# U.O.I v. M/S D.V. Poultry Farm & Ors

- **Citation:** (2023) 12 ILRA 631
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-12-20
- **Case number:** Writ-C No. 3820 of 2019
- **Bench:** Vivek Chaudhary, Manish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/u-o-i-v-m-s-d-v-poultry-farm-ors-49493
- **Pages:** 11

## Headnote

A. Civil Law - U.P. Co-operatives Societies
Act,1965-Section 70-the respondent no. 1
approached the petitioner -Bank for cash
credit for running a poultry unit-proprietor
of respondent no. 1 made default in
payment of loan amount-the respondent
no. 2/ Society initiated proceedings not in
pursuance of any arbitration agreement
but under section 70 of the act,1965
which too is not applicable to the
Petitioner Bank, who is an outsiderSection 70 does not empower the society
to adjudicate the dispute pertaining to
loan taken by the borrower from the Bank
as the petitioner bank is neither the
member of society nor the member of the
Committee of Management-the petitioner
bank rightly initiated the proceedings
against the respondent no. 1/borrower
under the Act,2002-In the present case,
the dispute is between the bank and
borrower-Hence,
the
impugned
order
passed
by
the
society
against
the
petitioner bank is without jurisdiction as
the provisions of the Act,1965 are not
applicable upon the petitioner bank.(Para
1 to 37)

The writ petition is allowed. (E-6)

List of Cases cited:

M/s M.D Frozen Foods Exports Pvt Ltd. Vs Hero
Fin Corp. Ltd. (2017) 16 SCC 741

## Text

12 All. U.O.I. Vs. M/S D.V. Poultry Farm & Ors.
631
taking steps for sensitizing lawyers for not
carrying Arms in the Court Premises.
----------
(2023) 12 ILRA 631
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 20.12.2023

BEFORE

THE HON'BLE VIVEK CHAUDHARY, J.
THE HON'BLE MANISH KUMAR, J.

Writ-C No. 3820 of 2019

U.O.I. ...Petitioner
Versus
M/S D.V. Poultry Farm & Ors.
 ...Respondents

Counsel for the Petitioner:
Maneesh Pandey, A.K. Saxena, Samarendra
Kumar, Vishwas Saraswat

Counsel for the Respondents:
Ratnesh Chandra, Gautam Kumar, Girish
Kr. Srivastava, Pradumn Shukla, Radhey
Krishna Tiwari, Vinay Kant Shukla, Vinod
Kumar Singh

A. Civil Law - U.P. Co-operatives Societies
Act,1965-Section 70-the respondent no. 1
approached the petitioner -Bank for cash
credit for running a poultry unit-proprietor
of respondent no. 1 made default in
payment of loan amount-the respondent
no. 2/ Society initiated proceedings not in
pursuance of any arbitration agreement
but under section 70 of the act,1965
which too is not applicable to the
Petitioner Bank, who is an outsiderSection 70 does not empower the society
to adjudicate the dispute pertaining to
loan taken by the borrower from the Bank
as the petitioner bank is neither the
member of society nor the member of the
Committee of Management-the petitioner
bank rightly initiated the proceedings
against the respondent no. 1/borrower
under the Act,2002-In the present case,
the dispute is between the bank and
borrower-Hence,
the
impugned
order
passed
by
the
society
against
the
petitioner bank is without jurisdiction as
the provisions of the Act,1965 are not
applicable upon the petitioner bank.(Para
1 to 37)

The writ petition is allowed. (E-6)

List of Cases cited:

M/s M.D Frozen Foods Exports Pvt Ltd. Vs Hero
Fin Corp. Ltd. (2017) 16 SCC 741
(Delivered by Hon'ble Vivek Chaudhary, J.
&
Hon'ble Manish Kumar, J.)

1. Present petition has been preferred
by the petitioner-Bank for quashing of the
impugned order dated 23.10.2018 passed
by the respondent no. 3-Mediator/Assistant
Housing Commissioner/Assistant Registrar,
Avas and Vikas Parishad, 104, Mahatma
Gandhi Marg, Lucknow under Section 70
of the U.P. Co-operative Societies Act,
1965 hereinafter referred to as ( the
Act,1965) by which the respondent no. 3
had directed the respondent no. 1-Shri
Dharamveer Sharma, the proprietor of M/s
D.V. Poultry Farm (Mortgagor) to contact
the Bank (present petitioner) for payment
of loan in accordance with law. It was
further directed to the respondent no. 2/
Bank (present petitioner) to release the Plot
No. C-120 and give physical possession to
Shri Dharamveer Sharma- proprietor of
respondent no. 1 in the present writ
petition.

2. The brief facts of the case are that
Mr. Dharamveer Sharma, the proprietor of
respondent no. 1 purchased a plot no. C120 admeasuring area 248.33 Sq. Yards
from respondent no. 2- Air Force Hindon
Co-operative Housing Society Limited,
Defense Colony Bhopura, Ghaziabad.
632 INDIAN LAW REPORTS ALLAHABAD SERIES

3. The respondent no. 1 approached
the petitioner-Bank for cash credit facility
of Rs. 30 Lac for working capital
requirements of running a poultry unit and
Term Loan of Rs. 110 lac for construction
of
poultry
shed
and
installation
of
machinery. The request of respondent no. 1
was considered by the petitioner-Bank and
the aforesaid limits were sanctioned to the
respondents on certain terms and conditions
stipulated in C.S.I. dated 25.10.2011.

4. The respondent no. 1 had again
approached the petitioner Bank for another
Term Loan Facility of the Rs. 24 lac for the
purpose of construction of poultry shed at
Village Pelokhurd, Tehsil Behat, District
Saharanpur, U.P., which was sanctioned by
the petitioner-Bank on 13.09.2012.

5. The aforesaid Cash Credit Limit
Facility and Term Loan Facility were
secured by mortgage of properties i.e. land
admeasuring area 0.646 hectare out of
Khasra No. 280/282/292 and Rakba No.
0.779/0.287/0.041,
Mauza-Pelokhurd,
Tehsil Behat, District Saharanpur, U.P. and
also House No. C-120 built on Plot
admeasuring area 248.33 square yards,
situated in Village Brahmpura(Bhopura),
Pargana-Loni,
Tehsil
and
District
Ghaziabad known as Defense Colony
(Hindon), Ghaziabad, U.P which is subject
matter in present dispute.

6. The proprietor of respondent no. 1
made default in payment of loan amount
due to which the loan account of the
proprietor of respondent no. 1 was declared
as Non Performing Assets on 13.10.2014.

7. The petitioner-Bank had proceeded
against the respondent no. 1 by issuing a
demand notice dated 28.11.2014 under
Section 13 (2) of the Securitisation and
Reconstruction of Financial Assets and
Enforcement of Securities Interest Act, 2002
(hereinafter referred to as, the Act of 2002).
The respondent no. 1 neither raised any
objection nor made the payment in the
account due to which the petitioner-Bank had
taken symbolic possession of the secured
property i.e. C-120 situated in Village
Brahmpura(Bhopura), Pargana-Loni, Tehsil
and District Ghaziabad known as Defense
Colony
(Hindon),
Ghaziabad,
U.P
on
21.02.2015.

8 . The petitioner Bank had filed a
Original Application No. 247 of 2015 for
recovery of bank dues under Section 19 of
the the Recovery of Debts and Bankruptcy
Act, 1993 (hereinafter referred to as, the Act,
1993) before the Debts Recovery Tribunal,
New Delhi. During the pendency of O.A. No.
247 of 2015, the petitioner Bank had obtained
an order dated 30.12.2015 for physical
possession of the mortgaged property under
Section 14 of the Act, 2002.

9. Against the demand notice dated
28.11.2014 issued under Section 13 (2) of the
Act, 2002 and subsequently proceedings for
taking possession of mortgaged property in
terms of notice dated 04.03.2015 under
Section 13 (4) of the Act, 2002, the
respondent no. 1 had filed a SARFAESI
Application No. 100 of 2016 (M/s D V
Poultry Farm Vs. Corporation Bank before
the Debts Recovery Tribunal, Lucknow,
which was dismissed vide order dated
17.04.2017, against which the respondent
no. 1 preferred an appeal bearing No. 59 of
2017 (M/s D V Poultry Farm Vs.
Corporation
Bank
before
the
Debts
Recovery Appellate Tribunal, Allahabad,
which
was
dismissed
for
want
of
prosecution vide order dated 20.07.2018 and
was however, restored on 20.09.2019, after
the auction sale.
12 All. U.O.I. Vs. M/S D.V. Poultry Farm & Ors.
633

10. The O.A. No. 247 of 2015
preferred by the petitioner Bank was finally
decided on 05.01.2019 and Recovery
Certificate No. 24 of 2019 was issued. The
Recovery Officer had issued the Sale
Proclamation dated 30.06.2019 but the
auction failed as no bid was received. The
second Sale Proclamation was issued on
26.07.2019 and the property was sold to the
highest bidder-respondent no. 4.

11. After the dismissal of the O.A.
preferred by the respondent no. 1 by the
D.R.T. vide its order dated 17.04.2017, the
respondent no. 2 i.e. Society preferred an
application dated 05.06.2017 before the
respondent no. 3 under Section 70 and 71
of the Act, 1965.

12. Learned counsel for the petitioner
has submitted that the impugned order
dated 23.10.2018 is hit by the provisions of
Section 34 of the Act, 2002 which bars the
jurisdiction of the Civil Court or any other
authority in respect of any auction or
auction to be made in pursuance of any
power conferred by or under the Act, 2002
or under the Recovery of Debts due to the
bank and Financial Institutions Act, 1993.

13. It is further submitted that the
respondent no. 1 had already assailed the
SARFAESI measures against the petitioner
Bank in a Securitization Application under
Section 17 of the Act, 2002 before D.R.T.,
Lucknow and the same was dismissed vide
order dated 17.04.2017. The property has
already auctioned and the respondent no. 1
has no right to restore possession in terms
of the impugned order.

14. On the other hand, the learned
Counsel for the respondent no. 2-Society
has submitted that the auction is bad since
the petitioner Bank had auctioned the
property
without
obtaining
the
permission/No Objection Certificate (for
brevity,' N.O.C.) from the Society.

15. On being asked by the Court to
show the provisions or the guidelines under
which such prior permission or N.O.C. is
required to the petitioner Bank to auction
the
mortgaged
property,
the
learned
Counsel for the respondent no.2-Society
has failed either to show any such provision
or disclose the same.

16. It is further submitted by the
learned counsel for the respondent nos. 1
and 2 that the petitioner Bank has statutory
alternative remedy to file an appeal against
the impugned order under Section 98 of the
Act, 1965 hence, the present writ petition is
liable to be dismissed.

17. It is also submitted that the
arbitration or mediation proceedings can be
initiated
for
amicable
and
peaceful
settlement of the dispute at any juncture of
time and stage of pending litigation before
Court of law.

18. It is also submitted that the
proceedings under the Act, 2002 and the
proceedings under the Arbitration can go
simultaneously. In support of the said
submissions, he drew the attention of this
Court on the judgment rendered by Hon'ble
Apex Court in the case of M/s M.D.
Frozen Foods Exports Pvt Limited. Vs.
Hero Fin Corp. Limited reported in 2017
(16) SCC 741.

19. It has also been argued by the
learned counsel for the respondent no. 2
that the Bank has auctioned the land more
than the mortgaged land. Even if this
submissions is taken to be correct for the
sake of argument, then too the remedy of
634 INDIAN LAW REPORTS ALLAHABAD SERIES
the respondent no. 2 against the petitioner
Bank would not be under Section 70 of
Act, 1965. Such an issue therefore, cannot
be decided in this writ petition which is not
filed by the respondent no. 2 seeking any
remedy in this regard. The respondent no. 2
could seek any appropriate remedy under
the law as available to it.

20.

Learned
counsel
for
the
respondent no. 1-borrower has submitted
that the petitioner Bank has auctioned the
property below the fixed price and
evaluated it below its real value. The said
statement made by him is not tenable in the
present proceedings as the respondent no. 1
had
never
challenged
the
auction
proceedings before any competent court of
law.

21. After hearing learned counsel for
the respective parties and going through the
record of the case, the issue which is
precisely to be decided in the present case
is, as to whether the respondent no. 3 had
jurisdiction to pass the impugned order
under Section 70 and 71 of the Act, 1965
vis-a-vis the petitioner Bank.

22. It is an admitted case of the
respondent
no.
2-Society
that
on
20.09.2012, the N.O.C. was granted to
mortgage the property i.e. Plot No. C-120
admeasuring area 248.33 square yards,
situated in Village Brahmpura(Bhopura),
Pargana-Loni,
Tehsil
and
District
Ghaziabad known as Defense Colony
(Hindon), Ghaziabad, U.P. So now to make
a submission that N.O.C. was not granted
for sale of property is not tenable in the
eyes of law. Once the N.O.C. was granted
to mortgage the property, all other legal
consequences would automatically follow
including
the
consequences
for
non
payment of the amount of loan.

23. Apart from the aforesaid, the
learned counsel for the respondent Society
failed to show any provision/guidelines
regarding requirement of N.O.C. while
mortgaging the property or for auction of
the property in default of payment. The
property sold by the Society to Shri
Dharamveer
Sharma
with
a
specific
mention
in
the
deed
that
"the
aforementioned
plot
is
conveyed,
transferred and sold in full and on free hold
basis to the aforesaid transferee and his
successor, heirs or assigns by the said
Transferror Society under the Trust and
Conditions."

24. For adjudication of the present
case, certain relevant paras of the judgment
rendered by Hon'ble Apex Court in the case
of M/s M.D. Forzen Foods (supra) are
reproduced hereinbelow:-

7. The agreement inter se the
parties contained an arbitration clause
and thus, the matter went to arbitration
(emphasized
by
us)
on
the
lender/respondent invoking the arbitration
clause on 16-11-2016. However, prior to
this invocation, a Notification was issued
on
5-8-2016
in
exercise
of
powers
conferred under sub-clause (iv) of clause
(m) of sub-section (1) of Section 2 read
with Section 31-A of the Sarfaesi Act,
specifying certain "non-banking financial
companies" (hereinafter referred to as
"NBFC") covered under clause (f) of
Section 45-I of the Reserve Bank of India
Act, 1934 (hereinafter referred to as "the
RBI Act"), having assets of Rs 500 crores
and above, as financial institutions and
directing that, in public interest, the
provisions of the Sarfaesi Act shall apply to
such
financial
institutions,
with
the
exceptions of the provisions of Sections 13
to 19, which shall apply only to such
12 All. U.O.I. Vs. M/S D.V. Poultry Farm & Ors.
635
security interest which is obtained for
securing repayment of secured debt with
principal amount of Rs 1 crore and above.
The respondent is at Sl. No. 68 of the said
notification.

26. A claim by a bank or a
financial institution, before the specified
laws came into force, would ordinarily
have been filed in the civil court having the
pecuniary jurisdiction. The setting up of the
Debt Recovery Tribunal under the RDDB
Act resulted in this specialised Tribunal
entertaining such claims by the banks and
financial institutions. In fact, suits from the
civil jurisdiction were transferred to the
Debt Recovery Tribunal. The Tribunal was,
thus, an alternative to civil court recovery
proceedings.

27. On
the Sarfaesi Act
being
brought into force seeking to recover debts
against security interest, a question was
raised whether parallel proceedings could
go
on
under
the
RDDB
Act
and
the Sarfaesi Act. This issue was clearly
answered in favour of such simultaneous
proceedings
in Transcore v. Union
of
India [Transcore v. Union of India, (2008)
1 SCC 125 : (2008) 1 SCC (Civ) 116] . A
later judgment in Mathew Varghese v. M.
Amritha Kumar [Mathew Varghese v. M.
Amritha Kumar, (2014) 5 SCC 610 : (2014)
3 SCC (Civ) 254] also discussed this issue
in the following terms: (Mathew Varghese
case [Mathew
Varghese v. M.
Amritha
Kumar, (2014) 5 SCC 610 : (2014) 3 SCC
(Civ) 254] , SCC pp. 640-41, paras 45-46)

"45. A close reading of Section
37
shows
that
the
provisions
of
the Sarfaesi Act or the Rules framed
thereunder will be in addition to the
provisions of the RDDB Act. Section 35 of
the Sarfaesi Act states that the provisions of
the Sarfaesi Act will have overriding effect
notwithstanding
anything
inconsistent
contained in any other law for the time
being in force. Therefore, reading Sections
35 and 37 together, it will have to be held
that in the event of any of the provisions of
the RDDB Act not being inconsistent with
the provisions of the Sarfaesi Act, the
application of both the Acts, namely,
the Sarfaesi Act and the RDDB Act, would
be complementary to each other. In this
context reliance can be placed upon the
decision
in Transcore v. Union
of
India [Transcore v. Union of India, (2008)
1 SCC 125 : (2008) 1 SCC (Civ) 116] . In
para 64 it is stated as under after referring
to Section 37 of the Sarfaesi Act: (SCC p.
162)

'64. ... According to American
Jurisprudence, 2d, Vol. 25, p. 652, if in
truth there is only one remedy, then the
doctrine of election does not apply. In the
present case, as stated above, the NPA Act
is an additional remedy to the DRT Act.
Together they constitute one remedy and,
therefore, the doctrine of election does not
apply. Even according to Snell's Principles
of Equity (31st Edn., p. 119), the doctrine
of election of remedies is applicable only
when there are two or more co-existent
remedies available to the litigants at the
time of election which are repugnant and
inconsistent. In any event, there is no
repugnancy nor inconsistency between the
two remedies, therefore, the doctrine of
election has no application.'

46. A reading of Section 37
discloses
that
the
application
of
the Sarfaesi Act will be in addition to and
not in derogation of the provisions of the
RDDB Act. In other words, it will not in
any way nullify or annul or impair the
effect of the provisions of the RDDB Act.
636 INDIAN LAW REPORTS ALLAHABAD SERIES
We are also fortified by our above
statement of law as the heading of the said
section also makes the position clear that
application of other laws is not barred. The
effect of Section 37 would, therefore, be
that in addition to the provisions contained
under
the Sarfaesi Act,
in
respect
of
proceedings initiated under the said Act, it
will be in order for a party to fall back
upon the provisions of the other Acts
mentioned in Section 37, namely, the
Companies Act, 1956; the Securities
Contracts (Regulation) Act, 1956; the
Securities and Exchange Board of India
Act, 1992; the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993,
or any other law for the time being in
force."

(emphasis in original)

28. These
observations,
thus,
leave no manner of doubt and the issue is
no more res integra, especially keeping in
mind the provisions of Sections 35 and 37
of the Sarfaesi Act, which read as under:

"35. The provisions of this Act to
override other laws.-The provisions of
this Act shall have effect, notwithstanding
anything inconsistent therewith contained
in any other law for the time being in force
or any instrument having effect by virtue of
any such law.

***

37. Application of other laws not
barred.-The provisions of this Act or the
rules made thereunder shall be in addition
to, and not in derogation of, the Companies
Act, 1956 (1 of 1956), the Securities
Contracts (Regulation) Act, 1956 (42 of
1956), the Securities and Exchange Board
of India Act, 1992 (15 of 1992), the
Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 (51 of
1993) or any other law for the time being in
force."

30. The only twist in the present
case is that, instead of the recovery process
under the RDDB Act, we are concerned
with an arbitration proceeding. It is trite to
say that arbitration is an alternative to the
civil proceedings. In fact, when a question
was raised as to whether the matters
which
came
within
the
scope
and
jurisdiction of the Debt Recovery Tribunal
under the RDDB Act, could still be
referred to arbitration when both parties
have
incorporated
such
a
clause,
(emphasized by us) the answer was given
in
the
affirmative.
[HDFC
Bank
Ltd. v. Satpal Singh Bakshi, 2012 SCC
OnLine Del 4815 : (2013) 134 DRJ 566]
That being the position, the appellants can
hardly be permitted to contend that the
initiation of arbitration proceedings would,
in any manner, prejudice their rights to
seek relief under the Sarfaesi Act.

31. The
discussion
in
the
impugned order [M.D. Frozen Foods
Exports (P) Ltd. v. Hero Fincrop Ltd., 2017
SCC OnLine Del 9190] refers to a
judgment of the Full Bench of the Delhi
High Court in HDFC Bank Ltd. v. Satpal
Singh Bakshi [HDFC Bank Ltd. v. Satpal
Singh Bakshi, 2012 SCC OnLine Del 4815
: (2013) 134 DRJ 566] opining that an
arbitration is an alternative to the RDDB
Act. In that context, the learned Single
Judge [M.D. Frozen Foods Exports (P)
Ltd. v. Hero Fincrop Ltd., 2017 SCC
OnLine Del 9190] has rightly held that this
Full
Bench
judgment
[HDFC
Bank
Ltd. v. Satpal Singh Bakshi, 2012 SCC
OnLine Del 4815 : (2013) 134 DRJ 566]
does not, in any manner, help the
12 All. U.O.I. Vs. M/S D.V. Poultry Farm & Ors.
637
appellants but, in fact, supports the case of
the respondent. The jurisdiction of the civil
court is barred for matters covered by the
RDDB Act, but the parties still have
freedom to choose a forum, alternate to,
and in place of the regular courts or
judicial system for deciding their inter se
disputes. All disputes relating to the "right
in personam" are arbitrable and, therefore,
the choice is given to the parties to choose
this alternative forum. A claim of money by
a bank or a financial institution cannot be
treated as a "right in rem", which has an
inherent public interest and would thus not
be arbitrable.

32. The aforesaid is not a case of
election of remedies as was sought to be
canvassed by the learned Senior Counsel
for the appellants, since the alternatives
are between a civil court, Arbitral Tribunal
or a Debt Recovery Tribunal constituted
under the RDDB Act. Insofar as that
election is concerned, the mode of
settlement of disputes to an Arbitral
Tribunal has been elected. The provisions
of the Sarfaesi Act are thus, a remedy in
addition to the provisions of the Arbitration
Act.
In Transcore v. Union
of
India [Transcore v. Union of India, (2008)
1 SCC 125 : (2008) 1 SCC (Civ) 116] it
was clearly observed that the Sarfaesi Act
was enacted to regulate securitisation and
reconstruction of financial assets and
enforcement of security interest and for
matters connected therewith. Liquidation of
secured
interest
through
a
more
expeditious procedure is what has been
envisaged under the Sarfaesi Act and the
two Acts are cumulative remedies to the
secured creditors.

34. We are, thus, unequivocally of
the view that the judgments of the Full Bench
of the Orissa High Court in Sarthak Builders
(P)
Ltd. v. Orissa
Rural
Dev.
Corpn.
Ltd. [Sarthak Builders (P) Ltd. v. Orissa
Rural Dev. Corpn. Ltd., 2014 SCC OnLine
Ori 75 : AIR 2014 Ori 83] , the Full Bench of
the Delhi High Court in HDFC Bank
Ltd. v. Satpal Singh Bakshi [HDFC Bank
Ltd. v. Satpal Singh Bakshi, 2012 SCC
OnLine Del 4815 : (2013) 134 DRJ 566] and
the Division Bench of the Allahabad High
Court in Pradeep Kumar Gupta v. State of
U.P. [Pradeep Kumar Gupta v. State of U.P.,
2009 SCC OnLine All 877 : AIR 2010 All 3]
lay down the correct proposition of law and
the view expressed by the Andhra Pradesh
High Court in Deccan Chronicles Holdings
Ltd. v. Union of India [Deccan Chronicles
Holdings Ltd. v. Union of India, 2014 SCC
OnLine AP 104 : AIR 2014 AP 78]
following the overruled decision of the
Orissa High Court in Subhash Chandra
Panda v. State of Orissa [Subhash Chandra
Panda v. State of Orissa, 2008 SCC OnLine
Ori 10 : AIR 2008 Ori 88] does not set forth
the
correct
position
in
law. Sarfaesi proceedings and arbitration
proceedings, thus, can go hand in hand.

25. Hon'ble Supreme Court has held in
the judgment of M/s M.D. Frozen Foods
(supra) relied by learned counsel for the
respondent no. 2 that all disputes relating to
the "right in personam" are arbitrable and
therefore, the choice is given to the parties to
choose this alternative forum. A claim of
money by a bank or financial institution
cannot be treated as a "right in rem". The
provisions of Act, 2002 are a remedy in
addition to the provision of Arbitration Act.
The Act, 2002 was enacted to regulate
securitisation and reconstruction of financial
assets and enforcement of security interest
and for matters connected therewith and the
arbitration proceedings are for amicable
settlement between the parties to the
agreement.
638 INDIAN LAW REPORTS ALLAHABAD SERIES

26. The judgment in the case of M.D.
Frozen Foods (supra) relied by the
respondent Society is not applicable in the
facts of the present case, as the facts before
the Apex Court in that case are that the
mortgagor can opt for arbitration, as per the
agreement and it is the mortgagor, who is
to choose the remedy available with him
whereas in the present case, the borrower
has chosen the remedy under the Act, 2002
by filing the O.A. before the D.R.T. The
borrower had not initiated any arbitration
proceedings against the petitioner Bank. It
is the society, who had chosen to file an
application under Section 70 of the Act,
1965.

27. As per the facts of the case, the
respondent no. 1 had taken a loan from the
petitioner Bank and defaulted in repayment
due to which his loan account had been
declared as N.P.A. The O.A. No. 247 of
2015 preferred by the petitioner Bank had
been finally decided on 05.01.2019 in
favour of the petitioner Bank and the
property was auctioned by the Sale
Proclamation issued by the Recovery
Officer.

28. The O.A. No. 100 of 2016
preferred by the respondent no. 1 was
dismissed vide order dated 17.04.2017
against which an Appeal No. 59 of 2017
was
preferred
before
the
D.R.A.T.,
Allahabad which was dismissed in default
on 20.07.2018 and the same was restored
on 20.09.2019. The appeal of the borrowerrespondent no. 1 was dismissed for non
prosecution
on
20.07.2018
and
was
restored on 20.09.2019 whereas the auction
was held on 26.07.2019 i.e. prior to
restoration of the appeal.

29. The another notable point in the
present case is that after dismissal of O.A.
preferred by the respondent no. 1-borrower
on 17.04.2017, the Society preferred an
application on 05.06.2017 under Section 70
and 71 of the Act, 1965 before the respondent
no. 3. Section 70 pertains to the settlement of
dispute which may be referred to the
arbitration. For convenience, Sections 70 and
71 are quoted hereinbelow:-

70. Disputes which may be referred
to arbitration. (1) Notwithstanding anything
contained in any law for the time being in
force, if any dispute relating to the
constitution, management of the business of a
cooperative society other than a dispute
regarding disciplinary action taken against a
paid servant of a society arises

(a) among members, past members
and persons claiming through members, past
members and deceased members; or

(b) between a member, past
member or any person claiming through, a
member, past member or deceased member,
and
the
society,
its
Committee
of
Management or any officer, agent or
employee of the society, including any past
officer, agent or employee; or

(c) between the society or its
committee and any past committee, any
officer, agent or employee or any past officer,
past agent or past employee or the nominee,
heir or legal representative of any deceased
officer,
deceased
agent,
or
deceased
employee of the society; or

(d) between a cooperative society
and any other cooperative society or
societies:

such dispute shall be referred to
the Registrar for action in accordance with
the provisions of this Act and the rules and
12 All. U.O.I. Vs. M/S D.V. Poultry Farm & Ors.
639
no court shall have jurisdiction to entertain
any suit or other proceeding in respect of
any such dispute:

Provided that a dispute relating
to an election under the provisions of this
Act or rules made thereunder shall not be
referred to the Registrar until after the
declaration of the result of such election.

(2) For the purpose of subsection
(1), the following shall be deemed to be
included
in
dispute
relating
to
the
constitution, management or the business
of a cooperative society, namely

(a) claims for amounts due when
a demand for payment is made and is either
refused or not complied with whether such
claims are admitted or not by the opposite
party;

(b) a claim by a surety against
the principal debtor where the society has
recovered from the surety any amount in
respect of any debt or demand due to it
from the principal debtor as a result of the
default of the principal debtor or whether
such debt or demand is admitted or not;

(c) a claim by a society for any
loss caused to it by a member, officer,
agent, or employee including past or
deceased
member,
officer,
agent,
or
employee,
whether
individually
or
collectively and whether such loss be
admitted or not; and

(d) all matters relating to the
objects of the society mentioned in the byelaws as also those relating to the election
of officebearers.

(3) If any question arises whether
a dispute referred to the Registrar under
this section is a dispute relating to the
constitution, management or the business
of cooperative society the decision thereon
of the Registrar shall be final and shall not
be called in question in any Court."

71A. Powers of creditor society
against debtor society and its members. -
(1) If a co-operative society is unable to
pay its debts (hereinafter in this section
referred to as the debtor society) by reason
of its members defaulting in the payment of
the moneys due to another Co-operative
Society (hereinafter in this section referred
to as the creditor-society), and the
Committee of Management of the debtorsociety omits or neglects to take necessary
steps for recovery of money due from its
members
the
creditor-society
may,
notwithstanding anything in this Act, direct
the said committee by a notice in writing to
proceed against the defaulting members in
accordance with the provisions of [Section
70 Section 91, Section 92 or Section 95-A],
as the case may be.

2)
If
the
Committee
of
Management of the debtor-society fails to
comply with the notice referred to in subsection (1) within a period of thirty days
from the date of service of such notice, the
creditor-society may itself proceed against
such defaulting members in accordance
with the provisions of [Section 70, Section
91, Section 92 or Section 95-A,] as the case
may be, as if they were members of he
creditor-society, and in that event, the
provisions of this Act and the rules made
thereunder and the bye-laws of the debtorsociety shall so apply as if all references to
the debtor-society and its Committee of
Management and officers in the said
provisions were references to the creditorsociety and its Committee of Management
and officers.
640 INDIAN LAW REPORTS ALLAHABAD SERIES

(3) Where the creditor-society
has in respect of any money due from the
debtor society, obtained an award or order
referred to in Section 92, against the
debtor-society, the creditor-society may
proceed
to
recover
such
money
in
accordance with the provisions of the Act
and the rules made thereunder, either from
the assets of the debtor-society or from the
members thereof to the extent of the debts
due from them to the debtor-society, or
from both

30. From the perusal of the
aforequoted sections, it is apparent that
both the sections pertain to the adjudication
of dispute between the Members, Past
Members, Society, its Committee of
Management,
its
past
Committee
of
Management etc.

31. In the present case, there is no
agreement much less for any arbitration
between the petitioner Bank and the
respondent no. 2 Society. The society
initiated proceedings not in pursuance of
any arbitration agreement but under Section
70 of the Act, 1965 which too is not
applicable to the petitioner Bank, who is an
outsider as discussed in the preceding
paragraphs.

32. Section 70 does not empower the
respondent no. 3/authority to adjudicate the
dispute pertaining to loan taken by the
borrower from the Bank. The borrower, who
is the member of the respondent society had
himself approached the D.R.T by filing an
O.A. which was dismissed and against which
the appeal was preferred before the D.R.A.T,
which is still pending and there is no order in
favour of the borrower.

33. Under Sections 70 and 71 of the
Act, 1965, the authority is competent and
empowered
to
decide
the
lis/dispute
between the persons mentioned in Section
70 and the petitioner Bank is neither the
member of Society nor the member of the
Committee of Management and having no
dispute with the society. The petitioner
Bank is an outsider and he has rightly
initiated
the
proceedings
against
the
respondent no. 1 under the Act, 2002.

34. The respondent no. 3 could not
issue any order or direction against the
petitioner Bank. The respondent no. 3 is
empowered and having jurisdiction to
decide the dispute between the society and
its members. In the present case, the
dispute is between the respondent nos. 1
and 2. Hence, the impugned order dated
23.10.2018 passed by the respondent no. 3
against the petitioner Bank is without
jurisdiction.

35. The plea taken by the respondent
society that the petitioner Bank has an
statutory alternative remedy to file an
appeal under Section 98 of the Act, 1965 is
not applicable in the present case as the
impugned order passed by the respondent
no. 3 is without jurisdiction and provisions
of the Act, 1965 are not applicable upon the
petitioner bank, hence, there is no occasion
for the petitioner Bank to avail the
alternative remedy provided under Section
98 of the Act, 1965.

36. In view of the discussions and
observations made hereinabove, it is held
that the impugned order dated 23.10.2018
passed by the respondent no. 3 as far as
directions issued against the petitioner bank
are without jurisdiction, thus, it is hereby
quashed.

37. Writ petition is allowed.
----------
12 All. M/S Pandit Damber Lal Bhagirathi Filling Station District Bulandshahr Vs. U.O.I. & Ors. 641
(2023) 12 ILRA 641
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 30.11.2023

BEFORE

THE HON'BLE MAHESH CHANDRA
TRIPATHI, J.
THE HON'BLE PRASHANT KUMAR, J.

Writ-C No. 9028 of 2022

M/S Pandit DamberLal Bhagirathi Filling
Station District Bulandshahr ...Petitioner
Versus
U.O.I. & Ors. ...Respondents

Counsel for the Petitioner:
Sri Rahul Pandey, Sri Rakesh Pande (Sr.
Adv.), Vishakha Pandey

Counsel for the Respondents:
A.S.G.I., Sri Anand Tiwari, Sri Brijesh
Kumar, Sri Deepesh Kumar Ojha, Sri
Saurabh Yadav, Sri Rakesh Kumar, Sri
Anand Tiwari, Sri Deepak Kumar Ojha, Sri
Neeraj Triipathi (Sr. Adv.)

A. Civil Law - Constitution of India,1950Article
226-
the
dealership
of
the
petitioner
was
terminated
by
IOCLpetitioner uncle made a complaint to the
IOCL that the petrol pump is situated at
ancestral land and there is no partition
and forged NOC was submitted by the
original allottee and petitioner's father
was in service hence, petrol pump could
not
have
been
allotted-In
lieu
of
settlement, the petitioner paid 17/-lakhs
to the complainant and the complaint was
withdrawn-even
after
amicable
settlement of the dispute between the
brothers, the complainant kept on writing
complaints to IOCL against the original
allottee-complainant turned greedy and
he filed writ petition for cancellation of
dealership-The IOCL was well aware of
the facts and did not take action on the
complaint earlier, hence it cannot be said
that the petitioner had got the dealership
by fraud and also IOCL is bound by
doctrine
of
acquiescence,
hence
the
impugned order is liable to be set
aside.(Para 1 to 45)

B. Apex Court held that acquiescence
would mean a tacit or passive acceptance.
When
acquiescence
takes
place,
it
presupposes
knowledge
against
the
particular act. From the knowledge comes
passive acceptance, therefore, instead of
taking action against any alleged refusal
to perform the original contract, despite
adequate knowledge of its term and
instead being allowed to continue by
consciously
ignoring
and
thereafter
proceeding further, acquiescence does
take place. (Para 39 )

The writ petition is allowed. (E-6)

List of Cases cited:

1. Tata Cellular Vs U.O.I. (1994) 6 SCC 651
2. St. of U.P. Vs Prem Shanker Sharma (2006)
10 ADJ 123

3. H.C. of Judicature at Bom. Vs Udai Singh
(1997) JT SC 298

4. A.V. Papayya Sastry & ors. Vs Govt. of A.P. &
ors. (2007) 4 SCC 221

5. Chandro Devi & Etc Vs U.O.I. (2017) 9 SCC 469

6. Sukh Sagar Medical College & Hospital Vs St.
of M.P. (2021) 13 SCC 587

7. U.O.I. Vs N. Murugesan & ors. (2022) 2 SCC 25

8. Bichitrananda Behera Vs St. of Ori. & ors.
(2023) INSC 902

(Delivered by Hon'ble Mahesh Chandra
Tripathi, J.
&
Hon'ble Prashant Kumar, J.)

1. Heard Shri Rakesh Pande, learned
Senior Counsel assisted by Shri Rahul