Full Judgment Text
1
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
WRIT PETITION NO. 117 OF 1993
AND
WRIT PETITION NO. 182 OF 1993
WRIT PETITION NO. 117 OF 1993
1. Ghanshyamdas Madanlal Chaudhary,
aged about 66 years, r/o Ward No.21,
Chikhali, Tq. Chikhali, Dist. Buldana.
2. M/s. Ghanshyamdas Madanlal
Chaudhari, alleged firm,
Near S.T. Stand, Chikhali,
Tq. Chikhali, District – Buldana. ... PETITIONERS
Versus
1. The Chikhali Urban Coop. Bank Ltd.
Chikhali, Tq. Chikhali,
District – Buldana.
2. Purushottam Madanlal Chaudhari,
r/o Chikhali, Tq. Chikhali,
District – Buldana.
3. Parasmal Sheshmal Shisodiya,
Gandhi Nagar, Chikhali,
Tq. Chikhali, District – Buldana.
4. State of Maharashtra,
through the Secretary,
Cooperative & Textile Department,
Mantralaya, Bombay – 32. ... RESPONDENTS
WRIT PETITION NO. 182 OF 1993
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Banwarilal Ghanshyamdas Chaudhari,
aged about 36 years,
r/o Ward No.21, Chikhali,
Tq. Chikhali, Dist. Buldana. ... PETITIONERS
Versus
1. The Chikhali Urban Coop. Bank Ltd.
Chikhali, Tq. Chikhali,
District – Buldana.
2. Dharamchand s/o Sheshmal Sisodiya,
Dukan Chikhali, Tq. Chikhali,
District – Buldana.
3. Baldeo s/o Tarachand Chaudhari,
c/o Nirmal Stores Ltd.,
Chikhali, Tq. Chikhali,
District – Buldana.
4. State of Maharashtra,
through the Secretary,
Cooperative & Textile Department,
Mantralaya, Bombay – 32. ... RESPONDENTS
Shri B.N. Mohta, Advocate holding for Shri G.B. Lohiya, Advocate for the
petitioners in both writ petitions.
S/Shri D.P. Thakare & T.R. Kankale, AGP for respondents No. 4 in
respective writ petitions.
.....
CORAM : B.P. DHARMADHIKARI, J.
JANUARY 10, 2007.
ORAL JUDGMENT :
The challenge raised by the petitioners in both the petitions is
identical and both the matters are directed to be heard together. The
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petitioners contend that unamended provisions of Section 44-A and
Section 96 of the Maharashtra Cooperative Societies Act, 1960,
(hereinafter referred to as the Act) will govern the determination of their
liability.
2. In Writ Petition No. 117 of 1993, the petitioner borrowed loan
of Rs.15,000/- sometimes in the year 1977. On 1.7.1981, Respondent
No.1 Cooperative Society filed dispute before the Cooperative Court
under Section 91 of the Act for recovery of amount of Rs.24,346.96 along
with interest as per its Bye laws. This dispute which came to be
registered as Dispute No.724/1982-83 was opposed by the present
petitioner who amongst other defence also contended that calculation of
interest and principal amount which in fact doubled the actual amount
borrowed by him from Bank was contrary to law. The Cooperative Court
has delivered the judgment on 6.1.1992 and it allowed the recovery as
claimed with interest at 15% per annum on Rs.17,919.02 ps. from
16.12.1991 till its realisation. This judgment was challenged by the
petitioners by filing Appeal No.62 of 1992 before the Cooperative
Appellate Court under Section 97 of the Act. The said appeal has been
dismissed by the Cooperative Appellate Court on 25.9.1992. However,
the appellate Court has increased rate of interest from 15% to 16.5%
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and allowed said increase in favour of Respondent No.1 – Society.
Therefore, appellate Court has stated that appeal is partly allowed.
3. In Writ Petition No.182 of 1993, the dispute under Section 91
of the Act was filed by Respondent No.1 – Bank against the petitioner
therein on 10.12.1981 for recovery of Rs.16,207.80 ps. with interest.
The petitioner opposed the dispute and he also raised defence of Dam
Duppat. The judgment came to be delivered by the Cooperative Court
on 14.5.1992 and Cooperative Court allowed said dispute. It also
granted interest at 15% on amount of Rs.12,744.16 ps. from the date of
dispute till its realisation. The petitioner filed appeal under Section 97 of
the Act before the Cooperative Appellate Court which came to be
registered as Appeal No.63 of 1992 and Cooperative Appellate Court has
vide its judgment dated 25.9.1992 negatived all contentions of the
appellant. However, it granted increase in rate of interest from 15% to
16.5% in favour of Respondent No.1 – Bank and it has therefore declared
that appeal is partly allowed. It is both these orders passed by the
Cooperative Court and Cooperative Appellate Court which form subject
matter of present writ petitions.
4. Initially, in Writ Petitions, provisions of Section 44-A of the Act
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5
were also challenged and prayer was made to declare amendment to
Section 44-A by Maharashtra Amendment Act No.20 of 1986 as ultra
vires. However, when the matter was placed before the Division Bench
on 27.11.2006, the challenge to validity was given up and therefore the
matter has been listed before this Court for final hearing.
5. I have heard Shri Mohta, learned counsel holding for Shri
Lohiya, learned counsel for the petitioners in both the petitions. S/Shri
Thakare & Kankale, learned AGP have appeared for respondents No. 4 in
respective writ petitions. Nobody has appeared for respondents No. 1 to
3. Actually the matter was heard partly on 9.1.2007 and nobody had
appeared for these respondents even on that date.
6. Shri Mohta, learned counsel has contended that loan is taken
in 1977 and dispute for its recovery has been filed in 1981. He contends
that provisions of Section 44-A of the Act as they stood in statute book on
the date of filing of dispute or on the date of taking of loan by the
petitioners would govern the further proceedings in said suit. In short his
contention is that the provisions of Section 44-A and provisions of Section
96 of the Act as amended by Maharashtra Amendment Act No. 20 of
1986 will not be applicable and Cooperative Court as also Cooperative
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Appellate Court have acted without jurisdiction in relying upon amended
provisions in this respect. He contends that by amending Section 44-A of
the Act, certain limitations have been introduced in order to attract rule
of Damdupat but there were no limitations in old Section 44-A of the Act
and therefore said Section 44-A would squarely govern the case of the
petitioners. He contends that when original loan was Rs.15,000/- in one
case and Rs.10,000/- in another case, the recovery of amount double
than these amounts could not have been ordered. He has further invited
attention to unamended provisions of Section 96 of the Act to urge that
the Cooperative Court did not possess power to grant future interest i.e.
interest from the date of institution of the suit till recovery of amount as
per said provision. He states that said power has been given to
Cooperative Court for the first time by introducing amendment in Section
96 in 1986 and hence Cooperative Court in present disputes which are
filed in 1981 could not have taken recourse to amended Section 96 of
the Act and could not have granted interest for the period after the
institution of disputes by Respondent No.1 – Bank. He has further invited
attention to disputes as filed to point out that Respondent No.1 has
prepared a proforma for preferring disputes before the Cooperative Court
and said proforma requires it to specify the amount of loan i.e. principal
amount separately and interest charged upon such principal amount
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separately. He states that in both the disputes no such separate figures
are shown by Respondent No.1. He contends that this requirement was
on account of unamended provisions of Section 44-A of the Act. In this
respect, he has also invited attention to Statements of Accounts filed by
Respondent No.1 in both the matters to point out that even said
application of mind is not apparent from statements of accounts. He
contends that one cannot ascertain what is interest factor charged by
Respondent No.1 from those statements of accounts. He has lastly
contended that the amount claimed in dispute, as filed, do not show the
principal loan amount as also interest factor thereof. The Cooperative
Court has instead of granting interest only on principal amount, granted
interest on entire amount claimed before it. In other words, he contends
that interest has been granted even on interest. He contends that the
Cooperative Court does not possess such power. He lastly argues that in
any case as contemplated by Section 34 of Civil Procedure Code,
Cooperative Court could not have granted interest in excess of 6% on the
amounts claimed before it for the period after filing of dispute. His last
two arguments are in the alternative and without prejudice to his rights
and contentions in relation to Section 96 of the Act. He has invited
attention to the judgment of the Hon'ble Apex Court in the case of
Central Bank of India vs. Ravindra, reported at AIR 2001 SC 3095, to
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substantiate his stand. The respective AGPs have stated that
Respondent No.4 was joined as party respondent because of challenge to
validity of Maharashtra Amendment Act No. 20 of 1986. They state that
as said challenge is given up, the Assistant Government Pleader is not
required to say anything in dispute which is essentially between
Respondent No.1 and the petitioners. However, the attention has been
invited to the Division Bench judgment of this Court in the case of N.N.
Bankar vs. A.P.V.K.S.S. Society Ltd., reported at 1994 (1) Mh.LR 477, to
point out that provisions of Section 44-A of the Act as amended have
been upheld by said Division Bench.
7. Section 44-A of the Act as it stood before its amendment in
1986 Amendment reads as under :
“44-A. Notwithstanding anything contained in any
agreement or any law for the time being in force, a Society
(other than a land development bank) shall not for any loan
given by it to any member for a period not exceeding 15
years whether the loan was given before or is given after
the commencement of the Maharashtra Cooperative
Societies (Third Amendment Act, 1973) charge, on account
of interest, a sum greater than the principal of the loan.”
While said provision after it is amended by Maharashtra
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Amendment Act No. 20 of 1986 reads as under :
“44-A. Notwithstanding anything contained in any
agreement or any law for the time being in force, a Society
(including a Cooperative Bank but excluding a land
development bank) shall not for any loan (including
rehabilitation loan but excluding long-term loan for
irrigation or agricultural development purposes or loan
exceeding rupees three thousand for non-agricultural or
commercial purposes) given by it to any member-including
a member-Society) for a period not exceeding 15 years,
whether the loan was given before or is given after the
commencement of the Maharashtra Co-operative Societies
(Second Amendment) Act, 1985, recover, in any manner
whatsoever, on account of interest, a sum greater than the
amount of the principal of the loan.”
It is apparent that the amended provision clearly stipulates
that it is not applicable to long-term loans for irrigation or agricultural
development purposes or loan exceeding rupees three thousand for non-
agricultural or commercial purposes. There was no such exclusion in
unamended Section 44-A of the Act. It included all types of loans and
stipulated that the creditor society shall not on account of interest,
charge a sum greater than the amount of the principal of the loan. By
amendment, though this principle has been maintained, the Legislature
has specified that it would not apply to non agricultural or commercial
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loans, if amount borrowed is in excess of Rs.3,000/-. Language of section
44-A before amendment clearly stated that it was attracted whether the
loan was given before or is given after the commencement of
Maharashtra Cooperative Societies (Third Amendment) Act, 1973. Thus,
the date on which loan was given was not held to be relevant by the
Legislature for application of even unamended Section 44-A. It is,
therefore, apparent that the Legislature enacted this provision in the
interest of borrowers and against the wish of creditors and made it
mandatory. The same intention is revealed even in amended provision
of Section 44-A. The said language is maintained and the Legislature has
specified that even if loan was given before or is given after the
commencement of the Maharashtra Co-operative Societies (Second
Amendment) Act, 1985, the borrower will not be required to pay interest
more than the amount of principal of the loan. It is, therefore, clear that
the date on which the present petitioners have received loan from
Respondent No.1 is not at all relevant in the matter. The Legislature
wants that provision to apply to all loans whether disbursed before or
after the commencement of the Act.
8. Though old Section 44-A of the Act did not exclude any loan, it
only exempted those loans which were given to members for a period
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exceeding 15 years. This exemption portion of Section 44-A has been
widened further by 1986 Amendment which stipulates that long term
loans for irrigation and agricultural development purposes or loans
exceeding Rs.3,000/- for non-agricultural or commercial purposes shall
not be subject to provisions of section 44-A. Thus, when old Section 44-A
is read along with the amended provision thereof, it is apparent that
even though a loan for irrigation or agricultural development purposes or
loan exceeding Rs.3,000/- for non agricultural or commercial purposes
was under the protective umbrella of Section 44-A prior to 1986 after
1986, it ceases to enjoy the said protection. It is, therefore, apparent
that merely because dispute is filed in 1981 and provisions of Section 44-
A have been amended thereafter, that cannot be the reason to contend
that old Section 44-A would govern the rights of the parties in the matter.
9. At this stage, Shri Mohta, learned counsel for the petitioners
has invited attention to Division Bench judgment in the case of Nivrutti
vs. A.P.V.K. Seva Sahakari Society Ltd., reported at AIR 1985 Bom. 131,
to contend that in the facts of present case, the loan amount is
crystalized in the year 1981 itself when dispute was filed and hence the
provisions of old Section 44-A alone will be applicable. The perusal of
said judgment reveals that the Hon'ble Division Bench there found that in
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unamended Section 44-A, legislature in its wisdom used the expression
“charge” which means demand. The Division Bench found that
expression used was not “recover”. The Division Bench in this
background observed that said expression cannot be confused with the
recovery of the amount after it has been crystalized either in an Award
or order of a competent authority. In the facts of said case, the Division
Bench found that on the date on which the society moved an application
under Section 101, the amount of interest charged by it was much less
than the principal amount and therefore Section 44-A was not applicable.
However, in relation to amended provision of Section 44-A, this
controversy is rendered redundant because amended provision of
Section 44-A does not use the word charge and it used the word recover.
I, therefore, find that this Division Bench judgment is not helpful to
present petitioners.
10. Section 44-A exempts commercial loans exceeding Rs.3,000/-
from its fold. As already stated above, amount of loan in both these
matters is more than Rs.3,000/-. The present petitioners in their written
statement before the Cooperative Court have stated that the dispute as
filed was not maintainable because it was filed against firm without
joining partners or proprietors thereof as parties. The Cooperative Court
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has considered these findings and has negatived it. In the process, the
Cooperative Court found that loan was obtained by the present
petitioners for business purposes and he avoided to pay loan dishonestly.
As already held above, the amended provisions of Section 44-A would
apply in the matter and as the loan has not been shown to have been
obtained for purposes other than non-agricultural purposes and in view
of the findings raised by the petitioners in their written statements, it will
have to be held that the petitioners have obtained loan for commercial
purposes. Hence, even on this count, the said challenge insofar as Writ
Petition No.117 of 1993 is concerned, is bound to fail.
11. Coming to the second argument about the provisions of
Section 96 of the Act, the amended provision of Section 96 reads as
under :
“When a dispute is referred to arbitration, the Cooperative
Court may, after giving a reasonable opportunity to the
parties to be heard, made an award on the dispute, on the
expenses incurred by the parties to the dispute in
connection with the proceedings, and fees and expenses
payable to the Co-operative Court. In case of money claim
preferred by society against a member, the amount of
award representing the interest shall not be less than the
amount of interest accrued thereon in accordance with the
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contractual rate of interest but where such money claim
relates to any loan referred to in section 44-A, the
provisions of that section shall apply to such money claim
as they apply to loan under section 44-A.”
The said provision as amended by Amendment Act No. 20 of
1986 insofar as portion relevant for present consideration is concerned,
it stipulates that the Cooperative Court cannot in a claim preferred by a
society against a member, award interest less than the amount of loan in
accordance with contractual rate of interest. Here, there is no dispute
about the fact that contractual rate was 16.5%. However, the argument
advanced is that under unamended provision of Section 96, Cooperative
Court did not possess any such powers. The unamended provisions of
Section 96 reads as under :
“When a dispute is referred to arbitration, the
Registrar (or the Co-operative Court may, after giving a
reasonable opportunity to the parties to the dispute to be
heard, make an award on the dispute, on the expenses
incurred by the parties to the dispute in connection with the
proceedings, and fees and expenses payable to the
Registrar (or the Co-operative Court, as the case may be,)
Such an award shall not be invalid merely on the ground
that it was made after the expiry of the period fixed for
deciding the dispute by the Registrar, and shall, subject to
appeal or review or revision, be binding on the parties to
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the dispute.”
12. It is, therefore, clear that unamended provision of Section 96
does not speak of any interest at all. It is further clear that if the
arguments of petitioners are accepted then the provisions of Amendment
Act also cannot be read as enabling Cooperative Court to award future
interest. When the provisions of Section 96 (unamended) are read with
amended provisions of Section 96 of the Act, it is apparent that by
Amendment Act No.20 of 1986, legislature has put an obligation upon
the Cooperative Court not to award interest at a rate lesser than
contractual rate of interest. By this amending provision, it is clear that
the legislature was aware that the Cooperative Court possessed power to
award future interest and hence it has taken precaution by amending
said provision in Section 96 of the Act by requiring the Cooperative Court
to award interest at contractual rate only. Thus, the arguments of the
petitioners are without any substance even on this count.
13. The learned counsel for the petitioners has contended that in
view of the judgment of the Hon'ble Apex Court in Central Bank of India
vs. Ravindra, (supra), particularly paragraph 55, clause 8 thereof, the
Court has got discretion in the matter of grant of interest pendente lite
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and post-decree interest. However, in view of the provisions
incorporated in Section 96 by Amendment Act No. 20 of 1986, which
mandates Cooperative Court to award interest at a rate not less than
contractual rate of interest, I find that this ruling again has no application
in the facts of present case. The learned counsel has contended that the
Cooperative Court has awarded interest on interest and in view of the
provisions of Section 34 of CPC, in any case such future interest could not
have been in excess of 6%. In view of the specific provision made by
Amendment Act No. 20 of 1986, in Section 96 of the Act, I find that
Section 34 of Civil Procedure Code will have no application here.
Similarly, perusal of disputes as filed by Respondent No.1 reveal that
they have claimed interest as mentioned in their Bye laws. The said
interest also appears to have been at 16.5%. The Cooperative court has
granted interest at 15% while delivering the awards on 6.1.1992 and
14.5.1991 respectively. It is apparent that the interest has been granted
in accordance with the provisions of agreement between the parties and
also in accordance with provisions of Bye laws. Therefore, I find that the
arguments of the petitioners about grant of interest on interest are
without any merit in the facts of both these writ petitions. The
Cooperative Court has, however, overlooked the mandate of Section 96
of the Act and has granted interest at a rate which was lesser than the
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contractual rate of interest between the parties. The Cooperative
Appellate Court has corrected that error and has granted interest at
agreed rate to Respondent No.1. Such use of discretion by the appellate
Court is in accordance with Section 96 of the Act and therefore not
illegal. The petitioners cannot take advantage of apparent error
committed by the Cooperative Court by ignoring mandate of Section 96
of the Act. I, therefore, find no substance even in arguments of learned
counsel for the petitioners that the Cooperative Appellate Court has
given relief to Respondent No.1 though Respondent No.1 did not file
appeal under Section 97 of the Act before it.
14. In the result, I find that there is no merit in any of the petitions
and both writ petitions are accordingly dismissed. However, in the
circumstances of the case, there shall be no order as to costs.
15. At this stage, Shri Mohta, learned counsel for the petitioners
states that as per orders of this Court passed in present matters, the
petitioners have already deposited the amount equal to double the loan
amount with Respondent No.1 – Bank in 1993 itself. He states that such
an amount along with interest accrued thereon should be taken into
consideration by Respondent No.1 - Bank while finalizing the amount, if
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any, outstanding against the petitioners. He states that he is making this
request without prejudice to the rights of the petitioners to file appeal
against the orders passed by this Court today.
16. Under the circumstances, Respondent No.1 – Bank shall take
into account the amounts deposited by the petitioners with it along with
interest, if any accrued upon it while working out for finalizing the
accounts of the petitioners in the matter.
JUDGE
*
*GS.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH
WRIT PETITION NO. 117 OF 1993
AND
WRIT PETITION NO. 182 OF 1993
WRIT PETITION NO. 117 OF 1993
1. Ghanshyamdas Madanlal Chaudhary,
aged about 66 years, r/o Ward No.21,
Chikhali, Tq. Chikhali, Dist. Buldana.
2. M/s. Ghanshyamdas Madanlal
Chaudhari, alleged firm,
Near S.T. Stand, Chikhali,
Tq. Chikhali, District – Buldana. ... PETITIONERS
Versus
1. The Chikhali Urban Coop. Bank Ltd.
Chikhali, Tq. Chikhali,
District – Buldana.
2. Purushottam Madanlal Chaudhari,
r/o Chikhali, Tq. Chikhali,
District – Buldana.
3. Parasmal Sheshmal Shisodiya,
Gandhi Nagar, Chikhali,
Tq. Chikhali, District – Buldana.
4. State of Maharashtra,
through the Secretary,
Cooperative & Textile Department,
Mantralaya, Bombay – 32. ... RESPONDENTS
WRIT PETITION NO. 182 OF 1993
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Banwarilal Ghanshyamdas Chaudhari,
aged about 36 years,
r/o Ward No.21, Chikhali,
Tq. Chikhali, Dist. Buldana. ... PETITIONERS
Versus
1. The Chikhali Urban Coop. Bank Ltd.
Chikhali, Tq. Chikhali,
District – Buldana.
2. Dharamchand s/o Sheshmal Sisodiya,
Dukan Chikhali, Tq. Chikhali,
District – Buldana.
3. Baldeo s/o Tarachand Chaudhari,
c/o Nirmal Stores Ltd.,
Chikhali, Tq. Chikhali,
District – Buldana.
4. State of Maharashtra,
through the Secretary,
Cooperative & Textile Department,
Mantralaya, Bombay – 32. ... RESPONDENTS
Shri B.N. Mohta, Advocate holding for Shri G.B. Lohiya, Advocate for the
petitioners in both writ petitions.
S/Shri D.P. Thakare & T.R. Kankale, AGP for respondents No. 4 in
respective writ petitions.
.....
CORAM : B.P. DHARMADHIKARI, J.
JANUARY 10, 2007.
ORAL JUDGMENT :
The challenge raised by the petitioners in both the petitions is
identical and both the matters are directed to be heard together. The
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3
petitioners contend that unamended provisions of Section 44-A and
Section 96 of the Maharashtra Cooperative Societies Act, 1960,
(hereinafter referred to as the Act) will govern the determination of their
liability.
2. In Writ Petition No. 117 of 1993, the petitioner borrowed loan
of Rs.15,000/- sometimes in the year 1977. On 1.7.1981, Respondent
No.1 Cooperative Society filed dispute before the Cooperative Court
under Section 91 of the Act for recovery of amount of Rs.24,346.96 along
with interest as per its Bye laws. This dispute which came to be
registered as Dispute No.724/1982-83 was opposed by the present
petitioner who amongst other defence also contended that calculation of
interest and principal amount which in fact doubled the actual amount
borrowed by him from Bank was contrary to law. The Cooperative Court
has delivered the judgment on 6.1.1992 and it allowed the recovery as
claimed with interest at 15% per annum on Rs.17,919.02 ps. from
16.12.1991 till its realisation. This judgment was challenged by the
petitioners by filing Appeal No.62 of 1992 before the Cooperative
Appellate Court under Section 97 of the Act. The said appeal has been
dismissed by the Cooperative Appellate Court on 25.9.1992. However,
the appellate Court has increased rate of interest from 15% to 16.5%
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and allowed said increase in favour of Respondent No.1 – Society.
Therefore, appellate Court has stated that appeal is partly allowed.
3. In Writ Petition No.182 of 1993, the dispute under Section 91
of the Act was filed by Respondent No.1 – Bank against the petitioner
therein on 10.12.1981 for recovery of Rs.16,207.80 ps. with interest.
The petitioner opposed the dispute and he also raised defence of Dam
Duppat. The judgment came to be delivered by the Cooperative Court
on 14.5.1992 and Cooperative Court allowed said dispute. It also
granted interest at 15% on amount of Rs.12,744.16 ps. from the date of
dispute till its realisation. The petitioner filed appeal under Section 97 of
the Act before the Cooperative Appellate Court which came to be
registered as Appeal No.63 of 1992 and Cooperative Appellate Court has
vide its judgment dated 25.9.1992 negatived all contentions of the
appellant. However, it granted increase in rate of interest from 15% to
16.5% in favour of Respondent No.1 – Bank and it has therefore declared
that appeal is partly allowed. It is both these orders passed by the
Cooperative Court and Cooperative Appellate Court which form subject
matter of present writ petitions.
4. Initially, in Writ Petitions, provisions of Section 44-A of the Act
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5
were also challenged and prayer was made to declare amendment to
Section 44-A by Maharashtra Amendment Act No.20 of 1986 as ultra
vires. However, when the matter was placed before the Division Bench
on 27.11.2006, the challenge to validity was given up and therefore the
matter has been listed before this Court for final hearing.
5. I have heard Shri Mohta, learned counsel holding for Shri
Lohiya, learned counsel for the petitioners in both the petitions. S/Shri
Thakare & Kankale, learned AGP have appeared for respondents No. 4 in
respective writ petitions. Nobody has appeared for respondents No. 1 to
3. Actually the matter was heard partly on 9.1.2007 and nobody had
appeared for these respondents even on that date.
6. Shri Mohta, learned counsel has contended that loan is taken
in 1977 and dispute for its recovery has been filed in 1981. He contends
that provisions of Section 44-A of the Act as they stood in statute book on
the date of filing of dispute or on the date of taking of loan by the
petitioners would govern the further proceedings in said suit. In short his
contention is that the provisions of Section 44-A and provisions of Section
96 of the Act as amended by Maharashtra Amendment Act No. 20 of
1986 will not be applicable and Cooperative Court as also Cooperative
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6
Appellate Court have acted without jurisdiction in relying upon amended
provisions in this respect. He contends that by amending Section 44-A of
the Act, certain limitations have been introduced in order to attract rule
of Damdupat but there were no limitations in old Section 44-A of the Act
and therefore said Section 44-A would squarely govern the case of the
petitioners. He contends that when original loan was Rs.15,000/- in one
case and Rs.10,000/- in another case, the recovery of amount double
than these amounts could not have been ordered. He has further invited
attention to unamended provisions of Section 96 of the Act to urge that
the Cooperative Court did not possess power to grant future interest i.e.
interest from the date of institution of the suit till recovery of amount as
per said provision. He states that said power has been given to
Cooperative Court for the first time by introducing amendment in Section
96 in 1986 and hence Cooperative Court in present disputes which are
filed in 1981 could not have taken recourse to amended Section 96 of
the Act and could not have granted interest for the period after the
institution of disputes by Respondent No.1 – Bank. He has further invited
attention to disputes as filed to point out that Respondent No.1 has
prepared a proforma for preferring disputes before the Cooperative Court
and said proforma requires it to specify the amount of loan i.e. principal
amount separately and interest charged upon such principal amount
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separately. He states that in both the disputes no such separate figures
are shown by Respondent No.1. He contends that this requirement was
on account of unamended provisions of Section 44-A of the Act. In this
respect, he has also invited attention to Statements of Accounts filed by
Respondent No.1 in both the matters to point out that even said
application of mind is not apparent from statements of accounts. He
contends that one cannot ascertain what is interest factor charged by
Respondent No.1 from those statements of accounts. He has lastly
contended that the amount claimed in dispute, as filed, do not show the
principal loan amount as also interest factor thereof. The Cooperative
Court has instead of granting interest only on principal amount, granted
interest on entire amount claimed before it. In other words, he contends
that interest has been granted even on interest. He contends that the
Cooperative Court does not possess such power. He lastly argues that in
any case as contemplated by Section 34 of Civil Procedure Code,
Cooperative Court could not have granted interest in excess of 6% on the
amounts claimed before it for the period after filing of dispute. His last
two arguments are in the alternative and without prejudice to his rights
and contentions in relation to Section 96 of the Act. He has invited
attention to the judgment of the Hon'ble Apex Court in the case of
Central Bank of India vs. Ravindra, reported at AIR 2001 SC 3095, to
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substantiate his stand. The respective AGPs have stated that
Respondent No.4 was joined as party respondent because of challenge to
validity of Maharashtra Amendment Act No. 20 of 1986. They state that
as said challenge is given up, the Assistant Government Pleader is not
required to say anything in dispute which is essentially between
Respondent No.1 and the petitioners. However, the attention has been
invited to the Division Bench judgment of this Court in the case of N.N.
Bankar vs. A.P.V.K.S.S. Society Ltd., reported at 1994 (1) Mh.LR 477, to
point out that provisions of Section 44-A of the Act as amended have
been upheld by said Division Bench.
7. Section 44-A of the Act as it stood before its amendment in
1986 Amendment reads as under :
“44-A. Notwithstanding anything contained in any
agreement or any law for the time being in force, a Society
(other than a land development bank) shall not for any loan
given by it to any member for a period not exceeding 15
years whether the loan was given before or is given after
the commencement of the Maharashtra Cooperative
Societies (Third Amendment Act, 1973) charge, on account
of interest, a sum greater than the principal of the loan.”
While said provision after it is amended by Maharashtra
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9
Amendment Act No. 20 of 1986 reads as under :
“44-A. Notwithstanding anything contained in any
agreement or any law for the time being in force, a Society
(including a Cooperative Bank but excluding a land
development bank) shall not for any loan (including
rehabilitation loan but excluding long-term loan for
irrigation or agricultural development purposes or loan
exceeding rupees three thousand for non-agricultural or
commercial purposes) given by it to any member-including
a member-Society) for a period not exceeding 15 years,
whether the loan was given before or is given after the
commencement of the Maharashtra Co-operative Societies
(Second Amendment) Act, 1985, recover, in any manner
whatsoever, on account of interest, a sum greater than the
amount of the principal of the loan.”
It is apparent that the amended provision clearly stipulates
that it is not applicable to long-term loans for irrigation or agricultural
development purposes or loan exceeding rupees three thousand for non-
agricultural or commercial purposes. There was no such exclusion in
unamended Section 44-A of the Act. It included all types of loans and
stipulated that the creditor society shall not on account of interest,
charge a sum greater than the amount of the principal of the loan. By
amendment, though this principle has been maintained, the Legislature
has specified that it would not apply to non agricultural or commercial
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10
loans, if amount borrowed is in excess of Rs.3,000/-. Language of section
44-A before amendment clearly stated that it was attracted whether the
loan was given before or is given after the commencement of
Maharashtra Cooperative Societies (Third Amendment) Act, 1973. Thus,
the date on which loan was given was not held to be relevant by the
Legislature for application of even unamended Section 44-A. It is,
therefore, apparent that the Legislature enacted this provision in the
interest of borrowers and against the wish of creditors and made it
mandatory. The same intention is revealed even in amended provision
of Section 44-A. The said language is maintained and the Legislature has
specified that even if loan was given before or is given after the
commencement of the Maharashtra Co-operative Societies (Second
Amendment) Act, 1985, the borrower will not be required to pay interest
more than the amount of principal of the loan. It is, therefore, clear that
the date on which the present petitioners have received loan from
Respondent No.1 is not at all relevant in the matter. The Legislature
wants that provision to apply to all loans whether disbursed before or
after the commencement of the Act.
8. Though old Section 44-A of the Act did not exclude any loan, it
only exempted those loans which were given to members for a period
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11
exceeding 15 years. This exemption portion of Section 44-A has been
widened further by 1986 Amendment which stipulates that long term
loans for irrigation and agricultural development purposes or loans
exceeding Rs.3,000/- for non-agricultural or commercial purposes shall
not be subject to provisions of section 44-A. Thus, when old Section 44-A
is read along with the amended provision thereof, it is apparent that
even though a loan for irrigation or agricultural development purposes or
loan exceeding Rs.3,000/- for non agricultural or commercial purposes
was under the protective umbrella of Section 44-A prior to 1986 after
1986, it ceases to enjoy the said protection. It is, therefore, apparent
that merely because dispute is filed in 1981 and provisions of Section 44-
A have been amended thereafter, that cannot be the reason to contend
that old Section 44-A would govern the rights of the parties in the matter.
9. At this stage, Shri Mohta, learned counsel for the petitioners
has invited attention to Division Bench judgment in the case of Nivrutti
vs. A.P.V.K. Seva Sahakari Society Ltd., reported at AIR 1985 Bom. 131,
to contend that in the facts of present case, the loan amount is
crystalized in the year 1981 itself when dispute was filed and hence the
provisions of old Section 44-A alone will be applicable. The perusal of
said judgment reveals that the Hon'ble Division Bench there found that in
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12
unamended Section 44-A, legislature in its wisdom used the expression
“charge” which means demand. The Division Bench found that
expression used was not “recover”. The Division Bench in this
background observed that said expression cannot be confused with the
recovery of the amount after it has been crystalized either in an Award
or order of a competent authority. In the facts of said case, the Division
Bench found that on the date on which the society moved an application
under Section 101, the amount of interest charged by it was much less
than the principal amount and therefore Section 44-A was not applicable.
However, in relation to amended provision of Section 44-A, this
controversy is rendered redundant because amended provision of
Section 44-A does not use the word charge and it used the word recover.
I, therefore, find that this Division Bench judgment is not helpful to
present petitioners.
10. Section 44-A exempts commercial loans exceeding Rs.3,000/-
from its fold. As already stated above, amount of loan in both these
matters is more than Rs.3,000/-. The present petitioners in their written
statement before the Cooperative Court have stated that the dispute as
filed was not maintainable because it was filed against firm without
joining partners or proprietors thereof as parties. The Cooperative Court
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13
has considered these findings and has negatived it. In the process, the
Cooperative Court found that loan was obtained by the present
petitioners for business purposes and he avoided to pay loan dishonestly.
As already held above, the amended provisions of Section 44-A would
apply in the matter and as the loan has not been shown to have been
obtained for purposes other than non-agricultural purposes and in view
of the findings raised by the petitioners in their written statements, it will
have to be held that the petitioners have obtained loan for commercial
purposes. Hence, even on this count, the said challenge insofar as Writ
Petition No.117 of 1993 is concerned, is bound to fail.
11. Coming to the second argument about the provisions of
Section 96 of the Act, the amended provision of Section 96 reads as
under :
“When a dispute is referred to arbitration, the Cooperative
Court may, after giving a reasonable opportunity to the
parties to be heard, made an award on the dispute, on the
expenses incurred by the parties to the dispute in
connection with the proceedings, and fees and expenses
payable to the Co-operative Court. In case of money claim
preferred by society against a member, the amount of
award representing the interest shall not be less than the
amount of interest accrued thereon in accordance with the
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contractual rate of interest but where such money claim
relates to any loan referred to in section 44-A, the
provisions of that section shall apply to such money claim
as they apply to loan under section 44-A.”
The said provision as amended by Amendment Act No. 20 of
1986 insofar as portion relevant for present consideration is concerned,
it stipulates that the Cooperative Court cannot in a claim preferred by a
society against a member, award interest less than the amount of loan in
accordance with contractual rate of interest. Here, there is no dispute
about the fact that contractual rate was 16.5%. However, the argument
advanced is that under unamended provision of Section 96, Cooperative
Court did not possess any such powers. The unamended provisions of
Section 96 reads as under :
“When a dispute is referred to arbitration, the
Registrar (or the Co-operative Court may, after giving a
reasonable opportunity to the parties to the dispute to be
heard, make an award on the dispute, on the expenses
incurred by the parties to the dispute in connection with the
proceedings, and fees and expenses payable to the
Registrar (or the Co-operative Court, as the case may be,)
Such an award shall not be invalid merely on the ground
that it was made after the expiry of the period fixed for
deciding the dispute by the Registrar, and shall, subject to
appeal or review or revision, be binding on the parties to
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the dispute.”
12. It is, therefore, clear that unamended provision of Section 96
does not speak of any interest at all. It is further clear that if the
arguments of petitioners are accepted then the provisions of Amendment
Act also cannot be read as enabling Cooperative Court to award future
interest. When the provisions of Section 96 (unamended) are read with
amended provisions of Section 96 of the Act, it is apparent that by
Amendment Act No.20 of 1986, legislature has put an obligation upon
the Cooperative Court not to award interest at a rate lesser than
contractual rate of interest. By this amending provision, it is clear that
the legislature was aware that the Cooperative Court possessed power to
award future interest and hence it has taken precaution by amending
said provision in Section 96 of the Act by requiring the Cooperative Court
to award interest at contractual rate only. Thus, the arguments of the
petitioners are without any substance even on this count.
13. The learned counsel for the petitioners has contended that in
view of the judgment of the Hon'ble Apex Court in Central Bank of India
vs. Ravindra, (supra), particularly paragraph 55, clause 8 thereof, the
Court has got discretion in the matter of grant of interest pendente lite
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and post-decree interest. However, in view of the provisions
incorporated in Section 96 by Amendment Act No. 20 of 1986, which
mandates Cooperative Court to award interest at a rate not less than
contractual rate of interest, I find that this ruling again has no application
in the facts of present case. The learned counsel has contended that the
Cooperative Court has awarded interest on interest and in view of the
provisions of Section 34 of CPC, in any case such future interest could not
have been in excess of 6%. In view of the specific provision made by
Amendment Act No. 20 of 1986, in Section 96 of the Act, I find that
Section 34 of Civil Procedure Code will have no application here.
Similarly, perusal of disputes as filed by Respondent No.1 reveal that
they have claimed interest as mentioned in their Bye laws. The said
interest also appears to have been at 16.5%. The Cooperative court has
granted interest at 15% while delivering the awards on 6.1.1992 and
14.5.1991 respectively. It is apparent that the interest has been granted
in accordance with the provisions of agreement between the parties and
also in accordance with provisions of Bye laws. Therefore, I find that the
arguments of the petitioners about grant of interest on interest are
without any merit in the facts of both these writ petitions. The
Cooperative Court has, however, overlooked the mandate of Section 96
of the Act and has granted interest at a rate which was lesser than the
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contractual rate of interest between the parties. The Cooperative
Appellate Court has corrected that error and has granted interest at
agreed rate to Respondent No.1. Such use of discretion by the appellate
Court is in accordance with Section 96 of the Act and therefore not
illegal. The petitioners cannot take advantage of apparent error
committed by the Cooperative Court by ignoring mandate of Section 96
of the Act. I, therefore, find no substance even in arguments of learned
counsel for the petitioners that the Cooperative Appellate Court has
given relief to Respondent No.1 though Respondent No.1 did not file
appeal under Section 97 of the Act before it.
14. In the result, I find that there is no merit in any of the petitions
and both writ petitions are accordingly dismissed. However, in the
circumstances of the case, there shall be no order as to costs.
15. At this stage, Shri Mohta, learned counsel for the petitioners
states that as per orders of this Court passed in present matters, the
petitioners have already deposited the amount equal to double the loan
amount with Respondent No.1 – Bank in 1993 itself. He states that such
an amount along with interest accrued thereon should be taken into
consideration by Respondent No.1 - Bank while finalizing the amount, if
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any, outstanding against the petitioners. He states that he is making this
request without prejudice to the rights of the petitioners to file appeal
against the orders passed by this Court today.
16. Under the circumstances, Respondent No.1 – Bank shall take
into account the amounts deposited by the petitioners with it along with
interest, if any accrued upon it while working out for finalizing the
accounts of the petitioners in the matter.
JUDGE
*
*GS.
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