THE SARASWAT CO-OPERATIVE BANK LIMITED AND ANR.versusMULANI ASSOCIATES THR. PROPRIETOR SHRI. BABULAL HAJIBHAI MULANI

                                                                   CRA.331.2023.doc

Ajay

                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                              CIVIL APPELLATE JURISDICTION

                    CIVIL REVISION APPLICATION NO. 331 OF 2023

       The Saraswat Co-op. Bank Ltd & Anr.                   Applicants
                                                          .. (Org. Defendants)
                 Versus
       Mulani Associates                                     Respondent
                                                          .. (Org. Plaintiff)
                                 ....................
             Mr. H.G. Dharmadhikari a/w Ms. Pallavi Baghel, Advocate for
              Applicants.
             None for Respondent.
                                      ...................
                                     CORAM : MILIND N. JADHAV, J.
                                     DATE      : JUNE 12, 2026
       P.C.:

       1.          Heard Mr. Dharmadhikari, learned Advocate for Applicants.

       None appears for Respondent.

       2.          Briefly stated, the present proceedings arise out of an order

       dated 15.09.2022 passed by the Civil Judge, Senior Division, Palghar

       in Summary Suit No.1 of 2021, whereby the Application filed by the

       Applicant – Original Defendant seeking dismissal of the Suit on the

       ground of non-compliance of Section 115 of the Multi-State Co-

       operative Societies Act, 2002 (for short 'the said Act') came to be

       rejected.

       2.1.        Applicant is a Multi-State Co-operative Bank registered

       under the provisions of the said Act.


       2.2.        Respondent – Original Plaintiff is an approved Valuer who



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was empanelled by Applicant – Bank and was engaged from time to

time for valuation of immovable properties offered as security for loan

sanctioned by the Applicant – Bank.


2.3.      Respondent claims to have rendered valuation services to

various branches of Applicant – Bank pursuant to his empanelment and

thereafter raised bills towards professional fees for such services.


2.4.      Alleging non-payment of the amounts due under the said

bills, Respondent instituted Summary Suit No.1 of 2021 before Civil

Judge, Senior Division, Palghar seeking recovery of an amount of

Rs.6,96,595/- together with interest.


2.5.      Upon appearance in the Suit, Applicant filed Application

contending that the Suit was not maintainable for want of compliance

with the mandatory provisions of Section 115 of the said Act. It was

Applicant’s contention that the valuation work carried out by the

Respondent was directly connected with the banking activities of the

Applicant and therefore the dispute was such a one touching the

business of the Society (Bank). Consequently, prior notice to the

Central Registrar as contemplated under Section 115 of the said Act

was therefore mandatory before institution of the Suit.

2.6.      Respondent opposed the said Application contending that

the Suit was merely for recovery of professional fees and did not

concern the constitution, management or business of Applicant within


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the meaning of Section 115 of the said Act. It was further contended

that the provisions relied upon by Applicant were not attracted to the

facts of the present case.

2.7.      After hearing the parties, Trial Court by order dated

15.09.2022, held that the subject matter of the Suit did not touch the

constitution, management or business of Applicant and consequently

the provisions of Section 115 of the said Act were not attracted. Trial

Court accordingly rejected the application.


2.8.      Being aggrieved by the said order, Applicant has invoked the

supervisory jurisdiction of this Court under Article 227 of the

Constitution of India challenging the legality and correctness of the

order dated 15.09.2022.

3.        Mr. Dharamadhikari, learned Advocate appearing for

Applicants while assailing the impugned order dated 15.09.2022 in

Summary Suit No.1 of 2021 would submit that Trial Court has failed to

appreciate the true scope and applicability of Section 115 of the said

Act and has erroneously rejected the Applicant's Application under

Order VII Rule 11 of the Code of Civil Procedure, 1908 (for short

‘CPC’).

3.1.       He would submit that Respondent – Original Plaintiff has

instituted Summary Suit No.1 of 2021 seeking recovery of an amount

of Rs.6,96,595/- alongwith interest towards professional fees allegedly

payable for valuation services rendered by the Respondent to various

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branches of the Applicant – Bank.


3.2.      He would submit that the Applicant is a Multi-State Co-

operative Bank registered under the provisions of the said Act and is

therefore governed by the statutory provisions contained therein.


3.3.      He would submit that Section 115 of the said Act mandates

issuance of prior notice to the Central Registrar before institution of

any Suit against a Multi-State Co-operative Society in respect of any

act touching its constitution, management or business.


3.4.      He would submit that admittedly no notice as contemplated

under Section 115 of the said Act was issued by the Respondent prior

to institution of the present Suit and therefore the Suit itself is not

maintainable in law.


3.5.      He would submit that Trial Court has failed to appreciate

that the services rendered by the Respondent as a Valuer are directly

connected with and form an integral part of the banking business

carried on by Applicant.


3.6.      He would submit that Respondent was engaged by the

Applicant for preparation of Valuation Reports in respect of immovable

properties offered as security by borrowers seeking financial assistance

from the Applicant – Bank.


3.7.      He would submit that such valuation services were availed in


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compliance with various Master Circulars issued by the Reserve Bank

of India governing management of advances by Urban Co-operative

Banks.


3.8.      He would submit that the Reserve Bank of India, by its

Master Circulars dated 04.07.2007, 05.07.2015 and 08.04.2022 has

emphasized the necessity of obtaining realistic valuation of immovable

properties accepted as collateral security for loans and advances.


3.9.      He would submit that valuation of secured assets is a

mandatory and essential requirement for assessing the adequacy of

security offered by borrowers and for taking an informed decision

regarding sanction and disbursement of loans.


3.10.     He would submit that in absence of a Valuation Report,

Applicant – Bank cannot proceed with the process of sanctioning or

disbursing loans and therefore valuation forms an indispensable

component of the lending process.


3.11.     He would submit that lending and advancing money against

security constitutes one of the principal objects and core business

activities of the Applicant – Bank as reflected in its bye-laws.


3.12.     He would therefore submit that the services rendered by the

Respondent are intrinsically connected with and have a direct nexus to

the banking business carried on by the Applicant.



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3.13.       He would submit that any dispute arising out of such

valuation services necessarily constitutes a dispute touching the

business of the Applicant – Bank within the meaning of Section 115 of

the said Act.


3.14.       He would submit that Trial Court has adopted an unduly

narrow interpretation of the expression "touching the business of the

society" and has failed to appreciate the broad ambit attributed to the

said expression by judicial precedents.


3.15.       In support of his submissions, he would place reliance upon

the judgment in Mohan Meakin Limited, Bombay Vs. The Pravara

Sahakari Sakhar Karkhana Ltd.1.

3.16.       Relying upon the observations contained therein, he would

submit that the expression "touching the business of the society" is

required to receive a wide and liberal interpretation and would include

all acts and transactions having a direct nexus with the principal

business activities of the Society.


3.17.       He would submit that Court in the aforesaid judgment has

held that where the subject matter of the dispute bears a direct

connection with the business activities of the Co-operative Society,

compliance with the statutory notice provision becomes mandatory.


3.18.       He would submit that the principles laid down in the

1   1987 Mh.LJ 503.

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aforesaid judgment squarely apply to the facts of the present case in as

much as valuation of properties offered as security for loans is an

essential and inseparable part of the lending activity undertaken by the

Applicant – Bank.


3.19.     He would therefore submit that the dispute raised by the

Respondent clearly pertains to an act touching the business of the

Applicant – Bank and consequently compliance with Section 115 of the

said Act was mandatory before institution of the Suit.


3.20.     He would submit that Trial Court has failed to appreciate the

mandatory nature of the statutory requirement and has erroneously

concluded that Section 115 of the said Act is not attracted to the

present proceedings.


3.21.     He would therefore submit that the impugned order dated

15.09.2022 deserves to be quashed and set aside and the plaint in

Summary Suit No.1 of 2021 is liable to be rejected under Order VII

Rule 11 of the CPC for non-compliance with the mandatory provisions

of Section 115 of the said Act.


4.        Though no one appears for the Respondent – Original

Plaintiff, the case of the Respondent as discernible from averments in

the plaint and the findings recorded in the impugned order is that the

Respondent is a Government-recognized valuer, architect and R.C.C.

consultant   carrying   on   professional   activities   through   Mulani

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Associates.


4.1.      It was the case of the Respondent before Trial Court that he

was appointed as an authorized architectural consultant and Valuer of

the Applicant - Bank and such appointment was renewed from time to

time since the year 1992.


4.2.      It was the case of the Respondent that pursuant to the said

appointment, he prepared Valuation Reports and rendered other

professional services to various branches of the Applicant – Bank for

several years.


4.3.      According to the Respondent, professional fees in the sum of

Rs.6,96,595/- remained outstanding towards the services rendered by

him to the Applicant – Bank.


4.4.      It     was   his   case   that   despite   repeated   demands,

correspondence and issuance of legal notice dated 20.02.2020, the

outstanding amount was not paid by the Applicant.


4.5.      It was the case of Respondent that the Applicant, in response

to the legal notice, sought particulars and details of the outstanding

bills and the same were duly furnished by him.


4.6.      Respondent therefore instituted Summary Suit No.1 of 2021

seeking recovery of the aforesaid amount together with interest.


4.7.      It was the case of the Respondent that the Suit is founded


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purely upon non-payment of professional fees for services rendered

and does not concern any dispute relating to the constitution,

management or business of the Applicant.


5.        I have heard Mr. Dharmadhikari, learned Advocate for

Applicants. Though none appears for the Respondent, I have perused

the averments in the Suit plaint, the impugned order and the material

placed on record. Submissions made by the learned Advocate at the

bar has received due consideration of the Court.


6.        Trial Court, upon consideration of the averments in the

plaint and the rival contentions, held that the dispute pertains to

recovery of professional fees allegedly payable for services rendered by

the Respondent and does not relate to any act touching the

constitution, management or business of the Applicant.

7.        Trial Court further concluded that the provisions of Section

115 of the said Act were not attracted to the facts of the present case

and consequently the requirement of issuance of notice to the Central

Registrar did not arise.

8.        Trial Court accordingly rejected the Application seeking

rejection of the plaint under Order VII Rule 11 of the CPC.


9.        The    principal   and   central   question   that   arises   for

consideration is whether the present Summary Suit instituted by the

Respondent for recovery of professional fees allegedly payable for


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valuation services rendered to the Applicant – Bank can be said to be a

Suit in respect of an act touching the constitution, management or

business so as to attract Section 115 of the said Act.

10.        At the outset, it is well settled that while considering an

Application under Order VII Rule 11 of the CPC, the Court is required

to examine the averments contained in the plaint and the documents

relied upon by the Plaintiff. The defence sought to be raised by the

Defendant cannot ordinarily be looked into for determining whether

the plaint is liable to be rejected.

11.        A perusal of the plaint reveals that the Respondent claims to

have rendered valuation and allied professional services to the

Applicant – Bank pursuant to his empanelment as a Valuer and

architectural consultant. The grievance of the Respondent is that

despite rendering such services and raising bills from time to time,

professional fees amounting to Rs.6,96,595/- remained unpaid. Suit is

therefore founded upon an alleged liability arising out of non-payment

of professional charges.

12.        Significantly, the plaint does not disclose any dispute

concerning the constitution of the Applicant, its internal management,

affairs of administration or any dispute relating to transactions

between the Applicant and its borrowers. The cause of action pleaded

in the Suit is confined to recovery of professional fees allegedly due

and payable to the Respondent.

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13.       The contention of the Applicant is that valuation of

immovable properties offered as security by borrowers constitutes an

essential part of the loan sanction process and therefore any dispute

arising from valuation services must necessarily be treated as a dispute

touching the business of the Bank.


14.       I am unable to accept the aforesaid contention. Though

Valuation Reports may be obtained by the Applicant in connection with

its lending activities, the present dispute does not arise out of any loan

transaction, recovery proceeding or enforcement of security toughing

upon the constitution and business of the Bank as a Society. The

controversy is confined to recovery of professional fees allegedly

payable to the Respondent.

15.       Merely because the Applicant may have availed the services

of the Respondent in connection with its lending activities or in

compliance with regulatory requirements would not by itself render

every dispute arising out of such professional engagement a dispute

touching the business within the meaning of Section 115 of the said

Act. The immediate and substantive controversy in the present

proceedings concerns alleged non-payment of professional charges and

not the conduct of banking business by the Applicant.

16.       The test is not whether the services rendered by the

Respondent were utilised by the Applicant in the course of its banking

activities, but whether the subject matter of the dispute itself directly

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concerns the business. In the present case, the dispute relates solely to

recovery of professional remuneration and therefore lacks the requisite

nexus contemplated under Section 115 of the said Act.


17.        The expression “touching the business of the society”

undoubtedly     deserves     a   broad   interpretation.   However,    such

interpretation cannot be stretched to include every transaction having

a remote or incidental connection with the functioning of a Co-

operative Society. There must exist a direct and proximate nexus

between the subject matter of the dispute and the principal business

activities of the society.

18.        In the facts of the present case, the dispute arises out of a

professional and contractual relationship between the parties which

has nothing to do with the constitution and business of the Applicant -

Bank. Respondent has approached the Court for recovery of the

outstanding professional fees allegedly payable for services rendered

by him. Such dispute cannot be equated with disputes relating to

advancement of loans, recovery of dues, enforcement of securities or

other core banking functions of the Applicant.

19.        Trial Court has therefore rightly observed that the Suit has

been instituted for recovery of professional charges allegedly payable

to the Respondent and not in respect of any act touching the

constitution, management or business of the Applicant. Once Section

115 of the said Act is held to be inapplicable, the question of issuance

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 of notice to the Central Registrar does not arise and consequently no

 ground is made out for rejection of the plaint under Order VII Rule 11

 of the CPC.

 20.            The findings recorded by Trial Court are based upon a

 proper appreciation of the pleadings and the statutory provisions and

 do not suffer from any perversity, illegality or jurisdictional error

 warranting interference.

 21.            The impugned order dated 15.09.2022 in Summary Suit

 No.1 of 2021 is legal and proper and calls for no interference. Hence

 order dated 15.09.2022 is confirmed and upheld.

 22.            In view of the above, Summary Suit No.1 of 2021 shall

 proceed further in accordance with law and on its own merits. Suit is

 expedited.

 23.            Civil Revision Application being devoid of merits is

 accordingly dismissed.

                                           [ MILIND N. JADHAV, J. ]


             Digitally signed by
RAVINDRA RAVINDRA
         MOHAN
MOHAN    AMBERKAR
AMBERKAR Date: 2026.06.12
             15:29:05 +0530




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