TaxTMI 
TaxTMI 
2025 (3) TMI 691
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....bhishek Kale, Mr. Vivek Dwivedi, Mr. Nevil Chopra, Mr. Aditya Khare and Ms. Rebecca Singh i/b. M/s. Naik Naik and Co. For the Respondent No.1: Dr. Virendra Tulzapurkar, Senior Advocate with Mr. Mandar Soman, Ms. Shruti Maniar, Ms. Shivani Bhandary and Ms. Kashmita Belwalkar i/b. M/s. Solomon and Co. For the Respondent No.4: Mr. Suresh Yadav with Mr. Avinash Khondkar and Ms. Khushbu Bhansali. For the Respondent-State: Mr. P.V. Nelson Rajan, AGP. For the Respondent-State: Ms. Savina R. Crasto, AGP in RPW/85/2024 & IA/10662/2024. JUDGMENT: A. THE CHALLENGE 1) Liquidator of Vasantdada Shetkari Sahakari Bank Ltd. (the Bank) has filed Interim Application No. 13400 of 2024 seeking recall of order dated 21 October 2022, which is passed in view of Minutes of Order dated 20 October 2022. Review Petition No. 85 of 2024 is filed by Mr. Amit Prabhakar Kore, suspended director of M/s. Shaila Clubs & Resorts Private Limited (Shaila Clubs) seeking review of Order dated 21 October 2022. Shaila Clubs has filed Review Petition No. 38 of 2023 seeking review of the Order dated 21 October 2022. 2) Thus, the Interim Application and the two Review Petitions essentially seek either ....
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....ing the Magistrate's order dated 22 October 2018. By order dated 20 December 2018, this Court granted interim stay to the Magistrate's order on condition of deposit of amount of Rs.50,00,000/- by Savannah. It appears that Savannah filed application bearing C.C. No.1052/MA/2019 before the Chief Metropolitan Magistrate seeking recall of the order dated 22 October 2018. The application was however rejected by the learned Magistrate by order dated 19 June 2019. Savannah filed Writ Petition No. 7542 of 2019 before this Court challenging Magistrate's order dated 19 June 2019. For showing bona fides, Savannah was made by this Court to deposit an amount of Rs. 2 crores. On condition of such deposit, this Court stayed possession order passed by the learned Magistrate. By order dated 17 January 2020, Writ Petition No. 7542 of 2019 was allowed by setting aside Magistrate's order dated 19 June 2019 and the matter was remanded before the learned Magistrate for fresh decision in accordance with law. The learned Additional Chief Metropolitan Magistrate thereafter passed order dated 4 March 2020 once again dismissing Savannah's application for recall of the order dated 22 October 2018 holding that....
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....the Minutes of Order. This Court accordingly disposed of Writ Petition No. 11610 of 2022 by taking on record the Minutes of Order dated 20 October 2022 in terms thereof. 7) It appears that the suspended director of Shaila Clubs Mr. Amit Kore complained to the Liquidator vide letter dated 17 November 2022 objecting to assignment of loan of Shaila Clubs to Savannah. The Bank addressed letter dated 17 November 2022 to the Resolution Professional requesting him not to act on the Minutes of Order and asserting that the mortgaged property of Shaila Clubs was still with the Bank. The Bank thereafter wrote to Shaila Clubs on 18 November 2022 referring to the objections of Mr. Amit Kore and stating that the OTS offered to Savannah has been cancelled and returning the amount of Rs. 87,92,000/- to Savannah. However, Savannah refused to accept the demand drafts. The Liquidator also filed an affidavit in Writ Petition No. 11610 of 2022 bringing on record the subsequent events and recorded that the decisions to offer benefit of OTS scheme to Savannah and to enter into consent terms were incorrect. 8) On the strength of the Order dated 21 October 2022 passed by this Court in terms of the Mi....
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....ave stepped into the shoes of the Bank and became transferee of loan account of the Shaila Clubs by paying paltry sum of Rs. 87,92,000/-. That as on the date of filing of Minutes of Order, the total dues of Shaila Clubs to the Bank were to the tune of Rs. 8,97,73,098/- whereas Savannah paid total amount of Rs. 3,37,92,000/- and has become transferee in respect of the loan account with right to recover the entire loan amount from Savannah by dealing with the mortgaged assets of Shaila Clubs. Mr. Seervai would submit that under the Reserve Bank of India Directives, a private party cannot be permitted to be a transferee in respect of NPA loan account of a Bank. He would rely upon Reserve Bank of India (Transfer of Loan Exposures) Directions, 2021 (RBI Directives) issued under the provisions of Sections 21 and 35A of the Banking Regulations Act, 1949 in support of his contention that the only entities listed in Clause (3) of the RBI Directives could be recognised and eligible transferees in respect of a loan account. That it is not lawful for the Bank to transfer loan account in favour of a private entity under the RBI Directives. He would also rely upon GR dated 6 June 2022 in support....
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....l, would not prevent this Court from exercising inherent power of recalling its order. That inherent power of recall of order need not be conferred and cannot be circumscribed by considerations of delay. In support of his contention, he would rely upon the following judgments: (i) Annada Prasad Mitra V/s. Sushil Kumar Mandal 1941 SCC OnLine Cal 210. (ii) Somar Bhuiya and Ors. V/s. Kapil Kumar Gautam and Ors. 1974 SCC OnLine Pat 95. (iii) Pooranchand Mulchand Jain V/s. Komalchand Beniprasad Jain 1961 SCC OnLine MP 74. (iv) M.M. Thomas V/s. State of Kerala and Another (2000) 1 SCC 666. (v) State of Maharashtra V/s. Digambar (1995) 4 SCC 683. 14) Mr. Seervai would further submit that Savannah has admitted in the Affidavit-in-Reply that it is not an eligible transferee for transfer of loan under the RBI Guidelines. That Savannah's claim of Liquidator taking independent commercial decision of entering into OTS scheme is baseless as Minutes of Order ultimately result in transfer of loan to any eligible transferee, which is completely unlawful. Mr. Seervai would accordingly pray for recall of the order dated 21 October 2022. 15) Mr. Nanka....
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....eiver to realise the remaining assets and actionable claim. That only custodian or receiver can sue or defend any disputes at the end of liquidation proceedings. He would rely upon judgment of this Court in Ashok Kisanrao Hande and Anr. V/s. The State of Maharashtra and Ors. Writ Petition No.5215 of 2012, decided on 25 March 2019. 18) In support of his contention that the maximum period prescribed under Section 109 of the MCS Act cannot be extended under any circumstances, he would submit that the judgment of the Apex Court in Goa State Cooperative Bank Limited (supra) is clearly distinguishable as the same involved the issue of right of the Bank to continue with recovery proceedings from defaulting members upon completion of period of liquidation. That in the present case, such right can be exercised only by Registrar himself or by custodian or receiver appointed by him. That in any case, the Liquidator does not have authority to represent the Bank and file the instant Interim Application. 19) Dr. Tulzapurkar would further submit that there is absolutely nothing illegal or unlawful in the arrangement agreed between the Bank and Savannah. That the Liquidator of the Bank has t....
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....lity in the compromise, the application for recall as well as review of order dated 21 October 2022 deserve to be dismissed. He would submit that interim application for recall as well as review petition of suspended director of Shaila Clubs otherwise suffer from gross delay and on that ground alone, they are liable to be dismissed. 22) In rejoinder, Mr. Seervai would submit that admittedly in the present case, no formal order is passed as mandated under Section 109 of the MCS Act by Registrar for termination of liquidation proceedings and discharging the Liquidator. That the Liquidator therefore continues to be incharge of the Bank. That the liquidator has various statutory and other duties qua the Applicant as set out in Section 105 of the MCS Act. He would further submit that the judgments cited by the Dr. Tulzapurkar are only on the point of period of liquidation of 15 years being mandatory and not on authority for the proposition that liquidation proceedings stand terminated without an order of the Registrar under Section 109 of the MCS Act. That the deeming fiction under Section 109 of the MCS Act can apply only once an actual order of the Registrar is passed for termin....
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....rit Petition No. 11610 of 2022 is disposed of in terms of Minutes of Order dated 20 October 2022, it would be apposite to reproduce the said Minutes as well- MINUTES OF ORDER 1. The Petitioner and Respondent No. 1 and 2 have settled their disputes out of Court. 2. By an order dated 28th of July 2022, the learned Deputy Registrar (Ur- ban Banks), Cooperative Societies, Maharashtra State, Pune, has extended the application of the One Time Settlement Scheme dated 6th of June 2022 to the Respondent No. 2 Bank. Accordingly, among other defaulters, Respondent No. 2 has offered the benefits of the same to Respondent No. 3 as also to the Petitioner since the Petitioner is in possession of the Premises. As against the actual dues of INR 8,97,73,098/- as of today, after the credit of INR. 2,50,00,000/- by the Petitioner under orders passed by this Hon'ble Court, the Petitioner has offered to deposit a further sum of INR. 87,92,000/-only. 3. Accordingly, the Petitioner has paid to the Respondent No. 2 amounts towards regularisation of NPA loan amount of Respondent. A. Bankers Cheque No. 920861 dated 2nd September 2022 drawn on SBI Bandra West branch in f....
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....ed application before the learned Magistrate seeking recall of Order dated 22 October 2018. After its recall application was rejected by the learned Magistrate by order dated 19 June 2019, Savannah filed Writ Petition No. 7542 of 2019 in this Court and deposited amount of Rs.2,00,00,000/- with the Liquidator. Earlier Savannah had deposited amount of Rs. 50,00,000/- in Writ Petition No. 14517 of 2018. This is how Savannah deposited total amount of Rs.2.50 crores with the Liquidator for the purpose of protecting its possession of Shaila Clubs' property. 28) As observed above, Savannah is not the owner of Shaila Clubs' property but was armed with merely a Conducting Agreement executed in its favour by Shaila Clubs and had right to manage Shaila Clubs' property for 15 years upto November 2022. For protecting property of the Club under its management, Savannah paid amount of Rs. 2.50 Crores to the Liquidator, which was actually supposed to be paid by Shaila Clubs. Savannah succeeded in Writ Petition No. 7542 of 2019 and proceedings were remanded before the learned Magistrate for being decided afresh. The learned Magistrate however, refused to recall earlier order dated 22 October 201....
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....355;विण्यात येते की, आमचे बँकेने शाखा ना. म. जोशी मार्ग, मुंबई येथून कर्जदार मे. शैला क्लब् अँड रिसॉर्ट प्रा. लि. यांना व्यवसायासाठी तारणी मध्यम मुदत कर्ज रक्कम रू.४,७५,००,०००/- इतके अदा केलेले आहे. बँकेने सदर फर्म कड....
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....42;ाखल केलेला आहे. या दाव्यातील निकालाप्रमाणे आपण वेळोवेळी मे. शैला क्लब अँड रिसॉर्ट प्रा.लि यांचे बँकेच्या कर्जखातेवर जवळपास रू.२.५० कोटी इतकी रक्कम जमा केलेली आहे. बँकेस मा. सहकार आयुक्त व निबंधकसो, सहकार&....
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....2;त करणे आवश्यक आहे. त्यामुळे आपण कर्जदाराच्या वतीने रक्कम जमा करून कर्जखाते निरंक करावे. टिप :- यापुर्वी आपण कोर्ट आदेशाप्रमाणे कर्जखातेवर रक्कम जमा केली असलेने आपणास विनंती बजा हे पत्र देणेत येत आहे. सद....
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....mpleted for the bank going into liquidation. It is necessary to return the amount of depositors as early as possible. Therefore, by depositing the amount on behalf of the borrower, clear the loan account. PS: As you have earlier deposited the amount on the loan account as per the order of the court, you are being given this request letter. This letter should not be taken as legal in nature. Sd/- Mrs. Smruti Patil Liquidator Vasantdada Shetkari Sahakari Bank Ltd, Sangli 30) Savannah expressed willingness to pay amount of Rs. 77,16,350/- suggested by the Liquidator but did not agree for closure of the loan account. Savannah instead requested the Bank to assign loan with all securities, rights and benefits to it. The counter offer made by Savannah reads thus: Date: 11/08/2022 To. The Official Liquidator Vasantdada Shetkari Sahakari Bank, Sangli Miraj Road, Sangli-416 416 Email: [email protected] Kind Attn: Ms. Smruti Patil (Liquidator) Dear Madam, Sub.: Reply to your letter dated 6th August 2022 addressed to Savannah Lifestyle Private Limited. ....
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....ue to your Bank, a Recovery Certificate came to be is- sued on 23rd February 2012 by the Deputy Registrar, Co-operative Societies, State of Maharashtra, against Shaila Clubs and Resorts Private Limited for an amount of INR 5,11,51,489 (Indian Rupees Five Crores Eleven Lakhs Fifty-One Thousand Four Hundred Eighty-Nine) under which your Bank was entitled to execute the Recovery Certificate and recover its outstanding dues from Shaila Clubs and Resorts Private Limited. We request you to kindly cooper- ate in executing necessary documents or making an application to the relevant authorities for transfer of the said Recovery Certificate in favour of Savannah Lifestyle or the said third party along with the charge on the club premises. 6. We can also file Consent Terms in Writ Petition No. 5289 of 2020 which has been filed by Savannah Lifestyle Private Limited, before the Hon'ble Bombay High Court. 7. Awaiting your confirmation of the aforesaid, we shall proceed with depositing the said amount with your Bank by way of Demand Draft as per the offer made by your Bank vide letter dated 06/08/2022 in the said letter. Sincerely, Savannah Lifestyle Private L....
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....e Debtor, i.e. Shaila Clubs, a party to any such OTS particularly given that Shaila Clubs is the "Borrower" under the loan documents and the erstwhile directors who are the Guarantor/s of the loan availed from Bank. It has now been brought to our notice, vide the captioned Intervention Application, that the OTS has been concluded with Savannah Lifestyle Private Limited ("Savannah Lifestyle"), a third party who has absolutely nothing to do with the loan availed of by Shaila Clubs. As you are well aware, the Company, i.e. Shaila Clubs, despite being a necessary party, was not even a party to the proceedings in the Bombay High Court. 3. In fact, it is due to Savanna Lifestyle defaulting on its obligations under its Conducting Agreement with Shaila Clubs, and their illegal occupation of the Shaila Clubs' property, that Shaila Clubs' account has become an NPA. You are well aware of the aforesaid, given the fact that Shaila Clubs, as well as the Bank, have had several litigations with Savannah Lifestyle over the past 15 years and against whom there is an FIR registered for forgery of a document for gaining illegal admission into the Committee of Creditors. 4. Given ....
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....rs Truly, Amit Kore Erstwhile Director of Shaila Clubs and Resorts Private Limited 33) On account of raising of objection by Shaila Clubs, the Liquidator of the Bank decided to resile from the compromise executed with Savannah and sent letter dated 18 November 2022 to the Managing Director of Savannah which reads thus: जावक क्र. : जा.क्र.व्हीएसएसबी / वसुली विभाग/२०२२-२३/५८/१८२ दिनांक : १८/११/२०२२ प्रति, मा. मॅनेजिंग डायरेक्टर, ने. सावनाह लाईफस्टाईल प्रा.लि.. १६४ हिë....
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....5;२०८६४ व . रू. ६५०/- RTGS ने जमा केलेल्या होत्या. परंतु, मे.शैला क्लब अँड रिसॉर्टस् प्रा.लि. हे बँकेकडील मुळ कर्ज खाते आहे व त्याचे संचालक अमित प्रभाकर कोरे यांनी दि. १७/११/२०२२ रोजी बँकेकडे सदर कर्जखातेबाबत हरकत नो....
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....;्द करणेत येत आहे. त्यामुळे आपण भरलेली ने. शैला क्लब अँड रिसॉर्टस् प्रा.लि. यांचे कर्जासाठीची OTS ची रक्कम बैंक आपले कंपनीचे नांवाने स्टेट बैंक ऑफ इंडीया, मुंबई वरील DD No.119938 र.रू.७७.१६.३५०/- ने व DD No.119937 ८.रू.१०,७५,०००/- व DD No.119936 रू. ६५०....
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....said Scheme. The Respondent No. 1 also offered to the Petitioner the benefit of the said Scheme , being the occupant the disputed premises which are mortgaged to Respondent No.1 4. The Petitioner came forward and accepted the terms of the said OTS Scheme and offered to pay a sum of Rs. 87,92,000/- for the settlement of the loan account of the Respondent No. 3. The Respondent No. 1 accepted the said offer of the Petitioner and entered consent terms, based thereon, in the present Writ Petition. I crave leave to refer to and rely upon the correct copy of the said consent terms and the order of this Hon'ble Court dated 21 of October 2022 as and when necessary. 5. I say that after the disposal of the present Writ Petition as aforesaid, the Respondent No. 3 has objected to the acceptance of the offer of the Petitioner to settle its loan account by letter dated 17 of November 2022. Hereto annexed and marked as Annexure A - 1 is the copy of the said letter dated 17 of November 2022. 6. After examination of the objections/letter dated 17 of November 2022, issued by the Respondent No. 3, the provisions of the law and after examining the file in that context, I have....
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....rpose of deciding the question, unless the Court, for reasons to be recorded, thinks fit to grant such adjournment. Explanation. An agreement or compromise which is void or voidable under the Indian Contract Act, 1872 (9 of 1872), shall not be deemed to be lawful within the meaning of this rule. 36) Thus, the Court is required to record a satisfaction that the Suit has been adjusted by a lawful agreement or compromise in writing and signed by the parties. Thus, for compromise of a suit under provisions of Order XXIII Rule 3 of the Code, the agreement or compromise must be lawful. It is Bank's contention that the transaction of assignment of Shaila Clubs' loan to Savannah is unlawful and is prohibited by the RBI Directives. 37) Sections 21 of the Banking Regulation Act, 1949 (Act of 1949) confers power on the Reserve Bank of India to control advances by the banking companies and provides thus: 21. Power of Reserve Bank to control advances by banking companies.- (1) Where the Reserve Bank is satisfied that it is necessary or expedient in the public interest [or in the interests of depositors] [or banking policy] so to do, it may determine the policy i....
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....y banking company in particular, it may, from time to time, issue such directions as it deems fit, and the banking companies or the banking company, as the case may be, shall be bound to comply with such directions. (2) The Reserve Bank may, on representation made to it or on its own motion, modify or cancel any direction issued under sub-section (1), and in so modifying or cancelling any direction may impose such conditions as it thinks fit, subject to which the modification or cancellation shall have effect. 40) In exercise of powers under Sections 21 and 35A of the Act of 1949, RBI issued 'Master Directions-Reserve Bank of India (Transfer of Loan Exposure) Directions, 2021' on 24 September 2021. Under Clause 3 of the Directives, the same applies to various entities enumerated therein, which are collectively referred to as 'lenders' throughout the Directives. Clause 3 of the Directives provides thus: 3. The provisions of these directions shall apply to the following entities (collectively referred to as lenders in these directions), unless specified otherwise: (a) Scheduled Commercial Banks; (b) Regional Rural Banks; (c) Primary (Ur....
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....4 of the Directives, the transfer of stressed loans is permitted only to the permitted transferees and asset reconstruction companies. Clause 54 reads thus: 54. In general, lenders shall transfer stressed loans, including through bilateral sales, only to permitted transferees and ARCs 44) Thus, under the 2021 Directives issued by the RBI, the lenders enumerated in Clause 3 thereof can transfer the stressed assets only to the lenders specified under sub-clauses (a), (d), (e) and (f) of Clause 3, which includes Scheduled Commercial Banks, Financial Institutions, Small Finance Banks and NBFCs. 45) The term "stressed asset" is defined under Clause 9 (k) as under: (k) "stressed loans" mean loan exposures that are classified as non- performing assets (NPA) or as special mention accounts (SMA); 46) Thus, under the Directives 2021 issued by the RBI, it was impermissible for the Applicant-Bank to transfer the loan of Shaila Clubs to any entity other than the ones enumerated in sub-clauses (a), (d), (e) and (f) of Clause 3. This is the reason why the Applicant-Bank as well as Shaila Clubs contend that the compromise entered into between the Bank and the Savannah is....
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.... 11 of the RBI directives assists the case of Savannah. All that Clause 11 provides is that loan transfer would result in transfer of economic interest without being accompanied by any change in underlying terms and conditions of the loan contract and in all cases where there are any modifications in the terms and conditions of the loan contract during or after transfer, the same shall be evaluated against the definition of the term "restructuring" provided in Paragraph No.1 of the Annexure to Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated 7 June 2019. Dr. Tulzapurkar has placed on record copy of the said Prudential Directions, 2019 which again does not assist the case of Savannah in any manner. All that Clause 11 provides is that there would be no change in the terms and conditions of loan contract upon transfer of loan and whenever such terms or conditions are modified, the same shall be evaluated against definition of the term 'restructuring' in Prudential Directions. Thus, Prudential Directions apply for limited purpose of definition of the term 'restructuring' that too when there are modification of terms and conditions in....
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....53) Judgment of the Apex Court in Suleman Noormohamed (supra) is relied upon by Mr. Seervai in support of his contention of unlawful compromise. The Apex Court has dealt with the issue of eviction for the tenant on the basis of compromise where the tenant opposed execution of the decree on the ground that the decree was nullity as the compromise, in absence of making out the ground for eviction under rent control legislation, was itself unlawful. The Apex Court held in paragraphs No. 8 as under: 2. It is not necessary to review again and again all the earlier judgments of this Court on the point. It will be sufficient to refer only to two, namely, Nagindas Ramdas v. Dalpatram Ichharam alias Brijram [(1974) 1 SCC 242 : (1974) 2 SCR 544] - a judgment which is noticed by the High Court also in its order under appeal and the case of Roshan Lal v. Madan Lal [(1975) 2 SCC 785 : (1976) 1 SCR 878] . 3. It was pointed out in Nagindas case by one of us (Sarkaria, J.) that the existence of one of the statutory grounds mentioned in Sections 12 and 13 of the Act, as in the case of other similar States Statutes, is a sine qua non to the exercise of jurisdiction by the Rent Cour....
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.... the context of the pleadings and other materials in the case, that the agreement is lawful, as in any other suit, so in an eviction suit, the Court is bound to record the compromise and pass a decree in accordance therewith. Passing a decree for eviction on adjudication of the requisite facts or on their admission in a compromise, either express or implied, is not different." (emphasis added) 54) The Apex Court has adversely commented upon practice followed in this Court disposing of matters by accepting the Minutes of Order. In Ajay Ishwar Ghute (supra), the Court referred to its judgment in Speed Ways Picture Pvt. Ltd. v. Union of India (1996) 6 SCC 705 and held in paragraph Nos. 16 to 20 as under: 16. Now, we deal with the concept of "Minutes of Order", which is peculiar only to the Bombay High Court. This Court, in the case of Speed Ways Picture Pvt. Ltd. v. Union of India1 had an occasion to consider the practice of passing orders in terms of "Minutes of Order". Paragraphs 5 and 6 of the said decision reads thus: "5. The basis upon which the review petition was decided is, in our view, not correct. Counsel for the appellants and the respondents p....
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....tes of Order". While passing an order in terms of the "Minutes of Order", the Court must record brief reasons indicating the application of mind. 18. For the convenience of the Court and as a matter of courtesy, the advocates draft "Minutes of Order" containing what could be incorporated by the Court in its order. Perhaps this practice was evolved to save the time of the Court. The advocates who sign and tender the "Minutes of Order" have greater responsibility. Before they sign the "Minutes of the order", the advocates have an important duty to perform as officers of the Court to consider whether the order they were proposing will be lawful. They cannot mechanically sign the same. After all, they are the officers of the Court first and the mouthpieces of their respective clients after that. 19. Even if parties file consent terms, while accepting the consent terms in terms of Rule 3 of Order XXIII of the Civil Procedure Code, 1908, the Court is duty-bound to look into the legality of the compromise. The Court has the jurisdiction to decline to pass a consent order if the same is tainted with illegality. However, an order passed by the Court in terms of compromise ....
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.... it actually travels beyond the scope of mere Minutes of Order and partakes character of consent terms between the Bank and Savannah. However irrespective of whether it is to be treated merely as Minutes of Order or whether it is to be construed as consent terms entered between Bank and Savannah, it must pass the muster of being a lawful order or a lawful compromise. 57) I have held above that the arrangement agreed between the Bank and Savannah is not only unlawful and it directly affects the rights of Shaila Clubs and could not have been accepted by this Court for disposing the Writ Petition No. 11610 of 2022. What has happened in the present case is that Writ Petition No. 11610 of 2022 filed challenging the order of the learned Magistrate relating to execution of possession warrant in pursuance of recovery certificate has been disposed of by settling the loan account of Shaila Clubs with a third party viz. Savannah. It was therefore otherwise questionable whether the loan account of Shaila Clubs could have been settled in the light of issue involved in the Writ Petition No. 11610 of 2022. But in any case, such settlement of loan account can never be without the consent of Sha....
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.... does not have the jurisdiction to declare that the compromise effected through the Minutes of Order accepted by this Court is unlawful. NCLT would always treat the Minutes of Order, with seal of this Court, to be lawful. It is therefore necessary that the order dated 21 October 2022 is recalled. 59) Savannah has strongly objected to the locus standi of the Liquidator to file Interim Application No.13400 of 2024. Reliance is placed on provisions of Section 109 of the M.C.S. Act, under which the maximum permissible period during which liquidation proceedings can be continued is 15 years. Section 109 of the MCS Act provides thus :- 109. Termination of liquidation proceedings (1) The winding up proceedings of a society shall be closed as soon as practicable within six years from the date the Liquidator takes over the custody or control of all the property, effects and actionable claims to which the society is or appears to be entitled and of all books, records and other documents pertaining to the business of the society, under sub-section (2) of section 103), unless the period is extended by the Registrar or the Government: Provided that, the Registrar s....
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....s, namely: (1) The appointment of the Liquidator shall be notified by the Registrar in the Official Gazette. (2) As soon as may be after the interim order is issued under Section 102,the Liquidator shall take over the custody and control of all the property, effects and actionable claims and books, records and other documents pertaining to the business of the society and continue to hold custody and control thereof until the interim order is vacated. (3) Where the interim order is vacated, the Liquidator shall take action in accordance with the provisions of sub-section (6) of Section 103. (4) Where the Liquidator receives the Registrars final order confirming the interim order, the Liquidator shall publish by such means as he may think proper a notice requiring all claims against the society to be notified to him within two months of the publication of the notice and shall thereafter proceed to take such further action as he is empowered to take under the Act. All liabilities recorded in the account books of the society shall be deemed ipso facto to have been duly notified to the Liquidator under this rule. (5) The Liquidator shall, aft....
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....istrar and he shall on such removal be bound to hand over all the property and documents relating to the society in liquidation to such person or persons as the Registrar may direct. (15) (i)The Liquidator shall not exercise the powers under clauses (c), (d), (e), (f, (g), (h) and (k) of Section 105 without the prior approval of the Registrar. (ii) An appeal against the order of the Liquidator under clauses (a), (b), (i), (j),(l), (m) and (n) of Section 105 shall lie to the Registrar. (16) The Liquidator shall keep such books and accounts as may from time to time be required by the Registrar. (17) At the conclusion of the liquidation proceedings, a general meeting of the members of the society shall be called. At such meeting, the Liquidator shall summarise his proceedings, point out causes of the failure of the society, and report what sum, if any, re- mains in his possession after meeting all the liabilities of the society as determined under the rules and suggest how the surplus, if any, should be utilised. (18) At the conclusion of the liquidation proceedings, unrealized assets and unrealized actionable claims, if any shall vest in t....
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....under: 18. It is apparent from the facts of the instant case that the winding up of the Society has been ordered and the Liquidator has been appointed as the Society has utterly failed to achieve its avowed objectives in disbursement of loans to proper persons and in its recovery. No doubt about it that the liquidation of the Society has come to an end after a particular period of time as fixed under Section 109. However, on lapse of time as fixed under sub-section (1) of Section 109 of the Act, proceedings have to be terminated by the Registrar on receipt of final report from the Liquidator as ordered under Section 109(2). However, at the same time, the Registrar has power to extend the period of 6 years fixed under Section 109(1), not exceeding one year at a time and four years in the aggregate, and maximum for 10 years. In case time is not extended, the winding up comes to an end on the expiry of 6 years or at the end of the extended period. The total period can be 10 years. The second proviso to Section 109 makes it clear that if the Registrar comes to a conclusion that the work of liquidation could not be completed by the Liquidator due to the reasons beyond his contr....
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....ity of the members for the loans cannot be said to have been wiped off. The disbursement of loan in an arbitrary manner and failure to recover was the very fulcrum on the basis of which winding up of the Society was ordered. 63) On the other hand, Dr. Tulzapurkar has relied upon judgment of Division Bench of this Court in Ashok Kisanrao Hande (supra) in which it is held in paragraph No. 7 and 17 to 19 as under :- 7. It is mentioned in the Petition that the extension was granted for liquidation proceeding on 10/12/2009 for a period of one year. The Petitioner has made reference to the proceedings in the Small Causes Court, in respect of premises of which M/s. Sunrise was landlord. The premises of the said bank was in the possession of the liquidator. It is prayed in this Petition that the letters dated 07/04/2012 and 19/04/2012 denying further extension be set aside. The letter dated 19/04/2012 is the letter issued by the Government of Maharashtra to the Commissioner for Cooperation and Registrar Cooperative Societies for approaching the Assistant Government Pleader, High Court to file appropriate affidavit in WP No.315/12 pointing out the rejection of extension for liqu....
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.... of the surplus kept at his disposal. 64) In my view, considering the peculiar facts and circumstances of the case, it is not really necessary to delve deeper into the aspect of Liquidator's authority to file and maintain Interim Application No.13400 to 2024. Even if it is technically held that the Liquidator did not have authority to file Interim Application No. 13400 of 2024 as on 21 August 2024, Savannah would still have to face Review Petition No. 85 of 2024 filed by Shaila Clubs. The real issue involved in the present case is whether the compromise is lawful and whether the order dated 21 October 2022 deserves to be recalled and /or reviewed. After having arrived at the conclusion that compromise is unlawful and the order passed by this Court on 21 October 2022 deserves to be recalled, I am not inclined to entertain the technical plea sought to be raised by Savannah about Liquidator's locus to file Interim Application for recall, especially in the light of the fact that the order is otherwise reviewable on application filed by Shaila Clubs and its suspended director. 65) On the issue of delay in filing of Interim Application No.13400 of 2024 and in filing the two Review ....