before the Cooperative Appellate Court. Inthe appeal, it is mainly contended that in view of Section 34 of theSecuritisation Act, the Civil Court or any other Court had no jurisdiction.The decree is, therefore, nullity. The provisions of Securitisation Actwould override other laws. The learned Judge, Cooperative AppellateCourt, however, dismissed the appeal by its judgment and order dated13.01.2020. So far as execution is concerned, the learned CJSD,Nandurbar in Darkhast held that execution petition is maintainable byorder dated 29.11.2022. The petitioner is, thus, before this Court,challenging the judgment and order passed in Appeal No.92 of 2019,confirming the order of the learned Appellate Court. 10.Learned Sr. Advocate Mr. Sapkal vehemently argued that thefactory failed to repay the amount of loan to the MCS Bank. The MCSBank, therefore, initiated recovery proceedings under the SecuritisationAct. After the remedy under the Securitisation Act was resorted to, noother Court, thereafter, had jurisdiction to entertain a suit. Pursuant to
Legal Reasoning
( 9 ) wp2746.23the action under the Securitisation Act, even sale certificate came to beissued. The movable and immovable properties were given in possessionof Astoria. Before initiating action under the the Securitisation Act,notice was issued on 30.08.2010. Though the dispute is filed on16.07.2010, the petitioner or the predecessors of the petitioner were notmade party. The factory filed reply on 30.07.2010, wherein it was clearlystated that the MCS Bank has taken possession of the factory on21.06.2010 pursuant to action under the Securitisation Act. It was,therefore, very much necessary for the respondent depositor to add theMCS Bank and Astoria as parties. It was necessary for the CooperativeCourt to consider this aspect and dismiss the dispute solely on thatground. However, the dispute came to be allowed by order dated28.03.2011. Thus, the petitioner was a necessary party. The right of thepetitioner was recognized by this Court in earlier Writ Petition. It wasnecessary for the Appellate Court to consider all these aspects and toallow the appeal. However, it totally failed to apply its mind properly,though it was pointed out that in view of the provisions of theSecuritisation Act, the Cooperative Court will not get jurisdiction.11.He submits that the provisions of the Securitisation Act beingSpecial Act by the Central Government, it would prevail upon the ( 10 ) wp2746.23Maharashtra Cooperative Societies Act. This basic aspect is notconsidered by the learned Cooperative Appellate Court. He, thus praysfor allowing the Writ Petition by quashing and setting aside theCooperative Appellate Court’s order. On merits, he submits that in viewof Bye-law No.1 of the factory, it could not have raised loan from theindividual parties like depositor. He relied upon provisions of Sections34, 35 and 37 of the Securitisation Act. He also relies upon judgments inthe case of M/s. Asha Oil Foods Pvt. Ltd. Vs. The Jalgaon JantaSahakari Bank Ltd. & Ors., 2004 BCI 516 and Marathwada GraminBank & Ors. Vs. Maharashtra State Co-operative Bank Ltd., 2007(1) Bom.C.R.819.12.Learned Advocate Mr. Jain for the original disputantvehemently opposes the writ petitions. He submits that the respondentsare depositors, who had deposited their money in the factory. However,they are deprived of the fruits of the judgment by the Cooperative Court,which is confirmed by the Cooperative Appellate Court. He submits thatthe notice of auction was given on 30.10.2010, whereas the dispute wasfiled prior to that i.e. on 16.07.2010. The judgment of the CooperativeCourt is dated 28.03.2011, whereas the sale certificate is dated30.08.2011. The possession is handed over on 30.09.2011. He thus ( 11 ) wp2746.23submits that the dispute was filed before notice of auction and thus allthe parties are bound by the decree. He prays for rejection of thepetitions.13.Inspite of service, none appears for the respondent –liquidator.14.This Court has to mainly consider the effect of the provisionsof the Securitisation Act and the action that is taken under the said Act.About the dates and events, there is no dispute. The only dispute isabout - whether dispute was maintainable in absence of making Astoriaas a party?. Secondly, whether the dispute was maintainable in view ofinitiation of action under the provisions of the Securitisation Act? 15.Sections 34, 35 and 37 of the Securitisation Act are asunder :-34. Civil court not to have jurisdiction.—No civil court shall havejurisdiction to entertain any suit or proceeding in respect of anymatter which a Debts Recovery Tribunal or the Appellate Tribunalis empowered by or under this Act to determine and no injunctionshall be granted by any court or other authority in respect of anyaction taken or to be taken in pursuance of any power conferredby or under this Act or under the Recovery of Debts Due to Banksand Financial Institutions Act, 1993 (51 of 1993). ( 12 ) wp2746.2335. The provisions of this Act to override other laws.—Theprovisions of this Act shall have effect, notwithstanding anythinginconsistent therewith contained in any other law for the timebeing in force or any instrument having effect by virtue of anysuch law.37. Application of other laws not barred.—The provisions of thisAct or the rules made thereunder shall be in addition to, and not inderogation of, the Companies Act, 1956 (1 of 1956), the SecuritiesContracts (Regulation) Act, 1956 (42 of 1956), the Securities andExchange Board of India Act, 1992 (15 of 1992), the Recovery ofDebts Due to Banks and Financial Institutions Act, 1993 (51 of1993) or any other law for the time being in force. 16.From reading of the sections, it is clear that once actionunder the Securitisation Act is initiated or to be initiated, no Civil Court orany other Court gets jurisdiction to deal with the properties or otherclaims. In the present case, it is clear that notice was issued under theSecuritisation Act by the MCS Bank to the factory. The possession of theproperties was handed over even prior to that on 20.06.2010. Thedispute was filed on 16.07.2010. It was therefore very much necessaryfor the depositors to make the MCS Bank, as a party. In the say itself,the factory had clearly stated that the property is in the possession of thebank. The bank did not even thereafter contest the dispute. However,from the say it was clear to the depositors and the Cooperative Courtthat the property is not in the possession of the factory and was inpossession of the MCS Bank pursuant to proceedings under the ( 13 ) wp2746.23Securitisation Act. In view of this it was necessary to add the bank as aparty. During pendency, the bank even sold the property in favour ofAstoria by accepting bid. The property was subsequently purchased bythe petitioner. It was necessary to add at least the MCS Bank andAstoria as party to the dispute, which was not done.17.So far as Bye-laws are concerned, this Court need not go intothe aspect as to whether the factory could have raised loan from theindividual depositors. In the judgment in the case of Asha Oil Foods(supra) the Division Bench of this Court considered the effects of theprovisions of the Securitisation Act. In that case provisions of section101 of the MCS Act were resorted to for recovery. It was held that inview of Securitisation proceeding, parties could not have resorted tosection 101 of the MCS Act. In the judgment in the case ofMarathwada Gramin Bank (supra) it was held that being securedcreditor, the MCS bank had issued notice under section 13 (2) of theSecuritisation Act on 16.08.2005. The possession was already taken. Itis, thereafter, the judgment was passed by the Cooperative Court. ThisCourt held that the provisions of the Securitisation Act being Central Act,will predominate and will have overriding effect over the provisions of theMCS Act, 1960. This Court delivered judgment by considering Article ( 14 ) wp2746.23246(1) of the Constitution. The Court considered various judgments ofthe Supreme Court and ultimately held that it was necessary for thebank, in that case, to resort to the provisions of appeal under section 17of the Securitisation Act.18.The main question before this Court is as to whether the MCSBank and the Astoria were necessary parties to the disputes. It is seenthat it was clearly brought to the notice of the disputant that theproperty was in possession of the bank. At least, thereafter, it wasnecessary for the disputant to add the bank as a party. This Court findsthat the judgment of the Cooperative Court was bad for non-joinder ofthe parties. The learned Appellate Court also failed to consider thesame.19.In view of the fact that the action was already initiated andpossession was already handed over pursuant to action under theSecuritisation Act, this Court holds that the dispute was not maintainablebefore the Cooperative Court. From the observations of this Court in theearlier Writ Petition, it is clear that the Court has considered and heldthat the petitioner had the right to participate being successor of Astoria,the Appellate Court, however, has not considered this aspect. It was
Decision
( 15 ) wp2746.23further necessary to see that the MCS Bank had already initiated actionunder the Securitisation Act and had taken possession. The materialdate is the date on which MCS Bank initiated proceedings under the Act.20.Thus, considering all the above, this Court has no hesitationin holding that the learned Member, Cooperative Appellate Court erred indismissing the appeals. For the reasons discussed above, the petitionsstand allowed. Hence, following order :-ORDER(i)Writ Petition No.12959 of 2017 is allowed in terms ofprayer clause (B-1). (ii)Rest of the Writ Petitions are allowed in terms of prayerclause (B).(iii)Rule made absolute accordingly.(iv)Pending civil application stands disposed off.[KISHORE C. SANT, J.] snk/2025/mar25/wp2746.23