Final Order 1

Order Details: Notice of Motion
Pdf Text: 1 NM 2112/19(Suit-1876/13)
IN THE BOMBAY CITY CIVIL COURT FOR GREATER MUMBAI
NOTICE OF MOTION NO.2112/2019
(CNR NO.MHCC010058672019)
IN
S. C. SUIT NO.1876/2013
Mr. Bagaram Ganeshramji Choudhary ..Plaintiff
V/s.
1. The Memon Cooperative Bank Ltd.
2. Shri Siddhartha Bhattacharya
3. Bank of Baroda .. Defendants.
Appearances :
Adv. A. K. Menon for plaintiff.
Adv. Bhadra Shette along with Adv. Rony P.J. h/f Rony and Co. for
defendant nos.1 and 3.
Coram : His Honour Judge
Shri. A.H.Laddhad
CR No. : 03.
Date : 17.12.2021.
ORDER
1. Defendant no.1 has filed instant notice of motion seeking
following reliefs.
(a) That this court may be pleased to reject or dismiss the above
suit for failure of plaintiff to obtain leave of the Central
Registrar of Cooperative Societies, New Delhi, to institute or
proceed with the above suit against the defendant no.1
Society and liquidator under Section 117 (2) of the Multi
State Cooperative Societies Act, 2002
(b) For such further and other orders as this Court may deem fit
and proper in the circumstances of the case.
2. It is contended by defendant that, the plaintiff has filed
instant suit seeking declaration of the arbitration award dated
17.5.2010 passed in their favour to be declared as null and void in so
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far as it relates to the sale of suit premise for recovery of defendant no.1
bank's dues.
3. It is contended that the defendant no.1 is governed by the
Multi State Cooperative Societies Act, 2002 (for short, MSCS Act). It is
contended that, vide order dated 23.5.2011, passed u/s. 89 of MSCS
Act, Government of India, has appointed liquidator and bank went
under liquidation. The plaintiff filed instant suit on 5.4.2013. At that
time, defendant no.1 was under liquidation. The plaintiff was well
aware of the aforesaid fact at the time of filing of the suit.
4. It is contended that, as per provisions of MSCS Act, when
the defendant no.1 went under liquidation, it can be represented only
by liquidator. As per Sec.117(2) of MSCS Act, while Multistate
Cooperative Society is being would up no suit or other legal
proceedings shall be proceeded with or instituted against the liquidator
or the society (under liquidation) without leave of the Central Registrar
of Cooperative Societies, New Delhi.
5. It is specifically contended that, the plaintiff has not
obtained such leave of the Central Registrar of Cooperative Societies to
institute or proceed with the above suit against defendant no.1 Society
(under liquidation) and the liquidator under the provisions of said
Section. Therefore, the above suit is liable to be dismissed.
6. The notice of motion is opposed by the plaintiff by filing his
say. It is contended by the plaintiff that, the present suit filed by him is
not a suit or a legal proceeding relating to the business of such society.
There is no legal bar for institution or proceeding against defendant
nos.1 and 2. He is neither member nor a borrower of the defendant
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no.1, or guarantor to the loan advanced by defendant no.1. It is
contended that, the main objects of the defendant no.1 are "to serve the
interests of members in more than one state". As he is not member of the
defendant no.1, there is no question of defendant no.1 serving his
interest.
7. It is contended that, the defendant no.1 is a Cooperative
bank, which has been defined in the Act to mean a "Multi State Co
operative Society which undertakes banking business". He had no banking
business with the defendant no.1. He has filed instant suit for declaring
an award passed by an arbitrator by which he had authorized
attachment and sale of his shop which was never offered by him to
defendant no.1 as a security.
8. It is contended that, he has not prayed for declaring entire
award as null and void. He only sought limited declaration that the
award be declared null and void in so far as it orders the sale of his
premises for recovery of defendant no.1's dues.
9. It is contended that, before filing of the suit he has served
statutory notice as contemplated u/s.115 of the Act and therefore, no
further bar affects in proceeding with the instant suit. Therefore, the
plaintiff prayed for dismissal of the Motion.
10. Heard both sides. Perused Motion, reply as well as written
notes of arguments filed by the parties. Defendant no.1 filed instant
Motion seeking for rejection or dismissal of the Suit on the ground of
bar contained u/s.117, subclause(2) of Multi State Cooperative
Societies Act, 2002. Section 117, subclause(2) of the said Act reads as
under:
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117. Bar of jurisdiction of courts. (1) Save as otherwise
provided in this Act, no court shall have jurisdiction in respect of
(a) the registration of a multiState Cooperative society or its
byelaws or of an amendment of the byelaws.
(b) any matter concerning the winding up and the dissolution of
a multiState cooperative society.
(2) While a multiState cooperative society is being wound up,
no suit or other legal proceedings relating to the business of such
society shall be proceeded with or instituted against the liquidator
or against the society or any member thereof, except by leave of
the Central Registrar and subject to such terms and conditions as
he may imposed.
(3) Save as otherwise provided in this Act, no decision or order
made under this Act shall be questioned in any court."
11. Ld. Advocate for the defendant no.1 contended by filing its
written submission that, M/s. R.K. Textiles, a proprietary concern of
M/s. Rehana Kapadia, borrowed huge loan from defendant no.1 bank.
Mrs. Nasreen Kapadia, Mrs. Mehjabeen Kapadia and Mrs. Fatima
Kapadia were guarantors. It is submitted that, Mrs. Fatima Kapadia
under deed dated 11.11.1993 had purchased shop no.2 from Marol
Land Developer and she had mortgaged it in favour of the bank to secure
the repayment of the loan of M/s. R.K. Textiles. Pending the security
with bank, Mrs. Fatima gifted the said shop to her son Mr. Ameen
Kapadia under deed dated 26.5.1994. Said Ameen had executed a
Power of Attorney in favour of one Mr. Makheja, as a attorney of Mr.
Ameen. Said Makheja surrendered the said shop to builder. It is
submitted that, the said builder sold said shop under deed dated
15.2.2007 in favour of the plaintiff. It is thus contended that, pending
mortgage, subsequent transactions took place. Therefore, the
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subsequent transactions are subject to bank's right as mortgagee.
12. It is further contended that, in the year 2009, the bank
initiated process of recovery referring its claim u/s. 84 of the said Act
and the matter was referred for arbitration. In the said arbitration, relief
regarding shop no.2, suit property, was claimed and said Mrs.Fatima,
after her death, her two sons Ameen and Ayaz, were joined. It is
submitted that, the plaintiff herein during pendency of the arbitration
proceeding filed an application for the intervention, however as he
could not appear therefore, the said application was dismissed vide
order dated 17.5.2010 and on that day, an award came to be passed.
Subsequently, the plaintiff again filed an application for restoration,
which was dismissed vide order dated 31.8.2010.
13. It is, thus, contended that, in the aforesaid circumstances, it
is undisputed that the defendant no.1 is a registered MultiState
Cooperative Society and in view of order dated 23.5.2011, the bank has
been ordered to be wound up and winding up proceeding is still going
on. Therefore, pending the winding proceedings, the suit which is filed
without obtaining leave u/s. 117(2) of the Act, is not maintainable.
14. It is vehemently argued by Ld. Adv.Bhadra Shette along
with Adv. Rony P.J. for the defendant no.1 that, cause of action and the
relief claimed in the plaint is relating to the business of bank. In order
to see the business of the bank, the object of the bank needs to be seen.
As per clause(6) of byelaws, Object of the Bank, is to mean, to lend
money either upon or without security, to manage, sell and to realize any
property in satisfaction of any of its claim etc. Therefore, giving loan to
M/s. R.K. Textiles on mortgage of security of shop no.2 and to sell the
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said shop, in execution of the award dated 10.6.2010 is relating to the
business of the bank.
15. Thus, it is contended that, what is business of the bank or
society is required to be considered on the basis of objects of the
society/ bank and as there is express bar prescribed u/s.117(2) of the
Act and no leave obtained by the plaintiff of Central Registrar,
therefore, present suit is not maintainable.
16. The defendants in support of their submissions relied upon
judgment of the Hon'ble Apex Court in the case of Deccan Merchants
Cooperative Bank Ltd V/s. M/s. Dalichand Jugraj Jain and ors. (AIR
1990 SC 1320).
17. Per contra, the plaintiff by filing his written notes of
arguments contended that, the defendant tendered present Motion on
the assumption that, there is a complete bar for institution or
continuation of the suit during winding up process. It is submitted that,
as per Sec.117(2) of the Act, there is bar for institution or continuation
of suit, if the suit is relating to the business of such society. However,
the defendant failed to plead how the suit is relating to the business of
the society. It is contended that, the plaintiff's case is that the suit is
relating to the business of the society and therefore, requirements of
Sec.117(2) of the Act is not required to be complied with.
18. The plaintiff in support of his submission relied on the
judgment of the Hon'ble Bombay High Court in the case of Devgiri
Nagari Sahakari Bank Ltd V/s. Subidabegum (2013(2) Bom CR
675). It is argued that, the activity of advancement of loan and effecting
recovery of dues is part of the banking business of defendant no.1
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society. The question of legality and correctness of attachment and sale
is a matter not relating to business of the society and therefore, bar
contemplated u/s.117(2) will not be attracted.
19. The plaintiff contended that, he has not questioned the
attachment and sale of the property or advancement of loan and
recovery of the loan but the only questioned correctness and legality of
the award, which cannot be regarded as a matter relating to the
business of the society.
20. It is argued that, Sec.115 and 117 of the Act uses two
different terms. Section 115 uses, "suits touching the business of the
society" and Section 117 uses words "Suits relating to the business of the
society". Two different words are being used by same statute which
certainly carrying different meaning. It is argued that, the word
"touching to the business of the society" is very wider connotation and
would include any matter which relates to, concerns or affects the
business of the society. Whereas, phrase 'relating to' is restrictive of
right to sue, must be construed strictly i.e. in favour of the right to sue.
21. It is thus contended that, the plaintiff has no business
relations with the defendant. He was neither member, borrower or
guarantor of the defendant and therefore, cannot have any dispute with
the defendants relating to the business of the society. In support of his
submission, Ld Advocate for the plaintiff relied on the judgment of the
Hon'ble Apex Court in the case of Kailash Nath Agarwal and Ors V/s.
Pradeshiya Industrial and Investment Corporation of U.P Ltd and
Ors (AIR 2003 SC 1886).
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22. I have considered rival contentions of the parties and also
provisions of the MCSC Act. As per Sec.117 of the said Act, bar of
jurisdiction of the court is only with respect to clause no.1, which
specifically bars jurisdiction of the court to do particular thing which
has been prescribed under subclause(1) (a) and (b), whereas sub
clause(2) of Sec.117 stats that, no suit or other legal proceedings
relating to the business of such society shall be proceeded with or
instituted against the liquidator or against the society or any member
thereof. Therefore, I am of the view that, the said bar of Sec.117(2) is
only with respect to the proceeding with the suit and is not absolute bar
of jurisdiction.
23. Sec.115 of the Act prescribes necessary statutory notice to
be given prior to filing of suit. Sec.115 of the Act reads as under :
"No suit shall be institute against a multiState cooperative
society or any of its officers in respect of any act touching the constitution,
management or the business of the society until the expiration of ninety
days after notice in writing has been delivered to the Central Registrar or
left at his office, stating the cause of action, the name, description and
place of residence of the plaintiff and the relief which he claims, and the
plaint shall contain a statement that such notice has been so delivered or
left."
24. The words used in Sec.115 is, act touching the
constitution, management or the business of the society. Therefore,
the Hon'ble Apex Court in the case of Kailash Nath Agarwal and Ors
V/s. Pradeshiya Industrial and Investment Corporation of U.P Ltd
and Ors (supra), specifically held in para 20 that, "there is apparent
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distinction between the expressions 'proceeding' and 'suit' used in
Sec.22(1). While it is true that two different words may be used in the
same statute to convey the same meaning, that is the exception rather
than the rule. The general rule is that when two different words are used
by the same statute, prima facie one has to construe these different words
as carrying different meaning. In Kanhaiyalal Vishindas Gidwani's case,
this court found that words 'subscribed' and 'signed' had been used in the
Representation of People Act, 1951 interchangeably and therefore, in that
context, the court came to the conclusion that, when the Legislature used
the word 'subscribed' it did not in end anything more than 'signing'. The
words 'suit' and 'proceeding' have not been used interchangeably in SICA.
Therefore, the reason which persuaded this court to give the same meaning
to two different words in a statute cannot be applied here".
25. Thus, after going through the aforesaid case laws and the
different terminology used in Sec.115 and 117 of the Act, it appears
that, the terminology 'touching to business of the society;' as used in
Sec.115 and the terminology 'relating to the business of the society'
used in Sec.117 appears to be connoting different meaning and
different intention.
26. The Hon'ble Apex Court in the case of Deccan Merchants
Cooperative Bank Ltd V/s. M/s. Dalichand Jugraj Jain and ors.
(supra), in para 15 observed that, "the question whether a dispute
touching the assets of a society would be a dispute touching the
business of the society would depend on the nature of the society and
the rules of byelaws governing it" . It is further held that, although the
nature of business with the society, thus can be ascertained from the
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object of the society, it cannot be said that whatever society does or is
necessarily required to do for the purpose of carrying out its object is
part of its business. The word 'touching' is very wide and would include
any matter which relates to or concerns the business of a society, but it
is doubtful whether the word 'affects' should also be used in defining
the scope of the word 'touching'. The question whether a dispute
touching the assets of a society would be a dispute touching the
business of the society would depend on the nature of the society and
the rules and byelaws governing it.
27. In the present case, it is no doubt that, it is object of the
bank to lend or advance money either upon or without security to
member or others as permitted by Central Registrar. It is also one of
the objects of the bank to manage, sell and to realize any property in
satisfaction of any of its claim etc. Thus, it is object of the defendant
no.1 to advance money to its members. Admittedly, the plaintiff is
neither member of defendant no.1 nor he has borrowed money nor he
was guarantor of any loan advanced by defendant no.1. The plaintiff by
way of present suit trying to protect his interest in the suit property.
28. In the case of Devgiri Nagari Sahakari Bank Ltd V/s.
Subidabegum(supra), plaintiff therein instituted suit against bank
without issuing notice u/s. 164 of Maharashtra Cooperative Societies
Act, 1960. The Hon'ble Bombay High Court, in para 5, observed that, 'it
is not disputed that certificate u/s.101 of the M.C.S. Act has been secured
by the petitioner for effecting recovery of dues and that the suit property
was attached and sold by conducting auction. The activity of advancement
of loan and effecting recovery of dues, is part of the banking business of
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petitioner. The question of legality and correctness of attachment and sale
is a different issue and that can be dealt with on its merits by the
competent forum".
29. Thus, the Hon'ble Bombay High Court has specifically
observed that, the question of legality and correctness of attachment
and sale is a different issue and it has to be decided before separate
forum. Thus, looking to the reliefs claimed by the plaintiff, I am of the
view that, the suit filed by the plaintiff is maintainable and it is not
barred u/s. 117, subclause(2) of Multi State Cooperative Societies Act,
2002. Therefore, in view of above discussion, I find no substance in the
notice of motion and same deserves to be dismissed. Thus, I proceed to
pass following order :
ORDER
1. Notice of Motion No.2112 of 2019 is hereby dismissed.
2. Costs in cause.
4. Notice of Motion is disposed off accordingly.
(A.H.Laddhad)
Judge,
Dated : 17.12.2021 City Civil and Sessions Court,
Dictated on :Through audio recording. Greater Bombay (CR 03)
Typed on : 20.12.2021
Draft given to HHJ o : 20.12.2021.
Signed on : 22.12.2021.
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“CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED JUDGMENT/ORDER.”
22.12.2021, at 3.10 pm (Nitin V. Ubale)
UPLOAD DATE AND TIME Selection Gr. Stenographer(Gr.1)
Name of the Judge (With Court room no.) Shri A.H.LADDHAD
(C.R. No.3)
Date of Pronouncement of JUDGMENT/ ORDER 17/12/2021
JUDGMENT/ORDER signed by P.O. on 22.12.2021
JUDGMENT/ORDER uploaded on 22.12.2021
On oral direction of HHJ, reuploaded again on
23.12.2021 after making change in name of
advocate for defendants in page1 and para.14.
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