MS MANJARA INDUSTRIAL CO OP SOC LTD vs BANK OF MAHARASHTRA on 1 October 2025

COMMON JUDGMENT

(Delivered on 01st October, 2025)

1. Both the Appeal No.6/2025 titled M/s. Manjra Industrial Co-Op. Soc. Ltd., & others Vs. Bank of Maharashtra & others and Appeal No.7/2025 titled Social Welfare Department, Latur, through its Authorised Officer, Shivkant Nagorao Chirkurte Vs. Bank of Maharashtra & others are being disposed of by passing a single Judgment and as both the Appeals are arise from common order dated 31.07.2024 passed by learned RO-II, DRT, Aurangabad in Recovery Certificate No.111/2020. Both the Appeals have filed by the appellants against the defendants under Section 30 (1) of Recovery of Debts and Bankruptcy Act (hereinafter referred as RDB Act) 1993.

APPEAL NO.6/2025

2. The brief facts of Appeal No.6/2025 are that the Appellant No.1 is an Industrial Co-Operative Societies Ltd. duly registered with the Registrar of Co-operative Society and Appellant No.2 to 5 are the Chairman, Vice-Chairman and Directors of Appellant No.1. Mr. Rajkumar Revappa Mane has been authorised by way of Board Resolution dated 03.08.2024 to sign, verify the claim, written statement etc. and to do all necessary action / Court Proceedings.

3. The Respondent No.1 Bank of Maharashtra is a Certificate- Holder Bank. The respondent No.2 is the original respondent No.6 in Original Application No.201/2015 and the Respondent No.3 is the Auction Purchaser. The respondent No.1 Bank of Maharashtra filed Original Application No.201/2015 against the appellant for Recovery of Rs.33,43,977/- (Rupees Thirty-Three Lacs

Forty-Three Thousand Nine Hundred Seventy-Seven only). The present respondent No.2 Social Welfare Department was defendant No.6 in the above Original Application. The Hon’ble Tribunal allowed the Original Application vide Judgment and Order dated 19.03.2020 and issued a Recovery Certificate for an amount of Rs.33,43,977/- (Rupees Thirty-Three Lacs Forty-Three Thousand Nine Hundred Seventy-Seven only) alongwith pendent-lite and future interest @12% per annum from 11.08.2015 till realization. The Recovery Proceedings were initiated vide Recovery Certificate No.111/2020 by Recovery Officer-II, Debts Recovery Tribunal, Aurangabad against the Certificate-Debtors / present appellants. The mortgaged property bearing Plot No.115 Latur Industrial Area, Village Varwandi, Latur admeasuring 3253 Square Meters was put to E-Auction by the Recovery Officer on 13.07.2023 and present respondent No.3 was declared as successful bidder in E-Auction.

4. It is further averred that the Appellants through one of its Directors filed objections Exhibit-37 in Recovery Certificate No.111/2020 before the Recovery Officer-II, Debts Recovery Tribunal, Aurangabad on various grounds and the

Certificate-Holder Bank on 20.05.2018 had offered an OTS to Certificate-Debtors under a Scheme for Rs.15,98,276.61Ps. (Rupees Fifteen Lacs Ninety-Eight Thousand Two Hundred Seventy-Six and Paisa Sixty-One only) and the same was accepted by the bank and accordingly Rs.9,00,000/- (Rupees Nine Lacs only) was also deposited by the Certificate Debtors. However, the Certificate Debtors were unable to deposit the balance amount of One Time Settlement and by letter dated 19.12.2019 requested the Certificate-Holder Bank to extend the time to deposit the balance One Time Settlement amount. The appellants amicably reached at One Time Settlement and the Certificate Holder Bank vide its OTS sanction letter dated 25.08.2023 has approved the OTS request letter and Certificate-Debtors had deposited entire certificate amount with the Certificate-Holder bank and on payment of OTS amount, the respondent bank has also agreed to release the charge on the secured documents. The appellants therefore filed application before the Recovery Officer and prayed for closure of Recovery Certificate in view of full satisfaction of the same.

5. The learned Recovery Officer on 09.10.2023 issued directions to the Certificate-Holder Bank directing them not to issue No Dues Certificate to the appellants till disposal of the objections Exhibit-37 filed by the appellants and objections Exhibit-38 filed by the Social Welfare Department, present Respondent No.2. The Recovery Officer after taking reply of the objections and hearing the parties vide Common Order dated 31.07.2024 dismissed the objections filed by the present appellants vide Exhibit-37 and further partly allowed the application filed as Exhibit-38 by the respondent no.2 and directed the Respondent No.2 to remove the plant and machinery lying in the auctioned property within 15 days from the date of order with liberty to sell the same as per law and further the E-Auction in favour of Respondent No.3 was confirmed and ordered to issue sale certificate in his favour. The Recovery officer further issued letter to Sub-Registrar for registering the sale certificate and appointed Mr. Anup Ghorpade to hand over the physical possession of the auctioned suit property.

6. Now, the appellants of Appeal No.6/2025 and Appellant of Appeal No.7/2025 have challenged the common order dated 31.07.2024 passed by the Recovery Officer on the

grounds that the Recovery Officer was vested with the power to execute the Recovery Certificate issued by the Tribunal. The loan account was liquidated by the appellants well before confirmation of the sale and as such the confirmation of sale is bad in law. The auction sale at the behest of the Certificate-Holder Bank was not required to be proceeded further when loan account of the appellants was settled by way of One Time Settlement and entire amount was paid and the Recovery Officer failed to follow the mandate of the law. Further, the Recovery Officer by its own order dated 09.10.2023 directed the Certificate-Holder Bank not to issue No Dues Certificate to the auction purchaser inspite of liquidation of loan account by way of One Time Settlement. There were no dues to be recovered under the recovery certificate on the date of confirmation of the sale from the present appellants and thereafter the Recovery Officer has no jurisdiction to adjudicate any claim of third party. The present appellants by filing the present appeal prayed that the Order dated 31.07.2024 passed by the Recovery Officer is liable to be quashed and set-aside and the sale certificate Exhibit-52 dated 31.07.2024 is also to be set-aside and auction sale conducted by the Recovery

Officer of the secured asset be also quashed and set-aside with all consequential actions and prayed for allowing the appeal.

7. The respondent No.1 namely Bank of Maharashtra filed Say at Exhibit-5 alleging therein that there was no One Time Settlement between the bank and the applicants but the applicants have paid the entire amount outstanding under the Recovery Certificate and in view of the same, Recovery Certificate being satisfied and No Dues Certificate to that effect has been issued in favour of appellants. Moreover, the respondent bank has filed the application for closure of Recovery Proceeding No.111/2020 in view of full satisfaction of the Recovery Certificate. The respondent no.1 bank has admitted that the Original Application No.201/2015 was filed in Debts Recovery Tribunal, Aurangabad and present respondent No.2, Social Welfare Department was defendant No.6 therein but the defendant No..6 failed to appear and never challenged the Judgment dated 19.03.2020 passed in Original Application No.201/2015 which has attained finality between the parties.

8. It is further submitted by the respondent No.1 Bank of

Maharashtra, the application filed at Exhibit-47 before the Recovery Officer was duly replied and it was contended that as per Section 31 A of the RDB Act, the respondent No.2 has no right / voice before the Tribunal. The Recovery Certificate issued by the Collector under the Maharashtra Land Revenue Code cannot be executed before this forum. The Tribunal has not recorded first charge of the Respondent No.2 over the secured asset vide Judgment dated 19.03.2020. It was admitted that the applicant has deposited entire amount outstanding under recovery certificate before confirmation of sale and issuance of sale certificate and recovery certificate is fully satisfied. The respondent No.l has already filed application before the Recovery Officer for withdrawal of Recovery Proceeding No.111/2020 in view of the above submissions and prayed for passing necessary orders in the Appeal.

9. No reply filed by the Respondent No.2 Social Welfare Department.

10. No reply of this Appeal was also filed on behalf of the Respondent No.3, Auction Purchaser, however, Mr. S.R. Vakil appeared on behalf of the Auction Purchaser.

APPEAL NO.7/2025

11. Brief facts of the Appeal No.7/2025 filed by the Social Welfare Department Latur are that; the Respondent No.1 namely Bank of Maharashtra i.e. the Certificate-Holder Bank filed Recovery Proceedings against the Respondent Nos.2 to 6 borrowers / Certificate Debtors for recovery of Rs.33,43,977/- (Rupees Thirty-Three Lacs Forty-Three Thousand Nine Hundred Seventy-Seven only) and in OA Para No.5.2 had admitted that the appellant is having first charge over the mortgaged property. The respondent Nos.2 to 6 and the present appellant were proceeded ex-parte in the Original Application No.201/2015. It is submitted that the Recovery Officer sold away the secured asset vide E-Auction dated 13.07.2023 and the respondent No.7 in the present Appeal was declared as highest bidder who had deposited the amount of Rs.1.22 Crores (Rupees One Crore Twenty-Two Lacs only). The Recovery Officer observed that the valuation of the machinery be called for and the same be put for auction. The present appellant filed objections before the Recovery Officer on 14.08.2023 as Exhibit-38 with the contentions that the respondent No.1

Certificate Holder Bank in its Original Application No.201/2015 admitted that the present Appellant Social Welfare Division having first charge and the respondent No.2 Certificate-Holder having second charge over the mortgaged property. Therefore, the appellant has first right of recovery of its amount and after recovery of appellant the due amount, the respondent No.1 will be entitled to recover his loan amount. The sale notice issued by the bank did not mention that there was encumbrance of present appellant on the property whereas it was well within the knowledge of the respondent bank and therefore the sale is vitiated. The entire property with plant and machinery was not put to auction and therefore the property had not fetched the appropriate price. The respondent No.1 bank filed its say to the application Exhibit-38 of the appellant and opposed the same. The respondent No.1 by its letter dated 25.08.2023 had sanctioned the One Time Settlement proposal submitted by the respondent No.2 and the Recovery Officer by its order dated 09.10.2023 has directed the respondent No.1 bank not to issue No Dues Certificate till the disposal of the objection petition. The sale is vitiated as the appellant was not made party to the present proceeding and the property was put to sale without mentioning the charge of the appellant. The respondent No.2 had deposited the OTS amount with respondent No.1 and filed application Exhibit-42 for closing the Recovery Proceedings as the amount had been recovered towards the Recovery Certificate.

12. It is further submitted by the appellant that as per the provisions of the Maharashtra Land Revenue Code, the appellant had filed an application to learned Collector for issuance of Recovery Certificate against the respondent no.2 namely M/s. Manjra Industrial Co-Operative Society Ltd. The Collector vide its Order dated 04.12.2023 had issued Recovery Certificate in favour of the appellant. The said Recovery Certificate had been produced on record at Exhibit-50. The Recovery Office-II by its Order dated 31.07.2024 was pleased to dismiss the application Exhibit-37 and partly allowed application Exhibit-38 filed by the appellant and directed the appellant to remove the plant and machinery lying in the auctioned property within 15 days and after removal of the same, the appellant filed an application for withdrawal of the amount. The present appellant has challenged the impugned order dated

31.07.2024 by filing the present Appeal on the grounds that the appellant was having his first charge over the mortgaged property which was sold by the respondent No.1 bank without disclosing the first charge of the present appellant. Further, the Recovery Certificate No.111/2020 was fully satisfied when the entire amount was paid by the borrower before issuance of sale certificate and confirmation of sale. The proceedings after satisfaction of the Recovery Certificate by the Recovery Officer, are without jurisdiction and the same needs to be quashed and set-aside. The Recovery Officer has wrongly observed in the order particularly in Para No.63 that the Social Welfare Department yet to recover the amount from the borrowers / Certificate Debtors and the mortgaged property is successfully auctioned and the Auction Purchaser has deposited the entire auction amount and prayer of the Certificate Debtor to cancel the auction cannot be considered as it would frustrate the object and purpose behind this auction and deter public confidence. When the respondent No.1 had settled the account, the Recovery Officer-II had no jurisdiction to act as Recovery Officer for the appellant. The Recovery Officer-II had no jurisdiction to confirm the sale when the respondent No.2 had already settled the account with respondent No.1. As per settlement, the appellant has initiated separate recovery proceedings under the Maharashtra State Land Revenue Code and the order of Recovery Officer has no binding effect on the appellant as he was not made party to the recovery proceedings. The appellant prayed that Order dated 31.07.2024 passed by the Recovery Officer-II in Recovery Certificate No.111/2020 and auction as well as sale certificate issued in favour of the Respondent No.7 be quashed and set-aside. The auction sale conducted by the Recovery Officer-II, Debts Recovery Tribunal, Aurangabad in Recovery Certificate No.111/2020 in respect of mortgaged property (secured asset) i.e. all the piece and parcel of the Property of Plot No.115, admeasuring total admeasuring 3253 Square Meters, situated at Latur, Industrial Area, Village Varwandi, Latur, be quashed and set-aside with all consequential actions and Appeal may be allowed with costs.

13. The respondent No.1 Bank of Maharashtra filed reply Exhibit-5 alleging therein that application filed by the appellant before the Recovery Officer was not maintainable

as sale was finalized on 13.07.2023. The Recovery Certificate was issued on 19.03.2020 which was never challenged by the appellant. The Mortgaged Property was put to sale as it was mortgaged with respondent No.1 and the respondent No.1, a secured creditor having priority charge over the appellant. It was admitted that the present appellant had first charge and he was made party in Original Application No.201/2015 but he failed to appear and the Tribunal allowed the Original Application No.201/2015 and nowhere charge of the appellant was recorded. The said Recovery Certificate was never challenged by the present appellant and it has attained finality. The Recovery Officer has rightly put the property for sale as there was no charge recorded in the Judgment in favour of the present appellant namely Social Welfare Division. The borrowers had paid the entire dues under the Recovery Certificate and it was not under One Time Settlement.

14. The respondent No.1 bank filed its say Exhibit-44 before the Recovery Officer. The respondent No.2 has paid the entire amount under Recovery Certificate and moved Application Exhibit-42 for closing the Recovery Proceedings as the amount being recovered towards the Recovery Certificate.

The respondent No.1 denied other allegations of the appellant and dismissal of the present appeal with costs has prayed for.

15. No reply was filed on behalf of the respondent / borrowers being Respondent Nos.2 to 6.

16. No reply filed by the respondent No.7 Auction Purchaser whereas Shri S.R. Vakil, Advocate has appeared on his behalf.

17. I have heard the learned counsels for the parties in both the appeals and gone through the material on record thoroughly and carefully. My findings are as under:-

REASONS

18. Before proceeding further, it is necessary to make reference of the operative part of the impugned order passed by the Recovery Officer-II, Debts Recovery Tribunal, Aurangabad on 31.07.2024, which is as under: “1. The objection filed by certificate debtor at Exh.37 is stand dismissed.

2. Application filed at Exh.38 is partly allowed.

3. The social welfare department/Tehsildar, Latur is directed to remove the plant and machinery lying on auctioned property within 15 days from the date of order and has liberty to sale the same as per law. After removal of plant and machinery from the auctioned property bearing Plot No. 115 admeasuring area 3253 Sq. Mtrs. Situated at Latur Industrial area, Village Varwanti, Latur, the social welfare department being first charge holder shall file an application before this forum for withdrawal of auction amount.

4. E-auction sale of property bearing Plot No.115 admeasuring area 3253 Sq. Mtrs. situated at Latur Industrial area, Village Varwanti, Latur conducted on 13.07.2023 is stand confirm in favour of successful auction purchaser Shri Girish Jugalkishorji Sikchi.

5. Sale certificate is issued in favour of auction purchaser.

6. Letter issued to concerned Sub-Registrar for registering the sale certificate.

7. Shri Anup Ghorpade is appointed as a court commissioner to hand over physical possession of auctioned property. Issue order to Shri Anup Ghorpade, court commissioner to hand over peaceful possession of auctioned property to the auction purchaser.

8. Registry is directed to send the copy of order to all concerned parties including District Magistrate, Latur and Tehsildar, Latur”.

19. In this case certain facts are admitted that appellant in the Appeal No.7/2025 namely Social Welfare Department was having first charge over the secured asset and the Bank of Maharashtra was having secondary charge. It is also admitted that the Bank of Maharashtra filed Original

Application No.201/2015 against the borrowers for recovery of Rs.33,43,977/- (Rupees Thirty-Three Lacs, Forty- Three Thousand, Nine Hundred and Seventy-Seven only) wherein Social Welfare Department was impleaded as defendant No.6. The defendant No.6 before Debts Recovery Tribunal was proceeded ex-parte. The Bank of Maharashtra obtained Recovery Certificate No.111/2020 in its favour without disclosing that Social Welfare Department, Latur was having priority charge over the mortgaged property.

20. The Bank of Maharashtra initiated Recovery Proceedings against the borrowers before the Recovery Officer-II, Debts Recovery Tribunal, Aurangabad and during the Recovery Proceedings , mortgaged property bearing Plot No.115, Latur Industrial Area, Village Warwanti, Latur admeasuring 3253 Sq. Meters was put to E-Auction by the Recovery Officer on 13.07.2023 and the Respondent No.3 of Appeal No.6/2025 and the Respondent No.7 of Appeal No.7/2025 namely Girish Jugalkishorji Sikchi (Auction Purchaser) was declared as successful bidder in E-Auction. The appellants of Appeal No.6/2025 being Certificate Debtors filed objections Exhibit-37 through one of its

Directors in Recovery Certificate No.111/2020 before the Recovery Officer-II, DRT, Aurangabad. The Appellant of Appeal No.7/2025 namely Social Welfare Department who was defendant No.6 in the Original Application No.201/2015 filed Objections / Application Exhibit-38 before the Recovery Officer-II, DRT, Aurangabad in Recovery Certificate No.111/2020 in respect of the mortgaged property. The Recovery Officer-II, DRT, Aurangabad after hearing the parties dismissed the objection of Certificate Debtors Exhibit-37 but partly allowed the application of Social Welfare Department Exhibit-38 vide order dated 31.07.2024.

21. Feeling aggrieved with the impugned order dated 31.07.2024, these two appeals have been preferred one by the appellants / borrowers / Certificate Debtors and other by Social Welfare Department who was having first charge over the mortgaged property.

22. During the pendency of the Recovery Proceedings before the Recovery Officer-II, DRT, Aurangabad, the present appellants of Appeal No.6/2025 / Certificate Debtors paid the entire amount of Recovery Certificate No.111/2020 and Recovery Certificate was satisfied and moved application

Exhibit-42 for closing the Recovery Proceedings as the amount has been recovered by the bank existing towards the disputed recovery certificate. It may be noted here that the Recovery Officer by its own order dated 09.10.2023 directed the Certificate-Holder Bank not to issue “No Dues Certificate” to the Auction Purchaser inspite of liquidation of loan account by way of One Time Settlement. It is also admitted fact that there are no dues to be recovered under the Recovery Certificate No.111/2020 on the date of confirmation of the sale from the appellants / borrowers. When the Recovery Certificate No.111/2020 was fully satisfied on payment of the amount by the borrowers to the respondent No.1 Bank of Maharashtra and moreso the appellants / borrowers moved an application Exhibit-42 before the Recovery Officer-II, DRT, Aurangabad for closing the Recovery Proceedings, thereafter the Recovery Officer has no jurisdiction to proceed further but the Recovery Officer has exceeded his jurisdiction as instead of closing the Recovery Proceedings, he proceeded ahead by issuing direction to Social Welfare Department and Tahsildar Latur, to remove plant and machinery lying on the auctioned property within 15 days from the date of the order and the

Social Welfare Department having First Charge-Holder to sale the same as per law and further directed the Social Welfare Department to file an application before the Recovery Officer for withdrawal of the auctioned amount. The Recovery Officer even further proceeded that E-Auction sale of property bearing Plot No.115, Latur Industrial Area, Village Warwanti, Latur admeasuring 3253 Sq. Meters conducted on 13.07.2023 stands confirmed in favour of the successful auction purchaser and the sale certificate be issued in his favour. Even he further ordered to issue letter to the concerned Sub-Registrar for registration of the sale certificate. Even one advocate was appointed as Court Commissioner for handing over the physical possession of the auctioned property to the auction purchaser. Therefore, after the request of the appellants / borrowers for closure of the Recovery Proceedings on payment of entire amount of Recovery Certificate to the Bank of Maharashtra, the impugned order passed by the Recovery Officer is apparently illegal and not sustainable in the eyes of law and the same is liable to be set-aside.

23. It may be noted here that the Social Welfare Department being appellant in Appeal No.7/2025 has filed Recovery Proceedings under the provisions of Maharashtra Land Revenue Code before the Collector against the borrowers / respondent No.2 namely M/s. Manjra Industrial Co-Op. Society Ltd. and Collector vide order dated 04.12.2023 had issued Recovery Certificate in favour of the appellant which has been produced on record as Exhibit-50. The Recovery Officer vide impugned order dated 31.07.2024 directed the Social Welfare Department to remove the plant and machinery lying in the auctioned property within 15 days and after removal of the same, he can also file application for withdrawal of the auctioned money. The Recovery Officer was not competent to realize the amount pertaining to the Recovery Certificate Exhibit-50 issued by the Collector in favour of the Social Welfare Department as the jurisdiction of the Recovery Officer was confined only to the extent of Recovery Certificate No.111/2020. When Social Welfare Department has already obtained Recovery Certificate Exhibit-50 from the Collector concerned, it is for the competent authority to proceed further against the borrowers as per law. Even the Recovery Officer has made a

very strange remarks in the impugned order that the prayer of the Certificate Debtors to cancel the auction cannot be considered as it would frustrate the object and purpose behind this auction and deter the public confidence. The Recovery Officer is bound by the law and he had to decide the issue in accordance with law when Recovery Certificate was fully satisfied, he thereafter seized to have further jurisdiction in the matter and reliance can be placed on Judgment of Mohan Wahi Vs. Commissioner, Income Tax, Varansi And Others, AIR 2001 SC 3906. Therefore, the application filed by the Social Welfare Department for claiming its right on the basis of first charge over the secured asset is sustainable and the impugned order dated 31.07.2024 is liable to be set-aside and both the appeals are liable to be accepted for the reasons stated above.

24. In view of above observations, I pass the following order.

ORDER

(A) Appeal No.6/2025 and Appeal No.7/2025 are hereby allowed and the E-Auction sale dated 13.07.2023 is hereby cancelled and set aside. (B) The impugned order dated 31.07.2024 passed by the learned Recovery Officer-II, Debts Recovery Tribunal, Aurangabad is hereby set-aside.

(C) The Recovery Officer-II, Debts Recovery Tribunal, Aurangabad is hereby directed to refund the sale consideration / auctioned amount to the Auction Purchaser namely Mr. Girish Jugalkishorji Sickhi alongwith interest, if deposited in the fixed deposit account. Or the Auction Purchaser is at liberty to move before the Recovery Officer-II, DRT, Aurangabad for refund of the amount deposited. (D) The respondent No.1 namely Bank of Maharashtra is hereby directed to restore the possession of the secured asset to the appellants / borrowers within 15 days of passing of this order. (E) Both the parties are left to bear their own costs. (F) The signed copy of this Judgment be also placed on Appeal No.7/2025. (G) Both Files i.e. Appeal No.6/2025 and Appeal No.7/2025 be consigned to the Record Room after due compliance. Pronounced in open Court. Date : 01.10.2025. Sd/- (Dr. J.R. Chauhan) Presiding Officer Debts Recovery Tribunal, Aurangabad