WP/7995/2007 of Lagisetty Renuka Vs The Deputy Registrar of Cooperative Societies, on 26 December 2007

O r d e r:

Assailing the order dated 15.09.2005, passed by respondent No.1, namely the Deputy Registrar of Co-operativeSocieties, confirming the sale of immovable properties and directingissuance of sale certificate, as confirmed by the A.P. Co-operativeTribunal vide orders dated 06.03.2007, passed in appeal in C.T.A. No.50 of 2005, the petitioners filed the present writ petition.

One Lingasetty Venkateswarlu, who is husband of petitionerNo.1 and father of petitioner Nos. 2 to 4, after the death of his father, bymaking his mother, namely Lingasetty Satyavathi co-applicant had obtained a loan of Rs.1,00,000/- from respondent No.3-Bank in the month of September, 2000 by mortgaging the houseproperty, which the petitioners contend is a joint family property. As theloanee failed to repay the loan amount, respondent No.3 initiatedaction for recovery of the loan amount, which led sale of the houseproperty in the auction conducted on 25.05.2005 in favour of oneLingaboina Venkateswarlu (impleaded respondent), for Rs.1,73,000/-. Assailing the said sale, the petitioners moved respondent No.1, whovide proceedings dated 15.09.2005 after considering the objectionsraised by the petitioners, rejected them and confirmed the sale anddirected issuance of sale certificate. Aggrieved thereby, the petitionerspreferred appeal in C.T.A. No. 50 of 2005, and the Co-operativeTribunal, vide orders dated 06.03.2007, confirmed the order ofrespondent No.1. Hence, the petitioners filed the present writ petition.

The learned counsel for the petitioners submitted that the houseproperty which Lingasetty Venkateswarlu along with his mother had mortgaged with the 3[rd] respondent-Bank for obtaining loan amount is ajoint family property and they have 3/4[th] share in the same. Hesubmits that already the petitioners have filed a suit in O.S. No. 31 of2006 on the file of the Senior Civil Judge, Khammam, againstLingasetty Venkateswarlu and his mother, for partition, and the saidCourt by order dated 27.02.2006 passed in I.A. No. 182 of 2006 hasgranted interim injunction restraining the defendants, including theofficial respondent Nos. 3 and 4 from alienating the suit scheduleproperty. He submits that the value of the mortgaged house property isworth Rs. 7,26,028/-, but the respondents have put it to sale by under-valuing it at Rs.2,86,860/-, and in fact sold the same to the highestbidder for Rs.1,71,000/- without conducting any public auction, andsince there are irregularities in the conduct of the sale, the sale cannotbe sustained and has to set aside. He submits that except the houseproperty, the petitioners have no other property, and as such,immediately, upon coming to know about the sale, they movedrespondent No.1, but without considering the objections raised by thepetitioners, respondent No.1, vide order dated 15.09.2005, confirmedthe sale and directed issuance of sale certificate, and the Co-operativeTribunal also dismissed the appeal in C.T.A. No. 50 of 2005, filed bythem by order dated 06.03.2007, confirming the order passed byrespondent No.1, which orders according to the petitioners, are illegaland arbitrary. He submitted that pursuant to the dismissal of theappeal, respondent No.4, namely the Divisional Co-operative Officer,pasted notice dated 11.04.2007 to the door of the petitioners,instructing them to vacate the premises. He submits that since thehouse property is subject matter of suit for partition, the respondentscannot be allowed to take further action in the matter, else thepetitioners would be put to irreparable loss and injury.

Respondent No.2 on his behalf and on behalf of respondentNos. 1 and 4 filed counter affidavit denying the allegations made bythe petitioner. The learned Government Pleader for Co-operationrepresenting the respondents submitted that the official respondents inthe conduct of auction as well as issuance of sale certificate, whichwas confirmed in appeal by the Co-operative Tribunal, have followedthe procedure prescribed under law, and in fact, they have issuednotice to the loanee and all concerned at every stage, and that havenot committed any irregularities, much less in the matter of fixation ofthe value of the property. He submitted that the petitioners have falselyobtained valuation certificate showing the extent of the property as1800 feet and got the value fixed at Rs.7,26,310/-, while the extent ofthe property mortgaged with respondent No.3 and which was put toauction for non-payment of the loan amount is only 500 feet, whosevalue as on the date of sale was Rs.2,86,860/-, while at the time oftaking loan was Rs.2,47,500/-, as certified by the Joint Registrar. Respondent No.1 after considering the objections taken by thepetitioners, disbelieved the same and rejected the same by orderdated 15.09.2005, confirmed the sale, and the same was rightly upheldby the Co-operative Tribunal in appeal in C.T.A. No. 50 of 2005, videorders dated 06.03.3007. The present writ petition and theproceedings that preceded it before respondent No.1 and the Co-operative Tribunal, are at the instance of the loanee, which is only witha view to frustrate the realization of the amounts advanced by it to theloanee.

Respondent No.3 also filed counter. The learned StandingCounsel for respondent No.3 reiterated the counter averments, and thestand taken by him is similar to the one taken by respondent Nos. 1, 2and 4. He contended that the petitioners filed the present writ petitionat the instance of the loanee with an intention to delay the recovery of the loan amount. The petitioners, neither before respondent No.1 norbefore the Co-operative Tribunal nor before this Court, made thehighest bidder in whose favour the sale was confirmed, a party-respondent. He submitted that the loanee at the time of obtaining loansubmitted family members certificate, issued by the Mandal RevenueOfficer, showing that he and his mother Lingasetty Satyavathi, are thelegal heirs of his late father, and that they are having absolute title overthe property, and considering that, they have granted the loan, and asthe loanee failed to pay the loan amount, they initiated steps beforerespondent No.1 for sale of the mortgaged property, which culminatedin the sale of the property, based on the valuation fixed by the JointRegistrar. He submitted that respondent No.1 after considering theobjections taken by the petitioners rejected the same, which wasconfirmed in appeal by the Co-operative Tribunal, and no interferenceis called for therewith.

Respondent No.5, who got impleaded in the writ petitionsubmitted that he purchased the property in question in public auctionon 25.05.2005 for Rs.1,73,000/- and he having paid the entire saleconsideration, the sale was confirmed by respondent No.1 videproceedings dated 15.09.2005, and that he even got the sale deedregistered in the Sub-Registrar’s Office. He stated that the order ofrespondent No.1 was even confirmed by the Co-operative Tribunal inC.T.A. No. 15 of 2005. The petitioners having filed civil suit in O.S. No.31 of 2006 on the file of Senior Civil Judge, Khammam, for partition,cannot assail the orders passed by the Co-operative Tribunal in C.T.A.No. 15 of 2005, which confirmed the order of respondent No.1confirming the sale in his favour.

Heard the learned counsel for the petitioner, the learnedGovernment Pleader for respondent Nos. 1, 2 and 4, the learned Standing Counsel for respondent No.3 and the learned counsel forrespondent No.5.

Conclusion

Though the petitioners raised several contentions, the limitedquestion that arises for consideration in the writ petition is whether therespondents in the conduct of sale, which was confirmed byrespondent No.1 and the Co-operative Tribunal in appeal, havecommitted any irregularities.

One Sri. Lingasetty Venkateshwarlu, who happens to be thehusband of petitioner No.1 and father of petitioner Nos. 2 to 4, bymaking his mother, Lingasetty Satyavathi co-applicant, took loan of Rs.1,00,000/- from respondent No.3-bank by mortgaging the houseproperty in the month of September, 2000. As the loanee failed torepay the loan amount, respondent No.3 got issued notices, and thesame did not yield any result, respondent No.3 moved respondentNo.1, who issued notice requesting the loanee to pay the outstandingloan amount.

However, as the loanee failed to respond to the notices dated21.07.2001, 20.08.2001, 08.12.2001 and 21.12.2001, respondent No.1initiated steps against the loanee under Section 71(2) of the A.P. Co-operative Societies Act, 1964 (for short ‘the Act’) for recovery of theloan amount. He issued notice dated 13.01.2002, and thereafter, afterissuing notice to all concerned, enquiry was conducted enquiry on19.02.2002, and as the loanee failed to turn up, he was set ex parte,and was again called upon to pay the outstanding amount.

As the amount was not paid, a certificate dated 19.03.2002under Section 71 of the Act, was issued to enable recovery. Inpursuance thereof, respondent No.3 filed execution petition beforerespondent No.1 on 23.04.2002. Respondent No.1 appointedrespondent No.2 as Sale Officer on 02.05.2002 to conduct sale of theproperty. In execution thereof, respondent No.2 visited the property and issued notices to the loanee as well as the guarantor on03.06.2002, 17.06.2002, 07.08.2002 and 08.08.2002, and as therewas no response, he published notification dated 13.10.1002 inTelugu news papers for sale of the property mentioning the date ofauction as 26.10.2002 and the same was even fixed to the door of theloanee, but he prevented the participants from bidding. Therefore, theycould not conduct auction as scheduled on that day.

However, when respondent No.2 sought to conduct auction, thepetitioner’s husband approached this Court and filed W.P. No. 21166of 2002 seeking stay of sale, but the same ultimately was dismissed on28.03.2003. Thereafter, the loanee filed insolvency petition in I.P. No.30 of 2001 on the file of the Court of the Senior Civil Judge,Khammam, which was dismissed holding that the husband ofpetitioner No.1 was having the means and capacity to discharge theloan amount. After, dismissal of the I.P., respondent No.2 issuedpublic auction notice dated 06.05.2005, which was published inTelugu newspaper (Eenadu) on 08.05.2005, fixing the date of auctionas 25.05.2005, and in the said auction, one LingaboinaVenkateswarlu, was declared the highest bidder at Rs.1,73,000/-.

It is at this point of time, the petitioners filed objections beforerespondent No.1 contending that the house property which was put toauction, is a joint family property, and that they have 3/4[th] share in thesaid property. They further contended that the value of the propertywas Rs. 7,26,310/-, while it was sold at Rs.1,71,000/- by undervaluingit at Rs. 2,86,860/-, and that no wide publicity, much less notice wasgiven with respect to the auction. Therefore, the sale shall not beconfirmed.

As can be seen from the record produced by the respondents,respondent No. 1 before passing the order dated 15.09.2005, issued

notices to all concerned. Though the hearing was conducted threetimes on 09.08.2005, 18.08.2005 and 23.08.2005, as neither thepetitioners nor their counsel appeared nor filed any material in supportof their case, he having considered the material placed before him,came to the conclusion that the valuation certificate produced by thepetitioners showing that the value of the property was Rs.7,26,310/-was with regard to an extent of 1800 Sq. ft., while the actual property mortgaged by the loanee wasonly 500 Sq. ft., whose value at the time of taking loan wasRs.2,47,500/- and at the time of putting it to auction, its value wasRs.2,86,860/-, and in fact, it is the case of the respondents that theproperty was auctioned at that price.

The fact that no wide publicity nor any notice was given beforeconducting the auction, was rejected by respondent No.1, consideringthe fact that apart publishing auction notice in Eenadu newspaper, asstated above, pamphlets were distributed and the notice was alsoaffixed in the Offices of the Mandal Development Officer and theMandal Revenue Officer, Khammam, Grama Panchayat, KhanapuramHaveli, Divisional Co-operative Officer and District Co-operativeOfficer, Khammam. He, thus came to the conclusion that theobjections raised by the petitioners are not genuine, and as such,rejected the same, and passed the impugned order dated 15.09.2005confirming the sale, and directed issuance of sale certificate.

Though against the said order, the petitioners preferred appealin C.T.A. No. 50 of 2005 before the Co-operative Tribunal, the factremains, the petitioners did not make the highest bidder a partyrespondent in the appeal, and though on that ground alone, the Co-operative Tribunal, thought it not to entertain the appeal, however, afterconsidering the grounds taken by the petitioners, and having regard tothe reasons assigned by respondent No.1 in his order, rejected them, and no exception can be taken thereto.

Though the petitioners have not made the auctioneer purchasera party-respondent to the writ petition, the fact remains, the auctionpurchaser has himself got impleaded as respondent No.5 in the writpetition. It is his case that he being the highest bidder in the auction,purchased the property and he having paid the entire saleconsideration, the sale was confirmed in his favour by respondentNo.1, which was even confirmed in appeal by the Co-operativeTribunal in C.T.A. No. 50 of 2005.

The contention of the petitioners that since they are livingseparately and away from the loanee, they are not aware of the loantaken by the loanee by mortgaging the title deeds, cannot be accepted,for it is the case of the respondents that the petitioners are living withthe loanee and his mother. That being the case of the respondents, ifnot the minors, at least petitioner No.1 should be in the know of thehappenings in the house, and more so when the respondents weremaking efforts to put the property to sale since 2002, were successfullybeing stalled by the loanee.

Though the petitioners claim that they being the legal heirs,have a share in the mortgaged property put to sale, it is the case of therespondents that the loanee at the time of taking loan from respondentNo.3 has produced certificate issued by the Mandal Revenue Officershowing that himself and his mother are the legal heirs of his latefather, and considering the same, the property was taken in mortgagedand the loan sanctioned. The husband of petitioner No.1, admittedly,having taken loan from respondent No.3, failed to pay the same, andthe Insolvency Petition in I.P.

No. 30 of 2001 on the file of the Senior Civil Judge, Khammam wasalso dismissed holding that despite having the capacity, he is notdischarging the loan amount, and in that view of the matter, the respondent No.3 is entitled to sell the property mortgaged to them andrecover its loan amount.

The petitioner No. 1 and petitioner Nos. 2 to 4, are no other thanthe wife and children of the loanee Lingasetty Venkiateshwarlu, and itseems that their intention is to one way or the other, drag on theproceedings, and stall the confirmation of the sale of their house infavour of the highest bidder. Inasmuch as, respondent No.1 aftergiving the fullest opportunity to the loanee, including the petitioners,and after following the due process of law, had passed orderconfirming the sale of mortgaged property in favour of respondentNo.5, no exception can be taken to the order passed by the Co-operative Tribunal, confirming the same in appeal. Therefore, thecontention of the petitioners that no notice was given to them by therespondent authorities before confirming the sale cannot be accepted. In that view of the matter, I find no reason whatsoever to interfere withthe impugned orders.

The writ petition is devoid of merit, and the same is accordinglydismissed. No costs.

Dated: 26[th] December, 2007.KSR

________________

N.V. RAMANA, J.