{"id":135461,"date":"2006-07-20T00:00:00","date_gmt":"2006-07-19T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/niranjan-d-woody-vs-the-south-indian-co-operative-on-20-july-2006"},"modified":"2016-01-12T09:36:02","modified_gmt":"2016-01-12T04:06:02","slug":"niranjan-d-woody-vs-the-south-indian-co-operative-on-20-july-2006","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/niranjan-d-woody-vs-the-south-indian-co-operative-on-20-july-2006","title":{"rendered":"Niranjan D. Woody vs The South Indian Co-Operative &#8230; on 20 July, 2006"},"content":{"rendered":"<div class=\"docsource_main\">Bombay High Court<\/div>\n<div class=\"doc_title\">Niranjan D. Woody vs The South Indian Co-Operative &#8230; on 20 July, 2006<\/div>\n<div class=\"doc_citations\">Equivalent citations: 2006 (5) BomCR 587<\/div>\n<div class=\"doc_author\">Author: D Chandrachud<\/div>\n<div class=\"doc_bench\">Bench: D Chandrachud<\/div>\n<\/p>\n<pre><\/pre>\n<p>JUDGMENT<\/p>\n<p>D.Y. Chandrachud, J.<\/p>\n<p>Page 2821<\/p>\n<p>1. Rule, by consent of Counsel returnable forthwith.  Counsel appearing on behalf of the Respondents waive service.  By consent of Counsel and at their request taken up for hearing  and final disposal.\n<\/p>\n<p>2. The Petitioner owns a plot of land at Santacruz1 on which  there is a building consisting of a ground floor, two storeys and two  garages. The Petitioner has a residential flat admeasuring 2435  sq.ft. therein. Apart from the residential flat of the Petitioner, the  building is in the occupation of eight tenants. Until the Petitioner  and his family came to be dispossessed, the residential flat was  occupied by the Petitioner, his wife and son. The property was  held jointly by the Petitioner with his father. The Petitioner&#8217;s father  expired in September 2005, leaving behind his last will and  testament, by which the right, title and interest is bequeathed to the  Petitioner.\n<\/p>\n<p>3. On 20th July 2001, the Petitioner availed of an Over Draft  Facility in the amount of Rs. 25 lakhs from the First Respondent  against a mortgage of the aforesaid immovable property. The First  Respondent moved the Assistant Registrar, Co-operative  Societies, for the recovery of its outstandings in a proceeding  under Section 101 of the Maharashtra Co-operative Societies&#8217; Act,  1960. The Assistant Registrar issued a recovery certificate on 1st  September 2004 in the amount of Rs. 45,14,081\/- together with  interest at the rate of 18% from 11th February 2004. The property  was attached in pursuance of the recovery certificate. The  property was put to auction sale in pursuance of a notice published by the First Respondent on 30th September 2005. The auction  notice covered a total of twenty three different properties including  the property which forms the subject matter of Page 2822 these proceedings.  The auction was slated to take place on 14th November 2005 and  the reserve price was fixed at Rs. 1,23,43,558\/-. Prospective  bidders were required to submit their offers on or before 15th  October 2005 together with 10% of the amount of the reserve price  as an earnest money deposit. The auction notice stipulated that in  case the highest bidder fails to pay the price within the stipulated  period, the earnest money would stand forfeited.\n<\/p>\n<p>4. The Third Respondent submitted an offer in the amount  of Rs. 1,24,50,000\/- and on 14th November 2005, the First  Respondent informed him of the acceptance of the offer. The  balance of Rs. 1,12,14,000\/- after giving due credit for the earnest  money that had already been paid, was required to be paid within a  period of fifteen days. The letter of acceptance stated that the  auction was on &#8216;as is where is basis&#8217;. The Third Respondent  made an endorsement to the following effect at the foot of the  letter of acceptance:\n<\/p>\n<p>Received and accepted with following terms:\n<\/p>\n<p>Note : you will have to give vacant possession of:\n<\/p>\n<p>1. self occupied flat of 2200 sq.ft.\n<\/p>\n<p>2. Comml premises occupied by Fabrik Eng : 275  sq.ft. approx.\n<\/p>\n<p>3. Garage (one) and<\/p>\n<p>4. Marketable title as mentioned by us in tender  submitted to you.\n<\/p>\n<p>The Third Respondent addressed a letter dated 14th November  2005 to the First Respondent acknowledging receipt of the letter of  acceptance. However, by his letter, the Third Respondent sought  an extension of a period of thirty days for the payment of the  balance.\n<\/p>\n<p>5. On 14th November 2005, the Petitioner filed a Writ  Petition in this Court under Article 226 of the Constitution (WP  7806 of 2005) for impugning the recovery certificate issued under  Section 101 of the Maharashtra Co-operative Societies&#8217; Act, 1960,  and the attachment of the property. An ad-interim order was  passed by a Learned Single Judge on 16th November 2005 by  which the First Respondent was directed not to dispossess the  Petitioner. The Third Respondent also made a statement that he  will not transfer the property or create any third party rights therein. The Third Respondent paid an amount of Rs. 6.45 lakhs being the  balance required to complete the payment of 15% of the bid  amount on 16th November 2005. The requirement of paying 15%  of the total bid amount at the time of purchase is, as would be  noticed hereafter, a mandatory requirement of Rule 107(11)(g) of  the Maharashtra Co-operative Societies&#8217; Rules, 1961,<\/p>\n<p>6. On 23rd November 2005, the Writ Petition filed by the  Petitioner was disposed of since the Petitioner had an alternative  remedy by way of a revision before the Divisional Joint Registrar of  Co-operative Societies under Section 154A. The case of the  Petitioner before the Court is that on 30th November 2005, the  period stipulated in Rule 107(11)(h) for the payment of the balance  85% of the purchase price expired. Admittedly, the Third  Respondent did not effect payment on or before that date. On 6th  December 2005, the Petitioner filed two revision applications  impugning the recovery certificate and the auction sale  respectively and deposited therewith an amount of Rs. 26.16 lakhs  in compliance with the mandatory requirement of pre-deposit under  Section 154(2A). On 12th December 2005, the First Respondent  addressed a Page 2823 communication to the Third Respondent extending the time to effect the balance payment until 25th December 2005. On  the same day the auction purchaser informed the First Respondent  that a cheque in the amount of Rs. 64.19 lakhs drawn on the First  Respondent Bank and a further cheque in the amount of Rs. 41.50  drawn as an escrow payment in favour of his Advocate was kept  ready. The auction purchaser sought an execution of the  conveyance. The conveyance was executed by the First  Respondent in favour of the Third Respondent on 12th December  2005. The conveyance records what are now admitted facts,  namely that (i) The auction purchaser had paid Rs. 12,34,356\/- prior  to the bidding process; (ii) The auction purchaser&#8217;s bid of  Rs. 1,24,50,000\/- was accepted by a letter dated 14th November  2005; (iii) The auction purchaser had paid a further amount of Rs.  6.45 lakhs on 16th November 2005; and (iv) The auction purchaser  had paid an amount of Rs. 64.19 lakhs and deposited the balance  of Rs. 41.50 lakhs with his Advocate to be kept in escrow until  probate was obtained of the will executed by the Petitioner&#8217;s late  father.\n<\/p>\n<p>7. The Revision Applications preferred by the Petitioner  were dismissed by the Divisional Joint Registrar, Co-operative Societies on 28th February 2006. On 3rd March 2006, the Petitioner  filed a second Writ Petition (W.P. 912 of 2006) impugning the  orders passed by the Divisional Joint Registrar. On 16th March  2006, a Learned Single Judge of this Court relegated the  Petitioner to the remedy of impugning the sale before the Recovery  Officer under Rule 107(11)(f). The Recovery Officer was directed  to dispose of the application within four weeks pending which, the  status quo would continue. The Special Recovery Officer passed  an order on 25th April 2006 upholding the auction sale. On the  next day, a notice was received from the First Respondent by the  Petitioner&#8217;s wife stating that possession would be taken over at 11  a.m. on 27th April 2006. On 27th April 2006 a petition under Article  226 of the Constitution (W.P. 1769 of 2006) was instituted and it  has been stated this was because the Revisional Authority under  Section 154 was on leave. An ad-interim order was passed  therein restraining the First Respondent and the auction purchaser  from taking possession. However, it is common ground that by  then the Fourth Respondent had forcibly evicted the Petitioner&#8217;s  wife and son from the premises and had taken possession. On  28th April 2006, an order was passed in the writ proceedings  recording that possession had already been taken. However, the Petitioner was granted liberty to again move the Divisional Joint  Registrar and parties were directed to maintain status quo for a  period of two weeks. The impugned order was thereupon passed  by the revisional authority on 12th June 2006 dismissing the  Revision Application against the order of the Special Recovery  Officer upholding the sale.\n<\/p>\n<p>8. On behalf of the Petitioner it has been submitted that  Rule 107(11)(g) of the Maharashtra Co-operative Societies&#8217; Rules,  1961 requires that an amount representing 15% of the price of the  immovable property has to be deposited by the auction purchaser  with the Sale Officer at the time of purchase and in default of such  deposit, the property, it has been provided, shall forthwith be  resold. In the present case, it was urged that the Third  Respondent was informed by the Bank on 14th November 2005 of  the acceptance of the bid. The Third Respondent had submitted  an earnest money Page 2824 deposit representing 10% of the reserve price.  The Third Respondent was, it was submitted, liable to make up the  balance representing 15% of the total bid amount immediately on  14th November 2005 at the time of purchase. This the Third  Respondent failed to pay and an amount of Rs. 6.45 lakhs representing the balance out of the 15% was deposited only on 16th  November 2005. That apart, under Rule 107(11)(h), the remainder  of the purchase money was required to be deposited within fifteen  days from the date of sale. Counsel submitted that the First  Respondent acted ultra vires the scope of its powers in extending  the time for making the payment of the balance in breach of the  mandate of Rule 107(11)(h) that the balance has to be paid within  fifteen days of the date of sale. It was submitted that the First  Respondent breached the mandatory condition of the Rule by not  paying the remaining balance within a period of fifteen days from  the sale of sale. The sale was, therefore, vitiated and was a nullity. Counsel submitted that the requirement prescribed by Clauses (g)  and (h) of Sub-rule (11) of Rule 107 is mandatory and in the  absence of strict compliance therewith, the sale is vitiated. In this  regard, reliance is placed on judgments of the Supreme Court to  which a reference would be made shortly hereafter. The  correctness of this submission now falls for determination.\n<\/p>\n<p>9. Rule 107 of the Maharashtra Co-operative Societies&#8217;  Rules, 1961, lays down the procedure for attachment and sale of  property. Under Sub-rule (10), the sale has to be by public auction to the highest bidder. The rule requires that the sale must be held  after the expiry of not less than thirty days calculated from the date  on which a notice of proclamation is affixed in the office of the  Recovery Officer. Clause (g) of Sub-rule (11) of Rule 107 provides  as follows:\n<\/p>\n<p> (g) A sum of money equal to 15 per cent of the price of  the immovable property shall be deposited by the  purchaser in the hands of the Sale Officer at the time of  the purchase, and in default of such deposit, the property  shall forthwith be re-sold:\n<\/p>\n<p>The next requirement that is stipulated is in Clause (h) of Sub-rule (11) which is to the following effect:\n<\/p>\n<p>(h) The remainder of the purchase money and the  amount required for the general stamp for the sale  certificate shall be paid within fifteen days from the date  of sale:\n<\/p>\n<p>Provided that, the time for payment of the cost  of the stamp may, for good and sufficient reasons, be  extended at the discretion of the Recovery Officer up to  thirty days from the date of sale:\n<\/p>\n<p>Provided further that, in calculating the  amounts to be paid under this clause, the purchaser  shall have the advantage of any set off to which he may  be entitled under Clause (k).\n<\/p>\n<p>10. From these provisions, it is abundantly clear that a sum  of money equal to 15% of the price of the property has to be  deposited by the purchaser with the Sale Officer at the time of  purchase. The remainder is required to be paid, together with the  amount required for the stamp duty on the sale certificate, within  fifteen days from the date of sale. The proviso to Clause (h)  empowers the Recovery Officer to extend the period for the  payment of the cost of the stamp for a period of upto thirty days  from the date of the sale. Therefore, where the rule making  authority as the delegate of the legislature considered Page 2825 it  appropriate to grant a power of relaxation to the Recovery Officer  that has been specifically provided. The only other dispensation  which is granted is an entitlement to set off in the case where the  applicant himself is a purchaser of the property. The requirement  of depositing 15% of the price of the immovable property at the  time of purchase is mandatory. The mandatory character of the  provision is emphasised by the consequence that if there is a  default in making the deposit, the property shall forthwith be resold. When there is a default in the payment of the remaining balance  within fifteen days from the date of sale, the Recovery Certificate  may, after defraying the expenses of sale forfeit the deposit which has been made upon which the defaulting purchaser shall forfeit all  claims to the property. Thereupon a fresh proclamation of sale  ensues and the property is resold.\n<\/p>\n<p>11. Counsel appearing on behalf of the First Respondent  submits that the expression that is used in Clause (g) is &#8220;at the time  of the purchase&#8221; while the expression in Clause (h) is &#8220;from the date  of sale&#8221;. An attempt was made on behalf of the First Respondent  to submit that the requirement that 15% of the price of the  immovable property be paid at the time of purchase means that the  deposit has to be made when the conveyance is executed. Hence,  it was urged that the requirement of paying of the remaining  balance within fifteen days from the date of sale must mean within  fifteen days from the date of the execution of the conveyance. The  submission cannot be accepted for the reason that it is in the teeth  of the plain and grammatical meaning of the language of the rules.  The Rules require firstly a payment of 15% of the price at the &#8216;time  of purchase&#8217; and secondly, the payment of the balance within  fifteen days from the &#8216;date of the sale&#8217;. The expression &#8220;time of  purchase&#8221; and the expression &#8220;date of sale&#8221; cannot mean to two  different events. The time of purchase and the date of sale are but facets of the same transaction. Under the Rules, the sale is to be  conducted by a public auction. The Sale Officer is undoubtedly  entitled to decline to accept the highest bid when it is unduly low or  for adequate reasons. The auction can be adjourned on the date  on which it is fixed. However, once the auction takes place and the  highest bid is accepted, the consequence thereof is to knock down  the sale in favour of the highest bidder. It is at that time that the  highest bidder must make a payment equivalent to 15% of the  total price of the immovable property. The time of purchase under  Clause (g) is the time when the bid is accepted. The payment of  the remainder within fifteen days must be with reference to that  date.\n<\/p>\n<p>12. The interpretation which should be placed on the  provisions of Rule 107(11) is illuminated by judgments of the  Supreme Court construing the provisions of Rules 84, 85, 86 and  87 of Order 21 of the Code of Civil Procedure, 1908. Without  digressing from the main subject of the present discussion, it would  be appropriate to place the provisions of Rule 107 of the  Maharashtra Co-operative Societies&#8217; Rules, 1961 in juxtaposition  with the provisions of Rules 84, 85, 86 and 87 of Order 21 of the Code of Civil Procedure, 1908:<\/p>\n<pre>\n \n\nPage 2826\n  Rule 107 of MCS Rules, 1961            Code of Civil Procedure, 1908\n                                       as amended and as applicable\n                                       in Bombay.\nRule 107(11)(g):                       84. Deposit by purchaser and\n                                       re-sale on default-\n(g) A sum of money equal to 15        -(1) On every sale of immovable\nper cent of the price of the           property the person declared to\nimmovable property shall be            be the purchaser shall pay\ndeposited by the purchaser in          immediately after such\nthe hands of the Sale Officer at       declaration a deposit of twentyfive\nthe time of the purchase, and in       per cent on the amount of\ndefault of such deposit, the           his purchase money to the\nproperty shall forthwith be resold:   officer or other person\n                                       conducting the sale and in\n                                       default of such deposit, the\n                                       property shall forthwith be resold.\n\n(h) The remainder of the              -85. Time for payment in full of\npurchase money and the                 purchase-money  The full\namount required for the general        amount of purchase-money\nstamp for the sale certificate         payable shall be paid by the\nshall be paid within fifteen days      purchaser into Court before the\nfrom the date of sale:                 Court closes on the fifteenth day\n                                       from the sale of the property:\nProvided that, the time for            Provided that, in calculating\npayment of the cost of the stamp       the amount to be so paid into\nmay, for good and sufficient           Court, the purchaser shall have\nreasons, be extended at the            the advantage of any set-off to\ndiscretion of the Recovery             which he may be entitled under\nOfficer up to thirty days from the     Rule 72.\ndate of sale:                          High Court Amendments\nProvided further that, in              (Bombay):\ncalculating the amounts to be          For the existing Rule 85,\npurchaser shall have the               paid under this clause, the\nadvantage of any set off to            substitute the following rule and\nwhich he may be entitled under         marginal note:-\nclause (k).                           85. Time for payment in full of\n                                       purchase money- The full\n                                       amount of purchase money\n                                       payable, together with the\n                                       amount required for the general\n                                       stamp paper for the certificate\n                                       under Rule 94, shall be paid by\n                                       the purchaser into Court before\n                                       the Court closes on the 15th day\n                                       from the date of the sale of the\n                                       property:\n                                       Provided further that, if as a\n                                       result of some bonafide mistake\n                                       or miscalculation the amount\n                                       deposited falls short of the full\n                                       amount of the purchase-money,\n                                       the Court may in its discretion,\n                                       allow the shortfall to be made up\n                                       after fifteen days of the sale, and\n                                       if the full amount of the\n                                       purchase-money is deposited\n                                       within such time as the Court\n                                       may allow, the Court may\n                                       condone the delay, if it\n                                       considers it just and proper to do\n                                       so.\n                                       Explanation:- When an amount\n                                       is tendered in Court on any day\n                                       after 1.00 P.M. but is not\n                                       accepted by the Court and is\n                                       paid into Court on the next\n                                       working day between 11.00 A.M.\n                                       and 1.00 P.M., the payment\n                                       shall be deemed to have been\n                                       made on the day on which the\n                                       tender is made. - (1.10.1983)\n\n \n\nPage 2827\n (i) In default of payment within       86. Procedure in default of\nthe period mentioned in the last       payment  In default of payment\npreceding clause, the deposit          within the period mentioned in\nmay, if the Recovery Officer           the last preceding rule, the\nthinks fit, after defraying the        deposit may, if the Court thinks\nexpenses of the sale, be               fit, after defraying the expenses\nforfeited to the State                 of the sale, be forfeited to the\nGovernment and the defaulting          Government and the property\npurchaser shall forfeit all claims     shall be re-sold, and the\nto the property or to any part of      defaulting purchaser shall forfeit\nthe sum for which it may               all claim to the property or to any\nsubsequently be sold.                  part of the sum for which it may\n                                       subsequently be sold.\n(j) Every resale or immovable          87. Notification on re-sale \nEvery re-sale of immovable             Every re-sale of immovable\nproperty, in default of payment        property, in default of payment\nof the purchase-money within           of the purchase-money within\nthe period allowed for such            the period allowed for such\npayment, shall be made after           payment, shall be made after\nthe issue of a fresh proclamation      the issue of a fresh proclamation\nin the manner and for the period       in the manner and for the period\nhereinbefore prescribed for the        hereinbefore prescribed for the\nsale.                                  sale.\n                                       High Court Amendments -\n                                       (Bombay)- In Rule 87, for the\n                                       words of the purchase money\n                                       substitute the words of the\n                                       amounts mentioned in Rule 85\n                                       (1.10.1983)\n \n\n<\/pre>\n<p>The provisions of Rules 84, 85 and 86 of Order 21 came up for  consideration before the Supreme Court in <a href=\"\/doc\/1984005\/\">Manilal Mohanlal  Shah v. Sardar Sayed Ahmed Sayed Mahamad.  To<\/a> recapitulate,  Order 21 Rule 84 requires on every sale of immovable property the  person who is declared to be the purchaser to deposit 25% of the  amount of the purchase money, immediately after such declaration.  The full amount of purchase money is to be paid before the close  of the fifteenth day from the sale of the property under Order 21,  Rule 85. In default, Rule 86 provides that the deposit may, after  defraying the expenses of the sale, be forfeited to Government and  the property shall be resold. In Manilal an application was filed  under Order 21 Rule 90, inter alia, on the ground that the payment  not having been effected within the period prescribed by Rules 84  and 85, the sale became void and was a nullity. The Court before  which the application was filed held that the application under Rule  90 was barred by limitation, but the sale being void and not being  a mere irregularity, the Court was bound to resell the property  irrespective of any application being made by the judgment-debtor.  The Supreme Court considered whether the failure to make the  deposit under Rules 84 and 85 was only a material irregularity in the sale which could only be set aside under Rule 90 of Order 21  or whether it was wholly void. The submission was that the  application under Order 21 Rule 90 was barred by limitation and a  mere failure to make the deposit under Rules 84 and 85 is only a  material irregularity. It was also argued before the Supreme Court  that the Court having once allowed the set-off and condoned the  failure to deposit, the mistake of the Court should not be allowed  to prejudice the purchasers who would certainly have deposited  the purchase price but for Page 2828 the mistake. The Supreme Court held  that both the contentions were &#8220;devoid of substance&#8221;. (Para 6 at Page 350)2<\/p>\n<p>The Supreme Court held as follows:\n<\/p>\n<p>The provision regarding the deposit of 25 per cent by  the purchaser other than the decree-holder is mandatory  as the language of the rule suggests. The full amount of the purchase-money must be paid within fifteen days  from the date of the sale but the decree-holder is entitled  to the advantage of a set-off. The provision for payment  is, however, mandatory&#8230;. (Rule 85). If the payment is  not made within the period of fifteen days, the court has  the discretion to forfeit the deposit, and there the  discretion ends but the obligation of the court to resell  the property is imperative. A further consequence of  non-payment is that the defaulting purchaser forfeits all  claims to the property&#8230;. (Rule 86).\n<\/p>\n<p>Having examined the language of the relevant rules and  the judicial decisions bearing upon the subject we are of  opinion that the provisions of the rules requiring the  deposit of 25 per cent of the purchase money  immediately on the person being declared as a  purchaser and the payment of the balance within 15  days of the sale are mandatory and upon noncompliance  with these provisions there is no sale at all.  The rules do not contemplate that there can be any sale  in favour of a purchaser without depositing 25 per cent of  the purchase money in the first instance and the balance  within 15 days. When there is no sale within the  contemplation of these rules, there can be no question,  of material irregularity in the conduct of the sale. Nonpayment  of the price on the part of the defaulting  purchaser renders the sale proceedings as a complete  nullity. The very fact that the Court is bound to resell the  property in the event of a default shows that the previous  proceedings for sale are completely wiped out as if they  do not exist in the eye of law. We hold, therefore, that in  the circumstances of the present case there was no sale  and the purchasers acquired no rights at all.\n<\/p>\n<p>It was urged before us that the Court could allow a setoff  in execution proceedings under its inherent powers  apart from the provisions of Order XXI, Rule 19 of the  Civil Procedure Code. We do not think that the inherent  powers of the Court could be invoked to circumvent the mandatory provisions of the Code and relieve the  purchasers of their obligation to make the deposit.\n<\/p>\n<p>Page 2829<\/p>\n<p>The judgment of the Supreme Court in Manilal&#8217;s case was  followed by a Bench of two Learned Judges in Balram v. Ilam  Singh. 1997(1) Mh. L.J. 687 Following the law laid down in Manilal&#8217;s case, the  Supreme Court held as follows:\n<\/p>\n<p> It is to be noted that the argument that it is only a  material irregularity in the sale to attract Rule 90 instead  of Rule 85 was expressly rejected; and it was clearly  held that Rule 85 being mandatory, its non-compliance  renders the sale proceedings a complete nullity requiring  the executing Court to proceed under Rule 86 and  property has to be resold unless the judgment-debtor  satisfies the decree by making the payment before the  resale. The argument that the executing court has  inherent power to extend time on the ground of its own  mistake was also expressly rejected. In our opinion the  contentions of the learned Counsel for the appellant are  fully negatived by this decision of the Court.\n<\/p>\n<p>The requirement of depositing the full amount of purchase money  within a period of fifteen days from the date of sale was similarly  held to be mandatory, brooking no exception:\n<\/p>\n<p> It is also to be noted that the duty to pay the full amount  of purchase money within the prescribed period of 15  days from the date of sale of the property is cast on the  purchaser by virtue of Rule 85 of Order 21 and therefore,  the entire responsibility to make full compliance of the mandatory provision is his.\n<\/p>\n<p>The decision in Manilal has also been followed by a Learned  Single Judge of this Court in Jagdish Radhakisan Kayasth v.  Ramesh N. Wagh.  In that case, the auction purchaser failed to  deposit 25% of the purchase price on the date of the auction until  5.30 p.m. and an extension of time sought was refused by the  Executing Court. The auction purchaser deposited the entire  amount on the next day. The Learned Single Judge held that  since there was a failure on the part of the auction purchaser to  comply with the mandatory condition of deposit under Rule 84(1),  the auction cannot be regarded as legal and valid in the eye of law.\n<\/p>\n<p>13. Counsel appearing on behalf of the First Respondent,  however, sought to distinguish the judgments of the Supreme  Court by adverting to the difference in the language used by the  legislature in Rules 84, 85 and 86 of Order 21 of the Code of Civil  Procedure, 1908 as contradistinguished from the terminology used  in Clauses (g) and (h) of Rule 107(11) of the Maharashtra Cooperative  Societies&#8217; Rules, 1961. The two provisions have been juxtaposed together for the purpose of comparison. In my view,  the differences in terminology are superficial. In any event, for the  reasons now indicated, those differences would not justify a  departure from the law laid down by the Supreme Court while  construing analogous statutory provisions. Rule 84 mandates a  deposit of 25% on every sale of immovable property by the person  declared to be the purchaser immediately after such declaration.  Rule 107(11)(g) requires a deposit of a sum of money equal to  15% of the price at the time of purchase. The words, &#8220;at the time  of purchase&#8221; in the case of an auction must mean the same thing  as the words &#8220;on every sale of immovable property&#8221; that are used  in Rule 84(1). &#8220;At the time of purchase&#8221; must necessarily mean at  the time when the auction purchaser is informed of the acceptance  of his bid. As in the case of Rule 84(1), Page 2830 Rule 107(11)(g) provides  that in default of such deposit, the property shall forthwith be  resold. Similarly, in so far as Rule 107(11)(h) is concerned, the  remainder has to be paid within fifteen days from the date of sale. Rule 85 of Order 21, similarly provides that the full amount of the  purchase money has to be paid before the fifteenth day of the sale  of the property. The consequences of default are provided in  similar terms both in Rule 107(11)(i) of the Maharashtra Co operative Societies&#8217; Rules, 1961 and in Rule 86 of Order 21. Both  sets of provisions &#8211; the provisions of Order 21 being statutory and  those of Rule 107 being subordinate legislation &#8211; emphasise the  fundamental principle that the mandate of deposit within the period  stipulated has to be complied with strictly. In the absence of  compliance with the mandatory requirement, the sale itself is no  sale in the eyes of law. In default of compliance, the sale is  rendered a nullity.\n<\/p>\n<p>14. A faint attempt was made on behalf of the First  Respondent to submit that the Petitioner has chosen to espouse  the remedy under Sub-rule (14) of Rule 107 and must be bound by  the limitation of the remedy which he chose. Counsel appearing on  behalf of the First Respondent submitted that if the consequence of  a default in the mandatory condition of deposit is that the sale itself  is vitiated, then it would not be open to the Petitioner to apply for  setting aside the sale on the ground of a material irregularity,  mistake or fraud within the meaning of Sub-rule (14) of Rule 107.  The submission has only to be stated to be rejected. It must be  noted that even before the Supreme Court in Manilal&#8217;s case, the  initial Court had been moved in an application under Order 21 Rule 90 of the Code of Civil Procedure, 1908 and the submission that  was urged was that since the application was belated, the  challenge was bound to fail. The Supreme Court rejected the  submission holding that once the sale itself was a nullity in default  of compliance with the mandatory condition of deposit there was no  question of a material irregularity in the conduct of sale; the  previous proceedings for sale were completely wiped out and there  was no sale that existed in the eye of law.\n<\/p>\n<p>15. On behalf of the auction purchaser, it has been  submitted that the Petitioner is disentitled to relief under Article  226 of the Constitution on account of his own conduct. Counsel  submitted that on 19th October 2005, the Petitioner had addressed  a letter to the First Respondent requesting the postponement of the  public auction by a period of three weeks to enable the Petitioner to  complete a transaction of sale with a buyer. The Petitioner had  agreed that if the process was not completed within a period of  three weeks, the Bank would be entitled to enforce the mortgage  and realise its dues without any further notice. It appears that a  Memorandum of Understanding was entered into on 18th October  2005 with the Third Respondent. The MOU stipulated that the price for the proposed sale was to be mutually settled and that the  sale would be completed within a period of three weeks from the  date thereof, time being of the essence. For whatever reason, the  MOU between the Petitioner and the Third Respondent did not  fructify into an agreement. That however, cannot defeat the  statutory rights of the Petitioner once the Bank set the sale process  in motion. The statement by the Petitioner in his letter dated 19th  October 2005 that the Bank would be at liberty to release the  mortgage without further notice to him was not a carte blanche for  the Bank to sell the property in any manner save and except in  accordance with the provisions of law. The Petitioner, at the  highest, had waived the requirement of a notice to him. What has  happened in the case is a clear and patent illegality. This Court  would not be justified in ignoring the illegality. The binding  principles of law laid down in successive decisions of the Supreme  Court Page 2831 could not have been deviated from for any reason  whatsoever, whether on the purported ground of equity set up by  the auction purchaser or otherwise. Moreover, the equities of the  auction purchaser can be adequately safeguarded by the  directions which I propose to issue in the matter. But it would  necessitate recording at this stage that the auction purchaser failed to comply with the mandate of law. 15% of the sale  consideration was not deposited on 4th November 2005, at the time  of purchase but thereafter. The deposit representing the balance  85% of the purchase price was sought to be made only on 12th  December 2005, much after the expiry of a period of 15 days of the  date of sale. Moreover, even at that stage an amount of Rs. 64.19  lakhs was paid to the Bank and it is not disputed that an amount of  Rs. 41.50 lakhs was kept by the Third Respondent with his  Advocate in escrow to be paid to the Bank at a subsequent date.  The amount placed in escrow is stated to have been released to  the Bank on 22nd February 2006.\n<\/p>\n<p>16. The legality of the order passed by the Divisional Joint  Registrar on 12th June 2006 has to be addressed. Before the  Divisional Joint Registrar it was specifically contended that there  was a failure on the part of the Third Respondent to deposit 15% of  the purchase price immediately upon the acceptance of the offer.  Surprisingly, on behalf of the Bank, a palpably incorrect statement  was made to the effect that &#8220;on the day of receiving the  acceptance Respondent No. 3 had paid Rs. 6.48 lakhs and thus a total amount received by the Bank was Rs. 18,82,000\/- which was  more than 15% of the purchase price&#8221;. (emphasis supplied). The  Divisional Joint Registrar held thus:\n<\/p>\n<p> It is admitted fact that the Respondent No. 3 has  complied with the auction notice by depositing 10% of  the Reserve Price i.e. Rs. 12,36,000\/-. Thereafter,  Respondent No. 3 has deposited Rs. 6,48,000\/-  immediately on acceptance of the offer by the SRO and,  therefore, there is a compliance of Sub-rule 11(g) of Rule  107 of MCS Rules, 1961 as has been rightly observed by  the Respondent No. 5 SRO in the impugned order.\n<\/p>\n<p>The finding that the Third Respondent had deposited Rs. 6.48  lakhs immediately on the acceptance of his offer is patently  erroneous and contrary to the record. The offer was accepted on  14th November 2005 while the payment of Rs. 6.48 lakhs was  effected on 16th November 2005. This position is undisputed.  Then in so far as the requirement of Rule 107(11)(h) is concerned,  the Divisional Joint Registrar dismissed the contention of the  Petitioner with the following observations:\n<\/p>\n<p> It is the fact that Sub-rule 11(h) of Rule 107 of the MCS  Rules, 1961 provides payment of remaining amount  within 15 days. However, auction took place on  14.11.2005. Writ Petition was filed by Applicant on 14-  11-2005 in which Hon&#8217;ble High Court Mumbai has  directed the Bank not to dispossess the Applicant.  However, while disposing of the Writ Petition No. 7806 of 2005 Hon&#8217;ble High Court directed to continue the earlier  orders for two weeks, and, therefore, due to these  litigations Auction Purchaser was not in a position to get  the vacant possession of the purchase property and,  therefore, the stand taken by the Auction Purchaser  demanding the extension of time for balance payment  was rightly considered by the Bank and SRO and  granted the extension of time for effecting remaining  payment, and therefore, I agree with the observations of  Respondent No. 5 SRO in the impugned order.\n<\/p>\n<p>The Divisional Joint Registrar has clearly lost sight of the fact that  the mandatory requirement of Rule 107(11)(h) could not have been  relaxed by the First Respondent Page 2832 for the purported reason that in  Writ Petition 7806 of 2006 this Court had directed the Bank not to  dispossess the Petitioner during the pendency of the revision. The  reasons which have weighed with the Divisional Joint Registrar are  ex-facie fallacious. The order of the Divisional Joint Registrar  ignores the absence of power in the First Respondent to deviate  from the mandatory time schedule laid down in the rules for the  payment of the purchase price.\n<\/p>\n<p>17. In these proceedings, as in any other proceedings under  Article 226 of the Constitution, the relief would have to be moulded  in a manner which would subserve the ends of justice. During the course of the hearing of this petition, I had called upon Counsel for  the Petitioner to inform the Court as to whether the Petitioner is  willing to pay the entire decretal dues of the Bank without any  further delay. A statement has been made before the Court by  Senior Counsel appearing on behalf of the Petitioner that the  Petitioner is ready to do so immediately, and in any case within a  period of one week from today. Counsel appearing on behalf of the  Petitioner has also agreed to pay interest to the Third Respondent  computed at the rate of 12% per annum from the date from which  the respective payments were made by the Third Respondent to  the First Respondent Bank. Counsel for the parties have placed on  the record signed statements quantifying the amount due and  payable under the recovery certificate and the payment required to  be made to the Third Respondent of interest at the rate of 12%.  These statements are taken on record and marked &#8220;X&#8221;.\n<\/p>\n<p>18. In these circumstances, the petition has to be allowed  and is accordingly allowed in the following terms:\n<\/p>\n<p>(i) The impugned order dated 12th June 2006 passed by the  Divisional Joint Registrar, Co-operative Societies is quashed and set aside. The revision preferred by the Petitioner under Section  154 of the Maharashtra Co-operative Societies&#8217; Act, 1960, against  the decision of the Special Recovery Officer shall accordingly stand  allowed. The sale in favour of the Third Respondent is a nullity;\n<\/p>\n<p>(ii) The Petitioner has undertaken to pay the full decretal  amount to the First Respondent under the recovery certificate  dated 1st September 2004 within one week from today. The  amount due and payable is quantified in a signed statement placed  on the record of this proceeding by Counsel for the First  Respondent and the Petitioner at Rs. 24,41,195\/-;\n<\/p>\n<p>(iii) The Petitioner shall pay over to the Third Respondent  interest at the rate of 12% per annum on the payments made by  the Third Respondent to the First Respondent from the date on  which each of the payments has been made. The amount payable  has been quantified, in a signed statement placed by Counsel for  the parties on the record, at Rs. 8,31,980\/-. The aforesaid  payments shall be made within a period of one week from today; and<\/p>\n<p>(iv) Upon receipt of the amount due under the recovery  certificate from the Petitioner, the First Respondent shall refund to  the Third Respondent the amount representing the sale  consideration received from the Third Respondent at the auction  sale forthwith.\n<\/p>\n<p>19. The petition is accordingly disposed of in these terms.  There shall be no order as to costs.\n<\/p>\n<p>1. Plot No. 52\/1, 5th Road, TPS-III, Golibar, Santacruz (East), Mumbai-400 055<\/p>\n<p>2. The judgment of the Supreme Court in para 6 reads as follows: The principal question which falls to be considered is whether the failure to  make the deposit under Order 21,m Rules 84, and 85 is only a material  irregularity in the sale which can only be set aside under Rule 90 or  whether it is wholly void. It is argued that the case falls within the former  category and the application under Rule 90 being barred by limitation, the  sale cannot be set aside. It is also contended that the Court having once  allowed the set-off and condoned the failure to deposit, the mistake of the  Court should not be allowed to prejudice the purchasers who would  certainly have deposited the purchase price but for the mistake. We are of  the opinion that both the contentions are devoid of substance. In order to  resolve this controversy a reference to the relevant rules of Order XXI of  the Civil Procedure Code will be necessary. These Rules are 72, 84, 85  and 86<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Bombay High Court Niranjan D. Woody vs The South Indian Co-Operative &#8230; on 20 July, 2006 Equivalent citations: 2006 (5) BomCR 587 Author: D Chandrachud Bench: D Chandrachud JUDGMENT D.Y. Chandrachud, J. Page 2821 1. Rule, by consent of Counsel returnable forthwith. Counsel appearing on behalf of the Respondents waive service. By consent of Counsel [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-135461","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Niranjan D. 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