Judgment:
A.H. Joshi, J.
1. Admit.
The Respondents, in appeal who are not appearing, need not be served afresh. Contesting respondents, are appearing. The Appeals are called out by consent of Advocates for the parties who are contesting / appearing. Heard at length for final disposal.
2. Status of the contesting parties in Letters Patent Appeal No. 197 of 2009 in Writ Petition No. 5993 of 2005 is as follows:
[i] Present respondent Nos. 25 and 26 were the writ petitioners. They are hereinafter referred to as Writ Petitioners.
[ii] Present appellant was respondent No. 7. He is hereinafter referred to as Appellant.
[iii] Appellant in Letters Patent Appeal No. 239 of 2009 was respondent No. 24 in Writ Petition No. 5993 of 2005.
3. Parties are referred to in this Judgment according to their status in the writ petition No. 5993 of 2005 for convenience.
Respondent No. 2 0 in the Writ Petition, namely Vaibhav Liquors Pvt. Ltd. is a Private Limited Company, who came into the picture in the working of respondent No. 6 initially as a lessee of distillery, and then as a purchaser.
Respondent No. 24 in writ petition Maharashtra State Co-operative Bank Limited is a Federal Bank, which has advanced loan to respondent No. 6, and is half way through in exercise of its powers under Section 13 of Securitization and Reconstruction of the Financial Assets and Enforcement of Securities Interest Act [SR FAESI Act] .
4. Facts of the case can be summarized as follows:
4.1 Respondent No. 6 Balaji Sahakari Sakhar Karkhana is a Co-operative Society [Balaji SSK], under liquidation. It was a Society falling in the category contemplated by Section 73G of Maharashtra Co-operative Societies Act registered some day around 22-3-1985.
4.2 Respondent Nos. 7 to 19 are the Founder Directors of the said Sugar Factory. It is alleged that they were members of 1st Board of Directors appointed by Government as well most are those who were elected to said Office later.
4.3 The petitioner No. l is a share holder and Member of the said Society, while Petitioner No. 2 is a Trade Union of the workers formerly employed in the said Sugar Factory.
4.4 The cost of project of the Balaji SSK which was estimated had gone in multiples when completed. When commissioned, it was run by incurring a huge loss. In a very sort duration Balaj i SSK had huge accumulated debts and loans due, to several banks, financial institutions and the Government. Its net worth had become negative by over Rs. 2 0 crores.
4.5 A distillery was established by the Sugar Factory sometime in 1993. The distillery unit was given on lease to the respondent No. 2 0 from the very beginning.
4.6 According to the writ petitioners, there was gross mismanagement and misappropriation of funds at a very large scale, and in the result, the sugar factory had come to a very precarious financial condition. It was not in a position to pay the price of the sugarcane procured by it from the farmers, wages to the workers and had failed in making the deposit of provident fund contribution of workers, already deducted from their salary and wages.
4.7 Entire sugar factory and distillery were sold by the Board of Directors to the respondent No. 2 0 in breach of orders restraining alienation etc., passed in various Writ Petitions.
4.8 The Petitioner Nos. 1 and 2 made certain complaints to authorities about mismanagement in the Sugar Factory and the distillery constructed / installed by the Balaji SSK. They have made serious allegations about the conduct of the Directors by way of mismanagement and misappropriations.
4.9 For the same reasons, several writ petitions and other judicial proceedings were launched by different aggrieved persons.
4.10 Simultaneously, the Joint Registrar (Sugar), Amravati, submitted two reports dated 9th January, 2 001 and 11th January, 2 001 to the Commissioner of Sugar in relation to affairs of the respondent No. 6.
4.11 In view of the material which was pointed out in the said reports submitted by Joint Registrar [Sugar], Commissioner of the Sugar and Additional Registrar Co-operative Societies passed order dated 22nd February, 2 002 and directed the enquiry under Section 83 of the Maharashtra Co-operative Societies Act, 1960 into the affairs of the Balaji SSK Ltd.
4.12 The order directing the enquiry reveals that it was passed in view of the material placed before him consisting of serious allegations of:
[a] Without receiving the full price, possession of the distillery was handed over to Vaibhav Liquor, i.e., respondent No. 20.
[b] Breach of terms and conditions on which the Govt., of Maharashtra had permitted the sale of distillery.
[c] Mismanagement of the funds of the sugar factory which were misused for unnecessary items and purposes.
Commissioner of Sugar also directed that the enquiry be completed within sixty days and the report be submitted.
4.13 Present appellant who was the Chairman of the Sugar Factory challenged the said order dated 22nd February, 2002 passed by the Commissioner of Sugar in Revision RVA 1303/Case No. 255/15S, before the Hon ble Minister, Co-operation, Govt. of Maharashtra. In the said Revision Application, stay to the said order for enquiry under Section 83 of the Maharashtra Co-operative Societies Act was granted.
4.14. After the stay of enquiry, authorities took steps for liquidation and winding up of the sugar factory, for which order dated 22nd May, 2002 was passed by the Commissioner of Sugar.
4.15 The petitioner No. l, therefore, filed Writ Petition No. 1199 of 2003 making several prayers before this Court seeking to quash and set aside the order dated 22nd May, 2002 passed by the Commissioner of Sugar initiating the liquidation proceedings, to rd declare the lease deed dated 3 April, 1995 and the sale-deed dated 29th December, 1998 in favour of M/s. Vaibhav Distillery to be null and void, to restore the possession of the distillery, seeking direction to the respondent No. 2 0 to pay certain amounts with interest and to recover damages sustained by the sugar factory. He also sought direction to constitute a Fact-finding-Committee headed by a retired Judge of this Court, and sought stay to the liquidation proceedings which were then pending before the Collector.
No relief whatsoever was granted in said Writ Petition, mostly considering pendency of case before Hon ble Minister and availability of remedies in law.
4.16 In 1997, some of the Members of the Trade Union of Workers of Respondent No. 6 had filed a suit against the sugar factory and its management before the Civil Court, seeking more or less the same or similar relief.
4.17 Thereafter, the petitioner No. l challenged before the Minister the order passed by the Commissioner of Sugar initiating the liquidation proceedings, which was registered as RVA 1303/Case No. 735/15S.
4.18 Petitioner No. l s petition challenging the order to initiate liquidation proceedings was registered as Revision Application.
4.19 Both Revision Applications, one filed by the respondent No. 7 against the order dated 22nd Feb., 2002 directing to hold enquiry under Section 83 and another filed by writ petitioner, were heard together by Hon ble Minister
4.20 The Hon ble Minister, by a common order dated 1st June, 2005, dismissed the revision filed by the petitioner and allowed the revision filed by respondent No. 7 and quashed the order dated 22nd Feb., 2002 in respect of enquiry under Section 83.
4.21 The said common order dated 1st June, 2005 passed by the Hon ble Minister, Cooperation, was impugned in the Writ Petition No. 5993 of 2005.
4.22 The Writ Petition No. 5993 of 2005 has been allowed by learned Single Judge of this Court by Judgment and order dated 5th March, 2 009.
4.23 The order passed by learned Single Judge is under challenge in these Letters Patent Appeals.
5. In the Writ Petitions, petitioners had challenged before the learned Single Judge the orders passed by the Hon ble Minister on 2st February, 2002 [Annex.77] and had sought reliefs for:
[a] quashing of the order passed by the Hon ble Minister of State for Co-operation, which is Annexure-77 [page No. 499 of Writ Petition paper-book] passed on 1st June, 2005 allowing Revision Application No. 255/15-S preferred by appellant, and dismissing Revision Application No. 735/2003 preferred by the Writ Petitioners.
[b] restoration of Order dated 22nd Feb. 2 002, passed by the Commissioner of Sugar initiating enquiry under Section 83 of the Maharashtra Co-operative Societies Act against present appellant and other office-bearers etc.
[c] quashing and setting side order [Annex.80] passed by the Commissioner of Sugar granting approval for disposal of the property of the Sugar Factory under liquidation in the manner indicated therein, which order was passed consequent upon the order passed by the Hon ble Minister, and said order [Annex. 80] was passed during pendency of Writ Petition.
6. Order passed by Hon ble Minister consists of certain observations which are eloquent and read as follows:
1 to 5 ...
6. It is seen from the Auditors Report that there is no truth in the charges of misappropriation of the property of factory, illegal acts, framed against Shri Keshav Narayan Patil alias Babasaheb Dhabekar by Shri Pandurang Thakre.
7. The outstanding dues of the institutions taken in liquidation are legally given on priority basis by the official liquidator. The liquidator will issue dues of the labourers as per provisions of law.
8. The appeal of Shri Pandurang Thakre to cancel the liquidation of the said factory and to revive the factory cannot be considered, in view of the gross loss of Rs. 8.62 crores, net loss of Rs. 1.67 crores incurred by the factory and outstanding liability of Rs. 19.09 crores. However, if the liquidators come to the conclusion that there is a possibility of revival of the factory, they can do so as per Section 105(0) of the Maharashtra Cooperative Societies Act, 1960. If Shri Pandurang Thakre submits a concrete plan for revival of the factory to the liquidator, they can take action under the said provisions.
9. The Auditors Report mentioned that there is no misappropriation of amount or misuse, however, some administrative lapses have been noticed. Hence there does not seem to be any need for inquiry under Section 83 of the Maharashtra Cooperative Societies Act, 1960. However, the liquidator has been appointed under Section 105 of the Maharashtra Co-operative Societies Act, 1960 and if, in their report, it is proved that anyone in the management of the factory or member of the factory has misappropriated or misused the amount of the factory, then under Section 88 of the Maharashtra Co-operative Societies Act, 1960, the Sugar Commissioner should initiate the action to recover the money from the concerned....
[Quoted from page Nos. 506 and 507 of the paper-book of Writ Petition No. 5993 of 2005].
7. Hon ble Minister had, therefore, held that the liquidator was already appointed and remedy under Section 88 was still open, and based thereon had passed his order dated 1st June, 2005.
8. The substance of the contention as advanced before learned Single Judge as is seen from perusal of Writ Petition and oral submissions is as follows:
[a] The Respondent No. 7 in Writ Petition [appellant] is a heavyweight politician, the kingpin in all the misconducts and Hon ble Minister s order has been passed to shield the deeds of the Respondent No. 7 in Writ Petition (the appellant in LPA No. 197 of 2009), particularly because he is a Member of Legislative Assembly of a ruling party and even a Cabinet Minister as narrated in para 3 8 and also at various places in the writ petition.
[b] It is not necessary to liquidate the assets of the Balaji SSK under liquidation to satisfy debts towards creditors.
[c] The acts and omissions of members of appointed as well as elected Directors which were all under the leadership of the appellant are of the nature of breach of trust, misappropriation, dishonest management and, therefore, the enquiry under Sections 83 and 88 should be caused and completed first before steps to sell the assets of Society are taken.
[d] The amount of liability of these misconducting directors and amount as would be found recoverable from present respondent No. 2 0 and the Directors / Members of Managing Committee and officers who had mismanaged and misappropriated the funds of Society, would be adequate to meet the outstanding liabilities of the Balaji SSK under liquidation.
[e] Various allegations and the basis thereof was demonstrated from the pleadings and the annexures to the writ petition.
9. The Writ Petition was strongly opposed by the Respondent No. 7 as well by State and the Registrar who were bound to justify Hon ble Minister s orders in which order, all orders passed by subordinate officers had merged.
10. In the course of time, the Respondent No. 2 had purchased the assets of the respondent No. 6 at the hands of respondent No. 7 [appellant] and his followers. The writ petitioners allege that said sale is null and void. It appears that even the respondent No. 2 0 has accepted the said sale to be null and void, or otherwise i.e. may be without prejudice to its rights under 1st sale deed has again entered into purchase of the same property of respondent No. 6, formerly purchased by it afresh, from the respondent No. 24. In spite of service, respondent No. 2 0 did not appear before the learned Single Judge, nor has it appeared in the present set of appeals.
11. As it has pleaded, and there is no controversy, on the point that the loan advanced by the Respondent No. 24 was around Rs. 13 crores and which having become overdue, had mounted to over Rs. 33 crores and further interest thereon. Respondent No. 24 was arrayed as respondent in the Writ Petition and has suffered the orders in the Writ Petition, and has, therefore, filed the Letters Patent Appeal No. 239 of 2009.
12. As is seen, the points, which arose for consideration of learned Single Judge, can be summarized as below:
[a] Whether an enquiry under Section 83 and consequent enquiry, if any, under Section 88 of the Maharashtra Cooperative Societies Act, was required to be closed?
[b] Should the sale and disposal of property in the process of liquidation and distribution of proceeds be done first in sequence i.e. before the fixation of liability, and should it destroy the prospects of revival of Society under liquidation and of the factories run by it?
13. The learned Single Judge has heard, scrutinized and finally decided the Writ Petition and in the operative order, gave certain directions. For the sake of convenience, those have been alphabetically marked by separating those as follows:
[A] Impugned order passed by the Hon ble Minister, Co-operation, is hereby quashed and set aside. Order passed by the Commissioner of Sugar on 22' February, 2 002 to hold enquiry under Section 83 is restored.
[B] In view of the facts and circumstances noted and observations made, the Commissioner of Sugar may, if he deems it proper, expand the scope of enquiry. Commissioner of Sugar shall appoint One-member or Three-member Enquiry Committee to hold the enquiry under Section 83. He shall see that Member or Members of that Enquiry Committee are completely independent, free from any influence, political or otherwise. Commissioner of Sugar shall see that enquiry is expedited and completed as early as possible and preferably within six months and if in the enquiry it is found that the Directors or any officers are found guilty, appropriate action under Section 88 shall also be expedited and taken at the earliest.
[C] In view of these directions, the respondent Nos. 6 to 24 shall not alienate or create any further encumbrances on any of the properties which are presently in their possession till the enquiry is completed.
[D] Respondent No. 24, who is in possession of the sugar factory by virtue of provisions taken under Securitization Act, shall be at liberty to use that property in any manner as it likes, except alienation during the said period.
14. Upon instructions, learned Adv. Mr. P.C. Madkholkar states that the appellant has no objection if the enquiry under Section 83 is conducted as ordered by Commissioner of Sugar, and by learned Single Judge.
15. In relation to the remaining part of the order, learned Adv. Mr. Madkholkar for the appellant has advanced following submissions which can be summarized as follows:
[a] Learned Single Judge has presumed that enquiry under Section 83 would essentially lead to enquiry under Section 88 and the liability thereunder, which indicates lack of advertence to provisions and scheme of legislation as to the intervening stages before the mechanism under Section 88 can be resorted.
[b] This lack of inadvertence discloses that learned Single Judge has decided the case hastily and without being mindful towards facts and the laws.
[c] The manner in which the affidavits are sworn proves that the affidavits are not based on personal knowledge, and the writ petition based on defective affidavit should have been dismissed in limini.
[d] The documents relied on in writ petition were not shown as secured from authentic custody. Such petition was not liable to be entertained, and should have been dismissed at the very threshold.
[e] The order clauses in the quoted portion, which are marked for convenience as [B] are in the nature of issue of a Writ of Mandamus and prohibition
[f] A petition for a Writ of Mandamus and for a Writ of Certiorari do fall under Article 226 of the Constitution of India, and would not lie before Single Judge.
[g] Though the petition before Single Judge was styled to suit to be a Petition for a Writ of Certiorari , reliefs granted in the operative order are of the nature of Mandamus and hence those are without jurisdiction.
[h] As the points pertaining to the maintainability of writ petition due to objection as regards defective affidavit and objection as to custody of documents, and as regards the point of jurisdiction of Single Judge was raised by the Respondent No. 7 before proceeding to hear the writ petition on merits and on all other points/issues involved therein, it was the duty of the learned Single Judge to have ruled first, as to whether the writ petition pertained to the jurisdiction of Single Judge or to the Division Bench.
[i] Since the point of jurisdiction was not decided and the petition for Mandamus is outside the scope of Single Judge, the impugned Judgment is without jurisdiction and hence nullity and deserves to be set aside.
16. In so far as the portions of operative order quoted and marked as [C] and [D] are concerned, learned Adv., for appellant Mr. Madkholkar wanted to argue on the same lines as indicated in points [a] to [c] noted in the foregoing paras.
This Court had indicated to learned Advocate Mr. Madkholkar that would the appellant argue to challenge these portions of operative order, there was every possibility that it would lead to an inference that the interest of the appellant (Respondent No. 7 in Writ Petition) are vested in protecting the respondent No. 2 0 Vidarbha Liquors Pvt. Ltd. Upon this indication learned Advocate Mr. P. C. Madkholkar, per prudence, elected not (to) further assail said part marked [C] and [D] for identification.
17. In support of his submissions, as regards challenge to part marked [B] for convenience of identification, learned Adv. Mr. Madkholkar has placed reliance on various judgments. The Judgments along with purpose for which those are relied are as follows:
[1] Shriram Gangaram Bute v. Dy. Registrar, Co-op. Societies, Akola and Ors. 2008 (4) ALL MR 726.
Point:
In this reported case, powers under Article 226 (and not 227) had been invoked. In view of provisions of High Court Appellate Side Rules, these powers are to be exercised only in relation to judicial or quasi-judicial orders passed by concerned authority. This hedging would imply that a single judge may not be in a position to issue mandatory or further directions in exercise of powers under Article 226, which he could have done in exercise of jurisdiction under Article 227.
[2] Union of India and Ors. v. Ranbir Singh Rathaur and Ors. : (2006) 11, SCC 696.
Point:
The High Court shall first decide the preliminary objections raised by the present appellants about the non-maintainability of the writ petitions.
[3] Udyami Evam Khadi Gramodyog Welfare Sanstha and Anr. v. State of Uttar Pradesh and Ors. : (2008) 1 SCC 560.
Point:
A writ remedy is an equitable one. A person approaching a superior court must come with a pair of clean hands. It not only should suppress any material fact, but also should not take recourse to the legal proceedings over and over again which amounts to abuse of the process of law. Repeated filing of writ petitions amounts to criminal contempt. Although the prayer made in the four writ applications were apparently different, it became evident that the core issue in each of the matters centered around recovery of the amount advanced to the appellants by the bank.
[4] Chiranjilal Shrilal Goenka v. Jasjit Singh and Ors. : (1993) 2 SCC 507.
Point:
A decree passed by a court without jurisdiction on the subject-matter or on the grounds on which the decree made which goes to the root of its jurisdiction or lacks inherent jurisdiction is a coram non judice, and is a nullity and is non est.
[5] A.K.K. Nambiar v. Union of India and Anr. : AIR 1970 SC 652 : (2008) 1 SCC 560.
Point:
The reasons for verification of affidavits are to enable the Court to find out which facts can be said to be proved on the affidavit evidence of rival parties. Allegations may be true to knowledge or allegations may be true to information received from persons or allegations may be based on records. The importance of verification is to test the genuineness and authenticity of allegations and also to make the deponent responsible for allegations. In essence verification is required to enable the Court to find out as to whether it will be safe to act on such affidavit evidence. In absence of proper verification, affidavits cannot be admitted in evidence.
[6] Bhupinder Singh v. State of Haryana and Ors. : AIR 1968 Punjab & Haryana 406 (V 55 C 91).
Point:
The provisions of Order 19, Rule 3, should be strictly observed, and affidavits which are violative of the requirements of the mandatory provisions of law, deserve to be ignored. The words that the contents of the affidavit are true and correct to the best of my knowledge and belief carry no sanctity and such a verification cannot be accepted.
[7] Caetano Dias v. Caetano Rodrigues and Ors. AIR 1978 Goa, Daman & Diu 12.
Point:
In the absence of a statement that the facts deposed to are of his own knowledge, it will always be open to the deponent to escape any criminal liability by stating that the statements he made in the affidavit are of his belief and not of his knowledge.
18. The respondent No. 24 the Maharashtra State Co-operative Bank Ltd. has challenged order passed by learned Single Judge in Letters Patent Appeal No. 239 of 2009 in so far as it relates to the order of restraint which has been passed by learned Single Judge, which part marked for identification as [D] reads as follows:
[D Respondent No. 24, who is in possession of the sugar factory by virtue of provisions taken under Securitization Act, shall be at liberty to use that property in any manner as it likes, except alienation during the said period.
[Quoted from page Nos. 47 and 48 of the paper-book of Letters Patent Appeal No. 197 of 2009] .
19. Learned Adv. Mr. M.V. Samarth has argued in support of appeal and opposed the prohibitory direction on various points. In the midst of submissions, Court had asked learned Adv. Mr. Samarth to place on record, if the Bank wants, the circumstances in which respondent No. 2 0 was chosen as a buyer be placed on record.
Learned Adv. Mr. Samarth took time and tendered affidavit on 18* December, 2009.
20. From oral submissions and from affidavit tendered before this Court, plea of the Bank, as is seen, is as follows:
[a] That, the appellant-Bank had financed and its over-dues had mounted to around Rs. 33 crores, and further interest.
[b] The entire property existing and as would be acquired in future, a plant and machinery, agricultural land and debts etc., were charged by Balaj i SSK in favour of the Bank, the original Respondent No. 24.
[c] The Commissioner of Sugar was independently processing to sell the property of Balaji SSK to complete the liquidation proceedings, however, the Bank had a right of enforcement of security interest which it had under Section 13 of the Securitization and Reconstruction of the Financial Assets and Enforcement of Securities Interest Act [SR FAESI Act] and it had taken steps to take possession of the property, had filed a Writ Petition and of late has actually taken possession.
[d] Taking possession by the Bank was hindered by respondent No. 20, who was the lessee in possession.
[e] Considering the obstructions created by respondent No. 20, in order to safeguard its best interest, the Bank had exercised its discretion of choosing to sell property by negotiations, and in its best judgment, found it proper to sell the property to respondent No. 20.
[f] Sale to other buyers was not foreseen by the Bank to be a possible event and, therefore, the respondent No. 2 0 was chosen as a prospective buyer as a practice deal.
[g] Rights of the secured creditor vested in it under the provisions of the SR FAESI Act have overriding effect being created by act of Parliament and are, therefore, superior in nature than the rival claims of other unsecured creditors, including the workers or other statutory dues, most amongst which are governed by various enactments of State Legislature or even by Parliament.
[h] The Bank was arrayed as a formal and consequential party in the Writ Petition and an order in the nature of prohibition could not have been granted in favour of the petitioners and against the respondents, particularly when there was no lis between the Bank and the writ petitioner before Honourable Minister.
21. Learned Adv. Mr. Samarth, as indicated herein before, has tendered affidavit for respondent No. 24. After giving a brief background of litigation initiated by respondent No. 20, he has summarized the facts as to the manner in which negotiations were finalized with respondent No. 20, relevant portion whereof reads as follows:
7] I further say that, in the meantime several attempts were made by the secured creditor, the Bank to dispose off the property, however, because of the pending litigation as stated above, the Bank did not secure appropriate price for the properties. In the meantime, M/s. Vaibhav Liquors also submitted their offers for purchase of Karkhana, however, the offer being low, was rejected by the Committee. The Executive Committee of the Bank thereafter on 4.9.2008, however, decided to negotiate sale of the properties with M/s. Vaibhav Liquors. Accordingly, Hon ble Chairman, Vice Chairman and Managing Director of the Bank were authorized by Executive Committee of the Bank to negotiate with M/s. Vaibhav Liquors. It is submitted that M/s. Vaibhav Liquors, on 24.1.2009, who are never recognized as the title holders of distillery by the Bank submitted their revised offer to purchase the entire properties, which includes disputed portion of the Distillery Unit and the Sugar factory for an amount of Rs. 11.11 crores in settlement of all pending disputes.
8] I further say that the said offer was placed before the Executive Committee on 28.1.2009 for final decision. A copy of the proposal submitted for approval of the Executive Committee is enclosed herewith for kind perusal of this Hon ble Court as Document No. 1 along with this affidavit. It is submitted that the said proposal was placed before the Executive Committee vide Subject No. 17, which was passed unanimously vide Resolution No. 17 in settlement of all disputes. A copy of the said subject and resolution passed thereon dated 28.1.2009 is enclosed herewith as Document No. 2.
9] I therefore say that the secured creditor Bank had special reasons to negotiate the sale of the property by private treaty in accordance with the provisions of Rule 8(5)(d) of the Security Interest (Enforcement) Rules, 2002. I further say that the Bank also has issued notice of 3 0 days as required under Rules on 24.8.2009.
[Quoted from page Nos. 699 and 700 of the Paper-Book of Letters Patent Appeal No. 197 of 2009] .
22. In order to substantiate his contention, learned Adv. Mr. Samarth has placed reliance on the precedents as follows:
[a] Marathwada Gramin Bank v. Maharashtra State Co-op. Bank Ltd. and Ors. : AIR 2007 Bom. 92.
Point:
Though the Securitisation Act, 2002 and Maharashtra Co-operative Societies Act, 1960 have been enacted by the respective legislatures in their allotted sphere and operate in different and separate fields, in the context of the appointment of the liquidator under the MCS Act, 1960 on the Karkhana an overlap or conflict has arisen. In such a situation by virtue of the non-obstante clause in Article 246(1) the Central Act will predominate. Therefore, the Securitisation Act, 2002 has overriding effect over the MCS Act or other Laws enacted even by the Parliament.
[b] The Maharashtra State Co-op. Bank Ltd. and Ors. v. The State of Mah. and Ors. : 2008 (4) BomCR 719.
Point:
Liquidator would be covered by the definition of borrower as contained in Section 2(1)(f) of the Securitization Act.
23. The Appeal is opposed by learned Adv. Mr. R.L. Khapre for respondent No. 25 by advancing following submissions:
[a] There were two Revision Applications before Hon ble Minister, namely, one which was filed by the appellant in Letters Patent Appeal, challenging the enquiry, being Case No. 255/15-S, and another was the Revision No. 735/2003 filed by petitioners herein making a grievance against the order permitting the sale of property.
[b] Hon ble Minister had allowed present appellant - petitioner, dropped the enquiry ordered by Director of Sugar and dismissed the Revision Application No. 735 of 2003 filed by Writ Petitioner present respondent No. 25.
[c] Hon ble Minister s order as regards allowing Revision Application No. 255/15-S is based on scanty reasons consisting of only two lines as seen found in paragraph No. 9 thereof.
[d] The order passed by the Hon ble Minister does not contain even one line reasons as far as dismissal of Revision Application No. 735 of 2003 is concerned.
[e] What was challenged before learned Single Judge was the order passed by Hon ble Minister exercising revisional jurisdiction under Section 154 of the Maharashtra Cooperative Societies Act.
[f] The revisional jurisdiction under Section 154 is inherently quasi judicial and cannot be considered to be administrative in nature. The matters arising out of exercise of revisional powers by the Hon ble Minister lie before learned Single Judge only.
[g] What learned Single Judge has done is setting aside the order dropping the enquiry and also setting aside the order of appointment of liquidator. The exercise of jurisdiction by learned Single Judge is squarely under Article 227 of the Constitution.
[h] In so far as the order of guiding the mode of enquiry, its time frame and the cautions to be observed by the Registrar is concerned, it is in the nature of directions to subordinate authority , and does not have the clothing, or frame of Mandamus , as commonly understood to be a prerogative writ issued for enforcement of constitutional or statutory right and corresponding obligation.
[i] While respondent No. 24 is a stranger to the liquidation proceedings, the default and need to sell the property has occurred only because of malicious conduct of the Board of Directors led by the respondent No. 7-Appellant. If the enquiry under Section 83, which is bound to lead to ultimate enquiry under Section 88 is completed and responsibility is fixed, respondent No. 2 0 is dispossessed, property is taken in possession, it would be totally unnecessary to sell the property.
[j] The agriculturists or other creditors of respondent No. 6 would willingly come forward to pay the price negotiated by respondent No. 24 with respondent No. 2 0 and take over the assets with all impediments at the hands of respondent No. 20.
[k] Though respondent No. 24 may have rights of superior nature due to overriding effect of SR FAESI Act, actions of respondent No. 24 are not above the law, and are open to scrutiny.
[1] Learned Single Judge has honoured the rights of the respondent No. 24 and permitted to take all steps, except executing a final sale-deed, thereby the scheme of SR FAESI Act has been honoured and there is no violation of rights of respondent No. 2 4.
[m] It is open to the Single Judge and within his jurisdiction to issue ancillary directions while deciding the petition under Article 227 of the Constitution of India.
24. Learned Adv. Mr. Khapre has argued that in so far as direction restraining respondent No. 7 in the Writ Petition [appellant in Letters Patent Appeal No. 197 of 2009] and his associates who were members of the Managing Committee of Balaji SSK is concerned, they do not have personal interest, except if they have a vested interest in the success of respondent No. 20. Therefore, in law, there is no prejudice that would be caused to the appellant in Letters Patent Appeal No. 197 of 2009. He, therefore, states that the order of restraint incorporated in part of the impugned order (marked [C] ) should remain unaffected in so far as these persons are concerned.
25. Learned Adv. Mr. R. L. Khapre has further argued that no prejudice, whatsoever, would be caused to the respondent No. 24, if the impugned order is confirmed. Since even now no money has actually come to the hands of the Respondent No. 24. Similarly, no prejudice would be suffered by the respondent No. 20, since respondent No. 2 0 is already in possession, has not cared to oppose present appeal, and prima facies, is seen to be in default towards payment of lease rent at the agreed rate. He further argued that but for vested interest of appellant in Letters Patent Appeal No. 197 of 2009, no legal right of said appellant is involved.
26. To substantiate his contention, learned Adv. Mr. Khapre placed reliance on following judgments:
[a] Haribhau Dagdu Tandale v. Industrial Co-op. Association Ltd., and Ors. : AIR 1997 SC 1475.
Point:
It is difficult to conceive that Liquidator could have intended to authorize the sale of the property without any urgency whatsoever, even when the appeal was pending. Pending appeal can result both in the confirmation of the interim winding up order as well as in the vacating thereof. The sale powers under Section 106 could have been intended only to meet such cases where sale of perishable articles or some other property of such nature cannot for some reason or the other wait till the disposal of the appeal.
[b] Surya Dev Rai v. Ram Chander Rai and Ors. : AIR 2003 SC 3044 (1).
Point:
In exercise of supervisory jurisdiction the High Court may not only give suitable directions so as to guide the subordinate Court as to the manner in which it would act or proceed thereafter or afresh, the High Court may in appropriate cases itself make an order in supersession or substitution of the order of the subordinate court as the court should have made in the facts and circumstances of the case.
[c] State of Maharashtra and Ors. v. Basantilal and Anr. : AIR 2003 SC 4688 .
Point:
It is an admitted fact that the order made by the Minister concerned was on a revision-petition filed against the order of the Commissioner of excise who himself was entertaining a petition before him under the provisions of the Act sitting as a quasi-judicial authority. It is also an undisputed fact that executive authorities also, if so empowered under a statute, exercise quasi-judicial powers. Such powers when exercised by an authority under a statute, sitting as a qusi-judicial authority results in a quasi-judicial order which can never be termed as an executive order requiring authentication under Article 166 of the Constitution of India.
[d] Shankar amchandra bhyankar v. .Krishnaji Dattatraya Bapat : AIR 1970 SC 1.
Point:
If there are two modes of invoking the jurisdiction of the High Court and one of those modes had been chosen and exhausted it would not be a proper and sound exercise of discretion to grant relief in the other set of proceedings in respect of the same order of the Subordinate Court. The refusal to grant relief in such circumstances would be in consonance with the anxiety of the Court to prevent abuse of process as also to respect and accord finality to its decisions.
[e] Kanhaiyyalal Fattelalji Upadhaya and Ors. v. Mahavir Tea Company and Ors. : 2007 (2) Bom.C.R. 808.
Point:
High Court also is entitled in appropriate case, in exercise of power/jurisdiction under Article 227, to make an order in supersession or substitution of the order of the subordinate Court though such power may not be available in exercise of original jurisdiction under Article 226. In the circumstances, the decision of the Apex Court in the case of Kishorilal (cited supra) is of no help to the appellant.
[f] Subhas Anna Kool v. Daund Tal. Sahakari Dudh Uttapadak Sangh Maryadit : 2006 (4) Bom.C.R. 607.
Point:
It is not a mere obligation to act judicially that will make an authority judicial but it is functioning in judicial capacity that will clothe it with judicial character, irrespective of fact that authority is administrative or judicial one. In instance case order being of quasi judicial nature it was subject to judicial review before a Single Judge in terms of Rule 18, Chapter 17 of High Court (A.S.) Rules.
[g] Vijay K. Mehta and Anr. v. Charu K. Mehta and Ors. 2009 (5) Mh.L.J. 29.
Point:
When the main reliefs sought in the petition were within the jurisdiction of Single Judge, all consequential orders passed by the Single Judge would be deemed to have been passed within jurisdiction of Single Judge.
[h] Keshrimal Jivj i Shah and Anr. v. Bank of Maharashtra and Ors. : 2004 (4) Bom.C.R. 842.
Point:
Transfer of immovable property in violation of injunction order or prohibition issued by Court, confers no right, title or interest in transferee, it is no transfer at all.
[i] Smt. Savitri Devi v. Civil Judge (Senior Division), Gorakhpur and Ors. : AIR 2003 Allahabad 321.
Point:
Sale of suit property in violation of a restraining order against such alienation would be a nullity.
[j] Mardia Chemicals Ltd., etc. etc. v. Union of India and Ors. etc. etc. : AIR 2004 SC 2371.
Point:
Right of mortgagor of redemption is recognized to be unfettered. It has to seek to recover money, and objective is not to sell the property.
[k] S.J.S. Business Enterprises (P) Ltd. v. State of Bihar and Ors. : AIR 2004 SC 2421.
Point:
Redemption is a right of absolute nature, unless there is a right of foreclosure or mortgage by conditional sale. Thus, the interest of the secured creditor is of recovering money and not of selling the property.
[1] Philomina Jose v. Federal Bank Ltd. and Ors. : AIR 2006 SC 1162.
Point:
In a suit for redemption, a mortgage other than a mortgage by conditional sale or an anomalous mortgage, the mortgagor has a right of redemption even after the sale has taken place pursuant to the final decree, but before the confirmation of such sale. In view of these provisions, the question of merger of mortgage-debt in the decretal-debt does not at all arise.
[m] Pandurang T. Thakre and Anr. v. State of Maharashtra and Ors. [Order dated 14th September, 2006 passed in Writ Petition No. 5993 of 2005 (Coram : B.R. Gavai, J.)] . AND
[n] Pandurang T. Thakre and Anr. v. State of Maharashtra and Ors. [Order dated 11th July, 2007 passed in Writ Petition No. 993 of 2005 (Coram : Smt. V.A. Naik, J.)] . These two orders are cited to show records of Writ Petition No. 5993 of 2005 and not as precedents.
[o] Madhya Pradesh Rajya Sahakari Bank Maryadit v. State of M.P. and Ors. AIR 2007 SC (Supp) 540.
Point:
It has been held that writ would be maintainable against a Co-operative society if it is established that a mandatory statutory provision of a statute has been violated. Therefore, nothing turns on this aspect of the matter.
[p] G. Ramegowda, Major etc. v. The Special Land Acquisition Officer, Bangalore : AIR 1988 SC 897.
Point:
The fact that the main appeals are themselves, in the meanwhile, disposed of finally on the merits by the High Court would not by itself detract from and bar the consideration of the correctness of the order condoning the delays. This is an instance of what are called dependent-orders and if the order excusing the delays is itself set aside in the Supreme Court appeals, the further exercise, made in the meanwhile, by the High Court finally disposing of the appeals would be rendered nugatory.
[q] Vithaldas and Ors. v. Mansukhlal 1980 (0) BCI 75.
Point:
The respondents were entitled to support the decision of the Tribunal even on the grounds which were not accepted by the Tribunal or any other grounds which may not have been taken notice of by the Tribunal whole they were patent on the face of the record.
27. Learned Adv. Mr. Madkholkar in Rejoinder has placed reliance on following precedents to urge the point noted therein below:
[1] Radhey Shyam and Anr. v. Chhabi Nath and Ors. : (2009) 5 SCC 616.
Point:
Ratio contained in Surya Dev Rai v. Ram Chander Rai : (2003) 6 SCC 675 is a qualified dictum, though it is not overruled. The matter is now before a Larger Bench.
[2] A.R. Antulay v. R.S. Nayak and Anr. : AIR 1988 SC 1531.
Point:
The Court, which does not have jurisdiction, cannot be conferred even by the superior Courts.
[3] (a) Seema Dhamdhere, Secretary, Mah. Public Service Commission v. State of Mah. and Ors. : (2008) 2 SCC 290.
(b) Gurpal Singh v. State of Punjab and Ors. : (2005) 5 SCC 136.
(c) Sunil Ramdas Kotkar and Ors. v. State of Maharashtra and Ors. : 2005 (4) Mh. L. J. 375.
Point:
Official documents cannot be used in the Public Interest Litigation without explaining their custody.
28. Now, therefore, the questions, which arise before this Court for consideration in two different appeals, are as follows:
(A) IN L.P.A. No. 197 OF 2009.
[a] Does the Writ of Certiorari admit issue of directions ancillary to Certiorari to modulate or guide the procedure and proceedings to be carried out by any authority or forum, to whom, or in relation to whom the Writ of Certiorari is issued?
[b] Are the directions issued by learned Single Judge exercising jurisdiction of superintendence not outside the scope of the jurisdiction of superintendence?
[c] Should the directions as are issued in present impugned judgment be regarded as Mandamus, and should be treated as issued in excess of jurisdiction?
[d] Whether the Hon ble Minister as Revisional Authority has failed to protect the advancement of the aims and objects of the Maharashtra Co-operative Societies Act?
[e] If answer to point [d] is affirmative, would the Single Judge be devoid of powers for issuing an order in the nature of orders and directions needed for restitutive justice and corrective directions ancillary to the issue of Writ of Certiorari and not separable as Mandamus?
[f] Are the directions contained in Para [C] quoted above, contained in the impugned order, of such a nature that those fall within the compass and ambit of powers and jurisdiction of Single Judge under Articles 226 and 277 of the Constitution of India?
(B) IN APPEAL No. 239 OF 2009:
[a] In absence of lis against Respondent No. 4 before the Hon ble Minister, could the writ petitioners have prayed for relief for any relief against Respondent No. 24 MSC Bank/appellant in LPA No. 239 of 2009.
[b] Are the directions contained in Para [D] quoted above which are contained in the impugned order of the nature which fall within the compass and ambit of powers and jurisdiction of Single Judge under Articles 226 and 277 of the Constitution of India?
29. This Court has given peaceful and analytical consideration to the issues involved and respective submissions, pleadings, documents relied upon by respective parties.
DISCUSSION AS TO CONCLUSIONS AND REASONS IN L.P.A. No. 197 OF 2009.
30. Certain findings as to facts, which are seen in impugned Judgment of learned Single Judge, are stated as follows:
30.1. On 06-11-1998 a statement was made before the Court in pending petition on behalf of the Committee members that until further orders the management would not sell, dispose of or encumber the property of the sugar factory. By orders dated 22-12-1997 and 28-11-1998 this Court had directed the management not to take any policy decision and imposed a restriction of expenses without prior leave of the Sugar Commissioner. This restriction continued as far as nominated Board of Directors or management committee is concerned till new Board was constituted after the election held in March 1999. In spite of this, the management executed a sale deed in respect of distillery in favour of respondent No. 2 0 on 29-12-1998. The sale deed reveals that it was in pursuance to the decision taken by Resolution dated 14-08-1998. The respondent No. 7 was authorised to enter into this contract and on the basis of that the respondent No. 7 executed a sale deed in favour of respondent No. 2 0 and sold away the Distillery. The Resolution dated 14-08-1998 as well as the sale deed were in clear reach of the statement made before this Court and in violation of the directions given by this Court.
30.2 Though in 1993 the distillery was still in process of installation the Board of Directors Respondents Nos. 7 to 19 decided to lease it out to respondent No. 20, when in 1996, the installation of Distillery was just completed.
3 0.3 Record reveals that respondent No. 2 0 did not pay the lease money regularly and it was in arrears of the same.
30.4 It appears that the management approached the Government for permission to sell the distillery and the permission was granted subject to certain conditions. Offset price of the distillery was fixed at Rs. 7.61 crores. The tenders were called and the maximum tender was for Rs. 5.61 crores submitted by respondent No. 20 was short by Rs. 2 crores in comparison to the offset price. The management did not call fresh tenders and why no further steps were taken to get more price of the distillery.
30.5 It appears that out of the sale price amount of Rs. 3.61 crores was paid by adjustment towards certain expenses incurred by respondent No. 20. Balance amount of Rs. 2 crores is also said to have been adjusted towards some payments or expenses and thus the sugar factory did not get any amount towards the sale price from the respondent No. 20.
30.6 All the details as to how the amount was spent on installation of that distillery and how the amount of sale price was adjusted, will come out only if thorough enquiry is held. However, one example may be given here about doubtful transactions.
30.7 Documents on record reveal that Complete Model 7X5 EXV LUB Air Compressor was purchased on 23.12.91 by the sugar factory from Chandresh Engineering Corporation. Said Chandresh Engineering Corporation had purchased it from its manufacturer Ingersoll Rand on 29-11-1991. That Unit was purchased by Chandresh Corporation for amount of Rs. 93,2 83/- and management of the sugar factory purchased the same Unit from Chandresh Engineering Corporation on 23-12-1991 for Rs. 3,15,000+ packaging and forwarding charges. This purchase was from some middle man and that too for a price which was more than 3 times the market price. It is not clear how many machines were purchased by the management at such exorbitant prices. This is an indication of the mismanagement and misappropriation of funds of the Sugar Factory.
30.8 The reports dated 09-01-2001 and 11-01-2001 submitted by the Divisional Joint Registrar (Sugar) to the Sugar Commissioner take note of the several allegations made by the Workers Union and some members about the mismanagement, misappropriation and corruption Report dated 09-01-2001 discloses that even the Annual General Meeting of the Society was not held for 7 years i.e. from 1993-94 to 1999-2000. Relevant information about the business transaction, and sale of the property of the sugar factory was never placed before the Members of the Cooperative society for 7 years continuously and the management was run by respondent No. 7 to 19 without holding the election and without calling the Annual General Meeting of the Society.
30.9 It reveals that there were allegations of corruption in purchase and installation of the machinery, misappropriation in the sale of sugar molasses, gunny bags, transportation.
30.10 It was alleged that 600 employees were not paid their wages since March 1996, provident fund amount deducted from the wages were not deposited with the Provident Fund Commissioner and the Society had incurred huge losses and was heavily indebted.
30.11. As per the Audit Reports amount of Rs. 440.59 lacs was recoverable as per the Balance Sheet dated 31.03.2 000. There were advances of Rs. 610.34 lacs and those amounts were to be recovered. This report indicated that amount of about Rs. 950.93 lacs was to be recovered from the debtors and the persons who had taken advances and no steps were taken for recovery of that amount. This is an indication that if the amounts would have been recovered, possibly the sugar factory would not be required to sell the distillery or it could be in a position to clear the dues of the different financial institutions and the due of the workers etc.
30.12 The Divisional Joint Registrar had recommended detailed audit in respect of the several points raised in those two reports.
30.13 In the light of the material disclosed in the said two reports the Director Sugar and Divisional Registrar Cooperative Societies passed the order dated 22.02.2002 for enquiry under Section 83 for which he gave his clear reasons. His order reveals that as per the said reports, the terms and conditions imposed on the sale of distillery were violated; there was mismanagement resulting in unnecessary expenditure; possession of the distillery was given to M/s Vaibhav Liquor Ltd., respondent No. 20 without receiving the price of the same and thus all the rules were trampled.
30.14 In the present case, it appears that in breach of the directions given by this Court and the commitments made before the Court, valuable property i.e. the distillery was disposed of and huge losses were already incurred. The factory had incurred gross losses of Rs. 8.62 crores and net loss of Rs. 1.67 crore. The factory was indebted to the Government and other financial institutions to the tune of more than Rs. 19 crores.
30.15 In the year 2003, the respondent No. 24 took over possession of sugar factory also for recovery of amount of more than Rs. 33.33 crores and thus neither the sugar factory nor the distillery is in possession of the Society.
30.16 Therefore, it is not the stage when the purpose would be served merely by an ordinary audit Section 81. It was necessary to hold detailed enquiry under Section 83 to find out where the things went wrong so that liability could be fastened on responsible persons and action could be taken under Section 88 for recovery of the property and money of the society and for recovery of the damages. In view of these circumstances, the Sugar Commissioner was justified in passing impugned order dated 22.02.2002 to hold enquiry under Section 83.
30.17 On perusal of the impugned order passed by the Minister, it appears that the Minister observed that Auditor s Report have mentioned that Directors or Members of the factory have not done any illegal act or misappropriation, however, some administrative lapses have been noticed.
30.18 The Minister also came to the conclusion that in view of the Auditors Report there is no truth in the charges of misappropriation of the property of factory, and illegal acts, framed against respondent No. 7. In fact, before coming to such conclusion it was necessary to hold detailed enquiry. However, the Minister came to the conclusion that there was no mismanagement and misappropriation, even without any such enquiry. If the facts and circumstances noted above would be borne in mind, the learned Minister could not have come to conclusion that enquiry is not required.
30.19 It should be borne in mind that the State of Maharashtra is supposed to be the leader in the field of cooperation in the country and because of the cooperative movement vast financial development has taken place in the State.
30.20 The cooperative societies and particularly sugar factories are established and run not as proprietary concern, partnership firm or private companies nor the huge funds required for establishment and running such factories come from the pockets of the Directors of such factories. The funds come from the Government, financial institutions and large number of members who are predominantly cultivators and farmers. It is necessary that the funds of these institutions should be property managed and protected. The management must be accountable for any mismanagement.
30.22 The Government is guardian of cooperative movement and the whole system and therefore, there is a heavy responsibility on the concerned Minister of Cooperation to see that when there are serious allegations of mismanagement and misappropriation, enquiry should be properly held and the guilty should be brought to book and made to compensate. 30.21 From the record and circumstances and impugned order, it appears that the learned Minister quashed the order of enquiry under Section 83 without any valid reasons.
31. The highlights quoted above do prima facie sufficiently demonstrate as to how the affairs of the society under liquidation were managed in a monarchical style, and how interference and consequential directions by learned Single Judge were necessary.
32. The documentary evidence adequately demonstrates that there existed material before the Commissioner which does prima facie make out a case for order of enquiry. At the same time, no material is shown to exist on record before Hon ble Minister which would ex facie nullify the need of enquiry under Section 83 and all procedures which do in the result follow.
33. The point as to whether enquiry under Section 83 should be done or should be dropped does not carry any significance, as learned Adv. Mr. Madkholkar has conceded that the appellant is not opposed to enquiry under Section 83 of the Maharashtra Co-operative Societies Act.
Moreover, in the order passed by Hon ble Minister need of enquiry under Section 88 of the Act is also left open.
34. In so far as the part of the order marked in the quotation as C giving restraint against the Directors preventing them from alienating the property etc. is a matter for which the appellant does not have the cause of action to challenge. As noted earlier, the appellant cannot challenge it unless his interests are vested in protecting the interest of the Respondent No. 2 0 M/s Vidarbha Liquors and only if the appellant is pursuing for the litigation as a proxy for Vidarbha Liquor. It is a matter of record that the writ petitioner has made allegations alleging malafide and vested interest on the part of the appellant, however, in so far as the challenge to said part of order is concerned, there is no foundation made in appeal. Moreover, as noted in para No. 16, per prudence, Mr. Madkholkar has refrained from making allegation against this part of the order.
35. The facts as found by learned Single Judge noted in foregoing para No. 3 0 indicate that well before the distillery unit was commissioned, the point of break even had become a mirage. The activity of the Respondent No. 6 had attained the stage of economic in viability, and at this point of time, the respondent No. 2 0 had entered the scene, and was engaged as a lessee, and had come to catch hold of the control of distillery unit, and had caught hold of the assets of Balaji SSK Ltd. 36. This Court cannot part with the conclusion as to dismissal of appeal without touching the points advanced as to:
(1) jurisdiction of Single Judge;
(2) improper or inadequate explanation as to custody of documents;
(3) as to improper affidavit in support of the writ petition.
This Court would have taken up the task, as a matter of pleasure, for dealing with and discussing these aspects and the challenge in the petition survived. In view of what this Court has noted in paragraphs No. 33 & 34, any discussion on these points is not required or justified.
37. In so far as the points framed in para 28(A) at (a) to (e) are concerned what this Court has observed, appreciated and holds is as below:
Direction identified as [B] in the operative order is of such effect that thereby the enquiry under Section 83 of the Act is intended to be expedited, done/caused meaningfully, impartially and un-influenced from pressure quarters of the power. By no stretch of interpretation or seen from any angle do not fit within the frame of mandamus issued for enforcement of legal or constitutional obligation. These directions do perfectly fit within the jurisdiction of superintendence, and were competent had those been issued by State Government. While exercising powers under Section 154 of Maharashtra Cooperative Societies Act. The points (a) to (e) of para 28(A) are, therefore, answered in support and to uphold clause identified as [B] in the impugned order.
38. Moreover, this Court concurs in totality with the findings and observations recorded by Single Judge. Being a concurring order, detailed discussion would not be necessary.
39. In these premises, the portion of order marked [B] and [C] contained in the operative part of the order passed by learned Single Judge is the justice in situation.
40. Had the Respondent No. 2 0 participated in the proceedings, this Court could have come to know his side, however, the respondent No. 2 0 has deprived this Court from knowing his plea. Be it as it is, since, the Respondent No. 2 0 has chosen to follow said course of not availing the opportunity of audience made available to him.
41. In the result, Letters Patent Appeal No. 197 of 2009 has no merit and deserves to be dismissed.
DISCUSSION AS TO CONCLUSIONS AND REASONS IN LETTERS PATENT APPEAL No. 239 OF 2009.
42. The respondent No. 24-Bank represents that it was constrained to sell the establishment in totality for the cost which is comparable to around or even less than 3 0% of its dues, falling prey to the litigious tactics of the respondent No. 20.
43. This Court even upon peaceful consideration believes from what prima facie appears is that the Respondent No. 24 who claims superior rights and powers under a central statute having overriding effect and equipped with special powers, ought not to have felt astute and helpless to have fallen prey to the litigious tactics of the respondent No. 20, and agreed to approve the sale of the property to a worthless cost, and offered it as if a ransom to the respondent No. 20.
44. The question, however, arises as to whether a statutory right available to respondent No. 24-Bank under Section 13 of the Securitization and Reconstruction of the Financial Assets and Enforcement of Securitization Interest Act [ SR FAE SI Act for short] , who is also appellant in connected appeal, should be defeated?
45. The statutory right available to respondent No. 23 has to be respected.
46. Respondent No. 24 is, however, not free from scrutiny. Respondent No. 24 has filed an affidavit as to the circumstances in which it preferred not to auction the property, but to give it to respondent No. 20. It is clear that respondent No. 24 has become impatient,and got panicked and feels content that one in the hand is better than two in the bushes and is, therefore, content with the paltry return of Rs. 11.11 crores.
47. Learned Adv. Mr. Khapre has already pointed out from record that a sugar factory having its plant and machinery of the status of worth of scrap and the small piece of land below it were sold for Rs. 15 crores and it is, therefore, a mystery for any outsider and no puzzle for the insider as to how the property admeasuring around 100 hectares of land [over 250 acres], potent of or actually cultivating sugarcane and huge volume of machinery of two factories could be sold out for a song.
48. Record shows, prima facie, that the Respondent No. 2 0 got the favours of a blue eyed boy while in the regime of appellant in LPA No. 197 of 2 009 and now when in the process of recovery by Respondent No. 24 appellant in LPA No. 239/2009 got a further latitude.
49. The circumstances, which speak volumes, were the reasons which had led to the learned Single Judge to pass a mandatory order.
50. On facts, the questions framed in para 28(B) at (a) & (b) generate a reply namely that there was no lis before Hon ble Minister against the Respondent No. 24. The Respondent No. 24 was not introduced by Liquidator or the Promoter/Directors who were indicated delinquents.
51. The mandatory order quoted and identified as Clause [D], however, comes into clutches of statutory rights and powers of appellant Bank vested in it by SR FAE SI Act.
52. These points (a) and (b) are, therefore, liable to be answered in favour of appellant Bank.
53. This statutory power of appellant is not absolute and immune from fetters and judicial scrutiny.
54. In view of availability of judicial scrutiny of action of appellant, for protecting the interest of the suffering creditors and permitting legitimate beneficiaries of the Society the farmers, the workers etc. to challenge sale by appellant-Bank by resorting to appropriate remedy before appropriate forum, the process of sale by the bank shall have to remain in abeyance for a reasonable period.
55. We are, therefore, satisfied that while the impugned order receives confirmation in generality by dismissing Letters Patent Appeal No. 197 of 2009, but the Order identified as Clause [D] as marked in para 13 of this Judgment so marked by us, has to be set aside by allowing Bank s Letters Patent Appeal No. 239 of 2009.
56. The order allowing Letters Patent Appeal No. 239 of 2009, however, needs to be kept in abeyance for 90 days from the date of this Judgment. The matter of legality, fairness, propriety, malafide acts of favour etc., whatsoever, are the objections to sale of property in favour of respondent No. 2 0 by respondent No. 24 shall remain open for scrutiny and adjudication by a competent forum, which may either be an appeal under Section 17 of the SR FAESI Act, an objection in the execution proceedings, or by way of a Writ Petition under Article 226, or any other remedy which may be resorted to by any interested party.
57. We are convinced that minimum of 90 days time is required for securing and procuring copies of documents as may be required for collecting copies of documents which ordinarily the Respondents would be obliged to supply to the interested parties, which we hope shall be supplied.
58. We, therefore, pass the order as follows:
[a] Letters Patent Appeal No. 197 of 2009 is dismissed.
[b] Part of order impugned, namely:
[D] Respondent No. 24, who is in possession of the sugar factory by virtue of provisions taken under Securitization Act, shall be at liberty to use that property in any manner as it likes, except alienation during the said period. is set aside, with liberty to the writ petitioners or any other person a beneficiary of the sugar factory and distillery, or creditor or any other interested party, to challenge the proposed sale by Respondent No. 24 in favour of respondent No. 2 0 or in favour of any other purchaser, on the ground of legality, fairness, lack of transparency, propriety, public interest, interest of un-secured creditors, Workers dues, or any other ground as may be available in law.
[c] We also record our expectation that enquiry under Sections 83 and all further actions as may ensue according to law shall be got completed by the Registrar in the manner indicated by the learned Single Judge on day-today basis.
[d] Letters Patent Appeal No. 239 of 2009 is partly allowed in terms of para (c) foregoing, and the remaining part of order shall remain unchanged and is confirmed.
[e] We direct the costs of the respondent Nos. 25 and 2 6 to be paid by each appellant which are quantified at Rs. 15,000-00 [rupees fifteen thousand only] in each appeal and bear of own. Other respondents as well shall bear their own costs. [f] Order Clause [b] shall come into operation after ninety days from today.