The contention that the recovery officer could not have considered any other document but the statement of accounts is again without merit. For determining the amount while recovering the loan, the authority would obviously consider only the statement of accounts. However, while determining the liability, the authority would have to take into consideration other documents as well, so that the guarantors do not go scot-free.
1. By this writ petition the petitioner has challenged the judgment and order passed by the Deputy Registrar, Co-operative Societies, Pune, in Application No.5 of 1988 dated 14.5.1992. By this order, the Deputy Registrar held that the petitioner who was a guarantor of a loan availed of by respondent No.4 herein was liable to repay the amount as respondent No.4 had 2
defaulted in repaying the loan.
2. The respondent No.4 which is a proprietary concern, availed of the cash credit facility from respondent No.3 Bank. The petitioner and respondent No.5 agreed to be the guarantors for the loan obtained by the respondent No.4 from the Bank. The loan sanctioned by the Bank was to the tune of Rs.5 lacs and the interest rate payable was 18% per annum. Various documents were executed in order to process the loan. These documents included a demand promissory note, cash credit agreement, letter of continuity, letter of hypothecation and the guarantee bond executed by the petitioner and respondent No.5.
3. The borrower i.e. respondent No.4 herein defaulted in repaying the loan. A notice dated 26.12.1987 was issued by the Bank to the borrower with a copy to the guarantors, demanding payment of the amount of Rs.5,61,107/- before 2.1.1988 as that was the outstanding amount. The borrower failed to comply with the demand notice and therefore proceedings were instituted by the Bank against it as well as the guarantors under Section 101 of the Maharashtra Co-operative Societies Act (in short, "the M.C.S. Act"). The respondent No.4 filed the written statement admitting its liability. The petitioner opposed the 3
application by raising several contentions. He also sought inspection of documents from the Bank. An inspection report was submitted to the Deputy Registrar, Co-operative Societies on 17.12.1991 by the petitioner.
4. Thereafter, the Deputy Registrar passed the impugned order on 19.5.1992. It was held that an amount of Rs.5,61,107.64 was payable to the Bank alongwith the interest at the rate of 18% per annum from 26.12.1987. It was further held that the petitioner and respondent No.5 were equally liable for the debt payable by the borrower i.e. respondent No.4 herein.
5. Several contentions have been raised on behalf of the petitioner. It has been submitted that while issuing a certificate under Section 101 of the M.C.S. Act, the Registrar is expected only to consider the statement of accounts. The Registrar, according to the learned advocate for the petitioner, cannot consider the deed of guarantee and other documents which would make the guarantors liable for repayment of the loan. Furthermore, it is contended that the Registrar, not being concerned with the deed of guarantee, cannot issue a recovery certificate against the guarantors. It is then submitted that since the only document required to be considered is the statement of accounts, the 4
Registrar need not consider the promissory note or any other document executed by the guarantors in order to make them liable for repaying the debt incurred by the principal borrower. It is then submitted that the inspection report submitted by the petitioner indicates the manner in which several irregularities have occurred in respect of the loan accounts of respondent No.4 herein for which the petitioner was one of the guarantors. It is pointed out that the District Deputy Registrar has ignored these allegations by observing that they were of a technical nature.
6. The learned advocate for the petitioner has relied on the judgment of the Division Bench of this Court in the case of Ramkrishna v/s District Deputy Registrar, reported in 1978 Mh.L.J. 17, in support of his submission that the exercise of power by the Registrar to issue a certificate postulates an application of mind to the facts of the case before him and the adjudication of the correctness or otherwise of the claim. The learned advocate also relies on the judgment of a learned Single Judge of this Court in the case of Kedarling Vikas Seva Society Ltd. v/s Dinkar Bhimrao Raut & ors., reported in 2003(1) Mh.L.J. 152, to submit that once a certificate for recovery of dues is issued under Section 101 of the M.C.S. Act, it attains 5
finality and cannot be challenged by raising a dispute under Section 91 of the M.C.S. Act.
7. Mr.Damle appearing for the respondent No.3 Bank submits that the petition is nothing but a delaying tactic adopted by the petitioner to evade the recovery of dues payable to the Bank. He points out that the loan of Rs.4 lacs was obtained in the year 1983 and till today the Bank has been unable to recover the amount. He submits that the certificate has attained finality in view of the order passed by the revisional authority confirming the issuance of a certificate. The learned advocate contends that the impugned order contains no infirmities as, in fact, it takes into consideration all the issues which are raised in this petition. He submits that the order passed by the District Deputy Registrar, Co-operative Societies on 19.5.1992 issuing the certificate under Section 101 of the Act is a detailed order which deals with all the objections raised by the petitioner. According to the learned advocate, the petitioner has an alternate remedy which is equally efficacious of filing a revision before the revisional authority under Section 154(2A) of the M.C.S. Act. He points out that the petition ought to be dismissed and the petitioner should be relegated to exhausting the statutory remedy available to him. He 6
submits that assuming the contention of the petitioner is to be accepted that the Deputy Registrar has not taken into consideration various contentions raised by the petitioner before issuing a certificate under Section 101, the revisional authority would always have considered these contentions. He points out that the remedy of filing a writ petition under Article 227 of the Constitution is not the appropriate remedy since this Court cannot evaluate the evidence before the Deputy Registrar. He submits that this Court exercises the power of superintendence under Article 227 of the Constitution which cannot be equated with appellate powers. He submits that all that has to be ascertained is whether there is any perversity in the impugned order or an error apparent on the face of the record. Apart from this, the learned advocate relies on the judgment of a learned Single Judge (Rebello, J.) of this Court in Writ Petition No.1091 of 2002, decided on 4.3.2002, between Kushal Mahabal Shetty v/s The Deputy Registrar, C.S., Thane, and Thane Janata Sahakari Bank Ltd., in support of the submission that the guarantor is equally liable as the principal borrower.
8. It is now well settled that the creditor bank can always recover the outstanding amount, both from the principal borrower as well as the guarantor. The 7
judgment in the case of Kushal Mahabal Shetty (supra) is sought to be distinguished by the learned advocate for the petitioner by contending that it would be applicable only in respect of a crop protection societies. He submits that the respondent No.1 being an urban co-operative bank cannot take advantage of the judgment of Rebello, J. in the case of Kushal Mahabal Shetty.
9. In my opinion, this submission is without merit. The provisions of Section 101 of the M.C.S. Act apply not only to crop protection societies but also to urban co-operative banks. The arrears payable to such a bank can be recovered not only from a principal borrower but also from the guarantor. Therefore, this submission of the learned advocate is unsustainable.
10. As regards the merits of the case as to whether the Deputy Registrar has dealt with all the various contentions raised by the petitioner in the inspection report, the Deputy Registrar has taken into consideration the objections raised and has found that these objections are of a technical nature. The Deputy Registrar in his impugned order has observed that the notice dated 21.12.1987 demanding the repayment of the outstanding balance against the cash credit loan account of the principal borrower, was not replied by the 8
petitioner or respondent No.5 who were the guarantors; nor did they deny their liability. In these circumstances, the Deputy Registrar has rightly held that the petitioner is liable jointly and severally for repayment of the loan advanced to the principal borrower.
11. The contention that the recovery officer could not have considered any other document but the statement of accounts is again without merit. For determining the amount while recovering the loan, the authority would obviously consider only the statement of accounts. However, while determining the liability, the authority would have to take into consideration other documents as well, so that the guarantors do not go scot-free.
12. Although the submission of Mr.Damle that the petition should be dismissed as the petitioner has an alternate efficacious remedy under the Act itself, I am not inclined to dismiss it on this ground. The petition has been admitted in the year 1992 and it would be futile to relegate the petitioner to an alternate remedy after 16 years.
13. Under the circumstances, the petition is dismissed. Rule discharged. No order as to costs.
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Bombay High Court
Dr.Vinayak Chintamani Agashe vs State Of Maharashtra on 19 December, 2008
Bench: Nishita Mhatre
1. By this writ petition the petitioner has challenged the judgment and order passed by the Deputy Registrar, Co-operative Societies, Pune, in Application No.5 of 1988 dated 14.5.1992. By this order, the Deputy Registrar held that the petitioner who was a guarantor of a loan availed of by respondent No.4 herein was liable to repay the amount as respondent No.4 had 2
defaulted in repaying the loan.
2. The respondent No.4 which is a proprietary concern, availed of the cash credit facility from respondent No.3 Bank. The petitioner and respondent No.5 agreed to be the guarantors for the loan obtained by the respondent No.4 from the Bank. The loan sanctioned by the Bank was to the tune of Rs.5 lacs and the interest rate payable was 18% per annum. Various documents were executed in order to process the loan. These documents included a demand promissory note, cash credit agreement, letter of continuity, letter of hypothecation and the guarantee bond executed by the petitioner and respondent No.5.
3. The borrower i.e. respondent No.4 herein defaulted in repaying the loan. A notice dated 26.12.1987 was issued by the Bank to the borrower with a copy to the guarantors, demanding payment of the amount of Rs.5,61,107/- before 2.1.1988 as that was the outstanding amount. The borrower failed to comply with the demand notice and therefore proceedings were instituted by the Bank against it as well as the guarantors under Section 101 of the Maharashtra Co-operative Societies Act (in short, "the M.C.S. Act"). The respondent No.4 filed the written statement admitting its liability. The petitioner opposed the 3
application by raising several contentions. He also sought inspection of documents from the Bank. An inspection report was submitted to the Deputy Registrar, Co-operative Societies on 17.12.1991 by the petitioner.
4. Thereafter, the Deputy Registrar passed the impugned order on 19.5.1992. It was held that an amount of Rs.5,61,107.64 was payable to the Bank alongwith the interest at the rate of 18% per annum from 26.12.1987. It was further held that the petitioner and respondent No.5 were equally liable for the debt payable by the borrower i.e. respondent No.4 herein.
5. Several contentions have been raised on behalf of the petitioner. It has been submitted that while issuing a certificate under Section 101 of the M.C.S. Act, the Registrar is expected only to consider the statement of accounts. The Registrar, according to the learned advocate for the petitioner, cannot consider the deed of guarantee and other documents which would make the guarantors liable for repayment of the loan. Furthermore, it is contended that the Registrar, not being concerned with the deed of guarantee, cannot issue a recovery certificate against the guarantors. It is then submitted that since the only document required to be considered is the statement of accounts, the 4
Registrar need not consider the promissory note or any other document executed by the guarantors in order to make them liable for repaying the debt incurred by the principal borrower. It is then submitted that the inspection report submitted by the petitioner indicates the manner in which several irregularities have occurred in respect of the loan accounts of respondent No.4 herein for which the petitioner was one of the guarantors. It is pointed out that the District Deputy Registrar has ignored these allegations by observing that they were of a technical nature.
6. The learned advocate for the petitioner has relied on the judgment of the Division Bench of this Court in the case of Ramkrishna v/s District Deputy Registrar, reported in 1978 Mh.L.J. 17, in support of his submission that the exercise of power by the Registrar to issue a certificate postulates an application of mind to the facts of the case before him and the adjudication of the correctness or otherwise of the claim. The learned advocate also relies on the judgment of a learned Single Judge of this Court in the case of Kedarling Vikas Seva Society Ltd. v/s Dinkar Bhimrao Raut & ors., reported in 2003(1) Mh.L.J. 152, to submit that once a certificate for recovery of dues is issued under Section 101 of the M.C.S. Act, it attains 5
finality and cannot be challenged by raising a dispute under Section 91 of the M.C.S. Act.
7. Mr.Damle appearing for the respondent No.3 Bank submits that the petition is nothing but a delaying tactic adopted by the petitioner to evade the recovery of dues payable to the Bank. He points out that the loan of Rs.4 lacs was obtained in the year 1983 and till today the Bank has been unable to recover the amount. He submits that the certificate has attained finality in view of the order passed by the revisional authority confirming the issuance of a certificate. The learned advocate contends that the impugned order contains no infirmities as, in fact, it takes into consideration all the issues which are raised in this petition. He submits that the order passed by the District Deputy Registrar, Co-operative Societies on 19.5.1992 issuing the certificate under Section 101 of the Act is a detailed order which deals with all the objections raised by the petitioner. According to the learned advocate, the petitioner has an alternate remedy which is equally efficacious of filing a revision before the revisional authority under Section 154(2A) of the M.C.S. Act. He points out that the petition ought to be dismissed and the petitioner should be relegated to exhausting the statutory remedy available to him. He 6
submits that assuming the contention of the petitioner is to be accepted that the Deputy Registrar has not taken into consideration various contentions raised by the petitioner before issuing a certificate under Section 101, the revisional authority would always have considered these contentions. He points out that the remedy of filing a writ petition under Article 227 of the Constitution is not the appropriate remedy since this Court cannot evaluate the evidence before the Deputy Registrar. He submits that this Court exercises the power of superintendence under Article 227 of the Constitution which cannot be equated with appellate powers. He submits that all that has to be ascertained is whether there is any perversity in the impugned order or an error apparent on the face of the record. Apart from this, the learned advocate relies on the judgment of a learned Single Judge (Rebello, J.) of this Court in Writ Petition No.1091 of 2002, decided on 4.3.2002, between Kushal Mahabal Shetty v/s The Deputy Registrar, C.S., Thane, and Thane Janata Sahakari Bank Ltd., in support of the submission that the guarantor is equally liable as the principal borrower.
8. It is now well settled that the creditor bank can always recover the outstanding amount, both from the principal borrower as well as the guarantor. The 7
judgment in the case of Kushal Mahabal Shetty (supra) is sought to be distinguished by the learned advocate for the petitioner by contending that it would be applicable only in respect of a crop protection societies. He submits that the respondent No.1 being an urban co-operative bank cannot take advantage of the judgment of Rebello, J. in the case of Kushal Mahabal Shetty.
9. In my opinion, this submission is without merit. The provisions of Section 101 of the M.C.S. Act apply not only to crop protection societies but also to urban co-operative banks. The arrears payable to such a bank can be recovered not only from a principal borrower but also from the guarantor. Therefore, this submission of the learned advocate is unsustainable.
10. As regards the merits of the case as to whether the Deputy Registrar has dealt with all the various contentions raised by the petitioner in the inspection report, the Deputy Registrar has taken into consideration the objections raised and has found that these objections are of a technical nature. The Deputy Registrar in his impugned order has observed that the notice dated 21.12.1987 demanding the repayment of the outstanding balance against the cash credit loan account of the principal borrower, was not replied by the 8
petitioner or respondent No.5 who were the guarantors; nor did they deny their liability. In these circumstances, the Deputy Registrar has rightly held that the petitioner is liable jointly and severally for repayment of the loan advanced to the principal borrower.
11. The contention that the recovery officer could not have considered any other document but the statement of accounts is again without merit. For determining the amount while recovering the loan, the authority would obviously consider only the statement of accounts. However, while determining the liability, the authority would have to take into consideration other documents as well, so that the guarantors do not go scot-free.
12. Although the submission of Mr.Damle that the petition should be dismissed as the petitioner has an alternate efficacious remedy under the Act itself, I am not inclined to dismiss it on this ground. The petition has been admitted in the year 1992 and it would be futile to relegate the petitioner to an alternate remedy after 16 years.
13. Under the circumstances, the petition is dismissed. Rule discharged. No order as to costs.
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