Splendor Complex Co-Op Hsg. Soc. Ltd. ... vs Anita Vinod Karnik And Ors

10wp851-19+c

IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

WRIT PETITION NO.851 OF 2019

Splendor Complex Co-Operative Housing Society Ltd. ... Petitioner. Versus Anita Vinod Karnik and Ors. ... Respondents.

WITH INTERIM APPLICATION (ST.) NO.6938 OF 2024 IN WRIT PETITION NO.851 OF 2019

Anita Vinod Karnik ... Applicant. In the matter between: Splendor Complex Co-Operative Housing Society Ltd. ... Petitioner. Versus Anita Vinod Karnik and Ors. ... Respondents.

---------- Mr. Atul Damle, Senior Advocate a/w Mr.Ajit Anekar and Ms.Priyanka Srivastav i/by Auris Legal for the Petitioner in writ petition. Mr. Mohit Bharadwaj, for the Applicant in Interim Application and for Respondent Nos.1 & 4 in writ petition. Mr. P.V. Nelson Rajan, AGP for the Respondent-State. ----------

Coram : Sharmila U. Deshmukh, J.

Date : July 31, 2024 P. C. :

1. By this Petition, exception is taken to the order dated 3 rd May,

2018 passed by the Respondent No.3-District Deputy Registrar of

Cooperative Housing Societies, dismissing the Petitioner's Revision

Application and upholding the order of the Deputy Registrar of Co-

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operative Housing Societies, allowing the application of the

Respondent No.1 filed under Section 9A of the Code of Civil

Procedure, 1908 (for short, "CPC") and disposing of the Recovery

Application for want of jurisdiction.

2. The facts of the case as pleaded in the Petition is that the

Respondent No 1 is the member of the Petitioner-Society and was in

default of the maintenance dues. For recovery of the outstanding

dues for the year April, 2014 to March, 2015, Recovery Application

No.86 of 2016 came to be filed by the Petitioner under Section 101 of

the Maharashtra Co-operative Societies Act, 1960 (for short, "MCS

Act") for issuance of recovery certificate for the unpaid dues and

interest. In the Recovery Application, the Respondent No 1 filed an

application under Section 9A of the CPC raising an issue of

jurisdiction, maintainability and that the Application raised disputed

questions of facts which could not be gone into in the absence of the

detailed evidence being led.

3. The Application was resisted by the Society dealing with the

objections raised by the Respondent No.1. Vide order dated 19 th

September, 2017, the Deputy Registrar disposed of the Recovery

Application for want of jurisdiction. As against this, the Revision

preferred before the District Deputy Registrar of Cooperative

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Societies came to be dismissed.

4. Heard Mr.Damle, learned Senior Advocate for the Petitioner and

Mr. Bharadwaj, leaned counsel for the Applicant in Interim Application

and for Respondent Nos.1 and 4.

5. Mr.Damle, learned Senior Advocate appearing for the Petitioner

would submit that the provisions of Section 9A of CPC are not

applicable to the proceedings under the MCS Act. He has taken this

Court in detail through the findings of the Deputy Registrar as well as

the District Deputy Registrar and the relevant statutory provisions.

He submits that the findings cannot be sustained as the provisions

make it clear that for recovery of the dues to the Society from a

member, special expeditious remedy is provided under Section 101 of

the MCS Act. He submits that the provisions empowers the Deputy

Registrar to go into the issue of quantification of the amounts by

looking into the documents which are produced. He submits that in

accordance with the Rules the statement of the account was

produced for consideration of the Deputy Registrar and the same

could have been considered at the time of hearing of the Application.

Drawing attention of this Court to the finding of the Appellate

Authority, he would submit that the Appellate Authority has observed

that there is an injunction against the flat owners association which

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was collecting the amount of maintenance from recovering any

amount and it is also observed that the Society is duly registered. He

submits that it is also not disputed that the property has been

conveyed to the Society. He submits that despite observing the said

fact, the Appellate Authority has held that there is a dispute between

the member of the Society about the amount due and in view thereof,

the provisions of Section 101 cannot be adhered to. He submits that

there is bound to be some dispute about the quantum of maintenance

which can be adjudicated under Section 101 of the MCS Act. He would

further submit that in event any dispute is raised by the

Respondent No.1, it is open for the Respondent No.1 to adopt

appropriate proceedings under Section 91 of MCS Act. He submits

that the jurisdiction of the Authorities under the MCS Act is not taken

away only because the defaulter submits that the evidence is

required.

6. Per contra, Mr.Bharadwaj, learned counsel appearing for the

Respondent Nos.1 and 4 would concede that Section 9A of the CPC is

not applicable to the proceedings initiated under the MCS Act. He

submits that some application had to be filed and accordingly that

application was filed with nomenclature under Section 9A. He submits

that by the impugned order the Recovery Application has been

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decided on merits as the defences had been adjudicated by the

Authority. He submits that the issues which were raised required

evidence to be led and under Section 86E, there is no provision of the

cross-examination and thus, the Authority did not have the jurisdiction

where disputed questions of fact are raised. He would further submit

that considering the dispute involved, the Petitioner is required to

adopt the remedy of Section 91 of the MCS Act as evidence would be

required to be led. He relies upon the decision of the learned Single

Judge of this Court in the case of Kiran K Sharma And Anr. vs. Laxmi

Estate Co-operative Housing Society Ltd. and 2 Ors. in Writ Petition

No.3479 of 2023, decided on 25 th January, 2024, and the decision of

the Division Bench of this Court in the case of Top Ten, a Partnership

firm and Anr. Vs. State of Maharashtra and Ors. [2011 SCC OnLine

Bom 1608].

7. Considered the submissions and perused the records.

8. The order passed by the Deputy Registrar was on an application

filed under Section 9A of the CPC. Once it is admitted by the learned

counsel for the Respondent Nos.1 and 4 that the provisions of

Section 9A of the CPC are not applicable to the Recovery Application

filed under the MCS Act and being unable to point out any provision of

MCS Act under which such an application could have been filed by the

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Respondent No.1, in fact, the impugned orders were required to be

quashed and set aside on this very ground alone. However,

considering that the Authorities below have adjudicated the

Application and have rendered findings which would impact the

recovery of dues by the Petitioner Society, this Court has considered

the issue whether the Recovery Application could have been

entertained by the Authority.

9. Before adverting to the facts of the case, it would be apposite

to take a look at the relevant provisions of the MCS Act . Section 101

of the MCS Act provides for recovery of certain sums and arrears due

to certain societies as arrears of land revenue and includes the arrears

due to the Co-operative Housing Society. Sub-Section (2) of Section

101 of the MCS Act, gives a suo motu power to the Registrar where

the concerned Society has failed to take action in respect of any

amount due as arrears to grant a certificate, after making such

inquiries, for the recovery of the amount stated therein as due as

arrears, which certificate shall be deemed to be issued as if on an

application made by the Society which certificate is final and

conclusive proof of the arrears stated therein.

10. The manner in which the inquiry is to be made is prescribed in

the Rules framed by the State Government and are contained in

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Chapter VIIIA of The Maharashtra Co-operative Societies Rules, 1961

(Rules of 1961). Rule 86A provides for the details which are required

to be contained in the application for grant of the certificate for

recovery, Rule 86B deals with the scrutiny of the application and

notice to the parties, Rule 86C provides for the appearance of the

parties and consequences of non-appearance, and Rule 86D provides

for the production and inspection of the documents. What is relevant

for our purpose is Rule 86E, which prescribes the procedures for

hearing of the Application and reads thus:

"86E. Procedure for hearing of application.-

(1) On receipt of the statement in defence of the opponent the applicant society shall prove contents of the application and also deal with the contention of defences. The opponent likewise may file reply in support of the defence on the next date, if he desires. No cross examination of any of the parties shall be permitted.

(2) On receipt of the replies, the Registrar shall proceed to hear oral arguments of the parties and shall close the proceeding for the order.

(3) Every endeavor shall be made by the Registrar to decide the application within three months from the first date of hearing. However, the Registrar may decide the application beyond the period of three months for the reasons to be recorded in writing."

11. Rule 86F provides that after hearing arguments of the parties, a

reasoned judgment shall be issued by the Registrar and order shall be

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passed for grant or rejection of the application.

12. Section 101 of the MCS Act enables the housing societies to

make an Application for recovery of the arrears due from the

members for obtaining the recovery certificate after following due

procedure. Section 101 is pre-faced with non-obstante clause and

provides that notwithstanding anything contained in Section 91, an

Application can be made under Section 101. In the present case,

accordingly an Application has been made under Section 101 of the

MCS Act seeking recovery of the arrears of maintenance. It cannot be

ignored that in every case where an application is made for recovery

of arrears there is bound to be some dispute which is raised by the

defaulter member against whom such arrears is sought. The question

is whether upon such a dispute being raised, the Registrar is required

to immediately dispose of the recovery application for want of

jurisdiction without ascertaining whether the dispute is bonafide.

13. For that purpose it will be necessary to consider the contentions

of the Respondent No.1 reflected in the impugned order. The

Respondent No.1 contends that amounts demanded are during the

period when the Authorized Officer was appointed and no records

have been provided to the Respondent No.1 in respect of approvals of

the said bills. The Society has not placed the agenda of the meeting

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held for deciding issue of recovery of dues from the Respondent No.1

and there is no detailed statement of account. It was further

contended that the Society has received Rs.17 crores from the

Developer at the time of re-development for which accounts is not

given. In the reply the Petitioner has produced minutes of the Special

General Body Meeting dated 13th March, 2016, Ledger Account in

respect of the Respondent No.1's flat for the relevant period. It was

contended that the periodic bills were raised on basis of the

resolutions passed by the Society from time to time. It was contended

that the bills were raised by the Authorised Officer and by the Society

during the period when it was in charge.

14. It is evident from the above, that the challenge to the authority

of the Committee members to file the recovery application was

suitably answered by producing the minutes of the Special General

Body Meeting. In event the Respondent No.1 disputed the resolutions

passed by the Society, the same should have been challenged by her

by filing Dispute under Section 91 of MCS Act. There is no such

challenge and thus the resolutions binds the Respondent No.1. The

ledger account was produced by the Society and what was required to

be considered was the quantification of the amount of arrears. The

Rules framed under the MCS Act confer vast powers on the

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authorities including the power to call for any relevant document.

Merely because the cross examination was not permitted under the

Rules would not entitle the authorities to decline to exercise

jurisdiction. Once the Resolutions passed by the Society as regards

the periodic payments to be made attained finality all that was

required was to ascertain the arrears due which could have been done

on the basis of the documents produced on record. There was no

question of deciding the validity of the resolutions.

15. If there is any dispute about the statement of account, it was

open for the Deputy Registrar to consider the documents and if it

finds that the claim raised by the Society is not supported by the

statement of accounts, the consequences would be dismissal of the

Recovery Application. However, it certainly cannot be said that the

moment the defaulter disputes the statement of accounts filed by the

Applicant-Society, the same would be outside the jurisdiction of the

Authority.

16. It is an admitted position that the Society is a registered Society

and is therefore enjoined to raise periodic bills upon the members

towards maintenance amount due from the members. In event upon

adjudication it is found that certain amounts were paid to the

association of flat owners, it would have been open for the authorities

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to consider the same while granting the recovery certificate. However,

in the present case, the authority on a preliminary objection of want

of jurisdiction has disposed of the Recovery Application. In an issue

seeking arrears what is only of importance is the quantification of the

arrears and the amount due which is within the jurisdiction of the

Authority under Section 101 of the MCS Act.

17. The decision in the case of Top Ten, a Partnership firm (supra),

on which the reliance is placed by the learned counsel appearing for

the Respondent Nos.1 and 4 has dealt with the provisions of Section

91 and Section 101 of the MCS Act in the context of to the

constitutional validity of Rule 86E of the Rules of 1961. It would be

profitable to reproduce paragraph 19 of the decision, which reads

thus:

"19. Thus very small types of disputes in which only limited question is of quantification of arrears due, is to be looked into by such Registrar while undertaking enquiry under section 101. Importance therefore, is to statement of accounts. The enquiry undertaken is only aimed at ascertaining whether amount disclosed in statement of accounts as arrears, is correct and due. The limited opportunity of defence is, therefore, extended to the the accounts borrower like petitioners. The correctness of amount shown as arrears can be verified from and from accounts of the society and from receipts produced by other side. Denial of cross-examination in this situation only shows legislative intent that if a

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genuine and disputed question of facts is found arising by the Registrar, he cannot proceed to resolve that question. The concerned society, in such circumstances, has to take recourse to filing of a dispute under section 91, where such disputed questions can be gone into. Hence, a bona fide defence being raised by a borrower or other person against whom such certificate is sought, cannot be resolved by the Registrar under this jurisdiction. If he finds such dispute arising, he has to deny the recovery certificate by passing appropriate judgment under Rule 86F.

In Ramchandra v. Collector, Nagpur (supra), the Division Bench of this Court has looked into the provisions of section 137. Section 137(1) was earlier a provision pari materia with provisions of section 101. Section 137(1) enables the Registrar to make such enquiry 'as he deems fit. Section 101 was also containing same phrase till 10- 5-2006. On that date, the said words have been replaced and Registrar, is obliged to conduct enquiry in such manner as may be prescribed. Thereafter, Chapter VIIIA has been added to 1961 Rules, prescribing the mode of enquiry. Thus, said Division Bench judgment is no longer relevant for interpreting the scheme of section 101. Paragraph 26 of this Division Bench judgment on which the petitioners have placed reliance, however, does not show any express finding about need of extending an opportunity of cross-examination. Moreover, there is no provision either in 1960 Act or in 1961 Rules, prohibiting such cross-examination in section 137 enquiry. This judgment, therefore, is of no assistance in present situation."

18. The Division Bench of this Court has held that the correctness of

the amount shown as arrears can be verified from the accounts of the

Society and from the receipts produced by the other side. It has

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further held that if the Registrar finds such dispute arising, he has to

deny the recovery certificate by passing an appropriate judgment

under Section 86F.

19. In the present case, it is not disputed that the Respondent

No.1 is the member of the Society and the Society is the registered

Society who is entitled to raise maintenance bills upon the members

and seek recovery thereof. In this case, the nature of dispute is

precisely which falls under Section 101 of the MCS Act.

20. The decision relied upon in the case of Kiran K Sharma And

Anr. (supra) was in the context where the penalty was imposed by the

Society for alleged commission of encroachment upon the common

space within the Society as well as interest on the amount of penalty.

It was in those facts that the learned Single Judge has held that the

provisions of Section 101 will be unavailable where such an amount

has been claimed. The facts of the case are distinguishable and does

not apply in the present case.

21. In the present case, it is not disputed that apart from the

recovery of arrears of maintenance there is no other amount which

has been claimed and therefore on the basis of the statement of

account and the defence pertaining to the quantification of the

amounts, the Authorities under the MCS Act could have quantified

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the arrears and issued the recovery certificate. In event the

Authorities came to a finding that the amount is not due or that there

are certain questions which are required to be adjudicated by leading

proper evidence, the Authority could have dismissed the Application

upon adjudication. However, one thing is clear that at the threshold,

the recovery application could not have been disposed of by the

Authorities for want of jurisdiction. Particularly, so when it is itself

admitted by the learned counsel for the Respondents that an

Application under Section 9A could not have been filed and that the

provisions of Section 9A of the CPC are not applicable. Although it is

sought to be contended that there was adjudication on merits, upon

perusal of the impugned order, it is clear that the authorities were

considering the application under Section 9A of CPC.

22. Coming to the Interim Application filed by the Respondent-

Applicant, the same was filed seeking dismissal of the Petition on the

ground that it has became infructuous. The contention raised was that

the amount which was claimed under the recovery certificate has

been paid on 22nd March, 2019. A reply has been filed by the Society

contending that the Respondent No.1 is a habitual defaulter and has

failed to pay the maintenance charges and as on 1 st May, 2024, the

balance payment including interest is in the sum of Rs.25,93,430.40.

To counter the maintenance claimed, the learned counsel for the

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Respondent No.1 would submit that it is admitted in the reply itself

that the luxury facilities is not made available and the Respondent

No.1 is enjoying the basic facilities. He submits that it is therefore

clear that all the facilities are not made available to the Respondent

No.1.

23. The Petition was required to be adjudicated in the context of

the exercise of jurisdiction by the authorities as it cannot be that

every time arrears of maintenance is sought to be recovered by the

Cooperative Housing Societies from the members, it becomes open

for the member to thwart the proceedings by raising malafide

disputes and contending that evidence is required to be led.

Relegating the Society to the remedy of Section 91 of the MCS Act in

wake of such malafide contentions of the defaulter render redundant

Section 101 of the MCS Act which is for the purpose of providing a

speedy remedy for recovery of the arrears due to the Society.

Particularly in case of the cooperative societies where the funds

collected from the members are utilized for maintenance of the

society and in event the society is relegated to the long drawn remedy

of filing a dispute under Section 91 of the MCS Act the Society will

have to suffer agony of a long drawn trial and in the meantime the

defaulter will continue to enjoy the basic facilities which would be

travesty of justice. It is for that reason that a speedy remedy has been

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provided under Section 101 of the MCS Act and the Authorities have

the jurisdiction to conduct a summary inquiry and quantify the arrears

of amounts which is due to the Society.

24. In light of the above discussion, the Petition is allowed.

25. The impugned order dated 3rd May, 2018 passed by the

Respondent No.3 is hereby quashed and set aside. The Recovery

Application is restored to the file of the Deputy Registrar.

26. It is open for the Respondent No.1 to place all necessary

materials before the Deputy Registrar to demonstrate that all the

amounts claimed by the Society have been paid by the Respondent

No.1.

27. By prayer clause (b) of the Interim Application, permission was

sought by Respondent No.4 to withdraw all amount deposited in this

Court vide order dated 22nd January, 2021.

28. With the consent of both the parties, the amount which has

been deposited in this Court is directed to be transferred to the office

of the Deputy Registrar, Cooperative Societies, K-East Ward, Mumbai.

The disbursement of the said amount will be subject to the outcome

of the Recovery Application.

[Sharmila U. Deshmukh, J.] (Corrected pursuant to the Speaking to the Minutes of the order dated 13/08/2024).

16 of 16 Signed by: Sanjay A. Mandawgad Designation: PA To Honourable Judge Date: 16/08/2024 10:43:41