REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1730 OF 2009
(Arising out of SLP No.7531 of 2008)
Woods Beach Hotels Ltd. ...Appellant(s)
VERSUS
Mapusa Urban Co-operative
Bank of Goa Ltd. & Ors. ...Respondent (s)
JUDGMENT
TARUN CHATTERJEE,J.
1. Leave granted.
2. This appeal is filed against an interim order dated 17th of
March 2008 in Writ Petition No. 138 of 2008 passed by the
High Court of Bombay at Goa whereby the High Court
admitted the Writ petition filed by Respondent No.1 and
stayed the operation of order dated 16th of August 2007
passed by the Registrar of Co-operative Societies, Goa.
3. The relevant facts leading to the filing of this appeal as
emerging from the records of this case have been succinctly
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referred here for the better understanding and determination
of the instant appeal.
The MAPUSA Urban Cooperative Bank of Goa Ltd.
(Respondent No.1, hereinafter referred to as "the Bank") had
extended credit facility of Rs.20 lacs to a proprietary firm
belonging to one of the Directors of the Woods Beach Hotel Ltd.
(hereinafter referred to as "the appellant") and an immovable
property of the appellant namely "Soranto" was allegedly
mortgaged to cover the aforesaid credit facility. The appellant
was not the principal borrower. The name and constitution of the
appellant company was changed and notified to the bank in
1994 but the notice did not mention about the change of
shareholders. The Bank initiated the proceedings for recovery of
the due amount before the Asst. Registrar (Respondent No.3) of
the Multi State Cooperative Societies under section 74 of The
Multi State Cooperative Societies Act, 1984 wherein the
appellant was impleaded in the capacity of third party mortgagor.
The proceeding was initiated in the old name of the appellant
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company and it was alleged by the appellant that no notice was
served on the appellant.
4. After obtaining an award from the Assistant Registrar, the
Bank filed execution application on 23rd of September 1999
for a sum of Rs. 52.35 lacs wherein it sought attachment of
the immovable property of the appellant. After being aware of
the award, the appellant tried to settle the matter with the
Bank and paid Rs. 6.63 lacs to the Bank in the process.
However the recovery officer of the bank went ahead with the
sale of the mortgaged immovable property and due to non-
availability of buyers eventually the Bank itself purchased the
property for Rs.97,04,222/- and the appellant alleged non-
service of notice regarding the same.
5. In July 2004, the appellant was forcibly dispossessed from its
property. Aggrieved by the said action, the appellant preferred
an appeal on 7th of December, 2005 before the Registrar of
Cooperative Societies (Respondent No. 2 herein) as
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according to them the property was worth more than Rs. 10
Crores and no notice was given to them during the entire
process. The appellant had also filed a Writ Petition no. 378
of 2004 in the High Court of Bombay at Goa seeking orders to
restore the possession of the property and to direct the bank
to deal with the property after giving due notice to the
appellant. The High Court rejected the Writ petition by its
order dated 29th of March 2005. Against this, the appellant
filed Special Leave Petition No. 17486 of 2005 in this Court,
which was dismissed with the observation that the appeal was
filed in the Court of Registrar, Multi State Cooperative
Societies, Goa.
6. The Registrar, during the pendency of the appeal, granted an
interim stay of operation of the order of the Assistant
Registrar and directed stay of the sale of the property in
question. By an order dated 16th of August, 2007, the
Registrar had set aside the Judgment of Assistant Registrar
and directed the following :-
"(a) The award/Judgment dated 26th August, 1995
passed by the Asst. Registrar against the Appellant
Company is set aside subject to the appellant
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company making payment of Rs. One Lac as cost to
the Respondent Bank within a period of two weeks.
(b) The Asst. Registrar is directed to re-hear the case
and decide the same within 6 months.
(c) The appellant company is directed to deposit with
the Asst. Registrar the amount of the decretal dues
as on date of this order within 4 weeks from today
and this amount shall be held by the Asst. Registrar
in interest-earning deposit for 6 months pending
decision from the Asst. Registrar."
Meanwhile, the Bank tried to find prospective buyers and tried
to sell off the property in question to a buyer named Softitel
Hospitality & Management which was found to be the highest
bidder having offered a price of Rs. 7.04 crores during the
auction conducted by the bank and they deposited an amount of
Rs.1 crore on 06th of May, 2006 with the bank in pursuance of
their bid. At the same time, the bank filed a review application
praying for review of the order before the Registrar, which was
also dismissed.
7. Against the aforesaid order of the Appellate Authority, the
Registrar of Cooperative Societies, Goa, the Bank has filed a
writ petition being W.P. No. 138 of 2008 before the High
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Court of Bombay at Goa, which is now pending decision. In
the said writ application, the Bank has taken a plea inter alia
that the Registrar had no jurisdiction to entertain the appeal
against the order of the Assistant Registrar.
8. While entertaining the prayer for interim relief, the High Court
prima facie found that the appeal itself was not maintainable
because the impugned order was passed nearly after 10
years when there was no right subsisting in favour of the
appellant bank on the day, the appeal was filed. Some other
findings were made in favour of the appellant bank prima
facie and for that purpose, the interim order of stay of the
operation of the order of the Registrar was granted by the
High Court. However, in the impugned interim order, it would
also be evident that a prayer was made by the appellant that
the status quo should be maintained by the parties during the
pendency of the writ petition in respect of the property in
question. The High Court by the impugned order rejected the
said prayer and the Special Leave Petition has been filed in
this Court against the said refusal, which, on grant of leave,
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was heard in the presence of the learned counsel for the
parties.
9. Since the appellant has already filed the writ petition, which is
pending before the High Court, in which the question of
jurisdiction of the Registrar to entertain the appeal filed
against the order of the Assistant Registrar shall be decided
finally by the High Court in the writ application, we are not
inclined to delve into the questions raised by the parties
before us in depth at this stage of the proceedings. The
learned Senior Counsel appearing on behalf of the appellant
sought to argue before us that during the pendency of the writ
application, the parties should be directed to maintain status
quo in respect of the property mortgaged by the appellant.
On the other hand, the learned senior counsel appearing for
the respondent bank sought to argue that since they have
already accepted a bid of Rs. 7.04 crores offered by Softitel
Hospitality & Management, they will suffer irreparable loss
and injury if status quo is granted till the disposal of the writ
application. Reliance was placed in a decision of this Court in
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the case of Padanathil Ruqmini Amma vs. P.K.Abdulla
[1996 (7) SCC 668] for the parties showing that when the
decree holder himself was the auction purchaser in a court
auction sale held in execution of a decree which is
subsequently set aside, restitution of the property can be
ordered in favour of the judgment-debtor and the decree-
holder auction purchaser is bound to return the property. In
that decision, it was also held that it is equally well settled that
if at a court auction sale in execution of a decree, the
properties are purchased by a bona fide purchaser who is a
stranger to the court proceedings, the sale in his favour is
protected and he cannot be asked to restitute the property to
the judgment-debtor if the decree is set aside. It was further
held in that decision that the ratio behind this distinction
between a sale to a decree-holder and a sale to a stranger is
that the court, as a matter of policy, will protect honest outside
purchasers at sales held in the execution of its decrees,
although the sales may be subsequently set aside, when
such purchasers are not parties to the suit. At this stage, the
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principle laid down by this Court in the aforesaid decision
need not be gone into in view of the fact that -
(1) The impugned order passed by the High Court was
the interim order in nature.
(2) The sale by the auction has not yet been confirmed
nor the Softitel Hospitality and Management has yet
deposited the entire sale consideration money nor
any sale deed has been effected relating to the
property in question ?
10. Considering the facts of the present case and taking into
account the fact that the Softitel Hospitality & Management was
the highest bidder in the auction held by the bank and they have
already deposited an amount of Rs. 1 crore with the bank, we
are of the view that a third party interest has now been created
in the aforesaid property. It is not in dispute that the Softitel
Hospitality and Management has not yet put in the balance
amount of Rs.6.04 crores nor the sale has yet been confirmed. It
is also not in dispute that the possession of the property in
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question has not yet been handed over to Softitel Hospitality and
Management by the bank. Under the aforesaid circumstances,
and considering the balance of convenience and inconvenience
and for meeting the ends of justice, we feel it proper to dispose
of this appeal in the following manner: -
(a) In the event, the appellant deposits a sum of Rs. 6.04
crores in the pending writ application before the High Court
within three months from this date, the parties shall be directed
to maintain status quo as regards the property in question
initially for a period of three months unconditionally from this
date and in the event the aforesaid amount is deposited within
the time specified hereinabove, the interim order shall continue
till the disposal of the writ petition or until further orders to be
passed by the High Court in the writ application.
(b) In default of making the deposit, as mentioned herein
above, the interim order, as granted, shall automatically
stand vacated.
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(c) We make it clear that we have not gone into the question
whether the impugned order granting ad interim stay of the
order of the Registrar was justified or not, as the parties
before us have restricted their arguments in respect of the
grant of status quo relating to the properties in question
only.
(d) The High Court is requested to decide the pending writ
petition within three months from the date of supply of a
copy of this order positively, after giving hearing to the
parties and after passing a reasoned order in accordance
with law.
11. We make it clear that whatever observations that have
been made by the High Court in the impugned order and any
observations, on the merits of the writ petition, if made by us in
this order, shall not stand in the way of the High Court from
deciding the writ application on merits without being influenced
by such observations, if any.
12. The appeal is thus disposed of. There will be no orders as
to costs.
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..............................J.
[TARUN CHATTERJEE]
..............................J.
[HARJIT SINGH BEDI]
NEW DELHI
March 24, 2009.
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