Woods Beach Hotels
Ltd. Vs. Mapusa Urban Co-Op. Bank of Goa Ld.& Ors.  INSC 614 (24
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)
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
3. The relevant facts
leading to the filing of this appeal as emerging from the records of this case
have been succinctly 1 referred here for the better understanding and
determination of the instant appeal. The MAPUSA Urban Cooperative Bank of Goa
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.
(here in after
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 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 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
4 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 5 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
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, 6 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 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 8 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 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
(b) In default of
making the deposit, as mentioned herein above, the interim order, as granted,
shall automatically stand vacated.
(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.
..............................J. [TARUN CHATTERJEE]
[HARJIT SINGH BEDI]