Draft amendment is allowed. The amendment, as sought for, shall be carried out forthwith.
In this writ petition, challenge is made to the order dated 18th October 2011 passed by the trial Court below Application Exh. 48 in Execution Application No. 21 of 2006 whereby the request made by judgment-debtor vide such an application preferred under Section 111 of the Gujarat Cooperative Societies Act, 1961 has been rejected.
To briefly state the facts, in the suit preferred before the Board of Nominees, being Lavad Case No. 303 of 1998, for recovery of a sum of Rs. 10,58,135=19p., a decree was passed on 25th September 1998 for the said amount with 12% per annum w.e.f 12th March 1998 together with cost of Rs. 5,000/=.
It is necessary to make a mention at this stage that the petitioner herein is a registered Cooperative Society under the Gujarat Cooperative Societies Act, 1961 ["the Act" for short] which has gone into liquidation. During pendency of this Lavad case, Liquidator was appointed on 15th February 1996 and necessary permission as was required for continuing with the proceedings also was obtained. Challenging the said decree, an appeal was preferred by the petitioner which came to be dismissed on 13th July 2002.
An execution application being Execution Application No. 67 of 2001 was preferred by the respondent herein before the learned Sr. Civil Judge, Jamnagar seeking execution of the judgment and award passed by the Board of Nominees wherein a compromise was entered into by and between the parties by tendering a compromise purshis dated 23rd March 2005. As one of the terms of the said compromise purshis permitted the respondent to initiate action in the event of non compliance of any of the terms, the petitioner preferred second Execution petition where some of the conditions were not adhered to. After giving the notice to the petitioner, when no reply was received, such second execution petition was preferred.
Objections were raised against this execution petition and entertaining those objections from the petitioner, at the relevant time, the Court dismissed the same. Challenge was made by the respondent on such dismissal before this Court by preferring Special Civil Application No. 7124 of 2010 wherein this Court [Coram : M.R Shah, J.] vide Order dated 24th June 2011, allowed the petition by setting aside the order of learned Principal Civil Judge dated 5th April 2010 passed in Reg. Darkhast No. 21 of 2006 with a further direction of deciding the said execution petition in accordance with law on merits and to dispose of the same at the earliest, but not later than one year from the date of receipt of the said order. Accordingly, the matter proceeded before the Executing Court where the said Application preferred under Section 111 of the Act was heard and the Court, after hearing both the sides, rejected the application. The same is challenged in this petition preferred under Article 227 of the Constitution of India.
Both the sides have pressed various issues for the determination of this Court. Learned advocate Shri Dharmesh V. Shah appearing for the Liquidator urged the Court that this Execution Petition cannot be proceeded further as there are other secured and unsecured creditors and the petitioner cannot be permitted to take away alone the large chunk of the amount of the Society, when in fact, he does not come under the definition of "secured creditor". He further urged that unless the Liquidator issues notice to the parties and ascertain the claim and provide details of secured and unsecured creditors, the Court ought not to have attached the properties which are Godowns situated at Jamnagar. He relied upon Sections 107 to 110 of the Act and further pointed out decision of this Court in Letters Patent Appeal Nos. 2458 of 2009 in Special Civil Application No. 7617 of 2009 wherein it has been held that the org. respondent-petitioner-Ahmedabad Mahila Nagrik Sahakari Bank Limited would not get preference as that would be contrary to the preference for distribution of amount; as prescribed under the law. He also relied upon the fact that there are many Letters Patent Appeals pending before this Court challenging fixation of the priorities by the Liquidator, where the learned Single Judge decided the priority in which the amount is to be released in favour of one or the other creditors. Being unhappy with the decision of the learned Single Judge, various Letters Patent Appeals have been preferred by all those creditors against the priority fixed by the learned Single Judge and those matters are fixed for hearing on 21st June 2012. According to the learned advocate, the issue is at large before the Division Bench in Letters Patent Appeals and therefore also, at present this Court should not set-aside the order of the trial Court.
As against that, learned advocate Shri Dipen Desai representing the respondent has vehemently submitted that the parties have been litigating for number of years and at every stage, the Liquidator is aware of the status of the proceedings. In fact, necessary leave under Section 112 of the Act has also been granted to continue with the suit. The Certificate for executing the decree granted under Section 103 of the Act has also been obtained and the law also provides that if the Liquidator is unable to fulfill his obligation within seven years, he would have no right to object to the same.
On thus having heard learned advocates for the parties as also on having examined closely the order of the trial Court, for the reasons to be mentioned hereinafter, this petition does not merit any consideration.
At the outset, it needs to be stated that the Liquidator has been appointed in this case from February 1996. Thus, more than fifteen years have passed since he has been appointed to take care of the Cooperative Society which has gone into liquidation. Statute provides for his duties - one of which, as per Section 110 of the Act, is to investigate all the claims against the society and subject to the provisions of the Act, to decide questions of priority arising out of such claims and to pay any class or classes of creditors in full or ratably according to the amount of such debts, the surplus being applied in payment of interest from the date of liquidation at a rate approved by the Registrar, but not exceeding the contract rates. He is also obliged to carry on the business of the Society, so far as may be necessary for the beneficial winding up of the same. There are other powers which are in the form of obligations of the Liquidator.
Section 112 of the Act specifies that no Civil Court shall take cognizance of any matter connected with the winding up, or dissolution of a Society; except by leave of the Registrar and subject to such terms as he may impose.
As can be noted from the record and the fact is not in dispute that such leave has already been obtained by the respondent while proceeding with the suit and thereafter.
The object of such permission is to ensure that the Liquidator is made aware of these proceedings so that for the benefit of the Society, he can effectively defend the suit or monitor institution of other necessary legal proceedings on behalf of the Society in the name of his office. Therefore, it is a matter of record that he is aware of all the proceedings which are going on, by and between the parties. He was also aware of the fact that there is a huge decreetal amount which the Society is required to pay to the respondent herein. After a span of fifteen years, when the Liquidator choses to state that he is not ready with the list of secured and unsecured creditors and on the basis of this, he seeks time, the trial Court was justified in its action. Even if it is admitted that the Liquidator is bound to discharge his duty and the preference of the distribution of the amount shall have to be made as prescribed under the law, the fact remains that there is no list for the Executing Court nor could the learned advocate appearing for the Liquidator pointed out to this Court from the record or otherwise, any such details of secured/unsecured creditors, and resultantly, the trial Court has appropriately dealt with all the aspects - be it factual or legal to conclude that the application preferred under Section 111 of the Act requires no entertainment and attachment made under Order 21 Rule 54 CPC of both the Godowns be continued. This Court sees no illegality in the order impugned and this petition, which is preferred challenging the said order under Article 227 of the Constitution, learned advocate could not point out either any jurisdictional error nor any material illegality warranting interference by this Court at this stage.
It is extremely painful to note that the Liquidator who has been appointed in February 1996 had, even after lapse of fifteen years, failed to comply with the basic requirement of inviting the claims. So as to ensure that the claim of any secured or unsecured creditor is not defeated on account of lethargy and in-action on the part of the Liquidator, liberty is granted to the petitioner herein to complete such procedure within three months from the date of receipt of this order and in the event of any substantive and substantial claim having come forth, the petitioner shall be at liberty to bring the same to the notice of the Executing Court, which shall decide the same at an appropriate stage; keeping in mind the material on record as also the prevailing law on the subject.
With these observations, Special Civil Application stands dismissed with no order as to costs. Interim relief is vacated.
{Ms.
Sonia Gokani, J.} Prakash* Top