HON'BLE SRI JUSTICE C.V. NAGARJUNA REDDY W.P.No.17925 of 2014 Date : 11-11-2014 Between :
The A.P. Mahesh Co-op. Urban Bank Ltd., Represented by its Managing Director Mr. Umesh Chand Asawa, Hyderabad .. Petitioner And Arbitrator/Deputy Registrar of Co-operative Societies, O/o. Divisional Coop. Officer, Golconda Division, Hyderabad and 2 others .. Respondents Counsel for petitioner : Sri Vedula Srinivas Counsel for respondent No.1 : Government Pleader for Co- operation Counsel for respondent No.2 : --
Counsel for respondent No.3 : Sri K. Rama Krishna The Court made the following ORDER:
This Writ Petition is filed for a mandamus to declare the action of respondent No.1 as contrary to Judgment dated 23-7-2013 in W.P.No.13216 of 2009 and for a consequential direction to respondent No.3 to proceed with A.R.C.No.21 of 2000 excluding respondent No.3.
Respondent No.2 has borrowed some money from the petitioner-Bank. When respondent No.2 committed default in payment of the loan amount, the petitioner has got the dispute referred to respondent No.1 under Section 61 of the A.P. Co-operative Societies Act, 1964 (for short "the Act"). Respondent No.3 who claims to be an agreement holder in respect of the property mortgaged by respondent No.2 in favour of the petitioner-Bank filed an application I.A.No.5 of 2005 for impleadment in the said arbitration proceedings. By order dated 24-3-2007, respondent No.1 has allowed the said application. Questioning the said order, the petitioner filed C.T.A.No.66 of 2007 on the file of the A.P. Co-operative Tribunal, Hyderabad (for short “the Tribunal”) which was dismissed. Assailing the same, the petitioner filed W.P.No.13216 of 2009 in this Court.
The petitioner filed an application under Section 73 of the Act in A.R.C.No.21 of 2000 for attachment of the property of respondent No.2, which was granted by respondent No.1 by order dated 11-5-2000. Respondent No.3 has filed a claim petition before respondent No.1 seeking raising of the attachment. Respondent No.1 has allowed the said claim petition by order dated 28-7-2004. The petitioner and respondent No.2 filed appeals before the Tribunal. Both the said appeals were dismissed by the Tribunal by separate orders dated 25-4-2008. Questioning the said orders, the petitioner filed W.P.No.21151 of 2008 and respondent No.2 filed W.P.No.23718 of 2008. A learned single Judge of this Court, by common order dated 23-7-2004 allowed all the three Writ Petitions. The learned Judge has held that respondent No.3 was not entitled to come on record in A.R.C.No.21/2000, as being agreement holder, he is not the affected by any order that may be passed in A.R.C.No.21/2000 by the arbitrator and that in a proceeding under Section 61 of the Act between the borrower and the Bank, third parties like respondent No.3 are not proper and necessary parties merely because they claim to have interest in the property mortgaged to the Bank. The learned Judge has also referred to Section 54(4) of the Act which protects the interests of the agreement holders. Feeling aggrieved by the said order, respondent No.3 filed W.A.No.1426, 1427 and 1428 of 2013. The Division Bench disposed of the said appeals by common order dated 28-11-2013 with certain observations. The Division Bench has referred to Section 54(4) and Section 52(21)(c) of the Act and clarified that the order of the learned single Judge will not be binding or be an influencing factor, that the same does not operate as res judicata and that the learned Judge (which obviously means the Civil Judge) shall proceed in accordance with law as if such Judgment was not rendered and the parties are free to approach the Civil Court for appropriate remedy, if so advised. Indeed, at the hearing, it has come out that respondent No.3 has already filed O.S.No.9 of 2003 for specific performance of the agreement of sale against respondent No.2 before the competent Civil Court and that the same is pending.
As rightly pointed out by Sri Vedula Srinivas, learned Counsel for the petitioner, the Division Bench has not reversed the Judgment of the learned single Judge and that it has only clarified the effect of the said Judgment keeping in view the provisions of Section 54(4) and 52(21)(c) of the Act under which respondent No.3 is entitled to pursue his remedy of a civil suit to establish his right over the property which is the subject matter of the proceedings before the competent authority under the provisions of the Act and the Rules made thereunder. The observations of the Division Bench that the Judgment of the learned single Judge will not be binding or be an influencing factor and that the same will not operate as res judicata are made in the context of reserving the right of respondent No.3 to pursue the remedy of a civil suit. These observations cannot be understood as the Division Bench overturning the Judgment of the learned single Judge on any of the aspects dealt by him in respect of the dispute pending before respondent No.1. Therefore, the said Judgment binds respondent No.1 and consequently he cannot issue notice to respondent No.3 and allow him to participate in the arbitration proceedings.
On the above analysis, the Writ Petition is allowed as prayed for, however, without prejudice to the right of respondent No.3 to pursue the pending civil suit filed by him.
As a sequel to the disposal of the Writ Petition, interim order dated 1-7-2014 is vacated and WPMP No.22470 of 2014 and WVMP No.2696 of 2014 are disposed of as infructuous.
Justice C.V. Nagarjuna Reddy Date : 11-11-2014 AM